News Column

Raute Corporation - Financial statements January 1 - December 31, 2013

February 12, 2014

Nastola, Finland, 2014-02-13 08:00 CET (GLOBE NEWSWIRE) -- RAUTE CORPORATION FINANCIAL STATEMENTS RELEASE FEBRUARY 13, 2014 AT 9:00 A.M. RAUTE CORPORATION - FINANCIAL STATEMENTS JANUARY 1 - DECEMBER 31, 2013 - The Group’s net sales amounted to EUR 83.3 million (MEUR 101.3), down 18% on the comparison period. The order intake was EUR 63 million (MEUR 116). - Operating profit was EUR +1.8 million (MEUR +5.0). Result before taxes was EUR +1.6 million (MEUR +4.8). - Undiluted earnings per share were EUR 0.30 (EUR +0.75) and diluted earnings per share were EUR 0.30 (EUR +0.74). - Fourth-quarter net sales amounted to EUR 24.5 million and the operating result was EUR 1.5 million. Order intake was EUR 22 million and the order book stood at EUR 28 million (MEUR 50) at the end of the reporting period. - Board of Directors will propose to the Annual General Meeting that a dividend of EUR 0.20 (EUR 0.50) per share be paid for the financial year 2013. - Board of Directors will propose to the Annual General Meeting that EUR 0.30 per share (EUR 0.00) be distributed from the non-restricted equity reserve as repayment of equity. - Raute’s net sales are expected to grow in 2014 and operating profit is anticipated to improve over the year 2013. TAPANI KIISKI, PRESIDENT AND CEO: SPRINT TO THE FINISH LINE AND GROWTH EXPECTATIONS The development that took place during the final quarter of 2013 was dual in nature. Measured in net sales and operating profit, the fourth quarter was the best quarter of 2013, a successful sprint to the finish line that we had been expecting based on the timing of our order book. The order intake returned almost to its normal level without any major individual orders, but the order book weakened somewhat regardless of this. Due to the order book situation and uncertainty related to the timing of new deliveries, we took the decision to carry out personnel adjustment measures at Nastola and JyvÄskylÄ in order to prepare for the expected underloading in some of our operations early this year. The low order intake level in project deliveries for 2013 was a disappointment to us, especially on the part of the first and third quarters. My expectations for positive development in the emerging markets in Russia and Asia still failed to materialize. No decisions were made concerning significant capacity-increasing investments at the planning and negotiation stage. The market situation experienced by the plywood and LVL mills and, above all, the financing-related problems of our customers prevented the implementation of projects. North America was the only major market area in which we achieved positive results. The capacity utilization rates of our customer industries remained high throughout the year, which was apparent in the growing demand for our technology services. Net sales for the whole of 2013 decreased 18 percent from the previous year. The growth of 13 percent experienced by technology services was not sufficient to compensate for the decrease in net sales that accumulated from large project deliveries. Due to the decrease in net sales, we were unable to achieve the previous year’s level that we had estimated for our 2013 operating profit. This serves as a reminder to us that we need to further develop our ability to adapt faster to changes in the market situation. We have high expectations for 2014. The uncertainty that we still face in market development seems to have become the new status quo, but, based on our current order book and ongoing negotiations, we estimate that there is potential for growth in project deliveries in Europe, Russia and Asia. We also believe that technology services will continue to grow strongly. My estimate is that a number of major projects that have long been under negotiation will start up during the first part of the year, and that they will contribute to bringing Raute back on track in financial performance. Furthermore, I am certain that some of our product development projects will reach a phase where they will begin to pay themselves back. Raute’s competitiveness and market position are strong. The EUR 8.5 million in contracts signed over the past two months by Raute for developing the various mills of a European plywood manufacturer bears testimony to the company’s long-term cooperation with its customers. We have shifted the focal point of our development projects to improving the cost competitiveness of our products and our operations. The results of this development work will begin to materialize further during 2014. I believe that we will begin to receive orders from areas in which we were not even involved a few years ago. Simultaneously our profitability will improve. We are seeking a clear improvement on the previous year in both net sales and profitability. I would like to send out a heartfelt thank you to Raute’s customers for their invaluable cooperation and trust, to our personnel for their outstanding work and flexibility in the face of ever-changing challenges, to our shareholders for their continued confidence in us, and to all our other partners for their role in furthering Raute’s development and success. FOURTH QUARTER OF 2013 Order intake and order book The order intake, EUR 22 million (MEUR 12), achieved a close-to-normal average level in the fourth quarter without any new major individual orders being placed. Technology services accounted for EUR 11 million (MEUR 8) of the order intake. The order book weakened during the fourth quarter by EUR 3 million, amounting to EUR 28 million at the end of 2013 (MEUR 50). Net sales Fourth-quarter net sales amounted to EUR 24.5 million (MEUR 33.9). Technology services accounted for 35 percent of total net sales (28%). Net sales increased 57 percent from the third quarter in line with the order book’s timing. Result and profitability Operating profit in the fourth quarter was EUR 1.5 million positive (MEUR 3.1 positive) and accounted for 6 percent (9%) of net sales. The result was EUR 0.9 million positive (MEUR 2.0 positive), and earnings per share were EUR 0.23 (EUR +0.49). Profitability improved in comparison with the previous quarters, which resulted from increased net sales. RAUTE CORPORATION - FINANCIAL STATEMENTS JANUARY 1- DECEMBER 31, 2013 BUSINESS ENVIRONMENT Market situation in customer industries Raute’s customers in the veneer, plywood and LVL (Laminated Veneer Lumber) industries are engaged in the manufacture of wood products used in investment commodities and are thus highly affected by fluctuations in construction, housing-related consumption, international trade, and transportation. The uncertainty related to the global economy and financial markets continued in 2013. For Raute’s customer industries, the market situation continued to be uncertain in several market areas. Demand for wood products technology and technology services In 2013, no major capacity-increasing projects were initiated by Raute’s customers. Investments were focused on relatively small machine and equipment investments and modernizations. Several large projects encompassing single production lines and mill-scale deliveries that are in the planning and negotiation phase were pending and in the negotiation phase throughout the year but the requirements for making the investment decisions, i.e. trust in the permanence of demand and the availability of funding, did not yet materialize. Demand for maintenance and spare parts services continued at a good level. This bears testimony to the fact that the utilization rates of Raute’s customers’ production facilities remained good. ORDER INTAKE AND ORDER BOOK Raute serves the wood products industry with a full-service concept based on service that encompasses the entire life cycle of the delivered equipment. Raute’s business consists of project deliveries and technology services. Project deliveries comprise complete production machinery for new mills, production lines and individual machines and equipment. Additionally, Raute’s full-service concept includes comprehensive technology services ranging from spare parts deliveries to regular maintenance and equipment modernizations as well as consulting, training and reconditioned machinery. The order intake for 2013 stood at EUR 63 million (MEUR 116). The order intake decreased by 45 percent on the previous year as a result of a lack of capacity-generating mill projects. The order intake grew or remained on a par with the previous year’s level in all market areas when comparing 2013 with the previous year minus any new capacity-generating orders. North America achieved the largest relative growth. 35 percent of the new orders came from Europe (31%), 25 percent from North America (6%), 23 percent from Russia (12%), 13 percent from South America (48%) and 4 percent from Asia-Pacific (3%). The strong fluctuations in the distribution of new orders between the various market areas are typical for project-focused business. The order intake for project deliveries stood at EUR 29 million (MEUR 89) and decreased from the previous year by 68 percent. No new orders related to building new production capacity were received (MEUR 66). A significant proportion of new orders were focused on drying technology and the further processing of dry veneer. The order intake for technology services stood at EUR 34 million (MEUR 27). The increase in order intake mainly resulted from modernization orders from Europe and North America. Spare parts and maintenance services remained at the previous year’s good level. COMPETITIVE POSITION Raute’s competitive position has remained strong. Raute’s solutions help customers in securing their delivery and service capabilities throughout the life cycle of the equipment or service offered by Raute. In such investments, the supplier’s overall expertise and extensive and diverse technology offering play a key role. The competitive edge provided by Raute is also a major draw when customers select their cooperation partners. Raute’s strong financial position and its long-term dedication to serving selected customer industries also enhance its credibility and improve its competitive position as a company that carries out long-term investment projects. NET SALES The Group’s net sales amounted to EUR 83.3 million (MEUR 101.3). Net sales declined by 18 percent on 2012. The decline resulted from the low order intake in project deliveries and from the scheduling of our order book. Net sales were generated by project deliveries related to the wood products technology business and by technology services. Net sales for project deliveries totaled EUR 51 million (MEUR 73), down 30 percent from the previous year. Net sales remained below those of the previous year in terms of project deliveries related to the construction of new plywood production capacity. Project deliveries accounted for 62 percent of total net sales (72%). The plywood industry’s share of the net sales for project deliveries was 77 percent (93%), while the LVL industry’s share was 23 percent (7%). Altogether four major new capacity-generating projects were at the installation and commissioning phase during the year, and they have proceeded according to the timetable set by the customer. The LVL mill order received from China in 2010 was completed. The expansion of a South American plywood mill, initiated in 2011, and the rebuilding of a mill destroyed in a fire in early 2012 have reached the commissioning phase. LVL machines ordered in July 2012 were installed in Germany under Raute’s supervision. Net sales for technology services totaled EUR 32 million (MEUR 28). Net sales grew 13 percent from the previous year and accounted for 38 percent (28%) of total net sales. The increase in net sales was predominantly the result of modernizations. Europe’s share of total net sales in 2013 was 40 percent (22%), South America’s 22 percent (52%), Russia’s 19 percent (14%), North America’s 14 percent (8%), and Asia-Pacific’s 5 percent (4%). RESULT AND PROFITABILITY The Group’s operating profit for 2013 was EUR 1.8 million positive (MEUR 5.0 positive) and accounted for 2 percent of net sales (5%). The profitability of operations declined from the previous year due to a decrease in net sales. The Group’s financial income and expenses totaled EUR -0.2 million (MEUR -0.3). The Group’s profit before tax was EUR 1.6 million positive (MEUR +4.8) and profit for the financial year was EUR 1.2 million positive (MEUR +3.0). Comprehensive income for the Group was EUR 1.2 million positive (MEUR +3.2). Undiluted earnings per share were EUR 0.30 (EUR +0.75) and diluted earnings per share were EUR 0.30 (EUR +0.74). Return on investment was 7 percent (15%) and return on equity 5 percent (+13%). CASH FLOW AND BALANCE SHEET The Group’s financial position remained good throughout the year. At the end of the financial year, the Group’s cash and cash equivalents exceeded interest-bearing liabilities by EUR 6.7 million (MEUR 8.1). At the end of the financial year gearing was -28 percent (-34%) and equity ratio 57 percent (48%). The Group’s cash and cash equivalents stood at EUR 12.7 million (MEUR 19.5) at the end of the financial year. The change in cash and cash equivalents during the financial year was EUR 6.8 million negative (MEUR 6.2 negative). Operating cash flow was EUR 3.7 million positive (MEUR 1.9 positive). Cash flow from investment activities totaled EUR 3.2 million negative (MEUR 2.9 negative). Cash flow from financing activities was EUR 7.4 million negative (MEUR 5.2 negative), including dividend payments of EUR 2.0 million (MEUR 1.2 million) and debt repayments of EUR 5.4 million. The Group’s balance sheet total at the end of the year stood at EUR 48.8 million (MEUR 63.1). Fluctuations in balance sheet working capital items and the key figures based on them are due to differences in the timing of customer payments and the cost accumulation from project deliveries, which is typical of the project business. Interest-bearing liabilities amounted to EUR 6.0 million (MEUR 11.5) at the end of the financial period, with current interest-bearing liabilities accounting for EUR 3.5 million (MEUR 5.6). The Parent company Raute Corporation has a EUR 10 million commercial paper program, which allows the company to issue commercial papers maturing in less than one year. The Parent company Raute Corporation is prepared for future working capital needs and has concluded long-term credit facility agreements with three Nordic banks totaling EUR 23.0 million. The main covenants for the credit facility are an equity ratio of >30% and gearing of EUR 16.9 million remained unused at the end of the financial period. LOANS TO RELATED PARTIES AND OTHER LIABILITIES On December 31, 2013, the Parent company Raute Corporation had loan receivables from its subsidiaries Raute Service LLC in the amount of EUR 355 thousand, Raute (Shanghai) Machinery Co., Ltd in the amount of EUR 550 thousand and Raute Canada Ltd. in the amount of EUR 682 thousand. Other liabilities are presented in the figures section of this report. EVENTS DURING THE REPORTING PERIOD Raute Corporation published stock exchange releases on the following events in 2013: September 4, 2013Raute's profit outlook for the full year 2013 weakened September 30, 2013Raute strengthens its Group Executive Board November 4, 2013Raute to initiate co-determination negotiations November 28, 2013 Co-determination negotiations concluded at Raute. RESEARCH AND DEVELOPMENT COSTS AND CAPITAL EXPENDITURE Raute’s goal is to be the leading technology supplier in its field, and to invest strongly in continuous research and development, particularly in plywood and LVL manufacturing technology and the supporting by-product handling, automation and instrumentation applications, especially machine vision. In 2013, the Group’s research and development costs totaled EUR 2.5 million (MEUR 2.5) and 3.0 percent of net sales (2.5%). In 2013, Raute continued to invest strongly in expanding its newest technology offering to meet the needs of the plywood and LVL industries and the supporting automation and instrumentation applications, especially machine vision. Additionally, the development of products designed for the emerging markets was continued. The Group’s investments during the financial year totaled EUR 3.2 million (MEUR 3.5). The majority of investments were related to productional investments at the mills in Nastola, Finland, and in China. Investments include EUR 0.6 million in capitalized development costs (MEUR 1.0). DEVELOPMENT OF OPERATIONS The development of production and delivery capabilities continued at the new plant in China where increasing the company’s own production capacity enables better control over the quality and delivery times of the components and equipment manufactured in China. The service ability and profitability of technology services were developed at Raute’s Canadian unit through the implementation of new organizational and operating models. PERSONNEL The Group’s headcount at the end of 2013 was 534 (503). Finnish Group companies accounted for 73 percent (74%) of employees, Chinese companies for 14 percent (11%), North American companies for 10 percent (11%), and other sales and service companies for 3 percent (4%). Converted to full-time employees (“effective headcount”), the average number of employees during the financial year was 515 (480). Salaries and remunerations paid by the Group totaled EUR 22.7 million (MEUR 23.7). The Group continued to develop the competence of its personnel and increase their commitment to the company. 3 percent (2%) of the payroll was invested in personnel training. The “Great Place to Work” project was used to develop Raute as a work community and work environment. The objective of the “SÄrmÄ” (Edge) project, which spanned the entire year, is to get Raute’s entire personnel to commit even more strongly to Raute’s customer promise and the better quality of products, services and operations. At the end of 2013, decisions based on the co-determination negotiations were made to adapt Raute’s operations to the lower order book level and the predicted low order intake in early 2014 as well as to the productional and financial situation resulting from these. The temporary lay-offs of personnel at the company’s Nastola and JyvÄskylÄ units for a maximum of 90 days began in December. The number of lay-offs and their timing will be decided based on order book development and the work load. REMUNERATION The Group has remuneration systems in place that cover the entire personnel. The Annual General Meeting held on March 31, 2010 resolved to issue a maximum of 240,000 stock options. In compliance with the authorization granted by the Annual General Meeting, the Board of Directors issued 13,700 stock options marked with the symbol 2010 A, 7,500 stock options marked 2010 B and 12,000 stock options marked 2010 C to the Group’s key employees during 2013. Of the stock options transferred earlier, 4,200 stock options marked with the symbol 2010 A, 2,500 stock options marked 2010 B and 5,000 stock options marked 2010 C were returned to the company during 2013. The Group’s key personnel held on December 31, 2013 a total of 80,000 stock options marked with the symbol 2010 A, 80,000 stock options marked 2010 B and 80,000 stock options marked 2010 C. The subscription period for stock options marked with the symbol 2010 A began on March 1, 2013. Stock options have not been exercised to subscribe for shares until December 31, 2013. The terms and conditions of the stock option scheme are available on the company’s website. SOCIETY AND THE ENVIRONMENT The environment is one of the values that guide Raute’s operations. Raute strives to systematically develop the environmental soundness of its products and services and to reduce the environmental impacts of its operations. The Group abides by the principles of good corporate citizenship, taking into consideration nature and its protection, and how society as a whole operates, while respecting local cultures. Raute’s operations mainly affect the environment indirectly when the company’s technology is used in the production processes of the wood products industry. Raute’s technology enables the wood products industry to substantially reduce the environmental load caused by its operations through, for example, more efficient use of wood raw materials, additives and energy. The Group’s own operations do not involve considerable environmental risks that might have a direct impact on the Group’s business operations or financial position. The Nastola main production units manage environmental matters in compliance with a certified environmental system. The operations and ethical principles of the partner and subcontractor network are also subjected to systematic inspection. Raute aims to continuously reduce energy consumption, decrease the volume of waste, and develop the working environment. SEASONAL FLUCTUATIONS IN BUSINESS The Group’s net sales and working capital fluctuate every quarter due to different types of project deliveries and their schedules. Business operations do not involve regular seasonal changes. RISKS AND RISK MANAGEMENT The Group’s identified key risk areas relate to the nature of the business, the business environment, financing, and damage or loss. The fluctuation in demand resulting from economic cycles and delivery and technology risks have been identified as the Group’s most significant business risks. The uncertainty related to the development of the global economy and financial markets maintains short-term risks. The most significant risks for Raute are related to the development of net sales and profitability. The Group has no ongoing legal proceedings or other disputes in progress that might materially affect the continuity of business operations, nor is the Board of Directors aware of any other legal risks related to the Group’s operations that might have such an effect. Business risks Impact of economic cycles on business operations Raute’s business operations are characterized by the sensitivity of investment demand to fluctuations in the global economy and the financing markets, and the cyclical nature of project business. The impact of changes in demand on the Group’s result is reduced by increasing the share of technology services, increasing operations in market areas with a small current market share, creating products for completely new customer groups and developing the partner network. Deliveries and technology The bulk of Raute’s business operations consists of project deliveries, which expose the company to risks caused by customer-specific solutions related to each customer’s end product, production methods or raw materials. At the quotation and negotiation phase, the company has to take risks relating to the promised performance figures and make estimates of implementation costs. Raute invests heavily in product development. The developmental phase for new technologies involves the risk that the project will not lead to a technologically or commercially acceptable solution. The functionality and capacity of new solutions produced as a result of development work cannot be fully verified until the solutions can be tested under production conditions in conjunction with the customer deliveries. Contract, product liability, implementation, cost and capacity risks are managed using project management procedures that comply with the company’s ISO-certified quality system. Technology risks are reduced by the conditions of delivery contracts and by restricting the number of simultaneous first deliveries. Emerging markets Raute’s objective is to increase its local business in China and Russia, among others, where, besides opportunities, companies face risks typical for emerging markets. Information security risks are managed according to a defined information security policy. Human resources Competence retention and development and ensuring the sufficiency of human resources are particularly important in cyclical business. Continuity is ensured by monitoring the development of the age structure, implementing systematic human resources management and investing in well-being at work. Financing risks The most significant financing risks in the Group’s international business operations are default risks and currency risks related to counterparties. The Group is also exposed to liquidity, refinancing, interest rate and price risks. The default risk relating to customers’ solvency is managed by covering the unpaid sum with bank guarantees, letters of credit or other securities. The Group’s liquid assets are mainly held in banks in the Nordic countries. The Group’s main currency is the euro. The most significant currency risks result from the following currencies: Chinese yuan (CNY), Russian ruble (RUB), Canadian dollar (CAD) and US dollar (USD). The main hedging instruments used are foreign currency forward contracts. Currency clauses are included in quotations to hedge against currency risks during the quotation period. Depending on the case, currency risks related to preliminary sales contracts are hedged with currency option contracts. The Group has made preparations for fluctuating working capital requirements and possible disturbances in the availability of money through long-term credit facility agreements with three Nordic banks. The interest rate risk related to the company’s variable interest rate loans is hedged with interest rate swaps. The Group’s interest risks are mainly related to the return on liquid assets. Risks of damage or loss Raute’s most significant single risks concerning material damage and business interruption loss are a fire or a serious machine or information system breakdown at the Nastola main unit, where the production, planning, financial, and ERP systems serving the Group’s key technologies are centrally located. Other risks of damage or loss include occupational safety risks, which are managed by means of active risk-prevention measures, such as continuous personnel training and investigation of all near-miss situations. Occupational safety and ergonomics are under continuous development. Raute’s production operations do not involve significant environmental risks. The main unit in Nastola has an ISO-certified environmental management program, whose principles are also adhered to in other units. The Group hedges against risks of damage or loss by assessing its facilities and processes in terms of risk management and by maintaining emergency plans. Global and local insurance programs are checked regularly as part of overall risk management. The objective is to use insurance policies to sufficiently hedge against all risks that are reasonable to handle through insurance due to economic or other reasons. Organizing risk management Raute’s risk management policy is approved by the Board of Directors. The Board is responsible for organizing internal control and risk management, and for monitoring their efficiency. The Executive Board defines the Group’s general risk management principles and operating policies, and defines the boundaries of the organization’s powers. The President and CEO and the CFO regularly report significant risks to the Board. The Group’s President and CEO controls the implementation of the risk management principles in the entire Group, while the Presidents of the Group companies are responsible for risk management in their respective companies. The members of the Group’s Executive Board are responsible for their own areas of responsibility across company boundaries. Raute has no separate internal auditing organization. The Controller function oversees the annual internal control plan approved by the Board, develops internal control and risk management procedures together with the operative leadership, and monitors compliance with risk management principles, operational policies and powers. GROUP STRUCTURE No changes took place in the Group’s legal structure during 2013. SHAREHOLDERS The number of shareholders totaled 1,682 at the beginning of the year and 1,915 at the end of the year. Series K shares were held by 49 private individuals (49) at the end of the financial year. Nominee-registered shares accounted for 3.1 percent (3.3%) of shares. No flagging notifications were given to the company in 2013. On December 31, 2013, the Board of Directors and the Group’s President and CEO held altogether 226,959 company shares, totaling 5.7 percent (5.7%) of the company shares and 11.2 percent (11.2%) of the votes. The figures include the holdings of their own, minor children and control entities. AUDITORS At Raute Corporation’s Annual General Meeting on April 8, 2013, the authorized public accounting company PricewaterhouseCoopers was chosen as auditor with Authorized Public Accountant Janne Rajalahti as the principal auditor. CORPORATE GOVERNANCE Raute Corporation complies with the Finnish Corporate Governance Code 2010 for listed companies issued by the Securities Market Association on June 15, 2010. Raute deviates from the Code’s recommendation 22 on appointing members to the Appointments Committee in that one member to the Committee is elected from outside the Board of Directors, as per the company’s Administrative Instructions, from among the representatives of major shareholders who have significant voting rights. The Board views this exception as justified, taking into consideration the company’s ownership structure and the possibility to consider the expectations of major shareholders as early as in the preparation phase of selecting members of the Board of Directors. Raute deviates from recommendation 9 on the number, composition and competence of the directors in that the company does not have both genders represented on the Board. When seeking new members, the Appointments Committee was unable to find any available female candidates fulfilling the criteria set for the members of the Board of Directors. An outline of Raute Corporation’s corporate governance principles and the company’s remuneration statement will be published together with the financial statements. CORPORATE GOVERNANCE STATEMENT Raute Corporation’s Board of Directors has handled Raute Corporation’s Corporate Governance Statement for 2013 according to chapter 7, section 7 of the Finnish Securities Markets Act and recommendation 54 of the Finnish Corporate Governance Code 2010 for listed companies issued by the Securities Market Association on June 15, 2010. The statement has been drawn up separately from the Report of the Board of Directors and will be published together with the financial statements. BOARD OF DIRECTORS AND PRESIDENT AND CEO The Annual General Meeting elects the Chairman and Vice-Chairman for the Board of Directors, and 3–5 Board members. At Raute Corporation’s Annual General Meeting on April 8, 2013, Mr. Erkki Pehu-Lehtonen was elected Chairman of the Board, Mr. Mika Mustakallio Vice-Chairman and Mr. Joni Bask, Mr. Risto HautamÄki, Mr. Ilpo Helander and Mr. Pekka Suominen as Board members. The Board of Directors appoints the President and CEO and confirms the terms of his or her employment, including fringe benefits. Mr. Tapani Kiiski, Licentiate in Technology, continued as Raute Corporation’s President and CEO. He was appointed as Raute Corporation’s President and CEO on March 16, 2004. As agreed in the executive contract, the term of notice is six months, and the severance pay equals twelve months’ salary. Raute Corporation’s Articles of Association do not grant any unusual authorizations to the Board of Directors, or to the President and CEO. Any decisions on changes to the Articles of Association or an increase in share capital are made in compliance with the regulations of the effective Companies Act. EXECUTIVE BOARD Raute’s Board of Directors appointed two new members to its Executive Board as of October 1, 2013. Raute Group’s Executive Board and the members’ areas of responsibility: - Tapani Kiiski, President and CEO, Chairman – Sales - Arja Hakala, Group Vice President, Finance, CFO – Finance and administration - Marko Hjelt, Group Vice President, Human Resources – Human resources and competence development (as of October 1, 2013) - Mika Hyysti, Group Vice President, Technology – Technology, products and R&D (October 1, 2013) - Timo Kangas, Group Vice President, Customer Care – Customer relationships and marketing, market area EMEA - Petri Lakka, Group Vice President, Technology Services – Technology services - Petri Strengell, Group Vice President, Operations – Project deliveries and operations. SHARES The number of Raute Corporations shares at the end of 2013 totaled 4,004,758, of which 991,161 were series K shares (ordinary share, 20 votes/share) and 3,013,597 series A shares (1 vote/share). The shares have a nominal value of 2 euros. Series K and A shares confer equal rights to dividends and company assets. Series K shares can be converted to series A shares under the terms set out in section 3 of the Articles of Association. If an ordinary share is transferred to a new owner who has not previously held series K shares, the new owner must notify the Board of Directors of this in writing and without delay. Other holders of series K shares have the right to redeem the share under the terms specified in Article 4 of the Articles of Association. Raute Corporation’s series A shares are listed on NASDAQ OMX Helsinki Ltd. The trading code is RUTAV. During 2013, 513,699 shares were traded (302,096) worth altogether EUR 4.4 million (MEUR 2.4). The number of shares traded represents 17 percent (10%) of all listed series A shares. The average price of a series A share was EUR 8.49 (EUR 8.22). The highest closing price of the year was EUR 9.33 and the lowest EUR 6.88. The company’s market capitalization at the end of 2013 totaled EUR 27.8 million (MEUR 36.0), with series K shares valued at the closing price of series A shares, EUR 6.95 (EUR 9.00), on December 31, 2013. Raute Corporation has signed a market making agreement with Nordea Bank Finland Plc in compliance with the Liquidity Providing (LP) requirements issued by NASDAQ OMX Helsinki Ltd. Other share-related information is presented in the figures section of this report. RAUTE’S DIVIDEND POLICY Raute exercises an active dividend policy. Its aim is to ensure competitive returns for its investors. Dividend payment takes into account future investment needs and the goal of maintaining a solid equity ratio. Due to the nature of the project business, the dividend is not directly tied to the annual result. DIVIDENDS FOR THE 2012 FINANCIAL YEAR The Annual General Meeting held on April 8, 2013 decided to pay a dividend of EUR 0.50 per share for the financial year 2012. The dividends amounted to a total of EUR 2.0 million, of which series A shares accounted for EUR 1,506,798.50 and series K shares for EUR 495,580.50. The dividend payment date was April 18, 2013. AUTHORIZATION OF REPURCHASE AND DISPOSAL OF OWN SHARES The Annual General Meeting held on April 8, 2013 authorized the company’s Board of Directors to decide on the repurchase of Raute Corporation series A shares with assets from the company’s non-restricted equity and to decide on a directed issue of a maximum of 400,000 shares. The Board of Directors did not exercise the authorization in 2013. The company did not possess company shares at the end of the financial period or hold them as security. EVENTS AFTER THE FINANCIAL YEAR Raute Corporation published stock exchange releases on the following events in 2014: January 28, 2014 Appointments Committee's proposal for the composition of Raute Corporation's Board of Directors February 12, 2014 The Board of Directors of Raute has decided to establish a long-term share based incentive program for the top management. PUBLICATION OF THE FINANCIAL STATEMENTS AND ANNUAL REPORT 2013 Raute Corporation’s consolidated financial statements 2013 will be published on February 13, 2014. Raute Corporation’s Annual Report 2013 will be published during week 9. ANNUAL GENERAL MEETING 2014 Raute Corporation’s Annual General Meeting will be held at Lahti’s Sibelius Hall on Monday March 31, 2014 at 6:00 p.m. A shareholder who wishes to include an issue in Raute Corporation’s Annual General Meeting’s agenda shall notify the company thereof in writing no later than February 21, 2014. THE BOARD OF DIRECTORS’ PROPOSAL FOR PROFIT DISTRIBUTION, DIVIDEND EUR 0.20 PER SHARE The Parent company’s distributable funds total EUR 13,804 thousand, of which the profit for the financial year January 1December 31, 2013 is EUR 1,312 thousand. The Board of Directors will propose to Raute Corporation’s Annual General Meeting, to be held on March 31, 2014 that a dividend of EUR 0.20 per share be paid for series A shares and series K shares for the financial year 2013, and that the remainder of distributable funds be transferred to equity. At the date of the proposal for profit distribution, there are a total of 4,004,758 shares entitled for the dividend, i.e. the total amount of dividends would be EUR 801 thousand. The dividend would be paid to a shareholder registered in the company’s shareholders’ register held by Euroclear Finland Ltd on the record date for dividend distribution, April 3, 2014. The payment date would be April 10, 2014. No essential changes have taken place in the company’s financial position since the end of the financial year. The company has good liquidity, and in the Board of Director’s view, the proposed profit distribution does not pose a risk to solvency. THE BOARD OF DIRECTORS’ PROPOSAL FOR DISTRIBUTION OF ASSETS FROM THE NON-RESTRICTED EQUITY RESERVE, EUR 0.30 PER SHARE The Board of Directors will propose to Raute Corporation’s Annual General Meeting, to be held on March 31, 2014 that the Annual General Meeting would resolve to distribute EUR 0.30 per share from the non-restricted equity reserve as repayment of equity. The repayment of equity would be paid to a shareholder registered in the company’s shareholders’ register held by Euroclear Finland Ltd on the record date April 3, 2014. The payment date would be April 10, 2014. OUTLOOK FOR 2014 Raute’s business operations are characterized by the sensitivity of investment commodity demand to cyclical fluctuations in the global economy and the financial markets. The development of the global economy and financial markets is still facing major uncertainty and the market situation for Raute’s customer industries is expected to remain unpredictable. However, improvement investments in the plywood industry to ensure quality and cost competitiveness and to maintain market shares are expected to be at a reasonable level in the near future, provided that the economic uncertainty does not spiral into a new crisis. Several large projects encompassing single production lines and mill-scale deliveries that are in the planning and negotiation phase are also pending. Thanks to its strong financial and market position and the development measures carried out, Raute is well positioned to respond to demand once the markets recover. In the prevailing global economic and financial market situation, Raute will have opportunities in 2014 to achieve growth in project deliveries especially in Europe, Russia and Asia. The strong growth in technology services is expected to continue. Based on the order book and ongoing negotiations, Raute’s net sales are expected to grow in 2014 and operating profit is anticipated to improve over the year 2013. SUMMARY OF FINANCIAL STATEMENTS AND NOTES The figures for the financial years 2012 and 2013 presented in the figures section of the financial statements bulletin have been audited. The presented interim financial report figures have not been audited. -------------------------------------------------------------------------------- Previou sly CONSOLIDATED STATEMENT OF Adjuste Adjusted present d ed COMPREHENSIVE INCOME 1.10.–3 1.10.–3 1.1.–31 1.1.–31.1 1.1.–31 1.12. 1.12. .12. 2. .12. (EUR 1 000) Note 2013 2012* 2013 2012* 2012 -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- NET SALES 3,4,5 24 512 33 914 83 274 101 273 101 273 -------------------------------------------------------------------------------- Change in inventories of -672 551 -954 500 500 finished goods and work in progress Other operating income 158 1 256 295 1 423 1 423 Materials and services -11 521 -19 388 -40 711 -55 725 -55 725 Employee benefits expense 13 -7 387 -8 047 -27 417 -28 761 -28 752 Depreciation and -479 -491 -2 174 -1 968 -1 968 amortization Other operating expenses -3 098 -4 680 -10 485 -11 720 -11 720 -------------------------------------------------------------------------------- Total operating expenses -22 486 -32 606 -80 787 -98 174 -98 165 -------------------------------------------------------------------------------- OPERATING PROFIT (LOSS) 1 513 3 116 1 828 5 022 5 031 -------------------------------------------------------------------------------- % of net sales 6 9 2 5 5 Financial income 210 -37 735 482 482 Financial expenses -513 -126 -974 -738 -738 -------------------------------------------------------------------------------- PROFIT (LOSS) BEFORE TAX 1 210 2 953 1 589 4 766 4 775 -------------------------------------------------------------------------------- % of net sales 5 9 2 5 5 Income taxes -294 -995 -394 -1 781 -1 759 -------------------------------------------------------------------------------- PROFIT (LOSS) FOR THE 916 1 958 1 196 2 985 3 016 PERIOD -------------------------------------------------------------------------------- % of net sales 4 6 1 3 3 Other comprehensive income items: Items that will not be reclassified to profit or loss Remeasurement of defined benefit 84 110 84 110 - obligations Items that may be subsequently reclassified to profit or loss Exchange differences on -101 42 -83 80 80 translating foreign operations -------------------------------------------------------------------------------- Comprehensive income items for the period, net of tax -17 152 1 190 80 -------------------------------------------------------------------------------- COMPREHENSIVE PROFIT 898 2 110 1 196 3 175 3 096 (LOSS) -------------------------------------------------------------------------------- Profit (loss) for the period attributable to Equity holders of the 916 1 958 1 196 2 985 3 016 Parent company Comprehensive profit (loss) for the period attributable to Equity holders of the 898 2 110 1 196 3 175 3 096 Parent company Earnings per share for profit (loss) attributable to Equity holders of the Parent company, EUR Undiluted earnings per 0,23 0,49 0,30 0,75 0,75 share Diluted earnings per share 0,23 0,49 0,30 0,74 0,75 Shares, 1 000 pcs Adjusted average number of 4 005 4 005 4 005 4 005 4 005 shares Adjusted average number of shares 4 013 4 008 4 013 4 008 4 008 diluted *Reflects the application of IAS 19 Employee benefit standard. The effects have no material effects and they are in the fourth quarter of the year 2013 and the comparison year. ------------------------------------------------------------------------ Adjuste Previousl d y presente d CONSOLIDATED BALANCE SHEET 31.12. 31.12. 31.12. (EUR 1 000) Note 2013 2012 2012 ------------------------------------------------------------------------ ASSETS Non-current assets Intangible assets 8 3 574 3 204 3 204 Property, plant and 8 8 396 7 892 7 892 equipment Other financial assets 500 789 789 Deferred tax assets 96 38 60 ------------------------------------------------------------------------ Total non-current assets 12 565 11 922 11 944 Current assets Inventories 5 047 7 130 7 130 Accounts receivables and 5 18 329 24 438 24 427 other receivables Income tax receivable 183 37 37 Cash and cash equivalents 12 658 19 548 19 548 ------------------------------------------------------------------------ Total current assets 36 218 51 154 51 143 ------------------------------------------------------------------------ TOTAL ASSETS 48 783 63 076 63 087 ------------------------------------------------------------------------ EQUITY AND LIABILITIES Equity attributable to Equity holders of the Parent company Share capital 8 010 8 010 8 010 Fair value reserve and 7 061 6 862 6 862 other reserves Exchange differences 20 103 103 Retained earnings 7 327 6 260 6 150 Profit (loss) for the 1 196 2 985 3 016 period ------------------------------------------------------------------------ Share of shareholders' equity that belongs to the owners of the Parent 23 613 24 220 24 141 company ------------------------------------------------------------------------ Total equity 23 613 24 220 24 141 ------------------------------------------------------------------------ Non-current liabilities Non-current provisions 460 56 56 Deferred tax liability 423 174 174 Non-current 9 2 500 5 866 5 866 interest-bearing liabilities Pension obligations 4 - 90 ------------------------------------------------------------------------ Total non-current 3 387 6 096 6 186 liabilities Current liabilities Current provisions 775 1 134 1 134 Current interest-bearing 9 3 481 5 594 5 594 liabilities Current advance payments 5 7 099 12 776 12 776 received Trade payables and other 10 428 13 255 13 255 liabilities ------------------------------------------------------------------------ Total current liabilities 21 783 32 759 32 759 Total liabilities 25 170 38 856 38 946 ------------------------------------------------------------------------ TOTAL EQUITY AND 48 783 63 076 63 087 LIABILITIES ------------------------------------------------------------------------ *Reflects the application of IAS 19 Employee benefit standard. -------------------------------------------------------------------------------- CONSOLIDATED STATEMENT OF CASH FLOWS 1.1.–31.12. 1.1.–31.12. (EUR 1 000) 2013 2012 -------------------------------------------------------------------------------- CASH FLOW FROM OPERATING ACTIVITIES Proceeds from customers 76 836 90 385 Other operating income 295 1 423 Payments to suppliers and employees -73 187 -89 379 -------------------------------------------------------------------------------- Cash flow before financial items and taxes 3 944 2 429 Interest paid from operating activities -364 -529 Dividends received from operating activities 180 118 Interests received from operating activities 122 269 Other financing items from operating activities 153 -275 Income taxes paid from operating activities -329 -75 -------------------------------------------------------------------------------- NET CASH FLOW FROM OPERATING ACTIVITIES (A) 3 704 1 938 -------------------------------------------------------------------------------- CASH FLOW FROM INVESTING ACTIVITIES Purchase of property, plant and equipment and -3 226 -3 055 intangible assets Proceeds from sale of property, plant and 53 160 equipment and intangible assets Purchase of investments -3 - -------------------------------------------------------------------------------- NET CASH FLOW FROM INVESTING ACTIVITIES (B) -3 176 -2 895 -------------------------------------------------------------------------------- CASH FLOW FROM FINANCING ACTIVITIES Repayments of current borrowings -2 100 - Repayments of non-current borrowings -3 250 -4 000 Dividends paid -2 002 -1 201 -------------------------------------------------------------------------------- NET CASH FLOW FROM FINANCING ACTIVITIES (C) -7 352 -5 201 -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- NET CHANGE IN CASH AND CASH EQUIVALENTS (A+B+C) -6 825 -6 159 -------------------------------------------------------------------------------- increase (+)/decrease (-) CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE PERIOD* 19 548 25 674 NET CHANGE IN CASH AND CASH EQUIVALENTS -6 825 -6 159 EFFECTS OF EXCHANGE RATE CHANGES ON CASH -66 33 -------------------------------------------------------------------------------- CASH AND CASH EQUIVALENTS AT THE END OF THE 12 658 19 548 PERIOD* -------------------------------------------------------------------------------- CASH AND CASH EQUIVALENTS IN THE BALANCE SHEET AT THE END OF THE PERIOD* Cash and cash equivalents 12 658 19 548 -------------------------------------------------------------------------------- TOTAL 12 658 19 548 -------------------------------------------------------------------------------- *Cash and cash equivalents comprise cash and bank receivables, which will be due within the following three months' period. -------------------------------------------------------------------------------- CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY Share Invested Share premiu non-restr Other Exchange Retain m icted ed (EUR 1 000) capita accoun equity reserv differen earnin l t reserve es ces gs -------------------------------------------------------------------------------- EQUITY at Jan. 1, 2013 8 010 0 6 498 364 103 9 245 (adjusted) -------------------------------------------------------------------------------- Comprehensive profit (loss) for the period Profit (loss) for the - - - - - 1 196 period Other comprehensive income items: Remeasurement of defined benefit 84 net liability Exchange differences on translating foreign operations - - - - -83 - -------------------------------------------------------------------------------- Total comprehensive profit 0 0 0 0 -83 1 280 (loss) for the period -------------------------------------------------------------------------------- Transactions with owners Equity-settled share-based transactions - - - 199 - - Reclassification between - - - - - - items Dividends paid - - - - - -2 002 Total transactions with 0 0 0 199 0 -2 002 owners -------------------------------------------------------------------------------- EQUITY at Dec. 31, 2013 8 010 0 6 498 563 20 8 522 -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY (CONTINUE) To the owners of (EUR 1 000) the Parent TOTAL company -------------------------------------------------------------------------------- EQUITY at Jan. 1, 2013 24 220 24 220 (adjusted) -------------------------------------------------------------------------------- Comprehensive profit (loss) for the period Profit (loss) for the 1 196 1 196 period Other comprehensive income items: Remeasurement of defined 84 84 benefit net liability Exchange differences on translating foreign operations -83 -83 -------------------------------------------------------------------------------- Total comprehensive profit 1 196 1 196 (loss) for the period -------------------------------------------------------------------------------- Transactions with owners Equity-settled share-based transactions 199 199 Reclassification between 0 0 items Dividends paid -2 002 -2 002 Total transactions with -1 803 -1 803 owners -------------------------------------------------------------------------------- EQUITY at Dec. 31, 2013 23 613 23 613 -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY Share Invested Share premiu non-restr Other Exchange Retain m icted ed (EUR 1 000) capita accoun equity reserv differen earnin l t reserve es ces gs -------------------------------------------------------------------------------- EQUITY at Jan. 1, 2012 8 010 6 498 0 187 23 7 351 -------------------------------------------------------------------------------- Comprehensive profit (loss) for the period Profit (loss) for the - - - - - 2 985 period Other comprehensive income items: Remeasurement of defined benefit 110 net liability Exchange differences on translating foreign operations - - - - 80 - -------------------------------------------------------------------------------- Total comprehensive profit 0 0 0 0 80 3 095 (loss) for the period -------------------------------------------------------------------------------- Transactions with owners Equity-settled share-based transactions - - - 177 - - Reclassification between - -6 498 6 498 - - - items Dividends paid - - - - - -1 201 -------------------------------------------------------------------------------- Total transactions with 0 -6 498 6 498 177 0 -1 201 owners -------------------------------------------------------------------------------- EQUITY at Dec. 31, 2012 8 010 0 6 498 364 103 9 245 (ADJUSTED) -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY (CONTINUE) To the owners of (EUR 1 000) the Parent TOTAL company -------------------------------------------------------------------------------- EQUITY at Jan. 1, 2012 22 069 22 069 -------------------------------------------------------------------------------- Comprehensive profit (loss) for the period Profit (loss) for the 2 985 2 985 period Other comprehensive income items: Remeasurement of defined 110 110 benefit net liability Exchange differences on translating foreign operations 80 80 -------------------------------------------------------------------------------- Total comprehensive profit 3 175 3 175 (loss) for the period -------------------------------------------------------------------------------- Transactions with owners Equity-settled share-based transactions 177 177 Reclassification between 0 0 items Dividends paid -1 201 -1 201 -------------------------------------------------------------------------------- Total transactions with -1 024 -1 024 owners -------------------------------------------------------------------------------- EQUITY at Dec. 31, 2012 24 220 24 220 (ADJUSTED) -------------------------------------------------------------------------------- NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 1. General information Raute Group is a globally operating technology and service company. Raute's customers are companies operating in the wood products industry that manufacture veneer, plywood and LVL. Raute's technology offering covers machinery and equipment for the entire production process. Raute's full-service concept is based on product life-cycle management. In addition to a broad range of machines and equipment, our solutions cover technology services ranging from spare parts deliveries to regular maintenance and equipment modernizations. Raute's head office is located in Nastola, Finland. Its other production plants are in the Vancouver area in Canada, in the Shanghai area in China, and in Kajaani, Finland. The company's sales network has a global reach. Raute Group's Parent company, Raute Corporation, is a Finnish public limited liability company established in accordance with Finnish law (Business ID FI01490726). Its series A shares are quoted on NASDAQ OMX Helsinki Ltd, under Industrials. Raute Corporation is domiciled in Lahti. The address of its registered office is Rautetie 2, FI-15550 Nastola, and its postal address is P.O. Box 69, FI-15551 Nastola. Raute Corporation's consolidated financial statements information is available online at www.raute.com or at the head office of the Parent company, Rautetie 2, FI-15550 Nastola, Finland. Raute Corporation's Board of Directors has on February 13, 2014 reviewed the consolidated financial statements for January 1 - December 31, 2013, and approved it to be published in compliance with this release. 2. Accounting principles Raute Corporation's financial statements bulletin January 1December 31, 2013 has been prepared in accordance with standard IAS 34 Interim Financial Reporting. The financial statements bulletin does not contain full notes and other information presented in the financial statements. Raute Corporation's financial statements with full notes will be published on February 13, 2014. Raute Corporation's financial statements bulletin for January 1 - December 31, 2013 has been prepared in accordance with the International Financial Reporting Standards, IFRS, accepted for application in the EU. Preparations have complied with the IAS and IFRS standards, as well as SIC and IFRIC interpretations, effective on December 31, 2013. The notes to the financial statements bulletin also comply with Finnish accounting legislation. The financial statements bulletin has been prepared according to the same accounting principles as those applied in the Annual financial statements for 2012, with the exception of standard IAS 19 Employee benefit. The amendment of the Employee benefit standard had an impact on the recognition, measurement and presentation of the post-employment benefits, and also to the notes to the financial statements. The figures of the comparison year 2012 have been adjusted according to the revised standard IAS 19 Employee benefits. The effect of the standard in the equity has been presented in the note number 14 to the financial statements bulletin. All of the figures presented in the consolidated financial statements are in thousand euro, unless otherwise stated. Due to the rounding of the figures in the financial statements tables, the sums of figures may deviate from the sum total presented in the table. Figures in parentheses refer to the corresponding figures in the comparison period. The preparation of Interim financial report in conformity with IFRS standards requires management to make certain critical accounting estimates and to exercise its judgment in applying the Group's accounting policies. Because the forward-looking estimates and assumptions are based on management's best knowledge at the reporting date, they comprise risks and uncertainties. The actual results may differ from these estimates. 3. Segment information Operational segment Continuing operations of Raute Group belong to the wood products technology segment. Due to Raute's business model, operational nature and administrative structure, the operational segment to be reported as wood products technology segment is comprised of the whole Group and the information on the segment is consistent with that of the Group. Segment reporting follows the principles of presentation of the consolidated financial statements. ------------------------------------------------------------- 31.12. 31.12. Wood products technology 2013 2012 ------------------------------------------------------------- Net sales 83 274 101 273 Operating profit (loss) 1 828 5 031 Assets 48 783 63 076 Liabilities 25 170 38 856 Capital expenditure 3 188 3 529 ----------------------------------------------------------------- Assets of the wood products technology 31.12. 31.12. segment by geographical location 2013 % 2012 % ----------------------------------------------------------------- Finland 40 492 83 53 620 85 North America 3 914 8 3 437 5 China 2 926 6 4 406 7 Russia 1 114 2 1 257 2 South America 198 0 199 0 Other 140 0 158 0 ----------------------------------------------------------------- TOTAL 48 783 100 63 076 100 ----------------------------------------------------------------- ----------------------------------------------------------------- Capital expenditure of the wood products technology segment by 31.12. 31.12. geographical location 2013 % 2012 % ----------------------------------------------------------------- Finland 2 324 73 2 980 84 North America 15 0 6 0 China 837 26 517 15 Russia 3 0 1 0 South America 1 0 22 1 Other 8 0 2 0 TOTAL 3 188 100 3 529 100 ----------------------------------------------------------------- 4. Net sales The main part of the net sales is comprised of project deliveries related to wood products technology and modernizations in technology services, which are treated as long-term projects. The rest of the net sales is comprised of technology services provided to the wood products industry such as spare parts and maintenance services as well as services provided to the development of customers' business. Project deliveries and modernizations related to technology services include both product and service sales, making it impossible to give a reliable presentation of the breakdown of the Group's net sales into purely product and service sales. Large delivery projects can temporarily increase the shares of various customers of the Group’s net sales to more than ten percent. At the end of the period, the Group had two customers (2), whose customized share of the Group's net sales temporarily exceeded ten percent. The total share of these customers was 28 percent. -------------------------------------------------------------------------------- 1.1.–31.12. 1.1.–31.12. Net sales by market area 2013 % 2012 % -------------------------------------------------------------------------------- EMEA (Europe and Africa) 33 697 40 22 179 22 LAM (South America) 18 020 22 52 588 52 CIS (Russia) 16 291 20 14 454 14 NAM (North America) 11 432 14 8 469 8 APAC (Asia-Pacific) 3 834 5 3 583 4 -------------------------------------------------------------------------------- TOTAL 83 274 100 101 273 100 -------------------------------------------------------------------------------- Finland accounted for 6 percent (6 %) of net sales. -------------------------------------------------------------------------------- 5. Long-term projects 31.12. 31.12. 2013 2012 -------------------------------------------------------------------------------- Net sales Net sales by percentage of completion 66 214 85 267 Other net sales 17 060 16 006 -------------------------------------------------------------------------------- TOTAL 83 274 101 273 -------------------------------------------------------------------------------- Project revenues entered as income from currently undelivered long-term projects recognized by percentage of completion 86 534 89 601 Amount of long-term project revenues not yet entered as 27 770 49 040 income (order book) Projects for which the value by percentage of completion exceeds advance payments invoiced - aggregate amount of costs incurred and recognized profits less recognized losses 65 872 64 872 - advance payments received 53 619 48 372 -------------------------------------------------------------------------------- Gross amount due from customers 12 253 16 499 -------------------------------------------------------------------------------- Projects for which advance payments invoiced exceed the value by percentage of completion - aggregate amount of costs incurred and recognized profits less recognized losses 20 467 27 890 - advance payments received 26 953 40 394 -------------------------------------------------------------------------------- Gross amount due to customers 6 486 12 504 -------------------------------------------------------------------------------- Advance payments included in the current liabilities in the balance sheet Gross amount due to customers 6 486 12 504 Other advance payment received, not under percentage of 613 272 completion -------------------------------------------------------------------------------- Total 7 099 12 776 -------------------------------------------------------------------------------- Specification of combined asset and liability items Advance payments paid 101 1 021 -------------------------------------------------------------------------------- Advance payments received included in inventories in the 101 1 021 balance sheet -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- 6. Number of personnel, persons 31.12. 31.12. 2013 2012 -------------------------------------------------------------------------------- Effective, on average 515 480 In books, on average 522 488 In books, at the end of the period 534 503 - of which personnel working abroad 148 132 -------------------------------------------------------------------------------- 7. Research and development costs 31.12. 31.12. 2013 2012 -------------------------------------------------------------------------------- Research and development costs for the period 2 523 2 516 Amortization capitalized development costs 405 126 Development costs recognized as an asset in the balance -615 -1 024 sheet Research and development costs entered as expense for the 2 313 1 618 period -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- 8. Changes in Intangible assets and in Property, 31.12. 31.12. plant and equipment 2013 2012 -------------------------------------------------------------------------------- Intangible assets Carrying amount at the beginning of the period 14 019 12 447 Exchange rate differences -10 7 Additions 1 552 2 198 Reclassification between items -2 188 -634 -------------------------------------------------------------------------------- Carrying amount at the end of the period 13 372 14 019 -------------------------------------------------------------------------------- Accumulated depreciation and amortization at the beginning -10 815 -11 014 of the period Exchange rate differences 7 -5 Accumulated depreciation and amortization of disposals and 1 791 679 reclassifications Depreciation and amortization for the period -782 -474 -------------------------------------------------------------------------------- Accumulated depreciation and amortization at the end of -9 799 -10 815 the period -------------------------------------------------------------------------------- Book value of Intangible assets, at the beginning of the 3 204 1 433 period Book value of Intangible assets, at the end of the period 3 574 3 204 Property, plant and equipment Carrying amount at the beginning of the period 41 673 44 463 Exchange rate differences -947 88 Additions 1 634 1 331 Disposals -44 -370 Reclassification between items 354 -3 839 -------------------------------------------------------------------------------- Carrying amount at the end of the period 42 670 41 673 -------------------------------------------------------------------------------- Accumulated depreciation and amortization at the beginning -33 782 -36 236 of the period Exchange rate differences 857 -70 Accumulated depreciation and amortization of disposals and 44 4 019 reclassifications Depreciation and amortization for the period -1 392 -1 494 -------------------------------------------------------------------------------- Accumulated depreciation and amortization at the end of -34 274 -33 782 the period -------------------------------------------------------------------------------- Book value of Property, plant and equipment, at the beginning of the period 7 892 8 226 Book value of Property, plant and equipment, at the end of the period 8 396 7 892 -------------------------------------------------------------------------------- 9. Interest-bearing liabilities 31.12. 31.12. 2013 2012 -------------------------------------------------------------------------------- Non-current interest-bearing liabilities recognized at 2 500 5 866 amortized cost Current interest-bearing liabilities 3 481 5 594 -------------------------------------------------------------------------------- TOTAL 5 981 11 461 -------------------------------------------------------------------------------- Maturities of the interest-bearing financial liabilities at Dec. 31, 2013 Financial liability Current Non-current Total -------------------------------------------------------------------------------- Non-current loans from 3 481 2 500 5 981 financial institutions, interest-bearing -------------------------------------------------------------------------------- Total 3 481 2 500 5 981 -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- 10. Pledged assets and contingent liabilities 31.12. 31.12. 2013 2012 -------------------------------------------------------------------------------- On behalf of the Parent company Business mortgages 3 946 - Loans from financial institutions 5 741 9 117 Business mortgages 5 750 6 700 Pension loans (TYEL) - 2 000 Business mortgages - 600 Credit insurance agreements - 1 400 Other liabilities - 100 Real estate mortgages - 101 Mortgage agreements on behalf of subsidiaries Loans from financial institutions 240 244 Other obligations 64 - Business mortgages 304 244 Commercial bank guarantees on behalf of the Parent company and 1 484 39 600 subsidiaries Other own obligations Rental liabilities maturing within one year 845 868 Rental liabilities maturing in one to five years 2 398 2 682 Rental liabilities maturing more than five years 185 519 -------------------------------------------------------------------------------- Total 3 428 4 069 -------------------------------------------------------------------------------- 11. Related party transactions No loans are granted to the company's management. On December 31, 2013, the Parent Company Raute Corporation had loan receivables from the subsidiary Raute Service LLC EUR 355 thousand (EUR 355 thousand), from Raute (Shanghai) Machinery Co., Ltd EUR 550 thousand and from Raute Canada Ltd.EUR 682 thousand (EUR 391 thousand). No pledges have been given or other commitments made on behalf of the company's management and shareholders. ----------------------------------------------------------------------- 12. Derivatives 31.12. 31.12. 2013 2012 ----------------------------------------------------------------------- Nominal values of forward contracts in foreign currency Economic hedging - Related to financing 1 311 2 093 - Related to the hedging of net sales 2 967 1 763 Fair values of forward contracts in foreign currency Economic hedging - Related to financing -3 -8 - Related to the hedging of net sales 24 18 Interest rate and currency swap agreements - Nominal value 1 991 4 117 - Fair value -42 -4 13. Share-based payments The fair value of the options granted according to the 2010 stock option plan is recognized as an expense in the income statement during the earning period of the options. An expense of EUR 199 thousand (EUR 177 thousand) was recognized for the options to the income statement during the period. 14. Effects of adopting the amended IAS 19 standard The Group has applied IAS 19 standard amendment as of January 1, 2013. According to the revised standard net interest expense or income of the net defined benefit liability or receivable has been defined using the discount rate estimated in the beginning of the financial year. Expected return on plan assets has not been recognized. -------------------------------------------------------------------------------- Previously presented Adjusted EUR 1 000 31.12.2012 Adjustment 31.12.2012 -------------------------------------------------------------------------------- Assets Deferred tax assets 60 -22 38 Receivables of pension obligations 0 11 11 Equity Retained earnings 9 166 79 9 245 Liabilities Pension obligations 90 -90 0 Effect of the amended accounting principle in the comparison information of the comprehensive income statement Previously presented Adjusted 1.1.-31.12. 1.1.-31.12. EUR 1 000 2012 Adjustment 2012 -------------------------------------------------------------------------------- Employee benefits expense +8 -9 -1 Income taxes -1 759 -22 -1 781 Other comprehensive income items: Items that will not be reclassified to profit or loss Remeasurement of defined benefit - 110 110 obligation 15. Financial assets and liabilities that are measured at fair value At the end of the reporting period December 31, 2013, the fair value of the financial assets categorized at fair value on hierarchy level 3 was EUR 500 thousand. The methods of fair value determination correspond the valuation principles presented in the Annual financial statements for 2012. There were no transfers between the hierarchy levels 1 and 2 during the reporting period. -------------------------------------------------------------------------------- 16. Exchange rates used in consolidation of subsidiaries 1.1.–31.12. 1.1.–31.12. Income statement, euros 2013 2012 -------------------------------------------------------------------------------- CNY (Chinese juan) 8,1655 8,1096 RUB (Russian rouble) 42,3248 39,9238 CAD (Canadian dollar) 1,3685 1,2848 USD (US dollar) 1,3282 1,2856 SGD (Singapore dollar) 1,6618 1,6062 CLP (Chilean peso) 658,1306 624,7032 -------------------------------------------------------------------------------- 31.12. 31.12. Balance sheet, euros 2013 2012 -------------------------------------------------------------------------------- CNY (Chinese uan) 8,3248 8,1809 RUB (Russian rouble) 45,3246 40,3295 CAD (Canadian dollar) 1,4671 1,3137 USD (US dollar) 1,3791 1,3194 SGD (Singapore dollar) 1,7414 1,6111 CLP (Chilean peso) 725,0943 625,1146 17. The Board of Directors' proposal for dividend distribution and measures concerning the result of 2013 The Board of Directors will propose to Raute Corporation's Annual General Meeting 2014, to be held on March 31, 2014, that a dividend of EUR 0.20 per share be paid for the financial year 2013, and that the remainder of distributable funds be transferred to equity. At the date of the proposal for profit distribution, there are a total of 4,004,758 shares entitled for the dividend, i.e. the total amount of dividends would be EUR 801 thousand. The Board of Directors will propose to the Annual General Meeting that the Annual General Meeting would resolve to distribute EUR 0.30 per share from the invested non-restricted equity reserve as repayment of equity. -------------------------------------------------------------------------------- 31.12. 31.12. FINANCIAL DEVELOPMENT 2013 2012 -------------------------------------------------------------------------------- Change in net sales, % -17,8 36,3 Exported portion of net sales, % 94,2 93,9 Return on investment (ROI), % 7,3 15,0 Return on equity, ROE, % 5,0 13,1 Interest-bearing net liabilities, EUR million -6,7 -8,1 Gearing, % -28,3 -33,5 Equity ratio, % 56,6 48,0 Gross capital expenditure, EUR million 3,2 3,5 % of net sales 3,8 3,5 Research and development costs, EUR million 2,5 2,5 % of net sales 3,0 2,5 Order book, EUR million 28 50 Order intake, EUR million 63 116 The figures of the comparison year 2012 have been adjusted according to the revised standard IAS 19 Employee benefits. -------------------------------------------------------------------------------- 31.12. 31.12. SHARE-RELATED DATA 2013 2012 -------------------------------------------------------------------------------- Earnings per share, (EPS), undiluted, EUR 0,30 0,75 Earnings per share, (EPS), diluted, EUR 0,30 0,74 Equity to share, EUR 5,90 6,03 Dividend per series A share, EUR 0,20* 0,50 Dividend per series K share, EUR 0,20* 0,50 Dividend per profit, % 66,7* 66,4 Effective dividend return, % 2,9* 5,6 Repayment of capital from invested 0,30* - non-restricted equity reserve, EUR * The Board of Directors' proposal to the Annual General meeting. Development in share price (series A shares) Lowest share price for the period, EUR 6,88 6,18 Highest share price for the period, EUR 9,33 9,24 Average share price for the period, EUR 8,49 8,22 Share price at the end of the period, EUR 6,95 9,00 Market value of capital stock - Series K shares, EUR million** 6,9 8,9 - Series A shares, EUR million 20,9 27,1 -------------------------------------------------------------------------------- Total, EUR million 27,8 36,0 -------------------------------------------------------------------------------- **Series K shares valued at the value of series A shares. Trading of the company's shares (series A shares) Trading of shares, pcs 513 699 302 096 Trading of shares, EUR million 4,4 2,4 Number of shares - Series K shares, ordinary shares (20 votes, 991 161 991 161 share) - Series A shares (1 vote/share) 3 013 597 3 013 597 -------------------------------------------------------------------------------- Total 4 004 758 4 004 758 -------------------------------------------------------------------------------- Number of shares, weighted average, 1 000 pcs 4 005 4 005 Number of shares, diluted, 1 000 pcs 4 013 4 008 Number of shareholders at Dec. 31 1 915 1 682 The figures of the comparison year 2012 have been adjusted according to the revised standard IAS 19 Employee benefits. -------------------------------------------------------------------------------- DEVELOPMENT OF 2013 2013 2013 2013 1.1.2013 1.1.2012 QUARTERLY RESULTS – – (EUR 1 000) 31.12.2013 31.12.2012 -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- NET SALES 23 386 19 766 15 610 24 512 83 274 101 273 -------------------------------------------------------------------------------- Change in inventories of finished goods and work in 364 -610 -37 -672 -954 500 progress Other operating 20 15 102 158 295 1 423 income Materials and -12 979 -8 906 -7 304 -11 521 -40 711 -55 725 services Employee benefits -6 871 -7 190 -5 969 -7 387 -27 417 -28 761 expense Depreciation and -479 -619 -597 -479 -2 174 -1 968 amortization Other operating -2 532 -2 740 -2 115 -3 098 -10 485 -11 720 expenses -------------------------------------------------------------------------------- Total operating -22 862 -19 456 -15 984 -22 486 -80 787 -98 174 expenses -------------------------------------------------------------------------------- OPERATING PROFIT 909 -286 -309 1 513 1 828 5 022 (LOSS) -------------------------------------------------------------------------------- % of net sales 4 -1 -2 6 2 5 Financial income 400 72 53 210 735 482 Financial expenses -224 -75 -161 -513 -974 -738 -------------------------------------------------------------------------------- PROFIT (LOSS) BEFORE 1 085 -289 -417 1 210 1 589 4 766 TAX -------------------------------------------------------------------------------- % of net sales 5 -1 -3 5 2 5 Income taxes -246 96 51 -294 -394 -1 759 -------------------------------------------------------------------------------- PROFIT (LOSS) FOR 839 -193 -366 916 1 196 2 985 THE PERIOD -------------------------------------------------------------------------------- % of net sales 4 -1 -2 4 1 3 Attributable to Equity holders of 839 -193 -366 916 1 196 2 985 the Parent company Earnings per share, EUR Undiluted earnings 0,21 -0,05 -0,09 0,23 0,30 0,75 per share Diluted earnings per 0,21 -0,05 -0,09 0,23 0,30 0,74 share Shares, 1 000 pcs Adjusted average 4 005 4 005 4 005 4 005 4 005 4 005 number of shares Adjusted average number of shares diluted 4 017 4 013 4 010 4 013 4 013 4 008 -------------------------------------------------------------------------------- Financial Q 1 Q 2 Q 3 Q 4 31.12. 31.12. development quarterly 2013 2013 2013 2013 2013 2012 -------------------------------------------------------------------------------- Order intake during 10 24 7 22 63 116 the period, EUR million Order book at the 37 40 31 28 28 50 end of the period, EUR million -------------------------------------------------------------------------------- 20 LARGEST SHAREHOLDERS AT DECEMBER 31, 2013 Number Number Total Total % of of of series number % of number voting series total By number of shares K A shares of shares shares of votes rights shares -------------------------------------------------------------------------------- 1. Sundholm GÖran - 624 398 624 398 15,6 624 398 2,7 2. Mandatum Life - 181 900 181 900 4,5 181 900 0,8 Unit-Linked 3. Laakkonen Mikko - 115 349 115 349 2,9 115 349 0,5 4. Suominen Pekka 48 000 62 429 110 429 2,8 1 022 429 4,5 5. Suominen Tiina 48 000 62 316 110 316 2,8 1 022 316 4,5 Sini-Maria 6. Siivonen Osku 50 640 53 539 104 179 2,6 1 066 339 4,7 Pekka 7. Kirmo Kaisa 50 280 41 826 92 106 2,3 1 047 426 4,6 Marketta 8. Mustakallio Kari 60 480 31 458 91 938 2,3 1 241 058 5,4 Pauli 9. Mustakallio Mika 57 580 29 270 86 850 2,2 1 180 870 5,2 Tapani 10. Keskiaho Kaija 33 600 51 116 84 716 2,1 723 116 3,2 Leena 11. SÄrkijÄrvi Anna 60 480 22 009 82 489 2,1 1 231 609 5,4 Riitta 12. Relander Harald - 75 000 75 000 1,9 75 000 0,3 13. Sijoitusrahasto - 75 000 75 000 1,9 75 000 0,3 Alfred Berg Small Cap Finland 14. Mustakallio Marja 43 240 16 047 59 287 1,5 880 847 3,9 Helena 15. Mustakallio Ulla 53 240 2 300 55 540 1,4 1 067 100 4,7 Sinikka 16. SÄrkijÄrvi Timo 12 000 43 256 55 256 1,4 283 256 1,2 17. 12 000 43 256 55 256 1,4 283 256 1,2 SÄrkijÄrvi-Martinez Anu Riitta 18. Suominen Jukka 24 960 27 964 52 924 1,3 527 164 2,3 Matias 19. Mustakallio Kai 47 420 4 594 52 014 1,3 952 994 4,2 Henrik 20. KeskinÄinen - 51 950 51 950 1,3 51 950 0,2 tyÖelÄkevakuutusyhti Ö Varma -------------------------------------------------------------------------------- Total 601 920 1 614 977 2 216 897 55,4 13 653 377 59,8 -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- Number Number Total Total % of of of series number % of number voting series total By number of votes K A shares of shares shares of votes rights shares -------------------------------------------------------------------------------- 1. Mustakallio Kari 60 480 31 458 91 938 2,3 1 241 058 5,4 Pauli 2. SÄrkijÄrvi Anna 60 480 22 009 82 489 2,1 1 231 609 5,4 Riitta 3. Mustakallio Mika 57 580 29 270 86 850 2,2 1 180 870 5,2 Tapani 4. Mustakallio Ulla 53 240 2 300 55 540 1,4 1 067 100 4,7 Sinikka 5. Siivonen Osku 50 640 53 539 104 179 2,6 1 066 339 4,7 Pekka 6. Kirmo Kaisa 50 280 41 826 92 106 2,3 1 047 426 4,6 Marketta 7. Suominen Pekka 48 000 62 429 110 429 2,8 1 022 429 4,5 8. Suominen Tiina 48 000 62 316 110 316 2,8 1 022 316 4,5 Sini-Maria 9. Suominen Jussi 48 000 - 48 000 1,2 960 000 4,2 10. Mustakallio Kai 47 420 4 594 52 014 1,3 952 994 4,2 Henrik 11. Mustakallio Marja 43 240 16 047 59 287 1,5 880 847 3,9 Helena 12. Mustakallio Risto 42 240 - 42 240 1,1 844 800 3,7 Knut kuolinpesÄ 13. Keskiaho Kaija 33 600 51 116 84 716 2,1 723 116 3,2 Leena 14. Sundholm GÖran - 624 398 624 398 15,6 624 398 2,7 15. Keskiaho 27 880 7 491 35 371 0,9 565 091 2,5 Juha-Pekka 16. Suominen Jukka 24 960 27 964 52 924 1,3 527 164 2,3 Matias 17. Keskiaho Marjaana 24 780 21 500 46 280 1,2 517 100 2,3 18. Kirmo Lasse 25 000 4 013 29 013 0,7 504 013 2,2 19. Keskiaho Vesa 23 030 - 23 030 0,6 460 600 2,0 Heikki 20. Kultanen Leea 22 405 8 031 30 436 0,8 456 131 2,0 Annikka -------------------------------------------------------------------------------- Total 791 255 1 070 301 1 861 556 46,5 16 895 401 74,0 -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- MANAGEMENTS' AND PUBLIC INSIDERS' SHAREHOLDING AND NOMINEE-REGISTERED SHARES Number Number Total Total % of of of number % of number voting series series total K shares A shares of shares of votes rights shares -------------------------------------------------------------------------------- Management's holding at Dec. 31, 2013 -------------------------------------------------------------------------------- The Board of Directors, The Group's President and CEO and Executive 122 880 111 029 233 909 5,8 2 568 629 11,2 Board* -------------------------------------------------------------------------------- Public insiders' 122 880 111 029 233 909 5,8 2 568 629 11,2 holding at Dec. 31, 2013 -------------------------------------------------------------------------------- *The figures include the holdings of their own, minor children and control entities. -------------------------------------------------------------------------------- Nominee-registered - 124 379 124 379 3,1 124 379 0,5 shares at Dec. 31, 2013 -------------------------------------------------------------------------------- RAUTE CORPORATION Board of Directors BRIEFING ON FEBRUARY 13, 2014 AT 2 P.M.: A briefing will be organized for analysts, investors and the media on February 13, 2014 at 2 p.m. at Scandic SimonkenttÄ Hotel, Roba cabinet, Simonkatu 9, Helsinki. The financial statements will be presented by Mr. Tapani Kiiski, President and CEO, and Mrs. Arja Hakala, CFO. FINANCIAL RELEASES IN 2014: Raute’s interim reports will be published as follows: - January–March on Tuesday, April 29, 2014 - January–June on Tuesday, July 29, 2014 - January–September on Wednesday, October 29, 2014. Raute Corporation’s consolidated financial statements will be published on February 13, 2014. Raute Corporation’s Annual Report 2013 will be published during week 9. Raute Corporation’s Annual General Meeting will be held in Lahti, at Sibelius Hall on Monday, March 31, 2014 at 6:00 p.m. FURTHER INFORMATION: Mr. Tapani Kiiski, President and CEO, Raute Corporation, tel. +358 3 829 3560, mobile +358 400 814 148 Ms. Arja Hakala, CFO, Raute Corporation, tel. +358 3 829 3293, mobile +358 400 710 387 DISTRIBUTION: NASDAQ OMX Helsinki Ltd, main media, www.raute.com RAUTE IN BRIEF: Raute is a technology and service company that operates worldwide. Raute’s customers are companies operating in the wood products industry that manufacture veneer, plywood and LVL (Laminated Veneer Lumber). The technology offering covers machinery and equipment for the entire production process. As a supplier of mill-scale projects Raute is a global market leader both in the plywood and LVL industries. Additionally, Raute’s full-service concept includes technology services ranging from spare parts deliveries to regular maintenance and equipment modernizations. Raute’s head office is located in Nastola, Finland. Its other production plants are in the Vancouver area of Canada, in the Shanghai area of China, and in Kajaani, Finland. Raute’s net sales in 2013 were EUR 83.3 million. The Group’s headcount at the end of 2013 was 534. More information about the company can be found at www.raute.com. Copyright © 2014 OMX AB (publ).


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