PURPOSE OF CORPORATE GOVERNANCE
PKC´s Board of Directors has ratified these Corporate Governance guidelines, which are in line with the Finnish Corporate Governance Code 2010. The Board of Directors is responsible for complying with the Corporate Governance guidelines and has committed itself to developing them further to benefit shareholders.
Corporate Governance is geared towards establishing a framework for responsible operations that generate added value for customers and shareholders as well as bolster the confidence of all interest groups (customers, shareholders, personnel, providers of finance, goods suppliers, etc.) in the organisation´s management and operating procedures. Corporate Governance applies to all the employees and not just the senior management, and all employees are bound to comply with the Group´s values, principles and objectives. PKC´s Board of Directors confirms the values that have been jointly selected by the employees. The values are presented on the company´s web site.
These Corporate Governance guidelines are published in their entirety on the company´s intranet pages, where all employees can read them. The guidelines are also published in their entirety on the company´s website and the key sections are included in the Annual Report. The Corporate Governance guidelines are reviewed and updated as necessary.
The Finnish Corporate Governance Code is publicly available, for example, on the website of the Finnish Securities Market Association www.cgfinland.fi.
In addition to legally mandatory bodies (General Meeting, Board of Directors and president), the Group´s management includes the Executive Board. The internal relationships, responsibilities, authorisations, obligations and operating practices of these parties and other personnel in the company´s employ have been established within the framework laid down in law to guide and manage business operations and administration in a manner that increases shareholder value.
The highest power of decision within the company is vested in the General Meeting, whose duties as specified in the Companies Act and the Articles of Association include:
Each shareholder is entitled to participate in the General Meeting and to exercise the right to speak and to vote, with each share carrying one vote.
According to the Articles of Association, the General Meeting is held in the company´s domicile in Helsinki. The Annual General Meeting is held, upon completion of the financial statements, on the day specified by the Board of Directors, which shall be no later than by the end of June.
A shareholder has the right to put items falling within the competence of the general meeting by virtue of the Limited Liability Companies Act on the agenda of the general meeting, if the shareholder so notifies the board of directors in writing well in advance of the general meeting so that the item can be added to the notice of the general meeting. The company gives on its website the mail or email address to which shareholders should send such proposals. In addition, the company makes available on its website the proposals for resolutions on items included in the agenda that shareholders have sent to the company as soon as this is possible in practice.
Invitation to the General Meeting shall be published on the Company´s Internet pages no more than three (3) months and no less than three (3) weeks prior to the meeting. The notice of the general meeting shall contain the following information:
In order to realise interaction between shareholders and the company´s governing bodies, as well as the right of shareholders to ask questions, the president, chairman of the Board of Directors, and a sufficient number of members of the Board and its committees shall be present at the General Meeting, along with, if necessary, the auditor and such persons as have been proposed for Board membership for the first time.
The minutes of the general meeting including the voting results and the appendices of the minutes that are part of a decision made by the meeting, shall be posted on the company website within two weeks of the general meeting.
Board of Directors
Members of the Board of Directors
According to the Articles of Association the Annual General Meeting elects 5-7 members to the Board of Directors. The term of office of Board members ends at the conclusion of the next Annual General Meeting following their election.
A person to be elected to the Board of Directors shall have the required competence for the task and the possibility to devote a sufficient amount of time to the work. Both genders shall, to the extent possible, be represented on the board. Board members are elected such that they represent both a wide range of expertise and the viewpoint of shareholders. Neither persons who are unable to manage themselves or their assets nor persons who are either employed by a competitor or are members of a competitor´s Board of Directors shall be elected to the Board; in addition, no member of the company´s Board of Directors shall agree to perform such tasks or commissions for a competitor.
The majority of the Board members must be independent of the company and at least two of said majority must be independent of the company´s significant shareholders. Board members must provide the Board of Directors with sufficient information for evaluating their competence and independence and report any changes in this information. Board members do not represent the parties that proposed them for Board membership or any other parties belonging to their sphere of interest. The Board of Directors evaluates the independence of its members annually. The independence of Board members is reported in the company´s Annual Report and on company´s website.
The members of the Board of Directors are presented in the Annual Report and on the company´s site at company´s web.
The proposal of the Board, or the nomination committee if such has been established within the Board, for board composition shall be included in the notice of the general meeting. The same applies to a proposal for the composition of the board made by shareholder(s) holding over 10% of the voting rights in the company, provided that the candidates have given their consent to the election and the company has received information on the proposal sufficiently in advance so that it may be included in the notice of the general meeting. Such proposals made after the publication of the Notice of Meeting will be published separately. The company shall report the biographical details of the candidates for the board on its website.
Duties of the Board of Directors
The Board of Directors attends to the Group´s administration and the due organisation of operations. The Board´s responsibilities include the duties specified for it in the Companies Act and the Articles of Association. The Board´s main duties include confirming the Group´s strategy and budget, deciding on financing agreements and the purchase and sale of major asset items. The Board monitors the Group´s performance by means of monthly reports drafted by management and other information supplied by management.
The duties of the Board of Directors include, but are not limited to:
It is the task of the Board of Directors to promote the best interests of the company and all the shareholders.
Working principles of the Board of Directors
The Board of Directors elects from amongst its members a chairman and possibly also a vice chairman whose terms of office last until the conclusion of the subsequent Annual General Meeting. The company´s president may not serve as the chairman or vice chairman of the Board of Directors.
The Board meets on average once a month and whenever necessary. The aim is for all Board members to be present at the meetings. If necessary, telephone meetings can also be held and decisions adopted without holding a meeting by decision minutes. The number of Board meetings held during the financial year and the average attendance rate of Board members at the meetings are disclosed in the Corporate Governance Statement.
The Board of Directors has drafted a written charter for its operations. It defines the key tasks and operating principles of the Board of Directors. The charter is published in its entirety on the company´s Internet site and its key content is summarised in the Annual Report.
The reports on the agenda are sent to the Board members in good time before the meeting, along with other information on significant matters when this is necessary, so that the Board members can become thoroughly acquainted with the issues at hand and thus make informed decisions. Board members also have the right to contact the Group´s employees or its experts to get more in-depth information if they so wish.
Each year, the Board of Directors independently self-assesses the effectiveness of its work and the quality of its task completion with an eye on development opportunities.
The Board has established among its members an Audit Committee, which shall concentrate particularly on review and preparation of matters pertaining to financial reporting and control and a Nomination and Remuneration Committee, which shall prepare the matters pertaining to the nomination and remuneration of Board members, the appointment and remuneration of the managing director and other executives of the company as well as the remuneration schemes of the personnel. The Board has approved written charters for the Committees, which are published in their entirety on the company´s website. The Board has not deemed necessary to establish other committees, since, taking into account the scope and nature of the company´s operations as well as Boards´ working methods, the Board is able to handle matters effectively without such committees.
Election of the president
The Board appoints the company´s president and defines his terms and conditions of employment in writing. The president's service contract is valid indefinitely. The company´s president´s profile is presented in the Annual Report and on the company´s website.
Duties of the president
As specified in the Companies Act, the president shall attend to the day-to-day administration of the company in accordance with the instructions and rules laid down by the General Meeting and the Board of Directors. The president is responsible for the operational management and supervision of business operations.
The president´s duties include, but are not limited to:
The president´s mandate does not include measures that are extraordinary or of far-reaching significance in terms of the scope and nature of the company´s operations.
PKC has an Executive Board whose task is to improve operative operations, carry out strategy work and monitor the realisation of the objectives and action plans set in strategy work as well as deal with other matters of vital importance for the company´s operations. The Executive Board comprises President and CEO (Chairman) and persons appointed by the Board upon President and CEO´s proposal. The Executive Board convenes on average monthly. The members of the Executive Board are presented in the Annual Report and on the company´s website.
The Group´s operations are divided into two business segments corresponding to its core competence areas: Wiring Systems and Electronics. Wiring Systems business is organised under PKC Wiring Systems Oy and Electronics business under PKC Electronics Oy.
The Executive Board and specifically the Executive Board members with business unit responsibility are responsible for the organisation and development of the businesses under their responsibility area. The Executive Board shall decide on policies and strategies relating to the business within the framework approved by PKC´s Board.
The companies belonging to the PKC Group are described in a separate Group companies attachment.
Open chart (pdf)
The Boards of Directors, the equivalent governing bodies, presidents and other management of Group companies are appointed by the president of the parent company and/or the responsible Executive Board member, who also decides on the terms of their service, in accordance with the general principles approved by the Board of Directors.
The Boards of Directors and the equivalent governing bodies of Group companies consist mainly of representatives of PKC´s management. The managing directors, Boards and the equivalent governing bodies of Group companies are responsible for all the duties set out by the parent company, Executive Board, the Executive Board members with business unit responsibility as well as the legislation and regulations of the country in question.
The PKC Group maintains and develops rewarding compensation systems. The aim of the Group´s incentive schemes is to encourage operations that increase the Group´s value.
Salaries and remuneration and other benefits
The remuneration paid to the Board of Directors is confirmed by the Annual General Meeting. Board members are not paid shares or share related rights as remuneration. The company reports on the remuneration paid to Board members during the financial year in the Remuneration Statement, published both in Annual Report and separately on the website. If a board member has an employment relationship or service contract with the company or its subsidiaries or acts as advisor of the company or its subsidiaries, the company shall describe the salaries and fees as well as other financial benefits paid for this duty during the financial period.
The Board of Directors confirms the president´s salary and other benefits. The Board of Directors reviews the president´s salary annually. President is included in the management´s bonus system, with a maximum annual bonus of six months´ salary depending on the achievement of the objectives set for each year. The president´s service contract has provision for 3 months notice period from the President´s part and 6 months from company´s part. In case the company terminates the contract without specific reason that would according to the employment contract law entitle to termination the president is entitled to a severance payment corresponding to 12 months´ salary. The retirement age is statutory and no voluntary insurance policies have been taken. The company discloses the amount of the president´s salary, remuneration, fringe benefits and other benefits paid during the financial year in the Remuneration Statement. In addition, the Remuneration Statement summarises the other financial benefits of the president´s employment relationship, such as the age of retirement, the criteria for determining the pension and other significant terms and conditions pertaining to remuneration.
The Board of Directors confirms the salaries and benefits of the members of the Executive Board. Salaries are set in accordance with the demands of the job and the responsibilities, professional skills and expertise it entails. Salaries are reviewed annually by the Board of Directors. Salaries may comprise cash salaries and benefits. The members of the Executive Board are included in the management´s bonus system.
Short-term Remuneration - Bonus System
The Group has in force a result based bonus system approved by the Board of Directors, the purpose of which is to reward achievement of strategic objectives and to offer competitive incentive scheme for personnel. The principles, terms and conditions, earnings criteria, maximum and minimum limits of targeted yield levels are confirmed annually by the Board. The members of the Executive Board, other key personnel, and also white and blue collar employees in Finland, are included in the system. The limit of the annual bonus is predominantly maximum of six months' salary, depending on the achievement of the objectives set annually. The system's earning period is the financial year.
Long-term Remuneration - Remuneration systems based on shares or share related rights
The General Meeting of shareholders decides on the remuneration systems based on shares or share related rights or authorises the Board of Directors to make such decision. Such remuneration systems shall be presented in the Remuneration Statement.
The share and option holdings of the Board of Directors and Executive Board are published in the Remuneration Statement and the shareholdings of insiders are also posted on PKC´s website.
In accordance with the Board´s decision, new voluntary pension insurance policies will not be taken out and no other particular benefits have been granted within the company.
The company complies with the Insider Guidelines of Helsinki Stock Exchange. The Board of Directors is responsible for complying with the Insider Guidelines and has committed itself to developing them further. Information on compliance with the Insider Guidelines is published in the Annual Report and on the company´s website.
The company maintains both public and company-specific insider registers as well as project-specific insider registers on individual projects.
Public insider register
Company´s public insider register includes President & CEO, Deputy CEO, members of the company's board of directors, and the auditor. In addition, the company has defined the members of the Executive Board as persons subject to the disclosure requirement under public insider register.
The public register also contains information on the insider's closely associated persons, controlled corporations and corporation in which they exercise influence together with their ownership information i.e. spouse, persons under his guardianship and other family members that have lived in the same household for at least one year (e.g. children not under insider´s guardianship, grandchildren and parents).
The information is published on the company´s website, where insiders´ information is presented for the last twelve months period.
Company-specific insider register
The company-specific insider register includes the following:
1) persons who by virtue of their position or duties in the issuer regularly obtains inside information
2) a person who works for the issuer under a contract of employment or otherwise and obtains inside information
A person, who is included in the company´s public insider register, is not included in the company specific register for the avoidance of double entries.
Company specific insider register is an internal, non-public register.
Project-specific insider register
When major unpublished projects that may have a significant effect on the value of company´s share are on-going the company maintains a project specific insider register that includes all persons that have information on the project. Board of Directors or the President & CEO decides on the establishment of project specific insider register. Upon registering a person to a project specific insider register he/she shall be informed in writing or other verifiable mean about the nature of the information regarding the project, confidentiality obligation and trading restriction.
Insider holdings and trading
The holdings of persons belonging to the public insider register and of their closely associated persons and controlled corporations are public and are published on the company´s website and in the Annual Report. The company´s shares belong to the book-entry system and trading information in securities maintained under the book-entry system is entered in a register of insider holdings. Ownership changes are automatically updated daily on the company´s website and the ownership changes for the last twelve months are available at the website. The ownership of company-specific insiders and project specific insiders is not public.The company recommends that insiders treat the shares as long-term investments and do not trade them actively. During the 30 days preceding the publication of the company´s interim reports or financial statement bulletins (closed window) and during the time that they have insider information, insiders may not trade in the company´s shares or share related rights. The trading restriction related to closed window and insider information ends on the day following the publication of stock exchange release, and in case of insider information the day following the abandonment of a project. It is recommended that trading be scheduled to take place within 30 days after the end of the trading restriction.
The company also recommends that its insiders ask the president or the person responsible for insider issues within the company (group´s general counsel) whether there are impediments to trading before making a deal. In similar situations, the members of the Board of Directors and the president shall contact the chairman of the Board of Directors. The company monitors the trading of insiders.
The purpose of internal control and risk management is to ensure the effective and successful operation of the Group, ability to identify, evaluate and monitor risks related to the business operations and compliance with the relevant regulations and operating principles.
Risk management is part of the Group´s control system. PKC Group has in use a group-wide risk management policy, which the parent company´s Board of Directors has confirmed. The objective of the risk management policy is to define the group-wide guidelines and set such goals for risk management that the group´s overall risk level is evaluated systematically and comprehensively in order to achieve the business objectives.
Internal control and internal audit
PKC Group Plc is the parent company for the whole group, so it manages and directs the operations for the whole group. The main responsibility for the internal control and risk management systems relating to the financial reporting process lies with the Board of PKC Group Plc. In this task the Board is assisted by the Audit Committee, whose main tasks include supervising the financial reporting process, monitoring the efficiency of the company´s internal control, internal audit, and risk management systems as well as monitoring significant economic risks and the measures to manage them.
The Board of PKC Group Plc has approved the internal control guidelines for the whole group, in which the general principles for the division of responsibilities, rights and control are determined at Group level.
The responsibility for the practical organisation of internal control and supervision rests with the president. Business responsible Executive Board members are responsible for the implementation of practical measures for internal control and for ensuring that the organisational structure of their own responsibility area is maintained so that authority, responsibilities and reporting relationships are clearly and thoroughly defined. They are also responsible for ensuring that the subsidiary companies have competent management, who adopt a sensible and steady management style and comply with the group and business area level guidelines and regulations.
Internal supervision methods include internal guidelines, reporting and various technical systems related to operations. Because the Group does not have a separate internal auditing organisation, special attention has been paid to the organisation of functions, the professional skill of employees, operating instructions, reporting and the scope of the audit.
The principles and objectives of risk management
Risk management is an integral part of everyday activities that increase corporate safety and facilitate the achievement of the set business objectives. The objective of the risk management is to form an operating environment in which all risks related to the business operations are managed comprehensively and systematically in all organisation levels. The principle is that all risks are identified, their magnitude and significance are assessed, the control measures are specified and the system for monitoring the implementation and effect of the measures is defined. Risk management process supports strategic planning, decision-making, continuity of operations and reporting at all organisation levels.
Comprehensive enterprise risk management creates added value to the company by safeguarding the achievement of the set business objectives and continuity of operations internally to group´s personnel and externally to customers, owners and other interest groups. With effective enterprise risk management the confidence of all interest groups in the company´s business operations is bolstered.
The key risk areas
PKC Group´s key risks include risks related to disturbance of deliveries, financing, personnel, labour safety, and information security and systems. For each of the key risks group-wide guidelines are drafted and they are monitored and developed continuously.
Operative risks include all the factors that may endanger or hinder the achievement of the set business objectives.
Operative risks include e.g. the following:
The main responsibility for hedging the operative risks is held by the Executive Board members in their own responsibility area.
Business environment and business cycle risks
Business cycles in the world economy affect demand for the products of PKC´s customers and thus also demand for the products manufactured by PKC and they influence its financial position in the short term. The long-term effects are evened out by the wide geographical spread of the operations of PKC´s customers, the ability to operate in different customer industries, long-term co-operation with the main customers, and the continuous improvement of the efficiency of operations.
Market and customer risks
The Group´s operations are dependent on agreements made with a relatively few globally operating customers and the development of their businesses. In order to decrease the risk associated with its clientele, the Group is focusing on its core competencies and the development of its know-how, and in so doing ensuring the deepening of its current customer relationships. PKC is also seeking to expand the customer base within its current areas of business and is also studying opportunities outside the current business areas.
PKC´s field of business is characterised by constant downward pressure on prices. Cost-effectiveness is being increased by continuously developing products, rationalising production, seeking out new and more flexible ways of working, making material suppliers compete harder for the company´s business and moving production to countries where labour costs are lower.
Purchasing and logistics risks
Materials account for an important share in the overall costs of end products. In order to lower material costs, purchasing prices are negotiated on a centralised basis, suppliers are asked to submit competitive bids and alternative suppliers are sought continually, whilst also developing the purchasing function further. Suppliers are audited in accordance with the procedure described in the quality system.
PKC Group buys the components needed in the manufacture of its products mostly from outside suppliers. PKC uses written contracts with its suppliers and aims to conclude global frame agreements with the major suppliers.
The trends in the world economy may affect the prices and availability of raw materials. A significant increase in copper price may weaken PKC Group´s profit in short term. Risks related to copper prices can be hedged through purchasing agreements and by means of raw materials futures and options. Also changes in the prices of oil and some other materials can indirectly hamper the Group´s operations if price fluctuations lead to a drop in demand for customers´ products. Price fluctuations of electric energy do not have an essential effect on the Group´s result.
The disturbances in deliveries may cause interruptions both at PKC and its customers. The risk is reduced by finding alternative suppliers, supplier audits, professional skill of the personnel working in the logistics, good customs co-operation and, to some extent, by buffer stocks. Generally accepted delivery terms are used in the deliveries of raw materials and components as well as end products. PKC Group has prepared for e.g. interruption and liability risks by means of insurance programmes covering the entire Group and through local policies supplementing them.
Risks related to manufacturing process
The efficiency and functionality of processes and working methods are monitored through internal assessments. The results of the assessments are utilised in continuous improvement of operations and response times by e.g. developing testing methods and employing new technologies.
The monitoring and development of the efficiency of production include aspects such as developing the working environment, keeping production machinery up to date, operational reliability and the degree of automation, maintenance programmes and the availability of spare parts as well as factors relating to the personnel´s work.
Contract and liability risks
The Group seeks to limit the contract and liability risks by means of written agreements and by taking out comprehensive insurance coverage. Written agreements have been made with major customers and suppliers and PKC´s aim is to carry contractual liability risks stemming from customer contracts to its suppliers to the extent applicable. One of the main purposes of the agreements is to agree on operating procedures and conditions to prevent the materialisation of risks, to divide responsibilities and to minimise any damage that may occur. In addition, product-related liability risks are warded off in advance by applying the procedures described in the quality system. PKC has prepared for property, business interruption, transport and liability risks (incl. product liability, operational liability and management liability) by means of insurance programmes covering the entire Group and through local policies supplementing them. Despite the preventive and restrictive means PKC may face damages that fall beyond the scope of the insurance coverage due to the scope or nature of damages. The insurance coverage is being monitored actively and developed together with experts.
Political, cultural and legislative risks
The PKC Group´s production is spread out over a wide geographical area, as is that of PKC´s main customers. Unfavourable political, economic and legislative changes may impair PKC´s operations in some countries. The risk connected with emerging countries is reduced by decentralising production across different countries, by complying very diligently with each country´s legislation, through functional co-operation networks, and by means of continuity plans. Legislative development and changes are monitored continuously.
The company´s Board of Directors has ratified the Group´s Treasury Policy, which defines the main activities, common management principles, division of responsibilities as well as control environment for Treasury and related financial risk management processes to be applied throughout PKC Group. Treasury Policy supports the objective of centralized, effective and harmonized Treasury management in the interest of the whole PKC Group.
The objective of PKC Group´s Treasury operations is to support the Group´s business operations and the implementation of the Group´s strategy by providing high-quality and integrated financing and financial risk management solutions.
The main Treasury activities in PKC Group are:
Strategic risk means the risk of unfavourable consequences that may arise from detrimental choices in business strategies, especially in sizing risks so that they correspond to group´s risk taking ability, production and personnel resources as well as to the professional skills of the employees.
Strategic risks involve e.g. the following:
Parent company´s Board of Directors´ duty is to define the Group´s willingness to take risks and to make decision on taking strategic risks. The Board of Directors decides also on the entire Group´s investment budget and major individual investments, strategically significant acquisitions and property deals as well as other measures that are extraordinary or of far-reaching in terms of the scope and nature of the company´s operations. Decisions to take strategic risks are made after carrying out diligent and comprehensive preparation, which may include e.g. various assessments, examining alternatives, risks analyses and possible due diligence.
Quality and environmental risks
Commitment to the quality of products and operations is a vital foundation of the group´s operations, with uncompromising quality being one of the most important factors and values guiding the Group´s operations. The cornerstone of R&D and production has always been to uphold product safety and adherence to requirements. In all its functions, the Group complies with the instructions, regulations, laws and restrictions including those pertaining to environmental considerations laid down by customers, society and other interest groups. In addition to product quality, steps have been taken to bolster operational quality over the entire production process. Various defect-prevention techniques are used in the planning of production processes and methods.
Even though the environmental impacts of its business are minimal, the Group strives to minimise such effects in co-operation with customers, suppliers and subcontractors in accordance with the principle of continuous improvement. Co-operation over the entire delivery chain is the most effective means of reducing the adverse environmental impacts of the chain of operations and achieving savings by recycling packaging, choosing recyclable materials, cutting down on material losses, energy consumption and unnecessary packaging materials, and other such means. Environmental aspects are reviewed annually.
PKC´s quality and environmental system has been established to achieve the set goals and to serve as a tool for developing the quality and efficiency of processes, products and services. The Group has certified quality and environmental systems that are developed continuously.
Quality and environmental requirements also extend to suppliers and subcontractors, and their performance is continuously assessed during co-operation.
Employees play a decisive role in development and competitiveness. The aim is to establish an efficient and competent working community in which employees feel at ease.
Personnel risks include e.g. the following:
The primary areas of focus are developing competence, commitment, and well-being at work. Development of competence is based on Group´s business strategies. Plans for the coming years include definition of the required competence and the means to secure such competence. Deputy systems ensure that if any employee is prevented from working or if their employment comes to an end, this will not cause irreplaceable gaps in the competence or interruptions in operations. Job well-being is part of human resources management. It is developed in co-operation with the occupational healthcare unit, the occupational safety organisation and personnel administration. Employees are offered competitive fringe benefits and they are encouraged to develop their own professional skills.
Labour protection and corporate safety risks
Labour protection and corporate safety risks mean the risk of unfavourable consequences that may arise from inadequate labour protection, occupational safety and working environment.
Labour protection and corporate safety risks include e.g. the following
PKC Group is committed to promoting the health and safety of its personnel. Labour protection which comprises of maintaining employee health, preventing accidents and sickness, and the malfunction-free operation of production machinery is a key element in supporting PKC´s business operations and improving both quality and productivity. Efficient labour protection is systematic and is based on the assessment of workplace dangers, health and safety plans and procedures that are followed by all employees. Working conditions and the level of both labour protection and safety are monitored continuously using various means, including regular workplace inspections and atmosphere questionnaires. Labour protection is a key element in supporting PKC´s business operations and the improvement of both quality and productivity. Education, training, counselling, prevention and risk control measures have also been implemented in all of PKC´s units.
Information security and information systems risks
Information security risks mean the risk of unfavourable consequences that may arise in the event that information is not secure from outsiders, information is not available to the right people at the right time, or the accuracy of information cannot be guaranteed. Information systems risks include risks related to e.g. disturbances and inadequacies in technical systems and they cover hardware, software and telecommunications risks.
PKC has drafted a Group-wide information security policy, which specifies the principles of the implementation of information security and creates objectives and guidelines for the development of information security. Policy specifies minimum-level procedures and working instructions for ensuring and maintaining information security. Practical instructions concerning the information security policy are defined in greater detail in the information security guidelines.
Information security covers all information pertaining to the Group, partners, customers, personnel and other interest groups, regardless of in which form or in what way the information is produced, processed, stored, modified, transferred, disseminated or destroyed.
The purpose of information security is to ensure that:
1. Information is kept secure from outsiders (Confidentiality)
2. Information is available to the right people at the right time (Usability)
3. Information is error-free (Integrity)
Effective information systems and telecommunications are a fundamental element of PKC´s operations. Electronic and real-time information transfer between customers, suppliers and PKC´s various manufacturing units is an absolute must for PKC´s smoothly running production operation. Contacts with customers and suppliers are generally handled by means of EDI. Disturbances in telecommunications and deficient capacity are a major risk for efficient business operations. PKC aims to minimise this risk by means of doubled connections. New alternatives for communications links are surveyed when need be with different partners in co-operation. PKC has taken steps to implement alternative solutions when and if necessary.
By means of continuous monitoring as well as surveying more effective solutions that provide greater data security, the Group endeavours to ensure that the data security of applications remains at an acceptable level. Recovery plans are in place to ensure that systems are restored running quickly following a failure or interruption of operations.
Risk management organisation and responsibilities
Parent company´s Board of Directors´ duty is to define the Group´s willingness to take risks, make decision on taking strategic risks, be liable for monitoring the results and measures of the risk management, as well as evaluate the functionality of risk management processes. The Board of Directors holds the final decision making power in accepting the risk management policy.
Executive Board handles risk management issues regularly in its meetings.
Each member of the Executive Board is the risk owner in his/her own area of responsibility. For some particular risks a risk owner may be some other person as defined in e.g. Group´s internal instructions or responsibility matrix. Each risk owner is responsible for, in his/her own area, drafting risk management plans and guidelines, organising their implementation, making sure that the personnel is committed to them. They are also responsible for risk monitoring and report regularly of the risks related to their operations. If need be, risk management work groups consisting of the risk owner and other personnel and experts may be set up in each function.
Reporting and providing of information on risk management
Reporting of risks is continuous and systematic and it has been integrated as part of business reporting. The president presents at Board meetings reports on the Group´s development and also otherwise informs the Board of Directors of significant issues related to business operations without undue delay. In addition, a specific risk management report is presented to the Board of Directors at least once a year.
In business reporting, PKC´s operations are divided into the Wiring Systems and Electronics business segments. The Executive Board members report to the president on a monthly basis, adhering to separate guidelines.
Legislation requires that the report by the board of directors contains an evaluation of the major risks and uncertainties. In addition, the interim reports and financial statements releases shall describe major short-term risks and uncertainties related to the business operations.
The company´s auditor must be an auditor approved by the Central Chamber of Commerce (Authorised Public Accountant). The auditor´s term of office is from the Annual General Meeting making the election to the conclusion of the next Annual General Meeting following his/her election.
The proposal for the auditor by the Board, or the audit committee if such has been established within the Board, shall be included in the notice of the general meeting. The same applies to a proposal made by shareholders with at least 10 % of the votes carried by the company shares, provided that the candidate has given his or her consent to the election and the company has received information on the proposal sufficiently in advance so that it may be included in the notice of the general meeting. If the board is not aware of a prospective auditor when the notice is published, a candidate proposed in corresponding order shall be disclosed separately.
The aggregate duration of the consecutive terms of an auditor may not exceed seven years. The seven-year rule applies only to the auditor with main responsibility, not to an audit firm.
When the scope and content of the audit are specified, the fact that the Group does not have an internal auditing organisation is taken into account. At the Board of Directors´ invitation, the auditor participates in a Board meeting at least once a year, thereby enabling open and constructive discussions between the Board and the auditor, and also when his/her presence is required. In addition, the auditor has the right to attend Board meetings regardless of whether the Board has decided to invite him if matters having a bearing on his/her duties are on the agenda.
The auditor shall be present at the company´s Annual General Meeting and, if necessary due to the nature of the matters under review, also at Extraordinary General Meetings. In addition, the auditor may be present at the Audit Committee meetings if need be.
The fees paid to the auditor during the financial period are reported in the Remuneration Statement published as part of annual report and separately on PKC´s website. If fees have been paid to the auditor for non-audit services, these fees shall be reported separately. Companies belonging to the same group or chain as the audit firm as well as companies controlled by the auditor are considered equal with the auditor.
In its communications, the company complies with the provisions of the Securities Market Act, the decisions of the Ministry of Finance, as well as the rules and recommendations of the Financial Supervision Authority and NASDAQ OMX Helsinki.
Good communication builds trust within the organisation and improves external corporate image. The company seeks to be consistent in all its communications, which is apparent in the communications procedures it has adopted, the informational content it releases and the manner of presentation. Communications are open and the information and estimates presented are substantiated so as to ensure that all market parties have simultaneous access to the same, sufficient and accurate information on the Group, its business operations, risks, financial position, functions, shares, strategy and development outlook.
The company´s Board of Directors defines the guidelines of communications and decides on the dates and content of the publication of matters falling under the scope of regular disclosure obligations as well as the publication of significant matters falling under the scope of continuous disclosure obligations. As part of its regular disclosure obligations, the company publishes interim reports concerning the first three, six and nine months of the financial year, a financial statement bulletin and its financial statements as well as an Annual Report.
The fundamental premise of the disclosure obligation is to ensure that all market parties are provided with sufficient and accurate information on securities and their issuers at the same time. Even though the company does not disclose in analysts and investors meetings other than already published information, company does not organise and aims not to attend analyst and investor meetings within 4 weeks preceding the publication of the company´s financial reports (“silent period´) in order to bolster the confidence of the securities markets. In principal, the company does not comment market rumours or analysts´ estimations at all.
In order to ensure prompt reaction the company has specified procedures for possible information leaks regarding projects and profit warnings.
Investor relations communications
Investor relations communications are attended to by the chairman of the Board of Directors and the company´s president together with the CFO in accordance with the guidelines set by the Board of Directors. Shareholders, members of other interest groups and other parties interested in the Group have the right to contact the president or CFO directly to receive more in-depth information. The president or CFO may provide the requested additional information, while taking insider information regulations and possible non-disclosure agreements made with third parties into account.
In addition to the communication under the disclosure obligation, company publishes financial report presentations in its website.
For the purpose of internal communications, the Group has in use an intranet. Due to the nature of the company´s operations, marketing is primarily business-to-business in nature.
The company has a website at www.pkcgroup.com. The site presents the Group´s business operations, the latest financial figures, ownership structure and other information concerning share ownership as well as information required to be disclosed on the basis of Finnish Corporate Governance Code.
The company updates the information on its website at certain intervals, in accordance with its own practices, so that the information on the website is up to date.