Financial Statements 1 January - 31 December 2011

Financial statements 1 January - 31 December 2011

Contents 2 Report by the Board of Directors 6 Consolidated income statement 7 Consolidated statement of financial position 8 Cash flow statement 8 Statement of changes in consolidated shareholders’ equity 9 Notes to the consolidated financial statements 30 Parent company income statement 30 Parent company balance sheet 31 Group development 34 Shareholders and shares 35 Per share data 36 Calculation of key financial ratios 37 The proposal of the Board of Directors for the distribution of profits 38 Auditor’s Report 39 Information for shareholders Financial statements COMPONENTA Annual report 2011 2 Report on 2011 by the board of directors

Financial targets for 2012 and 2013 India and China), and the increase in investments in the established The financial crisis that began in 2008 moved into a new phase after markets of Europe and America in 2011. many European countries ended up in a debt crisis. In consequence The rise in raw material prices caused by the growth in demand of the crisis, capital requirements for banks have been tightened, had a negative impact of altogether EUR 11 million on Componenta’s making it more difficult to obtain credit from banks. In the next few result in 2011. The prices of raw materials not covered by surcharge years the availability of financing from banks will be weak and its agreements rose sharply especially in the first three quarters of the price will be high. Because of this, at its meeting in January 2012 year. Componenta has reached agreement with all its customers on Componenta’s Board of Directors amended the company’s financial a new pricing mechanism under which the rise in costs mentioned goals. The company’s strategic target is to reduce the company’s above is compensated in the price of products as from the begin- level of debt and obtain a good credit rating during 2012 and 2013. ning of 2012. As part of this process, in spring 2012 Componenta is making a Overall the heavy truck market developed positively in 2011. share issue and issuing a hybrid bond. In addition, Componenta has New sales picked up well during the year and the close partnership started the process of selling off the unit in Manisa, Turkey, that in product development continued with heavy truck manufactur- produces aluminium wheels. The unit had net sales in 2011 of EUR 45 ers. Componenta’s delivery volumes to the heavy truck industry million, EBITDA was just under EUR 9 million, and it employs almost rose considerably from the previous year, although the production 400 people. Through these measures combined with the cash standstills implemented by customers at the end of the year had a flow from operations in 2012, the Group believes it can reduce the negative impact on final quarter sales. interest-bearing debt by about one third. Demand for components in the construction and mining industries increased significantly in 2011. The need for components rose Events in 2011 - summary quickly in consequence of the recovery in the economy and high In January Componenta published its new long-term strategy for 2011 raw material prices resulting from the mining projects that have – 2015. The new strategy aims at growth together with customers. been launched. Growth was strong in all markets. Componenta expanded its Corporate Executive Team in January Demand for agricultural machinery continued to rise from the by appointing three new members: Olli Karhunen, SVP of Opera- previous year mainly thanks to the markets in Europe and North tions Finland, Patrick Steensels, SVP of Operations Holland, and America. Rising food prices were a particular factor in the growth in Michael Sjöberg, SVP of Operations Sweden. demand. Componenta began statutory personnel negotiations at the end The number of new passenger cars registered in Europe declined of January at the Pietarsaari machine shop with the goal of examin- 1.7% in 2011 from the previous year, in consequence of the decline in ing the options for developing operations in Pietarsaari. The nego- the economic situation in Europe. However, vehicle production vol- tiations were completed in March, and as the result Componenta umes picked up well, especially in Germany, as a result of the strong decided to terminate machining operations in Pietarsaari during growth in exports. Thanks to the excellent demand for aluminium 2011. Most of the machining work that had taken place in Pietarsaari wheels, Componenta’s deliveries to the automotive industry in- and many of the machine tools for this work were transferred dur- creased for the whole year compared to the previous year. ing 2011 to the Group’s unit in Främmestad in Sweden. Componenta The recession continued to affect the wind power industry in strengthened the cast components supply chain by concentrating 2011 and there were no signs of growth. Demand was affected by the its business operations in larger, more profitable units. difficulties in arranging financing for wind park projects. The bank- In March Componenta decided to apply for public listing of the ruptcy in summer 2011 of the biggest customer in the wind power loan units of the bond and the subordinated capital loan issued in sector, Moventas Oy, also had a negative impact on Componenta’s 2010. The Finnish Financial Supervisory Authority approved Com- deliveries. ponenta’s listing prospectus for the bond and subordinated capital Demand in the machine building industry remained steady as in loan in April and trading in the loan units began at the end of April. the previous year. Market demand varied considerably, however, In April Componenta was informed by the Commission that from one sector and market area to another. Growth as a whole was it had rendered a new decision on 20 April 2011, confirming that low in 2011. Componenta did not receive any state aid from the City of Karkkila in connection with a share purchase transaction between Compo- Order book nenta and the City of Karkkila in 2005. The order book in the beginning of January 2012 was similar to what Componenta began statutory personnel negotiations in October it was at the same time in the previous year, standing at EUR 99.5 at Componenta Finland Oy Nisamo concerning the possible closure (94.6) million. The order book comprises orders confirmed to cus- of the unit. In December Componenta sold the business operations tomers for the next two months. The order book does not involve and production machinery of the Nisamo machine shop. The sale any significant cancellation risk. also ended the personnel negotiations. The order book for operations in Turkey increased 8% from the previous year, standing at EUR 51.8 (47.8) million in the beginning of Developments in Componenta’s business environment January. The order book in Turkey was boosted by good develop- and markets in 2011 ments in construction and mining machinery and in the automotive During 2011 economic trends were mainly positive, which was also industry. reflected in the considerable increase in demand for cast compo- The order book for operations in Finland declined 12% from the nents. Although demand rose significantly from 2010, it still did previous year, standing at EUR 13.8 (15.7) million in the beginning not return to its level before the recession. Factors contributing of January. The main factors in the decline were the closure of the to the growth in demand were the encouraging developments in Pietarsaari machine shop and the sale of the operations of the developing markets, in particular the BRIC countries (Brazil, Russia, Nisamo machine shop. Financial statements COMPONENTA Annual report 2011 3

The order book for operations in the Netherlands was 22% higher During the year new long-term bilateral loans totalling EUR than in the previous year, standing at EUR 20.1 (16.4) million in the 34.9 million were drawn to refinance short-term bank loans that beginning of January. Increased orders from manufacturers of con- matured during the period. Short-term interest-bearing liabilities struction, mining and agricultural machinery and from the heavy rose considerably in June because of a syndicated loan that matures truck and machine building industries contributed to the stronger in June 2012. The company is negotiating on a continuation of the order book in the Netherlands. current syndicated loan. A second option is for the company and The order book for operations in Sweden declined 10% from the its principal financing banks to agree on a new syndicated loan to previous year, standing at EUR 19.8 (22.0) million in the beginning replace the current one. The company’s principal financing banks of January. Decreased orders especially from the heavy truck and have taken the decision on credit facilities totalling some EUR 100 machine building industries weakened the order book in Sweden. million for 2012 and 2013. In accordance with a proposal by the Board Customers in the heavy truck industry imposed production stand- of Directors, the company will strengthen equity by altogether EUR stills before and after the year end in Sweden. 20 million through an increase in share capital and a hybrid bond. The company has also negotiated additional financing of EUR 50 Net sales million from other banks and, in addition, is negotiating with several The Group’s net sales in 2011 rose 28% from the previous year to EUR other financial institutions concerning financing totalling EUR 30 576.4 (451.6) million. The value of production in the year increased million in connection with the second option described above. The 27% to EUR 577.9 (454.7) million. The Group’s capacity utilization rate company’s financing needs will decrease if the planned sale of the during the financial year was 68% (57%). Manisa aluminium wheels business takes place. Net sales for operations in Turkey rose 35% from the previous At the end of the financial year Componenta’s liquidity was at a year to EUR 277.2 (204.8) million. Net sales for operations in Finland good level. Cash and bank receivables at the end of the year totalled increased 9% to EUR 112.8 (103.6) million. Net sales for operations in EUR 41.6 million. Unused committed credit facilities totalled EUR 0.0 the Netherlands rose 28% from the previous year to EUR 109.3 (85.1) million at the end of the year. The Group also has a EUR 150 million million. Net sales for operations in Sweden increased 43% to EUR commercial paper programme, from which the company had no 121.5 (84.7) million. debt at the end of the year. Componenta’s net sales in the financial period by customer The Group’s interest-bearing net debt, excluding the outstanding sector were as follows: heavy trucks 27% (26%), construction and capital notes of EUR 35.4 million, totalled EUR 207.5 (189.4) million mining 25% (21%), machine building 19% (20%), automotive 16% at the end of the year. The company’s net debt as a proportion of (20%), agricultural machinery 13% (11%), wind power 1% (2%) and shareholders’ equity, including the capital notes in shareholders’ other sales 0% (1%). equity, was 271.2% (170.5%). Componenta’s net cash flow from operations during the review Result period was EUR 3.6 (25.2) million, and of this the change in working The consolidated operating profit for the year, excluding one-time capital was EUR -10.0 (13.6) million. items, was EUR 29.8 (13.6) million and after one-time items of EUR Componenta makes more efficient use of capital with a pro- -7.4 million was EUR 22.5 (13.5) million. The one-time items relate to gramme to sell its trade receivables. Under this arrangement, some write-downs on machinery and equipment from closing down the of the trade receivables are sold without any right of recourse. At the Pietarsaari machine shop and from the sale of the Nisamo machine end of the year the company had sold trade receivables totalling EUR shop operations (EUR -2.6 million), estimated losses in efficiency 89.5 (63.9) million. The increase in the trade receivables sold partially from the period for running down production at these two plants compensated for the capital tied up in other working capital. (EUR -3.0 million), and other one-time costs (EUR -1.8 million). At the end of 2011, the invested capital of the company was EUR The operating profit improved significantly, even though it was 325.6 (311.5) million. weakened by the rise in the prices of certain non-surcharged raw The Group’s equity ratio was 9.4% (16.8%). The extremely sharp materials, amounting to some EUR 11 million. In addition, a quality decline in the value of the Turkish lira against the euro weakened the fault discovered in the summer at the Orhangazi production unit in Group’s shareholders’ equity by EUR -22.9 million from the previous Turkey and the costs for the process alterations required had a total year. Cumulatively, exchange rate differences after the acquisition impact of more than EUR -4 million on the result in the second half of the Turkish subsidiary have weakened the Group’s equity by EUR of the year. -41.0 million. The original price for the shares of the Turkish subsidi- The Group’s net financial costs for the financial year were EUR ary was EUR 149.0 million. Due to translation differences in book- -25.9 (-23.5) million. Net financial costs increased from the previous keeping, the value of the Turkish subsidiary’s net assets in Compo- year mainly because of higher interest costs. nenta’s consolidated balance sheet is EUR 108.0 million. The market The Group’s result for the period after financial items, excluding value of the Turkish subsidiary’s shares owned by Componenta on one-time items, was EUR 3.9 (-9.9) million and after one-time items 31 December 2011 was EUR 146.4 million. The Group’s shareholders’ EUR -3.4 (-10.0) million. Income taxes calculated from the result for equity at the end of the year, including the capital notes in equity, as a the financial year excluding one-time items totalled EUR -1.2 (+2.5) proportion of the balance sheet total was 17.5% (26.4%). million and after one-time items EUR +0.3 (+2.5) million Loans, commitments and contingent liabilities given by the The net result for the financial period excluding one-time items company to Group companies classified as related parties on 31 De- was EUR 2.7 (-7.4) million and after one-time items EUR -3.1 (-7.5) mil- cember 2011 totalled EUR 74.9 (134.9) million. Loans, commitments lion. Basic earnings per share for the period excluding one-time items and contingent liabilities given by the company to private persons was EUR 0.09 (-0.45) and after one-time items EUR -0.25 (-0.45). classified as related parties on 31 December 2011 totalled EUR 0.3 The return on investment excluding one-time items was 10.2% (0.3) million. (5.0%) and after one-time items 7.8% (5.0%). The return on equity excluding one-time items was 5.1% (-10.2%) and after one-time Investments items -5.8% (-10.3%). Componenta restricted the volume of investment in production facilities in 2011 due to the under-utilisation of current capacity. Balance sheet, financing and cash flow Investments in production facilities during the year totalled EUR At the end of December, the Group had outstanding capital notes 21.8 (8.5) million, of which finance lease investments accounted for and convertible capital notes, as defined in IFRS, with a total value EUR 4.0 (0.3) million. The net cash flow from investments was EUR of EUR 35.4 million. The Group repaid in November and December -12.7 (-10.4) million, which includes the cash flow from the Group’s the final instalments totalling EUR 5.2 million of the capital loan and investments in tangible and intangible assets, and the cash flow convertible bond issued in 2006 in accordance with the terms of the from shares sold and purchased and from the sale of tangible and loans. intangible assets. Financial statements COMPONENTA Annual report 2011 4

Research and development Issuing shares and granting option rights and other At the end of 2011, 117 (118) people worked in research and develop- special rights with an entitlement to shares ment at Componenta, which corresponds to 3% (3%) of the com- Componenta’s extraordinary general meeting of shareholders held pany’s total personnel. Componenta’s research and development on 8 September 2009 authorized the Board to decide to issue shares expenses in 2011 totalled EUR 2.4 (1.8) million, the equivalent of 0.4% and grant special rights with an entitlement to shares as defined in (0.4%) of the Group’s total net sales. chapter 10, section 1 of the Finnish Limited Liabilities Companies Act in one or more issues, either against payment or free of charge. The Environment number of shares to be issued, including the shares to be obtained Componenta is committed to the continuous improvement of its under the special rights, may be a maximum of 8,000,000 shares. production and to reducing its environmental impact. The objectives The Board may decide to issue either new shares or any company of the Group’s environmental policy are to reduce consumption of shares held by the company. energy and raw materials, restrict particle and VOC emissions, reduce Under the authorization, the Board of Directors may decide on all environmental noise from its operations, increase the sorting of the terms and conditions for a share issue and for granting special waste, and reduce the amount of waste that cannot be re-used. rights with an entitlement to shares, and includes the right to One of the most significant environmental aspects for Compo- disapply the pre—emptive subscription rights of shareholders. The nenta Group is the use of energy. In 2011 the Group’s production units authorization was presented as being used to strengthen the com- used 747 GWh (629 GWh) of energy. Most of the energy used, 67% pany’s balance sheet and financial position or for other purposes to (66%), was electricity. The foundries consume more than 90% of all be decided by the Board. the energy, since especially the melting processes at the foundries The authorization is valid for a period of five years from the date utilise much energy. In 2011 energy consumption at Componenta’s of the decision of the general meeting. The authorization cancelled foundries in proportion to output declined, so that relative energy the authorization given the Board by the AGM on 26 February 2007 efficiency improved. In order to reduce the environmental impact of to decide to issue shares and grant special rights with entitlement production and CO2 emissions, the Board of Directors confirmed tar- to shares. gets for 2012 to further improve the energy efficiency of the Group’s By the end of 2011 altogether 6,541,940 shares had been used iron foundries and reduce the amount of landfill waste. under this authorization. Of these, 6,500,000 shares were used in Componenta’s share issue in autumn 2009 and the remaining 41,940 Personnel shares in spring 2011 for paying the bonuses for the 2010 earning The Group had on average 4,717 (4,155) employees during the period in Componenta’s share-based incentive scheme 2010 – 2012. financial year, including 483 (303) leased employees. The number of Group personnel at the end of the year was 4,665 (4,414), which in- Share-based incentive scheme 2010 - 2012 cludes 425 (398) leased employees. At the end of the year 54% (52%) The Board of Directors of Componenta Corporation resolved on 10 of the personnel were in Turkey, 21% (24%) in Finland, 16% (16%) in March 2010 on a long-term bonus and incentive plan for key per- the Netherlands and 9% (8%) in Sweden. sonnel. The target group for the plan comprises key positions in the Group as determined by the Board of Directors. At the end of 2011 Shares and share capital the target group contained 47 people. The shares of Componenta Corporation are quoted on NASDAQ OMX The plan includes three earning periods, the calendar years 2010, Helsinki. At the end of the financial year the company had a total of 2011 and 2012. The Board of Directors decides on the earning criteria 17,499,738 shares. At the end of December the company had 2,135 for each earning period and on the targets for these. The earn- shareholders. At the end of the financial year the share capital had a ing criteria for the 2011 earning period were Componenta Group’s market capitalization of EUR 59.0 (104.6) million and the volume of result after financial items excluding one-time items. The amount of shares traded during the period was equivalent to 17.1% (48.6%) of the bonus in the earning period is determined after the end of the the share stock. period by the extent to which the targets set for the earning criteria have been achieved. Decisions of the Annual General Meeting Any bonuses will be paid in 2011, 2012 and 2013 as a combination Componenta’s Annual General Meeting on 28 February 2011 con- of company shares and cash. The part to be paid in cash is intended to firmed the financial statements for the 1 January - 31 December cover the taxes and tax-related costs arising from the bonus. If shares 2010 financial year and discharged the members of the Board of are paid in the incentive scheme, the shares may not be conveyed, Directors and the President and CEO from liability. In accordance pledged or otherwise used during a two-year restriction period. with the Board proposal, the AGM decided not to pay a dividend for The Board of Directors decided to allocate 18,700 shares for the the 1 January - 31 December 2010 financial year 2011 earning period, and the President and CEO’s allocation of this The AGM elected the following to the Board of Directors: Heikki was 5,000 shares and other key personnel received altogether Bergholm, Pii Kotilainen, Heikki Lehtonen, Juhani Mäkinen, Marjo 13,700 shares. The scheme’s impact on the Group’s result before tax Miettinen and Matti Tikkakoski. The AGM elected Authorized Public at the end of 2011 was EUR -0.1 million. Accountants PricewaterhouseCoopers Oy as auditor. The AGM resolved, in accordance with the proposal of the Board Board of Directors and Management of Directors, to authorize the Board of Directors to decide on the After the AGM on 28 February 2011, the Board of Directors held its purchase of a maximum of 1,700,000 of the Company’s own shares, organization meeting and elected Heikki Bergholm as its Chairman in one or several instalments, using the Company’s unrestricted and Juhani Mäkinen as Vice Chairman. The Board met 13 times in shareholders’ equity. The shares shall be purchased otherwise than 2011. The average attendance rate of Board members at its meetings in proportion to the holdings of the shareholders through public was 100%. The Board assessed its performance, under the leader- trading organised by NASDAQ OMX Helsinki Ltd at the market price ship of its chairman, in December 2011. prevailing at the moment of purchase. The authorization is valid for Heikki Lehtonen is President and CEO of Componenta. At the end a period of 18 months from the date of the decision of the AGM. The of the financial year the Corporate Executive Team (CET) of Com- authorization cancels the authorization to resolve on the purchase ponenta Corporation comprised the following members: President of own shares given to the Board of Directors by the Annual General and CEO Heikki Lehtonen, COO Yrjö Julin, CFO Mika Hassinen, Hakan Meeting on 10 March 2010. Göral, SVP, Operations Turkey, Olli Karhunen, SVP, Operations Fin- The AGM also authorized the Board of Directors to decide during land; Patrick Steensels, SVP, Operations Holland; Michael Sjöberg, 2011 on donations totalling a maximum of EUR 300,000 to the Aalto SVP, Operations Sweden, Anu Mankki, SVP, HR and General Counsel University and the Tampere University of Technology under terms Pauliina Rannikko. Communications Director Pirjo Aarniovuori was to be decided separately by the Board. Secretary to CET. Financial statements COMPONENTA Annual report 2011 5

Risks and business uncertainties started the process of selling off the unit in Manisa, Turkey, that The company’s current syndicated loan of EUR 164 million matures produces aluminium wheels for passenger cars in June 2012 and the company intends to either extend it or replace Componenta reviewed the Group’s financial objectives in Janu- it. If the company replaces this syndicated loan, the refinancing ary 2012. As a result, the Board of Directors decided to give up the will be achieved through the following measures. The company growth target for net sales in 2015 and to concentrate on reaching has already negotiated additional financing of EUR 50 million. In the targets of financial solidity and profitability. addition, the Board of Directors is proposing to strengthen the company’s equity capital by altogether EUR 20 million through Market outlook an increase in share capital and a hybrid bond. Shareholders in The demand outlook is satisfactory in all the Group’s customer sec- the company, whose combined holding in the company exceeds tors at the beginning of 2012. 50%, have stated that they intend to participate in the share issue. Demand prospects in the heavy trucks industry are uncertain Because of this, the Board of Directors considers that there are no at the beginning of 2012. The order book was 5% down on the major uncertainties relating to successfully carrying out the share previous year. issue. Marketing of the hybrid bond will begin in February 2012. Demand for construction and mining machinery components is The Board of Directors considers the risk factors in connection expected to continue to develop favourably mainly due to the high with the hybrid bond issue to be limited. The company’s principal level of activity in the mining industry and in developing markets. financing banks have taken the decision on credit commitments The order book at the beginning of 2012 was 38% higher than in the totalling some EUR 100 million for 2012 and 2013. The parties have previous year. discussed the terms of the loan agreement and the goal is to sign Demand for agricultural machinery is estimated to rise from the final loan agreement by the end of February 2012. The Board of the previous year mainly as a result of relatively high food prices. Directors considers the risk of the parties not reaching agree- The order book at the beginning of 2012 was 47% higher than in the ment on the terms of the loan to be small. The Board of Directors previous year. believes that the company meets the other requirements set for Demand in the automotive industry is expected to remain at the financing. the same level as in the previous year mainly due to the increase The most significant risks for Componenta are risks related to in market share. The order book at the beginning of 2012 was 17% the business environment (competition and price risk, commodity lower than at the corresponding time in the previous year. and environmental risks), operational risks (customer and supplier Demand in the machine building industry is expected to remain risks, productivity, production and process risks, labour market at the same level as in the previous year. The order book at the disruptions, contract and product liability risks, personnel risks, and beginning of 2012 was 9% down on the previous year. data security risks) as well as financial risks (financing and liquidity Demand in the wind power sector is expected to remain at a risk, currency, interest rate and credit risks). low level in Europe. In future, the outlook for the wind power sector In order to manage the Group’s business operations it is essential will be included in the demand outlook for the machine building to secure the availability of certain raw materials, such as recycled industry. metal and pig iron, and of energy, at competitive prices. The cost risk relating to raw materials is mainly managed with price agree- Outlook for Componenta ments, and under these agreements the prices of products are Componenta’s prospects for 2012 are based on general external adjusted in line with the changes in raw material prices. Increases economic indicators, delivery forecasts given by customers, and on in prices for raw materials may tie up more funds in working capital Componenta’s order intake and order book. than estimated. Componenta’s order book at the beginning of 2012 was 5% higher The financial risks relating to Componenta’s business operations than in the previous year. are managed in accordance with the treasury policy approved by Net sales in the first quarter of 2012 are expected to be similar to the Board of Directors. The objective is to protect the Group against that in the previous year. As a result of the price increases already unfavourable changes in the finance markets and to secure the implemented and the improved cost structure, the operating profit Group’s financial performance and financial position. and result after financial items excluding one-time items are ex- More detailed information about Componenta’s pected to improve from previous year. risks and risk management is given in the 2011 financial Net cash flow from operations in 2012 is expected to improve Read more statements section and on the company’s website at clearly and changes in working capital are expected to remain mod- online. www.componenta.com. erate, due to the sale of trade receivables. Investments in production facilities in 2012 are estimated at some EUR 12 million. Events after end of period Yrjö Julin, COO, is no longer continuing in the service of Componen- Dividend proposal ta, for personal reasons. Olli Karhunen has been appointed Senior The Board of Directors proposes to the Annual General Meeting to Vice President (SVP), Operations Development, being responsible be held on 23 February 2012 that, in accordance with the current for developing operations at Componenta. Seppo Erkkilä has been dividend policy, no dividend be paid for the 1 January - 31 December appointed SVP, Operations Finland and a member of the Corporate 2011 financial period. On 31 December 2011 the parent company had Executive Team. Antti Lehto has been appointed SVP, Sales and distributable equity of EUR 80.3 million. Product Development and a member of the Corporate Executive Team. Karhunen, Erkkilä and Lehto report to CEO Heikki Lehtonen. Annual General Meeting The appointments are valid as of 1 March 2012. Componenta Corporation’s Annual General Meeting of Sharehold- Other country responsibilities remain unchanged: Hakan Göral, ers will be held at 9.00 am on 23 February 2012 in Helsinki. Notice Senior Vice President, Operations, Turkey, Michael Sjöberg, Senior of the annual general meeting will be published in a separate stock Vice President, Operations, Sweden and Patrick Steensels, Senior exchange release. Vice President, Operations, the Netherlands. The senior vice presidents have business responsibility for operations in their respective Corporate Governance statement countries and they report to Heikki Lehtonen. Componenta Corporation is publishing the Componenta decided in January 2012 to strengthen the Group’s Corporate Governance statement for 2011 sepa- balance sheet. The company’s Board of Directors proposes to rately from the Report by the Board of Directors. Read more strengthen equity by altogether EUR 20 million through an increase The statement will be available on the company’s online. in share capital and a hybrid bond. In addition, the company has website at www.componenta.com. Financial statements COMPONENTA Annual report 2011 6

Consolidated income statement 1.1.-31.12.

MEUR Note 2011 % 2010 % NET SALES 1 576.4 100.0 451.6 100.0 Other operating income 4 2.3 0.6 Operating expenses 5,6,7 -536.3 -422.8 Depreciation, amortization and write-down of non-current assets 8 -20.2 -16.0 Share of the associated companies' result 0.2 0.2

OPERATING PROFIT 1 22.5 3.9 13.5 3.0

Financial income 9 13.0 16.5 Financial expense 9 -38.9 -40.0 Financial income and expenses in total -25.9 -23.5

PROFIT/LOSS AFTER FINANCIAL ITEMS -3.4 -0.6 -10.0 -2.2

Income taxes 10 0.3 2.5

PROFIT/LOSS FOR THE FINANCIAL PERIOD -3.1 -7.5

Allocation of net profit for the period To equity holders of the parent -4.3 -7.9 To non-controlling interest 1.2 0.4 -3.1 -7.5

Earnings per share calculated on the profit attributable to the shareholders of the parent company Earnings per share, EUR 11 -0.25 -0.45 Earnings per share with dilution, EUR 11 -0.25 -0.45

Consolidated statement of comprehensive income 1.1.-31.12.

MEUR 2011 2010 Net profit -3.1 -7.5 Other comprehensive income Translation differences -24.1 6.7 Cash flow hedges -3.9 4.8 Re-classification of investment properties 0.7 - Other items 0.1 0.0 Income tax on other comprehensive income 0.8 -1.3 Other comprehensive income, net of tax -26.4 10.3 Total comprehensive income -29.5 2.8

Allocation of total comprehensive income To equity holders of the parent -29.5 2.0 To non-controlling interest 0.0 0.8 -29.5 2.8 The notes are an integral part of these financial statements. Financial statements COMPONENTA Annual report 2011 7

Consolidated statement of financial position 31.12.

MEUR Note 2011 2010 ASSETS

NON-CURRENT ASSETS Tangible assets 12 212.4 245.3 Goodwill 13 28.0 33.1 Intangible assets 14 6.7 6.7 Investment properties 15 11.6 1.8 Shares in associated companies 16 1.3 1.3 Financial assets 17 0.7 0.5 Receivables 18 4.5 6.0 Deferred tax assets 19 26.4 20.9 291.6 315.6

CURRENT ASSETS Inventories 20 58.4 52.2 Receivables 21 35.2 41.7 Tax receivables 0.0 0.0 Assets held for sale 21 9.9 - Cash and cash equivalents 23 41.6 11.0 145.2 104.8

TOTAL ASSETS 436.8 420.4

LIABILITIES AND SHAREHOLDERS' EQUITY

SHAREHOLDERS' EQUITY Share capital 21.9 21.9 Share premium reserve 15.0 15.0 Unrestricted equity reserve 32.3 32.5 Other reserves 2.9 2.2 Cash flow hedges -0.7 2.3 Translation differences -41.0 -18.1 Retained earnings 7.7 15.6 Profit/loss for the financial period -4.3 -7.9 Equity attributable to equity holders of the parent company 24 33.8 63.4 Non-controlling interest 7.3 7.3 Shareholders' equity 41.1 70.7

LIABILITIES Non-current liabilities Capital loans 28 31.4 35.3 Other interest bearing 28 79.8 185.1 Provisions 27 7.6 8.5 Deferred taxes 19 8.3 9.6 Current liabilities Capital loans 28 4.1 5.1 Other interest bearing 28 169.3 15.3 Other non-interest bearing 29 92.9 89.5 Tax liability 0.2 0.1 Provisions 27 2.2 1.2 395.7 349.7

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY 436.8 420.4 The notes are an integral part of these financial statements. Financial statements COMPONENTA Annual report 2011 8

Cash flow statement 1.1.-31.12.

MEUR 2011 2010 Cash flow from operations Result after financial items -3.4 -10.0 Depreciation, amortization and write-down 20.2 16.0 Net financial income and expenses 25.9 23.5 Other income and expenses, adjustments to cash flow -0.4 1.7 Change in net working capital Inventories -11.4 -9.3 Current non-interest bearing receivables 0.4 -10.0 Current non-interest bearing liabilities 1.2 31.3 Other working capital items -0.2 1.6 Interest received 0.5 0.6 Interest paid -26.4 -22.1 Other financial income and expenses 1.1 0.8 Dividends received 0.0 0.0 Taxes paid -3.9 0.9 Net cash flow from operations 3.6 25.2

Cash flow from investing activities Capital expenditure in tangible assets -13.9 -7.7 Capital expenditure in intangible assets -2.2 -2.3 Proceeds from tangible and intangible assets 1.4 0.0 Other investments and loans granted -0.2 -0.4 Proceeds from other investments and repayments of loan receivables 2.1 0.1 Net cash flow from investing activities -12.7 -10.4

Cash flow from financing activities Repayment of finance lease liabilities -3.2 -2.4 Draw-down (+)/ repayment (-) of current loans -3.4 -36.3 Draw-down of non-current loans 90.4 54.3 Repayment of non-current loans and other changes -42.6 -27.2 Net cash flow from financing activities 41.0 -11.7

Change in liquid assets 31.9 3.1

Cash and bank accounts at the beginning of the period 11.0 7.6 Effects of exchange rate changes on cash -1.2 0.3 Cash and bank accounts at period end 41.6 11.0 The notes are an integral part of these financial statements.

Statement of changes in consolidated shareholders’ equity

Share Unrestricted Non- Share- Share premium equity Other Cash flow Translation Retained controlling holders’ MEUR capital reserve reserve reserves hedges differences earnings Total interest equity total Shareholders' equity 1.1.2011 21.9 15.0 32.5 2.2 2.3 -18.1 7.7 63.4 7.3 70.7 Net profit -4.3 -4.3 1.2 -3.1 Translation differences -22.9 -22.9 -1.2 -24.1 Cash flow hedges -3.0 -3.0 -3.0 Re-classification of investment properties 0.6 0.6 0.6 Other comprehensive income items 0.1 0.1 0.1 Total comprehensive income 0.7 -3.0 -22.9 -4.3 -29.5 0.0 -29.5 Other changes *) -0.2 0.1 -0.1 -0.1 Shareholders' equity 31.12.2011 21.9 15.0 32.3 2.9 -0.7 -41.0 3.4 33.8 7.3 41.1 *) Other changes in unrestricted equity reserve include given donation to universities, EUR 0.2 million. Financial statements COMPONENTA Annual report 2011 9

Notes to the consolidated financial statements

Accounting principles The financial statements of foreign subsidiaries have been adjusted to ensure consistency with the Group’s accounting policies. General information The financial statements of subsidiaries are consolidated using the Componenta is a metal sector group of companies with interna- acquisition method. Intra-group transactions have been eliminated tional operations. The Group manufactures cast, machined, surface- in the consolidation, as have the internal margin included in the treated, ready-to-install components and total solutions made up inventories of Group companies and intra-group receivables and from these. The Group’s customers are global manufacturers in the liabilities. The share of owners with a non-controlling interest (NCI) machine building, heavy truck, automotive, construction & mining, in the acquired entity is measured either at fair value or as the NCI’s agriculture and wind power industries. proportionate share of the identifiable net assets of the acquired The Group’s parent company is Componenta Corporation (busi- entity. The principle for measurement is specified separately for ness identity code 1635451-6), whose shares are quoted on the each acquisition. NASDAQ OMX Helsinki. The parent company is domiciled in Helsinki. Changes in the parent company’s holdings in subsidiaries that The registered street address is Panuntie 4, 00610 Helsinki, Finland. do not result in a loss of control are treated as transactions affecting A copy of the consolidated financial statements can be obtained shareholders’ equity. on the Internet at www.componenta.com or from the head office of Associated companies are companies in which the Group holds the Group’s parent company at Panuntie 4, 00610 Helsinki, Finland. shares with 20% to 50% of the voting rights or in which the Group The financial year for all group companies is the calendar year has significant interest but not control. and it ended on 31 December 2011. The financial statements of associated companies are consoli- The Board of Directors of Componenta Corporation has at its dated according to the equity method. The Group’s share of the meeting on 23 January 2012 approved these financial statements for result of associated companies is entered in the income statement. publication. According to the Finnish Companies Act, shareholders The value of shares is presented in the balance sheet as the acquisi- have the opportunity to approve or reject the financial statements tion cost of the shares adjusted by the Group’s share of the accumu- at the General Meeting of Shareholders held after publication. It lated results of associated companies and by the dividends paid by is also possible to amend the financial statements at the General the associated companies. Known deviations from IFRS accounting Meeting of Shareholders. policies in the financial statements of associated companies have been corrected. Basis for preparing consolidated financial statements Componenta’s consolidated financial statements have been Change in accounting policy prepared in accordance with International Financial Reporting In previous financial periods, the company applied the acquisition Standards (IFRS), applying the IAS and IFRS standards in force on cost model in the valuation of investment properties, recognising 31 December 2011 and SIC and IFRIC interpretations. The term ‘IFRS the assets in the balance sheet at their acquisition cost. In 2011, the standards’ refers to standards and interpretations of these in Finn- company adopted the fair value model pursuant to IAS 40, recog- ish legislation and provisions based on this approved for applying in nising the gains or losses arising from changes in the fair value of the EU in accordance with the procedure established in EU regula- investment property in net profit or loss for the period in which they tion (EY) 1606/2002. The notes to the consolidated financial state- arise. This change in accounting principles improves the accuracy of ments also conform to Finnish accounting and corporate legislation. the financial statements. The significance of investment properties The consolidated financial statements have been prepared based in the company’s financial statements has increased as a larger on the historical cost, except that the following items have been number of properties are now classified as investment properties. assessed at fair value: investment properties, financial assets and Gains arising from changes in the fair value of old investment prop- liabilities recognized in the income statement, derivative financial erties in 2011, totalling EUR 0.6 million before deferred taxes, are instruments, and items hedged at fair value. For mergers of busi- recognised under other operating income. This change in account- ness operations that took place before 2004, goodwill, as stated in ing principles does not affect the company’s result for 2010 or the IFRS 1, corresponds to the book value as defined under the previ- Group’s equity on 31 December 2010. The fair values of properties ous financial statement standards, and this has been used as the previously classified as investment properties corresponded es- deemed cost. sentially to their book values on 31 December 2010. The preparation of the financial statements in accordance with IFRS standards requires management to make estimates and judg- Translation of foreign currency items ments in applying the accounting principles. Information about the judgments made by management in the application of the Functional and presentation currency accounting principles employed by the Group and which have the The result and financial position of each of the Group’s business biggest impact on the figures given in the financial statements is units are measured in the currency of the main operating environ- given in the chapter “Accounting principles requiring judgments by ment for that unit. The operational and presentation currency for management and key sources of estimation uncertainty”. the Group’s parent company is the euro. The consolidated financial statements are presented in millions of euros unless otherwise Accounting principles for consolidated financial stated. statements The consolidated financial statements include Componenta Corpo- Transactions and balances ration and those Finnish and foreign subsidiaries in which the Group The foreign currency receivables and liabilities of the parent com- holds directly or indirectly shares with over 50% of the voting rights pany and subsidiaries domiciled in Euro area are translated into or in which the Group has control over financial and operating prin- euros at the exchange rate on the balance sheet date. The foreign ciples. The financial statements of subsidiaries are included in the currency receivables and liabilities of group companies domiciled consolidated financial statements from the date that Componenta outside Euro area are translated at the exchange rate for the coun- has obtained control in the subsidiary. try concerned on the balance sheet date. Financial statements COMPONENTA Annual report 2011 10

The foreign exchange rate differences arising from trade payables Goodwill equals the part of the acquisition cost that exceeds the and trade receivables are presented under other operating income Group’s share of the net fair value on the date of acquisition of the together with any related hedging results. Exchange rate differenc- identifiable assets, liabilities and contingent liabilities of a company es arising from borrowings, deposits and cash and cash equivalents acquired after 1 January 2004. For mergers of business operations together with any related hedging results are recognized under that took place before 2004, goodwill corresponds to the book value financial income and expenses. as defined under the previous financial statement standards, and this has been used as the deemed cost in accordance with IFRS. Group companies Goodwill is not amortized but is tested annually for impairment. The income statements of subsidiaries domiciled outside Euro area are translated into euros using the average exchange rates for the Impairment accounting period. Balance sheet items are translated into euros at The carrying amounts of the Group’s assets are reviewed at each the average exchange rate on the balance sheet date. balance sheet date to determine whether there is any indication The difference in the result for the period between the average of impairment. If any such indication exists, the asset’s recover- exchange rate for the accounting period and the exchange rate on able amount is estimated. An impairment loss is recognized for the the balance sheet date is recorded in shareholders’ equity in trans- amount by which the balance sheet value of the asset exceeds the lation differences. The shareholders’ equity of subsidiaries is trans- recoverable amount for the asset. The recoverable amount of an lated into euros in consolidation. Translation differences caused asset is the greater of its net selling price and value in use. As a rule, by changes in exchange rates between the date of acquisition and value in use is based on the estimated discounted future net cash the balance sheet date have been recorded in shareholders’ equity. flows obtainable through the asset. Translation differences from before 1 January 2004 are recorded, in accordance with the exception permitted by IFRS 1, under retained Investment properties earnings. After the transition date, translation differences arising Property that is owned by the Group and leased to an external par- during the preparation of the consolidated financial statements are ty, and that is not mainly owner-occupied, and which is held by the presented as a separate item of equity. Group to earn rentals or capital appreciation rather than for a use in the production of goods is classified as investment property and is Tangible and intangible assets valued in the balance sheet at fair value. Gains and losses arising on Property, plant and equipment are recorded in the balance sheet at revaluation to fair value are recognised in profit or loss for the period their historical cost less planned depreciation. For certain buildings in which they arise and are presented in other operating income the Group has made use of transitional relief, according to which in the income statement. Rental income from investment property it assessed the buildings at fair value in the 2004 opening balance is recorded in the Group’s net sales. The fair values of investment sheet and after that began planned depreciation on them. No depre- properties are determined by an independent and qualified real ciation is made on land and water areas. Intangible assets include estate evaluator annually. computer software, capitalized development costs and capitalized costs for obtaining customers. For intangible assets that have a Research and development costs limited useful economic life, straight-line depreciation is entered Research costs are charged to the income statement as incurred. as an expense in the income statement over their useful economic Expenditure on development activities relating to new products is lives. The Group has no intangible assets that have an unlimited capitalized and recognized as an expense under depreciation over useful economic life. their useful economic lives. The planned depreciation period for Maintenance and repair costs are usually recognized in the these costs is 5 years. In other respects, the Group’s minor research income statement as an expense as incurred. Major refurbishment and development costs are recorded as expenses as incurred. costs are capitalized and depreciated over their estimated useful life if these costs are likely to increase the future economic benefits Inventories embodied in the specific asset to which they relate. Inventories are stated at the lower of acquisition cost and net realiz- Investment grants are deducted from the carrying value of the able value. The acquisition cost is based on the FIFO principle. The asset, and grants to be recorded in the income statement are en- acquisition cost of manufactured products and work in progress tered under other operating income. includes the cost of raw materials, direct labour costs, other direct Planned depreciation, except of production machinery and costs as well as a proportion of variable and fixed production over- equipment, is calculated on a straight line basis on the historical heads. cost, based on the estimated useful economic life. On 1 January 2009 the Group started to use the units-of-production depreciation Leases method, in which the amount of depreciation is based on the actual The Group classifies its leases at the inception as finance or operat- output of production machinery and equipment. The units-of-pro- ing leases. Leases for fixed assets that transfer substantially all the duction method gives a more precise picture of the actual economic risks and rewards incidental to ownership to the Group are classified wear on production machinery and equipment than the straight as finance leases. They are recognized in the balance sheet under line method, especially when capacity usage changes quickly. Esti- fixed assets at the commencement of the lease at an amount equal mated useful economic lives are as follows: to the lower of the fair value of the leased asset and the present value of the minimum lease payments. Any substantial incremental capitalized development costs 5 years costs that are directly attributable to negotiating and arranging the intangible rights 3–10 years lease are added to the amount recognized as an asset. Deprecia- other intangible costs 3–20 years tion is made on the asset over its estimated useful economic life buildings and constructions*) 25–40 years consistently with the Group’s depreciation policy, or if there is no computing equipment 3–5 years reasonable certainty that ownership is obtained at the end of the other machinery and equipment 5–25 years lease term, the asset is depreciated over the shorter of the lease other tangible assets 5–10 years term and its useful economic life. The lower of the fair value of the asset and the present value *) Residual value 25% of acquisition cost of the minimum lease payments is recognized as a finance lease Financial statements COMPONENTA Annual report 2011 11

liability. Lease payments are divided into financing charges and Karkkila, Pietarsaari and Pori, the machine shops in Lempäälä reduction of the outstanding liability, using the effective interest and Pietarsaari, and the production unit for pistons in Pietarsaari. rate method so that the liability is repaid over the lease term as an Componenta Finland Ltd, a subsidiary of Componenta Corporation, annuity. The financing charge calculated with the effective interest has sold the business operations and production machinery of the rate is recognized as a financial expense. The difference between Nisamo machine shop during the financial year 2011. Machining the floating interest rate of the agreement and the effective interest operations at Componenta Finland Ltd’s Pietarsaari unit have been rate is recorded as a rental expense. terminated during the financial year 2011. The operations in the A lease is classified as operating lease if the lessor retains the Netherlands comprise the iron foundries in Heerlen and Weert, the majority of the risks and benefits of ownership, or if the value of the machine shop operations in Weert and the pattern shop in Tegelen. lease agreement is insignificant. Lease payments under operating The operations in Sweden comprise the Främmestad machine shop lease agreements are recognized as expenses in the income state- and the Wirsbo forge. Other business comprises the sales and ment on an accrual basis throughout the lease term. logistics company Componenta UK Ltd in Great Britain, service and real estate companies in Finland, the Group’s administrative func- Employee benefits/Pensions and other employee tions and associated company Kumsan A.S. in Turkey. The operating benefits business segments are based on the Group’s internal organizational Most of the Group’s pension schemes are defined contribution structure and internal financial reporting. schemes, for which payments are entered in the income state- Revenues and transfers between Componenta’s operating busi- ment in the period in which they occur. Componenta has pension ness segments are recorded at fair market prices. Segment assets schemes classified as a multi-employer defined benefit schemes and liabilities are items which the segment can utilize in its business in Sweden (Alecta ITP and AMF Pension/Avtalspension SAF-LO). operations and which can be reasonably allocated to the segment. Alecta ITP and AMF Pension/Avtalspension SAF-LO have been Net financial items, taxes and one-time items are not allocated to treated as defined contribution plans, in accordance with IAS 19.30 the operating business segments. (a), as the pension companies have not been able to provide actuarial valuations. Information on geographical areas Pension coverage for employees of Group companies in Finland Componenta monitors non-current assets and capital expenditure is provided in line with statutory arrangements under the TyEL in- in production facilities in its geographical areas which are Turkey, surance scheme with an insurance company. Under an agreement Finland, the Netherlands, Sweden and other countries. In addition made with the pension insurance company, the Group, as a major the net sales by market area is monitored in more detail. employer, is responsible in Finland for unemployment payments and work disability payments included in pension insurance pay- One-time items ments in their entirety at the moment when the pension starts. One-time items, described in the Report by the Board of Directors, Other non-Finnish subsidiaries operate pension schemes in ac- in certain notes and in group development tables are exceptional cordance with local practice and legislation. transactions that are not related to normal business operations. The Under Turkish Labour Law, the Group is required to pay termina- most common one-time items are capital gains and losses, ineffi- tion benefits to each employee who has completed one year of ciencies in production related to plant closures, additional write- service and whose employment is terminated without due cause, is downs, or reversals of write-downs, expenses due to accidents and called up for military service, dies or who retires after completing 25 natural disasters, provisions for planned restructuring, environ- years of service (20 years for women) and achieves the retirement mental matters and penalties. The Group’s management exercises age (58 for women and 60 for men). The amount payable consists of its discretion when taking decisions regarding the classification of one month’s salary. The estimated present value of the future prob- one-time items. able obligation of the Group arising from the termination benefits to be paid to the employees has been presented in non-current provi- Provisions sions and the change in the present value of the future probable A provision is recognized in the balance sheet when the Group has obligation in income statement. a present legal or constructive obligation as a result of a past event, it is probable that the obligation will have to be settled, and the Employee benefits/Share-based payments amount of the obligation can be reliably estimated. If it is possible to The Group has applied the IFRS 2 standard to the share-based incen- obtain compensation for some of the obligation from a third party, tive scheme for key personnel which was decided on 10 March 2010. the compensation is recognized as a separate asset item, but only A share-based incentive scheme has been set up for senior when it is in practice certain that the compensation will be obtained. management for the years 2010–2012. Bonuses are paid partly in A provision for restructuring is recognized when the Group has shares and partly in cash. The benefits given in the scheme are valued drawn up a detailed and formal restructuring plan and restructur- at fair value at the time when they are granted and are recognized ing has either commenced or the plan has been announced publicly. as an expense in the income statement on a straight-line basis over the earnings period. A liability is recognized for the part to be paid in Income taxes cash and the change in its fair value is correspondingly recognized Consolidated direct taxes include direct taxes based on the taxable as an expense for the period in which it occurs. The fair value of the profit of Group companies, calculated according to tax legislation in part to be paid in shares is recognized as an expense and an increase each company’s domicile. Deferred tax liabilities are recognized in in shareholders’ equity. The impact of the scheme on the result is the balance sheet in full and deferred tax assets to the extent that it presented in the income statement under personnel expenses. is probable that future taxable profit will be available against which the asset can be utilized. Deferred tax liabilities and assets are Operating segments calculated from all the temporary differences between the carrying Componenta has four business segments which are Turkey, Fin- amounts of assets and liabilities for financial reporting purposes land, Holland and Sweden. The operations in Turkey comprise the and the amounts used for taxation purposes, using the tax rate in iron foundry and machine shop in Orhangazi and the aluminium force on the balance sheet date. foundry and production unit for aluminium wheels in Manisa. Deferred tax assets for confirmed losses or for losses for the fi- The operations in Finland consist of the iron foundries in Iisalmi, nancial period have only been recognized to the extent to which it is Financial statements COMPONENTA Annual report 2011 12

probable that future profits will be generated that can be offset with Cash and cash equivalents the temporary differences. Deferred tax liabilities have been calcu- Cash and cash equivalents comprise cash in hand and in bank ac- lated for Finnish companies using a tax rate of 24.5%, for Swedish counts and deposits held at call with banks. companies using a rate of 26.3%, for the Turkish company using a rate of 20.0% and for Dutch companies using a rate of 25.0%. Impairment losses on financial assets Deferred tax liabilities and assets are presented in the balance An impairment loss is recognized in the income statement for a sheet as a net figure where they apply to the same tax authority financial asset or group of assets if there is objective evidence that an and when they can offset each other. event or events, such as a customer becoming insolvent, delinquency of payments and financial reorganisation or bankruptcy procedure of Revenue recognition the customer, have had a significant impact on estimated future cash Net sales comprises revenue from the sale of products, services, flows. The amount of the impairment loss is determined as the dif- raw materials, goods and energy, adjusted by indirect taxes and ference between the carrying amount of the financial asset and the sales adjustments. Sales adjustments primarily comprise annually discounted estimated future cash flows. Impairment losses on trade calculated bulk discounts and product returns that result in adjust- receivables can later be reversed through the income statement if it is ments to original invoices. The most significant revenue streams believed that the customer will pay their liabilities. For available-for- from products involve sales of castings and machined castings. sale financial assets, impairment losses are permanent. Revenue streams from services primarily include rental income and possible minor machining and assembly work performed on a Financial liabilities subcontracting basis. Revenue from the sale of goods is recognized Financial liabilities are classified in the following categories: in the income statement when the significant risks and rewards financial liabilities at fair value through profit and loss and financial of ownership have been transferred to the buyer and the Group liabilities at amortized cost. no longer has a right to dispose of the product or effective control over the product. This normally means when a product has been Financial liabilities at fair value through profit and loss delivered to the customer in accordance with agreed delivery terms. Derivative instruments acquired for hedging purposes to which the Revenue from the sale of services is recognized when the service is principles of hedge accounting are not applied are classified under rendered to the customer. financial liabilities at fair value through profit and loss. Financial liabilities held for trading are recognized at fair value using the Other operating income market prices on the balance sheet date. Realized and unrealized Revenues that are not part of actual net sales, such as revenue profit and losses resulting from changes in fair value are recognized from the sale of non-current assets and changes in the fair value of under financial income and expenses for the period in which they investment properties, are recorded under other operating income. are incurred. In addition the foreign exchange rate differences arising from trade payables and trade receivables are presented under other operating Financial liabilities at amortized cost income together with any related hedging results. Other financial liabilities are initially recognized at fair value, less any substantial transaction costs that are directly attributable to Financial assets the acquisition or issue of the financial liability. Financial liabilities The Group’s financial assets are initially classified in the follow- other than held for trading are recognized at amortized cost using ing categories: financial assets at fair value through profit and the effective interest rate method, so that the costs related to the loss, loans and other receivables, held-to-maturity investments acquisition or issue of the liability are recognized in the income and available-for-sale financial assets. At the balance sheet date statement during its contractual term. Substantial transaction costs Componenta does not have any financial assets classified as held- related to credit facility agreements are capitalized in the balance to-maturity date. sheet and recognized in the income statement during the credit facility’s contractual term. Interest payable on the financial liability Financial assets at fair value through profit and loss is recognized through profit and loss on an accrual basis. Financial assets at fair value through profit and loss include deriva- On initial recognition, the fair value of the liability component tive instruments acquired for hedging purposes to which hedge of convertible capital notes is estimated, in the lack of a reliably accounting is not applied. They are recognized at fair value using determined corresponding market interest rate, as the present market prices on the balance sheet date. Realized and unrealized value of the contractually determined stream of future cash flows profit and loss resulting from changes in fair value are recognized in discounted at a rate reflecting the investor’s return taken into the finance income and expenses for the period in which they are account the conversion option value to the investor and the early incurred. redemption call option value to the issuer. The liability component is subsequently measured at amortized cost. The equity component of Loans and other receivables the convertible capital notes is recognized in other equity reserves Loans and other receivables are initially recognized at fair value and less the costs attributable to the issue and deferred tax liability. valued thereafter at amortized cost using the effective interest rate 2 euros per share of the conversion price for shares converted method. Substantial transaction costs are taken into account when with the loan notes of the convertible capital notes is recognized in calculating the acquisition cost. the share capital, and the remainder in the share premium account or the reserve for invested unrestricted equity. The balance sheet Available-for-sale financial assets liability is reduced by the same proportion as that of the converted Holdings and investments that do not belong to the other financial loan notes to the remaining notional value of the loan. asset categories are classified under available-for-sale financial All changes in financial assets and liabilities are recognized using assets. The investments in this category are long-term unlisted settlement date accounting. shares and holdings that are closely linked with business operations and which the Group does not intend to sell or otherwise dispose of. Derivative instruments and hedge accounting Available-for-sale financial assets are valued at acquisition cost if The Group’s derivative instruments are recognized on the settlement no reliable market value is available, less any impairment loss. date at acquisition cost, after which they are recognized at fair value. Financial statements COMPONENTA Annual report 2011 13

The fair value of forward rate agreements is the profit or loss that used to calculate the diluted earnings per share takes into account would occur from closing the agreement, calculated at the market the diluting effect of outstanding options, conditional share-based price on the balance sheet date. The fair value of interest rate and payments, earnings-related share-based payments and convertible currency options is measured using commonly known option pricing capital notes. models. The fair value of interest rate swaps is calculated by discounting future cash flows at current interest rates at the balance sheet Dividend payment date. Foreign exchange forwards and swaps are valued at forward Dividends proposed by the Board of Directors to the Annual General prices on the balance sheet date. The fair value of electricity price Meeting are not recorded in the financial statements until they have forwards is the estimated profit or loss that would derive from closing been approved by the shareholders at the Annual General Meeting. the contracts at market prices on the balance sheet date. Derivative instruments are recognized as defined in IAS 39 Accounting principles requiring judgments by either as financial hedging instruments that are excluded from management and key sources of estimation uncertainty hedge accounting or as hedging instruments that qualify as cash To prepare the consolidated financial statements in accordance with flow hedges or as currency hedges of net investments in foreign International Financial Reporting Standards, management has to operations. When hedge accounting is applied, the hedged item and make estimates and assumptions about the future. the hedging relationship are identified and documented in accord- The Group’s management exercises its discretion when taking ance with the principles of hedge accounting. Hedge effectiveness decisions about the choice of accounting principles for the financial is assessed retrospectively when initiating hedge accounting and statements and their application. Estimates have been used when prospectively on a regular basis, at least quarterly. determining in the financial statements for example the realiz- For balance sheet date, cash flow hedge accounting is applied able value of certain assets like deferred tax assets, the amount of when hedging against future changes in interest rates and in electri provision related to pension obligations, impairments of trade re- city spot market prices. When cash flow hedge accounting is applied, ceivables, the useful economic life of tangible and intangible assets, the effective portions of changes in the fair value of hedging instru- fair values of financial assets and liabilities including derivatives, ments are recognized in shareholders’ equity in the hedging reserve. income tax, the value of inventories, provisions and contingent Accumulated changes in fair value of the interest rate derivatives are liabilities, and for tests for impairment. recognized in financial income and expenses in the income statement for the period when the hedged business operation takes place. Determining the fair value of assets acquired when Correspondingly, accumulated changes in fair value of the electric- merging business operations ity price forwards are recognized as an adjustment to purchases in In major mergers of business operations the Group has used an operating profit in the income statement for the period when the external consultant when estimating the fair value of tangible and hedged business operation takes place. When a hedging instrument intangible assets. For tangible assets, comparisons have been made matures, is sold, the hedging relationship is perceived to be ineffec- with the market prices of similar assets and estimates made of the tive or it is terminated, the cumulative gain or loss on the hedging reduction in value of the acquired assets due to age, wear and simi- instrument from the period when the hedge was effective remains lar factors. The fair value of intangible assets has been determined separately recognized in equity until the forecast transaction occurs. based on estimates of the cash flows relating to the assets, since no The cumulative gain or loss is recognized immediately through profit information has been available on the market about purchases of and loss if the forecast transaction is no longer expected to occur. The similar assets. ineffective part of the interest rate hedging relationship is recognized Management believes that the estimates and assumptions used in the income statement under financial income or expenses and the are sufficiently accurate as a basis for determining fair value. In ad- ineffective part of the electricity price hedging relationship is recog- dition the Group examines at least on every balance sheet date any nized as an adjustment to purchases in operating profit. indications of impairment in tangible and intangible assets. The realized and fair values of foreign exchange differences of currency derivatives designated as effective hedges of net invest- Application of standards ments in foreign operations are recognized in equity as a correc- As from 1 January 2011 the Group has applied the following new and tion item to translation differences. These items will be recognized revised standards and interpretations. Applying the new standards through profit and loss on disposal of the foreign operation. The inef- and interpretations has not had any impact on the result or share- fective part of the hedging relationship is recognized in the income holders’ equity. statement under financial income or expenses. IFRIC 19 Extinguishing Financial Liabilities with Equity Instru- Accumulated interest income or expenses from interest rate ments. The interpretation addresses the accounting by an entity swaps and currency swaps that have taken place during the finan- when the terms of a financial liability are renegotiated and result in cial period are recognized in the income statement under financial the entity issuing equity instruments to a creditor to extinguish all items, as are changes in the fair value of interest rate derivatives or part of the financial liability. Any difference between the carrying that are a part of the Group’s risk management policy but are amount of the financial liability extinguished and the initial meas- excluded from hedge accounting. Exchange differences rising from urement amount of the equity instruments issued is included in the currency derivatives designated as hedges of accounts receivables entity’s profit or loss for the period. The interpretation has not had a and payables are recognized in other operating income and from material impact on the Group’s financial statements. currency derivatives used to hedge against exchange differences IAS 24 (Amendment) Related Party Disclosures. The definition of for borrowings, deposits and other monetary items recognized in a related party has been clarified and certain disclosure require- financial income and expenses. Realized gains or losses from elec- ments in notes relating to government-related entities have been tricity price forwards are recognized under purchases as adjust- changed. The amendment has not had a material impact on the ment items. The fair values of derivative instruments are recognized Group’s financial statements. under current assets and liabilities in the balance sheet. IAS 32 (Amendment) Financial instruments: Presentation. Amendment relates to allow rights, options or warrants to acquire Earnings per share a fixed number of the entity’s own equity instruments for a fixed The basic earnings per share are calculated using the weighted amount of any currency to be classified as equity instruments average of shares in issue. The weighted average number of shares provided the entity offers the rights, options or warrants pro rata to Financial statements COMPONENTA Annual report 2011 14

all of its existing owners of the same class of its own non-derivative IAS 32 (Amendment) Financial instruments (effective for finan- equity instruments. The amendment has not had a material impact cial periods beginning on or after 1 January 2014). The amendments on the Group’s financial statements. address inconsistencies in current practice when applying the Annual Improvements to IFRS. The Annual Improvements pro- offsetting criteria. cess is a collection of necessary but non-urgent amendments to IFRS 9 Financial Instruments (effective date to be confirmed). IFRS standards implemented once per year. The most recent annual IFRS 9 is the first phase in a broader project to replace IAS 39 with improvements incorporate amendments to a total of seven stand- a new standard. Different measurement methods have been main- ards. The effects of the amendments vary according to the standard tained, but they have been simplified. IFRS 9 divides financial assets concerned. None of the amendments have had a material effect on into two classifications: those measured at amortised acquisition the Group’s financial statements. cost and those measured at fair value. The classification depends on the entity’s business model and the characteristics of the contrac- New and amended standards and interpretations not tual cash flows. The IAS 39 instructions on impairment and hedge yet effective in 2011 accounting will remain in force. The new standard does not change Certain new standards, amendments and interpretations to existing the recognition and measurement of financial liabilities, with the standards have been published that are mandatory for the Group’s exception of financial liabilities to which the fair value option is accounting periods beginning on or after 1 January 2011 or later applied. The standard has not yet been approved for application in periods and which the Group has not yet applied. The Group has the EU. identified the following standards as being relevant to its business. IFRS 10 Consolidated Financial Statements (effective for financial IFRS 7 (Amendment) Financial Instruments: Disclosures – periods beginning on or after 1 January 2013). In line with exist- Derecognation (effective for financial periods beginning on or ing principles, the standard establishes control as the basis for after 1 July 2011). The amendment will increase the transparency of consolidation. The standard also sets out how to apply the principle disclosures of transfers of financial assets and enables users of the of control to identify whether an investor controls an investee. The financial statements to evaluate the risks associated with trans- standard has not yet been approved for application in the EU. fers of financial assets and the effects of the risks on the entity’s IFRS 11 Joint Arrangements (effective for financial periods financial position, particularly with regard to the securitisation of beginning on or after 1 January 2013). The standard emphasises financial assets. The amendment has not yet been approved for the importance of the rights and obligations arising from joint ar- application in the EU. rangements in accounting rather than the legal structure of such IFRS 7 (Amendment) Financial instruments: Disclosures - Off- arrangements. There are two types of joint arrangements: joint setting Financial Assets and Financial Liabilities (effective for finan- operations and joint ventures. The standard also requires the equity cial periods beginning on or after 1 January 2013). The amendment method to be used in reporting on joint ventures in place of the pre- requires more extensive disclosures in notes. The disclosures focus viously allowed proportionate consolidation method. The standard on quantitative information about recognised financial instruments has not yet been approved for application in the EU. that are offset in the statement of financial position, as well as those IFRS 12 Disclosure of Interests in Other Entities (effective for recognised financial instruments that are subject to master netting financial periods beginning on or after 1 January 2013). The standard or similar arrangements irrespective of whether they are offset in covers the disclosure of information regarding interests in other the balance sheet. entities, including subsidiaries, joint arrangements, special purpose IAS 12 (Amendment) Income Taxes (effective for financial peri- entities and unconsolidated structured entities. The standard has ods beginning on or after 1 January 2012). IAS 12 previously required not yet been approved for application in the EU. an entity to evaluate what proportion of the carrying amount of an IFRS 13 Fair Value Measurement (effective for financial periods asset recognised at fair value on the balance sheet will be recovered beginning on or after 1 January 2013). The purpose of the standard through use (e.g. rental revenue) and what proportion through sale. is to increase consistency and reduce complexity by providing an The amendment introduces the presumption that recovery of the exact definition of fair value and setting out in a single standard the carrying amount will normally happen through sale. The presump- requirements for measuring fair value and making related disclo- tion applies to deferred taxes arising from investment properties, sures. The standard does not extend the use of fair value but pro- property, plant and equipment and intangible assets that are meas- vides a framework for situations where another standard requires ured using the fair value or revaluation model. The amendment has or permits fair value measurements. The standard has not yet been not yet been approved for application in the EU. approved for application in the EU. IAS 1 (Amendment) Presentation of Financial Statements (effec- IAS 27 (Revised in 2011) Consolidated and Separate Financial tive for financial periods beginning on or after 1 July 2012). The most Statements (effective for financial periods beginning on or after 1 significant change concerns the grouping of other comprehensive January 2013). The revised standard sets out the remaining require- income items based on whether they are potentially reclassifiable to ments pertaining to separate financial statements after the inclu- profit or loss at a later date, subject to certain conditions being met. sion of the provisions on control in IFRS 10. The revised standard has The amendment has not yet been approved for application in the EU. not yet been approved for application in the EU. IAS 19 (Amendment) Employee Benefits (effective for financial IAS 28 (Revised in 2011) Investments in Associates and Joint Ven- periods beginning on or after 1 January 2013). The amendment re- tures (effective for financial periods beginning on or after 1 January quires immediate recognition of actuarial gains and losses in other 2013). The revised standard sets out requirements for using the comprehensive income items, discontinuing the use of the corridor equity method of accounting for associates and joint ventures as method and measuring finance cost based on net interest. The a result of the publication of IFRS 11. The standard has not yet been amendment has not yet been approved for application in the EU. approved for application in the EU. Financial statements COMPONENTA Annual report 2011 15

Notes to the consolidated financial statements figures are in millions of euros unless otherwise stated.

NOTES TO THE CONSOLIDATED INCOME STATEMENT 1. Operating segments sales and logistics company Componenta UK Ltd in the UK, service Componenta’s business operations are divided into four operational and real estate companies in Finland, the Group’s administrative segments, Turkey, Finland, Holland and Sweden. functions and associated company Kumsan A.S. in Turkey. Trans The operations in Turkey comprise the iron foundry and machine actions between operating business segments as well as between shop in Orhangazi and the aluminium foundry and production unit other business are based on market prices. for aluminium wheels in Manisa. The operations in Finland consist The main products sold by operations Turkey are machined and of the iron foundries in Iisalmi, Karkkila, Pietarsaari and Pori and non-machined iron and aluminium cast components. The main the machine shops in Lempäälä and Pietarsaari, and the production products sold by operations Finland and Holland are machined and unit for pistons in Pietarsaari. Componenta Finland Ltd, a subsidi- non-machined iron cast components. The main products sold by ary of Componenta Corporation, has sold the business operations operations Sweden are machined and painted iron cast compo- and production machinery of the Nisamo machine shop during the nents and forged components. The main business of other business financial year 2011. Machining operations at Componenta Finland operations consists of the production of logistics services and the Ltd’s Pietarsaari unit have been terminated during the financial year rental of office and industrial premises. In addition, Group service 2011. The operations in the Netherlands comprise the iron foundries units are included in other business operations. in Heerlen and Weert, the machine shop operations in Weert and Segment assets and liabilities include items which the segment the pattern shop in Tegelen. The operations in Sweden comprise the uses in its business operations. Unallocated items include financial Främmestad machine shop and the Wirsbo forge. In addition, the and tax items, and items which are common to the whole Group. statements contain figures for Other business which includes the

Business segments 2011 Other One-time MEUR Turkey Finland Holland Sweden business items*) Eliminations Group External sales 206.7 89.8 101.3 120.4 58.2 576.4 Internal sales 70.5 23.1 7.9 1.1 32.8 -135.4 0.0 Total sales 277.2 112.8 109.3 121.5 91.0 -135.4 576.4 Share of the associated companies' result 0.2 0.2 Segment operating profit 28.7 -1.6 -1.9 3.6 1.2 -7.4 -0.1 22.5 Unallocated items 1.6 -25.5 Net profit -5.8 -3.1

Segment assets 193.5 79.9 49.3 68.6 51.3 -80.4 362.3 Shares in associated companies 1.3 1.3 Unallocated assets 73.2 Total assets 436.8

Segment liabilities 40.7 22.2 17.4 31.0 21.0 -29.5 102.9 Unallocated liabilities 292.8 Total liabilites 395.7

Capital expenditure in production facilities 11.8 2.3 2.0 4.4 1.4 21.8 Depreciation -6.0 -4.6 -1.8 -2.9 -2.4 -2.6 -20.2 *) One-time items in operating profit relate to terminating machining operations at Pietarsaari unit, EUR -3.8 million, and sale of the business operations and production machinery of the Nisamo machine shop, EUR -1.8 million, both units belong to business segment Finland, and also restructuring costs in Holland, EUR -0.7 million, write-downs of prepayments paid to suppliers, EUR -0.7 million and other one-time items, EUR -0.4 million.

Business segments 2010 Other One-time MEUR Turkey Finland Holland Sweden business items Eliminations Group External sales 161.5 85.0 81.1 84.2 39.9 451.6 Internal sales 43.3 18.6 4.0 0.5 25.5 -91.9 0.0 Total sales 204.8 103.6 85.1 84.7 65.3 -91.9 451.6 Share of the associated companies' result 0.2 0.2 Segment operating profit 15.2 -0.2 -1.5 0.8 -1.0 -0.1 0.4 13.5 Unallocated items -21.0 Net profit -0.1 -7.5

Segment assets 210.8 85.7 48.7 51.5 53.9 -70.0 380.6 Shares in associated companies 1.3 1.3 Unallocated assets 38.4 Total assets 420.4

Segment liabilities 33.5 24.2 12.8 25.7 25.7 -22.5 99.3 Unallocated liabilities 250.4 Total liabilites 349.7

Capital expenditure in production facilities 4.8 2.4 0.4 0.5 0.5 8.5 Depreciation -4.9 -4.8 -1.5 -2.1 -2.7 -16.0 Financial statements COMPONENTA Annual report 2011 16

Geographical areas 2011 5. Operating expenses The MEUR 2011 2010 Nether- Other Change in inventory of finished goods and work MEUR Turkey Finland lands Sweden countries Total in progress 1.5 3.1 Non-current assets *) 106.7 84.2 32.9 35.1 1.1 260.0 Production for own use 0.7 0.7 Capital expenditure in Materials, supplies and products -237.4 -172.9 production facilities 11.7 3.5 2.0 4.5 0.0 21.8 External services -44.5 -30.0 Personnel expenses -131.0 -119.6 Geographical areas 2010 Rents -5.4 -4.6 The Maintenance costs of investment properties -0.4 -0.1 Nether- Other Waste, property and maintenance -26.5 -21.6 MEUR Turkey Finland lands Sweden countries Total Energy -41.6 -36.9 Non-current assets *) 133.1 89.0 33.0 31.4 1.6 288.1 Sales and marketing -1.7 -2.2 Capital expenditure in Computer software -3.4 -3.6 production facilities 4.8 2.8 0.4 0.5 0.0 8.5 Tools for production -5.4 -3.6 *) Excluding non-current deferred tax assets, financial assets and other receivables. Freights -13.3 -10.1 External net sales by market area Other operating expenses -27.8 -21.3 Total operating expenses -536.3 -422.8 MEUR 2011 2010 Sweden 107.5 81.7 Audit fees -0.4 -0.4 Germany 106.4 76.0 Other fees -0.3 -0.1 Turkey 87.5 73.7 Total fees paid to auditors -0.7 -0.5 UK 64.9 47.5 Finland 57.8 53.8 6. Employee benefit costs Benelux countries 45.2 35.2 MEUR 2011 2010 France 35.6 27.8 Personnel expenses Italy 29.5 20.7 Salaries and fees -107.0 -94.8 Other European countries 9.1 9.1 Pension costs -10.5 -12.1 Other countries 33.0 26.1 Other personnel costs -13.5 -12.7 External net sales total 576.4 451.6 -131.0 -119.6 Country-specific net sales reflect the destination where goods have been delivered, or Average number of personnel by segment, requested to be delivered by the customer. excluding leased personnel Turkey 2,325 1,900 2. Business acquisitions Finland 903 956 There were no business acquisitions in 2011 and 2010. Holland 491 515 Sweden 315 301 3. Business divestments Other business 201 181 In December 2011, Componenta Corporation’s subsidiary Com- 4,234 3,853 ponenta Finland Oy signed an agreement to sell the business Personnel expenses include costs related to share-based payment EUR -0.1 (-0.1) million. operations and production machines of the Nisamo machine shop in Lempäälä. The buyer is a subsidiary of Tampereen Konepajat Oy, 7. Research and development costs which will carry on machining operations at the current Nisamo MEUR 2011 2010 premises as a machining subcontractor for Componenta. The effect The following amounts have been recognized of the sale of the Nisamo machine shop, through impairment of as- in the income statement under research and sets, on Componenta’s pre-tax profit in 2011 is EUR -1.5 million. development costs -2.4 -1.8

Carrying values of the sold assets before write-downs 8. Depreciation, amortization and write-down of non-current assets MEUR 2011 MEUR 2011 2010 Intangible assets 0.1 Depreciation and amortization Tangible assets 1.9 Tangible assets Inventories 0.1 Buildings and structures -2.3 -2.6 Total assets 2.1 Investment properties - 0.0 Machinery and equipment *) -12.7 -10.8 Sales price 0.6 Other tangible assets -0.5 -0.7 Write-downs of the assets/loss of the business divestment 1.5 -15.5 -14.1 Intangible assets 4. Other operating income Intangible rights -0.2 -0.1 MEUR 2011 2010 Computer software -0.3 -0.6 Rental income 0.7 0.7 Other capitalized expenditure -1.6 -1.2 Profit from sale of non-current assets 0.4 0.0 -2.1 -2.0 Exchange gains and losses of trade receivables Write-downs on machinery and equipment and and payables, incl. hedges 0.3 -1.1 intangible assets **) -2.6 0.0 Changes in fair value of investment properties 0.6 - Total depreciation, amortization and write-downs Other operating income 0.3 0.9 of non-current assets -20.2 -16.0 Other operating income total 2.3 0.6 *) The units-of-production depreciation method is used in production machinery and equipment. Planned depreciation based on normal utilized capacity was EUR 18.1 (-19.8) Rental income from investment properties million and capacity utilization correction was EUR 5.4 (9.0) million. included in net sales 0,5 0,1 **) Write-downs on machinery and equipment and intangible assets relate to sale of Nisamo operations and closing down the Pietarsaari machine shop. Financial statements COMPONENTA Annual report 2011 17

9. Financial income and expenses 2011 2010 MEUR 2011 2010 Basic and diluted earnings per share Dividend income from available-for-sale financial Numerator: Profit for the period attributable assets 0.0 0.0 to the shareholders of the parent company, Interest income from loans and other receivables 0.6 0.6 1,000 EUR -4,319 -7,880 Exchange rate gains from financial assets and Denominator: Weighted average number of liabilities recognized at amortized cost 7.5 9.0 outstanding shares during the financial year, Realized exchange rate gains from currency 1,000 shares 17,485 17,458 derivatives 4.2 5.2 Basic earnings per share, EUR -0.25 -0.45 Other financial income 1.1 2.1 Earnings per share with dilution, EUR -0.25 -0.45 Change in fair value of financial assets and liabilities The weighted average number of shares used to calculate the diluted earnings per share held for trading 0.0 -1.6 takes into account the dilutive effect of all potential shares with such an effect. The dilutive Ineffective portion of hedge accounting of net effect of convertible capital notes that have not been converted into shares (Note 28) and investment in foreign entities - - the share-based incentive scheme for employees (Note 25) will not be taken into account - fair values transferred from equity to profit in 2011 and 2010 since the dilution would increase the earnings per share. and loss - - Ineffective portion of cash flow hedge accounting 0.0 0.0 NOTES TO THE CONSOLIDATED STATEMENT Effective interest expenses for financial liabilities OF FINANCIAL POSITION recognized at amortized cost -19.5 -19.4 Exchange rate losses from financial assets and 12. Tangible assets liabilities recognized at amortized cost -4.8 -1.8 MEUR 2011 2010 Other charges on financial liabilities valued at Land and water areas amortized acquisition cost -0.5 -0.5 Acquisition cost at 1 Jan 24.3 23.5 Interest expenses and commissions for sold trade Additions 0.1 0.1 receivables -5.3 -3.2 Re-classifications -0.7 - Interest expenses for interest rate swaps -0.8 -1.8 Realized exchange rate losses from currency Translation differences -2.4 0.8 derivatives -7.3 -7.9 Book value at 31 Dec 21.3 24.3 Other financial expenses -1.0 -4.3 Financial income and expenses, total -25.9 -23.5 MEUR 2011 2010 Buildings and constructions Other operating income in note 4 includes a total of EUR 3.3 (0.2) million in exchange rate Acquisition cost at 1 Jan 111.6 108.4 gains and losses arising from foreign currency denominated sales and purchases and EUR Additions 0.4 0.5 -3.0 (-1.2) million from foreign exchange derivatives designated to these items. Disposals -0.9 - Interest income on interest rate swaps has been moved to compensate interest expenses. Re-classifications -13.2 0.0 During 2011 the Group has not received any significant commissions from financial assets. Translation differences -4.4 2.7 Acquisition cost at 31 Dec 93.5 111.6 10. Income taxes Accumulated depreciation at 1 Jan -44.3 -40.3 Accumulated depreciation on decreases and MEUR 2011 2010 re-classifications 3.9 -0.2 Income taxes Translation differences 2.6 -1.2 Income taxes for financial period -5.0 -0.2 Depreciation during the period -2.3 -2.6 Change in deferred taxes (see note 19) 5.3 2.8 Accumulated depreciation at 31 Dec -40.1 -44.3 0.3 2.5 Book value at 31 Dec 53.4 67.3 Income tax reconciliation between tax expense computed at statutory rates in Finland (26.0% in 2011 and 2010) and income tax expense provided on earnings. MEUR 2011 2010 Buildings and constructions, finance leasing MEUR 2011 2010 Acquisition cost at 1 Jan 0.3 0.3 Profit before tax -3.4 -10.0 Additions - - Acquisition cost at 31 Dec 0.3 0.3 Income tax using Finnish tax rate 0.9 2.6 Accumulated depreciation at 1 Jan 0.0 0.0 Difference between Finnish tax rate and rates in Depreciation during the period 0.0 0.0 other countries 0.7 0.6 Accumulated depreciation at 31 Dec 0.0 0.0 Tax exempt income 0.2 0.0 Book value at 31 Dec 0.2 0.3 Non-deductible expenses -0.3 -0.7 Effect of the change in corporate income tax rate MEUR 2011 2010 in other countries -0.1 - Machinery and equipment Effect of the change in corporate income tax rate in Finland *) -1.1 - Acquisition cost at 1 Jan 380.7 358.1 0.3 2.5 Additions 11.6 4.4 Disposals -13.9 -4.9 *) The Finnish corporate income tax rate will decrease from 26.0% to 24.5% in 2012. As a Re-classifications -23.5 4.6 result, deferred tax assets and liabilities relating to Finnish operations presented on the Translation differences -26.6 18.5 statement of financial position dated 31 December 2011 are valued at the new tax rate Acquisition cost at 31 Dec 328.3 380.7 of 24.5%. The effect of the change in tax rate on deferred tax assets and liabilities is recorded through income statement. Accumulated depreciation at 1 Jan -251.1 -232.4 Accumulated depreciation on increases 0.0 0.0 Accumulated depreciation on decreases and 11. Earnings per share re-classifications 32.1 3.0 Basic earnings per share is calculated by dividing the profit attributable to shareholders of Translation differences 16.4 -10.8 the parent company by the weighted average number of outstanding shares during the Depreciation and write-downs during the financial year. period -13.7 -10.8 Accumulated depreciation at 31 Dec -216.3 -251.1 Book value at 31 Dec 112.0 129.6 Financial statements COMPONENTA Annual report 2011 18

MEUR 2011 2010 There was no need to record impairment losses on the basis of impairment testing in Machinery and equipment, finance leasing 2011 and in 2010. Acquisition cost at 1 Jan 22.8 21.8 Additions 4.0 0.1 Sensitivity analysis: Disposals -4.4 -0.2 A sensitivity analysis was carried out on the Turkey segment using a variety of scenarios. Re-classifications -0.7 -0.1 These scenarios were achieved by altering the assumed values as follows: - by reducing profitability (EBITDA) 1-10% Translation differences 0.1 1.2 - by raising the weighted average cost of capital 1-20% Acquisition cost at 31 Dec 21.8 22.8 Accumulated depreciation at 1 Jan -7.3 -5.8 It is the opinion of management that the changes in the basic assumptions in the theore- Accumulated depreciation on decreases 2.2 0.0 tical scenarios mentioned above should not be interpreted as evidence that they are likely Translation differences 0.0 -0.3 to occur. However, none of these scenarios would have resulted in the need to recognize an Depreciation during the period -1.4 -1.2 impairment loss for goodwill. Accumulated depreciation at 31 Dec -6.5 -7.3 Book value at 31 Dec 15.3 15.5 14. Intangible assets MEUR 2011 2010 MEUR 2011 2010 Capitalized development costs Other tangible assets Acquisition cost at 1 Jan 0.2 0.0 Acquisition cost at 1 Jan 9.4 12.2 Additions 0.1 0.2 Additions 0.2 0.3 Re-classifications 0.0 - Disposals -0.4 -0.1 Acquisition cost at 31 Dec 0.3 0.2 Re-classifications -0.6 -3.7 Accumulated amortization at 1 Jan 0.0 0.0 Translation differences -0.9 0.6 Accumulated amortization on decreases - - Acquisition cost at 31 Dec 7.6 9.4 Amortization during the period 0.0 0.0 Accumulated depreciation at 1 Jan -6.7 -6.8 Accumulated depreciation on decreases and Accumulated amortization at 31 Dec 0.0 0.0 re-classifications 0.8 0.8 Book value at 31 Dec 0.3 0.2 Translation differences 0.7 -0.2 Depreciation during the period -0.5 -0.7 MEUR 2011 2010 Accumulated depreciation at 31 Dec -5.7 -6.7 Intangible rights Book value at 31 Dec 1.9 2.7 Acquisition cost at 1 Jan 1.4 1.3 Additions 1.1 0.1 MEUR 2011 2010 Disposals - 0.0 Advance payments and fixed assets under Re-classifications -0.1 - construction Translation differences -0.2 0.1 Acquisition cost at 1 Jan 5.6 5.3 Acquisition cost at 31 Dec 2.3 1.4 Additions 6.2 0.9 Accumulated amortization at 1 Jan -1.0 -0.9 Disposals -2.1 0.0 Accumulated amortization on increases 0.0 0.0 Re-classifications -0.7 -0.9 Accumulated amortization on decreases and Translation differences -0.8 0.3 re-classifications 0.1 0.0 Book value at 31 Dec 8.2 5.6 Translation differences 0.1 0.0 Amortization during the period -0.2 -0.1 Total tangible assets 212.4 245.3 Accumulated amortization at 31 Dec -0.9 -1.0 Book value at 31 Dec 1.3 0.4 Minimum lease payments and present values of the payments by maturity classes relating to finance lease agreements are presented in note 28. Finance lease agreements MEUR 2011 2010 mainly comprise production equipment leases, with average maturity of 5-7 years. Lease Computer software payments are tied to short-term market interest rates. The agreements do not include Acquisition cost at 1 Jan 5.1 4.7 restrictions on dividend payments, additional borrowing nor on entering into new lease Additions 0.3 0.4 agreements. Disposals -0.1 0.0 13. Goodwill Re-classifications 0.2 0.0 Acquisition cost at 31 Dec 5.5 5.1 MEUR 2011 2010 Accumulated amortization at 1 Jan -3.1 -2.5 Acquisition cost at 1 Jan 33.1 31.5 Accumulated amortization on decreases and Translation difference -5.1 1.6 re-classifications -0.6 0.0 Book value at 31 Dec 28.0 33.1 Amortization during the period -0.3 -0.6 Accumulated amortization at 31 Dec -4.0 -3.1 Allocation of goodwill and impairment testing Goodwill is allocated to cash generating units and most of the goodwill is recorded under Book value at 31 Dec 1.5 2.0 the Turkey segment. The goodwill allocated to Turkey was EUR 26.5 (31.6) million at the end of 2011. MEUR 2011 2010 The value in use of the Turkey segment has been defined by using the present value Other capitalized expenditure method. The calculations have used 5-year discounted cash flow plans that are based on Acquisition cost at 1 Jan 9.5 8.1 strategic plans approved by the management. The estimated cash flow of the segment Additions 0.1 1.2 is based on the use of property, plant and machinery in their present condition without Disposals -0.5 0.0 any possible acquisitions. Within strategic plans preparations the average historical Re-classifications -0.1 0.3 growth and EBITDA development have been taken into consideration. Cash flows beyond Acquisition cost at 31 Dec 9.0 9.5 five years are calculated using the residual value method. Stable 1% annual growth in Accumulated amortization at 1 Jan -5.8 -4.7 operating profit has been assumed when defining the residual value. Accumulated amortization on decreases and The discount rate used is the weighted average cost of capital before tax defined re-classifications 1.1 0.0 by Componenta. The factors in this are risk-free interest rate, market risk premium, the Amortization during the period -1.6 -1.2 industry beta, borrowing costs and the target ratio for shareholders’ equity to liabilities. Accumulated amortization at 31 Dec -6.3 -5.8 Componenta has used a weighted average cost of capital of 10.3% in its calculations Book value at 31 Dec 2.7 3.7 related to Turkey segment. Financial statements COMPONENTA Annual report 2011 19

MEUR 2011 2010 Associated companies 31 Dec 2011 Advance payments for intangible assets Profit/ Group Acquisition cost at 1 Jan 0.3 0.2 Assets, Liabilities, Net sales, Loss, share of Additions 0.7 0.3 MEUR MEUR MEUR MEUR holding, % Re-classifications 0.0 -0.3 Kumsan A.S., Turkki 5.2 0.7 5.5 0.8 25.1 Book value at 31 Dec 1.0 0.3 Kiinteistö Oy Niliharju, Helsinki 0.7 0.2 0.0 0.0 25.0

Associated companies 31 Dec 2010 Total intangible assets 6.7 6.7 Profit/ Group 15. Investment properties Assets, Liabilities, Net sales, Loss, share of MEUR 2011 MEUR 2010 MEUR MEUR MEUR MEUR holding, % Book value at 1 Jan 1.8 Acquisition cost at 1 Jan 2.3 Kumsan A.S., Turkki 5.5 0.8 5.5 1.0 25.1 Additions 0.0 Additions 0.0 Kiinteistö Oy Niliharju, Helsinki 0.7 0.2 0.0 0.0 25.0 Disposals 0.0 Acquisition cost at 31 Dec 2.3 The value of shares in associated companies does not include goodwill at 31 Dec 2011. Transfers 9.2 Accumulated depreciation at 1 Jan -0.5 All associated companies are unlisted. Profit/loss from Depreciation during the period 0.0 the fair valuation 0.6 Accumulated depreciation at 31 Dec -0.5 17. Financial assets Book value at 31 Dec 11.6 Book value at 31 Dec 1.8 MEUR 2011 2010 In 2010, the company applied the acquisition cost model in the valuation of investment Available-for-sale investments properties, recognizing the assets in the statement of financial position at their acquisition Acquisition cost at 1 Jan 0.5 0.4 cost. In 2011, the company adopted the fair value model, recognizing the gains or losses Additions 0.2 0.1 arising from changes in the fair value of investment properties in net profit or loss for the Disposals - 0.0 period in which they arise. The fair value of properties transferred to the investment pro- Book value at 31 Dec 0.7 0.5 perty category stood at EUR 9.2 million on 31 December 2011 and the difference between Available-for-sale financial assets consist of non-listed shares, the biggest investment the earlier book value and the fair value, EUR 0.6 million after taxes, is recognized through being Majakka Voima Oy. As the fair value of these shares is difficult to determine equity. The transferred properties, located in Karkkila and Lempäälä, are primarily used by reliably, they are recognized at acquisition cost less any impairment losses. According external tenants. The change in the fair value of old investment properties, EUR 0.6 million, to Componenta’s view the fair value and acquisition cost do not differ essentially. Other is recorded in other operating income. The fair values of investment properties are based financial assets are classified in fair value valuation method level 3, please see additional on assessment books prepared by an independent and professionally qualified evaluator information in note 22. There were no gains or losses from the sale of available-for-sale and last updated in late autumn 2011. In 2011 the evaluation was prepared by Kiinteistötaito financial assets in 2011. Peltola & Co Oy, mainly by using the yield value methods. 16. Shares in associated companies 18. Non-current receivables MEUR 2011 2010 MEUR 2011 2010 From associates Acquisition cost at 1 Jan 1.3 1.1 Loan receivables 0.1 0.1 Disposals 0.0 0.0 Share of results of associated companies 0.2 0.2 Other non-current receivables Translation differences -0.2 0.0 Loan receivables 3.2 4.8 Book value at 31 Dec 1.3 1.3 Other receivables 1.3 1.2 4.5 5.9

Total non-current receivables 4.5 6.0 From other non-current loan receivables EUR 2.6 (4.5) million (nominal currency SEK) mature in 2015 and EUR 0.6 (0.0) million in 2017. The Group’s loan receivables are mainly related to company reorganizations and acquisitions or investments.

19. Deferred tax assets and liabilities

Changes in deferred taxes during the financial year 2011

Recognized in Recognized Translation MEUR at 1 Jan 2011 income statement in equity differences at 31 Dec 2011 Deferred tax assets

Intercompany gain on sale of fixed assets 1.1 -0.4 0.0 0.7 Intercompany margin in inventory 0.2 0.0 0.0 0.2 Provisions 0.1 0.7 0.0 0.7 Tax losses carried forward 28.1 3.3 0.0 31.4 Fair valuation of investment properties 0.0 0.1 0.1 Revaluation of other real estate 0.9 -0.1 0.8 Other differences 2.3 0.7 0.5 -0.2 3.4 Total 32.6 4.3 0.6 -0.1 37.3 Offset with deferred tax liabilities -11.6 -11.0 Total 20.9 26.4 Deferred tax assets recognized for losses in Finland, in Sweden and in the Netherlands are based on the expected taxable income of the companies in these countries. It is estimated that these deferred tax assets can be utilized in 2-9 years. Financial statements COMPONENTA Annual report 2011 20

Recognized in Recognized Translation MEUR at 1 Jan 2011 income statement in equity differences at 31 Dec 2011 Deferred tax liabilities

Valuing tangible assets at fair value when merging businesses 4.6 -0.3 -0.7 3.6 Accelerated depreciation 5.6 0.3 -0.9 5.0 Fair valuation of investment properties 0.0 0.2 0.5 0.7 Revaluation of other real estate 4.8 -0.2 4.6 Finance leases 1.2 -0.3 0.9 Other differences 5.1 -0.6 0.1 -0.1 4.5 Total 21.2 -0.9 0.6 -1.8 19.2 Offset with deferred tax assets -11.6 -11.0 Total 9.6 8.3 Deferred income tax assets and liabilities are netted on the balance sheet primarily on a country-by-country basis when the country in question allows the balancing of taxable profits and losses between Group companies or when there is only one subsidiary in the country in question.

Changes in deferred taxes during the financial year 2010 Recognized in Recognized Translation MEUR at 1 Jan 2010 income statement in equity differences at 31 Dec 2010 Deferred tax assets

Intercompany gain on sale of fixed assets 1.5 -0.4 1.1 Intercompany margin in inventory 0.1 0.0 0.0 0.2 Provisions 0.1 0.0 0.1 Tax losses carried forward 23.7 4.4 28.1 Revaluation of other real estate 0.9 0.0 0.9 Other differences 3.4 -0.7 -0.4 2.3 Total 29.6 3.3 -0.4 0.0 32.6 Offset with deferred tax liabilities -12.9 -11.6 Total 16.6 20.9 Recognized in Recognized Translation MEUR at 1 Jan 2010 income statement in equity differences at 31 Dec 2010 Deferred tax liabilities

Valuing tangible assets at fair value when merging businesses 4.6 -0.3 0.3 4.6 Accelerated depreciation 4.7 0.7 0.2 5.6 Revaluation of other real estate 4.8 0.0 0.0 4.8 Finance leases 0.8 0.3 1.2 Other differences 4.0 0.0 0.9 0.2 5.1 Total 19.0 0.6 0.9 0.7 21.2 Offset with deferred tax assets -12.9 -11.6 Total 6.1 9.6 No deferred tax liability has been recognized for the undistributed profit of non-Finnish subsidiaries since possible distribution of profits would not give rise to any substantial tax effect.

20. Inventories Trade receivables by currency MEUR 2011 2010 2011 2010 Raw materials and consumables 15.9 12.3 % % Work in progress 7.7 6.0 EUR 89.3 82.5 Finished products and goods 20.8 21.4 SEK 6.0 9.4 Other inventories 13.8 12.3 TRY 3.3 4.8 Advance payments 0.2 0.2 GBP 1.5 2.9 Total inventories 58.4 52.2 USD - 0.4 Other inventories include mainly tools, patterns, fixtures and spare parts. During the financial year 2011 an expense of EUR -0.1 (-0.2) million was recognized to reduce Assets held for sale the book value of inventories to their net realizable value. Componenta has begun to take measures to sell a unit manufacturing aluminium wheels for passenger cars in Manisa, Turkey. The non-current tangible and intangible assets and 21. Trade and other short-term receivables inventory of the aluminium wheel manufacturing unit are classified as current assets held MEUR 2011 2010 for sale in accordance with IFRS 5. The sale of wheel manufacturing unit is expected to take Trade receivables 25.1 27.1 place in 2012. Loan receivables 1.5 1.8 MEUR 2011 Derivative receivables 0.1 3.9 Intangible assets 0.0 Prepayments and accrued income 5.8 5.6 Tangible assets 7.6 Other receivables 2.8 3.2 Inventories 2.3 Total trade and other short-term receivables 35.2 41.7 Total asset held for sale 9.9 Other receivables inlcude mainly value added tax receivables, and Prepayments and accrued income mainly prepaid accrued expenses. Financial statements COMPONENTA Annual report 2011 21

22. Classification of fair value of financial assets and liabilities Fair values by classification of valuation method 2011 Financial assets and liabilities that are valued at fair value are classfified on three levels, MEUR LEVEL 1 LEVEL 2 LEVEL 3 depending on the estimated reliability of the valuation method: Foreign exchange rate derivatives (OTC) - -0.3 - Interest rate derivatives (OTC) - -1.2 - LEVEL 1: Commodity derivatives -1.1 - - A reliable quoted market price exists for identical instruments quoted on an active market. Available-for-sale investments - - 0.7 Electricity price forwards are classified on this level, as their valuations are based on market prices for Nord Pool’s similar standardized products. LEVEL 2: Fair values by classification of valuation method 2010 MEUR LEVEL 1 LEVEL 2 LEVEL 3 A market price quoted on the active market exists for similar but not identical instruments. The Foreign exchange rate derivatives (OTC) - -1.9 - price may, however, be derived from observable market information. The fair values of interest Interest rate derivatives (OTC) - -0.4 - rate and currency derivatives are calculated by deriving them from price information obtained on the active market and using valuation techniques that are commonly applied in the market. Commodity derivatives 3.3 - - LEVEL 3: Available-for-sale investments - - 0.5 There is no active market for the instrument, a fair market price cannot be reliably derived, and No financial assets or liabilities were transferred from one level to another during the defining the fair value requires significant assumptions. financial year.

23. Cash and cash equivalents MEUR 2011 2010 Cash and cash equivalents included in the statement of financial position Cash at bank and in hand 41.6 11.0

Cash and cash equivalents included in the cash flow statement Cash at bank and in hand 41.6 11.0

24. Share capital, share premium reserve and other reserves Share premium Unrestricted Number of Share capital, reserve, Cash flow equity reserve, Other reserves, shares, (1,000) MEUR MEUR hedges, MEUR MEUR MEUR At 1 Jan 2010 17,458 21.9 15.0 -1.3 32.5 2.1 Redemption of convertible capital notes - - - - - 0.1 Other comprehensive income - - - 3.6 - - At 31 Dec 2010 17,458 21.9 15.0 2.3 32.5 2.2 Directed share issue without consideration 42 - - - - - Other comprehensive income - - - -3.0 - 0.7 Other changes *) - - - - -0.2 0.1 At 31 Dec 2011 17,500 21.9 15.0 -0.7 32.3 2.9 *) Other changes in unrestricted equity reserve include given donation to universities, EUR 0.2 million. The translation differences EUR -41.0 (-18.1) million in the Statement of changes in consolidated shareholders’ equity contain the translation differences arising from translating the financial statements of non-Euro area business units. Gains and losses from hedging the net investments in non-Euro area units are also included in translation differences if the conditions for hedge accounting are met. The share premium reserve contains the amount paid for shares in a share issue that exceeds the nominal value of the share if the decision concerning the issue of convertible capital notes on which the subscriptions are based was made before the 2006 change in the Finnish Company Act. The amount exceeding the nominal value when converting convertible capital notes issued after the new Company Act came into force (1 September 2006) is recognized in the unrestricted equity reserve. Cash flow hegdes include the valuations of commodity and interest derivatives. The fair value changes of hedging instruments in hedging reserve, before taxes, was EUR -1.4 (3.7) million, the amount released to income statement from the hedging reserve, before taxes, was EUR 2.5 (-1.1) million and the change of deferred taxes in hedging reserve was EUR 1.0 (-1.3) million. Other reserves include the conversion option component of the convertible capital notes EUR 2.0 (2.0) million, share-based payments EUR 0.3 (0.2) million according to IFRS 2 and the difference of the fair value and book value of the properties re-classified to investment property class EUR 0.6 (0,0) million. Legal reserve EUR 0.0 (0.0) million is also included in other reserves. After the closing date the Board of Directors has proposed to the Annual General Meeting that no dividend will be paid for 2011.

25. Share-based payment Share-based incentive scheme Share-based incentive scheme 2011 The Board of Directors of Componenta Corporation resolved on 10 March 2010 on a share- based incentive scheme for the period 2010-2012. The scheme has three earning periods, Vesting period begins 1.1.2011 the calendar years 2010, 2011 and 2012. Any bonuses will be paid in 2011, 2012 and 2013 as a Vesting period ends 31.12.2011 combination of company shares and cash. The part to be paid in cash is intended to cover the Release date of shares 1.1.2014 taxes and tax-related costs arising from the bonus. The shares may not be disposed of for Maximum number of shares 182,000 two years after the end of the earning period. If the employment or service of a key person Binding time left 2 years ends during this restriction period, they must return any shares given as a bonus without Share price at grant date, EUR 5.95 consideration. Share price at end of accounting period, EUR 3.37 Any earnings from the incentive scheme were based in 2011 on Componenta Group’s Criteria 100 % Result after financial items profit after financial items excluding one-time items and in 2010 the earnings were based excluding one-time items on cash flow from operations and result after financial items. At the end of 2011 the target group contained 47 people. If the targets set for the scheme had been achieved in full, Combined pay-out of earnings criteria 10% a maximum bonus of 182,000 and 161,500 Componenta Corporation shares would have been paid under the incentive scheme for the 2011 and 2010 earning periods. For the 2011 Share ownership obligation 2 years earning period in the scheme, 18,700 shares of Componenta Corporation will be paid, of Share ownership obligation ending date 1.1.2014 which to the President and CEO 5,000 shares and other key personnel 13,700. For the 2010 Number of personnel in scheme 47 earning period in the scheme, 41,940 shares, the President and CEO’s share of this is 7,500 shares and other key personnel will receive altogether 34,440 shares. The scheme’s impact on the Group’s result before tax in 2011 was EUR -0.1 (-0.1) million. Financial statements COMPONENTA Annual report 2011 22

Calculation of fair value of share bonus in 2011 27. Provisions Number of shares granted 182,000 Current Share price upon grant, EUR 5.95 Other Re- Assumed dividend before payment of bonus, EUR 0.00 benefit organisation Other Fair value (proportion in shares), EUR 5.95 MEUR plans provisions provisions Total Share price 31 December 2011, EUR 3.37 1 Jan 2011 - 0.0 1.2 1.2 Pay-out of earnings criteria, % 10.3 Translation differences - - -0.1 -0.1 Assumed number of shares to be rewarded 18,700 Additions to provisions - 1.0 0.4 1.4 Fair value of reward 31 December 2011, MEUR 0.03 Utilized during the period - - -0.3 -0.3 31 Dec 2011 - 1.0 1.2 2.2 Share-based incentive scheme 2010 Vesting period begins 1.1.2010 1 Jan 2010 - 0.1 1.0 1.1 Vesting period ends 31.12.2010 Translation differences - 0.0 0.0 0.0 Release date of shares 1.1.2013 Additions to provisions - - 0.1 0.1 Maximum number of shares 161,500 Utilized during the period - -0.1 0.0 -0.1 Number of shares rewarded 41, 940 31 Dec 2010 - 0.0 1.2 1.2 Binding time left 1 year Other current provisions include EUR 0.7 (0.6) million in provisions for legal fees relating to Share price at grant date, EUR 4.61 occupational accidents. The amounts are based on the management’s assessment. Share price at end of accounting period, EUR 3.37 Criteria 70% Result after financial items Non-current 30% Net cash flow from Other Re- Environ- operating activities benefit organisation mental Other MEUR plans provisions provisions provisions Total Combined pay-out of earnings criteria 15% for President and CEO and 30% 1 Jan 2011 7.5 0.1 0.3 0.5 8.5 for other key personnel Translation differences -1.2 - - - -1.2 Share ownership obligation 2 years Additions to provisions 0.6 - - 0.1 0.7 Share ownership obligation ending date 1.1.2013 Utilized during the period -0.2 - 0.0 - -0.3 Number of personnel in scheme 45 31 Dec 2011 6.6 0.1 0.3 0.6 7.6

Calculation of fair value of share bonus in 2010 1 Jan 2010 5.8 0.0 0.2 0.6 6.7 Number of shares granted 161,500 Translation differences 0.3 - - - 0.3 Share price upon grant, EUR 4.61 Additions to provisions 1.9 0.0 0.1 - 2.0 Assumed dividend before payment of bonus, EUR 0.00 Utilized during the period -0.4 - - -0.1 -0.5 Fair value (proportion in shares), EUR 4.61 31 Dec 2010 7.5 0.1 0.3 0.5 8.5 Share price 31 December 2011, EUR 3.37 The environmental provision relates to the closing of the landfill site used by the old Pay-out of earnings criteria, % 25.4 production works in Karkkila in accordance with the demands of environmental authorities. Number of rewarded shares 41,940 Closure includes piling up various soil layers and landscaping the area. According to the Fair value of reward 31 December 2011, MEUR 0.16 current plan, the project will be completed in 2013.

26. Pension obligations and other benefit plans MEUR 2011 2010 Change in provisions recognized as operating Pension obligations expenses in income statement -1.5 -1.5 Most of the Group’s pension plans are defined contribution plans. In Sweden Componenta has 28. Interest-bearing liabilities pension schemes, Alecta/ITP and AMF Pension/Avtalspension SAF-LO, classified as multi- employer defined benefit schemes. However, since Alecta and AMF Pension have not been MEUR 2011 2010 able to supply the required actuarial valuations, the Swedish pension plans have been treated Non-current interest-bearing financial liabilities as defined contribution plans in accordance with IAS 19.30 (a). Loans from financial institutions 34.1 137.9 Finance lease liabilities 9.5 8.4 Other benefit plans Pension loans 9.5 12.1 Under Turkish Labour Law, the Group is required to pay termination benefits to each Capital notes 31.4 35.3 employee who has completed one year of service and whose employment is terminated Convertible capital notes, liability portion - - without due cause, is called up for military service, dies or who retires after completing 25 Bonds 26.8 26.7 years of service (20 years for women) and achieves the retirement age (58 for women and Other liabilities - - 60 for men). The amount payable consists of one month’s salary limited to a maximum of TL 111.2 220.4 2,805.04 for each year of service as of 31 December 2011 (31 December 2010: TL 2,623.33). The liability is not funded. Current interest-bearing financial liabilities The provision has been shown under other benefit plans in note 27 and has been Loans from financial institutions 164.0 5.1 calculated by estimating the present value of the future probable obligation of the Finance lease liabilities 2.6 2.9 Group arising from the termination benefits to be paid to the employees. The following assumptions were used in the calculation of the total liability in 31 December 2011 and in Pension loans 2.6 3.9 31 December 2010; Annual discount rate 4.66% (5.92%) and turnover rate to estimate the Capital notes 4.1 2.9 probability of retirement 95.75% (97.00%). The principal assumption is that the maximum Convertible capital notes, liability portion - 2.2 liability for each year of service will increase in line with inflation and therefore the Bonds - - discount rate applied anticipates the effects of future inflation. Other liabilities*) - 3.5 173.3 20.4

Total interest-bearing liabilities 284.5 240.8 *) The item current other liabilities includes commercial paper loans issued by the Group for EUR 0.0 (2.0) million. Financial statements COMPONENTA Annual report 2011 23

Currency breakdown of interest-bearing financial liabilities Capital notes 2011 2010 % % Convertible Capital Notes 2006 Non-current EUR 86.2 82.7 The final instalment of EUR 2.3 million of Componenta Corporation’s Convertible Capital Notes SEK 4.2 2.2 dated 4 December 2006 was repaid with the interest in accordance with the terms on 7 December TRY 9.6 15.1 2011. The accrued interest on the loan for the period 1 January - 4 December 2011 was recorded as an expense in the income statement. During 2011 there were no conversions of notes into shares. Current EUR 98.9 84.0 Capital Notes 2006 SEK 0.8 16.0 The final instalment of EUR 2.9 million of Componenta Corporation’s Capital Notes dated 17 TRY 0.3 - November 2006 was repaid with the interest in accordance with the terms on 17 November 2011. Cash flows are settled in the nominal currency of each liability agreement. The accrued interest on the loan for the period 1 January - 17 November 2011 was recorded as an expense in the income statement. Range of nominal and effective interest rates for interest-bearing financial liabilities Capital Notes 2009 2011 2011 2010 2010 The Board of Directors of Componenta Corporation decided, under the authorization given by the Nominal Effective Nominal Effective extraordinary general meeting shareholders in 2009, to offer a subordinated capital loan. The loan interest interest interest interest issued on 28 September 2009 had a nominal amount of EUR 12.3 million with a rate of issue of 100 rates % rates % rates % rates % percent. If the terms and conditions for repayment are met, the loan will be repaid in three equal Loans from financial institutions 3.6 - 10.8 3.6 - 10.8 3.0 - 10.2 3.0 - 10.2 instalments on 28 September 2012, 28 September 2013 and 28 September 2014. The fixed interest Finance lease liabilities 1.6 - 15.3 1.5 - 19.0 1.3 - 7.8 1.5 - 7.8 of 10.10 percent p.a. will be paid annually in arrears on the loan capital on 28 September. Pension loans 4.0 - 4.8 4.0 - 4.8 3.8 - 5.4 3.8 - 5.4 The loan is not secured. Receivables based on the capital loan rank lower than Componenta Convertible capital notes - - 5.8 - 5.8 10.6 - 10.6 Corporation’s other debt commitments. The principal and interest may be repaid only to the Capital notes 10.0 - 10.1 12.9 - 12.9 6.8 - 10.1 8.3 - 12.2 extent that Componenta Corporation’s unrestricted equity and the sum of all the capital notes Bonds 8.0 - 8.0 9.8 - 9.8 8.0 - 8.0 8.8 - 8.8 exceed on the payment date the amount of the loss as stated in Componenta Corporation’s balance sheet approved for the previous financial year or in the balance sheet included in more re- Commercial papers - - 2.5 - 2.5 2.5 - 2.5 cent financial statements. Should the conditions for repayment not be met on the due date, that part of the principal shall be repaid as is possible under the repayment conditions. Repayment Repayment schedule for interest-bearing financial liabilities 2011 of the remaining loan will be deferred to future financial periods such that repayments deferred MEUR 2012 2013 2014 2015 2016 2017+ in 2013 and 2014 will take place, if the conditions for repayment are met, on 28 September and Loans from financial institutions 164.0 33.9 0.1 0.1 0.0 - after that annually on the basis of the first financial statements that make it possible to pay. Any Finance lease liabilities 2.6 2.7 2.7 2.3 1.8 - unpaid interest shall remain a liability of Componenta and will earn annual interest of 2 percent in Pension loans 2.6 2.6 2.6 2.6 0.5 1.1 excess of the interest rate payable on the notes. Convertible capital notes ------The loan has a balance sheet value on 31 December 2011 of EUR 12.2 million. Accrued Capital notes 4.1 4.1 4.1 23.2 - - interest for the period 28 September - 31 December 2011 has been recorded as an expense in Bonds - 26.8 - - - - the income statement and as a liability in accrued expenses. Other interest-bearing liabilities ------Capital Notes 2010 173.3 70.1 9.5 28.2 2.4 1.1 The Board of Directors of Componenta Corporation decided in 2010 to offer a subordinated capital Repayment schedule for interest-bearing financial liabilities 2010 loan to a limited group of selected investors. The notes were issued on 15 September 2010 with the nominal value of EUR 23.4 million. The rate of issue was 100 percent. Notes are due for repayment MEUR 2011 2012 2013 2014 2015 2016+ in full at maturity on 15 September 2015. The fixed interest to be paid annually in arrears on 15 Loans from financial institutions 5.1 137.6 0.1 0.1 0.1 0.0 September is 10.00 percent p.a. Finance lease liabilities 2.9 1.8 1.8 1.8 1.6 1.3 The loan is not secured. The loan is a subordinated debenture. The principal and interest Pension loans 3.9 2.6 2.6 2.6 2.6 1.6 may be repaid only to the extent that the amount of the unrestricted equity of Componenta Convertible capital notes 2.2 - - - - - and the amount of all capital notes of Componenta upon payment exceed the amount of loss as Capital notes 2.9 4.0 4.0 4.0 23.2 - stated in the balance sheet approved for the preceeding financial year or with the balance sheet Bonds - - 26.7 - - - included in more recent financial statements. Should the conditions for repayment not be met at Other interest-bearing liabilities 3.5 - - - - - maturity, the principal shall be repaid in part to the extent that this is possible. The repayment of 20.4 146.1 35.3 8.5 27.5 3.0 the remaining part is deferred until the financial statements meet the conditions under which it can be paid. Any unpaid interest shall earn interest of 2 percent in excess of the interest payable Maturity of finance lease liabilities on the notes. MEUR 2011 2010 The loan has a balance sheet value on 31 December 2011 of EUR 23.2 million. The accrued Minimum lease payments fall due as follows: interest on the loan from 15 September to 31 December 2011 has been recorded as an expense Not later than one year 3.3 3.3 in the income statement and as a liability in accrued expenses. Later than one year and not later than five years 10.5 7.7 Bonds Later than five years - 1.4 13.8 12.3 Bond 2010 Future financial expenses -1.7 -1.1 The Board of Directors of Componenta Corporation decided in 2010 to offer a bond to a limited group of selected investors. The bond was issued on 29 September 2010 with the nominal value 12.1 11.3 of EUR 26.9 million. The rate of issue was 100 percent. The bond is due for repayment in full at maturity on 29 September 2013. The fixed interest to be paid annually in arrears on 29 September Present value of minimum lease payments: is 8.00 percent p.a. Not later than one year 2.6 2.9 The bond is unsecured. Receivables based on the bond rank equal to Componenta Later than one year and not later Corporation’s other unsecured debt commitments. The bond has a balance sheet value on 31 than five years 9.5 7.0 December 2011 of EUR 26.8 million. The accrued interest on the loan from 29 September to 31 Later than five years - 1.3 December 2011 has been recorded as an expense in the income statement and as a liability in 12.1 11.3 accrued expenses. Financial statements COMPONENTA Annual report 2011 24

29. Current non-interest bearing liabilities Trade payables by currency MEUR 2011 2010 2011 2010 Trade payables to others 61.4 52.1 % % Trade payables to associated companies 0.1 0.1 EUR 54.9 57.5 Accrued expenses and deferred income 23.9 27.1 TRY 25.8 23.9 Derivative liabilities 2.3 1.1 SEK 17.2 17.0 Advances received 0.3 0.0 GBP 1.3 0.9 Other current liabilities 5.0 9.1 USD 0.7 0.8 Current non-interest bearing liabilities total 92.9 89.5

The most significant items in other current liabilities are value added tax payables, withholding taxes and custom payments.

30. Carrying values and fair values of financial assets and liabilities by category Financial assets 2011 2011 2010 2010 MEUR Carrying value Fair value Carrying value Fair value ITEMS RECOGNIZED AT FAIR VALUE Financial assets recognized at fair value through profit and loss Derivatives classified as held for trading 0.7 0.7 0.4 0.4

Financial items included in hedge accounting Derivatives (effective and ineffective portion) 0.0 0.0 3.4 3.4

ITEMS RECOGNIZED AT AMORTIZED COST AND AT COST Loans and other receivables Cash and cash equivalents 41.6 41.6 11.0 11.0 Loan receivables 3.4 3.4 4.9 4.9 Trade receivables 25.1 25.1 27.1 27.1

Available-for-sale financial assets Shares and holdings 0.7 0.7 0.5 0.5

Financial liabilities 2011 2011 2010 2010 MEUR Carrying value Fair value Carrying value Fair value ITEMS RECOGNIZED AT FAIR VALUE Financial liabilities recognized at fair value through profit and loss Derivatives classified as held for trading 2.1 2.1 2.7 2.7

Financial items included in hedge accounting Derivatives (effective and ineffective portion) 1.2 1.2 0.3 0.3

ITEMS RECOGNIZED AT AMORTIZED COST Other financial liabilities Loans from financial institutions 198.1 197.5 143.0 143.2 Finance leases 12.1 11.8 11.3 11.3 Pension loans 12.1 11.9 16.0 16.4 Convertible capital notes - liability component - - 2.2 2.3 Capital notes 35.4 35.5 38.2 38.3 Bonds 26.8 26.0 26.7 26.7 Commercial papers - - 2.0 2.0 Trade payables and other debt 61.7 61.7 53.7 53.7 The fair values of interest-bearing liabilities have been calculated by discounting the future cash flows for the contract with market rates corresponding to the terms of the contract on the closing date or with estimates of a fair rate. The carrying values of trade receivables and payables, commercial papers and finance leases tied to short-term market rates can be assumed to correspond with sufficient accuracy to their fair values due to the short maturity and interest rate renewal periods. The trade receivables are recorded in the statement of financial position adjusted by any impairment. Financial statements COMPONENTA Annual report 2011 25

31. Capital management The figures have not been discounted to correspond to their present values. The figu- Componenta Group’s objective for capital management is to ensure the Group’s viability res are valid only on the closing date and the amount of interest on floating rate contracts to operate in all circumstances. The sector in which Group operates is by nature relatively may vary from actual cash flows. The repayment table for financial liabilities is not meant capital intensive and thus requires active measures to optimize the capital structure. The to portray the Group’s expected total cash flow. strategically important acquisitions and investments in the past few years have had an There is a significant possibility of variation in future cash flows for currency derivati- impact on the Group’s capital structure. ves concerning the exchange rate difference and for this reason they are not included in The Board of Directors and Corporate Executive Team regularly monitor the capital the repayment table. Electricity forwards are essentially connected to physical electricity structure of the Group. In management reporting the different capital notes are included supplies and therefore are treated as part of future electricity purchases. This being the in shareholders’ equity. The Group monitors, in particular, the equity ratio, with capital case they are not reported in the Group’s cash flow table for financial liabilities. The ex- notes included in equity. The company has set the strategic financial target to 40 percent pected cash flows for currency derivatives, electricity forwards and interest rate options by the end of 2015. at the closing date correspond to their fair values (Note 33). The Group’s capital structure is managed among other things with the dividend policy For finance leases, repayments of the finance lease liability and interest expenses (with the approval of shareholders) and by issuing different types of capital notes. During are used as a sufficient approximation of actual rents paid. Only changes in interest 2011 the Group has continued its efforts to reduce working capital, for example by optimi- rates cause a small difference in the actual cash flow. The interest to be paid has been zing inventories, enhancing the collection of customer receivables and further expanding calculated with prevailing nominal interest rates. The actual interest payments on variable the sale of trade receivables. interest contracts will, therefore, probably differ slightly from the figures in the table. In addition to internal monitoring, the Group reports to its lenders the financial covenants relating to the capital structure as stated in the loan agreements. The Group Installments (nominal values) and interest payments on financial liabilities 2010 aims to achieve the interest margin incentives defined in the loan agreements in order to MEUR 2011 2012 2013 2014 2015 2016+ reduce interest expenses. Loans from financial institutions -5.1 -137.8 -0.1 -0.1 -0.1 0.0 Finance leases -2.9 -1.8 -1.8 -1.8 -1.6 -1.3 The key indicators for capital structure Pension loans -3.9 -2.6 -2.6 -2.6 -2.6 -1.6 31.12.2011 31.12.2010 Capital notes -2.9 -4.1 -4.1 -4.1 -23.4 - Net gearing, capital notes included in equity 271.2% 170.5% Convertible capital notes -2.3 - - - - - Equity ratio, capital notes included in equity 17.5% 26.4% Bonds - - -26.9 - - - Commercial papers -2.0 - - - - - 32. Financial risk management Trade payables and other debt -53.7 - - - - - The financial risks relating to Componenta Group’s business operations are managed in Interest expenses on loans -16.8 -13.3 -6.0 -3.2 -2.6 -0.1 accordance with the Group Treasury Policy approved by the Componenta Board of Directors. Interest rate swaps, net -0.8 -0.3 -0.3 0.0 0.0 - The objective is to protect the Group against unfavourable changes in the financial markets -90.4 -160.0 -41.8 -11.8 -30.3 -3.2 and to secure the performance of the Group and its financial position. Management of financial risks is centralized to the Group Treasury. The price risk of electricity is hedged with Foreign exchange risk electricity derivatives by an external consultant. In electricity purchase and hedging the ex- The Group’s foreign exchange risk is divided into transaction risk, which arises from income ternal consultant acts according to Componenta’s instructions which follow Componenta’s and expenses denominated in foreign currencies, and translation risk, which arises from purchase and risk policy. equity investments and related profit or loss denominated in foreign currencies. The trans action position is calculated from the foreign currency denominated trade receivables and Refinancing and liquidity risks trade payables in the balance sheet. These form the part of the transaction position in which The Group aims to ensure the availability of financing by spreading the repayment changes affect ’Operating profit’. The other part of transaction exposure includes items schedules, sources of funding and financial instruments in its loan portfolio. The proportion where the impact of changes in exchange rates are recorded in the income statement in of one source of funding may not exceed a limit set in the Group Treasury Policy. The most ’Financial income and expenses’ such as foreign currency cash in hand and at bank and the important financing instruments used in the Group are the 5-year syndicated credit facility Group’s internal and external foreign currency loans. The hedging level for both parts of the dated 28 June 2007 with a nominal value of EUR 164 million at the reporting date, various transaction position is set at 90 - 110%. If the total exposure for a specific currency is less capital notes and bonds, bilateral loans, a commercial paper programme (EUR 150 million), than EUR 3 million, however, the hedging decision is taken on a case by case basis. the sale of receivables without recourse, and lease financing. It is possible to deviate from this definition of the exposures in order to maintain In 2011 new bilateral bank loans were drawn, totally EUR 34.9 million, to refinance cost-efficiency. This has been done with Componenta Turkey’s foreign currency items short term bank loans. The sale of receivables was also extended considerably during where the hedging level for both transaction positions is set at 70-130%. However, these the year. The syndicated loan matures in June 2012 and the company intends to either hedging levels may stand at 0-130% at the discretion of the Group’s President & CEO. extend it or replace it. In the latter case the company’s principal financing banks have ta- The translation position is determined from the shareholders’ equity and retained ken the decision on credit facilities totalling some EUR 100 million for 2012 and 2013. The earnings of those foreign subsidiary and associated companies of the Group whose bu- company has also negotiated additional financing of EUR 50 million from other banks. In siness currency is not the euro. The translation risk to the Group’s equity is related to the addition, the Board of Directors is proposing to strengthen the company’s equity capital British, Turkish and Swedish subsidiaries as their equity denominated in local currency by altogether EUR 20 million trough an increase in share capital and a hybrid bond. is converted to euros. As stated in the Group Treasury Policy, the translation position is The company still continues negotiations with several financing institutions con- hedged 0 - 100% at the discretion of the Group’s President & CEO. cerning financing totalling EUR 30 million in connection with the previously prescribed To hedge against changes in exchange rates, the Group uses foreign currency loans alternative. and deposits and other natural hedging relationships, as well as common derivative Repayment schedule of the long-term interest bearing debt is presented in the note instruments such as foreign currency forward contracts and options, for which pricing on 28. The Group Treasury Policy states that the Group’s liquidity should cover its near-term the market is reliable. Foreign currency derivatives mature in less than one year. commitments. The minimum liquidity is defined in the Group Treasury Policy. In addition to The currencies with the most significant currency risk exposure are the Turkish lira, cash reserves, the Group ensures its liquidity with unused committed credit facilities. The the Swedish krona and the British pound sterling. cash and cash equivalents and unused committed credit facilities of the Group amounted The table below shows the sensitivity for price changes of the Group’s open currency to EUR 41.6 million (EUR 75.5 million) at the end of the fiscal year. exposures, including the currency derivatives used for hedging (note 33) in both transaction and translation position. Installments (nominal values) and interest payments on financial liabilities 2011 MEUR 2012 2013 2014 2015 2016 2017+ Loans from financial institutions -164.0 -33.9 -0.1 -0.1 0.0 - Finance leases -2.6 -2.7 -2.7 -2.3 -1.8 - Pension loans -2.6 -2.6 -2.6 -2.6 -0.5 -1.1 Capital notes -4.1 -4.1 -4.1 -23.2 - - Convertible capital notes ------Bonds - -26.8 - - - - Commercial papers ------Trade payables and other debt -61.7 - - - - - Interest expenses on loans -13.4 -7.4 -3.4 -2.6 -0.1 -0.1 Interest rate swaps, net -0.2 -0.3 -0.1 0.0 - - -248.7 -77.8 -12.9 -30.8 -2.4 -1.2 Financial statements COMPONENTA Annual report 2011 26

Closing rate Open total Estimate on potential Impact of change in currency rate + / - 31.12.2011 31.12.2011 exposure MEUR currency rate change % To income statement To equity EUR/USD 1.2939 -0.8 10 0.1 / -0.1 - EUR/GBP 0.8353 4.9 10 -0.1 / 0.1 -0.4 / 0.4 EUR/TRY 2.4438 136.9 10 0.2 / -0.2 -12.6 / 15.4 EUR/SEK 8.9120 -0.5 10 1.0 / -1.2 -0.9 / 1.1

Closing rate Open total Estimate on potential Impact of change in currency rate + / - 31.12.2010 31.12.2010 exposure MEUR currency rate change % To income statement To equity EUR/USD 1.3362 -0.1 10 0.0 / -0.0 - EUR/GBP 0.86075 3.7 10 -0.1 / 0.1 -0.2 / 0.3 EUR/TRY 2.0491 147.4 10 -0.1 / 0.1 -13.3 / 16.3 EUR/SEK 8.9655 -3.9 10 0.3 / -0.4 0.0 / -0.0 The Group does not apply cash flow or fair value hedge accounting as stated in IAS 39 for the transaction position.

Interest rate risk The interest rate risk to which fair values and the cash flow are exposed arises mainly from Interest rate derivatives that hedge the Group’s result are divided into derivatives the Group’s loan portfolio, sold trade receivables and finance leases. Because of the cyclical included in cash flow hedge accounting as defined in IAS 39, and assets and liabilities nature of the Group’s customer markets, the treasury policy states that the average period held for trading. Therefore interest rate fluctuations do not affect the carrying values of for renewing the interest rates of the Group’s net liabilities should be at least six months but interest-bearing items but only interest expenses and income recognized in the income no more than two years. The average interest fixing period for net liabilities is 13 months (17 statement. Changes in the fair values of interest rate derivatives classified as held for months). The interest rate risk is managed by spreading the loan portfolio between fixed and trading affect financial income and expenses in income statement whereas changes in floating interest rate loans and investments. The interest rate risk is spread among several the fair values of interest rate swaps included in cash flow hedge accounting affect the interest rate renewal periods and fluctuations in interest rates affect the Group’s financial Group’s shareholders’ equity. position in stages. The interest rate risk is managed also by using interest rate derivatives. Interest rate derivatives have been used to increase the number of fixed interest-bearing liabilities, so as to extend the average interest rate renewal period.

INCOME STATEMENT - FINANCIAL EXPENSES 31.12.2011 for 2012 31.12.2010 for 2011 Forecast change Sensitivity interest Forecast change Sensitivity interest MEUR in financial expenses rate curve +100bp in financial expenses rate curve +100bp Interest bearing financial liabilities -0.3 -1.4 -1.0 -1.3 Interest rate swaps, interest expenses and income net -0.3 0.7 0.6 0.8 Interest rate swaps, change in fair value - 0.9 - 0.7

SHAREHOLDERS’ EQUITY - HEDGING RESERVE Change in fair value Change in fair value interest rate interest rate curve +100bp curve +100bp Interest rate swaps, net (Included in cash flow hedge accounting) 0.2 0.2

The forecast change in financial expenses shows the change in interest expenses if interest Credit losses for the financial year were EUR -0.3 (-0.0) million. The credit losses rates actually follow the yield curve as priced by the market at the point of reference. The came mainly from Moventas, whose two subsidiaries filed for corporate restructuring sensitivity analysis estimates the parallel rise in the interest rate curve at 1.0 percentage in summer 2011. The corporate restructuring programmes were approved in December points. A positive change indicates a decrease and a negative change an increase in interest and thus the amount of credit loss for Componenta was confirmed. The Group’s credit expenses. loss risk of EUR 70.9 (46.8) million corresponds to the carrying value of financial assets, The assumption in the calculations is that loans that mature are refinanced with excluding available-for-sale financial assets. In accordance with the treasury policy comparable instruments. It is also assumed that no repayments are made, thus the cal- approved by the Board of Directors, surplus cash reserves are invested only with institu- culations only take into account the interest rate renewal risk regarding interest-bearing tions that are considered to carry low credit risk. The maximum period of the investment loans and their nominal interest rates. An exception are the interest rate swaps where it is is limited to one week and maximum amounts are defined for each counterparty. not assumed that the instruments will be rolled-over when they mature. The Group has received bank guarantees and bills of exchange against advances paid and trade receivables from some of its subcontractors, suppliers and customers. The Credit risk total amount of the guarantees and other commitments received from subcontractors Each group company is primarily responsible for the credit risk of its own trade receivables. and suppliers is EUR 2.3 million. The total amount of guarantees and other commitments The Group Credit Controlling sets guidelines, monitors credit risk management, and evalua- received from customers is EUR 1.6 million. The guarantees cannot be transferred or tes the creditworthiness of customers and their ability to fulfil their payment obligations. resold and they cannot be pledged forward. The Group has no significant concentrations of trade receivables. The customer base is widespread and the trade receivables from any single customer on a consolidated basis Outstanding trade receivables fall due as follows do not exceed 5% of the Group’s total trade receivables. 94% of sales is to Europe and is MEUR 31.12.2011 31.12.2010 spread among several countries. Not due 20.1 13.5 Many customers are financially sound and solid companies, but in individual cases Overdue reports on payment behaviour and capital adequacy from credit rating companies are less than 1 month 2.8 6.9 used to assist in credit decisions. The Group reduces its credit risk exposure by selling its 1 - 3 months 1.4 5.9 trade receivables to financing companies without recourse. The overdue trade receivables and customer payment behaviour is monitored on a 3 - 6 months 0.2 0.7 regular basis at least every fortnight. If overdue trade receivables exceed the limits set by more than 6 months 0.5 0.1 Group’s management, the Group Credit Controlling is prepared to suspend deliveries until 25.1 27.1 payment obligations have been met. Financial statements COMPONENTA Annual report 2011 27

33. Derivative instruments

Nominal values of derivative instruments Fair values of derivative instruments 2011 2010 2011 2011 2011 2010 MEUR Nominal value Nominal value Fair value, Fair value, Fair value, Fair value, Foreign exchange rate derivatives *) MEUR positive negative net net Foreign exchange rate forwards 2.0 11.0 Foreign exchange rate derivatives Foreign exchange rate swaps 80.8 69.2 Foreign exchange rate forwards 0.0 0.0 0.0 -0.3 Foreign exchange options 2.8 2.8 Foreign exchange rate swaps 0.7 -0.9 -0.3 -1.5 Foreign exchange options 0.0 0.0 0.0 -0.1 Interest rate derivatives Interest rate options 10,0 28,0 Interest rate derivatives Interest rate swaps Interest rate options 0.0 -0.1 -0.1 -0.3 Maturity in less than a year - 28,0 Interest rate swaps 0.0 -1.2 -1.2 -0.3 Maturity after one year but less than five years 80,0 60,0 Commodity derivatives Electricity price forwards 0.0 -1.1 -1.1 3.3 Commodity derivatives The fair value of derivative instruments corresponds to the gain or loss that would be Electricity price forwards recognized in the income statement if the contract were closed on the balance sheet date. Maturity in less than a year 5,2 4,0 The fair value of interest rate options, foreign exchange and electricity price forwards Maturity after one year but less is calculated using the prevailing market prices. Interest rate swaps are valued using than five years 5,4 5,7 discounted cash flow analysis using the yield curve prevailing on the reporting date. *) Foreign exchange rate derivatives mature in less than a year. The realized and unrealized exchange rate differences for currency derivatives hedging against changes in exchange rates for foreign currency trade receivables and trade payables in the balance sheet are recognized in ’Other operating income’. Exchange rate differences for foreign currency derivatives hedging against foreign currency loans and the accumulated interest difference and interest difference valuations are recognized in ’Financial income and expenses’. The fair values of interest rate derivatives that are not included in cash flow hedge accounting as defined in IAS 39 are recognized in ’Financial income and expenses’. Unrealized valuation gains and losses of derivatives are recognized in current receivables and liabilities.

Sensitivity analysis of electricity price forwards

Changes in the market prices of electricity price forwards would have the following impact on the fair values: Change in market price of electricity price forwards 2011 2010 MEUR 15 % / -15% 15 % / -15% Change in fair value of electricity price forwards 1,4 / -1,4 2,0 / -2,0 The sensitivity of the open foreign currency and interest rate exposures to changes in market prices is presented in Note 32. Derivative instruments included in cash flow hedge accounting 2011 2011 2010 2010 Nominal value Fair value, effective Nominal value Fair value, effective MEUR portion of hedges portion of hedges Interest rate derivatives Interest rate swaps 5.0 -0.1 23.0 -0.2

Commodity derivatives Electricity price forwards 10.6 -0.8 9.7 3.3 The fair values of interest rate and commodity derivatives designated as cash flow hedges against changes in market prices have been recognized in the hedging reserve of equity and will be recognized through profit and loss when the hedged item affects profit and loss or its occurance is no longer likely. Income statement effects arising from interest rate derivatives are recognized in ’Financial income and expenses’ and from electricy forwards in purchases included in Operating Profit. No exchange rate differences have been capitalized for the acquisition cost of subsidiaries during the current or previous year. Financial statements COMPONENTA Annual report 2011 28

Derivative instruments included in hedge accounting on net investments in foreign entities

No foreign exchange derivatives have been designated in the fiscal year or in the previous year as specifically hedges of translation items for foreign currency denominated shareholders’ equity. Hedge accounting on net investments in foreign entities does therefore not include derivatives.

Derivate instruments held for trading

2011 2011 2010 2010 MEUR Nominal value Fair value Nominal value Fair value Foreign exchange rate derivatives Foreign exchange rate forwards 2.0 0.0 11.0 -0.3 Foreign exchange rate swaps 80.8 -0.3 69.2 -1.5 Foreign exchange options 2.8 0.0 2.8 -0.1

Interest rate derivatives Interest rate options 10.0 -0.1 28.0 -0.3 Interest rate swaps 75.0 -1.1 65.0 -0.1 Derivative instruments classified as held for trading are part of the Group’s risk management but the hedge accounting principles of IAS 39 are not applied. The Group has no embedded derivatives at the balance sheet date.

34. Other leases 35. Contingent liabilities MEUR 2011 2010 Group as lessee Real-estate mortgages Minimum lease payment schedule for other non-cancellable leases For own debts 10.2 15.3 MEUR 2011 2010 Not later than one year 1.5 1.5 Business mortgages Later than one year but not later than five years 3.1 3.9 For own debts - - Later than five years 0.5 0.1 Minimum lease payments total 5.1 5.5 Pledges *) For own debts 282.0 222.0 Other non-cancellable leases mainly comprise real estate, production equipment and car leases. The leases mature on average in 3-5 years. Some of the leases contain call options Other commitments **) 3.1 4.7 at a strike price that can be expected to correspond to the fair value at the expiry date. The 2011 income statement includes lease payments of EUR -3.4 (-3.9) million for *) The increase in pledges is due to value increase of the collateral. other non-cancellable leases. **) Other commitments in 2011 include bank guarantees of EUR 2.3 (3.7) million.

Group as lessor On June 9, 2010 Componenta B.V. received a writ of summons of Wärtsilä Finland Oy in which Wärtsilä claimed that Componenta shall pay compensations to Wärtsilä amounting The minimum lease receivable schedule for other non-cancellable leases to EUR 8.5 million due to certain defects discovered in main bearing caps delivered by Com- MEUR 2011 2010 ponenta in 2007 and 2008. Componenta considers the claims of Wärtsilä to be unfounded Not later than one year 0.7 0.7 and Componenta has denied the claims. Componenta has firstly challenged the jurisdiction Later than one year but not later than five years 3.0 3.1 of the district court of Roermond, the Netherlands, to hear the claim. The district court of Minimum lease payments total 3.7 3.8 Roermond ruled in July 2011 in favour of Componenta and decided that the district court of Roermond does not have juridiction in the case. Wärtsilä has filed an appeal which is Some of the production and office space that is currently not needed by the Group is pending in the Court of Appeals. leased to external parties. The rental agreements are from one to three years in length and In addition to the processes described above some group companies are involved normally contain an option to extend the lease period after the lease expires. Some of the in few lawsuits and disputes relating to their business. Management believes that property is classified, in accordance with IFRS, as investment property. the outcome of such lawsuits and disputes will not have a material adverse effect on the Group’s result or financial position when taking into consideration the grounds presented for the lawsuits and disputes, insurance coverage in force and the extent of Group’s business.

Secured liabilities MEUR 2011 2010 Liabilities secured with real estate or business mortgages Loans from financial institutions 0.1 0.2 Pension loans 5.6 7.5 5.7 7.7 Liabilities secured with pledges Loans from financial institutions 164.0 108.8 Pension loans - 0.3 164.0 109.1 Financial statements COMPONENTA Annual report 2011 29

36. Related party disclosures Group companies Company Domicile Group share of holding, % Parent company share of holding, % Componenta Belgium N.V. Sint-Lambrechts-Woluwe, Belgium 100.0 - Componenta B.V. Belfeld, The Netherlands 100.0 100.0 Componenta Dökümcülük Ticaret ve Sanayi A.S. Orhangazi, Turkey 93.6 93.6 Componenta Finland Oy Karkkila, Finland 100.0 100.0 Componenta France S.A.S. Nanterre, France 100.0 - Componenta Främmestad AB Essunga, Sweden 100.0 - Componenta Germany GmbH Korshenbroich, Germany 100.0 - Componenta Italy Srl Milan, Italy 100.0 - Componenta Netherlands B.V. Tegelen, The Netherlands 100.0 - Componenta Sweden AB Kristinehamn, Sweden 100.0 - Componenta UK Ltd Staffordshire, United Kingdom 93.6 - Componenta USA, LLC Iowa, USA 100.0 - Componenta Wirsbo AB Surahammar, Sweden 97.0 - Karkkilan Koskikiinteistö Oy Karkkila, Finland 81.0 66.9 Karkkilan Lääkärikeskus Oy Karkkila, Finland 100.0 100.0 Karkkilan Valimokiinteistö Oy Karkkila, Finland 100.0 - Kiinteistö Oy Ala-Emali Karkkila, Finland 98.2 98.2 Kiinteistö Oy Pietarsaaren Tehtaankatu 13 Pietarsaari, Finland 100.0 - Kiinteistö Oy Uusporila Karkkila, Finland 100.0 31.8 Kiinteistö Oy Ylä-Emali Karkkila, Finland 100.0 100.0 Luoteis-Uudenmaan Kiinteistöt Oy Karkkila, Finland 100.0 100.0 Pietarsaaren Vanha Valimo Oy Pietarsaari, Finland 100.0 - Uudenmaan Rakennustiimi Oy Karkkila, Finland 100.0 100.0 Vanhan Ruukin Kiinteistöpalvelu Oy Karkkila, Finland 100.0 100.0

Transactions with related parties MEUR 2011 2010 Sale of goods to associated companies - -

Purchase of goods from associated companies -0.5 -0.3 Purchase of services from associated companies - - -0.5 -0.3 The prices of transactions with related parties are based on the Group’s general price lists in force during the financial year.

Fees, salaries and other benefits of the Board of Directors, President and CEO and other members of the Corporate Executive Team (CET)

Salaries, fees & 2011, EUR fringe benefits Bonuses Share bonuses Total Board of Directors 175,000 0 0 175,000 President and CEO 317,387 0 98,969 416,356 Other members of CET 1,429,656 93,617 187,369 1,710,642

Salaries, fees & 2010, EUR fringe benefits Bonuses Share bonuses Total Board of Directors 175,480 0 0 175,480 President and CEO 272,688 0 0 272,688 Other members of CET 861,939 0 0 861,939 In addition to the remuneration shown above the President and person acting as deputy for the President, have additional pension agreements of EUR 60,000 a year. The agreement includes old age pension after reaching the age of retirement, paid up pension policy rights if the employment of the insured is terminated before reaching the age entitling to old age pension as stated in the insurance policy, disability insurance, and life insurance for the duration of employment, of the paid up pension policy and of pension. The retirement age of the President and CEO is 63 years. Receivables from and payables to associated companies are listed in notes 18, 21 and 29.

Other related party disclosures Componenta has granted loan receivables totalling EUR 0.5 (0.5) million to persons who are related parties in this and previous financial years.

37. Events after end of period Yrjö Julin, COO, is no longer continuing in the service of Componenta, for personal reasons. presidents have business responsibility for operations in their respective countries and Olli Karhunen has been appointed Senior Vice President (SVP), Operations Development, they report to Heikki Lehtonen. being responsible for developing operations at Componenta. Seppo Erkkilä has been Componenta decided in January 2012 to strengthen the Group’s balance sheet. appointed SVP, Operations Finland and a member of the Corporate Executive Team. Antti The company’s Board of Directors proposes to strengthen equity by altogether EUR 20 Lehto has been appointed SVP, Sales and Product Development and a member of the million through an increase in share capital and a hybrid bond. In addition, the company Corporate Executive Team. Karhunen, Erkkilä and Lehto report to CEO Heikki Lehtonen. The has started the process of selling off the unit in Manisa, Turkey, that produces aluminium appointments are valid as of 1 March 2012. wheels for passenger cars Other country responsibilities remain unchanged: Hakan Göral, Senior Vice President, Componenta reviewed the Group’s financial objectives in January 2012. As a result, Operations, Turkey, Michael Sjöberg, Senior Vice President, Operations, Sweden and the Board of Directors decided to give up the growth target for net sales in 2015 and to Patrick Steensels, Senior Vice President, Operations, the Netherlands. The senior vice concentrate on reaching the targets of financial solidity and profitability. Financial statements COMPONENTA Annual report 2011 30

Parent company income statement 1.1.-31.12. (according to Finnish Accounting Standards)

Parent company income statement 1.1.-31.12. Parent company balance sheet 31.12. MEUR 2011 2010 MEUR 2011 2010 NET SALES 26.1 20.1 ASSETS Other operating income 0.7 0.8 Operating expenses -19.9 -15.5 NON-CURRENT ASSETS Depreciation, amortization and write-down of Intangible assets 1.7 1.0 non-current assets -0.4 -0.4 Tangible assets 0.4 0.4 Investment 318.0 240.7 OPERATING PROFIT 6.4 5.0 320.0 242.2

Financial income 17.5 18.3 CURRENT ASSETS Financial expense -28.5 -26.1 Non-current receivables 41.1 99.4 Financial income and expenses in total -11.0 -7.8 Current receivables 12.7 7.4 Cash and bank accounts 14.7 2.4 PROFIT AFTER FINANCIAL ITEMS -4.6 -2.9 68.4 109.2

Extraordinary items 0.6 - TOTAL ASSETS 388.5 351.4

PROFIT AFTER EXTRAORDINARY ITEMS -4.0 -2.9 LIABILITIES AND SHAREHOLDERS' EQUITY Change in untaxed reserves - - SHAREHOLDERS' EQUITY Income taxes 0.2 - Share capital 21.9 21.9 Share premium account 15.1 15.1 PROFIT/LOSS FOR THE FINANCIAL PERIOD -3.8 -2.9 Legal reserve 0.0 0.0 Unrestricted equity reserve 33.1 33.3 Retained earnings 51.0 53.9 Profit/loss for the financial period -3.8 -2.9 Shareholders' equity 117.4 121.4

LIABILITIES Non-current liabilities Capital loans 31.6 35.7 Other interest bearing liabilities 33.1 136.8 Current liabilities Capital loans 4.1 2.9 Other interest bearing liabilities 196.0 48.0 Non-interest bearing liabilities 6.4 6.6 Liabilities 271.1 230.0

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY 388.5 351.4 Financial statements COMPONENTA Annual report 2011 31

Group development

Group development 2007 - 2011 MEUR 2007 2008 2009 2010 2011 Net sales 634.7 681.4 299.6 451.6 576.4 Operating profit 42.7 47.3 -15.4 13.5 22.5 Financial income and expenses -20.0 -28.7 -21.8 -23.5 -25.9 Profit/loss after financial items 22.7 18.6 -37.2 -10.0 -3.4 Profit for the financial period 21.6 13.9 -28.7 -7.5 -3.1

Order book at period end 129.0 73.6 58.8***) 94.6**) 99.5*) Change in net sales, % 75.3 7.4 -56.0 50.7 27.6 Share of export and foreign activities in net sales, % 89.1 87.6 82.7 88.1 90.0 *) Order book on 12 January 2012 **) Order book on 10 January 2011 ***) Order book on 15 January 2010

Group development 2007 - 2011 excluding one-time items MEUR 2007 2008 2009 2010 2011 Net sales 634.7 681.4 299.6 451.6 576.4 Operating profit 34.9 47.9 -15.4 13.6 29.8 Financial income and expenses -20.0 -28.7 -21.8 -23.5 -25.9 Profit/loss after financial items 14.9 19.2 -37.2 -9.9 3.9

31.12.2007 31.12.2008 31.12.2009 31.12.2010 31.12.2011 Statement of financial position total, MEUR 497 448 388 420 437 Net interest bearing debt, MEUR 243 262 242 230 243 Invested capital, MEUR 371 339 317 311 326 Return on investment, % 11.9 13.6 -4.1 5.0 7.8 Return on equity, % 23.0 14.8 -45.1 -10.3 -5.8 Equity ratio, % 20.3 15.9 17.5 16.8 9.4 Net gearing, % 241.3 369.1 356.4 325.0 591.4 Investments in non-current assets, MEUR 64.5 46.0 17.9 8.5 21.8 Number of personnel at period end 4,314 4,294 3,614 4,016 4,240 Average number of personnel 4,206 4,395 3,684 3,853 4,234

Net sales by market area MEUR 1–12/2010 1–12/2011 Sweden 81.7 107.5 Germany 76.0 106.4 Turkey 73.7 87.5 UK 47.5 64.9 Finland 53.8 57.8 Benelux countries 35.2 45.2 France 27.8 35.6 Italy 20.7 29.5 Other European countries 9.1 9.1 Other countries 26.1 33.0 Total 451.6 576.4

Quarterly development of net sales by market area MEUR Q1/10 Q2/10 Q3/10 Q4/10 Q1/11 Q2/11 Q3/11 Q4/11 Sweden 15.5 21.9 19.5 24.8 29.8 30.2 21.6 25.9 Germany 15.2 20.9 18.6 21.2 25.3 28.0 26.8 26.2 Turkey 14.3 19.1 18.8 21.5 21.4 25.2 21.3 19.7 UK 9.9 12.0 12.5 13.1 15.9 17.2 15.7 16.1 Finland 11.0 13.6 12.9 16.3 14.7 15.7 13.0 14.4 Benelux countries 7.1 9.4 8.7 10.0 11.5 11.4 10.5 11.9 France 6.1 7.1 6.5 8.1 9.6 10.1 7.0 8.9 Italy 3.8 4.2 5.9 6.8 7.1 6.7 7.8 7.9 Other European countries 2.2 2.2 2.5 2.3 2.4 2.5 2.2 2.1 Other countries 6.1 6.9 6.5 6.6 6.4 9.7 8.2 8.7 Total 91.2 117.3 112.3 130.7 144.1 156.5 134.1 141.7 Financial statements COMPONENTA Annual report 2011 32

Group development excluding one-time items MEUR 1-12/2010 1-12/2011 Net sales 451.6 576.4 Operating profit 13.6 29.8 Net financial items *) -23.5 -25.9 Profit after financial items -9.9 3.9 *) Net financial items are not allocated to business segments

Group development by business segment excluding one-time items Operating profit, MEUR 1–12/2010 1–12/2011 Turkey 15.2 28.7 Finland -0.2 -1.6 Holland -1.5 -1.9 Sweden 0.8 3.6 Other business -1.0 1.2 Internal items 0.4 -0.1 Componenta total 13.6 29.8

Group development by quarter excluding one-time items MEUR Q1/10 Q2/10 Q3/10 Q4/10 Q1/11 Q2/11 Q3/11 Q4/11 Net sales 91.2 117.3 112.3 130.7 144.1 156.5 134.1 141.7 Operating profit 0.3 4.0 3.4 5.9 8.5 10.7 3.8 6.8 Net financial items *) -5.9 -6.2 -5.5 -5.9 -5.3 -6.6 -7.3 -6.7 Profit after financial items -5.6 -2.2 -2.1 0.0 3.2 4.1 -3.5 0.1 *) Net financial items are not allocated to business segments

Quarterly development by business segment excluding one-time items Operating profit, MEUR Q1/10 Q2/10 Q3/10 Q4/10 Q1/11 Q2/11 Q3/11 Q4/11 Turkey 3.2 3.3 4.5 4.3 8.3 8.5 7.3 4.6 Finland -0.6 0.7 -0.9 0.6 -1.3 0.5 -1.8 1.0 Holland -0.1 0.2 -1.0 -0.5 0.3 0.9 -2.2 -1.0 Sweden -1.4 0.0 0.6 1.6 1.2 1.5 0.2 0.7 Other business -0.7 -0.1 0.0 -0.2 0.1 -0.4 0.2 1.2 Internal items 0.0 -0.2 0.3 0.2 -0.2 -0.3 0.0 0.3 Componenta total 0.3 4.0 3.4 5.9 8.5 10.7 3.8 6.8

Group development MEUR 1-12/2010 1-12/2011 Net sales 451.6 576.4 Operating profit 13.5 22.5 Net financial items *) -23.5 -25.9 Profit after financial items -10.0 -3.4 *) Net financial items are not allocated to business segments

Group development by business segment Net sales, MEUR 1–12/2010 1–12/2011 Turkey 204.8 277.2 Finland 103.6 112.8 Holland 85.1 109.3 Sweden 84.7 121.5 Other business 65.3 91.0 Internal items -91.9 -135.4 Componenta total 451.6 576.4

Operating profit, MEUR 1–12/2010 1–12/2011 Turkey 15.2 28.7 Finland -0.2 -1.6 Holland -1.5 -1.9 Sweden 0.8 3.6 Other business -1.0 1.2 One-time items *) -0.1 -7.4 Internal items 0.4 -0.1 Componenta total 13.5 22.5 *) One-time items in 2011 relate to terminating machining operations at Pietarsaari unit, EUR -3.8 million, and sale of the business operations and production machinery of the Nisamo machine shop, EUR -1.8 million, both units belong to business segment Finland, and also restructuring costs in Holland, EUR -0.7 million, write-downs of prepayments paid to suppliers, EUR -0.7 million and other one-time items, EUR -0.4 million. Financial statements COMPONENTA Annual report 2011 33

Order book, MEUR 12/2010**) 12/2011*) Turkey 47.8 51.8 Finland 15.7 13.8 Holland 16.4 20.1 Sweden 22.0 19.8 Internal items -7.4 -6.0 Componenta total 94.6 99.5 *) Order book on 12 January 2012 **) Order book on 10 January 2011

Group development by quarter MEUR Q1/10 Q2/10 Q3/10 Q4/10 Q1/11 Q2/11 Q3/11 Q4/11 Net sales 91.2 117.3 112.3 130.7 144.1 156.5 134.1 141.7 Operating profit 0.3 4.0 3.4 5.8 6.0 10.1 3.0 3.3 Net financial items *) -5.9 -6.2 -5.5 -5.9 -5.3 -6.6 -7.3 -6.7 Profit after financial items -5.6 -2.2 -2.1 -0.1 0.7 3.5 -4.3 -3.4 *) Net financial items are not allocated to business segments

Quarterly development by business segment Net sales, MEUR Q1/10 Q2/10 Q3/10 Q4/10 Q1/11 Q2/11 Q3/11 Q4/11 Turkey 40.6 53.1 51.5 59.6 67.9 72.7 67.1 69.5 Finland 20.8 27.0 25.1 30.6 28.5 32.2 24.5 27.6 Holland 18.7 23.4 20.8 22.1 26.7 30.7 26.7 25.2 Sweden 15.8 21.3 20.6 26.9 32.4 32.5 25.5 31.2 Other business 14.3 16.2 16.8 18.1 21.8 23.3 22.2 23.7 Internal items -19.0 -23.7 -22.5 -26.7 -33.2 -34.9 -31.9 -35.4 Componenta total 91.2 117.3 112.3 130.7 144.1 156.5 134.1 141.7

Operating profit, MEUR Q1/10 Q2/10 Q3/10 Q4/10 Q1/11 Q2/11 Q3/11 Q4/11 Turkey 3.2 3.3 4.5 4.3 8.3 8.5 7.3 4.6 Finland -0.6 0.7 -0.9 0.6 -1.3 0.5 -1.8 1.0 Holland -0.1 0.2 -1.0 -0.5 0.3 0.9 -2.2 -1.0 Sweden -1.4 0.0 0.6 1.6 1.2 1.5 0.2 0.7 Other business -0.7 -0.1 0.0 -0.2 0.1 -0.4 0.2 1.2 One-time items *) 0.0 0.0 0.0 -0.1 -2.4 -0.6 -0.8 -3.5 Internal items 0.0 -0.2 0.3 0.2 -0.2 -0.3 0.0 0.3 Componenta total 0.3 4.0 3.4 5.8 6.0 10.1 3.0 3.3 *) One-time items in 2011 relate to terminating machining operations at Pietarsaari unit, EUR -3.8 million, and sale of the business operations and production machinery of the Nisamo machine shop, EUR -1.8 million, both units belong to business segment Finland, and also restructuring costs in Holland, EUR -0.7 million, write-downs of prepayments paid to suppliers, EUR -0.7 million and other one-time items, EUR -0.4 million.

Order book at period end, MEUR Q1/10 Q2/10 Q3/10 Q4/10**) Q1/11 Q2/11 Q3/11 Q4/11*) Turkey 32.6 42.4 42.5 47.8 54.0 59.4 57.6 51.8 Finland 13.6 15.8 16.7 15.7 17.6 16.3 15.2 13.8 Holland 13.4 14.6 14.7 16.4 17.7 21.0 18.2 20.1 Sweden 13.3 16.5 18.7 22.0 23.2 22.9 22.9 19.8 Internal items -5.0 -5.7 -6.8 -7.4 -8.3 -8.5 -10.1 -6.0 Componenta total 68.0 83.6 85.8 94.6 104.3 111.2 103.7 99.5 *) Order book on 12 January 2012 **) Order book on 10 January 2011 Financial statements COMPONENTA Annual report 2011 34

Shareholders and shares

Largest registered shareholders on 31 December 2011 Shareholder Shares Share of total voting rights, % 1 Lehtonen Heikki 5,318,840 30.39 Cabana Trade S.A. 3,501,988 Oy Högfors-Trading Ab 1,806,052 Lehtonen Heikki 10,800 2 Etra Capital Oy 4,347,464 24.84 3 Varma Mutual Pension Insurance Company 978,968 5.59 4 Finnish Industry Investment Ltd 666,666 3.81 5 Mandatum Life Insurance Company Ltd 586,425 3.35 6 Alfred Berg Small Cap Finland Fund 283,088 1.62 7 Bergholm Heikki 240,016 1.37 8 Finnish Cultural Foundation 236,000 1.35 9 Alfred Berg Finland Fund 221,099 1.26 10 Laakkonen Mikko 200,000 1.14 11 Lehtonen Anna-Maria 178,823 1.02 12 Special Investment Fund UBWave 150,000 0.86 13 Kukkonen Jorma 127,000 0.73 14 Nordea Finland Small Cap Fund 110,132 0.63 15 Caldanos Oy 104,000 0.59 Nominee-registered shares 562,742 3.22 Other shareholders 3,188,475 18.22 Total 17,499,738 100.00 The members of the Board of Directors own 32.2% of the shares. All shares have equal voting rights. If all the warrants were converted to shares, the holding of shares by the members of the Board of Directors would decrease to 31.7 %.

Breakdown of share ownership on 31 December 2011

Number of shares Shareholders % Shares % 1 - 100 500 23.42 31,630 0.18 101 - 500 875 40.98 258,014 1.47 501 - 1,000 336 15.74 274,630 1.57 1,001 - 5,000 307 14.38 698,208 3.99 5,001 - 10,000 34 1.59 243,484 1.39 10,001 - 50,000 57 2.67 1,260,376 7.20 50,001 - 100,000 8 0.37 497,400 2.84 100,001 - 500,000 12 0.56 2,348,433 13.42 500,001 - 6 0.28 11,887,563 67.93 Total = total issued 2,135 100.00 17,499,738 100.00

Shareholders by sector on 31 December 2011 % Finnish companies 43.17 Financial institutions and insurance companies 8.12 General government bodies 6.29 Non-profit institutions 1.83 Households 16.90 Nominee-registered shares and other foreign shareholders 23.69 100.00 Financial statements COMPONENTA Annual report 2011 35

Per share data

2011 2010 Earnings per share (EPS), EUR -0.25 -0.45 Earnings per share, with dilution (EPS), EUR -0.25 -0.45 Cash flow per share, EUR 0.20 1.44 Equity per share, EUR 1.93 3.63 Dividend per share, EUR *) 0.00 0.00 Payout ratio, % 0.00 0.00 Effective dividend yield, % 0.00 0.00 P/E multiple neg. neg. Share price at year end, EUR 3.37 6.01 Average trading price, EUR 5.34 5.29 Lowest trading price, EUR 3.26 4.02 Highest trading price, EUR 6.55 6.44 Market capitalization at year end, MEUR 59.0 104.6 Trading volume, 1,000 shares 2,986 8,483 Trading volume, % 17.1 48.6 Weighted average of the number of shares, 1,000 shares 17,485 17,458 Number of shares at year end, 1,000 shares 17,500 17,458 *) For the year 2011 a proposal of the Board of Directors.

Componenta Corporation (CTH) monthly share trading volume in 2007 - 2011, pcs

1,500,000 4,882,478

1,200,000

900,000

600,000

300,000

0 2007 2008 2009 2010 2011

Componenta Corporation (CTH) share price development in 2007 - 2011, EUR

3 2007 2008 2009 2010 2011

Componenta share price (CTH), EUR NASDAQ OMX Helsinki all share index Financial statements COMPONENTA Annual report 2011 36

Calculation of key financial ratios

Return on equity, % (ROE) = Profit after financial items – income taxes x 100 Shareholders' equity without preferred capital notes + non-controlling interest (quarterly average)

Return on investment, % (ROI) = Profit after financial items + interest and other financial expenses x 100 Shareholders' equity + interest bearing liabilities (quarterly average)

Equity ratio, % = Shareholders' equity, preferred capital notes excluded + non-controlling interest x 100 Balance sheet total - advances received

Earnings per share, EUR (EPS) = Profit after financial items – income taxes +/- non-controlling interest Average number of shares during the financial period

Earnings per share with dilution, EUR = As above, the number of shares has been increased with the warrants outstanding. When calculating the dilution effect of warrants, the number of shares has been adjusted with the number of own shares which the company could have acquired, if it would have used the funds generated from the warrants to buy back of own shares at market price (= average trading price). After tax interest expense of the convertible loan has been added to the profit of the period. Number of shares that can be subscribed by the loan has been added to the number of total shares.

Cash flow per share, EUR (CEPS) = Net cash flow from operating activities Average number of shares during the financial period

Average trading price, EUR = Trading volume Number of shares traded during the financial period

Equity per share, EUR = Shareholders' equity, preferred capital notes excluded Number of shares at period end

Dividend per share, EUR = Dividend Number of shares at period end

Payout ratio, % = Dividend Earnings (as in Earnings per share)

Effective dividend yield, % = Dividend per share x 100 Market share price at period end

Market capitalization, MEUR = Number of shares x market share price at period end

P/E multiple = Market share price at period end Earnings per share

Net interest bearing debt, MEUR = Interest bearing liabilities + preferred capital notes - cash and bank accounts

Net gearing, % = Net interest bearing liabilities x 100 Shareholders' equity, preferred capital notes excluded + non-controlling interest Financial statements COMPONENTA Annual report 2011 37

The proposal of the Board of Directors for the distribution of profits

The distributable equity of the parent company statement of financial position is EUR 80,345,774.54. The Board of Directors proposes to the Annual General Meeting to be held on 23 February 2012 that no dividend will be paid for financial year 2011.

Helsinki 23 January 2012

Heikki Bergholm Pii Kotilainen Marjo Miettinen Chairman

Juhani Mäkinen Matti Tikkakoski Heikki Lehtonen President & CEO Financial statements COMPONENTA Annual report 2011 38

Auditor’s Report (Translation from the Finnish Original)

To the Annual General Meeting of Componenta Oyj Board of Directors of the parent company or the Managing Director are guilty of an act or negligence which may result in liability in We have audited the accounting records, the financial state- damages towards the company or whether they have violated the ments, the report of the Board of Directors and the administra- Limited Liability Companies Act or the articles of association of the tion of Componenta Oyj for the year ended 31 December, 2011. company. The financial statements comprise the consolidated statement An audit involves performing procedures to obtain audit evi- of financial position, income statement, statement of compre- dence about the amounts and disclosures in the financial state- hensive income, statement of changes in equity and statement ments and the report of the Board of Directors. The procedures of cash flows, and notes to the consolidated financial state- selected depend on the auditor’s judgment, including the assessments, as well as the parent company’s balance sheet, income ment of the risks of material misstatement, whether due to fraud statement, cash flow statement and notes to the financial or error. In making those risk assessments, the auditor considers statements. internal control relevant to the entity’s preparation of financial statements and report of the Board of Directors that give a true and Responsibility of the Board of Directors and the Managing Director fair view in order to design audit procedures that are appropriate in The Board of Directors and the Managing Director are responsible the circumstances, but not for the purpose of expressing an opinion for the preparation of consolidated financial statements that give on the effectiveness of the company’s internal control. An audit also a true and fair view in accordance with International Financial includes evaluating the appropriateness of accounting policies used Reporting Standards (IFRS) as adopted by the EU, as well as for the and the reasonableness of accounting estimates made by manage- preparation of financial statements and the report of the Board of ment, as well as evaluating the overall presentation of the financial Directors that give a true and fair view in accordance with the laws statements and the report of the Board of Directors. and regulations governing the preparation of the financial state- We believe that the audit evidence we have obtained is sufficient ments and the report of the Board of Directors in Finland. The Board and appropriate to provide a basis for our audit opinion. of Directors is responsible for the appropriate arrangement of the control of the company’s accounts and finances, and the Managing Opinion on the Consolidated Financial Statements Director shall see to it that the accounts of the company are in com- In our opinion, the consolidated financial statements give a true pliance with the law and that its financial affairs have been arranged and fair view of the financial position, financial performance, and in a reliable manner. cash flows of the group in accordance with International Financial Reporting Standards (IFRS) as adopted by the EU. Auditor’s Responsibility Our responsibility is to express an opinion on the financial state- Opinion on the Company’s Financial Statements and the Report of ments, on the consolidated financial statements and on the report of the Board of Directors the Board of Directors based on our audit. The Auditing Act requires In our opinion, the financial statements and the report of the Board that we comply with the requirements of professional ethics. We of Directors give a true and fair view of both the consolidated and conducted our audit in accordance with good auditing practice in the parent company’s financial performance and financial position Finland. Good auditing practice requires that we plan and per- in accordance with the laws and regulations governing the prepara- form the audit to obtain reasonable assurance about whether the tion of the financial statements and the report of the Board of Direc- financial statements and the report of the Board of Directors are tors in Finland. The information in the report of the Board of Direc- free from material misstatement, and whether the members of the tors is consistent with the information in the financial statements.

Helsinki, 1 February, 2012

PricewaterhouseCoopers Oy Authorised Public Accountants

Jan Holmberg Authorised Public Accountant Financial statements COMPONENTA Annual report 2011 39

Information for shareholders

Annual General Meeting The press conferences for representatives of media and The Annual General Meeting of Componenta Corporation analysts held when the interim reports are published will will be held at 9.00 a.m. on Thursday, 23 February 2012 at be webcast simultaneously on the company’s website at the company’s headquarters in Käpylä, in the auditorium www.componenta.com. of the Sato building at Panuntie 4, 00610 Helsinki, Finland. Componenta’s publications and releases are available immediately after their release date at www.componenta. Right to participate com/Investors/Releases and publications. A shareholder, who on the record date of the General Publications and interim reports printed on paper Meeting, 13 February 2012, is registered as a shareholder in will only be sent to those who have requested it from the the company’s shareholders’ register maintained by Euro- company. Publications printed on paper can be ordered clear Finland Ltd, is entitled to attend the General Meeting. from Componenta’s website at www.componenta.com/ Order reports, by telephone +358 10 403 2744 or by e-mail Registration to [email protected]. A shareholder, who is registered in the shareholders’ By registering at Componenta’s website at register, wishing to participate in the General Meeting is www.componenta.com/Investors/Order you can order required to register his/her participation no later than all company releases directly to your own email address 20 February 2012 at 10.00 a.m. by letter to the address immediately after their release. Componenta Corporation, Panuntie 4, 00610 Helsinki, by All Componenta’s financial publications are drafted in telephone +358 10 403 2744, by fax +358 10 403 2721 or by both Finnish and English. email to [email protected]. The registration letter or message must have arrived prior to the Investor relations and contacts expiration of the registration period. Our aim is to provide comprehensive information about Componenta’s business, operating environment and finan- Dividend and dividend policy cial position for investment decisions. The Board of Directors proposes to the Annual General 30 days prior to the publication of any financial state- Meeting that that no dividend will be paid for the 2011 fiscal ments or quarterly reports Componenta has a closed year. window period during which we do not meet with capital The Board of Directors takes the financial performance, market representatives nor comment on result develop- financing structure and growth expectations into account ments. when making its proposal for the dividend to be paid. The Investors and shareholders are served at Componenta target is to pay a dividend of 30% - 50% of net profit. by the investor relations team consisting of President and CEO, CFO and Communications Directors. Contact our IR Financial information in 2012 team by email at [email protected]. Interim report January – March on 20 April 2012 Interim report January – June on 13 July 2012 Interim report January – September on 17 October 2012 Componenta Corporation Panuntie 4 FI-00610 Helsinki Finland Tel. +358 10 403 00 Fax +358 10 403 2721