BOARD OF DIRECTORS’ REPORT AND
FINANCIAL STATEMENTS 2020
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TABLE OF CONTENTS
GROUP KEY FIGURES..................................................................................3
CEO ROBIN LINDAHL .................................................................................4
BOARD OF DIRECTORS’ REPORT 1 JANUARY–31 DECEMBER 2020 ..5
OPERATING ENVIRONMENT ...................................................................................5
FINANCIAL RESULT ...................................................................................................5
BUSINESS SEGMENTS ..............................................................................................6
OTHER GROUP EVENTS DURING THE FINANCIAL PERIOD ...............................9
CORPORATE RESPONSIBILITY ................................................................................9
CHANGES IN GROUP STRUCTURE .........................................................................9
CHANGES IN TAALERI’S EXECUTIVE MANAGEMENT TEAM ..............................9
ANNUAL GENERAL MEETING 2020 .......................................................................9
TAALERI’S PERSONNEL ......................................................................................... 10
SHARES AND SHARE CAPITAL ............................................................................. 11
CAPITAL ADEQUACY OF TAALERI ..................................................................... 13
TAALERI’S RISK MANAGEMENT AND RISK POSITION ...................................... 14
MATERIAL EVENTS AFTER THE FINANCIAL PERIOD......................................... 15
OUTLOOK ................................................................................................................ 15
BOARD OF DIRECTORS´ DIVIDEND PROPOSAL ............................................... 15
KEY FIGURES ........................................................................................................... 16
GROUP FINANCIAL STATEMENTS ..........................................................20
CONSOLIDATED INCOME STATEMENT .............................................................21
CONSOLIDATED BALANCE SHEET .....................................................................22
CONSOLIDATED STATEMENT OF CASH FLOWS .............................................. 23
CHANGES IN GROUP EQUITY CAPITAL ..............................................................24
SEGMENT INFORMATION ....................................................................................25
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS ...........................28
ACCOUNTING POLICIES FOR PREPARING
THE CONSOLIDATED FINANCIAL STATEMENTS .......................................................... 28
NOTES TO THE INCOME STATEMENT ........................................................................... 37
NOTES TO THE BALANCE SHEET ................................................................................... 43
NOTES CONCERNING RISK POSITION .......................................................................... 55
OTHER NOTES ................................................................................................................... 71
PARENT COMPANY FINANCIAL STATEMENTS ......................................... 77
NOTES TO THE PARENT COMPANY FINANCIAL STATEMENTS ...................... 80
SIGNATURES FOR THE FINANCIAL STATEMENTS
AND BOARD OF DIRECTORS’ REPORT ....................................................... 96
AUDITOR’S REPORT ........................................................................................... 97
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GROUP KEY FIGURES
2020 2019
Long-term
target
Earnings key figures
Continuing earnings, MEUR 59.2 55.3
Growth in continuing earnings, % 7.1 6.3 > 15.0
Income, MEUR 69.4 67. 2
Operating profit, MEUR 17.5 16.5
Operating profit, % 25.3 24.5 > 20.0
Profit for the period, MEUR 13.1 11. 5
Return on equity*, % 10.1 9.3 > 15.0
Balance sheet key figures
Equity ratio, % 49.7 46.6 > 30.0
Group’s capital adequacy ratio, % 216.2 207.4**
Per share key figures
Earnings/share, EUR 0.46 0.39
Equity/share, EUR 4.75 4.45
Share closing price, EUR 8.12 8.42
Other key figures
Cost/income ratio excluding investment operations 76.7 83.7
Cost/income ratio 74.6 74.7
Number of full-time employees, average 192 186
Market capitalization, MEUR 229.8 238.3
Assets under management, BEUR 7.6 7.1
Guaranty insurance portfolio, BEUR 1.8 1.8
* Annualized
** Capital adequacy ratio includes the Board of Director’s dividend proposal for 2019, of which the Board of Directors has decided on 18 February
2021 not to distribute EUR 4.5 million
Income statement items are compared with figures for the corresponding period last year. The balance sheet is compared to the
situation at the end of 2019, unless otherwise stated.
TAALERI GROUP 1.1.–31.12.2020
• Income increased by 3.3 per cent to EUR 69.5 (67.2) million.
• Continuing earnings grew 7.1 per cent to EUR 59.2 (55.3) million. The continuing earnings of Wealth Management decreased
by 3 per cent, but the continuing earnings from assets under management increased by 8 per cent. The continuing earnings of
the Energy segment doubled to EUR 9.2 (4.6) million and the Insurance segment’s continuing earnings increased by 21 per cent
to EUR 14.6 (12.1) million.
• Performance fees totalled EUR 7.1 (5.2) million.
• Income from investment operations was EUR 3.2 (6.7) million.
• Operating profit increased by 6.6 per cent to EUR 17.6 (16.5) million, or 25.3 (24.5) per cent of income.
• Earnings per share were EUR 0.46 (0.39).
• Assets under management grew 7.3 per cent to EUR 7.6 (7.1) billion.
• Insurance exposure totalled EUR 1.8 (1.8) billion.
• The Board of Directors’ proposes a dividend of EUR 0.32 per share for 2020. The Board of Directors’ has decided that the
unpaid dividend of EUR 0.16 for 2019 will not be paid.
GROUP KEY FIGURES
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CEO ROBIN LINDAHL
I would like to warmly
thank our staff for
their committed and
hard work and our
customers for their
trust in us during these
exceptional times.
Taaleri’s result for the second half of 2020 was strong,
driven by the Energy and Insurance segments. From July to
December, the Group’s income increased by 18.5 per cent to
EUR 43.3 million and operating profit by 46 per cent to EUR
14.8 million. The result was improved especially by investment
returns, which strengthened towards the end of the year.
All in all, we can be satisfied with Taaleri’s year in a
challenging operating environment. The Group’s income
increased slightly to EUR 69.5 million, and operating profit
increased to EUR 17.6 million, representing 25 per cent of
income.
For the Wealth Management segment, the second half
of the year was weaker than in the previous year due to the
COVID-19 pandemic, but the trend took a positive turn
towards the end of the year. Continuing earnings from assets
under management grew, but continuing earnings other than
those based on assets under management remained below
the previous year’s level. During July–December, assets under
management took an upward turn, and in the last quarter
sales increased to the best figures of the year. The segment’s
expense awareness remained good in the second half of the
year.
I am especially pleased that in the SFR survey, institutional
investors chose our wealth management as the best in Finland
in challenger category. Particularly, investors appreciated our
customer service, vision and resources.
Launched in June, our digital wealth management service
specialising in impact investment has been well received by
existing and new customers. The service offers all investors
the opportunity to invest in new projects benefiting the
environment and society through a widespread ETF portfolio.
In accordance with our strategy, we continued the
development of our real estate business into a separate
operational unit. Our goal is to significantly increase the
assets under management of real estate funds by seeking
growth in new scalable products and expanding the investor
base. During the financial year we launched our first special
investment fund that invests in real estate, called Taaleri Real
Estate. The fund started its investment activities towards the
end of the year by acquiring rental homes, which are among
the safest real estate categories in the COVID-19 market
environment.
The Energy segment had a strong year and its continuing
earnings doubled from last year. The continuing earnings for
the second half of the year increased by 57 per cent to EUR
5.1 million, and the operating result showed a profit. The
SolarWind II fund, which invests in industrialscale wind and
solar power plants, reached EUR 320 million in investment
commitments in November. The fund has been invested in by
many major domestic and international institutional investors,
and I am very proud of the international breakthrough
achieved by our skilled Energy team. The fund will remain
open to investors until June 2021, and its maximum size is
EUR 400 million.
In the Insurance segment, Garantia turned in its best
insurance technical result ever. In the second half of the year,
the company’s income increased by 26 per cent to EUR 13.6
million and operating profit by 39 per cent to EUR 9.2 million.
The combined ratio for the financial year was 37 per cent and
the excellent result was due to successful underwriting, low
claims incurred and low operating expenses. The investment
return increased towards the end of the year and was
moderate, given the chosen level of risk. Garantia started
underwriting residential mortgage guarantees with a new
banking partner. The issuance of guarantees to OP Financial
Group’s mortgage customers began at the beginning of
October.
The COVID-19 pandemic is not over, although vaccines
promise to alleviate the situation this year. I would like to
warmly thank our staff for their committed and hard work and
our customers for their trust in us during these exceptional
times. Despite the unpredictability of the operating
environment, we are determined to continue developing and
implementing the company’s strategy. Our goal this year too
is to offer our customers profitable investments for the benefit
of the environment and society alike.
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The renewable
energy market
developed well,
and we see
especially the solar
and wind power
markets continuing
to grow.
BOARD OF DIRECTORS’ REPORT
1 JANUARY–31 DECEMBER 2020
OPERATING ENVIRONMENT
The COVID-19 pandemic had global public health and
economic impacts in 2020. Central banks and governments
responded to the crisis with rapid and substantial stimulus
measures. Central banks lowered interest rates and launched
bond purchase programmes which, despite the weak
economic situation, kept financing conditions rather good
and helped avert a global wave of bankruptcies. Governments
introduced direct and indirect support measures. Investments
in renewable energy were placed at the heart of the European
Union’s EUR 750 billion support package.
In the investment market, the year was unstable. The
COVID-19 pandemic initially led to a sharp decline in stock
prices, but the largescale monetary stimuli in the United States
and Europe and the positive news on the development of
the COVID-19 vaccine led to a reversal in price development.
At the end of the year, many stock exchange prices rose to
record levels, but regional differences were large.
In the real estate investment market, transaction volumes
have been at a record high in recent years. In the spring the
COVID-19 pandemic temporarily stopped the transaction
market almost completely, but towards the end of the year
the market clearly picked up. Uncertainties in the user market
directed capital to the safest real estate categories: housing,
public real estate and logistics.
The renewable energy market developed well, and we see
especially the solar and wind power markets continuing to grow.
The effects of the pandemic on the Finnish economy
began to be felt in the first quarter of the year, and in the
second quarter the gross domestic product reduced markedly
compared to the same time period the previous year.
Although the economy showed signs of recovery from the
third quarter on, preliminary estimates have it that the gross
domestic product fell by 3–4 per cent over the previous year.
The strong financial position of Finnish enterprises, their
proven ability to adapt to the conditions and the support
measures taken by the public sector towards enterprises
contributed to the success of Finnish enterprises under the
circumstances. Even the Finnish housing market was hardly
affected by the pandemic crisis. The housing market slowed
down temporarily in the spring, but the market quickly
returned to normal during the summer.
FINANCIAL RESULT
INCOME AND OPERATING PROFIT
EUR million 2020 2019 Change, %
Group income 69.5 67.2 3.4%
Wealth
Management 46.7 44.5 4.7%
Insurance 17.2 21.3 -19.2%
Energy 9.2 4.6 99.5%
Other
operations 0.1 -1.6 neg
Eliminations -3.7 -1.7
EUR million 2020 2019 Change, %
Group operating
profit/loss 17.6 16.5 6.3%
Wealth
Management 12.1 11. 8 3.2%
Insurance 9.9 12.7 -21.9%
Energy 0.2 -2.6 neg
Other
operations -4.7 -5.3 11.9 %
The Group’s share of the result of associated companies is taken
into account in the segmentspecific income. Segment information is
presented on page 25.
The Group’s income in January–December 2020 increased by
3.3 per cent to EUR 69.5 (67.2) million. Continuing earnings
grew 7.1 per cent to EUR 59.2 (55.3) million in 2020, which
is below the Group’s long-term target (over 15 per cent
growth). The continuing earnings of Energy and Insurance
segments outperformed the long-term targets, but Wealth
Management did not meet the long-term target. The Group’s
fee and commission income was EUR 49.2 (46.1) million,
of which the performance fees accounted for EUR 7.1 (5.2)
million. Net income from insurance operations was EUR 17.2
(21.3) million, of which net income from guaranty insurance
operations totalled EUR 14.6 (12.0) million. The net return on
investments in insurance operations totalled EUR 2.5 (9.2)
million, and the return on investments, at fair value, was 1.8
(8.1) per cent.
Taaleri Group’s investment operations yielded EUR 3.2
(6.7) million. Taaleri Group’s investment operations without
Garantia’s investment operations yielded EUR 0.6 (-2,5)
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million, which includes a fair value change of EUR -2.3 (-4.3)
million from the Fellow Finance ownership.
The Group’s operating profit was EUR 17.6 (16.5) million,
which represents a growth of 6.6 per cent. The operating
profit represented 25.3 (24.5) per cent of the Group’s income
and exceeds the Group’s long-term operating profit target
(more than 20 per cent).
The administrative costs totalled EUR 34.0 (33.7) million.
Personnel costs totalled EUR 25.2 (24.2) million, which
included variable salaries of EUR 5.3 (5.4) million. Other
administrative expenses totalled EUR 8.8 (9.5) million and
other operating expenses EUR 5.9 (5.2) million.
Profit for the financial period 2020 amounted to EUR 13.1
(11.5) million and the comprehensive income EUR 12.9 (13.2)
million. The Group’s return on equity was 10.1 (9.3) per cent
and below the Group’s long-term target (more than 15 per
cent). Return on equity remained weak due to the Group’s
high capitalization.
TAALERI’S BALANCE SHEET, INVESTMENTS AND
FINANCING
The balance sheet total of the Taaleri Group was EUR 268.0
(269.7) million. The Group’s cash and cash equivalents
totalled EUR 25.8 (20.1) million and investments EUR 194.8
(173.5) million, corresponding to 72.7 (64.3) per cent of the
Group’s balance sheet total.
The Group’s interest-bearing liabilities amounted to
EUR 64.7 (75.6) million, which consisted of EUR 34.9 (34.9)
million in Taaleri Plc bond programs, EUR 14.9 (25.9) million
in liabilities to credit institutions and the ten-year Tier 2 bond
at EUR 14.8 (14.8) million issued by Taaleri Plc during the
financial year 2019. Liabilities totalled EUR 134.8 (144.0)
million and equity stood at 133.2 (125.7) million.
The equity ratio of Taaleri Group remained strong at 49.7
(46.6) per cent and exceeded the Group’s long-term target 30
per cent.
BUSINESS SEGMENTS
Taaleri manages its business through three segments: Wealth
Management, Insurance and Energy. Operations that do not
belong to the segments are presented in Other operations.
WEALTH MANAGEMENT
Taaleri’s Wealth Management segment offers wealth
management services and investment solutions to private
individuals and companies. In addition to services and
allocation solutions based on the individual needs of our
customers, our offering includes all traditional asset classes
on the stock and money markets. We also offer various
opportunities for co-investment and private equity investments.
Wealth
Management,
EUR million 2020 2019 Change, %
Wealth
Management fees 37. 5 38.8 -3.4%
Performance fees 7.1 5.2 37.0%
Investment
operations 2.1 0.6 261.7%
Income 46.7 44.5 4.7%
Operating profit 12.1 11.8 3.2%
Full-time
personnel, average 118 116
Wealth Management’s income increased by 4.7 per cent
and was EUR 46.7 (44.5) million in January–December 2020
due to performance fees and gains from disposals. Wealth
Management’s continuing earnings suffered from corona virus
pandemic and totalled EUR 37.5 (38.8) million. Fee income
arising from assets under management grew eventually
8 per cent from last year’s level after the declining trend at the
beginning of the year, but transaction-based income turned
to be lower than last year. Performance fees totalled EUR 7.1
(5.2) million and were accrued from several funds during the
financial year. Investment operations from developed wind
projects generated profit of EUR 2.1 (0.6) million.
Wealth Management’s personnel expenses decreased
by 2.7 per cent and totalled EUR 13.6 (14.0) million and
other administrative expenses totalled EUR 12.1 million. Total
expenses were EUR 34.5 (32.8) million.
Wealth Management’s operating profit totalled EUR 12.1
(11.8) million, which corresponds to 26 (26) per cent of income.
Assets under management by Wealth Management grew
by 6.0 per cent to EUR 7.1 (6.7) billion. Growth was strongest
in the private equity funds and other assets that generate
continuing earnings. Assets under management that generate
continuing earnings grew 4.1 percentage points more than
total assets under management.
Assets under
management,
EUR million 31.12.2020 31.12.2019 Change, %
Assets under
management 7,121 6,715 6.0%
Mutual funds 1,209 1,023 18.2%
Private equity
funds 1,282 1,223 4.9%
Wealth
management 4,629 4,469 3.6%
During 2020, new investment commitments of EUR 153
million were raised in Taaleri Biorefinery, Taaleri SolarWind
II Feeder Fund, Taaleri Debt Funds I, Taaleri Real Estate and
Taaleri Impact. The Taaleri Mikro Markka and Mikro Rhein
-funds were opened for new subscriptions, of which Taaleri
Mikro Markka was returned to soft closed due to high
demand immediately after the first subscription date. Taaleri
announced Finland’s first digital asset management service
specializing in impact investment, which makes impact
investing accessible to everyone.
Taaleri Wealth Management was awarded the best ratings
in challengers-category in SFR’s Institutional Investor Survey.
The survey interviews representatives from some 100 of
Finland’s largest institutional investors. Taaleri received top
grades for customer service and for taking an active view on
markets, among other mentions. Taaleri’s resources were also
rated the best.
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INSURANCE
The Insurance segment includes Garantia Insurance Company
Ltd., an insurance company specializing in guaranty insurance.
The objective of Garantia is to modernize collateral practices
and provide customers with easy and cost-effective guaranty
solutions and new business opportunities through digital
channels. The company’s business is divided into guaranty
insurance and investment operations.
Insurance,
EUR million 2020 2019 Change, %
Net income from
guaranty insurance
operations 14.6 12.1 21.5%
- of which
Earned premi-
ums, net 14.9 13.4 11.0 %
- of which
Claims in-
curred, net -0.3 -1.4 -80.1%
Net income
from investment
operations 2.5 9.2 -72.5%
Income 17.2 21.3 -19.2%
Operating
expenses -5.5 -6.4 -13.8%
Allocation of
financing expenses -1.7 -2.2 -19.7%
Operating profit
before valuations 9.9 12.7 -21.9%
Change in
fair value of
investments 0.2 1.8 -89.4%
Result at fair value
before tax 10.1 14.5 -30.4%
Insurance,
EUR million 2020 2019 Change, %
Claims ratio, % 4.0% 12.1% -8.1 pp.
Expense ratio, % 32.7% 43.0% -10.3 pp.
Combined ratio, % 36.7% 55.1% -18.4 pp.
Return on
investments at fair
value, % 1.8% 8.1% -6.3 pp
Number of full-time
personnel, average 21 25 -4
Insurance,
EUR million 31.12.2020 31.12. 2019 Change, %
Investment port-
folio, fair value,
MEUR 159 151 5.8%
Guaranty insurance
portfolio, MEUR 1,817 1,837 -1.1%
Solvency ratio, % 229.4% 231.8% -2.4 pp.
Credit rating A- A- -
In January–December 2020, the income of the Insurance
segment was EUR 17.2 (21.3) million. The decrease in
segment revenue was due to decreased net return from
investment operations, attributable to the exceptional
investment environment caused by the COVID-19 pandemic.
Net income from investment operations in the financial year
totaled EUR 2.5 (9.2) million. Net income from insurance
operations in stead increased by 21.5 per cent to EUR 14.6
(12.1) million. The growth in net income from insurance
operations was due to growth in net premiums earned and
diminished claims incurred compared to the previous year.
The guarantee insurance portfolio decreased by 1.1
per cent from the end of the previous year to EUR 1,817
(1,837) million euros. The decrease was due to the segment’s
decision to discontinue the issuance of new commercial
guarantees related to the construction industry as of January
1, 2020. However, the increase in the guarantee portfolio
in other product groups was sufficient to compensate
for the decrease in the volume of guarantees caused by
discontinuation of commercial guarantees in the construction
sector.
Operating expenses amounted to EUR 5.5 (6.4) million.
Reduced operating expenses were an outcome of executed
strategic rationalization measures and diminished personnel
expenses. On average, the Insurance segment employed 21
(25) people during the financial year.
The Insurance segment’s operating profit before
valuations was EUR 9.9 (12.7) million. Result at fair value
before tax was EUR 10.1 (14.5) million.
INSURANCE OPERATIONS
In January–December 2020, gross premiums written
decreased 4.1 per cent to EUR 19.0 (19.8) million, but earned
premiums increased by 11.0 per cent to EUR 14.9 (13.4)
million. The decrease in premiums written was the result
of Garantia’s decision to cease underwriting construction
sector related commercial bonds as of 1 January 2020. The
development of premiums written from other product groups
was, however, positive. Regarding premiums from residential
mortgage guaranties, the year came up successful following
the good development seen in the housing market and the
new distribution channel obtained during the latter part of
the year. The demand for corporate loan guaranties was
supported by the accelerated demand for corporate financing
in the spring.
Gross exposure of the guaranty insurance portfolio was
EUR 1,817 (1,837) million at the end of 2020. Of the guaranty
insurance exposure outstanding at the end of the year,
consumer exposure made up 54 (45) per cent and corporate
exposure made up 46 (55) per cent. The consumer exposure
includes residential mortgage guaranties and rent guarantees
underwritten to private households. The corporate exposure
is comprised of corporate loan guaranties, commercial bonds,
and other business-related guaranties. During the financial
year, for the first time, the amount of consumer exposure
exceeded that of corporate exposure.
Claims incurred amounted to EUR 0.3 (1.4) million during
the financial year. Claims ratio decreased to 4.0 (12.1) per
cent, and the ratio of claims incurred as a percentage of the
guaranty insurance portfolio came down to 0.03 (0.09) per
cent. No major claims occurred during the financial year, and
the level of claims incurred remained low despite the poor
development of the general economy.
The expense ratio of insurance operations decreased in
2020 to 32.7 (43.0) per cent, following increased premiums
earned and diminished operating expenses. Combined ratio
was 36.7 (55.1) per cent.
INVESTMENT ACTIVITY
Net income from investment operations in 2020 was EUR 2.5
(9.2) million and it mainly consisted of interest income and
fair value changes. In addition, the change in the fair-value
investment assets recognised in comprehensive income
before taxes was EUR 0.2 (1.8) million. Hence, the return on
investment at fair value totalled EUR 2.7 (11.0) million, or 1.8
(8.1) per cent. The investment portfolio was valued at EUR 159
(151) million at the end of the financial year.
RISK POSITION
The principal risks associated with the Insurance segment’s
business operations are the credit risk arising from guaranty
insurance operations and the market risks concerning
investments assets.
The risk position of insurance operations remained stable
in 2020. Total guaranty insurance exposure remained close
to the level seen the previous year. The share of consumer
exposure as a proportion of total guaranty insurance exposure
increased, and the share of corporate exposure decreased.
Investment-grade exposures, or exposures rated AAA…
BBB-, accounted for 15.6 (12.6) per cent of the corporate
guaranty portfolio. Insurance exposure rated BB- or above
accounted for 73.2 (72.4) per cent. The share of the weak
rating classes of C+ or lower increased slightly and stood
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at 3.7 (1.7) per cent. The principal sectors in the corporate
guaranty insurance portfolio were construction at 35.4 (50.9)
per cent and manufacturing at 24.7 (21.0) per cent. None
of the other sectors exceeded 10 per cent of the portfolio.
44.8 (55.3) per cent of the construction sector exposure is
reinsured.
As part of the Taaleri Group, Garantia falls within the
scope of the large exposure regulation regime specified in
the EU Capital Requirements Regulation. At the end of 2020,
Garantia’s largest single counterparty exposure amounted to
19.8 (21.2) per cent of Taaleri Group’s own funds.
In investment operations, the level of risk was slightly
reduced from the previous year. Fixed income investments
(incl. cash and bank balances) made up 86.4 (84.4) per cent,
equity & private equity investments 12.5 (14.4) per cent, and
real-estate investments 1.1 (1.2) per cent of the investment
portfolio. The fixed income investments mainly consist of
investments in bonds of Finnish companies and Nordic
credit institutions with strong creditworthiness. The share of
investment-grade fixed income investments was 66.5 (54.5)
per cent. The modified duration of fixed income investments
was 3.5 (3.3).
CREDIT RATING
No changes took place in Garantia’s credit rating or its outlook
during 2020. On 14 October 2020, Standard & Poor’s Global
Ratings (S&P) confirmed Garantia Insurance Company Ltd.’s
Issuer Credit Rating (ICR), Financial Strength Rating (FSR)
and the Financial Enhancement Rating (FER) reflecting the
company’s solvency and willingness to meet its financial
commitments at A- with stable outlook.
ENERGY
The Energy segment includes Taaleri Energia, which is a
renewable energy project developer and fund manager. It
has a significant team in European scale focusing on wind
and solar energy, with solid engineering expertise, among
other things. The company is currently raising funds in its fifth
renewable energy fund. Taaleri Energia is one of the largest
private equity investors in the Finnish wind power market:
Taaleri Energia manages a 2.8-gigawatt wind and photovoltaic
portfolio, development projects included. The funds managed
by Energy are Wind Fund II–III, SolarWind I and SolarWind II.
In addition, Taaleri Energia manages the investment in Nyby
and Myllykangas wind farms on a mandate basis.
Energy segment,
EUR million 2020 2019 Change, %
Income 9.2 4.6 99.5%
Operating profit
before allocating
the financing
expenses 1.8 -1.4 neg
Allocation
of financing
expenses -1.6 -1.2 38.1%
Operating profit 0.2 -2.6 neg
Full-time
personnel, average 28 23
Energy segment’s income in January-December 2020
doubled to EUR 9.2 (4.6) million. The operating profit before
allocating the financing expenses was EUR 1.8 (-1.4) million
and operating profit was EUR 0.2 (-2.6) million. Number of
personnel in Energy segment increased by nine persons in
2020.
Taaleri Energia successfully exited its first wind project
in the U.S. in June. The ready to build project has been
developed in-house by Taaleri Energia. Taaleri Energia sold 93
per cent of Truscott Gilliland East -wind project to the Taaleri
SolarWind II -fund, AIP, Mutual Pension Insurance Company
Ilmarinen and Akuo Energy. Taaleri Energia will remain as
a minority owner with a seven per cent equity stake in the
project. The transaction had no result impact on the 2020
result, as the profit impacts from the project will be gradually
booked later.
Taaleri Energia’s newest international renewable energy
fund, Taaleri SolarWind II, exceeded the target size as the
commitments reached EUR 320 million at the end of the
period under review. The maximum size of the fund is EUR
400 million and the fundraising period has been extended
to June 2021. The third-close investors include the European
Bank for Reconstruction and Development (EBRD), the
Finnish Church Pension Fund, Obligo Global Infrastuktur II
Fund, YLE Pension Fund and the Nordic Environment Finance
Corporation (NEFCO). The fund has already made investment
decisions on wind farms in Finland, Norway, Poland and the
US, as well as PV solar plant in Spain. All investments are
currently under construction except for Spain.
The SolarWind I -fund’s projects have been developing
predominantly according to plan. The fund’s first investment,
the 158-MW Čibuk wind farm – the biggest in Serbia, received
an interim Feed-in Tariff for two months as a result of local
State of Emergency declared due to the COVID-19 pandemic.
The fund’s second investment, the 200-MW Baynouna solar
power project in Jordan, was delayed due to the COVID-19
pandemic restrictions on local labour movements but it
reached operational status in November. The fund’s third
investment, the 23-MW Slageryd wind farm in Sweden, is
already producing electricity and commissioning is expected
by the end of Q1 2021. The fund’s fourth investment, the 13.5-
MW Målajord wind farm project in Sweden, is currently under
construction.
A group of Korean institutional investors lead by Hana
Financial Investments and Korea Investments & Securities
has bought Nyby´s and Myllykangas wind farms from Taaleri
Private Equity Funds. Taaleri Energia is managing these
investments on behalf the new owners in the future.
OTHER OPERATIONS
Other operations include the Group administration services
of Taaleri Plc that support the segments and the investments
on the Group’s own balance sheet, which are done primarily
through Taaleri Sijoitus Oy. In 2020, investments were divided
into strategic and non-strategic investments. On 31 December
2020, Taaleri had a total of EUR 45.2 million in investments, of
which EUR 15.3 million were strategic and EUR 29.9 million
non-strategic. Investments are described in more detail under
segment information on page 38.
Strategic investments include investments that support
Taaleri’s core business and development of business
segments. Such investments include for example seed
investments in new funds. Existing strategic investments
include investments in Fintoil Oy, which produces tall oil in the
near future, the real estate development company Sepos Oy,
the real estate company Munkkiniemi Group Oy and Turun
Toriparkki Oy.
Non-strategic investments include shares in Fellow
Finance Oy, Inderes Oy, Mobify Invoices Oy, Ficolo Oy,
Rauma Marine Constructions and Oima Oy, among others. In
addition, non-strategic investments include a loan granted to
the Barrie real estate project in Canada.
Other operations,
EUR million 2020 2019 Change, %
Income 0.1 -1.6 106.3%
Operating profit -4.7 -5.3 11.9%
Number of full-time
personnel, average 26 21
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Other operations,
EUR million 31.12.2020 31.12. 2019 Change, %
Investments and
receivables, fair
value 45.2 41.5 8.8%
- Strategic
investments 15.3 11.2 36.6%
Real estate 9.0 8.7 3.6%
Bioindustry 4.0 1.0 302.2%
Energy 1.2 1.1 12.3%
Other
investments 1.1 0.5 134.2%
- Non-strategic
investments 29.9 30.3 -1.5%
Real estate 11.3 10.8 5.3%
Other
investments 18.5 19.6 -5.3%
In January-December 2020, income from Other Operations
amounted to EUR 0.1 (-1.6) million and operating profit
to EUR -4.7 (-5.3). Income for the year was burdened by a
change in the fair value of Fellow Finance totalling EUR -2.3
(-4.3) million.
Investments and loan receivables totalled EUR 45.2 (41.5)
million.
OTHER GROUP EVENTS DURING THE
FINANCIAL PERIOD
CORPORATE RESPONSIBILITY
Together with our customers and partners, we strive to
promote effective investment activities by implementing
financially profitable projects with a positive impact on the
environment and stakeholders. At the same time, we offer
our employees meaningful work and a growth platform for
development and for serving as social influencers. Taaleri’s
business segments work responsibly and comply with good
governance and the principles of responsible investment in all
their operations.
Taaleri is a forerunner in impact investing. We promote
impact investment by offering our customers innovative and
effective investment options. These include funds investing
in renewable energy projects, the Forest Fund, the Rental
Home Fund that provides affordable rental housing, the
Circular Economy Fund and the Special Investment Fund
Taaleri Impact. In addition, as part of our operations we
take into account the ESG factors of investments, meaning
the responsibility aspects of investments relating to the
environment, society and governance.
In 2020, Taaleri launched the Special Investment Fund
Taaleri Impact. Taaleri Impact is the first Finnish open impact
fund that seeks not only financial returns but also measurable
benefits to society and the environment. The fund invests its
assets directly or through other funds in the stock market, the
bond market and alternative investments. Through the Impact
fund, small investors can also invest in micro loans, renewable
energy projects, impactful listed and unlisted companies,
and more. The Taaleri Impact special investment fund raised
investments of EUR 18.7 million by the end of 2020.
In addition, during the financial year Taaleri announced
Finland’s first digital asset management service specialising
in impact investment at impakti.fi. The service allows
customers to build investment portfolios focused on impact
investment. The portfolios consist of ETF funds meeting strict
responsibility criteria and the Taaleri Impact Fund. By the end
of 2020, approximately one thousand customers had invested
through the Impakti service.
In 2020, Taaleri strongly promoted responsibility and
ESG aspects as part of its operations and investments. Taaleri
Wealth Management strengthened ESG considerations as
part of portfolio management and ESG reporting. In Taaleri
Energia and Taaleri’s real estate business, ESG issues were
promoted through policies and guidelines, among other
things. In addition, we launched company-wide responsibility
and ESG development work, which will continue in 2021.
As part of our responsibility work, we want to participate
in communities that promote practices and standards relating
to responsible investment and corporate responsibility. Taaleri
is committed to the UN Principles for Responsible Investment
(PRI) and reports annually based on the PRI. In 2020, we
received the highest A+ rating in Strategy and Governance.
In addition, we are signatories to the CDP (Carbon Disclosure
Project). We are one of the founding members of FINSIF
(Finland’s Sustainable Investment Forum) and involved
with FIBS (Finnish Business & Society), a network aiming to
promote socially and financially sustainable businesses in
Finland.
For more information on Taaleri’s responsibility, visit our
website at www.taaleri.com/en/corporate-responsibility.
CHANGES IN GROUP STRUCTURE
During the financial year Taaleri Energia exited the Truscott-
Gilliland East wind farm project in Texas, USA, leaving
Taaleri Energia with a seven per cent indirect holding in
the project company TG East Wind Project LLC. In addition,
Taaleri acquired all the non-controlling interests in Taaleri
Veropalvelut Oy and at the end of the financial year Taaleri’s
holding in Taaleri Veropalvelut Oy is 100 per cent. Taaleri
Sijoitus Oy’s holding in Mobify Invoices Oy decreased to
61.82 (68.00) percent with the share issue.
Additionally, there were established and merged
some management and project companies under Taaleri
Pääomarahastot, Taaleri Sijoitus and Taaleri Energia.
CHANGES IN TAALERI’S EXECUTIVE
MANAGEMENT TEAM
During the review period, Essi Sten was appointed Head of
Taaleri Real Estate business and a member of Taaleri Group’s
Executive Management Team. She began her position on 1
April 2020. At his own request, Karri Haaparinne resigned
from his position as Deputy CEO of Taaleri Plc and as a
member of the Taaleri Group’s Executive Management
Team on 13 August 2020. Haaparinne continues to serve as
a member of the boards of Taaleri Varainhoito Oy, Taaleri
Sijoitus Oy and Garantia Insurance Company, as well as a
member of the boards of certain co-investments.
ANNUAL GENERAL MEETING 2020
Taaleri Plc’s Annual General Meeting was held on 18 May
2020 in Helsinki. The General Meeting adopted the financial
statements for the 2019 financial period and granted the
members of the Board of Directors and the CEO discharge
from liability.
In accordance with the proposal of the Board of Directors,
the General Meeting decided that, based on the balance
sheet to be adopted for the financial period ending 31
December 2019, a dividend of EUR 0.16 per share be
distributed and the remaining part of the distributable funds
be retained in shareholders’ equity. The dividend payment
record date was 20 May 2020 and the dividend was paid on
28 May 2020.
In addition, the General Meeting authorised the Board
of Directors to at a later date decide on a payment of a
maximum dividend of EUR 0.16 per share for the financial
year 2019 with a payment at one or more occasions. The
athorisation is in force until the Annual General Meeting 2021.
The Board was also authorised to decide on the record date
and the date of payment of a possible dividend. Taaleri will
notify of the decisions separately.
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DECIDING ON THE REMUNERATION OF MEMBERS
OF THE BOARD OF DIRECTORS
The General Meeting decided on the annual remuneration
payable to the members of the Board of Directors as follows:
• Chairman of the Board of Directors EUR 50,000
• Vice Chairman of the Board of Directors EUR 36,000
• Chairman of the Audit Committee EUR 36,000
• Member of the Board of Directors EUR 30,000
The General Meeting decided that the members of the
Audit Committee will be paid a meeting-specific fee of EUR
1,000 to the Chairman of the Audit Committee and EUR 500
to each other member of the Audit Committee.
The annual remuneration will cover the entire term of
office and Committee work.
The Annual General Meeting decided additionally that
travel, and accommodation expenses of the members are
paid against invoices when the meeting of the Board of
Directors and the Committees takes place outside members’
domicile.
DECIDING ON THE NUMBER OF MEMBERS AND
THE MEMBERS OF THE BOARD OF DIRECTORS
AND ELECTION OF THE CHAIRMAN AND DEPUTY
CHAIRMAN OF THE BOARD OF DIRECTORS
The General Meeting decided that the number of the
members of the Board of Directors be set as six (6).
The current members of Board of Directors, Juhani
Elomaa, Juha Laaksonen, Hanna Maria Sievinen, Elina
Björklund and Tuomas Syrjänen. were re-elected to the Board
of Directors. Further, Petri Castrén was elected as a new
member of the Board.
The General Meeting decided to elect Juhani Elomaa as
the chairman of the Board of Directors and Juha Laaksonen as
a deputy chairman.
SELECTING THE AUDITOR AND DECIDING ON THE
AUDITOR’S REMUNERATION
The General Meeting decided that Ernst & Young Oy, a firm
of authorised public accounts, be re-elected as the company’s
auditor for a term ending at the close of the next Annual
General Meeting. Ernst & Young Oy has announced that Ulla
Nykky, Authorised Public Accountant, continues as the auditor
with principal responsibility.
AUTHORISING THE BOARD OF DIRECTORS TO
DECIDE ON THE PURCHASE OF THE COMPANY’S
OWN SHARES
The General Meeting decided to authorize the Board of
Directors’ to decide on the repurchase of the company’s own
shares using assets belonging to unrestricted equity on the
following conditions:
Up to 2,000,000 shares may be repurchased,
corresponding to 7.05% of all the company’s shares. The
repurchase may be made in one or more instalments. The
purchase price per share shall be the price given on the
Helsinki Stock Exchange or another market-based price.
The shares may be repurchased to develop the company’s
capital structure, to finance or implement corporate
acquisitions, investments or other arrangements related to
the company’s business operations, to be used as part of the
company’s incentive scheme, or to be cancelled if justified
from the point of view of the company and its shareholders.
The authorisation issued includes the right to decide whether
the shares will be repurchased in a private placement or in
proportion to the shares owned by shareholders. The re purchase
may take place through private placement only if there is a
weighty financial reason for it from the company’s perspective.
The Board of Directors has the right to decide on other
matters concerning the repurchase of shares.
This authorisation is valid for 18 months from the date of
the close of the Annual General Meeting.
This authorisation cancels the authorisation to purchase
the company’s own shares issued at the General Meeting of
20 March 2019.
AUTHORISING THE BOARD OF DIRECTORS TO
DECIDE ON SHARE ISSUE
The General Meeting decided to authorise the Board of
Directors to decide on the issue of new shares and the
assignment of treasury shares in the possession of the
company on the following terms:
The Board of Directors may issue new shares and assign
treasury shares in the possession of the company up to a
maximum of 2,500,000 shares, corresponding to 8.82% of all
the company’s shares.
The new shares may be issued and the treasury shares
possessed by the company may be assigned to the
company’s shareholders in proportion to their ownership
of shares or deviating from the shareholder’s pre-emptive
subscription right in a private placement, if there is a weighty
financial reason for it from the point of view of the company,
such as using the shares as consideration in potential
corporate acquisitions or other arrangements that are part of
the company’s business operations. or to finance investments
or as part of the company’s incentive scheme.
The Board of Directors may also decide on a free-of-
charge share issue to the company itself.
The new shares may be issued and the shares possessed
by the company may be assigned either against payment or
without payment. A private placement may only be without
payment if there is an especially weighty financial reason
for it from the point of view of the company and taking into
account the benefit of all its shareholders.
The Board of Directors will decide on all other factors
related to share issues and the assignment of shares.
The authorisation is valid until the end of the next Annual
General Meeting, however no longer than 30 June 2021.
This authorisation cancels the authorisation issued at the
General Meeting on 20 March 2019.
ORGANIZATION OF TAALERI PLC.’S BOARD OF
DIRECTORS
In its organization held on 20 March 2019, Taaleri Plc’s Board
of Directors elected the following members and chairmen to
its committees:
Hanna Maria Sievinen, Juhani Elomaa and Petri Castrén
were elected as members of the Board of Directors’ Audit
Committee. The Board of Directors elected Hanna Maria
Sievinen as Chairman of the Audit Committee.
Juhani Elomaa, Tuomas Syrjänen and Elina Björklund were
elected as members of the Board of Directors’ Remuneration
Committee. The Board elected Juhani Elomaa as Chairman of
the Remuneration Committee.
TAALERI’S PERSONNEL
The Group employed an average of 192 (186) full-time
people during the financial year. There were 118 (116) full-
time employees in the Wealth Management segment, 21 (25)
in the Insurance segment and 28 (23) in the Energia segment.
The full-time personnel of Other operations averaged 26 (21),
including 6 Mobify Invoices employees. Of the personnel, 98
(99) per cent were employed in Finland.
During January-December 2020, the personnel costs
of the Taaleri Group totalled EUR 25.2 (24.2) million, of
which fixed personnel costs totalled EUR 20.0 (18.8) million.
Personnel costs increased due to new recruitments mainly in
Energy segment.
INCENTIVE SCHEMES
Taaleri has two share-based incentive schemes for the Group’s
key persons.
The 2017 incentive scheme has three earning periods
lasting three years each. The Board of Directors will decide
on the earning criteria and the targets to be set for each
earning criterion at the beginning of each earning period. Any
remuneration awarded under the scheme will be based on
Taaleri Plc’s total shareholder return. The first earning period
expired 31 October 2020 as worthless. At the end of 2020,
the bonuses paid correspond with the value of no more than
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370,000 Taaleri Plc shares, including the part paid in cash. The
bonus will be paid partly in company shares and partly in cash.
In addition, on 19 June 2019, Taaleri Plc’s Board of
Directors decided on the establishment of a new share-based
incentive scheme for the company’s CEO Robin Lindahl. In
the scheme, the CEO will acquire a minimum of 200,000
euros worth of company shares. The share-based incentive
scheme is a one-off, five-year scheme, and the earning period
is 1 June 2019—15 June 2024. The earning period includes
three measuring periods, which commence at the beginning
of the earning period and end on 15 September in years
SHARES AND SHARE CAPITAL
Taaleri’s share on Nasdaq Helsinki
January–December
2020
No. of shares
traded
Total value
EUR
High
EUR
Low
EUR
Average*
EUR
Last
EUR
TAALA 4,103,591 29,795,452 9.76 5.82 7.26 8.12
* Volume weighted average
2022, 2023 and 2024. Any remuneration awarded under the
scheme will be based on Taaleri Plc’s total shareholder return.
The remuneration paid will correspond to the value of no
more than 249,000 Taaleri Plc shares, including the part paid
in cash.
The 2015 incentive scheme expired on 31 December
2020. The 2015 incentive scheme was based on synthetic
option rights, the bonus paid in cash. Taaleri Plc’s Board of
Directors had the right to require key personnel to purchase
company shares to a maximum of 50 per cent of the received
bonus amount.
Taaleri’s share has been listed on Nasdaq Helsinki, among
mid-cap companies, since 2016. The trading code is TAALA.
On 31 December 2020, the company possessed 45,000
(45,000) treasury shares.
On 31 December 2020, Taaleri Plc’s shareholders’ equity
was EUR 125,000.00 and the company had 28,350,620
registered shares.
Flaggings during the financial year 2020
During financial year 2020 there were no changes in
shareholdings that would have required flagging.
Share distribution, 31 December 2020
31.12.2020 % 31.12.2019 %
Market capitalization, EUR million 229.8 238.3
No. of shareholders 6,026 100.0 4,689 100.0
Shareholding per group
Private companies 9,990,910 35.2 10,004,585 35.3
Financial and insurance corporations 2,189,490 7.7 2,082,873 7.3
Public sector organizations 30,837 0.1 30,837 0.1
Non-profit institutions 226,278 0.8 226,117 0.8
Households 14,123,403 49.8 13,876,933 49.0
Nominee registrations and direct foreign
shareholders 1,789,702 6.3 2,129,275 7.5
10 biggest shareholders, 31 December 2020
No. % of shares
1. Veikko Laine Oy 2,932,519 10.34
2. Oy Hermitage Ab 2,840,308 10.02
3. Fennia Life Insurance Company Ltd 1,728,582 6.10
4. Elomaa Heikki Juhani 1,723,278 6.08
5. Swiss Life Luxembourg S.A. 1,496,270 5.28
6. Haaparinne Karri Erik 1,452,936 5.12
7. Lampinen Petri Juhani 500,000 1.76
8. Marthur Ranjit 440,000 1.55
9. Lehto Vesa 362,510 1.28
10. Neva-Aho Ronnie Juhani 320,051 1.13
Total, 13,796,454 48.66
of which Nominee registrations 207,752 0.73
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Share distribution by number of shares, 31 December 2020
Owners % Shares %
1–100 2,280 37.84 108,392 0.38
101–500 2,053 34.07 535,469 1.89
501–1,000 682 11.32 529,438 1.87
1,001–5,000 596 9.89 1,291,683 4.56
5,001–10,000 159 2.64 1,207,060 4.26
10,001–50,000 193 3.20 3,841,372 13.55
50,001–100,000 25 0.41 1,636,172 5.77
100,001–500,000 32 0.53 7,027,141 24.79
500,001– 6 0.10 12,173,893 42.94
Total 6,026 100.0 28,350,620 100.00
Taaleri Plc’s Board of Directors’ ownership, 31 December 2020, including organizations with controlling interests
No. % of shares
Chairman Juhani Elomaa 1,989,934 7.02
Vice Chairman Juha Laaksonen - -
Member Elina Björklund 12,000 0.04
Member Petri Castrén - -
Member Hanna Maria Sievinen 7,9 0 0 0.03
Member Tuomas Syrjänen 7,782 0.03
Total 2,017,616 7.12
12
10
8
6
4
2
0
2014 2015 2016 2017 2018 2019 2020
Taaleri Executive Management Team ownership, 31 December 2020, including organizations with controlling interests
No. % of shares
CEO Robin Lindahl 34,513 0.12
Legal counsel Janne Koikkalainen - -
Head of Wealth Management Perttu Purhonen - -
Head of Energy Kai Rintala - -
Head of Insurance Titta Elomaa 20,854 0.07
Head of Real Estate Essi Sten - -
CFO Minna Smedsten 18,049 0.06
Total 73,416 0.26
Taaleri share price development since listing: 20 April 2013–31 December 2020
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CAPITAL ADEQUACY OF TAALERI
CAPITAL ADEQUACY UNDER THE ACT ON THE
SUPERVISION OF FINANCIAL AND INSURANCE
CONGLOMERATES
Taaleri Group forms a financing and insurance conglomerate,
according to the Act on the Supervision of Financial and
Insurance Conglomerates (RaVa) (2004/699).
As a RaVa conglomerate, Taaleri Group discloses its
own funds and capital adequacy in accordance with the
capital adequacy regulations for financial and insurance
conglomerates. Taaleri RaVa conglomerate’s Tier 1 capital
amounted EUR 118.5 (110.3) million, Tier 2 capital amounted
EUR 14.8 (14.8) million and own funds amounted EUR
133.3 (125.1) million, with the minimum requirement
being EUR 61.7 (60.3) million. On 31 December 2019
RaVa conglomerate’s Tier 1 capital would have been EUR
114.8 million, Tier 2 capital EUR 14.8 (14.8) million and
own funds EUR 129.6 million, if the Board of Director’s
decision on 18 February 2021 not to pay the second half of
the 2019 dividend of EUR 4.5 million is taken into account.
The conglomerate’s capital adequacy was EUR 71.6 (64.8)
million and the capital adequacy ratio was 216.2 (207.4) per
cent, with the minimum requirement being 100 per cent.
Correspondingly, on 31 December 2019 the conglomerate’s
capital adequacy would have been EUR 69.3 million and
capital adequacy ratio 215.0 per cent, if the Board of
Director’s decision on 18 February 2021 not to pay the
second half of the 2019 dividend of EUR 4.5 million is taken
into account.
Within the Taaleri Group, the regulatory capital according
to Solvency II is determined and reported not only for
Garantia Insurance Company Ltd but also for Taaleri Plc as
a part of the RaVa conglomerate. The total solvency capital
requirement (SCR) of the parent company Taaleri Plc and
the subsidiary Garantia Insurance Company Ltd was EUR
34.6 (29.5) million. The Financial Supervisory Authority
confirmed in June 2020 a capital add-on totalling EUR 15.3
(19.8) million. The total solvency requirement was hence EUR
49.9 (49.3) million for the insurance business. The add-on
is implemented because the risk profile of Garantia’s non-
life underwriting risk module differs from the underlying
assumptions in the standard formula for the solvency capital
requirement calculation.
Taaleri’s own funds fully comprise its own unrestricted
Tier 1 basic funds and a EUR 15 million Tier 2 bond issued by
Taaleri Plc, in October 2019.
Capital adequacy of RaVa
conglomerate, EUR 1,000 31.12.2020 31.12.2019
Shareholders’ equity of the
Taaleri Group 133,209 125,729
Goodwill and other intangible
assets -6,778 -6,533
Non-controlling interests 1,134 182
Planned distribution of profit -9,072 -9,072*
Tier 1 Capital 118,492 110,286
Tier 2 Capital 14,839 14,825
Conglomerate’s own funds,
total 133,332 125,130
Financing business’
requirement for own funds 11,783 11,014
Insurance business’
requirement for own funds 49,900 49,307
Minimum amount of own
funds of the conglomerate,
total 61,683 60,321
Conglomerate’s capital
adequacy 71,649 64,809
Conglomerate’s capital
adequacy ratio 216.2% 207. 4%
* The Board of Director’s dividend proposal for 2019, of which the
Board of Directors has decided on 18 February 2021 not to distribute
EUR 4.5 million
CAPITAL ADEQUACY ACCORDING TO THE ACT
ON CREDIT INSTITUTIONS AND THE EU CAPITAL
REQUIREMENTS REGULATION (BASEL III)
Within the Taaleri Group, the regulatory capital according
to the Act on Credit Institutions (610/2014) and the EU
Capital Requirements Regulation (CRR) (No 575/2013 of
the European Parliament and of the Council) is determined
and disclosed to the supervised parties operating in the
Financing sector Taaleri applies the standardized approach
in the regulatory capital calculation of the credit risk capital
requirement.
Taaleri Group’s target level for the own funds of the
Financing sector is 1.3 times the internal risk-based capital
requirement, calculated on the basis of the pillar 1 minimum
capital requirement and additional pillar 2 risk-based capital
requirement.
The Finnish Financial Supervisory Authority has on 4
June 2020 decided to prolong the permission to leave the
insurance company holdings undeducted from the common
equity Tier 1 capital (CET1) given to Taaleri Plc, pursuant to
Article 49 (1) of the EU Capital Requirements Regulation (EU)
575/2013 (CRR), until 25 June 2021. The previous fixed term
permit was valid until 31 December 2020 and was granted
to Taaleri Plc 31 January 2019. The permission granted by
the Finnish Financial Supervision Authority on 31 January
2019 was related to the reform of the capital requirements
framework for investment firms that was pending in the
European Union at that time and the understanding of
the date of application of that new framework. The new
framework was originally scheduled to come into effect on 31
December 2020, but the date has since been confirmed to 26
June 2021.
With the permission Garantia’s acquisition expense of
EUR 60.4 million can be left undeducted. The impact on the
result accumulated by the insurance company investment
is not included in the consolidated Common Equity Tier
1 of the investment service company. Equity investments
include the Group’s internal insurance company investment
of EUR 60.4 million with a risk-weight of 100 per cent. If
the CRR 49 permission were not applied and using the
alternative calculation method, where the insurance company
investment is deducted from the Common Equity Tier 1 and
excluding the result of the financial period, were applied, the
consolidated Common Equity Tier 1 of the investment service
company would be EUR 19.0 million and equity EUR 33.8
million on 31 December 2020.
Taaleri’s financing sector’s Common Equity Tier 1 with the
CRR 49 permission is EUR 71.1 (70.9) million and equity EUR
86.0 (85.7) million, of which the profit of January-December
2020, EUR 3.5 (4.3) million, is deducted. The risk-weighted
commitments were EUR 226.9 (242.6) million, of which the
share of credit risk was EUR 149.0 (156.4) million and the
share of operational risk EUR 77.9 (86.2) million according
to the standardized approach. The Financing sector’s Tier 1
Capital adequacy ratio was 31.8 (29.2) capital adequacy ratio
was 38.4 (35.3) per cent.
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Financing sector’s capital adequacy, EUR 1,000 (with the CRR 49 permission) 31.12.2020 31.12 .2019
Common Equity Tier 1 before deductions 79,929 81,228
Deductions from the Common Equity Tier 1
Goodwill and intangible assets -6,428 - 6,184
Non-controlling interests 1,134 182
Profit of the review period -3,486 -4,330
Common Equity Tier 1 (CET1) 71,149 70,896
Tier 2 capital before deductions 14,839 14,825
Deductions from the Tier 2 capital - -
Tier 2 capital (T2) 14,839 14,825
Total capital (TC = T1 + T2) 85,988 85,720
Total risk-weighted commitments (total risk) 226,872 242,584
- of which the share of credit risk 148,951 156,380
of which insurance company holdings 60,350 60,350
- of which the share of operational risk 77,921 86,204
- of which the share of other risks - -
Common Equity Tier 1 (CET1) in relation to the amount of total risk (%) 31.8% 29.2%
Tier 1 capital (T1) in relation to the amount of total risk (%) 31.8% 29.2%
Total capital (TC) in relation to the amount of total risk (%) 38.4% 35.3%
SOLVENCY ACCORDING TO THE INSURANCE
COMPANIES ACT (SOLVENCY II)
Garantia’s solvency remained near the level seen in the
previous year. The company’s basic own funds were EUR
114.1 (112.7) million at the end of the financial year, and
solvency capital requirement was 49.7 (48.6) million. Solvency
ratio, or the ratio of basic own funds to the solvency capital
requirement, was 229.4 (231.8) percent.
Basic own funds grew in accordance with the profit for
the financial year. Basic own funds include foreseeable
dividends as a deduction, and these foreseeable dividends
grew compared to the previous year. The growth in the
solvency capital requirement was due to the growth in capital
requirements for non-life underwriting risk and market risk.
The growth in the capital requirement for underwriting
risk was to a significant effect a consequence of changes
in the standard parameters of Solvency II, used in solvency
calculations, that came into effect on 1 January 2020. Had
these parameters been already applied on 31 December
2019, Garantia’s solvency ratio would have been 219.3 per
cent at the end of financial year 2019.
Garantia’s own funds are formed in full of unrestricted
Tier 1 basic own funds. Garantia does not apply the transition
arrangements in defining its basic own funds and Garantia’s
own funds do not include items classified as ancillary own
funds. Garantia does not use the matching adjustment or the
volatility adjustment in the calculation of technical provisions.
Garantia applies the standard formula for solvency capital
requirement calculation. Garantia does not use the simplified
calculation in the standard formula’s risk modules or sub-
modules, or company-specific parameters instead of the
parameters of the standard formula. Garantia does not apply
the transition arrangements of technical provisions or market
risk calculations.
As of 30 June 2018, Garantia’s solvency capital
requirement has included a capital add-on set by the Financial
Supervisory Authority. The Financial Supervisory Authority
assesses the amount of the capital add-on at least once a year.
Most recently, on 29 May 2020, the Financial Supervisory
Authority reviewed its decision on the capital add-on; the
capital add-on was set to EUR 15.3 (17 June 2019: 19.8)
million. The updated capital add-on has been included in
the Company’s Solvency Capital Requirement as of 30 June
2020. When making its decision on the capital add-on in the
past year, the Financial Supervisory Authority for the first time
took in to account the capital requirement calculated as per
Garantia’s internal economic capital model.
In its decision concerning the capital add-on, the
Financial Supervisory Authority states that the risk profile
of Garantia’s non-life underwriting risk section differs from
the basic assumptions of the Solvency Capital Requirement
standard formula by more than 15 per cent, and hence the
prerequisites for the capital add-on are still fulfilled. According
to the assessment of the Financial Services Authority, no
significant changes have occurred in the risk profile of the
company since the previous decision, made on 17 June 2019.
In addition, the Finnish Financial Supervisory Authority repeats
its earlier view that the requirement to use an internal model is
not appropriate for Garantia.
According to the Insurance Companies Act, Solvency II
capital adequacy regulations do not fall within the scope of
statutory auditing.
TAALERI’S RISK MANAGEMENT AND
RISK POSITION
The task of risk management is to identify, assess, measure,
treat and control risks in all Taaleri Group’s businesses
that influence the realization of the Group’s strategic and
operative goals, as well as to oversee compliance with the
principles approved by the Taaleri Plc Board of Directors. Risk
management aims to mitigate the likelihood of unforeseeable
risks being realized, and their influence on and the threat
they present to Taaleri Group’s business operations. Risk
management supports achievement of strategic goals by
promoting better utilization of opportunities in all activities
and more efficient distribution of risk-taking capacity to
the different functions and projects within the defined risk
appetite framework.
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Taaleri Group’s risks are divided into five main categories:
strategic and business risk, credit risk, liquidity risk, market
risk and operational risk (including compliance risk). In
addition, Taaleri follows the development of political risks. The
principles of Taaleri’s risk and capital adequacy management
are described on page 56 in note 38 to the 2020 financial
statements.
The risk capacity of the Taaleri Group consists of a properly
optimized capital structure, profitability of business operations
and qualitative factors, including good corporate governance,
internal control, and proactive risk and capital adequacy
management. Taaleri Group’s attitude towards risk-taking is
based on careful consideration of an adequate risk/return
relationship. Taaleri Plc’s Board of Directors has decided that
the Group may not in its activities take a risk that jeopardizes
the target level set for the company’s own funds.
SEGMENT-SPECIFIC RISKS
The main risks of Taaleri’s Wealth Management segment
consist mainly of operational risks and, to a slight extent,
credit risks. The result of the Wealth Management segment is
influenced by the development of assets under management,
which depends on the progress of the private equity funds’
projects and the development of the capital markets. The
profit development is also influenced by the realization of
performance fee and commission income tied to the success
of investment operations. On the other hand, private equity
fund management fees are based on long-term contracts that
bring in a steady cash flow.
The insurance and investment activities carried out by
Garantia Insurance Company are central to Taaleri’s risk
position. The main risks associated with Garantia’s business
operations are credit risks arising from guaranty operations, and
the market risk regarding investment assets. Garantia’s capital
adequacy is strong and its risk position has remained stable.
The Energy segment’s objective is to channel assets
under management to renewable energy production projects
and to other energy projects supporting sustainability. The
goal is to internationalize and expand the Energy segment’s
business operations considerably, which naturally increase
risks relating to the growth and internationalization of the
operations. The Energy segment’s earnings are impacted by
its success in finding suitable projects, its ability to identify all
risks related to renewable energy’s international development,
construction, financing and operations, and its success
in the internationalization of its operations. The Energy
segment’s earnings are also affected by the success of its own
investments in energy projects.
The most significant risks of the Other operations consist
primarily of private investments and financing granted by
Taaleri Sijoitus Oy as well as of credit risks related to Taaleri
Plc’s granted loans and receivables from credit institutions.
The Other operations’ returns consist of the fair value changes
in investments and of profits/losses gained in connection with
the sales of its investments. The earnings and result of the
Other operations may thus vary significantly between periods
under review.
Taaleri falls within the sphere of regulation of large
customer risks defined in the EU Capital Requirements
Regulation. At the end of the January-December 2020 review
period, Taaleri’s largest single customer risk was 19.8 (21.2)
per cent of the Group’s own funds and the liabilities of any
(single) customer entity did not exceed the 25 per cent limit
set by law.
MATERIAL EVENTS AFTER THE
FINANCIAL PERIOD
Siri Markula has been appointed Taaleri Group’s Head of
Communications and Investor Relations on January 18,
2021 and Tero Saarno has been appointed Head of Taaleri’s
bioindustry business as of February 1, 2021.
Taaler’s Shareholders’ Nomination Board proposes to
the Annual General Meeting scheduled for March 25, 2021
that the number of Board members be seven (7), and that
Juhani Elomaa, Juha Laaksonen, Hanna Maria Sievinen,
Tuomas Syrjänen, Elina Björklund and Petri Castrén will be
re-elected as Board members, Peter Ramsay will be elected as
a new Board member and that Juhani Elomaa will be elected
Chairman of the Board and Juha Laaksonen will be elected
Deputy Chairman of the Board.
OUTLOOK
SHORT-TERM RISKS AND CONCERNS
The coronavirus pandemic will continue to cause uncertainty
in 2021. However, the global economy is likely to recover as
coronavirus vaccinations progress and the restrictive measures
in the global economy can be lifted. The most significant
external uncertainties affecting the Group’s operating profit
are changes in the operating and regulatory environment
and the development of the financial markets globally and
especially in Finland.
The results of the Wealth Management and the Energy
segments are influenced by the development of assets
under management, which depends among other things
on the progress of private equity fund projects and the
development of capital markets. Profit development is also
influenced by the realization of performance fees, which are
tied to the success of the investment operations. The Energy
segment’s earnings are also affected by the success of its own
investments in energy projects.
The Insurance segment’s guaranty insurance business
and investment activities have a major impact on Taaleri’s
operational income and capital adequacy.
The Other operations returns consist of the market value
changes in investments and of sales profits/losses gained
as well as returns of loans granted. The earnings and results
of the Other operations may thus vary significantly between
periods under review.
LONG-TERM FINANCIAL TARGETS
Taaleri’s long-term targets are at least 15 per cent growth in
continuing earnings, operating profit at least 20 per cent of
income, return-on-equity at least 15 per cent and equity ratio
at least 30 per cent.
The company aims to distribute a growing competitive
dividend annually, with consideration to the company’s
financial and financing situation as well as the Group’s capital
adequacy requirement.
BOARD OF DIRECTORS´ DIVIDEND
PROPOSAL
The Board of Directors proposes that a dividend of EUR
0.32 per share, a total of EUR 9,057,798.40 be paid for the
financial year 2020. The parent company’s distributable funds
were EUR 57,284,919.13, which includes EUR 9,265,339.98
in net profit for the year. The dividend is to be paid in one
instalment. In addition, the Board of Directors has decided
that an unpaid dividend of EUR 0.16 per share for 2019 will
not be paid.
The dividend will be paid to shareholders who are
registered in the list of shareholders maintained by Euroclear
Finland Ltd on the record date, which is 29 March 2021. The
dividend payment date proposed by the Board is 7 April
2021.
Helsinki, 18 February 2021
Taaleri Plc
Board of Directors
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KEY FIGURES
GROUP 2020 2019 2018
Income, EUR 1,000 69,406 67, 208 72,513
Operating profit (-loss), EUR 1,000 17, 5 4 8 16,458 23,895
- as percentage of turnover 25.3% 24.5% 33.0%
Net profit for the period, EUR 1,000 13,102 11,479 21,637
- as percentage of turnover 18.9% 17.1% 29.8%
Basic earnings per share, EUR 0.46 0.39 0.76
Diluted earnings per share, EUR 0.45 0.38 0.76
Return on equity % (ROE) 10.1% 9.3% 18.9%
Return on equity at fair value % (ROE) 10.0% 10.6% 17. 8%
Return on assets % (ROA) 4.9% 4.5% 9.3%
Cost/income ratio 74.6% 74.7% 67.0%
Cost/income ratio excluding investment operations 76.7% 83.7% 75.4%
Price/earnings (P/E) 17.7 21.5 9.3
Number of full-time employees, avg 192 186 183
Equity ratio -% 49.7% 46.6% 51.4%
Net gearing -% 29.2% 37.0% 24.3%
GROUP 2020 2019 2018
Equity/share, EUR 4.75 4.45 4.26
Dividend/share, EUR
1)
0.32 0.16 0.30
Dividend/earnings, %
1)
69.6% 40.9% 39.3%
Effective dividend yield, %
1)
3.9% 1.9% 4.2%
Loan receivables, EUR 1,000 6,699 8,294 9,379
Conglomerate's capital adequacy ratio, % 216.2% 207.4%
3)
186.0%
Financing sector capital adequacy ratio, % 38.4% 35.3% 24.9%
Number of shares at the end of period
2)
28,305,620 28,305,620 28,305,620
Average number of shares
2)
28,305,620 28,305,620 28,305,620
Share average price, EUR 7.26 7.37 9.69
- highest price, EUR 9.76 8.64 11.80
- lowest price, EUR 5.82 6.66 7.08
- closing price, EUR 8.12 8.42 7.10
Market capitalization, EUR 1,000
2)
229,842 238,333 200,970
Shares traded, thousands 4,104 3,020 2,247
Shares traded, % 14% 11% 8%
1)
The Board’s profit distribution proposal is 0.32/share for 2020.
2)
Reduced by own shares acquired.
3)
Capital adequacy ratio includes the Board of Director’s dividend proposal for 2019, of which the Board of Directors has decided on 18 February 2021
not to distribute EUR 4.5 million
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INSURANCE OPERATIONS KEY FIGURES
Taaleri’s insurance business operations consist entirely of Garantia Insurance Company Ltd. Garantia Insurance Company Ltd has
been consolidated from 1 April 2015.
EUR 1,000 2020 2019 2018
Net income from insurance 14,614 12,045 13,021
Earned premiums, net 14,885 13,406 12,277
Claims incurred, net -270 -1,361 744
Other income 33 14 202
Net income from investment operations 2,534 9,208 -734
Operating expenses -5,513 -6,393 -5,378
Operating profit before valuations 9,931 12,712 4,949
Change in fair value of investments 195 1,837 -1,690
Profit before taxes and non-controlling interests 10,127 14,549 3,259
Combined ratio, % 36.7% 55.1% 34.9%
Claims ratio, % 4.0% 12.1% -4.2%
Expense ratio % 32.7% 43.0% 39.1%
Return on investments at fair value, % 1.8% 8.1% -1.7%
Solvency ratio (S2), %
1)
229.4% 231.8% 233.4%
Insurance exposure, EUR billion 1.82 1.84 1.67
Number of employees, avg 21 25 26
1)
The Solvency II regulations do not fall within the sphere of statutory auditing under the Insurance Companies Act. The Solvency II -figures have not
been audited.
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Basic earnings per share, EUR
Profit or loss attributable to ordinary share holders of the parent company
Weighted average number of ordinary shares outstanding - repurchased own shares
Diluted earnings per share, EUR
Profit or loss attributable to ordinary share holders of the parent company
Weighted average number of ordinary shares outstanding
+ dilutive potential ordinary shares - repurchased own shares
Alternative performance measures
The Alternative Performance Measures (APMs) are presented to illustrate the financial performance of business operations and
to improve comparability between reporting periods. They should not be considered to be replacements for the performance
measures defined in IFRS -standards.
Return on equity (ROE), %
Profit for the period x 100
Total equity (average of the beginning and end of the year)
Return on equity at fair value
(ROE), %
Total comprehensive income for the period x 100
Total equity (average of the beginning and end of the year)
Return on assets (ROA), %
Profit for the period x 100
Balance sheet total (average of the beginning and end of the year)
Cost/income ratio, %
Fee and commission expense + interest expense
+ administrative expenses + depreciation + other operating expenses
Total income + share of associates’ profit or loss
Cost/income ratio, % excluding
investment operations
Fee and commission expense + interest expense
+ administrative expenses + depreciation + other operating expenses
Fee and commission income + net income from guaranty insurance operations
+ interest income + other operating income
Price/Earnings (P/E)
Price of series B share at the end of the period
Earnings/share
Equity ratio, %
Total equity x 100
Balance sheet total
Net gearing ratio, %
(Interest-bearing liabilities - cash and cash equivalents) x 100
Total equity
Equity/share, EUR
Equity attributable to ordinary share holders of the parent company
Number of shares at end of period - repurchased own shares
Dividend/share, EUR
Dividend payable for the financial period x 100
Weighted average number of ordinary shares
Dividend/earnings, %
Dividend/share x 100
Basic earnings per share
Effective dividend yield, %
Dividend/share x 100
Price of series B share at the end of the period
Conglomerate’s capital
adequacy ratio, %
Conglomerate’s total capital base
Conglomerate’s minimum requirement of total capital base
Total capital in relation to
risk-weighted items
Total Capital (TC)
Risk-weighted items (Total risk)
Common equity tier in relation
to risk-weighted items
Common Equity Tier (CET1)
Risk-weighted items (Total risk)
Market capitalization
Number of shares (A + B) at end of financial period, less repurchased own shares,
multiplied by stock exchange price of series B share at end of financial period
Shares traded, %
Shares traded during the financial period x 100
Weighted average number of ordinary shares outstanding
KEY FIGURES ACCOUNTING PRINCIPLES
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Combined ratio, % Claims ratio, % + Expense ratio, %
Claims ratio, %
(Claims incurred + operating expenses allocated to claims paid) x 100
Insurance premium income
This key figure is calculated after the share of the reinsurers.
Expense ratio, %
(Operating costs - Group’s allocated overhead and financing expenses
+ operating expenes allocated to claims paid) x 100
Insurance premium income
This key figure is calculated after the share of the reinsurers.
Solvency ratio (S2), %
Basic own funds x 100
Solvency capital requirement (SCR)
KEY FIGURES FOR INSURANCE OPERATIONS
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GROUP FINANCIAL STATEMENTS
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EUR 1,000 Note 1.1.–31.12.2020 1.1.–31.12.2019
CONTINUING OPERATIONS
Fee and commission income 3 49,152 46,052
Net income from insurance 4 17,149 21,253
From guaranty insurance operations 14,614 12,045
From investment operations 2,534 9,208
Net gains or net losses on trading in securities and foreign currencies 5 920 -139
Income from equity investments 6 -1,610 -1,812
Interest income 7 1,710 1,235
Other operating income 8 2,086 619
TOTAL INCOME 69,406 67, 20 8
Fee and commission expense 9 -6,030 -5,401
Interest expense 10, 49 -3,415 -3,142
Administrative expenses
Personnel costs 11, 4 4 -25,241 -24,197
Other administrative expenses 12 -8,775 -9,523
Depreciation, amortisation and impairment of tangible and intangible assets 13, 49 -2,502 -2,663
Other operating expenses 14, 49 -5,868 -5,229
Expected credit losses from financial assets measured at amortised cost 15 -100 -557
Share of associates' profit or loss 46 74 -37
OPERATING PROFIT 17,548 16,458
Income tax expense 16 -4,447 -4,979
PROFIT FOR THE PERIOD 13,102 11, 479
EUR 1,000 Note 1.1.–31.12.2020 1.1.–31.12.2019
Profit for the period 13,102 11,479
Items that may be reclassified to profit or loss 17
Translation differences -325 215
Changes in the fair value reserve 195 1,837
Income tax -39 -367
Items that may be reclassified to profit or loss in total -169 1,685
Items that may not be reclassified to profit or loss 17
Changes in the fair value reserve 6 10
Income tax -2 -1
Items that may not be reclassified to profit or loss in total 4 9
TOTAL COMPREHENSIVE INCOME FOR THE PERIOD 12,937 13,172
Profit for the period attributable to:
Owners of the parent company 13,012 11,078
Non-controlling interests 89 401
Total 13,102 11, 479
Total comprehensive income for the period attributable to:
Owners of the parent company 12,848 12,772
Non-controlling interests 89 401
Total 12,937 13,172
Earnings per share for profit attributable
Basic earnings per share, profit for the period 18 0.46 0.39
Diluted earnings per share, profit for the period 18 0.45 0.38
GROUP FINANCIAL STATEMENTS
CONSOLIDATED INCOME STATEMENT CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Income is presented as gross figures, except for gains or losses on trading in securities and foreign currencies, which are presented as net figures to
give a fair presentation of the operations.
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Assets, EUR 1,000 Note 31.12.2020 31.12 . 2019
Receivables from credit instutions 19, 25, 26, 39, 41 25,786 29,102
Receivables from the public and general government 20, 25, 26, 39, 41 6,699 8,294
Debt securities 21, 25, 26, 39, 41 1,498 1,498
Shares and units 22, 25, 26, 39, 41 21,971 9,232
Assets classified as held for sale 23 5,357 7,666
Participating interests 22, 25, 26, 39, 41 9,248 6,423
Insurance assets 24, 25, 26 160,410 153,325
Insurance receivables 3,705 4,663
Investments 156,705 148,662
Intangible assets 27 6,775 6,531
Goodwill 5,097 5,097
Other intangible assets 1,679 1,434
Tangible assets 28, 49 2,944 4,435
Owner-occupied properties 2,427 3,622
Other tangible assets 517 812
Other assets 29 14,455 18,110
Accrued income and prepayments 30 11, 237 22,851
Deferred tax assets 36 1,611 2,233
267,99 0 269,700
Liabilities, EUR 1,000 Note 31.12.2020 31.12 . 2019
LIABILITIES 134,781 143,971
Liabilities to credit institutions 25, 26, 31, 39, 41 14,939 25,929
Debt securities issued to the public 25, 26, 32, 39, 41 34,937 34,875
Insurance liabilities 24, 25, 26 34,676 32,303
Other liabilities 25, 33 5,401 6,509
Accrued expenses and deferred income 25, 34 14,623 13,940
Deferred tax liabilities 35 15,366 15,591
Subordinated debt 36 14,839 14,825
EQUITY CAPITAL 37 133,209 125,729
Share capital 125 125
Reserve for invested non-restricted equity 35,814 35,814
Fair value reserve -864 -935
Translation difference -89 236
Retained earnings or loss 86,344 79,592
Profit or loss for the period 13,012 11,078
Non-controlling interest -1,134 -182
267,99 0 269,700
CONSOLIDATED BALANCE SHEET
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EUR 1,000 1.1.–31.12.2020 1.1.–31.12.2019
Cash flow from operating activities:
Operating profit (loss) 17, 5 48 16,458
Depreciation 2,502 2,663
Other adjustments
Changes in fair value of investments 2,453 -1,111
Other adjustments -343 522
Cash flow before change in working capital 22,160 18,532
Change in working capital
Increase (-)/decrease (+) in loan receivables 1,760 1,241
Increase (-)/decrease (+) in current interest-free receivables 8,680 -15,654
Increase (+)/decrease (-) in current interest-free liabilities 800 7, 695
Cash flow from operating activities before financial items and taxes 33,401 11,814
Direct taxes paid (-) -1,972 -3,121
Cash flow from operating activities (A) 31,429 8,693
Cash flow from investing activities:
Investments in tangible and intangible assets -1,256 -1,038
Investments in subsidiaries and associated companies net of cash acquired -2,750 - 614
Other investments -14,891 -9,895
Cash flow from investing activities (B) -18,897 -11,546
EUR 1,000 1.1.–31.12.2020 1.1.–31.12.2019
Cash flow from financing activities:
Changes in synthetic options 897 828
Transactions with non-controlling interests -199 -
Increase in subordinated debt - 15,000
Decrease in debt securities issued to the public - -20,000
Increase in non-current liabilities 20,000 20,000
Decrease in non-current liabilities -31,000 -1,000
Dividends paid and other distribution of profit
To parent company shareholders -4,529 -8,492
To non-controlling shareholders -1,017 -514
Cash flow from financing activities (C) -15,848 5,822
Increase/decrease in cash and cash equivalents (A+B+C) -3,315 2,969
Cash and cash equivalents at beginning of period 29,102 26,133
Cash and cash equivalents at end of period 25,786 29,102
Net change in cash and cash equivalents -3,315 2,969
CONSOLIDATED STATEMENT OF CASH FLOWS
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EUR 1,000 Share capital
Fair value
reserve
Reserve for invested non-
restricted equity
Translation
differences
Retained
earnings Total
Non-controlling
interests Equity total
31.12 . 2019 125 -935 35,814 236 90,671 125,911 -182 125,729
Changes to previous years -89 89
1.1.2020 125 -1,024 35,814 236 90,760 125,911 -182 125,729
Total comprehensive income for the financial period 160 -325 13,012 12,848 89 12,937
Earnings for the period 13,012 13,012 89 13,102
Other comprehensive income items 160 -325 -165 -165
Distribution of profit -4,529 -4,529 -1,017 -5,546
Dividend EUR 0.16/share -4,529 -4,529 -4,529
Distribution of profit for subgroup - -1,017 -1,017
Share-based payments payable as equity 897 897 897
Shares sold to non-controlling interests
1)
-153 -153 -49 -202
Other -631 -631 24 -606
31.12.2020 125 -864 35,814 -89 99,357 134,343 -1,134 133,209
1.1.2019 125 -2,414 35,814 21 87,173 120,720 1,662 122,381
Total comprehensive income for the financial period 1,478 215 11,078 12,772 401 13,172
Earnings for the period 11,078 11,078 401 11,479
Other comprehensive income items 1,478 215 1,693 1,693
Distribution of profit -8,492 -8,492 -514 -9,006
Dividend EUR 0.30/share -8,492 -8,492 -8,492
Distribution of profit for subgroup - -514 -514
Share-based payments payable as equity 828 828 828
Shares sold to non-controlling interests
1)
Other 3 3 3
31.12 . 2019 125 -935 35,814 236 90,671 125,911 -182 125,729
1)
See note 45.
CHANGES IN GROUP EQUITY CAPITAL
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SEGMENT INFORMATION
BUSINESS SEGMENTS
Taaleri Group’s business segments are Wealth Management,
Insurance, and Energy. Any activity not belonging to these
segments is presented in Other operations.
The Wealth Management segment consists of the invest-
ment service company Taaleri Wealth Management Ltd and
its subsidiaries, as well as Taaleri Private Equity Funds Ltd
Group. The segment also includes Taaleri Kapitaali Oy. Fee
and commission income is the most significant income item
in the Wealth Management segment. Costs mainly comprise
personnel and other administrative expenses as well as fee
and commission expenses. The most significant type of busi-
ness risk is operative risk, but the business also entails market
risk and credit risk.
The Insurance segment comprises only Garantia Insurance
Company Ltd. Garantia is an insurance company specialising
in guaranty insurance. Garantia guarantees funding and other
liabilities for Finnish companies and insures investment-relat-
ed risks. The most significant income items in the Insurance
segment are fee and commission income from guaranty insur-
ance and investment income. The most significant risks in the
guaranty business are insurance risks and investment risks.
The Energy segment comprises Taaleri Energia Oy and
its subsidiaries. Taaleri Energia works actively in international
energy infrastructure markets seeking new investment oppor-
tunities. Operations are based on a life-cycle model, which
begins by seeking and selecting targets of development, then
continuing on through project development, construction
and operation to the controlled shutdown of energy plants.
Income from the Energy business is based on fund units from
the Energy segment. The Energy business also develops
projects whose income and costs are recorded in the finan-
cial period when the end result of the project can be reliably
assessed. The Energy business also includes operating and
maintenance services for wind farms from which annual fees
are received. The most significant risks of the Energy business
are country risks related to international projects and market
risks and credit risks.
Other operations include the Group administration ser-
vices of Taaleri Plc that support the segments and the invest-
ments on the Group’s own balance sheet that are implement-
ed through Taaleri Investments Ltd. The costs of services that
support the business segments are allocated to the segments
and charged monthly.
The segment reporting accounting principles are ex-
plained in greater detail in Note 2.
ENERGY
OTHER
OPERATIONS
WEALTH
MANAGEMENT
INSURANCE
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SignaturesParent company financial statements Auditor’s reportCEO’s reviewKey figures Board of Directors’ report Group financial statements
Continuing operations
1 January–31 December 2019, EUR 1,000
Wealth
management Insurance Energy Other Eliminations
1)
Total
Continuing earnings
38,784 12,059 4,632 1,472 -1,651 55,296
Performance fees
5,188 - - - 5,188
Investment operations
572 9,208 - -3,093 6,687
Total income
44,544 21,267 4,632 -1,621 67,171
Fee and commission expense
-6,485 -279 -232 -57 1,651 -5,401
Interest expense
-33 - - -2,919 -2,953
Personnel costs
-13,985 -3,845 -2,705 -3,662 -24,197
Direct expenses
-8,904 -1,858 -2,141 -3,405 -16,308
Depreciation, amortisation and impairment
-1,076 -42 -43 -57 -1,218
Impairment losses on loans and other
receivables
68 - -469 -157 -557
Operating profit before overhead costs
14,130 15,244 -959 -11,878 16,537
Overhead costs
-2,361 -370 -488 3,219 -
Allocation of financing expenses
- -2,163 -1,171 3,334 -
Operating profit before valuations
11,769 12,712 -2,619 -5,325 16,537
Change in fair value of investments
10 1,837 - - 1,847
Profit before taxes and non-controlling
interests
11,778 14,549 -2,619 -5,325 18,384
1)
The distribution of income related to energy funds between the Wealth Management segment and the Energy segment has been presented in
segment reporting on a gross basis. Intra-group fee income and fee expense subject to this presentation are eliminated in segment reporting in a
separate column.
Segment information - earnings
Continuing operations
1 January–31 December 2020, EUR 1,000
Wealth
management Insurance Energy Other Eliminations
1)
Total
Continuing earnings
37,475 14,647 9,242 1,551 -3,696 59,220
Performance fees
7,108 - - - 7,108
Investment operations
2,068 2,534 - -1,449 3,153
Total income
46,651 17,182 9,242 102 69,480
Fee and commission expense
-8,734 -228 -649 -114 3,696 -6,030
Interest expense
-49 - -4 -3,222 -3,275
Personnel costs
-13,602 -3,244 -4,331 -4,064 -25,241
Direct expenses
-9,051 -1,679 -1,943 -3,442 -16,115
Depreciation, amortisation and impairment
-1,023 -43 -42 -35 -1,143
Impairment losses on loans and other
receivables
5 - - -105 -100
Operating profit before overhead costs
14,197 11,987 2,273 -10,881 17,577
Overhead costs
-2,049 -318 -467 2,834 -
Allocation of financing expenses
- -1,738 -1,618 3,355 -
Operating profit before valuations
12,149 9,931 188 -4,691 17, 577
Change in fair value of investments
31 195 - -26 201
Profit before taxes and non-controlling
interests
12,180 10,127 188 - 4,717 17,778
1)
The distribution of income related to energy funds between the Wealth Management segment and the Energy segment has been presented in
segment reporting on a gross basis. Intra-group fee income and fee expense subject to this presentation are eliminated in segment reporting in a
separate column.
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Further information is provided below on Taaleri Group’s own balance sheet investments, the fair value of which exceeds EUR 1,000
thousand at the balance sheet date. Taaleri Group’s own balance sheet investments are presented in segment reporting as part of
the Other operations.
Strategic investments,
EUR 1,000 Investment type
Purchase price
31.12.2020
Fair value
31.12.2020
Holding
31.12.2020
Real estate investments
Sepos Oy Shares and participations 2,500 2,439 30.0 %
Turun Toriparkki Oy Shares and participations 3,502 3,026 48.2 %
Munkkiniemi Group Oy Shares and participations 5 303 47.0 %
Munkkiniemi Group Oy Loan 2,360 2,409 -
Bioindustry investments
Fintoil Oy Shares and participations 3,425 3,425 27.4 %
Non-strategic investments
EUR 1,000 Investment type
Purchase price
31.12.2020
Fair value
31.12.2020
Holding
31.12.2020
Real estate investments
Taaleri Datacenter Ky (Ficolo) Shares and participations 2,900 2,908 29.5 %
TT Canada RE Holdings Corporation Loan 6,729 7,687 -
Other investments
Inderes Oy Shares and participations 448 1,463 10.8 %
Fellow Finance Oyj Shares and participations 2,974 5,357 25.9 %
Fellow Finance Oyj Loan 1,500 1,508 -
Taaleri Telakka Ky Shares and participations 3,430 3,293 16.1 %
Investments in the non-strategic investment portfolio have a project-specific exit plan. Taaleri’s own co-investment projects will be
divested at the same pace as other co-investors.
Reconciliations
Reconciliation of total income 2020 2019
Total income of segments
69,480
67,171
Share of associates' profit or loss allocated to total income of segments
-74
37
Consolidated total income
69,406
67,208
Reconciliation of operating profit 2020 2019
Total earnings of segments before taxes and non-controlling interests
17,778
18,384
Change in fair value of investments
-201
-1,847
IFRS 16 Leases
2)
-29
-79
Consolidated operating profit
17,548
16,458
2)
The IFRS 16 Leases -standard is not applied in the segment reporting.
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SignaturesParent company financial statements Auditor’s reportCEO’s reviewKey figures Board of Directors’ report Group financial statements
1 BASIC INFORMATION ABOUT THE GROUP ................................................................ 29
2 SUMMARY OF THE SIGNIFICANT ACCOUNTING POLICIES
FOR PREPARING THE FINANCIAL STATEMENTS ........................................................ 29
ACCOUNTING POLICIES FOR PREPARING THE
CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS 31 DECEMBER 2020
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SignaturesParent company financial statements Auditor’s reportCEO’s reviewKey figures Board of Directors’ report Group financial statements
1 CORPORATE INFORMATION
domiciled in Helsinki , Finland and its registered office is at
listed on the Nasdaq Helsinki stock exchange. Taaleri Plc
and its subsidiaries form the Taaleri Group (“Taaleri” or “the
Group”). The Taaleri Group consists of three business areas:
services to institutional investors, companies and private in-
dividuals. The Group’s subsidiaries engaging in business are
Taaleri Wealth Management and its subsidiaries, Taaleri Pri-
vate Equity Funds Ltd Group, Taaleri Investments Ltd Group,
Taaleri Energia Oy and Garantia Insurance Company Ltd. In
addition, Taaleri has eight associated companies (see Group
companies on page 124). Taaleri’s principal place of business
is Finland and its offices are located in Helsinki, Tampere, Tur-
ku, Pori, Oulu, Luxembourgh, Spain and Nairobi. The opera-
tions of Taaleri are monitored by the Finnish Financial Supervi-
sory Authority. Taaleri Group forms a financing and insurance
conglomerate (RaVa conglomerate) and, therefore, it is within
the scope of the Finnish Act on the Supervision of Financial
and Insurance Conglomerates.
2 SUMMARY OF KEY ACCOUNTING
POLICIES FOR THE FINANCIAL
STATEMENTS
Key accounting policies applied to these consolidated finan-
cial statements are presented below. They have been applied
consistently during all presented financial periods, unless
otherwise stated.
2.1 BASIS OF PREPARATION
The consolidated financial statements of Taaleri have been
prepared according to the International Financial Reporting
Standards (IFRS). In the preparation of the financial state-
ments, the IAS and IFRS standards and the SIC and IFRIC
interpretations which were valid on 31 December 2020 have
been followed. IFRS refers to the standards and interpreta-
tions which have been approved in accordance with Regula-
tion (EC) No. 1602/2002 of the European Parliament and of
the Council. In addition to IFRS, regulations and guidelines on
investment service companies have been applied to the con-
solidated financial statements of Taaleri.
The consolidated financial statements have been prepared
over 12 months for the financial period of 1 January – 31 De-
cember 2020. The Board of Directors of Taaleri Plc approved
the consolidated financial statements for public release on 4
March 2021. Shareholders have the right to approve or reject
the financial statements at the Annual General Meeting held
after the release of the financial statements.
The information included in the financial statements is
presented in EUR thousand, and prepared in accordance with
an accounting model based on recoverable historical cost,
unless otherwise stated in the accounting policies below. As
the values presented in the financial statements have been
rounded from their exact values, the sum of individual figures
presented may differ from the sum total presented. Key fig-
ures have been calculated using exact values. The Board of
Director’s report and the financial statements are available in
Finnish and English. The Finnish version is the official version
that will apply if there is any discrepancy between the lan-
guage versions.
The preparation of financial statements according to IFRS
requires certain key accounting estimates to be used. In addi-
tion, it requires that members of the management use judge-
ment when applying the accounting policies. Section 2.18
offers a more detailed description on complex matters that
require judgement, and assumptions or estimates that have a
material impact on the group financial statements.
2.2 CONSOLIDATION PRINCIPLES
The consolidated financial statements include Taaleri Plc and
its subsidiaries that the parent company controls. The group
controls an entity when it is exposed, or has rights, to variable
returns from its involvement with the entity and has the ability
to affect those returns through its power over the entity. If
there are changes to one or more of the elements of control,
the group will reassess whether it still controls the subsidiary.
If the group loses control over a subsidiary, it recognises any
investment retained in the former subsidiary at its fair value on
the day control is lost, and any change in the carrying amount
is recognised through profit or loss.
The profit for the period attributable to the owners of the
parent company and the non-controlling interests is present-
ed in the consolidated income statement, and the attribution
of other comprehensive income is presented in the separate
statement of comprehensive income. The profit for the period
and comprehensive income are allocated to non-controlling
interests also if the proportion of non-controlling interests
became negative. The proportion of non-controlling interests
has been presented in shareholders’ equity on the consoli-
dated balance sheet, separate from equity attributable to the
shareholders of the parent company. Non-controlling interests
in an acquiree are measured at either fair value or the pro-
portionate share in the recognised amounts of the acquiree’s
net identifiable assets. The measurement principle is defined
separately for each purchase.
Associates, in which the parent company holds 20–50 per
cent of the votes provided by all shares or in which it other-
wise has significant influence, but not control, are consolidat-
ed using the equity method. If the investment in an associate
has been made by a venture capital organization, the deci-
sion can be made to measure the investment at fair value
through profit or loss in accordance with IFRS 9. When apply-
ing the equity method, investments are initially recognised
at cost and the carrying amount is increased or decreased to
recognise the investor’s share of the profit or loss of the in-
vestee after the date of acquisition. If the Group’s proportion
of an associate’s losses exceeds the carrying amount of the
investment, the investment is recognised as zero on the bal-
ance sheet and the losses exceeding the carrying amount are
not consolidated, unless the Group is committed to fulfilling
the associate’s obligations. The Group’s share of the associ-
ate’s profit for the period is presented before the operating
profit. The Group’s proportion from changes recognised in
other comprehensive income is recognised in the Group’s
other comprehensive income. When the Group loses its sig-
nificant influence, the remaining holding is recognised at fair
value, and the difference between the carrying amount and
the fair value of the remaining holding and any transfer gains/
losses is recognised through profit or loss. At the end of each
reporting period, it is evaluated whether or not there is objec-
tive evidence of any decrease in the value of the investment
in the associate. If there is such evidence, an impairment loss
is defined as the difference between the recoverable amount
of the investment and its carrying amount, and it is recog-
nised in the income statement line item “Share of associates’
profit or loss”.
Subsidiaries or associates acquired during the financial
period are consolidated from the date on which the Group
obtained control or significant influence, and subsidiaries
or associates sold are correspondingly consolidated until
the date on which control or significant influence is lost. If
required, adjustments are made to the financial statements of
subsidiaries so that their accounting policies correspond with
those of the Group.
All intra-group transactions, as well as receivables, liabil-
ities, unrealised profit and internal distribution of profit are
eliminated. Unrealised losses are not eliminated if the losses
are caused by impairment.
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2.3 BUSINESS COMBINATIONS AND GOODWILL
Business combinations are accounted for using the ac-
quisition method. Acquisition costs are defined as the
acquisition-date fair value of the consideration transferred
and any non-controlling interest in the acquired entity. For
each business combination, the Group selects whether the
non-controlling interests are measured at fair value or the
present ownership instruments’ proportionate share in the
recognised amounts of the acquiree’s identifiable net assets.
Acquisition-related costs are recognised as expenses in the
income statement over the periods, during which the costs
are incurred and the corresponding services are received.
When the Group acquires a business, it evaluates as-
sets and liabilities in the light of agreement terms, financial
conditions and other related conditions prevailing on the
acquisition date, to determine the correct classification. This
evaluation includes the separation of embedded derivatives
included in main agreements of the acquired business.
Any contingent consideration is recognised at fair value on
the acquisition date. A contingent considerations which has
been classified as an asset or liability, is a financial instrument
and is within the scope of IFRS 9 (Financial Instruments), is
measured at fair value, with any resulting gain or loss recog-
nised either in profit or loss or in other comprehensive income
in accordance with that IFRS. If a contingent considerations is
not within the scope of IFRS 9, it is accounted for according
to the applicable IFRS. A contingent consideration classified
as equity is not remeasured, and its subsequent settlement is
accounted for within equity.
Goodwill is recognised at the original acquisition cost,
which corresponds to the amount that the consideration
transferred and any non-controlling interest in the acquired
business, exceeds the net of the acquisition-date amounts of
the identifiable assets acquired and the liabilities assumed.
If the fair value of the acquired net assets exceeds the total
transferred contribution, the Group will reassess whether it
has correctly identified all of the assets acquired and liabilities
assumed, and it will review the procedures used to measure
the amounts to be recognised at the acquisition date. If the
fair value of the acquired net assets, even after the reassess-
ment, exceeds the total transferred contribution, profit is rec-
ognised through profit or loss.
After the original recognition, goodwill is recognised at
the acquisition cost less accrued impairment losses. Goodwill
acquired through business combinations is allocated, for im-
pairment testing purposes starting from the acquisition date,
to the Group’s cash-generating units which are expected to
benefit from the business combination, regardless of whether
or not other assets or liabilities of the object of acquisition are
allocated to these entities. Cash generating units are either
business segments or companies thereof.
Goodwill is tested annually against any impairment by dis-
counting estimated future net cash flows using market-based
discount factors. If the recoverable assets of a cash-generating
unit are lower than their carrying amount, an impairment loss
is recognised. Impairment losses associated with goodwill are
not reversed in future periods.
When goodwill has been allocated to a cash-generating
unit and an operation of the unit is disposed of, the goodwill
allocated to the operation disposed of is included in the carry-
ing amount of that operation when defining gains or losses on
the disposal. Goodwill transferred in such a situation is meas-
ured on the basis of the relative values of the operation dis-
posed of and the portion of the cash-generating unit retained.
2.4 SEGMENT REPORTING
Taaleri Group has three operating segments: Wealth Man-
agement, Insurance and Energy. Operations not included in
these three segments is presented under Other Operations.
Operating segments are reported in a way which is consistent
with internal reporting to the chief operating decision maker.
The Group’s Executive Management Team has been designat-
ed as the chief operating decision maker, who is responsible
for the allocation of resources to operating segments and the
evaluation of their results.
Segment reporting follows the Taaleri Group’s accounting
policies for financial statements, except for the following ex-
ceptions. The standard IFRS 16 Leases is not applied in seg-
ment reporting. The income and expenses which are deemed
to be directly attributable to each segment have been
allocated to those segments. The segment reporting only
includes group external income and expenses, except for the
distribution of income related to energy funds between the
Wealth Management segment and the Energy segment which
has been presented in segment reporting on a gross basis
from the financial year 2020 onwards. Intra-group fee income
and fee expense subject to this presentation are eliminated in
segment reporting in a separate column. Adjustments due to
the change in presentation have been made to the reportable
segment figures for both the financial years 2020 and 2019,
so both reportable segment figures are comparable. The
change in presentation has no effect on the reported operat-
ing profit or result of the segments. Assets and liabilities are
not monitored on a segment level and are therefore not pre-
sented in the group financial statements. The profitability and
result of the segments are assessed before tax.
2.5 NON-CURRENT ASSETS HELD FOR SALE
AND DISCONTINUED OPERATIONS
Non-current assets (or disposal groups) are classified as held
for sale if their carrying amount will be recovered principally
through a sale transaction, the asset is available for immediate
sale in its present condition, and the sale is highly probable. For
the sale to be highly probable, the appropriate level of man-
agement must be committed to a plan to sell the asset, and
actions required to complete the plan should indicate that it is
unlikely that significant changes to the plan will be made or that
the plan will be withdrawn. The management must be commit-
ted to the expected sale within one year after the classification.
A discontinued operation is a component of the Group
that either has been disposed of, or is classified as held for
sale, and represents a separate major line of business or is
part of a separate major line of business that has been dis-
posed of, or classified as held for sale. Assets classified as held
for sale are measured at the smaller of their carrying amount,
and fair value less costs to sell. Assets that meet the require-
ments set for being held for sale are presented separately on
the balance sheet and the result of discontinued operations
are presented separately as a single amount in the statement
of comprehensive income.
No depreciation is made on tangible or intangible assets if
they have been classified as held for sale. Assets and liabilities
held for sale are presented separately as current items on the
balance sheet.
2.6 FOREIGN CURRENCY ITEMS
Items included in the financial statements of Group compa-
nies are measured in the currency of the economic environ-
ment in which the company is mainly operating (functional
currency). The consolidated financial statements are present-
ed in euros, which is the functional and presentation currency
of the Group.
Transactions denominated in a foreign currency are trans-
lated at the exchange rate valid on the transaction date. Any
receivables and liabilities denominated in a foreign currency
and remaining open on the closing date are translated at the
exchange rate valid on the closing date. Exchange rate gains
and losses associated with actual business operations are
recognised in the income statement line item Net gains or net
losses on trading in foreign currencies.
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Income statements and balance sheets of Group compa-
nies (none of which are operating in a country with hyperinfla-
tion), using a functional currency other than the presentation
currency of the Group, are translated into the presentation
currency as follows: assets and liabilities on the balance sheet
are translated at the exchange rate valid on the closing date
and income and expenses on the income statement are trans-
lated at the period’s average exchange rate. Any goodwill
arising on the acquisition of a foreign operation and any fair
value adjustments to the carrying amounts of assets and lia-
bilities arising on the acquisition of that foreign operation are
treated as assets and liabilities of the foreign operation, and
translated at the closing rate. All translation differences are
recognised in other comprehensive income. If a subsidiary is
disposed of, the cumulative translation differences are trans-
ferred to the income statement as part of the gain or loss on
disposal.
2.7 FINANCIAL ASSETS AND LIABILITIES
Assets and liabilities are presented in the order of liquidity
which, for the Taaleri Group, offers more reliable and signifi-
cant information than the presentation of current and non-cur-
rent items.
Financial assets
At initial recognition, the Group’s financial assets are classified
into the following categories: those measured at fair value
through profit or loss, those measured at fair value through
other comprehensive income and those measured at amor-
tised cost. For the purpose of classification, financial assets
are grouped into debt instruments, equity instruments and
derivatives.
The classification of debt instruments depends on Taaleri’s
business model in the management of financial assets and the
characteristics of the cash flows of the financial assets in ques-
tion. Taaleri mainly manages its debt instruments according to
two different business models. Due to the nature of the insur-
ance operations, the objective of Garantia’s investment opera-
tions is achieved by both collecting contractual cash flows and
selling financial assets, i.e. applying the “hold to collect and
sell” business model. Accordingly, debt instruments that pass
the cash flow test are measured at fair value through other
comprehensive income. For debt instruments other than
those of insurance operations, the business model is mainly
holding the debt instruments to collect contractual cash flows,
meaning that debt instruments that pass the cash flow test
are measured at amortised cost. This estimate is performed
instrument-specifically, so the measurement basis is also de-
termined instrument-specifically. In both insurance investment
operations and the Group’s other investment operations, debt
instruments that do not pass the cash flow test are measured
at fair value through profit or loss.
Changes in fair value from debt instruments measured at
fair value through other comprehensive income are recog-
nised in the fair value reserve. Interest income, impairment
gains and losses as well as foreign exchange rate gains and
losses are recognised in profit or loss. When a debt instru-
ment is derecognised, the profit or loss in the fair value re-
serve is transferred, as an adjustment due to a change in the
classification, from equity to profit or loss in the net gains from
insurance investment operations, as the item belongs to the
investment assets of insurance operations.
The carrying amount of debt instruments recognised at
amortised cost includes the deductible item for expected
credit losses, and interest income is recognised in interest
income using the effective interest method. Sales gains and
losses are recognised in profit or loss.
Debt instruments measured at fair value through profit or
loss are measured at fair value, and any changes in fair value
are recognised in profit or loss. Interest income, profits from
funds, foreign exchange rate gains and losses as well as sales
gains and losses are also recognised in profit or loss.
A business model indicates how financial assets are man-
aged to achieve a certain business objective. In the “hold to
collect” business model, the objective is to collect contractual
cash flows; in the “hold to collect and sell” business model, the
objective is achieved by both collecting contractual cash flows
and selling financial assets; in the “trading” business model,
the objective is achieved by actively trading in the financial
assets. Determining the business model is based on estimat-
ing, for example, how the profitability of the financial assets is
assessed, how the risks of the operations are managed and
how often and to what extent the assets are tradedin.
The characteristics of the cash flows of the debt instru-
ments are evaluated in the cash flow test. If contractual cash
flows do not consist solely of payments of principal and inter-
est (basic lending arrangement), the instrument in question
is measured at fair value through profit or loss. If the cash
flows are subject to, for example, share prices or the debtor’s
financial situation, it is not a basic lending arrangement. At
Taaleri, such debt instruments mainly consist of mutual fund
investments, convertible bonds as well as profit-sharing and
subordinated loans.
Investments in equity instruments are measured at fair
value through profit or loss, meaning that changes in fair val-
ue, dividends, interest income, foreign exchange rate gains
and losses as well as sales gains and losses are recognised in
profit or loss. At the time of initial recognition, the manage-
ment may make an irrevocable choice concerning a proce-
dure according to which changes in fair value are recognised
in other comprehensive income and will not later be recycled
to profit or loss. In this case, dividend yields are recognised in
profit or loss, but changes in fair value, foreign exchange rate
gains and losses as well as sales gains and losses are recog-
nised in other comprehensive income. Taaleri’s non-strategic
investments will be measured according to this procedure at
fair value in other comprehensive income without recycling.
Taaleri does not have significant non-strategic investments.
Investments in financial assets are originally recognised at
fair value, to which transaction expenses are added, except
if the financial asset in question is recognised at fair value
through profit or loss, in which case the transaction expense is
recognised in expenditure. When recognising financial instru-
ment purchase and sales contracts, the date of the transaction
is used as the basis for recognition.
Financial assets are derecognised when the Group has lost
its contractual right to receive cash flows or moved the risks
and profits outside the Group to a significant extent.
Cash and cash equivalents, which correspond to the “Re-
ceivables from credit institutions” item in the Group’s balance
sheet, comprise call deposits and fixed deposits.
Financial liabilities
At the time of initial recognition, the Group’s financial liabil-
ities are classified into those measured at fair value through
profit or loss and those measured at amortised cost. The
Group has not had any financial liabilities measured at fair val-
ue through profit or loss in the 2019 or 2020 financial periods.
Other loans are originally recognised at fair value, to which
transaction expenses are added. Later, other loans are recog-
nised at amortised cost using the effective interest method.
Other liabilities are derecognised when their obligations have
been met and their validity has expired.
Fair value measurement
The Group recognises the aforementioned financial instru-
ments at fair value on the balance sheet or in the notes to the
financial statements. The Group has no other assets or liabil-
ities recognised at fair value. The fair value is the price that
would be received to sell an asset, or paid to transfer a liability
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SignaturesParent company financial statements Auditor’s reportCEO’s reviewKey figures Board of Directors’ report Group financial statements
in an orderly transaction between market participants at the
measurement date. The fair value of financial instruments
quoted in active markets is based on prices quoted on the
measurement date, and the fair value of financial instruments
not quoted on active markets is based on the group’s own
valuation methods. All financial instruments which have been
recognised at fair value on the balance sheet or the fair value
of which is presented in the notes, are classified into three
hierarchical levels according to the valuation techniques.
Level 1 includes instruments, the fair value of which is based
on quoted prices for identical assets or liabilities in active mar-
kets. Markets are deemed to be active if price quotations are
easily and regularly available, and they represent actual and
regular market transactions between independent parties. The
fair value of financial assets is based on buy quotations on the
measurement date. Level 1 instruments mainly consist of quot-
ed equity investments, equity and interest fund investments
and bond investments which have been classified to be availa-
ble for sale or recognised at fair value through profit or loss.
Level 2 includes instruments, the fair value of which is
based on information other than quoted prices, but still on
directly or indirectly observable information. To measure the
fair value these instruments, the Group uses generally accept-
ed valuation models, the input data of which is largely based
on verifiable market information.
Level 3 includes instruments, the fair value of which is
measured based on other than observable significant input
data. Level 3 instruments mainly consist of unquoted equity
investments. The value of these instruments is based on the
best information available in the prevailing conditions. Often,
they are recognised at acquisition cost or price details are ob-
tained from third parties. A significant amount of managerial
judgement is included in these measurements. Note 26 offers
a more detailed description of the measurement methods
applied to Level 3 instruments.
With regard to assets and liabilities presented repeatedly
in financial statements, the Group defines when transfers have
occurred between the hierarchical levels of fair value by reas-
sessing the classification (on the basis of input data available
at the lowest level, which is significant considering the entire
measurement process) at the end of each reporting period.
Impairment
Impairments are based on an expected credit loss (ECL)
model and impairments are recognised on all loans and debt
instruments that are not measured at fair value through profit
or loss, and on off-balance sheet liabilities.
Impairment is calculated using an individual credit risk
calculation model based on the probability of default (PD),
the loss given default (LGD), the exposure at default (EAD)
and the maturity (M): ECL = PD * LGD * EAD * M(min 1 or M).
For the purpose of impairment testing, assets to be
tested are divided into three stages. On the first stage are
instru-ments whose credit risk has not increased significantly;
on the second stage are instruments whose credit risk has
in-creased significantly; and on the third stage are instruments
whose value has decreased. For instruments on the first
stage, a loss allowance for 12 month expected credit losses
is recorded. For instruments on the second and third stag-es,
a loss allowance for lifetime expected credit losses is recog-
nised. On every reporting date Taaleri estimates whether the
credit risks of instruments has increased significantly com-
pared to the credit risk at initial recognition, and based on this
defines the expected credit loss.
A significant increase in credit risk is estimated based
on changes (or expected changes) in the credit rating. The
credit rating is deemed to take into account sensible and
reasonable information to the necessary extent. Additionally,
the credit risk is estimated to have increased significantly if
payments are over 30 days due.
The credit risk is deemed to have increased significantly if
the counterparty’s credit rating declines as follows:
• From investment grade, or rating classes AAA…BBB-, to
rating class BB- or lower;
• From rating classes BB+…BB- to rating class B- or lower:
• From rating classes B+…B- to rating class C or lower.
The expected credit loss for loans measured at amortised cost
is recognised in the P/L line item “Expected credit loss from fi-
nancial assets measured at amortised cost” and booked against
the book value of the loan. The expected credit loss for finan-
cial assets measured at fair value through other comprehensive
income is recognised in the P/L line item “Net income from
insurance, investment operations”, when the asset is part of the
insurance business’ investment portfolio, and booked against
the fair value reserve in other comprehensive income.
2.8 INSURANCE ASSETS AND LIABILITIES
Insurance contracts have been treated and valued according
to the definition of the IFRS 4 standard. According to the defi-
nition, an insurance contract is a contract under which signifi-
cant insurance risk has been passed from the policy holder to
the insurer. The company has no financial contracts pertaining
to the IFRS 4 standard which would deviate from insurance
contracts in that a financial risk but no significant insurance
risk is passed to the issuer of the contract.
Technical liabilities generated with regard to insurance
contracts are mainly calculated according to national regu-
lations. Deviating from national regulations, the equalisation
provision is recognised, according to IFRS, in shareholders’
equity adjusted with deferred taxes. Technical liabilities
generated from insurance contracts consist of provision for
unearned premium and claims provision. The provision for
unearned premium includes the proportion of the insurance
premium income accrued during the financial year and previ-
ous years, which is allocated to a period following the financial
year relative to the risk. The claims provision consists of two
parts: claims to be paid by the company after the financial
year caused by known losses occurred during or before the
financial year, and provisions made for unknown losses calcu-
lated using statistical methods for claims which have not been
reported to the insurance company by the reporting date.
Investment assets of insurance operations are measured
either at fair value through other comprehensive income or at
fair value through profit or loss, depending on the business
model used for managing the financial assets and the char-
acteristics of the cash flows of the financial assets in question.
More detailed measurement principles are presented in Sec-
tion 2.7 Financial assets and liabilities.
Recognition and valuation of insurance contracts
Premiums written include the premiums from contract periods
agreed in insurance contracts that have started during the
financial period. Insurance premium receivables that are un-
likely to be paid have been deducted from premiums written
as credit losses. In addition to premiums, premiums written
include start-up fees, management fees, waiver fees and other
such one-off payments, premium rebates and credit losses.
The provision for unearned premium includes the proportion
of insurance premiums written accrued during the financial
year and previous years, where the relevant risk is attributable
to future financial periods.
Claims paid include claims paid during the financial peri-
od, regardless of the date of loss occurrence. Claims paid also
include operating and depreciation expenses allocated to
claims management for the financial year, income from the re-
covery of recourse receivables, and expenses arising from the
collection of insurance receivables. According to guarantee
insurance agreements, the insurance company generally has
the right of recourse after a claim has been paid. Therefore,
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claims paid can be adjusted by the amount of the relevant re-
course receivable. Recourse receivables from insurance claims
are recognised in Garantia’s accounting records at probable
values that are calculated based on best possible information
available on the evaluation date. The valuation of recourse re-
ceivables is updated in conjunction with financial statements
and half-year financial reports. The provision for outstanding
claims includes the claims that have occurred during or before
the financial period and have not yet been paid.
Reinsurance receivables
“Reinsurance” refers to insurance contracts defined in the
IFRS 4 standard, with which an insurance company can obtain
compensation from another insurance company in case of an
insurance event. The company utilises facultative reinsurance
for corporate loan guarantees in those agreements which ex-
ceed the retention share of the insurance risk as defined by the
company and in situations where collaterals cannot be utilised
to sufficiently reduce the insurance risk. Commercial bond
have mainly been reinsured using Quota Share reinsurance,
under which all insurance contracts that have entered into force
during the calendar year are reinsured. According to the IFRS
4 standard, the reinsurers’ share of technical provisions are
treated as an asset. If an insurance liability has been reinsured,
the reinsurers’ share of the claims paid is simultaneously rec-
ognised in a separate account as receivables from reinsurers
reducing the amount of claims expenses. Similar recognitions
are made for reinsurers’ share of claims of recourse.
Adequacy testing for liabilities
associated with insurance contracts
On the closing date, the adequacy of the insurance liabilities
recognised on the balance sheet is evaluated. The testing is
based on current estimates of future cash flows from insur-
ance contracts.
2.9 TANGIBLE ASSETS
Tangible assets are recognised on the balance sheet if their
acquisition cost can be measured reliably and it is probable
that future economic benefits associated with the assets
will flow to the company. Tangible assets are carried on the
balance sheet at cost less any accumulated depreciation
and accumulated impairment losses. Tangible assets mainly
consist of machinery and equipment which are depreciated in
four years. Depreciation of an asset begins when it is available
for use. When an asset is classified as available for sale in ac-
cordance with IFRS 5, depreciation ceases.
The residual values and useful lives of assets are reviewed
on every closing date, and they are changed as required. If
the carrying amount of an asset is higher than the estimated
recoverable amount, the carrying amount is immediately re-
duced to correspond to the recoverable amount. The gain or
loss arising from the derecognition of an asset is included in
profit or loss. Gains are recognised in other operating income
and losses in depreciation and impairment. Gains or losses
are determined as the difference between the net disposal
proceeds and the carrying amount of the asset.
If there are indications that a tangible asset is impaired,
the assets recoverable amount is estimated. If the recoverable
amount is less than the assets carrying amount, the carrying
amount is reduced to its recoverable amount. The recoverable
amount of an asset is the higher of its fair value less costs of
disposal and its value in use.
2.10 INTANGIBLE ASSETS
Other intangible assets
Intangible assets are recognised on the balance sheet if their
acquisition cost can be measured reliably and it is probable
that future economic benefits associated with the assets will
flow to the company. Other intangible assets are carried on
the balance sheet at cost less any accumulated depreciation
and accumulated impairment losses. Intangible assets mainly
consist of IT software development costs and licences, the
useful life of which are 3–5 years. No internally generated in-
tangible assets have been recognised on the balance sheet.
The gain or loss arising from the derecognition of an asset
is included in profit or loss. Gains are recognised in other
operating income and losses in depreciation and impairment.
Gains or losses are determined as the difference between the
net disposal proceeds and the carrying amount of the asset.
If there are indications that an intangible asset is impaired,
the assets recoverable amount is estimated. If the recoverable
amount is less than the assets carrying amount, the carrying
amount is reduced to its recoverable amount. The recoverable
amount of an asset is the higher of its fair value less costs of
disposal and its value in use.
Goodwill
Goodwill accounting policies have been presented in Section
2.3 (Business combinations and goodwill).
2.11 LEASE AGREEMENTS
Taaleri recognises right-of-use assets at the commencement
date of the lease according to IFRS 16. Right-of-use assets are
measured at cost, less any accumulated depreciation and im-
pairment losses, and adjusted for any remeasurement of lease
liabilities. The cost of right-of-use assets includes the amount
of lease liabilities recognised, initial direct costs incurred,
and lease payments made at or before the commencement
date less any lease incentives received. Right-of-use assets
are recognised in tangible assets and are depreciated on a
straight-line basis over the lease term. The lease term used
is the non-cancellable lease period. Any renewal options are
included if management deems it reasonably certain that they
will be exercised.
At the commencement date of the lease, the Group
recognises lease liabilities measured at the present value of
lease payments to be made over the lease term. The lease
payments include fixed payments less any lease incentives
receivable, variable lease payments that depend on an index
or a rate, amounts expected to be paid under residual value
guarantees, and the exercise price of a purchase option rea-
sonably certain to be exercised, and payments of penalties
for terminating a lease, if the lease term reflects exercising
the option to terminate. Lease liabilities are recognised in
other liabilities and interest expenses in the interest expenses
line item. In calculating the present value of lease payments,
Taaleri uses its incremental borrowing rate, which manage-
ment has defined as being the interest rate of the latest debt
security issued to the public by Taaleri.
Taaleri applies an exemption on short-term leases (lease
term less than one year) and on leases of low-value assets
(below 5,000 euros). Lease payments on short-term leases
and leases of low-value assets are recognised as expense on a
straight-line basis over the lease term.
2.12 EMPLOYEE BENEFITS
Management long-term remuneration
All full-time Taaleri Group employees in Finland (except for the
Group CEO, the Deputy CEO, senior advisors and compliance
personnel, as well as employees of Taaleri Kapitaali Oy, the
Energia segment, Garantia and Mobify Invoices Oy) belong to
Taaleri Group’s remuneration fund (Taaleri Palkkiorahasto hr.).
Part of the Group’s annual remuneration is transferred to the
remuneration fund according to predefined criteria.
The Group uses long-term remuneration systems for per-
sonnel based on which persons belonging to them may receive
a bonus settled in Taaleri shares or cash for work performed
during the vesting period. Depending on the payment method,
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these remuneration programmes are recognised either in equi-
ty or as cash-settled share-based payment transactions.
Share-based employee benefits paid in equity are meas-
ured at fair value at the moment of granting. The amount
recognised in expenditure is amortised in personnel costs
and as an increase in equity during the vesting period. Also in
arrangements settled in the net amount – in which the Group
is obliged to pay withholding tax on the bonus to be paid,
due to which part of the bonus earned is spent on paying tax-
es – the bonus earned is treated as an asset fully paid in equity
instruments, despite the tax part paid in money.
The estimated number of shares to be implemented is
checked quarterly. The possible effects of adjustments made
to the original estimates are recognised in the income state-
ment as personnel costs, and the corresponding adjustment is
made in equity.
Pensions
The statutory pension cover of the company’s employees
and management has been arranged using TyEL (employee
pension) insurance agreements. Voluntary additional pension
insurance has been taken out for members of the company’s
management. All of the Group’s pension arrangements are
defined-contribution plans. Expenses arising from statutory
pension arrangements are recognised in the income state-
ment under personnel costs and those arising from voluntary
additional pension insurance is recognised under other
administrative expenses. Insurance premiums are paid to the
insurance company and recognised as expenses over the
financial period, which the premiums cover. The defined-con-
tribution plans have no other payment obligations.
2.13 CONTINGENT LIABILITIES
A contingent liability is a possible obligation that arises from
past events, and whose existence will be confirmed by the
occurrence of an uncertain event not wholly in the control of
the Group. In addition, an existing obligation which probably
does not require that the payment obligation is met, or the
amount of which cannot be estimated reliably, is considered
to be a contingent liability. The Group’s contingent liabilities
are presented in the notes to the financial statements.
2.14 INCOME TAXES AND DEFERRED TAXES
Tax expenses consist of taxes based on the taxable income
for the period, taxes for previous periods and deferred taxes.
Taxes are recognised through profit or loss, unless they are
associated with items recognised directly in shareholders’
equity or other comprehensive income. In this case, taxes
are recognised in the items in question. Taxes based on the
taxable income for the period is calculated from the taxable
income on the basis of tax rates valid in the specific country.
Deferred taxes are calculated on temporary differences
between the carrying amount and taxable value. However,
deferred tax liabilities are not recognised on the original rec-
ognition of goodwill. Deferred tax assets are recognised up
to the amount at which it is likely that taxable income will be
generated in the future, against which the temporary differ-
ence can be utilised. The Group’s most significant temporary
differences are generated from the elimination of the equali-
sation amount of guaranty liabilities in insurance activities and
the measurement of investments at fair value. Deferred taxes
are calculated using the tax rates regulated by the closing
date or tax rates which have been approved in practice before
the closing date.
2.15 REVENUE RECOGNITION PRINCIPLES
Revenue recognition principles for wealth management
Fee and commission income is based, for example, on fund
units, asset management, securities brokerage and the issu-
ance of securities. Taaleri Group’s most significant commission
income consists of fund units and asset management. Fee and
commission expenses include commissions paid to others
related to income recognised in commission income. Wealth
management commissions are invoiced beforehand every
quarter and accrued as income over every month. Securities
brokerage transactions are recognised according to the trad-
ing date. The above mentioned revenues are recognised in
Fee and commission income.
Project income and expenses are recognised during the
financial period when the project outcome can be evaluated
reliably. Short-term unfinished project expenses are activated
on the balance sheet. Project income is presented in other
operating income and, correspondingly, project expenses are
recognised in other operating expenses.
Net income from securities trading includes changes in
fair value of all financial instruments recognised at fair value
through profit or loss. Net income from trading in foreign cur-
rencies includes net gains from foreign exchange transactions,
as well as positive and negative foreign exchange differences
from translating assets and liabilities into euros.
Revenue recognition principles for insurance activities
Revenue recognition principles for insurance activities have
been described in Section 2.8 (Assets and liabilities from
insurance activities). All income from insurance activities are
presented in net income from insurance activities, apart from
changes in fair value from financial assets measured at fair
value through other comprehensive income, which are pre-
sented in the statement of comprehensive income.
Revenue recognition principles for the Energy business
Fee and commission income for the Energy business is based
on Energy segment fund units. The Energy business also
develops projects whose income and costs are recognised
in the financial period when the end result of the project can
be reliably assessed. Incomplete project costs are activated
on the balance sheet. Fee and commission expenses include
commissions paid to others related to income recognised in
fee and commission income.
The Energy business also includes operating and mainte-
nance services for wind farms, whose invoicing is based on a
pre-agreed annual payment, which is recognised as income
within the year as the year progresses.
Other income
Income from equity investments mainly includes dividend in-
come from equity investments and transfer gains/losses from
associates and subsidiaries, as well as available-for-sale finan-
cial assets. Dividends are mainly recognised after the Annual
General Meeting of the distributing company has made its
decision on the distribution of dividends.
Interest income and expenses on interest bearing assets
and liabilities are recognized on an accrual basis. On receiv-
ables, the difference between the acquisition cost and the
nominal value is recognised in interest income on an accrual
basis, and on liabilities the difference is recognised in interest
expenses on an accrual basis. The difference between the
nominal value and acquisition cost of fixed-rate bonds is rec-
ognised in interest income and expenses over the loan term
on an accrual basis.
The effective interest method has been applied to the
recognition of interest income and expenses over the agree-
ment term. When calculating the effective interest rate, the
expected life of the financial instrument and the future cash
flows are estimated based on all contractual terms. Received
commissions, transaction costs and possible premiums or
discounts, which are an integral part of the effective interest
rate of the financial instrument, have been taken into account
when recognising interest income and expenses.
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2.16 SHAREHOLDERS’ EQUITY
The Group classifies instruments it has issued, into equity or
liabilities (financial liabilities) on the basis of their characteris-
tics. Equity instruments include any contracts which indicate a
right to obtain a proportion of an entity’s assets after deduct-
ing all of its liabilities. Costs related to the issuance or acqui-
sition of equity instruments are accounted for as a deduction
from equity. If the company reacquires its own equity instru-
ments, those instruments are deducted from equity.
2.17 OPERATING PROFIT AND INCOME
The IAS 1 (Presentation of Financial Statements) standard
does not define the concept of operating profit. The Group
has defined it as follows: operating profit is the net amount of
Total income, Fee and commission expenses, Interest expens-
es, Administrative expenses, Depreciation and Impairments,
Other operating expenses and the Share of associate’s profit
or loss. All income statement items other than those listed
above are presented below the operating profit.
Income included in the total income have been presented
as a gross amount, apart from income from securities and
currency trading and income from insurance, which are pre-
sented as a net amount to offer a fair view.
2.18 ACCOUNTING POLICIES REQUIRING
MANAGEMENT’S JUDGMENT AND KEY
UNCERTAINTIES REGARDING ESTIMATIONS
When preparing the financial statements, estimates and
assumptions concerning the future need to be made, and
their outcome may differ from the estimates and assumptions
made. In addition, applying the accounting policies requires
judgement.
Taaleri has taken into account the uncertainty in the
preparation of the financial statements due to the coronavirus
pandemic. The effects of the prevailing circumstances have
been assessed in the estimates that require management’s
judgment and in the related key uncertainties. According to
management’s judgement coronavirus pandemic has not had
a significant impact on the financial statements or items sub-
ject to estimations.
In 2015 Taaleri acquired Garantia insurance company.
The purchase price paid, compared to the actual market
value includes uncertainty and managerial judgement. The
Group has measured assets and liabilities of the acquired
company at fair value according to best estimates, but future
guaranty losses involve significant uncertainties, particularly
in a poor market situation. The fact that EUR 28.6 million was
recognised in negative goodwill on the acquisition date of 31
March 2015, does not mean that no guaranty losses relating
to the outstanding guaranties on the acquisition date, could
occur in the future. On the acquisition date, the company was
not aware of any guaranty losses which the company had not
taken into account on its balance sheet and, according to
IFRS, general unallocated provisions cannot be made.
The measurement of the liabilities associated with the
guaranty operations offered by Garantia involve a number of
factors and uncertainties subject to judgement. In addition to
assumptions concerning the external operating environment,
the evaluation is mainly based on the insurance mathematical
analysis of its loss statistics. The managerial judgement is
particularly required to define risks and the capital required
for business operations, to price risks according to profitability
and solvency objectives, to fulfil the obligations required by
insurance agreements and to evaluate provisions for out-
standing claims caused by loss events that have already oc-
curred. According to management’s judgement coronavirus
pandemic has not had a significant impact on the measure-
ment of the liabilities associated with the guaranty operations.
When assessing the Group’s control in structured entities,
the power of the Group to affect relevant activities and its
exposure to variable returns are evaluated. The assessment
of control is subject to judgement. The assessment of control
is done in more detail, when the Group’s share in the struc-
tured entity’s net assets and returns exceeds 20 percent. The
investee is consolidated as a subsidiary at the latest, when
the Group’s exposure to variable returns is significant and the
Groups is able to use its power over the investee to affect the
amount of the variable returns.
When recognising and measuring the acquired assets and
liabilities in business acquisitions (Evervest Oy and Suomen
Vuokravastuu Oy in 2018), thus affecting the recognised
goodwill, managerial judgement has been used.
The values of businesses acquired through business
combinations are based on estimated future development,
estimated cash flows and the discount rate used. Goodwill is
tested annually for impairment. The recoverable amount de-
fined in impairment testing is often based on the value in use,
the calculation of which requires estimates of future cash flows
and the discount rate used. The possible effects of the corona-
virus pandemic have been considered on the estimated cash
flows in goodwill impairment testing. This has not had a signif-
icant impact on the outcome of the impairment testing. More
detailed information on goodwill is provided in Note 27.
Managerial judgement is needed when measuring the
unfinished projects of the Wealth Management and Energia
segments. External costs associated with active projects have
been recognised on the balance sheet if the net present
value of the project is positive. Project expenses have been
recognised through profit or loss if a project has ended or its
net present value is negative. The coronavirus pandemic has
caused delays in the progress of projects, but this has not had
a material effect on the valuation of unfinished projects.
When classifying and measuring financial assets manageri-
al judgement is needed, i.e. when deciding whether an equity
instrument is strategic or not, which affects whether the in-
strument is measured through profit or loss or other compre-
hensive income without recycling. Evaluating expected credit
loss requires judgement, i.e. when choosing which credit loss
models and parameters to use. The expected credit loss mod-
el is described in more detail in section 2.7 of the accounting
policies. The coronavirus pandemic has not had a significant
impact on the definition of expected credit losses.
Management must evaluate when the markets of financial
instruments are no longer deemed to be active. When the fair
value of a financial instrument is measured using valuation
methods, the management’s judgement is required for the
selection of the applicable valuation method. International
Valuation Standards (IVS) and valuation methods based on
their applications have been used to measure the fair value
of private equity fund investments and unquoted shares and
units. The valuations take a number of different factors into
consideration, such as when an investment was made and
at what price, the price development of quoted reference
companies, local market conditions in the specific industry,
realised and estimated operating results, and additional
investments. Value analyses have usually been prepared for
finished projects using a cash flow-based income approach
and a comparative market-based measurement method.
Funds including unfinished project have been measured at
their acquisition cost. Estimates and managerial judgement is
required in the valuations. Illiquid investments include uncer-
tainty regarding the future realised gains or losses, compared
to the estimated fair value.
Managerial judgement has been applied when measuring
the fair value of synthetic options, and the amount recognised
in profit or loss, from share-based payment schemes. Hence,
deferred taxes from the synthetic options have been recog-
nised in profit or loss and on the balance sheet. The corona-
virus pandemic has not had a significant impact on entries
arising from share-based payment schemes.
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Deferred taxes have been recognised from the equalisa-
tion amount of Garantia, the amount of which is based on loss
statistics confirmed by the management and estimated future
losses which involve judgement. Managerial judgement is
needed when comparing the current period’s loss ratio with
the long-term expected average, on the basis of which the
equalisation amount is either increased or decreased through
profit or loss, which has a direct impact on the amount of
deferred tax liabilities. The coronavirus pandemic has not
had a significant impact on the measurement of equalisation
amount.
2.19 APPLIED NEW AND REVISED STANDARDS
Starting from 1 January 2020, the Group has applied the fol-
lowing new and revised standards and interpretations with an
impact on the financial statements:
• Improvements to IFRS. Annual improvements to stand-
ards are performed collectively once a year. The impact
of these changes varies according to standard, but these
changes have not had any significant impact on consoli-
dated financial statements.
2.20 NEW AND REVISED STANDARDS TO BE
APPLIED LATER
Several new standards and amendments to and interpre-
tations of standards will only be adopted later than in the
financial periods beginning 1 January 2020, and they have
not been applied in the preparation of these consolidated
financial statements. It is expected that the following revisions
will have some impact on Taaleri’s financial statements:
IFRS 17 Insurance Contracts was issued in May 2017 as
replacement for IFRS 4 Insurance Contracts. The standard will
become applicable on 1 January 2023. The overall objective
of IFRS 17 is to provide better information on the financial
position and profitability of insurance companies. The pur-
pose is to increase the transparency and improve the com-
parability of financial statements. The accounting in IFRS 17
differs from the Solvency II capital adequacy calculations that
insurance companies currently use, and the technical provi-
sions will therefore not be the same. IFRS 17 harmonizes the
accounting for insurance liabilities and the application of local
accounting policies will no longer be allowed. Under IFRS 17
the measurement of the insurance liability will be at fair value.
The Group is assessing the impact of IFRS 17. The standard
has not yet been endorsed by the EU.
No other IFRS standard or IFRIC interpretation already
published but not yet valid is expected to have a material
impact on the Group.
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NOTES TO THE INCOME STATEMENT
3 FEE AND COMMISSION INCOME ................................................................................. 38
4 NET INCOME FROM INSURANCE ................................................................................. 38
5 NET GAINS OR NET LOSSES ON TRADING IN SECURITIES
AND FOREIGN CURRENCIES ......................................................................................... 39
6 INCOME FROM EQUITY INVESTMENTS ....................................................................... 39
7 INTEREST INCOME .......................................................................................................... 39
8 OTHER OPERATING INCOME ........................................................................................ 39
9 FEE AND COMMISSION EXPENSE ................................................................................ 39
10 INTEREST EXPENSE ......................................................................................................... 40
11 PERSONNEL COSTS ........................................................................................................ 40
12 OTHER ADMINISTRATIVE EXPENSES ............................................................................ 40
13 DEPRECIATION, AMORTISATION AND
IMPAIRMENT ON TANGIBLE AND INTANGIBLE ASSETS ........................................... 40
14 OTHER OPERATING EXPENSES ..................................................................................... 40
15 EXPECTED CREDIT LOSSES ........................................................................................... 41
16 INCOME TAXES ................................................................................................................ 41
17 OTHER COMPREHENSIVE INCOME ITEMS .................................................................. 41
18 EARNINGS PER SHARE .................................................................................................... 42
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3 FEE AND COMMISSION INCOME
1.1.–31.12.2020, EUR 1,000
Wealth
management Insurance Energy Other Total
Wealth management fees and
commissions 32,831 - 9,094 119 42,044
Performance fees 7,108 - - - 7,108
Total 39,939 - 9,094 119 49,152
1.1.–31.12.2019, EUR 1,000
Wealth
management Insurance Energy Other Total
Wealth management fees and
commissions 36,276 - 4,555 33 40,864
Performance fees 5,188 - - - 5,188
Total 41,464 - 4,555 33 46,052
4 NET INCOME FROM INSURANCE
EUR 1,000 1.1.–31.12.2020 1.1.–31.12.2019
Earned premiums, net
Premiums written 18,988 19,791
Reinsurers’ share -243 -1,009
Change in provision for unearned premiums -3,395 -5,629
Reinsurers’ share -465 254
Total 14,885 13,406
Claims incurred, net
Claims paid -1,080 -482
Reinsurers’ share 547 403
Change in provision for outstanding claims 592 -3,084
Reinsurers’ share -329 1,802
Total -270 -1,361
EUR 1,000 1.1.–31.12.2020 1.1.–31.12.2019
Net income from investment operations
Financial assets at fair value through other comprehensive income 2,326 2,366
Interest income 1,878 2,071
Profit or loss from sales 518 353
Others -70 -58
- of which change in expected credit loss -70 -58
Financial assets at fair value through profit or loss 208 6,842
Financial assets that need to be measured at fair value through profit or
loss 208 6,842
Change in fair value -1,102 4,761
Interest income 1,622
From dividends - 1,873
Profit or loss from sales -77 209
Other -234
Total 2,534 9,208
Net income from insurance, total 17,149 21,253
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5 NET GAINS OR NET LOSSES ON TRADING
IN SECURITIES AND FOREIGN CURRENCIES
Net gains or net losses on trading in securities, EUR 1,000 1.1.–31.12.2020 1.1.–31.12.2019
From financial assets measured at fair value through profit or loss
Financial assets that need to be measured at fair value through profit or loss 833 -955
Total 833 -955
Net gains or net losses on trading in securities and foreign currencies, EUR 1,000 1.1.–31.12.2020 1.1.–31.12.2019
Net gains or net losses on trading in securities by type
From shares and units 833 -955
Sales profit and loss 133 308
Changes in fair value 700 -1,263
Net gains or let losses on trading in securities, total 833 -955
Net gains or net losses on trading in foreign currencies 87 816
Total 920 -139
6 INCOME FROM EQUITY INVESTMENTS
EUR 1,000 1.1.–31.12.2020 1.1.–31.12.2019
From financial assets recognised at fair value in profit or loss 557 901
Dividend income 71 73
Profit or loss from divestments 485 829
From assets classified as held for sale -2,309 -4,267
Dividend income - 74
Changes in fair value -2,309 -4,341
From associated companies - 508
Profit or loss from divestments - 508
From group companies 142 1,046
Profit or loss from divestments 142 1,046
Total -1,610 -1,812
7 INTEREST INCOME
EUR 1,000 1.1.–31.12.2020 1.1.–31.12.2019
Interest income from other loans and receivables
From receivables from the public and general government 1,537 1,167
From Debt securities 86 51
Other interest income 87 17
Total 1,710 1,235
Interest income do not include income from financial assets that are impaired.
8 OTHER OPERATING INCOME
EUR 1,000 1.1.–31.12.2020 1.1.–31.12.2019
Rental income 5 8
Income from wind projects 1,642 171
Other income 439 439
Total 2,086 619
9 FEE AND COMMISSION EXPENSE
EUR 1,000 1.1.–31.12.2020 1.1.–31.12.2019
Wealth management fee and commission expenses 5,039 4,835
Other commission expenses 991 567
Total 6,030 5,401
40
SignaturesParent company financial statements Auditor’s reportCEO’s reviewKey figures Board of Directors’ report Group financial statements
10 INTEREST EXPENSE
EUR 1,000 1.1.–31.12.2020 1.1.–31.12.2019
Interest expenses from other liabilities
From liabilities to credit institutions 1,062 629
From receivables from credit institutions 28 15
From debt securities issued to the public 2,165 2,342
From subordinated debts 154 154
Other interest expenses 5 2
Total 3,415 3,142
11 PERSONNEL COSTS
EUR 1,000 1.1.–31.12.2020 1.1.–31.12.2019
Wages, salaries and fees 20,706 19,612
- whereof variable fees 3,585 3,859
Pension expenses - from defined contribution plans 3,115 3,297
Share-based payments 982 850
Payable in cash 982 850
Social security contributions 438 437
Total 25,241 24,197
12 OTHER ADMINISTRATIVE EXPENSES
EUR 1,000 1.1.–31.12.2020 1.1.–31.12.2019
ICT expenses 4,504 3,719
Marketing and communication expenses 1,589 1,908
Other expenses 2,682 3,897
Total 8,775 9,523
13 DEPRECIATION, AMORTISATION AND IMPAIRMENT ON
TANGIBLE AND INTANGIBLE ASSETS
EUR 1,000 1.1.–31.12.2020 1.1.–31.12.2019
Intangible assets
Planned depreciation 935 978
Tangible goods
Planned depreciation 1,567 1,685
Total 2,502 2,663
14 OTHER OPERATING EXPENSES
EUR 1,000 1.1.–31.12.2020 1.1.–31.12.2019
Premises and other rental expenses 723 601
External services 3,195 3,419
Equipment rental and leasing 90 162
Fees paid to the company’s auditors 372 349
Auditing fees 264 284
Tax services 30 37
Other 79 28
Other expenses 1,488 698
Total 5,868 5,229
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SignaturesParent company financial statements Auditor’s reportCEO’s reviewKey figures Board of Directors’ report Group financial statements
15 EXPECTED CREDIT LOSSES
EUR 1,000 Amortised cost
At fair value through other
comprehensive income
1)
Total
ECL 1.1.2020 665 434 1,099
Additions due to purchases 38 79 118
Deductions due to derecognitions 127 -53 74
Changes in risk parameters - 44 44
Recognised in profit or loss 165 70 235
ECL 31.12.2020 830 504 1,334
EUR 1,000 Amortised cost
At fair value through other
comprehensive income
1)
Total
ECL 1.1.2019 39 376 415
Additions due to purchases 628 63 692
Deductions due to derecognitions -3 -44 -47
Changes in risk parameters - 40 40
Recognised in profit or loss 626 58 684
ECL 31.12.2019 665 434 1,099
All financial assets subject to ECL calculations are on level 1, i.e. the credit risk has not increased significantly. There are no realised credit losses
recognised in the presented financial periods.
1)
Expected credit losses from financial assets measured at fair value through other comprehensive income all pertain to the insurance business, and
therefore the expected credit loss has been recognised in net income from insurance investment operations. See Note 4.
EUR 1,000 1.1.–31.12.2020 1.1.–31.12.2019
Received payments related to loans that have been written-off 65 68
Change in ECL -165 -626
Expected credit losses from financial assets
measured at amortised cost recognised in profit or loss -100 -557
16 INCOME TAXES
EUR 1,000 1.1.–31.12.2020 1.1.–31.12.2019
From profit for the financial period 4,427 4,842
Taxes from previous periods 227 13
Deferred taxes -207 124
Total 4,447 4,979
Reconciliation of taxes on the income statement with profit before taxes 1.1.–31.12.2020 1.1.–31.12.2019
Operating profit (profit before taxes) 17, 5 4 8 16,458
Taxes calculated at the tax rate of the parent company (20%) 3,510 3,292
Tax-free income -73 -143
Non-deductible expenses 967 1,811
The use of taxable losses not previously booked 4 177
Unbooked deferred tax receivables from taxable losses -207 -226
Share of the profits of associated and joint venture companies with taxes deducted 15 -7
Taxes from previous financial periods 227 89
Other items 5 -14
Taxes on the income statement 4,447 4,979
The effective tax rate in 2020 was 25% (2019: 30%).
17 OTHER COMPREHENSIVE INCOME ITEMS
Taxes concerning other comprehensive income 1.1.–31.12.2020 1.1.–31.12.2019
EUR 1,000 Pre-tax Tax effect After taxes Pre-tax Tax effect After taxes
Changes in the fair value reserve 201 -41 160 1,847 -368 1,478
Items that may be reclassified to profit or loss 195 -39 156 1,837 -367 1,470
Items that may not be
reclassified to profit or loss 6 -2 4 10 -1 9
Translation differences -325 - -325 215 - 215
Total -124 -41 -165 2,062 -368 1,693
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SignaturesParent company financial statements Auditor’s reportCEO’s reviewKey figures Board of Directors’ report Group financial statements
18 EARNINGS PER SHARE
BASIC EARNINGS PER SHARE
Basic earnings per share is calculated by dividing the profit or loss attributable to the company’s shareholders by the weighted aver-
age of the number of shares outstanding - with the exception of repurchased own shares (Note 37 Equity).
EUR 1,000 1.1.–31.12.2020 1.1.–31.12.2019
Profit from continuing operations attributable to the owners of the parent company 13,012 11,078
Total 13,012 11,078
Weighted average number of ordinary shares outstanding (1,000 pcs) 28,306 28,306
Basic earnings per share, continuing operations, EUR 0.46 0.39
DILUTED EARNINGS PER SHARE
Diluted earnings per share is calculated by adjusting the weighted average number of shares outstanding so that all dilutive po-
tential ordinary shares are assumed to be converted into ordinary shares. The Group’s dilutive potential ordinary shares consist of
share-based incentive arrangements (options) payable as shares. They are taken into account like options, from the date of their
granting when calculating the diluted earnings per share.
EUR 1,000 1.1.–31.12.2020 1.1.–31.12.2019
Profit from continuing operations attributable to the owners of the parent company 13,012 11,078
Total 13,012 11,078
Weighted average number of ordinary shares outstanding (1,000 pcs) 28,306 28,306
The dilutive effect of share options (1,000 pcs) 777 541
The weighted average of the number of shares when calculating the diluted
earnings per share (1,000 pcs) 29,083 28,847
Diluted earnings per share, continuing operations, EUR 0.45 0.38
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SignaturesParent company financial statements Auditor’s reportCEO’s reviewKey figures Board of Directors’ report Group financial statements
NOTES TO THE BALANCE SHEET
19 RECEIVABLES FROM CREDIT INSTITUTIONS .............................................................. 44
20 RECEIVABLES FROM THE PUBLIC AND GENERAL GOVERNMENT.......................... 44
21 DEBT SECURITIES ............................................................................................................ 44
22 SHARES AND UNITS ........................................................................................................ 44
23 ASSETS CLASSIFIED AS HELD FOR SALE ..................................................................... 45
24 INSURANCE ASSETS AND LIABILITIES ......................................................................... 45
25 CLASSIFICATION OF FINANCIAL ASSETS AND LIABILITIES ..................................... 46
26 FINANCIAL INSTRUMENTS AT FAIR VALUE ................................................................. 48
27 INTANGIBLE ASSETS ....................................................................................................... 49
28 TANGIBLE ASSETS ........................................................................................................... 50
29 OTHER ASSETS ................................................................................................................. 50
30 ACCRUED INCOME AND PREPAYMENTS .................................................................... 50
31 LIABILITIES TO CREDIT INSTITUTIONS ......................................................................... 50
32 DEBT SECURITIES ISSUED TO THE PUBLIC .................................................................. 50
33 OTHER LIABILITIES .......................................................................................................... 52
34 ACCRUED EXPENSES AND DEFERRED INCOME ....................................................... 52
35 DEFERRED TAX ASSETS AND LIABILITIES .................................................................... 52
36 SUBORDINATED DEBT.................................................................................................... 52
37 EQUITY CAPITAL .............................................................................................................. 53
44
SignaturesParent company financial statements Auditor’s reportCEO’s reviewKey figures Board of Directors’ report Group financial statements
19 RECEIVABLES FROM CREDIT INSTITUTIONS
EUR 1,000 31.12.2020 31.12 .2019
Repayable on demand 25,786 29,102
From domestic credit institutions 25,729 28,064
From foreign credit institutions 57 1,038
Other than repayable on demanded - -
From foreign credit institutions - -
Total 25,786 29,102
Receivables from credit institutions correspond fully to the Group’s cash balances. All cash balances are available for use by the
group.
20 RECEIVABLES FROM THE PUBLIC AND GENERAL GOVERNMENT
EUR 1,000 31.12.2020 31.12 .2019
Other than repayable on demanded
Companies and housing associations 4,871 6,691
Households 946 426
Foreign 883 1,177
Total 6,699 8,294
The group has subordinated receivables amounting to 2.5 (5.5) million euros. Information about impairment losses is presented in
Note 15 to the income statement. The maturity dates of receivables are presented in Note 39.
21 DEBT SECURITIES
EUR 1,000 31.12.2020 31.12 .2019
Other than those issued by general government
Available for sale
Other debt securities (not publicly quoted) 1,498 1,498
Total 1,498 1,498
22 SHARES AND UNITS
Shares and units, EUR 1,000 31.12.2020 31.12 .2019
Fair value through profit or loss 21,474 8,736
Fair value through other comprehensive income 497 496
Total 21,971 9,232
- of which publicly quoted 38 40
- of which shares in funds 617 475
Participating interests, EUR 1,000 31.12.2020 31.12 .2019
Acquisition cost 9,513 6,763
Share of the associates' profits -265 -339
Total 9,248 6,423
Total 31,219 15,655
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SignaturesParent company financial statements Auditor’s reportCEO’s reviewKey figures Board of Directors’ report Group financial statements
23 ASSETS CLASSIFIED AS HELD FOR SALE
Assets classified as held for sale, EUR 1,000 31.12.2020 31.12 .2019
Investments in associated companies 5,357 7,666
Total 5,357 7,666
As Taaleri’s associated company Fellow Finance Plc was listed on the First North exchange in October 2018, Taaleri Plc decided to
reclassify the holding as an asset held for sale. Taaleri Plc has promoted and promotes actively and continuously the sale. Fellow
Finance Plc is part of Taaleri’s Other operations.
24 INSURANCE ASSETS AND LIABILITIES
Insurance assets, EUR 1,000 31.12.2020 31.12. 2019
Investments
Loans and other receivables 134,970 125,138
Shares and units 21,735 23,525
Total 156,705 148,662
Receivables
Arising out of direct insurance operations 1,244 1,335
Arising out of reinsurance operations 2,460 3,328
Total 3,705 4,663
Total 160,410 153,325
Insurance liabilities, EUR 1,000 31.12.2020 31.12. 2019
Provision for unearned premiums 30,147 26,752
Claims outstanding 4,373 4,964
Liabilities arising out of direct insurance operations 56 61
Liabilities arising out of reinsurance operations 100 526
Total 34,676 32,303
46
SignaturesParent company financial statements Auditor’s reportCEO’s reviewKey figures Board of Directors’ report Group financial statements
25 CLASSIFICATION OF FINANCIAL ASSETS AND LIABILITIES
Financial assets and liabilities 31 December 2020,
EUR 1,000
At fair value through other comprehensive
income At fair value through profit or loss
Financial assets Amortised cost
Equity
instruments
3)
Others
Equity
instruments Others Total Fair value
Receivables from credit institutions
1)
25,786 25,786 25,786
Receivables from the public and general government 2,764 3,935 6,699 6,699
Debt securities 1,498 1,498 1,508
Shares and units 497 20,857 617 21,971 21,971
Insurance assets 100,348 39,717 16,640 156,705 156,705
Other financial assets 20,309
Financial assets total 30,048 497 100,348 60,575 21,191 232,969
Participating interests 9,248
Other than financial assets 25,774
Assets in total 31 December 2020 267,990
Financial liabilities At fair value through profit or loss Other liabilities Total Fair value
Liabilities to credit institutions 14,939 14,939 15,000
Debt securities issued to the public
2)
34,937 34,937 35,485
Subordinated debt 14,839 14,839 15,154
Other financial liabilities 16,349 16,349
Financial liabilities total 81,063 81,063
Other than financial liabilities 53,717
Liabilities in total 31 December 2020 134,781
1)
The carrying amount of these receivables are seen as the best estimate of their fair values.
2)
Bonds included in Debt securities issued to the public are carried at amortised cost.
3)
At initial recognition the Group’s non-strategic investments are specifically classified as measured at fair value through profit or loss. Thus, dividend yields are recognised in profit or loss, but changes in fair value, foreign exchange rate gains
and losses as well as sales gains and losses are recognised in other comprehensive income. These are not later recycled to profit or loss. The classification as a non-strategic investment is made instrument-by-instrument by management. Non-
strategic investments include small investments in limited partnerships associated to Taaleri’s private equity funds and equity investments in private companies not directly associated to Taaleri’s business strategy. On 31.12.2020 the fair value
of non-strategic investments was 497 (31.12.2019 496) thousand euros, of which none paid dividends in 2020 or 2019. No non-strategic investments were derecognised in 2020 or 2019.
47
SignaturesParent company financial statements Auditor’s reportCEO’s reviewKey figures Board of Directors’ report Group financial statements
Financial assets and liabilities 31 December 2019,
EUR 1,000
At fair value through other comprehensive
income At fair value through profit or loss
Financial assets Amortised cost
Equity
instruments
3)
Others
Equity
instruments Others Total Fair value
Receivables from credit institutions
1)
29,102 29,102 29,102
Receivables from the public and general government 2,060 6,234 8,294 10,509
Debt securities 1,498 1,498 1,730
Shares and units 496 8,260 475 9,232 9,232
Insurance assets 76,992 52,642 19,028 148,662 148,662
Other financial assets 27, 0 4 6 27, 0 4 6
Financial assets total 59,706 496 76,992 60,902 25,738 223,835
Participating interests 6,423
Other than financial assets 39,442
Assets in total 31 December 2019 269,700
Financial liabilities At fair value through profit or loss Other liabilities Total Fair value
Liabilities to credit institutions 25,929 25,929 26,162
Debt securities issued to the public
2)
34,875 34,875 35,967
Subordinated debt 14,825 14,825 15,154
Other financial liabilities 18,462 18,462
Financial liabilities total 94,090 94,090
Other than financial liabilities 49,881
Liabilities in total 31 December 2019 143,971
1)
The carrying amount of these receivables are seen as the best estimate of their fair values.
2)
Bonds included in Debt securities issued to the public are carried at amortised cost.
3)
At initial recognition the Group’s non-strategic investments are specifically classified as measured at fair value through profit or loss. Thus, dividend yields are recognised in profit or loss, but changes in fair value, foreign exchange rate gains
and losses as well as sales gains and losses are recognised in other comprehensive income. These are not later recycled to profit or loss. The classification as a non-strategic investment is made instrument-by-instrument by management. Non-
strategic investments include small investments in limited partnerships associated to Taaleri’s private equity funds and equity investments in private companies not directly associated to Taaleri’s business strategy. On 31.12.2019 the fair value
of non-strategic investments was 496 thousand euros, of which none paid dividends in 2019. No non-strategic investments were derecognised in 2019.
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SignaturesParent company financial statements Auditor’s reportCEO’s reviewKey figures Board of Directors’ report Group financial statements
26 FINANCIAL INSTRUMENTS MEASURED AT FAIR VALUE
Fair value of assets 31 December 2020, EUR 1,000 Level 1 Level 2 Level 3 Fair value total
Receivables from credit institutions 25,786 25,786
Receivables from the public and general government 5,964 735 6,699
Debt securities 1,508 1,508
Shares and units 654 21,317 21,971
Insurance assets 151,610 5,095 156,705
Total 152,264 33,258 27,147 212,670
Fair value of liabilities 31 December 2020, EUR 1,000 Level 1 Level 2 Level 3 Fair value total
Liabilities to credit institutions 15,000 15,000
Debt securities issued to the public 35,485 35,485
Subordinated debt 15,154 15,154
Total 65,639 65,639
Fair value of assets 31 December 2019, EUR 1,000 Level 1 Level 2 Level 3 Fair value total
Receivables from credit institutions 29,102 29,102
Receivables from the public and general government 9,815 694 10,509
Debt securities 1,730 1,730
Shares and units 516 8,716 9,232
Insurance assets 144,166 4,496 148,662
Total 144,682 40,647 13,907 199,235
Fair value of liabilities 31 December 2019, EUR 1,000 Level 1 Level 2 Level 3 Fair value total
Liabilities to credit institutions 26,162 26,162
Debt securities issued to the public 35,967 35,967
Subordinated debt 15,154 15,154
Total 77, 28 3 77, 28 3
FAIR VALUE HIERARCHY
Level 1: Fair values are based on the prices quoted on the
active market on identical assets or liabilities.
Level 2: Fair values are based on information other than
quoted prices included within level 1 that are observable for
the asset or liability, either directly (from prices) or indirectly
(derived from prices). When measuring the fair value of these
instruments, Taaleri Group uses generally accepted valuation
models whose information is based to a significant degree on
verifiable market information.
Level 3: Fair values are based on information concerning an
asset or liability, which is not based on verifiable market infor-
mation. Level 3 assets are mainly valued at a price received
from an external party or, if no reliable fair value is available/
determinable, at purchase price.
ASSETS CLASSIFIED AT LEVEL 3
Assets categorised within level 3 consist of unquoted shares
in private equity funds, stocks and debt securities. Shares in
private equity funds are mainly measuered at the latest fair
value received from the management company. Unquoted
shares are measured at fair value using discounted cash flow
analysis or, if it is determined that fair value cannot be meas-
ured reliably, at acquisition cost.
Reconciliation of assets categorised within level 3, EUR 1,000 1.1.–31.12.2020 1.1.–31.12.2019
Fair value January 1 13,907 10,961
Purchases 4,343 14,376
Sales and deductions - 615 -10,073
Change in fair value - income statement 635 -1,361
Change in fair value - comprehensive income statement 6 4
Change of associated company or subsidiary to an investment 8,872 -
Fair value at end of period 27,147 13,907
Unrealised gains or losses attributable to fair value measurements of assets
or liabilities categorised within level 3 held at the end of the reporting period
recognised in profit or loss, EUR 1,000 1.1.–31.12.2020 1.1.–31.12.2019
Net income from insurance 21 32
Net gains or net losses on trading in securities and foreign currencies 614 -1,394
Total 635 -1,361
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SignaturesParent company financial statements Auditor’s reportCEO’s reviewKey figures Board of Directors’ report Group financial statements
27 INTANGIBLE ASSETS
EUR 1,000 31.12.2020 31.12. 2019
Goodwill 5,097 5,097
Other intangible assets 1,679 1,434
IT systems and software 1,679 1,434
Total 6,775 6,531
2020 Goodwill
Other
intangible assets Total
Acquisition cost 1 January 2020 5,097 6,829 11,926
Increases - 1,180 1,180
Acquisition cost 31 December 2020 5,097 8,009 13,106
Accumulated depreciation, amortisation and impairment 1 January 2020 - 5,395 5,395
Depreciation during the financial period - 935 935
Accumulated depreciation, amortisation and impairment 31 December 2020 - 6,330 6,330
Book value 1 January 2020 5,097 1,434 6,531
Book value 31 December 2020 5,097 1,679 6,775
2019 Goodwill
Other
intangible assets Total
Acquisition cost 1 January 2019 5,097 5,896 10,993
Increases - 933 933
Acquisition cost 31 December 2019 5,097 6,829 11,926
Accumulated depreciation, amortisation and impairment 1 January 2019 - 4,418 4,418
Depreciation during the financial period - 978 978
Accumulated depreciation, amortisation and impairment 31 December 2019 - 5,395 5,395
Book value 1 January 2019 5,097 1,479 6,575
Book value 31 December 2019 5,097 1,434 6,531
GOODWILL ALLOCATION
AND IMPAIRMENT TESTING
Goodwill amounted to 5,097 (5,097) thousand euros on 31
December 2020. 4,750 (4,750) thousand euros was allocated
to the Wealth Management segment and 347 (347) thousand
euros to the Insurance segment.
In impairment testing, the recoverable amount of the unit
is determined based on its value in use. Cash flow forecasts
are based on predictions for a three-year period. Cash flows
after the forecast period are extrapolated using an even
0.5% growth factor, which is assessed as being suitable for a
growing business. Future cash flows are discounted using the
weighted average cost of capital., which is 12.8 percent for
the Wealth Management segment and 11.8 percent for the
Insurance segment. Parameters used in determining the dis-
count rate (risk-free interest, risk coefficient, risk premium and
capital structure) are based on factors observed in companies
engaged in similar or competing business and on the pre-
vailing market conditions at the end of September 2020. The
impairment testing of goodwill did not lead to recognition of
impairment losses.
In conjunction with impairment testing, sensitivity analyses
were carried out with regard to key assumptions, the discount
rate and residual value growth factor. The variables used in
the calculations are an increase of one percentage point in
the discount rate and a decrease of one percentage points in
growth following the forecast period. Separately examined,
the sensitivity analyses did not show any risk of impairment.
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SignaturesParent company financial statements Auditor’s reportCEO’s reviewKey figures Board of Directors’ report Group financial statements
28 TANGIBLE ASSETS
EUR 1,000 31.12.2020 31.12. 2019
Other tangible assets 2,944 4,435
Total 2,944 4,435
2020 2019
Acquisition cost 31 December 8,008 2,581
Increase due to adoption of IFRS 16 - 5,323
Acquisition cost 1 January 8,008 7,9 0 4
Increases 76 104
Acquisition cost 31 December 8,084 8,008
Accumulated depreciation, amortisation and impairment 1 January 3,573 1,888
Depreciations during the financial period 1,567 1,685
Accrued depreciation, amortisation and impairment 31 December 5,140 3,573
Book value on 1 January 4,435 692
Book value on 31 December 2,944 4,435
29 OTHER ASSETS
EUR 1,000 31.12.2020 31.12. 2019
Fee and commission income receivables 7,10 0 10,794
Other 7,355 7, 316
Total 14,455 18,110
30 ACCRUED INCOME AND PREPAYMENTS
EUR 1,000 31.12.2020 31.12. 2019
Pension and employer insurance premiums 23 10
Interest receivables 2,776 2,264
Tax receivables 252 29
Development projects 4,478 13,129
Other accrued income 3,707 7,419
Total 11,237 22,851
31 LIABILITIES TO CREDIT INSTITUTIONS
EUR 1,000 31.12.2020 31.12. 2019
Other liabilities to credit institutions 14,939 25,929
Total 14,939 25,929
The instalment schedule was renegotiated during the spring 2020 due to the coronavirus pandemic. Taaleri Plc is in compliance
with the monitored financial covenants (equity ratio >35% and receivables from credit institutions >EUR 6 million) for the loans.
Part of Insurance Company Garantia’s shares have been pledged for the loan, please see further details in Note 47 Contingent
Liabilities.
32 DEBT SECURITIES ISSUED TO THE PUBLIC
EUR 1,000 31.12.2020 31.12. 2019
Publicly issued bonds 34,937 34,875
Total 34,937 34,875
Taaleri Plc has issued one bond in 2016 and two in 2014. The bond issued in 2016 is listed on the Nasdaq HEL Corporate Bond
market and the bonds issued in 2014 were listed on the Nasdaq First North Bond Market Finland. The bonds issued in 2014 were
repaid in 2017 and 2019.
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SignaturesParent company financial statements Auditor’s reportCEO’s reviewKey figures Board of Directors’ report Group financial statements
Taaleri Plc bond 01/2016 Taaleri Plc bond 02/2014
Bond organiser(s): Danske Bank Oyj Bond organiser(s): Taaleri Wealth Management Ltd
Bond capital and currency: EUR 35,000,000.00 Bond capital and currency: EUR 20,000,000.00
Number of bond shares: 35,000 Number of bond shares: 20,000
Priority position of bond: Same as issuer’s other unsecured commitments Priority position of bond: Same as issuer’s other unsecured commitments
Settlement of bond: Euroclear Finland Ltd:s value-share system Settlement of bond: EFI’s OM value share system
Unit size of bond shares: EUR 1,000.00 Unit size of bond shares: EUR 1,000.00
Minimum subscription of bond: EUR 100,000.00 Minimum subscription of bond: EUR 10,000.00
Date of issue: 20.12.2016 Date of issue: 19.9.2014
Date of maturity: 20.12.2021 Date of maturity: 19.9.2019
Repayment amount: Nominal value of bond capital Repayment amount: Nominal value of bond capital
Date(s) of repayment: 20.12.2021
The bond will be repaid in one instalment
Date(s) of repayment: 19.9.2019
The bond will be repaid in one instalment
Interest: Fixed interest, 4.25% p.a.
Interest payment dates: Each year on 20 December,
beginning 20 December 2017 and
ending 20.12.2021
Interest: Fixed interest, 5.5% p.a.
Interest payment dates: Each year on 19 September,
beginning 19 September 2015 and
ending 19 September 2019
Basis of interest calculation: Actual/actual (ICMA) Basis of interest calculation: Actual/actual (ICMA)
Assumed banking day: Following Assumed banking day: Following
Issuing agent and payment agent: Danske Bank Oyj Issuing agent and payment agent: Svenska Handelsbanken
Bond ISIN code: FI4000232970 Bond ISIN code: FI4000108543
The covenants for the bonds are described in Note 38 ‘Principles for managing Group risk and capital adequacy’.
Further information about the bond programme can be found on the company’s website (only in Finnish):
www.taaleri.com/fi/investor-relations/velkasijoittajat
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SignaturesParent company financial statements Auditor’s reportCEO’s reviewKey figures Board of Directors’ report Group financial statements
33 OTHER LIABILITIES
EUR 1,000 31.12.2020 31.12. 2019
Accounts payable 1,403 1,616
Accounts payable - purchases of financial instruments - -
Fee and commission liabilities 981 653
Tax account liabilities 144 160
Lease liabilities 2,759 4,049
Other liabilities 114 31
Total 5,401 6,509
34 ACCRUED EXPENSES AND DEFERRED INCOME
EUR 1,000 31.12.2020 31.12. 2019
Accrued personnel costs 2,503 2,372
Cash settled share options 89 89
Accrued interest 203 365
Accrued tax 3,442 1,738
Other accrued expenses 8,387 9,376
Total 14,623 13,940
35 DEFERRED TAX ASSETS AND LIABILITIES
Deferred tax assets, EUR 1,000 31.12.2020 31.12. 2019
From employment benefits 339 598
From unused tax losses 1,222 1,598
From other IFRS adjustments 49 38
Total 1,611 2,233
Deferred tax liabilities, EUR 1,000 31.12.2020 31.12. 2019
From financial assets measured at fair value through profit or loss 674 907
From financial assets measured at fair value through other comprehensive income 470 344
From insurance equalisation provision 14,222 14,340
Total 15,366 15,591
36 SUBORDINATED DEBTS
EUR 1,000 31.12.2020 31.12. 2019
Tier 2 bond 14,839 14,825
Total 14,839 14,825
On 18.10.2019 Taaleri Plc issued Tier 2 notes totalling EUR 15 million. The Tier 2 Notes constitute a subordinated debt instrument,
which is included in the Tier 2 capital referred to in Article 63 of Regulation (EU) No 575/2013 of the European Parliament and of
the Council. The notes mature in ten years and bear a fixed interest rate of 5.0 per cent until 18 October 2024 and then onwards
EUR 5-year mid-swap rate plus 5.33 per cent. The terms and conditions of the Notes include a call option after five years from the
issuance and the company is also entitled to an early repayment before the call option under certain preconditions provided in the
terms and conditions of the Notes.
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37 EQUITY
SHARE CAPITAL
The company’s share capital on 31 December 2020 was
EUR 125,000 and the amount of shares 28,350,620. The
company’s shares do not have a nominal value. Trading in
Taaleri Plc’s shares are traded on the Nasdaq Helsinki main
market. The shares’ trading code is “TAALA” and ISIN code
FI4000062195.
The parent company possesses 45,000 of its own shares.
All shares issued have been paid for in full. The group uses
share-based incentive schemes. The company has not issued
convertible bonds or other than the above-mentioned special
rights.
Share rights and restrictions
Shareholders’ priority for
new shares when increasing
share capital
Shareholders have priority for
new shares in relation to the
shares they already own.
Voting right Each share entitles to one
vote
Dividend right Equal for all
OTHER AUTHORISATIONS
At the General Meeting on 18 May 2020, the Board of Direc-
tors was authorised to acquire in one or more instalments a
total of 2,000,000 shares. The purchase price per share is the
price on the Helsinki stock exchange on the date of purchase
of the shares, or another market-based price. Shares can be
acquired to improve the company’s capital structure, to fi-
nance business acquisitions and investments or to finance or
complete arrangements of other companies. Shares can also
be acquired to to be used as part of the company’s employee
incentive scheme or to be canceled if its in the best interest of
the company and the shareholders. The authorisation issued
to the Board includes the right to decide whether the shares
will be acquired in a targeted way or in relation to the shares
owned by shareholders. The purchase may only be targeted if
there is an important financial reason for it from the company’s
perspective. This authorisation is valid for 18 months from the
date of the decision made at the meeting. The authorisation
supersedes the previous authorisation.
At the Annual General Meeting on 18 May 2020, the
Board of Directors was authorised to decide on the issuance
of new shares and on the conveyance of own shares held
by the company (treasury shares). The Board of Directors
may issue new shares and convey treasury shares up to a
maximum 2,500,000 shares. New shares may be issued and
treasury shares conveyed to the company’s shareholders in
proportion to their current shareholdings or in derogation
of the pre-emptive subscription right of the shareholders by
means of a directed share issue if there is a weighty financial
reason for the company to do so, such as the shares are to be
used as consideration in possible company acquisitions or in
other arrangements that are part of the company’s business
or to finance investments or as part of the company’s incen-
tive scheme. The Board of Directors may also decide on the
issuance of shares without payment to the company itself. The
new shares may be issued and treasury shares may be con-
veyed either against payment or without payment. A directed
share issue may be executed without payment only if there is
an especially weighty financial reason for the company to do
so, taking the interests of all shareholders into account. The
Board of Directors will decide on all other factors relating to
the issuance and conveyance of shares. This authorisation is
valid for one year from the date of the decision made at the
meeting, but no longer than 30 June 2021. The authorisation
supersedes the previous authorisation.
Changes in number of shares 2020 Total
Number of shares 1 January 2020 28,350,620
Number of shares 31 December 2020 28,350,620
Number of votes 31 December 2020 28,350,620
Changes in number of shares 2019 Total
Number of shares 1 January 2019 28,350,620
Number of shares 31 December 2019 28,350,620
Number of votes 31 December 2019 28,350,620
ISSUER’S RESERVES WITHIN EQUITY
The following are descriptions of the reserves within equity.
Reserve for invested non-restricted equity
Cash received in the share issues in 2013 and 2015 were rec-
ognized in the reserve for invested non-restricted equity.
Translation differences
Translation differences caused by the conversion of the finan-
cial statements of foreign units.
Fair value reserve
The change in fair value of financial assets measured at fair
value through other comprehensive income is recognised
in the fair value reserve. The fair value change of debt instru-
ments is reclassified to profit or loss, when the instrument is
derecognised or an expected credit loss is recognised. The
fair value change of equity instruments is not reclassified to
profit or loss at any time.
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Changes in the Fair value reserve 2020 At fair value through other comprehensive
income
EUR 1,000
Loans and receivables
certificates
Stocks, shares
and funds Total
Fair value reserve 31 December 2019 -21 -915 -935
Changes to previous periods - -89 -89
Fair value reserve 1 January 2020 -21 -1,004 -1,024
Changes in fair value 6 266 271
Changes in expected credit losses - -70 -70
Deferred taxes -2 -39 -41
Fair value reserve 31 December 2020 -17 -847 -864
Changes in the Fair value reserve 2019 At fair value through other comprehensive
income
EUR 1,000
Loans and receivables
certificates
Stocks, shares
and funds Total
Fair value reserve 1 January 2019 -29 -2,385 -2,414
Changes in fair value 10 1,896 1,905
Changes in expected credit losses - -58 -58
Deferred taxes -1 -367 -368
Fair value reserve 31 December 2019 -21 -915 -935
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NOTES CONCERNING RISK POSITION
38 PRINCIPLES FOR MANAGING GROUP RISK AND CAPITAL ADEQUACY................. 56
39 MATURITY OF FINANCIAL ASSETS AND LIABILITIES ................................................. 67
40 CHANGES IN LIABILITIES ARISING FROM FINANCING ACTIVITIES ......................... 68
41 SENSITIVITY ANALYSIS OF MARKET RISK .................................................................... 68
42 QUANTITATIVE INFORMATION ON INSURANCE RISK
AND INSURANCE CONTRACT LIABILITIES .................................................................. 68
43 QUANTITATIVE INFORMATION ON INSURANCE INVESTMENT RISKS ................... 70
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38 GROUP’S RISK MANAGEMENT
PRINCIPLES AND CAPITAL
ADEQUACY
1. THE GROUP’S RISK MANAGEMENT
General
Based on the values, strategy and business plan of the
Group, targets are set for Taaleri Group that take into ac-
count the future prospects and risks of Taaleri’s businesses
and the industries they operate in. The Group’s values and
strategic and operational objectives create a foundation for
the management of the Group’s risks and capital adequacy.
Taaleri Group’s risk appetite and risk capacity are defined in
connection with its strategy, business plans and budgeting
process. In addition to the strategy, business plan and annual
budget, the Board of Directors of Taaleri Plc approves the
Group structure and business organisation which strives to
achieve the objectives.
The aim of internal control and risk management is to
support and promote business by systematically taking care
of risk control of the group and its companies and functions,
by reviewing and following up risks and by treating the risks
in an appropriate manner. Internal control is an integrated
part of the operational management of Taaleri Group, and risk
management is part of the Group’s internal control.
The task of risk management is to identify, assess, meas-
ure, treat and control risks in all Taaleri Group’s businesses that
influence the realisation of the Group’s strategic and operative
goals, as well as to oversee that the principles approved by
the Taaleri Plc Board of Directors are complied with. Risk man-
agement aims to reduce the likelihood of unexpected risks
being realised and their impact to Taaleri Group’s business
operations. Risk management supports achievement of strate-
gic goals by promoting better utilisation of opportunities in all
activities and more efficient distribution of risk-taking capacity
to the different functions and projects within the defined risk
appetite framework.
Taaleri Group’s risks are divided into five main cate-
gories: strategic and business operations risk, credit risk,
liquidity risk, market risk and operational risk (including
compliancerisk).
Risk and capital adequacy management aims to assure
Taaleri Group’s risk capacity and liquidity and ensure the con-
tinuity of the Group’s operations.
According to the rules of procedure of Taaleri Plc’s Board
of Directors, the Board confirms the Group’s common ob-
jectives and targets, and approves the principles for internal
control, risk and capital adequacy management.
Risk management is based on a systematic process. Risks
affecting group’s results, capital adequacy and liquidity are
continuously monitored by risk control and finance functions.
Operational, strategic and business risks are regularly as-
sessed in risk reviews aiming to identify, assess, measure and
treat risks that could affect the achievement of the Group’s
objectives and the amount of own capital.
Group Risk Officer is responsible for organising risk re-
views in all Group companies and operations at least annually.
Risks are continuously monitored, and risk events reported to
the Board of Directors and the Executive Management Team
on a quarterly basis.
Laws and regulations concerning the entire Group
In addition to the Investment Services Act, Credit Institutions
Act and Insurance Companies Act, Taaleri Group is operating
under the Act on Alternative Fund Managers and the Act on
the Supervision of Financing and Insurance Conglomerates
(699/2004), known as the RaVa-act, according to which the
parent company of the group shall have proper corporate
governance that enables the group to effectively manage its
risk, adequate internal control and risk management systems,
as well as adequate arrangements and plans for the recovery
or dissolution of the group.
Taaleri is a financial group, whose parent company Taaleri
Plc is listed on Nasdaq Helsinki’s main market. The Taaleri
Group comprises three business areas: Wealth Management,
Insurance, and Energy. The Group’s operational subsidiaries
are: Taaleri Wealth Management Ltd and its subsidiaries,
Taaleri Private Equity Funds Group, Taaleri Investments
Group, Taaleri Energia Group and Garantia Insurance
Company Ltd.
Taaleri Wealth Management Ltd is an investment manage-
ment company operating under supervision of the Finnish
Financial Supervisory Authority (FSA) and Taaleri Fund Man-
agement Ltd is a fund management company operating un-
der supervision of the FSA. In addition, Taaleri Private Equity
Funds Ltd and Taaleri Energia Funds Management Ltd have
licences granted by the FSA to act as alternative funds manag-
ers. Garantia Insurance Company Ltd is an insurance company
operating under supervision of the FSA.
All other Group companies belong to the RaVa Conglom-
erate, apart from Taaleri Tax Services Ltd, but it is, however,
included in the conglomerate as part of the Wealth Man-
agement consolidation group. Taaleri’s Wealth Management
consolidation group includes Taaleri Wealth Management Ltd
and its subsidiary Taaleri Fund Management Ltd. Taaleri Tax
Services Ltd is also taken into account in the Taaleri Wealth
Management consolidation group. The Financing sector
comprises the Taaleri Wealth Management consolidation
group, Taaleri Private Equity Funds Group, Taaleri Investments
Group and Taaleri Energia Group. The conglomerate’s in-
surance sector comprises Garantia Insurance Company Ltd.
The structure of the RaVa conglomerate and different consol-
idation groups are illustrated in the figure below in section
Capital adequacy management.
2. RISK MANAGEMENT ORGANISATION
The Board of Directors of Taaleri Plc take care of the Group’s
corporate governance and the appropriate organisation of its
operations, which includes organising and maintaining ade-
quate and effective internal control framework.
In matters concerning internal control and risk manage-
ment, the highest decision-making body is the Board of Direc-
tors of Taaleri Plc, which is responsible for:
• ensuring that the Group always has sufficient own funds of
adequate quality and distribution to cover regulatory min-
imum capital requirements and internal risk-based capital
requirements
• approving the group risk strategy and risk appetite based
on group strategy and annual planning
• approving plans to maintain capital adequacy in line with
the risk strategy
• approving the definitions of risk appetite and risk capacity,
setting a target level for capital adequacy and approving
the levels and quality of capital required by the risk profile
• monitoring the integrity of the internal control system, in-
cluding an efficient and robust risk management framework
• supervising the implementation of the Internal Audit Plan
after the initial participation of the Audit Committee
• approving the Group’s internal control, risk and capital
management principles
• approving the liquidity management strategy and liquidity
risk management principles
• approving the Group’s general policies and principles (in-
cluding dividend policy and financial strategy and policy)
• annually approving the principles for internal audit and the
Group’s continuity management principles and recovery plan
• regularly monitoring the development of the Group’s busi-
nesses, risk capacity, risk situation, and capital adequacy
as part of the company’s general financial situation using
quarterly risk management reports
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The three lines of defense describe the structure and opera-
tion of risk management in the Taaleri Group. Taaleri Group’s
first line of defense consists of the Group’s business opera-
tions, which perform daily risk management duties and ensure
compliance with internal and external requirements. The
Group’s second line of defense consists of the risk control and
compliance function and the Group’s risk and capital com-
mittee, whose task is to develop, maintain and monitor the
general operating and risk management principles and the
internal control framework at Group level. The Group’s third
line of defense consists of the internal audit function.
The second and third lines of defense are independent of
the controlled businesses, and report directly to the Board.
The Group executive management team is responsible for
operational risk management as instructed by the Board of
Directors. In matters related to internal control and risk man-
agement, the Group executive management team is respon-
sible for promoting a culture within the Group that accepts
regulatory compliance, internal control and risk management
as a normal and necessary part of the Group’s operations.
The Group’s risk control is performed by the risk control
function and the risk and capital management committee
both operating under the Group CEO. The risk control and
compliance function is responsible for the independent con-
trol of the Group’s risks. Risk control function comprises of
group risk officer, two compliance & risk managers and the
persons responsible for risk control in the supervised group
companies. The risk control function:
• maintains, develops and prepares the Group’s internal
control, risk and capital adequacy management principles
• supports business operations in risk management
measures
• ensures that all material risks are identified, assessed and
managed in the Group and Group companies and reg-
ularly reported to the Group management team and the
Board of Directors
• ensures that the Group’s risks remain within established
limits and ensures that risk measurement and risk control
methods are appropriate and reliable
• produces Group-level reporting on risks and risk manage-
ment and ensures that the management team, the Audit
Committee and the Board of Directors receive a reliable
overall picture of the Group’s risks
• supports Group companies in risk reviews and in devel-
opment and implementation of risk and capital adequacy
management
• assists management in planning the risk strategy and risk
appetite of the Group and its businesses when the strate-
gic goals are set
• ensures that risk management issues are properly taken
into consideration in key business decisions.
The risk and capital committee is responsible for the effective-
ness and efficiency of the Group’s risk and capital adequacy
management and it regularly reports to the Management Team,
the Board’s Audit Committee and the Board of Directors. The
risk and capital committee supports business operations in risk
management measures if needed, ensures that the Board of
Directors has an overall picture of the risks faced by the entire
Group, reviews and finalizes Group-level risk analyses, stress
tests and risk reports prepared by the group risk officer, reviews
and finalizes the Group’s continuity and recovery plans, and
processes new product and service descriptions.
The tasks of the Group Compliance are to:
• monitor compliance with regulations and internal guidelines
• advise the management team and the Board and other
personnel on compliance with regulatory and internal
guidelines
• assist Taaleri Plc’s Board of Directors, the management
team and other relevant bodies in regulatory compliance
issues and related compliance risk management by keep-
ing heads of businesses aware of the essential changes in
regulations and the potential impact on business
• monitor and regularly evaluate the adequacy and effec-
tiveness of the Group’s measures and procedures to en-
sure compliance
• be responsible for management of anti-money laundering
and AML training in the Group
INTERNAL CONTROL FRAMEWORK
AND OPERATING PROCEDURES
EXECUTIVE MANAGEMENT
BOARD OF DIRECTORS
1ST LINE OF DEFENCE comprises risk
management and compliance activities
performed in the day to day operations
throughout Taaleri Group
2ND LINE OF DEFENCE consists of the
group’s Risk and capital committee and
Group risk control and compliance function.
These organs develop and maintain the
internal control framework and procedures
and perform control activities that are
independent of the business operations
3RD LINE OF DEFENCE is an internal
audit function that is independent of the
Group’s business and control operations.
Internal audit assures that internal control,
risk management, capital adequancy
management and the management of
Group’s operations are properly and
adequately performed
1. BUSINESS OPERATIONS
• Risk and control environment
• Risk decisions in the daily operations
2. RISK AND CAPITAL
COMMITTEE, GROUP RISK
CONTROL AND COMPLIANCE
• Development of internal control, risk and
capital adequancy management policies
and principles.
• Independent compliance and risk control
3. INTERNAL AUDIT
• Independent and objective review
and assurance
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The Group compliance officer is responsible for compliance.
The Group Compliance consists of the Group compliance
officer, compliance & risk managers and a compliance task
group, which includes the Group compliance officer and
the persons responsible for compliance related issues in the
Group companies.
Internal Audit is an assurance function independent of the
operational functions of the Taaleri Group companies. The
internal audit function is set up by the Board of Directors and
operates under the authority of the Group CEO. The Taaleri
Group has outsourced the practical implementation of the
Group’s internal audit to an external service provider.
Internal audit is an independent, objective assurance and
consulting activity designed to check the adequacy, effective-
ness and efficiency of internal control. Internal audit supports
the Group’s senior and operational management (board,
CEO, line managers) in managing and supervising operations.
The objective of the Group’s internal audit is to support
the Group in achieving its goals by providing a systematic
approach to assessing and developing the effectiveness of
risk management, risk control and management processes.
Internal audit aims to add value to the organization and im-
prove its performance.
Internal audit work is guided by national and international
regulations as well as international standards of professional
practice in the field, including ethical rules, professional stand-
ards, and practical guidelines.
Taaleri Group’s risk and capital adequacy management is
an integral part of the Group’s management, decision-making
and business planning. Capital adequacy management is
based on a proactive approach that includes a group strategy
taking into account the impact of the operating environment,
annual plans, capital plans and risk strategies.
The Group’s strategic planning process (strategy process)
covers setting strategic goals, defining development projects,
and preliminary financial forecasts for the coming years. Deci-
sions on risk strategy and risk appetite in relation to the Group’s
risk capacity and expected returns are also made in the strategy
process. Capital targets and risk and capital limits are set in the
internal capital adequacy assessment process which is part of
the strategy process. Risk management development issues
and projects are also agreed upon in the process.
The annual plans generated in the Group’s strategy
process include financial analyses of the impact of planned
business developments on capital adequacy and risk-based
capital requirements as well as on the capital plan.
The capital plan includes targets for the level of own funds
of the Group and its affiliated companies for the current and
at least the next two years. In the capital plan and risk-based
capital calculations, the adequacy of own funds and the sol-
vency of the Group is assessed in relation to the business plan
and the risk profile of the business. The assessment also takes
into account deteriorating market conditions and, for exam-
ple, situations where operations are extended to new markets
or new products and their impact on the amount of capital.
If the amount of own funds seems inadequate, the Group’s
Board of Directors will decide on the necessary measures
to improve capital adequacy. As such, the aspects of capital
adequacy management and capital requirements are integral
parts of the strategy process and are taken into account when
deciding on the implementation of the measures.
In addition to the Group CEO, the Group management
team participates in the strategy process. Taaleri Plc’s Board
of Directors approves the Group’s strategy, annual plan and
capital plan presented by the CEO.
Continuity and recovery plans
Business continuity planning is a holistic process that iden-
tifies the factors that threaten the continuity of the Group’s
operations and their consequences and provides the basis
for resilience and effective countermeasures to safeguard the
Group’s stakeholders, reputation, brand, and operations. The
aim of Taaleri Group’s continuity planning is to prepare for
possible disturbances in advance and to ensure the continuity
and reliability of the Group’s operations. Continuity planning
is used to prepare for business interruptions so that opera-
tions can be continued, and losses can be limited in various
business-related disruptions.
TAALERI GROUP INTERNAL CONTROL ORGANISATION
BOARD OF
DIRECTORS
SHAREHOLDERS’
NOMINATION BOARD
CEO
GROUP EXECUTIVE
MANAGEMENT TEAM
AUDIT
COMMITTEE
REMUNERATION
COMMITTEE
Internal Audit
Group Risk Control
and Compliance
Risk and Capital
Committee
TAALERI
WEALTH
MANAGEMENT
LEGAL
FINANCE
ICT
TAALERI
INVESTMENTS
GARANTIA
INSURANCE
COMPANY
TAALERI
PRIVATEEQUITY
FUNDS
TAALERI
ENERGIA
Other businnesses /
support functions
Wealth ManagementInsurance Energy
Members of the Risk and Capital Committee
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The Group risk officer maintains continuity planning sup-
port material, on the basis of which the Group, its businesses
and companies make their continuity plans, supported by the
risk officer, if needed.
Based on the threat and vulnerability analyses, Taaleri
Group’s continuity plan reviews operating models for different
situations in different business processes and analyses processes
and disruptions. The continuity plan guides operations in various
continuity situations and also takes into account disruptions in
the processes of external service providers and suppliers.
The recovery plan sets out the measures to be taken in order
to safeguard the continuation of operations in a situation where
the financial position of the Group or its affiliated companies has
significantly deteriorated. In addition, the Recovery Plan defines
clear thresholds and qualitative criteria to identify situations
where a plan needs to be implemented to ensure the continuity
of the operations of the Group or its affiliated companies.
The continuity and recovery plans are annually reviewed.
The Group risk officer is responsible for drafting the continu-
ity and recovery plans and organising their annual updates.
Taaleri Plc’s Board of Directors approves the continuity man-
agement principles and the recovery plan.
3. CAPITAL ADEQUACY MANAGEMENT
Risk capacity and risk appetite
The risk capacity of the Taaleri Group consists of a properly
optimised capital structure, profitability of business operations
and qualitative factors, including good corporate govern-
ance, internal control and proactive risk and capital adequacy
management. Through effective risk management, the Taaleri
Group strives to ensure the continuity of the operations of the
Group and its companies and the risk capacity required to
achieve set strategic goals.
Taaleri Group’s attitude towards risk-taking is based on
careful consideration of adequate risk/return relationship.
Taaleri Plc’s Board of Directors has decided that the Group
may not in its activities take a risk that endangers the target
level set for the company’s own funds.
TAALERI PLC
Taaleri Tax Services Ltd
(100%)
Evervest Ltd
(100%)
TAALERI WEALTH
MANAGEMENT LTD
(100%)
Taaleri Fund
Management Ltd
(100%)
TAALERI PRIVATE EQUITY
FUNDS LTD (100%)
Fund management
companies
TAALERI INVESTMENTS
LTD (100%)
Mobify Invoices Ltd
(62%)
Taaleri Kapitaali Ltd
(70%)
TT Feeder funds
(100%)
Investment
management companies
(100%)
TAALERI ENERGIA LTD
(81%)
Taaleri Energia Funds
Managemement Ltd
(100%)
Taaleri Energia
Operations Ltd
(100%)
Energy’s project and
management companies
(100%)
GARANTIA INSURANCE
COMPANY LTD (100%)
Erdwärme Oberland GmbH
(82%)
RaVa-conglomerate
Wealth management
consolidation group
Financing sector consolidation
group, CRR49-permission
Insurance sector
TAALERI GROUP’S CAPITAL ADEQUACY CALCULATION GROUPS
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Taaleri Plc’s Board of Directors has separately defined
Group internal limits for real estate, equity, country, exchange
rate, interest rate and industry sector risks.
Capital management
The objective of Taaleri Group’s capital management is to main-
tain an efficient capital structure that enables the management
of usual financial obligations and ensures the continuity of the
business also in exceptional circumstances. The Group’s capital
structure, i.e. how the Group’s financing is organized and how
it is divided into debt and equity is regularly monitored in con-
nection with balance sheet management. The Group’s strategic
objective is to have at least 30 per cent equity ratio and a 15
per cent return on equity over the long term. The development
of the Group’s net gearing is also followed up.
Taaleri Plc has strengthened the Group’s own funds by ar-
ranging two share issues in 2013 and 2015, which have raised
a total of EUR 37.5 million to increase equity and strengthen
the balance sheet structure. During 2019 Taaleri issued a EUR
15 million Tier 2 bond to further strengthen its own funds.
Capital plan
The capital plan includes targets for the level of Group’s own
funds. In the capital plan and risk-based capital calculations,
the adequacy of own funds and the solvency of the Group is
assessed in relation to the business plan and the risk profile
of the business. If necessary, the Group’s Board of Directors
decides on measures to improve capital adequacy. Capital
adequacy management and capital requirements are integral
aspects of the strategy process and are taken into account
when deciding on the implementation of the measures.
In Taaleri Group, the adequacy of own funds is regularly
monitored by means of capital adequacy calculations carried
out in connection with the monitoring of Group finances.
Taaleri Group’s Board of Directors sets a target level and a
threshold level requiring corrective action for the amount of
own funds in relation to the statutory minimum requirement. If
own funds fall below the action level, measures to strengthen
the capital base and/or reduce risks will be taken immediately.
Taaleri’s goal is to keep the own funds at a level deter-
mined by the following:
The minimum level of own funds shall be the highest of:
• the minimum capital (€ 730,000 / € 125,000) for an Invest-
ment Firm, an Investment Management Company or an
Alternative Fund Manager (for licensed group companies)
defined in the legislation for such companies, or
• the regulatory minimum capital requirement (calculated
using the standardized approach for credit risk, market risk
and operational risks), i.e. Pillar 1; or
• the risk-based capital requirement (Pillar 1 capital plus
additional risk-based capital requirement, i.e. Pillars 1 + 2)
Taaleri Plc’s Board of Directors has decided that the internal
target level of own funds is 1.3 times the above defined mini-
mum level of own funds and the own funds of the finance and
insurance conglomerate (RaVa Group) formed by the Taaleri
Group must not fall below 1.1 times the minimum level of
own funds. The financial sector’s and the insurance sector’s
consolidation groups’ own funds target levels are consistent
with the group-level capital management objectives.
The Board of Directors has set the threshold level requiring
corrective action for own funds to be at 1.2 times the minimum
level of own funds. The monitoring of the level of own funds
covers the capital adequacy outcomes and the different phases
of the capital adequacy management process, including the
effect of stress tests scenarios to own funds. The results of stress
tests are taken into account in proactive capital planning.
Taaleri Group’s capital plans are updated at least once a
year in connection with annual planning. Capital plans are also
updated if the risk exposure, risk capacity or business profita-
bility substantially changes.
In 2015, the Finnish Financial Supervisory Authority con-
firmed that Taaleri has become a financing and insurance
conglomerate. The consolidated conglomerate solvency require-
ment for the whole group is prepared in accordance with the Act
on the Supervision of Financing and Insurance Conglomerates
(so-called Rava Act), and stress test scenarios with the same as-
sumptions are made for the financial and insurance sectors.
The Finnish Financial Supervisory Authority has 31.1.2019
given Taaleri Plc. permission pursuant to Article 49 (1) of the EU
Capital Requirements Regulation (EU) 575/2013 (CRR). The per
-
mission entitles Taaleri Plc. to not deduct the investments in the
own funds instruments of Garantia Insurance Company Limited
from the consolidated core capital (CET1) of the investment ser
-
vices firm. Garantia is part of Taaleri Plc’s financing and insurance
conglomerate supervised by the Financial Supervisory Authority.
Instead of deduction, investments in insurance company should
be risk-weighted in accordance with CRR Article 49 (4). The permit
is for a fixed term and is valid until 25.6.2021. The permit concerns
Garantia’s acquisition cost of EUR 60 million that can be left unde
-
ducted. Neither is the impact of the accumulated profits by the
insurance company included in the consolidated Common Equity
Tier 1 of the financing sector consolidation group. When using
this method allowed by the permission, the insurance company
investment is treated as a risk-weighted item in the capital ade
-
quacy calculations for the financing sector consolidation group.
Adjustment measures and sources of capital
Taaleri can use adjustment measures and sources of capital
specified in the internal capital adequacy assessment princi-
ples and recovery plan in a situation where the amount of own
funds falls below the set threshold level in regular solvency
monitoring. If necessary, measures can also be taken if the
outcome of the stress scenario analysis shows an obvious
possibility that the level of own funds will be lower than the
threshold level in the near future.
Taaleri has access to back-up funding facilities and possi-
bilities to reduce risk positions, cut costs and limit the distribu-
tion of profits when the situation so requires.
4. KEY RISKS AND RISK MANAGEMENT OF
THE WEALTH MANAGEMENT SEGMENT
(FINANCING SECTOR)
Strategic risk and business risk
In Taaleri Group, strategic risk is defined as the risk of unex-
pected change in the business or operating environment,
which affects the achievement of the Group’s long-term goals,
profitability or continuity of operations. Business risk is de-
fined as the uncertainty in achieving Taaleri Group’s current
operational targets.
Strategic risks may arise, for example, from competition,
changes in the operating environment, financial markets or
customer behaviour, or choosing the wrong strategy. Business
risks may arise from, for example, poor management, unex-
pected fluctuations in earnings or slow response to changes
in the operating environment.
The most significant strategic and business risks in Taaleri
Group are: focusing in wrong issues in the business plan,
major changes in the operating and regulatory environment,
failures in strategic investments, acquisition of new businesses
and the integration of acquired companies into the Group,
as well as the risks in internationalization of the operations.
Strategic and business risks have been assessed by analysing
the development of earnings, balance sheet and capital ad-
equacy in different scenarios set in the strategy process, the
baseline, bad, stress and crisis scenarios. In addition, strategic
and business risks are assessed in connection with risk reviews
and annual planning.
Strategic and business risk management aims to allocate
risk-taking capacity to businesses and projects that have the
best risk / return relationship, reduce the likelihood and im-
pact of unexpected losses and reduce the threats to Group’s
reputation.
The management of these risks is based on the general
principles and guidelines approved by the Group and ade-
quate allocation of resources into the planning and manage-
ment of operations. In addition, efforts are made to reduce
uncertainty arising from strategic risks by actively monitoring
legislative and regulatory changes and maintaining sufficient
resilience to changes in the economy, business cycle and
operating environment. Attempting to react proactively to
potential risks aims at reducing the likelihood of the risk re-
alising, impact of the risk if it realises, and vulnerability of the
company when the risk realises.
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Credit risk
Credit risk in general refers to the risk that the borrower or oth-
er counterparty is unable to meet its obligation to the financial
institution or that the value of the collateral is insufficient to cov-
er the liability. Credit risks in Taaleri Group can be divided into
credit risk (counterparty creditworthiness) and collateral risk.
Credit risk means that the counterparty is unable or un-
willing to fulfil its contractual obligations. Collateral risk means
that the collateral provided is not sufficient to cover the claim.
Loans granted to customers are the largest source of credit risk,
but credit risk also arises from other receivables, such as fee
receivables from customers, liquid assets and investments, and
off-balance sheet assets, such as issued guarantees and com-
mitments made on behalf of the Group or Group companies.
The counterparties of the Taaleri Group companies are the
Group’s debtors, customers of the services of the Group com-
panies, partners and subcontractors as well as banks and fixed
income funds, to which the liquid funds of the Taaleri Group
companies have been deposited.
In the financing sector, credit risk arises mainly from invest-
ments made by the parent company Taaleri Plc and Taaleri
Investments Ltd, loans granted and bank receivables.
Taaleri Asset Management Ltd does not engage in lend-
ing activities, so the company’s credit risk is comprised of
counterparty risk. Taaleri Asset Management Ltd may invest its
own funds only in financial institutions with high credit ratings
or in liquid fixed income funds. The financial standing and
development of business of Taaleri Asset Management’s main
counterparties is continuously monitored and changes in their
risk standing are reported to the management team and the
Board of Directors. The aim is to always diversify both credit
risk and counterparty risk to more than one counterparty, de-
pending on the market and the situation.
Taaleri calculates its minimum regulatory capital require-
ment for credit risks using the standardised approach.
Taking into account Taaleri’s business model and the low
amount of realised credit losses, the pillar 1 capital require-
ment is considered to adequately reflect the risk-based capital
requirements of the financing sector, with the exception of the
credit risk items of the Taaleri Investments Group and Garan-
tia. For these items, the pillar 2 risk-based capital requirement
for Taaleri Investments Group includes all balance sheet items,
with the exception of receivables from credit institutions,
weighed at a higher risk weight of 150%.
For Garantia’s credit risk items, an additional pillar 2 risk-
based capital requirement is added for Taaleri Ltd’s invest-
ment in the insurance company by using Garantia’s internal
risk model (confidence level 99,5%, without diversification
benefits) for those periods when the pillar 2 capital require-
ment becomes higher than the pillar 1 requirement.
Liquidity risk
Liquidity risk is the risk associated with the availability of refi-
nancing that arises when the maturities of the receivables and
liabilities are different. Liquidity risk also arises if receivables and
liabilities are too concentrated on individual counterparties.
Taaleri’s liquidity is monitored daily and Taaleri has credit account
that it can utilise in liquidity management. Liquidity is maintained
by investing the excess liquidity buffer in low risk money market
instruments that can be rapidly converted into cash.
Taaleri’s cash flow consists of easily predictable man-
agement fees from funds and private equity funds, interest
income on loans granted by Taaleri Plc and Taaleri Sijoitus
Oy, relatively predictable performance related fees, and eq-
uity investments made by Taaleri Sijoitus Oy. Investment and
exit activities may have a significant impact on cash flows.
The management fees paid by alternative investment funds
and co-investments are based on long-term contracts, and
management fees from existing funds and projects can be
relatively reliably forecasted for the next 12 months. The man-
agement fees of the mutual funds managed by Taaleri Fund
Management Company Ltd and the amount of funds in the
mutual funds are susceptible to changes in market values of
the funds and customer subscriptions and redemptions.
The clientele of Taaleri’s operations prone to liquidity risk
is highly diversified and the risk concentrations are monitored
regularly. In addition, the income stream is smoothed by the
steady long-term inflow of income from existing alternative
investment fund and co-investment projects. The aim is to
reduce the concentration of Taaleri’s operations by further
expanding the customer base.
Taaleri’s financial administration is responsible for the con-
tinuous monitoring of Taaleri’s financial situation and balance
sheet. The CFO monitors balance sheet items and the financial
situation on a monthly basis and reports on the situation to the
management team and the Group CEO. In addition, financial
administration regularly conducts analytical reviews to monitor
the items in the income statement and balance sheet.
Market risk
Market risk refers to the impact of market price fluctuations
on the market value of financial assets and liabilities. Different
types of market risk include interest rate, currency, equity, real
estate and commodity risks.
Interest rate risk refers to the impact of changes in interest
rates on the market value or net interest income of items in
the Group’s balance sheet or off-balance sheet, and thereby
their impact on solvency. Currency risk refers to the effect of
changes in exchange rates. Equity risk refers to the effect of
changes in share prices. Commodity risk refers to the effect of
changes in commodity prices.
The main items exposed to market risk in the financing
sector are Taaleri Investment Ltd’s investments and develop-
ment projects. In addition, market risk arises from other inter-
est rate and currency positions in the Group’s balance sheet.
In Taaleri Asset Management Ltd, market risk arises mainly
during settlement of customer trades. Taaleri Asset Management
Ltd does not take positions in financial instruments or commod-
ities for its own account and does not have a trading book or
external debt, except for a credit account for trade settlements.
The equity investments of Taaleri Investments Group are
mainly unlisted companies whose development is closely
monitored by the management. Taaleri calculates a risk-based
capital requirement for this market risk as 10% of the estimat-
ed investment assets of Taaleri Investments Group.
The market risks of Taaleri’s liquidity buffer are limited as
it is invested in short-term fixed income instruments and bank
accounts. Therefore, Taaleri does not calculate risk-based cap-
ital for the market risk of the liquidity buffer.
Operational risk
Operational risk refers to the risk of losses stemming from
inadequate or failed internal processes, people and systems
or from external events. Operational risk also includes legal,
compliance and information security risks. It is typical for
operational risks that the loss caused by the risk is not always
measurable. Operational risk effects may also be delayed and
indirectly manifested, for example, as a loss of reputation.
In Taaleri, operational risks are primarily managed by de-
veloping internal processes and by providing good operating
instructions and adequate training of personnel. The aim is
to reduce the losses due to operational risks by reducing the
likelihood and impact of the risks and reducing the company’s
vulnerability if the risk realises. Taaleri has comprehensive
insurance coverage for operational, crime, property, business
interruption and liability risks, which contributes to reducing
the impact of potential risks. The adequacy of the insurance
cover is assessed annually.
Efforts are made to manage the risks caused by abuse or
fraud by setting up internal procedures and arranging respon-
sibilities so that proper segregation of duties is achieved where
possible. Control points assigned to different processes also
play a key role in preventing abuse and errors. The Group’s
crime insurance covers damage caused by various internal and
external misconduct. In addition, Taaleri’s assets and premises
are protected by, for example, monitoring and access rights.
Taaleri is dependent on leadership and the skills of key
personnel and their commitment to Taaleri. Good reputation
is important to Taaleri in order to maintain good customer and
employee confidence.
Legal risks can be associated with contractual agreements
with customers, service providers, suppliers and other external
parties. The aim is to identify these risks through a detailed re-
view of the contracts, using external expertise when necessary.
The group companies and units are responsible for managing
the operational risks in their operations.
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In the annual self-assessment of operational risks, Taaleri’s
personnel identify and assess the key operational risks in
Group’s operations. According to the self-assessment, the
main sources of operational risk in Taaleri are currently pro-
cess errors, regulatory and compliance risks, human errors,
risks related to outsourcing and personnel risks.
Taaleri calculates its regulatory pillar 1 operational risk
capital requirement from the end of 2018 according to the
standardised approach. This amount is much higher than the
actual realised operational risk losses and also higher than
the risk-based pillar 2 capital requirement for operational risks
estimated in the annual risk reviews.
Taaleri’s principles of operational risk management, ap-
proved by the Board of Directors of Taaleri Group, describe in
more detail the organisation of operational risk management
and the methods for assessing, monitoring and reporting
operational risk to the Board of Directors and the Financial
Supervisory Authority.
5. KEY RISKS AND RISK MANAGEMENT OF
THE INSURANCE SEGMENT
The company’s risk management and solvency management
are based on Garantia’s values, Code of Conduct, strategy
and business objectives. The purpose of risk management
is to support the achievement of the company’s objectives
by identifying the company’s threats and opportunities and
ensuring that they remain within the limits of risk appetite and
risk capacity. Internal control that has been reliably organised
ensures the observance of the company’s business strategy,
the set targets and the principles and procedures related to
risk and solvency management.
At Garantia, the principal goal of internal control and risk
management is to secure the company’s risk capacity and thus
ensure the continuity of operations. Internal control covers
the activities of all of the company’s units and this includes the
arrangement of appropriate reporting on all of the company’s
organisational levels. Risk management includes the identifi-
cation, measurement, monitoring, management and reporting
of the individual risks and combined effect of risks that the
THE ORGANISATION OF GARANTIA’S RISK MANAGEMENT
TAALERI PLC, BOARD OF DIRECTORS
BOARD OF DIRECTORS
TAALERI PLC, MANAGEMENT COMMITTEE
CEO AND MANAGEMENT COMMITTEE
1. OPERATIVE
RISK MANAGEMENT
2. INDEPENDENT
RISK MANAGEMENT
3. AUDIT
LINE OF DEFENCE
• Applies risk management framework
and single guidelines
• Operational monitoring
• Makes risk decisions
• Supports top management in
arraging risk management
• Responsible for conditions for risk
management and control
• Owns the risk management framework
• Steering and development of risk decision process
• Risk and capital calculation
• Risk monitoring
• Inspects and assesses the risk management
framework and its application
TASK
Accounts, Legal Affairs, Investments
Finance and Risk Management
Compliance
The Actuarial Function
and Appointed Actuary
Internal Audit
Credit
committee
Collateral
Committee
Rating
Committee
ORGANISATION
Group Risk Management Committee
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company is exposed to. Risk and solvency management is
also integrated as an integral part of Garantia’s business pro-
cesses and planning and monitoring of operations.
Organisation, responsibilities
and control of risk management
Internal control and risk management in Garantia are organ-
ised in accordance with a model in which internal control has
three lines of defence. In accordance with this model, the
tasks have been assigned to (1) units that take business risks
in their operations by processing insurance policies, by mak-
ing binding decisions for the company and by operating at
the client interface (Operational risk management); (2) units
that are responsible for risk control, carry out independent
risk assessments and ensure that company guidelines and
acts and other legal provisions are complied with (Independ-
ent risk management); and (3) independent internal audit
(Internal audit). External control is the responsibility of the au-
ditors and supervisory authorities. The Risk and capital com-
mittee of the Taaleri Group is responsible for the functioning
and effectiveness of the group’s risk management process.
The Group Risk and capital committee, which is independent
of the risk-generating business lines, supports and steers in-
ternal control and risk and solvency management at Garantia
in order to ensure that group-level principles and guidelines
are also applied in the company. The committee reports to
the Taaleri Group’s Management Team and Taaleri Plc’s Board
of Directors.
Garantia’s Board of Directors is the supreme decision-mak-
ing body in matters concerning Garantia’s internal control,
risk management and solvency management. The Board
approves the principles and policies (incl. risk-taking limits)
concerning internal control and risk management and their
organisation and monitors and controls their effectiveness
and the development of the risk and solvency position. Garan-
tia’s CEO, supported by the Management Team, is responsible
for the arrangement of internal control and risk management
practices in accordance with internal control and risk manage-
ment principles.
The Board has appointed a Credit Committee, Collateral
Committee and a Rating Committee, which, in accordance
with the decision-making system approved by the Board, de-
cide on matters within their purview. The Credit Committee
is responsible for decisions relating to guaranty, claims and
investments. The Collateral Committee is responsible for col-
lateral assessment and for ensuring the quality and effective-
ness of the collateral assessment process. The independent
Rating Committee is responsible for approving credit ratings
and for ensuring the quality and effectiveness of the ratings
process. The Collateral Committee and Rating Committee
report to the CEO and the Credit Committee reports to the
Board of Directors.
The units in Garantia’s organisation that are responsible
for risk control carry out independent risk assessments and
ensure that company guidelines, acts and other legal provi-
sions are complied with, and thus form a so-called independ-
ent risk management function. The task of the independent
risk management function is to assist the Board of Directors
and other functions to ensure efficient risk management, to
monitor the functioning of the risk management system and
the company’s general risk profile as a whole, to report on
exposure to risks and to advise the Board in risk management
matters, to identify and assess developing risks and to ensure
the appropriateness of the risk models used to measure risks.
The independent risk management function reports to the
Taaleri Group Risk and Capital Committee, Garantia’s Board of
Directors and CEO.
Internal audit is an assessment, verification and consulting
function that is independent of the company’s operational
activities. The task of internal audit is to support the compa-
ny’s management in the achievement of targets by providing
a systematic approach to the assessment and development
of the adequacy and efficiency of the organisation’s risk man-
agement, control, management and administration processes.
Internal audit’s activities are based on an action plan that is
compiled annually. Internal audit reports on its observations,
conclusions and recommendations to the Boards of Directors
of Taaleri Plc and Garantia.
Risk management process
Garantia’s risk management process is made up of the follow-
ing areas:
• Operational planning;
• Capital management;
• Risk appetite;
• Identification and assessment of risks;
• Measurement of risks; and
• Control, treatment and reporting of risks.
Garantia’s operational planning is made up of long-term
(about 3 years) strategic planning and short-term (1 year) an-
nual planning. Operational planning is based on an analysis
of the operating environment, the competitive envi-ronment
and own operations and also on the Taaleri Group strategy.
Profit and solvency scenarios, and stress tests, risk review re-
sults, and a risk and solvency assessment are used to define
the company’s goals, projects supporting achievement of
these goals and risk appetite. Every year the actuary presents
the statements required by the Insurance Companies Act to
the Board of Directors to support operational planning. The
strategy and annual plan, including the own risk and solvency
assessment, are confirmed by the company’s Board of Direc-
tors, and the entire personnel are involved in its preparation.
Garantia’s goal is to be a reliable partner and the company
maintains strong solvency to ensure the continuity and stabil-
DECISION-MAKING BODIES
AND REPORTING RELATIONS
ANNUAL GENERAL MEETING
BOARD OF DIRECTORS
CEO
supported by Management Committee
CREDIT COMMITTEE RATING COMMITTEE
COLLATERAL
COMMITTEE
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ity of its operations. The Board has set Garantia’s target level
for capitalisation above the statutory solvency capital require-
ment, the minimum capital requirement required by credit
rating agency Standard & Poor’s for an AAA credit rating, and
the economic capital model defined at a confidence level of
99.5%. Garantia only distributes dividends or returns capital
to the owner when this does not put the A- credit rating or the
internal solvency target levels of Garantia at risk. The purpose
of capital management is to ensure in an anticipatory way that
the company has adequate capital reserves for exceptional
situations. The principal means to maintain balance between
risks and actual capitalisation is to ensure profitable business
operations and active risk management. If an imbalance is
detected, balance is restored with management of profit and
risk position, by refraining dividend payments or by acquiring
new capital.
Risk appetite means the amount and type of risks that the
company is prepared to take in order to achieve the targets
set for its business. Garantia has moderate risk appetite and
this is defined with so-called “risk-taking limits / risk indica-
tors”. The Board of Directors approves the risk-taking limits
/ risk indicators annually as part of the capital plan (solvency
limits), credit risk policy (concentration risks and risk-taking
limits concerning insurance operations), reinsurance policy
(risk-taking limits concerning reinsurance) and the investment
plan (risk-taking limits concerning investment activities).
Constant identification and assessment of risks in the
business and operating environment are part of Garantia’s
risk and solvency management process. The principal risks
associated with Garantia’s business operations are credit risks
arising from guaranty operations, investment risks regarding
assets covering technical provisions and shareholders’ equity,
strategic risks and operational and compliance risks. The iden-
tification and assessment of risks are described separately for
each risk below.
Garantia defines and assesses its capital requirement /
measures the risk of its business operations with three differ-
ent Value-at-Risk-based risk indicators. The primary indicator
used in the steering of operations, measurement of risk and
assessment of capital adequacy is economic capital (“Internal
risk capital”) at a confidence level of 99.5%. When estimating
its capital requirement, the company also uses the solvency
capital requirement (SCR) based on the Solvency II standard
formula at a confidence level of 99.5% including the capital
add-on and the minimum capital requirement corresponding
to AAA credit rating that is in accordance with the S&P’s Insur-
ance Capital Model. In addition to VaR-based risk indicators,
Garantia measures, monitors and assesses the risks of its
business operations and their development with other quanti-
tative and qualitative risk indicators. The measurement of risks
is described separately for each risk below.
Garantia’s monitoring and reporting of risk and solvency
position is divided into internal and external monitoring and
reporting. External reporting means the information pub-
lished for all stakeholders and reporting to the authorities.
Garantia also reports on its operations to external credit rating
agency Standard & Poor’s. Internally risk and solvency position
is reported to Garantia’s Management Team and Board of
Directors at least once a month and quarterly to the Taaleri
Group Risk and Capital Committee and further to the Board
of Directors of the Taaleri Group. The target of internal moni-
toring and reporting is to ensure that the company’s risk and
solvency position are within the limits of risk appetite.
Insurance risk
Insurance risk means a risk of loss arising from inadequate
assumptions concerning pricing and technical provisions or
an unfavourable change in the value of insurance liabilities.
In guaranties, the insurance risk mostly consists of credit risk,
i.e. the inability of the guaranteed counterparty to manage its
financial and/or operational obligations under the contract
in relation to the insured party. This may be the result of the
default of the guaranteed counterparty (default risk) or the
guaranteed counterparty may fail to fulfil a contractual obliga-
tion on time (delivery risk). The credit risk is also considered
to include the counterparty risk of the reinsurers or the party
providing other counter guaranties, which results from the
default of the reinsurer or the party providing other counter
guaranties, and the value change risk, which is caused by
changes in the fair value of the collateral.
The aim in the management of insurance risk related to
guarantee insurance i.e credit risk is to ensure that the negative
profit impacts arising from client and counterparty risks remain
at acceptable levels and that the returns are adequate in re-
lation to the risks taken. In guaranty insurance credit risks are
reduced by means of client selection, active management of
client relationships, monitoring of changes in the clients’ opera-
tions, pricing, diversification and also typically with reinsurance
and with collateral and covenant arrangements. Central to
the management of credit risks is the process of underwriting
insurance policies, which is controlled by the credit risk policy,
reinsurance policy and decision-making system approved
by the Board of Directors and the complementary process
descriptions and guidelines on credit risk assessment, audit-
ing of distribution partners, pricing, collateral and covenants
approved by the Management Team. The risk management
function monitors the functioning and quality of the insurance
process. In addition to the daily insurance process, credit risks
are identified and assessed at least once a year with a risk sur-
vey compiled in conjunction with the annual planning.
The amount of insurance risk is measured by the eco-
nomic capital model, by the solvency capital requirement
(SCR) including and excluding the capital add-on and by
S&P’s insurance capital model. The insurance risk’s economic
capital is defined separately for each contract with internal
ratings-based approach according to Basel II which considers
the exposure at default (EAD), the instrument’s credit rating
(probability of default, PD), duration, and the loss given de-
fault (LGD), which depends on counter-collateral and reinsur-
ance. The economic capital model also includes concentration
risk. Garantia regularly assesses its economic capital model
and the functionality of the parameters used in the calculation
of the amount of economic capital, including the effectiveness
of risk mitigating techniques as part of assessment of the
accuracy of the LGD parameter. Credit risks specific to clients
and groups of connected clients are assessed with the follow-
ing indicators in addition to economic capital model: client’s
rating and background variables, gross insurance exposure,
the proportion reinsured and amount and type of other collat-
eral, uncovered exposure, covenants and risk client status. The
credit risk exposure of the insurance portfolio is assessed with
the following indicators: gross exposure, proportion reinsured
and other collateral, and uncovered exposure and economic
capital figures by product group, rating class, industry, aver-
age maturity of exposure, claims incurred in relation to earned
premiums and insurance exposure. The insurance risk position
is monitored and reported to the Management Team and the
Board of Directors every month.
Quantitative information on insurance risks and technical
provisions are presented in note 42.
Actuarial assumptions
Under the Insurance Companies Act, insurance companies
must adopt prudent calculation criteria for determining the
technical provisions. The value of the technical provisions
must always be adequate so that the company can be rea-
sonably assumed to be able to manage its commitments. The
criteria for calculating the technical provisions must be sub-
mitted to the Financial Supervisory Authority before the end
of the financial year.
The provision for unearned premiums is determined as
‘pro rata parte temporis’. The proportion of the premiums
written of the valid insurance policies assigned to future finan-
cial years is determined on a guarantee basis. The outstand-
ing claims provision consists of known and unknown claims.
The individual claims due after the closing date are allocated
on a claims basis as part of the known outstanding claims. A
proportion of the premiums written accrued by the compa-
ny during a financial year is allocated to outstanding claims
unknown to the company on the closing date as part of un-
known outstanding claims, using a specific coefficient. Actual
technical provisions are not discounted.
The purpose of the equalization provision is to balance
the impact of years with exceptional technical results. The
equalization provision acts as a buffer, especially against
growth in claims incurred. In Garantia’s calculation bases for
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the equalization provision an amount corresponding to the
claims incurred for the period in question of the provision is
recognized annually into profit and loss until the equalization
provision reaches the targeted amount. In the long term the
equalization provision will gravitate to its target amount. The
calculation of the target amount has been defined in the In-
surance Companies Act.
Investment risks
The company’s investments are used for covering the tech-
nical provisions and the equity capital, and their primary
purpose is to secure the liquidity of insurance operations also
in years with exceptionally high claims. Garantia’s investment
activities are long-term and the objective is primarily to se-
cure capital and achieve stable and steadily increasing asset
growth. Market, counterparty (credit risk) and liquidity risk are
the risks affecting the investment activities.
Market risk means the possibility of losses or an unfavour-
able change in the economic situation due (directly or indi-
rectly) to the fluctuation in the market prices and volatility of
assets, liabilities and financial instruments. Changes in prices
affect the value of investment assets and annual returns. The
principal market risks are equity risk, interest rate risk, currency
risk and property risk. The credit risk of investments is made
up of counterparty risk and credit spread risk. Counterparty
risk means the risk of default pertaining to the contractual
counterparty. Credit spread risk describes the difference in
price of risky interest rate instruments and risk-free interest
rate instruments, in other words, the risk arising from a change
in the credit margin.
The main aim in the management of investment risks is to
keep the negative profit impacts arising from investments and
the changes in the values of investments at acceptable levels in
the long term, to ensure that investment returns are adequate
in relation to the risks taken and to safeguard the company’s
liquidity. Garantia follows the principle of prudence defined in
the Insurance Companies Act in its investment activities. Assets
are only invested in the type of assets where the company is
able to identify, measure, monitor, manage, control and report
the related risks. Investment activities should aim to ensure the
security, convertibility into cash, rate of return and availability
from location of investments, and to consider the nature of
insurance agreements and the interests of the insured.
Investment risks are managed through effective diversifi-
cation of the investments by asset class, sector, geographical
area, credit category and counterparty, and by ensuring ade-
quate liquidity of the investments. Central to the management
of investment risks is the daily implementation of investment
activity, which is controlled by the investment plan and deci-
sion-making powers approved by the Board. In addition to the
daily investment activities and monthly reporting, investment
risks are assessed at least once a year with a risk survey com-
piled in conjunction with the annual planning.
Capital requirements for investment risks are measured by
means of the economic capital model, the Solvency Capital
Requirement (SCR) and S&P’s insurance capital model. In
the economic capital model, investment risks are measured
on an instrument-specific basis with Value-at-Risk calculation
models for equity risk, currency risk, interest rate risk and
credit risk. The credit risk with fixed income and private equity
investments is defined with internal ratings-based method
according to Basel II which considers the amount of invest-
ment, the instrument’s credit rating, the loss given default and
duration. In addition to economic capital, investment risks are
measured based on asset class, by country, credit category,
counterparty, modified duration, interest rate sensitivity and
the amount of foreign currency denominated investments.
The investment risk position is monitored and reported to the
Management Team and the Board of Directors every month.
Quantitative information on insurance investment risks is
presented in Note 43.
Operational risks
Operational risks mean the risk of loss resulting from deficient
or faulty processes, human error, systems or external events.
Successful management of operational risks helps to en-
sure that the company’s operations are properly organised
and that the risks do not cause any unexpected direct or
indirect financial losses. Garantia is determined to maintain
and strengthen a corporate culture that is positively disposed
towards management of operational risks and internal con-
trol by continuously providing personnel with training and
guidelines.
In order to manage the operational risks, it is central to
identify and evaluate risks as well as to ensure the adequa-
cy of the control and management methods. The principal
tools in the management of operational risks are risk reviews
at least once a year on each unit, continuous registration of
operational risks, identification of corrective measures and
the monitoring and reporting of these, continuity planning,
principles for outsourcing, the planning and implementation
of new products, knowing your customer (KYC) and preven-
tion of money laundering and terrorist financing, and process
descriptions and other working instructions and operating
guidelines.
The extent of the operational risks is measured by the sol-
vency capital requirement (SCR) and the amount of economic
capital employed by operational risks, which is determined on
the basis of the annual risk reviews. Actual risk events and near
misses are monitored and registered, the corrective measures
concerning these are specified and the implementation of the
measures is followed. Operational risks are reported to the
Management Team and the Board of Directors on a quarterly
basis.
Other risks
Strategic risks are the risks that result from changes in the
operating and competitive environment, slow reaction to
changes, selection of the wrong strategy or business model or
the unsuccessful implementation of a strategy. Reputational
and regulatory risks are part of strategic risks. Reputational risk
means the risk that unfounded or founded unfavourable pub-
licity related to the company’s business operations or relations
weakens confidence in the company. Reputational risk is
usually a consequence of a materialised operational or com-
pliance risk which results in the deterioration of the company’s
reputation among its customers and other stakeholders. Reg-
ulatory risk means the risk that changes in laws or regulations
will materially weaken the company’s ability to carry out its
business operations.
The principal method in the management of strategic
risks is a systematic and continuous operational planning and
monitoring process which makes it possible to identify and
assess potential risks in the operating, competitive and reg-
ulatory environment and to update the strategy and manage
the measures to treat risks. Reputational risk is managed pro-
actively and long-term by operating in accordance with Ga-
rantia’s values, observing regulation and the Code of Conduct
confirmed by the Board of Directors and by communicating
openly and equitably with different stakeholders. Strategic
risks are monitored and assessed at least once a year with a
risk review compiled in conjunction with the annual planning.
Compliance risks are the risks pertaining to legal or ad-
ministrative consequences, economic losses or loss of reputa-
tion that result from the failure of the company to comply with
laws, decrees or other regulations applicable to its operations.
Legislative changes are actively monitored, and ongoing
projects are regularly reported to the Board of Directors. The
survey of risks conducted at Garantia in conjunction with an-
nual planning also includes the identification and assessment
of regulatory risks and the definition and monitoring of devel-
opment measures to reduce the risks. Providing the personnel
with guidelines and training is also central to managing com-
pliance risks.
Concentration risk means all types of risks that could lead
to such large losses that would endanger the solvency or
financial position of insurance or reinsurance companies. The
principal concentration risk in Garantia’s business operations
arises from the concentration risk of direct and indirect credit
and counterparty risk in guaranty and/or investment oper-
ations. Garantia’s total exposures contain large, individual
group of connected clients and industry-specific credit risk
concentrations. In addition, Garantia’s guaranties and invest-
ments are concentrated in Finland. The selection of clients
and investment targets and the continuous monitoring of
changes in the situation of clients is emphasised above all in
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the management of the credit concentration risk. Concentra-
tion risk is measured and assessed in the economic capital
model with a separate concentration risk model, according
to large exposures, as laid down in the Capital Requirements
Regulation of the EU and with risk limits specific to groups of
connected clients.
Liquidity risk means the risk that insurance and reinsurance
companies are unable to convert their investments or other
assets into cash in order to meet their financial obligations
that fall due for payment. Liquidity risk is limited at Garantia
as premiums written are collected before claims are paid and
the largest individual payments are insurance compensation
payments to beneficiaries or distribution of profit / repayment
of capital to shareholders and the payment dates for these
payments are usually known well in advance. Garantia has no
financial liabilities. The key tools for managing liquidity risk in
Garantia are maintaining sufficient amount of cash to handle
daily payments and the liquidity of the investment portfolio.
6. KEY RISKS AND RISK MANAGEMENT OF THE
ENERGY SEGMENT
Main risks in Energy segment’s operations include: market
risk (significant failure in the selection or exit of individual or
multiple investments and the resulting depreciation in value),
exchange rate risk (potential significant changes in exchange
rates for non-euro area investments), country risk (country and
destination-specific legal and political risks, and their impact
on individual investments); profitability risk (business risks of
the fund’s investments during construction and production
phase). The energy price risk can also affect the value of the
energy projects being developed and the profits of the ener-
gy funds. However, a significant part of the energy price risk is
mitigated with fixed price energy contracts.
Taaleri Energia Ltd’s subsidiary Taaleri Energia Funds Man-
agement Ltd (TEFM) has since June 2018 been authorized
by the Finnish Financial Supervisory Authority to act as an
alternative investment fund manager. TEFM is the manager of
alternative investment funds in the Energy segment and takes
care of risk management for the funds.
The Energy segment’s investment-specific and especially
international energy infrastructure investment risk manage-
ment has been integrated into the Energy segment’s oper-
ational processes that define quality criteria for investment
projects and their review. International investment activities
emphasize the need to commission external due diligence
reports in addition to the analyses done by Energy segment
personnel. Each project or transaction is reviewed by the En-
ergy segment Investment Committee where experienced, in-
dependent infrastructure investment professionals challenge
the investment proposals by Energia’s investment managers.
Each project or transaction is reviewed several times in the
Investment Committee before the final investment decision
is made. After the investment has been completed, the per-
sonnel of the Energy segment actively participate in project
implementation and decision-making, from the investment to
the exit. The Energy segment also continuously monitors the
key factors that may affect the value of projects as part of risk
management and investor reporting processes, and annually
updates fund-specific risk analyses and stress tests.
Taaleri Energia Ltd also invests its own funds in develop-
ment projects and its investment risk positions are monitored
as part of the RaVa-Group risk management.
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39 MATURITY SPREAD OF FINANCIAL ASSETS AND LIABILITIES
Financial assets 31.12.2020, EUR 1,000 <3 months 3–12 months 1–5 years 5–10 years >10 years Total
Receivables from credit institutions 25,786 25,786
Receivables from the public and general
government
1)
6 954 4,632 1,212 6,804
Debt securities 1,500 1,500
Other financial assets 12,767 7, 543 20,309
Interest 5 316 832 5 1,157
Financial assets total 38,564 1,270 14,507 1,217 - 55,558
Financial liabilities 31.12.2020, EUR 1,000 <3 months 3–12 months 1–5 years 5–10 years >10 years Total
Liabilities to credit institutions
1)
2,500 12,500 15,000
Debt securities issued to the public
1)
35,000 35,000
Subordinadet debt 15,000 15,000
Other financial liabilities 6,787 7,881 1,478 16,146
- of which lease liabilities 319 961 1,478 2,759
Interest 150 2,331 3,000 3,000 8,481
Financial liabilities total 9,756 58,673 5,956 18,000 - 89,627
1)
The maturity of financial assets are shown at their original value before impairments.
The maturity spread for insurance assets and liabilities is presented in Notes 42 and 43.
Financial assets 31.12.2019, EUR 1,000 <3 months 3–12 months 1–5 years 5–10 years >10 years Total
Receivables from credit institutions 29,102 29,102
Receivables from the public and general
government
1)
12 61 7,145 8,459
Debt securities 1,500 1,500
Other financial assets 19,790 7, 257 27,0 4 6
Interest 744 2,080 149 2,973
Financial assets total 48,892 757 10,898 7,294 - 69,081
Financial liabilities 31.12.2019, EUR 1,000 <3 months 3–12 months 1–5 years 5–10 years >10 years Total
Liabilities to credit institutions
1)
6,000 20,000 26,000
Debt securities issued to the public
1)
35,000 35,000
Subordinadet debt 15,000 15,000
Other financial liabilities 7, 508 8,127 2,463 18,097
- of which lease liabilities 343 1,244 2,463 4,049
Interest 278 2,651 4,883 3,750 11, 561
Financial liabilities total 8,129 18,021 64,808 18,750 - 105,659
1)
The maturity of financial assets are shown at their original value before impairments.
The maturity spread for insurance assets and liabilities is presented in Notes 42 and 43.
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40 CHANGES IN LIABILITIES ARISING FROM FINANCING ACTIVITIES
1.1.2020 Cash flows
Change in
fair value 31.12.2020
Liabilities to credit institutions 25,929 -11,000 10 14,939
Debt securities issued to the public 34,875 62 34,937
Subordinated debt 14,825 14 14,839
Total 75,629 -11,000 86 64,715
1.1.2019 Cash flows
Change in
fair value 31.12 .2019
Liabilities to credit institutions 6,996 19,000 -67 25,929
Debt securities issued to the public 54,815 -20,000 60 34,875
Subordinated debt - 15,000 -175 14,825
Total 61,811 14,000 -183 75,629
41 MARKET RISK SENSITIVITY ANALYSIS
A market risk sensitivity analysis has been prepared for the Group’s significant market risks, which are interest rate risk and price risk.
Sensitivity analyses are prepared by evaluating how each possible change in interest rate or prices might influence balance sheet items
that are sensitive to them. The effect is calculated before taxes. Separate sensitivity analyses have been prepared for insurance assets
and liabilities and are presented in Notes 41 and 42.
31.12.2020 31.12.2019
EUR 1,000
Risk
variable Change
Effect on
earnings
Effect on
equity
Effect on
earnings
Effect on
equity
Interest rate risk
1)
Interest
One percentage
point 262 262 36 36
Price risk
2)
Shares and units Fair value 10% 2,147 2,197 874 923
Receivables from the public
and general government Fair value 10% 394 394 623 623
Assets classified as held for
sale Fair value 10% 536 536 767 767
1)
In the interest rate risk sensitivity analysis financial assets and liabilities on the balance sheet with a variable interest rate have been taken into account.
2)
In the price risk sensitivity analysis financial instruments that are measured at fair value have been taken into account.
42 QUANTITATIVE INFORMATION ABOUT INSURANCE RISK
AND TECHNICAL PROVISIONS
Taaleri’s insurance operations consist only of the business of Garantia Insurance Company Ltd. Below is a presentation of quantita-
tive information for Garantia. Garantia Insurance Co Ltd was merged with the Group on 1 April 2015.
Trend in claims
incurred, EUR 1,000 Claims paid*
Change in provision for
outstanding claims* Claims incurred
%, of insurance
exposure Claims ratio, %
2020 -855 263 -592 0.03% 4.00%
2019 -336 -1,282 -1,618 0.09% 12.2%
2018 427 355 783 -0.05% -6.4%
2017 -343 -736 -1,079 0.07% 10.1%
2016 -934 -240 -1,174 0.09% 12.4%
2015 -1,421 -71 -1,492 0.13% 15.1%
2014 -569 157 -412 0.03% 3.7%
2013 -2,526 121 -2,405 0.18% 22.2%
2012 -1,772 504 -1,268 0.09% 11.7%
2011 -4,827 -753 -5,580 0.44% 50.8%
2010 -2,098 26 -2,072 0.15% 18.7%
* Incl. reinsurers’ share
Insurance exposure by product groups, EUR million 31.12.2020 31.12 .2019
Consumer exposure 972 828
Corporate exposure 844 1,009
Total 1,817 1,837
Consumer exposure includes residential mortgage loan guaranties and rent guaranties, where insurance risk is attributable to credit risk of households.
Corporate exposure is made up of corporate loan guaranties, commercial bonds and other guaranties, where insurance risk is attributable to credit risk of
corporates and other organisations.
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Corporate insurance exposure by credit rating, EUR million 31.12.2020 31.12 .2019
AAA...BBB- 126 121
BB+...BB- 462 572
B+...B- 186 248
C+ or weaker 30 16
Rated exposure total 803 958
Other exposure 41 51
Corporate exposure total 844 1,009
Corporate insurance exposure by industry, EUR million 31.12.2020 31.12 .2019
Construction 285 488
Manufacturing 198 201
Machinery and equipment industry (incl. repair) 81 93
Chemicals 21 22
Metals 43 37
Food 25 30
Other 29 18
Wholesale and retail trade 65 58
Finance and insurance 60 58
Transport and logistics 57 28
Water supply and waste management 33 26
Services 22 35
Other industries 83 64
Rated exposure total 803 958
Other exposure 41 51
Corporate exposure total 844 1,009
Other exposure consists of exposure where insurance risk is not directly attributable to the creditworthiness or industry sector of the counterparty.
Hence, this exposure has not been rated. The industry classification is based on the classification taxonomy of Statistics Finland.
Technical provisions (FAS), EUR 1,000 31.12.2020 31.12 .2019
Provision for unearned premiums 29,815 25,955
Provision for claims outstanding 2,310 2,573
Known provision for claims outstanding 1,373 1,642
Unknown provision for claims outstanding 937 931
Equalisation provision 71,109 71,701
Total 103,234 100,228
Provision for unearned premiums and claims outstanding by estimated maturity 31 December 2020
EUR 1,000 <1 year 1–2 years 2–3 years >3 years Total
Provision for unearned premiums 10,000 5,852 4,523 9,439 29,815
Provision for claims outstanding 2,310 2,310
Total 12,310 5,852 4,523 9,439 32,125
Provision for unearned premiums and claims outstanding by estimated maturity 31 December 2019
EUR 1,000 <1 year 1–2 years 2–3 years >3 years Total
Provision for unearned premiums 8,965 5,103 3,801 8,084 25,955
Provision for claims outstanding 2,573 2,573
Total 11,538 5,103 3,801 8,084 28,528
The duration of the cash flow distribution of technical provision excluding equalization provision is 2.7 (2.7) years.
Sensitivity analysis of insurance operations 31 December 2020
Risk parameter
Total amount,
EUR 1,000
Change in risk
parameter
Effect on equity,
EUR 1,000
Effect on combined ratio,
percentage point
Premium revenue 14,885 increases by 10% 1,191 improves 3.4pp
Claims incurred 592 increases by 10% - weakens 0.4pp
Large claim, EUR 10 million - EUR 10 million - weakens 67.2pp
Operating expenses 5,030 increases by 10% -402 weakens 3.4pp
Sensitivity analysis is based on Garantia Insurance Company Ltd’s FAS financial statements.
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Sensitivity analysis of insurance operations 31 December 2019
Risk parameter
Total amount,
EUR 1,000
Change in risk
parameter
Effect on equity,
EUR 1,000
Effect on combined ratio,
percentage point
Premium revenue 13,212 increases by 10% 1,059 improves 5.1pp
Claims incurred 1,618 increases by 10% - weakens 1.2pp
Large claim, EUR 10 million - EUR 10 million - weakens 75.5pp
Operating expenses 5,752 increases by 10% -460 weakens 4.3pp
Sensitivity analysis is based on Garantia Insurance Company Ltd’s FAS financial statements.
43 QUANTITATIVE INFORMATION ABOUT INSURANCE INVESTMENT RISKS
Taaleri’s insurance operations consist only of the business of Garantia Insurance Company Ltd. Below is a presentation of quantita-
tive information from Garantia from 2017 and the comparison periods, based on the figures in Garantia’s FAS financial statements.
Investment distribution at fair value, EUR million 31.12.2020 31.12 .2019
Fixed income investments* 138 127
Equity investments 20 22
Land and buildings 2 2
Total 159 151
* Includes cash and bank balances. Fixed income investments include mainly bonds issued by Finnish corporates and Nordic banks.
Investment sensitivity analysis, 31 December 2020
Investment class
Investments at fair
value, EUR million Risk parameter Change
Effect on equity,
EUR million
Bonds 137.7
Change in
interest rate 1% 3.8
Shares 15.6 Fair value 10% 1.2
Capital investments 6.1 Fair value 10% 0.5
The sensitivity analysis is based on Garantia’s FAS financial statements. When calculating the effects of changes, the market valuationhas, however,
been assumed before and after the change.
Investment sensitivity analysis, 31 December 2019
Investment class
Investments at fair
value, EUR million Risk parameter Change
Effect on equity,
EUR million
Bonds 127. 3
Change in
interest rate 1% 3.3
Shares 19.0 Fair value 10% 1.5
Capital investments 4.5 Fair value 10% 0.4
The sensitivity analysis is based on Garantia’s FAS financial statements. When calculating the effects of changes, the market valuationhas, however,
been assumed before and after the change.
Fixed-income portfolio (excl. bond funds) by maturity and credit rating 31 December 2020
EUR million <1 year 1–3 years 3–5 years >5 years Total %
AAA...AA- 0 - 5 - 5 4%
A+...A- 1 8 7 3 18 13%
BBB+...BBB- - 12 21 28 61 44%
BB+ or weaker 6 23 19 5 53 39%
Total 7 44 51 36 138 100%
Fixed-income portfolio (excl. bond funds) by maturity and credit rating 31 December 2019
EUR million <1 year 1–3 years 3–5 years >5 years Total %
AAA...AA- 0 4 - 5 9 7%
A+...A- 0 - 15 1 16 13%
BBB+...BBB- - 2 28 15 44 35%
BB+ or weaker 10 22 25 - 58 46%
Total 11 28 68 20 127 100%
Maturity date is the end of the term to maturity. If the instrument includes a call option, maturity is the first possible call date. The rating of an
instrument is an issuer rating or senior debt rating published by an external rating agency. If an external rating is not available, Garantia's internal
credit rating is used.
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OTHER NOTES
44 NOTES CONCERNING PERSONNEL AND MANAGEMENT ....................................... 72
45 INVESTMENTS IN SUBSIDIARIES ................................................................................... 74
46 INVESTMENTS IN ASSOCIATED COMPANIES ............................................................. 74
47 CONTINGENT LIABILITIES .............................................................................................. 75
48 PENSION LIABILITIES ...................................................................................................... 75
49 LEASES .............................................................................................................................. 75
50 RELATED PARTY DISCLOSURES ..................................................................................... 76
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2020 2019
Number of personnel Average no. Change Average no. Change
Permanent full-time personnel 192 6 186 3
Temporary part-time personnel 11 2 9 -1
Total 203 8 195 2
SHARE OPTION PLANS AND SHARE BASED
INCENTIVE SCHEMES FOR KEY EMPLOYEES
Share option plan 2015
The 2015 incentive scheme expired on 31 December 2020.
On 28 October 2015, the Board of Directors of Taaleri Plc
decided on a share-based incentive scheme for the Group’s
key employees. Under the incentive scheme, key persons are is-
sued synthetic option rights, and a potential bonus will be paid
in 2019–2020 in cash. The company’s Board of Directors may
oblige a key employee to acquire company shares comprising
up to 50% of the bonus. The payment in cash aims to cover tax
and tax-like payments incurred by key employees from bonus-
es. If the employment of a key employee ends before 2018,
in principle no bonus will be paid. The Board of Directors may
oblige that person to purchase Taaleri shares, and to set a pos-
sible one-year limitation period for the shares. At the moment
of granting, the bonuses paid based on the incentive scheme
will correspond to the value increase of a total of no more than
about 800,000 Taaleri Plc shares, including the part paid in
cash. The given value of a share was set at EUR 9.00, which will
be reduced by dividends distributed and by capital repayments
before the usage date. The final value of a share will be the
average price weighted by transaction amounts concluded in
the 20 trading days prior to the synthetic option excercise date.
On the date of granting of 25 February 2016, the fair value
of an option was set at EUR 1.77, on 12 May 2016 at EUR 2.07,
on 22 June 2016 at EUR 1.80, on 16 December 2016 at EUR
1.36 and on 30 October 2017 at EUR 2.83. Because the recip-
ient of an option is not entitled to receive dividends or capital
repayments during the earnings period, the dividends expect-
ed have been deducted from the share price on the date of
granting when setting the fair value.
The fair value of the payments to be settled in cash were
reassessed on each reporting day up to the end of 2017. On 1
January 2018 the amendments to IFRS 2 came into force and
since then the expense is recognised according to the initial
date of granting until the end of the earnings period.
Options outstanding
(number of options)
1.1.–31.12.
2020
1.1.–31.12.
2019
Outstanding at the beginning of
the period 545,000 615,000
Returned during the period 25,000 -
Exercised during the period 92,000 70,000
Expired during the period 427, 50 0
Outstanding at the end of
the period - 545,000
Excercisable at the end of
the period - -
Share based incentive scheme 2017
On 30 October 2017, the Board of Directors of Taaleri Plc decid-
ed on a share-based incentive scheme for the Group’s key em-
ployees. The scheme consists of three three-year earnings pe-
riods, namely 1/11/2017-31/10/2020, 1/11/2018-31/10/2021,
and 1/11/2019-31/10/2022. At the beginning of each period,
the Board of Directors decides on the earnings criteria and sets
performance targets. Approximately twenty persons, including
the members of the group’s executive board, are part of the
scheme. The potential bonuses from the scheme in the earnings
periods 2017-2020, 2018-2021 and 2019-2022 are based on
the total return of Taaleri Plc’s share. The first earnings period
expired 31 October 2020 as worthless. The potential bonus for
the earnings period 2018-2021 corresponds to a maximum of
the value of 240,000 shares, including the part paid in cash, and
for the earnings period 2019-2022 243,455 shares. The possible
bonus will be paid within approximately four years from the end
of the earnings period in four instalments. The bonus is paid
partly in shares and partly in cash. The payment in cash aims to
cover tax and tax-like payments incurred by key employees from
bonuses. If the employment of a key employee ends before the
payment of the bonus, in principle no bonus will be paid. Shares
received as a bonus may not be surrendered during a one-year
waiting period. Shares received under the scheme must be held
by the key employee until the value of the shareholding in the
company corresponds to the key employee’s yearly gross salary.
This amount of shares must be held by the key employee as
long as the employment in one of the group companies lasts.
On the date of granting on 30 October 2017, the fair value
of a unit was set at EUR 5.07, on 29 October 2018 at EUR 0.11
and on 30 October 2019 at EUR 1.65. Because the recipient
of a unit is not entitled to receive dividends or capital repay-
ments during the earnings period, the dividends expected
have been deducted from the share price on the date of
granting when setting the fair value.
Units outstanding
1.1.–31.12.
2020
1.1.–31.12.
2019
Outstanding at the beginning
of the period 552,044 397, 50 0
Granted during the period - 225,000
Returned during the period 6,888 70,456
Exercised during the period 137,000
Outstanding at the end of
the period 408,156 552,044
Excercisable at the end of
the period - -
44 NOTES CONCERNING PERSONNEL AND MANAGEMENT CEO’s share based incentive scheme
Taaleri Plc’s Board of Directors has decided on the establish-
ment of a new share-based incentive scheme for the compa-
ny’s CEO. In the scheme, the CEO will acquire a minimum of
200,000 euros of company shares. The share-based incentive
scheme is a one-off, five-year scheme, and the earning period
is 1 June 2019—15 June 2024. The earning period includes
three measuring periods, which commence at the beginning
of the earning period and end on 15 September in years
2022, 2023 and 2024. Any remuneration awarded under the
scheme will be based on Taaleri Plc’s total shareholder return
(TSR). The remuneration paid will correspond to the value of
no more than 249,000 Taaleri Plc shares, including the part
paid in cash.
Determining fair value
In order to determine fair value, the Group uses the Black-
Scholes model in option arrangements in which there are no
special conditions for creating rights, ie. the 2013 and 2015
share option plans. The expected volatility is determined
based on the actual price development of the parent com-
pany’s shares, taking into account the validity period of the
options still remaining. The fair value of shares in these option
arrangements, based on which the shares are granted, is
based on the quoted share price. Since 1 January 2018 the
recongnised expenses are based on the valuation at the time
the rights were granted.
The valuations of synthetic options and share based incen-
tive schemes on 31 December 2018 are based on accrued
expenses based on fair values up until 1 January 2018, and
from then on based on the valuations on the day the rights
were granted. During 2020 expenses from options and other
share based incentive schemes amounting to EUR 1.0 (0.9)
million were recognised in personnel costs.
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Share Options 2015, assumptions used granted 2/2016 granted 5/2016 granted 6/2016 granted 12/2016
Weighted price of shares on the date of
granting, EUR 8.76 9.18 8.78 8.31
Share price on 31 December 2020 8.12 8.12 8.12 8.12
Share price on 31 December 2019 8.42 8.42 8.42 8.42
Original issue price, EUR 9.00 9.00 9.00 9.00
Dividend-adjusted issue price, EUR 7.86 7.86 7.86 7.86
Expected volatility, % 24.4% 24.4% 24.4% 24.4%
Validity period on date of granting, years 4.9 4.6 4.5 4.0
Risk-free interest, % 0.04% 0.04% 0.04% -0.52%
Fair value of option at the time of granting, EUR 1.77 2.07 1.80 1.36
Share Options 2015, assumptions used granted 10/2017
Weighted price of shares on the date of granting, EUR 10.75
Share price on 31 December 2020 8.12
Share price on 31 December 2019 8.42
Original issue price, EUR 9.00
Dividend-adjusted issue price, EUR 7.86
Expected volatility, % 23.4%
Validity period on date of granting, years 3.17
Risk-free interest, % -0.43%
Fair value of option at the time of granting, EUR 2.83
Share based incentive scheme 2017, assumptions used granted 10/2017 granted 10/2018 granted 10/2019
Maximum value on the date of granting, EUR 1,717, 20 0 1,629,540 1, 537, 60 5
Share price on 31 December 2020 8.12 8.12 8.12
Share price on 31 December 2019 8.42 8.42 8.42
Allocation price of share 10.60 8.23 7. 27
Expected actualisation rate 59.15% 1.49% 25.74%
Discount rate 10.0% 10.0% 10.0%
CEO share based incentive scheme 2019, assumptions used granted 6/2019
Maximum value on the date of granting, EUR 1,752,960
Share price on 31 December 2020 8.12
Share price on 31 December 2019 8.42
Allocation price of share 7.04
Expected actualisation rate 26.61%
Discount rate 10.0%
The excpected actualisation rate is determined based on the future share price estimated using the Capital Asset Pricing Model,
where Taaleri’s company specific beta coefficient and the market risk is used. The risk free rate is based on government loans.
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45 INVESTMENTS IN SUBSIDIARIES
CHANGES IN SUBSIDIARY SHAREHOLDINGS 2020
During 2020 Taaleri divested its holding in wind farm project
located in Texas, USA, by reducing its holding in TGE Taaleri
LLC and its subsidiary TG East Wind Project LLC to seven
(100.0) per cent.
In addition, during 2020 Taaleri acquired all of the
non-controlling interests in Taaleri Veropalvelut Oy and at the
end of the financial year Taaleri’s holding in Taaleri Veropalve-
lut Oy is 100.0 (95.0).
Taaleri Sijoitus Oy’s holding in Mobify Invoices Oy de-
creased to 61.8 (68.0) percent with the share issue.
Additionally, during 2020, there were established and
merged some management - and project companies under
Taaleri Pääomarahastot, Taaleri Sijoitus and Taaleri Energia. All
group companies are listed on the financial statements of the
parent company.
CHANGES IN SUBSIDIARY SHAREHOLDINGS 2019
Taaleri Energia acquired Taaleri Energia Iberia SL in Spain and
establised Taaleri Solarwind II GP S.a.r.l. In Luxembourg during
the financial period.
During the financial period Taaleri divested its holding in
the property investment TT Canada RE Holding (100.0) and its
subsidiary Norther Lights Enterprises (85.0), and reduced its
holding in Taaleri Datacenter to 31.2 (100.0) per cent.
During the reporting period Taaleri reduced its ownership
in Taaleri Energia by 2.0 percent to commit its Energia seg-
ment’s key operative individuals. At the end of the financial
period Taaleri had a 78.6 (80.6) per cent stake in the company.
The effect of the sale is included in the table below.
Taaleri Wealth Management Ltd’s wholly owned subsid-
iary Kultataaleri Oy was merged into its parent company on
31.12.2019.
Additionally, during the financial period, management
and project companies were established and merged under
Taaleri Private Equity Funds and Taaleri Energia.
Effects on the equity attributable to owners of the parent of any changes in its
ownership interest in a subsidiary that do not result in a loss of control, EUR 1,000 2020 2019
From an addition to the share owned in subsidiaries -246 -
From a reduction in the share owned in subsidiaries without loss of control 93 80
Net effect on equity -153 80
There is not a material non-controlling interest in the group.
46 INVESTMENTS IN ASSOCIATED
COMPANIES
CHANGES IN ASSOCIATED COMPANIES
SHAREHOLDINGS 2020
On 31 December 2020 the group had nine associated com-
panies; Fellow Finance Plc, Hernesaaren Kehitys Oy, Munk-
kiniemi Group Oy, Taaleri Datacenter Ky, Fintoil Oy, Taaleri So-
larWind II SPV, Turun Toriparkki Oy, Masdar Taaleri Generation
and Sepos Oy. None of these is considered material to the
group. The associated companies, except for Fellow Finance
Plc and Fintoil Oy, are consolidated using the equity method.
Fellow Finance Plc is classified as held for sale (see Note 23).
Venture capital investment committed to associated company
Fintoil is decided to measure at fair value through profit or
loss in accordance with IFRS 9. A profit of 73 thousand euros
from continuing operations of the associated companies has
been recognised in the Group in the income statement item
‘Share of associates’ profit or loss’. The associated companies
have neither discontinued operations nor comprehensive
income items.
During the reporting period Taaleri acquired a 30.0 per-
cent share in Sepos Oy after which it is consolidated as asso-
ciated company. In addition, Taaleri’s holding in Taaleri Data-
center Ky decreased to 29.5 per cent and holding in Fintoil Oy
increased to 27.4 per cent.
CHANGES IN ASSOCIATED COMPANIES
SHAREHOLDINGS 2019
On 31 December 2019 the group had eight associated com-
panies; Fellow Finance Plc, Hernesaaren Kehitys Oy, Munk-
kiniemi Group Oy, Taaleri Datacenter Ky, Fintoil Oy, Taaleri
SolarWind II SPV, Turun Toriparkki Oy and Masdar Taaleri Gen-
eration. None of these is considered material to the group.
The associated companies, except for Fellow Finance Plc and
Fintoil Oy, are consolidated using the equity method. Fellow
Finance Plc is classified as held for sale (see Note 23) and
Fintoil as an investment that is valued at fair value. A loss of 37
thousand euros from continuing operations of the associated
companies has been recognised in the Group in the income
statement item ‘Share of associates’ profit or loss’. The asso-
ciated companies have neither discontinued operations nor
comprehensive income items.
During the reporting period former subsidiary Taaleri Da-
tacenter Ky had a capital call, after which Taaleri’s share in the
company is 31.2 per cent and it became an associated com-
pany. At the same time Taaleri Datacenter Ky’s subsidiary Fico-
lo Oy ceased to be Taaleri’s associated company. Additionally
Taaleri acquired a 33.3 per cent share in Hernesaaren Kehitys
Oy, a 50.0 percent share in Taaleri SolarWind II SPV, a 50.0
percent share in Masdar Taaleri Generation and 21.6 percent
in Fintoil Oy.
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47 CONTINGENT LIABILITIES
Commitments not
recognised as liabilities,
EUR 1,000 31.12.2020 31.12.2019
Total gross exposures of
guaranty insurance 1,816,527 1,837,468
Guarantees 2,000 2,000
Investment commitments 4,658 8,200
Pledged securities 15,000 10,000
Credit limits (unused) 10,200 10,200
Total 1,848,385 1,867,868
Garantia has received information that a matter concerning
a potential insurance event and a EUR 5 million claim with
penalty consequences and legal fees has become pending
in the Helsinki District Court on 29 December 2017. The
insurance claim concerns a pension fund which was a loan
guaranty customer of Garantia in 2011 and which was placed
in liquidation in December 2011 under the Pension fund act
(1164/1992, as amended) and subsequently declared bank-
rupt on 5 February 2018, related to which Garantia originally
received a claim on 30 December 2011. The processing of
the case in the district court has not yet begun, due to other
pending investigations related to the pension fund. Garantia
considers that the claim is still unfounded, which is why it has
49 LEASES
Right-of-use assets 2020, EUR 1,000 Office spaces Cars Equipment Total
Book value 1 January 2020 3,622 220 128 3,971
Increases 4 31 - 35
Remeasurements 12 - - 12
Decreases - -7 - -7
Depreciation -1,212 -117 -31 -1,359
Book value 31 December 2020 2,427 127 97 2,651
Lease liablities 31 December 2020 2,759
Right-of-use assets 2019, EUR 1,000 Office spaces Cars Equipment Total
Book value 1 January 2019 4,846 351 126 5,323
Increases 3 145 125 272
Decreases - -89 -91 -180
Depreciation -1,226 -187 -32 -1,445
Book value 31 December 2019 3,622 220 128 3,971
Lease liablities 31 December 2019 4,049
Items recognised in profit and loss related to lease agreements 1.1.–31.12.2020 1.1.–31.12.2019
Interest expense 140 189
Depreciation 1,359 1,445
Costs related to short term agreements 571 541
Costs related to agreements concerning low value assets 31 32
Costs related to agreements not in the scope of IFRS 16 13 27
Total 2 ,114 2,234
Interest expenses are recognised in interest expenses on the income statement. Costs related to short term agreements and agree-
ments concerning low value assets are recognised in other operating expenses.
Cash flows related to lease agreements amounted to EUR 2,086 (2,155) thousand in 2020.
not been entered in the profit and loss account as a provision
for outstanding claims.
48 PENSION LIABILITIES
Statutory pension cover for the company’s employees and
management is arranged through a TyEL insurance policy.
Additional voluntary pension insurance has been taken out for
the company’s management. The company has no unrecog-
nised pension liabilities. All the company’s pension arrange-
ments are defined contribution plans.
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50 RELATED PARTY DISCLOSURES
The parent company and its subsidiaries and associated com-
panies belong to the group’s related parties. Related parties
also include the members of the Board of Directors and the
executive board as well as their related parties.
The following belong to the company’s related parties:
1) Someone who, by virtue of shareholding, options or con-
vertible bonds has or may have at least 20 percent of the
company’s stocks or shares, or the voting rights attached
to them, or a corresponding shareholding or voting right
in an organisation belonging to the group, or in an organi-
sation exercising control in the company, unless the signif-
icance of the company that is the subject of ownership is
minor in terms of the whole group.
2) A member and deputy member of the Board of Directors,
CEO and Deputy CEO, and somebody in a similar position
in a company as referred to in point 1.
3) The children and spouse of someone as referred to in
point 2, or someone in a marital relationship with that
person.
4) An organisation and foundation in which an above-men-
tioned person, either alone or with another person, has
control as specified in Chapter 1, Paragraph 5 of the Ac-
counting Act.
Business transactions made with the company and compa-
nies belonging to the group have been carried out on terms
equivalent to those that prevail in arm’s length transactions.
Companies belonging to the Group are listed on page 111.
On 31 December 2020 the Chairman of the board Ju-
hani Elomaa was among the 10 largest shareholders of the
company.
Related party transactions with associated companies and related parties, EUR 1,000
2020 Sales Purchases Receivables Liabilities
Associated companies 761 - 4,713 -
Other related parties 200 - 5,002 -
2019 Sales Purchases Receivables Liabilities
Associated companies 1,206 - 7,410 -
Other related parties 177 - 5,265 -
MANAGEMENT SHAREHOLDINGS
At the end of 2020, members of the company’s Board of Directors and Group Management Team owned a total of 2,147,721 of the
company’s shares, which corresponds to 7.6% of the shares and the voting rights attached to all shares. The shareholdings of the
members of the company’s Board of Directors and Senior Management Team in the company, including related party holdings:
Name Position Number of shares
Juhani Elomaa
1)
Chairman of the Board of Directors 2,069,483
Titta Elomaa
2)
Managing Director Garantia 2,060,109
Robin Lindahl CEO 34,513
Minna Smedsten CFO 18,049
Elina Björklund Member of the Board of Directors 12,000
Hanna Maria Sievinen Member of the Board of Directors 7,90 0
Tuomas Syrjänen Member of the Board of Directors 7,782
Total 2,149,727
Total of share capital, % 7.6%
1)
Juhani Elomaa’s shareholding consists of 2,069,483 shares, 266,656 of which are owned by E-Capital Oy, in which he has a controlling interest, and
79,549 are owned by other related parties.
2)
Titta Elomaa’s shareholding consists of 2,060,109 shares, of which 2,039,255 are owned by other related parties.
FRINGE BENEFITS OF SENIOR MANAGEMENT
Senior management consists of the Board of Directors and the Executive Board
1)
. Compensation paid or payable to them for their
work consists of the following items:
EUR 1,000 2020 2019
Salaries, bonuses and other fringe benefits 2,364 2,515
Benefits to be paid at the end of employment 1,004 1,106
Total 3,368 3,621
1)
The composition of Taaleri’s Executive Board changed during the 2020 and 2019 financial periods. The benefits of those who left the Executive
Board are included in the table from the time when they belonged to the team.
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PARENT COMPANY FINANCIAL STATEMENTS
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EUR Note 1.1.–31.12.2020 1.1.–31.12.2019
Fee and commission income 2 4,988 5,700
Net gains or net losses on trading in securities and foreign currencies 3 -1,426 88,198
Net gains or let losses on trading in securities -1,288 88,267
Net gains or net losses on trading in foreign currencies -139 -69
Income from equity investments 4 9,000,000 7, 573, 887
Interest income 5 1,838,113 1,569,397
Other operating income 6 2,420,674 2,731,371
INCOME FROM INVESTMENT SERVICES 13,262,348 11,968,553
Fee and commission expense 7 -41,278 -40,481
Interest expense 8 -3,221,945 -2,919,135
Administrative expenses
Personnel costs 9
Wages, salaries and fees -2,629,797 -2,577,056
Other benefits -401,915 -465,357
Pension expenses -379,072 -419,357
Social security contributions -22,843 -46,000
Personnel costs, total -3,031,712 -3,042,413
Other administrative expenses 10 -1,014,429 -1,330,107
Depreciation, amortisation and impairment of tangible and intangible assets 11 -7,105 -19,030
Other operating expenses 12 -2,113, 861 -1,800,949
Expected credit losses from financial assets measured at amortised cost 13 -94 7,979
OPERATING PROFIT (LOSS) 3,831,924 2,824,419
Appropriations 14 5,500,000 4,700,000
Income taxes 15 -66,584 -18,721
PROFIT (LOSS) FOR THE PERIOD 9,265,340 7,505,698
Assets Note 31.12.2020 31.12.2019
Receivables from credit institutions 16, 29, 30, 31, 32 1,735,620 13,448,693
Receivables from the public and general government 17, 29, 30, 31, 32 34,610,035 29,916,129
Debt securities 18, 29, 30, 31, 32 1,497,738 1,497,738
Shares and units 19, 29, 30, 31 23,130 24,418
Participating interests 19, 29, 30, 31 3,153,624 2,997,624
Shares and units in group entities 19, 29, 30, 31 77,942,995 77,942,995
Intangible assets 20 3,553 10,658
Other assets 21 1,211,363 191,661
Accrued income and prepayments 22 3,372,600 4,188,241
Deferred tax assets 23 1,670 1,652
123,552,329 130,219,809
Liabilities Note 31.12.2020 31.12.2019
LIABILITIES 66,142,410 77, 5 4 6, 331
Liabilities to credit institutions 24, 29, 30, 31, 32 14,938,748 25,929,151
Debt securities issued to the public 25, 29, 30, 31, 32 34,936,919 34,874,547
Other liabilities 26 233,721 244,279
Accrued expenses and deferred income 27 1,193,972 1,673,541
Subordinated debt 28 14,839,051 14,824,813
EQUITY 33 57,4 09,919 52,673,478
Share capital 125,000 125,000
Non-restricted reserves 36,139,665 36,139,665
Reserve for invested non-restricted equity 36,139,665 36,139,665
Retained earnings or loss 11,879,914 8,903,115
Profit (loss) for the period 9,265,340 7,505, 698
123,552,329 130,219,809
PARENT COMPANY FINANCIAL STATEMENTS
PARENT COMPANY INCOME STATEMENT PARENT COMPANY BALANCE SHEET
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Note 1.1.–31.12.2020 1.1.–31.12.2019
Cash flow from operating activities:
Operating profit (loss) 3,831,924 2,824,419
Depreciation 7,105 19,030
Other adjustments
Changes in fair value of investments
- at fair value through profit or loss 1,381 -34,766
Cash flow before change in working capital 3,840,410 2,808,683
Change in working capital
Increase (-)/decrease (+) in loan receivables -4,694,000 -8,933,291
Increase (-)/decrease (+) in current interest-free receivables -134,275 -953,061
Increase (+)/decrease (-) in current interest-free liabilities -523,662 -456,238
Cash flow from operating activities before financial items and taxes -1,511,527 -7, 533,907
Direct taxes paid (-) -16,647 -
Cash flow from operating activities (A) -1,528,174 -7,533,907
Cash flow from investing activities:
Investments in subsidiaries and associated companies -156,000 33,291
Other investments - 5,000,000
Cash flow from investing activities (B) -156,000 5,033,291
PARENT COMPANY CASH FLOW STATEMENT
Note 1.1.–31.12.2020 1.1.–31.12.2019
Cash flow from financing activities:
Increase in Subordinated debt - 15,000,000
Decrease in Debt securities issued to the public - -20,000,000
Increase (+) in non-current liabilities 20,000,000 20,000,000
Decrease (-) in non-current liabilities -31,000,000 -1,000,000
Paid and received group contributions 5,500,000 3,000,000
Dividends paid and other distribution of profit -4,528,899 -8,491,686
Cash flow from financing activities (C) -10,028,899 8,508,314
Increase/decrease in cash and cash equivalents (A+B+C) -11,713,073 6 ,0 07, 698
Cash assets at the beginning of the financial period 13,448,693 7,4 4 0,995
Cash assets at the end of the financial period 1,735,620 13,448,693
Difference in cash assets -11,713,073 6 ,0 07, 698
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NOTES TO THE PARENT COMPANY FINANCIAL STATEMENTS
ACCOUNTING POLICIES FOR PREPARING THE FINANCIAL STATEMENTS
1 ACCOUNTING POLICIES FOR PREPARING
THE PARENT COMPANY FINANCIAL STATEMENTS ................................................... 81
NOTES TO THE INCOME STATEMENT
2 FEE AND COMMISSION INCOME ................................................................................. 82
3 NET GAINS OR NET LOSSES ON TRADING IN SECURITIES
AND FOREIGN CURRENCIES ......................................................................................... 82
4 INCOME FROM EQUITY INVESTMENTS ....................................................................... 82
5 INTEREST INCOME .......................................................................................................... 82
6 OTHER OPERATING INCOME ........................................................................................ 82
7 FEE AND COMMISSION EXPENSE ................................................................................ 83
8 INTEREST EXPENSE ......................................................................................................... 83
9 PERSONNEL COSTS ........................................................................................................ 83
10 OTHER ADMINISTRATIVE EXPENSES ............................................................................ 83
11 DEPRECIATION, AMORTISATION AND IMPAIRMENT ON
TANGIBLE AND INTANGIBLE ASSETS .......................................................................... 83
12 OTHER OPERATING EXPENSES ..................................................................................... 83
13 EXPECTED CREDIT LOSSES ........................................................................................... 84
14 APPROPRIATIONS ............................................................................................................ 84
15 INCOME TAXES ................................................................................................................ 84
NOTES TO THE BALANCE SHEET
16 RECEIVABLES FROM CREDIT INSTITUTIONS .............................................................. 85
17 RECEIVABLES FROM THE PUBLIC AND GENERAL GOVERNMENT.......................... 85
18 DEBT SECURITIES ............................................................................................................ 85
19 SHARES AND UNITS ........................................................................................................ 85
20 INTANGIBLE ASSETS ....................................................................................................... 86
21 OTHER ASSETS ................................................................................................................. 86
22 ACCRUED INCOME AND PREPAYMENTS .................................................................... 86
23 ACCRUED TAX ASSETS ................................................................................................... 86
24 LIABILITIES TO CREDIT INSTITUTIONS ......................................................................... 86
25 DEBT SECURITIES ISSUED TO THE PUBLIC .................................................................. 86
26 OTHER LIABILITIES .......................................................................................................... 87
27 ACCRUED EXPENSES AND DEFERRED INCOME ....................................................... 87
28 SUBORDINATED DEBT.................................................................................................... 87
29 ITEMS DENOMINATED IN DOMESTIC AND
FOREIGN CURRENCY AND CONSOLIDATED ITEMS ................................................. 87
30 CLASSIFICATION OF FINANCIAL ASSETS AND LIABILITIES ..................................... 88
31 FAIR VALUES AND CARRYING AMOUNTS OF FINANCIAL
ASSETS AND LIABILITIES, AND FAIR VALUE HIERARCHY .......................................... 90
32 MATURITY ANALYSIS OF FINANCIAL ASSETS AND LIABILITIES ............................... 91
33 INCRESES AND DECREASES OF EQUITY DURING THE FINANCIAL PERIOD ......... 91
NOTES CONCERNING GUARANTEES AND CONTINGENT LIABILITIES
34 GUARANTEES AND CONTINGENT LIABILITIES .......................................................... 92
35 PENSION LIABILITIES ...................................................................................................... 92
36 LEASING AND OTHER RENTAL LIABILITIES ................................................................. 92
LIST OF ACCOUNTING BOOKS USED ................................................................ 93
SUBSIDIARIES AND ASSOCIATED COMPANIES ................................................ 94
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ACCOUNTING POLICIES FOR PREPARING THE FINANCIAL STATEMENTS
1 ACCOUNTING PRINCIPLES OF
THE PARENT COMPANY’S
FINANCIAL STATEMENTS
Taaleri Plc’s financial statements have been prepared in ac-
cordance with the principles of Finnish bookkeeping legisla-
tion, the Act on Investment Services, the Ministry of Finance
decree on the financial statements of an investment service
company, the Accounting Act and regulations and guide-
lines of the Finnish Financial Supervisory Authority concern-
ing accountancy, financial statements and annual reports
in the financial sector. The financial statements have been
prepared for the 12-month period 1 January –31 December
2020.
Revenue recognition principles
Capital gains and losses and changes in value of shares and
units have been recorded as net gains from securities trading.
Income from equity investments -group mainly consists
of dividend yield from equity investments and capital gains/
losses from associates and Group companies and availa-
ble-for-sale financial assets. Dividends are primarily recog-
nised as income when the annual general meeting of the
company distributing the dividends has made a decision on
the distribution of dividends.
Interest income and expenses are recorded on a payment
basis from interest-bearing assets and liabilities.
Foreign currency items
Foreign currency transactions are recorded based on the
exchange rate on the day of the transaction. Foreign currency
receivables and liabilities outstanding at the end of the finan-
cial period are measured based on the exchange rate on the
date of closing the books. Exchange rate gains and losses re-
lated to actual business are recorded in the income statement
under net gains on trading in foreign currencies.
Taxes
Tax expense consists of taxes based on taxable income in the
period and tax from previous financial periods.
Financial instruments
IFRS 9 is applied when classifying and measuring financial
instruments. The accounting principles have been presented
in detail in note 2 of the group financial statements. The classi-
fication of Taaleri Plc’s financial assets and liabilities according
to IFRS 9 has been presented in Note 30.
When recording financial instrument purchase and sales
contracts, the date of the transaction is used as the basis for
recognition.
Receivables from credit institutions includes receivables
from credit institutions referred to in the Act on Credit Insti-
tutions and from similar foreign credit institutions, deposits
made in them and sums paid to creditors based on guaran-
tees and other off-balance sheet commitments.
Receivables from the public and general government
includes credit issued to parties other than credit institutions
and central banks, other such receivables and sums paid to
creditors based on guarantees and other off-balance sheet
commitments.
Shares, investment units and other such units, excluding
shares in subsidiaries and associates, which give the right to
the equity of an organisation are recognised in the balance
sheet item “Shares and units”.
Liabilities to credit institutions includes liabilities to credit
institutions and to central banks. A liability is considered paya-
ble on demand, if it can be terminated immediately or within
no more than one banking day.
Liabilities to the public and general government includes
liabilities to parties other than credit institutions and central
banks.
Debt securities issued to the public includes bonds issued
by Taaleri Plc in 2016-2019. Loan interest and transaction ex-
penses are amortised over the maturity period of the loans.
Subordinated debts include Tier 2 note issued by Taaleri
Plc in 2019. The Tier 2 notes constitute a subordinated debt
instrument.
Transaction expenses from liabilities to credit institutions
and from debt securities issued to the public are presented in
the income statement item “Interest expense”.
Fixed assets
Intangible assets are carried on the balance sheet at cost
less any accumulated depreciation. IT project and system
costs, among other things are activated as other long-term
expenditure. Tangible assets are carried on the balance sheet
at cost less any accumulated depreciation. If, at the end of
the financial period, the estimated recoverable amount from
intangible or tangible assets is found to be fundamentally and
permanently lower than their carrying amount, the difference
is recorded in profit or loss as an impairment loss.
The depreciation plan is as follows:
Computer software straight-line depreciation, 4 years
Other intangible rights straight-line depreciation, 3 years
Other long-term
expenditure straight-line depreciation, 3 years
Machinery and equipment straight-line depreciation, 4 years
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NOTES TO THE INCOME STATEMENT
2 FEE AND COMMISSION INCOME
1.1.–31.12.2020 1.1.–31.12.2019
Other fees 4,988 5,700
Total 4,988 5,700
3 NET GAINS OR NET LOSSES ON TRADING IN SECURITIES
AND FOREIGN CURRENCIES
Net gains or net losses on trading in securities 1.1.–31.12.2020 1.1.–31.12.2019
From financial assets measured at fair value through profit or loss
Financial assets that need to be measured at fair value through profit or loss -1,288 88,267
Total -1,288 88,267
Net gains or net losses on trading in securities and foreign currencies 1.1.–31.12.2020 1.1.–31.12.2019
Net gains or net losses on trading in securities by type
From shares and units -1,288 88,267
Sales profit and loss - 61,481
Changes in fair value -1,288 26,786
Net gains or let losses on trading in securities, total -1,288 88,267
Net gains or net losses on trading in foreign currencies -139 -69
Total -1,426 88,198
4 INCOME FROM EQUITY INVESTMENTS
1.1.–31.12.2020 1.1.–31.12.2019
From group companies 9,000,000 7,500,000
Dividend income 9,000,000 7,500,000
From associated companies - 73,887
Dividend income - 73,887
Total 9,000,000 7,573,887
5 INTEREST INCOME
1.1.–31.12.2020 1.1.–31.12.2019
From receivables from the public and general government 480,102 656,932
Other interest income -142 1,040
From group companies 1,358,153 911,425
Total 1,838,113 1,569,397
6 OTHER OPERATING INCOME
1.1.–31.12.2020 1.1.–31.12.2019
From other companies 4,642 7, 58 0
From group companies 2,416,032 2,723,791
Total 2,420,674 2,731,371
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7 FEE AND COMMISSION EXPENSE
1.1.–31.12.2020 1.1.–31.12.2019
From other operations 41,278 40,481
Total 41,278 40,481
8 INTEREST EXPENSES
1.1.–31.12.2020 1.1.–31.12.2019
From liabilities to credit institutions 891,493 417,711
From receivables from credit institutions 11, 24 6 4,969
From debentures issued 1,572,582 2,342,149
From subordinated debts 746,406 154,110
Other interest expenses 218 196
Total 3,221,945 2,919,135
9 PERSONNEL COSTS
1.1.–31.12.2020 1.1.–31.12.2019
Wages, salaries and fees 2,629,797 2, 577,056
Pension expenses 379,072 419,357
Social security contributions 22,843 46,000
Total 3,031,712 3,042,413
During the 2020 financial period, a total of EUR 1,148 (1,272) thousand in salaries and fees were paid to the Board of Directors, the
CEOs and Deputy CEO including the voluntary pension insurance. During the financial period, the average number of personnel
employed by the parent company was 17 (16).
The salaries and bonuses paid to the company’s current and previous CEO in 2020 including fringe benefits and pension in-
surance amounted to EUR 731 (732) thousand. If his employment is terminated by the company, the CEO is entitled to severance
pay corresponding to 12 months salary. The CEO is entitled to a statutory pension and his retirement age is determined within
the framework of the statutory pension system. The company’s CEOs are entitled to a voluntary pension insurance paid for by the
company, which cost was EUR 180 (110) thousand in 2020.
10 OTHER ADMINISTRATIVE EXPENSES
1.1.–31.12.2020 1.1.–31.12.2019
Voluntary personnel expenses 338,804 305,543
Marketing and communication expenses 238,780 364,719
Group internal administrative services 171,314 203,166
Other expenses 265,532 456,679
Total 1,014,429 1,330,107
11 DEPRECIATION, AMORTISATION AND IMPAIRMENT ON
TANGIBLE AND INTANGIBLE ASSETS
1.1.–31.12.2020 1.1.–31.12.2019
Intangible assets
Planned depreciation 7,105 19,030
Total 7,105 19,030
12 OTHER OPERATING EXPENSES
1.1.–31.12.2020 1.1.–31.12.2019
Premises and other leasing expenses 26,732 17,498
Equipment rental and leasing 65,106 132,662
Fees paid to the company’s auditors 109,356 123,954
Auditing fees 100,378 108,500
Other 8,978 15,454
Other expenses 1,912,667 1,526,835
Total 2 ,113,861 1,800,949
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14 APPROPRIATIONS
1.1.–31.12.2020 1.1.–31.12.2019
Group contributions received 5,500,000 5,000,000
Group contributions paid - 300,000
Total 5,500,000 4,700,000
15 TAXES
1.1.–31.12.2020 1.1.–31.12.2019
From profit for the financial period 68,619 17,125
Taxes from previous periods -2,016 -
Deferred taxes -19 1,596
Total 66,584 18,721
13 EXPECTED CREDIT LOSSES
Amortised cost
ECL 1.1.2020 8,258
Additions due to purchases 94
Deductions due to derecognitions -
Recognised in profit or loss 94
ECL 31.12.2020 8,352
Amortised cost
ECL 1.1.2019 16,237
Additions due to purchases 1,021
Deductions due to derecognitions -9,000
Recognised in profit or loss -7,979
ECL 31.12.2019 8,258
All financial assets subject to ECL calculations are on level 1, i.e. the credit risk has not increased significantly. There are no realised
credit losses recognised in the presented financial periods.
1.1.–31.12.2020 1.1.–31.12.2019
Expected credit losses from financial assets measured at amortised cost -94 7,979
Recognised in profit or loss -94 7,979
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NOTES TO THE BALANCE SHEET
16 RECEIVABLES FROM CREDIT INSTITUTIONS
31.12.2020 31.12.2019
Repayable on demand
From domestic credit institutions 1,735,620 13,448,693
Receivables from credit institutions, total 1,735,620 13,448,693
17 RECEIVABLES FROM THE PUBLIC AND GENERAL GOVERNMENT
31.12.2020 31.12.2019
Other than repayable on demanded
Group *
)
31,944,000 24,250,000
Personnel 306,035 306,129
Other companies 2,360,000 5,360,000
Total 34,610,035 29,916,129
Total amount of subordinated receivables:
*
)
Group internal 31,944,000 24,250,000
18 DEBT SECURITIES
31.12.2020 31.12.2019
Other than those issued by general government
Available for sale
Other debt securities (not publicly quoted) 1,497,738 1,497,738
Total 1, 497,738 1, 497,738
19 SHARES AND UNITS
31.12.2020 31.12.2019
Shares and units 23,130 24,418
Fair value through profit or loss 18,896 20,183
Fair value through other comprehensive income 4,235 4,235
- of which publicly quoted 18,896 20,183
- of which shares in funds - -
Shares and units in associated companies 3,153,624 2 ,997,624
Shares and units in group companies 77,942,995 77,942,995
Carrying amount total 81,119,750 80,965,038
- of which at acquisition cost 81,100,855 80,944,855
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20 INTANGIBLE ASSETS
2020 IT systems Total
Acquisition cost 1 January 85,659 85,659
Acquisition cost 31 December 85,659 85,659
Accumulated depreciation, amortisation and impairment 1 January 75,001 75,001
Depreciation during the financial period 7,105 7,105
Accrued depreciation 31 December 82,106 82,106
Carrying amount 1 January 10,658 10,658
Carrying amount 31 December 3,553 3,553
2019 IT systems Total
Acquisition cost 1 January 85,659 85,659
Acquisition cost 31 December 85,659 85,659
Accumulated depreciation, amortisation and impairment 1 January 55,971 55,971
Depreciation during the financial period 19,030 19,030
Accrued depreciation 31 December 75,001 75,001
Carrying amount 1 January 29,688 29,688
Carrying amount 31 December 10,658 10,658
21 OTHER ASSETS
31.12.2020 31.12.2019
Group internal receivables 1,129,639 18,620
VAT receivables 78,222 141,303
Other 3,501 31,738
Total 1,211,363 191,661
22 ACCRUED INCOME AND PREPAYMENTS
31.12.2020 31.12.2019
Group internal 3,202,844 3,642,090
Accrued interest 67,04 4 416,012
Tax accruals - 23,443
Other accrued income 102,712 106,696
Total 3,372,600 4,188,241
23 DEFERRED TAX ASSETS
31.12.2020 31.12.2019
From expected credit losses 1,670 1,652
Total 1,670 1,652
24 LIABILITIES TO CREDIT INSTITUTIONS
31.12.2020 31.12.2019
Other than repayable on demanded 14,938,748 25,929,151
Total 14,938,748 25,929,151
The instalment schedule was renegotiated during the spring 2020 due to the coronavirus pandemic. Taaleri Plc is in compliance with the
monitored financial covenants (equity ratio >35% and receivables from credit institutions >EUR 6 million) for the loans. Part of Insurance
Company Garantia’s shares have been pledged for the loan, please see further details in Note 34 Guarantees and contingent liabilities.
25 DEBT SECURITIES ISSUED TO THE PUBLIC
31.12.2020 31.12.2019
Publicly issued bonds 34,936,919 34,874,547
Total 34,936,919 34,874,547
Taaleri Plc has issued one bond in 2016 and two in 2014, of which one was repaid in 2017 and one in 2019. The bond issued in
2016 is listed on the Nasdaq HEL Corporate Bond market and the bonds issued in 2014 were listed on the Nasdaq First North Bond
Market Finland. See note 32 Debt securities issued to the public to the consolidated financial statements.
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26 OTHER LIABILITIES
31.12.2020 31.12.2019
Accounts payable 142,355 77,197
Other liabilities 68,664 4,998
Other group internal liabilities 22,702 162,085
Total 233,721 244,279
27 ACCRUED EXPENSES AND DEFERRED INCOME
31.12.2020 31.12.2019
Group internal accrued expenses 16,220 314,824
Holiday pay liability 298,508 260,675
Accrued interest 202,816 364,772
Accrued tax 50,659 17,125
Other accrued expenses 625,769 716,146
Total 1,193,972 1,673,541
28 SUBORDINATED DEBTS
31.12.2020 31.12.2019
Tier 2 bond 14,839,051 14,824,813
Total 14,839,051 14,824,813
On 18.10.2019 Taaleri Plc issued Tier 2 notes totalling EUR 15 million. The Tier 2 Notes constitute a subordinated debt instrument,
which is included in the Tier 2 capital referred to in Article 63 of Regulation (EU) No 575/2013 of the European Parliament and of
the Council. The notes mature in ten years and bear a fixed interest rate of 5.0 per cent until 18 October 2024 and then onwards
EUR 5-year mid-swap rate plus 5.33 per cent. The terms and conditions of the Notes include a call option after five years from the
issuance and the company is also entitled to an early repayment before the call option under certain preconditions provided in the
terms and conditions of the Notes.
29 ITEMS DENOMINATED IN DOMESTIC AND FOREIGN CURRENCY
AND CONSOLIDATED ITEMS
2020 EUR Other than EUR Total Group internal
Receivables from credit institutions 1,735,620 - 1,735,620
Receivables from the public and general
government 34,610,035 - 34,610,035 31,944,000
Debt securities 1,497,738 - 1,497,738
Shares and units 81,119,750 - 81,119,750 77,942,995
Other assets 4,589,185 - 4,589,185 4,332,484
Total 123,552,329 - 123,552,329 114,219,479
Liabilities to credit institutions 14,938,748 - 14,938,748
Debt instruments issued to the public 34,936,919 - 34,936,919
Subordinated debt 14,839,051 - 14,839,051
Other liabilities 1,427, 693 - 1, 427, 693 38,922
Total 66,142,410 - 66,142,410 38,922
2019 EUR Other than EUR Total Group internal
Receivables from credit institutions 13,448,693 - 13,448,693
Receivables from the public and general
government 29,916,129 - 29,916,129 24,250,000
Debt securities 1,497,738 - 1,497,738
Shares and units 80,965,038 - 80,965,038 77,942,995
Other assets 4,392,211 - 4,392,211 3,660,710
Total 130,219,809 - 130,219,809 105,853,706
Liabilities to credit institutions 25,929,151 - 25,929,151
Debt instruments issued to the public 34,874,547 - 34,874,547
Subordinated debt 14,824,813 - 14,824,813
Other liabilities 1,917,821 - 1,917,821 476,909
Total 77,546,331 - 77,546,331 476,909
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30 CLASSIFICATION OF FINANCIAL ASSETS AND LIABILITIES
Financial assets and liabilities 31 December 2020 At fair value through other comprehensive
income At fair value through profit or loss
Financial assets Amortised cost
Equity
instruments
4)
Others
Equity
instruments Others Total
Receivables from credit institutions
1)
1,735,620 1,735,620
Receivables from the public and general government 15,750,035 18,860,000 34,610,035
Debt securities 1,497,738 1,497,738
Shares and units
3)
4,235 18,896 23,130
Other financial assets 4,407, 221
Financial assets total 18,983,393 4,235 - 18,878,896 - 42,273,745
Participating interests 3,153,624
Shares and units in group entities 77,942,995
Other than financial assets 181,965
Assets in total 31 December 2020 123,552,329
Financial liabilities At fair value through profit or loss Other liabilities Total
Liabilities to credit institutions 14,938,748 14,938,748
Debt securities issued to the public
2)
34,936,919 34,936,919
Subordinated debt 14,839,051 14,839,051
Other financial liabilities 1, 377,03 4 1, 377, 034
Financial liabilities total - 66,091,751 66,091,751
Other than financial liabilities 50,659
Liabilities in total 31 December 2020 66,142,410
1)
The carrying amount of these receivables are seen as the best estimate of their fair values.
2)
Bonds included in Debt securities issued to the public are carried at amortised cost. Their fair value on 31 December 2020 was 50,639,315 (51,124,686) euros.
3)
Shares and units are measured at fair value.
4)
At initial recognition the company’s non-strategic investments are specifically classified as measured at fair value through profit or loss. Thus, dividend yields are recognised in profit or loss, but changes in fair value, foreign
exchange rate gains and losses as well as sales gains and losses are recognised in other comprehensive income. These are not later recycled to profit or loss. The classification as a non-strategic investment is made instrument-
by-instrument by management. Non-strategic investments include small investments in limited partnerships associated to Taaleri’s private equity funds and equity investments in private companies not directly associated to
Taaleri’s business strategy. On 31 December 2020 the fair value of non-strategic investments was 4,235 (4,235) euros, of which none paid dividends in 2020 or 2019. No non-strategic investments were derecognised in 2020 or
2019.
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Financial assets and liabilities 31 December 2019 At fair value through other comprehensive
income At fair value through profit or loss
Financial assets Amortised cost
Equity
instruments
4)
Others
Equity
instruments Others Total
Receivables from credit institutions
1)
13,448,693 13,448,693
Receivables from the public and general government 9,056,129 20,860,000 29,916,129
Debt securities 1,497,738 1,497,738
Shares and units
3)
4,235 20,183 24,418
Other financial assets 4,122,662 4,122,662
Financial assets total 28,125,222 4,235 - 20,880,183 - 49,009,640
Participating interests 2,9 97, 624
Shares and units in group entities 77,942,995
Other than financial assets 269,549
Assets in total 31 December 2019 130,219,809
Financial liabilities At fair value through profit or loss Other liabilities Total
Liabilities to credit institutions 25,929,151 25,929,151
Debt securities issued to the public
2)
34,874,547 34,874,547
Subordinated debt 14,824,813 14,824,813
Other financial liabilities 1,900,696 1,900,696
Financial liabilities total - 77,529,206 77,529,206
Other than financial liabilities 17,125
Liabilities in total 31 December 2019 77,546,331
1)
The carrying amount of these receivables are seen as the best estimate of their fair values.
2)
Bonds included in Debt securities issued to the public are carried at amortised cost. Their fair value on 31 December 2019 was 51,124,686 euros.
3)
Shares and units are measured at fair value.
4)
At initial recognition the company’s non-strategic investments are specifically classified as measured at fair value through profit or loss. Thus, dividend yields are recognised in profit or loss, but changes in fair value, foreign
exchange rate gains and losses as well as sales gains and losses are recognised in other comprehensive income. These are not later recycled to profit or loss. The classification as a non-strategic investment is made instrument-
by-instrument by management. Non-strategic investments include small investments in limited partnerships associated to Taaleri’s private equity funds and equity investments in private companies not directly associated to
Taaleri’s business strategy. On 31 December 2019 the fair value of non-strategic investments was 4,235 euros, of which none paid dividends in 2019. No non-strategic investments were derecognised in 2019.
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31 FAIR VALUES AND CARRYING AMOUNTS OF FINANCIAL ASSETS
AND LIABILITIES, AND FAIR VALUE HIERARCHY
2020 Carrying amount Fair value
Financial assets
Receivables from credit institutions 1,735,620 1,735,620
Receivables from the public and general government 34,610,035 34,610,035
Debt securities 1,497,738 1, 507,9 06
Shares and units 23,130 23,130
Total 37,866,524 37,876,692
Financial liabilities
Liabilities to credit institutions 14,938,748 15,000,000
Debt securities issued to the public 34,936,919 35,485,205
Subordinated debt 14,839,051 15,154,110
Total 64,714,718 65,639,315
2019 Carrying amount Fair value
Financial assets
Receivables from credit institutions 13,448,693 13,448,693
Receivables from the public and general government 29,916,129 32,130,737
Debt securities 1,497,738 1,730,267
Shares and units 24,418 24,418
Total 44,886,978 47,334,115
Financial liabilities
Liabilities to credit institutions 25,929,151 26,161,94 4
Debt securities issued to the public 34,874,547 35,966,899
Subordinated debt 14,824,813 15,154,110
Total 75,628,510 77, 282,953
Financial instruments measured at fair value
2020 Level 1 Level 2 Level 3 Total
Shares and units
Fair value through profit or loss 18,896 18,896
Fair value through other comprehensive income 4,235 4,235
Receivables from the public and general government 18,860,000 18,860,000
Total 18,896 18,860,000 4,235 18,883,130
2019 Level 1 Level 2 Level 3 Total
Shares and units
Fair value through profit or loss 20,183 20,183
Fair value through other comprehensive income 4,235 4,235
Receivables from the public and general government 20,860,000 20,860,000
Total 20,183 20,860,000 4,235 20,884,418
LEVELS OF HIERARCHY
Level 1: Fair values are based on the prices quoted on the
active market on identical assets or liabilities.
Level 2: Fair values are based on information other than
quoted prices included within level 1 that are observable for
the asset or liability, either directly (from prices) or indirectly
(derived from prices). When measuring the fair value of these
instruments, Taaleri Group uses generally accepted valuation
models whose information is based to a significant degree on
verifiable market information.
Level 3: Fair values are based on information concerning an
asset or liability, which is not based on verifiable market infor-
mation. Level 3 assets are mainly valued at a price received
from an external party or, if no reliable fair value is available/
determinable, at purchase price.
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32 MATURITY ANALYSIS OF FINANCIAL ASSETS AND LIABILITIES
31.12.2020 <3 months 3–12 months 1–5 years 5–10 years Total
Receivables from credit institutions 1,735,620 1,735,620
Receivables from the public and
general government
1)
18,116,125 16,500,000 34,616,125
Debt securities 1,500,000 1,500,000
Liabilities to credit institutions
1)
2,500,000 12,500,000 15,000,000
Debt securities issued to the public
1)
35,000,000 35,000,000
Subordinated debt 15,000,000 15,000,000
31.12.2019 <3 months 3–12 months 1–5 years 5–10 years Total
Receivables from credit institutions 13,448,693 13,448,693
Receivables from the public and
general government
1)
8,750,000 5,672,125 15,500,000 29,922,125
Debt securities 1,500,000 1,500,000
Liabilities to credit institutions
1)
6,000,000 20,000,000 26,000,000
Debt securities issued to the public
1)
35,000,000 35,000,000
Subordinated debt 15,000,000 15,000,000
1)
The maturity of financial assets and liabilities are shown at their original value before impairments.
33 INCRESES AND DECREASES OF EQUITY DURING THE FINANCIAL PERIOD
1.1.2020 Increase Decrease 31.12.2020
Share capital 125,000 125,000
Reserve for invested non-restricted equity 36,139,665 36,139,665
Retained earnings or loss 16,408,813 4,528,899 11,879,914
Profit (loss) for the period - 9,265,340 9,265,340
Total 52,673,478 9,265,340 4,528,899 57,409,919
Parent company distributable assets 31 December 2020 57, 28 4,919
1.1.2019 Increase Decrease 31.12.2019
Share capital 125,000 125,000
Reserve for invested non-restricted equity 36,139,665 36,139,665
Retained earnings or loss 17, 394 ,801 8,491,686 8,903,115
Profit (loss) for the period - 7, 505, 698 7, 505, 698
Total 53,659,467 7,505,698 8,491,686 52,673,478
Parent company distributable assets 31 December 2019 52,548,478
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NOTES CONCERNING GUARANTEES AND CONTINGENT LIABILITIES
34 GUARANTEES AND CONTINGENT LIABILITIES
Off balance sheet items 31.12.2020 31.12.2019
Pledged securities 15,000,000 10,000,000
Credit limits (unused) 5,000,000 5,000,000
Total 20,000,000 15,000,000
35 PENSION LIABILITIES
Statutory pension cover for the company’s employees and management is arranged through a TyEL insurance policy. Additional
voluntary pension insurance has been taken out for the company’s management. The company has no unrecognised pension
liabilities.
36 LEASING AND OTHER RENTAL LIABILITIES
31.12.2020 <1 year 1–5 years
Leasing payments 69,993 34,356
Total 69,993 34,356
31.12.2019 <1 year 1–5 years
Leasing payments 47, 581 37,792
Total 47,581 37,792
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LIST OF ACCOUNTING BOOKS USED
List of accounting journals
Income Statement in paper form
Balance sheet in paper form
Journal in paper form
General ledger in paper form
Purchases ledger in electronic form
Salary bookkeeping outsourced
Document types and means of storage
TITO Bank statements in paper form
NRD Nordea bank statements in paper form
DANSKE Danske Bank statements in paper form
MUTI Other bank statements in paper form
EL Electronic purchase invoices in electronic form
M2 Travel expense entries in electronic form
PT General ledger entries in paper form
JT Accrual entries in paper form
MT Memo vouchers in paper form
All bookkeeping material is kept at the company’s own premises as required by law.
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SUBSIDIARIES AND ASSOCIATED COMPANIES
Parent company Registered office Business ID
Taaleri Oyj Helsinki 2234823-5
Parent company’s direct shareholdings Registered office Business ID Group ownership
Taaleri Energia Oy Helsinki 2772984-6 78.55%
Taaleri Pääomarahastot Oy Helsinki 2264327-7 100.00%
Taaleri Sijoitus Oy Helsinki 2432616 -0 100.00%
Taaleri Varainhoito Oy Helsinki 2080113-9 100.00%
Vakuutusosakeyhtiö Garantia Helsinki 0944524-1 100.00%
Subgroup of Taaleri Varainhoito Oy Registered office Business ID Group ownership
Evervest Oy Helsinki 2710163-7 100.00%
Taaleri Rahastoyhtiö Oy Helsinki 2062840-1 100.00%
Taaleri Veropalvelut Oy Helsinki 2504066-6 100.00%
Taaleri Asunnot GP Oy Helsinki 3164868-6 100.00%
TT Syöttörahasto GP Oy Helsinki 2504070-3 100.00%
TT Syöttörahasto II GP Oy Helsinki 2677052-1 100.00%
TT Syöttörahasto III GP Oy Helsinki 2637390-5 100.00%
Subgroup of Taaleri Sijoitus Oy Registered office Business ID Group ownership
Mobify Invoicing Oy (ent. ClarkApps Oy) Turku 2714418-6 61.82%
Taaleri Biohiili GP Oy Helsinki 3151705-3 100.00%
Taaleri Biojalostamo GP Oy Helsinki 3115228 -5 100.00%
Taaleri Datacenter GP Oy Helsinki 2859905-1 100.00%
Taaleri Geoenergia GP Oy Helsinki 2808431-4 100.00%
Taaleri Kapitaali Oy Helsinki 2772994-2 70.00%
Galubaltis GP Oy Helsinki 2840499-8 100.00%
Taaleri Merenkulku GP Oy Helsinki 2766357-6 100.00%
Taaleri Telakka GP Oy Helsinki 2743458-9 100.00%
Taaleri Varustamo GP Oy Helsinki 2870420-2 100.00%
Erdwärme Oberland GmbH Munchen, Saksa HRB 180649 82.47%
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Subgroup of Taaleri Pääomarahastot Oy Registered office Business ID Group ownership
Taaleri Aurinkotuuli GP Oy Helsinki 2787459-2 100.00%
Taaleri Aurinkotuuli II GP Oy Helsinki 2948690-5 100.00%
Taaleri Afrikka Rahaston hallinnointiyhtiö Oy Helsinki 2606112-7 100.00%
Taaleri Afrikka Rahasto II GP Oy Helsinki 2772992-6 100.00%
Taaleri Porin Asuntorahaston hallinnointiyhtiö Oy Helsinki 2364138-8 100.00%
Taaleri Rauman Asuntorahaston hallinnointiyhtiö Oy Helsinki 2373394-4 100.00%
Taaleri Asuntorahasto VI hallinnointiyhtiö Oy Helsinki 2481017-1 100.00%
Taaleri Asuntorahasto VII GP Oy Helsinki 3161704 - 6 100.00%
Taaleri Kasvurahastot I GP Oy Helsinki 3011817-3 100.00%
Taaleri Kiertotalous GP Oy Helsinki 2745010 -8 100.00%
Taaleri Kiinteistökehitysrahaston hallinnointiyhtiö Oy Helsinki 2689264-1 100.00%
Taaleri Linnainmaankulman hallinnointiyhtiö Oy Helsinki 2413559-1 100.00%
Taaleri Biotehtaan hallinnointiyhtiö Oy Helsinki 2459599-3 100.00%
Taaleri Metsärahaston hallinnointiyhtiö Oy Helsinki 2512332-2 100.00%
Taaleri Metsärahasto III hallinnointiyhtiö Oy Helsinki 2652535-8 100.00%
Taaleri Georahasto I GP Oy Helsinki 2873880-8 100.00%
Taaleri Oaktree Syöttörahaston hallinnointiyhtiö Oy Helsinki 2442491-6 100.00%
Taaleri Ovitehtaan hallinnointiyhtiö Oy Helsinki 2577306-9 100.00%
Taaleri Päiväkotikiinteistöt GP Oy Helsinki 2993761- 4 100.00%
Taaleri Tallikiinteistöt GP Oy Helsinki 2921262-1 100.00%
Taaleri Tonttirahaston hallinnointiyhtiö Oy Helsinki 2669135-6 100.00%
Taaleri Tonttirahasto II GP Oy Helsinki 2781839-8 100.00%
Taaleri Tuulitehtaan hallinnointiyhtiö Oy Helsinki 2382657-7 80.00%
Nybyn TP Oy Helsinki 2557805-2 100.00%
Myllykankaan TP Oy Helsinki 2577307-7 100.00%
Taaleri Tuulitehdas II hallinnointiyhtiö Oy Helsinki 2623494-8 100.00%
Taaleri Tuulitehdas III GP Oy Helsinki 2748305-7 100.00%
Taaleri Tuulirahasto IV GP Oy Helsinki 2990792-5 100.00%
Taaleri Tuuli II Feeder GP Oy Helsinki 3155719-4 100.00%
Taaleri Tuuli III Feeder GP Oy Helsinki 3155720-7 100.00%
Taaleri Aurinkotuuli Feeder GP Oy Helsinki 3155769-6 100.00%
Taaleri Velkarahastot I GP Oy Helsinki 3133283-3 100.00%
Taaleri Vuokrakoti GP Oy Helsinki 2787453-3 100.00%
Subgroup of Taaleri Energia Oy Registered office Business ID Group ownership
Taaleri Energia Funds Management Oy Helsinki 2833245-3 100.00%
Taaleri Energia Operations Oy Helsinki 2710646-2 100.00%
Oltavan Tuulipuisto GP Oy Helsinki 2992126-8 100.00%
Posion TP Oy Helsinki 2994201-8 100.00%
Siikajoen TP Oy Helsinki 3167933-5 100.00%
Taaleri Energia Holding S.a.r.l. Luxemburg B223063 100.00%
Taaleri Energia North America LLC Delaware, USA 6716103 100.00%
Taaleri Solarwind II GP S.a.r.l. Luxemburg B232448 100.00%
Global Evenor SL Madrid B88293154 100.00%
Taaleri Energia Iberia SL Madrid B88293139 100.00%
Global Berserker SL Madrid B88365135 100.00%
Eldorado Solar Power Holding LLC USA 0803524720 100.00%
Eldorado Solar Power LLC USA 0803524711 100.00%
Deville Holding LLC USA 0803524735 100.00%
Deville Solar LLC USA 0803524732 100.00%
Associated companies consolidated using the equity method Registered office Business ID Group ownership
Fellow Finance Oyj Helsinki 2568782-2 25.91%
Sepos Oy Helsinki 2614256 -8 30.00%
Taaleri Datacenter Ky Helsinki 2842816-4 29.50%
Turun Toriparkki Oy Turku 2034713-2 48.15%
Munkkiniemi Group Oy Helsinki 2910063-8 47.0 0%
Hernesaaren Kehitys Oy Helsinki 2953535-9 33.32%
Taaleri SolarWind II SPV Sarl Luxemburg B234588 50.00%
Masdar Taaleri Generation Belgrad, Serbia 21511501 50.00%
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SIGNATURES FOR THE FINANCIAL STATEMENTS
AND BOARD OF DIRECTORS’ REPORT
Helsinki 18th February 2021
Juhani Elomaa
Chairman of the
Board of Directors
Juha Laaksonen
Vice Chairman of the
Board of Directors
Elina Björklund
Member of the
Board of Directors
Petri Castrén
Member of the
Board of Directors
Hanna Maria Sievinen
Member of the
Board of Directors
Tuomas Syrjänen
Member of the
Board of Directors
Robin Lindahl
Chief Executive
Officer
The Auditor’s note
Our auditor’s report has been issued today.
Helsinki 18th February 2021
Ernst & Young Oy
Authorized audit firm
Ulla Nykky
Authorised Public Accountant
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AUDITOR’S REPORT (Translation of the Finnish original)
To the Annual General Meeting of Taaleri Plc
REPORT ON THE AUDIT OF
THE FINANCIAL STATEMENTS
OPINION
We have audited the financial statements of Taaleri Plc (busi-
ness identity code 2234823-5) for the year ended 31 Decem-
ber, 2020. The financial statements comprise the consolidated
balance sheet, income statement, statement of compre-
hensive 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 per-
formance 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 gov-
erning the preparation of financial statements in Finland
and comply with statutory requirements.
Our opinion is consistent with the additional report submitted
to the Audit Committee.
BASIS FOR OPINION
We conducted our audit in accordance with good auditing
practice in Finland. Our responsibilities under good auditing
practice are further described in the Auditor’s Responsibilities
for the Audit of the Financial Statements section of our report.
We are independent of the parent company and of the
group 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 ac-
cordance 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 servic-
es that we have provided have been disclosed in note 14 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 finan-
cial statements of the current period. These matters were ad-
dressed 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 Au-
ditor’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 proce-
dures 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.
Key Audit Matter How our audit addressed the Key Audit Matter
Revenue recognition of fee and commission income
We refer to the point 2.15 in Summary of key accounting
policies on the financial statements and the note 3.
Fee and commission income in the consolidated group
accounts amounted to 49,2 million euros. Fee and
commission income is based, for example, on fund units,
asset management, securities brokerage and the issuance
of securities. Some of the fees and commissions are
performance based.
Revenue recognition was determined to be a key audit
matter and a significant risk of material misstatement
referred to in EU Regulation No 537/2014 point (c) of Article
10(2).
To address the risk of material misstatement in respect of
revenue recognition our audit procedures included, among
other things, assessing the compliance of the Group’s
accounting policies over revenue recognition of the fees
and commissions with applicable accounting standards.
We also identified and tested the key controls relating to
revenue recognition.
We tested the sales cutoff with analytical procedures.
We supplemented our procedures with test of details on
a transaction level in order to assure that the fees and
commissions have been recognized in a right accounting
period and they are in compliance with the corresponding
agreements. In addition, we also assessed the adequacy of
disclosures relating to the fee and commission income of
the group.
Valuation of technical provisions
We refer to the point 2.8 in Summary of key accounting
policies on the financial statements and note 24.
At the balance sheet date 31.12.2020 the value of technical
provisions amounted to 34,7 million euros.
The amount comprises mostly provisions from
unearned premiums and claims outstanding
relating to the guaranty services of the group.
The assessment of technical provisions includes
management assumptions and estimates relating to
future amounts to be paid and still unknown claims.
Our audit procedures included, among other things, the
assessment of the process relating to the identification and
evaluation of the provisions as well as identification of key
controls. In connection with the audit, we also assessed the
methodologies and assumptions used.
We involved our own internal actuarial specialist to assist us
in assessing the estimates and assumptions used.
We also assessed the adequacy of disclosures relating to
insurance liabilities.
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Key Audit Matter How our audit addressed the Key Audit Matter
Valuation of goodwill
We refer to the point 2.3 in Summary of key accounting
policies on the financial statements and note 27.
At the balance sheet date December 31, 2020, the value of
goodwill amounted to 5,1 million euros.
Valuation of goodwill was significant to our audit because
the annual impairment test is judgmental and is based on the
assumptions relating to markets and economic conditions.
The recoverable amount of a cash generating unit is based on
value-in-use calculations. There are a number of assumptions
used to determine the value in use, including the revenue
growth, the operating margin and the discount rate applied.
Changes in the above-mentioned assumptions may result in
an impairment of goodwill.
In connection with our audit our internal valuation
experts assisted us in evaluating the assumptions and
methodologies used by the management.
Our audit procedures included, among others, assessing
estimated growth and profitability as well as the discount
rate. We compared the used estimations to market data.
We reviewed the sensitivity in the available headroom
by cash generating unit and focused on whether any
reasonably possible change in assumptions could cause
the carrying amount to exceed its recoverable amount.
We assessed the disclosures in respect of goodwill
impairment testing.
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 con-
trol as they determine is necessary to enable the preparation
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 mis-
statement, whether due to fraud or error, and to issue an audi-
tor’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. Misstate-
ments can arise from fraud or error and are considered mate-
rial 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 prac-
tice, we exercise professional judgment and maintain profes-
sional 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 ap-
propriate 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, misrep-
resentations, or the override of internal control.
• Obtain an understanding of internal control relevant to
the audit in order to design audit procedures that are ap-
propriate 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 relat-
ed disclosures made by management.
• Conclude on the appropriateness of the Board of Direc-
tors’ and the Managing Director’s use of the going con-
cern 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 opin-
ion. 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 consolidat-
ed financial statements. We are responsible for the direc-
tion, supervision and performance of the group audit. We
remain solely responsible for our audit opinion.
of financial statements that are free from material misstate-
ment, whether due to fraud or error.
In preparing the financial statements, the Board of Direc-
tors 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 account-
ing. 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 opera-
tions, or there is no realistic alternative but to do so.
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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 require-
ments 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 sig-
nificance 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 ex-
tremely 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 in 2007, and our appoint-
ment represents a total period of uninterrupted engagement
of 14 years. Taaleri Plc has been a Public Interest Entity since
April 1
st
2016.
OTHER INFORMATION
The Board of Directors and the Managing Director are re-
sponsible for the other information. The other information
comprises the report of the Board of Directors.
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 informa-
tion 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 state-
ments and the report of the Board of Directors has been pre-
pared 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.
Helsinki 18 February 2021
Ernst & Young Oy
Authorized Public Accountant Firm
Ulla Nykky
Authorized Public Accountant
Taaleri Plc.
Kasarmikatu 21 B
00130 Helsinki
Business ID 2234823-5
info@taaleri.com
+358 46 714 7100