74370029VAHCXDR7B745-2023-12-31-en

Contents


Orion in brief ......................................................................	4
Report by the Board of Directors of Orion Corporation for the financial year 2023 .......................	6
Group’s key figures ...........................................................	37
Basic information on Orion’s shares ..............................	44
Calculation of the key figures ..........................................	45
Consolidated financial statements (IFRS) ....................	46
Consolidated income statement ....................................	46
Consolidated statement of comprehensive income ..	46
Consolidated statement of financial position ..............	47
Consolidated statement of changes in equity .............	48
Consolidated statement of cash flows ...........................	49
Notes to financial statements ..........................................	50
1 Basis of presentation of the consolidated financial statements ...........................................................................	50
2 Business performance ...................................................	53
2.1 Revenue from contracts with customers ...........	53
2.2 Depreciation, amortisation and impairments ..	57
2.3 Operating expenses .............................................	57
2.4 Other operating income and expenses ............	58
2.5 Finance income and expenses ...........................	58
2.6 Earnings and dividend per share .......................	59
3 Invested capital ...............................................................	60
3.1 Property, plant and equipment and intangible assets ...........................................................	60
3.2 Leased assets..........................................................	64
3.3 Joint arrangements ...............................................	67


3.4 Business combination ...........................................	68
3.5 Investment in associate .......................................	69
3.6 Inventories ..............................................................	69
3.7 Trade and other receivables ...............................	69
3.8 Provisions ................................................................	70
3.9 Trade payables and other liabilities ...................	69
4 Personnel .........................................................................	72
4.1 Employee benefits ................................................	72
4.2 Pension assets and pension liabilities ...............	74
5 Income taxes and deferred tax assets and liabilities ...............................................................................	78
5.1 Income taxes ...........................................................	78
5.2 Deferred tax assets and liabilities .......................	79
6 Financing and capital structure ...................................	80
6.1 Financial assets and liabilities by category .......	80
6.2 Financial risk management ..................................	83
6.3 Equity .......................................................................	87
6.4 Interest-bearing liabilities ....................................	88
6.5 Cash and cash equivalents ..................................	88
6.6 Other investments .................................................	88
6.7 Derivative contracts ...............................................	89
6.8 Contingent liabilities and commitments ...........	89
7 Other notes .....................................................................	90
7.1 Related party transactions ...................................	90
7.2 Auditor’s remuneration ........................................	90
7.3 Group companies ..................................................	91
7.4 Events after the end of reporting period ..........	91


Parent company Orion corporation’s financial statements (FAS) ...............................................................	92
Income statement .............................................................	92
Balance sheet .....................................................................	93
Cash flow statement ..........................................................	94
Parent company notes to the financial statements for 2023 (FAS) .....................................................................	95
Proposal by the Orion Corporation Board of Directors on use of profit funds from the financial year .......................................................................................	108
Signatures for the Financial Statements and Report by the Board of Directors ................................................	109
Auditor’s Report ................................................................	110
Independent Auditor’s Reasonable Assurance Report on Orion Corporation’s ESEF Financial Statements ..........................................................................	114
Events in 2023 ...................................................................	116

Translated, non-official version of Orion Corporation’s

Financial statement documents 2023, presented in ESEF

format.

All the figures in the financial statements have been rounded,

which is why the total sums of individual figures may differ

from the total sums shown.

ORION CORPORATION | Financial Statement documents 2023 3/118

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 oncology and pain.

Orion’s A and B shares are listed on Nasdaq Helsinki.

Business areas in the end of 2023



INNOVATIVE MEDICINES Innovative medicines developed or marketed by Orion, and which have patent or other product protection. Research focus areas oncology and pain.	BRANDED PRODUCTS Orion’s in-house developed legacy products and other products with brand value that provides a competitive advantage.	GENERICS AND CONSUMER HEALTH Generic prescription medicines and self-care products.	ANIMAL HEALTH Proprietary and generic products for companion animals and livestock.	FERMION Active pharmaceutical ingredients for Orion and other pharma companies.


	Net sales in 2023 (2022) 1,190 MEUR (1,341)
	Operating profit 275 MEUR (440)
	R&D investments 127 MEUR (133)
	Operating profit margin 23% (33%)
	Shareholders at the end of the year 88,722 (79,423)
	Personnel at the end of the year 3,632 (3,527)
	6 production sites in Finland, 1 in France, 1 in Belgium Production sites include packaging and warehouse operations in Salo, Finland and in Arendonk, Belgium

ORION CORPORATION | Financial Statement documents 2023 4/118

Net sales by business

Net sales by market area

The key themes of Orion’s corporate responsibility are ensuring patient safety and reliable supply of medications, in addition to which the Company

has responsibility for the environment, its employees, business ethics and transparency.


Customer complaints (pharmaceuticals) 59 Ppm (60)		GxP* audits by Orion 248 (281) *Good practices		Greenhouse gas emissions (Scope 1 & 2) 13,940 tCO2e (15,896)		Energy savings 11,459 MWh (858)		Injury rate LTIF 1 4.8 (3.7)		Code of Conduct training, no. of participants 460 (682)

ORION CORPORATION | Financial Statement documents 2023 5/118

Report by the Board of Directors of Orion Corporation

for the financial year 2023

Group’s key figures

Key figures relating to financial performance


	2021	2022	2023
Net sales, EUR million	1,041.0	1,340.6	1,189.7
EBITDA, EUR million	289.1	487.1	326.4
% of net sales	27.8%	36.3%	27.4%
Operating profit, EUR million	243.3	439.6	274.9
% of net sales	23.4%	32.8%	23.1%
Profit before taxes, EUR million	242.3	440.3	271.9
% of net sales	23.3%	32.8%	22.9%
Profit for the period, EUR million	193.8	349.5	216.8
% of net sales	18.6%	26.1%	18.2%
Research and development expenses, EUR million	117.7	133.2	126.9
% of net sales	11.3%	9.9%	10.7%
Capital expenditure, excluding acquired in business combinations, EUR million	85.4	109.6	92.7
% of net sales	8.2%	8.2%	7.8%
Acquired in business combination, net of cash, EUR million		82.0	0.1
Interest-bearing net liabilities, EUR million	-108.3	-118.7	93.3
Basic earnings per share, EUR	1.38	2.49	1.54
Cash flow from operating activities per share, EUR	1.53	3.09	0.85
Equity ratio, %	68.1%	60.9%	62.3%
Gearing, %	-14.5%	-13.1%	10.5%
Return on capital employed (before taxes), %	28.8%	45.1%	25.3%
Return on equity (after taxes), %	26.2%	42.2%	24.1%
Average personnel during the period	3,364	3,472	3,599

ORION CORPORATION | Financial Statement documents 2023 6/118

Events during the period


27 Jan 2023	Positive CHMP opinion for darolutamide in combination with docetaxel for the treatment of metastatic hormone-sensitive prostate cancer.
27 Feb 2023	Darolutamide receives approval for additional prostate cancer indication in Japan.
1 Mar 2023	Darolutamide receives EU approval for additional indication in prostate cancer.
20 Mar 2023	Darolutamide approved for additional prostate cancer indication in China.
22 Mar 2023	Orion Corporation’s Annual General Meeting was held in Helsinki.
23 Mar 2023	Orion and Bayer announced that the companies will expand clinical development program for darolutamide in prostate cancer.
25 May 2023	Orion held Capital Markets Day in Helsinki, Finland.
28 Jun 2023	Orion announced that the Company will invest EUR 30 million to increase production capacity in Finland.
7 Jul 2023	Orion announced that CFO Jari Karlson will retire on 30 April 2024.
31 Jul 2023	Orion announced European Commission approval of Ztalmy® (ganaxolone) for the adjunctive treatment of epileptic seizures associated with CDKL5 deficiency disorder.
22 Aug 2023	Orion announced that Julia Macharey has been appointed Senior Vice President of Orion Group’s new People & Culture group-level function and member of the Executive Management Board of Orion Group as of 1 February 2024.
20 Nov 2023	Orion Animal Health received FDA approval for Bonqat® (pregabalin oral solution).

Events after the period


5 Jan 2024	Orion and MSD announced the initiation of two phase 3 trials evaluating ODM-208/MK5684 in certain patients with metastatic castration-resistant prostate cancer.
11 Jan 2024	Orion announced that the insurance portfolio of Orion Pension Fund’s B fund has been transferred to an external pension insurance company, and the transfer has approximately EUR 31 million positive impact on the company's result in 2023.
23 Jan 2024	Orion announced that René Lindell has been appointed Chief Financial Officer of Orion Group as of 1 May 2024.

Impacts of the war in Ukraine on Orion

Orion has discontinued business operations in Russia.

Financial risks for Orion caused by the war in Ukraine relate to net sales, receivables and

inventories in Ukraine. Such risks, however, are not financially material to Orion. Orion does not

have any proprietary fixed assets in Ukraine nor in Russia.

Orion has exported commercial deliveries of medicines and donated medicines through charity

organisations to Ukraine. The company will continue efforts to deliver medicines to Ukraine also

going forward.

Orion does not procure energy, raw materials, or other utilities from Russia. The availability of

natural gas and raw materials from Russia and Ukraine could cause potential risks to Orion’s

suppliers. Together with its partners, Orion works to analyse and minimise possible risks.

ORION CORPORATION | Financial Statement documents 2023 7/118

Financial review

Change in reporting from 1 January 2023

Orion's new organisational structure entered into force on 1 January 2023, as a result of which,

starting from the beginning of reporting period 2023, Orion is reporting its net sales by business

division in accordance with the new organisational structure. The business divisions are

Innovative Medicines, Branded Products, Generics and Consumer Health, Animal Health, and

Fermion.

In addition to the new organisational structure and how Orion itemises net sales, the company

revised its accounting practice as of 1 January 2023 by re-assigning expenses associated with

information management – previously reported as cost of goods sold, sales and marketing

expenses or research and development expenses – to administrative expenses. The change does

not affect the Group’s reported key figures, operating profit or balance sheet, but it increases

previously reported administrative expenses for 2022 by EUR 6.6 million and correspondingly

decreases the cost of goods sold, sales and marketing expenses and research and development

expenses. More information on the impact of the revision is provided in a stock exchange release

published on 27 March 2023.

Net sales

Orion Group’s net sales decreased by 11.3% and totalled EUR 1,189.7 (1,340.6) million. The

decline is due to a significant EUR 228 million upfront payment recorded in the comparative

period. Excluding the upfront payment, net sales were slightly higher than in the comparative

period. Net sales in 2023 includes a EUR 30 million milestone payment. Exchange rate

fluctuations had a EUR 23.1 million negative impact on net sales during the period compared to

the comparative period when exchange rate fluctuations had a large positive impact on net sales

mainly due to RUB. Net sales of Orion’s top ten pharmaceuticals amounted to EUR 568.5 (536.7)

million. They accounted for 47.8% (40.0%) of total net sales.

Operating profit

Orion Group’s operating profit decreased by 37.5% and totalled EUR 274.9 (439.6) million. The

decline is due to a significant EUR 228 million upfront payment recorded in the comparative

period and its net impact of EUR 208 million on operating profit. The transfer of the insurance

portfolio of the Orion Pension Fund's B fund to an external pension insurance company on 31

December 2023 had a positive impact of EUR 30.7 million on operating profit in 2023. Excluding

these items, operating profit in the review period was slightly higher than in 2022. Operating

profit in 2023 includes a EUR 30 million milestone payment.

The total impact of Russia-related items on operating profit was EUR 23.3 million negative.

Exchange rates had a negative impact of EUR 8.2 million and lower sales and margins had a

negative impact of EUR 26.1 million. Divestment of some of Orion’s self-care brands in Russia had

a EUR 7.2 million positive impact and fixed costs had a EUR 3.8 million positive impact.

Gross profit from sales in local currencies increased by EUR 21.0 million from the comparative

period driven by higher Nubeqa® delivery volumes to Bayer and growth of Easyhaler® product

portfolio. Price, cost and product portfolio changes had a negative impact of EUR 70.7 million on

gross profit, of which roughly EUR 15 million are due to cost increases and changes in the

product mix, and roughly EUR 56 million due to price decreases. A significant part of the EUR 56

million is explained by the fact that during the first half of 2023 Orion supplied Nubeqa® to Bayer

at a lower price than in the first half of 2022. The impact of this price decrease on operating profit

was significant during the first half of 2023 compared to the first half of 2022. However, since the

lower supply price has correspondingly reduced the deductions from royalties starting from Q4

2022, the change in delivery price has only had a temporary timing impact on Orion's profits. In

addition, in January–March 2023 Orion sold some of the remaining inventories in Russia at a

clearly lower price than before. Currency rate changes had a negative impact of EUR 19.1 million.

With the combined impact of these items, the gross profit from product and service sales was

EUR 68.8 million lower than in the comparative period.

Milestone payments accounted for EUR 32.4 (233.7) million and royalties for EUR 123.9 (47.7)

million of net sales and operating profit. Other operating income and expenses accounted for

EUR 43.7 (5.7) million of operating profit. Other operating income includes EUR 7.2 million gain

from selling some of Orion’s self-care brands in Russia, and the EUR 30.7 million item recognised

from the transfer of Orion Pension Fund's B fund.

Operating expenses increased by EUR 8.9 million.

Operating expenses

Sales and marketing expenses increased by 7.5% and totalled EUR 224.8 (209.1) million. The

growth was mostly as planned. Sales and marketing costs increased because in the comparative

period COVID-19 still restricted promotional activities and because the costs now also include

sales and marketing costs of the acquired animal health company VMD (Inovet), which were

absent in January–June 2022. Research and development expenses decreased by 4.7% and

totalled EUR 126.9 (133.2) million. R&D costs accounted for 10.7% (9.9%) of the Group’s net

sales. Administrative expenses decreased by 0.7% and were EUR 74.8 (75.4) million. In the

comparative period, ODM-208 agreement related operating expenses were approximately EUR

20 million of which most were recorded as administrative expenses. The underlying increase in

ORION CORPORATION | Financial Statement documents 2023 8/118

administrative expenses is explained partly by VMD, partly by the new organisational structure as

the costs of the new group-level function Corporate Strategy and Program Management are

included in administrative expenses, and partly by increased information management costs. The

role of various information management tools and systems is becoming more important and

consequently related costs have increased. In addition, the ongoing revamping of Orion’s

Enterprise Resource Planning (ERP) system causes extra temporary costs.

Group’s profit

Profit for the period decreased by 38.0% and totalled EUR 216.8 (349.5) million. Basic earnings

per share were EUR 1.54 (2.49).

Financial position and cash flow

Cash flow from operating activities decreased by 72.6% and was EUR 119.0 (434.4) million. The

decrease is explained mainly by the decline in operating profit and the fact that working capital

increased more than in the comparative period. Currently, Nubeqa®-related inventories are

growing, and also the increasing Nubeqa® royalties are having a large impact on working capital

as royalties from the previous two quarters are included in the receivables. The EUR 30 million

milestone that was recorded in the third quarter of 2023 is also temporarily increasing

receivables. Receivables also increased as a result of the transfer of the Orion Pension Fund's B

fund to an external pension insurance company. The excess cash from the Pension fund is

expected to be received by the end of the first half of the year 2024.

Cash flow from investing activities was EUR -108.4 (-154.3) million. January–December 2023 cash

flow includes the upfront payments to Amneal and Jemincare, the total of EUR 33 million, and the

comparative period cash flow includes the VMD acquisition which happened in June 2022.

Cash flow from financing activities was EUR -243.2 (-159.8) million. The difference is mainly

explained by the EUR 100 million loan that was withdrawn in the comparative period.

Group’s total liabilities as at 31 December 2023 were EUR 548.6 (595.5) million. Interest-bearing

liabilities amounted to EUR 200.0 (214.0) million. Of the total interest-bearing liabilities, EUR

171.0 (196.8) million were long-term liabilities. The Group had EUR 106.7 (332.6) million in cash

and cash equivalents at the end of the reporting period.

Group’s gearing was 10.5% (-13.1%) and the equity ratio 62.3% (60.9%). Equity per share was

EUR 6.34 (6.48).

Capital expenditure

Capital expenditure totalled EUR 92.7 (109.6 excluding assets acquired in business combination)

million. This comprised EUR 72.3 (59.1) million on property, plant and equipment and EUR 20.4

(50.5) million on intangible assets. The increase is mainly due to various initiatives to increase

capacity at Orion's production sites.

ORION CORPORATION | Financial Statement documents 2023 9/118

Business review

Review of the Finnish human pharmaceuticals

market

Finland is an important market for Orion, generating about a quarter of the Group’s net sales.

According to Pharmarket statistics (1–12/2023), the total sales of Orion’s human pharmaceuticals

in January–December 2023, including both medicinal and non-medicinal products, grew by 2.5%

from the previous year.

A significant product group for Orion in Finland are reference-priced prescription drugs in the

pharmacy channel. The sales of Orion’s reference-priced prescription drugs increased by 8.6%

while the total market fell by 5.8% from the comparative period. The increase in Orion's

reference-priced prescription medicines in the statistics is explained by strong volume growth.

The average price of Orion’s reference-priced drugs was at a similar level to the comparative

period. The average price of reference-priced drugs in the market declined by approximately

11% from the comparative period (Source: Pharmarket). The strong decrease in the overall

market and the average price of reference-priced drugs is explained by the statistical method,

which takes into account products that are reference-priced prescription medicines at the time

the statistics are compiled. The statistics for January–December 2023 include several products

that were priced significantly higher in the comparative period because they were not yet

included in the reference price category. The impact of constant 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 a 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 non-medicinal

products):


EUR million	1–12/23	1–12/22	Change %
Total sales of human pharmaceuticals (hospital and pharmacy channel)
Market	3,218.4	3,097.7	+3.9%
Orion	345.3	336.8	+2.5%
Prescription drugs total (pharmacy channel)
Market	1,843.7	1,760.8	+4.7%
Orion	200.4	189.1	+6.0%
Reference priced prescription drugs (pharmacy channel)1
Market	369.2	392.0	-5.8%
Orion	101.1	93.0	+8.6%
Self-care products (pharmacy channel)
Market	487.5	476.9	+2.2%
Orion	119.1	116.4	+2.3%

1 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 1–12/2023

Orion’s market share in the sales of human pharmaceuticals in Finland

(medicinal and non-medicinal products):


Orion’s market share, %	1–12/23	1–12/22
Human pharmaceuticals in total (hospital and pharmacy channel)	10.7%	10.9%
Prescription drugs total (pharmacy channel)	10.9%	10.7%
Reference priced prescription drugs (pharmacy channel)1	27.4%	23.7%
Self-care products (pharmacy channel)	24.4%	24.4%

1 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 1–12/2023

ORION CORPORATION | Financial Statement documents 2023 10/118

Orion’s sales network

Orion’s products are sold globally in over one hundred countries through Orion’s own sales

network and by partners. Orion has its own sales network in Europe and five countries in the Asia-

Pacific region. Elsewhere in the world, Orion’s human pharmaceuticals are sold mainly by the

company’s partners. Orion is engaged in the sale of veterinary drugs through its own sales

network in the Nordic countries, Belgium, France, some Eastern European countries and

Vietnam. Elsewhere, these products are sold by partners. The company is also engaged in the

sale of Fermion and contract manufacturing products and services globally. In addition, Orion

markets and sells drugs and products manufactured by several other companies.

In January 2023, Orion announced it has signed a long-term license agreement with Amneal

Pharmaceuticals, Inc. to commercialise Amneal’s generic products in most parts of Europe as well

as in Australia and New Zealand. The initial portfolio will include a mix of generic products

commercially available in the U.S. today, as well as selected pipeline products currently under

development. Registration of the initial products in Europe, Australia and New Zealand started in

2023, with launches expected over the coming years.

During 2023, Orion made the first launches of a combination product of naproxen sodium and

sumatriptan in Europe. The product, which is for the treatment of acute migraine attacks, is

licensed from Nuvo Ireland and Orion has an exclusive right to package, distribute, market and

sell the product in most European countries. Launches will continue in 2024.

Orion is establishing a sales office in Japan, where initially the company plans to sell Parkinson's

disease products when the rights of entacapone products in Japan will be repatriated to Orion

during 2024.

Top ten best-selling pharmaceutical products


EUR million	1	1–12/23	1–12/22	Change %
Nubeqa® (prostate cancer)4	A	182.5	87.1	> 100 %
Easyhaler® product portfolio (asthma, COPD)	B	144.2	129.7	+11.1%
Entacapone products2 (Parkinson's disease)	B	88.4	113.4	-22.0%
Simdax® (acute decompensated heart failure)	C	25.7	42.9	-40.0%
Burana® (inflammatory pain)	C	25.1	26.7	-6.0%
Dexdomitor®, Domitor®, Domosedan® and Antisedan® (animal sedatives)	D	22.8	36.3	-37.4%
Dexmedetomidine products for human use3	C	21.5	37.3	-42.5%
Divina® series (menopausal symptoms)	B	21.0	27.6	-24.0%
Trexan® (rheumatoid arthritis, cancer)	C	19.1	15.2	+25.4%
Biosimilars (rheumatoid arthritis, inflammatory bowel diseases)	C	18.2	20.4	-10.5%
Total		568.5	536.7	+5.9%
Share of net sales, %		47.8%	40.0%

1 Business division, A = Innovative Medicines, B = Branded Products, C = Generics and Consumer

Health, D = Animal Health

2 Entacapone products include Stalevo®, Comtess®, Comtan® and all other products including

entacapone.

3 Includes Dexdor®, Precedex® and other dexmedetomidine products for human use

4 Starting from reporting period January–June 2023, the income from Nubeqa® packaging is included

in contract manufacturing and no longer reported as part of Nubeqa® product sales; for this reason, the

comparative figures from prior periods differ from previously published figures.

ORION CORPORATION | Financial Statement documents 2023 11/118

Innovative Medicines

The Innovative Medicines business division includes medicines with patent or other product

protection. In addition to the commercial sales and royalties from these products, any milestone

payments or other revenue, such as product sales for R&D use, related to the products or

research and development projects of the business division, are included in its net sales.

Net sales of the unit in January–December 2023 decreased by 28.6% and totalled EUR 235.1

(329.4) million. The decline is due to a significant EUR 228 million upfront payment recorded in

the comparative period. Excluding the upfront payment, net sales more than doubled from the

comparative period. Net sales in 2023 include a EUR 30 million milestone payment, related to

Nubeqa® sales. Currently, the net sales of the business division are mainly generated by Orion's

sales of Nubeqa®. Orion's sales of Nubeqa® in January–December 2023 increased by more than

100% and totalled EUR 182.5 (87.1) million, of which royalties were EUR 119.7 (40.2) million and

product sales, i.e., deliveries to Bayer, EUR 62.8 (46.9) million.

Nubeqa® (darolutamide) is approved in more than 80 countries around the world for the

treatment of patients with non-metastatic castration-resistant prostate cancer (nmCRPC), who are

at high risk of developing metastatic disease. It is also approved for the treatment of patients with

metastatic hormone-sensitive prostate cancer (mHSPC) in combination with chemotherapy in a

number of markets including the U.S., Japan, EU and China. Filings in other regions are

underway or planned by Bayer.

In July 2023, Orion’s collaboration partner Marinus Pharmaceuticals, Inc. received European

Union marketing authorisation for ganaxolone (brand name Ztalmy®) oral suspension for the

adjunctive treatment of epileptic seizures associated with cyclin-dependent kinase-like 5 (CDKL5)

deficiency disorder (CDD) in patients two to 17 years of age. Treatment may be continued in

patients 18 years of age and older. Orion has the right to sell and market ganaxolone in Europe.

Following the European Commission approval, Orion is focusing on making ganaxolone

available for patients in Europe and has pricing and reimbursement processes planned or

underway in Europe.

Branded Products

The Branded Products business division includes products that have a strong brand name which

provides a competitive advantage. Currently, most of the business division’s products are

products developed by Orion. Key products are the Easyhaler® product portfolio, the

entacapone products and the Divina® series. Total net sales of the Branded Products business

division in January–December 2023 decreased by 6.3% and were EUR 260.9 (278.5) 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 the treatment of asthma

and chronic obstructive pulmonary disease increased by 11.1% and amounted to EUR 144.2

(129.7) million. The sales of the budesonide-formoterol combined formulation increased by

14.0% to EUR 94.3 (82.7) million. The sales of other Easyhaler® products (beclometasone,

budesonide, formoterol, salbutamol and salmeterol-fluticasone combined formulation) increased

by 6.1% to EUR 49.9 (47.0) million. In June 2023, Orion announced that the Company will build

by 2026 a new dry-powder inhaler filling line in its Espoo pharmaceuticals manufacturing plant to

increase the production capacity of the Easyhaler® products. Orion has announced that the

Easyhaler® product portfolio has potential to exceed EUR 200 million in peak annual sales. The

estimate is based on, among others, recent initiatives and recommendations by healthcare

systems and health organisations to prefer dry-powder inhalers over metered-dose inhalers due

to climate reasons.

Orion’s entacapone products for the treatment of Parkinson’s disease are Stalevo®, Comtess®,

Comtan® and other entacapone-containing products. Their total net sales in January–December

2023 decreased by 22.0% and amounted to EUR 88.4 (113.4) million. The decrease is mainly due

to lower partner sales than in the comparative period, resulting from increased competition,

lower prices and inventory optimisation. Orion's own sales have also been affected by

competition and lower prices. Orion markets entacapone products in Europe and in some

countries in the Asia-Pacific region. Elsewhere, the products are sold by partners. The most

important individual market for Orion’s entacapone products is currently Japan, where Orion is

taking over sales when the distribution agreement with Novartis expires in 2024. Orion has

developed a generic levodopa-carbidopa combination product for the treatment of Parkinson’s

disease, and the product is in launch phase in Europe.

Sales of the Divina® series of hormone replacement products decreased by 24.0% to EUR 21.0

(27.6) million. The decrease is due to Russia, where the product series was not sold anymore in

2023.

ORION CORPORATION | Financial Statement documents 2023 12/118

Generics and Consumer Health

Net sales of the Generics and Consumer Health business division, comprising generic (off-patent)

prescription drugs (including biosimilars) and self-care products, decreased by 7.1% in January–

December 2023 and amounted to EUR 517.6 (557.2) million. The decline is explained by the

declining sales of Simdax®, dexmedetomidine products for human use, and the discontinuation

of business operations in Russia, where sales were strong in the comparative period before the

outbreak of the war. Excluding these items, business was solid and net sales were flat compared

to the year before which demonstrates good performance of the rest of the portfolio in

challenging market. Generic prescription drugs accounted for 75% (75%) and self-care products

for 25% (25%) of the business division’s net sales. The net sales of generic prescription drugs

decreased by 7.9% and were EUR 386.7 (419.8) million and the net sales of self-care products

decreased by 4.7% and were EUR 130.9 (137.3) million.

The Generics and Consumer Health business division has four geographic regions, which are

Finland and Baltics, Scandinavia, Eastern Europe, and Rest of the World (ROW). The unit’s sales in

Finland and Baltics increased by 2.9% and amounted to EUR 310.2 (301.5) million. The increase

came from both generic prescription drugs and self-care products. The general decline in the

prices of reference-priced generic drugs due to price competition continued, but Orion was able

to increase sales with strong volume development. In Scandinavia, the division’s sales decreased

by 1.2% and totalled EUR 78.0 (79.0) million. In Eastern Europe, the division’s sales increased by

1.3% and amounted to EUR 46.2 (45.5) million.

Sales in ROW declined by 36.6% and stood at EUR 83.2 (131.2) million. The decline is mostly due

to the generic competition and declining prices of Simdax® and dexmedetomidine products for

human use, together with the discontinuation of business operations in Russia where sales were

strong in the comparative period before the outbreak of the war.

Animal Health

In the Nordic countries, Belgium, France, some Eastern European markets and Vietnam, Orion

sells veterinary drugs itself, while the Company operates through partners in other markets. In

addition, Orion markets and sells veterinary drugs manufactured by several other companies.

Net sales of the Animal Health business division in January–December 2023 increased by 5.1%

and amounted to EUR 103.9 (98.9) million. Sales include the turnover of the animal health

company VMD (Inovet), acquired in June 2022, which explains the slight increase from the

comparative period. However, due to the changes in the economic environment the animal

health market as a whole experienced weakening of demand both in companion animal and

livestock segments in 2023, which lowered the sales. In addition, deliveries to partners were

lower than in 2022. These are the reasons for the clearly lower net sales in the second half of

2023 compared to 2022. The building of the new manufacturing plant at Arques site in France is

ongoing.

Sales of animal sedative products accounted for 21.9% (36.7%), or EUR 22.8 (36.3) million, of the

unit’s total net sales. The decrease is mainly due to lower deliveries to partners. The animal

sedative product family comprises Orion’s animal sedatives Dexdomitor® (dexmedetomidine),

Domitor® (medetomidine) and Domosedan® (detomidine), and antagonist Antisedan®

(atipamezole), which reverses the effects of the sedatives.

Fermion

Fermion manufactures active pharmaceutical ingredients for Orion and other pharmaceutical

companies. Its product range comprises nearly 30 pharmaceutical ingredients. It produces active

pharmaceutical ingredients for Orion’s proprietary drugs developed in-house as well as for

certain generic drugs. Fermion manufactures generic pharmaceutical ingredients for other

pharmaceutical companies and offers contract manufacturing services for the development and

manufacturing of new active pharmaceutical ingredients.

Net sales of Fermion in January–December 2023, excluding deliveries for Orion’s own use,

increased by 7.2% and totalled EUR 73.7 (68.7) million. In recent years, order cycles in the trade

in pharmaceutical raw materials have become increasingly shorter. This has led to clearly greater

fluctuation in business volumes than before, both within each annual period and between

different years. Demand for Fermion products has been good and production capacity has been

nearly fully utilised. The production capacity is increasingly more allocated to the manufacturing

of Orion's active pharmaceutical ingredients.

In June 2023, Orion announced that the company will invest in Fermion’s Hanko plant to increase

the manufacturing capacity of darolutamide.

Key licensing and collaboration agreements

regarding assets in the clinical development or

commercialisation phase

Orion has an agreement with Bayer for the development and commercialisation of darolutamide

(i.e. Nubeqa®). Bayer holds global commercial rights to darolutamide, and Orion is entitled to

receive annually tiered royalties on global darolutamide sales. The average annual royalty rate is

initially approximately 20% including product sales to Bayer. As the annual global sales increase,

the average annual royalty rate will increase. If the annual global darolutamide sales were EUR 3

billion, Orion’s average annual royalty rate would be slightly above 25%. Orion manufactures the

product for global markets, i.e. carries the cost of goods sold, and co-promotes the product in

ORION CORPORATION | Financial Statement documents 2023 13/118

Europe with Bayer. In addition to royalties, Orion is entitled to receive progressive one-off

milestone payments from Bayer that may total EUR 280 million, depending on the future sales

development of Nubeqa®. The first such milestone, EUR 30 million, was recorded in the third

quarter of 2023.

Orion has a global development and commercialisation agreement with MSD (tradename of

Merck & Co., Inc. Rahway NJ USA) for Orion’s investigational candidate ODM-208 and other

drugs targeting cytochrome P450 11A1 (CYP11A1). Under the terms of the agreement, Orion

and MSD, acting through its subsidiary, Merck Sharp & Dohme LLC, will co-develop and co-

commercialise ODM-208. Orion will be responsible for the manufacture of clinical and

commercial supply of ODM-208. Of the USD 290 million upfront payment received in Q3 2022,

Orion has reserved EUR 60 million to cover its share of ODM-208 development costs to be

accrued. Currently Orion is not booking any cost from the development of ODM-208. In addition,

the contract provides both parties with an option to convert the initial co-development and co-

commercialisation agreement into a global exclusive license to MSD. If the option is exercised,

MSD would assume full responsibility for all accrued and future development and

commercialisation expenses associated with the program. Orion would be eligible to receive

milestone payments associated with progress in the development and commercialisation of

ODM-208 as well as tiered double-digit royalties on sales if the product is approved. The total

amount potentially accrued from multiple regulatory and sales milestone events represents a

substantial opportunity for Orion. If the option is used, Orion could release the EUR 60 million

from the balance sheet and book it as revenue and operating profit.

Orion has an agreement with Jemincare, through which Orion has exclusive global development

and commercialisation rights, excluding mainland China, Hong Kong, Macau, and Taiwan, for a

potent and selective NaV 1.8 blocker (ODM-111). Orion also has ownership of certain key patent

applications relating to the compound within its own territory. Orion is fully responsible for its

own development and commercialisation costs. In addition, Orion will manufacture the products,

including active pharmaceutical ingredient, for its markets. Jemincare is upon achievement of

certain development, commercialisation and sales targets entitled to receive milestone

payments, which may be significant. In addition, Jemincare is eligible to receive tiered royalty of

8% to 15% on future sales in Orion territory.

Orion has a European wide marketing and distribution agreement with Marinus Pharmaceuticals,

Inc. for ganaxolone (i.e. Ztalmy®). Under the terms of the agreement, Orion has the right to sell

and market ganaxolone in Europe. Marinus is eligible to receive tiered royalty ranging from low

double-digits to low twenties on Orion’s future sales. In addition, Marinus is eligible to receive

milestone payments upon achievement of certain development and commercialisation

milestones. Marinus is the marketing authorisation holder and responsible for current and future

clinical trials of ganaxolone. Orion is responsible for market access in all 30 countries comprising

the European Economic Area (EEA) as well as in the United Kingdom and Switzerland.

Orion has a long-term license agreement with Amneal Pharmaceuticals, Inc. to commercialise

Amneal’s generic products in Orion territories. Under the terms of the agreement, Orion has

exclusive license to commercialise and sell Amneal’s generic products in most parts of Europe as

well as in Australia and New Zealand. The initial portfolio includes a mix of generic products

commercially available in the U.S. today, as well as selected pipeline products currently under

development.

In addition to the above agreements, Orion has a number of other licensing agreements with

various pharmaceutical companies, all of which are important but not considered key

agreements for the Group.

ORION CORPORATION | Financial Statement documents 2023 14/118

Research and development

The core therapy areas of Orion’s pharmaceutical research are oncology and pain. The company

also develops veterinary drugs and selected generic drugs. Orion’s key clinical development

projects are listed in the table on the next page.

In the early research phase, Orion has several projects investigating cancer and pain.

Additionally, Orion has projects underway to develop new veterinary drugs and selected generic

drugs. Together with Propeller Health, Orion has an ongoing development project in which the

Easyhaler® device is equipped with a sensor that monitors the use of the device.

Orion also has two clinical projects in the field of digital therapies. 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 has out-licensed ODD-403, a digital therapeutic (DTx) developed by Orion for patients

suffering from chronic pain and particularly from fear of movement and re-injury, to Newel

Health. Under the terms of the agreement, Newel will have global exclusive right to develop,

manufacture and commercialise ODD-403. Orion is entitled to receive royalty from the sales of

the product as well as sales milestone payments.

Key R&D events in January–December 2023

In March 2023, Orion and Bayer announced the initiation of Phase III ARASTEP clinical trial, which

investigates the efficacy of darolutamide plus androgen deprivation therapy (ADT) versus ADT

alone in hormone-sensitive prostate cancer, in patients with high-risk biochemical recurrence

(BCR) who have no evidence of metastatic disease by conventional imaging and a positive PSMA

PET/CT at baseline.

In Half-Year Report 2023, Orion announced that the company has initiated a Phase IIa clinical

trial, which investigates the efficacy of tasipimidine (ODM-105) for the treatment of insomnia,

which is often associated with pain and difficult to treat.

In Interim Report January–September 2023, Orion announced that the company has established

an R&D office in the United States. The office of few people in New York will coordinate Orion's

current and future R&D projects in North America.

In Interim Report January–September 2023, Orion announced that the company has initiated a

Phase I clinical trial with ODM-212 molecule, which is a TEAD inhibitor aimed for the treatment of

solid tumours with YAP/TEAD activation.

In December 2023, Orion and MSD initiated two Phase III trials, OMAHA1 and OMAHA2a,

evaluating ODM-208 (MK-5684, an investigational CYP11A1 inhibitor) in combination with

hormone replacement therapy (HRT), for the treatment of certain patients with metastatic

castration-resistant prostate cancer (mCRPC). During 2023, the CYPIDES phase II with ODM-208

proceeded as planned.

Also ODM-111 phase I proceeded as planned. SAD (single ascending dose) and MAD (multiple

ascending dose) cohorts in the ODM-111 phase I are already finalised. No significant safety

findings were identified in these cohorts and Orion is preparing to initiate phase II trials with

ODM-111 for both acute and chronic pain during 2024. More detailed data from the phase I is

planned to be presented later in a scientific conference or publication.

Orion Group’s R&D expenses in January–December 2023 decreased by 4.7% and totalled EUR

126.9 (133.2) million. They accounted for 10.7% (9.9%) of the Group’s net sales.

ORION CORPORATION | Financial Statement documents 2023 15/118

Key clinical development projects


Project	Indication	Phase I	Phase II	Phase III	Registration
ARANOTE (darolutamide)1	Prostate cancer (mHSPC)			Ongoing
ARASTEP (darolutamide)1	Prostate cancer (BCR)			Ongoing
OMAHA1 (ODM-208, CYP11A1 inhibitor)2	Prostate cancer (mCRPC)			Initiated
OMAHA2a (ODM-208, CYP11A1 inhibitor)2	Prostate cancer (mCRPC)			Initiated
CYPIDES (ODM-208, CYP11A1 inhibitor)2	Prostate cancer (mCRPC)		Ongoing
ODM-105 (tasipimidine)	Insomnia		Phase IIa ongoing
ODM-111 (NaV 1.8 blocker)	Pain	Ongoing
ODM-212 (TEAD inhibitor)	Solid tumours	Ongoing
1 In collaboration with Bayer 2 In collaboration with MSD

ORION CORPORATION | Financial Statement documents 2023 16/118

Personnel

The average number of employees in the Orion Group in January–December 2023 was 3,599

(3,472). At the end of December 2023 the Group had a total of 3,632 (3,527) employees, of

whom 2,727 (2,648) worked in Finland and 905 (879) outside Finland.

Salaries and other personnel expenses in January–December 2023 totalled EUR 273.0 (263.9)

million.

Changes in Executive Management

On 7 July 2023, Orion announced that Chief Financial Officer Jari Karlson will retire on 30 April

2024. Karlson will continue in his current position and as a member of the Executive Management

Board of the Orion Group until 30 April 2024.

On 22 August, Orion announced that Julia Macharey has been appointed Senior Vice President

of Orion Group’s new People & Culture group-level function and member of the Executive

Management Board of Orion Group as of 1 February 2024.

After the end of the reporting period on 23 January 2024, Orion announced that René Lindell has

been appointed Chief Financial Officer of Orion Group as of 1 May 2024. Lindell will start already

as of 1 April 2024 as Executive Advisor (until 30 April 2024) and member of the Group Executive

Management Board.

Transfer of pension insurance portfolio to

a pension insurance company

Orion transferred the insurance portfolio of the Orion Pension Fund's B fund to an external

pension insurance company at the end of 2023. The transfer had EUR 30.7 million positive impact

on Orion’s result in 2023. In addition, the transfer will have approximately EUR 40–45 million

positive impact on Orion’s cash flow during 2024. The amount of the cash flow impact depends

on the final valuation of the transferred pension liabilities and some illiquid investments, which

will only be available by the end of H1/2024.

Significant legal proceedings

On 26 October 2023, Orion Corporation filed together with Bayer et al a patent infringement

lawsuit against Hetero USA Inc. et al in the United States District Court for the District of

Delaware. Hetero USA Inc. (et al) has filed an Abbreviated New Drug Application (“ANDA”) for

Nubeqa® (darolutamide) with the U.S. Food and Drug Administration seeking approval to

commercialise a generic version of Nubeqa® prior to certain patents expiring in 2036 and 2038.

However, according to Orion’s information, the ANDA as filed does not seek approval prior to

the expiry of the compound patent protection for Nubeqa® (darolutamide) in the U.S.

In the U.S., generic pharmaceutical companies may apply for an ANDA after a certain time has

lapsed from the grant of the marketing authorisation of the originator’s product, and such

applications will occur in the ordinary course of business.

In addition to the above, 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 2023 17/118

Shares and shareholders

On 31 December 2023 Orion had a total of 141,134,278 (141,134,278) shares, of which

33,351,382 (34,186,494) were A shares and 107,782,896 (106,947,784) B shares. The Group’s

share capital is EUR 92,238,541.46 (92,238,541.46). At the end of December 2023, Orion held

782,973 (932,771) B shares as treasury shares. On 31 December 2023, the aggregate number of

votes conferred by the A and B shares was 774,027,563 (789,744,893) excluding treasury shares.

Voting rights conferred by shares

Each A share entitles its holder to twenty (20) votes at General Meetings of Shareholders and

each B share to one (1) vote. However, a shareholder cannot vote more than 1/20 of the

aggregate number of votes from the different 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 835,112 A

shares were converted into B shares in January–December 2023.

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 2023, the market

capitalisation of the Company’s shares, excluding treasury shares, was EUR 5,509.3 million.

In 2023, a total of 1,213,681 of Orion’s A shares and 64,267,609 B shares were traded on Nasdaq

Helsinki. The total value of the shares traded was EUR 2,651.5 million. During the year, 3.6% of

the A shares and 59.6% of the B shares were traded. The average turnover in Orion’s shares was

46.4%.

The price of Orion’s A shares decreased by 23.3% and the price of its B shares decreased by

23.4% in 2023. On 31 December 2023 the closing quotation was EUR 39.20 for the A shares and

EUR 39.27 for the B shares. The highest quotation for Orion’s A shares in 2023 was EUR 55.00

and the lowest quotation was EUR 34.25. The highest quotation for the B shares in 2023 was EUR

55.16 and the lowest quotation was EUR 32.89.

Orion shares are also traded on various alternative trading platforms in addition to Nasdaq

Helsinki.

Authorisations of the Board of Directors

On 22 March 2023, the Annual General Meeting of Orion Corporation authorised the Board of

Directors to decide on a share issue by issuing new shares. The Board of Directors shall be

entitled to decide on the issuance of no more than 14,000,000 new Class B shares. The share

issue authorisation shall be valid until the next Annual General Meeting of the Company. The

terms of the authorisation are reported in more detail in a stock exchange release on 22 March

2023.

On 23 March 2022, the Annual General Meeting authorised the Board of Directors to decide on a

share issue by conveying own shares. The Board of Directors is entitled to decide on the

conveyance of no more than 1,000,000 own Class B shares held by the Company. The

authorisation to convey own shares is valid for five years from the decision of the Annual General

Meeting. The terms of the authorisation are reported in more detail in a stock exchange release

on 23 March 2022.

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 2019, announced in a stock exchange release published

on 6 February 2019, and Orion Group’s Long-Term Incentive Plan 2022, announced in a stock

exchange release published on 10 February 2022.

Share ownership

Orion’s shares are in the book-entry system maintained by Euroclear Finland, and Euroclear

Finland maintains Orion’s official shareholder register.

At the end of December 2023, Orion had a total of 88,722 (79,423) registered shareholders, of

whom 95% (96%) were private individuals. They held 39% (38%) of the entire share stock and had

62% (61%) of the total votes. There were 46 (56) million nominee-registered and foreign-owned

shares, which was 32% (40%) of all shares, and they conferred entitlement to 9% (10%) of the total

votes.

At the end of December 2023, Orion held 782,973 (932,771) B shares as treasury shares, which is

0.55% (0.66%) of the Company’s total share stock and 0.10% (0.12%) of the total votes.

ORION CORPORATION | Financial Statement documents 2023 18/118

Flagging notifications

On 21 June 2023, Orion received a disclosure under Chapter 9, Section 5 of the Securities

Market Act, according to which the total number of Orion shares owned directly or indirectly by

Ilmarinen Mutual Pension Insurance Company (Ilmarinen) increased on 21 June 2023 above five

(5) per cent of Orion Corporation’s total voting rights.

The details of the notifications published by Orion are available at www.orion.fi/en/flaggings.

Management’s shareholdings

At the end of 2023, the members of the Board of Directors owned a total of 695,603 of the

Company’s shares, of which 625,563 were A shares and 70,040 B shares. At the end of 2023, the

President and CEO owned 30,020 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 217,574 of the Company’s shares, which were all B shares. Thus, the Company’s

executive management held 0.67% of all of the Company’s shares and 1.65% 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 Orion Corporation’s Board of

Directors on use of profit funds from the

financial year 2023

Orion Corporation’s distributable funds at 31 December 2023 are EUR 596,791,619.35 of which

the profit for the financial year is EUR 231,377,914.00. The Board of Directors proposes to the

Annual General Meeting that a dividend of EUR 1.62 per share be paid for the financial year that

ended on 31 December 2023. No dividend shall be paid on treasury shares held by the

Company on the record date for dividend payment. On the date of the proposal on the

distribution of profits there are 140,351,305 shares entitling to dividend, and thus the total

dividend would be EUR 227,369,114.10.

According to the proposal, the dividend would be paid in two instalments. The first instalment of

EUR 0.81 per share would be paid to a shareholder who is on the record date for the payment of

the dividend, 22 March 2024, registered in the Company’s shareholders’ register maintained by

Euroclear Finland Oy. The Board of Directors proposes that the first instalment would be paid on

3 April 2024. The second instalment of EUR 0.81 per share would be paid to a shareholder who is

on the record date for the payment of the dividend, 16 October 2024, registered in the

Company’s shareholders’ register maintained by Euroclear Finland Oy. The Board of Directors

proposes that the second instalment would be paid on 23 October 2024.

The Board of Directors proposes that the Annual General Meeting would authorise the Board of

Directors to resolve, if necessary, on a new record date for payment and payment date for the

second instalment of the dividend in case of changes in the rules of Euroclear Finland Oy or the

regulations regarding the Finnish book-entry system or if other rules binding the Company so

require.

In addition, the Board of Directors proposes to the Annual General Meeting that EUR 350,000 of

the Company’s distributable funds be donated to medical research and other purposes of public

interest as decided by the Board of Directors. Any remaining distributable funds would be

allocated to retained earnings.

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 2023 19/118

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 different 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 (5) and at most eight (8)

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 Chair of the Board of Directors, and the

Board of Directors elects the Vice Chair 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 Finnish 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.

Notice period of the service agreement of President and CEO is 6 months, both for the company

and for the President and CEO. The company has the right to immediately discharge the

President and CEO from her duties. In certain situations, if the President and CEO has breached

the service agreement, the company has also the right to terminate the service agreement with

immediate effect. With the exception of such agreement breach situations, if the company has

terminated the service agreement, the President and CEO shall be entitled to a severance pay

equalling to her base salary for 18 months. The prerequisite for the severance pay is also that the

company and the President and CEO enter into a separate agreement. If the President and CEO

terminates the service agreement, no severance pay is paid.

Orion publishes its Corporate Governance Statement and remuneration report for 2023

separately from the Report by the Board of Directors on the Company’s website at www.orion.fi/en.

Annual General Meeting 2023

The Annual General Meeting of Orion Corporation was held on 22 March 2023 at Messukeskus

Siipi conference centre in Helsinki. 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 report and proposals concerning authorisation

of the Board of Directors to decide on a share issue by issuing new shares and amendment to

Article 10 of the Articles of Association.

Distribution of a dividend of EUR 1.60 per share was approved for 2022, 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 22 March 2023.

Annual General Meeting 2024

Orion Corporation’s Annual General Meeting is planned to be held on Wednesday 20 March

2024 commencing at 14:00 EET.

ORION CORPORATION | Financial Statement documents 2023 20/118

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-effective 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,

Paragraph 1, Subparagraph 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.

ORION CORPORATION | Financial Statement documents 2023 21/118

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. Group production facilities are located in Finland, France and Belgium.

Pharmaceutical research centres are located in Finland and the United Kingdom. In addition,

Orion has an R&D unit in the United States. Orion had a total of 3,632 employees at the end of

2023, of them 2,727 in Finland and 905 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 conducted in 2018, 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. In 2023,

Orion re-conducted the materiality assessment to ensure that its corporate responsibility work

focuses on the most material themes in the future too and to prepare for the requirements of

Corporate Sustainability Reporting Directive. The materiality assessment was conducted

following the double materiality approach which combines impact materiality and financial

materiality. The assessment results will be published as a part of Company’s sustainability report.

The results largely corresponded to the previous materiality assessment results, so the key

themes of Orion's Sustainability Agenda continue to be ensuring patient safety and reliable

supply of medications, and responsibility for the environment, its employees, business ethics and

transparency. In 2023, the Company has advanced its Sustainability Agenda, prepared for

Corporate Sustainability Reporting Directive’s requirements and further developed sustainability

dialogue with stakeholders. The company established group-level Compliance and Public Affairs

functions in 2023. In addition during the year 2023, Orion has compiled social sustainability

roadmap and started to implement the group’s environmental sustainability roadmap which was

compiled in 2022. A separate Sustainability Report for 2023 will be published in April 2024. A

third-party limited assurance has been conducted to the non-financial reporting key figures and

selected figures in the Sustainability Report.

In 2023, Orion continued the process of integrating the animal health company V.M.D. NV

(“VMD”), acquired in June 2022, to Orion’s sustainability policies and risk management practices.

This integration will continue during 2024 and once completed, Orion will include the new

business units in its sustainability reporting indicators and results. The new business units have

been partially included in the 2023 reporting indicators and this is described indicator-by-

indicator basis and the new units are referred to as VMD units.

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 efficiency 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. In 2023, Orion started to

further develop its EHS management system based on ISO 14001 environmental standard and

ISO 45001 standard. The Company complies with valid legislation and with other regulations and

requirements applicable to its operations. Orion manufactures human and animal

pharmaceuticals and active pharmaceutical ingredients in an environmentally sustainable way,

ensuring efficient 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 of these situations.

Management of EHS matters is monitored through annual internal audits. Operations are

continuously improved by identifying development objectives. The management of sustainability

ORION CORPORATION | Financial Statement documents 2023 22/118

issues, including the management of climate change related risks and EHS risks, are also part of

the supplier and partner selection and management practices.

Orion’s most significant environmental impacts and risks are connected to emissions and

pharmaceuticals ending up in air, wastewater and the environment, the use of natural resources,

waste volumes arising from the operations, and climate change, biodiversity and air and water

quality. Orion monitors the impacts, for example, by measuring emissions, waste volumes and

resource use and defines development measures for impacted areas when needed. All Group’s

production plants have the valid environmental permits required for operations.

The Company’s objective is to improve safety at work, keeping in mind that incidents and

accidents are among the key social and human resources risks. The Company works continuously

to prevent incidents and accidents and to further promote a safety culture, for example through

comprehensive training, regular audits, teams’ regular safety sessions, and by encouraging

people to make safety observations.

Risks associated with the environment, social issues and personnel can typically lead to damage

to the Company's reputation or brand’s value or impact on financial costs. 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 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.

Climate and energy consumption

Orion has a climate target of carbon neutrality in its own operations by 2030, and the work

towards that target is progressing well. In addition to the carbon neutrality target of own

operations, Orion has committed to set science-based targets for reducing emissions in line with

limiting global warming to 1.5 degrees. In the planned science-based (SBTi) targets, emissions

generated in the value chain are now also included in Orion’s climate targets. The company

expects the approval of science-based climate targets to take place in 2024.

Orion systematically reduces its greenhouse gas emissions and engages in energy conservation

in accordance with Orion’s energy efficiency programme. Several projects were completed in

2023. Among others the Espoo heat pump plant project was completed. The plant utilises waste

heat from production processes and energy from outside air to produce zero emission heat for

the district network of Orion Espoo. In addition, a solar power plant owned, maintained, and

operated by Orion’s partner was completed in the Hanko production facility’s area. Orion is

committed to buying all electricity produced by the solar power plant at the fixed price according

to the contract.

Orion’s target is to improve energy efficiency by 15% of the energy consumption in 2016 by the

end of 2025. Orion reached this target in 2023, and thus achieved also the target of the joint

Energy Efficiency Programme for the members of the Confederation of Finnish Industries (EK) for

the years 2017–2025. In 2023, the Company achieved energy savings, besides Espoo’s heat

pump plant project, by investing in LED lighting in Espoo and Salo.

The greenhouse gas emission reductions in own operations (Scopes 1–2) are mainly achieved

through Orion’s energy efficiency programme measures, including energy transformation

projects, such as electrification of processes, in addition to which renewable and carbon free

energy sources are utilised. By the end of 2023 Orion has reduced the greenhouse gas emissions

in its own operations (Scopes 1–2) by 69% compared with 2016. In 2023, the Company further

developed and refined the calculations of greenhouse gas emissions from its value chain (Scope

3). The company reports Scope 3 emissions yearly in its sustainability report.


	2023	2022
Total energy consumption, energy savings and greenhouse gas emissions1
Total absolute energy consumption (MWh)2	159,242	154,832
Energy savings achieved by saving measures and efficiency improvements (MWh)3	11,459	858
Energy efficiency targets achieved4	108%	60%
Greenhouse gas emissions, Scope 1 (tCO2e)	5,511	5,110
Greenhouse gas emissions, Scope 2, market-based (tCO2e)5	8,429	10,786

1 VMD production plants in France and Belgium are included to the figures as of July 2022.

2 Orion Group’s properties that do not contribute significantly to the total and have no production operations, such as rented

offices, are excluded from reporting.

3 Energy savings are estimates calculated in compliance with the guidelines of the Energy Authority.

4 The energy savings target for 2025 is 15% of the energy consumption in 2016.

5 2022 figures restated due to refinement of the calculation of the emission factor.

Conservation of biodiversity and ecosystems

Orion recognises the importance of halting biodiversity loss and commits to working towards no

biodiversity loss caused by our business or our value chain. In 2023, Orion continued the work to

map its biodiversity impacts, especially those occurring in the value chain.

ORION CORPORATION | Financial Statement documents 2023 23/118

EU Taxonomy

The EU Taxonomy Regulation is a classification system for sustainable economic activities. Orion

has been actively monitoring the development of the EU Taxonomy and its related disclosure

obligations. During 2023, the Environmental Delegated Act was published now incorporating

non-climate objectives into the regulation. During the year, Orion conducted an assessment to

identify Taxonomy-eligible and aligned economic activities across new environmental objectives.

New relevant economic activities for Orion within the EU Taxonomy were identified and are

reported for the first time. Thus, the EU Taxonomy reporting for the financial year 2023 departs

from the previous years’ Taxonomy reporting at Orion.

Taxonomy-eligibility and alignment assessment

With the introduction of new environmental objectives, an updated group-wide assessment of

Taxonomy-eligibility and alignment was conducted during 2023. The screening to identify

Taxonomy-eligible activities was conducted by comparing the existing NACE-mapping of Orion’s

activities from previous years’ reporting to the Environmental Delegated Act. Out of the six

environmental objectives in the EU Taxonomy, the environmental objective of pollution

prevention and control was found as relevant for Orion. Within the environmental objective of

pollution prevention and control, two economic activities relevant for Orion were identified: 1.1

Manufacture of active pharmaceutical ingredients (API) or active substances and 1.2 Manufacture

of medicinal products.

In addition, an assessment of Taxonomy-alignment was also conducted during 2023. Although

the disclosure requirements for the financial year 2023 only concerns taxonomy eligibility, the

Company assessed its Taxonomy-alignment for the financial year 2023. The assessment for

Taxonomy-alignment was coordinated by the Corporate Responsibility function in close co-

operation with professionals working across the organisation. This included professionals from,

among others, Research & Development and representatives from business divisions. The

assessment of Taxonomy-alignment began by looking at substantial contribution and

investigating whether economic activities fulfilling the technical screening criteria were found. As

the technical criteria currently stands, economic activities fulfilling the technical screening criteria

were not identified. The evaluation of the technical screening criteria was performed at product

level.

Taxonomy-alignment requires demonstrating compliance with all three components: substantial

contribution, “Does Not Significantly Harm” (DNSH)-criteria and the Minimum Safeguards (MS).

As economic activities fulfilling the substantial contribution were not identified, the assessment

for Taxonomy-alignment was not pursued further. However, the Company will continue to

actively monitor the development of the regulation and update its Taxonomy-alignment

assessment in future reporting if the content of the regulation changes in material respect.

1.1 Manufacture of active pharmaceutical ingredients (API) or active

substances

One of the identified Taxonomy-eligible activities is 1.1 Manufacture of active pharmaceutical

ingredients (API) or active substances. At Orion, the eligible activity is the operations of Fermion.

Fermion manufactures active pharmaceutical ingredients for Orion and other pharmaceutical

companies. Its product range comprises nearly 30 pharmaceutical ingredients. Fermion’s

production, excluding deliveries for Orion’s own use, is considered as Taxonomy-eligible.

1.2 Manufacture of medicinal products

Most of Orion’s manufacturing is of medicinal products and is Taxonomy-eligible. There are,

however, some product groups that are not considered as medicinal products, such as vitamins

and basic ointments. These non-medicinal products are considered as non-eligible. In addition,

two exclusions were made for the activity 1.2. Manufacture of medicinal products. These

exclusions are veterinary medicines and medicinal products which are not manufactured by

Orion. These exclusions are based on Orion’s own strict interpretation and are subject to change

if definition of economic activity is clarified or if interpretation guidelines are specified.

The technical screening criteria states that in order for a medicine to be classified as Taxonomy-

aligned, it should be considered to be degradable in the environment in line with the European

Medicines Agency Guideline on the environmental risk assessment of medicinal products for

human use. The criteria therefore suggests that the economic activity concerns the manufacture

of medicines for human use and thus veterinary medicines are considered as non-eligible in line

with Orion’s strict interpretation of the regulation.

EU Taxonomy accounting policy

Turnover presented in the Taxonomy disclosures includes the Company’s net sales. More

information regarding turnover is available in Financial statement note 2.1 Revenue from

contracts with customers. Taxonomy-eligible net sales (A.2) corresponds to the share of external

net sales which are associated with the identified eligible economic activities.

Capital expenditure consists of additions to property, plant and equipment, intangible assets,

right-of-use assets and the additions in business combination excluding goodwill. More

information is available in Financial statement note 3.1 Property, plant and equipment and

intangible assets and 3.2 Leased assets. Capital expenditures for the financial year 2023 are not

fully comparable to the previous year due to the acquisition during 2022. Taxonomy-eligible

capital expenditures (A.2) corresponds to the share of capital expenditures which are associated

with the identified eligible economic activities. Investments related to non-eligible activities were

classified as non-eligible as whole.

ORION CORPORATION | Financial Statement documents 2023 24/118

Operating expenditure consists of costs related to research and development, maintenance

materials, leases of low-value assets and short-term leases. More information is available in

Financial statement note 2.3 Operating expenses and 3.2 Leased assets. The definition of

operating expenditures in the Taxonomy was revised and broadened during 2023. As a result of

this and the acquisition during 2022, the operating expenditures for the financial year 2023 are

not fully comparable to the previous year. The acquired business was consolidated into Group

financials from the acquisition date onwards and, therefore, the operating expenditures included

in Taxonomy covered only part of the year 2022. Taxonomy-eligible operating expenditures (A.2)

corresponds to the share of operating expenditures which are associated with the identified

eligible economic activities.

Double counting is avoided by having expenses classified with a cost centre and profit centre

structures that identifies activities to separate elements.

The tables below present the proportion of Taxonomy-aligned (A.1) and eligible (A.2) net sales,

capital- and operating expenditures for the financial year ending 31 December 2023. In addition,

information on nuclear and fossil gas related activities according to the Delegated Regulation

(EU) 2022/1214 is also reported.


Row	Nuclear energy related activities
1.	The undertaking carries out, funds or has exposures to research, development, demonstration and deployment of innovative electricity generation facilities that produce energy from nuclear processes with minimal waste from the fuel cycle.	NO
2.	The undertaking carries out, funds or has exposures to construction and safe operation of new nuclear installations to produce electricity or process heat, including for the purposes of district heating or industrial processes such as hydrogen production, as well as their safety upgrades, using best available technologies.	NO
3.	The undertaking carries out, funds or has exposures to safe operation of existing nuclear installations that produce electricity or process heat, including for the purposes of district heating or industrial processes such as hydrogen production from nuclear energy, as well as their safety upgrades.	NO
	Fossil gas related activities
4.	The undertaking carries out, funds or has exposures to construction or operation of electricity generation facilities that produce electricity using fossil gaseous fuels.	NO
5.	The undertaking carries out, funds or has exposures to construction, refurbishment, and operation of combined heat/cool and power generation facilities using fossil gaseous fuels.	NO
6.	The undertaking carries out, funds or has exposures to construction, refurbishment and operation of heat generation facilities that produce heat/cool using fossil gaseous fuels.	NO

ORION CORPORATION | Financial Statement documents 2023 25/118

Proportion of turnover from products or services associated with Taxonomy-aligned economic activities – disclosure covering year 2023


Financial year 2023	2023			Substantial contribution criteria						DNSH criteria (‘Does Not Significantly Harm’)
Economic activities	Code	Turnover EUR million	Proportion of turnover, year 2023	Climate change mitigation	Climate change adaptation	Water	Pollution	Circular economy	Biodiversity	Climate change mitigation	Climate change adaptation	Water	Pollution	Circular economy	Biodiversity	Minimum safeguards	Proportion of Taxonomy- aligned (A.1.) or eligible (A.2.) turnover year 2022	Category enabling activity	Category transitional activity
A. TAXONOMY-ELIGIBLE ACTIVITIES
A.1 Environmentally sustainable activities (Taxonomy-aligned)
Turnover of environmentally sustainable activities (Taxonomy-aligned) (A.1)		0	0%														0%
of which enabling		0	0%														0%
of which transitional		0	0%														0%
A.2 Taxonomy-eligible but not environmentally sustainable activities (not Taxonomy-aligned activities)
Manufacture of active pharmaceutical ingredients (API) or active substances	PPC 1.1	56	5%				EL										0%
Manufacture of medicinal products	PPC 1.2	720	60%				EL										0%
Turnover of Taxonomy-eligible but not environmentally sustainable activities (not Taxonomy-aligned activities) (A.2)		775	65%				100%										0%
A. Turnover of Taxonomy-eligible activities (A.1+A.2)		775	65%				100%										0%
B. TAXONOMY-NON-ELIGIBLE ACTIVITIES
Turnover of Taxonomy-non-eligible activities		414	35%
TOTAL		1,190	100%

ORION CORPORATION | Financial Statement documents 2023 26/118

Proportion of CapEx from products or services associated with Taxonomy-aligned economic activities – disclosure covering year 2023


Financial year 2023	2023			Substantial contribution criteria						DNSH criteria (‘Does Not Significantly Harm’)
Economic activities	Code	CapEx EUR million	Proportion of CapEx, year 2023	Climate change mitigation	Climate change adaptation	Water	Pollution	Circular economy	Biodiversity	Climate change mitigation	Climate change adaptation	Water	Pollution	Circular economy	Biodiversity	Minimum safeguards	Proportion of Taxonomy- aligned (A.1.) or eligible (A.2.) CapEx year 2022	Category enabling activity	Category transitional activity
A. TAXONOMY-ELIGIBLE ACTIVITIES
A.1 Environmentally sustainable activities (Taxonomy-aligned)
CapEx of environmentally sustainable activities (Taxonomy-aligned) (A.1)		0	0%														0%
of which enabling		0	0%														0%
of which transitional		0	0%														0%
A.2 Taxonomy-eligible but not environmentally sustainable activities (not Taxonomy-aligned activities)
Manufacture of active pharmaceutical ingredients (API) or active substances	PPC 1.1	19	21%				EL										0%
Manufacture of medicinal products	PPC 1.2	25	27%				EL										0%
CapEx of Taxonomy-eligible but not environmentally sustainable activities (not Taxonomy-aligned activities) (A.2)		44	48%				100%										0%
A. CapEx of Taxonomy-eligible activities (A.1+A.2)		44	48%				100%										0%
B. TAXONOMY-NON-ELIGIBLE ACTIVITIES
CapEx of Taxonomy-non-eligible activities		49	52%
TOTAL		93	100%

ORION CORPORATION | Financial Statement documents 2023 27/118

Proportion of OpEx from products or services associated with Taxonomy-aligned economic activities – disclosure covering year 2023


Financial year 2023	2023			Substantial contribution criteria						DNSH criteria (‘Does Not Significantly Harm’)
Economic activities	Code	OpEx EUR million	Proportion of OpEx, year 2023	Climate change mitigation	Climate change adaptation	Water	Pollution	Circular economy	Biodiversity	Climate change mitigation	Climate change adaptation	Water	Pollution	Circular economy	Biodiversity	Minimum safeguards	Proportion of Taxonomy- aligned (A.1.) or eligible (A.2.) OpEx year 2022	Category enabling activity	Category transitional activity
A. TAXONOMY-ELIGIBLE ACTIVITIES
A.1 Environmentally sustainable activities (Taxonomy-aligned)
OpEx of environmentally sustainable activities (Taxonomy-aligned) (A.1)		0	0%														0%
of which enabling		0	0%														0%
of which transitional		0	0%														0%
A.2 Taxonomy-eligible but not environmentally sustainable activities (not Taxonomy-aligned activities)
Manufacture of active pharmaceutical ingredients (API) or active substances	PPC 1.1	3	2%				EL										0%
Manufacture of medicinal products	PPC 1.2	160	87%				EL										0%
OpEx of Taxonomy-eligible but not environmentally sustainable activities (not Taxonomy-aligned activities) (A.2)		163	89%				100%										0%
A. OpEx of Taxonomy-eligible activities (A.1+A.2)		163	89%				100%										0%
B. TAXONOMY-NON-ELIGIBLE ACTIVITIES
OpEx of Taxonomy-non-eligible activities		20	11%
TOTAL		183	100%

ORION CORPORATION | Financial Statement documents 2023 28/118

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 2023, the Company launched Safety Value Creation

program, which covers Global Operations including production units in Finland, to achieve the

Company’s long-term safety objective. During the year, as a part of the program, Orion mapped

the current stage and set out development actions for focus areas which are Practical safety

leadership, Metrics & Rewarding, Competence management, Value from root cause analysis, and

Operational safety. The development actions will be carried out during the years 2024 and 2025.

Lessons learned and best practices will also be shared in the other Group-level functions and

Business divisions. The Company’s aim is to achieve zero lost time incidents. In year 2023, the

group level lost time incident frequency target was LTIF 1 ≤ 3.0. In addition, in 2023, the excellent

LTIF rate was defined as LTIF 1 ≤ 2.9. The group level target for the year 2023 or excellent LTIF

rate were not achieved. Orion is systematically working to improve safety at work and the Safety

Value Creation program will support achievement of LTIF target in the long term.


	2023	2022
Occupational well-being of personnel: Workplace injuries and sick leave of the personnel
Lost time incident frequency, LTIF 11	4.8	3.7
Absence due to illness (hours of absence due to illness as percentage of total theoretical working hours)2	3.5%	4.1%

1 Indicates the workplace injury rate as injuries causing an absence of at least one day per million total actual working hours. 2022

reporting includes Orion Group employees globally. VMD employees of production sites in France and Belgium are included as

of July 2022.

2 Hours of absence due to illness as percentage of total theoretical working hours of Company personnel. Reporting covers the

Orion Group’s employees in Finland.

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 is available in 17 languages. Correspondingly, the ethical guidelines of the Third Party

Code of Conduct applying to Orion’s suppliers and partners define the minimum requirements

to which Orion expect its partners to be committed. In 2023, the company updated the Third

Party Code of Conduct to correspond the PSCI Principles for Responsible Supply Chain

Management, which were updated in 2023, in order to advance and reinforce the commitment to

the UN Guiding Principles on Business and Human Rights (UNGP) throughout the value chain. In

addition to regulatory requirements, the document includes key principles for business

operations concerning sustainability and ethics. The Company’s Third Party Code of Conduct is

available in 13 languages.

Orion’s objective is that respect for human rights is fully realised in all its 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. The Company strives to

ensure that no violations take place in its own or its business relationships’ operations. Orion

works to prevent possible negative impacts in its value chain that are directly linked to the

Company’s operations, products or services by its business relations.

The principles that are included in the Company’s Code of Conduct and the anti-corruption

policy require that employees refuse to offer 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 partners in its supply chain to comply with Orion’s requirements and the Third

Party Code of Conduct. In selecting its suppliers, the Company concentrates its actions to

prevent and mitigate negative impacts especially to so-called high-risk countries where there is

an elevated risk of human rights or labour rights violations and/or exploitation of child labour,

and where national labour legislation is weak or not efficiently enforced. 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 human rights and labour rights, the

environment, occupational health and safety, ethics, and governance and management systems)

of their facilities and operations. Any findings detected in the sustainability audits will be

addressed with corrective actions 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.

Orion’s group-level Anti-bribery and Corruption compliance program is led by Orion’s

Compliance Function. In accordance with the anti-corruption policy, Orion does not tolerate

bribery or corruption in any of its business operations. However, Orion’s partnerships and

business may include corruption risks, which are identified and assessed in accordance with the

Group’s risk management system. Corruption risks are assessed, among other things, in

connection with the preparation of agreements with business partners. Training and awareness

are Company’s most important actions in managing these risks. Orion regularly and systemically

trains and orients its personnel to understand the purpose and meaning of anti-bribery and

ORION CORPORATION | Financial Statement documents 2023 29/118

corruption guidelines. Training is mandatory for a targeted portion of the personnel. Orion’s

business partners are required to comply with Orion’s Third Party Code of Conduct, which

includes key requirements for preventing corruption and bribery.

Orion has a public and confidential reporting channel for suspected misconduct, which

complements organisation’s usual reporting and notification channels. The centralised reporting

channel and investigation process promote good governance and ethical conduct, and ensure

that reports are handled in a systematic manner. Orion encourages its personnel and other

stakeholders to bring to the attention of the company’s management their experiences,

observations, and suspicions of any behaviour that violates human rights or any other guidelines.

Orion investigates and processes reports promptly and impartially through the Group’s

Compliance function. The company takes case-by-case corrective action when it detects non-

compliant behaviour.

Indicators and results

In 2023, Orion published two additional language version of the policy and related e-learning to

ensure accessibility to all employees. The majority of Group employees completed the

mandatory Code of Conduct e-learning in 2020, when the training was published. The Company

ensures that the training is completed by all new employees.

In 2023, Orion continued to apply its human rights due diligence practices with risk-based

approach. Orion was not made aware of any human rights violations in its own operations

through the whistleblowing channel in 2023. The Company takes all such notifications seriously

and handles them quickly and impartially.

Anti-corruption and bribery training is mandatory for certain personnel groups. Orion ensures

that the training is completed by all new employees for whom it is mandatory. In 2023, Orion

published additional language version of Anti-corruption and bribery training. The company

provides regular training and the Company carried out the previous comprehensive retraining

for the targeted personnel groups in 2022.


	2023	2022
Respect for human rights and prevention of corruption and bribery
Code of Conduct training, number of participants1, 2	460	682
Anti-corruption and anti-bribery training, number of participants1, 3	348	1,800

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.

2 VMD employees are included to training participants as of July 2022.

3 VMD employees are included to training participants as of 2023.

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 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 provide more benefits than risks for their users, be effective 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, which compliance with legislation and regulatory requirements is

monitored by internal audits and inspections 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 audits

manufacturing sites regularly to assess the adequacy of the quality system and that all GMP

(Good Manufacturing Practice) standards are followed. Orion analyses raw material and product

batches 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 the Finnish Medicines Act and EU standards, the defined QP (Qualified Person) in the quality

assurance organisation decides when a product batch is released for sale. QP is responsible for

ensuring that each individual batch has been manufactured and checked in compliance with laws

in force and in accordance with the requirements of the marketing authorisation and with GMP.

The stability of the product is monitored during the shelf life 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

beneficial for their users, effective 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 efficacy and safety. Clinical trials

ORION CORPORATION | Financial Statement documents 2023 30/118

involving human subjects can only be conducted with approval of the regulatory drug authorities

and ethical committees. The pharmacology and safety of a drug candidate are extensively

studied using preclinical laboratory models and by monitoring tolerability and adverse effects

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

effects 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 as well as based on

safety reports received from the market, Orion strives to ensure that its products have no such

unreasonable risks for patients in relation to the benefits of the drugs that might lead to liability

or withdrawal of a 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 insurances.

The manufacturing of pharmaceutical products is subject to regular inspections by the

authorities. Pharmaceutical products must provide more benefits than risks for the patients and

be 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 and wide supplier network may cause risks to the delivery reliability.

Authorities in different countries undertake regular and detailed inspections and audits of Orion’s

manufacturing sites and in Orion’s contract manufacturing sites. Should some inspection or audit

outcome lead to significant corrective actions, it may at least temporarily have effects that

decrease delivery reliability and increase costs. This risk is, however, mitigated by continuous

improvement and regular audit program by Orion. In addition, changing or new regulatory

guidelines are implemented proactively also.

Risks and risk management relating to patient safety in the Orion Group are described in more

detail in Orion’s web page.

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.


	2023	2022
Product quality and safety
Number of GxP inspections/audits of Orion’s operations1, total	78	63
Inspections by authorities	15	12
Audits by collaboration partners	63	51
Non-compliances from authority inspections	0	0
Number of GxP audits undertaken by Orion1	248	281
Rejections	2	1
Number of customer complaints about the Pharmaceuticals business (ppm2)	59	60

1 Inspections and audits of Good Practices (GxP) and ISO 13485 audits. The reporting covers inspections/audits of and

undertaken by Orion group excl. VMD units.

2 ppm = parts per million packages sold.

ORION CORPORATION | Financial Statement documents 2023 31/118

Strategy

Orion’s Board of Directors has confirmed the Company’s strategy for 2024–2028.

Global trends and operating environment for

pharma Industry

The following key global trends drive growth opportunities and challenges in pharma industry

and affect Orion’s operating environment:

• Demographics and aging of population: as population ages, the prevalence of various

diseases increases, causing increased demand for drugs and treatments.

• Cost pressure in healthcare and pharmaceuticals: the share of healthcare costs of

available funds continues to increase, both at national and individual level, creating

needs for cost-effective drugs and treatments. Geopolitical developments are decreasing

predictability and causing challenges in global supply chains.

• Advancements in science and technologies: personalised medicine, increased genetic

and epigenetic data and developments in drug dosing and diagnostics create

possibilities and markets for new treatments and therapies.

• Sustainability regulation and demand for sustainability: sustainability and compliance in

all business sectors increasingly guide the actions and decisions of consumers,

authorities and investors.

• Digitalisation, the use of AI and real time data: The amount and significance of data is

growing, and it has become a valuable tool for generating competitive business

opportunities. Societies and companies are increasingly relying on artificial intelligence,

machine learning, and automation.

Our purpose is building well-being

Well-being means something unique for each human being in all stages of life. We draw on our

century-long experience in healthcare while keeping our sights firmly set on future innovations to

support you every step of your way.

Our novel therapies help change the lives of patients across the globe. We serve societies in

sustaining health systems with a diverse portfolio of cost-effective and value-adding drugs. Our

veterinary products enable pet owners and farmers to care for their animals.

Inspired by our Nordic heritage, we strive to empower people around the world to live their lives

to the fullest – today and tomorrow.

Orion’s strategy 2024–2028, with a direction into

the 2030s

Orion is an innovative, research-focused pharmaceutical company with a strong Nordic heritage

that serves societies and helps change lives across the globe. All business divisions play a key

role in Orion’s growth strategy. The three key elements in the strategy are the following:

1) Build a customer driven portfolio through our competitive businesses:

• Innovative Medicines focuses on oncology and pain management, leveraging Orion’s

R&D expertise in these crucial and expanding fields.

• Branded Products continues building on its strength and success in Respiratory and

Parkinson’s disease.

• Generics and Consumer Health provides a large cost-effective generics portfolio

complemented by value-added and complex generics to European hospitals and other

selected markets and caters to customer needs with consumer health products with value

propositions.

• Animal Health continues building a competitive portfolio for companion and livestock

animals.

• Fermion manufactures key APIs to all business divisions.

2) Expand to new geographies:

• Strengthen European market position.

• Strengthen and expand operations in Asia Pacific including Japan.

• Establish operations in USA to build R&D and commercialisation capabilities.

3) Develop growth enablers:

Orion has determined the following areas where it builds its capabilities in order for the company

to achieve strategic success:

• Competences and culture development in accordance with Orion’s values.

• Safety and sustainability –  Prioritise patient safety and sustainability across the entire

product lifecycle, positioning Orion as a trustworthy European partner, known for

dependable delivery, transparency, and responsibility.

• Global commercialisation capabilities – build the expertise to enable the global

commercialisation of our products on a larger scale.

• Data driven execution excellence - Build expertise and operational models for a data-

driven approach, optimising decision-making based on hard data.

ORION CORPORATION | Financial Statement documents 2023 32/118

• Master End-to-End value chain developing competitive advantage in every step from

molecule development to marketing and distribution.

The roles of the business divisions in Orion’s business portfolio:

• In Innovative Medicines patients with cancer and pain meet innovations and disruptive

pharma to transform their lives. Innovative Medicines is the global growth driver for

Orion.

• Branded Products provides the platform for growth in Europe & Asia. In Branded

Products the target is to be an impactful player in Respiratory, Central Nervous System,

and Women’s Health in Europe and Asia.

• Generics and Consumer Health is Orion’s solid bedrock. In Generics and Consumer

Health we create everybody access to affordable quality medicines and help individuals

to promote their health.

• Animal Health is committed to the well-being of companion animals and livestock.

• Fermion manufactures key APIs to all business divisions.

Orion’s growth strategy in three steps according to Orion strategic roadmap:

1) Short term: Strengthen & Expand – Strengthen European and Asia Pacific market positions

2) Mid-term: Build and Invest – Build and invest into global commercial assets and capabilities

3) Long-term (2030s): Accelerate – Grow and maximise value of global assets

Non-financial targets – Orion’s sustainability commitments

We are taking proactive steps in business sustainability transformation. We address both

sustainability regulations and increasing demand for sustainability, reinforcing Orion’s

competitiveness and market access in a dynamic operating environment. Orion’s Sustainability

Agenda is a systematic approach to sustainability across the value chain. With this, we aim to

minimise our footprint and adverse impacts while enhancing our positive impacts on the

environment, people, and society.

• Patient safety as a top priority: Patient safety has been a priority for us for a hundred years

and it continues to be the cornerstone of our daily operations. We play a significant role

in ensuring reliable supply of medications – even in the wake of a crisis.

• Active work for a better environment: We want to be the environmental leaders in our

industry. We continuously raise the bar in climate and environmental responsibility, and

we challenge others to follow. We are strongly heading towards achieving carbon

neutrality in our own operations by 2030.

• Care for well-being professionals: We want to take care of our employees – professionals

who put their heart and expertise in everything they do. Our workplace is inspiring. We

want our people to feel well.

• Ethics at the core of our business: We maintain strict ethical standards and act

responsibly in all situations. Together with our partners we are building a transparent and

sustainable business.

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 for 2024–2028 are:

• To grow net sales with a compound average annual growth rate (CAGR) of at least 8%.

• To grow operating profit faster than net sales.

• To maintain an equity ratio of at least 50% and to generate return on equity (ROE) of 25%

or higher.

• To increase the dividend per share annually with a payout ratio of 50% to 100%.

Achievement of these objectives requires continuous and sufficient investments in development

of the product portfolio and growth. Received milestone payments which are part of Orion’s

business model can generate volatility in short term growth on net sales and operating profit.

ORION CORPORATION | Financial Statement documents 2023 33/118

Outlook for 2024

Net sales are estimated to be EUR 1,340 million to EUR 1,410 million.

Operating profit is estimated to be EUR 270 million to EUR 310 million.

Basis for outlook in more detail

Collaboration agreements with other pharmaceutical companies are an integral part 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

difficult. In some cases, they are conditional on terms such as R&D outcomes which are not

known until studies have been completed, the progress of R&D projects or the attainment of

specified sales levels. Regarding possible new contracts under negotiation, neither the outcome

nor the schedule of contract negotiations is generally known before the final signing of the

agreement.

Orion is eligible to receive milestone payments from Bayer based on sales of the Nubeqa®

product upon meeting certain global annual sales thresholds for the first time. In 2023 Orion

received one such milestone payment of EUR 30 million. The outlook for 2024 includes one

Nubeqa® sales-related milestone payment of EUR 70 million which is included in both the net

sales outlook and the operating profit outlook. The outlook does not include any other material

milestone payments or one-offs.

The outlook assumes that Orion's own production and other operations will be able to operate

normally throughout the year, and the supply chains of raw materials or ready-made products are

not facing significant disruptions. These and other risks are discussed in more detail under

'Near-term risks and uncertainties'.

The outlook does not include income, expenses or other impacts related to any future material

product or company acquisition or divestment.

Milestone payments received by Orion in 2019–2023


Year	2019	2020	2021	2022	2023
EUR million	51	42	3	234	32

Net sales

The outlook assumes that the net sales of Nubeqa® booked by Orion, and thus the net sales of

the Innovative Medicines business division, will clearly increase in 2024. Orion’s assumption is

based on forecasts received from its partner Bayer. However, it is difficult to predict the exact

level of product sales and royalties for the whole year of a strongly growing product. In addition,

the EUR 70 million Nubeqa®-related milestone is expected to increase the net sales of the

Innovative Medicines business division.

Branded Products and Animal Health business divisions are also estimated to improve their net

sales in 2024. Branded Products growth is anticipated to be driven by the Easyhaler® product

portfolio. The sales of entacapone products are assumed to recover somewhat after challenging

year 2023. At the same time, however, the market conditions for the entacapone products

continue to be tough with increasing competition and declining prices in many markets, and as a

result, the sales of the entacapone products are anticipated to be flat in 2024. Animal Health

growth is anticipated to be driven by sedatives portfolio, products in launch phase and

improving market conditions.

Generics and Consumer Health business division continues to suffer from the decline of Simdax®

and dexmedetomidine products due to generic competition and falling prices, but less than in

the recent years. Overall volume of generic products are expected to grow but at the same time

prices are expected to decline. Due to the aforementioned reasons, the net sales of the Generic

and Consumer Health business division is assumed to decrease slightly in 2024.

Fermion has been operating at very near full capacity over the past few years. The share of

manufacturing of the active pharmaceutical ingredients of Orion's own proprietary drugs is

estimated to increase, which may restrict capacity allocated to external business.

Operating profit

Gross profit is expected to increase clearly driven by growing Nubeqa® royalties and the

anticipated EUR 70 million Nubeqa®-related sales milestone.

The wide range in the operating profit estimate is mainly due to Nubeqa's sales booked by Orion

and the development of R&D costs. It is difficult to predict the exact level of royalties for the

whole year of a strongly growing product. Any variance from the predicted level can have

notable impact on Orion's operating profit. Also, the mechanism by which each quarter's product

deliveries are always fully deducted from the next quarter's royalty payments, is causing variance

to operating profit. Even though this impact on operating profit is only temporary, the timing of

product deliveries may have notable impact on Orion's operating profit in one calendar year.

Over the past few years, Orion has been determined to increase its investment in early-stage

research in line with its growth strategy. This work is now starting to bear fruit and several

ORION CORPORATION | Financial Statement documents 2023 34/118

projects are approaching the clinical development phase. Progressing these projects will also

require significantly higher R&D expenditure than in the past. At the same time, projects in the

clinical development phase have advanced and will advance during 2024, which will increase

project costs. However, there are uncertainties related to the progress and timing of projects,

which may mean that not all the costs projected for 2024 will materialise. Currently Orion is not

booking any costs related to the development of ODM-208 and thus the outlook does not

include any ODM-208 related R&D costs.

Sales and marketing expenses are expected to increase mainly due to growing investments to

the Easyhaler® sales and increasing Nubeqa® royalty payable due to an agreement with Endo

Pharmaceuticals.

Capital expenditure

The Group’s total capital expenditure in 2024 is expected to be at a similar level as in 2023, when

capital expenditure was EUR 93 million. The estimate of capital expenditure does not include any

investments related to any future material product or company acquisition.

Near-term risks and uncertainties

The outlook assumes that Orion's own production and other operations will be able to operate

normally. The realisation of sales of Orion-manufactured products requires that production and

the related supply chains and other operations are able to operate at the planned level. There

are a number of risks that could even materially disrupt Orion's production or other operations.

Such risks include, for example, accidents, strikes, employee illness, poor availability of supplies,

equipment, spare parts, products, energy, starting materials or semi-finished products, and the

failure of logistics chains or serious disruptions to information or communication systems. Current

risks to supply and logistics chains include geopolitical conflicts and unrest around the world. In

addition to conflicts and unrest, any other unforeseen changes in the operating environment

could cause disruptions to Orion's production, supply chains or other operations. Such risks may

include accidents, strikes, natural disasters, epidemics and pandemics, wars, terrorism, cyber-

attacks or hybrid influencing.

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. Changes in

pharmaceutical regulation in individual markets or more broadly, for example at EU level, may

affect the sales and profitability of Orion's products. Changes in overall market demand may also

have negative impact on sales.

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 affect the

value of deliveries.

Currently no single currency is posing a material exchange rate risk for Orion. In Orion’s total net

sales, the share of invoicing in US dollars has fallen to around ten per cent. 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®. Other key currencies that carry an exchange rate risk are European

currencies other than EUR. However, the overall effect of the risk arising from currencies of

European countries will be abated by the fact that Orion has organisations of its own in most

European 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 sales of

Parkinson’s drugs in Japan.

The current geopolitical conflicts and unrest, and other challenges in the global supply and

logistics chains of pharmaceuticals have increased the already elevated risk of supply disruptions.

Moreover, the disruptions, production volume changes and logistical challenges experienced in

other industries may also have unexpected and sudden ramifications that can manifest as

shortages of necessary raw materials, supplies and equipment in the chemical and

pharmaceutical industries and as increases in prices. The possible rise of raw material prices and

other supply chain costs deteriorates the profitability of Orion's products, since in the

pharmaceuticals industry it is very difficult to pass on cost increases to the prices of own

products, especially prescription medicines, particularly in Europe. If high cost inflation occurs, it

will pose a risk to Orion's profitability.

Authorities and key customers in different 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 effects 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

supply active pharmaceutical or other ingredients and components or parts (among these the

Easyhaler® products). 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 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 size and costs of new studies that are

being started are known relatively well in advance. However, there are uncertainties in the timing

ORION CORPORATION | Financial Statement documents 2023 35/118

and progression of any individual study. Any changes in the timing of new research or

development phases that are being launched may have a material impact on the projected cost

structure within a single year. 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 affect 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 affect Orion’s financial results. 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 2023 36/118

Group’s key figures

Key figures relating to financial performance


	2019	2020	2021	2022	2023
Net sales, EUR million	1,051.0	1,078.1	1,041.0	1,340.6	1,189.7
EBITDA, EUR million	308.9	336.5	289.1	487.1	326.4
% of net sales	29.4%	31.2%	27.8%	36.3%	27.4%
Operating profit, EUR million	252.8	280.1	243.3	439.6	274.9
% of net sales	24.1%	26.0%	23.4%	32.8%	23.1%
Profit for the period, EUR million	200.4	219.9	193.8	349.5	216.8
% of net sales	19.1%	20.4%	18.6%	26.1%	18.2%
Research and development expenses, EUR million	119.3	123.2	117.7	133.2	126.9
% of net sales	11.3%	11.4%	11.3%	9.9%	10.7%
Capital expenditure, excluding acquired in business combinations, EUR million	42.6	48.5	85.4	109.6	92.7
% of net sales	4.0%	4.5%	8.2%	8.2%	7.8%
Acquired in business combination, net of cash, EUR million				82.0	0.1
Depreciation, amortisation and impairment, EUR million	56.1	56.5	45.8	47.5	51.5
Personnel expenses, EUR million	217.1	227.0	231.0	263.9	273.0
Equity total, EUR million	779.4	731.3	747.9	908.1	890.1
Interest-bearing net liabilities, EUR million	-139.1	-185.8	-108.3	-118.7	93.3
Assets total, EUR million	1,035.7	1,115.6	1,114.0	1,503.6	1,438.6
Cash flow from operating activities, EUR million	270.8	299.1	215.7	434.4	119.0
Equity ratio, %	76.7%	66.7%	68.1%	60.9%	62.3%
Gearing, %	-17.8%	-25.4%	-14.5%	-13.1%	10.5%
Return on capital employed (before taxes), %	29.9%	34.8%	28.8%	45.1%	25.3%
Return on equity (after taxes), %	25.8%	29.1%	26.2%	42.2%	24.1%
Personnel at the end of the period	3,265	3,311	3,355	3,527	3,632
Average personnel during the period	3,251	3,337	3,364	3,472	3,599

ORION CORPORATION | Financial Statement documents 2023 37/118

Performance per share


	2019	2020	2021	2022	2023
Basic earnings per share, EUR	1.43	1.56	1.38	2.49	1.54
Diluted earnings per share, EUR	1.43	1.56	1.38	2.49	1.54
Cash flow from operating activities per share, EUR	1.93	2.13	1.53	3.09	0.85
Equity per share, EUR	5.55	5.21	5.32	6.48	6.34
Dividend per share, EUR1	1.50	1.50	1.50	1.60	1.62
Total dividend, EUR million1	210.7	210.7	210.8	224.3	227.4
Payout ratio, %1	105.2%	95.9%	108.8%	64.3%	104.9%

A share
Number of shares at the end of the period	36,335,463	35,122,793	34,813,206	34,186,494	33,351,382
% of total share stock	25.7%	24.9%	24.7%	24.2%	23.6%
Effective dividend yield, %1	3.7%	4.0%	4.2%	3.1%	4.1%
Price/earnings ratio (P/E)	28.64	23.97	26.16	20.52	25.45
Number of votes excluding treasury shares	726,709,260	702,455,860	696,264,120	683,729,880	667,027,640
% of total votes	87.5%	87.0%	86.8%	86.6%	86.2%
Total number of shareholders	19,990	22,015	23,252	23,232	24,589
Lowest quotation of review period, EUR	28.20	29.60	33.45	33.90	34.25
Average quotation of review period, EUR	34.26	40.26	36.33	41.38	41.19
Highest quotation of review period, EUR	42.00	48.45	41.05	54.00	55.00
Closing quotation at the end of review period, EUR	40.95	37.40	36.10	51.10	39.20
Trading volume, EUR million	73.5	102.5	58.9	69.9	50.0
Shares traded	2,149,046	2,547,090	1,620,990	1,684,646	1,213,681
% of the total number of shares	5.9%	7.3%	4.7%	4.9%	3.6%

1 The Board of Directors’ proposal for 2023 to the Annual General Meeting.

ORION CORPORATION | Financial Statement documents 2023 38/118


	2019	2020	2021	2022	2023
B share
Number of shares at the end of the period, including treasury shares	104,922,365	106,011,485	106,321,072	106,947,784	107,782,896
% of total share stock	74.3%	75.1%	75.3%	75.8%	76.4%
Treasury shares	765,399	671,082	571,314	932,771	782,973
Number of shares at the end of the period, excluding treasury shares	104,156,966	105,340,403	105,749,758	106,015,013	106,999,923
Effective dividend yield, %1	3.6%	4.0%	4.1%	3.1%	4.1%
Price/earnings ratio (P/E)	26.86	24.06	26.46	20.58	25.50
Number of votes excluding treasury shares	104,156,966	105,340,403	105,749,758	106,015,013	106,999,923
% of total votes	12.5%	13.0%	13.2%	13.4%	13.8%
Diluted number of shares, average	103,745,206	104,892,709	105,565,593	106,065,089	106,633,693
% of total share stock	73.4%	74.3%	74.8%	75.2%	75.6%
Total number of shareholders	52,913	56,487	64,385	63,016	71,309
Lowest quotation of review period, EUR	28.19	30.02	32.51	33.75	32.89
Average quotation of review period, EUR	33.48	40.69	35.86	42.16	40.48
Highest quotation of review period, EUR	42.52	48.80	39.42	54.18	55.16
Closing quotation at the end of review period, EUR	41.27	37.53	36.52	51.24	39.27
Trading volume, EUR million	2,846.5	4,213.9	3,027.7	3,344.4	2,601.5
Shares traded	85,303,946	103,556,863	84,437,433	79,342,616	64,267,609
% of the total number of shares	81.3%	97.7%	79.4%	74.2%	59.6%

A and B share total
Number of shares at the end of the period	141,257,828	141,134,278	141,134,278	141,134,278	141,134,278
Average number of shares during the period excluding treasury shares	140,571,373	140,506,969	140,546,563	140,501,281	140,326,681
Total number of votes conferred by the shares	830,866,226	807,796,263	802,013,878	789,744,893	774,027,563
Diluted number of shares, average	140,571,373	140,506,969	140,563,896	140,589,736	140,361,039
Total number of shareholders	66,595	72,003	80,792	79,423	88,722
Trading volume, EUR million	2,920.0	4,316.4	3,086.6	3,414.4	2,651.5
Shares traded	87,452,992	106,103,953	86,058,423	81,027,262	65,481,290
Total shares traded, % of total shares	61.9%	75.2%	61.0%	57.4%	46.4%
Market capitalisation at the end of the period excluding treasury shares, EUR million	5,786.5	5,267.0	5,118.7	7,179.1	5,509.3

1 The Board of Directors’ proposal for 2023 to the Annual General Meeting.

ORION CORPORATION | Financial Statement documents 2023 39/118

Largest shareholders by number of shares1


31 Dec 2023	A shares	B shares	Total shares	% of total shares	Total votes	% of total votes
1. Ilmarinen Mutual Pension Insurance Company	1,859,000	3,341,629	5,200,629	3.68%	40,521,629	5.23%
2. Varma Mutual Pension Insurance Company		4,627,523	4,627,523	3.28%	4,627,523	0.60%
3. Erkki Etola and companies	2,500,000	325,000	2,825,000	2.00%	50,325,000	6.50%
Etola Erkki	200,000			%	4,000,000	0.52%
Etola Oy	2,300,000			%	46,000,000	5.94%
Etola Group Oy		325,000		%	325,000	0.04%
4. Elo Mutual Pension Insurance Company	292,800	1,881,000	2,173,800	1.54%	7,737,000	1.00%
5. Land and Water Technology Foundation and companies	2,083,360		2,083,360	1.48%	41,667,200	5.38%
Land and Water Technology Foundation	1,034,860			%	20,697,200	2.67%
Tukinvest Oy	1,048,500			%	20,970,000	2.71%
6. OP Finland Fund		1,628,773	1,628,773	1.15%	1,628,773	0.21%
7. Ylppö Jukka	1,247,136	147,729	1,394,865	0.99%	25,090,449	3.24%
8. The State Pension Fund		1,300,000	1,300,000	0.92%	1,300,000	0.17%
9. The Social Security Institution of Finland, Kela		1,218,368	1,218,368	0.86%	1,218,368	0.16%
10. Danske Invest Finnish Equity Fund		987,379	987,379	0.70%	987,379	0.13%
10 largest total	7,982,296	15,457,401	23,439,697	16.61%	175,103,321	22.60%
Total	33,351,382	107,782,896	141,134,278	100.00%	774,810,536	100.00%

1 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 2023 40/118

Largest shareholders by number of votes1


31 Dec 2023	A shares	B shares	Total shares	% of total shares	Total votes %	% of total votes
1. Erkki Etola and companies	2,500,000	325,000	2,825,000	2.00%	50,325,000	6.50%
Etola Erkki	200,000				4,000,000	0.52%
Etola Oy	2,300,000				46,000,000	5.94%
Etola Group Oy		325,000			325,000	0.04%
2. Land and Water Technology Foundation and companies	2,083,360		2,083,360	1.48%	41,667,200	5.38%
Land and Water Technology Foundation	1,034,860				20,697,200	2.67%
Tukinvest Oy	1,048,500				20,970,000	2.71%
3. Ilmarinen Mutual Pension Insurance Company	1,859,000	3,341,629	5,200,629	3.68%	40,521,629	5.23%
4. Ylppö Jukka	1,247,136	147,729	1,394,865	0.99%	25,090,449	3.24%
5. Aho Group Oy and commanding votes	743,999	10,264	754,263	0.53%	14,890,244	1.92%
Aava Terveyspalvelut Oy	358,230	4			7,164,604	0.92%
Juhani Aho Foundation for Medical Research	107,800				2,156,000	0.28%
Aho Kari Jussi	85,263	1,835			1,707,095	0.22%
Lappalainen Annakaija	61,934	5,500			1,244,180	0.16%
Aho Ville Jussi	50,496	425			1,010,345	0.13%
Porkkala Miia	41,683				833,660	0.11%
Aho Antti Jussi	38,593	2,500			774,360	0.10%
6. Ylppö Into	577,936	240,200	818,136	0.58%	11,798,920	1.52%
7. Eija Ronkainen and companies	535,500	40,085	575,585	0.41%	10,750,085	1.39%
EVK-Capital Oy	535,500	16,671			10,726,671	1.38%
Eija Ronkainen		23,414			23,414	—%
8. Oy Ingman Finance Ab	445,000		445,000	0.32%	8,900,000	1.15%
9. Saastamoinen Foundation	429,996		429,996	0.30%	8,599,920	1.11%
10. Elo Mutual Pension Insurance Company	292,800	1,881,000	2,173,800	1.54%	7,737,000	1.00%
10 largest total	10,714,727	5,985,907	16,700,634	11.83%	220,280,447	28.43%
Total	33,351,382	107,782,896	141,134,278	100.00%	774,810,536	100.00%

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 2023 41/118

Ownership base by type of shareholder


31 Dec 2023	Owners	%	A shares	%	B shares	%	Total shares	%	Total votes	%
Non-financial companies	2,651	2.99%	4,742,749	14.22%	4,434,942	4.11%	9,177,691	6.50%	99,289,922	12.81%
Financial and insurance institutions	95	0.11%	595,065	1.78%	7,620,782	7.07%	8,215,847	5.82%	19,522,082	2.52%
Public sector entities	51	0.06%	2,156,606	6.47%	13,115,932	12.17%	15,272,538	10.82%	56,248,052	7.26%
Households	84,689	95.45%	22,187,212	66.53%	32,857,603	30.48%	55,044,815	39.00%	476,601,843	61.51%
Non-profit organisations	863	0.97%	2,476,968	7.43%	4,398,099	4.08%	6,875,067	4.87%	53,937,459	6.96%
Nominee-registered and foreign shareholders	372	0.42%	1,192,782	3.58%	44,572,565	41.35%	45,765,347	32.43%	68,428,205	8.83%
Number of treasury shares	1	0.00%			782,973	0.73%	782,973	0.55%	782,973	0.10%
Total	88,722	100.00%	33,351,382	100.00%	107,782,896	100.00%	141,134,278	100.00%	774,810,536	100.00%

Ownership base by number of shares


31 Dec 2023	Owners	%	A shares	%	B shares	%	Total shares	%	Total votes	%
1–100	44,741	50.43%	450,209	1.35%	1,449,587	1.34%	1,773,387	1.26%	9,099,084	1.17%
101–1,000	34,400	38.77%	3,156,205	9.46%	10,841,837	10.06%	12,626,232	8.95%	60,119,658	7.76%
1,001–10,000	8,772	9.89%	8,119,732	24.35%	16,894,053	15.67%	23,945,792	16.97%	166,938,215	21.55%
10,001–100,000	728	0.82%	7,406,143	22.21%	9,673,656	8.98%	18,508,668	13.11%	170,617,595	22.02%
100,001–1,000,000	67	0.08%	6,729,597	20.18%	10,712,898	9.94%	17,177,235	12.17%	134,789,990	17.40%
1,000,001–	13	0.01%	7,489,496	22.46%	57,427,892	53.28%	66,319,991	46.99%	232,463,021	30.00%
Total	88,721	100.00%	33,351,382	100.00%	106,999,923	99.27%	140,351,305	99.45%	774,027,563	99.90%
of which nominee- registered	11	0.01%	1,005,652	3.02%	44,292,335	41.39%	45,297,987	32.27%	64,405,375	8.32%
Number of treasury shares	1	0.00%			782,973	0.73%	782,973	0.55%	782,973	0.10%
Total	88,722	100.00%	33,351,382	100.00%	107,782,896	100.00%	141 134 278	100.00%	774,810,536	100.00%

ORION CORPORATION | Financial Statement documents 2023 42/118

Shareholdings in Orion Corporation of the Members elected to the Board of Directors

on 22 March 2023


31 Dec 2023	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			9,737	940	9,737	0.01%	0.00%
Hilpi Rautelin, Vice Chairman	4,800	3,000	4,734	573	9,534	0.01%	0.01%
Kari Jussi Aho	85,263	9,500	1,835	470	87,098	0.06%	0.22%
Maziar Mike Doustdar			955	470	955	0.00%	0.00%
Ari Lehtoranta			4,428	1,267	4,428	0.00%	0.00%
Veli-Matti Mattila			7,311	3,470	7,311	0.01%	0.00%
Eija Ronkainen	535,500		40,085	470	575,585	0.41%	1.39%
Karen Lykke Sørensen			955	470	955	0.00%	0.00%
Board of Directors total	625,563	12,500	70,040	8,130	695,603	0.49%	1.62%

The figures include the shares held by organisations and foundations controlled by the person.

Shareholdings in Orion Corporation for the Members of the Executive Management Board


31 Dec 2023	A shares	Change from 1 Jan	B shares	Change from 1 Jan	A and B total	% of total shares	% of total votes
Liisa Hurme, President and CEO			30,020	10,000	30,020	0.02%	0.00%
Satu Ahomäki			42,049	3,200	42,049	0.03%	0.01%
Olli Huotari			76,431	8,000	76,431	0.05%	0.01%
Juhani Kankaanpää			5,012	2,000	5,012	0.00%	0.00%
Jari Karlson			44,771	7,500	44,771	0.03%	0.01%
Virve Laitinen			22,773	6,050	22,773	0.02%	0.00%
Niclas Lindstedt			6,302	3,000	6,302	0.00%	0.00%
Hao Pan			13,138	3,000	13,138	0.01%	0.00%
Outi Vaarala			7,098	7,098	7,098	0.01%	0.00%
Executive Management Board total			247,594	49,848	247,594	0.18%	0.03%

The figures include the shares held by organisations and foundations controlled by the person

ORION CORPORATION | Financial Statement documents 2023 43/118

Basic information on Orion’s shares


31 Dec 2023	A share	B share	Total
Trading code on Nasdaq Helsinki	ORNAV	ORNBV
Listing day	1 Jul 2006	1 Jul 2006
ISIN code	FI0009014369	FI0009014377
ICB code	4500	4500
Reuters code	ORNAV.HE	ORNBV.HE
Bloomberg code	ORNAV.FH	ORNBV.FH
Share capital, EUR million	21.8	70.4	92.2
Counter book value per share, EUR	0.65	0.65
Minimum number of shares			1
Maximum number of A and B shares, and maximum number of all shares	500,000,000	1,000,000,000	1,000,000,000
Votes per share	20	1

A shares and B shares confer equal rights to the Company’s assets and dividends.

ORION CORPORATION | Financial Statement documents 2023 44/118

Calculation of the key figures


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 (basic and diluted)	=	Profit attributable to the owners of the parent company
		Average number of shares during the period, excluding treasury shares

Cash flow from operating activities per share, EUR	=	Cash flow from operating activities
		Average number of shares during the period, 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

Effective 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 excluding treasury shares x Closing quotation of the period

ORION CORPORATION | Financial Statement documents 2023 45/118

Consolidated financial statements (IFRS)

Consolidated income statement


EUR million	Note	2023	2022
Net sales	2.1	1,189.7	1,340.6
Cost of goods sold		-531.9	-489.0
Gross profit		657.7	851.6
Other operating income and expenses	2.4	43.7	5.7
Selling and marketing expenses	2.2, 2.3, 4.1	-224.8	-209.1
Research and development expenses	2.2, 2.3, 4.1	-126.9	-133.2
Administrative expenses	2.2, 2.3, 4.1	-74.8	-75.4
Operating profit		274.9	439.6
Finance income and expenses	2.5	-3.0	0.7
Profit before taxes		271.9	440.3
Income tax expense	5.1	-55.1	-90.8
Profit for the period		216.8	349.5

PROFIT ATTRIBUTABLE TO
Owners of the parent company		216.8	349.5

Basic earnings per share, EUR¹	2.6	1.54	2.49
Diluted earnings per share, EUR¹	2.6	1.54	2.49

¹ Earnings per share has been calculated from the profit attributable to the owners of the parent company.

Consolidated statement of comprehensive

income


EUR million	Note	2023	2022
Profit for the period		216.8	349.5
Cumulative translation adjustments	6.3	-0.3	-2.9
Items that may be reclassified subsequently to profit and loss		-0.3	-2.9
Remeasurement of pension plans, net of tax	4.2, 5.1	-16.2	37.0
Items that will not be reclassified to profit and loss		-16.2	37.0
Other comprehensive income, net of tax		-16.5	34.2
Comprehensive income for the period		200.3	383.7

COMPREHENSIVE INCOME ATTRIBUTABLE TO
Owners of the parent company		200.3	383.7

The notes are an integral part of the consolidated financial statements.

ORION CORPORATION | Financial Statement documents 2023 46/118

Consolidated statement of financial position


Assets

EUR million, 31 Dec	Note	2023	2022
Property, plant and equipment	3.1, 3.2	400.9	373.3
Goodwill	3.1	87.2	87.2
Intangible rights	3.1	106.8	100.0
Other intangible assets	3.1	6.1	3.8
Investment in associate	3.5	0.1	0.1
Other investments	6.6	0.2	0.2
Pension assets	4.2	6.9	56.2
Deferred tax assets	5.2	4.3	3.1
Other non-current assets	3.7	0.9	1.0
Non-current assets total		613.3	624.9

Inventories	3.6	362.2	315.6
Trade receivables	3.7	247.1	180.7
Current tax receivables		0.6	4.9
Other receivables	3.7	108.8	44.8
Cash and cash equivalents	6.5	106.7	332.6
Current assets total		825.3	878.7

Assets total		1,438.6	1,503.6


Equity and liabilities

EUR million, 31 Dec	Note	2023	2022
Share capital		92.2	92.2
Other reserves		4.6	3.3
Cumulative translation adjustments		-9.8	-10.8
Retained earnings		802.9	823.3
Equity attributable to owners of the parent company		890.1	908.1
Equity total	6.3	890.1	908.1

Deferred tax liabilities	5.2	31.8	42.2
Pension liability	4.2	4.1	3.0
Non-current provisions	3.8	0.5	0.6
Interest-bearing non-current liabilities	6.4	171.0	196.8
Other non-current liabilities	3.9	76.4	77.7
Non-current liabilities total		283.8	320.2

Current provisions	3.8	0.0	0.1
Interest-bearing current liabilities	6.4	29.0	17.2
Trade payables	3.9	102.3	114.4
Current tax liabilities		13.3	1.4
Other current liabilities	3.9	120.1	142.3
Current liabilities total		264.8	275.4

Liabilities total		548.6	595.5

Equity and liabilities total		1,438.6	1,503.6

The notes are an integral part of the consolidated financial statements.

ORION CORPORATION | Financial Statement documents 2023 47/118

Consolidated statement of changes in equity


		Equity attributable to owners of the parent company
EUR million	Note	Share capital	Other reserves	Cumulative translation adjustments	Remeasurement of pension plans	Treasury shares	Retained earnings	Retained earnings total	Equity total
Equity at 1 January 2022		92.2	3.3	-8.4	0.0	-18.2	678.9	660.7	747.9
Profit for the period		0.0	0.0	0.0	0.0	0.0	349.5	349.5	349.5
Other comprehensive income
Cumulative translation adjustments	6.3	0.0	0.0	-2.4	0.0	0.0	-0.5	-0.5	-2.9
Remeasurement of pension plans	4.2	0.0	0.0	0.0	37.0	0.0	0.0	37.0	37.0
Transactions with owners
Dividends paid	6.3	0.0	0.0	0.0	0.0	0.0	-211.2	-211.2	-211.2
Repurchase of treasury shares		0.0	0.0	0.0	0.0	-17.9	0.0	-17.9	-17.9
Share-based incentive plans	4.1	0.0	0.0	0.0	0.0	1.3	4.3	5.7	5.7
Other adjustments		0.0	0.0	0.0	0.0	0.0	0.0	0.0	0.0
Equity at 31 December 2022		92.2	3.3	-10.8	37.1	-34.8	821.1	823.3	908.1

Equity at 1 January 2023		92.2	3.3	-10.8	37.1	-34.8	821.1	823.3	908.1
Profit for the period		0.0	0.0	0.0	0.0	0.0	216.8	216.8	216.8
Other comprehensive income
Cumulative translation adjustments	6.3	0.0	0.0	1.0	0.0	0.0	-1.3	-1.3	-0.3
Remeasurement of pension plans	4.2	0.0	0.0	0.0	-16.2	0.0	0.0	-16.2	-16.2
Transactions with owners
Dividends paid	6.3	0.0	0.0	0.0	0.0	0.0	-224.9	-224.9	-224.9
Repurchase of treasury shares		0.0	0.0	0.0	0.0	0.0	0.0	0.0	0.0
Share-based incentive plans	4.1	0.0	0.0	0.0	0.0	6.8	-0.2	6.6	6.6
Other adjustments		0.0	1.3	0.0	0.0	0.0	-1.3	-1.3	0.0
Equity at 31 December 2023		92.2	4.6	-9.8	20.9	-28.0	810.0	802.9	890.1

The notes are an integral part of the consolidated financial statements.

ORION CORPORATION | Financial Statement documents 2023 48/118

Consolidated statement of cash flows


EUR million	Note	2023	2022
Profit before taxes		271.9	440.3

Finance income and expenses	2.5	3.0	-0.7
Depreciation, amortisation and impairments	2.2	51.5	47.5
Gains/losses on sales or disposals of property, plant and equipment and intangible assets	2.4	-7.7	-0.1
Unrealised foreign exchange gains and losses		-0.4	0.4
Change in pension assets and pension liabilities	4.2	-16.0	2.7
Change in provisions	3.8	-0.1	0.2
Other adjustments		5.7	63.6
Total adjustments to profit before taxes		36.1	113.6

Change in trade and other receivables		-89.0	11.0
Change in inventories		-47.9	-4.1
Change in trade and other payables		-7.9	-31.9
Total change in working capital		-144.8	-25.0

Interest and other financial expenses paid		-7.8	-5.0
Interest and other financial income received		4.8	6.0
Dividends received		0.0	0.0
Income taxes paid	5.1	-41.2	-95.6
Total net cash flow from operating activities		119.0	434.4

Investments in property plant, and equipment	3.1	-65.6	-56.5
Investments in intangible assets	3.1	-51.2	-16.6
Acquired in business combination, net of cash	3.4	-0.1	-82.0
Sales of property, plant and equipment and other investments	3.1, 6.6	8.5	0.9
Total net cash flow from investing activities		-108.4	-154.3


EUR million	Note	2023	2022
Changes in current loans including leasing liabilities	6.4	-6.6	-11.4
Proceeds of non-current loans	6.4		100.8
Repayment of non-current loans	6.4	-11.8	-20.0
Repurchase of treasury shares	6.3		-17.9
Dividends paid and other distribution of profits	6.3	-224.9	-211.2
Total net cash flow from financing activities		-243.2	-159.8

Net change in cash and cash equivalents		-232.6	120.4
Cash and cash equivalents at 1 January	6.5	332.6	216.7
Foreign exchange differences		6.6	-4.4
Cash and cash equivalents at 31 December	6.5	106.7	332.6

Reconciliation of cash and cash equivalents in statement of financial position


EUR million	2023	2022
Cash and cash equivalents in statement of financial position at the end of the period	106.7	332.6
Money market investments at the end of the period
Cash and cash equivalents in the statement of cash flows	106.7	332.6

The notes are an integral part of the consolidated financial statements.

ORION CORPORATION | Financial Statement documents 2023 49/118

Notes to 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 address is 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 (“Orion”, “Orion Group” or “Group”) 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’s shares are listed on

Nasdaq Helsinki. Trading in Orion’s shares commenced on 3 July 2006.

At its meeting on 13 February 2024, the Company’s Board of Directors has 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 headquarter, 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 effective at 31 December 2023.
	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 recognised 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. All figures in the financial statement have been rounded, which is why the total sums of individual figures may differ from the total sums show.

	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 affect 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 preparation 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.

ORION CORPORATION | Financial Statement documents 2023 50/118



	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.
	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 consolidated income statement. Foreign exchange gains and losses related to business operations are included in the corresponding items above the operating profit line. Net foreign exchange gains and losses resulting from hedges made for hedging purposes, but when no hedge accounting is applied, are recognised in other operating income or expenses. Foreign exchange gains and losses related to financial liabilities and receivables in foreign currencies and foreign exchange derivatives related to them are included in finance 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 different 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 translation differences arising from this and cumulative translation adjustments 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 cumulative translation adjustments 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 prevailing at the end of the reporting period.

ORION CORPORATION | Financial Statement documents 2023 51/118



		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. These assumptions include climate related factors where applicable. The actual values may differ from these estimates. Judgement is also exercised in applying the accounting policies. The accounting policies relating to 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 • 3.1 Property, plant and equipment and intangible assets • 3.2 Leased assets • 3.4 Business combination • 4.1 Employee benefits • 4.2 Pension assets and pension liabilities • 5.2 Deferred tax assets and liabilities The description for these above mentioned assets and liabilities are described in the notes. Respectively, Group’s 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 2023

New standards or amendments to standards, effective from January 1, 2023, has had no material

impact to Orion Corporation’s financial statement.

New IFRS standards, amendments and IFRIC

interpretations to be applied in future financial

periods

New standards, amendments or interpretation that are effective on or after January 1, 2024 are

not expected to have a material effect on Orion Corporation’s consolidated financial statement.

ORION CORPORATION | Financial Statement documents 2023 52/118

2 Business performance

2.1 Revenue from contracts with customers



	Accounting policies Revenue recognition principles The Group’s net sales comprise three different 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 differences 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 effects 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 2023 53/118



	Revenue from clinical phase research and development work undertaken with collaboration partners 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.

	Revenue is recognised mainly point in time. 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: • Innovative Medicines (innovative medicines developed or marketed by Orion, and which have patent or other product protection). • Branded Products (Orion’s in-house developed legacy products and other products with brand value that provides a competitive advantage) • Generics and Consumer Health (generic prescription medicines and self-care products) • Animal Health (proprietary and generic products for companion animals and livestock) • Fermion (active pharmaceutical ingredients for Orion and other pharmaceutical companies). In addition to these, net sales reporting contains one further item, Translation differences and Other operations, which mostly comprises translation differences 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 four 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 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 2023 54/118

Significant judgements related to recognition of

revenue

The Group’s significant judgements related to recognition of revenue concern both the contract

with Bayer on the licensing and development and commercialisation as well as manufacturing of

Nubeqa® and the contract with MSD (tradename of Merck & Co., Inc Rahway NJ USA), acting

through its subsidiary, Merck Sharp & Dohme LLC (later referred to as “MSD”).

In year 2022, Orion and MSD entered into a multi-year global development and

commercialisation agreement for Orion’s investigational candidate ODM-208 and other drugs

targeting cytochrome P450 11A1 (CYP11A1), an enzyme important in steroid production.

ODM-208 is an oral, non-steroidal inhibitor of CYP11A1 currently being evaluated in a Phase 2

clinical trial for the treatment of patients with metastatic castration-resistant prostate cancer

(mCRPC). Under the terms of the agreement, Orion and MSD will co-develop and co-

commercialise ODM-208.

In 2022, MSD made an upfront payment to Orion of USD 290 million and of this upfront payment,

Orion recognised approximately EUR 228 million as income at the time of signing and

approximately EUR 60 million was reserved to cover Orion’s share of ODM-208 development

cost to be accrued in the future. The management’s estimates of development costs are based

on previous experience with the development costs of similar drugs. Orion will be responsible for

the manufacture of clinical and commercial supply of ODM-208. In 2023 Orion and MSD are co-

developing the ODM-208 molecule, a novel selective hormone synthesis inhibitor (CYP11A1

inhibitor). Orion has an ongoing Phase II CYPIDES trial with ODM-208 for the treatment of

patients with metastatic castration-resistant prostate cancer (mCRPC).

In addition, the contract provides both parties with an option to convert the initial co-

development and co-commercialisation agreement into a global exclusive license to MSD. If the

option is exercised, MSD would assume full responsibility for all accrued and future development

and commercialisation expenses associated with the programme. Orion would be eligible to

receive milestone payments associated with progress in the development and commercialisation

of ODM-208 as well as tiered double-digit royalties on sales if the product is approved. The total

amount potentially accrued from multiple regulatory and sales milestone events represents a

substantial opportunity for Orion.

Net sales by revenues flows


EUR million	2023	2022
Sale of goods	1,033.3	1,059.3
Royalty income	123.9	47.7
Total sale of goods	1,157.2	1,106.9
Milestone payments	32.4	233.7
Total	1,189.7	1,340.6

In 2023 EUR 1.9 (2022: 3.3) million has been entered as income from performance obligations

transferred to customers over time and they are included in the Milestone payments. The Group

recognised EUR 1.7 (2022: 14.4) million of sales revenue to Sale of goods and Royalty income

from performance obligations satisfied during previous financial periods.

Net sales break-down


EUR million	2023	2022
Innovative Medicines	235.1	329.4
Branded Products	260.9	278.5
Generics and Consumer Health	517.6	557.2
Animal Health	103.9	98.9
Fermion	73.7	68.7
Translation differences and Other operations	-1.6	7.8
Total	1,189.7	1,340.6

Top ten best-selling pharmaceutical products


EUR million	2023	2022
Nubeqa® (prostate cancer)	182.5	87.1
Easyhaler® product portfolio (asthma, COPD)	144.2	129.7
Entacapone products (Parkinson's disease)	88.4	113.4
Simdax® (acute decompensated heart failure)	25.7	42.9
Burana® (inflammatory pain)	25.1	26.7
Dexdomitor®, Domitor®, Domosedan® and Antisedan® (animal sedatives)	22.8	36.3
Dexmedetomidine products for human use	21.5	37.3
Divina® series (menopausal symptoms)	21.0	27.6
Trexan® (rheumatoid arthritis, cancer)	19.1	15.2
Biosimilars (rheumatoid arthritis, inflammatory bowel diseases)	18.2	20.4
Total	568.5	536.7

ORION CORPORATION | Financial Statement documents 2023 55/118

Assets and liabilities based on contract


	2023		2022
EUR million	Asset	Liability	Asset	Liability
1 January	25.0	83.3	11.0	25.1
Revenue recognised during the financial period that was included in liabilities based on contract at the start of the period		-1.9		-3.3
Actual billing during the financial year	-25.0		-11.0
Increase of assets and liabilities on contract due to new business operations	49.7	1.2	25.0	61.5
31 December	49.7	82.6	25.0	83.3

Assets based on contract consist mainly of products and services transferred to customers, but

which are not yet invoiced.

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 2023 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

8.8 (2022: 10.7) million. The Group expects to recognise EUR 5.8 million as revenue for this

transaction price allocated to unsatisfied contracts during the financial years 2024 to 2026 (2022:

EUR 5.8 million during the financial years 2023 to 2025). The remaining EUR 3.0 million is

expected to be recognised as revenue starting from the beginning of the financial year 2027

(2022: EUR 5.0 million starting from the beginning of the financial year 2026). 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 effect for less than 12 months.

Other information related to recognition of revenue

The Group applies the practical expedient under IFRS 15 to not adjust consideration amounts by

the effect 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

3.7 Trade and other receivables. Information on liabilities based on customer contracts are given

in note 3.9 Trade payables and other liabilities.

Information on Phase III clinical trials related to darolutamide (ARAMIS, ARASENS, ARANOTE and

ARASTEP) are given in note 3.3 Joint arrangements.

Major customers

Revenues from major customer of the Group represented in 2023 approximately EUR 231.2

million of the Group’s total revenue.

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.


	Finland		Scandinavia		Other Europe		North America		Other countries		Group total
EUR million	2023	2022	2023	2022	2023	2022	2023	2022	2023	2022	2023	2022
Sales to external customers	333.5	326.4	142.3	138.9	366.5	398.5	174.5	334.7	172.8	142.1	1,189.7	1,340.6
Assets	1,142.9	1,202.2	41.1	45.1	239.0	238.6	0.2	0.0	15.4	17.7	1,438.6	1,503.6
Capital expenditure	83.3	103.1	0.5	0.7	8.6	5.4	0.2		0.2	0.5	92.7	109.6

ORION CORPORATION | Financial Statement documents 2023 56/118

2.2 Depreciation, amortisation and impairments



	Accounting policies Property, plant and equipment are depreciated over their useful life using the straight-line method. Land and water are not depreciated. Depreciation begins when the asset is available for use and it ceases at the moment when the asset is classified as held for sale, or is included in the disposal group. 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 Group’s most commonly applied estimated useful lives are presented in notes 3.1 Property, plant and equipment and intangible assets and 3.2 Leased assets.

Depreciation, amortisation and impairment by function


EUR million	2023	2022
Cost of goods sold	31.7	28.1
Selling and marketing	7.5	7.8
Research and development	4.6	4.7
Administration	7.8	7.0
Total	51.5	47.5

Depreciation, amortisation and impairment by asset class


EUR million	2023	2022
Buildings and constructions	16.5	15.0
Machinery and equipment	26.9	25.6
Other tangible assets	0.3	0.3
Property, plant and equipment, total	43.7	40.8

Intangible rights	6.4	5.7
Other intangible assets	1.5	1.0
Intangible assets, total	7.9	6.7

During the period, an impairment of EUR 1.0 (2022: 0.4) million was recognised in selling and

marketing expenses on intangible rights.

2.3 Operating expenses



	Accounting policies Group’s function-based consolidated income statement comprises selling and marketing expenses related to the distribution of products, field sales, marketing, advertising and other promotional activities, including the related wages and salaries. Research and development expenses comprise wages and salaries on research and development personnel, materials, procurement of external services and other costs related to research and development function. Research and development expenses also include expenses for research and development 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 research and development expenses in Group’s consolidated financial statements are given in note 3.1 Property, plant and equipment and intangible assets.

Cost by function


EUR million	2023	2022
Selling and marketing expenses	224.8	209.1
Research and development expenses	126.9	133.2
Administrative expenses	74.8	75.4
Total	426.5	417.7

ORION CORPORATION | Financial Statement documents 2023 57/118

2.4 Other operating income and expenses



	Accounting policies Other operating income and expenses comprise income and expenses that do not directly relate to the operating activities. Other operating income includes items such as gains on sales of property, plant and equipment, intangible assets and other investments and rental income. Respectively, other operating expenses includes for example losses on sales of property, plant and equipment, intangible assets and other investments, and modification and termination expenses of lease agreements. Additional information on foreign exchange gains and losses is presented in note 6.2 Financial risk management.


EUR million	2023	2022
Gains on sales of property, plant and equipment, intangible assets and other investments	7.9	0.4
Settlement gain of the transfer of Pension Fund's B fund	30.7
Rental income	2.3	2.1
Foreign exchange gains and losses	-0.4	0.8
Other operating income	3.5	2.7
Other operating expenses	-0.2	-0.4
Total	43.7	5.7

The insurance portfolio of the Orion Pension Fund's B fund has been transferred to pension

insurance company on 31 December 2023. The transfer has EUR 30.7 million positive impact on

Orion’s result in 2023. Additional information is presented in note 4.2 Pension assets and pension

liabilities.

2.5 Finance income and expenses



	Accounting policies Finance income and expenses comprise foreign exchange gains and losses related to financial liabilities and receivables in foreign currencies and foreign exchange derivatives related to them, interest income and expenses and other financial income and expenses. Borrowing costs are recognised in the consolidated statement of 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. Orion Group did not recognise any borrowing costs to tangible assets in 2023 or 2022.

Finance income and expenses


EUR million	2023	2022
Dividend income on other investments	0.0	0.0
Interest income	2.9	1.0
Foreign exchange gains and losses, net		1.5
Other finance income	0.0	0.0
Finance income, total	2.9	2.5

Interest expenses	5.2	1.5
Foreign exchange gains and losses, net	0.2
Other finance expenses	0.5	0.3
Finance expenses, total	6.0	1.8

Finance income and expenses, total	-3.0	0.7

ORION CORPORATION | Financial Statement documents 2023 58/118

Foreign exchange gains (+) and losses (-) included in finance income and

expenses


EUR million	2023	2022
Foreign exchange rate gains	2.1	5.1
Foreign exchange rate losses	-2.3	-3.6
Total	-0.2	1.5

Foreign exchange gains (+) and losses (-) above the operating profit


EUR million	2023	2022
In net sales	-1.6	7.3
In cost of goods sold	0.1	-0.1
In other income and expenses	-0.4	0.8
In functions’ expenses	0.1	-0.7

2.6 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 the end of reporting period.

Basic earnings per share


	2023	2022
Profit for the period attributable to owners of the parent company, EUR million	216.8	349.5
Weighted average number of shares during the period (1,000 shares)	140,327	140,501
Basic earnings per share, EUR	1.54	2.49

Diluted earnings per share


	2023	2022
Profit for the period attributable to owners of the parent company, EUR million	216.8	349.5
Weighted average number of diluted shares during the period (1,000 shares)	140,361	140,590
Diluted earnings per share, EUR	1.54	2.49

Dividend per share


	2023	2022
Dividend paid during the period, EUR million	224.6	210.9
Number of shares (1,000 shares)	140,352	140,563
Dividend per share paid during the period, EUR	1.60	1.50

The Group held 782,973 treasury shares at 31 December 2023.

For the financial year 2023 a dividend of EUR 1.62 per share, in total EUR 227.4 million is

proposed to the Annual General Meeting, planned to be held on 20 March 2024. These financial

statements do not reflect the proposed dividend.

ORION CORPORATION | Financial Statement documents 2023 59/118

3 Invested capital

3.1 Property, plant and equipment and intangible assets

Property, plant and equipment



	Accounting policies Property, plant and equipment comprise mainly factories, offices 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 and constructions 10–50 years • Machinery and equipment 5–15 years • Other tangible assets 10 years Land and water are 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 consolidated income statement.


	Land and water		Buildings and constructions		Machinery and equipment		Other property, plant and equipment1		Advance payments and construction in progress		Total
EUR million	2023	2022	2023	2022	2023	2022	2023	2022	2023	2022	2023	2022
Acquisition cost at 1 January	6.6	5.6	414.9	394.8	423.2	415.1	5.9	5.9	61.1	31.5	911.8	852.9
Additions			10.8	5.1	20.1	14.7	0.0	0.0	37.1	37.0	68.0	56.8
Acquired in business combination		1.5		10.0		1.1				12.7		25.4
Disposals	-0.0		4.1	-4.7	-7.0	-17.3	-0.1	-0.0	-0.2		-3.1	-22.0
Reclassifications		-0.6	20.3	9.7	13.3	9.7	0.1	0.0	-33.8	-20.1	-0.1	-1.3
Translation differences					-0.1	-0.0		-0.0			-0.1	-0.1
Acquisition cost at 31 December	6.6	6.6	450.1	414.9	449.7	423.2	5.9	5.9	64.3	61.1	976.5	911.8

Accumulated depreciation and impairment at 1 January	0.2	0.2	-238.9	-227.3	-304.2	-297.6	-4.0	-3.8			-546.9	-528.5
Accumulated depreciation on disposals and transfers			-3.8	0.9	6.3	17.2	0.1	0.0			0.2	18.1
Depreciation			-13.9	-12.5	-25.2	-23.8	-0.3	-0.3			-39.4	-36.6
Translation differences					0.1	0.0	0.0	0.0			0.1	0.0
Accumulated depreciation and impairment at 31 December	0.2	0.2	-256.6	-238.9	-323.1	-304.2	-4.2	-4.0			-583.8	-546.9

Carrying amount at 1 January	6.8	5.8	176.0	167.5	119.0	117.4	1.8	2.0	61.1	31.5	364.8	324.4
Carrying amount at 31 December	6.8	6.8	193.5	176.0	126.5	119.0	1.7	1.8	64.3	61.1	392.8	364.8

1 Other tangible assets mainly comprise basic improvements to rented apartments, asphalting, environmental works and art objects.

ORION CORPORATION | Financial Statement documents 2023 60/118

Intangible assets and goodwill



	Accounting policies Research and development costs Research costs are expensed as incurred to consolidated income statement. 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 useful life.

	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. Goodwill is not amortised but it is tested for impairment at least annually and if the events or changes in circumstances indicate that the carrying amount may not be recoverable. In the impairment testing, the carrying amount of goodwill is compared to recoverable amount, that is determined on the basis of the value-in-use calculation. In impairment testing, the goodwill is allocated to two cash generating units that form the Pharmaceuticals business. The Group does not have any other cash generating units. If the carrying amount of goodwill exceeds its recoverable amount, an impairment loss equal to the difference is recognised to income statement. In the impairment testing, the recoverable amount is determined on the basis of the value-in-use calculation. Impairment losses on goodwill are not reversed.



	Group goodwill comprise goodwill arising from Inovet acquisition in 2022 (more information on note 3.4 Business combination) and goodwill originated from the acquisition of Farmos- Group Ltd. in 1990. 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. The accounting for cloud computing arrangements depends on whether the cloud-based software classifies as a software intangible asset or a service contract. Those arrangements where the Group does not have control over the underlying software are accounted for as service contracts providing the Company with the right to access the cloud provider’s application software over the contract period. The ongoing fees to obtain access to the application software, together with related configuration or customisation costs incurred, are recognised under in the consolidated income statement when the services are received. Prepayments paid to the cloud vendor for customising services which are not distinct are recognised as expense over the contract period.

ORION CORPORATION | Financial Statement documents 2023 61/118



	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 consolidated income statement 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, 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 consolidated income statement 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 consolidated income statement 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 The Management’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. Actual cash flows can differ 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 2023 62/118


	Goodwill		Intangible rights1		Other intangible assets2		Total
EUR million	2023	2022	2023	2022	2023	2022	2023	2022
Acquisition cost at 1 January	87.2	13.5	253.5	201.6	58.5	56.2	399.3	271.2
Additions			19.5	49.9	0.9	0.6	20.4	50.5
Acquired in business combination		73.7		2.0		2.1		77.8
Disposals	-0.0		-27.5	-1.6	0.2	-0.0	-27.3	-1.6
Reclassifications			-2.8	1.7	2.9	-0.4	0.1	1.3
Translation differences			-0.0		-0.0	-0.0	-0.0	-0.0
Acquisition cost at 31 December	87.2	87.2	242.8	253.5	62.5	58.5	392.5	399.3

Accumulated depreciation and impairment at 1 January			-153.6	-148.6	-54.7	-53.7	-208.3	-202.3
Accumulated depreciation on disposals and transfers			23.9	0.8	-0.2		23.7	0.8
Amortisation			-5.4	-5.5	-1.5	-1.0	-6.9	-6.5
Impairment			-1.0	-0.2			-1.0	-0.2
Translation differences			-0.0	-0.0			-0.0	-0.0
Accumulated depreciation and impairment at 31 December			-136.0	-153.6	-56.4	-54.7	-192.4	-208.2

Carrying amount at 1 January	87.2	13.5	100.0	53.0	3.8	2.5	191.0	69.0
Carrying amount at 31 December	87.2	87.2	106.8	100.0	6.1	3.8	200.1	191.0

1 Intangible rights comprise mainly product rights and marketing authorisations with carrying amount EUR 82.4 (2022: 81.9) million, and also software, trademarks and patents.

2 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.

Impairment testing of goodwill, property, plant

and equipment and intangible assets

Goodwill

The goodwill in the Consolidated statement of financial position as at 31 December 2023

consists EUR 73.7 million goodwill from the acquisition of Inovet Animal Health business in 2022

and EUR 13.5 million goodwill originated from the acquisition of Farmos-Group Ltd. in 1990.

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 two per cent growth. Goodwill has been allocated to two cash-generating

units. Group assesses value of its goodwill for impairment annually or more frequently, if facts

and circumstances indicate, that the recoverable amount is lower than its carrying amount.

Calculation of value from cash-generating units requires use of estimates and judgments. The

management’s forecasts are based on the sales, margins and discount rate. Management

forecasts are based on forecasts on future trends. Management has considered climate-related

matters in cash flow estimates. 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 amount of a group of cash-

generating units is lower than its carrying amount. The discount rate for 2023 is 7.9% (2022:

6.1%).

ORION CORPORATION | Financial Statement documents 2023 63/118

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 as at 31 December 2023 was

EUR 91.0 (2022: 83.0) million.

Impairment recognised in the period

In 2023 impairment totalling to EUR 1.0 (2022: 0.4) million were recognised on the intangible

rights of the Pharmaceuticals business. 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.

3.2 Leased assets



	Accounting policies 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.

ORION CORPORATION | Financial Statement documents 2023 64/118



	Subsequent measuring of a lease 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 instalments 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 effective interest method. 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 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 in income statement. 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.

	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 office 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 offices 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 Group does not have such IT contracts that contain a lease contract. 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 instalments in the consolidated statement of income.

		Critical accounting estimates and assumptions, and main related uncertainties concerning recognising right-of-use assets The Group will assess at the time of inception whether a contract is, or contains, a lease and for open-ended contracts judgement is used for determining lease period. 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 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 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 2023 65/118


	Leased premises		Cars		Others		Total
EUR million	2023	2022	2023	2022	2023	2022	2023	2022
Acquisition cost at 1 January	13.3	11.1	4.1	5.3	1.5	1.1	18.9	17.5
Additions	1.2	1.1	2.4	1.0	0.7	0.2	4.3	2.3
Acquired in business combination		2.4		0.1		0.2		2.6
Disposals	-2.5	-1.2	-2.5	-2.3	-0.5	-0.0	-5.5	-3.5
Translation differences	-0.1	-0.0	-0.1	0.0			-0.2	0.0
Acquisition cost at 31 December	11.9	13.3	3.9	4.1	1.7	1.5	17.5	18.9

Accumulated depreciation and impairment at 1 January	-7.2	-5.9	-2.2	-2.5	-1.0	-0.8	-10.5	-9.2
Accumulated depreciation on disposals and transfers	2.4	1.2	2.4	1.9	0.5	0.0	5.2	3.1
Depreciation	-2.5	-2.5	-1.4	-1.7	-0.3	-0.2	-4.1	-4.4
Translation differences	-0.0	0.1	0.0	-0.0			-0.0	0.0
Accumulated depreciation and impairment at 31 December	-7.3	-7.2	-1.2	-2.2	-0.9	-1.0	-9.4	-10.5

Carrying amount at 1 January	6.1	5.2	1.9	2.8	0.4	0.2	8.4	8.3
Carrying amount at 31 December	4.6	6.1	2.7	1.9	0.8	0.4	8.1	8.4

Items arising from leases in the consolidated income statement


EUR million	2023	2022
Depreciation from right-of-use assets	4.4	4.4
Interest expenses from lease liabilities	0.2	0.2
Expense from short-term lease	0.7	0.6
Expense from leases of low-value assets	2.8	2.6
Lease income from third parties	-1.7	-1.5
Total	6.4	6.3

The Group has one business facility that it has leased out to a third party. The lease agreement is

open-ended. The lease revenue from the facility was in the financial period EUR 1.7 (2022: 1.5)

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 changes in current loans including leasing liabilities

contains EUR 4.0 (2022: 4.0) million of lease payments to lessors.

ORION CORPORATION | Financial Statement documents 2023 66/118

3.3 Joint arrangements

In the 2023 financial year, total cost of joint operations amounted to EUR 6.6 (2022: 8.5) million.

Licensing, development and commercialisation agreement between

Orion and Bayer

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 efficacy 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 efficacy of darolutamide in patients

with metastatic hormone-sensitive prostate cancer (mHSPC). The primary endpoint of the

ARASENS trial was reached in December 2021. Additionally, another clinical Phase III trial

(ARANOTE) was launched in 2020 to evaluate the efficacy 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).

The ARASTEP Phase III clinical study, commenced in year 2023, investigates the efficacy of

darolutamide plus androgen deprivation therapy (ADT) versus ADT alone in hormone-sensitive

prostate cancer, in patients with high-risk biochemical recurrence (BCR) who have no evidence of

metastatic disease by conventional imaging and a positive PSMA PET/CT at baseline.

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. Information on Nubeqa® sales revenue is provided in note 2.1

Revenue from contracts with customers.

Licensing, development and commercialisation agreement between

Orion and MSD

In year 2022 Orion and MSD (trade name of Merck & Co., Inc. Rahway NJ USA), acting through its

subsidiary, Merck Sharp & Dohme LLC (later referred to as “MSD”) entered into a multi-year

global development and commercialisation collaboration agreement for Orion’s investigational

candidate ODM-208 and other drugs targeting cytochrome P450 11A1 (CYP11A1), an enzyme

important in steroid production. ODM-208 is an oral, non-steroidal inhibitor of CYP11A1

currently being evaluated in a Phase 2 clinical trial for the treatment of patients with metastatic

castration-resistant prostate cancer (mCRPC).

Under the terms of the agreement, Orion and MSD will co-develop and co-commercialise

ODM-208. MSD made an upfront payment to Orion of USD 290 million in year 2022. Of this

upfront payment, Orion recognised approximately EUR 228 million as income at the time of

signing and approximately EUR 60 million was reserved to cover Orion’s share of ODM-208

development cost to be accrued in the future. The management’s estimates of development

costs are based on previous experience with the development costs of similar drugs. Orion will

be responsible for the manufacture of clinical and commercial supply of ODM-208.

Orion and MSD are considered to have joint control over the project. The contractual agreement

does not involve a separate investment vehicle. The project is considered a joint operation under

IFRS 11.

In addition, the contract provides both parties with an option to convert the initial co-

development and co-commercialisation agreement into a global exclusive license to MSD. If the

option is exercised, MSD would assume full responsibility for all accrued and future development

and commercialisation expenses associated with the programme. Orion would be eligible to

receive milestone payments associated with progress in the development and commercialisation

of ODM-208 as well as tiered double-digit royalties on sales if the product is approved. The total

amount potentially accrued from multiple regulatory and sales milestone events represents a

substantial opportunity for Orion.

Licensing, development and commercialisation agreement between

Orion and Amneal Pharmaceuticals

Orion Corporation signed in year 2022 a long-term license agreement with Amneal

Pharmaceuticals, Inc. to commercialise generic products in Orion territories. Under the terms of

the agreement, Orion is granted exclusive licence to commercialise and sell Amneal’s generic

products in most parts of Europe as well as in Australia and New Zealand. The initial portfolio will

include a mix of generic products commercially available in the U.S. today, as well as selected

pipeline products currently under development. In year 2023 first products were registered in

Europe and launches are expected to take place over the coming years. Orion and Amneal will

work together to develop and register products to Orion markets. The agreement is considered a

joint operation under IFRS 11.

ORION CORPORATION | Financial Statement documents 2023 67/118

3.4 Business combination

Acquisition of Inovet’s Animal Health business in 2022

Orion acquired on 15 June 2022 from Belgian private company Inovet BV its wholly owned

subsidiary V.M.D. NV and all companies belonging to V.M.D. NV’s group of companies (V.M.D.

NV and its subsidiary companies collectively, “VMD”). VMD is a veterinary pharmaceuticals

company specialised in medicines and health products for livestock. It also has a product

portfolio for companion animals and minor species. VMD has production sites in Arques, France

(manufacturing) and in Arendonk, Belgium (packaging) as well as its own sales operations in

Belgium, France, Hungary and Vietnam. Through this acquisition, Orion’s Animal Health unit

expanded its product portfolio and got a foothold in the livestock market, expanded its own

geographical presence to Western Europe and expanded export markets, and gained a

production unit that is specialised in manufacturing of veterinary medicines. The acquisition also

supported Orion Group’s growth strategy.

Orion Group has 100 percent equity interest over the acquired companies. Final capital

expenditure of the acquisition was in total EUR 94 million including the purchase price, net of

cash EUR 82 million and deferred payments of EUR 11 million in 2022 and purchase price of EUR

0.1 million in 2023. The acquisition resulted to EUR 73.7 million goodwill relating to expansion in

livestock market, expansion of own geographical presence to Western Europe and expansion in

export markets. The acquired business has been consolidated into Group financials from the

acquisition date onwards.

Final fair values of assets acquired, liabilities assumed, and goodwill recognised at the date of

acquisition, together with net cash flow impact for acquisition is summarised in the table. The net

assets acquired for the business combination is denominated in euros.



		Critical accounting estimates and assumptions, and main related uncertainties concerning business combinations The identifiable assets and liabilities acquired in a business combination are measured at fair value at the acquisition date. When determining the fair value of the acquired net assets, management is required to exercise judgement and make estimates. Estimates and judgement are based on the management’s best view of the situation at the time of the acquisition.

Fair values of assets acquired and liabilities assumed and goodwill at the

date of acquisition


EUR million
Non-current assets total	32.1

Inventories	26.3
Trade receivables and other receivables	14.6
Cash and cash equivalents	0.2
Current assets total	41.1
Assets total	73.2

Deferred tax liabilities	1.3
Pension liabilities	0.5
Interest-bearing non-current liabilities	23.9
Non-current liabilities total	25.7

Interest-bearing current liabilities	13.2
Trade payables and other current liabilities	16.6
Current liabilities total	29.8
Liabilities total	55.5
Net assets acquired	17.7

Goodwill	73.7
Interest accrual on deferred purchase price	2.2
Preliminary purchase consideration including interest	93.6
Deferred purchase price and earn-out	11.2
Consideration transferred	82.4

Cash flows associated with the acquisition


EUR million	2022
Consideration transferred in cash	82.3
Cash and cash equivalents acquired	-0.2
Net cash outflow	82.0

Cash flow associated with acquisition amounted to EUR 0.1 million in 2023.

ORION CORPORATION | Financial Statement documents 2023 68/118

3.5 Investment in associate


EUR million	2023	2022
Carrying amount at 1 January	0.1	0.1
Share of associate company result	0.0	0.0
Carrying amount at 31 December	0.1	0.1

Associate company


Holding at 31 Dec, %	Domicile	2023	2022
Hangon Puhdistamo Oy	Hanko	50.0%	50.0%

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 income statement and statement of financial position is minor.

Summarised financial information of associate


EUR million	2023	2022
Assets	2.8	3.0
Liabilities	2.3	2.4
Revenues	3.5	3.0
Profit for the period	0.0	0.0

The most recent available financial statements of the associate are for the years 2022 and 2021.

3.6 Inventories



	Accounting policies Inventories are presented in the statement of financial position using the standard price for self-manufactured products, and for purchased products using the weighted average cost method of variable costs incurred from procurement and manufacturing, or if lower, the probable selling price or replacement cost. 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 obtained in the ordinary course of business, from which the estimated expenses necessary to complete the product and the expenses arising from the sale have been deducted.


EUR million, 31 Dec	2023	2022
Raw materials and consumables	94.1	86.4
Work in progress	87.5	69.9
Finished products and goods	180.5	159.3
Total	362.2	315.6

The value of inventories has been impaired to correspond to net realisable value by recording

EUR 15.5 (2022: 14.9) million as an expense during the period.

3.7 Trade and other receivables


	Carrying amount	Fair value	Carrying amount	Fair value
EUR million, 31 Dec	2023	2023	2022	2022
Trade receivables	247.1	247.1	180.7	180.7
Receivables from associate	0.2	0.2	0.1	0.1
Prepaid expenses and accrued income	99.9	99.9	33.6	33.6
Derivative contracts	0.7	0.7	0.1	0.1
VAT receivables	3.3	3.3	7.9	7.9
Other receivables	4.8	4.8	3.1	3.1
Total	355.9	355.9	225.6	225.6

The carrying amount of trade receivables and other current receivables is a reasonable estimate

of their fair value.

ORION CORPORATION | Financial Statement documents 2023 69/118

Ageing analysis of trade receivables


	Carrying amount	Default rate	Expected credit loss	Carrying amount
EUR million, 31 Dec	2023	2023	2023	2022
Not due	205.5	0.02%	0.0	157.0
1 to 30 days past due	23.5	0.28%	0.1	11.5
31 to 60 days past due	2.4	0.37%	0.0	1.7
61 to 90 days past due	1.2	0.44%	0.0	2.7
Over 90 days overdue	14.4	0.56%	0.1	7.8
Total	247.1		0.2	180.7

The credit losses of trade and other receivables for the period were net EUR 0.9 (2022: 0.2)

million.

Specification of prepaid expenses and accrued income


EUR million, 31 Dec	2023	2022
Assets based on contracts	49.7	25.0
Return of funds of Pension Fund B	41.0
Service and maintenance	4.0	3.5
Pending research and development contributions	1.3	0.5
Other prepaid expenses	4.0	4.5
Total	99.9	33.6

Due to the short-term character of the prepaid expenses and accrued income, the carrying

amounts do not differ from fair value.

Other non-current receivables


EUR million, 31 Dec	2023	2022
Loan receivables from associate	0.7	0.2
Other non-current receivables	0.2	0.9
Total	0.9	1.0

Loan receivables include interest-bearing receivables. The carrying amounts do not materially

differ from fair values.

3.8 Provisions



	Accounting policies 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 are reviewed at the end of each reporting period and adjusted to reflect the current best estimate or reversed if they are no longer needed. A provision for restructuring costs is recognised only when general recognition criteria for provision are met and when the Group has compiled a detailed restructuring plan, to which it is committed and launched its implementation or informed the parties concerned on criteria on restructuring plan. Pension provisions include provisions for costs of additional days relating to unemployment pension. Other provisions include provision in Italy, which relates to compensation paid to the employee when leaving the company and management’s pension insurance provision in Sweden. These provisions are expected to materialise in the next 2–5 years.

		Critical accounting estimates and assumptions, and main related uncertainties concerning provisions The amount recognised as a provision is the best estimate of the expenditure required to settle the obligation at the reporting day, taking into account related risks and uncertainties, management judgment supplemented by experience with similar transactions and future events when there is sufficient evidence that they will occur and affect the amount of payment. Provisions for restructuring costs are recognised when the requirements for recognition are satisfied. For reasons beyond the control of management the final costs may differ from the initial amount for which the provision has been established.

ORION CORPORATION | Financial Statement documents 2023 70/118

Provisions


EUR million	Restructuring provisions	Pension provisions	Other provisions	Total
1 January 2023	0.0	0.0	0.6	0.6
Utilised during the period	-0.0		-0.2	-0.2
Reversal of provision			-0.1	-0.1
Additions to provisions	0.0	0.0	0.1	0.2
Translation differences			-0.0	-0.0
31 December 2023	0.0	0.1	0.4	0.5

EUR million, 31 Dec				2023
Non-current provisions				0.5
Current provisions				0.0
Total				0.5

3.9 Trade payables and other liabilities


EUR million, 31 Dec	2023	2022
Trade payables	102.3	114.4
Derivative contracts	0.5	0.3
Other current liabilities to associates	0.1	0.0
Accrued liabilities and deferred income	97.5	120.7
VAT liabilities	4.9	5.9
Other current liabilities	17.0	15.4
Total	222.4	256.7

Specification of accrued liabilities and deferred income


EUR million, 31 Dec	2023	2022
Personnel expenses	56.4	63.1
Liabilities based on contracts	15.7	14.6
Price reductions	16.0	5.0
Research and development expenses	1.9	7.6
Accrued interests	0.3	0.2
Liabilities based on licensing agreements		20.0
Other accrued liabilities and deferred income	7.2	10.2
Total	97.5	120.7

Due to the short-term character of the trade payables and other current liabilities, the carrying

amounts do not materially differ from fair value.

Other non-current liabilities


EUR million, 31 Dec	2023	2022
Liabilities based on contracts	66.9	68.7
Other liabilities	9.6	9.0
Total	76.4	77.7

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 2023 71/118

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, affect 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	2023	2022
Wages and salaries	210.2	204.4
Pension costs, defined contribution plans	25.7	23.8
Pension costs, defined benefit plans	8.7	6.0
Share-based incentive plans, equity-settled	7.1	5.7
Share-based incentive plans, cash-settled	5.1	10.3
Other social security expenses	16.3	13.9
Total	273.0	263.9

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.

Average number of personnel


Person	2023	2022
Average number of personnel	3,599	3,472

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 2022 includes three earning periods, which are the calendar years

2022–2024, 2023–2025 and 2024–2026. The Board of Directors decides on the earnings criteria

and on targets to be established for them at the beginning of each earning period. One earning

period, calendar years 2022–2024, commenced in 2022. One earning period, calendar years

2023–2025, commenced in 2023. The potential reward of the plan for the earning periods

commencing in 2022 and 2023 are based on achieving the Orion Group’s operating profit and

net sales targets.

The target group of the plan consists of approximately 60 people. The total maximum amount of

rewards to be paid on the basis of the plan is 760,000 Orion Corporation class 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 2022–2026. 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 2023, no Orion Corporation shares had been paid as rewards under this plan.

There are no restriction periods in the plan, as the duration of each earning period is three years.

According to the terms and the conditions of the plan, the rewards to be paid to a key person

shall be limited, if the limits set for the rewards to be paid from the plan for one calendar year are

exceeded.

The plan that 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 decided 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. One earning period, calendar years 2021–2023, commenced in 2021. The

potential rewards of the plans for the earning periods commencing in 2019, 2020 and 2021 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

ORION CORPORATION | Financial Statement documents 2023 72/118

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 2023, 302,472 B shares had been paid as rewards under this plan.

Under the plan, shares received based on one-year and two-year earning periods could not be

transferred during the restricted period determined in the plan. There is no restricted period for

the three-year earning periods. According to the terms and the conditions of the plan, the

rewards to be paid to a key person from the plan in force shall be limited, if the limits set for the

Orion Group long-term incentive plan rewards for one calendar year are exceeded.

The rewards under the plans 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, shall be paid as

follows:


Earning period	Reward paid / potential reward to be paid
2019	2 Mar 2020
2019–2020	1 Mar 2021
2019–2021	1 Mar 2022
2020–2022	1 Mar 2023
2021–2023	2024
2022–2024	2025
2023–2025	2026
2024–2026	2027

The costs due to plan are recognised as expenses during the restricted period. The anticipated

dividends have not been taken into account separately as they are taken into account in

determining the share-based rewards.

Earning periods currently in effect


	2023–2025	2022—2024	2021—2023	2020—2022
Start date of earning period	1 Jan 2023	1 Jan 2022	1 Jan 2021	1 Jan 2020
End date of earning period	31 Dec 2025	31 Dec 2024	31 Dec 2023	31 Dec 2022
Grant date of share rewards	23 Mar 2023	22 Mar 2022	3 Mar 2021	17 Mar 2020
Fair value of shares at granting, EUR	41.55	41.93	33.58	32.51

Transferred shares


	2023	2022	2021
Number of shares transferred during period	149,798	38,543	99,768
Price per transferred share, EUR1	44.26	41.32	34.11
Total price of transferred shares, EUR million	6.6	1.6	3.4
End date of restricted period2			31 Dec 2021

1 Average price of B share on transfer date.

2 Concerns only shares which are granted based on earning period term of one or two calendar years.

The earning periods of the Group’s share-based incentive plans in force and ending in the reporting period


	Earning periods	2019		2020		2021		2022		2023		2024		2025		2026	2027
The plan commenced in 2019	2020-2022		●	1	2		3		●
	2021-2023				●	1	2		3		●
The plan commenced in 2022	2022-2024						●	1	2		3		●
	2023-2025								●	1	2		3		●
	2024-2026										●	1	2		3		●


●	Granting of share rewards \| March		Earning period	●	Reward paid / potential reward to be paid \| March

ORION CORPORATION | Financial Statement documents 2023 73/118

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, France and Norway. The most significant individual pension plan in Finland is the Orion Pension Fund, through which pension plans are provided for white-collar staff working in Finland. The Pension Fund comprises Department A and Department B. Department A is supplementary insurance, which is entirely defined benefit based. Department B includes statutory pension insurance to which all white collar staff are entitled, and is partly treated as defined benefit plan and partly treated as defined contribution plan. 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. In 2023 Orion Pension Fund Department B was replaced with defined contribution plan arrangement and insurance portfolio is transferred to insurance company 31.12.2023. The Group also has defined benefit pension plans in France and in Norway, which a party outside the Group provides asset management. In addition, some individual persons in the Group 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 uncertainties concerning pension assets and pension liabilities 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 differ 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 affect the other comprehensive income for the period.

ORION CORPORATION | Financial Statement documents 2023 74/118

Defined benefit plans – amounts recognised in the statement of financial

position


	Pension fund	Other	Pension fund	Other
EUR million, 31 Dec	2023	2023	2022	2022
Present value of funded obligations	24.0	16.5	374.3	15.6
Fair value of plan assets	-30.9	-12.9	-430.5	-13.1
Surplus (-) / deficit (+)	-6.9	3.6	-56.2	2.5
Present value of unfunded obligations		0.5		0.5
Net asset (-) / liability (+) recognised in the statement of financial position	-6.9	4.1	-56.2	3.0

The insurance portfolio of the Orion Pension Fund's B fund has been transferred to pension

insurance company on 31 December 2023. The transfer has EUR 30.7 million positive impact on

Orion’s result in 2023. Final adjustment on settlement gain will be recognised in financial year

2024. The receivable of funds impact amount to EUR 41.0 million as at 31 December 2023. The

amount of the cash flow impact depends on the final valuation of the transferred pension liabilities

and some illiquid investments, which will only be available by the end of H1/2024.

The net change of pension asset and liability of EUR 50.5 million is mostly due to gain or loss

arising from settlements that relate to replacement of a defined benefit pension plan in Finland

with contribution plan, return on plans assets, a change in the discount rate and the difference

between the assumed and realised pension increase rate in the 2023 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 current value of the

obligation. The impact of the difference between assumed and realised pension increase rates

has been reported under the item Experienced gains (-) and losses (+). These 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, 31 Dec	2023	2023	2022	2022
Liabilities		4.1		3.0
Asset	-6.9		-56.2
Net asset (-) / liability (+) recognised in the statement of financial position	-6.9	4.1	-56.2	3.0

Defined benefit plan pension expenses in consolidated statement of

comprehensive income


	Pension fund	Other	Pension fund	Other
EUR million	2023	2023	2022	2022
Current service cost	10.3	0.1	5.9	0.5
Gains (-) and losses (+) arising from settlements	-30.7
Curtailments			-0.3
Past service cost		0.4
Interest expense and income, total	-2.2	0.1	-0.2	0.1
Pension expenses (+) / income (-) in income statement	-22.6	0.7	5.4	0.6
Items due to remeasurement	18.7	1.6	-44.7	-1.6
Pension expense (+) / income (-) statement of comprehensive income	-3.9	2.3	-39.3	-1.0

Defined benefit plan pension expenses by function


	Pension fund	Other	Pension fund	Other
EUR million	2023	2023	2022	2022
Cost of goods sold	3.6		2.2	0.0
Selling and marketing	1.1	0.2	0.6	0.2
Research and development	1.8		1.2	0.0
Administration	1.6	0.5	1.3	0.4
Other operating income and expenses	-30.7
Pension expense (+) / income (-) in the income statement	-22.6	0.7	5.4	0.6

Pension expense (+) / income (-) in the income statement includes impact from transfer of

obligation EUR 30.7 million in 2023.

ORION CORPORATION | Financial Statement documents 2023 75/118

Changes in present value of obligation


	Pension fund	Other	Pension fund	Other
EUR million	2023	2023	2022	2022
Defined benefit plan obligation at 1 January	374.3	16.5	437.1	18.7
Current service cost	10.3	0.1	5.9	0.5
Interest expense	14.3	0.6	4.3	0.3
Gains (-) and losses (+) arising from settlements	-361.2
Curtailments			-0.3
Past service cost		0.3
Items due to remeasurement
Gains (-) or losses (+) due to change in demographic assumptions
Gains (-) or losses (+) due to change in economic assumptions	1.5	0.3	-108.0	-3.8
Experienced gains (-) or losses (+)	-4.0	0.7	45.4	0.6
Total	-2.5	1.0	-62.6	-3.2
Translation differences and other adjustments		-0.7		-0.2
Benefits paid	-11.2	-0.8	-10.1	-0.4
Obligation at 31 December	24.0	16.6	374.3	16.5

Changes in fair value of plan assets


	Pension fund	Other	Pension fund	Other
EUR million	2023	2023	2022	2022
Fair value of plan assets at 1 January	430.5	13.2	452.1	13.8
Interest income	16.5	0.5	4.5	0.2
Settlements paid	-330.5
Items due to remeasurement
Return on plan assets excluding items in interest expense and income	-21.2	-0.6	-17.9	-1.6
Total	-21.2	-0.6	-17.9	-1.6
Translation differences and other adjustments		-0.3		-0.2
Employer contributions	-53.2	1.0	2.0	1.2
Benefits paid	-11.2	-0.8	-10.1	-0.4
Fair value of plan assets at 31 December	30.9	12.9	430.5	13.2

Fair values of assets of benefit plan arranged through the Orion Pension

Fund by asset category as percentages of fair value of all pension plan assets


%, 31 Dec	2023	2022
Equity in developed markets	43%	44%
Equity in emerging markets	0%	4%
Bonds	27%	14%
Cash and money market investments	7%	5%
Properties	22%	22%
Other	0%	11%
Total	100%	100%

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 2023 include shares issued by the parent company Orion

Corporation with fair value EUR 1.1 (2022: 37.0) million that account for 3.6% (2022: 8.3%) of the

plan assets.

ORION CORPORATION | Financial Statement documents 2023 76/118

The objective of the Orion Pension Fund is a distribution of investments that spreads risk

between different types of asset over the long term. Most of the assets are invested in shares and

properties.

Actuarial assumptions used by the Orion Pension Fund


%	2023	2022
Discount rate	3.4%	3.9%
Inflation rate	2.3%	2.6%
Future pension increases	2.0%	2.7%–2.9%
Future salary increases	2.0%	2.0%

In 2024 the Group expects to contribute EUR 0.6 million to its pension plans (in financial period

2022 it expected to contribute EUR 18 million in 2023 to its pension plans).

Discount rate is the most significant assumption, which affects the value of pension liability. In

2023 EUR 24.0 (2022: 374.3) million liability of the Orion Pension Fund has been discounted at a

discount rate of 3.4% (2022: 3.9%). The impact on the liability of a change in the discount rate of

+/- 0.5 percentage points would be EUR -1.4/+1.4 (2022: -29.9/+34.2) million, when other

assumptions unchanged. The weighted average duration of the defined benefit liability is 12

(2022: 18) years at the end of 2023.

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 affects 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 effect 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 affected 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 2023 77/118

5 Income taxes and deferred tax assets

and liabilities

5.1 Income taxes



	Accounting policies The income tax expense in the consolidated income statement 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 effect is also recognised in equity. Current tax is calculated on the basis of the tax rate in force in each country. Interest expenses on income taxes are reported as part of interest expenses.

Income taxes


EUR million	2023	2022
Current taxes	62.3	89.4
Adjustments for current tax of prior periods	0.1	0.2
Changes in deferred taxes	-7.3	1.1
Total	55.1	90.8

Disclosure regarding Pillar 2 minimum taxation

OECD Global Minimum Tax (Pillar 2 rules) become effective in January 1, 2024 and apply to the

financial years 2024 and onwards. Group has assessed the effect of the Pillar 2 rules and

estimates that rules do not have effect to Group’s effective tax rate nor corporate income tax cost.

Reconciliation between tax expense in statement of comprehensive income

and taxes calculated from Group’s 20.0% domestic tax rate


EUR million	2023	2022
Profit before taxes	271.9	440.3

Consolidated income taxes at Group’s domestic tax rate	54.4	88.1
Impact of different tax rates of foreign subsidiaries	0.1	0.4
Effect of deferred tax assets not recognised	1.2
Benefit arising from previously recognised tax losses	-0.1	-0.3
Income tax adjustments of prior periods	-0.3	0.2
Income taxes on undistributed earnings	0.1
Other items	-0.2	2.3
Income tax expense recognised in consolidated income statement	55.1	90.8

Effective tax rate	20.3%	20.6%

ORION CORPORATION | Financial Statement documents 2023 78/118

5.2 Deferred tax assets and liabilities



	Accounting policies Deferred tax is computed on temporary differences between the carrying amount and the taxable value. Deferred taxes have been calculated using the statutory tax rates or the tax rates enacted or substantively enacted as at reporting date. Deferred tax assets are only recognised to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilised. Deferred taxes are not recognised on items that do not affect accounting or tax profit. Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities and when the deferred income tax assets and liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity or different taxable entities where there is an intention to settle the balances on a net basis.

		Critical accounting estimates and assumptions, and main related uncertainties concerning deferred taxes In the preparation of the financial statements, Group estimates, in particular, the basis for recognising deferred tax assets. For this purpose, an estimate is made of how probable it is that the subsidiaries will generate sufficient taxable income against which unused tax losses or unused tax assets can be utilised. The factors applied in making the forecasts can differ 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	2023	2022
Revenue recognition	1.6	0.9
Internal inventory margin	0.8	1.6
Pension liabilities	1.7	0.6
Tax losses carried forward	2.9
Provisions and accruals	3.4
Lease liabilities	1.6	1.6
Other deductible temporary differences	0.1	0.0
Deferred tax assets	12.1	4.7
Offset against deferred tax liabilities	-7.8	-1.6
Total	4.3	3.1

Deferred tax liabilities


EUR million, 31 Dec	2023	2022
Depreciation difference and untaxed reserves	29.6	27.5
Pension assets	5.2	11.2
Capitalised cost of inventory	2.3	2.4
Undistributed earnings	0.9
Right-of-use assets	1.6	1.6
Other taxable temporary differences	0.0	1.0
Deferred tax liabilities	39.6	43.8
Offset against deferred tax assets	-7.8	-1.6
Total	31.8	42.2

Changes in deferred taxes arises from


EUR million, 31 Dec	2023	2022
Net deferred tax assets (+) / liability (-) at 1 January	-39.0	-27.4
Recognised in the income statement	7.3	1.1
Recognised in other comprehensive income	4.1	-9.2
Translation differences and other	0.1	-3.6
Net deferred tax assets (+) / liability (-) at 31 December	-27.5	-39.0

Amount of tax losses for which no deferred tax asset has not been

recognised due to uncertainty of utilisation


EUR million, 31 Dec	2023	2022
Tax loss carry forwards	16.5	16.5

ORION CORPORATION | Financial Statement documents 2023 79/118

6 Financing and capital structure

6.1 Financial assets and liabilities by category



	Accounting policies Classification The Group’s financial assets and liabilities 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 by balance sheet item is presented in the table concerning financial assets and liabilities. 1. Measured at amortised cost Financial assets are classified 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. Of the Group’s financial assets trade receivables, other receivables and cash and cash equivalents 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, which are not hedged, deferred purchase price and earn-out, shares and holdings and money market investments. Of financial liabilities, derivatives, which are not hedged, are measured at fair value and are recognised in income statement. 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.



	Interest-bearing current liabilities include the credit limits of bank accounts to the extent that they are used, commercial papers issued by the Company and 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 effective interest method less any impairment. Impairment losses are recognised in the consolidated income statement. Financial assets at fair value through profit or loss are initially recognised at fair value, and transaction costs are recognised as expenses in the consolidated income statement. 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 and transaction costs related to them are recognised as expenses in the consolidated income statement. Subsequently, financial liabilities except derivative liabilities at fair value through profit or loss are measured at amortised cost using the effective 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.

ORION CORPORATION | Financial Statement documents 2023 80/118



	Impairment At the end of each balance sheet date, it is assessed whether there are any indications of impairment of financial instruments. Impairments are estimated in two different 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 problems • breach of contract terms • high probability of bankruptcy or other financial restructuring of debtor For trade receivables, the Group 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 in income statement, 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. The specification of cash and cash equivalents is presented in the note 6.5 Cash and cash equivalents. Money market investments that are fair value through profit or loss instruments with maturities initially of over three months and no more than twelve months are regarded as cash and cash equivalents in the statement of cash flows.



	Derivative contracts Derivative contracts 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 presented under other receivables and liabilities in the balance sheet. 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. The specification of derivate contracts is presented in the note 6.7 Derivative contracts. 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.

ORION CORPORATION | Financial Statement documents 2023 81/118

Financial assets and liabilities by category


	2023				2022
EUR million, 31 Dec	Amortised cost	Fair value through profit and loss	Carrying amount of financial items	Fair value	Carrying amount of financial items
Other investments		0.2	0.2	0.2	0.2
Loan receivables from associate	0.7		0.7	0.7	0.2
Non-current assets total	0.7	0.2	0.9	0.9	0.3
Trade receivables	247.1		247.1	247.1	180.7
Other receivables	0.4		0.4	0.4	0.5
Derivative contracts		0.7	0.7	0.7	0.1
Cash and cash equivalents	106.7		106.7	106.7	332.6
Current assets total	354.1	0.7	354.8	354.8	514.0
Financial assets total	354.8	0.9	355.7	355.7	514.3

Non-current interest-bearing liabilities	171.0		171.0	163.1	196.8
Other non-current liabilities	67.1		67.1	67.1	68.6
Deferred purchase price and earn-out		9.3	9.3	9.3	9.1
Non-current liabilities total	238.1	9.3	247.4	239.5	283.6
Trade payables	102.3		102.3	102.3	114.4
Other current liabilities					0.2
Current interest-bearing liabilities	29.0		29.0	29.0	17.2
Derivative contracts		0.5	0.5	0.5	0.3
Current liabilities total	131.4	0.5	131.9	131.9	132.1
Financial liabilities total	369.5	9.9	379.3	371.4	415.7

Derivative contracts are included in other receivables and other liabilities in the statement of financial position.

ORION CORPORATION | Financial Statement documents 2023 82/118

Fair value measurement and hierarchy of financial instruments


EUR million, 31 Dec 2023	Level 1	Level 2	Level 3	Total
Derivatives
Currency derivatives		0.7		0.7
Other investments
Shares and investments			0.2	0.2
Assets total		0.7	0.2	0.9

Deferred purchase price and earn-out			-9.3	-9.3
Derivatives
Currency derivatives		-0.5		-0.5
Liabilities total		-0.5	-9.3	-9.9

EUR million, 31 Dec 2022	Level 1	Level 2	Level 3	Total
Derivatives
Currency derivatives		0.1		0.1
Other investments
Shares and investments			0.2	0.2
Assets total		0.1	0.2	0.3

Deferred purchase price and earn-out			-9.1	-9.1
Derivatives
Currency derivatives		-0.3		-0.3
Liabilities total		-0.3	-9.1	-9.4

The fair value of level 1 financial instrument is based on quotations available in the active

markets. The fair value of level 2 derivatives is based on the prices 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. No transfers between levels

occurred during the reporting period.

6.2 Financial risk management

The objective of the Group’s financial risk management is to decrease the negative effects of

market and counterparty risks on the Group’s profits and cash flows and to ensure sufficient

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 or CEO 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, the Swedish

krona, the Polish zloty, the Danish krone and the Norwegian krone. 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.

ORION CORPORATION | Financial Statement documents 2023 83/118


				Other significant currencies	Total
EUR million, 31 Dec	USD	SEK	PLN	Other significant currencies	2023	2022
Net position in statement of financial position	17.6	5.0	8.8	8.1	39.5	41.1
Forecast net position (12 months)	36.0	45.7	35.3	28.4	145.3	133.3
Net position, total	53.5	50.6	44.1	36.6	184.8	174.3
Currency derivatives for hedging	-21.2	-9.8	-8.6	-4.2	-43.9	-28.9
Net open position total	32.3	40.8	35.5	32.4	141.0	145.5

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. The fair value changes of the derivative contracts relating to milestone payments are

recognised in either sales revenues or operating income and expenses.

Translation risk

Translation risk arises from the equity of subsidiaries outside the eurozone. At 31 December 2023

the equity in these subsidiaries totalled EUR 56.7 (2022: 63.2) million. The most significant

translation risk arises from the British pound. This translation position has not been hedged.

Sensitivity analysis

The effect 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 recognised directly in income statement.


	Impact on profit
EUR million, 31 Dec	2023	2022
+/- 10% change in exchange rates	0.4/-0.5	-1.1/1.4

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 mainly fixed-price

contracts or 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 affect the Group’s cash flow and results. At 31 December 2023, the

Group’s interest-bearing liabilities totalled EUR 200.0 (2022: 214.0) million, which comprise of

long-term loans and lease liabilities. Of the loans from credit institutions, 106.8 million euros are

tied to the variable Euribor interest rate.

The effect of the increase in the interest rate on the net interest expenses has been estimated

with a sensitivity analysis, where it is assumed that the interest rate will rise in 2023 by one

percentage point (1%) from the interest rates priced at the balance sheet date, other factors

remaining the same. The effect on result before taxes would be EUR -0.6 (2022: -0.6) million.

Lease liabilities are not taken into account in the calculation.

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 2023 is the total of financial assets less carrying amounts of derivatives in

financial liabilities, which totalled EUR 355.2 (2022: 513.8) million (note 6.1 Financial assets and

liabilities by category). 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 effective collection is regularly undertaken.

ORION CORPORATION | Financial Statement documents 2023 84/118

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 different

geographical areas. In certain countries, the Group also sells directly to local hospitals. The 25

largest customers accounted for 78.0% of the trade receivables at 31 December 2023 (2022:

73.0%). The trade receivables are not considered to involve significant risk (note 3.7 Trade and

other receivables). Credit losses for the period recognised in income statement were EUR 0.9

(2022: 0.2) million. The Group has EUR 49.7 (25.0) million of assets based on contracts, for which

no expected credit losses have been booked.

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 Group has EUR 150 million committed, undrawn bank overdraft limits, which

will mature in 2028. In addition, the Group has a EUR 100 million 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 2023 were EUR 200.0 (2022: 214.0)

million, which consisted of bank loans and lease contract liabilities. The average maturity for

interest-bearing liabilities excluding lease liabilities is 4.0 years (2022: 4.7 years). At 31 December

2023, the Group’s cash and cash equivalents and money market investments, which decrease

liquidity risk, totalled EUR 106.7 (2022: 332.6) 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	2024	2025	2026	2027	2028	Total
Repayments of loans	25.6	25.7	25.6	24.9	90.1	191.9
Repayments of lease liabilities	3.4	2.2	1.4	0.5	0.5	8.0
Interest payments	5.2	4.5	3.8	3.2	7.3	24.0
Cash flow total, interest-bearing financial liabilities	34.2	32.3	30.8	28.6	97.9	223.9
Trade payables	102.3					102.3
Other non-interest- bearing financial liabilities	0.3					0.3
Cash flow total, non- interest-bearing financial liabilities	102.7					102.7
Derivative contracts, inflow	0.7					0.7
Derivative contracts, outflow	-0.5					-0.5
Cash flow total, derivative contracts	0.2					0.2
Cash flow total, all	137.0	32.3	30.8	28.6	97.9	326.7

ORION CORPORATION | Financial Statement documents 2023 85/118


EUR million, 31 Dec	2023	2024	2025	2026	2027	Total
Repayments of loans	13.9	25.6	25.6	25.6	115.2	205.9
Repayments of lease liabilities	2.1	2.4	0.9	0.7	0.7	6.8
Interest payments	3.7	3.4	3.0	2.6	7.1	19.7
Cash flow total, interest- bearing financial liabilities	19.6	31.5	29.5	28.8	123.0	232.4
Trade payables	114.4					114.4
Other non-interest- bearing financial liabilities	0.2					0.2
Cash flow total, non- interest-bearing financial liabilities	114.6					114.6
Derivative contracts, inflow	0.1					0.1
Derivative contracts, outflow	-0.3					-0.3
Cash flow total, derivative contracts	-0.1					-0.1
Cash flow total, all	134.1	31.5	29.5	28.8	123.0	346.9

Current market rates per contract are used for forecasts of interest payments on floating-rate

loans.

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 2023. Orion

fulfilled these financial covenants on 31 December 2023.

Financial covenants


	Requirements
Group equity ratio	> 30%
Group interest-bearing net liabilities /EBITDA	< 3.0

Group equity ratio


31 Dec	2023	2022
Equity, EUR million	890.1	908.1
Equity and liabilities total minus advances received, EUR million	1,427.8	1,491.0
Equity ratio, %	62.3%	60.9%

Group interest-bearing net liabilities / Group EBITDA


EUR million, 31 Dec	2023	2022
Interest-bearing net liabilities	93.3	-118.7
EBITDA	326.4	487.1
Interest-bearing net liabilities / EBITDA	0.29	-0.24

ORION CORPORATION | Financial Statement documents 2023 86/118

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 effects as a decrease in payments received. Other reserves include reserve funds, expendable fund and reserve for invested unrestricted equity. Reserve funds are required by local laws and part of restricted equity. The expendable fund and reserve for invested unrestricted equity are included in distributable funds under the Finnish Limited Liability Companies Act.

Changes in share capital


	A shares	B shares	Total	Share capital EUR million
Total number of shares at 1 Jan 2022	34,813,206	106,321,072	141,134,278	92.2
Conversion of A shares to B shares in 1 Jan–31 Dec 2022	-626,712	626,712	0
Total number of shares at 31 Dec 2022	34,186,494	106,947,784	141,134,278	92.2
Conversions of A shares to B shares in 1 Jan–31 Dec 2023	-835,112	835,112	0
Total number of shares at 31 Dec 2023	33,351,382	107,782,896	141,134,278	92.2
Number of treasury shares at 31 Dec 2023		782,973	782,973
Total number of shares at 31 Dec 2023, excluding treasury shares	33,351,382	106,999,923	140,351,305

Total number of votes at 31 Dec 2023 excluding treasury shares	667,027,640	106,999,923	774,027,563

On 31 December 2023 Orion had a total of 141,134,278 (2022: 141,134,278) shares, of which

33,351,382 (2022: 34,186,494) were A shares and 107,782,896 (2022: 106,947,784 ) B shares.

The Group’s share capital was EUR 92,238,541.46 (2022: 92,238,541.46). At the end of 2023

Orion held 782,973 (2022: 932,771) B shares as treasury shares. On 31 December 2023 the

aggregate number of votes conferred by the A and B shares was 774,027,563 (2022:

789,744,893) 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 different 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 2023 total of 835,112

A shares were converted to B shares.

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.

On 22 March 2023, the Annual General Meeting of Orion Corporation authorised the Board of

Directors to decide on a share issue by issuing new shares. The Board of Directors shall be

entitled to decide on the issuance of no more than 14,000,000 new Class B shares. The share

issue authorisation shall be valid until the next Annual General Meeting of the Company.

On 23 March 2022, the Annual General Meeting authorised the Board of Directors to decide on

the acquisition of the Company’s own shares and to decide on a share issue by conveying own

shares. The Board of Directors was entitled to decide on the acquisition of no more than 500,000

class B shares of the Company and is entitled to decide on the conveyance of no more than

1,000,000 own Class B shares held by the Company. Based on this authorisation and a decision

by the Board of Directors on 25 August 2022, Orion acquired a total of 400,000 B shares

between 1 September and 19 September, and 26 October and 4 November 2022. 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 authorisation to convey own

shares is valid for five years from the decision of the Annual General Meeting.

The Board of Directors is not authorised to increase the share capital or to issue bonds with

warrants or convertible bonds or stock options.

The Board of Directors proposes that a dividend of EUR 1.62 per share will be paid out, donation

of EUR 0.4 million based on the consolidated statement of financial position to be adopted for

the financial year ended December 31, 2023, and that the remaining part is carried forward in the

retained earnings in unrestricted equity.

ORION CORPORATION | Financial Statement documents 2023 87/118

Other reserves


EUR million, 31 Dec	2023	2022
Reserve funds	3.3	1.9
Expandable fund	0.5	0.5
Reserve for invested unrestricted equity	0.9	0.9
Total	4.6	3.3

Translation differences

Translation differences include those arising from translation of the financial statements of

foreign subsidiaries.

Dividends and other distribution of profits

A dividend of EUR 1.60 (2022: 1.50) per share were distributed in the 2022 financial year. In

addition, donations of EUR 0.4 (2022: 0.4) million were distributed from profit funds.

6.4 Interest-bearing liabilities


	Carrying amount	Fair value	Carrying amount	Fair value
EUR million, 31 Dec	2023	2023	2022	2022
Loans from credit institutions	166.3	158.4	192.0	173.0
Lease liabilities	4.7	4.7	4.7	4.7
Non-current liabilities total	171.0	163.1	196.8	177.7


	Carrying amount	Fair value	Carrying amount	Fair value
EUR million, 31 Dec	2023	2023	2022	2022
Loans from credit institutions	25.7	25.7	13.8	13.8
Lease liabilities	3.4	3.4	3.4	3.4
Current liabilities total	29.0	29.0	17.2	17.2

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 the loans has been determined by discounting the estimated cash flows to

present value by using the rate that would be prevailing for Group to withdraw loan at the end of

the financial year.

6.5 Cash and cash equivalents


	Carrying amount	Fair value	Carrying amount	Fair value
EUR million, 31 Dec	2023	2023	2022	2022
Cash and bank	106.7	106.7	227.7	227.7
Liquid money market investments			104.9	105.0
Total	106.7	106.7	332.6	332.7

Liquid money market investments included in cash and cash equivalents are bank 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 (2022: 0.2) million at 31 December 2023, include

mainly shares and investments in unlisted companies. They are stated at cost because their fair

value cannot be determined reliably.

ORION CORPORATION | Financial Statement documents 2023 88/118

6.7 Derivative contracts

Nominal values and maturity of currency derivatives


EUR million, 31 Dec	2023	2022
Currency forward contracts and currency swaps	49.3	39.3
Currency options	28.0	25.7

All derivatives have a maturity less than one year.

Fair values of non-hedge-accounting derivative


	2023			2022
EUR million, 31 Dec	Positive	Negative	Net	Net
Currency forward contracts and currency swaps	0.6	-0.4	0.3	-0.2
Currency options	0.1	-0.2	-0.1	0.0

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 0.3 (2022: 0.2) million and to counterparties EUR 0.1 (2022: 0.0) 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.

Contingencies for own liabilities


EUR million, 31 Dec	2023	2022
Guarantees	2.6	5.1
Other		0.3

Commitments

Orion has commitments for the acquisition of property, plant and equipment, which mainly

concern existing factories and premises in Finland.