Economic impact and responsibility
Impact through risk-taking
As a government-owned company, Finnish Industry Investment has a special mandate and follows the Finnish government's ownership steering policies in its operations. The policy objectives are based on the best possible overall social and economic result, which is primarily evaluated on the basis of how the company achieves its service mission and the costs that this incurs. The government's ownership steering policy focuses on increasing ownership value in a sustainable and responsible manner, taking all stakeholders into account.
Alongside profitable operation, the company aims to have a positive social impact through the indirect effects of private equity and venture capital investment on Finland’s society and economy. These include the growth of Finnish companies, the creation of new jobs and preservation of existing jobs, and the renewal of economic structures.
FII's operations must be profitable over the long-term, meaning that the real value of the capital invested in the company must increase. The targets set for the company’s impact necessitate a higher level of risk-taking, and the risks taken can affect the company’s profitability.
The challenging nature of the business environment has in recent years also been reflected in the company’s financial result. FII’s operations have been profitable when reviewed over the whole period of operation.
The whole19 years of FII's operation:
- FII has posted profits after taxes amounting to €184 million and losses totalling €122 million.
- The cumulative total of €550 million of investments in FII by the Finnish government has grown into €597 million in shareholders’ equity.
- Calculated over the whole period of operation, the average return on investment to the government has been positive, at approx. 2 %.
The continuity and growth of FII's investment operations have been secured with government capitalisation and with financing from the company’s own income.
Continuity and growth of investment activities (31 Dec 2014)
|Group's investments and commitments, m€||744||763||719||670||667||603||559|
|Portfolio companies, directly and through funds||610||517||510||486||480||462||438|
|Consolidated profit/loss, m€||-43||-8||7||-13||-6||-12||-24|
|New commitments during financial year||83||130||57||78||106||65||152|
|Governmental equity investments in FII, since 1995||550||470||470||420||420||420||270|
Economic impacts through capital flows
FII's direct economic impacts comprise direct investments and capital calls paid to portfolio companies and funds, payments to suppliers of goods and services, personnel expenses, taxes paid and investments. FII also makes small donations to charitable bodies. The direct economic impacts on stakeholders are illustrated in the table.
|Capital flows by stakeholder group, € thousands|
|Portfolio companies||Direct investments paid||-39,884||-36,965||-24,611||-48,036||-52,637|
|Repayments of direct investments and sales proceeds||8,201||7,673||7,594||11,998||3,553|
|Portfolio funds||Capital calls paid to funds||-61,584||-43,927||-57,513||-57,956||-60,427|
|Repayments of principle and profit shares from funds||58,324||54,406||28,598||40,992||28,078|
|Suppliers of goods and services||Goods and services||4,185|
|Other operating expenses||4,309||2,563||2,327||2,516||2,461|
|Personnel||Salaries and fees||6,099||2,855||2,800||2,374||2,386|
|Other personnel expenses||255||162||118||114||110|
|Personnel expenses, total||7,423||3,476||3,389||2,913||2,886|
|Public sector||Direct taxes||142||0||0||519||20|
|Charitable bodies||Donations given||4||2||2||2||4|
|Shareholders||Dividends paid to owners||0||0||0||0||0|
|Investments||Investments in tangible and intangible assets||746||21||650||67||0|
The figures in the consolidated financial statements for 2014 include Aker Arctic Technology Oy, a company specialising in ship engineering and associated testing services. Aker Arctic’s field of operation differs from Finnish Industry Investment’s other operations, and the merger had an impact on the structure and content of the Group’s income statement and balance sheet, and therefore on their comparability with previous years’ accounts.