Financial report 2012 CARGOTEC ANNUAL REPORT 2012 Essentials CEO’s review 1 Governance Corporate governance statement 3 Shareholders' Meeting 4 Shareholder rights 5 Board of Directors 6 Audit and Risk Management Committee 8 Nomination and Compensation Committee 9 CVs of Board members 10 President and CEO 14 Executive Board 15 CVs of Executive Board members 16 Insiders 19 External audit 20 Internal control of the financial reporting process 21 Remuneration statement 23 Board of Directors 24 President and CEO and the Executive Board 25 Long-term incentive plan 27 Financials Board of Directors' report 29 Consolidated financial statements (IFRS) Consolidated statement of income and consolidated statement of comprehensive income 41 Consolidated statement of financial position 42 Consolidated statement of changes in equity 44 Consolidated statement of cash flows 45 Notes to the consolidated financial statements 46 1. Accounting principles for the consolidated financial statements 47 2. Management estimates 57 3. Financial risk management 59 4. Segment information 64 5. Acquisitions and disposals 69 6. Long term construction contracts 73 7. Other operating income and expenses 74 8. Restructuring costs 75 9. Personnel expenses 76 10. Depreciation, amortisation and impairment charges 77 11. Financing income and expenses 78 12. Income taxes 79 13. Earnings per share 80 14. Goodwill 81 15. Other intangible assets 83 16. Property, plant and equipment 85 17. Investments in associated companies 89 18. Investments in joint ventures 90 19. Non-current available-for-sale investments 91 20. Deferred tax assets and liabilities 92 21. Inventories 94 22. Financial instruments by category 95 23. Accounts receivable and other non-interest-bearing receivables 97 24. Cash and cash equivalents 98 25. Non-current assets held for sale 99 26. Equity 100 27. Share-based payments 101 28. Interest-bearing liabilities 103 29. Employee benefits 105 30. Provisions 108 31. Accounts payable and other non-interest-bearing liabilities 109 32. Derivatives 110 33. Commitments 111 34. Group as lessor 112 35. Related-party transactions 113 36. Subsidiaries 115 Financial statements of the parent company (FAS) Parent company income statement 118 Parent company balance sheet 119 Parent company cash flow statement 120 Notes to the parent company financial statements 121 1. Accounting principles 122 2.-7. Notes to the income statement 124 8.-10. Intangible and tangible assets 126 11. Investments 128 12.-13. Receivables 129 14. Equity 130 15.-17. Liabilities and commitments 131 18. Derivatives 133 Key figures Key financial figures 134 Share-related figures 135 Calculation of key figures 136 Shares and shareholders 138 Share and share capital 139 Share price development and trading 140 Shareholders 142 Board and management shareholding 144 Board authorisations 145 Option programme 2010 146 Share-based incentive programme 2010 147 Signatures for Board of Directors´ report and financial statements 148 Auditor’s report 149 CARGOTEC ANNUAL REPORT 2012 / Essentials 1 Dear Reader, Looking back, 2012 began a new era for Cargotec. In order to improve profitability and cash flow, we launched a new operating model based on independent businesses. MacGregor, Kalmar and Hiab have now reached an important milestone. In September 2012, we announced our decision to reorganise our operations toward a business-driven organisation. This change in our operating model will enable us to improve shareholder value. Correspondingly, our Services business area and region EMEA (Europe, Middle East and Africa) organisations were integrated into MacGregor, Kalmar and Hiab as of 1 January 2013. In 2012, MacGregor achieved a strong result in a challenging market environment. Orders received were good in offshore logistics, merchant shipping and bulk handling alike. Kalmar had a good start to the year, but its result fell short of expectations due to major cost overruns in certain projects. For Hiab, 2012 was a good year in many market areas. In the United States, for example, Hiab performed strongly in 2012 from start to finish. Profitability improvement was a key target. This was achieved, as Hiab managed to develop its operating profit margin. Although Cargotec attempted to improve profitability and cash flow throughout the year, some targets were not reached. Every change process includes sacrifices and, for Cargotec, employee cooperation negotiations were an unavoidable consequence of reprioritising our actions and focusing on profitability. Unfortunately, we were forced to let go of employees who had given a solid performance. Although we have a great deal to accomplish in 2013, we are confident that We have a great shareholder value will greatly improve by the turn of 2014. Our goal is to ensure deal to that each business area generates sufficient cash flow for its operations. accomplish“ in 2013, but are confident Although cash flow and profitability were a concern for us last year, we are in an that, by the turn of excellent position to turn the situation around. We engaged in changes aimed at 2014, shareholder achieving streamlined operations, profitable growth and greater market share by value will be greatly 2014. MacGregor, Kalmar and Hiab stand apart from their respective competitors improved. in an important way: all three are global market leaders and the best known brands in their field. Competitive in China and anywhere in the world The strength of our brands is a particular advantage in China, a key market area in which we have invested a great deal and where we have established joint ventures. Today, a company that is competitive in the Chinese market is competitive anywhere in the world – correspondingly, it is impossible to be a world leader in your field without being a strong player in China. Our foremost target for the upcoming year and foreseeable future is to maximise shareholder value through improved profitability, performance, cash flow and customer value. Many of the changes announced in 2012 are still underway as this annual report comes out. Among the most notable is our plan to list MacGregor in Asia. Subject to market conditions, at present the plan is to advance the listing and have Cargotec retain a majority stake in the listed subsidiary. Solutions for a sustainable future CARGOTEC ANNUAL REPORT 2012 / Essentials 2 Solutions for a sustainable future In our line of business, sustainable solutions are not only a competitive advantage; they are a prerequisite for achieving growth everywhere in the world. Regardless of their location – be it China, the Americas, Europe or elsewhere around the globe – our customers require solutions that are both energy- and water-efficient. We have long-term experience of providing environmentally friendly, safe and sustainable solutions and take genuine pride in our efforts and investments in developing new products and services that are energy-efficient and environmentally friendly in terms of emissions, noise pollution and recyclability. Cargotec supports the ten principles of the UN Global Compact, which asks companies, within their sphere of influence, to embrace, support and enact a set of internationally defined core values in the areas of human rights, labour standards, the environment and anti- corruption. Offering sustainable cargo handling solutions that bring genuine value and competitive advantage to our customers is at the heart of all of our businesses: MacGregor, Kalmar and Hiab. Cargotec is dedicated to providing its customers and partners with the best solutions for creating a sustainable future. I would like to end with a sincere thank you to our customers and partners. Your unwavering trust in MacGregor, Kalmar and Hiab products and services enables us to provide you with optimum cargo handling solutions also in the future. I would also like to thank our personnel for their dedication and hard work during the year. Tapio Hakakari Vice Chairman of Board of Directors Interim President and CEO CARGOTEC ANNUAL REPORT 2012 / Governance 3 Corporate governance statement 2012 Cargotec’s governance and management are based on the Finnish Limited Liability Companies Act and Securities Markets Act, the company’s Articles of Association and the rules and guidelines of NASDAQ OMX Helsinki Ltd. Cargotec complies with the Finnish Corporate Governance Code 2010, available on the Securities Market Association’s website at www.cgfinland.fi/en, with the exception of recommendations 26, 29 and 32. Tapio Hakakari, Vice Chairman of the Board, was a member of the Nomination and Compensation Committee also during his position as interim President and CEO as of 8 October 2012 (recommendations 29 and 32). Karri Kaitue, member of the Audit and Risk Management Committee, worked as a consultant for the company in connection with the evaluation of listing MacGregor in Asia and was not independent of the company (recommendation 26). At the Shareholders’ Meeting, Cargotec’s shareholders exercise the highest decision-making power. The company is managed by the Board of Directors and the President and CEO. The corporate governance statement is issued as a separate report and disclosed, together with the financial statements, Board of Directors’ report and the remuneration statement, on the company website at www.cargotec.com > Investors > Governance. This information is also included in the annual report for 2012. CARGOTEC ANNUAL REPORT 2012 / Governance 4 Shareholders' Meeting Cargotec’s Shareholders’ Meeting is convened by the Board of Directors