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Financial statements 2007
Financial statements 2007
Board of Directors’ report 3
Group financial statements, IFRS
Consolidated income statement 9
Consolidated balance sheet 10
Consolidated cash flow statement 11
Consolidated statement of changes
in shareholders’ equity 12
Notes to the consolidated
financial statements 13
Parent company financial statements, FAS
Income statement 39
Balance sheet 40
Cash flow statement 41
Notes to the financial statements 42
Group key ratios 50
Calculation of key ratios 52
Shares and shareholders 53
The Board of Directors’ proposal for distribution
of profits, signatures for the Board of Directors’
report and financial statements 57
Auditors’ report 58
Development of quarterly results 59
Addresses 60
2
Board of Directors´
report
The Group’s net sales in 2007 totaled EUR 110.8 mil- equipment. Technology services include maintenance,
lion (MEUR 106.2), up 4.3 percent. The Group’s oper- spare part services, modernizations, consulting, train-
ating profit was EUR 8.6 million (MEUR 4.5). Financial ing, and reconditioned machinery.
income and expenses totaled EUR 0.4 million (MEUR
0.4). Profit before tax was EUR 9.0 million (MEUR 4.9) The order intake in 2007 amounted to EUR 90 million
and profit for the report period was EUR 6.6 million (MEUR 132), of which project deliveries accounted for
(MEUR 3.6). Earnings per share were EUR 1.65 (EUR EUR 61 million (MEUR 105), realized mostly in late 2007.
0.94), and return on equity was 21 percent (13%). The most significant new orders were log handling,
peeling and drying lines for the production of base
In this report, figures in parentheses refer to corre- layer parquet veneer in Sweden, as well as different
sponding figures for the previous year 2006. types of plywood production lines in Russia and Latvia.
Markets On the whole, Raute’s competitive position is good.
The market situation and investment demand in Rau- The company’s position is based on industry-leading
te’s customer industries were good in all main market technology maintained by strong product develop-
areas except for North America. Investment demand ment, a comprehensive service and product offering,
was particularly brisk in Russia. The investment de- as well as a broad range of solid references. Several
mand was spread more evenly over projects of vari- deliveries with reference value were introduced in-
ous sizes than in the previous year. Several mill-scale to production use in 2007. The deliveries will further
projects are being planned in different market areas, strengthen Raute’s competitive position in the corre-
but none of them were launched in 2007. sponding technology and market areas.
The price of wood raw material was high in most mar- Raute’s price competitiveness was undermined in 2007
ket areas. Problems related to the availability of wood by the rapid weakening of the US dollar against the
raw material hindered production in Europe, especial- euro and the Canadian dollar, currencies in which Rau-
ly in areas neighboring Russia. The increasing global te’s costs are mainly incurred. The challenge posed by
economic uncertainty originating from the subprime the declining US dollar was further heightened by the
mortgage crisis in the US was reflected in other re- expensive collective agreements signed in Finland in
gions in late 2007, and the continued rise in the cost fall 2007. Raute has sought to meet these challenges
of wood-based panel products settled down. by further developing its partner network and pro-
curement especially in China.
In North America, the rapid decrease in housing con-
struction weakened the demand for plywood and LVL Net sales and order book
used in construction. Low production capacity utili- The Group’s net sales (IFRS) totaled EUR 110.8 million
zation rates and the closing of several plywood mills (2006: MEUR 106.2; 2005: MEUR 108.6), up 4.3 percent
have affected investments as well as the demand for from 2006.
spare parts and basic maintenance services. The low
demand for plywood and LVL is expected to continue The portion of project deliveries in the Group’s net
at least until 2009. sales was 74 percent (79%). The plywood industry’s
share of the project deliveries was 82 percent (93%),
New orders and market position the LVL industry’s 16 percent (5%), and that of other,
Raute’s business consists of project deliveries and tech- smaller customer industries 2 percent (2%). The por-
nology services. Project deliveries encompass com- tion of technology services in the Group’s net sales
plete mills, production lines, and single machines and was 26 percent (21%).
3
Deliveries related to the four mill-scale orders re- ties and equipment. The number of personnel in Chi-
ceived in 2006 were reflected in the net sales distri- na at the end of the year was 24 (4).
bution by market area. Russia took over as the big-
gest market area in 2007, accounting for 35 percent The ERP and financial administration systems of Meca-
(12%) of net sales. Europe’s share of net sales rose no Group Oy, a Kajaani-based company specialized in
to 31 percent (29%) and North America’s to 22 per- machine vision, were renewed to comply with the
cent (16%). The share of other market areas fell to systems used at Raute Corporation. The harmonized
12 percent (43%). Finland’s share of net sales was 13 systems will enhance the management of Mecano’s
percent (10%). project deliveries as well as the co-operation between
different units.
The order book decreased in 2007, totaling EUR 56
million (MEUR 77) at the end of the year. Group structure
At the end of 2007, Raute Corporation established
In 2007, the net sales (FAS) of the Parent company a subsidiary, Raute (Shanghai) Trading Co., Ltd, in
Raute Corporation amounted to EUR 93.0 million Shanghai, China. With a focus on trading, the new
(2006: MEUR 91.1; 2005: MEUR 87.1). company started operations in the beginning of 2008.
Established at the end of 2006, Raute (Shanghai) Ma-
Result and profitability chinery Co., Ltd focuses on delivering products manu-
The Group’s operating profit (IFRS) was EUR 8.6 mil- factured by the company.
lion in 2007 (2006: MEUR 4.5; 2005: MEUR 4.4). The
operating profit accounted for 8 percent (2006: 4%; Financing
2005: 4%) of net sales. The improved performance The Group’s financial position remained strong. At the
resulted from growth in net sales, successful imple- end of 2007, the Group’s equity ratio (IFRS) was 70.3
mentation of projects, improved productivity, and percent (2006: 60.1%; 2005: 55.7%). Gearing was -32.5
the lower costs provided by a more even load distri- percent (2006: -80.3%; 2005: -41.5%) and the balance
bution and subcontracting in China. sheet totaled EUR 54.8 million (2006: MEUR 68.5; 2005:
MEUR 55.4). The strong fluctuation in balance sheet
The Group’s financial income and expenses totaled items and the key ratios based on them results from
EUR 0.4 million (MEUR 0.4). The Group’s profit differences in the timing of customer payments and
before tax was EUR 9.0 million (MEUR 4.9) and profit the cost accumulation from project deliveries, which is
for the report period was EUR 6.6 million (MEUR 3.6). typical of project business.
Earnings per share were EUR 1.65 (EUR 0.94). Return
on investment was 29 percent (19%) and return on At the end of the report period, the Group’s liquid
equity was 21 percent (13%). assets stood at EUR 11.3 million (MEUR 24.0) and in-
terest-bearing liabilities amounted to EUR 0.5 million
In 2007, net sales and profit benefited from a EUR 0.3 (MEUR 0.5).
million (MEUR +0.1) IFRS-compliant recognition of
currency hedges that were used for economic hedg- Operating cash flow was EUR 10.2 million negative
ing purposes but fell outside the scope of hedge ac- (MEUR 15.0), and investment cash flow was EUR 0.7
counting. million negative (MEUR -1.5). The financing cash flow
was EUR 1.8 million negative (MEUR -0.8) and in-
The operating profit (FAS) of the Parent company cludes EUR 2.8 million in dividend payments for 2006
Raute Corporation was EUR 7.8 million (2006: MEUR (MEUR 2.3).
4.0; 2005: MEUR 5.5). The operating profit account-
ed for 8 percent (2006: 4%; 2005: 6%) of net sales. Raute Corporation has a EUR 10 million domestic com-
The profit for the report period (FAS) was EUR 7.4 mercial paper program, which allows it to issue com-
million (MEUR -0.9). mercial papers maturing in less than one year. The
company also has bilateral non-current credit regula-
Development of operations tion agreements worth EUR 15 million.
The delivery capacity of the unit in China that became
operational at the end of 2006 has been raised dur- At the end of 2007, the equity ratio (FAS) of the Par-
ing 2007 by allocating more personnel in procurement ent company Raute Corporation was 72.2 percent
and production, and by increasing production facili- (2006: 59.0%; 2005: 63.1%).
4
Research and development costs Shares
and capital expenditure The number of Raute Corporation’s shares at the end
Raute’s goal is to be the leading technology supplier in of 2007 totaled 4 004 758, of which 991 161 were
its selected customer industries, and to invest strongly series K shares (ordinary share, 20 votes/share) and
in the continuous research and development of ap- 3 013 597 series A shares (1 vote/share). Series K and
plications especially in the areas of plywood and LVL A shares grant equal rights to dividend and compa-
technology and machine vision. In 2007, the Group’s ny assets. Series K shares can be converted to series A
research and development costs, EUR 4.0 million, re- shares under the terms described in section 3 of the
mained at a high level, representing 3.6 percent of net Articles of Association. If an ordinary share is trans-
sales (2006: MEUR 3.8 / 3.5% of net sales; 2005 MEUR ferred to a new owner who does not previously hold
3.6 / 3.3% of net sales). series K shares, the new owner shall report this to the
Board of Directors in writing and without delay. Other
The total amount of investments made was low at owners of series K shares have the right to redeem the
EUR 1.9 million (2006: MEUR 1.9; 2005: MEUR 3.8). The share under the terms described in Section 4 of the
largest single investment involved the development Articles of Association. The company did not possess
of operations at the mill located in China. The invest- company shares or hold them as security during the
ments made in 2007 include development costs in the report period.
amount of EUR 0.2 million (2006: MEUR 0.5; 2005:
MEUR 0.2). Other investments consisted of informa- Raute Corporation’s series A shares are listed on the
tion system and replacement investments. OMX Nordic Exchange, Helsinki. A total of 981 095
shares worth EUR 13.7 million were traded in 2007.
In 2007, the research and development costs (FAS) of The number of shares traded represents 33 percent
the Parent company Raute Corporation were EUR 2.9 of all series A shares. The average price of a series A
million, representing 3.2 percent of net sales (2006: share was EUR 13.85 (EUR 14.03). The highest rate of
MEUR 3.2 / 3.5% of net sales; 2005 MEUR 2.9 / 3.3% of the year was EUR 15.45 and the lowest EUR 12.40. The
net sales). Investments totaled EUR 1.6 million (2006: company’s market capitalization at the end of 2007
MEUR 1.8; 2005: MEUR 2.9). totaled EUR 57.5 million, with series K shares valued
at the closing price of series A shares on December 31,
Personnel 2007, that is EUR 14.35.
The Group’s headcount at the end of 2007 was 570
(540). Finnish Group companies accounted for 76 per- Raute Corporation has signed a market making agree-
cent (76%) of employees, North American companies ment with Nordea Bank Finland plc in compliance
for 18 percent (21%), Chinese companies for 4 percent with the Liquidity Providing (LP) requirements issued
(0%), and other sales and maintenance companies for by the OMX Nordic Exchange, Helsinki.
2 percent (3%).
Authorization for repurchase
Converted to full-time employees, the number of and disposal of own shares
Group employees was approximately 566 (2006: 546; The Annual General Meeting held on March 21, 2007
2005: 533). Salaries paid by the Group totaled EUR 24 authorized the Board of Directors to decide on the re-
million (2006: MEUR 22.0; 2005: MEUR 21.1). purchase of a maximum of 400 000 Raute Corpora-
tion series A shares with the company’s distributable
The Group uses performance-based pay systems cov- assets. Repurchased shares may be disposed of for im-
ering the entire personnel. In addition, the Group has portant financial reasons, such as funding acquisitions
a share-based incentive plan for the strategic period or other arrangements. The authorization was not ex-
2006–2008. The plan is described in detail in the section ercised in 2007.
Shares and Shareholders of the financial statements.
Loans to related parties
Converted to full-time employees, the number of and other liabilities
personnel employed by the Parent company Raute On December 31, 2007, the Parent company Raute
Corporation in 2007 was approximately 393 (2006: Corporation had loan receivables from its subsidiaries
386; 2005: 379). Salaries paid by the Parent compa- Raute Canada Ltd in the amount of CAD 4.7 million and
ny totaled EUR 16.3 million (2006: MEUR 14.8; 2005: Raute Service LLC in the amount of EUR 27 thousand.
MEUR 14.7). Raute Corporation had a loan of EUR 110 thousand
5
to the Raute Sickness Fund. Other obligations are de- Business risks
scribed in the notes to the financial statements. Impact of economic fluctuations
on business operations
Distribution of dividend Raute supplies technology and services to the wood
On March 21, 2007, the Annual General Meeting de- products industry. Business is characterized by sensi-
cided to distribute a dividend of EUR 0.70 per share. tivity to economic fluctuations due to changes in the
A total of EUR 2.8 million was paid in dividend on investment activity of customer industries. The im-
April 2, 2007. pact that the cyclical nature of project deliveries has
on the Group’s performance is mitigated by system-
Management atically increasing the share of technology services,
The Annual General Meeting elects the Chairman and by developing the subcontracting network, and by
Vice-Chairman for the Board of Directors, and 3–5 focusing on core competence. In the long term, the
Board members. Group’s growth opportunities are increased and the
impact of economic fluctuations balanced by devel-
On March 21, 2007, the Annual General Meeting re- oping operations in customer industries where the
elected Mr. Jarmo Rytilahti as Chairman of the Board, company’s market share is still small, and by creating
Ms. Sinikka Mustakallio as Vice-Chairman, and Mr. Mi- products for new customer groups, such as the deco-
ka Mustakallio, Mr. Panu Mustakallio, Mr. Pekka Paa- rative veneer industry.
sikivi, and Mr. Jorma Wiitakorpi as Board members.
The Group is prepared for fluctuations in the work-
The Board of Directors appoints the President and ing capital tied up in project operations. Raute Cor-
CEO and approves his or her employment, including poration has a EUR 10 million domestic commercial
wage benefits. paper program, which allows it to issue commercial
papers maturing in less than one year. The compa-
Mr. Tapani Kiiski, Licentiate in Technology, continued as ny also has bilateral non-current credit regulation
Raute Corporation’s President and CEO. He was appoint- agreements worth EUR 15 million.
ed President and CEO on March 16, 2004. As agreed in
the executive contract, the term of notice is six months, Delivery and technology risks
and the severance pay equals six months’ salary. The majority of Raute’s business operations consists
of different kinds of project deliveries, which always
Raute Corporation’s Articles of Association do not expose the company to risks caused by, for example,
grant any unusual authorizations to the Board of Di- the customer’s end product, production methods, or
rectors, or the President and CEO. customer-specific solutions related to raw materials.
At the quotation and negotiation phase, the com-
Any decisions on changes to the Articles of Association pany has to make estimates of the achievement of
or an increase in share capital are made in compliance promised performance figures and of the costs of im-
with the regulations of the effective Companies Act. plementation. Contract, product liability, implemen-
tation, cost, and capacity risks are managed using
Other management project management procedures that comply with
Mr. Tapani Kiiski continued as Chairman of Raute’s Ex- the company’s certified quality system.
ecutive Board, and the Board’s members included Ms.
Arja Hakala, CFO; Mr. Petri Strengell, Vice President, Raute emphasizes product development and con-
Technology and Operations; Mr. Timo Kangas, Vice tinuously develops new technology in order to offer
President, Technology Services; and Mr. Bruce Alexan- solutions for customers’ increasing needs. The func-
der, Vice President, North American Business Opera- tionality and capacity of new solutions cannot be
tions and President of North American companies. fully verified until the solutions can be tested under
production conditions in conjunction with the first
Auditors customer deliveries. Technology risks are reduced by
On March 21, 2007, the Annual General Meeting elec- the conditions of delivery contracts and by restricting
ted Authorized Public Accountants Ms. Anna-Maija the number of simultaneous first deliveries.
Simola and Mr. Antti Unkuri as auditors, and Ernst&
Young Oy, an authorized public accounting company,
as deputy auditor.
6
Financial risks The responsibility of the Group’s Controller func-
The main financial risks that Raute’s international tion is to develop risk management procedures
business operations are exposed to are credit, liquid- jointly with the operational management and to
ity, and currency risks. control compliance with the risk management prin-
ciples and powers. The principal product and opera-
The financial risks, as well as the risk management ob- tion liability risks, and property and personal dam-
jectives and procedures, are described in the notes to age risks are covered by insurance. The absence of
the financial statements. an internal auditing organization is taken into ac-
count when drawing up the content of Group re-
Accident risks porting and the internal audits of quality systems.
The production, planning, financial, and ERP sys- The company’s Board of Directors approves the au-
tems serving the Group’s key technologies are cen- diting program.
trally located at the Nastola main production plant.
A fire or serious breakdown in machinery may result A comprehensive risk assessment was carried out for
in considerable property or interruption loss. The business operations in 2007. The assessment identi-
Group hedges against such risks by assessing its fa- fied and evaluated risks of different types, defined
cilities and processes in terms of risk management areas for development, and specified measures to be
and by maintaining emergency plans. It regularly taken immediately. In addition, the risk assessment
reviews its insurance policies as part of overall risk increased and harmonized risk awareness among key
management. The objective is to use insurance poli- employees.
cies to sufficiently hedge all risks that are reasonable
to handle through insurance due to economical or Society and the environment
other reasons. The environment is one of the values that guide Rau-
te’s operations. Raute has been systematically devel-
The Group has no ongoing legal proceedings or other oping the environmental soundness of its products
disputes in progress that might materially affect the and services and aims to reduce the environmental im-
continuity of business operations, nor is the Board of pact of its own operations. The Group abides by the
Directors aware of any other legal risks related to the principles of good corporate citizenship, taking into
Group’s operations that might have such an effect. consideration nature and its protection, as well as the
operating methods of the surrounding society, and by
Risk management policy and organization showing respect to local cultures.
The Group has a risk management policy approved
by the Board of Directors. The President and CEO and Raute’s operations mainly affect the environment in-
the Chief Financial Officer report to the Board regu- directly when the company’s technology is used in the
larly about any major strategic and business risks. production processes of the wood products indus-
try. Raute’s technology enables the wood products
The Board of Directors determines the Group’s gen- industry to substantially reduce the environmental
eral attitude to risk and approves the risk manage- load caused by the industry’s operations, for exam-
ment policy at a general level. The Executive Board ple, through more efficient use of raw materials, ad-
determines the Group’s general risk management ditives, and energy.
principles and confirms various operating principles
and boundaries of powers. The Chief Financial Of- The Group’s own operations do not involve consid-
ficer is responsible for the coordination of risk man- erable environmental risks that might have a direct
agement. impact on the Group’s business operations or finan-
cial position. The Nastola and Jyväskylä plants man-
The Group’s President and CEO controls the imple- age environmental matters in compliance with a cer-
mentation of risk management in the entire Group, tified environmental system. At the Canadian plant,
while the Presidents of the Group companies are re- environmental surveys are carried out regularly by
sponsible for risk management in their respective an outside assessor. The operations and ethical prin-
companies. The members of the Executive Board ciples of the partner and subcontractor networks are
are responsible for their own fields across company also subjected to systematic inspection.
boundaries.
7
Raute aims to continuously reduce energy use, de- No essential changes have taken place in the compa-
crease the volume of waste, and develop the work- ny’s financial position since the end of the report peri-
ing environment. od. The company has good liquidity, and the proposed
dividend does not pose a risk to solvency in the Board
The Group’s environmental management is described of Directors’ view.
in more detail in the Annual Report, under Environ-
ment. Outlook 2008
Based on the positive market outlook of Raute’s cus-
The Board of Directors’ proposal for meas- tomer industries, investments and demand for services
ures concerning the company’s profit in the wood products industry are expected to remain
The parent company’s distributable assets total EUR at a good level, with the exception of North America.
18 232 thousand, of which EUR 7 385 thousand stands
for the period’s profit. Thanks to a strong order book and brisk demand,
Raute is well positioned to continue its growth also in
The Board of Directors will propose to the Annual 2008. The biggest threat to the good development is
General Meeting on April 2, 2008, that a dividend of an unexpectedly strong and rapid decline in the glo-
EUR 1.00 per share be paid on series A and K shares, bal economy.
totaling EUR 4.0 million. Other distributable funds will
be left in retained earnings.
8
Consolidated income statement
EUR 1 000 1.1–31.12.2007 1.1–31.12.2006
Note
2, 3, 4 NET SALES 110 799 106 206
5 Other operating income 461 199
Increase (+) or decrease (-) in inventories of
finished goods and work in progress 42 -111
6 Materials and services 60 999 62 418
7 Expenses from employee benefits 28 875 26 227
10, 16, 17 Depreciation, amortization and impairment charges 2 654 2 660
12 Other operating expenses 10 166 10 476
Total operating expenses 102 695 101 781
OPERATING PROFIT 8 607 4 513
13 Financial income 660 745
13 Financial expenses -291 -371
PROFIT BEFORE TAX 8 976 4 887
14 Income taxes -2 375 -1 255
PROFIT FOR THE PERIOD 6 601 3 632
Attributable to
Equity holders of the Parent company 6 601 3 632
15 Undiluted earnings per share, EUR 1.65 0.94
15 Diluted earnings per share, EUR 1.65 0.94
Shares
Adjusted average number of shares 4 004 758 3 866 561
Adjusted average number of shares diluted 4 004 758 3 866 561
FINANCIAL STATEMENTS 2007 / GROUP 9
Consolidated balance sheet
EUR 1 000 31.12.2007 31.12.2006
Note
ASSETS
Non-current assets
16 Intangible assets 2 546 2 924
17 Tangible assets 10 993 12 542
18 Other financial assets 449 395
27 Deferred tax asset 275 487
Total 14 263 16 348
Current assets
20 Inventories 4 515 4 933
4, 21 Accounts receivable and other receivables 24 739 23 184
22 Financial assets at fair value through profit or loss 2 144 10 195
23 Cash and cash equivalents 9 140 13 812
Total 40 537 52 124
TOTAL ASSETS 54 800 68 472
SHAREHOLDERS’ EQUITY AND LIABILITIES
Shareholders’ equity
24 Share capital 8 010 8 010
Share premium 6 498 6 498
24 Other funds 161 -201
Retained earnings 11 924 11 370
Profit for the financial year 6 601 3 632
Share of shareholders’ equity that belongs to owners
of the parent company 33 194 29 309
Total shareholders’ equity 33 194 29 309
Long-term liabilities
26 Provisions 286 262
27 Deferred tax liabilities 676 1 084
28, 36 Long-term interest-bearing liabilities 277 317
Total 1 239 1 663
Current liabilities
26 Provisions 971 1 726
29, 36 Short-term interest-bearing liabilities 213 150
30 Pension obligations 260 335
31 Advance payments received 7 590 19 726
Current tax liabilities 851 113
31 Trade and other payables 10 481 15 450
Total 20 367 37 500
Total liabilities 21 605 39 163
TOTAL SHAREHOLDERS’ EQUITY AND LIABILITIES 54 800 68 472
10 FINANCIAL STATEMENTS 2007 / GROUP
Consolidated cash flow statement
EUR 1 000 1.1–31.12.2007 1.1–31.12.2006
CASH FLOW FROM OPERATING ACTIVITIES
Proceeds from sales 96 117 116 046
Proceeds from other operating income 114 155
Payments of operating expenses -104 963 -100 100
Cash flow before financial items and taxes -8 732 16 102
Interests and other operating
financial expenses paid -394 -190
Interests and other income received 639 660
Dividends received 115 24
Income taxes paid -1 843 -1 614
NET CASH FROM (+) / USED IN (-) OPERATING ACTIVITIES (A) -10 214 14 982
CASH FLOW FROM INVESTING ACTIVITIES
Capital expenditure in tangible and intangible assets -1 964 -1 809
Purchases of assets-for-sale as investments -74 -49
Proceeds from sale of tangible and intangible assets 1 310 292
Proceeds from other investments 0 20
NET CASH FROM (+) / USED IN (-) INVESTING ACTIVITIES (B) -728 -1 545
CASH FLOW FROM FINANCING ACTIVITIES
Repayment of long-term and short-term loan receivables 1 000 95
Increase of short-term liabilities 63 0
Repayment of long-term liabilities -40 -67
Proceeds from issuance of shares 0 1 436
Dividends paid -2 803 -2 290
NET CASH FROM (+) / USED IN (-) FINANCING ACTIVITIES (C) -1 780 -826
NET CHANGE IN CASH AND CASH EQUIVALENTS (A+B+C) -12 723 12 611
increase (+) / decrease (-)
CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE YEAR* 24 006 11 395
CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR* 11 284 24 006
CASH AND CASH EQUIVALENTS IN THE BALANCE SHEET
Financial assets at fair value through profit or loss 2 144 10 195
Cash and cash equivalents 9 140 13 812
TOTAL 11 284 24 006
*Cash and cash equivalents comprise trading assets as well as cash and bank receivables, which will due under three
months’ period.
FINANCIAL STATEMENTS 2007 / GROUP 11
Consolidated statement of changes
in shareholders’ equity
owners of the Parent
shareholders´equity
that belongs to the
Retained earnings
Minority interest
Share premium
Exchange rate
Share capital
Other funds
differences
company
Share of
TOTAL
EUR 1 000
EQUITY Jan. 1, 2006 7 629 5 429 14 -533 13 384 25 923 224 26 147
Exchange differences from
net investments -338 -338 -338
Taxes related to items recognized in
equity or transferred from equity 88 88 88
Translation differences 808 808 808
Dissolution of associate Eloc Oy -224 -224
Net income recognized
directly in equity 0 0 -250 808 0 558 -224 334
Profit for the period 3 632 3 632 3 632
Total income and expenses
recognized in the period 0 0 -250 808 3 632 4 190 -224 3 966
Share capital increase (options) 381 1 069 -14 1 436 1 436
Dividend -2 290 -2 290 -2 290
Equity-settled share-based transactions 50 50 50
EQUITY Dec. 31, 2006 8 010 6 498 -201 274 14 726 29 309 0 29 309
EQUITY Jan. 1, 2007 8 010 6 498 -201 274 14 726 29 309 0 29 309
Exchange differences
from net investments 264 264 264
Taxes related to items recognized
in equity or transferred from equity 12 12 12
Translation differences -238 -238 -238
Other increase/decrease -48 -48 -48
Net income recognized
directly in equity 0 0 228 -238 0 -10 0 -10
Profit for the period 6 601 6 601 6 601
Total income and expenses
recognized in the period 0 0 228 -238 6 601 6 591 0 6 591
Share capital increase (options) 0 0
Dividend -2 803 -2 803 -2 803
Equity-settled share-based transactions 98 98 98
EQUITY Dec. 31, 2007 8 010 6 498 125 36 18 524 33 194 0 33 194
12 FINANCIAL STATEMENTS 2007 / GROUP
Notes to the consolidated
financial statements
GENERAL INFORMATION
• available-for-sale investments
Raute Group (‘Group’) is a globally operating technol- • financial assets and liabilities recognized
ogy corporation, whose core business consists of the at fair value through profit or loss
production processes of veneer-based wood products. • derivative financial instruments
Project deliveries include complete mills, production • hedged items in fair value hedge
lines, and single machines. Full-service technology serv- • cash-settled share-based transactions.
ices include spare part, maintenance, and moderniza-
tion services, as well as services related to developing All of the figures presented in these consolidated fi-
customers’ businesses. nancial statements are in thousand euro, unless oth-
erwise stated.
The Group’s Parent company, Raute Corporation, is a
Finnish public limited liability company established in The Group has applied the following
accordance with Finnish law (Business ID FI01490726). Its amended standards as of January 1, 2007:
series A shares are quoted on OMX Nordic Exchange, IFRS 7 Financial instruments:
Helsinki, under Industrials. Raute Corporation is domi- Presentation of the financial statements
ciled in Lahti, Finland. The address of its registered office According to the standard, the corporation must
is Rautetie 2, FI-15550 Nastola, Finland, and its postal present data in its financial statements that help us-
address is P.O. Box 69, FI-15551 Nastola, Finland. ers to estimate the impact of financial instruments on
the performance of the corporation and its financial
A copy of the consolidated financial statements is availa- position. In addition, the nature and the scope of risks
ble online at www.raute.com or at the head office of the caused by financial instruments and the corporation’s
Parent company, Rautetie 2, FI-15551 Nastola, Finland. risk management in regard to these risks must be de-
scribed.
These financial statements were authorized for issue by
Raute Corporation’s Board of Directors at its meeting IAS 1 Presentation of Financial Statements:
on February 12, 2008. According to the Finnish Compa- Amendment to the standard
nies Act, shareholders may approve or reject the finan- The amendment concerns the notes to the capital.
cial statements at the shareholders’ meeting arranged According to the amendment, the corporation must
after the statements have been issued. The sharehold- present information with which the users of the finan-
ers’ meeting also has the opportunity to make changes cial statements can base their assessment of the corpo-
to the financial statements. ration’s objectives, principles, and processes regarding
capital management.
1 ACCOUNTING PRINCIPLES
IFRIC 10 Interim financial reporting and impairment
Basis of preparation The corporation must evaluate on each reporting day
The consolidated financial statements have been pre- whether the goodwill or the value of available for sale
pared in accordance with International Financial Re- financial assets has decreased and, if necessary, recog-
porting Standards (IFRS). Preparations have complied nize the impairment.
with the IAS and IFRS standards, as well as SIC and IFRIC
interpretations, effective on December 31, 2007. With The following standards have taken effect during the
IFRS referred to the standards and their interpretations fiscal year, but according to the management’s view,
that have been approved for application within the EU they do not affect the profit or loss or the balance of
in the Finnish Accounting Act and regulations issued the company:
under it in accordance with the procedures laid down in
the EU regulation (EC) 1606/2002. The notes to the con- IFRIC 8 Scope of IFRS 2
solidated financial statements also comply with Finnish IFRIC 9 Reassessment of embedded derivates.
Accounting Legislation.
The preparation of financial statements in conformity
The consolidated financial statements have been pre- with IFRS requires management to make certain critical
pared under the historical cost convention, except for accounting estimates and to exercise its judgment in
the following items measured at fair value: applying the Group’s accounting policies. Information
FINANCIAL STATEMENTS 2007 / GROUP 13
about the estimates and judgment that the manage- The Group has made use of the exemption available
ment has used and that are most critical to the figures under IFRS 1 not to restate the acquisitions that took
in the financial statements are disclosed under ”Criti- place prior to January 1, 2004.
cal accounting judgments and key sources of estima-
tion uncertainty”. Foreign currency translation
Items included in the financial statements of each of
Segment reporting the Group’s entities are measured using the currency
The Group’s primary reporting format is by business of the primary economic environment in which the en-
segments and its secondary format by geographical tity operates (‘functional currency’). The consolidated
segments. The business segments are based on the financial statements are presented in euro, which is the
Group’s internal organization structure and internal fi- Parent company’s functional and presentation currency.
nancial reporting. A geographical segment is identified
as reportable if the market area it forms, accounts for Foreign currency transactions
more than 10 percent of the Group’s net sales and if its Foreign currency transactions are translated into the
business risks and profitability differ from those found functional currency using the exchange rates prevailing
in the economic environments of other market areas. at the dates of the transactions. In practice the transla-
tion is often carried out using rates that approximately
In the report periods 2006 and 2007 the Group’s contin- correspond to those prevailing at the dates of transac-
uing operations as a whole were included in the wood tions. Foreign currency non-monetary items measured
products technology segment. at fair value are translated into the functional currency
using the rates prevailing at the date of measurement.
Consolidated financial statements Otherwise non-monetary items are measured using the
The consolidated financial statements include the Par- rate prevailing at the date of transaction. Exchange
ent company Raute Corporation and its subsidiaries in differences arising from transactions are recognized in
which the Parent company holds, directly or indirect- the corresponding accounts in the income statement
ly, over 50 percent of the votes or in which it exercises before operating profit.
control otherwise. Control means the right to decide
on the company’s financial and business principles in Exchange differences arising from financial transactions
order to profit from the company’s operations. are recognized in financial income and expenses, ex-
cept for exchange differences arising from intra-Group
Mutual shareholding has been eliminated using the loans which have been treated as net investments in
purchase method. Subsidiaries are consolidated from foreign entities. Such exchange differences are recog-
the date on which control is transferred to the Group. nized in translation differences under equity, and they
They are de-consolidated from the date that control are recognized in financial expenses in the income
ceases. statement on full or partial disposal of the net invest-
ment.
Accounting policies of foreign subsidiaries have been
changed where necessary to ensure consistency with the The income statements of foreign subsidiaries are
policies adopted by the Group. All intra-Group transac- translated into euro using the weighted average ex-
tions, receivables, liabilities and unrealized margins, as change rates during the report period and balance
well as internal distribution of profit have been elimi- sheets are translated at the average rate on the bal-
nated. The profit or loss for the period has been allocat- ance sheet date. Exchange differences arising from
ed to equity holders of the Parent company and to mi- translation, as well as translation differences arising
nority interest in the income statement. In the balance from equity, are recognized as a separate component
sheet the minority interest is presented as a separate of equity. On partial or full disposal of a subsidiary,
item under equity. The minority interest’s share of accu- the accumulated translation differences are recog-
mulated losses recognized in the consolidated financial nized in the income statement as part of the gains
statements may not exceed the invested amount. or losses from disposal. According to the exemption
allowed by IFRS 1, translation differences that have
Associates over which the Group has significant influ- arisen prior to January 1, 2004, have been recognized
ence but not control, which generally means a holding in retained earnings, and the translation differences
of between 20 percent and 50 percent of the voting that have arisen after the transition date are present-
rights, are accounted for in the consolidated financial ed as a separate component of equity.
statements using the equity method. Unrealized gains
on transactions between the Group and its associates The exchange rates used for the consolidation of sub-
are eliminated to the extent of the Group’s interest in sidiaries are presented in the notes to the consolidated
the associates. The Group’s investment in associates in- income statement and balance sheet number 38.
cludes goodwill identified on acquisition.
14 FINANCIAL STATEMENTS 2007 / GROUP
Revenue recognition costs to sell. Depreciation of these assets has ended at
Net sales include revenue from the sale of products and the date of classification. Assets held for sale are pre-
services, as well as raw materials and equipment, ad- sented as separate items in the balance sheet.
justed net of indirect taxes, discounts, and exchange
differences from foreign currency sales. A separate major line of business which can be clearly
distinguished from other operations in terms of prop-
Revenue from the sale of spare parts and other goods, erty and result and which is part of a single disposal
as well as small and short-term projects, is recognized plan is treated as a discontinued operation.
in full when the significant risks and rewards have been
transferred to the buyer. After this the Group no long- Income taxes
er has control over the product. This generally means The taxes in the income statement include the estimat-
the moment at which the goods have been delivered ed taxes corresponding to the Group companies’ tax-
to the customer in accordance with the agreed delivery able profit for the period, as well as tax adjustments for
clause. Revenue from services is recognized in the pe- previous periods and the change in deferred taxes. Cur-
riod in which the service has been carried out. rent tax based on the taxable income is calculated on
taxable income using the tax rate in force in each coun-
Revenue and costs from long-term projects (deliveries try. Tax expenses are recognized in the income state-
of project nature) are recognized based on the percent- ment, except for items recognized directly in equity.
age of completion. Percentage of completion is meas-
ured on a cost-basis as the relation of actual project Deferred taxes are calculated for all temporary differ-
costs to the estimated overall project costs. When it is ences in accounting and taxation using the tax rates
probable that the total costs needed to complete the enacted by the reporting date. The principal temporary
contract will exceed total contract revenue, the expect- differences arise from the amortization of tangible as-
ed loss is recognized as an expense immediately. If the sets. Deferred tax is recognized in balance sheet in its
result of a long-term projects cannot be reliably esti- entirety.
mated, the project costs have been recognized as an
expenditure in the period in which they have incurred, Deferred tax receivables are recognized to the extent
and project revenue is recognized only to the extent that it is probable that taxable profits will be available
of project costs that are likely to be recovered. Long- against which temporary differences can be utilized.
term projects are recognized as revenue in full when
the risks and benefits related to ownership are trans- Financial assets and liabilities
ferred to the buyer. Financial assets and liabilities are classified in accord-
ance with IAS 39, Financial Instruments: Recognition
Costs related to projects that have not yet been recog- and Measurement, into the following:
nized in revenue are recognized as long-term projects
in progress under inventories. Net sales recognized on • financial assets at fair value through profit or loss
the basis of percentage of completion is allocated to • loans and other receivables
prepayments from customers. If such net sales exceed • available-for-sale financial assets
the prepayments received, the difference is presented • financial liabilities at fair value through profit
under short-term receivables in the balance sheet. or loss
• other financial liabilities.
Other operating income
Other operating income includes revenue not included All purchases and sales of financial assets are recog-
in net sales, such as lease income, insurance compensa- nized on the transaction date.
tions and gains on the disposal of fixed assets.
Classification is made based on the purpose of acqui-
Interests and dividends sition in conjunction with the original acquisition. An
Interest income is recognized as income in the period in item in financial assets is assigned to the Financial as-
which they have arisen. Dividend income is recognized sets at fair value through profit or loss group if it is held
when the company paying dividends pays it. for trading.
Non-current assets held for sale and Financial assets at fair value through profit or loss in-
discontinued operations clude shares and units, deposits with maturities under
Non-current assets held for sale and discontinued op- three months and other securities. Financial assets held
erations are treated in compliance with IFRS 5. Assets for trading have mainly been acquired to generate prof-
held for sale and assets related to discontinued opera- it from short-term changes in market price. Derivatives
tions classified as held for sale are measured at the low- that do not meet the conditions for hedge accounting
er of the following: carrying amount or fair value less provided for in IAS 39 are classified as held for trading.
FINANCIAL STATEMENTS 2007 / GROUP 15
Derivatives held for trading, as well as financial assets Financial liabilities
maturing within 12 months, are included in current as- Financial liabilities are recognized at fair value based
sets. The items in this group are measured at fair value. on the purchase consideration at the grant date less
Realized and unrealized gains and losses from changes transaction costs. Financial liabilities are included in
in fair value are recognized in the income statement in current and long-term liabilities and they may be inter-
the period in which they have arisen. est-bearing or non-interest-bearing.
Loan and other receivables are assets with fixed or de- Measurement of financial instruments
terminable payments that are not quoted in an active The fair values of all financial instruments in the balance
market and which the company does not hold for trad- sheet are based on market values. Fair values are pre-
ing. Loan and other receivables are measured at amor- sented according to IAS 39 standard in note number 37.
tized cost using the effective interest method. They are
included in non-current financial assets under accounts Impairment of financial assets
receivables and other receivables in the balance sheet At each reporting date the Group assesses whether
if they mature over 12 months from the balance sheet there is objective evidence of impairment of a financial
date. Otherwise they are included in current financial asset or a group of financial assets.
assets.
The Group recognizes impairment loss for trade receiv-
Sales and other revenue are recognized in accounts ables if there is objective evidence that the receivable
receivables at the original receivable amount. The de- cannot be recovered in full. The impairment loss recog-
fault risk related to overdue receivables is estimated on nized in the income statement is measured as the dif-
the basis of a comprehensive survey of receivables car- ference between the carrying amount and the present
ried out at the balance sheet date, and estimated credit value of estimated future cash flows discounted at the
losses are recognized as an expense. effective interest rate. If an impairment loss decreases
in a subsequent period, and the decrease can be ob-
Available-for-sale financial assets are assets not includ- jectively related to an event occurring after the im-
ed in derivatives that have been expressly assigned to pairment was recognized, the impairment is reversed
this group or that have not been classified into any oth- through profit or loss.
er group. They are included in non-current assets un-
less the intention is to hold them less than 12 months Derivative financial instruments
from the balance sheet date, in which case they are in- Derivative financial instruments to which hedge ac-
cluded in current assets. Available-for-sale financial as- counting is not applied in compliance with IAS 39 are
sets may consist of shares and interest-bearing invest- measured at fair value at the reporting date. The fair
ments. They are measured at fair value or, where fair values of currency forward contracts are determined by
value cannot be reliably determined, at cost of acqui- using the market values at the balance sheet date. The
sition. Impairment during ownership is directly recog- fair values of derivative financial instruments are pre-
nized in the fair value reserve in equity, including the sented in deferred income or receivables in the balance
tax effects. When an investment is sold or disposed, the sheet, and changes in fair value are presented in the
difference between the original cost and the realized income statement. Impairment related to operating ac-
price is recognized in the income statement. Perma- tivities are presented as adjustments to net sales.
nent impairment of assets is always recognized directly
in the income statement. Hedge accounting
The Group applies hedge accounting in compliance
Cash and cash equivalents with IAS 39. Derivative contracts hedging against cur-
Cash and cash equivalents comprise cash in hand, short- rency risks are treated as either fair value hedges or
term bank deposits and other highly liquid short-term economic hedges (excluded from the scope of hedge
investments with original maturities of three months or accounting). In fair value hedging, changes in the val-
less. Bank overdrafts are included in short-term inter- ues of the hedged item and the hedging instrument
est-bearing liabilities. Credit accounts related to Group are recognized in profit or loss. The result for economic
accounts are included in short-term interest-bearing li- hedges taken out against currency risks is recognized
abilities and presented net if the Group has a contrac- in net sales. When initiating hedge accounting, the re-
tual legal right of set-off concerning full or partial pay- lationship between the hedged item and the hedg-
ment or elimination of an amount to the lender. ing instrument is documented, as are the objectives
of the Group’s risk management. The effectiveness of
Financial assets are derecognized when the contractual hedging is tested regularly and the effective portion
right to cash flows expires or the Group has substantial- is recognized in line with the hedged item against the
ly transferred risks and income outside the Group. change in its value in profit or loss. Hedge accounting
is discontinued when the hedging instrument expires
16 FINANCIAL STATEMENTS 2007 / GROUP
or is sold, or the contract is terminated or exercised. life are presented in the balance sheet and recognized
The Group did not apply hedge accounting in compli- as an expense based on the straight-line depreciation
ance with IAS 39 at December 31, 2007. method over their useful life as follows:
The fair values of hedged derivative financial instru- Patents 10 years
ments are presented in non-current assets or liabilities Computer software 5 years
in the balance sheet when the remaining hedged item Other intangible assets 3–10 years.
is more than 12 months from the reporting date, and
in current assets or liabilities otherwise. Property, plant and equipment
All property, plant and equipment is measured at origi-
Intangible assets nal cost less accumulated depreciation and impairment.
An intangible asset is recognized in the balance sheet Ordinary repair and maintenance costs are recognized
only if it is probable that the expected future benefit through profit or loss as incurred.
attributable to the asset will flow to the entity and
the cost of the asset can be measured reliably. In other Land is not depreciated. Depreciation of other assets is
cases the expenditure from intangible assets is recog- calculated using the straight-line method over their es-
nized as an expense when incurred. Intangible assets timated useful lives:
include goodwill, capitalized development costs and
other intangible assets. Buildings 25–40 years
Machinery and equipment 4–12 years
Goodwill Other tangible assets 3–10 years.
Goodwill represents the excess of the cost of acquisi-
tion over the fair value of the Group’s share of the net The residual value of property, plant and equipment,
identifiable assets of the acquired subsidiary at the and the remaining useful lives are reviewed at each
date of acquisition. Goodwill is tested annually for im- balance sheet date. If needed, they are adjusted to re-
pairment. Goodwill is measured at original cost less im- flect changes in expectations of economic benefit.
pairment losses. The financial statements for 2007, in-
cluding the comparison data, do not include goodwill. The depreciation of property, plant and equipment
ceases when the asset is classified as held for sale in ac-
Research and development costs cordance with IFRS 5 Non-current Assets Held for Sale
Research and development costs are recognized as and Discontinued Operations.
an expense in the income statement. Development
expenditure incurred in planning new or more ad- Gains and losses on decommissioning and disposal of
vanced products are recognized as intangible assets in property, plant and equipment are presented in other
the balance sheet from the moment the product can operating income or expenses.
be produced technologically, utilized commercially,
and future financial benefit is expected from it. Capi- Impairment of assets
talized development costs include the material, work Tangible and intangible assets
and testing expenditure incurred directly from com- The Group’s intangible assets with an indefinite useful
pleting the asset for the intended purpose. Capital- life are tested annually for impairment. For other bal-
ized, in-progress development expenditure is tested ance sheet assets, impairment is tested if there are in-
annually for impairment. Development expenditure dications of impairment. This involves measuring the
previously recognized as an expense is not capitalized recoverable amount of the asset. An impairment loss is
at a later date. Development costs are depreciated recognized if the carrying amount exceeds the recov-
from the time the product is ready for use. The useful erable amount. The recoverable amount is the higher
life of development costs is three years, during which of an asset’s fair value less costs to sell or value in use.
time capitalized assets are recognized as an expense For the purposes of assessing impairment, assets are
on a straight line basis. grouped at the lowest levels for which there are sepa-
rately identifiable cash flows.
Other intangible assets
An intangible asset is recognized at original cost if the An impairment loss is recognized immediately in in-
cost of the asset can be reliably measured and it is prob- come statement. An impairment loss recognized for an
able that the economic benefits attributable to the as- asset other than goodwill is reversed when a change
set will flow to the entity. has taken place in the figures used to measure the re-
coverable amount of the asset. However, reversal of im-
Depreciation is not recognized for intangible assets pairment shall not exceed the asset’s carrying amount
with an indefinite useful life. They are tested annually less impairment loss. Impairment loss for goodwill is
for impairment. Intangible assets with a finite useful not reversed.
FINANCIAL STATEMENTS 2007 / GROUP 17
Leases tion plan the Group pays fixed contributions to a sepa-
Group as lessee rate entity. The Group has no legal or constructive ob-
Leases in which a significant portion of the risks and re- ligation to pay further contributions if the fund does
wards incident to ownership are retained by the lessor not hold sufficient assets to pay retirement benefits.
are treated as operating leases. Payments made under All other plans are defined benefit pension plans.
operating leases are recognized as an expense over the Contributions to defined contribution pensions plans
lease period. are recognized in profit or loss in the period in which
they are due.
Group as lessor
Assets held under other than finance leases are includ- The Finnish statutory employment pension scheme
ed in property, plant and equipment. They are depreci- and the pension plans of foreign subsidiaries are clas-
ated over the useful life, similar to property, plant and sified as defined contribution plans.
equipment in own use. Rental income is recognized in
other operating income on a straight-line basis over Defined benefit plans include Raute Corporation’s vol-
the lease term. untary supplementary pension plan and the disability
pension included in the Finnish pension scheme TEL,
Inventories which was withdrawn in 2005.
Inventories are measured at the lower of cost and net
realizable value. Raw materials and supplies are meas- The voluntary supplementary pension plan was trans-
ured using the weighted average cost method. The cost ferred from the Parent company’s pension fund to an
of finished goods and work in progress comprises di- outside insurance company in 2005. The obligations
rect material and production costs and the portion of from defined benefit plans are recognized as an ex-
indirect production costs and depreciation allocated pense separately for each plan based on calculations
to products at a normal capacity excluding interest ex- made by authorized actuaries.
penses. The value of inventories includes impairment
due to obsolescence. In accordance with the exemption allowed by IFRS 1,
all actuarial gains and losses have been recognized
Provisions in equity in the opening balance sheet on the date
Provisions are recognized when the Group has a of transition January 1, 2004. Subsequent actuarial
present legal or constructive obligation as a result of gains and losses have been recognized in profit or loss
past events, and it is probable that an outflow of re- over the employees’ average remaining working lives
sources will be required to settle the obligation, and a where they exceed the greater of the following: 10
reliable estimate of the amount can be made. percent of the defined benefit obligation or 10 per-
cent of the fair value of plan assets.
Provision related to warranty obligation is recognized
when revenue from a long-term project, service or spare Employee benefits:
part including a warranty clause has been recognized. Share-based payments
The amount of the warranty provision is estimated at The Group has applied the IFRS 2 standard to the
the beginning of the project based on past experience share-based incentive plan set up for key employees
from warranty costs. The unused provision is recog- on March 22, 2006.
nized as income at the end of the warranty period.
The Group has a share-based incentive plan for the Ex-
Provision for contract is recognized when the unavoid- ecutive Board and other key employees, as well as per-
able direct costs and estimated indirect production formance-based share remuneration and contingent
costs and depreciation under the contract exceed the share remuneration.
benefits from the contract.
The Group measures granted share-based payments in
Restructuring provision is recognized when the Group equity at the fair value at the grant date. Share- and
has drawn up a detailed plan for restructuring and cash-based payments are recognized as an expense
has started to implement the plan or has announced on a straight-line basis over the vesting period. The
its main features to those affected by it. The financial amount paid in shares is based on the management’s
statements for 2007, including the comparison data, do latest estimate at the grant date and each balance
not include restructuring provisions. sheet date of the number of shares expected to vest at
the end of the commitment period. Cash-settled pay-
Employee benefits: ments are based on the latest estimate of outstand-
Pension obligations ing shares and the fair value of shares at the balance
Pension plans are classified into defined benefit and sheet date.
defined contribution plans. Under a defined contribu-
18 FINANCIAL STATEMENTS 2007 / GROUP
Costs from option schemes set up prior to November Critical accounting judgments
7, 2002 have not been recognized in the income state- and key sources of
ment. estimation uncertainty
When preparing the consolidated financial state-
Share capital ments in compliance with IFRS, the company man-
Outstanding series K and A shares are presented in agement must make certain estimates and assump-
share capital. tions. In addition, the management must exercise its
judgment in applying the accounting policies. These
Expenditure related to own equity issues or acqui- may affect the assets and liabilities in the balance
sitions are presented as allowance for equity. If the sheet, the disclosure of commitments and possible
Parent company repurchases own equity instruments, assets in the financial statements, and income and
their acquisition cost is deducted from equity. expenses for the period. Actual results may differ
from the estimates.
Dividend
The dividend proposed by the Board of Directors to Intangible assets
the Annual General Meeting is recognized as a de- The Group’s intangible assets are tested annually for
duction from distributable equity, but not until ap- impairment. Other balance sheet assets are assessed
proved by the Annual General Meeting. for indications of impairment as explained in the ac-
counting principles above. The recoverable amounts
Operating profit of cash-generating entities have been determined
IAS 1 Presentation of Financial Statements does not based on value-in-use calculations, which require the
define the concept of operating profit. The Group use of estimates.
uses the following definition: operating profit is the
net sum calculated by adding other operating in- Long-term projects
come to net sales; deducting purchase expenses that The percentage of completion method is based on es-
have been adjusted by changes in inventories of fin- timates of expected project revenue and expenses, as
ished goods and work in progress and by expenses well as on reliable measurement of project progress.
from production for own use; and by deducting ex- Should the estimates of the project outcome change,
penses, depreciation and possible impairment losses the recognized revenue and profit will be adjusted in
from employee benefits, as well as other operating the period in which the change first becomes known
expenses. All other income statement items are pre- and can be estimated.
sented under operating profit. Exchange differences
and changes in the fair values of derivatives are in- Warranty provisions
cluded in operating profit if they have arisen from Warranty provisions are estimated on the basis of
business-related items. In other cases they are recog- experience in warranty period costs caused by the
nized in financial items. product with regard to special product risks.
Earnings per share Receivables
Undiluted earnings per share is calculated by divid- The management has estimated customers’ ability to
ing the period’s profit attributable to Parent compa- remit the payment of such trade receivables, about
ny equity holders by the weighted average of out- which the company has not received any securities.
standing shares in the period.
The Group’s companies’ ability to settle the trade re-
Diluted earnings per share is calculated using the ceivables and payments related to the loans has been
treasury stock method. In addition to the weighted estimated by the management.
average of outstanding shares, the divisor includes
additional shares from the presumed exercise of op- Deferred taxes
tions. The exercise of options is not taken into ac- The management has also made estimates pertain-
count in the calculation of earnings per share if the ing to deferred tax assets.
exercise price of options exceeds the average market
price of shares during the period. Options have a di- Share-based remuneration costs
lutive effect if the average market price of shares ex- The share-based remuneration costs have been cal-
ceeds the exercise price of options. culated by using the management’s estimations from
year 2008 about the Group’s result development and
The calculation of other key ratios is presented in the achieving of targets set in the strategy.
notes to the consolidated financial statements on
page 72.
FINANCIAL STATEMENTS 2007 / GROUP 19
Application of new or amended • IFRIC 12, Service Concession Arrangements,
IFRS standars and IFRIC interpretations effective on January 1, 2008
The following standards, interpretations, and their • IFRIC 13, Customer Loyalty Programmes,
amendments have been published, but they are not yet effective on July 1, 2008
in effect, or they will take effect on January 1, 2008 at • IFRS 8, Operating Segments, effective on
the earliest, nor has the Group applied these provisions January 1, 2009
prior to their obligatory entry into force. The Group • IAS 1, Presentation of Financial Statements:
will adopt in 2008 or later the following new or amend- Amendment to the standard, effective on
ed standards and interpretations published by IASB: January 1, 2009
• IAS 23, Borrowing Costs, effective on January 1,
• IFRIC 11, IFRS 2: Group and Treasury Share 2009, if the amendment will be approved in the EU.
Transactions, effective on January 1, 2008
EUR 1 000 2007 % 2006 %
2 SEGMENT INFORMATION
Primary reporting segment
Raute’s primary reporting segment is the business segment. Continuing
operations belong to the wood products technology segment.
Secondary reporting segment
The secondary reporting segment is geographical. The geographical
segment consists of market areas accounting for over 10 percent of the
Group’s net sales.
Geographical reporting segment information:
Net sales to external clients by clients’ geographical location
Russia 38 314 35 12 470 12
Europe 34 117 31 30 620 29
North America 24 047 22 17 107 16
South America 11 485 10 39 160 37
Others 2 836 3 6 849 6
TOTAL 110 799 100 106 206 100
Assets by geographical location
Russia 1 048 2 190 0
Europe 48 822 89 63 832 93
North America 3 275 6 4 158 6
South America 34 0 38 0
Others 1 621 3 254 0
TOTAL 54 800 100 68 472 100
Capital expenditure by geographical location
Russia 0 0 0 0
Europe 1 411 75 1 801 97
North America 74 4 51 3
South America 4 0 0 0
Others 380 20 0 0
TOTAL 1 869 100 1 852 100
20 FINANCIAL STATEMENTS 2007 / GROUP
EUR 1 000 2007 % 2006 %
3 PROCEEDS FROM SALES
The main part of the net sales is comprised of project deliveries related
to wood processing technology that are handled as construction contracts.
The rest of the net sales is comprised of technology services provided to the
wood products industry (spare parts, maintenance and modernization serv-
ices as well as services provided to the development of customers’ business).
Net sales by market area
Russia 38 314 35 12 470 12
North America 24 047 22 17 107 16
Rest of Europe 20 077 18 20 203 19
Finland 14 040 13 10 417 10
South America 11 485 10 39 160 37
Asia 915 1 5 593 5
Oceania 979 1 501 0
Others 942 1 755 1
TOTAL 110 799 100 106 206 100
4 LONG-TERM PROJECTS
Net sales
Net sales by percentage of completion 94 905 90 464
Other net sales 15 894 15 742
TOTAL 110 799 106 206
Project revenues entered as income from currently undelivered
long-term projects recognized by percentage of completion 120 722 77 607
Amount of long-term projects revenues not yet entered as income 53 474 74 281
Specification of combined asset and liability items
Advances paid 513 1 180
Advances wounded up by percentage of completion
Advances paid included in inventories 513 1 180
Accrued income corresponding to revenues by percentage of completion 120 942 76 989
Advances received from project customers -102 601 -62 588
Project receivables included in current assets 18 341 14 401
5 OTHER OPERATING INCOME
Capital gain on sale of fixed assets 346 44
Other 114 155
TOTAL 461 199
6 MATERIALS AND SERVICES
Materials and supplies
- Purchases during the period 54 993 55 907
- Change in inventories -883 -307
External services 6 889 6 818
TOTAL 60 999 62 418
7 EXPENSES FROM EMPLOYEE BENEFITS
Wages and salaries 24 028 22 024
Pension contributions
- Defined contribution plans 3 161 2 541
- Defined benefit plans -75 -45
Share-based payments settled in shares 98 52
Share-based payments settled in cash 97 44
Other personnel costs 1 566 1 611
TOTAL 28 875 26 227
FINANCIAL STATEMENTS 2007 / GROUP 21
EUR 1 000 2007 2006
Information about management’s employee benefits and loans is
presented in the notes to the financial statements number 32 Related
party transactions.
Information about the share-based incentive plan is presented
in the notes to the financial statement number 25 Share-based payments.
8 NUMBER OF PERSONNEL
Employed at Dec. 31, persons
Workers 187 182
Office staff 383 358
TOTAL 570 540
- of which personnel working abroad 140 130
Average, persons
Workers 196 188
Office staff 379 359
TOTAL 575 547
- of which personnel working abroad 140 127
9 RESEARCH AND DEVELOPMENT COSTS ENTERED
AS EXPENSES FOR THE PERIOD
Total research and development costs 3 969 3 765
Depreciation of previously capitalized development costs 363 228
Recognized as assets in balance sheet -233 -538
Research and development costs entered as expenses for the period 4 103 3 455
Total research and development costs 3 969 3 765
% of net sales 3.6 3.5
Research and development costs have been recognized in
operating expenses prior to operating profit.
10 DEPRECIATION, AMORTIZATION AND IMPAIRMENT CHARGES
Depreciation and amortization by class of assets
Intangible assets
- Capitalized development costs 367 228
- Other intangible assets 626 593
Tangible assets
- Buildings and structures 506 517
- Machinery and equipment 1 150 1 093
- Other tangible assets 5 6
TOTAL 2 654 2 437
Impairments by class of assets
- Buildings and structures 0 222
TOTAL 0 222
DEPRECIATION, AMORTIZATIONS AND IMPAIRMENTS TOTAL 2 654 2 660
11 ACQUISITIONS
No business acquisitions were made during the financial year
2007 and during the comparision year.
12 OTHER OPERATING EXPENSES
Indirect production expenses 1 570 1 644
Sales and marketing expenses 2 222 2 293
Administration expenses 2 517 2 874
Other expenses 3 857 3 665
TOTAL 10 166 10 476
22 FINANCIAL STATEMENTS 2007 / GROUP
EUR 1 000 2007 2006
13 FINANCIAL INCOME AND EXPENSES
Financial Income
Interest income on loans and receivables 276 209
Dividend income of available-for-sale investments 115 24
Sales profit of financial assets through profit or loss 446 584
Change in fair value of financial assets through profit or loss -245 -94
Other financial income 68 22
TOTAL 660 745
Financial expenses
Interest expenses on loans from financial institutions -17 -56
Losses from sales of available-for-sale investments 0 -13
Exchange rate losses of loans -198 -158
Other financial expenses -76 -144
TOTAL -291 -371
Exchange rate differences entered in income statement
Included in net sales 9 -154
Included in purchases and other expenses -12 54
Included in financial income and expenses -198 -158
TOTAL -201 -258
14 INCOME TAXES
Current tax -2 379 -1 488
From operations, previous years -176 -174
Change in deferred taxes 180 407
TOTAL -2 375 -1 255
Analysis of the relationship between realized tax expense and
theoretical accounting result using Finnish tax rate of 26 percent.
Profit before taxes 8 976 4 887
Taxes calculated using the Finnish tax rate, 26% -2 334 -1 271
Effect of differences in taxes from other countries -111 -78
Non-deductible income -333 0
Non-deductible costs 222 -45
Taxes from the previous financial years -27 0
Unrecognized tax assets from the losses of foreign subsidiaries 173 157
Other items 36 -18
Consolidated tax expense -2 375 -1 255
Effective tax rate, % 26.5 25.7
15 EARNINGS PER SHARE
Share of profit that belongs to owners of the Parent company 6 601 3 632
Weighted average number of shares, 1 000 shares 4 005 3 867
Diluted weighted average number of shares, 1 000 shares 4 005 3 867
Earnings per share, EUR 1.65 0.94
Diluted earnings per share, EUR 1.65 0.94
FINANCIAL STATEMENTS 2007 / GROUP 23
16 INTANGIBLE ASSETS
Long-term expenses
Development and intangible
EUR 1 000 costs rights* TOTAL
Intangible assests 2006
Carrying amount at Jan. 1, 2006 2 400 6 470 8 870
Additions 538 309 847
Other reclassifications between items 140 140
Carrying amount at Dec. 31, 2006 2 938 6 919 9 857
Accumulated depreciation and amortization at Jan. 1, 2006 -1 500 -4 613 -6 113
Depreciation for the financial period -228 -593 -821
Accumulated depreciation and amortization at Dec. 31, 2006 -1 728 -5 206 -6 934
Book value at Jan. 1, 2006 900 1 857 2 757
Book value at Dec. 31, 2006 1 211 1 713 2 924
Intangible assets 2007
Carrying amount at Jan. 1, 2007 2 938 6 919 9 857
Additions 236 298 534
Other reclassifications between items 112 112
Carrying amount at Dec. 31, 2007 3 174 7 329 10 503
Accumulated depreciation and amortization at Jan. 1, 2007 -1 728 -5 206 -6 934
Depreciation for the financial period -367 -658 -1 025
Accumulated depreciation and amortization at Dec. 31, 2007 -2 095 -5 864 -7 959
Book value at Jan. 1, 2007 1 211 1 713 2 924
Book value at Dec. 31, 2007 1 079 1 465 2 545
*Long-term expenditure and intangible rights include patents, computer software and product rights.
17 PROPERTY, PLANT AND EQUIPMENT
Assets in
Land Buildings Machinery Other progress and
and and and tangible advance
EUR 1 000 water structures equipment assets payments TOTAL
Property, plant and equipment 2006
Carrying amount at Jan. 1, 2006 1 234 14 849 24 627 411 566 41 687
Exchange rate differences -65 -486 -845 -34 -1 430
Additions 5 42 601 313 961
Disposals -16 -316 -335 -667
Other reclassifications between items 619 -759 -140
Carrying amount at Dec. 31, 2006 1 158 14 708 24 048 377 120 40 411
Accumulated depreciation and
amortization at Jan. 1, 2006 0 -7 506 -19 872 -369 0 -27 747
Exchange rate differences 440 824 34 1 298
Accumulated depreciations on disposals 145 274 419
Depreciation for the financial period -517 -1 093 -6 -1 616
Impairments -222 -222
Accumulated depreciation and
amortization at Dec. 31, 2006 0 -7 660 -19 867 -341 0 -27 868
Book value at Jan. 1, 2006 1 234 7 342 4 755 42 566 13 939
Book value at Dec. 31, 2006 1 158 7 047 4 181 36 120 12 542
24 FINANCIAL STATEMENTS 2007 / GROUP
Assets in
Land Buildings Machinery Other progress and
and and and tangible advance
EUR 1 000 water structures equipment assets payments TOTAL
Property, plant and equipment 2007
Carrying amount at Jan. 1, 2007 1 158 14 708 24 048 377 120 40 111
Exchange rate differences 6 -2 4
Additions 4 130 832 298 1 263
Disposals -122 -1 433 -3 -1 558
Other reclassifications between items 140 3 -255 -112
Carrying amount at Dec. 31, 2007 1 040 13 545 24 886 375 162 40 008
Accumulated depreciation and
amortization at Jan. 1, 2007 0 -7 660 -19 867 -341 0 -27 868
Exchange rate differences 2 2
Accumulated depreciations on disposals -50 -50
Depreciation for the financial period -447 -1 122 -5 -1 574
Impairments 33 444 477
Accumulated depreciation and
amortization at Dec. 31, 2007 33 -7 714 -20 989 -344 0 -29 014
Book value at Jan.1, 2007 1 158 7 047 4 181 36 120 12 542
Book value at Dec. 31, 2007 1 073 5 830 3 897 31 162 10 993
EUR 1 000 2007 2006
18 OTHER FINANCIAL ASSETS
Publicly quoted share investments 19
Not-listed share investments 430 395
Available-for-sale investments at year end 449 395
TOTAL 449 395
Realized sales losses have not been recognized during the financial
year from available-for-sale investments (EUR -13 thousand).
Unquoted shares are recognized at cost deducted with possible
impairments, since their fair value cannot be determined reliably.
19 LONG-TERM RECEIVABLES
Deferred tax receivable 275 487
TOTAL 275 487
20 INVENTORIES
Materials and supplies 2 357 2 664
Work in progress 692 1 018
Finished products/goods 953 71
Advance payments 513 1 180
TOTAL 4 515 4 933
In the year ended, EUR 78 thousand were recognized in expenses, reducing the carrying amount of inventories
to correspond to the disposal price (EUR 184 thousand).
FINANCIAL STATEMENTS 2007 / GROUP 25
EUR 1 000 2007 2006
21 ACCOUNTS RECEIVABLES AND OTHER RECEIVABLES
Short-term receivables
- Accounts receivables 4 449 5 519
- Loan receivables 0 1 000
- Accrued income from customers recognized according to
percentage of completion 18 341 14 401
- Accrued income and prepaid expenses 687 773
- Other receivables 1 262 1 491
TOTAL 24 739 23 184
The current values of receivables are presented in the notes to the financial statements number 37. Balance
sheet values correspond best to the amount of money, that is the maximum amount of credit risk without tak-
ing into consideration the fair value of collaterals, in such a case where other contract parties are not able to
fulfill their obligations related to financial instruments.
Receivables do not include significant credit risk clusters.
For accounts receivables there were no losses recognized during the financial year (EUR 5 thousand).
EUR 1 000 2007 2006
22 FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS
Held for trading 2 043 9 849
Fair valuation of cash and cash equivalents 101 346
Financial assets at fair value through profit or loss at the end
of the financial period 2 144 10 195
23 CASH AND CASH EQUIVALENTS
Cash and bank accounts 1 740 2 612
Bank deposits 7 400 11 200
TOTAL 9 140 13 812
Cash and cash equivalents in cash flow statement
Financial items at fair value through profit or loss 2 144 10 195
Cash and cash equivalents 9 140 13 812
TOTAL 11 284 24 006
24 SHAREHOLDERS’ EQUITY AND DISTRIBUTABLE FUNDS
Notes to equity
Reconciliation of the number of shares (1 000 pcs)
Number of shares Jan. 1 4 005 3 815
Shares subscribed with warrants 0 190
Number of shares Dec. 31 4 005 4 005
Nominal value, EUR 2.00 2.00
Total shareholders’ equity, EUR thousand 8 010 8 010
Series K shares (20 votes/share) 991 991
Series A shares (1 vote/share) 3 014 3 014
The minimum share capital is EUR 5 000 000 and the maximum share capital is EUR 20 000 000.
All issued shares are paid in full.
Other reserves include:
- Granted share-based remuneration settled in shares
- Exchange differences arising from intra-Group loans (net investment)
The share premium includes the value paid for shares in connection with a rights issue that exceeds the nominal
value.
26 FINANCIAL STATEMENTS 2007 / GROUP
Dividend
After the balance sheet date, the Board of Directors will propose to the Annual General Meeting that
a dividend of EUR 1.00 per share be paid from the financial year 2007.
25 SHARE-BASED PAYMENTS
SHARE-BASED INCENTIVE PLAN
The Board of Raute Corporation has on 22 March 2006 resolved to implement a share-based incentive plan. The
share-based incentive plan offers the target group a possibility to earn Raute Corporation series A shares as re-
ward for an earning period of three calendar years for attainment of the targets established for it.
The earning period began on January 1, 2006 and will end on December 31, 2008. The amount of reward that
shall be paid on the basis of the plan, has been bound to the Raute’s operating profit (weight 75%) and the
evaluation of the Board of Directors on e.g. the materialization of the strategy (weight +/-25%). The maximum
total reward is 65 000 Raute series A shares and a cash payment equivalent to the value of the shares, in the
maximum. The attainment of the targets established for the earning period will determine the amount to be
paid to the key personnel out of the maximum reward. The reward from the plan shall be paid to the key per-
sonnel as a combination of shares and cash payment, after the end of the earning period.
No reward shall be paid if a key person’s employment ends before the reward payment. In addition, a key person
must own the earned shares at least for two years from the reward payment.
The basic information on the share-based incentive plan has been collected in the table below:
Share-based payments in 2007
Issue date March 22, 2006
Instrument Share-based payment
Number of shares, max* 65 000
Share price upon grant, EUR 17.28
Fair value of the share upon grant**, EUR 15.28
Share price at the end of financial year, EUR 14.35
Earning period begins, date Jan. 1, 2006
Earning period ends, date Dec. 31, 2008
Earnings criteria Operating profit and Board’s evaluation on e.g. the materialization of the strategy
Pay-out assumption of earnings criteria, % 24
Vesting date of shares Jan. 1, 2009
Share ownership obligation, years 2
Remaining binding period, years 1
Target group (Dec. 31, 2007) 18
Number of shares Changes during Number of shares
Jan.1, 2007 financial year Dec. 31, 2007
Shares granted 56 000 2 000 58 000
Shares returned 0 -2 000 -2 000
Shares distributed 0 0 0
Shares forfeited 0 0 0
Shares total 56 000 0 56 000
* The numbers of shares presented in the table describe the numbers of shares to be distributed on the basis of
the share-based incentive plan. In addition, the Company is committed to pay a cash amount that corresponds
to the value of the shares in the maximum (proportion for taxes).
**The expected dividends of EUR 2.00, that the key people do not receive before the potential reward pay-
ment, have been deducted from the share price on the grant date.
Determination of the fair value
Raute Corporation has used Alexander Corporate Finance Oy as an advisor when determining the fair value of
the reward. As the reward will be paid as a combination of shares and cash payment, the determining of the
fair value of the reward is divided into two proportions, in accordance with IFRS 2 standard: a proportion set-
tled in shares and a proportion settled in cash. The proportion to be settled in shares will be entered in the
equity and the proportion to be settled in cash will be entered in liabilities. The fair value of the share-based
payment on the grant date was the market price of the Raute series A share, the dividends to be distributed be-
fore the reward payment deducted. The fair value of the share proportion was thus EUR 15.28 per share. Corre-
FINANCIAL STATEMENTS 2007 / GROUP 27
spondingly, the fair value of the proportion to be settled in cash will further be evaluated every reporting day until
the end of the earning period, and the fair value of the debt will thus change in accordance with Raute series A
share price. At the end of the financial year, the fair value of the cash proportion was EUR 14.35 per share. The fair
value of the rewards granted during the financial year was EUR 0.5 million in total. The effect of the rewards on the
profit of Raute Corporation is EUR 0.2 million during the financial year 2007 (MEUR 0.1).
Calculation of fair value of reward
Number of shares granted 56 000
Share price upon grant, EUR 14.35
Assumed dividend before reward payment *, EUR 2.00
Fair value (proportion in shares), EUR 15.28
Share price Dec. 31, 2007 (proportion in cash), EUR 14.35
Pay-out assumption of earnings criteria, % 31
Estimate of shares to be returned, % 10
Fair value of reward Dec. 31, 2007, EUR 459 456
*Dividend assumption is an estimate on distributed dividends before reward payment.
OPTION SCHEME
1 000 shares 2007 2006
Exercise price as Exercise price as
a weighted average The amount a weighted average The amount
per share, EUR of options per share, EUR of options
In the beginning of the financial year 0 212 500
Options exercised 0.00 0 7.47 -190 150
Options expired 0 22 350
Options available for exercise
at the end of the financial year 0 0
EUR 1 000 2007 2006
26 PROVISIONS
Warranty provisions
Book value at the beginning of the financial year 952 1 741
Additions 1 331 1 984
Used amounts -886 -2 013
Cancelled unused amounts -325 -735
Exchange rate differences 8 -25
Book value at the end of the financial year 1 080 952
Losses from long-term projects in order book
Book value at the beginning of the financial year 666 661
Additions 0 417
Decrease -489 -412
Book value at the end of the financial year 177 666
Other provision
Provision for disputed warranty obligations to customer 0 370
Provisions in balance sheet 1 257 1 988
from which
- long-term 286 262
- short-term 971 1 726
28 FINANCIAL STATEMENTS 2007 / GROUP
27 DEFERRED TAX LIABILITIES AND DEFERRED TAX ASSETS Items
Items recognized
entered in in sharehold-
EUR 1 000 income statement ers’ equity
Deferred tax assets Jan. 1, 2006 Dec. 31, 2006
Changes in fair value 0 58 58
Other taxable temporary differences 210 219 429
TOTAL 210 277 0 487
Jan. 1, 2007 Dec. 31, 2007
Changes in fair value 58 -58 0
Other taxable temporary differences 429 -154 275
TOTAL 487 -212 0 275
Deferred tax liabilities Jan. 1, 2006 Dec. 31, 2006
Depreciation differences and other provisions 452 -69 383
Changes in fair value 114 -24 90
Effects of Group consolidation 389 -63 326
Other taxable temporary differences 345 26 -86 285
TOTAL 1 300 -130 -86 1 084
Jan. 1, 2007 Dec. 31, 2007
Depreciation differences and other provisions 383 124 507
Changes in fair value 90 -65 25
Effects of Group consolidation 326 -233 93
Other taxable temporary differences 285 -104 -130 51
TOTAL 1 084 -278 -130 676
Unrecognized tax assets from losses of foreign subsidiaries are in total EUR 173 thousand (EUR 769 thousand).
Deferred tax liability is not recognized from undistributed earnings of Finnish subsidiaries and associated com-
panies, since in most cases these earnings are transferred to the Parent company without tax implications.
EUR 1 000 2007 2006
28 LONG-TERM INTEREST-BEARING LIABILITIES
Long-term interest-bearing-liabilities
- Other liabilities 277 317
TOTAL 277 317
Non-current loans are Technology Funding Agency loans, with repayment
scheduled for 2008–2013 and an interest rate of 1.0 percent. The loans have
no collaterals, and the Technology Funding Agency may, under certain
conditions, demand a loan to be fully or partly paid immediately
without notice.
29 SHORT-TERM INTEREST-BEARING LIABILITIES
Partial payments of long-term debts 63 40
Other short-term interest-bearing debts 150 110
Total short-term interest-bearing liabilities 213 150
Distribution of the Group’s short-term loans by currencies
- EUR, % 100 100
FINANCIAL STATEMENTS 2007 / GROUP 29
EUR 1 000 2007 2006
The weighted averages of effective interest rates of current
interest-bearing liabilities were:
Amortization of non-current loans, % 1.00 1.00
Other current loans, % 2.30 2.30
Fair values of financial liabilities are presented in the notes number 37.
30 PENSION OBLIGATIONS
Voluntary supplement to pension coverage has treated in
accounting as a defined benefit plan.
The supplementary pensions insurances has been arranged through
the Pension Fund to Sampo Life Insurance company.
Defined benefit pension plans
Items recognized in balance sheet
Present value of funded obligations 353 367
Fair value of assets included in the plan -364 -328
Difference -11 39
Present value of non-funded obligations
Unrecognized actuarial losses 232 205
Unrecognized costs based on retrospective work performance 39 91
Net liabilities (receivables) in balance sheet (liability +/receivable -) 260 335
Amounts in balance sheet
Liabilities 260 335
Assets 0 0
Net liabilities in balance sheet (liability +/receivable -) 260 335
Items entered in income statement
Costs based on the work performance in the financial year 15 17
Interest on obligation 17 16
Expected income from the assets included in the plan -15 -13
Effect of changes in billing basis
Net of recognized actuarial gains/losses in the financial year -15 11
Costs based on retrospective work performance -52 -52
Profits/losses resulting from the reduction of the plan
or fulfilling of the obligation -25 -24
Total, included in personnel expenses (expenses +/income -) -75 -45
Realized income from the assets included in the plan (expenses +/income -) -16 -52
Changes in net liabilities recognized in balance sheet
Net liabilities at Jan. 1 335 380
Net amount of income/expenses entered in income statement -75 -45
Net liabilities at Dec. 31 (liability +/receivable -) 260 335
30 FINANCIAL STATEMENTS 2007 / GROUP
EUR 1 000 2007 2006
Key actuarial assumptions
Discount interest, %
- Finland 4.5 4.5
Expected yield from the assets, %
- Finland 4.5 4.5
Yearly salary increase assumption, %
- Finland 2.5 3.0
Inflation assumption, %
- Finland 2.0 2.0
Personnel turnover assumption, %
- Finland 1.0 1.0
31 ADVANCE PAYMENTS RECEIVED, TRADE AND OTHER PAYABLES
Advance payments received EUR 7 590 thousand (EUR 19 726 thousand)
comprise of advances received from projects in progress.
Short-term liabilities in balance sheet
- Trade payables 2 495 6 085
- Accrued expenses and prepaid income 6 912 8 472
- Derivative liabilities 0 57
- Other liabilities 1 074 836
TOTAL 10 481 15 450
Substantial items included in accrued expenses and prepaid income
- Periodizing of project costs 1 003 3 860
- Periodizing of personnel costs 3 821 3 927
- Other accrued expenses and prepaid income 2 087 685
TOTAL 6 912 8 472
32 RELATED PARTY TRANSACTIONS
Raute Group’s related parties consist of associated companies, Board
members, President and CEO, Presidents of the subsidiaries and Raute
Corporation’s Sickness Fund.
Group’s ownership Parent company’s
interest and voting ownership interest
Group companies power, % and voting power, %
Raute Corporation, Lahti, Finland (Parent company) 100.00 100.00
Raute Canada Ltd., New Westminster, B.C., Canada 100.00 100.00
Raute Inc., Delaware, USA 100.00 100.00
Raute US, Inc., Rossville, Tennessee, USA 100.00 100.00
RWS-Engineering Oy, Lahti, Finland 100.00 100.00
Raute Group Asia Pte Ltd., Singapore 100.00 100.00
Raute WPM Oy, Lahti, Finland 100.00 100.00
Raute Chile Ltda. (former Raute Wood Santiago Limitada), Chile 100.00 50.00
Mecano Group Oy, Kajaani, Finland 100.00 100.00
Mecano Group Inc., Oregon, USA 100.00 100.00
Raute Service LLC, St. Petersburg, Russia 100.00 0.00
Raute (Shanghai) Machinery Co., Ltd, Shanghai, China 100.00 100.00
Raute (Shanghai) Trading Co., Ltd, Shanghai, China 100.00 100.00
EUR 1 000 2007 2006
Group management’s employee benefits
Salaries and other short-term employee benefits 913 1 015
Share-based payments 0 107
TOTAL 913 1 122
FINANCIAL STATEMENTS 2007 / GROUP 31
EUR 1 000 2007 2006
Salaries and remunerations of the management of the Parent company
President and CEO
Kiiski, Tapani 224 273
Members of the Board of Directors
Rytilahti, Jarmo, Chairman of the Board 36 36
Mustakallio, Mika, Member of the Board 18 18
Mustakallio Panu, Member of the Board 18 18
Mustakallio, Sinikka, Vice-Chairman of the Board 18 18
Paasikivi, Pekka, Member of the Board 18 18
Wiitakorpi, Jorma, Member of the Board 18 14
Lehtonen, Heikki, former Member of the Board 0 5
Nihti, Markku, former Member of the Board 0 5
TOTAL 350 405
The contracts of the management do not include any special conditions concerning retirement or the amount of
retirement allowance.
The company’s Board of Directors, President and CEO and Presidents of the subsidiaries owned a total of 89 788
series A shares and 98 990 series K shares. Management’s ownership corresponds to 4.7 percent of the shares in
the company and 9.1 percent of associated total voting rights. The figures include the holdings of their own, mi-
nor children and control entities.
Sickness Fund
Raute Group has an insurance fund, which pays its members additional benefits on top of compensations paid
according to the Sickness Insurance Act. Raute’s Sickness Fund covers personnel in Raute Corporation and its
domestic subsidiaries as well as personnel in the former subsidiary Raute Precision Oy. Raute’s Sickness Fund has
deposited its assets in Raute Corporation. The amount of deposits was EUR 110 thousand at Dec. 31 (EUR 110
thousand) and 3.4 percent (2.3%) of interest was paid to it.
No loans are granted and no pledges or other contigent liabilities have been given on behalf of the related par-
ties of the company.
EUR 1 000 2007 2006
33 OTHER LEASES AND OPERATING LEASE LIABILITIES
Group as lessee
Minimum rents paid on the basis of other non-cancellable leases:
- Within 1 year 127 169
- After the period of more than 1 and less than 5 years 370 470
TOTAL 497 639
The Group has rented in a part of office premises.
The rental agreements are made for the time being.
Minimum direct leasing rents paid on the basis of non-cancellable
direct leasing contracts:
- Under 1 year 60 49
- 1–5 years 60 57
- Over 5 years 0 0
TOTAL 120 106
Group as lessor
The Group has rented out the office and plant facilities that it does not need. The facilities have been classified as
tangible fixed assets in the financial statements. Lease income has been recognized in other operating income in
the financial statements and totaled EUR 77 thousand in 2007 (EUR 85 thousand).
32 FINANCIAL STATEMENTS 2007 / GROUP
EUR 1 000 2007 2006
34 CURRENCY DERIVATIVES
Currency derivatives are used for hedging purposes.
Nominal values of forward contracts in foreign currency
Economic hedging
- Related to financing 3 277 2 065
- Related to hedging of net sales 2 481 174
Hedge accounting
- Related to the hedging of net sales 0 7 000
Fair values of forward contracts in foreign currency
Economic hedging
- Related to financing -30 2
- Related to hedging of net sales 360 -8
Hedge accounting
- Related to the hedging of net sales 0 -50
Purchased currency options
- Nominal values 0 1 963
- Fair values 0 13
35 PLEDGED ASSETS AND CONTINGENT LIABILITIES
Pledged assets
Raute Group had on Dec. 31, 2007 long-term bilateral credit facilities
worth EUR 15 million (MEUR 15), which were unused during 2007.
Raute Corporation has a EUR 10 million (MEUR 10) domestic commercial
paper program, which is arranged by Nordea Bank Finland plc.
Within the limits of the program, the company can issue
commercial papers maturing in less than one year.
The debts and other contingent liabilities above have been secured
by mortgages
- Mortgages on real property 134 1 134
- Business mortgages 10 000 10 000
Contingent liabilities and other liabilities
For own debt
- Mortgages on real property 134 1 134
- Business mortgages 10 000 10 000
Security for Group’s liabilities
- Bank guarantees 17 584 14 116
Other own liabilities
Leasing and rent liabilities
- For the current accounting period 187 218
- For subsequent accounting periods 430 527
No money loans, pledges or other contingent liabilities have been
given on behalf of the management or shareholders.
FINANCIAL STATEMENTS 2007 / GROUP 33
36 MANAGEMENT OF FINANCING RISKS
The most significant financial risks that Raute Group is exposed to are liquidity, currency, and credit and counterparty
risks. The Group may also be exposed to price and interest rate risks.
The Group’s written financing policy, approved by the Board of Directors, is based on the principle of cost-effective
hedging against risks that have a negative effect on the Group’s performance or cash flow.
The financing policy defines the limiting values that guide operations, the adopted financial and hedging instru-
ments, and the acceptable counterparties.
The Parent company’s financing unit is responsible for the practical risk management. It identifies, assesses, and
hedges financial risks in co-operation with operating units.
Financial assets
The items included in the Group’s financial assets have been described by balance sheet item in note
number 37.
Financial assets include the percentage of completion receivables of the balance sheet that have arisen from
work performed related to binding sales contracts, and are a balance sheet item comparable to accounts re-
ceivables.
Liquidity risks
The minimum amounts of cash, current investments, and available credit liabilities have been defined to ensure
the Group’s liquidity. In the long term, risks related to the availability and pricing of funding are managed by
using a variety of sources for financing.
Most investment activities are carried out through mutual funds, which are required to exhibit good creditwor-
thiness and sufficient liquidity.
The Parent company has a EUR 10 million (MEUR 10) domestic commercial paper program, which allows it to
issue commercial papers maturing in less than one year. The company also has bilateral non-current credit regu-
lation agreements worth EUR 15 million (MEUR 15). Unused credit limits totaled EUR 15 million (MEUR 15) on
December 31, 2007.
The Group’s financial liabilities consist of trade payables, derivative payables and interest-bearing debts.
Trade payables are due in less than a month on average.
Interest-bearing liabilities are Technology Funding Agency loans with repayments scheduled for 2008–2013 and
an interest rate of 1.0 percent, as well as short-term bank loans of foreign subsidiaries. The share of long-term
loans is minor.
Currency risks
A significant share of the Group’s net sales is generated outside the euro zone.
The most important currencies, which are used in customer deliveries, and transactions between the Group
companies, are euro, and US and Canadian dollars. The currency distribution varies yearly.
The Group hedges itself against currency exchange risks related to business payments by using each Group com-
pany’s functional currency as the primary trading currency.
As stated in the Group’s financing policy, operating units hedge single currency items of over EUR 100 thousand
based on binding sales contracts and procurement contracts with the Group’s financing unit when the contracts
take effect. Forward contracts are mainly used in external hedging related to the currency risk of sales contracts.
The Group’s unhedged currency flow and forward contracts are mainly used for hedging against currency risks re-
lated to procurement contracts.
The forward contract receivables and liabilities related to business payments and denominated in foreign currency,
to which hedge accounting is not applied, arises the currency risk to the Group at reporting date. This currency risk
is recognized in profit or loss when value of forward contracts exceed the income recognizion of the respective
binding sales contracts. The measurement of the forward contracts and the percentage of completion receiva-
bles in compliance with IFRS improved the company’s net sales and operating profit by EUR 0.3 million (MEUR 0.1)
when compared to the Finnish Accounting Standards.
Currency clauses are used to hedge against currency risks during the quotation period. Depending on the case,
currency risks related to preliminary sales contracts are hedged with currency options.
34 FINANCIAL STATEMENTS 2007 / GROUP
The Group’s internal loans, other than equity loans, are hedged with forward contracts. Forward contracts related
to the economic hedging of the Group’s internal financing in Canadian dollars had a nominal value of EUR 3 million
at the end of the financial year (MEUR 2).
The coverage of currency risk hedging is verified quarterly by reviewing the Group’s net currency position in the
main currency pairs USD/EUR, CAD/EUR, and USD/CAD. Currency flows related to binding contracts, and derivate
contracts used for their hedging, are taken into account in the position from the reporting date onwards despite
of which year’s profit or loss, or equity the currency risk will effect. For the currency pair USD/EUR, the net currency
position at the reporting date was EUR -97 thousand (EUR -108 thousand), for the currency pair CAD/EUR, EUR 11
thousand (EUR 242 thousand), and for the currency pair USD/CAD EUR 532 thousand (EUR -278 thousand). For the
currency pair USD/EUR the Group’s net currency position related to financial assets at the reporting date was
EUR 38 thousand (EUR 76 thousand), for the currency pair CAD/EUR, EUR 76 thousand (EUR 379 thousand), and for
the currency pair USD/CAD, EUR 753 thousand (EUR 822 thousand).
The sensitivity analysis of the exchange rate’s transaction risk, i.e., the impact that a moderate, possible change in
the exchange rate would have on equity and the Group’s performance before taxes, is shown in the main currency
pairs USD/EUR, CAD/EUR, and USD/CAD in the following table. Accounts and percentage of completion receivables,
trade payables, internal loans, and derivative contracts have been taken into account when estimating the impact
of the changes in the exchange rate.
Sensitivity analysis of the transaction risk
Increase/decrease Effect on profit Effect on equity,
in CAD/EUR, % before tax, EUR 1 000
EUR 1 000
2007 5 4 0
-5 -4 0
Increase/decrease Effect on profit Effect on equity,
in USD/EUR, % before tax, EUR 1 000
EUR 1 000
2007 5 2 0
-5 -2 0
Increase/decrease Effect on profit Effect on equity,
in USD/CAD, % before tax, EUR 1 000
EUR 1 000
2007 5 37 0
-5 -37 0
Increase/decrease Effect on profit Effect on equity,
in CAD/EUR, % before tax, EUR 1 000
EUR 1 000
2006 5 19 0
-5 -19 0
Increase/decrease Effect on profit Effect on equity,
in USD/EUR, % before tax, EUR 1 000
EUR 1 000
2006 5 4 0
-5 -4 0
Increase/decrease Effect on profit Effect on equity,
in USD/CAD, % before tax, EUR 1 000
EUR 1 000
2006 5 29 0
-5 -29 0
The Group has foreign subsidiaries and is exposed to translation risks. Net investments and corresponding items in
subsidiaries have not been hedged. The total equity of Group companies outside the euro area was EUR 755 thou-
sand (EUR -553 thousand) at the end of the fiscal year. Net investments or corresponding items were EUR 1 million
(MEUR 2) in US dollars, and EUR -8 million (MEUR -7) in Canadian dollars. Exchange rate differences for net invest-
ments EUR 264 thousand (EUR -646 thousand), are recognized in equity.
The following table includes a sensitivity analysis on translation risks related to the possible changes in the ex-
change rate of US and Canadian dollars, and euro and the impact of the changes on the Group’s profit or loss
before tax, and equity. The impacts of +5/-5 percent changes in exchange rates on the fair values of foreign net in-
vestments have been taken into account in the sensitivity analysis.
FINANCIAL STATEMENTS 2007 / GROUP 35
Sensitivity analysis on translation
Increase/decrease Effect on profit Effect on equity,
in CAD/EUR, % before tax, EUR 1 000
EUR 1 000
2007 5 4 574
-5 -4 -574
Increase/decrease Effect on profit Effect on equity,
in USD/EUR, % before tax, EUR 1 000
EUR 1 000
2007 5 3 -59
-5 -3 59
Increase/decrease Effect on profit Effect on equity,
in CAD/EUR, % before tax, EUR 1 000
EUR 1 000
2006 5 99 800
-5 -99 -800
Increase/decrease Effect on profit Effect on equity,
in USD/EUR, % before tax, EUR 1 000
EUR 1 000
2006 5 12 -43
-5 -12 43
Credit and counterparty risks
The most significant credit and counterparty risks are related to the counterparties of project business and
investment activities.
Credit risks related to trade receivables of project deliveries are managed by expecting bank guarantees or con-
firmed letters of credit for customer payments, and by accelerated payment terms with long-term customers
approved by the Board of Directors. Technology service related credit risks are managed by regularly follow-
ing customer-specific payment behavior and credit limits. The age analysis of accounts receivables, and invoiced
advance payments of binding sales contracts which are recorded in the percentage of completion receivables in
the financial assets, is shown in the following table.
Accounts receivables
Accounts receivables, Advances invoiced, Total,
EUR 1 000 EUR 1 000 EUR 1 000
Dec. 31, 2007 4 449 6 048 10 497
Dec. 31, 2006 5 519 7 207 12 726
Age analysis of receivables
Neither past due <30 days 30–60 days >60 days
nor impaired
Dec. 31, 2007 9 088 1 205 125 79
Dec. 31, 2006 9 561 984 653 1 528
The amount of received bank guarantees was EUR 14.0 million (MEUR 14.1) at the end of the financial year.
Received bank guarantees and letters of credit covered 83 percent (48%) of the receivables recorded in the bal-
ance sheet, at the end of the financial year.
Investments and derivative agreements are only made with counterparties that meet the credit rating criteria
defined in the financing policy. When making investments, or derivative and loan agreements, the Group ap-
plies counterparty-specific upper limits to avoid risk concentrations.
During the financial year, there were no recognized credit losses. Investments related to the Group’s cash man-
agement have been made to money market instruments with a low credit risk. At the end of the financial year,
the maximum amount of credit risk is the book value of financial assets, EUR 11.3 million (MEUR 24.0).
36 FINANCIAL STATEMENTS 2007 / GROUP
Price risk
At the balance sheet date, in the consolidated financial statements there were no derivatives hedging price risk
that would affect the profit or loss.
The raw materials used by the Group are reprocessed steel products, other raw materials, components, and com-
modities; it is not possible to actively hedge against their market price risk with derivatives, and their price risk is
a part of the business risk. The price risk of steel is managed by regularly analyzing and following the price fluc-
tuation. The price risk of components is reduced by making blanket agreements with suppliers.
The Group’s production processes use electric power. The price risk of electric power is followed and managed
through fixed-price contracts.
The price risk of financial instruments is analyzed as part of fair value risk. At the balance sheet date, there were
no significant investments held for sale, the change of which in fair value price would essentially affect the
Group’s profit or loss, and equity.
Interest risks
Due to the strong financing position, the Group’s interest risks are minor.
The interest risk related to financial liabilities arises from the interest differences between derivative contract
currencies, and from loans. At the balance sheet date, short- and long-term interest-bearing liabilities totaling
EUR 490 thousand (EUR 467 thousand) had fixed interest rates.
The Group’s cash and cash equivalents include interest-bearing investments in funds and deposits whose profit
levels include an interest risk. At the balance sheet date, a total of EUR 9.5 million (MEUR 11.2) was invested in
deposits and other interest-bearing investments. Interest fund investments have been made in short-term inter-
est funds.
Capital structure management
The objective of the Group’s capital structure management is an effective capital structure that secures the
Group’s operational preconditions on the capital market. The rating of the Group’s Parent company was the
highest AAA throughout 2007.
The Group’s capital structure is followed by equity ratio, which has a strategic target value. During the financial
year 2007 the target value of eguity ratio was over 40 percent. Equity ratio on December 31, 2007, was 70.3 per-
cent (60.1%).
37 OTHER FINANCIAL INSTRUMENT DATA
The following table shows a comparision by category of carrying amounts and fair values, that are carried in the
balance sheet.
Carrying Carrying
amount Fair value amount Fair value
EUR 1 000 Notes Dec. 31, 2007 Dec. 31, 2007 Dec. 31, 2006 Dec. 31, 2006
Financial assets
Financial assests at fair value through
profit or loss
Held for trading 22 2 144 2 144 10 195 10 195
Loans and other receivables
Trade and other receivables 21, 23 30 350 30 350 16 719 16 719
Cash and cash equivalents 23 1 740 1 740 2 612 2 612
Available-for-sale financial assests 449 449 395 395
TOTAL 34 683 34 683 29 921 29 921
Financial liabilities
Financial liabilities at fair value through
profit or loss
Bank loans 28–29 63 63 0 0
Trade and other payables 31 3 047 3 047 6 553 6 553
TOTAL 3 110 3 110 6 553 6 553
FINANCIAL STATEMENTS 2007 / GROUP 37
Carrying Carrying
amount Fair value amount Fair value
EUR 1 000 Notes Dec. 31, 2007 Dec. 31, 2007 Dec. 31, 2006 Dec. 31, 2006
Aggregated by measurement category
Financial assests held for trading 2 144 2 144 10 195 10 195
Loans and receivables 30 350 30 350 16 719 16 719
Available-for-sale financial assests 2 189 2 189 3 007 3 007
Financial liabilities held for trading
measured at amortized cost 3 110 3 110 6 553 6 553
TOTAL 37 793 37 793 36 474 36 474
2007 2006
38 EXCHANGE RATES USED IN CONSOLIDATION OF THE SUBSIDIARIES
Income statement EUR EUR
USD 1.3706 1.2557
CAD 1.4689 1.4242
SGD 2.0636 1.9940
CLP 714.9118 695.9000
RUB 35.0199 34.1116
CNY 10.4186 10.0090
Balance sheet EUR EUR
USD 1.4721 1.3170
CAD 1.4449 1.5281
SGD 2.1163 2.0202
CLP 727.6318 696.4292
RUB 35.9860 34.68
CNY 10.7404 10.333
EUR 1 000
39 ADJUSTMENTS TO OPERATING CASH FLOW
Non-cash transactions in operating activities
Depreciations and amortizations -2 654 -2 660
Employee benefits -120 -51
Impairments 477 -222
Exchange rate differences -201 -258
Profit or loss from change in fair value of financial assests
through profit or loss 201 490
TOTAL -2 298 -2 701
40 EVENTS AFTER THE BALANCE SHEET DATE
According to Raute Corporation’s management, no such events have occurred after the balance sheet date, which
would have had effects on annual financial statements.
38 FINANCIAL STATEMENTS 2007 / GROUP
Parent company’s
income statement, FAS
EUR 1 000 1.1–31.12.2007 1.1–31.12.2006
Note
2, 3 NET SALES 92 977 91 092
Increase (+) or decrease (-) in inventories of
finished goods and work in progress 104 307
4 Other operating income 755 396
5 Materials and services 56 063 58 452
6 Personnel expenses 20 061 18 110
8, 14 Depreciation, amortization and impairment charges 1 832 1 769
9 Other operating expenses 8 126 9 470
Total operating expenses 86 082 87 802
OPERATING PROFIT 7 755 3 993
Financial income and expenses
10 Income from investments in other non-current assets 114 524
10 Interest and other financial income 700 883
10 Impairments from investments in non-current assets 0 -4 581
10 Interest and other financial expenses -238 -713
Total financial income and expenses 576 -3 887
PROFIT BEFORE EXTRAORDINARY ITEMS 8 331 105
11 Extraordinary items 885 222
PROFIT BEFORE APPROPRIATIONS AND TAXES 9 216 327
12 Appropriations 709 265
13 Income taxes -2 541 -1 447
PROFIT/LOSS FOR THE FINANCIAL YEAR 7 385 -854
FINANCIAL STATEMENTS 2007 / PARENT COMPANY 39
Parent company’s
balance sheet, FAS
EUR 1 000 31.12.2007 31.12.2006
Note
ASSETS
Non current assets
14 Intangible assets 1 851 1 945
14 Tangible assets 8 321 10 387
15 Investments 5 903 4 289
Non current assets total 16 075 16 621
Current assets
3, 16 Inventories 2 853 3 157
17 Long-term receivables 0 44
17 Short-term receivables 24 098 21 459
18 Investments held as current assets 2 144 10 194
Cash and cash equivalents 8 214 13 531
Current assets total 37 308 48 385
TOTAL ASSETS 53 383 65 006
LIABILITIES
Shareholders’ equity
19 Share capital 8 010 8 010
19 Share premium 6 498 6 498
19 Retained earnings 10 847 14 861
19 Profit/loss for the financial year 7 385 -854
Shareholders’ equity total 32 739 28 515
20 Appropriation reserve 765 1 475
21 Provisions 1 067 1 818
Liabilities
22 Deferred tax liabilities 0 130
23 Long-term liabilities 277 277
23 Short-term liablities 18 534 32 791
Liabilities total 18 811 33 198
TOTAL LIABILITIES 53 383 65 006
40 FINANCIAL STATEMENTS 2007 / PARENT COMPANY
Parent company’s
cash flow statement, FAS
EUR 1 000 1.1–31.12.2007 1.1–31.12.2006
CASH FLOW FROM OPERATING ACTIVITIES
Proceeds from sales 79 095 99 774
Proceeds from other operating income 409 352
Payments of operating expenses -87 224 -86 030
Cash flow before financial items and taxes -7 719 14 095
Interests and other operating -194
financial expenses paid -347 -194
Interests and other income received 743 843
Dividends received 114 524
Income taxes paid -1 579 -1 593
Cash flow before extraordinary items -8 788 13 675
NET CASH FROM (+) / USED IN (-) OPERATING ACTIVITIES (A) -8 788 13 675
CASH FLOW FROM INVESTING ACTIVITIES
Capital expenditure in tangible and intangible assets -1 230 -1 571
Purchase of assets-for-sale as investments -74 -49
Acquisition of subsidiary shares -343 -160
Proceeds from disposal of tangible and intangible assets 1 310 261
Proceeds from subsidiary shares 0 381
Proceeds from other investments 0 20
Loans granted 0 244
NET CASH FROM (+) / USED IN (-) INVESTING ACTIVITIES (B) -337 -875
CASH FLOW FROM FINANCING ACTIVITIES
Increase (+) / decrease (-) of short-term liabilities -1 576 1 306
Increase (-) / decrease (+) of long-term and short-term receivables -163 82
Proceeds from issuance of shares 0 1 436
Dividends paid -2 803 -2 290
Group contributions, paid and received 300 -165
NET CASH FROM (+) / USED IN (-) FINANCING ACTIVITIES (C) -4 243 369
NET CHANGE IN CASH AND CASH EQUIVALENTS (A+B+C) -13 367 13 169
increase (+) / decrease (-)
CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE YEAR 23 725 10 556
CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR 10 358 23 725
FINANCIAL STATEMENTS 2007 / PARENT COMPANY 41
Notes to the Parent company’s
financial statements
1 ACCOUNTING PRINCIPLES
Goodwill 5 years
Other intangible assets 3–10 years
The accounting principles of the Parent company’s fi- Buildings and structures 25–40 years
nancial statements are presented only for those parts Machinery and equipment 4–12 years
that differ from the accounting principles of the con- Other fixed assets 3–10 years.
solidated financial statements.
Gains and losses on decommissioning and disposal of
The Parent company’s financial statements have been property, plant and equipment are presented in other
prepared in accordance with the Finnish Accountancy operating income or expenses.
Act (FAS).
Pensions
Foreign currency items Statutory pension coverage of the Parent company
Other than euro denominated transactions are recog- has been arranged through an external pension insur-
nized at the exchange rate effective on the transaction ance company. Pension expenses are recorded as ex-
date. Receivables and liabilities denominated in other penses in the year which they are are incurred.
currencies are translated into euro at the average rate
of the balance sheet date, except for hedged items that Extraordinary items
are valued at the agreed contract rate. Advances paid Extraordinary items include significant and exception-
and received are entered in the balance sheet at the al income and expenses that are not a part of the usu-
exchange rate effective on the payment date. The ex- al business operations. Group contributions received
change rate gains resulting from the extension of pro- and paid are also recognized as extraordinary items.
tection contracts related to sales receivables will be
capitalized into accrued expenses or receivables. Other Income taxes
exchange rate gains and losses are handled according Income taxes recognized in the income statement in-
to their impact on profit. clude direct taxes for the period and tax adjustments for
previous periods. Current tax is calculated on taxable in-
Fixed assets come using the tax rate that is in force.
Fixed assets are stated at cost less accumulated deprecia-
tion, with the exception for some property items and re- Deferred tax assets and liabilities have not been recog-
valuated shares. Only variable costs arising from the ac- nized in the balance sheet for other than revaluations.
quisition and production of a product are included in the The deferred tax liability included in the depreciation
carrying amount. difference is presented in the notes item Appropriation
reserve.
Depreciations of tangible and intangible assets are re-
corded with the straight-line method over the expected
economic lives of the assets as follows:
EUR 1 000 2007 % 2006 %
2 NET SALES BY MARKET AREA
Finland 13 367 14 9 983 11
Russia 38 456 41 11 774 13
Rest of Europe 19 772 21 19 467 21
North America 7 550 8 4 142 5
South America 11 226 12 39 143 43
Asia 701 1 5 424 6
Oceania 963 1 466 1
Others 942 1 693 1
TOTAL 92 977 100 91 092 100
42 FINANCIAL STATEMENTS 2007 / PARENT COMPANY
EUR 1 000 2007 2006
3 REVENUE RECOGNITION METHOD BASED ON PERCENTAGE OF COMPLETION
Net sales by percentage of completion 82 218 81 005
Other net sales 10 759 10 087
TOTAL 92 977 91 092
Project revenues entered as income from currently undelivered
long-term projects recognized by percentage of completion 105 898 72 061
Amount of long-term project revenues not yet entered as income (order book) 52 718 68 115
Specification of combined asset and liability items
Advances paid 811 1 229
Advance payments included in inventories 811 1 229
Accrued income corresponding to revenues by percentage of completion 108 301 72 061
Advances received from project customers -91 245 -58 217
Balance sheet project receivables included in non-current receivables 17 056 13 844
4 OTHER OPERATING INCOME
Capital gain on sale of fixed assets 346 44
Other 409 352
TOTAL 755 396
5 MATERIALS AND SERVICES
Materials and supplies
- Purchases during the period 50 318 52 522
- Change in inventories 1 -370
External services 5 743 6 300
TOTAL 56 063 58 453
6 PERSONNEL EXPENSES
Personnel expenses in income statement
Wages and salaries 16 279 14 844
Pension costs 2 598 2 134
Other statutory personnel contributions 1 184 1 132
TOTAL 20 061 18 110
Salaries and remunerations of the management
Kiiski, Tapani, President and CEO 224 273
Members of the Board of Directors
Rytilahti, Jarmo, Chairman of the Board 36 36
Mustakallio, Mika, Member of the Board 18 18
Mustakallio, Panu, Member of the Board 18 18
Mustakallio, Sinikka, Vice-Chairman of the Board 18 18
Paasikivi, Pekka, Member of the Board 18 18
Wiitakorpi, Jorma, Member of the Board 18 14
Lehtonen, Heikki, former Member of the Board 0 5
Nihti, Markku, former Member of the Board 0 5
TOTAL 350 405
7 PERSONNEL
Employed at Dec. 31, persons
Workers 156 141
Office staff 242 245
TOTAL 398 386
- of which personnel working abroad 3 5
FINANCIAL STATEMENTS 2007 / PARENT COMPANY 43
EUR 1 000 2007 2006
Average, persons
Workers 157 145
Office staff 245 245
TOTAL 402 390
- of which personnel working abroad 3 5
8 DEPRECIATION, AMORTIZATION AND IMPAIRMENT CHARGES
Depreciation and amortization from tangible and intangible assets 1 832 1 769
TOTAL 1 832 1 769
9 OTHER OPERATING EXPENSES
Indirect production costs 1 285 1 593
Losses on Group companies’ trade receivables 0 1 190
Sales and marketing costs 2 142 2 045
Administration costs 1 704 2 519
Other costs 2 995 2 124
TOTAL 8 126 9 470
Auditors’ remunerations
Annual audit, statutory 31
Other audit related services under audit law 2
Tax services 8
Other services 10
TOTAL 51
10 FINANCIAL INCOME AND EXPENSES
Income from investments in other non-current assets
Dividends from Group companies 0 500
Dividends 114 24
TOTAL 114 524
Other interest and financial income
Group companies 166 181
Dividends and yield on investment funds from others 201 0
Other interest and financial income from others 333 702
TOTAL 700 883
Impairments from investments in non-current assets
Group companies 0 4 581
Interest and other financial expenses
Group companies 33 0
Other than associates or Group companies 205 713
TOTAL 238 713
Total financial income and expenses 576 -3 887
Exchange rate gains (+) / losses (-) included in total financial items 186 491
11 EXTRAORDINARY ITEMS
Extraordinary income
Contributions from Group companies 885 300
TOTAL 885 300
12 APPROPRIATIONS
Difference in planned and taxed depreciations 709 265
TOTAL 709 265
44 FINANCIAL STATEMENTS 2007 / PARENT COMPANY
EUR 1 000 2007 2006
13 INCOME TAXES
From operations, current financial year -2 251 -1 351
Tax impact of extraordinary items -230 78
From operations, previous financial years -59 -174
TOTAL -2 541 -1 447
14 NON-CURRENT ASSETS INTANGIBLE ASSETS
Capitalized product Intangible Other intangible
EUR 1 000 development costs rights assets TOTAL
Carrying amount at Jan. 1, 2007 398 910 3 707 5 016
Additions 167 73 100 340
Transfers between items 0 0 112 112
Carrying amount at Dec. 31, 2007 565 983 3 920 5 468
Accumulated depreciation
at Jan. 1, 2007 0 -387 -2 683 -3 070
Depreciation for the
accounting period -20 -165 -361 -546
Accumulated depreciation
at Dec. 31, 2007 -20 -553 -3 044 -3 617
Book value at Dec. 31, 2007 545 431 876 1 851
Book value at Dec. 31, 2006 398 523 1 025 1 945
TANGIBLE ASSETS
Machinery Other Assets in progress
Land and Buildings and and tangible and advance
EUR 1 000 water structures equipment assets payments TOTAL
Carrying amount at Jan. 1, 2007 406 9 554 17 314 336 120 27 730
Additions 4 130 545 0 211 890
Disposals -109 -946 -2 0 0 -1 058
Transfers between items 0 140 3 0 -255 -122
Carrying amount at Dec. 31, 2007 301 8 879 17 859 336 75 27 450
Accumulated depreciation
at Jan. 1, 2007 -4 159 -13 380 -304 -17 843
Depreciation for the
accounting period -318 -964 -4 -1 286
Accumulated depreciation
at Dec. 31, 2007 0 -4 477 -14 344 -308 0 -19 129
Revaluations at Jan. 1, 2007 13 487 0 0 0 500
Revaluations wound up -13 -487 0 0 0 -500
Revaluations at Dec. 31, 2007 0 0 0 0 0 0
Book value at Dec. 31, 2007 301 4 402 3 515 28 75 8 321
Book value at Dec. 31, 2006 419 5 883 3 933 32 120 10 387
Book value for production
machinery
Dec. 31, 2007 2 998
Dec. 31, 2006 3 467
FINANCIAL STATEMENTS 2007 / PARENT COMPANY 45
15 NON-CURRENT INVESTMENTS SHARES RECEIVABLES TOTAL
Group Group
EUR 1 000 companies Others companies
Carrying amount at Jan. 1, 2007 7 975 384 2 096 10 455
Additions 343 74 1 208 1 625
Disposals 0 -11 0 -11
Carrying amount at Dec. 31, 2007 8 318 447 3 304 12 069
Revaluations at Jan. 1, 2007 -6 166 0 0 -6 166
Disposals 0 0 0 0
Revaluations at Dec. 31, 2007 -6 166 0 0 -6 166
Book value at Dec. 31, 2007 2 152 447 3 304 5 903
Book value at Dec. 31, 2006 1 809 384 2 096 4 289
Shares owned by the company are presented in the notes number 25.
EUR 1 000 2007 2006
16 INVENTORIES
Materials and supplies 1 396 1 388
Work in progress 534 540
Finished products/goods 112 0
Advance payments 811 1 229
TOTAL 2 853 3 157
17 SPECIFICATION OF RECEIVABLES
Non-current receivables
Non-current receivables from Group companies
- Loan receivables 0 44
Total from Group companies 0 44
TOTAL 0 44
Current receivables
Current receivables from Group companies
- Accounts receivables 1 911 299
- Accrued income and prepaid expenses 1 103 300
Total from Group companies 3 013 599
Current receivables from others
- Accounts receivables 3 262 3 969
- Loan receivables 0 1 000
- Accrued income and prepaid expenses 17 193 14 571
- Other receivables 630 1 320
Total from others 21 085 20 860
TOTAL 24 098 21 459
Substantial items included in accrued income and prepaid expenses
- Contribution receivables from Group companies 885 135
- Project receivables entered according to percentage of completion 17 056 10 460
- Other accrued income 355 948
TOTAL 18 295 11 543
46 FINANCIAL STATEMENTS 2007 / PARENT COMPANY
EUR 1 000 2007 2006
18 FINANCIAL ASSETS AT FAIR VALUE THROUGH INCOME STATEMENT
Replacement cost 2 144 10 194
Book value 2 043 9 848
Difference 101 346
Financial assets at fair value through income statement
are fund units held for trading.
19 SHAREHOLDERS’ EQUITY
Share capital at Jan. 1 8 010 7 629
Share issue 0 381
Share capital at Dec. 31 8 010 8 010
Share issue reserve at Jan. 1 0 14
Share issue 0 -14
Share issue reserve at Dec. 31 0 0
Premium fund at Jan. 1. 6 498 5 429
Share premium fund 0 1 069
Share premium fund at Dec. 31 6 498 6 498
Retained earnings at Jan. 1 14 861 13 322
Changes during the financial year
- Loss/profit from the previous year -854 3 828
- Dividends -2 803 -2 289
- Reductions in revaluations -357 0
Retained earnings at Dec. 31 10 847 14 861
Profit/loss for the financial year 7 385 -854
Shareholders’ equity at Dec. 31 32 740 28 515
Distributable funds
Retained earnings at Dec. 31 10 847 14 861
Profit/loss for the financial year 7 385 -854
Distributable funds 18 232 14 007
Share capital of Parent company
Shares, 1 000 pcs 4 005 4 005
Nominal value, EUR 2.00 2.00
Total nominal value, 1 000 EUR 8 010 8 010
Series K shares (ordinary shares, 20 votes/share), 1 000 pcs 991 991
Series A shares (1 vote/share), 1 000 pcs 3 014 3 014
20 APPROPRIATION RESERVE
The untaxed reserve consists of accumulated depreciation difference
of EUR 933 thousand (EUR 1 475 thousand), including deferred tax liabilities
for EUR 243 thousand (EUR 383 thousand).
21 PROVISIONS
Estimated warranty accruals at Jan. 1 782 1 480
Amendment during the financial year 108 -698
Estimated warranty accruals at Dec. 31 890 782
Provision for disputed warranty obligations to customer 0 370
FINANCIAL STATEMENTS 2007 / PARENT COMPANY 47
EUR 1 000 2007 2006
Provision for loss/overheads from long-term projects
in order book at Jan. 1 666 661
Change in period -489 5
Provision for loss/overheads from long-term projects
in order book at Dec. 31 177 666
TOTAL 1 067 1 818
22 DEFERRED TAX LIABILITIES
- From revaluations 0 130
TOTAL 0 130
23 SPECIFICATION OF LIABILITIES
Non-current liabilities
Non-current tax liabilities
- Non-current deferred tax liabilities (specification in note number 22) 0 130
Non-current liabilities to others 277 277
TOTAL 277 407
Current liabilities
Current liabilities to Group companies
- Advances received 0 3 773
- Accounts payable 1 531 571
- Accrued expenses and prepaid income 140 89
- Other current liabilities 1 637 3 212
Total to Group companies 3 308 7 645
Current liabilities to others
- Advances received 7 002 12 894
- Accounts payable 1 978 4 877
- Accrued expenses and prepaid income 5 696 6 793
- Other current liabilities 550 582
Total to others 15 226 25 146
TOTAL 18 534 32 791
Interest-bearing debts
- Non-current 277 277
- Current 1 747 3 322
TOTAL 2 024 3 599
Substantial items included in accrued expenses and prepaid income
- Income taxes 850 0
- Accrued project expenses 981 3 476
- Accrued employee related expenses 2 715 3 101
- Other 1 291 305
TOTAL 5 836 6 882
48 FINANCIAL STATEMENTS 2007 / PARENT COMPANY
EUR 1 000 2007 2006
24 PLEDGED ASSETS AND CONTINGENT LIABILITIES
Pledged assets
Debts secured by mortgages
At Dec. 31, 2007, Raute Group had long-term bilateral credit facilities
worth EUR 15 million (MEUR 15), which were unused in 2007.
Raute Corporation has a EUR 10 million (MEUR 10) domestic commercial
paper program, which is arranged by Nordea Bank Finland plc. Within the
limits of the program, the company can issue commercial papers
maturing in less than one year.
Debts and other contingent liabilities above have been secured
by mortgages
- Mortgages on real property 134 1 134
- Business mortgages 10 000 10 000
Contingent liabilities and other liabilities
- Guarantees issued 328 646
Leasing and rent liabilities
- For the current accounting period 5 2
- For subsequent accounting periods 2 4
Nominal values of forward contracts in foreign currency
- Fair value of forward contracts, external 5 758 9 239
- Fair value of forward contracts, internal 568 380
- Fair value, external -30 -56
- Fair value, internal 360 5
Purchased currency options
- Nominal values 0 1 963
- Fair values 0 13
The nominal value is the value of underlying instruments converted into euro using the exchange rate of balance
sheet date. The market value is the profit generated, if the derivatives position would have been closed to the
market price on the balance sheet date.
Other own obligations
Letters of Guarantee engagements have been issued on behalf of certain subsidiaries. No money loans, patents or
other contingent liabilities have been given on behalf of the management or shareholders.
25 SHARES OWNED BY THE COMPANY
Subsidiaries Holding and voting right, % Book value, EUR 1 000
Raute Canada Ltd., New Westminster, B.C., Canada 100.00 84
Raute Inc., Delaware, USA 100.00 17
RWS-Engineering Oy, Lahti, Finland 100.00 203
Raute Group Asia Pte Ltd., Singapore 100.00 0
Raute WPM Oy, Lahti, Finland 100.00 9
Raute Chile Ltda. (former Raute Wood Santiago Limitada), Chile 100.00 15
Mecano Group Oy, Kajaani, Finland 100.00 1 331
Raute Service LLC, St. Petersburg, Russia 100.00 0
Raute (Shanghai) Machinery Co., Ltd, Shanghai, China 100.00 398
Raute (Shanghai) Trading Co., Ltd, Shanghai, China 100.00 95
Other shares Book value, EUR 1 000
Other shares total 447
FINANCIAL STATEMENTS 2007 / PARENT COMPANY 49
Key ratios describing
the Group’s financial development
EUR 1 000 2007 2006 2005 2004 2003*
Net sales 110 799 106 206 108 627 73 116 97 608
Change in net sales, % 4.3 -2.2 48.6 -25.1 9.8
Exported portion of net sales 96 759 95 789 78 183 65 136 84 419
% of net sales 87.3 90.2 72.0 89.1 86.5
Operating profit/loss 8 607 4 513 4 403 3 647 -3 340
% of net sales 7.8 4.2 4.1 5.0 -3.4
Profit/loss before income taxes, from
continuing operations 8 976 4 887 5 461 3 906 -2 274
% of net sales 8.1 4.6 5.0 5.3 -2.3
Profit/loss attributable to equity holders
of the Parent company 6 601 3 632 4 152 4 762 -2 703
% of net sales 6.0 3.4 3.8 6.5 -2.8
Return on investment (ROI), % 29.2 18.6 20.7 25.2 -5.4
Return on equity (ROE), % 21.1 13.1 15.8 19.9 -10.7
Balance sheet total 54 800 68 472 55 435 46 188 63 510
Interest-bearing net liabilities -10 794 -23 539 -10 861 -7 670 -4 238
% of net sales -9.7 -22.2 -10.0 -10.5 -4.3
Interest-free liabilities 21 116 38 696 28 755 19 289 30 922
Equity ratio, % 70.3 60.1 55.7 56.8 41.3
Quick ratio 2.8 2.7 2.0 1.5 1.2
Gearing, % -32.5 -80.3 -41.5 -30.6 -18.2
Gross capital expenditure 1 869 1 852 3 798 2 060 1 502
% of net sales 1.7 1.7 3.5 2.8 1.5
Research and development costs 3 969 3 765 3 616 3 093 2 651
% of net sales 3.6 3.5 3.3 4.2 2.7
Order book 56 217 76 699 55 317 35 417 38 774
Order intake, MEUR 90 132 109 68 99
Personnel at Dec. 31 570 540 533 543 758
Personnel, average 575 547 537 556 783
Dividend 4 005 2 803 2 289 1 526 3 815
* The year 2003 has been reported according to Finnish Accounting Standards (FAS).
**The Board of Directors’ proposal to the Annual General Meeting.
50 FINANCIAL STATEMENTS 2007 / GROUP
SHARE-RELATED DATA
2007 2006 2005 2004 2003*
Earnings per share from continuing operations, EUR 1.65 0.94 1.09 0.71 -0.71
Earnings per share from discontinued operations, EUR 0.54
Equity to share, EUR 8.29 7.32 6.80 6.47 6.11
Dividend per share, EUR 1.00 0.70 0.60 0.40 1.00
Dividend per profit, % 60.7 74.5 55.1 32.0 -141.1
Effective dividend yield, % 7.0 5.5 4.2 5.2 12.5
Price/earnings ratio (P/E ratio) 8.71 13.68 13.08 6.16 -11.29
Development in share price (series A shares)
Lowest, EUR 12.40 11.60 7.60 7.10 6.20
Highest, EUR 15.45 17.60 16.42 8.90 9.50
Average exchange rate for the
accounting period, EUR 13.85 14.03 11.24 8.14 8.12
Share price at Dec. 31, EUR 14.35 12.85 14.24 7.70 8.00
Market value of capital stock at Dec. 31,
EUR 1 000*** 57 468 51 461 54 320 29 372 30 517
Trading in the company’s shares (series A shares)
Shares traded during the financial year, 1 000 pcs 981 1 088 1 530 569 323
% of the number of series A shares 32.5 36.1 54.2 20.1 11.5
Issue-adjusted number of share average 4 004 758 3 866 561 3 814 608 3 814 608 3 814 608
Issue-adjusted number of share average
at year-end 4 004 758 4 004 758 3 814 608 3 814 608 3 814 608
The deferred tax liabilities have been included in the computation of the key ratios.
* The year 2003 has been reported according to Finnish Accounting Standards (FAS).
** The Board of Directors’ proposal to the Annual General Meeting.
***Series K shares valued at the value of series A shares.
FINANCIAL STATEMENTS 2007 / GROUP 51
Calculation of key ratios
Return on investment (ROI), % = (Profit before tax * + interest expenses + other financial expenses) x 100
Balance sheet total ./. non-interest bearing liabilities (average)
Return on equity (ROE), % = (Profit before tax * ./. taxes) x 100
Shareholders’ equity + minority interest (average)
Interest-bearing net liabilities = Interest-bearing liabilities ./. cash and cash equivalents
+ financial assets at fair value through profit or loss
Equity ratio, % = (Shareholders’ equity + minority interest) x 100
Balance sheet total ./. advances received
Quick ratio = (Cash and cash equivalents + financial assets at fair value through profit or loss
+ current receivables)
Current liabilities ./. advances received
Earnings per share (EPS), EUR = Profit for the financial year **
Equity issue-adjusted average number of shares during the year
Equity to share, EUR = Shareholders’ equity
Equity issue-adjusted number of shares at the day of the financial statements
Dividend per share, EUR = Distributed dividend for the financial year
Equity issue-adjusted number of shares at the day of the financial statements
Dividend per profit, % = Dividend per share x 100
Earnings per share
Effective dividend return, % = Dividend per share x 100
Equity issue-adjusted closing share price at Dec. 31
Price/earnings ratio (P/E ratio) = Equity issue-adjusted closing share price at Dec. 31
Earnings per share
Trend in share turnover, The trend in turnover of shares is given as the number of shares traded during
in volume and percentage the financial year and as the percentage of traded shares relative to issued share
figures (series A shares) stock during the year.
Market value of capital stock = Number of shares at year-end (series A + series K shares) x
closing price of the share on the last day of the year
Gearing, % = Interest-bearing liabilities ./. (Cash and cash equivalents + financial assets
at fair value through profit or loss) x 100
Shareholders’ equity + minority interest
* 2003: profit before extraordinary items
**2003: profit before extraordinary items and taxes ./. taxes +/- minority interests
52 FINANCIAL STATEMENTS 2007 / GROUP
Shares and shareholders
Current information on Raute’s shares and shareholders can be found on the company’s website
at www.raute.com.
SHARE CAPITAL AT DEC. 31, 2007
Total nominal
Voting Nominal value Number of value
Shares rights EUR/share 1 000 shares EUR 1 000
Series K shares (ordinary shares) 20 votes/share 2.00 991 1 982
Series A shares 1 vote/share 2.00 3 014 6 027
Total shares at Dec. 31, 2007 2.00 4 005 8 010
CHANGES IN SHARE CAPITAL FROM JAN. 1, 1994 TO DEC. 31, 2007
Share capital Number of Number of
EUR series K shares series A shares
Share capital at Jan. 1, 1994 5 359 073 1 054 600 2 124 240
Issue of share capital Sept. 21, 1994 1 069 285 635 768
Change of series K shares into series A shares 1998 -14 000 14 000
Decrease of share capital (premium fund) June 30, 2000 -12 648
Increase of share capital, capitalization issue June 30, 2000 1 213 506
Change of series K shares into series A shares 2003 -44 539 44 539
Change of series K shares into series A shares 2004 -4 900 4 900
Registration of shares with options Jan. 1–Dec. 31, 2006 380 300 190 150
Share capital at Dec. 31, 2007 8 009 516 991 161 3 013 597
Board authorizations Shares and shareholders
No decisions on share issues were made during the re- Raute Corporation’s series A shares are listed on the OMX
port period, nor were any convertible bonds or stock op- Nordic Exchange, Helsinki. The trading code is RUTAV.
tions issued. Raute Corporation has signed a market making agreement
with Nordea Bank Finland plc in compliance with the Li-
Raute Corporation’s Board of Directors has been author- quidity Providing (LP) requirements issued by the OMX
ized by the Annual General Meeting held on 21 March Nordic Exchange, Helsinki.
2007 to decide on the buyback and directed issue of a
maximum of 400 000 of the company’s series A shares. The number of shares at the end of the reporting year to-
The authorizations are effective until the next Annual taled 4 004 758, of which 991 161 were series K shares (or-
General Meeting. The Board of Directors has not exer- dinary share, 20 votes/share) and 3 013 597 series A shares
cised this authorization. (1 vote/share). The shares have a nominal value of EUR 2.00.
Market value of capital stock Trading in series A shares
at Dec. 31, EUR million
EUR 1 000 1 000 pcs
60 7 000 350
6 000 300
50
5 000 250
40
4 000 200
30 3 000 150
20 2 000 100
1 000 50
10
0 0
10/07
11/07
12/07
1/07
2/07
3/07
4/07
5/07
6/07
7/07
8/07
9/07
0
2003 2004 2005 2006 2007
Trading EUR 1 000 Trading 1 000 pcs
FINANCIAL STATEMENTS 2007 / GROUP 53
Series K shares can be converted to series A share under Incentive schemes
the terms described in Section 3 of the Articles of Asso- Share-based incentive plan
ciation. If a series K share is transferred to a new owner On March 22, 2006, the Board of Directors of Raute Cor-
who does not previously hold series K shares, other share- poration approved a share-based incentive plan for the
holders of the series K shares have the right to redeem strategy period 2006–2008. The potential reward from
the share under the terms described in Section 4 of the the plan will be based on the Group’s operating profit
Articles of Association. and on the Board of Directors’ assessment of the suc-
cess of the strategy. The incentive plan encompasses the
A total of 981 095 (1 088 288) shares were traded in 2007. Group’s Executive Board (5 members) and 13 other key
The total value of trading was EUR 13.7 million (MEUR employees. The rewards will be paid partly in shares and
15.4). The highest share price was EUR 15.45 (EUR 17.60) partly in cash. Decisions on the rewards will be made in
and the lowest EUR 12.40 (EUR 11.60). At the end of the 2009. The cash portion is meant for the payment of taxes
year, the share price was EUR 14.35 (EUR 12.85). The aver- and tax-related costs. The shares are subject to a two-year
age price was EUR 13.85 (EUR 14.03). The company’s mar- transfer prohibition.
ket capitalization at the end of the report period was EUR
57.5 million (MEUR 51.5), with series K shares valued at the Option scheme
closing price on December 31, 2007, of series A shares. Raute Corporation has no valid option scheme.
The number of shareholders totaled 1 144 at the beginning Insider issues
of the year, and 1 312 at the end of the financial year. Se- Raute Corporation follows the Guidelines for Insiders
ries K shares were owned by 46 (46) private individuals. The issued by the Helsinki Stock Exchange (nowadays OMX
management held 4.7 percent (4.5%) of company’s shares Nordic Exchange, Helsinki), the Central Chamber of Com-
and 9.1 percent (9.0%) of votes. Administratively regis- merce, and the Confederation of Finnish Industry and
tered shares accounted for 2.8 percent (1.3%) of shares. Employers. In addition, the company applies separate in-
sider instructions approved by the Board of Directors.
The company did not possess company shares during 2007
or hold them as security. The company’s public insiders include the Board of Direc-
tors, the Group’s President and CEO, the Executive Board,
No flagging notifications were given to the company in the Presidents of subsidiaries, and auditors.
2007.
DISTRIBUTION OF SHARES BY SHARE TYPE AT DEC. 31, 2007
Series A and K shares Number of Number of Number of
by shareholder groups shareholders % shares % voting rights %
Households 1 201 91.6 3 440 261 85.9 22 272 320 97.5
Credit and insurance institutions 3 0.2 80 665 2.0 80 665 0.4
Foreign shareholders 7 0.5 73 502 1.8 73 502 0.3
Non-profit institutions 8 0.6 25 531 0.6 25 531 0.1
Public institutions 3 0.2 62 350 1.6 62 350 0.3
Companies 86 6.6 225 157 5.6 225 157 1.0
Administrative registered 4 0.3 97 292 2.4 97 292 0.4
Total 1 312 100.0 4 004 758 100.0 22 836 817 100.0
DISTRIBUTION OF SERIES A SHARES BY SHARE TYPE AT DEC. 31, 2007
Series A shares Number of Number Number of
by shareholder groups shareholders % of shares % voting rights %
Households 1 199 91.5 2 449 100 81.3 2 449 100 81.3
Credit and insurance institutions 3 0.2 80 665 2.7 80 665 2.7
Foreign shareholders 7 0.5 73 502 2.4 73 502 2.4
Non-profit institutions 8 0.6 25 531 0.8 25 531 0.8
Public institutions 3 0.2 62 350 2.1 62 350 2.1
Companies 86 6.6 225 157 7.5 225 157 7.5
Administrative registered 4 0.3 97 292 3.2 97 292 3.2
Total 1 310 100.0 3 013 597 100.0 3 013 597 100.0
54 FINANCIAL STATEMENTS 2007 / GROUP
Series A shares Number of Number of Number of
by size of holding shareholders % shares % voting rights %
1–1 000 1 105 84.4 368 690 12.2 368 690 12.2
1 001–5 000 142 10.8 317 350 10.5 317 350 10.5
5 001–10 000 21 1.6 158 521 5.3 158 521 5.3
10 001–50 000 30 2.3 823 841 27.3 823 841 27.3
50 001–100 000 10 0.8 638 295 21.2 638 295 21.2
100 001– 2 0.2 706 900 23.5 706 900 23.5
Total 1 310 100.0 3 013 597 100.0 3 013 597 100.0
DISTRIBUTION OF SERIES K SHARES BY SHARE TYPE AT DEC. 31, 2007
Series K shares Number of Number of Number of
by shareholder groups shareholders % shares % voting rights %
Households 46 100.0 991 161 100.0 19 823 220 100.0
Total 46 100.0 991 161 100.0 19 823 220 100.0
Series K shares Number of Number of Number of
by size of holding shareholders % shares % voting rights %
1–1 000 2 4.3 580 0.1 11 600 0.1
1 001–5 000 2 4.3 7 429 0.8 148 580 0.8
5 001–10 000 14 30.4 92 653 9.3 1 853 060 9.3
10 001–50 000 24 52.2 668 619 67.5 13 372 380 67.5
50 001–100 000 4 8.7 221 880 22.4 4 437 600 22.4
Total 46 100.0 991 161 100.0 19 823 220 100.0
20 LARGEST SHAREHOLDERS AT DEC. 31, 2007
Number of Number of Total Total % of
series K series A number of % of total number voting
By number of shares shares shares shares shares of votes rights
1 Sundholm, Göran 525 000 525 000 13.1 525 000 2.3
2 Hietala, Pekka Tapani 181 900 181 900 4.5 181 900 0.8
3 Suominen, Jussi Matias 48 000 74 759 122 759 3.1 1 034 759 4.5
4 Suominen, Tiina Sini-Maria 48 000 73 759 121 759 3.0 1 033 759 4.5
5 Mustakallio, Kari Pauli 60 480 60 009 120 489 3.0 1 269 609 5.6
6 Kirmo, Kaisa Marketta 50 280 64 052 114 332 2.9 1 069 652 4.7
7 Suominen, Pekka Matias 48 000 64 159 112 159 2.8 1 024 159 4.5
8 Siivonen, Osku Pekka 50 640 53 539 104 179 2.6 1 066 339 4.7
9 Keskiaho, Kaija Leena 33 600 51 116 84 716 2.1 723 116 3.2
10 Särkijärvi, Riitta 60 480 22 009 82 489 2.1 1 231 609 5.4
11 Mustakallio, Mika 39 750 42 670 82 420 2.1 837 670 3.7
12 Mustakallio, Risto 42 240 35 862 78 102 2.0 880 662 3.9
13 Mustakallio, Ulla Sinikka 47 240 30 862 78 102 2.0 975 662 4.3
14 Sr Arvo Finland Value 63 042 63 042 1.6 63 042 0.3
15 Mustakallio, Marja Helena 42 240 20 662 62 902 1.6 865 462 3.8
16 Mustakallio, Kai Henrik 47 240 12 000 59 240 1.5 956 800 4.2
17 Kirmo, Lasse Antti 30 000 26 200 56 200 1.4 626 200 2.7
18 Särkijärvi, Timo Juha 12 000 43 256 55 256 1.4 283 256 1.2
19 Särkijärvi-Martinez, Anu Riitta 12 000 43 256 55 256 1.4 283 256 1.2
20 Suominen, Jukka Matias 24 960 27 964 52 924 1.3 527 164 2.3
Total 697 150 1 516 076 2 213 226 55.3 15 459 076 67.7
FINANCIAL STATEMENTS 2007 / GROUP 55
20 LARGEST SHAREHOLDERS AT DEC. 31, 2007
Number of Number of Total Total % of
series K series A number of % of total number voting
By number of votes shares shares shares shares of votes rights
1 Mustakallio, Kari Pauli 60 480 60 009 120 489 3.0 1 269 609 5.6
2 Särkijärvi, Riitta 60 480 22 009 82 489 2.1 1 231 609 5.4
3 Kirmo, Kaisa Marketta 50 280 64 052 114 332 2.9 1 069 652 4.7
4 Siivonen, Osku Pekka 50 640 53 539 104 179 2.6 1 066 339 4.7
5 Suominen, Jussi Matias 48 000 74 759 122 759 3.1 1 034 759 4.5
6 Suominen, Tiina Sini-Maria 48 000 73 759 121 759 3.0 1 033 759 4.5
7 Suominen, Pekka Matias 48 000 64 159 112 159 2.8 1 024 159 4.5
8 Mustakallio, Ulla Sinikka 47 240 30 862 78 102 2.0 975 662 4.3
9 Mustakallio, Kai Henrik 47 240 12 000 59 240 1.5 956 800 4.2
10 Mustakallio, Risto 42 240 35 862 78 102 2.0 880 662 3.9
11 Mustakallio, Marja Helena 42 240 20 662 62 902 1.6 865 462 3.8
12 Mustakallio, Mika 39 750 42 670 82 420 2.1 837 670 3.7
13 Keskiaho, Kaija Leena 33 600 51 116 84 716 2.1 723 116 3.2
14 Kirmo, Lasse Antti 30 000 26 200 56 200 1.4 626 200 2.7
15 Suominen, Jukka Matias 24 960 27 964 52 924 1.3 527 164 2.3
16 Sundholm, Göran 525 000 525 000 13.1 525 000 2.3
17 Särkijärvi, Timo Juha 12 000 43 256 55 256 1.4 283 256 1.2
18 Särkijärvi-Martinez, Anu Riitta 12 000 43 256 55 256 1.4 283 256 1.2
19 Hietala, Pekka Tapani 181 900 181 900 4.5 181 900 0.8
20 Sr Arvo Finland Value 63 042 63 042 1.6 63 042 0.3
Total 697 150 1 516 076 2 213 226 55.3 15 459 076 67.7
The number of administratively registered shares at December 31, 2007 was 93 025 (52 440).
Management interest at Dec. 31, 2007
The company’s Board of Directors, President and CEO, and Presidents of the subsidiaries owned a total of 89 788
series A shares and 98 990 series K shares. Management’s ownership corresponds to 4.7 percent of the shares in the
company and 9.1 percent of associated total voting rights. The figures include the holdings of their own, minor chil-
dren and control entities.
Public insider ownership at Dec. 31, 2007
Public insiders owned a total of 89 788 series A shares and 98 990 series K shares. Public insiders’ ownership corre-
sponds to 4.7 percent of the shares in the company and 9.1 percent of associated total voting rights. The figures in-
clude the holdings of their own, minor children and control entities.
Performance of series A shares, EUR
EUR
Raute OMX Helsinki OMX Helsinki OMX Helsinki Benchmark
Industrials Index Index CAP Index
56 FINANCIAL STATEMENTS 2007 / GROUP
The Board of Directors’ proposal
for distribution of profits, signatures
for the Board of Directors’ report
and financial statements
The Parent company’s distributable equity totals EUR 18 232 thousand, of which the profit for the financial year is
EUR 7 385 thousand, and the balance sheet amounts to EUR 53 383 thousand.
The Board of Directors proposes to the Annual General Meeting that the distributable funds be used in the
following way:
- EUR 1.00 per share distributed as dividend, i.e., a total of EUR 4 005 thousand
- Retained in equity EUR 14 227 thousand
EUR 18 232 thousand
No significant changes have taken place in the company’s financial position after the end of the report period.
The company has good liquidity, and the proposed profit distribution does not put liquidity at risk.
Nastola, February 12, 2008
Jarmo Rytilahti
Chairman of Board of Directors
Mika Mustakallio Panu Mustakallio
Sinikka Mustakallio Pekka Paasikivi Jorma Wiitakorpi
Tapani Kiiski
President and CEO
FINANCIAL STATEMENTS 2007 / GROUP 57
Auditors’ report
To the shareholders of Raute Corporation
We have audited the accounting records, the report of the Board of Directors, the financial statements and the ad-
ministration of Raute Corporation for the period Jan. 1–Dec. 31, 2007. The Board of Directors and the President and
CEO have prepared the consolidated financial statements, prepared in accordance with International Financial Re-
porting Standards as adopted by the EU, as well as the report of the Board of Directors and the Parent company’s
financial statements, prepared in accordance with prevailing regulations in Finland, containing the Parent company’s
balance sheet, income statement, cash flow statement and notes to the financial statements. Based on our audit,
we express an opinion on the consolidated financial statements, as well as on the report of the Board of Directors,
the Parent company’s financial statements and the administration.
We conducted our audit in accordance with Finnish Standards on Auditing. Those standards require that we per-
form the audit to obtain reasonable assurance about whether the report of the Board of Directors and the financial
statements are free of material misstatement. An audit includes examining on a test basis evidence supporting the
amounts and disclosures in the report of the Board of Directors and in the financial statements, assessing the ac-
counting principles used and significant estimates made by the management, as well as evaluating the overall finan-
cial statement presentation. The purpose of our audit of the administration is to examine whether the members of
the Board of Directors and the President and CEO of the Parent company have complied with the rules of the Compa-
nies’ Act.
Consolidated financial statements
In our opinion the consolidated financial statements, prepared in accordance with International Financial Reporting
Standards as adopted by the EU, give a true and fair view, as defined in those standards and in the Finnish Accounting
Act, of the consolidated results of operations as well as of the financial position.
Parent company’s financial statements, report of the Board of Directors and administration
In our opinion the Parent company’s financial statements have been prepared in accordance with the Finnish Ac-
counting Act and other applicable Finnish rules and regulations. The Parent company’s financial statements give
a true and fair view of the Parent company’s result of operations and of the financial position.
In our opinion the report of the Board of Directors has been prepared in accordance with the Finnish Accounting Act
and other applicable Finnish rules and regulations. The report of the Board of Directors is consistent with the consoli-
dated financial statements and the Parent company’s financial statements and gives a true and fair view, as defined
in the Finnish Accounting Act, of the result of operations and of the financial position.
The consolidated financial statements and the Parent company’s financial statements can be adopted and the mem-
bers of the Board of Directors and the President and CEO of the Parent company can be discharged from liability for
the period audited by us. The proposal by the Board of Directors regarding the disposal of distributable funds is in
compliance with the Companies’ Act.
Nastola, February 12, 2008
Anna-Maija Simola Antti Unkuri
APA APA
58 FINANCIAL STATEMENTS 2007 / GROUP
DEVELOPMENT OF QUARTERLY RESULTS
Total Q4 Q3 Q2 Q1
EUR 1 000 2007 2007 2007 2007 2007
NET SALES 110 799 25 683 26 466 29 769 28 882
Other operating income 461 386 17 19 38
Increase (+) or decrease (-) in inventories of
goods and work in progress 42 -252 103 -54 246
Materials and services 60 999 11 910 14 653 17 439 16 997
Expenses from employee benefits 28 875 8 103 6 397 7 369 7 007
Depreciation, amortization and impairment charges 2 654 654 684 663 653
Other operating expenses 10 166 2 709 2 412 2 427 2 618
Total operating expenses 102 695 23 376 24 146 27 898 27 276
OPERATING PROFIT 8 607 2 441 2 440 1 836 1 891
% of net sales 8 10 9 6 7
Financial income 660 159 -1 191 312
Financial expenses -291 -129 -57 -53 -51
PROFIT BEFORE TAX 8 976 2 470 2 382 1 973 2 151
% of net sales 9 10 9 7 7
Income taxes -2 375 -844 -536 -478 -517
PROFIT FOR THE PERIOD 6 601 1 626 1 845 1 495 1 634
% of net sales 7 6 7 5 6
Attributable to
Equity holders of the Parent company 6 601 1 626 1 845 1 495 1 634
Earnings per share, EUR
- Undiluted earnings per share 0.46 0.41 0.46 0.37 0.41
- Diluted earnings per share 0.46 0.41 0.46 0.37 0.41
Shares, 1 000 pcs
Adjusted average number of shares 4 005 4 005 4 005 4 005 4 005
Adjusted average number of shares diluted 4 005 4 005 4 005 4 005 4 005
FINANCIAL STATEMENTS 2007 / GROUP 59
Addresses
Raute Corporation Raute Group Asia Pte Ltd.
Head office and main production plant 35 Jalan Pemimpin # 06–02
Rautetie 2 Wedge Mount Industrial Building
P.O. Box 69 Singapore 577 176
FI-15551 Nastola Tel. +65 625 043 22
Finland Fax +65 625 053 22
Tel. +358 3 82911
Fax +358 3 829 3200 Raute Wood Indonesia Representative Office
www.raute.com Jl. Kelapa Tiga / Joe No. 75
Jagakarsa, Jakarta 12620
Raute Corporation Indonesia
Jyväskylä plant Tel. +62 21 7888 6461
Hakkutie 3 Fax +62 21 7888 9867
FI-40320 Jyväskylä
Finland Raute (Shanghai) Machinery Co., Ltd
Tel. +358 3 14 445 4400
Fax +358 3 14 445 4429 18 Building, No. 399, Yuan Zhong Road
Nan Hui District, Shanghai City, China
RWS-Engineering Oy P.C. 201300
Tuhkamäentie 2 Tel. +86 021 5818 6330
FI-15540 Villähde Fax +86 021 5818 6322
Finland
Tel. +358 3 829 61 Raute (Shanghai) Trading Co., Ltd
Fax +358 3 762 2378
17 Building, No. 399, Yuan Zhong Road
Mecano Group Oy Nan Hui District, Shanghai City, China
Syväojankatu 8 P.C. 201300
FI-87700 Kajaani Tel. +86 021 5818 6330
Finland Fax +86 021 5818 6322
Tel. +358 8 877 6700
Fax +358 8 612 1982 Raute Wood Moscow
www.mecanogroup.com Arkhangelski per., 1
101934 Moscow
Raute Canada Ltd. Russia
5 Capilano Way Tel. +7 495 628 3482
New Westminster, B.C. Fax +7 495 628 3482
Canada V3L 5G3
Tel. +1 604 524 6611 Raute Service LLC
Fax: +1 604 521 4035 V.O. Srednii prospect, 48
199178 St. Petersburg
Raute US, Inc. Russia
50 Commercial Loop Way Tel. +7 812 740 5386 (87)
Suite A, Rossville, TN Fax +7 812 740 5387
USA 38066
Tel. +1 901 853 7290
Fax +1 901 853 4765
Raute Chile Ltda.
Hernando de Aguirre 162 Of. 704
Providencia
Santiago
Chile
Tel. +56 2 233 4812
Fax +56 2 233 4748
