2022
Annual and
Sustainability Report
CONTENTS
Annual review 3
Orthex in brief 4
Key figures 5
Highlights of the year 6
Review by the CEO 7
Strategy 10
Sustainability 13
Key sustainability actions 2022 14
Sustainability at Orthex 15
Environmental: Aiming towards carbon neutrality by 2030 22
Social: Understanding our impact on people 30
Sustainability governance: Compliance and transparency 35
Governance 38
Corporate governance statement 2022 39
Board of Directors 43
Management Team 47
Remuneration report 2022 51
Financial review 55
Board of Directors’ report 57
Financial statements 78
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ANNUAL REVIEW SUSTAINABILITY GOVERNANCE FINANCIAL REVIEW
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Orthex in brief
and sells practical and durable household products with a mission to
make consumers’ everyday life easier. Orthex main consumer brands are
SmartStore™ in storage products, GastroMax™ in kitchenware and Orthex™
in home and plant care categories. In addition, Orthex sells externally
produced kitchen products under the Kökskungen™ brand.
Orthex has more than 100 years of experience in the production, design,
and marketing of household products, and it has approximately 800
customers in more than 40 countries. Orthex’s core geographic market is
Europe. Orthex is headquartered in Espoo, F inl and , and listed on Nasdaq
Helsinki Ltd (ORTHEX).
Orthex aims to be the industry forerunner in sustainability. Our high-quality,
safe, and durable products are made with care and timeless design. They
are made for long-term use and are recyclable in all our markets. We are
actively increasing the share of renewable and recycled raw materials in our
products. At the same time, we continuously strive to reduce the carbon
footprint of our products and operations and are aiming towards carbon
neutral production by 2030.
Product categories:
Storage Kitchen Home
& yard
Plant care
1)
Invoiced sales of SmartStore, GastroMax, Orthex, and Kökskungen
branded products accounted for 92% of total invoiced sales in 2022.
300+ employees
>
40
customer countries
Sustainability focus
>
90%
own brand sales
1)
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Key figures
-1.4%
Net sales decrease
outside Nordics
295
Personnel,
FTE during the year
- 7. 2%
Storage category
decrease
2.2
11.4%
17.0%
12.4%
6.5%
2019 2020 2021 2022
7.6
12.9
11.0
5.5
2019 2020 2021 2022
6.5
12.3
9.3
5.2
2019 2020 2021 2022
66.4
75.9
88.7
84.0
2019 2020 2021 2022
Net sales, EUR million
Adjusted EBITA, EUR million
Adjusted EBITA margin, %
Operating profit, EUR million
11.4%
17.0%
12.4%
6.5%
2019 2020 2021 2022
7.6
12.9
11.0
5.5
2019 2020 2021 2022
6.5
12.3
9.3
5.2
2019 2020 2021 2022
66.4
75.9
88.7
84.0
2019 2020 2021 2022
Net sales, EUR million Adjusted EBITA, EUR million
Adjusted EBITA margin, %
Operating profit, EUR million
11.4%
17.0%
12.4%
6.5%
2019 2020 2021 2022
7.6
12.9
11.0
5.5
2019 2020 2021 2022
6.5
12.3
9.3
5.2
2019 2020 2021 2022
66.4
75.9
88.7
84.0
2019 2020 2021 2022
Net sales, EUR million
Adjusted EBITA, EUR million
Adjusted EBITA margin, %
Operating profit, EUR million
11.4%
17.0%
12.4%
6.5%
2019 2020 2021 2022
7.6
12.9
11.0
5.5
2019 2020 2021 2022
6.5
12.3
9.3
5.2
2019 2020 2021 2022
66.4
75.9
88.7
84.0
2019 2020 2021 2022
Net sales, EUR million Adjusted EBITA, EUR million
Adjusted EBITA margin, %
Operating profit, EUR million
kgCO2
eq./kg
We reduced our relative
carbon footprint compared to
2021 level (2.5 kgCO2 eq./kg)
2022 2021 2020 2019
Net sales, EUR million 84.0 88.7 75.9 66.4
Adjusted EBITA, EUR million 5.5 11.0 12.9 7.6
Adjusted EBITA margin, % 6.5% 12.4% 17.0% 11.4%
Operating profit, EUR million 5.2 9.3 12.3 6.5
Net debt / Adjusted EBITDA 2.8 1.7 2.3 3.5
Earnings per share, basic (EUR) 0.12 0.35 0.47 0.12
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ISCC PLUS certificate
Lohja factory granted with the
ISCC PLUS certificate facilitating
the use of renewable materials
according to mass balance
approach.
In-store excellence
A flagship store solution in
a major DIY chain. Several
in-store implementations
together with major retail
chains throughout the year.
Highlights of the year
Materiality
assessment
Extensive materiality
assessment to sharpen our
sustainability strategy.
Mass balance
ISCC PLUS certified and
mass-balanced renewable
raw materials in the
SmartStore™ Compact
storage box series.
Commitment
to SBTi
SBTi approved Orthex’s
CO2 emissions
reduction target.
Recognitions
The new SmartStore™ Collect
Slim was awarded with
“Winner 2023” at the German
Design Awards.
AprilMarch
2022
June September November December
Digitalisation
Re-launch of Orthex
web pages and product
data systems in
five languages.
The issuing Certification Body is responsible for the accuracy of this document.
Version / Date:
1 (no adjustment)
/
1
7
.03.2022
Page
1
of
2
ISCC PLUS Certificate
Certificate Number:
ISCC
-
PLUS
-
Cert
-
SE205
-
00000
376
DNV Business Assurance Sweden AB,
Box 6046, Solna, Sweden
certifies
that
Oy Orthex Finland Ab
Immulantie 166
,
08500
Lohja
,
Finland
complies with the requirements of the certification system
ISCC
PLUS
(International Sustainability and Carbon Certification)
Place of the audit
(if different from the legal address of the system user as stated above; only
applicable for traders and traders with
storage):
n.a.
This certificate is valid from
1
7
.0
3
.2022
to
1
6
.0
3
.2023
.
The
site
of the system user is
certified as
:
Co
-
Processing
The
scope of the certificate includes the
following chain of custody options
:
(not applicable for paper traders)
Mass Balance
Stockholm
17
.03.2022
Place and d
ate
of issue
Stamp, Signature
of issuing party
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Review by the CEO
Orthex purpose is to improve everyday life with practical, beautiful, and sustainable
household products. We want to give consumers the opportunity to choose products
that are better for the environment; therefore we constantly strive to improve the
sustainability of our products and our operations.
Volatility and uncertainty affected the business environment during 2022, with geopolitical
disruption and high inflation across the value chain. The world after COVID-19 offered conditions
where the scarcity of products and the lack of efficient transport further increased transportation
costs both at land and sea to new record levels. Shift in consumer behaviour towards sustainability
and digital marketplaces is accelerating post covid. Whilst demand remained overall solid, the
pressure of inflation on consumers started to erode the consumption growth across product
categories and geographical areas during the year. As a result of the prevailing consumption
uncertainty, many retailers are carefully monitoring their inventory levels and limiting buying to
ensure efficiency. Orthex product price points are relatively low, and the products are bought to
solve real needs. Therefore, Orthex believes that its product categories will be less affected by
careful consumer purchasing behaviour than other more expensive consumer goods categories.
Sales growth in European markets
In 2022, driven by lower consumer confidence, Orthex’s net sales decreased by 5.2% to
EUR 84.0 million. In the strategically important European markets, we managed to deliver growth
year-on-year and the growth accelerated towards the end of the year. The positive European sales
development is a result of a successful commercial strategy implementation including widened
distribution, customer collaboration, new customers gained, price increases and launch of new
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products that all helped to counter the negative effects of careful customer
and consumer behaviour. The sales decreased in the Nordic core markets
driven by a few larger Nordic customers that limited their purchases during
the fourth quarter. The fourth quarter comparison is against an all-time high
sales quarter in 2021. No significant customers or important product listings
were lost during the year.
We are committed to implementing our growth strategy with a focus on
accelerated European and international growth with a strong focus on
sustainability. All functions and activities are designed to deliver and support
our growth ambition to become the number one brand in the storage
category in Europe while strengthening our Nordic category leader position.
Orthex’s products are sold in more than 40 countries, sales on our European
strategic markets grew by 4.7%. In 2022, sales outside the Nordic core
markets accounted for 20.2% (19.4) of Orthex’s invoiced sales.
Orthex has been able to utilize its capacity efficiently, which has positively
affected our delivery performance. The uncertainty in customer purchasing
behaviour is seen in an increase in inventory value towards the end of the
year. The inventory value is affected by higher raw material prices and higher
stock of our best-selling products in anticipation of sales growth. Focus will
be put in 2023 to manage the inventory to ensure more efficient working
capital levels.
Profitability was influenced
by cost inflation
In 2022, profitability was influenced by cost inflation, especially in raw
materials. The weakening of the Swedish krona and more expensive
purchased products, transports and energy also impacted the result
negatively. During the year, active measures to off-set the rising cost levels
were taken. Especially adopting the pricing of products to rapidly increasing
cost levels was done with a long-term view. The full-year adjusted EBITA
decreased to EUR 5.5 million (11.0). We are disappointed with the result
development for the year. Especially market conditions during the second
quarter of 2022 affected the overall result negatively. Towards the end of the
year, we already saw improving relative profitability despite uncertainty in
customer purchasing behaviour.
Sustainability at the core of Orthex
strategy
The company aims to be the industry forerunner in sustainability by offering
timelessly designed, high-quality, safe, long-lasting products, while reducing
the carbon footprint of its operations and products. Orthex has set as a main
target to work towards carbon neutrality in production by 2030.
We reached many significant sustainability milestones during 2022. One
major achievement was that SBTi approved Orthex’s near-term science-
based emissions reduction target, meaning that Orthex’s climate targets are
aligned with the target to keep global warming below 1.5°C.
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At the beginning of the year, we took an important step by ISCC PLUS
certifying our Lohja factory, which gave us the opportunity to start business
with mass balanced renewable materials in selected product series. In
addition, we sharpened our sustainability strategy based on feedback
from an extensive materiality assessment. In terms of recognition and
working with transparency, we earned a Nasdaq ESG Transparency Partner
certification, we improved our rating to B in the CDP Climate Change program
and as mentioned, our CO2 reduction targets were approved as science-
based targets. Our products got positive recognition, for example our fishnet
bucket was in the final of the most sustainable product competition in
Finland. In addition, we added to the family of products for waste sorting
by launching the very nicely designed SmartStore
TM
Collect Slim product to
enable recycling and sorting of waste in an increasing number of homes.
In terms of future development, we started two important raw material
related projects together with partners, the aim of which is to find break-
through solutions with which we can increase the use of sustainable raw
materials in our products. This is in line with our ambition to reduce our
carbon footprint and reach carbon neutrality.
A motivated and skilled personnel is our primary and most valuable resource.
We work actively with a zero-accident culture where everyone should feel
appreciated, welcomed, and safe at work. I am happy to report that the
already good results in our personnel survey shows improvement from the
previous year and the results are significantly more positive compared to the
peer group of Finnish manufacturing companies.
Digitalisation, in-store excellence,
and innovations support our growth
Digitalisation and in-store excellence play an important role in Orthex
business development and in our strategy execution. In digitalisation, there
are several important milestones achieved in 2022 including the creation
of strong in-house e-commerce competencies and thereto related new
customer openings in the fast-growing e-commerce business. Our ambition
is to be a strong value adding partner both to pure e-commerce players and
multi-channel partners. Another milestone is the successful re-launch of our
web pages in five languages and related product data systems. In addition,
Orthex has in 2022 significantly progressed in terms of data security and IT
protection readiness.
In terms of in-store excellence, we are proud to have implemented several
initiatives especially in the storage and kitchen categories together with
major retail chains in Europe and the Nordic countries. Making shopping
easier benefits both Orthex and its partners and gives the consumer the
choice to select increasingly sustainable products in the store. Innovation
We started two important
raw material related
research projects.
within our categories will further support our growth. We believe that the
demand for sustainable products will continue to increase and therefore we
are ensuring that we have a pipeline of exciting and relevant new products to
cater for the prevailing consumer trends.
I am pleased with many
of the important strategic
steps achieved.
Orthex has over a hundred years of experience in producing and selling
consumer goods. Now with the second year as a listed company behind us,
I am pleased with many of the important strategic steps achieved in 2022.
Despite the overall challenging conditions, we managed to achieve growth
in strategically important markets, we managed to strengthen our product
portfolio and we took important steps on our sustainability journey. I am
especially proud of our committed and passionate personnel that makes the
difference every day despite turbulent and unpredictable conditions.
With many good learnings from 2022, we are excited to start our third year as
a listed company. I take this opportunity to thank the whole Orthex team, our
stakeholders, and investors for the strong support in 2022.
Alexander Rosenlew
CEO
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Orthex’s key priorities in its growth strategy are to become the number one brand in the Storage category in Europe,
and strengthen its position as a leading houseware company in the Nordics branded with sustainable products.
Solid actions to keep
winning in the
Nordics
Accelerating growth in
the international markets
through strong customer
collaboration
Accelerating growth
through the online
retail channel
Market consolidation
provides growth
opportunities
1 2 3
Orthex aims to grow the Storage product category in
the Nordics through campaigns, expansion of in-store
concepts and launch of new products.
Orthex targets growth in the Kitchen product category
by focusing on sustainable products and distribution
expansion opportunities. Orthex also aims to capture the
e-commerce channel opportunities and the scalability of
its business model.
Orthex expects major growth opportunities in the
international markets and its go-to-market strategy
is delivered through local presence with a key account
approach. The key is to improve the distribution of
Orthex products in the international markets, invest in
strategic customers and new customer acquisition.
The company takes advantage of the e-commerce
growth opportunities by strengthening relationships
with e-commerce companies and working closely with
retailers executing a multi-channel strategy.
Orthex anticipates that acquisitions could
be an important opportunity to reach the
company’s strategic objectives. Orthex intends
to carefully evaluate acquisition opportunities
in Europe. The synergies achieved through
acquisitions are typically related to production,
sales and marketing, logistics, product category
expansions, overheads, and a stronger
bargaining position.
In 2022, the Nordics accounted
for 79.8 percent of Orthex
invoiced sales.
In 2022, international markets
accounted for 20.2 percent of
Orthex invoiced sales.
Strategy
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Commercial factors supporting the growth strategy
• Accelerating efforts to grow the Storage category in
international markets utilizing the company’s long experience
in the Nordics.
• The close distribution linkage between Kitchen and Storage
categories enables cross-selling by leveraging Orthex’s existing
customer network.
CLEAR CATEGORY STRATEGY
FOCUSING ON STORAGE
• Orthex aims to be the industry forerunner in sustainability
by offering high-quality, safe, and long-lasting products with
timeless design. Orthex is reducing the carbon footprint of its
operations and products by using more renewable and recycled
raw materials.
• Orthex believes that it has potential to become a preferred
supplier of sustainable products.
• Innovation plays an important role in Orthex growth strategy.
• When developing new products and concepts Orthex will
focus on improving consumers’ everyday life with sustainable
and practical products with timeless design.
GROWTH THROUGH INNOVATIONSSHOWING THE WAY IN SUSTAINABILITY
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Long-term
financial
targets
Sales growth
Pay-out ratio
An annual organic net sales growth to
exceed 5 per cent on a Group level, and
10 per cent outside the Nordics (growth
in local currencies).
Leverage
Net debt to adjusted EBITDA below 2.5x.
Leverage may temporarily exceed the
target (for example, in conjunction with
acquisitions).
Profitability
Improving EBITA margin
(adjusted for items affecting
comparability) exceeding 18 per
cent over time.
Distribution of a stable and over
time increasing dividend with a pay-
out of at least 50% of net profit on
a bi-annual basis.
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Key sustainability actions 2022
We updated our
sustainability strategy
and created the road map
towards carbon neutrality
by 2030.
SBTi approved Orthex’s
near-term science-based
emissions reduction target.
Our relative carbon
footprint was reduced
to 2.2 kgCO2 eq./kg
(2.5 kgCO2 eq./kg in 2021).
We decided to make
considerable investments
in research to find new
methods and raw
material solutions.
Our employee
satisfaction
result improved to
14.6 (14.4 in 2021)
Read more
Read more
Read moreRead more
Read more
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Sustainability at Orthex
Sustainability is a core element in implementing Orthex’s growth strategy and
key priorities as we strive to be the number one brand in storage products in
Europe and strengthen our position as a leading houseware company in the
Nordics. Sustainability is a key factor in all decision making at Orthex and a
significant driver of our development and investment agenda.
The main building blocks of our approach to sustainability are our products,
sustainable raw materials, and our carbon neutrality target. Orthex’s high-
quality, safe, and durable products are made with care and timeless design.
They are made for long-term use and are recyclable in all our markets. We
are actively increasing the share of renewable and recycled raw materials in
our products. We continuously strive to reduce the carbon footprint of our
operations and products and are aiming towards carbon neutral production
by 2030
¹)
. With these priorities, our goal is to be the industry forerunner in
sustainability.
Several initiatives around the world strive to reduce the use of single-use
plastic products that can end up as waste in nature or the oceans. Orthex
does not make single-use products. On the contrary, we believe that plastic
is a valuable raw material that should be used to make long-lasting, reusable,
and recyclable products, such as our own.
As stated in the EU’s European strategy for plastics, “plastics are an
important material in our economy and daily lives”. Orthex’s products and
resource-efficient operations contribute to the EU’s target to accelerate the
transition to a circular plastics economy.
Orthex supports the Plastics Roadmap for Finland which identifies measures
to reduce the harm caused by plastic waste, enhance the recycling and
product design of plastics, create conditions for circular innovations, and
reduce the dependency on fossil-based raw materials by advancing bio-
based solutions. These are long-term systemic changes, and they require
strong cooperation across the value chains. Orthex is involved in two
significant research projects, the goals of which are to increase the use of
recycled and renewable plastics. In line with Orthex’s sustainability strategy,
both projects support our 2030 carbon neutrality target and the target to
increase the use of sustainable raw materials.
1)
Target includes Orthex’s Scope 1 and 2 greenhouse gas emissions and relevant
parts of Scope 3 emissions. More details later in this section.
The main building blocks of our
approach to sustainability are our
products, sustainable raw materials,
and our carbon neutrality target.
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Materiality assessment
Orthex’s sustainability work and sustainability strategy are based on a
stakeholder materiality assessment to ensure that our sustainability priorities
focus on the most relevant sustainability topics.
In 2022, Orthex conducted a sustainability materiality assessment of the
company’s sustainability topics to align Orthex’s sustainability work with
our key stakeholders’ (customers, employees, shareholders, suppliers,
and consumers) expectations. More than 500 replies to the materiality
questionnaire were received, and the assessment results were supplemented
by interviews with selected customers, investors, and suppliers.
We ensure that our sustainability
strategy is in line with stakeholders’
expectations.
The materiality questionnaire and the interviews were built around our
previously defined sustainability priorities. We requested open feedback on
our sustainability work to find out if something relevant was missing from
our sustainability agenda. The result of the assessment confirmed that we
are focusing on the relevant sustainability topics (all topics rated above 4 on
scale 1–5), but gave us cause to raise a new topic – biodiversity – on our
sustainability agenda.
In the materiality matrix, the topics are presented based on their importance
to our stakeholders and on the impact on Orthex business.
Orthex materiality assessment
Impacts on Orthex business
ENVIRONMENTAL SOCIAL ECONOMICAL
Recycling of plastic
Sustainable
raw materials
Production scrap
Carbon emissions
Energy
Product safety
Employee health
and well-being
Zero accidents
Requirements for suppliers
Nordic production
Sustainability targets of customers
Profitability and growth
Sustainability reporting
Biodiversity
Importance to stakeholders
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Orthex’s updated sustainability strategy
During 2022, we conducted an extensive materiality assessment that
formed the basis for our sustainability strategy review. As a result of the
annual sustainability strategy review, the key sustainability aspects were
restructured to follow ESG (Environmental, Social and Governance) structure,
and relevant KPIs for each aspect were defined and finetuned. We will
continue reporting economic aspects and related targets as a part of our
financial reporting.
Environmental
Orthex’s environmental focus remains unchanged – we focus on
continuously minimising our impact on the environment and the climate,
and our key target is aiming towards carbon neutral production by 2030.
Based on the materiality assessment, our key environmental aspects
- environmentally sustainable choices, resource efficiency, responsible
production and consumption, and related targets and KPIs remain the same.
Read more about our work for the environment later in this report under
section Environmental.
Social
Caring for our people and product safety are the key elements of our social
responsibility. Orthex promotes a zero-accident vision and culture, and during
2022 we introduced a new KPI for safety – Lost-Time Injury Frequency (LTIF)
rate. This KPI will replace the number of work-related accidents and will
give us the opportunity to benchmark our safety performance. Stakeholder
engagement and sustainable supply chain remain important aspects to us
and will be reported from now on under Sustainability governance.
Governance
The most significant update of our sustainability strategy was adding
Governance as a key sustainability aspect. Orthex’s way to conduct business
goes beyond compliance with applicable laws and regulations - high ethical
standards and integrity are present in everything we do. Our Code of Conduct
and Supplier Code of Conduct define the key principles for how we engage in
business, and we have introduced two new KPIs related to this. In addition,
we want to increase transparency and raise environmental standards with
high-quality reporting, and we have set new ambitious targets related
to that.
Our key sustainability
aspects follow the ESG
(Environmental, Social &
Governance) structure.
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KPIs
Aspects
Caring for our people
Product safety
Customer satisfaction
Ethical business practices
Transparency
Environmentally sustainable choices
Resource efficiency
Responsible production and consumption
Sustainable materials
Energy efficiency
Production scrap
Reducing carbon footprint
Employee health and safety
Zero accidents culture
Work environment evaluation
Safe and tested products
Customer satisfaction
Ethics and integrity
Sustainable supply chain
Transparent reporting and commitment
ENVIRONMENTAL SOCIAL GOVERNANCE
PURPOSE: Improve everyday life with sustainable, practical products
Orthex designs, produces, and sells functional household products to customers and consumers. Our
offering is based on appealing and innovative concepts, responsibly produced,
long-lasting products of high quality and leading brands.
3. Promoting circular economy
4. Cooperation across the value chain
1. Sustainable raw materials share 2030: 80%
2. Energy efficiency and renewable energy
Actions:
VISION
#1 Brand in Storage in Europe and the leading houseware company in the Nordics.
Showing the way in sustainability in the industry.
TARGET 2030
Towards carbon neutral production
MISSION
Sustainability strategy
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Targets and indicators
Orthex’s sustainability targets and key performance indicators (KPIs)
Aspect Theme KPI Indicator Target Result 2020 Result 2021 Result 2022
E
ENVIRONMENTAL
Environmentally
sustainable choices
Sustainable materials
Share of renewable and recycled materials (used kg) : > % .% .% .%
Increase sales of products made from renewable and
recycled materials (%)
> times net sales growth
.%
(Net sales .%)
.%
(Net sales .%)
.%
(Net sales -.%)
Resource efficiency
Energy efficiency -% rolling years (kWh / produced kg)
)
. in and .
)
in
. . .
Production scrap Scrap rate < .% .% .%
)
.%
Responsible production
and consumption
Reducing carbon footprint
CO2 calculation for our operations (tCO2 eq./a) Towards carbon neutral production by , , ,
CO2 per produced kg (kgCO
eq./a) Reduce annually . . .
S
SOCIAL
Caring for our people
Employee health and safety
and zero accidents culture
Sickness absence rate (factory employees) < .% .% .%
Work related accidents with absence
)
Zero accidents
LTIF (factory employees) < N/A N/A
Work environment evaluation Employee satisfaction survey > . (Finnish manufacturing companies avg.) N/A . / . /
Product safety Safe and tested products All food contact materials tested % % % %
Customer satisfaction Customer satisfaction Customer satisfaction rate Improve
. /
()
. / . /
()
G
GOVERNANCE
Ethical business
practices
Ethics and integrity Share of employees committed to Code of Conduct % NEW NEW NEW
Sustainable supply chain
Suppliers aligned with Supplier Code of Conduct
(A+B suppliers)
% NEW NEW NEW
Share of suppliers that are BSCI members
(in risk countries), repr. % of purchase value
% N/A % %
)
Transparency
Transparent reporting and
commitment
CDP reporting Minimum B-level annually NEW NEW B
Commitment to Science Based Targets initiative Net-Zero Target validated and approved by NEW NEW NEW
Achieved In progress Actions needed New target
1)
Indicator and target adjusted for 2023-2025 period: Improve energy efficiency 1% annually (baseline 2022).
2)
Data is restated with updated information.
3)
Indicator will be replaced with LTIF starting 2023.
4)
Indicator adjusted to represent 90% of purchase value.
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Targets and indicators
Orthex’s sustainability targets and key performance indicators (KPIs)
Aspect Theme KPI Indicator Target Result Result Result
E
ENVIRONMENTAL
Environmentally
sustainable choices
Sustainable materials
Share of renewable and recycled materials (used kg) : > % .% .% .%
Increase sales of products made from renewable
and recycled materials (%)
> times net sales growth
.%
(Net sales .%)
.%
(Net sales .%)
.%
(Net sales -.%)
Resource efficiency
Energy efficiency -% rolling years (kWh / produced kg)
)
. in and .
)
in
. . .
Production scrap Scrap rate < .% .% .%
)
.%
Responsible
production and
consumption
Reducing carbon footprint
CO2 calculation for our operations (tCO2 eq./a) Towards carbon neutral production by , , ,
CO2 per produced kg (kgCO
eq./a) Reduce annually . . .
S
SOCIAL
Caring for our people
Employee health and safety
and zero accidents culture
Sickness absence rate (factory employees) < .% .% .%
Work related accidents with absence
)
Zero accidents
LTIF (factory employees) < N/A N/A
Work environment evaluation Employee satisfaction survey > . (Finnish manufacturing companies avg.) N/A . / . /
Product safety Safe and tested products All food contact materials tested % % % %
Customer satisfaction Customer satisfaction Customer satisfaction rate Improve
. /
()
. / . /
()
G
GOVERNANCE
Ethical business
practices
Ethics and integrity Share of employees committed to Code of Conduct % NEW NEW NEW
Sustainable supply chain
Suppliers aligned with Supplier Code of Conduct
(A+B suppliers)
% NEW NEW NEW
Share of suppliers that are BSCI members
(in risk countries), repr. % of purchase value
% N/A % %
)
Transparency
Transparent reporting and
commitment
CDP reporting Minimum B-level annually NEW NEW B
Commitment to Science Based Targets initiative Net-Zero Target validated and approved by NEW NEW NEW
Achieved In progress Actions needed New target
1)
Indicator and target adjusted for 2023-2025 period: Improve energy efficiency 1% annually (baseline 2022).
2)
Data is restated with updated information.
3)
Indicator will be replaced with LTIF starting 2023.
4)
Indicator adjusted to represent 90% of purchase value.
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UN Sustainable Development Goals
Orthex supports all seventeen UN Sustainable Development Goals (SDGs).
Based on identified priority sustainability topics, we have determined the
most relevant SDGs for Orthex, and how we can best contribute to them.
We have determined
the most relevant SDGs
for Orthex.
SDG 8 Decent work and
economic growth
We care for our employees and the people who work for our partners and
suppliers. We strive for sustainable growth by providing environmentally
sustainable choices and enhancing energy efficiency.
SDG 9 Industry, innovation,
and infrastructure
We produce sustainable and safe products. In our operations, we
continuously seek to improve energy efficiency.
SDG 12 Responsible production
and consumption
In our operations, we are committed to reducing our greenhouse gas
emissions, controlling our chemical use and waste management in a
responsible manner, and minimising scrap. Our products are recyclable
and increasingly made with bio-based and recycled materials, and
we are committed to responsible sourcing. The foundation of our
sustainability work lies upon ethical business conduct, compliance
with legislation, certified environmental management systems, and
sustainability reporting.
SDG 13
Climate action
We are committed to reducing our greenhouse gas emissions and aim
towards carbon neutral production by 2030.
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Sustainability governance and risk
management
At Orthex, sustainability is led by the Board of Directors, the CEO, and the
Management Team. Progress in sustainability is part of the CEO’s incentive
plan (read more later in the 2022 Remuneration Report). The Board of
Directors and the Management Team, including the CEO, review the
company’s sustainability indicators monthly, with a more comprehensive
review once a year. A three-year sustainability strategy is confirmed annually.
Orthex’s sustainability strategy is implemented by a dedicated working
team which sets targets for sustainability and monitors their progress. The
working team is led by the Chief Marketing Officer (CMO) and Operations
Director (OD) who report directly to the CEO and are part of the Management
Team. The team consists of the ESG Advisor, representatives of our quality
functions and, through the CMO and OD, covers production, procurement,
marketing, product development, and commercial functions. The ESG Advisor
is responsible for the development of the company’s sustainability strategy
and for coordinating and implementing sustainability initiatives in line with
the sustainability strategy. The everyday sustainability work at Orthex is
integrated into all operations and functions.
We have a dedicated
team that is setting
and monitoring
sustainability targets.
Orthex’s key sustainability-related policies and principles are:
• Orthex Code of Conduct
• Supplier Code of Conduct
• Anti-Corruption Policy
• Equal Rights & Opportunities Policy
• Quality, Environmental and Safety Policy
• Purchasing Policy
• HR Policy
Orthex’s risk management policy classifies risks into three groups: strategic,
operational, and financial risks. Orthex assesses ESG risks as part of the
systematic risk management process. Sustainability-related risks are
typically covered under operational risks, where we review circumstances
or events that can cause harm to people, property, business, assets,
or the environment.
The responsibility for implementing risk management lies with the
Management Team, and we strive to ensure that each employee
understands and can control risks within their operational environment
and responsibilities. We do this by, for example, implementing our Code of
Conduct (business ethics risks) and our ISO 45001 certified management
system (occupational safety risks). All our employees participate in cyber
security training and competition law training is provided to all relevant
employees and especially to those in the commercial functions. Read more
about our risk management and ESG-risks later in the Board of Directors’
Report for the year 2022.
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We focus on reducing our
emissions and promoting
the recycling of plastics.
Environmental: Aiming
towards carbon neutrality
by 2030
Orthex strives to continuously minimise its impact on the environment and
climate. The products we manufacture are of the highest quality and are
meant to last for years or even decades. Even after a product has worn out, it
can be recycled, and the material reused for some other purpose.
All our factories are ISO 14001 and 9001 certified for environmental and
quality management. We are making significant efforts to increase energy
efficiency and have been able to reduce energy consumption year after year.
Our focus areas within responsible production and consumption are reducing
our greenhouse gas emissions and promoting the recycling of plastics.
Relying on these and other measures, we are aiming towards carbon
neutrality in our production by 2030.
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Our road map towards
carbon neutrality by 2030
We have set an ambitious target and are aiming towards carbon neutrality
in our production by 2030. In 2022, we simulated our road map towards
carbon neutrality, taking into account Scopes 1, 2 and 3 (more details of
these on the next page). In 2021, we took a significant step and replaced
fossil-based electricity with renewable electricity in all our factories. This
action enabled us to reduce our Scope 2 emissions to zero.
As almost all our remaining emissions originate from the raw materials
(Scope 3), we will focus our efforts on increasing the share of renewable
and recycled raw materials in our production. Key drivers enabling us to
move towards our goal are: further adoption of the mass balance approach
(read more later in this section of the report), innovations, new sources of
raw materials, and development of plastic recycling technology.
In 2022, Science Based Targets initiative (SBTi) approved Orthex’s near-
term science-based emissions reduction target, which means that our
climate targets are aligned with the target to keep global warming below
1.5°C in accordance with the Paris Agreement.
2030
We focus
on Scope 3
emissions
Actions to improve resource efficiency
Mass balance approach
We will continue implementing a mass balance approach to make it
possible for us to offer consumers more sustainable products.
100%
renewable
energy
Scope 2 emissions
to zero
Raw material
development
Orthex road map towards carbon neutrality by 2030
We focus our efforts on
increasing the share of
renewable and recycled raw
materials in our production.
Innovations
We invest in researching new sources of raw materials.
Recycling technology
We closely follow development of plastic recycling
technologies e.g. chemical recycling.
2020
CO2 emissions
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In addition to direct greenhouse gas emissions from our operations
(Scope 1) and the production of purchased energy (Scope 2), we have
included the following relevant indirect emissions (Scope 3) in our target:
purchased goods and services, fuel and energy-related activities, upstream
transportation and distribution, and waste generated in operations.
Most of our greenhouse gas emissions originate from purchased goods
and services, such as raw material extraction, and the end-of-life of sold
products, like the incineration of products for energy. The latter is excluded
from our 2030 carbon neutrality target. This is because of our limited ability
to influence consumer behaviour – whether they recycle or discard our
products after use – but also because it is difficult to evaluate how the
recycling of plastic develops. As our products will be in use for decades,
it is likely that by the time they reach their end-of-life stage, most plastic
will be fully recycled. Even if we have limited influence on consumer
recycling behaviour, we proactively promote the recycling of plastics in our
communication channels and we actively participate in plastic recycling
awareness-raising activities. In addition, we make considerable investments
to find new methods and raw material solutions. Read more about our
investments in research later in this report.
In 2022, we reduced our total greenhouse gas emissions to 31,107 tCO2 eq.
(40,304 tCO2 eq. in 2021). Several factors contributed to this change, for
example changes in raw materials, better information about supplier-specific
emission factors and decreased mass of the purchased raw materials. Our
relative carbon footprint that eliminates the impact of business growth was
reduced to 2.2 kgCO2 eq./kg (2.5 kgCO2 eq./kg in 2021).
SCOPE 2
SCOPE 3
Waste generated
in operations
EoL sold
products
Production of
purchaced energy
Fuel and energy
related activities
SCOPE 1
Direct emissions
at production
plants
Upstream
transportation
and distribution
Purchased
goods and
services
Carbon footprint 2020-2022 (tCO2 eq.)
Year Scope 1 Scope 2 Scope 3 Total
kgCO2 eq./kg
of plastic products EoL sold products
2020 72 3,052 33,683 36,807 2.5 27, 280
2021 66 0 40,238 40,304 2.5 30,203
2022 74 0 31,033 31,107 2.2 26,534
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We aim to reduce our emissions and
increase the share of renewable
and recycled raw materials in our
production to 80% by 2030.
Sustainable raw materials
Increasing the share of renewable and recycled raw materials
Orthex promotes sustainability in all choices made along the life cycle of a
product. We only use durable and recyclable raw materials while minimising
their use and optimising logistics. Reducing greenhouse gas (GHG) emissions
and sourcing more and more renewable and recycled raw materials are at
the core of our strategy and sustainability vision. Our target is to increase
the share of used renewable and recycled raw materials in our production to
80% by 2030. In 2022, this share decreased slightly to 13.6% (14.1% in 2021).
However, the growth in sales of products made from renewable and recycled
materials was higher than the overall net sales growth.
Renewable raw materials
Plastics made from renewable raw materials, also often called bio-based,
reduce our dependency on limited fossil resources and have a significantly
smaller carbon footprint than fossil-based plastics. Orthex launched its
first products made from renewable raw materials already in 2016, and
we calculated the carbon footprints of all our bio-based product lines in
2020. For example, the carbon footprint of our GastroMax BIO food storage
products, which include sugarcane-based raw material, is reduced by more
than 80% compared to only using conventional plastic. The reduction is
explained by the carbon dioxide (CO2) generated in manufacturing being
largely compensated for by the CO2 absorbed during plant growth.
We currently use three renewable raw materials for our BIO products:
wood fibre, sugarcane, and castor oil. All these products are certified by
OK Biobased, which assures the share of bio-based raw materials in the
products. Our wood fibre originates from spruce trees in FSC and/or PEFC-
certified semi-natural forests in Sweden. The certification ensures that the
fibre comes from sustainably managed forests where biodiversity values
are considered. Our sugarcane fibre comes from Bonsucro-certified sources
in Brazil. The certification provides transparency and assurance for the
sustainability of the sugarcane value chain, including the active management
of biodiversity. Our castor oil originates from China through a Netherlands-
based supplier that is fully committed to sustainability in its value chain. Read
more about how we work with our suppliers later in the report.
Mass balance approach to drive the change
As transparent plastic and food contact with plastic are still difficult or even
impossible to achieve with recycled plastic, we have started to use renewable
raw materials by applying a mass balance approach in our products to make
it possible for us to offer consumers more sustainable products. The mass
balance approach means that renewable materials are mixed with fossil
materials in the raw material production process. This reduces the amount of
fossil-based plastic in the world.
In 2022, Orthex’s Lohja factory was granted an ISCC PLUS certificate and
we started using ISSC PLUS certified renewable raw materials applying the
mass balance approach in the production of our SmartStore™ Compact
and Compact Clear storage boxes. This supports Orthex’s long-term carbon
neutrality target, and our target to increase the share of sustainable raw
materials in our production to 80% by 2030.
Recycled raw materials
We want to create value out of what has been discarded, which is why we
have used recycled plastic in our production since the 1990s. For example,
the carbon footprint of our SmartStore™ products made with recycled
content is reduced by up to 60% compared to only using conventional
plastic. The SmartStore™ Recycled product line is also certified according
to the Blue Angel ecolabel which sets strict standards for environmentally
friendly products and services.
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The carbon footprint of
our SmartStore™ products
made with recycled content
is reduced by up to 60%.
Fishing nets discarded at sea put a lasting strain on the marine
ecosystems. A single net can remain in the sea for up to 600 years
before decomposing. More than 640 000 tons* of fishing gear end
up in the seas every year and in 2016, about 17% of all waste on
European shores consisted of fishing nets.
In 2018, Orthex introduced a new product line based on raw
material made from used fishing nets. The raw material is
collected from old fishing nets and ropes from harbours in
Scandinavia, in the UK and in Northern Europe. Collected material
is then sorted, cleaned, shredded, and extruded into raw material
from which the Orthex’s bucket, bowl and scoop products are
made. The raw material has up to 94% lower carbon emissions
compared to virgin plastic.
In 2022, Orthex joined forces with UPM Raflatac and introduced
Ocean Action label materials on its fishing net products. UPM
Raflatac collaborates closely with multiple partners in the value
chain to produce the Ocean Action labels. The Ocean Action label
materials are the world’s first label materials made from ocean
bound plastic waste. The ocean bound plastic waste is abandoned
plastic waste recovered from areas up to 50km inland from
shores, defined by OBPCert as “at risk of ending up in the ocean”.
ORTHEX AND UPM RAFLATAC HELP PREVENT MARINE LITTER WITH INNOVATIVE PRODUCTS
*Source: Greenpeace: Ghost gear fishing report 2019.
Orthex was among the first consumer goods companies in the world to start
using plastic packaging recycled by consumers as raw material for new
products in 2017, as soon as technology allowed it. Today, this plastic comes
from EuCertPlast-certified suppliers in Finland and the Netherlands. The
EuCertPlast certification (European Certification of Plastics Recycling) focuses
on the traceability of plastic materials and the quality of recycled content in
the end-product.
We also use recycled plastic from industrial sources. This material originates
from various reliable sources in Europe. The plastic in our products can
be recycled approximately 10 times. In practice, however, recycled plastic
is always a mix of plastics of different ages (some recycled more, some
fewer times). This means that while a certain part of the plastic mass
can be recycled ten times, the product as a whole can be recycled almost
indefinitely.
We also use plastic raw material made from old fishing nets to produce
household buckets and other products. Fishing nets are a major source
of plastic ocean waste. Reusing them as raw material prevents ocean
pollution and considerably reduces the carbon footprint of the new products,
compared to virgin plastic material. In 2022, we initiated collaboration with
UPM Raflatac and started using the world’s first label material made from
ocean bound plastic waste in our products made from old fishing nets.
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Investing in the research of
sustainable raw materials
We invest in research to find new methods and raw materials
We want to provide consumers with the opportunity to choose more
environmentally friendly products, and that is why we in 2022 decided to
make considerable investments in research to find new methods and raw
material solutions. Orthex is involved in two significant research projects, the
goals of which are to increase the use of recycled and renewable plastics.
In line with Orthex’s sustainability strategy, both projects support our 2030
carbon neutrality target and the target to increase the use of sustainable raw
materials.
Orthex launched a significant research project for the development of
future recycled plastic products in September 2022. The project will be
carried out in cooperation with partners and will last until the end of 2024.
The goals of the project are to build an ecosystem aimed at increasing the
use of recycled plastic and to generate new information about the use of
recycled plastic in different applications, especially in products suitable for
food contact. The project is part of the extensive and pioneering Borealis
SPIRIT (Sustainable Plastics Industry Transformation) program supported by
Business Finland, which aims to transform the plastics industry towards a
more sustainable future.
Since January 2023, Orthex also participates in a large cooperation project
of seven years to promote the circular economy of plastics. The PlastLIFE
SIP-EU project piloted by the Ministry of the Environment and the Finnish
Environment Institute (SYKE) is part of the EU’s LIFE program. As part of the
PlastLIFE SIP-EU project, the goal of Orthex’s work package is to find new
potential renewable plastic raw materials, test raw materials in production
and as finished products, and then bring products from renewable plastic to
the market.
We are involved in two significant
research projects that aim to
increase the use of recycled
and renewable plastics.
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Resource efficiency
Our efficient operations save natural resources
Orthex’s own operations are resource efficient and have minimal impact
on the environment, including local biodiversity. In optimizing resource
efficiency, our focus areas are improving energy efficiency and decreasing
production waste, or scrap. Our objective is always to save natural and other
resources.
A significant way to improve energy efficiency in our operations is to replace
old machines with energy-efficient ones. Investments in energy-efficient
machines have contributed to reducing Orthex’s energy consumption
significantly since 2017 as described in the table below. We adjusted our
energy-efficiency target for the period of 2023–2025 to improve energy
efficiency 1% annually (baseline year 2022).
Progress in energy consumption 2017-2022 (kWh/kg)
Year Outcome Target
2017 1.255 N/A
2018 1.203 1.234
2019 1.158 1.196
2020 1.131 1.145
2021 1.10 0 1.10 6
2022 1.092 1.073
We optimise our production in a way that minimises the emergence of poor-
quality products or production scrap. If scrap is created despite our measures,
mainly due to colour or material change during production, we are able to
reuse the vast majority of it as raw material elsewhere in production. This
effectively eliminates the creation of actual scrap. Our target is to achieve a
production scrap rate (cost of scrap products compared to produced volume)
of 1.42% by 2024. In 2022, we managed to reduce scrap even further so that
the scrap rate was only 0.96%.
Progress in reducing production scrap 2017-2022
(cost of scrap products compared to produced volume,
%)
Year Outcome Target
2017 1.35% 1.60%
2018 1.45% 1.55%
2019 1.47% 1.50%
2020 1.09% 1.50%
2021 0.98%
*)
1.50%
2022 0.96% 1.47%
All our factories have closed-loop systems for water use. Our operations
use cooling water in their manufacturing processes, and the water is fully
recycled in production. No wastewater is created in our operations, and no
water is released into nature.
As our products only contain the raw material and colour, we use minimal
volumes of chemicals in our production. Some chemicals are used for other
purposes, for example for cleaning. We also follow the Substitute It Now (SIN)
list to control the chemicals included in the making of our raw materials.
The SIN-list is a database of chemicals likely to be restricted or banned in
the EU. The purpose of this list is to support organisations in identifying and
replacing substances of high concern, based on the criteria defined in REACH,
the EU’s chemical regulation.
*)
Data is restated with updated information.
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Biodiversity
Our biodiversity impacts comes from our supply chains
In 2022, we conducted an extensive sustainability materiality assessment
and based on the feedback from our stakeholders, biodiversity was raised
on our sustainability agenda. Orthex’s own operations are resource efficient
and have minimal impact on the environment, including local biodiversity.
Our indirect biodiversity impacts come from our supply chains, and in 2022
Orthex worked together with the Finnish Chemical Industry Federation and
other member companies to create a long-term, industry-level biodiversity
vision, targets, and a roadmap. During 2023, we will continue the cooperation
with the Finnish Chemical Industry Federation to establish an approach to
measure and track biodiversity impacts within the industry over the years.
Promoting the recycling of plastic
Orthex fully supports the notion that plastic belongs in circulation, not in
nature. We proactively promote the recycling of plastics in our communication
channels and various events, while also engaging in dialogue with relevant
actors. In addition, we actively participate in awareness-raising activities,
organised by the Finnish Plastics Industries Federation, that seek to advance
the recycling of plastics in Finland. Orthex also cooperates with its customers
to raise awareness of recycling. In 2022, Orthex promoted recycling of plastics
in Finland by participating in a nation-wide awareness-raising campaign, and
together with other industry operators collected almost 11,000 kilograms of
plastics from consumers for recycling.
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Social: Understanding our
impact on people
Caring for our people
Employee feedback helps us build a safe and motivating workplace
It is our responsibility to ensure that everyone feels safe and motivated
at work, enjoys their workplace, and can contribute through continuous
improvement. We do this by managing our occupational health and safety
risks, taking preventive measures, educating employees, and continuously
evaluating and improving our ways of working. Leadership, commitment,
and engaged employees are key factors for us to succeed in this area and
in general. We follow up on our progress in monthly and annual reports
and meetings.
Occupational safety
Orthex promotes a zero-accident vision and culture. We want to ensure
that all our employees have a safe workplace every day. Our focus is on
preventing safety incidents, which is why we encourage our employees
to report any near-misses, unsafe practices, or other safety observations.
All reports are carefully analysed, and actions are carried out to prevent
similar situations from re-occurring. To ensure the safe use of chemicals,
we provide our employees with bulletins that define the hazard level of
the chemical and include relevant instructions for use and protective gear.
Our Supplier Code of Conduct requires our suppliers to ensure a safe and
healthy working environment for their employees.
Orthex’s operations are audited with ISO 45001 certification for
occupational health and safety (OHS). The certificate provides requirements
for and guidance on an OHS management system. The goal is to enable
organisations to provide safe and healthy workplaces by preventing
work-related injuries and health issues, and to help improve their OHS
performance. In 2022, we introduced a new KPI for safety – Lost-Time
Incident Frequency (LTIF) rate. This KPI will replace the number of work-
related accidents and will give us the opportunity to benchmark our safety
performance, since this KPI is widely used in peer companies. In 2022, the
LTIF was 9.
Health and well-being
We believe that the health and well-being of our employees form an
important part of their working ability. To ensure this, Orthex offers its
employees high-quality employer-provided occupational health care.
We also promote an early support model that aims to prevent and early
detect any negative development regarding employee health, safety,
and well-being. The model also enables managers to provide adequate
and timely support to employees and to promote dialogue as part of the
company culture.
We measure health and well-being of our factory employees with a key
performance indicator for sickness absence rate (% of total theoretical
working hours). The target for this indicator is to maintain the good level of
below 5%. In 2022, this rate was 6.5% (6.6% in 2021). During the Covid-19
pandemic, it has been a top priority for us to ensure the health and safety
of our employees. Employees are instructed to stay at home with the
slightest symptoms of an illness. We also continue hybrid working practices
where remote and in-office days vary depending on the situation.
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Human resources
In human resources, we focus on constantly developing an organisation
with highly motivated and skilled employees and great leadership, while
enabling continuous improvement for all. Orthex’s people management and
development process is a key element in guiding employee performance
and development. All managers are evaluated by their teams annually, and
all employees are provided with a structured way of giving and receiving
feedback. This helps ensure that everyone has an opportunity to influence
their personal development. Our employee performance reviews and
employee survey, both conducted annually, are also important elements of
people management at Orthex.
In 2022, we conducted an annual employee survey with the
response rate of 94% (94% in 2021). The broad survey focuses on
the following areas: well-being of the employees, preconditions for
work, functionality of the working community and development
conditions of the working community.
Our overall result of all areas improved to 14.6/20 (14.4 in 2021) and
we were above the peer group of Finnish manufacturing companies.
Among all areas evaluated by Orthex employees, the following
received the highest scores:
- awareness of the tasks and objectives of own work (4.5/5)
- support and help provided by the colleagues when needed (4.3/5)
- help and support provided by supervisor (4.2/5)
Areas where we want to improve are:
- employer makes efforts to develop operations and staff (3.1/5)
- ability to influence own workload (3.2/5)
- management showing appreciation of everyone’s work (3.2/5)
The results of the survey were discussed with each team and
development action plans were made and followed up on a
regular basis.
EMPLOYEE SURVEY TO IDENTIFY STRENGTHS AND IMPROVEMENT AREAS
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Diversity and inclusion
We promote equality and do not tolerate discrimination in any form. Our
employees have the freedom to organise themselves, and we respect
and engage openly with trade union and personnel representatives. Our
employee survey confirms that we live up to our core principles – a clear
majority of our employees feels that people are treated fairly at work,
regardless of sex, age, or cultural background.
In addition to our whistleblowing channel, launched in 2021, we operate
an internal feedback system for employees’ improvement proposals.
Each proposal is evaluated and documented. Based on these employee
observations, we have done numerous improvements in, for example, our
ways of working, work environment, and safety equipment. Our target is
to have each operation unit employee submit at least two development
proposals or reports of deviations annually. In 2022, one proposal or report
was submitted per employee.
Men 54%
Women 46%
Employees
by gender
Men 54%
Women 46%
Employees
by gender
Members of the
Board of Directors
by gender
Men 60%
Women 40%
Members of the
Board of Directors
by gender
Men 60%
Women 40%
Production (170)
Warehouse (66)
Sales (51)
Admin (17)
Marketing (12)
Headcount
by function
Total 316
Production (170)
Warehouse (66)
Sales (51)
Admin (17)
Marketing (12)
Headcount
by function
Total 316
A clear majority of our
employees feels that
people are treated fairly
at work.
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Product safety
We always make sure our products are safe to use
Product safety is a top priority for Orthex. We take great pride in offering
products that are manufactured with safe, high-quality raw materials
that make them durable, functional, and safe to use. We comply with all
relevant product safety regulations and guidelines, such as the EU’s Good
Manufacturing Practices and regulation concerning Plastic Materials and
Articles Intended to Come into Contact with Food.
All our products made from conventional plastic are free of Bisphenol A (BPA)
and phthalates. Recycled plastic is also tested and safe, but as it originates
from multiple plastic products, it cannot be used in food-contact products.
Around 90% of Orthex’s products are manufactured at our factories in
Finland and Sweden. The remaining 10% are manufactured by carefully
selected suppliers, mainly in Far East. We only work with big, reliable
suppliers that follow all regulations for food contact materials and test their
raw materials. For more information about how we work with our suppliers,
see section Responsible sourcing.
Food-contact products
We follow all EU regulations concerning food contact products. All these
products are carefully tested on a regular basis in independent, accredited
laboratories to ensure product safety. For example, our GastroMax BIO food
storage products undergo microwave testing to ensure that no substances
are released into food during heating. We specify these details in our
product-specific Declarations of Compliance. In addition, symbols on our
products and their packaging present which temperatures the product
endures and whether it is safe to use in, for example, the microwave, fridge,
or dishwasher. For more information about our product symbols, visit
www.orthexgroup.com.
Product safety
is a top priority
for Orthex.
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Customer satisfaction
We help our customers achieve their sustainability targets
Orthex serves various retail customers, such as traditional convenience
stores, specialty and hardware retailers, online stores, and department stores.
Consumers – the customers of our customers – are another important
stakeholder group for us. We believe that satisfied customers and consumers
will lead to a healthy and growing business. We work hard to meet or exceed
the expectations of our customers and consumers, and we seek to be the
preferred value-creating partner to our customers. As we increase the share
of renewable and recycled raw materials in our production and proceed
towards carbon neutrality, we can further support our customers in achieving
their own sustainability targets.
We actively participate in the sustainability work of our customers and
provide data and information to them so that they can use it in their
calculations and target setting.
90% of our products are manufactured in Finland and Sweden, which means
that the distance to our core markets – Nordic countries and Europe – is
short. This enables us to react to customer needs in a timely manner and
with less tiers in the customer’s supply chain. Our warehouse in Germany,
opened in 2020, further increases the efficiency of our logistics in Europe.
We measure customer satisfaction with a survey every second year. The
latest survey was conducted in 2021 when we improved our customer
satisfaction rate from 3.87 (2019) to 3.93, on a scale 1 to 5.
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Sustainability governance:
Compliance and
transparency
Ethics and integrity
We aim to go beyond compliance
Orthex operates internationally, and we strive to comply with all laws and
regulations applicable to our operations. However, our way to conduct
business goes beyond that: high ethical standards and integrity are present
in everything we do. Everyone at Orthex has a role in ensuring that the
company operates in an ethical and responsible manner, regardless of the
situation. We train and educate our employees to ensure that everyone
understands what ethical behaviour is and how to demonstrate it.
Orthex Code of Conduct applies to all our employees, and members of the
Management Team and the Board of Directors. The Code of Conduct defines
the key principles for how we engage in business, treat each other, and
safeguard Orthex’s assets. It is a tool that helps recognise ethical dilemmas
and presents ways to solve them. Our employees are encouraged to report
any breaches of the Code of Conduct to their supervisors or through Orthex’s
whistleblowing channel. In 2022, we set a new KPI to follow the share of
employees committed to Orthex Code of Conduct, and the target is 100%.
To promote accountability and foster a responsible company culture,
we introduced an internally operated whistleblowing channel in 2021.
The channel is open to all internal and external stakeholders and can be
used anonymously. Employees can use the channel via the company’s
intranet pages and other stakeholders through the company’s website
(Whistleblowing - Orthex Group). The employees and other stakeholders
may use the channel to report suspected non-compliance with Orthex’s Code
of Conduct or Supplier Code of Conduct; breaches of legislation; or other
regulations or guidelines. Such non-compliance may include, for example,
approval of a gift against guidelines, fraud, forgery, conflicts of interest, or
inappropriate behaviour by a colleague or a partner.
When Orthex receives a report of a suspected misconduct or non-compliance,
the matter is first investigated by the CEO and the relevant Operations
Director. After processing the report, the CEO determines potential further
actions, which can be corrective or disciplinary. The whistleblowing reports
are always processed in confidence, and information of the report’s content,
the subject of the report, or the whistleblower are disclosed only to persons
that are part of the investigation. In 2022, we did not receive any reports
through the whistleblowing channel.
Orthex’s way to conduct
business goes beyond
complying with laws
and regulations.
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Responsible sourcing
We have strict sustainability requirements for our suppliers
Our suppliers are key partners for us in controlling and developing the
sustainability of our value chain. In addition to engaging with our suppliers
directly, we are a member of amfori BSCI, a platform that enables companies
to improve visibility for the social performance of their supply chain. We aim
for active engagement with and continuous evaluation of our suppliers.
Supplier Code of Conduct
Our Supplier Code of Conduct (SCoC) presents Orthex’s sustainability
requirements for suppliers. Our suppliers must either commit to our Supplier
Code of Conduct or present their own code of conduct with similar or stricter
sustainability requirements compared to those in our SCoC. In 2022, we set
a target that all our A- and B-classified suppliers must align with Orthex
Supplier Code of Conduct. In countries that we have determined high-risk, we
monitor compliance with our SCoC in the supply chain through amfori BSCI
which carries out on-site inspections, audits, and periodic self-evaluations of
suppliers and their sub-contractors.
If the measures of amfori BSCI, or our own, reveal non-compliance with
our SCoC, we require the supplier to take corrective action and remedy
any adverse impacts on people or the environment, as well as ensure the
prevention of similar issues taking place in the future. The supplier is given
We improved our rating to
B-level (Management) in
climate change CDP reporting.
a timeframe to complete the agreed actions. If the supplier is unable to take
corrective, remedial, or preventative measures on its own, we will support in
developing and implementing an action plan.
If the supplier is unwilling to take corrective action, or there are repeated
and serious breaches of our SCoC, Orthex has the right to end the business
relationship. Orthex will not conduct any business with a supplier engaged in
violations of fundamental human rights, and we will immediately terminate
the business relationship with a supplier that commit such violations. These
zero-tolerance practices are listed in our SCoC.
Companies can join amfori BSCI to have access to a joint platform for
monitoring and auditing their supply chain. The platform is based on sharing
supplier information with members, which reduces time, effort, and costs for
individual companies but also increases consistency for buyers and suppliers.
Orthex has been a member of amfori BSCI since 2018. In 2022, we adjusted
our KPI for this area: we follow-up share of suppliers that are BSCI members
(in risk countries) and represent 90% of purchase value. The target is to cover
100% of these suppliers, and the result in 2022 was 94%.
Transparent reporting and commitment
We consider transparent reporting of our environmental, social and
governance (ESG) impact and efforts an important part of how we do
business. We receive an increasing number of various ESG related questions
and requests from our stakeholders, especially from customers and investors,
and we seek to increase transparency and provide reliable data on material
sustainability topics. Orthex reports on its sustainability efforts annually as a
part of its Annual and Sustainability Reports. In addition, Orthex contributes
to several third-party sustainability reports and commitments.
Orthex is certified Nasdaq ESG Transparency Partner. This certification is
used by Nasdaq to show engagement in the market transparency and raising
environmental standards. Sustainability is a core element in Orthex’s strategy
and with this reporting to Nasdaq’s ESG Data Portal we want to provide
quantifiable metrics on environmental, social and governance issues to the
public and investors.
Orthex reports on risk management and management practices related
to climate change in Climate Disclosure Project’s (CDP) climate change
program annually. CDP is a non-profit organisation that runs the global
disclosure system for investors, companies, cities, and states to manage their
environmental impacts. In 2022, we set a target, and achieved it, to reach
B-level (Management) in CDP reporting.
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In 2022, Orthex joined the group of international pioneering companies
by committing to science-based climate targets set by the Science Based
Targets initiative (SBTi). SBTi approved Orthex’s near-term science-based
emissions reduction target, which means that Orthex’s climate targets are
aligned with the target to keep global warming below 1.5°C in accordance
with the Paris Agreement. We wanted to increase our level of ambition
even further and have set the target to have our long-term Net-Zero target
validated and approved by SBTi by 2025.
Our climate targets are
aligned with the target to
keep global warming below
1.5 degrees.
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CORPORATE GOVERNANCE
STATEMENT 2022
Orthex Corporation (”Orthex” or ”the company”) is a public limited liability
company listed on Nasdaq Helsinki Ltd and headquartered in Espoo, Finland.
The company’s corporate governance complies with the company’s Articles
of Association and Corporate Governance Principles as well as rules and
regulations applicable to Finnish listed companies such as the Finnish Limited
Liability Companies Act (“Companies Act”) and Securities Markets Act, and
rules and regulations of Nasdaq Helsinki Ltd. The company also adheres
to the Finnish Corporate Governance Code 2020 (”CG Code”) issued by the
Securities Market Association. The CG Code is available on the association’s
website (www.cgfinland.fi).
This Corporate Governance Statement is issued as a separate statement
from the Board of Directors’ report, but it is published simultaneously
with it and with the company’s financial statements, sustainability
report, and the remuneration report on the corporate website at
www.investors.orthexgroup.com. As the company has no audit
committee, the company’s Board of Directors has reviewed the
Corporate Governance Statement.
Governing bodies
The Annual General Meeting, the Board of Directors and the CEO are
responsible for the governance of Orthex. The company’s shareholders
exercise the highest decision-making power at the general meeting of
shareholders. The Shareholders’ Nomination Board prepares proposal for the
composition of the Board of Directors to the Annual General Meeting. The
Annual General Meeting elects the members of the Board of Directors. The
company is managed by the Board of Directors and the CEO, appointed by the
Board of Directors. The company’s Management Team assists the CEO in the
operative management of the company. The members of the Management
Team are appointed by the Board of Directors together with the CEO.
Governance structure of Orthex Corporation
Shareholders
External independent auditor General meeting of shareholders
Board of Directors
CEO
Management Team
Shareholders’ Nomination Board
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General Meeting of Shareholders
The General Meeting of Shareholders is the ultimate decision-making body
of the company. At the General Meeting of Shareholders, shareholders
exercise their powers in accordance with the Companies Act and the Articles
of Association. The General Meeting of Shareholders decides on matters
that under the Companies Act and the Articles of Association are within its
purview. Annual General Meeting of Shareholders is convened by the Board
of Directors annually and it is held within six months from the end of the
previous financial year. An Extraordinary Meeting of Shareholders may be
convened as stipulated in the Companies Act. Matters on which the Annual
General Meeting decides include the adoption of the financial statements,
distribution of profits, discharge from liability, and election of the members
of the Board of Directors and the auditor, as well as their remuneration.
Decisions to amend the Articles of Association are also taken by a General
Meeting of Shareholders.
Annual General Meeting 2022
Orthex Corporation’s Annual General Meeting was held on 6 April 2022
in Espoo, Finland. The general meeting adopted the financial statements
and discharged the members of the Board of Directors and the CEO from
liability for the financial period 2021. The general meeting also approved the
remuneration policy and the remuneration report 2021 for the governing
bodies.
The general meeting decided that no dividend will be distributed for the
financial period ended on 31 December 2021. Instead, the general meeting
decided that shareholders be paid a capital return of EUR 0.18 per share from
the invested unrestricted equity fund totalling approximately EUR 3.2 million
in two instalments. The first instalment of the capital return, EUR 0.09 per
share, was paid on 21 April 2022. The second instalment of the capital return,
EUR 0.09 per share, was paid on 11 October 2022.
The general meeting resolved to re-elect Sanna Suvanto-Harsaae, Satu
Huber and Jens-Peter Poulsen to the Board and elect Markus Hellström
and Jyrki Mäki-Kala as new members to the Board. Ari Jokelainen and
Juuso Kivinen stepped down from the Board. Markus Hellström (b. 1974)
has a master’s degree in engineering and has solid experience in consumer
products, as he has had a long career in the Fazer Group in various leadership
positions. Since 2020, he has served as a member of the Fazer Group’s
management team and is currently responsible for the Fazer Confectionery
business area. The other new member of the Board, Jyrki Mäki-Kala (b. 1961),
brings to the Board especially expertise in economics and finance, which he
has accumulated as the CFO of both Neste Corporation and Kemira Oyj in the
years 2008–2022. He holds a master’s degree in economics. Since 2020, he
has served as a member of Anora Group Plc’s Board of Directors and Chair of
the Audit Committee.
Sanna Suvanto-Harsaae continues to chair Orthex Board. The members
of the Board of Directors are independent of the company and its
significant shareholders.
As to Board remuneration, the general meeting resolved that the
remuneration of the members of the Board of Directors remain the same and
that the Chair of the Board of Directors be paid a monthly fee of EUR 4,000
and other members of the Board of Directors a monthly fee of EUR 2,000.
Ernst & Young Oy, a firm of Authorised Public Accountants with APA Johanna
Winqvist-Ilkka as the signing audit partner, was re-elected the company’s
auditor.
In addition, the general meeting authorised the Board of Directors to decide
on the issuance of shares and on the issuance of special rights entitling to
shares. A total maximum of 1,800,000 shares and special rights entitling
to shares may be issued by virtue of the authorisation corresponding to
approximately 10 per cent of all the shares in the company. The authorisation
will be valid for 18 months from the decision of the general meeting.
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The Board of Directors
Under the company’s Articles of Association, the Board of Directors is
composed of a minimum of four and a maximum of eight members. Members
of the Board of Directors are elected at the general meeting. The term of
office of a member of the Board of Directors commences from the close of
the general meeting in which they are elected and expires at the close of the
following annual general meeting. The Board of Directors elects a chair from
among its members.
The Board of Directors is quorate when more than one-half of its members
are present. A decision by the Board of Directors is the opinion supported by
more than one-half of the members present at a meeting. In the event of a
tie, the Chair of the Board has the casting vote.
The Board of Directors convenes according to a pre-agreed schedule
normally from six to ten times a year and holds extra meetings when deemed
necessary. Meetings can also be held as teleconference meetings or by using
other technical means or devices.
The Board evaluates its operations and working methods once a year.
Duties of the Board of Directors
The tasks and responsibilities of the Board of Directors of the company are
determined in the Companies Act as well as in other applicable legislation.
The Board of Directors has general authority to decide and act in all matters
not reserved for other corporate governing bodies by law or under the
provisions of the company’s Articles of Association. The general task of the
Board of Directors is to duly organise Orthex’s management and operations.
1)
Member as of 6 April 2022
2)
Member until 6 April 2022
In all situations, the Board of Directors must act in accordance with Orthex’s
best interest.
The Board of Directors has a written charter that specifies its duties. The
duties of the Board of Directors include:
• approving reports of the Board of Directors, financial statements, and
interim reports
• seeing to the appropriate organisation of accounts and financial
administration
• preparing proposals for the general meeting of shareholders and convening
general meetings of shareholders
• approving and confirming strategic guidelines and long-term strategic
targets
• approving principles for risk management and internal control
• confirming annual budgets and operating plans
• appointing the CEO and deciding on the terms and conditions of the CEO
contract
• deciding on the company structure
• making significant business decisions, such as decisions on mergers
and acquisitions, significant contracts, investments, and financing
arrangements and
• deciding on other matters falling under the statutory responsibilities of the
Board of Directors.
Orthex’s Board of Directors has no committees, but the Board may consider
setting up potential committees in the future. As there are no committees,
the entire Board of Directors is responsible for discharging the statutory
duties of the audit committee.
Number of Board meetings and attendance rates
In 2022, the Board held 10 meetings. Some of these meetings were held
remotely or the resolutions were recorded per capsulam without convening.
Attendance in the meetings is reported in the table below.
Number of Board meetings and
members’ attendance 2022
Director
No. of meetings /
attendance Attendance-%
Sanna Suvanto-Harsaae
(Ch.)
10/10 100
Markus Hellström
1)
7/8 88
Satu Huber 9/10 90
Ari Jokelainen
2)
2/2 100
Juuso Kivinen
2)
2/2 100
Jyrki Mäki-Kala
1)
8/8 100
Jens-Peter Poulsen 10/10 100
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Diversity of the Board of Directors
Orthex regards diversity as an important and natural approach in its
operations. Diversity shall be part of such cooperative and functional Board
of Directors which is able to respond to the requirements set out in the
company’s business and strategic objectives. Such Board of Directors will also
be able to support and challenge the company’s operative management in a
proactive and constructive manner. The principles concerning the diversity of
the Board of Directors are in line with this premise.
When preparing the composition of the Board of Directors of Orthex,
attention is paid to the requirements set by the company’s Articles
of Association and the Corporate Governance Code, as well as to the
requirements set by the company’s operations and the premises of diversity
derived therefrom.
Significant factors concerning the composition of the Board of Directors
include mutually complementary variety of competences, education and
experience in different areas and professional fields and in management
and business operations existing in different development phases, as well as
the personal capabilities of each member, all of which add to the diversity
of the Board of Directors. Diversity is considered not only from the aspect of
gender but also from other factors promoting the Board’s diversity, such as
the age structure of the Board, the members’ educational and professional
background, their experience relevant for the position, and personal
characteristics. When preparing the composition, it is also assessed how
the members’ skills, education and experience complement each other. The
company’s long-term needs are also considered.
The purpose of the diversity principles is to contribute to making sure that
the Board of Directors’ combined competence and experience and the
diversity of its composition are sufficiently aligned with Orthex’s operational
needs. With regard to gender structure, the objective is that different genders
are sufficiently represented on the Board.
At year-end 2022, the company’s Board of Directors comprised five members.
Diversity of the Board of Directors with respect to gender, nationality, age as
well as educational and professional background is described on the next two
pages. Additional information for example on the Board members’ previous
positions of trust is available in the Investors section on the corporate
website.
Shareholdings of the members of the Board of Directors
The shareholdings of the members of the Board of Directors and entities
over which they exercise control, as at the end of 2022, are presented in
the table below. None of the members of the Board of Directors nor their
closely associated persons or entities has any share-based rights in Orthex or
its subsidiaries.
Board of Directors’ shareholdings on 31 December 2022
Director Position
Number of shares on
31 Dec. 2022
Sanna Suvanto-Harsaae Chair 6,901
Markus Hellström member 2,000
Satu Huber member 13,000
Jyrki Mäki-Kala member 2,010
Jens-Peter Poulsen member 8,900
Tot al 32,811
% of total number of shares 0.2%
Orthex total number of
shares
17,758,854
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Sanna Suvanto-Harsaae
Chair of the Board of Directors since 2021, member since 2020
Born 1966
Finnish and Danish citizen
Bachelor’s degree in Economics
Independent of the company and its significant shareholders
Main occupation: Professional director
• Posti Group Corporation, Chair of the Board of Directors since 2020
• BoConcept A/S, Chair of the Board of Directors since 2016
• TCM Group A/S, Chair of the Board of Directors since 2016
• Nordic Pet Care Group A/S, Chair of the Board of Directors since 2012
• Babysam A/S, Chair of the Board of Directors since 2008
• Anora Group Plc, Vice-Chair of the Board of Directors since 2021
• Harvia Plc, Vice-Chair of the Board of Directors since 2020
• Elopak ASA, member of the Board of Directors since 2021
• CEPOS (Center for Political Studies), member of the Board of Directors since 2017
• Broman Group Oy, member of the Board of Directors since 2016
Markus Hellström
Member of the Board of Directors since 2022
Born 1974
Finnish citizen
Master’s degree in Engineering
Independent of the company and its significant shareholders
Main occupation: Managing Director of Fazer Confectionery Ltd. and
Executive Vice President of Fazer Group since 2020
• Fazer Bakeries Ltd., Managing Director 2014–2020
• Fazer Bakeries Ltd., Vice President, Head of Operations, Bakery Business Unit
2013–2014
• Fazer Bakeries Ltd., Business Development Director / Business Controller 2007–2012
• Fazer Group, Sourcing Manager for Logistics Services 2004–2007
• Logico Solutions, Partner 2003–2004
• Candyking, Sweden, Logistics Manager 2000–2003
• GS1 Finland Oy, member of the Board of Directors since 2019
Satu Huber
Member of the Board of Directors since 2020
Born 1958
Finnish citizen
Master’s degree in Economics
Independent of the company and its significant shareholders
Main occupation: Professional director
• Elo Mutual Pension Insurance Company, Chief Executive Officer 2015–2021
• Elo Mutual Pension Insurance Company, Deputy Chief Executive Officer 2014–2015
• LähiTapiola Pension Insurance Company, Chief Executive Officer 2008–2013
• Finance Finland, Chief Executive Officer 2006–2008
• State Treasury of Finland, Director of Finance 1997–2006
• Several different positions in the banking sector 1982–1997
• European Money Market Institute, Chair and member of the Board of Directors
since 2022
• Ermitage Partners, member of the Advisory Committee since 2022
• Schibsted ASA, member of the Board of Directors since 2020
• HIFK - Idrottsföreningen Kamraterna, Helsingfors rf., member of the Supervisory
Board since 2021
Members of the Board of Directors on 31 December 2022
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Jyrki Mäki-Kala
Member of the Board of Directors since 2022
Born 1961
Finnish citizen
Master’s degree in Economics
Independent of the company and its significant shareholders
Main occupation: Professional director
• Neste Corporation, Chief Financial Officer, and member of Executive Committee
2013–2022
• Kemira Oyj, Chief Financial Officer 2008–2013
• Kemira Pulp & Paper, Vice President, and President positions 2005–2008
• Nokia Chemicals/Finnish Chemicals Oy, Director, and Vice President positions
1988–2005
• Anora Group Plc, member of the Board of Directors and Chair of the Audit Committee
since 2020
Jens-Peter Poulsen
Member of the Board of Directors since 2021
Born 1967
Danish citizen
Master’s degree in Economics
Independent of the company and its significant shareholders
Main occupation: Chief Executive Officer of Kvik A/S since 2013
• LEGO Group, Senior Vice President of the Market Group Asia & Emerging Markets
2011–2012
• LEGO System A/S, Senior Vice President, Market Group 1, 2006–2011
• LEGO System A/S, various Vice President and Senior Director positions and
responsibilities for different operations 2000–2005
• Jensen’s Catering A/S, Sales and Marketing Manager 1999–2000
• Arla Foods, several positions 1993–1999
• European House of Beds A/S, member of the Board of Directors since 2021
• Holmris B8 A/S, member of the Board of Directors since 2017
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Shareholders’ Nomination Board
Orthex Corporation’s extraordinary general meeting on 5 March 2021 decided
to establish a Shareholders’ Nomination Board. The Nomination Board
annually prepares proposals for the election and remuneration of members
of the Board of Directors to the Annual General Meeting. It is also the duty of
the Nomination Board to search for new director candidates.
The extraordinary general meeting adopted a Charter of the Shareholders’
Nomination Board, which governs the appointment, composition, and duties
and responsibilities of the Nomination Board. The Charter is available in the
Investors section on the corporate website. The Nomination Board has been
established for the time being and can only be dissolved by a decision of the
general meeting. The term of office of the members of the Nomination Board
expires annually when a new Nomination Board has been appointed.
The Nomination Board consists of the four largest shareholders of the
company as of 31 August or, if the company has more than four shareholders,
whose shareholding and voting rights in the company are more than 10
per cent, the corresponding number of shareholders or persons appointed
by them. The Chair of the Board acts as an expert member of the
Nomination Board.
Based on the shareholder register of Orthex Corporation as of 31 August
2022, the shareholders represented in the Shareholders’ Nomination Board
are Conficap Oy, Alexander Rosenlew, Ilmarinen Mutual Pension Insurance
Company and Thomasset Oy.
The representatives of the four largest shareholders in the Nomination Board
are:
• Maarit Toivanen, CEO, Chair of Board of Directors, Conficap Oy
• Alexander Rosenlew
• Annika Ekman, Head of Direct Equity Investments, Ilmarinen Mutual
Pension Insurance Company
• Mats Söderström, CEO, Thomasset Oy
Maarit Toivanen chairs the Nomination Board, and its expert member is
Sanna Suvanto-Harsaae, Chair of Orthex’s Board of Directors. No changes
took place in the composition of the Nomination Board during 2022.
The Nomination Board prepared the proposals for the composition and
remuneration of the Board of Directors and submitted them to the Board of
Directors of Orthex Corporation. The Board of Directors incorporated these
proposals into the notice of the meeting when convening Orthex Annual
General Meeting 2022.
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Chief Executive Officer
Alexander Rosenlew has been the Chief Executive Officer of Orthex
Corporation since 2010. Mr Rosenlew holds master’s degrees both in
economics and in management.
The CEO is responsible for the operational management of Orthex in
accordance with the instructions and orders given by the Board of Directors.
The CEO prepares matters to be decided by the company’s Board of Directors,
develops Orthex’s operations together with the Board in accordance with
the set objectives and ensures the proper implementation of the Board’s
decisions. The CEO is also responsible for ensuring that Orthex complies
with applicable laws and regulations and that the company’s financial affairs
have been arranged in a reliable manner. The CEO chairs the meetings of the
Management Team.
Management Team
The role of Orthex’s Management Team is to manage Orthex’s operative
business as a whole. The members of the Management Team have certain
powers to act within their respective areas of responsibility, and they have
a duty to develop Orthex’s business in accordance with the objectives set by
the company’s Board of Directors and the CEO.
Orthex’s Board of Directors appoints the members of the Management Team
together with the CEO. The Management Team meets regularly on a monthly
basis or when deemed necessary.
The composition of the Management Team changed during 2022. Michel
Mercier, a member of Orthex’s Management Team and Sales Director of the
export organisation since 2015, left the company at the end of July. Alex
Nielsen started in a new position as the Sales Director for European and
International Markets and as a member of the Management Team at the
beginning of September.
Members of Orthex’s Management Team are presented on the following
page. Additional information on the Management Team members’ career
history and potential positions of trust is available in the Investors section on
the corporate website.
Shareholdings of the members of the Management Team
The shareholdings of the CEO and other members of the Management Team
(including their closely associated persons or entities), as at the end of 2022,
are presented in the table below.
The CEO or other members of the Management Team (or their closely
associated persons or entities) have no share-based rights in Orthex or
its subsidiaries.
Management Team’s shareholdings on 31 December 2022
Management Team
member Position
Number of
shares on 31
Dec. 2022
Alexander Rosenlew CEO 2,0 47,726
Oy Rosaco Ab *) 33,500
Saara Mäkelä Chief Financial Officer 141,000
Hanna Kukkonen Chief Marketing Officer 200,800
Nicholas Ledin Sales Director, Nordic 61,850
Alex Nielsen
Sales Director, Europe and
International Markets 1,000
Hans Cronquist Operations Director, Tingsryd 100,000
Peter Ottosson Operations Director, Gnosjö 91,100
Tom Ståhlberg Operations Director, Lohja 315,750
**)
Tot al 2,992,726
% of total number of shares 16.9%
Orthex total number of shares 17,758 ,854
*)
controlled entity
**)
incl. holdings of closely associated persons
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Members of the Management Team on 31 December 2022
Alexander Rosenlew
Chief Executive Officer
Management Team member since 2010
Employed by Orthex since 2010
Born 1971, Finnish citizen
Master’s degrees in Economics and in Management
Alex Nielsen
Sales Director, Europe and International Markets
Management Team member since 2022
Employed by Orthex since 2022
Born 1972, Danish citizen
Business diploma in Marketing, HD(A)
Saara Mäkelä
Chief Financial Officer
Management Team member since 2017
Employed by Orthex since 2017
Born 1976, Finnish citizen
Master’s degree in Economics
Hans Cronquist
Operations Director, Tingsryd
Management Team member since 2019
Employed by Orthex since 2019
Born 1970, Swedish citizen
Master’s degree in Mechanical Engineering
Hanna Kukkonen
Chief Marketing Officer
Management Team member since 2012
Employed by Orthex since 2012
Born 1973, Finnish citizen
Master’s degree in Economics
Peter Ottosson
Operations Director, Gnosjö
Management Team member since 2013
Employed by Orthex since 2009
Born 1974, Swedish citizen
Bachelor’s degree in Machine Engineering, eMBA
Nicholas Ledin
Sales Director, Nordic
Management Team member since 2015
Employed by Orthex since 2001
Born 1970, Swedish citizen
High school graduate
Tom Ståhlberg
Operations Director, Lohja
Management Team member since 2012
Employed by Orthex since 2012
Born 1969, Finnish citizen
Master’s degree in Industrial Engineering
and Management
From left: Hanna Kukkonen, Saara Mäkelä, Tom Ståhlberg, Alex Nielsen, Nicholas Ledin, Peter Ottosson, Hans Cronquist, Alexander Rosenlew.
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Financial reporting process
Orthex compiles its financial reporting in accordance with the International
Financial Reporting Standards (IFRS), the Finnish Securities Markets Act, the
Finnish Accounting Act and the guidelines and statements of the Finnish
Accounting Board, while also complying with the rules and regulations
of the Financial Supervisory Authority and the rules of Nasdaq Helsinki
Ltd. The principles, instructions, practices, and areas of responsibility in
internal auditing and risk management relating to the company’s financial
reporting process are aimed at ensuring that the company’s financial
reporting is reliable and that the financial statements have been prepared
in accordance with applicable laws, regulations, and the company’s
operating principles. Orthex’s financial reporting is supervised on two levels,
in individual companies and at the group level. On both levels, control
measures and analyses are carried out to ensure the validity of financial
reporting. The Board of Directors is responsible for overseeing the financial
reporting process.
Risk management
The purpose of Orthex’s risk management is to ensure the fulfilment of
customer promises, business profitability, ability to pay dividends, value
creation for shareholders, responsible business, and business continuity. To
achieve this, Orthex strives to be aware of the uncertainties and risk factors
and opportunities associated with its objectives and operations, and to
identify, assess and manage risks and their consequences in a consistent and
effective manner.
Orthex has a risk management policy approved by the Board of Directors
that guides risk management in a way that supports the achievement of the
company’s objectives, protects personnel and the company’s various assets,
and ensures the financial sustainability of operations.
The responsibility for implementing risk management lies with the
Management Team. In addition, each employee must be aware of and
manage the risks associated with their own operating environment and areas
of responsibility. The company’s Board of Directors approves the company’s
risk management policy and monitors and assesses the effectiveness of
risk management.
Risk management principles
Risk management is a systematic activity designed to ensure comprehensive
and appropriate risk identification, assessment, management, and control.
It is an integral part of Orthex’s planning and management process,
decision making, day-to-day management of operations, and monitoring
and reporting procedures. Risks are assessed and managed in a business-
oriented and thorough manner. This means that key risks are systematically
identified, evaluated, managed, monitored, and reported as part of
the business.
Risk management process and reporting
Orthex prioritises risks according to the importance of the risk by
assessing the impact, likelihood, and level of risk management of the risk
materialisation. Risk management measures address the most significant
risks through cost-effective and appropriate policy options.
The Management Team regularly monitors the implementation of risk
management. If necessary, corrective measures will be taken.
The Management Team reports to the Board of Directors on risks and risk
management measures 2–3 times a year. The Board reviews the most
significant risks, measures to manage them and assesses the efficiency
and effectiveness of risk management. The Board reports on the most
significant risks and uncertainties in the annual Board of Directors’ reports
and any material changes in these factors in the interim reports. Additional
information on the company’s risk management and on the most significant
risks and uncertainties is available in the Board of Directors’ Report for the
year 2022.
Internal control and audit
The Company’s Board of Directors has confirmed the operating principles
of internal control followed at Orthex, aiming to ensure that the company’s
objectives regarding, inter alia, Orthex’s strategy, operations, practices, and
financial reporting in particular are met. The operating principles of internal
control also contribute to ensuring the company’s compliance with legislation
and regulations. Internal control is an essential part of business management
and in ensuring that the set objectives are met. Internal control is aimed to
be organised efficiently, so that any deviations from targets can be detected
as early as possible or that they can be prevented.
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Orthex’s tools of internal control include internal policies, guidelines, and
instructions, together with manual controls as well as controls built into
systems. In addition, internal control is implemented in the form of various
monitoring reports and meetings. The Board of Directors of Orthex is
responsible for organising the internal control and oversees the efficiency
of internal control. The Management Team and the CEO are responsible that
functioning control procedures are in use.
Orthex Group has not organised its internal audit as a separate function. The
Board assesses annually the need for internal audit procedures and may use
internal company resources or external service providers for internal audit
measures. Any outcomes of such procedures or measures are reported to the
Board of Directors.
Related party transactions
The Board of Directors has defined the principles for monitoring and
evaluating related party transactions. The company evaluates and monitors
transactions concluded between the company and its related parties and
ensures that any conflicts of interest are taken into account appropriately in
the decision-making process of the company. The company keeps a list of
related parties.
Approval of related party transactions concluded in the ordinary course of
business and on customary commercial terms is subject to the company’s
normal approval policies and processes. Approval of a related party
transaction that is not concluded in the ordinary course of business or
on customary terms is subject to the Board of Directors’ approval. The
company’s finance function monitors related party transactions as a part of
the company’s normal reporting and control procedures and reports related
party transactions to the Board of Directors.
The Board of Directors regularly evaluates the reported related party
transactions and the appropriateness of the company’s process and policies
on related party transactions. Information on transactions concluded
between the company and its related parties is disclosed, as required,
annually in the notes to the company’s consolidated financial statements.
Material related party transactions are disclosed in accordance with Chapter
8, section 1a of the Securities Markets Act.
Insider administration
Orthex has prepared insider guidelines approved by the company’s Board of
Directors, the purpose of which is to clarify and supplement the operating
methods of Orthex and its insiders and to serve as a practical tool in handling
insider matters. The Insider Guidelines define clear operating instructions for,
among other things, the management of inside information, the maintenance
of insider lists and the reporting of transactions by persons subject
to disclosure.
The Insider Guidelines apply to Orthex and persons in managerial positions at
Orthex, as well as to persons working for Orthex who have access to inside
information or who have otherwise become aware of inside information. In
addition, the Insider Guidelines apply by agreement to persons otherwise
acting on behalf of or for Orthex in the performance of their duties through
which they have access to inside information.
Orthex’s insider administration compiles insider lists and keeps them up to
date in electronic form. In addition to individual insider lists (project-specific
insider list), Orthex may prepare a supplement for permanent insiders
(permanent insiders). Permanent insiders include only those persons who,
by virtue of their duties, are considered to have continuous access to all
inside information about Orthex. In the project-specific insider list, Orthex
will include those with inside information about the project, including any
external advisors and experts.
Insider lists are maintained by an electronic procedure prepared and / or
approved by the Financial Supervisory Authority or another appropriate body
that meets the applicable requirements. Insider lists are not public and are
not made available to the public.
Orthex will notify the insider in writing of his or her insider status, the
resulting obligations and any penalties for breach of those obligations.
The person entered in the project-specific insider list will be notified of the
termination of the project and the closure of the project-specific insider list.
Persons discharging managerial responsibilities at Orthex and other
permanent insiders, as determined by Orthex, should schedule their trading
in Orthex financial instruments in a manner that does not undermine
confidence in the securities market.
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Persons discharging managerial responsibilities at Orthex are the members of
the Board of Directors, the CEO, and the members of the Management Team.
Orthex maintains a list of the persons in managerial position and the persons
and entities closely associated with them.
The persons in managerial position at Orthex as well as any other persons
possibly deemed permanent insiders by Orthex may not enter into
transactions for their own account or for the account of a third party during
a closed period beginning 30 days prior to the disclosure date of Orthex’s
financial statements release, half-year report and the three- and nine-
month interim reports provided periodically by Orthex and ends 24 hours
after publishing the group’s interim report, half-year report or financial
statements release.
In accordance with Nasdaq Helsinki Ltd’s insider guidelines, Orthex stipulates
that persons who participate in the preparation, auditing or publication
of Orthex’s financial reports may not carry out transactions for their own
account or on behalf of a third party during a closed period.
The trading restriction also applies to disabled persons under the control
of the interests of the persons covered by the trading restriction. A person
subject to a trading restriction is responsible for complying with the trading
restriction even when the management of his or her securities and other
financial instruments has been entrusted to another person, such as a
portfolio manager.
Persons in managerial position at Orthex and their close associates shall
disclose to Orthex and the Financial Supervisory Authority all transactions
they make on their own account in respect of Orthex with its shares,
debt instruments or derivatives or other related financial instruments.
The reporting obligation applies to transactions carried out on or off
any marketplace.
A person in managerial position or another person subject to a trading
restriction specified by the company should request an assessment of
the legality and regularity of the proposed transaction in the financial
instrument from the company’s insider administration. Notwithstanding the
appraisal procedure, the person in a managerial position or the other person
mentioned above is responsible for ensuring that they comply with the laws,
regulations, and instructions.
Orthex has an internal whistleblowing channel through which Orthex
employees can anonymously report any suspected violations of financial
market rules and regulations. Other stakeholders can report suspected
infringements by sending email to whistleblow@orthexgroup.com. Further
information and instructions for whistleblowing are available on the
corporate website Whistleblowing - Orthex Group.
External audit
According to the Articles of Association, the company has one auditor.
The auditor must be a firm of authorised public 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 parent 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 and submits regular reports
on its findings to the Board of Directors.
At the Annual General Meeting 2022, Ernst & Young Oy, a firm of Authorised
Public Accountants, with Johanna Winqvist-Ilkka, Authorised Public
Accountant, as the signing audit partner, was elected the company’s auditor.
The fees for the audit paid to the auditor in 2022 totalled EUR 174 thousand.
In addition, EUR 35 thousand was paid to the auditor for non-audit services.
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REMUNERATION REPORT
2022
Orthex Corporation’s (”Orthex” or ”the company”) remuneration report for
the financial year 2022 has been prepared in accordance with the Finnish
Corporate Governance Code 2020 issued by the Securities Market Association
and other applicable regulations. The Corporate Governance Code is available
on the association’s website (www.cgfinland.fi). The remuneration report
is published simultaneously with the corporate governance statement, the
Board of Directors’ report, the financial statements, and the sustainability
report on the corporate website at www.investors.orthexgroup.com. The
company’s Board of Directors has prepared and approved this remuneration
report and it will be presented to the Annual General Meeting to be held on
18 April 2023 for the shareholders’ advisory approval.
This remuneration report describes how Orthex has applied the remuneration
policy approved at the company’s Annual General Meeting on 6 April 2022.
The remuneration report describes the remuneration and other financial
benefits paid to the members of the Board of Directors and the CEO during
the financial year 2022. In addition, the remuneration report compares the
development of the remuneration of the Board of Directors and the CEO with
the development of the employees’ average remuneration and the company’s
financial development over the past five years.
As to the company’s remuneration policy for governing bodies, the company’s
Board of Directors has decided to amend it so that the remuneration policy
defines clear maximum payments for short- and long-term incentives
payable to the CEO and that the company’s potential long-term incentive
scheme can be other than share based. When deciding to amend the
remuneration policy, the Board of Directors considered the shareholders’
opinions, which were presented in connection with the approval of the
remuneration policy at the 2022 general meeting. The Board of Directors
proposes to the 2023 Annual General Meeting that the amended
remuneration policy be approved. The decision of the general meeting
regarding the remuneration policy is advisory.
Introduction
The goal of Orthex’s remuneration schemes is to promote the company’s
competitiveness and support the implementation of the company’s strategy.
The remuneration schemes also aim to engage key personnel in long-term
work to achieve personal and shared goals and increase shareholder value.
Effective and competitive remuneration is an essential tool for hiring capable
management in the company, which in turn contributes to the company’s
financial success and implementation of good governance. Remuneration
supports the implementation of the company’s strategy and long-term
profitability and promotes the company’s competitiveness.
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Development of the Group’s financial performance and remuneration
The following table shows the development of the total remuneration of the Board of Directors and the CEO compared to the development of Orthex employees’
average remuneration and the company’s financial development over the past five years.
Development of total remuneration and financial development over the past five years
EUR thousand 2022 2021 2020 2019 2018, FAS
Net sales 84,048 88,694 75,865 66,427 62,490
Adjusted EBITA 5,490 10,996 12,933 7, 5 93 5,227
Board of Directors
1)
144 126 71 58 41
CEO
1)
527 478 367 302 259
Employees' average remuneration
2)
55 58 55 53 51
1)
The remuneration of the Board of Directors and the CEO was adjusted in connection with the company’s IPO in March 2021.
2)
Employees’ average remuneration is total employee remuneration divided by the average number of personnel during the year.
Summary of remuneration in 2022
In 2022, the actual remuneration of the members of the Board of Directors
and the CEO followed the remuneration policy. Orthex did not deviate
from the remuneration policy in the remuneration of the members of the
Board of Directors and the CEO and did not exercise its right to recover the
remuneration during 2022.
During the financial year 2022, the members of the Board of Directors were
paid fixed monthly fees. The amount of the fees paid depended on the
member’s role in the Board: Chair of the Board – member of the Board. As
decided at the 2022 AGM, the monthly fees remained the same. The fees
paid are disclosed under section “Remuneration of the Board of Directors”.
The total remuneration paid to the CEO during the financial year 2022
consisted of fixed base salary with fringe benefits and variable short-term
incentive paid for the performance in 2021. The CEO’s total remuneration
in the financial year 2022 amounted to EUR 527,189 of which variable
remuneration accounted for 19 per cent. Orthex has no long-term share-
based or other incentive schemes in place, which partly explains the share
of variable remuneration of the CEO’s total remuneration. No changes have
taken place in the CEO’s remuneration since the company’s listing in March
2021. The salaries and incentives paid to the CEO are disclosed under section
“Remuneration of the CEO”.
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Remuneration of the Board of Directors
The Annual General Meeting decides on the remuneration to be paid to the
members of the Board of Directors. The proposal for the remuneration of the
members of the Board of Directors for the 2022 Annual General Meeting was
prepared by the company’s Shareholders’ Nomination Board.
In accordance with the decision of the Annual General Meeting in 2022, the
remuneration of the Board of Directors remained the same and the Chair
of the Board of Directors was paid a monthly fee of EUR 4,000 and other
members of the Board of Directors a monthly fee of EUR 2,000.
Board fees were paid monthly in cash. No meeting fees were paid for Board
meetings. The remuneration of the members of the Board of Directors does
not involve pension contributions and the members of the Board of Directors
are not covered by Orthex’s incentive schemes.
Reasonable travel and other expenses related to the Board work were
reimbursed in accordance with the company’s travel rules.
The remuneration paid to the members of the Board of Directors in 2022 is
shown in the table on the right. The members of the Board of Directors did
not receive any other financial benefits.
Remuneration of the Board of Directors 2022
EUR Remuneration
Sanna Suvanto-Harsaae 48,000
Markus Hellström
1)
18,000
Satu Huber 24,000
Ari Jokelainen
2)
6,000
Juuso Kivinen
2)
6,000
Jyrki Mäki-Kala
1)
18,000
Jens-Peter Poulsen 24,000
Tot al 144,000
1)
Member of the Board as of 6 April 2022
2)
Member of the Board until 6 April 2022
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Remuneration of the CEO
The Board of Directors decides on the remuneration of the CEO. The CEO of
Orthex is Alexander Rosenlew since 2010. The CEO’s remuneration consists of
a fixed base salary with fringe benefits and a variable short-term incentive.
In 2022, Orthex did not have any long-term share-based or other incentive
schemes. The purpose of rewarding the CEO is to guide the implementation
of the company’s strategic goals and thereby promote the company’s long-
term financial success, competitiveness, and favourable development of
shareholder value. The CEO’s significant shareholding (11.7%) in the company
strengthens the alignment of the CEO’s interests with those of shareholders.
Under Orthex’s variable short-term incentive scheme, the CEO may be
granted annual performance-based incentives in addition to his fixed annual
salary. The aim of the incentive scheme is to encourage the CEO to commit
to the company and motivate him to achieve the best possible result. In
addition, the incentive scheme is intended to encourage the CEO to work in a
way that supports Orthex’s strategy, growth, and competitiveness.
Incentives under annually commencing short-term incentive plans are
discretionary and tied to Orthex’s results of operations and the achievement
of relevant performance metrics and/or individual performance targets. The
terms and objectives of the incentive plan, including performance metrics
and weights, are determined, and approved annually in advance by the
company’s Board of Directors. In 2022, the metrics and weights of the CEO’s
incentive plan were as follows: profitability 50%, turnover 35%, sustainability
15%. During the financial year 2022, the maximum amount of the CEO’s
incentive corresponded to 7 months’ gross base salary.
The CEO is entitled to a statutory pension. The CEO’s pension and retirement
age are determined on the basis of the Employees’ Pensions Act. The CEO
does not have any supplementary pension insurance paid by the company.
The salaries, incentives and fringe benefits paid to the CEO in 2022 are
shown in the table below. The incentive paid in 2022 is based on the 2021
short-term incentive plan. The CEO’s earned short-term incentive for 2021
was 43% of the annual maximum short-term incentive.
Remuneration of the CEO paid in 2022
EUR 2022
Fixed based salary and mobile phone benefit 425,861
Incentives 101,328
Other financial benefits -
Tot al 527,189
Share of fixed pay of total remuneration 81%
Share of variable pay of total remuneration 19%
The CEO participated in the company’s short-term incentive plan 2022, for
which the set performance targets were mostly not achieved. The CEO’s
earned short-term incentive for 2022 was 5% of the annual maximum
short-term incentive. The performance-based incentive for the year 2022,
EUR 11,900, will be paid in April 2023.
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CONTENTS
Board of Directors’ report 57
KEY FIGURES 71
Financial statements 78
CONSOLIDATED FINANCIAL STATEMENTS, IFRS 79
Consolidated income statement 79
Consolidated statement of comprehensive income 79
Consolidated statement of financial position 80
Consolidated statement of changes in equity 81
Consolidated statement of cash flows 82
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 83
1. Accounting principles for the consolidated financial statements 83
2. Net sales 86
3. Other operating income 87
4. Operating expenses 87
5. Employee benefits 88
6. Financial income and expenses 90
7. Income taxes 91
8. Intangible assets 93
9. Property, plant and equipment 95
10. Leases 97
11. Financial assets and financial liabilities 99
12. Fair value hierarchy 109
13. Inventories 111
14. Trade and other receivables 111
15.Trade and other payables 111
16. Share capital and reserves 112
17. Related party disclosures 114
18. Collaterals, commitments and contingent assets and liabilities 114
19. Subsequent events 114
PARENT COMPANY FINANCIAL STATEMENTS, FAS 115
Parent company income statement 115
Parent company balance sheet 116
Parent company statement of cash flows 117
Notes to the parent company financial statements 118
SIGNATURES FOR THE BOARD OF DIRECTORS’ REPORT
AND FINANCIAL STATEMENTS 122
AUDITOR’S REPORT 123
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Board of Directors’ report
Orthex is a leading Nordic houseware company. Orthex designs, produces,
and sells household goods with a mission to make consumers’ everyday life
easier. Orthex offers a broad assortment of household goods in four product
categories: Storage, Kitchen, Home & Yard, and Plant Care.
Orthex strives to create functional, sustainable, and high-quality household
products. Orthex also aims to be the industry forerunner in sustainability.
Orthex markets and sells its products under three main consumer brands:
SmartStore
TM
, GastroMax
TM
and Orthex
TM
. In addition, it sells externally
produced kitchen products under the Kökskungen
TM
brand. Orthex’s core
geographic markets are the Nor dic s and the export markets. The export
markets are divided into the rest of Europe and the rest of the world. Orthex
is headquartered in Espoo, Finland, and it currently has seven local sales
offices located in the Nordics, Germany, France, and the United Kingdom.
Key figures
EUR million 2022 2021 2020
Invoiced sales 85.8 90.6 77.9
Net sales 84.0 88.7 75.9
Gross margin 17.9 23.2 24.6
Gross margin, % 21.3% 26.2% 32.4%
EBITDA 9.2 13.2 16.5
EBITDA margin, % 10.9% 14.9% 21.7%
Adjusted EBITDA 9.3 14.8 17.1
Adjusted EBITDA margin, % 11.1% 16.7% 22.5%
EBITA 5.3 9.4 12.3
EBITA margin, % 6.3% 10.6% 16.3%
Adjusted EBITA 5.5 11.0 12.9
Adjusted EBITA margin, % 6.5% 12.4% 17.0%
Operating profit 5.2 9.3 12.3
Operating profit margin, % 6.2% 10.4% 16.2%
Net cash flows from operating activities 6.2 9.0 12.7
Net debt / Adjusted EBITDA 2.8x 1.7x 2.3x
Adjusted return on capital employed (ROCE), % 15.9% 33.0% 40.3%
Equity ratio, % 36.3% 35.8% 22.6%
Earnings per share, basic (EUR) 0.12 0.35 0.47
FTEs 295 314 285
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Market overview
Orthex operates in the home storage, kitchenware, plant care and other
household products market, which has historically been stable and resilient
throughout different economic cycles. The market for household products
in Europe is fragmented. According to Orthex’s estimate, there are more
than 30 significant competitors in Europe, 15 of which are roughly as
big as Orthex in terms of net sales. Although the market is competitive,
fragmentation lowers the threshold to increase market share and find
attractive niches.
The major megatrends supporting Orthex’s business include urbanisation
and the related increase in the number of households and decrease in living
space per household. As the area allocated for housing is sparser and more
expensive in growth centres benefiting from urbanisation, consumers often
choose location over space, resulting in increasing supply of smaller homes.
Small spaces, in turn, drive demand for functional storage solutions and
household products that allow efficient use of the living space. More people
live in single-person households and family sizes are decreasing. According
to Eurostat, the number of single-person households in the EU increased
by 28.5% between 2009 and 2021. Despite households being inhabited by
fewer people, the need for necessities, such as home storage, food storage
and kitchen utensils, remains nearly the same per household.
Consumption patterns supporting Orthex’s business are mainly related
to how people spend their time at home. One of these is the increased
interest in cooking at home, which is becoming more common as a pastime
and as a healthy, and less expensive alternative to ready-made meals.
Consequently, many households are updating and expanding their kitchen
utensil assortments.
In addition, consumers are increasingly concerned about climate change
and biodiversity and want to do their part in the fight against them
by buying sustainable products and sorting and recycling their waste.
Tightening legislation also supports this development. However, only a
few households have enough pre-installed waste recycling and sorting
solutions, which creates a demand for these and for recycling and sorting
solutions that can also function as interior design elements.
A third consumption pattern supporting Orthex’s business is the demand
for houseplants. Houseplants bring fresh air, colour, and cosiness
into homes. Their use as design elements is becoming commonplace,
particularly in dense urban areas that have limited green spaces. In
addition, there is increasing popularity for gardening herbs and vegetables
at home and indoors. These trends are driving demand for flowerpots and
related products.
Volatility and uncertainty affected the business environment during 2022,
with geopolitical disruption and high inflation across the value chain. The
world after COVID-19 offered conditions where the scarcity of products and
the lack of efficient transport further increased transportation costs both
at land and sea to new record levels. Shift in consumer behaviour towards
sustainability and digital marketplaces is accelerating post covid. Whilst
demand remained overall solid, the pressure of inflation on consumers
started to erode the consumption growth across product categories
and geographical areas during the year. As a result of the prevailing
consumption uncertainty, many retailers are carefully monitoring their
inventory levels and limiting buying to ensure efficiency. Orthex product
price points are relatively low, and the products are bought to solve real
needs. Therefore, Orthex believes that its product categories will be less
affected by careful consumer purchasing behaviour than other more
expensive consumer goods categories.
Long-term financial targets
As long-term financial targets the company has adopted to an average
annual organic Net sales growth to exceed 5 per cent at the Group level
and to exceed 10 per cent outside the Nordics (growth in local currencies),
adjusted EBITA margin (adjusted for items affecting comparability) to
exceed 18 per cent over time and net debt to adjusted EBITDA ratio to
stay below 2.5x. Leverage may temporarily exceed the target range (for
example, in conjunction with acquisitions).
The company aims to distribute a stable and over time increasing
dividend with a pay-out of at least 50 per cent of net profit, in total, on a
biannual basis.
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Group performance
Net sales and profitability
In 2022, the Group’s Net sales decreased by 5.2% to EUR 84.0 million (88.7).
Invoiced sales amounted to EUR 85.8 million (90.6). The decrease of constant
currency Net sales was 3.8% compared to 2021.
EBITA was 5.3 million (9.4) during 2022 and decreased by 43.3%. Adjusted
EBITA decreased by 50.1% to EUR 5.5 million (11.0). Adjusted EBITA margin
decreased to 6.5% (12.4). Operating profit was EUR 5.2 million (9.3). Items
affecting comparability totalled EUR 0.2 million (1.6).
In 2022, profitability was influenced by cost inflation, especially in raw
materials. The weakening of the Swedish krona and more expensive
purchased products, transports and energy also impacted the
result negatively.
Orthex’s financial income and expenses during the financial year consisted
of EUR 2.2 million net expenses (1.6). In December, Orthex signed a new
EUR 32.5 million credit facility agreement including a 3+1+1-year term loan of
EUR 25.5 million and a revolving credit facility of EUR 7.0 million.
Development by geography
Orthex’s core market area by geography is the Nordics, where the Group’s
invoiced sales in 2022 amounted to EUR 68.5 million (73.0). Invoiced sales in
the Nordics totalled 79.8% (80.6) of the Group’s total invoiced sales. Invoiced
sales in the rest of Europe grew to EUR 15.9 million (15.1). Sales in the rest of
the world decreased to EUR 1.5 million (2.4).
Orthex’s products are sold in more than 40 countries, and export to non-
Nordic countries grew by 0.8 percentage points and accounted for 20.2%
(19.4) of the Group’s invoiced sales at the end of the period.
Invoiced sales by geography
EUR million 2022 2021 2020
Nordics 68.5 73.0 6 4.1
Rest of Europe 15.9 15.1 11.4
Rest of the world 1.5 2.4 2.4
Tot al 85.8 90.6 77.9
Development by product category
Orthex has four product categories: Storage, Kitchen, Home & Yard, and
Plant Care. The largest category is Storage with invoiced sales totalling
EUR 55.1 million (59.4) during 2022. Products in the Storage category will
play a key role in Orthex’s expansion in Europe, as Orthex often uses them as
flagship products when seeking agreements with new retailers.
Orthex has a strong position in the Nordics in food storage and kitchenware
markets. However, the Group’s invoiced sales in the Kitchen category
decreased to EUR 19.8 million (20.1).
Invoiced sales in the Plant Care category decreased to EUR 5.5 million (5.7).
Invoiced sales in the Home & Yard category decreased to EUR 5.3 million
(5.4).
The sales decrease was driven by the changed purchase behaviour of
retail customers.
Invoiced sales by product category
EUR million 2022 2021 2020
Storage 5 5.1 59.4 49.4
Kitchen 19.8 20.1 19.0
Plant Care 5.5 5.7 4.5
Home & Yard 5.3 5.4 5.0
Tot al 85.8 90.6 77.9
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Financial position and cash flow
The balance sheet totalled EUR 81.8 million (88.8) at the end of the
financial year, of which equity accounted for EUR 29.7 million (31.8).
At the end of the financial year, the Group’s net debt was EUR 26.0 million
(25.9). Non-current interest-bearing liabilities were EUR 32.0 million (36.0)
and Orthex’s total interest-bearing liabilities were EUR 36.3 million (40.2).
Interest-bearing liabilities include loans from credit institutions, pension
liabilities, and lease liabilities.
During 2022, the Group’s net cash flows from operating activities were
EUR 6.2 million (9.0) and cash conversion was 61.9% (67.7). Capital returns
paid during the period had an impact of EUR 3.2 million and repayment
of short-term borrowings an impact of EUR 1.5 million on net cash
flows. Interest paid during the period totalled EUR 1.1 million. Cash and
cash equivalents amounted to EUR 10.3 million (14.3) at the end of the
financial year.
Net debt/adjusted EBITDA was 2.8x (1.7). Orthex’s long-term target is to
keep Net debt/adj. EBITDA below 2.5x.
At the end of the financial year, the Group’s Equity ratio was 36.3% (35.8).
Adjusted return on capital employed (ROCE) was 15.9% (33.0) and Return
on equity (ROE) 6.9% (24.7).
Investments, research, and product
development
Orthex’s investments during 2022 amounted to EUR 3.6 million (4.8) and
were mainly related to increasing the production capacity and moulds for
new products.
In 2022, Orthex launched a research project for the development of
recycled plastics. The goals of the project are to build an ecosystem aimed
at increasing the use of recycled plastic and to generate new information
about the use of recycled plastic in different applications, especially
in products suitable for food contact. In addition, Orthex announced
that starting in January 2023, it will participate in a large seven-year
cooperation research project to find new potential renewable plastic
raw materials. These investments in research support Orthex’s 2030
carbon neutrality target and the target to increase the use of sustainable
raw materials. Research and product development expenses have not
been capitalized.
Personnel
In 2022, the average number of personnel employed by Orthex was 295
(314) and wages and salaries amounted to EUR 18.3 million. In 2021 and
2020, wages and salaries amounted to EUR 19.7 million and EUR 17.1 million,
respectively. Group headcount at the end of the financial year was 316
(320), of which 54% (54) worked in production, 21% (22) in warehouse,
16% (15) in sales, 5% (6) in administration and 4% (3) in marketing.
Group structure
In order to simplify the Group structure, Orthex Corporation’s Swedish
subsidiary Smartstore AB was merged into its parent company Orthex
Sweden AB as of 15 September 2022.
Governance
The company’s corporate governance complies with the company’s Articles
of Association and Corporate Governance Principles as well as rules and
regulations applicable to Finnish listed companies such as the Finnish
Limited Liability Companies Act and Securities Markets Act, and rules
and regulations of Nasdaq Helsinki Ltd. The company also adheres to
the Finnish Corporate Governance Code 2020 (”CG Code”) issued by the
Securities Market Association. The CG Code is available on the association’s
website (www.cgfinland.fi).
Further information on the company’s governance principles is available
in the Corporate Governance Statement 2022 published simultaneously
with the Board of Directors’ report and the Financial Statements. As the
company has no audit committee, the company’s Board of Directors has
reviewed the Corporate Governance Statement.
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Decisions of the Annual General Meeting
Orthex Corporation’s Annual General Meeting was held on 6 April 2022 at
the company’s headquarters in Espoo, Finland. To limit the spread of the
corona virus pandemic, the Annual General Meeting took place without
shareholders’ and their proxy representatives’ presence at the meeting
venue. The shareholders of the company participated in the meeting and
exercised their shareholder’s rights by voting in advance.
The general meeting adopted the financial statements and discharged
the members of the Board of Directors and the CEO from liability for the
financial period 2021. The general meeting also approved the remuneration
policy and the remuneration report 2021 for the governing bodies.
The general meeting decided that for the financial period ended on 31
December 2021, shareholders be paid in two instalments a capital return
of EUR 0.18 per share from the invested unrestricted equity fund totalling
approximately EUR 3.2 million. The first instalment of the capital return
amounting to EUR 0.09 per share was paid on 21 April 2022 and the second
instalment amounting to EUR 0.09 per share on 11 October 2022.
The general meeting resolved to re-elect Sanna Suvanto-Harsaae, Satu
Huber and Jens-Peter Poulsen to the Board and elect Markus Hellström
and Jyrki Mäki-Kala as new members to the Board for a term of office
ending at the end of the next Annual General Meeting. Ari Jokelainen and
Juuso Kivinen stepped down from the Board. Sanna Suvanto-Harsaae
continues to chair the Board. The general meeting further resolved that
the remuneration of the members of the Board of Directors remain the
same and that the Chair of the Board of Directors be paid a monthly fee of
EUR 4,000 and other members of the Board of Directors a monthly fee of
EUR 2,000.
Ernst & Young Oy, a firm of Authorised Public Accountants with APA
Johanna Winqvist-Ilkka as the signing audit partner, was re-elected the
company’s auditor.
In addition, the general meeting authorised the Board of Directors to
decide on the issuance of shares and on the issuance of special rights
entitling to shares. A total maximum of 1,800,000 shares and special
rights entitling to shares may be issued by virtue of the authorisation
corresponding to approximately 10 per cent of all the shares in the
company. The authorisation will be valid for 18 months from the decision of
the general meeting.
Board of Directors
On 31 December 2022, the company’s Board of Directors consisted of the
following members: Sanna Suvanto-Harsaae (Chair), Markus Hellström,
Satu Huber, Jyrki Mäki-Kala and Jens-Peter Poulsen.
Management’s ownership and remuneration
On 31 December 2022, the members of the Board of Directors, the CEO,
and other members of the Management Team, including their closely
associated persons and entities, owned a total of 3,025,537 company
shares corresponding to 17.0% of the total number of shares. Information
on the shareholdings of the members of the Board of Directors, the CEO,
and other members of the Management Team is disclosed in the Corporate
Governance Statement 2022 and on the corporate website.
Information on the remuneration of the members of the Board of Directors,
the CEO, and other members of the Management Team is disclosed in the
notes to the financial statements. The remuneration of the members of
the Board of Directors and the CEO is also described in the Remuneration
Report 2022.
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Composition of Shareholders’ Nomination Board
The Extraordinary General Meeting on 5 March 2021 decided to establish
a Shareholders’ Nomination Board for the company and the Nomination
Board’s charter was approved. The Nomination Board consists of the four
largest registered shareholders of the company as of 31 August. According
to the shareholders’ register, the company’s four largest shareholders on
31 August 2022 were Conficap Oy, Alexander Rosenlew, Ilmarinen Mutual
Pension Insurance Company, and Thomasset Oy.
On 1 September 2022, the company announced that these shareholders
have appointed their representatives to the Shareholders’ Nomination
Board, the composition of which is as follows:
• Maarit Toivanen, CEO and Chair of the Board of Conficap Oy
• Alexander Rosenlew
• Annika Ekman, Head of Direct Equity Investments,
Ilmarinen Mutual Pension Insurance Company
• Mats Söderström, CEO of Thomasset Oy
The Nomination Board has elected Maarit Toivanen as its chair. The Chair
of Orthex’s Board of Directors, Sanna Suvanto-Harsaae, acts as an expert
member of the Nomination Board.
More information on the Nomination Board is available on the corporate
website at Nomination Board - Orthex Group.
Shares and shareholders
Orthex’s shares are listed on Nasdaq Helsinki Ltd. Trading in Orthex’s share
began on the Nasdaq Helsinki main list on 29 March 2021.
At the end of the reporting period, Orthex Corporation’s registered share
capital amounted to EUR 80,000 and the registered number of issued
shares was 17,758,854. All shares carry one vote and have equal voting
rights. There are no voting restrictions associated with the shares. The
shares hold no nominal value. The trading code of the shares is “ORTHEX”,
and the ISIN code FI4000480504.
Trading volume during the period was EUR 37.4 million and 5,653,412
shares. The highest price of the share was EUR 11.29 and the lowest
was EUR 3.82. The closing price of the share at the end of December
was EUR 4.68. The year-end market value of the share capital stood at
EUR 83.1 million. The company did not have any treasury shares at the end
of the review period.
At the end of the review period, the number of registered shareholders
including nominee registers was 16,596. The nominee-registered shares
accounted for 11.1% of the total number of shares and amounted to
1,967,850 shares. At the end of the period, the ten largest registered
shareholders possessed a total of 49.7% of Orthex’s shares and votes.
Authorisations, option and share-based incentive
schemes
During 2022, Orthex did not have any share option or share-based incentive
schemes.
Orthex’s Board of Directors is authorised to issue a total maximum of
1,800,000 shares and special rights entitling to shares in one or several
issues. The authorisation will be valid until 6 October 2023. The Board of
Directors has no other authorisations.
Major shareholders 31 Dec 2022*
Shareholder
No. of
shares
% of
shares
Conficap Oy 2,486,240 14.00
Rosenlew Alexander 2 ,0 47,726 11.53
Ilmarinen Mutual Pension Insurance
Company
1,061,000 5.97
Thomasset Oy 761,000 4.29
Varma Mutual Pension Insurance
Company
639,350 3.60
OP-Finland Small Cap 506,901 2.85
Oy Julius Tallberg Ab 386,351 2.18
Fondita Nordic Micro Cap Investment
Fund
328,500 1.85
Ståhlberg Tom Christian 313,500 1.77
Aktia Capital Mutual Fund 300,000 1.69
Tot al 8,830,568 49.72
*)
Source: Euroclear Finland
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Share distribution 31 Dec 2022*
Number of shares Number of shareholders % of shareholders Number of % of shares
1-100 11,174 67.33 624,095 3.51
101-1,000 4,867 29.33 1,490,513 8.39
1,001-10,000 468 2.82 1,200,439 6.76
10,001-100,000 66 0.40 2,247,719 12.66
100,001-1,000,000 17 0.10 4,852,422 2 7. 32
> 1,000,000 4 0.02 7,343,666 41.35
Tot al 16,596 100 17,75 8,854 100
Nominee registered 8 0.05 1,967,850 11.08
*)
Source: Euroclear Finland
Under the provisions of the Securities Market Act, changes in holdings
must be disclosed when the holding reaches, exceeds, or falls below
5, 10, 15, 20, 25, 30, 50 or 66,7 (2/3) per cent of the voting rights or
the number of shares in the company. The stock exchange releases on
notifications of changes in holdings (flaggings) are available on the corporate
website at https://investors.orthexgroup.com/media/.
Sector distribution 31 Dec 2022*
Sector
No. of
shares
% of
shares
Households 6,398,032 36.03
Private companies 4,961,924 27.94
Financial and insurance institutions 1,910,400 10.76
Public sector organisations 2,198,291 12.38
Non-profit institutions 300,480 1.69
Rest of the world 21,877 0.12
Tot al 17,758,8 5 4 100
*)
Source: Euroclear Finland
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Sustainability
Sustainability is a core element in implementing Orthex’s growth strategy and
key objectives as we strive to be the number one brand in storage products
in Europe, and to strengthen our position as a leading houseware company in
the Nordics. Sustainability is a key factor in all decision making at Orthex and
a significant driver of our development and investment agenda. Orthex aims
to be the industry forerunner in sustainability by offering timelessly designed,
high-quality, safe, and long-lasting products, reducing the carbon footprint of
its operations and products, and sourcing more and more of its raw materials
from renewable and recycled materials. Orthex’s main sustainability target is
to aim towards carbon neutrality in production by 2030.
Orthex has identified priority sustainability topics in environmental, social
and governance (ESG) areas. For each topic, the company has defined key
performance indicators and targets. More information can be found in the
Annual and Sustainability Report’s dedicated section on sustainability.
Sustainability actions in 2022
In March, Orthex’s Lohja factory was granted an ISCC PLUS certificate. The
international Sustainability and Carbon Certification (ISCC) is a globally
applicable sustainability certification system, which covers all sustainable
feedstocks, including agricultural and forestry biomass, circular and bio-
based materials, and renewables.
During the first half of the year, Orthex conducted a sustainability materiality
assessment of the company’s sustainability topics to align Orthex’s
sustainability work with stakeholders’ expectations. More than 500 replies
to the materiality questionnaire were received, and the assessment results
were supplemented by interviews with selected customers, investors, and
suppliers. In April, Orthex was certified as a Nasdaq ESG Transparency
Partner. This certification is used by Nasdaq to show engagement in the
market transparency and raising environmental standards. In addition, Orthex
disclosed environmental data in CDP Climate change program to meet the
demands of investors and customers and to increase transparency.
During the second half of the year, Orthex started using ISSC PLUS certified
renewable raw materials applying mass balance approach in the production
of its popular SmartStore™ Compact and Compact Clear storage boxes.
Orthex also launched a significant research project for the development of
recycled plastics. The goals of the project are to build an ecosystem aimed
at increasing the use of recycled plastic and to generate new information
about the use of recycled plastic in different applications, especially in
products suitable for food contact. In addition, Orthex announced that
starting in January 2023, it will participate in a large seven-year cooperation
research project to find new potential renewable plastic raw materials. These
significant investments in research support Orthex’s 2030 carbon neutrality
target and the target to increase the use of sustainable raw materials.
In addition, Orthex extended its selection of products made from recycled
plastics by launching SmartStore™ Collect Slim recycling solution. Orthex
also participated in a competition for the most sustainable product in Finland
with two products: Orthex bucket from old fishing nets and the SmartStore™
Collect sorting solution. Out of 291 pre-screened products, the competition
panel selected Orthex bucket from old fishing nets as one of the 11 finalists.
In November, the Science Based Targets initiative (SBTi) approved Orthex’s
near-term science-based emissions reduction target, which means that
Orthex’s climate targets are aligned with the target to keep global warming
below 1.5°C in accordance with the Paris Agreement.
Orthex’s sustainable business practices are described comprehensively in the
2022 Annual and Sustainability Report’s dedicated section on sustainability.
As will be brought up in the sustainability section, the company has
continued its investments in building the roadmap towards carbon neutrality
and in the use of renewable and recycled materials to reduce the carbon
footprint of its products and production.
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Risks and uncertainties
Risk management
The purpose of Orthex’s risk management is to ensure the fulfilment of
customer promises, business profitability, ability to pay dividends, value
creation for shareholders, responsible business and business continuity. To
achieve this, Orthex strives to be aware of the uncertainties and risk factors
and opportunities associated with its objectives and operations, and to
identify, assess and manage risks and their consequences in a consistent and
effective manner.
Orthex’s risk management policy guides risk management in a way that
supports the achievement of the company’s objectives, protects personnel
and the company’s various assets, and ensures the financial sustainability of
operations.
The responsibility for implementing risk management lies with the
Management Team. In addition, each employee must be aware of and
manage the risks associated with their own operating environment and areas
of responsibility. The company’s Board of Directors approves the company’s
risk management policy and monitors and assesses the effectiveness of
risk management.
Risk management principles
Risk management is a systematic activity designed to ensure comprehensive
and appropriate risk identification, assessment, management, and control.
It is an integral part of Orthex’s planning and management process,
decision making, day-to-day management of operations, and monitoring
and reporting procedures. Risks are assessed and managed in a business-
oriented and thorough manner. This means that key risks, including ESG
(Environmental, Social and Governance) risks, are systematically identified,
evaluated, managed, monitored, and reported as part of the business.
Risk management process and reporting
Orthex prioritises risks according to the importance of the risk by
assessing the impact, likelihood, and level of risk management of the risk
materialisation. Risk management measures address the most significant
risks through cost-effective and appropriate policy options.
The Management Team regularly monitors the implementation of risk
management. If necessary, corrective measures will be taken.
The Management Team reports to the Board of Directors on risks and risk
management measures 2-3 times a year. The Board reviews the most
significant risks, measures to manage them and assesses the efficiency and
effectiveness of risk management.
Risk classification
Risk refers to an event or circumstance that may hinder or prevent the
achievement of targets or may result in missing of business opportunities.
Orthex classifies risks in three groups:
• Strategic risks
• Operational risks
• Financial risks
Strategic risks refer to uncertainty that is primarily related to changes in the
operating environment and the ability to utilize or anticipate these changes.
These changes may relate, for example, to the general economic situation,
customer consumption behaviour, competition, legislation, or technological
developments. When assessing strategic risks and opportunities, the goal
is to find the business opportunities that are used to achieve the goals with
manageable risks, while avoiding those that present unreasonably high risks.
Operational risk means a circumstance or event that can prevent or hinder
the achievement of objectives or cause harm to people, property, business,
information, or the environment. Operational risks are avoided or reduced,
but in such a way, that the costs of risk avoidance are proportionate to the
magnitude of the risk.
Financial risks are those related to Orthex’s financial position. These include
e.g., availability and cost of finance, net working capital and liquidity, and
foreign exchange rate fluctuations. Orthex’s financial risk management is
described in the notes to the consolidated financial statements.
Non-economic impacts are also considered when assessing risks. Reputation
risk arises if Orthex’s operations conflict with the expectations of various
stakeholders, such as customers, suppliers, regulators, or shareholders.
Responsible practices are key to preventing reputational risks. Reputation
risks are managed through timely and adequate communication.
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Main strategic, operational, and financial risks
Risks relating to the macroeconomic environment
Increased inflation, raising interest rates, Russia’s war against Ukraine,
and political tensions impact the global economic trend as well as the
development of consumers’ purchasing behaviour and, as a result, can
have an impact on Orthex’s business. Russia’s war against Ukraine does not
directly affect Orthex’s business as Orthex’s products are not manufactured
or sold in Russia, Belarus or Ukraine and the company does not source
raw materials from these countries. However, Russia’s war against Ukraine
causes disturbances in global supply chains and contributes to the general
economic situation and consumers’ purchasing power and behaviour. These
factors may affect the company’s sales and profitability as well as operational
reliability and efficiency. The Group has hedged part of its interest-bearing
liabilities against rising interest rates with interest derivatives. In addition,
some of the electricity contracts have been purchased at fixed prices due to
the strong volatility of market electricity.
Risks relating to changes in competitive environment
Orthex operates in a competitive and fragmented home storage, kitchenware,
plant care and other household products market. Even though the markets
in which Orthex operates are fragmented, Orthex’s competitors may
consolidate, establish consortiums, or aim to expand their operations in the
future, which may increase competition in Orthex’s markets, including in the
Nordics. Any significant consolidation could create competitors with more
financial, technical, marketing, or other resources that would enable them
to assign more resources to the sale of household goods than currently,
which, in turn, could have an adverse effect on Orthex’s business and
growth opportunities.
Risks relating to sourcing of raw materials
Plastic polymers are the largest group of raw materials used in the
production of Orthex’s products. Raw material prices are typically negotiated
annually based on estimated volumes for the year ahead. Orthex does
not hedge against raw material price fluctuations. Accordingly, Orthex’s
profitability is particularly exposed to fluctuations in virgin plastic polymer
(produced directly from crude oil and never been used or processed before)
prices, which have historically fluctuated to a certain extent in line with crude
oil price fluctuations.
Orthex also uses renewable and recycled materials in the production of its
products and sells products entirely sourced from external suppliers, as well
as products that are partly produced in-house and partly consist of externally
sourced components. The prices of these raw materials and traded goods
have not historically been subject to the same level of fluctuation as virgin
plastic polymers. However, there has been shortage on the market because
of higher demand and this can lead to higher prices also in renewable
and recycled materials. If Orthex is unable to offset price increases in raw
materials and traded goods, whether through price increases or otherwise, or
should there be significant disruptions in their availability, this could have a
material adverse effect on Orthex’s profitability and/or margins.
During 2021, raw material prices rose to exceptionally high levels and
continued rising further during the first half of 2022. Even if the raw material
price index is down from its highpoint in April 2022, the raw material prices
were exceptionally high during the entire reporting period. This has had and
may continue to have an adverse effect on Orthex’s profitability.
Risks relating to quality of products
Thanks to its own production, Orthex can control the quality of its products
and the health and environmental aspects of production and products.
Although Orthex has several quality control measures in place, there can
be no assurances that such measures will always be adequate to detect
potential product quality defects.
Any significant quality issue may require a considerable amount of
management resources. Responding to detected or suspected quality issues,
for example, by proactively adjusting production processes or by switching
the materials or components used, usually gives rise to costs that may be
significant. Such events may also lead to product recalls, product liability or
warranty claims, and contractual liabilities towards Orthex’s customers and/
or end-customers, or to third-party claims. Product quality issues or product
recalls may also harm Orthex’s reputation and lead to loss of customers.
Furthermore, Orthex’s insurance coverage does not cover claims based on
quality issues and product liability claims concerning Orthex’s products.
Realisation of the aforementioned risks may have a material adverse
effect on Orthex’s business, results of operations, financial position and/
or reputation.
Risks relating to changes in customer preferences
Several megatrends and consumer preferences have been driving the
demand in the home storage, food storage and kitchen utensils markets in
recent years, including population growth, urbanisation, changes in the form
of housing, sustainability, and design preferences among the end-customers
of Orthex’s products. Changes in consumer preferences could relate to,
among others, improved functionality, higher quality, innovative solutions,
new technologies, attractive design, and new and more advanced materials.
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If Orthex is unable to successfully anticipate and identify changing consumer
preferences, Orthex could lose its market share in the Nordics, its sales
development may be slower than expected, and it may be forced to rely on
price reductions to dispose of excess or slow-moving inventory or to make
significant investments in the future to remain competitive. Any of these
could have a material adverse effect on Orthex’s business, financial position
and/or results of operations.
Risks relating to production facilities and warehouse
operations
As Orthex’s production largely relies on its own production facilities, events
that would cause significant disruptions in or the suspension of Orthex’s
production facilities could materially affect Orthex’s ability to deliver its
products to its customers in a timely manner. Orthex’s production facilities
may be damaged or destroyed, or they may be closed or the equipment on
the premises may be damaged due to, for example, fire, accident, natural
disaster, or equivalent events beyond Orthex’s control. Similarly, Orthex’s
warehouses could be subject to similar events, which could destroy all or
part of Orthex’s inventory. Such events or incidents could result in material
disruptions and delays in Orthex’s production and deliveries and in Orthex
not necessarily being able to fulfil its obligations to its customers. If Orthex
were unable to locate alternative production facilities, transfer production
to Orthex’s other production facilities or to repair the damaged premises or
equipment in a timely and cost-effective manner, such conditions could have
a material adverse effect on Orthex’s business, financial position and/or
results of operations.
Risks relating to IT infrastructure and systems
Difficulties in maintaining and updating IT infrastructure, deficiencies in
IT systems, and external cyber-attacks related to IT systems may have an
adverse effect on Orthex. Orthex uses information technology infrastructure,
applications and software products that cover essential aspects of its
business, such as production, inventory management, logistics, human
resources, finances, and other administrative systems. Orthex’s IT systems
and infrastructure may be vulnerable to cybersecurity risks, including
cyber-attacks, direct or indirect, such as computer viruses and worms,
phishing attacks, and penetrating or bypassing security measures in order
to gain unauthorised access to Orthex’s information networks and systems.
Exploitation of possible weaknesses in Orthex’s security controls could
disrupt its business and cause leakage of sensitive information, theft of
intellectual property and damage to Orthex’s reputation.
Risks relating to management and employees
The success of Orthex’s business and strategy depends on Orthex’s ability
to attract and retain key management and production personnel. The loss
of management or key personnel may result in the loss of expertise or, in
certain circumstances, the transfer of expertise to Orthex’s competitors. In
addition, Orthex’s production processes require qualified, skilled production
workers (particularly with specialized training and knowledge of plastic).
In accordance with its current strategy, in addition to strengthening its
market position in the Nordics, Orthex will focus on accelerating its growth in
the international markets outside the Nordics, which imposes new demands
to Orthex’s management and personnel. Orthex’s geographical expansion
also requires the recruitment of additional personnel. If Orthex is not
successful in recruiting and retaining qualified key personnel, this may have
an adverse effect on Orthex’s business.
Risks relating to regulation and compliance
With operations in several countries, Orthex is subject to a variety of laws and
regulations, and potential violations of such laws and regulations could have
an adverse effect on Orthex. Orthex must comply with laws and regulations
enacted at both the national and EU level concerning its operations in
relation to matters including health, safety, consumer protection and
marketing, general product safety, environment, employment, competition,
company law, data protection, international trade, and taxation in all
countries in which Orthex pursues business. Failure to comply with applicable
laws and regulations may cause Orthex financial losses, undermine Orthex’s
business opportunities and harm Orthex’s reputation.
Risks relating to taxation
Orthex’s tax burden depends on certain tax laws and regulations and their
application and interpretation (for example, with regard to transfer pricing
rules). Changes in tax laws and regulations or their interpretation and
application may increase Orthex’s tax costs to a significant degree, which
could have an adverse effect on Orthex’s financial condition and/or results
of operations. In addition, Orthex may at times be subject to tax audits
conducted by national tax authorities. Tax audits or other auditing measures
carried out by tax or other authorities, such as customs officials, could result
in an imposition of additional taxes (such as income taxes, taxes at source
and property, capital, transfer, and value-added taxes), which could lead to an
increase in Orthex’s tax liability.
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Orthex Group was subject to a tax audit of Orthex Corporation regarding
the financial years 2020 and 2021. Orthex Corporation received early in May
2022 a tax audit report from the Finnish tax authorities including subsequent
taxes and tax increases amounting to a total of EUR 0.3 million relating to
the VAT deductibility of IPO related costs. The company disagrees with the
interpretation made in the tax audit and has filed a claim for adjustment
to its taxation with the Assessment Adjustment Board of the Finnish tax
authority. However, the company was requested to pay additional taxes in
accordance with the interpretations set out in the tax audit report and the
company paid the subsequent taxes and tax increases in June 2022. The
Group has not recognised the subsequent taxes and tax increases in the
consolidated statement of comprehensive income.
Risks relating to currency fluctuations
Orthex has operations in several countries, so the company is exposed to
transaction and translation risk related mainly to the Swedish krona, the
Norwegian krone, the Danish krone, the British pound sterling and the
U.S. dollar. The Group is typically not hedged against currency risk, except
for certain large purchases under the Kökskungen brand. Fluctuations
in exchange rates and interest rates can have a material adverse effect
on Orthex.
Risks relating to liquidity
Orthex currently finances its business and investments with operational
cash flows and debt financing. Sufficient cash flow is required for Orthex’s
business and maintaining its ability to service its debt. There can be no
assurance that Orthex will be able to secure financing to a sufficient extent
and on competitive terms to finance its business and investments. Changes
in the macroeconomic environment or in the general financial markets may
have an adverse effect on the availability, price, and other terms of financing.
Changes in the availability of equity and debt financing and in the terms of
the financing available may influence Orthex’s ability to invest in developing
and growing its business in the future. If Orthex is not able to obtain
financing on competitive terms or at all, this may have a material adverse
effect on Orthex’s business, financial position and/or results of operations.
ESG risks
Orthex assesses ESG risks as a part of its systematic risk management
process. During 2022, ESG risks were reviewed and the following most
significant ESG risks were identified: unfavourable changes in environmental
and other related legislation, product safety related issues, and employee
health and safety related risks. To mitigate these risks, Orthex actively
monitors applicable legislation, uses accredited test laboratories for
food contact testing, and systematic health and safety process has been
implemented through the work environment committee. Failure to comply
with environmental legislation, product safety regulations or laws and
regulations applicable to employee health and safety may cause Orthex
financial losses, undermine Orthex’s business opportunities and harm
Orthex’s reputation.
Board of Directors’ proposal for the use
of the profit shown on the balance sheet
and resolution on the distribution of
dividends
According to the financial statements to be adopted for the financial year
ended 31 December 2022, the parent company’s distributable funds amount
to EUR 12,305,159.20, including the profit for the period of EUR 4,303,730.55.
The Board of Directors proposes to the general meeting that based on
the financial statements to be adopted for the financial year ended on 31
December 2022, shareholders be paid a dividend of EUR 0.11 per share
totalling approximately EUR 2.0 million based on the number of registered
shares in the company at the time of the proposal.
The dividend is proposed to be paid in two instalments as follows:
• The first instalment of the dividend amounting to EUR 0.06 per share will
be paid to a shareholder who is registered in the company’s shareholder
register held by Euroclear Finland Oy on the record date of the first
instalment of the dividend payment 20 April 2023. The Board of Directors
proposes that the first instalment of the dividend be paid on 27 April 2023.
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• The second instalment of the dividend amounting to EUR 0.05 per share
will be paid in October 2023 to a shareholder who is registered in the
company’s shareholder register held by Euroclear Finland Oy on the
record date of the second instalment of the dividend payment 2 October
2023. The Board of Directors proposes that the second instalment of
the dividend be paid on 10 October 2023. The Board of Directors further
proposes that the Board be authorised to decide, if necessary, on a new
record date and date of payment for the second instalment of the dividend
should the rules of Euroclear Finland Oy or statutes governing the Finnish
book-entry system change or otherwise so require.
There have been no significant changes in the parent company’s financial
position after the financial year-end. The company’s liquidity is good, and the
Board of Directors deems that the company’s solvency will not be jeopardised
by the proposed dividend distribution.
Events after the financial year
On 24 January 2023, Orthex Corporation disclosed the Shareholders’
Nomination Board’s proposals to the Annual General Meeting 2023 regarding
the composition and remuneration of the Board of Directors.
The Shareholders’ Nomination Board proposes that the Board of Directors
would consist of five (5) members and that Sanna Suvanto-Harsaae, Markus
Hellström, Jyrki Mäki-Kala and Jens-Peter Poulsen would be re-elected to the
Board and that Anette Rosengren be elected as a new member to the Board,
all for a term of office ending at the end of the next Annual General Meeting.
Satu Huber was no longer available for re-election to the Board.
All director nominees have consented to their election and confirmed that
they are independent of the company and its significant shareholders.
Background information on the director nominees is available on the
corporate website Board of Directors - Orthex Group.
Regarding the remuneration of the members of the Board of Directors, the
Shareholders’ Nomination Board proposes that the Board fees remain the
same and that the Chair of the Board of Directors be paid a monthly fee of
EUR 4,000 and other members of the Board of Directors a monthly fee of
EUR 2,000. The Nomination Board further proposes that reasonable travel
and other expenses related to the Board work be reimbursed in accordance
with the company’s travel rules.
Market outlook
Volatility and uncertainty affected the business environment during 2022,
with geopolitical disruption and high inflation across the value chain. Whilst
demand remained overall solid, the pressure of inflation on consumers
started to erode the consumption growth across product categories and
geographical areas during the year.
To ensure effective implementation and adoption of its strategy, Orthex
is constantly evaluating consumer trends, customer demands and market
conditions. The strategy is designed to deliver the specified long-term
financial targets. In addition, an overall focus on sustainability is at the heart
of business development. It is likely that the unpredictable market conditions
seen in 2022 will continue, including volatile cost drivers with quick changes
in cost components and high overall or increasing cost levels compared to the
year 2022.
Orthex will strive to navigate as efficiently as possible, adopting swiftly to
potentially fast changing conditions. In 2021, we successfully increased the
production capacity in our factories, and we are prepared for growth. We are
also prepared to further increase capacity when needed. Product and process
innovation and testing new sustainable materials will have a continued
important role in the commercial strategy. The focus will be on growing the
sales of our branded products throughout Europe, thus improving everyday
life with practical sustainable products.
Russia’s war against Ukraine does not directly affect Orthex’s business as
Orthex’s products are not manufactured or sold in Russia, Belarus or Ukraine
and the company does not source raw materials from these countries.
However, Russia’s war against Ukraine causes disturbances in global supply
chains and contributes to the general economic situation and consumers’
purchasing power and behaviour.
Espoo, 7 March 2023
Board of Directors
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EUR thousand 2022 2021 2020
Net sales 84,048 88,694 75,865
Net sales growth, % -5.2% 16.9% 14.2%
Constant currency invoiced sales growth, % -3.8% 15.7% 14.8%
Invoiced sales 85,794 90,552 77,877
Invoiced sales growth, % -5.3% 16.3% 15.5%
Gross margin 17,919 23,204 24,601
Gross margin, % 21.3% 26.2% 32.4%
EBITDA 9,15 4 13,226 16,458
EBITDA margin, % 10.9% 14.9% 21.7%
EBITA 5,317 9,380 12,336
EBITA margin, % 6.3% 10.6% 16.3%
Operating profit 5,191 9,250 12,281
Operating profit margin, % 6.2% 10.4% 16.2%
Items affecting comparability 173 1,616 597
Adjusted gross margin 17,919 23,279 24,601
Adjusted gross margin, % 21.3% 26.2% 32.4%
Adjusted EBITDA 9,328 14,842 17,0 5 4
Adjusted EBITDA margin, % 11.1% 16.7% 22.5%
Adjusted EBITA 5,490 10,996 12,933
Adjusted EBITA margin, % 6.5% 12.4% 17. 0%
Adjusted operating profit 5,364 10,867 12,878
Adjusted operating profit margin, % 6.4% 12.3% 17.0%
FTEs 295 314 285
Personnel expenses 18,300 19,693 17,0 5 6
EUR thousand 2022 2021 2020
Key cash flows indicators
Net cash flows from operating activities 6,177 8,979 12,709
Operating free cash flows 5,774 10,046 13,853
Cash conversion, % 61.9% 6 7.7% 81.2%
Investments in tangible and intangible assets -3,553 -4,797 -3,201
Financial position key figures
Net debt 26,028 25,887 38,886
Net debt / adjusted EBITDA last 12 months 2.8x 1.7x 2.3x
Net working capital 13,670 14,482 12,379
Capital employed excluding goodwill 33,487 34,004 31,835
Return on capital employed (ROCE), % 15.4% 28.1% 38.4%
Adjusted return on capital employed (ROCE), % 15.9% 33.0% 40.3%
Equity ratio, % 36.3% 35.8% 22.6%
Return on equity, % 6.9% 24.7% 49.0%
Key figures
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Share-related key figures
EUR 2022 2021 2020
Earnings per share, basic (and diluted) 0.12 0.35 0.47
Equity per share 1.67 1.79 1.05
Effective dividend yield, % 2.4% 1.6% n.a.
Price per earnings 39.2 31.9 n.a.
Closing share price on the last day of trading 4.68 11.04 n.a.
Highest 11.29 12.50 n.a.
Lowest 3.82 7.3 0 n.a.
Market value of shares at the end of period, EUR
million
83,1 19 6,1 n.a.
No. of shares traded, pcs 5,653,412 21,933,614 n.a.
Of weighted average number of shares, % 31.8% 125.9% n.a.
No. of shares outstanding at the end of the period,
pcs 17,75 8 , 85 4 17,75 8 , 8 5 4 16,277,000
Weighted average number of shares outstanding,
pcs
17,75 8 , 85 4 17,425,944 16,277,000
Dividend payout and capital return per share total 0.11* 0.18 n.a.
Dividend payout and capital return per share,
total of result, % 92.1% 52.0% n.a.
*) Board of Directors’ proposal
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Reconciliation of alternative performance measures
EUR thousand 2022 2021 2020
Net sales growth, %
Net sales 84,048 88,694 75,865
Net sales growth, % -5.2% 16.9% 14.2%
Constant currency Net sales growth, %
Net sales 84,048 88,694 75,865
FX rate adjustment - -1,291 813
Constant currency Net sales 84,048 87,403 76,679
Constant currency Net sales growth, % -3.8% 15.7% 14.8%
Invoiced sales
Net sales 84,048 88,694 75,865
Discounts and bonuses 3,182 3,067 2,757
Other sales and refunds -1,437 -1,209 -746
Invoiced sales 85,794 90,552 77,877
Invoiced sales growth, % -5.3% 16.3% 15.5%
Gross margin
Net sales 84,048 88,694 75,865
Cost of sales - 66,12 9 -65,490 -51,264
Gross margin 17, 919 23,204 24,601
Gross margin, % 21.3% 26.2% 32.4%
EUR thousand 2022 2021 2020
EBITDA
Operating profit 5,191 9,250 12,281
Depreciation, amortisation and impairment 3,964 3,976 4,17 7
EBITDA 9,15 4 13,226 16,458
EBITDA margin, % 10.9% 14.9% 21.7%
EBITA
Operating profit 5,191 9,250 12,281
Amortisation and impairment 126 129 55
EBITA 5,317 9,380 12,336
EBITA margin, % 6.3% 10.6% 16.3%
Operating profit
Operating profit 5,191 9,250 12,281
Operating profit margin, % 6.2% 10.4% 16.2%
Items affecting comparability / adjustments
(Gross margin)
Other items affecting comparability - 75 -
Items affecting comparability / adjustments
(Gross margin) - 75 -
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Reconciliation of alternative performance measures
EUR thousand 2022 2021 2020
Items affecting comparability / adjustments
(EBITDA)
Other items affecting comparability 173 85 -
Costs related to listing - 1,531 597
Items affecting comparability / adjustments
(EBITDA) 173 1,616 597
Adjusted gross margin
Gross margin 17,919 23,204 24,601
Adjustments (gross margin) - 75 -
Adjusted gross margin 17,919 23,279 24,601
Adjusted gross margin, % 21.3% 26.2% 32.4%
Adjusted EBITDA
Operating profit 5,191 9,250 12,281
Depreciation, amortisation and impairment 3,964 3,976 4,17 7
Adjustments (EBITDA) 173 1,616 597
Adjusted EBITDA 9,328 14,842 17,054
Adjusted EBITDA margin, % 11.1% 16.7% 22.5%
Adjusted EBITA
Operating profit 5,191 9,250 12,281
Amortisation and impairment 126 129 55
Adjustments (EBITA) 173 1,616 597
Adjusted EBITA 5,490 10,996 12,933
Adjusted EBITA margin, % 6.5% 12.4% 17. 0 %
EUR thousand 2022 2021 2020
Adjusted operating profit
Operating profit 5,191 9,250 12,281
Adjustments 173 1,616 597
Adjusted operating profit 5,364 10,867 12,878
Adjusted operating profit margin, % 6.4% 12.3% 17.0%
Earnings per share, basic (and diluted), EUR
Profit for the period 2,121 6,035 7,6 92
Weighted average number of shares outstanding 17,75 9 17,426 16,277
Earnings per share, basic (and diluted), EUR 0.12 0.35 0.47
Operating free cash flows
Adjusted EBITDA 9,328 14,842 17,0 5 4
Investments in tangible and intangible assets -3,553 -4,797 -3,201
Operating free cash flows 5,774 10,046 13,853
Cash conversion, %
Operating free cash flows 5,774 10,046 13,853
Adjusted EBITDA 9,328 14,842 17,0 5 4
Cash conversion, % 61.9% 67.7% 81.2%
Net debt
Total interest-bearing liabilities 36,312 40,220 44,13 6
Cash and cash equivalents -10,284 -14,334 -5,250
Net debt 26,028 25,887 38,886
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EUR thousand 2022 2021 2020
Net debt/ Adjusted EBITDA
Net debt 26,028 25,887 38,886
Adjusted EBITDA, 12 months 9,328 14,842 17,0 5 4
Net debt/ Adjusted EBITDA 2.8x 1.7x 2.3x
Net working capital
Inventories 14,283 12,647 9,906
Trade and other receivables 13,387 15,528 14,264
Trade and other payables -14,000 -13,692 -11,791
Net working capital 13,670 14,482 12,379
Capital employed excluding goodwill
Total equity 29,711 31,798 17,022
Net debt 26,028 25,887 38,886
Goodwill -22,252 -23,680 -24,072
Capital employed excluding goodwill 33,487 34,004 31,835
Return on capital employed (ROCE), %
Operating profit 5,191 9,250 12,281
Average capital employed excluding goodwill 33,746 32,920 31,970
Return on capital employed (ROCE), % 15.4% 28.1% 38.4%
EUR thousand 2022 2021 2020
Adjusted return on capital employed (ROCE), %
Adjusted operating profit 5,364 10,867 12,878
Average capital employed excluding goodwill 33,746 32,920 31,970
Adjusted return on capital employed (ROCE), % 15.9% 33.0% 40.3%
Equity ratio, %
Total equity 29,711 31,798 17,022
Total assets 81,837 88,842 75,368
Equity ratio, % 36.3% 35.8% 22.6%
Return on equity, %
Profit for the period 2,121 6,035 7,6 92
Total equity (average for the first and last day of the
period)
30,754 24,410 15,693
Return on equity, % 6.9% 24.7% 49.0%
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Calculation of key figures
IFRS key figures
Earnings per
share,
basic (and diluted)
= Profit for the period attributable to the
owners of the parent / Weighted average
number of shares outstanding
Alternative performance measures
Orthex presents alternative performance measures as additional information
to financial measures presented in the consolidated income statement,
consolidated balance sheet and consolidated statement of cash flows
prepared in accordance with IFRS. In Orthex’s view, alternative performance
measures provide significant additional information on Orthex’s results of
operations, financial position and cash flows to management, investors,
analysts, and other stakeholders.
Alternative performance measures should not be viewed in isolation or as
a substitute to the IFRS financial measures. All companies do not calculate
alternative performance measures in a uniform way, and therefore Orthex’s
alternative performance measures may not be comparable with similarly
named measures presented by other companies.
Key figure Formula
Constant currency invoiced sales growth, % Invoiced sales growth calculated by using previous year’s revenue translated at average
foreign exchange rates for the current year
Invoiced sales Product sales to resale customers excluding off invoice discounts, customer bonuses and
cash discounts
Invoiced sales growth, % Increase in invoiced sales
Gross margin Net Sales less Cost of sales
Gross margin, % Gross margin / Net sales
EBITDA Operating profit before depreciation, amortisation and impairment
EBITDA margin, % EBITDA / Net sales
EBITA Operating profit before amortisation and impairment
EBITA margin, % EBITA / Net sales
Operating profit Operating profit
Operating profit margin, % Operating profit / Net sales
Items affecting comparability Material items outside ordinary course of business including restructuring costs, net
gains or losses from sale of business operations or other non-current assets, strategic
development projects, external advisory costs related to capital reorganisation, impairment
charges on non-current assets incurred in connection with restructurings, compensation
for damages and transaction costs related to business acquisitions
Adjusted gross margin Gross margin excluding items affecting comparability
Adjusted gross margin, % Adjusted gross margin / Net sales
Adjusted EBITDA EBITDA excluding items affecting comparability
Adjusted EBITDA margin, % Adjusted EBITDA / Net sales
Adjusted EBITA EBITA excluding items affecting comparability
Adjusted EBITA margin, % Adjusted EBITA / Net sales
Adjusted operating profit Operating profit excluding items affecting comparability
Adjusted operating profit margin, % Adjusted operating profit / Net sales
Net cash flows from operating activities Net cash from operating activities as presented in the consolidated statement of cash flows
Operating free cash flows Adjusted EBITDA less investments in tangible and intangible assets
Cash conversion, % Operating free cash flows / Adjusted EBITDA
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Key figure Formula
Investments in tangible and intangible assets Investments in tangible and intangible assets as presented in the consolidated statement
of cash flows
Net debt Current and non-current interest-bearing liabilities less cash and cash equivalents
Net debt / adjusted EBITDA last 12 months Net debt / Adjusted EBITDA
Net working capital Inventories, trade and other receivables less trade and other payables
Capital employed excluding goodwill Total equity and net debt and less goodwill
Return on capital employed (ROCE), % Operating profit / Average capital employed excluding goodwill
Adjusted return on capital employed (ROCE), % Adjusted operating profit / Average capital employed excluding goodwill
Equity ratio, % Total equity / Total assets
Return on equity, % Result for the period / Total equity (average for the first and last day of the period)
Share-related key figures
Equity per share, EUR Total equity attributable to the equity holders of the parent / Number of outstanding shares
at the end of the financial year
Effective dividend yield, % Dividend/share / Price of share at the end of the accounting period
Price per earnings, EUR Closing price of share at the end of the financial year / Earnings per share
Market value of shares at the end of period Number of shares at the end of accounting period x Price of the
share at the end of accounting period
Dividend payout and capital return per share, total
of result, %
(Dividend/share + Return of capital/share) / Earnings per share
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Consolidated income statement
EUR thousand Note
Jan 1 - Dec 31
2022
Jan 1 - Dec 31
2021
Net Sales 2 84,048 88,694
Cost of sales -66,129 -65,490
Gross Margin 17,919 23,204
Other operating income 3 206 549
Selling and marketing expenses -7,846 -8,468
Administrative expenses -5,089 -6,035
Operating profit 5,191 9,250
Financial income and expenses 6 -2,182 -1,586
Profit before taxes 3,009 7,664
Income taxes 7 -888 -1,629
Profit for the period 2,121 6,035
Profit for the period attributable to:
Equity holders of the parent 2,121 6,035
Earnings per share for profit attributable
to the equity holders of the parent:
Earnings per share, basic (and diluted), EUR 0.12 0.35
Consolidated statement of comprehensive income
EUR thousand Note
Jan 1 - Dec
31 2022
Jan 1 - Dec
31 2021
Profit for the period 2,121 6,035
Other comprehensive income
Items that may be reclassified subsequently to profit or
loss:
Translation differences -2,053 -622
Items that will not be reclassified to profit or loss:
Remeasurement gains (+) / losses (-) from defined benefit
plans
5 1,042 -58
Other comprehensive income for the period, net of tax -1,011 -680
Total comprehensive income for the period 1,110 5,355
Total comprehensive income attributable to:
Equity holders of the parent 1,110 5,355
Consolidated financial statements, IFRS
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Consolidated statement of financial position
EUR thousand Note 31 Dec 2022 31 Dec 2021
ASSETS
Non-current assets
Intangible assets 8 22,377 23,901
Property, plant and equipment 9 13,547 13,131
Right-of-use assets 10 7,011 8,030
Other non-current assets 95 94
Deferred tax assets 7 760 1,163
Total non-current assets 43,790 46,320
Current assets
Inventories 13 14,283 12,647
Trade and other receivables 14 13,387 15,528
Derivative financial instruments 11 93 14
Cash and cash equivalents 11 10,284 14,334
Total current assets 38,047 42,522
TOTAL ASSETS 81,837 88,842
EUR thousand Note 31 Dec 2022 31 Dec 2021
EQUITY AND LIABILITIES
Equity attributable to the equity holders of the parent
company
Share capital 80 80
Invested unrestricted equity fund 7,851 11,047
Retained earnings 22,301 19,138
Translation differences -521 1,532
Total equity 11 29,711 31,798
Non-current liabilities
Loans from credit institutions 11 22,363 23,720
Lease liabilities 10, 11 6,480 7,544
Pension liabilities 5, 11 3,179 4,742
Deferred tax liabilities 7 769 742
Total non-current liabilities 32,791 36,748
Current liabilities
Loans from credit institutions 11 3,000 3,000
Lease liabilities 10, 11 1,290 1,214
Trade and other payables 15 14,000 13,692
Derivative financial instruments 11 8 -
Income tax liabilities 1,037 2,390
Total current liabilities 19,335 20,296
Total liabilities 52,126 57,044
TOTAL EQUITY AND LIABILITIES 81,837 88,842
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Consolidated statement of changes in equity
Equity attributable to the equity holders of the parent company
EUR thousand Share capital Treasury shares
Invested unrestricted
equity fund Retained earnings
Translation
differences Total equity
1 Jan 2022 80 - 11,047 19,138 1,532 31,798
Profit for the period 2,121 2,121
Translation differences -2,053 -2,053
Remeasurement gains (+) / losses (-) from defined benefit plans 1,042 1,042
Total comprehensive income for the period 3,163 -2,053 1,110
Transactions with owners:
Capital return from the invested unrestricted equity fund -3,197 -3,197
31 Dec 2022 80 - 7,851 22,301 -521 29,711
1 Jan 2021 3 -71 1,775 13,161 2,154 17,022
Profit for the period 6,035 6,035
Translation differences -622 -622
Remeasurement gains (+) / losses (-) from defined benefit plans -58 -58
Total comprehensive income for the period 5,977 -622 5,355
Transactions with owners:
Increase in share capital 78 -78 -
Cancellation of treasury shares 71 -71 -
Share issue 10,000 10,000
Expenses related to the share issue -686 -686
Discount related to the personnel share issue 106 106
31 Dec 2021 80 - 11,047 19,138 1,532 31,798
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Consolidated statement of cash flows
EUR thousand Note
1 Jan - 31 Dec
2022
1 Jan - 31 Dec
2021
Cash flows from operating activities
Profit before taxes 3,009 7,664
Adjustments:
Depreciation, amortisation and impairment 4 3,964 3,976
Financial income and expenses 6 2,182 1,586
Other adjustments 204 -48
Cash flows before changes in working capital 9,358 13,179
Changes in working capital
Decrease (+) / increase (–) in trade and other receivables 1,324 -1,489
Decrease (+) / increase (–) in inventories -2,358 -2,905
Decrease (–) / increase (+) in trade and other payables 1,155 2,326
Cash flows from operating activities before financial
items and taxes 9,479 11,112
Interests paid -1,135 -1,331
Income taxes paid -2,167 -801
Net cash flows from operating activities 6,177 8,979
Cash flows from investing activities
Investments in tangible and intangible assets -3,553 -4,797
Sale of tangible and intangible assets 28 132
Net cash flows from investing activities -3,525 -4,665
EUR thousand Note
1 Jan - 31 Dec
2022
1 Jan - 31 Dec
2021
Cash flows from financing activities
Proceeds from share issue 16 - 10,000
Costs from share issue recognised in equity 16 - -857
Repayment of lease liabilities 10 -1,312 -1,286
Proceeds from long-term borrowings 25,500 -
Repayment of long-term borrowings -25,500 -
Repayment of short-term borrowings 11 -1,500 -3,000
Capital return from the invested unrestricted equity fund 16 -3,197 -
Net cash flows from financing activities -6,008 4,857
Net change in cash and cash equivalents -3,356 9,172
Net foreign exchange differences 11 -694 -88
Cash and cash equivalents at 1 January 14,334 5,250
Cash and cash equivalents at 31 December 10,284 14,334
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Parent company financial statements, FAS
Parent company income statement
EUR Note
1 Jan - 31 Dec
2022
1 Jan - 31 Dec
2021
Net sales 2 840,000.00 741,000.00
Administrative expenses -1,129,658.85 -2,639,671.68
Operating result -289,658.85 -1,898,671.68
Interest income from group companies 596,288.04 935,949.53
Dividends received from group companies 2,000,000.00 -
Other interest and financial income from others 0.01 16.25
Interest and financial expenses to others -640,831.85 -1,480,194.10
Financial income and expenses 5 1,955,456.20 -544,228.32
Profit (loss) before appropriations and taxes 1,665,797.35 -2,442,900.00
Appropriations
Group contribution 6 3,100,000.00 2,400,000.00
Income taxes 7 -462,066.80 -21,639.03
Profit (loss) for the period 4,303,730.55 -64,539.03
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Parent company balance sheet
EUR Note 31 Dec 2022 31 Dec 2021
ASSETS
NON-CURRENT ASSETS
Investments
Holdings in subsidiaries 8 25,295,133.29 25,295,133.29
Receivables from subsidiaries 8 10,534,421.82 9,938,133.78
Investments total 35,829,555.11 35,233,267.07
NON-CURRENT ASSETS TOTAL 35,829,555.11 35,233,267.07
CURRENT ASSETS
Short-term receivables
Receivables from subsidiaries 9 2,402,779.70 3,162,422.32
Prepayments and accrued income 10 360,668.86 1,345.71
Short-term receivables total 2,763,448.56 3,163,768.03
Cash and cash equivalents 135,414.20 196,569.09
CURRENT ASSETS TOTAL 2,898,862.76 3,360,337.12
ASSETS TOTAL 38,728,417.87 38,593,604.19
EUR Note 31 Dec 2022 31 Dec 2021
SHAREHOLDERS’ EQUITY AND LIABILITIES
SHAREHOLDERS’ EQUITY
Share capital 80,000.00 80,000.00
Invested unrestricted equity fund 8,430,263.84 11,626,857.56
Retained earnings - 428,835.19 -36 4,29 6.16
Profit (loss) for the period 4,303,730.55 -64,539.03
SHAREHOLDERS’ EQUITY TOTAL 11 12,385,159.20 11,278,022.37
LIABILITIES
Long-term liabilities
Loans from credit institutions 12 22,500,000.00 24,000,000.00
Long-term liabilities total 22,500,000.00 24,000,000.00
Short-term liabilities
Loans from credit institutions 12 3,000,000.00 3,000,000.00
Income tax liabilities 462,066.80 -
Trade payables 56,800.19 29,072.77
Other payables 38,135.6 4 43,036.99
Accruals and deferred income 13 286,256.04 243,472.06
Short-term liabilities total 3,843,258.67 3,315,581.82
LIABILITIES TOTAL 26,343,258.67 27,315,581.82
SHAREHOLDERS’ EQUITY AND LIABILITIES
TOTAL
38,728,417.87 38,593,604.19
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Parent company statement of cash flows
EUR Note
1 Jan - 31 Dec
2022
1 Jan - 31 Dec
2021
Cash flows from operating activities
Profit before appropriations and tax 1,665,797.35 -2,442,900.00
Adjustments:
Financial income and expenses 5 -1,955,456.20 544,228.32
Other adjustments -44,630.90 16.25
Cash flows before changes in working capital -334,289.75 -1,898,655.43
Changes in working capital
Decrease (+) / increase (–) in trade and other
receivables
-239,680.53 - 65,115.64
Decrease (–) / increase (+) in trade and other
payables
2,065,610.05 76,592.02
Cash flows from operating activities before
financial items and taxes 1,491,639.77 -1,887,179.05
Interests and other financing expenses paid -596 200,95 -1,500,536.57
Income taxes paid - -146,870.71
Net cash flows from operating activities 895,438.82 -3,534,586.33
Cash flows from investing activities
Repayment of long-term loans - 507,474.15
Repayment of short-term loans - 1,392,525.85
Net cash flows from investing activities - 1,900,000.00
EUR Note
1 Jan - 31 Dec
2022
1 Jan - 31 Dec
2021
Cash flows from financing activities
Proceeds from share issue - 10,000,003.80
Capital return from the invested unrestricted equity
fund
-3,196,593.72 -
Repayment of short-term loans -1,500,000.00 -11,124,614.40
Proceeds from long-term borrowings 25 500 000,00 -
Repayment of long-term borrowings -25 500 000,00 -
Group contributions received 3,740,000.00 2,700,000.00
Net cash flows from financing activities -956,593.72 1,575,389.40
Net change in cash and cash equivalents -61,154. 9 0 -59,196.93
Cash and cash equivalents transferred from merger - 168,214.08
Cash and cash equivalents at 1 January 196,569.09 87,5 51.94
Cash and cash equivalents at 31 December 135,414.19 196,569.09
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Notes to the parent
company financial
statements
1. Parent company accounting principles
The financial statements of Orthex Corporation have been prepared in
accordance with the Finnish Accounting Act and Ordinance and other
statutes regulating the preparation of financial statements (Finnish
Accounting Standards, FAS). The financial statements are presented in euros.
The preparation of financial statements in conformity with regulations in
force and generally accepted accounting principles requires management
to make estimates and assumptions that affect the valuation of assets and
liabilities and reported amounts of revenues and expenses. Actual results
could differ from those estimates.
Transactions in foreign currencies
Transactions in foreign currencies are recorded at the rates of exchange
prevailing at the date of the transaction. At the end of the reporting period
balances in foreign currencies are translated using the exchange rate
prevailing at the end of the reporting period.
Income taxes
Income taxes consist of the aggregate current tax expense based on the
Finnish tax rules and adjustments to prior year taxes.
The parent company does not account for deferred taxes as a stand-
alone entity.
Receivables
Receivables are valued at the lower of book value and recoverable value.
Appropriations
Appropriations in the parent company balance sheet consist of received
group contributions.
Derivatives
Orthex Corporation has interest rate derivatives. Hedge accounting is not
applied to interest rate derivatives to the extent that the derivatives protect
the parent company’s interest rate risk. The fair values of the derivatives are
recorded in the balance sheet and changes in the fair value are recorded in
the financial items of the income statement. The realized profit or loss of
interest rate swaps hedging variable rate loans is presented in the income
statement in financial items. The fair values of interest rate swaps are
determined using a method based on the present value of future cash flows,
which is supported by market interest rates at the end of the reporting period
and other market information.
2. Net sales
Net sales
EUR 2022 2021
Administration services 840,000.00 741,000.00
3. Personnel costs and number of
employees
Personnel costs, book value
EUR 2022 2021
Wages and salaries 763,240.79 603,444.08
Pension costs 114,731.09 83,210.24
Other personnel costs 16,030.41 15,301.52
Tot al 894,002.29 701,955.84
CEO and Board remuneration, book value
EUR 2022 2021
CEO 437,761.00 508,089.00
Board of Directors 144,000.00 126,200.00
Number of employees
Average (FTE) 2022 2021
Employees 2 2
Tot al 2 2
The CEO and CFO of Orthex Group work in Orthex Corporation.
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4. Fees paid to company’s auditors
EUR 2022 2021
Audit fees 83,176.0 0 67,949.00
Other 19,032.03 447,448.50
Tot al 102,208.03 515,397. 5 0
5. Financial income and expenses
EUR 2022 2021
Interest and financial income from
group companies 596,288.04 935,949.53
Dividends received from group
companies 2,000,000.00 -
Other interest and financial income
from others -0,01 16.25
Total financial income 2,596,288.05 935,965.78
Interest and financial expenses to
others -640,831.85 -1,480,194.10
Total financial expenses -640,831.85 -1,480,194.10
Total financial income and
expenses
1,955,456.20 -544,228.32
8. Investments
EUR Holdings in subsidiaries
Receivables from
subsidiaries Total
Acquisition cost
Balance at 1 Jan 2021 11,258,583.95 9,938,133.78 21,196,717.73
Additions 15,410,000.00 - 15,410,000.00
Additions from merger 25,295,133.29 - 25,295,133.29
Decreases -26,668,583.95 - -26,668,583.95
Balance at 31 Dec 2021 25,295,133.29 9,938,133.78 35,233,267.07
Additions - 596,288.04 596,288.04
Balance at 31 Dec 2022 25,295,133.29 10,534,421.82 35,829,555.11
Shares in subsidiaries
Number of shares Domicile % of share capital Book value, EUR
Oy Orthex Finland Ab 135,170 Helsinki 100 25,295,133.29
Total, Dec 31 2022 25,295,133.29
During the financial year 2021, Oy Orthex Group Ab was merged to the parent company Orthex Corporation.
6. Appropriations
EUR 2022 2021
Group contribution received 3,100,000.00 2,400,000.00
Tot al 3,100,000.00 2,400,000.00
7. Income taxes
EUR 2022 2021
Current year taxes -462,066.80 -
Taxes from previous years - -21,639.03
Tot al -462,066.80 -21,639.03
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11. Shareholders’ equity
EUR 2022 2021
Share capital, Jan 1 80,000.00 2,500.00
Increase in share capital - 77,500.00
Share capital, Dec 31 80,000.00 80,000.00
Invested unrestricted equity fund, Jan 1 11,626,857.56 1,704,353.76
Capital return from the invested unrestricted equity fund -3,196,593.72 -
Increase in share capital - -77,500.00
Share issue - 10,000,003.80
Invested unrestricted equity fund, Dec 31 8,430,263.84 11,626,857. 5 6
Retained earnings, Jan 1 -428,835.19 - 364,296.16
Retained earnings, Dec 31 -428,835.19 - 364,296.16
Profit (loss) for the period 4,303,730.55 -64,539.03
Distributable earnings, Dec 31 12,305,159.20 11,198,022.37
Shareholders’ equity total, Dec 31 12,385,159.20 11,278,022.37
9. Receivables from subsidiaries
EUR 2022 2021
Sales receivables 171,452.22 -
Other receivables 2,2 31,327.48 3,16 2,42 2 .32
Tot al 2,402,779.70 3,162,422.32
10. Prepayments and accrued income
EUR 2022 2021
Value added taxes related to
the tax audit
265,828.75 -
Derivatives 92,766.00 -
Other items 2,074.11 1,345.71
Tot al 360,668.86 1,345.71
The value of the underlying asset of the derivatives in the financial
statements on 31 December 2022 was EUR 12,750,000.00, and the maturity
date of the derivatives is 22 December 2025.
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12. Long-term liabilities
EUR 31 Dec 2022 31 Dec 2021
Loans from credit institutions:
Payable in the next 12 months 3,000,000.00 3,000,000.00
Payable between one and five
years 22,500,000.00 24,000,000.00
13. Accruals and deferred income
EUR 31 Dec 2022 31 Dec 2021
Wages, salaries and social costs 108,193.07 89,628.18
Other 178,062.97 153,843.88
Tot al 286,256.04 243,472.06
14. Contingencies and pledged assets
EUR 31 Dec 2022 31 Dec 2021
Pledges given on behalf of
Group companies:
Enterprise mortgages 48,100,000.00 48,100,000.00
Property mortgages 10,192,329.66 10,192,32 9.66
Tot al 58,292,329.66 58,292,329.66
The company has a credit limit of EUR 7,000,000.00, of which
EUR 1,000,000.00 has been allocated to Oy Orthex Finland Ab and
EUR 878,023.08 to Orthex Sweden AB.
Contingent liabilities
Orthex Corporation was subject to a tax audit regarding the financial years
2020 and 2021. The company received in February 2022 a tax audit report
from the Finnish tax auhorities. The tax audit report included subsequent
taxes and tax increases amounting to a total of EUR 0.3 million, relating to
the VAT deductibility of IPO related costs. The company disagrees with the
interpretation made in the tax audit and has filed a claim for adjustment.
The company was requested to pay additional taxes in accordance with
the interpretations set out in the tax audit report. The company paid the
subsequent taxes and tax increases in June 2022 but has filed a claim for
adjustment to its taxation to the Assessment Adjustment Board of the
Finnish tax authority. The company has not recognised the subsequent taxes
and tax increases in the income statement.
15. Company shares
The company has 17,758,854 shares. The company’s share capital is
EUR 80,000.00. Each share entitles its holder to one vote at the Annual
General Meeting.
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Signatures for the Board of Directors’ report and financial statements
Espoo, 7 March 2023
Sanna Suvanto-Harsaae, Chair of the Board of Directors Satu Huber Jyrki Mäki-Kala
Markus Hellström Jens-Peter Poulsen Alexander Rosenlew, CEO
Auditor’s note
Our auditor’s report has been issued today.
Espoo, March
Ernst & Young Oy
Authorised Public Accountant Firm
Johanna Winqvist-Ilkka
Authorised Public Accountant
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Auditor’s report
To the Annual General Meeting of Orthex Corporation
Report on the Audit of the
Financial Statements
Opinion
We have audited the financial statements of Orthex Corporation (business
identity code 2727990-2) for the year ended 31 December 2022. The financial
statements comprise the consolidated balance sheet, income statement,
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 as well as its financial performance and its cash
flows in accordance with International Financial Reporting Standards (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 accordance with the laws
and regulations governing the preparation of financial statements in
Finland and comply with statutory requirements.
Our opinion is consistent with the additional report submitted to the Board
of Directors.
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 Financial Statements section of
our report.
We are independent of the parent company and of the group companies
in accordance with the ethical requirements that are applicable 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 companies are in
compliance with laws and regulations applicable in Finland regarding these
services, and we have not provided any prohibited 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 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.
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were
of most significance in our audit of the financial statements 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.
We have fulfilled the responsibilities described in the Auditor’s responsibilities
for the audit of the financial statements section of our report, including in
relation to these matters. Accordingly, our audit included the performance
of procedures designed to respond to our assessment of the risks of
material misstatement of the financial statements. The results of our audit
procedures, including the procedures performed to address the matters
below, provide the basis for our audit opinion on the accompanying financial
statements.
We have also addressed the risk of management override of internal controls.
This includes consideration of whether there was evidence of management
bias that represented a risk of material misstatement due to fraud.
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Key Audit Matter How our audit addressed the Key Audit Matter
Valuation of goodwill
We refer to note to the consolidated financial statements.
The value of goodwill at the date of the financial statements amounted to 22.3 million euros, representing
27.2% of the group’s total assets and 74.9% of the group’s equity.
Valuation of goodwill is based on management’s estimates about the value-in-use calculations of the
group’s cash generating units.
There are a number of underlying assumptions used to determine the value-in-use of a cash generating
unit, including the development of revenue and profitability and the discount rate applied to cash flows
estimates. The results of value-in-use calculations may vary significantly when the underlying assumptions
are changed. Changes in the
above-mentioned individual assumptions may result in an impairment of goodwill.
Valuation of goodwill was a key audit matter because the assessment process requires significant
management judgements and forecasts to be made, because it is based on assumptions related to market
and economic conditions extending far into the future and because the amount of goodwill is material to the
consolidated financial statements.
This matter was also a significant risk of material misstatement as defined by EU Regulation No 537/2014,
point (c) of Article 10(2).
Our audit procedures to address the risk of material misstatement regarding valuation of goodwill included
among others:
• involving our valuation specialists to assist us in assessing the appropriateness of the methodologies,
impairment calculations and underlying assumptions applied by management in the impairment testing;
• testing the mathematical accuracy of the impairment calculations;
• comparing the key assumptions applied by management in the impairment testing to approved budgets
and forecasts, information available in external sources and our independently calculated industry
averages such as for the weighted average cost of capital used in discounting cash flows;
• comparing the outcome of the impairment test to the market capitalization of Orthex Oyj; and
• comparing the principles applied by management in the impairment testing to the requirements set out in
the standard IAS 36 Impairment of Assets.
We also assessed the appropriateness of the disclosures regarding impairment testing made in the notes to
the consolidated financial statements.
Revenue recognition
We refer to note to the consolidated financial statements.
According to the accounting policy presented in the consolidated financial statements, revenue from the
sales of goods is recognized at the point in time when control of the goods is transferred to the customer.
Cash and volume discounts granted to customers are taken into account when determining the amount of
revenue recognized.
The revenue of Orthex Group is mainly generated from sales of household products to retailers.
There are multiple varying contractual terms across the group’s markets regarding the above-mentioned
discounts which could lead to misstatement of revenue, either due to fraud or error. The group focuses
on revenue as a key performance measure which could create an incentive for revenue to be recognized
prematurely. Due to these circumstances, revenue recognition was determined to be a key audit matter.
This matter was also a significant risk of material misstatement as defined by EU Regulation No 537/2014,
point (c) of Article 10(2).
Our audit procedures to address the risk of material misstatement regarding revenue recognition included
among others:
• assessing the compliance of the group’s accounting policies over revenue recognition, including those
related to discounts, with the applicable accounting standards;
• analyzing a sample of contracts with customers and comparing the terms determined in them to the terms
used in the group’s calculations regarding discounts;
• testing the mathematical accuracy of the group’s calculations of discounts and assessing the adequacy of
liabilities recognized based on those calculations;
• testing the accuracy of revenue recognition by performing both analytical procedures and tests of details
on a transaction level before and after the date of the financial statements; and
• analyzing the timing of revenue recognition based on delivery lead times.
We also assessed the appropriateness of the disclosures regarding revenue recognition made in the notes
to the consolidated financial statements.
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Key Audit Matter How our audit addressed the Key Audit Matter
Valuation of inventories
We refer to note to the consolidated financial statements.
The value of inventories at the date of the financial statements amounted to 14.3 million euros, representing
17.5% of the group’s total assets and 48.1% of the group’s equity.
Inventories are valued at the lower of cost or net realizable value. Inventories are presented net of an
impairment loss allowance recognized for slow-moving or obsolete inventories or for inventories that have
an otherwise lower net realizable value than cost.
Valuation of inventories was a key audit matter because the carrying value of inventories is material to the
consolidated financial statements and because valuation of inventories involves management’s judgment
and estimates in order to determine the amount of slow-moving or obsolete inventories as well as the net
realizable value of inventories.
Our audit procedures included among others:
• assessing the group’s accounting policies over inventory valuation and comparing them to the applicable
accounting standards;
• comparing unit values of selected inventory items to sales prices;
• testing exceptional inventory values using data analysis;
• assessing the assumptions applied and the calculations prepared by management regarding slow-moving
or obsolete inventories and the expected demand and net realizable value of inventory items; and
• testing the mathematical accuracy of the impairment loss allowance calculations prepared by
management and assessing the adequacy of the allowances recognized.
We also assessed the appropriateness of the disclosures regarding valuation of inventories made in the
notes to the consolidated financial statements.
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Responsibilities of the Board of Directors and the
Managing Director for the Financial Statements
The Board of Directors and the Managing Director are responsible for the
preparation of consolidated financial statements that give a true and fair
view in accordance with International Financial Reporting Standards (IFRS) as
adopted by the EU, and of financial statements 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 Managing Director are also responsible for such
internal control as they determine is necessary to enable the preparation of
financial statements that are free from material misstatement, whether due
to fraud or error.
In preparing the financial statements, the Board of Directors and the
Managing Director are responsible for assessing the parent company’s and
the group’s ability to continue as going concern, disclosing, as applicable,
matters relating to going concern and using 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 on whether the financial
statements as a whole are free from material misstatement, 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 accordance with good auditing practice will always
detect a material misstatement when it exists. Misstatements can arise from
fraud or error and are considered material if, individually or in aggregate, they
could reasonably be expected to influence the economic decisions 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 skepticism throughout the
audit. We also:
• Identify and assess the risks of material misstatement of the financial
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 basis for our opinion. The risk of not
detecting a material misstatement resulting from fraud is higher than for
one resulting from error, as fraud may involve collusion, forgery, intentional
omissions, misrepresentations, or the override of internal control.
• Obtain an understanding of internal control relevant to the audit 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 disclosures made
by management.
• Conclude on the appropriateness of the Board of Directors’ and the
Managing Director’s use of the going concern basis of accounting and
based on the audit evidence obtained, whether 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
attention in our auditor’s report to the related disclosures in the financial
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, future 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 financial
information of the entities or business activities within the group to express
an opinion on the consolidated financial statements. We are responsible for
the direction, supervision and performance of the group audit. We remain
solely responsible for our audit opinion.
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ANNUAL REVIEW SUSTAINABILITY GOVERNANCE FINANCIAL REVIEW
Annual and Sustainability Report 2022
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 regarding 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 governance,
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 disclosure 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 communication.
Other Reporting Requirements
Information on our audit engagement
We were first appointed as auditors by the Annual General Meeting on May
7, 2009 and our appointment represents a total period of uninterrupted
engagement of 14 years. Orthex Oyj has been a public interest entity since
March 25, 2021.
Other information
The Board of Directors and the Managing Director are responsible for the
other information. The other information comprises the report 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 responsibility
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 obtained in the audit, or otherwise appears
to be materially misstated. With respect to report of the Board of Directors,
our responsibility 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 Directors is
consistent with the information in the financial statements and the report of
the Board of Directors has been prepared in accordance 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 conclude that there is
a material misstatement of this other information, we are required to report
that fact. We have nothing to report in this regard.
Espoo, March 7, 2023
Ernst & Young Oy
Authorized Public Accountant Firm
Johanna Winqvist-Ilkka
Authorized Public Accountant
