DESTIA GROUP
FINANCIAL STATEMENTS 2014
CONTENTS
DESTIA GROUP FINANCIAL STATEMENTS 2014 CONTENTS Report of the Board of Directors Consolidated income statement and consolidated statement of comprehensive income (IFRS) Consolidated balance sheet (IFRS) Consolidated cash flow statement (IFRS) Consolidated statement of changes in equity
8 9 10 11
Notes to the consolidated financial statements 1 Accounting principles 2 Revenue 3 Long-term projects 4 Material and services 5 Other operating income and expenses 6 Depreciations 7 Impairments 8 Employee benefits 9 Research and development expenses 10 Financial income and expenses 11 Income taxes 12 Earning per share 13 Tangible assets 14 Goodwill 15 Impairment tests 16 Other intangible assets 17 Acquisitions from business operations 18 Available receivables and other receivables 19 Inventories 20 Accounts receivables and other receivables 21 Cash and cash equivalents 22 Deferred tax assets and liabilities 23 Equity 24 Financial liabilities 25 Accounts payable and other liabilities 26 Pension obligations 27 Provisions 28 Financial risk management 29 Other lease agreement 30 Conditional liabilities and assets 31 Insiders 32 Events after the end of the reporting period
12 12 19 19 19 19 19 20 20 20 20 21 21 22 22 23 24 24 25 25 25 26 26 27 28 29 30 32 33 35 36 36 36
Group’s key figures Parent company income statement (FAS) Parent company balance sheet (FAS) Parent company cash flow statement Notes to financial statements, Parent company (FAS) Board of Director’s proposal on the use of distributable assets Auditor’s report
37 38 39 41 42 46 47
Destia Destia Destia Destia Destia Destia Destia
2
subgroup, consolidated subgroup, consolidated subgroup, consolidated subgroup’s key figures subgroup, consolidated subgroup, consolidated subgroup, consolidated
income statement (IFRS) balance sheet (IFRS) cash flow statement (IFRS)
3
48 49 50 51 income statement, quarterly figures (IFRS) 52 balance sheet, quarterly figures (IFRS) 53 cash flow statement, guarterly figures (IFRS) 54
D E S T I A G R O U P / F I N A N C I A L S TAT E M E N T S
REPORT OF THE BOARD OF DIRECTORS
REPORT OF THE BOARD OF DIRECTORS 2014 Operating environment
The operating environment of the infrastructure field declined as economic uncertainty continued in 2014. During the first half of the year, signs of recovery were evident in the global and eurozone economy, but these signs faded in the eurozone during the summer. During the year, the infrastructure market was weakened by the decreases in house-building construction and private investments, in particular. The decisions by the Finnish government taken in June to promote significant traffic projects, such as the Helsinki City Rail Loop, the Western Metro line, and the Tampere light rail system, created a faint positive note on the market in the second quarter. Demand in the infrastructure sector remained moderate, but the slowing down of the entire construction market is evident as a low amount of work in infrastructure design, among other things. Competition for projects was fierce throughout the entire year. Despite the decline in the total market, basic demand in the infrastructure field is created by the large projects planned for the next few years in the public-sector project programme. The Confederation of Finnish Construction Industries RT (CFCI) estimates that construction contracted some 3 per cent in 2014. According to the estimate, civil engineering declined by about one per cent. RT forecasts that construction as well as civil engineering will contract by one per cent in 2015. According to the construction confidence indicators published by the Confederation of Finnish Industries EK, construction business confidence at the end of the year recovered slightly from the level of the autumn but remained rather weak, however. The Finnish construction confidence indicators were below the average of the EU countries. According to Statistics Finland, the costs of the civil engineering industry fell 1.5 per cent from December 2013 to December 2014. The annual change in costs varied by sub-index from -10.0 per cent in surfacing to 1.6 per cent in concrete structures. The decrease in the total index in December was particularly affected by the lowered prices of bitumen, fuels and energy from the corresponding time in the previous year. The lowering of costs was held back by the increase of the prices of soil and aggregates.
New group structure
On 26 May 2014, the State of Finland concluded an agreement with Ahlström Capital, the aim of which was to transfer the entire share capital of Destia Ltd to the ownership of Ahlström Capital. The Finnish Competition and Consumer Authority approved the trade of Destia Ltd shares between Ahlström Capital and the State of Finland, and Destia Ltd was transferred to Ahlström Capital’s ownership on 1 July 2014. In conjunction with the transfer of ownership, MEUR 42 was paid to the State of Finland as repayment of capital. Destia Group Oyj is Destia Ltd’s parent company, which was established in connection with the ownership arrangement of Destia and which owns 100 % of Destia Ltd’s shares. During the financial year, Destia Kalusto Oy, a subsidiary of Destia Ltd, merged with Destia Ltd, and Kaivujyrä Oy, a parent company of Destia Rail Oy, merged with Destia Rail Oy which is a part of the Destia subgroup. The mergers were implemented on 1 October 2014. The financial statement reports on the financial development of Destia Group for the second half of the year 1 July 2014–31 December 2014. Destia Group Oyj began its operations on 22 April 2014 at the time of the purchase of Destia Ltd, so comparative figures do not exist.
IFRS financial statements
The consolidated financial statements were prepared in accordance with the International Financial Reporting Standards (IFRS). Key orders received during the year, and the order book At Destia, in addition to safety, the focus of human resources development in 2014 was on customer work. Personnel training increased competence in consistent and goal-oriented customer work. Investment in customer work in a challenging market situation is evident as a better order book than in the corresponding period the previous year. The order book at the end of December was MEUR 628.2. The order book is spread over more years than last year. The most significant new contracts worth at least MEUR 1 concluded during the third and fourth quarter: • The Joensuu eastern regional contract, will be completed in September 2017 • The construction of Kantola event park in Hämeenlinna, will be completed in May 2015 • The improvement of jetties and perimeter structures at Kaupunginlahti in Uusikaupunki, will be completed in December 2015. • Construction of the Western Metro feeder connections between Espoonlahti and Matinkylä in Espoo, will be completed in July 2016 • The upgrading of main road 11435 between Vantaan- laaksontie and Lentoasemantie, will be completed in September 2015 • The construction of a pedestrian underpass and planned roads in the downhill skiing area of Saariselkä, will be completed in September 2015 • Maintenance of the street lighting network in Lahti, will be completed in April 2017 • Construction of the Mikkeli section of National Road 5, will be completed in November 2016 • Earth and road construction work for five wind farms in Tornio, will be completed in January 2015 • Construction of a connecting water pipeline between Muurame and Korpilahti in Jyväskylä, will be completed in December 2015 • Construction of the Ahonpää lineside in the Seinäjoki–Oulu rail project, to be completed in October 2015 • Excavation contract of Finnoo and Sammalvuori access tunnels in Espoo, to be completed in November 2015 • Excavation contract of Kaitaa and Soukka access tunnels in Espoo, to be completed in November 2015 • Construction of the Kettumäki overpass in Hämeenlinna, to be completed in November 2015 • Maintenance Area 11 track and safety equipment maintenance in 2015–2020 • Regional maintenance contract in Turku, in the Raunistula– Paattinen area, ends in May 2018 • To private customers: • Rock construction contract in Vantaa, to be completed in June 2015 • Rock construction contract in Hamina, to be completed in June 2015 • Underground substation distribution network cabling in Helsinki, to be completed in March 2015 • Construction of a high-capacity line and extensive line arrangements in Keminmaa, to be completed in October 2016.
Revenue development
Destia Group’s revenue for the financial year was MEUR 261.8. In the financial year, other operating income amounted to MEUR 1.7. This mainly includes sales income from fixed assets and rental profit from property. Result development
D E S T I A G R O U P / F I N A N C I A L S TAT E M E N T S
3
REPORT OF THE BOARD OF DIRECTORS RESULT DEVELOPMENT
Destia Group 7–12/2014
Group’s key figures (IFRS), MEUR
261.8
Revenue
12.5
Operating result % of revenue
4.8
Result for the period
5.5
% of revenue
2.1
Return on investment, %
9.2 29.4
Equity ratio, %
42.4
Net gearing, %
1,502
Average personnel
9.3
Occupational accidents resulting in absence from work *) Comparable order book at the end of period
628.2
*) Occupational accidents of Destia´s own personnel per one million working hours
Destia Group’s operating profit for the financial year was MEUR 12.5. Destia Group’s result for the financial year was MEUR 5.5. The operating profit for the financial year was encumbered by the MEUR 2.2 costs, and the result for the financial year was encumbered by the MEUR 4.7 costs, which relate to the acquisition and financial arrangements of Destia’s shares. Income taxes in the financial year totalled MEUR 1.9.
Balance sheet, cash flow and financing
At the end of the financial year, the total assets on Destia Group’s balance sheet stood at MEUR 264.6. Return on investment was 9.2 per cent, equity ratio 29.4 per cent, and gearing 42.4 per cent. Destia has invested in managing its working capital in a determined fashion. As a result of this, cash flow has developed positively. The cash flow for the financial year comprised operating cash flow of MEUR 18.0, investment cash flow of MEUR -90.2 and financing cash flow of MEUR 109.9 At the beginning of July, Destia Ltd took out a MEUR 9 short-term loan, all of which was amortised in October. Destia Group’s financial position remained satisfactory after the repayment of capital to the State of Finland. The Group’s Commercial Paper programme of MEUR 150 was not used in the reference period. For working capital financing needs, a shortterm MEUR 30.0 financing limit was negotiated in connection with Destia Ltd’s share transaction. At the end of the reference period, MEUR 19 credit limits as well as the remaining MEUR 11 financing limit remained unused. A business mortgage of MEUR 39 was provided to Destia Ltd’s financiers as a security for the financing package. Destia Group Oyj’s equity includes not only the MEUR 38 invested unrestricted equity fund but also a total of MEUR 29 of equity instruments. Destia Group Oyj issued a MEUR 65 bond as part of the financing of the Destia transaction. This loan is unsecured and will mature in full in June 2019. The loan coupon has a variable interest rate based on the three-month Euribor rate, and the loan margin is 4.5 %. The loan will be listed on the Helsinki Stock Exchange by June 2015. It is hedged by means of an interest rate swap up to the time of its maturity.
4
At the end of the financial year, Destia Group’s liabilities stood at MEUR 66.8. Of all Destia Group’s loans, 0.3 per cent were shortterm and 97.7 per cent long-term. The Group’s interest-bearing net liabilities at the end of the financial year were MEUR 29.1. Bisnode Finland Oy granted an AAA credit rating to Destia Ltd on 9 July 2014. The rating is the highest on the seven-tier scale. Only 2.6 % of all Finnish companies belong to the same credit category.
Shares and share capital
The registered share capital of Destia Group Oyj is EUR 80,000 and its total number of shares is 80,000. The company is 100 % owned by AC Infra Oy, which is part of the Ahlström Capital Group. The registered share capital of Destia Ltd is MEUR 17.0, and its total number of shares is 680,000. The shares of the company were 100 % transferred to the ownership of Destia Group Oyj in the share transaction between Ahlström Capital and the State of Finland on 1 July.
Investments and divestments
In the financial year, Destia Group’s gross investments were MEUR 72.5, which amounted to 27.7 per cent of revenue. The investments were the acquisition of the whole share capital of Destia Ltd and Group fleet investments.
Personnel
Destia’s number of personnel during the financial year was 1,502. At the end of December, the number of personnel was 1,429, 1,354 of whom were permanent staff and 75 temporary employees. Due to the seasonality of the business, the number of personnel varies during the year, peaking in the summer. New collective agreements for infrastructure industry employees and salaried personnel were signed on 27 February 2014. Both agreements are valid from 1 April 2014, and the contractual period for both agreements consists of two contractual periods: 1 April 2014–31 January 2016 and 1 February 2016–31 January 2017. In 2014, on the basis of the cooperation negotiations held in the business units to reduce the number of personnel, the employment of a total of 38 persons was ended and 63 persons were laid off for 87 months. On 19 December 2013, Destia Ltd’s Board of Directors decided on the structure and principle of a bonus scheme for 2014 covering all personnel. The bonus system forms part of the overall staff reward scheme. The bonus scheme brings a supportive, in-house co-operation and strategy-enhancing control and reward element to compensation. The scheme will support and develop the company’s profitability and operating conditions. The target group for the new bonus scheme is comprised of four different personnel groups: 1) personnel working on Destia projects; 2) Project Managers; and 3) President and CEO, Senior Vice Presidents and other support function personnel and business unit support personnel, and 4) Executive Vice Presidents. On 30 October 2014, Destia Group Oyj’s Board of Directors decided to end the previous management long-term incentive schemes and adopt a new long-term incentive scheme for 2014−2018. The purpose of the scheme is to commit certain key persons to the company and offer them a competitive reward scheme. The Board of Directors decides on the long-term incentive scheme and the persons covered by it. The scheme covers some 75 persons. The earnings period is 2014–2018, and the earnings criterion is the value increase of the company. The criteria for the long-term incentive scheme are the same for all people belonging to the scheme. These criteria apply to the whole Group and differ from the bonus scheme criteria. Remuneration accumulated in the earnings period will be paid in cash no later than in 2019.
D E S T I A G R O U P / F I N A N C I A L S TAT E M E N T S
REPORT OF THE BOARD OF DIRECTORS In 2014, staff costs were MEUR 46.9, 17.9 per cent of revenue. Staff costs include MEUR 6.0 in performance and incentive bonuses for all personnel. In the reference period, Destia carried out the 2014 personnel survey, for which the response rate was 78 per cent (76). The results of the survey continued to show positive development and are on a good level. No significant differences between units were evident in the survey. Human resources development was Destia’s strategic area of focus in 2014. Determined investment in occupational safety was evident in a positive improvement in accident frequency which, at the end of the year, was at a record low of 9.3 (10.8) accidents per one million working hours. Goal-oriented customer work was supported with the Voitto training events, in which some 520 Destia employees participated during the year.
Organisational structure and management
In 2014, Destia’s operations divided into four regional and two national business units. Infrastructure construction and maintenance was offered by the regional business units: Southern Finland, Western Finland, Eastern Finland and Northern Finland. Their business included the construction and maintenance of traffic routes, industrial and traffic environments and the complete living environment, as well as the services of the winter maintenance management centre, Kelikeskus. The national Special Construction business unit was responsible for railway construction and railway infrastructure maintenance, rock and mining construction and aggregates services. Destia’s other national business unit, Consulting Services, took care of design, surveying and international consultancy. The following support functions support the business units: Finance, Legal Services, Human Resources, Communications, and Processes. In 2014, Destia’s Management Team comprised President and CEO Hannu Leinonen, CFO Pirkko Salminen, and Executive Vice Presidents Minna Heinonen, Pasi Kailasalo, Jouni Karjalainen, Jukka Raudasoja, Marko Vasenius and Seppo Ylitapio, and personnel representative Jouko Korhonen. In addition to the persons mentioned above, the Extended Management Team also includes Senior Vice Presidents Laura Ahokas, Miia Apukka, Aki Markkola and Tom Schmidt. In September 2014, the decision was made to condense the Destia organisation from 1 January 2015. The Railways, Rock, Aggregates and Fleet business units that belonged to Special Construction were transferred to the regional business units. As a result of this, at the beginning of 2015 Destia’s organisation comprises four regional business units, Southern Finland, Western Finland, Eastern Finland and Northern Finland, as well as Consulting Services and support functions. At the beginning of 2015, Minna Heinonen, Executive Vice President of the Special Construction business unit, took charge of Destia’s Southern Finland business unit. Jouni Karjalainen, Executive Vice President of the Southern Finland business unit, was appointed Executive Vice President, Large Project, Sales and Project Development as of the start of 2015. This position was established to strengthen Destia’s grip on future large projects. The organisation of the Processes support function was updated as of 1 January 2015 to realise the objectives of Destia’s growth strategy and to improve competitiveness. At the same time, the name of the Processes unit was changed to Business Development and Operational Excellence. Heidi Erha was appointed to lead the unit. Tom Schmidt focuses on taking care of the preparation of the E18 Hamina−Vaalimaa PPP project.
As of 1 January 2015, Destia’s Management Team comprises President and CEO Hannu Leinonen, CFO Pirkko Salminen, Director Jouni Karjalainen, and Executive Vice Presidents Minna Heinonen, Pasi Kailasalo, Jukka Raudasoja, Marko Vasenius and Seppo Ylitapio, and personnel representative Jouko Korhonen. General Counsel Aki Markkola serves as Secretary of the Management Team.
Decisions of Annual General Meetings
For the Destia transaction, AC Alpha Oyj was founded on 22 April 2014, whose Chairman of the Board of Directors was Panu Routila, with Board members consisting of being Jacob af Forselles, Sebastian Burmeister and Ulla Palmunen. After the realisation of the acquisition, the name of the company was changed to Destia Group Oyj, which owns 100 % of Destia Ltd’s shares. On 1 July 2014, Ahström Capital Oy President and CEO Panu Routila was elected Chairman of the Board of Directors of Destia Group Oyj and Destia Ltd, and Ahlström Capital Oy Investment Director Jacob af Forselles, Permanent Secretary to the Ministry of Defence Arto Räty and Matti Mantere and Solveig Törnroos- Huhtamäki were elected members of the Board. It was decided to maintain the remuneration paid to the members of the Board unchanged. However, remuneration will not be paid to the representatives of the company’s parent company shareholders serving as members of the Board of Directors. At its organising meeting, the Board of Directors elected Arto Räty Vice Chairman. Two committees were appointed to support the work of the Board of Directors: a Nomination and Remuneration Committee and an Audit Committee. Panu Routila was elected Chairman and Matti Mantere and Arto Räty the members of the Nomination and Remuneration Committee. Solveig Törnroos-Huhtamäki was elected Chairperson of the Audit Committee, and Jacob af Forselles and Arto Räty members. At the end of the year, in addition to the permanent committees an assisting committee, which assists the Board of Directors and management in certain business projects, was founded. Of the members of the Board of Directors, Matti Mantere and Arto Räty are members of the assisting committee. In addition, an external advisor participates in committee meetings, when necessary. At the beginning of December, administration was streamlined by focusing the Group’s board work as well as the committees to Destia Group Oyj level. In the same connection, Hannu Leinonen was elected Chairman of the Board of Directors of Destia Ltd and Aki Markkola and Pirkko Salminen members of the Board. No remuneration is paid to the members of the Board of Directors of Destia Ltd. Ernst & Young Oy has served as Destia Group Oyj’s auditor in the 2014 financial year. APA Kristina Sandin served as the auditor with principal responsibility.
Litigation and disputes
In November 2012, Destia submitted to the authorities an investigation request regarding the sale of surplus and demolition material for personal benefit at one of its railway sites. In August 2014, Helsinki District Court sentenced three persons to imprisonment, which was suspended, and one person to a fine. The court ruled that the value of the property misappropriated from Destia and the Finnish Transport Agency, totalling €163,500, must be repaid as requested. The decision of the district court has been appealed. None of the convicted people work for Destia anymore. In January 2013, the environmental authority made a request to investigate Destia’s Harjula soil area at Mäntsälä. In summer 2012, on its own initiative Destia informed the environmental authority that soil had by mistake been taken from outside the extraction area covered by the valid permit, but from property owned by the company. Destia continues to investigate the matter in co-operation with the environmental authority.
D E S T I A G R O U P / F I N A N C I A L S TAT E M E N T S
5
REPORT OF THE BOARD OF DIRECTORS In a decision given by the Helsinki District Court on 31 May 2013, Destia has won its civil case in which Telasteel Oy demanded about MEUR 1 in compensation from Destia. The dispute concerned a contract in which Telasteel was a subcontractor for Destia. Telasteel has appealed the decision at the Court of Appeal. The Court of Appeal gave a decision on the matter after the financial year ended (see Events following the financial year).
Short-term risks and uncertainties
Destia classifies risks as market and operating environment risks, operational risks, financial risks and damage risks. Of the market and operating environment risks, fluctuation in the economy and uncertainty in the market situation are particularly causing a significant risk for Destia’s business. Both public and private sector investments in infrastructure construction are decreasing, which is reflected in the competitive situation in the industry. The competitive situation in Destia’s core business areas continues to be fierce. Success in tendering for regional main road maintenance contracts as well as large contracts is of paramount importance. The fluctuation in the price of oil-based commodities causes uncertainty with regard to the profitability of the company. The risk is being prevented by monitoring and assessing the commodity price development, by ensuring key procurements economically from a project perspective, and by hedging the price risks using derivative instruments. In the management of risks caused by the operating environment, it is essential to focus on the selected business areas, and to ensure the operational cost-efficiency, solidity, as well as readiness to react in varying situations. The most significant operational risks concern project management and profitability. Uncertainty is being created by the potential fluctuation of input prices and the ability to manage project risks. The key factors in project management are an efficient process from tender calculation to implementation, cost monitoring, ensuring resources and developing project management expertise. Destia has invested in the reliable financial reporting of essential content, which is a requirement for the identification and assessment of financial risks. The reliability of financial reports is ensured through monitoring and by developing control methods. The Destia subgroup’s exemption freedom from net liabilities has significantly reduced financial risks. Financial risks related to the financing of the new parent company, are managed in accordance with the treasury policy. In Destia’s damage risk management, the key factors are proactive project management procedures, investments in occupational safety and ensuring adequate insurance cover.
Corporate responsibility
Destia’s clear goal is to be customers’ number one choice and number one in the infrastructure field in Finland. The realisation of the strategy requires responsible operations from Destia and those working with it. In 2014, Destia crystallised a corporate responsibility programme, which is founded on evaluation by the company itself and by interest groups on themes integral to responsibility. The corporate responsibility programme guides the day-to-day work of corporate responsibility and leadership at Destia. In corporate responsibility reporting, Destia follows the reporting guidelines of Global Reporting Initiative (GRI) and its G4 version at the core level. Corporate responsibility reporting is part of Destia’s annual report. In addition, a GRI compilation has been made of 2014.
6
Environmental issues
Destia holds the international combined ISO 9001 and 14001 quality and environmental certificate concerning all contracting services, or services for infrastructure construction, infrastructure maintenance consulting, aggregates, and railways. In the financial year, Destia’s operations were conducted in accordance with the certification requirements. Operational focus was placed on eco-efficiency, use of natural resources and materials, consumption of fuels and energy, operational environmental safety, and consideration for the areas near locations where Destia operates. Destia’s environmental issues are reported in greater detail in the annual report found on Destia’s website.
Research and development
During the financial year, Destia continued its strong investment in research and development activities. The company divides its product development into three areas: model-based production, production mobile information collection and production-oriented method and technology development. In 2014, nearly 50 production development related projects were ongoing. Destia is a pioneer in the field in model-based production, which utilises three-dimensional digital models in the design of structures and production as well as in the use of construction machinery. During the year, model-based production was made use of at over 40 sites. All in all, nearly 200 Destia sites have been realised with construction machinery automation. During last year, Destia received two awards for the Tikkurilantie project carried out in cooperation with Siltanylund. First the project was highly commended at the BIM Awards 2014 organised by Finnish Tekla, after which it won at the international competition of the Tekla BIM Awards in the cast-in-situ structures series. Destia was responsible for the overall implementation of the project, Siltanylund taking care of bridge design. The project was the first large modelling project in the infrastructure field. By participating in the activities of infrastructure modelling co- operation forum buildingSMART Finland, Destia was involved in the development of customer practices in the infrastructure field during the financial year. In addition, Destia was an active participant in Tekes’ development programmes. Destia is a key party in two Tekes-funded projects, engaging in cooperation between companies across sector boundaries. During the year, several results relating to method and fleet development improving productivity and safety were also created. The costs of R&D activities of the Destia Group totalled some MEUR 0.5 during the time period of 1 July 2014-31 December 2014. In addition to the Voitto training supporting customer work, several significant ICT system development projects were ongoing. In late 2014, an extensive enterprise resource planning (ERP) system development project was launched. During the financial year, the development costs of these activities were MEUR 0.6.
Corporate Governance Statement
Destia Group Oyj’s Corporate Governance Statement will be published in the company’s 2014 annual report on Destia’s website at www.destia.fi. Events following the reporting period Destia won the maintenance contract for Maintenance Area 12 track and safety equipment for 2015−2020. As a result of this, one half of Finnish railway network Maintenance Areas are maintained by Destia. On 30 January 2015, the Helsinki Court of Appeal gave a decision on the civil case concerning a contract between Destia Ltd and Telasteel Oy. Some of the demands presented were settled in favour of Destia, others in favour of Telasteel. The compensation demands presented in the case were accepted only partly. Both
D E S T I A G R O U P / F I N A N C I A L S TAT E M E N T S
REPORT OF THE BOARD OF DIRECTORS Destia and Telasteel pay their own legal expenses. The decision given by the District Court was overruled and Telasteel was freed from its obligation to compensate Destia’s legal expenses at the District Court. Destia was obligated to pay Telasteel EUR 260,000 with penalty interest as laid down in the Interest Act as of 8 October 2011.
Growth strategy and financial objectives
The Board of Directors has ratified Destia’s strategy for 2014−2022 and the financial objectives for the 2014−2016 business planning period. The key focus of the strategy is to grow profitably on the infrastructure market through good customer work and by making good use of in-house expertise. Based on this, the Board confirmed the following financial objectives for the 2014−2016 business planning period: • Average growth in revenue of 5 % per year • Operating profit of 4 % by the end of 2016 • Return on investment of 15 % by the end of 2016 • Equity ratio of 40 % by the end of 2016 Destia’s core businesses are large road projects and infrastructure maintenance requiring special expertise. The focus areas of Destia’s strategic growth in the coming period are in the rock and railways businesses and in energy construction. At Destia, we are investing strongly in the development of customer work. Human resources development is still the company’s strategic area of focus.
Outlook for 2015
Economic uncertainty continues both in Finland and throughout the eurozone. It is likely that the Finnish economy is catching up with budding economic growth in the global economy and eurozone more slowly than elsewhere in Europe. The contraction of the infrastructure market is likely to stop in 2015. Competition for projects will continue to be fierce due to the number of large projects and the amount of private sector investments being small. Destia’s order book, which is at a better level than at year-end, and the measures taken to improve customer work and project management provide a solid foundation for the positive improvement of revenue without compromising profitability.
Proposal by the Board on the use of distributable assets
Destia Group Oyj’s FAS-compliant loss for the financial year was EUR 5,166,857.22, which is proposed to be recorded on the profits and losses account. Destia Group Oyj’s distributable assets total EUR 32,833,142.78, including the EUR 38,000,000 in the invested unrestricted equity fund. Destia Group Oyj’s Board of Directors proposes to the General Meeting that no dividend or repayment of capital be paid for the financial period that ended on 31 December 2014 but that MEUR 2 of hybrid loan amortisation and EUR 1,482,222.21 of hybrid loan interest accrued be paid.
D E S T I A G R O U P / F I N A N C I A L S TAT E M E N T S
7
CONSOLIDATED INCOME STATEMENT AND CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
CONSOLIDATED INCOME STATEMENT AND CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME IFRS EUR 1,000
Note
1 July – 31 Dec 2014
Revenue
2, 3
261,780
Other operating income
5
1,698
Materials and services
4
176,732
Employee benefit expenses
8
46,903
Depreciations
6
4,715
Other operating expenses
5
Operating profit
22,663 12,465
Financial income
10
30
Financial expenses
10
5,063
Profit before taxes
7,432
Income taxes
11
Result for the period
1,944 5,487
Other comprehensive income including tax effects Items that will not be reclassified to profit and loss Actuarial profit and loss from benefit-based pension arrangements
-1,512 -1,512
Items that may bee reclassified subsequently to profit and loss Translation differences of foreign subsidiaries
-1 -907
Cash flow hedges
-908 Other comprehensive income net of tax Comprehensive income for the financial year
-2,420 3,068
Result for the period and comprehensive income for the period belong to parent company shareholders Undiluted/diluted earnings per share, EUR
8
D E S T I A G R O U P / F I N A N C I A L S TAT E M E N T S
68.59
CONSOLIDATED BALANCE SHEET
CONSOLIDATED BALANCE SHEET IFRS EUR 1,000
Note
31 Dec 2014
ASSETS Non-current assets Tangible assets
13
56,829
Goodwill
14
83,154
Other intangible assets
16
1,723
Available-for-sale financial assets
18
2,083
Deferred tax assets
22
Non-current assets, total
3,739 147,529
Current assets Inventories
19
19,876
Accounts and other receivables
20
59,555
Cash and cash equivalents
21
37,650
Current assets, total
117,081
Assets, total
264,610 31 Dec 2014
EQUITY AND LIABILITIES Equity attributable to equity holders of the parent company
23 80
Share capital Invested unrestricted equity fund
38,000
Hybrid loans
29,000 -908
Other items
2,493
Retained earnings Equity, total
68,666
Non-current liabilities Deferred tax liabilities
22
956
Pension liabilities
26
2,750
Provisions
27
13,801
Financial liabilities
24
64,399
Non-current liabilities, total
81,906
Current liabilities Accounts payable and other liabilities
25
76,403
Provisions
27
5,941
Financial liabilities
24
471 31,224
Advances received Current liabilities, total
114,038
Equity and liabilities, total
264,610
D E S T I A G R O U P / F I N A N C I A L S TAT E M E N T S
9
CONSOLIDATED CASH FLOW STATEMENT
CONSOLIDATED CASH FLOW STATEMENT IFRS 1 Jul – 31 Dec 2014
EUR 1,000 OPERATING CASH FLOW STATEMENT
262,555
Cash receipts from customers Expenses paid to suppliers and personnel
-239,667 -1,678
Interests paid
38
Interests received
-993
Other financial items Tax paid
-2,275
Net operating cash flow
17,980
INVESTMENT CASH FLOW Investments in intangible and tangible assets
-4,874 2,212
Sale of intangible and tangible assets Subsidiary shares acquired
-87,532
Net investment cash flow
-90,194
FINANCIAL CASH FLOW 80
Rights issue Investment in Invested unrestriced equity fund
38,000
Increase in non-current debt (+)
65,000
Increase in non-current equity instruments (+)
17,000
Increase in short-term financing (+)
9,000
Decrease in short-term financing (-)
-15,781
Interests and other financial items paid Net financial cash flow
-3,426 109,873
Change in cash and cash equivalents
37,659
Cash and cash equivalents at beginning of financial year -9
Effect of exhange rate changes Cash and cash equivalents at end of financial year
10
D E S T I A G R O U P / F I N A N C I A L S TAT E M E N T S
37,650
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY IFRS Equity attributable to equity holders of the parent company
EUR 1,000 Share capital
Hedge instrument fund
Invested unrestricted equity fund
Hybrid loans
Translation differences
Retained earnings
Total
5,487
5,487
Equity 1 July 2014 Other comprehensive income Result for the period Other comprehensive income Translation differences
-1
Cash flow hedges
-907
-907
Actuarial profit or loss from benefit-based arrangements Comprehensive profit and loss for the financial year, total Rights issue
-907
-1
-1,512
-1,512
3,976
3,068
80
80
Investment in Invested unrestricted equity fund
38,000
Hybrid loans
38,000 29,000
29,000
Interest of hybrid bonds Equity total 31 Dec 2014
-1
80
-907
38,000
29,000
D E S T I A G R O U P / F I N A N C I A L S TAT E M E N T S
-1
-1 482
-1,482
2,493
68,666
11
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Basic information about the Group
Destia Group Oyj was established in connection with the ownership arrangement of Destia and owns 100 % of Destia Ltd’s shares. Destia Group continues the business operations of Destia subgroup (Destia). Destia is a Finnish infrastructure and construction service company, which plans, builds and maintains traffic routes and industrial and traffic environments as well as complete living environments. Our services cover the whole spectrum, from overground operations to subterranean construction. The Group mainly operates in Finland. The Group’s parent company is Destia Group Oyj. The parent company is based in Helsinki, c/o Destia Oy, PO BOX 206, 01301 Vantaa. Destia Group Oyj is owned by AC Infra Oy, which is part of Ahlström Capital Group. A copy of the Consolidated Financial Statements is available at www.destia.fi or from Destia Ltd’s head office at Heidehofintie 2, 01300 Vantaa. On 12 February 2015, Destia Group Oyj’s Board of Directors approved these financial statements for publication in their entirety. Under the Finnish Limited Liability Companies Act, shareholders may approve or reject the financial statements at the General Meeting held following their publication. The General Meeting may also take the decision to amend the financial statements.
1. ACCOUNTING PRINCIPLES Basic principles
Destia Group’s consolidated financial statements were prepared in compliance with the International Financial Reporting Standards (IFRS), and the preparation abided by the International Accounting Standard (IAS) and International Financial Reporting Standards (IFRS) as well as the interpretations by the Standing Interpretations Committee (SIC) and International Financial Reporting Interpretations Committee (IFRIC) in force as at 31 December 2014. The International Financial Reporting Standards refer to the standards approved in the Finnish Accounting Act and provisions issued by virtue of it to be adopted in the EU in accordance with the procedure regulated by the EU regulation (EC) no 1606/2002 and the subsequent interpretations. The notes to the consolidated financial statements are also in line with the requirements of the Finnish accounting and Community legislation supplementing the IFRS regulations. As Destia Group Oyj was established in connection with the ownership arrangement of Destia, comparative figures do not exist for Destia Group. Figures describing Destia’s business operations (consolidated income statement, balance sheet, cash flow statement and key figures) are presented with comparative figures as additional information following the consolidated financial statements. At the end of 2011, Destia Group’s subgroup (Destia) switched to IFRS practices, at the same time applying IFRS 1 First-time Adoption of International Financial Reporting Standards, the switchover date being 1 January 2010. Destia Group Oyj is Destia Ltd’s parent company, which was established in connection with the ownership arrangement of Destia and which owns 100 % of Destia Ltd’s shares. The consolidated financial statement and its appendices reports on the financial development of Destia Group for the second half of the year, 1 July 2014–31 December 2014. The financial statements are prepared in accordance with the Finnish Accounting Act (FAS-compliant) for the financial period 22 April–31 December 2014. As Destia Group Oyj began its operations in connection
12
with the acquisition of Destia Ltd, comparative figures do not exist in the consolidated financial statements or in the special purpose vehicle. The Consolidated Financial Standards were prepared with reference to original acquisition costs, with the exception of tradable financial assets, financial assets and liabilities recognised at fair value through profit or loss, and fair value hedges, which are valued at the current rate. The figures are in thousands of euros. Preparing the statements in accordance with the IFRS standards requires management to make certain estimates and have information relating to considered decisions the management has taken. This information relating to considered decisions, used in the application of the Group’s accounting policies, and which mostly affect the figures in the financial statements, is given in the section entitled ‘Accounting policies requiring discretion on the part of the management and the main factors of uncertainty connected with the estimates made’.
Accounting policies governing the Consolidated Financial Statements Subsidiaries
Subsidiaries are companies over which the Group exercises control. This is when the Group holds more than 50 % of the votes, or has control of the company in another way. Furthermore, the existence of a potential voting right is taken into account when the conditions for control of the company are being assessed, when the instruments giving entitlement to a potential voting right can be realised at the time of examination. Control means the right to decide the company’s principles underlying finances and business in order to achieve benefit from its operations. Intra-Group shareholdings are eliminated using the acquisition cost method. The consideration transferred, the acquired company’s identifiable assets and liabilities assumed are measured at their acquisition-date fair values. The expenditure incurred through an acquisition is recognised as a cost. The consideration transferred does not include transactions treated separately from the acquisition. Their effect is accounted for through profit or loss at the time of the acquisition. Any contingent consideration is measured at its acquisition-date fair value, and is classed either as a liability or equity. Contingent consideration classed as a liability is measured at fair value on the last day of each reporting period, and the ensuing profit or loss is recognised through profit or loss or in other comprehensive income. Contingent consideration classified as equity is not remeasured. Acquired subsidiaries are consolidated from the time the Group has acquired control, and transferred subsidiaries until that control ceases. All the Group’s internal commercial transactions, receivables, liabilities, unrealised gains and internal profit distribution are eliminated when the Consolidated Financial Statements are being prepared. Unrealised losses are not eliminated if the loss is due to impairment. Changes to the parent company’s share of ownership in subsidiaries that do not lead to loss of control are treated as equity-related transactions.
Changes to items denominated in foreign exchange Figures showing the results and financial position of the units in the Group are denominated in the currency which is that for each unit’s main operating environment (‘functional currency’). The figures in the Consolidated Financial Statements are in euros, which is the functional and reporting currency of the Group’s parent company.
Commercial transactions denominated in foreign exchange
Commercial transactions denominated in a foreign currency are denominated in the functional currency at the rate on the date of the transaction. In practice, rates are often used that approximate
D E S T I A G R O U P / F I N A N C I A L S TAT E M E N T S
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS to the rate on the date in question. Monetary items denominated in a foreign currency are converted to the functional currency using the rate of exchange on the last day of the reporting period. Non-monetary items denominated in a foreign currency, and which are measured at fair value, are converted to the functional currency using the exchange rates on the date fair value is determined. Otherwise, non-monetary items are measured at the exchange rate on the date of the transaction.
Assets are depreciated during their estimated useful life on a straight-line basis. The exception is areas of soil, depreciation on which is calculated according to use. No depreciation is calculated for land. Estimated useful lives are as follows:
Gains and losses from commercial transactions denominated in a foreign currency and changes to monetary items are treated through profit or loss. Exchange rate gains and losses from the business operation are included in equivalent items above operating profit. Exchange rate gains and losses from foreign currency loans are included in finance income and expenses, except for exchange rate differences on loans which are to protect net investments in foreign units, and which are effective there. These exchange rate differences are recognised in other comprehensive income, and accumulated exchange rate differences are shown separately under equity, until the foreign unit is partially or wholly disposed of.
An asset’s residual value and its useful life are revised at the end of each financial year, at the very least, and, where necessary, adjusted to reflect the changes that have taken place with regard to the expectations of its financial benefit. When a tangible fixed asset is classified as held for sale in accordance with IFRS 5 Non-current Assets Held for Sale and Discontinued Operations, the depreciation process ends. The gains and losses from the sale of decommissioned tangible fixed assets or their disposal are recognised in profit and loss.
Conversion of the financial statements of foreign companies in the Group The items for income and costs in the statements of comprehensive income and separate income statements of foreign companies in the Group are converted to euros at the exchange rates on the dates on which the commercial transactions take place, and the figures in the balance sheets are converted using the exchange rates on the date on which the reporting period ends. The translation of the profit and loss and comprehensive profit and loss for the financial period using different exchange rates, in the income statement and comprehensive income statement, causes a translation difference in equity on the balance sheet, which is entered in ‘Other comprehensive profit a loss items’. Translation differences arising from the elimination of the acquisition cost of foreign subsidiaries and the conversion of equity items accumulating after an acquisition are recognised in other comprehensive income. If a subsidiary is sold wholly or partially, the accumulated translation differences are reclassified to profit or loss as part of the profit or loss from sales.
Tangible fixed assets (Property, plant and equipment) Tangible fixed assets are measured at acquisition cost less accumulated depreciation and impairment losses. An acquisition cost includes the expenditure incurred directly from acquiring a tangible fixed asset, including the costs of dismantling or moving the asset based on the original value, and of restoring the location to its original state, if the organisation has such an obligation. The acquisition costs of an asset that has been produced by the company itself includes the costs of materials, the direct costs of employee benefits and the other direct costs of preparing the asset for its intended purpose. When preparation of an asset for its intended purpose or sale requires a good deal of time, the direct borrowing costs of its acquisition, construction or production are capitalised as part of its acquisition costs. If an asset consists of more than one part, whose lifetimes vary in length, each part is treated as a separate commodity. In such cases, expenditure for the replacement of the part is capitalised and any book value remaining when that replacement takes place is derecognised. Expenditure incurred at a later date is only included in the book value of a tangible fixed asset if the Group is likely to benefit financially from the commodity in the future and the acquisition cost of the commodity can be reliably determined. Other repair and maintenance costs are recognised as incurred.
Buildings: 10–40 years Machinery and equipment: 3–20 years Other tangible assets: according to use
Government subsidies Government/public subsidies are entered in the profit and loss statement when it is reasonably certain that they will be obtained. Subsidies that have been received as payments against already realised costs are recognised through profit or loss in the period in which the subsidy is realised. Subsidies are presented in other operating income.
Intangible assets Goodwill
Goodwill is recognised at the amount by which the transferred consideration exceeds the Group’s share of identifiable fair value net assets for an acquired company on the date it is acquired. No deprecation is recognised for goodwill (or any other unlimited-life intangible assets), but it is tested annually for potential impairment. For this purpose, goodwill is allocated to units producing money flow. Goodwill is measured at the original acquisition price less impairment.
Research and development expenditure
Research expenditure is recognised through profit or loss. Development expenditure incurred from the planning of new or more advanced procedures and concepts is capitalised as intangible assets in the balance sheet from the time when they are technically feasible, can be commercially exploited and can be expected to produce future economic benefit. Capitalised development costs include the material, labour and testing costs which are directly incurred when preparing the commodity for its intended purpose. Previously amortised development costs are no longer recognised at a later date. Amortisation begins when the asset is ready to be used. Incomplete assets are tested annually for impairment. After initial recognition, capitalised development costs are valued at the original acquisition cost less amortisation and impairment.
Other intangible assets
An intangible asset is entered in the balance sheet at the original acquisition cost, where it can be determined reliably and where the Group is likely to expect to benefit financially from the asset in the future. Intangible assets with a restricted useful life are amortised on a straight-line basis through profit or loss within their known or estimated useful life. The depreciation periods for other intangible assets are: Computer software: 5 years Other intangible rights: 5 years
Inventories
Inventories are measured at the acquisition cost or net realisation value, whichever is the lower. The acquisition cost is determined
D E S T I A G R O U P / F I N A N C I A L S TAT E M E N T S
13
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS using the average weighted share price method. The acquisition cost of finished good and intermediate inventories consists of the raw materials, the expenses incurred from direct work, other direct expenses, an appropriate share of the variable general costs of manufacture and fixed general costs at a normal level of activity. The net realisable value is the estimated selling price in the ordinary course of business less the estimated necessary costs of completion of the inventories and the estimated costs necessary to realise yield.
Rental agreements The Group as lessee
Rental agreements relating to fixed tangible assets, which expose the Group to significant risks and rewards inherent in holding such assets, are classified as finance lease agreements. An asset acquired through a finance lease agreement is entered in the balance sheet at the inception of the lease at the fair value of the leased commodity or the present value of the minimum lease payments, whichever is lower. An asset acquired through a finance lease agreement is depreciated over its useful life or within the lease term, whichever is shorter. Lease payments are apportioned between the finance charge and the reduction of the outstanding liability so that the finance charge is allocated to each period during the lease term to produce a constant periodic rate of interest on the remaining balance of the liability. Rental obligations are included in financial liabilities. Leases where a significant portion of the risks and rewards of ownership are retained by the lessor are classified as other rental agreements. Payments made under operating leases expenses are charged to the income statement on a straight-line basis over the period of the lease.
The Group as lessor
Assets let by the Group are included in tangible fixed assets in the balance sheet. They are depreciated during their useful life in the same way as equivalent tangible fixed assets in the Group’s use. Revenue from rental agreements is charged to the income statement on a straight-line basis over the period of the lease. Impairment of tangible and intangible assets At each date the reporting period ends, the Group assesses whether there are suggestions that an asset is impaired. If there are such signs, an estimate is made of the amount that is recoverable on the asset in question. In addition, an estimate is made each year of the following: goodwill, unlimited-life intangible assets and intangible assets in progress. The need to record impairment is examined at the level of units producing money flow, i.e. at the lowest unit level, which is mainly independent of the other units and whose money flows can be distinguished from the money flows of equivalent units and are virtually independent of them. The recoverable amount is the fair value of the asset less expenditure incurred from its sale or its utility value, whichever is the greater. The utility value is the present value of future net money flows expected to be derived from an asset or cash-generating unit. The discounting has been performed in accordance with IAS 36. An impairment loss is recognised when the book value of an asset is greater than its recoverable amount. An impairment loss is recognised directly through profit or loss. If the impairment loss is allocated to a unit producing a money stream, it is first applied to reduce the goodwill for that unit, and then to reduce the value of other assets of the unit uniformly. When an impairment loss is being entered, the useful life of the asset being depreciated is re-assessed. An impairment loss for an asset other than goodwill is reversed if there has been a change in the values used to determine the recoverable amount on the asset. However,
14
impairment losses cannot be reversed to exceed the asset’s book value as it would be, had no impairment loss been recognised. In no circumstances can impairment losses recognised for goodwill be reversed.
Employee benefits Pension obligations
Pension schemes are classified as defined benefit or defined contribution plans. With the latter, the Group pays fixed premiums into a separate unit. The Group has no legal or constructive obligation to increase premiums if the organisation in receipt of the premiums is unable to pay the relevant pension benefits. All schemes that do not fulfil these conditions are defined benefit plans. Payments made into defined contribution plans are recognised through profit or loss in the financial year in which the obligation arises. The Group’s obligations regarding defined benefit plans are calculated separately for each scheme, using the projected unit credit method. Pension expenditure is recognised as costs on the basis of authorised actuarial calculations for the length of service of personnel. When the current value of a pension obligation is being calculated, the discount rate used is the yield on high-quality bonds issued by companies, and if that is not available, the interest on state debentures. Owing to the non-recurring payment of pension contributions, the pay rise percentage used in the calculations is 0. The maturity of bonds and debentures corresponds essentially to the maturity of the pension obligation being calculated. From the current value of a pension obligation in a balance sheet is subtracted the assets included in the pension scheme measured at fair value on the last day of the reporting period and the unvested past service costs. Past service costs are recognised on the straight-line basis through profit or loss for the period in which they are vested. If the benefits are vested directly, they are recognised as direct costs.
Provisions and contingent liabilities Provisions are recognised when the Group has a present legal or constructive obligation as a result of past events, it is probable that an outflow of resources will be required to settle the obligation, and a reliable estimate of the amount can be made. Provisions are stated at the present value of the obligation. The discount rate is determined to reflect current market assessments of the time value of money and the risks specific to the obligation. If the Group expects a provision to be reimbursed, for example, by a third party, the reimbursement is recognised as a separate asset if the reimbursement is virtually certain. A quality reservation (provision) is recognised when a project covered under a guarantee clause is delivered. The amount of the quality reservation (provision) is based on the experience-based estimate of the guarantee costs to be incurred. The Group recognises a provision for onerous contracts when the expected benefits to be derived from a contract are less than the unavoidable costs of meeting obligations. A reorganisation provision is recognised when the Group has drawn up a detailed reorganisation plan, begun on its execution and reported the matter. A provision associated with environmental obligations is recognised when the Group has an obligation based on environmental legislation and the Group’s principles of environmental responsibility and which relates to the decommissioning of a production plant, landscaping responsibilities, repairing environmental damage or moving equipment from one place to another.
D E S T I A G R O U P / F I N A N C I A L S TAT E M E N T S
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS A contingent liability is a potential obligation arising as a result of past events, whose existence is only confirmed when an uncertain event takes place which is beyond the Group’s control. Contingent liabilities may also be regarded as existing obligations that are unlikely to require fulfilment of a payment obligation, or a reliable estimate of the amount cannot be made. A contingent liability is presented in the Notes to the Financial Statements.
Interest and dividends
Taxes based on taxable income for the period and deferred taxes Tax expenses comprise tax based on taxable income for the period and deferred tax. Income tax is recognised through profit or loss, except for taxes related to items recognised directly to the shareholders’ equity or the comprehensive income statement. With these, tax is recognised in the relevant items. Tax based on taxable income for the period is calculated using the corporate income tax rate effective in each country. Deferred taxes are calculated on all temporary differences between the book value and taxable value. However, no deferred tax liability is recognised if it is due to the initial recognition of an asset or liability where there is no matter of a merger or the commercial transaction at the time does not affect the business results or taxable income.
Non-current assets (or a disposal group) and assets and liabilities relating to discontinued operations are classified as held for sale, if their book value will be recovered principally through the sale of the assets rather than through continuing use. For this to be the case, the sale must be highly probable, the asset (or disposal group) must be available for immediate sale in its present condition, subject only to terms that are usual and customary, the management must be committed to selling and the sale should go ahead within one year from the date of classification.
Deferred taxation is recognised for investments in subsidiaries, except where the Group is able to specify a date on which the temporary difference dissolves and the temporary difference will probably not dissolve in the foreseeable future. The largest temporary differences arise from the depreciation of tangible fixed assets, the valuation of derivative contracts at fair value, defined benefit pension plans and unused taxable losses. Deferred taxes are calculated using the statutory tax rates by the last day of the reporting period or the tax rates which have been approved in practice by the closing date. Deferred tax assets are recognised to the extent that it is probable that taxable income, against which the temporary difference can be applied, will materialise in the future.
Revenue recognition Sales (Turnover) are/is presented in such a way that the revenue from the sales of goods and services at fair value are recognised and adjusted to allow for indirect taxes, discounts and exchange rate differences for sales in foreign currencies.
Long-term projects
The revenue and costs of long-term projects are recognised as such with reference to the stage of completion, when the final financial result for the project can be estimated reliably enough. The stage of completion is determined for each project as the share of the costs incurred from the work carried out by the review date compared with the total costs estimated for the project. Expenditure that relates to a project still not entered as income is recognised as long-term projects in progress under inventories. If the expenditure incurred and recognised gains exceed the amount invoiced for the project, the difference is shown under trade and other receivables in the balance sheet. If the expenditure incurred and recognised gains are less than what is invoiced for the project, the difference is shown under trade payables and other debt. When the end financial result of a long-term project cannot be reliably assessed, the project expenditure is recognised in the same period in which it is incurred, and the revenue from the project is only recognised up to the amount where a sum of money equivalent to the expenditure incurred is available. If it is probable that the overall expenditure incurred in completing the project will exceed total income from it, the expected loss is entered as a direct cost.
Sold goods and services
Revenue from the sale of goods is recognised when the significant risks, rewards and effective control associated with the ownership of the goods have transferred to the purchaser. As a general rule, this is when delivery under the terms of the contract relating to the products takes place. Revenue from services is entered as income in the financial year in which the service is delivered.
Interest received is recognised using the effective interest rate method, and dividend income when entitlement to a dividend arises.
Non-current assets held for sale and discontinued operations
Immediately prior to classification, the assets held as for sale or assets and liabilities of a disposable group are measured in accordance with the IFRS standards to be applied. From the time of the classification, assets held for sale (or a disposable group) are measured at book value or at fair value less the expenditure incurred from their sale, whichever is the lower. Depreciation of these assets ends at the time of classification. Assets included in a disposable group – and not included in the scope of the IFRS 5 valuation rules – and liabilities (in a disposable group) are measured in accordance with the IFRS standards even after the classification date. A discontinued operation is a part of the Group which has been disposed of or which has been classified as held for sale, and which meets the following conditions: it is a significant separate business unit or unit representing a geographical area, part of one coordinated plan relating to disposal of a separate key business area or geographical territory, or a subsidiary that was acquired exclusively for the purpose of selling it on. The financial result for discontinued operations is recognised as its own item in the Group’s comprehensive income statement. Assets held for sale, disposable groups, items recognised in other comprehensive income relating to assets held for sale, and liabilities included in a disposable group are presented in the balance sheet separately from other items.
Financial assets and liabilities Financial assets
The Group classifies financial assets in the following categories: financial assets at fair value through profit or loss, investments held till maturity, loans and other receivables and available-for-sale financial assets. The classification depends on the purpose of the acquisition of the financial assets, and they are classified when they are originally purchased. Transaction costs are included in the original book value for financial assets, where it concerns an item that is not measured at fair value through profit or loss. All purchases and sales of financial assets are recognised on the date of trading, which is the date on which the Group undertakes to buy or sell the financial instrument. The balance sheet depreciation of financial assets takes place when the Group has lost its agreed entitlement to money flows, or when it has transferred risks and revenue outside the Group to a significant extent. Included in financial assets at fair value through profit or loss are items included in financial assets acquired to be held for trading, or which are classified at fair value at initial recognition through profit or loss (use of the fair value option). The classification may only be altered in rare circumstances. The latter group includes financial assets that are managed based on fair value or an item included in financial assets associated with one or more embedded derivatives that changes contractual money flows
D E S T I A G R O U P / F I N A N C I A L S TAT E M E N T S
15
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS s ubstantially, where the entire compound instrument is measured at fair value. Financial assets held for trading are mainly acquired to control changes in short-term market prices. Derivatives that are not contracts of guarantee or do not meet the conditions of hedge accounting are classified as held for trading. Derivatives that are held for trading and financial assets maturing within 12 months are included in current assets. Group items are measured at fair value, based on the quoted market price on the last day of the reporting period. The fair values of interest rate swaps are determined as the current value of future money flows and foreign exchange forwards are measured at the rates in force for them on the last day of the reporting period. When measuring derivatives and other financial instruments that are not to be traded, the Group usually uses approved valuation methods and discounted values for future money streams. Both unrealised and realised gains and losses from changes in fair value are recognised through profit or loss in the financial year in which they are made. Loans and other receivables are non-derivative assets with fixed or measurable payments. They are not quoted in active markets and the Group does not hold them for trading or classify them as available-for-sale at initial recognition. They are valued at amortised cost using the effective interest rate method. Loans and other receivables are presented as current or non-current financial assets depending on their nature, the latter if they mature after 12 months have passed. Available-for-sale financial assets are non-derivative assets specifically included in this classification or not included in any other. They are included in non-current assets, except if they are to be held for under 12 months from the last day of the reporting period, in which case they are included in current assets. Available-for-sale financial assets may consist of shares and interest-bearing investments. They are measured at fair value or, when fair value cannot be reliably determined, at acquisition cost. The fair value of an investment is determined with reference to its buying rate. If there are no quoted rates for available-for-sale financial assets, the Group applies various valuation methods to value them. They include, for example, references to recent trades between independent bodies, discounted money flows or valuations for other similar instruments. For this, information obtained from the markets is generally used as opposed to contributing factors that the Group has itself decided, which are used as little as possible. Changes to the fair value of available-for-sale financial assets are recognised in other comprehensive income, and are presented in the fair value fund, with consideration being given to their implications for tax. Accumulated fair value adjustments are transferred from equity through profit or loss when an investment is sold or its value is impaired so that an impairment loss on the investment should be recognised. Interest on available-for-sale debt instruments is recognised in finance income using the effective interest rate method.
Cash and cash equivalents
Cash and cash equivalents comprise cash balances, call deposits and other short-term highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value. The items classified as cash and cash equivalents have a maturity of no more than twelve months from the time of acquisition.
Impairment of financial assets
The Group assesses on the last day of each reporting period whether there is any objective evidence that a financial asset or group of financial assets is impaired. If the fair value of investments has fallen significantly below the acquisition cost and period determined by the Group, this is an indication of an impairment of available-for-sale share. If any such evidence exists, the
16
amount recognised in the shareholders’ fair value reserve is unrecognised and recognised in the income statement. Impairment loss on available-for-sale financial assets categorised as equity instruments are not reversed through profit or loss. A later reversal of impairment loss on interest rate instruments is, however, recognised through profit or loss. The Group recognises an impairment loss on trade receivables, when there is objective evidence that a receivable is not fully collectible. The borrower’s significant financial difficulties, probability of a bankruptcy or non-payment exceeding 90 days are evidence of impairment loss on a trade receivable.
Financial liabilities
Financial liabilities are initially recognised in accounting at fair value. Transaction costs are included in the initial book value of the financial liabilities measured at acquisition cost. Later, financial liabilities, except for derivatives that are liabilities, are measured at amortised acquisition cost using the effective interest rate method. Financial liabilities are included in non-current and current liabilities, being classed as current unless the Group has an unconditional right to defer payment of the debt within at least 12 months from the last day of the reporting period. Expenses under liabilities are recognised as costs in the period in which they are incurred. Commissions associated with loan commitments are recognised as transaction costs to the extent that it is probable that the entire loan commitment or part of it will be taken up. In such a case, the commission is entered in the balance sheet until the loan is taken up. When it is, the commission associated with loan commitments is recognised as part of the transaction costs. If the loan commitment is unlikely to be taken up, the commission is recognised as an advance payment for a liquidity service and is amortised as a cost for the period of the loan commitment.
Derivative financial instruments and hedge accounting Derivatives are initially recognised at fair value on the date the derivative contract is entered into and are subsequently remeasured at their fair value. Gains and losses resulting from measurement at fair value are treated in the accounts in the way specified for the purpose of use of the derivative instrument. The profit and loss effects of the changes to the values of derivative instruments where hedge accounting is applied, and which are effective hedging instruments, are presented uniformly with the hedged item. When entered into, derivative financial instruments are treated as fair value hedges of receivables, liabilities or fixed commitments, or, in the case of currency exchange risk, as money flow hedges, money flow hedges for an anticipated and highly likely commercial transaction, as hedges of net investments in a foreign unit, or as derivative financial instruments that do not meet the hedge accounting criteria. When a hedging arrangement is entered into, the relationship between the item being hedged and the hedging instrument, as well as the objectives of the Group’s risk management and the hedging strategy are documented. When starting out, and at least every time the financial accounts are being prepared, the Group documents the effectiveness of qualifying derivatives by examining their ability to offset changes to the fair value of the hedged item or money streams.
Money flow hedging
The change in the fair value of the effective portion of derivative instruments qualifying for hedge cash flow is recognised in other comprehensive income and presented in the hedge fund under equity (in Other funds). The gains and losses accumulated in equity from hedging instruments are transferred to the statement of income when the hedged item impacts on profit or loss. Gains and losses from derivatives hedging an anticipated sale in a foreign currency are recognised as sales adjustments when the sale
D E S T I A G R O U P / F I N A N C I A L S TAT E M E N T S
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS goes ahead. The ineffective portion of a derivative instrument is recognised in other operating income and expenses. If a hedged, anticipated commercial transaction leads to the recognition of an asset not included in financial assets, such as a tangible fixed asset, the gains and losses accumulated in equity are reclassified as an adjustment to the acquisition cost of that asset. When a derivative financial instrument acquired for money flow hedging matures or is sold, or when the conditions of hedge accounting are no longer met, the gain or loss from the derivative instrument remains under equity until such time as the anticipated commercial transaction takes place. However, if that is no longer expected to happen, the gain or loss under equity is directly recognised through profit or loss.
Other hedging instruments where hedge accounting does not apply
Even if certain hedging relationships meet the requirements of effective hedging set for the Group’s risk management, hedge accounting may not apply to them. Such instruments include derivatives hedging a commodity risk in connection with operations and some derivatives hedging currency risks. Changes to their fair value are recognised in other business revenue and costs in accordance with the Group’s established practice. In the balance sheet, these commodity risk and foreign currency trade receivable/account payable derivatives are presented in current receivables or liabilities. The fair values for hedging instruments are presented in Notes to the Financial Statements under Fair values for financial assets and liabilities. Changes to the hedge fund are presented in Notes to the Financial Statements under Equity, in the section Other funds.
Share capital Ordinary shares are presented as share capital. Expenditure relating to the issue or acquisition of own equity instruments are presented as an allowance account under equity.
Operating profit IAS 1 standard (Presentation of Financial Statements) does not define operating profit. The Group has defined it as follows: operating profit is the net sum obtained after adding other operating income to revenues and then deducting purchasing costs adjusted by the change in stocks of finished products and work in progress, the costs incurred for own-use manufacture, costs from employee benefits, depreciation, amortisation and any impairment losses, and other operating expenses. All other income statement items are presented under operating profit. Exchange rate differences and changes in the fair value of derivatives are included in operating profit if they arise from items connected with business operations; otherwise they are entered in financing items. In its tables and texts, the Group uses both the term ‘operating result’ and ‘operating profit’.
Accounting policies requiring discretion on the part of the management and the main factors of uncertainty connected with the estimates made Estimates and assumptions regarding the future have to be made during preparation of the financial statements, but the final outcome may be otherwise. Furthermore, the application of accounting policies requires discretion.
Discretion on the part of management regarding choice and application of accounting policies
Group management makes considered decisions regarding the selection and application of accounting policies. This applies in particular to those cases in which the IFRS standards in effect provide the opportunity to choose between various accounting, valuation or presentation methods..
Factors of uncertainty connected with estimates
The estimates made in connection with preparing the financial statements reflect the best judgement of the management on the last day of the reporting period. These estimates are affected by past experience and assumptions regarding future developments, which are regarded as well-founded at the time of closing of the accounts, and which relate, for example, to expected trends in the Group’s economic operating environment in terms of revenue and costs. The Group regularly monitors the realisation of these estimates and assumptions and any changes to background factors with the business units through internal and external information sources. Any changes in estimates and assumptions are recognised in the financial statements of the period during which such corrections are made. The key assumptions regarding the future and the main factors of uncertainty connected with the estimates made on the last day of the reporting period, which pose a significant risk of change to the book values of the Group’s assets and liabilities basically during the following year, are given below. Group management regards these particular areas of the financial statements as crucial. Application of accounting policy as it affects them mostly requires the utilisation of significant estimates and assumptions.
Impairment testing
The Group carries out annual impairment testing of goodwill, intangible assets in progress and intangible assets having an indefinite useful life. Suggestions of impairment are evaluated in the way described above in the accounting policies. The recoverable amounts of cash-generating units have been defined on the basis of value in use calculations. These calculations call for the use of estimates.
Recognition as income and expenses
As described in the revenue recognition policies, the revenue and costs of a long-term project are recognised as income and expenses on the basis of the stage of completion, once the outcome of the project can be reliably estimated. Recognition associated with the stage of completion is based on estimates of expected income and expenses of the project and reliable measurement of project progress. If estimates of the project’s outcome change, the recognised income and profit/loss are amended in the period in which the change is first known about and can be estimated for the first time. Any loss expected from a project is directly recognised as an expense.
Tax
When tax is recognised in the accounts, management’s most essential estimate applies to the criteria for recording deferred tax receivables. When a tax-deductible temporary difference dissolves, it results in smaller quantities of taxable income in subsequent financial years. The most common deductible temporary difference between taxation and accounts is a loss verified in taxation. Management has to estimate whether in the future sufficient taxable income will accumulate against which unused tax losses can be used. A deferred tax receivable is only recognised on losses to the extent that there is an estimated income to be generated in subsequent financial years, against which the company can probably reduce its tax losses.
Employee benefits
The factors used to calculate employee benefit obligations that require the management’s assessment are connected, for example, to an estimate of the expected return on funds in defined benefit pension plans, determining the discount rate used to calculate the pension cost and obligation for the financial year, forecasting future trends in pay, the assumed rise in pension costs, assumed lengths of service of personnel, and inflation trends.
D E S T I A G R O U P / F I N A N C I A L S TAT E M E N T S
17
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Provisions
When recognising provisions, the management has to assess whether there is a legal or actual obligation in which there is a probable liability to pay a debt. In addition, they have to assess the extent of the obligation and estimate the time when it is realised. If all this can be done reliably, the obligation is recognised as a provision in the financial statements.
The adoption of amendments to the IAS 36 and IAS 39 standards and the new IFRS standards 10, 11 and 12 IFRS 10 Consolidated Financial Statements (in force from 1 January 2014 or from financial periods beginning thereafter). This standard determines, in accordance with the existing principles, control as a key factor in determining whether an entity will need to be consolidated into consolidated financial statements. The standard also gives additional guidelines about determining control when it is difficult to evaluate. This standard does not affect the consolidated financial statements. IFRS 11 Joint Arrangements (in force from 1 January 2014 or from financial periods beginning thereafter). This standard emphasises, in the accounting processing of joint arrangements, the rights and obligations resulting from them rather than their legal form. There are two types of joint arrangements: joint operations and joint ventures. The standard also requires a single method in the reporting of joint ventures, the equity method, and the previously used combination alternative is no longer permitted. This standard does not affect the consolidated financial statements.
procedures when, in a benefit-based arrangement, contributions to the arrangement are required from employees or third parties. The amendments to this standard do not affect the consolidated financial statements. IFRS 15 Revenue from Contracts with Customers (in force from 1 January 2017 or from financial periods beginning thereafter). This new standard includes a five-stage set of guidelines on the recognition of revenue received based on customer contracts, and replaces the present IAS 18 and IAS 11 standards and related interpretations. The recognition of revenue may take place within a period of time or at a certain point in time, and the key criterion is the transfer of control. The standard also increases the number of notes to the financial statements. The Group will assess the impact of this standard. IFRS 9 Financial Instruments and amendments thereto (in force from 1 January 2018 or from financial periods beginning thereafter). This new standard replaces the present IAS 39 Financial Instruments: Recognition and Measurement. IFRS 9 amends the classification and measurement of financial assets and includes, for the assessment of the impairment of financial assets, a new model based on expected credit losses. For the most part, the classification and measurement of financial liabilities meets the requirements of the present IAS 39. In terms of hedge accounting, there are still three types. More risk positions than previously can be included under hedge accounting and the principles of hedge accounting have been combined with risk management. The Group will assess the possible impact of this standard.
IFRS 12 Disclosure of Interests in Other Entities (in force from 1 January 2014 or from financial periods beginning thereafter) This standard contains the requirements for notes to the financial statements, which concern different shares in other entities including associated companies, joint arrangements, structured entities and other off-balance sheet companies. This standard has no fundamental impact on the consolidated financial statements. IAS 36 Impairment of Assets, amended by Recoverable Amount Disclosures for Non-Financial Assets (in force from 1 January 2014 or from financial periods beginning thereafter). This amendment supplements the requirements for the notes to the financial statements, which concern cash flow-generating units at which impairment is targeted. The amendment to this standard does not affect the consolidated financial statements. IAS 39 Financial Instruments: Recognition and Measurement, amended by Novation of Derivatives and Continuation of Hedge Accounting (in force from 1 January 2014 or from financial periods beginning thereafter). This amendment concerns the prerequisites for applying hedge accounting in situations where derivatives are transferred to a so-called central counterparty. As a result of this amendment, hedge accounting can be continued in the said transfer situations if certain conditions are met. The amendment to this standard does not affect the consolidated financial statements.
Application of the new and amended IFRS standards
IASB has published the following new or revised standards and interpretations, which the Group has not yet applied. The Group will adopt them from the effective date of each standard and interpretation or, if the effective date is not the first day of a financial period, from the start of the financial period following the effective date. In the opinion of the Group, other standards or interpretations published by IASB but not listed here will have no impact on the future consolidated financial statements. IAS 19 Employee Benefits, amended by Defined Benefit Plans: Employee Contributions (in force from 1 July 2014 or financial periods beginning thereafter). The amendments clarify accounting
18
D E S T I A G R O U P / F I N A N C I A L S TAT E M E N T S
REVENUE 2. REVENUE 2014
EUR 1,000 Revenue, materials
11,498
Revenue,services
17,245
Revenue, recorded for long-term projects
233,036
Revenue, total
261,780
3. LONG-TERM PROJECTS 2014
EUR 1,000 Accrued expenses realised and profits recorded (less losses) Advance payments received for unfinished projects
233,036 30,462
4. MATERIALS AND SERVICES 2014
EUR 1,000
45,058
Purchases during financial year
2,311
Change in inventories External services
129,363
Materials and services, total
176,732
5. OTHER OPERATING INCOME AND EXPENSES 2014
EUR 1,000 Sales profits from tangible and intangible assets and relinquishing operations
891
Rental and other income
807
Other operating income, total
1,698
Losses from sale of tangible and intangible assets
313 2,007
Rents
2,214
Voluntary personnel expenses Other fixed expenses
18,129
Other operating expenses, total
22,663
Auditing expenses 61
Actual auditing
2
Other services Auditing expenses, total
62
6. DEPRECIATIONS 2014
EUR 1,000 Despreciations by type of assets Depreciations of tangible assets Buildings and structures
345
Buildings and structures, financial leasing
114 3,562
Machinery and equipment
350
Other tangible assets Intangible rights
345
Intangible rights Depreciations, total
4,715
D E S T I A G R O U P / F I N A N C I A L S TAT E M E N T S
19
IMPAIRMENTS 7. IMPAIRMENTS In 2014 no impairments were made. Goodwill impairments are covered in Notes 14 and 15. 8. EMPLOYEE BENEFITS 2014
EUR 1,000
37,935
Wages and salaries Pension expenses, payment-based arrangements Pension expenses, benefit-based arrangements
6,688 30 2,249
Other personnel-related expenses Employee benefit expenses, total
46,903
Information about employee benefits to the management is provided in Note 31, Insiders. Information about benefit-based pension arrangements is provided in Note 26, Pension obligations. Average personnel 2014 560
Waged employees
942
Clerical employees Average personnel, total
1,502
Personnel at end of financial year
1,429
9. RESEARCH AND DEVELOPMENT EXPENSES The expenses of the Group`s research and development activities in 2014 totalled MEUR 0.5. The Group has not activated its research and development expenses in the balance sheet. 10. FINANCIAL INCOME AND EXPENSES 2014
EUR 1,000 Financial income Interest income from loans and other receivables
30
Total
30
Financial expenses Interest expenses from financing liabilities recognised at atmortised cost Changes in value of financial assets and liabilities recognised at fair value through profit and loss Interest expenses for financial leasing contracts
253 12
Other financial expenses
1,383
Total
5,063
Financial income and expenses, total Information about financing is provided in Note 28.
20
3,415
D E S T I A G R O U P / F I N A N C I A L S TAT E M E N T S
-5,033
INCOME TAXES 11. INCOME TAXES 2014
EUR 1,000 Tax based on taxable income for the period
2,862 -917
Deferred taxes Total
1,944
Comprehensive income items include deferred tax income EUR 227 thousand resulting from cash flow hedging and from benefit-based pension arrangements EUR 378 thousand. Reconciliation statement between tax expenses and taxes calculated using the Group’s domestic tax rate (20 %) Result before taxes
7,432
Taxes calculated using domestic tax rate
1,486
Different tax rates for foreign subsidiaries
7
Tax effect of tax-free items
-19
Tax effect of non-deductible items and confirmed losses
469
Income taxes, total
1,944
12. EARNING PER SHARE Undiluted earnings per share are calculated by dividing the result for the financial year attributable to the parent company’s shareholders by the weighted average number of shares outstanding during the financial year. 2014
EUR 1,000 Result for financial year attributable to the parent company’s shareholders (EUR 1,000) Weighted average number of shares during the financial year (1,000) Undiluted earnings per share (EUR/share)
5,487 80 68,59
The Group has no diluting instruments that would convert to ordinary shares.
D E S T I A G R O U P / F I N A N C I A L S TAT E M E N T S
21
TANGIBLE ASSETS 13. TANGIBLE ASSETS EUR 1,000 Land and water areas
Buildings and structures
Buildings and structures, financial leasing
Machinery and equipment
Other tangible assets
Advance payments and construction in progress
Total
2,403
6,457
644
25,358
38
300
52
4,343
18,638
645
54,146
2,641
1,357
8,730
-26
-7
-1,603
Acquisition cost 1 Jan 2014 Subsidiary acquisition Increases Decreases Transfers between items Acquisition cost on 31 Dec 2014
3 2,440
6,734
-1,636
1,495 690
29,593
21,279
-1,545
-47
457
61,193
Accumulated depreciation on 1 Jan 2014 Accrued depreciation for decreases and transfers
7
7
Depreciation
-345
-114
-3,562
-350
-4,371
Accumulated depreciation on 31 Dec 2014
-345
-107
-3,562
-350
-4,364
6,390
583
26,031
20,929
Book value on 31 Dec 2014
2,440
457
56,829
14. GOODWILL EUR 1,000 Goodwill Acquisition cost 1 Jan 2014 Translation differences (+/-) Subsidiary acquisition
83,154
Acquisition cost 31 Dec 2014
83,154
Accrued depreciation on 1 Jan 2014 Translation differences (+/-) Accumulated depreciation on 31 Dec 2014 Book value on 31 Dec 2014
22
83,154
D E S T I A G R O U P / F I N A N C I A L S TAT E M E N T S
IMPAIRMENT TESTS 15. IMPAIRMENT TESTS Impairment test are annually performed on goodwill, comparing the book value of goodwill with the accruable amounts of its cash-flow-producing units. In addition, impairment testing is performed whenever there are signs of impairment. An impairment loss is recorded if the book value of net assets allocated to cash-flow-producing units (including goodwill) is greater than the accruable amount of cash-flow-producing unit. In 2014, among Destia Group´s business units goodwill was included in Destia subgroup´s business entity and it was allocated as follows:
31.12.2014 MEUR Destia subgroup
83.2
At the end of the year 2014, tests were performed on Destia subgroup. On the basis of the tests no impairment losses were recorded. The accruable amounts of cash-flow-producing units that have goodwill are based on calculated working values. The working value is determined by discounting the future cash flows produced by cash-flow-producing units in the continuous use of assets to present value. The calculation of working values is based on the following key assumptions: The cash flows used in the calculations are based on earlier experience and on the Board-approved 2015 budget and business plan 2016–2017. The cash flows of later financial years were extrapolated using a terminal growth rate of 1.8 %, depending on the cash-flow-producing unit, which reflects both the expected average growth rate and the effect on inflation. Cash flows were discounted using the discounting interest rate specified after taxes. The discounting interest rate is based on the weighted average cost of capital (WACC). The discounting interest rates (after taxes) used 2014: 7.53 % WACC on määritelty seuraavilla perusteilla: - Risk-free interest rate: The 10-year Finnish government bond, 31 December 2014 - The liability profit requirement (before taxes) and country-specific market risk premium, which is the issued marginal for the bond. - The control group’s market-based beta (the beta coefficient reflects the change sensitivity of the value in relation to value changes in the industry) Sensitivity analyses for impairment testing: The accruable amount for Destia subgroup exceeds the book value by MEUR 88.4. The key assumptions used in the sensitivity analysis are related to the earnings after interest, taxes, depreciation and amortisation (EBITDA), the discounting interest rate and the working capital. When other assumptions remain unchanged in Destia subgroup, an unfavourable change of 2 percentage points in the EBITDA would cause a need to record goodwill impairment.
D E S T I A G R O U P / F I N A N C I A L S TAT E M E N T S
23
OTHER INTANGIBLE ASSETS 16. OTHER INTANGIBLE ASSETS EUR 1,000 Intangible rights
Advance payments
Total
2,014
10
2,024
Acquisition cost 1 Jan 2014 Subsidiary acquisition Decreases
-4
-4 54
-6
47
2,063
4
2,068
Transfers between items Acquisition cost on 31 Dec 2014 Accumulated depreciation on 1 Jan 2014 Depreciation
-345
-345
Accumulated depreciation on 31 Dec 2014
-345
-345
Book value on 31 Dec 2014
1,718
17. ACQUISITION FROM BUSINESS OPERATIONS Acquisitions 2014 Subsidiary acquisition On 1 July 2014, the Group acquired through a share transaction Destia Ltd’s entire share capital. Destia is a Finnish infrastructure and construction service company, building, maintaining and designing traffic routes, traffic and industrial environments as well as complete living environments. Our services cover the whole spectrum, from comprehensive overground operations to subterranean construction. Destia Ltd and its subsidiaries mainly operate in Finland. The transaction was financed with Ahlström Capital Group’s MEUR 38 invested unrestricted equity fund and MEUR 29 equity hybrid loans. In addition, a MEUR 65 bond was issued on 19 June 2014. The operating profit for the financial year is encumbered by the MEUR 2.2 costs, and the result for the financial year is encumbered by the MEUR 4.7 costs, which relate to the acquisition and financial arrangements of Destia’s shares. The acquisition cost calculation is final, and the entire amount of the acquisition cost that exceeds the sum total of net assets is goodwill. Goodwill stands at MEUR 83.
1,723
Time-of-acqusition fair values Assets Property, plant and equipment Other intangible goods
54 4
Inventories
22
Accounts receivable and other receivables
59
Deferred tax assets Cash and cash equivalents Assets total
2 50 192
Liabilities Financial liabilities Accounts payable and other liabilities Provisions Deferred tax liability Repayment of capiltal to State 1 July Liabilities, total
8 100 17 1 42 167
Net assets
25
Goodwill from acquired business operations
83
Net assets Total acquisition cost
24
4
D E S T I A G R O U P / F I N A N C I A L S TAT E M E N T S
25 108
ACCOUNTS RECEIVABLES AND OTHER RECEIVABLES 18. AVAILABLE RECEIVABLES AND OTHER RECEIVABLES EUR 1,000 Shares and stakes, unquoted Acquisition cost 1 Jan 2014 Translation differences (+/-) Subsidiary acqusition
2,083
Acquisition cost on 31 Dec 2014
2,083
Accumulated depreciation on 1 Jan 2014 Translation differences (+/-) Book value on 31 Dec 2014
2,083
19. INVENTORIES 2014
EUR 1,000 Materials and supplies
19,876
Total
19,876
20. ACCOUNTS RECEIVABLE AND OTHER RECEIVABLES EUR 1,000 Accounts receivables Other receivables
2014 40,695 1,397
Accrued income
17,462
Accounts and other receivables, total
59,555
Age distribution of accounts receivable and items recorded as impairment losses EUR 1,000
2014
Impairment losses
Net 2014
36,826
36,826
Less than 30 days
2,268
2,268
30–60 days
1,254
1,254
Not due Due
61–90 days
336
More than 90 days
552
540
12
41,235
540
40,695
Accounts receivable, total
336
The Group has recorded impairment losses of EUR 540 thousand for accounts receivable. No significant credit risk concentrations are related to accounts receivable. The balance sheet values of accounts receivable best correspond to the maximum amount of credit risk related to them. Other risks related to accounts receivable are described in Note 28. The fair values of receivables correspond to the book value. The most significant accrued income items consist of percentage-of-completion receivables and sales allocations EUR 14,761 thousand and other items EUR 2,701 thousand.
D E S T I A G R O U P / F I N A N C I A L S TAT E M E N T S
25
DEFERRED TAX ASSETS AND LIABILITIES 21. CASH AND CASH EQUIVALENTS 2014
EUR 1,000 Cash in hand and at banks
37,650
Cash and cash equivalents, total
37,650
The balance sheet values of cash and cash equivalents best correspond to the maximum amount of credit risk related to them.
22. DEFERRED TAX ASSETS AND LIABILITIES EUR 1,000 Itemisation of deferred tax assets 2014 1 July 2014
In income statement
In other comprehensive income
1,292
Confirmed losses Pension benefits Other allocation differences
166
6
1,648
23
1,814
1,320
1,292 378
550 1,671
Hedge instrument fund Total
31 Dec 2014
227
227
605
3,739
Confirmed losses for which deferred tax assets have not been recorded
1 452
No deferred tax assets have been recorded for Destia Sverige AB. Destia Sverige AB´s losses will not expire.
Itemisation of deferred tax liabilities 2014
Depreciation differences and voluntary provisions
26
1 July 2014
In income statement
267
226
In other comprehensive income
31 Dec 2014 493
Other allocation differences
286
177
463
Total
553
403
956
D E S T I A G R O U P / F I N A N C I A L S TAT E M E N T S
EQUITY 23. EQUITY EUR 1,000 Other items Number of shares
Share capital
Invested unrestriced equity fund
Hybrid loans
Translation differences
Hedge instrument fund
Increases
80,000
80
38,000
29,000
-1
-907
31 Dec 2014
80,000
80
38,000
29,000
-1
-907
1 Jan 2014
Information on shares and share capital Destia Group Oy has one share type. The maximum number of shares is 80 thousand. The share capital of Destia Group Oyj is MEUR 0,08. In connection with the trade of Destia Ltd’s shares, the transaction was financed with Ahlström Capital Group’s MEUR 38 invested unrestricted equity fund and MEUR 29 of equity hybrid loans. Furthermore, on 19 June 2014, a MEUR 65 bond was issued. It is shown in Note 24. Descriptions of equity funds are provided below: Invested unrestricted equity fund The invested unrestricted equity fund includes equity-like investments and the share subscription price to the extent to which it is not recorded in the share capital by explicit decision. Hybrid loans Hybrid loans are loans issued by the owner, which are items comparable to equity. The amortisation and interest payments of hybrid loans are decided by the Annual Meeting on proposal by the Board of Directors. In order of priority, the loans are last behind other loans. Equity includes equity hybrid loans from Ahlström Capital valued at MEUR 29. Interest on the loans is 10 %. Other items Translation differences The translation differences include the differences resulting from the translation of foreign subsidiaries. Hedge instrument fund Hedge instrument fund include the effective portions of the changes in fair value of derivative instruments used in cash flow hedging.
D E S T I A G R O U P / F I N A N C I A L S TAT E M E N T S
27
FINANCIAL LIABILITIES 24. FINANCIAL LIABILITIES 2014
EUR 1,000
62,854
Loans from financial institutions
412
Financial leasing liabilities Financial liabilities recognised at fair value through profit and loss Non-current financial liabilities, total
1,133 64,399
Financial leasing liabilities
209
Financial liabilities recognised at fair value through profit and loss
262
Current financial liabilities, total
471
Financial leasing liabilities – total amount of minimun leases Maturing within one year
245
Maturing within more than one year and less than five years
415
Total
660
Financial leasing liabilities – present value of minimum leases Maturing within one year
209
Maturing within more than one year and less than five years
412
Total
620
Financial expenses accrued in the future
-40
Total amount of financial leasing liabilities
620
Destia Group Oyj issued a MEUR 65 bond as part of the financing of the Destia transaction. This loan is unsecured and will mature in full in June 2019. The loan coupon has a variable interest rate based on the three-month Euribor rate, and the loan margin is 4.5 %. The loan will be listed on the Helsinki Stock Exchange by June 2015. The loan is hedged by means of an interest rate swap up to the time of its maturity.
28
D E S T I A G R O U P / F I N A N C I A L S TAT E M E N T S
ACCOUNTS PAYABLE AND OTHER LIABILITIES GROUP’S CARRYING AMOUNTS OF FINANCIAL ASSETS AND LIABILITIES 2014
EUR 1,000 Financial assets Available-for-sale financial assets Available-for-sale financial assets (level 3)
2,083
Financial assets at fair value through profit or loss Current Trade and other receivables (level 2)
42,093
Cash and cash equivalents (level 2)
37,650
Financial liabilities Financial liabilities at fair value through profit or loss Interest rate swaps, in hedge accounting (level 2) Other derivatives, not in hedge accounting (level 2)
1,133 262
Financial liabilities valued at amortized acquisition cost Non-current 62,854
Bonds, interest-bearing (level 2) Financial leasing liability, interest-bearing (level 2)
412
Current Financial leasing liability, interest-bearing (level 2) Trade payables and other liabilities (level 2) The carrying value Level 1: Exchange Level 2: Fair value Level 3: Fair value
209 77,444
equals for the fair value. The levels adopted in fair value accounting: traded securities. determined by observable parameters. determined by non-observable parameters.
25. ACCOUNTS PAYABLE AND OTHER LIABILITIES 2014
EUR 1,000 Accounts payable
36,085
Other non-interest-bearing liabilities
10,135
Accrued expenses
30,183
Accounts payable and other non-interest-bearing liabilities,total
76,403
The most significant items in accrued expenses are personnel expenses allocations EUR 20,869 thousand, purchase allocations EUR 5,446 thousand, and other allocations EUR 3,868 thousand.
D E S T I A G R O U P / F I N A N C I A L S TAT E M E N T S
29
PENSION OBLIGATIONS 26. PENSION OBLIGATIONS 2014
EUR 1,000 The following items have entered in the balance sheet Present value on funded obligations
11,128
Fair value of assets included in the arrangement
-8,378
Present value of pension obligation
2,750
Unrecorded expenses based on retrospective work performance Fulfilling an obligation Unrecorded actuarial profit (+) / loss (-) Net liability (+) / asset (-)
2,750
In the balance sheet Liability for benefit-based pension benefits
2,750
Net obligation
2,750
Liability for payment-based pension benefits Pension obligations in balance sheet, total (net)
2,750
In comprehensive income statement Expenses based on work performance during the period
6 317
Interest expenses Expected profit from assets included in the arrangement Benefit-based arrangements, total
-293 30
Expenses for payment-based pension benefits Pension expenses in comprehensive income statement, total
30
Changes in present value of pension obligation 9,761
Obligation at the start of the period Expenses based on work performance during the period
317
Interest expenses
3,298
Actuarial loss (+) / profit (-)
-404
Benefits paid
30
6
Reduction of arrangements
-1,850
Obligation at the end of the financial year
11,128
D E S T I A G R O U P / F I N A N C I A L S TAT E M E N T S
PENSION OBLIGATIONS Changes in the fair value of assets included in the arrangement
2014 8,931
Assets at the start of the period Expected profit from assets included in the arrangement
293 1,408
Actuarial loss (+) / profit (-)
-404
Benefits paid
-1,850
Reduction of arrangements Assets at the end of the financial year
8,378
Realised profit from pension arrangements
1,700
Realised profit from assets in pension arrangements
1,700
Actuarial assumptions Discounting interest rate
2.0 %
Inflation
2.0 %
Future pay rises
0.0 %
Future pension rises
2.0 %
The Group expects to pay EUR 530 thousand for benefit-based pension arrangements in 2015. EUR 1,000 31 Dec 2014
2014
Present value of benefit-based obligations
11,128
Fair value of assets included in the arrangement
-8,378
Deficit / surplus
2,750
Sensitivity analysis If the discount rate decreased by 0.25 percentage points, benefit pension liabilities would increase by 111 thousand euros, if other assumptions would remain unchanged. The sensitivity analysis is based on the notion that when one assumption changes, all other assumptions remain unchanged. In practice, this is not probable, and changes occurring in some assumptions may correlate with each other. ”The sensitivity of a benefit obligation to the changes of significant actuarial assumptions has been calculated using the same method as in calculating the pension obligation recorded on the balance sheet.
D E S T I A G R O U P / F I N A N C I A L S TAT E M E N T S
31
PROVISIONS 27. PROVISIONS EUR 1,000 Guarantee provisions Environmental provisions 1 July 2014
4,114
Other provisions
Total
8,021
5,356
17,492
Provisions additions
1,108
1,369
2,477
Expensed provisions
-328
-14
-1,242
-1,585
Reversals of unused provisions
-1,174
-116
-98
-1,388
5,385
19,742
Effect of discounting 31 Dec 2014
EUR 1,000 Non-current provisions Current provisions Total
238
2,506
3,959
10,398
2,745
2014 13,801 5,941 19,742
Guarantee provisions Guarantee provisions have been made to cover any obligations during the warranty period of contractual agreements. They are based on experiences from previous years. Environmental provisions The Group has land areas that it is obliged to restore to their original condition. The present value of estimated landscaping costs has been activated to the acquisiton cost of the areas and presented as a provision. The discounting factor used in determining the present value is 0,8 %. In addition, the Group has a provision for cleaning a contaminated land area, made for cleaning the former asphalt plant in the capital region. Other provisions Other provisions include dispute and litigation provisions of MEUR 0.7, project loss provisions of MEUR 3.7 and other provisions of MEUR 1.0 of which 0.5 MEUR is related to personnel.
32
D E S T I A G R O U P / F I N A N C I A L S TAT E M E N T S
FINANCIAL RISK MANAGEMENT 28. FINANCIAL RISK MANAGEMENT In the normal course of business, the Group is exposed to a number of financing risks. The objective of the Group’s risk management is to minimise the adverse effects of changes in the financial markets on the Group’s earnings. The primary types of financing risks are foreign exchange risks, interest rate risks and commodity risks. The Group’s financing policy determines the guidelines and practices for the Group’s financing activities. The Group’s general principles of risk management and financing policy are approved by the Board of Directors, and their practical implementation is the responsibility of the Group Chief Financial Officer and the centralised Finance and Treasury unit together with the business units. The Group’s Finance and Treasury unit identifies and assesses the risks and acquires the instruments required for protection against them in close co-operation with the operational units. Hedging transactions are carried out in accordance with the financing policy. The Group performs risk management by means of forward exchange contracts, foreign currency loans, interest rate swaps and commodity derivatives. Financing risks are reported to the Board of Directors and Audit Committee quarterly. Internal and external audits monitor Group compliance with financial policy. Credit risk Destia Group’s credit risk consists of the credit risk of accounts receivable related to the business operations and of the counterparty risk related to other financial instruments. The management of the credit risk of accounts receivable aims to increase the amount of advances received and to assess the customer’s creditworthiness in good time during the tendering process, enabling assessment of the collateral amount, the instrument and the eligibility of the collateral offered that may be needed. The Group’s credit risk is managed by the business unit controllers in accordance with instructions prepared by the Finance and Treasury unit. The Group has no significant credit risk concentrations related to accounts receivable. The counterparty risk related to other financial instruments is generated when Destia invests assets in money market instruments offered by other companies, public organisations or financial institutions. The risk is related to the counterparty of the contract not being able to fulfil its contractual obligations. The counterparty risk is managed via counterparty limits. Counterparty limits are only determined for counterparties deemed to be solvent and have a good credit rating. Select counterparties are set maximum limits in euros and maximum maturity limits. The counterparty and counterparty limits are approved by the Group’s Board of Directors. The maximum amount of the Group´s credit risk corresponds to the book value of financial assets at the end of the financial year. The age distribution of accounts receivable is presented in Note 20. Liquidity risk Liquidity risk management aims to ensure that the Group is able to fulfil its financial obligations at all times. Annual cash flow forecasts are prepared for the next three years during strategy planning, and monthly forecasts are made for the next year during budgeting. In addition, liquidity planning is carried out daily. In the long term, the aim is to secure liquidity by means of persistent, proactive financing arrangements and the establishment of short-term financing limits. According to the Group’s operational instructions, cash assets must be invested in liquid money market instruments to ensure flexibility. The following table shows the maturity distribution of the Group’s financial liabilities. The amounts have not been discounted, and they include both interest payments and capital repayments.
31 Dec 2014
Balance sheet value
Contractbased cash flows
Less than 1 year
1–2 years
2–3 years
3–4 years
More than 4 years
-650
-707
-822
-65,459
-650
-707
-822
-65,459
Maturity distribution of financial liabilities Loans from financial institutions
65,000
-68,270
-632
Accounts payable and other liabilities
46,221
-46,221
-46,221
111,221
-114,491
-46,853
Total
Maturity distribution of derivative liabilities Interest rate swaps Commodity derivatives Total
1,133
-800
-272
262
-262
-262
1,395
-1,062
-534
-256
-197
-82
8
-256
-197
-82
8
The tables do not include financial leasing liabilities, for which additional information is provided in Note 24.
D E S T I A G R O U P / F I N A N C I A L S TAT E M E N T S
33
FINANCIAL RISK MANAGEMENT Foreign exchange risk Foreign exchange risk refers to the insecurity related to the result, balance sheet and cash flow caused by changes in currency exchange rates. The international operations of Destia Group are minor at this stage, so the amounts affected by foreign exchange risk, or foreign exchange positions, are small and the foreign exchange risk is low. The Group’s foreign exchange risk is managed in a centralised manner by the Finance and Treasury unit. The aim is to direct the foreign exchange risk at the parent company by invoicing foreign subsidiaries in their domestic currency. The Group’s internal loans are also in the debtor’s domestic currency. The foreign exchange risk grows as international operations increase, making it necessary to assess the risk via foreign exchange position calculations. Position calculations are prepared for currency cash flows and balance items in foreign currencies separately. According to the Group´s financing policy, the foreign exhange risk must be covered to at least 50 and at most 100 per cent, using forward exchange and option contracts or foreign currency loans as hedging instruments. Hedging operations are directed at cash flows and balance items separately. Currency derivatives may only be used for hedging purposes.The efficiency of hedging must be measured monthly. The Group does not apply IAS 39 hedge accounting to currency hedging. The Group doesn´t have any significant outstanding foreign exchange positions. In the end of the financial year provisions denominated in NOK worth MNOK 3.6 have not been hedged. The Group’s assets and liabilities in foreign currencies on the last day of the period under review were as follows: 2014 EUR 1,000
NOK
USD
SEK
Current assets Accounts and other receivables
140
15
Cash and cash equivalents
151
101
5
8
-393
286
108
-393
286
108
Current liabilities Loans from financial institutions Accounts payable and other liabilities Other provisions Total
393
Forward exchange contracts Position, total
The table below shows how the Group’s equity is affected if the euro strengthens or weakens against the Norwegian krone, the United States dollar or the Swedish krona while the other factors remain unchanged. The sensitivity analysis is based on assets and liabilities in foreign currencies on the last day of the period under review.
2014 EUR 1,000
NOK
USD
SEK
Change percentage
10 %
10 %
10 %
-31
23
9
Effect on profit after taxes Effect on equity
Interest rate risk Interest rate risk is the risk of market interest rates affecting the Group’s interest expenses and profits. The Group’s interest rate risk primarily consists of the interest rate risk of the external loan portfolio. The interest rate risk is managed by spreading the Group’s loans and investments across various maturities on the one hand and variable and fixed-rate instruments on the other. The risk of the loan and investment portfolio is determined by interest position calculation. According to the Group’s financing policy, the interest rate risk must be covered to at least 50 and at most 100 per cent, using short- or long-term forward rate or future contracts, interest rate option contracts or interest rate swaps. Interest rate derivatives may only be used for hedging purposes. The Group’s interest rate risk is managed in a centralised manner by the Finance and Treasury unit. At the moment, the Group has hedged its variable interest rate loan portfolio through interest rate swaps. The Group applies to these interest rate swaps IAS 39 cash flow hedge accountings. Hydrid loans are not part of interest risk management.
34
D E S T I A G R O U P / F I N A N C I A L S TAT E M E N T S
OTHER LEASE AGREEMENT The table below shows the Group’s interest position on the last day of the period under review: EUR 1,000
2014
Variable-raste 65,000
Financial liabilities Net
65,000
Interest rate swaps
65,000
Variable-rate position, total
0
The Group has no fixed-rate financial assets or liabilities. Effect of interest changes on the Group’s result and equity The table below shows how the Group’s equity is affected if the interest rates increase or decrease and the other factors remain unchanged. The sensitivity analysis is based on the interest position on the last day of the period under review. EUR 1,000
2014 +/-0.5 %
Change Effect on profit after taxes Effect on equity
1,194
Commodity risk In its operations, Destia Group is exposed to commodity risk related to commodity price fluctuations. Destia’s significant commodity risks are determined in connection with tendering. The necessary hedging procedures are planned on a projectspecific basis by co-operation between the business units and the Economics and Financing unit. Monthly rolling period for diesel hedging is 12 months. The hedging rate is 25 % from average yearly purchases. Management of capital The purpose of enhancing Destia’s use of capital is to speed up the incoming cash flow and slow down the outgoing cash flow. The efficient use of capital is ensured by efficient, safe and profitable investments or use of existing assets. Efficiency is also ensured by improving the terms of payment in contractual negotiations, by efficiently managing payment transactions with the help of cash flow forecasts, and by utilising an efficient bank account network and programme as well as up-to-date accounts payable and receivable activities.
EUR 1,000
2014 68,666
Equity
264,610
Balance sheet total Advances received
31,224
Equity ratio
29.4 %
29. OTHER LEASE AGREEMENT Group as lessee Other lease agreements include, for example, leases for premisies and equipment. The average terms of the lease agreements are 1–7 years. Minimun leases paid on the basis of non-cancellable lease agreements:
EUR 1,000
2014
Within one year
3,314
Within more than one year and less than five years
2,589
Within more than five years Total
13 5,916
During the financial year, lease expenses of EUR 1,819 thousand for other lease agreements were recognised though income statement.
D E S T I A G R O U P / F I N A N C I A L S TAT E M E N T S
35
CONDITIONAL LIABILITIES AND ASSETS 30. CONDITIONAL LIABILITIES AND ASSETS 2014
EUR 1,000 Guarantees and contingent liabilities Business mortgage
39,000
Bank quarantees
79,301
Disputes and litigation The Group has unfinished disputes related to projects, which have been prepared for with cost provisions to the extent that the Group deems the disputes substantial and the claims justified. 31. INSIDERS The Group´s insiders include the parent company and subsidiaries. In addition, the insiders include the members of the Board and Management Team, including the President and CEO. The Group´s parent company and subsidiary relations in year 2014 were as follows:
Company
City
Country
Group´s share of ownership and votes %
Parent company´s share of ownership and votes %
Destia Group Oyj, Parent company
Helsinki
Finland
Destia Ltd, parent company of the subgroup
Vantaa
Finland
100
100
Estonia
100
100
31 Dec 2014
Destia Ltd, subsidiaries Destia Eesti AS Turgel Grupp AS
Estonia
100
100
Kouvola
Finland
100
100
Sweden
100
100
Destia International Oy
Helsinki
Finland
100
100
Finnroad Oy
Helsinki
Finland
100
100
Destia Rail Oy Destia Sverige AB
On 1 October 2014, Destia Fleet Ltd was merged with Destia Ltd, and Kaivujyrä Oy with Destia Rail Limited. Consortia have also been established for large and long-term projects, which also involve external parties. Management´s emplyee benefits
2014
EUR 1,000 Salaries and other short-term emplyee benefits
1,326
Total
1,326
Salaries and remuneration: 298
President & CEO
46
Members of the Board of Directors It has been agreed that the retirement age of the President & CEO is 63.
32. EVENTS AFTER THE END OF THE REPORTING PERIOD Nothing to report
36
D E S T I A G R O U P / F I N A N C I A L S TAT E M E N T S
GROUP’S KEY FIGURES
GROUP’S KEY FIGURES Destia Group
IFRS
7–12/2014
MEUR
261,8
Revenue Change from previous year, %
12,5
Operating profit for the period % of revenue
4,8
Result for the period
5,5
% of revenue
2,1 5,5
Result for the period
19,1
EBITDA *)
7,3
% of revenue
72,5
Gross investments
27,7
% of revenue
264,6
Balance sheet total Equity
68,7
Equity ratio, % 1)
29,4
Net gearing, % 2)
42,4
Interest-bearing liabilities
66,8
Current Ratio 3)
1,0
Quick Ratio 4)
1,0
Return on equity, % 5)
8,0
Return on investment, % 6)
9,2 68,59
Earnings per share, EUR **)
858,32
Equity per share, EUR
1 502
Average personnel Occupational accidents resulting in absence from work ***)
9,3 628,2
Comparable order book Research and development expenses
0,5
% of other operating expenses
2,1
*) EBITDA adjusted by non-recurring items related to acquisition **) Number of shares is: Destia Group Oyj 80,000, Destia Ltd 680,000 ***) Occupational accidents of Destia’s own personnel per one million working hours Formulas: 1) (Equity/(balance sheet total - advances received))*100 2) ((Interest-bearing liabilities - cash and cash equivalents and held-to-maturity investments)/equity)*100 3) (Inventories + liquid assets)/current liabilities 4) Financial assets without receivables from uncompleted contracts/current liabilities without advance payments 5) (Result for the period/average equity)*100 (opening and closing balance) 6) (Result before taxes + interest costs and other financial expenses)/(invested capital average)*100 (balance sheet total - non-interest-bearing liabilities - provisions, opening and closing balance) Under points 5 and 6 equity at 31 December 2014 and total balance sheet at 31 December 2014 have been used as Destia Group’s balance sheet value
D E S T I A G R O U P / F I N A N C I A L S TAT E M E N T S
37
PARENT COMPANY INCOME STATEMENT (FAS)
DESTIA GROUP OYJ INCOME STATEMENT (FAS) EUR 1,000 INCOME STATEMENT (FAS)
22 Apr – 31 Dec 2014
Revenue
600
Personnel expenses Salaries and fees
230
Pension expenses
41 7
Other personnel expenses Personnel expenses
278
Other operating expenses
1,611
Operating result
-1,289
Financial income and expenses Interest expenses to Group companies
1,482
Interest expenses to others
3,353 334
Other financial expenses Financial income and expenses
-5,169
Profit/loss before extraordinary items
-6,459
Profit/loss before taxes
-6,459
Income and deferred tax
1,292
Profit/loss for the financial year
38
-5,167
D E S T I A G R O U P / F I N A N C I A L S TAT E M E N T S
PARENT COMPANY BALANCE SHEET (FAS)
DESTIA GROUP OYJ BALANCE SHEET (FAS) EUR 1,000 BALANCE SHEET (FAS)
31 Dec 2014
ASSETS NON-CURRENT ASSETS INVESTMENTS Holdings in Group companies
109,352
Investements
109,352
NON-CURRENT ASSETS
109,352
CURRENT ASSETS RECEIVABLES Other receivables
2,621
Deferred tax assets
1,292
Receivables
3,913
Cash and cash equivalents
15,975
CURRENT ASSETS TOTAL
19,888
ASSETS
129,240
D E S T I A G R O U P / F I N A N C I A L S TAT E M E N T S
39
PARENT COMPANY BALANCE SHEET (FAS)
DESTIA GROUP OYJ BALANCE SHEET (FAS) EUR 1,000 BALANCE SHEET (FAS)
31 Dec 2014
EQUITY AND LIABILITIES EQIUTY 80
Share capital Reserve for invested non-restricted equity
38,000
Profit / loss for the period
-5,167
Equity total
32,913
LIABILITIES Non-current liabilities Equity instruments
29,000
Bonds
65,000
Non-current liabilities
94,000
Current liabiliteis 496
Accounts receivables
1,482
Liabilities from Group companies
44
Other liabilities Accrues expenses
305
Current liabilities
2,327
LIABILITIES TOTAL
96,327
EQUITY AND LIABILITIES
40
129,240
D E S T I A G R O U P / F I N A N C I A L S TAT E M E N T S
PARENT COMPANY CASH FLOW STATEMENT
DESTIA GROUP OYJ CASH FLOW STATEMENT EUR 1,000 CASH FLOW STATEMENT (FAS)
22 Apr – 31 Dec 2014
CASH FLOW FROM BUSINESS OPERATION 600
Payments received from customers Payments to supplier of goods/services and to personnel
-2,233
Interest paid on business operations
-3,243
Other financial items from business operations
-1,877
Net cash flow from business operations
-6,753
CASH FLOW FROM INVESTMENT ACTIVITIES Acquired shares in subsidiaries
-97,352
Cash flow from investment activities
-97,352
Net cash flow from investment activities
-97,352
CASH FLOW FROM FINANCIAL ACTIVITIES 80
Rights issue Sijoitus SVOP-rahastoon
38,000
Investment in invested unstricted equity fund (+)
65,000
Increace in non-current loans (+)
17,000
Net financial cash flow
120,080
Net financial cash flow
120,080
Change in cash and cash equivalents
15,975
Cash and cash equivalents at the end of the financial period
15,975
Cash and cash equivalents at the beginning of the financial period
0 15,975
D E S T I A G R O U P / F I N A N C I A L S TAT E M E N T S
41
NOTES TO FINANCIAL STATEMENTS, PARENT COMPANY (FAS)
NOTES TO FINANCIAL STATEMENTS, PARENT COMPANY (FAS) DESTIA GROUP OYJ Accounting principles Destia Ltd’s parent company is Destia Group Oyj, which was established in connection with the ownership arrangement of Destia and which owns 100 % of Destia Ltd’s shares. Comparative figures do not exist for Destia Group Oyj. Destia Group Oyj’s financial statements for the financial year 22 April−31 December 2014 have been prepared in accordance with the Finnish Accounting Act. Destia Group prepared its consolidated financial statements in accordance with the reporting principles of the International Financial Reporting Standards (IFRS). Valuing investments Investments have been valued at acquisiton cost. Financial assets Financial assets have been values at acquisiton price, or at a likely transfer price which is lower than the acquisition cost. Derivative instruments The fair value of derivative contracts prepared to hedge cash flows to be generated in future financials years has been processed as an off-balance-sheet-liability. Pensions Personnel pensions have been ensured by means of insurance at an external pension insurance company. Pension expenses have been entered as expenses during the year they were incurred.
42
D E S T I A G R O U P / F I N A N C I A L S TAT E M E N T S
NOTES TO INCOME STATEMENT, PARENT COMPANY (FAS)
NOTES TO INCOME STATEMENT, PARENT COMPANY (FAS) 2014
1 000 EUR Revenue Revenue from Group companies
600
Revenue, total
600
Average number of personnel
0
Personnel at end of the financial year
3
Management salaries and fees 36
President and CEO
8
Members of the Board of Directors Total
44
Auditor´s fees Actual auditing
2
Other services
0
Total
2
Other operating income 0
Travelling expenses
1,581
Administrative expenses
29
Insurances Total
1,611
Financial expenses Interest expenses To Group companies
1,482
To others
3,353
Total
4,835
Other financial expenses 52
Collateral fees
279
Other liability expenses
3
Other financial expenses Total
334
Income tax and deferred tax 1,292
Change in deferred tax asset
D E S T I A G R O U P / F I N A N C I A L S TAT E M E N T S
43
NOTES TO INCOME STATEMENT, PARENT COMPANY (FAS)
NOTES TO BALANCE SHEET, PARENT COMPANY (FAS) 2014
1 000 EUR Non-current assets Investments Holdings in Group companies 1.7.
109,352
Holdings in Group companies 31.12.
109,352
Current assets Receivables Other receivables
2,621
Total
2,621
Deferred tax assets 1,292
Deferred tax assets Equity and liabilities Equity Restricted equity Share capital at 22 Apr
80
Share capital at 31 Dec
80
Restricted equity, total
80
Non-restricted equity Fund for invested non-restricted equity 1 July
38,000
Fund for invested non-restricted equity 31 Dec
38,000
Profit/loss for the period
-5,167
Non-restricted equity, total
33
Equity, total
32,913
Distributable non-restricted equity Fund for invested non-restricted equity
44
38,000
Profit/loss for the period
-5,167
Total
32,833
D E S T I A G R O U P / F I N A N C I A L S TAT E M E N T S
NOTES TO INCOME STATEMENT, PARENT COMPANY (FAS)
NOTES TO BALANCE SHEET, PARENT COMPANY (FAS) Shares and shareholders Registered
Shareholder
%
22 Apr 2014
AC Infra Oy (Ahlström Capital)
100
Share capital EUR 80 000
1 000 EUR Non-current liabilities Non-current liabilites Bonds
65,000
Equity instruments
29,000
Total
94,000
Current liabilities 496
Accounts payable
1,482
Liabilities to Group companies
44
Other liabilities
305
Accrued expenses Total
2,327
Main items relating to accrued expenses and deferred income Interest-related
110
Personnel-related
195
Total
305
Derivative contracts Interest derivatives Nominal value
65,000
Fair value
-1,133
Nominal values and fair values are presented as net amounts. Fair value is an estimate of the gains and losses that would have been realise, if the derivative contracts had been terminated at the balance sheet date.
D E S T I A G R O U P / F I N A N C I A L S TAT E M E N T S
45
BOARD OF DIRECTOR´S PROPOSAL ON THE USE OF DISTRIBUTABLE ASSETS
BOARD OF DIRECTOR´S PROPOSAL ON THE USE OF DISTRIBUTABLE ASSETS Destia Group Oyj’s FAS compliant loss for the financial year was EUR 5,166,857.22, which is proposed to be recorded on the profits and losses account. Destia Group Oyj’s distributable assets total EUR 32,833,142.78, including the EUR 38,000,000 in the invested unrestricted equity fund. Destia Group Oyj’s Board of Directors proposes to the General Meeting that no dividend or repayment of capital be paid for the financial period that ended on 31 December 2014 but that MEUR 2 of hybrid loan amortisation and EUR 1,482,222.21 of hybrid loan interest accued be paid.
Signatures for Board of Director’s report and financial sharements Vantaa, 12 February 2015 Panu Routila Jacob af Forselles Arto Räty Solveig Törnroos-Huhtamäki Matti Mantere Hannu Leinonen President and CEO The Auditor´s Note
46
Our auditor´s report has been issued Vantaa, 12 February 2015
Ernst & Young Oy Authorized Public Accountant Firm Kristina Sandin Authorized Public Accountant
today.
D E S T I A G R O U P / F I N A N C I A L S TAT E M E N T S
AUDITOR’S REPORT
AUDITOR’S REPORT To the Annual General Meeting of Destia Group Oyj
We have audited the accounting records, the financial statements, the report of the Board of Directors, and the administration of Destia Group Oyj for the financial year 22 April, 2014 – 31 December, 2014. The financial statements comprise the consolidated statement of financial position, statement of comprehensive income, statement of changes in equity and statement of cash flows, and notes to the consolidated financial statements, as well as the parent company’s balance sheet, income statement, cash flow statement and notes to the financial statements.
Responsibility of the Board of Directors and the Managing Director
The Board of Directors and the Managing Director are responsible for the preparation of consolidated financial statements that give a true and fair view in accordance with International Financial Reporting Standards (IFRS) as adopted by the EU, as well as for the preparation of financial statements and the report of the Board of Directors that give a true and fair view in accordance with the laws and regulations governing the preparation of the financial statements and the report of the Board of Directors in Finland. The Board of Directors is responsible for the appropriate arrangement of the control of the company’s accounts and finances, and the Managing Director shall see to it that the accounts of the company are in compliance with the law and that its financial affairs have been arranged in a reliable manner.
Auditor’s Responsibility
Our responsibility is to express an opinion on the financial statements, on the consolidated financial statements and on the report of the Board of Directors based on our audit. The Auditing Act requires that we comply with the requirements of professional ethics. We conducted our audit in accordance with good auditing practice in Finland. Good auditing practice requires that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and the report of the Board of Directors are free from material misstatement, and whether the members of the Board of Directors of the parent company or the Managing Director are guilty of an act or negligence which may result in liability in damages towards the company or have violated the Limited Liability Companies Act or the articles of association of the company.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements and the report of the Board of Directors. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation of financial statements and report of the Board of Directors that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the company’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements and the report of the Board of Directors. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Opinion on the consolidated financial statements
In our opinion, the consolidated financial statements give a true and fair view of the financial position, financial performance, and cash flows of the group in accordance with International Financial Reporting Standards (IFRS) as adopted by the EU.
Opinion on the company’s financial statements and the report of the Board of Directors
In our opinion, the financial statements and the report of the Board of Directors give a true and fair view of both the consolidated and the parent company’s financial performance and financial position in accordance with the laws and regulations governing the preparation of the financial statements and the report of the Board of Directors in Finland. The information in the report of the Board of Directors is consistent with the information in the financial statements. Vantaa, 12 February 2015 Ernst & Young Oy Authorized Public Accountant Firm Kristina Sandin Authorized Public Accountant
D E S T I A G R O U P / F I N A N C I A L S TAT E M E N T S
47
DESTIA SUBGROUP, CONSOLIDATED INCOME STATEMENT AND CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
DESTIA SUBGROUP, CONSOLIDATED INCOME STATEMENT AND CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME IFRS MEUR
Destia subgroup
Destia subgroup
1–12/2014
1–12/2013
431,5
489,7
3,3
5,3
Continuing operations Revenue Other operating income Materials and services
284,2
335,4
Employee benefit expenses
86,9
86,9
Depreciations
10,0
12,2
Other operating expenses
38,5
41,6
Operating result
15,1
18,9
Financial income
0,2
0,6
Financial expenses
2,0
2,7
13,3
16,8
2,8
4,2
10,5
12,5
0,0
2,3
10,5
14,9
-1,5
-1,3
-1,5
-1,3
-0,0
0,0
0,3
1,0
0,3
1,0
-1,2
-0,4
9,3
14,5
15,44
21,85
Result before taxes Income taxes Result for the period of continuing operations Discontinued operations Result for the period of discontinued operations Result for the period Other comprehensive income including tax effects Items that will not be reclassified to profit and loss Actuarial profit and loss from benefit-based pension arrangements Items that may be reclassified subsequently to profit and loss Tanslation differences of foreign subsidiaries Cash flow hedges
Other comprehensive income net of tax Comprehensive income for the financial year Result for the period and comprehensive income for the period belong to parent company shareholders. Undiluted/diluted earnings per share (EUR/share)
48
D E S T I A G R O U P / F I N A N C I A L S TAT E M E N T S
DESTIA SUBGROUP, CONSOLIDATED BALANCE SHEET (IFRS)
DESTIA SUBGROUP, CONSOLIDATED BALANCE SHEET IFRS MEUR
Destia subgroup
Destia subgroup
31.12.2014
31.12.2013
Tangible assets
56,8
57,7
Goodwill
17,0
17,0
Other intangible assets
1,7
2,4
Available-for-sale financial assets
2,1
2,1
ASSETS Non-current assets
2,2
2,0
79,8
81,2
Inventories
19,9
20,6
Accounts and other receivables
59,1
63,8
Deferred tax assets Non-current assets, total Current assets
21,7
54,5
Current assets, total
100,6
138,9
Assets, total
180,5
220,0
Share capital
17,0
17,0
Invested unrestricted equity fund
14,4
56,4
Cash and cash equivalents
EQUITY AND LIABILITIES Equity attributable to equity holders of the parent company
0,0
-0,3
Retained earnings
19,8
10,8
Equity, total
51,1
83,9
0,7
0,6
Other items
Non-current liabilities Deferred tax liabilities Pension liabilities Provisions Financial liabilities Non-current liabilities, total
2,8
0,8
13,8
11,8
0,4
10,9
17,6
24,1
74,1
75,7
5,9
6,6
Current liabilities Accounts payable and other liabilities Provisions Financial liabilities
0,5
0,2
Advances received
31,2
29,5
Current liabilities, total
111,7
112,0
Equity and liabilities, total
180,5
220,0
D E S T I A G R O U P / F I N A N C I A L S TAT E M E N T S
49
DESTIA SUBGROUP, CONSOLIDATED CASH FLOW STATEMENT
DESTIA SUBGROUP, CONSOLIDATED CASH FLOW STATEMENT IFRS MEUR
Destia subgroup
Destia subgroup
1–12/2014
1–12/2013
438,4
475,2
-410,4
-456,8
-0,2
-0,7
OPERATING CASH FLOWS Cash receipts from customers Expenses paid to suppliers and personnel Interests paid Interests received Other financial items
0,1
0,2
-1,3
-2,2
Tax paid
-3,5
-0,5
Net operating cash flow, continuing operations
23,0
15,1
Net operating cash flow, discontinued operations Net operating cash flow
-0,2 23,0
14,9
-6,8
-7,6
3,0
6,5
INVESTMENT CASH FLOW Investments in intangible and tangible assets Sale of intangible and tangible assets Investments in other assets
-26,0
Proceeds from the sale of other investments Net investment cash flow, continuing operations
25,9 -3,7
-1,2
-3,7
-1,2
-10,0
-20,2
Net investment cash flow, discontinued operations Net investment cash flow
FINANCIAL CASH FLOWS Decrease in non-current debt (-) Increase in short-term financing (-)
15,8
Decrease in short-term financing (-)
-15,8
-0,1
Capital repayment to the State of Finland
-42,0
Net financial cash flow, continuing operations
-52,0
-20,3
Net financial cash flow
-52,0
-20,3
Change in cash and cash equivalents
-32,8
-6,6
Cash and cash equivalents at beginning of financial period
54,5
61,1
Cash and cash equivalents at end of financial period
21,7
54,5
Net financial cash flow, discontinued operations
50
D E S T I A G R O U P / F I N A N C I A L S TAT E M E N T S
DESTIA SUBGROUP’S KEY FIGURES
DESTIA SUBGROUP’S KEY FIGURES IFRS MEUR
Destia subgroup
Destia subgroup
Destia subgroup
2014
2013
2012
Revenue, continuing operations
431,5
489,7
507,3
Change from previous year, %
-11,9
-3,5
3,0
15,1
18,9
14,0
Operating profit for the period, continuing operations % of revenue Result for the period, continuing operations
3,5
3,9
2,8
10,5
12,5
11,1
2,4
2,6
2,2
10,5
14,9
10,8
Gross investments
8,0
9,5
7,3
% of revenue
1,9
1,9
1,4
180,5
220,0
223,5
51,1
83,9
69,4
% of revenue Result for the period
Balance sheet total Equity Equity ratio, % 1)
34,3
44,0
35,2
Net gearing, % 2)
-41,2
-51,6
-40,5
Interest-bearing liabilities
0,6
11,2
32,9
Current Ratio 3)
0,8
1,2
1,3
Quick Ratio 4) Return on equity, % 5)
0,9
1,2
1,3
15,5
19,4
16,8
20,9
22,1
12,5
Earnings per share, EUR
15,44
21,85
15,90
Equity per share, EUR
75,20
123,41
102,08
Average personnel
1 502
1 515
1 591
Return on investment, % 6)
9,3
10,8
15,6
628,2
574,6
600,8
Research and development expenses
0,9
1,1
1,0
% of other operating expenses
2,4
2,6
2,4
Occupational accidents resulting in absence from work *) Order book
*) Occupational accidents of Destia’s own personnel per one million working hours Formulas: 1) (Equity/(balance sheet total – advances received))*100 2) ((Interest-bearing liabilities – cash and cash equivalents and held-to-maturity investments)/Equity) *100 3) (Inventories + liquid assets)/current liabilities 4) Financial assets without receivables from uncompleted contracts/current liabilities without advance payments 5) (Result for the period/average equity)*100 (opening and closing balance) 6) (Result before taxes + interest costs and other financial expenses)/(invested capital average)*100 (balance sheet total - non-interest-bearing liabilities - provisions, opening and closing balance)
D E S T I A G R O U P / F I N A N C I A L S TAT E M E N T S
51
DESTIA SUBGROUP, CONSOLIDATED INCOME STATEMENT, QUARTERLY FIGURES (IFRS)
DESTIA SUBGROUP, CONSOLIDATED INCOME STATEMENT, QUARTERLY FIGURES IFRS MEUR
Destia subgroup
Destia subgroup
Destia subgroup
Destia subgroup
Destia subgroup
Destia subgroup
Destia subgroup
Destia subgroup
10–12/2014
7–9/2014
4–6/2014
1–3/2014 10–12/2013
7–9/2013
4–6/2013
1–3/2013
125.4
136.3
102.0
67.7
143.3
156.0
112.3
78.1
1.4
0.7
0.8
0.4
1.5
1.7
0.8
1.3
Materials and services
83.3
93.4
Employee benefit expenses
64.1
43.3
98.4
110.7
74.7
51.7
25.0 2.2
21.6
22.0
18.3
25.4
20.6
21.8
19.1
2.5
2.6
2.7
3.1
3.0
3.0
3.1
Other operating expenses
12.6
8.1
10.1
7.6
12.4
10.2
11.2
7.8
Operating result
3.8
11.4
3.9
-3.9
5.5
13.2
2.5
-2.2
Financial income
0.0
0.0
0.1
0.1
0.1
0.0
0.4
0.1
Financial expenses
0.4
1.0
0.4
0.2
0.9
0.2
1.3
0.4
Result before taxes
3.4
10.4
3.6
-4.0
4.7
13.1
1.6
-2.5
Income taxes
-0.7
-2.3
-0.7
-0.8
-1.3
-3.2
-0.3
-0.6
Result for the period of continuing operations
2.7
8.2
2.9
-3.2
3.3
9.9
1.3
-1.9
Result for the period of discontinued operations
0.0
0.0
0.0
-0.0
0.1
0.6
Result for the period
2.7
8.2
2.9
-3.2
3.4
10.4
Continuing operations Revenue Other operating income
Depreciations
Discontinued operations
52
D E S T I A G R O U P / F I N A N C I A L S TAT E M E N T S
1.7 1.3
-0.3
DESTIA SUBGROUP, CONSOLIDATED BALANCE SHEET, QUARTERLY FIGURES
DESTIA SUBGROUP, CONSOLIDATED BALANCE SHEET, QUARTERLY FIGURES IFRS MEUR
Destia Destia Destia Destia Destia Destia Destia Destia subgroup subgroup subgroup subgroup subgroup subgroup subgroup subgroup 12/2014
9/2014
6/2014
3/2014
12/2013
9/2013
6/2013
3/2013
Tangible assets
56.8
53.6
54.1
55.5
57.7
60.5
62.9
63.1
Goodwill
17.0
17.0
17.0
17.0
17.0
17.0
17.0
17.0
1.7
1.9
2.0
2.2
2.4
2.5
2.3
2.4
0.1
0.1
0.1
ASSETS Non-current assets
Other intangible assets Pension receivable Available-for-sale financial assets
2.1
2.1
2.1
2.1
2.1
2.1
2.1
1.7
Deferred tax assets
2.2
1.8
1.8
1.9
2.0
3.3
3.6
4.2
79.8
76.2
77.1
78.7
81.2
85.5
88.0
88.6
Inventories
19.9
23.5
22.2
21.2
20.6
23.6
23.4
23.8
Accounts and other receivables
59.1
66.2
59.4
42.4
63.8
72.5
73.4
42.4
Non-current assets, total Current assets
Held-to-maturity investments Cash and cash equivalents
25.0 21.7
11.6
50.5
54.1
54.5
29.5
24.8
25.2
Current assets, total
100.6
101.3
132.1
117.7
138.9
125.6
121.6
116.4
Assets, total
180.5
177.6
209.1
196.4
220.0
211.2
209.6
205.0
EQUITY AND LIABILITIES Equity attributable to equity holders of the parent company Share capital
17.0
17.0
17.0
17.0
17.0
17.0
17.0
17.0
Invested unrestricted equity fund
14.4
14.4
56.4
56.4
56.4
56.4
56.4
56.4
0.0
0.0
0.0
-0.2
-0.3
-0.3
-0.3
-1.2
Retained earnings
Other items
19.8
18.6
10.4
7.5
10.8
8.7
-1.8
-3.0
Equity, total
51.1
50.0
83.8
80.7
83.9
81.8
71.3
69.2
1.4
1.4
1.4
Non-current liabilities Deferred tax liabilities
0.7
0.5
0.6
0.6
0.6
Pension liabilities
2.8
0.8
0.8
0.8
0.8
13.8
11.1
11.6
11.7
11.8
14.1
14.5
14.6
0.4
0.4
0.5
10.8
10.9
11.1
11.2
32.5
17.6
12.9
13.5
23.9
24.1
26.6
27.1
48.5
74.1
73.6
65.1
50.6
75.7
73.0
68.2
49.5
5.9
5.6
5.8
6.2
6.6
7.4
8.6
9.5
Provisions Financial liabilities Non-current liabilities, total Current liabilities Accounts payable and other liabilities Provisions Financial liabilities
0.5
9.2
7.0
0.3
0.2
0.3
0.4
0.4
Advances received
31.2
26.3
33.8
34.8
29.5
22.1
34.0
28.0
Current liabilities, total
111.7
114.8
111.8
91.8
112.0
102.8
111.1
87.3
Equity and liabilities, total
180.5
177.6
209.1
196.4
220.0
211.2
209.6
205.0
D E S T I A G R O U P / F I N A N C I A L S TAT E M E N T S
53
DESTIA SUBGROUP, CONSOLIDATED CASH FLOW STATEMENT, QUARTERLY FIGURES (IFRS)
DESTIA SUBGROUP, CONSOLIDATED CASH FLOW STATEMENT, QUARTERLY FIGURES IFRS MEUR
Destia Destia subgroup subgroup
Destia Destia Destia subgroup subgroup subgroup
Destia Destia Destia subgroup subgroup subgroup
10–12/ 2014
7–9/ 2014
4–6/ 2014
1–3/ 2014
10–12/ 2013
7–9/ 2013
4–6/ 2013
1–3/ 2013
Cash receipts from customers
140.7
121.9
81.8
93.9
161.9
141.6
86.0
85.6
Expenses paid to suppliers and personnel
-119.4
-117.3
-80.6
-93.1
-134.9
-137.5
-88.1
-96.3
-0.1
-0.0
-0.2
-0.0
-0.2
-0.0
-0.5
-0.0
0.0
0.0
0.0
0.0
0.0
0.0
OPERATING CASH FLOWS
Interests paid Dividends received Interests received
0.0
0.0
0.0
0.1
0.0
0.0
0.1
0.1
Other financial items
-0.0
-0.9
-0.4
-0.0
-1.0
-0.1
-1.1
-0.1
Tax paid
-1.1
-1.1
-1.2
-0.0
-0.4
-0.3
0.5
-0.3
Net operating cash flow, continuing operations
20.1
2.6
-0.5
0.8
25.5
3.7
-3.1
-11.0
20.1
2.6
-0.5
0.8
25.5
4.2
-3.1
-11.7
-2.5
-2.4
-0.5
-1.4
-2.2
-1.0
-3.7
-0.7
1.4
0.8
0.5
0.3
1.8
1.6
1.6
1.5 -25.0
Net operating cash flow, discontinued operations Net operating cash flow
0.5
-0.7
INVESTMENT CASH FLOW Investments in intangible and tangible assets Sale of intangible and tangible assets Investments in other assets
0.0
-1.0
Proceeds from the sale of other investments
0.0
25.9
Net investment cash flow, continuing operations
-1.0
-1.6
0.1
-1.1
-0.3
0.6
22.8
-24.2
Net investment cash flow
-1.0
-1.6
0.1
-1.1
-0.3
0.6
22.8
-24.2
0.0
0.0
0.0
0.0
-0.2
0.0
-20.0
0.0
FINANCIAL CASH FLOWS Increase in non-current debt (+) Decrease in non-current debt (-)
0.0
-10.0
Decrease in short-term financing (-)
9.0
6.8
Decrease in short-term financing (-)
-9.0
Capital repayment to the State of Finland Net financial cash flow, continuing operations
-6.8
-0.1
-42.0 -9.0
-39.8
-3.2
0.0
-0.2
0.0
-20.1
0.0
Net financial cash flow
-9.0
-39.8
-3.2
0.0
-0.2
0.0
-20.1
0.0
Change in cash and cash equivalents
10.1
-38.9
-3.6
-0.3
25.0
4.8
-0.4
-35.9
Cash and cash equivalents at beginning of financial period
11.6
50.5
54.1
54.5
29.5
24.8
25.2
61.1
Cash and cash equivalents at end of financial period
21.7
11.6
50.5
54.1
54.5
29.5
24.8
25.2
Net financial cash flow, discontinued operations
54
D E S T I A G R O U P / F I N A N C I A L S TAT E M E N T S
D E S T I A G R O U P / F I N A N C I A L S TAT E M E N T S
55