Contents Report of the Board of Directors ..................................................................................................................... 3 Key figures for the Group ................................................................................................................................ 8 Consolidated Financial Statements................................................................................................................. 9 Consolidated income statement ...................................................................................................................... 9 Consolidated statement of comprehensive income ....................................................................................... 10 Consolidated balance sheet ............................................................................................................................ 11 Consolidated statement of changes in equity ................................................................................................ 12 Consolidated statement of cash flows ............................................................................................................ 13 Notes to the consolidated financial statements ............................................................................................. 14 1 General information ..................................................................................................................................... 14 2 Summary of significant accounting policies ............................................................................................... 14 3 Segment information ................................................................................................................................... 28 4 Revenue ....................................................................................................................................................... 29 5 Expenses by nature ..................................................................................................................................... 30 6 Depreciation, amortisation and impairment ............................................................................................... 31 7 Employee benefit expenses ......................................................................................................................... 31 8 Research and development ......................................................................................................................... 32 9 Other operating income .............................................................................................................................. 32 10 Other operating expenses .......................................................................................................................... 32 11 Finance income and costs .......................................................................................................................... 33 12 Income taxes .............................................................................................................................................. 34 13 Intangible assets ........................................................................................................................................ 35 14 Property, plant and equipment .................................................................................................................. 38 15 Available-for-sale financial assets .............................................................................................................. 39 16 Carrying amounts and fair values of financial assets and liabilities by category ...................................... 40 17 Hierarchy of financial assets and liabilities at fair value ........................................................................... 41 18 Financial risk management ....................................................................................................................... 42 19 Inventories ................................................................................................................................................. 48 20 Trade and other receivables ...................................................................................................................... 48 21 Cash and cash equivalents ......................................................................................................................... 49 22 Equity related information ........................................................................................................................ 49 23 Share-based investment plan ..................................................................................................................... 50 24 Employee benefit obligations .................................................................................................................... 51 25 Provisions .................................................................................................................................................. 54 26 Borrowings................................................................................................................................................. 55 27 Deferred tax assets and liabilities .............................................................................................................. 58 28 Trade and other payables .......................................................................................................................... 60 29 Commitments and contingent liabilities ................................................................................................... 60 30 Related party transactions ......................................................................................................................... 62 31 Post-balance sheet events .......................................................................................................................... 64 Financial statements of the parent company ................................................................................................. 65

Report of the Board of Directors Paroc (“Company”) is one of the leading manufacturers of mineral wool insulation products in Europe. The Group’s products include building insulation, technical insulation, marine insulation, building elements and acoustic products. Paroc has manufacturing operations in Finland, Sweden, Lithuania, Poland and Russia. It has sales companies and representatives in 13 countries in Europe. Paroc’s consolidated financial statements have been prepared according to international financial reporting standards (IFRS). The consolidated financial statements have been prepared for the accounting period from 1 January to 31 December, 2014. Year 2014 Business environment was very challenging with turbulence in various markets. Construction activity remained at modest levels in the Company's main market but also in CEE and WE regions. Net sales for the year ended December 31, 2014 was € 417.5 million, 3.6 % lower than previous year. The decrease was predominantly due to adverse development of a number of our functional currencies against euro. The like-for-like growth index (at constant foreign exchange rates) would indicate a flat net sales development. Sales in most of our markets were rather flat or slightly down, except for in Russia where volumes increased 50 %. Technical Insulation products increased in some countries, e.g. in Baltic countries, Germany and Belgium. The tense situation between Russia and Ukraine has not really impacted our Russian sales volumes but the steep decline in the value of the rouble has been negative. The Company focused on ramping-up the new line in Russia with good success. Raw material prices decreased in 2014 compared to the previous year, especially coke and energy costs came down substantially. There were good productivity improvements in the production facilities. Weakening RUB, SEK and NOK affected the operative result negatively. EBITDA excluding unusual items amounted to €77.4 million which is a decrease of 2.9 % compared to the same period 2013 or an increase of 9 % at comparable exchange rates. The health and safety programme that was kicked-off in 2011, with the target to become an accident free working place as well as to reduce sick leave absence started to pay off in 2012. Total amount of accidents halved in 2012 from 2011. In 2014 the good trend continued and accident frequency (LTIF 1) improved from 8.3 in 2013 to 6.2 in 2014. Sick leave % decreased from 3.6 % down to 3.3 %. The Group’s capital investments for the financial period 2014 amounted to €25.5 million (2013: €58.6 million). The biggest investment were investments in Parainen factory in Finland to increase capacity and labour efficiency as well as secure operations of the furnace on L5 in Parainen factory, packaging investment in Hällekis factory in Sweden and productivity investments in Trzemeszno factory in Poland. Due to the planned Lappeenranta factory closure at the end of 2016, reorganization of production equipment amounted to €4.2 million. The factory closure project has progressed according to the plan and the most of technical insulation production has been relocated in Sweden. Paroc Sound HoldCo 41424 AB and Paroc Sound IPCo 41523 Oy were established in October 2013 in order to facilitate the transfer of Paroc Group intellectual property rights from Paroc Oy Ab to Paroc Group Oy. Both companies were merged into current Paroc companies during 2014. In May 2014 Paroc Group Oy issued a high-yield bond of €430 million. The offering was an i) euro-denominated fixed rate senior secured notes due 2020 in an aggregate principal amount of € 200 million at 6.25 %, and ii) eurodenominated floating rate senior secured notes due 2020 in an aggregate principal amount of €230 million at threemonth Euribor plus 525 basis points. The proceeds were used to fully repay the senior notes of €350 million and to partly repay the junior notes of €100 million. In December 2014 Paroc Group Oy repurchased fixed rate notes worth €4 million.

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In October 2014, funds advised by CVC Capital Partners, signed an SPA to acquire Paroc Group from the current institutional shareholders. The sale was completed on February 13, 2015. Sales and results The consolidated net sales of Paroc amounted to €417.5 million in 2014 (2013: €433.1 million). The consolidated operating profit was €36.6 million (2013: €47.2 million), which was 8.8 % of net sales (2013: 10.9 %). The operating profit decreased mainly due to weaker exchange rates and higher one-off costs, mainly related to the ownership change and the issuance of the high-yield bond. On the offsetting side there was improved productivity in the operations, decreasing raw material prices and distributions costs. € millions Net sales Operating profit % of net sales

2014 417.5 36.6 8.8

2013 433.1 47.2 10.9

2012 430.4 40.3 9.4

2011 404.8 28.8 7.1

Financial position At the end of the period the Company’s liquid assets amounted to €23.1 million (2013: €69.6 million) and net debt €393.8 million (2013: €282.2 million). The equity ratio was 4.5 % (2013: 24.2 %). The Group’s cash flow is partially hedged with foreign exchange forwards. Interest rate risk has been managed with interest rate derivatives. The external loans were refinanced during the year through a high yield bond with maturity in May 2020. The fixed rate notes of €196 million carry a coupon of 6.25 %. The floating rate notes of €230 million carry a coupon of 5.25 % above three month Euribor. The interest rate risk of the floating rate notes has been managed by swapping the floating rate to fixed up to May 2019. The fixed rate is 0.50 %. A revolving credit facility of €60 million ensures flexible short term liquidity. The terms of the financing structure include incurrence based covenants. € millions Liquid assets Net debt Equity ratio %

2014 23.1 393.8 4.5

2013 69.6 282.2 24.2

2012 72.2 279.9 22.3

2011 65.7 286.5 19.3

Paroc is exposed to many currency risks. These are Scandinavian currencies, Polish zloty, Russian rouble, British pound and US dollar. From 60 to 80 % of the net cash flow exposure is hedged on a rolling six months cycle. The instruments used are foreign exchange forwards. Cash flow hedge accounting is employed. The effective part of the fluctuation in market value of the hedging instruments is shown in the fair value reserve in other comprehensive income. Research and development The total research and development expenditure of Paroc in 2014 amounted to €6.1 million (2013: €6.3 million). This was 1.5 per cent of net sales (2013: 1.5 %).

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Risks and uncertainties Financial risks Financial risks for the Company and the Group are liquidity risk, credit risk and market risk for the financial instruments. The Group constantly monitors the required financing of the business to avoid liquidity risk. Credit risk is reduced with customer credit insurance and by monitoring the development of customers’ profitability. Tax dispute related to transfer pricing The Finnish tax authorities have made a tax reassessment concerning years 2006-2008 in Paroc Oy Ab. Based on tax decisions that came in 2012 and 2013 the Company should pay in total €29.5 million in taxes, penalties and interest. The amount includes €14.1 million taxes and €15.5 million accrued corporate interests and penalty interests. Interests have been calculated until December 31, 2014. The Company has a different interpretation related to the transfer pricing of the Group’s intra-group pricing of supplies of raw materials, license fees and distribution services than the tax authorities and the Company made an appeal against the tax assessment with the Board of Appeals. On June 17, 2014 the Board of Appeals decided to reduce the penalty tax from €2.4 million to €3,200. Otherwise Paroc's appeal was dismissed. The penalty tax reduction is legally binding as neither Paroc nor the representative of the government appealed that part of the decision. Paroc has appealed the main issue to the Helsinki Administrative Court on August 25, 2014. Paroc has been granted a further interdiction of payment until the end of the appeal process in the Helsinki Administrative Court. The obligation to pay the tax realizes in case the appeal process is lost. The Group has not made any provisions in the 2014 financial statements since the management strongly believes that all transfer pricing guidelines have been followed and the same method has been followed consistently from 2009 to 2014. The Company has obtained a third party opinion from legal expert on the matter, which supports the management’s view. Key figures and environment The Group employed on average during the financial year 2 093 employees (2013: 2 063 employees). At the end of the year the numbers of employees were 2 032 (2013: 2 059). The group paid a total of €74.5 million in wages and salaries (2013: €76.2 million). Paroc sustainability program continued and the target to reduce energy consumption by 30 % by 2020 from 2011 is well on track. Consistent work with the melting units doubled the energy efficiency compared to year 2013 and the energy consumption has been reduced by 12.2 % in 2014 compared to 2011 level. Work with energy efficiency has also reduced carbon emissions with 16 % since 2013. Stone wool sector was deemed to be exposed to carbon leakage which means that the Company will receive free allowances equal to mineral wool benchmark until 2019. Following the program pursuing best available cleaning technique on all Paroc lines, Vilnius line 1 is now the last line to be equipped with the bag filter. The said investment will reduce the dust emission from melting with 95 % and at same time it can be stated that the outdoor air in the vicinity of the plants has improved significantly. Surveys were completed in Sweden and Lithuania regarding raising the awareness of the production impact on soil and groundwater. The investigations will continue in 2015 with the other sites and so far the results have been according to the expectations to limit the pollution and in line with the type of industry. Paroc has followed its policy of being transparent towards competent authorities and generally can be concluded that all sites conformed to regulatory requirements and current environmental laws.

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Shares of the Company The share capital of the Company is comprised of 2.500 shares with a nominal value of EUR 1/share. The Company has only one class of shares, and each share is entitled to one vote in the Annual General Meeting. Board of Directors and Auditors In the annual shareholder meeting of the parent company on May 1, 2014 Lauri Ratia was re-elected as Chairman of the Company's Board of Directors. Máirtin Clarke, Mats O. Paulsson, Simo Manner and Kari Lehtinen were reelected as ordinary members of the Company's Board of Directors. PricewaterhouseCoopers Oy, Authorised Public Accountants, was re-elected as the Company’s auditor, with Kim Karhu, Authorised Public Accountant, acting as the chief auditor. Lauri Ratia, Máirtin Clarke, Simo Manner and Mats O. Paulsson resigned from their service as ordinary members of the Board of Directors of the Company as of February 13, 2015 and Peter Törnquist was elected as chairman and Gustaf Martin-Löf, Søren Vestergaard-Poulsen, Kari Lehtinen and Christoph Röttele as ordinary members of the Board of Directors. On March 18, 2015 in accordance with unanimous resolution of the shareholders Jukka Hienonen and Magnus Agervald were elected as ordinary members of the Board of Directors. Christoph Röttele's service as an ordinary member of the Board of Directors was terminated. On March 18, 2015 the Board of Directors elected Jukka Hienonen as Chairman of the Board and Peter Törnquist as Vice Chairman of the Board. On March 26, 2015 in accordance with unanimous resolution of the shareholders Augusto Lippi was elected as ordinary member of the Board of Directors. Events after the statement of financial position date The sale of the entire issued share capital of the parent company Safari Finco 1 Oy to funds managed or advised by CVC Capital Partners Limited was completed on February 13, 2015. The Senior Secured Noted due 2020 and Floating Rate Senior Secured Noted due 2020 will remain issued and outstanding following completion of the Acquisition. The €60 million Super Senior Revolving Credit Facility signed in May 2014 will also remain in place following completion. After the completion of the sale, the ultimate parent of the Group is Parry Sarl (Société Anonyme à Responsabilité Limitée), incorporated in Luxembourg. Outlook for 2015 2014 was a year with decreasing volumes in many markets. On the Group level, volumes were rather flat, mainly due to strong growth in Russia and slightly positive volume development in Technical insulation business. The economic situation in Europe remains unstable but gradual recovery continues. Energy renovation markets are forecast to grow. There are some positive expectations in some of Paroc's market areas but the construction activity are foreseen to remain at pretty low year 2014 level in Finland. The political uncertainties ongoing in Russia and Ukraine are being followed carefully. Sales are expected to have a modest growth from 2014 level and operating profit is expected to increase from 2014 level. Cash flow of the Group is expected to be strong due to expected improved business performance. The liquidity situation is good.

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Proposal to the Annual General Meeting The distributable funds of the parent company are €181 768 834.61 of which the loss for the financial year is €-19 427 222.59. The Board of Directors proposes to the Annual General Meeting no dividend to be distributed.

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Key figures for the Group € thousands Net sales Operating profit % of net sales Profit/loss before taxes % of net sales Profit/loss for the period % of net sales Return on equity % Return on capital employed % Net gearing % Equity ratio % Personnel in average for the year

2014 417 524 36 646 8.8 7 264 1.7 2 882 0.7

2013 433 128 47 205 10.9 29 685 6.9 25 590 5.9

2012 430 386 40 300 9.4 24 915 5.8 17 929 4.2

2011 404 837 28 817 7.1 4 231 1.0 4 766 1.2

2010 347 769 12 559 3.6 1 205 0.3 -893 -0.3

2009 0 -409 0.0 -615 0.0 -660 0.0

3.1 7.8 1519.0 4.5

16.9 9.6 184.1 24.2

13.5 9.3 202.7 22.3

4.3 7.4 252.0 19.3

-0.8 4.4 264.6 19.6

-1.3 -0.2 329.8 17.3

2 093

2 063

2 019

1 991

1 945

1 951

Definitions of key figures Return on equity % Return on capital employed % Net gearing % Equity ratio %

= =

Profit for the year Average total equity

x 100

Profit before taxes + Finance costs x 100 Average capital employed

=

Net debt Total equity

x 100

=

Total equity Assets total – Advances received

x 100

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Consolidated Financial Statements Consolidated income statement Year ended 31 December 2014 2013

€ thousands

Note

Revenue Cost of sales Gross profit

3, 4 5

417 524 -303 326 114 198

433 128 -311 505 121 623

Selling and marketing expenses Research and development expenses Administrative expenses Other operating income Other operating expenses Operating profit

5 5, 8 5 9 10

-35 077 -6 114 -26 323 341 -10 379 36 646

-34 853 -6 277 -26 801 480 -6 967 47 205

Finance income Finance costs Profit before taxes

11 11

1 436 -30 818 7 264

2 339 -19 859 29 685

Income tax expense Profit for the year

12

-4 383 2 882

-4 095 25 590

2 882

25 590

Profit attributable to: Owners of the parent

The notes are an integral part of these financial statements.

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Consolidated statement of comprehensive income € thousands

Note

Profit for the year Other comprehensive income: Items that may be subsequently reclassified to profit or loss Actuarial gains and losses on defined benefit plans Actuarial gains and losses Income tax relating to actuarial gains and losses

Year ended 31 December 2014 2013 2 882

25 590

-819 160 -659

476 -116 360

-2 252

1 972

1 916 67

1 750 -1 038

-34 848 2 232 -32 886

-11 568 789 -8 096

Other comprehensive income for the year, net of tax

-33 545

-7 736

Total comprehensive income for the year Attributable to: Owners of the parent

-30 663

17 854

-30 663

17 854

-30 663

17 854

24

Items that may be subsequently reclassified to profit or loss Cash flow hedges Fair value changes during the financial year Reclassification adjustments from other comprehensive income to profit or loss Income tax relating to cash flow hedges Translation differences Translation differences Income tax relating to translation differences

Total comprehensive income attributable to equity shareholders arises from: Continuing operations

The notes are an integral part of these financial statements.

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Consolidated balance sheet € thousands ASSETS Non-current assets Intangible assets Property, plant and equipment Available-for-sale financial assets Deferred income tax assets Trade and other receivables Current assets Inventories Trade and other receivables Income tax receivables Derivative financial instruments Cash and cash equivalents

Note

Non-current liabilities Borrowings Derivative financial instruments Deferred income tax liabilities Pension obligations and other employee benefits Provisions for other liabilities and charges Trade and other payables Current liabilities Trade and other payables Income tax liabilities Borrowings Derivative financial instruments Provisions for other liabilities and charges

2013

13 14 15, 16, 17 27 16

246 061 207 098 80 3 288 2 119 458 646

259 209 233 237 80 2 020 3 417 497 964

19 20

39 909 53 526 1 767 802 23 130 119 134 577 780

36 536 51 367 1 328 489 69 627 159 348 657 312

22

3 -2 427 100 000 -10 970 -60 683 25 923

3 -2 150 100 000 21 639 39 394 158 886

16, 26 16, 17 27 24 25 16, 26

416 607 2 160 29 195 12 908 7 149 12 468 032

351 684 460 32 881 12 873 6 817 16 404 730

28

78 866 3 068 294 1 260 337 83 825 551 858 577 780

86 555 3 219 123 2 953 847 93 696 498 427 657 312

16, 17 16, 21

TOTAL ASSETS EQUITY AND LIABILITIES Equity attributable to equity holders of the parent company Share capital Fair value reserve Reserve for invested non-restricted equity Translation differences Retained earnings

As at 31 December 2014

16, 26 16, 17 25

Total liabilities TOTAL EQUITY AND LIABILITIES

The notes are an integral part of these financial statements.

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Consolidated statement of changes in equity Attributable to owners of the parent Reserve for invested Fair nonShare value restricted capital reserves equity 3 -4 830 100 000

€ thousands Equity on January 1, 2013 Total comprehensive income for the year Profit for the period Other comprehensive income, net of tax Actuarial gains and losses on defined benefit pension plans Cash flow hedges, net of tax Translation differences Total comprehensive income for the year Transactions with owners Capital return Total transactions with owners Equity on December 31, 2013

€ thousands Equity on January 1, 2014

Translation differences 32 415

Retained earnings 16 188

Noncontrolling interest -

Total equity 143 776

-

-

-

-

25 590

-

25 590

-

2 683 -3 2 680

-

-10 776 -10 776

360 25 950

-

360 2 683 -10 779 17 854

3

-2 150

100 000

21 639

-2 744 -2 744 39 394

-

-2 744 -2 744 158 886

Attributable to owners of the parent Reserve for invested Fair nonShare value restricted capital reserves equity 3 -2 150 100 000

Translation differences 21 639

Retained earnings 39 394

Noncontrolling interest -

Total equity 158 886

Total comprehensive income for the year Profit for the period Other comprehensive income, net of tax Actuarial gains and losses on defined benefit pension plans Cash flow hedges, net of tax Translation differences Total comprehensive income for the year

-

-

-

-

2 882

-

2 882

-

-270 -7 -277

-

-32 609 -32 609

-659 2 222

-

-659 -270 -32 616 -30 663

Transactions with owners Dividends Total transactions with owners Equity on December 31, 2014

3

-2 427

100 000

-10 970

-102 300 -102 300 -60 683

-

-102 300 -102 300 25 923

The notes are an integral part of these financial statements.

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Consolidated statement of cash flows € thousands Cash flow from operating activities Profit for the year Adjustments for Income taxes recognized Depreciation and amortization Impairments Gain/loss on sale of intangible and tangible assets Interest income and expense Other adjustments

Note

Year ended 31 December 2014 2013 2 882

25 590

4 383 31 250 24 58 24 546 -759 62 383

4 095 28 695 690 44 12 602 -981 70 735

-6 976 -6 376 -1 439 23 47 615

4 670 -2 325 3 936 660 77 676

Interest received Interest paid Dividends received Income taxes paid Net cash from operating activities

321 -22 082 55 -7 548 18 361

432 -12 998 36 -5 328 59 818

Cash flow from investing activities Purchases of property, plant and equipment Purchases of intangible assets Purchases of available-for-sale financial assets Capitalized borrowing costs Proceeds from sale of property, plant and equipment Change in other long-term receivables Change in other short-term payables Net cash used in (-)/generated from investing activities

-23 778 -1 409 22 1 301 473 -23 391

-58 589 -1 589 -12 -1 560 11 -1 465 732 -62 473

-5 030

-2 655

Cash flow from financing activities Proceeds from borrowings Transaction costs related to financing Repayment of borrowings Dividends paid to company's shareholders Group contribution paid/received Net cash used in (-)/generated by financing activities

429 379 -11 703 -354 000 -102 300 -3 430 -42 055

-635 -635

Net decrease (-)/increase in cash and cash equivalents Cash and cash equivalents in the beginning of the period Foreign exchange rate effect on cash and cash equivalents Cash and cash equivalents at the end of the period

-47 085 69 627 587 23 130

-3 290 72 161 757 69 627

12 6 6

Change in working capital Change in trade and other receivables Change in inventories Change in trade and other payables Change in provisions

Cash flow before financing activities

The notes are an integral part of these financial statements.

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Notes to the consolidated financial statements 1 General information Paroc Group Oy (”Parent company” or ”Company”) is a Finnish limited liability company organised on 11 December 2009 under the laws of Finland. The parent company and its subsidiaries together form Paroc Group (the “Group” or “Paroc”). The domicile and address of the Company’s registered office is Energiakuja 3, 00180 Helsinki. A copy of the consolidated finance statements is available at the above mentioned address or via email from [email protected]. The ultimate parent of the Group is Safari Luxco 1 S.A., which is incorporated in Luxembourg. Operations of the Group started on 23 December 2009, when the Parent company acquired Paroc Sverige AB and its subsidiaries from Paroc Group Holding Oy. The production of stone wool started in Sweden in 1937 and in Finland in 1952. Paroc name and trade mark was registered for the first time in 1982. Today Paroc is one of the major manufacturers of mineral wool insulation products in Europe. Its products include building insulation, technical insulation and marine insulation, as well as building elements and acoustics products. Group has manufacturing plants in Finland, Sweden, Lithuania and Poland, and sales companies and representatives in 13 European countries.

2 Summary of significant accounting policies Basis of preparation The financial statements of Paroc have been prepared in accordance with International Financial Reporting Standards and IFRIC Interpretations as adopted by the EU as of December 31, 2014. The consolidated financial statements are presented in thousands of Euros and have been prepared under the historical cost conventions unless otherwise stated in the accounting principles. The following standards have also been applicable for the first time effective from 1 January 2014:  Amendment to IFRSs 10, 11 and 12 on transition guidance. Amendments provide additional relief limiting the requirement to provide adjusted comparative information to only the preceding comparative period. The effective date within EU is 1 January 2014.  IFRS 10 Consolidated financial statements. The objectives are to establish principles for the presentation and preparation of consolidated financial statements. The effective date within EU is 1 January 2014.  IFRS 11 Joint arrangements. The standard is focusing on the rights and obligations of the joint arrangement rather than its legal form. The effective date within EU is 1 January 2014.  IFRS 12 Disclosures of interests in other entities. The standard includes the disclosure requirements for all forms of interests in other entities. The effective date within EU is 1 January 2014.  IAS 27 Separate financial statements (revised 2011). The revised standard includes the provisions on separate financial statements that are left after the control provisions of IAS 27 have been included in the new IFRS 10. The effective date within EU is 1 January 2014.  IAS 28 Associates and joint ventures (revised 2011). The revised standard includes the requirements for joint ventures and associates to be equity accounted following the issue of IFRS 11. The effective date within EU is 1 January 2014.  IAS 32 Financial instruments: Presentation (amendment). The amendment clarifies asset and liability offsetting. The effective date is 1 January 2014.

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 Amendments to IFRS 10, 12 and IAS 27 on consolidation for investment entities. The effective date is 1 January 2014.  IAS 36 Impairment of assets (amendment). This amendment addresses the disclosure of information about the recoverable amount of impaired assets if that amount is based on fair value less costs of disposal. The effective date is 1 January 2014.  IAS 39 Financial instruments: recognition and measurement (amendment). This amendment provides relief from discontinuing hedge accounting when novation of a hedging instrument to a central counterparty meets specified criteria. The effective date is 1 January 2014. Changes in the accounting standards during the accounting period did not have a material impact on the Group’s consolidated financial statements. The consolidated financial statements have been prepared for the accounting period from 1 January to 31 December, 2014. The financial statements have been authorised for issue by the Board of Directors of Paroc Group on 26 March, 2015. According to the Finnish Companies’ Act the Annual General Meeting has the right to approve, reject or make any changes to the financial statements after the publication. Standards, amendments and interpretations to existing standards that are not yet effective The IASB has published the following new or amended standards and interpretations, which are not yet effective and have not yet been adopted by the Group in its financial statements. The Group will adopt each standard and interpretation from their effective date, or if the effective date is different from the first date of the reporting period, from the start of the next reporting period following the effective date. The Group will adopt the following standards and interpretations in 2015 or later:  Annual improvements 2012 – 2012 reporting cycle include changes to IFRS 2 Share-based payments, IFRS 3 Business combinations, IFRS 8 Operating segments, IFRS 13 Fair value measurement, IAS 16 Property, plant and equipment, IAS 38 Intangible assets and IAS 24 Related party disclosures. The effective date is 1 July 2014.  Annual improvements 2011 – 2013 reporting cycle include changes to IFRS 3 Business combinations, IFRS 13 Fair value measurement and IAS 40 Investment property. The effective date is 1 July 2014.  IAS 19 Defined benefit plans: Employee contributions (amendment). The amendment allows contributions that are linked to service, and do not vary with the length of employee service, to be deducted from the cost of benefits earned in the period that the service is provided. The effective date is 1 July 2014.  IFRIC 21 Levies. This interpretation of IAS 37 provisions, contingent liabilities and contingent assets sets out criteria for the recognition of liability, one of which is the requirement for the entity to have a present obligation as a result of a past event. The effective date is 17 June 2014.  Amendment to IFRS 11 Joint arrangements. The amendment provides new guidance regarding acquisition of an interest in a joint operation. The effective date is 1 January 2016. The standard has not yet been endorsed by the EU.  Amendment to IAS 16 Property, plant and equipment and IAS 38 Intangible assets. The use of revenue-based methods to calculate depreciation of an asset is not appropriate because revenue generated by an activity that includes the use of an asset generally reflects factors other than the consumption of the economic benefits embodied in the asset. The effective date is 1 January 2016. The standard has not yet been endorsed by the EU.  Amendments to IFRS 10 and IAS 28 regarding the sale or contribution of assets between an investor and its associate or joint venture. A full gain or loss is recognised when a transaction involves a business. A

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partial gain or loss is recognised when a transaction involves assets that do not constitute a business, even if those assets are in a subsidiary. The effective date is 1 January 2016. The standard has not yet been endorsed by the EU.  Amendment to IAS 27 Separate financial statements. The amendment allows entities to use the equity method to account for investments in subsidiaries, joint ventures and associated in their separate financial statements. The effective date is 1 January 2016. The standard has not yet been endorsed by the EU.  IFRS 14 Regulatory deferral accounts. First-time adopters of IFRS can continue to recognise amounts related to rate regulation in accordance with their previous GAAP requirements when they adopt IFRS. The effect of rate regulations must be separately presented from other items. The effective date is 1 January 2016. The standard has not yet been endorsed by the EU.  Annual improvements 2014. These annual improvements include changes to IFRS 5 Non-current assets held for sale and discontinued operations, IFRS 7 Financial instruments: disclosures, IAS 19 Employee benefits and IAS 34 Interim financial reporting. The effective date is 1 January 2016. The standard has not yet been endorsed by the EU.  Amendments to IAS 1: Disclosure Initiative. The effective date is 1 January 2016. The standard has not yet been endorsed by the EU.  IFRS 15 Revenue from contracts with customers. This converged standard replaces IAS 11 Construction contracts and IAS 18 Revenue and related interpretations. Revenue is recognised when a customer obtains control of the goods or service. The core principle is delivered in the following steps: • • • • •

Identify the contract with a customer Identify the performance obligations in the contract Determine the transaction price Allocate the transaction price to the performance obligations in the contract Recognise revenue when the entity satisfies a performance obligation.

The effective date is 1 January 2017. The standard has not yet been endorsed by the EU.  IFRS 9 Financial instruments. The complete version of IFRS 9 replaces most of the guidance in IAS 39. The standard retains but simplifies the mixed measurement model and establishes three primary measurement categories for financial assets: amortised cost, fair value through OCI and fair value through P&L. The standard relaxes the requirements for hedge effectiveness by replacing the bright line hedge effectiveness tests. The effective date is 1 January 2018. The standard has not yet been endorsed by the EU. The above mentioned amendments to the standards and interpretations are estimated to have effect mainly on presentation in disclosures. Critical accounting estimates and judgements The preparation of financial statements requires estimates and assumptions regarding the future in which results may differ from the estimates and assumptions made. In addition to this, applying the accounting policies requires judgement. Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.

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Uncertainty related to critical accounting estimates The Group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are addressed below.

Impairment testing The Group tests goodwill, intangible assets not yet available for use and intangible assets with indefinite lives for impairment annually. In addition to this, impairment indicators are assessed as described in the accounting policies. The recoverable amounts of the cash generating units are determined based on value in use calculations. The Group's business is managed on a matrix basis and as such, cash generating units for goodwill impairment testing purposes have been determined on a geographical basis, however, impairment calculations have been prepared also on a business area basis, which is the primary basis for managing the business. Preparation of these calculations requires the use of estimates, which are further described in note 13. The pre-tax cash flow projections are based on budgeted amounts and strategy forecasts approved by the Board of Directors. Cash flows beyond the three-year projection period are extrapolated using the estimated growth rate of 2 % (2013: 2 %). The discount rate used in the impairment testing is the pre-tax weighted average cost of capital ("WACC"), which consist of the peer group unlevered beta and risk free rate per country, targeted debt to equity ratio, and equity market risk premium per country. Additional information on sensitivity of the recoverable amount to changes in assumptions used is presented in the note 13 Intangible assets.

Income taxes The Group is subject to income taxes in numerous jurisdictions. Significant judgement is required in determining the worldwide provision for income taxes. There are many transactions and calculations for which the ultimate tax determination is uncertain. Management judgement is required for the calculation of the provision for income taxes and deferred tax assets and liabilities. The Group reviews at each balance sheet date the carrying amount of deferred tax assets. The Group considers whether it is probable that the group entities will have sufficient taxable profits against which the unused tax losses or unused tax credits can be utilised. The factors used in estimates may differ from actual outcome which could lead to significant adjustments to deferred tax assets expensed in the statement of income. Where the final tax outcome of these matters is different from the amounts that were initially recorded, such differences will impact the current and deferred income tax assets and liabilities in the period in which such determination is made.

Employee benefits The Group operates a mixture of pension and other post-employment benefit schemes. The present value of the pension obligations depends on a number of factors that are determined on an actuarial basis using a number of assumptions. The assumptions used in determining the net cost (income) for pensions include the discount rate and changes in future compensation. The Group determines the appropriate discount rate at the end of each year. This is the interest rate that should be used to determine the present value of the appropriate discount rate. The Group considers the interest rates of high-quality corporate bonds that are denominated in the currency in which the benefits will be paid and that have terms to maturity approximating the terms of the related pension obligation. Statistical information used may differ materially from actual results due to changing market and economic conditions, changes in service period of plan participants or change in other factors. Actuarial gains and losses arising from experience adjustments and changes in actuarial assumptions are charged or credited to equity in other comprehensive income in the period in which they arise. Significant differences in actual experience or sig-

17(79)

nificant changes in assumptions may materially affect the future amounts of the defined benefit obligation and future expense. Other key assumptions for pension obligations are based on current market conditions. Additional information is disclosed in note 24. Consolidation principles The consolidated financial statements include the parent company Paroc Group Oy and all subsidiaries where over 50 % of the subsidiary’s voting rights are controlled directly or indirectly by the parent company, or the parent company is otherwise in control of the company. The acquisition method is applied to the business combinations. The consideration transferred for the acquisition of a subsidiary is determined as the fair values of the assets transferred and liabilities incurred. Acquisition-related costs are expensed as incurred. Acquired subsidiaries are accounted for using the acquisition method, according to which the assets and liabilities of the acquired company are measured at fair value as of the acquisition date. Goodwill is the excess of the cost of the business combination over the acquirer’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities. Subsidiaries acquired during the financial year are included in the financial statements from the date of their acquisition and disposed subsidiaries are included up to their date of sale. All internal transactions, receivables and liabilities, distribution of profit and unrealised profits are eliminated at consolidation. Segment reporting Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. The Group's chief operating decision-maker has been identified as the CEO and Executive Board, which are responsible for allocating resources and assessing performance of the operating segments. Foreign subsidiaries The consolidated financial statements are presented in Euros which is the functional and presentation currency of the parent company. Items of each subsidiary included in the consolidated financial statements are measured using the currency of the primary economic environment in which the entity operates (“the functional currency”). In the consolidated financial statements the statement of incomes of the foreign subsidiaries are translated at average exchange rates and statements of financial position at the closing rate as of the date of that statement of financial position. Translating the profit for the year and the total comprehensive income for the year using different exchange rates causes translation differences. This change is presented in other comprehensive income. Correspondingly, the translation differences arising from the equity of the foreign subsidiaries are recorded under equity and presented in other comprehensive income. In addition, cumulative translation adjustment includes the exchange gains and losses on monetary items (foreign currency denominated receivables from subsidiaries) that qualify for the classification as a part of the net investment in the foreign operation (quasi equity). When a consolidated foreign subsidiary is sold, the cumulative translation differences relating to that subsidiary recorded in equity are recognised in the income statement as part of gain or loss on the sale. Foreign currency transactions The Group companies’ foreign currency transactions are translated into functional currencies using the exchange rates prevailing at the dates of the transactions. Foreign exchange differences relating to ordinary busi-

18(79)

ness operations are presented above operating profit in translation differences related to sales and purchases. Receivables and liabilities denominated in foreign currencies outstanding on the reporting date are translated using the exchange rates quoted on the reporting date. Translation differences relating to finance are presented in finance income and cost. Revenue recognition The Group's revenue comprises of the fair value of consideration received from the sale of goods and services deducted by the sales related indirect taxes, estimated customer bonuses, discounts and other similar refunds. Sales of goods The products sold by the Group are building insulation, technical insulation, marine insulation, building elements and acoustic products. The main source of revenue is building material sales. Revenue from building material sales is recognised when all of the following criteria have been satisfied; (1)The Group has transferred to the buyer the significant risks and rewards of ownership of the goods; (2)The Group retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold; (3) The amount of revenue can be measured reliably; (4) It is probable the economic benefits associated with the transaction will flow to the entity; and (5) The costs incurred or to be incurred with respect to the transaction can be measured reliably. Revenue is recognised based on sales contract prices deducted by estimated discounts at the time of sale. Estimating and recognising discounts are based on previous experience. The time of payment granted for the goods sold is according to market practice and thus the sales include no financing arrangement. Sales of services Revenues from sale of services are recognized once the service has been rendered. Current and deferred income taxes The deferred tax liabilities and assets of the Group have, to a major part, arisen in connection with the formation of Paroc Group in December 2009. The income taxes related to the current period earnings, adjustments to previous period taxes and changes in deferred tax are recognised in the consolidated income statement. Tax is recognised in the consolidated income statement, except to the extent that it relates to items recognised in other comprehensive income or directly in equity. In this case, the tax is also recognised in other comprehensive income or directly in equity, respectively. Current tax related to the taxable profit for the period is calculated using the tax laws that have been enacted or substantively enacted by the end of the reporting period in the countries where the subsidiaries of the company operate and accrue taxable income. Management reviews the decisions made in the tax returns regularly in situations where the applicable tax laws leave room for interpretations. When necessary, provisions are recognised for the amounts expected to be paid to tax authorities.

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Deferred income tax is recognised, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements. However, the deferred income tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the balance sheet date and are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled. Deferred income tax assets are recognized only to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilised. Deferred income tax is provided on temporary differences arising on investments in subsidiaries and associates, except where the timing of the reversal of the temporary difference is controlled by the group and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities, and when the deferred income taxes assets and liabilities relate to income taxes levied by the same taxation authority on either the taxable entity or different taxable entities where there is an intention to settle the balances on a net basis. Intangible assets Intangible assets are recognised at the original acquisition cost. Intangible rights including quarry rights acquired in a business combination are recognised at fair value at the acquisition date. Those intangible assets with definite useful lives are carried at cost less accumulated amortisation and impairment losses. Amortisation periods are based on the estimated useful lives as follows: Asset Development costs Patents Computer software Customer relationships Quarry rights Technology related intangible assets

Useful life (years) 0–5 up to 20 0–5 20 17 – 84 15

Goodwill and other intangibles with indefinite useful lives, like the brand Paroc, are not amortised but tested for impairment annually. Goodwill Goodwill arising from the acquisition represents the excess of the cost of acquisition over the fair value of the identifiable assets, liabilities and contingent liabilities recognised at the date of acquisition. Goodwill is recognised at cost and is subsequently measured at cost less any accumulated impairment losses. Goodwill is not amortised but tested for impairment annually. Cash generating units to which goodwill has been allocated are tested for impairment annually or whenever events or changes in circumstances indicate that the carrying amount of a cash generating unit may not be recoverable. An impairment loss is recognised when the carrying amount of the cash generating unit exceeds its recoverable amount. The impairment loss is first allocated to reduce the carrying amount of goodwill allocated to the cash generating unit,

20(79)

and then to the other assets of the unit on pro rata basis. Impairment losses on goodwill are not reversed in any circumstances. Research and development costs All research costs are expensed when incurred. Development costs are also expensed as incurred unless all of the following six criteria are met: (1) There is technical feasibility of completing the intangible asset so that it will be available for use or sale. (2) There is intention to complete the intangible asset and use or sell it. (3) There is ability to use the intangible asset or to sell it. (4) Intangible asset will generate future income. (5) Adequate technical, financial and other resources to complete the development are available. (6) The cost can be measured reliably. After all the criteria are met, the development costs are recognised as an asset and amortised as mentioned above. Computer Software Acquisition costs of new software clearly associated with an identifiable and unique product, which will be controlled by the Group and has probable benefit, are recognised as an intangible asset and depreciated over the software’s expected useful life. Associated costs include staff costs of the implementation team and an appropriate portion of overhead, but exclude the cost of maintaining the software, which is expensed as incurred. Website costs are expensed as incurred. Emission allowances Acquired CO2 rights are capitalised under intangible assets at cost. CO2 rights received free of charge are recognised at zero value. A provision is recognised to cover the obligation to return emission allowances when the CO2 rights received free of charge are not enough to cover the actual amount of emissions. The provision is measured at its expected value, which is the market value of those emission rights needed to meet the return obligation at the reporting date or the contractual price if the emission rights are based on a contract or they have been otherwise agreed on. Property, plant and equipment Property, plant and equipment are initially measured at cost. As of subsequent measurement dated Paroc applies the cost model according to IAS 16 where the property, plant and equipment are carried at cost less accumulated depreciation and any accumulated impairment losses. Acquisition cost includes all costs necessary to bring the asset to working condition for its intended use. This includes the asset's original purchase price, costs of site preparation, delivery and handling, installation, related professional fees for architects and engineers, and in case the entity incurs an obligation to dismantle and remove the asset and restore the site on which it is located, the estimated cost of meeting this obligation. General and specific borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or

21(79)

sale. Depreciation of property, plant and equipment is calculated on a straight-line basis over expected useful lives. Land is not depreciated, with the exception of asphalting and other infrastructure costs. The usual estimated useful lives are as follows: Assets Building and constructions: Factory buildings Residential and office buildings Electric wire Building equipment Machinery and equipment: Production machinery Furnace Transportation equipment Office furniture Computers Other tangible assets

Useful life (years) 15 - 25 20 - 40 5 – 40 5 - 25

5 - 20 10 - 17 5 – 15 5 - 10 3 5 - 10

The estimated useful lives are reviewed at the end of each reporting period and, if they differ significantly from previous estimates, the depreciation periods are adjusted accordingly. Depreciation begins when the asset is available for use (i.e. when it is in the location and condition necessary for it to be capable of operating in the manner intended by management) and continues until the asset is derecognised. An asset is removed from the balance sheet on disposal or when it is withdrawn from use and no future economic benefits are expected from it. The gain or loss on disposal is the difference between the net disposal proceeds and the carrying amount, and is recognised in the statement of income in other operating income and expenses. Government grants Grants from the government are recognised at their fair value where there is a reasonable assurance that the grant will be received and the group will comply with all conditions attached. Government grants relating to the purchase of property, plant and equipment are deducted from the acquisition cost of the asset. The depreciation is calculated based on the adjusted carrying value of the asset. Thus government grants are recognized as income during the assets useful life in the form of reduced depreciation charges. Other government grants are recognised as income over the periods necessary to match them with the costs for which they are intended to compensate, on a systematic basis. Government grants that are receivable as compensation for expenses or losses already incurred, or for the purpose of giving immediately financial support to the Group with no future related costs, are recognised in profit or loss in the period in which they become receivable.

22(79)

Impairment of intangible and tangible assets At the end of each reporting period the Group assesses, whether there are any indications that an asset is impaired. If any such indication exists, the Group estimates the recoverable amount of the asset. Goodwill and intangible assets with indefinite useful lives are tested for impairment annually, irrespective as to whether there are any indications of impairment. In addition to this, an impairment test is performed whenever there are indicators of impairment. For impairment testing purposes, goodwill is allocated to cash generating units based on the reporting structure applied in monitoring the Group's business. The recoverable amount of a cash generating unit is the higher of its fair value less cost to sell or value in use. Value in use is the present value of the future cash flows expected to be derived from the cash-generating unit. The discount rate used in determining the present value of the cash flows is a pre-tax rate reflecting the current market assessment of the time value of money and asset specific risks. An impairment loss is recognised in the statement of income, if the carrying amount of the asset exceeds its recoverable amount. An impairment loss is reversed if the recoverable amount of the asset is increased. However, the reversal of the impairment loss shall not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset in prior years. Impairment losses on goodwill are not reversed. Leases Group as lessee A lease is classified as a finance lease if it transfers substantially all the risks and rewards incidental to ownership. A lease is classified as an operating lease if it does not transfer substantially all the risks and rewards incidental to ownership. Finance leases are recognised as assets and liabilities in the balance sheet at amounts equal to the fair value of the leased property or, if lower, the present value of the minimum lease payments. Initial direct costs identified as directly attributable to activities performed by the Company for a finance lease are added to the amount recognised as an asset. The discount rate used in calculating the present value of the minimum lease payments is the interest rate implicit in the lease. For finance leases, minimum lease payments are apportioned between the finance charge and the reduction of the outstanding liability. The finance charge is allocated to each period during the lease term so as to produce a constant periodic rate of interest on the remaining balance of the liability. Assets held under a finance lease are depreciated over the shorter of the useful life of the asset or the term of the lease. Lease payments under an operating lease are recognised as an expense on a straight-line basis over the lease term. Financial assets The group classifies its financial assets in the following categories: at fair value through profit or loss, loans and receivables, and available-for-sale. The classification depends on the purpose for which the financial assets were acquired. Management determines the classification of its financial assets at initial recognition. Financial assets at fair value through profit or loss are financial assets held for trading. A financial asset is classified in this category principally for the purpose of selling in the short term. Derivatives are also in this category unless they are designated as hedging instruments that qualify for hedge accounting.

23(79)

Loans and receivables consist mainly of trade receivables and they are measured at amortised cost less provision for impairment. All outstanding trade receivables past due over 60 days are assessed separately. Impairment for trade receivables is also recognised when there is other evidence of insolvency, bankruptcy or liquidation of the debtor. The Group’s available-for-sale financial assets consist of investments in unquoted shares. These shares have been measured at cost, because their fair values cannot be measured reliably. Dividends received are presented as part of finance income. An impairment of financial assets available-for-sale is recognised if there is objective evidence of impairment. Financial assets are classified as current assets if expected to be settled within 12 months, otherwise they are classified as non-current. Financial assets and liabilities are offset and the net amount reported in the balance sheet when there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis or realise the asset and settle the liability simultaneously. Financial assets are derecognised when the rights to receive cash flows from the investments have expired or have been transferred and the Group has transferred substantially all risks and rewards of ownership. Derivative financial instruments Derivative financial instruments are initially and subsequently recognized at fair value in the statement of financial position. Derivatives are designated as hedges of the fair value of recognised assets and liabilities or firm commitments (fair value hedges), hedges of forecast transactions or firm commitments (cash flow hedges) or hedges of a net investment in a foreign operation (net investment hedge). The Group has only applied cash flow hedge accounting in the consolidated financial statements. At the contract date the derivatives are classified as hedging instruments and in cash flow hedge accounting. The interest rate differential component of foreign exchange forwards is immediately recognised in the income statement. The effective portion of changes in the fair values of the currency component is recognised in other comprehensive income in the fair value reserve and the ineffective portion is adjusted to sales or purchases. When the underlying forecasted sale or purchase occurs the cumulative changes of fair value are transferred into the income statement to adjust sales or purchases. When a hedging instrument expires or is sold, or when a hedge no longer meets the criteria for hedge accounting, any cumulative gain or loss existing in equity at that time remains in equity and is recognised in the income statement when the forecasted transaction occurs. If the forecast transaction is no longer expected to occur, the cumulative gain or loss reported in other comprehensive income is immediately transferred to the income statement. Hedging effectiveness testing is carried out at least every quarter. The Group applies cash flow hedge accounting for hedging its interest rate risk using interest rate derivatives. The changes in fair values of the hedging instruments are recorded through the fair value reserve. The cash flow hedge accounting impact from interest rate swaps is recognised gross under finance income and costs. Inventories Inventories are measured at lower of cost or net realizable value. Costs are assigned to inventories by the method most appropriate to the particular class of inventory, with purchased inventories being valued on a first-in-first-out (FIFO) basis and manufactured inventories being technically valued at the standard costs, reflecting the FIFO basis, comprising direct costs and a systematic appropriate allocation of indirect costs related to fixed and variable manufacturing overheads.

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Raw material costs include transportation, load handling and other costs incurred in conjunction with the supply of stone from Paroc's own and concession quarries. Net realizable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale. An allowance for obsolete products and spare parts is recorded as expense in the period during which the obsolescence has been noted based on technical aging or other factors. Cash and cash equivalents Cash and cash equivalents include cash at hand, bank deposits and other short-term highly liquid investments with original maturities of three months or less. Share capital Ordinary shares are classified as equity. The Group does not have any treasury shares. Incremental costs directly attributable to the issue of new shares are presented as a deduction of equity. Trade payables Trade payables are obligations to pay for the goods and services that have been acquired in the ordinary course of business from suppliers. Accounts payables are classified as current liabilities if the payment is due within one year or less. Otherwise they are presented as non-current liabilities. Trade payables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method. Borrowings Borrowings are recognised in the balance sheet in current or non-current liabilities initially at fair value, net of transaction costs incurred. Subsequently the financial liabilities are measured at amortised cost. Interest and transaction costs included in effective interest are allocated to the statement of income using the effective interest method over the expected loan maturity. Share-based investment plan A part of the Paroc Group’s key persons is involved in Safari Luxco 1 S.A. Group’s share-based investment plan. The plan has been carried out through a special purpose vehicle in Luxembourg. At Paroc Group level, the plan is treated as equity-settled share-based payment transaction where Paroc Group has no obligation to settle the sharebased payment transaction under normal conditions. Participants have bought their shares at fair value. Provisions A provision is recognised when the Group has a present legal or constructive obligation as a result of past events and it is probable that an outflow of resources will be required to settle the obligation, and when a reliable estimate of the amount can be made. A provision is measured at the present value of the expenditure required to settle the obligation. The discount factor used in the calculation of the present value is determined so that it reflects the current market assessment of the time value of money.

25(79)

Environmental provisions are recognised, based on current interpretation of environmental laws and regulations, when it is probable that present obligation has arisen and the amount of such liability can be reliably estimated. Paroc also has a liability for deliveries of defective goods. This liability is not a warranty for the future years but instead of an obligation to replace defective goods either with new goods or within a credit note. Employee benefits Pension obligations Within Paroc there are several pension schemes following local regulation and practice in each country. The plans are classified as either defined benefit plans or defined contribution plans. A defined contribution plan is a pension plan under which the Group pays fixed contributions into a separate entity. The Group has no legal or constructive obligations to pay further contributions if the fund does not hold sufficient assets to pay all employees the benefits relating to employee service in the current and prior periods. Contributions to defined contribution plans are recognised as an expense in the period the employee has rendered the service. Defined benefit plans are post-employment benefit plans other than defined contribution plans. A defined benefit plan usually define an amount of pension benefit that an employee will receive on retirement, usually dependent on one or more factors such as age, year of service and compensation. The liability recognised in the balance sheet with respect to defined benefit pension plans is the present value of the defined benefit obligation at the end of the reporting period less the fair value of plan assets. For defined benefit plans, pension costs are assessed using the Projected Unit Credit Method with actuarial valuations being carried out at each balance sheet date. The present value of the defined benefit obligation is determined by discounting the estimated future cash outflows using interest rates of high-quality corporate bonds that are denominated in the currency in which the benefits will be paid, and that have terms to maturity approximating to the terms of the related pension liability. Actuarial gains and losses arising from experience adjustments and changes in actuarial assumptions are charged or credited to equity in other comprehensive income in the period in which they arise. Service cost is recognised immediately in the income statement. Top management located in Finland and Sweden has individual voluntary pension plans. These plans entitle a pension benefit at the age of 62 and they are classified as defined contribution plans. Other long-term employee benefits Paroc also has other employee benefits such as jubilee benefits, long-service benefits and bonus arrangements, which are not payable wholly within 12 months after the end of the reporting period. The Group recognises a provision where contractually obliged or where there is a past practice that has created a constructive obligation for settlement, resulting in an outflow of resources embodying economic benefits. Re-measurements caused by other long-term employee benefits are recognised immediately in the consolidated income statement. Dividend distribution The dividend liability to the company’s shareholders is recognised as a liability in the consolidated financial statements when a meeting of shareholders has decided on the dividend distribution.

26(79)

Capital return The Finnish legislation allows a Finnish subsidiary or parent to give tax deductible group contribution to another Finnish group company when statutory requirements are met. Group contribution system in Finland is governed by a special law, the Act on Contributions between Affiliated Companies. In the consolidated financial statements group contribution is included in the retained earnings in the equity. The group contribution liability is recognised as current liability when the decision on group contribution has been made. Operating profit IAS 1 Presentation of Financial Statements does not define operating profit. The Group has defined it as follows: operating profit is a net amount, comprised of net sales added to other operating income, deducted with purchases adjusted for the change in finished goods and work in progress inventories and costs related to goods manufactured for private consumption and deductions for employment benefits, impairment losses and other operating expenses. All other statement of income items are presented below operating profit.

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3 Segment information The Group’s chief operating decision-maker (“CODM”) is the CEO and Executive Board. Operating segments have been determined based on the information reported to and viewed by the CODM for the purposes of allocating resources to the segments and assessing their performance. The CODM manages the business both from a division perspective and from a geographic perspective. The set of components that constitutes the Group’s operating segments has been determined by reference to the core principle governing segment reporting, that is, based on provision of information that enables evaluation of the nature and financial effects of the business activities in which the Group engages and the economic environments in which it operates. The reportable segments of Paroc Group are Insulation, Panel Systems and Base Production. The following table represents revenue and profit information and certain key measures regarding the Group's operating segments for the year ended December 31, 2014 and 2013, respectively:

€ thousands Net sales External Internal

Insulation 381 853 369 415 12 438

Year ended December 31, 2014 Panel SysBase producEliminations tem tion and allocations 48 333 191 557 -204 219 48 252 -98 -45 81 191 655 -204 174

Total 417 524 417 524 0

EBITDA Depreciation and amortization

53 255 6 292

2 786 884

15 925 15 032

-4 047 9 066

67 920 31 274

Operating profit Capital expenditure

10 707

1 185

12 288

1 277

36 646 25 456

Year ended December 31, 2013 Insulation 390 778 375 523 15 254

Panel System 56 216 56 163 53

Base production 207 800 531 207 269

Eliminations and allocations -221 666 911 -222 577

Total 433 128 433 128 0

EBITDA Depreciation and amortization

53 539 3 372

5 219 892

18 548 16 312

-717 8 809

76 589 29 385

Operating profit Capital expenditure

45 047

899

11 602

1 004

47 204 58 553

€ thousands Net sales External Internal

28(79)

Net sales by geographic area: Year ended December 31, 2014 € thousands

Finland

Sweden

Poland

Lithuania

Russia

Other countries

Total

Net sales Non-current assets1

83 315 162 018

103 023 179 813

28 595 55 125

18 116 19 119

39 578 37 053

144 897 30

417 524 453 159

Year ended December 31, 2013 € thousands

Finland

Sweden

Poland

Lithuania

Russia

Other countries

Total

Net sales Non-current assets1

87 433 168 182

108 776 187 458

28 055 59 314

17 756 20 644

36 089 56 817

155 019 31

433 128 492 446

1

Non-current assets include intangible and tangible assets

The reportable segment Insulation comprises of operating segments aggregated pursuant to the aggregation criteria in IFRS 8, as the insulation business is managed using a matrix organization including both divisional and geographical information. Eliminations and allocations include the elimination of transactions among segments, of which the majority relates to the intercompany sales of the Base production segment. The CODM assesses the performance of the segments based on measures of net sales and EBITDA. EBITDA is defined as profit for the period from continuing operations before income tax expense, financial income and costs, depreciation, amortization and impairment losses. No single customer represents 10 % or more of Group revenues. No measures of assets and liabilities by segment are reviewed by the CODM.

4 Revenue € thousands

Year ended 31 December 2014 2013

Sale of building materials Other revenue Total

410 818 6 706 417 524

426 273 6 855 433 128

29(79)

Revenue by geographical area € thousands

Year ended 31 December 2014 2013

Sweden Finland Poland Germany Other EU Russia Norway Other Total

103 023 83 315 28 595 25 564 88 573 39 578 29 738 19 138 417 524

108 776 87 433 28 055 23 381 92 973 36 089 29 628 26 793 433 128

5 Expenses by nature € thousands

Year ended 31 December 2014 2013

Raw material and consumables used1) Production for own use Change in inventories Distribution costs Employee benefit expenses (note 7) Research and development expenses (note 8) Depreciation, amortisation and impairment (note 6) Operating lease expenses (note 28) IT costs Other expenses Total

-135 611 276 4 171 -41 202 -93 537 -3 593 -31 274 -6 112 -6 053 -57 906 -370 840

-138 357 231 841 -44 738 -96 731 -3 785 -29 385 -6 134 -5 721 -55 657 -379 436

1)

Specification has been changed and consumables include maintenance materials, utilities and spare parts. Year 2013 specification has been changed accordingly.

Expenses by nature include cost of sales, selling and marketing expenses, research and development expenses and administrative expenses. Other expenses include energy expenses, fuels, and services for production, other indirect production costs and other miscellaneous costs. Auditor's fees € thousands Authorised Public Accountants PricewaterhouseCoopers Audit fees Auditor's statements and opinions Tax consulting Other services Total

Year ended 31 December 2014 2013 -461 -3 -16 -674 -1 155

-393 -14 -55 -12 -474

30(79)

6 Depreciation, amortisation and impairment Depreciation, amortization and impairment by function: € thousands Depreciation and amortisation Cost of sales Selling and marketing Research and development Administration Impairment Cost of sales Research and development Administration Total

Year ended 31 December 2014 2013 -25 236 -1 988 -2 521 -1 505

-22 943 -2 035 -2 491 -1 225

-24 -31 274

-690 -29 385

Depreciation, amortization and impairment by type of asset: € thousands Property, plant and equipment Mineral deposits and land areas Buildings and constructions Machinery and equipment Buildings and constructions & machinery and equipment under finance lease Other tangible assets Advances paid and construction in progress Intangible assets Intangible rights Other intangible assets Total

Year ended 31 December 2014 2013 -117 -5 365 -19 032 -189 -574 -24

-90 -4 494 -18 047 -281 -642 -

-4 449 -1 521 -31 274

-4 432 -1 399 -29 385

7 Employee benefit expenses € thousands Wages and salaries Pension expenses Defined contribution plans Defined benefit plans (note 23) Other indirect employee costs Total

Year ended 31 December 2014 2013 -74 537

-76 181

-8 577 -397 -10 025 -93 537

-9 824 -379 -10 347 -96 731

31(79)

Personnel in average during the financial year € thousands Finland Poland Sweden Lithuania Russia Other Total

Year ended 31 December 2014 2013 652 549 406 262 162 62 2 093

711 545 395 254 101 57 2 063

Employee benefits for the key management personnel and the Board of Directors are presented in the note 30 Related party transactions.

8 Research and development The consolidated income statement includes expensed research and development costs €3.6 million (2013: €3.8 million) and depreciation and amortisation of assets of research and development €2.5 million (2013: €2.5 million). Government grants received relating to marketing and development projects were €0.2 million (2013: €0.2 million).

9 Other operating income € thousands Gains on sale of tangible assets Other operating income Total

Year ended 31 December 2014 2013 28 313 341

0 480 480

10 Other operating expenses € thousands Loss on sale of tangible assets Property tax Termination benefits M&A related costs Russia expansion and start-up expenses Demolishing expenses Write-down and valuation allowances for bad debts Other operating expenses Total

Year ended 31 December 2014 2013 -86 -181 -625 -2 868 -4 937 -123 -1 558 -10 379

-44 -330 -318 -3 901 -929 -248 -1 197 -6 967

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11 Finance income and costs € thousands Finance income Dividend income from available-for-sale financial assets Interest income from loans and receivables Other financial income Fair value gains on financial instruments: Interest rate swaps: cash flow hedges, transfer from equity Total

€ thousands Finance costs Interest expenses Financial liabilities measured at amortised cost Finance lease agreements Other finance costs Fair value losses on financial instruments: Interest rate swaps: cash flow hedges, transfer from equity Exchange gains/losses (-) Total

Year ended 31 December 2014 2013 55 327 616

36 432 1 134

438 1 436

737 2 339

Year ended 31 December 2014 2013 -21 420 -138 -4 415

-9 154 -161 -3 867

-3 585 -1 261 -30 818

-4 123 -2 554 -19 859

Exchange gains and losses in the statement of income € thousands Revenue Purchases Finance income and costs Total

Year ended 31 December 2014 2013 -1 212 210 -1 261 -2 263

181 33 -2 554 -2 340

Exchange rate differences on derivative instruments have been recognized as adjustment to revenue with €-0.1 million (2013: €1.0 million), to purchases with €0.4 million (2013: €0.2 million) and to finance income and costs with €0.1 million (2013: €0.1 million).

33(79)

12 Income taxes The components of income taxes are as follows: € thousands Current tax expense Current tax from previous years Other direct taxes Deferred taxes Total

Year ended 31 December 2014 2013 -8 155 -135 -11 3 919 -4 383

-7 807 22 -11 3 701 -4 095

The differences between income tax expense computed at Finnish statutory rate of 20 % (2013: 24.5 %) and income tax expense provided in the consolidated statement of income are as follows: € thousands Profit/loss (-) before taxes Tax calculated at Finnish tax rate Tax effects of: Different tax rates applied to foreign subsidiaries Revenues exempt from taxation Expenses not deductible for tax purposes Utilisation of previously unrecognised tax losses Tax losses for which no deferred tax asset is recognised Unused tax losses and tax offsets now recognised as deferred Effect of revaluation of previously recognised deferred taxes Tax for previous accounting periods Other direct taxes Deferred tax balance due to change in income tax rate Tax charge Effective tax rate

Year ended 31 December 2014 2013 7 264 -1 453

29 685 -7 273

507 213 -2 348 -1 164 8 -136 -11 -4 383 60.3 %

1 499 142 -497 66 -1 615 -216 22 -11 3 787 -4 095 13.8 %

Impact of the change in income tax rate in 2013 was attributable to the decrease in the Finnish tax rate from 24.5 % to 20 % on 1 January 2014. The income tax charged (-)/credited to equity during the year is as follows: € thousands Current tax Capital return Total

Year ended 31 December 2014 2013 -

686 686

34(79)

13 Intangible assets

Development costs

Intangible rights

Goodwill

Other intangible assets

22 160 35 22 195

2 916 2 916

6 614 4 809 7 427

176 211 -4 058 172 153

4 071 1 145 -367 4 849

283 433 -4 854 1 145 442 280 166

-904 -310

-4 415 -1 514

-1 555 -583

-1 416 -676

0 -

-1 181 -815

-15 126 -5 831

-7 588

-1 214

-5 929

-2 138

-2 092

0

-1 996

-20 957

21 324

30 197

10 302

16 266

778

5 335

172 153

2 853

259 209

21 324 -583 20 741

37 785 -860 36 925

11 516 10 11 526

22 195 48 22 243

2 916 0 2 916

7 427 -59 -323 3 977 11 022

172 153 -7 143 165 010

4 849 1 1 279 -7 -386 5 736

280 166 -8 586 1 279 -330 3 591 276 120

0 -

-7 588 -1 889 -

-1 214 -313 -

-5 929 -1 527 -

-2 138 -583 -

-2 092 323 -720 -3 467

0 -

-1 996 7 -938 6

-20 957 329 -5 970 0 -3 461

0

-9 477

-1 527

-7 456

-2 721

-5 956

0

-2 921

-30 059

20 741

27 448

9 999

14 787

194

5 066

165 010

2 815

246 061

Customer relationships

Quarrying rights

21 656 -332 21 324

38 295 -510 37 785

11 509 7 11 516

0 -

-5 655 -1 933

0

Carrying amount at 31 Dec 2013 Acquisition cost at 1 Jan 2014 Translation differences Additions Disposals Reclassifications Acquisition cost at 31 Dec 2014

€ thousands Acquisition cost at 1 Jan 2013 Translation differences Additions Reclassifications Acquisition cost at 31 Dec 2013 Accumulated amortization and impairment at 1 Jan 2013 Amortisation Accumulated amortisation and impairment at 31 Dec 2013

Accumulated amortization and impairment at 1 Jan 2014 Disposals Amortisation Impairment Reclassifications Accumulated amortisation and impairment at 31 Dec 2014 Carrying amount at 31 Dec 2014

Technology related intangible assets

Brand

Total

In determining that the Paroc brand has an indefinite useful life, Group Management has considered various factors such as the past and expected longevity of the brand, the impact of possible changes in technologies, the impact of possible evolutions of the regulatory environment. Based on the analysis of these factors, management has determined and confirmed at 31 December 2014 that there is no foreseeable limit to the period of time over which brand Paroc is expected to generate cash inflows for the Group.

35(79)

Goodwill impairment tests Goodwill has been allocated to the following cash-generating units (CGUs) based on the reporting structure used in group business monitoring: € thousands Carrying value at 1 Jan 2013 Translation differences Carrying value at 31 Dec 2013 Translation differences Carrying value at 31 Dec 2014

Insulation Finland

Insulation Sweden

Panel Systems

Total

37 284 37 284 37 284

129 735 -4 058 125 677 -7 143 118 534

9 192 9 192 9 192

176 211 -4 058 172 153 -7 143 165 010

No impairment losses in respect of goodwill have been recognised in 2014 and 2013. Value-in-use calculations are made to estimate the recoverable amounts of CGUs. The calculations use pre-tax cash flows based on three-year strategy approved by management excluding any cash flows from expansion investments, and a growth rate to perpetuity of 2 % (2013: 2 %) per annum of cash flows beyond the budgeted period, which corresponds to the realised long-term growth of the CGUs and business areas in question. The key assumptions used in cash flow projections are based on management estimates related to the profitability of the Group measured as gross margin and the discount rate applied, supported by the estimates made by Euroconstruct and Forecon. The most significant key assumption affecting the projections is the development of residential construction business, and also the development of commercial building construction business which has an effect on Paroc panels. Discount rates used in the calculations are the pre-tax weighted average cost of capital (WACC). WACC consists of peer group unlevered beta and risk free rate per country, targeted debt to equity ratio, and equity market risk premium per country. The following WACCs were used: % 2013 2014

Insulation Finland

Insulation Sweden

Panel Systems

8.1 7.2

8.5 7.3

8.1 7.2

In Insulation Finland, the recoverable amount calculated based on value in use exceeded carrying value by €53.5 million. A rise in the discount rate from 7.2 % to 9.0 % or a fall in gross margin by 2.1 percentage points for the projection period would remove the remaining headroom. According to the management’s assumption, in other cash generating units, any reasonably possible change in a key variable would not create a situation in which the unit’s carrying value would exceed its value in use.

36(79)

Emission allowances The European Emission Trading Scheme started on January 1, 2005. In the beginning of 2008 emission rights were extended to cover the manufacturing of mineral wool. Paroc’s sites included in the European Emission Trading Scheme are the plants in Finland, Sweden, Poland and Lithuania. The following table summarises the Group’s emission allowances held as of 31 December 2014. Their carrying value (acquisition cost) was €2.2 million. The Group’s emission rights granted for free in 2014 amounted to 212 304 tons (2013: 216 171 tons). New emission rights were not acquired in 2014 or in 2013. Emission rights consumed by the Group in 2014 amounted 237 521 tons (2013: 269 018 tons). At the year-end 2014, Paroc does not have any emission rights forwards (2013: 0). € thousands

Tons

Balance at 1 Jan 2013 Emission allowances received free of charge Balance at 31 Dec 2013

489 578 216 171 705 749

Actual emissions Adjustments in respect of prior years Emission allowances held at 31 Dec 2013

-269 018 -6 344 430 387

Balance at 1 Jan 2014 Emission allowances received free of charge Balance at 31 Dec 2014

430 387 212 304 642 691

Actual emissions Emission allowances held at 31 Dec 2014

-237 521 405 170

37(79)

14 Property, plant and equipment

Mineral deposits and land areas 5 463 -54 2 5 411

Buildings and constructions 71 248 -567 32 960 103 641

Machinery and equipment 148 643 -1 503 63 -11 322 34 716 170 597

Other tangible assets 8 652 -126 353 8 879

Advances paid and construction in progress 45 404 -1 427 57 332 -68 475 32 834

Total 279 410 -3 677 57 395 -11 322 -444 321 362

-262 -90 -

-14 384 -4 563 -

-47 159 11 267 -17 569 -690

-1 744 -642 -

-12 289 -

-75 838 11 267 -22 864 -690

-352

-18 947

-54 151

-2 386

-12 289

-88 125

Carrying amount at 31 Dec 2013

5 059

84 694

116 446

6 493

20 545

233 237

Acquisition cost at 1 Jan 2014 Translation differences Additions Disposals Reclassifications Acquisition cost at 31 Dec 2014

5 411 -158 294 5 547

103 641 -13 297 -21 6 250 96 574

170 597 -10 019 -2 171 17 567 175 974

8 879 -181 0 -6 262 8 954

32 834 -881 24 177 -36 -24 415 31 678

321 362 -24 536 24 177 -2 234 -43 318 726

-352 -117 -

-18 947 21 -5 434 -10

-54 151 2 133 -19 152 0 -261

-2 386 -574 -

-12 289 -24 -85

-88 125 2 154 -25 278 -24 -356

-469

-24 371

-71 432

-2 960

-12 398

-111 629

5 078

72 203

104 543

5 994

19 280

207 098

€ thousands Acquisition cost at 1 Jan 2013 Translation differences Additions Disposals Reclassifications Acquisition cost at 31 Dec 2013 Accumulated amortization and impairment at 1 Jan 2013 Disposals Amortisation Impairment Accumulated amortisation and impairment at 31 Dec 2013

Accumulated amortization and impairment at 1 Jan 2014 Disposals Amortisation Impairment Reclassifications Accumulated amortisation and impairment at 31 Dec 2014 Carrying amount at 31 Dec 2014

During the year, the Group did not capitalise any borrowing costs on qualifying assets. Borrowing costs amounting to €1.6 million in 2013 were capitalised using the borrowing rate of 4.597 % until 25 February 2013 and after that with rate 3.647 %.

38(79)

Finance lease agreements Property, plant and equipment include assets acquired under finance leases:

Buildings and constructions 2 487 -2 -83 2 402

Machinery and equipment 911 23 934

-254 -69 -323

-500 -211 -711

.754 -280 -1 034

Carrying amount at 31 Dec 2013

2 079

223

2 302

Acquisition cost at 1 Jan 2014 Translation differences Acquisition cost at 31 Dec 2014

2 402 -2 2 400

934 934

3 336 -2 3 334

-323 2 -69 -390

-711 -120 -831

-1 034 2 -189 -1 221

2 010

103

2 113

€ thousands Acquisition cost at 1 Jan 2013 Translation differences Additions Reclassifications Acquisition cost at 31 Dec 2013 Accumulated amortization and impairment at 1 Jan 2013 Amortisation Accumulated amortisation and impairment at 31 Dec 2013

Accumulated amortization and impairment at 1 Jan 2014 Translation differences Amortisation Accumulated amortisation and impairment at 31 Dec 2014 Carrying amount at 31 Dec 2014

Total 3 398 -2 23 -83 3 336

15 Available-for-sale financial assets All available-for-sale financial assets are considered to be non-current unless they are expected to be realised within twelve months. € thousands Carrying amount in the beginning of the period Translation differences Additions Disposals Carrying amount at 31 December Less non-current portion Current portion Shares in other companies

Year ended 31 December 2014 2013 80 80 -80 0

68 12 80 -80 0

80

80

The Group holds a 11.5 % interest in Steinull hf, an Icelandic mineral fibre insulation company.

39(79)

16 Carrying amounts and fair values of financial assets and liabilities by category

2014 € thousands Non-current financial assets Available-for-sale financial assets Trade and other receivables1 Current financial assets Trade and other receivables1 Derivative financial instruments Cash and cash equivalents Carrying amount

Loans and receivables

€ thousands Non-current financial assets Available-for-sale financial assets Trade and other receivables1 Current financial assets Trade and other receivables1 Derivative financial instruments Cash and cash equivalents Carrying amount

Derivatives used for hedging

Carrying amount at balance sheet date

Financial liabilities at amortised cost

Available-forsale

Total

2 119

-

-

80 -

-

80 2 119

80 2 119

45 703 23 130 70 952

-

802 802

80

-

45 703 802 23 130 71 834

45 703 802 23 130 71 834

-

-

2 160

-

416 607 12 -

416 607 12 2 160

416 607 12 2 160

-

-

1 260 3 420

-

295 73 673 490 587

295 73 673 1 260 494 007

295 73 673 1 260 494 007

Non-current financial liabilities Borrowings Other liabilities Derivative financial instruments Current financial liabilities Borrowings Trade and other payables2 Derivative financial instruments Carrying amount

2013

Fair value through profit or loss

Loans and receivables

Fair value through profit or loss

Derivatives used for hedging

Carrying amount at balance sheet date

Financial liabilities at amortised cost

Available-forsale

Total

3 417

-

-

80 -

-

80 3 417

80 3 417

42 992 69 627 116 036

-

489 489

80

-

42 992 489 69 627 116 605

42 992 489 69 627 116 605

-

460

-

351 684 16 -

351 684 16 460

351 684 16 460

-

2 953 3 413

-

123 77 070 428 893

123 77 070 2 953 432 306

123 77 070 2 953 432 306

Non-current financial liabilities Borrowings Other liabilities Derivative financial instruments Current financial liabilities Borrowings Trade and other payables2 Derivative financial instruments Carrying amount 1 Trade and other receivables do not include prepayments and tax related receivables. 2 Trade and other payables do not include tax related liabilities.

40(79)

17 Hierarchy of financial assets and liabilities at fair value 2014 € thousands Assets Available-for-sale financial assets Derivatives used for hedging Assets total

Level 1

Liabilities Derivatives for hedging Liabilities total

2013 € thousands Assets Available-for-sale financial assets Derivatives used for hedging Assets total

Level 2

Total

-

802 802

80 80

80 802 882

-

3 420 3 420

-

3 420 3 420

Level 1

Liabilities Derivatives for hedging Liabilities total

Level 3

Level 2

Level 3

Total

-

489 489

80 80

80 489 569

-

3 413 3 413

-

3 413 3 413

Classification is based on IFRS 7 –standard requirement, where level 1 instrument are traded in active market and their fair values are based on market quotations. The fair values of level 2 instruments are determined by using valuation techniques. These valuation techniques maximise the use of observable market data where it is available and rely as little as possible on entity specific estimates. The fair value of level 3 instruments is based on non-observable market data. Available-for-sale financial assets cannot be measured at fair value, as fair values are not available, and are classified as level 3 instruments. The carrying amount is the Management best estimate of the fair value of available-for-sale financial assets. Specific valuation techniques used to value financial instruments include:  

The fair value of interest rate swaps is calculated as the present value of the estimated future cash flows based on observable yield curves; The fair value of forward contracts is determined using forward exchange rates at the balance sheet date and prevailing interest rate differential, with the resulting value discounted back to present value.

41(79)

18 Financial risk management Substantial parts of Paroc operations are international and highly leveraged. Consequently the Group is exposed to a variety of financial risks. These risks can be split to following areas:  Interest rate risk  Currency risk  Commodity price risk  Liquidity risk  Credit risk Group Treasury, which is legally located within Paroc Oy Ab in Finland, has the main responsibility to manage financial risks. The parent company Board of Directors has approved the treasury policy, which defines operative guidelines and responsibilities of risk management. Interest rate risk Paroc is exposed to interest rate risk due to its €230 million Floating rate notes. The interest rate risk is managed based on the treasury policy. The Floating rate notes carry a coupon of 5.25 % above 3 month Euribor. The interest rate exposure of the Floating rate notes has been fully hedged with interest rate swaps up to May 2019 whereby the Group pays fixed interest and receives three month Euribor. Cash flow hedge accounting is employed and effective part of the fluctuation in market value is shown in the fair value reserve in other comprehensive income. Group Treasury constantly follows financial markets development and frequently meets the CFO in order to implement proper measures to manage interest rate risk. Foreign exchange risk Paroc is exposed to many currency risks. These are Scandinavian currencies, Polish zloty, Russian rouble, British pound and US dollar. The Group policy is that sales companies are buying the products they sell in their own functional currencies in order to avoid most of the currency risk. The Group currency risk is thus concentrated to the producing countries. Paroc does not hedge its net investments in Group companies. The management of foreign exchange risk is described in the treasury policy. The producing countries hedge their estimated six month rolling cash flow and partially hedge that internally with either Group Treasury or directly with selected banking counterparties. The Treasury makes the external hedging transactions with banking partners. The instruments used are foreign exchange forwards. Cash flow hedge accounting is employed. The effective part of the fluctuation in market value of the hedging instruments is shown in the fair value reserve in other comprehensive income. Liquidity risk Paroc has a Super Senior Revolving Facility Agreement with a nominal amount of €60 million. The revolving credit facility (RCF) can be drawn, used for bank guarantees or allocated as overdraft facilities on bank accounts. The facility is committed and can be drawn fully with three banking days’ notice. The purpose of the facility is to balance changes in working capital and fund capital expenditure. At year end the facility was fully available save for a SEK 35 million pension guarantee. The available facility amounted to €56.3 million. The available liquidity defined as cash and cash equivalents added with unutilised committed facilities, was €79.4 million at year end. All of the Group’s excess liquidity has been concentrated to the Group Treasury, which takes internal deposits and pays interest based on the financial items transfer pricing policy. Group companies, which need financ-

42(79)

ing, can consequently borrow internally from the Group Treasury. The Group operates cross border cash pools that aim to improve the utilization of the Group's liquidity. Group Treasury makes short term external deposits with accepted banking counterparties. The aim is to obtain competitive yield without compromising the capital. The Group Treasury monitors the liquidity on a daily basis. The Group Treasurer decides on the banks used by Paroc Group together with the CFO. Primary selection is based on banks who are participating in the Group financing and one main bank for cash management. The Group Treasury can place short term deposits with banks providing their rating in short-term obligations is at least P-1 (Moody’s) or similar. The Group Treasury is responsible for follow up of counterpart ratings. Electricity risk The Company has a need to buy electricity for production purposes. Around half of the needed energy is consumed in Poland and Lithuania. The other half is consumed in Sweden and Finland. The Company has an electricity hedging policy stating that the electricity purchased for Lithuania and Poland is agreed through long-term contracts and fixed prices annually. For the Nordic countries the electricity purchases are based on rolling estimates for the coming three years. Treasury is purchasing electricity from the vendor in the form of long-term physical contracts, based on estimates from the production units. The price is fixed as percentage of estimated usage on a rolling three year basis. The first year is fixed 75-85 %, the second year 35-45 % and third year 10-20 %. The price is agreed with the physical electricity vendor. Credit risk The Company has insured credit risk in trade receivables. Insurance covers sales in all significant countries. All sales above €5 thousand are covered with a deductible of 10 %. The group also has its own internal credit policy, which specifies the principles, if an insurance company is not granting a limit to the customer. In these specific cases division management has the power to grant an internal limit up to €100 000 and from then on, the power lies with the Group CFO and CEO. The Group companies are following the status of trade receivables on a weekly basis. Ageing analysis of trade receivables is shown in note 20 Trade and other receivables. Management of capital risk The target for risk management of capital is to ensure the Group’s ability to continue as a going concern so that it would be able to provide returns to its owners and benefits to other interest groups. The target is to maintain an optimal capital structure in order to reduce financing costs. Management follows the Group’s capital structure on a regular basis. The Group target is north of 30 % equity. The main rule is that dividends are not paid for owners. Investments and increase in working capital is financed mainly with cash flows from the operating activities. At the end of the period the Group’s liquid funds were €23.1 million (2013: €69.6 million). Net debt amounted to €398.8 million (2013: €282.2 million). Solidity was 4.5 % (2013: 24.2 %). Liquidity in the near future is good.

43(79)

Derivative financial instruments, nominal values € thousands

Year ended 31 December 2014 2013

Interest rate swaps Foreign exchange forwards Total

230 000 42 667 272 667

350 000 33 410 383 410

Derivative financial instruments, market values Year ended 31 December 2014 2013

€ thousands Interest rate swaps Positive fair value of foreign exchange forwards Negative fair value of foreign exchange forwards Total

-3 053 802 -367 -2 618

-3 219 489 -194 -2 924

Offsetting financial assets and financial liabilities The following financial assets and financial liabilities are subject to offsetting, enforceable master netting arrangements and similar agreements.

31 Dec 2014 € thousands Derivative assets Derivative liabilities

31 Dec 2013 € thousands Derivative assets Derivative liabilities

Gross amounts of financial instruments in the balance sheet

Related financial instruments that are not offset in the balance sheet

Net amount

802 -3 420

-366 366

436 -3 054

Gross amounts of financial instruments in the balance sheet

Related financial instruments that are not offset in the balance sheet

Net amount

489 -3 413

-489 489

0 -2 924

Foreign exchange translation exposure The following table below shows the net foreign exchange transaction exposure by currency, estimated highly probable transactions and hedges in place for operational items. Operational items include trade receivables and trade payables.

44(79)

Transaction risk and hedging operational items 2014 € thousands

LTL

GBP

SEK

NOK

DKK

PLN

RUB

Net balance sheet exposure Cash flow 1-6 months Derivatives Total net exposure

1 264 0 118 1 382

449 3 126 -2 825 750

8 848 11 219 -9 170 10 897

1 123 6 897 -5 463 2 557

1 197 2 129 -2 095 1 231

514 -12 571 10 825 -1 232

787 0 -118 669

2013 € thousands

LTL

GBP

SEK

NOK

DKK

PLN

RUB

Net balance sheet exposure Cash flow 1-6 months Derivatives Total net exposure

1 024 1 024

796 2 625 -1 790 1 631

7 582 10 324 -8 369 9 537

937 6 322 -4 969 2 290

1 139 2 054 -2 068 1 125

-266 -10 024 9 649 -641

2 308 2 308

Sensitivity analysis, 10 % depreciation of each currency against Euro 2014 € thousands

LTL

GBP

SEK

NOK

DKK

PLN

RUB

Net balance sheet exposure Derivatives Derivatives, P/L Derivatives, OCI Total net exposure Simulation +/- 10 %

1 264 118 1 382 138

449 -2 825 -471 -2 354 -2 376 -238

8 848 -9 170 -1 528 -7 642 -322 -32

1 123 -5 463 -911 -4 553 -4 340 -434

1 197 -2 095 -698 -1 397 -898 -90

514 10 825 1 804 9 021 11 339 1134

787 -118 669 67

2013 € thousands

LTL

GBP

SEK

NOK

DKK

PLN

RUB

Net balance sheet exposure Derivatives Derivatives, P/L Derivatives, OCI Total net exposure Simulation +/- 10 %

1 024 1 024 102

796 -1 790 -298 -1 492 -994 -99

7 582 -8 369 -1 395 -6 974 -787 -79

937 -4 969 -828 -4 141 -4 032 -403

1 139 -2 068 -689 -1 379 -929 -93

-266 9 649 1 608 8 041 9 383 938

2 308 2 308 231

45(79)

The following table below shows the net foreign exchange transaction exposure by currency for financial items. Financial items include internal loans, deposits and cash and cash equivalents. Transaction risk and hedging financial items 2014 € thousands Assets Liabilities Derivatives, P/L Total net exposure 2013 € thousands Assets Liabilities Derivatives, P/L Total net exposure

LTL

GBP

SEK

NOK

DKK

PLN

RUB

-13 843 -13 843

134 -1 027 -893

8 676 -13 992 -5 316

553 -1 787 -1 234

254 254

15 047 15 047

72 72

LTL

GBP

SEK

NOK

DKK

PLN

-17 638 -17 638

1 895 1 895

-4 352 -4 352

1 517 1 517

937 937

19 316 19 316

Sensitivity analysis, 10 % depreciation of each currency against Euro 2014 € thousands Assets Liabilities Derivatives, P/L Total net exposure Simulation +/- 10 % 2013 € thousands Assets Liabilities Derivatives, P/L Total net exposure Simulation +/- 10 %

LTL

GBP

SEK

NOK

DKK

PLN

RUB

-13 843 -13 843 -1 384

134 -1 027 -893 -89

8 676 -13 992 -5 316 -532

553 -1 787 -1 234 -123

254 254 25

15 047 15 047 1 505

72 72 7

LTL

GBP

SEK

NOK

DKK

PLN

-17 638 -17 638 -1 764

1 895 1 895 190

-4 352 -4 352 -435

1 517 1 517 152

937 937 94

19 316 19 316 1 932

Translation position in equity The translation impact of two significant internal long-term quasi-equity currency loans are shown in translation differences in equity. A loan amounting to 2.464 million SEK resulted in a translation impact of €4.3 million (2013: €20.2 million). A loan amounting to 2.000 million RUB resulted in a translation impact of €-16.3 million (2013: €-3.2 million).

46(79)

Contractual maturity analysis

€ thousands Outstanding senior secured notes Finance lease liabilities Interest expenses Interest rate derivatives Trade payables and other liabilities Foreign exchange derivative assets Foreign exchange derivative liabilities Total

€ thousands Loans from financial institutions Finance lease liabilities Interest expenses Interest rate derivatives Trade payables and other liabilities Foreign exchange derivative assets Foreign exchange derivative liabilities Total

31 Dec 2014 426 000 1 482 3 053 43 138 -802 367

31 Dec 2013 350 000 1 807 3 219 48 971 -489 195

< 1 year 295 26 082 894 43 138 -802 367 69 973

< 1 year 123 12 765 2 759 48 971 -489 195 64 324

1-5 years

> 5 years

1 187 104 401 2 160 107 747

1-5 years

426 000 13 005 439 005

> 5 years

350 000 1 684 5 850 460 357 994

-

Sensitivity analysis for interest rate risk Effect of 1 % increase in interest rates (impacts only income since interest cost has been fully hedged): € thousands Change in interest expenses Change in interest income Total

Year ended 31 December 2014 2013 0 231 231

0 696 696

Applied principles for sensitivity analysis Impact from 1 % increase in interest rate for financing cost within the next 12 months if the change had occurred at balance sheet date would be zero since the interest bearing liabilities have been fully hedged. The effect of a 1 %point increase in interest would increase the value of the interest rate hedge instruments by about €7.9 million. The fluctuation of market value of the interest rate hedges is shown in OCI. The sensitivity analysis has been calculated with same principles for the cash and cash equivalents of the Group.

47(79)

19 Inventories € thousands Raw materials Work in progress Finished products Advances paid for inventories Total

Year ended 31 December 2014 2013 17 693 586 20 924 706 39 909

17 703 501 17 361 971 36 536

20 Trade and other receivables Non-current € thousands Loans to related parties (note 29) Other receivables Total

Year ended 31 December 2014 2013 1 899 220 2 119

2 197 1 220 3 417

Current € thousands Trade receivables Prepaid expenses Accrued income Receivables from related parties (note 29) Other receivables Total

Year ended 31 December 2014 2013 42 462 4 419 123 58 6 463 53 526

39 638 1 041 384 51 10 253 51 367

Significant items in accrued income € thousands Financial items Other items Total

Year ended 31 December 2014 2013 0 123 123

201 183 384

48(79)

Ageing analysis of trade receivables € thousands

Year ended 31 December 2014 2013

Not yet due Overdue less than 30 days 30-60 days 61-180 days over 180 days Impairment of trade receivables Total

36 033

31 684

5 763 398 358 226 -315 42 462

7 510 349 266 195 -366 39 638

21 Cash and cash equivalents € thousands

Year ended 31 December 2014 2013

Cash at bank and on hand Cash equivalents Total

23 130 23 130

53 641 15 986 69 627

22 Equity related information Number of shares Balance at 1 January 2013 Issue of shares Balance at 31 December 2013 Issue of shares Balance at 31 December 2014

2 500 2 500 2 500

Share capital in € thousands 3 3 3

According to the Articles of Association, the maximum number of shares is 2.500 shares with a nominal amount of one Euro per share. All issued shares have been fully paid up. The Company has only one class of shares and each share entitle to one vote at the Annual General Meeting. The Group does not have any treasury shares. Total equity consists of share capital, fair value reserve, reserve for invested non-restricted equity, translation differences and retained earnings. Fair value reserve Fair value reserve includes fair value changes of derivative instruments assigned as cash flow hedges. Reserve for invested non-restricted equity Safari Finco 1 Oy's investment in 2009 to reserve for invested non-restricted equity.

49(79)

Translation differences Translation differences include those arisen through the translation of the financial statements of foreign companies into Euros. Also gains and losses from quasi-equity loans are reported in translation differences. Retained earnings Period result and changes in ownership of company's own shares are booked to retained earnings. Dividend per share A dividend of €102.3 million was paid to the parent company Safari Finco Oy in May 2014. The Board of Directors' proposal is that no further dividend shall be paid for the financial year ended 31 December 2014.

23 Share-based investment plan On December 23, 2009, upon completion of the restructuring of Paroc Group, the shareholders of Safari Luxco 1 S.A. approved a long-term share-based investment plan for the management and a select group of employees who had invested in the previous long-term share-based investment plan. In accordance with the plan, the management shareholders set up a special purpose vehicle (SPV) to Luxembourg and subscribed shares in said SPV. Said special purpose vehicle purchased in total 13.02 % of the share capital of Group intermediate company (Safari Luxco 2 S.A.) which in turn indirectly via Safari Finco 1 Oy owns Paroc Group Oy shares. According to the terms and conditions of the investment plan the shares of said SPV cannot be sold, pledged or otherwise disposed of and the shareholder is obliged to sell his or her shares when he or she becomes a Leaver, i.e. ceases to be employed by a company belonging to Paroc Group. The return on the plan is expected only when there is an exit, i.e. Paroc Group or major part thereof is sold and when the exit yields more than certain predetermined thresholds. In accordance with the Shareholders Agreement (SHA) the fair market value of the shares is determined annually in accordance with the principles set out in the SHA by an independent accountant. At the end of the financial year 2014 there were some 112 employees and four nonexecutive board members of Paroc Group companies holding shares in the said SPV (2013: some 115 employees and four nonexecutive board members). The four nonexecutive board members also directly own 1.98 % shares of Safari Luxco 2 S.A. with return on plan expected only at exit when certain threshold is exceeded. During 2014 there were no new shareholders and three leavers in the SPV (2013: no new shareholders and seven leavers). Share-based investment plan ceased to exist on February 13, 2015 as a result of the Paroc Group sale transaction completing. The plan did not cause any entries in the consolidated financial statement.

50(79)

24 Employee benefit obligations In Finland employees are insured in accordance with the Employees’ Pension Act (TyEL). The earnings-related pension provision is handled by pension insurance companies and it is classified as a defined contribution plan. Statutory earnings-related pension insurance provides security in case of old age, disability, death of the family provider and unemployment of an aging person. The earnings-related benefits also include rehabilitation. Top management located in Finland has individual voluntary pension plans. These plans entitle a pension at the age of 62. The plan was changed in 2010 so that it is classified as a defined contribution plan. The old defined benefit plan in Finland has been terminated. The old pension liability in Sweden is still accounted for as a defined benefit plan in the financial statements (retirement obligation until 1993). After 1993 the ITP-pension plan has been operated by Alecta and the plan is defined as a multi-employer defined benefit plan. Following this change, the classification of such pension plan is still not clearly determined considering the current regulation guideline and available information. The plan operated by Alecta has been consequently accounted for as defined contribution plan in the financial statements. In Lithuania, pension premiums are paid in every salary payment as a percentage of gross salary. These pensions are funded by the state social insurance fund and treated as defined contribution plan. In Poland, payments to the state treasury fund (ZUS) are made monthly on the basis of actual value of salaries paid during the month and treated as defined contribution plan. In other countries the pension arrangements are done in accordance with the local legislation and practice and they are treated as defined contribution plans. Income statement charge for: € thousands

Year ended 31 December 2014 2013

Defined benefit pension plans Defined contribution pension expenses Other long-term employee benefits Total

-397 -8 577 -244 -9 218

Balance sheet obligations for: € thousands Other long-term employee benefits Total

-379 -9 824 -289 -10 492

As at 31 December 2014 2013 3 003 3 003

2 759 2 759

51(79)

Defined benefit pension plans The old pension liability in Sweden for white collar employees is accounted for as a defined benefit plan. The amounts recognised in the income statement are as follows: € thousands Interest cost Total

Year ended 31 December 2014 2013 -383 -383

-379 -379

Of the total charge €-0.4 million were included in financial expenses (2013: €-0.4 million). In 2015, the Group expects to pay €-0.3 million in contributions to the defined benefit plans. The amounts recognised in the balance sheet are as follows: € thousands Present value of funded obligations Total

As at 31 December 2014 2013 9 905 9 905

10 114 10 114

The liability has been recognised in the balance sheet as non-current. Movement in the net liability recognised in the balance sheet: € thousands Net liability in the beginning of the period Translation differences Expense (+)/income (-) as above Contributions paid by employer Recognised actuarial gain (-)/loss (+) during the year in other comprehensive income Capital transfer Net liability at the end of the period

Movement in the present value of defined benefit obligations: € thousands Defined benefit obligation in the beginning of the period Translation differences Current service cost Interest cost Actuarial gains and losses on obligation Capital transfer Present value of obligation at the end of the period

As at 31 December 2014 2013 10 114 11 356 -575 -355 371 370 -617 -640 638 -587 -27 -30 9 905 10 114

As at 31 December 2014 2013 10 114 11 356 -575 -355 -617 -640 371 370 638 -587 -27 -30 9 905 10 114

52(79)

Principal actuarial assumptions were as follows: As at 31 December 2014 2013 Discount rate Inflation

2.75 % 1.50 %

4.00 % 2.00 %

Assumptions regarding future mortality are set based on actuarial advice. Average life expectancy for a 65-year old female is 25 years (2013: 25 years) and for a 65-year old male 23 years (2013: 23 years). The weighted average duration of the defined benefit obligation is 21 years. The sensitivity of the defined benefit obligation to changes in weighted principal assumptions is:

Discount rate Inflation

Life expectancy

Impact on defined benefit obligation Change in Increase in Decrease in assumption assumption assumption 0.50 % Decrease by 5.1 % Increase by 5.5 % 0.50 % Increase by 5.5 % Decrease by 5.1 %

Increase by 1 year in assumption Increase by 3.3 %

Decrease by 1 year in assumption Decrease by 3.3 %

The above sensitivity analysis is based on a change in an assumption while holding all other assumptions constant. € thousands Present value of defined benefit obligation Fair value of plan assets Surplus (-)/Deficit (+) in the plan Experience adjustments on plan assets Experience adjustments on plan liabilities

As at 31 December 2014 2013 9 905 9 905 0

10 114 10 114 0

53(79)

25 Provisions Year ended 31 December 2014: € thousands

Environmental

Claims and guarantees

Restructuring

Total

7 319 -1 5 -631 353 7 044

185 190 -185 190

160 465 -317 -56 252

7 664 -1 661 -948 -241 353 7 486

Carrying amount in the beginning of the period Translation differences Additions Used during the year Unused amounts reversed Unwinding of discount Carrying amount at the end of the period

Allocation between current and non-current provisions € thousands Non-current Current Total

As at 31 December 2014 2013 7 149 337 7 486

6 817 847 7 664

Environmental provisions The environmental provisions cover the costs from future closure of quarries related to landscaping, security arrangements and stacking area lining work; and future closure of dumpsites related to landscaping. The provisions for quarries are estimated to be used between 2020 and 2096. A provision of €6.7 million has been recognized for demolishing costs related to the Lappeenranta production facilities. These costs are expected to be incurred by the end of 2018. Provisions for claims and guarantees In general the provision for guarantees is based on previous actual costs. They are expected to be fulfilled during next 12 months. Restructuring provisions The provisions include restructuring expenses, due to a formal plan by management or a commitment, where no more economic benefit is expected to be received or such a contract is terminated.

54(79)

26 Borrowings Interest-bearing borrowings Non-current € thousands Bonds Loans from financial institutions Finance lease liabilities Total

As at 31 December 2014 2013 415 420 1 187 416 607

350 000 1 684 351 684

Current € thousands Finance lease liabilities Total

As at 31 December 2014 2013 295 295

123 123

Fair value of issued securities As at 31 December € thousands Senior secured notes, €200 million Floating rate notes, €230 million Total

2014

2013

190 000 220 800 410 800

-

The trading activity in the bonds is low. The valuation is based on Reuters screen indication as at 31 Dec.

Bonds On May 9, 2014 Paroc Group issued an aggregate of €430 million of Notes consisting of €200 million of Senior Secured Fixed Rate Notes and €230 million of Floating Rate Notes which were listed on the Irish Stock Exchange’s Global Exchange Market. The bond offering was significantly oversubscribed and allocated to over 200 institutional investors. The proceeds from the Notes issue were used to repay the Group’s existing Senior Notes and to partially repay the parent’s existing junior notes through a distribution of a dividend. Transactions costs of €11.7 million have been capitalised at inception and are expensed over the maturity of the Notes. On December 10, 2014 Paroc Group repurchased Fixed Rate Notes worth €4.0 million at 99 % in the open market. The purpose was to reduce gross leverage ahead of the Specified change of Control Event (portability test) in conjunction with the completion of the transaction with CVC. The €4.0 million Notes have been cancelled effective 3 February 2015.

55(79)

The following table presents the maturities, the coupons and the interest payment dates for the two tranches of the bond: Tranche: Amount: Maturity: Coupon:

Fixed Rate Notes € 200 million1 May 15, 2020 6.250 % per annum

Interest payment dates:

May 15 and November 15 every year, commencing November 15, 2014

Floating Rate Notes € 230 million May 15, 2020 Three-month EURIBOR plus 5.250 % per annum, reset quarterly February 15, May 15, August 15 and November 15 every year, commencing August 15, 2014

On December 10, 2014 €4.0 million of Fixed Rate notes were purchased from the open market. These notes have been cancelled with the Trustee on 3 February 2015. 1

The Company has a Super Senior Revolving Credit Facility amounting to €60 million. The facility expires in November 2019 and is used for capital expenditure, working capital management and general corporate purposes. At December 31, 2014, the facility was undrawn save for a SEK 35 million pension guarantee. The available facility amount was €56.3 million. Arrangement fees of €1.45 million related to the facility have been capitalised and are amortised over the lifetime of the facility. The following table presents the terms and conditions for the facility: Amount: Maturity: Repayment: Interest period: Total interest: Usage: Commitment: Commitment fee:

Super Senior Revolving Credit Facility €60 million November 14, 2019 At maturity 1, 2, 3, 6 months or as agreed with the Agent Applicable EURIBOR + 3.25 % margin subject to leverage ratio test Capital expenditure, working capital management and general corporate purposes Facility is committed 37.5 % of applicable margin

Finance lease liabilities Minimum lease payments € thousands Not later than 1 year 1-5 years Later than 5 years Less finance charges Present value of minimum lease payments

As at 31 December 2014 2013 410 1 379 0 -307 1 482

137 2 115 0 -444 1 807

56(79)

Present value of minimum lease payments € thousands Not later than 1 year 1-5 years Later than 5 years Present value of minimum lease payments

As at 31 December 2014 2013 295 1 187 0 1 482

123 1 684 0 1 807

Paroc has finance lease for forklifts, production machines and office premises in Parainen. Paroc has an obligation to buy the office premises after the end of the lease period.

57(79)

27 Deferred tax assets and liabilities

1 Jan 2014

Recognised in statement of income

Recognised in other comprehensive income

Exchange difference

31 Dec 2014

2 826 139 362 377 12 804 4 520

22 26 -63 -22 5 428 5 389

200 112 312

-3 -15 -11 -29

2 845 350 297 344 5 440 916 10 192

Offset against deferred tax liabilities Deferred tax assets, net

-2 500 2 020

-

-

-

-6 904 3 288

Deferred tax liabilities Property, plant and equipment Tax over book depreciation Finance leases Intangible assets Other financial liabilities Fair value measurement of acquired net assets Other temporary differences Cash flow hedges Total

3 184 5 155 459 227 6 23 301 2 998 50 35 380

353 235 -38 2 368 -1 524 76 1 470

48 48

-6 -7 -435 -349 -2 -799

3 531 5 383 421 227 2 374 21 342 2 725 96 36 099

Offset against deferred tax assets Deferred tax liabilities, net

-2 500 32 881

-

-

-

-6 904 29 195

€ thousands Deferred tax assets Provisions Pension obligations Finance leases Other temporary differences Tax losses carried forward Cash flow hedges Total

58(79)

1 Jan 2013

Recognised in statement of income

Recognised in other comprehensive income

Exchange difference

31 Dec 2013

0 2 756 244 525 631 237 1 816 6 209

1 70 -163 -245 -214 -551

-116 -1 012 -1 128

-1 11 -9 -11 -10

0 2 826 139 362 377 12 804 4 520

Offset against deferred tax liabilities Deferred tax assets, net

-2 885 3 324

-

-

-

-2 500 2 020

Deferred tax liabilities Property, plant and equipment Tax over book depreciation Finance leases Intangible assets Other financial liabilities Fair value measurement of acquired net assets Other temporary differences Cash flow hedges Total

2 288 5 389 626 442 12 28 371 2 758 24 39 910

888 -223 -167 -215 -6 -4 895 366 -4 252

26 26

8 -11 -175 -126 -304

3 184 5 155 459 227 6 23 301 2 998 50 35 380

Offset against deferred tax assets Deferred tax liabilities, net

-2 885 37 024

-

-

-

-2 500 32 881

€ thousands Deferred tax assets Book over tax depreciation Provisions Pension obligations Finance leases Other temporary differences Tax losses carried forward Cash flow hedges Total

Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities and when the deferred taxes relate to the same fiscal authority. The net operating loss carry-forwards for which no deferred tax asset is recognised due to uncertainty of their utilisation amounted to €9.4 million at 31 December 2014 (2013: €8.4 million). These losses expire during the years 20192024. The undistributed earnings of subsidiaries amounted to €15.8 million in 2014 (2013: €12.1 million). The Group has recognised €2.4 million (2013: €2.3 million) deferred tax liability with respect to the undistributed earnings of subsidiaries. The consolidated statement of financial position includes deferred tax assets of €1.6 million (2013: €0 million) in subsidiaries, which have generated losses in current year. The recognition of these deferred tax assets is based on profit estimates, which indicate that the utilisation of these deferred tax assets is probable.

59(79)

28 Trade and other payables € thousands Trade payables Advances received Accrued expenses and deferred income Other current liabilities Total

As at 31 December 2014 2013 36 245 1 200 36 414 5 007 78 866

41 908 1 375 34 757 8 515 86 555

Significant items in accrued expenses and deferred income € thousands Personnel expenses Discounts given Financial items Purchases Claims Other items Total

As at 31 December 2014 2013 13 883 15 041 3 154 2 409 199 1 728 36 413

16 415 13 481 995 1 608 201 2 057 34 757

29 Commitments and contingent liabilities Pledged assets to secure own borrowings and other liabilities comprise of the following: € thousands

As at 31 December 2014 2013

Mortgages on property Mortgages on other company assets Other pledged assets Total

3 785 559 2 679 927 9 033 6 474 519

2 549 849 990 281 8 442 3 548 572

Guarantors for the € 430 million bond are Paroc Sverige AB, Paroc AB, Paroc Oy Ab, Paroc Panel System Oy Ab, Paroc Polska Sp. Z.0.0., UAB Paroc and ZAO Paroc. Description of the tax dispute related to transfer pricing The Finnish tax authorities have made a tax reassessment concerning years 2006-2008 in Paroc Oy Ab. Based on tax decisions that came in 2012 and 2013 the company should pay in total €29.5 million in taxes, penalties and interest. The amount includes €14.1 million taxes and €15.5 million accrued corporate interests and penalty interests. Interests have been calculated until December 31, 2014. The company has a different interpretation related to the transfer pricing of the Group’s intra-group pricing of supplies of raw materials, license fees and distribution services than the tax authorities and the Company

60(79)

made an appeal against the tax assessment with the Board of Appeals. On June 17, 2014 the Board of Appeals decided to reduce the penalty tax from €2.4 million to €3,200. Otherwise Paroc's appeal was dismissed. The penalty tax reduction is legally binding as neither Paroc nor the representative of the government appealed that part of the decision. Paroc has appealed the main issue to the Helsinki Administrative Court on August 25th, 2014. Paroc has been granted a further interdiction of payment until the end of the appeal process in the Helsinki Administrative Court. The obligation to pay the tax realizes in case the appeal process is lost. The Group has not made any provisions in the 2014 financial statements since the management strongly believes that all transfer pricing guidelines have been followed and the same method has been followed consistently from 2009 to 2014. The Company has obtained a third party opinion from legal expert on the matter, which supports the management’s view. Lease payments recognized as an expense in the income statement € thousands Minimum lease payments Contingent rentals Total

As at 31 December 2014 2013 6 147 6 147

5 073 1 061 6 134

Non-cancellable operating lease commitments € thousands Not later than 1 year 1-5 years Later than 5 years Total

As at 31 December 2014 2013 5 345 7 792 1 582 14 719

3 651 5 659 5 9 315

Group has leased office buildings, IT equipment, forklifts and company cars.

61(79)

30 Related party transactions The parent and its subsidiaries are related parties to the Group. Members of the Board of Directors and key management, including the CEO, are also defined as related parties. Transactions between Company and its subsidiaries have been eliminated and these are not disclosed in this note. Details of the transactions carried out between the Group and other related parties are disclosed below. The Group’s parent company is Paroc Group Oy (incorporated in Finland). The immediate parent is Safari Finco 1 Oy (incorporated in Finland), which owns 100 % of the Paroc Group Oy shares. The ultimate parent is Safari Luxco 1 S.A. (incorporated in Luxembourg). A copy of the consolidated financial statements is available at Paroc Group Oy, Energiakuja 3, 00180 Helsinki or by email from [email protected]. The following transactions took place between the Company and its parent Safari Finco 1 Oy and the ultimate parent Safari Luxco 1 S.A.: € thousands Purchases of goods and services Interest income from related parties Safari Finco 1 Oy Safari Luxco 1 S.A Total

Year ended 31 December 2014 2013 1 6 58 66

17 52 69

Further, as explained in note 22, a dividend amounting to €102.3 million was paid to our parent Safari Finco 1 Oy. Period -end balances arising from trading transactions between the Company and its parent Safari Finco 1 Oy and the ultimate parent Safari Luxco 1 S.A. amounted to the following: € thousands Receivables from the related parties Safari Finco 1 Oy Safari Luxco 1 S.A Ogier Employee Benefit Trustee Limited Total Less non-current portion Current portion

€ thousands Payables to related parties Safari Finco 1 Oy Total Less non-current portion Current portion

As at 31 December 2014 2013 5 1 776 176 1 957 -1 899 58

683 1 538 28 2 249 -2 197 51

As at 31 December 2014 2013 -

3 430 3 430 0 3 430

62(79)

Compensation of key management personnel The remuneration of directors and other members of the key management (consisting of the Board of Directors and members of the Paroc Management Team) during the year was as follows: € thousands

Year ended 31 December 2014 2013

Salaries and other short-term employee benefits Termination benefits Post-employment benefits Total

2 559 45 112 2 716

2 585 249 2 834

727

667

Salaries of CEO and members of the Board of Directors

The Board of Directors approves the key management compensation considering the work performance and the financial performance of the Group. The CEO has the right to be retired at the age of 62. There were no outstanding loan receivables from key management. Part of Paroc Group’s management and a group of employees take part of the share-based investment plan through a special purpose vehicle in Luxembourg granted by Safari Luxco 1 S.A. More information can be found in note 23 Share-based investment plan. Group companies on 31 December 2014 Registered office Paroc A/S Paroc AB Paroc AS Paroc AS Paroc Export Oy Ab Paroc GmbH Paroc Limited Paroc OOO Paroc Oy Ab Paroc Panel System AB Paroc Panel System Oy Ab Paroc Polska Sp. Z o.o. Paroc SIA Paroc Sverige AB Paroc UAB

Fredensborg Skövde Tallinn Oslo Helsinki Hamburg Liverpool Izoplit Helsinki Skövde Helsinki Trzemeszno Riga Skövde Vilnius

Country Group holding, % Denmark Sweden Estonia Norway Finland Germany Great Britain Russia Finland Sweden Finland Poland Latvia Sweden Lithuania

100 100 100 100 100 100 100 100 100 100 100 100 100 100 100

63(79)

31 Post-balance sheet events The sale of the entire issued share capital of the parent company Safari Finco 1 Oy to funds managed or advised by CVC Capital Partners Limited was completed on February 13, 2015. The Senior Secured Fixed Rate Notes due 2020 and Floating Rate Senior Secured Notes due 2020 will remain issued and outstanding following completion of the Acquisition. The €60 million Super Senior Revolving Credit Facility signed in May 2014 will also remain in place following completion. After the completion of the sale, the ultimate parent of the Group is Parry Sarl (Société Anonyme à Responsabilité Limitée), incorporated in Luxembourg.

64(79)

Financial statements of the parent company Income statement of the parent company (FAS) €

Note

Year ended 31 December 2014 2013

Revenue

2

13 728 792.44

8 098 820.77

Administrative expenses Research and development expenses Other operating income Other operating expenses

3

-12 324 510.11 -1 841 078.23 208 637.70 -3 665 211.49 -17 622 162.13

-9 584 503.47 190.01 -679 842.56 -10 264 156.02

-3 893 369.69

-2 165 335.25

14 890 491.92 17 915 024.98 -20 262 543.50 -29 181 204.32 -16 638 230.92

10 564 067.40 1 739 023.26 -9 208 27.98 -4 699 364.97 -1 604 492.29

-20 531 600.61

-3 769 827.54

1 239 000.00

3 846 000.00

-19 292 600.61

76 172.46

-134 621.98 0.00

-60 217.49 -140.70

-19 427 222.59

15 814.27

6 6

Operating loss Finance income and costs Interest income Other financial income Interest expenses Other financial expenses Profit/loss (-) before extraordinary items Group contributions Profit before appropriations and taxes Appropriations Income tax expense Profit/loss (-) for the period

7

65(79)

Balance sheet of the parent company (FAS) € ASSETS Non-current assets Intangible assets Intangible rights Other capitalised expenditure Goodwill

Note

8

Investments Shares in Group companies Shares in other companies Loans receivables

9

Total non-current assets

Cash and cash equivalents Total current assets TOTAL ASSETS

2013

8

Tangible assets Buildings and constructions Machinery and equipment Advances paid and constructions in progress

Current assets Receivables Trade receivables Other receivables Prepaid expenses and accrued income

As at 31 December 2014

2 562 944.97 1 818 009.38 3 016 577.93 7 397 532.28

1 277 012.32 1 661 650.49 2 938 662.81

8 751.36 294 950.85 37 991.30 341 693.51

0.00 9 928.85 0.00 9 928.85

393 482 842.18 10 127.30 264 267 430.87

399 239 587.79 10 000.00 227 953 692.59

665 499 626.14

630 151 872.04

13 803 027.76 1 720 603.29 3 959 275.16 19 482 906.21

7 638 845.98 3 975 853.03 1 635 450.30 13 250 149.31

0.00

0.00

19 482 906.21 684 982 532.35

13 250 149.31 643 402 021.35

10

11

66(79)

€ EQUITY AND LIABILITIES Shareholders' equity Share capital Fair value reserve Reserve for invested non-restricted equity Retained earnings Profit/loss (-) for the financial year

Note 12

Appropriations Accumulated depreciation difference

13

Provisions

14

Non-current liabilities Interest-bearing Bonds Loans from financial institutions Non-interest-bearing Other long-term loans Total non-current liabilities Current liabilities Interest-bearing Other short-term loans Non-interest-bearing Trade payables Other payables Accrued expenses and deferred income Total current liabilities Total liabilities TOTAL EQUITY AND LIABILITIES

As at 31 December 2014

2013

2 500.00 -3 333 484.62 100 000 000.00 101 196 057.20 -19 427 222.59 178 437 849.99

2 500.00 -2 504 263.96 100 000 000.00 203 480 242.93 15 814.27 300 994 293.24

995 013.22

626 825.71

23 939.98

0.00

426 000 000.00 0.00

0.00 299 233 756.68

10 800.00 426 010 800.00

20 195 767.29 319 429 523.97

67 280 694.54

15 327 634.91

3 186 015.78 1 186 939.16 7 861 279.68 79 514 929.16 505 525 729.16 684 982 532.35

1 413 017.78 611 346.13 4 999 379.61 22 351 378.43 341 780 902.40 643 402 021.35

15

16

17

67(79)

Cash flow statement of the parent company (FAS) € Cash flow from operating activities Profit/loss (-) before extraordinary items Adjustments for Depreciation and amortization Unrealised exchange gains and losses Financial income and expenses Change in provisions

Note

Year ended 31 December 2014 2013 -20 531 600.61

-3 769 827.54

1 648 487.25 -126 205.44 8 148 591.98 23 939.98 -10 836 786.84

792 315.20 -285 704.11 1 824 473.44 0.00 -1 438 743.01

-7 202 629.98 3 163 197.19 -4 039 432.79

-960 128.61 568 975.22 -391 153.39

Interest received Interest paid Income taxes paid

12 787 612.73 -20 465 011.68 0.00 -7 677 398.95

10 563 335.61 -12 357 063.11 -140.70 -1 793 868.20

Net cash from operating activities

-22 553 618.58

-3 623 764.60

Cash flow from investing activities Purchases of other investments Investments in tangible and intangible assets Change in long-term receivables, increase (-)/decrease (+) Net cash used in (-)/generated from investing activities

-127.30 -1 212 851.50 -56 498 705.57 -57 711 684.37

-15 831.11 -690 454.61 -438 925.62 -1 145 211.34

430 000 000.00 -303 233 756.68 51 953 059.63 -102 300 000.00 3 846 000.00 80 265 302.95

-7 239 024.06 12 008 000.00 4 768 975.94

0.00 0.00 0.00

0.00 0.00 0.00

Change in working capital Current receivables, increase (+)/decrease (-) Current liabilities, increase (-)/decrease (+)

Cash flow from financing activities Proceeds from borrowings Repayment of borrowings Short-term loans, increase (+)/decrease (-) Dividends paid Group contributions received Net cash used in (-)/generated by financing activities Net decrease (-)/increase in cash and cash equivalents Cash and cash equivalents in the beginning of the period Cash and cash equivalents at the end of the period

5

68(79)

Notes to the parent company's financial statements 1. Accounting principles Paroc Group Oy’s financial statements have been prepared in accordance with the laws and regulations in Finland. The Company’s financial period is from 1 January 2014 to 31 December 2014. The financial statements are prepared in Euros. Transactions in foreign currency Transactions denominated in foreign currency are recorded at the exchange rates prevailing on the transaction date. Receivables and payables denominated in foreign currency at the balance sheet date have been translated at the closing rate of the European Central Bank as of the balance sheet date. Exchange rate gains from non-current, with maturity more than one year, receivables and liabilities denominated in foreign currency are treated as non-interestbearing non-current receivables and liabilities. Financial instruments and hedge accounting Derivatives are initially recognised at fair value on the date of the derivative contract and are subsequently remeasured at fair value. The Company claims cash flow hedge accounting. The effective portion of changes in the fair value of the derivatives that are designated and qualify as cash flow hedges recognised in the fair value reserve. The gain or loss relating to the ineffective portion is recognised immediately in the income statement under the appropriate item. Gains and losses accumulated in the equity are transferred into income statement in the periods when the hedged item if affects the result (for example when hedged estimated sales occurs). When a hedging instrument expires or is sold or when the hedge no longer meets the criteria for hedge accounting, any cumulative gain or loss existing in equity at that time remains in equity and is recognised in the income statement only when the forecast transaction occurs. If the forecast transaction is no longer expected to occur, the cumulative gain or loss reported in equity is immediately transferred to the income statement under the appropriate item. Net sales Sales include proceeds from sales of Group services, after deduction of indirect sales taxes, granted discounts and realised and unrealised exchange differences. Sales of services are recognised upon delivery of the services. Pensions The Company’s pension commitments are covered by pension insurances. Non-current assets and depreciation The carrying values of intangible and tangible assets are based on original acquisition costs less depreciation according to plan and impairment losses. Straight-line depreciation according to plan is based on the estimated useful life of the asset as follows: Intangible rights Other long-term expenditure Machinery and equipment

5 – 10 years 5 – 10 years 3 – 5 years

Leasing Lease payments are treated as rental expenses. Deferred taxes Deferred taxes are not recognised in parent company’s balance sheet.

69(79)

2. Revenue € thousands

Year ended 31 December 2014 2013

Sale of Group internal services Total

13 729 13 729

8 099 8 099

By market area Finland Sweden Other EU Other countries Total

3 374 4 427 5 620 307 13 729

3 007 2 126 2 953 12 8 099

3. Personnel expenses € thousands

Year ended 31 December 2014 2013

Wages, salaries and other remuneration

-3 823

-2 911

Other personnel expenses Pension expenses Other personnel expenses Total

-663 -202 -4 688

-492 -140 -3 544

39

24

-727 -727

-667 -667

Average number of personnel Salaries and fees to the management Managing Directors and members of the Board of Directors Total

4. Auditor's fees € thousands Authorised Public Accountants PwC Audit fees Tax consultancy Other consultancy fees Total

Year ended 31 December 2014 2013 -82 -5 -649 -736

-122 -35 -15 -172

70(79)

5. Depreciation € thousands

Year ended 31 December 2014 2013

Depreciation by function Administration Research and development Goodwill Total

-1 134 -51 -464 -1 648

-792 -792

Depreciation according to plan by balance sheet lines Intangible rights Goodwill Buildings and constructions Machinery and equipment Total

-1 112 -464 -1 -72 -1 648

-783 -10 -792

6. Other operating income and expenses € thousands Other operating income Other income Total

Year ended 31 December 2014 2013 209 209

0 0

Other operating expenses Other expenses Total

-3 665 -3 665

-680 -680

Total other operating income and expenses

-3 457

-680

7. Financial income and expenses € thousands

Year ended 31 December 2014 2013

Interest income from Group companies Interest income from others Total

14 833 58 14 890

10 564 0 10 564

Other financial income from Group companies Realised exchange rate gains Other financial income from others Total

618 16 819 478 17 915

646 21 1 071 1 739

71(79)

Interest expenses to Group companies Interest expenses to others Total

-1 095 -19 168 -20 263

-603 -8 605 -9 208

Other financial expenses to Group companies Realised exchange rate losses Other financial expenses to others Total

-28 -91 -29 062 -29 181

-22 -20 -4 657 -4 699

Total financial income and expenses

-16 638

-1 604

8. Intangible and tangible assets Intangible assets

€ thousands Acquisition cost at 1 Jan 2013 Additions Other changes Acquisition cost at 31 Dec 2013

Intangible rights

Other longterm expenditure

Goodwill

Work in progress

Total

1 256 466 -33 1 689

2 513 32 2 545

-

182 720 -498 405

3 952 1 218 -531 4 639

-138 -274 -412

-780 -509 -1 288

-

-

-918 -783 -1 700

Carrying amount at 31 Dec 2013

1 277

1 257

-

405

2 939

Acquisition cost at 1 Jan 2014 Additions Other changes Acquisition cost at 31 Dec 2014

1 689 355 4 994 7 038

2 545 812 39 3 396

3 481 3 481

405 1 063 -1 142 326

4 639 5 710 3 892 14 241

-412 -596 -3 467 -4 475

-1 288 -577 -39 -1 904

-464 -464

-

-1 700 -1 637 -3 506 -6 844

2 563

1 492

3 017

326

7 398

Accumulated depreciation at 1 Jan 2013 Depreciation during the financial year Accumulated depreciation at 31 Dec 2013

Accumulated depreciation at 1 Jan 2014 Depreciation during the financial year Other changes Accumulated depreciation at 31 Dec 2014 Carrying amount at 31 Dec 2014

72(79)

Tangible assets

€ thousands

Buildings and constructions

Advances paid and constructions in progress

Machinery and equipment

Total

Acquisition cost at 1 Jan 2013 Additions Acquisition cost at 31 Dec 2013

-

33 4 37

-

33 4 37

Accumulated depreciation at 1 Jan 2013 Depreciation during the financial year Accumulated depreciation at 31 Dec 2013

-

-17 -10 -27

-

-17 -10 -27

Carrying amount at 31 Dec 2013

-

10

-

10

Acquisition cost at 1 Jan 2014 Additions Other changes Acquisition cost at 31 Dec 2014

13 13

37 87 426 550

150 -112 38

37 237 328 601

Accumulated depreciation at 1 Jan 2014 Depreciation during the financial year Other changes Accumulated depreciation at 31 Dec 2014

-1 -4 -4

-27 -72 -156 -255

-

-27 -72 -160 -259

9

295

38

342

Carrying amount at 31 Dec 2014

9. Investments

€ thousands

Investments in subsidiaries

Acquisition cost at 1 Jan 2013 Additions Acquisition cost at 31 Dec 2013

399 234 6 399 240

Carrying amount at 31 Dec 2013

399 240

Acquisition cost at 1 Jan 2014 Additions Disposals Acquisition cost at 31 Dec 2014

399 240 5 130 -10 887 393 483

Carrying amount at 31 Dec 2014

393 483

Shares in subsidiaries Paroc Sverige AB

Number of shares 2 175 078

%

100

Book value 393 483

73(79)

10. Receivables € thousands

As at 31 December 2014 2013

Loan receivables Group companies Others Total

264 092 176 264 267

227 926 28 227 954

Trade receivables Group companies Others Total

13 720 83 13 803

7 639 7 639

Other receivables Group companies Others Total

1 239 482 1 721

3 846 130 3 976

Prepaid expenses and accrued income Group companies Others Total

3 768 191 3 959

1 341 295 1 635

282 819 931 283 750

240 751 453 241 204

Total receivables Group companies Others Total

11. Prepaid expenses and accrued income, specification € thousands

Financial items Other items Total

As at 31 December 2014 2013 3 749 210 3 959

518 1 117 1 635

74(79)

12. Shareholders' equity

Share capital

Fair value reserve

Reserve for invested nonrestricted equity

Equity 1 Jan 2013 Cash flow hedges Fair value changes during the year Reclassifications to income statement Profit/loss (-) for the financial year Equity 31 Dec 2013

3

-5 557

3

Equity 1 Jan 2014 Cash flow hedges Fair value changes during the year Reclassifications to income statement Dividends Profit/loss (-) for the financial year Equity 31 Dec 2014

€ thousands

Other equity

Total

100 000

203 480

297 926

158 2 895 -2 504

100 000

16 203 496

158 2 895 16 300 994

3

-2 504

100 000

203 496

300 994

3

-3 520 2 690 -3 333

100 000

-102 300 -19 427 81 769

-3 520 2 690 .102 300 -19 427 178 438

Distributable reserves € thousands

As at 31 December 2014 2013

Reserve for invested non-restricted equity Retained earnings Profit/loss (-) for the financial year Total

100 000 101 196 -19 427 181 769

100 000 203 480 16 303 496

13. Appropriations € thousands

Change in depreciation difference Total

As at 31 December 2014 2013 135 135

60 60

14. Provisions € thousands

Provisions Total

As at 31 December 2014 2013 24 24

-

75(79)

15. Non-current liabilities € thousands

As at 31 December 2014 2013

Interest-bearing non-current liabilities Bonds Loans from financial institutions Total

426 000 426 000

299 234 299 234

11 11

20 196 20 196

Liabilities with maturity later than five years Bonds Total

426 000 426 000

-

Bonds Fixed Rate Notes 2014 / 2020 6.25 % Floating Rate Notes 2014 / 2020 Three-month Euribor plus 5.25 % Total

196 000 230 000 426 000

-

Non-interest-bearing non-current liabilities Other non-current liabilities Total

16. Current liabilities € thousands Interest-bearing current liabilities Group companies Total

As at 31 December 2014 2013 67 281 67 281

15 328 15 328

Trade payables Group companies Others Total

1 701 1 485 3 186

553 860 1 413

Other non-interest-bearing liabilities Others Total

1 187 1 187

611 611

Accrued expenses and deferred income Group companies Others Total

41 7 821 7 861

4 999 4 999

69 023 10 492 79 515

15 881 6 470 22 351

Non-interest-bearing current liabilities

Total current liabilities Group companies Others Total

76(79)

17. Accrued expenses and deferred income, specification € thousands

Personnel expenses Financial items Other items Total

As at 31 December 2014 2013 1 019 6 116 726 7 861

820 4 069 110 4 999

18. Pledged assets and contingent liabilities € thousands Pledged assets as collateral for Group companies liabilities and commitments Mortgages on company assets Pledged shares Total Contingent liabilities Company guarantees Total Leasing commitments Due next year Due over a year Total Other commitments Jubilee benefits Total

As at 31 December 2014 2013 900 000 393 483 1 293 483

200 000 399 234 599 234

5 475 5 475

5 800 5 800

146 141 287

146 150 296

-

7 7

19. Derivative financial instruments € thousands

As at 31 December 2014 2013

Nominal values Interest rate swaps from Group companies Interest rate swaps from others Total

230 000 230 000

-50 766 350 000 299 234

Market values Interest rate swaps from Group companies Interest rate swaps from others Total

-3 053 -3 053

467 -3 219 -2 752

77(79)

Signatures for the report of the Board of Directors and financial statements Helsinki, 26 March 2015

Jukka Hienonen Chairman of the Board

Peter Törnquist Vice Chairman of the Board

Magnus Agervald Member of the Board

Kari Lehtinen Member of the Board and CEO

Augusto Lippi Member of the Board

Gustaf Martin-Löf Member of the Board

Søren Vestergaard-Poulsen Member of the Board

The Auditor's note Our auditor's report has been issued today. Helsinki, 26 March 2015 PricewaterhouseCoopers Oy Authorised Public Accountants

Kim Karhu Authorised Public Accountant

78(79)

79(79)