AI assistant
Componenta Oyj Annual Report 2011
3307_rns_2012-02-02_d1a0c77a-a322-439d-a7db-6cb338443f03.pdf
Annual Report
Open in viewerOpens in your device viewer
Financial statements
1 January - 31 December 2011
Contents
- Report by the Board of Directors
- Consolidated income statement
- Consolidated statement of financial position
- Cash flow statement
- Statement of changes in consolidated shareholders' equity
- Notes to the consolidated financial statements
- Parent company income statement
- Parent company balance sheet
- Group development
- Shareholders and shares
- Per share data
- Calculation of key financial ratios
- The proposal of the Board of Directors for the distribution of profits
- Auditor's Report
- Information for shareholders
Report on 2011 by the board of directors
Financial targets for 2012 and 2013
The financial crisis that began in 2008 moved into a new phase after many European countries ended up in a debt crisis. In consequence of the crisis, capital requirements for banks have been tightened, making it more difficult to obtain credit from banks. In the next few years the availability of financing from banks will be weak and its price will be high. Because of this, at its meeting in January 2012 Componenta's Board of Directors amended the company's financial goals. The company's strategic target is to reduce the company's level of debt and obtain a good credit rating during 2012 and 2013. As part of this process, in spring 2012 Componenta is making a share issue and issuing a hybrid bond. In addition, Componenta has started the process of selling off the unit in Manisa, Turkey, that produces aluminium wheels. The unit had net sales in 2011 of EUR 45 million, EBITDA was just under EUR 9 million, and it employs almost 400 people. Through these measures combined with the cash flow from operations in 2012, the Group believes it can reduce the interest-bearing debt by about one third.
Events in 2011 - summary
In January Componenta published its new long-term strategy for 2011 – 2015. The new strategy aims at growth together with customers.
Componenta expanded its Corporate Executive Team in January by appointing three new members: Olli Karhunen, SVP of Operations Finland, Patrick Steensels, SVP of Operations Holland, and Michael Sjöberg, SVP of Operations Sweden.
Componenta began statutory personnel negotiations at the end of January at the Pietarsaari machine shop with the goal of examining the options for developing operations in Pietarsaari. The negotiations were completed in March, and as the result Componenta decided to terminate machining operations in Pietarsaari during 2011. Most of the machining work that had taken place in Pietarsaari and many of the machine tools for this work were transferred during 2011 to the Group's unit in Främmestad in Sweden. Componenta strengthened the cast components supply chain by concentrating its business operations in larger, more profitable units.
In March Componenta decided to apply for public listing of the loan units of the bond and the subordinated capital loan issued in 2010. The Finnish Financial Supervisory Authority approved Componenta's listing prospectus for the bond and subordinated capital loan in April and trading in the loan units began at the end of April.
In April Componenta was informed by the Commission that it had rendered a new decision on 20 April 2011, confirming that Componenta did not receive any state aid from the City of Karkkila in connection with a share purchase transaction between Componenta and the City of Karkkila in 2005.
Componenta began statutory personnel negotiations in October at Componenta Finland Oy Nisamo concerning the possible closure of the unit. In December Componenta sold the business operations and production machinery of the Nisamo machine shop. The sale also ended the personnel negotiations.
Developments in Componenta's business environment and markets in 2011
During 2011 economic trends were mainly positive, which was also reflected in the considerable increase in demand for cast components. Although demand rose significantly from 2010, it still did not return to its level before the recession. Factors contributing to the growth in demand were the encouraging developments in developing markets, in particular the BRIC countries (Brazil, Russia, India and China), and the increase in investments in the established markets of Europe and America in 2011.
The rise in raw material prices caused by the growth in demand had a negative impact of altogether EUR 11 million on Componenta's result in 2011. The prices of raw materials not covered by surcharge agreements rose sharply especially in the first three quarters of the year. Componenta has reached agreement with all its customers on a new pricing mechanism under which the rise in costs mentioned above is compensated in the price of products as from the beginning of 2012.
Overall the heavy truck market developed positively in 2011. New sales picked up well during the year and the close partnership in product development continued with heavy truck manufacturers. Componenta's delivery volumes to the heavy truck industry rose considerably from the previous year, although the production standstills implemented by customers at the end of the year had a negative impact on final quarter sales.
Demand for components in the construction and mining industries increased significantly in 2011. The need for components rose quickly in consequence of the recovery in the economy and high raw material prices resulting from the mining projects that have been launched. Growth was strong in all markets.
Demand for agricultural machinery continued to rise from the previous year mainly thanks to the markets in Europe and North America. Rising food prices were a particular factor in the growth in demand.
The number of new passenger cars registered in Europe declined 1.7% in 2011 from the previous year, in consequence of the decline in the economic situation in Europe. However, vehicle production volumes picked up well, especially in Germany, as a result of the strong growth in exports. Thanks to the excellent demand for aluminium wheels, Componenta's deliveries to the automotive industry increased for the whole year compared to the previous year.
The recession continued to affect the wind power industry in 2011 and there were no signs of growth. Demand was affected by the difficulties in arranging financing for wind park projects. The bankruptcy in summer 2011 of the biggest customer in the wind power sector, Moventas Oy, also had a negative impact on Componenta's deliveries.
Demand in the machine building industry remained steady as in the previous year. Market demand varied considerably, however, from one sector and market area to another. Growth as a whole was low in 2011.
Order book
The order book in the beginning of January 2012 was similar to what it was at the same time in the previous year, standing at EUR 99.5 (94.6) million. The order book comprises orders confirmed to customers for the next two months. The order book does not involve any significant cancellation risk.
The order book for operations in Turkey increased 8% from the previous year, standing at EUR 51.8 (47.8) million in the beginning of January. The order book in Turkey was boosted by good developments in construction and mining machinery and in the automotive industry.
The order book for operations in Finland declined 12% from the previous year, standing at EUR 13.8 (15.7) million in the beginning of January. The main factors in the decline were the closure of the Pietarsaari machine shop and the sale of the operations of the Nisamo machine shop.
The order book for operations in the Netherlands was 22% higher than in the previous year, standing at EUR 20.1 (16.4) million in the beginning of January. Increased orders from manufacturers of construction, mining and agricultural machinery and from the heavy truck and machine building industries contributed to the stronger order book in the Netherlands.
The order book for operations in Sweden declined 10% from the previous year, standing at EUR 19.8 (22.0) million in the beginning of January. Decreased orders especially from the heavy truck and machine building industries weakened the order book in Sweden. Customers in the heavy truck industry imposed production standstills before and after the year end in Sweden.
Net sales
The Group's net sales in 2011 rose 28% from the previous year to EUR 576.4 (451.6) million. The value of production in the year increased 27% to EUR 577.9 (454.7) million. The Group's capacity utilization rate during the financial year was 68% (57%).
Net sales for operations in Turkey rose 35% from the previous year to EUR 277.2 (204.8) million. Net sales for operations in Finland increased 9% to EUR 112.8 (103.6) million. Net sales for operations in the Netherlands rose 28% from the previous year to EUR 109.3 (85.1) million. Net sales for operations in Sweden increased 43% to EUR 121.5 (84.7) million.
Componenta's net sales in the financial period by customer sector were as follows: heavy trucks 27% (26%), construction and mining 25% (21%), machine building 19% (20%), automotive 16% (20%), agricultural machinery 13% (11%), wind power 1% (2%) and other sales 0% (1%).
Result
The consolidated operating profit for the year, excluding one-time items, was EUR 29.8 (13.6) million and after one-time items of EUR -7.4 million was EUR 22.5 (13.5) million. The one-time items relate to write-downs on machinery and equipment from closing down the Pietarsaari machine shop and from the sale of the Nisamo machine shop operations (EUR -2.6 million), estimated losses in efficiency from the period for running down production at these two plants (EUR -3.0 million), and other one-time costs (EUR -1.8 million).
The operating profit improved significantly, even though it was weakened by the rise in the prices of certain non-surcharged raw materials, amounting to some EUR 11 million. In addition, a quality fault discovered in the summer at the Orhangazi production unit in Turkey and the costs for the process alterations required had a total impact of more than EUR -4 million on the result in the second half of the year.
The Group's net financial costs for the financial year were EUR -25.9 (-23.5) million. Net financial costs increased from the previous year mainly because of higher interest costs.
The Group's result for the period after financial items, excluding one-time items, was EUR 3.9 (-9.9) million and after one-time items EUR -3.4 (-10.0) million. Income taxes calculated from the result for the financial year excluding one-time items totalled EUR -1.2 (+2.5) million and after one-time items EUR +0.3 (+2.5) million
The net result for the financial period excluding one-time items was EUR 2.7 (-7.4) million and after one-time items EUR -3.1 (-7.5) million. Basic earnings per share for the period excluding one-time items was EUR 0.09 (-0.45) and after one-time items EUR -0.25 (-0.45).
The return on investment excluding one-time items was 10.2% (5.0%) and after one-time items 7.8% (5.0%). The return on equity excluding one-time items was 5.1% (-10.2%) and after one-time items -5.8% (-10.3%).
Balance sheet, financing and cash flow
At the end of December, the Group had outstanding capital notes and convertible capital notes, as defined in IFRS, with a total value of EUR 35.4 million. The Group repaid in November and December the final instalments totalling EUR 5.2 million of the capital loan and convertible bond issued in 2006 in accordance with the terms of the loans.
During the year new long-term bilateral loans totalling EUR 34.9 million were drawn to refinance short-term bank loans that matured during the period. Short-term interest-bearing liabilities rose considerably in June because of a syndicated loan that matures in June 2012. The company is negotiating on a continuation of the current syndicated loan. A second option is for the company and its principal financing banks to agree on a new syndicated loan to replace the current one. The company's principal financing banks have taken the decision on credit facilities totalling some EUR 100 million for 2012 and 2013. In accordance with a proposal by the Board of Directors, the company will strengthen equity by altogether EUR 20 million through an increase in share capital and a hybrid bond. The company has also negotiated additional financing of EUR 50 million from other banks and, in addition, is negotiating with several other financial institutions concerning financing totalling EUR 30 million in connection with the second option described above. The company's financing needs will decrease if the planned sale of the Manisa aluminium wheels business takes place.
At the end of the financial year Componenta's liquidity was at a good level. Cash and bank receivables at the end of the year totalled EUR 41.6 million. Unused committed credit facilities totalled EUR 0.0 million at the end of the year. The Group also has a EUR 150 million commercial paper programme, from which the company had no debt at the end of the year.
The Group's interest-bearing net debt, excluding the outstanding capital notes of EUR 35.4 million, totalled EUR 207.5 (189.4) million at the end of the year. The company's net debt as a proportion of shareholders' equity, including the capital notes in shareholders' equity, was 271.2% (170.5%).
Componenta's net cash flow from operations during the review period was EUR 3.6 (25.2) million, and of this the change in working capital was EUR -10.0 (13.6) million.
Componenta makes more efficient use of capital with a programme to sell its trade receivables. Under this arrangement, some of the trade receivables are sold without any right of recourse. At the end of the year the company had sold trade receivables totalling EUR 89.5 (63.9) million. The increase in the trade receivables sold partially compensated for the capital tied up in other working capital.
At the end of 2011, the invested capital of the company was EUR 325.6 (311.5) million.
The Group's equity ratio was 9.4% (16.8%). The extremely sharp decline in the value of the Turkish lira against the euro weakened the Group's shareholders' equity by EUR -22.9 million from the previous year. Cumulatively, exchange rate differences after the acquisition of the Turkish subsidiary have weakened the Group's equity by EUR -41.0 million. The original price for the shares of the Turkish subsidiary was EUR 149.0 million. Due to translation differences in bookkeeping, the value of the Turkish subsidiary's net assets in Componenta's consolidated balance sheet is EUR 108.0 million. The market value of the Turkish subsidiary's shares owned by Componenta on 31 December 2011 was EUR 146.4 million. The Group's shareholders' equity at the end of the year, including the capital notes in equity, as a proportion of the balance sheet total was 17.5% (26.4%).
Loans, commitments and contingent liabilities given by the company to Group companies classified as related parties on 31 December 2011 totalled EUR 74.9 (134.9) million. Loans, commitments and contingent liabilities given by the company to private persons classified as related parties on 31 December 2011 totalled EUR 0.3 (0.3) million.
Investments
Componenta restricted the volume of investment in production facilities in 2011 due to the under-utilisation of current capacity. Investments in production facilities during the year totalled EUR 21.8 (8.5) million, of which finance lease investments accounted for EUR 4.0 (0.3) million. The net cash flow from investments was EUR -12.7 (-10.4) million, which includes the cash flow from the Group's investments in tangible and intangible assets, and the cash flow from shares sold and purchased and from the sale of tangible and intangible assets.
Research and development
At the end of 2011, 117 (118) people worked in research and development at Componenta, which corresponds to 3% (3%) of the company's total personnel. Componenta's research and development expenses in 2011 totalled EUR 2.4 (1.8) million, the equivalent of 0.4% (0.4%) of the Group's total net sales.
Environment
Componenta is committed to the continuous improvement of its production and to reducing its environmental impact. The objectives of the Group's environmental policy are to reduce consumption of energy and raw materials, restrict particle and VOC emissions, reduce environmental noise from its operations, increase the sorting of waste, and reduce the amount of waste that cannot be re-used.
One of the most significant environmental aspects for Componenta Group is the use of energy. In 2011 the Group's production units used 747 GWh (629 GWh) of energy. Most of the energy used, 67% (66%), was electricity. The foundries consume more than 90% of all the energy, since especially the melting processes at the foundries utilise much energy. In 2011 energy consumption at Componenta's foundries in proportion to output declined, so that relative energy efficiency improved. In order to reduce the environmental impact of production and CO2 emissions, the Board of Directors confirmed targets for 2012 to further improve the energy efficiency of the Group's iron foundries and reduce the amount of landfill waste.
Personnel
The Group had on average 4,717 (4,155) employees during the financial year, including 483 (303) leased employees. The number of Group personnel at the end of the year was 4,665 (4,414), which includes 425 (398) leased employees. At the end of the year 54% (52%) of the personnel were in Turkey, 21% (24%) in Finland, 16% (16%) in the Netherlands and 9% (8%) in Sweden.
Shares and share capital
The shares of Componenta Corporation are quoted on NASDAQ OMX Helsinki. At the end of the financial year the company had a total of 17,499,738 shares. At the end of December the company had 2,135 shareholders. At the end of the financial year the share capital had a market capitalization of EUR 59.0 (104.6) million and the volume of shares traded during the period was equivalent to 17.1% (48.6%) of the share stock.
Decisions of the Annual General Meeting
Componenta's Annual General Meeting on 28 February 2011 confirmed the financial statements for the 1 January - 31 December 2010 financial year and discharged the members of the Board of Directors and the President and CEO from liability. In accordance with the Board proposal, the AGM decided not to pay a dividend for the 1 January - 31 December 2010 financial year
The AGM elected the following to the Board of Directors: Heikki Bergholm, Pii Kotilainen, Heikki Lehtonen, Juhani Mäkinen, Marjo Miettinen and Matti Tikkakoski. The AGM elected Authorized Public Accountants PricewaterhouseCoopers Oy as auditor.
The AGM resolved, in accordance with the proposal of the Board of Directors, to authorize the Board of Directors to decide on the purchase of a maximum of 1,700,000 of the Company's own shares, in one or several instalments, using the Company's unrestricted shareholders' equity. The shares shall be purchased otherwise than in proportion to the holdings of the shareholders through public trading organised by NASDAQ OMX Helsinki Ltd at the market price prevailing at the moment of purchase. The authorization is valid for a period of 18 months from the date of the decision of the AGM. The authorization cancels the authorization to resolve on the purchase of own shares given to the Board of Directors by the Annual General Meeting on 10 March 2010.
The AGM also authorized the Board of Directors to decide during 2011 on donations totalling a maximum of EUR 300,000 to the Aalto University and the Tampere University of Technology under terms to be decided separately by the Board.
Issuing shares and granting option rights and other special rights with an entitlement to shares
Componenta's extraordinary general meeting of shareholders held on 8 September 2009 authorized the Board to decide to issue shares and grant special rights with an entitlement to shares as defined in chapter 10, section 1 of the Finnish Limited Liabilities Companies Act in one or more issues, either against payment or free of charge. The number of shares to be issued, including the shares to be obtained under the special rights, may be a maximum of 8,000,000 shares. The Board may decide to issue either new shares or any company shares held by the company.
Under the authorization, the Board of Directors may decide on all the terms and conditions for a share issue and for granting special rights with an entitlement to shares, and includes the right to disapply the pre—emptive subscription rights of shareholders. The authorization was presented as being used to strengthen the company's balance sheet and financial position or for other purposes to be decided by the Board.
The authorization is valid for a period of five years from the date of the decision of the general meeting. The authorization cancelled the authorization given the Board by the AGM on 26 February 2007 to decide to issue shares and grant special rights with entitlement to shares.
By the end of 2011 altogether 6,541,940 shares had been used under this authorization. Of these, 6,500,000 shares were used in Componenta's share issue in autumn 2009 and the remaining 41,940 shares in spring 2011 for paying the bonuses for the 2010 earning period in Componenta's share-based incentive scheme 2010 – 2012.
Share-based incentive scheme 2010 - 2012
The Board of Directors of Componenta Corporation resolved on 10 March 2010 on a long-term bonus and incentive plan for key personnel. The target group for the plan comprises key positions in the Group as determined by the Board of Directors. At the end of 2011 the target group contained 47 people.
The plan includes three earning periods, the calendar years 2010, 2011 and 2012. The Board of Directors decides on the earning criteria for each earning period and on the targets for these. The earning criteria for the 2011 earning period were Componenta Group's result after financial items excluding one-time items. The amount of the bonus in the earning period is determined after the end of the period by the extent to which the targets set for the earning criteria have been achieved.
Any bonuses will be paid in 2011, 2012 and 2013 as a combination of company shares and cash. The part to be paid in cash is intended to cover the taxes and tax-related costs arising from the bonus. If shares are paid in the incentive scheme, the shares may not be conveyed, pledged or otherwise used during a two-year restriction period.
The Board of Directors decided to allocate 18,700 shares for the 2011 earning period, and the President and CEO's allocation of this was 5,000 shares and other key personnel received altogether 13,700 shares. The scheme's impact on the Group's result before tax at the end of 2011 was EUR -0.1 million.
Board of Directors and Management
After the AGM on 28 February 2011, the Board of Directors held its organization meeting and elected Heikki Bergholm as its Chairman and Juhani Mäkinen as Vice Chairman. The Board met 13 times in 2011. The average attendance rate of Board members at its meetings was 100%. The Board assessed its performance, under the leadership of its chairman, in December 2011.
Heikki Lehtonen is President and CEO of Componenta. At the end of the financial year the Corporate Executive Team (CET) of Componenta Corporation comprised the following members: President and CEO Heikki Lehtonen, COO Yrjö Julin, CFO Mika Hassinen, Hakan Göral, SVP, Operations Turkey, Olli Karhunen, SVP, Operations Finland; Patrick Steensels, SVP, Operations Holland; Michael Sjöberg, SVP, Operations Sweden, Anu Mankki, SVP, HR and General Counsel Pauliina Rannikko. Communications Director Pirjo Aarniovuori was Secretary to CET.
5 Financial statements COMPONENTA Annual report 2011
Risks and business uncertainties
The company's current syndicated loan of EUR 164 million matures in June 2012 and the company intends to either extend it or replace it. If the company replaces this syndicated loan, the refinancing will be achieved through the following measures. The company has already negotiated additional financing of EUR 50 million. In addition, the Board of Directors is proposing to strengthen the company's equity capital by altogether EUR 20 million through an increase in share capital and a hybrid bond. Shareholders in the company, whose combined holding in the company exceeds 50%, have stated that they intend to participate in the share issue. Because of this, the Board of Directors considers that there are no major uncertainties relating to successfully carrying out the share issue. Marketing of the hybrid bond will begin in February 2012. The Board of Directors considers the risk factors in connection with the hybrid bond issue to be limited. The company's principal financing banks have taken the decision on credit commitments totalling some EUR 100 million for 2012 and 2013. The parties have discussed the terms of the loan agreement and the goal is to sign the final loan agreement by the end of February 2012. The Board of Directors considers the risk of the parties not reaching agreement on the terms of the loan to be small. The Board of Directors believes that the company meets the other requirements set for the financing.
The most significant risks for Componenta are risks related to the business environment (competition and price risk, commodity and environmental risks), operational risks (customer and supplier risks, productivity, production and process risks, labour market disruptions, contract and product liability risks, personnel risks, and data security risks) as well as financial risks (financing and liquidity risk, currency, interest rate and credit risks).
In order to manage the Group's business operations it is essential to secure the availability of certain raw materials, such as recycled metal and pig iron, and of energy, at competitive prices. The cost risk relating to raw materials is mainly managed with price agreements, and under these agreements the prices of products are adjusted in line with the changes in raw material prices. Increases in prices for raw materials may tie up more funds in working capital than estimated.
The financial risks relating to Componenta's business operations are managed in accordance with the treasury policy approved by the Board of Directors. The objective is to protect the Group against unfavourable changes in the finance markets and to secure the
Read more
online.
Group's financial performance and financial position. More detailed information about Componenta's risks and risk management is given in the 2011 financial statements section and on the company's website at www.componenta.com.
Events after end of period
Yrjö Julin, COO, is no longer continuing in the service of Componenta, for personal reasons. Olli Karhunen has been appointed Senior Vice President (SVP), Operations Development, being responsible for developing operations at Componenta. Seppo Erkkilä has been appointed SVP, Operations Finland and a member of the Corporate Executive Team. Antti Lehto has been appointed SVP, Sales and Product Development and a member of the Corporate Executive Team. Karhunen, Erkkilä and Lehto report to CEO Heikki Lehtonen. The appointments are valid as of 1 March 2012.
Other country responsibilities remain unchanged: Hakan Göral, Senior Vice President, Operations, Turkey, Michael Sjöberg, Senior Vice President, Operations, Sweden and Patrick Steensels, Senior Vice President, Operations, the Netherlands. The senior vice presidents have business responsibility for operations in their respective countries and they report to Heikki Lehtonen.
Componenta decided in January 2012 to strengthen the Group's balance sheet. The company's Board of Directors proposes to strengthen equity by altogether EUR 20 million through an increase in share capital and a hybrid bond. In addition, the company has
started the process of selling off the unit in Manisa, Turkey, that produces aluminium wheels for passenger cars
Componenta reviewed the Group's financial objectives in January 2012. As a result, the Board of Directors decided to give up the growth target for net sales in 2015 and to concentrate on reaching the targets of financial solidity and profitability.
Market outlook
The demand outlook is satisfactory in all the Group's customer sectors at the beginning of 2012.
Demand prospects in the heavy trucks industry are uncertain at the beginning of 2012. The order book was 5% down on the previous year.
Demand for construction and mining machinery components is expected to continue to develop favourably mainly due to the high level of activity in the mining industry and in developing markets. The order book at the beginning of 2012 was 38% higher than in the previous year.
Demand for agricultural machinery is estimated to rise from the previous year mainly as a result of relatively high food prices. The order book at the beginning of 2012 was 47% higher than in the previous year.
Demand in the automotive industry is expected to remain at the same level as in the previous year mainly due to the increase in market share. The order book at the beginning of 2012 was 17% lower than at the corresponding time in the previous year.
Demand in the machine building industry is expected to remain at the same level as in the previous year. The order book at the beginning of 2012 was 9% down on the previous year.
Demand in the wind power sector is expected to remain at a low level in Europe. In future, the outlook for the wind power sector will be included in the demand outlook for the machine building industry.
Outlook for Componenta
Componenta's prospects for 2012 are based on general external economic indicators, delivery forecasts given by customers, and on Componenta's order intake and order book.
Componenta's order book at the beginning of 2012 was 5% higher than in the previous year.
Net sales in the first quarter of 2012 are expected to be similar to that in the previous year. As a result of the price increases already implemented and the improved cost structure, the operating profit and result after financial items excluding one-time items are expected to improve from previous year.
Net cash flow from operations in 2012 is expected to improve clearly and changes in working capital are expected to remain moderate, due to the sale of trade receivables. Investments in production facilities in 2012 are estimated at some EUR 12 million.
Dividend proposal
The Board of Directors proposes to the Annual General Meeting to be held on 23 February 2012 that, in accordance with the current dividend policy, no dividend be paid for the 1 January - 31 December 2011 financial period. On 31 December 2011 the parent company had distributable equity of EUR 80.3 million.
Annual General Meeting
Componenta Corporation's Annual General Meeting of Shareholders will be held at 9.00 am on 23 February 2012 in Helsinki. Notice of the annual general meeting will be published in a separate stock exchange release.
Corporate Governance statement
Componenta Corporation is publishing the Corporate Governance statement for 2011 separately from the Report by the Board of Directors. The statement will be available on the company's website at www.componenta.com.
6 Financial statements COMPONENTA Annual report 2011
Consolidated income statement 1.1.-31.12.
| MEUR | Note | 2011 | % | 2010 | % |
|---|---|---|---|---|---|
| NET SALES | 1 | 576.4 | 100.0 | 451.6 | 100.0 |
| Other operating income | 4 | 2.3 | 0.6 | ||
| Operating expenses | 5,6,7 | -536.3 | -422.8 | ||
| Depreciation, amortization and write-down of non-current assets | 8 | -20.2 | -16.0 | ||
| Share of the associated companies' result | 0.2 | 0.2 | |||
| OPERATING PROFIT | 1 | 22.5 | 3.9 | 13.5 | 3.0 |
| Financial income | 9 | 13.0 | 16.5 | ||
| Financial expense | 9 | -38.9 | -40.0 | ||
| Financial income and expenses in total | -25.9 | -23.5 | |||
| PROFIT/LOSS AFTER FINANCIAL ITEMS | -3.4 | -0.6 | -10.0 | -2.2 | |
| Income taxes | 10 | 0.3 | 2.5 | ||
| PROFIT/LOSS FOR THE FINANCIAL PERIOD | -3.1 | -7.5 | |||
| Allocation of net profit for the period | |||||
| To equity holders of the parent | -4.3 | -7.9 | |||
| To non-controlling interest | 1.2 | 0.4 | |||
| -3.1 | -7.5 | ||||
| Earnings per share calculated on the profit attributable to the shareholders of | |||||
| the parent company | |||||
| Earnings per share, EUR | 11 | -0.25 | -0.45 | ||
| Earnings per share with dilution, EUR | 11 | -0.25 | -0.45 |
Consolidated statement of comprehensive income 1.1.-31.12.
| MEUR | 2011 | 2010 |
|---|---|---|
| Net profit | -3.1 | -7.5 |
| Other comprehensive income | ||
| Translation differences | -24.1 | 6.7 |
| Cash flow hedges | -3.9 | 4.8 |
| Re-classification of investment properties | 0.7 | - |
| Other items | 0.1 | 0.0 |
| Income tax on other comprehensive income | 0.8 | -1.3 |
| Other comprehensive income, net of tax | -26.4 | 10.3 |
| Total comprehensive income | -29.5 | 2.8 |
| Allocation of total comprehensive income | ||
| To equity holders of the parent | -29.5 | 2.0 |
| To non-controlling interest | 0.0 | 0.8 |
| -29.5 | 2.8 |
The notes are an integral part of these financial statements.
7 Financial statements COMPONENTA Annual report 2011
| MEUR | Note | 2011 | 2010 |
|---|---|---|---|
| ASSETS | |||
| NON-CURRENT ASSETS | |||
| Tangible assets | 12 | 212.4 | 245.3 |
| Goodwill | 13 | 28.0 | 33.1 |
| Intangible assets | 14 | 6.7 | 6.7 |
| Investment properties | 15 | 11.6 | 1.8 |
| Shares in associated companies | 16 | 1.3 | 1.3 |
| Financial assets | 17 | 0.7 | 0.5 |
| Receivables | 18 | 4.5 | 6.0 |
| Deferred tax assets | 19 | 26.4 | 20.9 |
| 291.6 | 315.6 | ||
| CURRENT ASSETS | |||
| Inventories | 20 | 58.4 | 52.2 |
| Receivables | 21 | 35.2 | 41.7 |
| Tax receivables | 0.0 | 0.0 | |
| Assets held for sale | 21 | 9.9 | - |
| Cash and cash equivalents | 23 | 41.6 | 11.0 |
| 145.2 | 104.8 | ||
| TOTAL ASSETS | 436.8 | 420.4 | |
| LIABILITIES AND SHAREHOLDERS' EQUITY | |||
| SHAREHOLDERS' EQUITY | |||
| Share capital | 21.9 | 21.9 | |
| Share premium reserve | 15.0 | 15.0 | |
| Unrestricted equity reserve | 32.3 | 32.5 | |
| Other reserves | 2.9 | 2.2 | |
| Cash flow hedges | -0.7 | 2.3 | |
| Translation differences | -41.0 | -18.1 | |
| Retained earnings | 7.7 | 15.6 | |
| Profit/loss for the financial period | -4.3 | -7.9 | |
| Equity attributable to equity holders of the parent company | 24 | 33.8 | 63.4 |
| Non-controlling interest | 7.3 | 7.3 | |
| Shareholders' equity | 41.1 | 70.7 | |
| LIABILITIES | |||
| Non-current liabilities | |||
| Capital loans | 28 | 31.4 | 35.3 |
| Other interest bearing | 28 | 79.8 | 185.1 |
| Provisions | 27 | 7.6 | 8.5 |
| Deferred taxes | 19 | 8.3 | 9.6 |
| Current liabilities | |||
| Capital loans | 28 | 4.1 | 5.1 |
| Other interest bearing | 28 | 169.3 | 15.3 |
| Other non-interest bearing | 29 | 92.9 | 89.5 |
| Tax liability | 0.2 | 0.1 | |
| Provisions | 27 | 2.2 | 1.2 |
| 395.7 | 349.7 | ||
| TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | 436.8 | 420.4 |
The notes are an integral part of these financial statements.
8 Financial statements COMPONENTA Annual report 2011
Cash flow statement 1.1.-31.12.
| MEUR | 2011 | 2010 |
|---|---|---|
| Cash flow from operations | ||
| Result after financial items | -3.4 | -10.0 |
| Depreciation, amortization and write-down | 20.2 | 16.0 |
| Net financial income and expenses | 25.9 | 23.5 |
| Other income and expenses, adjustments to cash flow | -0.4 | 1.7 |
| Change in net working capital | ||
| Inventories | -11.4 | -9.3 |
| Current non-interest bearing receivables | 0.4 | -10.0 |
| Current non-interest bearing liabilities | 1.2 | 31.3 |
| Other working capital items | -0.2 | 1.6 |
| Interest received | 0.5 | 0.6 |
| Interest paid | -26.4 | -22.1 |
| Other financial income and expenses | 1.1 | 0.8 |
| Dividends received | 0.0 | 0.0 |
| Taxes paid | -3.9 | 0.9 |
| Net cash flow from operations | 3.6 | 25.2 |
| Cash flow from investing activities | ||
| Capital expenditure in tangible assets | -13.9 | -7.7 |
| Capital expenditure in intangible assets | -2.2 | -2.3 |
| Proceeds from tangible and intangible assets | 1.4 | 0.0 |
| Other investments and loans granted | -0.2 | -0.4 |
| Proceeds from other investments and repayments of loan receivables | 2.1 | 0.1 |
| Net cash flow from investing activities | -12.7 | -10.4 |
| Cash flow from financing activities | ||
| Repayment of finance lease liabilities | -3.2 | -2.4 |
| Draw-down (+)/ repayment (-) of current loans | -3.4 | -36.3 |
| Draw-down of non-current loans | 90.4 | 54.3 |
| Repayment of non-current loans and other changes | -42.6 | -27.2 |
| Net cash flow from financing activities | 41.0 | -11.7 |
| Change in liquid assets | 31.9 | 3.1 |
| Cash and bank accounts at the beginning of the period | 11.0 | 7.6 |
| Effects of exchange rate changes on cash | -1.2 | 0.3 |
| Cash and bank accounts at period end | 41.6 | 11.0 |
The notes are an integral part of these financial statements.
Statement of changes in consolidated shareholders' equity
| Share | Unrestricted | Non | Share | |||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Share | premium | equity | Other | Cash flow | Translation | Retained | controlling | holders' | ||
| MEUR | capital | reserve | reserve | reserves | hedges | differences | earnings | Total | interest | equity total |
| Shareholders' equity 1.1.2010 | 21.9 | 15.0 | 32.5 | 2.1 | -1.3 | -24.5 | 15.6 | 61.3 | 6.5 | 67.8 |
| Net profit | -7.9 | -7.9 | 0.4 | -7.5 | ||||||
| Translation differences | 6.3 | 6.3 | 0.4 | 6.7 | ||||||
| Cash flow hedges | 3.6 | 3.6 | 3.6 | |||||||
| Total comprehensive income | 3.6 | 6.3 | -7.9 | 2.0 | 0.8 | 2.8 | ||||
| Other changes | 0.1 | 0.1 | 0.1 | |||||||
| Shareholders' equity 31.12.2010 | 21.9 | 15.0 | 32.5 | 2.2 | 2.3 | -18.1 | 7.7 | 63.4 | 7.3 | 70.7 |
| Share | Unrestricted | Non | Share | |||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Share | premium | equity | Other | Cash flow | Translation | Retained | controlling | holders' | ||
| MEUR | capital | reserve | reserve | reserves | hedges | differences | earnings | Total | interest | equity total |
| Shareholders' equity 1.1.2011 | 21.9 | 15.0 | 32.5 | 2.2 | 2.3 | -18.1 | 7.7 | 63.4 | 7.3 | 70.7 |
| Net profit | -4.3 | -4.3 | 1.2 | -3.1 | ||||||
| Translation differences | -22.9 | -22.9 | -1.2 | -24.1 | ||||||
| Cash flow hedges | -3.0 | -3.0 | -3.0 | |||||||
| Re-classification of investment properties | 0.6 | 0.6 | 0.6 | |||||||
| Other comprehensive income items | 0.1 | 0.1 | 0.1 | |||||||
| Total comprehensive income | 0.7 | -3.0 | -22.9 | -4.3 | -29.5 | 0.0 | -29.5 | |||
| Other changes *) | -0.2 | 0.1 | -0.1 | -0.1 | ||||||
| Shareholders' equity 31.12.2011 | 21.9 | 15.0 | 32.3 | 2.9 | -0.7 | -41.0 | 3.4 | 33.8 | 7.3 | 41.1 |
*) Other changes in unrestricted equity reserve include given donation to universities, EUR 0.2 million.
Notes to the consolidated financial statements
Accounting principles
General information
Componenta is a metal sector group of companies with international operations. The Group manufactures cast, machined, surfacetreated, ready-to-install components and total solutions made up from these. The Group's customers are global manufacturers in the machine building, heavy truck, automotive, construction & mining, agriculture and wind power industries.
The Group's parent company is Componenta Corporation (business identity code 1635451-6), whose shares are quoted on the NASDAQ OMX Helsinki. The parent company is domiciled in Helsinki. The registered street address is Panuntie 4, 00610 Helsinki, Finland.
A copy of the consolidated financial statements can be obtained on the Internet at <www.componenta.com>or from the head office of the Group's parent company at Panuntie 4, 00610 Helsinki, Finland. The financial year for all group companies is the calendar year
and it ended on 31 December 2011.
The Board of Directors of Componenta Corporation has at its meeting on 23 January 2012 approved these financial statements for publication. According to the Finnish Companies Act, shareholders have the opportunity to approve or reject the financial statements at the General Meeting of Shareholders held after publication. It is also possible to amend the financial statements at the General Meeting of Shareholders.
Basis for preparing consolidated financial statements
Componenta's consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS), applying the IAS and IFRS standards in force on 31 December 2011 and SIC and IFRIC interpretations. The term 'IFRS standards' refers to standards and interpretations of these in Finnish legislation and provisions based on this approved for applying in the EU in accordance with the procedure established in EU regulation (EY) 1606/2002. The notes to the consolidated financial statements also conform to Finnish accounting and corporate legislation.
The consolidated financial statements have been prepared based on the historical cost, except that the following items have been assessed at fair value: investment properties, financial assets and liabilities recognized in the income statement, derivative financial instruments, and items hedged at fair value. For mergers of business operations that took place before 2004, goodwill, as stated in IFRS 1, corresponds to the book value as defined under the previous financial statement standards, and this has been used as the deemed cost.
The preparation of the financial statements in accordance with IFRS standards requires management to make estimates and judgments in applying the accounting principles. Information about the judgments made by management in the application of the accounting principles employed by the Group and which have the biggest impact on the figures given in the financial statements is given in the chapter "Accounting principles requiring judgments by management and key sources of estimation uncertainty".
Accounting principles for consolidated financial statements
The consolidated financial statements include Componenta Corporation and those Finnish and foreign subsidiaries in which the Group holds directly or indirectly shares with over 50% of the voting rights or in which the Group has control over financial and operating principles. The financial statements of subsidiaries are included in the consolidated financial statements from the date that Componenta has obtained control in the subsidiary.
The financial statements of foreign subsidiaries have been adjusted to ensure consistency with the Group's accounting policies. The financial statements of subsidiaries are consolidated using the acquisition method. Intra-group transactions have been eliminated in the consolidation, as have the internal margin included in the inventories of Group companies and intra-group receivables and liabilities. The share of owners with a non-controlling interest (NCI) in the acquired entity is measured either at fair value or as the NCI's proportionate share of the identifiable net assets of the acquired entity. The principle for measurement is specified separately for each acquisition.
Changes in the parent company's holdings in subsidiaries that do not result in a loss of control are treated as transactions affecting shareholders' equity.
Associated companies are companies in which the Group holds shares with 20% to 50% of the voting rights or in which the Group has significant interest but not control.
The financial statements of associated companies are consolidated according to the equity method. The Group's share of the result of associated companies is entered in the income statement. The value of shares is presented in the balance sheet as the acquisition cost of the shares adjusted by the Group's share of the accumulated results of associated companies and by the dividends paid by the associated companies. Known deviations from IFRS accounting policies in the financial statements of associated companies have been corrected.
Change in accounting policy
In previous financial periods, the company applied the acquisition cost model in the valuation of investment properties, recognising the assets in the balance sheet at their acquisition cost. In 2011, the company adopted the fair value model pursuant to IAS 40, recognising the gains or losses arising from changes in the fair value of investment property in net profit or loss for the period in which they arise. This change in accounting principles improves the accuracy of the financial statements. The significance of investment properties in the company's financial statements has increased as a larger number of properties are now classified as investment properties. Gains arising from changes in the fair value of old investment properties in 2011, totalling EUR 0.6 million before deferred taxes, are recognised under other operating income. This change in accounting principles does not affect the company's result for 2010 or the Group's equity on 31 December 2010. The fair values of properties previously classified as investment properties corresponded essentially to their book values on 31 December 2010.
Translation of foreign currency items
Functional and presentation currency
The result and financial position of each of the Group's business units are measured in the currency of the main operating environment for that unit. The operational and presentation currency for the Group's parent company is the euro. The consolidated financial statements are presented in millions of euros unless otherwise stated.
Transactions and balances
The foreign currency receivables and liabilities of the parent company and subsidiaries domiciled in Euro area are translated into euros at the exchange rate on the balance sheet date. The foreign currency receivables and liabilities of group companies domiciled outside Euro area are translated at the exchange rate for the country concerned on the balance sheet date.
The foreign exchange rate differences arising from trade payables and trade receivables are presented under other operating income together with any related hedging results. Exchange rate differences arising from borrowings, deposits and cash and cash equivalents together with any related hedging results are recognized under financial income and expenses.
Group companies
The income statements of subsidiaries domiciled outside Euro area are translated into euros using the average exchange rates for the accounting period. Balance sheet items are translated into euros at the average exchange rate on the balance sheet date.
The difference in the result for the period between the average exchange rate for the accounting period and the exchange rate on the balance sheet date is recorded in shareholders' equity in translation differences. The shareholders' equity of subsidiaries is translated into euros in consolidation. Translation differences caused by changes in exchange rates between the date of acquisition and the balance sheet date have been recorded in shareholders' equity. Translation differences from before 1 January 2004 are recorded, in accordance with the exception permitted by IFRS 1, under retained earnings. After the transition date, translation differences arising during the preparation of the consolidated financial statements are presented as a separate item of equity.
Tangible and intangible assets
Property, plant and equipment are recorded in the balance sheet at their historical cost less planned depreciation. For certain buildings the Group has made use of transitional relief, according to which it assessed the buildings at fair value in the 2004 opening balance sheet and after that began planned depreciation on them. No depreciation is made on land and water areas. Intangible assets include computer software, capitalized development costs and capitalized costs for obtaining customers. For intangible assets that have a limited useful economic life, straight-line depreciation is entered as an expense in the income statement over their useful economic lives. The Group has no intangible assets that have an unlimited useful economic life.
Maintenance and repair costs are usually recognized in the income statement as an expense as incurred. Major refurbishment costs are capitalized and depreciated over their estimated useful life if these costs are likely to increase the future economic benefits embodied in the specific asset to which they relate.
Investment grants are deducted from the carrying value of the asset, and grants to be recorded in the income statement are entered under other operating income.
Planned depreciation, except of production machinery and equipment, is calculated on a straight line basis on the historical cost, based on the estimated useful economic life. On 1 January 2009 the Group started to use the units-of-production depreciation method, in which the amount of depreciation is based on the actual output of production machinery and equipment. The units-of-production method gives a more precise picture of the actual economic wear on production machinery and equipment than the straight line method, especially when capacity usage changes quickly. Estimated useful economic lives are as follows:
| capitalized development costs | 5 years |
|---|---|
| intangible rights | 3–10 years |
| other intangible costs | 3–20 years |
| buildings and constructions*) | 25–40 years |
| computing equipment | 3–5 years |
| other machinery and equipment | 5–25 years |
| other tangible assets | 5–10 years |
*) Residual value 25% of acquisition cost
Goodwill equals the part of the acquisition cost that exceeds the Group's share of the net fair value on the date of acquisition of the identifiable assets, liabilities and contingent liabilities of a company acquired after 1 January 2004. For mergers of business operations that took place before 2004, goodwill corresponds to the book value as defined under the previous financial statement standards, and this has been used as the deemed cost in accordance with IFRS.
Goodwill is not amortized but is tested annually for impairment.
Impairment
The carrying amounts of the Group's assets are reviewed at each balance sheet date to determine whether there is any indication of impairment. If any such indication exists, the asset's recoverable amount is estimated. An impairment loss is recognized for the amount by which the balance sheet value of the asset exceeds the recoverable amount for the asset. The recoverable amount of an asset is the greater of its net selling price and value in use. As a rule, value in use is based on the estimated discounted future net cash flows obtainable through the asset.
Investment properties
Property that is owned by the Group and leased to an external party, and that is not mainly owner-occupied, and which is held by the Group to earn rentals or capital appreciation rather than for a use in the production of goods is classified as investment property and is valued in the balance sheet at fair value. Gains and losses arising on revaluation to fair value are recognised in profit or loss for the period in which they arise and are presented in other operating income in the income statement. Rental income from investment property is recorded in the Group's net sales. The fair values of investment properties are determined by an independent and qualified real estate evaluator annually.
Research and development costs
Research costs are charged to the income statement as incurred. Expenditure on development activities relating to new products is capitalized and recognized as an expense under depreciation over their useful economic lives. The planned depreciation period for these costs is 5 years. In other respects, the Group's minor research and development costs are recorded as expenses as incurred.
Inventories
Inventories are stated at the lower of acquisition cost and net realizable value. The acquisition cost is based on the FIFO principle. The acquisition cost of manufactured products and work in progress includes the cost of raw materials, direct labour costs, other direct costs as well as a proportion of variable and fixed production overheads.
Leases
The Group classifies its leases at the inception as finance or operating leases. Leases for fixed assets that transfer substantially all the risks and rewards incidental to ownership to the Group are classified as finance leases. They are recognized in the balance sheet under fixed assets at the commencement of the lease at an amount equal to the lower of the fair value of the leased asset and the present value of the minimum lease payments. Any substantial incremental costs that are directly attributable to negotiating and arranging the lease are added to the amount recognized as an asset. Depreciation is made on the asset over its estimated useful economic life consistently with the Group's depreciation policy, or if there is no reasonable certainty that ownership is obtained at the end of the lease term, the asset is depreciated over the shorter of the lease term and its useful economic life.
The lower of the fair value of the asset and the present value of the minimum lease payments is recognized as a finance lease liability. Lease payments are divided into financing charges and reduction of the outstanding liability, using the effective interest rate method so that the liability is repaid over the lease term as an annuity. The financing charge calculated with the effective interest rate is recognized as a financial expense. The difference between the floating interest rate of the agreement and the effective interest rate is recorded as a rental expense.
A lease is classified as operating lease if the lessor retains the majority of the risks and benefits of ownership, or if the value of the lease agreement is insignificant. Lease payments under operating lease agreements are recognized as expenses in the income statement on an accrual basis throughout the lease term.
Employee benefits/Pensions and other employee benefits
Most of the Group's pension schemes are defined contribution schemes, for which payments are entered in the income statement in the period in which they occur. Componenta has pension schemes classified as a multi-employer defined benefit schemes in Sweden (Alecta ITP and AMF Pension/Avtalspension SAF-LO). Alecta ITP and AMF Pension/Avtalspension SAF-LO have been treated as defined contribution plans, in accordance with IAS 19.30 (a), as the pension companies have not been able to provide actuarial valuations.
Pension coverage for employees of Group companies in Finland is provided in line with statutory arrangements under the TyEL insurance scheme with an insurance company. Under an agreement made with the pension insurance company, the Group, as a major employer, is responsible in Finland for unemployment payments and work disability payments included in pension insurance payments in their entirety at the moment when the pension starts.
Other non-Finnish subsidiaries operate pension schemes in accordance with local practice and legislation.
Under Turkish Labour Law, the Group is required to pay termination benefits to each employee who has completed one year of service and whose employment is terminated without due cause, is called up for military service, dies or who retires after completing 25 years of service (20 years for women) and achieves the retirement age (58 for women and 60 for men). The amount payable consists of one month's salary. The estimated present value of the future probable obligation of the Group arising from the termination benefits to be paid to the employees has been presented in non-current provisions and the change in the present value of the future probable obligation in income statement.
Employee benefits/Share-based payments
The Group has applied the IFRS 2 standard to the share-based incentive scheme for key personnel which was decided on 10 March 2010.
A share-based incentive scheme has been set up for senior management for the years 2010–2012. Bonuses are paid partly in shares and partly in cash. The benefits given in the scheme are valued at fair value at the time when they are granted and are recognized as an expense in the income statement on a straight-line basis over the earnings period. A liability is recognized for the part to be paid in cash and the change in its fair value is correspondingly recognized as an expense for the period in which it occurs. The fair value of the part to be paid in shares is recognized as an expense and an increase in shareholders' equity. The impact of the scheme on the result is presented in the income statement under personnel expenses.
Operating segments
Componenta has four business segments which are Turkey, Finland, Holland and Sweden. The operations in Turkey comprise the iron foundry and machine shop in Orhangazi and the aluminium foundry and production unit for aluminium wheels in Manisa. The operations in Finland consist of the iron foundries in Iisalmi,
Karkkila, Pietarsaari and Pori, the machine shops in Lempäälä and Pietarsaari, and the production unit for pistons in Pietarsaari. Componenta Finland Ltd, a subsidiary of Componenta Corporation, has sold the business operations and production machinery of the Nisamo machine shop during the financial year 2011. Machining operations at Componenta Finland Ltd's Pietarsaari unit have been terminated during the financial year 2011. The operations in the Netherlands comprise the iron foundries in Heerlen and Weert, the machine shop operations in Weert and the pattern shop in Tegelen. The operations in Sweden comprise the Främmestad machine shop and the Wirsbo forge. Other business comprises the sales and logistics company Componenta UK Ltd in Great Britain, service and real estate companies in Finland, the Group's administrative functions and associated company Kumsan A.S. in Turkey. The operating business segments are based on the Group's internal organizational structure and internal financial reporting.
Revenues and transfers between Componenta's operating business segments are recorded at fair market prices. Segment assets and liabilities are items which the segment can utilize in its business operations and which can be reasonably allocated to the segment. Net financial items, taxes and one-time items are not allocated to the operating business segments.
Information on geographical areas
Componenta monitors non-current assets and capital expenditure in production facilities in its geographical areas which are Turkey, Finland, the Netherlands, Sweden and other countries. In addition the net sales by market area is monitored in more detail.
One-time items
One-time items, described in the Report by the Board of Directors, in certain notes and in group development tables are exceptional transactions that are not related to normal business operations. The most common one-time items are capital gains and losses, inefficiencies in production related to plant closures, additional writedowns, or reversals of write-downs, expenses due to accidents and natural disasters, provisions for planned restructuring, environmental matters and penalties. The Group's management exercises its discretion when taking decisions regarding the classification of one-time items.
Provisions
A provision is recognized in the balance sheet when the Group has a present legal or constructive obligation as a result of a past event, it is probable that the obligation will have to be settled, and the amount of the obligation can be reliably estimated. If it is possible to obtain compensation for some of the obligation from a third party, the compensation is recognized as a separate asset item, but only when it is in practice certain that the compensation will be obtained.
A provision for restructuring is recognized when the Group has drawn up a detailed and formal restructuring plan and restructuring has either commenced or the plan has been announced publicly.
Income taxes
Consolidated direct taxes include direct taxes based on the taxable profit of Group companies, calculated according to tax legislation in each company's domicile. Deferred tax liabilities are recognized in the balance sheet in full and deferred tax assets to the extent that it is probable that future taxable profit will be available against which the asset can be utilized. Deferred tax liabilities and assets are calculated from all the temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes, using the tax rate in force on the balance sheet date.
Deferred tax assets for confirmed losses or for losses for the financial period have only been recognized to the extent to which it is probable that future profits will be generated that can be offset with the temporary differences. Deferred tax liabilities have been calculated for Finnish companies using a tax rate of 24.5%, for Swedish companies using a rate of 26.3%, for the Turkish company using a rate of 20.0% and for Dutch companies using a rate of 25.0%.
Deferred tax liabilities and assets are presented in the balance sheet as a net figure where they apply to the same tax authority and when they can offset each other.
Revenue recognition
Net sales comprises revenue from the sale of products, services, raw materials, goods and energy, adjusted by indirect taxes and sales adjustments. Sales adjustments primarily comprise annually calculated bulk discounts and product returns that result in adjustments to original invoices. The most significant revenue streams from products involve sales of castings and machined castings. Revenue streams from services primarily include rental income and possible minor machining and assembly work performed on a subcontracting basis. Revenue from the sale of goods is recognized in the income statement when the significant risks and rewards of ownership have been transferred to the buyer and the Group no longer has a right to dispose of the product or effective control over the product. This normally means when a product has been delivered to the customer in accordance with agreed delivery terms. Revenue from the sale of services is recognized when the service is rendered to the customer.
Other operating income
Revenues that are not part of actual net sales, such as revenue from the sale of non-current assets and changes in the fair value of investment properties, are recorded under other operating income. In addition the foreign exchange rate differences arising from trade payables and trade receivables are presented under other operating income together with any related hedging results.
Financial assets
The Group's financial assets are initially classified in the following categories: financial assets at fair value through profit and loss, loans and other receivables, held-to-maturity investments and available-for-sale financial assets. At the balance sheet date Componenta does not have any financial assets classified as heldto-maturity date.
Financial assets at fair value through profit and loss
Financial assets at fair value through profit and loss include derivative instruments acquired for hedging purposes to which hedge accounting is not applied. They are recognized at fair value using market prices on the balance sheet date. Realized and unrealized profit and loss resulting from changes in fair value are recognized in the finance income and expenses for the period in which they are incurred.
Loans and other receivables
Loans and other receivables are initially recognized at fair value and valued thereafter at amortized cost using the effective interest rate method. Substantial transaction costs are taken into account when calculating the acquisition cost.
Available-for-sale financial assets
Holdings and investments that do not belong to the other financial asset categories are classified under available-for-sale financial assets. The investments in this category are long-term unlisted shares and holdings that are closely linked with business operations and which the Group does not intend to sell or otherwise dispose of. Available-for-sale financial assets are valued at acquisition cost if no reliable market value is available, less any impairment loss.
Cash and cash equivalents
Cash and cash equivalents comprise cash in hand and in bank accounts and deposits held at call with banks.
Impairment losses on financial assets
An impairment loss is recognized in the income statement for a financial asset or group of assets if there is objective evidence that an event or events, such as a customer becoming insolvent, delinquency of payments and financial reorganisation or bankruptcy procedure of the customer, have had a significant impact on estimated future cash flows. The amount of the impairment loss is determined as the difference between the carrying amount of the financial asset and the discounted estimated future cash flows. Impairment losses on trade receivables can later be reversed through the income statement if it is believed that the customer will pay their liabilities. For available-forsale financial assets, impairment losses are permanent.
Financial liabilities
Financial liabilities are classified in the following categories: financial liabilities at fair value through profit and loss and financial liabilities at amortized cost.
Financial liabilities at fair value through profit and loss
Derivative instruments acquired for hedging purposes to which the principles of hedge accounting are not applied are classified under financial liabilities at fair value through profit and loss. Financial liabilities held for trading are recognized at fair value using the market prices on the balance sheet date. Realized and unrealized profit and losses resulting from changes in fair value are recognized under financial income and expenses for the period in which they are incurred.
Financial liabilities at amortized cost
Other financial liabilities are initially recognized at fair value, less any substantial transaction costs that are directly attributable to the acquisition or issue of the financial liability. Financial liabilities other than held for trading are recognized at amortized cost using the effective interest rate method, so that the costs related to the acquisition or issue of the liability are recognized in the income statement during its contractual term. Substantial transaction costs related to credit facility agreements are capitalized in the balance sheet and recognized in the income statement during the credit facility's contractual term. Interest payable on the financial liability is recognized through profit and loss on an accrual basis.
On initial recognition, the fair value of the liability component of convertible capital notes is estimated, in the lack of a reliably determined corresponding market interest rate, as the present value of the contractually determined stream of future cash flows discounted at a rate reflecting the investor's return taken into account the conversion option value to the investor and the early redemption call option value to the issuer. The liability component is subsequently measured at amortized cost. The equity component of the convertible capital notes is recognized in other equity reserves less the costs attributable to the issue and deferred tax liability.
2 euros per share of the conversion price for shares converted with the loan notes of the convertible capital notes is recognized in the share capital, and the remainder in the share premium account or the reserve for invested unrestricted equity. The balance sheet liability is reduced by the same proportion as that of the converted loan notes to the remaining notional value of the loan.
All changes in financial assets and liabilities are recognized using settlement date accounting.
Derivative instruments and hedge accounting
The Group's derivative instruments are recognized on the settlement date at acquisition cost, after which they are recognized at fair value.
The fair value of forward rate agreements is the profit or loss that would occur from closing the agreement, calculated at the market price on the balance sheet date. The fair value of interest rate and currency options is measured using commonly known option pricing models. The fair value of interest rate swaps is calculated by discounting future cash flows at current interest rates at the balance sheet date. Foreign exchange forwards and swaps are valued at forward prices on the balance sheet date. The fair value of electricity price forwards is the estimated profit or loss that would derive from closing the contracts at market prices on the balance sheet date.
Derivative instruments are recognized as defined in IAS 39 either as financial hedging instruments that are excluded from hedge accounting or as hedging instruments that qualify as cash flow hedges or as currency hedges of net investments in foreign operations. When hedge accounting is applied, the hedged item and the hedging relationship are identified and documented in accordance with the principles of hedge accounting. Hedge effectiveness is assessed retrospectively when initiating hedge accounting and prospectively on a regular basis, at least quarterly.
For balance sheet date, cash flow hedge accounting is applied when hedging against future changes in interest rates and in electricity spot market prices. When cash flow hedge accounting is applied, the effective portions of changes in the fair value of hedging instruments are recognized in shareholders' equity in the hedging reserve. Accumulated changes in fair value of the interest rate derivatives are recognized in financial income and expenses in the income statement for the period when the hedged business operation takes place. Correspondingly, accumulated changes in fair value of the electricity price forwards are recognized as an adjustment to purchases in operating profit in the income statement for the period when the hedged business operation takes place. When a hedging instrument matures, is sold, the hedging relationship is perceived to be ineffective or it is terminated, the cumulative gain or loss on the hedging instrument from the period when the hedge was effective remains separately recognized in equity until the forecast transaction occurs. The cumulative gain or loss is recognized immediately through profit and loss if the forecast transaction is no longer expected to occur. The ineffective part of the interest rate hedging relationship is recognized in the income statement under financial income or expenses and the ineffective part of the electricity price hedging relationship is recognized as an adjustment to purchases in operating profit.
The realized and fair values of foreign exchange differences of currency derivatives designated as effective hedges of net investments in foreign operations are recognized in equity as a correction item to translation differences. These items will be recognized through profit and loss on disposal of the foreign operation. The ineffective part of the hedging relationship is recognized in the income statement under financial income or expenses.
Accumulated interest income or expenses from interest rate swaps and currency swaps that have taken place during the financial period are recognized in the income statement under financial items, as are changes in the fair value of interest rate derivatives that are a part of the Group's risk management policy but are excluded from hedge accounting. Exchange differences rising from currency derivatives designated as hedges of accounts receivables and payables are recognized in other operating income and from currency derivatives used to hedge against exchange differences for borrowings, deposits and other monetary items recognized in financial income and expenses. Realized gains or losses from electricity price forwards are recognized under purchases as adjustment items. The fair values of derivative instruments are recognized under current assets and liabilities in the balance sheet.
Earnings per share
The basic earnings per share are calculated using the weighted average of shares in issue. The weighted average number of shares used to calculate the diluted earnings per share takes into account the diluting effect of outstanding options, conditional share-based payments, earnings-related share-based payments and convertible capital notes.
Dividend payment
Dividends proposed by the Board of Directors to the Annual General Meeting are not recorded in the financial statements until they have been approved by the shareholders at the Annual General Meeting.
Accounting principles requiring judgments by management and key sources of estimation uncertainty
To prepare the consolidated financial statements in accordance with International Financial Reporting Standards, management has to make estimates and assumptions about the future.
The Group's management exercises its discretion when taking decisions about the choice of accounting principles for the financial statements and their application. Estimates have been used when determining in the financial statements for example the realizable value of certain assets like deferred tax assets, the amount of provision related to pension obligations, impairments of trade receivables, the useful economic life of tangible and intangible assets, fair values of financial assets and liabilities including derivatives, income tax, the value of inventories, provisions and contingent liabilities, and for tests for impairment.
Determining the fair value of assets acquired when merging business operations
In major mergers of business operations the Group has used an external consultant when estimating the fair value of tangible and intangible assets. For tangible assets, comparisons have been made with the market prices of similar assets and estimates made of the reduction in value of the acquired assets due to age, wear and similar factors. The fair value of intangible assets has been determined based on estimates of the cash flows relating to the assets, since no information has been available on the market about purchases of similar assets.
Management believes that the estimates and assumptions used are sufficiently accurate as a basis for determining fair value. In addition the Group examines at least on every balance sheet date any indications of impairment in tangible and intangible assets.
Application of standards
As from 1 January 2011 the Group has applied the following new and revised standards and interpretations. Applying the new standards and interpretations has not had any impact on the result or shareholders' equity.
IFRIC 19 Extinguishing Financial Liabilities with Equity Instruments. The interpretation addresses the accounting by an entity when the terms of a financial liability are renegotiated and result in the entity issuing equity instruments to a creditor to extinguish all or part of the financial liability. Any difference between the carrying amount of the financial liability extinguished and the initial measurement amount of the equity instruments issued is included in the entity's profit or loss for the period. The interpretation has not had a material impact on the Group's financial statements.
IAS 24 (Amendment) Related Party Disclosures. The definition of a related party has been clarified and certain disclosure requirements in notes relating to government-related entities have been changed. The amendment has not had a material impact on the Group's financial statements.
IAS 32 (Amendment) Financial instruments: Presentation. Amendment relates to allow rights, options or warrants to acquire a fixed number of the entity's own equity instruments for a fixed amount of any currency to be classified as equity instruments provided the entity offers the rights, options or warrants pro rata to all of its existing owners of the same class of its own non-derivative equity instruments. The amendment has not had a material impact on the Group's financial statements.
Annual Improvements to IFRS. The Annual Improvements process is a collection of necessary but non-urgent amendments to IFRS standards implemented once per year. The most recent annual improvements incorporate amendments to a total of seven standards. The effects of the amendments vary according to the standard concerned. None of the amendments have had a material effect on the Group's financial statements.
New and amended standards and interpretations not yet effective in 2011
Certain new standards, amendments and interpretations to existing standards have been published that are mandatory for the Group's accounting periods beginning on or after 1 January 2011 or later periods and which the Group has not yet applied. The Group has identified the following standards as being relevant to its business.
IFRS 7 (Amendment) Financial Instruments: Disclosures – Derecognation (effective for financial periods beginning on or after 1 July 2011). The amendment will increase the transparency of disclosures of transfers of financial assets and enables users of the financial statements to evaluate the risks associated with transfers of financial assets and the effects of the risks on the entity's financial position, particularly with regard to the securitisation of financial assets. The amendment has not yet been approved for application in the EU.
IFRS 7 (Amendment) Financial instruments: Disclosures - Offsetting Financial Assets and Financial Liabilities (effective for financial periods beginning on or after 1 January 2013). The amendment requires more extensive disclosures in notes. The disclosures focus on quantitative information about recognised financial instruments that are offset in the statement of financial position, as well as those recognised financial instruments that are subject to master netting or similar arrangements irrespective of whether they are offset in the balance sheet.
IAS 12 (Amendment) Income Taxes (effective for financial periods beginning on or after 1 January 2012). IAS 12 previously required an entity to evaluate what proportion of the carrying amount of an asset recognised at fair value on the balance sheet will be recovered through use (e.g. rental revenue) and what proportion through sale. The amendment introduces the presumption that recovery of the carrying amount will normally happen through sale. The presumption applies to deferred taxes arising from investment properties, property, plant and equipment and intangible assets that are measured using the fair value or revaluation model. The amendment has not yet been approved for application in the EU.
IAS 1 (Amendment) Presentation of Financial Statements (effective for financial periods beginning on or after 1 July 2012). The most significant change concerns the grouping of other comprehensive income items based on whether they are potentially reclassifiable to profit or loss at a later date, subject to certain conditions being met. The amendment has not yet been approved for application in the EU.
IAS 19 (Amendment) Employee Benefits (effective for financial periods beginning on or after 1 January 2013). The amendment requires immediate recognition of actuarial gains and losses in other comprehensive income items, discontinuing the use of the corridor method and measuring finance cost based on net interest. The amendment has not yet been approved for application in the EU.
IAS 32 (Amendment) Financial instruments (effective for financial periods beginning on or after 1 January 2014). The amendments address inconsistencies in current practice when applying the offsetting criteria.
IFRS 9 Financial Instruments (effective date to be confirmed). IFRS 9 is the first phase in a broader project to replace IAS 39 with a new standard. Different measurement methods have been maintained, but they have been simplified. IFRS 9 divides financial assets into two classifications: those measured at amortised acquisition cost and those measured at fair value. The classification depends on the entity's business model and the characteristics of the contractual cash flows. The IAS 39 instructions on impairment and hedge accounting will remain in force. The new standard does not change the recognition and measurement of financial liabilities, with the exception of financial liabilities to which the fair value option is applied. The standard has not yet been approved for application in the EU.
IFRS 10 Consolidated Financial Statements (effective for financial periods beginning on or after 1 January 2013). In line with existing principles, the standard establishes control as the basis for consolidation. The standard also sets out how to apply the principle of control to identify whether an investor controls an investee. The standard has not yet been approved for application in the EU.
IFRS 11 Joint Arrangements (effective for financial periods beginning on or after 1 January 2013). The standard emphasises the importance of the rights and obligations arising from joint arrangements in accounting rather than the legal structure of such arrangements. There are two types of joint arrangements: joint operations and joint ventures. The standard also requires the equity method to be used in reporting on joint ventures in place of the previously allowed proportionate consolidation method. The standard has not yet been approved for application in the EU.
IFRS 12 Disclosure of Interests in Other Entities (effective for financial periods beginning on or after 1 January 2013). The standard covers the disclosure of information regarding interests in other entities, including subsidiaries, joint arrangements, special purpose entities and unconsolidated structured entities. The standard has not yet been approved for application in the EU.
IFRS 13 Fair Value Measurement (effective for financial periods beginning on or after 1 January 2013). The purpose of the standard is to increase consistency and reduce complexity by providing an exact definition of fair value and setting out in a single standard the requirements for measuring fair value and making related disclosures. The standard does not extend the use of fair value but provides a framework for situations where another standard requires or permits fair value measurements. The standard has not yet been approved for application in the EU.
IAS 27 (Revised in 2011) Consolidated and Separate Financial Statements (effective for financial periods beginning on or after 1 January 2013). The revised standard sets out the remaining requirements pertaining to separate financial statements after the inclusion of the provisions on control in IFRS 10. The revised standard has not yet been approved for application in the EU.
IAS 28 (Revised in 2011) Investments in Associates and Joint Ventures (effective for financial periods beginning on or after 1 January 2013). The revised standard sets out requirements for using the equity method of accounting for associates and joint ventures as a result of the publication of IFRS 11. The standard has not yet been approved for application in the EU.
Notes to the consolidated financial statements
figures are in millions of euros unless otherwise stated.
NOTES TO THE CONSOLIDATED INCOME STATEMENT
1. Operating segments
Componenta's business operations are divided into four operational segments, Turkey, Finland, Holland and Sweden.
The operations in Turkey comprise the iron foundry and machine shop in Orhangazi and the aluminium foundry and production unit for aluminium wheels in Manisa. The operations in Finland consist of the iron foundries in Iisalmi, Karkkila, Pietarsaari and Pori and the machine shops in Lempäälä and Pietarsaari, and the production unit for pistons in Pietarsaari. Componenta Finland Ltd, a subsidiary of Componenta Corporation, has sold the business operations and production machinery of the Nisamo machine shop during the financial year 2011. Machining operations at Componenta Finland Ltd's Pietarsaari unit have been terminated during the financial year 2011. The operations in the Netherlands comprise the iron foundries in Heerlen and Weert, the machine shop operations in Weert and the pattern shop in Tegelen. The operations in Sweden comprise the Främmestad machine shop and the Wirsbo forge. In addition, the statements contain figures for Other business which includes the
sales and logistics company Componenta UK Ltd in the UK, service and real estate companies in Finland, the Group's administrative functions and associated company Kumsan A.S. in Turkey. Transactions between operating business segments as well as between other business are based on market prices.
The main products sold by operations Turkey are machined and non-machined iron and aluminium cast components. The main products sold by operations Finland and Holland are machined and non-machined iron cast components. The main products sold by operations Sweden are machined and painted iron cast components and forged components. The main business of other business operations consists of the production of logistics services and the rental of office and industrial premises. In addition, Group service units are included in other business operations.
Segment assets and liabilities include items which the segment uses in its business operations. Unallocated items include financial and tax items, and items which are common to the whole Group.
Business segments 2011
| Other | One-time | |||||||
|---|---|---|---|---|---|---|---|---|
| MEUR | Turkey | Finland | Holland | Sweden | business | items*) | Eliminations | Group |
| External sales | 206.7 | 89.8 | 101.3 | 120.4 | 58.2 | 576.4 | ||
| Internal sales | 70.5 | 23.1 | 7.9 | 1.1 | 32.8 | -135.4 | 0.0 | |
| Total sales | 277.2 | 112.8 | 109.3 | 121.5 | 91.0 | -135.4 | 576.4 | |
| Share of the associated companies' result | 0.2 | 0.2 | ||||||
| Segment operating profit | 28.7 | -1.6 | -1.9 | 3.6 | 1.2 | -7.4 | -0.1 | 22.5 |
| Unallocated items | 1.6 | -25.5 | ||||||
| Net profit | -5.8 | -3.1 | ||||||
| Segment assets | 193.5 | 79.9 | 49.3 | 68.6 | 51.3 | -80.4 | 362.3 | |
| Shares in associated companies | 1.3 | 1.3 | ||||||
| Unallocated assets | 73.2 | |||||||
| Total assets | 436.8 | |||||||
| Segment liabilities | 40.7 | 22.2 | 17.4 | 31.0 | 21.0 | -29.5 | 102.9 | |
| Unallocated liabilities | 292.8 | |||||||
| Total liabilites | 395.7 | |||||||
| Capital expenditure in production facilities | 11.8 | 2.3 | 2.0 | 4.4 | 1.4 | 21.8 | ||
| Depreciation | -6.0 | -4.6 | -1.8 | -2.9 | -2.4 | -2.6 | -20.2 |
*) One-time items in operating profit relate to terminating machining operations at Pietarsaari unit, EUR -3.8 million, and sale of the business operations and production machinery of the Nisamo machine shop, EUR -1.8 million, both units belong to business segment Finland, and also restructuring costs in Holland, EUR -0.7 million, write-downs of prepayments paid to suppliers, EUR -0.7 million and other one-time items, EUR -0.4 million.
Business segments 2010
| Other | One-time | |||||||
|---|---|---|---|---|---|---|---|---|
| MEUR | Turkey | Finland | Holland | Sweden | business | items | Eliminations | Group |
| External sales | 161.5 | 85.0 | 81.1 | 84.2 | 39.9 | 451.6 | ||
| Internal sales | 43.3 | 18.6 | 4.0 | 0.5 | 25.5 | -91.9 | 0.0 | |
| Total sales | 204.8 | 103.6 | 85.1 | 84.7 | 65.3 | -91.9 | 451.6 | |
| Share of the associated companies' result | 0.2 | 0.2 | ||||||
| Segment operating profit | 15.2 | -0.2 | -1.5 | 0.8 | -1.0 | -0.1 | 0.4 | 13.5 |
| Unallocated items | -21.0 | |||||||
| Net profit | -0.1 | -7.5 | ||||||
| Segment assets | 210.8 | 85.7 | 48.7 | 51.5 | 53.9 | -70.0 | 380.6 | |
| Shares in associated companies | 1.3 | 1.3 | ||||||
| Unallocated assets | 38.4 | |||||||
| Total assets | 420.4 | |||||||
| Segment liabilities | 33.5 | 24.2 | 12.8 | 25.7 | 25.7 | -22.5 | 99.3 | |
| Unallocated liabilities | 250.4 | |||||||
| Total liabilites | 349.7 | |||||||
| Capital expenditure in production facilities | 4.8 | 2.4 | 0.4 | 0.5 | 0.5 | 8.5 | ||
| Depreciation | -4.9 | -4.8 | -1.5 | -2.1 | -2.7 | -16.0 |
Geographical areas 2011
| The | ||||||
|---|---|---|---|---|---|---|
| Nether | Other | |||||
| MEUR | Turkey | Finland | lands | Sweden | countries | Total |
| Non-current assets *) | 106.7 | 84.2 | 32.9 | 35.1 | 1.1 | 260.0 |
| Capital expenditure in | ||||||
| production facilities | 11.7 | 3.5 | 2.0 | 4.5 | 0.0 | 21.8 |
Geographical areas 2010
| The | ||||||
|---|---|---|---|---|---|---|
| Nether | Other | |||||
| MEUR | Turkey | Finland | lands | Sweden | countries | Total |
| Non-current assets *) | 133.1 | 89.0 | 33.0 | 31.4 | 1.6 | 288.1 |
| Capital expenditure in | ||||||
| production facilities | 4.8 | 2.8 | 0.4 | 0.5 | 0.0 | 8.5 |
*) Excluding non-current deferred tax assets, financial assets and other receivables.
External net sales by market area
| MEUR | 2011 | 2010 |
|---|---|---|
| Sweden | 107.5 | 81.7 |
| Germany | 106.4 | 76.0 |
| Turkey | 87.5 | 73.7 |
| UK | 64.9 | 47.5 |
| Finland | 57.8 | 53.8 |
| Benelux countries | 45.2 | 35.2 |
| France | 35.6 | 27.8 |
| Italy | 29.5 | 20.7 |
| Other European countries | 9.1 | 9.1 |
| Other countries | 33.0 | 26.1 |
| External net sales total | 576.4 | 451.6 |
Country-specific net sales reflect the destination where goods have been delivered, or requested to be delivered by the customer.
2. Business acquisitions
There were no business acquisitions in 2011 and 2010.
3. Business divestments
In December 2011, Componenta Corporation's subsidiary Componenta Finland Oy signed an agreement to sell the business operations and production machines of the Nisamo machine shop in Lempäälä. The buyer is a subsidiary of Tampereen Konepajat Oy, which will carry on machining operations at the current Nisamo premises as a machining subcontractor for Componenta. The effect of the sale of the Nisamo machine shop, through impairment of assets, on Componenta's pre-tax profit in 2011 is EUR -1.5 million.
Carrying values of the sold assets before write-downs
| MEUR | 2011 |
|---|---|
| Intangible assets | 0.1 |
| Tangible assets | 1.9 |
| Inventories | 0.1 |
| Total assets | 2.1 |
| Sales price | 0.6 |
| Write-downs of the assets/loss of the business divestment | 1.5 |
4. Other operating income
| MEUR | 2011 | 2010 |
|---|---|---|
| Rental income | 0.7 | 0.7 |
| Profit from sale of non-current assets | 0.4 | 0.0 |
| Exchange gains and losses of trade receivables | ||
| and payables, incl. hedges | 0.3 | -1.1 |
| Changes in fair value of investment properties | 0.6 | - |
| Other operating income | 0.3 | 0.9 |
| Other operating income total | 2.3 | 0.6 |
| Rental income from investment properties | ||
| included in net sales | 0,5 | 0,1 |
5. Operating expenses
| MEUR | 2011 | 2010 |
|---|---|---|
| Change in inventory of finished goods and work | ||
| in progress | 1.5 | 3.1 |
| Production for own use | 0.7 | 0.7 |
| Materials, supplies and products | -237.4 | -172.9 |
| External services | -44.5 | -30.0 |
| Personnel expenses | -131.0 | -119.6 |
| Rents | -5.4 | -4.6 |
| Maintenance costs of investment properties | -0.4 | -0.1 |
| Waste, property and maintenance | -26.5 | -21.6 |
| Energy | -41.6 | -36.9 |
| Sales and marketing | -1.7 | -2.2 |
| Computer software | -3.4 | -3.6 |
| Tools for production | -5.4 | -3.6 |
| Freights | -13.3 | -10.1 |
| Other operating expenses | -27.8 | -21.3 |
| Total operating expenses | -536.3 | -422.8 |
| Audit fees | -0.4 | -0.4 |
| Other fees | -0.3 | -0.1 |
| Total fees paid to auditors | -0.7 | -0.5 |
6. Employee benefit costs
| MEUR | 2011 | 2010 |
|---|---|---|
| Personnel expenses | ||
| Salaries and fees | -107.0 | -94.8 |
| Pension costs | -10.5 | -12.1 |
| Other personnel costs | -13.5 | -12.7 |
| -131.0 | -119.6 | |
| Average number of personnel by segment,excluding leased personnel |
| Turkey | 2,325 | 1,900 |
|---|---|---|
| Finland | 903 | 956 |
| Holland | 491 | 515 |
| Sweden | 315 | 301 |
| Other business | 201 | 181 |
| 4,234 | 3,853 |
Personnel expenses include costs related to share-based payment EUR -0.1 (-0.1) million.
7. Research and development costs
| MEUR | 2011 | 2010 |
|---|---|---|
| The following amounts have been recognized | ||
| in the income statement under research and | ||
| development costs | -2.4 | -1.8 |
8. Depreciation, amortization and write-down of non-current assets
| MEUR | 2011 | 2010 |
|---|---|---|
| Depreciation and amortization | ||
| Tangible assets | ||
| Buildings and structures | -2.3 | -2.6 |
| Investment properties | - | 0.0 |
| Machinery and equipment *) | -12.7 | -10.8 |
| Other tangible assets | -0.5 | -0.7 |
| -15.5 | -14.1 | |
| Intangible assets | ||
| Intangible rights | -0.2 | -0.1 |
| Computer software | -0.3 | -0.6 |
| Other capitalized expenditure | -1.6 | -1.2 |
| -2.1 | -2.0 | |
| Write-downs on machinery and equipment and | ||
| intangible assets **) | -2.6 | 0.0 |
| Total depreciation, amortization and write-downs | ||
| of non-current assets | -20.2 | -16.0 |
*) The units-of-production depreciation method is used in production machinery and equipment. Planned depreciation based on normal utilized capacity was EUR 18.1 (-19.8) million and capacity utilization correction was EUR 5.4 (9.0) million.
**) Write-downs on machinery and equipment and intangible assets relate to sale of Nisamo operations and closing down the Pietarsaari machine shop.
9. Financial income and expenses
| MEUR | 2011 | 2010 |
|---|---|---|
| Dividend income from available-for-sale financial | ||
| assets | 0.0 | 0.0 |
| Interest income from loans and other receivables | 0.6 | 0.6 |
| Exchange rate gains from financial assets and | ||
| liabilities recognized at amortized cost | 7.5 | 9.0 |
| Realized exchange rate gains from currency | ||
| derivatives | 4.2 | 5.2 |
| Other financial income | 1.1 | 2.1 |
| Change in fair value of financial assets and liabilities | ||
| held for trading | 0.0 | -1.6 |
| Ineffective portion of hedge accounting of net | ||
| investment in foreign entities | - | - |
| - fair values transferred from equity to profit | ||
| and loss | - | - |
| Ineffective portion of cash flow hedge accounting | 0.0 | 0.0 |
| Effective interest expenses for financial liabilities | ||
| recognized at amortized cost | -19.5 | -19.4 |
| Exchange rate losses from financial assets and | ||
| liabilities recognized at amortized cost | -4.8 | -1.8 |
| Other charges on financial liabilities valued at | ||
| amortized acquisition cost | -0.5 | -0.5 |
| Interest expenses and commissions for sold trade | ||
| receivables | -5.3 | -3.2 |
| Interest expenses for interest rate swaps | -0.8 | -1.8 |
| Realized exchange rate losses from currency | ||
| derivatives | -7.3 | -7.9 |
| Other financial expenses | -1.0 | -4.3 |
| Financial income and expenses, total | -25.9 | -23.5 |
Other operating income in note 4 includes a total of EUR 3.3 (0.2) million in exchange rate gains and losses arising from foreign currency denominated sales and purchases and EUR -3.0 (-1.2) million from foreign exchange derivatives designated to these items.
Interest income on interest rate swaps has been moved to compensate interest expenses. During 2011 the Group has not received any significant commissions from financial assets.
10. Income taxes
| MEUR | 2011 | 2010 |
|---|---|---|
| Income taxes | ||
| Income taxes for financial period | -5.0 | -0.2 |
| Change in deferred taxes (see note 19) | 5.3 | 2.8 |
| 0.3 | 2.5 |
Income tax reconciliation between tax expense computed at statutory rates in Finland (26.0% in 2011 and 2010) and income tax expense provided on earnings.
| MEUR | 2011 | 2010 |
|---|---|---|
| Profit before tax | -3.4 | -10.0 |
| Income tax using Finnish tax rate | 0.9 | 2.6 |
| Difference between Finnish tax rate and rates in | ||
| other countries | 0.7 | 0.6 |
| Tax exempt income | 0.2 | 0.0 |
| Non-deductible expenses | -0.3 | -0.7 |
| Effect of the change in corporate income tax rate | ||
| in other countries | -0.1 | - |
| Effect of the change in corporate income tax rate | ||
| in Finland *) | -1.1 | - |
| 0.3 | 2.5 |
*) The Finnish corporate income tax rate will decrease from 26.0% to 24.5% in 2012. As a result, deferred tax assets and liabilities relating to Finnish operations presented on the statement of financial position dated 31 December 2011 are valued at the new tax rate of 24.5%. The effect of the change in tax rate on deferred tax assets and liabilities is recorded through income statement.
11. Earnings per share
Basic earnings per share is calculated by dividing the profit attributable to shareholders of the parent company by the weighted average number of outstanding shares during the financial year.
| 2011 | 2010 | |
|---|---|---|
| Basic and diluted earnings per share | ||
| Numerator: Profit for the period attributable | ||
| to the shareholders of the parent company, | ||
| 1,000 EUR | -4,319 | -7,880 |
| Denominator: Weighted average number of | ||
| outstanding shares during the financial year, | ||
| 1,000 shares | 17,485 | 17,458 |
| Basic earnings per share, EUR | -0.25 | -0.45 |
| Earnings per share with dilution, EUR | -0.25 | -0.45 |
The weighted average number of shares used to calculate the diluted earnings per share takes into account the dilutive effect of all potential shares with such an effect. The dilutive effect of convertible capital notes that have not been converted into shares (Note 28) and the share-based incentive scheme for employees (Note 25) will not be taken into account in 2011 and 2010 since the dilution would increase the earnings per share.
NOTES TO THE CONSOLIDATED STATEMENT OF FINANCIAL POSITION
12. Tangible assets
| MEUR | 2011 | 2010 |
|---|---|---|
| Land and water areas | ||
| Acquisition cost at 1 Jan | 24.3 | 23.5 |
| Additions | 0.1 | 0.1 |
| Re-classifications | -0.7 | - |
| Translation differences | -2.4 | 0.8 |
| Book value at 31 Dec | 21.3 | 24.3 |
| MEUR | 2011 | 2010 |
| Buildings and constructions | ||
| Acquisition cost at 1 Jan | 111.6 | 108.4 |
| Additions | 0.4 | 0.5 |
| Disposals | -0.9 | - |
| Re-classifications | -13.2 | 0.0 |
| Translation differences | -4.4 | 2.7 |
| Acquisition cost at 31 Dec | 93.5 | 111.6 |
| Accumulated depreciation at 1 Jan | -44.3 | -40.3 |
| Accumulated depreciation on decreases and | ||
| re-classifications | 3.9 | -0.2 |
| Translation differences | 2.6 | -1.2 |
| Depreciation during the period | -2.3 | -2.6 |
| Accumulated depreciation at 31 Dec | -40.1 | -44.3 |
| Book value at 31 Dec | 53.4 | 67.3 |
| MEUR | 2011 | 2010 |
| Buildings and constructions, finance leasing | ||
| Acquisition cost at 1 Jan | 0.3 | 0.3 |
| Additions | - | - |
| Acquisition cost at 31 Dec | 0.3 | 0.3 |
| Accumulated depreciation at 1 Jan | 0.0 | 0.0 |
| Depreciation during the period | 0.0 | 0.0 |
| Accumulated depreciation at 31 Dec | 0.0 | 0.0 |
| Book value at 31 Dec | 0.2 | 0.3 |
| MEUR | 2011 | 2010 |
| Machinery and equipment | ||
| Acquisition cost at 1 Jan | 380.7 | 358.1 |
| Additions | 11.6 | 4.4 |
| Disposals | -13.9 | -4.9 |
| Re-classifications | -23.5 | 4.6 |
| Translation differences | -26.6 | 18.5 |
| Acquisition cost at 31 Dec | 328.3 | 380.7 |
| Accumulated depreciation at 1 Jan | -251.1 | -232.4 |
| Accumulated depreciation on increases | 0.0 | 0.0 |
| Accumulated depreciation on decreases and | ||
| re-classifications | 32.1 | 3.0 |
| Translation differences | 16.4 | -10.8 |
| Depreciation and write-downs during the | ||
| period | -13.7 | -10.8 |
| Accumulated depreciation at 31 Dec | -216.3 | -251.1 |
| Book value at 31 Dec | 112.0 | 129.6 |
| MEUR | 2011 | 2010 |
|---|---|---|
| Machinery and equipment, finance leasing | ||
| Acquisition cost at 1 Jan | 22.8 | 21.8 |
| Additions | 4.0 | 0.1 |
| Disposals | -4.4 | -0.2 |
| Re-classifications | -0.7 | -0.1 |
| Translation differences | 0.1 | 1.2 |
| Acquisition cost at 31 Dec | 21.8 | 22.8 |
| Accumulated depreciation at 1 Jan | -7.3 | -5.8 |
| Accumulated depreciation on decreases | 2.2 | 0.0 |
| Translation differences | 0.0 | -0.3 |
| Depreciation during the period | -1.4 | -1.2 |
| Accumulated depreciation at 31 Dec | -6.5 | -7.3 |
| Book value at 31 Dec | 15.3 | 15.5 |
| MEUR | 2011 | 2010 |
| Other tangible assets | ||
| Acquisition cost at 1 Jan | 9.4 | 12.2 |
| Additions | 0.2 | 0.3 |
| Disposals | -0.4 | -0.1 |
| Re-classifications | -0.6 | -3.7 |
| Translation differences | -0.9 | 0.6 |
| Acquisition cost at 31 Dec | 7.6 | 9.4 |
| Accumulated depreciation at 1 Jan | -6.7 | -6.8 |
| Accumulated depreciation on decreases and | ||
| re-classifications | 0.8 | 0.8 |
| Translation differences | 0.7 | -0.2 |
| Depreciation during the period | -0.5 | -0.7 |
| Accumulated depreciation at 31 Dec | -5.7 | -6.7 |
| Book value at 31 Dec | 1.9 | 2.7 |
| MEUR | 2011 | 2010 |
| Advance payments and fixed assets under | ||
| construction | ||
| Acquisition cost at 1 Jan | 5.6 | 5.3 |
| Additions | 6.2 | 0.9 |
| Disposals | -2.1 | 0.0 |
| Re-classifications | -0.7 | -0.9 |
| Translation differences | -0.8 | 0.3 |
| Book value at 31 Dec | 8.2 | 5.6 |
Total tangible assets 212.4 245.3 Minimum lease payments and present values of the payments by maturity classes relating to finance lease agreements are presented in note 28. Finance lease agreements
mainly comprise production equipment leases, with average maturity of 5-7 years. Lease payments are tied to short-term market interest rates. The agreements do not include restrictions on dividend payments, additional borrowing nor on entering into new lease agreements.
13. Goodwill
| MEUR | 2011 | 2010 |
|---|---|---|
| Acquisition cost at 1 Jan | 33.1 | 31.5 |
| Translation difference | -5.1 | 1.6 |
| Book value at 31 Dec | 28.0 | 33.1 |
Allocation of goodwill and impairment testing
Goodwill is allocated to cash generating units and most of the goodwill is recorded under the Turkey segment. The goodwill allocated to Turkey was EUR 26.5 (31.6) million at the end of 2011.
The value in use of the Turkey segment has been defined by using the present value method. The calculations have used 5-year discounted cash flow plans that are based on strategic plans approved by the management. The estimated cash flow of the segment is based on the use of property, plant and machinery in their present condition without any possible acquisitions. Within strategic plans preparations the average historical growth and EBITDA development have been taken into consideration. Cash flows beyond five years are calculated using the residual value method. Stable 1% annual growth in operating profit has been assumed when defining the residual value.
The discount rate used is the weighted average cost of capital before tax defined by Componenta. The factors in this are risk-free interest rate, market risk premium, the industry beta, borrowing costs and the target ratio for shareholders' equity to liabilities. Componenta has used a weighted average cost of capital of 10.3% in its calculations related to Turkey segment.
There was no need to record impairment losses on the basis of impairment testing in 2011 and in 2010.
Sensitivity analysis:
A sensitivity analysis was carried out on the Turkey segment using a variety of scenarios. These scenarios were achieved by altering the assumed values as follows: - by reducing profitability (EBITDA) 1-10%
- by raising the weighted average cost of capital 1-20%
It is the opinion of management that the changes in the basic assumptions in the theoretical scenarios mentioned above should not be interpreted as evidence that they are likely to occur. However, none of these scenarios would have resulted in the need to recognize an impairment loss for goodwill.
14. Intangible assets
| MEUR | 2011 | 2010 |
|---|---|---|
| Capitalized development costs | ||
| Acquisition cost at 1 Jan | 0.2 | 0.0 |
| Additions | 0.1 | 0.2 |
| Re-classifications | 0.0 | - |
| Acquisition cost at 31 Dec | 0.3 | 0.2 |
| Accumulated amortization at 1 Jan | 0.0 | 0.0 |
| Accumulated amortization on decreases | - | - |
| Amortization during the period | 0.0 | 0.0 |
| Accumulated amortization at 31 Dec | 0.0 | 0.0 |
| Book value at 31 Dec | 0.3 | 0.2 |
| MEUR | 2011 | 2010 |
| Intangible rights | ||
| Acquisition cost at 1 Jan | 1.4 | 1.3 |
| Additions | 1.1 | 0.1 |
| Disposals | - | 0.0 |
| Re-classifications | -0.1 | - |
| Translation differences | -0.2 | 0.1 |
| Acquisition cost at 31 Dec | 2.3 | 1.4 |
| Accumulated amortization at 1 Jan | -1.0 | -0.9 |
| Accumulated amortization on increases | 0.0 | 0.0 |
| Accumulated amortization on decreases and | ||
| re-classifications | 0.1 | 0.0 |
| Translation differences | 0.1 | 0.0 |
| Amortization during the period | -0.2 | -0.1 |
| Accumulated amortization at 31 Dec | -0.9 | -1.0 |
| Book value at 31 Dec | 1.3 | 0.4 |
| MEUR | 2011 | 2010 |
| Computer software | ||
| Acquisition cost at 1 Jan | 5.1 | 4.7 |
| Additions | 0.3 | 0.4 |
| Disposals | -0.1 | 0.0 |
| Re-classifications | 0.2 | 0.0 |
| Acquisition cost at 31 Dec | 5.5 | 5.1 |
| Accumulated amortization at 1 Jan | -3.1 | -2.5 |
| Accumulated amortization on decreases and | ||
| re-classifications | -0.6 | 0.0 |
| Amortization during the period | -0.3 | -0.6 |
| Accumulated amortization at 31 Dec | -4.0 | -3.1 |
| Book value at 31 Dec | 1.5 | 2.0 |
| MEUR | 2011 | 2010 |
| Other capitalized expenditure | ||
| Acquisition cost at 1 Jan | 9.5 | 8.1 |
| Additions | 0.1 | 1.2 |
| Disposals | -0.5 | 0.0 |
| Re-classifications | -0.1 | 0.3 |
| Acquisition cost at 31 Dec | 9.0 | 9.5 |
| Accumulated amortization at 1 Jan | -5.8 | -4.7 |
| Accumulated amortization on decreases and | ||
| re-classifications | 1.1 | 0.0 |
| Amortization during the period | -1.6 | -1.2 |
| Accumulated amortization at 31 Dec | -6.3 | -5.8 |
| Book value at 31 Dec | 2.7 | 3.7 |
| MEUR | 2011 | 2010 |
|---|---|---|
| Advance payments for intangible assets | ||
| Acquisition cost at 1 Jan | 0.3 | 0.2 |
| Additions | 0.7 | 0.3 |
| Re-classifications | 0.0 | -0.3 |
| Book value at 31 Dec | 1.0 | 0.3 |
| Total intangible assets | 6.7 | 6.7 |
15. Investment properties
| 2011 | MEUR | 2010 |
|---|---|---|
| 1.8 | Acquisition cost at 1 Jan | 2.3 |
| 0.0 | Additions | 0.0 |
| 0.0 | Acquisition cost at 31 Dec | 2.3 |
| 9.2 | Accumulated depreciation at 1 Jan | -0.5 |
| Depreciation during the period | 0.0 | |
| 0.6 | Accumulated depreciation at 31 Dec | -0.5 |
| 11.6 | Book value at 31 Dec | 1.8 |
In 2010, the company applied the acquisition cost model in the valuation of investment properties, recognizing the assets in the statement of financial position at their acquisition cost. In 2011, the company adopted the fair value model, recognizing the gains or losses arising from changes in the fair value of investment properties in net profit or loss for the period in which they arise. The fair value of properties transferred to the investment property category stood at EUR 9.2 million on 31 December 2011 and the difference between the earlier book value and the fair value, EUR 0.6 million after taxes, is recognized through equity. The transferred properties, located in Karkkila and Lempäälä, are primarily used by external tenants. The change in the fair value of old investment properties, EUR 0.6 million, is recorded in other operating income. The fair values of investment properties are based on assessment books prepared by an independent and professionally qualified evaluator and last updated in late autumn 2011. In 2011 the evaluation was prepared by Kiinteistötaito Peltola & Co Oy, mainly by using the yield value methods.
16. Shares in associated companies
| MEUR | 2011 | 2010 |
|---|---|---|
| Acquisition cost at 1 Jan | 1.3 | 1.1 |
| Disposals | 0.0 | 0.0 |
| Share of results of associated companies | 0.2 | 0.2 |
| Translation differences | -0.2 | 0.0 |
| Book value at 31 Dec | 1.3 | 1.3 |
Associated companies 31 Dec 2011
| Profit/ | Group | ||||
|---|---|---|---|---|---|
| Assets, | Liabilities, | Net sales, | Loss, | share of | |
| MEUR | MEUR | MEUR | MEUR | holding, % | |
| Kumsan A.S., Turkki | 5.2 | 0.7 | 5.5 | 0.8 | 25.1 |
| Kiinteistö Oy Niliharju, Helsinki | 0.7 | 0.2 | 0.0 | 0.0 | 25.0 |
Associated companies 31 Dec 2010
| Profit/ | Group | ||||
|---|---|---|---|---|---|
| Assets, | Liabilities, | Net sales, | Loss, | share of | |
| MEUR | MEUR | MEUR | MEUR | holding, % | |
| Kumsan A.S., Turkki | 5.5 | 0.8 | 5.5 | 1.0 | 25.1 |
| Kiinteistö Oy Niliharju, Helsinki | 0.7 | 0.2 | 0.0 | 0.0 | 25.0 |
The value of shares in associated companies does not include goodwill at 31 Dec 2011. All associated companies are unlisted.
17. Financial assets
| MEUR | 2011 | 2010 |
|---|---|---|
| Available-for-sale investments | ||
| Acquisition cost at 1 Jan | 0.5 | 0.4 |
| Additions | 0.2 | 0.1 |
| Disposals | - | 0.0 |
| Book value at 31 Dec | 0.7 | 0.5 |
Available-for-sale financial assets consist of non-listed shares, the biggest investment being Majakka Voima Oy. As the fair value of these shares is difficult to determine reliably, they are recognized at acquisition cost less any impairment losses. According to Componenta's view the fair value and acquisition cost do not differ essentially. Other financial assets are classified in fair value valuation method level 3, please see additional information in note 22. There were no gains or losses from the sale of available-for-sale financial assets in 2011.
18. Non-current receivables
| MEUR | 2011 | 2010 |
|---|---|---|
| From associates | ||
| Loan receivables | 0.1 | 0.1 |
| Other non-current receivables | ||
| Loan receivables | 3.2 | 4.8 |
| Other receivables | 1.3 | 1.2 |
| 4.5 | 5.9 | |
| Total non-current receivables | 4.5 | 6.0 |
From other non-current loan receivables EUR 2.6 (4.5) million (nominal currency SEK) mature in 2015 and EUR 0.6 (0.0) million in 2017. The Group's loan receivables are mainly related to company reorganizations and acquisitions or investments.
19. Deferred tax assets and liabilities
Changes in deferred taxes during the financial year 2011
| Recognized in | Recognized | Translation | |||
|---|---|---|---|---|---|
| MEUR | at 1 Jan 2011 | income statement | in equity | differences | at 31 Dec 2011 |
| Deferred tax assets | |||||
| Intercompany gain on sale of fixed assets | 1.1 | -0.4 | 0.0 | 0.7 | |
| Intercompany margin in inventory | 0.2 | 0.0 | 0.0 | 0.2 | |
| Provisions | 0.1 | 0.7 | 0.0 | 0.7 | |
| Tax losses carried forward | 28.1 | 3.3 | 0.0 | 31.4 | |
| Fair valuation of investment properties | 0.0 | 0.1 | 0.1 | ||
| Revaluation of other real estate | 0.9 | -0.1 | 0.8 | ||
| Other differences | 2.3 | 0.7 | 0.5 | -0.2 | 3.4 |
| Total | 32.6 | 4.3 | 0.6 | -0.1 | 37.3 |
| Offset with deferred tax liabilities | -11.6 | -11.0 | |||
| Total | 20.9 | 26.4 |
Deferred tax assets recognized for losses in Finland, in Sweden and in the Netherlands are based on the expected taxable income of the companies in these countries. It is estimated that these deferred tax assets can be utilized in 2-9 years.
| MEURDeferred tax liabilities | at 1 Jan 2011 | Recognized inincome statement | Recognizedin equity | Translationdifferences | at 31 Dec 2011 |
|---|---|---|---|---|---|
| Valuing tangible assets at fair value when merging businesses | 4.6 | -0.3 | -0.7 | 3.6 | |
| Accelerated depreciation | 5.6 | 0.3 | -0.9 | 5.0 | |
| Fair valuation of investment properties | 0.0 | 0.2 | 0.5 | 0.7 | |
| Revaluation of other real estate | 4.8 | -0.2 | 4.6 | ||
| Finance leases | 1.2 | -0.3 | 0.9 | ||
| Other differences | 5.1 | -0.6 | 0.1 | -0.1 | 4.5 |
| Total | 21.2 | -0.9 | 0.6 | -1.8 | 19.2 |
| Offset with deferred tax assets | -11.6 | -11.0 | |||
| Total | 9.6 | 8.3 |
Deferred income tax assets and liabilities are netted on the balance sheet primarily on a country-by-country basis when the country in question allows the balancing of taxable profits and losses between Group companies or when there is only one subsidiary in the country in question.
Changes in deferred taxes during the financial year 2010
| Recognized in | Recognized | Translation | |||
|---|---|---|---|---|---|
| MEUR | at 1 Jan 2010 | income statement | in equity | differences | at 31 Dec 2010 |
| Deferred tax assets | |||||
| Intercompany gain on sale of fixed assets | 1.5 | -0.4 | 1.1 | ||
| Intercompany margin in inventory | 0.1 | 0.0 | 0.0 | 0.2 | |
| Provisions | 0.1 | 0.0 | 0.1 | ||
| Tax losses carried forward | 23.7 | 4.4 | 28.1 | ||
| Revaluation of other real estate | 0.9 | 0.0 | 0.9 | ||
| Other differences | 3.4 | -0.7 | -0.4 | 2.3 | |
| Total | 29.6 | 3.3 | -0.4 | 0.0 | 32.6 |
| Offset with deferred tax liabilities | -12.9 | -11.6 | |||
| Total | 16.6 | 20.9 | |||
| Recognized in | Recognized | Translation | |||
| MEUR | at 1 Jan 2010 | income statement | in equity | differences | at 31 Dec 2010 |
| Deferred tax liabilities | |||||
| Valuing tangible assets at fair value when merging businesses | 4.6 | -0.3 | 0.3 | 4.6 | |
| Accelerated depreciation | 4.7 | 0.7 | 0.2 | 5.6 | |
| Revaluation of other real estate | 4.8 | 0.0 | 0.0 | 4.8 | |
| Finance leases | 0.8 | 0.3 | 1.2 | ||
| Other differences | 4.0 | 0.0 | 0.9 | 0.2 | 5.1 |
| Total | 19.0 | 0.6 | 0.9 | 0.7 | 21.2 |
| Offset with deferred tax assets | -12.9 | -11.6 | |||
| Total | 6.1 | 9.6 | |||
No deferred tax liability has been recognized for the undistributed profit of non-Finnish subsidiaries since possible distribution of profits would not give rise to any substantial tax effect.
20. Inventories
| MEUR | 2011 | 2010 |
|---|---|---|
| Raw materials and consumables | 15.9 | 12.3 |
| Work in progress | 7.7 | 6.0 |
| Finished products and goods | 20.8 | 21.4 |
| Other inventories | 13.8 | 12.3 |
| Advance payments | 0.2 | 0.2 |
| Total inventories | 58.4 | 52.2 |
Other inventories include mainly tools, patterns, fixtures and spare parts.
During the financial year 2011 an expense of EUR -0.1 (-0.2) million was recognized to reduce the book value of inventories to their net realizable value.
21. Trade and other short-term receivables
| MEUR | 2011 | 2010 |
|---|---|---|
| Trade receivables | 25.1 | 27.1 |
| Loan receivables | 1.5 | 1.8 |
| Derivative receivables | 0.1 | 3.9 |
| Prepayments and accrued income | 5.8 | 5.6 |
| Other receivables | 2.8 | 3.2 |
| Total trade and other short-term receivables | 35.2 | 41.7 |
Other receivables inlcude mainly value added tax receivables, and Prepayments and accrued income mainly prepaid accrued expenses.
Trade receivables by currency
| 2011 | 2010 | |
|---|---|---|
| % | % | |
| EUR | 89.3 | 82.5 |
| SEK | 6.0 | 9.4 |
| TRY | 3.3 | 4.8 |
| GBP | 1.5 | 2.9 |
| USD | - | 0.4 |
Assets held for sale
Componenta has begun to take measures to sell a unit manufacturing aluminium wheels for passenger cars in Manisa, Turkey. The non-current tangible and intangible assets and inventory of the aluminium wheel manufacturing unit are classified as current assets held for sale in accordance with IFRS 5. The sale of wheel manufacturing unit is expected to take place in 2012.
| MEUR | 2011 |
|---|---|
| Intangible assets | 0.0 |
| Tangible assets | 7.6 |
| Inventories | 2.3 |
| Total asset held for sale | 9.9 |
22. Classification of fair value of financial assets and liabilities
Financial assets and liabilities that are valued at fair value are classfified on three levels, depending on the estimated reliability of the valuation method:
LEVEL 1:
A reliable quoted market price exists for identical instruments quoted on an active market. Electricity price forwards are classified on this level, as their valuations are based on market prices for Nord Pool's similar standardized products.
LEVEL 2:
A market price quoted on the active market exists for similar but not identical instruments. The price may, however, be derived from observable market information. The fair values of interest rate and currency derivatives are calculated by deriving them from price information obtained on the active market and using valuation techniques that are commonly applied in the market. LEVEL 3:
There is no active market for the instrument, a fair market price cannot be reliably derived, and defining the fair value requires significant assumptions.
Fair values by classification of valuation method 2011
| MEUR | LEVEL 1 | LEVEL 2 | LEVEL 3 |
|---|---|---|---|
| Foreign exchange rate derivatives (OTC) | - | -0.3 | - |
| Interest rate derivatives (OTC) | - | -1.2 | - |
| Commodity derivatives | -1.1 | - | - |
| Available-for-sale investments | - | - | 0.7 |
Fair values by classification of valuation method 2010
| MEUR | LEVEL 1 | LEVEL 2 | LEVEL 3 |
|---|---|---|---|
| Foreign exchange rate derivatives (OTC) | - | -1.9 | - |
| Interest rate derivatives (OTC) | - | -0.4 | - |
| Commodity derivatives | 3.3 | - | - |
| Available-for-sale investments | - | - | 0.5 |
No financial assets or liabilities were transferred from one level to another during the financial year.
23. Cash and cash equivalents
| MEUR | 2011 | 2010 |
|---|---|---|
| Cash and cash equivalents included in the | ||
| statement of financial position | ||
| Cash at bank and in hand | 41.6 | 11.0 |
| Cash and cash equivalents included in the cash | ||
| flow statement | ||
| Cash at bank and in hand | 41.6 | 11.0 |
24. Share capital, share premium reserve and other reserves
| Share premium | Unrestricted | |||||
|---|---|---|---|---|---|---|
| Number of | Share capital, | reserve, | Cash flow | equity reserve, | Other reserves, | |
| shares, (1,000) | MEUR | MEUR | hedges, MEUR | MEUR | MEUR | |
| At 1 Jan 2010 | 17,458 | 21.9 | 15.0 | -1.3 | 32.5 | 2.1 |
| Redemption of convertible capital notes | - | - | - | - | - | 0.1 |
| Other comprehensive income | - | - | - | 3.6 | - | - |
| At 31 Dec 2010 | 17,458 | 21.9 | 15.0 | 2.3 | 32.5 | 2.2 |
| Directed share issue without consideration | 42 | - | - | - | - | - |
| Other comprehensive income | - | - | - | -3.0 | - | 0.7 |
| Other changes *) | - | - | - | - | -0.2 | 0.1 |
| At 31 Dec 2011 | 17,500 | 21.9 | 15.0 | -0.7 | 32.3 | 2.9 |
*) Other changes in unrestricted equity reserve include given donation to universities, EUR 0.2 million.
The translation differences EUR -41.0 (-18.1) million in the Statement of changes in consolidated shareholders' equity contain the translation differences arising from translating the financial statements of non-Euro area business units. Gains and losses from hedging the net investments in non-Euro area units are also included in translation differences if the conditions for hedge accounting are met.
The share premium reserve contains the amount paid for shares in a share issue that exceeds the nominal value of the share if the decision concerning the issue of convertible capital notes on which the subscriptions are based was made before the 2006 change in the Finnish Company Act. The amount exceeding the nominal value when converting convertible capital notes issued after the new Company Act came into force (1 September 2006) is recognized in the unrestricted equity reserve. Cash flow hegdes include the valuations of commodity and interest derivatives. The fair value changes of hedging instruments in hedging reserve, before taxes, was EUR -1.4 (3.7) million, the amount released to income statement from the hedging reserve, before taxes, was EUR 2.5 (-1.1) million and the change of deferred taxes in hedging reserve was EUR 1.0 (-1.3) million. Other reserves include the conversion option component of the convertible capital notes EUR 2.0 (2.0) million, share-based payments EUR 0.3 (0.2) million according to IFRS 2 and the difference of the fair value and book value of the properties re-classified to investment property class EUR 0.6 (0,0) million. Legal reserve EUR 0.0 (0.0) million is also included in other reserves.
After the closing date the Board of Directors has proposed to the Annual General Meeting that no dividend will be paid for 2011.
25. Share-based payment
Share-based incentive scheme
The Board of Directors of Componenta Corporation resolved on 10 March 2010 on a sharebased incentive scheme for the period 2010-2012. The scheme has three earning periods, the calendar years 2010, 2011 and 2012. Any bonuses will be paid in 2011, 2012 and 2013 as a combination of company shares and cash. The part to be paid in cash is intended to cover the taxes and tax-related costs arising from the bonus. The shares may not be disposed of for two years after the end of the earning period. If the employment or service of a key person ends during this restriction period, they must return any shares given as a bonus without consideration.
Any earnings from the incentive scheme were based in 2011 on Componenta Group's profit after financial items excluding one-time items and in 2010 the earnings were based on cash flow from operations and result after financial items. At the end of 2011 the target group contained 47 people. If the targets set for the scheme had been achieved in full, a maximum bonus of 182,000 and 161,500 Componenta Corporation shares would have been paid under the incentive scheme for the 2011 and 2010 earning periods. For the 2011 earning period in the scheme, 18,700 shares of Componenta Corporation will be paid, of which to the President and CEO 5,000 shares and other key personnel 13,700. For the 2010 earning period in the scheme, 41,940 shares, the President and CEO's share of this is 7,500 shares and other key personnel will receive altogether 34,440 shares. The scheme's impact on the Group's result before tax in 2011 was EUR -0.1 (-0.1) million.
Share-based incentive scheme 2011
| Vesting period begins | 1.1.2011 |
|---|---|
| Vesting period ends | 31.12.2011 |
| Release date of shares | 1.1.2014 |
| Maximum number of shares | 182,000 |
| Binding time left | 2 years |
| Share price at grant date, EUR | 5.95 |
| Share price at end of accounting period, EUR | 3.37 |
| Criteria | 100 % Result after financial items |
| excluding one-time items | |
| Combined pay-out of earnings criteria | 10% |
| Share ownership obligation | 2 years |
| Share ownership obligation ending date | 1.1.2014 |
| Number of personnel in scheme | 47 |
| Calculation of fair value of share bonus in 2011 | |
|---|---|
| Number of shares granted | 182,000 |
| Share price upon grant, EUR | 5.95 |
| Assumed dividend before payment of bonus, EUR | 0.00 |
| Fair value (proportion in shares), EUR | 5.95 |
| Share price 31 December 2011, EUR | 3.37 |
| Pay-out of earnings criteria, % | 10.3 |
| Assumed number of shares to be rewarded | 18,700 |
| Fair value of reward 31 December 2011, MEUR | 0.03 |
| Share-based incentive scheme 2010 | |
|---|---|
| Vesting period begins | 1.1.2010 |
| Vesting period ends | 31.12.2010 |
| Release date of shares | 1.1.2013 |
| Maximum number of shares | 161,500 |
| Number of shares rewarded | 41, 940 |
| Binding time left | 1 year |
| Share price at grant date, EUR | 4.61 |
| Share price at end of accounting period, EUR | 3.37 |
| Criteria | 70% Result after financial items |
| 30% Net cash flow from | |
| operating activities |
| Combined pay-out of earnings criteria | 15% for President and CEO and 30% |
|---|---|
| for other key personnel | |
| Share ownership obligation | 2 years |
| Share ownership obligation ending date | 1.1.2013 |
| Number of personnel in scheme | 45 |
| Calculation of fair value of share bonus in 2010 | |
| Number of shares granted | 161,500 |
| Share price upon grant, EUR | 4.61 |
| Assumed dividend before payment of bonus, EUR | 0.00 |
| Fair value (proportion in shares), EUR | 4.61 |
| Share price 31 December 2011, EUR | 3.37 |
| Pay-out of earnings criteria, % | 25.4 |
| Number of rewarded shares | 41,940 |
| Fair value of reward 31 December 2011, MEUR | 0.16 |
26. Pension obligations and other benefit plans
Pension obligations
Most of the Group's pension plans are defined contribution plans. In Sweden Componenta has pension schemes, Alecta/ITP and AMF Pension/Avtalspension SAF-LO, classified as multiemployer defined benefit schemes. However, since Alecta and AMF Pension have not been able to supply the required actuarial valuations, the Swedish pension plans have been treated as defined contribution plans in accordance with IAS 19.30 (a).
Other benefit plans
Under Turkish Labour Law, the Group is required to pay termination benefits to each employee who has completed one year of service and whose employment is terminated without due cause, is called up for military service, dies or who retires after completing 25 years of service (20 years for women) and achieves the retirement age (58 for women and 60 for men). The amount payable consists of one month's salary limited to a maximum of TL 2,805.04 for each year of service as of 31 December 2011 (31 December 2010: TL 2,623.33). The liability is not funded.
The provision has been shown under other benefit plans in note 27 and has been calculated by estimating the present value of the future probable obligation of the Group arising from the termination benefits to be paid to the employees. The following assumptions were used in the calculation of the total liability in 31 December 2011 and in 31 December 2010; Annual discount rate 4.66% (5.92%) and turnover rate to estimate the probability of retirement 95.75% (97.00%). The principal assumption is that the maximum liability for each year of service will increase in line with inflation and therefore the discount rate applied anticipates the effects of future inflation.
27. Provisions
Current
| Other | Re | |||
|---|---|---|---|---|
| benefit | organisation | Other | ||
| MEUR | plans | provisions | provisions | Total |
| 1 Jan 2011 | - | 0.0 | 1.2 | 1.2 |
| Translation differences | - | - | -0.1 | -0.1 |
| Additions to provisions | - | 1.0 | 0.4 | 1.4 |
| Utilized during the period | - | - | -0.3 | -0.3 |
| 31 Dec 2011 | - | 1.0 | 1.2 | 2.2 |
| 1 Jan 2010 | - | 0.1 | 1.0 | 1.1 |
| Translation differences | - | 0.0 | 0.0 | 0.0 |
| Additions to provisions | - | - | 0.1 | 0.1 |
| Utilized during the period | - | -0.1 | 0.0 | -0.1 |
| 31 Dec 2010 | - | 0.0 | 1.2 | 1.2 |
Other current provisions include EUR 0.7 (0.6) million in provisions for legal fees relating to occupational accidents. The amounts are based on the management's assessment.
Non-current
| Other | Re | Environ | |||
|---|---|---|---|---|---|
| benefit | organisation | mental | Other | ||
| MEUR | plans | provisions | provisions | provisions | Total |
| 1 Jan 2011 | 7.5 | 0.1 | 0.3 | 0.5 | 8.5 |
| Translation differences | -1.2 | - | - | - | -1.2 |
| Additions to provisions | 0.6 | - | - | 0.1 | 0.7 |
| Utilized during the period | -0.2 | - | 0.0 | - | -0.3 |
| 31 Dec 2011 | 6.6 | 0.1 | 0.3 | 0.6 | 7.6 |
| 1 Jan 2010 | 5.8 | 0.0 | 0.2 | 0.6 | 6.7 |
| Translation differences | 0.3 | - | - | - | 0.3 |
| Additions to provisions | 1.9 | 0.0 | 0.1 | - | 2.0 |
| Utilized during the period | -0.4 | - | - | -0.1 | -0.5 |
| 31 Dec 2010 | 7.5 | 0.1 | 0.3 | 0.5 | 8.5 |
The environmental provision relates to the closing of the landfill site used by the old production works in Karkkila in accordance with the demands of environmental authorities. Closure includes piling up various soil layers and landscaping the area. According to the current plan, the project will be completed in 2013.
| MEUR | 2011 | 2010 |
|---|---|---|
| Change in provisions recognized as operating | ||
| expenses in income statement | -1.5 | -1.5 |
28. Interest-bearing liabilities
| MEUR | 2011 | 2010 |
|---|---|---|
| Non-current interest-bearing financial liabilities | ||
| Loans from financial institutions | 34.1 | 137.9 |
| Finance lease liabilities | 9.5 | 8.4 |
| Pension loans | 9.5 | 12.1 |
| Capital notes | 31.4 | 35.3 |
| Convertible capital notes, liability portion | - | - |
| Bonds | 26.8 | 26.7 |
| Other liabilities | - | - |
| 111.2 | 220.4 | |
| Current interest-bearing financial liabilities | ||
| Loans from financial institutions | 164.0 | 5.1 |
| Finance lease liabilities | 2.6 | 2.9 |
| Pension loans | 2.6 | 3.9 |
| Capital notes | 4.1 | 2.9 |
| Convertible capital notes, liability portion | - | 2.2 |
| Bonds | - | - |
| Other liabilities*) | - | 3.5 |
| 173.3 | 20.4 | |
Total interest-bearing liabilities 284.5 240.8 *) The item current other liabilities includes commercial paper loans issued by the Group for EUR 0.0 (2.0) million.
Currency breakdown of interest-bearing financial liabilities
| 2011 | 2010 | ||
|---|---|---|---|
| % | % | ||
| Non-current | EUR | 86.2 | 82.7 |
| SEK | 4.2 | 2.2 | |
| TRY | 9.6 | 15.1 | |
| Current | EUR | 98.9 | 84.0 |
| SEK | 0.8 | 16.0 | |
| TRY | 0.3 | - | |
Cash flows are settled in the nominal currency of each liability agreement.
Range of nominal and effective interest rates for interest-bearing financial liabilities
| 2011 | 2011 | 2010 | 2010 | |
|---|---|---|---|---|
| Nominal | Effective | Nominal | Effective | |
| interest | interest | interest | interest | |
| rates % | rates % | rates % | rates % | |
| Loans from financial institutions | 3.6 - 10.8 | 3.6 - 10.8 | 3.0 - 10.2 | 3.0 - 10.2 |
| Finance lease liabilities | 1.6 - 15.3 | 1.5 - 19.0 | 1.3 - 7.8 | 1.5 - 7.8 |
| Pension loans | 4.0 - 4.8 | 4.0 - 4.8 | 3.8 - 5.4 | 3.8 - 5.4 |
| Convertible capital notes | - | - | 5.8 - 5.8 | 10.6 - 10.6 |
| Capital notes | 10.0 - 10.1 | 12.9 - 12.9 | 6.8 - 10.1 | 8.3 - 12.2 |
| Bonds | 8.0 - 8.0 | 9.8 - 9.8 | 8.0 - 8.0 | 8.8 - 8.8 |
| Commercial papers | - | - | 2.5 - 2.5 | 2.5 - 2.5 |
Repayment schedule for interest-bearing financial liabilities 2011
| MEUR | 2012 | 2013 | 2014 | 2015 | 2016 | 2017+ |
|---|---|---|---|---|---|---|
| Loans from financial institutions | 164.0 | 33.9 | 0.1 | 0.1 | 0.0 | - |
| Finance lease liabilities | 2.6 | 2.7 | 2.7 | 2.3 | 1.8 | - |
| Pension loans | 2.6 | 2.6 | 2.6 | 2.6 | 0.5 | 1.1 |
| Convertible capital notes | - | - | - | - | - | - |
| Capital notes | 4.1 | 4.1 | 4.1 | 23.2 | - | - |
| Bonds | - | 26.8 | - | - | - | - |
| Other interest-bearing liabilities | - | - | - | - | - | - |
| 173.3 | 70.1 | 9.5 | 28.2 | 2.4 | 1.1 |
Repayment schedule for interest-bearing financial liabilities 2010
| MEUR | 2011 | 2012 | 2013 | 2014 | 2015 | 2016+ |
|---|---|---|---|---|---|---|
| Loans from financial institutions | 5.1 | 137.6 | 0.1 | 0.1 | 0.1 | 0.0 |
| Finance lease liabilities | 2.9 | 1.8 | 1.8 | 1.8 | 1.6 | 1.3 |
| Pension loans | 3.9 | 2.6 | 2.6 | 2.6 | 2.6 | 1.6 |
| Convertible capital notes | 2.2 | - | - | - | - | - |
| Capital notes | 2.9 | 4.0 | 4.0 | 4.0 | 23.2 | - |
| Bonds | - | - | 26.7 | - | - | - |
| Other interest-bearing liabilities | 3.5 | - | - | - | - | - |
| 20.4 | 146.1 | 35.3 | 8.5 | 27.5 | 3.0 |
Maturity of finance lease liabilities
| MEUR | 2011 | 2010 |
|---|---|---|
| Minimum lease payments fall due as follows: | ||
| Not later than one year | 3.3 | 3.3 |
| Later than one year and not later | ||
| than five years | 10.5 | 7.7 |
| Later than five years | - | 1.4 |
| 13.8 | 12.3 | |
| Future financial expenses | -1.7 | -1.1 |
| 12.1 | 11.3 | |
| Present value of minimum lease payments: | ||
| Not later than one year | 2.6 | 2.9 |
| Later than one year and not later | ||
| than five years | 9.5 | 7.0 |
| Later than five years | - | 1.3 |
| 12.1 | 11.3 |
Capital notes
Convertible Capital Notes 2006
The final instalment of EUR 2.3 million of Componenta Corporation's Convertible Capital Notes dated 4 December 2006 was repaid with the interest in accordance with the terms on 7 December 2011. The accrued interest on the loan for the period 1 January - 4 December 2011 was recorded as an expense in the income statement. During 2011 there were no conversions of notes into shares.
Capital Notes 2006
The final instalment of EUR 2.9 million of Componenta Corporation's Capital Notes dated 17 November 2006 was repaid with the interest in accordance with the terms on 17 November 2011. The accrued interest on the loan for the period 1 January - 17 November 2011 was recorded as an expense in the income statement.
Capital Notes 2009
The Board of Directors of Componenta Corporation decided, under the authorization given by the extraordinary general meeting shareholders in 2009, to offer a subordinated capital loan. The loan issued on 28 September 2009 had a nominal amount of EUR 12.3 million with a rate of issue of 100 percent. If the terms and conditions for repayment are met, the loan will be repaid in three equal instalments on 28 September 2012, 28 September 2013 and 28 September 2014. The fixed interest of 10.10 percent p.a. will be paid annually in arrears on the loan capital on 28 September.
The loan is not secured. Receivables based on the capital loan rank lower than Componenta Corporation's other debt commitments. The principal and interest may be repaid only to the extent that Componenta Corporation's unrestricted equity and the sum of all the capital notes exceed on the payment date the amount of the loss as stated in Componenta Corporation's balance sheet approved for the previous financial year or in the balance sheet included in more recent financial statements. Should the conditions for repayment not be met on the due date, that part of the principal shall be repaid as is possible under the repayment conditions. Repayment of the remaining loan will be deferred to future financial periods such that repayments deferred in 2013 and 2014 will take place, if the conditions for repayment are met, on 28 September and after that annually on the basis of the first financial statements that make it possible to pay. Any unpaid interest shall remain a liability of Componenta and will earn annual interest of 2 percent in excess of the interest rate payable on the notes.
The loan has a balance sheet value on 31 December 2011 of EUR 12.2 million. Accrued interest for the period 28 September - 31 December 2011 has been recorded as an expense in the income statement and as a liability in accrued expenses.
Capital Notes 2010
The Board of Directors of Componenta Corporation decided in 2010 to offer a subordinated capital loan to a limited group of selected investors. The notes were issued on 15 September 2010 with the nominal value of EUR 23.4 million. The rate of issue was 100 percent. Notes are due for repayment in full at maturity on 15 September 2015. The fixed interest to be paid annually in arrears on 15 September is 10.00 percent p.a.
The loan is not secured. The loan is a subordinated debenture. The principal and interest may be repaid only to the extent that the amount of the unrestricted equity of Componenta and the amount of all capital notes of Componenta upon payment exceed the amount of loss as stated in the balance sheet approved for the preceeding financial year or with the balance sheet included in more recent financial statements. Should the conditions for repayment not be met at maturity, the principal shall be repaid in part to the extent that this is possible. The repayment of the remaining part is deferred until the financial statements meet the conditions under which it can be paid. Any unpaid interest shall earn interest of 2 percent in excess of the interest payable on the notes.
The loan has a balance sheet value on 31 December 2011 of EUR 23.2 million. The accrued interest on the loan from 15 September to 31 December 2011 has been recorded as an expense in the income statement and as a liability in accrued expenses.
Bonds
Bond 2010
The Board of Directors of Componenta Corporation decided in 2010 to offer a bond to a limited group of selected investors. The bond was issued on 29 September 2010 with the nominal value of EUR 26.9 million. The rate of issue was 100 percent. The bond is due for repayment in full at maturity on 29 September 2013. The fixed interest to be paid annually in arrears on 29 September is 8.00 percent p.a.
The bond is unsecured. Receivables based on the bond rank equal to Componenta Corporation's other unsecured debt commitments. The bond has a balance sheet value on 31 December 2011 of EUR 26.8 million. The accrued interest on the loan from 29 September to 31 December 2011 has been recorded as an expense in the income statement and as a liability in accrued expenses.
29. Current non-interest bearing liabilities
| MEUR | 2011 | 2010 |
|---|---|---|
| Trade payables to others | 61.4 | 52.1 |
| Trade payables to associated companies | 0.1 | 0.1 |
| Accrued expenses and deferred income | 23.9 | 27.1 |
| Derivative liabilities | 2.3 | 1.1 |
| Advances received | 0.3 | 0.0 |
| Other current liabilities | 5.0 | 9.1 |
| Current non-interest bearing liabilities total | 92.9 | 89.5 |
| Trade payables by currency | |||
|---|---|---|---|
| -- | -- | -- | ---------------------------- |
| 2011 | 2010 | |
|---|---|---|
| % | % | |
| EUR | 54.9 | 57.5 |
| TRY | 25.8 | 23.9 |
| SEK | 17.2 | 17.0 |
| GBP | 1.3 | 0.9 |
| USD | 0.7 | 0.8 |
The most significant items in other current liabilities are value added tax payables, withholding taxes and custom payments.
30. Carrying values and fair values of financial assets and liabilities by category
| Financial assets | ||||
|---|---|---|---|---|
| 2011 | 2011 | 2010 | 2010 | |
| MEUR | Carrying value | Fair value | Carrying value | Fair value |
| ITEMS RECOGNIZED AT FAIR VALUE | ||||
| Financial assets recognized at fair value through profit and loss | ||||
| Derivatives classified as held for trading | 0.7 | 0.7 | 0.4 | 0.4 |
| Financial items included in hedge accounting | ||||
| Derivatives (effective and ineffective portion) | 0.0 | 0.0 | 3.4 | 3.4 |
| ITEMS RECOGNIZED AT AMORTIZED COST AND AT COST | ||||
| Loans and other receivables | ||||
| Cash and cash equivalents | 41.6 | 41.6 | 11.0 | 11.0 |
| Loan receivables | 3.4 | 3.4 | 4.9 | 4.9 |
| Trade receivables | 25.1 | 25.1 | 27.1 | 27.1 |
| Available-for-sale financial assets | ||||
| Shares and holdings | 0.7 | 0.7 | 0.5 | 0.5 |
| Financial liabilities | ||||
| 2011 | 2011 | 2010 | 2010 | |
| MEUR | Carrying value | Fair value | Carrying value | Fair value |
| ITEMS RECOGNIZED AT FAIR VALUE | ||||
| Financial liabilities recognized at fair value through profit and loss | ||||
| Derivatives classified as held for trading | 2.1 | 2.1 | 2.7 | 2.7 |
| Financial items included in hedge accounting | ||||
| Derivatives (effective and ineffective portion) | 1.2 | 1.2 | 0.3 | 0.3 |
| ITEMS RECOGNIZED AT AMORTIZED COST | ||||
| Other financial liabilities | ||||
| Loans from financial institutions | 198.1 | 197.5 | 143.0 | 143.2 |
| Finance leases | 12.1 | 11.8 | 11.3 | 11.3 |
| Pension loans | 12.1 | 11.9 | 16.0 | 16.4 |
| Convertible capital notes - liability component | - | - | 2.2 | 2.3 |
| Capital notes | 35.4 | 35.5 | 38.2 | 38.3 |
| Bonds | 26.8 | 26.0 | 26.7 | 26.7 |
The fair values of interest-bearing liabilities have been calculated by discounting the future cash flows for the contract with market rates corresponding to the terms of the contract on the closing date or with estimates of a fair rate.
The carrying values of trade receivables and payables, commercial papers and finance leases tied to short-term market rates can be assumed to correspond with sufficient accuracy to their fair values due to the short maturity and interest rate renewal periods. The trade receivables are recorded in the statement of financial position adjusted by any impairment.
Commercial papers - - 2.0 2.0 Trade payables and other debt 61.7 61.7 53.7 53.7
31. Capital management
Componenta Group's objective for capital management is to ensure the Group's viability to operate in all circumstances. The sector in which Group operates is by nature relatively capital intensive and thus requires active measures to optimize the capital structure. The strategically important acquisitions and investments in the past few years have had an impact on the Group's capital structure.
The Board of Directors and Corporate Executive Team regularly monitor the capital structure of the Group. In management reporting the different capital notes are included in shareholders' equity. The Group monitors, in particular, the equity ratio, with capital notes included in equity. The company has set the strategic financial target to 40 percent by the end of 2015.
The Group's capital structure is managed among other things with the dividend policy (with the approval of shareholders) and by issuing different types of capital notes. During 2011 the Group has continued its efforts to reduce working capital, for example by optimizing inventories, enhancing the collection of customer receivables and further expanding the sale of trade receivables.
In addition to internal monitoring, the Group reports to its lenders the financial covenants relating to the capital structure as stated in the loan agreements. The Group aims to achieve the interest margin incentives defined in the loan agreements in order to reduce interest expenses.
The key indicators for capital structure
| 31.12.2011 | 31.12.2010 | |
|---|---|---|
| Net gearing, capital notes included in equity | 271.2% | 170.5% |
| Equity ratio, capital notes included in equity | 17.5% | 26.4% |
32. Financial risk management
The financial risks relating to Componenta Group's business operations are managed in accordance with the Group Treasury Policy approved by the Componenta Board of Directors. The objective is to protect the Group against unfavourable changes in the financial markets and to secure the performance of the Group and its financial position. Management of financial risks is centralized to the Group Treasury. The price risk of electricity is hedged with electricity derivatives by an external consultant. In electricity purchase and hedging the external consultant acts according to Componenta's instructions which follow Componenta's purchase and risk policy.
Refinancing and liquidity risks
The Group aims to ensure the availability of financing by spreading the repayment schedules, sources of funding and financial instruments in its loan portfolio. The proportion of one source of funding may not exceed a limit set in the Group Treasury Policy. The most important financing instruments used in the Group are the 5-year syndicated credit facility dated 28 June 2007 with a nominal value of EUR 164 million at the reporting date, various capital notes and bonds, bilateral loans, a commercial paper programme (EUR 150 million), the sale of receivables without recourse, and lease financing.
In 2011 new bilateral bank loans were drawn, totally EUR 34.9 million, to refinance short term bank loans. The sale of receivables was also extended considerably during the year. The syndicated loan matures in June 2012 and the company intends to either extend it or replace it. In the latter case the company's principal financing banks have taken the decision on credit facilities totalling some EUR 100 million for 2012 and 2013. The company has also negotiated additional financing of EUR 50 million from other banks. In addition, the Board of Directors is proposing to strengthen the company's equity capital by altogether EUR 20 million trough an increase in share capital and a hybrid bond.
The company still continues negotiations with several financing institutions concerning financing totalling EUR 30 million in connection with the previously prescribed alternative.
Repayment schedule of the long-term interest bearing debt is presented in the note 28. The Group Treasury Policy states that the Group's liquidity should cover its near-term commitments. The minimum liquidity is defined in the Group Treasury Policy. In addition to cash reserves, the Group ensures its liquidity with unused committed credit facilities. The cash and cash equivalents and unused committed credit facilities of the Group amounted to EUR 41.6 million (EUR 75.5 million) at the end of the fiscal year.
Installments (nominal values) and interest payments on financial liabilities 2011
| MEUR | 2012 | 2013 | 2014 | 2015 | 2016 | 2017+ |
|---|---|---|---|---|---|---|
| Loans from financial institutions | -164.0 | -33.9 | -0.1 | -0.1 | 0.0 | - |
| Finance leases | -2.6 | -2.7 | -2.7 | -2.3 | -1.8 | - |
| Pension loans | -2.6 | -2.6 | -2.6 | -2.6 | -0.5 | -1.1 |
| Capital notes | -4.1 | -4.1 | -4.1 | -23.2 | - | - |
| Convertible capital notes | - | - | - | - | - | - |
| Bonds | - | -26.8 | - | - | - | - |
| Commercial papers | - | - | - | - | - | - |
| Trade payables and other debt | -61.7 | - | - | - | - | - |
| Interest expenses on loans | -13.4 | -7.4 | -3.4 | -2.6 | -0.1 | -0.1 |
| Interest rate swaps, net | -0.2 | -0.3 | -0.1 | 0.0 | - | - |
| -248.7 | -77.8 | -12.9 | -30.8 | -2.4 | -1.2 |
The figures have not been discounted to correspond to their present values. The figures are valid only on the closing date and the amount of interest on floating rate contracts may vary from actual cash flows. The repayment table for financial liabilities is not meant to portray the Group's expected total cash flow.
There is a significant possibility of variation in future cash flows for currency derivatives concerning the exchange rate difference and for this reason they are not included in the repayment table. Electricity forwards are essentially connected to physical electricity supplies and therefore are treated as part of future electricity purchases. This being the case they are not reported in the Group's cash flow table for financial liabilities. The expected cash flows for currency derivatives, electricity forwards and interest rate options at the closing date correspond to their fair values (Note 33).
For finance leases, repayments of the finance lease liability and interest expenses are used as a sufficient approximation of actual rents paid. Only changes in interest rates cause a small difference in the actual cash flow. The interest to be paid has been calculated with prevailing nominal interest rates. The actual interest payments on variable interest contracts will, therefore, probably differ slightly from the figures in the table.
Installments (nominal values) and interest payments on financial liabilities 2010
| MEUR | 2011 | 2012 | 2013 | 2014 | 2015 | 2016+ |
|---|---|---|---|---|---|---|
| Loans from financial institutions | -5.1 | -137.8 | -0.1 | -0.1 | -0.1 | 0.0 |
| Finance leases | -2.9 | -1.8 | -1.8 | -1.8 | -1.6 | -1.3 |
| Pension loans | -3.9 | -2.6 | -2.6 | -2.6 | -2.6 | -1.6 |
| Capital notes | -2.9 | -4.1 | -4.1 | -4.1 | -23.4 | - |
| Convertible capital notes | -2.3 | - | - | - | - | - |
| Bonds | - | - | -26.9 | - | - | - |
| Commercial papers | -2.0 | - | - | - | - | - |
| Trade payables and other debt | -53.7 | - | - | - | - | - |
| Interest expenses on loans | -16.8 | -13.3 | -6.0 | -3.2 | -2.6 | -0.1 |
| Interest rate swaps, net | -0.8 | -0.3 | -0.3 | 0.0 | 0.0 | - |
| -90.4 | -160.0 | -41.8 | -11.8 | -30.3 | -3.2 |
Foreign exchange risk
The Group's foreign exchange risk is divided into transaction risk, which arises from income and expenses denominated in foreign currencies, and translation risk, which arises from equity investments and related profit or loss denominated in foreign currencies. The transaction position is calculated from the foreign currency denominated trade receivables and trade payables in the balance sheet. These form the part of the transaction position in which changes affect 'Operating profit'. The other part of transaction exposure includes items where the impact of changes in exchange rates are recorded in the income statement in 'Financial income and expenses' such as foreign currency cash in hand and at bank and the Group's internal and external foreign currency loans. The hedging level for both parts of the transaction position is set at 90 - 110%. If the total exposure for a specific currency is less than EUR 3 million, however, the hedging decision is taken on a case by case basis.
It is possible to deviate from this definition of the exposures in order to maintain cost-efficiency. This has been done with Componenta Turkey's foreign currency items where the hedging level for both transaction positions is set at 70-130%. However, these hedging levels may stand at 0-130% at the discretion of the Group's President & CEO.
The translation position is determined from the shareholders' equity and retained earnings of those foreign subsidiary and associated companies of the Group whose business currency is not the euro. The translation risk to the Group's equity is related to the British, Turkish and Swedish subsidiaries as their equity denominated in local currency is converted to euros. As stated in the Group Treasury Policy, the translation position is hedged 0 - 100% at the discretion of the Group's President & CEO.
To hedge against changes in exchange rates, the Group uses foreign currency loans and deposits and other natural hedging relationships, as well as common derivative instruments such as foreign currency forward contracts and options, for which pricing on the market is reliable. Foreign currency derivatives mature in less than one year.
The currencies with the most significant currency risk exposure are the Turkish lira, the Swedish krona and the British pound sterling.
The table below shows the sensitivity for price changes of the Group's open currency exposures, including the currency derivatives used for hedging (note 33) in both transaction and translation position.
| Closing rate | Open total | Estimate on potential | Impact of change in currency rate + / - | ||
|---|---|---|---|---|---|
| 31.12.2011 | 31.12.2011 | exposure MEUR | currency rate change % | To income statement | To equity |
| EUR/USD | 1.2939 | -0.8 | 10 | 0.1 / -0.1 | - |
| EUR/GBP | 0.8353 | 4.9 | 10 | -0.1 / 0.1 | -0.4 / 0.4 |
| EUR/TRY | 2.4438 | 136.9 | 10 | 0.2 / -0.2 | -12.6 / 15.4 |
| EUR/SEK | 8.9120 | -0.5 | 10 | 1.0 / -1.2 | -0.9 / 1.1 |
| Closing rate | Open total | Estimate on potential | Impact of change in currency rate + / - | ||
| 31.12.2010 | 31.12.2010 | exposure MEUR | currency rate change % | To income statement | To equity |
| EUR/USD | 1.3362 | -0.1 | 10 | 0.0 / -0.0 | - |
| EUR/GBP | 0.86075 | 3.7 | 10 | -0.1 / 0.1 | -0.2 / 0.3 |
| EUR/TRY | 2.0491 | 147.4 | 10 | -0.1 / 0.1 | -13.3 / 16.3 |
| EUR/SEK | 8.9655 | -3.9 | 10 | 0.3 / -0.4 | 0.0 / -0.0 |
Interest rate risk
The interest rate risk to which fair values and the cash flow are exposed arises mainly from the Group's loan portfolio, sold trade receivables and finance leases. Because of the cyclical nature of the Group's customer markets, the treasury policy states that the average period for renewing the interest rates of the Group's net liabilities should be at least six months but no more than two years. The average interest fixing period for net liabilities is 13 months (17 months). The interest rate risk is managed by spreading the loan portfolio between fixed and floating interest rate loans and investments. The interest rate risk is spread among several interest rate renewal periods and fluctuations in interest rates affect the Group's financial position in stages. The interest rate risk is managed also by using interest rate derivatives. Interest rate derivatives have been used to increase the number of fixed interest-bearing liabilities, so as to extend the average interest rate renewal period.
Interest rate derivatives that hedge the Group's result are divided into derivatives included in cash flow hedge accounting as defined in IAS 39, and assets and liabilities held for trading. Therefore interest rate fluctuations do not affect the carrying values of interest-bearing items but only interest expenses and income recognized in the income statement. Changes in the fair values of interest rate derivatives classified as held for trading affect financial income and expenses in income statement whereas changes in the fair values of interest rate swaps included in cash flow hedge accounting affect the Group's shareholders' equity.
INCOME STATEMENT - FINANCIAL EXPENSES
| 31.12.2011 for 2012 | 31.12.2010 for 2011 | ||||
|---|---|---|---|---|---|
| Forecast change | Sensitivity interest | Forecast change | Sensitivity interest | ||
| MEUR | in financial expenses | rate curve +100bp | in financial expenses | rate curve +100bp | |
| Interest bearing financial liabilities | -0.3 | -1.4 | -1.0 | -1.3 | |
| Interest rate swaps, interest expenses and income net | -0.3 | 0.7 | 0.6 | 0.8 | |
| Interest rate swaps, change in fair value | - | 0.9 | - | 0.7 |
SHAREHOLDERS' EQUITY - HEDGING RESERVE
| Change in fair value | Change in fair value interest rate | |
|---|---|---|
| interest rate curve +100bp | curve +100bp | |
| Interest rate swaps, net | ||
| (Included in cash flow hedge accounting) | 0.2 | 0.2 |
The forecast change in financial expenses shows the change in interest expenses if interest rates actually follow the yield curve as priced by the market at the point of reference. The sensitivity analysis estimates the parallel rise in the interest rate curve at 1.0 percentage points. A positive change indicates a decrease and a negative change an increase in interest expenses.
The assumption in the calculations is that loans that mature are refinanced with comparable instruments. It is also assumed that no repayments are made, thus the calculations only take into account the interest rate renewal risk regarding interest-bearing loans and their nominal interest rates. An exception are the interest rate swaps where it is not assumed that the instruments will be rolled-over when they mature.
Credit risk
Each group company is primarily responsible for the credit risk of its own trade receivables. The Group Credit Controlling sets guidelines, monitors credit risk management, and evaluates the creditworthiness of customers and their ability to fulfil their payment obligations.
The Group has no significant concentrations of trade receivables. The customer base is widespread and the trade receivables from any single customer on a consolidated basis do not exceed 5% of the Group's total trade receivables. 94% of sales is to Europe and is spread among several countries.
Many customers are financially sound and solid companies, but in individual cases reports on payment behaviour and capital adequacy from credit rating companies are used to assist in credit decisions. The Group reduces its credit risk exposure by selling its trade receivables to financing companies without recourse.
The overdue trade receivables and customer payment behaviour is monitored on a regular basis at least every fortnight. If overdue trade receivables exceed the limits set by Group's management, the Group Credit Controlling is prepared to suspend deliveries until payment obligations have been met.
Credit losses for the financial year were EUR -0.3 (-0.0) million. The credit losses came mainly from Moventas, whose two subsidiaries filed for corporate restructuring in summer 2011. The corporate restructuring programmes were approved in December and thus the amount of credit loss for Componenta was confirmed. The Group's credit loss risk of EUR 70.9 (46.8) million corresponds to the carrying value of financial assets, excluding available-for-sale financial assets. In accordance with the treasury policy approved by the Board of Directors, surplus cash reserves are invested only with institutions that are considered to carry low credit risk. The maximum period of the investment is limited to one week and maximum amounts are defined for each counterparty.
The Group has received bank guarantees and bills of exchange against advances paid and trade receivables from some of its subcontractors, suppliers and customers. The total amount of the guarantees and other commitments received from subcontractors and suppliers is EUR 2.3 million. The total amount of guarantees and other commitments received from customers is EUR 1.6 million. The guarantees cannot be transferred or resold and they cannot be pledged forward.
Outstanding trade receivables fall due as follows
| MEUR | 31.12.2011 | 31.12.2010 |
|---|---|---|
| Not due | 20.1 | 13.5 |
| Overdue | ||
| less than 1 month | 2.8 | 6.9 |
| 1 - 3 months | 1.4 | 5.9 |
| 3 - 6 months | 0.2 | 0.7 |
| more than 6 months | 0.5 | 0.1 |
| 25.1 | 27.1 |
33. Derivative instruments
Nominal values of derivative instruments
| 2011 | 2010 | |
|---|---|---|
| MEUR | Nominal value | Nominal value |
| Foreign exchange rate derivatives *) | ||
| Foreign exchange rate forwards | 2.0 | 11.0 |
| Foreign exchange rate swaps | 80.8 | 69.2 |
| Foreign exchange options | 2.8 | 2.8 |
| Interest rate derivatives | ||
| Interest rate options | 10,0 | 28,0 |
| Interest rate swaps | ||
| Maturity in less than a year | - | 28,0 |
| Maturity after one year but less | ||
| than five years | 80,0 | 60,0 |
| Commodity derivatives | ||
| Electricity price forwards | ||
| Maturity in less than a year | 5,2 | 4,0 |
| Maturity after one year but less | ||
| than five years | 5,4 | 5,7 |
*) Foreign exchange rate derivatives mature in less than a year.
Fair values of derivative instruments
| 2011 | 2011 | 2011 | 2010 | |
|---|---|---|---|---|
| Fair value, | Fair value, | Fair value, | Fair value, | |
| MEUR | positive | negative | net | net |
| Foreign exchange rate derivatives | ||||
| Foreign exchange rate forwards | 0.0 | 0.0 | 0.0 | -0.3 |
| Foreign exchange rate swaps | 0.7 | -0.9 | -0.3 | -1.5 |
| Foreign exchange options | 0.0 | 0.0 | 0.0 | -0.1 |
| Interest rate derivatives | ||||
| Interest rate options | 0.0 | -0.1 | -0.1 | -0.3 |
| Interest rate swaps | 0.0 | -1.2 | -1.2 | -0.3 |
| Commodity derivatives | ||||
| Electricity price forwards | 0.0 | -1.1 | -1.1 | 3.3 |
The fair value of derivative instruments corresponds to the gain or loss that would be recognized in the income statement if the contract were closed on the balance sheet date. The fair value of interest rate options, foreign exchange and electricity price forwards is calculated using the prevailing market prices. Interest rate swaps are valued using discounted cash flow analysis using the yield curve prevailing on the reporting date.
The realized and unrealized exchange rate differences for currency derivatives hedging against changes in exchange rates for foreign currency trade receivables and trade payables in the balance sheet are recognized in 'Other operating income'. Exchange rate differences for foreign currency derivatives hedging against foreign currency loans and the accumulated interest difference and interest difference valuations are recognized in 'Financial income and expenses'. The fair values of interest rate derivatives that are not included in cash flow hedge accounting as defined in IAS 39 are recognized in 'Financial income and expenses'. Unrealized valuation gains and losses of derivatives are recognized in current receivables and liabilities.
Sensitivity analysis of electricity price forwards
Changes in the market prices of electricity price forwards would have the following impact on the fair values:
| Change in market price of electricity price forwards | |||
|---|---|---|---|
| 2011 | 2010 | ||
| MEUR | 15 % / -15% | 15 % / -15% | |
| Change in fair value of electricity price forwards | 1,4 / -1,4 | 2,0 / -2,0 | |
The sensitivity of the open foreign currency and interest rate exposures to changes in market prices is presented in Note 32.
Derivative instruments included in cash flow hedge accounting
| 2011Nominal value | 2011Fair value, effective | 2010Nominal value | 2010Fair value, effective | |
|---|---|---|---|---|
| MEUR | portion of hedges | portion of hedges | ||
| Interest rate derivatives | ||||
| Interest rate swaps | 5.0 | -0.1 | 23.0 | -0.2 |
| Commodity derivatives | ||||
| Electricity price forwards | 10.6 | -0.8 | 9.7 | 3.3 |
The fair values of interest rate and commodity derivatives designated as cash flow hedges against changes in market prices have been recognized in the hedging reserve of equity and will be recognized through profit and loss when the hedged item affects profit and loss or its occurance is no longer likely. Income statement effects arising from interest rate derivatives are
recognized in 'Financial income and expenses' and from electricy forwards in purchases included in Operating Profit.
No exchange rate differences have been capitalized for the acquisition cost of subsidiaries during the current or previous year.
Derivative instruments included in hedge accounting on net investments in foreign entities
No foreign exchange derivatives have been designated in the fiscal year or in the previous year as specifically hedges of translation items for foreign currency denominated shareholders' equity. Hedge accounting on net investments in foreign entities does therefore not include derivatives.
Derivate instruments held for trading
| 2011 | 2011 | 2010 | 2010 | |
|---|---|---|---|---|
| MEUR | Nominal value | Fair value | Nominal value | Fair value |
| Foreign exchange rate derivatives | ||||
| Foreign exchange rate forwards | 2.0 | 0.0 | 11.0 | -0.3 |
| Foreign exchange rate swaps | 80.8 | -0.3 | 69.2 | -1.5 |
| Foreign exchange options | 2.8 | 0.0 | 2.8 | -0.1 |
| Interest rate derivatives | ||||
| Interest rate options | 10.0 | -0.1 | 28.0 | -0.3 |
| Interest rate swaps | 75.0 | -1.1 | 65.0 | -0.1 |
Derivative instruments classified as held for trading are part of the Group's risk management but the hedge accounting principles of IAS 39 are not applied.
The Group has no embedded derivatives at the balance sheet date.
34. Other leases
Group as lessee
| Minimum lease payment schedule for other non-cancellable leases | |
|---|---|
| -- | ----------------------------------------------------------------- |
| MEUR | 2011 | 2010 |
|---|---|---|
| Not later than one year | 1.5 | 1.5 |
| Later than one year but not later than five years | 3.1 | 3.9 |
| Later than five years | 0.5 | 0.1 |
| Minimum lease payments total | 5.1 | 5.5 |
Other non-cancellable leases mainly comprise real estate, production equipment and car leases. The leases mature on average in 3-5 years. Some of the leases contain call options at a strike price that can be expected to correspond to the fair value at the expiry date.
The 2011 income statement includes lease payments of EUR -3.4 (-3.9) million for other non-cancellable leases.
Group as lessor
The minimum lease receivable schedule for other non-cancellable leases
| MEUR | 2011 | 2010 |
|---|---|---|
| Not later than one year | 0.7 | 0.7 |
| Later than one year but not later than five years | 3.0 | 3.1 |
| Minimum lease payments total | 3.7 | 3.8 |
Some of the production and office space that is currently not needed by the Group is leased to external parties. The rental agreements are from one to three years in length and normally contain an option to extend the lease period after the lease expires. Some of the property is classified, in accordance with IFRS, as investment property.
35. Contingent liabilities
| 10.2 | 15.3 |
|---|---|
| - | - |
| 282.0 | 222.0 |
| 3.1 | 4.7 |
*) The increase in pledges is due to value increase of the collateral.
**) Other commitments in 2011 include bank guarantees of EUR 2.3 (3.7) million.
On June 9, 2010 Componenta B.V. received a writ of summons of Wärtsilä Finland Oy in which Wärtsilä claimed that Componenta shall pay compensations to Wärtsilä amounting to EUR 8.5 million due to certain defects discovered in main bearing caps delivered by Componenta in 2007 and 2008. Componenta considers the claims of Wärtsilä to be unfounded and Componenta has denied the claims. Componenta has firstly challenged the jurisdiction of the district court of Roermond, the Netherlands, to hear the claim. The district court of Roermond ruled in July 2011 in favour of Componenta and decided that the district court of Roermond does not have juridiction in the case. Wärtsilä has filed an appeal which is pending in the Court of Appeals.
In addition to the processes described above some group companies are involved in few lawsuits and disputes relating to their business. Management believes that the outcome of such lawsuits and disputes will not have a material adverse effect on the Group's result or financial position when taking into consideration the grounds presented for the lawsuits and disputes, insurance coverage in force and the extent of Group's business.
Secured liabilities
| MEUR | 2011 | 2010 |
|---|---|---|
| Liabilities secured with real estate or business | ||
| mortgages | ||
| Loans from financial institutions | 0.1 | 0.2 |
| Pension loans | 5.6 | 7.5 |
| 5.7 | 7.7 | |
| Liabilities secured with pledges | ||
| Loans from financial institutions | 164.0 | 108.8 |
| Pension loans | - | 0.3 |
| 164.0 | 109.1 |
29 Financial statements
COMPONENTA Annual report 2011
36. Related party disclosures
| Group companies | |||
|---|---|---|---|
| Company | Domicile | Group share of holding, % | Parent company share of holding, % |
| Componenta Belgium N.V. | Sint-Lambrechts-Woluwe, Belgium | 100.0 | - |
| Componenta B.V. | Belfeld, The Netherlands | 100.0 | 100.0 |
| Componenta Dökümcülük Ticaret ve Sanayi A.S. | Orhangazi, Turkey | 93.6 | 93.6 |
| Componenta Finland Oy | Karkkila, Finland | 100.0 | 100.0 |
| Componenta France S.A.S. | Nanterre, France | 100.0 | - |
| Componenta Främmestad AB | Essunga, Sweden | 100.0 | - |
| Componenta Germany GmbH | Korshenbroich, Germany | 100.0 | - |
| Componenta Italy Srl | Milan, Italy | 100.0 | - |
| Componenta Netherlands B.V. | Tegelen, The Netherlands | 100.0 | - |
| Componenta Sweden AB | Kristinehamn, Sweden | 100.0 | - |
| Componenta UK Ltd | Staffordshire, United Kingdom | 93.6 | - |
| Componenta USA, LLC | Iowa, USA | 100.0 | - |
| Componenta Wirsbo AB | Surahammar, Sweden | 97.0 | - |
| Karkkilan Koskikiinteistö Oy | Karkkila, Finland | 81.0 | 66.9 |
| Karkkilan Lääkärikeskus Oy | Karkkila, Finland | 100.0 | 100.0 |
| Karkkilan Valimokiinteistö Oy | Karkkila, Finland | 100.0 | - |
| Kiinteistö Oy Ala-Emali | Karkkila, Finland | 98.2 | 98.2 |
| Kiinteistö Oy Pietarsaaren Tehtaankatu 13 | Pietarsaari, Finland | 100.0 | - |
| Kiinteistö Oy Uusporila | Karkkila, Finland | 100.0 | 31.8 |
| Kiinteistö Oy Ylä-Emali | Karkkila, Finland | 100.0 | 100.0 |
| Luoteis-Uudenmaan Kiinteistöt Oy | Karkkila, Finland | 100.0 | 100.0 |
| Pietarsaaren Vanha Valimo Oy | Pietarsaari, Finland | 100.0 | - |
| Uudenmaan Rakennustiimi Oy | Karkkila, Finland | 100.0 | 100.0 |
| Vanhan Ruukin Kiinteistöpalvelu Oy | Karkkila, Finland | 100.0 | 100.0 |
Transactions with related parties
| MEUR | 2011 | 2010 |
|---|---|---|
| Sale of goods to associated companies | - | - |
| Purchase of goods from associated companies | -0.5 | -0.3 |
| Purchase of services from associated companies | - | - |
| -0.5 | -0.3 |
The prices of transactions with related parties are based on the Group's general price lists
in force during the financial year.
Fees, salaries and other benefits of the Board of Directors, President and CEO and other members of the Corporate Executive Team (CET)
| Salaries, fees & | ||||
|---|---|---|---|---|
| 2011, EUR | fringe benefits | Bonuses | Share bonuses | Total |
| Board of Directors | 175,000 | 0 | 0 | 175,000 |
| President and CEO | 317,387 | 0 | 98,969 | 416,356 |
| Other members of CET | 1,429,656 | 93,617 | 187,369 | 1,710,642 |
| Salaries, fees & | ||||
|---|---|---|---|---|
| 2010, EUR | fringe benefits | Bonuses | Share bonuses | Total |
| Board of Directors | 175,480 | 0 | 0 | 175,480 |
| President and CEO | 272,688 | 0 | 0 | 272,688 |
| Other members of CET | 861,939 | 0 | 0 | 861,939 |
In addition to the remuneration shown above the President and person acting as deputy for the President, have additional pension agreements of EUR 60,000 a year. The agreement includes old age pension after reaching the age of retirement, paid up pension policy rights if the employment of the insured is terminated before reaching the age entitling to old age pension as stated in the insurance policy, disability insurance, and life insurance for the duration of employment, of the paid up pension policy and of pension. The retirement age of the President and CEO is 63 years.
Receivables from and payables to associated companies are listed in notes 18, 21 and 29.
Other related party disclosures
Componenta has granted loan receivables totalling EUR 0.5 (0.5) million to persons who are related parties in this and previous financial years.
37. Events after end of period
Yrjö Julin, COO, is no longer continuing in the service of Componenta, for personal reasons. Olli Karhunen has been appointed Senior Vice President (SVP), Operations Development, being responsible for developing operations at Componenta. Seppo Erkkilä has been appointed SVP, Operations Finland and a member of the Corporate Executive Team. Antti Lehto has been appointed SVP, Sales and Product Development and a member of the Corporate Executive Team. Karhunen, Erkkilä and Lehto report to CEO Heikki Lehtonen. The appointments are valid as of 1 March 2012.
Other country responsibilities remain unchanged: Hakan Göral, Senior Vice President, Operations, Turkey, Michael Sjöberg, Senior Vice President, Operations, Sweden and Patrick Steensels, Senior Vice President, Operations, the Netherlands. The senior vice
presidents have business responsibility for operations in their respective countries and they report to Heikki Lehtonen.
Componenta decided in January 2012 to strengthen the Group's balance sheet. The company's Board of Directors proposes to strengthen equity by altogether EUR 20 million through an increase in share capital and a hybrid bond. In addition, the company has started the process of selling off the unit in Manisa, Turkey, that produces aluminium wheels for passenger cars
Componenta reviewed the Group's financial objectives in January 2012. As a result, the Board of Directors decided to give up the growth target for net sales in 2015 and to concentrate on reaching the targets of financial solidity and profitability.
Parent company income statement 1.1.-31.12. (according to Finnish Accounting Standards)
| Parent company income statement 1.1.-31.12. | ||
|---|---|---|
| MEUR | 2011 | 2010 |
| NET SALES | 26.1 | 20.1 |
| Other operating income | 0.7 | 0.8 |
| Operating expenses | -19.9 | -15.5 |
| Depreciation, amortization and write-down of | ||
| non-current assets | -0.4 | -0.4 |
| OPERATING PROFIT | 6.4 | 5.0 |
| Financial income | 17.5 | 18.3 |
| Financial expense | -28.5 | -26.1 |
| Financial income and expenses in total | -11.0 | -7.8 |
| PROFIT AFTER FINANCIAL ITEMS | -4.6 | -2.9 |
| Extraordinary items | 0.6 | - |
| PROFIT AFTER EXTRAORDINARY ITEMS | -4.0 | -2.9 |
| Change in untaxed reserves | - | - |
| Income taxes | 0.2 | - |
| PROFIT/LOSS FOR THE FINANCIAL PERIOD | -3.8 | -2.9 |
| Parent company balance sheet 31.12. | ||
|---|---|---|
| MEUR | 2011 | 2010 |
| ASSETS | ||
| NON-CURRENT ASSETS | ||
| Intangible assets | 1.7 | 1.0 |
| Tangible assets | 0.4 | 0.4 |
| Investment | 318.0 | 240.7 |
| 320.0 | 242.2 | |
| CURRENT ASSETS | ||
| Non-current receivables | 41.1 | 99.4 |
| Current receivables | 12.7 | 7.4 |
| Cash and bank accounts | 14.7 | 2.4 |
| 68.4 | 109.2 | |
| TOTAL ASSETS | 388.5 | 351.4 |
| LIABILITIES AND SHAREHOLDERS' EQUITY | ||
| SHAREHOLDERS' EQUITY | ||
| Share capital | 21.9 | 21.9 |
| Share premium account | 15.1 | 15.1 |
| Legal reserve | 0.0 | 0.0 |
| Unrestricted equity reserve | 33.1 | 33.3 |
| Retained earnings | 51.0 | 53.9 |
| Profit/loss for the financial period | -3.8 | -2.9 |
| Shareholders' equity | 117.4 | 121.4 |
| LIABILITIES | ||
| Non-current liabilities | ||
| Capital loans | 31.6 | 35.7 |
| Other interest bearing liabilities | 33.1 | 136.8 |
| Current liabilities | ||
| Capital loans | 4.1 | 2.9 |
| Other interest bearing liabilities | 196.0 | 48.0 |
| Non-interest bearing liabilities | 6.4 | 6.6 |
| Liabilities | 271.1 | 230.0 |
| TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | 388.5 | 351.4 |
Group development
Group development 2007 - 2011
| MEUR | 2007 | 2008 | 2009 | 2010 | 2011 |
|---|---|---|---|---|---|
| Net sales | 634.7 | 681.4 | 299.6 | 451.6 | 576.4 |
| Operating profit | 42.7 | 47.3 | -15.4 | 13.5 | 22.5 |
| Financial income and expenses | -20.0 | -28.7 | -21.8 | -23.5 | -25.9 |
| Profit/loss after financial items | 22.7 | 18.6 | -37.2 | -10.0 | -3.4 |
| Profit for the financial period | 21.6 | 13.9 | -28.7 | -7.5 | -3.1 |
| Order book at period end | 129.0 | 73.6 | 58.8***) | 94.6**) | 99.5*) |
| Change in net sales, % | 75.3 | 7.4 | -56.0 | 50.7 | 27.6 |
| Share of export and foreign activities in net sales, % | 89.1 | 87.6 | 82.7 | 88.1 | 90.0 |
*) Order book on 12 January 2012
**) Order book on 10 January 2011
***) Order book on 15 January 2010
Group development 2007 - 2011 excluding one-time items
| MEUR | 2007 | 2008 | 2009 | 2010 | 2011 |
|---|---|---|---|---|---|
| Net sales | 634.7 | 681.4 | 299.6 | 451.6 | 576.4 |
| Operating profit | 34.9 | 47.9 | -15.4 | 13.6 | 29.8 |
| Financial income and expenses | -20.0 | -28.7 | -21.8 | -23.5 | -25.9 |
| Profit/loss after financial items | 14.9 | 19.2 | -37.2 | -9.9 | 3.9 |
| 31.12.2007 | 31.12.2008 | 31.12.2009 | 31.12.2010 | 31.12.2011 | |
|---|---|---|---|---|---|
| Statement of financial position total, MEUR | 497 | 448 | 388 | 420 | 437 |
| Net interest bearing debt, MEUR | 243 | 262 | 242 | 230 | 243 |
| Invested capital, MEUR | 371 | 339 | 317 | 311 | 326 |
| Return on investment, % | 11.9 | 13.6 | -4.1 | 5.0 | 7.8 |
| Return on equity, % | 23.0 | 14.8 | -45.1 | -10.3 | -5.8 |
| Equity ratio, % | 20.3 | 15.9 | 17.5 | 16.8 | 9.4 |
| Net gearing, % | 241.3 | 369.1 | 356.4 | 325.0 | 591.4 |
| Investments in non-current assets, MEUR | 64.5 | 46.0 | 17.9 | 8.5 | 21.8 |
| Number of personnel at period end | 4,314 | 4,294 | 3,614 | 4,016 | 4,240 |
| Average number of personnel | 4,206 | 4,395 | 3,684 | 3,853 | 4,234 |
Net sales by market area
| MEUR | 1–12/2010 | 1–12/2011 |
|---|---|---|
| Sweden | 81.7 | 107.5 |
| Germany | 76.0 | 106.4 |
| Turkey | 73.7 | 87.5 |
| UK | 47.5 | 64.9 |
| Finland | 53.8 | 57.8 |
| Benelux countries | 35.2 | 45.2 |
| France | 27.8 | 35.6 |
| Italy | 20.7 | 29.5 |
| Other European countries | 9.1 | 9.1 |
| Other countries | 26.1 | 33.0 |
| Total | 451.6 | 576.4 |
Quarterly development of net sales by market area
| MEUR | Q1/10 | Q2/10 | Q3/10 | Q4/10 | Q1/11 | Q2/11 | Q3/11 | Q4/11 |
|---|---|---|---|---|---|---|---|---|
| Sweden | 15.5 | 21.9 | 19.5 | 24.8 | 29.8 | 30.2 | 21.6 | 25.9 |
| Germany | 15.2 | 20.9 | 18.6 | 21.2 | 25.3 | 28.0 | 26.8 | 26.2 |
| Turkey | 14.3 | 19.1 | 18.8 | 21.5 | 21.4 | 25.2 | 21.3 | 19.7 |
| UK | 9.9 | 12.0 | 12.5 | 13.1 | 15.9 | 17.2 | 15.7 | 16.1 |
| Finland | 11.0 | 13.6 | 12.9 | 16.3 | 14.7 | 15.7 | 13.0 | 14.4 |
| Benelux countries | 7.1 | 9.4 | 8.7 | 10.0 | 11.5 | 11.4 | 10.5 | 11.9 |
| France | 6.1 | 7.1 | 6.5 | 8.1 | 9.6 | 10.1 | 7.0 | 8.9 |
| Italy | 3.8 | 4.2 | 5.9 | 6.8 | 7.1 | 6.7 | 7.8 | 7.9 |
| Other European countries | 2.2 | 2.2 | 2.5 | 2.3 | 2.4 | 2.5 | 2.2 | 2.1 |
| Other countries | 6.1 | 6.9 | 6.5 | 6.6 | 6.4 | 9.7 | 8.2 | 8.7 |
| Total | 91.2 | 117.3 | 112.3 | 130.7 | 144.1 | 156.5 | 134.1 | 141.7 |
Group development excluding one-time items
| MEUR | 1-12/2010 | 1-12/2011 |
|---|---|---|
| Net sales | 451.6 | 576.4 |
| Operating profit | 13.6 | 29.8 |
| Net financial items *) | -23.5 | -25.9 |
| Profit after financial items | -9.9 | 3.9 |
| *) Net financial items are not allocated to business segments |
Group development by business segment excluding one-time items
| Operating profit, MEUR | 1–12/2010 | 1–12/2011 |
|---|---|---|
| Turkey | 15.2 | 28.7 |
| Finland | -0.2 | -1.6 |
| Holland | -1.5 | -1.9 |
| Sweden | 0.8 | 3.6 |
| Other business | -1.0 | 1.2 |
| Internal items | 0.4 | -0.1 |
| Componenta total | 13.6 | 29.8 |
Group development by quarter excluding one-time items
| MEUR | Q1/10 | Q2/10 | Q3/10 | Q4/10 | Q1/11 | Q2/11 | Q3/11 | Q4/11 |
|---|---|---|---|---|---|---|---|---|
| Net sales | 91.2 | 117.3 | 112.3 | 130.7 | 144.1 | 156.5 | 134.1 | 141.7 |
| Operating profit | 0.3 | 4.0 | 3.4 | 5.9 | 8.5 | 10.7 | 3.8 | 6.8 |
| Net financial items *) | -5.9 | -6.2 | -5.5 | -5.9 | -5.3 | -6.6 | -7.3 | -6.7 |
| Profit after financial items | -5.6 | -2.2 | -2.1 | 0.0 | 3.2 | 4.1 | -3.5 | 0.1 |
*) Net financial items are not allocated to business segments
Quarterly development by business segment excluding one-time items
| Operating profit, MEUR | Q1/10 | Q2/10 | Q3/10 | Q4/10 | Q1/11 | Q2/11 | Q3/11 | Q4/11 |
|---|---|---|---|---|---|---|---|---|
| Turkey | 3.2 | 3.3 | 4.5 | 4.3 | 8.3 | 8.5 | 7.3 | 4.6 |
| Finland | -0.6 | 0.7 | -0.9 | 0.6 | -1.3 | 0.5 | -1.8 | 1.0 |
| Holland | -0.1 | 0.2 | -1.0 | -0.5 | 0.3 | 0.9 | -2.2 | -1.0 |
| Sweden | -1.4 | 0.0 | 0.6 | 1.6 | 1.2 | 1.5 | 0.2 | 0.7 |
| Other business | -0.7 | -0.1 | 0.0 | -0.2 | 0.1 | -0.4 | 0.2 | 1.2 |
| Internal items | 0.0 | -0.2 | 0.3 | 0.2 | -0.2 | -0.3 | 0.0 | 0.3 |
| Componenta total | 0.3 | 4.0 | 3.4 | 5.9 | 8.5 | 10.7 | 3.8 | 6.8 |
Group development
| MEUR | 1-12/2010 | 1-12/2011 |
|---|---|---|
| Net sales | 451.6 | 576.4 |
| Operating profit | 13.5 | 22.5 |
| Net financial items *) | -23.5 | -25.9 |
| Profit after financial items | -10.0 | -3.4 |
*) Net financial items are not allocated to business segments
Group development by business segment
| Net sales, MEUR | 1–12/2010 | 1–12/2011 |
|---|---|---|
| Turkey | 204.8 | 277.2 |
| Finland | 103.6 | 112.8 |
| Holland | 85.1 | 109.3 |
| Sweden | 84.7 | 121.5 |
| Other business | 65.3 | 91.0 |
| Internal items | -91.9 | -135.4 |
| Componenta total | 451.6 | 576.4 |
| Operating profit, MEUR | 1–12/2010 | 1–12/2011 |
|---|---|---|
| Turkey | 15.2 | 28.7 |
| Finland | -0.2 | -1.6 |
| Holland | -1.5 | -1.9 |
| Sweden | 0.8 | 3.6 |
| Other business | -1.0 | 1.2 |
| One-time items *) | -0.1 | -7.4 |
| Internal items | 0.4 | -0.1 |
| Componenta total | 13.5 | 22.5 |
*) One-time items in 2011 relate to terminating machining operations at Pietarsaari unit, EUR -3.8 million, and sale of the business operations and production machinery of the Nisamo machine shop, EUR -1.8 million, both units belong to business segment Finland, and also restructuring costs in Holland, EUR -0.7 million, write-downs of prepayments paid to suppliers, EUR -0.7 million and other one-time items, EUR -0.4 million.
| Order book, MEUR | 12/2010**) | 12/2011*) |
|---|---|---|
| Turkey | 47.8 | 51.8 |
| Finland | 15.7 | 13.8 |
| Holland | 16.4 | 20.1 |
| Sweden | 22.0 | 19.8 |
| Internal items | -7.4 | -6.0 |
| Componenta total | 94.6 | 99.5 |
*) Order book on 12 January 2012
**) Order book on 10 January 2011
Group development by quarter
| MEUR | Q1/10 | Q2/10 | Q3/10 | Q4/10 | Q1/11 | Q2/11 | Q3/11 | Q4/11 |
|---|---|---|---|---|---|---|---|---|
| Net sales | 91.2 | 117.3 | 112.3 | 130.7 | 144.1 | 156.5 | 134.1 | 141.7 |
| Operating profit | 0.3 | 4.0 | 3.4 | 5.8 | 6.0 | 10.1 | 3.0 | 3.3 |
| Net financial items *) | -5.9 | -6.2 | -5.5 | -5.9 | -5.3 | -6.6 | -7.3 | -6.7 |
| Profit after financial items | -5.6 | -2.2 | -2.1 | -0.1 | 0.7 | 3.5 | -4.3 | -3.4 |
*) Net financial items are not allocated to business segments
Quarterly development by business segment
| Net sales, MEUR | Q1/10 | Q2/10 | Q3/10 | Q4/10 | Q1/11 | Q2/11 | Q3/11 | Q4/11 |
|---|---|---|---|---|---|---|---|---|
| Turkey | 40.6 | 53.1 | 51.5 | 59.6 | 67.9 | 72.7 | 67.1 | 69.5 |
| Finland | 20.8 | 27.0 | 25.1 | 30.6 | 28.5 | 32.2 | 24.5 | 27.6 |
| Holland | 18.7 | 23.4 | 20.8 | 22.1 | 26.7 | 30.7 | 26.7 | 25.2 |
| Sweden | 15.8 | 21.3 | 20.6 | 26.9 | 32.4 | 32.5 | 25.5 | 31.2 |
| Other business | 14.3 | 16.2 | 16.8 | 18.1 | 21.8 | 23.3 | 22.2 | 23.7 |
| Internal items | -19.0 | -23.7 | -22.5 | -26.7 | -33.2 | -34.9 | -31.9 | -35.4 |
| Componenta total | 91.2 | 117.3 | 112.3 | 130.7 | 144.1 | 156.5 | 134.1 | 141.7 |
| Operating profit, MEUR | Q1/10 | Q2/10 | Q3/10 | Q4/10 | Q1/11 | Q2/11 | Q3/11 | Q4/11 |
| Turkey | 3.2 | 3.3 | 4.5 | 4.3 | 8.3 | 8.5 | 7.3 | 4.6 |
| Finland | -0.6 | 0.7 | -0.9 | 0.6 | -1.3 | 0.5 | -1.8 | 1.0 |
| Holland | -0.1 | 0.2 | -1.0 | -0.5 | 0.3 | 0.9 | -2.2 | -1.0 |
| Sweden | -1.4 | 0.0 | 0.6 | 1.6 | 1.2 | 1.5 | 0.2 | 0.7 |
| Other business | -0.7 | -0.1 | 0.0 | -0.2 | 0.1 | -0.4 | 0.2 | 1.2 |
| One-time items *) | 0.0 | 0.0 | 0.0 | -0.1 | -2.4 | -0.6 | -0.8 | -3.5 |
| Internal items | 0.0 | -0.2 | 0.3 | 0.2 | -0.2 | -0.3 | 0.0 | 0.3 |
| Componenta total | 0.3 | 4.0 | 3.4 | 5.8 | 6.0 | 10.1 | 3.0 | 3.3 |
*) One-time items in 2011 relate to terminating machining operations at Pietarsaari unit, EUR -3.8 million, and sale of the business operations and production machinery of the Nisamo machine shop, EUR -1.8 million, both units belong to business segment Finland, and also restructuring costs in Holland, EUR -0.7 million, write-downs of prepayments paid to suppliers, EUR -0.7 million and other one-time items, EUR -0.4 million.
| Order book at period end, MEUR | Q1/10 | Q2/10 | Q3/10 | Q4/10**) | Q1/11 | Q2/11 | Q3/11 | Q4/11*) |
|---|---|---|---|---|---|---|---|---|
| Turkey | 32.6 | 42.4 | 42.5 | 47.8 | 54.0 | 59.4 | 57.6 | 51.8 |
| Finland | 13.6 | 15.8 | 16.7 | 15.7 | 17.6 | 16.3 | 15.2 | 13.8 |
| Holland | 13.4 | 14.6 | 14.7 | 16.4 | 17.7 | 21.0 | 18.2 | 20.1 |
| Sweden | 13.3 | 16.5 | 18.7 | 22.0 | 23.2 | 22.9 | 22.9 | 19.8 |
| Internal items | -5.0 | -5.7 | -6.8 | -7.4 | -8.3 | -8.5 | -10.1 | -6.0 |
| Componenta total | 68.0 | 83.6 | 85.8 | 94.6 | 104.3 | 111.2 | 103.7 | 99.5 |
*) Order book on 12 January 2012
**) Order book on 10 January 2011
Shareholders and shares
Largest registered shareholders on 31 December 2011
| Shareholder | Shares | Share of total voting rights, % |
|---|---|---|
| 1 Lehtonen Heikki | 5,318,840 | 30.39 |
| Cabana Trade S.A. | 3,501,988 | |
| Oy Högfors-Trading Ab | 1,806,052 | |
| Lehtonen Heikki | 10,800 | |
| 2 Etra Capital Oy | 4,347,464 | 24.84 |
| 3 Varma Mutual Pension Insurance Company | 978,968 | 5.59 |
| 4 Finnish Industry Investment Ltd | 666,666 | 3.81 |
| 5 Mandatum Life Insurance Company Ltd | 586,425 | 3.35 |
| 6 Alfred Berg Small Cap Finland Fund | 283,088 | 1.62 |
| 7 Bergholm Heikki | 240,016 | 1.37 |
| 8 Finnish Cultural Foundation | 236,000 | 1.35 |
| 9 Alfred Berg Finland Fund | 221,099 | 1.26 |
| 10 Laakkonen Mikko | 200,000 | 1.14 |
| 11Lehtonen Anna-Maria | 178,823 | 1.02 |
| 12 Special Investment Fund UBWave | 150,000 | 0.86 |
| 13 Kukkonen Jorma | 127,000 | 0.73 |
| 14 Nordea Finland Small Cap Fund | 110,132 | 0.63 |
| 15 Caldanos Oy | 104,000 | 0.59 |
| Nominee-registered shares | 562,742 | 3.22 |
| Other shareholders | 3,188,475 | 18.22 |
| Total | 17,499,738 | 100.00 |
The members of the Board of Directors own 32.2% of the shares. All shares have equal voting rights.
If all the warrants were converted to shares, the holding of shares by the members of the Board of Directors would decrease to 31.7 %.
Breakdown of share ownership on 31 December 2011
| Number of shares | Shareholders | % | Shares | % |
|---|---|---|---|---|
| 1 - 100 | 500 | 23.42 | 31,630 | 0.18 |
| 101 - 500 | 875 | 40.98 | 258,014 | 1.47 |
| 501 - 1,000 | 336 | 15.74 | 274,630 | 1.57 |
| 1,001 - 5,000 | 307 | 14.38 | 698,208 | 3.99 |
| 5,001 - 10,000 | 34 | 1.59 | 243,484 | 1.39 |
| 10,001 - 50,000 | 57 | 2.67 | 1,260,376 | 7.20 |
| 50,001 - 100,000 | 8 | 0.37 | 497,400 | 2.84 |
| 100,001 - 500,000 | 12 | 0.56 | 2,348,433 | 13.42 |
| 500,001 - | 6 | 0.28 | 11,887,563 | 67.93 |
| Total = total issued | 2,135 | 100.00 | 17,499,738 | 100.00 |
Shareholders by sector on 31 December 2011
| % | |
|---|---|
| Finnish companies | 43.17 |
| Financial institutions and insurance companies | 8.12 |
| General government bodies | 6.29 |
| Non-profit institutions | 1.83 |
| Households | 16.90 |
| Nominee-registered shares and other foreign shareholders | 23.69 |
| 100.00 |
Per share data
| 2011 | 2010 |
|---|---|
| -0.25 | -0.45 |
| -0.25 | -0.45 |
| 0.20 | 1.44 |
| 1.93 | 3.63 |
| 0.00 | 0.00 |
| 0.00 | 0.00 |
| 0.00 | 0.00 |
| neg. | neg. |
| 3.37 | 6.01 |
| 5.34 | 5.29 |
| 3.26 | 4.02 |
| 6.55 | 6.44 |
| 59.0 | 104.6 |
| 2,986 | 8,483 |
| 17.1 | 48.6 |
| 17,485 | 17,458 |
| 17,500 | 17,458 |
*) For the year 2011 a proposal of the Board of Directors.
Componenta Corporation (CTH) monthly share trading volume in 2007 - 2011, pcs
Componenta Corporation (CTH) share price development in 2007 - 2011, EUR
Calculation of key financial ratios
| Return on equity, % (ROE) | = | Profit after financial items – income taxes x 100Shareholders' equity without preferred capital notes + non-controlling interest (quarterly average) |
|---|---|---|
| Return on investment, % (ROI) | = | Profit after financial items + interest and other financial expenses x 100Shareholders' equity + interest bearing liabilities (quarterly average) |
| Equity ratio, % | = | Shareholders' equity, preferred capital notes excluded + non-controlling interest x 100Balance sheet total - advances received |
| Earnings per share, EUR (EPS) | = | Profit after financial items – income taxes +/- non-controlling interestAverage number of shares during the financial period |
| Earnings per share with dilution, EUR | = | As above, the number of shares has been increased with the warrants outstanding. When calculating thedilution effect of warrants, the number of shares has been adjusted with the number of own shares whichthe company could have acquired, if it would have used the funds generated from the warrants to buy backof own shares at market price (= average trading price). After tax interest expense of the convertible loan hasbeen added to the profit of the period. Number of shares that can be subscribed by the loan has been addedto the number of total shares. |
| Cash flow per share, EUR (CEPS) | = | Net cash flow from operating activitiesAverage number of shares during the financial period |
| Average trading price, EUR | = | Trading volumeNumber of shares traded during the financial period |
| Equity per share, EUR | = | Shareholders' equity, preferred capital notes excludedNumber of shares at period end |
| Dividend per share, EUR | = | DividendNumber of shares at period end |
| Payout ratio, % | = | DividendEarnings (as in Earnings per share) |
| Effective dividend yield, % | = | Dividend per share x 100Market share price at period end |
| Market capitalization, MEUR | = | Number of shares x market share price at period end |
| P/E multiple | = | Market share price at period endEarnings per share |
| Net interest bearing debt, MEUR | = | Interest bearing liabilities + preferred capital notes - cash and bank accounts |
| Net gearing, % | = | Net interest bearing liabilities x 100Shareholders' equity, preferred capital notes excluded + non-controlling interest |
The proposal of the Board of Directors for the distribution of profits
The distributable equity of the parent company statement of financial position is EUR 80,345,774.54. The Board of Directors proposes to the Annual General Meeting to be held on 23 February 2012 that no dividend will be paid for financial year 2011.
Helsinki 23 January 2012
Heikki Bergholm Pii Kotilainen Marjo Miettinen Chairman
Juhani Mäkinen Matti Tikkakoski Heikki Lehtonen
President & CEO
Auditor's Report (Translation from the Finnish Original)
To the Annual General Meeting of Componenta Oyj
We have audited the accounting records, the financial statements, the report of the Board of Directors and the administration of Componenta Oyj for the year ended 31 December, 2011. The financial statements comprise the consolidated statement of financial position, income statement, statement of comprehensive income, statement of changes in equity and statement of cash flows, and notes to the consolidated financial statements, as well as the parent company's balance sheet, income statement, cash flow statement and notes to the financial statements.
Responsibility of the Board of Directors and the Managing Director
The Board of Directors and the Managing Director are responsible for the preparation of consolidated financial statements that give a true and fair view in accordance with International Financial Reporting Standards (IFRS) as adopted by the EU, as well as for the preparation of financial statements and the report of the Board of Directors that give a true and fair view in accordance with the laws and regulations governing the preparation of the financial statements and the report of the Board of Directors in Finland. The Board of Directors is responsible for the appropriate arrangement of the control of the company's accounts and finances, and the Managing Director shall see to it that the accounts of the company are in compliance with the law and that its financial affairs have been arranged in a reliable manner.
Auditor's Responsibility
Our responsibility is to express an opinion on the financial statements, on the consolidated financial statements and on the report of the Board of Directors based on our audit. The Auditing Act requires that we comply with the requirements of professional ethics. We conducted our audit in accordance with good auditing practice in Finland. Good auditing practice requires that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and the report of the Board of Directors are free from material misstatement, and whether the members of the
Board of Directors of the parent company or the Managing Director are guilty of an act or negligence which may result in liability in damages towards the company or whether they have violated the Limited Liability Companies Act or the articles of association of the company.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements and the report of the Board of Directors. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation of financial statements and report of the Board of Directors that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the company's internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements and the report of the Board of Directors.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Opinion on the Consolidated Financial Statements
In our opinion, the consolidated financial statements give a true and fair view of the financial position, financial performance, and cash flows of the group in accordance with International Financial Reporting Standards (IFRS) as adopted by the EU.
Opinion on the Company's Financial Statements and the Report of the Board of Directors
In our opinion, the financial statements and the report of the Board of Directors give a true and fair view of both the consolidated and the parent company's financial performance and financial position in accordance with the laws and regulations governing the preparation of the financial statements and the report of the Board of Directors in Finland. The information in the report of the Board of Directors is consistent with the information in the financial statements.
Helsinki, 1 February, 2012
PricewaterhouseCoopers Oy Authorised Public Accountants
Jan Holmberg Authorised Public Accountant
Annual General Meeting
The Annual General Meeting of Componenta Corporation will be held at 9.00 a.m. on Thursday, 23 February 2012 at the company's headquarters in Käpylä, in the auditorium of the Sato building at Panuntie 4, 00610 Helsinki, Finland.
Right to participate
A shareholder, who on the record date of the General Meeting, 13 February 2012, is registered as a shareholder in the company's shareholders' register maintained by Euroclear Finland Ltd, is entitled to attend the General Meeting.
Registration
A shareholder, who is registered in the shareholders' register, wishing to participate in the General Meeting is required to register his/her participation no later than 20 February 2012 at 10.00 a.m. by letter to the address Componenta Corporation, Panuntie 4, 00610 Helsinki, by telephone +358 10 403 2744, by fax +358 10 403 2721 or by email to [email protected]. The registration letter or message must have arrived prior to the expiration of the registration period.
Dividend and dividend policy
The Board of Directors proposes to the Annual General Meeting that that no dividend will be paid for the 2011 fiscal year.
The Board of Directors takes the financial performance, financing structure and growth expectations into account when making its proposal for the dividend to be paid. The target is to pay a dividend of 30% - 50% of net profit.
Financial information in 2012
Interim report January – March on 20 April 2012 Interim report January – June on 13 July 2012 Interim report January – September on 17 October 2012
The press conferences for representatives of media and analysts held when the interim reports are published will be webcast simultaneously on the company's website at www.componenta.com.
Componenta's publications and releases are available immediately after their release date at www.componenta. com/Investors/Releases and publications.
Publications and interim reports printed on paper will only be sent to those who have requested it from the company. Publications printed on paper can be ordered from Componenta's website at www.componenta.com/ Order reports, by telephone +358 10 403 2744 or by e-mail to [email protected].
By registering at Componenta's website at www.componenta.com/Investors/Order you can order all company releases directly to your own email address immediately after their release.
All Componenta's financial publications are drafted in both Finnish and English.
Investor relations and contacts
Our aim is to provide comprehensive information about Componenta's business, operating environment and financial position for investment decisions.
30 days prior to the publication of any financial statements or quarterly reports Componenta has a closed window period during which we do not meet with capital market representatives nor comment on result developments.
Investors and shareholders are served at Componenta by the investor relations team consisting of President and CEO, CFO and Communications Directors. Contact our IR team by email at [email protected].
Componenta Corporation
Panuntie 4 FI-00610 Helsinki Finland Tel. +358 10 403 00 Fax +358 10 403 2721