Corporate Governance

Internal auditing

The purpose of internal auditing and risk management is to ensure that the company’s operations are efficient and profitable, that the supply of information is reliable, and that the regulations and policies are observed. Internal auditors are responsible for helping the Board and the CEO to assess the appropriateness and effectiveness of the Group’s processes and systems, the efficiency and adequacy of internal auditing, and the accuracy and adequacy of the accounting and reporting. At Edita Group, internal auditing goals are decided upon annually by the Board by means of, for example, risk assessments. Practical implementation is entrusted to an independent external firm of authorized public accountants.

The internal audit reports to the Board of Directors or the Audit Committee. Internal audit assessments are distributed to Edita Group Plc’s Board of Directors, Audit Committee, auditors and CEO. The CEO, together with other executives, is responsible for ensuring that any actions required on account of observations made by internal auditors are duly initiated in accordance with the Board of Directors’ instructions.

Taking into consideration the size of the company and its level of internal auditing during the reporting period, no separate assignment concerning internal auditing was made during the year.

Auditing

The authorized public accountant firm elected by the Annual General Meeting to audit the parent company, Edita Group Plc, audits the entire Group with regard to accounting, financial statements, and administration each financial year. In addition to the audit report issued in connection with the company’s financial statements, the auditors also regularly report on their findings to the board and the board’s Audit Committee.

Edita Group Plc’s Auditor is KPMG Oy, with Ari Eskelinen, APA, acting as the auditor from 11 March on in charge for the reporting period. The total fees paid to the auditor for auditing and other services amounted to EUR 237,000 during the 18 months reporting period.

Risk management

The Board of Directors is responsible for the appropriate organization of risk management. Risk management is a part of the Board of Directors’ annual clock.

Risk management is an inseparable part of strategic planning and operational goal setting. Risk management is based on an organization-wide approach to identifying, assessing, managing, and monitoring material risks. The CEO and other executives ensure that risk management is a continuous, integral part of the Group’s day-to-day management and operations. The CEO and CFO together with the other management identify and monitor risks, develop, and coordinate risk management activities, as well as update the Group’s risk profile.

The executives report to the Board on the risks concerning each business area. Unless there is a need for ad-hoc reporting, the CEO reports to the Board on risk management annually in conjunction with budgeting. The Board of Directors deals with the most significant risks and evaluates the efficiency of risk management at least once a year. The external audit monitors risk management as a part of the regular auditing program.

Internal control

The Board of Directors, assisted by the Audit Committee, is responsible for the organization of internal control. The CEO manages the implementation of control and reports on it regularly to the Board.

Internal control is an integral part of the company’s governance and its management system. The internal control of operations is based on supervision and control systems built into the management system. The action plan and the regular reporting based on the action plan are, in addition to monthly financial reports, key practices that support management and internal control. Internal control is not a separate process. As part of the company’s functions, it covers all the company’s operating principles, guidelines and systems. The monitoring of policies and instructions is carried out by centralized support functions such as financial management, human resource management and information management, as well as by the external and internal audit.

The objective of internal control aimed at reliable financial reporting is to ensure that the reporting is reliable and complies with generally accepted principles, applicable legislation and regulations governing the preparation of financial statements. The company uses centralized financial and cash management. Financial reporting is based on financial processes, in which dangerous combinations of duties are avoided, and on internal policies such as approval authorizations, the investment policy and the financing policy. The achievement of financial targets and balance sheet management are monitored through monthly Group-wide reports.

Sustainability

Edita Group releases annual sustainability reports as part of annual reports. The sustainability activities cover responsibility related to the Environmental, Social and Governance aspects (ESG) and are integrated within the Edita Group’s business strategy. The Group also reports its financial responsibility as a part of its annual reporting. The goal of Edita Group’s Board of Directors, the Board Committees and other executives is to operate our business in a responsible way. Sustainability aspects and goals are re-evaluated and set annually as a part of the Group strategy process.

Compensation

Compensation of board members

The Annual General Meeting decides on the compensation of Board members annually. Members of the Board and its committees are financially compensated. Members of the Board are not entitled to incentive systems based on shares or share derivatives.

Compensation of the CEO and corporate executives

During the reporting period, the compensation of the Group CEO, Group executives and Business Area management teams consists of a fixed monthly salary and standard benefits. Parts of the corporate executives and key employees are also eligible for a performance-based incentive program. In 2023, the Group paid out incentives based on the Group performance targets for the budgeting year 2021. Edita Group does not use incentive systems based on shares or share derivatives.

Furthermore, the business areas can apply incentive systems based on sales and production efficiency. These systems do not overlap with the Group’s performance-based incentive system.

The Board of Directors of Edita Group decides the terms and conditions of the contracts as well as the compensation of the CEO and the Group executives. The Board also decides on the principles of compensation for other key positions.

Upon termination of their contracts, the CEO and other members of the Group executives will be entitled to the salary paid for the period of notice as well as benefits. The period of notices are in accordance with the state ownership policy in force at that time. The period of notice for the CEO when terminating their employment is six months for both parties. The period of notice for the managing directors of subsidiaries is six months when notice is served by the employer and three months if the notice is served by the managing director. The period of notice for terminating the employment of other members of the Group executives is three to six months when notice is served by the employer and three months when notice is served by the corporate executive in question. Upon termination of employment by the employer, the managing directors of subsidiaries will be entitled to compensation equivalent to maximum of three months’ salary in addition to the salary paid for the period of notice. Upon resignation, the corporate executive in question will only be entitled to the salary paid for the period of notice as well as benefits.

The CEO’s retirement age is set according to the legislation.