rettig group annual report · pdf filerettig group annual report 2014 ... turnover 933 eur...

ANNUAL REPORT 2014 RETTIG GROUP 1

Rettig G

roup A

nn

ual Rep

ort 2014

Rettig Group is a Finnish family business that creates value

for generations through sustainable and long-term growth.

In all our businesses we focus on leading market positions

and more customer value with less environmental impact.

Rettig Group Annual Report

2014VALUE FOR GENERATIONS

2 RETTIG GROUP ANNUAL REPORT 2014

The year in brief

EBITDA

131 EUR million

2013: 132

Net gearing

59%2013: 70%

Return on capital employed*

5.8%2013: 4.6%

Personnel at end of period

4,0742013: 4,322

Turnover

933 EUR million

2013: 974

EBIT*

43 EUR million

2013: 36

Net result*

28EUR million

2013: 1

Capital employed

710EUR million

2013: 753

Turnover by business area 2014

• RETTIG ICC 58%

• NORDKALK 36%

• BORE 6%

EBITDA by business area 2014

• RETTIG ICC 44%

• NORDKALK 43%

• BORE 13%

Capital employed by business area 2014

• RETTIG ICC 27%

• NORDKALK 45%

• BORE 28%

Turnover by country 2014

• FINLAND 20%

• GERMANY 16%

• SWEDEN 12%

• POLAND 10%

• UNITED KINGDOM 9%

• FRANCE 7%

• RUSSIA 5%

• OTHER 20%

*Including goodwill depreciation and non-recurring expences.

1907Henning von Rettig

became shareholder in Pargas Kalkbergs

Aktiebolag

1898A distinguished

industrialist and culture patron,

Fredric von Rettig, was raised to nobility

1897Rettig was

actively involved in the establishment of Bore Steamship

Company

1940P.C.Rettig & Co bought a majority stake of tobacco factory Ph.U. Strengberg & Co in Jakobstad, Finland

1970Rettig entered the heating industry by acquiring Purmo Tuote-Produkt in Purmo, near Jakobstad, Finland

1926Hans von Rettig became the major shareholder of Bore Steamship Company

1994Ann, Cyril, Tom and Hans von Rettig took over responsibility of the family business. Rettig sold the stake in Partek (orig. Pargas Kalkberg)

1977The company’s head office moved from Turku to Espoo in Finland. In 1990 the head office moved to Bulevardi in Helsinki

1995The tobacco

business was divested to

R.J. Reynolds Tobacco

International

Our history

2003Rettig Group acquired the first stake in Nordkalk. By 2010 Nordkalk was wholly

owned by Rettig Group

2013Rettig Group is wholly owned, through Rettig Capital, by the

family branches of Cyril and Tom von Rettig

2014Bore decided

to focus on the RoRo business

1845Pehr Cerelius

Rettig established a tobacco factory in

Turku, Finland

1790sSteffen Cerillius Rettig moved from Hamburg, Germany, to Karlskrona in Sweden and established a tobacco factory

1809Pehr Christian Rettig established a tobacco factory in Gävle, Sweden

Indoor climate comfortEurope’s leading supplier of heat emitters and indoor climate comfort.

Industrial shipping servicesEurope’s leading RoRo tonnage provider.

Limestone-based productsNorthern Europe’s leading supplier of limestone-based products for industry, agriculture and environmental care.

Contents

Chairman’s review 2

Corporate values 4

Our businesses 5

Value for generations 6

CEO’s review 8

Strategic actions in 2014 10

Sustainability key performance indicators 11

Rettig Group 2014 12

Investor Relations 14

Megatrends 15

Business operations

Rettig ICC 18

Nordkalk 23

Bore 27

Financial statementsBoard of Directors’ report 32

Income statement 36

Balance sheet 37

Cash flow statement 38

Accounting principles 39

Notes to the financial statements 41

Five-year review 53

Calculation of financial ratios 53

Auditor’s report 54

Governance and risk management 55

Board of Directors 57

Group management 58

Business area management teams 59

Contacts 60

that market conditions have been such that we have been forced to make difficult decisions affecting our employees in all three business areas. As we continue to work towards our mission of “Value for generations”, I am especially thankful for every individual contribution and for the hard work of all our employees in 2014.

I would also like to thank our customers and business partners for their assistance, cooperation and support as Rettig Group continues to create value for generations.

Cyril von RettigChairman of the Board

For eight generations we have ensured growth, and we are dedicated to creating long-term, sustainable

success and value in the future. We stand for responsible ownership, commitment and risk diversification.

As an owner our main responsibility is to accumulate and prioritise resources for our businesses in order to develop sustainable business operations in the long term. We support our businesses in their challenges and opportunities.

Rettig Group represents not only tradition, but also vision and adaptability. We have grown deep industrial roots over 200 years, but we have also persistently evolved our businesses through flexible initiatives. Throughout our history we have been involved in various industries. Today, Rettig Group has three business areas, with operations mainly in Europe: indoor climate comfort, limestone-based products and industrial shipping services.

Our way of working is to make no hasty decisions and to act prudently. The year 2014 was characterised by difficult market conditions in Europe as a whole and in all three of our business areas. It is clear that change and difficult decisions were required in all three business areas to improve cost-efficiency and to ensure the long-term sustainability of our businesses.

During times of change, our corporate values are especially important. We believe in openness, fairness, modesty as well as trust and respect. These values remain and play an important role as we continue to adapt the business to a changing business environment.

While 2014 was a challenging year, our mission remains unchanged: we focus on sustainable long-term growth, leading market positions and more customer value with less environmental impact. The ambition to create more with less is crucial for sustainable growth and market leadership.

Our three businesses develop and implement innovative technologies in line with our mission statement. Key megatrends including energy-efficient buildings, the efficient use of resources, clean water and air as well as low-emission transport are increasingly important drivers of our businesses, where our clean technologies play a crucial role. This is an area where we have much to give, learn and gain.

It is with great appreciation for our employees that I can say that pride for the profession and commitment characterise our people and the way of working throughout the whole Group. With that in mind, it is very unfortunate

Value for generationsRettig Group’s mission is to create

value for generations of owners, key stakeholders and society in general.

Chairman’s review


We have grown deep industrial roots over 200 years, but we have also persistently evolved our businesses through flexible initiatives.

Rettig Group valuesThe traditions and values of Rettig are the essence of the Rettig

culture, whether it is within the Group or as we interact with our external stakeholders. As such, our core values are a very

important part of who we are, our attitude and our style.

OpennessAn open mindset is essential for

interactive teamwork and sharing information. With free flow of information

we create an atmosphere conducive to understanding our business operations

at all levels in the organisation.

Trust and respectTrust and respect are the most

fundamental elements of our interaction and communication with different

stakeholders. Without trust and respect people feel neither empowered nor

prepared to take charge.

FairnessFairness is the Rettig approach to handling

both internal and external relationships. It is also our attitude when meeting

challenges and solving problems. Solutions that are perceived as fair by all parties

become permanent solutions.

ModestyModesty is the principle applied by

Rettig in listening to and understanding divergent views and opinions. The opposite

of modesty is arrogance. A modest organisation is sensitive to early signals.



MISSION

RETTIG ICC

More indoor climate comfort with less resources, energy and emissions.

NORDKALK

More clean water, food, energy and products with less resources and emissions.

BORE

More RoRo sea transport with less fuel and emissions.

VISION Europe’s leading supplier of heat emitter and indoor climate comfort solutions. Growth from related and new markets.

Northern Europe’s leading supplier of limestone-based products. Growth from high-value businesses and new markets.

Europe’s leading RoRo tonnage provider with a sustainable and energy-efficient fleet.

BUSINESS DRIVERS

Housing construction including newbuild and refurbishment.

Construction activity. Production of metals, paper and other materials. Water and flue gas cleaning. Agriculture.

International trade within Europe.

CUSTOMER BASE

Sanitary and plumbing wholesalers in Europe, and increasingly in North America and Asia.

Pulp and paper, construction, chemical, metals and mining industries, power plants and generation, environmental care and agriculture in the Baltic Sea region.

Established line operators in Europe.

MAIN MARKETS

Austria, Belgium, Finland, France, Germany, Netherlands, Poland, Russia, Sweden, the UK.

Baltic countries, Finland, Germany, Poland, Russia, Sweden.

The Baltic Sea, the Bay of Biscay, the Mediterranean Sea, the North Sea.

PRESENCE Manufacturing at 14 plants in Austria, Belgium, France, Germany, Hungary, Ireland, Poland, Sweden, Turkey and the UK.

Activities at more than 30 locations in Estonia, Finland, Germany, Lithuania, Norway, Poland, Russia, Sweden and Ukraine.

Nine RoRo vessels with shore offices in Finland and the Netherlands.

PRODUCTS AND SERVICES

Radiators, underfloor heating, valves and controls as well as related services.

Limestone-based products and services for industrial, environmental and agricultural processes.

RoRo tonnage providing. Partner in shipping. Innovative shipping solutions.

Businesses of Rettig Group


MISSION

Sustainable long-term growth • Leading market positions •

More customer value with less environmental impact

ROCE > 9%

NET GEARING < 60%

EBITDA GROWTH > 5% P.A.

Value for generations

TARGETS AND VISION

Bore –Europe’s leading RoRo tonnage provider with a sustainable and energy-efficient fleet.

Rettig ICC – Europe’s leading supplier of heat emitters and indoor climate comfort solutions. Growth from related and new markets.

Nordkalk – Northern Europe’s leading supplier of limestone-based products. Growth from high-value businesses and new markets.


CORPORATE VALUES

Openness • Fairness •

Modesty • Trust and respect

GROW PROFITS

REDUCE DEBT TO ENABLE GROWTH

FINANCE PROACTIVELY

MEGATRENDSSTRATEGIC ACTIONS

Grow in target marketsSimplify operationsInnovate new solutions

Reduce emissionsImprove efficiencyEnsure fleet competitiveness

Improve cost-efficiency Innovate new businessGrow profitably


In 2014, weak economic development in our main markets resulted in low overall demand. Construction activity

in Europe remained at its lowest level for seven years, about 20 per cent below its 2007 peak. Low activity in building and refurbishment resulted in continued weak overall demand for indoor climate comfort solutions and limestone-based construction materials. Demand for limestone-based products suffered as a result of the continued decrease in graphic paper consumption. On the other hand, demand was supported by somewhat increased steel production. The short-sea shipping market continued to suffer from heavy overcapacity. However, the balance of supply and demand in the RoRo (roll-on roll-off) niche market continued to tighten thanks to the high level of scrapped old vessels and lack of newbuilds.

STRATEGY IMPLEMENTATIONThe aim of Rettig Group is for Economic Value Added and profitable growth with a strong balance sheet. These strategic objectives translate into long-term financial targets of an ROCE over 9 per cent, EBITDA annual growth above 5 per cent and net gearing below 60 per cent over the business cycle.

Despite challenging market conditions and a 4.1 per cent decline in turnover, profitability improved somewhat thanks to increased efficiencies as well as reduced costs and depreciations in all three business areas. For instance, personnel and fixed costs were EUR

15 million lower than in the previous year. The Group’s operating profit (EBIT) grew by 19.3 per cent to EUR 43 million, including EUR 17 million goodwill depreciation and EUR 9 million non-recurring expenses due to restructuring. ROCE increased from 4.6 to 5.8 per cent. The Group’s net result increased to EUR 28 million, including EUR 20 million from the 17.0 per cent ownership in the demutualised and merged insurance companies Redarnas Ömsesidiga Försäkringsbolag and Försäkringsaktiebolaget Alandia. Despite an EBITDA-margin improvement from 13.5 per cent to 14.0 per cent, the EBITDA of approximately EUR 131 million remained on the same level as the previous year. Thanks to a strong free cash flow of EUR 103 million, net debt was reduced by 14.2 per cent. Thus, the targeted net gearing level of below 60 per cent was achieved at the end of the year.

Rettig ICC focused on its strategic actions ensuring growth in targeted markets, simplifying operations and introducing innovative, new product solutions. Important steps were taken in the area of simplifying operations. Heat emitter production capacity was adapted to the reduced level of demand by transferring production from Jakobstad in Finland, mainly to the more

Focus on strategy2014 was characterised by continued

strong cash flow and improved profitability despite weak demand.

CEO’s review

10

8

6

4

2

0

Return on capital employed, Rettig Group %

10 11 12 13 14

100

80

60

40

20

0

10 11 12 13 14

Net gearing, Rettig Group %

150

120

90

60

30

0

10 11 12 13 14

-8% -7% 5%66% -1%EBITDA growth

EBITDA,Rettig Group EUR million


EBITDA growth > 5% p.a.Net gearing < 60%ROCE > 9%

Long-term key financial targets:

cost-efficient plant in Rybnik in Poland, where there was spare capacity available. The Hewing underfloor heating plant in Germany was successfully restructured. Sales and Marketing was also successfully reorganised globally.

Nordkalk continued to focus on its strategic actions improving cost-efficiency, innovating new business and growing profitably. Cost-efficiency was improved thanks to production-platform and supply-chain optimisation; this included the closure of two old lime kilns in Lappeenranta in Finland. The Swedish Land and Environment Court announced its positive decision in the case of the planned new quarry in Bunge on the island of Gotland in Sweden. The court decision was appealed and a final outcome of the long legal process is expected by 2016 at the latest. Nordkalk’s permit at the current Klinthagen quarry on Gotland was extended. Small but important steps in the area of innovation were taken through the sale of new high-value limestone-based fillers for paints and coatings as well as

the first commercial contract for delivery of lime granules to clean sulphur from the exhaust gases of cargo ships.

Bore focused on its strategic actions reducing emissions, renewing through divestment and supporting Nordkalk. One major achievement was the divestment of the entire general cargo fleet of seven vessels and complete exit from the loss-making CoA (Contract- of-Affreightment) business, allowing Bore to focus fully on the TP (Tonnage Providing) business with the remaining nine RoRo vessels. Important aspects of this successful restructuring included the long-term agreement with the Dutch shipping company Royal Wagenborg, including cost-competitive sea freights for Nordkalk, as well as the adjustment of Bore’s shore organisation. An agreement with the unions was reached to enable mixed crews on all Bore’s Finnish-flagged vessels, thereby reducing personnel costs.

Changes in the Rettig Group Management Team took place in the form of the appointments of Jarkko

Kaplin as CEO of Nordkalk, succeeding Bertel Karlstedt, and Christian Ståhlberg as Group General Counsel, succeeding Berndt Lindberg, as of 2015.

OUTLOOK FOR 2015The business environment will remain challenging in 2015, as the economic growth in Europe is forecast to continue weak. We expect to improve our profitability through continued focus on the implementation of our strategy.

I thank our customers for their continued trust and good cooperation. The year has been tough and demanding for our employees, and I wish to thank them all for their unfailing commitment and good work. Furthermore, my thanks go to our owners, the Rettig family, board members and colleagues for their trust and support as well as our banks, investors and suppliers for their good cooperation.

Hans SohlströmPresident and CEO


Strategic actions in 2014

KEY ACTIONS ACHIEVEMENTS

RETTIG GROUP

Grow profits EBITDA declined by 0.8 per cent to EUR 131 million. EBIT improved by 19.3 per cent to EUR 43 million. ROCE improved from 4.6 to 5.8 per cent.

Reduce debt to enable growth Net gearing reduced from 69.9 to 59.4 per cent.

Finance proactively Maintenance of current funding strategy and activities.

RETTIG ICC

Grow in target markets Solid year-on-year growth in Eastern Europe and China.

Simplify operations Restructuring of sales and marketing organisation.

Closure of factories in Järpås in Sweden and Jakobstad in Finland. Manufacturing started in Gateshead in the UK and Rybnik in Poland of products formerly made in Järpås and Jakobstad.

Opening of new logistics centre for Hewing GmbH in Germany, reducing handling and transport of underfloor heating pipes.

Innovate new solutions Launch of new UK-produced electric radiator ranges in Sweden and France, the two major electric radiator markets.

Commencement of activities at the new R&D centre in Saxony in Germany.

Several product improvements and launches, including MMA’s intelligent thermostatic valve FVRe and thermostatic head MMA Sensia.

NORDKALK

Improve cost-efficiency Continued focus on improved capacity utilisation in the production network, including closure of two old lime kilns in Lappeenranta in Finland.

Personnel reductions completed according to plan of co-determination negotiations.

Renewed permit received for Nordkalk’s current Klinthagen quarry on Gotland in Sweden, as well as a permit for an extension area located north-west of Klinthagen.

Permit and conditions received from Swedish Land and Environment Court for the planned limestone quarry in Bunge Ducker on Gotland in Sweden. Final outcome of the legal process expected by 2016.

Innovate new business First commercial agreement signed to supply absorbents for dry-scrubber solution on board vessels.

Expansion of production capacity for Nordkalk E-Series, launched in 2013, for high-performing polymer applications.

Grow profitably Material efficiency improved from 87.9 per cent to 90.9 per cent through increased sale of by-products.

Strong growth in agriculture segment in Poland.

BORE

Renew through divestment Divestment of complete Contract-of-Affreightment dry cargo fleet.

Mixed crew manning model agreed on Finnish-flagged RoRo vessels.

Restructuring of operations.

Support Nordkalk Contract with Royal Wagenborg, as part of CoA fleet divestment, for shipping of main part of Nordkalk limestone deliveries.

Reduce emissions NAPA installed on M/V Estraden, M/V Norsky and M/V Norstream.

Variable Frequency Drive (VFD) installed on M/V Bore Song.

Scrubbers installed on M/V Bore Song and M/V Seagard.

Norsepower’s Flettner rotor prototype installed on M/V Estraden.

Combinator mode installed on car carriers.


Sustainability key performance indicators

For more detailed information about sustainability of our business areas and their specific key performance indicators,

go to www.nordkalk.com or www.bore.eu.

The mission of Rettig Group is to create value through sustainable and long-term growth. As a family business with a long-term view, balancing economic reality with issues relating to people and our environment has always been a natural mode of operation throughout our long business history. While people and our environment are prerequisites for our business they are also assets that enable economic growth. As our operating environment and society evolve, we are now taking a first step to report to our external stakeholders how we perform on these three key drivers:

RETTIG GROUP

ECONOMIC 2014 2013

ROCE 5.8% 4.6%

EBITDA growth -0.8% 4.9%

Net gearing 59.4% 69.9%

RETTIG ICC NORDKALK BORE

PEOPLE 2014 2013 2014 2013 2014 2013

Absence 3.9% n/a 2.7% 3.0% 3.6% 3.5%

Accident frequency 7.6% 13.9% 9.9% 8.7% 2.6% 3.0%

ENVIRONMENT 2014 2013 2014 2013 2014 2013

Resource efficiency

Scrapped steel (kg)/ Produced (kg) Utilisation rate of quarried stone Fuel consumption

3.1% 3.4% 90.9% 87.9% 28.0 29.3

Emissions to air

CO2

Tonnes/Tonnes of produced quicklime Gram/Kilometre and tonnes of cargo (fleet average)

1.1 1.0 90.5 95.0

SOX 0.4 0.5

NOX 1.8 1.9

Return On Capital Employed (ROCE): Earnings before interest and tax (EBIT) / Capital employed, annual average, %.

EBITDA growth: Year-on-year growth in earnings before interest, tax, depreciation and amortisation (EBITDA), %.

Net gearing: Interest-bearing liabilities - interest-bearing assets / Shareholders’ equity + minority interests, %.

Absence: Absence hours of own employees / Regular contracted hours (excl. absence due to long-term illness), %. Illness lasting more than three months considered long-term illness.

Accident frequency: Accidents at work / Million work hours of own employees, %. Calculation of work hours of Bore's seamen: 24h x number of seamen x days. An accident at Rettig ICC and Nordkalk is defined as an incident at work leading to absence for at least one day (LTA1). At Bore all incidents at work are defined as accidents.

Scrapped steel: Process scrap (e.g. faulty produced or damaged products, customer returns) and design scrap (scrap included in the technical drawing of a product) at radiator plants.

Utilisation rate of quarried stone: Tonnes of utilised quarried stone / Tonnes of total quarried stone, %.

Fuel consumption: Measured by grams per tonne kilometre, derived from voyage miles and tonnes of cargo. Varies from year to year depending on the customer’s trade route.


Rettig Group 2014Efficiency improvement measures helped us to improve profitability in

continued difficult market conditions.

5 SeptemberFirst agreement on supply of Nordkalk’s absorbents for dry scrubber solution for German shipping company Rörd Braren

5 SeptemberBore and P&O Ferries agree continued charter of M/V Bore Song in the North Sea trade

9 SeptemberLegal process for Nordkalk’s Bunge quarry in Sweden continues

30 SeptemberNordkalk completes codetermination negotiations on Gotland in Sweden

23 JuneRettig ICC decides to discontinue production of heat emitters in Jakobstad in Finland

13 AugustBore and P&O Ferries agree continued charter of M/V Norsky and M/V Norstream

21 August2014 half-year result: improved profitability in challenging market conditions

18 DecemberCo-operation negotiations with Bore’s shore personnel completed

10 DecemberBore agrees mixed crew manning model for Finnish flagged RoRo vessels

26 NovemberJarkko Kaplin appointed CEO of Nordkalk


9 January Bore and P&O Ferries confirmed continued charter of M/V Norsky, M/V Norstream and M/V Bore Song

7 February Changes in Rettig Capital’s ownership structure

27 February2013 full-year result published: strong cash flow and improved profitability in challenging market conditions

24 AprilInterim Management Statement

6 MaySale of Bore’s M/V Klenoden completed

3 OctoberChristian Ståhlberg appointed General Counsel of Rettig Group as of 1.1.2015

7 OctoberBore to focus on RoRo tonnage providing. Bore to exit CoA business as all CoA vessels divested. Royal Wagenborg to handle majority of Nordkalk’s sea-freights

2 JuneCourt gives green light to Nordkalk’s Bunge quarry on Gotland

13 OctoberBore and P&O Ferries agree charter of M/V Estraden on cross-channel trade

23 OctoberInterim Management Statement

20 NovemberNordkalk granted permit to continue operations in Klinthagen on Gotland

25 FebruaryDe-mutualisation and merger planned within the Alandia Insurance Group

Investor Relations

Rettig Group is a family held company with a pro-active funding strategy. Our funding policy is designed to give Rettig Group access to a variety of financing sources at any time.

We finance our operations by supplementing our internally generated funds with external loans. We have short-term and long-term financing programmes to secure the required financial flexibility.

We aim to communicate our strategy clearly with a high degree of transparency. To achieve this Rettig Group reports quarterly, arranges updates and an annual Capital Markets Day for its core banks

ISSUER AMOUNT EURMILLION

COUPON (ANNUAL)

ISSUE DATE MATURITY DATE

STATUS LISTING RATING ISIN

Rettig Group Ltd.

58.15* 5% 22.6.2010 22.6.2015 Senior, unsecured Not listed n/a FI4000014204

Rettig Group Ltd.

100 5.25% 25.6.2012 25.6.2017 Senior, unsecured and unsubordinated

Not listed n/a FI4000046347

OUTSTANDING BONDS

*After buy-back completed on 2 October 2013 (original amount at issue EUR 100 million).

and debt investors. We also arrange informational meetings for our core group of banks.

ContactFurther information about Rettig Group including its investor relations activities is available on the company’s website www.rettig.fi. Inquiries can be sent to [email protected].

Funding structureon 31.12.2014

• BONDS, PRIVATE PLACEMENT 52%

• LOANS FROM FINANCIAL

INSTITUTIONS 32%

• CAPITAL LOANS 11%

• COMMERCIAL PAPER 6%

Financial calendar

26.2.2015 Financial Statements Release for the year 2014

Publication of the Annual Report 2014

20.3.2015 Capital Markets Day

23.4.2015 Interim Management Statement 1.1-31.3.2015

20.8.2015 Interim Report 1.1-30.6.2015

22.10.2015 Interim Management Statement 1.1-30.9.2015

120

100

80

60

40

20

0

Debt maturity profi leon 31.12.2014EUR million

• FINANCIAL INSTITUTIONS • BOND I • BOND II • SHIP FINANCE

2015 2016 2017 2018 2019 2020+



Megatrends driving our business

Demand for sustainable and environmentally friendly products and services continues to grow as resources are becoming increasingly scarce. This is a strategic business opportunity for Rettig Group, as all our business areas continuously strive to offer customers more value with less environmental impact. Four megatrends are particularly important to Rettig Group as key drivers of long-term demand in our three business areas.

Our solution includesLow-temperature heat emitters such as ULOW E2 from Rettig ICC.

A new generation of intelligent fan convectors, such as the iVector or Vido from Rettig ICC, combining low water temperature with efficient operation.

Our solution includesNordkalk’s limestone-based products for desulphurisation of flue-gases from power plants and industry as well as ships.

Nordkalk’s products for water treatment, such as the processing of drinking water, purification of waste water, neutralisation of industrial waste water, treatment of natural water and mine water, and stabilisation of sludge.

Nordkalk Fostop® curbs nutrient run-off to waterways.

Bore provides low-emission transport through energy-saving technologies and some of the most energy-efficient RoRo ships on the market.

Our solution includesNordkalk’s limestone-based products for improved harvests.

Reduced energy consumption through Rettig ICC’s indoor climate comfort solutions.

Improved material efficiency and recycling of materials at Rettig ICC and Nordkalk.

Continuous efforts to improve energy-efficiency.

Our solution includesEnergy-saving technologies such as frequency converters and voyage-planning systems on board Bore’s fleet.

Continuous efforts to improve efficiency and cut the fuel consumption of Bore’s fleet.

Nordkalk lime granules clean sulphur from the exhaust gases of cargo ships (FGD Vessels).

Buildings are responsible for up to 40 per cent of energy use in most countries. The majority of that energy is used for space-heating equipment and distribution. Buildings can make a major contribution to reducing global energy consumption and tackling climate change.

EU directives set targets for energy-efficiency in building stock by 2020. Newbuilds have been the focus so far, but renovations are expected to be more in the spotlight in the future.

Finding new sources of supply and extracting them is becoming increasingly challenging and expensive, while demand for resources continues to grow due to a growing global population and middle class that in turn drive growth in consumption.

The international shipping industry is responsible for the carriage of about 90 per cent of world trade.

Sea transports are the most energy-efficient way to transport goods.

As of 1 January 2015, the EU Sulphur Directive sets a maximum sulphur limit of 0.1 per cent for marine fuels in the Baltic Sea, the North Sea and the English Channel.

Phosphorus is a major source of eutrophication of sea and inland water, reducing oxygen levels and thus harming sea life. About 30 per cent of the Baltic Sea acutely suffers from reduced oxygen levels.

As of 1 January 2015, the EU Sulphur Directive sets a maximum sulphur limit of 0.1 per cent for marine fuels in the Baltic Sea, the North Sea and the English Channel. Vessels operating in these areas need to install a sulphur scrubber or make a transition to low-sulphur fuel to reduce emissions to air.

In 2013 a campaign was started to raise funds for the New Children’s Hospital in Helsinki. The premises of

the current Children’s Hospital, built in the 1940s, are in very bad condition and no longer meet the standards of a modern medical care unit. The new state-of-the-art hospital, which will provide care for children from all over Finland, is planned to open at the end of 2017.

During 2014 the fundraising campaign received a lot of attention in the Finnish media as well as from local communities across the country. In August 2014 the campaign’s EUR 30 million target was reached thanks to donations made by numerous companies, local organisations and private individuals. By the end of the year, approximately an additional EUR 2 million had been donated to the New Children’s Hospital.

The total estimated cost of the new hospital is EUR 160 million. In addition to the funds raised through the public campaign, the Finnish state and HUS (the Hospital District of Helsinki and Uusimaa,

a joint authority formed by 24 municipalities) have pledged to fund the project to the tune of EUR 40 million each. The rest is to be funded through external loans.

The initial phase of the construction work started in August when the first building permits had been received and the Finnish construction company SRV set off the first blast to prepare the ground for the planned hospital. Once the final building permits for the whole project have been received in the spring of 2015, construction will enter the next phase, with the aim to have the hospital ready to treat children from all over Finland as of the end of 2017.

Rettig Group decided in 2013 to donate its Purmo heating products to the New Children’s Hospital to a value of at least EUR 1 million. “As a family business, we understand the importance of the well-being of the family,” said Cyril von Rettig, Chairman of Rettig Group. “We are happy that we can support a project of this kind, which is so important for our society and future generations.”

CASE:

Children’s hospital


We are supporting a project that is important for society and future generations.


BUSINESS OPERATIONS

Growth through risk diversification and

sustainable solutions


Rettig ICC Most of Rettig ICC’s core markets faced an

economic slowdown during the year 2014. However, sales continued to grow in Poland and China and Rettig ICC expanded into new emerging markets.

The product portfolio of Rettig Indoor Climate Comfort (Rettig ICC) comprises hydronic and

electric heat emitters, valves and controls. Steel panel radiators remain the core product, accounting for around 60 per cent of sales. However, substantial business is done through sales of decorative radiators, convectors and underfloor heating products. Rettig ICC is a manufacturer of valves and controls for hydronic heating systems and also of stainless-steel chimney systems.

Rettig ICC is a global player but the largest part of its business is done in Europe, where it operates sales forces in most European countries. The main business partners are heating and sanitary wholesalers. Rettig ICC supports these via close contacts with all key decision makers within the supply chain, such as architects, heating engineers and installers. To complement its sales activities, Rettig ICC runs specific marketing initiatives to create awareness for the various brands in its portfolio such as Vogel&Noot, Myson, Finimétal, Purmo Radson, LVI, Thermopanel and MMA. Rettig ICC currently operates 14 plants in 11 different countries. This makes Rettig ICC a “local supplier” almost everywhere in Europe.

THE MARKET IN 2014 Rettig ICC’s core markets were, with some exceptions, all sluggish in 2014. Sales to Russia were badly affected by the weakening rouble. Economic

problems in the eurozone continued to affect demand for all heat emitters, especially in the second half of the year. Even Germany, Rettig ICC’s largest market, witnessed an economic slowdown during the year. France and Benelux continued to suffer from weak demand, although the Austrian market picked up from 2013. The United Kingdom market was flat, growth in the private sector being offset by the continuing decline in public-sector housing new-build and refurbishment. In Scandinavia, the market was affected by the general downturn in Europe. By contrast, in Poland, despite some especially fierce competition, the market grew due to growth in the house construction sector. Further afield, the Chinese market continued to grow and Rettig ICC expanded into other growing markets such as Australia and Turkey.

GROWTHIn sales terms 2014 can be divided into two: the first half, which delivered some

good sales growth in some markets, especially in Eastern Europe; and the second half, which saw a significant downturn in sales levels due to lower construction activity caused by eurozone economic problems. Rettig ICC was also affected by the conflict in Ukraine and its implications on the Russian market. Despite this, Rettig ICC’s sales force continued to develop the business in Russia. Sales also continued to grow in China. Underfloor heating sales were generally good. Through Hewing GmbH, Rettig ICC’s wholly owned manufacturer of underfloor heating pipes, Rettig ICC experienced continued improvement. Overall, Rettig ICC’s sales were below those of 2013 but thanks to cost-reducing measures EBITDA remained close to the 2013 level.

SIMPLIFICATION OF OPERATIONSIn the beginning of the year, Rettig ICC’s global sales and marketing organisation was restructured to adapt to changing market conditions and improve competitiveness through a streamlined sales and marketing organisation while maintaining the brand portfolio.

The launch of the new UK produced electric radiator ranges in Sweden and France led to the closure of the Järpås plant, where these types of electric radiators had been produced before. The Järpås closure was completed in 2014.

Hewing GmbH opened its new logistics centre on time and on budget in March 2014. This investment removed the need

Rettig ICC strategic actions

Grow in target markets‒

Simplify operations‒

Innovate new solutions


for double handling and transport of pipes, and means that all Hewing’s activities are concentrated in one location.

During the middle part of the year, in light of both the long-term decline in the core markets for steel panel radiators and increasing manufacturing costs in Finland, the painful decision was taken to cease production in the Jakobstad plant. Jakobstad’s output is replaced by the production of radiators in Rybnik in Poland and other products in the UK and France. As with earlier Rettig ICC plant closures, a comprehensive plan was put in place to support our employees to find alternative employment.

The rollout of the enterprise resource planning (ERP) project continued in 2014 in the UK where the project was fully completed. Although some difficulties were encountered early on, service levels to customers were not significantly affected. Work was commenced in Hewing GmbH in Germany to prepare for an implementation in mid 2015, meaning that most sites will be operating on the same IT platform.

INNOVATIONThe new Research Centre in Crimmitschau in Germany was formally opened in May and is now fully equipped and staffed. Research into new materials and new product concepts is continuing, and although these are not yet ready for the marketplace this will provide the brands with a range of new, low-energy-use and flexible products in future years.

In 2014, following extensive field trials, the new Gateshead (UK) designed and produced electric radiator ranges were launched in both Sweden and France. The customer reaction to this product in these largely electric markets has been good, and Rettig ICC intends to adapt the product for sale into other markets.

2015 MARKET OUTLOOKRettig ICC’s core markets are expected to continue to present challenges with low levels of construction activity and depressed levels of demand. Despite this Rettig ICC will continue with its strategy of growing sales in new markets, simplifying and reducing costs in its manufacturing operations as well as developing new products. The business will continue to invest in people and leadership development as challenging market conditions require faster and better thinking. Similarly, Rettig ICC will continue to put great emphasis on excellent customer relationships. The business places tremendous value on these because they are the basis of Rettig ICC continuing to create ‘value for generations’.

We will continue to invest in people and leadership development as challenging market conditions require faster and better thinking.


Independent studies show that half of the Swedish population air their rooms, some doing so regardless of the season. The estimated increase in energy consumption while airing is 200 kWh per apartment per year. With over 2.5 million apartments in Sweden there is great potential for reducing both energy consumption and carbon emissions.

Rettig ICC’s MMA has developed a thermostatic valve that senses excessive airing and reduces power output of the radiator accordingly. The intelligent valve, which is being rolled out in a pan-Scandinavian launch, is stepless, presettable and tamperproof. During excessive airing the valve reacts immediately in combination with a thermostatic head, closing the valve and reducing the output from the radiator.

“We wanted to do something that would really be the first of its kind, in terms of both sustainability and aesthetics,” says Thomas Arvidsson, Project Leader. “Our customers benefit from both reduced unnecessary power usage while airing and a secured power output due to the tamperproof valve.”

The Gateshead factory in the UK produces a special type of hydronic radiator: the “round top”. During tests it was found that this hydronic radiator was suitable for conversion into an oil-filled electric radiator with the addition of the electric components and controls. A multi-functional team of all ages was pulled together from several countries to develop and market a product range necessary to compete in the principal markets including the UK, France and Sweden.

Manufacturing equipment in Gateshead was prepared to manu-facture the product. Input from sales and marketing teams in Sweden and France was essential to secure the successful launch of the new product range. Extensive, but successful, field testing of the final ap-proved design was undertaken in Sweden and France. Finally, in 2014, versions of the new oil-filled electric radiator for continental European markets rolled off the production lines in Gateshead.

With new features such as the “window open” function, which shuts down the radiator when the window is opened, and “sequential control”, which reduces heat loss through the back wall, Rettig ICC could increase the efficiency of the product – a completely new electric radiator developed in a timely and cost-efficient way using an existing hydronic radiator as a base.

CASE:

Reducing energy consumption through intelligent valves

CASE:

Developing an efficient electric radiator

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KEY INPUTS

• People

• Steel

• Brass

• Energy

• Other materials

KEY BUSINESS ACTIVITIES

• Research

• Design

• Procurement

• Production

• Warehousing and logistics

• Sales and marketing

PRODUCTS

• Steel panel radiators

• Decorative radiators

• Towel warmers

• Underfloor heating

• Convectors

• Valves and controls

APPLICATIONS

• Heating of residential and light commercial buildings (refurbishment and new build)

CUSTOMERS

• Heating and plumbing wholesalers

• Installers

• Home owners

• Offices

• Schools

• Hospitals


Rettig ICC business model:

HOW DOES RETTIG ICC CREATE VALUE?

CASE:

Committed to a cleaner environment

Various limestone-based products are used in environmental care, both to prevent environmental

problems and to solve them; the products are effective in such areas as adjusting the pH in water treatment processes, neutralising industrial flue gases and reducing phosphorus leakage from fields into waterways.

One of the Baltic Sea’s biggest problems is eutrophication caused by nitrogen and phosphorus overloads originating from agriculture. In order to efficiently prevent eutrophication, the amount of nutrient leakage into watercourses must be reduced.

In 2012, Nordkalk made a five-year-long commitment to the Baltic Sea Action Group (BSAG). The goal is to reduce the phosphorus burden on the Baltic Sea caused by agriculture, using

Nordkalk’s Fostop® method. This lime-based method contributes not only to cleaner water and bigger yields but also to a more efficient agriculture with less fuel consumption.

In Sweden, where the state grants environmental subsidies to farmers for curbing phosphorus run-off, Nordkalk’s Fostop Structure is a well-established method. In Finland, however, lack of subsidies makes it difficult to implement the method, despite its clear benefits to both farmers and communities.

Nordkalk’s work for a cleaner Baltic Sea continues with further development of additional Fostop products, such as Fostop Filters for minimising phosphorus leakage in agricultural “hotspots” and for sewage treatment from single households, as well as for treating run-off waters from animal paddocks.



Nordkalk Despite declining turnover, Nordkalk’s

EBITDA remained almost unchanged in 2014 as a result of cost-efficiency measures.

Nordkalk is northern Europe’s leading supplier of limestone-based products. The company’s

key customers operate in the pulp and paper, construction, metals and mining, and chemical industries as well as in environmental care and agriculture. Nordkalk has operations in nine countries in over 30 locations in the Nordic and Baltic Sea region.

THE MARKET IN 2014 In 2014 total sales of limestone-based products decreased clearly in comparison with 2013. The market situation was universally difficult, and stagnation of the Russian economy and weakening of the rouble had a negative effect on exports from Estonia and Finland to Russia.

Nordkalk was able to keep the sales on last year’s level in three of the six main customer segments. In the segments construction and other industries that includes chemical industry, sales were slightly higher than in 2013, with new product launches contributing. In the agriculture segment, sales in Finland suffered from weather conditions. However, strong sales in Poland lifted total sales of the segment almost to the level of the previous year.

A significant drop took place in the segment of metals and mining, as Nordkalk’s long-term agreement with SSAB in Luleå in Sweden expired at the end of 2013, and the lime kiln in Luleå was sold back to SSAB. Sales also fell in environmental care as well as in the pulp and paper segment, where structural changes continued.

In addition to the tough market situation, new regulations made the operating environment challenging. The European Union’s Industrial Emissions Directive (IED) was implemented in national legislation in Sweden from January 2014. This has limited lime kilns’ use of recycled oil to no more than 40 per cent of their total energy consumption, leading to significantly increased costs at Nordkalk’s subsidiary KPAB on Gotland.

IMPROVED COST-EFFICIENCYNordkalk’s strategic key actions are focused on improving cost-efficiency, innovating new business and growing profitably.

Nordkalk’s result remained broadly on the same level as in 2013 despite significantly decreased turnover. The positive outcome was partly boosted by Nordkalk’s continuous improvement process (CIP), a common effort throughout the organisation that led to considerable savings in 2014. CIP aims at improved operational efficiency, whether relating to energy costs, products, the supply chain, purchasing or fixed costs. It is included in the incentive programme

of several of Nordkalk’s managers and is an effort to learn from the reported deviations and share best practices. New reporting tools and ways to communicate are created, and the personnel is encouraged to share ideas on how to do better. As an example, in 2014 a record number of health and safety observations were reported – 2.4 per employee – which shows the commitment of the organisation to health and safety issues.

During the past two years, Nordkalk has concentrated on continuous improvements in all areas of operation in order to improve cost-efficiency. One of the focus areas has been capacity utilisation in the production network, supported by effective supply-chain operations. Improvement of these enabled Nordkalk to close down two old lime kilns in Lappeenranta in Finland in May.

The average number of personnel decreased during 2014 as an outcome of the operational restructuring realised throughout Nordkalk and especially in Finland. Nordkalk’s co-determination negotiations on Gotland in 2014, and in January 2015, led to redundancies due to decreasing production in the quarry. A continuation permit was granted for the current Klinthagen quarry in November which secures limestone supply for a few years.

Meanwhile, the process for opening the new quarry at Bunge continues. In June 2014, the Land and Environment Court granted Nordkalk a permit and conditions, but this decision was appealed. In September 2014 the Land and Environment Court of Appeal granted a leave to appeal in the case.

Nordkalk strategic actions

Improve costefficiency‒

Innovate new business‒

Grow profitably


Nordkalk received a legally valid court decision on permissibility of the Bunge quarry operations in 2009. Since then appeals and hearings have followed. The final outcome of the legal process is expected by 2016.

INNOVATING NEW BUSINESS Nordkalk’s R&D focuses on creating new applications for limestone-based know-how and products, which provide cost-effective and environmentally sound alternatives to customers. A new generation of limestone-based products, Nordkalk E-Series, is tailored for high performance in coatings and adhesives. The products will improve the properties of the end applications, e.g. wear resistance. Initially launched to the polymers market in 2013, the products have been further developed. The launch was followed by expansion of production capacity in Pargas last year.

The FGD Vessels project – limestone-based flue gas desulphurisation (FGD) on board – proceeded with successful pilot-scale trial runs and the first delivery agreement. In September the German shipping company Rörd Braren announced that it will have flue gas scrubbers based on dry desulphurisation technology installed on two of its ships. The dry-scrubber solution utilises Nordkalk’s granules made of calcium hydroxide, or slaked lime, to absorb sulphur from the exhaust gases. Ships

have been required to comply with the strict emission levels from the beginning of 2015, when the new Sulphur Emission Directive came into force.

Nordkalk has extensive experience of flue gas desulphurisation in large power plants and waste incineration plants. The company is investing in a granulation plant in Landskrona in southern Sweden to serve a wide range of customers in the FGD segment, in addition to vessels, such as industrial operations affected by more stringent regulation. Agricultural run-off water and mine water are also potential applications of these granules.

GROWING PROFITABLYAs a step in running an economically and an environmentally sound business, Nordkalk strives to use all of its raw material and thus reaching 100 per cent material efficiency. The efforts include use of all by-products: wall rock that is extracted in addition to regular limestone, sand that is produced in the flotation process, filter dust that builds up in lime kilns and at grinding plants, and residues that are created in lime burning and slaking. Nordkalk also assists its customers by handling their process by-products in a sustainable way.

In 2014, Nordkalk was able to raise the material efficiency rate from 87.9 to 90.9 per cent. Sales of wall rock increased, and reactive lime kiln dust was increasingly used in agriculture as well as in the

chemical industry. In Kurevere in Estonia, Nordkalk exceeded the goal of 100 per cent material efficiency by selling fine material from a secondary deposit for agricultural use. The 100 per cent goal was also reached by Ignaberga and Uddagården in Sweden, and Sławno in Poland. In Lappeenranta in Finland Nordkalk received an environmental permit for extention of its wall rock storage area, and for a new stone handling line. Both are essential for long-term operations in Lappeenranta. Nordkalk aims to grow in all customer segments, relying on its main products as well as newly developed applications. In Poland, for example, new business has been successfully generated in the agriculture segment.

2015 MARKET OUTLOOKNordkalk’s market conditions will remain challenging in 2015. Growth is expected in agricultural and environmental applications, where Nordkalk products contribute to sustainable development by reducing for instance sulphur emissions and phosphorus leakage. Sales in the construction segment are also estimated to increase, despite uncertainty in the market. An electricity tax increase for mining companies in Finland, imposed from the beginning of 2015, is expected to have a negative impact on the competitiveness of the Finnish mining industry.

Nordkalk has long experience of flue gas desulphurisation in waste incineration plants such as Vantaa Energy in Finland, which started its waste-to-energy operations in 2014.


For geological reasons, wall rock is typical in Finnish quarries. In addition to limestone, Nordkalk extracts stone with a lower calcium carbonate content for customers’ processes. In the Lappeenranta and Pargas quarries in Finland, wall rock represents approximately one-third of all quarried stone products.

Wall rock is used for the building of infrastructure, such as founda-tions for roads, airports or wind farms. However, until recently most of the wall rock has been disposed of in quarry areas. The transporta-tion of stone to construction sites, often over long distances, had been considered too expensive, while previously untouched areas have been quarried to supply needed stone material. This is now changing.

“Environmental awareness in society is growing,” says Nordkalk’s Sales Manager, Erno Somervuori. “Combined with the fact that all our stone material now has the CE marking, we were able to increase sales of wall rock considerably in 2014. In addition to our largest market in Finland, we have sold and transported stone products by sea to neighbouring countries. For example, in the Baltic states and Russia various infrastructure projects are ongoing, and demand for aggregates has been growing.”

CASE:

Sales of wall rock increasing

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Poland is one of the major food producers in Europe. In cultivation, limestone-based products contribute to better harvests. Nordkalk has become the leading supplier of agricultural liming products in Poland. The company’s market share has significantly increased since 2010, thanks to new products and successful marketing.

“We have branded our agricultural lime and introduced a new product on the Polish market,” explains Agri Sales Manager Michał Wojciak. “In 2014, sales of the new product, Solid Cal, developed very well.”

Nordkalk focuses on sharing information on the benefits of liming: better soil structure allows plants to use the nutrients more efficiently, resulting in bigger yields. Nordkalk is active in the Polish Lime Association, which is actively working on launching a national liming programme. Demand for agricultural lime is expected to grow in Poland, and in order to maintain its leading position, Nordkalk will continue to diversify its product palette and increase capacity.

CASE:

Nordkalk: leader in agricultural liming products in Poland

Nordkalk business model:

HOW DOES NORDKALK CREATE VALUE?

KEY INPUTS

• People

• Raw material reserves

• Permits

• Energy

• Network of partners

• Social acceptance


• Limestone (Calcite and Dolomite)

• Aggregates

• Powders

• Quicklime

• Hydrated (slaked) lime

• Wollastonite and other special products

• Secondary products (wall rock, flotation sand, filter dust)

• Knowledge and customer based service concepts

APPLICATIONS

• Purification

• Neutralisation

• Filling

• Stabilisation

CUSTOMERS

• Pulp and paper

• Metals and mining

• Construction

• Chemical industry

• Environment

• Agriculture



• Customer relations

• Community relations

• Operations in quarries or underground

• Crushing, screening and sorting

• Grinding and flotation

• Burning and slaking

• Granulation and bricketting

• Storage and customer deliveries


Bore In the continuously challenging markets in 2014,

Bore made progress in turning its long-term negative result trend and focused its business on

the RoRo tonnage providing shipping segment.

Bore has a long shipping history, dating back to 1897. The company offers industrial shipping services

with a highly maintained fleet, consisting of vessels that offer year-round service and excellent ice-class certification. Bore is constantly progressing towards a new generation in sustainable shipping. Safety, efficiency, innovative shipping and reduction of the environmental footprint are key drivers in Bore’s business operations. In 2014, Bore made a significant change in business focus, and as of 2015 the company concentrates on the Roll-on/Roll-off (RoRo) tonnage providing segment.

THE MARKET IN 2014 The shipping market in 2014 continued to be challenging, although some signs of strengthening in the market were visible at the beginning of 2014.

In the Contract-of-Affreightment (CoA) market Bore has traditionally operated in north- and southbound trade, shipping dry bulk cargo of industrial customers including Nordkalk. In 2014 the CoA market was in a recession throughout the year. The market was characterised by continued low international trade in combination with oversupply of vessels operating in the Baltic Sea and the North Sea, where Bore’s vessels mainly were employed.

In the RoRo market Bore charters its vessels on time-charter contracts to established line operators in Europe. In 2014 the RoRo segment suffered from oversupply of vessels. Bore was engaged

in developing innovative shipping solutions together with its customers as part of meeting market demand. This included energy-saving and emission-related initiatives which are part of reducing Bore’s environmental footprint.

The EU Sulphur Directive of 2008, derived from an International Maritime Organisation (IMO) decision, designated the Baltic Sea, the North Sea and the English Channel as Sulphur Emission Control Areas (SECA). In this SECA, ships must use fuel with a sulphur content of less than 0.1 per cent as of 1 January 2015 or fit an exhaust scrubber system that will achieve equivalent reductions in emission while using less expensive fuel with higher sulphur content.

During the year, the shipping industry operating in the Baltic Sea, the North Sea and the English Channel was actively engaged in establishing solutions that meet not only legal requirements, but also the technical requirements of the vessels and the commercial requirements of the customers, who typically pay the fuel.

STRATEGY IMPLEMENTATIONIn 2014, Bore continued to focus on its key strategic actions, involving divesting to renew, supporting Nordkalk and emission reduction. Despite the challenging market the whole of Bore’s fleet was chartered out throughout 2014 to well-established customers. With a motivated and competent crew Bore’s vessels continued to serve on their specific trades providing high standard cargo handling according to customer expectations.

As a result of the strategic actions completed during 2014, Bore’s key strategic actions in 2015 onwards will concentrate on reduction of emissions, efficiency improvement and fleet competitiveness.

DIVEST TO RENEW AND SUPPORT NORDKALKDuring the year Bore was actively engaged in divesting its CoA vessels. In May, M/V Klenoden was sold, and in the autumn M/V Fingard and M/V Swegard were divested. During the autumn, the sale of M/V Nordgard, M/V Sydgard, M/V Ostgard and M/V Westgard, was agreed with the Dutch shipping company Royal Wagenborg. The sale of the four CoA vessels included a framework contract with Royal Wagenborg covering the majority of Nordkalk’s sea freights from 2015 to 2017.

Due to several years of overcapacity in the CoA market and unsustainably poor profitability, Bore decided during the second half of the year to exit the

Bore strategic actions

Reduce emissions‒

Improve efficiency‒

Ensure fleet competitiveness


general cargo CoA business by the end of 2014. The small size of Bore’s CoA fleet was uncompetitive against larger players in the tough CoA market.

As a consequence of Bore’s exit of the CoA segment, the company adapted its shore organisation to the new RoRo focused shipping business model. The employer–employee consultation process was completed in December 2014 and the new organisation, including the management team as of January 2015, was confirmed before the end of the year.

Another key project initiated in 2014 was the introduction of a new mixed crew model on Bore’s Finnish-flagged RoRo vessels. Throughout 2014, seven of Bore’s RoRo vessels were sailing under

the Finnish flag and two under the Dutch flag. After extensive negotiations with the three Finnish maritime unions, including the Finnish Shipowners’ Association, an agreement was reached on a mixed crew model on all Bore’s Finnish-flagged vessels. The intention is to implement the new mixed crew model during 2015 through voluntary arrangements.

REDUCE EMISSIONSTo maintain a high technical standard on board its vessels, manage fuel consumption and meet growing demand for environmentally friendly shipping solutions, Bore continued to engage in a number of initiatives during the year relating to its RoRo fleet, including the Norsepower rotor sail pilot project on board M/V Estraden, scrubber solutions on board M/V Bore Song and M/V Seagard, and Marine Gas Oil coolers on M/V Estraden, M/V Norsky, M/V Norstream and the three RoRo car carriers. Bore also had an important role in supporting Nordkalk to launch its FGD vessels concept to reduce maritime sulphur emissions.

Focus on strong partnerships with current and future RoRo customers.

Bore’s RoRo vessel M/V Norstream approaching Zeebrugge in Belgium.

2015 MARKET OUTLOOKIn 2014, Bore made progress in turning around its long-term negative result trend. To achieve further improvement, focus will be on strong shipping partnerships with current and future RoRo customers. As the Sulphur Directive came into force in January 2015 in Bore’s key markets, innovative shipping and reduction of environmental footprint will be more important than ever to strengthen the position as Europe’s leading shipping partner within the RoRo segment.

Overcapacity in the RoRo market is expected to continue in 2015. However, the balance between supply and demand is levelling thanks to the continued scrapping of old vessels.

As of 2015 Bore will enter the tonnage taxation regime, having moved from corporate income taxation at the end of 2014. 2014 was the last year when Finnish shipping companies could apply for tonnage taxation.

Thanks to continued good partnership with its customers, the main part of Bore’s fleet is chartered for 2015.


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Innovative shipping and reduction of the environmental footprint are important drivers to strengthen Bore’s position as the leading shipping partner within the RoRo segment.

In 2014, Bore tested a prototype of an auxiliary wind-propulsion solution, the Norsepower Rotor Sail Solution, on board its RoRo vessel M/V Estraden. The rotor sails, developed by the Finnish marine engineering company Norsepower, allow the main engines to be throttled back, saving fuel and reducing emissions while providing the power needed to maintain speed and voyage time.

The rotor sails operate based on the Magnus effect: when wind meets the spinning rotor sail, it accelerates air flow on one side of the rotor sail and restricts the air flow on the opposite side of the rotor sail. The resulting difference in pressure creates a force that is perpendicular to the wind flow direction – a lift force. The circulatory flow, created here by the skin friction, is the same phenomenon that creates lift for an aircraft wing. Read more: www.norsepower.com

CASE:

Reducing emissions with the Norsepower Rotor Sail Solution

As of 1 January 2015, ships operating on the SECA comprising the Baltic Sea, the North Sea and the English Channel are required to meet emission levels of less than 0.1 per cent. To meet this requirement Bore is engaged in a number of initiatives:

• Installation of a scrubber on M/V Bore Song in December 2014 and on M/V Seagard by April 2015.

• Installation of MGO (Marine Gas Oil) coolers on M/V Estraden, M/V Auto Bank, M/V Auto Baltic, M/V Auto Bay, M/V Norsky and M/V Norstream.

• Installation of Variable Frequency Drives (VFD) on M/V Bore Sea and M/V Seagard, and on M/V Bore Song by April 2015. The VFD allows variable Main Engine revolutions while still using shaft generators, thus reducing speed and saving fuel.

• NAPA, the voyage optimisation software, in use on M/V Bore Sea, M/V Bore Song, M/V Seagard, M/V Norsky and M/V Norstream, and as of 2015, on M/V Estraden.

• LED lighting has been introduced on M/V Norstream.• Small Frequency Drives have been installed on pumps to reduce

power consumption and increase the lifetime of the pumps and fans. • Fuel-reduction measures have been adopted, such as regular

underwater hull cleaning, use of better-quality antifouling during dry-docking, and polishing of propellers.

CASE:

Strengthening the position as RoRo shipping partner

Bore business model:

HOW DOES BORE CREATE VALUE?


KEY INPUTS

• Personnel

• Vessels

• Energy saving solutions

• Cargo handling

• ICT

• Environmental footprint


• Time charter negotiations

• Technical maintenance of fleet

• Administration including manning of vessels


• Time chartering of RoRo vessels including crew and technical maintenance

• Development of innovative shipping solutions together with customers

CUSTOMERS

• Established line operators


Board of Directors’ report 32

Income statement 36

Balance sheet 37

Cash flow statement 38

Accounting principles 39

Notes to the financial statements 41

Five-year review 53

Calculation of financial ratios 53

Auditor’s report 54

Financial statements


The improvement in EBIT is primarily attributable to non-recurring costs that were EUR 3 million lower and less depreciations that were EUR 5 million lower in 2014 than in the previous year. The total amount of restructuring costs 2014 for Rettig ICC and Bore was EUR 9 million.

Net financial items included EUR 20 million as a result of the recognition in income of Bore’s shareholding in Redarnas Ömsesidiga Försäkringsbolag, which was spun off during 2014 to form Försäkringsaktiebolaget Alandia. This was the main reason why the Group’s net financial result improved from the previous year’s EUR 1 million to EUR 28 million in 2014.

RETTIG ICCRettig ICC is the European market leader in radiators for waterborne heat and indoor climate control regulators. The company’s technical heating products are manufactured for homes and commercial buildings and are mainly sold via sanitary and heating wholesalers in all parts of Europe except the south.

Overall demand for radiator products fell slightly during 2014 compared with the previous year, primarily due to weak growth in the EU. In Rettig ICC’s key

Board of Directors’ Report

GENERAL INFORMATION The year 2014 was characterised by continued weak growth in Europe. Official economic indicators revealed low activity levels within the EU, which in turn held back growth. In addition, the Ukrainian crisis strained political and economic relations, in particular between Russia and the EU. The underlying structural problems in several EU countries also continued to hamper economic growth in the region.

The finance markets remained stable. Access to financing for medium-sized and large companies in Finland was generally good, with the banking sector and other financial institutions demonstrating a clear willingness to finance these companies.

Despite the weak growth in Europe the company improved its profitability during 2014, principally on the back of adaptation measures that started to pay off in the year under review.

GROUP STRUCTURERettig Group Ltd, which is headquartered in Helsinki in Finland, is the parent company of the Rettig Group (“the Group”), and is a wholly owned subsidiary of Rettig Capital Ltd. The parent company

Rettig Group Ltd’s main activities comprise the sale of services to units within the Rettig ICC, Nordkalk and Bore business areas, as well as to other Rettig companies.

The Group’s heating solutions and indoor climate business is operated by Rettig Indoor Climate Comfort (Rettig ICC). Operations are managed via the Netherlands-based subsidiary Rettig ICC b.v.

Nordkalk Corporation is a wholly owned subsidiary of the parent company Rettig Group Ltd and is headquartered in Pargas in Finland.

Bore Ltd, which is wholly owned by the parent company Rettig Group Ltd, manages the company’s shipping business and, in addition to its head office in Helsinki, has an office in Mariehamn in Finland along with a branch in the Netherlands.

SALES AND PERFORMANCEThe Group posted total turnover of EUR 933 million in 2014 (EUR 974 million), which represents a decrease of EUR 41 million compared with the previous year. The Group’s EBIT amounted to EUR 43 million (EUR 36 million), which equates to an increase of EUR 7 million.


markets, sales volumes rose in Poland and Russia, while volumes decreased somewhat in the UK, France and Sweden.

In the year under review Rettig ICC posted total turnover of EUR 545 million (EUR 554 million). EBITDA came in at EUR 60 million (EUR 61 million). The lower EBITDA of EUR 1 million is attributable to a lower turnover. One key decision during the year was to cease production of radiators in Jakobstad.

NORDKALKNordkalk is northern Europe’s leading manufacturer of high-quality limestone-based products for the paper, steel and construction material industries and environmental and agriculture sectors. The company operates in a number of countries, including Finland, Sweden, Poland, Norway, Estonia and Russia.

Sales fell during 2014 compared with the previous year. Especially sales to the steel and paper industry tailed off, while sales of limestone products to above all the chemical industry sector increased compared with the previous year.

Nordkalk posted turnover of EUR 332 million in 2014 (EUR 358 million). EBITDA for 2014 closed on EUR 59 million (EUR 60 million). The deterioration in results of

EUR 1 million was largely attributable to lower sales.

BORE Bore operates the Rettig Group’s shipping business and the fleet includes RoRo vessels, vehicle carrier vessels and general cargo vessels that trade in the Baltic Sea, the North Sea and in the Bay of Biscay and the Mediterranean Sea.

The shipping industry experienced another challenging year in 2014. Continuing weak demand for industrial products resulted in lower transport volumes. In tandem with overcapacity of vessels and low charter rates, this meant profitability continued to be squeezed.

As a result of the persistently challenging market situation and ensuing poor profitability, in 2014 Bore decided to focus on the RoRo business, which in turn led to the disposal of the general cargo business (Contract-of-Affreightment) and the sale of all vessels associated with this business. In the wake of the above, Bore’s operations were restructured and the company’s activities were mainly concentrated in Helsinki.

Bore’s turnover for the year totalled EUR 58 million (EUR 67 million). EBITDA came in at EUR 17 million (EUR 15 million).

The improved result is attributable to realised gains on the sale of vessels.

Bore Ltd’s application to join the Finnish tonnage taxation system as from the beginning of 2015 has been approved by the tax authorities.

FINANCING AND FINANCIAL POSITION At the end of 2014 the Group had long-term liabilities of EUR 196 million (EUR 265 million) and current liabilities of EUR 260 million (EUR 258 million). The Group’s interest-bearing net liabilities amounted to EUR 247 million (EUR 288 million). Cash and cash equivalents totalled EUR 30 million (EUR 48 million). At the reporting date the consolidated equity and net gearing ratios were 45 per cent (42 per cent) and 59 per cent (70 per cent) respectively.

Interest-bearing net liabilities in the parent company amounted to EUR 39 million (EUR 75 million), while the equity ratio was 52 per cent (49 per cent). In 2011 the parent company received a capital loan of EUR 26 million from Rettig’s owners. The above capital loan is included in shareholders’ equity in the calculation of the parent company’s and the consolidated equity and net gearing ratios.


RISK FACTORSThe greatest operational and strategic risks for Rettig ICC’s activities relate to fluctuating prices of raw materials, significant changes in the macroeconomic situation, major changes in the customer base and product range, as well as access to raw materials.

The most significant operational and strategic risks impacting Nordkalk’s business are closely related to market demand, increased competition, access to raw materials, energy prices and environmental requirements.

The delayed establishment of Bunge quarry on Gotland will probably result in additional costs for Nordkalk; however, these are not expected to be material. At the reporting date costs recognised in the balance sheet in respect of the Bunge project totalled around EUR 18 million.

The main operational and strategic risks to which the Bore business is exposed relate to customers’ operating conditions and financial position, and the condition of the vessels.

SHARESThe company’s shares are divided into two categories: ordinary shares and A shares. A total of 179,000 ordinary shares are in circulation. No A shares have been issued. One ordinary share carries 20 votes.

INVESTMENTS, PERSONNEL, PAYROLL EXPENSES AND REMUNERATIONInvestments were made in the amount of EUR 31 million in non-current assets and in the amount of EUR 7 million in product development costs.

In 2014 the Group employed an average of 4,234 employees (2013: 4,372 employees; 2012: 4,578 employees), of whom 78 per cent (2013: 77 per cent; 2012: 78 per cent) worked outside Finland. The Group’s payroll expenses and remuneration for the accounting period totalled EUR 147 million (2013: EUR 154 million; 2012: EUR 153 million).

BOARD OF DIRECTORS, PRESIDENT AND CEO AND AUDITORS The Board of Directors for 2014 comprised Cyril von Rettig (Chairman), Ann von Rettig, Tom von Rettig, Martin Granholm (Vice Chairman), Christoffer Taxell, Anders Moliis-Mellberg and Bjarne Mitts.

The company’s President and CEO is Hans Sohlström.

Sixten Nyman, Authorised Public Accountant, and the auditing firm KPMG Oy Ab were the auditors for 2014.

OUTLOOK FOR 2015Financial uncertainty in the EU is expected to persist and growth in Europe is forecast

to remain weak. The key requirement will be to ensure that the Group continues to be positioned to meet any challenges that may arise during 2015 in such a way that the businesses can be developed in a sustainable manner.


PROPOSED DISTRIBUTION OF EARNINGS

According to the balance sheet as of 31 December 2014, the parent company’s distributable reserves were as follows:

The Extraordinary General Meeting that was held in December 2014 decided that a dividend of EUR 16,500,000.00 be paid. The Board of Directors recommends that the distributable reserves as of 31 December 2014 be carried forward to new account.

Helsinki, 13 February 2015

Cyril von Rettig, Chairman

Ann von Rettig

Tom von Rettig

Martin Granholm

Christoffer Taxell

Anders Moliis-Mellberg

Bjarne Mitts

Hans Sohlström, President and CEO

Retained earnings 1 January 2014 EUR 357,008,068.05

Proposed dividend for 2014 EUR -16,500,000.00

Fund for paid-in unrestricted shareholders’ equity EUR 5,500,000.00

Retained earnings from the current accounting year EUR 25,412,411.67

Total distributable reserves 31 December 2014 EUR 371,420,479.72


Income statementNOTE GROUP PARENT COMPANY

EUR THOUSAND 2014 2013 2014 2013

TURNOVER (1) 933,396 100% 973,694 100% 9,066 100% 8,566 100%

Cost of goods sold -752,825 -791,214 0 0

GROSS PROFIT 180,571 19% 182,480 19% 9,066 100% 8,566 100%

Sales and marketing expenses -54,525 -58,462 -177 -194

Administration expenses -48,594 -50,708 -8,277 -8,002

Other operating income (3) 11,339 10,562 24 217

Other operating expenses (3) -46,133 -48,101 0 0

EARNINGS BEFORE INTEREST AND TAXES (EBIT) (2), (4) 42,658 5% 35,771 4% 636 7% 586 7%

Financial income and expenses (5) 291 -25,042 12,370 16,163

PROFIT BEFORE EXTRAORDINARY ITEMS 42,949 5% 10,729 1% 13,005 143% 16,749 196%

Group contribution (6) 0 0 15,419 3,175

PROFIT AFTER EXTRAORDINARY ITEMS 42,949 5% 10,729 1% 28,425 314% 19,925 233%

Direct taxes (7) -11,782 -6,911 -3,013 -874

Minority interest -2,737 -2,576 0 0

NET RESULT 28,430 3% 1,242 0% 25,412 280% 19,051 222%


Balance sheetNOTE GROUP PARENT COMPANY

EUR THOUSAND 2014 2013 2014 2013

ASSETS

NON-CURRENT ASSETS (8)

Intangible assets 5,968 6,910 4,436 6,029

Goodwill on consolidation 133,953 141,082 0 0

Tangible assets 472,600 526,111 1,134 286

Investments (9), (10) 27,394 6,986 586,491 614,945

639,915 69% 681,089 68% 592,060 77% 621,260 78%

CURRENT ASSETS

Inventories (11) 109,377 108,246 0 0

Receivables (12) 131,780 143,155 164,451 154,997

Deferred tax asset (13) 11,925 14,494 860 3,873

Current investments 2 2 0 0

Cash and cash equivalents 29,792 47,608 9,036 15,976

282,876 31% 313,506 32% 174,348 23% 174,846 22%

TOTAL ASSETS 922,791 100% 994,595 100% 766,408 100% 796,105 100%

EQUITY AND LIABILITIES

SHAREHOLDERS' EQUITY (14)

Share capital 3,011 3,011 3,011 3,011

Retained earnings 350,738 373,308 340,508 337,957

Fund of invested non-restricted equity 0 0 5,500 5,500

Net result for the financial year 28,430 1,242 25,412 19,051

382,179 41% 377,561 38% 374,431 49% 365,519 46%

MINORITY INTEREST 8,140 1% 8,754 1% 0 0

PROVISIONS (15) 34,132 4% 37,599 4% 973 0% 1,030 0%

LIABILITIES

Capital loans (16) 26,000 3% 26,000 3% 26,000 3% 26,000 3%

Other liabilities (17) 456,080 49% 523,687 52% 365,004 48% 403,556 51%

Deferred tax liabilities (13) 16,261 2% 20,994 2% 0 0

TOTAL EQUITY AND LIABILITIES 922,791 100% 994,595 100% 766,408 100% 796,105 100%


Cash flow statement GROUP PARENT COMPANY

EUR MILLION 2014 2013 2014 2013

CASH FLOW FROM OPERATIONS

Earnings Before Interest and Taxes (EBIT) 43.5 35.8 0.6 0.6

Adjustments:

Depreciations 78.5 83.3 2.0 1.9

Capital gains/losses included in operating income -2.4 -0.1 0.0 0.0

Other non-cash income and expenses 4.3 10.2 -0.1 -0.1

Interest expenses and other financial expenses paid -18.4 -27.7 -16.5 -23.9

Interest income received 1.7 1.4 15.1 18.5

Dividends received 0.0 0.0 46.1 56.8

Taxes paid -13.9 -11.0 0.0 0.0

Cash flow from operations excluding change in working capital 93.2 91.9 47.3 53.9

Change in working capital:

Change in current operating receivables 12.7 6.0 -1.0 -0.2

Change in inventories -0.9 2.1 0.0 0.0

Change in non-interest-bearing liabilities -13.6 -13.3 -0.5 -8.8

Cash flow from operations (A) 91.4 86.7 45.7 44.9

CASH FLOW FROM INVESTING ACTIVITIES

Investments in intangible and tangible assets -31.2 -27.5 -1.2 -0.1

Acquired subsidiary and associated companies’ shares 0.0 -0.3 0.0 0.0

Sale of intangible and tangible assets 7.7 5.9 0.0 0.0

Investments in other non-current assets 0.0 0.2 0.0 0.0

Cash flow from investing activities (B) -23.5 -21.7 -1.2 -0.1

Cash flow from operations and investing activities (A + B) 67.9 64.9 44.5 44.8

CASH FLOW FROM FINANCING ACTIVITIES

Increase in long-term loans 0.0 4.4 0.0 0.0

Repayments of long-term loans -17.7 -63.7 -17.5 -63.7

Change in long-term receivables -1.2 -0.2 -5.8 17.7

Change in current receivables non operating -0.2 3.2 5.0 4.5

Repayments of current loans -35.9 -0.1 -35.9 -0.1

Dividends paid -18.3 -20.3 -15.0 -12.0

Change in current liabilities -12.4 -14.8 12.3 -14.1

Other financial items 0.0 0.0 5.6 0.0

Cash flow from financing activities (C) -85.7 -91.6 -51.4 -67.8

Cash flow for the year (A + B + C) -17.8 -26.6 -6.9 -23.0

Cash and cash equivalents on 1 January 47.6 74.2 16.0 38.9

CASH AND CASH EQUIVALENTS ON 31 DECEMBER 29.8 47.6 9.0 16.0


Accounting principles

All Group companies apply uniform accounting principles based on Finnish accounting legislation, which conforms to EU accounting directives and to generally accepted accounting standards.

SCOPE OF CONSOLIDATIONThe consolidated financial statements include Rettig Group Ltd and those companies in which the parent company directly or indirectly holds more than half of the voting rights. Dormant companies are excluded since they have no material impact on the disclosure of a true and fair view. Major investments in associated companies, i.e. those in which the parent company directly or indirectly owns 20–50 per cent of the voting rights at the year-end, are accounted for in the consolidated financial statements using the equity method.

CONSOLIDATION PRINCIPLESThe acquisition of companies is accounted for using the purchase method. The excess value of the purchase price is allocated to the underlying balance sheet items up to the fair value of the assets acquired, and the remaining elimination difference is carried over as goodwill on consolidation. If the acquisition cost of the shares is less than the corresponding capital, the negative difference is allocated to the values of assets and liabilities which are considered to be the basis for the difference. The proportion of the negative difference which cannot be allocated is recognised as other operating income in the consolidated income statement. Intragroup transactions, balances and

profits, material internal margins and dividends are eliminated on consolidation.

The financial results of subsidiaries acquired or divested during the year are included in the consolidated financial statements from their acquisition date up to their disposal date. The Group’s share of the associates’ net result is reported under financial items in the income statements. The Group’s share in joint ventures is consolidated using the proportionate consolidation method.

The minority interest in equity, including untaxed appropriations less deferred taxes, and in the net profit for the financial year is calculated prior to the elimination of internal transactions and balances.

Sales gains or losses on divestments of business areas are recognised as operating income/expenses and income taxes due to sales gains are recorded in taxes.

NON-CURRENT ASSETSThe balance sheet values of tangible and intangible assets are based on direct historical cost less accumulated depreciation and write-downs. In addition, certain land areas may be stated at revalued amounts. Asset values are regularly reviewed. A predetermined schedule is applied to calculate depreciation and amortisation of non-current assets. Depreciation and amortisation is calculated using the straight-line method over the assets’ expected useful life. As a rule, depreciation and amortisation periods are as follows:

• Intangible rights 5–10 years• Goodwill 5–10 years• Goodwill on consolidation 5–20 years• Goodwill allocated

to mines and quarries 30 years• Other capitalised

expenditure 3–10 years• Buildings and

constructions 10–40 years• Vessels 18–25 years• Machinery and equipment 3–10 years• Heavy process

machinery and kilns 15–25 years • Other tangible assets 5–10 years

Land and water are not depreciated with the exception of quarries and mines which are subject to substance depreciations. Amortisation of goodwill on consolidation is generally calculated over five years. When material goodwill arises on the acquisition of a subsidiary, which results in the Group acquiring a significant market share, the amortisation period may be longer than five years, but may not, however, exceed twenty years. The elimination difference allocated to non-current assets on consolidation is depreciated according to the depreciation schedule for each item. Amortisation of consolidation goodwill that has been allocated to quarries and mines are amortised over thirty years due to the strategic nature of the mines.

Long-term investments comprise financial investments and receivables intended to be held for more than one year. These are valued at acquisition cost. The value of shares in subsidiaries is reviewed annually against cash flow estimates.


INVENTORIESInventories are valued using the lower of cost or market method. Cost is calculated according to the FIFO principle. The cost of inventories includes, in addition to direct costs, an appropriate proportion of purchase and production overheads.

CASH AND MARKETABLE SECURITIESCash and cash equivalents include cash in hand, bank balances, deposits of up to three months and other funds that are equivalent to cash.

Marketable securities comprise equity securities, deposits and debt securities intended for resale within a year. Marketable securities are stated at the lower of cost or market value. Changes in market values are recognised in the income statement under financial items.

PROVISIONS AND APPROPRIATIONS Accumulated untaxed appropriations, net of any deferred tax liability, are included in the consolidated balance sheet as part of retained earnings but may not, however, be treated as disposable funds.

Mandatory provisions are future expenses that are judged to be imminent and which will probably not generate any future income. These are charged against income as a provision under liabilities.

The Group’s pension arrangements conform to the customs and practice prescribed by local legislation in each country. Pension costs, post-retirement benefits and changes in pension obligations are mainly recognised in the income statement. Provisions include estimated costs for future pensions. The retirement age of the managing directors of Group companies varies between 60 and 65 years.

REVENUE RECOGNITIONTurnover is recognised upon the exchange of goods or the performance of services, net of sales taxes, discounts and exchange rate differences. The delivery costs of products sold are recorded as production expenses and bad debts are recognised as Sales and marketing expenses.

EMISSION RIGHTSEmission rights are recognised using the net value method. In other words, current values are not recognised in the balance sheet. Emission rights acquired to cover shortfalls, and shortfalls not covered by acquisition, are reported as a cost provision according to their value at the balance sheet date. Gains on the sale of surplus emission rights are recognised under other operating income.

RESEARCH AND DEVELOPMENT COSTS Research and development costs are expensed in the year they are incurred.

TAXESTaxes for the financial year are shown in the consolidated financial statements as a combined amount covering the taxes recognised in single-entity financial statements prepared in accordance with local tax rules.

A deferred tax asset or liability is determined by accounting for timing differences between the tax written-down and accounting values of assets and liabilities using the current tax rate or the enacted tax rates effective for the future years. Deferred tax liabilities are recognised in full in the balance sheet, while deferred tax assets are only recognised to the expected extent these can be utilised to reduce future tax. Deferred tax liabilities on acquired fair values are recognised in the consolidated financial statements.

FOREIGN CURRENCIESForeign currency transactions during the year are recognised in the financial statements at the exchange rates that apply on the date at the transaction.

Receivables and liabilities denominated in foreign currencies are translated into euro at the closing rate determined by the European Central Bank (ECB) at the balance sheet date. If the amount is fixed by a forward contract, the forward rate is applied. Realised and unrealised exchange gains and losses on receivables and liabilities are recognised in the income statement.

Derivatives designated as hedges are measured on a monthly basis, and any consequent unrealised gains and losses are recognised in financial income and expenses on the same basis as the gains and losses on the underlying hedged item. Foreign currency-denominated future cash flows can normally be hedged for up to 12 months.

Foreign exchange gains and losses relating to normal business operations are treated as adjustments to sales and purchases. Gains and losses associated with financing are recognised as financial income and expenses.

With regard to shareholders’ equity, translation differences due to exchange rate fluctuations are recognised in the consolidated financial statements under retained earnings. The income statements of all foreign subsidiaries are translated into euro at the months’ average exchange rates and the balance sheets at the year-end exchange rate.


Notes to the financial statements

GROUP PARENT COMPANY

EUR THOUSAND 2014 2013 2014 2013

1) TURNOVER BY BUSINESS AREA

Rettig ICC 545,131 554,425 0 0

Nordkalk 331,629 357,761 0 0

Bore 57,513 66,879 0 0

Other -877 -5,371 9,066 8,566

933,396 973,694 9,066 8,566

Other includes eliminations and parent company’s activities.Management and royalty fees reported in turnover.

TURNOVER BY MARKET AREA

Finland 188,981 205,232 1,993 1,752

Other EU countries 663,565 696,799 6,576 6,315

Other European countries 53,735 52,311 0 0

Other market areas 27,116 19,352 497 500

933,396 973,694 9,066 8,566

2) PERSONNEL EXPENSES

Wages and salaries 147,095 153,898 2,946 2,901

Pension expenses 11,874 12,305 483 456

Other social expenses 30,278 31,450 347 350

189,246 197,653 3,776 3,707

Salaries and remunerations for management 6,637 6,596 1,069 924

AVERAGE NUMBER OF PERSONNEL

In Finland 930 1,015 18 19

Abroad 3,304 3,357 0 0

4,234 4,372 18 19



EUR THOUSAND 2014 2013 2014 2013

3) OTHER OPERATING INCOME

Gain from sale of fixed assets 3,228 1,707 17 5

Rent income 1,364 1,538 0 0

Subsidies and grants 547 803 0 0

Compensations from insurance companies 166 23 0 0

Non-recurring income 159 414 0 0

Other 5,874 6,077 8 212

11,339 10,562 24 217

OTHER OPERATING EXPENSES

R&D expenses -7,534 -7,037 0 0

Amortisation of goodwill and goodwill on consolidation -17,150 -17,120 0 0

Losses on divestments of fixed assets -33 -833 0 0

Non-recurring expenses -9,108 -12,333 0 0

ICT expenses -8,902 -8,546 0 0

Other -3,406 -2,232 0 0

-46,133 -48,101 0 0

Audit costs included in Administration expenses -796 -783 -71 -65

4) DEPRECIATION BY ACTIVITY

Purchasing and production 53,027 58,712 0 0

Sales and marketing 640 813 0 0

Research and development 723 524 0 0

Administration 6,985 6,170 1,968 1,933

Goodwill 0 329 0 0


78,524 83,339 1,968 1,933

DEPRECIATION BY ASSET CATEGORY

Intangible rights 1,249 1,113 1,843 1,853

Goodwill 0 329 0 0


Other capitalised expenditure 1,278 1,020 32 0

Land and water 3,881 5,239 0 0

Buildings and constructions 7,765 7,931 0 0

Vessels 19,608 20,101 0 0

Machinery and equipment 25,822 29,706 93 80

Other tangible assets 1,772 1,110 0 0

78,524 83,339 1,968 1,933



EUR THOUSAND 2014 2013 2014 2013

5) FINANCIAL INCOME AND EXPENSES

Share of result, associated companies -171 48 0 0

-171 48 0 0

Dividend income

Group companies 0 0 46,138 56,831

Other 0 1 0 0

0 1 46,138 56,831

Interest income

Group companies 388 351 14,423 18,721

Other 1,284 995 22 20

1,672 1,346 14,445 18,741

Interest expenses

Group companies 0 0 -71 -38

Other -14,419 -18,102 -12,595 -14,943

-14,419 -18,102 -12,666 -14,980

Other financial income

Group companies 0 0 5,697 4,925

Other 20,412 71 13,385 12,803

20,412 71 19,082 17,728

Other financial expenses

Group companies 0 0 -11,075 -8,282

Write-downs on shares in Group companies 0 0 -30,883 -37,000

Other -7,203 -8,406 -12,671 -16,876

-7,203 -8,406 -54,629 -62,157

Amount of exchange rate differences included in other financial items -2,978 -1,178 -998 -363

Total financial income and expenses 291 -25,042 12,370 16,163

6) GROUP CONTRIBUTION

Group contribution received 0 0 15,419 3,175

Group contribution paid 0 0 0 0

0 0 15,419 3,175

7) DIRECT TAXES

Taxes on the result for the financial year -13,816 -12,735 0 0

Taxes for previous financial years -109 57 -3,013 -872

Changes in deferred tax 2,143 5,767 0 -2

-11,782 -6,911 -3,013 -874


8) INTANGIBLE AND TANGIBLE ASSETS

ACQUISITION COST 1.1.

CHANGES IN EXCHANGE

RATES

TRANSFERS ACQUISITION ADDITIONS DISPOSALS ACQUISITION COST 31.12.

ACCUMULATED DEPRECIATION

1.1.

ADDITIONS CHANGES IN EXCHANGE

RATES

DISPOSALS ACCUMULATED DEPRECIATION

31.12.

NET BOOK VALUE 31.12.

EUR THOUSAND

GROUP 2014

Development expenses 464 33 0 0 45 0 542 23 101 5 0 129 413

Intangible rights 12,192 -106 180 0 678 -12 12,932 9,554 1,148 -73 -4 10,625 2,307

Goodwill 1,184 0 0 0 0 0 1,184 1,184 0 0 0 1,184 0

Goodwill on consolidation 329,146 0 10,020 0 0 0 339,166 188,064 17,150 0 0 205,214 133,953

Other capitalised expenditure 13,148 -59 313 0 403 0 13,805 9,319 1,278 -39 0 10,558 3,247

Land and water areas 98,797 -741 -10,293 0 59 -105 87,717 15,449 3,881 -76 0 19,254 68,463

Buildings and constructions 167,073 -1,933 488 0 1,329 -478 166,479 80,426 7,765 -536 -125 87,530 78,949

- capitalised interests 273 0 0 0 0 0 273 40 0 0 0 40 233

Vessels 388,001 0 0 0 0 -19,059 368,942 183,649 19,608 0 -11,712* 191,545 177,397

Machinery and equipment 546,679 -5,091 8,042 0 9,993 -594 559,028 432,944 25,822 -2,780 0 455,986 103,042

- capitalised interests 3,272 0 0 0 0 0 3,272 326 0 0 0 326 2,946

Other tangible assets 14,166 -187 2,927 0 870 0 17,776 7,474 1,771 -122 0 9,123 8,653

Construction in progress 27,864 -1,425 -11,677 0 14,255 0 29,017 0 0 0 0 0 29,017

Advance payments, tangibles 294 0 0 0 3,606 0 3,900 0 0 0 0 0 3,900

TOTAL 2014 1,602,555 -9,509 0 0 31,238 -20,249 1,604,034 928,452 78,524 -3,621 -11,841 991,514 612,521

PARENT COMPANY 2014

Intangible rights 18,573 0 0 0 12 0 18,585 12,545 1,843 0 0 14,388 4,197

Other capitalised expenditure 246 0 0 0 270 0 516 246 32 0 0 278 239

Buildings and constructions 475 0 0 0 0 0 475 475 0 0 0 475 0

Machinery and equipment 909 0 0 0 83 -14 978 623 93 0 0 716 262

Other tangible assets 17 0 0 0 0 0 17 17 0 0 0 17 0

Advance payments, tangible rights 0 0 0 0 871 0 871 0 0 0 0 0 871

Advance payments, intangible rights 5 0 -5 0 0 0 0 0 0 0 0 0 0

TOTAL 2014 20,225 0 -5 0 1,237 -14 21,443 13,906 1,968 0 0 15,873 5,570

PARENT COMPANY 2013






Advance payments, intangible rights 0 0 0 0 5 0 5 0 0 0 0 0 5

TOTAL 2013 20,100 0 0 0 138 -14 20,224 11,973 1,933 0 0 13,906 6,315

GROUP 2013

Development expenses 265 -6 0 0 205 0 464 0 23 0 0 23 441

Intangible rights 11,250 -53 31 92 872 0 12,192 8,505 1,090 -41 0 9,554 2,638

Goodwill 1,489 -305 0 0 0 0 1,184 1,140 329 -285 0 1,184 0

Goodwill on consolidation 328,974 -94 -1 267 0 0 329,146 171,367 16,791 -94 0 188,064 141,082


Land and water areas 99,623 -594 -298 0 66 0 98,797 10,251 5,239 -41 0 15,449 83,348

Buildings and constructions 165,678 -1,286 722 0 1,959 0 167,073 72,804 7,931 -309 0 80,426 86,647


Vessels 412,611 0 0 0 0 -24,610 388,001 185,967 20,101 0 -22,418 183,649 204,352

Machinery and equipment 541,475 -6,114 3,039 0 11,924 -3,645 546,679 406,251 29,706 -3,012 0 432,944 113,735


Other tangible assets 12,919 -138 489 0 896 0 14,166 6,437 1,110 -72 0 7,474 6,692

Construction in progress 21,453 -602 -3,994 0 11,007 0 27,864 0 0 0 0 0 27,864

Advance payments, tangibles 126 0 -84 0 252 0 294 0 0 0 0 0 294

TOTAL 2013 1,612,316 -9,217 0 359 27,351 -28,255 1,602,555 871,405 83,339 -3,874 -22,418 928,452 674,103

*Incl. correction of error of EUR -1,314 thousand in fair value depreciation in 2012.


8) INTANGIBLE AND TANGIBLE ASSETS

ACQUISITION COST 1.1.

CHANGES IN EXCHANGE

RATES

TRANSFERS ACQUISITION ADDITIONS DISPOSALS ACQUISITION COST 31.12.

ACCUMULATED DEPRECIATION

1.1.

ADDITIONS CHANGES IN EXCHANGE

RATES

DISPOSALS ACCUMULATED DEPRECIATION

31.12.

NET BOOK VALUE 31.12.

EUR THOUSAND

GROUP 2014

Development expenses 464 33 0 0 45 0 542 23 101 5 0 129 413

Intangible rights 12,192 -106 180 0 678 -12 12,932 9,554 1,148 -73 -4 10,625 2,307

Goodwill 1,184 0 0 0 0 0 1,184 1,184 0 0 0 1,184 0

Goodwill on consolidation 329,146 0 10,020 0 0 0 339,166 188,064 17,150 0 0 205,214 133,953


Land and water areas 98,797 -741 -10,293 0 59 -105 87,717 15,449 3,881 -76 0 19,254 68,463

Buildings and constructions 167,073 -1,933 488 0 1,329 -478 166,479 80,426 7,765 -536 -125 87,530 78,949


Vessels 388,001 0 0 0 0 -19,059 368,942 183,649 19,608 0 -11,712* 191,545 177,397

Machinery and equipment 546,679 -5,091 8,042 0 9,993 -594 559,028 432,944 25,822 -2,780 0 455,986 103,042


Other tangible assets 14,166 -187 2,927 0 870 0 17,776 7,474 1,771 -122 0 9,123 8,653

Construction in progress 27,864 -1,425 -11,677 0 14,255 0 29,017 0 0 0 0 0 29,017

Advance payments, tangibles 294 0 0 0 3,606 0 3,900 0 0 0 0 0 3,900

TOTAL 2014 1,602,555 -9,509 0 0 31,238 -20,249 1,604,034 928,452 78,524 -3,621 -11,841 991,514 612,521

PARENT COMPANY 2014






Advance payments, tangible rights 0 0 0 0 871 0 871 0 0 0 0 0 871

Advance payments, intangible rights 5 0 -5 0 0 0 0 0 0 0 0 0 0

TOTAL 2014 20,225 0 -5 0 1,237 -14 21,443 13,906 1,968 0 0 15,873 5,570

PARENT COMPANY 2013






Advance payments, intangible rights 0 0 0 0 5 0 5 0 0 0 0 0 5

TOTAL 2013 20,100 0 0 0 138 -14 20,224 11,973 1,933 0 0 13,906 6,315

GROUP 2013

Development expenses 265 -6 0 0 205 0 464 0 23 0 0 23 441

Intangible rights 11,250 -53 31 92 872 0 12,192 8,505 1,090 -41 0 9,554 2,638

Goodwill 1,489 -305 0 0 0 0 1,184 1,140 329 -285 0 1,184 0

Goodwill on consolidation 328,974 -94 -1 267 0 0 329,146 171,367 16,791 -94 0 188,064 141,082


Land and water areas 99,623 -594 -298 0 66 0 98,797 10,251 5,239 -41 0 15,449 83,348

Buildings and constructions 165,678 -1,286 722 0 1,959 0 167,073 72,804 7,931 -309 0 80,426 86,647


Vessels 412,611 0 0 0 0 -24,610 388,001 185,967 20,101 0 -22,418 183,649 204,352

Machinery and equipment 541,475 -6,114 3,039 0 11,924 -3,645 546,679 406,251 29,706 -3,012 0 432,944 113,735


Other tangible assets 12,919 -138 489 0 896 0 14,166 6,437 1,110 -72 0 7,474 6,692

Construction in progress 21,453 -602 -3,994 0 11,007 0 27,864 0 0 0 0 0 27,864

Advance payments, tangibles 126 0 -84 0 252 0 294 0 0 0 0 0 294

TOTAL 2013 1,612,316 -9,217 0 359 27,351 -28,255 1,602,555 871,405 83,339 -3,874 -22,418 928,452 674,103

*Incl. correction of error of EUR -1,314 thousand in fair value depreciation in 2012.



EUR THOUSAND 2014 2013 2014 2013

9) INVESTMENTS

Shares in Group companies 1.1. 0 0 453,553 420,553

Increase 0 0 31,815 70,000

Write-downs 0 0 -33,278 -37,000

Shares in Group companies 31.12. 0 0 452,090 453,553

Receivables from Group companies 6,000 4,750 133,909 138,900

Capital loan receivables from Group companies 0 0 0 22,000

Shares in associated companies 91 721 0 0

Other shares and holdings 21,245 1,116 67 67

Other receivables 58 400 425 425

27,394 6,986 586,491 614,945


COUNTRYGROUP SHAREHOLDINGAND VOTING RIGHTS %

10) SHARES AND HOLDINGS IN COMPANIES OWNED BY GROUP AND PARENT COMPANY

SUBSIDIARIES OWNED BY PARENT COMPANY

Nordkalk Corporation Finland 100

Bore Ltd Finland 100

Rettig (China) Co. Ltd China 100

Rettig Metal Ticaret ve Sanayi A.S. Turkey 100

Rettig ICC b.v. The Netherlands 100

Rettig Heating Group France SAS France 100

Rettig (UK) Ltd UK 100

Rettig Ireland Limited Ireland 100

Rettig Inc. USA. USA 100

Rettig Sweden AB Sweden 100

Rettig Austria GmbH Austria 100

Rettig Srl. Romania 100

Rettig Group Ceska s.r.o. Czech Republic 100

OTHER GROUP COMPANIES OWNED BY SUBSIDIARIES

Finimétal SASU France 100

AB Markaryds Metallarmatur Sweden 100

Rettig Belgium N.V. Belgium 100

Rettig Germany GmbH Germany 100

Hewing GmbH Germany 100

Rettig Värme Ab (group) Finland 100

Rettig Heating Sp.z o.o. Poland 100

Rettig Hungary Kft Hungary 100

VNH Fabryka - Grzejników Sp.z o.o. Poland 100

Rettig Hrvatska d.o.o. Croatia 100

Rettig Slovenija d.o.o. Slovenia 100

Rettig Ic ve Dis Ticaret Limited Sirketi Turkey 100

Nordkalk AB Sweden 100

Nordkalk AS Estonia 100

Nordkalk GmbH Germany 100

NK-East Oy (group) Finland 100

Nordkalk Sp.z o.o. Poland 100

Suomen Karbonaatti Oy Finland 51

NorFraKalk AS Norway 50

Verdalskalk AS Norway 10



EUR THOUSAND 2014 2013 2014 2013

11) INVENTORIES

Raw materials and supplies 30,646 36,229 0 0

Work in progress 9,675 5,346 0 0

Finished goods 62,221 59,239 0 0

Prepayments 12 64 0 0

Other inventories 6,823 7,369 0 0

109,377 108,246 0 0

12) RECEIVABLES

Trade receivables 98,272 111,851 9 6

Other receivables 19,853 18,329 2,245 2,459

Prepayments and accrued income 12,376 10,437 1,109 635

Group companies:

Loan receivables 0 0 138,839 140,515

Trade receivables 0 0 1,575 617

Other receivables 1,279 2,538 19,223 7,773

Prepayments and accrued income 0 0 1,452 2,993

131,780 143,155 164,451 154,997

MATERIAL ITEMS INCLUDED IN PREPAID EXPENSES AND ACCRUED INCOME

Accrued interests 406 159 73 155

Subsidies and grants 2,118 2,749 0 0

Insurance receivables 459 385 0 0

Rents and leases 774 844 0 0

Tax receivables 602 1,023 540 378

Option premium 218 46 218 46

Prepaid Group bonus 1,470 1,167 0 0

Refund energy tax and excise duty 773 797 0 0

Arbitration compensation 517 0 0 0

Other 5,039 3,267 277 56

12,376 10,437 1,108 635

13) DEFERRED TAXES

Deferred tax receivable

Timing differences 8,421 9,271 860 3,873

Consolidation entries 3,504 5,223 0 0

11,925 14,494 860 3,873

Deferred tax liability

Appropriations 5,521 10,040 0 0

Timing differences 10,740 10,954 0 0

16,261 20,994 0 0



EUR THOUSAND 2014 2013 2014 2013

14) SHAREHOLDERS’ EQUITY

Restricted equity

Share capital as of 1.1. 3,011 3,011 3,011 3,011

Share capital as of 31.12. 3,011 3,011 3,011 3,011

Retained earnings as of 1.1. 374,550 390,738 357,008 351,457

Dividends -16,500 -13,500 -16,500 -13,500

Other change -3,871 -281 0 0

Correction of error concerning previous period (2012) -1,314

Translation difference -2,127 -3,649 0 0

Retained earnings as of 31.12. 350,738 373,308 340,508 337,957

Fund of invested non-restricted equity 0 0 5,500 5,500

Profit for the financial year 28,430 1,242 25,412 19,051

Total shareholders' equity 382,179 377,561 374,431 365,519

Distributable funds:

Retained earnings 340,508 337,957

Fund of invested non-restricted equity 5,500 5,500

Profit/loss for the financial year 25,412 19,051

Total distributable funds 371,420 362,508



EUR THOUSAND 2014 2013 2014 2013

15) PROVISIONS

Provision for pensions as of 1.1. 18,418 18,505 1,030 1,099

Increase (+) / Decrease (-) 3,532 -87 -57 -69

Provision for pensions as of 31.12. 21,950 18,418 973 1,030

Changes in the year have been recorded under other financial items and in equity in accordance with practice prescribed by local legislation.

Provision for warranties and guarantees as of 1.1. 1,256 1,317 0 0

Increase (+) / Decrease (-) -207 -61 0 0

Provision for warranties and guarantees as of 31.12. 1,049 1,256 0 0

Increases have been recorded under Cost of goods sold.

Provisions for taxation as of 1.1. 0 56 0 0

Increase (+) / Decrease (-) 60 -56 0 0

Provisions for taxation as of 31.12. 60 0 0 0

Changes have been recorded under Direct taxes.

Provisions for recultivation as of 1.1. 3,217 3,037 0 0

Increase (+) / Decrease (-) 38 180 0 0

Provisions for recultivation as of 31.12. 3,255 3,217 0 0

Other provisions as of 1.1. 14,708 7,820 0 0

Decrease from purchase acquisition calculation Nordkalk -2,757 -907 0 0

Other Increase (+) / Decrease (-) -4,134 7,795 0 0

Other provisions as of 31.12. 7,817 14,708 0 0

Changes have been recorded under Other operating expenses.

Total provisions as of 31.12. 34,132 37,599 973 1,030

16) Rettig Group Ltd has been granted capital loans according to the Finnish Company Act, subordinated to all other liabilities of the company, capital and interest payments being subject to the restrictions of the Act, by members of the Rettig family and investors closely linked to the family. The loans amount to EUR 26 million. The term of the loans is 5 years until 2016 with fixed interest rate of 8% per annum. Accrued interest on the loans as per 31.12.2014 has been booked to the income statement of the financial year.



EUR THOUSAND 2014 2013 2014 2013

17) LONG-TERM LIABILITIES

Loans from credit institutions 83,679 96,670 79,756 92,042

Pension loans 1,698 1,862 0 0

Corporate bonds 100,000 158,150 100,000 158,150

Other long-term liabilities 10,294 8,652 0 0

195,671 265,334 179,756 250,192

LIABILITIES FALLING DUE AFTER FIVE YEARS

Loans from credit institutions 41,107 51,250 39,600 49,700

CURRENT LIABILITIES

Current portion of long-term liabilities 70,436 18,036 70,436 17,536

Loans from credit institutions 43 3,985 0 0

Advances received 1,203 1,501 0 0

Trade payables 73,752 78,164 93 155

Other short-term liabilities 39,950 79,916 17,612 53,638

Accruals and deferred income 59,062 62,822 7,988 8,427

Group companies:

Trade payables 0 0 74 23

Loan payables 0 0 6,000 30,125

Other short-term liabilities * 15,965 13,929 83,044 43,460

260,409 258,353 185,248 153,364

* Rettig Capital Ltd / Thunship

MATERIAL ITEMS INCLUDED IN ACCRUALS AND DEFERRED INCOME

Tax liabilities 60 718 0 0

Salary accruals 21,268 22,448 692 641

Annual discounts, marketing supports 20,635 20,814 0 0

Accrued interests 6,848 6,962 6,798 6,957

Valuation of currency derivatives 0 616 0 616

Option premium 148 39 148 39

Other 10,103 11,225 349 174

59,062 62,822 7,988 8,427



EUR THOUSAND 2014 2013 2014 2013

CONTINGENT LIABILITIES

LOANS AND CREDIT FACILITIES AGAINST WHICH COLLATERAL AND MORTGAGES HAVE BEEN PLEDGED:

Loans and credit facilities from credit institutions 79,601 85,110 75,678 82,165

of which outstanding 79,601 85,110 75,678 82,165

Mortgages on real estate and floating charges pledged 4,881 8,968 0 0

Mortgages on vessels pledged 144,800 144,800 0 0

Guarantees issued on behalf of group companies 9,331 10,062 9,331 10,062

LEASING AND RENTAL COMMITMENTS:

Portion falling due during the next financial year 13,344 15,887 188 190

Portion for subsequent years 84,030 86,879 73 109

97,374 102,766 261 300

DERIVATIVE CONTRACTS:

Currency derivative contracts, underlying value 142,374 109,904 242,699 210,557

Interest rate derivative contracts, underlying value 82,086 52,938 69,470 48,167

Commodity derivative contracts, underlying value 13,276 16,100 0 0


2014 2013 2012 2011 2010 *

EUR MILLION

Turnover 933 974 970 968 919

outside Finland, % 80 79 74 74 80

EBITDA 131 132 125 134 146

EBIT 43 36 24 52 60

Net result 28 1 -5 13 21

Balance sheet total 923 995 1,105 1,126 1,060

Free cash flow 103 107 83 -9 41

Capital employed 710 753 817 872 826

Return on capital employed, % 6 5 3 6 7

Net debt 247 288 327 366 298

Net gearing, % 59 70 75 82 66

Equity ratio, % 45 42 39 40 43

Net debt / EBITDA 1.9 2.2 2.6 2.7 2.0

Gross investments 31 27 44 151 104

Number of personnel, end of period 4,074 4,322 4,417 4,454 4,563

* Proforma unaudited; Rettig Group consolidated as if Nordkalk had been wholly owned from 1 January 2010.

Five-year review

Calculation of financial ratios

Free cash flow = EBITDA +/- change in net working capital - investments + divestments +/- adjustments

Return on capital employed, % =EBIT

× 100Capital employed, annual average

Net gearing, % =Interest-bearing liabilities - interest-bearing assets

× 100Shareholders’ equity + minority interest

Equity ratio, % =Shareholders’ equity + minority interest

× 100Balance sheet total - advances received

Net debt to EBITDA =Interest-bearing liabilities - interest-bearing assets

× 100EBITDA

Note: Capital loans treated as shareholders’ equity in the calculations.


We have audited the accounting records, the financial statements, the Board of Directors’ report and the administration of Rettig Group Ltd for the year ended 31 December 2014. The financial statements comprise the consolidated balance sheet, income statement and cash flow statement and notes to the consolidated financial statements, as well as the parent company’s balance sheet, income statement, cash flow statement and notes to the financial statements.

RESPONSIBILITY OF THE BOARD OF DIRECTORS AND THE PRESIDENT AND CEO The Board of Directors and the President and CEO are responsible for the preparation of financial statements and Board of Directors’ report that give a true and fair view in accordance with the laws and regulations governing the preparation of the financial statements and the Board of Directors’ report in Finland. The Board of Directors is responsible for the appropriate arrangement of the control of the company’s accounts and finances, and the President and CEO shall see to it that the accounts of the company are in compliance with the law and that its financial affairs have been arranged in a reliable manner.

AUDITOR’S RESPONSIBILITYOur responsibility is to express an opinion on the financial statements, on the consolidated financial statements and on the Board of Directors’ report based

Auditor’s report To the Annual General Meeting

of Rettig Group Ltd

on our audit. The Auditing Act requires that we comply with the requirements of professional ethics. We conducted our audit in accordance with good auditing practice in Finland. Good auditing practice requires that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and the Board of Directors’ report are free from material misstatement, and whether the members of the Board of Directors of the parent company and the President and CEO are guilty of an act or negligence which may result in liability in damages towards the company or have violated the Limited Liability Companies Act or the articles of association of the company.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements and the Board of Directors’ report. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation of financial statements and the Board of Directors’ report that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the company’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness

of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements and the Board of Directors’ report.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

OPINION In our opinion, the financial statements and the Board of Directors’ report give a true and fair view of both the consolidated and the parent company’s financial performance and financial position in accordance with the laws and regulations governing the preparation of the financial statements and the Board of Directors’ report in Finland. The information in the Board of Directors’s report is consistent with the information in the financial statements.

Helsinki, 13 February 2015

Sixten NymanAuthorised Public Accountant

KPMG Oy AbJari HärmäläAuthorised Public Accountant


Governance and risk management

Risks can only be managed if they are identified and understood in advance.

The operations of Rettig Group are managed in a decentralised way through relatively independent

business areas and companies. As an investor in and owner of its businesses, Rettig Group is responsible for the integrated overall strategy, value creation, financing, investment prioritisation and resource allocation. The business areas have an operational business role, being responsible for their respective business strategies, operations and profitability development within the framework of the overall integrated Group strategy.

The idea of decentralisation is to delegate operational management of business areas and companies to employees closest to business realities with an intimate understanding of business rationale and market or customer needs.

While operating in a responsible, long-term and prudent way, we also support an atmosphere or organisational culture that allows a certain degree of experimentation, risk taking and learning from mistakes for the benefit of business development.

Rettig Group is directed and controlled through the board of Rettig Group, supported by its audit committee, the Rettig Group President and CEO together with his management team, and business area CEOs with their management teams, as well as company boards. The operations are managed within a framework of Rettig management policies

and procedures set by the Group board, including a risk management policy.

The purpose of the risk management policy is to integrate risk assessment into business decisions, particularly major ones. Risk assessment is a natural part of our business thinking and decision making process and can only be managed if risks are identified and understood in advance. Within Rettig Group, risk assessment may include the assessment of strategic, operational, financial or hazard risks. The severity and probability of strategic and operational risks in particular are evaluated on a regular basis.

AUDIT COMMITTEE

PRESIDENT AND CEO / RETTIG GROUP MANAGEMENT

COMPANY BOARD OF DIRECTORS

RETTIG GROUP LTD BOARD

OF DIRECTORS

BUSINESS AREA CEO / BUSINESS

AREA MANAGEMENT

STRATEGIC RISKSFor Rettig Group a key strategic risk is one that significantly prevents the Group from following its mission of “Value for generations”.

For business areas, strategic risks are mainly related to external factors that could impact markets, customers and competitiveness.

A strategic risk typically has the potential to have a long-term impact on the business.

OPERATIONAL RISKSOperational risks are part of the daily work of the businesses. They are identified, assessed and managed on a daily basis.

FINANCIAL RISKSThe main financial risks are foreign exchange risk, interest rate risk, liquidity and refinancing risk and credit risk. They are managed through hedging instruments, a diversified funding portfolio and management of customer receivables.

HAZARD RISKSHazard risks are mainly related to occupational health and safety, personnel security, information security, natural disasters, fire and other accidents. They are managed through occupational health and safety systems and instructions, crisis management guidelines, information security policy, environmental management systems and appropriate insurance arrangements.


Risk severity Risk probability Risk management

STRATEGIC RISKS

GROUP

Business environment risk × × × × Continuous assessment and risk diversification.

Weak balance sheet × × × × Careful and prudent risk taking.

Reputational risk × × × Careful and prudent reputation management.

Rettig ICC

Market stagnation × × × × Growth in target markets.

Customer dependency × × × Wide customer base. Good customer contact.

Limited product portfolio × × × Innovative new solutions.

Nordkalk

Major change in customer base × × × × × Diversified customer segmentation. Cost competitiveness.

Raw material availability × × × × Proactive limestone reserve policy.

Environmental legislation × × × × Responsibility in all operations. Investments into Best Available Technology (BAT).

Bore

Overcapacity of vessels × × × × × × Renewal and innovative shipping solutions.

Environmental legislation × × Reduction of emissions.

Intermodalism × × × Attractive and efficient fleet.

OPERATIONAL RISKS

Rettig ICC

Steel price fluctuations × × × × Alternative suppliers. Simplified operations.

Plant interruptions × × Flexible production platforms.

Nordkalk

Energy prices × × × × Efficient sourcing. Hedging. Alternative energy sources.

Low capacity utilisation × × × × Optimised utilisation of internal networks. Enterprise resource planning (ERP).

Bore

Quality level of vessels × × × × Regular maintenance and dockings according to high technical standards.

Availability of seamen × × × Attractive and safe workplace.

Key strategic and operational risks

Risk assessment is a natural part of our business thinking

and decision making.


Board of Directors

CYRIL VON RETTIG

B.Sc. (Econ.)Born 1954Chairman of the BoardMember since 1988Operational engagement:Bore (1978 – 1990)

TOM VON RETTIG

Born 1955Member since 1988President and CEO 1996 – 1998Operational engagement: Tobacco (1976 – 1995)

BJARNE MITTS

B.Sc. (Econ.)Born 1949Member since 2012 Other board assignments: Rettig Capital Ltd (Chairman), Svenska Handelsbanken AB (publ) Branch Operation in Finland, Åbo Akademi University Foundation

CHRISTOFFER TAXELL

LL.M.Born 1948Member since 2012 Other board assignments: Föreningen Konstsamfundet (Chairman), Ålandsbanken Plc

ANN VON RETTIG

M.Sc. (Soc. Sc.)Born 1953Member since 1988Operational engagement: administration and portfolio management (1987 – 1996)

MARTIN GRANHOLM

M.Sc. (Eng.), D.Sc. (Tech.) h.c.Born 1946Vice Chairman of the BoardMember since 2005Other board assignments: Algol Oy (Chairman), Oy Norcar-BSB Ab, Fortum Corporation Advisory Council

ANDERS MOLIIS-MELLBERG

M.Sc. (Eng.)Born 1951Member since 2012Other board assignments: Faxell 2.0 Oy Ab (Chairman)

Group management

JOSEFINA TALLQVIST

M.Sc. (Econ.)Born 1969Director Corporate Communication and IREmployed by Rettig since 2013

HANS SOHLSTRÖM

M.Sc. (Tech.), M.Sc. (Econ.)Born 1964President and Chief Executive Officer Employed by Rettig since 2012

TOMAS ÖLANDER

B.Sc. (Econ.)Born 1957Chief Financial Officer Employed by Rettig since 2002

TOMAS VON RETTIG

BBA, CEFABorn 1980Vice President Corporate Finance and DevelopmentEmployed by Rettig since 2008

NEIL MACPHERSON

M.A. (Hons)Born 1957Chief Executive Officer, Rettig ICCEmployed by Rettig since 2004

HÅKAN MODIG

M.Sc. (Econ.)Born 1964Chief Executive Officer, BoreEmployed by Rettig since 2013

JARKKO KAPLIN

M.Sc. (Chem. Eng.)Born 1967Chief Executive Officer, Nordkalk, as of 1 January 2015Employed by Rettig since 2012

CHRISTIAN STÅHLBERG

LL.M.Born 1974General counsel as of 1 January 2015Employed by Rettig since 2015


Until 31 December 2014:Bertel Karlstedt, M.Sc. (Eng.), born 1962, Chief Executive Officer, Nordkalk, employed by Rettig from 2010 and Nordkalk from 2005 Berndt Lindberg, Master of Laws, born 1952, General counsel, employed by Rettig from 1990


Business area management teams

TOMASZ TARABURABusiness Development and Brand Director, East

KLAUS ROGETZERBrand Director, West

NEIL MACPHERSONChief Executive Officer

WERNER

HINTERBERGERChief Information Officer

STIG BJÖRKQVISTChief Financial OfficerGroup Business Controller

LINDA CURRIEChief Personnel Officer

Nordkalk Bore

JOS BONGERSChief Operations OfficerDeputy Chief Executive Officer

ESA TIKKAVice President, Business & Management Development

KARI VAINIOChief Legal Officer

KIM NORDELLChief Financial Officer

JARKKO KAPLINChief Executive Officer, as of 1 January 2015Vice President, PulpPaper & Finland Division, until 31 December 2014

ANDERS MATTSSONVice President, Metals & Mining Division

TARMO TUOMINENChief Technology Officer

JAN WEBERVice President,Central & Eastern Europe Division

KATARINA HILDÉNVice President, Administration

PETTER RUDA Vice President, Finance and Business Development

JÖRGEN MANSNERUSVice President, Marine Management

HÅKAN MODIGChief Executive Officer

Rettig ICC

JOHAN STRUYF Director Research and Development

Until 31 December 2014: Bertel Karlstedt, Chief Executive Officer

Until 31 December 2014:Jörgen Bolin, VP FinanceKim Engfelt, Shipping Logistics ManagerJhonny Husell, EVP Commercial


• RETTIG GROUP - HEAD OFFICE

• NORDKALK - HEAD OFFICE

• NORDKALK

• RETTIG ICC - HEAD OFFICE

• RETTIG ICC

• BORE - HEAD OFFICE

• BORE

H

H

H

H

PRINT: Libris

PAPER: G-Print 250 g (cover), Maxi Offset 120 g

PHOTOGRAPHS: Tuomo Manninen, Rettig Group, Rettig ICC, Nordkalk and Bore archives • Coverphoto © Johnér Bildbyrå AB / Roine Magnusson

• Page 4 photo © Etsabild AB / Anne Nyblaeus • Page 12 and 13 photos Pär-Henrik Sjöström • Page 16 photo © Arkkitehtitoimisto SARC and Architect

Group Reino Koivula • Page 22 photo © Johnér Bildbyrå AB / Ulf Huett Nilsson

RETTIG GROUP LTD

RETTIG ICC

www.rettigicc.com

www.vogelundnoot.com

www.purmoradson.com

Bulevardi 46, P.O.Box 115

FI-00121 Helsinki

Finland

Tel. +358 9 618 831

Fax +358 9 6188 3397

Email: [email protected]

www.rettig.fi

NORDKALK

www.nordkalk.com

BORE

www.bore.eu


The year in brief

EBITDA

131 EUR million

2013: 132

Net gearing

59%2013: 70%

Return on capital employed*

5.8%2013: 4.6%

Personnel at end of period

4,0742013: 4,322

Turnover

933 EUR million

2013: 974

EBIT*

43 EUR million

2013: 36

Net result*

28EUR million

2013: 1

Capital employed

710EUR million

2013: 753

Turnover by business area 2014

• RETTIG ICC 58%

• NORDKALK 36%

• BORE 6%

EBITDA by business area 2014

• RETTIG ICC 44%

• NORDKALK 43%

• BORE 13%

Capital employed by business area 2014

• RETTIG ICC 27%

• NORDKALK 45%

• BORE 28%

Turnover by country 2014

• FINLAND 20%

• GERMANY 16%

• SWEDEN 12%

• POLAND 10%

• UNITED KINGDOM 9%

• FRANCE 7%

• RUSSIA 5%

• OTHER 20%

*Including goodwill depreciation and non-recurring expences.

1907Henning von Rettig

became shareholder in Pargas Kalkbergs

Aktiebolag

1898A distinguished

industrialist and culture patron,

Fredric von Rettig, was raised to nobility

1897Rettig was

actively involved in the establishment of Bore Steamship

Company

1940P.C.Rettig & Co bought a majority stake of tobacco factory Ph.U. Strengberg & Co in Jakobstad, Finland

1970Rettig entered the heating industry by acquiring Purmo Tuote-Produkt in Purmo, near Jakobstad, Finland

1926Hans von Rettig became the major shareholder of Bore Steamship Company

1994Ann, Cyril, Tom and Hans von Rettig took over responsibility of the family business. Rettig sold the stake in Partek (orig. Pargas Kalkberg)

1977The company’s head office moved from Turku to Espoo in Finland. In 1990 the head office moved to Bulevardi in Helsinki

1995The tobacco

business was divested to

R.J. Reynolds Tobacco

International

Our history

2003Rettig Group acquired the first stake in Nordkalk. By 2010 Nordkalk was wholly

owned by Rettig Group

2013Rettig Group is wholly owned, through Rettig Capital, by the

family branches of Cyril and Tom von Rettig

2014Bore decided

to focus on the RoRo business

1845Pehr Cerelius

Rettig established a tobacco factory in

Turku, Finland

1790sSteffen Cerillius Rettig moved from Hamburg, Germany, to Karlskrona in Sweden and established a tobacco factory

1809Pehr Christian Rettig established a tobacco factory in Gävle, Sweden


Rettig G

roup A

nn

ual Rep

ort 2014

Rettig Group is a Finnish family business that creates value

for generations through sustainable and long-term growth.

In all our businesses we focus on leading market positions

and more customer value with less environmental impact.

Rettig Group Annual Report

2014VALUE FOR GENERATIONS

rettig group annual report · pdf filerettig group annual report 2014 ... turnover 933 eur...

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