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The objective of Etteplan Oyj’s internal control and risk management is to ensure that the Company’s operations are efficient and profitable, its information is reliable, and it complies with appropriate regulations and operating principles. The objectives also include identification, assessment, and monitoring of risks related to business operations. Internal audit helps to improve the efficient fulfilment of the Board’s supervision obligation.

 

Operating principles of internal control

 

Etteplan’s internal control process in controlled by the Finnish Companies Act, the Securities Markets Act and other laws and regulations applicable to the operations of the company, the rules and recommendations of the Helsinki Stock Ex-change as well as Corporate Governance Code for Finnish listed companies. External control is implemented by the company’s auditors and the authorities.

Internal control in Etteplan covers financial reporting and other monitoring. The function of internal control is to ensure that the company achieves the goals and objectives set for it, as well as uses its resources economically and appropriately. Internal control also aims to ensure among other things correct and reliable financial and other information, compliance with external regulations and internal guidelines and policies as well as sufficient security of operations and information. Furthermore, internal control aims to ensure the organization of adequate and appropriate IT and manual systems to support the operations of the company.

In Etteplan internal control is executed by the Board of Directors, management and the company’s entire personnel. Internal control is divided into 1) proactive control, 2) day-to-day control and 3) subsequent control. Proactive control consists of specification of corporate values and general operational principles. Day-to-day control includes operational steering and monitoring and thereto related operational systems and work instructions. Subsequent control comprises management evaluations and inspections, comparisons and verifications with the aim of ensuring that the goals are met and the agreed operational principles are followed.

 

Organization of risk management

 

Risk management is an integral part of Etteplan’s business management and internal control framework. The function of risk management is to anticipate future risks, to ensure that targets are reached and to secure operations in changing conditions. The objective is to ensure that the company’s operations are efficient and profitable, that the information produced is reliable and that it complies with the appropriate regulations and operating principles.

The key measures of Etteplan risk management are proactive measures, securing operations, limiting adverse impacts and utilizing opportunities. Etteplan risk management consists of coordinated measures aiming to identify, evaluate, manage and control all major risk areas of the Group in a systematic and proactive manner.

Etteplan’s risk management process is led by the Group President and CEO together with the Management Group member responsible for risk management. The Management Group monitors the significant risks of the business units and supervises the development of the Group’s risk management system and practices.

The business managers have the primary responsibility for risk management. Managers are responsible for risk management in their business areas in compliance with the Group’s risk management guidelines. Risk management ensures profit, quality and continuity.

Managers report on the major risks and overall risk status of their business area to the Management Group as part of the monthly business reporting. The Group’s financial administration monitors and assesses operational and financial risks and takes measures to hedge against them in cooperation with the Board of Directors, the Management Group and operative management.

The Board of Directors supervises risk management and approves the risk management guidelines of the Group. Risk management actions and the most relevant Group level risks are reported regularly to the Board of Directors.

Risks and risk management are presented on Company’s website and in the Annual report 2017.

Reviews concerning financing risks are presented in the notes to the consolidated financial statements in the Annual Report 2017.

Etteplan2017_Riskmanagement.jpg

 

Internal audit

 

Etteplan Group does not have separate internal audit function. The Board can engage external advisors to perform evaluations relating to control environment or other activities.

 

Description of the main features of the internal control and risk management systems pertaining to the financial reporting process

 

Etteplan prepares consolidated financial statements and interim reports in accordance with the International Financial Reporting Standards, as adopted by EU, the Securities Markets Acts as well as the appropriate Financial Supervision Authority Standards and Nasdaq Helsinki Ltd’s rules. The Report of the Board of Directors of Etteplan and parent company financial statements are prepared in accordance with Finnish Accounting Act and the opinions and guidelines of the Finnish Accounting Board.

Etteplan Group observes Group level accounting principles and instructions, which are applied in all Group companies and according to which the Group's financial reporting is prepared. Together with reporting calendar and schedules, accounting principles and instructions form the framework for timely and correct Group reporting. Etteplan’s business operations are in all material respects located in Finland, Sweden, China, the Netherlands and Poland, and all countries have local accounting and financial reporting organizations, systems and reporting to the Group. Internal control and risk management systems and practices as described below are designed to ensure that the financial reports as disclosed by the Company give essentially correct information about the Company finances.

Etteplan has a common Group consolidation system. Accounting data is transferred from the local accounting systems either automatically or manually and correctness is controlled by the Group’s accounting team. Common chart of accounts forms the basis of Group reporting. The Group accounting, consolidation and published financial reports are prepared by the centralized team.

 

Internal control over financial reporting

 

Proper arrangement and monitoring of internal control is the responsibility of the local management in accordance with the Group framework. Etteplan Board of Directors has approved operating principles of internal control, which have been prepared in accordance with the Finnish Corporate Governance Code 2015 recommendation 25. Operating principles include the main features of risk management process, summary of risks, control objectives and common control points for financial reporting as well as roles and responsibilities in executing and monitoring internal control in Etteplan.

Internal controls over financial reporting process at the country and Group level was a focus area in 2009. Since then the processes have been reviewed and updated annually. Etteplan’s finance organization has analyzed process risks and defined control objectives for external financial reporting process. Existing control points in the process have been documented. These control points include for example reconciliations, authorizations, analysis, and segregation of key accounting duties. The work has been led by the Group CFO.

According to its annual clock, the Management Group has monthly meetings where also financial performance and financial reporting are analyzed. Prior to these meetings, financial reports have been analyzed in the business group level to detect any irregularities or errors. Group level financial reports are prepared to the Etteplan Board on a monthly basis. The Board also reviews and approves interim financial reports, annual results report and financial statements.

Etteplan does not have separate internal audit function. The Board can engage external advisors to perform evaluations relating to control environment or other activities.

Management of financial risks: Management_of_financial_risks.pdf

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Key financial data

5 year history

Back to Key financial data EUR 1,000, Financial period Jan 1 – Dec 31 2017 IFRS 2016 IFRS 2015 IFRS 2014 IFRS 2013 IFRS Revenue 214,768 183,938 141,143 131,916 128,647 Change in revenue, % 16.8 30.3 7.0 -1.9 -4.3 EBIT from business operations 17,163 12,071 9,540 7,394 6,280 % of revenue 8.0 6.6 6.8 5.6 4.9 Operating profit (EBIT) 15,484 10,131 8,594 7,856 6,366 % of revenue 7.2 5.5 6.1 6.0 4.9 Profit before taxes and non-controlling interest 14,745 9,441 7,933 7,168 5,672 % of revenue 6.9 5.1 5.6 5.4 4.4 Profit for the financial year 11,586 7,604 6,189 6,147 4,390 Return on equity, % 20.9 17.4 19.5 22.7 17.5 ROCE, % 17.8 14.8 17.4 17.8 14.6 Equity ratio, % 40.7 40.0 37.8 39.5 35.9 Gross investments 7,589 30,186 9,867 3,565 2,344 % of revenue 3.5 16.4 7.0 2.7 1.8 Net gearing, % 43.0 55.9 41.6 56.5 73.4 Personnel, average 2,711 2,407 1,948 1,813 1,736 Personnel at year end 2,802 2,545 2,074 1,859 1,728 Wages and salaries 144,965 129,172 101,452 94,367 70,363   Back to Key financial data Read more

Consolidated statement of comprehensive income

Back to Key financial data   EUR 1,000 Note Jan 1 – Dec 31, 2017   Jan 1 – Dec 31, 2016   Revenue 7 214,768   183,938   Other operating income 9 446   517   Materials and services 12 -20,429   -13,893   Staff costs 13 -144,965   -129,172   Other operating expenses   -29,021   -26,440   Depreciation and amortization 20, 21 -5,315   -4,818   Operating profit (EBIT)   15,484 7.2% 10,131 5.5% Financial income 15 538   555   Financial expenses 16 -1,277   -1,245   Profit before taxes   14,745   9,441 Income taxes 18 -3,160   -1,838   Profit for the financial year   11,586   7,604   Other comprehensive income, that may be subsequently reclassified to profit or loss           Foreign subsidiary net investment hedge 4.1.1 0   103   Currency translation differences   -727   -1,157   Change in fair value of investments available-for-sale   9   -6   Other comprehensive income for the year, net of tax 18 -718   -1,080   Total comprehensive income for the year   10,868   6,524               Profit for the financial year           Equity holders of the parent company   11,470   7,436   Non-controlling interest   115   168       11,586   7,604   Total comprehensive income attributable to           Equity holders of the parent company   10,759   6,356   Non-controlling interest   108   168       10,868   6,524   Earnings per share calculated from the profit attributable to equity holders of the parent company           Basic earnings per share, EUR 19 0.47   0.33   Diluted earnings per share, EUR 19 0.47   0.33     The notes are an integral part of the financial statements.   Back to Key financial data Read more

Consolidated statement of financial position

Back to Key financial data EUR 1,000  Note Dec 31, 2017 Dec 31, 2016 ASSETS       Non-current assets       Tangible assets 20 3,524 2,910 Goodwill 21 59,014 58,128 Other intangible assets 21 17,875 18,036 Investments available-for-sale 22 691 680 Other non-current receivables 36 88 41 Deferred tax assets 35 79 365 Non-current assets, total   81,270 80,159         Current assets       Inventory 24 250 255 Trade and other receivables 25 52,507 49,180 Current tax assets 26 326 139 Cash and cash equivalents 27 10,074 4,750 Current assets, total   63,157 54,324 TOTAL ASSETS   144,427 134,483         EQUITY AND LIABILITIES       Capital attributable to equity holders of the parent company       Share capital 28 5,000 5,000 Share premium account 28 6,701 6,701 Unrestricted equity fund 28 18,524 18,524 Own shares 28 -80 -386 Cumulative translation adjustment 28 -2,701 -1,981 Other reserves 28 228 219 Retained earnings 28 18,780 17,099 Profit for the financial year 28 11,470 7,436 Capital attributable to equity holders of the parent company, total   57,923 52,613 Non-controlling interest 37 0 165 Equity, total   57,923 52,777         Non-current liabilities       Deferred tax liabilities 35 3,442 3,293 Interest-bearing liabilities 30 19,634 23,807 Other non-current liabilities 32 700 649 Non-current liabilities, total   23,776 27,750         Current liabilities       Interest-bearing liabilities 30 15,329 10,461 Trade and other payables 33 45,724 42,513 Current income tax liabilities 34 1,675 982 Current liabilities, total   62,728 53,956 Liabilities, total   86,504 81,706 TOTAL EQUITY AND LIABILITIES   144,427 134,483   The notes are an integral part of the financial statements.   Back to Key financial data Read more

Consolidated statement of cash flows

Back to Key financial data EUR 1,000 Note Jan 1 - Dec 31, 2017 Jan 1 - Dec 31, 2016 OPERATING CASH FLOW       Cash receipts from customers   211,280 174,644 Operating expenses paid   -189,949 -165,607 Operating cash flow before financial items and taxes   21,331 9,037         Interest and payment paid for financial expenses 16 -773 -813 Interest received 15 55 44 Income taxes paid 18 -2,359 -2,606 Operating cash flow (A)   18,254 5,661         INVESTING CASH FLOW       Purchase of tangible and intangible assets 20, 21 -2,105 -1,879 Acquisition of subsidiaries, net of cash acquired 5 -3,108 -22,262 Proceeds from contingent asset 9 0 215 Proceeds from sale of tangible and intangible assets 9 26 24 Purchase of investments 25 0 -10 Loan receivables, decrease 25 0 45 Investing cash flow (B)   -5,187 -23,866         Cash flow after investments (A+B)   13,067 -18,204         FINANCING CASH FLOW       Share issue net of cost 28 0 13,937 Purchase of own shares 28 -262 -693 Acquisition of non-controlling interest 37 -1,696 0 Short-term loans, increase 30 607 11,685 Short-term loans, decrease 30 -5,855 -22,547 Long-term loans, increase 30 5,000 20,601 Long-term loans, decrease 30 0 -4,569 Payment of finance lease liabilities 30,31 -1,642 -1,184 Dividend paid and other profit distribution 28 -3,930 -3,046 Financing cash flow (C)   -7,777 14,184         Variation in cash (A+B+C) increase (+) / decrease (-)   5,290 -4,020         Assets at the beginning of the financial period   4,750 8,807 Exchange gains or losses on cash and cash equivalents   35 -37 Assets at the end of the financial period 27 10,074 4,750   The notes are an integral part of the financial statements.   Back to Key financial data Read more

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