CORPORATE GOVERNANCE STATEMENT 2017

GOVERNING PRINCIPLES

Aspo’s decision-making and administration comply with the Finnish Companies Act, securities
market legislation, other regulations concerning public companies, Aspo Plc’s Articles of
Association, and the rules and regulations of Nasdaq Helsinki Ltd.

Aspo follows the Finnish Corporate Governance Code which is available on the Securities Market
Association’s website www.cgfinland.fi.

In addition to the Corporate Governance Statement Aspo has published a separate Annual report
2017 in the Financial Statements and Responsibility 2017 release.

GROUP STRUCTURE

The Aspo Group’s parent company, Aspo Plc, is a Finnish public company domiciled in Helsinki.
The main responsibility for Aspo Group’s administration and operations lies with Aspo Plc’s
governing bodies, which are the Shareholders’ Meeting, the Board of Directors and the CEO. The
highest decision-making power is exercised by the shareholders at the Shareholders’ Meeting.

Aspo Plc’s task is to own, lead and develop the operations of its subsidiaries and other Group
companies, centrally administer the Group companies, take care of issues related to financing
and strategic planning, and plan and implement financially expedient investments.

The Group’s operational business is carried out in the Group companies, ESL Shipping Ltd,
Leipurin Plc, Telko Ltd and Kauko Ltd, and in their subsidiaries in Finland and abroad.

Shareholders’ Meeting

The Annual Shareholders’ Meeting is arranged every year on a date set by the Board of Directors
and it deals the issues that are the Annual Shareholders’ Meeting’s responsibility as outlined in
the Articles of Association, the proposals of the Shareholders’ Nomination Board and the Board
of Directors and possible other proposals to the Shareholders’ Meeting. The Annual
Shareholders’ Meeting, for instance, confirms the financial statements, elects the Board members
and the auditor, and decides on profit distribution and the remuneration of the Board members
and the auditor.

Shareholders are, according to the Companies Act, entitled to bring issues falling within the
domain of the Shareholders’ Meeting to be dealt with at the Shareholders’ Meeting if they demand
this in writing from the Board of Directors well in advance so that the issue can be included in the
notice of the meeting.

The Board of Aspo Plc convenes the Shareholders’ Meetings. The notice of the meeting is
published in a stock exchange release and on the company’s website not earlier than two months
and not later than twenty-one (21) days prior to the meeting, however at least nine (9) days prior
to the record date for the shareholders’ meeting. In addition, the Board of Directors may at their
discretion decide to announce about the shareholders’ meeting in one or several newspapers.
In addition, the following information is published on the company’s website 21 days before the
Shareholders’ Meeting at the latest:

  • total number of shares and votes by share class on the date of the notice of the meeting
  • documents to be presented to the Shareholders’ Meeting
  • decision proposal of the Board of Directors or some other competent body
  • any issue that is included in the agenda of the Shareholders’ Meeting but for which no decision is proposed

 

The decisions of the Shareholders’ Meeting are published after the meeting in a stock exchange
release.The minutes of the Shareholders’ Meeting with the voting results and appendices related
to the decisions are published on the company’s website within two weeks of the Shareholders’ Meeting.  

Shareholders' nomination board

Aspo has a permanent Shareholders’ Nomination Board that prepares proposals to the Annual
Shareholders’ Meeting for the election and remuneration of the members of the Board of Directors
and the remuneration of the Board committees. The Shareholders' Nomination Board consists of
the representatives of the four largest shareholders and in addition, the Chairman of the
company’s Board as an expert member of the Nomination Board.

The following representatives of the largest shareholders were members of the Nomination Board
which prepared proposals for the Annual Shareholders’ Meeting 2018: Reima Rytsölä, Chairman
(Varma Mutual Pension Insurance Company); Veronica Timgren (Nyberg family, including Oy
Havsudden Ab); Tapio Vehmas (Vehmas family) and Mikko Mursula (Ilmarinen Mutual Pension
Insurance Company). In addition, Gustav Nyberg, Chairman of Aspo Board of Directors, has
acted as an expert member of the Nomination Board.

Board of Directors

According to the Articles of Association, Aspo Plc’s Board of Directors comprises no fewer than
five and no more than eight members. The number of members of the Board is determined at the
Shareholders’ Meeting, where its members are also elected. The members of the Board of
Directors elect a chairman and a vice chairman from amongst themselves. In the 2017 Annual
Shareholders’ Meeting, six Board members were elected. The term of the members ends at the
conclusion of the Annual Shareholders’ Meeting following the election.

The Board constitutes a quorum when more than half of the members, including either the
chairman or vice chairman, are present.

The duties and responsibilities of the Board of Directors are set out in the Articles of Association,
the Finnish Companies Act and other applicable legislation. Aspo Plc’s Board of Directors has
confirmed written standing orders which state that the matters to be handled by the Board include,
but are not limited to:

  • Aspo Group’s strategic policies and divisional strategies
  • Group structure
  • matters to be presented to Shareholders’ Meetings
  • interim reports and consolidated financial statements
  • Group business plans, budgets and investments
  • expanding and scaling back operations, acquisitions/divestments of companies or operations
  • Group risk management, insurance and treasury policies
  • Group environmental policy
  • management remuneration and incentive plans
  • appointment of the CEO
  • monitoring the financial and financing situation of Aspo Group

The Board carries out an annual self-evaluation of its operations and working methods.

In 2017, the Board of Directors arranged 10 meetings, of which four were teleconferences. The
participation rate was 100.


Board members on December 31, 2017

Gustav Nyberg

Full-time Chairman of the Board since 2009, member of the Board since 2008
B.Sc. (Econ.), eMBA, born 1956
Dependent on the company and its major shareholders

Shareholdings in Aspo on December 31, 2017: 731,667 or 2.36% of the total number of shares,
Oy Havsudden Ab:3,142,941 shares or 10.15% of the total number of shares.
Aspo´s hybrid bond 2016: Oy Havsudden Ab: EUR 1.9 million
Participation in the board meetings: 100%

Mammu Kaario

Member of the Board since 2012, member of the Audit Committee since 2012
LL.M, MBA, born 1963
Independent of the company and its major shareholders

Shareholdings in Aspo on December 31, 2017: 10,000 or 0.03% of the total number of shares.
Aspo´s hybrid bond 2016: EUR 0.1 million
Participation in the board meetings: 100%

Mikael Laine

Member of the Board since 2016, member of the Audit Committee since 2016
M.Sc. (Econ.), born 1964
Independent of the company and its major shareholders
SVP, Strategy, Cargotec Corporation, 2014–

Shareholdings in Aspo on December 31, 2017: 5,000 or 0.02% of the total number of shares.
Participation in the board meetings: 100%

Roberto Lencioni

Member of the Board since 1999, Vice Chairman of the Board since 2015
Chairman of the Audit Committee since 2010
LL.M., born 1961
Independent of the company and its major shareholders
Managing Director, Oy Gard (Baltic) Ab, 2003–

Shareholdings in Aspo on December 31, 2017: 10,687 or 0.03% of the total number of shares.
Aspo´s hybrid bond 2016: EUR 0.3 million
Participation in the board meetings: 100%

Salla Pöyry

Member of the Board since 2016, member of the Audit Committee since 2016
D.Sc. (Econ.), CEFA, born 1984
Independent of the company and its major shareholders
Chairman of the Board (Managing Director),
Procurator-Holding Oy 2015–

Shareholdings in Aspo on December 31,2017: 1,000 or 0.003% of the total number of shares,
Procurator-Holding Oy: 470,969 or 1.52% of the total number of shares.
Participation in the board meetings: 100%

Risto Salo

Member of the Board since 2008
M.Sc. (Tech.), born 1951
Chairman of the Board, Hollming Ltd, 2005–
Independent of the company and its major shareholders

Shareholdings in Aspo on December 31, 2017: 165,160 or 0.53% of the total number of shares,
Ratius Ltd 572 or 0.002% of the total number of shares.
Participation in the board meetings: 100%


Board committees

The Board has established an Audit Committee with the objective of preparing issues related to
the company’s financial reporting and control. The Audit Committee does not have independent
decision-making authority, but the Board makes the decisions on the basis of preparations by the
committee. The Audit Committee consists of the chairperson and at least two members, who the
Board appoints from among the Board members for one year at a time. The Board of Directors
has appointed Mammu Kaario as Chairman of the Audit Committee and Mikael Laine, Salla Pöyry
and Risto Salo as committee members.

The tasks of the Audit Committee are:

  • monitoring the financial statement reporting process
  • control of the financial reporting process
  • monitoring the effectiveness of internal control and risk
    management systems
  • review of internal audit’s plans and reports
  • review of the description of the main principles related to the internal control and risk management systems over financial reporting process included in the company’s Corporate Governance Statement 
  • monitoring the statutory audit of the financial statements and consolidated financial statements
  • assessing the independence of the audit firm
  • assessing the auxiliary services offered by the audit firm
  • preparing the decision on the election of the auditor

 

The Audit Committee will convene regularly at least twice a year. In 2017, the Audit Committee
had four meetings. The participation rate was 100.

Aspo has no other committees besides the Audit Committee.


Chairman of the Board

Gustav Nyberg, B.Sc. (Econ.), eMBA (61) has acted as the Chairman of the Aspo Plc’s Board of
Directors.

Diversity on the Board of Directors

Aspo regards diversity on the Board of Directors as a significant part of sustainable operations,
and a success factor that allows the company to reach its strategic goals. Diversity must be part of
a functional Board of Directors
which is able to work together and respond to the requirements set by the company's businesses and
strategic goals, and to challenge
the company's acting management in a proactive and constructive manner.

The Shareholders' Nomination Board prepares and presents the proposal for the composition of
the Board of Directors to the Annual Shareholders’ Meeting. When planning the composition of
the Board of Directors, the Nomination Board of Aspo's shareholders takes account of the needs
and development phases of the company's businesses, as well as the competence areas required
by different board committees. When selecting board members, the objective is to ensure that the
Board of Directors wholly supports the development of Aspo's current and future business
operations.

The chairman of the Board of Directors proposes the competence and know-how required from
board members to the Nomination Board so that each member can be assumed to have the
required expertise and experience. The objective of the preparatory work of the Nomination Board
is to ensure that the Board of Directors forms a functional whole.

Diversity on the Board of Directors is examined from different points of view. For the composition
of Aspo's Board of Directors, key factors are competence, with each board member
supplementing one another, education and experience in different business fields, management
and operations in different development phases, as well as the personal characteristics of each
member. In addition, diversity on the Board of Directors is supported by experience in an
international operating environment and consideration of the age and gender distribution. The
objective is that both genders are represented by at least two members. Aspo fulfills this objective.

Members of Aspo's Board of Directors must have the competence required for the position and
the ability to allocate sufficient time to their tasks. When forming the Board of Directors, long-term
needs and replacement planning are also taken into account. The composition of the Board of
Directors and the number of members must enable the Board of Directors to work effectively.

Aspo owns and develops businesses belonging to the Group. The Boards of Directors of each
subsidiary prepare and decide on the strategies of each business. The subsidiaries are
independent of one another, and they have separate objectives, customer needs, capital
structures and business cycles. Therefore, they need independent Boards of Directors that
produce genuine added value for the development of the companies. Aspo's CEO acts as the
chair of the Boards of Directors of all subsidiaries. The aim is to find active top experts in their
fields who are still actively engaged in business life for the Boards of Directors of the subsidiaries.

Another aim is to follow the same level of diversity on the Boards of Directors of the subsidiaries
as on the Aspo Board of Directors. Through their work, the Boards of Directors of the subsidiaries
support diversity on the Board of Directors of Aspo.

Chief Executive Officer

The Board of Directors appoints Aspo Plc’s CEO. Aki Ojanen, eMBA (57), acts as the CEO of
Aspo. The CEO leads and develops of the Group’s business and is responsible for the operative
management in accordance with the instructions of the Board of Directors. The CEO presents
matters and reports to the Board of Directors. The CEO is responsible for the Group
administration in accordance with the instructions of the Board of Directors, and for the company
accounting complying with applicable legislation and the reliable arrangement of the company
finances. He also serves as the Chairman of the subsidiary Boards and acts as the operational
supervisor of the Managing Directors of the subsidiaries and Group administration. He is also
responsible for internal audit and for Group risk management, which are coordinated by the CFO.

Group Executive Committee

The CEO is assisted by the Group Executive Committee, which is responsible for developing the
strategic structure of Aspo Group and its earnings, as well as prepares the policies and common
practices. The Croup Executive Committee consists of the Group CEO, Group CFO, Group
Treasurer, Group Legal Affairs, and the Managing Directors of the Group companies. The Group
Executive Committee convenes at least six times a year.


Group Executive Committee members on December 31, 2017

Aki Ojanen
CEO, Aspo Plc, 2009–
eMBA, born 1961
Shareholdings in Aspo on December 31, 2017: 30,701 or 0.10% of the total number of shares

Kalle Kettunen
Managing Director, Telko Ltd, 2009–
M.Sc. (Tech.), MBA, born 1964
Shareholdings in Aspo on December 31, 2017: 29,529 or 0.10% of the total number of shares

Sami Koskela
Managing Director, Kauko Ltd, 2015–
M.Sc. (Tech.), born 1979
Shareholdings in Aspo on December 31, 2017: 15,775 or 0.05% of the total number of shares

Matti-Mikael Koskinen
Managing Director, ESL Shipping Ltd, 2013–
M.Sc. (Econ.), born 1972
Shareholdings in Aspo on December 31, 2017: 26,029 or 0.08% of the total number of shares

Mikko Laavainen
Managing Director, Leipurin Plc, 2016–
M.Sc. (Econ.), born 1973
Shareholdings in Aspo on December 31, 2017: 8,600 or 0.03% of the total number of shares

Arto Meitsalo
CFO, Aspo Plc, 2009–
Managing Director, Aspo Services Ltd, 2013–
M.Sc. (Econ.), born 1963
Shareholdings in Aspo on December 31, 2017: 30,768 or 0.10% of the total number of shares

Toni Santalahti
Director, Legal Affairs, Aspo Plc, 2017-
LL.M, born 1971
Shareholdings in Aspo on December 31, 2017: 8,457 or 0.03% of the total number of shares

Harri Seppälä
Group Treasurer, Aspo Plc, 2008–
eMBA, born 1964
Shareholdings in Aspo on December 31, 2017: 55,100 or 0.18% of the total number of shares

Remuneration

The salaries, remuneration and other financial benefits of the management and the members of the
Board of Directors are presented in a separate remuneration statement atwww.aspo.com .

Audit

According to the Articles of Association, the Annual Shareholders’ Meeting elects the auditor,
which must be an audit firm approved by the Central Chamber of Commerce. The term of the
auditor ends at the conclusion of the Annual Shareholders’ Meeting following the election.

The auditor elected by the Shareholders’ Meeting is responsible for instructing and coordinating
the auditing work throughout the Group. The auditor provides the company’s shareholders with
the auditor’s report in connection with the annual report, in accordance with legislation. The Board
of Directors also receives other possible auditing reports.

The 2017 Annual Shareholders’ Meeting elected the APA firm Ernst & Young Oy as the auditor,
with APA Harri Pärssinen as the principal auditor. In 2017, companies belonging to the EY chain
in Finland and abroad were paid about EUR 246,000 in compensation for performing audits for
Aspo Group. In addition, other services were acquired for about EUR 87,000.

Internal control

Aspo’s internal control includes the control that is built in to the business processes, the Group’s
management system and financial reporting covering the entire Group. Internal control is an
integral part of the company’s management, risk management and administration.

The aim of internal control is to create sufficient certainty of goals and objectives being reached
in the following issues:

  • operational profitability and efficiency and capital control
  • reliability and integrity of financial and operational information
  • compliance with laws, regulations and agreements, as well as ethical principles and social responsibility
  • safeguarding and responsible management of assets and brands

 

The responsibility to arrange the control lies with the Board of Directors and the CEO both at
Group level and in the different business areas. The Group’s Board is responsible to the
shareholders and the CEO to the Board. The chain of responsibility continues throughout the
organization so that each Aspo employee is responsible to his/her superior for control. Group
company controllers have control responsibility concerning compliance with legislation and Group
instructions. As well as to the subsidiary management, they also report to the CFO. The CFO
reports to the CEO and Board on possible findings. The internal audit function supports the Group
management in their control task and the aim is to offer the Aspo board sufficient assurance that
the control is working.

Financial reporting

The control of financial reporting is based on monitoring of business processes. The information
for financial reporting is created as business processes progress, and responsibility for correct
information is shared by all participants in the process. The financial reporting process is
decentralized and monitored by the Audit Committee.

The financial statements of the Group are compiled according to the IFRS standards; those of the
parent company and Finnish subsidiaries according to the Finnish Accounting standards. Each
separate company complies with the legislation of the country where it is located, but reports
based on the Aspo’s internal accounting instructions. Separate companies may have their own
chart of accounts, but all information is consolidated on the basis of a common chart of accounts
to the unit level, where their reliability is assessed before the information is transferred to Group
level. Aspo Group’s financial information is verified, and assessed on monthly basis. At each
phase the unit responsible for the quality and generation of information will assess its reliability.
The Group-level monitoring and reconciliation mechanisms are used on both monthly and
quarterly bases.

The systems required for financial reporting are decentralized and used according to the
principles of internal control. Achieving the set targets is monitored on a monthly basis with the
Group’s consolidation and reporting system. In addition to actual and comparative figures, the
system provides up-to-date forecasts. The reports are provided to the Aspo Board of Directors
monthly. The Board of Directors assesses the Group’s position and future based on the provided
information. The Board of Directors is responsible for the contents and publication of the financial
statement.

In 2017, the Group’s reporting system was updated which also improves the level of internal
control.

Besides the Audit Committee, the reliability of reporting and processes are assessed by an
independent, external audit firm.

Internal audit

The purpose of internal audit is to support assessment and assurance of the Group to verify the
efficiency of risk management, control, management and administration. Internal audit assists the
management and the organization in ensuring the Group targets and in ensuring the effectiveness
and development of the control system.

The Board of Directors approves the principles of internal audit as part of internal control.
The Group CFO is responsible for coordination of internal audit, and reports the findings to the
CEO, the Audit Committee and the Board of Directors. Internal audit is organized corresponding
to the size of the Group. Additional resources and special skills will be purchased for demanding
assessments if needed. The target is to perform several risk-based audits annually. The audits
are based on risk assessment as defined in the risk analyses of individual business units. The
objects of the audit assessment and assurance are profitability and efficiency of activities,
reliability of financial and operational reporting, compliance issues and safeguarding of assets.

The Audit Committee monitors the operations and efficiency of the company’s internal audit in its
meetings. The committee also reviews the plans and reports of the internal audit.

Risk management

The target of risk management is to ensure the implementation of Group strategy, development
of financial results, shareholder value, dividend payment ability and business continuity. The
operational management of the business units is responsible for risk management. They are also
responsible for determining sufficient measures and their implementation, and for monitoring and
ensuring that the measures are implemented as part of daily management of operations. Risk
management is coordinated by the Group CFO, who reports to the Group CEO.

The Audit Committee monitors the efficiency of the risk management systems and deals with
processes, plans and reports of the risk management.

Each business unit has a separate risk management program. Business risks and their
management are dealt with in the business unit management teams. The functions common to
the whole Group will ensure that sufficient risk assessment and reporting procedures are
incorporated into the processes they are responsible for. In terms of certain risks, the risk
management principles and main content have been defined in Group-level policies and
guidelines. The Group administration is responsible for Group-level insurance plans.

Risk management is essentially based on the aforementioned procedures of internal control,
where the chain of responsibility extends throughout the Group. The most important factors in
business risk management are a profound understanding of the business and command of the
tools which are used for daily business operations and their management. Characteristic risks in
each business area are identified in the business units, assessed in the business unit
management teams, and reported to the subsidiary Boards and, if need be, also to the Aspo
Board of Directors or the Audit Committee. Aspo’s CEO acts as the Chairman of the Boards of
the subsidiaries.

Risks are continuously assessed and their management is discussed in the business unit
management teams. Risk assessments are updated according to Aspo’s management policy and
the most noteworthy findings are presented in the quarterly interim reports. Larger projects always
include a separate risk analysis. The most significant risks for the Group are assessed once a
year and the results are presented in the annual report.

Financial risks, their management principles and related organization are presented in the notes
to the financial statements.

Insider management

Aspo Group follows Nasdaq Helsinki Ltd’s insider instructions. The persons discharging
managerial responsibilities include the members of the Board and the Group Executive
Committee. In addition, a project-specific insider register is kept on persons participating in the
preparation of insider projects.

Persons discharging managerial responsibilities are not allowed to trade in securities issued by
the company for 30 days before the publication of interim reports or financial statements releases.
Project-specific insiders are not allowed to trade in securities issued by the company until the
termination of the project.

The Group’s CFO is responsible for the control and monitoring of insider issues. Aspo Plc’s insider
register is maintained by Euroclear Finland Ltd.

 

ASPO PLC

Board of Directors

Published on March 20, 2018


Updated: 20.03.2018