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 ................................................................................................................................... 27 4 Revenue ....................................................................................................................................................... 29 5 Expenses by nature ..................................................................................................................................... 29 6 Depreciation, amortisation and impairment ............................................................................................... 30 7 Employee benefit expenses ......................................................................................................................... 31 8 Research and development ......................................................................................................................... 31 9 Other operating income .............................................................................................................................. 31 10 Other operating expenses .......................................................................................................................... 32 11 Finance income and costs .......................................................................................................................... 33 12 Income taxes .............................................................................................................................................. 34 13 Intangible assets ........................................................................................................................................ 35 14 Property, plant and equipment .................................................................................................................. 39 15 Available-for-sale financial assets .............................................................................................................. 40 16 Carrying amounts and fair values of financial assets and liabilities by category ...................................... 41 17 Hierarchy of financial assets and liabilities at fair value ........................................................................... 42 18 Financial risk management ....................................................................................................................... 43 19 Inventories ................................................................................................................................................. 49 20 Trade and other receivables ...................................................................................................................... 49 21 Cash and cash equivalents ......................................................................................................................... 50 22 Equity related information ........................................................................................................................ 50 23 Share-based investment plan ..................................................................................................................... 52 24 Employee benefit obligations .................................................................................................................... 52 25 Provisions .................................................................................................................................................. 55 26 Borrowings................................................................................................................................................. 56 27 Deferred tax assets and liabilities .............................................................................................................. 59 28 Trade and other payables .......................................................................................................................... 61 29 Commitments and contingent liabilities ................................................................................................... 61 30 Related party transactions ......................................................................................................................... 63 31 Post-balance sheet events .......................................................................................................................... 65 Financial statements of the parent company ................................................................................................. 66

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, 2015. Year 2015 Business environment in 2015 was very challenging with turbulence in various markets. Construction activity declined in many countries, e.g. Russia, Finland, Baltic countries, Ukraine and Belarus. In Sweden construction activities increased significantly but Western Europe construction activity grew only modestly. Net sales for the year ended December 31, 2015 was € 409.9 million, 1.8 % lower than previous year. Like for like growth (at constant foreign exchange rates) was 1.0 % y/y. Sales volume increased y/y in both Building Insulation and in Technical Insulation, but slightly decreased in Panel System -segment. Building Insulation sales volumes increased by 5 % and Technical Insulation sales volume increased by 4 %. Both Nordic and Western European countries increased a couple of percentages and in Eastern European countries volume growth was stronger. The Company focused on a number of efficiency programmes during 2015. A decision to close the Lappeenranta factory already in April 2016 instead of in December 2016 was taken due to the low market demand in Finland. Input cost prices decreased slightly in 2015 compared to the previous year. There were significant productivity improvements in the production facilities. Weakening RUB, SEK and NOK affected the operative result negatively. EBITDA excluding unusual items amounted to €77.2 million which is a decrease of 0.3 % compared to the same period 2014. The negative effect from the exchange rates was €5.6 million. Paroc sold its shareholdings of 11.5% in Steinull hf., a stone wool producer on Iceland and the sales profit was €1.3 million. Like for like EBITDA increase (with constant exchange rates and excluding the profit from Steinull hf shares) was 5.6 %. 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 continued to pay off. The accident frequency (LTIF 1) has declined from 25.1 in 2011 to 5.2 in 2015. The target is to reach zero by 2020 and that obviously requires new working methods. The Group’s capital investments for the financial period 2015 amounted to €32.7 million (2014: €25.5 million). The biggest investment related to capacity increase in the polish factory. €3 million were environmental / OH&S related investments and on top of that there were efficiency related investments in various factories. Due to the Lappeenranta factory closure at the end of April 2016, reorganization of production equipment and also environment took place. The factory closure project has progressed according to the plan and most of technical insulation production has been relocated in Sweden. On February 13, 2015 the sale of the entire share capital of the parent company Safari Finco 1 Oy to funds managed or advised by affiliates of CVC Capital Partners Advisory Company (Luxembourg) S.a.r.l. was completed. After the completion of the sale, the ultimate parent of the Group is Parry Sàrl (Société Anonyme à Responsabilité Limitée), incorporated in Luxembourg. On 1 April 2015 the following changes in the Group organization were made. The former Base Production and former Building Insulation were merged to create business unit Building Insulation. Acoustics business consisting of production in Skövde and sales teams in Finland and Sweden were gathered in business unit Building Insulation. Former R&D, Technology, Operational Excellence, OHS and E&S responsibility areas in all divisions have been centralized to a new Group Technology and Operations function. The above mentioned changes affect-

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ed the segments and they were from 1 April, 2015 onwards: Building Insulation, Technical Insulation, Panel System and Eliminations & allocations. As the result of the organization changes the following appointment were made with the effect as of 1 April 2015. Former head of Group HR, Jan Gustafsson, was appointed head of Business Unit, Building Insulation. Former head of Building Insulation, Lars Westerlund, left the company. Former head of Base Production, Joakim Westerlund, was appointed head of Group Technology and Operations function. Former purchase and logistics Director, Patrik Ahlbäck, was appointed head of Supply Chain Management (SCM), Purchase and logistics. Hanne Peltola was appointed Group HR Director as of June 1, 2015. Hanne worked previously at Outotec’s Minerals and Processing business area. Fredrik Jonsson, head of Technical Insulation, left the company in November 2015. CEO, Kari Lehtinen is acting as the head of Technical Insulation business. Sales and results The consolidated net sales of Paroc amounted to €409.9 million in 2015 (2014: €417.5 million). The consolidated operating profit was €42.1 million (2014: €36.6 million), which was 10.3 % of net sales (2014: 8.8 %). The operating profit increased mainly due lower one-off costs, mainly related to the ownership change and the issuance of the high-yield bond in 2014. Improved productivity in the operations, decreasing raw material prices and distributions costs almost offset the significantly negative effect from the weaker exchange rates. € millions Net sales Operating profit % of net sales

2015 409.9 42.1 10.3

2014 417.5 36.6 8.8

2013 433.1 47.2 10.9

2012 430.4 40.3 9.4

Financial position At the end of the period the Company’s liquid assets amounted to €40.4 million (2014: €23.1 million) and net debt was €377.9 million (2014: €393.8 million). The equity ratio was 5.9 % (2014: 4.5 %). The Group’s cash flow in foreign currency is partially hedged with foreign exchange forwards. Interest rate risk has been managed with interest rate derivatives in addition to the fixed rate notes. 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 2018. 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. The Group has met the terms of the covenants for the financial years 2015 and 2014. Paroc Group Oy has a long-term loan receivable of €17.2 million from its parent company Safari Finco 1 Oy. The interest rate for the loan is 3 %. € millions Liquid assets Net debt Equity ratio %

2015 40.4 377.9 5.9

2014 23.1 393.8 4.5

2013 69.6 282.2 24.2

2012 72.2 279.9 22.3

Paroc Group is consolidated into Parry Holding AB (incorporated in Sweden) financial statements, which is the highest consolidation level of the Group. The financial statements of Parry Holding AB will be completed during

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April 2016. The indicative equity ratio of that Group is approximately 17 %. The equity ratio including shareholder loan is approximately 28 %. 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. Paroc Group Board of Directors approved an updated hedging policy in December 2015 according to the following: The exposure is hedged by Group Treasury in a rolling nine months cycle. The exposure is hedged at the discretion of the Group finance director and the CFO: (i) first six months 90 % +/- 10 % and (ii) the following three months 60 – 80 %. This ensures a continuous rolling hedge within a specified interval at all times. The new policy will be followed from January 2016 onwards. The Group's parent company The revenue of the Group's parent company Paroc Group Oy in 2015 was €15.4 million (2014: €13.7 million) and the profit for the period was €16.2 million (2014: loss for the period was €-19.4 million). In 2015 Paroc Group Oy received €28.5 million dividends from its subsidiary Paroc Sverige AB. At the end of December 2015 total balance sheet amounted to €702.3 million (2014: €685.0 million). Research and development The total research and development expenditure of Paroc in 2015 amounted to €5.8 million (2014: €6.1 million). This was 1.4 per cent of net sales (2014: 1.5 %). Risks and uncertainties Operational risks Operational risks for the Company and the Group are the uncertainty related to the Russian environment, closure of the Lappeenranta factory and operational changes related to that. The other operational risks are more general to their nature, like key personnel related risks or operational risks related to the continuously changing environment, as digitalisation new innovations. 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 €22.1 million in taxes, penalties and interest. The amount includes €14.1 million taxes and €8.0 million accrued corporate interests and penalty interests. Interests have been calculated until December 31, 2015. In addition Paroc Oy Ab and Paroc Panel System Oy Ab received a decision for year 2009 according to the same principle as the years 2006-2008. The tax payment including taxes, penalties and interests for 2009 is €4.7 million. The amount includes €3.3 million taxes and €1.4 million accrued corporate interests and penalty interests. The total non-recoverable amount in MAP process from years 2006-2009 would be € 9.4 million.

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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. In case Finnish tax authorities would apply the same approach for years 2010-2015, the total amount for taxes, penalties and interest would be approximately €24 million, where the non-recoverable amount in a MAP process would be €3 million. The Group has not made any provisions in the 2015 financial statements since the management strongly believes that all transfer pricing guidelines have been followed and the same method has been followed consistently from 2010 to 2015. 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 2 028 employees (2014: 2 093 employees). At the end of the year the numbers of employees were 1 945 (2014: 2 032). The group paid a total of €71.4 million in wages and salaries (2014: €74.5 million). Paroc sustainability program continued and the target to reduce energy consumption by 30 % by 2020 from 2011 is well on track. Energy consumption has been reduced by 12.3 % in 2015 compared to 2011 level. Sustainability has been increasingly important for the construction industry. Paroc has included its raw material suppliers in the certification scheme. In May 2015 Paroc European operations was awarded BES 6001 certificate for responsible sourcing with rating “good”. Making more out of less supports the European Commission circular economy ambitions. Paroc managed to decrease the amount of waste from the factories with close to 20% in 2015 compared to previous year. 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. 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 On April 27, 2015 in accordance with unanimous resolution of the shareholders Jukka Hienonen was re-elected as Chairman and Peter Törnquist as Vice Chairman of the Board of Directors. Magnus Agervald, Kari Lehtinen, Gustaf Martin-Löf, Augusto Lippi and Søren Vestergaard-Poulsen were re-elected as ordinary members of the Company's Board of Directors. On May 26, 2015 in accordance with unanimous resolution of the shareholders KPMG Oy Ab, Authorised Public Accountants, was elected as the Company's auditor, with Juha-Pekka Mylén, Authorised Public Accountant, acting as the chief auditor.

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Events after the balance sheet date Announced changes in Group management On 15 January 2016 it was announced that Mr. Johan Magnusson, B.Sc (Engineering), M.Sc (Bus. Adm.), 52, has been appointed Senior Vice President, Technical Insulation business unit as of March 1, 2016. He reports to Kari Lehtinen, Group CEO and is a member of Paroc Group Management Team. Johan Magnusson has extensive experience in international sales, key account management and business development on various senior management positions in industrial companies. Johan Magnusson joins Paroc from Assa Abloy Entrance System AB where he recently served as President and head of a business area. Earlier, he held different leadership positions in Rautaruukki. On 8 February 2016 it was announced that Mr. Jari Airola, MBA, M.Sc (Eng.), 46, has been appointed Senior Vice President, Building Insulation as of March 1, 2016. He reports to Kari Lehtinen, Group CEO and is a member of Paroc Group Management Team. Jari Airola has extensive experience in business management, international sales management and business development on various senior management positions in global industrial companies. He joins Paroc from Huntsman Pigments and Additives where he recently served as Global Business Unit Director. Earlier, he held different leadership positions in chemical industry companies such as Sachtleben Chemie and Kemira Pigments. Payment of €20 million to the parent company On 21 January 2016 the Board of Directors has decided to make a payment of €20.0 million to the parent company Safari Finco 1 Oy in the form of a long-term loan. The loan is given in compliance with the provisions concerning "Restricted Payments" in the Indenture signed in May 2014. Increase of available Super Senior Revolving Credit Facility The Board of Directors has, in order to secure sufficient available liquidity, decided to increase the "Available Facility" of the Super Senior Revolving Credit Facility signed on 14 May 2014. The amendment agreement was signed on 25 February 2016. The Available Facility amount has increased from €60.0 million to €80.0 million. The change comes into effect on 31 March 2016. The SSRCF banks ING Bank N.V., London Branch, Nordea Bank Finland Plc and Danske Bank Finland (the original Mandated Lead Arrangers) have increased the participation pro rata. The terms and conditions for the facility are set out in the note 26 Borrowings. Outlook for 2016 The economic situation in Europe remains somewhat unstable but growth is expected in most of the European countries. There are positive growth expectations in many of Paroc's market areas. Russian construction activity is expected to remain very unstable and the market demand could decrease even further in 2016. Construction activity in Finland is foreseen to remain at a pretty low level even though some small growth is expected. Net sales are estimated to grow by 2-5% at comparable exchange rates as compared to 2015. EBITDA and operating profit are expected to increase from 2015 level. Cash flow of the Group is expected to be strong due to expected improved business performance. The liquidity situation is good. Proposal to the Annual General Meeting The distributable funds of the parent company are €197 986 625.20 of which the loss for the financial year is €16 217 790.59. 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

2015 409 936 42 131 10.3 10 920 2.7 6 782 1.7

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

Return on equity % Return on capital employed % Net gearing % Equity ratio %

22.3 9.4 1 078.6 5.9

3.1 7.8 1 519.0 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

2 028

2 093

2 063

2 019

1 991

1 945

Personnel in average for the year

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

=

Profit for the year Average total equity

x 100

=

Profit before taxes + Finance costs Average capital employed

x 100

=

Net debt Total equity

x 100

=

Total equity Assets total – Advances received

x 100

= Borrowings – Cash and cash equivalents

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Consolidated financial statements Consolidated income statement Year ended 31 December 2015 2014

€ thousands

Note

Revenue Cost of sales Gross profit

3, 4 5

409 936 -300 217 109 719

417 524 -303 326 114 198

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

5 5, 8 5 9 10

-34 451 -5 811 -25 669 1 411 -3 068 42 131

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

Finance income Finance costs Profit before taxes

11 11

1 077 -32 289 10 920

998 -30 380 7 264

Income tax expense Profit for the year

12

-4 137 6 782

-4 383 2 882

6 782

2 882

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 will not be reclassified to profit or loss Actuarial gains and losses on defined benefit plans Actuarial gains and losses Related tax

Year ended 31 December 2015 2014 6 782

2 882

126 -19 107

-819 160 -659

-2 225

-2 252

1 439 2 276 733 2 223

1 916 -34 848 2 299 -32 886

Other comprehensive income for the year, net of tax

2 330

-33 545

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

9 112

-30 663

9 112

-30 663

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 Translation differences Related tax

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 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 tax liabilities Pension obligations and other employee benefits Provisions Trade and other payables Current liabilities Trade and other payables Income tax liabilities Borrowings Derivative financial instruments Provisions

2014

13 14 15, 16, 17 27 16

244 080 209 423 38 6 463 17 475 477 479

246 061 207 098 80 3 288 2 119 458 646

19 20

30 741 43 004 1 553 347 40 421 116 066 593 544

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

22

3 -3 054 100 000 -8 119 -53 794 35 035

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

16, 26 16, 17 27 24 25 16

417 949 2 075 30 648 13 118 4 865 9 468 664

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

28

84 098 1 021 366 2 077 2 283 89 846 558 509 593 544

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

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 2015

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 -2 150 100 000

€ thousands Equity on January 1, 2014 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 Translation differences Total comprehensive income for the year Transactions with owners Dividends Total transactions with owners Equity on December 31, 2014

€ thousands Equity on January 1, 2015

Translation differences 21 639

Retained earnings 39 394

Noncontrolling interest -

Total equity 158 886

-

-

-

-

2 882

-

2 882

-

-270 -7 -277

-

-32 609 -32 609

-659 2 222

-

-659 -270 -32 616 -30 663

3

-2 427

100 000

-10 970

-102 300 -102 300 -60 683

-

-102 300 -102 300 25 923

Attributable to owners of the parent Reserve for invested Fair nonShare value restricted capital reserves equity 3 -2 427 100 000

Translation differences -10 970

Retained earnings -60 683

Noncontrolling interest -

Total equity 25 923

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 Translation differences Total comprehensive income for the year

-

-

-

-

6 782

-

6 782

-

-624 -3 -628

-

2 851 2 851

107 6 889

-

107 -624 2 847 9 112

Transactions with owners Dividends Total transactions with owners Equity on December 31, 2015

3

-3 054

100 000

-8 119

-53 794

-

35 035

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, amortization and impairments Gain/loss on sale of intangible and tangible assets Interest income and expense Other adjustments

Note

Year ended 31 December 2015 2014 6 782

2 882

4 137 32 911 -1 260 27 585 1 762 71 918

4 383 31 274 58 24 546 -759 62 383

11 084 9 170 1 537 -337 93 372

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

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

775 -26 646 55 -7 931 59 624

321 -22 082 55 -7 548 18 361

Cash flow from investing activities Purchases of property, plant and equipment Purchases of intangible assets Proceeds from sale of property, plant and equipment Sale of available-for-sale financial assets Change in other long-term receivables Change in other short-term payables Net cash used in investing activities

-31 277 -1 404 26 1 300 -15 355 4 150 -42 561

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

17 063

-5 030

-684 8 -676

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

16 388 23 130 903 40 421

-47 085 69 627 587 23 130

12 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 Cash flow from financing activities Proceeds from borrowings Transaction costs related to financing Repayment of borrowings Dividends paid to company's shareholders Change in interest bearing current liabilities Group contribution paid/received Net cash used in financing activities 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

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 financial statements is available at the above mentioned address or via email from [email protected]. After the completion of the sale of the entire issued share capital of the parent company Safari Finco 1 Oy to funds managed or advised by affiliates of CVC Capital Partners Advisory Company (Luxembourg) S.a.r.l. on February 13, 2015, the ultimate parent of the Group is Parry Sarl (Société Anonyme à Responsabilité Limitée), incorporated in Luxembourg. Until February 13, 2015 the ultimate parent of the Group was Safari Luxco 1 S.A., incorporated in Luxembourg. Paroc Group is consolidated into Parry Holding AB (incorporated in Sweden) financial statements, which is the highest consolidation level of the Group. A copy of the consolidated financial statement will be available from the above mentioned address of Paroc Group. 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, Poland and Russia, 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, 2015. 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 2015:  Annual improvements 2010 – 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.

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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, 2015. The financial statements have been authorised for issue by the Board of Directors of Paroc Group on February 25, 2016. 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 2016 or later:  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.  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.  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 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.  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 EU has decided not to launch the endorsement process of this interim standard and to wait for the final standard.  Annual improvements 2012 - 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.  Amendments to IAS 1: Disclosure Initiative. The effective date is 1 January 2016.  IFRS 15 Revenue from contracts with customers and associated amendments. 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

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•

Recognise revenue when the entity satisfies a performance obligation.

The effective date is 1 January 2018. 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. 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 % (2014: 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.

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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 significant 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. Unrealised losses are eliminated only to the extent that there is no evidence of impairment. 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.

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Paroc has three reportable segments: Building Insulation, Technical Insulation and Panel System. 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 business operations are presented above operating profit in translation differences related to sales and purchases. Monetary assets and liabilities denominated in foreign currencies are translated using the exchange rates quoted on the reporting date. Non-monetary assets and liabilities that are measured at fair value in a foreign currency are translated at the exchange rate when the fair value was determined. Non-monetary items that are measured based on historical cost in a foreign currency are translated using the exchange rate prevailing at the dale of the transaction. 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.

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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. 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 nor 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:

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Asset Development costs Patents Computer software Customer relationships Quarry rights Technology related intangible assets

Useful life (years) less than 5 up to 20 less than 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, 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.

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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 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

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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. 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

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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. 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. Paroc uses non-recourse factoring arrangement for working capital management. Sold receivables have been derecognised when substantially all the risks and rewards of ownership have been transferred to the buyer of the receivables. 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.

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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. 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.

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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 At the moment Paroc does not have any share-based payment arrangements. Share-based investment plan, which started in 2009, ceased to exist on February 13, 2015 as a result of the Paroc Group sale transaction completing. 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. 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 de-

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nominated 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. Termination benefits Termination benefits are expensed at the earlier of the dates when the Group can no longer withdraw the offer of those benefits and when the Group recognises costs for a restructuring. If benefits are not expected to be settled wholly within 12 months of the reporting date, then they are discounted. 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. 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. Paroc Group Oy and its Finnish subsidiaries can give group contribution to Safari Finco 1 Oy, which owns 100 % of the Paroc Group Oy shares. 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 business unit 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. As of April 1, 2015 the new reportable segments of Paroc Group are Building Insulation, Technical Insulation and Panel System. Group's financial statements reflect the new reporting structure with comparative information being restated accordingly. Building Insulation -segment includes stone wool production and a range of insulation products and solutions for residential and commercial buildings in both new-build and renovation construction markets. Products in the Building Insulation range from general building insulation to more specialised acoustic or fire protection insulation products. Technical Insulation –segment includes production of high-quality stone wool products used in specialised industrial and technical applications. Products are primarily used to provide insulation from heat, fire, condensation and sound. Panel System manufactures sandwich façade panels – lightweight steel-faced panels with an insulating core of stone wool. The main application of these panels is in the industrial and commercial construction of warehouses, municipal buildings and offices. The following table represents revenue and profit information and certain key measures regarding the Group's operating segments for the year ended December 31, 2015 and 2014, respectively:

€ thousands Net sales External Internal EBITDA Depreciation and amortization Operating profit Finance income Finance costs Profit before taxes Capital expenditure

Building Insulation 290 706 238 975 51 731

Year ended December 31, 2015 Technical Eliminations and Insulation Panel System allocations 129 048 46 777 -56 594 124 167 46 746 49 4 882 31 -56 643

44 583 -19 755 24 828

28 950 -3 163 25 788

2 298 -884 1 413

-788 -9 110 -9 898

28 005

2 442

1 215

1 019

Total 409 936 409 936 0 75 043 -32 911 42 131 1 077 -32 289 10 920 32 680

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Building Insulation 299 822 247 582 52 241

€ thousands Net sales External Internal EBITDA Depreciation and amortization Operating profit Finance income Finance costs Profit before taxes Capital expenditure 1 Reportable

Year ended December 31, 2014 restated1 Technical Eliminations and Insulation Panel System allocations 129 548 48 333 -60 180 121 735 48 252 -45 7 813 81 -60 135

Total 417 524 417 524 0

39 428

29 753

2 786

-4 047

67 920

-18 492 20 935

-2 831 26 922

-884 1 903

-9 066 -13 114

17 518

5 477

1 185

1 277

-31 274 36 646 1 436 -30 818 7 264 25 456

segments were changed in 2015 and the comparative information has been restated accordingly.

Year ended December 31, 2015 € thousands

Finland

Sweden

Poland

Lithuania

Russia

Other countries

Total

Net sales Non-current assets2

82 766 157 683

106 911 187 496

40 335 58 846

18 626 17 462

24 044 31 966

137 256 51

409 936 453 503

Year ended December 31, 2014 € thousands

Finland

Sweden

Poland

Lithuania

Russia

Other countries

Total

Net sales Non-current assets2

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

2

Non-current assets include intangible and tangible assets

Eliminations and allocations include the elimination of transactions among segments, of which the majority relates to the intercompany sales of the Building Insulation -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.

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4 Revenue € thousands

Year ended 31 December 2015 2014

Sale of building materials Revenue from services Other revenue Total

402 997 6 203 737 409 936

410 818 6 105 601 417 524

Other revenue comprises sale of other materials, commissions received and royalty income. Revenue by geographical area € thousands

Year ended 31 December 2015 2014

Sweden Finland Poland Germany Other EU Russia Norway Other Total

106 911 82 766 40 335 28 224 86 116 24 044 23 812 17 730 409 936

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

5 Expenses by nature € thousands

Year ended 31 December 2015 2014

Raw material and consumables used Production for own use Changes in inventories of finished goods and work in progress Distribution costs Employee benefit expenses (note 7) Lease and contingent rent Maintenance costs Travel expenses Marketing communication and other marketing costs Insurances Consulting and external services IT costs Depreciation, amortisation and impairment charges (note 6) Other expenses Total

-147 352 360 -4 079 -37 943 -90 786 -6 892 -14 017 -4 110 -7 713 -889 -5 601 -6 315 -32 911 -7 899 -366 148

-155 890 276 4 171 -41 202 -93 153 -7 043 -15 792 -4 707 -8 053 -737 -8 198 -6 120 -31 274 -3 118 -370 840

Expenses by nature include cost of sales, selling and marketing expenses, research and development expenses and

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administrative expenses. The breakdown of expenses by nature has been changed and the comparative figures have been restated accordingly. Auditor's fees € thousands Audit fees Auditor's statements and opinions Tax consulting Other services Total

Year ended 31 December 2015 2014 -415 -7 -12 -42 -477

-461 -3 -16 -674 -1 155

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 Total

Year ended 31 December 2015 2014 -26 287 -1 925 -2 060 -1 368

-25 236 -1 988 -2 521 -1 505

-1 272 -32 911

-24 -31 274

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 2015 2014 -91 -5 849 -19 785 -148 -581 -

-117 -5 365 -19 032 -189 -574 -24

-5 384 -1 073 -32 911

-4 449 -1 521 -31 274

30(82)

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 2015 2014 -71 404

-74 537

-9 011 -258 -10 371 -91 044

-8 577 -397 -10 025 -93 537

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

Year ended 31 December 2015 2014 583 541 408 255 178 64 2 028

652 549 406 262 162 62 2 093

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 €3.8 million (2014: €3.6 million) and depreciation and amortisation of assets of research and development €2.1 million (2014: €2.5 million). Government grants received relating to marketing and development projects were €0.4 million (2014: €0.2 million).

9 Other operating income € thousands Gain on sale of shares (note 15) Gain on sale of tangible assets Other operating income Total

Year ended 31 December 2015 2014 1 257 6 148 1 411

28 313 341

The gain on sale of shares relates to the sale of shareholdings in Steinull hf.

31(82)

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 Write-down and valuation allowances for bad debts Other operating expenses Total

Year ended 31 December 2015 2014 -2 -189 -356 -407 -801 -139 -1 173 -3 068

-86 -181 -625 -2 868 -4 937 -123 -1 558 -10 379

32(82)

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 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 2015 2014 55 717 306 1 077

55 327 616 998

Year ended 31 December 2015 2014 -26 675 -115 -2 163

-21 420 -138 -4 415

-1 219 -2 116 -32 289

-3 147 -1 261 -30 380

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

Year ended 31 December 2015 2014 -91 15 -2 116 -2 192

-1 212 210 -1 261 -2 263

Exchange rate differences on derivative instruments have been recognized as adjustment to revenue with €0.0 million (2014: €-0.1 million), to purchases with €0.1 million (2014: €0.4 million) and to finance income and costs with €0.1 million (2014: €0.1 million).

33(82)

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 2015 2014 -5 765 -195 -10 1 833 -4 137

-8 155 -135 -11 3 919 -4 383

The differences between income tax expense computed at Finnish statutory rate of 20 % (2014: 20 %) and income tax expense provided in the consolidated statement of income are as follows: € thousands Profit 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 Tax losses for which no deferred tax asset is recognised Unused tax losses and tax offsets now recognised as deferred 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 2015 2014 10 920 -2 184

7 264 -1 453

-75 942 -1 033 -1 581 -195 -10 0 -4 137 37.9 %

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

34(82)

13 Intangible assets

Development costs

Intangible rights

Goodwill

Other intangible assets

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

-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

-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

20 741 214 20 955

36 925 284 37 209

11 526 -5 11 521

22 243 -26 22 217

2 916 2 916

11 022 -19 49 -44 509 11 518

165 010 2 624 167 634

5 736 1 309 -68 -464 6 514

276 120 3 072 1 359 -112 46 280 483

0 -

-9 477 -1 818 -

-1 527 -297 -

-7 456 -1 453 -

-2 721 -194 -

-5 956 44 -1 815 -

0 -

-2 921 68 -879 -

-30 059 112 -6 457 0 0

0

-11 296

-1 824

-8 909

-2 916

-7 727

0

-3 732

-36 403

20 955

25 913

9 697

13 309

0

3 791

167 634

2 781

244 080

Customer relationships

Quarrying rights

21 324 -583 20 741

37 785 -860 36 925

11 516 10 11 526

0 -

-7 588 -1 889 -

0

Carrying amount at 31 Dec 2014 Acquisition cost at 1 Jan 2015 Translation differences Additions Disposals Reclassifications Acquisition cost at 31 Dec 2015

€ thousands Acquisition cost at 1 Jan 2014 Translation differences Additions Disposals Reclassifications Acquisition cost at 31 Dec 2014 Accumulated amortization and impairment at 1 Jan 2014 Disposals Amortisation Impairment Reclassifications Accumulated amortisation and impairment at 31 Dec 2014

Accumulated amortization and impairment at 1 Jan 2015 Disposals Amortisation Impairment Reclassifications Accumulated amortisation and impairment at 31 Dec 2015 Carrying amount at 31 Dec 2015

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 2015 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(82)

Goodwill impairment tests Following the change in the reporting segments as of 1 April 2015, the goodwill has been reallocated to the following cash-generating units (CGUs) based on the current reporting structure used in group business monitoring, whereby the comparable figures have been restated in order to retain comparability: € thousands Carrying value at 1 Jan 2014 Translation differences Carrying value at 31 Dec 2014 Translation differences Carrying value at 31 Dec 2015

Building Insulation

Technical Insulation

Panel System

Russia

Total

90 607 -3 972 86 636 1 460 88 095

72 354 -3 172 69 182 1 165 70 348

9 192 9 192 9 192

0 0 0

172 153 -7 143 165 010 2 625 167 635

The carrying amount of Paroc brand has been allocated to the cash-generating units as follows: € thousands Carrying value at 1 Jan 2014 Translation differences Carrying value at 31 Dec 2014 Translation differences Carrying value at 31 Dec 2015

Building Insulation

Technical Insulation

Panel System

Russia

Total

10 227 -324 9 903 119 10 022

8 167 -259 7 908 95 8 003

2 930 2 930 2 930

0 0 0

21 324 -583 20 741 214 20 955

No impairment losses in respect of goodwill have been recognised in 2015 and 2014. 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 the Board of Directors, excluding any cash flows from expansion investments, using a growth rate to perpetuity of 2 % (2014: 2 %) per annum for the cash flows beyond the strategy horizon, which altogether correspond to the realised long-term growth of the CGUs and business areas in question. The key assumptions used in the 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, as used in the annual strategy revision process. The most significant key assumption affecting the projections are the development of the residential construction business, and also the development of the commercial building construction business, the latter having an effect on Paroc Panel System segment. Discount rates used in the calculations are the pre-tax weighted average cost of capital (WACC). WACC consists of the 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:

WACC-% (pre-tax) 2014 2015

Building Insulation

Technical Insulation

Panel System

Russia

8.1 7.6

8.1 7.5

7.8 7.3

17.2 14.4

36(82)

For all CGUs the goodwill was allocated to, the following table shows amounts by which these two assumptions would need to change individually for the estimated recoverable amount to be equal to the carrying amount: Headroom in percentage points Pre-tax WACC-% Gross Margin-%

Building Insulation

Technical Insulation

Panel System

10.9 8.2

12.0 13.5

7.7 2.9

In CGU Building Insulation, the recoverable amount calculated based on value in use exceeded carrying value by €498.4 million. A rise in the discount rate by 10.9 percentage units or a fall in gross margin by 8.2 percentage points, each individually, for the projection period would remove the remaining headroom. In CGU Technical Insulation, the recoverable amount calculated based on value in use exceeded carrying value by €394.1 million. The discount rate would need to increase by 12.0 percentage units or the gross margin drop by 13.5 percentage points, each individually, for the carrying amount to be equal to the recoverable amount. In CGU Panel System, the recoverable amount calculated based on value in use exceeded carrying value by €35.6 million. In case of the gross margin fall by 2.9 percentage points or the discount rate increase by 7.7 percentage units in the projection period the recoverable amount vs carrying amount headroom would equal zero. According to the management’s assumption, any other reasonably possible change in other key variables would not create a situation in which the CGU’s carrying value would exceed its value in use.

37(82)

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 2015. Their carrying value (acquisition cost) was €1.2 million (2014: €2.2 million). The Group’s emission rights granted for free in 2015 amounted to 181 376 tons (2014: 212 304 tons). In 2015 the Group purchased 192 343 tons new emission rights (2014: 0 tons). Emission rights consumed by the Group in 2015 amounted 234 013 tons (2014: 237 521 tons). At the year-end 2015, Paroc does not have any emission rights forwards (2014: 0). Tons 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

Balance at 1 Jan 2015 Emission allowances received free of charge Sales of excess allowances Purchased emission allowances Balance at 31 Dec 2015

405 170 181 376 -5 830 192 343 773 059

Actual emissions Adjustments in respect of prior years Emission allowances held at 31 Dec 2015

-234 013 -56 404 482 642

38(82)

14 Property, plant and equipment

Mineral deposits and land areas 5 411 -158 294 5 547

Buildings and constructions 103 641 -13 297 -21 6 250 96 573

Machinery and equipment 170 597 -10 019 -2 171 17 567 175 974

Other tangible assets 8 879 -181 0 -6 262 8 954

Advances paid and construction in progress 32 834 -881 24 177 -36 -24 415 31 679

Total 321 362 -24 536 24 177 -2 234 -42 318 727

-352 -117 -

-18 947 21 -5 434 -10

-54 151 2 133 -19 153 0 -261

-2 386 -574 -

-12 289 -24 -85

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

-469

-24 370

-71 432

-2 960

-12 398

-111 629

Carrying amount at 31 Dec 2014

5 078

72 203

104 542

5 994

19 281

207 098

Acquisition cost at 1 Jan 2015 Translation differences Additions Disposals Reclassifications Acquisition cost at 31 Dec 2015

5 547 -5 65 5 607

96 573 -1 905 -1 3 866 98 533

175 974 -402 59 -2 832 21 340 194 139

8 954 13 -53 411 9 324

31 679 -175 31 263 -25 728 37 039

318 727 -2 474 31 322 -2 886 -45 344 643

-469 -91 -

-24 370 1 -5 918 -

-71 432 2 808 -18 608 -1 255 -

-2 960 53 -565 -16 -

-12 398 -

-111 629 2 863 -25 183 -1 272 -

-560

-30 287

-88 488

-3 488

-12 398

-135 220

5 047

68 246

105 652

5 836

24 641

209 423

€ thousands Acquisition cost at 1 Jan 2014 Translation differences Additions Disposals Reclassifications Acquisition cost at 31 Dec 2014 Accumulated amortization and impairment at 1 Jan 2014 Disposals Depreciation Impairment Reclassifications Accumulated amortisation and impairment at 31 Dec 2014

Accumulated amortization and impairment at 1 Jan 2015 Disposals Depreciation Impairment Reclassifications Accumulated amortisation and impairment at 31 Dec 2015 Carrying amount at 31 Dec 2015

During 2014 and 2015, the Group did not capitalise any borrowing costs on qualifying assets. Impairment of machinery and equipment in 2015 relates for the most part to the closure of the Lappeenranta factory.

39(82)

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

Buildings and constructions 2 402 -2 2 400

Machinery and equipment 934 934

-323 2 -69 -390

-711 -120 -831

-1 034 2 -189 -1 221

Carrying amount at 31 Dec 2014

2 010

103

2 113

Acquisition cost at 1 Jan 2015 Translation differences Acquisition cost at 31 Dec 2015

2 400 2 400

934 934

3 334 0 3 334

-390 -69 -460

-831 -78 -910

-1 221 0 -148 -1 369

1 940

24

1 965

€ thousands Acquisition cost at 1 Jan 2014 Translation differences Acquisition cost at 31 Dec 2014 Accumulated amortization and impairment at 1 Jan 2014 Translation differences Depreciation Accumulated amortisation and impairment at 31 Dec 2014

Accumulated amortization and impairment at 1 Jan 2015 Translation differences Depreciation Accumulated amortisation and impairment at 31 Dec 2015 Carrying amount at 31 Dec 2015

Total 3 336 -2 3 334

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 2015 2014 80 -43 38 -38 0

80 80 -80 0

38

80

The Group sold in December 2015 its 11.5 % interest in Steinull hf, an Icelandic mineral fibre insulation company. The gain on the sale was €1.3 million (note 9).

40(82)

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

2015 € 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

Financial liabilities at amortised cost

Available-forsale

Carrying amount at balance sheet date

Total

17 476

-

-

38 -

-

38 17 476

38 17 476

37 155 40 421 95 052

-

347 347

38

-

37 155 347 40 421 95 436

37 155 347 40 421 95 436

-

-

2 075

-

417 949 9 -

417 949 9 2 075

417 949 9 2 075

-

-

2 077 4 152

-

366 78 707 497 031

366 78 707 2 077 501 183

366 78 707 2 077 501 183

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

2014

Fair value through profit or loss

Loans and receivables

Fair value through profit or loss

Derivatives used for hedging

Financial liabilities at amortised cost

Available-forsale

Carrying amount at balance sheet date

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 1 Trade and other receivables do not include prepayments and tax related receivables. 2 Trade and other payables do not include tax related liabilities.

41(82)

17 Hierarchy of financial assets and liabilities at fair value 2015 € thousands Assets Available-for-sale financial assets Derivatives used for hedging Assets total

Level 1

Liabilities Derivatives for hedging Liabilities total

2014 € thousands Assets Available-for-sale financial assets Derivatives used for hedging Assets total

Level 2

Total

-

347 347

38 38

38 347 384

-

4 152 4 152

-

4 152 4 152

Level 1

Liabilities Derivatives for hedging Liabilities total

Level 3

Level 2

Level 3

Total

-

802 802

80 80

80 802 882

-

3 420 3 420

-

3 420 3 420

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.

42(82)

18 Financial risk management Substantial parts of Paroc's 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 2018 whereby the Group pays fixed interest and receives three month Euribor. Cash flow hedge accounting is employed and the 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 internally the products they sell in their own functional currencies in order to avoid most of the currency risk. The Group currency transaction risk is thus concentrated to the producing countries. Paroc does not hedge its net investments in Group companies nor internal financing. The management of foreign exchange risk is described in the treasury policy. The producing countries hedge their estimated future cash flows. The hedging is done either internally with Group Treasury or directly with selected banking counterparties. The first six months is hedged at 90 % +/- 10 % and the following three months 60 – 80 %. This ensures a continuous rolling hedge within a specified interval at all times. The instruments used are primarily foreign exchange forwards but also options can be used. 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 as cash, 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. The facility is available as long as the "Drawn Super Senior Leverage Ratio" covenant is complied with. The definition is Total Drawn Super Senior Debt to Consolidated Pro Forma EBITDA shall not exceed 2.0:1. This covenant is measured at each quarter end provided that there are outstanding RCF utilisations. The Group has met the terms of the covenants for the financial years 2015 and 2014.

43(82)

At year end the facility was fully available. The available liquidity defined as cash and cash equivalents added with unutilised committed facilities, was €100.4 million at year end. The majority 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 financing, 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 included in the insurance program 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 business unit 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 the notes 20 to the financial statements. 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. 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 €40.4 million (2014: €23.1 million). Net debt amounted to €377.9 million (2014: €398.8 million). Solidity was 5.9 % (2014: 4.5 %). Liquidity in the near future is good.

44(82)

Derivative financial instruments, nominal values € thousands

Year ended 31 December 2015 2014

Interest rate swaps Foreign exchange forwards Total

230 000 64 557 294 557

230 000 42 667 272 667

Derivative financial instruments, market values Year ended 31 December 2015 2014

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

-3 590 347 -562 -3 806

-3 053 802 -367 -2 618

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 2015 € thousands Derivative assets Derivative liabilities

31 Dec 2014 € 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

347 -4 152

-347 347

0 -3 805

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

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.

45(82)

Transaction risk and hedging operational items 2015 € thousands

LTL

GBP

SEK

NOK

DKK

PLN

RUB

-

189 2 146 -2 588 -253

8 722 11 627 -9 534 10 815

398 5 285 -4 322 1 361

1 102 1 628 -1 702 1 028

2 453 -7 853 7 889 2 489

440 440

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

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

Sensitivity analysis, 10 % depreciation of each currency against Euro 2015 € thousands

LTL

GBP

SEK

NOK

DKK

PLN

RUB

-

189 -2 588 -431 -2 157 -2 399 -240

8 722 -9 534 -1 589 -7 945 -812 -81

398 -4 322 -720 -3 602 -3 924 -392

1 102 -1 702 -567 -1 135 -600 -60

2 453 7 889 1 315 6 574 10 342 1 034

440 440 44

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

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

46(82)

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 2015 € thousands Assets Liabilities Derivatives, P/L Total net exposure 2014 € thousands Assets Liabilities Derivatives, P/L Total net exposure

LTL

GBP

SEK

NOK

DKK

PLN

RUB

0

0

-59 202 -59 202

191 -149 42

3 -207 -204

48 240 48 240

0

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

Sensitivity analysis, 10 % depreciation of each currency against Euro 2015 € thousands Assets Liabilities Derivatives, P/L Total net exposure Simulation +/- 10 % 2014 € thousands Assets Liabilities Derivatives, P/L Total net exposure Simulation +/- 10 %

LTL

GBP

SEK

NOK

DKK

PLN

RUB

0 0

0 0

-59 202 -59 202 -5 920

191 -149 42 4

3 -207 -204 -20

48 240 48 240 4 824

-

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

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 cumulative translation impact of €10.1 million (2014: €4.3 million). A loan amounting to 2.000 million RUB resulted in a cumulative translation impact of €-18.6 million (2014: €16.3 million).

47(82)

Contractual maturity analysis

€ thousands Outstanding senior secured notes1 Finance lease liabilities Interest expenses Interest rate derivatives Trade payables and other liabilities Foreign exchange derivative assets Foreign exchange derivative liabilities Total 1

31 Dec 2015 426 000 1 187 3 590 45 820 -347 562

< 1 year 359 26 153 1 485 45 820 -347 562 74 034

1-5 years

> 5 years

426 000 828 91 252 2 104 520 184

-

The senior secured notes are due in May 2020.

€ 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

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

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

1-5 years

> 5 years

1 187 104 401 2 160 107 747

426 000 13 005 439 005

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 2015 2014 0 404 404

0 231 231

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 €5.5 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.

48(82)

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

Year ended 31 December 2015 2014 12 446 395 17 207 693 30 741

17 693 586 20 924 706 39 909

During 2015 inventories of €0.5 million were written down to net realisable value (2014: €0.5 million).

20 Trade and other receivables Non-current € thousands Loans to related parties (note 30) Other receivables Total

Year ended 31 December 2015 2014 17 233 243 17 476

1 899 220 2 119

Current € thousands Trade receivables Prepaid expenses Accrued income Receivables from related parties (note 30) Other receivables Total

Year ended 31 December 2015 2014 35 770 2 334 431 4 469 43 004

42 462 4 419 123 58 6 463 53 526

Other receivables include VAT receivables, travel advances and other receivables.

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Ageing analysis of trade receivables € thousands

Year ended 31 December 2015 2014

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

31 227

36 033

4 136 291 204 286 -374 35 770

5 763 398 358 226 -315 42 462

21 Cash and cash equivalents € thousands

Year ended 31 December 2015 2014

Cash at bank and on hand Total

40 421 40 421

23 130 23 130

22 Equity related information Number of shares Balance at 1 January 2014 Issue of shares Balance at 31 December 2014 Issue of shares Balance at 31 December 2015

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.

50(82)

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 dividend shall be paid for the financial year ended 31 December 2015.

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23 Share-based investment plan At the moment Paroc does not have any share-based payment arrangements. Share-based investment plan, which started in 2009, 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 statements.

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 is classified as a defined contribution plan. 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 2015 2014

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

-258 -9 011 -475 -9 744

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

-397 -8 577 -244 -9 218

As at 31 December 2015 2014 3 478 3 478

3 003 3 003

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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 2015 2014 -258 -258

-383 -383

Of the total charge €-0.3 million were included in financial expenses (2014: €-0.4 million). In 2016, 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 2015 2014 9 640 9 640

9 905 9 905

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 2015 2014 9 905 10 114 219 -575 263 371 -638 -617 -103 638 -6 -27 9 640 9 905

As at 31 December 2015 2014 9 905 10 114 219 -575 -638 -617 263 371 -103 638 -6 -27 9 640 9 905

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Principal actuarial assumptions were as follows: As at 31 December 2015 2014 Discount rate Inflation

2.75 % 1.50 %

2.75 % 1.50 %

Assumptions regarding future mortality are set based on actuarial advice. Average life expectancy for a 65-year old female is 25 years (2014: 25 years) and for a 65-year old male 23 years (2014: 23 years). The weighted average duration of the defined benefit obligation is 14 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 4.9 % Increase by 5.3 % 0.50 % Increase by 5.3 % Decrease by 4.9 %

Increase by 1 year in assumption Increase by 3.4 %

Decrease by 1 year in assumption Decrease by 3.4 %

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 2015 2014 9 640 9 640 0

9 905 9 905 0

54(82)

25 Provisions Year ended 31 December 2015: € thousands

Environmental

Claims and guarantees

Restructuring

Total

7 044 -314 -7 370 -1 500 5 593

190 98 -190 98

252 114 -409 0 1 500 1 457

7 486 213 -723 -197 370 0 7 148

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

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

As at 31 December 2015 2014 4 865 2 283 7 148

7 149 337 7 486

Environmental provisions The environmental provision of €5.3 million relates to the demolishing costs in Lappeenranta production facilities. The costs are expected to be incurred by the end of 2018. The remaining part of the provision covers 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. 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. The restructuring provision of €1.1 million relates to the Lappeenranta plant closure and most of the provision will be used during 2016.

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26 Borrowings Interest-bearing borrowings Non-current € thousands Bonds Finance lease liabilities Total

As at 31 December 2015 2014 417 122 828 417 949

415 420 1 187 416 607

Current € thousands Other interest-bearing liabilities Finance lease liabilities Total

As at 31 December 2015 2014 7 359 366

295 295

Fair value of issued securities As at 31 December € thousands Senior secured notes, €196 million Floating rate notes, €230 million Total

2015

2014

193 000 217 350 410 350

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 (level 1).

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 included in the effective interest rate calculation 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.

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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 € 196 million 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

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, 2015, the facility was undrawn. 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 2015 2014 449 927 0 -190 1 187

410 1 379 0 -307 1 482

57(82)

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 2015 2014 359 828 0 1 187

295 1 187 0 1 482

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.

58(82)

27 Deferred tax assets and liabilities Recognised in statement of income

Recognised in other comprehensive income

Exchange difference

2 845 350 297 344 5 440 916 10 192

-144 -49 -59 124 397 -

-28 68

5 9 -11 -

289

40

3

Offset against deferred tax liabilities Deferred tax assets, net

-6 904 3 288

-

-

-

-4 041 6 463

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

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

423 -24 -30 -58 -384 -1 507 16 -

-95

-1 565

-95

2 74 139 34 249

3 956 5 433 391 169 1 990 19 974 2 775 1 34 689

Offset against deferred tax assets Deferred tax liabilities, net

-6 904 29 195

-

-

-

-4 041 30 648

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

1 Jan 2015

31 Dec 2015

2 706 282 238 457 5 837 984 10 504

59(82)

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

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 €8.0 million at 31 December 2015 (2014: €9.4 million). These losses relate to the OOO Paroc in Russia and will expire during the years 2019-2025. The undistributed earnings of subsidiaries amounted to €17.7 million in 2015 (2014: €15.8 million). The Group has recognised €2.5 million (2014: €2.4 million) deferred tax liability with respect to the undistributed earnings of subsidiaries.

60(82)

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

As at 31 December 2015 2014 41 033 576 37 169 5 321 84 098

36 245 1 200 36 414 5 007 78 866

Other current liabilities include other tax payables (e.g. value-added tax, real estate tax, environmental tax, payroll tax and social security contributions) and other salaries related liabilities. Significant items in accrued expenses and deferred income € thousands Personnel expenses Discounts given Financial items Purchases Claims Other items Total

As at 31 December 2015 2014 13 859 15 545 3 133 3 214 198 1 219 37 169

13 883 15 041 3 154 2 409 199 1 728 36 413

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

As at 31 December 2015 2014

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

3 786 556 2 680 922 12 627 1 276 6 481 382

3 785 559 2 679 927 9 033 6 227 6 480 746

Guarantors for the € 426 million bond are Paroc Sverige AB, Paroc AB, Paroc Oy Ab, Paroc Panel System Oy Ab, Paroc Polska Sp. Z o.o., 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 €22.1 million in taxes, penalties and interest. The amount includes €14.1 million taxes and €8.0 million accrued corporate interests and penalty interests. Interests have been calculated until December 31, 2015. In addition Paroc Oy Ab and Paroc Panel

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System Oy Ab received a decision for year 2009 according to the same principle as the years 2006-2008. The tax payment including taxes, penalties and interests for 2009 is €4.7 million. The amount includes €3.3 million taxes and €1.4 million accrued corporate interests and penalty interests. The total non-recoverable amount in MAP process from years 2006-2009 would be € 9.4 million. 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. In case Finnish tax authorities would apply the same approach for years 2010-2015, the total amount for taxes, penalties and interest would be approximately €24 million, where the non-recoverable amount in a MAP process would be €3 million. The Group has not made any provisions in the 2015 financial statements since the management strongly believes that all transfer pricing guidelines have been followed and the same method has been followed consistently from 2010 to 2015. 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 2015 2014 6 892 6 892

6 147 6 147

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

As at 31 December 2015 2014 4 364 6 828 775 11 967

5 345 7 792 1 582 14 719

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

62(82)

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 Parry Sarl (incorporated in Luxembourg). Until February 13, 2015 the ultimate parent company was 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 were carried out with related parties during the year 2015 and 2014: € 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 2015 2014 2 1 452 454

6 58 66

As explained in note 22, a dividend amounting to €102.3 million was paid in 2014 to the parent company Safari Finco 1 Oy. Period -end balances arising from trading transactions with related parties 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

As at 31 December 2015 2014 17 233 17 233 -17 233 -

5 1 776 176 1 957 -1 899 58

63(82)

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 2015 2014

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

2 206 237 35 2 478

2 559 45 112 2 716

571

727

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. Group companies on 31 December 2015 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 Parainen 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

64(82)

31 Post-balance sheet events Announced changes in Group management On 15 January 2016 it was announced that Mr. Johan Magnusson, B.Sc (Engineering), M.Sc (Bus. Adm.), 52, has been appointed Senior Vice President, Technical Insulation business unit as of March 1, 2016. He reports to Kari Lehtinen, Group CEO and is a member of Paroc Group Management Team. Johan Magnusson has extensive experience in international sales, key account management and business development on various senior management positions in industrial companies. Johan Magnusson joins Paroc from Assa Abloy Entrance System AB where he recently served as President and head of a business area. Earlier, he held different leadership positions in Rautaruukki. On 8 February 2016 it was announced that Mr. Jari Airola, MBA, M.Sc (Eng.), 46, has been appointed Senior Vice President, Building Insulation as of March 1, 2016. He reports to Kari Lehtinen, Group CEO and is a member of Paroc Group Management Team. Jari Airola has extensive experience in business management, international sales management and business development on various senior management positions in global industrial companies. He joins Paroc from Huntsman Pigments and Additives where he recently served as Global Business Unit Director. Earlier, he held different leadership positions in chemical industry companies such as Sachtleben Chemie and Kemira Pigments. Payment of €20 million to the parent company On 21 January 2016 the Board of Directors has decided to make a payment of €20.0 million to the parent company Safari Finco 1 Oy in the form of a long-term loan. The loan is given in compliance with the provisions concerning "Restricted Payments" in the Indenture signed in May 2014. Increase of available Super Senior Revolving Credit Facility The Board of Directors has, in order to secure sufficient available liquidity, decided to increase the "Available Facility" of the Super Senior Revolving Credit Facility signed on 14 May 2014. The amendment agreement was signed on 25 February 2016. The Available Facility amount has increased from €60.0 million to €80.0 million. The change comes into effect on 31 March 2016. The SSRCF banks ING Bank N.V., London Branch, Nordea Bank Finland Plc and Danske Bank Finland (the original Mandated Lead Arrangers) have increased the participation pro rata. The terms and conditions for the facility are set out in the note 26 Borrowings.

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Financial statements of the parent company Income statement of the parent company (FAS) € REVENUE Research and development expenses Administrative expenses Other operating income Other operating expenses OPERATING LOSS Finance income and costs Income from dividends Interest income Other financial income Interest expenses Other financial expenses PROFIT/LOSS (-) BEFORE EXTRAORDINARY ITEMS Extraordinary items Group contributions PROFIT/LOSS (-) BEFORE APPROPRIATIONS AND TAXES Appropriations Change in depreciation difference Income tax expense PROFIT/LOSS (-) FOR THE PERIOD

Note 2

6 6 7

Year ended 31 December 2015 2014 15 375 959.27

13 728 792.44

-3 013 527.36 -12 403 684.83 4 042.34 -1 592 602.84 -1 629 813.42

-1 841 078.23 -12 324 510.11 208 637.70 -3 665 211.49 -3 893 369.69

28 492 785.41 15 775 239.33 504 617.22 -26 109 049.39 -2 013 278.67 16 650 313.90

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

15 020 500.48

-20 531 600.61

754 000.00 754 000.00

1 239 000.00 1 239 000.00

15 774 500.48

-19 292 600.61

443 256.49 33.62

-134 621.98 0.00

16 217 790.59

-19 427 222.59

66(82)

Balance sheet of the parent company (FAS) € Assets NON-CURRENT ASSETS Intangible assets Intangible rights Goodwill Other capitalised expenditure Advance payments and work in progress

Note

Tangible assets Buildings Machinery and equipment Advance payments and work in progress

8

Investments Shares in Group companies Receivables from Group companies Shares in other companies

9

CURRENT ASSETS Receivables Long-term receivables Loans

10

Short-term receivables Trade receivables Receivables from Group companies Other receivables Prepaid expenses and accrued income Cash and cash equivalents TOTAL ASSETS

As at 31 December 2015

2014

8

11

2 285 085.37 2 320 444.37 1 317 905.21 444 309.90 6 367 744.85

2 562 944.97 3 016 577.93 1 492 022.34 325 987.04 7 397 532.28

7 833.48 278 055.56 83 519.70 369 408.74

8 751.36 294 950.85 37 991.30 341 693.51

393 482 842.18 285 410 910.38 10 127.30 678 903 879.86

393 482 842.18 264 091 554.35 10 127.30 657 584 523.83

0.00

175 876.52

13 517 717.04 754 000.00 114 530.86 2 246 974.31 16 633 222.21

13 803 027.76 1 239 000.00 481 603.29 3 959 275.16 19 482 906.21

0.00

0.00

702 274 255.66

684 982 532.35

67(82)

€ 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 11

APPROPRIATIONS Accumulated depreciation difference

12

PROVISIONS

14

NON-CURRENT LIABILITIES Long-term liabilities Bonds Loans from Group companies Other loans Short-term liabilities Trade payables Loans from Group companies Other payables Accrued expenses and deferred income

TOTAL EQUITY AND LIABILITIES

As at 31 December 2015

2014

2 500.00 -3 760 595.90 100 000 000.00 81 768 834.61 16 217 790.59 194 228 529.30

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

551 756.73

995 013.22

17 578.61

23 939.98

426 000 000.00 5 810 098.38 7 200.00 431 817 298.38

426 000 000.00 0.00 10 800.00 426 010 800.00

2 926 957.03 64 111 070.15 569 276.87 8 051 788.59 75 659 092.64

3 186 015.78 67 280 694.54 1 186 939.16 7 861 279.68 79 514 929.16

702 274 255.66

684 982 532.35

15

68(82)

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 Cash flow before change in working capital

Note

Year ended 31 December 2015 2014 15 020 500.48

-20 531 600.61

2 006 228.29 -292 007.56 -16 647 704.15 -6 361.37 80 655.69

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

2 052 951.88 -1 177 098.99 956 508.58

-7 202 629.98 3 163 197.19 -14 876 219.63

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

16 086 881.79 -27 264 537.45 28 492 785.41 -33.62 18 271 604.71

12 787 612.73 -20 465 011.68 0.00 0.00 -22 553 618.58

Cash flow from investing activities Investments in tangible and intangible assets Change in long-term receivables Purchases of other investments Net cash used in investing activities

-1 003 999.19 -15 333 381.13 0.00 -16 337 380.32

-1 212 851.50 -56 495 105.57 -127.30 -57 711 684.37

0.00 -3 600.00 -3 169 624.39 0.00 1 239 000.00 -1 934 224.39

430 000 000.00 -303 237 356.68 51 953 059.63 -102 300 000.00 3 846 000.00 80 261 702.95

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 Change in short-term loan payables Dividends paid to company's shareholders Cash flow from group contributions Net cash from/used in (-) financing activities Net change in cash and cash equivalents Cash and cash equivalents in the beginning of the financial year Cash and cash equivalents at the end of the financial year

5

69(82)

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 2015 to 31 December 2015. 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.

70(82)

2. Revenue € thousands

Year ended 31 December 2015 2014

Sale of Group internal services Total

15 376 15 376

13 729 13 729

By market area Finland Other Nordic countries Other EU countries Other countries Total

4 384 4 788 5 825 379 15 376

3 374 4 479 5 568 307 13 729

3. Personnel expenses € thousands

Wages, salaries and remuneration Pension expenses Other personnel expenses Total Average number of personnel Finland Total Salaries and fees to the management Managing Director and members of the Board of Directors Total

Year ended 31 December 2015 2014 -4 011 -848 -246 -5 106

-3 823 -663 -202 -4 688

51 51

39 39

-571 -571

-727 -727

4. Auditor's fees € thousands

Audit fees Certificates and statements Tax consultancy Other consultancy fees Total

Year ended 31 December 2015 2014 -142 -2 -1 -28 -174

-82 -5 -649 -736

71(82)

5. Depreciation € thousands

Year ended 31 December 2015 2014

Depreciation by function Research and development Administration Goodwill Total

-94 -1 217 -696 -2 006

-51 -1 134 -464 -1 648

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

-1 205 -696 -1 -105 -2 006

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

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

Year ended 31 December 2015 2014 4 4

209 209

Other operating expenses Amortisation of goodwill Other expenses Total

-696 -896 -1 593

-464 -3 201 -3 665

Total other operating income and expenses

-1 589

-3 457

Other expenses include M&A related costs and other nonrecurring exceptional items.

72(82)

7. Financial income and expenses € thousands

Year ended 31 December 2015 2014

Dividend income from Group companies Total

28 493 28 493

-

Interest income from Group companies Interest income from others Total

15 775 0 15 775

14 833 58 14 890

91 414 505

618 16 819 478 17 915

-1 635 -24 474 -26 109

-1 095 -19 168 -20 263

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

-128 -1 886 -2 013

-28 -91 -29 062 -29 181

Total financial income and expenses

16 650

-16 638

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

73(82)

8. Intangible and tangible assets Intangible assets

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

Intangible rights

Other longterm expenditure

Goodwill

Work in progress

Total

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

Carrying amount at 31 Dec 2014

2 563

1 492

3 017

326

7 398

Acquisition cost at 1 Jan 2015 Additions Other changes Acquisition cost at 31 Dec 2015

7 038 380 7 418

3 396 372 3 769

3 481 3 481

326 839 -721 444

14 241 1 592 -721 15 112

-4 475 -658 -5 133

-1 904 -546 -2 451

-464 -696 -1 160

-

-6 844 -1 901 -8 744

2 285

1 318

2 320

444

6 368

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

Accumulated depreciation at 1 Jan 2015 Amortisation during the financial year Other changes Accumulated amortisation at 31 Dec 2015 Carrying amount at 31 Dec 2015

74(82)

Tangible assets

€ thousands

Buildings and constructions

Machinery and equipment

Advances paid and constructions in progress

Total

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

Carrying amount at 31 Dec 2014

9

295

38

342

Acquisition cost at 1 Jan 2015 Additions Other changes Acquisition cost at 31 Dec 2015

13 13

550 87 638

38 165 -119 84

601 252 -119 734

Accumulated depreciation at 1 Jan 2015 Depreciation during the financial year Other changes Accumulated depreciation at 31 Dec 2015

-4 -1 -5

-255 -104 -359

-

-259 -105 -365

8

278

84

369

Carrying amount at 31 Dec 2015

75(82)

9. Investments

€ thousands

Shares in subsidiaries

Shares others

Receivables from Group companies

Total

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

399 240 5 130 -10 887 393 483

10 10

227 949 36 314 264 262

627 203 41 444 - 10 887 657 760

Carrying amount at 31 Dec 2014

393 483

10

264 262

657 760

Acquisition cost at 1 Jan 2015 Additions Disposals Acquisition cost at 31 Dec 2015

393 483 393 483

10 10

264 262 23 037 -1 894 285 406

657 760 23 037 -1 894 678 904

Carrying amount at 31 Dec 2015

393 483

10

285 406

678 904

€ thousands

Number of shares

Nominal value

%

10

Others Group companies Paroc Sverige AB Total shares

Book value

2 175 078

100

393 483 393 493

76(82)

10. Receivables € thousands

As at 31 December 2015 2014

Loan receivables Group companies Others Total

285 411 285 411

264 092 176 264 267

Trade receivables Group companies Others Total

13 517 13 517

13 720 83 13 803

Other receivables Group companies Others Total

754 115 869

1 239 482 1 721

1 843 404 2 247

3 768 191 3 959

301 525 519 302 044

282 819 931 283 750

Prepaid expenses and accrued income Group companies Others Total Total receivables Group companies Others Total

Prepaid expenses and accrued income, specification € thousands

Personnel expenses Financial items Other items Total

As at 31 December 2015 2014 75 1 874 298 2 247

3 749 210 3 959

Trade receivables by age € thousands

Undue Total

As at 31 December 2015 2014 -

83 83

77(82)

11. Shareholders' equity

Share capital

Fair value reserve

Reserve for invested nonrestricted equity

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

3

-2 504

3

Equity 1 Jan 2015 Cash flow hedges Fair value changes during the year Reclassifications to income statement Dividends Profit/loss (-) for the financial year Equity 31 Dec 2015

€ thousands

Other equity

Total

100 000

203 496

300 994

-3 520 2 690 -3 333

100 000

-102 300 -19 427 81 769

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

3

-3 333

100 000

81 769

178 438

3

-1 988 1 561 -3 761

100 000

-16 218 97 987

-1 988 1 561 -16 218 194 229

Distributable reserves € thousands

As at 31 December 2015 2014

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

100 000 81 769 16 218 197 987

100 000 101 196 -19 427 181 769

12. Appropriations € thousands

Change in depreciation difference Total

As at 31 December 2015 2014 -443 -443

135 135

13. Income taxes € thousands

Income taxes from previous years Total

As at 31 December 2015 2014 0 0

-

78(82)

14. Provisions € thousands

Jubilee benefits

Book value in the beginning of the financial year Additions Used during the year Total

24 1 -7 18

15. Liabilities € thousands

As at 31 December 2015 2014

Loans Group companies Bonds Total

69 921 426 000 495 921

67 281 426 000 493 281

Trade payables Group companies Others Total

1 617 1 310 2 927

1 701 1 485 3 186

576 576

1 198 1 198

82 7 970 8 052

41 7 821 7 861

71 620 435 857 507 476

69 023 436 503 505 526

Other liabilities Others Total Accrued expenses and deferred income Group companies Others Total Total liabilities Group companies Others Total

Accrued expenses and deferred income, specification € thousands

Personnel expenses Financial items Other items Total

As at 31 December 2015 2014 986 6 642 423 8 052

1 019 6 116 726 7 861

79(82)

Liabilities with maturity later than five years € thousands

Bonds Total

As at 31 December 2015 2014 -

426 000 426 000

16. Pledged assets and contingent liabilities € thousands Pledged assets as collateral for Group companies liabilities and commitments Mortgages on company assets Pledged shares Total

As at 31 December 2015 2014 900 000 392 483 1 292 483

900 000 392 483 1 292 483

Contingent liabilities Company guarantees Total

152 152

5 475 5 475

Leasing commitments Due next year Due over a year Total

159 291 450

146 141 287

17. Derivative financial instruments € thousands

As at 31 December 2015 2014

Nominal values Interest rate swaps from others Total

230 000 230 000

230 000 230 000

Market values Interest rate swaps from others Total

-3 590 -3 590

-3 053 -3 053

80(82)

Signatures for the report of the Board of Directors and financial statements Helsinki, 25 February 2016

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,

February 2016

KPMG Oy Ab Authorised Public Accountants

Juha-Pekka Mylén Authorised Public Accountant

81(82)

82(82)