Annual Report • Feb 10, 2009
Annual Report
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we keep cargo on the move™
ANNUAL REPORT 2008
| Cargotec's Operating Environment 4–5 | |
|---|---|
| CEO's Message 6–7 | |
| Vision and Key Figures 8–9 | |
| Strategy Implementation 10–11 |
| Load Handling 14–15 | |
|---|---|
| Container and Heavy Material Handling 16–17 | |
| Marine Cargo Handling 18–19 | |
| Services 20–21 | |
| Customer Focused R&D 22–23 |
Sustainable Development at Cargotec .................................................. 26–29 The Environment as Part of Sustainable Development ........................... 30–33 Personnel .................................................... 34–37 Internal Control and Risk Management ...... 38–42 UN Global Compact... ........................................ 43
| Information for Shareholders 46–47 | |
|---|---|
| Corporate Governance 48–53 | |
| The Board of Directors 54–55 | |
| Executive Board 56–57 |
BOARD OF DIRECTORS' REPORT AND FINANCIAL STATEMENTS 2008 ............. 59
Cargotec, the global market leader in cargo handling, provides technologically leading solutions close to customers.
GLOBALLY SERVING MARKET LEADER
Loader cranes Demountables Tail lifts Truck-mounted forklifts Forestry and
recycling cranes
Terminal tractors Forklift trucks Log stackers Deck cranes Hatch covers
Cargotec's cargo handling solutions include on-road load handling equipment, container handling equipment, heavy industrial material handling equipment, marine cargo fl ow and offshore solutions and comprehensive services close to customers.
Cargotec's product development focuses on effi ciency and environmental considerations. Products are developed in collaboration with customers based on their needs.
Cargotec employs close to 12,000 people in over 40 countries and had sales of EUR 3.4 billion in 2008. The Company's shares are quoted on the NASDAQ OMX Helsinki.
Cargotec's key customer groups include ship owners ship and port operators, ship yards, distribution centres, fl eet operators, logistics companies and truck owner-operators as well as the defence forces of various countries. Other major customers include heavy industry, terminals and municipalities. Cargotec serves its customers globally, either through its own sales companies or distributors. Its production units are located in Finland, Sweden, Norway, Estonia, Poland, the Netherlands, Ireland, Spain, the United States, China, India, Korea, Malaysia and Singapore. Part of its manufacturing has been outsourced to partner plants that are located mainly in Asia.
Demand for Cargotec's products and services is based on increasing world trade as well as the needs of land and sea transportation. The needs of heavy industrial material handling in, for example, wood processing and at sawmills are refl ected in Cargotec's demand. Increasing volumes in sea transportation boost demand for MacGREGOR's equipment while the increasing usage
Ship-to-shore cranes Yard cranes Straddle carriers Shuttle carriers Reachstackers
Lashing systems RoRo equipment Mooring systems Bulk handling solutions Offshore solutions
" Cargotec's versatile service offering and global network guarantee the availability of services close to customers, including equipment maintenance and modernisation projects and the supply of spare parts.
of containers in goods transportation boosts demand for Kalmar's container handling equipment in ports. Demand for Hiab's load handling equipment goes hand in hand with activity in land transportation and the building sector as well as new truck registrations. Furthermore, increasing waste processing effi ciency increases demand for Hiab's solutions.
Customers are increasingly outsourcing their equipment maintenance activities in order to obtain expert services that ensure uninterrupted operations. Furthermore, growing costs are increasing the effi ciency requirements placed on cargo handling. Cargotec's versatile services and global network guarantee the availability of services close to customers, including equipment maintenance and modernisation projects and the supply of spare parts.
Cargotec improves the effi ciency of cargo fl ows and offers ways of enhancing the productivity of its customers' operations. We keep our customers' cargoes on the move using the broadest selection of cargo handling solutions and services available, which are provided close to our customers.
Our world-leading cargo handling brands, Hiab, Kalmar and MacGREGOR, offer solutions for the load handling of vehicles, container and heavy material handling, marine cargo fl ows and offshore operations.
In technological development, we take our customers' business needs into consideration and invest in environmentally friendly innovations.
Cargotec's operating environment changed drastically during 2008. The fi rst months were times of high demand and strong order intake. The markets for container handling equipment and marine cargo fl ow systems as well as for offshore solutions were strong. We were also able to improve our market position in several areas. We started the year with an exceptionally long order book especially for MacGREGOR and were able to also close the year with an order book that extends a few years ahead. The need for increased effi ciency in container ports around the world calls for energy effi ciency and automation. At Kalmar our investments and efforts in developing new generation, energy effi cient solutions resulted in the launch of the Pro FutureTM concept.
The last three months were plagued by the impacts of the global fi nancial crisis, affecting also the demand for Cargotec's offering. The year 2008 for Hiab, despite the increased presence in Asia and the success in the Chinese market for waste handling equipment, proved to be a very challenging period due to the continued downturn in the U.S. construction industry which also spread to Europe. Despite the challenging market situation we achieved an annual sales growth of 13 percent in 2008. As a result of lower demand and profi tability we were forced to take heavy measures with personnel impacts in Hiab and Kalmar during the last months of 2008. These measures mainly took place in Western Europe and North America to adjust capacity to the prevailing market situation. The development of profitability in 2008 was naturally a disappointment for
us and improving the internal effi ciency and ways of working will thus be the focus when adjusting to future changes in the operating environment.
Cargotec's targets in the fi ve-year strategic period of 2007–2011 remain unchanged. To support our strategic journey towards achieving the targets, we launched in January 2008 a global change programme called On the Move with three clearly defi ned targets to increase internal effi ciency, enhance customer focus and facilitate growth. The programme, which continues for a number of years, included in the fi rst phase a number of extensive projects including consolidation of IT, HR and Communications functions to corporate level; development of frontline activities towards our customers; creation of a new common supply strategy for Cargotec; and reorganisation of the company structure to new country organisations in several countries globally. To enhance customer focus Hiab, Kalmar and MacGREGOR changed their operative structure during the year.
The service market continued to be active and in 2008 we were able to reach a record high service sales of 871 million euros. Our large, global base of installed equipment together with the growing interest of reducing lifetime operating costs with proactive maintenance provided us excellent opportunities for continued growth in services. We have further developed the services business model and strategy which we launched already in 2007. The Cargotec Services organisation acts as an internal centre of expertise and concentrates through a matrix role on managing the development of Hiab, Kalmar and MacGREGOR's service activities as well as improving Cargotec's shared service elements in areas such as spare parts management, technician recruitment and training, service product and concept development, and mergers and acquisitions of service companies.
As we have now entered the third year of our fi ve-yearstrategic period our aim for 2009 is to raise our profitability towards our target levels. We have initiated many of the key internal activities already in 2008. We will continue to work on internal effi ciency by further enhancing the One Company ways of working. With the common One Company approach we can also better support the sustainable development according to the UN Global Compact principles. The country re-organisation activities continue with a clearly set plan and by the end of 2009 a vast majority of our personnel will be working in consolidated country organisations. One of the main success factors will be the development of our supply to be closer to our markets as well as in lower cost environments. Better utilisation of the supply and sourcing synergy benefi ts and know-how of the common global supply organisation will also be an advantage. We will continue to develop the management and organisation model of the Company to further enhance the development of solutions and customer focus.
I would like to thank our customers and partners for their cooperation during these times of turbulence and uncertainty. I would also like to express my gratitude to all Cargotec employees. It has been a year of rapid changes caused by both the internal development initiatives and the changing market environment forcing us to make heavy adjustments.
These measures were taken to ensure our future competitiveness. The year 2008 was a year of mixed news towards our shareholders and we will strive for improved performance as we enter 2009.
Mikael Mäkinen President and CEO
In January 2008, we launched a global change programme called On the Move with three clearly defi ned targets to increase internal effi ciency, enhance customer focus and facilitate growth.
Cargotec improves the effi ciency of cargo fl ows by offering handling systems and related services for the loading and unloading of goods. Our closeness to customers, global network and market leader position enable us to proactively and innovatively address customers' needs.
| Financial period 2008 |
Financial period 2007 |
Financial period 2006 |
||
|---|---|---|---|---|
| Orders received | MEUR | 3,769 | 4,106 | 2,910 |
| Order book Dec 31 | MEUR | 3,054 | 2,865 | 1,621 |
| Sales | MEUR | 3,399 | 3,018 | 2,597 |
| Operating profi t from operations* | MEUR | 173.7 | 221.1 | 222.6 |
| Net income for the period | MEUR | 120.8 | 138.4 | 166.1 |
| Return on equity | % | 13.7 | 15.6 | 20.2 |
| Return on capital employed | % | 12.7 | 16.8 | 23.1 |
| Gearing | % | 55.3 | 36.3 | 12.3 |
* Excluding non-recurring items, including restructuring costs
*** Including restructuring costs 19 MEUR
Number of Employees at the End of Period 06 07 08 8,51611,187 11,826
Sales by Market Area
* Europe, Middle East and Africa ** Asia Pacifi c
Employees by Market Area
EMEA 65% Americas 11% APAC 24%
Employees by Market Area
Hiab is the global market leader in on-road load handling solutions. The solutions are in use when goods are moved in local transportation, building industry, waste handling, recycling, agriculture and forestry, public services and in the defence forces.
Kalmar is a global provider of container and heavy duty materials handling equipment, automation applications and related services. The solutions are used in terminals, ports, heavy industry, the defence forces and distribution centres.
MacGREGOR is a global provider of marine cargo fl ow and offshore solutions which are used in general cargo, bulk, container, RoRo and naval vessels as well as in bulk terminals and in offshore industry.
Orders Received (MEUR)
Americas 18% APAC 11%
Sales by Market Area
Sales by Market Area Market Area EMEA 60%
Employees by
EMEA 77% Americas 14% APAC 9%
Americas 12% APAC 28%
9
Cargotec's strategy and strategic targets, confi rmed in 2006 for a period of fi ve years and reaching thus until 2011, are based on profi table growth in both developing and consolidating markets. An important goal is to build Cargotec a leading position in services.
In 2008, the focus has been on expanding the sales in the emerging markets and supporting service business growth. Strategy implementation actions aim for increased customer focus and improved internal effi ciency by building a more integrated company. The growth of Cargotec's business kept well pace with the growth of the global material fl ow and demand on cargo handling capacity. The demand for more effi cient and sustainable cargo handling solutions creates a favorable environment for Cargotec as the market leader in
cargo handling. The strength of the company lies in the global presence throughout the chain of material fl ow in local transportation, distribution centres, terminals, ports, and ships.
Cargotec provides customers with solutions for effi cient cargo loading and unloading throughout the lifetime of the equipment. Some of the cargo handling solutions offered include also third party equipment. Research
and development activities focus on automation, safety, security and increased energy effi ciency. In product development projects the use of electric drives and hybrid technology has played a key role.
Within the internal change programme On the Move, which aims for effi cient implementation of the strategy, Cargotec has initiated development projects aiming for increased customer focus and internal effi ciency. In 2008 several actions were taken to increase the customer focus. Among those is the development of new business models which triggered changes in organisation structure in the business areas. During the year the expansion of the sales and service network continued both through integrating completed acquisitions and organic growth. Well-functioning Information Management tools are a necessity for supporting the growth of the business and therefore several development projects were initiated. For example, a corporate-wide project for frontline IT platform development was started during the year.
Internal efficiency has been further developed by consolidating the back-offi ce functions in Information Management, Human Resources and Communications, and by developing common shared service centres taking care of fi nancial and accounting tasks for the business units. Furthermore, consolidation of the legal structure by creating country organisations for Finland,
Sweden and the United States, which together represent more than a third of Cargotec's personnel, has supported reaching the strategic target of a one company approach.
During the year and as a signifi cant part of the On the Move programme Cargotec defi ned its global supply strategy. This resulted in a plan and specifi c actions, according to which the product supply will be strengthened in Asia, Americas and Eastern Europe to better meet the customer base development. All these above actions aim for reaching of the set profi tability targets.
Finally, several corporate-wide activities in personnel and management development took place during the year. However, these activities were affected by the declined demand and consequential restructuring measures towards the end of the year.
The economic downturn creates challenges for the business. The strategic actions and plans that have taken place during 2008 enable Cargotec to have a more fl exible base for adjusting to the changes in the operating environment. Many of these actions were also accelerated. Despite the uncertain market situation Cargotec has been able to grow the business according to the set targets. The more challenging market environment underlines the need to focus on improving the long-term profi tability and competitiveness of the business.
Magnus Pettersson works as a Product Development Manager in Hudiksvall, Sweden.
Cargotec is the market leader in its fi eld. Its intensely growing service business is close to the everyday lives of customers.
BUSINESS OPERATIONS IN 2008
Cargotec's business area Hiab develops and provides customer-driven on-road load handling solutions and the related services. Hiab's products are utilised in moving goods and materials on the road, in construction sites, forests, industry, waste management, recycling and by the defence forces.
Hiab is the global market leader in developing and providing on-road load handling solutions. Thanks to customer-driven product and solution development, Hiab helps customers enhance their effi ciency and productivity, and its versatile services ensure the safe functioning of equipment throughout its long life cycle.
Hiab has load handling equipment production units in eleven countries, and sales companies and representative offi ces throughout the world. Its comprehensive product range includes HIAB loader cranes, LOGLIFT and JONSERED forestry and recycling cranes, MULTILIFT demountable systems, ZEPRO, FOCOLIFT, AMA, DEL, ULTRON and WALTCO tail lifts and MOFFETT and PRINCETON PIGGY BACK® truckmounted forklifts.
In the fi rst half of the year, demand was favourable in Hiab's key market area, Europe, but due to the global fi nancial crisis, and the intense slowdown in European construction markets, demand began to fall in the second half of the year. In the United States, demand remained low throughout the year.
However, with respect to solutions for the environmental and defence industries, demand for load handling equipment developed favourably all year. Hiab booked major orders for delivery e.g. to the United Kingdom's Ministry of Defence and the United States' Army. The service business and the related installation services grew signifi cantly. Also, the Asia Pacifi c market area showed continuous business growth.
The load handling business expanded further on a global scale, partly as a consequence of acquisitions. The tail lift business grew via sales company acquisitions in Australia and New Zealand, and through the acquisitions of the UK-based DEL Equipment and US-based Ultron Lift, both manufacturers of tail lifts. Furthermore, Hiab acquired the majority of the business of Bowman Cranes, its South African partner, a cargo handling equipment supplier.
Hiab transformed its operations in order to enhance its customer orientation, with a particular focus on the environmental, defence and forestry customer segments, by developing new comprehensive solutions to meet these segments' needs. In crane product lines, synergy benefi ts were pursued through the integration of product lines in terms of product development, production and marketing.
Product development launched major projects, introducing solutions that will enhance the safety and effi ciency of load handling, such as an automated load protection device and a crane solution that meets new EU regulations for passenger hoists. Investments in the development of more pro-environmental and effi cient technology continued, and early in the year, Hiab opened a new state-of-the-art crane-testing centre in Hudiksvall, Sweden.
Hiab launched reorganisation and restructuring measures as a consequence of intensely declining demand. In order to adjust its production capacity, a plan was drawn up to decrease and consolidate crane manufacturing capacity. Moreover, the operations of several production units underwent adjustment measures in the United States and Europe.
In the fi rst part of 2009 the prospects for the load handling business are highly uncertain. The global fi nancial crisis has considerably decreased the need for short haul distribution activity, particularly in construction. Economic developments in Europe and the United States are refl ected in demand for Hiab's products. On the other hand, growth potential is projected for the load handling business in emerging markets in the Middle East and Africa, and the Asia Pacifi c market areas. The service business will undergo intense development, particularly as regards spare part deliveries, installation services and maintenance models, and through the strengthening of the organisation. Furthermore, a major focus will be placed on environmental and defence sector solutions, and business operations focussing on key customer segments will be further strengthened.
In product development, environmentally friendly and ecologically effi cient solutions with lower fuel consumption will remain a focus area. The development of Hiab's production structure will continue as part of Cargotec's Supply strategy, which will react more nimbly to the change in the geographical focus of its customer base.
Kalmar, Cargotec's business area for container and heavy material handling, automated applications and the related services, provides solutions for ports, terminals, distribution centres and heavy industry worldwide.
Kalmar is the market leader in container handling equipment in ports and terminals where containers are handled by ship-to-shore cranes, yard cranes, shuttle and straddle carriers, reachstackers and empty container handlers. Moreover, Kalmar's forklift trucks are used by heavy industry, its log stackers by the wood and paper industry, and its terminal tractors by distribution and logistics centres. Decades of experience in the special needs of customers and the life cycle of products has made Kalmar a forerunner in automation solutions for container handling in ports and the development of energy-effi cient solutions. Kalmar has production
plants in China, Finland, India, Malaysia, Sweden and the USA, and operations in more than 140 countries.
Kalmar further strengthened its presence close to customers. Its global sales and service network grew via acquisitions, new sales and service offi ces were set up and its dealer network expanded. Container handling markets remained strong regardless of fi nancial insecurity, except in the United States, where container traffi c volumes declined due to the economic slowdown.
This was refl ected in local customers' willingness to invest. In the wood and paper industry, demand for Kalmar equipment declined towards the end of the year.
The market share of Kalmar's yard cranes grew and orders were received e.g. from Vietnam, Thailand, India, Brazil, Columbia, Morocco and South Africa. The Shanghai assembly unit mainly managed deliveries to the Asian markets. Orders for reachstackers and terminal tractors were record-high, and the number of new major service agreements was higher than before. Kalmar was awarded a major new 5-year contract by the US Ministry of Defence to supply Rough Terrain Container Handlers (RTCH), and these machines will be produced in the newly constructed manufacturing facility in San Antonio, Texas.
Customers' intense interest in automation solutions continued. The many orders placed in 2008 include navigation, container position verifi cation and remote monitoring systems developed by Kalmar. Alternative forms of energy, and the environmental impacts of equipment drew more interest than before, and Kalmar launched a new Pro Future™ concept for rating equipment on the basis of its environmental impact. During the year, several products complying with the latest environmental requirements were launched on the market, including a hybrid straddle carrier, a battery driven forklift truck, a compact forklift truck, a distribution tractor and an unmanned shuttle carrier, of which the hybrid straddle carrier and battery driven forklift truck were rated in
accordance with the Pro Future™ concept.
In 2008, Kalmar introduced a specifi c operating model for major customers, enabling it to respond more rapidly to a changing operating environment and to enhance cooperation with, and customer service for, globally operating customers.
2008 saw investments in project activity expertise and development of operating methods due to defects detected in these fi elds. The new organisation and operating model creates the preconditions for profi table project operations and meets the productivity demands on investments set by major customers. At the end of the year, Kalmar adapted its operations in order to enhance its competitiveness in the more challenging market situation.
Product development will implement a number of projects in response to growing requirements with respect to the environment, productivity and safety. Focus will be on winning new maintenance contracts and modernisation projects, while continuing the expansion of operations in Asia and emerging markets. In these markets product demand is expected to develop more positively than in Europe and the United States, where it is forecast that the impacts of the economic downturn will in the short term decrease the number of containers handled. The development of the global production structure will continue as part of Cargotec's Supply strategy.
Cargotec's business area MacGREGOR provides cargo fl ow solutions for dry bulk carriers, container vessels, general cargo and RoRo ships, and offshore support vessels, as well as specialised cargo handling systems for tankers and transloaders. MacGREGOR also offers dry bulk handling solutions for ports and terminals.
MacGREGOR is the market leader in engineering and service solutions for the maritime transportation and offshore industries. Products include hatch covers, cranes, equipment for RoRo ships and ports, solutions for cargo lashing, ship-based and terminal-based bulk handling, offshore load handling and naval logistics. MacGREGOR also provides worldwide service and
support. MacGREGOR operates in 50 major shipping and shipbuilding countries and its service network consists of approximately 60 service stations.
MacGREGOR's order intake was record-high, with deliveries booked up to 2012. During the fi rst half of
the year, the shipbuilding market continued to be very lively and high oil prices boosted demand for offshore solutions. In particular, demand for cargo flow solutions for car carriers, bulk carriers and container vessels, as well as offshore cranes and winches, was lively.
In response to growing demand, a new winch factory was opened in China, and capacity in existing partnerships was increased for hatch cover and crane production. Moreover, MacGREGOR invested in its existing Singapore facility, to secure deliveries of large active heave-compensated cranes for the Asian market. New partnerships were formed in India and Vietnam.
The market for converting tankers into bulk carriers was booming during the fi rst six months of the year, and a high number of hatch cover conversion orders were received. Furthermore, the market for service solutions and conversion and modernisation projects remained positive. MacGREGOR continued to develop its Onboard Care concept, which offers ship-owners tailor-made care packages.
The acquisition of an offshore service specialist company in the spring strengthened MacGREGOR's geographical presence in the important Americas and Gulf of Mexico area. In order to grow further and be close to its customers, business was also expanded into Brazil, India, Vietnam and Qatar.
To further improve customer focus and cooperation between divisions, MacGREGOR merged its RoRo, Dry Cargo and Crane divisions and the selfunloaders part
of the Bulk Handling division into a new Merchant Ship Division.
Customers are showing an increased interest in environmentally friendly solutions. In 2008, the fi rst environmentally friendly electrically driven products were delivered to end customers, for example hatch covers (E-roll). Also, electric cranes have been successfully tested onboard ships.
The fi nancial turbulence caused a radical slowdown for new ship building orders towards the year end. During the second half of the year, freight rates plunged, especially for bulk and container freights, which, together with diffi culties in arranging fi nancing, led to cancellations at some shipyards. To better respond to rapid changes in the market, MacGREGOR increased its risk management activities signifi cantly.
Despite the uncertainty in the markets, MacGREGOR has a record high order book and will focus on ensuring timely delivery of its customers' orders. A special focus continues to be placed on proactive follow-up of the market situation and customer activity.
MacGREGOR continues to invest in R&D in order to maintain its leadership position. The year 2009 will be marked by a focus on organic growth through widening the existing product offering, the improvement of existing products, new product development, production capacity increases and a stronger global presence.
Cargotec's service business continues to play a major role in the company's development and profi tability. Located in all major service hubs worldwide, Cargotec is well-placed to maintain its own as well as other-branded equipment. Maximising machine uptime and improving the lifetime cost-effi ciency of its customers' equipment remains Cargotec's top priority as the industry's leading solutions provider.
The Cargotec Services operating model was implemented in order to fast-track the company's growth in services. This approach has seen the effi cient adoption of common internal processes and created a platform for developing the most innovative and market-driven solutions tailored to the cargo handling customers.
In 2008, Cargotec's service business achieved the set growth targets and the importance of services as cyclical support for new equipment was further reinforced.
Cargotec reaffi rmed its position as a dedicated service provider by citing numerous opportunities for quick and profitable service growth. Demand for spare parts grew as the company's installed base increased. To meet customers' availability requirements, Cargotec
improved its material management systems and strengthened its network of strategically located parts warehouses.
Cargotec expanded its presence in key regions of the world to better serve growing markets and supplement its service offering. It reinforced its offshore division by acquiring a U.S. Gulf Coast-based service specialist. Other major acquisitions which brought Cargotec closer to its customers included service companies in Italy, Argentina, South Africa, and the establishment of its own sales and service location in Mexico.
The number of maintenance contracts received by Cargotec reached record levels. More customers realised the benefi ts of fl exibility by outsourcing their service operations in order to focus on their core business. Cargotec entered into a fi ve-year total terminal main-
tenance agreement with Europe Combined Terminals, the operator of the state-of-the-art and highly automated Euromax Terminal in Rotterdam, Holland. This service contract, featuring a comprehensive partnership between a manufacturer and an industrial service supplier, is signifi cant in the industry.
Unique service solutions are only effective if skilled and knowledgeable people are in place. Cargotec invested in training programmes in order to recruit, train and deploy service technicians. Making use of the latest diagnostics and remote monitoring technology is of critical importance in maximising equipment uptime and ensuring productivity. Cargotec made additional improvements to its service management systems and reporting tools, to help customers avoid unplanned downtime in their operations.
Cargotec will continue to focus on fulfi lling customers' requirements through tailored solutions leveraged through an expanding geographical footprint and service offering. Strong organic growth will be possible through an increase in the number of total service contracts. More robust processes and tools used to manage the company's spare parts chain will complement these agreements and drive profi tability. Cargotec will continue to invest in its training programmes for service personnel and support its service management by developing systemised ways of sharing knowledge and resources. Synergies found internally as well as in meeting customers' expectations will be used as an opportunity for the further development of Cargotec's service business.
Cargotec's technology leadership is based on solutions which pay attention to product development in enhancing the customer's productivity, alongside awareness of growing environmental requirements. The aim is to improve Cargotec's technological competitiveness by investing in shared product development across all business areas.
In 2008, Cargotec established a shared product development unit in India to serve all business areas. Moreover, in the spring, Cargotec acquired 60 percent of an Italian company, Idea Designing & Consulting, based in the city of Massa. The company focuses on the development of cargo handling equipment, such as forklift trucks, reachstackers and loader cranes.
Construction of a shared product development unit began in the city of Pune in India in 2007, and by the end of 2008 the unit already employed almost 40 engineers. Like the product development unit in Italy, it supports Cargotec's business units in product development. The Indian unit has three key areas of expertise: design, structural analyses and software development. In 2008, the Pune unit's tasks included structural analyses for MacGREGOR, and design and
software development for Kalmar's Intelligence & Automation unit, while the product development unit in Italy engaged in concept planning of new products and design of new features for existing Hiab and Kalmar products.
Although business units' R&D centres will continue to conduct the majority of research and development, Cargotec intends to expand the operations of both the Italian and Indian product development units in 2009.
Cargotec's subsidiary Cargotec Port Security began operating in the United States in the spring of 2008, developing container security solutions and ensuring the effi ciency of container fl ows through ports. Cargotec Port Security has developed a method of measuring radiation, which will enable Cargotec's Bromma container spreaders to detect any radioactive material within containers. Containers can be scanned when lifted, which means that they do not need to be removed for separate inspection. This increases the productivity of terminals. In 2008, the U.S. Customs and Border Protection Service performed fi eld tests on spreadermounted radiation detection solutions. In these tests, radiation detection equipment developed by Cargotec detected and identifi ed radioactive material throughout the container, even through seven protective layers. In addition, the U.S. Department of Energy carried out fi eld testing, in which the system demonstrated 100% accuracy. The US Department of Homeland Security awarded the system a Qualifi ed Anti-Terrorism Technology (QATT) designation.
Cargotec's MacGREGOR offshore cranes' active heave-compensation system (AHC) represents submarine high technology. Offshore cranes equipped with the AHC system facilitate the lowering and lifting of equipment (structures and tools) regardless of the swell of the sea. The equipment is used for the construction, servicing and maintenance of subsea installations. While the AHC system compensates for the heaving of the waves, the crane can operate precisely even in extremely rough weather conditions. In this way, the customer gains more operating time through not having to wait for optimal weather conditions. These cranes offer a maximum capacity of 600 tonnes, and operate to depths of up to 3,000 metres. Demand for cranes equipped with the AHC system has increased due to oil drilling being conducted at ever greater depths, and the increasing share of subsea oil fi elds.
For years, Cargotec's product development has focused on environmental considerations such as energy effi ciency, the minimisation of emissions and noise levels, and the prevention of oil leakages. Customers are seeking increasingly energy effi cient solutions due to stricter environmental requirements and increasing fuel costs.
In 2008, Kalmar launched the Pro Future™ concept, encompassing environmentally friendly equipment. To gain the Pro Future™ marking, equipment is rated against fi ve criteria: energy effi ciency, power source, emissions, noise pollution and recyclability. With the help of Pro Future™ solutions, customers can genuinely develop environmentally sustainable operations and reduce fuel consumption. During the year, among other innovations, Kalmar launched a straddle carrier utilising hybrid technology. This new hybrid straddle carrier saves costs for customers, through a lower fuel requirement for transporting containers. Moreover, such hybrid technology cuts straddle carriers' annual carbon dioxide emissions by 50 tonnes per straddle carrier. Other Pro Future™ products include the variable speed rubbertyred gantry (RTG) crane, as well as variable speed straddle carrier, automatic stacking crane, battery driven forklift truck and ship-to-shore crane with regenerative energy source.
In its new generation loader crane, Hiab has taken account of environmental considerations: thanks to its renewed steering system, the payload of the new truck-mounted crane has increased by some 20 percent, while fuel consumption has decreased by as much as 40 percent.
In 2008, MacGREGOR continued the development of electrically-driven solutions. Their benefi ts for ship owners include the elimination of oil pollution, and damage to goods, as there is no need for hydraulic oil. Furthermore, energy is saved as there is no need for the continuous use of equipment. Benefi ts for shipyards include that cable wiring is easier and piping is not needed. During the year, electrically operated cardecks and hatch covers were delivered to customers.
The intense development of automated product solutions continued in 2008 within Kalmar's Intelligence & Automation unit. Automated solutions enhance the productivity of customers' operations and minimise costs in ports and terminals by decreasing the need for fuel, and enabling better utilisation of the equipment as the degree of automation increases. Safety is also being enhanced in container yards. Early 2008 saw the launch of the new, fully-automated Kalmar Autoshuttle™ shuttle carrier that is able to pick, place and transport containers between ship-to-shore (STS) and yard stacking cranes, without a driver.
Kalmar continued to supply automatic stacking crane systems (ASCs) and the related automation and control systems to HHLA, the biggest terminal operator in the Port of Hamburg, with the aim of automating its container terminals by the year 2015. Automation and new stacking cranes will double the capacity of the terminal. In the autumn of 2008, delivered equipment was tested, involving cranes performing designated operations unmanned. In this project, Kalmar has developed several automation systems that can be utilised as automated solutions become more common in ports.
Cargotec acquired an interest in FIMECC (Finnish Metals and Engineering Competence Cluster Oy), a cluster of strategic excellence in metal products and the engineering industries, established in 2008. FIMECC Oy is an innovation company combining the industry's visions of future competitive assets with the competence of research institutions. Strategic themes include the service business, user experience, global networks, intelligent solutions and breakthrough materials. FIMECC's shareholder base comprises around 15 leading Finnish technology companies, universities and research institutions. The aim of Cargotec's involvement in FIMECC is to promote research projects key to Cargotec's business and product development.
Cargotec bears responsibility for people, products and the environment. Attention to sustainable development forms the basis of successful business operations throughout the world.
RESPONSIBILITY FOR OPERATING ENVIRONMENT
Shruti Tilak works as a Front Offi ce Executive
Cargotec aims at promoting sustainable development through its own activities by producing sustainable solutions and products for its customers and taking into account of environmental and social wellbeing in all of its operations.
Cargotec has committed itself to a number of international sustainable development initiatives and commitments which will further the building of its own sustainable development activities. Through the cooperation programmes and organisations underlying these principles, Cargotec is also maintaining an active conversation with various interest groups in order to identify the best practices and understand the challenges of sustainable development in global operations. The most important international sustainable development commitments supported by Cargotec include:
The Commitment to the UN Global Compact Initiative obliges Cargotec to annually report its efforts towards the implementation of the ten principles specified in the Initiative. More information on the UN Global
Compact principles and their application in this Annual Report is available on page 43.
Cargotec is engaged in the continuous development of a corporate-wide sustainable operating model. To this end, the Company is seeking to provide its interest groups with solutions that contribute to positive environmental and occupational safety effects. Furthermore, Cargotec is constantly developing its operating models and policies in various competence areas by integrating sustainable development considerations in them from the very beginning, thereby making environmental and social wellbeing a natural part of the Company's operations. For example, in connection with acquisitions, social and environmental responsibilities are taken into consideration in line with Cargotec's established practices.
As a global operator, Cargotec has identified the challenges related to compliance with its general operating principles within the company's sphere of infl uence. In the future, the Company will further develop appropriate tools to monitor compliance with, and develop, its general operating principles, both locally and globally. Another initiative supporting the building of harmonised operating principles throughout Cargotec is the On the Move change programme, which provides new opportunities for creating models that promote sustainable development.
The purpose of this is to defi ne Cargotec's ethical values and launch a common, sustainable way of working among Cargotec's personnel throughout the world. The implementation of the Code of Conduct began in 2007 with a global training process that involved approximately 250 supervisors. In each Cargotec unit, the unit manager was then responsible for arranging Code of Conduct training within his/her area of responsibility. In addition to this, Code of Conduct training is provided as part of the induction programme targeted at new employees.
Cargotec's Code of Conduct provides operating models related to stakeholder relationship management, environmental considerations and human resource and human rights principles. The Code of Conduct also provides detailed guidelines for political neutrality and a strict anti-corruption approach. The minimum operational principles suggested include adherence to local legislation and international human rights regulations. Cargotec's internal audit function monitors compliance with the Code of Conduct. Furthermore, staff members can report violations against the Code of Conduct to the internal audit function, which considers all reported cases and resolves them in cooperation with the person or organisation in question. Each case is also reported to Cargotec's top management while the Board of Directors obtains a summary of the cases. The few cases identifi ed in 2008 were considered by the top management and resolved in cooperation with the persons concerned.
In 2007, Cargotec began to systematically monitor various social and environmental indices. Today, this monitoring forms an elementary part of reporting in the largest Cargotec production units. The indices applied are based on international standard (Global Reporting Initiative, GRI) which has been adapted to company-specifi c characteristics. Through these indices, Cargotec aims at sharing the best practices, in terms of environmental considerations and occupational health and safety, throughout its organisation. Furthermore,
the indices support the Company's risk management processes since information is collected on the present status of social and environmental management in the various Cargotec units. Based on these indices, at the end of 2008 the Company determined those matters whose development will be internally monitored in support of management decision-making.
In addition to these specifi c indices, sustainable development activities were monitored in 2007 and 2008 through audit processes targeted at Cargotec's risk management operations. Analyses of the present status of Cargotec's operations from the viewpoint of risk management processes are being extended into the area of sustainable development. Based on these analyses, the Company will generate recommended practices.
Operating in line with the principles of sustainable development, and furthering this approach, forms part of Cargotec's strategy. While the targets of sustainable development are approved by Corporate management, the business areas and units can further specify these targets for their functions. In 2008, Cargotec continued to actively build the various sub-areas of sustainable development in collaboration with HR, product and business development, sourcing, environmental, health
The new way to handle waste in China.
Cargotec tailors its products and services to meet its customers' needs as comprehensively as possible. In 2008, Cargotec's Hiab business area established an environmental business organisation aimed at producing effi cient and safe solutions for the waste management sector.
These solutions further the creation of a waste management infrastructure and improve human and environmental wellbeing alongside the modernisation of waste transportation management. In China, Hiab has been building its cooperation with local authorities and equipment suppliers for years, alongside the development and modernisation of waste management infrastructure and transportation methods. In Shanghai, for example, expert organisations have been invited to participate in such development work in order to ensure that the development needs of Shanghai's waste management are fully understood. Based on the results of this cooperation, Hiab and the local authorities and organisations arranged training sessions and other events, during which the needs of waste management, as well as its links to environmental and health issues, were examined. Over the last few years, cooperation with the local authorities has led to novel, safer waste management arrangements in Shanghai. In addition to the overall concept, Hiab has delivered waste compactors and demountable systems enabling
the safe, effi cient and hygienic transfer of waste from one location to another. As part of this cooperation, eight modern municipal waste transfer depots have been built in Shanghai. This comprehensive cooperation culminated in the Olympic Games in Beijing for which Hiab supplied waste management solutions in cooperation with a Finnish waste container manufacturer.
The old way to handle waste in China.
Cargotec's environmental policy defi nes the Company's environmental principles. Based on these, Cargotec's business areas have further defi ned their environmental principles in line with their specifi c circumstances.
The main environmental effects of Cargotec's operations are related to the use of its products. For this reason, in 2008 the Company focused on identifying product-based environmental perspectives. In Cargotec's own processes, the largest environmental effects can be identifi ed in production plants. The Company aims to render environmental assessments and management a natural part of the plants' operative management. In the future, Cargotec will place increasing emphasis on managing the environmental effects of its growing service business and the entire supply chain. In 2008, the Company introduced its new subcontractor criteria in which
environmental safety, occupational health and safety and quality issues have been taken into account more extensively than before. These criteria have been implemented with selected subcontractors, and their extension throughout the subcontractor base will be assessed later, on the basis of the results of the pilot phase.
Cargotec's strategic business development goals support the creation of holistic, sustainable, long-term solutions for customers. In product development, environmental
considerations form an integral part of planning and manufacturing. In the service business, the focus is on extending product life cycles while an extensive service network helps uphold effi cient operating characteristics. In addition to product development and services, Cargotec is seeking to train its customers to use Cargotec equipment so that safety and environmental matters reach optimal level.
In product planning, product quality assessments play a key role, the aim being to guarantee product safety and sustainability as extensively as possible. Environmental impacts are evaluated in collaboration with the customer, and the related goals are set from the customer's perspective. Consideration and anticipation of legislation, rules and regulations form a natural part of the product development process. To further develop its environmental impact assessments and product planning, Cargotec launched projects in 2008 in order to identify the best practices in the Company's various product lines.
Energy effi ciency, safety and the prevention of oil leakages represent key focus areas in Cargotec's product development. In 2008, the Company determined a clear environmental criterion for energy effi ciency, according to which it undertakes to reduce the use of fossil fuels by 10 percent in its equipment over the next 6–10 years. A major step was taken in environmental impact assessments when Kalmar launched its Pro Future™ environmental criteria. All Kalmar equipment meeting these criteria will bear the Pro Future™ symbol.
Cargotec is committed to reducing the use of fossil fuels in its equipment by 10 percent through the Clinton Global Initiative launched by the former U.S. president Bill Clinton.
Founded in 2005, the aim of the Initiative is to implement solutions to global challenges by creating networks and partnerships. Cargotec was invited to join this initiative and signed its own commitment as the fi rst Finnish organisation to do so, in 2008.
The commitment duration was defi ned as 6–10 years. Through this commitment, Cargotec wants to contribute to the achievement of the principles of sustainable development and the development of novel products and services.
Kalmar continued to steer its product development activities in a more environmentally friendly direction in 2008 and took a major step towards doing so by supporting its customers' contribution to sustainable development, through the launch of the Pro Future™ concept.
Kalmar rates its equipment using fi ve environmental- and effi ciency-based indicators: source of power, energy effi ciency, emissions, noise pollution and recyclability. Within each category, a product or service is evaluated and scored, the highest totals offering the most environmentally friendly benefi ts.
At present, Kalmar's Pro Future™ range includes among others hybrid straddle carrier, automatic stacking crane, battery driven forklift truck and a ship-to-shore crane with regenerative energy source.
By upgrading its service business, Cargotec provides its customers with the opportunity to ensure optimal use of equipment throughout its entire life cycle. Regular service intervals not only extend the product's life cycle but also keep its environmental effects and safety at the appropriate level. This, in turn, promotes a clean and safe working environment for end users. It is also possible to modernise certain earlier product models to improve their effi ciency and reduce their environmental effects. Cargotec is constantly developing its maintenance and modernisation solutions in line with changes in customer and authority requirements.
The most signifi cant environmental effects associated with Cargotec's processes are related to those originating from the operations of the various business units as well as transportation and commuting to and from work. The certifi ed ISO 9001 and ISO 14001 quality and environmental management systems form the basis of Cargotec's environmental management, and the Company's regular internal and external audits and management audits are aimed at monitoring the achievement of the related objectives. As a global operator, Cargotec has identifi ed the challenges related to the management of environmental issues in various countries. Its aim is to achieve the best possible practices in local circumstances.
Cargotec has continued to build certifi ed management systems into its production units with the aim of creating an operational model that helps to identify the most important environmental effects and respond to them in all units. Eight of Hiab's 16 production units and two of its sales companies apply environmental management systems certifi ed under ISO 14001. These systems cover approximately 80 percent of the sales of Hiab's production units. Six of Kalmar's seven production units apply certifi ed environmental management systems, these systems covering also approximately 80 percent of the sales of Kalmar's production units. MacGREGOR commissions most of its products from selected partners independently responsible for their production processes. Operational guidelines related to the management of environmental issues are included in the quality systems of most MacGREGOR units. Furthermore, all of Cargotec's business areas have been working on partly shared certifi cations which cover various units within the business area in question. The purpose of this is to further the setting and achievement of joint targets. Hiab began to harmonise its certifi cations in 2008 while Kalmar and MacGREGOR initiated this earlier.
Handling environmental risks and responsibilities forms part of continuous processes. In the context of corporate acquisitions and divestments, Cargotec analyses environmental issues as part of the due diligence process and manages any identifi ed responsibilities according to standardised practices. An environmental assessment was performed in connection with
" Cargotec's strategic business development goals support the creation of holistic, sustainable, long-term solutions for customers.
major acquisitions completed in 2008. Furthermore, an extensive environmental assessment was conducted in 14 production units in accordance with a programme introduced in 2007. This involved the evaluation of management systems, facilities and production from the viewpoint of their environmental effects while taking into account the units' operating environment. Extensive soil cleaning work was carried out in two Cargotec sites in 2008 as a result of industrial activities that had taken place in those sites earlier. Cargotec is seeking to systemise the monitoring of matters brought up in connection with environmental impact assessments.
In 2007, Cargotec began to develop the reporting of corporate-level environmental indices. These indices were collected from production units since their environmental effects are the most signifi cant among Cargotec's operations. At present, environmental indices are collected from 19 production units, in addition to which preliminary information has been collected from planning and sales units. With respect to new production units joining the Company through acquisitions, key fi gures will be collected in line with the established practice. The collection of environmental indices makes the pinpointing of the best practices and solutions between the various units more effi cient. It also improves the identifi cation of corporate-level environmental challenges and enables responding to these challenges through shared targets. These environmental indices have been determined in accordance with international standards and deal mainly with the production units' use of energy, waste fl ow management, water and materials consumption, greenhouse gas emissions and other emissions into the air. Despite the increasing use of video and telephone conferences, Cargotec's global presence has also increased the need for travel. Cargotec is actively seeking business travel partners that pay attention to reducing the environmental impact of their operations. In 2009, Cargotec will initiate the systematic monitoring of environmental effects arising from travel with the aim of identifying and minimising these effects.
Cargotec invests in personnel development in order to further improve job satisfaction and commit employees to the realisation of the Company's strategy. The On the Move change programme, supporting the Company strategy, aims at developing Cargotec into a strong market leader and a global employer of choice.
During the reporting period, a uniform operating model and a global matrix organisation were created for human resources (HR) management in line with the On the Move programme. The pooling of resources into a worldwide HR expert network laid a solid basis for supporting the objectives of both business operations and the entire organisation. Competence and support in key areas, and strategic planning, were consolidated in centres of expertise, while operative human resources management and local business support functions were organised regionally to serve the country organisations being set up. An increased customer focus and comprehensiveness and quality of services are essential in the development of HR management's operating methods and expertise.
Human Resources Management and People Strategy Implementation of the new people strategy, approved by Cargotec's Board in 2007, was enhanced in the reporting period. Special focus areas included support for employee and change management, the development of leadership skills and human resources competence development, alongside committing the best talents. The comprehensive introduction of shared HR management processes and tools was reinforced globally.
The support of HR management played a key role during the year, in the On the Move programme's product supply and country re-organisation projects , and other major development projects. Key duties included supporting the management in change management, and identifying the best talents for key positions as
business areas upgraded their organisations to further customer orientation.
Cargotec is committed to equal opportunity in employment policies, procedures and practices, and respects the freedom of association of the personnel.
Thanks to the enhanced effi ciency of HR management reporting practices, the comprehensiveness and quality of information gained from the organisation improved during the year.
On December 31, 2008, Cargotec had a total of 11,826 employees. 15 percent of its employees were female (2007: 15) and 85 percent male (2007: 85). Three percent of Cargotec's total employees worked part time (2007: 3) and 97 percent full time (2007: 97).
As a result of lower demand and profi tability, Cargotec initiated restructuring measures in October, mainly in Western Europe and North America, which resulted in personnel reductions affecting some 1,000 people. These measures were aimed at adjusting capacity in Hiab to the prevailing market situation and improving Hiab's and Kalmar's profi tability. The need for personnel cuts was highest in Finland, Sweden, the Netherlands and the USA.
Cargotec rewards its employees through various incentive systems. In 2008, the compensation and reward systems were unifi ed, and position classifi cations were
updated. The purpose of these measures was to promote a corporate culture based on target-orientation and shared efforts. Country organisations initiated the harmonisation of country-specifi c compensation and employee benefi t systems.
Cargotec has a top management incentive programme which defi nes both short- and long-term targets. The incentive programme consists of a long-term, share-based reward system and the top management's bonus scheme that comprises both fi nancial and personal targets. Furthermore, Cargotec's local units have collective incentive schemes based on the unit's fi nancial and productivity targets. In 2008, Cargotec paid a total of EUR 387 (2007: 356) million in salaries and remunerations.
In 2008, the new performance management process was developed further on the basis of feedback received from management and key personnel, and the process was introduced worldwide in other personnel groups, too. A new personal performance assessment method was implemented for top management. Talent management was invested in by extending the annual management review of managers and key personnel into continuous leadership dialogue. This process ensures a suffi cient number of key experts and the adequacy of succession plans. Hiab implemented a 360 leadership assessment for approximately 60 managers. The individual feedback given to participants helped in planning and improving personal leadership.
The development of an online recruitment tool improved communication related to job opportunities throughout the organisation. The worldwide introduction of the new tool enhanced equal career development opportunities for all employees, and internal job rotation. Cargotec's external employer image was clarifi ed with the help of local recruitment events and through cooperation with educational institutions and universities.
Cargotec's key HR policies were renewed during the year, and the service range of HR management was compiled into a comprehensive HR Service Catalogue. A new common intranet and collaboration portal Flow was introduced for improving interaction between employees and organisation units. The implementation of virtual e-training was surveyed as part of the development project of a virtual learning platform and training management system. Local employee surveys were conducted along with a global atmosphere survey targeted at leadership and key personnel in connection with the On the Move programme.
Cargotec's human resources competence development is based on corporate-level, centralised and local training programmes provided in various Cargotec countries, customised to meet the needs of employees and businesses, while global training programmes focus on the development of leadership skills and expertise in various sectors.
In 2008, the Cargotec Experience induction programme was arranged 14 times around the world, with a total of some 400 employees participating. The purpose of this programme is to strengthen Cargotec's corporate culture and familiarise employees with the Company's global operations.
The Coaching to Success training programme for supervisors was launched during the year with the purpose of improving communication and infl uencing skills required in team management. The Leading the Move leadership training programme for middle and top management focuses on leadership, change and strategic business development.
The Sourcing Excellence training programme, promoting the implementation of Cargotec's common sourcing and purchasing strategy, continued during the year, covering almost all managers and key persons working in sourcing and purchasing. The Sales Academy training programme for sales personnel, previously implemented in Kalmar, was expanded to cover all business areas. Furthermore, the Sales Leadership Master Class, an advanced sales executive training programme, continued in cooperation with various companies and universities. Also, the Managerial Finance programme for executives with profi t responsibility was implemented in various parts of the world.
Cargotec applies an employee cooperation system that it has jointly developed and agreed on with its personnel. This system is based on statutory employee information and consultation requirements. At Cargotec, cooperation has been organised at corporate and location level. At its locations, cooperation is based on national legislation. Cooperation forums at corporate level include the Cargotec Personnel Meeting in Europe, which consists of 19 personnel representatives from 11 different countries, in addition to which the Cooperation Committee operates in Finland, and the Corporate Information Committee in Sweden. These forums, convening on an annual basis, are joint meetings for personnel representatives and management, while the working committees operating under the forums meet more frequently. In 2008, a higher than usual number of meetings were arranged for the various working committees, due to the change projects entailed in the On the Move programme. Active interaction promoted constructive collaboration and enhanced the possibilities of personnel to participate in corporate strategic planning and the implementation of strategy.
Cargotec aims to ensure safe working conditions for its employees. Cargotec's health and safety management is based on the Company's Code of Conduct, risk management and safety policies as well as unit-specifi c health and safety management systems, the aim being to minimise the number of industrial injuries by means of preventive measures. The Code of Conduct specifi es that each employee is responsible for protecting him or herself and his or her co-workers, workplace, community and environment. According to the Code, everyone must also report any defi ciencies in occupational health and safety and prevent possible damage or injuries.
Occupational health and safety issues were developed further through the standardisation of internal rules and regulations, and by arranging regular inspections and training sessions for personnel. Measures taken in 2008 included the initiation of the expansion of the OHSAS system to cover all of Cargotec's operative units in Finland. The system will be country-specifi c, and certifi ed under the name of the new Finnish legal entity, Cargotec Finland Oy.
2008 also saw the introduction of the reporting of occupational health and safety indicators in almost all manufacturing units. These key fi gures will provide comparable information on the occupational health and safety status of units, and the overall corporate-wide situation. Moreover, reporting will provide information on the reasons for accidents resulting in absence. This information will facilitate the more effective advancement of various units' safety operations, and promote cooperation between units.
In 2009, the strategic and operational support provided by Cargotec's HR management to business will be reinforced. Intensive support provided to On the Move development projects and change management will continue as country organisations are introduced in an increasing number of countries. In the reorganisation of the product supply structure, suffi cient personnel resources and expertise will be ensured. By defi ning leadership values and basic areas of expertise required for good management, alongside indicators of personnel wellbeing, leadership will be developed further while establishing a comprehensive basis for atmosphere and job satisfaction surveys to be implemented throughout the organisation.
The uniformity of position classifi cations throughout the organisation will be developed further while a strategy for a comprehensive employee compensation and incentive system will be defi ned. Methods of competence management, performance assessment and compensation will be integrated into a consistent process to motivate better performance and promote fair compensation.
Service engineers must have excellent skills for example in electronics, hydraulics and problemsolving. In order to secure its supply of qualifi ed service personnel, MacGREGOR launched a Service Academy training programme for students at the end of 2006, and in early 2008 this programme was expanded into a Cargotec-wide service training project.
Service engineers trained in the Cargotec Service Academy receive theoretical training in cooperation with various educational institutions. The students chosen for the programme have recently fi nished their university or other studies, or have gained a few years' experience in working life.
Depending on their previous experience, students complete three months of theoretical studies. The programme begins with them familiarising themselves with Cargotec and its products, and completing an intensive course in the English language. In the following stage of the programme, the trainees embark on theoretical studies in order to learn the basics of hydraulics, electronics, fl ame-cutting and electric welding, followed by a six-months practical on-the-job training period. The training also includes safety aspects related to working on vessels in ports and shipyards. After graduation, the aim is to place students in service positions within Cargotec.
So far, Service Academy programmes have been arranged in Shanghai, China, and in Manila, the Philippines, and Cargotec employs some 50 service engineers who have completed the programme.
Cargotec began the systematic development of its internal control in 2007. In Cargotec, internal control is charged with ensuring that management's decisions are implemented throughout the organisation, functions work effi ciently and the appropriate decisions are taken concerning business operations. In addition, it must ensure that risk management is adequate and that personnel adhere to the company's policies and external regulations and legislation.
Internal control involves securing an ethical and healthy corporate and management culture, policies, guidelines and clearly defi ned reporting and communications. Internal control systems are monitored regularly. Cargotec's Board of Directors approved the internal control policy in 2008.
Responsibility for internal control at Cargotec is divided into three tiers. Line management is primarily responsible for internal control. It is aided by corporate support functions, which defi ne policies and instruct on and supervise risk management. Internal and external audits form the third tier, their task being to ensure that the fi rst two tiers are functioning effectively.
Internal control does not have a separate reporting process; instead, its reporting is based on fi nancial reports, management reports, risk reports and internal audit reports.
Cargotec's risk management supports business operations and objectives by anticipating potential threats to the company's operations and by managing the risks they entail. This ensures that the set objectives can be achieved. A core principle is continuous, systematic and preventive action for identifying, assessing and handling risks and, if they materialise, treating them effectively.
Cargotec defi nes a risk as any internal or external threat or uncertainty which may prevent or jeopardise operations and the achievement of objectives. The scope of Cargotec's operations requires that it utilise comprehensive risk management, which encompasses business risk management, safety and hazard risk management, risk transfer and continuity management. These areas also include sustainable development perspectives, which are taken into consideration when developing risk management.
The objective of comprehensive risk management is the development and consistent use of systematic and practical risk management systems throughout the organisation and partner network. This produces analysed information on risks at various levels of business operations, allowing key risks to be managed effectively and constantly and risk management measures to be monitored as part of business management and decisionmaking. Comparative risk awareness enables the communication and reporting of risks and cooperation at different levels of the Company, in order to continuously enhance operations.
Cargotec's Board of Directors has approved the company's risk management policy, which defi nes the objectives, principles, activities and areas of responsibility of risk management. In addition, companies in the delivery chain must be familiar with Cargotec's risk management principles and practices and follow similar principles. Guidelines concerning risk management and instructions on self-assessment have been drafted for suppliers and subcontractors.
The President and CEO and the Executive Board are responsible for the methods, implementation and
Risks are identifi ed by forming a comprehensive view of events which originate from the internal and external environment of the business area or unit, and which can infl uence the achievement of the company's objectives.
Risks are assessed by estimating the consequences and probability of an adverse event, and evaluating the importance of the risk in question.
The evaluation of the risks enables the company to prioritise risks and target treatment actions effectively. Actions include avoiding, reducing, sharing, transferring and accepting risks in accordance with the company's risk tolerance.
Communicating and reporting risks information to the organisation.
Monitoring of changes in risks and of the execution of the treatment actions that have been decided upon.
Sharing and transferring risks under agreement or using insurance programmes.
supervision of risk management, and report on these to the Board of Directors. Cargotec's risk management is spread across business areas and units. Each unit is responsible for assigning responsibility for risk management and identifying, managing and reporting risks. Units develop their risk management procedures and train their personnel in accordance with development plans that have been drawn up.
The Corporate Risk Management function is responsible for the development of comprehensive risk management. This is supported by the creation of corporate-wide risk management principles, practices and risk reports, the development of tools and the application and adoption of these tools.
The Corporate Risk Management team is composed of the Corporate Risk Management Director and the persons responsible for risk management in the business areas. The Risk Management team continuously assesses the effi ciency of the risk management process, considers development needs, plans and measures and monitors their implementation. In 2008, cooperation with the corporate responsibility organisation was enhanced.
The Corporate Treasury function manages fi nancial risks centrally.
The Internal Audit unit operates under the supervision of the President and CEO and the Board of Directors' Audit Committee, reporting regularly to the Audit Committee on its operations and audit results. The goal of Cargotec's internal audit is to ensure that the Company's operations are effi cient and profi table, its business risk management is adequate and appropriate and the information it produces is reliable. The audit also ensures that instructions and operating principles are followed. The Internal Audit function inspects the operations of the Company's major subsidiaries and other units on a regular basis. It is also responsible for internal control and business risk auditing.
Cargotec divides risks into strategic and business risks, fi nancial risks and operational and hazard risks. The purpose of this classifi cation is to clarify the organisation of risks and handling procedures and the defi nition of responsibilities.
Strategic and business risks are related to business cycles in the world economy and Cargotec's customer sectors, the availability of raw materials and components and trends in the related prices, mergers and acquisitions and the operations of dealers and subcontractors. Cargotec addresses these risks by striving to identify them and prepare for them in advance. The
Company also prepares for them by signing long-term delivery agreements and seeking alternative suppliers. Since the share of outsourced production is signifi cant and suppliers are global, close cooperation with key suppliers (Vendor Management), audits and regular forecasts on the need for and availability of raw materials and components form an increasingly important means of managing delivery risks.
Cargotec's treasury operations and fi nancial risk management principles are defi ned in the Corporate Treasury Policy. The Company's fi nancial risks are centrally managed by the Corporate Treasury, which draws up fi nancial risk reports for Corporate Management and the Board of Directors on a regular basis. Financial risks arising from Cargotec's business activities include currency, interest rate, refi nancing and liquidity, counterparty and operative credit risks. The Company seeks to protect itself against these risks in order to ensure a fi nancially sound basis for developing its business operations. For a more detailed description of fi nancial risks, see Note 2 of the Financial Statements.
Operational risks relate to persons, property, processes, products, information technology and practices. The materialisation of such risks may lead to bodily injuries, property damage, business interruption or product liability claims. Cargotec's main activities related to the management of these risks are related fi rst and foremost to increasing product safety and information security and ensuring business continuity. With respect to key person risks, succession plans for leadership and key assignments are updated on an annual basis, for the purpose of ensuring continuity in operations.
Cargotec's main hazard risks include risks related to personnel, property, business interruptions and logistics. In addition to preventive risk management measures, the Company protects itself against these risks by taking out worldwide insurance policies that cover all units. The effi cient handling of accidents also forms an important part of hazard risk management.
Implementation of the Risk Management Process Cargotec's main principle is that risk management should take place systematically and as a continuous part of day-to-day business operations. The objective is that, in addition to reacting to problems, the Company moves towards a uniform and preventive way of working that systematically identifi es risks and in which correc-
tive measures are taken suffi ciently early. This entails that personnel are well trained in the risk management process, methods and tools.
Strategic risks are examined as part of the Company's strategic planning. The identifi cation and examination of operational risks takes place in connection with annual planning and forms a continuous part of normal business operations.
Manufacturing units may identify, assess, process and report key risks posing a threat of business interruption, using a tool intended for risk management. The tool also enables the creation of a summary of key risks threatening the continuity of the operations of a business area or the entire Company. This helps identify focal areas where risk management development measures can be directed.
Matters relating to product safety form part of the product development process. The underlying principle is to improve product safety and take the device safety point of view into account during a product's design stage.
With the purpose of improving and harmonising risk management, the level and profi tability of risk management is continuously assessed using the ISO systems, quality and environmental systems and health and safety systems of the Company's units. The units continued to enhance their systems in 2008. Operations are also assessed in management reviews.
The Corporate Risk Management function carries out audits of risk management levels within the units. These audits involve the inspection of risk management work carried out therein and the management of operational and hazard risks, as outlined in the risk chart. In addition, the Company carries out supplier audits and audits in connection with M&A and corporate restructuring transactions.
As Cargotec becomes more harmonised, its capabilities for the development and implementation of risk management will be further improved. The goal is that, besides general risk management principles and guidelines, Cargotec also has risk management tools that facilitate practical work and which are implemented throughout the Company. These tools will also enable consistent reporting and the creation of summary reports in order to form a better overall view.
During the year, Cargotec has developed a basic risk management tool, the application and adoption of which will be studied in the operations, business projects and risk reporting of the business units.
The increasing diversity of project operations is creating growing requirements for the management of risks which threaten projects. Cargotec is currently conducting a study using a business project model, in order to examine its various work stages and current practices. Based on the study, Cargotec will assess how operations can be fi ne-tuned in terms of risk management, and how tools and reports facilitating work can be developed in order to support decision-making and manage risks.
Information security has been enhanced by continuing information security inspections in units and service centres. Moreover, Cargotec has created guidelines for fi xing any defi ciencies detected. The corporate information security guidelines have been developed by drafting an up-to-date information security policy and a number of lower-level information security guidelines concerning information management and users. This work will be continued by creating even more detailed information security guidelines for the management of user IDs and user rights, for example. Efforts have been made to increase the general level of information security awareness among the entire personnel during introduction training, among other things. Several IT related measures have been implemented in order to increase the security of Cargotec's information network. A new e-mail system was introduced in 2008, in connection with which the information security of remote and mobile use has been improved.
The programme for the assessment and development of the level and procedures of risk management in manufacturing units, which was started in 2007, was continued in 2008. Almost all of the manufacturing units have been audited. The audits focused primarily on operational and hazard risks at business locations, which have been identified during risk charting. The units received a report of the audits, stating the overall risk management situation, risk areas in particular need of development and recommendations for measures to be taken. Based on these recommendations, some of the units have already created a detailed action plan that includes timetables, responsible persons and cost budgets. The standardised auditing concept enables the easy comparison and learning from others in support of continuous improvement. Key measures have been related to securing continuity in both external and internal dependencies, whether they concern a unit's own operations or supplier cooperation.
During 2008, the manufacturing units began the comprehensive reporting of environmental, occupational health and safety information indicators, the objective of which is to produce information in support of corporate risk management and sustainable development measures.
Several tools have been developed for the management of supplier risks, the adoption of which was begun in 2008. Criteria have been drawn up for Cargotec's supplier requirements in order to assess the capabilities of suppliers, ensure their level of know-how and minimise supplier risks. New suppliers are audited in accordance with these criteria and the competence of existing suppliers is enhanced. Procurement categories are managed using category strategies, and during their creation, risks related to materials and their markets are taken into account as a specifi c area of focus. Cargotec strives to minimise the quality, cost and availability risks of procured materials using ISO/TS 16949 based tools, the wide-scale introduction of which was started in the latter half of 2008. When negotiating procurement agreements, Cargotec aims, in addition to the aforementioned risks, to minimise supplier and product specifi c cost and currency exchange risks.
Guidelines concerning crisis management were supplemented in 2008 by issuing a policy and guidelines concerning communications in potential crisis situations. This policy complements existing guidelines on the reporting of serious accidents and the handling of accidents.
Key further measures in risk management will focus on the testing of tools developed by Cargotec in selected units, the processes of project deliveries, the management of key risks and the development of reporting.
PRINCIPLE 1: Businesses should support and respect the protection of internationally proclaimed human rights. PAGES: 26–30
PRINCIPLE 2: Businesses should make sure that they are not complicit in human rights abuses. PAGES: 27, 34–40
PRINCIPLE 3: Businesses should uphold the freedom of association and the effective recognition of the right to collective bargaining. PAGES: 27, 34–38
PRINCIPLE 4: Businesses should uphold the elimination of all forms of forced and compulsory labour. PAGES: 27, 38–40
PRINCIPLE 5: Businesses should uphold the effective abolition of child labour. PAGES: 27, 38–40
PRINCIPLE 6: Businesses should uphold the elimination of discrimination in respect of employment and occupation. PAGES: 27–28, 34–37
PRINCIPLE 7: Businesses should support a precautionary approach to environmental challenges. PAGES: 22–23, 27–28, 30–33, 38
PRINCIPLE 8: Businesses should undertake initiatives to promote greater environmental responsibility. PAGES: 22–23, 26–27, 31–32
PRINCIPLE 9: Businesses should encourage the development and diffusion of environmentally friendly technologies. PAGES: 22–23, 27, 30–33
PRINCIPLE 10: Businesses should work against corruption in all its forms, including extortion and bribery. PAGES: 27, 38–40, 49–50
Cargotec Corporation supports the ten principles of the UN Global Compact, which asks companies to embrace, support and enact, within their sphere of infl uence, a set of internationally defi ned core values in the areas of human rights, labour standards, the environment, and anti-corruption.
The table on left lists the ten principles of the UN Global Compact, and states where information on how Cargotec Corporation addresses these issues is included in this Cargotec Annual Report 2008.
Christian Lönnqvist works as a Manager in RORO Service Competence Centre in Gothenburg, Sweden.
Cargotec's objective is profi table growth in consolidating and emer ging markets. The Company serves the capital markets on a regular and equal basis, in support of the fair valuation of its shares.
CARGOTEC AS AN INVESTMENT
Cargotec Corporation's Annual General Meeting will be held at the Marina Congress Centre, Katajanokanlaituri 6, Helsinki, on Thursday, March 5, 2009 at 2 p.m.
Shareholders wishing to attend the meeting must be entered in the Cargotec shareholder register at the Euroclear Finland Ltd (formerly Finnish Central Securites Depository) by no later than the record date of the meeting, February 23, 2009. Shareholders must register for the AGM by 4 p.m. on March 2, 2009.
A shareholder whose shares are registered in his/her personal book-entry account at the Euroclear Finland is automatically registered in the Cargotec shareholder register. A nominee registered shareholder can be temporarily registered in the shareholder register for attending the Annual General Meeting and he/she is advised to request neces sary instructions regarding the registration and the issuing of proxy documents from his/her custodian bank.
Shareholders must register to attend the meeting by 4 p.m. on March 2, 2009 either:
Any proxies must be submitted in connection with registration for the meeting.
The Board of Directors will propose to the Annual General Meeting convening on March 5, 2009 that of the distributable profi t, a dividend of EUR 0.59 per class A share and EUR 0.60 per outstanding class B share be paid. Only those registered as shareholders at the Euroclear Finland by March 10, 2009, the record date for dividend distribution, are entitled to divi dends. The date proposed by the Board of Directors for the payment of dividends is March 17, 2009.
• February 2, 2009 Financial statements review 2008
(in pdf format on the internet)
period January–March 2009
period January–June 2009
period January–September 2009
Publication of Financials
Cargotec Corporation publishes its fi nancial reports and stock exchange and press releases in English and Finnish. The reports and releases are available on the Company's website at www.cargotec.com, where you can also request that the material be sent to your e-mail address. In addition, fi nancial reports can be ordered by mail from Cargotec Corporation, Investor Relations, P.O. Box 61, FI-00501 Helsinki, Finland, by e-mail from [email protected], by phone from +358 204 55 4284 or by fax from +358 204 55 4876. The Annual Report will be sent to all shareholders.
For changes in shareholder addresses, please contact the bank or brokerage managing the book-entry account.
The role of Cargotec's Investor Relations is to provide information on the Company as an investment and to serve Cargotec's shareholders and other capital market participants. The aim is to provide reliable and timely information regularly and equally in support of a fair valuation of the Company's shares. Cargotec does not conduct meetings with capital market representatives during the three weeks prior to the publication of fi nancial statements or interim reports.
Contact Information
Eeva Sipilä, CFO Tel. +358 204 55 4281 E-mail: [email protected]
Paula Liimatta, IR Manager Tel. +358 204 55 4634 E-mail: [email protected]
Tiina Aaltonen, Executive Assistant, IR Tel. +358 204 55 4284 E-mail: [email protected]
Information on analysts providing coverage on Cargotec is available on the Company's website at www.cargotec.com/investors.
Cargotec Corporation's ("Cargotec" or "Company") governance and management are based on the Finnish Limited Liability Companies Act and Securities Markets Act, the Company's Articles of Association and the rules and guidelines of NASDAQ OMX Helsinki Oy ("Helsinki Stock Exchange"). At Cargotec, the Company's shareholders at the Shareholders' Meeting exercise the highest decision-making power. The Company is managed by the Board of Directors and the President and CEO.
Cargotec complies with the insider guidelines of the Helsinki Stock Exchange. The Company has organised its governance in compliance with the Corporate Governance Recommendation for Listed Finnish Companies issued by the Helsinki Stock Exchange, the Central Chamber of Commerce, and the Federation of Finnish Industries, EK, which came into force on July 1, 2004. Changes in corporate governance exacted by the recommendations in the Securities Market Association's Finnish Corporate Governance Code, valid as of January 1, 2009, will be taken into account in the Company's corporate governance during the 2009 fi nancial period. The Corporate Governance Statement, as referred to in the Code, will be given as from the fi nancial statements for 2009.
The Shareholders' Meeting is convened by the Company's Board. According to the Articles of Association, the Annual General Meeting ("AGM") shall be held annually within three months after the closing of the fi nancial period, on a day designated by the Board. An Extraordinary Shareholders' Meeting in respect of specific matters shall be held when considered necessary by the Board, or when requested in writing by an auditor of the company or by shareholders representing at least 10 percent of all the issued shares of the company.
The issues decided on by the Shareholders' Meeting include the approval of the financial statements, distribution of profit, amendments to the Articles of Association, granting of release from liability to the members of the Board of Directors and to the President and CEO, the election of the members of the Board and auditor, and their remunerations.
The notice of the Shareholders' Meeting shall be published in at least two daily newspapers, decided upon by the Board and appearing in the Helsinki region, and on the Company's internet pages. The notice specifi es the matters to be considered by the meeting as well as the proposals made by the Board to the meeting. The shareholders must register for the meeting in the manner specifi ed in the notice.
The names of candidates for Cargotec's Board are published in connection with the notice of the Shareholders' Meeting, if the candidates have given their consent to their election and the proposal has been made by the Nomination and Compensation Committee of Cargotec's Board, or if the proposal is supported by shareholders representing at least
one-tenth of the total voting rights of the Company. The names of any candidates appointed after the notice has been issued will be published separately if the aforementioned conditions are met. Furthermore, the Board Audit Committee's proposal for the auditor will be published in a similar manner prior to the Shareholders' Meeting.
It is the Company's aim that all members of the Board and the President and CEO be present at the Shareholders' Meeting, and that a candidate standing for the Board for the fi rst time attend the Shareholders' Meeting deciding on the election unless he or she has a substantive reason to be absent.
A shareholder has the right to attend the Shareholders' Meeting if he or she has been entered into the register of shareholders at least ten days before the meeting and if the shareholder has declared to the Company his/her intention to attend in the manner specifi ed in the notice of the Shareholders' Meeting. A holder of nominee-registered shares can also attend the Shareholders' Meeting by registering him/herself in the register of shareholders and declaring to the company his/her intention to attend the meeting. A shareholder can attend the Shareholders' Meeting either in person or via a representative authorised by the shareholder. A shareholder has the right to raise issues for consideration by the Shareholders' Meeting if he or she so requests in a written notifi cation to the Board in good time for the matter to be included in the notice of the Shareholders' Meeting. In the Shareholders' Meeting, all shareholders have the right to raise questions and propose resolutions regarding issues on the agenda. A dividend will be paid to any shareholder who is registered in the Company's shareholder register on the record date of the dividend payment.
2008 The AGM, held on February 29, 2008, decided to amend the Company's articles of association mainly due to the Limited Liability Companies Act that entered into force in 2006.
Cargotec's Board includes a minimum of fi ve and a maximum of eight regular members, as well as a maximum of three deputy members. Board members are elected in the AGM for a term of offi ce that expires at the end of the fi rst AGM following the election. The Board elects the Chairman and Deputy Chairman from among its members. The majority of Board members shall be independent of the Company and signifi cant shareholders. During the election of Board members, due attention should be paid to ensuring that members mutually complement one another in terms of experience and expertise in the Company's line of business and its stage of development.
Cargotec's Board is responsible for the management and proper organisation of the Company's operations as well as representing the Company. The duties of the Board are determined on the basis of the Articles of Association and the Finnish Limited Liability Companies Act. The Board has compiled a written charter for its work that defi nes its main duties and operating principles.
In compliance with the charter, the Board convenes regularly seven times a year, and whenever necessary, by invitation of the Chairman. The Board's responsibilities include approving the Company's financial statements and interim reports, the supervision of accounting and the control of the Company's fi nancial matters, and preparing issues to be presented to the Shareholders' Meeting. The Board also decides on the Company's contributions, loans, and guarantees. The Board elects Cargotec's President and CEO and decides on the related terms of employment. Furthermore, the Board confi rms the Company's strategic plans and annual action plans as well as signifi cant acquisitions and investments and approves the Company's risk management principles.
The Board reviews its own performance and procedures once a year through internal self-assessment. Moreover, the Board conducts an annual assessment of the independence of its members.
2008 Cargotec's AGM confi rmed the number of members of the Board as six according to the proposal of the Nomination and Compensation Committee. Henrik Ehrnrooth, Tapio Hakakari, Ilkka Herlin, Peter Immonen and Karri Kaitue were re-elected as regular members of the Board, and Antti Lagerroos was elected as a new member.
At its organisational meeting, the Board elected Ilkka Herlin to continue as Chairman of the Board and Henrik Ehrnrooth to continue as Deputy Chairman. Kari Heinistö, SEVP, acts as Board secretary.
The members of the Board are independent of the Company and, with the exception of Ilkka Herlin, also independent of significant shareholders in the Company. Ilkka Herlin, Chairman of the Board, is one of the largest owners of Cargotec, holding over 20 percent of the votes and over 10 percent of the shares of the Company.
The Board members are presented on pages 54–55 and their shareholdings on December 31, 2008 on page 51 of this Annual Report. Up-to-date information on the shares and option rights held by Board and management is available on Cargotec's website at www.cargotec.com/investors.
Cargotec's Board convened 9 times during 2008 with an average attendance rate of 96 percent.
Three committees assist Cargotec's Board in its work: the Audit Committee, the Nomination and Compensation Committee, and the Working Committee. The Board elects the members and Chairman of the committees from among its members and confi rms the committees' charters. The committees have no autonomous decision-making power. They prepare minutes of their meetings and report to the Board on a regular basis.
The purpose of the Audit Committee is to assist the Board in fulfi lling its responsibility to oversee the management's conduct of the Company's fi nancial reporting process. The Audit Committee directs and supervises internal auditing within the Company in accordance with its charter by, among other activities, assessing the adequacy and appropriateness of the Company's internal control and risk management as well as handling internal audit plans and reports. Furthermore, the Committee prepares a proposal to the AGM regarding the election and fees of the external auditor(s), defi nes and monitors the non-audit services purchased from the auditing fi rm in order to avoid jeopardising the auditors' independence and, alongside the auditor, reviews the fi nancial statements and at least one interim report before their submission to the Board. The Audit Committee meetings are attended by the members, the secretary to the Committee, the Company's Director of Internal Audit, the President and CEO, and the representatives of the auditing fi rm. The Committee convenes without the presence of the Company's management if the matters to be dealt with so require. The Audit Committee consists of a minimum of three Board members.
2008 Karri Kaitue acted as the chairman of the Audit Committee, while Ilkka Herlin and until Feb 29, 2008 Peter Immonen and Antti Lagerroos as of Feb 29, 2008 acted as members of the Committee. Committee members are independent of the Company and, with the exception of Ilkka Herlin, independent of signifi cant shareholders in the Company. Committee members possess years of experience in business management duties. The Committee convened 4 times during the fi nancial period, and Committee members' attendance rate in meetings was 100 percent.
The task of the Nomination and Compensation Committee is to prepare a proposal to Cargotec's AGM concerning the composition and remuneration of the Board. Furthermore, the Committee prepares a proposal to the Board regarding the appointment of the President and CEO and the terms of employment. It is also the Committee's duty to ensure that the resourcing of the Company management is appropriate and that their salary and other terms are competitive. Management here refers to the President and CEO, the Executive Board, and persons reporting primarily to members of the Executive Board. The Nomination and Compensation Committee confi rms the appointment of Company management members and considers, principally once a year, their salary adjustments, bonus principles, bonuses earned, and succession planning. Furthermore, the Committee's tasks include preparing and presenting to the Board stock option, share, and other employee incentive programmes as well as preparing proposals concerning the Company's voluntary pension schemes. The Nomination and Compensation Committee consists of a minimum of three Board members. The Committee convenes as needed but at least three times a year.
2008 Ilkka Herlin acted as chairman of the Nomination and Compensation Committee, while Henrik Ehrnrooth, Tapio Hakakari and Peter Immonen acted as members of the Committee. Committee members are independent of the Company. The Committee convened 5 times during the financial period, and Committee members' average attendance rate in meetings was 85 percent.
The tasks of the Working Committee are to monitor the Company's fi nancial status, prepare strategic issues for consideration by the Board and monitor their implementation. The Working Committee consists of a minimum of three Board members.
2008 Ilkka Herlin acted as chairman of the Working Committee, with Tapio Hakakari and Peter Immonen as members. Committee members are independent of the Company. The Committee convened 11 times during the fi nancial period, and Committee members' attendance rate in meetings was 100 percent.
The Board elects Cargotec's President and CEO and determines the related terms of employment. Mikael Mäkinen has been Cargotec's President and CEO since 2006.
The President and CEO is responsible for ensuring that the targets, plans, guidelines and goals set by the Board are carried out within Cargotec. The President and CEO also ensures that the accounting practices of the Company comply with the law and that fi nancial
Cargotec's Board of Directors' direct share and option holdings and holdings of controlled corporations on December 31, 2008 as well as changes during the Financial year
| Class A shares |
Change | Class B shares |
Change | 2005A options |
Change | 2005B options |
Change | |
|---|---|---|---|---|---|---|---|---|
| Ilkka Herlin | 2,940,067 | 4,550,000 | 189,000 | |||||
| Henrik Ehrnrooth | 60,000 | |||||||
| Tapio Hakakari | 152,000 | 51,100 | ||||||
| Peter Immonen | 48,000 | 14,000 | ||||||
| Karri Kaitue | ||||||||
| Antti Lagerroos* |
* Member of the Board of Directors as of Feb 29, 2008
Cargotec's Executive Board's direct shareholdings, option holdings and holdings of Moving Cargo Oy, a company jointly-owned by the Executive Board, on December 31, 2008 as well as changes during the Financial year
| Class A shares |
Change | Class B shares |
Change | 2005A options |
Change | 2005B options |
Change | |
|---|---|---|---|---|---|---|---|---|
| Mikael Mäkinen | 11,000 | 1,000 | ||||||
| Pekka Vauramo | ||||||||
| Kari Heinistö | 14,000 | 6,000 | 0 | -1,000 | 0 | -1,000 | ||
| Lauri Björklund* | 300 | 300 | ||||||
| Harald de Graaf | 9,500 | |||||||
| Olli Isotalo | 0 | -1,360 | ||||||
| Axel Leijonhufvud** | ||||||||
| Kirsi Nuotto | ||||||||
| Eeva Sipilä | 5,600 | |||||||
| Matti Sommarberg | ||||||||
| Pekka Vartiainen | 11,000 | 3,000 | 0 | -1,000 | ||||
| Moving Cargo Oy | 226,694 | 142,340 | 0 | -5,500 |
* Member of the Executive Board until Dec 31, 2008
** Member of the Executive Board as of Jan 1, 2009
matters are handled in a reliable manner. The employment terms of the President and CEO are defi ned in a written employment contract.
Cargotec's Executive Board comprises the President and CEO, senior executive vice presidents, presidents of business areas, CFO, and senior vice presidents in charge of human resources, supply and operations development, i.e. a total of ten members. The Executive Board monitors business development, initiates actions, and defi nes operative principles in accordance with guidelines set by the Board. Chaired by the President and CEO, the Executive Board convenes every month and whenever necessary.
The President and CEO and other members of the Executive Board are presented on pages 56–57 of this Annual Report. Their share and option holdings on December 31, 2008 are presented on page 51 of this Annual Report while up-to-date information on these holdings is available on the Company's website at www.cargotec.com/investors.
2008 On Feb 1, 2008, Cargotec's SEVP Kari Heinistö was appointed to lead the On the Move change programme. Eeva Sipilä was appointed Cargotec's CFO as of Feb 1, 2008. Pekka Vauramo was appointed as Deputy to CEO Mikael Mäkinen as of Dec 18, 2008. In addition, Axel Leijonhufvud was appointed as of Jan 1, 2009 as SVP, Product Supply.
The Shareholders' Meeting decides on the remuneration of members of the Board. Board members are not included in the Company's share-related remuneration schemes.
The Board decides on the remunerations, incentive payments, and other benefi ts of the President and CEO and the Executive Board on the basis of a proposal made by the Nomination and Compensation Committee. Compensation for the Executive Board comprises a fi xed base salary and a bonus, which is based on the achievement of Cargotec's fi nancial and personal targets. For the President and CEO, the maximum annual bonus is 60 percent of the annual salary, and for other members of the Executive Board, 33–50 percent.
Executive Board members are covered by Cargotec's share-based incentive programme for key managers for the period 2007–2011. Potential rewards from the incentive programme are based on achievement of fi ve-year sales and operating income targets as defi ned in Cargotec's strategy. The rewards will be paid during 2009–2012, partly in class B shares and partly in cash. The cash portion is dedicated to covering possible taxes and tax-related payments resulting from the reward.
Shares distributed as a reward will include a prohibition on handing over or selling the shares within one year of the end of any earnings period, with the exception of the fi nal earnings period when no prohibitions are included. The maximum amount to be paid out as shares is 387,500 class B shares currently held by the Company as treasury shares.
The period of notice of the President and CEO is six months and he has the right to compensation for termination of employment of 12 months' salary. He is entitled to a statutory pension. Other members of the Executive Board have a period of notice of 6–12 months and are entitled to compensation for termination of employment corresponding to 6–12 months' salary. One member is entitled to retire at the age of 60. In this case, the pension received corresponds to 60 percent of the total average annual salary excluding share incentive programmes in the last ten full years of service. This arrangement has been covered with insurances taken out by the Company.
2008 The AGM decided to keep the remunerations of the Board at the previous year's level. The monthly remuneration was EUR 5,000 for the Chairman, EUR 3,500 for the Deputy Chairman and EUR 2,500 for the other Board members. In addition, a remuneration of EUR 500 was paid for attendance of the meetings of the Board and its committees. Expenses were compensated against an invoice. In 2008, a total of EUR 274,520 was paid in Board remunerations.
The salaries, bonuses and other monies paid to members of the Board, the President and CEO, and the Deputy to CEO during the fi nancial period were EUR 1,514,009. For a more detailed specifi cation of the salaries and remunerations paid to these persons, see Note 32 of the Financial Statements.
The base salary of Cargotec's President and CEO Mikael Mäkinen for the financial year 2008 was EUR 532,958 including benefits. Mäkinen's bonus paid during 2008 was EUR 239,118. He is included in the Company's top management share-based incentive scheme.
The loans Cargotec has granted to Moving Cargo Oy, a company jointly-owned by the Executive Board for the fi nancing of a top management incentive programme, totalled EUR 3.5 million on December 31, 2008. Cargotec has not granted other special benefi ts nor made other corresponding arrangements with parties belonging to its inner circle. For further information on the terms of the loan, see Note 32.
The statutory external audit includes control of accounting, fi nancial statements, and administration for the financial period. In addition to the auditors' report issued annually, the auditors report to the Board on their auditing observations on a regular basis. Cargotec's fi nancial period is the calendar year.
According to the Articles of Association, the Company shall have at least one and a maximum of three auditors. The Auditors shall be authorised public accountants.
The auditors are elected annually by the AGM and their assignment expires at the end of the fi rst AGM following the election. PricewaterhouseCoopers Oy has acted as Cargotec's auditor since the beginning of the company's fi rst fi nancial period, June 1, 2005. Auditors' fees are compensated against an invoice.
2008 The AGM elected authorised public accountants Johan Kronberg and PricewaterhouseCoopers Oy as Cargotec's auditors according to the proposal of the Audit Committee of Cargotec's Board. PricewaterhouseCoopers nominated Authorised Public Accountant Jouko Malinen as its principal auditor.
For the financial period, Cargotec companies' audit fees totalled EUR 2.3 (2007: 2.5) million, while EUR 1.5 (2007: 1.9) million was paid in non-audit fees to the auditing firm.
The Company's internal audit, risks and risk management alongside internal control are described on pages 38–42 of this Annual Report. Financial risks are specifi ed in Note 2 of the Financial Statements.
The Code of Conduct, approved and adopted by Cargotec's Board, determines how Cargotec personnel are expected to behave in their daily work, internally with their colleagues, and externally with customers and other stakeholders. The Code explains Cargotec's role as a responsible member of the local and global communities of which the Company forms a part. The Code of Conduct is available on the Company's website at www.cargotec.com/about Cargotec, under the section Sustainable Development.
Cargotec applies the insider guidelines of the Helsinki Stock Exchange, in addition to which the Board has approved internal insider guidelines that are based on the Stock Exchange guidelines.
In compliance with the Finnish Securities Markets Act, Cargotec's permanent public insider register comprises, due to their positions, the members of the Board, the President and CEO, the auditors, and members of the Executive Board. Persons employed by the Company who, on account of their position or duties, have
regular access to insider information, form Cargotec's permanent company-specifi c group of insiders. Those persons who, on the basis of an employment or other contract, work for the Company and obtain insider information associated with a specific project, are considered the Company's project-specific insiders. In addition to the public insider register, the Company maintains a permanent company-specifi c insider register and the project-specifi c insider register in the Euroclear Finland's (formerly Finnish Central Securities Depository) SIRE system.
Permanent insiders are prohibited from trading in Cargotec's securities for 21 days prior to the publication of Cargotec's interim reports or fi nancial statement releases. Project-specifi c insiders are prohibited from trading in the Company's securities until the project concerned has been cancelled or disclosed. Cargotec's Legal Department is responsible for adherence to insider guidelines and for monitoring the duty to declare as well as the maintenance of insider registers.
Cargotec keeps in touch with its stakeholders by means of open communication and dialogue while attending to its stakeholder relations in a sincere, impartial and confi dential manner. However, the rules of the Stock Exchange may restrict communications in various ways.
Continuously updated information on Cargotec is available on the Company's website at www.cargotec.com. Stock exchange releases and press releases are available on the Company's website immediately after they have been published.
Ph.D.
Board member since July 12, 2005 Chairman of Nomination and Compensation Committee and Working Committee Member of Audit Committee
Chairman of the Board of Directors of Wipunen varainhallinta oy and the Foundation for a Living Baltic Sea
Member of the Board of Directors of D-sijoitus Oy, Mariatorp Oy, WIP Asset Management Ltd and Finnish Foundation for Share Promotion
Chairman of the Board of Directors of WIP Asset Management Ltd, 2000–2005 Member of the Board of Directors of KONE Corporation, 1990–2000
Managing Director of Security Trading Oy, 1987–2000
M.Sc. (Forest Economics), B.Sc. (Econ.)
Independent member
Board member since July 12, 2005 Member of Nomination and Compensation Committee
Chairman of the Board of Directors of Pöyry Plc Member of the Board of Directors of Oy Forcit Ab and Otava Books and Magazines Group Ltd
Vice Chairman of the Board of Directors of Pöyry Plc, 1997–2003
Executive Board Member of the Pöyry Group, 1996–1997 Chairman of the Board of Directors of Jaakko Pöyry Holding Oy, 1995
Vice Chairman of the Board of Directors of Finvest Plc, 1995–1998
Chief Executive Officer of the Pöyry Group, 1986–1995 President of PEN, Pöyry & Nokia Advanced Engineering, 1984–1985 Employed by the Pöyry Group, 1979–
Master of Laws
Independent member
Board member since July 12, 2005 Member of Nomination and Compensation Committee and Working Committee
Chairman of the Board of Directors of Enfo Oyj and Esperi Care Oy, Member of the Board of Directors of Etteplan Oyj, Martela Oyj and Havator Holding Oy
Director, Secretary to the Board of Directors of KONE Corporation, 1998–2006 Director Administration of KCI Konecranes Plc, 1994–1998 Worked for KONE Corporation, 1983–1994
M.Sc. (Econ.)
Independent member
Board member since July 12, 2005 Member of Nomination and Compensation Committee and Working Committee
Chairman of the Board of Directors of WIP Asset Management Oy
Vice Chairman of the Board of Directors of the Foundation for a Living Baltic Sea
Member of the Board of Directors of Mariatorp Oy, Wipunen varainhallinta oy and the Finnish Shareholders Association
LL. Lic.
Independent member
Board member since July 12, 2005 Chairman of Audit Committee
Vice Chairman of the Board of Directors of Okmetic Group and Outotec Oyj
Employed by Outokumpu Group since 1990: Deputy Chief Executive Officer of Outokumpu Group and Vice Chairman of the Group Executive Committee
LL.Lic.
Independent member
Board member since February 29, 2008 Member of Audit Committee
Chairman of the Board of Wärtsilä Corporation since 2003 Member of the Board of Wärtsilä Corporation since 2002
Member of the Supervisory Board of Ilmarinen Mutual Pension Insurance Company since 1996
President & CEO and Member of the Board of Finnlines Plc 1990–2007 Employed by Nokia Corporation 1984–1990
President and CEO, M.Sc. (Eng.) Naval Architect
Employed by Cargotec Corporation since 2006
Employed by Wärtsilä Corporation 1982–2006: Group Vice President, Ship Power, 1999–2006 Managing Director, Wärtsilä NSD Singapore, 1997–1998 Vice President, Marine, Wärtsilä SACM Diesel, 1992–1997
Member of the Board of Directors of Glaston Corporation, Volvo Penta AB and Technology Industries of Finland. As of Jan 1, 2009 Member of the Board of Directors of ICC Finland and Deputy Chairman of the Board of Directors of Finpro
Senior Executive Vice President, M.Sc. (Econ.)
Employed by Cargotec Corporation since 1983
Chief Financial Officer, Cargotec Corporation, 1993–2000
Member of the Board of Directors of Suomen Autoteollisuus Oy, Deputy Charmain of Association of Finnish Deference and Aerospace Industries, Member of the Board of Directors of Scout Foundation
CFO, M.Sc. (Econ.), CEFA
Employed by Cargotec Corporation since 2005
SVP, IR & Communications, Cargotec Corporation, 2005–January 2008 VP, Investor Relations, Metso Corporation, 2002–2005 Equity Analyst, Mandatum Stockbrokers Ltd (Sampo Bank plc),1999–2002
(b. 1956) President, Hiab Business Area
M.Sc. (Eng.) Employed by Cargotec
Corporation since 2003
Employed by ESAB Corporation 1983–2003: Regional Director, Scandinavia, 2000–2003 President, Oy ESAB, 1998–2003 President, ESAB Nederland B.V., 1995–1998
Senior Executive Vice President, Deputy to CEO
President, Kalmar Business Area M.Sc. (Mining)
Employed by Cargotec Corporation since 2007
Employed by Sandvik 1985–2007: President of the Underground Hard Rock Mining division of Sandvik Mining and Construction (SMC) and member of SMC management team Sandvik Country Manager in Finland, 2005–2007 President of TORO Loaders division of SMC, 2003–2005 President of Drills division of SMC, 2001–2003
President, MacGREGOR Business Area M.Sc. (Eng.)
Employed by Cargotec Corporation since 1993
President, Bromma Conquip AB, 2003–2006 Managing Director, Velsa Oy, 1999–2002 VP, Technology and Production Development, Kalmar Industries AB, 1997–1999
Cargotec Services, B.Sc. (Eng)
Employed by Cargotec Corporation since 2006
Employed by KONE Corporation 1987–2006: Managing Director, KONE Ireland Ltd., 2004–2006 Vice President Marketing, New Equipment Business, 2000–2004 Product Marketing Manager, 1997–2000
engineering) Employed by Cargotec
Vice President Product Supply, Kalmar, 2007–2008 Vice President Components, Ruukki Engineering, Sweden, 2005–2006 CEO, Weibulls group, 2000–2005 Managing Director, Weibulls Sweden AB, 1996–2000 Production Manager, Saint-Gobain Isover AB, Sweden, 1995–1996
(b. 1959)
Senior Vice President, Human Resources, M.A. (French, Communications)
Employed by Cargotec Corporation since 2006
Employed by GlaxoSmithKline Finland 2001–2006: Human Resources and Customer Education Director, 2006 Human Resources and Communications Director, 2004–2005 Human Resources Director, 2001–2004 Director, Global Education, Datex-Ohmeda, 1998–2001
Senior Vice President, Operations Development, M.Sc. (Eng.), M.Sc. (Econ.)
Employed by Cargotec Corporation since 1985
Vice President, Business and Operations Development, Kalmar, 1998–2006 Senior Vice President, EMEA, Sisu Terminal Systems, 1997 Senior Vice President, MHE Business, Sisu Terminal Systems, 1994–1996
Current key positions of trust:
Member of the Board of Directors of FIMECC Oy
| BOARD OF DIRECTORS' REPORT 59 | ||
|---|---|---|
| Consolidated Income Statement 69 | |
|---|---|
| Consolidated Balance Sheet 70 | |
| Consolidated Statement | |
| of Changes in Equity 72 | |
| Consolidated Cash Flow Statement 73 |
| 1. | Accounting Principles for the | |
|---|---|---|
| Consolidated Financial Statements 74 | ||
| 2. | Financial Risk Management 81 | |
| 3. | Segment Information 85 | |
| 4. | Acquisitions and Disposals 89 | |
| 5. | Percentage of Completion Method 91 | |
| 6. | Other Operating Income and Expenses 92 | |
| 7. | Restructuring costs 92 | |
| 8. | Personnel Expenses 93 | |
| 9. | Depreciation, Amortisation | |
| and Impairment Charges 93 | ||
| 10. | Financing Income and Expenses 94 | |
| 11 | Income Taxes 95 | |
| 12. | Earnings per Share 96 | |
| 13. | Goodwill 97 | |
| 14. | Other Intangible Assets 98 | |
| 15. | Property, Plant and Equipment 99 | |
| 16. | Investments in Associated Companies | |
| and Joint Ventures 102 | ||
| 17. | Non-current Available-for-sale | |
| Investments 103 | ||
| 18. | Deferred Tax Assets and Liabilities 103 | |
| 19. | Inventories 104 | |
| 20. | Financial Instruments by Category 105 | |
| 21. | Accounts Receivable and Other | |
| Non-interest-bearing Receivables 107 | ||
| 22. | Cash and Cash Equivalents 107 | |
| 23. | Equity 108 | |
| 24. | Share-based Payments 109 | |
| 25. | Interest-bearing Liabilities 111 | |
| 26. | Employee Benefi ts 113 | |
| 27. | Provisions 115 | |
| 28. | Accounts Payable and Other | |
| Non-interest-bearing Liabilities 116 | ||
| 29. | Commitments 116 | |
| 30. | Derivatives 117 | |
| 31. | Group as Lessor 118 | |
|---|---|---|
| 32. | Related-party Transactions 118 | |
| 33. | Principal Subsidiaries on Dec 31, 2008 119 |
| Parent Company Income Statement 123 | |
|---|---|
| Parent Company Balance Sheet 124 | |
| Parent Company Cash Flow Statement 126 |
| 1. | Accounting Principles for the | |
|---|---|---|
| Parent Company Financial Statements 127 | ||
| 2. | Personnel Expenses 128 | |
| 3. | Depreciation and Amortisation 128 | |
| 4. | Other Operating Income 128 | |
| 5. | Other Operating Expenses 129 | |
| 6. | Financing Income from | |
| Group Companies 129 | ||
| 7. | Extraordinary Items 130 | |
| 8. | Income Taxes 130 | |
| 9. | Intangible Assets 130 | |
| 10. | Tangible Assets 131 | |
| 11. Shares and Participations 132 | ||
| 12. Receivables from Group Companies 133 | ||
| 13. Deferred Assets from External Parties 133 | ||
| 14. Equity 133 | ||
| 15. Long-term Debt 134 | ||
| 16. Liabilities to Group Companies 134 | ||
| 17. Accruals to External Parties 134 | ||
| 18. Commitments 135 | ||
| 19. Derivatives 135 | ||
| Key Financial Figures 136 | |
|---|---|
| Share-related Key Figures 137 | |
| Calculation of Key Figures 138 | |
| SHARES AND SHAREHOLDERS 139 | |
| SIGNATURES FOR BOARD OF DIRECTORS' REPORT AND FINANCIAL STATEMENTS 143 |
|
AUDITORS' REPORT .................................... 144
The markets for load handling equipment were strong in Europe for the fi rst part of the year but weakened signifi cantly during the second half as a result of a general slowdown in construction-related customer segments. In the United States, demand for load handling equipment was slack throughout the year. However, there are opportunities in government business as various countries are looking for ways to boost economic growth. In Asia Pacifi c, growth remained healthy, with the exception of Japan.
The markets for container handling equipment remained healthy until the last quarter, during which the economic uncertainty began to be refl ected in customers' investment decisions. The markets for reachstackers, straddle carriers and rubber-tyred gantry (RTG) cranes were active. Demand for medium and light fork lift trucks as well as terminal tractors in mature markets slackened towards the end of the year. Port operators' interest in automation continued with several automation projects in simulation and planning phase.
The markets for marine cargo fl ow systems and offshore solutions were strong throughout the year, which can be seen in the high number of orders received. However, the turbulence in the fi nancial markets and lower ship capacity utilisation slowed down new ship orders towards the end of the year. Market uncertainty was increased by speculation relating to cancellations of already placed ship orders.
Demand for services remained favourable, the economic downturn having no signifi cant effect on activity. Customers are increasingly interested in improving their operational fl exibility. In emerging markets, high usage rates of equipment supported demand for services. Service demand in Europe was healthy. In the US, weak economic environment affected demand for services.
Orders received in 2008 totalled EUR 3,769 (4,106) million. Especially, the boom in shipbuilding boosted the orders received by MacGREGOR during January–September. The value of orders secured by Cargotec during the fourth quarter was down to EUR 633 (1,214) million refl ecting the sharply increased economic uncertainty.
Of total orders received, Hiab accounted for EUR 818 (985) million while its share of orders received in October–December was EUR 157 (254) million. Major part of the orders Hiab secured were small individual orders, which is typical of its operations. Orders received have declined as a result of a drop in demand in construction-related customer segments in the US and also in Europe during the second half of the year.
During the fourth quarter, Hiab received an order for over
EUR 16 million from the Iraqi Ministry of Electricity. This order includes 95 loader cranes and cargo bodies assembled on trucks. Most of the deliveries will take place during 2009. In addition, Hiab received an order for 21 hooklifts and 9 loader cranes from the Finnish Army and an order for 100 demountables and 20 loader cranes to be installed by Hiab from the Dutch Fire Brigade and Highway Police.
In September, Hiab received a signifi cant order from BAE Systems Inc. in the US for 428 loader cranes and 32 hooklifts. Delivery of the equipment started during the fourth quarter of 2008, with most of the deliveries taking place during 2009.
During the second quarter, Hiab booked an order for 90 demountables to be delivered to the United Kingdom's Ministry of Defence. Furthermore, Hiab delivered demountables and deep waste collection units to the Olympic Village in Beijing, China.
Of total orders received, Kalmar accounted for EUR 1,566 (1,429) million while its share of orders received in October–December was EUR 348 (346) million. Several orders include navigation, container position verifi cation and remote monitoring systems developed by Kalmar. Order intake for reachstackers was on a record high level during 2008.
During the fourth quarter, Kalmar was awarded a new fi ve-year contract to supply Rough Terrain Container Handlers (RTCH) to the US Department of Defence. This new contract was awarded by the Tank-Automotive Armament Command (TACOM) and is structured to have multiple delivery order releases over the term of the contract. The value of the initial delivery orders will be around EUR 100 million and the equipment will be delivered during 2009–2010. The total value of the fi ve-year contract is estimated to be over EUR 300 million.
During the second half, Kalmar additionally received several orders for E-One+ rubber-tyred gantry cranes (RTG), straddle carriers and terminal tractors. During the fi rst half of 2009, four E-One+ rubber-tyred gantry cranes (RTG) will be delivered to the Evyap Port in Turkey and during the third quarter, two E-One+ rubber-tyred gantry cranes (RTG) to the Port of Koper's container terminal in Slovenia, eight to the Port of Kumport in Turkey and four to the Port of Livorno, Italy.
Orders for straddle carries were received from the United Kingdom, Greece and Australia. Two of the 15 straddle carries being delivered to DP World Southampton and one of the six being delivered to Tilbury Container Services during the fi rst half of 2009 will be fi tted with Kalmar's new hybrid technology, while the remainder are capable of being upgraded to hybrids in the future. During
the fi rst half of 2009, an additional 10 straddle carriers will be delivered to the Piraeus Port Authority in Greece. Four new automatic straddle carriers will be brought into service at the Fisherman Islands container terminal in Brisbane, Australia by September 2009. Some 42 terminal tractors were delivered to the Port of Salalah in Oman by the end of 2008.
During the third quarter, Kalmar booked a signifi cant order for E-One+ rubber-tyred gantry cranes (RTG) from South Africa. A total of 32 RTGs will be delivered to Transnet Port Terminals in Cape Town, South Africa starting in the summer of 2009 with the last units arriving in autumn 2010.
During the fi nancial period, Kalmar also received an order of seven E-One+ rubber-tyred gantry cranes (RTG) and 10 reachstackers from Indian Arshiya International. The delivery of this equipment started at the end of 2008.
In June, Kalmar received an order for 30 terminal tractors, seven E-One+ rubber-tyred gantry cranes (RTG) and fi ve reachstackers from Sociedad Portuaria Regional de Cartagena (SPRC) of Colombia. This equipment will operate at SPRC's new Contecar terminal in Cartagena. The smaller equipment has been delivered and the RTGs will be operational by May 2009.
In May, Kalmar received an order for 30 straddle carriers from Transnet Port Terminals (TPT) of South Africa. The deliveries to TPT's container terminal in the Port of Durban began in the summer, with the fi nal units arriving in January 2009.
In March, Kalmar received an order for 48 EDRIVE® straddle carriers for Eurogate's operations in Germany. A total of 22 units have been ordered for Eurogate's CTB Bremerhaven container terminal, and 13 units will go to Eurogate's CTH Hamburg. Another 13 units will be deployed at the MSC Gate Bremerhaven terminal, a joint venture between Eurogate and Mediterranean Shipping Company. Equipment deliveries began in the autumn with the last units arriving at the beginning of 2009. In addition, Kalmar provided Steveco Oy with ten Kalmar EDRIVE® straddle carriers for the Mussalo container terminal in Kotka, Finland.
During the fi rst quarter, Kalmar received E-One+ rubber-tyred gantry crane (RTG) orders from, for example, Vietnam, Thailand, India, Brazil and Morocco. Kalmar will deliver 17 of these cranes to Vietnam International Container Terminals' Ho Chi Minh City facility between 2008 and 2010. LCMT Company Ltd. from Thailand ordered six RTGs for its terminal at the Port of Laem Chabang. The cranes are due to for delivery by March 2009. Kalmar will also deliver 11 RTGs to Gateway Terminals India at Nhava Sheva in January 2009. South America's largest container terminal operator, Santos Brasil S/A, ordered 12 RTGs for delivery by March 2009. Furthermore, Somaport operating in the port of Casablanca, Morocco, ordered ten RTGs to be delivered in early 2009.
In February, Kalmar received an order for 22 E-One+ rubber-tyred gantry cranes (RTGs) from South African
Transnet Limited. This equipment will be delivered in 2008–2009 for the new Port of Ngqura. In February, Kalmar also secured an order from the Port of Tacoma on the US West Coast for the supply of seven straddle carriers. These will be used in container handling in on-dock rail facilities and will be equipped with Kalmar's monitoring system, speeding up their operation. The machines were delivered during the second half of 2008.
Of total orders received, MacGREGOR accounted for EUR 1,393 (1,696) million while its share of orders received in October–December was EUR 129 (616) million. The drop in orders received during the fourth quarter refl ected the exceptional shipbuilding boom of the past couple of years clearly slowing down. Also the global economic slowdown at the end of the year created a situation of overcapacity in many ship types, which has lead ship owners to reconsider their investment plans.
During the fourth quarter, MacGREGOR received orders worth nearly EUR 30 million from China for ten shipsets of cranes, hatch covers and fi xed container fi ttings. This equipment will be delivered in 2010–2011.
During the third quarter, MacGREGOR received signifi cant hatch cover, ship crane and RoRo equipment orders from Korea, Singapore, China and Japan. Hatch covers will be delivered for 39 container ships. An order of new ship cranes and hatch covers for four heavy-lift vessels was received from Singapore. RoRo equipment and hoistable car decks will be delivered for 16 pure car/truck carriers in 2009–2011.
In August, the Offshore division received a major order for two active heave compensated offshore cranes from Finnish Finstaship. The cranes will delivered during the second half of 2010.
During the second quarter, MacGREGOR obtained extensive hatch cover and RoRo equipment orders, mainly from Korea and Japan. The hatch cover orders are for a large number of container and bulk vessels to be delivered in 2009–2012. The RoRo equipment orders include the design and manufacture of RoRo equipment as well as hoistable car decks for four deep-sea ConRos (vessels carrying both container and RoRo cargo). The equipment will be delivered in 2010–2011.
In June, MacGREGOR signed a contract to supply selfloading and unloading cement handling systems for three cement carriers. Deliveries of the systems will begin during summer 2009.
In May, the Offshore division received a crane order from the US-based Edison Chouest Offshore. The cranes will be delivered by the fi rst quarter of 2009. Furthermore, a large number of orders were received, in particular for davits, for delivery during 2008–2009.
During the fi rst quarter, MacGREGOR received a large number of ship crane and hatch cover orders, mainly
from China and Korea. MacGREGOR will deliver a total of 276 bulk handling cranes for vessels, to be delivered to ship owners in Germany, Singapore, China and Korea. MacGREGOR also agreed to deliver hatch covers for 70 container vessels, 120 bulk vessels and 41 general cargo ships. The equipment will be delivered in 2009–2011.
In March, MacGREGOR received a major bulk handling equipment order from the Taiwan Power Company for coalhandling equipment. MacGREGOR's Siwertell bulk handling system features a totally closed conveying system that limits the amount of cargo dust released into the air.
In March, MacGREGOR also received an order for 30 shipsets of tanker cranes for a Chinese shipyard. Provision and hose handling cranes will be delivered in 2008–2010 for tankers ordered by Turkish, Norwegian, Russian and Cypriot ship owners.
In January, MacGREGOR received RoRo equipment orders for 12 pure car/truck carriers (PCTCs). These orders include hoistable car decks for four vessels that will be built in the Korean Hyundai Heavy Industries shipyard and delivered during 2009–2010. Additionally, the orders include the design and delivery of key components for eight PCTCs under construction in China.
The services market continued to be active, which was refl ected in the demand for maintenance, modernisation contracts and spare parts. Maintenance contracts were received from European as well as emerging market customers in for example India, Russia and Africa. Cargotec continued to enhance its service network.
An order for annual maintenance of some 600 loader cranes was received from Electricité Réseau Distribution France.
The market for ship conversions was very active and several orders were received for delivery during 2008–2009. However, the economic uncertainty slowed down demand during the second half. The hatch cover conversion order received from Everlast Shipping S.A. in Greece in September was cancelled. Contracts received during May include one for the supply of electrically driven hoistable car decks for Finnlines' two RoRo vessels, as well as a contract for the conversion of a vessel's control systems.
In May, a fi ve-year operation and maintenance contract for rubber-tyred gantry cranes and reachstackers was signed with Arshiya International in Mumbai, India and a three-year leasing and full maintenance contract for reachstackers in the port of Gothenburg, Sweden.
Additional contracts include a fi ve-year full maintenance contract in April on four ship-to-shore cranes delivered to the port of Vuosaari, Finland. Another contract in the same port covers the maintenance of straddle carriers, terminal tractors and reachstackers.
In March, a fi ve-year service contract was signed with the Norwegian company, Norsteve Oslo, covering the
maintenance, spare parts and repairs of fi ve straddle carriers at the Sjursøya container terminal in the Port of Oslo.
During the fi rst quarter, a major maintenance contract for ship unloaders was received from the Philippines.
Cargotec's order book totalled EUR 3,054 (2,865) million on December 31, 2008. Of the order book, Hiab accounted for EUR 164 (260) million, Kalmar EUR 704 (660) million, and MacGREGOR EUR 2,187 (1,946) million. Order cancellations booked in MacGREGOR in the fourth quarter totalled EUR 119 million. Key fi gures on fi nancial performance, including comparison data, are shown in their entirety under the section "Key Figures" of the Financial Statements.
Cargotec's sales grew by 13 percent and totalled EUR 3,399 (3,018) million. Sales derived from 2008 acquisitions were EUR 32 million. Sales growth is a result of increased delivery volumes in Kalmar and MacGREGOR and growth in service. Sales growth was strongest in Asia Pacifi c.
Sales for the fourth quarter were EUR 924 (868) million. Hiab's sales amounted to EUR 216 (244) million, Kalmar's EUR 413 (364) million and MacGREGOR's EUR 298 (261) million. Hiab's sales declined due to the weakened market in Europe during the second half of the year. Kalmar's and MacGREGOR's sales grew as a result of strong order intake and increased deliveries.
Sales from services increased by 15 percent year-onyear and amounted to EUR 871 (757) million, representing 26 (25) percent of total sales. This growth was boosted by strong demand for spare parts and maintenance agreements. Services accounted for 23 (17) percent of January –December sales at Hiab, 29 (30) percent at Kalmar, and 23 (25) percent at MacGREGOR.
Cargotec's fi nancial result refl ects a year of two very distinct halves, in which the fi rst half was characterised by soaring demand, which then plummeted due to the global fi nancial crisis and slowing markets especially in Hiab.
Cargotec's operating profi t for 2008 totalled EUR 173.7 (203.1) million. The operating profi t includes EUR 19 million of costs and asset write-downs booked in the fourth quarter from the restructuring actions initiated in September. The 2007 comparison operating profi t includes the cost of EUR 18 million in Kalmar business area related to a container spreader inspection and repair programme booked in the fourth quarter.
Excluding restructuring costs the operating profi t for 2008 was EUR 192.8 (203.1) million, representing 5.7 (6.7) percent of sales. The operating profi t includes a EUR 8.3 (9.9) million cost impact from the purchase price allocation treatment of acquisitions and EUR 9 million in costs from the On the Move change programme.
Operating profi t for the fourth quarter excluding the EUR 19 million restructuring costs and write-downs was EUR 35.9 (46.3) million, equal to 3.9 (5.3) percent of sales. Hiab accounted for EUR 3.7 (19.1) million of the fourth quarter operating profi t, Kalmar for EUR 12.1 (26.9) million, and MacGREGOR for EUR 30.7 (22.3) million.
Of Cargotec's business areas, MacGREGOR improved its profi tability from the previous year, recording a record result for the fi nal quarter; major business growth has been achieved during the last two years, alongside an improvement in profi tability.
Kalmar's operating profi t for the year includes a signifi cant amount of expenses due to cost overruns in projects. During the year, project cost provisions of EUR 16 million were booked in the business area's operating profi t: EUR 4 million for the fi rst quarter, EUR 5 million for the third and EUR 7 million for the fourth.
Capacity utilisation rates were lowered by a major slowdown in the European market during the third quarter, clearly eroding the profi tability of Hiab in the second half of the year. Hiab's operating profi t was further burdened by the slower and more-expensive-than-expected ramp-up of Hiab's component plant extension in Narva, Estonia.
In both Hiab and Kalmar, raw material and material costs continued to rise in the second half which, alongside faltering demand, affected profi tability. Clear signs of falling costs, due to reductions in raw material prices, and lower capacity utilisation rates among subcontractors, only emerged at the very end of the year.
Due to weakening markets, September saw the initiation of a restructuring programme, the original reduction forecasts of 700 employees being increased to almost 1,000. These measures were aimed at adjusting capacity in Hiab to the prevailing market situation and improving both Hiab's and Kalmar's profi tability. Moreover, an annual profi tability improvement of around EUR 25 million in addition to capacity adjustments is being sought through the cost saving programme. The related costs and write-downs are estimated at approximately EUR 35 million. Of these, EUR 19 million was booked in the fi nal quarter of 2008, including EUR 3 million in write-downs. The remainder is expected to incur in early 2009.
Net income for 2008 was EUR 120.8 (138.4) million and earnings per share EUR 1.91 (2.17).
Cargotec's net working capital grew and, by December 31, 2008, amounted to 324 (253) million. Capital remained employed in components and unfi nished products. On the other hand, advance payments received as order confi rmations from MacGREGOR's customers had a positive impact on net working capital. Advances received totalled EUR 420 (244) million at the end of the year. Tangible assets on the balance sheet were EUR 284 (254) million and intangible assets EUR 754 (751) million.
Cash fl ow from operating activities before fi nancial items and taxes was EUR 133.8 (235.1) million. In January– December, the dividend payment totalled EUR 66.6 (63.8) million and acquisitions amounted to EUR 46.5 (172.5) million. Net debt was EUR 478 (326) million on December 31, 2008, including EUR 555 (488) million in interest-bearing debt. The total equity/total assets ratio was 33.0 (38.3) percent while gearing increased to 55.3 (36.3) percent.
Cargotec's fi nancing structure is healthy. Interest-bearing debt consists mainly of long-term corporate bonds maturing from the year 2012. On December 31, 2008, Cargotec had EUR 635 million of unused credit facilities.
Return on equity for the fi nancial year was 13.7 (15.6) percent and return on capital employed was 12.7 (16.8) percent.
In 2008, Cargotec's research and product development expenditure was EUR 47.0 (46.4) million, representing 1.4 (1.5) percent of sales.
In April, Cargotec opened an engineering centre in Pune, India, providing engineering resources in emerging markets in support of product development that better responds to local needs. The engineering centre has been established as a resource pool for Cargotec R&D centres around the world. It covers various engineering activities from drafting to structural analysis as well as software engineering. The unit employed almost 40 engineers at the end of the year.
In September, Hiab expanded its crane offering with a solution that fulfi ls the new EU-standard and enables using truck-mounted cranes to lift personnel baskets.
Hiab introduced a new automatic load covering system to be used with demountable units when transporting waste and recycling materials.
During the fi rst quarter, Hiab opened a state-of-the-art crane-testing centre at its loader crane production facility in Hudiksvall, Sweden. The centre offers Hiab and other business areas the opportunity to test more and longer cranes and components as well as ensuring that testing is more precise than before.
Kalmar launched in 2008 the Pro Future™ concept encompassing all of its environmentally friendly equipment. This equipment will be rated against fi ve ecological decision-making drivers: source of power, energy effi ciency, emissions, noise pollution and recyclability.
The fi rst two Pro Future™ solutions launched were an AC electrical forklift truck for empty container handling and a hybrid straddle carrier. Kalmar received the fi rst order for a hybrid straddle carrier during the third quarter. These Pro Future™ solutions were followed in the third quarter by a variable speed rubber-tyred gantry crane and a variable speed electric straddle carrier. During the fourth quarter, Kalmar introduced an additional two new Pro Future™ solutions: an automatic stacking crane and a ship-to-shore crane with regenerative energy source.
During the fi rst quarter, Kalmar launched a new, fullyautomated shuttle carrier that is able to pick, place and transport containers between ship-to-shore (STS) and yard stacking cranes without a driver. The new Kalmar Autoshuttle™ ensures the cost effi ciency, productivity and fl exibility of port operations, particularly in the very big ports of the future.
During 2008, Kalmar introduced a new medium range terminal tractor offering better ergonomics and driver comfort as well as lower noise levels than earlier models, also an electric forklift truck was launched in the medium lift range.
MacGREGOR continued to develop electronically operated cargo handling solutions and a new ship crane control system. The Offshore division focused on the development of deck equipment enabling the use of cranes in diffi cult weather conditions and when operating in deep waters. In September, MacGREGOR signed the fi rst contract to deliver totally electrically-driven sets of RoRo equipment to two pure car/truck carriers.
In February, MacGREGOR signed an agreement with the US Navy on the development of a ship-to-ship vehicle transfer system. With the help of this system, large vehicles can be transferred from one ship to another while the ships are in motion. The prototype of the system will be delivered by the end of 2009.
Cargotec's capital expenditure for 2008, excluding acquisitions and customer fi nancing, totalled EUR 76.8 (53.2) million. Investments in customer fi nancing were EUR 35.9 (37.5) million.
The decision was taken to concentrate Hiab's crane manufacture in Europe in three factories, entailing the closure of production at the Salo plant in Finland. A further decision was taken to wind down the manufacture of truck-mounted forklifts in Ohio, USA, and focus production in Cargotec's common production unit in Kansas, USA.
In April, Cargotec formed a subsidiary, Cargotec Port Security, to develop enhanced container security solutions. Cargotec has been exploring and investing in the area of radiation detection in container security for the past two years. It has entered into an exclusive global technical licensing agreement with the US-based Innovative American Technology, and has successfully fi eld tested spreader-mounted radiation detection.
During the second quarter, Hiab initiated the extension of a tail lift production plant in Oborniki, Poland. The project was completed during 2008. In Korea, Hiab invested in a new painting line at the loader cranes production unit. Another project was fi nalised in Raisio, Finland, resulting in a major increase in the production capacity of demountable systems due to the implementation of a more competitive production process.
During the second quarter, Kalmar started to expand
its production facility for rough-terrain container handling equipment in Cibolo, Texas, USA as well as initiating an expansion of capacity in Ipoh, Malaysia for container spreaders. Investments in the fi rst quarter include expanding its presence in the Americas by opening a new sales company in Mexico as well as a new service unit in Zeebrugge, Belgium.
In March, MacGREGOR opened a new offshore equipment production unit in Tianjin, China. The new unit also enables production optimisation and effi ciency improvements in the offshore production units of Norway and Singapore. Part of offshore cranes production were moved from Norway to Singapore to make room for the increased production of bigger size cranes in Norway.
In January, Cargotec announced the launch of an extensive On the Move change programme aiming at a profi tability improvement of EUR 80–100 million. The change programme aims to form a basis for profi table growth through improved customer focus and effi ciency. The projects in the fi rst phase have focused on streamlining support functions and company structure as well as initiating IT projects that improve effi ciency. In Finland, Sweden, Singapore and USA, operations began in Cargotec country companies.
In order to improve closeness to customers Hiab, Kalmar and MacGREGOR changed their structure towards more customer oriented organisations during the reporting period.
During the second half, the focus was on developing the global supply footprint closer to customers as well as towards lower cost environments. For this implemention, Cargotec established a common corporate level Supply organisation, which is responsible for sourcing and supply for the business areas.
The fi rst joint supply chain projects are proceeding in China and Estonia. The production capacity in Shanghai, China will be doubled. The expansion will include moving Hiab's assembly unit to the same site as the existing Kalmar facility. The capacity and productivity of the production unit in Narva, Estonia, acquired in 2007, has been upgraded. As part of the actions to improve the supply chain, Cargotec is planning to establish a new assembly factory in Poland mainly for Kalmar equipment.
During January–December, Cargotec completed eight acquisitions, of which four were in Hiab's business area.
In order to strengthen its R&D capabilities, Cargotec acquired 60 percent of Idea Designing & Consulting S.r.l. in Massa, Italy. The company employs ten people in product design.
In October, Kalmar acquired 80% of two Italian service companies, CVS Technoports S.r.l. and CVS Service S.r.l. Subsequent to the transaction, the companies work under the name Offi cine Cargotec Ferrari and the companies focus on developing the service offering towards container and material handling customers in Italy. The two companies' combined sales turnover in 2007 was approximately EUR 8 million and the companies employ 65 people.
In August, Kalmar signed an agreement to acquire Argentina-based Equipos y Servicios para Terminales y Puertos SRL. The company has been Kalmar's dealer for Argentina, Uruguay and Paraguay. In addition to new equipment distribution, the company provides equipment commissioning, technical and spare part support, and equipment repair and refurbishment in South America. The company's sales in 2007 were around EUR 1 million and it employs 17 people.
In June, Hiab concluded an agreement to acquire the business of a long-term distributor of tail lifts in New Zealand. In addition to tail lift sales, the business comprises installation, repairs, maintenance and spare parts sales.
At the end of March, Hiab concluded an agreement to acquire the operations of the South African company Bowman Cranes (Pty) Limited, Hiab's long-term agent in the region. This company supplies, installs and services truckrelated load handling equipment. In 2007, its sales were approximately EUR 18 million and it employs 70 people.
In February, Hiab signed an agreement to acquire 70 percent of the operations of an Australian company, O'Leary's Material Handling Services Pty Ltd., the leading supplier of tail lifts in Western Australia. The company employs 24 people and had sales of approximately EUR 2.6 million in 2007.
In February, Hiab also agreed to acquire UK-based Del Equipment (UK) Limited and US-based Ultron Lift Corp. Both of these companies manufacture tail lifts. The aggregate sales of the companies in 2007 were approximately EUR 23 million and the companies employ 164 persons.
In April, MacGREGOR signed an agreement to acquire US-based Platform Crane Service, Inc. The sales of the company in 2007 totalled USD 16 million and the company employs 105 persons.
On December 31, 2008, Cargotec employed 11,826 (11,187) people. Due to the restructuring measures, the number of employees declined by 370 people mainly in Finland and Sweden. Hiab employed 4,308 (4,418) people, Kalmar 4,766 (4,459), and MacGREGOR 2,577 (2,223). The average number of employees during 2008 was 11,777 (10,276).
Of Cargotec's total employees, 13 (14) percent were located in Finland, 20 (22) percent in Sweden and 30 (30) percent in the rest of Europe. North and South American personnel represented 11 (11) percent, Asia Pacifi c 24 (22) percent and the rest of the world 2 (1) percent of total employees. 15 (15) percent of the personnel were female and 85 (85) percent male. 3 (3) percent of Cargotec's total employees worked part time and 97 (97) percent full time.
Salaries and remunerations to employees totalled EUR
387 (356) million for the fi nancial period.
As a result of lower demand and profi tability, Cargotec initiated restructuring measures in September, mainly in Western Europe and North America. These measures aim at adjusting capacity in Hiab to the prevailing market situation and improving Hiab's and Kalmar's profi tability. The negotiations ended by the end of the year resulted in a reduction of 954 employees: 271 in Finland, 241 in Sweden, 117 in the USA, 91 in the Netherlands and a total of 234 in other countries. Hiab saw 635 employee reductions, Kalmar 309 and corporate functions 10.
Restructuring continued after the end of the fi nancial year, due to the further weakening of the markets.
Implementation of the new people strategy, approved by Cargotec's Board in 2007, was enhanced in the reporting period. Special focus areas included support for employee and change management, the development of leadership skills and human resources competence development, alongside committing the best talents. During the fi nancial year, a uniform operating model and a global matrix organisation were created for human resources (HR) management in line with the One the Move change programme. The comprehensive introduction of shared HR management processes and tools was reinforced globally. Additionally, Cargotec's key HR policies were renewed during the year.
Cargotec's environmental policy defi nes the environmental principles. The main environmental effects of Cargotec's operations are related to the use of its products. For this reason, the Company focused on indentifying productbased environmental perspectives in 2008.
In 2008, Cargotec introduced its new subcontractor criteria in which environmental safety, occupational health and safety and quality issues have been taken into account more extensively than before.
Cargotec's strategic business development goals support the creation of holistic, sustainable, long-term solutions for customers. In product development, environmental considerations form an integral part of planning and manufacturing. In the service business, the focus is on extending product life cycles while an extensive service network helps uphold effi cient operating characteristics. In addition to product development and services, Cargotec is seeking to train its customers to use Cargotec equipment so that safety and environmental matters reach an optimal level.
Energy effi ciency, safety and the prevention of oil leakages represent key focus areas in Cargotec's product development. In 2008, Cargotec determined a clear environmental criterion for energy effi ciency, according to which it undertakes to reduce the use of fossil fuels by 10 percent in its equipment over the next 6–10 years. A major step was taken in environmental impact assessment when Kalmar, partly as a result of the aforementioned commitment, launched its Pro Future™ environmental criteria.
The most signifi cant environmental effects associated with Cargotec's processes are related to those originating from the operations of the various business units as well as transportation and commuting to and from work. The certifi ed ISO 9001 and ISO 14001 quality and environmental management systems form the basis of Cargotec's environmental management, and regular internal and external audits and management audits are aimed at monitoring the achievement of the related objectives.
Cargotec continued to build certifi ed management systems into its production units with the aim of creating an operational model that helps to identify the most important environmental effects and respond to them in all units. Eight of Hiab's 16 production units and two of its sales companies apply environmental management systems certifi ed under ISO 14001. These systems cover approximately 80 percent of the sales of Hiab's production units. Six of Kalmar's seven production units apply certifi ed environmental management systems, these systems covering also approximately 80 percent of the sales of Kalmar's production units. MacGREGOR commissions most of its products from selected partners independently responsible for their production processes. Operational guidelines related to the management of environmental issues are included in the quality systems of most MacGREGOR units.
Furthermore, an extensive environmental assessment was conducted in 14 production units in accordance with a programme introduced in 2007. This involved the evaluation of management systems, facilities and production from the viewpoint of their environmental effects while taking into account the units' operating environment. Extensive soil cleaning work was carried out in two Cargotec sites in 2008 as a result of industrial activities that had taken place in those sites earlier.
Cargotec's President and CEO and the Executive Board are responsible for the methods, implementation and supervision of risk management, and report on these to the Board of Directors. The Corporate risk management function is responsible for the development of comprehensive risk management. This is supported by the creation of Corporatewide risk management principles, practices and risk reports, the development of tools and the application and adoption of these tools. Business areas and units are responsible for assigning, managing and reporting the risks involved in their own operations. The Corporate Treasury function manages fi nancial risks centrally. Cargotec has an internal auditing function which is responsible for internal control and business risk auditing. The Internal Audit unit operates under the supervision of the President and CEO and the Board of Directors' Audit Committee, reporting regularly to the Audit Committee on its operations and audit results.
Cargotec began the systematic development of its internal control in 2007. Cargotec's Board of Directors approved the internal control policy in 2008. Responsibility for internal control at Cargotec is divided into three tiers. Line management is primarily responsible for internal control. It is aided by Corporate support functions, which defi ne policies and instruct on and supervise risk management. Internal and external audits form the third tier, their task being to ensure that the fi rst two tiers are functioning effectively. As Cargotec becomes more harmonised, its capabilities for the development and implementation of risk management will be further improved. The goal is that, besides general risk management principles and guidelines, Cargotec also has risk management tools that facilitate practical work and which are implemented throughout the Company. During the year, Cargotec has developed a basic risk management tool, the application and adoption of which will be studied in the operations, business projects and risk reporting of the business units.
Cargotec defi nes a risk as any internal or external threat or uncertainty which may prevent or jeopardise operations and the achievement of objectives. Risks are divided risks into strategic and business risks, fi nancial risks and operational and hazard risks.
Strategic and business risks are related to business cycles in the world economy and Cargotec's customer sectors, the availability of raw materials and components and trends in the related prices, mergers and acquisitions and the operations of dealers and subcontractors. Cargotec addresses these risks by striving to identify them and prepare for them in advance.
Cargotec's treasury operations and fi nancial risk management principles are defi ned in the Corporate Treasury Policy. Financial risks arising from Cargotec's business activities include currency, interest rate, refi nancing and liquidity, counterparty and operative credit risks. The Company seeks to protect itself against these risks in order to ensure a fi nancially sound basis for developing its business operations. For a more detailed description of fi nancial risks, see Note 2 of the Financial Statements.
Operational risks relate to persons, property, processes, products, information technology and practices. Cargotec's main activities related to the management of these risks are related fi rst and foremost to increasing product safety and information security and ensuring business continuity. With respect to key person risks, succession plans for leadership and key assignments are updated on an annual basis, for the purpose of ensuring continuity in operations.
Cargotec's main hazard risks include risks related to personnel, property, business interruptions and logistics. In addition to preventive risk management measures, Cargotec protects itself against these risks by taking out worldwide insurance policies that cover all units.
Cargotec's share capital on December 31, 2008 totalled EUR 64,304,280. The share capital increased by EUR 83,907 during the fi nancial period as a result of the subscription for class B shares under Cargotec option rights.
On December 31, 2008, the number of listed class B shares totalled 54,778,191 while that of unlisted class A shares totalled 9,526,089. Class B shares accounted for 85.2 (85.2) percent of the total number of shares and 36.5 (36.5) percent of votes. Class A shares accounted for 14.8 (14.8) percent of the total number of shares and 63.5 (63.5) percent of votes. The total number of votes attached to all shares was 15,002,201 (14,994,074) at the year end. At the end of the fi nancial period, Cargotec held a total of 2,990,725 class B shares, which corresponds to 4.7 percent of the total number of shares and 2.0 percent of votes.
In a distribution of dividends, the dividend paid on the class B shares is higher than that on the class A shares. The difference between the dividends paid on the different classes of shares is at minimum one (1) percent and at maximum two and one half (2.5) percent, calculated from the accounting par value of the share.
Trading with 2005A option rights ended on March 20, 2008. The remaining 2005B option rights may be used to subscribe for a further 104,730 class B shares, thereby increasing Cargotec's share capital by EUR 104,730. The said number of shares that can be subscribed for under the remaining option rights constitutes 0.2 percent of Cargotec's total number of shares and 0.07 percent of the total number of votes. For a more detailed description of the option programme, see Note 24 of the Financial Statements.
The closing price of Cargotec's class B shares on December 31, 2008 was EUR 8.09. The average share price for January–December was EUR 21.47, the highest quotation being EUR 36.49 and the lowest EUR 7.63. The share price dropped 74 percent during the fi nancial period. In January–December, approximately 86 million Cargotec class B shares were traded on the NASDAQ OMX Helsinki, corresponding to a turnover of approximately EUR 1,868 million. The average daily trading volume of class B shares was 338,722 shares or EUR 7,381,727.
On December 31, 2008, the total market value of Cargotec class B shares was EUR 419 million, excluding treasury shares held by the Company. The period-end market capitalisation, in which unlisted class A shares are valued at the average price of class B shares on the last trading day of the fi nancial period, was EUR 495 million, excluding treasury shares held by the Company.
The loans Cargotec has granted to Moving Cargo Oy, a company jointly-owned by the Executive Board for the fi nancing of a top management incentive programme, totalled EUR 3.5 million on December 31, 2008. Cargotec has not granted other special benefi ts nor made other
corresponding arrangements with parties belonging to its inner circle. For further information on the terms of the loan, see Note 32, "Related-party transactions".
On December 18, Cargotec's Board of Directors appointed Pekka Vauramo as Senior Executive Vice President and Deputy to CEO Mikael Mäkinen. Vauramo continues to be responsible for the Kalmar business area.
Axel Leijonhufvud was appointed as Senior Vice President, Product Supply, starting from January 1, 2009. Leijonhufvud was earlier responsible for product supply in Kalmar and was Chairman of Kalmar's RTCH (Rough Terrain Container Handling) board at Cargotec Corporation. Lauri Björklund, Senior Vice President, Production and Purchasing, was appointed as Senior Vice President, Corporate Development Projects as of January 1, 2009.
On February 1, 2008, Cargotec's Senior Executive Vice President Kari Heinistö was appointed to lead the On the Move change programme. He continues as a member of the Executive Board and secretary to Cargotec's Board of Directors. Eeva Sipilä was appointed as Cargotec's CFO as of February 1, 2008. Minna Karhu was appointed as Vice President, Corporate Communications of Cargotec as of February 1, 2008.
The election of the members of the Board of Directors, and of the auditor, and their remunerations, as well as on changes in the Articles of Association are decided by the General Meeting of Shareholders. The Board of Directors elects Cargotec's President and CEO and determines the term of employment. The period of notice of the President and CEO is six months and he has the right to a compensation for termination of employment of 12 months.
Cargotec Corporation's Annual General Meeting (AGM) was held on February 29, 2008 in Helsinki. The meeting approved the fi nancial statements and consolidated fi nancial statements as well as granted discharge from liability to the President and CEO and the members of the Board of Directors for the accounting period January 1–December 31, 2007.
The AGM approved the Board's proposal of a dividend of EUR 1.04 for each of the 9,526,089 class A shares and EUR 1.05 for the 52,789,559 outstanding class B shares.
The number of members of the Board of Directors was confi rmed at six according to the proposal of the Board's Nomination and Compensation Committee. Henrik Ehrnrooth, Tapio Hakakari, Ilkka Herlin, Peter Immonen, Karri Kaitue and Antti Lagerroos were elected as members of the Board of Directors.
Authorised public accountants Johan Kronberg and PricewaterhouseCoopers Oy were re-elected as auditors according to the proposal of Audit Committee of Cargotec's Board of Directors.
In addition, the AGM resolved to amend the Articles of Association mainly due to and to align with the new Finnish Companies Act effective as from 2006.
The AGM authorised the Board of Directors of Cargotec to decide on acquisition of the Company's own shares with non-restricted equity. The shares may be acquired in order to develop the capital structure of the Company, fi nance or carry out possible acquisitions, implement share-based incentive plans, or to be transferred for other purposes or to be cancelled. The shares may be acquired through a directed acquisition as defi ned in Finnish Companies Act, Chapter 15 § 6.
Altogether no more than 6,400,000 own shares may be purchased, of which no more than 952,000 are class A shares and 5,448,000 are class B shares. The abovementioned amounts include the 1,904,725 class B shares in the Company's possession on the AGM date, which were purchased during 2005–2007. The proposed amount corresponds to less than 10 percent of the share capital of the Company and the total voting rights. The acquisition of own shares will decrease the non-restricted equity. The authorisation is in effect for a period of 18 months from the date of decision of the AGM.
In addition, the AGM authorised the Board of Directors to decide on transfer of treasury shares. The Board of Directors was authorised to decide to whom and in which order the treasury shares will be transferred. The Board of Directors may decide on the transfer of treasury shares otherwise than in proportion to the existing pre-emptive right of shareholders to purchase the Company's own shares. The treasury shares may be used as compensation in acquisitions and in other arrangements as well as to implement the Company's share-based incentive plans in the manner and to the extent decided by the Board of Directors. The Board of Directors has also the right to decide on the transfer of the shares in public trading at the NASDAQ OMX Helsinki to be used as compensation in possible acquisitions. This authorisation is in effect for a period of 18 months from the date of decision of the AGM.
Cargotec's Board of Directors in its organising meeting elected Ilkka Herlin to continue as Chairman of the Board and Henrik Ehrnrooth to continue as Deputy Chairman. Cargotec's Senior Executive Vice President Kari Heinistö continues to act as secretary to the Board of Directors. Cargotec's Board of Directors decided that the Audit Committee, Nomination and Compensation Committee as well as Working Committee continue to assist the Board in its work.
The Board of Directors elected among its members Ilkka Herlin, Karri Kaitue and Antti Lagerroos as members of the Audit Committee. Karri Kaitue was re-elected as Chairman of the Audit Committee. Board members Henrik Ehrnrooth, Tapio Hakakari, Ilkka Herlin and Peter Immonen were elected to the Nomination and Compensation Committee. Ilkka Herlin was re-elected as chairman of the Nomination and Compensation Committee. Board members Tapio Hakakari, Ilkka Herlin and Peter Immonen were elected to the Working Committee. Ilkka Herlin was re-elected as chairman of the Working Committee.
Cargotec's Board of Directors decided to exercise the authorisation of the AGM to acquire the Company's own shares. In accordance with the authorisation class B shares were purchased at public trading in the NASDAQ OMX Helsinki at the market price.
A total of 1,086,000 own shares were repurchased during the period March 25–August 23, 2008 at an average price of EUR 21.73. Cargotec held a total of 2,990,725 class B shares on December 31, 2008. For further information on Board authorisations for the purchase of shares, see the section "Shares and Shareholders".
Due to the fi nancial crisis, the global economic situation is marked by huge uncertainty. Cargotec's operations are subject to signifi cant short-term risks and uncertainty factors, specifi cally related to the effects of the slump on demand for Cargotec's products and services and the willingness of customers to invest. The fact that many factors underlying this uncertainty are beyond the control of the Company merely serves to amplify the challenge confronting risk analysis.
Prolonged uncertainty and credit drought increases the risk of lower, general willingness to invest and consequently demand for Cargotec's equipment could further decrease. Shipbuilding in particular has been affected by signifi cant order cancellations due to lower shipping utilisation rates combined with major increases in fi nancing costs. The credit crunch may also see other customer groups move their investment decisions back or cancel orders. Furthermore, customers' and suppliers' fi nancial situations will affect the collection of receivables and the level of bad debt.
Lower demand will require additional capacity adjustment measures. Further falling off of demand at a faster rate than the implementation of capacity cuts will have a negative impact on performance.
Staff reductions continued in January as the markets continued to weaken. In the unit manufacturing tail lifts in Bispgården, Sweden, negotiations began on the need for a reduction in the workforce of 75. At Kalmar's Ljungby and Lidhult units in Sweden, negotiations began on the need for a reduction in the workforce of 97. Cargotec plans to make its operations more effi cient by reorganising and transferring a majority of its business in Ljungby to its Lidhult facility. Meanwhile, in Finland negotiations began for planned temporary lay-off of 900 staff for a maximum of 90 days in Raisio and Tampere and a reduction of 60 staff in Tampere.
The parent company's distributable equity on December 31, 2008 was EUR 959,964,211.07 of which net income for the period was EUR 158,536,423.21 The Board of Directors will propose to the Annual General Meeting convening on March 5, 2009, that of the distributable profi t, a dividend of EUR 0.59 per each of the 9,526,089 class A share and EUR 0.60 per each 51,787,466 class B share outstanding be paid, totalling EUR 36,692,872.11. The rest of the distributable equity, EUR 923,271,338.96 will be retained and carried forward.
No signifi cant changes have occurred in the Cargotec's fi nancial position after the end of the fi nancial year. The liquidity is good and, in the Board of Director's view, the proposed distribution of dividend does not pose a risk to the Company's fi nancial standing.
In the current uncertain economic situation it is diffi cult to estimate the demand for Cargotec's products. This is further complicated by possible order cancellations and delays. The preconditions for sales growth exist in services and MacGREGOR. Sales of Hiab and Kalmar are expected to decline from 2008. Signifi cant restructuring measures costing EUR 35 million were decided on during 2008 to create a new supply platform and improve profi tability in Cargotec. Focus is on the rapid implementation of these measures. Approximately EUR 16 million of these costs remain for 2009.
Cargotec Corporation's Annual General Meeting will be held at the Marina Congress Center in Helsinki on Thursday, March 5, 2009 at 2 p.m
Helsinki, February 2, 2009 Cargotec Corporation Board of Directors
| MEUR | Note | Jan 1–Dec 31, 2008 an 1–Dec 31, 2008 |
% | Jan 1–Dec 31, 2007 an 1–Dec 31, 2007 |
% |
|---|---|---|---|---|---|
| Sales | 3, 5 | 3,399.2 | 3,018.2 | ||
| Cost of goods sold | -2,762.5 | -2,376.8 | |||
| Non-recurring items* | - | -18.0 | |||
| Gross profi ross profi t | 636.7 | 18.7 | 623.4 | 20.7 | |
| Other operating income | 6 | 39.1 | 26.8 | ||
| Selling and marketing expenses | -189.9 | -197.4 | |||
| Research and development expenses | -43.6 | -38.9 | |||
| Administration expenses | -212.0 | -176.1 | |||
| Restructuring costs | 7 | -19.1 | - | ||
| Other operating expenses | 6 | -38.0 | -34.9 | ||
| Share of associated companies' and joint ventures' net income | 0.6 | 0.3 | |||
| Operating profi perating profi t |
3, 8, 9 | 173.7 | 5.1 | 203.1 | 6.7 |
| Financing income | 10 | 16.0 | 16.7 | ||
| Financing expenses | 10 | -44.5 | -35.5 | ||
| Income before taxes ncome before |
145.2 | 4.3 | 184.4 | 6.1 | |
| Taxes | 11 | -24.4 | -46.0 | ||
| Net income for the period et income for the |
120.8 | 3.6 | 138.4 | 4.6 | |
| Net income for the period attributable to: et income for the period attributable |
|||||
| Equity holders of the Company | 118.4 | 136.5 | |||
| Minority interest | 2.4 | 1.8 | |||
| Total | 120.8 | 138.4 | |||
| Earnings per share for profi arnings per share for profi t attributable to the equity t attributable to the equity holders of the Company: olders of the |
12 | ||||
| Basic earnings per share, EUR | 1.91 | 2.17 | |||
| Diluted earnings per share, EUR | 1.91 | 2.16 |
* Kalmar business area related container spreader inspection and repair programme
| MEUR | Note | Dec 31, 2008 ec 31, | Dec 31, 2007 ec 31, |
|---|---|---|---|
| Assets | |||
| Non-current assets on-current |
|||
| Goodwill | 13 | 669.2 | 670.2 |
| Other intangible assets | 14 | 85.0 | 81.0 |
| Property, plant and equipment | 15 | 283.5 | 253.7 |
| Investments in associated companies and joint ventures | 16 | 7.0 | 4.8 |
| Available-for-sale investments | 17, 20 | 2.0 | 2.3 |
| Loans receivable and other interest-bearing assets 1) | 20 | 7.7 | 5.5 |
| Deferred tax assets | 18 | 97.2 | 55.5 |
| Derivative assets | 30 | 55.0 | 8.9 |
| Other non-interest-bearing assets | 20, 21 | 8.1 | 12.0 |
| Total non-current assets otal non-current |
1,214.6 | 1,094.0 | |
| Current assets urrent |
|||
| Inventories | 19 | 881.9 | 657.4 |
| Loans receivable and other interest-bearing assets 1) | 20 | 0.2 | 0.4 |
| Income tax receivables | 18.5 | 18.3 | |
| Derivative assets | 30 | 130.4 | 50.8 |
| Accounts receivable and other non-interest-bearing assets | 20, 21 | 714.0 | 582.8 |
| Cash and cash equivalents 1) | 20, 22 | 79.2 | 179.0 |
| Total current assets otal current |
1,824.3 | 1,488.7 | |
| Total assets otal | 3,038.9 | 2,582.6 |
1) Included in interest-bearing net debt
| MEUR | Note | Dec 31, 2008 ec 31, | Dec 31, 2007 ec 31, |
|---|---|---|---|
| Equity and liabilities quity and |
|||
| Equity attributable to the equity holders of the Company quity attributable to the equity holders of the |
|||
| Share capital | 64.3 | 64.2 | |
| Share premium account | 98.0 | 97.4 | |
| Treasury shares | -93.6 | -70.0 | |
| Translation differences | -20.4 | -29.6 | |
| Fair value reserves | -54.5 | 19.9 | |
| Retained earnings | 861.6 | 808.7 | |
| Total equity attributable to the equity holders of the Company otal equity attributable to the equity holders of the |
23, 24 | 855.3 | 890.6 |
| Minority interest | 9.1 | 6.1 | |
| Total equity otal | 864.4 | 896.7 | |
| Non-current liabilities on-current |
|||
| Loans 1) | 20, 25 | 440.2 | 433.3 |
| Deferred tax liabilities | 18 | 43.0 | 38.5 |
| Pension obligations | 26 | 33.5 | 35.2 |
| Provisions | 27 | 34.6 | 38.4 |
| Derivative liabilities | 30 | 84.5 | 14.9 |
| Other non-interest-bearing liabilities | 20, 28 | 26.6 | 53.2 |
| Total non-current liabilities otal non-current |
662.5 | 613.6 | |
| Current liabilities urrent |
|||
| Current portion of long-term loans 1) | 20, 25 | 4.0 | 3.5 |
| Other interest-bearing liabilities 1) | 20, 25 | 110.6 | 51.6 |
| Provisions | 27 | 70.4 | 70.8 |
| Income tax payables | 53.2 | 46.9 | |
| Derivative liabilities | 30 | 129.3 | 17.6 |
| Accounts payable and other non-interest-bearing liabilities | 20, 28 | 1,144.4 | 882.0 |
| Total current liabilities otal current |
1,512.0 | 1,072.4 | |
| Total equity and liabilities otal equity and liabilities |
3,038.9 | 2,582.6 |
1) Included in interest-bearing net debt. In addition, the calculation of the interest-bearing net debt includes the hedging of cross-currency risk relating to the USD 300 million Private Placement bond, totalling on December 31, 2008, EUR 10.2 (Dec 31, 2007: 21.9) million.
| Share | Share premium |
Treasury reasury | Translation ranslation | Fair value air value | Retained etained | Minority inority | Total | ||
|---|---|---|---|---|---|---|---|---|---|
| MEUR | capital | account | shares | differences ifferences | reserves eserves | earnings arnings | Total | interest nterest | equity |
| Equity on Dec 31, 2006 quity on Dec 31, |
64.0 | 96.0 | -23.9 | -12.0 | 10.5 | 734.2 | 868.8 | 8.0 | 876.8 |
| Gain/loss on cash fl ow hedges booked to equity* |
18.5 | 18.5 | 0.0 | 18.5 | |||||
| Gain/loss on cash fl ow hedges transferred to IS |
-9.1 | -9.1 | 0.0 | -9.1 | |||||
| Translation differences | -17.6 | -17.6 | -0.7 | -18.3 | |||||
| Net income recognised directly in equity |
- | - | - | -17.6 | 9.4 | - | -8.2 | -0.7 | -8.9 |
| Net income for the period | 136.5 | 136.5 | 1.8 | 138.4 | |||||
| Total recognised income and expenses for the period |
- | - | - | -17.6 | 9.4 | 136.5 | 128.4 | 1.1 | 129.5 |
| Dividends paid | -63.2 | -63.2 | -0.5 | -63.7 | |||||
| Shares subscribed with options | 0.2 | 1.3 | 1.5 | 1.5 | |||||
| Acquisition of treasury shares | -46.1 | -46.1 | -46.1 | ||||||
| Share-based incentives, value of received services* |
1.2 | 1.2 | 1.2 | ||||||
| Other changes | - | -2.5 | -2.5 | ||||||
| Equity on Dec 31, 2007 quity on Dec 31, |
64.2 | 97.4 | -70.0 | -29.6 | 19.9 | 808.7 | 890.6 | 6.1 | 896.7 |
| Gain/loss on cash fl ow hedges booked to equity* |
-103.6 | -103.6 | 0.4 | -103.2 | |||||
| Gain/loss on cash fl ow hedges transferred to IS |
29.2 | 29.2 | 29.2 | ||||||
| Translation differences | 9.2 | 9.2 | 0.6 | 9.8 | |||||
| Total net income recognised directly in equity |
- | - | - | 9.2 | -74.5 | - | -65.3 | 1.0 | -64.2 |
| Net income for the period | 118.4 | 118.4 | 2.4 | 120.8 | |||||
| Total recognised income and expenses for the period |
- | - | - | 9.2 | -74.5 | 118.4 | 53.2 | 3.4 | 56.6 |
| Dividends paid | -65.3 | -65.3 | -0.6 | -66.0 | |||||
| Shares subscribed with options | 0.1 | 0.6 | 0.7 | 0.7 | |||||
| Acquisition of treasury shares | -23.6 | -23.6 | -23.6 | ||||||
| Share-based incentives, value of received services* |
-0.2 | -0.2 | -0.2 | ||||||
| Other changes | - | 0.2 | 0.2 | ||||||
| Equity on Dec 31, 2008 quity on Dec 31, |
64.3 | 98.0 | -93.6 | -20.4 | -54.5 | 861.6 | 855.3 | 9.1 | 864.4 |
* Net of tax
| MEUR | Note | Jan 1–Dec 31, 2008 an 1–Dec 31, |
Jan 1–Dec 31, 2007 an 1–Dec 31, |
|---|---|---|---|
| Net income for the period | 120.8 | 138.4 | |
| Depreciation and impairments | 60.1 | 59.8 | |
| Financing items and taxes | 52.9 | 64.7 | |
| Change in receivables | -171.2 | -118.4 | |
| Change in payables | 309.3 | 198.5 | |
| Change in inventories | -237.5 | -107.6 | |
| Other adjustments | -0.6 | -0.4 | |
| Cash fl ow from operations ow from |
133.8 | 235.1 | |
| Interest received | 4.9 | 5.6 | |
| Interest paid | -25.5 | -12.0 | |
| Dividends received | 0.0 | 0.0 | |
| Other fi nancial items | 11.2 | -12.5 | |
| Income taxes paid | -30.7 | -43.6 | |
| Cash fl ow from operating activities ow from operating |
93.7 | 172.6 | |
| Capital expenditure | -113.2 | -90.8 | |
| Proceeds from sales of fi xed assets | 15 | 15.0 | 12.5 |
| Acquisitions, net of cash | 4 | -46.5 | -172.5 |
| Cash fl ow from investing activities, other items | -10.5 | -13.5 | |
| Cash fl ow from investing activities ow from investing |
-155.1 | -264.3 | |
| Proceeds from share subscriptions | 0.7 | 1.5 | |
| Acquisition of treasury shares | -23.6 | -46.1 | |
| Proceeds from long-term borrowings | 0.7 | 274.5 | |
| Repayments of long-term borrowings | -2.4 | -29.5 | |
| Proceeds from short-term borrowings | 61.3 | 40.8 | |
| Repayments of short-term borrowings | -32.0 | -31.5 | |
| Dividends paid | -66.6 | -63.8 | |
| Cash fl ow from fi ow from fi nancing activities nancing |
-61.9 | 145.9 | |
| Change in cash hange in |
-123.3 | 54.2 | |
| Cash, cash equivalents and bank overdrafts at the beginning of period | 22 | 167.5 | 114.5 |
| Effect of exchange rate changes | 1.7 | -1.1 | |
| Cash, cash equivalents and bank overdrafts at the end of period ash, cash equivalents and bank overdrafts at the end of |
22 | 45.9 | 167.5 |
| Bank overdrafts at the end of period | 33.3 | 11.4 | |
| Cash and cash equivalents at the end of period ash and cash equivalents at the end of |
79.2 | 179.0 |
Cargotec Corporation is a limited liability company domiciled in Helsinki, Finland. The registered address is Sörnäisten rantatie 23, 00500 Helsinki, Finland. Cargotec is the world's leading provider of cargo handling solutions whose products are used in the different stages of material fl ow in ships, ports, terminals, distribution centres and local transportation.
Cargotec Corporation was formed through the demerger of Kone Corporation on June 1, 2005 when it also was listed on the Helsinki Stock Exchange. Cargotec comprises three business areas: Hiab, Kalmar and MacGREGOR. After becoming listed on the stock market, Cargotec has been developed through acquisitions and by strengthening the service offerings provided by the business areas.
These consolidated fi nancial statements were approved for publishing by the Board of Directors on February 2, 2009. Pursuant to the Finnish Limited-liability Companies Act the shareholders have the right to approve or reject the fi nancial statements in the General Meeting held after their publication. The General Meeting also has the right to amend the fi nancial statements. A copy of the annual report is available on Internet at www.cargotec.com and a copy of the consolidated fi nancial statements and parent company's fi nancial statements from Cargotec Corporation's head offi ce, at Sörnäisten rantatie 23, 00500, Helsinki, Finland.
Cargotec Corporation's consolidated fi nancial statements have been prepared according to the International Financial Reporting Standards (IFRS) approved by the European Union. Financial information is presented in millions of euros and business transactions are based on purchase method unless otherwise stated. All fi gures presented have been rounded and consequently the sum of individual fi gures may deviate from the presented sum total.
Cargotec has applied the following new and amended standards and interpretations as of January 1, 2008:
IFRIC 14, IAS 19 – The Limit on a Defi ned Benefi t Asset, Minimum Funding Requirements and their Interaction. The interpretation provides guidance on assessing the limit in IAS 19 on the amount of the surplus that can be recognised as an asset. It also explains how the pension asset or liability may be affected by a statutory or contractual minimum funding requirement. Cargotec has defi ned benefi t pension arrangements, but the adoption of the interpretation does not have a material effect on the fi nancial statements.
IAS 39 (Amendment) and IFRS 7 (Amendment), 'Reclassifi cation of fi nancial assets' permits an entity to reclassify non-derivative fi nancial assets in particular circumstances and with certain
criteria. In case of reclassifi cation, additional disclosures are required. The amendments have no material impact on 2008 fi nancial statements, as Cargotec had no such assets whose reclassifi cation management estimated to be necessary.
The consolidated fi nancial statements include the parent company Cargotec Corporation and the companies, which it owns directly or indirectly (by holding more than 50% of the voting rights or in which it otherwise exercises control). Inter-company shareholdings have been eliminated using the purchase method. Investments in associated companies (in which Cargotec holds 20–50% of the voting rights or exercises signifi cant infl uence) and joint ventures (joint control with third parties) are accounted for in the consolidated fi nancial statements under the equity method.
All inter-company transactions, receivables, liabilities, unrealised profi ts and distribution of profi ts within Cargotec are eliminated in the consolidated fi nancial statements. Distribution of net income for the period to the equity holders of the parent company and to minority interest is presented in the income statement. Equity attributable to minority interest is disclosed as a separate item in the equity.
Subsidiaries acquired during the fi nancial period are included in the consolidated fi nancial statements from the date of obtaining control, and divested subsidiaries up to the date of handing over control.
Transactions in foreign currencies are recorded at the exchange rate prevailing on the date of the transaction. Open foreigncurrency denominated receivables and liabilities at the end of the fi nancial period, both intragroup and external, are translated using the exchange rate of the balance sheet date. Foreign exchange gains and losses related to normal business operations are treated as adjustments to sales or costs. Foreign exchange gains and losses associated with fi nancing are included in fi nancial income and expenses.
Exchange differences arising on a loan agreement that forms part of a net investment in a foreing subsidiary are recognised initially in translation differences under equity, and reclassifi ed from equity to profi t or loss on disposal of the net investment.
Items of each subsidiary included in the consolidated fi nancial statements are measured using the currency that best refl ects the operational environment of that subsidiary ("the functional currency"). The consolidated fi nancial statements are presented in euros, which is the functional and reporting currency of the parent company.
The income statements of subsidiaries whose functional currency is other than euro are translated into euros using the average exchange rate of the fi nancial period. Balance sheet items, with the exception of net income for the fi nancial period, are translated into euros with the balance sheet date exchange rate. Translation differences caused by different exchange rates are recorded in equity.
Translation differences caused by elimination of shareholdings in foreign subsidiaries and translation differences from equity items recognised after the acquisition date are recorded as a separate item under equity. When a subsidiary is sold, accumulated translation differences are recognised in the income statement as part of the gain or loss on the sale.
The primary segment reporting format is business segments and the secondary format is geographical segments. Business segments produce products and services subject to risks and returns that are different from those of other business segments. Secondary segments are the main market areas where products and services are subject to risks and returns that are different from those of segments operating in other economic environments. Sales are reported by the geographical location of the customer while assets and capital expenditure by the geographical location of the assets.
Sales includes revenues from goods and services sold net of sales taxes, discounts and translation differences from foreign currency denominated revenues. Revenues from goods sold are recorded after the signifi cant risks and rewards have been transferred to the buyer and Cargotec no longer has authority or control over the goods. Usually this means the moment when goods have been handed over to the customer in accordance with the agreed contractual terms.
Revenue from repair work is recognised when the work has been carried out and revenues from short-term services when the service has been rendered. Income from the leases is recognised on a straight-line basis over the lease term.
Revenue from separately identifi ed long-term contracts is recorded as sales under the percentage of completion method when the outcome of the project can be measured reliably. The percentage of completion is determined by reference to the individual contract costs incurred to date as a percentage of the total estimated contract costs. When the conditions for percentage of completion method are not met costs are recognised as incurred and revenues to the extent that corresponding costs are expected to be recovered. Possible contract losses are recognised as an expense immediately.
Research and development costs are mainly expensed when incurred since the future fi nancial benefi ts of new products are proven at such a late stage that the portion to be activated is immaterial and hence, the cost are not activated. However, development cost fulfi lling predetermined fi nancial and technical feasibility criteria are activated. Development costs activated in the balance sheet consist mainly of materials, supplies, direct labour costs and the related overhead costs. These are depreciated on a straight-line basis over their economic useful life.
Tax expenses in the income statement include taxes on the taxable income of Cargotec companies for the period, tax adjustments for previous fi nancial periods and the change in deferred taxes. The income tax effects of items recognised directly under equity are recognised similarly directly under equity. Deferred tax assets or liabilities consist of temporary differences between fi nancial reporting and the taxation calculated based on the effective prevailing tax rates. Temporary differences arise from e.g. defi ned benefi t pension plans, provisions, elimination of inter-company inventory profi ts, depreciation differences in tangible assets, untaxed reserves, tax losses carried forward and fair value adjustments in the assets and liabilities of acquired companies. Deferred tax assets relating to tax losses carried forward and other temporary differences are recognised only to the extent that it is probable that future taxable profi ts will be available against which unused tax losses can be utilised.
Acquired companies are accounted for using the purchase method according to which the assets and liabilities of acquired company are measured at fair value upon the date of acquisition. Goodwill represents the excess of the cost of acquisition over the fair value of the identifi able assets, liabilities and contingent liabilities. Goodwill is tested for impairment at least annually by using the value-in-use method in which goodwill is allocated to cash-generating units. Goodwill is stated at cost less any impairment losses. Impairment losses are recognised in the income statement.
Other intangible assets include patents, trademarks, licenses, software, acquired order books and customer relationships. Intangible assets acquired in a business combination are valued at fair value on the acquisition date. Intangible assets with defi nite useful lives are stated at cost less accumulated amortisations and impairment losses, if any. These assets are amortised on a straight-line basis over their useful lives, which typically do not exceed 10 years. Trademarks with indefi nite useful lives are not amortised but are tested for impairment using value-in-use method. Impairment losses are recognised in the income statement.
Property, plant and equipment are stated at cost less accumulated depreciations and impairment losses, if any. The assets' residual values and useful lives are reviewed, and adjusted if
appropriate, on each balance sheet date. Depreciation is recorded on a straight-line basis over the expected economic useful life of assets as follows:
Buildings 5–40 year Machinery and equipment 4–10 year Land and water areas are not depreciated.
Ordinary maintenance and repairs costs are charged to the income statement during the fi nancial period in which they are incurred. The cost of major renovations is included in the asset's carrying amount and is depreciated over the expected economic useful life of the asset.
Gains and losses on sales of property, plant and equipment are included in operating income.
Financing costs are charged to the income statement during the fi nancial period in which they are incurred.
The carrying amounts of non-current assets and other balance sheet items are reviewed for potential impairment an annual basis. Should any indication arise, the asset is tested for impairment. An impairment tests determines the recoverable amount of an asset which is the net selling price or the higher cash fl ow based value in use. An impairment loss is charged to the income statement when the carrying amount exceeds the recoverable amount.
A previously recognised impairment loss is reversed only if there has been a signifi cant change in the estimates used to determine the recoverable amount, but not to an extent higher than the carrying amount that would have been determined had no impairment loss been recognised in prior years.
Goodwill and intangible assets with indefi nite useful lives are tested for impairment when any indication of impairment exists, at least annually. Goodwill is allocated to the cashgenerating units (CGU) of Cargotec, identifi ed according to the business segment level at which goodwill is monitored for internal management purposes. The recoverable amount of a CGU is determined by value-in-use calculations. In assessing the recoverable amount, estimated future cash fl ows are discounted to their present value based on the weighted average cost of capital prevailing in Cargotec for the currency area in which the cash-generating unit can be considered to be located. The weighted average cost of capital refl ects Cargotec's average, long-term fi nancial structure of Cargotec and shareholder risk premium. Impairment losses recognised under goodwill in the income statement are not reversed.
Cargotec has rented property, plant and equipment. Lease agreements in which the lessor bears the ownership risks and rewards are classifi ed as operating leases. Operating lease expenses are charged to the income statement on a straightline basis over the lease period.
Lease agreements in which Cargotec has substantially all of
ownership risks and rewards are classifi ed as fi nance leases. Finance lease agreements are entered into the balance sheet as assets and liabilities upon the inception of the lease period, at of the fair value of the leased equipment or the estimated present value of the minimum lease payments, whichever is lower. Assets acquired under fi nance lease agreements are depreciated over the useful life of the asset or the lease period, whichever is shorter. Lease payments are allocated between repayment of the lease liability and fi nance charge, so as to achieve a constant interest rate on outstanding balance. Lease obligations, net of fi nance charges, are included in interest-bearing liabilities.
In operating leases the risks and rewards attendant on the ownership of an asset remain with the lessor. The leased asset is recognised on the balance sheet according to the nature of the asset. Income from operating leases is recognised on a straight-line basis over the lease term. The depreciation of the leased asset is consistent with the normal depreciation policy of similar assets.
In fi nance leases, the risks and rewards of ownership are transferred to the lessee. The selling profi t is recognised similarly to profi t from an outright sale. Finance lease receivables are recognised on balance sheet at present value. Financial charges relating to the fi nance lease contract are recognised in the income statement over the lease term so as to achieve a constant interest rate on the outstanding balance.
Trade fi nance arrangements are used in certain customer segments, distribution channels and geographical markets. In these arrangements Cargotec, the seller of the equipment, is involved in arranging fi nancing with a fi nancing partner for the customer and/or the dealer. Trade fi nance contracts are classifi ed as operating or fi nance lease contracts, hire purchase contracts or loans with similar features.
Revenue recognition and balance sheet treatment of sales transactions that include end customer or dealer fi nancing depend on the true nature of the transaction, i.e. how risks and rewards related to ownership are divided between Cargotec, the customer and the fi nancing partner.
Inventories are measured at the lower of cost or estimated net realisable value, whichever is lower. Cost is determined using standard cost, which approximates actual cost on the fi rst-in- fi rst out (FIFO) basis. The cost of fi nished goods and work in progress includes raw materials, direct labour, other direct costs and a proportion of indirect costs related to manufacturing and overheads. An allowance is recorded for obsolete items. Net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and costs necessary to making the sale in question.
Financial assets are classifi ed as fi nancial assets recorded at fair value through profi t or loss, loans and other receivables recognised at amortised cost, held-to-maturity investments or fi nancial assets available-for-sale. The classifi cation of assets is performed upon the initial purchase and determined in line with the aim of the asset. Assets with maturities under 12 months are included in balance sheet under current assets, and those with maturities over 12 months under non-current assets, except for derivative instruments recorded at fair value through profi t or loss, which are included in current assets regardless of maturity.
The fi nancial assets recorded at fair value through profi t or loss include derivative instruments to which hedge accounting is not applied. These are measured at fair value without the impact of possible transaction costs. The changes in fair value are recognised in the income statement.
Loans and other receivables at amortised cost are not quoted in the market and are not kept for trading purposes. Loan receivables are measured at amortised cost using the effective interest method. Transaction costs directly attributable to the acquisition or issue of the fi nancial asset are included in the initial recognised amount. Impairment losses are recognised in the income statement if the carrying amount of the loan receivable is greater than the estimated recoverable amount.
Accounts receivable are recorded at original invoiced amount less an estimated valuation allowance for impairment. An allowance is recognised when there is objective evidence that Cargotec will not be able to collect all amounts due. Heldto-maturity investments are valued at accrued cost. There were no held-to-maturity investments on the balance sheet date.
Financial assets available-for-sale consist of investments in shares or interest-bearing assets. Current fi nancial assets available-for-sale are valued at fair value. Changes in fair values are booked in the fair value reserve in equity, taking the tax effect into account. Changes in fair values are transferred from equity to the income statement when the investment is sold or when there is objective evidence that the fair value has decreased in such a way that recognition of an impairment loss is required. Impairment of interest-bearing assets can be reversed through the income statement if the fair value of the asset increases due to event occurring after the recognition of the impairment loss. Impairment on investments in shares cannot be reversed.
Purchases and sales of derivative instruments are recognised on the trade-date, while the other fi nancial asset categories are recognised on the settlement date.
Cash and cash equivalents include cash balances, short-term deposits with banks and other short-term liquid investments with maturity up to three months. Bank overdrafts are included in other current interest-bearing liabilities. In the cash fl ow
statement bank overdrafts are deducted from cash and cash equivalents.
Financial liabilities are classifi ed as fi nancial liabilities recorded at fair value through profi t or loss, or fi nancial liabilities recognised at amortised cost. Liabilities with maturities of under 12 months are included in the balance sheet under current liabilities, and those with maturities of over 12 months under non-current liabilities, except for derivative instruments recorded at fair value through profi t or loss, which are included under current liabilities regardless of maturity.
Financial liabilities recorded at fair value through profi t or loss consist of derivative instruments to which hedge accounting is not applied. They are measured at fair value without the impact of possible transaction costs. Changes in fair value are recognised in the income statement.
Financial liabilities recognised at amortised cost are initially recognised in current and non-current liabilities at fair value, net of any transaction costs incurred. This category includes interest-bearing and non-interest-bearing payables. Interest and transaction costs are accrued and recorded in the income statement over the period of the loan payable using the effective interest rate method.
On the date of entry into a derivative contract, Cargotec designates it as either a) cash fl ow hedge of highly probable operative cash fl ow or cash fl ow from a fi rm commitment, b) fair value hedge of loan or deposit, an other balance sheet item or fi rm commitment in foreign currency, c) hedge of investment in a foreign entity or as d) derivative not qualifying for hedge accounting. At the balance sheet date all derivative instruments fell into the categories of cash fl ow hedges or derivatives not qualifying for hedge accounting.
Derivative instruments, to which hedge accounting is applied, and for which the underlying cash fl ow matures after twelve months, are included in non-current assets and liabilities. Other derivative instruments are included in current assets and liabilities.
Derivative instruments are initially recognised on the balance sheet at cost, which equals the fair value, and are subsequently measured at fair value on each balance sheet date. Fair values of FX forward contracts and forward rate agreements are based on quoted market rates on the balance sheet date. The fair values of cross-currency and interest rate swaps are calculated as the present value of the estimated future cash fl ows. Options are valuated based on generally accepted valuation models. No options or forward rate agreements were in use on the balance sheet date.
Hedge accounting in accordance with IAS 39 is applied to hedges of operative cash fl ows and hedges of cash fl ows associated with foreign currency denominated borrowings. To qualify for hedge accounting the Company documents the hedge relationship of the derivative instrument and the underlying hedged item, the Company's risk management
targets and the strategy of applying hedge accounting. When starting hedge accounting and at least upon every interim closing of the accounts the Company documents and estimates the effectiveness of the hedge by measuring the ability of the hedging instrument to offset any changes in the fair value of the underlying asset or cash fl ow.
Changes in the fair value of effective cash fl ow hedges under hedge accounting are recognised in equity in fair value reserves. The ineffective portion is recognised immediately in the income statement. Cumulative gains or losses on the hedge deferred to equity are recognised in the income statement as adjustment of the underlying hedged item when the underlying hedged item is recognised. The cumulative change in the fair value of hedging instruments relating to operative items that no longer expected to materialise are recognised immediately in the income statement under other operating expenses. When the hedging instrument is sold, the contract is revoked or exercised or the relation of the hedging instrument and the underlying item is revoked or exercised or the relationship between the hedging instrument and the underlying item is revoked, the cumulative change in the fair value of the hedging instrument is booked as a separate item under equity and is recognised in the income statement when the underlying operative item materialises.
Changes in the fair value of derivatives that qualify as fair value hedges are recorded in the income statement together with any changes in the fair value of the hedged asset or liability that are attributable to the hedged risk. Any gain or loss on effective hedges of net investments in foreign operations is recognised under equity through the statement of changes in equity. Gains and losses accumulated under equity on an effi cient portion of the hedging instrument are transferred to the income statement when the foreign operation is disposed of.
Changes in the fair values of hedges, to which hedge accounting is not applied, are recognised in the income statement, either in operative income and expenses, or fi nancial income and expenses depending on the underlying exposure.
The dividends proposed by the Board of Directors are not recognised in the fi nancial statements until approved by the Company's shareholders at the Annual General Meeting.
Cargotec operates various pension plans in accordance with local conditions and practices. The plans are classifi ed as either defi ned contribution plans or defi ned benefi t plans. Contributions to the defi ned contribution plans are charged directly to the income statement on the year to which these contributions relate.
Defi ned benefi t plans are funded through payments to insurance companies or pension funds as determined by actuarial calculations. The liability of defi ned benefi t pension plan is the present value of future obligations less the fair value of plan assets together with adjustments for unrecognised actuarial gains or losses. Pension costs assessed by annual actuarial calculations are recognised in the income statement
over the expected average remaining working lives of the employees. The liability of defi ned benefi t pension plan is determined by projected unit credit method. The yield of a high quality bond issued by a corporate or government is used as discount factor in net present value calculation. Unrecognised actuarial gains or losses are booked in the income statement over the expected average remaining working lives of the employees to the extent that they exceed which ever is greater 10% of the liability or 10% of the fair value of plan assets.
Provisions are recognised when Cargotec has a current legal or constructive obligation as a result of past events, and it is probable that an outfl ow of resources will be required to settle the obligation and a reliable estimate of the amount of the obligation can be made. Provisions are accounted for using the best estimate for the costs required to settle the obligation on the balance sheet date. If the time value of money is signifi cant the provision is stated at present value of estimated costs.
Provisions for warranties cover the estimated costs of repairing or replacing products still under warranty on the balance sheet date. Provisions for warranty are calculated based on historical experience of levels of repairs and replacements.
A provision is recorded for a loss-making contract when the costs required to fulfi l the commitment exceed the gain expected from the contract.
A restructuring provision is recorded when Cargotec has prepared a detailed restructuring plan and started the implementation of, or communicated, the plan. A restructuring plan consists of at least the following information: business which is affected by the restructuring, the main units affected by the restructuring, the location, job descriptions and estimated number of employees who will receive compensation for termination of employment as well as costs to be incurred and the timetable of the plan. No provision is made for expenses related to the continuing operations.
When the company purchases shares in Cargotec Corporation, the consideration paid and directly attributable costs are recognised as a deduction in equity. When such shares are sold, the consideration received, net of directly attributable transaction costs and income tax effect, is included in equity.
Cargotec has applied IFRS 2 (Share-based Payment) to option plans where options have been granted and vesting period has been started after the formation of the Company on June 1, 2005.
Options are valued at fair value on the grant date and recognised as an expense in the income statement during the vesting period. For equity-settled share-based payment transactions (e.g. share options), a corresponding increase is recorded under equity. For cash-settled share-based payment transactions (e.g. synthetic options), a corresponding debt is recorded. The cost of the options determined upon the grant date refl ects Cargotec estimate of the number of options that
will ultimately vest at the end of the share-based payment's vesting period. The fair value of the options is determined on the basis of market prices or Black-Scholes -option pricing model. Non-market criteria are not included in the fair value of the option but taken into account in the number of options assumed have been vested at the end of the vesting period. Upon each closure of the accounts, Cargotec updates its estimate of the fi nal amount of the options to be rested. In equity-settled share-based payment transactions the fair value of the options is adjusted after the vesting date only if the aforementioned estimate changes. Cash-settled share-based payment transactions are remeasured at fair value during each fi nancial period until the liability is settled. Any changes in estimates and fair values are recorded in the income statement over the vesting period.
When the options are exercised, the proceeds, net of any transaction costs, are credited to the share capital (accounting par value) and share premium account.
The consolidated fi nancial statements have been prepared in accordance with International Financial Reporting Standards which require that Cargotec's management make estimates and assumptions that affect the reported amounts of assets and liabilities, as well as the disclosure of contingent assets and liabilities upon the date of fi nancial statements, and the reported amounts of income and expenses during the fi nancial period. These estimates are based on management's best knowledge of current events and actions and actual results may differ from the estimates. Accounting estimates are employed in the fi nancial statements to determine reported amounts, including the impairment of goodwill and other assets, the useful lives of tangible and intangible assets, and provisions and taxes.
The completed contract method is Cargotec's main revenue recognition principle. The percentage of completion method is applied to separately identifi ed long-term contracts. Completion is generally measured by reference to cost incurred to date as a percentage of estimated total project costs. The margin is recognised prudently in accordance with the historical variations in pre- and post calculations. If there is any uncertainty about the margin costs are recognised when incurred and, no profi t is recognised. Possible contract losses are immediately recognised as an expense and recognised revenues and profi ts are subject to revisions during the project in the event that the assumptions regarding the overall project outcome are revised. Changes in cost structure may affect the total cost and hence the amount to be recognised as expenses. The percentage of completion method is only used when a reliable estimate of the stage of completion can be made.
Recognition and the carrying amount of deferred tax assets are reviewed in particular. Cargotec considers whether it is probable that the subsidiaries will have suffi cient taxable
profi ts against which unused tax losses or unused tax credits can be utilised.
A reliable estimate of the amount to be provided is a prerequi site for booking a provision. The amount recognised is the best estimate of the expenditure required to settle the present obligation on the balance sheet date. Estimates of the outcome and fi nancial effect require the judgement by the management, based on similar transactions and, in some cases, statements from independent experts. The provisions are reviewed and adjusted regularly to refl ect the current best estimate.
The measurement of fair value of assets acquired through business combinations is based on the market value of similar assets (tangible assets), or an estimate of expected cash fl ows (intangible assets). The management trusts the estimates and assumptions to be suffi ciently reliable for determining fair values.
The book values of assets are reviewed regularly, at least annually, in order to assess whether an asset has been impaired. In assessing impairment both external and internal sources, of information are considered. External sources include a signifi cant decline in market value that is not result of the passage of the time or a normal use of the assets or increase in interest sales. Internal sources of information include evidence of the obsolescense of, or physical damage to, an asset when the recoverable amount of an asset is less than the carrying amount, an impairment loss is recognised as an expense immediately, and the carrying amount is reduced to the asset's recoverable amount.
In 2009 Cargotec will adopt the following new and amended standards and interpretations by the IASB published in 2007. - IAS 1: Presentation of Financial Statements. The revised standard requires non-owner changes in equity to be presented separately from owner changes in equity. It has impact on the presentation of Financial Statements in 2009.
IAS 23: Borrowing Costs. The amended standard requires that the costs, including borrowing costs, that are directly attributable to the acquisition, construction or production of a qualifying asset form part of the cost of that asset. In previous years, Cargotec has expensed such borrowing costs when incurred. The amendment is estimated to have no material impact on the coming fi nancial statement.
IFRS 2: Share-based payments -Vesting Conditions and Cancellations: The amended standard clarifi es that vesting conditions are service conditions and performance conditions only. Other features of a share-based payment are not vesting conditions.
IFRS 8: Operating segments. The standard requires that the
segment information in the fi nancial statements should be based on the management reporting of the Company. The application of IFRS 8 has no material impact of the presentation of the segment information, as the previously presented segment information was based on the required management reporting structure.
IAS 1: Presentation of Financial Statement and IAS 32: Financial Instruments: Presentation. – Puttable Financial Instruments and Obligations Arising on Liquidation. The amended standards require certain puttable fi nancial instruments to be categorised as equity, whereas they were previously categorised as liability.
Amendments to IFRS 1: First-time Adoption of International Financial Reporting, and to IAS 27: Consolidated and Separate Financial Statements – Cost of an Investment in a Subsidiary, Jointly Controlled Entity or Associate. The amendments are applicable to fi rst-time adopter of IFRS, and have therefore no impact on Cargotec Financial Statements.
IFRIC 12: Service Concession Arrangements. Cargotec has no such arrangements, and the interpretation has no impact on the fi nancial statements.
IFRIC 13: Customer Loyalty programmes. Cargotec has no such programmes, and the interpretation has no impact on the fi nancial statements.
IFRIC 15: Agreements for the Costruction of Real Estate. The interpretation provides guidance on how to determine whether IAS 18: Revenue or IAS 11: Construction Contracts should be applied to particular transactions. The interpretation may be applied to the delivery of other goods or services. Management estimates the interpretation has no material impact on the fi nancial statements.
IFRIC 16: Hedges of a Net Investment in a Foreign Operation. The interpretation clarifi es the accounting for the hedge of a net investment in a foreign operation in an entity's consolidated fi nancial statements. Management estimates the interpretation has no material impact on the fi nancial statements.
The following standards and interpretations have been published, but they are not in force 2008 and they will not be applied in 2009
IAS 27: Consolidated and Separate Financial Statements. The amended standard requires that the changes in a parent company's ownership interest that do not result in a loss of control are accounted for as equity transactions. If the control is lost, the remaining investment should be measured at fair value at the date that the control is lost and any resulting gain or loss should be recognised in profi t or loss. The respective accounting will be applied to associated companies and jointly controlled entities.
IFRS 3: Business Combinations. The revised standard includes several signifi cant changes, which have impact on accounting of goodwill and sales profi t or loss resulting from disposal of businesses. The changes have impact on profi t and loss in the acquisition year and in the years when additional earn-outs are paid or additional acquisitions performed.
IAS 39 (amendment), "Financial instruments: Recognition and measurement – Eligible Hedged Items" prohibits designating infl ation as a hedgeable component of a fi xed rate debt. It also
prohibits including time value in the one-sided hedged risk when designating options as hedges.
Cargotec was listed on June 1, 2005 and the Company's fi rst fi nancial period was June 1–December 31, 2005. The annual report presents pro forma comparison fi gures for those periods for which offi cial comparative fi gures are not available. Pro forma fi gures present Cargotec's fi nancial information based on its business and corporate structure at the time of the listing to facilitate the fi nancial evaluation of the Company. Hence, MacGREGOR's marine cargo fl ow business acquired in spring 2005 is included in the pro forma fi gures of all comparison periods as if the acquisition would have happened before the periods presented. Pro forma information is based on IFRS and the accounting principles of Cargotec's offi cial consolidated fi nancial statements have been applied when suitable. The fi gures are unaudited. The fi nal accounting impact of the MacGREGOR acquisition according to IFRS 3 is included in the offi cial result as of June 1, 2005. In the 2005 pro forma fi gures the impact has been recognised as an adjustment to equity. The pro forma accounting principles prior to the listing are presented in Cargotec's listing particulars.
Cargotec fi nance function and fi nancial risk management are conducted according to the Treasury Policy, approved by the Board of Directors. Organization of responsibilities and principles of fi nancial risk management, monitoring and reporting are defi ned in the Treasury Policy. Treasury Committee, appointed by the Board, is responsible for Treasury Policy compliance and for organising and monitoring treasury functions. Detailed guidelines for fi nancing functions are defi ned in Treasury Instructions, approved by the Treasury Committee.
The objective of treasury management is to secure suffi cient funding for business operations, avoiding fi nancial constraint at all times, to provide business units with fi nancial services, to minimise the costs of fi nancing, to manage fi nancial risks (currency, interest rate, liquidity and funding, credit and operational risks) and to provide Cargotec Executive Board with information on the fi nancial position and risk exposures of Cargotec and its business units.
Cargotec Treasury is responsible for funding at corporate level, for managing liquidity and fi nancial risks, for providing effi cient set up of fi nancing operations and for monitoring business unit fi nancial positions. Cargotec Treasury reports these issues monthly to the Board of Directors. The business units are responsible for hedging their fi nancial risks according to the Treasury Policy and instructions from Cargotec Treasury.
Cargotec operates in approximately 160 countries and is, due to global operations, exposed to risks arising from foreign exchange rate fl uctuations. A signifi cant proportion of Cargotec sales and costs are generated in foreign currencies, mostly in US dollars and Swedish krona. Cargotec also operates in countries in which hedging currency risks is restricted, such as in China and South Korea.
The objective of currency risk management is to hedge operations against exchange rate fl uctuations, thus allowing time for the business units to react and adapt to changes in exchange rates. Foreign currency positions, which include sales, purchases and fi nancing related contractual cash fl ows, and highly probable forecast cash fl ows, are hedged through forward contracts. The business units report their risk exposures and hedging levels to Cargotec Treasury. In countries, in which hedging is restricted, foreign currency denominated loans and deposits may be used as hedging instruments.
Cargotec applies hedge accounting under IAS 39 to the majority of its hedging contracts. A change in the fair value of a future cash fl ow hedge is recognised in the cash fl ow hedge reserve under equity until the cumulative profi t or loss is recorded in the income statement simultaneously with the underlying cash fl ow. Hedge accounting is not applied in cases where its impact on the consolidated income statement is deemed insignifi cant by Cargotec Treasury. The majority of the hedging instruments have maturities of three years or less.
Sensitivity analysis, in accordance with IFRS 7, aims is to represent the sensitivity of the consolidated income and equity with respect to foreign exchange rate fl uctuations. The calculation of the income statement sensitivity includes the sensitivity of foreign currency denominated fi nancial assets and liabilities in the balance sheet, the sensitivity of hedges assigned to balance sheet items and the sensitivity of hedges to which hedge accounting is not applied, i.e. to which changes in fair values are recognised through profi t or loss. The sensitivity of equity arises from hedges of forecast cash fl ows, to which hedge accounting is applied and hence changes in fair value recognised in the cash fl ow hedge reserve under equity. A foreign exchange rate impact on the fair value of the hedge reserve is expected to be offset by the corresponding impact on the underlying cash fl ow the forecast fl ows materialise.
The net exposures including Cargotec companies' foreign currency denominated fi nancial instruments, along with the analysed effects of currency strengthening against other currencies, if occurred at the end of period, are presented in the table below. Weakening of currency would result in effect of opposite sign. The exchange rate change percentages used for calculating the sensitivity, are the historic EUR/USD and EUR/SEK volatilities during year 2008 (Dec 31, 2007: fi ve percent change).
Investments in non-euro-area subsidiaries cause translation differences, recorded in consolidated equity (translation risk). The objective of managing translation position is to hedge the capital structure so as to balance the effect of foreign exchange rate fl uctuations on debt and equity. The capital structures of Cargotec foreign subsidiaries may be hedged through cross currency and interest rate swaps or foreign currency denominated debt instruments. For the moment, no hedging requirements have emerged due to the capital structure.
Fluctuations in market interest rates have an effect on consolidated interest outfl ows and the fair value of interest-bearing receivables, loans payable and derivative instruments. The objective of interest rate risk management is to mitigate the impact of interest rate changes on the income statement, balance sheet and cash fl ow, also taking account of the market value of net debt. The duration of the fi nancial portfolio is maintained within the limits set by the Treasury Committee, by balancing between fi xed and fl oating rate debt and by using derivative instruments.
| Dec 31, 2008 ec 31, | Dec 31, 2007 ec 31, | |||||
|---|---|---|---|---|---|---|
| MEUR | USD | EUR | SEK | USD | EUR | SEK |
| Foreign currency denominated fi nancial instruments and hedges of those items |
7.1 | 36.3 | 3.3 | 25.5 | 2.4 | 4.2 |
| Hedges of future cash fl ows in equity reserve | -548.4 | -390.9 | 1.4 | -417.8 | -375.5 | -1.9 |
| Change in currency rate used | 12% | 12% | 7% | 5% | 5% | 5% |
| Effect on Income before taxes | 0.9 | 4.4 | 0.2 | 1.3 | 0.1 | 0.2 |
| Effect on Equity | -65.8 | -46.9 | 0.1 | -20.9 | -18.8 | -0.1 |
| MEUR | 0–6 mths –6 | 6–12 mths –12 | 12–24 mths 2–24 | 24–36 mths 4–36 | Later | Total |
|---|---|---|---|---|---|---|
| Interest-bearing assets | -79.5 | -4.2 | - | - | -3.5 | -87.2 |
| Non-current loans from fi nancial institutions |
118.8 | 0.8 | 0.1 | 0.1 | 0.7 | 120.6 |
| Corporate bonds* | - | - | - | - | 314.7 | 314.7 |
| Finance lease liabilities | 1.7 | 1.6 | 1.3 | 0.7 | 3.7 | 8.9 |
| Current interest-bearing liabilities** | 107.7 | 2.9 | - | - | - | 110.6 |
| Net | 148.7 | 1.2 | 1.4 | 0.8 | 315.6 | 467.6 |
| MEUR | 0–6 mths –6 | 6–12 mths –12 | 12–24 mths 2–24 | 24–36 mths 4–36 | Later | Total |
|---|---|---|---|---|---|---|
| Interest-bearing assets | -179.2 | -3.7 | - | - | -2.0 | -184.9 |
| Non-current loans from fi nancial institutions |
121.8 | 0.4 | 0.3 | 0.3 | 0.3 | 123.0 |
| Corporate bonds* | - | - | - | - | 302.8 | 302.8 |
| Finance lease liabilities | 1.6 | 1.4 | 2.5 | 2.2 | 3.1 | 10.9 |
| Current interest-bearing liabilities** | 51.6 | - | - | - | - | 51.6 |
| Net | -4.2 | -1.9 | 2.8 | 2.5 | 304.3 | 303.6 |
* On December 31, 2008, the interest fi xing period for corporate bonds ranged between 4 and 11 years.
** Including bank overdrafts
On December 31, 2008, Cargotec consolidated interest-bearing debt totalled EUR 554.8 (December 31, 2007: 488.4) million, of which EUR 314.7 (December 31, 2007: 302.8) million consisted of fi xed rate corporate bonds, and EUR 230.3 (December 31, 2007: 173.8) million of fl oating rate loans, short term loans and bank overdraft facilities. The remaining EUR 9.8 (December 31, 2007: 11.7) million consisted of fi nance leases and long term fi xed rate loans. The EUR 87.2 (December 31, 2007: 184.9) million consolidated investment portfolio consisted mainly of bank account balances and fl oating rate loan receivables. On December 31, 2008, the average duration of the debt portfolio, excluding bank overdrafts, was 50 (December 31, 2007: 59) months and that of the loan receivables 21 (December 31, 2007: 2) months.
For interest sensitivity analysis in accordance with IFRS 7, rate change of 1.6 percentage points was used, representing the maximum variance in the most common reference rate in Cargotec debt portfolio, 6 months euribor, during year 2008. Following the sensitivity analysis, if the market interest rate would have been 1.6 percentage points lower/higher, the impact on the consolidated interest expenses on a yearly basis would be EUR 1.2 (December 31, 2007: 0.5) million.
Cash fl ows of the USD 300 million Private Placement corporate bonds, funded in February 2007 and maturing in years 2014 to 2019, are converted into euro fl ows using long term cross currency and interest rate swaps. Resulting from the hedging, Cargotec effectively holds EUR 225 million long term fi xed rate debt. Hedge accounting under IAS 39 is applied to these cross currency and interest rate swaps.
In addition to the risks related to the treasury function, Cargotec is exposed to price and supply risks relating to raw material and component purchases. The business units are responsible for identifying these risks and determining the required hedging measures. These risks are managed by thorough supplier selection process and long-term relationships with strategic suppliers.
Liquidity risk is managed by retaining long term liquidity reserves exceeding short term liquidity requirements. On December 31, 2008, the liquidity reserves, including cash and cash equivalents and unused long term credit facilities, totalled EUR 714.2 (December 31, 2007: 764.0) million. Short term liquidity requirement includes the repayments of short and long term debt within the next 12 months, and strategic liquidity requirement, defi ned by Treasury Committee, which covers the operative funding requirements within the next 12 months. On December 31, 2008, short-term interest-bearing liabilities and the current portion of long-term interest-bearing liabilities maturing during the next 12 months totalled EUR 80.9 (December 31, 2007: 43.7) million.
On December 31, 2008, committed, unused long-term credit facilities included in liquidity reserves totalled EUR 635 (December 31, 2007: 585) million, of which EUR 50 million matures in 2010, EUR 535 million in 2012 and EUR 50 million in year 2013. According to the facility agreements, Cargotec has a right to withdraw funds on 3 days notice on agreed terms. Additionally, to fulfi l short-term cash management requirements, Cargotec has short term bank overdraft facilities of EUR 113 (December 31, 2007: 118) million and a EUR 150 million Commercial Paper facility, of which EUR 36.2 (December 31, 2007: 0) million was used.
Funding risk is defi ned as risk of an untenably high proportion of loans or credit facilities maturing at a time when refunding is not economically or contractually feasible. The risk is minimised by balancing the repayment schedules of loans and credit facilities, as well as retaining fl exible credit facility agreements. Cargotec loan agreements include, in addition to standard terms, covenants restricting the corporate capital structure. According to the covenant, Cargotec gearing must be retained below 125 percent. On December 31, 2008 gearing was 55.3 (December 31, 2007: 36.3) percent. According to management assessment, Cargotec is in good position regarding liquidity and there are no signifi cant concentrations of risks relating to refunding.
Table below represents maturity analysis of fi nancial liabilities. The fi gures are non-discounted contractual cash fl ows. Cargotec Treasury reports cash fl ows and liquidity monthly to Treasury Committee and Board of Directors.
| MEUR | 2009 | 2010 | 2011 | 2012 | 2013 | Later | Total |
|---|---|---|---|---|---|---|---|
| Derivatives | |||||||
| Fx forward contracts, outfl ow | -2,689.6 | -694.6 | -219.1 | -14.7 | -0.2 | - | -3,618.2 |
| Fx forward contracts, infl ow | 2,684.0 | 653.3 | 205.0 | 13.7 | 0.2 | - | 3,556.2 |
| Cross-currency and interest rate swaps, outfl ow | -10.5 | -10.5 | -10.5 | -10.5 | -10.5 | -255.0 | -307.4 |
| Cross-currency and interest rate swaps, infl ow | 12.0 | 12.0 | 12.0 | 12.0 | 12.0 | 249.0 | 309.0 |
| Derivatives, net erivatives, |
-4.0 | -39.8 | -12.6 | 0.5 | 1.5 | -6.0 | -60.4 |
| Accounts payable and other non-interest bearing liabilities | -678.1 | -5.6 | -5.3 | -5.3 | -5.9 | -4.6 | -704.7 |
| Loans from fi nancial institutions, repayments | -77.7 | -19.2 | -20.2 | -50.6 | -0.1 | -30.0 | -197.8 |
| Loans from fi nancial institutions, fi nance charges | -5.8 | -5.8 | -3.9 | -2.7 | -1.4 | -3.4 | -23.0 |
| Corporate bonds, repayments* | - | - | - | -100.0 | - | -215.6 | -315.6 |
| Corporate bonds, fi nance charges | -15.8 | -15.8 | -15.8 | -13.8 | -12.0 | -34.0 | -107.2 |
| Finance leases, repayments | -3.3 | -1.3 | -0.7 | -1.4 | -0.3 | -2.0 | -8.9 |
| Finance leases, fi nance charges | -0.4 | -0.3 | -0.2 | -0.2 | -0.2 | -0.9 | -2.1 |
| Total | -785.1 | -87.8 | -58.6 | -173.5 | -18.3 | -296.4 | -1,419.8 1,419.8 |
| MEUR | 2008 | 2009 | 2010 | 2011 | 2012 | Later | Total |
|---|---|---|---|---|---|---|---|
| Derivatives | |||||||
| Fx forward contracts, outfl ow | -1,835.4 | -462.6 | -270.2 | -48.9 | -4.4 | - | -2,621.5 |
| Fx forward contracts, infl ow | 1,868.4 | 463.3 | 270.2 | 48.6 | 4.3 | - | 2,654.9 |
| Cross-currency and interest rate swaps, outfl ow | -10.5 | -10.5 | -10.5 | -10.5 | -10.5 | -274.5 | -326.9 |
| Cross-currency and interest rate swaps, infl ow | 11.3 | 11.3 | 11.3 | 11.3 | 11.3 | 250.8 | 307.5 |
| Derivatives, net erivatives, |
33.9 | 1.6 | 0.8 | 0.6 | 0.8 | -23.7 | 14.0 |
| MEUR | 2008 | 2009 | 2010 | 2011 | 2012 | Later | Total |
|---|---|---|---|---|---|---|---|
| Accounts payable and other non-interest bearing liabilities | -598.2 | -8.8 | -31.2 | -4.6 | -5.4 | -2.2 | -650.4 |
| Loans from fi nancial institutions, repayments | -40.7 | -0.3 | -22.0 | -20.2 | -50.1 | -30.0 | -163.3 |
| Loans from fi nancial institutions, fi nance charges | -6.7 | -6.3 | -6.3 | -5.3 | -3.7 | -5.3 | -33.5 |
| Corporate bonds, repayments* | - | - | - | - | -100.0 | -203.8 | -303.8 |
| Corporate bonds, fi nance charges | -15.1 | -15.1 | -15.1 | -15.1 | -15.1 | -47.1 | -122.7 |
| Finance leases, repayments | -3.0 | -2.5 | -2.2 | -0.2 | -0.2 | -2.8 | -10.9 |
| Finance leases, fi nance charges | -0.5 | -0.5 | -0.4 | -0.2 | -0.2 | -1.3 | -3.1 |
| Total | -630.3 | -31.8 | -76.4 | -45.0 | -174.0 | -316.0 | -1,273.6 1,273.6 |
* The maturities of corporate bonds range between 2012 and 2019.
The business units are responsible for managing the operational credit risks. On account of the diverse and global clientele, Cargotec is not exposed to signifi cant credit risk concentrations. Credit risks are managed through contractual clauses including advance payments, bank guarantees or other guarantees. Risks of default or fraud are controlled by monitoring the creditworthiness of customers. Credit risks relating to major contracts are shared with fi nancial institutions, insurance companies or export guarantee boards, when feasible. More information on trade receivables is presented in Note 21.
Cargotec holds no signifi cant external loan receivables. Deposits of liquidity reserves and trading in fi nancial instruments are only accepted with counterparties confi rmed by the Treasury Committee. The Treasury Committee examines counterparties and sets counterparty limits based on their solvency and creditworthiness. Cargotec Treasury actively reviews counterparty risks and may reject a counterparty on immediate notice. On December 31, 2008, only Cargotec's main relationship banks were accepted as counterparties. The maximum risk relating to investments corresponds to their carrying amount. However, according to the management assessment, no credit losses are anticipated on the investments of liquidity reserves.
The management of operational risks aims to eliminate losses or increased risk levels due to errors in procedures or insuffi cient monitoring. The risks are minimised by maintaining a high level of profi ciency, identifying and documenting routine procedures and organising responsibilities. Risks relating to transactions are minimised by conducting regular general assessments and monitoring trading limits, market valuations and daily trade confi rmations.
The goal of capital structure management is to secure operational preconditions at all times and to maintain the optimum capital cost structure. The target capital structure is determined by Shareholders and is regularly monitored by the Board of Directors.
Gearing, calculated as the ratio of net debt to equity, is the key fi gure monitored for capital structure management. Net debt is calculated as net of interest-bearing liabilities and assets, including cash and cash equivalents. The long-term target is to keep gearing under 50 percent. Net debt and gearing is represented in the table below.
| MEUR | Dec 31, 2008 ec 31, | Dec 31, 2007 ec 31, |
|---|---|---|
| Interest-bearing liabilities* | 565.0 | 510.4 |
| Interest-bearing receivables | -7.9 | -5.9 |
| Cash and cash equivalents | -79.2 | -179.0 |
| Interest-bearing net debt | 477.8 | 325.5 |
| Equity | 864.4 | 896.7 |
| Gearing | 55.3% | 36.3% |
* The hedging of US Private Placement corporate bonds to eliminate the effect of exchange rate changes is included in interest bearing liabilities for calculation of gearing.
The segment information is presented in primary reporting by business segment and in secondary reporting by geographical segment. Pricing of inter-segment transactions is based on current market prices.
The primary business segments based on the internal reporting and management structure are Hiab, Kalmar and MacGREGOR. Hiab is the global market leader in on-road load handling solutions for moving, lifting, loading and unloading products, goods or raw material from vehicles. Kalmar is the world's leading provider of container and heavy load handling equipment and services. Kalmar has activities in terminals, ports, heavy industry and distribution centres. MacGREGOR is the global market leader in providing marine cargo fl ow solutions, offshore solutions and related services. Its solutions are used in general cargo, bulk, container and RoRo vessels, tankers, bulk terminals and offshore industry. The segment Others consists mainly of those group administration costs, which are not allocated to businesses.
The fi nancial performance of the business segments is measured through operating profi t. Financing income and expenses and taxes are not allocated to the business segments. Business segments' assets comprise intangible assets, property, plant and equipment, investments in associated companies and joint ventures, available-for-sale investments, inventories and operating non-interest-bearing receivables (including derivatives designated as hedges of future commercial transactions). Unallocated assets comprise loans and other interestbearing assets, cash and cash equivalents, income tax receivables, deferred tax assets, deferred interests and derivatives designated as hedges of future treasury transactions. Business segments' liabilities comprise pension obligations, provisions and operating non-interestbearing liabilities (including derivatives designated as hedges of future commercial transactions). Unallocated liabilities comprise loans and other interest-bearing liabilities, deferred tax liabilities, income tax payables, accrued interests and derivatives designated as hedges of future treasury transactions.
Geographical segments are based on the main market areas. Sales are reported by customer location, while assets and capital expenditure by the location of the assets. Goodwill has not been allocated to geographical segments.
| MEUR | Hiab | Kalmar | MacGREGOR acGREGOR | Others | Eliminations liminations | Total |
|---|---|---|---|---|---|---|
| Sales | ||||||
| Services | 211.8 | 436.9 | 222.1 | - | - | 870.8 |
| Products | 687.1 | 1,078.3 | 763.0 | - | - | 2,528.4 |
| External sales total | 898.9 | 1,515.3 | 985.1 | - | - | 3,399.2 |
| Internal sales | 8.1 | 0.2 | 0.0 | - | -8.3 | 0.0 |
| Total sales otal | 907.0 | 1,515.5 | 985.1 | - | -8.3 | 3,399.2 |
| Share of associated companies' and joint | ||||||
| ventures' net income | 0.1 | 0.2 | 0.2 | - | - | 0.6 |
| Operating profi perating profi t |
35.2 * | 85.1 * | 83.6 | -30.1 | - | 173.7 |
| Operating profi t-% | 3.9% | 5.6% | 8.5% | - | - | 5.1% |
| Operating profi perating profi t excluding restructuring t excluding restructuring |
49.4 | 89.6 | 83.6 | -29.8 | - | 192.8 |
| Operating profi t % excluding restructuring | 5.4% | 5.9% | 8.5% | - | - | 5.7% |
| Financing items and taxes | - | - | - | - | - | -52.9 |
| Net income et income |
- | - | - | - | - | 120.8 |
| Depreciation and amortisation | 15.1 | 33.0 | 8.7 | 0.6 | - | 57.4 |
| Impairment charges | 0.7 | 2.0 | - | - | - | 2.7 |
* Including EUR 19.1 million restructuring costs.
| MEUR | Hiab | Kalmar | MacGREGOR acGREGOR | Others | Eliminations liminations | Total |
|---|---|---|---|---|---|---|
| Sales | ||||||
| Services | 161.1 | 405.8 | 190.5 | - | - | 757.5 |
| Products | 766.1 | 937.5 | 557.2 | - | - | 2,260.7 |
| External sales total | 927.2 | 1,343.3 | 747.7 | - | - | 3,018.2 |
| Internal sales | 4.0 | 0.0 | 0.0 | - | -4.0 | 0.0 |
| Total sales otal | 931.2 | 1,343.3 | 747.7 | - | -4.0 | 3,018.2 |
| Share of associated companies' net income | 0.1 | 0.1 | 0.2 | - | - | 0.3 |
| Operating profi perating profi t |
73.8 | 87.5 * | 59.4 | -17.5 | 0.0 | 203.1 |
| Operating profi t % | 7.9% | 6.5% | 7.9% | - | - | 6.7% |
| Financing items and taxes | - | - | - | - | - | -64.7 |
| Net income et income |
- | - | - | - | - | 138.4 |
| Depreciation and amortisation | -14.0 | -35.7 | -9.9 | -0.2 | - | -59.8 |
| Impairment charges | - | - | -0.1 | - | - | -0.1 |
* Including the one-off cost of EUR 18.0 million related to a container spreader inspection and repair programme.
| MEUR | Hiab | Kalmar | MacGREGOR acGREGOR | Others | Eliminations liminations | Total |
|---|---|---|---|---|---|---|
| Non-interest-bearing assets | 697.9 | 1,081.8 | 933.9 | 26.2 | -19.3 | 2,720.6 |
| Investments in associated companies and joint ventures |
0.5 | 3.9 | 2.5 | - | - | 7.0 |
| Unallocated assets, interest-bearing | - | - | - | - | - | 87.2 |
| Other unallocated assets | - | - | - | - | - | 224.2 |
| Total assets otal | 698.5 | 1,085.7 | 936.5 | 26.2 | -19.3 | 3,038.9 |
| Non-interest-bearing liabilities | 173.6 | 512.7 | 713.7 | 6.7 | -19.3 | 1,387.4 |
| Unallocated liabilities, interest-bearing | - | - | - | - | - | 554.8 |
| Other unallocated liabilities | - | - | - | - | - | 232.3 |
| Total liabilities otal |
173.6 | 512.7 | 713.7 | 6.7 | -19.3 | 2,174.5 |
| Assets employed | 524.9 | 572.9 | 222.8 | 19.5 | - | 1,340.1 |
| Capital expenditure | 25.0 | 65.3 | 18.0 | 4.4 | - | 112.8 |
| MEUR | Hiab | Kalmar | MacGREGOR acGREGOR | Others | Eliminations liminations | Total |
|---|---|---|---|---|---|---|
| Non-interest-bearing assets | 662.8 | 929.0 | 690.1 | 16.9 | -7.1 | 2,291.7 |
| Investments in associated companies | 3.5 | 0.2 | 1.1 | - | - | 4.8 |
| Unallocated assets, interest-bearing | - | - | - | - | - | 184.9 |
| Other unallocated assets | - | - | - | - | - | 101.2 |
| Total assets otal | 666.2 | 929.3 | 691.2 | 16.9 | -7.1 | 2,582.6 |
| Non-interest-bearing liabilities | 188.9 | 438.0 | 439.5 | 6.2 | -7.1 | 1,065.5 |
| Unallocated liabilities, interest-bearing | - | - | - | - | - | 488.4 |
| Other unallocated liabilities | - | - | - | - | - | 132.0 |
| Total liabilities otal |
188.9 | 438.0 | 439.5 | 6.2 | -7.1 | 1,685.9 |
| Assets employed | 477.3 | 491.3 | 251.7 | 10.7 | - | 1,231.1 |
| Capital expenditure | 14.9 | 65.9 | 8.4 | 1.5 | - | 90.7 |
| rders | Orders received | Order book rder | ||
|---|---|---|---|---|
| MEUR | Jan 1–Dec 31, 2008 an 1–Dec 31, |
Jan 1–Dec 31, 2007 an 1–Dec 31, |
Dec 31, 2008 ec 31, | Dec 31, 2007 ec 31, |
| Hiab | 818.1 | 984.9 | 164.2 | 259.7 |
| Kalmar | 1,565.8 | 1,429.3 | 704.2 | 660.1 |
| MacGREGOR | 1,393.4 | 1,695.7 | 2,186.5 | 1,946.3 |
| Eliminations | -8.6 | -4.2 | -0.5 | -0.8 |
| Total | 3,768.7 | 4,105.7 | 3,054.4 | 2,865.2 |
| Average | At the end of period t the end of |
|||
|---|---|---|---|---|
| Jan 1–Dec 31, 2008 an 1–Dec 31, |
Jan 1–Dec 31, 2007 an 1–Dec 31, |
Dec 31, 2008 ec 31, | Dec 31, 2007 ec 31, | |
| Hiab | 4,509 | 4,091 | 4,766 | 4,418 |
| Kalmar | 4,680 | 4,233 | 4,308 | 4,459 |
| MacGREGOR | 2,449 | 1,880 | 2,577 | 2,223 |
| Corporate administration | 139 | 72 | 175 | 87 |
| Total | 11,777 | 10,276 | 11,826 | 11,187 |
| MEUR | Hiab | Kalmar | MacGREGOR acGREGOR | Eliminations liminations | Total |
|---|---|---|---|---|---|
| EMEA (Europe, Middle East, Africa) | 644.3 | 887.6 | 374.5 | -5.6 | 1,900.8 |
| Americas | 159.6 | 361.1 | 37.5 | -1.8 | 556.4 |
| Asia Pacifi c | 103.1 | 266.8 | 573.0 | -1.0 | 941.9 |
| Total | 907.0 | 1,515.5 | 985.1 | -8.3 | 3,399.2 |
| MEUR | Hiab | Kalmar | MacGREGOR acGREGOR | Eliminations liminations | Total |
|---|---|---|---|---|---|
| EMEA (Europe, Middle East, Africa) | 622.9 | 745.3 | 310.9 | -2.0 | 1,677.1 |
| Americas | 216.7 | 368.0 | 63.6 | -1.7 | 646.6 |
| Asia Pacifi c | 91.6 | 230.0 | 373.3 | -0.3 | 694.5 |
| Total | 931.2 | 1,343.3 | 747.7 | -4.0 | 3,018.2 |
| MEUR | Dec 31, 2008 ec 31, | Dec 31, 2007 ec 31, |
|---|---|---|
| EMEA (Europe, Middle East, Africa) | 1,617.5 | 1,304.9 |
| Americas | 191.9 | 158.0 |
| Asia Pacifi c | 391.7 | 256.1 |
| Goodwill* | 669.2 | 670.2 |
| Eliminations | -142.6 | -92.7 |
| Total | 2,727.6 | 2,296.5 |
* Goodwill has not been allocated to geographical areas.
| MEUR | Jan 1–Dec 31, 2008 an 1–Dec 31, |
Jan 1–Dec 31, 2007 an 1–Dec 31, |
|---|---|---|
| EMEA (Europe, Middle East, Africa) | 80.7 | 73.9 |
| Americas | 13.9 | 6.8 |
| Asia Pacifi c | 18.1 | 10.0 |
| Total | 112.8 | 90.7 |
| Dec 31, 2008 ec 31, | Dec 31, 2007 ec 31, | |
|---|---|---|
| EMEA (Europe, Middle East, Africa) | 7,693 | 7,498 |
| Americas | 1,246 | 1,211 |
| Asia Pacifi c | 2,887 | 2,478 |
| Total | 11,826 | 11,187 |
In 2008 Cargotec made eight acquisitions of which four in Hiab's business area.
In February, in order to strengthen its R&D capabilities, Cargotec acquired 60 percent of Idea Design & Consulting S.r.l, Italy. The accounting of this business combination also includes the minority share, which include a redemption obligation. The acquisition was fi nalised in February.
In February, Hiab made an agreement to acquire the UK based Del Equipment (UK) Limited and the U.S. based Ultron Lift Corp. These companies manufacture tail lifts in UK and U.S. The acquisitions were fi nalised at the end of March. In February, Hiab signed also an agreement to acquire 70 percent of the operations of Australian O'Leary's Material Handling Services Pty Ltd., the leading supplier of tail lifts in Western Australia. The acquisition was closed in April. At the end of March, Hiab concluded an agreement to acquire the majority of the operations of the South African Bowman Cranes (Pty) Limited. This company supplies, installs and services truck-related load handling equipment. The acquisition was fi nalised in June. In June, Hiab concluded an agreement to acquire the business of Zepro Tailgate (1987) Limited in New Zealand. In addition to tail lift sales, the business comprises installation, repairs, maintenance and spare parts sales. The acquisition was closed in July.
In April, MacGREGOR signed an agreement to acquire U.S. based Platform Crane Service, Inc (PCS). The acquisition was closed in May.
Kalmar acquired Argentinean Equipos y Servicios Terminales y Puertos SRL (ESTP). In addition to new equipment distribution the company provides equipment commissioning, technical and spare part support as well as equipment repairing and refurbishing in South America. In October Kalmar acquired 80 percent of two Italian service companies, CVS Technoports S.r.l. and CVS Service S.r.l.
Management estimates that the consolidated sales for Jan 1–Dec 31, 2008 would have been EUR 3,426 million if the acquisitions had been completed on Jan 1, 2008.
The table on the next page summarises the acquisitions completed in 2008. The business combinations of Equipos y Servicios Terminales y Puertos SRL, CVS Technoports S.r.l. and CVS Service S.r.l. were accounted as preliminary as the determination of fair values to be assigned to the assets, liabilites and contingent liabilities was yet not fi nalised.
| Net fair values of et fair values |
Assets and liabilities ssets and |
|
|---|---|---|
| MEUR | identifi able assets and liabilities able assets and liabilities of the acquired businesses f the acquired |
immediately before mmediately business combination usiness |
| Other intangible assets | 4.3 | 0.0 |
| Property, plant and equipment | 3.5 | 3.3 |
| Inventories | 12.9 | 12.7 |
| Non-interest-bearing assets | 14.3 | 14.3 |
| Interest-bearing assets and Cash and cash equivalents | 0.9 | 0.9 |
| Interest-bearing liabilities | -6.3 | -6.3 |
| Other non-interest-bearing liabilities | -21.7 | -19.9 |
| Acquired net assets cquired net |
7.8 | 5.0 |
| Transaction price | 52.0 | |
| Costs related to acquisitions | 2.6 | |
| Goodwill oodwill | 46.8 | |
| Transaction price paid in cash | 45.7 | |
| Costs related to acquisitions | 2.4 | |
| Cash and cash equivalents in acquired businesses | -0.9 | |
| Total cash outfl otal cash outfl ow from acquisitions ow from |
47.2 |
The business combinations of Hydramarine AS, Indital Construction Machinery Ltd, Bay Equipment Repairs Inc and Balti ES were accounted as preliminary at the end of 2007, as the determination of fair values was still unfi nished. The accounting of these acquisitions is fi nalised in 2008. It had no impact on the previous year's fi gures.
In 2007 Cargotec made several acquisitions in line with its strategy. These acquisitions were individually immaterial.
In February, a contract was signed to acquire 95 percent of the Indian company, Indital Construction Machinery Ltd. The acquisition was fi nalized in April. Cargotec ownership was raised to 100 percent in December. In September Cargotec bought the remaining shares (49 percent) in Kalmar India Pvt. Ltd.
In January, Hiab signed a contract to acquire a majority holding of its Australian importer, BG Crane Pty. Ltd. The acquisition was fi nalized in February. In January, Hiab also signed an agreement of intent to acquire the sales, service and installation units of its distributor Berger in the Czech Republic, Slovakia, Hungary and Croatia. The acquisition was fi nalized in May. In May, Hiab signed a contract to acquire the Estonian company Balti ES. The acquisition was fi nalized in June. In July, Hiab signed an agreement to acquire Bay Equipment Repairs Inc., a service company based in Florida, U.S.A.
In January, Kalmar acquired Tagros d.o.o., a Slovenia-based service company. In January, Kalmar signed also an agreement to acquire Truck och Maskin i Örnsköldsvik AB, a Swedish company. The acquisition was fi nalized in February. In February, Kalmar acquired the assets and business of Port Equipment Service, Inc. (PES), a U.S. based service company. In April, Kalmar signed a contract to acquire the remaining minority share in Kalmar Asia Pacifi c Ltd. Kalmar now fully owns the company. In December 2006, a contract was signed to acquire Kalmar's Spanish distributor, Kalmar Espana S.A. The acquisition was fi nalized in April. In August, Kalmar made an agreement to acquire Advanced Cargo Transshipment B.V. (ACT), an automation and software producer based in the Netherlands.
In March, MacGREGOR agreed to acquire 90 percent of the Norwegian Hydramarine AS and Singaporean Plimsoll Corporation Pte Ltd. The acquisitions were fi nalized in April. The accounting of these two business combinations includes also the minority share with the redemption obligation. The debt-free acquisition price of these business combinations was approximately EUR 136 million and the goodwill recognised according to the calculations was EUR 123 million. In May, a contract was signed to acquire Vestnorsk Hydraulikkservice AS (VNH) of Norway. The acquisition was fi nalized in June.
Management estimates that the consolidated sales for Jan 1−Dec 31, 2007 would have been approximately EUR 3,057 million if the acquisitions had occurred on Jan 1, 2007.
The table below summarises the acquisitions in January 1−December 31, 2007 excluding acquisitions of minority interests. The business combinations of Hydramarine AS, Indital Construction Machinery Ltd, Bay Equipment Repairs Inc. and Balti ES were accounted as preliminary as the determination of fair values to be assigned to the assets, liabilities and contingent liabilities was not yet fi nalised.
| Net fair values of et fair values identifi able assets and liabilities able assets and |
Assets and liabilities ssets and liabilities immediately before mmediately before |
|
|---|---|---|
| MEUR | of the acquired businesses f the acquired |
business combination usiness |
| Other intangible assets | 15.3 | 0.2 |
| Property, plant and equipment | 25.8 | 25.5 |
| Inventories | 54.0 | 53.0 |
| Non-interest-bearing assets | 43.3 | 43.3 |
| Interest-bearing assets, cash and cash equivalents |
6.7 | 6.7 |
| Interest-bearing liabilities | -21.1 | -21.1 |
| Other non-interest-bearing liabilities | -92.9 | -89.0 |
| Acquired net assets cquired net |
31.2 | 18.7 |
| Transaction price | 194.3 | |
| Costs related to acquisitions | 3.3 | |
| Goodwill oodwill | 166.4 | |
| Transaction price paid in cash | 155.4 | |
| Costs related to acquisitions | 3.3 | |
| Cash and cash equivalents in acquired businesses | -3.0 | |
| Total cash outfl otal cash outfl ow from acquisitions ow from |
155.6 |
The goodwill is attributable to the experienced and capable personnel employed by the businesses and to the synergies. Synergies are expected from the possibility to expand operations to new market areas and to utilise new product knowledge and new technologies in developing current business. Management estimates that synergies are also gained from services' greater global presence, utilisation of economies of scale and integration of sourcing and sales network for new products.
A goodwill of EUR 10.2 million was recognised of the acquisition of the minority shares of Kalmar India Pvt. Ltd and Kalmar Asia Pacifi c Ltd. The cash outfl ow from these acquisitions was EUR 13.1 million.
Sales include EUR 214.0 (Jan 1–Dec 31, 2007: 119.8) million of income recognised based on the percentage of completion of the longterm construction contracts. The balance sheet includes from the percentage of completion method EUR 86.7 (Dec 31, 2007: 31.1) million in unbilled contract revenue and EUR 15.5 (19.9) million in advances received.
| MEUR | Jan 1–Dec 31, 2008 an 1–Dec 31, |
Jan 1–Dec 31, 2007 an 1–Dec 31, |
|---|---|---|
| Gain on disposal of intangible and tangible assets | 0.7 | 1.2 |
| Customer fi nance related other income | 22.9 | 17.6 |
| Rent income | 2.3 | 4.4 |
| Income from order cancellations | 5.9 | - |
| Other income | 7.3 | 3.5 |
| Total | 39.1 | 26.8 |
| MEUR | Jan 1–Dec 31, 2008 an 1–Dec 31, |
Jan 1–Dec 31, 2007 an 1–Dec 31, |
|---|---|---|
| Loss on disposal of intangible and tangible assets | 0.1 | 0.1 |
| Customer fi nance related other expenses | 21.8 | 17.6 |
| Restructuring costs | - | 4.2 |
| Expenses from order cancellations | 5.9 | - |
| Other expenses | 4.8 | 13.0 |
| Total | 32.6 | 34.9 |
| MEUR | Jan 1–Dec 31, 2008 an 1–Dec 31, |
Jan 1–Dec 31, 2007 an 1–Dec 31, |
|---|---|---|
| Annual audit | 2.3 | 2.5 |
| Other statements | 0.0 | 0.0 |
| Tax advice | 0.8 | 1.0 |
| Other services | 0.7 | 0.8 |
| Total | 3.8 | 4.4 |
| MEUR | MacGREGOR acGREGOR | Kalmar | Hiab | Other | Total |
|---|---|---|---|---|---|
| Employment termination costs | - | 2.4 | 9.9 | 0.3 | 12.6 |
| Asset impairments and write-downs | - | 2.0 | 1.5 | - | 3.5 |
| Other restructuring costs* | - | 0.1 | 2.8 | 0.1 | 3.0 |
| Total | - | 4.5 | 14.1 | 0.3 | 19.1 |
* Includes e.g. contract (other than employment contracts) termination costs.
Due to weakening markets, September saw the initiation of a restructuring programme. The measures were aimed at adjusting capacity in Hiab to the prevailing market situation and improving both Hiab's and Kalmar's profi tability. Moreover, an annual profi tability improvement of around EUR 25 million in addition to capacity adjustments is being sought through the cost saving programme. The related costs and write-downs are estimated at approximately EUR 35 million. Of these, EUR 19 million was booked in the fi nal quarter of 2008. The remainder is expected to incur in early 2009.
| MEUR | Jan 1–Dec 31, 2008 an 1–Dec 31, |
Jan 1–Dec 31, 2007 an 1–Dec 31, |
|---|---|---|
| Wages and salaries | 387.5 | 352.9 |
| Equity-settled share-based payment transactions | -0.2 | 1.2 |
| Cash-settled share-based payment transactions | -0.8 | 2.2 |
| Pension costs* | 27.1 | 27.9 |
| Other statutory employer costs | 108.6 | 98.6 |
| Total | 522.2 | 482.8 |
* Pension costs are presented in more detail in Note 26. Employee Benefi ts. Information on key management compensation is presesented in Note 32. Related-party Transactions and information on share-based payment transactions in Note 24. Share-based Payments.
| MEUR | Jan 1–Dec 31, 2008 an 1–Dec 31, |
Jan 1–Dec 31, 2007 an 1–Dec 31, |
|---|---|---|
| Cost of goods sold | 38.2 | 35.2 |
| Selling and marketing | 9.7 | 9.8 |
| Research and development | 1.4 | 0.9 |
| Administration | 5.0 | 4.2 |
| Other | 5.8 | 9.7 |
| Total | 60.1 | 59.8 |
| MEUR | Jan 1–Dec 31, 2008 an 1–Dec 31, |
Jan 1–Dec 31, 2007 an 1–Dec 31, |
|---|---|---|
| Intangible assets | 8.3 | 10.6 |
| Buildings | 8.0 | 7.2 |
| Machinery & equipment | 21.1 | 19.4 |
| Finance lease agreements | 0.7 | 0.7 |
| Customer fi nance agreements | 19.4 | 21.9 |
| Total | 57.4 | 59.8 |
| MEUR | Jan 1–Dec 31, 2008 an 1–Dec 31, |
Jan 1–Dec 31, 2007 an 1–Dec 31, |
|---|---|---|
| Goodwill | - | - |
| Other intangible assets | 0.0 | 0.1 |
| Property, plant and equipment | 2.7 | - |
| Total | 2.7 | 0.1 |
| MEUR | Jan 1–Dec 31, 2008 an 1–Dec 31, |
Jan 1–Dec 31, 2007 an 1–Dec 31, |
|---|---|---|
| Interest income on loans receivable and cash and cash equivalents | 4.2 | 6.3 |
| Interest income on interest rate derivatives, cash fl ow hedges | 11.5 | 10.2 |
| Interest income on interest rate derivatives, non-hedge accounted | - | 0.1 |
| Change in fair value of interest rate derivatives, non-hedge accounted | - | 0.0 |
| Other fi nancing income | 0.3 | 0.0 |
| Dividend income on assets available for sale | 0.0 | 0.0 |
| Total | 16.0 | 16.7 |
| MEUR | Jan 1–Dec 31, 2008 an 1–Dec 31, |
Jan 1–Dec 31, 2007 an 1–Dec 31, |
|---|---|---|
| Interest expenses on fi nancial liabilities measured at amortised cost | 31.1 | 23.4 |
| Interest expenses on interest rate derivatives, cash fl ow hedges | 10.5 | 9.0 |
| Interest expenses on interest rate derivatives, non-hedge accounted | - | 0.2 |
| Arrangement and commitment fees relating to interest-bearing loans | 0.8 | 0.6 |
| Other fi nancing expenses | 1.2 | 0.7 |
| Exchange rate differences, net | 0.9 | 1.6 |
| Total | 44.5 | 35.5 |
| MEUR | Jan 1–Dec 31, 2008 an 1–Dec 31, |
Jan 1–Dec 31, 2007 an 1–Dec 31, |
|---|---|---|
| Exchange rate differences on interest-bearing loans and receivables | -75.1 | 2.3 |
| Exchange rate differences on derivative instruments, cash fl ow hedges | 11.8 | -21.9 |
| Exchange rate differences on derivative instruments, non-hedge accounted | 62.4 | 18.1 |
| Total | -0.9 | -1.6 |
| MEUR | Jan 1–Dec 31, 2008 an 1–Dec 31, |
Jan 1–Dec 31, 2007 an 1–Dec 31, |
|---|---|---|
| Sales | ||
| Exchange rate differences on sales | 28.1 | -1.3 |
| Exchange rate differences on hedges of sales | -18.7 | 8.7 |
| Cost of goods sold | ||
| Exchange rate differences on purchases | -7.7 | -2.3 |
| Exchange rate differences on hedges of purchases | -5.4 | 0.4 |
| Other operating income and expenses | ||
| Ineffective portion of cash fl ow hedges | -5.1 | 0.0 |
| Exchange rate differences on derivatives. non-hedge accounted | -0.3 | 0.9 |
| Total | -9.1 | 6.3 |
| MEUR | Jan 1–Dec 31, 2008 an 1–Dec 31, |
Jan 1–Dec 31, 2007 an 1–Dec 31, |
|---|---|---|
| Current year tax expense | 46.3 | 56.2 |
| Deferred tax expense | -8.9 | -3.9 |
| Tax expense for previous years | -13.0 | -6.3 |
| Total | 24.4 | 46.0 |
| MEUR | Jan 1–Dec 31, 2008 an 1–Dec 31, |
Jan 1–Dec 31, 2007 an 1–Dec 31, |
|---|---|---|
| Income before taxes | 145.2 | 184.4 |
| Tax calculated at domestic tax rate* | 37.8 | 47.9 |
| Effect of different tax rates in foreign subsidiaries | -6.1 | 11.2 |
| Previous years' taxes | -13.0 | -6.3 |
| Non-deductible expenses and tax exempt income | 0.0 | -9.6 |
| Benefi t arising from previously unrecognised tax losses and temporary differences | -2.4 | -1.9 |
| Unrecognised current year tax losses and temporary differences | 10.7 | 1.7 |
| Change in previously unrecognised tax losses and temporary differences | -2.5 | 1.2 |
| Effect of changes in tax rates | 0.0 | 1.7 |
| Total | 24.4 | 46.0 |
| Effective tax rate, % | 16.8% | 25.0% |
* The domestic (Finland) tax rate is 26% (2007: 26%).
Basic earnings per share is calculated by dividing the net income attributable to the equity holders of the Company by the weighted average number of shares outstanding during period. Diluted earnings per share is calculated by adjusting the weighted average number of shares for the effect of all potential dilutive shares. Cargotec has a dilutive option programme. The options have a diluting effect, when the exercise price with an option is lower than the market value of the Company share. The diluting effect is the number of shares that the Company has to issue gratuitously because the received funds from the exercised options do not cover the fair value of the shares. The fair value of the Company's share is determined as the average market price of the shares during period.
| Jan 1–Dec 31, 2008 an 1–Dec 31, |
Jan 1–Dec 31, 2007 an 1–Dec 31, |
|
|---|---|---|
| Net income attributable to the equity holders of the Company, MEUR | 118.4 | 136.5 |
| Weighted average number of shares during fi nancial period, ('000) | 61,893 | 62,965 |
| Basic earnings per share, EUR asic earnings per share, |
1.91 | 2.17 |
| Jan 1–Dec 31, 2008 an 1–Dec 31, |
Jan 1–Dec 31, 2007 an 1–Dec 31, |
|
|---|---|---|
| Net income attributable to the equity holders of the Company, MEUR | 118.4 | 136.5 |
| Weighted average number of shares during fi nancial period, ('000) | 61,893 | 62,965 |
| Effect of share options, ('000) | 89 | 231 |
| Diluted weighted average number of shares during fi nancial period, ('000) | 61,982 | 63,195 |
| Diluted earnings per share, EUR iluted earnings per share, |
1.91 | 2.16 |
| MEUR | Dec 31, 2008 ec 31, | Dec 31, 2007 ec 31, |
|---|---|---|
| Book value at the beginning of period | 670.2 | 513.3 |
| Translation difference | -47.8 | -19.3 |
| Companies acquired | 46.8 | 176.7 * |
| Other changes | - | -0.5 |
| Book value at the end of period ook value at the end of |
669.2 | 670.2 |
* Including EUR 10.2 million goodwill from the acquisition of minority interests.
For impairment testing goodwill is allocated to business segments, which form Cargotec's cash generating units.
| MEUR | Dec 31, 2008 ec 31, | Dec 31, 2007 ec 31, |
|---|---|---|
| Hiab | 195.8 | 181.4 |
| Kalmar | 218.9 | 220.5 |
| MacGREGOR | 254.5 * | 268.3 * |
| Total | 669.2 | 670.2 |
* MacGREGOR includes EUR 128.6 (31.12.2007:123.6) million goodwill of Offshore division, treated separately for impairment testing.
Goodwill is impairment tested annually or more frequently when there is an indication that the current value is not recoverable. The impairment testing of goodwill is carried out by value-in-use method.
Based on the calculations no impairment loss recognition is required. Of the business segments, Hiab's sensitivity to the operating environment is highest, whereas in the other segments the difference between calculated present values and carrying amounts of assets is signifi cant and according to management assessment, no conceivable change in the main variables used for impairment testing would result in recoverable cash fl ow to decrease below the carrying amount. The present value of Hiab segment cash fl ow is sensitive to the assumptions on future demand and the implementation of adequate capacity and cost structure restructuring to ensure cash generation. If the determined discount rate would be 2% higher an impairment charge would arise on Hiab´s goodwill.
The cash fl ow projections used in value-in-use calculations are based on fi nancial budgets approved by the management. In addition to the yearly budgeting process, cash fl ows are projected for a two year period. Cash fl ows beyond the three-year period are extrapolated cautiously by assuming 2% growth. The discount rate (WACC) used was 10.5% (2007: 11.7%) before taxes.
The main source of uncertainty in impairment testing is management's estimates of profi tability (EBITA) for each cash generating unit. The outcome of impairment testing is not particularly sensitive for changes in discount rate.
| MEUR | Development costs evelopment |
Trademarks rademarks | Other* | Total |
|---|---|---|---|---|
| Acquisition cost Jan 1, 2008 | 9.2 | 42.7 | 53.4 | 105.3 |
| Translation difference | 0.0 | -0.5 | -1.0 | -1.5 |
| Additions | 3.7 | - | 4.9 | 8.6 |
| Disposals | -0.4 | - | -0.2 | -0.5 |
| Reclassifi cation | - | - | -0.3 | -0.3 |
| Companies acquired | - | 1.2 | 3.6 | 4.8 |
| Acquisition cost Dec 31, 2008 cquisition cost Dec 31, |
12.6 | 43.4 | 60.5 | 116.5 |
| Accumulated amortisation and impairment Jan 1, 2008 | -0.7 | -0.4 | -23.2 | -24.3 |
| Translation difference | 0.0 | 0.0 | 0.8 | 0.8 |
| Amortisation during the fi nancial period | -0.3 | -0.6 | -7.4 | -8.3 |
| Disposals | 0.4 | - | 0.0 | 0.4 |
| Reclassifi cation | - | - | 0.0 | 0.0 |
| Companies acquired | - | 0.0 | 0.0 | 0.0 |
| Accumulated amortisation and impairment Dec 31, 2008 ccumulated amortisation and impairment Dec 31, |
-0.7 | -1.0 | -29.8 | -31.5 |
| Book value Jan 1, 2008 | 8.5 | 42.3 | 30.2 | 81.0 |
| Book value Dec 31, 2008 | 11.9 | 42.4 | 30.7 | 85.0 |
| MEUR | Development costs evelopment |
Trademarks rademarks | Other* | Total |
|---|---|---|---|---|
| Acquisition cost Jan 1, 2007 | 1.8 | 42.0 | 37.2 | 81.0 |
| Translation difference | 0.0 | -0.1 | -0.5 | -0.7 |
| Additions | 7.5 | - | 2.5 | 10.0 |
| Disposals | - | - | 0.0 | 0.0 |
| Reclassifi cation | -0.4 | -0.8 | 0.9 | -0.2 |
| Companies acquired | 0.3 | 1.7 | 13.3 | 15.4 |
| Acquisition cost Dec 31, 2007 cquisition cost Dec 31, |
9.2 | 42.7 | 53.4 | 105.3 |
| Accumulated amortisation and impairment Jan 1, 2007 | -0.5 | - | -13.3 | -13.8 |
| Translation difference | 0.0 | - | 0.2 | 0.2 |
| Amortisation during the fi nancial period | -0.3 | -0.4 | -9.9 | -10.6 |
| Impairment charges | -0.1 | - | - | -0.1 |
| Disposals | - | - | 0.0 | 0.0 |
| Reclassifi cation | 0.4 | - | -0.2 | 0.2 |
| Companies acquired | -0.3 | - | -0.1 | -0.4 |
| Accumulated amortisation and impairment Dec 31, 2007 ccumulated amortisation and impairment Dec 31, |
-0.7 | -0.4 | -23.2 | -24.3 |
| Book value Jan 1, 2007 | 1.3 | 42.0 | 23.9 | 67.2 |
| Book value Dec 31, 2007 | 8.5 | 42.3 | 30.2 | 81.0 |
* Other intangibles include patents, product licenses, software licences and other intangible assets.
The trademarks have been measured at fair value in connection with the acquisition (see Note 4. Acquisitions and disposals). Part of the trademarks have been assessed to have indefi nite useful lives, including MacGREGOR. It is estimated that they will create cash fl ow for an indefi nite period. The estimate is based on their position as global, market area or customer segment specifi c market leadership and their long history. The MacGREGOR trademark has been used since the 1930's and it is continuously developed. The trademarks are impairment tested annually or more frequently if there is an indication that their current value would not be recoverable.
Other trademarks have been estimated to create cash fl ow during their useful lives, which are assessed to be about 5 years. These trademarks are amortised on a straight-line basis over their useful lives.
| MEUR | Land | Buildings uildings | Machinery & achinery & equipment quipment |
Fixed assets ixed under construction nder |
Advance payments ayments |
Total |
|---|---|---|---|---|---|---|
| Acquisition cost Jan 1, 2008 | 12.9 | 143.3 | 428.1 | 11.5 | 0.1 | 595.9 |
| Translation difference | -0.1 | -3.1 | -24.0 | -0.3 | 0.0 | -27.5 |
| Additions | 0.8 | 20.1 | 63.7 | 18.8 | 0.7 | 104.1 |
| Disposals | 0.0 | -0.4 | -29.5 | 0.0 | 0.0 | -29.9 |
| Reclassifi cation | - | 10.8 | 2.7 | -13.6 | -0.1 | -0.2 |
| Companies acquired | - | 0.6 | 5.7 | - | 0.5 | 6.8 |
| Acquisition cost Dec 31, 2008 cquisition cost Dec 31, |
13.6 | 171.2 | 446.7 | 16.4 | 1.2 | 649.1 |
| Accumulated depreciation and impairment Jan 1, 2008 |
-0.7 | -72.4 | -269.1 | - | - | -342.2 |
| Translation difference | -0.5 | 2.3 | 16.2 | - | - | 18.1 |
| Depreciation during the fi nancial period | - | -8.3 | -40.8 | - | - | -49.1 |
| Impairment | - | -2.0 | -0.7 | - | - | -2.7 |
| Disposals | - | 0.1 | 13.2 | - | - | 13.3 |
| Reclassifi cation | - | - | 0.2 | - | - | 0.2 |
| Companies acquired | - | -0.3 | -3.0 | - | - | -3.3 |
| Accumulated depreciation and ccumulated depreciation and impairment Dec 31, 2008 mpairment Dec 31, |
-1.2 | -80.6 | -283.9 283.9 |
- | - | -365.7 |
| Book value Jan 1, 2008 | 12.2 | 70.9 | 159.0 | 11.5 | 0.1 | 253.7 |
| Book value Dec 31, 2008 | 12.4 | 90.7 | 162.8 | 16.4 | 1.2 | 283.5 |
| MEUR | Land | Buildings uildings | Machinery & achinery & equipment quipment |
Fixed assets ixed under construction nder |
Advance payments ayments |
Total |
|---|---|---|---|---|---|---|
| Acquisition cost Jan 1, 2007 | 11.6 | 130.5 | 366.7 | 3.2 | 0.7 | 512.7 |
| Translation difference | -0.3 | -4.5 | -10.8 | -0.2 | 0.0 | -15.9 |
| Additions | 0.9 | 7.0 | 59.0 | 13.7 | 0.2 | 80.7 |
| Disposals | -0.2 | -0.8 | -26.0 | -0.3 | 0.0 | -27.2 |
| Reclassifi cation | 0.0 | 2.7 | 3.8 | -5.0 | -0.9 | 0.5 |
| Companies acquired | 1.0 | 8.3 | 35.4 | 0.2 | 0.2 | 45.2 |
| Acquisition cost Dec 31, 2007 cquisition cost Dec 31, |
12.9 | 143.3 | 428.1 | 11.5 | 0.1 | 595.9 |
| Accumulated depreciation and impairment | ||||||
| Jan 1, 2007 | -0.8 | -63.2 | -231.1 | - | - | -295.1 |
| Translation difference | 0.0 | 2.1 | 7.9 | - | - | 10.1 |
| Depreciation during the fi nancial period | - | -7.5 | -41.7 | - | - | -49.2 |
| Impairment | - | 0.3 | 11.7 | - | - | 12.0 |
| Reclassifi cation | - | 0.0 | 0.1 | - | - | 0.1 |
| Companies acquired | - | -4.1 | -15.9 | - | - | -20.1 |
| Accumulated depreciation and ccumulated depreciation and impairment Dec 31, 2007 mpairment Dec 31, |
-0.7 | -72.4 | -269.1 269.1 |
- | - | -342.2 |
Book value Jan 1, 2007 10.8 67.3 135.6 3.2 0.7 217.6 Book value Dec 31, 2007 12.2 70.9 159.0 11.5 0.1 253.7
Property, plant and equipment include capitalised fi nance leases as follows:
| Machinery & achinery | |||
|---|---|---|---|
| MEUR | Buildings uildings | equipment | Total |
| Acquisition cost Jan 1, 2008 | 6.2 | 4.2 | 10.4 |
| Translation difference | -0.4 | -0.2 | -0.6 |
| Additions | 0.2 | 0.9 | 1.1 |
| Disposals | - | -0.3 | -0.3 |
| Reclassifi cation | - | -1.3 | -1.3 |
| Companies acquired | 0.0 | 0.8 | 0.8 |
| Acquisition cost Dec 31, 2008 cquisition cost Dec 31, |
6.0 | 4.2 | 10.2 |
| Accumulated depreciation and impairment Jan 1, 2008 | -2.7 | -2.0 | -4.7 |
| Translation difference | 0.1 | 0.2 | 0.3 |
| Depreciation during the fi nancial period | -0.3 | -0.4 | -0.7 |
| Disposals | - | 0.2 | 0.2 |
| Companies acquired | - | 0.1 | 0.1 |
| Accumulated depreciation and impairment Dec 31, 2008 ccumulated depreciation and impairment Dec 31, |
-2.9 | -1.9 | -4.9 |
| Book value Jan 1, 2008 | 3.5 | 2.2 | 5.7 |
| Book value Dec 31, 2008 | 3.1 | 2.2 | 5.4 |
| Machinery & achinery | |||
|---|---|---|---|
| MEUR | Buildings uildings | equipment | Total |
| Acquisition cost Jan 1, 2007 | 6.5 | 8.5 | 15.0 |
| Translation difference | -0.3 | -0.1 | -0.5 |
| Additions | 0.1 | 0.6 | 0.7 |
| Disposals | - | -0.9 | -0.9 |
| Reclassifi cation | - | -6.1 | -6.1 |
| Companies acquired | - | 2.3 | 2.3 |
| Acquisition cost Dec 31, 2007 cquisition cost Dec 31, |
6.2 | 4.2 | 10.4 |
| Accumulated depreciation and impairment Jan 1, 2007 | -2.7 | -1.9 | -4.6 |
| Translation difference | 0.2 | 0.1 | 0.3 |
| Depreciation during the fi nancial period | -0.3 | -0.4 | -0.7 |
| Disposals | - | 0.7 | 0.7 |
| Reclassifi cation | - | -0.6 | -0.6 |
| Accumulated depreciation and impairment Dec 31, 2007 ccumulated depreciation and impairment Dec 31, |
-2.7 | -2.0 | -4.7 |
| Book value Jan 1, 2007 | 3.8 | 6.6 | 10.4 |
| Book value Dec 31, 2007 | 3.5 | 2.2 | 5.7 |
Property, plant and equipment include machinery and equipment leased out under customer fi nance contracts classifi ed as operating leases as follows:
| MEUR | Machinery & equipment achinery & |
|---|---|
| Acquisition cost Jan 1, 2008 | 156.9 |
| Translation difference | -8.8 |
| Additions | 35.9 |
| Disposals | -16.4 |
| Reclassifi cation | 0.1 |
| Companies acquired | - |
| Acquisition cost Dec 31, 2008 cquisition cost Dec 31, |
167.7 |
| Accumulated depreciation and impairment Jan 1, 2008 | -75.8 |
| Translation difference | 5.0 |
| Depreciation during the fi nancial period | -19.4 |
| Disposals | 3.2 |
| Reclassifi cation | -0.1 |
| Companies acquired | - |
| Accumulated depreciation and impairment Dec 31, 2008 ccumulated depreciation and impairment Dec 31, |
-87.0 |
| Book value Jan 1, 2008 | 81.2 |
| Book value Dec 31, 2008 | 80.7 |
| MEUR | Machinery & equipment achinery & |
|---|---|
| Acquisition cost Jan 1, 2007 | 121.2 |
| Translation difference | -2.5 |
| Additions | 37.5 |
| Disposals | -18.6 |
| Reclassifi cation | 5.0 |
| Companies acquired | 14.3 |
| Acquisition cost Dec 31, 2007 cquisition cost Dec 31, |
156.9 |
| Accumulated depreciation and impairment Jan 1, 2007 | -55.8 |
|---|---|
| Translation difference | 1.5 |
| Depreciation during the fi nancial period | -21.9 |
| Disposals | 6.7 |
| Reclassifi cation | 0.2 |
| Companies acquired | -6.5 |
| Accumulated depreciation and impairment Dec 31, 2007 ccumulated depreciation and impairment Dec 31, |
-75.8 |
| Book value Jan 1, 2007 | 65.4 |
| Book value Dec 31, 2007 | 81.2 |
| ssociated | Associated companies | oint | Joint Ventures | Total | |||
|---|---|---|---|---|---|---|---|
| MEUR | 2008 | 2007 | 2008 | 2007 | 2008 | 2007 | |
| Book value Jan 1 | 4.5 | 2.4 | 0.4 | - | 4.8 | 2.4 | |
| Translation difference | -0.1 | -0.1 | 0.0 | - | -0.1 | -0.1 | |
| Share of net income | 0.3 | 0.3 | 0.1 | 0.1 | 0.5 | 0.3 | |
| Dividends received | - | -0.2 | - | - | - | -0.2 | |
| Additions | 1.3 | 3.0 | - | 0.1 | 1.3 | 3.2 | |
| Disposals | - | - | - | - | - | - | |
| Reclassifi cation | 0.6 | -1.0 | - | 0.2 | 0.6 | -0.9 | |
| Companies acquired | - | 0.0 | - | - | - | 0.0 | |
| Book value Dec 31 ook value Dec |
6.5 | 4.5 | 0.5 | 0.4 | 7.0 | 4.8 |
On December 31, 2008 the book value of investments in associated companies includes EUR 2.8 (Dec 31, 2007: 2.5) million of goodwill. The book value of associated companies and joint ventures at the end of period does not include publicly listed shares.
| Net in | Shareholding (%) hareholding |
||||||
|---|---|---|---|---|---|---|---|
| MEUR | Country | Assets | Liabilities iabilities | Sales | come | Parent company arent |
Group |
| Hymetal S.A.* | France | 7.7 | 6.3 | 15.6 | 0.3 | - | 40.0 |
| Haida-MacGREGOR Jiangyin Sealing Co., Ltd* |
China | 5.0 | 1.5 | 9.2 | 0.7 | - | 25.0 |
| Kalmar (Malaysia) Sdn. Bhd.** | Malaysia | 0.3 | 0.3 | 0.5 | 0.0 | - | 50.0 |
| Montaje, Mantenimiento y Reformas de Instalaciones Portuarias, S.A.* |
Spain | 9.8 | 7.3 | 10.2 | 0.3 | - | 30.0 |
| Processiones, Superfi ciales y Aplicaciones, S.L.* |
Spain | 0.4 | 0.2 | 1.3 | 0.0 | - | 30.0 |
| Dalian Nurmi Hydraulics Co Ltd.* | China | 5.6 | 0.0 | 5.2 | 0.2 | 25.0 | 25.0 |
| Starmax V.O.F** | Netherlands | 3.0 | 2.7 | 7.4 | 0.3 | - | 50.0 |
On December 31, 2008, in addition to companies mentioned above, Cargotec had holdings in 4 associated companies.
| Net in | Shareholding (%) hareholding |
||||||
|---|---|---|---|---|---|---|---|
| MEUR | Country | Assets | Liabilities iabilities | Sales | come | Parent company arent |
Group |
| Hymetal S.A.* | France | 7.9 | 6.8 | 15.3 | 0.0 | - | 40.0 |
| Haida-MacGREGOR Jiangyin Sealing | |||||||
| Co., Ltd* | China | 4.3 | 0.7 | 6.0 | 0.8 | - | 25.0 |
| Kalmar (Malaysia) Sdn. Bhd.** | Malaysia | 0.9 | 0.4 | 4.7 | 0.1 | - | 50.0 |
| Montaje, Mantenimiento y Reformas | |||||||
| de Instalaciones Portuarias, S.A.* | Spain | 7.9 | 6.3 | 16.8 | 0.7 | - | 30.0 |
On December 31, 2007, in addition to companies mentioned above, Cargotec had holdings in 5 associated companies and 2 joint ventures.
The fi gures presented in the tables above are based on the latest available fi nancial statements.
* Associated company
** Joint venture
| MEUR | 2008 | 2007 |
|---|---|---|
| Book value Jan 1 | 2.3 | 1.6 |
| Translation difference | -0.1 | 0.0 |
| Additions | 0.4 | 0.2 |
| Disposals | -0.1 | -0.1 |
| Reclassifi cation | -0.6 | 0.0 |
| Companies acquired | 0.0 | 0.6 |
| Book value Dec 31 ook value Dec |
2.0 | 2.3 |
Non-current available-for-sale investments include unlisted shares which are carried at cost as the fair value of these assets cannot be measured reliably or the fair value would not signifi cantly differ from the acquisition cost.
| MEUR | Jan 1, 2008 an 1, | Charged to harged to income statement tatement |
Charged to harged shareholders' hareholders' equity |
Translation ranslation difference |
Acquired/sold cquired/sold companies ompanies |
Dec 31, 2008 ec 31, |
|---|---|---|---|---|---|---|
| Tax losses carried forward | 14.9 | 10.0 | - | -1.7 | - | 23.3 |
| Provisions | 15.2 | 2.3 | - | 0.5 | 0.1 | 18.1 |
| Depreciation difference | 1.6 | -0.3 | - | -0.1 | 0.1 | 1.4 |
| Pensions | 3.9 | 0.0 | - | -0.3 | - | 3.7 |
| Consolidation entries | 7.7 | -0.7 | - | -0.1 | 0.1 | 7.0 |
| Change in fair value | 1.8 | - | 32.4 | 0.2 | 0.0 | 34.4 |
| Other temporary differences for assets | 10.4 | -1.1 | - | 0.0 | 0.1 | 9.4 |
| Total | 55.5 | 10.3 | 32.4 | -1.4 | 0.4 | 97.2 |
| MEUR | Jan 1, 2008 an 1, | Charged to harged to income statement tatement |
Charged to harged shareholders' hareholders' equity |
Translation ranslation difference |
Acquired/sold cquired/sold companies ompanies |
Dec 31, 2008 ec 31, |
|---|---|---|---|---|---|---|
| Depreciation difference | 3.9 | -0.7 | - | -0.4 | 0.0 | 2.7 |
| Goodwill amortisation | 3.4 | 0.5 | - | 0.2 | 0.5 | 4.6 |
| Allocation of fair value on acquisitions | 12.7 | -3.1 | - | -1.0 | 0.2 | 8.9 |
| Research and development | 1.1 | 1.7 | - | - | - | 2.8 |
| Change in fair value | 8.4 | - | 4.6 | 0.1 | 0.0 | 13.2 |
| Other temporary differences for liabilities | 9.0 | 1.5 | - | -0.5 | 0.8 | 10.8 |
| Total | 38.5 | 0.0 | 4.6 | -1.7 | 1.5 | 43.0 |
| MEUR | Jan 1, 2007 an 1, | Charged to harged to income statement tatement |
Charged to harged shareholders' hareholders' equity |
Translation ranslation difference |
Acquired/sold cquired/sold companies ompanies |
Dec 31, 2007 ec 31, |
|---|---|---|---|---|---|---|
| Tax losses carried forward | 16.0 | -2.0 | - | -0.6 | 1.5 | 14.9 |
| Provisions | 10.0 | 5.4 | - | -0.7 | 0.4 | 15.2 |
| Depreciation difference | 1.6 | 0.0 | - | 0.0 | 0.1 | 1.6 |
| Pensions | 3.6 | 0.3 | - | 0.0 | 0.1 | 3.9 |
| Consolidation entries | 6.3 | 1.4 | - | 0.0 | 0.0 | 7.7 |
| Change in fair value | 1.5 | - | 0.6 | 0.0 | -0.3 | 1.8 |
| Other temporary differences for assets | 11.7 | -1.1 | - | -0.4 | 0.2 | 10.4 |
| Total | 50.7 | 4.0 | 0.6 | -1.7 | 2.0 | 55.5 |
| MEUR | Jan 1, 2007 an 1, | Charged to harged to income statement tatement |
Charged to harged shareholders' hareholders' equity |
Translation ranslation difference |
Acquired/sold cquired/sold companies ompanies |
Dec 31, 2007 ec 31, |
|---|---|---|---|---|---|---|
| Depreciation difference | 3.3 | 0.3 | - | -0.1 | 0.4 | 3.9 |
| Goodwill amortisation | 2.4 | 0.8 | - | -0.3 | 0.4 | 3.4 |
| Allocation of fair value on acquisitions | 11.5 | -2.5 | - | -0.2 | 3.8 | 12.7 |
| Research and development | 0.0 | 1.1 | - | 0.0 | - | 1.1 |
| Change in fair value | 5.5 | 0.0 | 3.7 | -0.4 | -0.3 | 8.4 |
| Other temporary differences for liabilities | 7.7 | 0.1 | - | -0.3 | 1.5 | 9.0 |
| Total | 30.5 | -0.2 | 3.7 | -1.3 | 5.8 | 38.5 |
On December 31, 2008 Cargotec had EUR 68.1 (Dec 31, 2007: 110.6) million of tax losses carried forward of which no deferred tax assets were recognised because the realisation of the tax benefi t is not probable. The tax losses of EUR 6.0 (Dec 31, 2007: 0.1) million will expire during next fi ve years and the rest EUR 62.1 (Dec 31, 2007: 105.8) million have no expiry date or it is over fi ve years.
Deferred tax liability on undistributed earnings of foreign subsidiaries has not been recognised because distribution of the earnings is in the control of Cargotec and such distribution is not probable within the foreseeable future.
| MEUR | Dec 31, 2008 ec 31, | Dec 31, 2007 ec 31, |
|---|---|---|
| Raw materials and supplies | 274.6 | 231.5 |
| Work in progress | 355.4 | 228.4 |
| Finished goods | 198.5 | 163.7 |
| Advance payments | 53.5 | 33.8 |
| Total | 881.9 | 657.4 |
Obsolescence allowances of inventories to net realisable value were EUR 49.9 (Dec 31, 2007: 38.4) million during the period.
| Loans and oans and receivables at eceivables at |
Available-for-sale vailable-for-sale |
Assets at fair ssets at fair value through alue through |
Derivatives erivatives defi ned as cash ned as cash |
Book value ook | |
|---|---|---|---|---|---|
| MEUR | amortised cost mortised |
fi nancial assets nancial |
profi t or loss t or | fl ow hedges ow | Dec 31. 2008 Dec 31. 2008 |
| Non-current fi on-current fi nancial assets nancial |
|||||
| Interest-bearing receivables | 7.7 | 7.7 | |||
| Available-for-sale investments | 2.0 | 2.0 | |||
| Derivative assets | 55.0 | 55.0 | |||
| Other non-interest-bearing receivables |
8.1 | 8.1 | |||
| Total | 15.8 | 2.0 | - | 55.0 | 72.8 |
| Current fi urrent fi nancial assets nancial |
|||||
| Loans receivable | 0.2 | 0.2 | |||
| Derivative assets | 82.1 | 48.3 | 130.4 | ||
| Accounts receivable and other non interest-bearing receivables |
714.0 | 714.0 | |||
| Cash and cash equivalents | 79.2 | 79.2 | |||
| Total | 793.5 | - | 82.1 | 48.3 | 923.9 |
| Total fi nancial assets nancial |
809.3 | 2.0 | 82.1 | 103.3 | 996.7 |
| Financial liabilities inancial liabilities |
Liabilities at fair iabilities at fair value through alue |
Derivatives erivatives defi ned as cash ned as cash |
Book value ook | |
|---|---|---|---|---|
| MEUR | at amortised cost t amortised |
profi t or loss t or | fl ow hedges ow | Dec 31, 2008 Dec 31, |
| Non-current fi on-current fi nancial liabilities nancial |
||||
| Interest-bearing liabilities | 440.2 | 440.2 | ||
| Derivative liabilities | 84.5 | 84.5 | ||
| Other non-interest-bearing liabilities | 26.6 | 26.6 | ||
| Total | 466.9 | - | 84.5 | 551.4 |
| Current fi urrent fi nancial liabilities nancial |
||||
| Interest-bearing liabilities | 114.6 | 114.6 | ||
| Derivative liabilities | 14.9 | 114.5 | 129.3 | |
| Accounts payable and other | ||||
| non-interest-bearing liabilities | 695.2 | 695.2 | ||
| Total | 809.8 | 14.9 | 114.5 | 939.1 |
| Total fi nancial liabilities nancial |
1,276.6 | 14.9 | 199.0 | 1,490.5 |
| Loans and oans and receivables at eceivables at |
Available-for-sale vailable-for-sale |
Assets at fair ssets at fair value through alue through |
Derivatives erivatives defi ned as cash ned as cash |
Book value ook | |
|---|---|---|---|---|---|
| MEUR | amortised cost mortised |
fi nancial assets nancial |
profi t or loss t or | fl ow hedges ow | Dec 31, 2007 Dec 31, 2007 |
| Non-current fi on-current fi nancial assets nancial |
|||||
| Interest-bearing receivables | 5.5 | 5.5 | |||
| Available-for-sale investments | 2.3 | 2.3 | |||
| Derivative assets | 8.9 | 8.9 | |||
| Other non-interest-bearing receivables |
12.0 | 12.0 | |||
| Total | 17.5 | 2.3 | - | 8.9 | 28.7 |
| Current fi urrent fi nancial assets nancial |
|||||
| Loans receivable | 0.4 | 0.4 | |||
| Derivative assets | 23.3 | 27.4 | 50.8 | ||
| Accounts receivable and other non-interest-bearing receivables |
582.8 | 582.8 | |||
| Cash and cash equivalents | 179.0 | 179.0 | |||
| Total | 762.3 | - | 23.3 | 27.4 | 813.1 |
| Total fi nancial assets nancial |
779.8 | 2.3 | 23.3 | 36.3 | 841.8 |
| Financial liabilities inancial liabilities |
Liabilities at fair iabilities at fair value through alue through |
Derivatives erivatives defi ned as cash ned as cash |
Book value ook | |
|---|---|---|---|---|
| MEUR | at amortised cost t amortised |
profi t or loss t or | fl ow hedges ow | Dec 31, 2007 Dec 31, 2007 |
| Non-current fi on-current fi nancial liabilities nancial |
||||
| Interest-bearing liabilities | 433.3 | 433.3 | ||
| Derivative liabilities | 14.9 | 14.9 | ||
| Other non-interest-bearing liabilities | 52.2 | 52.2 | ||
| Total | 485.5 | - | 14.9 | 500.4 |
| Current fi urrent fi nancial liabilities nancial liabilities |
||||
| Interest-bearing liabilities | 55.1 | 55.1 | ||
| Derivative liabilities | 2.6 | 15.0 | 17.6 | |
| Accounts payable and other | ||||
| non-interest-bearing liabilities | 614.5 | 614.5 | ||
| Total | 669.6 | 2.6 | 15.0 | 687.3 |
| Total fi nancial liabilities nancial |
1,155.1 | 2.6 | 29.9 | 1,187.7 |
Derivative instruments are presented in fair value. The fair values of interest-bearing receivables and accounts payable and other noninterest-bearing payables are not materially different from balance sheet values. Information on fair values of other items is presented in their respective notes.
| MEUR | Dec 31, 2008 ec 31, | Dec 31, 2007 ec 31, |
|---|---|---|
| Non-current non-interest-bearing assets | 8.1 | 12.0 |
| MEUR | Dec 31, 2008 ec 31, | Dec 31, 2007 ec 31, |
|---|---|---|
| Accounts receivable | 535.9 | 475.9 |
| Receivables from construction contracts | 77.7 | 26.2 |
| Deferred interests | 4.5 | 4.6 |
| Other deferred assets | 96.0 | 76.1 |
| Total | 714.0 | 582.8 |
The Company has deducted EUR 15.5 (Dec 31, 2007: 11.1) million for doubtful accounts from accounts receivable.
| MEUR | Dec 31, 2008 ec 31, | Dec 31, 2007 ec 31, |
|---|---|---|
| Undue | 367.7 | 346.8 |
| 1–90 days due | 147.4 | 111.8 |
| 91–360 days due | 29.4 | 21.4 |
| Over 360 days due | 6.9 | 7.0 |
| Total | 551.4 | 487.0 |
| MEUR | Dec 31, 2008 ec 31, | Dec 31, 2007 ec 31, |
|---|---|---|
| Cash at bank and in hand | 78.2 | 100.5 |
| Short-term deposits | 1.1 | 78.4 |
| Total | 79.2 | 179.0 |
| MEUR | Dec 31, 2008 ec 31, | Dec 31, 2007 ec 31, |
|---|---|---|
| Total cash and cash equivalents | 79.2 | 179.0 |
| Bank overdrafts used | -33.3 | -11.4 |
| Cash and cash equivalents in the cash fl ash and cash equivalents in the cash fl ow statement ow |
45.9 | 167.5 |
Total equity consists of share capital, share premium account, treasury shares, translation differences, fair value reserves, retained earnings and minority interest. The share premium account includes the impacts of change in share capital, which exceeds the accounting par value of the shares. Translation differences caused by translation of foreign companies' fi nancial statements are included in translation differences. Fair value reserves include the changes in fair value of derivatives hedging cash fl ows and changes in fair value of availablefor-sale fi nancial assets. Net income for the period is recorded in retained earnings.
According to Cargotec's Articles of Association, the Company's share capital is divided into class A and class B shares, the maximum total number of shares being 260 million. The number of class A shares is at maximum 260 million and the number of class B shares is at maximum 260 million. Cargotec class B shares are quoted on the NASDAQ OMX Helsinki. The accounting par value of both class A and class B shares is EUR 1 per share. The shares have no nominal value. The Articles of Association state that the company's minimum share capital is EUR 60 million and the maximum share capital EUR 260 million. The share capital can be raised or reduced within these limits without an amendment to the Articles of Association. Cargotec's share capital is fully paid up.
At the Annual General Meeting, each class A share is assigned one vote, as is each block of 10 class B shares, with the provision that each shareholder is entitled to at least one vote. Cargotec class B shares entitle the holder to a higher dividend than class A shares. According to the Articles of Association, class B shares entitle to at least one percent and at most 2.5 percent higher dividend than class A shares, calculated from the accounting par value of the share.
At the end of 2008, Cargotec held 2,990,725 (Dec 31, 2007: 1,904,725) class B shares as treasury shares. The total cost for shares purchased during the fi nancial period was EUR 23.6 (Jan 1–Dec 31, 2007: 46.1) million. Board authorisations to resolve to repurchase and to dispose treasury shares and to increase the share capital are presented in the chapter Shares and Shareholders.
| Number of umber | Number of umber | ||
|---|---|---|---|
| class A shares lass A |
class B shares lass B |
Total | |
| Number of shares on Jan 1, 2007 | 9,526,089 | 54,520,371 | 64,046,460 |
| Share subscription with option rights | 0 | 173,913 | 173,913 |
| Number of shares on Dec 31, 2007 umber of shares on Dec 31, |
9,526,089 ,526,089 | 54,694,284 4,694,284 | 64,220,373 4,220,373 |
| Treasury shares on Dec 31, 2007 | 0 | -1,904,725 | -1,904,725 |
| Number of shares outstanding on Dec 31, 2007 umber of shares outstanding on Dec 31, |
9,526,089 ,526,089 | 52,789,559 2,789,559 | 62,315,648 2,315,648 |
| Number of shares on Jan 1, 2008 | 9,526,089 | 54,694,284 | 64,220,373 |
| Share subscription with option rights | 0 | 83,907 | 83,907 |
| Number of shares on Dec 31, 2008 umber of shares on Dec 31, |
9,526,089 ,526,089 | 54,778,191 4,778,191 | 64,304,280 4,304,280 |
| Treasury shares on Dec 31, 2008 | 0 | -2,990,725 | -2,990,725 |
| Number of shares outstanding on Dec 31, 2008 umber of shares outstanding on Dec 31, |
9,526,089 ,526,089 | 51,787,466 1,787,466 | 61,313,555 1,313,555 |
After December 31, 2008 the following dividends were proposed by the Board of Directors to be paid: EUR 0.59 per each class A share and EUR 0.60 per each class B share in circulation, a total of EUR 36,692,872.11.
Cargotec option rights 2005A and 2005B are based on the demerged Kone Corporation's 2004 option programme. At the effective date of the demerger June 1, 2005, holders of option rights under the Kone 2004 option programme received new option rights so that each series A option right of Kone Corporation was converted into one series 2005A option right of Cargotec and one series A option right of new KONE, and each series B option right of Kone was converted into one series 2005B option right of Cargotec and one series B option right of new KONE.
At the date of the demerger on June 1, 2005, the personnel of the demerged Kone Corporation held 72,185 Cargotec 2005A option rights and 125,240 Cargotec 2005B option rights.
Trading with 2005A option rights ended on March 20, 2008 and share subscription period on March 31, 2008. 2005B option rights are listed on the NASDAQ OMX Helsinki. Each Cargotec option right entitles the holder to subscribe for three class B shares in Cargotec. The shares that have been subscribed for under the option rights are entitled to dividends for the fi nancial period during which the subscription has taken place. Other shareholder rights are effected upon the registration of the increase of the share capital in the trade register. The share subscription price is EUR 8.59. 2005B option rights entitle the holder to subscribe for class B shares in Cargotec annually, during the period January 2–November 30, on dates separately determined by the Board of Directors, so that 2005B option rights entitle subscription during the period June 13, 2005–March 31, 2009.
Cargotec has applied IFRS 2 (Share-based Payment) to option and plans where options have been granted and vesting period has been started after the formation of the Company on June 1, 2005.
In January 2007, Cargotec published a new share-based incentive scheme for the company's key managers for the years 2007−2011. The rewards will be paid during 2009−2012 in both class B shares and cash. The cash portion is dedicated to cover possible taxes and tax-related payments resulting from the total reward. Shares distributed as reward will contain a prohibition to hand over or sell the shares within one year of the end of an earnings period with the exception of the fi nal earnings period when no prohibitions are included. The shares will be lost if the holder leaves the company before the prohibition period ends.
At the end of December 2008, the earnings period 2007−2008 involves 62 persons. If they were to receive the maximum number of shares in accordance with the scheme, a total of 135,825 shares, their shareholding obtained via the programme would amount to 0.1 percent of the total voting rights of Company's class A and B shares. Share price at grant date was EUR 45.14.
In July 2005, Cargotec's Board of Directors decided on a new share-based incentive scheme for 35 top management members. The scheme included share options and synthetic options. The duration of the incentive scheme at the grant date was 1.6 years. The top management was granted 20,660 Cargotec 2005B option rights and 65,000 synthetic option rights.
The fair value of the share option rights at the grant date was based on the weighted average trading price of Cargotec 2005A and 2005B option rights during June–August 2005 and was EUR 46.05. The option rights were granted free of charge and were fully expensed at the grant as there were not employment obligation connected them. The option rights were handed over to the participants of the incentive scheme in March 2007. The earnings criteria for synthetic options was defi ned to be the Cargotec's class B share performance during July 2005–February 2007. The synthetic options were settled in cash in March 2007. The fair value of the options was EUR 28.22 at payment day.
| Number of option rights umber of option rights |
Number of 2005A umber of options |
Number of 2005B umber of options |
|---|---|---|
| At the beginning of the fi nancial period Jan 1, 2007 | 37,895 | 82,955 |
| Exercised option rights | -25,170 | -32,801 |
| At the end of fi t the end of fi nancial period Dec 31, 2007 nancial period Dec 31, |
12,725 | 50,154 |
| Exercisable option rights on Dec 31, 2007 | 12,725 | 50,154 |
| Number of 2005A umber of options |
Number of 2005B umber of options |
|
|---|---|---|
| At the beginning of the fi nancial period Jan 1, 2008 | 12,725 | 50,154 |
| Exercised option rights | -12,725 | -15 244 |
| At the end of fi t the end of fi nancial period Dec 31, 2008 nancial period Dec 31, 2008 |
0 | 34,910 |
| Exercisable option rights on Dec 31, 2008 | 0 | 34,910 |
The weighted average share price at the dates of exercise of share options in 2008 was EUR 20.38 (Jan 1–Dec 31, 2007: 38.60).
| MEUR | Dec 31, 2008 ec 31, | Dec 31, 2007 ec 31, |
|---|---|---|
| Non-current | ||
| Loans from fi nancial institutions | 120.4 | 122.5 |
| Corporate bonds | 314.7 | 302.8 |
| Finance lease liabilities | 5.3 | 8.0 |
| Total | 440.2 | 433.3 |
| Current portion of long-term loans | ||
| Loans from fi nancial institutions | 0.4 | 0.5 |
| Finance lease liabilities | 3.6 | 3.0 |
| Total | 4.0 | 3.5 |
| Current | ||
| Loans from fi nancial institutions | 77.3 | 40.2 |
| Bank overdrafts used | 33.3 | 11.4 |
| Total | 110.6 | 51.6 |
| Total interest-bearing liabilities otal interest-bearing |
554.8 | 488.4 |
On December 31, 2008, the average effective interest rate of long-term loans and corporate bonds was 4.9 (December 31, 2007: 5.0) percent. The effective euro interest rate, after hedging of USD denominated corporate bonds through cross-currency and interest rate swaps, was 4.4 (December 31, 2007: 4.5) percent. The average interest rate of short-term loans was 4.3 (December 31, 2007: 5.7) percent.
The fair values of corporate bonds, presented below, are calculated as discounted cash fl ows using market rates. The fair values of other interest-bearing liabilities are not materially different from their carrying amounts.
| Fair value, MEUR air value, |
||||
|---|---|---|---|---|
| Coupon rate, % oupon rate, |
Nominal value ominal |
Dec 31, 2008 ec 31, | Dec 31, 2007 ec 31, | |
| 2005–2012 | 3.80 | EUR 100 million | 100.1 | 94.4 |
| 2007–2014 | 5.44 | USD 95 million | 79.6 | 68.8 |
| 2007–2017 | 5.58 | USD 120 million | 107.5 | 88.2 |
| 2007–2019 | 5.68 | USD 85 million | 79.1 | 63.4 |
| MEUR | Dec 31, 2008 ec 31, | Dec 31, 2007 ec 31, |
|---|---|---|
| USD* | 217.9 | 211.8 |
| EUR | 260.4 | 208.0 |
| CNY | 31.7 | 28.2 |
| SEK | 19.9 | 25.3 |
| Other | 25.0 | 15.1 |
| Total | 554.8 | 488.4 |
*USD denominated Private Placement corporate bonds are hedged through cross currency and interest rate swaps defi ned as cash fl ow hedges in accordance with IAS 39.
Cargotec has non-cancellable fi nance lease agreements for property, plant and equipment with varying terms and renewal rights.
| MEUR | Dec 31, 2008 ec 31, | Dec 31, 2007 ec 31, |
|---|---|---|
| Minimum lease payments | ||
| Less than 1 year | 3.6 | 3.5 |
| 1–5 years | 4.5 | 6.4 |
| Over 5 years | 2.9 | 4.1 |
| Total | 11.1 | 14.0 |
| Future fi nance charges | -2.1 | -3.1 |
| Present value of fi resent value of fi nance lease liabilities nance lease |
8.9 | 10.9 |
| MEUR | Dec 31, 2008 ec 31, | Dec 31, 2007 ec 31, |
|---|---|---|
| Less than 1 year | 3.6 | 3.0 |
| 1–5 years | 3.3 | 5.1 |
| Over 5 years | 2.0 | 2.8 |
| Present value of fi resent value of fi nance lease liabilities nance lease |
8.9 | 10.9 |
Cargotec has various employee benefi t plans throughout the world. Pension arrangements are made in accordance with local regulations and practise in line with the defi ned contribution pension plans or defi ned benefi t pension plans. For defi ned benefi t pension plans retirement, disability, death and termination income benefi ts are determined, retirement benefi ts generally being a function of years worked and fi nal salary.
In Finland, pension cover has been arranged through local insurance companies in accordance with defi ned contribution plans (Finnish Statutory Employment Pension Scheme "TyEL"). In Sweden several companies have arranged the pension cover through both insurance companies and book reserves in accordance with the Swedish "FPG/PRI System".
The main countries having funded defi ned benefi t plans are UK, USA, Norway and Sweden. Defi ned benefi t pension plans are funded by the relevant group companies to satisfy local statutory funding requirements. The discount rates used in actuarial calculations of employee benefi ts liabilities are adjusted to market rates.
| Defi ned benefi t plans t |
post-employment | Other ost-employment benefi ts |
Total | |||
|---|---|---|---|---|---|---|
| MEUR | Dec 31, 2008 ec 31, | Dec 31, 2007 ec 31, | Dec 31, 2008 ec 31, | Dec 31, 2007 ec 31, | Dec 31, 2008 ec 31, | Dec 31, 2007 ec 31, |
| Present value of unfunded obligations | 21.1 | 30.2 | - | - | 21.1 | 30.2 |
| Present value of funded obligations | 32.0 | 37.9 | - | - | 32.0 | 37.9 |
| Fair value of benefi t plans' assets | -18.3 | -27.1 | - | - | -18.3 | -27.1 |
| Unrecognised actuarial gains (+)/losses (-) | -1.3 | -5.9 | - | - | -1.3 | -5.9 |
| Total | 33.5 | 35.2 | - | - | 33.5 | 35.2 |
| Defi ned benefi t plans t |
Other post-employment ost-employment benefi ts |
Total | |||||
|---|---|---|---|---|---|---|---|
| MEUR | Dec 31, 2008 ec 31, | Dec 31, 2007 ec 31, | Dec 31, 2008 ec 31, | Dec 31, 2007 ec 31, | Dec 31, 2008 ec 31, | Dec 31, 2007 ec 31, | |
| Benefi t obligation at the beginning of period |
68.0 | 68.5 | - | - | 68.0 | 68.5 | |
| Current service costs | 1.5 | 1.4 | - | - | 1.5 | 1.4 | |
| Interest costs | 2.6 | 2.8 | - | - | 2.6 | 2.8 | |
| Contributions by plan participants | -2.2 | 1.3 | - | - | -2.2 | 1.3 | |
| Net actuarial gains (-) / losses (+) recognised |
-1.0 | -0.4 | - | - | -1.0 | -0.4 | |
| Translation difference | -10.3 | -3.2 | - | - | -10.3 | -3.2 | |
| Benefi ts paid | -4.3 | -2.4 | - | - | -4.3 | -2.4 | |
| Acquisitions/Disposals of new companies | - | 0.7 | - | - | - | 0.7 | |
| Curtailments | -1.1 | -0.7 | - | - | -1.1 | -0.7 | |
| Past-service costs | - | 0.0 | - | - | - | 0.0 | |
| Benefi t obligation at the end of period t obligation at the end of |
53.1 | 68.0 | - | - | 53.1 | 68.0 |
| Other | ||||||
|---|---|---|---|---|---|---|
| Defi ned benefi t plans t |
post-employment ost-employment benefi ts |
Total | ||||
| MEUR | Dec 31, 2008 ec 31, | Dec 31, 2007 ec 31, | Dec 31, 2008 ec 31, | Dec 31, 2007 ec 31, | Dec 31, 2008 ec 31, | Dec 31, 2007 ec 31, |
| Plan assets at the beginning of period | 27.1 | 27.9 | - | - | 27.1 | 27.9 |
| Expected return on plans assets | 1.1 | 1.4 | - | - | 1.1 | 1.4 |
| Net actuarial gains (-)/losses (+) recognised | -2.3 | -0.7 | - | - | -2.3 | -0.7 |
| Translation difference | -5.1 | -1.6 | - | - | -5.1 | -1.6 |
| Employer contribution | 0.8 | 1.6 | - | - | 0.8 | 1.6 |
| Employee contribution | 0.0 | 0.0 | - | - | 0.0 | 0.0 |
| Benefi ts paid | -1.7 | -1.7 | - | - | -1.7 | -1.7 |
| Acquisitions/Disposals of new companies | - | 0.3 | - | - | - | 0.3 |
| Settlements | -1.5 | 0.0 | - | - | -1.5 | 0.0 |
| Plan assets at the end of period lan assets at the end of |
18.3 | 27.1 | - | - | 18.3 | 27.1 |
| MEUR | Jan 1–Dec 31, 2008 an 1–Dec 31, |
Jan 1–Dec 31, 2007 an 1–Dec 31, |
|---|---|---|
| Defi ned contribution pension plans | 21.3 | 24.9 |
| Defi ned benefi t pension plans | 3.0 | 3.1 |
| Other post-employment benefi ts | - | - |
| Total | 24.3 | 27.9 |
| MEUR | Jan 1–Dec 31, 2008 an 1–Dec 31, |
Jan 1–Dec 31, 2007 an 1–Dec 31, |
|---|---|---|
| Current service costs | 1.3 | 1.5 |
| Interest costs | 2.4 | 2.9 |
| Expected return on plan assets | -1.1 | -1.5 |
| Net actuarial gains (-)/losses (+) recognised | 0.3 | 0.1 |
| Past-service costs | 0.0 | 0.0 |
| Gains/loss curtailments | 0.0 | 0.0 |
| Total | 3.0 | 3.1 |
| 2008 | 2007 | |||||
|---|---|---|---|---|---|---|
| Europe | USA | Europe | USA | |||
| Discount rate, % | 4.3–6.6 | 6.25–6.5 | 1.75–6.0 | 5.75 | ||
| Expected return on plan assets, % | 4.0–6.6 | 7.0 | 2.0–7.0 | 7.0 | ||
| Future salary increase, % | 2.0–4.5 | 0.0 | 2.0–5.0 | 4.5 | ||
| Future pension increase, % | 2.5–4.25 | 2.0–3.6 | ||||
| Expected average remaining working years | 5–23 | 11–22 |
| MEUR | Provision rovision for warranty or |
Provision rovision for claims or |
Provision for rovision business usiness re-organization e-organization |
Provision for rovision for loss contracts oss |
Other provisions rovisions |
Total |
|---|---|---|---|---|---|---|
| Total provision Jan 1, 2008 | 70.2 | 0.5 | 2.1 | 5.7 | 30.7 | 109.1 |
| Translation difference | -4.6 | 0.0 | 0.0 | 0.0 | -3.8 | -8.4 |
| Increase | 32.3 | 2.2 | 3.3 | 6.1 | 16.7 | 60.6 |
| Provision used | -20.5 | -0.2 | -1.5 | -0.3 | -0.2 | -22.8 |
| Reversal of provision | -10.0 | -0.1 | -0.3 | -4.5 | -20.1 | -35.0 |
| Companies acquired/sold | 0.6 | 0.0 | 0.0 | 0.0 | 0.7 | 1.4 |
| Total provision Dec 31, 2008 otal provision Dec 31, |
68.0 | 2.3 | 3.6 | 7.0 | 24.0 | 105.0 |
| Provision for rovision | ||||||
|---|---|---|---|---|---|---|
| MEUR | Provision rovision for warranty or |
Provision rovision for claims or |
business usiness re-organization e-organization |
Provision for rovision for loss contracts oss |
Other provisions rovisions |
Total |
| Total provision Jan 1, 2007 | 50.7 | 0.6 | 0.1 | 5.9 | 15.6 | 72.9 |
| Translation difference | -1.2 | 0.0 | 0.1 | -0.1 | -0.7 | -1.9 |
| Increase | 43.1 * | 0.2 | 3.8 | 4.1 | 23.2 | 74.5 |
| Provision used | -13.1 | -0.2 | -1.3 | -0.3 | -0.7 | -15.6 |
| Reversal of provision | -10.4 | -0.1 | -0.5 | -4.0 | -7.6 | -22.5 |
| Companies acquired/sold | 1.1 | - | - | - | 0.8 | 1.9 |
| Total provision Dec 31, 2007 otal provision Dec 31, |
70.2 | 0.5 | 2.1 | 5.7 | 30.7 | 109.2 |
* Including the one-off cost of EUR 18.0 million related to a container spreader inspection and repair programme.
| MEUR | Dec 31, 2008 ec 31, | Dec 31, 2007 ec 31, |
|---|---|---|
| Non-current liabilities | 34.6 | 38.4 |
| Current liabilities | 70.4 | 70.8 |
| Total | 105.0 | 109.2 |
Provisions for warranties cover the expenses related to warranty claims from goods sold in the fi nancial period or earlier with a valid warranty. Provisions for claims are made for claims received for which the value, probability and realisation can be estimated. Provisions for loss contracts are recognised when it is probable that contract costs will exceed the estimated total contract revenue. The expected loss is recognised as an expense immediately. Other provisions include various items, e.g. related to product quality, severance, unemployment and other employment items, taxes and the sale of divested operations.
| MEUR | Dec 31, 2008 ec 31, | Dec 31, 2007 ec 31, |
|---|---|---|
| Share-based incentives | - | 1.0 |
| Other non-interest-bearing liabilities | 26.6 | 52.2 |
| Total | 26.6 | 53.2 |
| MEUR | Dec 31, 2008 ec 31, | Dec 31, 2007 ec 31, |
|---|---|---|
| Accounts payable | 344.8 | 363.9 |
| Advances received | 420.4 | 243.8 |
| Accrued interests | 17.1 | 16.3 |
| Share-based incentives | 0.2 | - |
| Accrued salaries, wages and employment costs | 73.5 | 73.7 |
| Advance rents, customer fi nance | 29.0 | 23.6 |
| Project costs | 70.7 | 73.9 |
| Other accrued expenses | 188.8 | 86.8 |
| Total | 1,144.4 | 882.0 |
| MEUR | Dec 31, 2008 ec 31, | Dec 31, 2007 ec 31, |
|---|---|---|
| Guarantees | 0.2 | 2.2 |
| Dealer fi nancing | 0.2 | 8.4 |
| End customer fi nancing | 11.5 | 7.5 |
| Operating leases | 48.0 | 47.7 |
| Off balance sheet investment commitments | - | 1.2 |
| Other contingent liabilities | 4.0 | 3.7 |
| Total | 63.9 | 70.6 |
Cargotec leases property, plant and equipment under non-cancellable operating leases. The leases have varying terms and renewal rights.
It is not anticipated that any material liabilities will arise from trade fi nance commitments.
| MEUR | Dec 31, 2008 ec 31, | Dec 31, 2007 ec 31, |
|---|---|---|
| Less than 1 year | 14.9 | 14.1 |
| 1–5 years | 26.5 | 27.4 |
| Over 5 years | 6.7 | 6.3 |
| Total | 48.0 | 47.7 |
The aggregate operating lease expenses totalled EUR 15.6 (Jan 1–Dec 31, 2007: 13.6) million.
| MEUR | Positive fair value ositive fair Dec 31, 2008 ec 31, |
Negative fair value egative fair Dec 31, 2008 ec 31, |
Net fair value et fair Dec 31, 2008 ec 31, |
|---|---|---|---|
| FX forward contracts. cash fl ow hedges | 79.6 | 199.0 | -119.4 |
| FX forward contracts, non-hedge accounted | 82.1 | 14.9 | 67.2 |
| Cross currency and interest rate swaps, cash fl ow hedges | 23.7 | - | 23.7 |
| Total | 185.4 | 213.8 | -28.4 |
| Non-current portion: FX forward contracts, cash fl ow hedges |
31.3 | 84.5 | -53.2 |
| Cross currency and interest rate swaps, cash fl ow hedges | 23.7 | - | 23.7 |
| Non-current portion on-current |
55.0 | 84.5 | -29.5 |
| Current portion urrent |
130.4 | 129.3 | 1.1 |
| Positive fair value ositive fair |
Negative fair value egative fair |
Net fair value et fair |
|
|---|---|---|---|
| MEUR | Dec 31, 2007 ec 31, | Dec 31, 2007 ec 31, | Dec 31, 2007 ec 31, |
| FX forward contracts. cash fl ow hedges | 36.3 | 25.0 | 11.3 |
| FX forward contracts. non-hedge accounted | 23.3 | 2.6 | 20.7 |
| Cross currency and interest rate swaps. cash fl ow hedges | - | 4.9 | -4.9 |
| Total | 59.7 | 32.6 | 27.1 |
| Non-current portion: | |||
| FX forward contracts, cash fl ow hedges | 8.9 | 10.0 | -1.1 |
| Cross currency and interest rate swaps. cash fl ow hedges | - | 4.9 | -4.9 |
| Non-current portion on-current |
8.9 | 14.9 | -6.0 |
| Current portion urrent |
50.8 | 17.6 | 33.2 |
Cross currency and interest rate swaps hedge the US Private Placement corporate bond funded in February 2007.
| MEUR | Dec 31, 2008 ec 31, | Dec 31, 2007 ec 31, |
|---|---|---|
| FX forward contracts | 3,617.5 | 2,610.0 |
| Cross currency and interest rate swaps | 225.7 | 225.7 |
| Total | 3,843.3 | 2,835.7 |
Cargotec rents out container handling equipment under non-cancellable operating leases. The leases have varying terms and renewal rights.
| MEUR | Dec 31, 2008 ec 31, | Dec 31, 2007 ec 31, |
|---|---|---|
| Less than 1 year | 10.5 | 11.8 |
| 1–5 years | 15.0 | 18.9 |
| Over 5 years | 0.8 | 3.2 |
| Total | 26.3 | 33.9 |
Rent income recognised in sales was EUR 13.9 (Jan 1-Dec 31, 2007: 15.7) million.
| ssociated | Associated companies | oint | Joint ventures | Total | ||
|---|---|---|---|---|---|---|
| MEUR | Jan 1–Dec 31, 2008 | an 1–Dec 31,2008Jan 1–Dec 31, 2007 ec 31,2007Jan 1–Dec 31, 2008 Dec 31,2008Jan 1–Dec 31, 2007 | an 1–Dec 31,2007Jan 1–Dec 31, 2008 ec 31,2008Jan 1–Dec 31, 2007 ec 31,2007 | |||
| Sale of goods and services | 8.0 | 7.5 | 7.2 | 4.6 | 15.2 | 12.1 |
| Purchase of goods and services | 17.6 | 5.6 | 0.0 | 0.1 | 17.6 | 5.7 |
| Associated companies ssociated |
Joint ventures oint |
Total | ||||
|---|---|---|---|---|---|---|
| MEUR | Dec 31, 2008 ec 31, | Dec 31, 2007 ec 31, | Dec 31, 2008 ec 31, | Dec 31, 2007 ec 31, | Dec 31, 2008 ec 31, | Dec 31, 2007 ec 31, |
| Current loans receivable | - | - | 0.2 | 0.2 | 0.2 | 0.2 |
| Accounts receivable | 2.0 | 1.5 | 3.9 | 1.3 | 5.9 | 2.8 |
| Accounts payable | 2.3 | 1.1 | 0.0 | 0.0 | 2.3 | 1.1 |
Transactions with associated companies and joint ventures are made at market price.
| MEUR | Jan 1–Dec 31, 2008 an 1–Dec 31, |
Jan 1–Dec 31, 2007 an 1–Dec 31, |
|---|---|---|
| Wages and salaries | 4.2 | 3.7 |
| Share-based key management incentive scheme | -0.4 | 1.3 |
| Post-employment benefi ts | 0.1 | 0.2 |
| Total | 3.9 | 5.3 |
Key management consists of the Board of Directors and the Executive Board. Executive Board members are covered by the Cargotec's share-based incentive programme for key managers for period 2007–2011. The maximum amount to be paid out to Exceutive Board members for the earnings period as shares is 58,000 class B shares. Further information on this incentive programme is presented in Note 24. Share-based Payments.
The period of notice of the President and CEO is six months and he has a right to a compensation for termination of employment of 12 months. Other members of the Executive Board have a period of notice of 6-12 months and are entitled to compensation for termination of employment corresponding to 6-12 months' salary. One member is entitled to retire at the age of 60. In this case, the pension received corresponds to 60 percent of the total average annual salary excluding share-based incentive programmes in the last ten full years of service. This arrangement has been covered with insurances taken out by the Company.
The loans Cargotec has granted to Moving Cargo Oy, a company jointly-owned by the members of the Executive Board, for fi nancing an incentive programme for the Executive Board amount to EUR 3.5 million at December 31, 2008 (Dec 31, 2007: EUR 2.0 million). Of the total amount EUR 0.5 million is non-interest-bearing convertible bond loan which falls due on March 31, 2012. The rest of the loan carries an interest of 4.78% and will be repaid latest when due on March 31, 2012.
| 1.000 EUR .000 | Jan 1–Dec 31, 2008 an 1–Dec 31, |
Jan 1–Dec 31, 2007 an 1–Dec 31, |
|
|---|---|---|---|
| Mikael Mäkinen | President and CEO | 772.1 | 673.2 |
| Pekka Vauramo | Deputy to CEO (as of Dec 18, 2008) | 12.3 | - |
| Kari Heinistö | Deputy to CEO (until Dec 18, 2008) | 455.1 | 854.5 * |
| Ilkka Herlin | Chairman of the Board | 73.7 | 74.2 |
| Henrik Ehrnrooth | Debuty Chairman of the Board | 46.5 | 46.0 |
| Tapio Hakakari | Board member | 41.7 | 42.2 |
| Peter Immonen | Board member | 42.0 | 44.0 |
| Karri Kaitue | Board member | 35.0 | 36.0 |
| Antti Lagerroos | Board member (as of Feb 29, 2008) | 30.0 | - |
| Carl-Gustaf Bergström | Board member (until Feb 29, 2008) | 5.5 | 592.9 * |
Further information on share and option ownership of the Board of Directors and top management is available under the section "Shares and Shareholders".
* Cargotec's previous President and CEO and member of BoD, Carl-Gustaf Bergström, and Senior Executive Vice President, Kari Heinistö, were part of Cargotec top management incentive scheme that ended in March 2007.
| Country | Group shareholding (%) roup shareholding |
|
|---|---|---|
| Cargotec Finland Oy | Finland | 100 |
| Cargotec Sweden AB | Sweden | 100 |
| MacGREGOR (SWE) AB | Sweden | 100 |
| Cargotec Solutions LLC | USA | 100 |
| MacGREGOR-Kayaba Ltd | Japan | 75 |
| MacGREGOR Plimsoll Pte Ltd | Singapore | 90 |
| Kalmar Asia Pacifi c Ltd | Hong Kong | 100 |
| Kalmar RT Center LLC | USA | 100 |
| Hiab GmbH | Germany | 100 |
| Kalmar Industries B.V. | The Netherlands | 100 |
| Kalmar Flurförderzeuge Vertriebs GmbH | Germany | 100 |
| MacGREGOR Bulk AB | Sweden | 100 |
| MacGREGOR Hydramarine AS | Norway | 90 |
| Hiab B.V. | The Netherlands | 100 |
| Cargotec USA Inc | USA | 100 |
| Kalmar Belgium NV | Belgium | 100 |
| Hiab S.A.S | France | 100 |
| Kalmar Hebefahrzeuge Handelges.m.b.H. | Austria | 100 |
| Hiab Ltd. | UK | 100 |
| Country | Group shareholding (%) roup shareholding |
|
|---|---|---|
| Hiab, S.A. | Spain | 100 |
| Kalmar Ltd. | UK | 100 |
| MacGREGOR Shanghai Trading Co., Ltd. | China | 100 |
| Kalmar Rental B.V. | The Netherlands | 100 |
| Waltco Truck Equipment Co. Inc. | USA | 100 |
| Z-Lyften Produktion AB | Sweden | 100 |
| Cargotec CHS Asia Pacifi c Pte Ltd. | Singapore | 100 |
| Hiab Australia Pty. Ltd. | Australia | 80 |
| Catracom NV | Belgium | 100 |
| MacGREGOR (DEU) GmbH | Germany | 100 |
| Hiab AS | Norway | 100 |
| Hiab K.K. | Japan | 100 |
| OOO Cargotec RUS | Russia | 100 |
| Kalmar Norge AS | Norway | 100 |
| Hiab Hana Ltd. | Republic of Korea | 99 |
| Kalmar France S.A.S | France | 100 |
| Kalmar South East Asia Pte. Ltd | Singapore | 100 |
| Kalmar España, S.A. | Spain | 82 |
| Hiab Sp. Z o.o. | Poland | 100 |
| Hiab SA/NV | Belgium | 100 |
| Servicios Hiab S.A. de C.V. | Mexico | 64 |
| Hiab S.A. de C.V. | Mexico | 64 |
| Kalmar Port Machinery Shanghai Ltd | China | 100 |
| Zepro Danmark A/S | Denmark | 100 |
| Moffett Ltd | UK | 100 |
| Moffett Engineering Ltd | Ireland | 100 |
| Moffett Research & Development Ltd | Ireland | 100 |
| Bransdale Limited | Ireland | 100 |
| Hiab s.r.l. | Italy | 100 |
| MacGREGOR (NOR) AS | Norway | 100 |
| Ultron Lift Corp. | USA | 100 |
| MacGREGOR (USA) Inc. | USA | 100 |
| MacGREGOR (GBR) Ltd | UK | 100 |
| MacGREGOR (SGP) Pte Ltd. | Singapore | 100 |
| Hiab (Pty) Ltd. | South Africa | 74 |
| DEL Equipment (UK) Ltd. | UK | 100 |
| Kalmar Equipment (Australia) Pty. Ltd. | Australia | 100 |
| Cargotec India Private Limited | India | 100 |
| Kalmar Port Machinery (Shenzhen) Co., Ltd | China | 100 |
| MacGREGOR (ITA) S.r.l. | Italy | 100 |
| MacGREGOR (KOR) Ltd | Republic of Korea | 100 |
| MacGREGOR (NLD) B.V. | The Netherlands | 100 |
| Hiab Chile S.A. | Chile | 100 |
| Zepro France s.a.r.l. | France | 100 |
| Interhydraulik Zepro GmbH | Austria | 100 |
| Hiab spol s.r.o. | Slovakia | 100 |
| MacGREGOR-PCS Inc. | USA | 100 |
| Cargotec Services Marine LLC | USA | 100 |
| MacGREGOR (FRA) S.A.S. | France | 100 |
| Hiab Load Handling Equipment (Shanghai) Co., Ltd | China | 100 |
| Kalmar Danmark A/S | Denmark | 100 |
| MacGREGOR (GRC) EPE | Greece | 100 |
| Hiab s.r.o | Czech Republic | 100 |
| Hiab Sdn Bhd | Malaysia | 100 |
| AMA Polska Sp. Z o.o. | Poland | 100 |
| Cargotec Brazil Indústria e Comércio de Equipamentos | ||
| para Movimentacao de Cargas Ltda | Brazil | 100 |
| MacGREGOR (HRV) d.o.o. | Croatia | 100 |
| Moffett B.V. | The Netherlands | 100 |
| MacGREGOR (DNK) A/S | Denmark | 100 |
| SRMP - Societe Reunionaise de Maintenance Portuaire | France | 51 |
| Bromma Far East Pte. Ltd. | Singapore | 100 |
| Kalmar Industries South Africa (Pty) Ltd | South Africa | 100 |
| Country | Group shareholding (%) roup shareholding |
|
|---|---|---|
| Hiab Kft. | Hungary | 100 |
| Tagros d.o.o. | Slovenia | 100 |
| Kalmar Industries ( Shanghai ) Co., Ltd | China | 100 |
| MacGREGOR BLRT Baltic OÜ | Estonia | 51 |
| O'Leary's Material Handling Services Pty Ltd | Australia | 56 |
| Hiab d.o.o. | Croatia | 100 |
| MacGREGOR ESP, S.A. | Spain | 100 |
| Hiab Balti AS | Estonia | 100 |
| Platform Crane Services Mexico S. de R.L. | Mexico | 100 |
| LeeBur-Multilift B.V. | The Netherlands | 100 |
| Bromma GmbH | Germany | 100 |
| OOO MacGREGOR (RUS) | Russia | 100 |
| Hiab New Zealand Ltd | New Zealand | 80 |
| Kalmar ACT B.V. | The Netherlands | 100 |
| MacGREGOR (POL) Sp. Z o.o | Poland | 100 |
| MacGREGOR (BRA) Ltda | Brazil | 100 |
| All Set Marine Lashing AB | Sweden | 100 |
| Equipos y Servicios Para terminales y Puertos S.R.L. | Argentina | 100 |
| MacGREGOR Group AB | Sweden | 100 |
| Hiab Cranes, S.L. | Spain | 100 |
| Cargotec Ukraine, LLC | Ukraine | 100 |
| Cargotec de México, S.A. de C.V. | Mexico | 100 |
| Offi cine Cargotec Ferrari Prato S.r.l. | Italy | 80 |
| Offi cine Cargotec Ferrari Genova S.r.l. | Italy | 80 |
| Cargotec U.S. Manufacturing Oy | Finland | 100 |
| Cargotec Holding Netherlands B.V. | The Netherlands | 100 |
| Cargotec Holding (Ireland) Ltd. | Ireland | 100 |
| Cargotec Norway AS | Norway | 100 |
| Cargotec Holding Sweden AB | Sweden | 100 |
| Cargotec U.S. Sales Oy | Finland | 100 |
| Cargotec Holding, Inc. | USA | 100 |
| Cargotec Holding UK Ltd. | UK | 100 |
| Cargotec Holding S.a.r.l. | France | 100 |
| MacGREGOR Beteiligungs GmbH | Germany | 100 |
| Kalmar Industries S.r.l. | Italy | 100 |
| Conver Ingenieurtechnik GmbH & Co KG | Germany | 100 |
| Zeteco AB | Sweden | 100 |
| Kalmar Holding BV | The Netherlands | 100 |
| Cargotec Holding Finland Oy | Finland | 100 |
| MHI Acquisition Corp. | USA | 100 |
| MacGREGOR S.A.S. | France | 100 |
| Kalmar B.V. | The Netherlands | 100 |
| Bringeven Ltd. | UK | 100 |
| Koffert Sverige AB | Sweden | 100 |
| Kalmar RT Holding LLC | USA | 100 |
| Kalmar Nevada Inc. | USA | 100 |
| Cargotec Patenter AB | Sweden | 100 |
| BMH Marine Taiwan Branch | Taiwan | 100 |
| MacGREGOR Shanghai Equipment Maintenance & Repair Co., Ltd. | China | 100 |
| Cargotec Engineering Italy S.r.l. | Italy | 60 |
| MacGREGOR (CYPRUS) Ltd. | Cyprus | 100 |
| MacGREGOR (UKR) | Ukraine | 99 |
| MacGREGOR Goodway (Shanghai) Marine Engineering Consulting Co., Ltd. | China | 67 |
| Cargotec FZCO | United Arab Emirates | 100 |
| Bromma (Malaysia) Sdn. Bhd. | Malaysia | 100 |
| OOO Kalmar Pogruchiki I Crani | Russia | 100 |
| Cargotec Swizerland S.A. | Switzerland | 100 |
| MacGREGOR (CHN) Ltd | Hong Kong | 100 |
Other subsidiaries (32 companies)
A complete list of shares and participations is enclosed in Cargotec's offi cial statutory accounts.
Staff reductions continued in January as the markets continued to weaken. In the unit manufacturing tail lifts in Bispgården, Sweden, negotiations began on the need for a reduction in the workforce of 75. At Kalmar's Ljungby and Lidhult units in Sweden, negotiations began on the need for a reduction in the workforce of 97. Cargotec plans to make its operations more effi cient by reorganising and transferring a majority of its business in Ljungby to its Lidhult facility. Meanwhile, in Finland negotiations began for the temporary lay-off of 900 staff for a maximum of 90 days in Raisio and Tampere and a reduction of 60 staff in Tampere.
| MEUR | Note | Jan 1–Dec 31, 2008 an 1–Dec 31, |
Jan 1–Dec 31, 2007 an 1–Dec 31, |
|---|---|---|---|
| Sales | 26.1 | 16.6 | |
| Administration expenses | 2,3 | -34.7 | -22.5 |
| Other operating income | 4 | 0.0 | 0.0 |
| Other operating expenses | 5 | - | 0.0 |
| Operating income/loss perating |
-8.6 | -5.9 | |
| Financing income and expenses | 6 | ||
| Interest and fi nancial income | |||
| From subsidiaries | 364.1 | 132.4 | |
| From other | 208.0 | 118.1 | |
| Interest and other fi nancial expenses | |||
| To subsidiaries | -50.6 | -28.4 | |
| To other | -370.6 | -137.4 | |
| Total fi nancing income and expenses | 150.8 | 84.7 | |
| Income before extraordinary items ncome before extraordinary |
142.3 | 78.8 | |
| Extraordinary items | 7 | ||
| Extraordinary income | - | 12.8 | |
| Extraordinary expenses | - | 0.0 | |
| Total extraordinary items | - | 12.8 | |
| Income before appropriations and taxes ncome before appropriations and |
142.3 | 91.6 | |
| Taxes | 8 | - | 0.0 |
| Change in deferred taxes | 16.2 | 3.9 | |
| Profi t for the fi t for the fi nancial period nancial |
158.5 | 95.4 |
Figures are presented according to Finnish Accounting Standards (FAS).
| MEUR | Note | Dec 31, 2008 ec 31, | Dec 31, 2007 ec 31, |
|---|---|---|---|
| Assets | |||
| Non-current assets on-current |
|||
| Intangible assets | |||
| Intangible rights | 0.1 | 0.0 | |
| Other long-term expenditures | 1.6 | - | |
| Total intangible assets otal intangible |
9 | 1.6 | 0.0 |
| Tangible assets | |||
| Land | 0.4 | 0.4 | |
| Buildings | 0.4 | 0.6 | |
| Machinery and equipment | 0.3 | 0.2 | |
| Other tangible assets | 0.0 | 0.1 | |
| Assets under construction | 1.0 | - | |
| Total tangible assets otal tangible |
10 | 2.1 | 1.2 |
| Investments | |||
| Shares in subsidiaries | 1,508.2 | 1,555.4 | |
| Shares in associated companies | 1.4 | - | |
| Other stocks and shares | 1.1 | 1.5 | |
| Total investments otal |
11 | 1,510.7 | 1,556.9 |
| Total non-current assets otal non-current |
1,514.4 | 1,558.1 | |
| Current assets urrent assets |
|||
| Receivables | |||
| Long-term receivables | |||
| Receivables from subsidiaries | 12 | 281.0 | 33.5 |
| Derivative assets | 19 | 23.7 | - |
| Deferred tax asset | 19.4 | 4.2 | |
| Other receivables | 7.7 | 13.6 | |
| Total long-term receivables otal long-term |
331.9 | 51.3 | |
| Short-term receivables | |||
| Accounts receivable | 0.0 | 0.0 | |
| Receivables from subsidiaries | 12 | 1,006.6 | 762.2 |
| Derivative assets | 19 | 5.0 | 1.5 |
| Other receivables | 6.5 | - | |
| Deferred assets | 13 | 7.1 | 5.1 |
| Total short-term receivables otal short-term |
1,025.3 | 768.8 | |
| Total receivables otal |
1,357.2 | 820.2 | |
| Cash and bank ash and bank |
15.2 | 119.5 | |
| Total current assets otal current |
1,372.4 | 939.6 | |
| Total assets otal | 2,886.8 | 2,497.8 |
| MEUR | Note | Dec 31, 2008 ec 31, | Dec 31, 2007 ec 31, |
|---|---|---|---|
| Equity and liabilities quity and liabilities |
|||
| Capital and reserves apital and |
|||
| Share capital | 64.3 | 64.2 | |
| Share premium account | 98.0 | 97.4 | |
| Fair value reserve | 25.1 | 12.6 | |
| Treasury shares | -93.6 | -70.0 | |
| Retained earnings | 895.0 | 864.9 | |
| Profi t for the fi nancial period | 158.5 | 95.4 | |
| Total capital and reserves otal capital and |
14 | 1,147.3 | 1,064.6 |
| Liabilities iabilities | |||
| Long-term liabilities | |||
| Corporate bonds | 314.7 | 302.8 | |
| Loans from fi nancial institutions | 118.8 | 121.7 | |
| Liabilities to subsidiaries | 16 | 50.0 | 50.0 |
| Derivative liabilities | - | 4.9 | |
| Deferred tax liability | 8.8 | 5.4 | |
| Total long-term liabilities otal long-term liabilities |
15 | 492.4 | 484.8 |
| Current liabilities | |||
| Loans from fi nancial institutions | 49.5 | 6.6 | |
| Accounts payable | 3.2 | 3.0 | |
| Liabilities to subsidiaries | 16 | 1,154.6 | 917.8 |
| Derivative liabilities | 19 | 11.1 | 1.1 |
| Other liabilities | 5.2 | - | |
| Deferred liabilities | 17 | 23.5 | 19.9 |
| Total current liabilities otal current |
1,247.1 | 948.4 | |
| Total liabilities otal |
1,739.4 | 1,433.2 | |
| Total equity and liabilities otal equity and |
2,886.8 | 2,497.8 |
Figures are presented according to Finnish Accounting Standards (FAS).
| MEUR | Jan 1–Dec 31, 2008 an 1–Dec 31, |
Jan 1–Dec 31, 2007 an 1–Dec 31, |
|---|---|---|
| Cash fl ow from operating activities ow from operating activities |
||
| Operating income/loss | -8.6 | -5.9 |
| Adjustments to operating income/loss | 0.3 | 0.1 |
| Change in working capital | 9.3 | -5.4 |
| Interest paid | -77.4 | -129.1 |
| Dividends received | 308.9 | 107.9 |
| Interest received | 56.4 | 117.3 |
| Income taxes paid | - | -2.4 |
| Cash fl ow from operating activities ow from operating activities |
288.9 | 82.5 |
| Cash fl ow from investing activities ow from investing |
||
| Capital expenditure in fi xed assets | -3.0 | -1.0 |
| Investments in subsidiaries | -57.8 | -125.9 |
| Proceeds form investments in subsidiaries | 0.0 | 119.4 |
| Proceeds from sales of fi xed assets | 0.2 | 0.0 |
| Investments in other stocks and shares | -1.0 | -8.3 |
| Cash fl ow from investing activities ow from investing |
-61.6 | -15.8 |
| Cash fl ow from fi ow from fi nancing activities nancing |
||
| Acquisition of treasury shares | -23.6 | -46.1 |
| Share subscriptions with options | 0.7 | 1.5 |
| Increase in loans receivable | -678.7 | -379.7 |
| Disbursement of loans receivable | 149.3 | 28.3 |
| Proceeds from short-term borrowings | 122.6 | 166.0 |
| Repayments of short-term borrowings | - | -49.3 |
| Proceeds from long-term borrowings | 570.8 | 275.5 |
| Repayments of long-term borrowings | -420.1 | -14.0 |
| Dividends paid | -65.3 | -63.2 |
| Group contributions | 12.8 | 47.6 |
| Cash fl ow from fi ow from fi nancing activities nancing |
-331.6 | -33.5 |
| Change in cash hange in |
-104.3 | 33.2 |
| Cash and cash equivalents at the beginning of period | 119.5 | 86.3 |
| Cash and cash equivalents at the end of period ash and cash equivalents at the end of |
15.2 | 119.5 |
| Change in working capital: hange in working |
||
| Increase in short-term receivables | 5.1 | -2.7 |
| Decrease in short-term receivables | - | - |
| Increase in short-term payables | 4.2 | - |
| Decrease in short-term payables | - | -2.7 |
| Change in working capital hange in working |
9.3 | -5.4 |
Cargotec Corporation's fi nancial statements have been prepared according to the Finnish Accounting Standards (FAS) for the fi nancial period January 1−December 31, 2008.
Transactions in foreign currencies are recorded at the exchange rate prevailing on the date of the transaction. Foreign currency denominated receivables and payables outstanding at the end of the fi nancial period are revalued at the exchange rate prevailing on the balance sheet date. Exchange rate gains/losses relating to operations are treated as adjustments to sales and costs. Exchange rate gains/losses associated with fi nancial instruments are included in fi nancing income and expenses.
The extraordinary income and expenses consist of group contributions paid and received.
Tax expenses in the income statement consist of taxes based on taxable income for the period. Deferred tax assets and liabilities, due to temporary differences between the fi nancial statements and tax accounting, are calculated using the future period's tax rate valid on the closing date. The deferred tax assets and liabilities resulting from the fair value fl uctuation of the derivative instruments used for hedging the foreign currency nominated bond, funded in February 2007, are recorded on the balance sheet.
Intangible and tangible assets are stated at cost less impairment losses and accumulated depreciation and amortisation. Depreciation and amortisation are determined based on the expected useful economic life as follows:
| Intangible rights | 5−10 years |
|---|---|
| Other capitalised expenditure | 5−6 years |
| Buildings | 25 years |
| Machinery and equipment | 3–5 years |
Provisions are recognised when the Company has a current legal or contractual obligation and no corresponding income is expected, or when probable future losses are to be expected.
Derivative instruments are initially recognised on the balance sheet at cost, which equals the fair value, and subsequently measured at fair value on each balance sheet date. Fair values of forward contracts and forward rate agreements are based on quoted market rates at the
balance sheet date. The fair values of cross-currency and interest rate swaps are calculated as present value of estimated future cash fl ows. Options are valuated based on generally accepted valuation models. No options or forward rate agreements were outstanding on the balance sheet date.
Derivative instruments, for which hedge accounting is applied, and for which the underlying cash fl ow matures after twelve months, are included in non-current assets and liabilities. Other derivative instruments are included in current assets and liabilities.
Hedge accounting in accordance with IAS 39 is applied to hedges of operative cash fl ows and hedges of cash fl ows associated with foreign currency denominated borrowings. To qualify for hedge accounting the Company documents the hedge relationship of the derivative instrument and the underlying hedged item, the Company's risk management targets and the strategy of applying hedge accounting. When starting hedge accounting and at least in every interim closing the Company documents and estimates the effectiveness of the hedge by measuring the ability of the hedging instrument to offset changes in fair value of the underlying asset or cash fl ow. Changes in the fair value of effective cash fl ow hedges are recognised in equity in fair value reserve. The ineffective portion is recognised immediately in the income statement. Cumulative gain or loss on the hedge deferred to equity is recognised in the income statement as adjustment to the underlying cash fl ow when the underlying cash fl ow is recognised. Changes in the fair value of hedging instruments relating to operative items that no longer are expected to materialise are recognised immediately in the income statement in other operating expenses. If the hedging instrument is sold, the contract is revoked or exercised or the relation of the hedging instrument and the underlying item is revoked, the cumulative change in the fair value of the hedging instrument is booked as a separate item in the equity and is recognised in the income statement when the underlying operative item materialises.
Changes in the fair values of hedges, for which hedge accounting is not applied, are recognised in the income statement, either in operative income and expenses, or fi nancial income and expenses depending on the underlying exposure.
Equity consists of share capital, share premium account, fair value reserves, treasury shares and retained earnings, less dividends paid. The portion of change in share capital exceeding the accounting par value of the share is recorded in the share premium account. Fair value reserves consist of the cumulative change in the fair value of the derivative instruments defi ned as cash fl ow hedges. The net income for the period is recorded in retained earnings.
| MEUR | Jan 1–Dec 31, 2008 an 1–Dec 31, |
Jan 1–Dec 31, 2007 an 1–Dec 31, |
|---|---|---|
| Wages and salaries | 9.7 | 9.0 |
| Pension costs | 1.3 | 1.1 |
| Other statutory employer costs | 0.4 | 0.4 |
| Total | 11.3 | 10.5 |
The salaries, bonuses and other monies paid to members of the Board during the fi nancial period totalled EUR 0.3 (Jan 1–Dec 31, 2007: 0.3) million.
The salaries, bonuses and other monies paid to the President and CEO, and deputy to CEO during the fi nancial period totalled EUR 1.2 (Jan 1–Dec 31, 2007: 2.1) million.
| Jan 1–Dec 31, 2008 an 1–Dec 31, |
Jan 1–Dec 31, 2007 an 1–Dec 31, |
|
|---|---|---|
| Administrative employees | 97 | 70 |
Pension benefi ts of personnel are arranged with external pension insurance company.
One member of the Executive Board is entitled to retire at the age of 60. In this case, the pension received corresponds to 60 percent of the total average annual salary excluding share incentive programmes in the last ten full years of service. This arrangement has been covered with insurances taken out by the company.
| MEUR | Jan 1–Dec 31, 2008 an 1–Dec 31, |
Jan 1–Dec 31, 2007 an 1–Dec 31, |
|---|---|---|
| Intangible rights | 0.0 | 0.0 |
| Other capitalised expenditure | 0.1 | 0.0 |
| Buildings | 0.0 | 0.0 |
| Machinery and equipment | 0.1 | 0.1 |
| Other tangible assets | 0.0 | 0.0 |
| Total | 0.3 | 0.2 |
| MEUR | Jan 1–Dec 31, 2008 an 1–Dec 31, |
Jan 1–Dec 31, 2007 an 1–Dec 31, |
|---|---|---|
| Gain on disposal of assets | 0.0 | 0.0 |
| Total | 0.0 | 0.0 |
| MEUR | Jan 1–Dec 31, 2008 an 1–Dec 31, |
Jan 1–Dec 31, 2007 an 1–Dec 31, |
|---|---|---|
| Loss on disposal of assets | - | - |
| Other expenses | - | 0.0 |
| Total | 0.0 | 0.0 |
| MEUR | Jan 1–Dec 31, 2008 an 1–Dec 31, |
Jan 1–Dec 31, 2007 an 1–Dec 31, |
|---|---|---|
| Interest income | 52.9 | 23.7 |
| Dividend income | 308.9 | 107.9 |
| Exchange rate differences | 1.1 | - |
| Other fi nancing income | 1.1 | 0.8 |
| Total | 364.1 | 132.4 |
| MEUR | Jan 1–Dec 31, 2008 an 1–Dec 31, |
Jan 1–Dec 31, 2007 an 1–Dec 31, |
|---|---|---|
| Interest income | 2.2 | 4.3 |
| Exchange rate gains | 205.8 | 113.9 |
| Total | 208.0 | 118.1 |
| MEUR | Jan 1–Dec 31, 2008 an 1–Dec 31, |
Jan 1–Dec 31, 2007 an 1–Dec 31, |
|---|---|---|
| Interest expenses | 49.6 | 28.4 |
| Exchange rate differences | 0.9 | - |
| Total | 50.6 | 28.4 |
| MEUR | Jan 1–Dec 31, 2008 an 1–Dec 31, |
Jan 1–Dec 31, 2007 an 1–Dec 31, |
|---|---|---|
| Interest expenses | 21.4 | 18.2 |
| Exchange rate losses | 243.4 | 116.5 |
| Impairment of investments in subsidiaries | 105.0 | 2.0 |
| Ohter fi nancing expenses | 0.9 | 0.8 |
| Total | 370.6 | 137.4 |
| MEUR | Jan 1–Dec 31, 2008 an 1–Dec 31, |
Jan 1–Dec 31, 2007 an 1–Dec 31, |
|---|---|---|
| Group contributions received | - | 12.8 |
| MEUR | Jan 1–Dec 31, 2008 an 1–Dec 31, |
Jan 1–Dec 31, 2007 an 1–Dec 31, |
|---|---|---|
| Taxes associated with extraordinary items | - | - |
| Other income tax | - | 0.0 |
| Change in deferred taxes | -16.2 | -3.9 |
| Total | -16.2 | -3.9 |
| MEUR | 2008 | 2007 |
|---|---|---|
| Intangible rights ntangible rights |
||
| Acquisition cost on Jan 1 | 0.1 | 0.1 |
| Additions during period | 0.1 | 0.0 |
| Disposals during period | 0.0 | - |
| Acquisition cost on Dec 31 | 0.2 | 0.1 |
| Accumulated amortisation on Jan 1 | 0.0 | - |
| Amortisation during the period | 0.0 | 0.0 |
| Accumulated amortisation on Dec 31 | 0.1 | 0.0 |
| Book value on Dec 31 ook value on Dec |
0.1 | 0.0 |
| Other intangible assets ther intangible |
||
| Acquisition cost on Jan 1 | 0.1 | 0.1 |
| Additions during period | 1.6 | - |
| Disposals during period | - | - |
| Acquisition cost on Dec 31 | 1.7 | 0.1 |
| Accumulated amortisation on Jan 1 | 0.1 | 0,1 |
| Amortisation during the period | 0.1 | 0.0 |
| Accumulated amortisation on Dec 31 | 0.2 | 0.1 |
| Book value on Dec 31 ook value on Dec 31 |
1.6 | 0.0 |
| MEUR | 2008 | 2007 |
|---|---|---|
| Buildings uildings | ||
| Acquisition cost on Jan 1 | 0.6 | 0.2 |
| Additions during period | - | 0.4 |
| Disposals during period | -0.2 | - |
| Acquisition cost on Dec 31 | 0.4 | 0.6 |
| Accumulated depreciation on Jan 1 | 0.0 | 0.0 |
| Disposals | 0.0 | - |
| Depreciation during the period | 0.0 | 0.0 |
| Accumulated depreciation on Dec 31 | 0.0 | 0.0 |
| Book value on Dec 31 ook value on Dec |
0.4 | 0.6 |
| Machinery and equipment achinery and |
||
| Acquisition cost on Jan 1 | 0.3 | 0.1 |
| Book value on Dec 31 ook value on Dec |
0.3 | 0.2 |
|---|---|---|
| Accumulated depreciation on Dec 31 | 0.2 | 0.1 |
| Depreciation during the period | 0.1 | 0.1 |
| Accumulated depreciation associated with reclassifi ed and disposed items | - | 0.0 |
| Accumulated depreciation on Jan 1 | 0.1 | - |
| Acquisition cost on Dec 31 | 0.5 | 0.3 |
| Disposals during period | 0.0 | 0.0 |
| Additions during period | 0.2 | 0.2 |
| Acquisition cost on Jan 1 | 0.1 | 0.1 |
|---|---|---|
| Additions during period | 0.0 | 0.0 |
| Disposals during period | 0.0 | 0.0 |
| Acquisition cost on Dec 31 | 0.1 | 0.1 |
| Accumulated depreciation on Jan 1 | 0.1 | - |
| Depreciation during the period | 0.0 | 0.0 |
| Accumulated depreciation on Dec 31 | 0.1 | 0.1 |
| Book value on Dec 31 ook value on Dec |
0.0 | 0.1 |
| Book value on Dec 31 ook value on Dec |
1.0 | - |
|---|---|---|
| Acquisition cost on Dec 31 | 1.0 | - |
| Additions during period | 1.0 | - |
| Acquisition cost on Jan 1 | - | - |
| Shareholding % hareholding |
Book value ook Dec 31, 2008 ec 31, MEUR |
Book value ook Dec 31, 2007 ec 31, MEUR |
|
|---|---|---|---|
| Subsidiaries ubsidiaries |
|||
| Hiab Balti AS | 100.0 | 16.5 | 10.1 |
| Cargotec Engineering, Italy S.r.l. | 60.0 | 1.1 | - |
| Cargotec Holding Finland Oy | 100.0 | 0.0 | 0.0 |
| Cargotec Holding Netherlands B.V. | 100.0 | 98.9 | 98.9 |
| Cargotec Holding S.a.r.l. | 100.0 | 16.5 | 16.5 |
| Cargotec Sweden AB | 100.0 | 223.4 | 223.4 |
| Cargotec Holding, Inc. | 100.0 | 208.0 | 248.0 |
| Cargotec Norway AS | 100.0 | 13.3 | 13.3 |
| Cargotec Holding Sweden AB | 100.0 | 103.3 | 163.3 |
| Catracom NV | 0.2 | 0.0 | 0.0 |
| Ciretek Oy | 100.0 | 0.0 | 0.0 |
| Forastar Oy Ab | 100.0 | 0.0 | 0.0 |
| Hiab Oy | - | - | 5.0 |
| Hiab d.o.o. | 100.0 | 0.3 | 0.3 |
| Hiab Kft. | 100.0 | 2.7 | 2.7 |
| Hiab s.r.o. | 100.0 | 1.0 | 1.0 |
| Hiab SA/NV | 100.0 | 749.4 | 700.4 |
| Hiab spol. s.r.o. | 100.0 | 0.8 | 0.0 |
| Kalmar Belgium NV | 100.0 | 11.2 | 10.8 |
| Kalmar Danmark A/S | 100.0 | 0.1 | 0.1 |
| Kalmar Industries South Africa (Pty) Ltd | 100.0 | 0.7 | 0.7 |
| Kalmar UK Holding AB | 100.0 | 59.6 | 59.6 |
| Kiinteistö Oy Kalasatama | 100.0 | 0.1 | 0.1 |
| Oy Sisu Ab | 100.0 | 0.0 | 0.0 |
| Tagros d.o.o. | 100.0 | 1.2 | 1.2 |
| 1,508.2 | 1,555.4 | ||
| Associated companies ssociated |
|||
| Dalian Nurmi Hydraulics Co. Ltd. 25.0% | 1.4 | - | |
| 1.4 | - | ||
| Other shares ther |
|||
| Dalian Nurmi Hydraulics Co. Ltd. 19.9% | - | 0.6 | |
| Other shares | 1.1 | 0.9 | |
| 1.1 | 1.5 |
| MEUR | Dec 31, 2008 ec 31, | Dec 31, 2007 ec 31, |
|---|---|---|
| Accounts receivable | 14.5 | 3.7 |
| Other receivables | 974.0 | 743.7 |
| Deferred assets | 18.1 | 14.8 |
| Total | 1,006.6 | 762.2 |
| MEUR | Dec 31, 2008 ec 31, | Dec 31, 2007 ec 31, |
|---|---|---|
| Value added tax receivable | 0.0 | 0.0 |
| Advances paid, investments | 0.4 | 0.3 |
| Other deferred assets | 6.7 | 4.8 |
| Total | 7.1 | 5.1 |
| MEUR | 2008 | 2007 |
|---|---|---|
| Share capital on Jan 1 | 64.2 | 64.0 |
| Share subscriptions with options | 0.1 | 0.2 |
| Share capital on Dec 31 hare capital on Dec |
64.3 | 64.2 |
| Share premium account on Jan 1 | 97.4 | 96.0 |
| Share subscriptions with options | 0.6 | 1.3 |
| Share premium account on Dec 31 hare premium account on Dec |
98.0 | 97.4 |
| Fair value reserves on Jan 1 | 12.6 | -0.5 |
| Cash fl ow hedges | 16.9 | 17.7 |
| Change in deferred taxes | -4.4 | -4.6 |
| Fair value reserves on Jan 31 air value reserves on Jan |
25.1 | 12.6 |
| Retained earnings on Jan 1 | 890.4 | 904.3 |
| Treasury shares acquired | -23.6 | -46.1 |
| Dividends paid | -65.3 | -63.2 |
| Retained earnings on Dec 31 etained earnings on Dec |
801.4 | 794.9 |
| Net income et | 158.5 | 95.4 |
| Total equity otal | 1,147.3 | 1,064.6 |
| Distributable equity istributable |
960.0 | 890.4 |
| MEUR | Dec 31, 2008 ec 31, | Dec 31, 2007 ec 31, |
|---|---|---|
| Maturity after 5 years | ||
| Corporate bonds | 314.7 | 302.8 |
| Loans from fi nancial institutions | - | 30.0 |
| Loans from group companies | 50.0 | 50.0 |
| Other long-term debt | ||
| Loans from fi nancial institutions | 118.8 | 91.7 |
| Derivative liabilities | - | 4.9 |
| Deferred tax liabilities | 8.8 | 5.4 |
| Total | 492.4 | 484.8 |
| MEUR | Dec 31, 2008 ec 31, | Dec 31, 2007 ec 31, |
|---|---|---|
| Accounts payable | 0.6 | 0.4 |
| Other debt | 1,202.1 | 966.3 |
| Accruals | 1.9 | 1.1 |
| Total | 1,204.6 | 967.8 |
| MEUR | Dec 31, 2008 ec 31, | Dec 31, 2007 ec 31, |
|---|---|---|
| Accrued taxes | - | - |
| Accrued salaries, wages and employment costs | 2.3 | 2.2 |
| Accrued interests | 16.3 | 16.0 |
| Other accruals | 4.8 | 1.7 |
| Total | 23.5 | 19.9 |
| MEUR | Dec 31, 2008 ec 31, | Dec 31, 2007 ec 31, |
|---|---|---|
| Guarantees given on behalf of group companies | 599.3 | 358.8 |
| Guarantees given on behalf of associated companies | 0.2 | 1.6 |
| Guarantees given on behalf of others | - | 0.6 |
| 599.5 | 361.0 |
| MEUR | Dec 31, 2008 ec 31, | Dec 31, 2007 ec 31, |
|---|---|---|
| Rental liabilities given on behalf of others | 3.7 | 3.4 |
| Leasing liabilities | ||
| Maturity within the next fi nancial period | 0.3 | 0.2 |
| Maturity after next fi nancial period | 0.4 | 0.3 |
| Total | 4.4 | 3.9 |
| Positive fair value ositive fair |
egative fair | Negative fair value | Net fair value et fair |
||||
|---|---|---|---|---|---|---|---|
| MEUR | Dec 31, 2008 ec 31, | Dec 31, 2007 ec 31, | Dec 31, 2008 ec 31, | Dec 31, 2007 ec 31, | Dec 31, 2008 ec 31, | Dec 31, 2007 ec 31, | |
| FX Forward Contracts | 3.9 | 1.5 | 10.2 | 1.1 | -6.3 | 0.4 | |
| Interest rate swaps, maturity within 1 year | 1.1 | - | 0.9 | - | 0.2 | - | |
| Cross currency and interest rate swaps, maturity after 1 year |
23.7 | - | - | 4.9 | 23.7 | -4.9 | |
| Total | 28.8 | 1.5 | 11.1 | 5.9 | 17.7 | -4.5 |
| MEUR | Dec 31, 2008 ec 31, | Dec 31, 2007 ec 31, |
|---|---|---|
| FX Forward Contracts | 399.1 | 241.6 |
| Interest rate swaps, maturity within 1 year | 79.7 | 0.0 |
| Cross currency and interest rate swaps, maturity after 1 year | 225.7 | 225.7 |
| Total | 704.5 | 467.3 |
| Consolidated Income Statement onsolidated Income |
2008 | 2007 | 2006 | Jun 1–Dec 31, un 1–Dec 31, 2005 |
Pro forma ro 2005 |
Pro forma ro 2004 |
|
|---|---|---|---|---|---|---|---|
| Sales | MEUR | 3,399 | 3,018 | 2,597 | 1,419 | 2,358 | 1,900 |
| Exports from and sales outside Finland |
MEUR | 3,280 | 2,919 | 2,528 | 1,374 | 2,288 | 1,835 |
| Operating income | MEUR | 174 | 203 | 240 | 124 | 195 | 124 |
| % of sales | % | 5.1 | 6.7 | 9.3 | 8.8 | 8.3 | 6.5 |
| Operating income from operations |
MEUR | 193 4) | 221 3) | 223 2) | 113 1) | 180 1) | 124 |
| % of sales | % | 5.7 4) | 7.3 3) | 8.6 2) | 8.0 1) | 7.6 1) | 6.5 |
| Income before taxes | MEUR | 145 | 184 | 232 | 126 | 191 | 113 |
| % of sales | % | 4.3 | 6.1 | 8.9 | 8.8 | 8.1 | 6.0 |
| Net income for the period | MEUR | 121 | 138 | 166 | 87 | 137 | 78 |
| % of sales | % | 3.6 | 4.6 | 6.4 | 6.2 | 5.8 | 4.1 |
| Other key fi ther key fi gures | 2008 | 2007 | 2006 | Jun 1–Dec 31, un 1–Dec 31, 2005 |
Pro forma ro 2005 |
Pro forma ro 2004 |
|
|---|---|---|---|---|---|---|---|
| Wages and salaries | MEUR | 387 | 353 | 297 | 160 | 280 | 259 |
| Depreciation, amortisation and impairment |
MEUR | 60 | 60 | 41 | 24 | 38 | 33 |
| Capital expenditure in intangible assets and property, plant and equipment |
MEUR | 77 | 53 | 47 | 18 | 29 | 25 |
| Capital expenditure in customer fi nancing |
MEUR | 36 | 38 | 22 | 21 | 28 | 18 |
| % of sales | % | 3.3 | 3.0 | 2.6 | 2.8 | 2.4 | 2.2 |
| Research and development costs | MEUR | 47 | 46 | 31 | 18 | 30 | 29 |
| % of sales | % | 1.4 | 1.5 | 1.2 | 1.2 | 1.3 | 1.5 |
| Equity | MEUR | 864 | 897 | 877 | 767 | 767 | 654 |
| Total assets | MEUR | 3,039 | 2,583 | 1,988 | 1,781 | 1,781 | 1,639 |
| Interest-bearing net debt | MEUR | 4787) | 326 7) | 107 | 121 | 121 | 281 |
| Return on equity | % | 13.7 | 15.6 | 20.2 | 20.8 5) | 19.2 | 12.6 |
| Return on capital employed | % | 12.7 | 16.8 | 23.1 | 21.9 5) | 20.9 | 12.9 |
| Total equity/total assets | % | 32.9 | 38.3 | 47.6 | 46.2 | 46.2 | 42.2 |
| Gearing | % | 55.3 7) | 36.3 7) | 12.3 | 15.7 | 15.7 | 43.0 |
| Orders received | MEUR | 3,769 | 4,106 | 2,910 | 1,366 | 2,385 | 2,337 |
| Order book | MEUR | 3,054 | 2,865 | 1,621 | 1,257 | 1,257 | 1,219 |
| Average number of employees | 11,777 | 10,276 | 8,026 | 7,446 | 7,388 | 7,201 | |
| Number of employees at the end of period |
11,826 | 11,187 | 8,516 | 7,571 | 7,571 | 7,294 | |
| Dividends | MEUR | 37 6) | 65 | 63 | 41 | 41 | - |
1) Excluding gain on the sale of Consolis and impact of the fi nal accounting of MacGREGOR acquisition after taxes
2) Excluding gain on the sale of property
3) Excluding a one-off cost related to a container spreader inspection and repair programme
4) Excluding restructuring costs
5) Annualised
6) Board's proposal
7) Including cross currency hedging of the USD 300 million Private Placement corporate bonds.
| 2008 | 2007 | 2006 | Jun 1–Dec 31, un 1–Dec 31, 2005 |
Pro forma ro 2005 |
Pro forma ro 2004 |
||
|---|---|---|---|---|---|---|---|
| Earnings per share | |||||||
| Basic earnings per share | EUR | 1.91 | 2.17 | 2.57 | 1.35 8) | 2.11 | 1.20 |
| Diluted earnings per share | EUR | 1.91 | 2.16 | 2.56 | 1.34 9) | 2.10 | 1.20 |
| Equity per share | EUR | 13.95 | 14.29 | 13.72 | 11.93 | 11.93 | 10.17 |
| Dividend per class B share | EUR | 0.60 6) | 1.05 | 1.00 | 0.65 | - | - |
| Dividend per class A share | EUR | 0.59 6) | 1.04 | 0.99 | 0.64 | - | - |
| Dividend per earnings, class B share | % | 31.4 6) | 48.4 | 38.9 | 48.2 | - | - |
| Dividend per earnings, class A share | % | 30.8 6) | 47.9 | 38.5 | 47.5 | - | - |
| Effective dividend yield, class B share | % | 7.4 6) | 3.3 | 2.4 | 2.2 | - | - |
| Price per earnings, class B share | EUR | 13.5 | 14.6 | 16.4 | 21.7 | - | - |
| Development of share price, class B share |
|||||||
| Average share price | EUR | 21.47 | 40.55 | 34.62 | 24.59 | - | - |
| Highest share price | EUR | 36.49 | 49.83 | 43.50 | 30.40 | - | - |
| Lowest share price | EUR | 7.63 | 29.78 | 28.84 | 21.84 | - | - |
| Closing price at the end of period | EUR | 8.09 | 31.65 | 42.10 | 29.29 | - | - |
| Market capitalisation at the end of period 10) |
MEUR | 495 | 1,971 | 2,667 | 1,866 | - | - |
| Market capitalisation of class B shares at the end of period 11) |
MEUR | 419 | 1,671 | 2,266 | 1,593 | - | - |
| Trading volume, number of class B shares traded |
('000) | 85,697 | 70,945 | 52,909 | 43,423 | - | - |
| Trading volume, number of class B shares traded |
% | 156.6 | 130.0 | 97.2 | 80.0 | - | - |
| Weighted average number of class A shares 12) |
('000) | 9,526 | 9,526 | 9,526 | 9,526 | 9,526 | 9,526 |
| Number of class A shares at the end of period 12) |
('000) | 9,526 | 9,526 | 9,526 | 9,526 | 9,526 | 9,526 |
| Weighted average number of class B shares 11) |
('000) | 52,367 | 53,439 | 54,169 | 54,222 | 54,225 | 54,229 |
| Number of class B shares at the end of period 11) |
('000) | 51,787 | 52,790 | 53,816 | 54,191 | 54,191 | 54,229 |
| Diluted weighted average number of class B shares 11) |
('000) | 52,456 | 53,669 | 54,502 | 54,613 | 54,630 | 54,641 |
6) Board's proposal
8) Annualised earnings per share 2.31 EUR
9) Annualised earnings per share 2.30 EUR
10) Including class A and B shares, excluding treasury shares
11) Excluding treasury shares
12) No dilution on class A shares
| Net income for period | |||
|---|---|---|---|
| Return on equity (%) | = | 100 x | Total equity (average for period) |
| Income before taxes + interest and other fi nancing expenses | |||
| Return on capital employed (%) | = | 100 x | Total assets – non-interest-bearing debt (average for period) |
| Total equity/total assets (%) | = | 100 x | Total equity |
| Total assets – advances received | |||
| Gearing (%) | = | 100 x | Interest-bearing debt1) – interest-bearing assets |
| Total equity | |||
| Net income attributable to the equity holders of the Company | |||
| Basic earnings/share | = | Share issue adjusted weighted average number of shares during period (excluding treasury shares) |
|
| Total equity attributable to the equity holders of the Company | |||
| Equity/share | = | Share issue adjusted number of shares at the end of period (excluding treasury shares) |
|
| Dividend for fi nancial period | |||
| Dividend/share | = | Share issue adjusted number of shares at the end of period (excluding treasury shares) |
|
| Dividend for fi nancial period/share | |||
| Dividend/earnings (%) | = | 100 x | Basic earnings/share |
| Effective dividend yield (%) | = | 100 x | Dividend/share |
| Share issue adjusted closing price for the class B share at the end of period | |||
| Price/earnings (P/E) | = | Share issue adjusted closing price for the class B share at the end of period | |
| Basic earnings/share | |||
| Average share price | = | EUR amount traded during period for the class B share | |
| Share issue adjusted number of class B shares traded during period | |||
| Number of class B shares outstanding at the end of period x closing price for | |||
| Market capitalisation at the end of period |
= | the class B share at the end of period + Number of class A shares outstanding at the end of period x closing day |
|
| average price for the class B share | |||
| Trading volume | = | Number of class B shares traded during period | |
| Trading volume (%) | = | 100 x | Number of class B shares traded during period |
| Average weighted number of class B shares during period |
1) Including cross currency hedging of the USD 300 million Private Placement corporate bonds.
Cargotec's shares are registered in the book-entry securities system maintained by the Euroclear Finland (formerly Finnish Central Securities Depository). On December 31, 2008, Cargotec's share capital, fully paid and entered in the trade register, totalled EUR 64,304,280 and there were 54,778,191 class B shares listed on the NASDAQ OMX Helsinki and 9,526,089 unlisted class A shares.
In 2008, the number of shares registered in the trade register increased by 83,907 as a result of the subscription for shares under 2005A and 2005B option rights.
At the Annual General Meeting, each class A share is assigned one vote, as is each block of ten class B shares, with the provision that each shareholder is entitled to at least one vote. The total number of votes attached to all shares was 15,002,201 at the end of the year 2008.
As of the AGM of 2008 up to the year end, Cargotec repurchased 1,086,000 own shares. On December 31, 2008, the Company held a total of 2,990,725 class B shares, accounting for 4.65 percent of the share capital and 1.99 percent of the total voting rights of all shares. The number of issued class B shares, excluding treasury shares held by the Company, totalled 51,787,466 on December 31, 2008.
Cargotec's class B share closed at EUR 8.09 on December 31, 2008. The highest quotation for the fi nancial period was EUR 36.49 and the lowest was EUR 7.63. Moreover, the average share price for the fi nancial period was EUR 21.47. Share price decreased by 74 percent during the year. Over the same period, the OMX Helsinki Benchmark Cap index fell by 50 percent.
Share Price and Volume
On December 31, 2008, the total market value of Cargotec's class B shares was EUR 419 million, excluding treasury shares held by the Company. The Company's year-end market capitalisation, in which the unlisted class A shares are valued at the average closing price of class B shares on the last trading day of the fi nancial period, was EUR 495 million, excluding treasury shares held by the Company.
During the fi nancial period, approximately 86 million Cargotec class B shares were traded on the NASDAQ OMX Helsinki, corresponding to a turnover of approximately EUR 1,868 million. The average daily trading volume of B shares was 338,722 shares or EUR 7,381,727.
Information on the Cargotec share price is available on the Company's website at www.cargotec.com/investors.
Cargotec's Annual General Meeting of February 29, 2008 authorised the Board of Directors to decide to repurchase the Company's own shares with assets distributable as profi t. Own shares can be repurchased in order to develop the capital structure of the Company, fi nance or carry out possible acquisitions, implement the Company's share-based incentive plans, or to be transferred for other purposes or to be cancelled. Altogether, no more than 6,400,000 own shares may be repurchased, of which no more than 952,000 are class A shares and 5,448,000 are class B shares. The above-mentioned amounts include the 1,904,725 class B shares which were already in the Company's possession in February 2008. Based on the above-mentioned authorisation, Cargotec repurchased 1,086,000 class B shares at the market price in
Monthly volume weighted average price
OMXHB Cap indexed monthly closing price
public trading on the NASDAQ OMX Helsinki during the period March 25–August 23, 2008 at an average purchase price of EUR 21.73 per share. During the period, the total accounting par value of the repurchased shares was EUR 1,086,000, their share of the share capital was 1.69 percent, and their share of the total voting rights was 0.72 percent. The repurchased shares were in the Company's possession on December 31, 2008. With regard to the authorisation, an amount corresponding to 952,000 class A shares and 4,362,000 class B shares remained unused on December 31, 2008. Repurchasing of shares had no signifi cant impact on the division of ownership and voting rights in the Company.
In addition, the Annual General Meeting authorised the Board of Directors to decide to distribute any shares repurchased. The Board of Directors was authorised to decide to whom and in which order the repurchased shares would be distributed. The repurchased shares may be used in acquisitions and in other arrangements as well as to implement the Company's sharebased incentive plans in the manner and to the extent decided by the Board of Directors. The Board of Directors also has the right to decide on the distribution of the shares in public trading at the NASDAQ OMX Helsinki, to be used as compensation in possible acquisitions. This authorisation is limited to a maximum of 952,000 class A shares and 5,448,000 class B shares repurchased by the Company. The Board of Directors was authorised to decide to whom and in what order the repurchased shares would be distributed. The authorisation remained unused on December 31, 2008.
At the end of the fi nancial year, Cargotec's Board of Directors had no current authorisation to grant option rights or other special rights entitling to shares, or raise the share capital. Neither has the Company decided to issue shares, option rights, or convertible bonds during the fi nancial period.
Cargotec's option programme is based on the demerged Kone Corporation's 2004 option programme, under which each series A option right of Kone Corporation was converted into one 2005A option right of Cargotec and each series B option right of Kone Corporation was converted into one 2005B option right of Cargotec.
At the beginning of the fi nancial period, the number of 2005A option rights was 12,725. Trading with 2005A option rights ended on March 20, 2008. The highest quote for a 2005A option right was EUR 79.56, the lowest was EUR 52.59 and the closing price was EUR 57.66.
Cargotec's 2005B option rights are listed on the NASDAQ OMX Helsinki. At the beginning of the fi nancial period, the number of 2005B option rights was 50,154 and at the end of the period 34,910. In 2008 the highest quote for a 2005B option right was EUR 68.00, the lowest was EUR 0.86 and the closing price at the year-end was EUR 0.86. The remaining 2005B option rights may be used to subscribe for a further 104,730 class B shares,
(Based on ownership records of the Euroclear Finland)
% of shares outstanding
thereby increasing the share capital by EUR 104,730. For a more detailed description of the option programme, see Note 24 of the Financial Statements.
At the end of 2008, Cargotec had over 15,000 shareholders, the largest shareholder being Wipunen varainhallinta oy. Ilkka Herlin is the largest owner when including shares owned directly as well as through companies where controlling power is exercised. There were 13,300,372 nominee-registered shares, representing 21.69 percent of the total number of shares, excluding treasury shares held by the Company, which corresponded to approximately 8.87 percent of all votes. A monthly updated list of Cargotec's major shareholders is available on the Company's website at www.cargotec.com/investors.
On December 31, 2008, the aggregate shareholding of Cargotec's Board of Directors, the President and CEO, the Deputy to CEO and companies controlled by them was 2,940,067 class A shares and 5,047,694 class B shares, which corresponded to 12.42 percent of the total number of all class A and class B shares and 22.96 percent of all votes. At the end of 2008, the number of 2005B option rights owned by the Board of Directors, the President and CEO and the Deputy to CEO was 1,000. Assuming that all option rights had been exercised for the subscription of shares at the beginning of the fi nancial period, the Board of Directors, the President and CEO, and the Deputy to CEO would have held 22.96 percent of the votes on December 31, 2008.
Up-to-date information on the shares and option rights held by members of the Board of Directors and management is available on Cargotec's website at www.cargotec.com/investors.
Cargotec's share capital is divided into class A and class B shares, the latter as well as the 2005B option rights being quoted on the NASDAQ OMX Helsinki.
| Class B share lass B |
2005B option right 005B option |
|---|---|
| ISIN code: FI0009013429 | ISIN code: FI0009618367 |
| Ticker: CGCBV | Ticker: CGCBVEW205 |
| Index: OMX Helsinki CAP | Number of listed option rights: 34,910* |
| Sector: Industrials | Conversion rate: 1:3 |
| Reuters ric: CGC.HE | Subscription price: EUR 8.59 per share |
| Bloomberg: CGCBV FH | Share subscription period ends: March 31, 2009 |
* December 31, 2008
| Number of shares umber of |
Number of shareholders umber of |
% of shareholders of |
Total shares otal | % of share capital of share capital excl. treasury shares xcl. treasury |
|---|---|---|---|---|
| 1–100 | 5,964 | 37.53 | 363,311 | 0.59 |
| 101–500 | 6,368 | 40.07 | 1,695,558 | 2.77 |
| 501–1,000 | 1,739 | 10.94 | 1,354,633 | 2.21 |
| 1,001–10,000 | 1,619 | 10.19 | 4,528,760 | 7.39 |
| 10,001–100,000 | 162 | 1.02 | 5,030,997 | 8.21 |
| 100,001–1,000,000 | 30 | 0.19 | 7,409,496 | 12.09 |
| over 1,000,000 | 9 | 0.06 | 40,925,364 | 66.75 |
| Total | 15,891 | 100.00 | 61,308,119 1,308,119 | 99.99 |
| of which nominee registered | 16 | 13,300,372 | 21.69 | |
| In the joint book-entry account | 5,436 | 0.01 | ||
| Number of shares outstanding umber of shares outstanding |
61,313,555 1,313,555 | 100.00 | ||
| Treasury shares on December 31, 2008 | 1 | 2,990,725 | ||
| Total number of shares on otal number of shares on December 31, 2008 ecember 31, |
64,304,280 4,304,280 |
Based on ownership records of the Euroclear Finland.
| Shareholder hareholder | Class A shares |
Class B shares |
Shares total |
Shares, % hares, | Votes | Votes, % otes, | |
|---|---|---|---|---|---|---|---|
| Wipunen varainhallinta oy | |||||||
| 1 | (in Ilkka Herlin's controlling power) | 2,940,067 | 4,550,000 | 7,490,067 | 11.65 | 3,395,067 | 22.63 |
| Mariatorp Oy | |||||||
| 2 | (in Niklas Herlin's controlling power) | 2,940,067 | 4,290,000 | 7,230,067 | 11.24 | 3,369,067 | 22.46 |
| 3 | D-sijoitus Oy (in Ilona Herlin's controlling power) | 2,940,067 | 3,850,000 | 6,790,067 | 10.56 | 3,325,067 | 22.16 |
| 4 | Toshiba Elevator And | ||||||
| Building Systems Corporation | 3,023,340 | 3,023,340 | 4.70 | 302,334 | 2.02 | ||
| 5 | Cargotec Corporation | 2,990,725 | 2,990,725 | 4.65 | 299,072 | 1.99 | |
| 6 | Kone Foundation | 705,888 | 1,232,454 | 1,938,342 | 3.01 | 829,133 | 5.53 |
| 7 | Varma Mutual Pension Insurance Company | 1,314,378 | 1,314,378 | 2.04 | 131,437 | 0.88 | |
| 8 | Ilmarinen Mutual Pension Insurance Company | 787,900 | 787,900 | 1.23 | 78,790 | 0.53 | |
| 9 | The State Pension Fund | 750,000 | 750,000 | 1.17 | 75,000 | 0.50 | |
| 10 | Sundholm Göran | 450,001 | 450,001 | 0.70 | 45,000 | 0.30 | |
| 11 | Tapiola Mutual Pension Insurance Company | 440,000 | 440,000 | 0.68 | 44,000 | 0.29 | |
| 12 | Herlin Heikki | 400,000 | 400,000 | 0.62 | 40,000 | 0.27 | |
| 13 | Nurminen Hanna | 390,001 | 390,001 | 0.61 | 39,000 | 0.26 | |
| 14 | Mandatum Life Insurance Company | 319,729 | 319,729 | 0.50 | 31,972 | 0.21 | |
| 15 | ABN Amro Finland Investment Fund | 269,362 | 269,362 | 0.42 | 26,936 | 0.18 | |
| 16 | Etera Mutual Pension Insurance Company | 260,000 | 260,000 | 0.40 | 26,000 | 0.17 | |
| 17 | Fondita Nordic Small Cap Fund | 245,000 | 245,000 | 0.38 | 24,500 | 0.16 | |
| 18 | Investment Fund Aktia Capital | 239,000 | 239,000 | 0.37 | 23,900 | 0.16 | |
| 19 | Sampo Suomi Osake Investment Fund | 238,239 | 238,239 | 0.37 | 23,823 | 0.16 | |
| 20 | Moving Cargo Oy | 226,694 | 22,694 | 0.35 | 22,669 | 0.15 | |
| Total | 9,526,089 ,526,089 | 26,266,823 6,266,823 | 35,792,912 5,792,912 | 55.65 | 12,152,767 2,152,767 | 81.01 | |
| Nominee registered | 13,300,372 | ||||||
| Other owners | 15,210,996 | ||||||
| Total number of shares issued on December 31, 2008 otal number of shares issued on December 31, |
64,304,280 4,304,280 |
Based on ownership records of the Euroclear Finland. Based on ownership records of the Euroclear
| Year | Number of umber Class B shares lass B |
|---|---|
| 2005 | 203,700 |
| 2006 | 501,025 |
| 2007 | 1,200,000 |
| 2008 | 1,086,000 |
| Total number of treasury shares on December 31, 2008 otal number of treasury shares on December 31, |
2,990,725 ,990,725 |
Helsinki, February 2, 2009
Ilkka Herlin Henrik Ehrnrooth Chairman of the Board Deputy Chairman
Tapio Hakakari Peter Immonen Member of the Board Member of the Board
Karri Kaitue Antti Lagerroos Member of the Board Member of the Board
Mikael Mäkinen President and CEO
We have audited the accounting records, the fi nancial statements, the report of the Board of Directors and the administration of Cargotec Corporation for the year ended on 31 December, 2008. The fi nancial statements comprise the consolidated balance sheet, income statement, cash fl ow statement, statement of changes in equity and notes to the consolidated fi nancial statements, as well as the parent company's balance sheet, income statement, cash fl ow statement and notes to the fi nancial statements.
The Board of Directors and the Managing Director are responsible for the preparation of the fi nancial statements and the report of the Board of Directors and for the fair presentation of the consolidated fi nancial statements in accordance with International Financial Reporting Standards (IFRS) as adopted by the EU, as well as for the fair presentation of the parent company's fi nancial statements and the report of the Board of Directors in accordance with laws and regulations governing the preparation of the fi nancial statements and the report of the Board of Directors in Finland. The Board of Directors is responsible for the appropriate arrangement of the control of the company's accounts and fi nances, and the Managing Director shall see to it that the accounts of the company are in compliance with the law and that its fi nancial affairs have been arranged in a reliable manner.
Our responsibility is to perform an audit in accordance with good auditing practice in Finland, and to express an opinion on the parent company's fi nancial statements, on the consolidated fi nancial statements and on the report of the Board of Directors based on our audit. Good auditing practice requires that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the fi nancial statements and the report of the Board of Directors are free from material misstatement and whether the members of the Board of Directors of the parent company and the Managing Director have complied with the Limited Liability Companies Act.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the fi nancial statements and the report of the Board of Directors. The procedures selected depend on the auditor's judgement, including the assessment of the risks of material misstatement of the fi nancial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the fi nancial statements in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the fi nancial statements and the report of the Board of Directors.
The audit was performed in accordance with good auditing practice in Finland. We believe that the audit evidence we have obtained is suffi cient and appropriate to provide a basis for our audit opinion.
In our opinion, the consolidated fi nancial statements give a true and fair view of the fi nancial position, fi nancial performance and cash fl ows of the group in accordance with International Financial Reporting Standards (IFRS) as adopted by the EU.
In our opinion, the fi nancial statements and the report of the Board of Directors give a true and fair view of both the consolidated and the parent company's fi nancial performance and fi nancial position in accordance with the laws and regulations governing the preparation of the fi nancial statements and the report of the Board of Directors in Finland. The information in the report of the Board of Directors is consistent with the information in the fi nancial statements.
Helsinki, February 2, 2009
Authorised Public Accountants
Accountant Accountant
Jouko Malinen Johan Kronberg Authorised Public Authorised Public
Sörnäisten rantatie 23 P.O. Box 61 FI-00501 Helsinki, Finland Tel +358 (0)204 5511 Fax +358 (0)204 55 4275
[email protected] www.cargotec.com
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