Financial Statement
documents 2020
ORION CORPORATION | Financial Statement documents 2020 |
For more than a century, Orion has been building
well-being by providing effective medical treatments.
Our drugs have been used to eliminate national
diseases, prevent heart attacks, cure everyday
headaches and save lives in intensive care units.
We have developed from a shop founded by three
pharmacists into an international company that
carries out medical research at the top international
level. We develop and produce new, unprecedented
treatments that can improve the quality of life for
people with cancer, neurological disorders, asthma
or chronic obstructive pulmonary disease, among
others. Our self-care products that support well-
being help people take care of themselves every day.
Orion’s products are available in more than 100
countries.
Contents
All the figures in the financial statements have been rounded, which is why
the total sums of individual figures may dier from the total sums shown.
ORION IN BRIEF ....................................................................
FINANCIAL STATEMENTS AND REPORT BY
THE BOARD OF DIRECTORS ...............................................
REPORT BY THE BOARD OF DIRECTORS FOR
THE FINANCIAL YEAR .................................................
Group’s key figures ..........................................................30
Basic information on Orion’s shares ...............................37
Calculation of the key figures ............................................ 38
CONSOLIDATED FINANCIAL STATEMENTS IFRS .........
CONSOLIDATED INCOME STATEMENT ........................
CONSOLIDATED STATEMENT OF
COMPHERENSIVE INCOME ...........................................
CONSOLIDATED STATEMENT OF
FINANCIAL POSITION .....................................................
CONSOLIDATED STATEMENT OF CHANGES
IN EQUITY .........................................................................
CONSOLIDATED STATEMENT OF CASH FLOWS ........
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS ...............................................
1 Basis of presentation of the consolidated financial
statements ..................................................................... 44
2 Business performance ...................................................47
2.1 Revenue from contracts with customers .............47
2.2 Other operating expense and income ................. 51
2.3 Finance income and expenses ............................. 53
2.4 Earnings and dividend per share ......................... 54
3 Invested capital .............................................................. 55
3.1 Property, plant and equipment ............................. 55
3.2 Intangible assets ..................................................60
3.3 Joint arrangements ...............................................63
3.4 Investments in associates, joint ventures
and joint operations ............................................ 64
3.5 Inventories ........................................................... 64
3.6 Trade and other receivables .................................65
3.7 Provisions ............................................................ 66
3.8 Trade payables and other liabilities ..................... 67
4 Personnel ...................................................................... 68
4.1 Employee benefits ............................................... 68
4.2 Pension assets and pension liabilities ................ 71
5 Income taxes and deferred taxes ...................................75
5.1 Income taxes .........................................................75
5.2 Deferred taxes ...................................................... 76
6 Financing and capital structure .....................................77
6.1 Financial assets and liabilites by category ........... 77
6.2 Financial risk management ................................ 80
6.3 Equity ....................................................................83
6.4 Interest-bearing liabilities ....................................85
6.5 Cash and cash equivalents ................................... 85
6.6 Other investments ...............................................85
6.7 Derivatives ............................................................ 85
6.8 Contingent liabilities and commitments ............ 86
7 Other notes ....................................................................87
7.1 Related party transactions ....................................87
7.2 Auditor’s remuneration ........................................87
7.3 Group companies .................................................88
7.4 Events after the end of the reporting period ...... 88
PARENT COMPANY ORION CORPORATION’S
FINANCIAL STATEMENTS FAS .........................................
INCOME STATEMENT ......................................................
BALANCE SHEET ..............................................................
CASH FLOW STATEMENT ................................................
PARENT COMPANY NOTES TO THE FINANCIAL
STATEMENTS ....................................................................
PROPOSAL BY THE ORION CORPORATION
BOARD OF DIRECTORS ON USE OF PROFIT
FUNDS FROM THE FINANCIAL YEAR .............................
AUDITOR’S REPORT ..........................................................
INDEPENDENT AUDITOR’S REASONABLE
ASSURANCE REPORT ON ESEF REPORTING .................
KEY EVENTS IN .........................................................
ORION CORPORATION | Financial Statement documents 2020 |
Orion in brief
Orion is a globally operating Finnish pharmaceutical company − a builder of well-being.
Orion develops, manufactures and markets human and veterinary pharmaceuticals and active
pharmaceutical ingredients. The company is continuously developing new drugs and treatment
methods. The core therapy areas of Orion’s pharmaceutical R&D are neurological disorders,
oncology and respiratory diseases for which Orion develops inhaled pulmonary medication. Orion’s
A and B shares are listed on Nasdaq Helsinki.
Business areas
Net sales in 2020 (2019)
, MEUR (,)
Operating profit
MEUR ()
R&D investments
MEUR ()
production sites in Finland
Operating profit margin
% (%)
Shareholders (on 31 December 2020)
, (,)
Personnel at year’s end
, (,)
Proprietary Products
Drugs developed in-house
and other drugs with product
protection
Animal Health
Medicine and well-being
products for animals
Specialty Products
Generic prescription drugs,
self-care products and
biosimilars
Fermion and contract
manufacturing
Active pharmaceutical
ingredient (API) production for
Orion and API and pharma-
ceutical production for other
pharmaceutical companies
ORION CORPORATION | Financial Statement documents 2020 |
Customer
complaints
(pharmaceuticals)
Ppm (76)
Code of Conduct
training, no. of
participants
,
(n/a)
GxP* audits
by Orion
(238)
Greenhouse gas
emissions
(scope 1 & 2)
,
tCO
2
e (20,123)
Energy savings
target set for
2025 achieved
%
(51%)
Injury rate
.
LTIF 1 (6.6)
The key themes of Orion’s corporate responsibility are ensuring patient safety
and reliable supply of medications, in addition to which the Company has a
responsibility for the environment, its employees, business ethics and transparency.
Head oce in Finland
R&D: Finland and UK
Production sites in Finland
Support functions in India
Orion’s products are available in over one hundred countries
Own sales organisation
Global sales partner network
7%
8%
46%
39%
Proprietary products
39
Specialty Products
46
Animal Health
8
Fermion and Contract manufacturing
7
Net sales by business
Proprietary products
Specialty Products
Animal Health
Fermion and Contract manufacturing
1
13%
8%
34%
16%
29%
Finland
29
Scandinavia
16
Other Europe
34
North America
8
Rest of the World
13
Net sales by market area
Finland
Scandinavia
Other Europe
North America
Rest of the World
2
*
Good Practices
ORION CORPORATION | Financial Statement documents 2020 |
Report by the Board of Directors for the
financial year 2020
Group’s key figures
Key figures relating to financial performance
Net sales, EUR million . ,. ,.
EBITDA, EUR million . . .
% of net sales .% .% .%
Operating profit, EUR million . . .
% of net sales .% .% .%
Profit before taxes, EUR million . . .
% of net sales .% .% .%
Profit for the period, EUR million . . .
% of net sales .% .% .%
R&D expenses, EUR million . . .
% of net sales .% .% .%
Capital expenditure, EUR million . . .
% of net sales .% .% .%
Interest-bearing net liabilities, EUR million -. -. -.
Basic earnings per share, EUR . . .
Cash flow per share before financial items, EUR . . .
Equity ratio, % .% .% .%
Gearing, % -.% -.% -.%
ROCE (before taxes), % .% .% .%
ROE (after taxes), % .% .% .%
Average personnel during the period , , ,
ORION CORPORATION | Financial Statement documents 2020
|
Events during the period
23 Jan 2020 Japan’s Ministry of Health granted marketing authorisation to darolutamide for the treatment of non-metastatic
castration-resistant prostate cancer (nmCRPC).
30 Jan 2020 Orion announced that new results from the ARAMIS trial indicate that the combination of darolutamide and
conventional hormonal therapy significantly extend the overall survival of men with non-metastatic castration-
resistant prostate cancer.
31 Jan 2020 The Committee for Medicinal Products for Human Use (CHMP) of the European Medicines Agency (EMA) issued
a positive opinion, recommending darolutamide be granted marketing authorisation.
5 Mar 2020 Orion announced that the Company’s SVP for Research and Development, Christer Nordtstedt, resigned from his
post for family reasons.
19 Mar 2020 Orion cancelled the Annual General Meeting which was due to be held on 25 March 2020 due to the coronavirus
situation.
30 Mar 2020 Nubeqa
®
(darolutamide) was granted marketing authorisation in the EU as a new treatment for non-metastatic
castration-resistant prostate cancer.
24 Apr 2020 Orion upgraded full-year outlook for 2020.
28 Apr 2020 Orion announced that Mr. Markku Huhta-Koivisto, SVP for Growth Projects and member of the Executive
Management Board of the Orion Group will retire in July 2020 and leave the Executive Management Board of the
Orion Group as of 1 May 2020.
6 May 2020 Orion Corporation’s Annual General Meeting was held in Helsinki.
25 May 2020 Orion announced that Professor Outi Vaarala has been appointed as Senior Vice President for Research and
Development as of 1 June 2020.
15 Jun 2020 Orion decided on cancellation of shares on the joint account.
25 Jun 2020 The cancellation of shares on the joint account was entered in the Finnish Trade Register.
8 Jul 2020 Orion upgraded full-year outlook for 2020.
28 Jul 2020 Orion announced that Phase III REFALS trial evaluating the ecacy of oral levosimendan in treatment of ALS
patients did not reach its pre-specified endpoints.
10 Sep 2020 New England Journal of Medicine published final overall survival data for darolutamide showing treatment
significantly extends life in men with non-metastatic castration-resistant prostate cancer.
10 Sep 2020 Orion announced that the company is planning to renew its R&D strategy and organisation.
19 Oct 2020 Orion announced that the statutory co-operation negotiations regarding the Research & Development function
were completed.
19 Oct 2020 Orion upgraded full-year outlook for 2020.
Events after the period
18 Jan 2021 Orion Animal Health and Vetoquinol announced that they are expanding collaboration.
8 Feb 2021 Orion and Bayer announced that they are initiating a new phase III ARANOTE trial with darolutamide.
ORION CORPORATION | Financial Statement documents 2020
|
Financial review
Change in reporting of net sales
Starting with the January–March 2020 interim report, Orion has combined Fermion’s external net sales and Orion’s contract
manufacturing net sales in reporting. The item “Other operations” reported in the context of net sales mostly comprises the
impact of exchange rate changes on consolidated net sales.
Net sales
Orion Group’s net sales in 2020 totalled EUR 1,078 (1,051) million, an increase of 3%. Exchange rates impacted net sales
negatively by EUR 16 million. Net sales of Orion’s top ten pharmaceuticals in 2020 were EUR 460 (458) million. They accounted
for 43% (44%) of the total net sales.
In the first half of 2020, net sales increased clearly from 2019, due to the spike in demand caused by the COVID-19 pandemic in
March and April and the timing of milestone payments, for example. In the second half of the year, net sales fell from 2019 as a
result of a number of things, such as the timing of milestone payments and partner deliveries, levelling out of the impacts of the
spike in demand in the first half of the year, and a very strong fourth quarter in the comparative period in 2019.
Operating profit
The Orion Group’s operating profit was up by 11% at EUR 280 (253) million. EBITDA was up by 9% at EUR 337 (309) million.
The positive eect of increased net sales calculated in local currencies on the gross profit of product and service sales was
EUR 25 million. Price, cost and product portfolio changes had a positive impact of EUR 9 million and currency rate changes a
negative impact of EUR 14 million. The improvement in the cost level was due to, for example, the high capacity utilisation rate
of production facilities and reduction of scrap and inventory write-os. In all, with the joint impact of these items, the gross
profit from product and service sales was EUR 20 million higher than in the comparative period.
Milestone payments accounted for EUR 42 (51) million and royalties for EUR 19 (11) million of net sales and operating profit. The
increase in other operating income improved operating profit by EUR 3 million.
Operating expenses decreased by EUR 6 million.
Operating expenses
The Group’s sales and marketing expenses were down by 5% and totalled EUR 204 (216) million. Due to the COVID-19
pandemic, travel expenses in particular decreased significantly. However, expenses were clearly higher towards the end of the
year than earlier during the year, mostly due to marketing investments that took place towards the end of the year.
Research and development expenses were up by 3% and amounted to EUR 123 (119) million. R&D expenses increased late in the
year from the comparative period mainly due to the timing of clinical trials, such as the new ARANOTE trial. They accounted for
11% (11%) of the Group’s net sales. Research projects are reported in more detail under the ’Research and development’ section
of this review.
Administrative expenses were EUR 49 (48) million.
Other operating income and expenses amounted to EUR 5 (2) million (positive).
Group’s profit
Profit for the period was EUR 220 (200) million.
Basic earnings per share were EUR 1.56 (1.43). Equity per share was EUR 5.21 (5.55).
The return on capital employed before taxes (ROCE) was 35% (30%) and the return on equity after taxes (ROE) 29% (26%).
ORION CORPORATION | Financial Statement documents 2020
|
Financial position
The Group’s gearing was -25% (-18%) and the equity ratio 67% (77%).
The Group’s total liabilities at 31 December 2020 were EUR 384 (256) million. At the end of the period, interest-bearing liabilities
amounted to EUR 109 (10) million, including EUR 105 (7) million of long-term liabilities. Orion withdraw a EUR 100 million
long-term loan from the European Investment Bank in the year under review. The loan ensures that the Company’s liquidity will
be good despite possible adverse impacts of the coronavirus pandemic. The EUR 50 million short-term loan withdrawn in the
first quarter was repaid in the third quarter. Orion is not currently aware of factors that would materially aect the Company’s
liquidity negatively.
The Group had EUR 294 (149) million of cash and cash equivalents and money market investments at the end of the review
period.
Cash flow
Cash flow from operating activities was EUR 299 (271) million. Cash flow improved both due to increased profit and decrease
in working capital. Working capital decreased by EUR 27 million during the year despite inventories were increased due to the
COVID-19 pandemic.
The cash flow from investing activities was EUR -40 (-34) million.
The cash flow from financing activities was EUR -115 (-371) million. The dierence to the comparative period is due to the change
in amounts of loans. In 2020, net borrowing increased by EUR 100 million. In the comparative period, a matured bond loan of
EUR 150 million was repaid.
Capital expenditure
The Group’s capital expenditure totalled EUR 49 (43) million. This comprised EUR 37 (35) million on property, plant and
equipment and EUR 12 (7) million on intangible assets.
Key business targets for 2020
TARGET DEVELOPMENT –/
Launch and commercialisation of the prostate cancer drug
darolutamide jointly with Bayer. Continued research and
development collaboration in the ARASENS trial (metastatic
prostate cancer) to expand the indication.
• First commercial sales of darolutamide in Japan and the EU.
• The fully recruited ARASENS trial is estimated to be
completed in 2021.
Development of orally administered levosimendan
(ODM-109) for the treatment of symptoms of ALS in Phase
III clinical trial (REFALS) and preparation for its possible
commercialisation. In research and development, the
potential of dierent projects are reviewed with consideration
of the total research portfolio.
• The REFALS trial did not reach its pre-specified endpoints.
• Orion has currently no plans on the establishment of
commercial operations in the United States.
• Orion is in negotiations with a potential partner to take
ODM-203 to the next development phase.
Strengthening Orion’s position as the most significant
provider of generic drugs in Finland and competitive pricing.
Development of a competitive product portfolio in Specialty
Products and strengthening of product launches.
In self-care products and reference-priced prescription
drugs Orion is a clear market leader and grew faster than the
market. The product portfolio was increased and developed as
planned.
Accelerating the growth of the Easyhaler
®
product portfolio
and strengthening its market position. Progress on the
launch of the salmeterol-fluticasone Easyhaler
®
in Europe.
Easyhaler
®
product portfolio sales increased by 10%.
Evaluation of new in-licensing opportunities in Europe,
particularly in the area of hospital care.
The work continues. In 2020, a few significant in-licensing
agreements in the Specialty Products unit.
ORION CORPORATION | Financial Statement documents 2020
|
Key business targets for 2021
TARGET Outcome
Nubeqa
®
Supporting sales growth and co-promotion in Europe with Bayer Ongoing
Positive outcome from Phase III ARASENS trial Ongoing
Taking Phase III ARANOTE trial forward together with Bayer Ongoing
Easyhaler
®
product portfolio Sales growth Ongoing
ODM-208 Taking the development program forward according to plan Ongoing
Finland Maintenance and strengthening of market position Ongoing
Scandinavia Reinforcing Orion’s position in generic prescription drugs
and self-care products
Ongoing
Future growth enablement In-licensing of new products Ongoing
Portfolio enhancement through product acquisitions and M&A Ongoing
Orion regularly monitors the progress of these goals in its financial reviews.
ORION CORPORATION | Financial Statement documents 2020
|
Business review
Review of the Finnish human pharmaceuticals market
Finland is the most important individual market for Orion, generating more than a quarter of the Group’s net sales. According
to Pharmarket statistics (1–12/2020), the total sales of Orion’s human pharmaceuticals, including both medicinal and non-
medicinal products, grew slightly slower than the market in 2020. In March, the COVID-19 epidemic increased demand strongly,
but the impact of this spike in demand mostly levelled out in the course of the year.
Orion’s biggest product group in Finland are reference-priced prescription drugs in the pharmacy channel. The sales of Orion’s
reference-priced prescription drugs increased from the comparative period faster than the market despite continuing tough
price competition and availability disruptions. The average price of reference-priced drugs in the market declined approximately
5% from the comparative period (Source: Pharmarket). The impact of price competition on Orion has been significant due to
the Company’s broad product range and significant market share in Finland.
Despite the challenging operating environment, Orion has maintained its position as leader in marketing pharmaceuticals in
Finland. Orion has a particularly strong position in reference-priced prescription drugs and self-care products, with its market
share being a quarter of the market in each.
SALES OF HUMAN PHARMACEUTICALS IN FINLAND MEDICINAL AND NONMEDICINAL PRODUCTS:
EUR million –/ –/ Change %
Total sales of human pharmaceuticals (hospital and pharmacy channel)
Market , , +%
Orion +%
Prescription drugs total (pharmacy channel)
Market , , +%
Orion +%
Reference priced prescription drugs (pharmacy channel) *
Market -%
Orion +%
Self-care products (pharmacy channel)
Market +%
Orion +%
* The reference-priced prescription drugs group metric counts in products that were reference-priced prescription drugs at the time the statistics
were compiled. For this reason, sales and market share figures in the comparative period may deviate from previously published data.
Source: Pharmarket sales statistics 1–12/2020
ORION’S MARKET SHARE IN THE SALES OF HUMAN PHARMACEUTICALS IN FINLAND
MEDICINAL AND NONMEDICINAL PRODUCTS:
Orion’s market share, % –/ –/
Human pharmaceuticals in total (hospital and pharmacy channel) % %
Prescription drugs total (pharmacy channel) % %
Reference priced prescription drugs (pharmacy channel)* % %
Self-care products (pharmacy channel) % %
* The reference-priced prescription drugs group metric counts in products that were reference-priced prescription drugs at the time the statistics
were compiled. For this reason, sales and market share figures in the comparative period may deviate from previously published data.
Source: Pharmarket sales statistics 1–12/2020
ORION CORPORATION | Financial Statement documents 2020 |
Proprietary Products
The product portfolio of the Proprietary Products unit consists of patented prescription products in three therapy areas:
neurological disorders, oncology and critical care, and inhaled pulmonary drugs under Easyhaler
®
product portfolio.
Net sales of the Proprietary Products unit in 2020 were up by 3% and totalled EUR 420 (406) million.
NET SALES BY PRODUCT
EUR million −/ −/ Change %
Easyhaler
®
product portfolio . . +.%
Stalevo
®
, Comtess
®
and Comtan
®
. . +.%
Simdax
®
. . - .%
Dexdor
®
. . -.%
Nubeqa
®
* . . +.%
Other** . . -.%
TOTAL . . +.%
* includes product sales to Bayer and royalties booked by Orion
** includes milestone payments and products such as Enanton
®
, Precedex
®
and pharmaceuticals sold for use in clinical trials.
In 2020, net sales of darolutamide sold for use in clinical trials were EUR 11.6 (0.8) million.
Orion’s Easyhaler
®
is a dry-powder inhaler developed in-house, for which Orion has developed Easyhaler
®
-adapted dry powder
formulations of several well-known generic active pharmaceutical ingredients (salbutamol, beclometasone, budesonide,
formoterol, salmeterol and fluticasone). Total net sales of the Easyhaler
®
product portfolio for treatment of asthma and chronic
obstructive pulmonary disease were up by 10% in 2020 at EUR 115 (104) million. In March, the COVID-19 pandemic increased
demand momentarily, but the demand levelled out in the course of the year, and at the end of the year, sales were behind the
previous year. According to Orion’s estimate, the development towards the end of the year was aected by customers using
their stockpiles following the strong demand earlier in the year, as well as reduced numbers of doctors’ appointments due to
tighter coronavirus restrictions in place in various parts of Europe. Sales of the budesonide-formoterol combined formulation
were up by 15% at EUR 72 (62) million. The combined sales of other Easyhaler
®
products were EUR 43 (42) million.
Besides Orion’s sales, co-marketing partner Menarini sells the budesonide-formoterol combined formulation in France and in
a few Southern European countries. The first marketing authorisation applications have also been submitted outside Europe.
Menarini is in charge of selling the budesonide-formoterol combined formulation in the Asia and Pacific region, and Hikma
Pharmaceuticals PLC in the Middle East and North Africa.
The sales of salmeterol-fluticasone combined formulation have also started in several European countries, but they have
developed slower than anticipated, and for the time being, the product has no material impact on the product family’s net sales.
Orion’s drugs for treatment of Parkinson’s disease are Stalevo
®
(active pharmaceutical ingredients carbidopa, levodopa and
entacapone) and Comtess
®
/Comtan
®
(entacapone). Their total net sales in 2020 were EUR 99 (98) million, or at the level
forecast at the beginning of 2020. The fluctuating sales in the course of the year were due to the timing of partner deliveries.
With the exception of Japan, the distribution agreements with Novartis concerning Parkinson’s drugs expired in 2020. In most
of these markets, Orion has since entered into distribution agreements with new partners. In Singapore, Thailand and Malesia,
Orion sells these products through its own sales organisations.
BREAKDOWN OF SALES OF PARKINSON’S DRUGS /:
EUR million −/ −/ Change %
Deliveries to key partners -%
Orion’s own sales +%
Net sales of Orion’s Dexdor
®
intensive care sedative (dexmedetomidine) were EUR 55 (57) million. Sales were extremely strong
in March and April due to increased demand caused by the COVID-19 pandemic as well as shortages in some competing
products in the markets. In the summer, the demand for the product fell to the level where it was expected to be at the
beginning of the year due to generic competition, but it picked up again slightly late in the year. For this reason, the sales of
Dexdor
®
in 2020 were on par with the previous year, although generic competition for the product has started and expanded in
ORION CORPORATION | Financial Statement documents 2020
|
Europe. The impact of COVID-19 was also evident in the sales of Precedex
®
, which developed significantly more favourably than
anticipated in the course of the year, mainly due to the spike in demand in spring. Sales of Precedex
®
totalled EUR 12 (13) million
in 2020.
Simdax
®
(levosimendan), a drug for treatment of acute decompensated heart failure is sold in some 60 countries worldwide.
Net sales of the product in 2020 were down by 8% and amounted to EUR 62 (68) million. Sales began to decline late in the
year due to a decrease in planned hospital visits caused by the COVID-19 pandemic and, in some markets, due to falling prices.
Simdax
®
is a liquid infusion concentrate, and its formulation patent in key markets expired in September 2020.
In 2020, Orion booked a total of EUR 17 (2) million of product sales for deliveries of Nubeqa
®
(darolutamide) to Bayer and in
royalties from the same product. Nubeqa
®
is a drug indicated for the treatment of non-metastatic castration-resistant prostate
cancer. In addition, Orion booked a total of EUR 28 million in milestone payments from first commercial sales of the product
in the EU and Japan. In the comparative period in August 2019, Orion booked a EUR 45 million milestone payment for the first
commercial sales of the product in the USA.
Bayer holds global commercial rights to darolutamide. In Europe, however, Orion and Bayer have agreed on co-promotion. In
addition, Orion will manufacture the product for global markets. Besides milestone payments, Orion will also receive tiered
royalties on global darolutamide sales, which will be approximately 20% including product sales to Bayer. Initially the royalty will
be slightly lower, and as sales increase, royalties may increase slightly. Orion also has the possibility to receive one-o payments
from Bayer when certain global annual sales targets are met for the first time.
Specialty Products
Net sales of the Specialty Products unit’s o-patent products, i.e. generic prescription drugs, self-care products and biosimilars
were up by 3% in 2020 and totalled EUR 498 (486) million. The COVID-19 pandemic caused a drug hoarding phenomenon
in Finland and other main markets in March, which partly explains the full-year development of Specialty Products’ net sales.
In Orion’s assessment, the fundamental need for these products has not materially changed, and the impact of the spike in
demand largely levelled out during the rest of the year. However, in some products, such as generic dexmedetomidine products,
full-year sales were higher than expected at the start of the year due to the pandemic. On the other hand, the sales of some
products fell behind anticipated levels in part due to pandemic restrictions. As a whole, the business developed favourably in
many regions despite the COVID-19 impacts. The expected clear decline in the net sales of biosimilars had a negative impact on
the unit’s overall net sales.
In 2020, the Specialty Products unit signed new in-licensing agreements on development or registration phase products. If the
development and registration projects succeed, these products are estimated to reach markets gradually in the coming years
and their long-term combined sales potential will exceed EUR 80 million.
BREAKDOWN OF SPECIALTY PRODUCTS’ NET SALES BY PRODUCT GROUP /:
EUR million –/ −/ Change %
Share of unit’s
net sales –/
Share of unit’s
net sales –/
Generic prescription drugs + % % %
Self-care products + % % %
Biosimilars - % % %
TOTAL + %
The Specialty Products unit’s most important market areas are Finland, Scandinavia and Eastern Europe and Russia. In Finland,
the unit’s sales in 2020 increased by 3% and were EUR 280 (272) million. The growth is mainly due to the spike in demand
for self-care products and prescription drugs caused by the COVID-19 epidemic in March. On the other hand, net sales were
negatively aected by the decline in the prices of generic drugs due to price competition as well as availability disruptions due to
causes other than the COVID-19 pandemic. This impact, however, was clearly smaller than in the few preceding years.
In Scandinavia, the sales of Specialty Products totalled EUR 78 (89) million, down by 12%. The decline is due to the expected
clear decrease in the sales of biosimilars. Strong demand for generic prescription drugs in the course of the year and particularly
in March mitigated the decline in Specialty Products’ net sales in Scandinavia. In Eastern Europe and Russia, Specialty
Products’ sales were up by 3% and amounted to EUR 70 (68) million. Specialty Products’ sales in regions other than Finland,
Scandinavia and Eastern Europe and Russia increased by 23% and stood at EUR 71 (57) million. The growth was attributable,
among other things, to an increase in generic dexmedetomidine product sales due to the COVID-19 pandemic.
ORION CORPORATION | Financial Statement documents 2020
|
In Specialty Products, 72% (68%) of the net sales came from generic prescription drugs, 25% (24%) from self-care products
and 3% (8%) from biosimilars. The biosimilars net sales totalled EUR 18 (38) million, down by 53%. The expected decline is
due to lost tendering competitions. Biosimilars distributed by Orion include Remsima
®
(infliximab), Ritemvia
®
(rituximab)
and Amgevita
®
(adalimumab). Starting with the Q1/2021 interim report, Orion will no longer separately report its biosimilars
business, and will instead report biosimilars as part of generic prescription drugs.
Animal Health
In the Nordic countries and some Eastern European markets Orion itself sells veterinary drugs, and in other markets
the Company operates through partners. In addition, in the Nordic countries Orion markets and sells veterinary drugs
manufactured by several other companies. Orion’s Animal Health unit has a strong market position in the Nordic countries, its
home markets.
Net sales of the Animal Health unit were up by 4% in 2020 and amounted to EUR 89 (86) million. Sales of animal sedative
products accounted for 39% (42%), or EUR 35 (36) million, of the unit’s total net sales. The animal sedative product family
comprises Orion’s animal sedatives Dexdomitor
®
(dexmedetomidine), Domitor
®
(medetomidine) and Domosedan
®
(detomidine), and antagonist Antisedan
®
(atipamezole), which reverses the eects of the sedatives.
In June 2020, The U.S. Food and Drug Administration (FDA) granted marketing authorisation to Clevor
®
, a product of
Orion’s Animal Health unit whose European launch also started in 2020. Clevor
®
, with ropinirole as the active pharmaceutical
ingredient, is an eye-drop formula designed to induce vomiting in dogs. The drug can be utilised to treat poisoning in
dogs, among other things. After the review period in January 2021, Orion announced an agreement with Vetoquinol on the
distribution of Orion’s Clevor
®
in the United States.
Orion ceased to distribute products of animal health company Zoetis in Denmark, Norway and Sweden on 31 December 2020,
as Zoetis is setting up its own sales and marketing activities in these countries. The distribution of Zoetis products in these
countries amounted to EUR 28 million in net sales for Orion in 2020. The impact of this product portfolio on Orion Group’s
overall operating profit was not material. The expiration of this agreement opens up opportunities to utilise Orion’s strong and
competent sales network in Scandinavia in collaboration with other animal health companies.
Fermion and contract manufacturing
Fermion manufactures active pharmaceutical ingredients for Orion and other pharmaceutical companies. Its product range
comprises nearly 30 pharmaceutical ingredients. Fermion produces the active pharmaceutical ingredients for Orion’s in-house
developed proprietary drugs. For other pharmaceutical companies Fermion manufactures generic pharmaceutical ingredients
and oers contract manufacturing services for development and manufacturing of new active pharmaceutical ingredients.
Net sales of Fermion and contract manufacturing excluding deliveries for Orion’s own use were up by 6% and totalled EUR 75
(71) million. In recent years order cycles in the trade in pharmaceutical raw materials have become ever shorter, and this has led
to clearly greater fluctuation in business volume than before within each year and between dierent years. Demand for Fermion
products has been good, and production capacity has been nearly fully utilised.
ORION CORPORATION | Financial Statement documents 2020
|
Research and development
The Group’s R&D expenses in 2020 totalled EUR 123 (119) million, up 3%. They accounted for 11% (11%) of the Group’s
net sales. R&D expenses also include expenses related to development of the current portfolio. The core therapy areas of
Orion’s pharmaceutical R&D are neurological disorders, oncology and respiratory diseases, for which Orion develops inhaled
pulmonary drugs.
Orion has focused on managing the safety and continued treatment of patients involved in clinical trials during the COVID-19
pandemic. However, the exceptional circumstances may cause delays in ongoing projects. For example, in 2020 patient
recruitment for the ODM-208 and ODM-209 projects experienced delays due to COVID-19.
Professor Outi Vaarala started as Senior Vice President for Orion’s Research and Development in June 2020. In the second
half of 2020, Orion refocused its research and development function and revised the function’s strategy. The changes and
reorganisation aim at strengthening the company’s R&D portfolio and speeding up the progress of research projects. The
changes aected the entire research and development organisation and involved a round of cooperation negotiations in Finland.
Key clinical development projects
Project Indication PHASE Registration
Darolutamide
1
ARASENS Prostate cancer (mHSPC) I II III*
Darolutamide
1
ARANOTE Prostate cancer (mHSPC) I II III*
ODM-208 (CYP11A1 inhibitor) Prostate cancer (CRPC) I II*
ODM-209 (CYP11A1 inhibitor)
Prostate cancer (CRPC),
breast cancer I*
Easyhaler
®
tiotropium COPD Bioequivalence study*
New dry-powder inhaler /
indacaterol-glycopyrronium COPD Bioequivalence study*
1 In collaboration with Bayer = Phase completed = Status changed
= Phase ongoing
Orion is working on a project to expand the Easyhaler
®
product portfolio for the treatment of asthma and COPD by developing
a tiotropium formulation for European markets. The bioequivalence study with the formulation is ongoing. Tiotropium is a long-
acting anticholinergic bronchodilator used in the treatment of chronic obstructive pulmonary disease.
To strengthen its position in the treatment of respiratory diseases, Orion is developing a new-generation dry-powder inhaler and
has launched the first product development project on the new device platform. Orion develops an indacaterol-glycopyrronium
combined formulation indicated for the treatment of COPD mainly for the European markets, and the bioequivalence study
related to the product development with the formulation is commencing. Glycopyrronium and indacaterol are long-acting
bronchodilators.
In addition, Orion has together with Propeller Health an ongoing development project in which the Easyhaler
®
device is
equipped with a sensor that monitors the use of the device.
Orion and Bayer have an ongoing Phase III clinical trial (ARASENS), which evaluates the ecacy and safety of darolutamide
in the treatment of patients with newly diagnosed metastatic hormone-sensitive prostate cancer (mHSPC) who are starting
hormone therapy. The treatment is darolutamide in combination with hormonal therapy (androgen deprivation therapy, ADT)
and docetaxel, a chemotherapy drug. The trial is estimated to be completed in 2021.
Orion is also initiating Phase III clinical ARANOTE trial with Bayer. The ARANOTE trial investigates the ecacy and safety of
darolutamide in combination with androgen deprivation therapy (ADT) versus placebo plus ADT in patients with metastatic
hormone-sensitive prostate cancer (mHSPC).
In 2020 Orion completed the Phase III clinical REFALS trial evaluating the ecacy and safety of oral levosimendan (ODM-109)
in the treatment of ALS (amyotrophic lateral sclerosis). The primary endpoint of the trial was to show a dierence between
levosimendan and placebo in slow vital capacity (SVC) in the supine position at 12 weeks. An important secondary endpoint
was to show a dierence between levosimendan and placebo in patient functionality measured by ALSFRS-R Scale (Revised
ORION CORPORATION | Financial Statement documents 2020
|
Amyotrophic Lateral Sclerosis Functional Rating Scale) in combination with survival at 48 weeks compared to the baseline. The
trial did not reach its pre-specified endpoints. No new safety concerns were identified for levosimendan in this study.
Orion has also suspended the REFALS-ES trial that provided an opportunity for all applicable patients completing the REFALS
study to receive oral levosimendan treatment for as long as clinically required, since the outcome of the REFALS study indicates
that levosimendan does not provide clinical benefit to the patients.
Orion has completed its Phase I clinical trial on the ODM-208 molecule, a novel selective hormone synthesis inhibitor (CYP11A1
inhibitor). Due to the COVID-19 pandemic, new patient recruitment to the expanded Phase I clinical trial had to be temporarily
suspended in the spring of 2020, leading to a slight delay in the project. Based on the results obtained, Orion has launched
a Phase II clinical trial on the ODM-208 molecule. In preclinical studies, the ODM-208 has shown antitumor activity. It has
potential ecacy also for those cancers that have become resistant to the standard hormonal treatments. Orion is the first
pharmaceutical company to develop a drug that works with this mechanism. The trial will investigate the safety and tolerability
of the drug candidate in prostate cancer patients.
Orion has an ongoing Phase I clinical trial on the ODM-209 molecule. This molecule is a selective hormone synthesis inhibitor
(CYP11A1 inhibitor) much like the ODM-208. As with ODM-208, a decision has been made to expand this trial as well to ensure
sucient research data for making informed decisions regarding subsequent development phases. The recruitment of new
patients to the expanded Phase I clinical trial had to be temporarily suspended in the spring of 2020 due to the COVID-19
pandemic, causing a slight delay in the project. In preclinical studies, the ODM-209 has shown antitumor activity. Like
ODM-208, it has potential ecacy also for those hormone-dependent cancers that have become resistant to the standard
hormonal treatments. The trial will investigate the safety and tolerability of the drug candidate in prostate cancer and breast
cancer patients.
Orion has carried out a Phase II clinical trial with a new targeted FGFR+VEGFR inhibitor (ODM-203) for the treatment of
cancers. The trial has investigated the ecacy of the drug candidate in slowing the growth of solid cancerous tumours in
patients with detected FGFR changes in cancerous tumours. Orion is in negotiations with a potential partner to take ODM-203
to the next development phase.
Orion has carried out a Phase I clinical trial with a BET protein inhibitor (ODM-207) which inhibits transcription of key
oncogenes such as Myc in many cancers. The results of the trial were published in the British Journal of Cancer on
29 September 2020. The project is no longer listed as a key clinical project.
Orion has two ongoing clinical pilot trials in the field of digital therapies. The VIRPI (Pilot Study of a Virtual Reality Software
for Chronic Pain) trial investigates the impacts of using virtual reality software in treating chronic low back pain. The
ODD-402 project in collaboration with Healthware Group investigates how the care of Parkinson’s patients could be developed,
personalised and improved using a digital tool that collects data from patients.
Orion also has several projects in the early research phase investigating neurological disorders, including rare neurological
diseases, cancer and neuropathic pain, among others.
Personnel
The average number of employees in the Orion Group in 2020 was 3,337 (3,251). At the end of 2020 the Group had a total of
3,311 (3,265) employees, of whom 2,615 (2,594) worked in Finland and 696 (671) outside Finland.
Salaries and other personnel expenses in 2020 totalled EUR 227 (217) million.
Changes in executive management
Christer Nordstedt was Senior Vice President for Research and Development until 1 April 2020.
Markku Huhta-Koivisto, SVP for Growth Projects, served on the Executive Management Board of the Orion Group until
1 May 2020 and retired in July 2020.
Professor Outi Vaarala started as Senior Vice President for Research and Development and member of the Executive
Management Board on 1 June 2020.
Significant legal proceedings
Companies belonging to the Orion Group are parties to various legal disputes, which are not, however, considered to be
significant legal proceedings for the Group.
ORION CORPORATION | Financial Statement documents 2020
|
Shares and shareholders
On 31 December 2020 Orion had a total of 141,134,278 (141,257,828) shares, of which 35,122,793 (36,335,463) were A shares and
106,011,485 (104,922,365) B shares. The Group’s share capital is EUR 92,238,541.46 (92,238,541.46). At the end of 2020 Orion
held 671,082 (765,399) B shares as treasury shares. On 31 December 2020, the aggregate number of votes conferred by the A and
B shares was 807,796,263 (830,866,226) excluding treasury shares.
At the end of December 2020, Orion had 72,003 (66,595) registered shareholders.
Voting rights conferred by shares
Each A share entitles its holder to twenty (20) votes at General Meetings of Shareholders and each B share one (1) vote.
However, a shareholder cannot vote more than 1/20 of the aggregate number of votes from the dierent share classes
represented at a General Meeting of Shareholders. The Company itself and Orion Pension Fund do not have the right to vote at
an Orion Corporation General Meeting of Shareholders.
Both share classes, A and B, confer equal rights to the Company’s assets and dividends.
Conversion of shares
The Articles of Association entitle shareholders to demand the conversion of their A shares to B shares within the limitation on
the maximum number of shares of a class. A total of 1,149,020 A shares were converted into B shares in 2020.
Cancellation of shares
Orion cancelled 63,650 Orion Corporation A shares and 59,900 Orion Corporation B shares on the Company’s joint account on
25 June 2020. According to the decision made by the Annual General Meeting of 6 May 2020 on the forfeiture of shares on the
joint account, these shares had been transferred to the Company.
Trading in Orion’s shares
Orion’s A shares and B shares are quoted on Nasdaq Helsinki in the Large Cap group under the Healthcare sector heading
under the trading codes ORNAV and ORNBV. Trading in both of the Company’s share classes commenced on 3 July 2006, and
information on trading in the Company’s shares has been available since that date.
On 31 December 2020, the market capitalisation of the Company’s shares, excluding treasury shares, was EUR 5,267 million.
In 2020 a total of 2,547,090 of Orion’s A shares and 103,556,863 B shares were traded on Nasdaq Helsinki. The total value of the
shares traded was EUR 4,316 million. During the year, 7.3% of the A shares and 97.7% of the B shares were traded. The average
turnover in Orion’s shares was 75.2%.
The price of Orion’s A shares decreased by 8.7% and the price of its B shares by 9.1% in 2020. On 31 December 2020 the closing
quotation was EUR 37.40 for the A shares and EUR 37.53 for the B shares. The highest quotation for Orion’s A shares was EUR 48.45
and the lowest quotation was EUR 29.60. The highest quotation for the B shares in 2020 was EUR 48.80 and the lowest quotation
was EUR 30.02.
Orion shares are also traded on various alternative trading platforms in addition to Nasdaq Helsinki. In 2020, 25% of all trading in
Orion’s A share and 59% of all trading in its B share took place outside Nasdaq Helsinki Oy (Source: Fidessa Fragmentation Index).
Authorisations of the Board of Directors
On 26 March 2019, the Annual General Meeting of Orion Corporation authorised the Board of Directors to decide on an
acquisition of no more than 350,000 Orion Corporation B shares. Based on this authorisation and a decision by the Board of
Directors on 25 April 2019, Orion acquired a total of 250,000 B shares between 2 and 13 May 2019. The authorisation to acquire
own shares was valid for 18 months from the decision of the Annual General Meeting and it expired during the review period.
The Board of Directors was authorised by Orion Corporation’s Annual General Meeting on 26 March 2019 to decide on a share
issue in which shares held by the Company can be conveyed. The Board of Directors is authorised to decide on a share issue in
which no more than 850,000 B shares held by the Company can be conveyed. The authorisation to issue shares is valid for five
years from the decision taken by the Annual General Meeting.
ORION CORPORATION | Financial Statement documents 2020
|
The terms and conditions of the authorisations are reported in more detail in a stock exchange release on 26 March 2019.
The Board of Directors is not authorised to increase the share capital or to issue bonds with warrants or convertible bonds or
stock options.
Share-based incentive plans
The Group has two currently operating share-based incentive plans for key persons of the Group: Orion Group’s Long-Term
Incentive Plan 2016, announced in a stock exchange release published on 2 February 2016 and Orion Group’s Long-Term
Incentive Plan 2019, announced in a stock exchange release published on 6 February 2019.
Share ownership
Orion’s shares are in the book-entry system maintained by Euroclear Finland, and Euroclear Finland maintains Orion’s ocial
shareholder register.
At the end of 2020, Orion had a total of 72,003 (66,595) registered shareholders, of whom 96% (96%) were private individuals. They
held 39% (40%) of the entire share stock and had 61% (60%) of the total votes. There were 57 (53) million nominee-registered and
foreign-owned shares, which was 40% (38%) of all shares, and they conferred entitlement to 10% (9%) of the total votes.
At the end of December 2020, Orion held 671,082 (765,399) B shares as treasury shares, which is 0.5% (0.5%) of the Company’s
total share stock and 0.08% (0.09%) of the total votes.
Flagging notifications
In 2020 Orion received no flagging notifications.
Management’s shareholdings
At the end of 2020, the members of the Board of Directors owned a total of 687,063 of the Company’s shares, of which 628,991
were A shares and 58,072 B shares. At the end of 2020, the President and CEO owned 72,891 of the Company’s shares, which
were all B shares. The members of the Group’s Executive Management Board (excluding the President and CEO) owned a total of
159,946 of the Company’s shares, which were all B shares. Thus, the Company’s executive management held 0.65% of all of the
Company’s shares and 1.59% of the total votes. These shareholdings include holdings by controlled corporations.
Orion’s dividend distribution policy
Orion’s dividend distribution takes into account the distributable funds and the capital expenditure and other financial
requirements in the medium and long term to achieve the financial objectives.
Proposal by the Board of Directors: dividend EUR 1.50 per share
The parent company’s distributable funds are EUR 477,075,050.26, or EUR 3.40 per share. This includes EUR 216,389,442.49,
or EUR1.54 per share, of profit for the financial year. These per share amounts are calculated excluding treasury shares held by
the Company. The Board of Directors proposes payment of a dividend of EUR 1.50 (1.50) per share from the parent company’s
distributable funds.
No dividend shall be paid on treasury shares held by the Company on the dividend distribution record date. On the day when the
profit distribution was proposed, the number of shares conferring entitlement to receive dividend totalled 140,463,196, on which
the total dividend payment would be EUR 210,694,794.00. The Group’s payout ratio for the financial year 2020 would be 95.9%
(105.2%). The dividend payment date would be 7 April 2021, and shareholders registered in the Company’s shareholder register
on 29 March 2021 would be entitled to the dividend payment.
The Board of Directors further proposes that EUR 350,000 (250,000) be donated to medical research and other purposes of
public interest in accordance with a separate decision by the Board and that EUR 266,030,256.26 remain in equity.
ORION CORPORATION | Financial Statement documents 2020
|
Corporate governance
The operations and activities of Orion Corporation and its subsidiaries (the Orion Group) are based on compliance with laws
and regulations issued thereunder, as well as with ethically acceptable operating practices. The tasks and duties of the dierent
governance bodies of the Group are determined in accordance with legislation and the corporate governance principles of the
Group.
In its governance, Orion Corporation follows the Finnish Corporate Governance Code 2020 for companies listed on Nasdaq
Helsinki Ltd. Orion Corporation departs from the Code’s recommendation No. 15 concerning the election of members to the
Nomination Committee, which can also include persons other than members of the Board. More detailed information on
compliance with the Corporate Governance Code and departure from it can be found on Orion’s website at www.orion.fi/en.
The management system of the Orion Group consists of the Group level functions and business divisions. In addition, the
system includes the organisation of the administration of the legal entities. For the steering and supervision of operations, the
Group has a control system for all levels.
The parent company of the Group is Orion Corporation, whose shareholders exercise their decision-making power at a General
Meeting of Shareholders in accordance with the Limited Liability Companies Act and the Articles of Association. The General
Meeting of Shareholders elects the Board of Directors and decides on amendments to the Articles of Association, issuance of
shares and repurchase of the Company’s own shares, among other things.
The Board of Directors of Orion Corporation handles and decides all the most important issues relating to the operations of the
whole Group or any units irrespective of whether the issues legally require a decision of the Board of Directors. The Board also
ensures that good corporate governance practices are followed in the Orion Group.
The Board of Directors of the parent company comprises at least five and at most eight members elected by a General Meeting
of Shareholders. The term of the members of the Board of Directors ends at the end of the Annual General Meeting of
Shareholders following the election. The General Meeting of Shareholders elects the Chairman of the Board of Directors, and
the Board of Directors elects the Vice Chairman of the Board of Directors, both for the same term as the other members.
The President and CEO of the parent company is elected by the Board of Directors. In accordance with the Limited Liability
Companies Act, the President and CEO is in charge of the day-to-day management of the Company in accordance with
instructions and orders issued by the Board of Directors. In addition, the President and CEO ensures that the bookkeeping of
the Company complies with the law and that its asset management is arranged in a reliable way.
If the service contract of the President and CEO is terminated on the Company’s initiative, the notice period is 6 months. If
the service contract is terminated on the initiative of the President and CEO, the notice period is 6 months, unless otherwise
agreed. The service ends at the end of the notice period. If the service contract is terminated either on the Company’s initiative
or on the initiative of the President and CEO because of a breach of contract by the Company, the President and CEO will be
compensated with a total sum corresponding to the monetary salary for 18 months, unless otherwise agreed between the
parties. No such separate compensation will be paid if the President and CEO resigns at his own request for reasons other than
a breach of contract by the Company.
Orion publishes its Corporate Governance Statement and remuneration report for 2020 separately from the Report by the
Board of Directors on the Company’s website at www.orion.fi/en.
Annual General Meeting 6 May 2020
Orion Corporation’s Annual General Meeting was held in Messukeskus Helsinki, Expo and Convention Centre, on 6 May 2020
with special arrangements due to the COVID-19 pandemic. In addition to matters in accordance with Section 10 of the Articles of
Association and Chapter 5, Section 3 of the Limited Liability Companies Act, the meeting dealt with the Company’s remuneration
policy and a proposal regarding the cancellation of Orion Corporation shares on the joint account.
Distribution of a dividend of EUR 1.50 per share was approved for 2019, in accordance with the Board’s proposal.
The decisions taken by the Annual General Meeting and the organising meeting of the Board of Directors were reported in stock
exchange releases on 6 May 2020.
Annual General Meeting 25 March 2021
The Annual General Meeting of the Shareholders of Orion Corporation will be held on Thursday 25 March 2021 commencing
at14:00.
ORION CORPORATION | Financial Statement documents 2020
|
Significant risks and uncertainties
Risk management is an integral part of the day-to-day management processes and the Corporate Governance of the Orion
Group, and it is closely related to the Company’s responsibility structures and principles of operational control. It is part of the
Company’s strategy process, operational planning and monitoring, and internal control system.
The purpose of risk management is to identify, assess and manage by cost-eective measures the risks that may threaten the
Company’s operations and the achievement of the set goals.
The risk management policy is based on Orion Group’s strategies and financial objectives. The aim is to identify, analyse and
evaluate the risks threatening the implementation of the Company’s strategy and achievement of the Company’s objectives.
Identified risks are responded to, so that the Company can be hedged against losses or opportunities related to potential risks
can be utilised.
Risks are divided into the following main categories:
• Strategic risks
• Operational risks
• Financial risks
• Compliance risks
Agreements referred to in Ministry of Finance decree 1020/2012, Section 8,
Subsection 1, Paragraph 11
Orion and its co-operation partner Bayer (Bayer Consumer Care AG) have licensing, commercialisation, manufacturing and
supply agreements in place concerning the Nubeqa
®
drug. These agreements include terms concerning change of control in
the company that entitle a party to terminate the agreement in certain circumstances, as referred to in the Ministry of Finance
Decree 1020/2012, Section 8, Subsection 1, Paragraph 11.
Non-financial reporting
Orion is a globally operating Finnish pharmaceutical company. Orion develops, manufactures and markets human and
veterinary pharmaceuticals and active pharmaceutical ingredients. The company operates in the global pharmaceuticals market
as part of a global supply chain. Orion procures final products and pharmaceutical ingredients from others, while others also
purchase them from Orion. All Group production facilities and pharmaceutical research centres are located in Finland, with
the exception of the Nottingham site. Orion had a total of 3,311 employees at the end of 2020, of them 2,615 in Finland and 696
outside Finland.
Orion is committed to continuously improving its performance in sustainability. In managing matters related to the
environment, occupational health and safety and human resources, and ensuring its operations are ethical, the Company strives
to achieve the high objectives it has set for the above. Based on a materiality assessment the Company has identified material
themes and indicators for its corporate responsibility. They are prioritised in the development of operations, and the Company
also regularly reports on the indicators. The key themes of Orion’s Sustainability Agenda are ensuring patient safety and reliable
supply of medications, in addition to which the Company has a responsibility for the environment, its employees, business
ethics and transparency. In 2020, the Company has advanced its Sustainability Agenda, continued integrating sustainability
into key processes and taken measures to increase awareness of sustainability, such as in-house training and investments in
sustainability communications. A separate, third-party verified Sustainability Report for 2020 will be published in April or May.
The non-financial reporting key figures have also been verified by a third party.
Environment, social matters and personnel
Policies
Orion’s environmental, health and safety (EHS) policy defines the Group-level commitment on how Orion manages
environmental matters and promotes the well-being of its workforce. The environmental management system, for managing
and developing environmental matters, is built upon the principles set out in the ISO 14001 environmental standard. In the
development of energy eciency Orion applies the principles of the ETJ+ energy management system framework and practices
consistent with the ISO 50001 standard. In management of occupational health and safety, Orion applies the ISO 45001
standard. The Company complies with valid legislation and with other regulations and requirements applicable to its operations.
ORION CORPORATION | Financial Statement documents 2020
|
Orion manufactures human and animal pharmaceuticals and active pharmaceutical ingredients in an environmentally
sustainable way, ensuring ecient use of materials and energy and appropriate wastewater management.
Orion’s human resources policy defines the principles adopted in the Orion Group concerning human resources management
and attending to human resources matters. Compliance with legislation, collective agreements, occupational health and
safety regulations, and other obligations shall be ensured in attending to human resources matters. In its operations, the
Company complies with the principles of non-discrimination, equality and fairness. The aim of the Group’s values, management
principles, ethical guidelines and policies is to ensure that the Company operates in a socially responsible manner concerning
its personnel and working conditions. The human resources policy defines what well-being at work means in Orion, and the
responsibilities for developing the workforce and promoting the working and functional capabilities of its employees.
Risks and risk management
Risks related to the environment, social matters and personnel are identified and managed as part of the Group’s overall
risk assessment and management process. Various organisations’ expertise and co-operation are utilised in assessing and
managing risks with the aim of continuously improving operations. The Group’s environmental, occupational health and
occupational safety guidelines define procedures and responsibilities for predicting, preventing and identifying deviations and
exceptional situations causing possible harm. In addition, the guidelines define how to identify, assess, deal with and manage
the risks involved in such situations. Management of EHS matters is monitored through annual internal audits. Operations
are continuously improved by identifying development objectives. The management of sustainability issues is also part of our
supplier and partner selection and management practices.
Orion’s most significant environmental impacts arise in the consumption of raw materials, energy and water; emissions
into air and water; and waste volumes arising from the operations. Annual development measures are defined for impacted
areas, and the progress of these measures is monitored, for example, by measuring emissions, monitoring the amount of
waste and compiling statistics on the amounts of resources used. All of the Group’s production plants are in Finland, and the
manufacturing plants have the valid environmental permits required for operations.
The Company’s objective is to improve safety at work, keeping in mind that accidents and incidents are among the key social
and human resources risks. The Company works continuously to prevent accidents and incidents and to further promote a
culture of safety, for example through comprehensive training, regular audits and by encouraging people to make observations
that promote safety.
Risks associated with the environment, social issues and personnel can typically lead to damage to the Company’s reputation.
Besides risk management, the Company communicates in a way that is reliable, transparent, comprehensive and timely to avoid
reputational risk. Systematic communication of both positive and negative matters also makes predictive action and learning
from incidents possible.
Indicators and results
Orion continuously measures and monitors matters related to the environment, social impacts and personnel, and reports on
them annually in its Sustainability Report. The key figures concerning operations relate to energy, greenhouse gas emissions
and the well-being of employees.
Total energy consumption, energy savings and greenhouse gas emissions
Orion systematically reduces its greenhouse gas emissions and engages in energy conservation through an Energy Eciency
Programme. Orion is committed to the joint Energy Eciency Programme for the members of the Confederation of
Finnish Industries (EK) for the years 2017–2025. In the programme period, the savings target for 2025 is 7.5% of the energy
consumption in 2016, which in Orion’s case translates to savings of slightly over 12,000 MWh. The intermediate target of
the programme for 2020 was 4% savings of the energy consumption in 2016. Orion did not quite meet this target as the
implementation of one of its energy eciency projects was postponed to 2021 due to the COVID-19 pandemic. In 2020, the
Company achieved energy savings by investing in LED lighting changes and by improving the energy eciency of air supply unit
at the Salo warehouse by replacing four fan motors. Of Energy Eciency Programme target for 2025, 53% is now achieved.
The Company’s aim is a 75% reduction in greenhouse gas emissions caused by its own operations by 2025 compared with 2016.
The greenhouse gas emission reductions are mainly achieved by Energy Eciency Programme measures, in addition to which
ORION CORPORATION | Financial Statement documents 2020
|
renewable energy sources are utilised. By the end of 2020 Orion has reduced its greenhouse gas emissions by 58% compared
with 2016.
Total energy consumption, energy savings and greenhouse gas emissions
Total absolute energy consumption (MWh)
, ,
Energy savings achieved by saving measures and eciency improvements (MWh)
,
Energy Eciency Programme targets achieved % %
Greenhouse gas emissions, scope 1 (tCO2e) , ,
Greenhouse gas emissions, scope 2 (tCO2e) , ,
1
The reported energy consumption, including electricity, heating and fuels, covers the Orion Group’s properties in Finland except for those that do
not contribute significantly to the total and have no production operations. The Group has no production plants outside Finland. Rented oces
abroad are excluded from this report.
2
Energy savings are estimates calculated in compliance with the guidelines of the Energy Authority.
Occupational well-being of personnel: Workplace injuries and sick leave of the personnel
By taking care of occupational health and well-being at work, Orion aims to ensure that Orion employees are fit for work
and healthy at work, and not exposed to occupational diseases. Achievement of this is shown by the occupational well-being
indicators
of lost time incident frequency and absence due to illness rate. In 2020, the Company made eorts to further
develop its safety culture by continuing Skills to care -managerial trainings. Most of the managers in Finland, around 170 of
them, were trained in the course of the year. The Company’s aim is to achieve zero lost time incident frequency by continuously
striving to prevent incidents and accidents and to improve the safety culture. The lost time incident frequency in 2020 evolved
in the right direction, but the 2020 target of LTIF 1 ≤ 3.0 was not achieved. The Company continues its sustained eorts to
achieve the zero incident goal.
During the COVID-19 pandemic, the occupational health and well-being of personnel faced new kinds of risks. Orion adapted
its operating guidelines to ensure a safe work environment for personnel in the exceptional circumstances during the pandemic.
The Company strove to minimise contacts that were not essential for business continuity, for example, through extensive
remote working arrangements and by minimising external visits to production sites. Additionally, hygiene guidelines were
updated to make them appropriate for the current situation.
Occupational well-being of personnel: Workplace injuries and sick leave of the personnel
Lost time incident frequency, LTIF
. .
Absence due to illness (hours of absence due to illness as percentage of total theoretical
working hours)
.% .%
1
The reporting of injuries and sick leave absences covers the Orion Group’s employees in Finland.
2
Indicates the workplace injury rate as injuries causing an absence of at least one day per million total actual working hours.
3
Hours of absence due to illness as percentage of total theoretical working hours of Company personnel.
Respect for human rights and prevention of corruption and bribery
Policies
Orion’s Code of Conduct defines the Group’s ethical practices and commitment to complying with laws, ethically approved
practices and respect for human rights. Orion expects all its personnel to comply with the Code of Conduct and practices
resulting from it. The Code of Conduct, updated in 2019, is available in 14 languages. Correspondingly, the ethical guidelines
of the Supplier Code of Conduct applying to Orion’s suppliers define the minimum requirements to which Orion expect
its partners to be committed. In addition to regulatory requirements, they include key principles for business operations
concerning sustainability and ethics.
Orion’s aim is to comply with human rights obligations in all its operations. The Company strives to ensure that there are no
violations in its own or its collaboration partners’ operations. Orion complies with and respects the United Nations Universal
Declaration of Human Rights and the principles in ILO conventions, and expects the same from its partners.
ORION CORPORATION | Financial Statement documents 2020
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The principles that are included in the Code of Conduct and the anti-corruption policy require that employees refuse to oer
or take a bribe, or any comparable benefit. Orion has zero tolerance of all forms of bribery and corruption in its business
operations.
Risks and risk management
Orion expects the suppliers in its supply chain to comply with Orion’s requirements and the Third Party Code of Conduct. In
selecting its suppliers, the Company has a critical approach as regards so-called risk countries where there is a risk of human
rights or labour rights violations and/or exploitation of child labour, and where national labour legislation is weak or at least
poorly monitored. Orion manages risks in its supply chain through its due diligence practices. Suppliers’ compliance with
regulations and requirements is monitored through regular or random assessment surveys and by undertaking risk-based
sustainability audits (involving matters such as the environment, occupational health and safety, working conditions and ethics)
of their facilities and operations. Any findings detected in the sustainability audits will be addressed and followed up. Persons
working for the Orion Group are expected to be familiar and comply with the Code of Conduct. Code of Conduct e-learning is
mandatory for all personnel.
Identifying and assessing risks relating to corruption is part of the comprehensive overall Group Risk Management. Among
other things, assessing bribery risks is a standard part of the preparation of all collaboration agreements. Training and
increasing awareness are the most critical actions to mitigate these risks. The Company regularly and systematically educates
and trains its personnel to internalise the purpose and importance of these principles. The training is mandatory for the
selected personnel.
For reporting any misconduct, Orion has a public whistleblowing channel that complements the usual communications
and reporting channels. The channel promotes good governance and ethical operations, and improves processes after any
reported incident. Orion encourages the personnel to bring to the attention of the Company’s management their experiences,
observations and suspicions about behaviour suggesting violation of human rights, as well as any other activity breaching the
ethical codes. Orion investigates and deals with cases quickly and impartially and, to the extent possible, confidentially. The
Company takes appropriate case-specific measures to end the conduct and activity violating the principles.
Indicators and results
In 2020, Orion put in time and eort to roll out the updated Code of Conduct and increase related awareness among personnel.
The Company rolled out a Code of Conduct e-learning that is mandatory to all employees and available in 14 languages. By the
end of the year, 3,410 employees had completed the training.
The Company strengthened the risk management of its supply chain in 2020 by expanding the supplier sustainability process
risk-based assessment questionnaires and sustainability audits to also apply to its indirect suppliers.
In 2020, Orion reviewed the Company’s human rights due diligence processes and started a Group-level human rights impact
assessment. Orion was not made aware of any human rights violations in its own operations through the whistleblowing
channel in 2020. The Company takes all such notifications seriously and handles them quickly and impartially.
Anti-corruption and bribery training is mandatory for certain personnel groups. We provide regular training, and the last
comprehensive targeted personnel training was arranged in 2017, when the total number of employees attending was 2,808.
The Company ensures that the training is completed by all new employees for whom it is mandatory.
Respect for human rights and prevention of corruption and bribery
Code of Conduct training, number of participants
, n/a
Anti-corruption and anti-bribery training, number of participants
1
Participants in training: all individuals who completed the training in the course of the year, including those in part-time, temporary and past
employment.
Product quality and safety
Policies
Patient safety is a basic guiding value in all Orion’s operations, for which the Company works to ensure throughout the product
life cycle. Ensuring the availability of medications by preventing supply disruptions and by communicating through appropriate
ORION CORPORATION | Financial Statement documents 2020
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channels constitutes part of ensuring patient safety. As a pharmaceutical company, Orion is legally obligated to monitor the
safety and quality of its products. The Company ensures that the drugs developed, manufactured and marketed are proven to
be safe for their users, eective for the indications for which they are approved, and consistent with the quality standards set for
them.
Orion ensures continuous monitoring of the safety of products, manages risks throughout the life cycle of a product and takes
timely and appropriate measures to ensure safe use of products and patient safety. Orion maintains the pharmacovigilance
system required by legislation and regulatory requirements, and compliance with legislation and regulatory requirements is
monitored by internal audits and audits conducted by authorities.
The quality of Orion’s products is ensured by rigorous management of the entire supply chain irrespective of the location of raw
materials and product manufacture. The Company inspects manufacturing sites regularly to assess the adequacy of the quality
system. Orion analyses each raw material and product batch to ensure that quality requirements set in advance for the product
are met, undertakes process controls and checks that activities have been appropriately documented. In compliance with EU
legislation and the Finnish Medicines Act, the defined Qualified Person in the quality assurance organisation decides when a
product batch is released for sale and is responsible for ensuring that the product meets all the conditions set in the marketing
authorisation by the authorities. The shelf life of products and any customer complaints are monitored throughout the entire
product life. Immediate action is taken if any deficiency in product quality is detected.
Risks and risk management
The Company ensures that the drugs developed, manufactured and marketed are proven to be safe for their users, eective for
the indications for which they are approved, and consistent with the quality standards set for them. The Company cooperates
with the authorities and reports and communicates on product quality and safety operations in a manner that is appropriate for
its stakeholders.
The launch of a new proprietary product in the market is preceded by extensive phased research that delineate the drug’s
pharmacological properties, such as its ecacy and safety. Clinical trials involving human subjects can only be conducted
with approval of the regulatory drug authorities. The pharmacology and safety of a drug candidate are extensively studied
using preclinical laboratory models and by monitoring tolerability and adverse eects throughout the clinical trials. For the
marketing authorisation application and the summary of products characteristics (SPC), each research phase and its results are
carefully documented for regulatory approval. Marketing authorisation issued by drug authorities is required to start sales and
marketing of a drug. In accordance with the statutory requirements, the drug’s adverse eects continue to be monitored even
after product has been launched. Orion ensures continuous safety monitoring of the safety of products, collects feedback from
customers and carries out benefit-risk assessments throughout the product life cycle.
Through the trials and pharmaceutical production methods described above, Orion strives to ensure that its products have
no such adverse eects that might lead to liability or withdrawal of an established product from the market. To cover for the
financial impact of product liability risk, the Orion Group’s products and operations are insured through operational and
product liability insurance.
The manufacturing of pharmaceutical products is subject to regular inspections by the authorities. Pharmaceutical products
must be safe, ecacious and compliant with all quality requirements. To comply with statutory requirements, in pharmaceutical
production close attention must be paid to various safety and quality risks.
Adequate quality of pharmaceuticals is ensured through systematic, comprehensive management of operations covering all
factors with direct and indirect impact on the quality of the drugs. The operations are managed by comprehensive instructions
and adequate control of materials and products before and after production.
Orion’s broad product range may cause risks to the delivery reliability and make it challenging to maintain the very high-
quality standard required in production. Authorities and key customers in dierent countries undertake regular and detailed
inspections of development and manufacturing of drugs at Orion’s production sites. Carrying out any remedial actions that may
be required may at least temporarily have eects that decrease delivery reliability and increase costs. Orion’s product range also
contains products manufactured by other pharmaceutical companies and products that Orion manufactures on its own but for
which other companies deliver active pharmaceutical or other ingredients. Possible problems related to the delivery reliability or
quality of the products of those manufacturers may cause a risk to Orion’s delivery reliability.
Risks and risk management relating to patient safety in the Orion Group are described in more detail in Orion’s Corporate
Governance Statement at 8.2.3.1.2. Research and development risks, at 8.2.3.2.2. Risks associated with pharmaceutical
production and at 8.2.3.2.4. Product liability risks. Risks associated with the COVID-19 pandemic and their management are
described in section 8.2.3.2.8 of the report.
ORION CORPORATION | Financial Statement documents 2020
|
Indicators and results
The Company carries out annual audits at the facilities and operations of suppliers and partners to ensure compliance with
Good Practices (GxP) specified for the pharmaceutical industry. Key figures for inspections and audits of Orion’s operations and
audits conducted by the Company include GxP inspections and audits.
Because of restrictions in place due to the COVID-19 pandemic, most of the audits on our suppliers and partners in 2020 were
conducted remotely. Audits of Orion’s operations were likewise conducted remotely.
In 2020 during the COVID-19 pandemic, Orion prioritised the production of products critical for the care of patients, in
particular of products used in support of the treatment of COVID-19 patients or those most vulnerable to the pandemic. The
availability of Orion’s products remained at a good level throughout 2020 despite the COVID-19 pandemic.
Product quality and safety
Number of GxP inspections/audits of Orion’s operations
1
, total
Inspections by authorities
Audits by collaboration partners
Non-compliances from authority inspections
Number of GxP audits undertaken by Orion
Rejections
Number of customer complaints about the Pharmaceuticals business (ppm
2
)
1
Inspections and audits of Good Practices (GxP).
2
ppm = parts per million packages sold.
Strategy
Orion’s Board of Directors has confirmed the Company’s strategy for 2021–2025.
Operating environment
Orion’s strategy implementation is supported by global healthcare megatrends that have material impact on the consumption
and price level of drugs as well as on pharmaceutical research. These megatrends include:
• ageing of population
• advances in science: personalised medicine, increased genetic and epigenetic data and developments in drug dosing and
diagnostics
• the increasing cost burden of healthcare, need for cost-eective treatments and drugs
• increased personal responsibility for own health
• sustainability
Mission
Orion’s mission is to build well-being. Orion builds well-being by bringing to markets drugs that give patients help and an
eective treatment for their illnesses. An eective drug also creates added value for the patient by improving the quality of life.
Focus areas
The crucial focus areas for implementing the strategy are:
• Quality and safety. High quality, product safety and complying with requirements of authorities are indispensable in the
pharmaceutical industry.
• Competitive product portfolio requires continuous renewal of the portfolio. Orion invests in product development,
manufacturing, acquisition and eective launching of products and management of their life cycle.
• Strong corporate culture of working together, the basis of which is valuable and important work for the customer. Orion
wants to be an excellent workplace and a responsible and attractive employer that continuously develops the well-being of its
personnel at work and their expertise.
ORION CORPORATION | Financial Statement documents 2020
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• Partnerships. Orion’s operations are based on utilising worldwide networks. Well-managed partnerships and collaborations
are a competitive advantage for the Company.
• Productivity and flexibility. Price pressure on drugs requires cost awareness and seamless cooperation between dierent parts
of the Company to achieve the targeted profitability level. Flexibility to react rapidly to changes in the operating environment is
also needed. Due to its size, Orion can be more agile than large companies and gain a competitive advantage from this
Strategic targets
The following strategic targets and their achievement are monitored in the Company with clearly defined indicators:
• Growing more rapidly than the growth in the market. The key objective in the coming years is to persistently strive for growing
faster than the markets. The objective is to increase net sales to EUR 1.5 billion by 2025. Growth enables the Company to
develop and take manageable risks. The target of growing faster than the markets should be achieved by the Company as a
whole and in the geographic and product areas in which Orion operates.
Orion’s solid balance sheet supports the Company’s chances to grow and achieve its financial goals. Orion is currently
working on numerous projects that target growth. The Company continues to invest in its own research and development
activities, for example by investing in new clinical trials, and actively evaluates in-licensing opportunities of products in
the late stage of development. At the same time, the solid balance sheet strengthens Orion’s equity position and ability to
continue achieving its dividend distribution objective.
The single most important growth project in the next few years is the commercialisation of the Nubeqa
®
prostate cancer drug
in partnership with Bayer. Other than this, growth in the near future will be sought especially from the Easyhaler
®
product
portfolio and possibly through product acquisitions.
• Providing new innovative and cost-eective drugs and treatments for patients. The product development pipeline has
balanced numbers of proprietary products and generic projects in dierent phases. In its research the Company aims for the
best input/output ratio in the field.
• Working together to benefit the customer. Orion’s personnel are committed and understand the needs of customers. The
working atmosphere, customer satisfaction and Company image are at a high level.
• Continuous improvement of performance in sustainability. Patient safety is the most vital aspect of Orion’s corporate
responsibility, and managing the environmental responsibilities is an important part of the Company’s sustainability. In
addition, Orion aims to continuously develop the personnel’s occupational safety and ability to cope with their work.
• Strong development of profitability
Financial objectives
Through the financial objectives Orion aims to develop the Group’s shareholder value and ensure financial stability and
profitable growth. Orion’s financial objectives are:
• Growing net sales more rapidly than growth of the pharmaceuticals market. Achievement of this objective requires
continuous investment in development of the product portfolio.
• Maintaining profitability at a good level. The aim is operating profit that exceeds 25% of net sales.
• Keeping the equity ratio at least 50%.
• Distributing an annual dividend that in the next few years will be at least EUR 1.30 per share, and increasing the dividend in
the long term.
In the short term what actually happens may deviate from the objectives.
ORION CORPORATION | Financial Statement documents 2020
|
Outlook for 2021
Orion estimates that net sales in 2021 will be slightly lower than in 2020 (net sales in 2020 were EUR 1,078 million).
Operating profit is estimated to be lower or clearly lower than in 2020 (operating profit in 2020 was EUR 280 million).
Basis for outlook in more detail
Collaboration agreements with other pharmaceutical companies are an important component of Orion’s business model.
Agreements often include payments recorded in net sales and operating profit that vary greatly from year to year. Forecasting
the timing and amount of these payments is dicult. In some cases they are conditional on terms such as research outcomes
which are not known until studies have been completed, the progress of research projects or the attainment of specified sales
levels. On the other hand, neither the outcome nor the schedule of contract negotiations is generally known before the final
signing of the agreement.
In 2020 Orion received a total of EUR 42 million in milestone payments, most of these in connection with the commercialisation
of Nubeqa
®
in Europe and Japan (EUR 28 million in total) and the transfer of distribution rights to Parkinson’s products to new
partners around the world. In 2019, Orion received a total of EUR 51 million in milestone payments, of which EUR 45 million in
connection with the commercialisation of Nubeqa
®
in the United States. The net sales and operating profit estimates for 2021
include less than EUR 5 million of milestone payments, a significantly lower figure than in the preceding years.
Orion estimates that its operating profit in 2020 was around EUR 40 million higher due to the impacts of the COVID-19
pandemic than the Company estimated at the beginning of 2020. More than half of this came from the increased international
sales of dexmedetomidine products and the rest from lower than anticipated expenses and increased sales of other products.
The outlook for 2021 does not contain similar impacts due to the pandemic.
The outlook is based on the assumption that Orion’s own production can continue to operate normally despite the COVID-19
pandemic. This requires, among other things, continued success in employee protection so that absence rates do not
significantly increase, that personal protective equipment, starting materials, intermediate products and materials are available
and that the logistics chains are suciently functional.
The outlook does not include any income or expenses associated with possible product or company acquisitions.
Net sales
Orion continues persistent actions to generate growth more rapidly than growth of the market in the long term. However,
in 2021 net sales will be negatively aected by significantly lower milestone payments than in the previous years, generic
competition and expiration of a major distribution agreement in the Animal Health unit. In addition, the COVID-19 pandemic
significantly increased the demand for some Orion products in 2020, but similar added sales beyond normal demand are not
anticipated for the same products in 2021, which negatively aects net sales in comparison with 2020.
Sales of Orion’s Dexdor
®
and Simdax
®
will decrease due to generic competition. In 2020, the sales of Dexdor
®
remained at
the previous year’s level due to the increased demand caused by the COVID-19 pandemic, but in 2021 its sales are expected to
decline.
Nubeqa
®
, the drug developed by Orion in collaboration with Bayer, received marketing authorisation in the United States in
2019 and in the EU and Japan in 2020. Nubeqa
®
has now been approved in several other countries as well, and marketing
authorisation application filings in other regions are underway or planned by Bayer. The outlook anticipates that the net sales of
Nubeqa
®
booked by Orion will clearly increase in 2021. Orion’s estimate is based on forecasts received from its partner Bayer.
The sales of the Easyhaler
®
product portfolio will continue to grow also in 2021 due to combined formulations (budesonide-
formoterol and salmeterol-fluticasone) launched in the past few years. However, growth is expected to be slower than in the
preceding years. The sales of Orion’s branded Parkinson’s drugs (Comtess
®
, Comtan
®
and Stalevo
®
) are estimated to remain at
the same level as in the previous year.
The Scandinavian distribution agreement between Orion’s Animal Health unit and the animal health company Zoetis, in eect
for several years, terminated at the end of 2020. As a consequence, the net sales of Orion’s Animal Health unit in 2021 will
decrease clearly from the previous year. Distribution of Zoetis products contributed around EUR 28 million to Orion’s net sales
in 2020.
Sales of generic products account for a significant proportion of Orion’s total sales. Decline in the price of generic drugs and
availability disruptions due to causes other than the COVID-19 pandemic have impacted Orion’s net sales negatively in the past
ORION CORPORATION | Financial Statement documents 2020
|
few years. However, the combined negative impact of price decline and product shortages is estimated to be clearly smaller
in 2021 than in the previous years. The demand for some generic drugs sold by Orion exceeded normal levels in 2020 due to
the COVID-19 pandemic, but the demand for these products is estimated to return to a more normal level this year, negatively
aecting net sales development in 2021 in comparison with 2020.
The outlook for 2021 includes under EUR 5 million in milestone payments, which is clearly less than what was booked in 2020
(EUR 42 million) or 2019 (EUR 51 million).
Operating profit
Orion anticipates clearly lower milestone payments in 2021 than in 2020, and the Company’s net product sales are expected to
decrease slightly from 2020. Operating profit will also be aected by declining sales of the proprietary products Dexdor
®
and
Simdax
®
due to generic competition. Growing sales of products like Easyhaler
®
product portfolio or Nubeqa
®
will not be able to
compensate for the resulting decline in operating profit. Orion therefore estimates that operating profit will be lower or clearly
lower than in 2020.
Orion anticipates that operating expenses will remain at a similar level with the previous year. Depreciations related to the
acquisition of sales and distribution rights for the Parkinson’s drugs were booked for the final time in 2020, and this will reduce
sales and marketing expenses by around EUR 12 million. At the same time, increasing investments are made in the sales and
marketing of products that are experiencing growth. Expenses that saw a decline due to the COVID-19 pandemic are anticipated
to return to a more normal level in the second half of 2021. R&D expenses are estimated to remain at a similar level as in the
previous year.
The Group’s total capital expenditure in 2021 is expected to be more than in 2020, when capital expenditure was EUR 49
million. However, the COVID-19 pandemic may slow down the implementation of planned investments. Orion has launched a
project to renew its enterprise resource planning (ERP) system, and renovations of the Company head oce in Espoo will also
commence in 2021. Most of the investments in these projects will materialise in 2022–2023.
Near-term risks and uncertainties
The outlook is based on the assumption that Orion’s own production can continue to operate normally despite the COVID-19
pandemic. The sales of Orion-manufactured products depend on the ability of production and the entire supply chain
to operate at the planned level. This involves numerous pandemic-related risks that may cause even material production
disruptions. Such risks include the infection of employees, poor availability of personal protective equipment, poorer availability
of starting materials and intermediate products as well as logistics chain disruptions.
In the course of 2020, as the agreement with Novartis expired, Orion transferred the distribution of the Parkinson’s drugs
Stalevo
®
and Comtan
®
to new partners in most non-European markets with the exception of Japan. Orion started to sell these
products on its own in Singapore, Malaysia and Thailand and continues to sell them in Europe. These changes, as well as
continued generic competition aecting sales negatively, have been factored into the outlook for the current year. However, they
still entail uncertainty that may materially aect the accuracy of the estimate made at this stage.
The basic patents for Dexdor
®
and Simdax
®
have expired and generic competition on these products has begun. In 2020, the
COVID-19 pandemic strongly increased the demand for intensive care sedatives, and therefore the sales of Dexdor
®
decreased
far less than anticipated. Its sales are estimated to notably decrease in 2021, but this estimate is subject to substantial
uncertainty due to the pandemic situation. Generic competition to Simdax
®
started in the first markets in 2020. In 2021, net
sales of Simdax
®
are estimated to decrease, but it is dicult to make exact estimates of sales at this point. Actual sales will be
aected, among other things, by the timing of the beginning of generic competition in the various markets and the intensity of
this competition.
Sales of individual products and also Orion’s sales in individual markets may vary, for example depending on the extent to
which the ever-tougher price and other competition prevailing in pharmaceutical markets in recent years will specifically focus
on Orion’s products. Product deliveries to key partners are based on timetables that are jointly agreed in advance. Nevertheless,
they can change, for example as a consequence of decisions concerning adjustments of stock levels. In addition, changes in
market prices and exchange rates aect the value of deliveries. The COVID-19 pandemic significantly increased the demand
for some Orion products in 2020, but similar added sales beyond normal demand are not anticipated for the same products
in 2021. There is uncertainty around this estimate, since the path of the pandemic and its impacts on the demand for Orion’s
products are dicult to assess with any precision. On the other hand, Orion is unaware of how much of the stockpiles acquired
by customers in 2020 are remaining and when customers might start using inventories that exceed normal stock levels.
ORION CORPORATION | Financial Statement documents 2020
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The structural exchange rate risk due to the US dollar has decreased in recent years because the share of Orion’s net sales
invoiced in dollars has fallen to below ten per cent and at the same time the value of purchases in dollars has increased. The
weight of the US dollar will increase due to increasing sales of Nubeqa
®
. The greatest exchange rate risk at present relates to
European currencies such as the Swedish and Norwegian crown and British pound. However, the overall eect of the risk due to
currencies of European countries will be abated by the fact that Orion has organisations of its own in most of these countries,
which means that in addition to sales income, there are also costs in these currencies. The exchange rate performance of the
Japanese yen is significant due to increased sales of Parkinson’s drugs in Japan. The exchange rate eect related to the Russian
rouble has increased due to the strong volatility of the currency. However, Russian sales are not a significant portion of Orion’s
entire net sales
Orion’s broad product range may cause risks to the delivery reliability and make it challenging to maintain the high quality
standard required in production. The impact of availability disruptions on the Company’s net sales has increased in the past
few years. The ongoing COVID-19 pandemic has clearly ramped up this risk, as restrictions on travel and other operations and
the increase in sick leaves in dierent parts of the world may cause delayed disruptions in pharmaceuticals’ global distribution
and logistics chains. In Orion’s estimate, the COVID-19 pandemic will not significantly aect the availability of Company
products in the first half of 2021, but there is a risk of poorer product availability in the second half of the year. Authorities and
key customers in dierent countries carry out regular and detailed inspections of drug development and manufacturing at
Orion’s production sites. Any remedial actions that may be required may at least temporarily have eects that decrease delivery
reliability and increase costs. Orion’s product range also contains products manufactured by other pharmaceutical companies
and products that Orion manufactures on its own but for which other companies deliver active pharmaceutical or other
ingredients. Possible problems related to the delivery reliability or quality of the products of those manufacturers may cause a
risk to Orion’s delivery reliability. The single-channel system used for pharmaceuticals distribution in Finland, in which Orion’s
products have been delivered to customers through only one wholesaler, may also cause risks to delivery reliability.
Research projects always entail uncertainty factors that may either increase or decrease estimated costs. The projects may
progress more slowly or faster than assumed, or they may be discontinued. Nonetheless, changes that may occur in ongoing
clinical studies, for example due to the COVID-19 pandemic, are reflected in costs relatively slowly and are not expected to
have a material impact on earnings in the current year. Owing to the nature of the research process, the timetables and costs
of new studies that are being started are known well in advance. They therefore typically do not lead to unexpected changes in
the estimated cost structure. Orion often undertakes the last, in other words Phase III, clinical trials in collaboration with other
pharmaceutical companies. Commencement of these collaboration relationships and their structure also materially aect the
schedule and cost level of research projects.
Collaboration arrangements are an important component of Orion’s business model. Possible collaboration and licensing
agreements related to these arrangements also often include payments to be recorded in net sales that may materially aect
Orion’s financial results. In 2014–2020 the annual payments varied from EUR 5 million to EUR 51 million. The payments may be
subject to conditions relating to the progress of research projects or sales or to new contracts to be signed, and whether these
conditions or contracts materialise and what their timing is will always entail uncertainties.
ORION CORPORATION | Financial Statement documents 2020
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Group’s key figures
Key figures relating to financial performance
Net sales, EUR million¹ ,. ,. . ,. ,.
EBITDA, EUR million¹ . . . . .
% of net sales¹ .% .% .% .% .%
Operating profit, EUR million¹ . . . . .
% of net sales¹ .% .% .% .% .%
Profit for the period, EUR million¹ . . . . .
% of net sales¹ .% .% .% .% .%
R&D expenses, EUR million¹ . . . . .
% of net sales¹ .% .% .% .% .%
Capital expenditure, EUR million¹ . . . . .
% of net sales¹ .% .% .% .% .%
Depreciation, amortisation and impairment,
EUR million¹ . . . . .
Personnel expenses, EUR million¹ . . . . .
Equity total, EUR million . . . . .
Interest-bearing net liabilities, EUR million -. -. -. -. -.
Assets total, EUR million ,. ,. ,. ,. ,.
Cash flow from operating activities, EUR million . . . . .
Equity ratio, % .% .% .% .% .%
Gearing, % -.% -.% -.% -.% -.%
ROCE (before taxes), % .% .% .% .% .%
ROE (after taxes), % .% .% .% .% .%
Personnel at the end of the period¹ , , , , ,
Average personnel during the period¹ , , , , ,
Contuining operations since 2017
ORION CORPORATION | Financial Statement documents 2020 |
Perfomance per share
Basic earnings per share, EUR . . . . .
Diluted earnings per share, EUR . . . . .
Cash flow per share before financial items, EUR . . . . .
Equity per share, EUR . . . . .
Dividend per share, EUR . . . . .
Total dividend, EUR million . . . . .
Payout ratio, % .% .% .% .% .%
A share
Number of shares at the end of the period ,, ,, ,, ,, ,,
% of total share stock .% .% .% .% .%
Eective dividend yield, % .% .% .% .% .%
Price/earnings ratio (P/E) . . . . .
Number of votes excluding treasury shares ,, ,, ,, ,, ,,
% of total votes .% .% .% .% .%
Total number of shareholders , , , , ,
Closing quotation at the end of previous financial year,
EUR . . . . .
Lowest quotation of review period, EUR . . . . .
Average quotation of review period, EUR . . . . .
Highest quotation of review period, EUR . . . . .
Closing quotation at the end of review period, EUR . . . . .
Trading volume, EUR million . . . . .
Shares traded ,, ,, ,, ,, ,,
% of the total number of shares .% .% .% .% .%
The Board of Directors’ proposal for 2020 to the AGM.
The data in table includes Continuing and Discontinued operations.
ORION CORPORATION | Financial Statement documents 2020 |
B share
Number of shares at the end of the period, including
treasury shares ,, ,, ,, ,, ,,
% of total share stock .% .% .% .% .%
Treasury shares , , , , ,
Number of shares at the end of the period,
excluding treasury shares , , ,, ,, ,, ,,
Eective dividend yield, % .% .% .% .% .%
Price/earnings ratio (P/E) . . . . .
Number of votes excluding treasury shares ,, ,, ,, ,, ,,
% of total votes .% .% .% .% .%
Total number of shareholders , , , , ,
Closing quotation at the end of previous financial year,
EUR . . . . .
Lowest quotation of review period, EUR . . . . .
Average quotation of review period, EUR . . . . .
Highest quotation of review period, EUR . . . . .
Closing quotation at the end of review period, EUR . . . . .
Trading volume, EUR million ,. ,. ,. ,. ,.
Shares traded ,, ,, ,, ,, ,,
% of the total number of shares .% .% .% .% .%
A and B share total
Number of shares at the end of the period ,, ,, ,, ,, ,,
Average number of shares during the period excluding
treasury shares ,, ,, ,, ,, ,,
Total number of votes ,, ,, ,, ,, ,,
Total number of shareholders , , , , ,
Trading volume, EUR million ,. ,. ,. ,. ,.
Shares traded ,, ,, ,, ,, ,,
Total shares traded, % of total shares .% .% .% .% .%
Market capitalisation at the end of the period excluding
treasury shares, EUR million ,. ,. ,. ,. ,.
¹ The Board of Directors’ proposal for 2020 to the AGM.
The data in table includes Continuing and Discontinued operations.
ORION CORPORATION | Financial Statement documents 2020
|
Largest shareholders by number of shares
31 Dec 2020 A shares B shares Total shares
% of total
shares Total votes
% of total
votes
1. Ilmarinen Mutual Pension Insurance Company ,, ,, ,, .% ,, .%
2. Erkki Etola and companies ,, , ,, .% ,, .%
Etola Erkki , ,, .%
Etola Oy ,, ,, .%
Tiiviste-Group Oy , , .%
3. Land and Water Technology Foundation and companies ,, ,, .% ,, .%
Land and Water Technology Foundation ,, ,, .%
Tukinvest Oy ,, ,, .%
4. Elo Mutual Pension Insurance Company , ,, ,, .% ,, .%
5. The Social Security Institution of Finland, Kela ,, ,, .% ,, .%
6. Ylppö Jukka ,, , ,, .% ,, .%
7. Varma Mutual Pension Insurance Company ,, ,, .% ,, .%
8. Into Ylppö and commanding votes , , ,, .% ,, .%
Ylppö Into , , ,, .%
Ylppö Eeva , , ,, .%
Ylppö Aurora , , ,, .%
9. The State Pension Fund , , .% , .%
10. Aho Group Oy and commanding votes , , , .% ,, .%
Aava Terveyspalvelut Oy , ,, .%
Juhani Aho Foundation for Medical Research , ,, .%
Aho Kari Jussi , ,, .%
Lappalainen Annakaija , , ,, .%
Aho Ville Jussi , ,, .%
Porkkala Miia , , .%
Aho Antti Jussi , , .%
10 largest total ,, ,, ,, .% ,, .%
Total ,, ,, ,, .% , , .%
The list includes the direct holdings and votes of the Company’s major shareholders, corresponding holdings of organisations or foundations
controlled by a shareholder in so far as they are known to the issuer, holdings of a pension foundation or pension fund of a shareholder or an
organisation controlled by a shareholder, and other holdings the use of which the shareholder, alone or together with a third party, may decide on
under a contract or otherwise.
ORION CORPORATION | Financial Statement documents 2020 |
Largest shareholders by number of votes
31 Dec 2020 A shares B shares Total shares
% of total
shares Total votes
% of total
votes
1. Erkki Etola and companies ,, , ,, .% ,, .%
Etola Erkki , ,, .%
Etola Oy ,, ,, .%
Tiiviste-Group Oy , , .%
2. Land and Water Technology Foundation and companies ,, ,, .% ,, .%
Land and Water Technology Foundation ,, ,, .%
Tukinvest Oy ,, ,, .%
3. Ilmarinen Mutual Pension Insurance Company ,, ,, ,, .% ,, .%
4. Ylppö Jukka ,, , ,, .% ,, .%
5. Into Ylppö and commanding votes , , ,, .% ,, .%
Ylppö Into , , ,, .%
Ylppö Eeva , , ,, .%
Ylppö Aurora , , ,, .%
6. Aho Group Oy and commanding votes , , , .% ,, .%
Aava Terveyspalvelut Oy , ,, .%
Juhani Aho Foundation for Medical Research , ,, .%
Aho Kari Jussi , ,, .%
Lappalainen Annakaija , , ,, .%
Aho Ville Jussi , ,, .%
Porkkala Miia , , .%
Aho Antti Jussi , , .%
7. Saastamoinen Foundation , , .% ,, .%
8. Orion Pension Fund² , , , .% ,, .%
9. Eija Ronkainen and companies , , , .% ,, .%
EVK-Capital Oy , , ,, .%
Eija Ronkainen , , .%
10. Oy Ingman Finance Ab , , .% ,, . %
10 largest total ,, ,, ,, .% ,, .%
Total ,, ,, ,, .% , , .%
The list includes the direct holdings and votes of the Company’s major shareholders, corresponding holdings of organisations or foundations
controlled by a shareholder in so far as they are known to the issuer, holdings of a pension foundation or pension fund of a shareholder or an
organisation controlled by a shareholder, and other holdings the use of which the shareholder, alone or together with a third party, may decide on
under a contract or otherwise.
Not entitled to vote at Orion’s General Meetings of shareholders.
ORION CORPORATION | Financial Statement documents 2020 |
Ownership base by type of shareholder
31 Dec 2020 Owners % A shares % B shares % Total shares % Total votes %
Non-financial
companies ,
. ,, . ,, . ,, . ,, .
Financial and
insurance
institutions
. , . ,, . ,, . ,, .
Public sector
entities
. ,, . ,, . ,, . ,, .
Households ,
. ,, . ,, . ,, . ,, .
Non-profit
organisations
. ,, . ,, . ,, . ,, .
Nominee-registered
and foreign
shareholders
. ,, . ,, . ,, . ,, .
Number of treasury
shares
, . , . , .
Total
, . ,, . ,, . ,, . ,, .
Ownership base by number of shares
31 Dec 2020 Owners % A shares % B shares % Total shares % Total votes %
1–100
, . , . ,, . ,, . ,, .
101–1,000
, . ,, . ,, . ,, . ,, .
1,001–10,000
, . ,, . ,, . ,, . ,, .
10,001–100,000
. ,, . ,, . ,, . ,, .
100,001–1,000,000
. ,, . ,, . ,, . ,, .
1,000,001–
. ,, . ,, . ,, . ,, .
Total
, . ,, . ,, . ,, . ,, .
of which nominee-
registered
. , , . ,, . ,, . ,, .
Number of treasury
shares
, . , . , .
Total
, . ,, . ,, . ,, . ,, .
ORION CORPORATION | Financial Statement documents 2020 |
Shareholdings in Orion Corporation of the Members elected to
the Board of Directors on 6 May 2020
31 Dec 2020 A shares
Change
from 1 Jan B shares
Change
from 1 Jan A and B total
% of total
shares
% of total
votes
Mikael Silvennoinen, Chairman , , . .
Timo Maasilta, Vice chairman , , , . .
Kari Jussi Aho , , . .
Pia Kalsta . .
Ari Lehtoranta , , . .
Hilpi Rautelin , , , . .
Eija Ronkainen , , , . .
Board of Directors total , , , , . .
The figures include the shares held by organisations and foundations controlled by the person.
Shareholdings in Orion Corporation of the Members of
the Executive Management Board
31 Dec 2020 A shares
Change
from 1 Jan B shares
Change
from 1 Jan A and B total
% of total
shares
% of total
votes
Timo Lappalainen, President and CEO , , , . .
Satu Ahomäki , , , . .
Olli Huotari , , , . .
Liisa Hurme , -, , . .
Jari Karlson , - , . .
Virve Laitinen , -, , . .
Outi Vaarala . .
Executive Management Board total , , , . .
The figures include the shares held by organisations and foundations controlled by the person.
ORION CORPORATION | Financial Statement documents 2020 |
31 Dec 2020 A share B share Total
Trading code on Nasdaq Helsinki ORNAV ORNBV
Listing day Jul Jul
ISIN code FI FI
ICB code
Reuters code ORNAV.HE ORNBV.HE
Bloomberg code ORNAV.FH ORNBV.FH
Share capital, EUR million . . .
Counter book value per share, EUR . .
Minimum number of shares
Maximum number of A and B shares,
and maximum number of all shares ,, ,,, ,,,
Votes per share
A shares and B shares confer equal rights to the Company’s assets and dividends.
Basic information on Orion’s shares
ORION CORPORATION | Financial Statement documents 2020 |
EBITDA = Operating profit + Depreciation + Amortisation + Impairment losses
Interest-bearing net liabilities =
Interest-bearing liabilities - Cash and cash equivalents - Money market
investments
Return on capital employed
(ROCE), %
=
Profit before taxes + interest and other finance expenses
x 100
Total assets - Non-interest-bearing liabilities (average during the period)
Return on equity (ROE), % =
Profit for the period
x 100
Total equity (average during the period)
Equity ratio, % =
Equity
x 100
Total assets - Advances received
Gearing, % =
Interest-bearing liabilities - Cash and cash equivalents - Money market investments
x 100
Equity
Earnings per share, EUR =
Profit available for the owners of the parent company
Average number of shares during the period, excluding treasury shares
Cash flow per share before
financial items, EUR
=
Cash flow from operating activities + Cash flow from investing activities
Average number of shares, excluding treasury shares
Equity per share, EUR =
Equity attributable to owners of the parent company
Number of shares at the end of the period, excluding treasury shares
Dividend per share, EUR =
Dividend to be distributed for the period
Number of shares at the end of the period, excluding treasury shares
Payout ratio, % =
Dividend per share
x 100
Earnings per share
Eective dividend yield, % =
Dividend per share
x 100
Closing quotation of the period
Price/earnings ratio (P/E) =
Closing quotation of the period
Earnings per share
Average share price, EUR =
Total EUR value of shares traded
Average number of traded shares during the period
Market capitalisation, EUR million = Number of shares at the end of the period x Closing quotation of the period
Calculation of the key figures
ORION CORPORATION | Financial Statement documents 2020 |
Consolidated financial statements (IFRS)
Consolidated income statement
EUR million Note
Net sales . 1,078.1 1,051.0
Cost of goods sold -427.0 -417.6
Gross profit 651.0 633.4
Other operating income and expenses . 5.4 2.2
Selling and marketing expenses ., . -204.3 -215.7
R&D expenses ., . -123.2 -119.3
Administrative expenses ., . -48.9 -47.8
Operating profit 280.1 252.8
Finance income . 0.2 0.7
Finance expenses . -2.0 -2.6
Profit before income taxes 278.3 250.8
Income tax expense . -58.4 -50.5
Profit for the period 219.9 200.4
Consolidated statement of comprehensive income
OTHER COMPREHENSIVE INCOME INCLUDING TAX EFFECTS
EUR million Note
Translation dierences -1.4 0.9
Items that may be reclassified subsequently to profit and loss -1.4 0.9
Remeasurement of pension plans . -59.4 19.9
Items that will not be reclassified to profit and loss -59.4 19.9
Other comprehensive income net of tax -60.8 20.9
Comprehensive income for the period including tax eects 159.1 221.2
PROFIT ATTRIBUTABLE TO
Owners of the parent company 219.9 200.4
COMPREHENSIVE INCOME ATTRIBUTABLE TO
Owners of the parent company 159.1 221.2
Basic earnings per share, EUR¹ . 1.56 1.43
Diluted earnings per share, EUR¹ . 1.56 1.43
Depreciation, amortisation and impairment . -56.5 -56.1
Personnel expenses -227.0 -217.1
Earnings per share has been calculated from the profit attributable to the owners of the parent company.
The notes are an integral part of the consolidated financial statements.
ORION CORPORATION | Financial Statement documents 2020
|
Consolidated statement of financial position
ASSETS
EUR million, 31 Dec Note
Property, plant and equipment . 319.6 320.9
Goodwill . 13.5 13.5
Intangible rights . 26.8 34.8
Other intangible assets . 2.7 2.8
Investments in associates . 0.1 0.1
Other investments . 0.2 0.2
Pension asset . 55.8
Deferred tax assets . 8.4 6.8
Other non-current receivables . 0.5 0.8
Non-current assets total 371.8 435.6
Inventories . 258.1 230.3
Trade receivables . 157.4 196.5
Other receivables . 33.9 24.3
Money market investments . 35.0
Cash and cash equivalents . 294.4 114.0
Current assets total 743.7 600.1
Assets total 1,115.6 1,035.7
EQUITY AND LIABILITIES
EUR million, 31 Dec Note
Share capital 92.2 92.2
Other reserves 3.4 3.0
Retained earnings 635.7 684.2
Equity attributable to owners of the parent company 731.3 779.4
Equity total . 731.3 779.4
Deferred tax liabilities . 29.3 41.2
Pension liability . 19.9 3.4
Provisions . 0.4 0.4
Interest-bearing non-current liabilities . 105.5 6.7
Other non-current liabilities . 15.0 17.1
Non-current liabilities total 170.1 68.8
Trade payables . 86.7 79.0
Current tax liabilities . 2.5 2.6
Other current liabilities . 121.8 102.6
Interest-bearing current liabilities . 3.1 3.3
Current liabilities total 214.1 187.5
Liabilities total 384.2 256.3
Equity and liabilities total 1,115.6 1,035.7
The notes are an integral part of the consolidated financial statements.
ORION CORPORATION | Financial Statement documents 2020
|
Consolidated statement of changes in equity
Equity attributable to owners of the parent company
EUR million Note Share capital Other reserves
Remeasure-
ment of
pension plans Own shares
Translation
dierences
Retained
earnings Equity total
Equity at 1 January 2019 92.2 2.9 10.5 -18.0 -7.7 693.2 773.1
Impact of adoption of the IFRS 16 standard -0.2 -0.2
Adjusted equity at 1 January 2019 92.2 2.9 10.5 -18.0 -7.7 693.0 772.9
Profit for the period 200.4 200.4
Other comprehensive income
Translation dierences 0.7 0.2 0.9
Remeasurement of pension plans 19.9 19.9
Transactions with owners
Dividend . -211.4 -211.4
Repurchase of own shares -7.4 -7.4
Share-based incentive plan . 0.9 1.6 2.5
Other adjustments 0.0 1.5 1.5
Equity at 31 December 2019 92.2 3.0 30.5 -24.5 -7.0 685.2 779.4
Equity at 1 January 2020 92.2 3.0 30.5 -24.5 -7.0 685.2 779.4
Profit for the period 219.9 219.9
Other comprehensive income
Translation dierences -0.9 -0.5 -1.4
Remeasurement of pension plans -59.4 -59.4
Transactions with owners
Dividend . -210.4 -210.4
Share-based incentive plan . 2.9 0.4 3.3
Other adjustments 0.4 -0.6 -0.1
Equity at 31 December 2020 92.2 3.4 -28.9 -21.5 -7.9 694.1 731.3
The notes are an integral part of the consolidated financial statements.
ORION CORPORATION | Financial Statement documents 2020
|
EUR million Note
Profit before taxes 278.3 250.8
Financial income and expenses . 1.8 2.0
Depreciation, amortisation and impairment . 56.5 56.1
Gains/losses on sales or disposals of property, plant
and equipment and intangible assets -0.0 -0.1
Unrealised foreign exchange gains and losses 0.7 -0.4
Change in pension asset and pension obligation . -2.0 0.5
Change in provisions . 0.0 0.0
Other adjustments 1.3 0.6
Total adjustments to profit before taxes 58.2 58.7
Change in trade and other receivables 33.0 -0.2
Change in inventories -29.0 -8.0
Change in trade and other payables 23.1 22.7
Total change in working capital 27.1 14.5
Interest and other financial expenses paid -5.6 -7.0
Interest and other financial income received 3.8 3.1
Dividends received 0.0 0.0
Income taxes paid . -62.7 -49.3
Total net cash flow from operating activities 299.1 270.8
Investments in property, plant and equipment . -34.0 -28.7
Investments in intangible assets . -6.7 -7.5
Sales of property, plant and equipment, other investments
and associated companies ., ., . 1.0 0.8
Sale of subsidiary 1.4
Total net cash flow from investing activities -39.7 -34.0
Current loans raised . 1.6 1.4
Repayments of current loans ., . -5.6 -154.2
Non-current loans raised . 100.0
Repurchase of own shares . -7.4
Dividends paid and other distribution of profits . -211.1 -211.2
Total net cash flow from financing activities -115.1 -371.4
Net change in cash and cash equivalents 144.3 -134.5
Cash and cash equivalents at 1 Jan . 149.0 283.7
Foreign exchange dierences 1.1 -0.1
Cash and cash equivalents at 31 Dec . 294.4 149.0
Consolidated statement of cash flows
ORION CORPORATION | Financial Statement documents 2020 |
RECONCILIATION OF CASH AND CASH EQUIVALENTS IN STATEMENT OF FINANCIAL POSITION
EUR million
Cash and cash equivalents in statement of financial position
at the end of the period 294.4 114.0
Money market investments at the end of the period 35.0
Cash and cash equivalents in the statement of cash flows 294.4 149.0
The notes are an integral part of the consolidated financial statements.
ORION CORPORATION | Financial Statement documents 2020
|
Notes to the consolidated financial statements
1 Basis of presentation of the consolidated financial statements
General information
Orion Corporation is a Finnish public limited company domiciled in Espoo, Finland and registered at Orionintie 1, FI-02200
Espoo. Orion Corporation and its subsidiaries develop and manufacture human and veterinary pharmaceuticals and active
pharmaceutical ingredients that are marketed globally.
The Orion Group’s first financial year was 1 July–31 December 2006, because the Group came into being on 1 July
2006 following the demerger of its predecessor Orion Group into the pharmaceuticals and diagnostics business and a
pharmaceutical wholesale and distribution business. Orion Corporation is listed on Nasdaq Helsinki. Trading in Orion’s shares
commenced on 3 July 2006.
At its meeting on 9 February 2021, the Company’s Board of Directors approved the publication of these consolidated financial
statements. Under the Finnish Limited Liability Companies Act, shareholders have the option to accept or reject the financial
statements at the Annual General Meeting, which is held after the publication of the financial statements. In addition, the AGM
may amend the financial statements. The financial statement documents can be viewed at the website www.orion.fi/en, and
copies of the financial statements are available from Orion Corporation’s headquarters, Orionintie 1, FI-02200 Espoo.
Accounting policies
The Consolidated Financial Statements of the Orion Group have been prepared in accordance with International Financial
Reporting Standards (IFRS) applying the IAS and IFRS standards as well as IFRIC interpretations eective at 31 December 2020.
International Financial Reporting Standards refer to the standards and their interpretations approved for application in the EU in
accordance with the procedure stipulated in the EU’s regulation (EC) No. 1606/2002 and embodied in the Finnish Accounting Act
and provisions issued under it. The notes to the consolidated financial statements have also been prepared in accordance with
the requirements in Finnish accounting legislation and Community law that complement the IFRS regulations.
The information in the consolidated financial statements is based on historical costs, except for financial assets separately
recorded at fair value through profit or loss or recorded through other comprehensive income.
Monetary figures in the financial statements are expressed in millions of euros unless otherwise stated.
Consolidation principles
The consolidated financial statements cover the parent company Orion Corporation and all companies directly or indirectly
owned by it and controlled by the Group, as well as associates, joint ventures and joint operations.
Subsidiaries
Subsidiaries are those companies, which are controlled by Orion Corporation. A company is controlled by the Group if the
Group is exposed, or has rights, to variable returns from its involvement with the entity and has the ability to aect those
returns through its power over the entity.
Internal shareholdings have been eliminated using the acquisition method of accounting. In the consolidated financial
statements, acquired subsidiaries are fully consolidated from the date the Group acquires control, and divested subsidiaries
are deconsolidated from the date control ceases. All intra-Group transactions, receivables and liabilities, distribution of profit
and unrealised internal gains are eliminated in the compilation of the consolidated financial statements. The consolidated profit
for the financial year is divided into portions attributable to owners of the parent company and non-controlling interests. The
portion of the equity attributable to the non-controlling interests is included in Group equity and specified in the statement of
changes in equity.
Associates, joint ventures and joint operations
Associates are all companies over which the Group has significant influence but not control. Significant influence generally
means a shareholding of 20% to 50% of the voting rights.
ORION CORPORATION | Financial Statement documents 2020
|
Joint ventures are joint arrangements in which the parent companies or subsidiaries have joint control of an entity that is not
part of the Group and in which a parent company or subsidiary has rights to the net assets of the arrangement. Associates and
joint ventures are incorporated into the consolidated financial statements using the equity method of accounting.
Joint operations are joint arrangements that have been implemented without a separate investment instrument or in which the
legal form of the arrangement is such that the parties have direct rights to certain assets or obligations for certain liabilities.
Joint operations are incorporated into the consolidated financial statements in accordance with the proportional interest in the
joint operation.
If the Group’s share of the losses of an associate or joint venture exceeds the carrying amount, it is not consolidated unless the
Group has made a commitment to fulfil the liabilities of the associate or joint venture.
Foreign currency translation
Functional and presentation currency
Items included in the financial statements of each of the Group’s companies are measured using the currency of the primary
economic environment in which the company operates (the functional currency). The consolidated financial statements are
presented in euros, which is the functional currency of the parent company of the Group and the Group’s presentation currency
for the consolidated financial statements.
Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the
transactions. Monetary items in foreign currencies at the end of the reporting period in the statement of financial position are
booked using the exchange rates at the end of the reporting period. Foreign exchange gains and losses from translation of the
items are recognised in the statement of comprehensive income. Exchange rate gains and losses related to business operations
are included in the corresponding items above the operating profit line. Exchange rate dierences resulting from hedges made
for hedging purposes but for which hedge accounting under IFRS 9 does not apply are included as net amounts within other
operating income or expenses. Exchange rate gains and losses related to financial liabilities and receivables in foreign currencies
and foreign exchange derivatives related to them are included in financial income and expenses. Non-monetary items in foreign
currencies in the statement of financial position which are not measured at fair value are measured using the exchange rate at
the date of the transaction.
Group companies
For all Group companies with a functional currency dierent from the Group’s presentation currency, the income statements
are translated into euros using average exchange rates for the reporting period, and the statements of financial position are
translated into euros using the exchange rates at the end of the reporting period. Any exchange dierence arising from this
and translation dierences arising from elimination of the acquisition costs of these companies are recognised in equity and
changes are disclosed in the items under other comprehensive income. There are no Group companies operating in a country
with hyperinflation.
The accumulated translation dierences related to divestment of Group companies, which are recognised in equity, are
recognised as gains or losses in the statement of comprehensive income.
Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the
foreign entity and translated at the exchange rate at the end of the reporting period.
Critical accounting estimates and assumptions, and main related uncertainties
Compiling the consolidated financial statements in accordance with the IFRS and accounting standards requires that the
Company’s management make certain estimates and assumptions concerning the future that have an impact on the items
included in the financial statements. The actual values may dier from these estimates. The accounting policies relating to
ORION CORPORATION | Financial Statement documents 2020
|
areas that call for more than ordinary judgement from the management and to associated uncertainty factors are presented
in the following notes:
• 2.1 Revenue from contracts with customers
• 3.2 Intangible assets
• 3.7 Provisions
• 4.1 Employee benefits
• 4.2 Pension assets and liabilities
• 5.2 Deferred taxes
Judgement is also exercised in applying the accounting policies.
Within the Group, the principal assumptions concerning the future and the main uncertainties relating to estimates at the
end of the reporting period that constitute a significant risk of causing a material change in the carrying values of assets and
liabilities within the next financial year are described in the note describing the financial statement item in question.
New IFRS standards, amendments and IFRIC interpretations applied in
financial year 2020
The following new standards, amendments and interpretations, which have been endorsed in the EU and which are applicable
for Group’s business model, have been adopted as of 1 January 2020.
• Conceptual Framework (amendment). To the revised Framework is codified IASB’s thinking adopted in recent standards. The
Framework does not override the requirements of individual IFRSs.
• IFRS 3 (amendment), Business Combinations. The amendment narrows and clarifies the definition of a business. With the
change is also permitted a simplified assessment of whether an acquired set is a group of assets rather than a business.
• IAS 1, Presentation of Financial Instruments and IAS 8, Accounting Policies, Changes in Accounting Estimates and Errors
(amendment). The amendments clarify the definition of material and improve possibilities to apply consistently the concept
across all IFRS Standards.
The standard amendments had not material eect on Orion’s consolidated financial statements.
New IFRS standards, amendments and IFRIC interpretations to be applied in future
financial periods
Upcoming new standards, amendments to the current standards and interpretations published at the balance sheet date to be
applied on 1st January 2021 or later are not expected to have a material impact on consolidated financial statements.
ORION CORPORATION | Financial Statement documents 2020
|
2 Business performance
2.1 Revenue from contracts with customers
Accounting policies
Revenue recognition principles
The Group’s net sales comprise three dierent revenue flows, which are product sales, revenue from sales rights to products
and revenue from clinical phase research and development work undertaken with collaboration partners. Revenue recognition
principles related to these are described below:
Product sales Consolidated net sales include revenue from sales of goods adjusted for indirect taxes and currency
translation dierences on sales in foreign currencies. A delivery to a customer of one batch of
product constitutes one distinct performance obligation for which the revenue will be recognised in
accordance with the delivery terms when the control is transferred from the Group to the customer.
The selling price may include variable consideration, such as various discounts or incentives, among
other things. The consideration is recognised as net sales that the Group expects to be entitled to
taking into account the eects of discounts and incentives.
The Group has consignment stock arrangements in place with distributors and logistics partners
operating in various countries. In these cases the Group owns the products held in the distributor’s
and logistics partners’ consignment stock until they are delivered to the customer, at which point
the Group recognises their sale in net sales. In Finland, the arrangement between Orion and Oriola
explains a significant part of the Group’s total consignment stock arrangements.
Net sales consisting of product sales also comprises royalties, which the Group recognises as
revenue based on agreements signed with cooperation partners. The Group has sold the sales
rights of certain products to cooperation partners and is entitled to royalties determined by the
sales of these products achieved by the partners. The Group recognises the royalties as revenue
once the partner has later sold the products to its own customers and the right to royalties has been
established.
Revenue from sales
rights to products
The Group enters into agreements in which it transfers the sales rights to a product already in
the markets to an external party outside the Group and agrees to manufacture the product for
that external party. For transferring sales rights and manufacturing products, depending on the
agreement the Group may receive milestone payments, revenue from manufacture and sales
of the products and royalty income. Typically milestone payments are fixed payments made at
the time of signing of an agreement with no restitution obligation and payments related to the
commercialisation of a product.
The Group itself has generally been manufacturing the product before the sale of sales rights to the
product, so the Group would have know-how related to manufacture that would otherwise not be easily
attained by the customer. Two separate performance obligations are constituted at the time of sale of
sales rights to products, which are 1) the transferred sales right and 2) manufacture of products and
royalty payments received from them. Some of the considerations are variable due to conditionality of
milestone payments and value adjustments related to the sales price of the products.
The Group may receive under the agreement milestone payments related to commercialisation.
They are considered as distinct performance obligations if they are satisfied by a certain volume
of sales achieved by the customer. The accrued sales revenue entails value for the customer, so a
performance obligation subject to sales volume is considered satisfied when the target for sales has
been achieved. Performance obligations related to commercialisation are treated as performance
obligations satisfied at a single point of time, because estimating future sales volume entails
uncertainty factors.
ORION CORPORATION | Financial Statement documents 2020
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Revenue from clinical
phase research and
development work
undertaken with
collaboration partners
The Group has entered into agreements with collaboration partners that relate to clinical phase
research and development projects. Under these agreements milestone payments shall be paid
when a certain development phase has been achieved. Milestone payments normally comprise
a single upfront payment for Orion’s past development work received on signing the agreement,
and milestone payments based on the completion of subsequent phases or research results of the
project later on. In addition, payments related to commercial rights to the finished product such as
royalties may be agreed in the agreements. Depending on the content of the agreement, agreements
may consist of performance obligations that are considered separately, or they may form a single
service and product package that consists of performance obligations.
Fixed milestone payments on signing an agreement are considered as distinct performance
obligations that are satisfied on signing of the agreement. Clinical phase trials may be conducted
through many service providers, and the collaboration partner can then utilise in its own business
operations the research results conveyed on signing. Research and development work performed
during the agreement period is considered a separate performance obligation and milestone
payments for this phase are processed as variable considerations because they are conditional
on reaching specific phases or research results. Even though Orion satisfies the performance
obligations over time, revenue is only recognised on confirmation of the final research results
because a reliable evaluation of research results in advance would entail uncertainty factors.
The agreements may also include a decision on arranging manufacture of finished product if it can
be commercialised. For each agreement, considerations related to commercialisation are evaluated
on the basis of whether the milestone payments and sales of finished products together constitute
a performance obligation or whether the milestone payments can be identified as performance
obligations distinct from sales of the finished product. Likewise, on the basis of each agreement, it
is evaluated whether the performance obligation related to milestone payments will be satisfied at a
single point of time or over a period of time. Royalty payments are recognised as revenue when the
partner has sold products subject to royalties.
Agreements usually do not include a financing component, because a significant portion of the considerations is variable and
their reception will be confirmed in the future.
The Group itemises net sales as follows:
• Proprietary Products (patented prescription products for three therapy areas)
• Specialty Products (o-patent generic prescription products, self-care products and biosimilars)
• Animal Health (veterinary products for pets and production animals)
• Fermion and Contract manufacturing (manufacture of active pharmaceutical ingredients for Orion and manufacture of
pharmaceuticals for other companies)
In addition to these, net sales reporting contains one further item, “Other operations”, which mostly comprises the impacts of
exchange rate changes on Orion’s net sales.
Segment reporting
The Group has one reportable operating segment, which is reported in a manner consistent with the internal reporting provided
to the chief operating decision maker. The chief operating decision maker, who is responsible for resources and assessing the
performance, is the President and CEO of Orion Corporation, who makes the Group’s strategic decisions. The Group consists
of one business area, “Pharmaceuticals business”, which comprises five business divisions. Due to the nature of the business
model and corporate governance, the entire Group is reported as a single operating segment.
Critical accounting estimates and assumptions, and main related uncertainties
concerning revenue from contracts with customers
The Group has contracts with customers that may include transfer of sales rights to products, product manufacturing,
clinical phase research and development work and terms related to commercialisation. The Group exercises judgement
especially regarding the specification of distinct performance obligations, whether the performance obligations are
recognised over time or at a single point of time and regarding the recognition time of variable considerations. The Group
takes into account the limitation to revenue recognition and recognises revenue only to the extent that it is very likely that a
significant reversal to accrued recognised revenue will not be needed.
ORION CORPORATION | Financial Statement documents 2020
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REVENUE BY REVENUE FLOWS
EUR million
Sale of goods ,. .
Royalty income . .
Total product sales ,. ,.
Milestone payments . .
Group total ,. ,.
In the financial year 2020 EUR 0.6 (0.6) million of the profits from clinical phase R&D falls under Milestone payments and
EUR11.6 (0.8) million under Product sales. Profits from clinical phase R&D are reported under Product sales once the product
is commercially available. EUR 2.1 (2.0) million has been entered as income from performance obligations delivered to
customers. The Group recorded EUR 0.6 (0.7) million of sales performance obligations satisfied during previous financial years.
NET SALES BY BUSINESS DIVISION
EUR million
Proprietary products . .
Specialty products . .
Animal Health . .
Fermion and Contract manufacturing . .
Other -. .
Group total ,. ,.
ASSETS AND LIABILITIES BASED ON CONTRACT
EUR million Asset Liability Asset Liability
1 Jan . . . .
Revenue recognised during the financial period that was
included in liabilities based on contract at the start of the
period -. -.
Increase of considerations received less revenue recognised
during the financial year . .
Actual billing during the financial year . -.
Increase of assets and liabilities based on contract due to new
business operations . . . -.
31 Dec . . . .
Assets based on contract consist mainly of products and services transferred to customers, but which are not yet invoiced.
Liabilities based on contract mainly of advance payments received.
Transaction price allocated to remaining performance obligations
The total transaction price allocated to contracts that were partly or entirely unsatisfied at the end of the financial year 2020 and
were related to the revenue flows “Revenue from sales rights to products” and “Revenue from clinical phase R&D collaboration
with collaboration partners” was EUR 16.1 (2019: 46.1) million. The Group expects to recognise EUR 6.2 million as revenue
for this transaction price allocated to unsatisfied contracts during the financial years 2021 to 2023 (2019: EUR 34.2 million
during the financial years 2020 to 2022). The remaining EUR 9.9 million is expected to be recognised as revenue starting from
the beginning of the financial year 2024 (2019: EUR 11.9 million starting from the beginning of the financial year 2023). The
Group applies the practical expedient under IFRS 15 of not reporting the transaction price allocated to remaining performance
obligations for contracts that are in eect for less than 12 months.
ORION CORPORATION | Financial Statement documents 2020
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Significant judgements related to recognition of revenue
The Group’s significant judgements related to recognition of revenue concern the contract with Bayer on the licensing,
development and commercialisation as well as manufacturing of Nubeqa.
Licensing, development and commercialisation
Darolutamide, developed by Orion in collaboration with Bayer for treatment of patients with prostate cancer, was granted
marketing authorisation by the United States Food and Drug Administration (FDA) under the brand name Nubeqa in July 2019.
The first Nubeqa product sales in the United States materialised in August 2019. The Phase III clinical trial (ARAMIS) on the
product was concluded in 2018. Significant judgement was required with regard to recognition of the sales revenue resulting
from the research project and commercialisation of the product; these judgements were related to specifying performance
obligations and the recognition time of variable considerations.
Through the Bayer contract, Orion licensed Nubeqa-related rights to Bayer. In this context the parties agreed on cooperation
related to carrying out the Phase III clinical trial and the commercialisation of the product. The license granted to Bayer is
considered as a separate performance obligation. The consideration for this comprises the single upfront payment for Orion’s
past research work received on signing the agreement, milestone payments to be received in connection with commercialisation
and royalty payments based on sales. The performance obligation will be satisfied over time, and related considerations are
variable payments by nature. The considerations will be recognised as net sales once it is highly likely that a significant reversal
to accrued recognised revenue will not be needed.
In the 2020 financial year, a total of EUR 28 million of milestone payments received in the context of the commercialisation
of Nubeqa were recognised in net sales. Of these, EUR 20 million were attributable to Nubeqa’s first commercial sale in the
EU and EUR 8 million to its first commercial sale in Japan. In the 2019 financial year, EUR 45 million were correspondingly
recognised in net sales for the first commercial sale of Nubeqa in the United States.
Manufacturing
Orion will manufacture darolutamide for global markets. The manufacturing is a separate performance obligation that
comprises the manufacture, packaging and sales of darolutamide to Bayer as well as building production capacity, which is
preceding beforementioned activities. The consideration related to building the production capacity will be satisfied over
time. It will be recognised as net sales over the term of the contract, because Bayer will receive the benefit from the milestone
payments for building production capacity as it receives finished Nubeqa products manufactured using the production capacity.
Milestone payments related to building production capacity and payments for the manufacture and packaging of Nubeqa are
fixed payments by nature.
Orion will additionally receive royalties on Nubeqa sales that will be recognised as net sales once Bayer has sold the products
and the right to royalties has been established.
Other information related to recognition of revenue
The Group applies the practical expedient under IFRS 15 to not adjust consideration amounts by the eect of a financing
component when a customer pays a product to the Group within a year from the delivery of the product or when a significant
portion of the consideration promised by the customer is variable and the amount or timing of such consideration varies based
on a future event that is not essentially controlled by the customer.
Information on assets based on customer contracts and expected credit losses are given in note 3.6. Trade and other
receivables. Information on liabilities based on customer contracts are given in note 3.8. Trade payables and other liabilities.
Information on Phase III clinical trials related to darolutamide (ARAMIS, ARASENS and ARANOTE) are given in note 3.3 Joint
arrangements.
Data relating to geographical regions
These geographical regions correspond to the Group’s main markets. Net sales are presented according to the customer’s
location. Assets and capital expenditure are presented according to their location.
ORION CORPORATION | Financial Statement documents 2020
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Finland Scandinavia Other Europe North America Other countries Group total
EUR million
Sales to external
customers . . . . . . . . . . ,. ,.
Assets . . . . . . . . . ,. ,.
Capital expenditure . . . . . . . . . .
TOP TEN BESTSELLING PHARMACEUTICAL PRODUCTS
EUR million
Easyhaler (asthma, COPD) . .
Stalevo, Comtess and Comtan (Parkinson’s disease) . .
Simdax (acute decompensated heart failure) . .
Dexdor (intensive care sedative) . .
Dexdomitor, Domitor, Domosedan and Antisedan (animal sedatives) . .
Burana (inflammatory pain) . .
Divina series (menopausal symptoms) . .
Biosimilars (rheumatoid arthritis, inflammatory bowel diseases) . .
Trexan (rheumatoid arthritis, cancer) . .
Nubeqa (prostate cancer) . .
Total . .
2.2 Other operating expenses and income
Accounting policies
The function-based expenses in Group’s consolidated statement of profit and loss include the following. The cost of goods
sold comprises wages and salaries, materials, procurement and other costs related to manufacturing and procurement. The
expenses of selling and marketing operations comprise costs related to the distribution of products, field sales, marketing,
advertising and other promotional activities, including the related wages and salaries. R&D expenses comprise wages and
salaries, materials, procurement of external services and other costs related to R&D function. R&D expenses also include
expenses for R&D projects that are classified as joint operations. The portion of the expenses that corresponds to the Group’s
contractual share of a project is recognised as an expense. Further information on recognition of R&D expenses in Group’s
consolidated financial statements are given in note 3.2 Intangible assets.
ORION CORPORATION | Financial Statement documents 2020
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R&D EXPENSES
EUR million
R&D expenses . .
DEPRECIATION, AMORTISATION AND IMPAIRMENT BY FUNCTION
EUR million
Cost of goods sold . .
Selling and marketing . .
Research and development . .
Administration . .
Total . .
DEPRECIATION, AMORTISATION AND IMPAIRMENT BY TYPE OF ASSET
EUR million
Buildings and constructions . .
Machinery and equipment . .
Other tangible assets . .
Property, plant and equipment, total . .
Intangible rights . .
Other intangible assets . .
Intangible assets, total . .
During the period, an impairment charge of EUR 1.2 (2019: 0.0) million was recognised in selling and marketing expenses on
intangible rights.
OTHER OPERATING INCOME AND EXPENSES
EUR million
Gains on sales of property, plant and equipment, intangible assets and other investments . .
Rental income . .
Exchange rate gains and losses . -.
Service charges received from discontinued operations .
Other operating income . .
Other operating expenses -. -.
Total . .
Other operating income EUR 2.0 (2019: 0.6) million comprise small items, which separately are not material.
ORION CORPORATION | Financial Statement documents 2020
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2.3 Finance income and expenses
Accounting policies
Borrowing costs
Borrowing costs are recognised in the statement of comprehensive income as an expense in the period in which they are
incurred. Borrowing costs that are directly attributable to the acquisition, construction or production of an asset that requires a
substantial period of time to be made ready are capitalised as a part of the cost of that asset.
FINANCE INCOME AND EXPENSES
EUR million
Interest income on money market investments . .
Dividend income on other investments . .
Other interest income . .
Foreign exchange gains and losses, net .
Other finance income . .
Finance income, total . .
Interest expenses . .
Foreign exchange gains and losses, net .
Other finance expenses . .
Finance expenses, total . .
Finance income and expenses, total -. -.
During the period the Group did not acquire any assets requiring a substantial completion time, and therefore no borrowing
costs have been capitalised during the period.
FOREIGN EXCHANGE GAINS + AND LOSSES INCLUDED IN FINANCE INCOME AND EXPENSES
EUR million
Foreign exchange rate gains . .
Foreign exchange rate losses -. -.
Net -. .
FOREIGN EXCHANGE GAINS + AND LOSSES ABOVE THE OPERATING PROFIT LINE
EUR million
In net sales -. .
In cost of goods sold . -.
In other income and expenses . -.
In functions’ expenses . -.
ORION CORPORATION | Financial Statement documents 2020
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2.4 Earnings and dividend per share
Accounting policies
Earnings per share are calculated by dividing the profit for the period attributable to owners by the weighted average number
of shares outstanding during the period. The weighted average number of shares has been adjusted for the number of treasury
shares held by the Group during the period.
Dividend per share is calculated by dividing the dividend distributed during the period by the number of shares outstanding at
31 December.
BASIC EARNINGS PER SHARE
Profit for the period attributable to owners of the parent company, EUR million . .
Weighted average number of shares during the period (1,000 shares) , ,
Basic earnings per share, EUR . .
DILUTED EARNINGS PER SHARE
Profit used to determine diluted earnings per share, EUR million . .
Weighted average number of shares for diluted earnings per share (1,000 shares) , ,
Diluted earnings per share, EUR . .
DIVIDEND PER SHARE
Dividend paid during the period, EUR million . .
Number of shares at 31 Dec, (1,000 shares) , ,
Dividend per share paid during the period, EUR . .
The Group held 671,082 Company’s B shares as treasury shares at 31 December 2020.
For the financial year 2020 a dividend of EUR 1.50 per share, in total EUR 210.7 million is proposed to the Annual General
Meeting, planned to be held on 25 March 2021. These financial statements do not reflect the proposed dividend.
ORION CORPORATION | Financial Statement documents 2020 |
3 Invested capital
3.1 Property, plant and equipment
Accounting policies
Property, plant and equipment
Property, plant and equipment comprise mainly factories, oces and research centres, and machines and equipment
for manufacturing, research and development. Property, plant and equipment are measured at their historical cost, less
accumulated depreciation and impairment, and are depreciated over their useful life using the straight-line method. The
residual value and useful life of property, plant and equipment are reviewed when necessary, but at least at every year end
for the financial statements, and adjusted to correspond to probable changes in the expectations of economic benefits. The
estimated useful lives are as follows:
• Buildings 20–50 years
• Machinery and equipment 5–10 years
• Other tangible assets 10 years
Land is not depreciated. Repair and maintenance costs are recognised as expenses for the reporting period. Improvement
investments are capitalised if they are expected to generate future economic benefits. Gains and losses on disposals of
property, plant and equipment are recognised in the statement of comprehensive income.
Right-of-use assets (leases)
Recognition at the inception of the lease
At the commencement of a lease, the Group recognises a lease liability and a corresponding right-of-use asset. The lease liability
is measured at the present value of the lease payments payable over the lease term that have not yet been paid. The leases are
discounted at the rate implicit in the lease or the Group’s incremental borrowing rate. In practice, the Group discounts the
leases using the Group’s incremental borrowing rate, since the rates implicit in the Group’s leases typically cannot be readily
determined. The incremental borrowing rate is based on market rates plus a country risk associated premium. The right-of-use
asset is initially measured at acquisition cost, which includes the original amount of the lease liability plus any initial direct costs
incurred by the Group, estimated restoration costs and any lease payments made at or prior to commencement, less lease
incentives obtained.
Leases paid by the Group consist of fixed payments, variable leases, amounts payable based under residual value guarantees,
purchase option exercise prices, if it is reasonably certain that the option will be exercised as well as of payments associated
with termination sanctions if it has been taken into account in the lease term that the Group will exercise its lease termination
option.
When a variable lease depends on an index or a rate, these are taken into consideration when determining lease liability.
Variable lease payments are initially measured using the index or rate as at the commencement date. Other variable leases, such
as leases to be payable based on asset performance, are not included in the lease liability. Factually fixed payments, which are
dependent on the functioning of an asset, for example, are taken into consideration when measuring the lease liability.
Subsequent measuring of a lease
After lease commencement, the Group measures the right-of-use asset using the acquisition cost model. The right-of-use
asset is measured at acquisition cost less accumulated depreciation and accumulated impairment, adjusted by any cost of
remeasurement of the lease liability. Depreciation is recognised in equal installments over the useful life of the asset or a shorter
lease-term. The residual value and useful life of the right-of-use asset is reviewed when necessary, but at least at every year end
for the financial statements, and an impairment is recognised if expected economic benefits change.
The Group values the lease liability in subsequent periods using the eective interest method. The lease liability is remeasured
if actual lease payments materially dier from lease payments contained in the original measurement and if the change in lease
payments is based on clauses of the lease agreement that were in force at the inception of the lease. The lease is subsequently
remeasured, for example, when there is a change in future lease payments due to a change in the index or rate used to
ORION CORPORATION | Financial Statement documents 2020
|
determine those payments, or if there is a change in the amounts expected to be payable under a residual value guarantee.
Changes in the assessment of a purchase option of an underlying asset or an extension or termination option may also lead to
a remeasurement of the lease liability. The carrying amount of the right-of-use asset is adjusted by the lease liability amount
following a remeasurement, or if the right-of-use asset has a carrying amount of zero, it is recognised through profit or loss.
The Group may re-negotiate leases during the lease term. Changes may lead to a revision of the duration of the lease term or
to changing the underlying asset. The Group processes lease modifications in accordance with IFRS 16 as modifications of the
scope of the lease or of the consideration payable, which were not part of the original terms agreed at the inception of the lease.
Information on Group leases
The Group has roughly 400 leases involving a right-of-use asset under IFRS 16. The nature of these leases is described below.
Leases of business premises
Outside Finland, the Group typically operates in leased premises. The premises are mainly oce premises with fixed-term or
open-end leases. The Group has defined the average duration of its open-end leases for 7–10 years. The estimate is based on
previous experience on the duration of similar leases. The leases do not contain material extension options. Some leases are
subject to annual raises based on an index stated on the lease contract.
Lease of vehicles
Measured by numbers, car leases are the predominant lease type signed by the Group. Cars are mostly leased by Group oces
outside Finland. Vehicles for employees working in the Group’s non-Finnish subsidiaries are typically on lease. The leases
typically run for 3–5 years and are signed without extension or purchase options.
Other leases
The Group’s other leases are mostly associated with factory operations. The Group has contracts with various service providers
involving a lease. The agreements relating to Group’s IT software are service agreements.
The Group as lessor
The Group has one business facility that it has leased out to a third party. The Group treats this lease as an operational contract,
since it does not grant the lessee any gains or risks essentially associated with the leased facility that arise from the ownership
of an asset. The Group also has other low-value leases in which it operates as the lessor. Rental revenue from operative lease
contracts is recognised in equal installments in the consolidated statement of profit and loss.
ORION CORPORATION | Financial Statement documents 2020
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Critical accounting estimates and assumptions, and main related uncertainties
concerning recognising right-of-use assets from customer contracts
Determining whether an arrangement contains a lease
The Group will assess at the time of inception whether a contract is, or contains, a lease. A contract contains a lease when
it contains an identified asset and it conveys the right to direct the use of that asset for a specific period of time. The
precondition is that the Group pays a consideration to the contracting party in exchange for this right.
The asset can be identified either explicitly, for example, based on a specific identification code, or implicitly, when the asset is
not specified in the contract but in practice the contract can only be performed using a specific asset. The identified asset may
also be a physically separable part of a larger asset, if it represents a substantial part of the total capacity of the asset. If the
contracting party may substitute the asset with another one and gain financially in the process, the contract does not involve an
identified asset and thus does not constitute a lease.
A contract conveys control to the Group when the Group gains substantially all the economic benefits from using the asset
and has the right to direct the use of the identified asset during its useful life. Determination of the Group’s right to direct the
use of an asset involves considering its right to change things such as:
• what type of output is generated;
• when the output is generated;
• where the output is generated; and
• how much output is generated
Separating components of a contract
In some cases, contracts may contain lease components, which is due to the fact that the contract obligates the contracting
party to provide various obligations to the Group. In such multi-component arrangements, the Group will specify each lease
component and process them separately in accounting. The right to use the underlying asset is a separate lease component
when the Group is able to benefit from the use of the asset either as such or jointly with other easily accessible resources and
the asset is not highly dependent on other assets stipulated by the contract or it is not strongly attached to them. The Group
allocates the contractual consideration to each lease component in proportion to their relative individual prices.
Lease term
The lease term is the period during which the lease cannot be cancelled. The lease term is extended by the period covered
by an extension option or termination option, if the Group is reasonably certain to exercise the extension option or not to
exercise the termination option. The Group makes use of practical expedients and does not enter as liabilities leases with
a lease term of 12 months or less, or leases associated with low-value assets. These leases are recognised as a constant
expense over the lease term.
ORION CORPORATION | Financial Statement documents 2020
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Owned by Orion
Land and water
Buildings and
constructions
Machinery and
equipment
Other property,
pland and
equipment¹
Advance payments
and construction
in progress Total
EUR million
Historical cost at
1 Jan . . . . . . . . . . . .
Additions . . . . . . . . . .
Disposals -. -. -. -. -. -. -. -. -. -. -.
Transfers between
statement of financial
position items . . . . . . -. - . . .
Translation
dierences -. . - . . -. .
Historical cost at
31 Dec . . . . . . . . . . . .
Accumulated
depreciation and
impairment at 1 Jan
. . - . -. -. -. -. -. -. -.
Accumulated
depreciation on
disposals and
transfers . . . . . . . .
Depreciation
for the year -. -. -. -. -. -. -. -.
Translation
dierences . - . . -. . -.
Accumulated
depreciations and
impairment at 31 Dec . . -. - . -. -. -. -. -. -.
Carrying amount at
1 Jan . . . . . . . . . . . .
Carrying amount at
31 Dec . . . . . . . . . . . .
Other tangible assets mainly comprise basic improvements to rented apartments, asphalting, environmental works and art objects.
ORION CORPORATION | Financial Statement documents 2020 |
Right-of-use assets
2020 Leased premises Cars Others Total Owned by Orion Total
EUR million
Historical cost at
1 Jan . . . . . . . .
Impact of adoption of
the IFRS 16 standard . . . . .
Additions . . . . . . . . . . .
Disposal -. -. -. -. - . -. -. -. -. -.
Transfers between
statement of
financial position
items . . . .
Translation
dierences -. . -. . -. . -. . -. .
Historical cost at
31 Dec . . . . . . . . . . . .
Accumulated
depreciation and
impairment at 1 Jan -. -. -. -. -. -. -. -.
Impact of adoption
of the IFRS 16
standard -. -. -. -. -.
Accumulated
depreciation on
disposals and
transfers . . . . . . . . . .
Depreciation for the
year -. -. -. -. -. -. -. -. -. -. -. -.
Translation
dierences . -. . - . . -. . - . . -.
Accumulated
depreciations and
impairment at 31 Dec -. -. -. -. -. -. -. -. -. -. -. -.
Carrying amount at
1 Jan . . . . . . . .
Carrying amount at
31 Dec . . . . . . . . . . . .
ORION CORPORATION | Financial Statement documents 2020
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Leases
ITEMS ARISING FROM LEASES IN THE CONSOLIDATED INCOME STATEMENT
EUR million
Depreciation from right-of-use assets . .
Interest expense from lease liabilities . .
Expense from short-term lease . .
Expense from leases of low-value assets . .
Lease income from third parties -. -.
Total . .
The Group has one business facility that it has leased out to a third party. The lease agreements is open-ended. The lease
revenue from the facility was in the financial period EUR 2.2 (2019: 2.2) million.
Lease liabilities
The reconciliation of lease liabilities under current and non-current interest-bearing liabilities on the Group’s consolidated
balance sheet and undiscounted maturity spread of lease liabilities are presented in note 6.2.3 Liquidity risk.
Lease-related items entered in the consolidated cash flow statement
The consolidated cash flow statement item “Repayments of current loans” contains EUR 3.9 (2019: 3.0) million of lease
payments to lessors from the lease contracts capitalized in the balance sheet.
3.2 Intangible assets
Accounting policies
Research and development costs
Research costs are expensed as incurred in the statement of comprehensive income. Intangible assets generated from
development activities are recognised in the statement of financial position only if the expenditure of the development phase
can be reliably determined, the product is technically feasible and commercially viable, the product is expected to generate
future economic benefits and the Group has the intention and resources to complete the development work. The Group’s
view is that until an authority has granted marketing authorisation, it could not be demonstrated that an intangible asset
would generate future economic benefits. The Group has therefore not capitalised its internal development costs. The same
principle for recognition has been applied for externally purchased services. Software, buildings, machinery and equipment
used in research and development activities are depreciated and recognised under research and development costs over their
usefullife.
Goodwill
Goodwill represents the excess of the cost of an acquisition over the fair value of the Group’s share of the net assets of the
acquired company at the date of acquisition. Goodwill is measured at cost less accumulated impairment losses. For the purpose
of impairment testing, goodwill is allocated to cash-generating units or groups of cash-generating units that are expected to
benefit from the business combination. Cash-generating units have been grouped according to operating segment. The goodwill
in the consolidated statement of financial position arose prior to the adoption of IFRS, and it corresponds to the carrying
amount according to the previous financial reporting standards, which was used as the deemed cost on 1 January 2004 when
making the transition to IFRS.
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Intangible rights and other intangible assets
Intangible rights and other intangible assets are measured at their historical cost, less accumulated amortisation and
impairment. They are amortised over their useful life, usually five to ten years, using the straight-line method. As a rule, acquired
marketing rights are amortised over the remaining term of the contract.
Externally acquired intangible rights, such as product and marketing rights, are recognised in the statement of financial
position. For a product under development, the cost bases are assessed. The costs of payments for research and development
work undertaken that has not yet generated an intangible right recognisable in the statement of financial position are recognised
as research and development costs. However, if an intangible right is considered to have been transferred to the Group,
the costs are recognised in the statement of financial position. Amortisations of marketing authorisations, and product and
marketing rights included in the intangible rights are disclosed under selling and marketing expenses, and recording of an
amortisation expense will commence when an authority has issued authorisation for marketing of the product and selling of it
commences.
Government grants
Government grants related to research activities are recognised as decreases in the research expenses incurred in the
corresponding reporting period. If an authority decides to convert an R&D loan into a grant, that is recognised in the statement
of comprehensive income under other operating income. Government grants related to the acquisition of property, plant and
equipment or intangible assets are recognised as decreases in their acquisition costs. Such grants are recognised as income in
the form of reduced depreciation during the useful life of the asset.
Impairment of property, plant, equipment and intangible assets
At the end of each reporting period, the Group assesses whether there are indications that an asset may be impaired. If there
are any such indications, the respective recoverable amount is assessed. As regards goodwill and an intangible asset not yet
available for use, the assessment is undertaken annually even if no such indications had become apparent. The recoverable
amount is the higher of the asset’s fair value less selling costs or value in use. The value in use is obtained by discounting
the present value of the future cash flows from that asset. The discount rate is the weighted average cost of capital (WACC)
calculated before tax and using Standard & Poor’s index for the healthcare industry as the debt-to-equity ratio. The index
corresponds to the potential and risks of the asset under review.
An impairment loss is recognised in the statement of comprehensive income for the amount by which the asset’s carrying
amount exceeds its recoverable amount. An impairment loss other than on goodwill is reversed if there is a change in the
circumstances and the asset’s recoverable amount exceeds its carrying amount. An impairment loss is not reversed to more
than what the carrying amount of the asset would have been had there been no impairment loss.
Impairment of goodwill is recognised in the statement of comprehensive income under Other operating expenses, which
include expenses not allocable to specific operations. Intangible assets not yet available for use, comprising mainly marketing
authorisations and product rights, are tested for impairment individually for each asset carrying material value in the statement
of financial position. Impairment charges are recognised as an expense under the appropriate activity, and for marketing
authorisations and product and marketing rights under selling and marketing expenses.
Critical accounting estimates and assumptions, and main related uncertainties
concerning impairment of property, plant and equipment and intangible assets
Actual cash flows can dier from estimated discounted future cash flows because changes in the long-term economic life
of the Company’s assets, the forecast selling prices of products, production costs and the discount rate applied in the
calculations can lead to the recognition of impairment losses.
ORION CORPORATION | Financial Statement documents 2020
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Goodwill Intangible rights¹
Other
intangible assets² Total
EUR million
Historical cost at 1 Jan . . . . . . . .
Additions . . . . . .
Disposals -. - . -. -. - .
Transfers between statement of financial position items - . . . - . .
Translation dierences -. . -. -. .
Historical cost at 31 Dec . . . . . . . .
Accumulated amortisation and impairments at 1 Jan -. -. -. -. -. -.
Accumulated amortisation on disposals . . . . .
Amortisation for the period -. -. -. -. -. -.
Impairment -. -. -. -.
Accumulated amortisation and impairment at 31 Dec -. -. -. -. -. -.
Carrying amount at 1 Jan . . . . . . . .
Carrying amount at 31 Dec . . . . . . . .
Intangible rights comprise mainly product rights and marketing authorisations with carrying amount EUR 18.7 (2019: 27.0) million, and also
software, trademarks and patents.
Other intangible assets include development costs for software paid to external parties and entry fees.
Besides goodwill, the Group has no other intangible assets with indefinite useful life. The Group has no internally produced
intangible assets. All intangible assets have been obtained through acquisition.
Impairment testing of goodwill, property, plant and equipment and
intangible assets
Goodwill
The goodwill of EUR 13.5 million originated from the acquisition of Farmos-Group Ltd. in 1990. In impairment testing, the
goodwill is allocated to the cash generating units that form the Pharmaceuticals business.
In the impairment tests, the recoverable amount is determined on the basis of the value-in-use calculation. The cash flow
forecasts are based on the detailed five-year plans adopted by the management. The cash flows beyond the forecast period
adopted by the management have been calculated cautiously assuming zero per cent growth. The management’s forecasts are
based on the growth of global pharmaceutical markets, market shares in sales of pharmaceuticals, and the trends expected in
pharmaceutical markets and sales.
The discount rate used is the weighted average cost of capital (WACC), in which the special risks related to the cash generating unit
have been taken into account. The discount rate is defined before taxes. The discount rate for the period is 4.3% (2019: 4.7%).
Based on impairment testing, there was no need to recognise any impairment of goodwill during the period.
A change in any of the main variables used would, reasonably judged, not lead to a situation in which the recoverable amounts
of a group of cash-generating units were lower than their carrying amount.
ORION CORPORATION | Financial Statement documents 2020
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Intangible assets not yet available for use
Intangible assets not yet available for use are tested for impairment annually. The recoverable amount is based on the value in
use. Cash flow forecasts adopted by the management cover a 5–15 year period from taking asset into use. The use of forecasts
for periods of over five years is based on the estimated useful life of products. Beyond the five-year period, the cash flow growth
rate does not exceed the average growth rates of markets for the Company’s products and the pharmaceutical industry. The
discount rates for the period varied from 10% to 12%, and they are defined separately for each unit taking into account its risks.
The carrying amount of intangible assets not yet available for use was EUR 10.0 (2019: 5.1) million.
Impairment charges recognised in the period
During the period impairment charges totalling EUR 1.2 (2019: 0.0) million were recognised on the intangible rights of
the Pharmaceuticals business. Intangible rights not yet available for use accounted for EUR 1.0 (2019: 0.0) million of the
impairments. The most significant impairment charges relate to acquired rights to products the development of which has
ceased, and to products that are already in markets, but for which the forecast recoverable cash flows were less than the
carrying amount. The full carrying amount of rights to products the development of which has ceased has been recognised as
an expense.
There were no other indications that the value of intangible assets might have been impaired during the period.
3.3 Joint arrangements
In the 2020 financial year, total cost of joint operations amounted to EUR 11.3 (2019: 9.5) million. At the end of the financial
year 2020, Orion had no (2019: EUR 0.5 million) of the upfront payments related to the joint operations in the consolidated
statement of financial position.
Licensing, development and commercialisation agreement between Orion
and Bayer
In year 2014, Orion commenced global collaboration with Bayer in the development and commercialisation of the novel
androgen receptor antagonist darolutamide (brand name Nubeqa).
Darolutamide is in clinical development for the treatment of patients with prostate cancer. The clinical Phase III trial (ARAMIS)
launched in 2014 continued to evaluate the ecacy and safety of darolutamide in patients with non-metastatic castration-
resistant prostate cancer (nmCRPC). The primary endpoint of the ARAMIS trial was reached in October 2018. A second clinical
Phase III trial (ARASENS) began in 2016 and evaluates the safety and ecacy of darolutamide in patients with metastatic
hormone-sensitive prostate cancer (mHSPC). The ARASENS trial is estimated to reach completion in 2021. Additionally, another
clinical Phase III trial (ARANOTE) was launched in 2020 to evaluate the ecacy and safety of the combined darolutamide and
hormonal therapy (androgen deprivation therapy, ADT) vs. combined placebo and hormonal therapy in patients with metastatic
hormone-sensitive prostate cancer (mHSPC).
Orion and Bayer set up a steering group for the darolutamide Phase III clinical trial. They are considered to have joint control
over the project. The agreement does not involve a separate investment instrument, so the project is considered a joint
operation under IFRS 11. Bayer takes main responsibility for the darolutamide research project costs, irrespective of the outcome
of the research.
Under the agreement, Bayer will commercialise the product globally while Orion has the option of co-promoting the product
in Europe. In addition, Orion will manufacture and package the product for global markets. The United States Food and Drug
Administration (FDA) granted marketing authorisation to Nubeqa in July 2019, and sales in the United States commenced in
August 2019. In the 2020 financial year, Nubeqa sales commenced in the EU and Japanese markets. Orion received milestone
payments from Bayer upon first commercial sales of Nubeqa in the United States, EU and Japan. Orion recognises the Nubeqa
sales revenue in sales of goods and royalty income. Orion may also receive one-o payments from Bayer if certain sales targets
are met. Information on Nubeqa sales revenue is provided in Note 2.1.
ORION CORPORATION | Financial Statement documents 2020
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3.4 Investments in associates, joint ventures and joint operations
EUR million
Carrying amount at 1 Jan . .
Share of associated companies’ results
Carrying amount at 31 Dec . .
ASSOCIATES AND JOINT VENTURES OF THE GROUP
Holding at 31 Dec, % Domicile
Hangon Puhdistamo Oy Hanko .% .%
Hangon Puhdistamo Oy engages in wastewater treatment for the companies that own it. The company operates at cost, by
covering its own expenses and without making any profit, so its impact on the consolidated statement of comprehensive
income and statement of financial position is minimal.
SUMMARISED FINANCIAL INFORMATION OF ASSOCIATES
EUR million
Assets . .
Liabilities . .
Revenues . .
Profit (+) or loss (-) for the period . .
The most recent available financial statements of the associate are for the years 2019 and 2018.
3.5 Inventories
Accounting policies
Inventories are presented in the statement of financial position using the standard price for self-manufactured products, and
for purchased products the weighted average cost method using the value of the purchase and variable conversion costs, or
if lower, the net realisable or replacement value. Inventories are valued at the cost of the materials consumed plus the cost of
conversion, which comprises costs directly proportional to the amount produced and a systematically allocated share of fixed
and variable production overheads.
The net realisable value is the estimated selling price obtainable through normal business, less the estimated expenses incurred
in finalising the product and selling it.
EUR million, 31 Dec
Raw materials and consumables . .
Work in progress . .
Finished products and goods . .
Total . .
The value of inventories has been impaired by EUR 12.3 (2019: 12.5) million for the period so it corresponds to net realisable value.
ORION CORPORATION | Financial Statement documents 2020
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3.6 Trade and other receivables
Carrying amount Fair value Carrying amount Fair value
EUR million, 31 Dec
Trade receivables . . . .
Current tax assets . . . .
Receivables from associates . . . .
Prepaid expenses and accrued income . . . .
Receivables on derivative contracts . . . .
VAT receivables . . . .
Other receivables . . . .
Money market investments . .
Total . . . .
The maturities of the money market investments on their acquisition dates were over three months but no more than six
months. The carrying amount of trade receivables and other current receivables is a reasonable estimate of their fair value.
AGEING ANALYSIS OF TRADE RECEIVABLES
Carrying amount Default rate
Expected
credit loss Carrying amount
EUR million, 31 Dec
Not yet due . .% . .
1 to 30 days past due . .% . .
31 to 60 days past due . .% . .
61 to 90 days past due . .% . .
Over 90 days overdue . .% . .
Total . . .
The total credit losses of trade and other receivables for the period were net EUR 0.0 (2019: 0.0) million.
MATERIAL ITEMS INCLUDED IN PREPAID EXPENSES AND ACCRUED INCOME
EUR million, 31 Dec
Assets based on contracts . .
Prepayments for service and maintenance . .
Pending R&D contributions . .
Price dierential payments . .
Prepaid sales rights .
Pending compensations . .
Share remunerations for restricted period . .
Pending compensation due to inventory write-down .
Other prepaid expenses and accrued income . .
Total . .
Assets due to agreements include royalties since period 2019.
Due to the short-term character of the prepaid expenses and accrued income, the carrying amounts do not dier from fair
value.
ORION CORPORATION | Financial Statement documents 2020
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OTHER NONCURRENT RECEIVABLES
EUR million, 31 Dec
Loan receivables from associates . .
Other loan receivables . .
Other non-current receivables . .
Total . .
Loan receivables include interest-bearing receivables. The carrying amounts do not materially dier from fair values.
3.7 Provisions
Accounting policies
A restructuring provision is recognised when the Group has compiled a detailed restructuring plan, launched its
implementation or informed the parties concerned.
Critical accounting estimates and assumptions, and main related uncertainties
concerning recognisition of provisions
A provision is recognised when the Group has a present legal or constructive obligation as a result of a past event, and it is
probable that an outflow of resources will be required to settle the obligation and a reliable estimate of the amount of the
obligation can be made.
PROVISIONS
EUR million
Pension
provisions
Restructuring
provisions
Other
provisions Total
1 Jan 2020 , , , ,
Exchange rate dierences . .
Reclassification of provisions - . .
Utilised during the period -. -.
Additions to provisions . .
31 Dec 2020 . . .
EUR million, 31 Dec
Non-current provisions . .
Total . .
ORION CORPORATION | Financial Statement documents 2020
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Pension, restructuring and other provisions
Pension provisions include provisions for costs of additional days relating to unemployment pension. Other provisions include
mainly provision in Italy, which relates to compensation paid to the employee when leaving the company, management’s pension
insurance provision in Sweden and allowance for bad debts in Russia. The provisions are expected to materialise in the next
2–5 years.
3.8 Trade payables and other liabilities
EUR million, 31 Dec
Trade payables . .
Current tax liabilities . .
Liabilities on derivative contracts . .
Other current liabilities to associates . .
Accrued liabilities and deferred income . .
VAT liabilities . .
Other current liabilities . .
Total . .
MATERIAL ITEMS INCLUDED IN ACCRUED LIABILITIES AND DEFERRED INCOME
EUR million, 31 Dec
Liabilities from share-based incentive plans . .
Liabilities from other incentive plans . .
Other accrued salary, wage and social security payments . .
Accrued price reductions . .
Liabilities based on contract . .
Accrued unpaid sales rights .
Accrued price adjustments . .
Accrued R&D expenses . .
Accrued royalties . .
Accrued litigation costs . .
Accrued expert fees . .
Accrued sales compensation . .
Accrued interest .
Other accrued liabilities and deferred income . .
Total . .
Due to the short-term character of the trade payables and other current liabilities, the carrying amounts do not materially dier from
fair value.
OTHER NONCURRENT LIABILITIES
EUR million, 31 Dec
Liabilities based on contract . .
Other liabilities . .
Total . .
Liabilities due to agreements include items from accruals of sales income, which have been described in Note 2.1 Revenue from
contracts with customers.
ORION CORPORATION | Financial Statement documents 2020
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4 Personnel
4.1 Employee benefits
Accounting policies
The benefits under the share-based incentive plan for key employees approved by the Board of Directors are recognised as an
expense in the income statement during the vesting period of the benefit. The equity-settled portion is measured at fair value at
the time of granting the benefit, and an increase corresponding to the expense entry in the statement of comprehensive income
is recognised in equity. The cash-settled portion is recognised as a liability, which is measured at fair value at the end of the
reporting period. The fair value of shares is the closing quotation for B shares on the day of granting the benefit.
Critical accounting estimates and assumptions concerning share-based incentive
plans
Non-market vesting conditions, such as individual goals and result targets, aect the estimate of the final number of shares
and amount of associated cash payments. The estimate of the final number of shares and associated cash payments is
updated at the end of each reporting period. Changes in estimates are recognised in the statement of comprehensive
income.
Employee benefits
EUR million
Wages and salaries . .
PENSION COSTS
Defined contribution plans . .
Defined benefit plans . .
SHARE-BASED INCENTIVE PLAN
Equity-settled . .
Cash-settled . .
Other social security expenses . .
Total . .
Average number of personnel , ,
Defined benefit pension obligations are presented in Note 4.2, Pension assets and pension liabilities. The management’s
employee benefits are presented in Note 7.1, Related party transactions.
ORION CORPORATION | Financial Statement documents 2020
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Share-based incentive plans
The Group has two share-based incentive plans in force for key persons of the Group.
The plan that commenced in 2016 includes earning periods and the Board of Directors has annually decided on the beginning
and duration of the earning periods in 2016, 2017 and 2018. The Board of Directors has decided on the earning criteria and
targets to be established for them at the beginning of each earning period. Two earning periods, calendar year 2016 and
calendar years 2016–2018, commenced upon implementation of the plan. Two earning periods, calendar year 2017 and calendar
years 2017–2019, commenced in 2017. Two earning periods, calendar year 2018 and calendar years 2018–2020, commenced in
2018. The reward under the plan for the earning periods 2016, 2017 and 2018 is based on the Orion Group’s operating profit and
for the earning periods 2016–2018, 2017–2019 and 2018–2020 on the total return on Orion Corporation B shares.
The target group of the plan consists of no more than 50 people. The total maximum amount of rewards to be paid based on
the plan is 500,000 Orion Corporation B Shares and a cash payment corresponding to the value of the shares. By 31 December
2020, a total of 216,659 Orion Corporation B shares had been paid as rewards under this plan.
Under the plan, shares received based on one-year earning periods cannot be transferred during the restricted period
determined in the plan. There is no restricted period for the three-year earning periods. The value of reward to be paid based on
the plans during one calendar year is a key person’s gross annual salary multiplied by 1.75, in the maximum, at the date of the
reward payment.
The plan than commenced in 2019 includes five earning periods, which are the calendar years 2019, 2019–2020, 2019–2021,
2020–2022 and 2021–2023. The Board of Directors decides on the earnings criteria and on targets to be established for them at the
beginning of each earning period. Three earning periods, calendar year 2019, calendar years 2019–2020 and 2019–2021, commenced
upon implementation of the plan. One earning period, calendar years 2020–2022, commenced in 2020. The potential rewards of the
plans for the earning periods commencing in 2019 and 2020 are based on achieving the Orion Group’s operating profit and net sales
targets.
The target group of the plan consists of approximately 50 people. The total maximum amount of rewards to be paid on the
basis of the plan is 700,000 Orion Corporation B shares and a cash payment corresponding to the value of the shares. The total
maximum amount includes a separate, so called reward for commitment part that the Board of Directors can use by a separate
decision during the years 2019–2023. The maximum amount of the reward for commitment is no more than 100,000 shares
and a cash payment corresponding to the value of the shares. By 31 December 2020, a total of 58,661 B shares had been paid as
rewards under this plan.
Under the plan, shares received based on one-year and two-year earning periods cannot be transferred during the restricted
period determined in the plan. There is no restriction period for the three year earning periods.
Earning periods
The plan commenced
in 2016
2016 ○ 1○ 2 3
2016–2018 ○ 1 2 3 ○
2017 ○ 1○ 2 3
2017–2019 ○ 1 2 3 ○
2018 ○ 1○ 2 3
2018–2020 ○ 1 2 3 ○
The plan commenced
in 2019
2019 ○ 1○ 2 3
2019–2020 ○ 1 2 ○ 3
2019–2021 ○ 1 2 3 ○
2020–2022 ○ 1 2 3 ○
2021–2023 ○ 1 2 3 ○
○ Granting of share rewards | March
Earning period
Restricted period (shares cannot be transferred)
○ Reward paid / potential reward to be paid | March
ORION CORPORATION | Financial Statement documents 2020 |
The rewards under the plan shall be paid partly in the form of the Company’s B shares and partly in cash. Rewards under the
plans have been paid and potential future rewards under the plans shall be paid as follows:
Earning period
Reward paid on/
potential reward to be paid in
2016 Mar
2017 Mar
2016–2018 Mar
2018 Mar
2017−2019 Mar
2018−2020
2019 Mar
2019–2020
2019–2021
2020–2022
2021–2023
The costs due to the plan are recorded as expenses during the restricted period. The anticipated dividends have not been taken
into account separately because they are taken into account in determining the share-based rewards. The fair values of the
rewards granted based on the total return on Orion Corporation B shares for the earning periods are shown in the table below.
The fair values have been determined using the Binary “asset or nothing call” option evaluation method.
EARNING PERIODS CURRENTLY IN EFFECT
– – – –
Start date of earning period Jan Jan Jan Jan Jan
End date of earning period Dec Dec Dec Dec Dec
End date of restricted period Dec Dec
Grant date of share rewards Mar Mar Mar Mar Mar
Fair value of shares at granting, EUR . . . . .
Fair value of reward at grant date, EUR¹ .
The fair value of the rewards per share on the granting date has been determined with the binary asset or nothing call evaluation method.
TRANSFERRED SHARES
Number of shares transferred during period , , ,
Price per transferred share, EUR¹ . . .
Total price of transferred shares, EUR million . . .
End date of restricted period² Dec Dec Dec
Average price of B share on transfer date.
Concerns only shares which are granted based on earning period term of calendar year.
ORION CORPORATION | Financial Statement documents 2020 |
4.2 Pension assets and pension liabilities
Accounting policies
The Group has pension plans in accordance with each country’s local regulations and practices. The Group has both defined
contribution and defined benefit plans. In the defined contribution plans, the Group pays fixed contributions to separate
entities. The Group has no legal or constructive obligations to pay further contributions if the recipient of the contributions is
unable to pay the employee benefits. All the plans that do not fulfil these criteria are defined benefit plans. The payments to
the defined contribution plans are recognised as expenses in the statement of comprehensive income in accordance with the
contributions payable for the period.
The Orion Group has defined benefit pension plans in Finland and Norway. The regulation of these pension plans is quite
similar. The most significant individual pension plan in Finland is the Orion Pension Fund, through which pension plans
are provided for white-collar sta working in Finland. The Pension Fund includes statutory pension insurance to which
all whitecollar sta are entitled (Department B), only part of which is treated as defined benefit based under IAS 19, and
supplementary insurance for some white-collar sta (Department A), which is entirely defined benefit based. Assets of the
Orion Pension Fund are invested in accordance with Finnish legislation. The management and Board of Directors of the Pension
Fund are responsible for management of the assets of the Fund. The Group also has defined benefit pension plan in Norway for
which a party outside the Group provides asset management. In addition, the Group management has defined benefit pension
plans taken out with life assurance companies. The obligations under the defined benefit pension plans have been calculated
separately for each plan.
The pension expenses related to the defined benefit pension plans have been calculated using the projected unit credit
method. The pension expenses are recognised as expenses by distributing them over the whole estimated period of service
of the personnel. The net defined benefit liability to be recorded in the statement of financial position is the present value of
the defined benefit obligation at the end date of the reporting period less the fair value of plan assets. The present value of the
defined benefit obligation is the present value of the estimated future pensions payable, and the discount rate applied is the
interest rate of low-risk bonds issued by companies with a maturity that corresponds to that of the defined benefit obligation as
closely as possible. The interest rate is derived from bonds issued in the same currency as the benefits payable.
Items arising from remeasurement of defined benefit plan assets are recognised directly into components of other
comprehensive income during the period when they arise. The most substantial items due to remeasurement in the Group are
due to actuarial gains and losses and return on the plan assets (excluding net interest items).
The Group applies an accounting procedure in which net interest arising from plan assets is recognised functionally above
operating profit as part of defined benefit plan pension expense.
Critical accounting estimates and assumptions, and main related uncerntainties
The Group has various pension plans to provide for the retirement of its employees or to provide for when the employment
ends. Various statistical and other actuarial assumptions are applied in calculating the expenses and liabilities of employee
benefits, such as the discount rate, estimated changes in the future level of wages and salaries, and employee turnover.
The statistical assumptions made can dier considerably from the actual trend because of, among other things, a changed
general economic situation and the length of the period of service. The gains and losses due to changes in actuarial
assumptions are recorded into components of other comprehensive income during the period in which they arise. The
changes aect the comprehensive income for the period.
ORION CORPORATION | Financial Statement documents 2020
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DEFINED BENEFIT PLANS AMOUNTS RECOGNISED IN THE STATEMENT OF FINANCIAL POSITION
Pension fund Other Pension fund Other
EUR million, 31 Dec
Present value of funded obligations . . . .
Fair value of plan assets -. -. -. -.
Surplus (-) / deficit (+) . . -. .
Present value of unfunded obligations . .
Net asset (-) / liability (+) recognised in the statement of
financial position . . -. .
The net pension liability change of EUR 72.3 million is mostly due to a change in the discount rate and the dierence between
the assumed and realised pension increase rate in the 2020 financial year. The change in discount rate has been reported
under the item “Gains (-) and losses (+) due to changes in economic assumptions” of the table illustrating the change in the
present value of the obligation. The impact of the dierence between assumed and realised pension increase rates has been
reported under the item “Experienced gains (-) and losses (+)”. Both items have been directly recognised in equity under other
comprehensive income.
AMOUNTS IN CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Pension fund Other Pension fund Other
EUR million
Liabilities . . .
Asset -. -.
Net asset (-) / liability (+) recognised in the statement of
financial position . . -. .
DEFINED BENEFIT PLAN PENSION EXPENSES IN CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Pension fund Other Pension fund Other
EUR million
Current service cost . . . .
Interest expense and income, total -. . -. .
Pension expense (+) / income (-) in income statement . . . .
Items due to remeasurement . . -. .
Pension expense (+) / income (-) in statement
of comprehensive income . . -. .
DEFINED BENEFIT PLAN PENSION EXPENSES BY FUNCTION
Pension fund Other Pension fund Other
EUR million
Cost of goods sold . .
Selling and marketing . . . .
Research and development . .
Administration . . . .
Pension expense (+) / income (-) in the income statement . . . .
ORION CORPORATION | Financial Statement documents 2020
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CHANGES IN PRESENT VALUE OF OBLIGATION
Pension fund Other Pension fund Other
EUR million
Defined benefit plan obligation at 1 Jan . . . .
Current service cost . . . .
Interest expense . . . .
Curtailments - .
Items due to remeasurement:
Gains (-) or losses (+) due to change in economic
assumptions . . . .
Experienced gains (-) or losses (+) . -. . - .
Total . . . .
Foreign exchange dierences -. .
Benefits paid -. -. -. -.
Obligation at 31 Dec . . . .
CHANGES IN FAIR VALUE OF PLAN ASSETS
Pension fund Other Pension fund Other
EUR million
Fair value of plan assets at 1 Jan . . . .
Interest income . . . .
Items due to remeasurement:
Return on plan assets excluding items in interest expense
and income . . . .
Total . . . .
Foreign exchange dierences -. .
Employer contributions . . . .
Benefits paid -. -. -. -.
Fair value of plan assets at 31 Dec . . . .
FAIR VALUES OF ASSETS OF BENEFIT PLAN ARRANGED THROUGH THE ORION PENSION
FUND BY ASSET CATEGORY AS PERCENTAGES OF FAIR VALUE OF ALL PLAN ASSETS
%
Equity in developed markets % %
Equity in emerging markets % %
Bonds % %
Cash and money market investments % %
Properties % %
Other % %
Total % %
In other benefit plans the insurance companies are responsible for the plan assets, so it is not possible to present a breakdown
of those assets.
The Pension Fund plan assets in 2020 include shares issued by the parent company Orion Corporation with fair value EUR 27.1
(2019: 29.7) million that account for 6.6% (2019: 7.7%) of the plan assets.
The objective of the Orion Pension Fund is a distribution of investments that spreads risk between dierent types of asset over
the long term. Most of the assets are invested in shares and bonds.
ORION CORPORATION | Financial Statement documents 2020
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ACTUARIAL ASSUMPTIONS USED BY THE ORION PENSION FUND
%
Discount rate . .
Inflation rate . .
Future pension increases . –. .–.
Future salary increases . .
In 2020 the Group expects to contribute EUR 17 million to its pension plans (in period 2019 expected to contribute
EUR16million in 2020 to its pension plans).
Discount rate is the most significant assumption, which aects the value of pension liability discount rate of 0.50%
(2019: 1.65%). The EUR 324.9 (2018: 299.7) million liability of the Orion Pension Fund has been discounted at a discount
rate of 1.65% (2.25%). The impact on the liability of a change in the discount rate of +/- 0.50 percentage points would be
EUR-39.0/+45.3 (2019: -27.7/+31.9) million, when other assumptions unchanged.
The weighted average duration of the defined benefit liability is 20 (2019: 16) years.
The defined benefit plans expose the Group to risks, the most significant of which are described in more detail below.
Volatility related to assets and liability
The discount rate applied in calculating the net liability due to the plans is based on the return of low-risk bonds issued by
companies. The Group determines the discount rate based on publicly available market information. Discount rate is the most
significant assumption, which aects the value of pension liability.
The Group’s target over the long-term for defined benefit plan assets is to achieve a return exceeding the discount rate because
some of the assets are equity instruments for which the return over the long term is expected to be higher than the return of
bonds on which the discount rate is based. The value of defined benefit assets changes as the return rises above or decreases
below the discount rate. This may generate a surplus or deficit of plan assets. The solidity of the Orion Pension Fund is good, so
the Orion Pension Fund can withstand quite a heavy fall in stock markets.
Changes in returns of bonds
The Group may have to change the discount rate if the return on bonds changes. That would alter the liabilities of the defined
benefit plans and the components relating to defined benefit plans to be recorded in the statement of comprehensive income.
However, some of the assets of the plans are invested in bonds, and the change in their value may partly compensate for the
eect of the change in the liability on the value of the net debt.
Inflation risk
The liability of the defined benefit plans would increase if inflation increased. Some of the plan assets are invested in equity
instruments that are aected only a little by inflation. Acceleration of inflation would therefore increase the deficit of the defined
benefit plans.
Anticipated life expectancy
Defined benefit plan liabilities to a large extent relate to the generation of life-long benefits for members. A rise in anticipated
life expectancy would therefore increase the defined benefit liability.
ORION CORPORATION | Financial Statement documents 2020
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5 Income taxes and deferred taxes
5.1 Income taxes
Accounting policies
The income tax expense in the consolidated statement of comprehensive income includes taxes based on the profit of the
Group companies for the financial year, tax adjustments for previous financial years and deferred tax. For items recognised
directly in equity, the corresponding tax eect is also recognised in equity. Current tax is calculated on the basis of the tax rate in
force in each country.
INCOME TAXES
EUR million
Current taxes . .
Adjustments in respect of prior periods -. .
Deferred taxes . -.
Total . .
TAXES RECOGNISED IN OTHER COMPREHENSIVE INCOME
EUR million
Remeasurement of pension plans (income -/ expense +) -. .
RECONCILIATION BETWEEN TAX EXPENSE IN STATEMENT OF COMPREHENSIVE INCOME
AND TAXES CALCULATED FROM GROUP’S .% DOMESTIC TAX RATE
EUR million
Profit before taxes . .
Consolidated income taxes at Group’s domestic tax rate . .
Impact of dierent tax rates of foreign subsidiaries . .
Tax-exempt income -. - .
Non-deductible expenses . .
Utilisation of deductible losses -. -.
Tax adjustments for previous financial years -. .
Withholding tax provision related to dividends .
Items due to IFRS adjustments . -.
Disposal of acquisition due to sold subsidiary -.
Other items . - .
Income tax expense recognised in consolidated income statement . .
Eective tax rate .% .%
The Group has booked a withholding tax provision related to dividends of EUR 1.4 million in the financial year 2020.
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5.2 Deferred taxes
Accounting policies
Deferred tax is computed on all temporary dierences between the carrying amount and the taxable value. Deferred tax assets
due to confirmed tax losses of Group companies are imputed only to the extent that they can be utilised in the future. Deferred
taxes are computed using the tax rates valid or in practice approved at the end of the reporting period.
Critical accounting estimates and assumptions, and main related uncerntainties
concerning deferred taxes
In preparing the financial statements, the Group estimates, in particular, the basis for recording deferred tax assets. For this
purpose, an estimate is made of how probable it is that the subsidiaries will generate sucient taxable income against which
unused tax losses or unused tax assets can be utilised. The factors applied in making the forecasts can dier from the actual
figures, and this can lead to expense entries for tax assets in the income statement.
DEFERRED TAX ASSETS
EUR million, 31 Dec
Pension liability . .
Accruals of sales revenue . .
Internal inventory margin . .
Other deductible temporary dierences . .
Total . .
DEFERRED TAX LIABILITIES
EUR million, 31 Dec
Depreciation dierence and untaxed reserves . .
Capitalised cost of inventory . .
Pension assets .
Eects of consolidation and elimination . .
Other taxable temporary dierences . .
Total . .
CHANGE IN DEFERRED TAX ARISES FROM
EUR million
Pension assets/liabilities . -.
Capitalised cost of inventory . .
Depreciation dierence and untaxed reserves . .
Accruals of sales revenue -. -.
Internal inventory margin -. .
Deductible losses and other timing dierences -. .
Total . -.
During the period, an increase in equity of EUR 14.4 (2019: a decrease of EUR 5.3) million due to income taxes was recognised.
The recognised taxes increased at 31 Dec 2020 the equity by EUR 10.5 (2019: decreased equity by EUR 4.0) million.
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6 Financing and capital structure
6.1 Financial assets and liabilities by category
Accounting policies
Classification
The Group’s financial items are recognised and measured at amortised cost or at fair value through profit or loss. The
classification of assets depends on the business models defined by the Company and on the cash flows of the financial assets
based on contract. The classification may change following a change in business model. Classification per item in statement of
financial position is found in the note concerning financial assets and liabilities.
1. Measured at amortised cost
When the target of the business model is to hold financial assets for the purpose of collecting cash flows based on contract
and the cash flows are based exclusively on the payment of equity and interests, assets are classified at amortised cost. Of
the Group’s financial assets trade receivables, other receivables and financial assets are classified at amortised cost. Financial
liabilities except for derivatives are classified at amortised cost.
2. Recognised at fair value through profit or loss
Financial assets are measured at fair value through profit or loss when they are not held for collecting cash flows based on
contract nor for both collecting cash flows and for sale or when they were classified at this class in the initial classification. The
Group’s financial assets recognised at fair value through profit or loss comprise derivatives, shares and interests and money
market investments. Of financial liabilities, derivatives are measured at fair value and are recognised through profit or loss.
A financial asset or liability with maturity over 12 months from the reporting date is included in the non-current assets or
liabilities in the statement of financial position. If a financial asset is intended to be held for less than 12 months or its maturity
is less than 12 months from the reporting date, it is included in the current assets in the statement of financial position. The
credit limits of bank accounts to the extent that they are used and commercial paper issued by the Company are included in
interest-bearing current liabilities, as are any repayments of capital of non-current interest-bearing liabilities due in the next 12
months.
Recognition and measurement
Purchases and sales of financial assets are recognised in the accounting through settlement date accounting except for
derivatives, which are recognised on the acquisition date. Financial assets measured at amortised cost are also initially
recognised at fair value, but transaction costs are taken into account in the value. After initial measurement, the value of these
financial assets is measured at amortised cost using the eective interest method less any impairment. Impairment losses are
recognised in the statement of comprehensive income.
Financial assets at fair value through profit or loss are initially recognised at fair value, and transaction costs are recognised as
expenses in the statement of comprehensive income. Unrealised and realised gains and losses due to changes in the fair value
are recognised through profit or loss. Fair value is based on the quoted market price on the end date of the reporting period.
Financial liabilities are initially recognised in accounting at fair value less transaction costs. Subsequently, financial liabilities
except derivative liabilities at fair value through profit or loss are measured at amortised cost using the eective interest
method.
A financial asset is derecognised in the statement of financial position when the Group no longer has the contractual rights
to receive the cash flows or when it has substantially transferred the risks and income from the asset to outside the Group.
Liabilities are derecognised in the statement of financial position once the debt has extinguished.
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Impairment
At the end of each reporting period, it is assessed whether there is any objective evidence of expected credit losses regarding an
item in the Group’s financial assets.
Impairments are estimated in two dierent ways, either based on the amount of expected credit losses in the next 12 months or
based on the amount of expected credit losses over the entire lifetime of the financial asset. As a rule, the used time period is
the next 12 months unless there are specific grounds for a significantly increased credit risk of a financial asset.
Criteria applied by the Group in stating that there is significantly increased credit risk:
• issuer’s or debtor’s considerable financial problem
• breach of contract terms, such as neglecting payments or payments long overdue
• high probability of bankruptcy or other financial restructuring of debtor
For trade receivables, the Company applies a simplified model based on the amount and due date distribution of overdue
receivables. Trade receivables do not include a significant financing component, and thus expected credit losses are recognised
over the entire lifetime of the financial asset. Historical credit loss experience is used as the basic information in the provision
matrix, and it is adjusted as needed with a future outlook estimate.
Expected credit losses are recognised through profit or loss, with the counter-item reducing the item in financial assets.
Recognition takes place at the next reporting date.
Cash and cash equivalents
Cash and cash equivalents comprise cash in hand, bank deposits and assets in bank accounts, and liquid debt instruments.
Liquid debt instruments are short-term certificates of deposit and commercial paper with maturities initially of no more than
three months issued by banks and companies.
Money market investments that are available-for-sale debt instruments with maturities initially of over three months and no
more than twelve months and liquid bond funds are regarded as cash and cash equivalents in the statement of cash flows.
Money market investments are part of the Group’s active cash management.
Derivative instruments
Derivatives are classified as measured at fair value through profit or loss and are initially recognised at fair value on the date the
derivative contract is entered into and are subsequently remeasured at their fair value using the closing market prices on the
end date of the reporting period. Derivatives are recognised under other receivables and liabilities in the statement of financial
position. The Group does not apply hedge accounting to foreign exchange derivatives that hedge items in foreign currencies
in the statement of financial position or hedge highly probable forecast cash flows, even though they have been acquired for
hedging purposes in accordance with the Group’s treasury policy.
Both unrealised and realised gains and losses due to changes in the fair value of derivatives recorded through profit or loss are
recognised in the reporting period in which they are incurred through profit or loss under either Other income and expenses or
Finance income and expenses, depending on whether operational revenue or finance items have been hedged.
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FINANCIAL ASSETS AND LIABILITIES BY CATEGORY
EUR million, 31 Dec
Amortised cost
Fair value through
profit or loss
Carrying amount
of financial items Fair value Carrying amount
Other investments . . . .
Other non-current receivables . . . .
Non-current assets total . . . . .
Trade receivables . . . .
Other receivables . . . .
Money market investments .
Cash and cash equivalents . . . .
Derivatives . . . .
Current assets total . . . . .
Financial assets total . . . . .
Non-current interest-bearing liabilities . . . .
Other non-current liabilities . . . .
Non-current liabilities total . . . .
Trade payables . . . .
Other current liabilities . . . .
Current interest-bearing liabilities . . . .
Derivatives . . . .
Current liabilities total . . . . .
Financial liabilities total . . . . .
Derivative contracts are included in other receivables and other liabilities in the statement of financial position.
SPECIFICATION OF FINANCIAL LIABILITIES INCLUDED IN CASH FLOW FROM FINANCING ACTIVITIES
EUR million, 31 Dec Cash flows
Other
changes with
no related
payment
Interest-bearing non-current liabilities . -. . .
Interest-bearing current liabilities -. . . .
Other changes with no related payment are due to new lease contracts and reclassification of lease contracts to long-term and
short-term interest-bearing liabilities during the leasing period.
FAIR VALUE THROUGH PROFIT OR LOSS
Financial instruments measured at fair value in the statement of financial position are grouped as follows into three hierarchy
levels depending on the valuation technique
EUR million, 31 Dec 2020 Level Level Level Total
Derivatives
Currency derivatives . .
Other investments
Shares and investments . .
Assets total . . .
Derivatives
Currency derivatives -. -.
Liabilities total -. -.
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EUR million, 31 Dec 2019 Level Level Level Total
Derivatives
Currency derivatives . .
Money market investments . .
Other investments
Shares and investments . .
Assets total . . . .
Derivatives
Currency derivatives -. -.
Liabilities total -. -.
The fair value of level 1 financial instrument is based on quotations available in active markets. The fair value of level 2
derivatives is based on data feeds available in the markets. The fair value of level 3 financial instruments cannot be estimated on
the basis of data available in the markets.
The Group applies the principle of recognising transfers between levels of fair value hierarchy on the date on which the event
triggering the transfer occurred.
6.2 Financial risk management
The objective of the Group’s financial risk management is to decrease the negative eects of market and counterparty risks on
the Group’s profits and cash flows and to ensure sucient liquidity.
The main principles for financial risk management are defined in the Group Treasury Policy approved by the Board of Directors of
the parent company, and the Group Treasury is responsible for its implementation. Treasury activities are centralised in the Group
Treasury.
6.2.1 Market risk
The Group is exposed to market risks related to foreign currency exchange rate, market interest rate and electricity price.
6.2.1.1 Foreign currency exchange rate risk
The Group’s foreign currency exchange rate risk consists of transaction risk and translation risk.
Transaction risk
Transaction risk arises from operational items (such as sales and purchases) and financial items (such as loans, deposits and
interest flows) in foreign currency in the statement of financial position, and from forecast cash flows over the upcoming 12
months. Transaction risk is monitored and hedged actively. In accordance with the Treasury Policy, items based on significant
currencies in the statement of financial position are normally hedged 90–105% and the forecast cash flows over the upcoming
12 months 0–50%. Currency derivatives with maturities up to 12 months are used as hedging instruments.
The most significant currencies for the Group’s operational items are the US dollar, Swedish krona, Polish zloty, Norwegian
krona, Russian rouble, Japanese yen and British pound. As regards these currencies, no individual currency accounts for a
significant portion of the overall position. The position as regards these currencies is presented below.
EUR million, 31 Dec USD SEK PLN
Other
significant
currencies
Total
Net position in statement of
financial position . . . . . .
Forecast net position (12 months) . . . . . .
Net position, total . . . . . .
Currency derivatives for hedging -. -. -. -. -. -.
Net open position total . . . . . .
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The Group’s internal loans and deposits are denominated in the local currency of the subsidiary and the most significant ones
have been fully hedged with currency swaps.
The fair value changes of the currency derivatives are recognised through profit and loss in either other operating income and
expenses or finance income and expenses depending on whether, from an operational perspective, sales revenues or financial
assets and liabilities have been hedged.
Translation risk
Translation risk arises from the equity of subsidiaries outside the eurozone. At 31 December 2020 the equity in these
subsidiaries totalled EUR 62.2 (2019: 59.8) million. The most significant translation risk arises from the British pound. This
translation position has not been hedged.
Sensitivity analysis
The eect of changes in foreign currency exchange rates on the Group’s results (before taxes) and equity at the reporting date
is presented below for the significant currencies. The assumption used in the sensitivity analysis is a +/- 10% change in the
exchange rates (foreign currency depreciates/appreciates by 10%) while other factors remain unchanged. In accordance with
IFRS 7, the sensitivity analysis includes only the financial assets and liabilities in the statement of financial position, and so the
analysis does not take into account the forecast upcoming 12-month foreign currency cash flow included in the position. The
potential translation position is not taken into account in the sensitivity analysis. In the case the Group is not adapting hedge
accounting, the changes of exchange rates are recorded directly to profit or loss.
Impact on profit
EUR million, 31 Dec
+/- 10% change in exchange rates -./. -./.
6.2.1.2 Electricity price risk
The price risk refers to the risk resulting from changes in electricity market prices. The market price of electricity fluctuates
greatly due to weather conditions, hydrology and emissions trading, for example. The Group obtains its electricity through
deliveries that are partly fixed-price contracts and partly tied to the spot price of the price area of Finland, and in the latter case
is therefore exposed to electricity price fluctuation. This price risk is not hedged.
6.2.1.3 Interest rate risk
Changes in interest rates aect the Group’s cash flow and results. At 31 December 2020, the Group’s interest-bearing liabilities
totalled EUR 108.5 (2019: 10.0) million, which comprise of long-term loans and lease liabilities.
6.2.2 Counterparty risk
Counterparty risk is realised when a counterparty to the Group does not fulfil its contractual obligations, resulting in non-
payment of funds to the Group. The maximum credit risk exposure at 31 December 2020 is the total of financial assets less
carrying amounts of derivatives in financial liabilities, which totalled EUR 454.3 (2019: 348.6) million (Note 6.1). The main risks
relate to trade receivables, cash and cash equivalents, and money market investments.
The Group Treasury Policy defines the requirements for the creditworthiness of the financial institutions acting as counterparties
to Group companies. Limits have been set for counterparties on the basis of creditworthiness and solidity, and they are regularly
monitored and updated. The duration of money market investments is less than 12 months.
The Group Customer Credit Policy defines the basis for classifying customers and setting limits for them, and the ways through
which the credit risk is managed. Payment performance and the financial situation of customers are monitored, and eective
collection is regularly undertaken. Credit risk can be reduced by requiring advance payment as a payment term or a letter of
credit or a bank guarantee to secure the payment, or by using credit insurance. In the pharmaceutical industry, trade receivables
are typically generated by distributors representing dierent geographical areas. In certain countries, the Group also sells
directly to local hospitals. The 25 largest customers accounted for 73.9% of the trade receivables at 31 December 2020 (2019:
78.1%). The trade receivables are not considered to involve significant risk (note 3.6). Credit losses for the period recognised
through profit and loss were EUR 0.0 (2019: 0.0) million.
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6.2.3 Liquidity risk
The Group seeks to maintain a good liquidity position in all conditions. This is ensured by cash flows from operating
activities and cash and cash equivalents and other money market investments. The company has EUR 100 million of binding
undrawn bilateral credit limits that will mature in 2024. In addition to this, the Group has undrawn bank overdraft limits
and aEUR100million unconfirmed commercial paper program from which no commercial papers had been issued on the
reporting date.
The Group’s interest-bearing liabilities at 31 December 2020 were EUR 108.5 (2019: 10.0) million, which consisted of loan
from EIB with fixed interest rate and lease liabilities. At 31 December 2020, the Group’s cash and cash equivalents and money
market investments, which decrease liquidity risk, totalled EUR 294.4 (2019: 149.0) million. To ensure the Group’s liquidity, any
surplus cash is invested mainly in short-term euro-denominated interest-bearing instruments with good creditworthiness. An
investment-specific limit is determined for each investment.
FORECAST UNDISCOUNTED CASH FLOWS OF FINANCIAL LIABILITIES, INTEREST PAYMENTS AND DERIVATIVES
EUR million, 31 Dec 2020 – Total
Repayments of loans . . . . .
Repayments of lease liabilities . . . . . .
Interest payments . . . . . .
Cash flow total, interest-bearing financial liabilities . . . . . .
Trade payables . .
Other non-interest-bearing financial liabilities . . .
Cash flow total, non-interest-bearing financial
liabilities . . .
Derivative contracts, inflow . .
Derivative contracts, outflow -. -.
Cash flow total, derivative contracts . .
Cash flow total, all . . . . . .
EUR million, 31 Dec 2019 – Total
Repayments of finance lease liabilities . . . . . .
Cash flow total, interest-bearing financial liabilities . . . . . .
Trade payables . .
Other non-interest-bearing financial liabilities . . .
Cash flow total, non-interest-bearing financial
liabilities . . .
Derivative contracts, inflow . .
Derivative contracts, outflow -. -.
Cash flow total, derivative contracts -. -.
Cash flow total, all . . . . . .
Forward rates or the average reference rate per contract are used for forecasts of interest payments on floating-rate loans.
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6.2.4 Management of capital structure
The financial objectives of the Group include a capital structure related goal to maintain the equity ratio, i.e. equity in proportion
to total assets, at a level of at least 50%. This equity ratio is not the Company’s opinion of an optimal capital structure, but
rather part of an aggregate consideration of the Company’s growth and profitability targets and dividend policy.
The terms of credit limit agreements of the Company include covenants that specify that if the covenants are breached, the
lender optionally has the right to demand early repayment of the loan. The key figures used in calculation of covenants are
calculated in accordance with the formulas given in loan agreements. The following tables show the levels of financial covenants
specified in the terms of the loans and the corresponding values at 31 December 2020.
FINANCIAL COVENANTS Requirements
Group equity ratio >%
Group interest-bearing net liabilities / EBITDA <.
GROUP EQUITY RATIO
31 Dec
Equity, EUR million . .
Equity and liabilities total minus advances received, EUR million ,. ,.
Equity ratio, % .% .%
GROUP INTERESTBEARING NET LIABILITIES / GROUP EBITDA
EUR million, 31 Dec
Interest-bearing net liabilities -. -.
EBITDA . .
Interest-bearing net liabilities / EBITDA -. -.
6.3 Equity
Accounting policies
Ordinary shares are presented as share capital. Transaction costs directly due to issuance of new shares or options are
presented in equity including tax eects as a decrease in payments received. If a Group company purchases shares in the
Company, the payment and direct costs relating to the acquisition are deducted from the equity.
The expendable fund and reserve for invested unrestricted equity are included in distributable funds under the Finnish Limited
Liability Companies Act.
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CHANGES IN SHARE CAPITAL
A shares B shares Total
Share capital
EUR million
Total number of shares at 1 Jan 2019 ,, ,, ,, .
Conversions of A shares to B shares in 1 Jan–31 Dec 2019 -, ,
Total number of shares at 31 Dec 2019 ,, ,, ,, .
Cancellation during the financial period -, -,
Conversions of A shares to B shares in 1 Jan–31 Dec 2020 -,, ,,
Total number of shares at 31 Dec 2020 ,, ,, ,, .
Number of treasury shares at 31 Dec 2020 , ,
Total number of shares at 31 Dec 2020, excluding treasury shares ,, ,, ,,
Total number of votes at 31 Dec 2020 excluding treasury shares ,, ,, ,,
On 31 December 2019 Orion had a total of 141,134,278 (141,257,828) shares, of which 35,122,793 (36,335,463) were A shares and
106,011,485 (104,922,365) B shares. The Group’s share capital was EUR 92,238,541.46 (92,238,541.46). At the end of 2020 Orion
held 671,082 (765,399) B shares as treasury shares. On 31 December 2020 the aggregate number of votes conferred by the A and
B shares was 807,796,263 (830,866,226) excluding treasury shares.
All shares issued have been paid in full.
Orion’s shares have no nominal value. The counter book value of the A and B shares is about EUR 0.65 per share.
Each A share entitles its holder to twenty (20) votes at General Meetings of Shareholders and each B share one (1) vote.
However, a shareholder cannot vote more than 1/20 of the aggregate number of votes from the dierent share classes
represented at the General Meetings of Shareholders. In addition, Orion and Orion Pension Fund do not have the right to vote
at Orion Corporation’s General Meetings of Shareholders.
Both share classes, A and B, confer equal rights to the Company’s assets and dividends.
The Articles of Association entitle shareholders to demand the conversion of their A shares to B shares within the limitation on
the maximum number of shares of a class. In 2020 a number of 1,140,020 A shares were converted to B shares.
Orion cancelled 63,650 Orion Corporation A shares and 59,900 Orion Corporation B shares on the Company’s joint account on
25 June 2020. According to the decision made by the Annual General Meeting of 6 May 2020 on the forfeiture of shares onthe
joint account, these shareshad been transferred to the Company.
According to Orion’s Articles of Association, the minimum number of all shares in the Company is one (1) and the maximum
number is 1,000,000,000. A maximum number of 500,000,000 of the shares shall be A shares and a maximum number of
1,000,000,000 shares shall be B shares.
Orion’s Board of Directors was authorised by the Annual General Meeting on 26 March 2019 to decide on acquisition of shares
in the Company and on a share issue in which shares held by the Company can be conveyed.
The Board of Directors is authorised to decide on conveyance of no more than 850,000 Orion Corporation B shares held by the
Company. They authorisation to issue shares is valid for five years from the decision taken by the Annual General Meeting. The
authorisation to be exercised is described in Note 4.1 under “Share-based payments”.
The Board of Directors is not authorised to increase the share capital or to issue bonds with warrants or convertible bonds or
stock options.
After the end of the period, the Board of Directors proposed a dividend of EUR 1.50 per share to be distributed.
OTHER RESERVES
EUR million
Expendable fund . .
Reserve for invested unrestricted equity . .
Reserve funds . .
Total . .
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Translation dierences
Translation dierences include those arising from translation of the financial statements of foreign entities.
Dividends and other distribution of profits
A dividend of EUR 1.50 (2019: 1.50) per share were distributed in the 2020 financial year. In addition, donations of EUR 0.3
(2019: 0.3) million were distributed from profit funds.
6.4 Interest-bearing liabilities
Carrying amount Fair value Carrying amount Fair value
EUR million, 31 Dec
Loans from credit institutions . .
Lease liabilities . . . .
Non-current liabilities total . . . .
Carrying amount Fair value Carrying amount Fair value
EUR million, 31 Dec
Lease liabilities . . . .
Current liabilities total . . . .
The carrying value of lease liabilities can be considered as the fair value because of the short-term nature of the agreements.
The fair value of a bond was based on the estimated market value received from the bank. The market interest rate at the end
of the financial year was 0%, above which a company-related margin was added in discounting.
6.5 Cash and cash equivalents
Carrying amount Fair value Carrying amount Fair value
EUR million, 31 Dec
Cash and bank balances . . . .
Money market investments . .
Total . . . .
Money market investments included in cash and cash equivalents are band deposits, certificates of deposit and commercial
paper with maturities of no more than three months on acquisition issued by banks and companies.
6.6 Other investments
Other investments, with asset value of EUR 0.2 (2019: 0.2) million at 31 December 2020, include mainly shares and investments
in unlisted companies. They are stated at cost, because their fair value cannot be determined reliably.
6.7 Derivatives
NOMINAL VALUES AND MATURITY OF DERIVATIVES
EUR million, 31 Dec
Currency derivatives
Currency forward contracts and currency swaps . .
Currency options . .
All derivatives have a maturity less than one year.
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FAIR VALUES OF DERIVATIVES
EUR million, 31 Dec
Positive Negative Net Net
Non-hedge-accounting derivatives
Currency forward contracts and currency swaps . - . . -.
Currency options . - . . - .
All derivatives are OTC derivatives, and market quotations at the end of the reporting period have been used for determining
their fair value. Derivatives measured at fair value have been reported in the consolidated statement of financial position on a
gross basis. Derivative contract terms agreed with banks allow netting in the event of payment default or bankruptcy, among
other things. At the end of the reporting period, after netting the counterparty risk to Orion was EUR 0.5 (2019: 0.0) million and
to counterparties EUR 0.0 (2019: 0.6) million.
6.8 Contingent liabilities and commitments
Accounting policies
A contingent liability is a potential liability based on previous events. It depends on the realisation of an uncertain future event
beyond the Group’s control. Contingent liabilities also include obligations that will most likely not lead to a payment or its size
cannot be reliably determined. Contingent liabilities are disclosed in the Notes.
COMMITMENTS AND CONTINGENCIES
EUR million, 31 Dec
Contingencies for own liabilities
Guarantees . .
Other . .
Commitments
Orion has commitments for the acquisition of property, plant and equipment, which mainly concern existing factories and
premises in Finland.
Significant legal proceedings
Companies belonging to the Orion Group are parties to various legal disputes, which are not, however, considered to be
significant legal proceedings for the Group.
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7 Other notes
7.1 Related party transactions
In the Orion Group, the related parties are deemed to include the parent company Orion Corporation, the subsidiaries and
associated and aliated companies, the members of the Board of Directors of Orion Corporation, the members of the Executive
Management Board of the Orion Group, the immediate family members of these persons, the companies controlled by these
persons, and the Orion Pension Fund.
Related party transactions
The Group’s material related party transactions relate to pension contributions paid to the Orion Pension Fund and services
acquired from Lääkärikeskus Aava Oy. Services were purchased from Lääkärikeskus Aava Oy during the financial year 2020 for
EUR 0.2 million. The Group’s debt to Lääkärikeskus Aava Oy at the end of the financial year 2020 was EUR 0.0 million.
MANAGEMENT’S EMPLOYMENT BENEFITS
EUR million
Salaries and other short-term employment benefits . .
Share-based benefits . .
Post-employment benefits . .
SALARIES AND REMUNERATION
EUR million
Timo Lappalainen, President and CEO . .
Mikael Silvennoinen, Chairman . .
Timo Maasilta, Vice chairman . .
Kari Jussi Aho .
Pia Kalsta . .
Ari Lehtoranta . .
Hilpi Rautelin . .
Eija Ronkainen . .
Heikki Westerlund . .
Board of Directors, total . .
Exact figures are available in the Corporate Governance Statement, under Remuneration Statement
The retirement age of the parent company’s President and CEO is agreed to be 60 years and the pension level 60% of the
agreed pensionable salary. During the period EUR 0.1 (2019: 0.1) million was recorded as expenses for the statutory pension and
EUR 0.6 (2019: 0.5) million for the supplementary pension of the parent company’s President and CEO.
Loans, guarantees and other commitments to or on behalf of the related parties
Orion Corporation is the lender of an interest-bearing loan of EUR 0.4 million to Hangon Puhdistamo Oy.
7.2 Auditor’s remuneration
EUR million
Auditing . .
Assignments under Auditing Act Section 1 Subsection 1 Paragraph 2 . .
Advice on taxation .
Other services .
Total . .
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7.3 Group companies
Group Parent company
31 Dec 2020 Ownership % Share of votes % Ownership % Share of votes %
Pharmaceuticals
Parent company Orion Corporation, Espoo
Fermion Oy, Espoo . . . .
Kiinteistö Oy Harmaaparta, Espoo . . . .
Kiinteistö Oy Tonttuvainio, Espoo . . . .
Orion Export Oy, Espoo¹ . . . .
Saiph Therapeutics Oy, Espoo¹ . . . .
FinOrion Pharma India Pvt. Ltd., India . . . .
OOO Orion Pharma, Russia . .
Orion Pharma (Austria) GmbH, Austria . . . .
Orion Pharma (Ireland) Ltd., Ireland . . . .
Orion Pharma (UK) Ltd., United Kingdom . . . .
Orion Pharma A/S, Denmark . . . .
Orion Pharma AB, Sweden . . . .
Orion Pharma AG, Switzerland . . . .
Orion Pharma AS, Norway . . . .
Orion Pharma BVBA, Belgium . . . .
Orion Pharma d.o.o., Slovenia . . . .
Orion Pharma East LLP, Kazakstan . . . .
Orion Pharma GmbH, Germany . . . .
Orion Pharma Hellas, Pharmakeftiki Mepe, Greece . . . .
Orion Pharma Kft., Hungary . . . .
Orion Pharma (MY) SDN. BMD., Malaysia . . . .
Orion Pharma Poland Sp. z o.o., Poland . . . .
Orion Pharma Romania S.R.L., Romania . . . .
Orion Pharma (SG) Pte. Ltd., Singapore . . . .
Orion Pharma S.L., Espanja . . . .
Orion Pharma S.r.l., Italy . . . .
Orion Pharma s.r.o., Czech . . . .
Orion Pharma s.r.o., Slovakia . . . .
Orion Pharma SA, France . . . .
Orion Pharma Thai Co, Ltd., Thailand . . . .
Orion Pharma, Inc., USA¹ . . . .
Orionfin Unipessoal Lda, Portugal . . . .
OÜ Orion Pharma Eesti, Estonia . . . .
TOV Orion Pharma Ukraine, Ukraine . . . .
UAB Orion Pharma, Lithuania . . . .
These companies are not engaged in business activities.
There are no companies in which the Group’s ownership is 1/5 or more that have not been consolidated as associated
companies or subsidiaries.
7.4 Events after the end of the reporting period
There have been no other events after the reporting period.
ORION CORPORATION | Financial Statement documents 2020
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Parent company Orion corporation’s
financial statements (FAS)
EUR million Note
Net sales . .
Other operating income . .
Operating expenses , -. -.
Depreciation, amortisation and impairment -. -.
Operating profit . .
Finance income and expenses . .
Profit before extraordinary items, appropriations and taxes . .
Appropriations . .
Income tax expense -. -.
Profit for the period . .
Income Statement
ORION CORPORATION | Financial Statement documents 2020 |
Balance Sheet
ASSETS
EUR million, 31 Dec Note
Intangible rights . .
Other long-term expenditure . .
Intangible assets total . .
Land . .
Buildings and constructions . .
Machinery and equipment . .
Other tangible assets . .
Advance payments and construction in progress . .
Tangible assets total . .
Holdings in Group companies . .
Other investments . .
Investments total . .
Non-current assets total . .
Inventories . .
Non-current receivables . .
Trade receivables . .
Other current receivables . .
Investments .
Cash and bank . .
Current assets total . .
Assets total . .
LIABILITIES
EUR million, 31 Dec Note
Share capital . .
Expendable fund . .
Reserve for invested unrestricted equity . .
Retained earnings . .
Profit for the period . .
Shareholders’ equity . .
Appropriations . .
Provisions . .
Loans from credit institutions .
Non-current liabilities total .
Trade payables . .
Other current liabilities . .
Current liabilities total . .
Liabilities total . .
ORION CORPORATION | Financial Statement documents 2020
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Cash flow statement
EUR million
Operating profit . .
Depreciation, amortisation and impairment . .
Other adjustments . .
Total adjustments to operating profit . .
Change in non-interest-bearing current receivables . -.
Change in inventories -. .
Change in non-interest-bearing current liabilities . .
Total change in working capital¹ . .
Interest and other financial expenses paid -. -.
Dividends received² . .
Interest and other financial income received² . .
Income tax paid -. -.
Total net cash flow from operating activities . .
Investments in intangible assets -. -.
Investments in tangible assets -. -.
Sales of intangible assets .
Sales of tangible assets . .
Investment in subsidiary shares -.
Sale of subsidiary .
Sales of other investments .
Repayments of loan receivables . .
Total net cash flow from investing activities -. -.
Repurchase of treasury shares -.
Non-current loans raiseed .
Current loans raised .
Repayments of current loans -. -.
Dividends paid and other distribution of profits -. -.
Group contributions received . .
Total cash flow from financing activities -. -.
Net change in cash and cash equivalents . -.
Cash and cash equivalents at 1 Jan³ . .
Net change in cash and cash equivalents . -.
Cash and cash equivalents at 31 Dec³ . .
The change of the short-term loans and receivables between the parent company and the Finnish subsidiaries are recorded in the change of the
parent company’s working capital at their gross value.
The dividends and interest paid by the subsidiaries are included in the cash flow from operating activities of the parent company.
Cash and cash equivalents include liquid securities with a very low fluctuation-in-value risk, as well as cash in hand and at bank.
ORION CORPORATION | Financial Statement documents 2020 |
Parent company notes to the financial statements for 2020 (FAS)
The parent company of the Orion Group is Orion Corporation, business ID 1999212-6, domiciled in Espoo.
The Orion Group’s first financial year was 1 July–31 December 2006, because the Group came into being on 1 July 2006
following the demerger of its predecessor Orion Group into a pharmaceuticals and diagnostics business and a pharmaceutical
wholesale and distribution business. Orion Corporation was listed on the Helsinki stock exchange on 3 July 2006.
Accounting policies
The Financial Statements of Orion Corporation are prepared in accordance with the Finnish Accounting Act, as well as other
provisions and regulations related to compilation of financial statements.
Non-current assets
The Balance Sheet values of intangible and tangible assets are based on their historical costs, depreciated according to plan.
The depreciation according to plan is based on the economic life of the assets, following the straight-line depreciation method.
The historical cost of the intangible and tangible assets includes assets with remaining economic life, as well as fully depreciated
non-current asset items that are still in operative use. The corresponding policies are applied to the accumulated depreciation.
The economic lives of various asset categories are as follows:
• intangible rights and other capitalised expenditure 5–10 years
• goodwill 5–20 years
• buildings 20–40 years
• machinery, equipment and furniture 5–10 years
• vehicles 6 years
• other tangible assets 10 years
As a rule, goodwill is amortised over five years. In certain cases, however, the estimated economic life of the goodwill is longer,
but at maximum twenty years. Other long-term expenditure items that generate or maintain income for three years or longer are
capitalised and are normally depreciated over five years.
Land areas and revaluations are not depreciated according to plan. The production and oce facilities were revalued in the
Orion Group in the 1970s and 1980s. The revaluations are based on valuation of each asset separately.
Research and development expenses
R&D expenses are entered as expenses during the financial year in which they are incurred.
Inventories
Inventories are presented in the Balance Sheet using the standard price for self-manufactured products, and for purchased
products the weighted average cost method using the value of the purchase and variable conversion costs, or if lower, the net
realisable or replacement value
Foreign currency transactions
The valuation of the receivables and liabilities denominated in foreign currencies is based on the exchange rates quoted by the
European Central Bank on the reporting date. The resulting translation gains and losses are recognised through profit or loss.
Translation gains and losses related to business operations are recorded as adjustments of sales and purchases, whereas those
related to financial items are recognised under financial income or expenses.
ORION CORPORATION | Financial Statement documents 2020
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Financial assets and liabilities and derivative financial instruments
Other investments, derivatives and part of securities are measured at fair value using an alternative treatment allowed under
the Finnish Accounting Act Chapter 5, Section 2a. Other loans and receivables and other financial liabilities included in financial
instruments are measured at amortised cost.
Other investments include shares and investments, securities include interest instruments, which are included in current assets.
Other investments are measured at fair value using the price quoted in active markets on the reporting date. Investments in
unquoted shares are measured at acquisition cost because their fair value cannot be measured using the fair value method.
Loans and receivables comprise cash and cash equivalents, loans granted, and trade and other receivables. Other financial
liabilities include interest-bearing liabilities and trade and other payables.
Foreign exchange derivatives for hedging currency risk are measured at fair value using market prices on the reporting date.
The fair value of foreign exchange derivatives that hedge operative items is recorded in other operating income and expenses,
whereas the fair value of foreign exchange derivatives that hedge loans and receivables denominated in foreign currencies is
recorded in translation dierences in the financial items.
Provisions
Commitments by the Company to future expenses that are unlikely to generate corresponding revenue are deducted from
income as provisions. Similarly, future losses that are likely to materialise are deducted from income.
Net sales
Net sales include revenue from sales of goods and services adjusted for indirect taxes, discounts and currency translation
dierences on sales in foreign currencies. Net sales also include milestone payments under contracts with marketing partners,
which are paid by the partner as a contribution to cover the R&D expenses of a product during the development phase and are tied
to certain milestones in research projects. In addition, net sales include royalties from the products licensed out by the Group.
Revenue from sales of goods is recognised when the significant risks and rewards of ownership of the goods have been transferred
to the buyer. Revenue from services is recognised when the service has been provided. Milestone payments are recognised when
the R&D project has progressed to a phase that, in accordance with an advance agreement with the partner, triggers the partner’s
obligation to pay its share. Royalties are recorded on an accrual basis in accordance with the licensing agreements.
Share-based payment
The share-based incentive plan for key employees approved by the Board of Directors includes the portion to be settled in
shares and the portion to be settled in cash. The portion to be settled in shares does not give rise to any entries aecting
the accounts. The rights relating to the portion to be settled in cash are valued at fair value at the balance sheet date and are
recognised as expense during the vesting period of the right. The estimate of the final number of shares and associated cash
payments is updated at each reporting date. Further information on share-based payments are given in the note 4. Operating
expenses, depreciation, amortisation and impairment.
Pension arrangements
The pension security of the Company’s employees has been arranged through the Orion Pension Fund and pension insurance
companies. Supplementary pension security has been arranged through the pension fund for employees whose employment
began prior to 25 June 1990 and continues until retirement. Supplementary pensions for some executives have also been
arranged through pension insurance companies. The pension liability of the Orion Pension Fund is covered in full.
Income taxes
Income taxes comprise the taxes based on taxable profit and tax adjustments to previous financial periods. The financial
statements do not itemise the deferred tax liabilities and assets, but the notes record the deferred tax liabilities and assets
recognised in the balance sheet. These deferred tax liabilities or assets are calculated from material dierences due to timing
between the tax assessment and the financial statements, using the tax rate confirmed at the time of the financial statements
for subsequent years.
ORION CORPORATION | Financial Statement documents 2020
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1 Net sales
NET SALES BY BUSINESS AREA
EUR million
Pharmaceuticals business . .
Total . .
NET SALES BY MARKET AREA
EUR million
Finland . .
Scandinavia . .
Other Europe . .
North America . .
Other countries . .
Total . .
2 Other operating income
EUR million
Service charges received from Group companies . .
Rental income . .
Returned royalties .
Gains on sales of property, plant and equipment and intangible assets . .
Gains on sales of shares . .
Other operating income . .
Total . .
3 Change in provisions
EUR million
Change in provisions . .
Total, increase (-), decrease (+) . .
ORION CORPORATION | Financial Statement documents 2020
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4 Operating expenses, depreciation, amortisation and impairment
OPERATING EXPENSES
EUR million
Increase (-) or decrease (+) in stocks of finished goods or work in progress -. .
Production for own use -. -.
Raw materials and services
Purchases during the financial year . .
Increase (-) or decrease (+) in stocks -. -.
External services . .
Total . .
Personnel expenses
Wages and salaries . .
Pension expenses . .
Share-based incentive plan . .
Other social security expenses . .
Total . .
Other operating expenses . .
Total . .
The accounting method of expenses of the share-based incentive plan was revised in the 2020 financial year. In accordance with
the Accounting Board’s statement no. 1998 issued on 15 January 2020, no entries that aect accounting should arise from the
portion of share-based payments that is settled in the form of shares. The expenses arising from the share-based incentive plan
in the 2020 financial year thus only include the expense arising from the portion that is settled in cash. The expense for the 2019
comparative period has not been adjusted, and it includes the expenses arising from both the portion settled in the form of
shares as well as in cash.
Voluntary social security expenses are included in other operating expenses.
AUDITOR’S REMUNERATION
EUR million
Auditing fee . .
Assignments under Auditing Act Section 1 Subsection 1 Paragraph 2 . .
Other services .
Total . .
DEPRECIATION, AMORTISATION AND IMPAIRMENT
EUR million
Impairment . .
Other depreciation and amortisation . .
Total . .
See Balance Sheet Notes 8–9 for depreciation and amortisation by Balance Sheet item for the financial year.
See Accounting Policies for the financial statements of the parent company for basis of provisions according to plan.
AVERAGE NUMBER OF EMPLOYEES
Average number of employees during the financial year , ,
ORION CORPORATION | Financial Statement documents 2020
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Share-based payments
The Group has two share-based incentive plans in force for key persons of the Group.
The plan that commenced in 2016 includes earning periods and the Board of Directors has annually decided on the beginning
and duration of the earning periods in 2016, 2017 and 2018. The Board of Directors has decided on the earning criteria and
targets to be established for them at the beginning of each earning period. Two earning periods, calendar year 2016 and
calendar years 2016–2018, commenced upon implementation of the plan. Two earning periods, calendar year 2017 and calendar
years 2017–2019, commenced in 2017. Two earning periods, calendar year 2018 and calendar years 2018–2020, commenced in
2018. The reward under the plan for the earning periods 2016, 2017 and 2018 is based on the Orion Group’s operating profit and
for the earning periods 2016–2018, 2017–2019 and 2018–2020 on the total return on Orion Corporation B shares.
The target group of the plan consists of no more than 50 people. The total maximum amount of rewards to be paid based on
the plan is 500,000 Orion Corporation B Shares and a cash payment corresponding to the value of the shares. By 31 December
2020, a total of 216,659 Orion Corporation B shares had been paid as rewards under this plan.
Under the plan, shares received based on one-year earning periods cannot be transferred during the restricted period
determined in the plan. There is no restricted period for the three-year earning periods. The value of reward to be paid based on
the plans during one calendar year is a key person’s gross annual salary multiplied by 1.75, in the maximum, at the date of the
reward payment.
The plan than commenced in 2019 includes five earning periods, which are the calendar years 2019, 2019–2020, 2019–2021,
2020–2022 and 2021–2023. The Board of Directors decides on the earnings criteria and on targets to be established for them
at the beginning of each earning period. Three earning periods, calendar year 2019, calendar years 2019–2020 and 2019–2021,
commenced upon implementation of the plan. One earning period, calendar years 2020–2022, commenced in 2020. The
potential rewards of the plans for the earning periods commencing in 2019 and 2020 are based on achieving the Orion Group’s
operating profit and net sales targets.
The target group of the plan consists of approximately 50 people. The total maximum amount of rewards to be paid on the
basis of the plan is 700,000 Orion Corporation B shares and a cash payment corresponding to the value of the shares. The total
maximum amount includes a separate, so called reward for commitment part that the Board of Directors can use by a separate
decision during the years 2019–2023. The maximum amount of the reward for commitment is no more than 100,000 shares
and a cash payment corresponding to the value of the shares. By 31 December 2020, a total of 58,661 B shares had been paid as
rewards under this plan.
Under the plan, shares received based on one-year and two-year earning periods cannot be transferred during the restricted
period determined in the plan. There is no restriction period for the three year earning periods.
The rewards under the plan shall be paid partly in the form of the Company’s B shares and partly in cash. Rewards have been
paid and potential future rewards, shall be paid as follows:
Earning period
Reward paid on /
potential reward to be paid in
2016 Mar
2017 Mar
2016–2018 Mar
2018 Mar
2017–2019 Mar
2018–2020
2019 Mar
2019–2020
2019–2021
2020–2022
2021–2023
ORION CORPORATION | Financial Statement documents 2020
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5 Finance income and expenses
EUR million
Income from Group companies . .
Income from other non-current investments
Dividend income from other shares and equity . .
Interest income from Group companies
Interest income from other companies . .
Other interest and finance income
Interest income from Group companies . .
Interest income from other companies . .
Change in values . .
Other finance income . .
Interest expenses and other finance expenses
Interest expenses to Group companies - . -.
Interest expenses to others -. -.
Other finance expenses -. -.
Total . .
FINANCE INCOME AND EXPENSES INCLUDE
EUR million
Income from equity in other companies . .
Interest income . .
Interest expenses -. -.
6 Appropriations
EUR million
Change in cumulative accelerated depreciation . .
Group contribution received . .
Total . .
ORION CORPORATION | Financial Statement documents 2020
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7 Income taxes
EUR million
Income tax on ordinary activities . .
Tax adjustments for previous financial years -. .
Total . .
Deferred tax liability and deferred tax asset
No deferred tax liability or deferred tax asset of the Parent company has been recorded in the Company’s Balance sheet.
DEFERRED TAX ASSET
EUR million
Provisions . .
Total . .
DEFERRED TAX LIABILITY
EUR million
Appropriations . .
Revaluations . .
Total . .
8 Intangible assets
Intangible rights Goodwill
Other capitalised
expenditure Total
EUR million
Acquisition cost at 1 Jan¹ . . . . . . . .
Additions . . . . . .
Disposals -. - . -. -. -.
Transfers between Balance Sheet items - . -. . . -. -.
Acquisition cost at 31 Dec . . . . . . . .
Accumulated amortisation and impairment at 1 Jan¹ -. -. -. -. -. -. -. -.
Accumulated amortisation on disposals . . . . .
Amortisation for the financial year -. -. -. -. -. -.
Impairment -. -. -. -.
Accumulated amortisation and impairment
at 31 Dec -. -. -. -. -. -. -. -.
Book value at 1 Jan . . . . . .
Book value at 31 Dec . . . . . .
Accumulated dierence between total and
planned amortisation at 1 Jan . . . . . .
Change in cumulative accelerated amortisation,
increase (+) / decrease (-) -. -. . . -. -.
Accumulated dierence at 31 Dec . . . . . .
Initial values include fixed asset items with remaining useful life and fully depreciated asset items still in operational use. Accumulated depreciation
is calculated in the corresponding way.
ORION CORPORATION | Financial Statement documents 2020 |
9 Tangible assets
Land and water
Buildings and
constructions
Machinery and
equipment
Other tangible
assets
1
Advance payments
and construction
in progress Total
EUR million
Acquisition cost at 1 Jan¹ . . . . . . . . . . . .
Additions . . . . . . . . . .
Disposals -. -. -. - . -. - . -. -.
Transfers between
Balance Sheet items . . . . . . -. -. . .
Acquisition cost at 31
Dec . . . . . . . . . . . .
Accumulated
depreciation at Jan¹ -. -. -. -. -. -. -. -.
Accumulated
depreciation on
disposals and transfers . . . . . .
Depreciation for the
financial year -. -. -. -. -. - . -. -.
Accumulated
depreciation at 31 Dec -. -. -. -. -. -. -. -.
Book value at 1 Jan . . . . . . . . . . . .
Book value at 31 Dec . . . . . . . . . . . .
Accumulated dierence
between total and
planned depreciation
at 1 Jan . . . . . . . .
Change in cumulative
accelerated
depreciation, increase
(+) / decrease (-) . . . -. . . . -.
Accumulated dierence
at 31 Dec . . . . . . . .
Initial values include fixed asset items with remaining useful life and fully depreciated asset items still in operational use. Accumulated depreciation
is calculated in the corresponding way.
The book value of production machines and equipment at 31 December 2020 was EUR 50.8 (2019: 54.2) million. The revaluation
included in the acquisition cost of land was EUR 0.1 (2019: 0.1) million and in the acquisition cost of buildings EUR 16.5 (2019:
16.5) million.
ORION CORPORATION | Financial Statement documents 2020
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10 Investments
Shares in
Group companies
Receivables from
Group companies
Other shares
and equity Loan receivables
Total
EUR million
Acquisition cost at 1 Jan . . . . . . . . .
Additions . .
Disposals -. -. -. - . -. - . - . -.
Acquisition cost at 31 Dec . . . . . . .
Accumulated impairment at 1 Jan -. -. -. -. -.
Change during the period . .
Accumulated impairment at 31 Dec -. -. -. -.
Book value at 1 Jan . . . . . . . . .
Book value at 31 Dec . . . . . . .
Loan receivables are equity loan receivables under the Companies Act.
11 Inventories
EUR million, 31 Dec
Raw materials and consumables . .
Work in progress . .
Finished products/goods . .
Other inventories . .
Total . .
12 Non-current receivables
EUR million, 31 Dec
Other receivables from Group companies . .
Loan receivables from associated companies . .
Other loan receivables . .
Total . .
ORION CORPORATION | Financial Statement documents 2020
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13 Current receivables
EUR million, 31 Dec
Trade receivables . .
Receivables from Group companies
Trade receivables . .
Loan receivables . .
Other receivables . .
Prepaid expenses and accrued income . .
Total . .
Loan receivables from associated companies . .
Other loan receivables . .
Other receivables . .
Prepaid expenses and accrued income . .
Total . .
MATERIAL ITEMS INCLUDED IN PREPAID EXPENSES AND ACCRUED INCOME
EUR million, 31 Dec
Income tax receivable .
Receivables from royalties . .
Prepayments for services and maintenance . .
Price dierencies from sales and other sales accruals . .
Pending contributions . .
Pending price dierencies . .
Prepaid sales rights .
Pending compensations . .
Prepaid remunerations under incentive plan . .
Receivables based on derivative contracts . .
Pending compensation due to inventory write-down .
Other prepaid expenses and accrued income . .
Total . .
14 Investments
EUR million, 31 Dec
Other securities: interest instruments .
Total .
DIFFERENCE BETWEEN MARKET VALUE AND BOOK VALUE
EUR million, 31 Dec
Market value .
Corresponding book value -.
Accrued interest from interest instruments included in prepayments and accrued income -.
Dierence .
ORION CORPORATION | Financial Statement documents 2020
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15 Shareholder’s equity
SHARE CAPITAL
Share capital
Share capital at 1 Jan . .
Share capital at 31 Dec . .
EXPENDABLE FUND
EUR million
Expendable fund at 1 Jan . .
Expendable fund at 31 Dec . .
RESERVE FOR INVESTED UNRESTRICTED EQUITY
EUR million
Reserve for invested unrestricted equity at 1 Jan . .
Reserve for invested unrestricted equity at 31 Dec . .
RETAINED EARNINGS
EUR million
Retained earnings at 1 Jan . .
By decision of Annual General Meeting
dividends distributed -. -.
donations made -. -.
share rewards paid . .
repurchase of own shares -.
Cancellation of shares .
Unpaid dividends . .
Profit for the financial year . .
Retained earnings at 31 Dec . .
PARENT COMPANY SHARE CAPITAL BY SHARE CLASS
31 Dec number EUR number EUR
A shares (20 votes/share) ,, ,,
B shares (1 vote/share) ,, ,,
Total ,, ,,. ,, ,,.
During the financial year 1 January to 31 December 2020 1,149,020 A shares were converted into B shares. A total of 63,650 A
shares and 59,900 B shares were cancelled during the year.
16 Appropriations
EUR million, 31 Dec
Cumulative accelerated depreciation . .
Total . .
ORION CORPORATION | Financial Statement documents 2020
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17 Provisions
EUR million, 31 Dec
Pension provisions . .
Total . .
18 Non-current liabilities
EUR million, 31 Dec
Loans from credit institutions .
Total .
19 Current liabilities
EUR million, 31 Dec
Advances received . .
Trade payables . .
Liabilites to Group companies
Trade payables . .
Accrued liabilities and deferred income . .
Other liabilities . .
Total . .
Other liabilities . .
Accruals and deferred income . .
Total . .
MATERIAL ITEMS INCLUDED IN ACCRUED LIABILITIES AND DEFERRED INCOME
EUR million, 31 Dec
Liabilities from share-based incentive plan . .
Other accrued salary, wage and social security payments . .
Accrued price reductions . .
Accrued price adjustments related to sales and purchases . .
Accrued prepayments of sales rights .
Accrued R&D expenses . .
Non-sold part of repurchased inventories .
Accrued royalties and commisions . .
Accrued litigation costs . .
Accrued sales compensations . .
Accrued expert fees . .
Withholding tax provision related to dividends .
Non-paid compensation on royalty income .
Liabilities on derivative contracts . .
Tax liability .
Accrued interest .
Other accrued liabilities and deferred income . .
Total . .
ORION CORPORATION | Financial Statement documents 2020
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LIABILITIES INCLUDE
EUR million, 31 Dec
Non-current interest-bearing liabilities .
Current interest-bearing liabilities . .
Current non-interest-bearing liabilities . .
Total . .
20 Notes relating to members of administrative bodies
SALARIES AND REMUNERATION PAID TO MEMBERS OF ADMINISTRATIVE BODIES OF THE COMPANY
EUR million
President and CEO and members of Board of Directors . .
No partial remuneration has been paid.
No loans have been granted to the members of administrative bodies.
Management pension commitments
The retirement age of the Company’s President and CEO is agreed to be 60 years and the pension level 60% of the agreed
pensionable salary.
21 Contingencies
CONTINGENCIES FOR OWN LIABILITIES
EUR million, 31 Dec
Guarantees given . .
TOTAL GUARANTEES
EUR million, 31 Dec
Total guarantees . .
22 Liabilities and commitments
LEASE AGREEMENTS
EUR million, 31 Dec
Payments payable under lease agreements
within next 12 months . .
later than 12 months . .
Total . .
The terms of lease agreements are normal.
OTHER LIABILITIES
EUR million, 31 Dec
Drug damage liability . .
ORION CORPORATION | Financial Statement documents 2020
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VAT liability for real estate investments
The company is liable to review VAT deductions made for real estate investments completed in 2012–2020 if the use subject to
VAT decreases during the review period. The last review year is 2029 and the maximum liability is EUR 14.9 million.
23 Financial risks
The objective of the financial risk management is to decrease the negative eects of market and counterparty risks on the
Group’s profits and cash flows and to ensure sucient liquidity.
The main principles for financial risk management are defined in the Group Treasury Policy approved by the Board of Directors
of the parent company, and the Group Treasury is responsible for its implementation. Treasury activities are centralised in the
Group Treasury.
There are more information about the financial risks in the Group’s Financial Statements.The main dierence between
company’s and Group’s risk position is in the reported currency position, because (parent) company centrally hedges the
Group’s currency risk without implementing internal hedges separately with the subsidiaries.
24 Derivatives
NOMINAL VALUES AND MATURITY OF DERIVATIVES
EUR million, 31 Dec
Currency derivatives
Currency forward contracts and currency swaps . .
Currency options . .
All derivatives have a maturity less than one year.
FAIR VALUES OF DERIVATIVES
EUR million, 31 Dec Positive Negative Net Net
Non-hedge-accounting derivatives
Currency forward contracts and currency swaps . - . . -.
Currency options . -. . -.
FAIR VALUE MEASUREMENT AND HIERARCHY
Financial instruments measured at fair value in the stament of financial position are grouped as follows into three hierarchy
levels depending on the valuation technique
EUR million, 31 Dec 2020 Level Level Level Total
Derivatives
Currency derivatives . .
Other investments
Shares and investments . .
Assets total . . .
Derivatives
Currency derivatives -. -.
Liabilities total -. -.
ORION CORPORATION | Financial Statement documents 2020
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EUR million, 31 Dec 2019 Level Level Level Total
Derivatives
Currency derivatives . .
Money market investments . .
Other investments
Shares and investments . .
Assets total . . . .
Derivatives
Currency derivatives -. -.
Liabilities total -. -.
The fair value of level 1 financial instrument is based on quotations available in active markets. The fair value of level 2
derivatives is based on data feeds available in the markets. The fair value of level 3 financial instruments cannot be estimated on
the basis of data available in the markets.
The Group applies the principle of recognising transfers between levels of fair value hierarchy on the date on which the event
triggering the transfer occurred.
25 Holdings in other companies
See Note 7.3 Group companies in the Notes to the Consolidated financial statements for the Parent Company’s holdings in
other companies.
ORION CORPORATION | Financial Statement documents 2020
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Proposal by the Orion Corporation Board
of Directors on use of profit funds from
the financial year
The parent company’s distributable funds are EUR 477,075,050.26, including EUR 216,389,442.49 of profit for the financial year.
The Board of Directors proposes that the distributable funds of the parent company be used as follows:
• distribution of EUR 1.50 of dividend per share. No dividend shall be paid on treasury shares
held by the Company on the record date for dividend payment. On the day when the profit
distribution was proposed, the number of shares conferring entitlement to receive dividend
totalled 140,463,196, on which the total dividend would be EUR ,,.
• donations to medical and other purposes of
public interest as decided by the Board of Directors EUR ,.
• retention in equity EUR ,,.
EUR ...
There have been no material changes in the Company’s financial position since the end of the financial year. The liquidity of
the Company is good and, in the opinion of the Board of Directors, the proposed profit distribution would not compromise the
liquidity of the Company.
ORION CORPORATION | Financial Statement documents 2020
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Signatures for the Financial Statements
and Report by the Board of Directors
The Board of Directors submits these Financial Statements and the Report by the Board of Directors to the Annual General
Meeting of Shareholders for approval.
Espoo, 9 February 2021
Mikael Silvennoinen Timo Maasilta Kari Jussi Aho
Chairman Vice Chairman
Pia Kalsta Ari Lehtoranta Hilpi Rautelin
Eija Ronkainen
Timo Lappalainen
President and CEO
Our auditor’s report has been issued today.
Espoo, 9 February 2021
KPMG OY AB
Kimmo Antonen
Authorised Public Accountant
ORION CORPORATION | Financial Statement documents 2020
|
Report on the Audit of the Financial Statements
Opinion
We have audited the financial statements of Orion Corporation (business identity code 1999212-6) for the year ended 31
December 2020. The financial statements comprise the consolidated statement of financial position, income statement,
statement of comprehensive income, statement of changes in equity, statement of cash flows and notes, including a summary
of significant accounting policies, as well as the parent company’s balance sheet, income statement, cash flow statement and
notes.
In our opinion
• the consolidated financial statements give a true and fair view of the group’s financial position, financial performance and
cash flows in accordance with International Financial Reporting Standards (IFRS) as adopted by the EU
• the financial statements give a true and fair view of the parent company’s financial performance and financial position in
accordance with the laws and regulations governing the preparation of financial statements in Finland and comply with
statutory requirements.
Our opinion is consistent with the additional report submitted to the 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 accordance with
these requirements.
In our best knowledge and understanding, the non-audit services that we have provided to the parent company and group
companies are in compliance with laws and regulations applicable in Finland regarding these services, and we have not provided
any prohibited non-audit services referred to in Article 5(1) of regulation (EU) 537/2014. The non-audit services that we have
provided have been disclosed in note 7.2 to the consolidated financial statements.
We believe that the audit evidence we have obtained is sucient and appropriate to provide a basis for our opinion.
Materiality
The scope of our audit was influenced by our application of materiality. The materiality is determined based on our professional
judgement and is used to determine the nature, timing and extent of our audit procedures and to evaluate the eect of
identified misstatements on the financial statements as a whole. The level of materiality we set is based on our assessment
of the magnitude of misstatements that, individually or in aggregate, could reasonably be expected to have influence on the
economic decisions of the users of the financial statements. We have also taken into account misstatements and/or possible
misstatements that in our opinion are material for qualitative reasons for the users of the financial statements..
This document is an English translation of the Finnish auditor’s report. Only the Finnish version of the report is legally binding.
Auditor’s Report
To the Annual General Meeting of Orion Corporation
ORION CORPORATION | Financial Statement documents 2020
|
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial
statements of the current period. These matters were addressed in the context of our audit of the financial statements as a
whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. The significant risks of
material misstatement referred to in the EU Regulation No 537/2014 point (c) of Article 10(2) are included in the description of
key audit matters below.
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.
The Key Audit Matter How the matter was addressed in the audit
Revenue recognition (refer to no 2.1 Revenue from contracts with customers)
Both parent company’s net sales and consolidated net sales
comprise dierent revenue flows: product sales, revenue
from sales rights to products and revenue from clinical phase
research and development work undertaken with collaboration
Net sales include both fixed and variable considerations.
Variable considerations relate to various discounts or
incentives in sales of goods or to conditional milestone
payments in collaboration agreements, among other things.
Thus, revenue recognition involves management judgement.
Due to analyses of dierent contract terms and conditions
associated with the choice of a revenue recognition method
and high level of management judgement involved, revenue
recognition is considered a key audit matter.
Our audit procedures included evaluation of the revenue
recognition principles applied by the Group and assessment
of their appropriateness by reference to IFRS standards.
We assessed the eectiveness of control environment and
application controls in respect of the main sales software and
the related user rights management.
We identified and assessed internal controls over invoicing as
well as tested their eectiveness. In addition we performed
substantive testing and analytical procedures based partly
on data analytics in order to assess the appropriateness
of revenue recognition and the accounting treatment of
recording revenue and the related expenses in the correct
period.
We discussed with the management the revenue recognition
practices applied and decisions involving management
judgement which had a significant impact on revenue
recognition.
Furthermore, we considered the appropriateness of the
Group’s disclosures in respect of revenue recognition
principles and net sales.
ORION CORPORATION | Financial Statement documents 2020
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Inventories (refer to note 3.5 Inventories)
The inventories account for a significant amount
(approximately 23%) of the total consolidated assets.
Pricing of individual inventory items is based on the
functionality of information systems and the accuracy of
product-specific calculations.
Inventories are valued at cost or, if lower, at net realisable or
replacement value.
Management judgement is used in determining the need
for impairment and assessing aged items in the inventories.
Due to the significance of the inventories and management
judgement relating to the valuation, inventories is considered
a key audit matter.
Our audit procedures included consideration of the valuation
principles applied by the Group and assessment of their
appropriateness based on IFRS standards.
We assessed the eectiveness of control environment
and application controls in respect of the main inventory
management software and the related user rights
management.
We participated in physical stock counts in selected locations
and assessed the appropriateness of stock count processes.
We performed data analysis to test the appropriateness of
pricing and the reliability of valuation calculations
We assessed the suciency of impairment entries relating to
the inventories.
We considered the suciency of the Group’s disclosures in
respect of inventories and assessed their appropriateness.
ORION CORPORATION | Financial Statement documents 2020
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Responsibilities of the Board of Directors and the Managing Director
for the Financial Statements
The Board of Directors and the Managing Director are responsible for the preparation of consolidated financial statements
that give a true and fair view in accordance with International Financial Reporting Standards (IFRS) as adopted by the EU, and
of financial statements that give a true and fair view in accordance with the laws and regulations governing the preparation of
financial statements in Finland and comply with statutory requirements. The Board of Directors and the Managing Director are
also responsible for such internal control as they determine is necessary to enable the preparation of financial statements that
are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the Board of Directors and the Managing Director are responsible for assessing the parent
company’s and the group’s ability to continue as a going concern, disclosing, as applicable, matters relating to going concern
and using the going concern basis of accounting. The financial statements are prepared using the going concern basis of
accounting unless there is an intention to liquidate the parent company or the group or cease operations, or there is no realistic
alternative but to do so.
Auditor’s Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance
is a high level of assurance, but is not a guarantee that an audit conducted in accordance with good auditing practice will always
detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if,
individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the
basis of the financial statements.
As part of an audit in accordance with good auditing practice, we exercise professional judgment and maintain professional
skepticism throughout the audit. We also:
• Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and
perform audit procedures responsive to those risks, and obtain audit evidence that is sucient and appropriate to provide a
basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting
from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal
control.
• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate
in the circumstances, but not for the purpose of expressing an opinion on the eectiveness of the parent company’s or the
group’s internal control.
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related
disclosures made by management.
• Conclude on the appropriateness of the Board of Directors’ and the Managing Director’s use of the going concern basis of
accounting and based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions
that may cast significant doubt on the parent company’s or the group’s ability to continue as a going concern. If we conclude
that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the
financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit
evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the parent company
or the group to cease to continue as a going concern.
• Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether
the financial statements represent the underlying transactions and events so that the financial statements give a true and fair
view.
• Obtain sucient appropriate audit evidence regarding the financial information of the entities or business activities within the
group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and
performance of the group audit. We remain solely responsible for our audit opinion.
ORION CORPORATION | Financial Statement documents 2020
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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 requirements
regarding independence, and communicate with them all relationships and other matters that may reasonably be thought to
bear on our independence, and where applicable, related safeguards.
From the matters communicated with those charged with governance, we determine those matters that were of most
significance in the audit of the financial statements of the current period and are therefore the key audit matters. We describe
these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in
extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse
consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.
Other Reporting Requirements
Information on our audit engagement
We were first appointed as auditors by the Annual General Meeting on 20 March 2018, and our appointment represents a total
period of uninterrupted engagement of three years.
Other Information
The Board of Directors and the Managing Director are responsible for the other information. The other information comprises
the report of the Board of Directors. 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 above mentioned other information
and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our
knowledge obtained in the audit, or otherwise appears to be materially misstated. Our responsibility also includes considering
whether the report of the Board of Directors has been prepared in accordance with the applicable laws and regulations.
In our opinion, the information in the report of the Board of Directors is consistent with the information in the financial
statements and the report of the Board of Directors has been prepared in accordance with the applicable laws and regulations.
If, based on the work we have performed, we conclude that there is a material misstatement of the report of the Board of
Directors, we are required to report that fact. We have nothing to report in this regard.
Other statements
We support that the financial statements should be adopted. The proposal by the Board of Directors regarding the use of the
profit shown in the balance sheet is in compliance with the Limited Liability Companies Act. We support that the Members of
the Board of Directors and the Managing Director should be discharged from liability for the financial period audited by us.
Espoo 9 February 2021
KPMG OY AB
Kimmo Antonen
Authorised Public Accountant, KHT
ORION CORPORATION | Financial Statement documents 2020
|
To the Board of Directors of Orion Corporation
We have undertaken a reasonable assurance engagement on the iXBRLmarking up of the consolidated financial statements for
the year ended December 31,2020 included in the Orion Corporation’s digital files [74370029VAHCXDR7B745-2020-12-31_en.zip]
prepared in accordance with the requirements of Article 4 of EU Delegated Regulation 2018/815 (ESEF RTS).
The Responsibility of the Board of Directors and
Managing Director
The Board of Directors and Managing Director are responsible for preparing the report of the Board of Directors and financial
statements (ESEF financial statements) that comply with the requirements of ESEF RTS. This responsibility includes:
• preparation of ESEF financial statements in XHTML format in accordance with Article 3 of the ESEF RTS
• marking up the consolidated financial statements included in the ESEF financial statements with iXBRL tags in accordance
with Article 4 of the ESEF RTS; and
• ensuring consistency between ESEF financial statements and audited financial statements.
The Board of Directors and the Managing Director are also responsible for such internal control as they deem necessary to
prepare the ESEF financial statements in accordance with the requirements of the ESEF RTS.
Auditor’s Independence and Quality Control
We are independent of the company in accordance with the ethical requirements applicable in Finland, which apply to the
engagement we have performed, and we have fulfilled our other ethical obligations in accordance with these requirements.
The auditor applies International Standard on Quality Control 1 and accordingly maintains a comprehensive system of quality
control including documented policies and procedures regarding compliance with ethical requirements, professional standards
and applicable legal and regulatory requirements.
Auditor’s Responsibility
In accordance with the Engagement Letter our responsibility is to express an opinion on whether the marking up of the
consolidated financial statements included in the ESEF financial statements comply in all material respects with the Article 4 of
the ESEF RTS. We conducted our reasonable assurance engagement in accordance with International Standard on Assurance
Engagements 3000.
The engagement involves procedures to obtain evidence whether;
• the consolidated financial statements included in the ESEF financial statements are, in all material respects, marked up with
iXBRL tags in accordance with Article 4 of the ESEF RTS, and;
• the ESEF financial statements and the audited financial statements are consistent with each other.
The nature, timing and the extent of procedures selected depend on practitioner’s judgement. This includes the assessment of
the risks of material departures from the requirements set out in the ESEF RTS, whether due to fraud or error.
Independent Auditor’s Reasonable
Assurance Report on Orion Corporation’s
ESEF Financial Statements
This document is an English translation of the Finnish Independent Auditor’s Reasonable Assurance report.
Only the Finnish version of the report is legally binding.
ORION CORPORATION | Financial Statement documents 2020
|
We believe that the evidence we have obtained is sucient and appropriate to provide a basis for our opinion.
Opinion
In our opinion, the consolidated financial statements included in the ESEF financial statements of Orion Corporation identified
as [74370029VAHCXDR7B745-2020-12-31_en.zip] for the year ended December 31, 2020 are marked up, in all material respects,
in compliance with the ESEF Regulatory Technical Standard.
Our audit opinion relating to the consolidated financial statements of Orion Corporation for the year ended December 31, 2020
is set out in our Auditor’s Report. In this report, we do not express an audit opinion, review conclusion or any other assurance
conclusion on the consolidated financial statements.
Espoo 26 February 2021
KPMG OY AB
Kimmo Antonen
Authorised Public Accountant, KHT
ORION CORPORATION | Financial Statement documents 2020
|
Key events
in
May
Orion received total
of EUR28 million in
milestones from Bayer for
the first commercial sales
of darolutamide in
the EU and Japan
June
The US Food and Drug
Administration FDA granted
marketing authorisation
for Orion Animal Health’s
Clevor
®
product
March
Marketing authorisation
was granted for Nubeqa
®
in the European Union*
January
Marketing authorisation
was granted for Nubeqa
®
in Japan*
May
Orion’s Annual General
Meeting was held with
special arrangements due
to COVID-19 pandemic
June
Professor Outi Vaarala
started as Orion’s Senior
Vice President for Research
and Development
* Marketing authorisation is granted for the treatment of men with non-metastatic castration-resistant prostate cancer
(nmCRPC), who are at high risk of developing metastatic disease.
ORION CORPORATION | Financial Statement documents 2020 |
November
Orion announced
EUR 17 million investments
in its production plants
in Turku
September
The formulation patent
of Simdax
®
expired
in key markets
July
Orion’s phase 3 REFALS
trial evaluating the ecacy
of oral levosimendan
in treatment of ALS patients
did not reach its
pre-specified endpoints
September
Orion announced plans
to renew its R&D strategy
and organisation
ORION CORPORATION | Financial Statement documents 2020 |
