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FINANCIALSTATEMENTSANDANNUALREPORT201728AnnualReportConsolidatedFinancialStatements,IFRS38ConsolidatedStatementofComprehensiveIncome39ConsolidatedBalanceSheet40ConsolidatedCashFlowStatement41ConsolidatedStatementofChangesinEquity42NotestotheConsolidatedFinancialStatements78KeyFigures79CalculationPrinciplesofKeyFiguresParentCompany'sFinancialStatements,FAS80ParentCompany'sIncomeStatement81ParentCompany'sBalanceSheet82ParentCompany'sCashFlowStatement83NotestotheParentCompany'sFinancialStatements90SharesandShareholders92DividendProposaloftheBoard93Auditor'sReport97InformationforInvestors2727Aspoisaconglomeratethatownsanddevelopsbusinessoperationsinnorth-ernEuropeandgrowthmarkets,focusingondemandingB-to-Bcustomers.
Aspo'sstrongcorporatebrands–ESLShipping,Leipurin,TelkoandKauko–aimtobemar-ketleadersintheirsectors.
Subsidiariesareresponsiblefortheirownoperationsandcustomerrelationships,andthedevel-opmentofthese.
Togethertheygener-ateAspo'sgoodwill.
Aspo'sGroupstruc-tureandbusinessoperationsarecontin-uallydevelopedwithoutanypredefinedschedule.
Aspo'soperatingsegmentsare:ESLShipping,Leipurin,Telko,andKauko.
OtheroperationsincludeAspoGroup'sadministration,thefinancialandICTser-vicecenter,andasmallnumberofotheroperationsnotcoveredbybusinessunits.
MARKETOVERVIEWThegeneralmarketuncertaintydecreasedbothinthewesternandeasternmar-ketsduring2017.
Industrialproduc-tionincreasedinthemainmarketareasofAspo'sbusinessoperations.
TherawmaterialpricesimportantforAsporemainedunchangedorincreased.
TheRussiannationaleconomy,importantforAspo'sbusinesses,startedgrowingandtheexchangeratefluctuationsdecreased.
Globalpricesofdrybulkcargo,whichareespeciallyimportantfortheshippingcom-pany,increased,butarestillatalowlevel.
Theglobaleconomyisexpectedtocon-tinueitsgrowth.
However,generalpoliti-calriskshaveincreased,whichmayhavearapidimpactontheoperatingenviron-mentorreducefreetradeinthelongerterm.
NETSALESAspoGroup'snetsalesincreasedfromthepreviousyear,beingEUR502.
4mil-lion(457.
4).
Netsalesgrewinallsegmentsandallmarketareas.
Inrelativeterms,netsalesgrewthemostintheBalticregion.
InthemarketareaofRussia,UkraineandotherCIScountries,netsalesgrewthroughouttheyear,eventhoughgrowthsloweddowntowardstheendoftheyear.
FINANCIALPERFORMANCEAspoGroup'soperatingprofitamountedtoEUR23.
1million(20.
4).
ESLShipping'soperatingprofitincreasedtoEUR13.
5million(12.
6).
TheoperatingprofitofLeipurinimprovedtoEUR3.
1million(2.
0)includingasalesgainofEUR0.
4millionfromthedivestmentofthemeatindus-tryrawmaterialsbusinessandcompen-sationrelatedtoLeipurin'sprojectdeliv-erycompletedin2014,includingprocess-ingfees,totalingEUR-0.
5million.
Telko'soperatingprofitincreasedtoEUR10.
8million(10.
1)includingEUR-0.
6millionincostsarisingfromthediscontinuedtermi-nalprojectinSt.
Petersburgandperson-nelarrangements.
TheoperatingresultofKaukoamountedtoEUR-0.
2million(-0.
1).
AEUR0.
3millionimpairmentlossofcommissionreceivablesrelatedtopreviouslydivestedbusinessoperationsreducedtheoperatingresult.
Theoperat-ingresultofotheroperationsincreasedslightlyandwasnegativeatEUR-4.
1mil-lion(-4.
2).
EarningspersharewereEUR0.
56(0.
49)forthefinancialyear.
EquitypersharewasEUR3.
67(3.
75).
MoreinformationabouttheGroup'skeyfiguresandtheircalculationprinciplesareavailablefromthetableofkeyfiguresintheconsolidatedfinancialstatements.
FINANCIALTARGETSAspo'sobjectiveistoreachanaveragereturnonequityofover20%,gearingofupto100%andanoperatingprofitof7%withthecurrentstructureby2020.
Theoperatingprofitrateforthefinan-cialyearwas4.
6%(4.
5),returnonequitywas17.
1%(14.
6),andgearingwas103.
9%(89.
8).
ASPO'SBUSINESSOPERATIONSESLShippingESLShippingistheleadingdrybulkcargocompanyintheBalticSearegion.
Attheendofthefinancialyear,thecompany'sfleetconsistedof18units,ofwhichthecompanyowned13.
Onevesselwasoperatedunderalong-termleaseagree-mentandfoursmallervesselunitsweretime-chartered.
ESLShipping'sservicerangeisbasedonthecompany'sabilitytooperateeffectivelyandreliablyiniceregionsandtoloadandunloadshipsatsea.
TransportationoperationsintheBalticSeaandtheNorthSeaarebasedonlong-termcustomeragreementsandestab-lishedcustomerrelationships.
Thegeneralmarketpricesofdrybulkcargocontinuedtoincreasein2017butturnedtoadecreasetowardstheendoftheyear,endingupclosetothelevelattheendofpreviousyear.
Cargopricelev-elsarestillfairlylowwhenexaminedinthelongterm.
In2017,ESLShippingimproveditsprofitability,anditsoperatingprofitstoodatEUR13.
5(12.
6)million.
Itsnetsalesgrewby11%toEUR79.
3(71.
4)million.
In2017,thecargovolumecarriedbyESLShippingamountedto11.
4(10.
7)milliontons.
TheincreaseinthecargovolumewaslargelyattributabletothedistancestraveledbySupramaxvesselsbeingshorterthaninthepreviousyear.
Asaresultoftheagreementsituationbeingbetterthaninthecomparativeperiod,theSupramaxvesselsproducedprofit.
Aspartofitsgrowthstrategy,theshippingcompanylaunchednewopera-tionsduringautumnintheBalticSeaandtheNorthSearegardingasmallervesselclass.
Theseoperationssupporttheflexi-bleserviceofferedtoexistingcustomers,regardlessofthetransportationbatchsize,andenabletheshippingcompanytoexpanditsportfoliotonewcustom-ersandmaterialflows.
Whenexpanded,theoperatingmodelwilltieuplesscapi-talandincreasetheoperatingprofit,whileitmaydecreasetheoperatingprofitrate.
Theoperationshavebeenprofitableanddevelopedinaccordancewiththeinter-nalgoalsset.
Theshippingcompany'sprojecttobuildtheworld'sfirsttwoLNG-fueleddrycargovesselshasproceededasplanned,anditscooperationwithSinotrans&CSCJinlingshipyardhasbeenproductive.
Thenewvesselswillstartoperationsduringthefirsthalfof2018.
Theuniqueautonomousloadhandlingsolutionofthevesselswillimprovesafetyandefficiencyatports.
ThebuildingprojectispartoftheBothniaBulkprojectfundedpartlybytheEU.
TheEUsupportsenergy-efficiencyandenvi-ronmentalinvestmentsinships.
DuringANNUALREPORT201728AnnualReport2016–2019,ESLShippingwillreceiveatmostEUR5.
9millioninsubsidies.
Inaddi-tiontoESLShipping,theBothniaBulkprojectinvolvesSSABEuropeOy,LuleHamnAB,OxelsundHamnAB,RaahenSatamaOyandRaahenVoimaOy.
TheEUfundinghasbeenawardedfromtheConnectingEuropeFacilityTransportinstrument.
TheshippingcompanynegotiatedthemanningofitsnewvesselsandtheopportunitytohavethevesselsundertheFinnishflagwithshippingtradeunions.
ThepartiesreachedanagreementthatenablesatleastthefirstvesseltoberegisteredinFinland.
Inordertosecurecompetitivenessinthelongtermandtheavailabilityofacompetentcrew,thecom-panyalsoagreedtoexpandthemixedcrewsofitscurrentvesselsthroughnat-uralemployeeturnoverandthenewjobopportunitiesofferedbythenewvessels.
In2017,twovesselsturnedtomixedcrewsinaccordancewiththeagreement.
Duringthefinancialperiod,fourvesselsweredockedasplanned.
Onevesselwastakenoutofservicefor12daysofmain-tenanceduetoextensivecranedamage.
Maintenancecostsandthedeductibleoftheinsuranceindemnityfortherepairshavebeenrecognizedasexpensesforthefinancialperiod.
LeipurinLeipurinisauniqueproviderofsolutionsforbakeryandconfectioneryproducts,thefoodindustryandtheoutofhome(OOH)market.
ThesolutionsofferedbyLeipurinrange,forexample,fromprod-uctdevelopment,recipes,rawmaterials,trainingandequipmentallthewaytothedesignofsalesoutlets.
Aspartofitsfull-rangeservices,Leipurindesigns,deliversandmaintainsproductionlinesforthebakingindustry,bakingunitsandothermachineryandequipmentrequiredinthefoodindustry.
Leipurinusesleadinginter-nationalmanufacturersasitsrawmaterialandmachinerysupplypartners.
LeipurinoperatesinFinland,Russia,theBalticcountries,Poland,Ukraine,KazakhstanandBelarus.
In2017,theeconomyandthecon-sumerpurchasingpowerdevelopedpositivelyinFinlandandinthewesternNETSALESBYSEGMENT2017MEUR2016MEURChangeMEURChange%ESLShipping79.
371.
47.
911.
1Leipurin122.
3112.
79.
68.
5Telko262.
2240.
321.
99.
1Kauko38.
633.
05.
617.
0Otheroperations0.
00.
00.
0Total502.
4457.
445.
09.
8OPERATINGPROFITBYSEGMENT2017MEUR2016MEURChangeMEURChange%ESLShipping13.
512.
60.
97.
1Leipurin3.
12.
01.
155.
0Telko10.
810.
10.
76.
9Kauko-0.
2-0.
1-0.
1-100.
0Otheroperations-4.
1-4.
20.
12.
4Total23.
120.
42.
713.
2NETSALESBYMARKETAREA2017MEUR2016MEURChangeMEURChange%Finland160.
8149.
411.
47.
6Scandinavia50.
647.
53.
16.
5Balticcountries58.
850.
48.
416.
7Russia,Ukraine+otherCIScountries164.
9145.
619.
313.
3Othercountries67.
364.
52.
84.
3Total502.
4457.
445.
09.
82017MEUR2016MEURChangeMEURESLShipping16.
85.
011.
8Leipurin0.
50.
30.
2Telko0.
51.
4-0.
9Kauko0.
10.
00.
1Otheroperations0.
10.
2-0.
1Total18.
06.
911.
1INVESTMENTSBYSEGMENTEXCLUDINGBUSINESSACQUISITIONS29AnnualReport1201008060402001314151617GEARING%98.
2101.
0101.
489.
8103.
9Target202025201510501314151617RETURNONEQUITY%8.
917.
819.
114.
617.
1Target20208765432101314151617OPERATINGPROFIT%2.
34.
84.
64.
54.
6Target2020markets.
Intheeasternmarkets,theeconomiesandthepurchasingpowerofconsumersstartedtoincrease.
Thecon-sumerpricesoffoodproductsincreasedslightlyinFinlandandtheeasternmar-kets.
InRussia,therateofinflationwaslow,andthepurchasingpowerofcon-sumersandretailvolumesweregrowing.
ThepricesofrawmaterialsimportanttoLeipurinshowedvariationfromonerawmaterialgrouptoanother.
Allinall,priceswereatthelevelofthepreviousyear.
Thesnackproductmarketisgrowinginallmarketareas.
ThenetsalesofLeipurinamountedtoEUR122.
3(112.
7)million.
Theoper-atingprofitwasEUR3.
1(2.
0)million,includingasalesgainofEUR0.
4millionfromthedivestmentofthemeatindus-tryrawmaterialsbusinessandcompen-sationrelatedtoLeipurin'sprojectdeliv-erycompletedin2014,includingprocess-ingfees,totalingEUR-0.
5million.
NetsalesinRussia,UkraineandotherCIScountriesamountedtoEUR35.
0(30.
6)million.
Profitabilityinthismarketareaimprovedto8%(7).
Thenetsalesofrawmaterialopera-tionsincreasedby3.
4%fromthepreviousyear.
AchangehastakenplaceinRussia,asaresultofwhichbakeriesarenolon-gerresponsibleforretailbreadwastage;instead,anyunsoldbreadiscoveredbytheretailindustry.
Thischangehassig-nificantlyreducedthemanufactureofpackedbread.
Investmentsinexpand-ingtotheOOHmarketdeceleratedthedevelopmentoftheoperatingprofitofrawmaterialoperations,inparticular.
TosupportOOHoperations,Leipurinoper-atesG'latoFrescogelateriainHelsinkiandtwocafésrelatedtotestbakeryopera-tionsinEspoo.
Thesethreeunitsactasconceptualmodelsfortheentireoperat-ingareaofLeipurin.
Aturnforthebetterwasseeninmachineryoperations'result.
TheRussianeconomiccrisisattheendof2014cutoffmachinerysalestoRussia.
LeipurinturnedtonewmarketareasinEuropeandout-sideEurope.
Atthebeginningof2017,theorderbookforLeipurin'sownpro-ductionreachedarecordlevel,andthemachinerybusinesshasstabilizedtheprofitabilitylevelofitsoperations.
Thenumberofdeliveriesincreasedattheendoftheyear.
Attheendofthefinancialyear,theorderbookwasatagoodlevel,coveringthefirsthalfof2018.
In2017,LeipurindivesteditsmeatindustryrawmaterialsbusinesstoMPMaustepalvelutOy.
TheyearlyeffectofthedivestmentinLeipurin'snetsalesisapproximatelyEUR4million.
AEUR0.
4millionsalesgainwasrecognizedfromthedivestment.
TelkoTelkoisaleadingexpertandsupplierofplasticrawmaterialsandindustrialchem-icals.
Businessisbasedonrepresenta-tionofthebestinternationalprincipalsandontheexpertiseofthepersonnel.
TelkohassubsidiariesinFinland,theBalticcountries,Scandinavia,Poland,Russia,Belarus,Ukraine,Kazakhstan,Azerbaijan,ChinaandIran.
ThegeneraldevelopmentinthemarketenvironmenthascontinuedtobepositiveinTelko'soperatingcountries.
ParticularlyinRussia,economyandindustrialinvest-mentshaveturnedtoanincrease.
Industrialproductionisgrowinginthewesternmarkets.
Comparedwiththepre-viousyear,thepricelevelofhigh-volumeplasticsremainedunchanged,butthepricesoftechnicalplasticswerehigher.
Thepricelevelofindustrialchemicalswasstable,slightlyhigherthaninthecompar-isonperiod.
In2017,Telko'snetsalesreachedanewrecord,beingEUR262.
2(240.
3)mil-lion.
Thenetsalesincreasedrapidlyduringthefirsthalfoftheyearandevenedouttowardstheendoftheyear.
Duringthesecondhalf,theincreaseinnetsaleswaslimitedbymeasurestakentoimproveprofitability.
OperatingprofitimprovedtoEUR10.
8(10.
1)million.
Theoperatingprofitfor2017includesEUR0.
6millionincostsarisingfromthediscontinuedtermi-nalprojectinSt.
Petersburgandperson-nelarrangements.
In2017,netsalesintheeasternmar-ketsgrewby11%toEUR123.
6(110.
8)million.
InRussia,netsalesincreasedby14%,inUkraineby3%andinthewesternmarketsby8%.
Intheeasternmarkets,operatingprofitratewaslessthan5%.
Salesvolumesintheeasternmarketsincreasedbutthegrowthwassloweddowntowardstheendoftheyearduetomeasurestakenasaresultofacustomeranalysisconductedinsummer2017.
Low-marginproductswererepricedandpartofthecustomervolumewasdiscontin-ued,whichsloweddownthegrowth.
30AnnualReportInaddition,otheractivitiescarriedoutin2017toimproveprofitabilitywerecompletedbytheendoftheyear.
ThelogisticsterminalprojectplannedinSt.
Petersburgwasdiscontinued,andlogis-ticsfunctionshavebeenorganizedusingexternalpartners.
KaukoKaukoisaspecialistindemandingmobileknowledgeworkenvironments.
Itsup-pliesthebesttools,solutionsforimprov-ingproductivityandservicesforsecur-ingeffectiveusefortheneedsofindus-tries,logistics,healthcaresectorandtheauthorities.
Kaukosolutionscombinecustomizedapplications,devicesandservices.
Itsproductrangealsoincludesproductsthatimproveenergyefficiency.
Kauko'skeymarketareaisFinland.
TherecoveredeconomicsituationinFinlandwasreflectedinanincreaseinthenumberofsmallerdeliveries.
Inaddition,Finland's100thcentenaryandinvestmentsinvisualandlightingsystemsacceleratedthesaleofAVproducts.
Themigrationfromfossiltorenewableformsofenergysharplyincreasedthesalesoftheenergysector.
In2017,Kauko'snetsalesgrewby17%toEUR38.
6(33.
0)million.
Itsoperat-ingresultstoodatEUR-0.
2(-0.
1)million.
AEUR0.
3millionimpairmentlossofcom-missionreceivablesrelatedtopreviouslydivestedbusinessoperationsreducedtheoperatingresult.
Thenetsalesofener-gy-efficiencyequipmentincreasedby26%fromthecomparativeperiodtoEUR14.
5(11.
5)million,withgrowthcomingespe-ciallyfromsolarpowersystems.
ThenetsalesofprojectoperationsinChinastoodatEUR6.
5(3.
3)millionandthenetsalesofmobileknowledgeworkwereEUR17.
6(18.
1)million.
Inlinewithitsstrategy,Kaukocontin-uedrecruitingkeypersonnelandexpand-ingtherangeofservicesprovidedbythecompany.
Kaukoisinvestingresourcesinthedevelopmentandsalesofsolutionsformobileknowledgework.
Duringtheyear,twocertifiedcomputersdesignedbyKaukoandbuiltinGermanywerelaunchedforthehealthcaresector.
Thesecomput-ersmeettheproductsafetyrequirementssetfortheEUarea.
Thefirstagreementsofsolutionoper-ationswereconcludedin2017.
Thesalesofinformationtechnologyequipmentandspecialcomputersandtabletsfordemandingenvironmentswasatagoodlevel.
Thesalesofsolarpowerenergysystemscontinueditssignificantgrowthduringtheyear.
In2017,thedecisionwastakentodis-continuetheactivitiesinChina.
In2017,Kaukotooklegalactionincivilcourtagainsttwoformeremployeesduetobreachesofthenon-competeclauses.
Afterthefinancialyear,ManagingDirectorSamiKoskelaresignedfromthecompanyandArtoMeitsalo,CFOofAspoPlc,wasappointedactingManagingDirector.
OtheroperationsOtheroperationsincludeAspoGroup'sadministration,thefinancialandICTser-vicecenter,andasmallnumberofotherfunctionsnotcoveredbybusinessunits.
Theoperatingresultofotheropera-tionswasEUR-4.
1(-4.
2)million.
Aspo'sadministrativecostshavestabilizedatthelevelrealizedin2017.
CHANGESINGROUPSTRUCTUREAsplanned,TelkohasstartedoperationsintheMiddleEastandfoundedasubsid-iaryTelkoMiddleEastCoinIran.
TelkoaimstoacquirerawmaterialsandstarttosellspecialtechnicalproductsinIran.
FINANCINGTheGroup'scashandcashequivalentsstoodatEUR19.
9(22.
6)million.
Thecon-solidatedbalancesheetincludedatotalofEUR136.
6(125.
4)millionininterest-bear-ingliabilities.
Theaverageinterestrateofinterest-bearingliabilitieswas1.
8%(1.
8)attheendofthefinancialperiod.
Non-interest-bearingliabilitiestotaledEUR72.
2(69.
8)million.
AspoGroup'sgearingwas103.
9%(89.
8)anditsequityratiowas35.
6%(37.
4).
TheGroup'snetcashfromoperatingactivitiesamountedtoEUR17.
4(16.
2)millioninJanuary–December.
Duringthefinancialperiod,thechangeinnetwork-ingcapitalwasEUR-12.
6(-10.
6)million.
WorkingcapitalwasparticularlytiedintheincreaseinaccountsreceivableofESLShippingandTelkoandtheinventoriesofKauko.
NetcashfrominvestingactivitiestotaledEUR-16.
6(-6.
1)million.
Thenetcashfrominvestingactivitiesmainlycon-sistedofadvancepaymentsforvesselsunderconstruction.
TheGroup'sfreecashflowwasEUR0.
8(10.
1)million.
InNovember,AspoPlcsignedaEUR20millionrevolvingcreditfacilityagree-ment.
Theagreementhasamaturityoftwoyears,anditincludesanoptionofoneyear.
Thisnewagreementreplacedanexpiringrevolvingcreditfacilityagree-mentbythesameamount.
TheamountofcommittedrevolvingcreditfacilitiessignedbetweenAspoanditsmainfinancingbankswasEUR40mil-lionattheendofthefinancialperiod.
Therevolvingcreditfacilitiesremainedfullyunusedattheendofthefinancialperiod.
EUR4millionofAspo'sEUR80millioncommercialpaperprogramwereinuse.
In2018,atotalofapproximatelyEUR16millioninfinancingagreementswillfalldue.
OnMay27,2016,AspoissuedahybridbondofEUR25million.
Thefixedcouponrateofthebondis6.
75%perannum.
Thebondhasnospecifiedmaturitydate,butthecompanymayexerciseanearlyredemptionoptionafterfouryearsofitsissuancedate.
Aspohashedgeditsinterestrateriskbymeansofinterestrateswaps.
TheirfairvalueonDecember31,2017wasEUR-0.
4(-0.
6)million.
AspoGrouphashedgeditscurren-cy-denominatedcashflowsassociatedwiththeacquisitionofnewvesselsusingcurrencyforwardagreements,towhichhedgeaccountingisapplied.
Thenominalvalueofthesecurrencyforwardagree-mentswasEUR27.
0million,andtheirfairvaluewasEUR-1.
7(1.
7)milliononDecember31,2017.
INVESTMENTSIn2017,theGroup'sinvestmentsstoodatEUR18.
0(6.
9)million,consistingmainlyofthedockingandmaintenanceinvestmentsofESLShipping'svesselsandadvancepay-mentsfortheLNG-fueleddrycargoves-selsorderedbytheshippingcompany.
TheEUsupportsenergy-efficiencyandenviron-mentalinvestmentsinships.
During2016–2019,ESLShippingwillreceiveatmostEUR5.
9millioninsubsidies,ofwhichitreceivedEUR2.
1millionin2016.
PERSONNELAttheendoftheyear,AspoGrouphad909employees(895).
OfAspoGroup'spersonnel,50%(46)workinFinland,35%(38)inRussia,UkraineandotherCIScountries,8%(8)inBalticcountries,2%(2)inScandinavia,and5%31AnnualReport(6)inothercountries.
Menmakeup57%(58)andwomen43%(42)ofthepersonnel.
OfAspoGroup'semploymentcontracts,97%(97)arefull-time.
Duringthefinancialyear,107(124)newemploymentcontractsweresigned.
Thecostofallemployeeben-efitswithintheGroupin2017amountedtoEUR41.
6million(40.
0).
RemunerationAspoGroupappliesaprofitbonusplan,whichwasadoptedin2013.
TheprofitbonusplanappliedtoFinnishpersonnelislinkedwiththepersonnelfundsothatthebonuscanbeinvestedinthepersonnelfundorwithdrawnincash.
Thelong-termgoalofthefundingsystemisthatthepersonnelwillbecomeasignificantshare-holdergroupinthecompany.
AllpersonsworkingatAspoGroup'sFinnishcompa-niesaremembersofthepersonnelfund.
In2015,theBoardofDirectorsofAspoPlcapprovedashare-basedincen-tiveplanforabout30persons.
Theplanincludedthreeearningsperiods,thecal-endaryears2015,2016and2017.
TheBoardofDirectorsdecidedontheplan'sperformancecriteriaandrequiredper-formancelevelsforeachcriterionatthebeginningofeachearningsperiod.
Therewardfromtheearningsperiod2015wasbasedontheGroup'searningspershare(EPS).
In2016,onthebasisofthe2015earningsperiod,employeesincludedintheplanreceived88,970trea-surysharesasashare-basedreward,aswellascashequalingthevalueoftheshares,atmost,inordertopaytaxes.
Inaccordancewiththerulesofincentiveplansatotalof5,275treasuryshares,orig-inallygrantedonthebasisofshare-basedincentiveplans,werereturnedtoAspoduetoendedcontractsofemploymentin2016.
Therewardfromthe2016earningsperiodwasbasedontheGroup'searn-ingspershare(EPS).
In2017,onthebasisofthe2016earningsperiod,employeesincludedintheplanreceived25,740trea-surysharesasashare-basedreward,aswellascashequalingthevalueoftheshares,atmost,inordertopaytaxes.
Therewardfromthe2017earningsperiodwasbasedontheGroup'searningspershare(EPS).
Onthebasisofthe2017earningsperiod,employeesincludedintheplanwillreceive70,525treasurysharesasashare-basedreward,aswellascashequalingthevalueofthesharesatmostinordertopaytaxes.
RISKSANDRISKMANAGEMENTTheglobaleconomicoutlookimprovedduringtheyear,andeconomicgrowthreducedfinancialrisksassociatedwithAspo'smarketareas.
SetbacksrelatedtofreetradeagreementsdidnothaveanynoticeableimpactonAspo'sbusinesses.
ThedecreaseineasterneconomieshasstoppedandtherecoveryoftheRussianeconomyhascontinued,whilewesterneconomiesaremakinggoodprogress.
InRussia,inflationhascontinuedtoslowdown,andconsumptiondemandandinvestmentsaregrowing.
Generalcargopricesinseatransportincreasedthrough-outthesecondhalfoftheyear.
RisksinallofAspo'sbusinesseshavedecreasedasaresultoftheimprovedmarketdevelopment.
However,anyrapidchangesininternationalpolitics,exchangeratesorcommoditiesmarketsmayhaveanimpactonthedemandandcompeti-tivenessoftheproductsofAspo'scom-panies.
Growthineasternandwesternmarketswasstilllimitedbylowdemandforinvestmentassets.
However,ithasalreadyincreased.
InvestmentshaveincreasedinRussia,eventhoughmostofthemaretargetedattheenergysec-tor.
PrivateconsumptionhasalsogoneupinRussia,whichisexpectedtoboostimports.
Astherehavebeennostructuralchangesintheeconomy,norapidgrowthisexpectedinRussia.
StrategicrisksRussianexportsandimportsofgoodsincreasedsignificantly,andeconomicsit-uationinUkrainehasimprovedclearly.
TheRussianeconomyhasalsostabilizedandinflationhasdecelerated.
Deterioratedconsumptiondemandinthelongtermhasaffectedalltrade,buttheincreaseinnominalwagesandtheimprovedcon-fidenceofconsumerstowardstheecon-omyincreasedconsumption.
NosignsofdecreasewerevisibleanymoreinthefinancingmarketorpaymentsinRussiaandUkraine.
Companiesaremorewillingtomakeinvestments,eventhoughthesaleofinvestmentassetsisstillsloweddownbycaution.
Thepromotionofdomesticproductionhasincreasedthevolumeofrawmate-rialsanditemsproducedlocallyintheRussianindustrialproduction,despitethedecreaseinquality.
Thismayreducethepositionofimportedrawmaterialsinthevaluechainandlowerthemarginlevel,butanincreaseinimportvolumesmayaddtothedemandofforeignrawmate-rialsand,correspondingly,reducerelatedrisksforAspo.
Politicalriskshaveincreasedglob-ally,whichmayhavearapidimpactonAspo'soperatingenvironmentandreducefreetradeinthelongterm.
TheeconomicandpoliticalsituationinAspo'smarketareasmayhavemadeitmoredifficulttomakestructuralchangesaspartofAspo'sstrategy.
Thesituationmaycon-tinueunchanged,but,astheeconomicandpoliticalpressurealleviates,itmaychangecompletelyandrapidly.
Economicsanctionsorotherobsta-clesarisingfromtheeconomicorpoliti-calsituationinRussiamay,inpart,reducetransportationvolumesoriginatingfromRussiaandthedemandforunloadingservicesforlargeoceanlinersatsea.
ProtectionistactionsmaydecreaseseatransportationintheRussianarcticifRussiasetstricterregulationsoninter-naltransportation,forexample,regard-ingthetransportofenergyproducts.
InFinlandandtherestofEurope,socialpressurestoreducetheuseofcoalinenergyproductionhaveincreased,whichwillreducecoaltransportationvolumesinthefuture.
Correspondingly,thetrans-portationvolumesofreplacementenergyproductswillincrease.
Duetothischange,itisdifficulttoestimatefuturetranspor-tationvolumes.
Theextendedlowlevelofinternationalfreightindicesandtheglobalincreaseinthenumberofves-sels,particularlyinlargesizecategories,haveincreaseduncertaintyoverthelong-termprofitabilityofshippingcompanies.
Nevertheless,therearesignsofareason-ableincreaseinfreightindicesandofadecreaseinthenumberofvesselsinthelongterm.
Strategicrisksmaybecausedbydete-riorationofglobaleconomics,thepoliticalatmosphere,protectionismandtheout-lookandproductionchoicesofindustrialcustomers.
Decisionsonenergyproduc-tionstructuresaffectedbyenvironmen-talpolicyandotherpoliticalchoicescausechangesinindustryandenergyproduc-tionthatmaydecreasetheuseoffos-silfuelsandincreasetheuseofalterna-tiveformsofenergy.
TheflowofgoodsintheBalticSeamaychangeasaresultofsteelproduction,coststructures,changesinthecustomerstructure,suchascentral-izationofownership,orforotherreasons.
32AnnualReportThesechangesmayhavenegativecon-sequencesonoperationsastheneedfortransportationdecreases,buttheycanalsobeseenassignificantopportunities.
Asaresultoflowcargopricesininterna-tionalshipping,competitionovercargoesmayalsobecomefiercerintheBalticSea.
Mild,ice-freewintersmayalsoincreasecompetition.
Inordertoimproveitscom-petitiveposition,ESLShippingisbuild-ingnew,low-emissionvesselswithbetterfueleconomyforthisregionandcustomerbase.
Theywillalsobeabletooperateiniceconditions.
Strategicrisksareinfluencedbylong-termchangesincargoprices,thebuild-ingofnewshipsandtheremovalofoth-ersfromthemarkets,investmenttrends,andchangesintradestructures,espe-ciallyinwesternmarkets.
Ineasternmarkets,risksareincreasedbysuchfac-torsaspoliticalinstability,socialstruc-turesortheirlackofreactiontothedif-ficultiesencounteredbybusinessoper-ations.
Theaccumulationanddischargeofinvestmentsmaycauselong-termchangesinthecompetitivesituationandcustomerbehavior.
Tradebetweeneast-ernandwesternmarketsmaysufferfromrestrictionsonfreetrade,asaresultofwhichtheremaybeadecreaseinsalesofgoodsandservices.
Rapidchangesineconomicstructuresmaycauserisksduetochangesinthecustomerorprincipalstructureortech-nologies,andduetounusedopportunitiesthatrequireaquickresponse.
Disruptivechangesmaybeveryrapid.
Aspo'sstra-tegicrisksareevenedoutbythedistri-butionofbusinessoperationsoverfoursegments,itsengagementinbusinessoperationsinabroadgeographicalarea,anditsabilitytoreactquicklytochang-ingsituations.
Inadditiontowesternmarkets,Aspooperatesinareaswhereeconomicdevel-opmentmayturnrapidlypositiveorneg-ative,whichcouldsignificantlychangetheprevailingoperatingconditions.
OperationalrisksEconomicuncertaintyinAspo'soperat-ingenvironmenthasdecreasedduringthefinancialyear.
However,operationalriskshaveremainedunchanged.
Theseincluderisksrelatedtosupplychains,goodsandservices,andpersons.
Foralongtime,thefocusofAspo'sgrowthhasbeenonemergingmarketareas,whererisksdeceleratinggrowthareaffectedbyfactorssuchasexchangeratefluctuationsandinterestrates,thelevelofandchangesintheglobalmar-ketpricesofrawmaterials,industrialandcommercialinvestments,customerliquid-ity,changesinlegislationandimportreg-ulations,andinactivity,biasorcorruptionamongpublicauthorities.
Economicgrowthand,alternatively,anydecreaseinproductionmayhaveanimpactondemandforrawmaterials.
Politicalandeconomicinstabilityisdisturbingcommer-cialactivitiesand,ifthesituationcontin-ues,thegrowthofAspo'sbusinessoper-ationsmayslowdown.
Consumerbehav-iorandconfidencearealsoreflectedinrisksassociatedwithB-to-Bcustomersandtheirrisklevels.
Thegrowthopportu-nitiespresentedbyemergingmarketsareencouraginginterestamongcompetitorsinstartingorexpandingbusinessoperationsintheseareas.
Thechallengingemerg-ingmarketsandtheescalatedsituationinUkrainehavealsocausedcompetitorstowithdrawfromthesemarkets,whichhascreatednewpotentialforAspo'sbusi-nesses,increasedtheirmarketsharesand,insomebusinessareas,evenimprovedprofitabilitytemporarily.
Hedgingagainstexchangeratechangesisnotpossibleinallconditionsand,especially,atalltimes.
Changesinexchangeratesmaylowertheresultsandequityonthebalancesheetasaresultoftranslationdifferences.
Thenagain,changesinexchangeratesmayalsostrengthentheresultandbalancesheet.
Aschangesincreditlossrisksarediver-sifiedacrossbusinessesandcustomers,201720162015Averagepersonnelduringthefinancialyear877871862Wages,salariesandshare-basedpaymentsduringthefinancialyear,MEUR34.
732.
633.
9PERSONNELAVERGAGEPERSONNELBYSEGMENTESLShipping20172016Officestaff2925Marinepersonnel201200230225LeipurinOfficestaff244256Non-officeworkers6158305314TelkoOfficestaff264256Non-officeworkers511269267KaukoOfficestaff4236Non-officeworkers664842OtheroperationsOfficestaff2523Total87787133AnnualReportAspo'sbusinesseshavenotbeensub-jectedtoanysignificantcreditlossesrelatedtotheircustomers,eventhoughcreditlossriskshaveincreased.
Principalriskshavematerializedthroughunre-ceivedcommissionreturns.
SalesmarginsmaybereducedandfinancialclaimsrelatedtodeliveriesmayemergeifAspo'sproductsarenotsuitedforthecustomers'productionprocessesordon'thavetherighttechnicalprop-erties.
Operativeriskshavealsobeenincreasedbycomputer-relatedcrime,mal-wareandtheincreasednumberoffraudattempts.
Ifrealized,theserisksmaymeanfinanciallossesforAspo.
Aspohasappropriateinformationsecurityandinter-naltrainingarrangements,butindividualcasesmayoccurduetothedecentralizedstructureofoperations.
ThequantityandprobabilityoftheGroup'slossrisksareregularlyassessed.
Abiddingprocesswasarrangedforgen-eralinsurancepoliciesandtheamountsinsuredwereupdatedin2016.
TheamountsinsuredaresufficientinviewofthescopeofAspo'soperations,butinsur-ancecompaniesmayrestrictthevalidityofinsurancepoliciesasaresultofrisksincreasingforvariousreasons,suchasinwarareas.
FinancialrisksAspoGroup'sfinancingandfinancialriskmanagementarecarriedoutcentrallybytheparentcompanyinaccordancewiththetreasurypolicyapprovedbytheBoardofDirectors.
RefinancingriskRefinancingriskismanagedbydecentral-izinginterest-bearingdebtwithrespecttothecounterparty,theformoffinanc-ing,andmaturity.
LiquidityriskLiquidityriskismanagedbysecuringtheGroup'ssufficientcashandcashequiv-alentstogetherwithcommittedrevolv-ingcreditfacilitiesandotherfinancingreserves.
InterestrateriskThecompanyhedgesagainstinterestratechangesbybindinginterest-bearingdebtpartlytofloatingrateloansandpartlytofixed-rateloans.
Inaddition,interestratederivativesareusedforhedgingagainstinterestraterisks.
CreditrisksTheGroupusestermsofpaymentbasedonadvancepaymentsandbankguaran-teestohedgeagainstcreditrisks.
Deepunderstandingofcustomersisanintegralpartofthecreditriskmanagement.
CurrencyriskWithinAspoGroup,thecurrencyriskisprimarilymanagedthroughcustomerandsupplieragreementsatthebusinesslevel,andsecondarilyusingcurrencyderivatives.
Additionalinformationonthefinan-cialrisksontheFinancialStatements'Note26.
InternalcontrolandriskmanagementOneoftheresponsibilitiesofAspo'sAuditCommitteeistomonitortheeffi-ciencyoftheGroup'sinternalcontrol,internalaudit,andriskmanagementsys-tems.
TheAuditCommitteemonitorstheriskmanagementprocessandcarriesoutnecessarymeasurestopreventstrate-gicrisksinparticular.
InaccordancewiththeinternalcontrolprinciplesapprovedbytheBoardofDirectors,riskmanage-mentispartofAspo'sinternalcontrol,anditstaskistoensuretheimplementa-tionoftheGroup'sstrategy,developmentoffinancialresults,shareholdervalue,div-idendpaymentability,andcontinuityinbusinessoperations.
Theoperationalman-agementofthebusinessesisresponsibleforriskmanagement.
Themanagementisresponsibleforspecifyingsufficientmea-suresandtheirimplementation,andformonitoringandensuringthatthemea-suresareimplementedaspartofday-to-daymanagementofoperations.
RiskmanagementismanagedbyAspo'sCFO,whoreportstotheGroupCEO.
Amoredetailedaccountoftheriskmanagementpolicyandthemostsignifi-cantriskshasbeenpublishedonthecom-pany'swebsite.
RESEARCHANDDEVELOPMENTAspoGroup'sR&Dfocuses,accordingtothenatureofeachsegment,ondevelop-ingoperations,proceduresandproductsaspartofthecustomer-specificopera-tions,whichmeansthatthedevelopmentinputsareincludedinnormaloperationalcostsandarenotitemized.
Thedevelop-mentandcertificationcostsofmedicalcomputersdevelopedbyKaukohavebeencapitalizedasproductdevelopmentcosts,andtheywillbeamortizedovertheiruse-fullife.
TheamountofthesecostsislowatanAspoGrouplevel.
CORPORATERESPONSIBILITYTheCEOandBoardofDirectorsofAspoGroupareresponsibleforthemanage-mentofcorporateresponsibilityinaccor-dancewiththecompany'sriskmanage-mentpolicy.
Ensuringcorporaterespon-sibilityisvitalinordertosecurethecompany'slong-termdevelopment.
Aspoactslikeagoodcorporatecit-izeninallitsoperatingcountries.
ForAspo,beingagoodcorporatecitizenmeansbearingitssocialresponsibilities,asdemonstratedbythewayAspoalwayspaysitstaxesinthecountrywhereithasmadeitsprofit.
Onlyaresponsiblyled,growingcompanycancreatejobs,taxrevenueandwellbeing.
Aspotreatsallofitsemployeesandstakeholdersfairlyandequallyinallitsoperatingcountries.
AspoGroup'sCodeofConductandenvironmentalpolicyformacommonsetofrulesforallbusinesses.
Aspo'skeyoperationsconsistofthedevelopmentofthetradeandlogisticsbusinessesitowns.
Aboveall,Aspoapproachescor-porateresponsibilitythroughresponsibleleadershipandmanagement.
KeyaspectsofcorporateresponsibilityinthefieldsinwhichthebusinessesAspoownsoper-atearereductioninenergyconsumptionandthevolumeofwaste,thewellbeingofemployeesandsafeworkingenviron-ment,equalityandgoodgovernance.
Aspotakesclimatechangeseriouslyandaimstoreduceitsimpactthroughitsactions.
SustainabiltyreportsofAspo'sbusi-nesseswerecompiledin2017.
AllofAspo'sbusinesseshavecommonandindividualinformationthatrepresentstheresponsibilityoftheiroperations.
Aspo'sresponsibilityreportispublishedintheFinancialStatementsandResponsibilityReport2017publicationinconjunctionwiththeissuanceoffinancialstatements.
SHARECAPITALANDSHARESAspoPlc'ssharecapitalonDecember31,2017wasEUR17,691,729.
57andthetotalnumberofshareswas30,975,524ofwhichthecompanyheld370,486shares;thatis,1.
2%ofthesharecapital.
AspoPlchasoneshareseries.
Eachshareentitlestheshareholdertoonevoteat34AnnualReporttheshareholders'meeting.
Aspo'sshareisquotedonNasdaqHelsinkiOy'sMidCapsegmentunderindustrialproductsandservices.
DuringJanuary–December2017,atotalof2,850,780AspoPlcshareswithamarketvalueofEUR25.
4millionweretradedonNasdaqHelsinki,inotherwords,9.
2%ofthestockchangedhands.
DuringJanuary–December,thesharepricereachedahighofEUR10.
00andalowofEUR8.
20.
TheaveragepricewasEUR8.
91andtheclosingpriceatyear-endwasEUR10.
00.
Attheendoftheyear,themarketvalueexcludingtreasuryshareswasEUR306.
1million.
ThenumberofAspoPlcsharehold-erswas9,060atyear-end.
Atotalof923,683shares,or3.
0%ofthesharecapital,werenomineeregisteredorheldbynon-domesticshareholders.
MANAGEMENTANDAUDITORSIn2017,theAnnualShareholders'Meetingre-electedLL.
M.
,MBAMammuKaario,M.
Sc.
(Econ.
)MikaelLaine,LL.
M.
RobertoLencioni,B.
Sc.
(Econ.
),eMBAGustavNyberg,D.
Sc.
(Econ.
)SallaPyryandM.
Sc.
(Tech.
)RistoSalototheBoardofDirectors.
AttheBoard'sorga-nizingmeetingheldaftertheAnnualShareholders'Meeting,GustavNybergwaselectedasChairmanoftheBoardandRobertoLencioniasVice-Chairman.
AtthemeetingtheBoardalsodecidedtoappointMammuKaarioChairmanoftheAuditCommitteeandMikaelLaine,SallaPyryandRistoSaloascommitteemembers.
In2017,theBoardofDirectorsarranged10meetings,ofwhichfourweretelecon-ferences.
Theparticipationratewas100%.
eMBAAkiOjanenhasactedastheCEOofthecompany.
TheauthorizedpublicaccountantfirmErnst&YoungOyhasbeenthecompa-ny'sauditor.
HarriPrssinen,APA,hasactedastheauditorincharge.
DECISIONSOFTHESHAREHOLDERS'MEETINGSDividendTheAnnualShareholders'MeetingofAspoPlconApril5,2017,approvedthepaymentofadividendtotallingEUR0.
42pershareinaccordancewiththeBoardofDirectors'proposal.
Thedividendwaspaidintwoinstall-ments.
ThepaymentdateforthefirstinstallmentofEUR0.
21persharewasApril18,2017andthepaymentdateforthesecondinstallmentofEUR0.
21persharewasNovember6,2017.
BoardauthorizationsAuthorizationoftheBoardofDirectorstodecideontheacquisitionoftreasurysharesTheAnnualShareholders'MeetingonApril5,2017authorizedtheBoardofDirectorstodecideontheacquisitionofnomorethan500,000ofthetreasurysharesusingtheunrestrictedequityofthecompanyrepresentingabout1.
6%ofallthesharesinthecompany.
Theauthorizationincludestherighttoaccepttreasurysharesasapledge.
Theautho-rizationwillremaininforceuntiltheAnnualShareholders'Meetingin2018butnotmorethan18monthsfromtheapprovalattheShareholders'Meeting.
TheBoardofDirectorshasnotusedtheauthorization.
AuthorizationoftheBoardofDirectorstodecideonashareissueoftreasurysharesTheAnnualShareholders'MeetingonApril9,2015authorizedtheBoardofDirectorstodecideonashareissue,throughoneorseveralinstallments,tobeexecutedbyconveyingtreasuryshares.
Anaggregatemaximumamountof900,000sharesmaybeconveyedbasedontheautho-rization.
TheauthorizationwillremaininforceuntilSeptember30,2018.
TheBoardofDirectorshasusedtheauthorizationin2016andgranted88,970treasurysharestoemployeesincludedintheearningsperiod2015oftheshare-basedincentiveplan2015–2017.
In2017,theBoardofDirectorsgranted25,740treasurysharestoemployeesincludedintheearningsperiod2016.
AuthorizationoftheBoardofDirectorstodecideonarightsissueTheAnnualShareholders'MeetingonApril9,2015authorizedtheBoardofDirectorstodecideonarightsissueforconsideration.
Theauthorizationispro-posedtoincludetherightoftheBoardofDirectorstodecideonalloftheothertermsandconditionsoftheconveyanceandthusalsoincludestherighttodecideonadirectedshareissue,indeviationfromtheshareholders'pre-emptiveright,ifacompellingfinancialreasonexistsforthecompanytodoso.
Thetotalnum-berofnewsharestobeofferedforsub-scriptionmaynotexceed1,500,000.
TheauthorizationwillremaininforceuntilSeptember30,2018.
TheBoardofDirectorshasnotusedtheauthorization.
PROPOSALSOFTHENOMINATIONBOARDTOTHESHAREHOLDERS'MEETINGTheShareholders'NominationBoardcon-sistsoftherepresentativesofthefourlargestshareholders.
AccordingtothelistofshareholdersasofAugust31,2017,thefollowingrepresentativesofthelargestshareholdersweremembersoftheNominationBoardwhichpreparedproposalsfortheAnnualShareholders'Meeting2018:VeronicaTimgren(Nybergfamily,includingOyHavsuddenAb);TapioVehmas(Vehmasfamily);ReimaRytsl,Chairman(VarmaMutualPensionInsuranceCompany);andMikkoMursula(IlmarinenMutualPensionInsuranceCompany).
Inaddition,GustavNyberg,ChairmanofAspoBoardofDirectors,hasactedasanexpertmemberoftheNominationBoard.
TheNominationBoardofAspoPlc'sshareholdersproposestotheAnnualShareholdersMeetingofAspoPlctobeheldonApril10,2018thattheBoardofDirectorswillhavesixmembers.
MembersoftheBoardTheNominationBoardproposesthatMammuKaario,MikaelLaine,GustavNyberg,SallaPyryandRistoSalo,cur-rentmembersofthecompany'sBoardofDirectors,bere-electedasmembersoftheBoardandTatuVehmasbeelectedasthenewmemberoftheBoardforthetermclosingattheendoftheAnnualShareholders'Meeting2019.
RemunerationpaidtothemembersoftheBoardTheNominationBoardproposesthatthecompensationsoftheBoardmem-bersremainunchangedandBoardmem-bersreceivethefollowingmonthlyremuneration:EUR2,700permonthformembersoftheBoardofDirectorsEUR4,050permonth,fortheViceChairmanEUR5,400permonth,fortheChairman35AnnualReportTheNominationBoardproposesthatthemeetingfeespaidtomembersoftheAuditCommitteeremainunchanged.
TheNominationBoardproposesthatameetingfeeofthemembersoftheAuditCommitteewillbeEUR700permeetingandameetingfeeoftheChairmanoftheAuditCommitteeEUR1,050permeeting.
IftheChairmanoftheAuditCommitteeisalsotheViceChairmanortheChairmanoftheBoardofDirectors,theNominationBoardproposesthatthefeepaidtotheChairmanoftheAuditCommitteeisthesameasthatpaidtomembersoftheAuditCommittee.
Boardmembershav-ingafull-timepositioninanAspoGroupcompanyarenotpaidafee.
ThecharteroftheShareholders'NominationBoardTheNominationBoardproposesthatthearticle6ofthecharterwillbechangedsothattheNominationBoardshallsubmititsproposalstotheBoardofDirectorsatthelatestonFebruary1(formerly:January1)precedingtheAnnualShareholders'Meeting.
EVENTSAFTERTHEFINANCIALYEAROnJanuary9,2018,SamiKoskela,ManagingDirectorofKaukoLtdandamemberoftheGroupExecutiveCommitteeresignedfromthecompany.
ArtoMeitsalo,CFOofAspoPlc,wasappointedactingManagingDirector.
OUTLOOKFOR2018Theglobaleconomyisexpectedtocon-tinueitsgrowth.
Theeconomicsitua-tioninRussiaandtheeasternmarketsisimproving,andthispositivedevelopmentisexpectedtocontinuein2018.
However,itisdifficulttopredictfuturedevelopmentinRussia,UkraineandotherCIScountries.
Exchangeratesareexpectedtocontinuetofluctuateheavily.
EconomicgrowthintheEU,andparticularlyinFinland,hasaccelerated,andFinnishexportvolumeshaveincreasedsignificantly.
IndustrialproductionisexpectedtoincreaseinthemainmarketareasofAspo'sbusinessesinNorthernEuropeandinthemarketofRussia,UkraineandotherCIScoun-tries.
Thispositivetrendisexpectedtocontinue.
ThepricesofindustrialrawmaterialsandoilthatareimportanttoAspoareexpectedtoremainattheircurrentlevelorstrengthen.
DrybulkfreightratesinseatransportationthatareimportanttoESLShippingareexpectedtoremainattheircurrentlevelorstrengthen.
TheGroupaimstocontinuetoincreasethemarketsharesofitsbusinessesprof-itablyinthestrategicallyimportanteast-erngrowthmarkets.
Guidancefor2018:Aspo'soperatingprofitwillbeEUR25–31(23.
1)millionin2018.
ESLShippingTheshippingcompany'svesselcapacitywillincreasebytwo25,000DWTves-selswhenthebuildingprojectiscom-pletedandthenewvesselsstartoper-atingduringthefirsthalfoftheyear.
Theincreaseincapacityisexpectedtoimproveoperationalefficiencyandprofit-ability,particularlyduringthesecondhalfoftheyearwhentheretypicallyhasbeenashortageofvesselcapacity.
Inaddition,thenewvesselswillsignificantlyreduceenvironmentalloadscausedbyopera-tions.
Theshippingcompanyhasallo-catedsignificantresourcestoensurethehigh-qualitydeliveryandstartofopera-tionsofthenewvessels.
InthevesselclassesoperatedbyESLShipping,onlyafewdrycargovesselshavebeenorderedfromshipyards,asaresultofwhichthebalancebetweensup-plyanddemandisexpectedtoimprove.
Inthefuture,thetrendwillbeacceleratedbythestricterenvironmentalregulationssetforshippingoperations,whichmayreducetheuseofoldervessels,particu-larlyintheBalticSea.
Economicgrowthisexpectedtoimproveintheshippingcompany'smainmarketareas.
Themarketcargopricesoflargedrycargovesselshavegenerallybeenatahealthierlevel,whichoffersanadvantageinagreementnegotiations.
Demandforrawmaterialsandtheirtrans-portationhasincreased,whichmayleadtocongestionatports.
Higherdemandmayincreasemarketcargopricesbybind-ingthevesselcapacity,butitmayalsohaveanegativeimpactontheefficientoperationsoftheshippingcompany.
Shipfuelpricesaremuchhigherthanintheyearbefore.
However,thishasnosignif-icantimpactonprofitabilityasaresultoffuelclausesincustomeragreements.
TheshippingcompanyhassecuredmostoftheuseofitstransportationcapacityintheBalticSeaandNorthernEuropethroughlong-termagreements.
Generaldemandinthesteelindustryisgoodandtransportvolumesareexpectedtoimproveclearlyfromthepreviousyear.
ESLShippingaimstoincreaseitsnetsalesandtoreachanoperatingprofitlevelof20–24%by2020.
Itwillreachthisgoalasaresultofitsnewener-gy-efficientvessels,animprovedopera-tionalefficiencyofallvessels,newgrow-ingtransportvolumesandanincreaseinloadingandunloadingoperationsatsea.
LeipurinThemarketsituationisexpectedtoremainchallenginginLeipurin'skeymarkets.
ThemarketpositionisexpectedtoremainstrongintheindustrialbakingsectorinFinland,RussiaandtheBalticregion.
ThenetsalesandoperatingprofitofLeipurinareexpectedtoincreasein2018.
Theweakeningoftheeconomicsit-uationinRussiaisexpectedtohavestopped,andconsumerpurchasingpowerisexpectedtoimprove.
Thelocalprocure-mentofbakeryrawmaterialshasbeenincreasedinRussiatoreplaceimportedrawmaterials.
Theaimistorespondtochangesindemandbydevelopingaprod-uctrangewithmorecompetitiveprices,andtorespondtothedomesticfoodcampaigncurrentlyinprogressinRussia.
Localprocurementhasbeendecentralizedand,currently,therearealreadydozensofsignificantregionalproductionpartners.
Leipurinwillmaintainagoodprofitabil-ityintheregion,strengthenitsmarketposition,andlookforgrowthinsalestobreadandpastrysectors,aswellastoin-shopbakeries.
TheOOHmarketisasignificantareaofgrowthforLeipurin.
Leipurinwillcon-tinuetoinvestintheOOHmarket,partic-ularlyinFinlandandthewesternmarkets,whereLeipurinisresponding,forexample,tothegrowingdemandfromchaincus-tomers,suchascafés.
Inmachineryoperations,equipmentinvestmentsofbakeriesareexpectedtoincreaseinFinlandandtheBalticregion.
AmoderateincreaseininvestmentsisexpectedinRussia.
Leipurin'smachin-eryoperationswillcontinuetostrengthenthesalesandagentnetworkinWesternEuropeandtheMiddleEast.
Theexpan-sionofthesourcingnetworkforLeipurin'sownmachineproductionandtheshorten-ingofmanufacturingandinstallationleadtimeswillcontinue.
Thegrowthinthepro-ductionofbakerymachineswillbedriven36AnnualReportbyincreasedinvestmentsinhomemar-ketsandinEurope.
TelkoTheeconomicsituationisexpectedtocontinueitspositivedevelopmentinTelko'smarketareas.
Thegrowthinindustrialproductioninthewesternmar-ketsisexpectedtoincreasetheproduc-tioncapacityofTelko'scustomercom-panies,whichwillhaveapositiveimpactonTelko'soperations.
WhenthenationaleconomiesinRussia,Kazakhstan,BelarusandUkraineincrease,operat-ingconditionsinthemarketareaareexpectedtoimprove,whichwillhaveapositiveimpactoncustomercompanies.
Telko'sregionalstrategyinRussiaandlocalunitsinmetropoliseswillenablegrowthincomingyears.
ThemeasurestoimprovetheefficiencyofoperationsinRussiawerecompletedin2017,andwillhaveafullimpactontheoperat-ingprofitstartingfromthefirstquar-terof2018.
In2017,atotalof2.
8milliontonsofnewpolyethylenecapacitywascom-pletedintheUSA.
Thisproductionmainlycoverslinearhigh-densitypolyethylene.
AsEuropeismainlyanimporterofthesetypesofproducts,thisnewcapacityisexpectedtoincreaseimportsfromtheUSAanddecreasethepricesofplasticrawmaterials.
Theseimportsareexpectedtoincreasenolaterthanduringthesecondhalfof2018.
OneofTelko'simportantplasticrawmaterialpartnersincreaseditscapacityintheUSAsignificantlyin2017.
ThisisexpectedtoimproveTelko'scom-petitiveness,regardlessoftheexpecteddecreaseinprices.
Pricesofseveraltechnicalplasticsareestimatedtoremainhighorincreasein2018,asdemandwillbehigherthansupply.
Technicalplasticsareusedintheautomotiveindustry,inparticular,whichisshowingstrongglobalgrowth.
Pricesofindustrialchemicalsareexpectedtostrengthen.
Telkohasshownthatitisabletogrowquicklyandprofitablyinemergingmarkets.
Asplanned,TelkohasstartedoperationsintheMiddleEastinordertoacquirerawmaterialsandtosellspecialtechnicalproducts.
However,theopera-tionsofTelkoMiddleEast,Telko'ssub-sidiaryinIran,arenotexpectedtohaveanysignificantimpactonthenetsalesoroperatingprofitofTelkoin2018.
Telkoaimstodoubleitsoperatingprofitbytheendof2020.
TelkoexpectsthatitsnetsaleswillbeEUR300–350millionanditsoperatingprofitratewillincreaseto6–7%.
Telkoaimstoimproveitsoperatingprofitin2018.
Itcanreachthesegoalsbycontinuingitsgrowthinthecurrentkeymarketsandpossiblybyexpandingitsoperationstonewgeo-graphicareas.
Thedevelopmentofprof-itabilityisbasedonefficientprocurementactivities,investingintechnicalproductsofferingmoreaddedvalue,thedevelop-mentoflogisticsandmoreactivepricing.
KaukoThenetsalesandprofitabilityoftotalsolutionsformobileknowledgeworkareexpectedtoincrease.
Kaukoisaproviderofintegratedandcustomizedtotalsolu-tions,combiningapplications,devicesandotherservices.
Thenumberofordersfortheapplicationbusinessisexpectedtoincrease.
Serviceoperationswillbeexpandedbyshiftingmorefocusontotalsolu-tions.
Accordingtolong-termestimates,thesaleoflaptopswilldecreaseandthesaleofruggedtabletswillincreaseinthemarketsforruggedcomputers.
Kaukoholdsaparticularlystrongmarketposi-tioninthesectorofruggedtabletsfordemandingenvironments.
Kaukoprovidesthehealthcaresec-torwithvariousmobileITsolutionstoimprovetheworkingefficiencyofthemedicalsector.
Thenewcomputerintro-ducedbyKaukoforthehealthcaresectorallowslaunchingsalestootherOEMchan-nelsoutsideKauko'sregularmarketarea.
Intheenergysector,thenetsalesofsolarpowerproductsareexpectedtocon-tinuetoincreaserapidly.
KaukomadeadecisiontodiscontinueitsprojectoperationsinChina,andtheoperationswillbediscontinuedduringthefirsthalfof2018.
LEGALPROCEEDINGSOnFebruary27,2015,theHelsinkiDistrictCourtannounceditsjudgementinthecasebetweenESLShippingandtheFinnishStateregardingfairwayduesleviedduringtheyears2001-2004.
Accordingtothejudgement,theFinnishStatewasrequiredtorefundtoESLShippingapproximatelyEUR3millioninaccordancewiththecompany'sclaim,aswellaslegalexpensesandinterest.
TheStatelodgedanappealagainsttheDistrictCourt'sjudgementand,initsrul-ingissuedonAugust8,2016,theCourtofAppealoverruledtheHelsinkiDistrictCourt'sjudgementandrejectedESLShipping'slegalactionastime-barred.
ThecompanyappliedforaleavetoappealfromtheSupremeCourt,whichrejectedtheapplication.
Theshippingcompanywonlegalpro-ceedingsagainstIndianABGShipyardconcerningthecompensationpayableforrepairsmadetom/sAlppiladuringthewarrantyperiod.
ThevesselwasdeliveredtoESLShippingin2011.
Accordingtotherulingofthearbitrationcourt,ABGShipyardwasrequiredtorefundtherepairexpensesandinteresttoESLShippingaccordingtothecompany'sclaims.
Theimpactofrulingwillbetakenintoaccountduringthefinancialyearoverwhichtheimposedpaymentisreceived.
TelkohasinitiatedaprocessattheAdministrativeCourtconcerningthetaxincreaseimposedbyFinnishCustomsrelatedtobatchesofmaterialthatTelkoimportedin2013and2014.
Telkocon-sidersthechargesimposedbyFinnishCustomstobeunfounded.
ThechargesofEUR1.
7millionwererecognizedasexpensesin2015.
Inspring2017,KaukotooklegalactionincivilcourtagainsttwoindividualswhoworkedinleadingpositionsinthemobileknowledgeworkunitthatprovidesITsolutionsforthehealthcaresectorduetobreachesofthenon-solicitationandnon-competeclauses.
Afterthefinancialyear,onFebruary2018,theDistrictCourthasdecidedthematterforthebenefitofthedefendants.
ThedecisionisnotyetfinalandithasnoeffectontheresultofAspoGroup.
AspoPlchasissuedaCorporateGovernanceStatement2017.
Inaddition,Aspo'sResponsibilityreportofnon-financialinformationrequiredbytheFinnishAccountingActispub-lishedatthesametimewiththisAnnualreport.
Bothdocumentshavebeenpublishedonthecompany'swebsitewww.
aspo.
com.
37AnnualReportCONSOLIDATEDSTATEMENTOFCOMPREHENSIVEINCOME1,000EURNotesJan1–Dec31,2017Jan1–Dec31,2016Netsales1502,360457,404Otheroperatingincome32,0371,224Materialsandservices6-370,554-334,752Employeebenefitexpenses4-41,554-39,963Depreciation,amortizationandimpairmentlosses5-11,869-11,623Otheroperatingexpenses7-57,284-51,899Operatingprofit23,13620,391Financialincome81,9911,045Financialexpenses8-4,073-4,090Totalfinancialincomeandexpenses-2,082-3,045Profitbeforetaxes21,05417,346Incometaxes9-1,646-1,492Profitfortheperiod19,40815,854OthercomprehensiveincomeItemsthatmaybereclassifiedtoprofitorlossinsubsequentperiods:Translationdifferences-3,0703,240Cashflowhedges-3,6971,403Incometaxonothercomprehensiveincome9192-102Othercomprehensiveincomefortheperiod,netoftaxes-6,5754,541Totalcomprehensiveincome12,83320,395ProfitfortheperiodattributabletoParentcompanyshareholders19,40815,854TotalcomprehensiveincomeattributabletoParentcompanyshareholders12,83320,395Earningspershareattributabletoparentcompanyshareholders,EUR10Earningspershare0.
560.
49Dilutedearningspershare0.
560.
49Thenotespresentedonpages42–79formanintegralpartoftheconsolidatedfinancialstatements.
38ConsolidatedFinancialStatements,IFRSCONSOLIDATEDBALANCESHEETASSETS1,000EURNotesDec31,2017Dec31,2016Non-currentassetsIntangibleassets117,9949,436Goodwill1242,01342,643Tangibleassets13119,918113,320Available-for-salefinancialassets14170172Receivables155251,441Deferredtaxassets173,2673,432Totalnon-currentassets173,887170,444CurrentassetsInventories1860,92156,708Accountsreceivableandotherreceivables1966,03359,753Currenttaxassets331204Cashandcashequivalents2019,92322,627Totalcurrentassets147,208139,292Totalassets321,095309,736EQUITYANDLIABILITIES1,000EURNotesDec31,2017Dec31,2016EquityattributabletoparentcompanyshareholdersSharecapital2117,69217,692Sharepremium214,3514,351Investedunrestrictedequityreserve2112,06112,054Fairvaluereserve21-2,569936Otherreserves2125,00025,000Translationdifferences-21,681-18,604Retainedearnings77,41373,098Totalequity112,267114,527Non-currentliabilitiesDeferredtaxliabilities173,3004,243Loansandoverdraftfacilities22109,517116,640Otherliabilities23522368Totalnon-currentliabilities113,339121,251CurrentliabilitiesProvisions251,216508Loansandoverdraftfacilities2227,1028,794Accountspayableandotherliabilities2366,81764,120Currenttaxliabilities354536Totalcurrentliabilities95,48973,958Totalliabilities208,828195,209Totalequityandliabilities321,095309,736Thenotespresentedonpages42–79formanintegralpartoftheconsolidatedfinancialstatements.
39ConsolidatedFinancialStatements,IFRSCONSOLIDATEDCASHFLOWSTATEMENT1,000EURJan1–Dec31,2017Jan1–Dec31,2016CashflowsfromoperatingactivitiesOperatingprofit23,13620,391Adjustmentstooperatingprofit:Depreciation,amortizationandimpairmentlosses11,86911,623Gainsandlossesonsaleoftangibleassets285-86Gainsandlossesonsaleofbusinessoperations-352Employeebenefits718121Changeinprovisions699-12Unrealizedforeignexchangegainsandlossesonoperatingactivities350-16Changeinworkingcapital:Inventories-6,330-6,331Currentreceivables-8,808121Non-interest-bearingcurrentliabilities2,495-4,463Interestpaid-5,062-3,700Interestreceived1,024419Incometaxespaid-2,590-1,866Netcashfromoperatingactivities17,43416,201CashflowsfrominvestingactivitiesInvestmentsintangibleandintangibleassets-3,961-4,993Advancepaymentsonvessels-13,692-1,315Proceedsfromsaleoftangibleassets293162Proceedsfromsaleofavailable-for-salefinancialassets198Dividendsreceived21Proceedsfromsaleofbusinessoperations600Netcashfrominvestingactivities-16,560-6,145CashflowsfromfinancingactivitiesProceedsfromcurrentloans3,641Repaymentsofcurrentloans-3,528Proceedsfromnon-currentloans15,6007,226Repaymentsofnon-currentloans-7,827-6,664Repaymentsofhybridinstrument-20,308Proceedsfromhybridinstrumentissue24,844Hybridinstrument,interests-1,687-883Dividendsdistributed-12,854-12,540Netcashfromfinancingactivities-3,127-11,853Changeincashandcashequivalents-2,253-1,797CashandcashequivalentsJan.
122,62723,888Translationdifferences-451536Cashandcashequivalentsatyear-end19,92322,627Thenotespresentedonpages42–79formanintegralpartoftheconsolidatedfinancialstatements.
40ConsolidatedFinancialStatements,IFRSCONSOLIDATEDSTATEMENTOFCHANGESINEQUITY1,000EURNotesSharecapitalSharepremiumInvestedunrestrictedequityreserveFairvaluereserveOtherreservesTranslationdifferencesTreasurysharesRetainedearningsTotalEquityJanuary1,20172117,6924,35112,05493625,000-18,604-2,34175,439114,527ComprehensiveincomeProfitfortheperiod19,40819,408Othercomprehensiveincome,netoftaxesCashflowhedges-3,505-3,505Translationdifferences7-3,077-3,070Totalcomprehensiveincome7-3,505-3,07719,40812,833TransactionswithownersDividendpayment-12,854-12,854Hybridinstrument,interests-2,700-2,700Share-basedincentiveplan172289461Totaltransactionswithowners172-15,265-15,093EquityDecember31,201717,6924,35112,061-2,56925,000-21,681-2,16979,582112,267EquityJanuary1,20162117,6924,35111,929-36520,000-21,844-2,75173,563102,575ComprehensiveincomeProfitfortheperiod15,85415,854Othercomprehensiveincome,netoftaxesCashflowhedges1,3011,301Translationdifferences3,2403,240Totalcomprehensiveincome1,3013,24015,85420,395TransactionswithownersDividendpayment-12,540-12,540Hybridinstrument,repayment-20,000-308-20,308Hybridinstrument,issue25,000-15624,844Hybridinstrument,interests-715-715Share-basedincentiveplan410-134276Transferofreserves125-1250Totaltransactionswithowners1255,000410-13,978-8,443EquityDecember31,201617,6924,35112,05493625,000-18,604-2,34175,439114,52741ConsolidatedFinancialStatements,IFRSBASICINFORMATIONAspoPlcisaFinnishpubliccorporationdomiciledinHelsinki.
AspoPlc'ssharesarelistedonNasdaqHelsinkiLtd.
Aspoisaconglomeratethatfocusesonsectorsrequiringextensivespecialistknowledge.
TheGroup'soperationsareorganizedintoindependentsegmentsESLShipping,Leipurin,Telko,andKauko.
OtheroperationsincludeAspoGroup'sadministration,thefinancialandICTservicecenter,andasmallnumberofotheroper-ationsnotcoveredbythebusinessunits.
TheGroup'sparentcompanyisAspoPlc.
TheparentcompanyisdomiciledinHelsinkianditsregisteredaddressisLintulahdenkuja10,FI-00500Helsinki,Finland.
AcopyoftheconsolidatedfinancialstatementsisavailableinAspoPlc'sheadofficeatLintulahdenkuja10,FI-00500Helsinki,Finland.
AspoPlc'sBoardofDirectorshasapprovedtheconsolidatedfinancialstate-mentsforissueatitsmeetingonFebruary15,2018.
PursuanttotheFinnishCompaniesAct,shareholdersmayeitheradoptorrejecttheconsolidatedfinancialstatementsattheAnnualShareholders'Meetingheldaftertheissue,ormayalsodecidetomodifythem.
ACCOUNTINGPRINCIPLESBasisofaccountingAspoPlc'sconsolidatedfinancialstate-mentshavebeenpreparedinaccordancewithInternationalFinancialReportingStandards(IFRS)approvedintheEU,applyingthestandardsandinterpreta-tionsvalidonDecember31,2017.
Thenotestotheconsolidatedfinancialstate-mentsalsocomplywithcomplemen-taryFinnishAccountingStandardsandCompanylegislation.
AllfiguresintheconsolidatedfinancialstatementsarepresentedinEURthou-sandsandarebasedontheoriginalcostoftransactions,unlessotherwisestatedintheAccountingPrinciples.
AsofJanuary1,2017AspoGrouphasappliedthefollowingnewandamendedstandardsandinterpretations,whichhadnomaterialeffectonthereportedinformation:AmendmentstoIAS7StatementofCashFlows-DisclosureInitiative.
Thestandardrequiresthecompaniestopres-entspecificationofchangesinliabilitiesarisingfromcashflows(forexamplewith-drawalsandrepaymentsofloans)aswellasnon-cashchanges.
AmendmentstoIAS12IncomeTaxes-RecognitionofDeferredTaxAssetsforUnrealizedLosses.
TheamendmentsmadeinJanuary2016toIAS12clarifytherecog-nitionofdeferredtaxesthatrelatetotheassetsmeasuredatfairvalue,andtheirfairvaluebeinglowerthantheasset'stax-ationvalue.
PrinciplesofconsolidationTheconsolidatedfinancialstatementsincludetheparentcompanyAspoPlcandallitssubsidiaries.
Theterm"subsidiary"referstoacompanyinwhichtheGroupexercisescontrol.
TheGroup'sassociatedcompaniesincludecompaniesinwhichtheGroupowns20%–50%ofthevotingrightsandatleasta20%holding,orinwhichtheGroupotherwiseholdssignificantinflu-ence.
JointventuresarecompanieswheretheGroupexercisesjointcontrolwithotherpartiesonthebasisofanagreement.
Associatedcompaniesandjointventuresareconsolidatedusingtheequitymethod.
IftheGroup'sshareoflossesinanassoci-atedcompanyorajointventureexceedsthecarryingamount,lossesinexcessofthecarryingamountwillnotbeconsoli-datedunlesstheGroupundertakestoful-filltheobligationsoftheassociatedcom-panyorjointventure.
UnrealizedprofitsbetweentheGroupandassociatedcom-paniesandjointventuresareeliminatedinaccordancewiththeGroup'sownership.
TheGrouphashadnoassociatedcompa-niesaftertheyear2014.
Subsidiariesacquiredduringthefinan-cialyearhavebeenconsolidatedfromthetimeAspogainedcontroloverthem.
DivestedoperationsareincludeduptothetimeAspolosescontrol.
Acquiredsubsidiariesareconsolidatedusingtheacquisitionmethod.
Considerationandtheacquiredcompany'sassetsandliabilitiesaremeasuredatfairvalueatthetimeofacquisition.
Acquisition-relatedcostsareenteredasexpenses.
Anycontingentcon-siderationisrecognizedatfairvalueuponacquisitionandisclassifiedeitherasalia-bilityorequity.
Thecontingentconsider-ationclassifiedasaliabilityismeasuredatfairvalueatthereportingdate,andtheresultinggainorlossisenteredinprofitorloss.
Thecontingentconsiderationclassi-fiedasequityisnotremeasured.
Thecostofgoodwillistheamountbywhichthesubsidiaryacquisitioncostexceedsthenetfairvalueoftheacquiredidentifiableassets,liabilitiesandcontingentliabilities.
AcquisitionspriortoJanuary1,2010havebeenrecognizedincompliancewiththeregulationsvalidatthetime.
Intra-Grouptransactions,receivablesandliabilitiesandintra-Groupprofitdistri-butionhavebeeneliminatedwhenprepar-ingtheconsolidatedfinancialstatements.
Distributionofthefinancialyear'sprofitbetweentheparentcompany'ssharehold-ersandnon-controllingshareholdersispresentedinthefaceofthestatementofcomprehensiveincome.
Thepotentialinterestattributabletothenon-controllingshareholdersispresentedasaseparateitemundertheconsolidatedequity.
TheGrouphadnonon-controllingsharehold-ersin2016and2017.
Inpreviousyears,theGrouphadanon-controllingshareholderAspoManagementOy.
Thecompanywasthemanagements'holdingcompanyanditwasestablishedin2010toenablesig-nificantlong-termshareholdingwithinAspoPlcamongparticipants.
AspoPlcacquiredallsharesinAspoManagementOythroughashareswaponNovember3,2014.
Beforetheshareswap,AspoPlcheldcontroloverAspoManagementOythroughashareholderandloancon-tractonthebasisofwhichthecompanywasincludedinAspo'sconsolidatedfinan-cialstatementsalsoduring2010–2013.
Beforetheshareswap,themanagement'sinvestmentinAspoManagementOywastreatedasanon-controllinginterestintheconsolidatedfinancialstatements.
AspoPlc'ssharesheldbyAspoManagementOyweredeductedfromtheconsolidatedequity.
In2015AspoManagementOywasmergedwithAspoPlc.
ItemsdenominatedinforeigncurrenciesTransactionsdenominatedinforeigncur-renciesarerecordedattheexchangeratesatthetransactiondates.
Receivablesandliabilitiesdenominatedinforeigncurren-ciesandoutstandingattheendoftheNOTESTOTHECONSOLIDATEDFINANCIALSTATEMENTS42NotestotheConsolidatedFinancialStatementsfinancialyeararetranslatedusingtheexchangeratesatthereportingdate.
Thegainsandlossesarisenfromforeigncur-rencydenominatedtransactionsandthetranslationofmonetaryitemsarerecog-nizedinprofitorloss.
Foreignexchangegainsandlossesrelatedtobusinessoper-ationsareincludedinthecorrespondingitemsabovetheoperatingprofit.
Foreignexchangegainsandlossesarisenfromloansdenominatedinforeigncurren-ciesareincludedinfinancialincomeandexpenses.
Aspohasclassifiedtheinternalnon-cur-rentloanswithinTelkosegmenttoTelko'sBelarusian,UkrainianandKazakhstanisubsidiariesasnetinvestmentsinfor-eignoperationsunderIAS21standard.
Anyunrealizedforeignexchangegainsandlossesrelatedtothesenetinvest-mentswillberecognizedinothercom-prehensiveincome.
SubsidiariesabroadResultsandfinancialpositionoftheGroup'sunitsaremeasuredintheprimarycurrencyoftheunit'seconomicenviron-ment("functionalcurrency").
Theconsoli-datedfinancialstatementsarepresentedineuro,theparentcompany'sfunctionalandpresentationcurrency.
Intheconsol-idatedfinancialstatements,theincomestatementsofsubsidiariesabroadaretranslatedintoeurousingtheaveragerateofthefinancialyear.
Balancesheetitemsaretranslatedintoeurousingtheexchangeratesatthereportingdate.
Translationdifferencesarepresentedasaseparateitemunderequity.
Whenaninterestinasubsidiaryisdivestedinitsentiretyorpartiallysuchthatcontrolislost,theaccumulatedtranslationdiffer-encesarereclassifiedtothestatementofcomprehensiveincomeaspartofthesalesgainorloss.
SegmentreportingAspo'soperatingsegmentsareESLShipping,Leipurin,TelkoandKauko.
Theoperatingsegmentsarereportedinamannerthatisuniformwithinter-nalreportingtothechiefoperatingdeci-sionmakerofthecompany.
TheBoardofDirectorshasbeenidentifiedasthechiefoperatingdecisionmaker.
Itisresponsi-blefortheallocationofresourcestotheoperatingsegmentsandtheassessmentoftheirresults.
Inter-segmenttransac-tionsarecarriedoutatmarketprices.
TangibleassetsTangibleassetsarerecognizedatcostnetofcumulativedepreciationlesspossi-bleimpairmentlosses.
Fornewconstruc-tionsofvessels,financialexpensesaris-ingduringconstructionarecapitalizedaspartofthecostanddepreciatedovertheusefullifeoftheassetitem.
Depreciationiscalculatedonastraight-linebasisovertheestimatedusefullifeasfollows:Buildingsandstructures15–40yearsVessels17–30yearsPushers18yearsDockings2–3yearsMachineryandequipment3–10yearsPiping5–20yearsRefurbishmentcostsfrompremises5–10yearsOthertangibleassets3–40yearsLandisnotdepreciated.
Apreviouslyrecognizedimpairmentlossontangibleassetsisreversediftheesti-matesusedinthedeterminationoftherecoverableamountchange.
Carryingamountincreasedduetothereversalofanimpairmentlossmaynotexceedthecarryingamountthatwouldhavebeendefinedfortheassetitemifnoimpair-mentlosshadbeenrecognizedinprevi-ousyears.
Gainsandlossesarisingfromtheremovalfromuseanddisposaloftan-gibleassetsareincludedinotheroperat-ingincomeandexpenses.
GoodwillandotherintangibleassetsAcquiredsubsidiariesareconsolidatedusingtheacquisitionmethod.
Goodwillarisingonabusinesscombinationisrec-ognizedattheacquisitiondateatanamountrepresentingtheexcessoftheconsiderationtransferredintheacquisi-tionoverthefairvalueoftheidentifiableassetsacquiredandliabilitiesassumed.
Goodwillisnotamortized,butistestedatleastannuallyusingthetestingbasedonthevalueinuse(seeGoodwillimpair-menttest,Note12).
Noamortizationisrecognizedforintan-gibleassetswithindefiniteusefullives,buttheyaretestedannuallyforimpair-ment.
TheusefullivesoftheLeipurinandTelkosegments'brandsareestimatedtobeindefinite.
Thestrongimageandhis-toryofthebrandssupportthemanage-ment'sviewthatthebrandswillaffectcashflowgenerationoveranindefinableperiod.
Otherintangibleassetsaremeasuredatcostandamortizedonastraight-linebasisovertheirusefullives.
Theamortiza-tionperiodsforotherintangibleassetsare:Softwareandassociatedlicenses3–5yearsPrincipalrelationshipsandtechnologyacquiredthroughbusinesscombinations10yearsTheGroupassessesthecarryingamountsoftangibleandintangibleassetsannu-ally,ormoreoftenifthereisanyindica-tionofpotentialimpairment.
Ifsuchindi-cationexists,therecoverableamountoftheassetinquestionisdetermined.
Impairmentisassessedatthelevelofcash-generatingunits.
Therecoverableamountisthefairvaluelesscoststosell,orthevalueinuse,ifhigher.
Thecash-flow-basedvalueinuseisdeterminedbycalculatingthediscountedpresentvalueofpredictedcashflows.
Thediscountrateofthecalculationsisbasedontheaveragecostofcapital(WACC),whichreflectsthemarket'sviewofthetimevalueofmoneyandtherisksinvolvedinAspo'sbusinessoperations.
Animpairmentlossisrecognizedinthestatementofcomprehensiveincomeifthecarryingamountoftheassetishigherthanitsrecoverableamount.
Whereanimpairmentlossisrecognizedforanassetitemsubjecttodeprecia-tion,theassetitem'susefullifeisre-es-timated.
Animpairmentlossrecognizedforassetsotherthangoodwillisreversediftheestimatesusedinthedetermina-tionoftherecoverableamountchangetoasubstantialextent.
Carryingamountincreasedduetothereversalofanimpair-mentlossmaynotexceedthecarryingamountthatwouldhavebeendeter-minedfortheassetitemifnoimpair-mentlosshadbeenrecognizedinprevi-ousyears.
Animpairmentlossrecognizedfromgoodwillisnotreversedunderanycircumstances.
43NotestotheConsolidatedFinancialStatementsResearchanddevelopmentcostsAsarule,researchanddevelopmentcostsarerecognizedasexpensesatthetimeoftheiroccurrence.
Developmentcostsaris-ingfromthedesignofnewproductsarecapitalizedinthebalancesheetasintan-gibleassetsfromthedatewhentheprod-uctistechnicallyandcommerciallyfea-sibleandexpectedtogeneratefinancialbenefitsinthefuture.
Capitalizeddevel-opmentcostswillbeamortizedovertheirusefullife.
Otherdevelopmentcostsarerecognizedasexpensesupontheirrealiza-tion.
Anydevelopmentcostsrecognizedearlierasexpenseswillnotbecapitalizedduringlaterperiods.
In2017,thedevel-opmentandcertificationcostsofmedicalcomputersdevelopedbyKaukohavebeencapitalizedasproductdevelopmentcosts,andtheywillbeamortizedovertheiruse-fullife.
TheamountofthesecostsislowatanAspoGrouplevel.
Therewerenocapitalizeddevelopmentcostsin2016.
AspoGroup'sR&Dfocuses,accordingtothenatureofeachsegment,ondevel-opingoperations,proceduresandprod-uctsaspartofcustomer-specificoper-ations,whichmeansthatdevelopmentinputsareincludedinnormaloperationalcostsandarenotitemized.
InventoriesInventoriesaremeasuredatcostornetrealizablevalue,iflower.
Thecostisdeter-minedusingtheFIFO(first-in,first-out)principle.
Thecostoffinishedgoodsandworkinprogressincludesrawmaterialpurchasecosts,directmanufacturingwages,otherdirectmanufacturingcosts,andashareofmanufacturingoverheads(basedonnormaloperatingcapacity),borrowingcostsexcluded.
Netrealizablevalueistheactualsalespriceintheordi-narycourseofbusiness,lesstheprod-uct'scostsofcompletionandsale.
Leasingagreements–GroupaslesseeLeasingagreementswheretheGroupassumesanessentialpartoftherisksandbenefitsinherentinownershipareclassifiedasfinancialleasingagreements.
Assetsacquiredthroughfinancialleasingagreementarerecognizedinthebalancesheetatanamountequalingthefairvalueoftheleasedassetatthestartoftheagreementoratthepresentvalueofmini-mumleasepayments,iflower.
Leasepay-mentsaredividedintofinancialexpensesandloanrepayment.
Correspondingleas-ingliabilities,lessfinancialexpenses,areincludedininterest-bearingliabilities.
Theinterestoffinanceisrecognizedinprofitorlossovertheleasingperiodsothattheinterestratefortheremainingliabilityisthesameforeachfinancialyear.
Assetsleasedunderfinancialleasingagree-mentsaredepreciatedeitherovertheirusefullivesoroverthetermoftheleas-ingagreement,ifshorter.
Financialleas-ingagreementsincludeleasingagree-mentsofmachineryandequipmentandITsoftware.
Leasingagreementsinwhichthemate-rialpartofrisksandbenefitsinherentinownershipremainwiththelessorareclas-sifiedasoperatingleases,theleasingpay-mentsofwhicharerecognizedinprofitorlossasexpensesovertheleasingperiod.
EmployeebenefitsStatutorypensioncoverisprovidedforbytakingoutinsurancewithpensioninsur-ancecompanies.
InAspo'sforeignunits,thepensioncoverisarrangedinaccor-dancewithlocallegislationandsocialsecurityregulations.
TheGrouponlyhasdefinedcontributionpensionschemes,withanyassociatedpaymentsbeingenteredinthestatementofcomprehen-siveincomeoverthefinancialyeartowhicheachspecificchargeappliesto.
Share-basedpaymentsTheGrouphasshare-basedincentiveplansforthemanagement,wherepartoftherewardissettledinsharesandtherestincash.
Note29showsmoreinformationontheshare-basedarrange-ments.
Assignedsharesaremeasuredatfairvalueatthetimeofassignmentandrecognizedinthestatementofcompre-hensiveincomeascostsoverthevalidityoftheincentiveplan.
Theeffectsofotherthanmarket-basedconditions(e.
g.
prof-itabilityandprofitgrowthtarget)arenotincludedinthefairvaluebuttakenintoaccountintheamountofsharestowhicharightisassumedtobegeneratedbytheendofthevestingperiod.
Havingrecog-nizedashare-basedpaymentexpense,theothersideoftheentryistoequityfortheproportiontobesettledinshares,andtoliabilitiesfortheproportiontobeset-tledincash.
Thefairvalueforthepropor-tiontobesettledincashisremeasuredateachreportingdate.
SharecapitalOrdinarysharesarepresentedasthesharecapital.
Transactioncostsdirectlyresultingfromtheissuanceofnewsharesarerecognized,afteradjustingtheirpotentialtaxeffects,asareductionofachievedpaymentsunderequity.
Whenthecompanypurchasestrea-suryshares,theconsiderationpaidforthesharesandtheacquisitionrelatedcostsarerecognizedasareductioninequity.
Whenthesharesaresold,theconsider-ation,lessdirecttransactioncostsandthepossibleeffectofincometaxes,isrec-ognizedinequity.
ProvisionsAprovisionisrecognizedinthebalancesheetiftheGrouphas,asaresultofapastevent,apresentlegalorconstructiveobli-gationthatwillprobablyhavetobeset-tled,andtheamountoftheobligationcanbereliablyestimated.
Warrantyprovisionsincludethecostofproductrepairorreplace-mentifthewarrantyperiodisstilleffectiveatthereportingdate.
Warrantyandmainte-nanceobligationsusuallyextendover1–2years.
Warrantyprovisionsaredeterminedonthebasisofhistoricalexperience.
Theamountrecognizedinprovisionsisthepresentvalueofthecoststhatareexpectedtooccurwhensettlingtheobligation.
IncometaxesTheGroup'sincometaxesincludetaxesbasedontheGroupcompanies'profitsforthefinancialyear,adjustmentoftaxesfrompreviousfinancialyearsandchangesindeferredtaxes.
Incometaxesarerecog-nizedinaccordancewiththetaxratevalidineachcountry.
Deferredtaxassetsandliabilitiesarecalculatedfromthetempo-rarydifferencesbetweenaccountingandtaxationinaccordancewiththetaxrateinforceatthereportingdateorattheesti-matedtaxpaymentdate.
Elementsresult-ingintemporarydifferencesincludepro-visions,depreciationdifferencesandtaxlosses.
Deferredtaxassetsarerecognized44NotestotheConsolidatedFinancialStatementsfromtaxlossesandothertemporarydif-ferencestotheextentthatitislikelythattheymaybeutilizedinthefuture.
Theshareofprofitsorlossesofassociatedcompaniesorjointventurespresentedinthestatementofcomprehensiveincomeiscalculatedfromentity'sprofitorloss,anditincludestheimpactoftaxes.
ESLShippingLtdwasincludedintonnagetaxationretrospectivelyfromJanuary1,2011.
Intonnagetaxation,shippingoperationsshiftedfromtaxa-tionofbusinessprofittotonnage-basedtaxation.
RevenuerecognitionprinciplesMostoftheGroup'snetsalesarisefromthesalesofproducts.
Revenuefromthesalesofproductsisrecognizedinconnec-tionwithdelivery,whenthematerialrisksandbenefitsassociatedwiththeowner-shipofgoodshavetransferredtothebuyeraccordingtothepre-definedinter-nationaldeliveryterms.
ApartfromESLShipping,onlyasmallshareoftheoper-atingsegments'netsalesarisesfromthesaleofservices,fromwhichrevenueisrecognizedoncetheserviceshavebeenrendered.
Mostotherservicesprovidedbythesegmentsareconsideredtobepartofthecustomerserviceastheyrelateforexampletothedevelopmentandplanningofproductconceptsandtailoredsolu-tions.
TherevenuefromESLShipping'sservicesisrecognizedwhentheservicesarerenderedaccordingtothetranspor-tationorotherservicecontracts.
AttheendofthereportingperiodtherevenuefromESLShipping'suncompletedorintransitservicesisrecognizedbasedontheshareofdayscompletedtodateoftheestimatedtotallengthoftimeforper-formingtheservice.
Incomeandcostsfromconstruc-tioncontractsbuiltaccordingtoindivid-ualordersarerecognizedasrevenueandexpensesonthebasisoftheper-centageofcompletionmethodwhentheoutcomeoftheprojectisreliablyassess-able.
Thestageofcompletionisdefinedastheshareofrealizedplanning,pro-ductionandinstallationhoursaccumu-latedbythetimeofreviewfromtheproject'sestimatedplanning,productionandinstallationhours.
Costsassociatedwithaproject,forwhichnorevenuehasbeenrecorded,arerecognizedininvento-riesunderincompleteconstructioncon-tracts.
Whenitislikelythattheprojectwillgeneratelosses,theywillbeexpensedimmediately.
Aspoappliestherecogni-tionprincipleofconstructioncontractstoLeipurin'sownmachineproduction,whichcomprisesonlyasmallpartoftheGroup'snetsales.
SubsidiesGovernmentsubsidiesgrantedtocom-pensateforexpensesincurredarerec-ognizedinthestatementofcomprehen-siveincomeintheperiodsinwhichtheexpensesrelatedtotheobjectofthesub-sidyareexpensed.
Subsidiesreceivedarepresentedasnetdeductionsfromgener-atedexpenses.
Subsidiesrelatedtotheacquisitionoftangibleassetshavebeenrecognizedasadjustmentstotheircost.
Subsidiesareenteredasincomeduringtheperiodofuseoftheassetitemintheformofsmallerdepreciation.
FinancialassetsAspoclassifiesthefinancialassetsintoloansandotherreceivables,financialassetsavailableforsale,andfinancialassetsatfairvaluethroughprofitorloss.
Theclassificationtakesplaceinconnec-tionwiththeinitialacquisition.
Loansandotherreceivablesarerec-ognizedatthesettlementdateandmea-suredinitiallyatfairvalueaddedwithanytransactioncosts.
Afterinitialrecognition,loansandreceivablesaremeasuredatamortizedcostusingtheeffectiveinter-estratemethod.
Financialassetsatfairvaluethroughprofitorlossincludepotentialderivatives,towhichhedgeaccountingisnotapplied.
Theyarerecognizedatfairvalueatthesettlementdateandaresubsequentlyremeasuredatfairvalueattheendofeachfinancialyear.
Financialassetsavailableforsaleincludeinvestmentsinshares.
Theyaremeasuredatfairvalue,usingquotedmar-ketpricesandrates,oranimputedpres-entvalue.
Changesinthefairvalueoffinancialassetsavailableforsalearerec-ognizedinothercomprehensiveincomeandpresentedinthefairvaluereserveinequity,takingthetaximpactintoaccount.
Whensuchanassetissoldorimpaired,theaccumulatedchangesinfairvaluearereclassifiedfromequitytoprofitorlossasfinancialitems.
Acquisitionsordispos-alsoffinancialassetsavailableforsalearerecognizedonthesettlementdate.
Ifreliablemarketvalueisnotavailable,available-for-salefinancialassetsarerec-ognizedatcost.
FinancialassetsarederecognizedwhentheGrouphaslostthecontrac-tualrighttothecashflows,ormateri-allymovedrisksandrewardsawayfromtheGroup.
TheGroupwritesdownreceivablesifthereisobjectiveevidencethatthereceiv-ablecannotbecollectedinfull.
FinancialliabilitiesGroup'sfinancialliabilitiesrecognizedatfairvaluethroughprofitorlossincludederivatives,towhichhedgeaccountingisnotapplied.
Theyarerecognizedatthesettlementdateandmeasuredatfairvalueattheendofeachfinancialyear.
Financialliabilitiesmeasuredatamor-tizedcostsarerecognizedatthesettle-mentdateandmeasuredatamortizedcost,lesstransactioncosts.
Interestexpensesarerecognizedinthestatementofcomprehensiveincomeoverthecon-tractualtermoftheloanusingtheeffec-tiveinterestmethod.
Financialliabilitiesareclassifiedascurrentwhentheyfallpayablewithintwelvemonthsoftheendofthereportingperiod.
CashandcashequivalentsCashandcashequivalentsincludecash,bankdepositsandotherhighlyliquidnomorethanthreemonths'investments.
Overdraftfacilitiesinusearepresentedundercurrentandnon-currentliabilities.
DerivativesDerivativesareinitiallyrecognizedatfairvalueonthedaytheGroupbecomesacontractualcounterparty,andaresubse-quentlymeasuredatfairvalue.
TheGroupapplieshedgeaccountingtothehedgingofpredictedforeigncurrencydenominatedcashflowsarisingfromtheacquisitionoftangibleassets.
Thechangeinthefairvalueoftheeffectiveportionofhedgingisrecognizedinothercom-prehensiveincomeandpresentedinthehedgingreservethatisincludedinthe45NotestotheConsolidatedFinancialStatementsfairvaluereserveunderequity.
Profitsandlossesrecognizedunderequityarereclassifiedtothecostoftheassetinquestionduringthefinancialperiodwhenthehedgeditemiscapitalized.
Hedgeaccountingisalsoappliedtointerestrateswapstohedgethefutureinterestratecashflowsasfixed.
Thechangeinthefairvalueoftheeffectiveportionofhedginghasbeenrecognizedinothercomprehen-siveincomeandpresentedinthehedgingreserveincludedinthefairvaluereserveunderequity.
Interestratesoftheinter-estrateswaprealizedduringthefinan-cialyeararerecognizedinfinancialitems.
Hedgeaccountingisnotappliedtootherderivatives.
Whenapplyinghedgeaccounting,therelationbetweenthehedginginstrumentsandhedgeditemsisdocumentedatthestartofhedging,aswellastheriskman-agementtargetsandstrategiesusedasguidelineswhenlaunchingdifferenthedg-ingactions.
Atthestartofhedgingandcontinuouslyafterthisaction,theGrouppreparesanestimatewhetherthederiv-ativesusedinhedgingeffectivelyabolishthechangesinfairvaluesorcashflowsofthehedgedobjects.
Thegainorlossrelat-ingtoaninefficientportionisimmediatelyrecognizedinthestatementofcompre-hensiveincomeasfinancialitems.
Whenthehedginginstrumentexpiresorissoldorwhenhedgingdoesnotmeetthecrite-riaofhedgeaccounting,theaccumulatedgainsandlossesretainedinequityatthattimeremaininequity,andarereclassi-fiedtothestatementofcomprehensiveincomeonlyaftertheforecasttransactionaffectsprofitorloss.
Iftheforecasttrans-actionisnolongerexpectedtooccur,theaccumulatedgainorlossretainedunderequityisimmediatelyreclassifiedtothestatementofcomprehensiveincomeasfinancialitems.
Changesinthefairvalueofderiva-tives,towhichthehedgeaccountingisnotapplied,associatedwithfinancialitemsarerecognizedinfinancialincomeandexpenses.
Changesinthefairvalueofotherderivativesarerecognizedinotheroperatingincomeandexpenses.
Fairvalueofderivativesisdeterminedonthebasisofquotedmarketpricesandrates,thediscountingofcashflowsandoptionvaluationmodels.
Thefairvalueofcurrencyforwardsiscalculatedbydis-countingthepredictedcashflowsfromtheagreementsinaccordancewithinter-estratesofthecurrenciessold,trans-latingthediscountedcashflowsattheexchangeratesatthereportingdate,andcalculatingthedifferencebetweenthedis-countedvalues.
Fairvaluesofcurrencyoptionsaredeterminedusingcommonlyadoptedoptionvaluationmodels.
Thefairvalueofinterestrateswapsiscalculatedbydiscountingthepredictedcashflowsfromtheagreementsbyusingthemar-ketpricesvaliduponvaluation.
FairvaluehierarchyPreparingtheconsolidatedfinancialstate-mentsrequiresthemeasurementoffairvalues,forbothfinancialandnon-finan-cialassetsandliabilities.
Groupclassifiesthefairvaluemeasurementhierarchyasfollows:Level1:Thefairvaluesoffinancialinstrumentsarebasedonquotedpricesonactivemarkets.
Amarketmaybecon-sideredactivewhenquotedpricesareavailableonaregularbasisandthepricesrepresenttheinstrument'sactualvalueinliquidtrading.
Level2:Thefinancialinstrumentsarenottradedonactiveandliquidmarkets.
Thevalueofthefinancialinstrumentcanbedeterminedonthebasisofmarketvalueandpossiblypartiallyonthebasisofderiveddeterminationofvalue.
Ifthefactorsinfluencingtheinstrument'sfairvalueareneverthelessavailableandveri-fiable,theinstrumentbelongstolevel2.
Level3:Thevaluationofthefinancialinstrumentisnotbasedonverifiablemar-ketinformation.
Norareotherfactorsthataffecttheinstrument'sfairvalueavailableorverifiable.
ManagementjudgmentanduseofestimatesWhenpreparingtheconsolidatedfinan-cialstatementsinaccordancewithIFRS,theGroupmanagementmustusejudg-mentsincludingtherecognitionoftrans-actions,selectionandapplicationofrel-evantIFRSstandardoraccountingprin-ciple,determinationoftheappropriatefinancialstatementpresentation,andestimatesandassumptionstherecogni-tionofitemsisbasedon.
Thisjudgmentaffectstheamountsandpresentationofassetsandliabilitiesinthebalancesheetatthetimeofpreparation,thereportingofcontingentassetsandliabilities,andtheamountsandpresentationofincomeandexpensesduringthefinancialyear.
Estimatesareused,forinstance,todeterminethecarryingamountsofgood-willandbrandsandtheirexpectedyields,theusefullivesoftangibleandintangi-bleassets,aswellastherecoverableamountsofinventoriesandassetsandliabilities.
Theestimatesarebasedontheinformationcompiledfromthebusi-nessunitsrelatedtotherespectivemar-ketsanddevelopmentofthebusinessesandtheirimpactontheGroup'snetsalesandcostlevel;theexperienceoftheman-agement;andotherjustifiableassump-tionsthatconstitutethebestcurrentassessmentsofthemanagement.
Duetochangesinthefactorsthatformthebasisforestimates,itispossiblethatfinalfig-uresmay,sometimessignificantly,deviatefromtheassessmentsusedintheconsol-idatedfinancialstatements.
AccordingtotheGroupmanagement,goodwillandbrandimpairmenttestingandrecognitionofdeferredtaxassetsinvolvethemostsignificantestimatesandassumptions.
Otherjudgmentusedincludestheselectionofaccountingprin-ciplesrelatedtorecognitionoftheincomefromconstructioncontracts,interestrateswapsandleasingagreements.
Thisselec-tiondidn'thaveamaterialimpactontheGroup'sfinancialstatements.
GoodwillandbrandimpairmenttestingTheGroupteststhecarryingamountsofgoodwillandbrandsannuallyormoreoftenifthereisanyindicationofpoten-tialimpairment.
GoodwillisallocatedtotheGroup'scash-generatingunitsiden-tifiedonthebasisinwhichthemanage-mentmonitorsgoodwillintheinternalmanagementreporting.
Theunit'srecov-erableamountiscalculatedonthebasisofvalue-in-usecalculations.
Thecash-flow-basedvalueinuseisdeterminedbycalcu-latingthediscountedpresentvalueofpre-dictedcashflows.
Thecashflowsinclude,amongothersprojectionsoffuturesales,profitabilityandmaintenancecapitalexpenditures.
Thediscountrateofthe46NotestotheConsolidatedFinancialStatementscalculationsisdeterminedthroughtheweightedaveragecostofcapital(WACC)thatdepictstheoverallcostsofequityandliabilities,takingintoaccountthepar-ticularrisksrelatedtoassetitemsandlocationofoperations.
Theweightedaver-agecostofcapitalreflectstheGroup'saveragenon-currentfinancialstructure.
Differentestimatesandassumptionscouldsignificantlyaffecttheamountsofgoodwillandbrandsreportedintheconsolidatedfinancialstatements.
Animpairmentlossisimmediatelyrecog-nizedinprofitorlossiftheasset'scar-ryingamountishigherthanitsrecover-ableamount.
Animpairmentlossrecog-nizedforgoodwillisnotreversedunderanycircumstances.
Goodwill,brandsandtheirimpairmenttestingarediscussedinmoredetailinNote12.
DeferredtaxassetsAttheendofeachfinancialyear,theGroupestimatesifitissufficientlyprob-ablethattaxableprofitwillbeavailableinthefutureagainstwhichthetaxlossescanbeutilized.
Theestimatesarebasedonmanagementprojectionsonfutureresults.
Theamountofdeferredtaxassetsintheconsolidatedfinancialstate-mentswouldbeimpactedif,forexample,futuretaxableincomedeviatedfromthemanagementprojectionsorrelatedtaxlegislationchanged.
AdoptionofneworamendedIFRSstandardsandinterpretationsTheGroupwilladoptthefollowingstan-dards,amendmentsandinterpretationsin2018:IFRS15RevenuefromContractswithCustomers,EffectivedateofIFRS15,andClarificationstoIFRS15(effectiveforfinancialperiodsstartingonorafterJanuary1,2018).
IFRS15wasissuedinMay2014.
Thestandardincludesafive-stepmodeltorecognizerevenuefromcus-tomercontracts.
IFRS15offersacompre-hensiveframeworktodeterminewhetherrevenuecanberecognized,howmuchcanberecognizedandwhen.
AccordingtoIFRS15,anentitymustrecognizerev-enueinanamountthatreflectsthecon-siderationtowhichtheentityexpectstobeentitledinexchangeforthegoodsorservicesinquestion.
IFRS15supersedesallthepreviouslyvalidguidelinesonrev-enuerecognitionprinciples,e.
g.
IAS18Revenue,IAS11Constructioncontracts,andtherelatedIFRICinterpretations.
Aspowilladoptthenewstandardbyusingthefullyretrospectivemethodandpracticalexpedientsallowedbythestandard.
Aspopreparedtoadoptthestandardfromtheendof2016totheendof2017,byimplementinganIFRS15projectthatcoveredthewholeGroup.
Intheproj-ect,varioustypesofsalestransactionswereanalyzedineachsegmentusingtheIFRS15five-stepmodel,anddifferencesbetweenthenewandpreviousincomerecognitionprincipleswereidentified.
In2017,thepracticesandsalescontractswereamendedtocomplywithIFRS15,ifapplicable.
Duringtheproject,staffweretrainedtoidentifynewtypesoftransac-tionsandtoapplythenewstandardtotheirrevenuerecognition.
Throughouttheentireyear,Aspo'sauditcommitteemon-itoredtheprogressoftheprojectandtheadoptionofthestandard.
AspoGroup'soperatingsegmentsareESLShipping,Leipurin,TelkoandKauko.
Theoperatingsegmentsarereportedinamannerthatisuniformwithinter-nalreportingtothechiefoperatingdeci-sion-makerofthecompany.
Aspo'srev-enuemainlyconsistsofthefollowingstreams:SalesofrawmaterialsintheplasticsandchemicalindustriesSalesofrawmaterialsandmachinesinthebakeryandotherfoodindustriesSalesofshiptransportationservicesintheenergyandmetalindustriesSalesoftoolsandapplicationsformobileknowledgeworkandsalesofequipmentandapplicationsthatincreaseenergyefficiencyTheeffectofthenewstandardontherev-enuerecognitionprinciples:ThemajorityofAspo'srevenuecomesfromthesalesofgoodsfromwhichreve-nueisrecognizedupondeliveryoncethesignificantrisksandbenefitsassociatedwiththeownershiphavebeenpassedontothebuyerinaccordancewiththedeliverymethodclauses.
ApartfromESLShipping,onlyasmallpartoftheoperat-ingsegments'salescomefromthesalesofservicestocustomersfromwhichrev-enueisrecognizedoncetheserviceshavebeenrendered.
Themajorityofotherser-vicesofferedbythesegmentsarecon-sideredpartofthecustomerservicebecausetheyarerelated,forexample,tothedevelopmentanddesignofprod-uctconceptsandcustomizedsolutions.
ESLShipping'srevenueisrecognizedovertimewhentheservicesarerendered.
Therevenuerecognitionisbasedontrans-portationorotherserviceagreements.
Attheendofthereportingperiod,reve-nuefromESLShipping'sintransitoroth-erwiseincompleteservicesisrecognizedbasedontheshareofservicedayscom-pletedovertheestimatedtotaldurationofperformingtheservice.
AspoGrouphasappliedtherevenuerecognitionprinciplesforconstructioncontractstoLeipurin'sownmachinepro-ductionwhichcomprisesonlyasmallpartoftheGroup'srevenue.
Therecognitionprinciplehasbeendescribedinmoredetailundertheaccountingprinciples.
AccordingtothenewIFRS15stan-dard,anentitymustrecognizerevenueonceithassatisfieditsperformanceobli-gationbytransferringthepromisedgoodsorservicestothecustomer.
TheGroup'ssalesagreementsmainlyconcernthesaleofproductstocustomers,andtheGrouphasidentifiedoneperformanceobligationintheagreements.
Thetransactionpriceismainlyfixed,whileinsomecasestheconsiderationmaybevariable.
Revenueisrecognizedoncetheproductshavebeendeliveredtothecustomerataspecificpointoftime.
Theadoptionofthestan-dardwillhavenosignificantimpactonrev-enuerecognitioncomparedtothecom-pany'searlierrevenuerecognitionprinci-ples.
However,aminorimpactontimingortheamountofrevenuetoberecog-nizedhasbeenidentifiedinasmallnum-berofindividualtransactions,result-ingfrome.
g.
exceptionalwarrantyperi-ods,individualvariableconsiderations,ortermsofdelivery.
ThefollowingtablespresentAspo'srev-enuebysegmentfor2017inaccordancewiththeGroup'sreportingbasedonIFRS15standard.
Sincetheeffectofapplyingthestandard'srevenuerecognitionprinci-plesisminor,therehasbeennoneedtorestatethecurrentnetsalesreportingfor47NotestotheConsolidatedFinancialStatementsSPECIFICATIONSOFNETSALESBYIFRS15NETSALESBYMARKETAREAIN20171,000EURESLShippingLeipurinTelkoKaukoTotalFinland29,10448,11752,45431,102160,777Scandinavia15,81884733,9126650,643Balticcountries5,51432,04720,67451258,747Russia,Ukraine+otherCIScountries6,20435,039123,6090164,852Othercountries22,6516,18231,5776,93167,341Total79,291122,232262,22638,611502,360NETSALESBYTIMINGOFRECOGNITIONIN20171,000EURESLShippingLeipurinTelkoKaukoTotalAtapointoftime114,629261,31638,411414,356Overtime79,2917,60391020088,004Total79,291122,232262,22638,611502,360NETSALESBYPRODUCTCATEGORYIN20171,000EURESLShipping79,291Rawmaterials103,223Machinery19,009Leipurin122,232Plastics150,690Chemicals111,536Telko262,226Mobileknowledgework17,630Energy-efficiencyequipment14,485Other6,496Kauko38,611Total502,36048NotestotheConsolidatedFinancialStatements2017topresenttheeffectsofadoptingthestandardontheGroup'snetsalesfigures.
IFRS9FinancialInstrumentsandAmendmentstoIFRS9(effectiveforfinancialperiodsstartingonorafterJuly1,2018).
ThenewstandardreplacesthecurrentIAS39standardFinancialinstru-ments:RecognitionandMeasurement.
IFRS9changestheclassificationandmeasurementoffinancialassets,andintroducesanewmodelofexpectedcreditlossesforevaluatingfinancialassets.
Theclassificationandmeasurementoffinan-cialliabilitiesislargelyinlinewithcur-rentIAS39requirements.
Thenewstan-dardstillincludesthreetypesofhedgeaccounting.
However,thestandardallowsformoreriskpositionsthanbeforetobeincludedinthehedgeaccounting,andthehedgeaccountingprinciplesareharmo-nizedwithriskmanagement.
Inmeasur-ingfinancialassets,Aspoisadoptingamodelbasedonexpectedcreditlossesandappliesasimplifiedapproachtoeachsegment'stradereceivables.
Inhedgeaccounting,TheGroupwillcontinueitspreviouslydeterminedhedgingprinci-ples.
TheadoptionofthestandardisnotexpectedtohaveanymaterialimpactontheGroup'sfinancialstatements.
IFRS2,Share-basedPayment,amendedbyClassificationandMeasurementofShare-basedPaymentTransactions*(effectiveforfinancialperi-odsstartingonorafterJanuary1,2018).
Thechangesbringclaritytothecategori-zationandvaluationofshare-basedtrans-actions.
TheamendmentisnotexpectedtohaveamaterialeffectontheGroup'sfinancialstatements.
IFRIC22ForeignCurrencyTransactionsandAdvanceConsideration*(effectiveforfinancialperiodsstartingonorafterJanuary1,2018).
Theinterpretationspec-ifiesthatthedateofconversionoftheadvanceontheassetitem,expenseorincomerelatedtotheforeigncurrencyisthedateonwhichtheentityoriginallyrecordsanadvancepaymentordeferredincomeontheadvancetransaction.
Ifthetransactioniscomprisedofseveraladvancetransactions,thesettlementdateisdeterminedseparatelyforeachindividualtransaction.
TheinterpretationisconsistentwiththeGroup'scurrentaccountingprinciples.
TheGroupwilladoptthefollowingnewstandards,amendmentsandinterpreta-tionsin2019orlater:IFRS16LeasingAgreements(effectiveforfinancialperiodsstartingonorafterJanuary1,2019).
IFRS16wasissuedinMay2016.
Asaresultofthenewstan-dard,almostallleaseagreementswillbeenteredinthebalancesheet,becauseoperationalandfinanceleaseagreementsarenolongerseparated.
Inaccordancewiththenewstandard,leasesarerecog-nizedinthebalancesheetasa'right-of-use'assetandafinancialliabilityfortheleasepayments.
Theonlyexceptionsareshort-termleaseagreementsandagree-mentswithlow-valueassets.
Therewillbenosignificantchangestotheaccountingtreatmentappliedbythelessors.
TheGrouphascustomaryleaseagree-mentsrelatingtobusinessoperations,suchasleasesforofficeandwarehousefacilities,andcarandtransportationvehi-clesagreements.
SomeITequipmentisalsoleased.
Aspohasbegunpreparingfortheadoptionofthenewstandardbycol-lectingtherelevantinformationoncurrentleaseagreementsintheentireGroup,andhasanalyzedthemostsignificantonesinaccordancewiththecriteriaoftheIFRS16standard.
Morespecifically,abouttwentyleaseagreementshavebeenanalyzed,andbasedontheagreementstheimpactoftheadoptionofIFRS16ontheGroup'sbalancesheetandstate-mentofcomprehensiveincomehavebeenassessed.
Basedontheagreements,thebalancesheettotalwouldhaveincreasedbyaboutEUR20millioncomparedtotheopeningbalanceof2018.
Adoptionofthestandardwillaffectthepresentationofthestatementofcomprehensiveincome,butwillnothaveasignificanteffectontheresultforthefinancialyear.
Theanalysisoftheeffectswillbecomemorespecificduringtheyear2018,oncealltheleaseagreementsoftheGrouphavebeenclas-sifiedandassessedinaccordancewiththeIFRS16criteria.
Accordingtothecur-rentestimate,thestandardwillhaveasignificantimpactonAspo'sconsolidatedfinancialstatements,includingthenoteswiththekeyfigures.
Accordingtothepreliminaryestimate,Aspowilladoptthenewstandardusingsimplifiedmethodfrom1January2019.
Inthiscase,thecumulativeeffectoftheleaseagreementswillbetakenintoaccountbyadjustingtheopeningbalanceofretainedearningsorotherequityitematthetransitiondate,andnotbyrestat-ingthecomparativedata.
Also,adecisionwillbemadein2018ontheIT-systemrequiredfortheimplementationofthestandard.
Aspo'sauditcommitteeismon-itoringtheprogressoftheprojectandtheadoptionofthestandard.
IFRIC23UncertaintyoverIncomeTaxTreatments*(effectiveforfinancialperi-odsstartingonorafterJanuary1,2019).
Theinterpretationclarifiestheaccount-ingtreatmentinasituationwherethetaxationrelatedaccountingtreatmentoftheentityisnotyetapprovedbythetaxauthority.
TherevisionisnotexpectedtohaveanymajorimpactontheGroup'sfinancialstatements.
AnnualimprovementsmadetoIFRSs2015–2017*.
ThroughtheAnnualImprovementsprocedure,smallandlessurgentchangestothestandardsarecol-lectedintoonesetandareimplementedonceayear.
Theeffectsofthesechangesvaryfromonestandardtoanother.
*NotyetendorsedforusebytheEU.
49NotestotheConsolidatedFinancialStatementsAspo'soperatingsegmentsareESLShipping,Leipurin,Telko,andKauko.
ESLShippinghandlesseatransporta-tionofenergysectorandindustrialrawmaterials,andoffersrelatedservices.
LeipurinservesthebakeryandotherfoodindustryaswellasOut-of-Homemarketbyprovidingrawmaterials,pro-ductionmachinery,productionlinesinclud-ingdesignandmaintenanceaswellasbakingrelatedexpertise.
Telkoacquiresandsuppliesplasticrawmaterialsandchemicalstoindustry.
Itsextensivecustomerservicealsocoverstechnicalsupportandthedevelopmentofproductionprocesses.
Kaukoistheexpertindemandingworkingenvironmentprovidingtotalsolu-tions,servicesandequipmentformobileknowledgeworkaswellasinenergyeffi-ciencyequipment.
OtheroperationsincludeAspoGroup'sadministration,thefinancialandICTser-vicecenter,andasmallnumberofotheroperationsnotcoveredbybusinessunits.
ThesegmentstructurecorrespondswiththeGroup'sorganizationalstructure1,000EUR20172016Saleofgoods411,839378,847Salesofservices82,91875,073Constructioncontractrevenue7,6033,484Total502,360457,404Revenuerecognizedbyreferencetothestageofcompletionfromopenconstructioncontracts5,3561,221NETSALESandinternalreporting,wheremeasure-mentprinciplesofassetsandliabilitiesareinaccordancewithIFRS.
Theassessmentofeachsegment'sprofitabilityisbasedonthesegment'soperatingprofitandnetsalestoexternalcustomers.
TheBoardofDirectorsisresponsibleforassess-ingthesegmentsandmakingresourcingdecisions.
Thesegment'sassetsandliabilitiesareitemsthatthesegmentusesinitsbusi-nessoperationsorthatcanbereasonably1.
NetSalesandSegmentInformationGEOGRAPHICALAREASTheGroupmonitorsitsnetsalesinaccor-dancewiththefollowinggeographicaldivision:Finland,Scandinavia,theBalticcountries,Russia,UkraineandotherCIScountries,andothercountries.
Netsalesofthegeographicalregionsispresentedaspercustomerlocationandtheirassetsasperlocation.
NetsalesNon-currentassets*1,000EUR2017201620172016Finland160,777149,395144,984153,249Scandinavia50,64347,52848Balticcountries58,74750,370471405Russia,Ukraine+otherCIScountries164,852145,6149641,594Othercountries67,34164,49724,19711,756Total502,360457,404170,620167,012allocatedtothesegment.
Itemsnotallo-catedtosegmentsconsistofitemsasso-ciatedwithincometaxesandcentral-izedfinancinginthestatementofcom-prehensiveincomeandbalancesheet.
Investmentsconsistofincreasesintan-gibleassetsandintangibleassetsthatwillbeusedinmorethanonefinancialyear.
Pricingbetweensegmentsisbasedonfairmarketprices.
Thereisnoconsider-ableinter-segmentnetsales.
*Non-currentassetsotherthanfinancialassetsandassetsrelatedtotaxes.
50NotestotheConsolidatedFinancialStatementsOPERATINGSEGMENTS20171,000EURESLShippingLeipurinTelkoKaukoUnallocateditemsGrouptotalSalestoexternalcustomers79,291122,232262,22638,611502,360Inter-segmentsales613Netsales79,291122,232262,23238,624502,360Operatingprofit13,4993,13310,817-173-4,14023,136Netfinancialexpenses-2,082Profitbeforetaxes21,054Incometaxes-1,646Profitfortheperiod19,408Depreciationontangibleassets8,69731480547229,885Amortizationonintangibleassets63787668402641,984Segment'sassets132,89363,46376,39523,56824,776321,095Segment'sliabilities10,95317,87729,6986,560143,740208,828Investments16,8114775391234217,99220161,000EURESLShippingLeipurinTelkoKaukoUnallocateditemsGrouptotalSalestoexternalcustomers71,407112,719240,33432,944457,404Inter-segmentsales548Netsales71,407112,719240,33932,992457,404Operatingprofit12,6432,00110,103-140-4,21620,391Netfinancialexpenses-3,045Profitbeforetaxes17,346Incometaxes-1,492Profitfortheperiod15,854Depreciationontangibleassets8,347337696106159,501Amortizationonintangibleassets55868783396202,122Segment'sassets121,09762,77178,11520,00527,748309,736Segment'sliabilities9,16714,28732,0315,391134,333195,209Investments5,0422531,379161876,87751NotestotheConsolidatedFinancialStatementsACQUISITIONSANDDIVESTMENTSIN2017AND2016In2017,LeipurindivesteditsmeatindustryrawmaterialsbusinesstoMPMaustepalvelutOy.
ThedivestmenthasanimpactofapproximatelyEUR4mil-lionannuallyonthenetsalesofLeipurin.
Thegainonthesalewas0.
4million.
Goodwillallocatedtothedivestedbusi-nessamountedtoEUR0.
6million.
Inaddition,KaukoLtddivesteditssharesinthejointventureRollSystemsOytothejointventurer.
TheoperationsofthejointventurewerepartoftheIndustrialoperationsdivestedin2015.
ThedivestmenthadaminorimpactontheGroup'sresult.
Nobusinessesweredivestedduringthefinancialyear2016.
Nonewbusinesseswereacquiredinfinancialyears2017or2016.
2.
DivestedandAcquiredBusinesses1,000EUR20172016Gainsonsaleoftangibleassets18587Rentsandrelatedremunerations817633Gainsonsaleofbusinessoperations352Leasingagreementrelatedcompensation232117Otherincome451387Total2,0371,2243.
OtherOperatingIncome52NotestotheConsolidatedFinancialStatementsAttheendofthefinancialyear,thenum-berofemployeesofAspoGroupwas909(895),whiletheaverageduringthefinan-cialyearwas877(871).
Theaveragenum-berofofficestaffwas604(596)andthatofnon-officeworkers273(275).
1,000EUR20172016Wagesandsalaries33,72232,068Pensionexpenses,definedcontributionplans5,2445,289Share-basedpayments928524Otheremployeebenefitexpenses1,6602,082Total*41,55439,963*ExpensesaredecreasedbythegovernmentsubsidyformerchantvesselsfromtheMinistryofTransportandCommunications,accordingtowhichESLShippingreceiveswithholdingtaxesandsocialsecurityexpensesrelatedtomarinepersonnel'spaysasrefunds4,6615,158InformationregardingtheemployeebenefitsofkeymanagementpersonnelispresentedintheRelatedpartiessection.
EMPLOYEEBENEFITEXPENSES20172016ESLShipping235226Leipurin315322Telko288280Kauko4642Otheroperations2525Total909895PERSONNELBYSEGMENTATYEAR-END20172016ESLShipping230225Leipurin305314Telko269267Kauko4842Otheroperations2523Total87787120172016Finland436415Scandinavia2019Balticcountries7573Russia,Ukraine+otherCIScountries327338Othercountries5150Total909895AVERAGEPERSONNELBYSEGMENTDURINGTHEFINANCIALYEARPERSONNELBYGEOGRAPHICALAREAATYEAR-END4.
EmployeeBenefitsandPersonnelInformation53NotestotheConsolidatedFinancialStatements1,000EUR20172016PurchasesduringtheperiodESLShipping13,1979,597Leipurin94,83686,899Telko225,998209,434Kauko34,00328,707Total368,034334,637Changeininventories-5,219-6,453OutsourcedservicesLeipurin4,0032,965Telko3,2283,198Kauko508405Total7,7396,568Totalmaterialsandservices370,554334,7521,000EUR20172016DepreciationandamortizationIntangibleassets1,9842,122Buildings310325Vessels8,6858,339Machineryandequipment860808Othertangibleassets3029Total11,86911,623Totaldepreciation,amortizationandimpairmentlosses11,86911,6235.
Depreciation,AmortizationandImpairmentLosses6.
MaterialsandServices54NotestotheConsolidatedFinancialStatements1,000EUR20172016Rents7,7427,404ESLShipping30,15826,989Leipurin6,8146,777Telko8,1096,471Kauko2,1872,184Otheroperations2,2742,074Total57,28451,8991,000EUR20172016Dividendincomefromavailable-for-salefinancialassets11Interestincomefromloansandotherreceivables1,137723Foreignexchangegains657321Gainsonsaleofavailable-for-salefinancialassets196Totalfinancialincome1,9911,045Interestandotherfinancialexpenses-3,208-3,164Foreignexchangelosses-865-926Totalfinancialexpenses-4,073-4,090Totalfinancialincomeandexpenses-2,082-3,0451,000EUR20172016Auditing290290Taxadvice5560Otherservices13880Total483430TheitemsaboveoperatingprofitincludeEUR-0.
9million(-0.
6)inexchangeratedifferencesfor2017.
InterestexpensesincludeEUR0.
0million(0.
1)incontin-gentrentsrecognizedascostsarisenfromfinanceleasingagreementsduringthefinancialyear.
7.
OtherOperatingExpenses8.
FinancialIncomeandExpensesAUDITORS'FEES55NotestotheConsolidatedFinancialStatements1,000EUR20172016Taxesfortheperiod-2,283-1,980Changeindeferredtaxassetsandliabilities636475Taxesfrompreviousfinancialyears113Total-1,646-1,492TAXESINTHESTATEMENTOFCOMPREHENSIVEINCOME1,000EUR20172016Cashflowhedges192-102INCOMETAXONOTHERCOMPREHENSIVEINCOME1,000EUR20172016Profitbeforetaxes21,05417,346Taxescalculatedusingtheparentcompany'staxrate-4,211-3,469Impactofforeignsubsidiaries'taxrates255308Impactoftonnagetaxation3,1282,964Lossesforwhichnodeferredtaxassetwasrecognized-892-1,163Utilizationofpreviouslyunrecognizedtaxlosses1916Allowancefromdeferredtaxassets-354Taxesfrompreviousfinancialyears113Withholdingtaxes-272-124Timingdifferences,tax-freeandnon-deductibleitems508-27Taxesinthestatementofcomprehensiveincome-1,646-1,492Effectivetaxrate8%9%RECONCILIATIONOFTHETAXEXPENSEINTHESTATEMENTOFCOMPREHENSIVEINCOMEANDTAXESCALCULATEDUSINGTHEGROUPSPARENTCOMPANYSTAXRATE20%9.
IncomeTaxes56NotestotheConsolidatedFinancialStatements1,000EUR20172016UndilutedProfitfortheperiodattributabletoparentcompanyshare-holders19,40815,854Interestofthehybridbond(adjustedbytaxeffect)-2,160-819Averagenumberofsharesduringperiod(1,000)30,59930,564Earningspershare,EUR0.
560.
49DilutedDilutedearningspershare,EUR0.
560.
49Earningspershareiscalculatedbydivid-ingtheprofitorlossattributabletotheparentcompany'sshareholdersbytheweightedaveragenumberofoutstand-ingsharesduringthefinancialyear.
Whencalculatingtheearningspershare,inter-estandpricepremiumcostofthehybridbond,adjustedfortaxeffect,hasbeenconsideredasaprofit-reducingitem.
Whencalculatingthedilutedearningspershareinpreviousyears,theaveragenum-berofshareswasadjustedwiththedilu-tiveeffectoftheequity-basedconvert-iblecapitalloanandtheshareholdingplanforAspoManagementOy.
Attheendof2016and2017,therewerenodilutingcomponents.
Intangiblerightsmainlyconsistofcor-poratebrandsdescribedinNote12.
Intangibleassetsalsoincludesoftwareandassociatedlicenses,aswellasprin-cipalrelationshipsandnewtechnologyacquiredinbusinesscombinations.
1,000EURIntangiblerightsOtherintangibleassetsAdvancepaymentsofintangibleassetsTotalAcquisitioncost,Jan.
19,34317,291626,640Translationdifferences24547Increases59374118551Decreases-1,518-1,410-6-2,934Acquisitioncost,Dec.
317,88616,30011824,304Accumulatedamortization,Jan.
1-3,686-13,518-17,204Translationdifferences-3-47-50Accumulatedamortizationofdecreases1,5181,4102,928Amortizationfortheperiod-70-1,914-1,984Accumulatedamortization,Dec.
31-2,241-14,069-16,310Carryingamount,Dec.
315,6452,2311187,99411.
IntangibleAssets10.
EarningsperShare201757NotestotheConsolidatedFinancialStatements1,000EURIntangiblerightsOtherintangibleassetsAdvancepaymentsofintangibleassetsTotalAcquisitioncost,Jan.
110,04916,32654726,922Translationdifferences-4-49-53Increases274906523Decreases-729-10-13-752Transfersbetweenclasses534-5340Acquisitioncost,Dec.
319,34317,291626,640Accumulatedamortization,Jan.
1-4,323-11,546-15,869Translationdifferences44650Accumulatedamortizationofdecreases72710737Amortizationfortheperiod-94-2,028-2,122Accumulatedamortization,Dec.
31-3,686-13,518-17,204Carryingamount,Dec.
315,6573,77369,4362016Otherintangibleassets1,000EUR20172016Acquisitioncost,Jan.
14,6143,610Increases307480Transfersbetweenclasses534Decreases-1,341-10Acquisitioncost,Dec.
313,5804,614Accumulatedamortization,Jan.
1-2,527-1,731Accumulatedamortizationofdecreases1,34110Amortizationfortheperiod-848-806Accumulatedamortization,Dec.
31-2,034-2,527Carryingamount,Dec.
311,5462,087INTANGIBLEASSETSLEASEDUNDERFINANCIALLEASESAREINCLUDEDININTANGIBLEASSETSASFOLLOWS58NotestotheConsolidatedFinancialStatementsGoodwillisallocatedtotheGroup'scash-generatingunitsbybusinessunit,dependingonthelevelofgoodwillmoni-toringininternalreporting.
Everyunitrep-resentseachofAspo'soperatingseg-ments.
Goodwillisallocatedtotheseg-mentsasfollows:ESLShippingEUR0.
8million(0.
8),LeipurinEUR26.
7million(27.
3),TelkoEUR5.
0million(5.
0),andKaukoEUR9.
5million(9.
5).
TheusefullivesofbrandsincludedinLeipurinandTelkosegmentshavebeenestimatedtobeindefinite.
Thestrongimageandhistoryofthesebrandssupportthemanagement'sviewthatthesebrandswillaffectcashflowgen-erationoveranindefinableperiod.
Thebrandshavebeentestedforimpair-ment.
Accordingtotestresults,thereisnoneedforimpairment.
IMPAIRMENTTESTINGFuturecashflowsinimpairmentcalcu-lationshavebeendefinedonthebasisofvalueinuse.
Cashflowestimatesarebasedonthree-yearfinancialplansapprovedbytheBoardofDirectors.
Intesting,cashflowestimatesarepreparedforfiveyears,afterwhichthecashflowisassumedtogrowsteadily.
Thetermi-nalvaluehasbeencalculatedbyusingagrowthassumptionof1%(1).
Therecov-erableamountindicatedbythetestsclearlyexceedsthecarryingamountofgoodwillineachsegment.
Theshareoftheterminalvaluevariedfrom56%to71%oftherecoverableamountandwashighestintheKaukosegment.
Thegood-willsofESLShippingandotheroperationsarenotsignificantcomparedtotherecov-erableamount.
Theimpairmenttestsindi-catethatnoimpairmenthasoccurred.
Whenestimatingnetsales,theassumptionisthatcurrentoperationscanbemaintained,andnetsaleswillgrowinacontrolledmannerattherateestimatedinfinancialplans.
Thesalesmarginisesti-matedtofollownetsalesgrowth.
Itisestimatedthatcostswillincreaseslowlyasaresultofcontinuouscostmanage-ment.
Fixedcostsareexpectedtogrowasmuchastherateofinflationatthemost.
Thediscountrateisdeterminedforeachsegmentthroughtheweightedaver-agecostofcapital(WACC)thatdepictstheoverallcostsofequityandliabili-ties,takingintoaccounttheparticularrisksrelatedtotheassetitemsandloca-tionofoperations.
Thepost-taxdiscountrate(WACC)usedinthecalculationswas9.
1–14.
0%.
FACTORSINFLUENCINGIMPAIRMENTTESTINGANDSENSITIVITYANALYSISSloweconomicgrowth,changesinexchangeratesandheavyfluctuationintheoperatingenvironmentmakeitmoredifficulttoevaluatetheassumptionsusedinimpairmenttesting.
Themanagementbelievestheassumptionstobeappro-priateandthattestedoperationshaveasustainablebasis.
Therearenoindica-tionsofimpairmentinthebusinessoper-ations'goodwillbuttheresultoffutureimpairmenttestingdependsonthereal-izationofestimatedfuturecashflows.
Asubstantialnegativechangeinfuturecashflows,asignificantincreaseininter-estratesorahightying-uprateofcapital1,000EUR20172016Acquisitioncost,Jan.
143,99044,041Decreases-598Translationdifferences-32-51Acquisitioncost,Dec.
3143,36043,990Accumulatedimpairmentlosses,Jan.
1-1,347-1,347Accumulatedimpairmentlosses,Dec.
31-1,347-1,347Carryingamount,Dec.
3142,01342,643GOODWILL1,000EUR20172016ESLShipping790790Leipurin26,68327,281Telko5,0005,032Kauko9,5049,504Otheroperations3636Total42,01342,643ALLOCATIONOFGOODWILL1,000EUR20172016Leipurin3,1483,148Telko2,1552,155Total5,3035,303BRANDS12.
Goodwill59NotestotheConsolidatedFinancialStatements1,000EURLandBuildingsMachineryandequipmentVesselsOthertangibleassetsWorkinprogressandadvancepaymentsTotalAcquisitioncost,Jan.
1545,5009,166242,38972911,039268,877Translationdifferences-5-201-20-226Increases1367022,91413,71517,467Decreases-227-1,628-57,842-470-60,167Transfersbetweenclasses931-930-10Acquisitioncost,Dec.
31546,3357,109187,46172824,264225,951Accumulateddepreciation,Jan.
1-2,756-6,558-145,954-289-155,557Translationdifferences-1110109Accumulateddepreciationofdecreases2271,52557,54859,300Accumulateddepreciationoftransfers-2852850Depreciationfortheperiod-310-860-8,685-30-9,885Accumulateddepreciation,Dec.
31-3,125-5,498-97,091-319-106,033Carryingamount,Dec.
31543,2101,61190,37040924,264119,918mayresultinanimpairmentlossofgood-will.
Itisthemanagement'sviewthattheestimatesoffuturecashflowsandthetying-uprateofcapitalusedinthetest-ingarelikely.
Eachsegmenthasundergoneasen-sitivityanalysisinwhichthevaluesusedasbasicassumptionsinthetestingwereloweredoneatatimeotherfac-torsremainingthesame.
Asaresultofthis,thevalueofsegmentsfuturecashflowshasdecreasedandtherecoverableamountislower.
Thechangesandtheireffectswere:13.
TangibleAssetsTangibleassetsincludeadvancepaymentsforESLShipping'supcomingLNG-fueledvessels.
TheEUsupportsenergy-efficiencyandenvironmentalinvestmentsinships.
ESLShippingreceivessubsidyofatmostEUR5.
9millionin2016–2019,ofwhichEUR2.
1millionwaspaidin2016.
Thisreducestheadvancepaymentsrelatedtothevesselpurchase.
Toobtainthesubsidy,itisrequiredthattheactivitieslistedintheagreementarecarriedoutandthatthearisingcostsaredocumentedinanapprovedmanner.
2017WACCwasraisedby20%,effect18–19%(18).
operatingprofitwascutdownby10%,effect9–12%(6–12).
Thesensitivityanalysisshowsthatthereisnoneedforimpairment.
60NotestotheConsolidatedFinancialStatementsTANGIBLEASSETSLEASEDUNDERFINANCIALLEASESAREINCLUDEDINTANGIBLEASSETSASFOLLOWSMachineryandequipment1,000EUR20172016Acquisitioncost,Jan.
1441439Increases522Decreases-185Acquisitioncost,Dec.
31308441Accumulateddepreciation,Jan.
1-333-244Accumulateddepreciationofdecreases185Depreciationfortheperiod-90-89Accumulateddepreciation,Dec.
31-238-333Carryingamount,Dec.
31701081,000EURLandBuildingsMachineryandequipmentVesselsOthertangibleassetsWorkinprogressandadvancepaymentsTotalAcquisitioncost,Jan.
1545,5008,120238,6767219,396262,467Translationdifferences28089369Increases9413,71311,6416,296Decreases-238-17-255Transfersbetweenclasses637-700Acquisitioncost,Dec.
31545,5009,166242,38972911,039268,877Accumulateddepreciation,Jan.
1-2,431-5,754-137,615-260-146,060Translationdifferences-159-159Accumulateddepreciationofdecreases163163Depreciationfortheperiod-325-808-8,339-29-9,501Accumulateddepreciation,Dec.
31-2,756-6,558-145,954-289-155,557Carryingamount,Dec.
31542,7442,60896,43544011,039113,320201661NotestotheConsolidatedFinancialStatements1,000EURUnlistedsharesAcquisitioncost,Jan.
1172Decreases-2Acquisitioncost,Dec.
31170Carryingamount,Dec.
3117020171,000EURUnlistedsharesAcquisitioncost,Jan.
1172Acquisitioncost,Dec.
31172Carryingamount,Dec.
311722016Available-for-salefinancialassetsareunlistedshares.
Becausetheirfairvaluecannotbereliablydetermined,theyhavebeenrecognizedattheiracquisitioncostlesspossibleimpairments.
14.
FinancialAssetsAvailableforSale1,000EUR20172016Derivativecontracts41,248Loanreceivables171193Deferredreceivables350Total5251,441KaukoLtdowned50%ofthejointven-tureRollSystemsOy.
Kaukodivesteditsinvestmentinthejointventuretothejointventurerin2017.
Thetransactiondidnothaveamaterialimpactontheconsolidatedstatementofcomprehen-siveincome,becausethecompanyanditssubsidiaryhadproducedalossandtheGroup'sfinancialstatementsdidnotincludeashareofthejointventure'sresult.
16.
JointVentures15.
Non-currentReceivables62NotestotheConsolidatedFinancialStatementsDeferredtaxliabilityonthetransitiontotonnagetaxationisrelievedthroughannualstatesubsidiesduringthevalidityoftheTonnageTaxActiftheprecondi-tionsforsuchreliefaremet.
TheamountoftaxreliefwasEUR0.
6millionin2017,andEUR4.
1millionin2011–2016.
ThebalancesheetincludesdeferredtaxassetsofEUR2.
5million(2.
9)fromFinnishcompanieswithanegativeresultforthefinancialyears2012or2013.
Thesedeferredtaxassetsarerecog-nizedonthebasisofthemanagement'sprofitforecastindicatingthattherealiza-tionofthedeferredtaxassetsinquestionisprobable.
NodeferredtaxassetswererecognizedonthetaxablelossesofEUR20.
4millionincurredbyFinnishcompa-niesinotheryears.
Theutilizationperiodofthesetaxablelossesis10years.
TheGrouphadEUR2.
5million(3.
4)inunusedtaxablelossesinsubsidiariesabroad,onwhichnodeferredtaxassetshavebeenrecognizedbecausetheGroupisunlikelytoaccumulatetaxableincomeagainstwhichthelossescouldbeutilizedbeforetheselossesexpire.
Thelossexpiryperiodvariesfromonecountrytoanother.
Somelossesexpirein2018,whilesomelossesdonothaveanyexpiryperiodsetoutwithinthescopeofthecurrentleg-islation.
AdeferredtaxliabilityofEUR1.
5million(1.
4)hasnotbeenrecognizedfromtheretainedearningsofsubsidiar-iesabroadbecausetheyarepermanentlyinvestedinthecountriesinquestion.
1,000EUR20172016Derivatives160125Employeebenefits3011Lossesavailableforutilizationagainstfuturetaxableincome2,7283,025Othertemporarydifferences349271Total3,2673,432DEFERREDTAXASSETS1,000EUR20172016Depreciationinexcessofplan231232Deferredtaxliabilityduetotonnagetaxation1,8532,470Tangibleandintangibleassets1,1851,396Derivatives85Othertemporarydifferences3160Total3,3004,243DEFERREDTAXLIABILITIES1,000EUR20172016Deferredtaxassets,Jan.
13,4323,797ItemsrecognizedinthestatementofcomprehensiveincomeUnutilizedtaxlosses-297-248Employeebenefits19-24Othertemporarydifferences-12-58Itemsrecognizedinothercomprehensiveincome125-35Deferredtaxassets,Dec.
313,2673,432CHANGESINDEFERREDTAXASSETS1,000EUR20172016Deferredtaxliabilities,Jan.
14,2434,978ItemsrecognizedinthestatementofcomprehensiveincomeDepreciationinexcessofplan-116Deferredtaxliabilityduetotonnagetaxation-617-618Tangibleandintangibleassets-211-245Othertemporarydifferences-4745Itemsrecognizedinothercomprehensiveincome-6767Deferredtaxliabilities,Dec.
313,3004,243CHANGESINDEFERREDTAXLIABILITIES17.
DeferredTaxes63NotestotheConsolidatedFinancialStatementsAnexpenseofEUR0.
3million(0.
3)wasrecognizedduringthefinancialyearforawrite-downofinventoriestonetrealizablevalue.
Accountsreceivabledonotinvolvesignificantcreditlossrisks.
AtotalofEUR0.
9million(0.
4)wasrecognizedasimpairmentlossfromaccountsreceivable.
1,000EUR20172016Materialsandsupplies1,6151,272Finishedgoods56,30453,478Otherinventories3,0021,958Total60,92156,7081,000EUR20172016Accountsreceivable54,29448,079Accountsreceivableonconstructioncontracts*1,215887RefundfromtheMinistryofTransportandCommunications2,3572,615Advancepayments2,1682,651VATreceivable640983Derivativecontracts443Loanreceivables2134Otherdeferredreceivables5,3384,061Total66,03359,753*Aggregateditemsrelatedtoconstructioncontracts:Accruedincomeaccordingtothestageofcompletion5,3561,221Advancesreceivedrelatedtoconstructioncontracts-4,141-334Accountsreceivableonconstructioncontracts1,21588720.
CashandCashEquivalents18.
Inventories19.
AccountsReceivableandOtherReceivables1,000EUR20172016Bankaccountsanddeposits19,92322,62764NotestotheConsolidatedFinancialStatements1,000EURin1,000sSharecapitalSharepremiumInvestedunrestrictedequityreserveHybridinstrumentTreasurysharesTotalJanuary1,201630,49617,6924,35111,92920,000-2,75151,221Share-basedincentiveplan84410410Hybridinstrument,issue25,00025,000Hybridinstrument,repayment-20,000-20,000Transferfromthereserve125125December31,201630,57917,6924,35112,05425,000-2,34156,756TreasurysharesheldbytheGroup396Totalnumberofshares30,976Shareshavenonominalvalue.
EQUITY20171,000EURin1,000sSharecapitalSharepremiumInvestedunrestrictedequityreserveHybridinstrumentTreasurysharesTotalJanuary1,201730,57917,6924,35112,05425,000-2,34156,756Share-basedincentiveplan26172172Translationdifferences77December31,201730,60517,6924,35112,06125,000-2,16956,935TreasurysharesheldbytheGroup370Totalnumberofshares30,976OnDecember31,2017,AspoPlc'snum-berofshareswas30,975,524andthesharecapitalwasEUR17.
7million.
OnMay27,2016,AspoissuedaEUR25millionhybridbond.
Thecouponrateofthebondis6.
75%perannum.
Thebondhasnomaturitybutthecom-panymayexerciseanearlyredemptionoptionafterfouryearsfromtheissu-ingdate.
Aninterestpaymentobliga-tionissetupiftheAnnualShareholders'Meetingdecidestodistributedividends.
Ifnodividendisdistributed,thecompanycandecideuponthepaymentofinter-estseparately.
Ahybridbondisaninstru-mentwhichissubordinatedtothecom-pany'sotherdebtobligations.
Inthecon-solidatedfinancialstatements,theloanhasbeenclassifiedasequity,andinterestpaidispresentedinequityaccordingtoitsnature.
Thehybridbonddoesnotcon-fertoitsholderstherightsofashare-holderanddoesnotdilutetheholdingsoftheshareholders.
Equityconsistsofthesharecapital,sharepremium,fairvaluereserve,trans-lationdifferences,investedunrestrictedequityreserve,otherreserves,andretainedearnings.
SharesubscriptionsbasedontheconvertiblecapitalloanthatwereissuedduringthevalidityoftheoldCompaniesAct(29.
9.
1978/734)wererecognizedinthesharepremium.
Theinvestedunrestrictedequityreserveincludesotherequity-typeinvestmentsandsharesubscriptionpricetotheextentthatitisnotrecognizedinthesharecapitalinaccordancewithaseparateresolution.
Thefairvaluereserveincludesaccumu-latedchangesinthefairvalueofderiv-ativeinstrumentsunderhedgeaccount-ingandtherecognitionofavailable-for-salefinancialassetsatfairvalue.
Otherreservesincludehybridinstruments.
DIVIDENDSAfterthereportingdate,theBoardofDirectorshasproposedthatadividendofEUR0.
43persharebedistributedfor2017,andthatthedividendbepaidintwoinstallments,EUR0.
21pershareinAprilandEUR0.
22pershareinNovember.
AdividendofEUR0.
42wasdistributedfor2016intwointstallments:EUR0.
21pershareinAprilandEUR0.
21pershareinNovember.
EQUITY201621.
Equity65NotestotheConsolidatedFinancialStatements1,000EUR20172016Cashflowhedges-2,569936FAIRVALUERESERVEIn2015,AspoPlcissuedaEUR11millionunsecuredprivateplacementbond.
ThebondpaysfixedinterestrateandmaturesonSeptember29,2022.
1,000EUR20172016Loans89,74794,056Pensionloans5,7147,143Bond10,93410,922Financialleasingliabilities9771,442Overdraftfacilitiesinuse2,1453,077Total109,517116,640NON-CURRENTLOANSANDOVERDRAFTFACILITIES1,000EUR20172016Financialleasingliabilities–totalamountofminimumleasepaymentsWithinoneyear707838Afteroneyearandwithinfiveyears1,0001,477Total1,7072,315Financialleasingliabilities–presentvalueofminimumleasepaymentsWithinoneyear680806Afteroneyearandwithinfiveyears9771,442Total1,6572,248Futurefinancialexpenses5067MATURINGOFFINANCIALLEASINGLIABILITIES1,000EUR20172016Loans23,3094,642Pensionloans1,4291,429Financialleasingliabilities680806Overdraftfacilitiesinuse1,6841,917Total27,1028,794CURRENTLOANSANDOVERDRAFTFACILITIES22.
Loans66NotestotheConsolidatedFinancialStatementsTheGrouphasprovidedforstatutorypen-sioncoverbytakingoutinsurancewithpensioninsurancecompanies.
Infor-eignunits,thepensioncoverisarrangedinaccordancewithlocallegislationandsocialsecurityregulations.
TheGroup'spensionschemesaretreatedasdefinedcontributionplansintheconsolidatedfinancialstatements.
1,000EUR20172016Definedcontributionplans5,2445,289PENSIONEXPENSESINTHESTATEMENTOFCOMPREHENSIVEINCOMETherecognizedprovisionsarebasedonbestestimatesonthereportingdate.
WarrantyprovisionsaremainlyassociatedwiththeGroup'sproductwarranties,rentalprovisionstooneroussubleasecontractsofofficepremises,contractpaymentstocompensationsofoldprojectdeliver-ies,andpensionprovisionstodirectpen-sionliabilitiesgrantedbytheGroup.
Taxprovisionswerebasedonanyincreasedexpensesarisingfromongoingtaxinquires.
1,000EURWarran-tiesandmainte-nanceservicesRentalagree-mentsCompen-sationsfordeliveriesPensioncommit-mentsTaxchargesTotalDecember31,2016266216521508Increaseinprovisions13980489708December31,20174052964895211,2161,000EUR20172016Derivativecontracts122368Othernon-interest-bearingliabilities400Total522368OTHERNON-CURRENTLIABILITIES1,000EUR20172016Accountspayable37,16139,209Advancesreceived,constructioncontracts2,410377Advancesreceived,others3,4793,267Salariesandsocialsecuritycontributions6,8546,328Employercontributions1,2381,585Accruedinterest1,6402,150Derivativecontracts1,939258VATliability3,8444,366Share-basedincentiveplan566190Othercurrentliabilities200Othercurrentdeferredliabilities7,4866,390Total66,81764,120ACCOUNTSPAYABLEANDOTHERLIABILITIES24.
PensionObligations25.
Provisions23.
AccountsPayableandOtherLiabilities67NotestotheConsolidatedFinancialStatements26.
1FINANCIALRISKMANAGEMENTPRINCIPLESANDORGANIZATIONThefunctionofAspoGroup'sfinancialriskmanagementistoprotecttheoper-atingmarginandcashflows,andeffec-tivelymanagefund-raisingandliquidity.
TheGroupaimstodevelopthepredictabil-ityoftheresults,futurecashflows,andcapitalstructure,andcontinuouslyadaptitsoperationstochangesintheoperat-ingenvironment.
FinancialriskmanagementisbasedonthetreasurypolicyapprovedbytheBoardofDirectors,whichdefinesthemainprin-ciplesforfinancialriskmanagementinAspoGroup.
Thetreasurypolicydefinesgeneralriskmanagementobjectives,therelationshipbetweentheGroup'sparentcompanyandbusinessunits,thedivisionofresponsibility,andriskmanagement-re-latedreportingrequirements.
Thetreasurypolicyalsodefinestheoperatingprinciplesrelatedtotheman-agementofcurrencyrisks,interestraterisks,andliquidityandrefinancingrisks.
TogetherwiththeGroupTreasurer,Aspo'sCEOisresponsiblefortheimple-mentationoffinancialriskmanagementinaccordancewiththetreasurypolicyapprovedbytheBoardofDirectors.
Thebusinessunitsareresponsibleforrecog-nizingtheirownfinancialrisksandman-agingthemtogetherwiththeparentcom-panyinaccordancewiththeGroup'strea-surypolicyandmoredetailedinstructionsprovidedbytheparentcompany.
26.
2MARKETRISKSCurrencyriskAspoGrouphascompaniesandaffili-atesin17countries,andtheoperationstakeplacein12differentcurrencies.
TheGroup'scurrencyriskconsistsofforeigncurrency-denominatedinternalandexter-nalreceivables,liabilities,estimatedcur-rencyflows,derivativecontractsandtranslationrisksrelatedtoresultsandcapital.
ThetargetofAspoGroupistodecreasetheuncertaintyrelatedtofluc-tuationsinresults,cashflowsandbal-ancesheetitems.
Atthebusinessunitlevel,currencyriskmainlyoccurswhenaunitsellsprod-uctsandserviceswithitsdomesticcur-rency,butthecostsarerealizedinafor-eigncurrency.
InaccordancewithAspo'sstrategy,anincreasinglysignificantpartofthenet1,000EUR20172016EUR132,790120,441USD2,1453,077Other1,6841,917Total136,619125,435INTEREST-BEARINGLIABILITIESBYCURRENCY1,000EUR20172016EUR38,20228,610SEK1,2961,108DKK1,1781,075PLN670873RUB4,1379,576UAH3,7423,638USD4,2181,351Other8511,848Total54,29448,079ACCOUNTSRECEIVABLEBYCURRENCY1,000EUR20172016EUR35,92135,733SEK727722DKK387181PLN239300RUB1,4291,028UAH128642USD3,7843,234Other4351,103Total43,05042,943ACCOUNTSPAYABLEANDADVANCESRECEIVEDBYCURRENCYsalesofTelkoandLeipurinoriginatesfromRussia.
Inaddition,aconsiderablepartofTelko'snetsalescomesfromUkraine.
Aspo'smostextensivecurrencyrisksarerelatedtotheRussianruble.
Iftherubleweakenedagainsttheeuro,theRussiannetsalesandresultdenominatedineurooftheTelkoandLeipurinsegmentswoulddecrease.
TheRussianrublestrengthenedduringthefirsthalfof2017,comparedtothesameperiodinthepreviousyear,andremainedstablethroughthelatterhalfoftheyear.
ChangesintheRussianrubleagainsttheeurohadnosignificantimpactonGroup'snetsalesandresultfor2017.
ThecurrencyrisksofESLShippingaremainlyrelatedtodollar-denominatedinvestments.
Theshippingcompanyhadamajorinvestmentprogramunderwayin2017fortheconstructionoftwonewvessels.
ThetotalvalueoftheinvestmentisapproximatelyEUR60million,andtherelatedcashflowsoccurintheyears2015–2018.
Partofthefuturecashflows26.
FinancialRisksandFinancialRiskManagement68NotestotheConsolidatedFinancialStatements1,000EUREquity2017Equity2016SEK-984-1,487DKK6,1625,974RUB16,17019,246NOK-10044UAH1751,112PLN1,7871,690BYN-837-826CNY430-1,587KZT-433-353AZN26-19IRR-91EUR7,0549,642Total29,35933,436INVESTMENTSINFOREIGNSUBSIDIARIES1,000EUR20172016Cashandcashequivalents19,92322,627Revolvingcreditfacilities40,00040,000Total59,92362,627CASHANDCASHEQUIVALENTSANDUNUTILIZEDCOMMITTEDREVOLVINGCREDITFACILITIESrelatedtothecontractaredollar-denomi-nated,andtheyhavebeenhedgedintheirentiretybycurrencyforwardagreements,towhichhedgeaccountingisapplied.
Atthereportingdate,AspoGroup'scurrencypositionmainlyconsistedofinternalandexternalinterest-freeandinterest-bearingreceivablesandliabilitiesdenominatedinforeigncurrency.
Interest-bearingliabilitiesaremainlydenominatedineuro.
MostofAspoGroup'saccountsreceiv-ablearedenominatedineuro.
AccountsreceivabledenominatedinUSdollarcom-prisethesecondlargestitem.
BecauseasignificantpartofTelkoandLeipurinoperationscomesfromRussia,accountsreceivablefromthismarketareaaresignificant.
AspoGrouphasmadeinvestmentsinsubsidiariesabroad.
Inaddition,theequityofsubsidiariesabroadincreasesthroughprofitablebusiness.
ThetotalequityoftheGroup'ssubsidiariesabroadatthereportingdatewasEUR29.
4mil-lion(33.
4).
Ruble-denominatedinvest-mentsofEUR16.
2million(19.
2)insub-sidiariesoperatinginRussiawerethebig-gestinvestmentinregardtothecurrencyamount.
DespitethesignificantshareofequitybeingdenominatedintheRussianruble,theGroupdeemsthatdiversify-ingisatasufficientlevel,andthereisnoneedtohedgethetranslationposi-tionassociatedwiththeequitiesofitssubsidiariesabroad.
ThetableshowstheGroup'sshareinthesubsidiaries'equitybycurrency.
Inaddition,non-currentintra-Grouploanreceivables(includedintheTelkoseg-ment)fromTelko'sBelarusian,UkranianandKazakhstanisubsidiarieshavebeenclassifiedasnon-currentnetinvestmentsinforeignoperations.
InterestrateriskTofinanceitsoperations,AspoGroupusesbothfixed-rateandfloating-ratelia-bilitiesthatcauseaninterestrateriskinAspoGroup'scashflowandprofitasaresultofchangesintheinterestratelevel.
Inadditiontofixed-rateliabilities,AspoGroupusesinterestratederiva-tivestodecreaseapossiblegrowthinfuturecashflowscausedbyanincreaseinshort-termmarketinterestrates.
OnDecember31,2017,theGroup'sinter-est-bearingliabilitiestotaledEUR136.
6million(125.
4)andcashandcashequiv-alentsstoodatEUR19.
9million(22.
6).
AspoGroup'screditportfolioisreviewedwithregardtoaverageinterestrate,thedurationofinterestrateposition,aver-ageloanmaturity,andrelationbetweenfixed-rateandfloating-rateliabilities.
Onthebalancesheetdate,theaverageinter-estrateoninterest-bearingliabilitieswas1.
8%(1.
8),thedurationofinterestratepositionwas1.
9years(2.
1),theaver-ageloanmaturitywas3.
4years(4.
2),andtheshareoffixed-rateliabilitieswas47%(42).
In2017,theaveragematurityofinterest-bearingloansandthedurationofinterestratepositionshortened,andtheportionoffixed-rateloansincreased.
SensitivitytomarketrisksAspoGroupisexposedtointerestrateandcurrencyrisksviafinancialinstru-ments,suchasfinancialassetsandlia-bilitiesincludingderivativecontracts,includedinthebalancesheetonthereportingdate.
Thecurrencypositionvar-iesduringthefinancialyearand,accord-ingly,thepositionincludedinthebalancesheetonthereportingdatedoesnotnec-essarilyreflectthesituationduringthefinancialyear.
Theimpactofforeigncur-rencydenominatedsalesandpurchasetransactionsmadeduringthefinancialyearonthestatementofcomprehen-siveincomeisnottakenintoaccountinthesensitivityanalysisunlesstheywerehedgedthroughderivatives.
Thesensitivityanalysisisusedtoana-lyzetheimpactofmarkettrendsonmea-surements.
TheUSdollarposesasignifi-cantcurrencyriskforAspoGroupduetovesselinvestments.
Cashflowsrelatedtotheinvestmenthavebeenhedgedbycur-rencyforwards.
ThefluctuationbetweentheRussianrubleandeuroisthemostsignificantfactorcausingcurrencyriskstotheGroup.
Thesensitivityanalysisregard-ingchangesintheeuro/Russianrubleexchangerateisbasedonthefollowingassumptions:Theexchangeratechangeof+/-30%.
Thepositionincludestheruble-denominatedfinancialassetsandliabilitiesofcompaniesthatusetheeuroastheirfunctionalcurrencyandtheeuro-denominatedfinancialassetsandliabilitiesofsubsidiariesoperatinginRussia,i.
e.
accountsreceivableandotherreceivables,loansandoverdraftfacilitiesused,accountspayableandotherliabilities,69NotestotheConsolidatedFinancialStatements201720161,000EURStatementofcompre-hensiveincomeEquityStatementofcompre-hensiveincomeEquityCurrencyrisk+30%strengtheningofeuroagainstRUB197-3,731-1,473-4,441-30%weakeningofeuroagainstRUB-3656,9302,7358,248InterestrateriskChangeof+100basicpointsinthemarketinterestrates-738-738Changeof-100basicpointsinthemarketinterestrates734739SENSITIVITYANALYSISFORFOREIGNCURRENCYANDINTERESTRATERISKaswellascashandcashequivalentsonthereportingdate.
Futurecashflowsarenottakenintoaccountintheposition.
Thesensitivitycalculationresultingfromchangesininterestratesisbasedonthefollowingassumptions:Theinterestlevelchangesbyonepercentagepoint.
Thepositionincludesfloating-rateinterest-bearingfinancialliabilitiesandassets.
Thecalculationisbasedonbalancesheetvaluesonthereportingdate,andchangesincapitalduringtheyeararenottakenintoaccount.
Inthesensitivityanalysis,theeffectsinthestatementofcomprehensiveincomearecalculatedasprofitbeforetaxes.
Theequitysensitivityanalysiscoversthecapitalinvestedinthesubsidiarywithregardtothecurrencyrisk.
MarketrisksalsohaveanimpactonAspoGroupthroughitemsotherthanfinancialinstruments.
TheoilpricehasanimpactonAspoGroup'sfinancialper-formancethroughtransportationcosts.
TheGrouphashedgedagainstthisriskbymeansofcontractualclauses.
Thefluctua-tionsinrawmaterialpricesforchemicalsandfoodalsoaffecttheGroup'sfinancialperformance.
HedgeaccountingThefutureUSdollar-denominatedcashflowsrelatedtotheESLShipping'sves-selinvestmentshavebeenhedgedwithcurrencyforwards.
Totalcapitalofthecur-rencyforwardsisapproximatelyUSD31million.
Thecurrencyforwardsaresubjecttohedgeaccounting,andtheeffectivepartofchangesintheirfairvalueisrec-ognizedinthehedgingreserveunderthefairvaluereserveofAspoGroup'sequity.
Theeffectivepartofthechangesinfairvalueofcurrencyforwards,EUR-2.
4mil-lion(1.
3),isrecognizedinothercompre-hensiveincome,whiletheinterestportionofthecurrencyforwardsisrecognizedinthefinancialitemsofthestatementofcomprehensiveincome.
ThefloatinginterestrateofthetermloantakenoutbyAspoPlcin2011andmaturedin2015washedgedwithaninterestrateswapthroughoutthevalid-ityoftheloanagreement.
Thesaidinter-estrateswapwassubjecttohedgeaccounting,andchangesinitsfairvaluewereenteredinothercomprehensiveincome.
Thehedgingrelationbetweentheloanhedgedandthehedginginstru-mentwaseffective.
Thesaidtermloan,maturedin2015,wasrenewedwiththesameamount,andhedgingofthevariableinterestoftherenewedtermloanwascon-tinuedwithaninterestswap,buthedgeaccountingwasdiscontinuedinconnec-tionwiththerenewalduetoitspartialineffectiveness,andchangesinfairvaluehavesincebeenrecognizedthroughprofitorloss.
Thelossaccumulatedinequityby2015wasEUR0.
6millionandisenteredinprofitorlossinaccordancewiththeorig-inalforecasttransaction,stillexpectedtooccurby2019.
ThefairvalueoftheinterestratederivativeamountedtoEUR-0.
4mil-lion(-0.
6)onDecember31,2017.
ThefairvalueofGroup'sotherinterestrateswapstowhichhedgeaccountingisappliedwasEUR0.
0milliononDecember31,2017.
Theeffectiveportionofthechangesintheirfairvalue,EUR0.
0million,wasrecognizedinothercomprehensiveincome,andinter-estexpensesforthefinancialyearandtheinefficientportionwererecognizedinthefinancialitems.
26.
3LIQUIDITYANDREFINANCINGRISKTheobjectiveofAspoGroupistoensuresufficientfinancingforoperationsinallsituationsandmarketconditions.
Inaccordancewiththetreasurypolicy,thesourcesoffinancingarediversifiedamongasufficientnumberofcounterpartiesanddifferentloaninstruments.
Thesufficientnumberofcommittedfinancingagree-mentsandsufficientmaturityensureAspoGroup'scurrentandnear-futurefinancingneeds.
AspoGroup'smostsignificantfinancingneedsin2017wererelatedtothevesselinvestmentsbyESLShippingandthecom-panyhassignedvesselfinanceagreementsofEUR50million.
In2017,ESLShippingmadepaymentsofapproximatelyEUR12millionrelatedtotheshipinvestments.
ThemainfinancingsourceofTelko,LeipurinandKaukoisthecashflowfromtheiropera-tions.
Liquidityisensuredthroughcashandcashequivalents,theissuingofcommer-cialpapersandcommittedoverdraftlimits,aswellasrevolvingcreditfacilitiesgrantedbyselectedcooperationbanks.
AGEINGANALYSISOFACCOUNTSRECEIVABLE1,000EUR20172016Notmatured41,80234,438Matured1–30daysago8,3997,722Matured31–60daysago1,7982,604Matured61–90daysago1,1921,219Maturedmorethan90daysago1,1032,096Total54,29448,07970NotestotheConsolidatedFinancialStatementsTheGroup'scashandcashequivalentsattheendofthefinancialyear2017wereEUR19.
9million(22.
6).
Atthereport-ingdate,AspoPlchadaEUR80milliondomesticcommercialpaperprogramofwhichEUR4millionwereinuse.
Atthereportingdate,AspoPlcalsohadrevolv-ingcreditfacilitiesgrantedbyselectedcooperationbanksintheamountofEUR40millionwhichwerefullyunutilized.
Inthefinancialyear,AspoPlcsignedarevolv-ingcreditfacilityagreementamountingtoEUR20million.
Theagreementreplacedanexpiringrevolvingcreditfacilityagree-mentofthesameamount.
Financialcovenantsassociatedwithsignificantfinancialagreementswerenotbreachedduringthefinancialyear.
26.
4CREDITANDCOUNTERPARTYRISKSTheGrouphascreditriskfromaccountsreceivables.
TheTelkoandLeipurinseg-mentshaveaninternationalandhighlydiversifiedcustomerbase,andnoconsider-ablecustomerriskcenters.
ESLShipping'saccountsreceivableareconnectedtolong-termcustomerrelationshipswithcredit-worthycompanies.
Theturnoverrateofitsaccountsreceivableishigh.
Allseg-mentshedgeagainstcreditrisksbyusing,whennecessary,paymenttermsbasedonadvancepaymentsandbankguarantees.
AspoGroup'saimistohavelowcashandcashequivalents.
Thecounterpartyriskismanagedbyselectingwell-known1,000EURBalancesheetvalueDec31,2017Cashflow20182019202020212022-Loans-131,133-26,940-22,027-35,921-19,275-34,672Overdraftfacilities-3,829-1,684-2,145Otherliabilities-400-200-200Financialleasingliabilities-1,657-707-467-302-217-14Accountspayableandotherliabilities-44,083-44,083DerivativeinstrumentsInterestrateswapsHedgeaccountingappliedCashflowstobepaid-54-17Cashflowstobereceived214212HedgeaccountingnotappliedCashflowstobepaid-260-122CurrencyforwardsHedgeaccountingappliedCashflowstobepaid-26,999Cashflowstobereceived25,320MATURITYANALYSIS20171,000EURBalancesheetvalueDec31,2016Cashflow20172018201920202021-Loans-118,192-8,170-22,699-21,769-35,684-38,410Overdraftfacilities-4,994-1,917-3,077Financialleasingliabilities-2,248-838-653-413-248-163Accountspayableandotherliabilities-47,310-47,310DerivativeinstrumentsInterestrateswapsHedgeaccountingnotappliedCashflowstobepaid-258-249-119CurrencyforwardsHedgeaccountingappliedCashflowstobepaid-9,163-26,999Cashflowstobereceived9,60628,247MATURITYANALYSIS201671NotestotheConsolidatedFinancialStatementsandfinanciallysolventdomesticandinter-nationalbanksascounterparties.
Excessfundsareinvestedinbankdepositsandshort-termmoneymarketinstruments.
Thederivativecontract-basedcounterpartyriskismanagedbyselectingwell-knownandsolventdomesticbanksascounterparties.
26.
5CAPITALMANAGEMENTTheobjectiveoftheGroupistoachieveacapitalstructure,withwhichAspoGroupcanensuretheoperationalframeworkforshort-andlong-termoperations,andasufficientreturnonequity.
Themainfactorsaffectingthecapitalstructurearepossibleacquisitionsanddivestments,AspoPlc'sdividendpolicy,thevesselinvestmentsofESLShippingandtheprofitabilityofthesubsidiaries'businessoperations.
ThedevelopmentoftheGroup'scapitalstructureismainlymonitoredthroughtheequityratioandgearing.
OnDecember31,2017,theequityratiowas35.
6%(37.
4)andgearingwas103.
9%(89.
8).
Duringthefinancialyear2017,AspoGroup'scapitalstructureremainedalmostunchangedcomparedwiththepreviousyear.
1,000EURLoansandotherreceivablesAvailable-for-salefinancialassetsrecognizedinothercomprehensiveincomeOtherfinancialliabilitiesDerivativesinhedgeaccountingrecognizedinothercompre-hensiveincomeDerivativesoutsidehedgeaccountingrecognizedthroughprofitandlossCarryingamountFinancialassetsmeasuredatfairvalueNon-currentfinancialassetsAvailable-for-salefinancialassets170170Non-currentreceivables44Total1704174FinancialassetsmeasuredatamortizedcostNon-currentfinancialassetsNon-currentreceivables*171171CurrentfinancialassetsAccountsreceivableandotherreceivables*54,95554,955Cashandcashequivalents19,92319,923Total75,04975,049FinancialliabilitiesmeasuredatfairvalueNon-currentfinancialliabilitiesOthernon-currentliabilities122122CurrentfinancialliabilitiesAccountspayableandotherliabilities1,6792601,939Total1,6793822,061FinancialliabilitiesmeasuredatamortizedcostNon-currentfinancialliabilitiesLoansandoverdraftfacilities109,517109,517Othernon-currentliabilities400400CurrentfinancialliabilitiesLoansandoverdraftfacilities27,10227,102Accountspayableandotherliabilities*44,08344,083Total181,102181,102FINANCIALASSETSANDLIABILITIES2017*Comprisesonlyfinancialassetsorfinancialliabilitiesincludedinthecorrespondingbalancesheetitem72NotestotheConsolidatedFinancialStatements*Comprisesonlyfinancialassetsorfinancialliabilitiesincludedinthecorrespondingbalancesheetitem.
1,000EURLoansandotherreceivablesAvailable-for-salefinancialassetsrecognizedinothercomprehensiveincomeOtherfinancialliabilitiesDerivativesinhedgeaccountingrecognizedinothercompre-hensiveincomeDerivativesoutsidehedgeaccountingrecognizedthroughprofitandlossCarryingamountFinancialassetsmeasuredatfairvalueNon-currentfinancialassetsAvailable-for-salefinancialassets172172Non-currentreceivables1,2481,248CurrentfinancialassetsAccountsreceivableandotherreceivables443443Total1721,6911,863FinancialassetsmeasuredatamortizedcostNon-currentfinancialassetsNon-currentreceivables*193193CurrentfinancialassetsAccountsreceivableandotherreceivables*49,09649,096Cashandcashequivalents22,62722,627Total71,91671,916FinancialliabilitiesmeasuredatfairvalueNon-currentfinancialliabilitiesOthernon-currentliabilities368368CurrentfinancialliabilitiesAccountspayableandotherliabilities258258Total626626FinancialliabilitiesmeasuredatamortizedcostNon-currentfinancialliabilitiesLoansandoverdraftfacilities116,640116,640CurrentfinancialliabilitiesLoansandoverdraftfacilities8,7948,794Accountspayableandotherliabilities*47,31047,310Total172,744172,744FINANCIALASSETSANDLIABILITIES2016AsdescribedintheAccountingPrinciples,theGroupclassifiesthedeterminingoffairvaluesoffinancialassetsandliabilitiesondifferentlevelsinthefairvaluehierarchy.
Group'sderivativesincludeinterestrateswapsandcurrencyforwardsandtheyfallintolevel2inthefairvaluehierarchy.
Available-for-salefinancialassetsfallintohierarchylevel3.
Financialassetsandliabilitiesnotmeasuredatfairvaluefallintohierarchylevel2.
Theirfairvaluesarenotmateriallydifferentfromtheircarryingamounts.
Thefairvaluesofnon-currentloansarebasedondiscountedfuturecashflowstakingintoaccountAspo'screditmargin.
73NotestotheConsolidatedFinancialStatements27.
DerivativeContracts201720161,000EURNominalvalueFairvalues,netNominalvalueFairvalues,netCurrencyderivativesCurrencyforwards-26,999-1,679-36,1621,691InterestratederivativesInterestrateswaps30,385-37815,000-626Total-2,0571,065CONTINGENTLIABILITIESAspartoftheirordinarybusinessactiv-ities,Aspoandsomeofitssubsidiariessigndifferentagreementsunderwhichguaranteesareofferedtothirdpartiesonbehalfofthesesubsidiaries.
Theseagree-mentsareprimarilymadeinordertosup-portorimproveGroupcompanies'cred-itworthiness,andthroughthemitiseas-iertofindsufficientfinancing.
HYBRIDINSTRUMENTOnMay27,2016,AspoissuedaEUR25millionhybridbond.
Thecouponrateofthebondis6.
75%perannum.
Thebondhasnomaturitybutthecompanymayexerciseanearlyredemptionoptionafterfouryearsfromtheissuingdate.
ENVIRONMENTALREMEDIATIONOBLIGATIONRaumaTerminalServicesOy,acompanywithintheAspoGroup,isobligated,withregardtolandareasleasedfromtheTownofRaumatorestorethelandareassothattheyareinthesameconditionasbeforethelease.
Thescopeoftheobliga-tioncoversthedismantlingofthebuild-ingsbuiltbythecompany,includingtheirfoundations,andlevelingthedismantledarea.
Thereviewalsoincludesregularenvi-ronmentalresponsibilitiesfromwhichnocostsariseaccordingtothecompa-ny'sunderstanding.
Theareahaslong-termleaseagreements,andtheTownofRaumahasnotexpressedanyintentiontochangethearea'spurposeofuse.
Asaresult,theobligationhasbeentreatedasacontingentliabilityintheconsoli-datedfinancialstatements,andnosep-aratetransactionshavebeenenteredinthestatementofcomprehensiveincomeoronthebalancesheet.
LEGALPROCEEDINGSOnFebruary27,2015,theHelsinkiDistrictCourtannounceditsjudgementinthecasebetweenESLShippingandtheFinnishStateregardingfairwayduesleviedduringtheyears2001–2004.
Accordingtothejudgement,theFinnishStatewasrequiredtorefundtoESLShippingapproximatelyEUR3millioninaccordancewiththecompany'sclaim,aswellaslegalexpensesandinterest.
TheStatelodgedanappealagainsttheDistrictCourt'sjudgementand,initsrul-ingissuedonAugust8,2016,theCourtofAppealoverruledtheHelsinkiDistrictCourt'sjudgementandrejectedESLShipping'slegalactionastime-barred.
ThecompanyappliedforaleavetoappealfromtheSupremeCourtwhichwasrejectedinFebruary2018.
Nofairwayduesrelatedreceivableswererecognized,sotherejectionhasnoeffectonthecon-solidatedfinancialstatements.
Theshippingcompanywonlegalpro-ceedingsagainstIndianABGShipyardconcerningthecompensationpayableforrepairsmadetom/sAlppiladuringthewarrantyperiod.
Thevesselwasdeliv-eredtoESLShippingin2011.
Accordingtotherulingofthearbitrationcourt,ABGShipyardwasrequiredtorefundtherepairexpensesandinteresttoESLShippingaccordingtothecompa-ny'sclaims.
Theimpactofrulinghasnotbeenincludedinthefinancialstatement,butitwillbetakenintoaccountduringthefinancialyearoverwhichtheimposedpaymentisreceived.
TelkohasinitiatedaprocessattheAdministrativeCourtconcerningthetax1,000EUR20172016Mortgagesgiven104,454104,454Guarantees27,59340,316Othercommitments*36,67038,063Total168,717182,833COLLATERALFOROWNDEBT1,000EUR20172016Withinoneyear10,7547,255Afteroneyearandwithinfiveyears10,64914,339Afterfiveyears120Total21,52321,594OPERATINGLEASERENTALSPAYABLE*Othercommitmentsaremainlyrelatedtonewvesselscontracts.
28.
ContingentAssetsandLiabilities,andOtherCommitments74NotestotheConsolidatedFinancialStatementsInformationonsubsidiarieswithinAspoGroup'srelatedpartiesispresentedintheattachedtable.
Informationonjointven-tureswithinAspoGroup'srelatedpartiesispresentedinNote16.
Therelatedpar-tiesalsoincludekeymanagementperson-nel,i.
e.
membersoftheBoardofDirectorsandtheGroupExecutiveCommittee,andanyentitiesundertheircontrol.
InformationaboutthemembersoftheBoardandtheGroupExecutiveCommitteeisavailableintheCorporateGovernancesection.
MANAGEMENTEMPLOYEEBENEFITSShare-basedincentiveplan2015–2017TheBoardofDirectorsofAspoPlcapprovedinitsmeetingonFebruary11,2015,ashare-basedincentiveplandirectedtoapproximately30persons.
Theaimoftheplanistocombinetheobjec-tivesoftheshareholdersandthosewithintheplaninordertoincreasethevalueofthecompany,tocommittheparticipantstothecompany,andtoofferthemacom-petitiveincentiveplanbasedonalong-termholdingofthecompany'sshares.
Theplanincludesthreeearningsperi-ods,calendaryears2015,2016,and2017.
TheprerequisiteforparticipationintheplanandforreceiptofrewardonbasisofeachearningsperiodisthatthepersonacquiresAspo'sshares,orholdsthecompany'sshares,uptothenumberpredeterminedbytheBoardofDirectors.
Aspo'sBoardofDirectorswilldecideontheplan'sperformancecriteria,requiredperformancelevelsforeachcriterionandpersonstowhomparticipationpossibilityisofferedatthebeginningofeachearn-ingsperiod.
TherewardwillbepaidpartlyinAspoPlc'ssharesandpartlyincash.
ThecashproportionisintendedtocoverCompanyDomicileHolding,%AspoPlc,parentcompanyFinlandAspoPalvelutLtdFinland100.
00OyBomanshipAbFinland100.
00BomanshipEuropeUnipessoalLdaPortugal100.
00ESLShippingLtdFinland100.
00KaukoGmbHGermany100.
00KaukoLtdFinland100.
00LeiConceptOyFinland100.
00OOOLeipurienTukkuRussia100.
00LeipurienTukkuOyFinland100.
00LeipurinPlcFinland100.
00FLLCLeipurinBelarus100.
00LLCLeipurinUkraine100.
00SIALeipurinLatvia100.
00TOOLeipurinKazakhstan100.
00UABLeipurinLithuania100.
00LeipurinEstoniaASEstonia100.
00LeipurinPolandSp.
zo.
o.
Poland100.
00OOONPKLeipurinRussia100.
00RaumaTerminalServicesOyFinland100.
00Suhi-SuomalainenHiiliOyFinland100.
00TelkoLtdFinland100.
00FLLCTelkoBelarus100.
00LLCTelkoUkraine100.
00OOOTelkoRussia100.
00TelkoUABLithuania100.
00TelkoCaucasusLLCAzerbaijan100.
00LLCTelkoCentralAsiaKazakhstan100.
00TelkoEstoniaOEstonia100.
00TelkoDenmarkA/SDenmark100.
00TelkoLatviaSIALatvia100.
00TelkoMiddleEastCo.
Iran100.
00TelkoNorwayASNorway100.
00Telko-PolandSp.
zo.
o.
Poland100.
00TelkoShanghaiLtd.
China100.
00TelkoSwedenABSweden100.
00OOOTelkoTerminalRussia100.
00OyTroiliAbFinland100.
00VulganusOyFinland100.
0029.
RelatedPartiesGROUPCOMPANIESincreaseimposedbyFinnishCustomsrelatedtobatchesofmaterialthatTelkoimportedin2013and2014.
TelkoconsidersthechargesimposedbyFinnishCustomstobeunfounded.
ThechargesofEUR1.
7mil-lionwererecognizedasexpensesin2015.
Inspring2017,Kaukotooklegalactionincivilcourtagainsttwoindivid-ualswhoworkedinleadingpositionsinthemobileknowledgeworkunitthatprovidesITsolutionsforthehealthcaresectorduetobreachesofthenon-solic-itationandnon-competeclauses.
Afterthefinancialyear,onFebruary2018,theDistrictCourthasdecidedthematterforthebenefitofthedefendants.
Thedeci-sionisnotyetfinalandithasnoeffectontheresultofAspoGroup.
AspoGroup'scompaniesarepartiestosomelegalproceedingsanddisputesassociatedwithregularbusinessopera-tions.
Thefinancialimpactofthesepro-ceedingsanddisputescannotbeesti-matedforcertainbut,onthebasisoftheinformationavailableandtakingintoaccounttheexistinginsurancecoverandprovisionsmade,AspoGroupbelievesthattheydonothaveanymaterialadverseimpactontheGroup'sfinancialposition.
75NotestotheConsolidatedFinancialStatementsSALARIESANDBENEFITSOFBOARDMEMBERSANDCEOtaxesandtax-relatedcostsarisingfromtherewardtotheperson.
Asarule,norewardwillbepaid,ifaperson'semploy-mentorservicecontractendsbeforetherewardpayment.
Thesharesreceivedasrewardmaynotbesoldduringthecom-mitmentperiod,whichwillendtwoyearsfromtheendoftheearningsperiod.
Ifaperson'semploymentorservicecon-tractendsduringthecommitmentperiod,thepersonmustgratuitouslyreturnthesharesreceivedasareward.
Therewardfromtheearningsperiod2015wasbasedontheGroup'searningspershare(EPS).
In2016,onthebasisofthe2015earningsperiod,employeesincludedintheplanreceived88,970trea-surysharesasashare-basedreward,aswellascashequalingthevalueofthesharesinordertopaytaxes.
Inaccordancewiththerulesofincen-tiveplansatotalof5,275treasuryshares,originallygrantedonthebasisofshare-basedincentiveplans,werereturnedtoAspoduetoendedcontractsofemploy-mentin2016.
Therewardfromthe2016earningsperiodwasbasedontheGroup'searn-ingspershare(EPS).
In2017,onthebasisofthe2016earningsperiod,employeesincludedintheplanreceived25,740trea-surysharesasashare-basedreward,aswellascashequalingthevalueoftheshares,atmost,inordertopaytaxes.
Therewardfromthe2017earningsperiodwasbasedontheGroup'searningspershare(EPS).
Theshare-basedcostofrewardswasonthebalancesheetdateestimatedatintotalofEUR1.
1million.
Itwillbeaccruedovertheyears2017–2019onthebasisoftherulesoftheincentiveplan.
OnFebruary15,2018,theBoardofDirectorsdecidedthattherewardforthe2017earningsperiodwillbe70,525sharesandcashcorrespondingatmosttothevalueofthesharesforcoveringtaxes,i.
e.
anamountcorrespondingtothevalueofapproximately70,500shares.
Onthebasisoftheshare-basedincen-tiveplan2015–2017,atotalof185,235treasurysharesweregranted,aswellascashequalingthevalueofthesharesinordertopaytaxes.
Whenthedecisionregardingthe2015–2017planwastakentherewardstobepaidcorrespondedtotheapproximatemaximumtotalvalueof900,000AspoPlcshares(includingalsotheproportiontobepaidincash).
20172016Totalexpensesrecognizedinemployeebenefitexpenses928524Accruedexpensesinthebalancesheetliabilitiesrelatedtotheproportionpaidincash566190SHARE-BASEDPAYMENTSRECOGNIZEDINTHEPERIODGrantdateTransferdateNumberofsharesgrantedMarketvalueofshareongrantdate,EURMarketvalueofshareontransferdate,EURCoversyears2015–2017Feb.
11,2015Theshareoftheyear2015Mar.
13,2015Mar.
18,201688,9707.
727.
25Theshareoftheyear2016Mar.
11,2016Mar.
24,201725,7407.
208.
43Theshareoftheyear2017Mar.
13,201770,5258.
76SHARE-BASEDINCENTIVEPLAN201720161,000EURSalariesandremu-nerationsPensionsSalariesandremu-nerationsPensionsOjanenAki,CEO186209CEO,salaries372372CEO,bonuses82206CEO,share-basedpayments85250NybergGustav,ChairmanoftheBoard853287115MembersoftheBoardofDirectors:ArtevaMatti*7KaarioMammu3431LaineMikael**3322LencioniRoberto,ViceChairmanoftheBoard4745Pentti-vonWalzelKristina*8PyrySalla**3322SaloRisto3329Total8042181,079324*MemberoftheBoarduntilApril7,2016**MemberoftheBoardsinceApril7,2016Pensionbenefitsincludebothstatutoryandvoluntarypensionpayments.
76NotestotheConsolidatedFinancialStatementsTherehavebeennomaterialeventsaftertheendofthefinancialyear.
30.
EventsAftertheFinancialYearOtherbenefitsTheCEOhasasupplementarydefinedcontributionpensionplaninwhichthepensionisdeterminedinaccordancewiththeaccumulatedinsurancesavingsatthetimeofretirement.
TheCEO'sretirementageisthelowestpossiblestatutoryretire-mentagelessthreeyears.
ThestatutorypensioncostrecognizedasexpenseswasEUR83,180andthevoluntarypensioncostwasEUR102,835.
TheperiodofnoticeappliedtotheCEOissixmonths.
Ifnoticeisgivenbythecompany,sever-ancepaycorrespondingto18months'salarywillbepaidinadditiontothesal-aryforthenoticeperiod.
TheChairmanoftheBoardhadasup-plementarydefinedcontributionpensionplaninwhichthepensionwasdeterminedbasedontheaccumulatedinsurancesavingatthetimeofretirement.
TheChairmanretiredinApril2017.
Thestatu-torypensioncostrecognizedasexpenseswasEUR6,626andthevoluntarypen-sioncostwasEUR25,745.
InformationonAspo'shybridbondsub-scribedbytherelatedpartiesispresentedintheCorporateGovernancesection.
1,000EUR20172016Salariesandothershort-termemployeebenefits1,8361,946Post-employmentbenefits552548Share-basedpayments671381Total3,0592,875KEYMANAGEMENTPERSONNELCOMPENSATION77NotestotheConsolidatedFinancialStatements78KeyfiguresKEYFIGURES20172016201520142013Netsales,MEUR502.
4457.
4445.
8482.
9476.
3Operatingprofit,MEUR23.
120.
420.
623.
410.
8Shareofnetsales,%4.
64.
54.
64.
82.
3Profitbeforetaxes,MEUR21.
117.
321.
319.
06.
6Shareofnetsales,%4.
23.
84.
83.
91.
4Profitfortheperiod,MEUR19.
415.
919.
818.
48.
6Shareofnetsales,%3.
93.
54.
43.
81.
8Returnoninvestment(ROI),%9.
98.
711.
29.
94.
6Returnonequity(ROE),%17.
114.
619.
117.
88.
9Equityratio,%35.
637.
433.
835.
234.
4Gearing,%103.
989.
8101.
4101.
098.
2Grossinvestmentsintangibleandintangibleassets,MEUR18.
06.
915.
118.
74.
9Shareofnetsales,%3.
61.
53.
43.
91.
0Personnel,Dec.
31909895857879869Averagenumberofpersonnel877871862882878Share-specificindicatorsEarnings/share(EPS),EUR0.
560.
490.
610.
570.
28Dilutedearnings/share,EUR0.
560.
490.
610.
570.
30Equity/share,EUR3.
673.
753.
363.
423.
39Nominaldividend/share,EUR(2017proposedbyBoardofDirectors)0.
430.
420.
410.
400.
21Dividend/earnings,%76.
385.
467.
170.
375.
3Effectivedividendyield,%4.
35.
15.
57.
03.
5Price/earningsratio(P/E)17.
716.
612.
310.
021.
6Dilutedprice/earningsratio(P/E)17.
716.
612.
310.
020.
4Sharepricedevelopmentaverageprice,EUR8.
916.
957.
236.
205.
74lowestprice,EUR8.
206.
005.
925.
215.
19highestprice,EUR10.
008.
218.
167.
526.
82Closingpriceonthelastdayoftrading,EUR10.
008.
187.
505.
696.
03Marketvalueofshares,Dec.
31,MEUR309.
8253.
4232.
3176.
3186.
7excludingtreasuryshares,MEUR*306.
1250.
1228.
7173.
0182.
6Developmentofshareturnover,1,0002,8512,4914,8864,8724,032Developmentofshareturnover,%9.
28.
015.
815.
713.
0Totalsharetrading,EUR1,00025,40517,32635,34030,22222,917Registeredsharecapital,numberofshares,Dec31,1,00030,97630,97630,97630,97630,967outstanding,Dec.
3130,60530,57930,49630,40230,274outstanding,average30,59930,56430,47930,31230,282dilutednumberofshares,average30,59930,56430,47930,31231,945InadditiontoIFRSfigures,theAsporeleasesothercommonlyusedkeyfigures,whicharemainlyderivedfromthestatementofcomprehensiveincomeandbalancesheet.
Accordingtothemanagement,keyfiguresclarifythepicturedrawnbythestatementofcomprehensiveincomeandbalancesheetofAspo'sfinancialperformanceandfinancialposition.
*SharesinAspoPlcownedbyAspoManagementOywereincludedintreasurysharesbetween2010and2014.
AspoManagementOywasmergedwithAspoPlcin2015.
79KeyfiguresCALCULATIONPRINCIPLESOFKEYFIGURESReturnoninvestment,%(ROI)=(Profitbeforetaxes+Interestandotherfinancialexpenses)x100Balancesheettotal–Interest-freeliabilities(average)Returnonequity,%(ROE)=(Profitbeforetaxes–Taxes)x100Equity+Non-controllinginterest(average)Equityratio,%=(Equity+Non-controllinginterest)x100Balancesheettotal–AdvancesreceivedGearing,%=(Interest-bearingliabilities–Cashandcashequivalents)x100Equity+Non-controllinginterestAveragenumberofpersonnel=AveragenumberofpersonnelattheendofeachmonthEarningspershare(EPS),EUR*=Profitbeforetaxes–Incometaxes–Non-controllinginterestAdjustedaveragenumberofsharesduringthefinancialyearEquitypershare,EUR=EquityAdjustednumberofsharesonbalancesheetdateAdjusteddividendpershare,EUR=DividendpersharepaidforthefinancialyearShareissuemultiplierDividend/earnings,%*=Adjusteddividendpersharex100EarningspershareEffectivedividendyield,%=Adjusteddividendpersharex100AveragesharepriceonclosingdayweightedwithtradingvolumeShareissueadjustedrepaymentofcapital/share,EUR=RepaymentofcapitalpersharepaidforthefinancialyearShareissuemultiplierRepaymentofcapital/earnings,%=Shareissueadjustedrepaymentofcapitalpersharex100EarningspershareEffectiverepaymentofcapitalyield,%=Shareissueadjustedrepaymentofcapitalpersharex100AveragesharepriceonclosingdayweightedwithtradingvolumePrice/earningsratio(P/E)*=AdjustedaveragesharepriceonclosingdayEarningspershareMarketvalueofshares,EUR=NumberofsharesoutsidetheGroupxAveragesharepriceonclosingdayweightedwithtradingvolumeFreecashflow=Netcashfromoperatingactivities+NetcashfrominvestingactivitiesTheimpactoftreasuryshareshasbeeneliminatedinthecalculationofkeyfigures.
*Whencalculatingtheearningspershare,interestofthehybridbond,adjustedfortaxeffect,hasbeenconsideredasaprofit-reducingitem.
1,000EURNotesJan1–Dec31,2017Jan1–Dec31,2016Otheroperatingincome1.
12,3802,133Staffexpenses1.
2-2,071-2,175Depreciationandamortization1.
3-21-14Otheroperatingexpenses1.
4-4,484-4,139Operatingloss-4,196-4,195Financialincomeandexpenses1.
515,68414,504Profitbeforeappropriationsandtaxes11,48810,309Appropriations1.
63,5602,495Profitbeforetaxes15,04812,804Incometaxes00Profitfortheperiod15,04812,804PARENTCOMPANY'SINCOMESTATEMENT80PARENTCOMPANY'SFINANCIALSTATEMENTS,FASPARENTCOMPANY'SBALANCESHEET1,000EURNotesDec31,2017Dec31,2016Non-currentassetsIntangibleassets2.
110Tangibleassets2.
1148154Investments2.
283,42783,429Totalnon-currentassets83,58583,583CurrentassetsNon-currentreceivables2.
350,55043,100Currentreceivables2.
318,86019,521Cashandcashequivalents2,9767,231Totalcurrentassets72,38669,852Totalassets155,971153,435ASSETS1,000EURNotesDec31,2017Dec31,2016EquitySharecapital2.
417,69217,692Sharepremium2.
44,3514,351Investedunrestrictedequityreserve2.
416,70616,662Retainedearnings2.
42,1272,029Profitfortheperiod15,04812,804Totalequity55,92453,538Provisions2.
5760375LiabilitiesNon-currentliabilitiesLoansfromGroupcompanies2.
65,7147,143Bond2.
611,00011,000Loansfromfinancialinstitutions2.
640,00040,000Perpetualbond2.
625,00025,000Deferredliabilities2.
6122368Totalnon-currentliabilities81,83683,511CurrentliabilitiesLoansfromfinancialinstitutions2.
74,000LiabilitiestoGroupcompanies2.
711,40514,660Accountspayable2.
7125Otherliabilities2.
73968Deferredliabilities2.
72,0071,158Totalcurrentliabilities17,45116,011Totalliabilities99,28799,522Totalequityandliabilities155,971153,435EQUITYANDLIABILITIES81PARENTCOMPANY'SFINANCIALSTATEMENTS,FASPARENTCOMPANY'SCASHFLOWSTATEMENT1,000EURJan1–Dec31,2017Jan1–Dec31,2016CashflowsfromoperatingactivitiesOperatingloss-4,196-4,195Adjustmentstooperatingloss464-126Changeinworkingcapital-460-200Interestpaid-3,399-2,926Interestreceived772809Dividendsreceived19,90012,502Netcashfromoperatingactivities13,0815,864CashflowsfrominvestingactivitiesInvestmentsintangibleandintangibleassets-24-134Proceedsfromsaleoftangibleandintangibleassets406Proceedsfromsaleofinvestments19829Netcashfrominvestingactivities174301CashflowsfromfinancingactivitiesRepaymentofnon-currentloansfromGroupcompanies-1,429-1,429Changeinnon-currentreceivablesfromGroupcompanies-7,450-3,000Changeincurrentreceivables849416Changeincurrentliabilities745-687Perpetualbond,proceedsfromissue25,000Perpetualbond,repayment-20,000Groupcontributionsreceived2,4954,550Dividendsdistributed-12,854-12,540Purchaseoftreasuryshares-39Proceedsfromsaleoftreasuryshares134387Netcashfromfinancingactivities-17,510-7,342Changeincashandcashequivalents-4,255-1,177CashandcashequivalentsJan17,2318,408Cashandcashequivalentsatyear-end2,9767,23182PARENTCOMPANY'SFINANCIALSTATEMENTS,FAS1.
1OtherOperatingIncomeNOTESTOTHEPARENTCOMPANY'SFINANCIALSTATEMENTSACCOUNTINGPRINCIPLESAspoPlc'sfinancialstatementshavebeencompiledinaccordancewithFAS.
Theaccountingprincipleshavenotchangedfromthepreviousyear.
Whencompil-ingthefinancialstatements,theman-agementofthecompanymust,inaccor-dancewithvalidregulationsandgoodaccountingpractice,makeestimatesandassumptionsthataffectthemeasure-mentandaccruingoffinancialstatementitems.
Theactualfiguresmaydifferfromtheestimates.
FOREIGNCURRENCYTRANSACTIONSForeigncurrencydenominatedtransac-tionsarerecordedattheexchangeratesvalidonthetransactiondate.
Onthereportingdate,thereceivablesandliabili-tiesonthebalancesheetaremeasuredattheexchangeratesofthereportingdate.
Hedginginstrumentsforopenforeigncur-rencydenominateditemsaremeasuredattherateofthereportingdate,takingintoaccountinterestrates.
Foreignexchangegainsandlossesrelatedtobusinessoper-ationsarerecognizedasnetsalesandoperationalexpenseadjustmentitems.
Financingrelatedforeignexchangegainsandlossesarerecognizedinfinancialincomeandexpenses.
PENSIONSThecompany'spensioncoverageisarrangedthroughpensioninsurance.
RECEIVABLESReceivablesaremeasuredatacquisitioncostoratprobablevalue,iflower.
NON-CURRENTASSETSANDDEPRECIATIONSNon-currentassetsarerecognizedinthebalancesheetatacquisitioncost,lessdepreciations.
Thedepreciationperiodsfornon-currentassetsare:Intangiblerights3–5yearsOthercapitalizedlong-termexpenditure10yearsBuildings15–40yearsMachineryandequipment3–8yearsLEASINGLeasingpaymentsaretreatedasrentexpenses.
PROVISIONSProvisionsinthebalancesheetincludeitemsthatareeitherbasedoncontractsorotherwisebindingobligations,buthavenotyetrealized.
Changestoprovisionsareincludedintheincomestatement.
INCOMETAXESTheincometaxesintheincomestate-mentincludetaxescalculatedonprofitfortheperiodbasedonFinnishtaxlegis-lationandadjustmentoftaxesfrompre-viousfinancialyears.
DIVIDENDSThedividendproposedbytheBoardofDirectorstotheAnnualShareholders'Meetingwasnotyetrecognizedinthefinancialstatements.
Thedividendsareonlytakenintoaccountafterthedeci-sionbytheAnnualShareholders'Meeting.
MEASUREMENTOFFINANCIALINSTRUMENTSFairvaluemeasurementcompliantwithChapter5,section2aoftheAccountingActisappliedtotheaccountingtreat-mentoffinancialderivatives,andchangesintheirfairvaluewereenteredintheincomestatement.
Financialderivativesweremeasuredatthemarketpricesofthebalancesheetdate.
1,000EUR20172016Salesgainfrominvestments21Otheroperatingincome,Group503472Rentalincome,Group833895Otherrentalincome812626Otheroperatingincome232119Total2,3802,13383NotestotheParentCompany'sFinancialStatements1,000EUR20172016Othercapitalizedlong-termexpenditure1Machineryandequipment2014Total21141.
3DepreciationandAmortization1,000EUR20172016Rents2,0902,015Otherexpenses2,3942,124Total4,4844,1391.
4OtherOperatingExpenses1.
2PersonnelandBoardMembersTheCEO'sretirementageisthelowestpossiblestatutoryretirementagelessthreeyears.
1,000EUR20172016Salariesandremunerations1,1561,386Share-basedpayments446118Profitbonuspaidtothepersonnelfund1434Pensionexpenses421610Othersocialsecurityexpenses3427Total2,0712,175STAFFEXPENSES1,000EUR20172016CEO,salaries372372CEO,bonuses83206CEO,share-basedpayments85250MembersoftheBoardofDirectors,remunerations264251Total8041,079AVERAGENUMBEROFPERSONNELDURINGTHEFINANCIALYEAR1,000EUR20172016Auditing3735Taxadvice4127Otherservices10659Total184121AUDITOR'SFEES20172016Officestaff55MANAGEMENTSALARIESANDBENEFITS84NotestotheParentCompany'sFinancialStatements1,000EUR20172016IncomeGroupcontributions3,5602,4951.
6Appropriations1,000EURIntangiblerightsOthercapitalizedlong-termexpendi-tureTotalintangiblesLandBuildingsMachineryandequipmentOthertangibleassetsTotaltangiblesAcquisitioncost,Jan.
1347034711217073256Increases11111313Decreases-146-146-19-19Acquisitioncost,Dec.
31,20172011121211216473250Accumulateddepreciation,Jan.
1-347-347-12-90-102Accumulateddepreciationofdecreases1461461919Depreciationandamortizationfortheperiod-1-1-19-19Accumulateddepreciation,Dec.
31,2017-201-1-202-12-90-102Carryingamount,Dec.
31,201701010107473148Carryingamount,Dec.
31,20160001080731542.
1IntangibleandTangibleAssets1,000EUR20172016DividendincomeFromGroupcompanies18,90016,500Fromothers2Incomefromnon-currentinvestments18,90016,502OtherinterestandfinancialincomeFromGroupcompanies772806Fromothers1963Totalinterestandotherfinancialincome968809InterestexpensesandotherfinancialexpensesToGroupcompanies-138-158Toothers-4,046-2,649Totalinterestandotherfinancialexpenses-4,184-2,807Totalfinancialincomeandexpenses15,68414,5041.
5FinancialIncomeandExpenses85NotestotheParentCompany'sFinancialStatements1,000EURSubsidiarysharesOthersharesTotalAcquisitioncost,Jan.
183,24418583,429Decreases-2-2Acquisitioncost,Dec.
31,201783,24418383,427Acquisitioncost,Dec.
31,201683,24418583,4292.
2Investments1,000EUR20172016ReceivablesfromGroupcompaniesLoanreceivables50,55043,100Totalnon-currentreceivables50,55043,1001,000EUR20172016ReceivablesfromGroupcompaniesDividendreceivables15,00016,000Groupcontributionreceivables3,5602,495Cashpoolaccounts771Deferredreceivables78Total18,56019,344Otherreceivables134139Deferredreceivables16638Total300177Totalcurrentreceivables18,86019,5212.
3Non-currentandCurrentReceivablesCURRENTRECEIVABLESNON-CURRENTRECEIVABLES86NotestotheParentCompany'sFinancialStatements2.
4Equity1,000EUR20172016Sharecapital,Jan.
117,69217,692Sharecapital,Dec.
3117,69217,692Sharepremium,Jan.
14,3514,351Sharepremium,Dec.
314,3514,351Investedunrestrictedequityreserve,Jan.
116,66216,579Share-basedpayments4483Investedunrestrictedequityreserve,Dec.
3116,70616,662Retainedearnings,Jan.
114,83314,098Dividendpayment-12,854-12,540Share-basedpayments148471Retainedearnings,Dec.
312,1272,029Profitfortheperiod15,04812,804Totalequity55,92453,538DistributablefundsunderunrestrictedequitytotalEUR33,881,234.
68(31,495,378.
54)2.
5Provisions1,000EUR20172016Share-basedincentiveplan443138Onerousrentalcontract296216Provisionfortaxcharges2121Total76037587NotestotheParentCompany'sFinancialStatements2.
6Non-currentLiabilities1,000EUR20172016LoansfromGroupcompanies5,7147,143Bond11,00011,000Perpetualbond25,00025,000Loansfromfinancialinstitutions40,00040,000Totalnon-currentloans81,71483,143Measurementofinterestrateswap122368Totaldeferredliabilities122368Totalnon-currentliabilities81,83683,511LoansmaturingafterfiveyearsLoansfromGroupcompanies1,429Bond11,000OnMay27,2016,AspoPlcissuedaEUR25millionhybridbond.
Thebondhasnomaturitybutthecompanymayexcerciseanearlyredemptionoptionafterfouryears.
Thecouponrateofthebondis6.
75%perannum.
In2015,AspoPlcissuedaEUR11mil-lionunsecuredprivateplacementbond.
ThebondpaysfixedinterestrateandmaturesonSeptember29,2022.
2.
7CurrentLiabilities1,000EUR20172016Loansfromfinancialinstitutions4,000Unpaiddividend116Accountspayable125Otherliabilities3868Deferredliabilities*1,9961,152Total6,0451,351LiabilitiestoGroupcompaniesCashpoolaccounts9,95013,122Otherliabilities1,4551,538Total11,40514,660Totalcurrentliabilities17,45016,011*MainitemsAccruedinterests1,439408Accruedsalaries51860388NotestotheParentCompany'sFinancialStatements2.
8OtherNotes1,000EUR20172016Payablewithinoneyear93115Payablelater164222Total257337FUTURELEASEPAYMENTS1,000EUR20172016Payablewithinoneyear2,0421,976Payablelater7601,976Total2,8023,952OTHERRENTALLIABILITIES1,000EUR20172016Guarantees72,20888,876Total72,20888,8761,000EUR20172016InterestrateswapNominalvalue15,00015,000Fairvalue-382-626GUARANTEESONBEHALFOFGROUPCOMPANIESDERIVATIVECONTRACTS89NotestotheParentCompany'sFinancialStatementsNumberofshares%ofsharesandvotingrightsHavsuddenOyAb3,142,94110.
15VehmasTatu2,306,6767.
45VarmaMutualPensionInsuranceCompany1,438,4124.
64VehmasTapio1,375,8274.
44IlmarinenMutualPensionInsuranceCo1,000,6763.
23RobinsonJoanna754,2592.
44NybergGustav731,6672.
36InvestmentfundNordeaNordicSmallCap721,0402.
33MandatumLifeUnit-Linked541,6101.
75Procurator-HoldingOy470,9691.
52Tenmajorshareholders,total12,484,07740.
31Nomineeregistrations862,2952.
78Othershares17,258,66655.
72Totalsharesoutstanding30,605,03898.
80Treasuryshares370,4861.
20Sharestotal30,975,524100.
00MAJORSHAREHOLDERSONDECEMBER31,2017NumberofsharesNumberofownersShareofowners%Totalshares%ofshares1–1001,54917.
1090,1370.
29101–5003,37637.
27932,3903.
01501–1,0001,60217.
681,224,5253.
951,001–5,0002,02422.
344,380,51814.
145,001–10,0002893.
192,057,9126.
6510,001–50,0001671.
843,318,24610.
7150,001–100,000190.
211,295,3054.
18100,001–500,000240.
265,658,91918.
27500,001–90.
1012,013,10838.
79Totalinjointaccounts10.
014,4640.
01Total9,060100.
0030,975,524100.
00DISTRIBUTIONOFOWNERSHIPONDECEMBER31,2017BYNUMBEROFSHARES%OwnershipShares1.
Households94.
960.
02.
Companies3.
718.
83.
Financialandinsuranceinstitutions0.
28.
34.
Non-profitorganizations0.
84.
55.
Publicorganizations0.
18.
16.
Non-domestic0.
30.
3Total100.
0100.
0DISTRIBUTIONOFOWNERSHIPONDECEMBER31,2017BYOWNERSHIPGROUPSSHARECAPITALAspoPlc'ssharecapitalonDecember31,2017wasEUR17,691,729.
57andthetotalnumberofshareswas30,975,524ofwhichthecompanyheld370,486shares;thatis,1.
2%ofthesharecapital.
SHARESAspoPlchasoneshareseries.
Eachshareentitlestheshareholdertoonevoteattheshareholders'meeting.
Aspo'sshareisquotedonNasdaqHelsinkiOy'sMidCapsegmentunderindustrialproductsandservices.
ThetradingcodeoftheshareisASPO.
DIVIDENDAspoPlchasanactive,cash-flow-baseddividenddistributionpolicy,thegoalofwhichistodistrib-ute,onaverage,atleasthalfoftheGroup'sannualprofittoshareholders.
TheBoardofDirectorsproposestotheAnnualShareholders'MeetingthatEUR0.
43persharebepaidindividendsforthe2017financialyear,representing76%oftheGroup'searningspershare.
Thedividendwillbepaidintwoinstall-ments.
ThefirstinstallmentofEUR0.
21persharewillbepaidtoshareholderswhoareregisteredintheshareholders'registermaintainedbyEuroclearFinlandLtdontherecorddateofApril12,2018.
TheBoardofDirectorsproposesthatthedividendbepaidonApril19,2018.
ThesecondinstallmentofEUR0.
22persharewillbepaidinNovember2018toshareholderswhoareregisteredintheshareholders'registermaintainedbyEuroclearFinlandLtdontherecorddate.
AtitsmeetingtobeheldonOctober25,2018,theBoardofDirectorswilldecideontherecordandpaymentdatesofthesecondinstallment,inaccordancewiththerulesoftheFinnishbook-entrysecuritiessystem.
Accordingtothecurrentsystem,thedivi-dendrecorddatewouldbeOctober29,2018andthepaymentdatewouldbeNovember5,2018.
NodividendispaidfortreasurysharesheldbyAspoPlc.
AUTHORIZATIONSTheAnnualShareholders'MeetingonApril5,2017authorizedtheBoardofDirectorstodecideontheacquisitionofnomorethan500,000ofthetrea-surysharesusingtheunrestrictedequityofthecom-panyrepresentingabout1.
6%ofallthesharesinthecompany.
Theauthorizationincludestherighttoaccepttreasurysharesasapledge.
Theauthoriza-tionwillremaininforceuntiltheAnnualShareholders'Meetingin2018butnotmorethan18monthsfromtheapprovalattheShareholders'Meeting.
TheBoardofDirectorshasnotusedtheauthorization.
TheAnnualShareholders'MeetingonApril9,2015authorizedtheBoardofDirectorstodecideSHARESANDSHAREHOLDERS90SharesandShareholders4.
03.
53.
02.
52.
01.
51.
00.
501314151617EQUITY/SHAREEUR3.
673.
393.
423.
363.
7510,0008,0006,0004,0002,00001314151617NUMBEROFSHAREHOLDERS9,0607,3898,1508,9299,236108642010864201716151413Monthlyturnover,MEURAverageprice,EURSHARETRADINGANDAVERAGEPRICESMEUREURonashareissue,throughoneorseveralinstallments,tobeexecutedbyconvey-ingtreasuryshares.
Anaggregatemax-imumamountof900,000sharesmaybeconveyedbasedontheauthorization.
TheauthorizationwillremaininforceuntilSeptember30,2018.
TheBoardofDirectorshasusedtheauthorizationin2016andgranted88,970treasurysharestoemployeesincludedintheearningsperiod2015oftheshare-basedincentiveplan2015-2017.
OnMarch27,2017theBoardofDirectorsgranted25,740treasurysharestoemploy-eesincludedintheearningsperiod2016.
TheAnnualShareholders'MeetingonApril9,2015authorizedtheBoardofDirectorstodecideonarightsissueforconsideration.
TheauthorizationincludestherightoftheBoardofDirectorstodecideonalloftheothertermsandcon-ditionsoftheconveyanceandthusalsoincludestherighttodecideonadirectedshareissue,indeviationfromtheshare-holders'pre-emptiveright,ifacompellingfinancialreasonexistsforthecompanytodoso.
Thetotalnumberofnewsharestobeofferedforsubscriptionmaynotexceed1,500,000.
TheauthorizationwillremaininforceuntilSeptember30,2018.
TheBoardofDirectorshasnotusedtheauthorization.
SHARETRADINGANDSHAREPRICEDEVELOPMENTIn2017,atotalof2,850,780AspoPlcshareswithamarketvalueofEUR25.
4millionweretradedonNasdaqHelsinki,inotherwords,9.
2%oftheshareschangedhands.
Duringthefinancialyear,thesharepricereachedahighofEUR10.
00andalowofEUR8.
20.
TheaveragepricewasEUR8.
91andtheclosingpriceatyear-endwasEUR10.
00.
ThecompanyhasaliquidityprovidingagreementregardingitssharewithNordeaBankAB.
Atyear-end,themarketvalueofthesharesexcludingthetreasuryshareswasEUR306.
1million.
Forthelatesttradinginformation,pleasevisit:www.
aspo.
com.
SHAREOWNERSHIPAspo'ssharesareincludedinthebook-en-trysystemmaintainedbyEuroclearFinlandLtd.
Attheendof2017,thenumberofshareholdersatAspototaled9,060.
Ofthese,97.
2%representeddirectshare-holdingand2.
8%nomineeregistrations.
Atotalof0.
3%oftheshareswasheldbyforeignentities.
OnDecember31,2017,thetenlargestshareholdersownedatotalof40.
3%ofthecompany'ssharesandvotingrights.
Alistofmajorshareholderswithmonthlyupdatesisshownonthecompa-ny'swebsiteat:www.
aspo.
com.
SHAREHOLDINGBYTHEBOARDOFDIRECTORSANDGROUPEXECUTIVECOMMITTEEOnDecember31,2017,thetotalnum-berofsharesownedbythemembersofAspoPlc'sBoardofDirectorswithentitiesundertheircontrolwas4,537,996shares,whichrepresents14.
7%ofthesharesandvotingrights.
OnDecember31,2017,AspoPlc'sCEOandtheothermembersoftheGroupExecutiveCommitteeheldatotalof204,999shares,whichrepresents0.
7%ofthesharesandvotingrights.
91SharesandShareholdersTheparentcompany'sdistributablefundsonDecember31,2017totaledEUR33,881,234.
68withtheprofitforthefinancialyeartotalingEUR15,047,876.
37.
Thecompany'sregisterednumberofsharesonDecember31,2017was30,975,524,ofwhichthecompanyheld370,486.
TheBoardofDirectorsproposestotheShareholders'Meetingthatthecompany'sdistributablefundsbedistributedasfollows:AdividendofEUR0.
43persharebepaidoutintwoinstallmentson30,605,038shares*EUR13,160,166.
34toberetainedinequityEUR20,721,068.
34EUR33,881,234.
68*numberofsharesentitlingtodividendsonthesigningdateThedividendwillbepaidintwoinstallments.
ThefirstinstallmentofEUR0.
21persharewillbepaidtoshareholderswhoareregisteredintheshareholders'registermaintainedbyEuroclearFinlandLtdontherecorddateofApril12,2018.
TheBoardofDirectorsproposesthatthedividendbepaidonApril19,2018.
Thesecondinstall-mentofEUR0.
22persharewillbepaidinNovember2018toshareholderswhoareregisteredintheshareholders'registermaintainedbyEuroclearFinlandLtdontherecorddate.
AtitsmeetingtobeheldonOctober25,2018,theBoardofDirectorswilldecideontherecordandpaymentdatesofthesecondinstallment,inaccordancewiththerulesoftheFinnishbook-entrysecuritiessystem.
Accordingtothecurrentsystem,thedividendrecorddatewouldbeOctober29,2018andthepaymentdatewouldbeNovember5,2018.
NodividendispaidtothetreasurysharesheldbyAspoPlc.
Nosignificantchangeshavetakenplaceinthecompany'sfinancialpositionsincetheendofthefinancialyear.
Thecompany'sliquidityisgoodandintheopinionoftheBoardofDirectorstheproposeddividendwillnotputthecompany'ssolvencyatrisk.
BeforetheBoardofDirectorsimplementstheresolutionoftheAnnualShareholders'Meeting,theBoardofDirectorsmust,inaccordancewiththeFinnishCompaniesAct,assesswhetherthecompany'ssolvencyand/orfinancialpositionhaschangedaftertheresolutionoftheAnnualShareholders'Meetingsothattherequirementsfordiv-idenddistributionintheFinnishCompaniesActarenolongerfulfilled.
Itisaprereq-uisitefortheimplementationoftheresolutionoftheAnnualShareholders'MeetingthattherequirementsintheFinnishCompaniesActarefulfilled.
Helsinki,March1,2018GustavNybergMammuKaarioMikaelLaineRobertoLencioniSallaPyryRistoSaloAkiOjanenCEODIVIDENDPROPOSALOFTHEBOARD92DIVIDENDPROPOSALOFTHEBOARDAUDITOR'SREPORTTotheAnnualGeneralMeetingofAspoOyjREPORTONTHEAUDITOFFINANCIALSTATEMENTSOpinionWehaveauditedthefinancialstate-mentsofAspoOyj(businessidentitycode1547798-7)fortheyearended31December,2017.
Thefinancialstatementscomprisetheconsolidatedbalancesheet,statementofcomprehensiveincome,statementofchangesinequity,state-mentofcashflowsandnotes,includingasummaryofsignificantaccountingpoli-cies,aswellastheparentcompany'sbal-ancesheet,incomestatement,statementofcashflowsandnotes.
Inouropiniontheconsolidatedfinancialstatementsgiveatrueandfairviewofthegroup'sfinancialpositionaswellasitsfinancialperformanceanditscashflowsinaccordancewithInternationalFinancialReportingStandards(IFRS)asadoptedbytheEU.
thefinancialstatementsgiveatrueandfairviewoftheparentcompany'sfinancialperformanceandfinancialpositioninaccordancewiththelawsandregulationsgoverningthepreparationoffinancialstatementsinFinlandandcomplywithstatutoryrequirements.
Ouropinionisconsistentwiththeaddi-tionalreportsubmittedtotheAuditCommittee.
BasisforOpinionWeconductedourauditinaccordancewithgoodauditingpracticeinFinland.
Ourresponsibilitiesundergoodauditingprac-ticearefurtherdescribedintheAuditor'sResponsibilitiesfortheAuditofFinancialStatementssectionofourreport.
Weareindependentoftheparentcom-panyandofthegroupcompaniesinaccor-dancewiththeethicalrequirementsthatareapplicableinFinlandandarerele-vanttoouraudit,andwehavefulfilledourotherethicalresponsibilitiesinaccor-dancewiththeserequirements.
Inourbestknowledgeandunderstand-ing,thenon-auditservicesthatwehaveprovidedtotheparentcompanyandgroupcompaniesareincompliancewithlawsandregulationsapplicableinFinlandregardingtheseservices,andwehavenotprovidedanyprohibitednon-auditser-vicesreferredtoinArticle5(1)ofregu-lation(EU)537/2014.
Thenon-auditser-vicesthatwehaveprovidedhavebeendisclosedinnote7totheconsolidatedfinancialstatements.
Webelievethattheauditevidencewehaveobtainedissufficientandappropri-atetoprovideabasisforouropinion.
KeyAuditMattersKeyauditmattersarethosemattersthat,inourprofessionaljudgment,wereofmostsignificanceinourauditofthefinancialstatementsofthecurrentperiod.
Thesematterswereaddressedinthecon-textofourauditofthefinancialstate-mentsasawhole,andinformingouropin-ionthereon,andwedonotprovideasep-arateopiniononthesematters.
WehavefulfilledtheresponsibilitiesdescribedintheAuditor'sresponsibilitiesfortheAuditoftheFinancialStatementssectionofourreport,includinginrelationtothesematters.
Accordingly,ourauditincludedtheperformanceofproceduresdesignedtorespondtoourassessmentoftherisksofmaterialmisstatementofthefinancialstatements.
Theresultsofourauditprocedures,includingthepro-ceduresperformedtoaddressthemat-tersbelow,providethebasisforourauditopinionontheaccompanyingfinancialstatements.
Wehavealsoaddressedtheriskofman-agementoverrideofinternalcontrols.
Thisincludesconsiderationofwhethertherewasevidenceofmanagementbiasthatrepresentedariskofmaterialmisstate-mentduetofraud.
(TranslationoftheFinnishoriginal)93AUDITOR'SREPORTKeyAuditMatterHowourauditaddressedtheKeyAuditMatterValuationofgoodwillWerefertotheconsolidatedfinancialstatements'accountingpoliciesandtothenote12Atthebalancesheetdate31.
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2017,thevalueofgood-willamountedtoEUR42,0millionrepresenting13%oftotalassetsand37%oftotalequity.
Annuallyperformedimpair-menttestswereconsideredasakeyauditmatter,because:theestimationprocessiscomplexandincludesjudgmentalareasimpairmenttestisbasedonassumptionsinrelationtomarketandeconomicconditions:goodwillissignificantrelativetothefinancialstatements.
TheGroup'scash-generatingunits'recoverableamountisdeterminedbyandbasedonthevalueinusecalculations,whichmayvarysignificantlywhentheunderlyingassump-tionsincludedinthecalculationschanges.
Thedetermina-tionofvalueinuseisaffectedbyseveralassumptions,suchasforexamplerevenuegrowth,grossmargin,andthedis-countrateappliedondiscountingthecashflows.
Changesintheabovementionedassumptionsmayresultinanimpair-mentofgoodwill.
ValuationofgoodwillisakeyauditmatterandasignificantriskofmaterialmisstatementreferredtoinEURegulationNo537/2014,point(c)ofArticle10(2).
Ourauditprocedures,whichtakeintoaccountsignificantriskofmaterialmisstatementinvaluationofgoodwill,includedamongothers:aspartofaudit,valuationspecialistassistedusinevaluatingtheassumptionsandmethodologiesusedespeciallyon:forecastedrevenuegrowth,profitabilityaswellasontheaveragecostofcapitalusedtodiscountthecashflows;assessmentofmanagement'sforecastingaccuracyandcomparisonofprojectionstothelatestbudgetsapprovedbytheBoard;assessmentofappropriatenessofsensitivityanalysesandwhetherreasonablypossiblechangeinkeyassumptionscouldcausethecarryingamounttoexceeditsrecoverableamount;weassessedtheadequacyofthenotesrelatedtosensitivityanalysesforassumptionsusedinimpairmenttestspresentedinthenote12.
RevenuerecognitionWerefertotheconsolidatedfinancialstatements'revenuerecognitionaccountingpoliciesandtothenote1Inthefinancialyear2017AspoGroup'sturnoveramountedtoEUR502million,whichmainlyconsistsofsaleofgoods,butalsofromservicessoldtocustomers.
Minorpartoftheturnoverconsistsofrevenuerecognizedfromcustomerspe-cificlong-termprojects.
Revenuefromsaleofgoodsisrecognizedwhentherisksandrewardsoftheunderlyingproductshavebeentransferredtothecustomer.
Revenuefromservicesisrecognizedaftertheservicehasbeenrendered.
Salescontracttermsandprac-ticesvaryindifferentmarkets.
TurnoverisGroup'skeyperformanceindicator,whichmaybeanincentiveforprematurerevenuerecognition.
RevenuerecognitionisakeyauditmatterandasignificantriskofmaterialmisstatementreferredtoinEURegulationNo537/2014,point(c)ofArticle10(2)duetoriskrelatedtocorrecttimingofrevenuerecognition.
Ourauditprocedures,whichtakeintoaccountsignificantriskofmaterialmisstatementinrevenuerecognition,includedamongothers:assessmentofthecomplianceofcompany'saccountingpoliciesoverrevenuerecognitionandcomparisonwithapplicableaccountingstandards;testingoftherevenuerecognitionincludingthetestingofinternalcontrolstotheextentappropriate.
Ourtestsincludedexternalconfirmations,reconciliationofsalesagainstcustomercontractsandverificationofacceptanceofdeliveries;analyticalproceduresrelatingtorevenuerecognition;assessmentoftheadequacyoffinancialstatementnotesrelatedtorevenues.
94Auditor'sReportKeyAuditMatterHowourauditaddressedtheKeyAuditMatterValuationofinventoriesWerefertotheconsolidatedfinancialstatements'account-ingpoliciesandtothenote18Atthebalancesheetdate31.
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2017,thevalueofinven-toryamountedtoEUR61millionrepresenting19%oftotalassetsand54%oftotalequity.
Inventoriesaremeasuredatacquisitioncostornetrealizablevalueiflower.
Netreal-izablevalueisthesalespriceintheordinarycourseofbusi-nesslesssalescostsandthecostsneededtofinishthepro-ductionofthegoods.
Impairmentduetoobsolescenceisconsideredinvaluationofinventories.
Aspohassegmentandmarketspecificproce-durestoidentifyimpairmentduetoobsolescence.
Inventoryisakeyauditmatterduetothesizeoftheaccountbalanceandbecauseinventoryvaluationinvolvesmanage-mentjudgement.
Ourauditprocedures,whichtakeintoaccountriskrelatedtovaluationofinventories,includedamongothers:assessmentofthecomplianceofcompany'saccountingpoliciesoninventoryvaluationandcomparisonwithapplicableaccountingstandards;assessmentoftheprocessesandpracticesrelatedtoinventoryvaluation,andinmajorlocationstestingofthecontrolsrelatedtoprocesses;testofdetailproceduresrelatedtoacquisitioncostofinventory:assessmentofthecomplianceofobsolescenceprovisionswiththegroupaccountingpolicies:assessmentoftheappropriatenessandcorrectnessofmanagementjudgementincludedinobsolescenceprovisions:assessmentofthenotesrelatedtoinventories.
ResponsibilitiesoftheBoardofDirectorsandtheManagingDirectorfortheFinancialStatementsTheBoardofDirectorsandtheManagingDirectorareresponsiblefortheprepa-rationofconsolidatedfinancialstate-mentsthatgiveatrueandfairviewinaccordancewithInternationalFinancialReportingStandards(IFRS)asadoptedbytheEU,andoffinancialstatementsthatgiveatrueandfairviewinaccordancewiththelawsandregulationsgoverningthepreparationoffinancialstatementsinFinlandandcomplywithstatutoryrequire-ments.
TheBoardofDirectorsandtheManagingDirectorarealsoresponsibleforsuchinternalcontrolastheydeter-mineisnecessarytoenabletheprepara-tionoffinancialstatementsthatarefreefrommaterialmisstatement,whetherduetofraudorerror.
Inpreparingthefinancialstatements,theBoardofDirectorsandtheManagingDirectorareresponsibleforassessingtheparentcompany'sandthegroup'sabilitytocontinueasgoingconcern,disclosing,asapplicable,mattersrelatingtogoingconcernandusingthegoingconcernbasisofaccounting.
Thefinancialstatementsarepreparedusingthegoingconcernbasisofaccountingunlessthereisanintentiontoliquidatetheparentcompanyorthegrouporceaseoperations,orthereisnorealisticalternativebuttodoso.
Auditor'sResponsibilitiesfortheAuditofFinancialStatementsOurobjectivesaretoobtainreasonableassuranceonwhetherthefinancialstate-mentsasawholearefreefrommaterialmisstatement,whetherduetofraudorerror,andtoissueanauditor'sreportthatincludesouropinion.
Reasonableassur-anceisahighlevelofassurance,butisnotaguaranteethatanauditconductedinaccordancewithgoodauditingpracticewillalwaysdetectamaterialmisstate-mentwhenitexists.
Misstatementscanarisefromfraudorerrorandareconsid-eredmaterialif,individuallyorinaggre-gate,theycouldreasonablybeexpectedtoinfluencetheeconomicdecisionsofuserstakenonthebasisofthefinancialstatements.
Aspartofanauditinaccordancewithgoodauditingpractice,weexercisepro-fessionaljudgmentandmaintainprofes-sionalskepticismthroughouttheaudit.
Wealso:Identifyandassesstherisksofmaterialmisstatementofthefinancialstatements,whetherduetofraudorerror,designandperformauditproceduresresponsivetothoserisks,andobtainauditevidencethatissufficientandappropriatetoprovideabasisforouropinion.
Theriskofnotdetectingamaterialmisstatementresultingfromfraudishigherthanforoneresultingfromerror,asfraudmayinvolvecollusion,forgery,intentionalomissions,misrepresentations,ortheoverrideofinternalcontrol.
Obtainanunderstandingofinternalcontrolrelevanttotheauditinordertodesignauditproceduresthatareappropriateinthecircumstances,butnotforthepurposeofexpressinganopinionontheeffectivenessoftheparentcompany'sorthegroup'sinternalcontrol.
Evaluatetheappropriatenessofaccountingpoliciesusedandthereasonablenessofaccountingestimatesandrelateddisclosuresmadebymanagement.
Concludeontheappropriateness95Auditor'sReportoftheBoardofDirectors'andtheManagingDirector'suseofthegoingconcernbasisofaccountingandbasedontheauditevidenceobtained,whetheramaterialuncertaintyexistsrelatedtoeventsorconditionsthatmaycastsignificantdoubtontheparentcompany'sorthegroup'sabilitytocontinueasagoingconcern.
Ifweconcludethatamaterialuncertaintyexists,wearerequiredtodrawattentioninourauditor'sreporttotherelateddisclosuresinthefinancialstatementsor,ifsuchdisclosuresareinadequate,tomodifyouropinion.
Ourconclusionsarebasedontheauditevidenceobtaineduptothedateofourauditor'sreport.
However,futureeventsorconditionsmaycausetheparentcompanyorthegrouptoceasetocontinueasagoingconcern.
Evaluatetheoverallpresentation,structureandcontentofthefinancialstatements,includingthedisclosures,andwhetherthefinancialstatementsrepresenttheunderlyingtransactionsandeventssothatthefinancialstatementsgiveatrueandfairview.
Obtainsufficientappropriateauditevidenceregardingthefinancialinformationoftheentitiesorbusinessactivitieswithinthegrouptoexpressanopinionontheconsolidatedfinancialstatements.
Weareresponsibleforthedirection,supervisionandperformanceofthegroupaudit.
Weremainsolelyresponsibleforourauditopinion.
Wecommunicatewiththosechargedwithgovernanceregarding,amongothermat-ters,theplannedscopeandtimingoftheauditandsignificantauditfindings,includ-inganysignificantdeficienciesininternalcontrolthatweidentifyduringouraudit.
Wealsoprovidethosechargedwithgov-ernancewithastatementthatwehavecompliedwithrelevantethicalrequire-mentsregardingindependence,andcom-municatewiththemallrelationshipsandothermattersthatmayreasonablybethoughttobearonourindependence,andwhereapplicable,relatedsafeguards.
Fromthematterscommunicatedwiththosechargedwithgovernance,wedeterminethosemattersthatwereofmostsignificanceintheauditofthefinan-cialstatementsofthecurrentperiodandarethereforethekeyauditmatters.
Wedescribethesemattersinourauditor'sreportunlesslaworregulationprecludespublicdisclosureaboutthematterorwhen,inextremelyrarecircumstances,wedeterminethatamattershouldnotbecommunicatedinourreportbecausetheadverseconsequencesofdoingsowouldreasonablybeexpectedtoout-weighthepublicinterestbenefitsofsuchcommunication.
OTHERREPORTINGREQUIREMENTSInformationonourauditengagementWewerefirstappointedasauditorsbytheAnnualGeneralMeetingon10.
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2013,andourappointmentrepresentsatotalperiodofuninterruptedengagementof5years.
OtherinformationTheBoardofDirectorsandtheManagingDirectorareresponsiblefortheotherinformation.
Theotherinformationcom-prisesthereportoftheBoardofDirectorsandtheinformationincludedintheAnnualReport,butdoesnotincludethefinan-cialstatementsandourauditor'sreportthereon.
WehaveobtainedthereportoftheBoardofDirectorspriortothedateofthisauditor'sreport,andtheAnnualReportisexpectedtobemadeavailabletousafterthatdate.
Ouropiniononthefinancialstatementsdoesnotcovertheotherinformation.
Inconnectionwithourauditofthefinan-cialstatements,ourresponsibilityistoreadtheotherinformationidentifiedaboveand,indoingso,considerwhethertheotherinformationismateriallyincon-sistentwiththefinancialstatementsorourknowledgeobtainedintheaudit,orotherwiseappearstobemateriallymis-stated.
WithrespecttoreportoftheBoardofDirectors,ourresponsibilityalsoincludesconsideringwhetherthereportoftheBoardofDirectorshasbeenpre-paredinaccordancewiththeapplicablelawsandregulations.
Inouropinion,theinformationinthereportoftheBoardofDirectorsiscon-sistentwiththeinformationinthefinan-cialstatementsandthereportoftheBoardofDirectorshasbeenpreparedinaccordancewiththeapplicablelawsandregulations.
If,basedontheworkwehaveperformedontheotherinformationthatweobtainedpriortothedateofthisauditor'sreport,weconcludethatthereisamaterialmis-statementofthisotherinformation,wearerequiredtoreportthatfact.
Wehavenothingtoreportinthisregard.
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2018Ernst&YoungOyAuthorizedPublicAccountantFirmHarriPrssinenAuthorizedPublicAccountant96Auditor'sReport