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Board of directors' report

Overview

Net sales EUR 273.6 million was 8% higher than in 2010. Comparable proforma net sales in 2010, including Veriteq acquisition, were EUR 254.6 million. Operating profit improved by EUR 4.3 million or 36% compared to 2010.

Controlled Environment’s net sales performance was stable throughout the year whereas Weather had a very strong fourth quarter compared to quite stable first three quarters.

Net sales increased in APAC region by 20% and in Americas by 10%, but EMEA region decreased by 2%.

Orders received improved significantly in the second half of the year, compared to the first half of 2011. High net sales during the fourth quarter increased the full year net sales to 8% above previous year.

Services sales in 2011 grew by 21% to EUR 40.8 million.

Implementation of the company-wide ERP program progressed in 2011 with go-lives in Germany and the USA. Roll-out will continue until the end of 2012.

In 2011, Vaisala launched 39 products. In 2011 R&D spend was EUR 3.4 million below the 2010 level. In 2011 R&D costs were 10.2% of net sales (12.4%) which is the longer term target level for R&D investment.

Market outlook

Uncertainty in the global economy and shifts in exchange rates are expected to affect Vaisala's business. Based on the structure of Vaisala's customer base and the orders rece¬ived, the company's market situation is expected to remain materially unchanged in 2012.

Financial guidance

Vaisala expects its net sales in 2012 to stay on the same level as in the preceding year. The operating profit is expected to improve moderately. Net sales in 2011 were EUR 273.6 million and operating profit was EUR 16.1 million.

As in previous years, seasonal fluctuation is typical of Vaisala's business, and the first quarter is expected to be modest.

Vaisala’s long-term business outlook remains unchanged.


President and CEO Kjell Forsén on Vaisala’s result:

The global financial crisis affected our governmental customers’ investment capability. The beginning of the year was slow, but demand increased during the second half of the year especially in Weather business area and resulted in significantly increased order intake and sales.
 
During the year solid revenue growth continued in Asia-Pacific amounting to 20%. Also Americas did well growing by 10% whereas in Europe revenues declined by 2%.
 
Our delivery capability was good throughout the year, and especially our capacity to deliver complex projects advanced during 2011.

Strong performance in the industrial business continued in 2011. Controlled Environment increased their net sales by 13% and the operating profit by 18%. Roll-out of the Life Science offering in Europe and Asia progressed according to the plan.

Vaisala announced on August 31, 2011 that it combines its Meteorology and Weather Critical Operations business areas into one Weather business area from the fourth quarter 2011 onwards.

Our Service business grew by 21% year-on-year amounting to 15% of our total revenues and increasing the share of recurring revenue.
 
During the year our R&D spending returned to a level of 10% after two years of higher level spending needed to speed up renewal of our offering. Yet a total of 39 new product launches was achieved.
 
Our opening backlog for 2012 is strong resulting from the increased order intake during second half of 2011. Also our financial position as well as our position in main business areas is strong. Due to the still ongoing global financial crisis the market is, however, not expected to grow.


Market situation, net sales and order book

Uncertainty in the global economy is expected to affect Vaisala's business. In the challenging economic situation Vaisala has nevertheless been able to retain its market shares.

Order intake was strong throughout the second half of 2011 and the year was finished with a 4% higher order book than at the end of 2010. The total value of the order book was EUR 134.3 (129.0) million at the end of December. Of the order book, approximately EUR 13 million will be delivered in 2013 or later.

Orders received decreased by 3% year-on-year and totaled EUR 278.8 (286.7) million.

Vaisala Group’s net sales grew by 8% year-on-year and totaled EUR 273.6 (253.2/2010; 231.8/2009) million. Net sales growth came both from Controlled Environment which grew by EUR 8.3 million and from Weather, which grew by EUR 12.0 million. At comparable exchange rates, Vaisala Group's net sales would have grown by 10%.

The organic growth of net sales was 8%. The comparable 2010 proforma net sales including Veriteq acquisition were EUR 254.6 million.

Net sales of Weather grew by 6% and Controlled Environment by 13% (organic growth of combined Vaisala Controlled Environment and Veriteq was 11%).

Operations outside Finland accounted for 98% (97) of net sales.

Net sales in euros increased by 10% in Americas, totaling EUR 110.2 (100.0/2010; 94.3/2009) million. Organic growth in Americas of combined Vaisala, and Veriteq was 9%. Net sales decreased by 2% in the EMEA region to EUR 90.7 (92.4/2010; 84.9/2009) million and increased in the APAC region by 20% to EUR 72.7 (60.8/2010; 52.6/2009) million.


 
Performance and balance sheet

Operating profit for the financial year was EUR 16.1 (11.8/2010; 12.0/2009) million or 5.9% of net sales. Profit before taxes was EUR 16.1 (14.0/2010; 10.1/2009) million or 5.9% of net sales, up by 15%. Net profit for the financial year was EUR 10.4 (10.2/2010; 6.9/2009) million or 3.8% of net sales and increasing 2% from previous year. Earnings per share for the financial year was EUR 0.57 (0.56/2010; 0.38/2009) and increased 2% from 2010.
 
Vaisala Group’s solvency ratio and liquidity remained strong. On December 31, 2011, the balance sheet total was EUR 250.8 (248.7/2010; 231.4/2009) million. The Group's solvency ratio at the end of the financial year was 74% (76%/2010; 81%/2009).

Vaisala Group's consolidated liquid assets totaled EUR 45.5 (35.3/2010; 50.1/2009) million.


Capital expenditure

Gross capital expenditure totaled EUR 16.7 (30.1/2010; 27.7/2009) million.

The majority of the 2011 capital expenditure is related to Helsinki factory renovation.


Weather

Vaisala announced on August 31, 2011 that it combines its Meteorology and Weather Critical Operations business areas into one Weather business area starting October 1, 2011. Results for the Weather business area have been calculated from previous reported numbers by combining the results of the previous Meteorology and Weather Critical Operations business areas.

Net sales of Weather increased by 6% year-on-year to EUR 201.8 (189.8/2010; 182.6/2009) million. At comparable exchange rates, the net sales would have increased by 8%. Business growth was coming mainly from sales to airports customers.

Operating profit for financial year 2011 was EUR 5.9 (3.8/2010; 8.9/2009) million. The positive development was a result of fixed cost reductions of EUR 5.6 million or 6% from previous year’s level. R&D costs reduced by as much as 12% year-on year and R&D costs were 11.0% of net sales (13.3%).

The value of orders received for Weather was EUR 209.1 (220.4) million and the order book stood at EUR 130.3 million at the end of 2011.


Controlled Environment

Net sales of Controlled Environment grew by 13% year-on-year to EUR 71.7 (63.4/2010; 49.2/2009) million. In comparable exchange rates, the net sales would have grown by 14%. The organic growth of combined Vaisala Controlled Environment and Veriteq was 11%. The comparable 2010 pro forma net sales including Veriteq acquisition were EUR 64.8 million. The organic growth at comparable exchange rates would have been 12%. Strongest growth was seen in Europe 18%, China 16% and USA 12%.

Operating profit for 2011 was EUR 10.5 (8.9/2010; 3.4/2009) million. Operating profit increased by 18% despite the continued growth investments in Life Science related sales and marketing. Additionally Vaisala's and Veriteq's sales organizations were combined to achieve desired cross-selling synergies.

Strong demand for the whole offering continued throughout 2011. The value of orders received for Controlled Environment was EUR 69.7 (66.3) million and the order book stood at EUR 4.0 million at the end of 2011.


Product Launches

In total, Vaisala launched 39 products in 2011 of which 28 in Weather and 11 in Controlled Environment. The most significant product launches were:

First quarter: Vaisala Automatic Weather Station AWS330, a WMO compliant off-the-shelf automatic weather station for professional meteorology; updates to for the Vaisala Road Weather Navigator; the IRIS Weather radar software release 8.12.8; the HMP110T, temperature probe; the Vaisala Dropsonde RD94 for deployment from a variety of aircraft and the related AVAPS II upgrade packages; the Vaisala Differential Pressure Transmitters PDT101 and PDT102 that are designed especially for demanding cleanroom applications to measure very low differential pressures; and the Vaisala HUMICAP® Dewpoint Transmitter for refrigerant dryers.

Second quarter: Vaisala Thunderstorm Total Lightning Sensor TLS200, with improved quality, easier maintenance and serviceability and overall improved operator interface; the Vaisala Wind Measurement System WTS specifically engineered for wind resource assessment, power curve measurement and monitoring operational wind farms; the Vaisala Veriteq Continuous Monitoring System viewLinc 3.6, the latest iteration of the viewLinc software gives customers the ability to directly integrate their monitoring devices with Vaisala’s continuous monitoring system; the Vaisala Single Polarization Doppler Weather Radar WRK100 and the Vaisala Dual Polarization Doppler Weather Radar WRK200, both equipped with klystron radar technology; and MODBUS communication protocol features for the HMT330 series transmitters.

Third quarter: Vaisala INTERCAP® Humidity and Temperature Transmitters HMD42/53 for humidity and temperature measurement in heating and ventilation ducts; Vaisala Mobile Ceilometer CL31M which is based on the CL31 Ceilometer platform and utilizes single-lens technology; Software Release for DSC111 remote road surface state sensor; Vaisala Dewpoint and Pressure Transmitter DPT146 for compressed air, the first transmitter on the market that monitors two of the most important measurements in compressed air: dewpoint and process pressure.

Fourth quarter: Vaisala Multi-parameter Transmitter DPT145 for SF6 Gas for online monitoring of SF6 (sulfur hexafluoride) insulation condition in high voltage equipment; new software release for Road Weather Advisor, RoadDSS Observer and RoadDSS Navigator; Vaisala Veriteq 1200 Series Data Logger, a replacement and upgrade to the 1000-LT series of Logger; Vaisala MARWIN MW32 Software Version 1.1.6; Vaisala Thunderstorm Total Lightning Database TLD100 and TLD200 based on a Linux operating system and PostgreSQL relational database; Vaisala Fault Analysis and Lightning Location System FALLS® 5.1 and FALLS® Server 5.1, a client application that allows you to query previously recorded lightning information in a GIS (geographic information systems) environment. FALLS Server is the lightning data management processor module that receives and stores real-time lightning data from the Vaisala Thunderstorm central processor. 


 
Other functions

Research and development

Expenditure in research and development totaled EUR 28.0 (31.4/2010; 28.4/2009) million. The share of research and development expenses of the Group's net sales reduced to 10% from previous year’s 12%.

One off costs of EUR 1.5 million relating to the consolidation of R&D activities were booked in the fourth quarter.

Services

Vaisala's service business is reported as part of Weather and Controlled Environment. Services sales grew by 21% during 2011 and totaled EUR 40.8 (33.8/2010; 28.1/2009) million.

Growth in the Services business came mainly from the roads, airports and industrial customers.


Personnel

The average number of people employed in the Vaisala Group in the financial year was 1 386 (1 408/2010; 1 302/2009). The number of employees at the end of the financial year was 1 394 people. 44% (43/2010; 44/2009) of the personnel was based outside Finland. R&D headcount was 248 (286/ 2010; 266/2009) in average during 2011 and 18% (20/2010; 20/2009) of the employees worked in R&D.

Salaries paid by the company are based on local collective and individual agreements, individual performance and the demand level of each job. The base salaries are supplemented by results-based bonus systems, which cover all Vaisala personnel. The total sum of salaries and bonuses paid in 2011 was EUR 63.9 (68.8/2010; 63.3/2009) million.

Vaisala has two types of incentive plans; one based on the development of operative cash flow and profitability covering all employees, and the other, three-year plan, based on the development of profitability and covering key personnel.

Changes in the company's management

Hannu Katajamäki was appointed Executive Vice President, Vaisala Services and a member of Vaisala's Business and Strategic Management Groups starting April 1, 2011. Scott Sternberg, the former head of Vaisala Services, continues as President, Vaisala Inc and remains a member of Vaisala's Strategic Management Group.

Vesa Pylvänäinen was appointed Executive Vice President, Vaisala Operations and a member of Vaisala's Business and Strategic Management Groups. He started in his new position on May 9, 2011.

Kaarina Muurinen was appointed Vaisala's Chief Financial Officer and a member of Vaisala's Business and Strategic Management Groups. She started in her new position on September 19, 2011. Jouni Lintunen, the former CFO, has taken on new responsibilities within Vaisala.

Riina Kirmanen, Director of Marketing, was appointed a member of Vaisala's Strategic Management Group starting October 1, 2011.

Kai Konola, the head of former Weather Critical Operations Business Area, was appointed Executive Vice President, Weather Business Area and a member of Vaisala's Business and Strategic Management Groups starting October 1, 2011 after the Meteorology and Weather Critical Operations business areas were combined. Martti Husu, head of former Meteorology Business Area, took on a new position in Vaisala.

Risk management

Organization of risk management

Vaisala has a risk management policy that has been approved by the Board of Directors and that covers the company's business, operational, hazard and financing risks. Vaisala’s strategic management group regularly assesses risk management policy, and the scope, adequacy and focus areas of related practices. The policy aims at ensuring the safety of the company's personnel, operations and products as well as the continuity of operations. The policy also covers intellectual capital, corporate image and brand protection.

Risk management is integrated into business processes and operations and each employee’s daily work. This is accomplished by the risk management process that was approved by Vaisala's strategic management group in 2010. The deployment of the risk management process has continued in 2011 and now covers half of the businesses and functions.

The risk management process is a continuous tool for risk identification and management. The purpose of the process is to support the company’s strategy and planning process and to provide more information, supporting better decision making.

Vaisala’s risk management process consists of risk identification, risk assessment, risk management actions, follow-up and risk reporting. Risks are reported to the strategic management group quarterly. The most significant risks are reported to the board annually and whenever considered necessary.
Risk management in Vaisala is not a separate process, but it operates as part of the company’s operating calendar. 

More detailed operational instructions are defined by the strategic management group. These include approval, bidding and procurement authorizations and terms of payments.

Usual risks related to international business affect Vaisala’s operating environment. The most significant of these are risks relating to changes in the global economy, currency exchange rates (with particular respect to the U.S. dollar), supply network management and production activities. Vaisala monitors these risks and prepares for them in accordance with the company's risk management policy. In addition Vaisala is exposed to changes in global trade, technology or in political and economic environments and natural disasters. These may affect Vaisala's business in terms of for example component availability, order cancellations, logistics and loss in market potential.

Group-level insurance programs have been established to deal with manageable operational risks. These programs cover risks relating to property damage, business interruption, different liabilities, transport and business travel. Vaisala's ability to tolerate risks is good and the company has a strong capital structure, ensuring capital adequacy.


Near-term risks and uncertainties

The most significant near term risks and uncertainties are estimated to relate to the company's ability to maintain its delivery capability, availability of critical components, changes in the global economy, shifts of currency exchange rates, interruptions in manufacturing, customers' financing capability, changes in purchasing or investment behavior, and delays or cancellations of orders and deliveries. The changes in the competitive landscape may affect the volume and profitability of the business by introducing new competitors and price erosion in areas that traditionally have been strong for the company, which may constitute risks for both the net sales and profit.

Market development and the realization of projects in the industrial business affect the net sales and operating result. The company has additionally expanded its project activities into emerging markets where the profitability of the projects is lower than normally, due to the market-making nature of the business. The share of project business out of the total business volume is also growing.  Should the assumptions regarding the profitability and new business opportunities in the project business prove wrong, this may constitute risks for Vaisala's net sales and profit.

Changes in subcontractor relations, their operations or operating environment may have a negative impact on Vaisala's business. Vaisala monitors these risks and prepares for them in accordance with the company's risk management policy.

Vaisala is currently implementing significant development projects, which are building the foundation for a successful execution of Vaisala's strategy. A new Group-wide ERP system is in the implementation phase.

Vaisala has made acquisitions and their impact on net sales and operating result depends essentially on the success of integration activities. In case the assumptions about achievable synergies prove incorrect or the integration fails, these constitute a short-term risk regarding Vaisala's net sales and result.


Interest rate risk

The company has no significant interest-bearing liabilities or receivables. Interest rate risk arises from the effects of interest rate changes on interest-bearing receivables and liabilities in different currencies. According to the company’s management, the interest rate risk is currently immaterial if the interest rate changes. Interest rate changes affect the fair value of both cash flows and investments. A change of one percent point in the interest rate would affect the company’s result after taxes by around EUR 73 (EUR 56) thousand, calculated on an approximate cash position of EUR 9.9 (EUR 7.5) million. Further information on interest-bearing receivables is given in Note 21.

Market risk on investment activity

At the end of 2011 there were no significant investments. Further information on assets recognized at fair value through profit and loss is given in Note 20.

Currency risk

The international nature of operations exposes the Group to risks that arise when investments in different currencies are converted into the parent company’s functional currency. The most significant currencies for the Group are the US dollar, the Japanese yen and the British pound. The Group has many investments in its foreign subsidiaries, whose net assets are exposed to currency risks. The Group does not hedge the currency risks related to its subsidiaries' net assets. The separate table features a sensitivity analysis on how changes in the rates of the most important currencies for the Group and in the euro, both in terms of average rate and balance sheet day rate, would affect the consolidated profit after taxes. The sensitivity analysis calculation does not incorporate the effects of parent company purchases in other currencies during the financial year. 


2011   Effect on result after taxes EUR thousand
USD/EUR Exchange rate rise 10% 759.7
 Exchange rate fall  10% -744.7
   
JPY/EUR Exchange rate rise 10% 58.9
 Exchange rate fall  10% -48.2
   
GBP/EUR Exchange rate rise 10% 167.5
 Exchange rate fall  10% -155.6
   
2010   
USD/EUR Exchange rate rise 10% 699.0
 Exchange rate fall  10% -779.0
   
JPY/EUR Exchange rate rise 10% 97.7
 Exchange rate fall  10% -79.9
   
GBP/EUR Exchange rate rise 10% 333.1
 Exchange rate fall  10% -309.4



The Group recognizes monetary items at net in accounting and hedges them with currency forwards to which the Group does not apply hedge accounting in accordance with IAS 39. Around 42% of the Group’s net sales arises in US dollars, 6% in Japanese yens and 3% in British pounds. A significant proportion of Group purchases take place in euros. Currency forwards are used to hedge the net position arising from these. The degree of hedging is around 50 per cent of the order book and trade receivables. The degree of hedging at the end of the financial year was 55%. Hedging is arranged by the parent company (Note 11. Financial income and expenses).

Liquidity risk
The main principles of the liquid assets’ investment policy in the order of their priority are a) minimizing credit loss risks, b) ensuring liquidity, and c) maximizing return on investment. The maximum term of investment is 12 months.

The Group aims to continuously assess and observe the level of funding required to finance the business to ensure that the Group has sufficient liquid assets for financing its operations. Group financing is arranged through the parent company, and the financing of the subsidiaries is arranged through internal loans. The parent company also provides the subsidiaries with the necessary credit limit guarantees. The parent company assumes responsibility for financial risk management and for investing surplus liquidity. To fulfill the liquidity need, the parent company has EUR 20 million credit loan limit, which is currently unused. Additionally, the subsidiaries have EUR 1.5 million credit loan limit, currently unused. The company has no other external financial liabilities other than those related to finance leasing (Note 24. Interest-bearing liabilities).

With the company's current balance sheet structure, liquidity risks are immaterial.

 
Counterparty risk
Liquid assets are directed, within set limits, to investments whose creditworthiness is good. The investments and investment limits are redefined annually. Further information on the classification of investments is given in Note 21. Cash and cash equivalents.

Credit risk
The Group applies a stringent credit issuance policy. Credit risks are hedged by using letters of credit, advance payments and bank guarantees as terms of payment. According to Group management, the company has no material credit risk concentrations, because no individual customer or customer group represents an excessive risk, resulting from global diversification of the company's customer pool. Total credit losses arising from accounts receivable and recognized for the financial year amounted to EUR 0.7 million (0.5), and the total net credit loss for the financial year was EUR 0.7 million (0.5). The maximum amount of the Group’s credit risk corresponds with the carrying amount of financial assets at the end of the financial year. The periodic distribution of accounts receivable items is presented in Note 20 in the Notes to the Financial Statements.

Management of capital assets
Management of the Group’s capital assets aims at ensuring normal company operation and increasing shareholder value with an optimum capital structure. The goal is to attain the best possible returns over the long term.  An optimum capital structure also ensures lower capital costs. Capital structure can be affected through dividend distribution and share repurchases or emission, for example. The Group can alter or adjust the amount of dividend payable to shareholders, the amount of capital returned to them or the number of new shares issued. The company has no significant financial liabilities. The shareholders’ equity indicated in the consolidated balance sheet represents the capital assets managed. The company has no interest-bearing debt nor issued covenants.

Internal Control

Vaisala aims to be a good corporate citizen, and an appropriate level of documented internal control policies supports this. According to the Finnish Corporate Governance Code, the purpose of internal control is to ensure the effective and profitable operations of the company, reliable information and compliance with the relevant regulations and operating principles. Internal control aims to improve the efficient fulfillment of the Board’s supervision obligation.

Internal control is a process carried out by the Board of Directors, operative management and other employees within Vaisala. It is designed to provide reasonable assurance that the operations are effective, efficient and aligned with strategy, financial reporting and management information is reliable, complete and timely, and the Group is in compliance with applicable laws and regulations as well as Vaisala internal policies and ethical values, including sustainability.

The Vaisala internal control framework consists of:
- Internal control, risk management and corporate governance policies and principles set by the Board of Directors,
- Management overseeing the implementation and application of the policies and principles
- Finance department and business controllers monitoring the efficiency and effectiveness of the operations and reliability of the financial and management reporting
- Enterprise risk management process identifying, assessing and mitigating risks threatening the realization of Vaisala’s objectives
- Compliance procedures making sure that all applicable laws, regulations, internal policies and ethical values, including sustainability, are adhered to
- Effective control environment at all organizational levels including control activities tailored for each process and creating group minimum requirements for business and geographical areas
- Shared ethical values and internal control culture among all employees
- Internal audit assignments reviewing the effectiveness of the internal controls as needed.

Internal Control roles and responsibilities

Board of directors
- Is ultimately responsible for the administration and the proper organization of the operations of the company
- Ensures that the company has duly endorsed the corporate values applied to its operations
- Approves the internal control, risk management and corporate governance policies
- The Board of Directors or the President and CEO can assign Vaisala’s external auditors or other external service provider to perform internal audit assignments as needed.

President and CEO
- Is in charge of the day-to-day management of the company in accordance with the instructions and orders given by the Board
- Sets the ground of the internal control environment by providing leadership and direction to senior managers and reviewing the way they are controlling the business
- Ensures that the accounting practices of the company comply with the law and that the financial matters are handled in a reliable manner.
   
Management Group
- Senior managers assign responsibility for establishment of more specific internal control policies and procedures to personnel responsible for the unit's functions. Of particular significance are financial officers and their staffs, whose control activities cut across, as well as up and down, the operating and other units of the group.

Finance and control function
- Helps units and functions to set up adequate control activities
- Together with risk management director, facilitates the enterprise risk management process and reporting its results to the management
- Operatively follows-up the adequacy and effectiveness of control activities.

Internal audit assignments
- Examines and evaluates the adequacy and effectiveness of the organization's governance, risk management process, system of internal control structure, and the quality of performance in carrying out assigned responsibilities to achieve the organization's stated goals and objectives.

General Counsel, business area and corporate function directors
- Are responsible for making sure that all functions and employees in their responsibility areas adhere to applicable laws, regulations and internal policies.


Vaisala's shares

At the end of 2011, the Group’s Board of Directors had no authorizations for increasing the share capital, granting special rights, or issuing stock option rights.

On December 31, 2010, the price of Vaisala’s A share in the NASDAQ OMX Helsinki Oy was EUR 20.50, and at the end of 2011, the share price was EUR 16.40. The highest quotation during 2011 was EUR 24.80 and the lowest EUR 15.56. The number of shares traded in the stock exchange during 2011 was 878,205.

On December 31, 2011, Vaisala had 18,218,364 shares, of which 3,389,351 are series K shares and 14,829,013 are series A shares of which 9,150 are held by the company. The shares have no counter book value. The K shares and A shares are differentiated by the fact that each K share entitles its owner to 20 votes at a General Meeting of Shareholders while each A share entitles its owner to 1 vote. The A shares represent 81.4% of the total number of shares and 17.9% of the total votes. The K shares represent 18.6% of the total number of shares and 82.1% of the total votes.

The market value of Vaisala’s A shares on December 31, 2011 was EUR 243.0 million, excluding the company’s own shares. Valuing the K shares - which are not traded on the stock market - at the rate of the A share’s closing price on the final day of the financial year, the total year-end market value of all the A and K shares together was EUR 298.6 million, excluding the company’s own shares.
 
Vaisala’s main shareholders are listed on the Group website and in the Notes to the Financial Statements. 

The shares give equal rights to dividends. According to the company's Articles of Association, the maximum number of shares is 68,490,017 and Vaisala Group’s maximum share capital is EUR 28.8 million. All issued shares have been fully paid for. The shares have no consent or redemption clauses attached to them.

According to the Articles of Association, a K share can be converted into an A share in the manner specified in the Articles.

The number of shares held and controlled by Vaisala Corporation's Board of Directors on December 31, 2011 was 1,320,969; accounting for 14.7% of the total votes (2010: 1,312,249 shares and 14.6% of the total votes). The company's President and CEO owned 2,720 shares.


Conversion of unlisted series K shares into series A

Vaisala Corporation´s 333 unlisted shares (series K) have been converted into listed shares (series A). The conversion has been registered in the Finnish Trade Register on December 22, 2011. Listing of the new series A shares was applied for as of December 23, 2011.


Treasury shares and parent company shares

At the end of the financial year, the company held a total of 9,150 Vaisala A shares, which represented 0.05% of the share capital and 0.01% of the votes. The consideration paid for these shares was EUR 251,898.31.


Board of Directors

Members of the Board
In accordance with Vaisala Corporation’s Articles of Association, the company’s Board of Directors comprises at least four (4) and at most eight (8) members. According to current practice, the Board comprises seven members. All Board members are appointed by a General Meeting of Shareholders. The Board elects a Chairman and a Vice Chairman from among its members.

Term of office of members of the Board
In deviation from recommendation no. 10 of the Finnish Corporate Governance Code, the term of office of members of the Board is not one year. Instead, the term of office is 3 years, as stipulated in the Articles of Association. The term of office begins after the General Meeting of Shareholders at which the member is elected, and ends at the close of the third Annual General Meeting that follows the member’s election.

Independence of the Board members
Evaluated against the criteria given in Recommendation 15, all seven members of the Board of Directors are independent of the company. Evaluated against the criteria given in Recommendation 15, Yrjö Neuvo, Stig Gustavson, Mikko Niinivaara, Timo Lappalainen and Maija Torkko are independent of both the company and the shareholders. Evaluated against the criteria given in Recommendation 15 Raimo Voipio and Mikko Voipio are dependent on significant shareholders. The current composition of the Board of Directors fulfills the independence requirements stated in the Recommendation 14.

President and CEO
Vaisala’s President and CEO is appointed by the Board. The President and CEO manages the company in accordance with the instructions and orders given by the Board, and informs the Board of the development of the company’s business and financial situation. The President and CEO is also responsible for arranging the company’s operative management.


Related party transactions

Vaisala Group's related parties include subsidiaries, associated companies, members of the Board of Directors, and the President and CEO. Transactions with related parties are based on market prices and conditions.

No loans were granted to the related parties, and no contingent liabilities were made on their behalf.


Group structure

The company has subsidiaries in Australia, Canada, China, Germany, France, Japan, Malaysia, United Kingdom and United States and regional offices in India, Canada, China, Korea and the United Arab Emirates.

The addresses and contact details of Vaisala offices are available on the company's website.


Environment

Vaisala has signed a voluntary energy efficiency agreement with the Federation of Finnish Technology Industries, aiming at energy efficiency and cost savings. As a signatory, Vaisala participates in a number of energy efficiency initiatives. Full list of all the initiatives is published on March 2012 in the company's corporate responsibility report 2011, which is available on Vaisala's website at www.vaisala.com/cr.

Vaisala's new office building in Vantaa, Finland is energy efficient and self-sufficient. Geothermal energy and solar panels are used in large scale. Electrical devices with low power consumption have been preferred. The modern building automation system has several innovative features which enable lower energy consumption and better adjustment of indoor conditions. The new head office achieved a LEED for New Construction certification at Gold level.
 
Vaisala Head Office is granted the right to use the Green Office mark issued by WWF Finland and associate itself with the Green Office Network.

 
Active involvement in the scientific community

Vaisala is involved in active discussion with different stakeholders, promoting advancement in science, particularly the development of environmental measurements. Vaisala collaborates in several projects with leading research institutes in the field, such as NOAA (the National Oceanic and Atmospheric Administration, USA), Finnish Meteorological Institute (FMI), Colorado State University, University of Massachusetts, the University of Oklahoma, the US National Center for Atmospheric Research (NCAR), Deutscher Wetterdienst, VTT (Technical Research Centre of Finland), the Aalto University, Finland and the University of Helsinki, Finland.

Vaisala’s representatives participate in the Board of the Federation of Finnish Technology Industries and in its committees, such as the Environmental Committee. Vaisala participates in the Board on Atmospheric Sciences and Climate of the National Research Council/National Academy of Sciences (USA). Vaisala also participates on the Board of Trustees of the University Corporation for Atmospheric Research, the Director’s Advisory Committee of the National Center for Atmospheric Research, and the Dean’s Advisory Board to the College of Engineering at Colorado State University and advisory committees at Howard University and the University of Arizona.

Vaisala also closely collaborates with a number of meteorological authorities around the world and takes part in the activity of the UN World Meteorological Organization (WMO). During the year, Vaisala granted research scholarships to universities, students and researchers in both the United States and Finland. Vaisala is also a partner of Cleen Oy, a strategic center for science, technology and innovation for energy and environment businesses.

Vaisala is one of the main sponsors of Science On a Sphere (SOS), which is a projection technique developed in the United States by the National Oceanic and Atmospheric Administration (NOAA). The sphere is on display at the Finnish Science Center Heureka in Vantaa.

Following a decision made at the 2011 Annual General Meeting, a donation of EUR 250,000 was granted to the University of Helsinki, Finland..


Proposals to the Annual General Meeting

Vantaa, February 8, 2012
Vaisala Corporation
Board of Directors​