Annual Report • Feb 13, 2015
Annual Report
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In 2014, we achieved the targeted level for all of the strategic targets. Net sales incerased, profitability improved and balance sheet strengthened.
In the strategy period 2015–2017, Suominen aims for growth ahead of the markets, product leadership and a market-driven way of operating.
Suominen 2014 / Strategy / Operating Environment / Business Review / Sustainability / Corporate Governance / Financial Statements
The divestment of the Flexibles business area in July 2014 was the final step in Suominen's transformation into a purely nonwovens company.
| Suominen in brief3 | |
|---|---|
| Key events of 2014 5 | |
| Key figures6 | |
| Review by the President & CEO | 7 |
| Strategy10 | |
| Strategy 2012–2014 |
11 |
| Strategy 2015–201714 | |
| Operating Environment 16 | |
| Megatrends as driver of change | |
| in the nonwovens market | 17 |
| Business Review |
20 |
| Nonwovens21 | |
| 25 Flexibles |
|
| Sustainability |
26 |
| Suominen's Sustainability strategy27 | |
| Environmental responsibility | 29 |
| Social responsibility31 | |
| Economic responsibility33 | |
| Corporate Governance |
34 |
| Corporate Governance Statement35 | |
| Board of Directors | 40 |
| Corporate Executive Team41 | |
| Financial Statements | 42 |
Suominen manufactures nonwovens as roll goods for wipes and hygiene products and for medical applications. End products, such as wet wipes and wound dressings, made of nonwovens bring added value to the daily lives of consumers and professional users around the world. Suominen operates on three continents, close to its customers, and is the world's largest manufacturer of nonwovens used in wiping products. The company's shares (SUY1V) are quoted on the NASDAQ OMX Helsinki.
401.8 M€
Net sales 2014 (+7.5%) Over 60% of Suominen's net sales is generated in Americas.
591
Number of employees Suominen's nearly 600 employees serve customers on three continents.
● Trading plants (not owned by Suominen)
growth and product leadership
– and results achieved » Dividend policy: the company distributes roughly 30% of the profit for the financial year as
annual dividends.
10 January Suominen announced the purchase of the Paulínia plant in Brazil from Ahlstrom Corporation. The enterprise value of the deal was EUR 17.5 million, and it was financed through an issuance of a convertible hybrid bond.
27 May Suominen introduced the nonwoven BIOLACE® Skin as part of the Home Spa product range.
11 July Suominen announced an agreement on the divestment of its Flexibles business. The transaction transforms Suominen into a company focused exclusively on nonwovens.
4 December Suominen announced the launch of an investment program to execute its growth strategy. The value of the first phase of investments is around EUR 4 million. The total value of the investment program will be EUR 30–50 million between 2015 and 2017.
4 December Suominen's Board of Directors resolved on incentive plans for management and key employees and on a share issue.
17 February Suominen launched the value-adding Novolino™ Nonwoven in the market.
26 September Suominen announced it has diversified and expanded its financing. The company issued a EUR 75 million bond and renewed its bank facilities. Extended financing enables Suominen to execute its growth strategy.
24 October Suominen transitions to a new strategic phase. In 2015–2017, the focus will be on more actively developing the company into a forerunner in its industry. The targets are product leadership and profitable growth. 24 October Suominen's Board of Directors approved a dividend policy according to which 30% of the profit for the financial year will be distributed as annual dividends.
All of Suominen's stock exchange and news releases published in 2014 can be found on the company's website at www.suominen.fi.
| 2014 | 2013 | 2012 | |
|---|---|---|---|
| Net sales, € million | 401.8 | 373.7 | 356.9 |
| Operating profit before non-recurring items, € million | 26.9 | 19.4 | 14.9 |
| Operating profit, € million | 25.9 | 18.9 | 8.9 |
| Profit before income taxes, € million | 17.8 | 13.1 | -0.3 |
| Profit for the period, continuing operations, € million | 10.2 | 5.7 | -2.8 |
| Profit for the period, discontinued operations, € million | -5.2 | -21.8 | -9.0 |
| Profit for the period, € million | 5.0 | -16.1 | -11.9 |
| Cash flow from operations, € million | 37.1 | 21.3 | 24.9 |
| Investments, € million | 7.1 | 4.4 | 2.7 |
| 2014 | 2013 | 2012 |
|---|---|---|
| 41.2 | 32.9 | 34.4 |
| 0.44 | 0.32 | 0.39 |
| 0.04 | 0.02 | -0.01 |
| -0.02 | -0.09 | -0.04 |
| 0.02 | -0.07 | -0.05 |
| 0.15 | 0.09 | 0.10 |
| 34.7 | 96.2 | 101.0 |
| 15.7 | 12.4 | 5.0 |
| 591 | 550 | 603 |
Equity ratio, %
€ million
Organic
Equity per share, €
Net sales,
Operating profit before non-recurring items,
Earnings per share, €
-5 — 0 — 5 — 10 — 15 — 20 —
Cash flow per share, €
12 13 14
Gearing, %
Investments, € million
0 — 1 — 2 — 3 — 4 — 5 — 6 — 7 — 8 —
Return on invested capital (ROI), %
0 — 5 — 10 — 15 — 20 —
12 13 14
Average personnel
12 13 14
Suominen aims for:
Orange indicates the target level.
In 2014, our dedicated eµorts to execute Suominen's strategy continued. We implemented several important measures on various fronts with our organization that was renewed at the start of the year. We developed Suominen's corporate culture and way of working, improved our profitability, and actively sought out ways to be in the lead of our competitors. We expanded our business to the attractive South American markets through a business acquisition, and finalized Suominen's transformation into a purely nonwovens company by divesting our Flexibles business.
The outcome of our work was also reflected in Suominen's financial success. In 2014, we achieved the targeted level for all of the financial targets set by the company's Board of Directors: the return on investments for continuing operations increased to 15.7% (target level >10%) and gearing ratio fell to 34.7% (target level 40–80%). The third target, organic net sales growth at a rate faster than the industry average (some 3%), was also achieved. Net sales from Suominen's continuing operations increased organically by 3.5% in 2014, totaling EUR 401.8 million. +3.5%
Suominen's profitability improved considerably from the previous year. Operating profit from Suominen's continuing operations, excluding non-recurring items, increased to EUR 26.9 million and profit for the financial year to EUR 10.2 million. The fairly positive development in profitability was primarily due to strategic changes in the product portfolio: we succeeded in growing the share of products with higher added value. In addition, our cost structure has remained healthy. The leaner cost structure achieved in 2012–2013 was permanent in nature and therefore continues to have a positive eµect on our key figures.
Proposal for fund distribution
Suominen's substantially lower gearing ratio is further proof of the favorable development in the company's balance sheet in 2014. The company's debt repayment capacity and its healthy financial position, both thanks to the good operative cash flow, facilitated the refinancing. 0.01€/share
Suominen's Board of Directors proposes a fund distribution of EUR 0.01 per share for the 2014 financial period. If the Annual General Meeting approves the proposal, Suominen will distribute funds for its shareholders in spring of 2015 for the first time in five years.
In February 2014 we acquired Ahlstrom's nonwovens plant in Paulínia, Brazil. The enterprise value of the deal was EUR 17.5 million, and we financed it through an issue of a convertible hybrid bond treated as equity.
The Paulínia plant is the only unit in Brazil that manufactures nonwovens for wiping products using modern spunlace technology,
which gives us a technological advantage over our competitors. The acquisition additionally gives us a foothold in the emerging South American markets, which offer very promising opportunities for growth. Demand for Suominen's products is growing in South America at a rate of around 6–10% per year, depending on the application area.
The Suominen Way is one of the cornerstones of our strategy. Employees that pull together to achieve the same goals are, in my opinion, a prerequisite for any company to succeed, which is why I have always considered building a common culture very important also for Suominen.
This, too, was an eventful area in 2014. The new organizational structure and management system that took effect at the start of 2014 target a more focused, transparent and agile operating model. It reinforces our ability to develop new business and to launch new products in the market at a faster rate than before.
We also decided to give greater prominence to occupational safety issues at Suominen and introduced the Behavior-Based Safety program, which focuses on pre-empting unsafe work conditions and developing employees' behavior. At the end of the year, we outlined the focus areas of Suominen's sustainability and defined the key projects for developing these areas. The projects will be started up in the course of 2015. Suominen's sustainability matters are discussed at greater length on pages 26–36.
Suominen's transformation process began in November 2011, when we acquired Ahlstrom's Home & Personal business area. The transaction grew and propelled Suominen further into the international markets, thus also making nonwovens Suominen's largest business area. Since then, we have decisively clarified our corporate structure and expanded to a new continent. In July 2013, we sold the Codi Wipes business, and following an acquisition in February 2014, we expanded our operations to South America. The divestment of the Flexibles business area in July 2014 was the final step in Suominen's transformation into a purely nonwovens company. With our focus now exclusively on nonwovens, we are able to even more effectively focus all of our resources on reinforcing the market leadership of the Convenience business area and on developing and growing Suominen's emerging Care business area.
Suominen is a financially strong company focused on one business and is ready to embark on a new strategic phase. In 2015– 2017, the focus will be on more actively developing the company into a forerunner in its industry. Our strategy continues to be based on our three established cornerstones – The Suominen Way, Step Change in Profitability, and In the Lead. In the future, however, we will place greater focus on the In the Lead cornerstone, aiming for growth ahead of the markets, a market-driven way of operating and product leadership.
We plan to invest approximately EUR 30–50 million in growth initiatives over the 2015–2017 period, backed by a refinancing round that we concluded in September 2014. Our expanded and diversified financing base now consists of a 75-millioneuro bond and renewed banks loans. The first steps in the investment program were actually taken already in late 2014, when we
announced a total of roughly EUR 4 million in investments in the Alicante, Paulínia and Nakkila plants. These investments will benefit both of our business areas and will allow us to further increase the share of value-added products in the company's portfolio.
Moreover, in January 2015 we announced a plan to invest in a new manufacturing line, in North America. The planned investment would support our growth strategy and would be the largest single initiative in the investment program.
In connection with the revised strategy, Suominen's Board of Directors revised the company's financial targets. In 2015–2017 we are aiming for:
The Board of Directors also defined Suominen's dividend policy, according to which the company will distribute roughly 30% of the profit for the financial year in annual dividends. In assessing its proposal for the payment of dividends, the company's Board of Directors will also consider Suominen's future investment needs and the stability of its financial position.
Our targets are ambitious, but within reach. The successful execution of our strategy will result in net sales of roughly EUR 500 million for Suominen at the end of the strategy period. We are a financially stable growth company that is valued by our employees. Our way of operating and our supply chain are increasingly agile and our well-thought-out product range consists of the best products available in the market. We have earned our reputation as the forerunner in the nonwovens industry and as an interesting investment.
Like the preceding years, 2014 was very interesting and eventful for Suominen. We took many significant steps towards reaching our goal of being the forerunner in our industry. The work we carried out was also reflected positively in Suominen's financial development. I wish to thank Suominen's employees for their uncompromising attitude and determination. I additionally send thanks to our customers, business partners, shareholders and financiers for the confidence they have shown in us. Heading into the new strategy period, we are in a good position to continue towards product leadership and profitable growth.
Nina Kopola President & CEO
In recent years, Suominen has focused strongly on building a common corporate culture and operating methods. At the same time, the company's profitability has been decisively improved and its financial position reinforced.
Suominen achieved the targeted level for all of its strategic targets. In 2014
In recent years, Suominen has focused strongly on building a common corporate culture and operating methods. At the same time, the company's profitability has been decisively improved and its financial position reinforced. In 2014, the company reached its targeted level in all of its strategic targets.
Suominen's 2012 strategy is based on building a common culture, improving profitability, and being a forerunner. The strategy encompasses three cornerstones:
Accelerating its customers' business and increasing the share of products with higher added value in the company's portfolio are key strategic targets.
In 2014, Suominen achieved the targeted level for all of the financial targets set by the company's Board of Directors to measure the execution of the strategy. Suominen's return on investments from continuing operations increased to 15.7% (target level >10%) and gearing ratio fell to 34.7% (target level 40–80%). A third target, organic net sales growth at a rate faster than the sector average (some 3%), was also achieved. Net sales from Suominen's continuing operations increased organically by 3.5% in 2014, totaling EUR 401.8 million.
All of the Group's operations and decisionmaking draw on Suominen's way of operating, which forms a clear value base for the company. The Suominen way of operating can be described in three words: Empowerment, Accountability and Passion.
Empowerment means Suominen's employees have the opportunity and the responsibility to develop the company's operations and processes to the best of their ability. They are able to make quick and timely decisions in their areas of responsibility.
Every Suominen employee is accountable for his or her work and particularly for the outcome of that work. The employees are also aware of their responsibility in terms of how their actions affect, for example, their colleagues, customers and business partners. In situations where mistakes have been made or deviations have occurred, the matter is promptly rectified and improved.
Suominen's employees show passion for their work and for seeing a job through. Passion is the result of the employee understanding the importance of his or her work input to the future of the company. This passion fuels the employees' productivity and their desire to see their work through.
At Suominen, work is done "with a cool head, a warm heart, and clean hands", i.e. with drive, with a big heart, and with a high level of ethics. Suominen employees work as a team, sharing their knowledge and best practices with one another.
Only a profitable company can invest in growth or create value for its shareholders, for example, by paying out dividends. A crucial aspect of boosting profitability at Suominen is the continuous improvement of productivity and e¼ciency. Persistent and systematic eµorts are made in the company to streamline processes and enhance e¼ ciency. Cost consciousness is an integral part of day-to-day operations throughout the company.
Production at Suominen's plants is always based on customer demand, and production volumes can be swiftly adjusted according to demand.
Suominen is the world's leading producer of nonwovens used in wiping products. The company additionally has its sights set on being a substantial supplier of selected nonwovens for hygiene products and medical applications. Suominen's goals are both to reinforce its market position and to establish itself as the most progressive operator in its field and a respected and innovative partner.
Accelerating its customers' business and increasing the share of products with higher added value in the company's portfolio are key strategic targets. The In the Lead
cornerstone of Suominen's strategy aims to accomplish all of the above-mentioned goals.
Products with higher added value in Suominen's portfolio include, for example, professional, household and personal hygiene wipes, as well as nonwovens
intended for use in hygiene and medical products. 2011 11/2011 7/2013 2/2014 7/2014
Understanding the needs of product end users is the key to Suominen's future success. The needs of end users also guide product and service development at Suominen. The company proactively
monitors changes in the markets and in the needs of end users and introduces new products, often in cooperation with its customers. Suominen also continuously develops its technological and materials know-how for the benefit of its customers.
STRATEGY 2015–2017:
Suominen will invest in total EUR 30–50 million in growth investments during the strategic period 2015–2017.
For its 2015–2017 strategy period, Suominen has set its sights on being the forerunner in its industry. The company targets growth, a market-driven way of operating and product leadership.
Suominen's strategy for the future continues to be based on the three cornerstones that have guided its operations since 2012: The Suominen Way, Step Change in Profitability, and In the Lead.
In the new strategy period that kicked off at the start of 2015, Suominen will, however, place greater focus on the In the Lead cornerstone, aiming for profitable growth, a market-driven way of operating and product leadership.
In the execution of its strategy, Suominen will focus on developing four key areas:
The refinancing round completed by Suominen in September 2014 will enable the company to execute its growth-focused strategy. By Suominen's estimates, the company will invest a total of approximately EUR 30–50 million in growth projects in the 2015–2017 strategy period.
Suominen launched its investment program directed at executing the company's growth strategy already in December 2014 with the announcement of the first three investment projects. These initial decisions concern the Alicante plant in Spain and the Paulínia plant in Brazil. The company also confirmed in January 2015 that it will increase the production capacity of the Nakkila plant in Finland to flexibly respond to the current market demand.
The combined value of these initial steps of the investment program is roughly EUR 4 million, and they will enhance Suominen's ability to further increase the share of valueadding products in its portfolio. The investments will benefit both of Suominen's business areas.
The investment in the Alicante plant is intended to particularly serve the globally growing industrial wiping products and medical nonwovens markets. The Paulínia investment will expand the plant's product range and further reinforce its position in the growing South American wiping products market. It will also enable the supply of nonwovens for use in hygiene and medical products from the Paulínia plant.
In January 2015, Suominen announced it has started a planning process to execute an investment in a new wetlaid production line. According to company's initial plans, the new nonwovens manufacturing line would serve several higher value-adding end-use applications, and would be essential for the execution of Suominen's growth strategy. This investment project is still in the preparation phase; and Suominen has not, for example, selected machine suppliers. For that reason, the total value of the investment was not yet disclosed. The project is, however, clearly the most substantial one in Suominen's growth investment program.
Suominen's policy is to distribute roughly 30% of the profit for the period in annual dividends. In assessing its proposal for the payment of dividends, the company's Board of Directors will also consider Suominen's future investment needs and the stability of its financial position.
If Suominen successfully executes its strategy and reaches its targeted net sales growth, the company's net sales will amount to approximately EUR 500 million by the end of 2017.
Several global megatrends are bolstering the growing demand for nonwovens. 5 % in average
Demand for nonwovens grows annually
Suominen's products are used in disposable products intended for use by both consumers and in professional applications, for instance in wet wipes, hygiene and medical products. The general economic situation and consumers' confidence in the development of their personal finances determine consumer demand, even though the demand for daily consumer goods is not very cyclical in nature. Suominen's most important market areas are Europe and North America.
Demand for nonwovens used in wipes and in hygiene and medical products is increasing at an annual rate of roughly 5% worldwide and at a rate of some 3% in Suominen's market areas. In emerging markets, such as Asia and South America, annual growth in the nonwovens market averages 7 to 8%. In Europe and North America, however, growth is expected to be slightly slower, at 2 to 6 % annually.
Global expenditure on health, USD
Estimated aggregate demand in USD in 2020
A number of megatrends, or global phenomena that are profoundly changing the structure of society, are behind the growth forecasts. These changes are also having an impact on consumer behavior.
The global population currently stands at more than 7 billion, with more than half already living in urban centers. According to the United Nations, the global population will reach 9.6 billion by the year 2050, at which point two thirds of the global population will be living in urban areas.
There is a direct correlation between the rise in the standard of living and, for example, demand for hygiene products. According to various sources, a rise in the GDP to approximately USD 1,000 per capita could spark demand for disposable sanitary napkins. When the GDP rises to roughly USD 3,000, demand extends to disposable diapers and, with further increases, to other daily hygiene and comfort-enhancing products.
The global middle class (the segment of the population with an annual income of between USD 3,000–20,000) is set to become the consumer group with the highest purchasing power in the world in the near future. It has been estimated that by 2020, 2.1 billion people will make up the global middle class. The rise in the
standard of living and changing lifestyles will be reflected in the consumer behavior of the prospering middle class. In addition to essential commodities, the consumption of this demographic will center around solutions that make daily routines easier and less time-consuming. Some examples are disposable household towels and beauty care wipes.
With the ageing of the population and changing health-care models, new needs are emerging and demand for nonwovens used in medical applications and incontinence products is increasing.
to combat hospital-acquired infections and various pandemics is also contributing to the
Ageing, pandemics and changing healthcare models are reflected in the rising costs of health care. On the other hand, cash flows related to health care are increasing as a result of consumers' interest in enhancing their well-being and health. The overall costs of health care are expected to double
increase in demand.
between 2010 and 2020.
UN report: World Population Ageing 1950–2050.
*
By 2050, people over the age of 60 will make up slightly more than 20% of the global population, whereas in 2000 this demographic accounted for only 10% of the population.* The average age of the population is increasing especially in industrialized countries. At the same time, the ageing population is staying active for longer, which increases the need for, for example, new incontinence products. On the other hand, the need to find cost-eµective solutions
Western Europe North America South America
age groups: 0–14 15–44 45–64 65+ years
Suominen manufactures high-quality nonwovens as roll goods for wipes, hygiene and medical products. Suominen's strategic goal is to establish itself as the product leader and forerunner in selected applications.
Success in the implementation of the strategy would result in net sales of roughly EUR 500 million for Suominen at the end of 2017.
Suominen manufactures high-quality nonwovens as roll goods for wipes, hygiene and medical products. Suominen's strategic goal is to establish itself as the product leader and forerunner in selected applications.
Suominen has two business areas: Convenience and Care. Convenience offers nonwovens mainly for a range of wiping applications, while Care business area serves medical and hygiene markets. The business areas were formed at the beginning of 2014.
The most significant application areas for Suominen's nonwovens in 2014 were baby and toddler wipes (41% of sales), personal care wipes (21%), household wipes (17%), industrial wipes (11%), and hygiene and medical products (8%). All of the nonwovens used in the wiping products are part of the Convenience business area. The products used for hygiene and medical care are part of the Care business area.
Suominen has a total of eight production plants in Brazil, Finland, Italy, Spain and the United States. The number rose to eight when Suominen acquired the Paulínia plant in Brazil in February 2014. All of the company's production plants are located in key market areas close to customers; and serve both business areas.
In addition to its own production plants, Suominen has manufacturing cooperation agreements with three nonwovens plants in Europe. Thanks to the wide geographical reach of its production network, Suominen is able to not only e¼ciently serve its global customers, but also to offer its products flexibly at the level.
Due to the divestment of the Flexibles business unit in 14 July 2014, Suominen has not reported on segments since the
January–March 2014 interim report. In the January–March 2014 interim report, Convenience and Care were reported under the Nonwovens segment, and prior to that under the Wiping segment.
In its strategy for years 2015–2017, Suominen's focus is on profitable growth with product leadership, aiming to be in the lead of the industry. The company's objective is to oµer its customers a selective range of the best products available in the market. Moreover, Suominen focuses on demanddriven management of its supply chain and proactive management of key customer accounts, with the goal of adding value for both parties.
In this strategy period, Suominen is also targeting a major change in its product portfolio. The goal is not only to grow in terms of net sales but also achieve a more balanced breakdown of sales by product application and to increase the share of products with higher added value in the portfolio. Such products include, for example, nonwovens for wipes for professional use, household and for personal care, as well as nonwovens used in hygiene and medical products. Success in achieving these targets would result in net sales of roughly EUR 500 million for the company at the end of the strategy period.
To read more about Suominen's strategy, w please see the section "Strategy"
Suominen's Convenience business area supplies high-quality nonwovens as roll goods for use in various wiping products, such as baby and toddler care products, household and personal hygiene wipes and wipes for professional use, such as for hotel, restaurant and catering industry and health care institutions. Suominen is the world's leading producer of nonwovens for wiping products. In 2014, the business area accounted for 92% of Suominen's net sales.
Customers of the Convenience business area include global consumer brands, manufacturers of private labels and regional nonwoven converters. Suominen's customer relationships are typically very long, on average more than ten years.
The outlook for the Convenience business area is promising, as demand for nonwovens used in wiping products is projected to increase in all market areas. In Suominen's most important market areas, i.e. Americas and Europe, demand for the company's products is growing at an average rate of 3% annually, but for many of Suominen's advanced nonwovens products, such as dispersible nonwovens, the growth in demand is clearly brisker. The conditions for growth are favorable, as an appreciation for a healthy lifestyle, wellbeing and high level of personal hygiene, as well as eµorts to achieve everyday comfort and convenience are current global megatrends that are gaining momentum.
In line with the strategy, the Convenience business area is seeking growth especially in those product areas where Suominen's product leadership is established and where it has the opportunity to create higher added value. Proactive management of key customer accounts and contributing to their success play an important role. In addition, the strategy for the near future focuses on enhancing and harmonizing services and internal processes.
Suominen's Care business area offers its customers a wide range of nonwovens for use in hygiene and medical product applications. Hygiene products include for example sanitary pads, diapers and products for adult incontinence. Nonwovens for medical products are used, for example, in surgical drapes and masks, wound dressings and undercast padding. The Care business area accounted for 8% of Suominen's net sales, and the goal is to substantially grow the business area in the coming years.
The customers of the Care business area consist of global consumer brands, manufacturers of medical and hygiene products and regional nonwoven converters. Suominen's know-how and production plants deliver the stringent quality that medical and hygiene customers require. The company's competitive advantage of diverse manufacturing technology platforms, global presence and unique capabilities, and Suominen's ability to create a wide-ranging product oµerings for these selected market segments. Suominen has a solid reputation in the markets.
Also in the Care business, increased demand for products is in the forecast. In its main market areas, i.e. Americas and Europe, demand for nonwovens used in medical products is projected to grow at an annual rate of roughly 4%, and demand for nonwovens for hygiene products at a projected annual rate of around 3%. Like in Convenience business, these are also average figures, meaning that for many of Suominen's product applications, such as nonwovens for advanced wound care, the growth forecasts are higher. The growth forecasts are supported by the current global health and well-being megatrends, increase in the number of pandemics, as well as the challenges and changing operating models faced by the health care sector. These developments boost the demand for hygiene and medical products as well as for nonwovens used in their production.
The goal for the Care business area is to achieve substantial growth. Growth will be sought by, among other things, by growing the customer base and developing a targeted portfolio of unique new products that will bring added value to customers.
In 2014, Suominen's net sales from continuing operations (Convenience and Care business areas) grew by 7.5% from the comparison period to EUR 401.8 million. Net sales of Convenience business area were EUR 369.4 million and net sales of Care business area EUR 32.3 million.
Operating profit before non-recurring items increased by 38% and amounted to EUR 26.9 million. Operating profit after
AIMING AT MORE balanced portfolio 2014
AIMING AT MORE balanced portfolio
Nonwovens sales by main end use applications
non-recurring items was EUR 25.9 million (18.9 in 2013). Profit before taxes was EUR 17.8 million (13.1). Profit for the period from continuing operations was EUR 10.2 million (5.7) and from discontinued operations (Flexibles business area) EUR -5.2 million (-21.8). The Group profit for the period was EUR 5.0 million (-16.1).
For more information about Suominen in 2014, w see the section "Financial Statements"
Suominen's business expanded to South America in February 2014 as the company acquired the nonwovens plant in Paulínia, Brazil, previously part of Ahlstrom's Home & Personal business. The enterprise value of the transaction was EUR 17.5 million. The Home & Personal business was principally acquired from Ahlstrom already in 2011, but due to delayed approvals from the authorities and consequent renegotiations, the transaction involving the Brazilian unit was delayed.
The acquisition opened up a new and growing South American market area to Suominen. The Paulínia unit is the only plant in Brazil that manufactures nonwovens for wiping products using modern spunlace technology. The acquisition enables Suominen to better serve its global customers which further reinforces the company's position as the leading manufacturer of nonwovens.
In February of 2014, Suominen launched its value-adding Novolino™ range of nonwovens. The range represents an entirely new kind of nonwoven that can be used to manufacture, for example, napkins, table covers and guest hand towels for hotels and restaurants.
In May, Suominen introduced the nonwoven BIOLACE® Skin as part of the Home Spa product range. Biolace® Skin is especially intended for use in cosmetic "home spa" applications such as facial sheet masks, cosmetic pads and exfoliation sheets.
In January 2015, Suominen launched a new lightweight product FIBRELLA™ Lite Spunlace to its nonwoven oµering, particularly targeted to the global hygiene market. Fibrella™ Lite nonwovens meet the exacting requirements for a light yet stretchable material with strength and elongation properties required in laminates for absorbent hygiene products in baby care and adult incontinence applications.
All product launches support Suominen's strategy of increasing the share of valueadding products in the company's portfolio and expanding its product range beyond wiping products.
The investment to expand production capacity for flushable nonwovens at the Windsor Locks plant in the U.S. was completed according to plan in spring 2014. The total value of the investment amounted to approximately EUR 2.5 million.
Suominen also expanded its oµering of flushable nonwovens in Europe by increasing its manufacturing cooperation with Ahlstrom's Ställdalen plant at the start of 2014.
The goal of Suominen's We Love Wipes consumer dialogue is to increase consumer awareness about various nonwoven products, how they can be used in various settings and their product characteristics – all in a fun and entertaining way. At the same time, the dialogue provides Suominen and its partners with valuable information about consumer needs and thus enables the company to develop new nonwovens products with greater added value. Moreover, Suominen has a great opportunity to test its product ideas directly with consumers in the We Love Wipes community.
Suominen launched the We Love Wipes dialogue in 2013, and the Englishlanguage based community currently has more than 20,000 members. The active We Love Wipes dialogue continues at welovewipes.com, and on social media platforms like Facebook and Twitter.
In connection with the publication of its growth strategy in October 2014, Suominen announced its intention to invest EUR 30 to 50 million in growth initiatives between 2015 and 2017. In December, Suominen announced the kick-oµ of the investment program and the first initiatives in its plan, involving Suominen's plants in Alicante, Spain, and Paulínia, Brazil. In addition, the company announced it would examine its opportunities to increase the production capacity of its Nakkila plant in Finland. In January 2015 Suominen confirmed it will implement the capacity expansion plan in Nakkila to be able to meet the current market demand for nonwovens.
The combined value of these initial investments is roughly EUR 4 million, and they will enhance Suominen's ability to further increase its share of value-adding products in the company's portfolio. The projects will benefit both the Convenience and Care business areas. The investment in the Alicante plant will particularly serve the global growth in the industrial wiping products and medical nonwovens markets. The Paulínia investment will expand the plant's product range and further reinforce Suominen's position in the growing South American wiping and medical products market.
In January 2015, Suominen announced it has initiated a planning process to execute an investment in a new wetlaid production line in order to implement its growth strategy for 2015–2017. The planned investment would be the most significant initiative in Suominen's growth investment program announced in December 2014. The new line would be located in North America, where demand for higher-value adding nonwovens has both developed favorably historically and also has attractive growth forecasts.
To read more about Suominen's events w in 2014, visit the website
In early 2015, Suominen launched a new lightweight product FIBRELLA™ Lite Spunlace to its nonwoven oµering, particularly targeted to the global hygiene market.
The product meets the exacting requirements for a light yet stretchable material with strength and elongation properties required in laminates for absorbent hygiene products in baby care and adult incontinence applications.
Available in 25 g/m2 and 28 g/m2 configurations, Fibrella™ Lite oµers versatility for combination of materials using hotmelt, extrusion, heat and ultrasonic lamination. Its cloth-like, extremely soft feel, the breathability and skin-friendliness make it an ideal element in laminates for hygiene products.
Introduction of Fibrella™ Lite is in keeping with Suominen's strategic target to increase the share of products with higher value-add in our portfolio. It is also an important milestone in the growth plan for the Care business area as it represents an expansion into the hygiene business.
Fibrella™ Lite is a perfect example of innovative application of technology to match traditionally incompatible nonwoven features like softness, strength and light weight together in one material. Its applicability for various lamination processes creates a broad range of potential end products, which adds to the attractiveness of the launch.
The sale of the Flexibles business area was the final step in Suominen's transformation into a purely nonwovens company. The divested business continues under new ownership with the time-honored name of Amerplast.
The Flexibles business was divested in July 2014 to the UK-based private equity firm Lonsdale Capital Partners LLP and the business's management. The divestment included Suominen Joustopakkaukset Oy and its subsidiaries, as well as Suominen Polska Sp. z.o.o.
The transaction gives Suominen the status of being a company focused exclusively on nonwovens, which is in line with its strategy.
The enterprise value of the transaction was EUR 20 million, on top of which there is a customary earn-out component amounting to around EUR 1 million, subject to the fulfilment of certain conditions. Suominen Corporation retains a minority stake of 19.9% in the business. The cash component of the purchase price amounted to EUR 5.7 million.
In accordance with the IFRS 5 standard, Suominen recognized a non-recurring loss of approximately EUR 5.9 million in the result of its discontinued operations due to the divestment.
The divested business continues under new ownership with the time-honored name of Amerplast. Amerplast produces printed plastic film packaging for consumer applications for industry and the retail sector. Amerplast manufactures highperformance flexible packaging for fastmoving consumer goods for both food and non-food categories.
At the end of 2014, Suominen defined its sustainability strategy to support the company's business strategy and its targets.
1.94
Suominen's accident frequency rate is among the lowest in the industry.
At the end of 2014, Suominen defined its sustainability strategy to support the company's business strategy and its targets. Suominen's sustainability strategy additionally helps the company in responding to stakeholder demands, also going forward. The sustainability strategy crystallizes Suominen's focus areas in sustainable development, as well as the key projects to be launched in 2015.
Although sustainability is nothing new to Suominen, this marks the first time the company has clearly laid down its strategic importance and specified which areas in the broad field of sustainability are the most crucial to Suominen and its stakeholders.
Suominen assesses the sustainability of its operations from three angles: social, economic, and environmental.
Suominen's sustainability strategy is based on the company's Code of Conduct, business strategy, and on the Sustainability Statement that was in force between 2012 and 2014. The sustainability strategy has three focus areas that support the business strategy and which are, in Suominen's view, top priorities for the company and its stakeholders. In these chosen areas, Suominen additionally has the potential to make its operations even more sustainable.
The focus areas of sustainability for Suominen are:
Achieving product leadership is also a key target of Suominen's business strategy. It is a prerequisite for meeting the company's growth targets.
Achieving product leadership is possible if Suominen succeeds in:
» creating the best value-adding product range in carefully selected markets. This requires effective product development and good management of the product range.
Product safety is the starting point for Suominen's production. Suominen's production plants ensure that the products meet the high technical and hygiene standards set by the customers. The product range offered by the leader in the nonwovens industry is, in all respects, not just safe, but also composed in such a way that it takes into account the sustainability requirements of consumers and other end users. The raw materials selected for use in nonwovens, for example, have a significant impact on the environmental impacts of the end product, such as wet wipes, for its entire life cycle. Suominen's goal is to continue to use more and more raw materials from renewable sources in its product range, which will mean that in many cases the end product will be disposable, for instance, through composting. Suominen will launch a separate project in 2015 to develop the sustainability of its product range.
Sustainable operations throughout the organization cover such areas as health, safety and environmental (HSE) matters, good management of human resources, and general ways of working as defined by Suominen's Code of Conduct. Suominen's customers typically incorporate sustainability aspects into the criteria they use to select their nonwovens supplier, which is another reason why good management of these issues is important for the whole company.
Suominen is committed to offering its employees a safe and healthy work environment. The target of zero lost-time accidents has been set. In 2014, Suominen launched the Behavior Based Safety program, which focuses on the attitudes, behavior and working methods of the employees, and was one of the best performing companies in its industry in terms of occupational safety indicators.
To ensure the well-being of the work community and equal career opportunities throughout the Group, Suominen decided to introduce a development project in 2015 to prevent discrimination at the workplace and promote equal career opportunities. More information about Suominen's occupational safety and personnel matters is contained on page 31.
The key to reducing the environmental load from the company's operations is the efficient use of resources (raw materials, energy, water, etc.). Suominen monitors its resource efficiency and reports on it annually. In 2015, the spotlight will mainly be on improving Suominen's water and energy e¼ciency. More detailed information on the company's environmental matters is presented on page 29.
Suominen strives to foster sustainability throughout its value chain and focuses especially on fulfilling the demands inherent in its own role. When the nonwovens supplied by Suominen meet or even exceed the requirements set by the customer in every respect, it means that the converting of nonwovens into wiping or hygiene or medical products is e¼cient and that the end product also fulfils its intended purpose and is safe to use.
| Alicante | ISO 14001, ISO 9001 |
|---|---|
| Bethune | ISO 14001, ISO 9001 |
| Cressa | ISO 9001, FSC, PEFC |
| Green Bay | ISO 14001, ISO 9001, FSC |
| Mozzate | ISO 9001, FSC, PEFC |
| Nakkila | ISO 14001, ISO 9001, FSC, PEFC, Oeko Tex |
| Paulínia | |
| Windsor Locks | ISO 9001 |
The closest links to Suominen in its value chain are customers and goods and services suppliers. Suominen fosters longterm and mutually beneficial, confidential relationships with its customers, suppliers and other business partners.
Suominen has been engaged in a dialogue about sustainability with its customers for a long time. Meeting the sustainability criteria stemming from consumers' needs and passed on to Suominen by customer companies is a condition for most nonwovens deliveries.
In terms of financial value, the most crucial suppliers are raw material suppliers, and sustainability has played a role in Suominen's purchasing decisions for some time. In the course of 2015, Suominen intends to draft a separate Supplier Code of Conduct, laying down the sustainability commitments it requires from its suppliers. The goal of the Supplier Code of Conduct is to create and reinforce ethical ways of operating in the value chain.
Suominen's 2014 Annual Report examines sustainability from the angles of financial, social and environmental responsibility. Suominen reports on its sustainability every year in its Annual Report.
Health, safety and environmental (HSE) data is collected from the Group's production units. In accordance with the materiality principle, those locations that do not have production operations have not been included.
The graphics in the Sustainability section present historical data as of 2012. Suominen acquired Ahlstrom's Home & Personal business on 1 November 2011, which means comparisons cannot be made between current data and data from 2011 and earlier. The data from 2013 and 2014 does not contain the divested businesses (Codi Wipes, Flexibles); all of the graphs reflect Suominen's continuing business.
The Windsor Locks plant in the United States is used by both Suominen and Ahlstrom Corporation. Where the Windsor Locks plant is concerned, only the resources used by Suominen are taken into account in the environmental figures. In the safety indicators, personnel who have worked on Suominen's production lines but are not on Suominen's payroll are excluded.
Suominen continues to build its sustainability reporting with the goal of open and equal stakeholder communication.
Suominen strives to reduce the environmental load of its operations and minimize the environmental impacts of its products throughout their life cycle. The company revised its environmental targets in 2014 and seeks to improve particularly its energy and water e©ciency.
Suominen is committed to taking into consideration the environmental impacts of its operations in accordance with the International Chamber of Commerce's (ICC) principles of sustainable development. The environmental impacts of the company's operations are primarily related to the raw materials, energy and water used in production, and to the waste generated during the production process. Suominen prioritizes the continuous improvement and streamlining of its operations, and fosters the principle of reusing and recycling materials.
In 2014, Suominen defined its strategy for sustainability. The three focus areas of the strategy are: Achieving product leadership, Fostering responsibility throughout the value chain, and Operating sustainably across the company. Minimizing the environmental impacts of the company's operations has a key role in this. In 2014, Suominen also strengthened its Health, Safety, Environment and Quality organization.
In 2014 Suominen purchased some 138,000 tons of fiber raw materials. More than half of the purchased fibers originated from renewable resources. The volume of raw materials purchased increased slightly from the previous year, mainly due to the acquisition of the Paulínia plant in Brazil in February. Viscose, pulp, polypropylene, and polyester were the main raw materials used.
Nonwovens are manufactured by combining selected fibers. Of Suominen's production technologies, the most common is carding, where bales of fibers are opened, blended and then formed into a web using a carding machine. Carded webs can be bonded using hydroentangling, or thermal or chemical bonding. Suominen's technology platform additionally includes wetlaid, airlaid, and composite manufacturing. In most cases, Suominen does not utilize chemicals in its production process, but bonds the fibers with water, air or heat.
Energy use and water consumption increased from the previous year. The unfavorable trend in energy e¼ciency and water efficiency was mainly attributable to the acquisition of the Paulínia plant. Of energy sources, the share of natural gas increased from 2013 and amounted to 47%.
In 2014, a very positive trend was seen in the amount of landfill waste. The approximately 60% reduction in landfill waste was the result of several targeted activities, including investments in recycling, and success in identifying new external end users for the waste generated in the company's manufacturing process.
The increase in Suominen's greenhouse gas emissions was mainly attributable to the acquisition of the Paulínia plant. The amount of greenhouse gas emissions in proportion to produced tons increased as well, mainly due to the market-related downtime taken at plants during the year.
In developing its operating models to foster sustainability, Suominen strives to exploit all of its resources (including raw materials, water and energy) as e¼ciently as possible through the entire manufacturing chain. In 2015 and beyond, Suominen targets improved resource e¼ciency, and particularly improved water and energy e¼ciency. In energy e¼ciency, the target is to achieve a 2% reduction, while in water e¼ciency the goal is set at a 12% percent decrease in 2015. Moreover, the company aims to enhance the measurement of its greenhouse gas emissions in order to implement the emissions-decreasing measures as eµectively as possible in the future.
In August 2014, three out of Suominen's four European plants were certified under the FSC and PEFC schemes. The FSC (Forest Stewardship Council) and PEFC (Programme for the Endorsement of Forest Certification) are international certification schemes for companies involved in the manufacture of products derived from wood-based raw materials.
The certification is one example of Suominen's commitment to ensuring the sustainability of its supply chain. FSC and PEFC certification allows Suominen to oµer its globally operating customers who seek sustainable solutions a broad range of certified nonwovens.
Including sourced PP Spunbond
Waste to landfill
Energy consumption by source in 2014 (in total 1,644,398 kJ)
In 2014, Suominen's plant in Green Bay, WI, U.S.A., was recognized by the Green Bay Metropolitan Sewerage District's NEW Water program for its full compliance with local wastewater discharge standards during the last three years. The mission of NEW Water is to promote public health and welfare through the collection, treatment, and reclamation of wastewater. The organization encourages regional operators to prevent pollution and to ensure that water contaminated by human activity is returned clean to the environment. www.newwater.us
Suominen is committed to offering its employees a safe and healthy work environment. The preferred way of working at Suominen is defined in the company's strategy, particularly in its Suominen Way cornerstone.
Suominen develops and manufactures products and solutions that bring added value to the daily lives of both consumers and professionals. The products made of Suominen's nonwovens promote well-being and quality of life. Suominen's nonwovens are used in the manufacture of, for example, wiping products that help people in their daily routines. They are also used in hygiene products, such as feminine care and incontinence products, and in various medical applications, for example, in surgical drapes and wound care products.
Suominen has long-standing relationships with its customers, in many cases extending more than ten years. Long-term partnerships can be achieved only through the work of a professional, motivated and committed staµ. Suominen employs some
600 people. The company has production plants in Brazil, Finland, Italy, Spain and the United States. The Brazilian plant was acquired in February 2014.
Suominen strives to reinforce a corporate culture that is intrinsically committed, accountable and entrepreneurial. The Suominen Way – the company's way of operating – can be described in three words: Empowerment, Accountability, and Passion. Suominen's employees have the opportunity to contribute to the company's operations, and they have the ability to make quick and timely decisions. Every Suominen employee is accountable for his or her work and particularly for the outcome of that work. Work is done "with a cool head, a warm heart and clean hands", i.e. with drive, with a big heart, and with a high level of ethics. To support employees in ethical decision-making at all times, Suominen issued a Code of Conduct in 2014.
The desired company culture strongly supports the execution of the business strategy. In its strategy for 2015–2017, Suominen targets growth, a marketdriven approach to operations and product leadership. Prerequisites for the accomplishment of these ambitious targets include not only the right cultural environment, but also the development of the right capabilities. In creating these capabilities, developing the competence of the employees plays a key role.
At Suominen, occupational safety is developed according to the principle of continuous improvement. In improving safety, Suominen places particular emphasis on influencing attitudes, behavior, and operating models and on building a culture of work safety. Safety monitoring is part of the daily activities of Suominen's production plants.
In 2014, the eight plants of Suominen recorded a total of two lost-time accidents. Two accidents is two too many, but the figure reflects a clear improvement in safety at Suominen compared with the 2013 level. Moreover, the incident frequency and incident severity rates reached the best levels ever in the company's recorded history. Thanks to these achievements, Suominen climbed to the best-in-class position in the industry in terms of safety. For instance, Suominen's Accident Frequency Rate in 2014 (1.94) was significantly lower than the average in the nonwovens and related industries – according to both US statistics by the US Occupational Safety and Health Administration and European data published by the Confederation of European Paper Industries (CEPI).
In 2015 Suominen continues to target zero lost-time accidents and aims to deploy new leading safety indicators to support the achievement of an ever-safer workplace.
In late 2013, a project based on the Behavior-Based Safety (BBS) approach was started. BBS emphasizes the individual's responsibility in occupational safety, takes the human factor into account, and focuses on influencing the attitudes and motivation of individuals. Through the implementation of the BBS program, Suominen aimed to reach a new level in safety. The results of the preliminary charting carried out at Suominen's plants at the turn of 2013–2014 illustrated that
Suominen employees feel a strong sense of personal accountability for safety at work.
The BBS program was kicked oµ in May 2014 at Suominen's Bethune, SC, plant. Later on in the year the program was expanded to Green Bay, WI, and Alicante, Spain. The program will be introduced at other Suominen plants in 2015.
Safety Walks are at the heart of the BBS. Safety Walks are a process that creates a safety partnership between the observer and the observed individual, focusing people's attention and actions on their daily safety behavior as well as on the safety behavior of those around them. Safety Walks are based on the notion that safety is everyone's responsibility. In a Safety Walk, a trained employee walks through the plant premises, identifying both safe and unsafe behaviors and conditions, and then openly discusses his or her observations with the employees. At the same time, it is crucial to motivate employees to be committed and to take responsibility for both their own safety and the safety of others. By the end of 2014, a total of 90 Suominen employees had participated in Safety Walk training. A total of 861 Safety Walks were performed and altogether 412 safe and 184 unsafe behaviors were identified during the walks.
Accident frequency
12 13 14
rate (AFR)
0 — 2 — 4 — 6 — 8 — 10 —
In June 2014, Suominen initiated a campaign to encourage employees to pay attention to an easy form of exercise: walking during the day. All employees received a pedometer with which they could easily track and monitor their activity. Participation in the campaign was voluntary. The campaign also served as a competition, and the winner was selected based on the time spent walking until the end of the year. All plants participated in the campaign, and the most active walker from each plant was awarded. According to the statistics, the winner logged nearly 500 hours of walking between July and December.
Suominen's Corporate Executive Team (CET) recognized the company's Italian sites with the first-ever Suominen Safety Award in December 2014. The award represented not only the achievements in safety made by the plants, but also the continuous improvement efforts and proactivity demonstrated. CET also emphasized that the Mozzate and Cressa plants set perfect examples of the Suominen Way as described in the Suominen cornerstones.
The plants were praised also for their proactive approach to the Behavior Based Safety (BBS) program and for their leading position in Suominen's internal safety statistics. In April 2014, the Cressa plant had operated for more than four years without a single lost-time accident.
In addition to the recognition for the Italian plants, Suominen's CET gave honorary mention to the Green Bay plant where, thanks to the correct and immediate reactions of Suominen's employees, the life of a truck driver was saved earlier in 2014.
The Suominen Safety Award is annual recognition given by Suominen's CET to a plant that has shown commitment, a proactive approach and continuous improvement in safety.
Suominen complies with local laws and regulations, good governance and other generally accepted business practices. Everywhere it operates, the Group strives to carry out its business activities according to the expectations of society and the stakeholders within its operating environment. Economic vitality – good profitability and a strong balance sheet – is a prerequisite for Suominen to meet its financial obligations to various stakeholders.
A crucial aspect of improving profitability at Suominen is the continuous improvement of productivity and e¼ciency. Determined and systematic efforts are made in the company to streamline processes, boost efficiency and maintain cost-effective operations.
Suominen's balance sheet developed favorably in 2014. The company's debt repayment capacity and its healthy financial position, both thanks to good operative cash flow, facilitated the refinancing in September 2014. The syndicated credit facility withdrawn in 2011 was fully repaid, and its mortgages were released. As a substitute, Suominen issued a bond of EUR 75 million to be listed on the Helsinki Stock Exchange and agreed on a new loan facility of EUR 55 million with two banks. The refinancing allows Suominen to further develop its business operations and to execute its growth strategy for the 2015– 2017 period.
Suominen bears its financial obligations towards its stakeholders and society, and contributes to increasing economic wellbeing. The financial impacts of Suominen's operations are specified in greater detail in the table below.
Suominen's financial targets are presented on page 15 and at Suominen website.
| Stakeholder | Direct impact in 2014 | |
|---|---|---|
| Customers | Net sales 401.8 M€ | Suominen's major customers include international brand-name goods and private label manufacturers. |
| Employees | Wages and salaries 32.3 M€ | Suominen employed some 600 people in Europe and in North and South America in 2014. |
| Business partners | Materials and services 314.9 M€ | Suominen purchases raw materials and other products and services from local and international business partners. |
| Society | Corporate income taxes paid 7.4 M€ | Suominen and its units are significant employers in the communities where they operate and thereby promoters of general well-being. |
| Financiers | Net financial expenses 8.1 M€ | |
| Shareholders | No dividends were paid for the 2013 financial year |
|
Suominen Corporation Annual Report 2014
The Corporate Governance Statement of Suominen is published as separate statement (pages 35–39) in connection with the Report by the Board of Directors. The statement can also be viewed at Suominen's website.
The Nomination Board of Suominen consists of four members, three of which shall be appointed by the company's three largest shareholders.
Suominen Corporation ("Suominen") complies with the Finnish Corporate Governance Code 2010 issued by the Securities Market Association (below "Code"). The Corporate Governance Statement, required by the Code; Securities Market Act, Chapter 7, Section 7; and Section 7 of the Ministry of Finance's Decree on the Regular Duty of Disclosure of an Issuer of a Security and in accordance with the Code, Recommendation 54, is published as separate statement in connection with the Report by the Board of Directors. The statement can also be viewed on the website of Suominen, at www.suominen.fi.
The Audit Committee and the Board of Directors of Suominen Corporation have reviewed the statement. The statement will not be updated during the financial year, but up-to-date information on its various topics is available on Suominen's website.
The Finnish Corporate Governance Code 2010 for listed companies is available at the website of the Securities Market Association, www.cgfinland.fi.
Responsibility for Suominen Group's business operations belongs to the constitutional bodies required by the Limited Liability Companies Act: the General Meeting of Shareholders, which elects the members of the Board of Directors; and the President and CEO, who is appointed by the Board of Directors.
The Group's supreme decision-making body is the General Meeting of Shareholders where shareholders exercise their decisionmaking power. The Board of Directors is responsible for the company's management and its appropriate organization. As the Group's parent company, Suominen Corporation is responsible for the Group's management, accounting and financing, product development and management of intellectual property, human resources, ICT as well as communications and investor relations.
Until 31 March 2014, Suominen Group had two reporting segments: Wiping and Flexibles. However, due to the divestment of Flexibles business area on 14 July 2014, Suominen did not report any segments as from the interim report for January-June 2014.
The Annual General Meeting of Suominen Corporation, held on 26 March 2013, resolved to establish a permanent Shareholders' Nomination Board according to the proposal by the Board of Directors. The task of the Nomination Board is to prepare and present to the Annual General Meeting, and, if necessary, to an Extraordinary General Meeting, a proposal on the remuneration of the members of the Board of Directors, a proposal on the number of the members of the Board of Directors and a proposal on the members of the Board of Directors. In addition, the task of the Nomination Board is to seek candidates as potential board members.
The Nomination Board shall consist of four (4) members, three of which shall be appointed by the company's three largest shareholders, who shall appoint one member each. The Chair of the company's Board of Directors shall serve as the fourth member.
The Nomination Board is established to exist and serve until the General Meeting of the company decides otherwise. The members shall be nominated annually and their term of office shall end when new members are nominated to replace them. The members of the Nomination Board shall be independent of the company and a person belonging to the company's operative management cannot be a member of the Nomination Board.
The representatives notified by the company's three largest shareholders form Suominen Corporation's permanent Nomination Board. The shareholders entitled to appoint members to the Nomination Board were determined on the basis of the registered holdings in the company's shareholders' register on 1 September 2013 and on 1 September 2014.
From 4 September 2013 to 1 September 2014, the representatives of the Nomination Board were Jan Lång, President & CEO of Ahlstrom Corporation; Timo Ritakallio, Deputy CEO of Ilmarinen Mutual Pension Insurance Company; and Risto Murto, CEO of Varma Mutual Pension Insurance Company. Jorma Eloranta, Chair of Suominen's Board of Directors, served as the fourth member of the Nomination Board. The Nomination Board appointed from among its members Jan Lång to act as the Chairman.
On 2 September 2014, Marco Levi, President & CEO of Ahlstrom Corporation; Timo Ritakallio, Deputy CEO of Ilmarinen Mutual Pension Insurance Company; and Reima Rytsölä, Chief Investment O¼cer of Varma Mutual Pension Insurance Company were appointed representatives to the Nomination Board. Jorma Eloranta, Chair of Suominen's Board of Directors, serves as the fourth member of the Nomination Board. The Nomination Board elected Marco Levi as Chairman.
Due to the changes in the shareholdings, Marco Levi resigned from the Nomination Board on 13 October 2014. Mr. Thomas Ahlström was nominated to represent AC Invest Two B.V. in the Nomination Board. Further, the Nomination Board elected him as the Chairman of the Nomination Board.
In 2014, the Nomination Board convened 5 times. The attendance rate at meetings was 100%.
Until the Annual General meeting of 2014, Mr. Jorma Eloranta (Chair), Mr. Risto Anttonen (Deputy Chair), Ms. Suvi Hintsanen, Mr. Hannu Kasurinen and Mr. Heikki Mairinoja formed the Board of Directors of Suominen 2014.
The Annual General meeting held on 26 March 2014 re-elected Mr. Risto Anttonen, Mr. Jorma Eloranta, Ms. Suvi Hintsanen and Mr. Hannu Kasurinen as the members of the Board of Directors. Additionally, Ms. Jaana Tuominen was elected as a new member. The period of service of the Board of Directors ends at the close of the Annual General Meeting 2015.
Biographical details of the members are as follows.
The Board of Directors is responsible for the administration and appropriate organization of Suominen's operations. The Board is responsible for taking decisions on matters that are likely to have a major impact on the Company's operations. The Board convenes according to an annual meeting plan. The main duties of the Board include:
» deciding on financial borrowings and pledging securities
» considering and approving strategies and action plans
The Board of Directors is elected by the General Meeting of Shareholders. It consist of at least three and at most seven members.
The Board of Directors convenes under the direction of the Chair or, if the Chair is unable to attend, the Deputy Chair. Principally, the matters are presented by the President & CEO.
In 2014, the Board of Directors convened 21 times, of which seven times per capsulam. The average attendance rate at meetings was 99%.
The Board of Directors has evaluated the independence of its members. All members are independent of the company and its significant shareholders.
The Board of Directors reviews its operations and procedures through an annual self-assessment.
The main tasks of the Audit Committee relate to ensuring the company's good governance, accounting and financial reporting, internal control systems and monitoring of thirdparty auditing. The Audit Committee will prepare for the Board matters that fall under its areas of responsibilities, but it does not have independent decision-making powers unless the Board resolves otherwise on certain matters.
The Chair and members of the committee are elected annually at the Board's constitutive meeting. At least three members will be elected to the committee. The members of the Audit Committee must be independent of the company, and at least one member must be independent of the company's significant shareholders.
From 1 January 2014 until 26 March 2014, until the constitutive meeting of the Board, the Audit Committee consisted of Hannu Kasurinen as Chair and Suvi Hintsanen and Heikki Mairinoja as members. In its constitutive meeting on 26 March 2014, the Board of Directors elected Hannu Kasurinen as Chair and Suvi Hintsanen and Jaana Tuominen as members of the Audit Committee.
In 2014, the Audit Committee convened four times. The attendance rate at meetings was 100%.
The Board of Directors decided on 26 March 2014 to alter the Remuneration Committee of Suominen Corporation's Board of Directors to Personnel and Remuneration Committee.
The Personnel and Remuneration Committee will prepare the remuneration and appointment matters concerning the company's President & CEO and other members of senior management, as well as principles and procedures related to remuneration of the company's employees. The Committee will prepare for the Board matters that fall under its areas of responsibilities, but it does not have independent decision-making powers unless the Board resolves otherwise on individual matters.
The Chair and members of the committee will be elected annually at the Board's constitutive meeting. The minimum number of committee members is two, which deviates from recommendation 22 of the Finnish Corporate Governance Code, which states that Board committees must have at least three members. Suominen Corporation's Board of Directors states that, taking into consideration the number of members of the Board and the scope and nature of the company's business operations, the Personnel and Remuneration Committee is able to effectively handle the matters assigned to it with only two members. The majority of the members of the Personnel and Remuneration Committee must be independent of the company. The President & CEO or a member of the company's or Group's management may not be a member of the Personnel and Remuneration Committee.
From 1 January 2014 until 26 March 2014, until the constitutive meeting of the Board of Directors, the members of the Personnel and Remuneration Committee were Jorma Eloranta (Chair) and Risto Anttonen. In its constitutive meeting held on 26 March 2014, the Board of Directors elected Jorma Eloranta as the Chair of the Personnel and Remuneration Committee and Risto Anttonen as the member.
In 2014, the Personnel and Remuneration Committee convened three times. The attendance rate at meetings was 100%.
The President & CEO of Suominen Corporation is appointed by the Board of Directors. The President & CEO is responsible for day-to-day operations in accordance with the Companies Act and guidelines and instructions provided by the Board of Directors. The President & CEO is responsible for ensuring that the company's accounting practices comply with the law and that its assets are reliably managed. The President & CEO acts as the Chair of the Corporate Executive Team and as the direct superior of the Team's members.
Mrs Nina Kopola, b. 1960, M.Sc. (Chem. Eng.), Technology Licentiate acts as the President & CEO of Suominen Corporation.
The President & CEO is supported by the Corporate Executive Team and Corporate Leadership Team. The Corporate Executive Team comprised in 2014, in addition to the President & CEO who acts as its Chairman, the Senior Vice Presidents of the business areas (Senior Vice President, Flexibles business area until the closing of its divestment, 14 July 2014), Senior Vice Presidents of Operations, the CFO; and the Senior Vice President, Human Resources.
The Corporate Leadership Team comprises, in addition to the members of the Corporate Executive Team, Vice President of R&D, Vice President of Investments & Technology, CIO; Vice President, Marketing & Product Management; Vice President, Sourcing; and Vice President, Corporate Communications & IR.
Suominen Group observes the guidelines for insiders issued by the NASDAQ OMX Helsinki Ltd on 1 July 2013 and the company's
own insider guidelines approved by the Board of Directors.
The members of the Board of Directors, the President and CEO and the Principal Auditor are included in the company's public insider register. The public register is available at Suominen's website via the online service provided by Euroclear Finland Ltd.
The company also maintains a companyspecific register of non-public insiders. Permanent insiders listed here include the members of the Corporate Executive Team and certain other employees of the company, who by virtue of their position or responsibilities regularly receive insider information. A project-specific insider register is maintained to cover persons that are involved with the planning and preparation of significant projects dealing with insider information. The Senior Vice President, CFO is responsible for Suominen's insider management.
Insiders are not allowed to trade in securities issued by the company for a period beginning at the end of a financial period or a financial year and ending with the publication of the interim report or financial statement release for the period or financial year in question (closed window). Insiders must consult the person responsible for insider issues for advice on the legal and procedural implications of any trading in securities that they might plan.
Control operations are embedded in the organization of Suominen. Controlling is executed in connection with steering of business processes and in wide-ranging reporting processes.
Suominen has no separate organization for internal audit. The company purchases internal audit services from an external partner. Suominen's control environment is based on given instructions, business culture and on the way of working adopted by company's managers and employees. Suominen has established its values or principles, which encourage everyone at Suominen to an active and ethical way of working both with various stakeholders and within the Group. In cascading the working principles in the organization, honesty, transparency and working in teams are integral parts in establishing high moral behavior throughout the company.
The foundation of the internal control process relating to the financial reporting is built up around the Group's policies approved by the Board of Directors and other directives and instructions. The responsibility structure of the Group is based on authority inherent in the positions and work descriptions, segregation of duties and the "two-eyes" and "one-over" principles. Effective internal control requires that duties are properly allocated to employees and potential conflicts of interests are identified and eliminated. Satisfactory control environment is ensured through internal analyses and evaluations of key processes as well as through revisions made by external auditors.
The Group Finance supports the business units in analyzing their performance and in the decision-making concerning various business choices. Business Controllers at unit level have the task to ensure that the control procedures are in place at various units. ICT function's role is to maintain the security checks of ICT systems throughout the Group companies.
Risk management is considered an integral part of running the business, and identification and assessment of risk is an essential element of internal control. The aim is to focus on the material risks that are significant from the business perspective. Risks are categorized into business risks caused by changes in the business environment and operational risks, which may be a result of shortcomings in the way that the organization manages its processes.
Operational risks are considered to have a potential material value in transactions with external parties. However, Group instructions, process check-ups, allocation of tasks and standards set up by total quality operating systems help to establish a prudent environment, in which exposure to material risks can be mitigated.
Risks relating to financial reporting are evaluated and monitored by the Board, aiming to ensure that the financial reporting of the corporation is reliable, supports decision making and serves the needs of external stakeholders. Valuation of assets and liabilities according to various evaluation assumptions and criteria may constitute a risk.
Estimates and assumptions involving a significant risk of causing material changes in the carrying amounts of assets and liabilities are continuously evaluated and benchmarked against other similar entities. Complex and/or changing business circumstances may present a challenge when assessing the carrying amounts of assets. To avoid errors in stating the fair values of assets or liabilities, regular checkups are made, e.g. by comparing material flows, values, and quantity and quality data with the information given in the accounts. The risk of errors caused by irregularities and discontinuities in information is reduced by using established and automated systembased audit trails.
The control activities include general as well as detailed controls, which aim at preventing, identifying, and correcting errors and deviations. In addition to the Group level instructions, control activities are also conducted at unit and plant levels.
Several control activities are applied in the ongoing business processes to ensure that potential errors or deviations in the financial reporting are prevented, identified, and corrected. Suominen divides control activities into following three categories. Documented instructions help the organization to standardize the monitoring of tasks. Continuous and regular reporting conveying feedback on performance of Group functions and entities ensures that instructions and defined processes are followed. In critical processes, specific authorizations are needed in the work-flow, either for security or verification needs.
In practice, control activities are conducted in management group meetings, where results of the activities are reviewed. More focused control is exercised when specific reconciliation of accounts or analyses of the processes for financial reporting are conducted. The need for separate evaluations, as well as their scope and frequency, will be defined by assessing risks and the effectiveness of ongoing monitoring procedures. It is the responsibility of Business Controllers to ensure that control activities in the financial processes are appropriate and in accordance with the Group's policies and instructions. Information security and related control activities play a key role when the features of ICT systems are being defined and applied.
The Group Accounting manual, policies approved by the Board and other directives and instructions relating to the financial reporting are updated and communicated on a regular basis from management to all aµected employees and are also available in the intranet systems of Group companies. In addition, a standard reporting package is used by the units. The Group management and the business unit management conduct monthly reviews that include analysis of performance metrics and indicators assisting the management to better understand the underlying business performance.
Ongoing responsibility for follow-up rests with the business units' management groups and controller functions. In addition, separate internal control reviews on key financial processes are conducted with external auditors on a rolling basis. The results of the reviews are reported to employees involved.
Regular inspections by quality auditors or customer audit personnel cover also the internal controls of delivery chain processes.
The Group's Finance function monitors the operations and processes of the group units and the accuracy of external and internal financial reporting.
b. 1951
M.Sc. (Tech), Doctor of Science in Technology h.c.
Member of the Board since 2011, Chair of the Board since 2011
Independent member
b. 1949
B.Sc. (Econ.) Member of the Board since 2011, Deputy Chair of the Board since 2012
Independent member
Suvi Hintsanen
b. 1967 M.Sc. (Econ.)
Head of Cash Management and Trade Finance, Pohjola Bank plc
Member of the Board since 2010
Independent member
b. 1963
M.Sc. (Econ.)
CFO, Renewable Packaging Division, Stora Enso Oyj
Member of the Board since 2012
Independent member
Jaana Tuominen b. 1960 M.Sc. (Chem. Eng.) CEO of Paulig Group Member of the Board since 2014
Independent member
Detailed, up-to-date information on the principal working experience and positions of trust as well as on the shareholdings of the members of the Board of Directors is available on Suominen's website www.suominen.fi. Additionally, information on the Board's remuneration is included in Suominen's Remuneration Statement, also available at www.suominen.fi.
Detailed, up-to-date information on the principal working experience and positions of trust as well as on the shareholdings of the members of Suominen's Corporate Executive Team is available on Suominen's website www.suominen.fi. Information on their remuneration is included in the Suominen's Remuneration Statement, also available at www.suominen.fi.
1 January–31 December 2014
| Report by the Board of Directors |
43 | |
|---|---|---|
| -------------------------------------- | ---- | -- |
| Consolidated Balance Sheet 52 | |
|---|---|
| Consolidated Statement of Income | 53 |
| Consolidated Statement of Comprehensive Income |
54 |
| Statement of Changes in Shareholders' Equity |
55 |
| Consolidated Cash Flow Statement | 56 |
| Notes to the Consolidated Financial Statements | 57 |
| Parent Company Statement of Income |
92 |
|---|---|
| Parent Company Balance Sheet |
93 |
| Parent Company Cash Flow Statement 94 |
|
| Notes to the Financial Statements of the Parent Company | 95 |
| Signing of the Financial Statements |
101 |
|---|---|
| The Auditor's Note | 101 |
| Auditor's Report | 102 |
| Share Capital and Shareholders | 103 |
| Key figures per share | 104 |
| Key figures on financial performance |
105 |
| Calculation of the Key figures | 106 |
| Information for shareholders |
107 |
All figures in the Report by the Board of Directors refer to continuing operations of the Group unless otherwise stated. The figures are compared with those of the corresponding period in 2013 unless otherwise stated. In accordance with IFRS 5, the comparison data of the balance sheets have not been revised and, consequently, include both non-allocated items and discontinued operations.
Suominen's business developed in accordance with the company's strategy in 2014. The successful execution of the strategy was reflected also in the financial indicators. In 2014, the company achieved the targeted level for all of the financial targets set by the Board of Directors: the return on investments (ROI) of continuing operations increased to 15.7% (target level >10%) and gearing ratio fell to 34.7% (target level 40–80%). The third target, organic net sales growth at a rate faster than the industry average (some 3%), was also achieved. Net sales from Suominen's continuing operations increased organically by 3.5%.
Suominen's net sales from continuing operations grew in total by 7.5% from the comparison period to EUR 401.8 million (373.7). Operating profit before non-recurring items from continuing operations amounted to EUR 26.9 million (19.4). Operating profit after nonrecurring items was EUR 25.9 million (18.9). The non-recurring items reported in the review period totaled EUR -1.0 million (-0.5). Profit before taxes from continuing operations was EUR 17.8 million (13.1) and profit for the period was EUR 10.2 million (5.7). Earnings per share from continuing and discontinued operations was EUR 0.02 (-0.07) and cash flow per share EUR 0.15 (0.09).
The market environment continued to be divided also in 2014. In North America, the other of the two principal market regions of Suominen, the overall economic situation was more positive, which was mirrored in the demand for the products supplied by Suominen. In Europe, the economic outlook was more uncertain and the competition remained tough for the most of the year. At the latter half of the year, the demand in Europe improved.
Suominen's balance sheet developed favorably in 2014. Based on the strong cash flow from operations and the company's healthy financial status, Suominen had the opportunity for refinancing, implemented in September 2014. The syndicated credit facility withdrawn in 2011 was fully amortized and its mortgages were released. As a substitute, Suominen issued a EUR 75 million bond and agreed of a new syndicated EUR 55 million loan facility with banks. The new loan facility consists of a term loan of EUR 10 million with a maturity of three years; a multicurrency revolving credit facility of EUR 30 million with a maturity of four years; and an investment loan of EUR 15 million with a maturity of four years. The refinancing enables Suominen to execute its growth strategy in 2015–2017.
In 2014, Suominen's strategy, with cornerstones The Suominen Way, Step Change in Profitability and In the Lead, was implemented tenaciously.
The renewed Group structure, organization, management system, and operating model were eective as of 1 January 2014. Through the changes implemented, Suominen will become an even more focused and agile company. The company's ability to create new business and develop products with increased added value will be strengthened.
As of 1 January 2014, Suominen's Nonwovens business unit was divided into two new business areas. The Convenience business area focuses on serving customers that manufacture wiping products as well as travel and catering nonwovens, while the Care business area is concerned with customers that manufacture health care and hygiene products.
Suominen expanded its operations to the growing nonwovens markets of South America through the acquisition of Paulínia plant in Brazil from Ahlstrom Corporation on February 2014. The enterprise value of the transaction was EUR 17.5 million and it was financed by issuing a convertible hybrid bond of EUR 17.5 million.
Suominen divested its Flexibles business area in July. The divestment completed Suominen's transformation from a company with three equal businesses into a company focusing entirely on nonwovens. Now Suominen can, in line with its strategy, concentrate even more intensely on developing its nonwovens business and further strengthening its globally leading market position.
In October, Suominen published its strategy for the period 2015– 2017. In the strategy for the coming years, Suominen emphasizes its active development into a forerunner in its industry. In terms of financial targets, Suominen will – more strongly than earlier – focus on growing its organic net sales at a rate that exceeds the industry average. In the execution of the strategy Suominen can
utilize the opportunities oered by its strong financial status and leading market position.
Alongside with the growth targets, Suominen continues to uphold its relative profitability and stable financial position. Goal is to achieve a return on investment (ROI) of more than 12% in the future, and to maintain a healthy gearing ratio, i.e. between 40 and 80%.
In connection with the strategy update, Suominen's Board of Directors approved a dividend policy for the company. Suominen's policy is to distribute approximately 30% of its profit for the period in annual dividends. In assessing its proposal for the payment of dividends, the company's Board of Directors will also consider Suominen's future investment needs and the solidity of its financial position.
The Board of Directors of Suominen proposes to the Annual General Meeting that funds shall be distributed EUR 0.01 per share of the financial year 2014. Should the Annual General Meeting approve the proposal, Suominen would distribute its first funds in five years in spring 2015.
Suominen's Corporate Governance Statement of 2014 has been published as a separate statement at Suominen website, www.suominen.fi. Additionally, Suominen has published its Remuneration Statement for 2014, available at the same website.
On 31 December 2014 Suominen has two business areas, Convenience and Care. Convenience business area supplies nonwovens as roll goods for wiping products. Care business area manufactures nonwovens for hygiene products and medical applications. Suominen divested its Flexibles business area in July 2014.
In the interim report for January-March 2014, Convenience and Care business areas were reported in Nonwovens segment and Flexibles business area as an independent segment. As from the interim report for January-June 2014, Suominen has not reported any segments.
Suominen's net sales from continuing operations grew by 7.5% from the comparison period to EUR 401.8 million (373.7). Net sales of Convenience business area were EUR 369.4 million and net sales of Care business area EUR 32.3 million.
Operating profit before non-recurring items from continuing operations increased by 38% and amounted to EUR 26.9 million (19.4). Operating profit after non-recurring items was EUR 25.9 million (18.9). The non-recurring items reported in the review period totaled EUR -1.0 million (-0.5), of which EUR -1.2 million were costs related to restructuring measures and to the acquisition of the Brazilian unit; and EUR 0.2 million were items related to the closing down of the fiber production in Nakkila in 2012. Profit before taxes was EUR 17.8 million (13.1). Profit for the period from continuing operations was EUR 10.2 million (5.7) and from discontinued operations EUR -5.2 million (-21.8). The Group profit for the period was EUR 5.0 million (-16.1).
Cash flow from operations was EUR 37.1 million (21.3) in January-December. As of the beginning of the year, EUR 6.1 million (6.5 released) in working capital was released.
Suominen completed the acquisition of Paulínia plant in Brazil from Ahlstrom Corporation on 10 February 2014. The Paulínia plant was part of Ahlstrom's former Home and Personal business operations, acquired by Suominen in 2011, but the acquisition of the Brazilian unit was prolonged due to delay in receiving approval from the authorities and consequent renegotiations. The transaction was implemented through acquisition of the shares of the local company. The enterprise value of the transaction was EUR 17.5 million and the final consideration EUR 19.6 million.
Due to the transaction Suominen's nonwovens business has now a foothold in the growing South American market region. The acquired plant is the only nonwovens manufacturing facility utilizing modern spunlace technology in production of wiping products in Brazil. The plant employs some 40 people and its annual net sales have amounted approximately to EUR 20 million.
Suominen reports in the discontinued operations the Flexibles business area, divested in July 2014, and Codi Wipes business unit, divested in summer 2013. Prior to June 2014 Flexibles business was reported as an individual segment and prior to June 2013, Codi Wipes as part of Suominen's Wiping segment.
The enterprise value of the Flexibles business amounted to EUR 20.3 million, which includes a contingent consideration of EUR 1.0. At the time of the closing of the deal, on 14 July 2014, Suominen had a loan receivable of EUR 8.5 million. Suominen retains a minority shareholding of 19.9% in the divested business. The cash component of the purchase price amounted to EUR 5.7 million. A revised non-recurring loss of EUR 5.9 million was recognized.
Suominen reported a non-recurring loss totaling EUR 5.2 million in January-December 2014 in its discontinued operations.
The profit after taxes from discontinued operations was EUR -21.8 million in January–December 2013.
The Group result in 2014 including the discontinued operations was EUR 5.0 million (-16.1).
| € 1,000 | 2014 | 2013 | Change % | 2012 |
|---|---|---|---|---|
| Net sales | 401,762 | 373,684 | 7.5 | 356,883 |
| Operating profit | 25,897 | 18,916 | 36.9 | 8,920 |
In September 2014, Suominen renewed its financing. The syndicated credit facility withdrawn in 2011 was fully amortized and its mortgages were released. As a substitute, Suominen issued a bond and agreed of a new syndicated EUR 55 million loan facility with banks.
On 23 September 2014, Suominen issued a EUR 75 million bond to be listed in the NASDAQ OMX Helsinki Stock Exchange. Principal
amount of each book-entry unit of the senior unsecured notes is EUR 1,000, with an ISIN code FI40000108576. Each note will be freely transferable after it has been registered into the respective book-entry account. The notes constitute direct and unsecured obligations of Suominen and they are guaranteed as for own debt by the Guarantors, i.e. subsidiaries of Suominen Corporation. The notes bear interest from, and including, September 23, 2014 at the rate of 4.375% per annum until 23 September 2019, when the notes shall be repaid in full at their nominal value.
In connection with issuing the bond, Suominen entered into a syndicated credit facilities agreement totaling EUR 55 million in September. It consists of a term loan of EUR 10 million with a maturity of three years; a multicurrency revolving credit facility of EUR 30 million with a maturity of four years; and an investment loan of EUR 15 million with a maturity of four years. The facilities are guaranteed as for own debt by the subsidiaries of Suominen Corporation.
The Group's interest-bearing net liabilities amounted to EUR 37.8 million (75.5) at the end of the review period. The gearing ratio was 34.7%.
Net financial expenses were EUR 8.1 million (5.8), or 2.0% (1.5%) of net sales. Due to the refinancing and the discontinuing of the hedge accounting for the interest rate hedging, a non-recurring loss of EUR 0.9 million was recognized. Also the remaining costs of EUR 2.0 million for the previous syndicated loan were recognized in the financial expenses.
A total of EUR 6.1 million of working capital was released (released 6.5). Trade receivables amounting to EUR 0.1 million were sold to the bank. The equity ratio was 41.2% (32.9%). Cash flow from operations was EUR 37.1 million (21.3), representing a cash flow of EUR 0.15 per share (0.09).
The gross investments of the continued operations totaled EUR 7.1 million (4.4). Planned depreciation of the continuing operations amounted to EUR 15.6 million (13.9). Suominen invested EUR 1.7 million in capacity expansion of high value added nonwovens at the Windsor Locks plant in the United States and EUR 1.0 million in intangible assets. Other investments were in maintenance. The investments of the discontinued operations were EUR 0.6 (1.4) million.
| Capital expenditure | |||
|---|---|---|---|
| € 1,000 | 2014 | 2013 | 2012 |
| Continuing operations | 7,066 | 4,413 | 2,744 |
| % of net sales | 1.8 | 1.2 | 0.8 |
| Invested capital | |||
| € 1,000 | 31 Dec 2014 |
31 Dec 2013 |
31 Dec 2012 |
| Non-current assets | 134,633 | 133,838 | 163,816 |
| Current assets | 129,978 | 105,073 | 115,125 |
| Deferred tax liabilities | -8,789 | -7,183 | -5,653 |
| Trade payables | -47,403 | -45,016 | -46,381 |
| Accruals and prepayments | -10,042 | -10,380 | -13,064 |
| Other non-interest-bearing liabilities |
-4,627 | -3,357 | -6,066 |
| Total | 193,750 | 172,976 | 207,776 |
| Key figures | |||
|---|---|---|---|
| 2014 | 2013 | 2012 | |
| Return on capital invested (ROI), % |
12.0 | -0.7 | 0.4 |
| Return on capital invested (ROI), %, continuing operations |
15.7 | 12.4 | 5.0 |
| Return on equity (ROE), % | 5.1 | -18.6 | -11.2 |
| Equity ratio, % | 41.2 | 32.9 | 34.4 |
| Gearing ratio, % | 34.7 | 96.2 | 101.0 |
| Earnings/share, continuing operations, EUR |
0.04 | 0.02 | -0.01 |
| Earnings/share, discontinued operations, EUR |
-0.02 | -0.09 | -0.04 |
| Earnings/share, EUR | 0.02 | -0.07 | -0.05 |
| Equity/share, EUR | 0.44 | 0.32 | 0.39 |
Further key figures as well as their calculation rules are included in the consolidated financial statements.
| € 1,000 | Q1/2014 | Q2/2014 | Q3/2014 | Q4/2014 | Q1-Q4/2014 |
|---|---|---|---|---|---|
| Net sales | 98,353 | 95,340 | 103,291 | 104,778 | 401,762 |
| Operating profit before non-recurring items | 6,384 | 5,524 | 8,710 | 6,233 | 26,851 |
| % of net sales | 6.5 | 5.8 | 8.4 | 5.9 | 6.7 |
| Non-recurring items | -233 | -278 | -349 | -94 | -954 |
| Operating profit, total | 6,151 | 5,246 | 8,361 | 6,139 | 25,897 |
| % of net sales | 6.3 | 5.5 | 8.1 | 5.9 | 6.4 |
| Net financial expenses | -1,467 | -1,276 | -4,334 | -997 | -8,075 |
| Profit before income taxes | 4,684 | 3,970 | 4,027 | 5,142 | 17,822 |
The Group's R&D function employed a total of 13 (15) people at the end of the year. R&D expenditure totaled EUR 2.9 million (3.0), equivalent to 0.7% (0.8%) of net sales. Suominen invests in R&D to oer its customers ever-better materials and more functional solutions and to increase the share of the products with higher value added in its portfolio. Suominen´s R&D is a centralized function, which is reflected, for example, in the ownership of Suominen Corporation for all business-related patents and related technologies, know-how, processes, recipes and solutions developed by Suominen Corporation. The company is targeting to have extensive industrial rights to the nonwoven-based solutions and technologies thereto as well as test and pilot equipment needed. This way it can oer best possible support to the group companies to satisfy the current and future customer needs.
In 2014, Suominen employed an average of 826 (1 037, discontinued operations included) people. The average number of employees of the Flexibles business area, divested in July 2014, was 235.
To adjust the production volumes of Nakkila plant in Finland with the business environment prevailing in June 2014, Suominen Nonwovens Ltd initiated codetermination negotiations concerning potential temporary lay-offs involving its operations personnel as well as the employees working in administrative and support functions related with operations. In total the negotiation process involved approximately 75 people. The temporary lay-os were implemented in shorter periods and the lay-o period was 60 days per person at maximum.
| 2014 | 2013 | 2012 | |
|---|---|---|---|
| Nonwovens | 581 | 537 | 594 |
| Group management and administration |
10 | 13 | 9 |
| Total, continuing operations | 591 | 550 | 603 |
| Wages and salaries, EUR 1,000 | 32,276 | 31,540 | 33,011 |
The goal of Suominen's Human Resources strategy is to support business operations, and thereby, the employees' competence development, motivation and their commitment to the company's goals is promoted. Suominen has target-oriented programs to improve employees' working ability, skills, wellbeing and safety at work.
| Key HR indicators | |||
|---|---|---|---|
| 2014 | 2013 | 2012 | |
| Incentives paid, EUR 1,000 | 1,655 | 1,496 | 2,017 |
| % of wages and salaries | 5.8 | 4.7 | 6.1 |
| Sick absences, % of total working hours |
2.4 | 2.8 | 2.5 |
| Training costs, EUR 1,000 | 231 | 106 | 123 |
Suominen's goal is to reduce the environmental load caused by the company's operations and to minimize the environmental impacts of its products throughout their life cycle. In addition to continuously improving and enhancing its operations, Suominen's environmental efforts are guided by the principles of reusing and recycling materials. Suominen is committed to taking into consideration the environmental impacts of its operations in accordance with the principles of sustainable development of the International Chamber of Commerce (ICC).
Suominen complies with the local legislation and o³cial guidelines wherever it operates. Separate environmental permits are required for operations in some of the Group's units. Of Suominen's units, the Nakkila, Alicante, Bethune, Green Bay and Windsor Locks units are ISO 14001 certified.
The environmental impacts of Suominen's operations primarily stem from the raw materials, energy and water used in production and from the waste generated during the production process. Environmental requirements are incorporated into product and process development projects from the very start, with the aim of using raw materials, energy, water and other resources, such as packaging materials and transport services, as e³ciently as possible. The Group focuses on systematically lowering its waste volumes and making its operations more energy efficient. Suominen's product range also includes products made from environmentally friendly materials.
The materials used in the manufacture of products mainly consist of viscose, pulp, polypropylene and polyester. There is the risk that production plants might release hazardous substances into the environment. Suominen strives to control environmental risks by means of the quality and environmental systems used in production operations.
Reducing environmental impacts requires long-term development work, an important element of which is the harmonization of key indicators between the various business areas and units. Suominen's goal is to have more comprehensive, commensurable data available in the future on the impacts of the company's operations. This would allow development measures to be targeted e³ciently, and as eectively as possible.
In 2014, Suominen's production plants used a total of 138,000 tons of raw materials, 1,644,398 gigajoules of energy and 5,431,730 m3 of water. Landfill waste generated at the production plants amounted to 888 tons.
Suominen's overall environmental expenditure was EUR 1.0 million (1.1). No material environment-related investments were made.
The estimate on the development of Suominen's net sales is partially based on the forecasts and delivery plans provided for Suominen by its customers. Changes in these forecasts and plans resulting from changes in the market conditions or in customers' inventory levels may aect Suominen's net sales. Due to the continued uncertainty in the general economic situation and the cautious consumer purchasing habits, the forecasts include uncertainty.
Suominen has numerous regional, national or international competitors in its dierent product groups. There is currently oversupply in several product groups especially in Europe. Products based on new technologies and imported from countries of lower production costs may reduce Suominen's competitive edge. If Suominen is not able to compete with an attractive product oering, it may lose some of its market share. Competition may lead to increased pricing pressure on the company's products.
Suominen's customer base is concentrated, which adds to the customer-specific risk. This may aect Suominen's result if customers' purchasing habits become more cautious as a result of a general fall in consumption, or as a result of sales losses. The Group's ten largest customers currently account for 52% (57%) of the Group net sales. Long-term contracts are preferred with the largest customers. In practice the customer relationships are long-term and last for several years. Customer-related credit risks are managed in accordance with a risk policy approved by the Board of Directors. Credit limits are confirmed for customers on the basis of credit ratings and customer history. Suominen also uses export credit guarantees and insures against customer risks to a limited extent.
Suominen purchases significant amounts of pulp- and oil-based raw materials annually. Raw materials are the largest cost item for operations. Rapid changes in the global market prices of raw materials aect the company's profitability. Extended interruptions in supplies of Suominen's main raw materials could disrupt production and have a negative impact on the Group's overall business operations. As Suominen sources its raw materials from a number of major international suppliers, significant interruptions are unlikely. Changes in raw material prices have a rapid eect on Suominen's financial performance, as stocks equal two to four weeks consumption and passing on price changes in these materials to the prices Suominen charges its contract customers takes between two to five months.
Due to the acquisition of the manufacturing plant in Brazil, the risks that are characteristic to any developing region, including significant changes in business environment or exchange rates, could have an impact on Suominen's operations in Brazil.
There could be a risk of Suominen's business operations being interrupted due to abrupt and unforeseen events, such as power outages or fire and water damage. Suominen may not be able to control these events through predictive actions, which could lead to interruptions in business. Risks of this type are insured in order to guarantee the continuity of operations. As Suominen has valid damage and business interruption insurance, it is expected that the damage would be compensated and the financial losses caused by the interruption of business would be covered.
Suominen uses certain technologies in its production. In the company management's view, the chosen technologies are competitive and there is no need to make major investments in new technologies. However, it cannot be excluded that the company's technology choices could prove wrong, and the development of new or substitute technologies would then require investments.
Suominen aims to protect its business against product liability risks through the use of systematic quality assurance processes and products liability insurance. R&D is responsible for ensuring the underlying safety of the group's products during their development. Continuous quality control is designed to guarantee product quality during production. Management considers it unlikely that the Group will face significant product liability-related claims, and is unaware of any such claims.
Suominen is subject to income taxes in numerous jurisdictions. Significant judgment is required to determine the total amount of income tax at Group level. There are many transactions and calculations that leave room for uncertainty as to the final amount of tax. Taxation risks also relate to changes in tax rates or tax legislation, or misinterpretations, and materialization of the risk could result in increased payments or sanctions by the tax authorities, which in turn could lead to financial loss. Deferred tax assets included in the balance sheet require that the deferred tax assets can be recovered in the future taxable income.
The Group's financial risks are managed in accordance with a policy approved by the Board of Directors. Financial risks relate to the adequacy of funding, credit risks, and the market risks associated with financial instruments, divided into currency, interest rate, and commodity risks. The financial risks are described in note 21 of the consolidated financial statements of the Group.
The continued positive development of Suominen's business operations in the United States increases the relevance of the exchange rate risk related to USD in the Group's total exchange risk position. Suominen hedges this foreign exchange position in accordance with its hedging policy.
The sensitivity of the goodwill to the changes in the business environment is described in the notes to the consolidated financial statements. Goodwill is tested annually to determine whether there is any impairment. The test calculations are based on closing date estimates of future developments. The actual cash flows may deviate from the forecast future discounted cash flows, as the long economic life-time of the company's non-current assets, changes in the estimated sales volumes, product prices, production costs, and in interest rates used in discounting may result in impairment recognitions. The fair value based on value in use of assets or businesses in total or in part do necessarily correspond to the price that a third party would pay for them.
The registered number of Suominen's issued shares totaled 247,934,122 shares, equaling to a share capital of EUR 11,860,056.00.
The number of Suominen Corporation shares traded on NASDAQ OMX Helsinki from 1 January to 31 December 2014 was 97,683,100 shares, accounting for 39.7% of the share capital and votes. The trading price varied between EUR 0.47 and EUR 0.81. The closing trading price was EUR 0.81, giving the company a market capitalization of EUR 199,365,788 on 31 December 2014.
On 1 January 2014 Suominen Corporation held 1,924,367 of its own shares. On 5 June 2014, the portion of the remuneration of the Board of Directors to be paid in shares, in total 120,848 shares, was delivered in accordance with the decision by the Annual General Meeting. On 31 December 2014, Suominen held 1,803,519 own shares, accounting for 0.7% of the share capital and votes.
On 31 December 2014, the target group for Suominen's share-based incentive plan included seven employees. One employee left the program during the review period. At the end of the financial period, the rewards to be paid on the basis of the plan corresponded to a value of roughly 1,668,333 Suominen Corporation shares in total, including the portion to be paid in cash. The aim of the plan is to align the objectives of shareholders and key employees in order to increase the value of the company, to commit the key employees to the company, and to oer them a competitive reward plan based
on long-term shareholding in the company. The plan covers one performance period: the calendar years 2012–2014. The potential reward from the performance period will be based on Suominen Group's cumulative Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) and cumulative cash flow, and it will be paid in 2015 partly in company shares and partly in cash.
The Board of Directors of Suominen Corporation approved on 4 December 2014 two new share-based incentive plans for the Group management and Group key employees. The aim of the new plans is to combine the objectives of the shareholders and the persons participating in the plans in order to increase the value of the Company in the long-term, to bind the participants to the Company, and to oer them competitive reward plans based on earning and accumulating the company's shares.
The new Performance Share Plan includes one performance period, calendar years 2015—2017. The Board of Directors will decide on further performance periods. The Board of Directors of the Company will decide on the Plan's performance criteria and required performance levels for each criterion at the beginning of a performance period. The Performance Share Plan is directed to approximately 15 people. The potential reward of the Plan from the performance period 2015—2017 will be based on the Suominen Group's Net Sales growth, Earnings before Interest and Taxes (EBIT) and Return on Invested Capital (ROI). The rewards to be paid on the basis of the performance period 2015—2017 correspond to the value of an approximate maximum total of 2,300,000 Suominen Corporation shares (including also the proportion to be paid in cash). The Board of Directors is entitled to reduce the rewards agreed in the Performance Share Plan if the limits set by the Board of Directors for the share price are reached.
The new Matching Share Plan includes one three-year performance period, calendar years 2015—2017. The prerequisite for receiving reward on the basis of this Plan is that a person participating in the Plan owns or acquires the company's shares up to the number determined by the Board of Directors. Furthermore, receiving of reward is tied to the continuance of participant's employment or service upon reward payment.
The members of the Corporate Executive Team and the Corporate Leadership Team belong to the target group of the Matching Share Plan. The rewards to be paid on the basis of the Matching Share Plan correspond to the value of an approximate maximum total of 550,000 Suominen Corporation shares (including also the proportion to be paid in cash). In order to implement the Matching Share Plan, the Board of Directors resolved on a share issue against payment directed to the target group.
The potential rewards from the performance periods 2015—2017 will be paid partly in the Company's shares and partly in cash in 2018. The cash proportion is intended to cover taxes and taxrelated costs arising from the reward to the participant. As a rule, no reward will be paid, if a participant's employment or service ends before the reward payment.
A member of the Corporate Executive Team must hold 50% of the net number of shares given on the basis of the Plans, as long as his or her shareholding in total corresponds to the value of half of his or her annual gross salary. The President & CEO of the company must hold 50% of the net number of shares given on the basis of the Plans, as long as his or her shareholding in total corresponds to the value of his or her annual gross salary. Such number of shares must be held as long as the participant's employment or service in a group company continues.
Suominen issued on 10 February 2014 a convertible hybrid bond of EUR 17,500,000, treated as equity, to finance the acquisition of the nonwovens business operations in Brazil. The bond was oversubscribed. The bond consists of 175 bond notes, each having the nominal value of EUR 100,000. The bond does not have a guarantee or other collateral. The principal of the bond has a fixed annual interest of 5.95% until 10 February 2018. After that date, the principal of the bond will have a fixed annual interest of 6.95% until 10 February 2019. After that date, the principal of the bond will have a fixed annual interest of 7.95%. The interest accrued for the bond by 10 February 2018 will be capitalized to the principal of the bond annually on 10 February. Thereafter and commencing on 10 May 2018, the interest is payable in the discretion of the Board of Directors quarterly on 10 February, 10 May, 10 August and 10 November. No interest shall be paid on the capitalized interest until 10 February 2018. After that date, the capitalized interest shall be a part of the actual principal of the bond and annual interest shall be paid to the whole amount of the principal according to the interest terms of the bond.
Suominen has the right to redeem the bond in whole or in part on 10 February 2018 or thereafter, on each interest payment date, at the nominal value of the bond together with the accrued interest.
A bond note entitles the bondholder to convert the bond note and the potential capitalized interest for shares in Suominen at the conversion rate of EUR 0.50 per share. The period for converting starts on 11 February 2014 and ends on 10 February 2018. The number of shares to be received through the conversion must always be at least 200,000. If the total value of the bond including interest accrued were converted through an issue of new shares, the number of shares in Suominen might increase by no more than 43,330,000 on the basis of the conversion.
The conversion rate shall be recorded under the invested nonrestricted equity fund.
A precondition for issuing the hybrid bond was a resolution made by the Extraordinary General Meeting (EGM) held on 31 January 2014, according to which the Board of Directors of the company was authorized to decide on the granting of stock options and other special rights entitling to shares referred to in Chapter 10, Section 1 of the Companies Act. The special rights carry the right to receive against payment new shares in the company or own shares held by the company. A special right may also be granted to a creditor of the company on the condition that the creditor´s receivables are used to set o against the subscription price of shares. The maximum number of new shares that may be subscribed and/or own shares held by the company that may be conveyed by virtue of the special rights granted by the company is 43,333,000 shares in total.
The EGM authorized the Board of Directors of Suominen to decide on all terms and conditions related to granting the special rights. The authorization is valid until further notice, however no longer than five years from the date of the authorization given by the general meeting. The authorizations did not revoke any earlier decisions regarding granting of stock options and other special rights entitling to shares.
The Annual General Meeting (AGM) of Suominen Corporation was held on 26 March, 2014. The AGM decided that no dividend will be paid for the financial year 2013.
The AGM adopted the financial statements and the consolidated financial statements for the financial year 2013 and discharged the members of the Board of Directors and the President & CEO from liability.
The AGM confirmed the number of members of the Board of Directors to be five (5). The AGM re-elected Mr Risto Anttonen, Mr Jorma Eloranta, Ms Suvi Hintsanen and Mr Hannu Kasurinen as members of the Board of Directors, and elected Ms Jaana Tuominen as a new member of the Board of Directors for the next term of o³ce, expiring at the end of the first Annual General Meeting following their election. The remuneration of the members of the Board of Directors was resolved to maintain unchanged. The resolutions were in accordance with the proposals submitted by the Nomination Board of Suominen's shareholders. In its constitutive meeting, the Board of Directors elected Jorma Eloranta as its Chair and Risto Anttonen as Deputy Chair.
PricewaterhouseCoopers Oy, Authorized Public Accountants, was reelected as auditor, with Heikki Lassila, Authorized Public Accountant, as the principal auditor of Suominen Corporation.
The AGM authorized the Board of Directors to decide on the repurchase of the company's own shares and to decide on a share issue and issuance of special rights entitling to shares referred to in Chapter 10, Section 1 of the Companies Act.
In accordance with the decision taken by the Annual General Meeting of Suominen Corporation, the representatives notified by the company's three largest shareholders were appointed to Suominen Corporation's permanent Nomination Board. The shareholders entitled to appoint members to the Nomination Board were determined on the basis of the registered holdings in the company's shareholders' register on 1 September 2014.
The representatives appointed to the Nomination Board on 2 September 2014 were Marco Levi, President & CEO of Ahlstrom Corporation; Timo Ritakallio, Deputy CEO of Ilmarinen Mutual Pension Insurance Company; and Reima Rytsölä, Chief Investment Officer of Varma Mutual Pension Insurance Company. Jorma Eloranta, Chair of Suominen's Board of Directors, serves as the fourth member of the Nomination Board. On 23 September 2014, the Nomination Board appointed from among its members Marco Levi, President & CEO of Ahlstrom Corporation, to act as the Chairman.
On 7 October 2014 the composition of the Nomination Board changed due to the change of the largest shareholder of Suominen Corporation after a share transaction announced. Marco Levi, the President and CEO of Ahlstrom Corporation and Chairman of the Nomination Board of Suominen, resigned from his position. Mr Thomas Ahlström, Managing Director of Antti Ahlström Perilliset Oy and a member of the Board of Directors at Ahlström Capital Oy, was nominated to represent AC Invest Two B.V. in the Nomination Board on 13 October 2014. Further, the Nomination Board elected him as the Chairman of the Nomination Board. Other members of the Nomination Board are Timo Ritakallio, Reima Rytsölä and Jorma Eloranta, as announced on 2 September 2014.
The Annual General Meeting (AGM) held on 26 March 2014 authorized the Board of Directors to repurchase a maximum of 3,000,000 of the company's own shares. The authorization shall be valid until 30 June 2015.
The Board of Directors is also authorized, by the AGM held on 26 March 2014, to decide on issuing new shares and/or conveying the company's own shares held by the company and/or granting special rights entitling to shares referred to in Chapter 10, Section 1 of the Finnish Companies Act. New shares may be issued and/or company's own shares held by the company or its group company may be conveyed at the maximum amount of 25,000,000 shares in aggregate. The maximum number of new shares that may be subscribed and own shares held by the company that may be conveyed by virtue of the options and other special rights granted by the company is 25,000,000 shares in total which number is included in the maximum number stated earlier. The authorizations revoke the authorizations decided by the AGM on 26 March 2013 regarding share issue and issuance of special rights entitling to shares, but do not revoke the authorization decided by the Extraordinary General Meeting on 31 January 2014 regarding granting of stock options and other special rights entitling to shares. The authorizations shall be valid until 30 June 2017.
The Annual General Meeting (AGM) of Suominen Corporation held on 26 March 2014 resolved to keep the remuneration to the members of the Board of Directors unchanged. In 2014, the Chair will be paid an annual fee of EUR 50,000, Vice Chair of the Board an annual fee of EUR 37,500 and other Board members an annual fee of EUR 28,000. Further, the members of the Board will receive a fee of EUR 500 for each meeting held in the home country of respective member and a fee of EUR 1,000 per each meeting held elsewhere than in the home country of respective member. 60% of the annual remuneration is paid in cash and 40% in Suominen Corporation's shares.
The portion of the above remuneration to be paid in shares was delivered on 5 June 2014 by transferring own shares held by Suominen Corporation without consideration, in accordance with the authorization by the AGM. The transferred shares are of the same class as the company's other shares. The number of shares transferred was determined based on the share value in the stock exchange trading maintained by NASDAQ OMX Helsinki Ltd, and calculated as the trade volume weighted average quotation of the share during the one month period immediately following the date on which the interim report of January-March 2014 of the company was published. In total 120,848 shares were given out of the own shares held by the company by the decision of the Board of Directors on 5 June 2014. Since the decision taken by the Board of Directors was essentially an execution of a detailed resolution taken by the AGM, the Board did not exercise independent discretion when it decided on the transfer of the shares.
After the Annual General Meeting held on 26 March 2014, Suominen Corporation's Board of Directors decided in its constitutive meeting that the earlier Remuneration Committee will be altered to Personnel and Remuneration Committee. Jorma Eloranta was elected as Chair and Risto Anttonen as a member of the committee.
Hannu Kasurinen was elected as Chair and Suvi Hintsanen and Jaana Tuominen as members of the Audit Committee.
During the review period, 1 January–31 December 2014, Suominen received the following notifications referred to in Chapter 9, Section 5 of the Securities Market Act:
Ahlstrom Corporation (business identity code 1670043-1) and AC Invest Two B.V. (business identity code 51490943) notified Suominen on 7 October 2014 about the changes in their shareholdings. According to the notifications, AC Invest Two B.V. acquires in total 66,666,666 Suominen shares from Ahlstrom Corporation, representing 26.89% of all shares and votes in Suominen Corporation. Due to the acquisition, the shareholding of AC Invest Two B.V. in Suominen Corporation exceeds the flagging threshold of 25% and increases into 67,724,176 shares, corresponding to 27.32% of shares and votes in Suominen Corporation. According to the notification by AC Invest Two B.V, their earlier shareholding in Suominen Corporation was below 5% of all shares and votes. According to the notification by Ahlstrom Corporation, due to the divestment of the shares, the shareholding of Ahlstrom Corporation in Suominen Corporation decreases to zero (zero shares and votes). Ahlstrom Corporation's earlier shareholding in Suominen Corporation was 26.89% of all shares and votes.
Oy Etra Invest Ab, business identity code 0672234-6 notified on 5 February 2014 about an agreement or other arrangement that, if realized, would result in the crossing of the 5% notification threshold as referred to in the Chapter 9 Section 5 of the Securities Market Act and calculated from the total number of shares and voting rights. The notification was made for Erkki Etola, Oy Etra Invest Ab and Tiiviste-Group Oy (business identity code 0115121-4) together. Erkki Etola has a controlling interest on Oy Etra Invest Ab and Tiiviste-Group Oy.
Proportion of all shares and voting rights after crossing of the notification threshold would be:
Oy Etra Invest Ab, Erkki Etola and Tiiviste-Group Oy in total: number of shares 18,827,336 and share of all shares and voting rights 6.46%
Ahlstrom Corporation (business identity code 1670043-1) notified on 5 February 2014 about an agreement or other arrangement that, if realized, would result in the acquisition or disposal of shares or voting rights. According to the notification, the ownership and the voting rights of Ahlstrom Corporation may decrease so that the following thresholds will be crossed: 25%, 20%, 15%, 10% or 5%.
Ahlström Capital Oy (business identity code 1670034-3) and AC Invest Two B.V. (registration code 51490943) notified on 5 February about an agreement or other arrangement that, if realized, would result in the acquisition or disposal of shares or voting rights. According to the notification, the ownership and the voting rights may increase so that the following thresholds will be reached or crossed: 5%, 10%, 15%, 20% or 25%.
Ahlstrom Corporation (business identity code 1670043-1) notified on 10 January 2014 about an agreement or other arrangement that, if realized, would result in the acquisition or disposal of shares or voting rights. According to the notification the ownership and the voting rights may increase or decrease so that the following thresholds will be reached or crossed: 5%, 10%, 15%, 20%, 25% or 30%.
Ahlström Capital Oy (business identity code 1670034-3) and AC Invest Two B.V. (registration code 51490943) notified on 10 January 2014 about an agreement or other arrangement that, if realized, would result in the acquisition or disposal of shares or voting rights. According to the notification the ownership and the voting rights may increase so that the following thresholds will be reached or crossed: 5%, 10%, 15%, 20%, 25% or 30%.
The parent company has a French branch o³ce, address Suominen Corporation, 101, rue Concordet, 38090 Vaulx-Milieu, reg. number 790118079.
Ms Lynda A. Kelly joined Suominen as Senior Vice President, Care business area and a member of the Corporate Executive Team on 12 May 2014. Lynda A. Kelly, a US citizen, will report to Ms Nina Kopola, President & CEO of Suominen Corporation.
Mr Dan Dunbar joined Suominen as Vice President, Sourcing and a member of the Corporate Leadership Team on 14 July 2014. Dan Dunbar, a US citizen, will report to Ms Nina Kopola, President & CEO of Suominen Corporation.
Mr Reima Kerttula, Senior Vice President, Flexibles, resigned from Suominen Corporate Executive Team on 14 July, 2014 due to the divestment of Flexibles business area.
At the closing date 31 December 2014 the Corporate Executive Team of Suominen Corporation consisted of
Suominen announced on 30 January 2015 that it has started a planning process to execute an investment in a new wetlaid production line, to be located in the US, in order to implement its growth strategy. The planned investment would be the most significant single initiative in Suominen's growth investment program of EUR 30-50 million announced in December 2014.
According to Suominen's initial plans, the new nonwovens manufacturing line would serve several higher value-adding enduse applications. Since the project is still in the preparation phase, the company did not yet comment the total value of the investment.
On 29 January 2015, Suominen received two notifications of major shareholding under Securities Market Act Chapter 9 Section 5 from Mandatum Life Insurance Company Limited (Mandatum). With a transaction executed on 23 January 2015 Mandatum has sold Suominen Corporation's shares based on which Mandatum's share of Suominen Corporation's existing shares and votes has decreased to less than 5%. After the transaction Mandatum owns
12,318,243 shares and votes in Suominen Corporation (4.97% of total shares and votes).
In addition, Mandatum notified that it has, on 5 February 2014, subscribed convertible hybrid bond notes issued by Suominen Corporation, which entitles Mandatum to subscribe maximum of 3,714,000 new shares in Suominen during the converting period of 11 February 2014 to 10 February 2018. In case Mandatum uses its subscription right, its ownership of total shares and votes in Suominen Corporation exceeds again over the 5% threshold and consequently would result in crossing of the 5% notification threshold. This arrangement was not notified on the subscription date of the convertible hybrid bond because at that time Mandatum owned more than 5% of the shares in Suominen Corporation and thus the arrangement would not have at that time led to crossing of new notification thresholds.
Suominen's products are used in daily consumer goods, such as wet wipes, hygiene product and medical nonwovens. The general economic situation determines the development of consumer demand, even though the demand for consumer goods is not very cyclical in nature. Europe and North America are the main market regions for Suominen.
The market environment continued to be divided also in 2014. In North America, the overall economic situation and consumers' confidence on their own financial situation were more positive, which was mirrored in the demand for the products supplied by Suominen. In Europe, the economic outlook was more uncertain and the competition remained tough for the most of the year. At the latter half of the year, the demand in Europe improved, but challenges in forecasting the development of the competitive environment of the European nonwovens market continue.
Suominen assesses the trend in the demand for its products on the basis of both the general market situation and, above all, on the basis of the framework agreements drawn up with its customers. Suominen estimates that in 2015, the demand for its products will continue to grow at the pace of 2014 on average.
Suominen expects that for the full year 2015, its net sales and operating profit excluding non-recurring items will improve from year 2014. In 2014, Suominen's net sales amounted to EUR 401.8 million and operating profit excluding non-recurring items to EUR 26.9 million.
The distributable assets of the parent company at the end of 2014 totaled EUR 69,700,269.72, consisting of the loss for the financial year, EUR -9,618,929.34; retained earnings of earlier financial periods, EUR -17,828,766.04; invested non-restricted equity fund, EUR 97,191,611.31 and acquisitions costs of own shares, EUR -43,619.21.
The proposal about the fund distribution by the Board of Directors to the Annual General Meeting in spring 2015:
The Board of Directors proposes that funds shall be distributed from the invested non-restricted equity fund in the amount of 0.01 euros per share. Calculated on the basis of the current total amount of shares a total of 2,461,306.03 euros would be distributed. The date of record for the distribution of the funds is 23 March 2015 and the funds shall be paid on 30 March 2015.
The Board of Directors proposes that no dividend shall be paid for the financial year 2014 because of the negative value of the retained earnings.
The Board of Directors proposes that parent company's loss for the financial period, -9,618,929.34, and the losses from the previous financial periods, -17,828,766.04 euros, shall be covered from the invested non-restricted equity fund.
Suominen Corporation Board of Directors
| Note | 2014 | |
|---|---|---|
| 2013 | ||
| 5,29 | 15,496 | 15,496 |
| 5,29 | 12,510 | 12,025 |
| 6,29 | 88,721 | 98,640 |
| 8,9 | 1,124 | 939 |
| 8 | 8,202 | |
| 8 | 450 | 451 |
| 8 | 2 614 | 511 |
| 10 | 5,516 | 5,778 |
| 134,633 | 133,838 | |
| 11 | 32,380 | 31,908 |
| 12 | 52,269 | 46,908 |
| 8 | 600 | 131 |
| 1,682 | 1,182 | |
| 13 | 4,618 | 6,359 |
| 14 | 38,430 | 18,585 |
| 129,978 | 105,073 | |
| 264,611 | 238,911 | |
| € 1,000 | Note | 2014 | 2013 | |
|---|---|---|---|---|
| LIABILITIES | ||||
| Non-current liabilities | ||||
| Deferred tax liabilities | 10 | 8,789 | 7,183 | |
| Provisions | 18 | 132 | ||
| Other non-current liabilities | 19,20 | 1,729 | 1,125 | |
| Debentures | 17,21 | 75,000 | ||
| Interest-bearing liabilities from financial institutions | 17,21 | 6,667 | 69,828 | |
| Pension loans | 17,21 | 571 | ||
| Non-current liabilities, total | 92,185 | 78,839 | ||
| Current liabilities | ||||
| Interest-bearing liabilities from financial institutions | 17,21 | 3,347 | 23,500 | |
| Pension loans | 17,21 | 571 | ||
| Income tax liabilities | 31 | 246 | 144 | |
| Trade payables and other liabilities | 19 | 60,096 | 57,351 | |
| Current liabilities, total | 63,689 | 81,566 | ||
| Liabilities, total | 155,874 | 160,405 | ||
| Shareholders' equity and liabilities, total | 264,611 | 238,911 |
The notes to the financial statements are an integral part of these consolidated financial statements.
| Share capital | 15 | 11,860 | 11,860 |
|---|---|---|---|
| Share premium account | 15 | 24,681 | 24,681 |
| Invested non-restricted equity fund | 15 | 97,192 | 97,123 |
| Fair value and other reserves | 15 | 52 | -1,042 |
| Translation di‡erences | 15 | 3,418 | -3,022 |
| Other shareholders' equity | 15 | -46,890 | -51,094 |
| Shareholders' equity | 90,313 | 78,506 | |
| Hybrid bond | 18,424 | ||
| Shareholders' equity, total | 108,737 | 78,506 |
| 1 January–31 December | |||
|---|---|---|---|
| € 1,000 | Note | 2014 | 2013 |
| Net sales | 2 | 401,762 | 373,684 |
| Cost of goods sold | -352,091 | -333,580 | |
| Gross profit | 49 671 | 40 104 | |
| Other operating income | 25 | 2,655 | 2,485 |
| Sales and marketing expenses | -6,278 | -5,583 | |
| Research and development | -2,877 | -3,139 | |
| Administration expenses | -14,144 | -13,659 | |
| Other operating expenses | 25 | -2,177 | -810 |
| Operating profit before non-recurring items | 26,851 | 19,398 | |
| Non-recurring items | 27 | -954 | -482 |
| Operating profit | 25,897 | 18,916 | |
| Financial income | 30 | 902 | 959 |
| Financial expenses | 30 | -8,978 | -6,740 |
| Profit before income taxes | 17,821 | 13,135 | |
| Income taxes | 31 | -7,645 | -7,419 |
| Profit for the period, continuing operations | 10,177 | 5,716 | |
| Discontinued operations | |||
| Profit/loss for the period | 717 | -3 521 | |
| Impairment loss recognized on the remeasurement to fair value and cost to sell |
-5,921 | -18 314 | |
| Profit/loss for the period, discontinued operations | -5,204 | -21,835 | |
| Profit/loss for the period | 4,973 | -16,119 |
| 1 January–31 December | |||
|---|---|---|---|
| € 1,000 | Note | 2014 | 2013 |
| Earnings per share attributable to the equity holders of the | |||
| company | |||
| - earnings per share, € | 32 | 0.02 | -0.07 |
| - earnings per share, diluted, € | 32 | 0.02 | -0.07 |
| - earnings per share, continuing operations, | |||
| diluted and non-diluted € | 32 | 0.04 | 0.02 |
| - earnings per share, discontinued operations, | |||
| diluted and non-diluted € | 32 | -0.02 | -0.09 |
| - earnings per share before non-recurring items, | |||
| continuing operations, € | 32 | 0.05 | 0.03 |
Performance share plan and stock option plan did not have any dilutive eects on earnings per share. Hybrid bond has a dilutive eect on earnings per share.
The notes to the financial statements are an integral part of these consolidated financial statements.
Profit for the period is attributable to the equity holders of the company.
| 1 January–31 December | |||
|---|---|---|---|
| € 1,000 | Note | 2014 | 2013 |
| Profit/loss for the period | 4,973 | -16,119 | |
| Other comprehensive income: | |||
| Items that may be reclassified subsequently to profit or loss: | |||
| Currency translation di‡erences on foreign operations | 15 | 6,863 | -2,664 |
| Fair value changes of cash flow hedges | 15 | 1,368 | 353 |
| Items related to discontinued operations | 3 | 355 | |
| Other reclassifications | 3 | 325 | |
| Total | 8,234 | -1,631 | |
| Items that will not be reclassified subsequently to profit or loss: | |||
| Actuarial gains and losses | 20 | -150 | 18 |
| Total | -150 | 18 | |
| Income tax on other comprehensive income | 15 | -650 | 120 |
| Total other comprehensive income | 7,434 | -1,493 | |
| Total comprehensive income for the period | 12,407 | -17,612 | |
| Total comprehensive income arises from: | |||
| Continuing operations | 17,611 | 4,220 | |
| Discontinued operations | 3 | -5,204 | -21,832 |
| Total comprehensive income for the period | 12,407 | -17,612 |
| Share | Share premium |
Invested non-restrict |
Own | Translation | Fair value | Other shareholders´ |
Hybrid | |||
|---|---|---|---|---|---|---|---|---|---|---|
| € 1,000 | capital | account | edequity fund | shares | di‡erences | reserves | equity | Total | bond | Total |
| Total equity at 1 Jan 2014 | 11,860 | 24,681 | 97,123 | -43 | -3,021 | -999 | -51,094 | 78,506 | 78,506 | |
| Profit for the period | 4,973 | 4,973 | 4,973 | |||||||
| Other comprehensive income | 6,439 | 1,094 | -,100 | 7,434 | 7,434 | |||||
| Total comprehensive income for the period | 6,439 | 1,094 | 4,874 | 12,407 | 12,407 | |||||
| Share-based payments | 70 | 70 | 70 | |||||||
| Conveyance of own shares | 69 | 69 | 69 | |||||||
| Total contributions by and distributions to owners | 69 | 70 | 139 | 139 | ||||||
| Hybrid bond | -739 | -739 | 18,424 | 17,685 | ||||||
| Total equity at 31 Dec 2014 | 11,860 | 24,681 | 97,192 | -43 | 3,418 | 95 | -46,889 | 90,313 | 18,424 | 108,737 |
| € 1,000 | Share capital |
Share premium account |
Invested non-restrict edequity fund |
Own shares |
Translation di‡erences |
Fair value reserves |
Other shareholders´ equity |
Total | Hybrid bond |
Total |
|---|---|---|---|---|---|---|---|---|---|---|
| Total equity at 1 Jan 2013 | 11,860 | 24,681 | 97,054 | -43 | -549 | -1,209 | -35,783 | 96,011 | 96,011 | |
| Profit / loss for the period | -16,119 | -16,119 | -16,119 | |||||||
| Other comprehensive income | -2,472 | 209 | ,770 | -1,493 | -1,493 | |||||
| Total comprehensive income for the period | -2,472 | 209 | -15,349 | -17,612 | -17,612 | |||||
| Share-based payments | 38 | 38 | 38 | |||||||
| Conveyance of own shares | 69 | 69 | 69 | |||||||
| Total contributions by and distributions to owners | 69 | 38 | 107 | 107 | ||||||
| Total equity at 31 Dec 2013 | 11,860 | 24,681 | 97,123 | -43 | -3,021 | -999 | -51,094 | 78,506 | 78,506 |
| 1 January–31 December | |||
|---|---|---|---|
| € 1,000 | Note | 2014 | 2013 |
| Operations | |||
| Profit/loss for the period | 4,973 | -16,119 | |
| Adjustments on profit/loss for the period | 33 | 39,953 | 42,739 |
| Cash flow before change in working capital | 44,927 | 26,620 | |
| Increase/decrease in current non-interest-bearing receivables | 1,489 | 3,585 | |
| Increase/decrease in inventories | 2,723 | 10,523 | |
| Increase/decrease in current non-interest-bearing liabilities | 1,928 | -7,626 | |
| Cash flow before financial income/expenses and taxes | 51,067 | 33,102 | |
| Interest expenses | -6,564 | -6,255 | |
| Interest income | 50 | 39 | |
| Direct taxes paid | -7,434 | -5,556 | |
| Cash flow from operations | 37,119 | 21,330 | |
| Investments | |||
| Investments in tangible and intangible assets | -7,740 | -5,598 | |
| Proceeds from disposed business operations | 3 | 4,736 | 3,441 |
| Proceeds from sale of tangible and intangible assets | 59 | 785 | |
| Combined business operations | 4 | -19,261 | |
| Cash flow from investments | -22,206 | -1,372 |
| 1 January–31 December | |||
|---|---|---|---|
| € 1,000 | Note | 2014 | 2013 |
| Financing | |||
| Withdrawal of non-current loans | 10,000 | ||
| Repayments of non-current loans | -78,220 | -21,042 | |
| Change in debentures | 75,000 | ||
| Repayments of capital loans | -920 | ||
| Withdrawal of hybrid bond | 17,500 | ||
| Change in current loans | -18,324 | 6,300 | |
| Cash flow from financing | 5,956 | -15,662 | |
| Change in cash and cash equivalents | 20,869 | 4,296 | |
| Cash and cash equivalents 1 Jan. | 18,585 | 14,301 | |
| Unrealized exchange rate di‡erences | -1,023 | -13 | |
| Change in cash and cash equivalents | 20,869 | 4,296 | |
| Cash and cash equivalents 31 Dec. | 14 | 38,430 | 18,585 |
The notes to the financial statements are an integral part of these consolidated financial statements.
Consolidated cash flow statement includes the discontinued operations.
Suominen Corporation, domiciled in Helsinki, Finland (Itämerentori 2, 00180 Helsinki, Finland) is the parent company of the group. The group manufactures nonwovens mainly for consumer goods companies. The Flexibles business unit divested in July 2014 manufactured flexible packaging. The consolidated financial statements of Suominen are prepared in compliance with the International Financial Reporting Standards (IFRS) applicable within the EU, and according to eective IAS and IFRS standards and SIC and IFRIC interpretations at 31 December 2014.
Suominen Codi Wipes sold in July 2013 and Suominen Flexibles sold in July 2014 are reported as discontinued operations in these consolidated financial statements.
Financial figures are presented in thousands of euros and are based on original acquisition costs, unless otherwise stated.
The preparation of the consolidated financial statements in accordance with international accounting practice requires the company's management to use accounting estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and reported amounts of revenues and expenses during the reported periods. These estimates and assumptions are based on historical experience and other sound and reasonable suppositions under the circumstances the financial statements are being prepared. Actual results may dier from these assumptions.
These consolidated financial statements were approved for publication by the Board of Directors on 30 January 2015. Copies of the consolidated financial statements are available on the website www.suominen.fi and in the headquarters of the parent company in Itämerenkatu 2, 00180 Helsinki, Finland.
Any of the central new standards (IFRS 10, IFRS 11, IFRS 12 and IAS 32) did not have any material impact on the consolidated financial statements.
IFRS 10 Consolidated financial statements (to be applied in EU for the financial years starting on January 1, 2014 or later). The standard establishes principles for the presentation and preparation of consolidated financial statements when an entity controls one or more other entity (an entity that controls one or more other entities) to present consolidated financial statements. It gives instructions for defining the control when otherwise di³cult to identify. The revised standard did not to have any material impact on the consolidated financial statements.
IFRS 11 Joint arrangements (to be applied in EU for the financial years starting on January 1, 2014 or later). The standard focuses on the rights and obligations of the arrangement rather than its legal form. There are two types of joint arrangement: joint operations and joint ventures. According to the standard only one method for the consolidation is allowed, so called equity method. Proportional consolidation of joint ventures is no longer allowed.The group does not have on the balance sheet date any joint arrangements applicable to this standard.
IFRS 12 Disclosures of interests in other entities (to be applied in EU for the financial years starting on January 1, 2014 or later). The standard includes the disclosure requirements for all forms of interests in other entities, including joint arrangements, associates, special purpose vehicles and other o balance sheet vehicles. The revised standard did not have material impact on the consolidated financial statements.
IAS 32 Financial Instruments: Presentation. Amendment on asset and liability osetting entities (to be applied in EU for the financial years starting on January 1, 2014 or later). The amendments clarify the rights to set-o financial assets and liabilities and gives further instructions to the subject. The revised standard did not have any material impact on the consolidated financial statements.
IAS 19 Defined benefit plans: Employee contributions (Proposed amendments to IAS 19) (to be applied for the financial periods starting on 1 July 2015 or later). The amendment clarifies the recognition of the payment that the employees or third parties are requested to make to a defined benefit plan. The revised standard did not have any impact on the consolidated financial statements
Annual improvements 2010-2012 and 2011-2013 (to be applied mainly for the financial periods starting on 1 July 2014 or later) and 2012-2014 (to be applied mainly for the financial periods starting on 1 January 2016 or later) small changes and non-critical amendments are combined and realized once a year. The impact of the standards vary but do not have any material impact.
IFRS 15 Revenue from contracts with customers (to be applied for the financial periods starting on 1 January 2017 or later). The new standard defines a five-step model to recognize the revenue and replaces the current standards IAS18 and IAS 11as well as their interpretations. The timing of the revenue recognition can vary depending on the central principle of the transfer of the title. The standard also increases the number of disclosures needed. Management is assessing the impact of the new standard on the consolidated financial statements.
IFRS 9 Financial instruments and its amendments (to be applied as from the financial year starting from 1 January 2018 or later). The new standard replaces IAS 39 Financial instruments: recognition and valuation. IFRS 9 changes the classification and valuation of the financial assets and contains new model for assessing the impairment of the financial assets based on the expected credit losses. The classification and valuation of financial liabilities are mainly the same as defined in IAS39. For the hedge accounting there are still three methods. Hedge accounting can be applied to a greater number of risk exposures than before and the hedge accounting principles have been harmonized with those in the risk management. Management is assessing the impact of these changes on the consolidated financial statements.
The consolidated financial statements include those companies in which Suominen Corporation held control during the financial year. The group has control on entity when it has a participation in the entity and is exposed to or has right to its variable revenue and can influence the revenue by using its control in the entity.
Subsidiaries are included in the consolidated financial statements from the date control is acquired to when control is surrendered. The assets and liabilities of such acquisitions are recognized using the acquisition cost method at fair value on the acquisition date. The purchase price is allocated to the relevant assets at fair value, and the unallocated part of the acquisition cost capitalized to the balance sheet as goodwill. Identifiable assets and assumed liabilities acquired at business combinations are recognized at fair value on the date of acquisition. The costs of acquisition are recognized in profit or loss when occurring. Following the IFRS 5 standard the sold subsidiaries are reported as discontinued operations.
All intra-group transactions, balances and unrealised margins of intra-group deliveries, intra-group receivables and liabilities, and internal profit distribution have been eliminated.
As from July 2014 the group has no reportable segments.
Before July 2014 the group had two reportable segments, Nonwovens (former Wiping) and Flexibles. The Flexibles business unit, sold in July 2014 and reported in the discontinued operations was a reportable segment. Codi Wipes sold in July 2013 and reported in the discontinued operations was another operating segment within Wiping. The segmentation is based on the organizational structure and the reporting of the company. The risk and profitability of the products and customers of the dierent reporting segments are dissimilar.
The top operative decision maker of Suominen is the President & CEO, who is assisted by the Corporate Executive Team. The President & CEO presents the major items, like investments above one million euro, and those required by law, to the Board of Directors for their approval. By following the ruling of the Corporate Governance the President & CEO allocates the resources to the segments and the lower organizational levels.
Since July 2014 the business operations of Suominen have according to IFRS 8 included two operating segments, Convenience and Care. They are not reported separately, because the business operations of Suominen are monitored as a whole when the top management allocates the resources and monitors its performance. The business operations are similar in all parts of the group which means that the risks and profitability related to its products and customers are indierent. Additionally the manufacturing process is similar and the same production lines are used in both operating segments. Thus the aggregation criteria in IFRS 8 are met.
The assets and liabilities of the segment included the operational items and the goodwill allocated to them. The non-allocated revenues and costs were items of the group not distributed to the segments. The non-allocated assets were items related to the group management, loans and other receivables and investments to shares. The non-allocated liabilities included items related to the group management, loans from the financial institutions and investors as well as corporate taxes.
The consolidated financial statements are presented in euros, as this is the operating and reporting currency used by the parent company. The income statements of group companies outside euro area have been translated into euros at the average rate for the financial year, and the balance sheets at the reference rate quoted by the European Central Bank on the balance sheet date.
Translation differences arising from the elimination of the shareholders' equities of foreign subsidiaries are included in the consolidated equity. Translation differences arising from loans to subsidiaries regarded as capital investments are treated in a similar manner to the translation differences for subsidiaries' equity. The translation differences from the loans taken to hedge the net investments in the foreign subsidiaries are recognized in the other comprehensive income until the foreign subsidiary is fully or partly divested.
Business transactions denominated in foreign currencies are entered at the rates current on the date of the transactions concerned or equivalent rates. Exchange rate dierences resulting from translation are recognized in the income statement. Receivables and liabilities
denominated in foreign currencies are translated into euros at the reference rate of the European Central Bank on the balance sheet date.
Foreign currency profits and losses associated with the Group's main business operations are recognized as adjustment items related to the expenses incurred through sales or purchases and manufacturing. Gains and losses from currency derivatives are recognized in other operating income and expenses. Other financing-related currency gains and losses are recognized at net value in financial income and expenses.
Goodwill represents the excess of the acquisition cost over the fair value of net assets of the acquired company. Goodwill has been allocated to cash generating units that benefit from the acquired net assets and synergies, and the carrying amount is tested annually for impairment at the balance sheet date. If the present value of the future cash flow of a business is expected to be less than the carrying amount of the cash-generating unit, the impairment loss is recognized in the statement of income. The impairment loss of goodwill is never reversed.
Other intangible assets include patents, software licences and customer relations which were identifiable assets at business combination. They are recognized in the balance sheet at the original acquisition cost and depreciated using planned straightline depreciation on the basis of their probable economic life.
Other items which are recognized as other intangible assets, are development and procurement costs that are directly attributable to the design and testing of identifiable and unique software or assets of similar nature. They are valued at their original acquisition cost and depreciated using planned straight-line depreciation on the basis of their probable economic life.
| Intangible rights3–13 years | |
|---|---|
| Customer relations 13 years |
|
| Other long-term expenses5–10 years |
Future expenditure on intangible assets is capitalized only if the economic benefits to the company from the assets increase above the level originally planned. Otherwise, expenditure is immediately recognized in the statement of income.
Tangible non-current assets consist mainly of land areas, buildings, structures, machinery, and equipment; and are primarily recognized in the balance sheet at their direct acquisition cost less planned depreciation and potential impairment. If a fixed asset consists of several items with dierent economic lives, the items concerned are treated separately.
When part of a fixed asset is renewed, the cost of the new item is capitalized and the eventual carrying value is written o. Other subsequent costs are capitalized only if the future economic benefit to the company is increased by the new item. All other expenditure, such as normal maintenance and repair, is charged to the statement of income during the financial period in which it is incurred.
Tangible fixed assets are depreciated using planned straight-line depreciation on the basis of their expected economic life. Land areas are not depreciated.
| The depreciation periods used for tangible non-current assets are: | |
|---|---|
| Buildings and structures 10–40 years | |
| Machinery and equipment 4–17 years | |
| Other tangible assets 3–5 years |
Depreciation is calculated on the period in which the asset becomes operational.
Gains and losses from the sale and disposal of fixed assets are calculated as a dierence between the sales price and the carrying value, and recognized as other operating income or expenses.
The carrying amounts of assets are evaluated at each reporting date to determine whether there is any indication of impairment. If such indication exists, the recoverable amount is estimated.
Recoverable amount of goodwill and other intangible assets, that have an indefinite useful life, is estimated annually.
An impairment loss is recognized whenever the carrying amount exceeds the recoverable amount. Impairment losses are immediately recognized in profit or loss. The recoverable amounts of intangible and tangible assets are defined either on the basis of fair value less costs or value in use, if higher. When defining the value in use of an asset, future cash flows are discounted to the present value using the average cost of capital of the relevant cash-generating unit. Specific risks associated with the asset are included in the discount rate.
A previously recognized impairment loss on plant and equipment and intangible assets, with the exception of the impairment losses from goodwill, is reversed if there has been a change in the estimates used to determine the recoverable amount. However, a reversal is not made to an extent higher than the carrying amount (less accumulated depreciation) that would have been determined if no impairment loss had been recognized in previous years. Impairment losses from goodwill are never reversed.
Expenditure on research and development is expensed during the year in which it occurs. Expenditure on product and process development is not capitalized, as no separate assets are developed and future economic benefits cannot be assessed as required under IAS 38. There was no capitalized expenditure related to research and development on the balance sheet date.
Leasing contracts in which the risks and benefits associated with the assets are mainly transferred to the company are classified according to the IAS 17 standard as financial leases. Property acquired under finance lease is depreciated and recognized as a non-current asset, and finance cost for finance leasing is recognized as an interest-bearing liability. The depreciation period of an leased asset is either the economic life time of the assets or the lease period if less. The lease payments are split into a financial cost and instalment of the loan by using the equal interest rate for each period. The payments associated with operating leases are expensed in rentals of equal size over the lease term.
The long-term contract covering process heat sourced from a power plant adjacent to Suominen's production unti in Finland has been treated as operating lease, as a major part of the thermal energy generated by the plant is supplied to third parties. Long-term leasing contracts on premises are treated as operating leases when the risks and benefits of the owner have not been transferred to the lessee and Suominen is not responsible for major obligations at the end of the lease.
Financial assets have been classified into the following categories: financial assets at fair value through profit or loss, loans and receivables, held-to-maturity investments and available-for-sale financial assets. The classification depends on purpose for which the financial assets were acquired. Management determines the classification of the financial assets at initial recognition.
Financial assets at fair value through profit or loss are financial assets held for trading. A financial asset is classified in this category if acquired principally for the purpose of selling in the shortterm. Derivatives not included in the hedge accounting are also categorized as held for trading unless as Suominen has derivatives for currency hedging. Contingent considerations are classified as financial assets at fair value through profit or loss. Assets in this category are classified as current assets.
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are included in current assets, except for maturities greater than 12 months after the balance sheet date. These are classified as non-current assets. On the balance sheet date, Suominen held only non-current held-to-maturity loans.The group's loans and receivables comprise trade and other receivables and cash and cash equivalents in the balance sheet.
Held-to-maturity investments are non-derivatives that have fixed payments maturing on a fixed date and where the group has a firm intent and ability to hold the instrument until maturity. They are carried at amortized cost using the eective interest method and they are included in non-current assets.
Available-for-sale financial assets are non-derivatives that are either designated in this category or not classified in any of the other categories. They are included in non-current assets unless management intends to dispose of the investment within 12 months of the balance sheet date. On the balance sheet date, Suominen held only non-current available-for-sale financial assets.
Regular purchases and sales of financial assets are recognized on the trade date. Investments are initially recognized at fair value plus transaction costs for all financial assets not carried at fair value through profit or loss. Financial assets carried at fair value through profit or loss are initially recognized at fair value and transaction costs are expensed in the income statement. Financial assets are derecognized when the rights to receive cash flows from the investments have expired or have been transferred and the group has transferred substantially all risks and rewards of ownership. Available-for-sale financial assets and financial assets at fair value through profit or loss are subsequently carried at fair value. Loans and receivables are carried at amortized cost using the eective interest method.
Gains or losses arising from changes in the fair value of the financial assets at fair value through profit or loss category are presented in the income statement within other operative income and expensein the period in which they arise.
Changes in the fair value of available-for-sale instruments are recognized directly in equity. When an available-for-sale instrument is sold or impaired, any cumulative change in the fair value in equity is removed from equity and recognized in the income statement as other operative income and expenses. Interest on available-for-sale instruments, calculated by using the eective interest method, is recognized in the income statement under financial items.
The fair values of quoted investments are based on current bid prices. If the market for a financial asset is not active, and for unlisted securities, the group establishes fair value by using valuation techniques. These include the use of recent arm's length transactions, reference to other instruments that are substantially the same, discounted cash flow analysis, and option pricing models making maximum use of market inputs and relying as little as possible on entity-specific inputs.
The group assesses at each balance sheet date whether there is objective evidence that a financial asset or a group of financial assets is impaired. In the case of equity securities classified as available for sale, a significant or prolonged decline in the fair value of the security below its cost is considered as an indicator that the securities are impaired. If any such evidence exists for available-for-sale financial assets, the cumulative loss – measured as the dierence between the acquisition cost and the current fair value, less any impairment loss on that financial asset previously recognized in profit or loss – is removed from equity and recognized in the income statement.
Derivatives are initially recognized at fair value on the date a derivative contract is entered into and are subsequently remeasured at their fair value. The method of recognizing the resulting gain or loss depends on whether the derivative is designated as a hedging instrument, and if so, the nature of the item being hedged. Suominen designates derivatives as hedges of a particular risk associated with a recognized asset or liability or a highly probable forecasted transaction (cash flow hedge). The full fair value of a hedging derivative is classified as a current asset or liability. Trading derivatives are classified as current assets or liabilities.
The eective portion of changes in the fair value of derivatives that are designated and qualified as cash flow hedges is recognized in the fair value reserve in the other comprehensive income. The gain or loss relating to the realized interest rate swaps hedging variable rate borrowings and the ineective portion of the hedging are recognized through profit or loss as financial income or expenses. The realized gain or loss of the expired electricity derivatives is recognized through profit or loss as a correction to electricity expenses and the gain or loss related to the ineective portion of the hedging as other operative income and expenses.
The eective portion of the equity hedge, the hedge made for the equity against the exchange rate fluctuation, is recognized in the conversion dierence in the other comprehensive income and the ineective portion in the exchange dierences of financial items. Amounts accumulated in equity are recognized through profit or loss in the periods when the hedged item aects profit or loss, for example, when the forecasted hedged sales incur or the hedged item discontinues.
When a hedging instrument expires or is sold, or when a hedge no longer meets the criteria for hedge accounting, any cumulative gain or loss existing in equity at that time remains in equity and is recognized when the forecasted transaction is ultimately recognized through profit or loss. When a forecast transaction is no longer expected to incur, the cumulative gain or loss that was reported in equity is immediately recognized through profit or loss as other operative income and expenses.
The group documents the relationship between the hedged item and the hedging instrument as well as the target for the risk management and the hedging strategy in the beginning of the hedge accounting. The group makes and documents prospective effectiveness tests at the initial recognition and retrospective eectiveness tests at each balance sheet date.
There are derivatives that do not meet the criteria for hedge accounting. Changes in the fair value of such derivatives are recognized through profit or loss as other operating income and expenses or in the financial items.
Revenue comprises the fair value of the sale of goods and services in the ordinary course of the group's activities. Revenue is shown net of valuea dded or sales tax, returns, rebates, discounts and foreign exchange rate dierences of sales.
Revenue from the sale of goods is recognized when the entity has transferred the significant risks and rewards of ownership of the goods to the buyer. In general the recognition is done when the goods are delivered in accordance with contractual terms. Revenue from rent is recognized evenly during the term to tenancy.
Dividends are recognized when the shareholder's right to receive payment is established. Interest is recognized using the eective interest method.
Purchase costs are determined using the first-in-first-out principle or weighted average price. The value of inventories includes all the direct and indirect costs associated with their purchase. The cost of manufactured products includes the cost of materials, direct labour, and other direct costs, together with the relevant share of general manufacturing overheads, but excluding sales, general administration, and financing costs.
Inventories are valued at the cost of purchase or the probable lower net realisable value, which is the estimated sale price in the ordinary course of business, less the estimated costs of completion and selling expenses.
Obsolete items in inventories are written down.
Trade receivables are recognized initially at fair value and subsequently measured at amortized cost using the effective interest method, less provision for impairment. A provision for impairment of trade receivables is recognized when there is objective evidence that the group will not be able to collect all amounts due according to the original terms of the receivables. Significant financial di³culties of the debtor, probability that the debtor will enter bankruptcy or financial reorganization, and default or delinquency in payments are considered indicators that the trade receivable is impaired. The amount of the impairment is the dierence between the asset's carrying amount and the present value of estimated future cash flows, discounted at the original eective interest rate. The carrying amount of the asset is reduced, and the amount of the loss is recognized through profit or loss as other operating expense. Subsequent recoveries of amounts previously written o are recognized through profit or loss as other operating income.
Cash at bank and in hand includes cash and cash equivalents. They are classified as loans and other receivables.
The dividends proposed by the Board of Directors are only recognized following the resolution taken by the General Meeting of Shareholders.
The treasury shares acquired by the company and the related costs are presented as deductions of equity. At disposal the funds received are entered in equity.
The proceeds from the share issuance are recognized in the invested non-restricted equity fund following the resolution taken by the General Meeting of Shareholders. The costs of share issuance are reducing the funds recognized.
Non-diluted earnings per share are calculated using the weighted average number of shares for the period in question. The average number of shares used in calculating diluted earnings per share is adjusted by the number of company shares held and the dilution eect of the share-based rewards, the stock options and the hybrid bond. The group does not hold any other convertible bonds that would dilute earnings per share.
Suominen has a share-based incentive plan targeted to the key employees of the group. According to the terms and conditions of the plan, shares of Suominen Corporation are granted. The rewards are partly settled in cash. The expected annual cost of the expected reward is recognized through profit or loss as personnel costs. The fair value of the cash-settled part of the reward is recognized in liabilities. The fair value is calculated by using the share price on the balance sheet date. The equity-settled part is recognized in equity by using the share price of the granting date.
On the balance sheet date the group did not have any granted stock option plans.
According to IFRS hybrid bonds can be classified in the equity when the interest and loan payments are fully controlled by the group and are not connected to any other loans. The hybrid bond is initially recognized at amortized cost. The hybrid bond of Suominen is classified according to IFRS in equity. The accrued interest is capitalized and recognized in the retained earnings. The share of the bond and its accrued interest converted into shares is recognized in the invested non-restricted equity fund.
Suominen Corporation operates pension schemes to cover the pension benefits of its employees in various countries in accordance with local legislation and established local practice. In Finland, the Finnish Employment Pension Scheme (TyEL) is mainly used. Pension schemes may include additional pension benefits, options for early retirement, or compensation for disability.
Pension schemes are classified either as defined contribution plans or defined benefit plans. A defined contribution plan is a pension plan under which the group pays fixed contributions into a separate entity. Contributions to defined contribution plans are expensed during the period to which the contribution relates.
The present value of the pension obligations of defined benefit plans is determined using the projected unit credit method, and plan assets are recognized at fair value on the balance sheet date. Pension costs are recognized in the statement of income, spreading regular costs over the service time of employees calculated by actuaries annually. The company's pension obligation is calculated as the present value of estimated future pension payments, using the discount rates of government or equivalent securities.
Actuarial gains and losses and changes in them are recognized directly in the other comprehensive income over the expected average remaining service lives of the employees concerned. Actuarial gains and losses arising from the revaluation of the liability in the benefit plan are recognized in the other comprehensive income when incurred.
Suominen has a personnel benefit scheme for employments terminations in Italy. In other countries Suominen has defined contribution plans as pension schemes.
Borrowings are recognized initially at nominal value. The transaction costs incurred are recognized periodically through profit or loss. Borrowings are subsequently recognized at amortized cost; any dierence between the proceeds (net of transaction costs) and the redemption value is recognized through profit or loss over the period of the borrowings using the eective interest method.
Fees paid on the establishment of loan facilities are recognized as transaction costs of the loan to the extent that it is probable that some or all of the facility will be drawn down. In this case, the fee is deferred until the draw-down occurs and is amortized over the period of the facility.
Borrowings are classified as current liabilities in case they mature within 12 months of the balance sheet date.
Listed debentures are initially recognized at fair value, net of transaction costs incurred. Debentures are subsequently recognized at amortized cost; any dierence between the proceeds (net of transaction costs) and the redemption value is recognized in the income statement over the period of the borrowings using the eective interest method. The fair value of a listed debenture is based on the market price on the balance sheet date.
The fair value of other financial liabilities is recognized through profit or loss by discounting the estimated future cash flow to the balance sheet date.
Provisions are costs recognized as liabilities in the balance sheet, as they are present obligations and as it is probable that fulfilment of the obligation will require financial payment or cause financial loss. Conditional liabilities, which are not recognized as liabilities in the balance sheet, are possible obligations that have not been confirmed yet.
A provision is recognized when:
Changes in provisions are recognized through profit or loss.
The group's income taxes include income taxes of group companies based on local taxable profit for the financial period, together with tax adjustments for previous periods and the change of deferred income taxes as well as changes in the deferred tax assets and liabilities arising from the consolidation.
Deferred tax assets and liabilities are recognized for all temporary dierences arising from the dierence between the tax basis of assets and liabilities and their carrying amounts. Temporary dierences arise from unused tax losses, depreciation dierences, provisions, personnel benefit schemes, revaluation of hedging instruments, intragroup margins in inventory, and recognition of assets at fair value at business acquisitions.
Deferred tax assets are recognized only to the extent that it is probable that future taxable profit will be available against which the deductible temporary dierences can be utilized. Deferred tax assets and liabilities are calculated using the tax rate in force or which has been enacted by the balance sheet date and is expected to apply for the following years. Deferred tax liability is not provided on goodwill.
Gains and losses from the disposal of business operations are presented separately net of taxes in the statement of income and in the other comprehensive income. In these consolidated financial statements the disposal of Codi Wipes and Flexibles are reported as discontinued operations.
Grants received to compensate for costs are recognized in the income statement for the period for which the related costs are recognized as expenses. Grants received are recognized to oset the expenses in question. Grants related to the purchase of property are deducted from the acquisition cost.
Gains from the sales of assets, net gains on currency derivatives, gains on the ineective portion of electricity hedging, insurance recoveries and sales other than product sales, such as royalties and rental income and the proceeds from the recycled goods, are recognized as other operating income.
Losses from the sales of assets, other expenses not associated with normal operations, losses on the ineective portion of cash flow hedging and net losses on currency derivatives, are recognized as other operating expenses.
The following income, expense, gain and loss items will be reported as financial income and expenses in the consolidated financial statements:
These items are recognized as financial income and expenses excluding credit losses on trade receivables, which are recognized as other operative expenses.
Certain financial performance indicators are reported excluding non-recurring items. These indicators are applied in the consolidated financial statements to eliminate the profit or loss impact of certain significant transactions which are unusual or infrequent in nature, like impairment losses of assets, gains or losses from the sales of tangible or intangible assets and restructuring costs. Any measures derived with eliminating non-recurring items are not measures of financial reporting under the IFRS.
Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.
The group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are addressed below:
The group tests annually whether goodwill has suffered any impairment, in accordance with the accounting policy stated in the note 5. The recoverable amounts of cash-generating units have been determined based on value-in-use calculations. These calculations require the use of estimates. The realized cash flows can dier from estimated discounted cash flows, as the financial utilization time is long and the estimated sales prices, production costs, and the changes in discount rate used in the calculations can lead to substantial recognition of impairment losses. The sensitivity of these calculations is described in the note 5.
Book value of tangible assets is comparable to the recoverable amount of assets if there is reason to assume that the fair value is the book value. The recoverable amount can be fair value or a use value, if higher, calculated by discounting the future cash flows at the current interest rate. The amount and timing of cash flows include risks.
The group is subject to income taxes in numerous jurisdictions. Significant judgement is required in determining the worldwide provision for income taxes. There are many transactions and calculations for which the ultimate tax determination is uncertain. The group recognizes liabilities for anticipated tax audit issues on the basis of estimates related to whether additional taxes will be due. The group makes judgements over the accounting principles concerning tax assets when preparing the annual accounts. The management evaluates the probability of subsidiaries to generate taxable income against unused tax losses or unused tax credits. If the final tax outcome is dierent from the amounts that were initially recorded, such dierences will aect the current tax receivables and deferred tax assets as well as current tax liabilities and deferred tax liabilities for the periods the dierences are realized.
| € 1,000 | 2014 | 2013 |
|---|---|---|
| Finland | 2,516 | 2,292 |
| Other Europe | 139,738 | 138,020 |
| North and South America | 248,942 | 224,132 |
| Other countries | 10,565 | 9,240 |
| Total | 401,762 | 373,684 |
The share of the US of the total net sales was 233,309 thousand euro (198,726).
The USD/EUR rate used for the conversion was the annual midrate 1.3289.
| € 1,000 | 2014 | 2013 |
|---|---|---|
| Finland | 61,214 | 49,553 |
| Other Europe | 61,565 | 76,700 |
| North and South America | 141,832 | 112,658 |
| Total | 264,611 | 238,911 |
| € 1,000 | 2014 | 2013 |
|---|---|---|
| Finland | 2,624 | 2,173 |
| Other Europe | 731 | 449 |
| North and South America | 3,710 | 1,792 |
| Total | 7,066 | 4,413 |
In July 2014 Suominen sold its Flexibles business unit, focused on flexible packaging manufacturing, to Lonsdale Capital Partners LLP investment company and the business unit management. Due to the divestment, Flexibles business unit has been reported in these consolidated financial statements in the discontinued operations. In the previous financial statements, Flexibles was repoted as its own segment.
Due to the divestment, Suominen recognized a non-recurring loss of EUR 5.2 million in its discontinued operations in 2014.
| € 1,000 | 2014 | 2013 |
|---|---|---|
| Net sales | 32,521 | 59,438 |
| Costs | -31,608 | -62,601 |
| Profit before income taxes from discontinued operations |
913 | -3,163 |
| Income taxes | -197 | -231 |
| Profit after income taxes from discontinued operations |
716 | -3,394 |
| Impairment loss recognized on the re measurement to fair value and cost to sell |
-5,921 | |
| Profit/loss for the period from discontinued operations |
-5,205 | -3,394 |
| Cash flow from discontinued operations | ||
| Cash flow from operations | 774 | -815 |
| Cash flow from investing activities | -376 | -1,154 |
Cash flow from financing -1,800 2,019 Change in cash and cash equivalents -1,402 50
| € 1,000 | 2014 |
|---|---|
| The impact of the divestment of Flexibles on the Group financial position |
|
| Tangible and intangible assets | 17,942 |
| Non-current receivables | 1,511 |
| Inventories | 7,340 |
| Trade receivables and other current receivables | 9,004 |
| Cash at bank and in hand | 997 |
| Non-current liabilities | 4,642 |
| Trade payables and other current liabilities | 10,157 |
| Net assets | 21,995 |
| Cash consideration | 5,733 |
| Cash equivalents held by discontinued operations | -997 |
The unpaid part of the consideration EUR 1.0 million is recognized in the balance sheet as a non-current receivable, note 8.
Net cash flow 4,736
In July 2013 Suominen sold its Codi Wipes business unit, focused on wet wipes manufacturing, to Value Enhancement Partners investment company. Due to the divestment, Codi Wipes business unit has been reported in these consolidated financial statements in the discontinued operations. In the previous financial statements, Codi Wipes was repoted as part of Suominen´s Wiping segment.
Due to the divestment, Suominen recognized a non-recurring loss of EUR 18.7 million in its discontinued operations in 2013.
| € 1,000 | 2013 | 2012 |
|---|---|---|
| Net sales | 24,278 | 49,436 |
| Costs | -24,736 | -55,868 |
| Profit before income taxes from discontinued operations |
-457 | -6,432 |
| Income taxes | 119 | -209 |
| Profit after income taxes from discontinued operations |
-339 | -6,641 |
| Impairment loss recognized on the re measurement to fair value and cost to sell |
-18,314 | |
| Profit/loss for the period from discontinued operations |
-18,653 | -6,641 |
| Cash flow from operations | -1,697 | 2,584 |
|---|---|---|
| Cash flow from investing activities | -297 | -758 |
| Change in cash and cash equivalents | -1,994 | 1,826 |
| Inventories | 4,493 |
|---|---|
| Trade receivables and other current receivables |
2,968 |
| Cash at bank and in hand | 2,782 |
| Other liabilities | 358 |
| Trade payables and other current liabilities | 3,162 |
| Net assets | 6,723 |
| Total consideration | 6,723 |
| Cash consideration | 6,223 |
| Cash equivalents held by discontinued operations |
-2,872 |
| Net cash flow | 3,441 |
The unpaid part of the consideration EUR 0.5 million is recognized in the balance sheet as a non-current receivable, note 8.
Suominen acquired the Brazilian unit of the Ahlstrom Home and Personal nonwovens business on 10 February 2014. The main parts of the Home and Personal nonwovens business were acquired in 2011, but due to the delays for some licenses and authorizations the acquisition of the Brazilian business was prolonged. Thanks to the acquisition, Suominen's nonwovens business currently covers also the South American markets.
The balance sheet and the income statement of the Brazilian company were consolidated to Suominen as from 1 February 2014.
The shares of the local company were acquired. The enterprise value was EUR 17.5 million. The final consideration was EUR 19.6 million.
| Consideration | Fair value |
|---|---|
| Cash | 19,558 |
Recognized amounts of identifiable assets acquired and liabilities assumed according to the initial calculations:
| € 1,000 | Note | Fair values |
|---|---|---|
| Property, plant and equipment | 6 | 10,779 |
| Intangible assets | 5 | 20 |
| Other non-current receivables | 2,737 | |
| Inventories | 3,195 | |
| Trade and other receivables | 3,423 | |
| Cash | 297 | |
| Total assets | 20,452 | |
| Financial liabilities | 17 | 416 |
| Other liabilities | 478 | |
| Total liabilities | 894 |
| The identifiable net assets | 19,558 | ||||
|---|---|---|---|---|---|
| ----------------------------- | -------- | -- | -- | -- | -- |
The transaction costs of EUR 0.2 million are reported in the nonrecurring items.
The Group´s net sales would have been EUR 403.3 million and operating profit EUR 26.3 million, if the transaction had been realized at the start of 2014 and the costs in the end of 2013.
The group did not have any business combinations in 2013.
| 2014 | Intangible | Other capitalized |
Pre- | ||
|---|---|---|---|---|---|
| € 1,000 | rights | Goodwill | expenditure | payments | Total 2014 |
| Acquisition cost 1 Jan. | 9,650 | 15,496 | 6,386 | 1,001 | 32,532 |
| Combined business operations | 20 | 20 | |||
| Translation di‡erence | - 10 | 88 | 1 | 79 | |
| Increase | 150 | 1,118 | 1,148 | 2,416 | |
| Discontinued operations | -1,054 | - 111 | -1,165 | ||
| Transfers between items | 1,540 | -1,540 | |||
| Acquisition cost 31 Dec. | 10,296 | 15,496 | 7,482 | 609 | 33,882 |
| Accumulated depreciation 1 Jan. | -3,949 | -1,065 | -5,013 | ||
| Translation di‡erence | -2 | -5 | -7 | ||
| Discontinued operations | 996 | 9 | 1,005 | ||
| Depreciation for the financial year | -1,241 | -621 | -1,862 | ||
| Accumulated depreciation 31 Dec. | -4,195 | -1 681 | -5,876 | ||
| Book value 31 Dec. | 6,100 | 15,496 | 5,801 | 609 | 28,006 |
| Other | |||||
| 2013 | Intangible | capitalized | Pre- | ||
| € 1,000 | rights | Goodwill | expenditure | payments | Total 2013 |
| Acquisition cost 1 Jan. | 9 364 | 26,715 | 6,986 | 641 | 43,706 |
| Translation di‡erence | 153 | 0 | -342 | -189 | |
| Increase | 133 | 168 | 702 | 1,004 | |
| Decrease/sale | - 6 | - 6 | |||
| Discontinued operations | -11,219 | -763 | -11,982 | ||
| Acquisition cost 31 Dec. | 9 650 | 15,496 | 6,386 | 1,001 | 32,533 |
| Accumulated depreciation 1 Jan. | -2,909 | -1,197 | -4,107 | ||
| Translation di‡erence | 1 | -11 | -8 | ||
| Discontinued operations | 648 | 648 | |||
| Depreciation for the financial year | -1,041 | -505 | -1,546 | ||
| Accumulated depreciation 31 Dec. | -3,949 | -1,065 | -5,013 | ||
| Book value 31 Dec. | 5,701 | 15,496 | 5,322 | 1,001 | 27,520 |
When the Home and Personal business was acquired from Ahlstrom in 2011, EUR 5,979 thousand of the consideration was allocated to customer relations. At the balance sheet date the fair value of the customer relations was EUR 4,523 thousand.
At disposal of Flexibles in 2014, a total decrease of EUR 159 thousand was recognized for the intangible assets and reported in the discontinued operations.
At disposal of Codi Wipes, a total decrease of EUR 115 thousand including an imparment loss of EUR 73 thousand was recognized for the intangible assets. The goodwill of EUR 11,219 thousand related Codi Wipes was fully impaired in 2013.
Intangible assets include assets on financial leases:
| 2014 € 1,000 |
Intangible rights |
|---|---|
| Acquisition value Jan 1. | 130 |
| Depreciation for the financial year | -32 |
| Book value 31 Dec. | -98 |
Suominen has recognized goodwill from the acquisition of the business operations of Home and Personal business from Ahlstrom in 2011. On the balance sheet date the goodwill was EUR 15,495 thousand. The group has only one reportable segment. It is also a cash generating unit. Two operating segments, Convenience and Care, are not meeting the definitions for separate cash generating units, like stated for the segment reporting in the principles for preparing consolidated financial statements
In the consolidated financial statements the recoverable amount for the business was determined as the value in use in the impairment testing. Projected cash flows are based on the actual performance and five-year forecasts based on business strategy. The main assumptions underlying these forecasts were revised at the balance sheet date. Cash flow in the residual period beyond the five-year forecasted period was extrapolated using the growth rates for the relevant business areas. The key assumptions regarding the values in use are linked to the sales trend prevailing in the cash-generating units, cost and investment levels, and the discount rate used.
The annual growth rate for Suominen's net sales during the period covered by the forecast has been estimated at 4.1%. In 2015, Suominen continues to follow its In the Lead strategy. The group aims to increase the share of products with higher added value in its portfolio and focuses, among other things, on streamlining its processes and especially on accelerating the product development process. According to the management view no such adverse changes are likely to come up in the expectations that would lead into any impairment of assets.
The amounts of the investments needed for replacing the existing capacity has been estimated based on the planned depreciation in each cash-generating unit.
The rate used in discounting has been derived by using targeted capital structure at the time of impairment test. Net gearing, or ratio of net debt to equity, is 70%. Cost of capital has been calculated as a weighted average cost before taxes for equity and debt and taking into the consideration the risk-free rate, and the risk margins of equity and debt respectively. Discounting rate used in the calculation is the weighted average of the risk-free 10-year bond rates in the operating countries.
Impairment testing is based on present estimates of future developments. The uncertainty in measuring the values in use for cash-generating units was captured by analyzing variations in the amount or timing of cash flows. The element of uncertainty and risk has been accounted for in the discount rates and by taking into consideration the testing errors of past impairment tests.
The management does not foresee that any eventual changes in the central assumptions would lead into any impairment of the goodwill. Thus no sensitivity analysis is presented.
The critical assumptions in the test calculations are as follows:
| € 1,000 | 2014 | 2013 |
|---|---|---|
| Discounting rate | 11.8% | 11.9% |
| Growth of net sales 2015–19 (2014–18) | 4.1% | 3.6% |
| Annual growth rate in the residual period | 1.0% | 1.0% |
| Operating profit in the residual period % | 7.4% | 8.9% |
| 6. TANGIBLE ASSETS | Advance | |||||
|---|---|---|---|---|---|---|
| Machinery | Other | payments | ||||
| 2014 | Land | and | tangible | and work | Total | |
| € 1,000 | areas | Buildings | equipment | assets | in progress | 2014 |
| Acquisition cost 1 Jan. | 2,343 | 57,509 | 182,107 | 524 | 1,272 | 243,755 |
| Business combinations | 2,419 | 3,101 | 5,250 | 10 | 10,779 | |
| Translation di‡erence | 160 | 1,150 | 7,872 | 2 | -81 | 9,103 |
| Increase | 1,035 | 2 | 3,613 | 4,650 | ||
| Decrease/sale | -9 | -9 | ||||
| Discontinued operations | -944 | -18,462 | -50,405 | -67 | 87 | -69,791 |
| Transfers between items | 175 | 3,566 | -3,742 | |||
| Acquisition cost 31 Dec. | 3,977 | 43,473 | 149,417 | 471 | 1,149 | 198,488 |
| Accumulated depreciation 1 Jan. | -35,638 | -109,003 | -476 | -145,117 | ||
| Translation di‡erence | -140 | -2,375 | -2,516 | |||
| Discontinued operations | 11,035 | 40,487 | 58 | 51,580 | ||
| Depreciation for the financial year | -1,585 | -12,117 | -12 | -13,714 | ||
| Accumulated depreciation 31 Dec. | -26,327 | -83,008 | -431 | -109,767 | ||
| Book value 31 Dec. | 3,977 | 17,146 | 66,408 | 41 | 1,149 | 88,721 |
| 2013 | Land | Machinery and |
Other tangible |
Advance payments and work |
Total | |
|---|---|---|---|---|---|---|
| € 1,000 | areas | Buildings | equipment | assets | in progress | 2013 |
| Acquisition cost 1 Jan. | 2,400 | 68,451 | 214,994 | 513 | 773 | 287,131 |
| Translation di‡erence | -57 | -505 | -3,055 | 1,331 | -1,412 | -3,699 |
| Increase | 38 | 930 | 12 | 2,682 | 3,662 | |
| Decrease/sale | -447 | -447 | ||||
| Discontinued operations | -10,504 | -30,984 | -1,332 | -,120 | -42,940 | |
| Writedowns | -2 | -2 | ||||
| Other changes | 49 | 49 | ||||
| Transfers between items | 28 | 623 | -,651 | |||
| Acquisition cost 31 Dec. | 2,343 | 57,509 | 182,107 | 524 | 1,272 | 243,755 |
| Accumulated depreciation 1 Jan | -42,817 | -125,837 | -459 | -169,113 | ||
| Translation di‡erence | 74 | 2,296 | -1,330 | 1,041 | ||
| Other changes | -49 | -49 | ||||
| Depreciation on decrease/sale | 429 | 429 | ||||
| Discontinued operations | 8,890 | 27,364 | 1,322 | 37,576 | ||
| Depreciation for the financial year | -1,786 | -13,206 | -8 | -15,000 | ||
| Accumlated depreciation 31 Dec. | -35,638 | -109,003 | -476 | -145,115 | ||
| Book value 31 Dec. | 2,343 | 21,871 | 73,104 | 48 | 1,272 | 98,640 |
Balance sheet value of machinery and equipment in production 71,086
At the disposal of Flexibles business operations the tangible assets decreased by EUR 4,340 thousand and the value decreased by EUR 17,783 in total. The related losses were recognized in the result of the discontinued operations. At the disposal of Codi Wipes business operations the tangible assets decreased by EUR 5,364 thousand.
The carrying amounts of tangible assets are reviewed to determine whether there is any indication of impairment, such as a significant decline in an asset's market value, adverse changes in the business environment, adverse changes in the extent to which or manner in which an asset is used or expected to be used, or a deterioration in financial performance below what was expected.
If such indication exists, the recoverable amount is estimated as either the fair value of the asset less selling expenses or the value in use, if this is higher. When estimating an asset's value in use, the relevant future cash flows are discounted by using the average cost of capital before taxes of the cashgenerating unit concerned. The risk inherent in the value in use is captured by analysing variations in the amount or timing of cash flows.
| Percentage of total number of shares and voting power | |
|---|---|
| Suominen Nonwovens Ltd., Nakkila, Finland | 100.0 |
| Flexmer Ltd., Tampere, Finland | 100.0 |
| Suominen Italy Holding, s.r.l., Mozzate, Italy | 100.0 |
| Suominen Spain Holding, S.A., Alicante, Spain | 100.0 |
| Suominen US Holding, Inc.,Windsor Locks, The United States | |
| of America | 100.0 |
| Suominen Brasil Indústria e Comércio de Não-Tecidos Ltda., | |
| Paulínia, Brazil | 100.0 |
| Owned through subsidiaries: | |
| Cressa Nonwovens s.r.l.,Mozzate, Italy | 100.0 |
| Mozzate Nonwovens s.r.l., Mozzate, Italy | 100.0 |
| Alicante Nonwovens S.A.U., Alicante, Spain | 100.0 |
| Bethune Nonwovens, Inc., Bethune, | |
| The United States of America | 100.0 |
| Green Bay Nonwovens, Inc., Green Bay, The United States of America |
100.0 |
| Windsor Locks Nonwovens, Inc., Windsor Locks, The United States of America |
100.0 |
On 31 December 2014 the book value of non-current and current financial assets were total EUR 104,712 thousand (2013: EUR 67,954 thousand).
| Total | 980 | 450 | 102,146 | 1,124 | 12 | 104,712 | 104,712 | |
|---|---|---|---|---|---|---|---|---|
| Cash and cash equivalents | 38,430 | 38,430 | 38,430 | 14 | ||||
| Loan receivables | 8,802 | 8,802 | 8,802 | |||||
| Other receivables | 1,011 | 12 | 1,023 | 1,023 | 13 | |||
| Trade receivables | 52,269 | 52,269 | 52,269 | 12 | ||||
| Other non-current receivables | 980 | 1,634 | 2,614 | 2,614 | 3 | |||
| Held-to-maturity investments | 450 | 450 | 450 | |||||
| Available-for-sale financial assets | 1,124 | 1,124 | 1,124 | 9 | ||||
| € 1,000 | Financial assets at fair value through profit or loss |
Held-to maturity investments |
Loans and receivables |
Available-for sale financial assets |
Derivatives in hedge accounting |
Book value | Fair value Note | |
| 2014 | Classes by instrument's nature |
Financial assets at fair value through profit or loss includes the contingent consideration from the disposal of Flexibles business operations EUR 980 thousand.
| 2013 | Classes by instruments nature | |||||||
|---|---|---|---|---|---|---|---|---|
| Financial | ||||||||
| assets at | Derivatives | |||||||
| fair value | Held-to | Available-for | held for | |||||
| through | maturity | Loans and | sale financial | hedge | ||||
| € 1,000 | profit or loss | investments | receivables | assets | accounting | Book value | Fair value Note | |
| Available-for-sale financial assets | 939 | 939 | 939 | 9 | ||||
| Held-to-maturity investments | 451 | 451 | 451 | |||||
| Other non-current receivables | 511 | 511 | 511 | 3 | ||||
| Trade receivables | 46,908 | 46,908 | 46,908 | 12 | ||||
| Other receivables | 58 | 371 | 429 | 429 | 13 | |||
| Loan receivables | 131 | 131 | 131 | |||||
| Cash and cash equivalents | 18,585 | 18,585 | 18,585 | 14 | ||||
| Total | 569 | 451 | 65,996 | 939 | 67,954 | 67,954 |
Financial assets at fair value through profit or loss includes the contingent consideration from the disposal of Codi Wipes business operations. EUR 511 thousand.
Held-to-maturity investments are non-derivatives that are carried at amortised cost using the eective interest method. As of the closing date the book value of these assets equals to fair value.
Non-current financial assets at fair value through profit or loss are contingent considerations. Their fair value is based on the estimated outcome of the terms and conditions defined in the sales agreement.
Available-for-sale financial assets are investments. The fair value is defined by discounting the future cash flows at the balance sheet date.
The book value of non-derivative receivables and cash equivalents equals to fair value based on short maturity of these current assets.
At the disposal of its Flexibles business Suominen Corporation granted two loans to Bright Maze Oy, the acquiree: Vendor Loan Note (EUR 6,255 thousand) and Subordinated Loan Note (EUR 2,277 thousand). The interest is capitalized on both loans in each December.
The interest on Vendor Loan Note is 6% p.a. and it is installed semi annually as from June 2015. The loan matures on 31 December 2018. Should the ownership structure of Bright Maze Group change materially, the loan with the accrued and capitalized interest will be repaid prematurely. The borrower may repay the loan at any time.
The interest on Subordinated Loan Note is 9% p.a. and it is fully repaid at its maturity on 31 July 2024. Should the ownership structure of Bright Maze Group change materially, the loan with the accrued and capitalized interest will be repaid prematurely. The borrower may repay the loan at any time. The loan has no security and it is the last in the ranking order. Prior to the maturity, Suominen has the right to convert the loan into equity at its sole discretion.
| € 1,000 | 2014 | 2013 |
|---|---|---|
| Book value 1 Jan. | 939 | 939 |
| Increase | 347 | |
| Decrease | -17 | |
| Change in fair value | -145 | |
| Book value 31 Dec. | 1,124 | 939 |
Available-for-sale financial assets include unlisted shares. At the disposal of its Flexibles business unit Suominen acquired 19.9% of the shares of Bright Maze Oy.
In 2013 Suominen acquired shares of a real estate company.
| € 1,000 | 2014 | 2013 |
|---|---|---|
| Deferred tax assets | ||
| Recognized in equity | ||
| Defined pension plan | 119 | |
| Fair value reserve | -33 | 250 |
| Recognized through profit or loss | ||
| Long-term expenses | 1,927 | 1,037 |
| Employment benefits | 60 | |
| Unused tax losses | 2,693 | 2 975 |
| Other temporary di‡erences | 750 | 1 516 |
| Total deferred tax assets | 5,516 | 5,778 |
| Total deferred tax liabilities | 8,789 | 7,183 |
|---|---|---|
| Other temporary di‡erences | 1,064 | 57 |
| Intangible assets | 2,624 | 1,580 |
| Tangible assets | 5,102 | 5,546 |
| Deferred tax assets | 5,516 | 5,778 |
|---|---|---|
| Deferred tax liabilities | 8,789 | 7,183 |
| Net tax liability | 3,273 | 1,405 |
| € 1,000 | 2014 | 2013 |
|---|---|---|
| Cash flow hedges | -237 | -142 |
| Actuarial gains and losses | 47 | 72 |
| Translation di‡erences | -423 | 190 |
| Fair value reserves | -37 | |
| Total | -650 | 120 |
Deferred tax assets refer to the confirmed tax losses that can probably be used in future years against taxable income generated in the same country. Deferred tax assets are based on the estimated realization of the related tax benefit through future taxable income.
At the balance sheet date Suominen had total EUR 30.6 million tax losses from previous years. At the disposal of the Flexibles business unit tax losses of EUR 9.4 million were derecognized.
Tax losses of the financial year based on the result of the year are expected to be EUR 1.4 million and confirmed losses to be used EUR 0.9 million.
Suominen has recognized deferred tax assets for the losses of EUR 15.9 million from the perious and for the financial year and left deferred tax assets unrecognized for the losses amounting to EUR 16.1 million. At the disposal of the Flexibles business unit deferred tax assets recognized for the losses amounting to EUR 1.2 million were derecognized.
It is estimated that Suominen is not capable in loss balancing until several years, which causes uncertainty in balancing tax losses. Tax losses concerned will expire mainly in 2019-2023.
No deferred tax liability is recognized for the undistributed profits of subsidiaries, as the group decides the distribution of such profit and no such distribution is likely in the immediate future.
| € 1,000 | 2014 | 2013 |
|---|---|---|
| Raw materials and consumables | 17,001 | 13,170 |
| Work in progress | 1,394 | 2,222 |
| Finished products and goods | 13,985 | 16,515 |
| Total inventories | 32,380 | 31,908 |
The value at cost of inventories totals EUR 32,778 thousand (EUR 32,614 thousand). The value has been reduced by EUR 399 thousand to cover obsolete stock (EUR 707 thousand).
The acquisition value of the inventories included in the raw material purchases and change in inventory was EUR 315,585 thousand (305,895 thousand).
The ageing structure of the trade receivables and the recognized credit losses:
| € 1,000 | 2014 | 2013 |
|---|---|---|
| Not yet due | 48,378 | 42,535 |
| Past due date | ||
| less than 5 days | 1,759 | 2,302 |
| 5–30 days | 1,912 | 1,803 |
| 31–120 days | 222 | 269 |
| more than 120 days | -1 | -1 |
| 3,892 | 4,373 | |
| Total trade receivables | 52,269 | 46,908 |
Recognized credit losses on trade receivables were EUR 7 thousand (EUR 27 thousand )
Trade receivables by currency:
| € 1,000 | 2014 | 2013 |
|---|---|---|
| EUR | 28,452 | 24,298 |
| SEK | 495 | |
| PLN | 489 | |
| RUB | 1,193 | |
| NOK | 84 | |
| USD | 21,576 | 19,921 |
| BRL | 2,225 | 231 |
| Other currencies | 17 | 429 |
| Total | 52,269 | 46,908 |
Suominen had a program to sell trade receivables with irrevocable rights to the bank that ended in 2014. To replace this, the group has started with a selected supplier status a Supply Chain Financing Program where the receivable are sold with non-recourse right. Both programs were releasing capital employed.
For the value of EUR 16.4 (18.3) million of the trade receivables in USD originated from the U.S.A.
| € 1,000 | 2014 | 2013 |
|---|---|---|
| Other receivables | ||
| Indirect taxes | 793 | 1,078 |
| Statutory and other insurances | 91 | 158 |
| Other | 308 | 528 |
| Total other receivables | 1,192 | 1,764 |
| Accrued income and prepaid expenses | ||
| Social security and healthcare | 25 | 71 |
| Statutory and other insurances | 49 | 136 |
| Indirect taxes | 210 | 81 |
| Insurance compensations | 14 | 41 |
| Rebates | 691 | 371 |
| Loan arrangements | 1,725 | 3,031 |
| Other | 711 | 864 |
| Total accrued income and prepaid | ||
| expenses | 3,425 | 4,596 |
| € 1,000 | 2014 | 2013 |
|---|---|---|
| Total cash and at bank | 38,430 | 18,585 |
Total other current receivables 4,618 6,359
The fair value of cash and cash equivalents equal to their nominal value.
| € | Registered share capital, € |
Share premium account, € |
Invested non-resticted equity fund, € |
Fair value and other reserves, € |
Translation di‡erences, € |
Other shareholders' equity, € |
Total, € | Hybrid bond, € | Total, € |
|---|---|---|---|---|---|---|---|---|---|
| 31 Dec 2013 | 11,860,056 | 24,680,588 | 97,123,012 | -1,042,310 | -3,021,401 | -51,093,829 | 78,506,116 | 78,506,116 | |
| Conveyance of own shares | 68,600 | 68,600 | 68,600 | ||||||
| Hybrid bond | -739,430 | -739,430 | 18,424,288 | 17,684,858 | |||||
| Other comprehensive income | 1,094,275 | 6,439,577 | 4,943,504 | 12,477,356 | 12,477,356 | ||||
| 31 Dec 2014 | 11,860,056 | 24,680,588 | 97,191,612 | 51,965 | 3,418,176 | -46,889,755 | 90,312,642 | 18,424,288 | 108,736,930 |
The registered equity of Suominen totals EUR 11,860,056. The number of issued shares was 247,934,122 in the beginning and in the end of the financial year. Suominen has one series of shares. Each share has one vote in the general meeting of the company and all the shares have an equal right to the dividend and the company assets. Share has no nominal value. Suominen Corporation shares are listed on NASDAQ OMX Helsinki Ltd. All issued shares are fully paid up. The company held 1,803,519 treasury shares at the balance sheet date.
The Members of the Board of Directors and the President & CEO of Suominen Corporation owned a total of 444,256 shares (2013: 490,171 shares) as of 31 December 2014. These shares represented 0.2% (December 2013: 0.1%) of the total number of shares and votes.
The share premium account is the difference between the subscription price and the nominal value according to the former corporation act in Finland. The invested non-restricted fund includes other investments associated to equity and the part of the subscribtion value of the shares that is not resolved to be recognized in the share capital.
Changes in the fair value of the available-for-sale financial assets and derivative instruments included in cash flow hedging according to the IAS 39 standard are included in the fair value reserve. The changes in fair value of the defined benefit plan are recognized in the actuarial gains and losses. In autumn 2014 the hedge accounting for the interest derivatives discontinued and the changes in the fair values were recognized in the financial costs.
In the beginning of the financial year Suominen held 1,924,367 own shares. The portion of the remuneration of the Board of Directors to be paid by shares, in total 120,848 shares, was delivered during the financial year. In the end of the financial year Suominen held 1,803,519 own shares.
| Fair value and other reserves | 2014 | 2013 | |||||
|---|---|---|---|---|---|---|---|
| € 1,000 | Cash flow hedges | Own shares | Change in fair value reserves |
Total | Cash flow hedges | Own shares | Total |
| Total 1 Jan. | -999 | -44 | -1,043 | -1,209 | -44 | -1,253 | |
| Cash flow hedges deferred in equity | 241 | 241 | 353 | 353 | |||
| Change in fair value of the assets available for sale | 183 | 183 | |||||
| Change in fair value transferred to profit or loss | 944 | 944 | |||||
| Total | 186 | -44 | 183 | 325 | -856 | -44 | -900 |
| Deferred taxes | -237 | -37 | -274 | -142 | -142 | ||
| Total 31 Dec. | -51 | -44 | 146 | 52 | -999 | -44 | -1,042 |
Translation dierences are the exchange rate dierences arising from the elimination of the acquisition costs of the group's noneuro companies. Some loans granted to the subsidiaries can be associated to equity because of the non-existing replayment plan. The translation dierences of such loans are recognized in the translation dierence in equity. When the Flexibles business was sold, their loans associated to equity were repaid and the translations differences were recognized in the results of the discontinued operations.
Suominen has an Equity Hedge program to hedge the translation position in USD. The investment in the United States of America is hedged with a currency derivative of USD 39 million (until September 2014 an external loan of USD 39.4 million). The exchange rate dierences from the direct investments in capital and Equity Hedge loan are recognized in the other comprehensive income.
Acuarial gains and losses are recognized in compliance with the IAS 19 standard for the defined benefit plan in Italy.
Retained earnings include the retained earnings from the financial year and previous years.
Suominen issued on 10 February 2014 a convertible hybrid bond of EUR 17,500,000, treated as equity, to finance the acquisition of the nonwovens business operations in Brazil. The bond was oversubscribed. The bond consists of 175 bond notes, each having the nominal value of EUR 100,000. The bond does not have a guarantee or other collateral. The principal of the bond has a fixed annual interest of 5.95% until 10 February 2018. After that date, the principal of the bond will have a fixed annual interest of 6.95% until 10 February 2019. After that date, the principal of the bond will have a fixed annual interest of 7.95%. The interest accrued for the bond by 10 February 2018 will be capitalized to the principal of the bond annually on 10 February. Thereafter and commencing on 10 May 2018, the interest is payable in the discretion of the Board of Directors quarterly on 10 February, 10 May, 10 August and 10 November. No interest shall be paid on the capitalized interest until 10 February 2018. After that date, the capitalized interest shall be a part of the actual principal of the bond and annual interest shall be paid to the whole amount of the principal according to the interest terms of the bond.
Suominen has the right to redeem the bond in whole or in part on 10 February 2018 or thereafter, on each interest payment date, at the nominal value of the bond together with the accrued interest.
A bond note entitles the bondholder to convert the bond note and the potential capitalized interest for shares in Suominen at the conversion rate of EUR 0.50 per share. The period for converting starts on 11 February 2014 and ends on 10 February 2018. The number of shares to be received through the conversion must always be at least 200,000. If the total value of the bond including interest accrued were converted through an issue of new shares, the number of shares in Suominen might increase by no more than 43,330,000 on the basis of the conversion.
The conversion rate shall be recognized in the invested nonrestricted equity fund.
The bond notes entitle the bondholders to a special compensation equaling to the dividend paid per share, should the company pay dividends. The total impact would be EUR 350 thousand for each dividend amount of EUR 0.01 per share.
The share-based incentive plan is targeted to the key personnel of the group. The program is aiming at combining the targets of the owners and the key personnel to increase the value of the company and the commitment of the key personnel by oering them a longterm incentive plan based on the ownership of the company. Under the plan, Suominen shares are awarded to the key personnel. A part of the reward is settled in cash.
The key terms and conditions of the share-based incentive plan are
The fair value of the equity settled part is calculated by using the share price of 0.42 euro on the granting date, and thus 219 (85) thousand euro is recognized in employment benefits and in equity. The fair value of the cash-settled part is calculated by using the share price of the balance sheet date, 0.81 (0.48) euro, and thus 228 (100) thousand euro is recognized in employment benefits and in liabilities.
One employee exited from the plan during the financial year, for which the company reversed the initial cost recognition by EUR 12 thousand.
The Board of Directors of Suominen Corporation approved on 4 December 2014 two new share-based incentive plans for the group management and group key employees. The aim of the new plans is to combine the objectives of the shareholders and the persons participating in the plans in order to increase the value of the company in the long-term, to bind the participants to the company, and to oer them competitive reward plans based on earning and accumulating the company´s shares.
The new Performance Share Plan includes one performance period, calendar years 2015—2017. The Board of Directors will decide on further performance periods. The Board of Directors of the Company will decide on the Plan's performance criteria and required performance levels for each criterion at the beginning of a performance period. The Performance Share Plan is directed to approximately 15 people. The potential reward of the Plan from the performance period 2015—2017 will be based on the Suominen group´s net sales growth, Earnings before Interest and Taxes (EBIT) and Return on Invested Capital (ROI). The rewards to be paid on the basis of the performance period 2015—2017 correspond to the value of an approximate maximum total of 2,300,000 Suominen Corporation shares (including also the proportion to be paid in cash). The Board of Directors is entitled to reduce the rewards agreed in the Performance Share Plan if the limits set by the Board of Directors for the share price are reached.
The new Matching Share Plan includes one three-year performance period, calendar years 2015—2017. The prerequisite for receiving reward on the basis of this Plan is that a person participating in the Plan owns or acquires the company' shares up to the number determined by the Board of Directors. Furthermore, receiving of reward is tied to the continuance of participant´s employment or service upon reward payment.
The members of the Corporate Executive Team and the Corporate Leadership Team belong to the target group of the Matching Share Plan. The rewards to be paid on the basis of the Matching Share Plan correspond to the value of an approximate maximum total of 550,000 Suominen Corporation shares (including also the proportion to be paid in cash). In order to implement the Matching Share Plan, the Board of Directors resolved on a share issue against payment directed to the target group.
The potential rewards from the performance periods 2015—2017 will be paid partly in the company's shares and partly in cash in 2018. The cash proportion is intended to cover taxes and taxrelated costs arising from the reward to the participant. As a rule, no reward will be paid, if a participant´s employment or service ends before the reward payment.
A member of the Corporate Executive Team must hold 50% of the net number of Shares given on the basis of the Plans, as long as his or her shareholding in total corresponds to the value of half of his or her annual gross salary. The President & CEO of the company must hold 50% of the net number of Shares given on the basis of the Plans, as long as his or her shareholding in total corresponds to the value of his or her annual gross salary. Such number of shares must be held as long as the participant's employment or service in a group company continues.
On 31 December 2014 the book value of non-current and current financial liabilities were total EUR 133,811 thousand (2013: EUR 140,934 thousand).
| 2014 | 2013 | ||||
|---|---|---|---|---|---|
| € 1,000 | Book value | Fair value | Book value | Fair value | Note |
| Non-current | |||||
| Loans from financial institutions | 6,667 | 6,667 | 69,828 | 69,144 | 21 |
| Pension loans | 571 | 577 | 21 | ||
| Bonds | 75,000 | 75,150 | 21 | ||
| Other non-current financial liabilities | 350 | 350 | 21 | ||
| Total | 82,017 | 82,167 | 70,399 | 69,721 | |
| Current *) | |||||
| Repayment of non-current liabilities | |||||
| Loans from financial institutions | 3,333 | 3,333 | 23,500 | 23,412 | 21 |
| Pension loans | 571 | 594 | 21 | ||
| Financial leases | 14 | 14 | 21 | ||
| Derivatives not in hedge accounting | 121 | 121 | 94 | 94 | 21 |
| Derivatives in hedge accounting | 197 | 197 | 1,354 | 1,354 | 21 |
| Other current financial liabilities | 726 | 726 | 21 | ||
| Trade payables | 47,403 | 47,403 | 45,016 | 45,016 | 19 |
| Total | 51,794 | 51,794 | 70,535 | 70,470 | |
| Total | 133,811 | 133,961 | 140,934 | 140,191 |
*) In the balance sheet under current liabilities.
Financial liabilities are other than liabilities held for trading and derivative liabilities according to the definitions in the IFRS 7 and IAS 39 standards, and are valued at amortized cost.
In September 2014 Suominen renewed its financing. The syndicated loan withdrawn in 2011 was fully repaid and the mortgages held as collaterals were released. To replace it, Suominen issued a bond of EUR 75 million and entered into a loan arrangement of EUR 55 million with the banks.
The bond is listed in the NASDAQ OMX Helsinki Stock Exchange. The fair value of the bond is based on its market value on the balance sheet date. The tenor of the bond is five year after which it will be repaid in full. The notes constitute direct and unsecured obligations of Suominen and they are guaranteed as for own debt by the Guarantors, i.e. subsidiaries of Suominen Corporation. The notes bear interest at the rate of 4.375% p.a.and the interest is paid semiannually.
Loans from financial institutions have floating interest rates.
Fair values for fixed-interest bearing liabilities have been calculated by discounting future cash flows at the appropriate interest rate prevailing on the closing date (2.95 - 4.45%). Pension loans repaid in 2014 had fixed interest rates.
Fair values for electricity derivatives are determined by using the forward prices in Nordpool for the same period and discounting them with relevant interest rates. Fair values for currency derivatives are determined by using the spot rates and relevant swap points based on interest rate dierences at the balance sheet date.
The book value of trade payables equals to fair value based on short maturity of these current liabilities.
Financial liabilities at fair value through profit or loss arose from the acquisition of intangible assets. Their fair values are calculated by discounting the probable future cash flows to the balance sheet date. No fair value hedging was applied to the financial liabilities during the financial year.
| Loans from financial |
||
|---|---|---|
| € 1,000 | institutions | Bonds |
| 2015 | 3,330 | |
| 2016 | 3,330 | |
| 2017 | 3,340 | |
| 2018 | ||
| 2019– | 75,000 |
| € 1,000 | 2014 | 2013 |
|---|---|---|
| Provisions 1 Jan. | 132 | 280 |
| Charged to statement of income | -132 | -280 |
| Increases | 132 | |
| Provisions 31 Dec. | 132 |
Reserve recognized in 2009 on the estimated future losses of a rental guarantee obligation of discontinued business operations were fully charged to the statement of income in 2013. A provision of EUR 132 thousand was recognized for the restructuring costs of the Flexibles in 2013, and derecognized in 2014 at the disposal of the Flexibles business unit.
For the value of EUR 21.3 (18.5) million of the trade payables in USD originated from the U.S.A.
Suominen has a defined benefit plan in Italy as defined by IAS19. According to the local practice the arrangement is not funded. The total amount of the defined benefit plan is based on the years of employment and the closing payroll of the key personnel. The liability arising from the arrangement is defined by using the actuarial calculations.
As from 1 January 2013 Suominen applies the revised IAS 19 standard for its employee benefits. The impact of the implementation is described in the principles for preparing the consolidated financial statements..
| € 1,000 | 2014 | 2013 |
|---|---|---|
| Arrangements related to post-employment benefits |
||
| Present value of net obligation | ||
| Net obligation 1 Jan. | 1,024 | 1,092 |
| Interest cost | 33 | 35 |
| Actuarial gains (-) and losses (+) recognized in equity |
150 | -18 |
| Expenses recognized in the statement of | ||
| income | -57 | -85 |
| Net obligation 31 Dec. | 1,151 | 1,024 |
| Fair value 31 Dec. | 1,151 | 1,024 |
|---|---|---|
| Actuarial gains or losses recognized in equity |
150 | -18 |
| Benefits paid | -57 | -85 |
| Interest cost | 33 | 35 |
| Unfunded | 1,024 | 1,092 |
| Fair value 1 Jan. | ||
| € 1,000 | 2014 | 2013 |
|---|---|---|
| Expenses recognized in the statement of income: |
||
| Interest cost | 33 | 35 |
| Benefits paid | -57 | -85 |
| Total expenses recognized in the statement of income |
-24 | -50 |
| Expenses allocated by function: | ||
| Procurement and production | -57 | |
| Total expenses allocated by function | -57 | -85 |
| 31 Dec. | 2014 | 2013 |
|---|---|---|
| Discount rate (%) | 2.20 | 3.25 |
| Expected rate of inflation (%) | 1.80 | 1.80 |
| Expected average remaining working life (years) |
15.70 | 15.70 |
No assets are included in the arrangement.
| € 1,000 | 2014 | 2013 |
|---|---|---|
| Accumulated amount 1 Jan. | -229 | -247 |
| Change during year | -150 | 18 |
| Accumulated amount 31 Dec. | -379 | -229 |
Suominen Corporation is exposed to several financial risks in its business operations. Risks include among other foreign exchange risk, interest risk, counterpart risk, liquidity risk and commodity risk. The financing policy approved by Suominen Corporation's Board of Directors defines the authorities, responsibilities and principles to be followed in the group. Financing and financial risk management is the responsibility of the group's financial administration. The purpose of financial risk management is to hedge the group against significant financial risks.
A variety of financial instruments subject to prior approvals are used in risk management. Financial instruments used in hedging are exposed to changes in market prices, the solvency of counterparts or the liquidity of instruments.
Responsibilities and authorities in Suominen Corporation's risk management are defined in the group's financial policy approved and confirmed yearly by the Board of Directors. The President & CEO approves all major funding operations and the main principles to be followed when hedging financial risks. The CFO is responsible for ensuring that the policy is observed throughout the group, and for individual financial operations concerning funding, managing liquidity and financial risks. The financial risk management is centralized to the group's financial administration, who is making all the market operations with the approved counterparties.
The group operates internationally and is therefore exposed to foreign exchange risk related to business transactions and translation of balance sheet items into euro, the operating currency of the parent. The aim of the group's foreign exchange risk management is to hedge earnings from business operations and to avoid exchange rate losses. Currency transactions are designed to reduce exchangerate-related risks and avoid losses of this type.
Changes in the exchange rate are impacting the consolidated balance sheet, statement of income and cash flow statement. In addition to USD, which generates the most significant impacts, BRL is causing translation risk to the group.
The foreign exchange transaction exposure comprises of already known and estimated cash flows for the next 12 months. The transaction risks in USD arises from the business transactions in USD in the euro area and in Brazil, and from the business transactions in EUR in Brazil. The USD risk arises from business and treasury transactions in USD. The hedged foreign exchange exposure comprising of the sales, purchases and interest payments in foreign currencies for a 12 month period should vary between 3 and 9 months under the hedging policy. The exchange rate risk in Brazil is hedged case by case. In the comparison period the SEK, NOK, PLN and RUB exposures from the Flexibles business unit are included. At the disposal the exposures discontinued. The exposure in BRL arose when the business unit in Brazil was acquired in February 2014.
Common derivative contracts are used in hedging, as their pricing can be verified on the market. Suominen does not adopt IAS 39 hedge accounting in currency hedging for the transaction risk. Changes in market values of currency hedging instruments are recognized through profit or loss. Suominen uses currency derivatives for the equity hedge as defined in IAS 39.
The consolidated transaction exposure on the balance sheet date:
| Transaction exposure 2014 | ||
|---|---|---|
| € 1,000 | 12 months´ cash flow |
Currency hedges |
| USD/EUR | 18,948 | -4,118 |
| EUR/BRL | -3,075 | |
| USD/BRL | 1,184 | |
| Total nominal value | 23,207 | 4,118 |
| € 1,000 | 12 months´ cash flow |
Currency hedges |
|---|---|---|
| SEK/EUR | -2,261 | -564 |
| USD/EUR | 1,510 | 1,160 |
| PLN/EUR | -5,518 | 2,889 |
| NOK/EUR | 1,866 | -753 |
| RUB/EUR | 4,444 | -1,412 |
| Other | 445 | |
| Total nominal value | 16,045 | 6,778 |
The transaction exposure above includes receivables in foreign currencies total of EUR 5,152 thousand (EUR 5,643 thousand) and payables total of EUR 4,447 thousand (EUR 8,551 thousand).
| Capital investments in | |||||
|---|---|---|---|---|---|
| € 1,000 | Loans granted | Loans taken | foreign subsidiaries | Hedged with loans | Open exposure |
| BRL | 19,887 | 19,887 | |||
| USD | 50,842 | -2,971 | 47,134 | 32,419 | 126,424 |
| Capital investments in | |||||
|---|---|---|---|---|---|
| € 1,000 | Loans granted | Loans taken | foreign subsidiaries | Hedged with loans | Open exposure |
| SEK | -2,870 | 3,473 | 603 | ||
| PLN | 9,823 | -656 | 1,091 | 10,258 | |
| USD | 54,910 | -17,651 | 42,138 | -28,540 | 50,856 |
| 2014 | ||||||
|---|---|---|---|---|---|---|
| € 1,000 | Rate change % |
Impact on profit after tax |
Impact on equity |
Rate change % |
Impact on profit after tax |
Impact on equity |
| USD/EUR | 8 | 73 | 1,179 | -8 | -73 | -1,179 |
| 2013 | ||||||
| Rate change | Impact on profit | Impact on | Rate change | Impact on profit | Impact on | |
| € 1,000 | % | after tax | equity | % | after tax | equity |
| SEK/EUR | 10 | -184 | -10 | 184 | ||
| PLN/EUR | 10 | -124 | 626 | -10 | 124 | -626 |
| USD/EUR | 11 | -826 | 4,003 | -11 | 826 | -4,003 |
| NOK/EUR | 11 | 66 | -11 | -66 | ||
| RUB/EUR | 13 | 147 | -13 | -147 | ||
| Total | -921 | 4,629 | , | 921 | -4,629 |
Correspondingly the translation exposure is as follows: Loans consist of intra-group loans granted to the foreign subsidiaries (+) and loans taken from them (-). The loans granted in USD can be associated to equity because the repayment is not anticipated. These lendings amount to USD 61.7 million equalling to EUR 50.8 million. Like for the capital investments, the translation dierences from these lending are recognized in the other comprehensive income. The translation dierences from loans taken are recognized through profit or loss. Capital investments in foreign subsidiaries include only the cash contributions in equity. When Suominen sold its Flexibles business in July 2014, the loans granted in PLN were repaid and the translation dierences from those loans were transferred from the other comprehensive income to the loss from discontinued operations.
Suominen has an Equity Hedge program for hedging the translation exposure in USD. The holding in the subsidiaries in the USA is hedged with a currency derivative of USD 39.4 million (USD loan of 39.4 million in 2013). The exchange rate dierences related to the capital investments and the Equity Hedge loan are recognized in the other comprehensive income.
.
As required by IFRS 7, the table summarizes the sensitivity of financial instruments on currency risk at the date of the balance sheet. In the sensitivity analysis, the financial instruments include currency forwards, intra-group currency investments, intra-group short-term and long-term currency receivables and payables, granted intra-group loans associated to equity and external net borrowings. External currency derivatives in the Equity Hedge program are not included in the sensitivity analysis because the foreign exchange dierences are fully o-set by those in the net investments. Sensitivities in currency rates of the balance sheet date are estimated on the basis of the actual volatility of the currencies over the past 12 months at a probability confidence level of 10%. The exchange rate sensitivity is calculated for the following 12 months by using the rates on the balance sheet date. The rate dierence means the change of euro rate against other currencies and the US dollar rate against Brazilian real.
The management assesses the hedging eectiveness by combining the estimated net cash flow for 12 months in foreign exchange to the effect of the hedging instruments. Additionally, the management assesses the impact of the changes in exchange rates on the financial instruments and capital investments in foreign currencies. The net impact caused by the change in currency rates as described above on annual profit after taxes in 2014 is estimated to be EUR +/- 0.4 million (+/-0.3) and on equity EUR +/- 1.1 million (+/- 4.3). Sensitivities in currency rates of the balance sheet date are estimated on the basis of the actual volatility of the currencies over the past 12 months at a probability confidence level of 10%. The exchange rate sensitivity is calculated for the following 12 months by using the rates on the balance sheet date.
| Total | -+781 | +-318 | -+370 | -+1,115 | |
|---|---|---|---|---|---|
| USD/BRL | 8 | -+58 | -+46 | ||
| EUR/BRL | 20 | +-132 | +-105 | +-3,182 | |
| USD/EUR | 8 | -+855 | +-318 | -+429 | -+4,297 |
| € 1,000 | Currency strengthens/ weakens % |
Impact on 12 months currency cash flow |
Impact on hedging instruments |
Net impact after tax |
Net impact on translation exposure or equity |
The group's interest rate risks are linked to general increases in interest rates and the associated increases in interest costs. Ideally, it would be possible to compensate for increases in interest rates through stronger business resulting from an improved business climate. Demand for the company's end products is primarily dependent on overall demand for consumer goods which is subject to relatively little cyclicality. As the business is capital-intensive and the economic lifetime of production equipment is long, the use of fixed interest rates in the company's loan portfolio is to be recommended. However, lower interest costs can be achieved over the long term with short-term interest rates. The interest rate risk associated with the company's loan portfolio is diversified to ensure that the portfolio comprises both floating and fixed interest rates spread over a range of interest periods. Suominen's Board of Directors has determined the interest rate structure of the loan portfolio and the range in which it can vary. The average interest duration can vary between 12 and 36 months. As of the end of 2014, it was 50 months (19 months interest rate swaps included in 2013).
On the balance sheet date the amount of the group´s loans with fixed interest rates were EUR 75 million (2.4) and those with floating interest rate EUR 10.0 million (92.0). All loans were denominated in EUR. On the balance sheet date the group did not have any interest rate swaps for hedging (EUR 50.4 million in 2013). The interest rate structure of the loan portfolio was changed at the refinancing in autumn 2014.
The sensitivity of interest rate risk is calculated on the basis of a 0.5% shift in the interest rate curve.
Based on the actual volatility of interest rates over the past 12 months, the probability is highest for long-term loans. A shift in the interest rate curve of 0.5% would have aected the interest costs of the company loans and in the comparison period also the interest rate swaps during a period of 12 months as shown in the table:
On the balance sheet date the cash and at bank of the group were EUR 38.4 million which were not included in the sensitivity analysis.
Impact on profit is the result of a change in the interest cash flows. In the consolidated financial statements of 2013 Suominen applied hedge accounting for its interest rates swaps and the change in the eective part of the swaps was recognized in the fair value reserve in the equity. In 2014 the swaps were preterminated at the refinancing and their result was recognized from the other comprehensive income to the financial items.
| 2014 | Impact on | Impact on | ||||
|---|---|---|---|---|---|---|
| € 1,000 | Change in Interest % |
profit after tax |
Impact on equity |
Change in Interest % |
profit after tax |
Impact on equity |
| Loans with floating interest | +0.5 | -40 | -0.5 | 40 | ||
| 2013 | Impact on | Impact on | ||||
| Change in | profit | Impact on | Change in | profit | Impact on | |
| € 1,000 | Interest % | after tax | equity | Interest % | after tax | equity |
| Loans with floating interest | +0.5 % | -368 | -0.5% | 368 | ||
| Interest rate swaps | +0.5 % | 237 | 571 | -0.5% | -237 | -571 |
| Total | -131 | 131 |
Suominen's operational policy on electricity procurement covers purchases of the group's Finnish units and the principles to be followed in managing electricity price risks. An independent consultant is employed to assist the company in electricity purchases and related risk management. Increases in the market price of electricity are managed through the use of fixed-price contracts and electricity derivatives.
The group's electricity price risk exposure is reviewed on a rolling basis in three-year periods. Exposure at the end of 2014 was hedged by establishing that fixed-price electricity will account for 93% (79) of projected usage in 2015, 93% (40) in 2016, and 93% (40) in 2017. Prices are hedged with OTC contracts. According these contracts Suominen pays on average EUR 41.8 / MWh (53.8) in 2015.
Cash flow hedge accounting is also applied to electricity purchases, to neutralize fluctuations in the price of electricity over specific periods. Hedging must be eective both prospectively and retrospectively. The eectiveness of hedges are documented at the beginning of hedge transactions and tested during the hedging period. The eectiveness of hedging is tested on the basis of an established regression. The change in the value of the eective hedging instruments is recognized in the statement of income along with the hedged cash flow.
The price sensitivity of electricity derivatives has been estimated on the basis of the volatility of the prices so that the probability of price changes compared to the year-end price is +/-15%. The volatility has been estimated based on the past price changes and the market view embedded in the option prices.
| 2014 | ||
|---|---|---|
| Price change | Impact on profit | Impact on |
| € / MWh | After tax | equity |
| +6 | 7 | 125 |
| -6 | 0 | -132 |
| 2013 | ||
| Price change | Impact on profit | Impact on |
| € / MWh | After tax | equity |
| +7 | 43 | 347 |
| -7 | -390 | |
The most significant individual credit risks relate to trade receivables from international companies with high credit ratings. The biggest ten trade receivables account for 52% of all trade receivables. The credit risk policy approved by the Board of Directors governs the principles to be followed when granting credit to customers and the responsibilities of the organization in this area. Credit is granted to customers after a credit approval process has been completed. Suominen has limited credit risk insurance cover for designated customers. The credit exposure of customers is reported at least once a month to the persons responsible for sales. During the financial year, credit losses recorded through profit and loss totalled EUR 7 thousand (27). The ageing structure of the trade receivables is shown in the note 12 to the consolidated financial statements. The maximum amount of credit losses from trade receivables, EUR 42 million, when a 20% coverage of the credit insurance is considered. For the remaining trade receivables the maximum credit risk is close to the nominal value. The group uses supply chain financing amounting to about one fifth of the sales on the balance sheet date.
The Board of Directors has approved a counterpart list of companies and financial institutions with good credit ratings for investment activities and the use of derivative contracts. The amount invested in a single counterpart is capped. Liquid funds are invested with reputable banks with su³cient credit ratings or in commercial papers oering high liquidity and credit ratings. The group's maximum exposure to credit risk is equal to the book value of financial assets at the end of the financial year.
Suominen aims to maintain adequate financing buers at all times to be able to meet its short-term commitments. The estimated cash flow from operations, liquid assets, unused loan facilities and committed undrawn facility agreements shall cover projected financing needs for the next 12 months. Refinancing risk is managed by diversifying loan maturities. The average maturity of drawn loans in accordance with committed facility agreements was 4.4 years (2.2) at year-end. Suominen has a financial arrangement negotiation in 2014 including a debenture of EUR 75 million maturing in 2019 and a committed syndicated loan facility totalling to EUR 55 million. The facility consists of a EUR 30 million revolving credit facility loan maturing in 2018, a term loan of EUR 10 million with the final repayment in 2017 and a term loan of EUR 15 million with the final repayment in 2018. On the balance sheet date the unused committed loan facility was EUR 40.3 million, when the trade finance limit in use was EUR 4.7 million.
Suominen has commercial paper programmes totalling EUR 40 million, fully unused at the year-end.
The maturity of loans and derivatives is presented in the following table. Table includes the undiscounted values of both interest payments and repayments of capital.
| 31 December 2014 | under 6 | 6-12 | ||||
|---|---|---|---|---|---|---|
| € 1,000 | Balance sheet value/limit | Cash flow | months | months | 1-2 years | 2-4 years |
| Financial liabilities | ||||||
| Trade payables | 47,403 | -47,403 | -47,403 | |||
| Other current financial liabilities | 726 | -726 | -354 | -372 | ||
| Other non-current financial liabilities | 350 | -350 | -350 | |||
| Guarantee commitments | 5,817 | -5,817 | -717 | -1,800 | -3,300 | |
| Loans from financial institutions | 10,014 | -10,277 | -14 | -3,371 | -6,892 | |
| Bonds | 75,000 | -91,415 | -1,627 | -1,654 | -6,563 | -81,571 |
| Total | 139,310 | -155,988 | -50,115 | -7,197 | -17,105 | -81,571 |
| Committed credit limits | ||||||
| Commitment credit limits, over 6 months |
40,302 | -40,302 | ||||
| Derivative contracts | ||||||
| Currency forward deals | -236 | |||||
| Cash flow, receivables | 36,276 | 36,276 | ||||
| Cash flow, payable | -36,537 | -36,537 | ||||
| Electricity derivatives | ||||||
| Hedge accounting | -71 | -71 | -52 | -20 | ||
| 31 December 2013 | under 6 | 6-12 | ||||
| € 1,000 | Balance sheet value/limit | Cash flow | months | months | 1-2 years | 2-4 years |
| Financial liabilities | ||||||
| Trade payables | 45,016 | -45,016 | -45,016 | |||
| Guarantee commitments | 1,060 | -1,060 | -1,060 | |||
| Loans from financial institutions | ||||||
| 93,327 | -104,402 | -4,122 | -7,774 | -9,854 | -82,653 | |
| Pension loans | 1,143 | -1,218 | -297 | -310 | -611 | |
| Total | 140,546 | -151,696 | -49,435 | -9,144 | -10,465 | -82,653 |
| Committed credit limits | ||||||
| Credit limits, over 6 months | 20,000 | -20,000 | ||||
| Derivative contracts | ||||||
| Currency forward deals | 35 | |||||
| Cash flow, receivable | 6,464 | 6,464 | ||||
| Cash flow, liability | -7,829 | -7,829 | ||||
| Interest rate derivatives | ||||||
| Hedge accounting | -990 | -1,205 | -336 | -315 | -554 | |
| Electricity derivatives Hedge accounting |
-364 | -364 | -250 | -114 |
Suominen's capital management aims to support business activities by ensuring good conditions by means of the group's balance sheet and capital structure and to increase the shareholder value by aiming at a competitive return on invested capital. The capital structure shall be such that the debt financing can be ensured.
The Board of Directors monitors the capital structure as regards the equity ratio and gearing. The capital structure can be influenced by dividend policy and share issues. The group can buy upon need its own shares or issue new shares as authorized by the general meetings, or decide to sell assets or parts of businesses to reduce liabilities.
The group's equity ratio was 41.2% (32.9) at year-end, and its gearing was 34.7% (96.2). The group utilized a sale of receivables program until the end of 2014. Instead, the group has started as a selected supplier a Supply Chain Financing program with selected customers. The receivables are sold on non-recourse basis. Both programs release capital employed in the balance sheet.
At the date of the balance sheet, the equity ratio and gearing were as follows:
| € 1,000 | 2014 | 2013 |
|---|---|---|
| Interest bearing liabilities | 85.0 | 94.5 |
| Interest bearing receivables | -8.8 | -0.4 |
| Financial assets | -38.4 | -18.6 |
| (A) Net liabilities | 37.8 | 75.5 |
| (B) Shareholder's equity | 108.7 | 78.5 |
| (C) Balance sheet total –advance payments | 264.0 | 238.9 |
| Gearing, (A/B) | 34.7 | 96.2 % |
| Equity ratio, (B/C) | 41.2 | 32.9 % |
The funding is managed by maintaining good relations with the financial institutions. The cooperation with the banks is built on longlasting relationships. In September 2014 Suominen renewed its financing. The syndicated facility withdrawn in 2011 was fully repaid and its mortgages were released. As a substitute, Suominen issued a bond of EUR 75 million and agreed a new syndicated EUR 55 million loan facility with two banks.
On 23 September 2014, Suominen issued a EUR 75 million bond to be listed in the NASDAQ OMX Helsinki Stock Exchange. Principal amount of each book-entry unit of the senior unsecured notes is EUR 1,000, with an ISIN code FI40000108576. Each note will be freely transferable after it has been registered into the respective book-entry account.
The notes constitute direct and unsecured obligations of Suominen and they are guaranteed as for own debt by the Guarantors, i.e. subsidiaries of Suominen Corporation.
The notes bear interest from, and including, September 23, 2014 at the rate of 4.375% per annum until 23 September 2019, when the notes shall be repaid in full at their principal amount.
In connection with issuing the bond, Suominen entered into a syndicated credit facilities agreement totaling EUR 55 million in September. It consists of a term loan of EUR 10 million with a maturity of three years; a multicurrency revolving credit facility of EUR 30 million with a maturity of four years; and an investment loan of EUR 15 million with a maturity of four years. The facilities are guaranteed as for own debt by the subsidiaries of Suominen Corporation.
Suominen plans to cover the amortization needs with its cash flow from operations and by sale of non-core business operations and assets.
| 2014 | 2013 | ||||||||
|---|---|---|---|---|---|---|---|---|---|
| Instrument | Nominal | Fair value | Positive | Negative | Nominal | Fair value | Positive | Negative | |
| € 1,000 | value | total | fair value | fair value | value | total | fair value | fair value | Note |
| Currency derivatives | |||||||||
| Held for hedge accounting (Equity Hedge) | 32,310 | -114 | -114 | ||||||
| Held for trading | 3,997 | -121 | -121 | 14,321 | -35 | 58 | -94 | 21 | |
| Interest rate derivatives | |||||||||
| Held for hedge accounting | 50,425 | -990 | -990 | 21 | |||||
| Electricity derivatives | |||||||||
| Held for hedge accounting | 1,031 | -71 | 12 | -83 | 2,776 | -364 | -364 | 21 | |
| Electricity derivatives, MWh | 52,608 | 61,368 |
The fair values of the derivatives are recognized in the balance sheet as gross amounts and they can be netted with each other in case of breach of contractual terms or bankruptcy. After the netting, the derivative assets by counterparty would be EUR 0 thousand and the liabilities EUR 307 thousand. The group does not have any other material netting contracts for financial assets.
| 2014 | 2013 | ||||
|---|---|---|---|---|---|
| € 1,000 | Level 1 Level 2 |
Level 3 | Level 1 | Level 2 | Level 3 |
| Assets measured at fair value | |||||
| Other financial assets | 980 | 511 | |||
| Assets held for sale | 1,124 | 939 | |||
| Total | 2,104 | 1,450 | |||
| Derivatives measured at fair value | |||||
| Currency derivatives | -236 | -35 | |||
| Interest rate derivatives | -990 | ||||
| Electricity derivatives | -71 | -364 | |||
| Total | -307 | -1,389 |
During the financial year there were no transfers in the three-level fair value measurement hierachy.
Values in hierachy level 1 are directly based on values quoted in an active market.
The fair value for financial instruments that are not traded in an active market is determined by using valuation techniques. These valuation techniques maximise the use of observable market data where it is applicable and rely as little as possible on entity specific estimates. If all significant inputs required to fair value of an instrument are observable, the instrument is included in level 2.
Fair values for electricity derivatives are determined by using the forward prices in Nordpool for the same period and discounting them with relevant interest rates. Fair values for currency derivatives are determined by using the spot rates and relevant swap points based on interest rate dierences at the balance sheet date.
Fair values for interest rate swaps are determined by using the quotes based on euribor and USD libor curves and discounting future cash flows with relevant interest rates.
If one or more of the significant inputs is based on mangement evaluation and not observable market data, the instrument is included in level 3.
The fair value of the shares in the real estate company classified as assets available for sale are calculated by discounting the probable future cash flows to the balance sheet date. The fair value of the shares in Bright Maze Oy classified similarly is calculated by using an EBITDA multiplier and a comparable data analysis.
| € 1,000 | 2014 | 2013 |
|---|---|---|
| Other operating income | ||
| Profit from sale of fixed assets | 19 | 47 |
| Indemnities | 154 | 169 |
| Rents | 393 | 228 |
| Recovery of bad debts | 3 | |
| Derivatives not in hedge accounting | 89 | 61 |
| Ine‡ective part of the cash flow hedging | 52 | |
| Recycled product sales | 1,599 | 1,096 |
| Other operating income | 350 | 836 |
| Total | 2,655 | 2,485 |
| Other operating expenses | ||
| Bad debts | 7 | 16 |
| Total | -2,177 | 810 |
|---|---|---|
| Other | -1,559 | 794 |
| Ine‡ective part of the cash flow hedging | -421 | |
| Derivatives not in hedge accounting | -204 | |
Recycled products are second choice products sold.
| € 1,000 | 2014 | 2013 |
|---|---|---|
| Statutory audit | 397 | 245 |
| Other services | 227 | 191 |
| Total | 624 | 437 |
| € 1,000 | 2014 | 2013 |
|---|---|---|
| Restructuring | -653 | -925 |
| Gains from the sales of fixed assets | 678 | |
| Other non-recurring items | -301 | -235 |
| Total | -954 | -482 |
| € 1,000 | 2014 | 2013 |
|---|---|---|
| Salaries and other compensations | 32,276 | 31,540 |
| Share-based payments | 198 | 82 |
| Pension expenditure | ||
| Defined benefit plans | 57 | 85 |
| Defined contribution plans | 1,364 | 1,528 |
| Other payroll connected expenses | 11,028 | 10,936 |
| Total | 44,923 | 44,171 |
Average number of personnel 591 550
Details on employee benefits paid to management are specified in note 37. Related party disclosure.
Personnel expenses included restructuring costs of EUR 0.4 million for Flexibles in 2013.
| € 1,000 | 2014 | 2013 |
|---|---|---|
| By function | ||
| Production | 13,257 | 12,319 |
| Sales and marketing | 592 | 460 |
| Research and development | 899 | 880 |
| Administration | 828 | 233 |
| Total continuing operations | 15,576 | 13,892 |
| Discontinued operations | 1,340 | 14,965 |
| Total | 16,916 | 28,857 |
| By asset group | ||
| Buildings and constructions | 1,585 | 1,405 |
| Machinery and equipment | 12,120 | 10,980 |
| Other tangible assets | 9 | 7 |
| Other intangible assets | 1,862 | 1,500 |
| Total | 15,576 | 13,892 |
| Discontinued operations | 1,340 | 14,965 |
| Total | 16,916 | 28,857 |
Depreciation of Codi Wipes and Flexibles and the impairment loss for the goodwill related to Codi Wipes acquisition are included in the discontinued operations.
| € 1,000 | Note | 2014 | 2013 |
|---|---|---|---|
| Interest income on financial assets recog nized at fair value through profit of loss |
712 | 959 | |
| Change in fair values of financial liabilities | 17 | 144 | |
| Gains on fair value hedging | 46 | ||
| Financial income | 902 | 959 | |
| Interest expenses on loans valued at amor tized cost |
-3,217 | -5,555 | |
| Arrangement costs at refinancing | -1,999 | ||
| Discontinued hedge accounting and other costs related to the refinancing |
-1,165 | ||
| Exchange rate di‡erences (net) | -916 | 421 | |
| Derivatives, not in hedge accounting | 165 | ||
| Expenses on sales of receivables | -166 | -197 | |
| Other financial expenses | -1,515 | -1,574 | |
| Financial expenses | -8,977 | -6,740 | |
Financial income and expenses, total -8,075 -5,781
| € 1,000 | 2014 | 2013 |
|---|---|---|
| Net sales | 234 | -257 |
| Other operating income | 104 | -80 |
| Cost of goods sold | -208 | |
| Financial income and expenses | -916 | 586 |
| Foreign exchange gains and losses, total | -786 | 249 |
| € 1,000 | 2014 | 2013 |
|---|---|---|
| Income taxes for financial year | -7,572 | -4,618 |
| Income taxes from previous years | 199 | 14 |
| Deferred taxes | -272 | -2,815 |
| Income taxes total | -7,645 | -7,419 |
| Profit before taxes | 17,821 | 13,135 |
| Tax calculated at the domestic corporate | ||
| tax rate of 20.0% | -3,564 | -3,218 |
| Impact on the change in tax rate in Finland 24.5% -> 20% |
812 | |
| E‡ect of di‡erent tax rates in foreign sub | ||
| sidiaries | -2,003 | -1,825 |
| Expenses only deductible for tax purposes | 166 | 374 |
| Expenses not deductible for tax purposes | -2,075 | -2,873 |
| Not recognized deferred tax assets on | ||
| period's taxable losses | -908 | |
| Other items | -168 | 219 |
| Tax cost total | -7,645 | -7,419 |
| € 1,000 | 2014 | 2013 |
|---|---|---|
| Profit for the period, continuing operations | 10,177 | 5,716 |
| Profit for the period, discontinued operations | -5,204 | -21,835 |
| Profit for the period | 4,973 | -16,119 |
| Average weighted number of shares, non-diluted | 246,082 | 245,908 | |
|---|---|---|---|
| Average weighted number of shares, diluted | 281,936 | 245,908 |
| - earnings per share, € | 0.02 | -0.07 |
|---|---|---|
| - earnings per share, diluted, € | 0.02 | -0.07 |
| - earnings per share, continuing operations, non diluted and diluted € |
0.04 | 0.02 |
| - earnings per share, non-diluted and diluted discontinued operations € |
-0.02 | -0.09 |
| - earnings per share before non-recurring items, continuing operations, € |
0.05 | 0.03 |
Suominen's stock option plan did not have a dilutive eect on earnings per share. The stock option plans expired in 2013 at no value.
When calculating the number of shares and further the earnings per share, the shares payable under the share -based incentive plan plan are included in the total. The shares payable under the plan did not have any dilutive eect in 2014 or 2013.
The dilutive eect of the hybrid bond is calculated by assuming the bond being fully converted into shares at the issuance date and the interest accrued by the balance sheet date being converted into shares following the loan agreement.
Adjustments on operations cash flow from 1 Jan. to 31. Dec.
| € 1,000 | 2014 | 2013 |
|---|---|---|
| Adjustments on profit/loss for the period | ||
| Income taxes | 7,645 | 7,419 |
| Financial income and expenses | 8,075 | 5,781 |
| Depreciation | 15,576 | 13,892 |
| Gains and losses on sales of fixed assets | -19 | -725 |
| Change in provisions | 132 | |
| Other adjustments | 8,543 | 16,372 |
| Total | 39,953 | 42,739 |
Cash flow and thus also its adjustments include the discontinued operations.
| € 1,000 | 2014 | 2013 |
|---|---|---|
| Operating leases, real estates | ||
| Minimum lease payments on irrevocable contracts |
||
| Not later than 1 year | 3,473 | 3,296 |
| Later than 1 year and not later than 5 | ||
| years | 11,860 | 12,480 |
| Later than 5 years | 6,489 | 6,896 |
| Total | 21,822 | 22,672 |
Nakkila's long-term contract covering the purchase of process heat from a nearby heating plant is treated as and is included in the operating leases, because a major portion of the energy is sold to third parties.
| 1,353 | |
|---|---|
| 125 | |
| 1,089 | 2,373 |
| 618 |
| € 1,000 | 2014 | 2013 |
|---|---|---|
| For own debt | ||
| Loans from financial institutions | 10,000 | 91,345 |
| Bond | 75,000 | |
| Total | 85,000 | 91,345 |
| Nominal values of mortgages | ||
| Real estate mortgages | 27,042 | |
| Floating charges | 165,761 | |
| Pledged subsidiary shares and loans | 189,699 | |
| Total | 382,502 | |
| Guarantee commitments | ||
| Absolute guarantees | 85,000 | |
|---|---|---|
| Guarantees on other own commitments | 1,800 | |
| Guarantees on behalf of third parties | 4,017 | |
| Total | 90,817 | |
Guarantees are related to a real estate financial lease granted to a third party. Suominen acquired the real estate in 2013.
Guarantees on other own commitments are collaterals given to suppliers. Guarantees on behalf of third parties are collaterals given on behalf of the Flexibles business unit disposed in 2014.
Absolute guarantees are collaterals given by the subsidiaries on behalf of the parent company for the external loans.
| € 1,000 | 2014 | 2013 |
|---|---|---|
| In the statement of income | ||
| Cost of goods sold | 1,030 | 1,087 |
| - including depreciation | 142 | 123 |
| In the balance sheet | ||
| Tangible assets | 136 | 596 |
The Suominen Group has related party relationships with the members of the Board of Directors, the President & CEO, the members of the Corporate Executive Team and Ahlstrom Corporation with its subsidiaties and participating companies until 7 October 2014.
| € 1,000 | 2014 | 2013 |
|---|---|---|
| Employee benefits paid to the members of the Board of Directors, the President & CEO, and the members of the Executive Team |
||
| Salaries and other short-term employee benefits |
1,725 | 2,315 |
| Post-employment benefits | 170 | 224 |
| Share-based payments | 198 | 79 |
| Total | 2,093 | 2,618 |
| Salaries and other short-term remuneration paid to the members of the Board of Directors and the President & CEO |
||
| Total | 565 | 580 |
|---|---|---|
| Nina Kopola, President & CEO | 369 | 379 |
| 2014 | 28 | |
| Jaana Tuominen, member as of 26 March | ||
| Hannu Kasurinen, member | 32 | 33 |
| Suvi Hintsanen, member | 33 | 34 |
| Heikki Mairinoja, member until 26 March 2014 | 5 | 34 |
| Mikko Maijala, Deputy Chair until 4 April 2012 | 1 | |
| Risto Anttonen, Deputy Chair | 43 | 44 |
| Jorma Eloranta, Chair | 55 | 56 |
The members of the Board of Directors and the members of the Corporate Executive Team have no pension arrangements with Suominen, with the exception of the President and CEO.
On 5 June 2014 40% of the remuneration to the Board of Directors was paid by company shares (120,848 shares) at the fair value of EUR 69 thousand. This amount is included in the compensations above. Board members were not included in stock option plans. Stock option plans expired in 2013.
A written contract has been made with the President & CEO, under which she shall have a six-month period of notice. Should the company terminate the contract, additional compensation corresponding to the 12 months' salary shall also be paid. The President & CEO has a supplementary pension plan, with a cost of 11.5% of her annual income as defined in the Finnish Pension Law. The costs for the supplementary pension plan was EUR 35 thousand and for the statutory pension plan EUR 26 thousand.
The members of the company's Board of Directors and the President & CEO owned, either directly or via a company or organisation in which they held controlling power, 444,256 shares on 31 December 2014. These shares entitle holders to 0.2% of voting rights.
Insiders subject to the declaration
| requirement | Shares |
|---|---|
| Jorma Eloranta, Chair of the Board | 152,434 |
| Risto Anttonen, Deputy Chair of the Board | 108,253 |
| Suvi Hintsanen, Member of the Board | 94,586 |
| Hannu Kasurinen, Member of the Board | 69,253 |
| Jaana Tuominen, Member of the Board | 19,730 |
| Total | 444,256 |
The members of the Corporate Executive Team did not hold any shares on 31 December 2014.
No loans, guarantees or other collaterals have been given on behalf of related parties.
| € 1,000 | 2014 | 2013 |
|---|---|---|
| Sales of goods and services | 5,083 | 16,439 |
| Purchases of goods and services | 58,487 | 62,342 |
| Trade and other receivables | 1,396 | |
| Trade and other payables | 2,073 |
Other related-party transactions are transactions with Ahlstrom Corporation and its group companies until 7 October 2014.
| 1 January–31 December € 1,000 |
Note | 2014 | 2013 |
|---|---|---|---|
| Net sales | 15,494 | 15,208 | |
| Cost of goods sold | -758 | -782 | |
| Gross profit | 14,736 | 14,426 | |
| Other operating income | 2 | 419 | 177 |
| Sales and marketing expenses | -1,567 | -1,073 | |
| Research and development | -2,382 | -2,301 | |
| Administration expenses | -7,830 | -8,513 | |
| Other operating expenses | 2 | -26,456 | -18,790 |
| Operating profit before non-recurring items | -23,079 | -16,075 | |
| Non-recurring items | -421 | ||
| Operating profit | -23,500 | -16,075 | |
| Financial income | 6 | 22,800 | 18,164 |
| Financial expenses | 6 | -8,918 | -7,465 |
| Profit before income taxes | -9,617 | -5,376 | |
| Group contributions | 28 | 34 | |
| Profit before depreciation dižerence and | |||
| income taxes | -9,589 | -5,342 | |
| Change in depreciation di‡erence | -30 | -140 | |
| Corporate tax | -29 | ||
| Profit/loss for the period | -9,619 | -5,511 |
Parent Company Financial Statements, FAS
| 31 December € 1,000 |
Note | 2014 | 2013 | 31 December € 1,000 |
Note | 2014 | 2013 |
|---|---|---|---|---|---|---|---|
| ASSETS | SHAREHOLDERS´ EQUITY AND LIABILITIES | ||||||
| Non-current assets | Shareholders' equity | ||||||
| Share capital | 12 | 11,860 | 11,860 | ||||
| Intangible assets | 5,8 | 7,360 | 8,003 | Share premium account | 12 | 24,681 | 24,681 |
| Tangible non-current assets | 5,9 | 163 | 164 | Other shareholders' equity | 12 | 69,700 | 79,251 |
| Shares and participations | Shareholders' equity, total | 106,241 | 115,791 | ||||
| Participations in group companies | 10 | 103,840 | 115,416 | ||||
| Other shares and participations | 10 | 942 | 923 | Appropriations | |||
| Loans receivable | Accumulated depreciation dižerence | 1,371 | 1,341 | ||||
| Loans receivable from group companies | 67,402 | 39,898 | |||||
| Loans receivable from third parties | 8,202 | Liabilities | |||||
| Non-current assets, total | 187,908 | 164,403 | Non-current liabilities | ||||
| Interest-bearing liabilities | |||||||
| Current assets | Bonds | 14 | 75,000 | ||||
| Hybrid bond | 14 | 17,500 | |||||
| Loan receivables | 11 | 600 | 131 | Loans from financial institutions | 14 | 6,667 | 65,862 |
| Other current receivables | 11 | 28,204 | 66,301 | Other non-current financial liabilities | 15 | 1,274 | |
| Cash at bank and in hand | 33,930 | 15,945 | Loans from group companies | 429 | |||
| Current assets, total | 62,734 | 82,377 | Non-current liabilities, total | 100,870 | 65,862 | ||
| Assets, total | 250,642 | 246,780 | Current liabilities | ||||
| Interest-bearing liabilities | |||||||
| Loans from financial institutions | 14 | 3,333 | 23,486 | ||||
| Loans from group companies | 14 | 34,981 | 36,541 | ||||
| Trade payables and other current | |||||||
| liabilities | 15 | 3,846 | 3,758 | ||||
| Current liabilities, total | 42,160 | 63,786 | |||||
| Liabilities, total | 143,030 | 129,648 | |||||
| Shareholders' equity and liabilities, total | 250,642 | 246,780 |
| 1 January–31 December | |||
|---|---|---|---|
| € 1,000 | Note | 2014 | 2013 |
| Operations | |||
| Profit/loss for the period | -9,619 | -5,511 | |
| Adjustments on profit/loss for the period | 17 | 14,673 | 9,185 |
| Cash flow before change in working capital | 5,054 | 3,674 | |
| Increase/decrease in current non-interest-bearing receivables | 1,872 | ,705 | |
| Increase/decrease in current non-interest-bearing liabilities | -1,528 | 1,344 | |
| Cash flow before financial income/expenses and taxes | 5,398 | 5,723 | |
| Interest expenses paid and received | -1,106 | -2,240 | |
| Corporate taxes paid | -29 | ||
| Cash flow from operations | 4,263 | 3,483 | |
| Investments | |||
| Investments | 8,9,10 | -1,265 | -1,884 |
| Investments in group companies | -21,558 | -8,234 | |
| Discontinued operations | 5,733 | 6,223 | |
| Change in non-current loan receivable | -35,812 | 37,486 | |
| Change in current loan receivable | 37,481 | -31,753 | |
| Cash flow from investments | -15,422 | 1,838 | |
| Financing | |||
| Non-current loans repaid | 14 | -78,220 | -19,429 |
| Non-current loans withdrawn | 14 | 10,000 | |
| Hybrid bond | 14 | 17,500 | |
| Bond | 14 | 75,000 | |
| Change in capital loans | 14 | -920 | |
| Change in current loans | 14 | -10,985 | 8,121 |
| Dividends received | 15,848 | 11,869 | |
| Cash flow from financing | 29,143 | -,359 | |
| Change in cash and cash equivalents | 17,986 | 4,962 | |
| Cash and cash equivalents 1 Jan. | 15,945 | 10,983 | |
| Change in cash and cash equivalents | 17,986 | 4,962 | |
| Cash and cash equivalents 31 Dec. | 33,930 | 15,945 |
The financial statements of Suominen Corporation have been prepared according to Finnish Accounting Standards (FAS).
Fixed assets are entered in the balance sheet at direct acquisition cost less planned depreciation. They are depreciated with planned straight-line depreciation calculated on the basis of their probable economic life.
| The depreciation periods are: | |
|---|---|
| Vehicles 4 years |
|
| Machinery and equipment4–10 years | |
| Intangible assets and other long-term expenditure4–10 years |
Depreciation is calculated starting from the period the fixed assets become operational.
Indirect sales taxes, discounts provided, and foreign exchange dierences from sales are deducted from sales revenue. Net sales consist of sales of intra-group services.
All employees of the company are included in a mandatory pension insurance policy taken out with an insurance company. Pension costs are accrued following the same timing and principles as salaries.
Business transactions denominated in foreign currencies are entered at the exchange rates current on the date of transaction. Receivables and liabilities denominated in foreign currencies are translated into euros at the reference rate of the European Central Bank on the balance sheet date. The exchange rate dierences from business transactions, receivables, and liabilities are recognized in the statement of income. Gains and losses on the forward contracts hedging sales income and purchases are entered as other operating income and expenses. The net sum of exchange rate dierences on other financial instruments is entered in financial income and expenses.
Unrealized marked-to-market values of derivatives and realized gains and losses of matured the derivatives are immediately recognized in the other operating income and expenses.
Interest rate and electricity derivatives are marked to market on the balance sheet date. When a derivative matures, the interest income or expense of an interest rate derivative is recognized in the financial income and expenses, and the clearing gain or loss of a electricity derivative is recognized in profit or loss as adjustment to electricity purchases.
Investments to subsidiaries are valued at acquisition cost. The valuation of listed shares is based on fair value, which is the market value on the balance sheet date. Unlisted shares are valued at acquisition cost, because no reliable fair values are available.
Impairment charge is booked when there is reliable external evidence, that the fair value is permanently reduced.
Accrual-based taxes determined in accordance with the financial results of the company, paid taxes and received advances from previous periods following the local legal requirements, are included in the statement of income.
| € 1,000 | 2014 | 2013 |
|---|---|---|
| Other operating income | ||
| Rent income | 78 | |
| Recovered bad debts | 88 | |
| Gains from currency derivatives | 194 | 86 |
| Other | 146 | 3 |
| Total | 418 | 177 |
| Losses from sales on participations in group | ||
|---|---|---|
| companies | -26,245 | -18,411 |
| Reversal of compulsory provisions | -135 | |
| Losses from currency derivatives | -325 | -230 |
| Other | -306 | -14 |
| Total | -26,876 | -18,790 |
| € 1,000 | 2014 | 2013 |
|---|---|---|
| Salaries and other compensations | 3,389 | 3,766 |
| Pension expenditure | ||
| Defined contribution plans | 530 | 382 |
| Other payroll connected expenses | 617 | 270 |
| Total | 4,536 | 4,418 |
Salaries and bonuses paid to management
| Members of the Boards of Directors, and | ||
|---|---|---|
| President & CEO | 734 | 580 |
The President & CEO of the Company has a statutory pension insurance and a supplementary pension plan, a cost of 11.5% of her annual income as defined in the Finnish Pension Law.
Average number of personnel 24 22
| € 1,000 | 2014 | 2013 |
|---|---|---|
| Statutory audit | 111 | 101 |
| Other services | 199 | 74 |
| Total | 310 | 175 |
| 47 | 1 |
|---|---|
| 78 | |
| 1,612 | 1,593 |
| 264 | 143 |
| 2,001 | 1,737 |
| Impairment losses Total |
1,960 2,001 |
1,700 1,737 |
|---|---|---|
| Other intangible assets | 41 | 37 |
| Machinery and equipment |
| Total | 13,883 | 10,699 |
|---|---|---|
| € 1,000 | 2014 | 2013 |
|---|---|---|
| Income taxes from previous years | 29 | |
| Income taxes total | 0 | 29 |
| 8. INTANGIBLE ASSETS | Advance | ||||
|---|---|---|---|---|---|
| Other | payments | ||||
| Intangible | intangible | and work | |||
| € 1,000 | rights | assets | in progress | Total 2014 | Total 2013 |
| Acquisition cost 1 Jan. | 10,129 | 1,001 | 11,130 | 10,295 | |
| Increase | 130 | 1,064 | 1,143 | 2,336 | 835 |
| Disposals / decrease | -1,064 | -1,064 | |||
| Transfers between items | 1,540 | -1,540 | |||
| Acquisition cost 31 Dec. | 11,799 | 604 | 12,402 | 11,130 | |
| Accumulated depreciation 1 Jan | -3,127 | -3,127 | -1,427 | ||
| Depreciation for the financial year | -1,916 | -44 | -1,960 | -1,700 | |
| Depreciation on disposals | 44 | 44 | |||
| Accumulated depreciation 31 Dec. | -5,043 | -5,043 | -3,127 | ||
| Book value 31 Dec. | 6,756 | 604 | 7,360 | 8,003 |
| 9. TANGIBLE ASSETS | Advance | ||||
|---|---|---|---|---|---|
| € 1,000 | Intangible rights |
Other intangible assets |
payments and work in progress |
Total 2014 | Total 2013 |
| Acquisition cost 1 Jan. | 413 | 16 | 429 | 356 | |
| Increase | 2 | 38 | 40 | 75 | |
| Writedowns | -2 | ||||
| Acquisition cost 31 Dec. | 413 | 18 | 38 | 469 | 429 |
| Accumulated depreciation 1 Jan. | -266 | -266 | -229 | ||
| Depreciation for the financial year | -41 | -41 | -37 | ||
| Accumulated depreciation 31 Dec. | -307 | -307 | -266 | ||
| Book value 31 Dec. | 106 | 18 | 38 | 163 | 164 |
| € 1,000 | group companies | shares | Total 2014 | Total 2013 |
|---|---|---|---|---|
| Acquisition cost 1 Jan. | 115,416 | 923 | 116,339 | 131,250 |
| Increases | 21,558 | 20 | 21,578 | 9,132 |
| Impairment losses | -33,133 | - 1 | -33,135 | -24,043 |
| Acquisition cost 31 Dec. | 103,841 | 941 | 104,782 | 116,339 |
| Book value 31 Dec. | 103,841 | 942 | 104,782 | 116,339 |
| Percentage of total number of shares and voting power | |
|---|---|
| Suominen Nonwovens Ltd., Nakkila, Finland | 100.0 |
| Flexmer Oy, Tampere, Finland | 100.0 |
| Suominen Italy Holding, s.r.l., Mozzate, Italy | 100.0 |
| Suominen Spain Holding, S.A., Alicante, Spain Suominen US Holding, Inc.,Windsor Locks, |
100.0 |
| The United States of America Suominen Brasil Indústria e Comércio de Não-Tecidos |
100.0 |
| Ltda., Paulínia, Brazil | 100.0 |
| Percentage of total number of shares and voting power | |
|---|---|
| Owned through subsidiaries: | |
| Cressa Nonwovens s.r.l.,Mozzate, Italy | 100.0 |
| Mozzate Nonwovens s.r.l., Mozzate, Italy | 100.0 |
| Alicante Nonwovens S.A.U., Alicante, Spain | 100.0 |
| Bethune Nonwovens, Inc., Bethune, The United States of America |
100.0 |
| Green Bay Nonwovens, Inc., Green Bay, The United States of America |
100.0 |
| Windsor Locks Nonwovens, Inc., Windsor Locks, The United States of America |
100.0 |
(In the other shares and participations in the balance sheet)
| Percentage of | Shareholders´ Profit/loss |
|||||
|---|---|---|---|---|---|---|
| total number of | Number of Nominal value | Book value | equity of | in the latest | ||
| shares and | shares | of shares | of shares the company financial statements | |||
| voting power | pcs | € 1 000 | € 1 000 | € 1 000 | € 1 000 | |
| Real estate companies | ||||||
| Kiinteistö Oy Virtain Inkantie 62, Virrat | 100.0 | 5,000 | 0 | 0 | 911 | |
| Participating interests | ||||||
| Kiinteistö Oy Killinpolku, Virrat, Finland | 25.0 | 1 | 8 | 8 | 101 | 0 |
| Bright Maze Oy, Helsinki | 19.9 | 19,900 | 20 | 20 | -1,132 | -1,431 |
| € 1,000 | 2014 | 2013 |
|---|---|---|
| Loan receivables | 600 | 131 |
| Other receivables | 115 | 228 |
| Accrued income and prepaid expenses | ||
| Social security and healthcare | 3 | 2 |
| Indirect tax | 210 | 71 |
| Gains from currency derivatives | 9 | |
| Contingent considerations | 980 | |
| Loan provisions and arrangement fees | 1,725 | 3,031 |
| Other | 99 | 504 |
| Total accrued income and prepaid expenses | 3,017 | 3,617 |
| Receivables from group companies | ||
| Interest-bearing receivables | 22,442 | 60,943 |
| Other receivables | 2,629 | 1,513 |
| Total | 25,072 | 62,456 |
| Total other current receivables | 28,204 | 66,301 |
| € 1,000 | 2014 | 2013 |
|---|---|---|
| Share capital 1 Jan. and 31 Dec. | 11,860 | 11,860 |
| Share premium account 1 Jan. and 31 Dec. | 24,681 | 24,681 |
| Reserve for own shares 1 Jan. and 31 Dec | -44 | -44 |
| Invested non-restricted equity fund 1 Jan. | 97,123 | 97,054 |
| Conveyance of own shares | 69 | 69 |
| Invested non-restricted equity fund 31 Dec. | 97,192 | 97,123 |
| Retained earnings 31 Dec. | -17,829 | -12,318 |
| Profit for the period | -9,619 | -5,511 |
| Shareholders´ equity 31 Dec. | 106,241 | 115,791 |
| Retained earnings 31 Dec. | -17,829 | -12,318 |
|---|---|---|
| Invested non-restricted equity fund | 97,192 | 97,123 |
| Own shares | -44 | -44 |
| Non-restricted equity 31 Dec. | 79,319 | 84,761 |
| Profit for the period | -9,619 | -5,511 |
| Distributable assets | 69,700 | 79,251 |
See note 15 in the consolidated financial statements.
| € 1,000 | 2014 | 2013 |
|---|---|---|
| Current * | ||
| Repayment of non-current liabilities | ||
| Loans from financial institutions | 3,333 | 22,915 |
| Pension loans | 571 | |
| Repayment of non-current liabilities | 3,333 | 23,486 |
| Current loans | ||
| Loans from group companies | 34,981 | 36,541 |
| Total current interest-bearing liabilities | 38,314 | 60,027 |
| Non-current | ||
| Bond | 75,000 | |
| Loans from financial institutions | 6,667 | 65,290 |
| Pension loans | 571 | |
| Hybrid bond | 17,500 |
| Total interest-bearing liabilities | 137,481 | 125,888 |
|---|---|---|
Total non-current interest-bearing liabilities 99,167 65,861
* In the balance sheet under current liabilities.
| € 1,000 | 2015 | 2016 | 2017 | 2018 2019– |
|---|---|---|---|---|
| Repayments of non current loans in future |
||||
| Loans from financial institutions |
3,330 | 3,330 | 3,340 | |
| Bond | 75,000 | |||
| Total | 3,330 | 3,330 | 3,340 | 75,000 |
Hybrid bond does not have any maturity.
| € 1,000 | 2014 | 2013 |
|---|---|---|
| Provisions 1 Jan. | 280 | |
| Decrease | -280 | |
| Provisions 31 Dec. |
Compulsory provision against estimated financial losses on rental liability of discontinued business operation was reversed in 2013.
| € 1,000 | 2014 | 2013 |
|---|---|---|
| Current | ||
| Trade payables | 359 | 852 |
| Other current liabilities | 814 | 89 |
| Accrued expenses | ||
| Interest | 902 | 812 |
| Payroll and social security | 1,283 | 1,460 |
| Losses from currency derivatives | 121 | 66 |
| Equity Hedge | 114 | |
| Other accrued expenses | 3 | 383 |
| Total accrued expenses | 2,424 | 2,721 |
| Liabilities to group companies | 249 | 96 |
| Total trade paybles and other current liabilities | 3,846 | 3,758 |
| Non-current | ||
| Accrued interest on hybrid bond | 924 | |
| Other non-current liabilities | 350 | |
| Total non-current financial liabilities | 1,274 | 0 |
| Total non-interest-bearing liabilities | 5,121 | 3,758 |
Other non-current liabilities EUR 0.4 million and other current liabilities EUR 0.7 million were related to an acquisition of intangible assets.
| € 1,000 | 2014 | 2013 |
|---|---|---|
| Guarantees | ||
| Guarantees for loans | ||
| Guarantees on behalf of group companies | 5,033 | |
| Other contingent liabilities | ||
| Guarantees on behalf of group companies | 5,037 | 5,904 |
| Guarantees on behalf of third parties | 4,017 | |
| Total | 9,054 | 10,937 |
Guarantees on behalf of third parties are collaterals given on behalf of the Flexibles business unit disposed in 2014.
| Pledged business mortgages, subsidiary shares and loans |
215,560 | |
|---|---|---|
| Total | 215,560 | |
| Operating leases | ||
| Falling due next year | 92 | 113 |
| Falling due in subsequent years | 116 | 147 |
| Total | 208 | 260 |
| Rent liabilities | ||
| Falling due next year | 174 | 203 |
| Falling due later | 176 | |
| Total | 174 | 379 |
| € 1,000 | 2014 | 2013 |
|---|---|---|
| Adjustments on profit/loss for the period | ||
| Change in depreciation di‡erence | 30 | 140 |
| Group contributions | -28 | -34 |
| Financial income and expenses | -13,883 | -10,699 |
| Corporate taxes | 29 | |
| Depreciation | 2,001 | 1,737 |
| Gain and losses from disposals for | ||
| non-current assets | 26,245 | 17,820 |
| Other adjustments | 308 | 192 |
| Total adjustments on cash flow from operations | 14,673 | 9,185 |
The Board of Directors proposes to the Annual General Meeting scheduled to be held on 19 March 2015 for the distribution of profit as follows:
| Parent Company profit for 1 January–31 December 2014 | -9,618,929,34 € |
|---|---|
| Retained earnings according to the Parent Company balance sheet | -17,828,766,04 € |
| Invested non-restricted equity fund | 97,191,611,31 € |
| Own shares | -43,619,21 € |
| Total | 69,700,296,72 € |
Board proposes that no dividend is paid for the financial year 2014.
The Board of Directors proposes that funds shall be distributed from the invested non-restricted equity fund in the amount of EUR 0.01 per share. Calculated on the basis of the total amount of shares outstanding at the balance sheet date a total of EUR 2,461,306.03 would be distributed.
The Board of Directors proposes that the loss for the financial period and the losses from the previous financial periods shall be covered from the invested non-restricted equity fund.
The financial position of the company has not materially changed after the balance sheet date.
Helsinki, 30 January 2015
Jorma Eloranta Risto Anttonen Jaana Tuominen Chair
Suvi Hintsanen Hannu Kasurinen Nina Kopola
President & CEO
Our auditor's report has been issued today.
Helsinki, 30 January 2015
PricewaterhouseCoopers Oy Authorised Public Accountants
Heikki Lassila Authorised Public Accountant
We have audited the accounting records, the financial statements, the report of the Board of Directors and the administration of Suominen Corporation for the year ended 31 December 2014. The financial statements comprise the consolidated statement of financial position, statement of income, 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.
The Board of Directors and the President & CEO 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 President & CEO shall see to it that the accounts of the company are in compliance with the law and that its financial aairs have been arranged in a reliable manner.
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 President & CEO 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 eectiveness 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 su³cient and appropriate to provide a basis for our audit opinion.
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.
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, 30 January 2015
PricewaterhouseCoopers Oy Authorised Public Accountants
Heikki Lassila Authorised Public Accountant
| Number of | Total shares held Percentage of shares | |||
|---|---|---|---|---|
| Number of shares | shareholders | Percentage in each category | and voting power | |
| 1–100 | 339 | 8.4 % | 20,571 | 0.0 % |
| 101–500 | 759 | 18.9 % | 229,257 | 0.1 % |
| 501–1,000 | 649 | 16.2 % | 550,495 | 0.2 % |
| 1,001–5,000 | 1,365 | 34.0 % | 3,572,821 | 1.4 % |
| 5,001–10,000 | 397 | 9.9 % | 3,198,630 | 1.3 % |
| 10,001–50,000 | 383 | 9.5 % | 8,165,608 | 3.3 % |
| 50,001–100,000 | 58 | 1.4 % | 4,203,063 | 1.7 % |
| 100,001–500,000 | 40 | 1.0 % | 8,937,145 | 3.6 % |
| over 500,000 | 25 | 0.6 % | 217,232,745 | 87.6 % |
| Total | 4,015 | 100.0 % | 246,110,335 | 99.3 % |
| Shares held by the company | 1,803,519 | 0.7 % | ||
| Shares not transferred to the book-entry | ||||
| system | 20,268 | 0.0 % | ||
| Total | 4,015 | 247,934,122 | 100.0 % | |
| out of which nominee registered | 7 | 2,890,558 | 1.2 % |
| Number of | Total shares held Percentage of shares | |||
|---|---|---|---|---|
| shareholders | Percentage in each category | and voting power | ||
| Companies | 198 | 4.9 % | 42,971,371 | 17.3 % |
| Financial institutions and insurance | ||||
| companies | 13 | 0.3 % | 21,148,991 | 8.5 % |
| Public institutions | 7 | 0.2 % | 66,993,245 | 27.0 % |
| Non-profit organisations | 22 | 0.5 % | 8,869,458 | 3.6 % |
| Individuals | 3,756 | 93.7 % | 35,384,742 | 14.3 % |
| Foreign shareholders | 12 | 0.3 % | 67,851,970 | 27.4 % |
| Total | 4,008 | 100.0 % | 243 219 777 | 98.1 % |
| Nominee registered shares | 7 | 2,890,558 | 1.2 % | |
| Shares held by the Company | 1,803,519 | 0.7 % | ||
| Shares not transferred to the book-entry system | 20,268 | 0.0 % | ||
| Total | 4,015 | 247,934,122 | 100.0 % |
| Percentage of | |||
|---|---|---|---|
| Shareholder | Total shares held |
shares and voting power |
|
| 1. | AC Invest Two B.V. | 67,724,176 | 27.3 % |
| 2. Ilmarinen Mutual Pension Insurance Company | 26,422,103 | 10.7 % | |
| 3. | Varma Mutual Pension Insurance Company | 22,500,000 | 9.1 % |
| 4. | Finnish Industry Investment Ltd | 22,009,604 | 8.9 % |
| 5. | Elo Mutual Pension Insurance Company | 14,123,255 | 5.7 % |
| 6. | Mandatum Life Insurance Company Limited | 13,633,000 | 5.5 % |
| 7. | Oy Etra Invest Ab | 12,223,320 | 4.9 % |
| 8. | Evald ja Hilda Nissi Foundation | 6,943,646 | 2.8 % |
| 9. | Heikki Bergholm | 4,635,562 | 1.9 % |
| 10. | The Finnish Innovation Fund Sitra | 4,344,444 | 1.8 % |
| 11. Juhani Maijala | 3,286,743 | 1.3 % | |
| 12. Mikko Maijala | 3,017,337 | 1.2 % | |
| 13. | Yleisradion Eläkesäätiö | 2,222,222 | 0.9 % |
| 14. | Nordea Bank Finland Plc | 2,215,090 | 0.9 % |
| 15. | Eeva Maijala | 1,793,635 | 0.7 % |
| 16. | Apteekkien Eläkekassa | 1,530,665 | 0.6 % |
| 17. | Onninen-Sijoitus Oy | 1,422,410 | 0.6 % |
| 18. | Harald Relander | 1,300,000 | 0.5 % |
| 19. | Oy Chemec Ab | 1,216,112 | 0.5 % |
| 20. | Veikko Laine Oy | 1,070,400 | 0.4 % |
Key figures per share
| IFRS | IFRS | IFRS | IFRS | IFRS | |
|---|---|---|---|---|---|
| 2014 | 2013 | 2012 | 2011 | 2010 | |
| Earnings/share (EPS), € | 0.02 | -0.07 | -0.05 | -0.11 | -0.34 |
| Earnings/share (EPS), diluted, € | 0.02 | -0.07 | -0.05 | -0.11 | -0.34 |
| Earnings/share (EPS) from continuing operations, non diluted and diluted, € |
0.04 | 0.02 | -0.01 | -0.14 | -0.29 |
| Earnings/share (EPS) from discontinued operations, non diluted and diluted € |
-0.02 | -0.09 | -0.04 | 0.03 | -0.06 |
| Earnings/share (EPS) before non-recurring items, € | 0.05 | 0.03 | 0.01 | -0.10 | -0.07 |
| Cash flow from operations/share, € | 0.15 | 0.09 | 0.10 | -0.03 | -0.06 |
| Equity/share, € | 0.44 | 0.32 | 0.39 | 0.44 | 0.70 |
| P/E ratio | 40.08 | -7.32 | -7.25 | -3.51 | -1.51 |
| Distributed funds/share, €* | 0.01 | ||||
| Share price | |||||
| lowest, € | 0.47 | 0.34 | 0.33 | 0.36 | 0.48 |
| highest, € | 0.81 | 0.61 | 0.47 | 0.64 | 1.74 |
| average, € | 0.52 | 0.48 | 0.39 | 0.49 | 0.79 |
| at year end, € | 0.81 | 0.48 | 0.35 | 0.39 | 0.52 |
| Market capitalization on 31 Dec, € million | 199.4 | 118.1 | 86.1 | 95.9 | 24.6 |
| Number of shares | |||||
| average during the year | 246,082,357 | 245,907,846 | 245,873,824 | 85,887,023 | 35,532,883 |
| at year end | 246,130,603 | 246,009,755 | 245,873,824 | 245,873,824 | 47,226,209 |
| adjusted with share issue (factor 1.53) | 41,768,853 | ||||
| dilutive e‡ect included | 281,936,387 | ||||
| Number of shares traded as | 97,683,100 | 11,332,737 | 3,660,581 | 3,930,341 | 6,639,579 |
| percentage of the average during the year | 39.7 | 4.6 | 1.5 | 4.6 | 18.7 |
| percentage of the average during the year, adjusted with share issue |
15.9 | ||||
No dividends were paid during the financial year.
*Proposal by the Board of Directors
| Key figures | Key figures on financial performance | IFRS 2014 |
IFRS 2013 |
IFRS 2012 |
IFRS 2011 |
IFRS 2010 |
|---|---|---|---|---|---|---|
| Net sales, continuing operations, € million | 401.8 | 373.7 | 356.9 | 98.3 | 55.7 | |
| Export and international operations, continuing operations, € million as % of net sales |
399.2 99.4 |
349.6 93.5 |
333.0 93.3 |
70.8 72.0 |
28.7 51.4 |
|
| Operating profit from continuing operations before non-recurring items, € million as % of net sales |
26.9 6.7 |
19.4 5.2 |
14.9 4.2 |
-4.3 -4.4 |
-3.6 -6.5 |
|
| Operating profit from continuing operations, € million, as % of net sales |
25.9 6.4 |
18.9 5.1 |
8.9 2.5 |
-7.2 -7.3 |
-8.5 -15.3 |
|
| Profit for the period before taxes, € million as % of net sales |
17.8 4.4 |
13.1 3.5 |
-0.3 -0.1 |
-12.0 -12.2 |
-12.3 -22.0 |
|
| Profit/loss for the period, continuing operations, € million as % of net sales |
10.2 2.5 |
5.7 1.5 |
-2.8 -0.8 |
-11.8 -12.0 |
-12.0 -21.6 |
|
| Profit/loss for the period, discontinued operations, € million as % of net sales |
-5.2 -1.3 |
-21.8 -5.8 |
-9.0 -2.5 |
2.2 2.3 |
-2.3 -4.2 |
|
| Profit/loss for the period, € million as % of net sales |
5.0 1.2 |
-16.1 -4.3 |
-11.9 -3.3 |
-9.5 -9.7 |
-14.4 -25.9 |
|
| Cash flow from operations, € million | 37.1 | 21.3 | 24.9 | -2.9 | -2.5 | |
| Balance sheet total, € million | 264.6 | 238.9 | 278.9 | 338.1 | 119.4 | |
| Return on equity (ROE), % | 5.1 | -18.6 | -11.2 | -20.9 | -37.3 | |
| Return on invested capital (ROI), % | 12.0 | -0.7 | 0.4 | -3.7 | -10.6 | |
| Return on invested capital (ROI) from continuing operations, % | 15.7 | 12.4 | 5.0 | -9.2 | 2.4 | |
| Equity ratio, % | 41.2 | 32.9 | 34.4 | 32.2 | 27.9 | |
| Equity ratio, %, capital loans in equity | 32.9 | 34.8 | 32.8 | 32.9 | ||
| Gearing, % | 34.7 | 96.2 | 101.0 | 111.0 | 174.0 | |
| Gearing, %, capital loans in equity | 96,2 | 98,8 | 107,5 | 132,1 | ||
| Gross investments, continuing operations, € million as % of net sales |
7,1 1,8 |
4,4 1,2 |
2,7 0,8 |
1,7 1,7 |
1,8 3,2 |
|
| Expenditure on R&D, continuing operations, € million as % of net sales |
2,9 0,7 |
3,0 0,8 |
3,2 0,9 |
1,2 1,2 |
1,2 2,1 |
|
| Average personnel, continuing operations | 591 | 550 | 603 | 250 | 212 |
| Earnings/share | Profit before income taxes - income taxes |
|---|---|
| Adjusted number of shares held outside the group (average) | |
| Cash flow from operations/share | Cash flow from operations as in the cash flow statement |
| Adjusted number of shares held outside the group (average) | |
| Equity/share | Shareholders' equity |
| Adjusted number of shares held outside the group at year end | |
| Dividend/share | Dividend/share for the financial year |
| Adjustment coe³cient for share issues after the financial year | |
| Dividend/earnings, % | Dividend/share x 100 |
| Earnings/share | |
| Dividend/cash flow from operations, % | Dividend/share x 100 |
| Cash flow from operations/share | |
| Dividend yield, % | Dividend/share x 100 |
| Adjusted share price at year end | |
| P/E ratio | Adjusted share price at year end |
| Earnings/share | |
| Market capitalization | Number of shares held outside the group at year end x adjusted share price at year end |
| Return on equity (ROE), % | (Profit before income taxes - income taxes) (last 12 months) x 100 |
| Shareholders' equity (quarterly average) | |
| Return on invested capital (ROI), % |
(Profit before income taxes + profit from discontinued operations incl. income taxes + interest and other financial expenses) (last 12 months) x 100 |
| (Balance sheet total - non-interest bearing liabilities) (quarterly average) | |
| Equity ratio, % | Shareholders' equity x 100 |
| Balance sheet total - advances received | |
| Gearing, % | (Interest-bearing liabilities - interest-bearing receivables - cash at bank and in hand) x 100 |
| Shareholders' equity |
In 2015, Suominen Corporation will publish financial reports as follows:
Interim Report 1 January - 31 March on 27 April 2015 Interim Report 1 January - 30 June on 17 July 2015 Interim Report 1 January - 30 September on 26 October 2015
Financial Statement Release of 2014 was published on 30 January 2015. Financial reports and other Stock Exchange Releases are published in Finnish and English and are available on the company's website www.suominen.fi immediately after their publication. The internet pages also contain information on how to join the mailing list for releases. All financial reports and other releases will be distributed via e-mail. The English editions are translations of the Finnish originals, which will prevail in the event of any dispute.
Notice is given to the shareholders of Suominen Corporation to the Annual General Meeting to be held on Thursday 19 March 2015 at 10.00 am. at Finlandia Hall (Helsinki-Hall), at the address Mannerheimintie 13 e, 00100 Helsinki. The reception of persons who have registered for the meeting will commence at 9.00 am. Dur-ing the coffee service after the Annual General Meeting, shareholders will have the opportunity to meet the management of the company.
Notice of the Annual General Meeting has been announced as stock exchange release on 30 January 2015. All materials to the Annual General Meeting are available on the company's website www.suominen.fi > Investors > Corporate Governance > General Meetings of Shareholders > AGM 2015.
Shareholders who are entered in the Company's Register of Shareholders maintained by Euroclear Finland Ltd on 9 March 2015 are entitled to attend the Annual General Meeting. Notice of attendance at the Annual General Meeting is requested by 4 pm on 13 March 2015, either
a) by e-mail at [email protected], b) by telephone at +358 (0)10 214 3551 (weekdays from 8.00am to 4.00pm) c) in writing to Suominen Corporation, Itämerentori 2, FI-00180 or d) by fax at +358 (0)9 773 1109.
The notice of attendance must include the name of the shareholder, his or her personal id number, address, phone number and the name of an eventual assistant or representative and the representative's personal id number.
The Board of Directors proposes that funds shall be distributed from the invested non-restricted equity fund in the amount of 0.01 euros per share. Calculated on the basis of the current total amount of shares a total of 2,461,306.03 euros would be distributed. The date of record for the distribution of the funds is 23 March 2015 and the funds shall be paid on 30 March 2015.
The Board of Directors proposes that no dividend shall be paid for the financial year 2014.
The Board of Directors proposes that parent company's loss for the financial period, -9,618,929.34, and the losses from the previous financial periods, -17,828,766.04 euros, shall be covered from the invested non-restricted equity fund.
Investor relations of Suominen Corporation are the responsibility of Anu Heinonen, Vice President, Corporate Communications & IR, tel. +358 10 214 3555.
Requests for management appointments shall be addressed to Eeva Oinonen, Executive Assistant, PA to President & CEO, tel. +358 (0)10 214 3551.
E-mail addresses follow the format [email protected].
Suominen's closed period commences at the end of a reporting period and ends when the interim report of financial statements release concerning the financial period in question has been published. No meetings between investors and company representatives will be ar-ranged, nor will any comments on financial performance or development be issued during the closed period.
Head Oce Itämerentori 2 FI-00180 Helsinki Finland Tel. +358 (0)10 214 300
Detailed contact information to Suominen locations worldwide is available at www.suominen.fi.
[email protected] www.suominen.fi Twitter: @SuominenCorp LinkedIn: Suominen Corporation
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