Annual Report 2015 BUILDING THE BIGGER PICTURE...1/4 Earthworks began in the Kala-satama centre 2/4...

Annual Report 2015

BUILDING THE BIGGER PICTURE

Destia in brief ...............................................2

DESTIA’S YEAR 2015Key figures ....................................................3Destia’s key events 2015 ..............................4President and CEO’s review .........................5Destia’s business operations ........................7Strategy and targets .....................................9Operating environment ...............................11Destia and the opportunities created by megatrends ................................................12

CORPORATE RESPONSIBILITYDestia and corporate responsibility ............13Profitable business .....................................15Production of services ................................16Customer satisfaction ................................17Safety .........................................................18Skilled and thriving Destia personnel .........20Procurement and partnerships ...................22Environment ...............................................23New solutions and sector development .....24Social participation and communications ..26

GRI content index 2015 .............................27

Corporate governance statement ..............32

Financial statements ..................................39

CONTENTS

1DESTIA’S YEAR 2015 CORPORATE RESPONSIBILITY FINANCIAL STATEMENTSGRI CORPORATE GOVERNANCE

Destia is a Finnish service company in the infrastructure and construction sector. We build, maintain and design not only traffic routes, railways and traffic and industrial environments but also complete living environments. Our services cover subterranean construction, extensive overground operations and energy and engineering construc-tion.

Destia is a company of experts, where people enjoy a supportive atmosphere and the greatest opportunities in the infrastruc-ture sector to make use of and develop their competence. With our diverse expertise, we create the conditions for safe and smooth traffic, building the bigger picture, piece by piece.

Our customers include government organisa-tions, cities and towns, industrial companies and commercial enterprises. Our extensive network of offices guarantees that we are close to the customer all over Finland. In 2015, Destia Group’s revenue was MEUR 462.8 and the number of personnel on aver-age 1,505.

DESTIA – BUILDING THE BIGGER PICTURE

READ MOREWe built the Kettumäki bridge in Hämeenlinna.

2DESTIA’S YEAR 2015 CORPORATE RESPONSIBILITY FINANCIAL STATEMENTSGRI CORPORATE GOVERNANCE

http://via.destia.fi/in-english/kettumaki-bridge.html

KEY FIGURES

REVENUE AND ORDER BOOK INCREASED AS COMPETITION INTENSIFIED

KEY FIGURES (IFRS), EUR Million

Destia Group 2015

Destia Group 2014*

Destia subgroup 2014

Revenue 462.8 261.8 431.5

Operating profit 12.9 12.5 15.1

% of revenue 2.8 4.8 3.5

Result for the reporting period 6.7 5.5 10.5

% of revenue 1.5 2.1 2.4

Return on investment, % 9.4 9.2 20.9

Earnings per share, EUR 56.14 53.77

Equity ratio, % 31.2 29.4 34.3

Net gearing, % 32.6 42.4 -41.2

Average personnel 1,505 1,502 1,502

Accidents resulting in absence ** 7.6 9.3 9.3

Order book at the end of reporting period 717.4 628.2 628.2

* Established on 1 July 2014** Accidents per one million working hours

The difficult situation with the Finnish econo-my continued to weaken the operating envi-ronment of the entire construction sector and also affected Destia’s development. Competi-tion in the sector is fierce and the level of prices quoted low. As a result of growth in maintenance and construction volumes, our revenue, however, increased. Our order book also developed positively. In accordance with our strategy, we have succeeded in increas-ing the share of private sector orders in our order book, both in terms of numbers and revenue. This demonstrates the success of our efforts to develop of our customer and sales work.

3CORPORATE RESPONSIBILITY FINANCIAL STATEMENTSGRI CORPORATE GOVERNANCEDESTIA’S YEAR 2015

DESTIA’S KEY EVENTS 2015JANUARY20/1 Start of the Young Talent develop-

ment programme targeted at tal-ented young Destia employees

29/1 Topping-out ceremony for the Western Metro RU13 project contracted by Destia

FEBRUARY2/2 To continue the positive develop-

ment of workplace safety, monthly 15-minute site safety meetings covering all project personnel were initiated

3/2 Agreement concluded for the maintenance of the Northern Fin-land track-network maintenance area 12

4/2 Destia selected to build the Hami-na access roads and the Sivatti pedestrian and bicycle path for the E18 Hamina bypass contract

24/2 Destia selected to upgrade Nation-al Road 8 to a motorway at Nousi-ainen

MARCH3/3 The Reposaari bridge contracted

by Destia was highly commended in the 2015 Bridge of the Year competition

23/3 Chosen to carry out the renovation of the dam at the Imatra hydro-electric power plant

APRIL1/4 Earthworks began in the Kala-

satama centre2/4 Commitment to the Responsible

Summer Job campaign and the employment of about 150 trainees and summer workers in summer 2015

8/4 Winning the competitive tendering contract for municipal technology in Varkaus

10/4 Winning the competitive tendering contract for the track maintenance area 8 (Ylä-Savo)

24/4 Winning six multi-year contracts in the competitive tendering for re-gional highway maintenance con-tracts: Sodankylä, Lapua, Puolan-ka, Kemijärvi–Posio, Parkano and Porvoo

27/4 Signed a contract to build an over-taking lane on National Road 3 at Hämeenkyrö

MAY18/5 Work started on a National Road 8

upgrading contract at Luostarinkylä in Rauma

22/5 Agreement signed for an upgrad-ing contract of Main Road 77 at Viitasaari

JUNE1/6 Start of construction work to up-

grade Main Road 148 in Kerava3/6 Contract concluded for super-

structure work between Eskola and Ylivieska

8/6 Bridge repair contract begun in Northern Savonia

17/6 65 MEUR bond to institutional in-vestors was listed on the Helsinki Stock Exchange maintained by Nasdaq Helsinki Oy

26/6 Destia wins the cable installations for Suvilahti−Viikinmäki in Helsinki

26/6 Winning the competitive tendering for the alliance contract at Helsinki Airport

JULY1/7 Earthworks begun for a natural gas

distribution pipeline between Tahkoluoto and Kaanaa

2/7 Destia wins construction work of a new bioproduct mill to be built in Äänekoski

3/7 Surface structures for the Vantaa Housing Fair area completed

16/7 Finland’s largest events park in Hämeenlinna, built by Destia, prepared for its first events

17/7 Contract concluded for the con-struction of the Patokangas raw wood terminal

AUGUST28/8 Destia selected as the main con-

tractor for the first development stage of KymiRing, the motorsport centre to be built in Iitti

SEPTEMBER11/9 Maintenance contract for E18

Koskenkylä–Kotka won by Destia25/9 The best dissertations honoured in

Destia’s annual infrastructure-field dissertation competition

OCTOBER8/10 The E18 Hamina bypass fully com-

pleted29/10 Completion of an overpass built by

Destia celebrated in Mikkeli; the overpass is part of the National Road 5 contract in Mikkeli

NOVEMBER23/11 Destia sells its measuring, drilling

and laboratory services to Mitta Oy

DECEMBER21/12 Third contract victory for prelimi-

nary work at the Hanhikivi1 nuclear power plant project in Pyhäjoki: earthworks for the reactor building

31/12 Asset deal between Destia and Mitta Oy:n concluded


http://via.destia.fi/in-english/luostarinkyla-rauma.html


http://via.destia.fi/in-english/increasing-capacity.html

http://via.destia.fi/in-english/increasing-capacity.html

http://www.destia.fi/en/references/kantola-event-park.html

http://www.destia.fi/en/references/kantola-event-park.html

http://via.destia.fi/in-english/national-road-5.html

http://via.destia.fi/in-english/national-road-5.html

http://www.destia.fi/en/news/stock-exchange-releases/destia-sells-survey-drilling-and-laboratory-services-to-mitta.html



PRESIDENT AND CEO’S REVIEW

A MODERATE YEAR IN A CHALLENGING MARKET SITUATIONDestia's success in 2015 was moderate despite a challenging operating environment. As a result of the poor economy, demand in the infrastructure sector remained on rather a low level, which was evident in the fierce competition for projects. In spite of the chal-lenging market situation, our revenue and or-der book increased. Our operating profit fell slightly short of the previous year. During the year, individual unsuccessful projects weak-ened our result in comparison with the previ-ous year.

In accordance with our strategy, we fo-cused on strengthening our core businesses and on growth in selected business areas. Large road projects requiring special exper-tise and infrastructure maintenance consti-tute our core business.

Railway construction and maintenance, and rock and energy infrastructure construc-tion are our key areas of growth. In 2015, we succeeded in strengthening our position in these areas. In the railway business, we have achieved a major intermediate goal, as half of Finland’s railway network maintenance is carried out by Destia.

At the end of the year, we divested our measurement, drilling and laboratory servic-es in order to clarify our business portfolio. The sale of these businesses also strength-ened our balance sheet and created better conditions for developing and growing our core operations. As a result of the trans-action, our professionals in measurement, drilling and laboratory services gained better opportunity to develop under new owner-ship, specialising in these services.

Road weather conditions are monitored in real- time at Destia’s winter maintenance management centre, Kelikeskus, and the information is trans-mitted to the maintenance crew. Keli keskus oper-ators, supervisors and drivers are in contact with each other by means of mobile solutions.

KELIKESKUS GUIDES MAINTENANCE

READ MOREDestia's winter maintenance


http://www.destia.fi/en/services/maintenance.html#winter

We also improved our customer work and sales work. Our share of private customers increased both in terms of numbers and rev-enue. Destia’s order book at the end of last year was bigger than the previous year and is spread over more years than previously. Our order book together with the development of our customer and sales work provide a good foundation for 2016.

OCCUPATIONAL SAFETY AT THE BEST LEVEL EVERIn order to achieve our strategic objectives, we continued to invest in human resource development. We focused on expertise, cus-tomer work and occupational safety. We also determinedly advanced our internship pro-grammes. Increasingly, we have been able to hire new employees through internships.

In recent years, we have focused attention on improving occupational safety. I am very

happy that our systematic work to improve safety has borne fruit. The accident frequen-cy of our employees is at a record low: 7.6 occupational accidents per one million work-ing hours. The improvement of occupational safety has also been evident in the good feedback received from customers and in-dustrial safety authorities. Investment in oc-cupational safety continues.

A RESPONSIBLE PIONEERWe are constantly developing our operations and services to respond quickly to the needs of a changing world. Urbanisation, climate change and questions of accountability relat-ing to the environment and safety are affect-ing the development not only of the infra-structure field but also the whole construc-tion sector. At Destia, in all our operations, we particularly look after the welfare of the environment and the safety of our own per-sonnel and that of the whole of society. Changes in the operating environment are also creating opportunities for growth, to which we can respond by utilising our strong service package, vast expertise and operat-ing practices.

Since 2013, as the load of our organisa-tional load has been lower, we have focused on developing our operations and on digital-isation. Together with our construction op-erations, planning and road network surveys

have a significant role in the digitalisation of our production. We are a pioneer in mod-el-based production, and we make use of 3D digital models in the design of structures, the planning of production and the use of work machines. In addition to utilising digital solutions in design and production, we have targeted our investments into practical meth-odology and technology development.

During the past year, we initiated and advanced several development projects through which we are creating a foundation for our future profitable growth. One of our greatest efforts has been the ERP project, in which we are harmonising our operating practices and building tools to support our business. In 2016, the ERP development pro-ject will proceed to commissioning. Through this project, we are boosting our operations and improving our processes and competi-tiveness.

GROWTH BY WINNING MARKET SHARE2015 was the first whole year under private ownership. Our owner has supported us strongly in the implementation of our strategy and in the further development of the com-pany.

The aim of our growth strategy is to grow profitably through excellent custom-er work and by utilising our own expertise. Our business plan period will end at the end

We are constantly developing our operations and services to respond quickly to the needs of a changing world.

of 2016. During this year, we will be setting new targets for the next three-year period. Our strategic financial targets in the current three-year period have been a 5% growth in revenue, operating profit of 4%, return on investment of 15%, and equity ratio of 40%. We will review these for the next three-year period when setting the new targets.

The purposeful development of the com-pany continues, and I hope that our invest-ments, particularly in customer work, the development of our harmonised operating practices and occupational safety will show as better and added-value service for our customers. This will create the foundation for our profitable growth.

THANK YOU FOR 2015A big thank you to all hard-working Destia employees for your professional and com-mitted work. We will continue to build the bigger picture honestly, boldly and skilfully in 2016.

Thanks to all our customers, subcontrac-tors, the owner and other partners for their faith in us. We aim to continue our coopera-tion even more succesfully this year.

Hannu LeinonenPresident and CEO


DESTIA’S BUSINESS OPERATIONS

TOTAL SOLUTIONS FOR THE ENTIRE INFRASTRUCTURE LIFE CYCLE ROAD CONSTRUCTION

We carry out large and demanding as well as smallerlocal road and street projects in a professional manner.However, large road projects requiring special expertiseis our strategic focus area. In accordance with ourlife-cycle model, our services include not only designand implementation, but also the maintenance andfinancing of traffic routes.

FOUNDATION AND FIELD ENGINEERINGWe build roads, streets and other infrastructure founda-tion structures using the latest technology in the field. Our work machinery is equipped with precise position-ing devices and control systems that allow the opera-tors to utilise 3D digital planning information. We are al-ready using model-based production at some 50 sites every year.

ROCK CONSTRUCTIONTogether with our broad partner network, we plan and construct tunnels and underground facilities, such as parking areas, goods and freight stations and civil de-fence shelters. Underground construction is becoming more common in growth centres, and infrastructure projects increasingly include the construction of tun-nels making rock construction one of our strategic growth areas.

ENERGY INFRASTRUCTUREIn addition to rock and railway business, energy infra-structure is another one of our strategic growth areas. We offer services in the construction, renovation and design of electricity distribution networks, lighting and telematics, district heating networks, natural gas net-works and wind farm projects.

Destia’s wide range of services covers the entire infra-structure life cycle from design to maintenance. Thanks to our diverse expertise, we can carry through subpro-jects or large projects in their entirety on the turnkey principle.

ENGINEER CONSTRUCTIONThe construction, maintenance and repair of concrete structures such as bridges, water towers, multi-storey car parks and piers are our fields of expertise. We main-tain and service most of Finland's bridges and we also have long experience in the restoration of aqueducts, railway bridges and museum bridges. In engineering construction projects, we use the sector’s latest meth-ods and equipment, which we are also continuously developing.


MAINTENANCE Our maintenance services cover the winter maintenance of traffic routes and the living environment, as well as the maintenance of gravel roads, bridges and the traffic environment in general. Our high-quality operations are based on the most reliable weather and road weather forecasts produced by Destia’s Winter Maintenance Management Centre, experienced personnel, and so-phisticated working methods and equipment.

ORGANISATIONAL STRUCTUREOur operations are divided into four regional business units, Southern Finland, Western Finland, Eastern Fin-land and Northern Finland, as well as the national Con-sulting Services business unit.

The operations of the regional business units cover the construction and maintenance of traffic routes, traf-fic and industrial environments and the complete living environment, as well as the services of our Winter Main-tenance Management Centre, rock construction, energy infrastructure, railway construction and maintenance and aggregates and fleet services. The business of the Consulting Services business unit comprises design, road network surveys and international consultancy.

DESIGNOur expertise in infrastructure design is wide and com-prehensive: we carry out road, street, railway and re-gional planning as well as traffic, environmental, geo- technical, bridge and rock construction planning related to infrastructure projects. We also offer services for in-ternational consulting projects. In our planning, we uti-lise the opportunities presented by digitalisation, and we are already using information model-based planning in most of our projects.

ROAD NETWORK SURVEYSWe are the leading supplier of analysis, survey and quality control services relating to traffic route and envi-ronment investments in Finland. Our specialists are the most experienced in the country in analysing road con-dition and traffic. We have at our disposal a wide range of measuring equipment and testing methods.

AGGREGATESWe have about 300 soil areas around the country. Destia offers high-quality aggregates needed in the construction of roads and buildings, as well as for con-crete products and all types of surfacings. Our nation-wide sales and supply network enables us to deliver CE certified aggregate to any location in the country.

RAILWAY CONSTRUCTION AND MAINTENANCEOur railway services cover the entire life cycle of railway maintenance throughout Finland. Our railway work var-ies from demanding superstructure contracts over many kilometres to smaller bridge, culvert and mass changing works. We are responsible for half of the 12 maintenance areas in Finland’s network of railway tracks.


STRATEGY AND TARGETS

PROFITABLE GROWTH BY WINNING MARKET SHARE

OUR VISION:

WE ARE THE NUMBER ONE CHOICE FOR OUR CUSTOMERS AND NUMBER ONE IN THE INFRASTRUCTURE SECTOR IN FINLAND

OUR MISSION:

BUILDING THE BIGGER PICTUREWe at Destia build, maintain and design our living environment so that it is efficient and safe. We cre-ate advanced solutions and servic-es with great professional skill, uti-lising the latest working methods in the industry.

OUR VALUES:

ACHIEVING GOALS FAIRLY, BOLDLY AND SKILFULLYOur operations are based on fairness, bold-ness and skill, and through these we achieve our goals. We are fair with our customers, part-ners and each other. We create responsible in-frastructure solutions with boldness and skill, building the bigger picture, piece by piece.

The key target of Destia’s strategy for 2014–2022 is to achieve profitable growth on the infrastructure market through excellent customer work and making use of the company’s own exper-tise.

Our core business comprises large road projects and infrastructure maintenance requiring special expertise. Our focus ar-eas of strategic growth are in the rock and railway businesses and in energy construction. Human resource develop-ment is one of our strategic areas of fo-

cus. In that, we are particularly investing in the development of customer work. Our strong expertise and the Destia spirit, our harmonised, ethically sustainable and responsible way of doing business, form the firm foundation for the implementa-tion of our strategy.

CORPORATE RESPONSIBILITY FINANCIAL STATEMENTSGRI CORPORATE GOVERNANCEDESTIA’S YEAR 2015 9

OUR COMMITMENT

We are committed to making Destia grow profitably and making it a producer

of complete infrastructure services providing the best customer service.

Of Destia’s stock of contracts, a significant part comprises long-term

projects and service contracts with both the public and private sectors.

STRATEGIC AREAS OF FOCUS

OUR FINANCIAL TARGETS FOR THE 2014−2016 OPERATING PERIOD• Average growth of 5% per year • Operating profit (EBIT) ratio 4%

by the end of 2016 • Return on investment ratio 15%

by the end of 2016 • Equity ratio 40% by the end of

2016

The Destia spirit

Ensuring conditions

Winning on the market

The leading areas of growth during the operating period: • track construction and maintenance• energy construction• rock construction

We are the number one choice for our

customers and number one in the

infrastructure sector in Finland

DigitalisationPerformance management

Building expertise and competence

CORPORATE RESPONSIBILITY AS PART OF DESTIA’S STRATEGY

Customer satisfactionProduction of services

Digitalisation

Customer-oriented service and project

management

Winning on the market

People and the environment

Ensuring conditions

Consistent way of working

The Destia spirit

Skilled and thriving Destia personnel

Procurement and partnershipsSafety

EnvironmentProfitable business

Destia solutions (R&D)

Ethical businessParticipation in society

Internal and external corporate communicationsThe foundation of corporate responsibility: Destia’s values of goal-achievement through fairness, boldness and skill.

Our aim is to be the number one choice for our customers and number one in the infra-structure sector in Finland. Putting our strat-egy into practice requires responsible actions from us, our partners and those working with us. The corporate responsibility programme guides our day-to-day corporate responsibil-ity work and leadership.

The underlying themes of our strategy are the Destia spirit, ensuring the right conditions

and winning on the market. The Destia spirit is created by our harmonised, responsible way of working. Securing strong operating conditions covers a wide range of significant themes related to people and the environ-ment. We endeavour to win markets through innovative and strongly customer-driven ac-tivities.


OPERATING ENVIRONMENT

MEGATRENDS CHANGING THE INFRASTRUCTURE AND CONSTRUCTION SECTORS

Finland’s infrastructure and construction sectors are in the midst of great change. In order to take advantage of the opportunities presented by the change and to solve problems, companies need completely new kinds of operating practices and services.

URBANISATION is creating needs to develop infrastructure Urbanisation, one of the most significant global meg-atrends, is also changing urban structures and creat-ing needs for infrastructure development in Finland. Of the Finnish infrastructure market, 56% is in the sub-regional units of the six largest urban areas.

CLIMATE CHANGE demands the development of infrastructure systems Climate change requires the society and private property owners to develop their infrastructure systems to cope with new conditions such as heat and heavy rain.

AGEING POPULATION creates new types of needs for living environmentsAs life expectancy increases and the birth rate declines, the average age of the population is rising in nearly all industrialised countries, including Finland. An ageing pop-ulation needs accessible and safe living environments. In Finland’s sparsely populated regions, in particular, where ageing is a special problem, new kinds of service con-cepts are also needed to keep the regions vital.

RESPONSIBILITYSafety and environment issues are becoming increasingly prominent As a result of increased environmental awareness in the society and due to multinational environmental agree-ments, responsibility issues concerning the environment and safety have become prominent in the operations of all organisations. The development of corporate responsibili-ty is also an increasingly important function in companies.

Railway traffic to prevent congestion and reduce the burden on the environment

Subterranean construction as a solution to the shortage

of space in citiesSafe and smooth

traffic environmentsAccessible and safe living environments

Renewable energy solutions

Efficient, environmentally-friendly, reliable energy

infrastructure


Careful planning creates a strong founda-tion for safe solutions. Our planning and consulting services cover traffic safety plan-ning services from regional plans to prelimi-nary surveys and traffic safety assessments of the plans.

WE TAKE CARE OF THE WELFARE OF THE ENVIRONMENT Efficient infrastructure serves

the needs of citizens and companies but is also environmentally effective. Our aim is to minimise the environmental impact of our own operations and solutions, and to con-stantly improve resource efficiency, material efficiency and energy efficiency.

The environmental impact of roads and streets must be minimised. In order to achieve this goal, we have developed solu-tions, for example, for the protection of groundwater, the conservation of rivers and streams and reducing the electricity con-sumption of roads.

Efficient operations save the environment. We are a pioneer in the use of work machine automation. Work machine automation is in use at nearly all our suitable civil engineer-ing-focused sites. The aim is to boost the

WE BUILD EFFICIENT URBAN ENVIRONMENTSEfficient traffic solutions and

roads in good condition are a prerequisite for smooth movement in cities. We are a specialist in road and street projects. In addi-tion to planning and implementation, we also take care of the maintenance of traffic routes.

Subterranean construction brings more space to confined urban environments, and the volume of subterranean construc-tion is constantly increasing in growth centres. We plan and construct tunnels and underground facilities, such as parking areas, goods and freight stations and civil defence shelters.

In traffic solutions, congestion prevention and environmental aspects favour an in-crease in rail traffic. Our railway network services cover the entire life cycle of railway maintenance throughout Finland, from plan-ning to maintenance.

In urban environments, diverse expertise in engineering construction is needed. The construction, maintenance and repair of con-crete structures such as water towers and railway bridges and multi-storey car parks are

performance and precision of work and to re-duce material waste.

WE DEVELOP INFRASTRUCTURE SYSTEMS THAT WITHSTAND EXTREME WEATHER PHENOMENA

As the climate warms, infrastructure sys-tems must be developed to withstand in-creasingly variable and more powerful weather phenomena. We renew old energy networks and take them underground in order to safeguard the security of supply. We also develop our maintenance services to meet the new needs created by extreme weather phenomena.

WE OFFER SOLUTIONS FOR THE NEEDS OF AN AGEING POPULATIONAn ageing population needs ac-

cessible and safe living environments, and we develop different types of solutions to preserve and build them. Alongside our re-gional road-maintenance contracts and the Winter Maintenance Management Centre, we have created services to support safe traffic and to improve the availability of goods and services in sparsely populated regions, where ageing is a special problem.

among our fields of expertise. We maintain and look after most of the bridges in Finland.

WE INVEST STRONGLY IN SAFETYHigh-quality traffic arrange-ments increase the safety of

road users. Ensuring safety during construc-tion and end use is the starting point in all our road construction projects. In end-solutions, safety is increased, for instance, by correctly positioned over- and underpasses and green bridges.

The efficient care and maintenance of traf-fic environments is a prerequisite for safe traffic. Our maintenance services cover the winter maintenance of traffic routes and the living environment, as well as the mainte-nance of gravel roads, bridges and the traffic environment in general.

We also have long term experience of analysing road conditions and traffic. We have a wide range of measuring equipment and test methods at our disposal, producing reliable information on the current state and future needs of the road network. Condition surveys provide crucial initial data for allocat-ing funds for improving roads and streets, for planning improvements and for maintaining road surfaces.

DESTIA AND THE OPPORTUNITIES CREATED BY MEGATRENDS

WE RESPOND TO THE NEEDS OF THE CHANGING OPERATING ENVIRONMENT

Destia is constantly developing its operations and services to meet the needs of a rapidly changing world; piece by piece we build a better functioning society and cre-ate the conditions for safe and smooth movement. In all our operations, we take spe-cial care of the welfare of the environment and the safety of our own personnel and the whole of society. Our service portfolio, vast expertise and operating practices cre-ate a solid foundation for growth, created by the trends in our operating environment.


DESTIA AND CORPORATE RESPONSIBILITY

MAKING THE WORLD RUN SMOOTHER

Our corporate responsibility work is guided by our mission, vision, values and strategy. Our values define that we strive to achieve our goals through fairness, boldness and skill. Our vision of being the number one choice for our customers and the number one in the infrastructure field in Finland re-quires responsible operations, both from us and from those who work with us.

In corporate responsibility reporting, we follow the Global Reporting Initiative (GRI) reporting guidelines and their G4 version at the core level.

CORPORATE RESPONSIBILITY PROGRAMME AND ETHICAL GUIDELINES GUIDE OUR OPERATIONS Responsible operations in our daily work and management are guided by our corporate re-sponsibility programme and ethical guide-lines. The corporate responsibility programme

is based on the themes fundamental to re-sponsibility as outlined by us and our stake-holders. The ethical guidelines describe the operating principles accepted in our compa-ny, which create a common basis for our de-cision-making and operations. Our common operating principles define the Destia spirit, our shared ethically sustainable and respon-sible way of doing business.

ESSENTIALITY CHART CREATES THE FRAMEWORK FOR OUR OPERATIONSCreated in autumn 2013 by combining the views of Destia’s employees and a dialogue with stakeholders, the essentiality chart is our tool for formulating and managing corpo-rate responsibility policies, and it serves as the foundation for our corporate responsibili-ty programme.

The aspects of our corporate responsibili-ty considered the most important are located in the upper right section of the chart. They constitute the key content of our corporate responsibility and GRI reporting, and we an-nually set targets, measures and indicators for them.

Destia’s operations have a significant impact on the society, the environment and the company’s stakeholders, making our field of corporate responsibility multifaceted.

minor

min

or

moderate

mod

erat

e

INTE

REST

OF

STAK

EHOL

DERS

IMPACT ON DESTIA’S OPERATIONS

great

grea

t

Social participation

Production of services

Safety

Ethical business

Procurement and partnerships

Skilled and thriving Destia personnel

Profitable business

Customer satisfaction

Internal and external corporate communications

Environment

New solutions and sector development

ESSENTIALITY CHART PRESENTING DESTIA’S CORPORATE RESPONSIBILITY

READ MOREGRI compilation starts on page 27 of the annual report.

13DESTIA’S YEAR 2015 FINANCIAL STATEMENTSGRI CORPORATE GOVERNANCECORPORATE RESPONSIBILITY

Stakeholder Importance of and interaction with the stakeholderCustomers and clients

Our customers include government organisations, municipalities, cities, industrial en-terprises and other businesses. Of our stock of contracts, a significant part comprises long-term projects and service contracts with general government and companies.

Owner, financiers and shareholders

Destia was transferred to the ownership of Ahlström Capital on 1 July 2014 when Ahlström Capital purchased the entire shareholding in Destia Ltd from the State of Finland. Destia Ltd continues as a successful, dynamic market player.

Personnel Our skilled and motivated personnel serve our customers and infrastructure users daily all over Finland. Human resource development is one of our strategic areas of focus.

Subcontractors and partners

We work with thousands of suppliers every year. Our procurement operations are mainly with local service providers. In our operations, we make use of a network of reliable sup-pliers.

Infrastructure users, neighbours

We pay particular attention to the safety of and communication with the users of the infrastructure and the multitude of people living and working in our vicinity.

Authorities In our field of business, quality, safety and environmental aspects are some of the key elements considered in providing services. We comply with the general requirements as set out in the legislation and the special requirements of each project or service contract.

Decision-makers Infrastructure is an essential element of Finland’s success and smooth everyday life. Political decision-makers contribute to creating the operating environment in which we offer our services nationwide. Public spending is controlled through transparency and strict rules for competitive tendering. We do not support any political parties.

CLOSE INTERACTION WITH STAKEHOLDERSDestia builds, maintains and designs traffic and industrial environments. We are part of a value chain that comprises a large group of players and stakeholders. The vital interac-tion takes place between us and our custom-ers. Many of our projects have a direct im-pact on the everyday life of the infrastructure users as well as the people and businesses in the vicinity.

The form and significance of stakeholder inter-action are determined by the nature of Destia’s business operations and value chain.

Owner, financiers and shareholders

Sub-contractors and partners

Sector development

Laws and regulations

CustomerRequirements,

criteria

Infrastructure users,

neighbours

Built environment,

nature

Personnel


PROFITABLE BUSINESS

WELL-BEING FOR ALL STAKEHOLDERS Destia’s financially responsible operations aim to generate well-being through the crea-tion of sustainable added economic value. This is best achieved by developing and of-fering top quality services for our customers. By selling them profitably, we can respond to the owner’s profit expectations through a good return-on-investment ratio and a healthy equity ratio. We also want to provide jobs, create financial well-being for various stakeholders by means of our procurement and investments as well as ensure that taxes and tax-like liabilities are paid. For us to be able to achieve these targets, our business needs to grow, show a profit and be cost-

effective. Moreover, it is typical of the infra-structure and construction sectors that satis-fying customer needs and creating financial well-being for stakeholders require persever-ance from companies.

In the construction industry, the concept of financial responsibility also means that companies are responsible for ensuring that customers receive the services and struc-tures that they need at the agreed price and quality and on schedule. Throughout the en-tire life cycle, the infrastructure created must increasingly be able to meet the changing needs of its users.

DIVISION OF FINANCIAL BENEFIT BY STAKEHOLDER 2015

INVESTMENTS MEUR 9.2Gross investments (2014: MEUR 8.0)

FINANCIERS MEUR 4.3Financing costs (2014: MEUR 5.7)

PERSONNEL MEUR 71.5Salaries and remuneration (2014: MEUR 71.1)

SUPPLIERS MEUR 324.7Materials and services from external subcontractors

(2014: MEUR 284.2)

PUBLIC SECTOR MEUR 17.2Taxes and tax-like payments MEUR 0.5 (2014: MEUR 2.4)Pension and indirect personnel costs MEUR 16.7 (2014: MEUR 16.1)

CUSTOMERS MEUR 462.82015 revenue

(2014: MEUR 431.5)

DESTIA’S YEAR 2015 FINANCIAL STATEMENTSGRI CORPORATE GOVERNANCE 15CORPORATE RESPONSIBILITY

PRODUCTION OF SERVICES

CUSTOMER DRIVEN ACTIVITIES AND RESPONSIBILITY GUIDE OUR OPERATIONSDestia has a key role in the Finnish society. Thanks to our large service portfolio and an extensive network of offices, our operations affect the lives of nearly all Finns. We build, maintain and design not only traffic and in-dustrial environments but also complete liv-ing environments. In the production of ser-vices, we make use of the most advanced work methods and the opportunities afforded by digitalisation.

The foundation of our service production is customer centricity, essential elements of which include keeping customer promises and implementing services following the objectives set, in an efficient, high-quality and economic fashion. Customer surveys show that our services are considered of high quality and we are seen as a reliable operator, that also participates in the further development of the entire field.

Responsible methods are part of our everyday project operations. We pay

READ MOREWe build the Kettumäki bridge in Hämeenlinna.

special attention to the transparency of our operations, and we have zero tolerance to misuse.

We possess the international combined ISO 9001 and ISO 14001 quality and environmental certificate, covering our infrastructure construction, infrastructure maintenance, consulting, aggregates and railways services. Our operations fully comply with the certification requirements, by which we can ensure for our customers and other stakeholders that the operations are of top quality and take environmental aspects into consideration. In addition, our operating practices comply with the OHSAS 18001 occupational health and safety standard.

In corporate responsibility reporting, we follow the Global Reporting Initiative (GRI) guidelines and their G4 version at the core level. The GRI compilation is part of our an-nual report.

DESTIA’S YEAR 2015 FINANCIAL STATEMENTSGRI CORPORATE GOVERNANCECORPORATE RESPONSIBILITY 16

http://via.destia.fi/in-english/kettumaki-bridge.html

CUSTOMER SATISFACTION

OUR AIM – TO BE THE NUMBER ONE CHOICE FOR OUR CUSTOMERSThe aspiration to high customer satisfaction is laid down in Destia’s strategy, and it is also a starting point for the company’s responsi-ble operations. Our aim is to be the number one choice for our customers, a trusted part-ner and a pioneer in our field. We want to be the first company that our customers think of when they need a reliable versatile specialist in the field of infrastructure and construction. It is also important for us to be the most at-tractive partner for our entire cooperation network. Customer satisfaction is one of the key indicators showing how well we are suc-ceeding in our work, the development of which we monitor regularly.

CUSTOMER SATISFACTION AN IMPORTANT OBJECTIVE IN PROJECT MANAGEMENTCustomer satisfaction is an important part of Destia’s project management. Clear pro-ject-specific and Group-level objectives have been set for it, and its development is moni-tored systematically. We carefully analyse the customer feedback we receive and, on that basis, we take the necessary development steps, on which we also report internally.

Our key indicators of customer satisfac-tion are the quarterly-reported project feed-back and the net popularity index. In 2015, project feedback was 4.0 (4.1 in 2014). The net popularity index, which indicates how large a share of our customers would recom-mend us, was 12 (7). Improvement in cus-

tomer satisfaction is linked to our strategic indicators.

Based on the feedback we receive from customers and partners, our stakeholders expect from us above all responsible oper-ations, adhering to the terms set out in con-tracts, innovation and a successful service package. The deepening of customer work and the development of operating practices are continuing in 2016 as part of our strate-gic development programme.

SATISFIED PERSONNEL – SATISFIED CUSTOMERSWe believe that the job satisfaction of our own personnel has a decisive significance for customer satisfaction. Therefore, we invest strongly in job satisfaction, and we annually measure the satisfaction of our employees with their job, manager, work community and the company as a whole.

We pay particular attention to the ser-vice attitude of our personnel. Encouraging the adoption of a ‘Yes, we can!’ attitude and encouraging employees to listen to the customers and resolve their challenges are important elements of the development of customer work and project management. At the core of the Destia spirit is the principle of doing patient and good work honestly and fairly – always thinking of what is best for the customer.


SAFETY

SAFETY IS CENTRAL TO ALL OPERATIONSDestia wants to guarantee safe and healthy work conditions for all its employees and subcontractors working at its sites, and also takes care of the traffic safety of road users. Safety is a key element of our social respon-sibility and our aim in all our operations.

In recent years, our occupational safety has clearly improved and this good trend continued in 2015. The accident frequency, or the number of workplace accidents lead-ing to at least one day of absence per one million working hours, dropped to the record low figure of 7.6 (9.3 in 2014). 6.5 work days were lost due to sickness or accidents per person year, meaning the sickness absence rate was 2.6.

THE PRINCIPLE OF PLANNING FROM GENERAL TO SPECIFIC ENSURES PROJECT SAFETYOur business operations are project-based, and they are typically carried out at different sites and in varying conditions. We strive to ensure safety at the sites in accordance with the principle of planning from general to spe-cific. This means that, in addition to our com-mon safety procedures, all safety matters re-lated to a project are first examined from the

perspective of the entire project and then specified in more detail for each phase of the project.

Because many of our projects are carried out along traffic routes, traffic safety is a par-ticular priority for us. Safety is ensured with properly planned and implemented traffic arrangements at the sites for the benefit of vehicle traffic and employees. If necessary, these arrangements also cover rail traffic. In maintenance work, traffic safety is ensured by, for example, marking the fleet clearly and performing the work at appropriate times.

SAFETY MONITORED CLOSELY AND MEASURED WITH PRECISIONEach year, the measures related to occupa-tional safety and the allocation of the related responsibilities are decided on by the Occu-pational Safety Committee chaired by Destia’s President and CEO. The Occupa-tional Safety Committee is also responsible for monitoring the measures affecting occu-pational safety; the responsibility for imple-menting these measures, however, lies with the line management. Safety issues are pro-cessed regularly by our management teams and reported on a monthly basis.


CONSTRUCTION INDUSTRIES’ 2020 COMMITMENTDestia has signed the Confederation of Finn-ish Construction Industries RT’s “zero acci-dents in the field of construction 2020” com-mitment. The management’s occupational safety commitment and the principles of safe work are:• An accident-free site/plant is a matter of

honour to us.• Our goal is for accidents to decrease by

30 per cent each year.

SAFEST OPERATOR 2015

We reward our personnel and units for acci-dent-free operations. First awarded in 2011, the Safest Operator award has had a winner every year since. In 2015, rock construc-tion received the honour for its outstanding achievement: 0 occupational accidents dur-ing the year.

In addition to Safest Operator, since May 2012 we have also rewarded our business units for accident-free periods of 120 days. An accident-free period means that not one absence resulting from a workplace accident and leading to absence from work may occur within that time.

Our systematic efforts to develop occupa-tional safety are yielding results: the number of occupational accidents has declined sig-nificantly at our sites.

Four times a year, all our staff are sent a safety bulletin, which contains topical mes-sages from the Occupational Safety Com-mittee, follows the development of the key figures related to safety, discusses accidents and safety observations that have taken place, and gives advice on how to avoid ac-cidents.

COMPULSORY ONLINE INDUCTION OFFERS BASIC INFORMATION ABOUT SAFETY ISSUESIn the construction business, the careful in-duction of employees in their jobs and work locations is particularly important, as people must be able to perform their work safely. In a variety of ways, we ensure that all those working at our sites are familiar with our safety principles.

In 2013, we introduced an online induc-tion course, which provides the fundamen-tals on our company and its approach to safe management and work. The induction is compulsory for all Destia employees and subcontractors before they start work on the company’s sites. A total of some 6,200 per-sons have completed online induction, 4,200 of whom are subcontractors. In addition to our permanent staff, all our summer work-ers also participate in induction events that cover the principles of safe working. We also teach occupational safety issues at different institutes.

ACCIDENT FREQUENCY TREND

SERIOUSNESS OF INJURIES

NUMBER OF SAFETY OBSERVATIONS

2012 2013 2014 2015

Absence of 1−29 days 33 21 18 15

Absence of more than 30 days 5 4 3 3

2013 2014 2015

400 799 1,108

2012 2013 2014 2015

• We enhance occupational safety system-atically.

• We examine each accident and danger-ous situation.

• We have all the necessary resources in use for taking care of occupational safety matters.

• We compile statistics and report acci-dents according to shared instructions.

• We also require compliance with these goals and demands from our contracting parties.

7.69.3

10.8

15.6


the ‘one over’ principle, which means that, in these matters, the decision-maker is the su-pervisor’s supervisor.

We want to guarantee safe and healthy working conditions for all our employees. Through responsible actions, we prevent occupational accidents and health risks and improve working conditions.

Each Destia employee is responsible for the effectiveness, safety and honesty of his or her own decision-making and actions, and for the creation and maintenance of a good working environment. We are worthy of the trust placed in us.

SKILLED AND THRIVING DESTIA PERSONNEL

STRONG INVESTMENT IN HUMAN RESOURCE DEVELOPMENT

Infrastructure and construction sector's de-velopment trends, in particular the increase of digital solutions, require that the compa-nies constantly develop the expertise of their personnel with perseverance. Destia focuses special attention on the development of cus-tomer relationship management, engineering construction and site automation expertise.

A prime example of the development of the expertise of our personnel is the Tosi-toimi training organised for many years now, focusing on the development of common op-erating practices and customer work.

We also invest in improving our staff’s qualifications. In our sector, important qualifi-cations include those to do with road safety, railway work safety, the occupational safety card and a professional lorry driver qualifica-tion.

PERSONNEL SATISFACTION INCREASEDWe annually measure the satisfaction of our employees with their job, supervisor, work community and the company as a whole. Other key themes of the survey are well-be-ing and motivation at work.

On the scale of 1 to 5, the overall average in the 2015 survey was 3.81 (3.79), the index measuring supervisory work was 3.87 (3.88), and the well-being at work and commitment index was 3.85 (3.83). Staff were also asked how well, in their opinion, Destia takes into account environmental responsibility and social responsibility. The score for environ-mental responsibility was 3.98 (3.92), and for social responsibility it was 3.79 (3.71). The response rate was 76% (78%).

Every year, we process the results of the personnel survey unit by unit and team by team and, based on discussions, we select 1 to 3 measures for implementation in order to further improve the results.

GOOD SUPERVISORY WORK IS KEY FOR REACHING TARGETS Supervisors play a key role in the motivation and commitment, welfare and job satisfac-tion of employees. Good supervisory work is also an area of focus in our strategy and one basis of our supervisors’ incentive system.

Our supervisors are responsible for ensur-ing that there is frank, open and constructive

discussion on all work-related matters, and that participation in such discussion is the right and duty of every Destia employee. Supervisors also set a good example in the implementation of responsible work practic-es and intervene in any issues requiring cor-rection. Each supervisor must hold regular development discussions with their subordi-nates.

CLEAR EMPLOYER AND EMPLOYEE PRINCIPLESAs an important part of our corporate culture, responsibility is instituted for us in the high ethical requirements related to the work of the company’s Board of Directors, manage-ment, other personnel and partners.

We respect our employees’ basic rights and the collective and other agreements that bind us. We select employees on the basis of suitability for the job, experience and edu-cation. We treat everyone equally and assess our personnel based on work performance. Decisions on an employee’s employment relationship and its financial rewards adhere to the guidelines given and always at least to

READ MOREOur ethical guidelines can be found in full at our website.


http://www.destia.fi/en/destia/values-and-ethical-guidelines.html

PERSONNEL AGE DISTRIBUTION31 December 2015

PERSONNEL GENDER DISTRIBUTION 31 December 2015

men ............... 86%

women .......... 14%

permanent temporary

DEVELOPMENT OF NUMBER OF PERSONNEL31 December 2015

2012 2013 2014 2015

EVERY YEAR 150 SUMMER WORKERS AND TRAINEES

“A nice, varied and responsible job” − that’s how young people who worked at Destia last summer described their summer job. According to the feedback received, good experiences result from the fact that we at Destia have a good spirit, we induct people properly into their jobs and we take good care of occu-pational safety.

“Another interesting week behind, full of experiences. A hot and sunny Fri-day included casting the ingredients for concrete rail elements and keeping good order at the site in general. Varied tasks provide know-how, which you

don’t learn sitting in lectures at school,” said one summer worker on our in-tranet.

Engineering student Janne Heikkinen was so inspired by his summer job at Destia’s National Road 8 multilevel interchange site at Luostarinkylä that he stayed on in the job until the end of the year. “Destia has a nice group of peo-ple, and they take good care of occupational safety,” he said.

–24 ............... 4.9%

25–29 ......... 11.7%

30–34 ......... 11.5%

35–39 ......... 10.5%

40–44 ........... 6.7%

45–49 ......... 10.7%

50–54 ......... 15.6%

55–59 ......... 17.9%

60–64 ........... 9.5%

65– ............... 1.1%

1,417

1,502

85

1,375

1,465

90

1,354

1,429

75

1,403

1,492

89


PROCUREMENT AND PARTNERSHIPS

SUPPLEMENTING IN-HOUSE RESOURCES

In Finland, Destia operates nationwide and cooperates with thousands of suppliers. We carry out projects by supplementing our own fleet and expertise by extensive subcontract-ing. We select the partners in our supply chains on a project-by-project basis, often from local, skilled subcontractors. Therefore, our procurement is largely local service pro-curement and, according to the feedback re-ceived from stakeholders, we are considered a significant local employer.

The partnerships of “Destia’s Designat-ed Partner” form a collaboration network supplementing our expertise, enhancing the efficiency of project implementation and en-suring a high-quality end-result for our cus-tomers. In 2015, we increased the partner-ship agreements of the “Destia's Designated Partner” network by 70 percent. The network continues to grow.

We mainly procure materials from external suppliers. Destia only produces aggregates,

which we typically acquire from locations close to projects. Examples of materials and products that we procure include various steel products and road salt to prevent slip-periness. Before concluding an agreement, we evaluate all material suppliers both in Fin-land and abroad and check their production plants or areas. The manufacture of products or materials and the operations of production plants are frequently monitored by a third party.

Our entire procurement process adheres to our values, ethical guidelines and the prin-ciples of fair competitive tendering. We cen-trally acquire all products and services that are remarkable in terms of volume. In addi-tion to the laws and regulations, we require from our partners the right skills and a will-ingness to comply with our operating models and safety and environmental regulations.

In 2015, our total volume of procurement was MEUR 320.5 (263.4). Because of the

nature of our business, most of our procure-ment is carried out in Finland, but we also procure some products and services directly from foreign suppliers. In 2015, 1.5% (2.9%) of all our procurement was made from for-eign suppliers.

THE CONTRACTOR’S OBLIGATIONS AND LIABILITY COMBATS THE GREY ECONOMY In our operations, we observe the Act on the Contractor’s Obligations and Liability when Work is Contracted Out, by which we en-deavour to combat the grey economy and promote fair competition between compa-nies and compliance with the terms and con-ditions of employment. We also require our suppliers to take care of their legal obliga-tions, and in our service procurement con-tracts we require them to be registered in the Contractor's Obligations Act register (Tilaaja-vastuu.fi). This makes it easier to check, doc-ument and monitor the obligations that sup-

pliers have under the Act. We also require them to meet the obligation to provide notifi-cations and reports in the construction in-dustry as laid down in the legislation. We re-quire our foreign service providers to supply the same reports and information under the laws and regulations that we expect from our Finnish suppliers.

CE CERTIFICATIONS COMPULSORY FOR CONSTRUCTION PRODUCTSSince 2013, CE certification has been com-pulsory for construction products. This certi-fication indicates that the manufacturer de-clares that its product meets the require-ments of the relevant EU directives and has undergone any inspections that may be re-quired. The obligation for CE certification concerns the aggregates that we produce and the products that we procure.


ENVIRONMENT

OUR AIM IS TO MINIMISE ENVIRONMENTAL IMPACTDestia’s aim is to build environmentally-effi-cient infrastructure which also serves the needs of citizens and businesses as well as possible. We constantly work to minimise the environmental impact of all our projects and to improve resource, material and energy ef-ficiency.

Our environmental management is based on an environmental management system designed under the ISO 14 001 standard. This ensures that environmental protection targets are taken into consideration in all our operations and decision-making. In this way, our environmental management promotes the eco-efficiency of our own operations and reduces environmental harm throughout the life cycle of our services and solutions.

Infrastructure projects entail a great deal of regulation and activities subject to various permits. We always operate in accordance with the valid environmental legislation and regulations.

As part of project management, we moni-tor the level of customer satisfaction towards our care of environmental issues. In 2015, we were given an average mark of 4.0 on a scale of 1−5 (4.0 in 2014 and 2013) for the man-agement of environmental and safety issues.

NATURE VALUES IMPORTANT IN THE USE OF SOIL AND AGGREGATES Destia has 316 licensed aggregate areas. In 2015, about 100 areas were in active use.

Every year, we use some 3 million tonnes of soil and aggregates.

In soil and aggregates extraction, we al-ways strive to conserve natural biodiversity. When acquiring new areas, we study their natural values in advance and systematically exclude protected areas and those that are otherwise valuable from a natural perspective from our operations. Legislation specifies the most valuable species and habitats, but we also aim to conserve other valuable locations on our own initiative.

Extraction areas at the end of their life cycle are treated so that vegetation returns to them as quickly as possible. Soil and ag-gregates extraction is not always a threat to natural biodiversity and may even increase it. For example, once our operations have ended, a quarry pond, a cliff for birds to nest on or a sunny slope for sun-loving vegetation may be created in the area.

MORE EFFICIENT WORK FOR THE GOOD OF THE ENVIRONMENTWe are a pioneer in the utilisation of working machine automation, and we use it to boost the efficiency of our work, to improve accu-racy and to reduce material waste at nearly all our suitable earthwork sites.

We always recycle and reuse construction materials whenever possible. Examples of this include the reuse of crushed concrete and crushed material made from waste as-

phalt, as well as the use of old structural lay-ers in road projects.

In order to optimise material efficiency and fuel consumption in project activities, we pay close attention to the planning of operat-ing practices and logistics. We also monitor the use of our fleet of trucks using a GPS-based system. By combining operating and fuel consumption data, we get precise infor-mation about the efficiency and economy of each truck. In our railway business, we also monitor the efficiency of the use of the fleet, and we have succeeded, for example, in re-ducing the number of transfers of our rolling stock by 15% in 2015.

Furthermore, energy audits were per-formed at two of Destia's worksite bases,

providing several good ideas for cutting en-ergy consumption.

QUALITY AND ENVIRONMENTAL CERTIFICATE FOR ALL SERVICESWe possess the international combined ISO 9001 and 14001 quality and environmental certificate, covering all our services: infra-structure construction, infrastructure mainte-nance, consulting and aggregates services and the railway business. Through proce-dures which are in line with the certification requirements, we ensure for our customers and stakeholders that our operations are of high quality and take into account the well-being of the environment.

MODELLING NOISE

Certain stages of aggregate extraction gen-erate very high levels of noise. In their work, Destia noise planners Taina Mattila (on the left) and Hannele Sivonen use CadnaA noise calculation software that they created in their work, by which they can study how much noise is generated by aggregate extraction and crushing. A noise impact assessment is always completed before the work is actually begun. The greatest noise originates from drilling, breaking and the crushing plant. By means of this model, they can find locations at the site that are as favourable as possible for these operations, so that the noise does not cause unreasonable harm to the immediate surround-ings. A noise survey is also a good way to en-sure the granting of environmental permits.


NEW SOLUTIONS AND SECTOR DEVELOPMENT

PRODUCT DEVELOPMENT RESPONDS TO THE NEEDS OF A DIGITALISING SECTORIncreasing digitalisation is revolutionising the entire infrastructure and construction indus-try. It affects the way how projects are de-signed, implemented and monitored. Re-al-time production reporting solutions boost efficiency, improve the quality of the work and end-products and make possible more effective reporting and communications be-tween the various parties. Destia is constant-ly developing its services to respond quickly to the demands of a changing world.

In order to take full advantage of the opportunities presented by digitalisation, in our R&D work we invest strongly in developing digital operating models and the production practices exploiting them. Our product development can be divided into three areas: model-based production, mobile data acquisition and reporting in production as well as production-oriented method and technology development.

In our field, we are a pioneer in information model-based production, whereby the road models and digital models of earth structures produced by designers can be transferred to production by means of working machine automation. Our work machines are equipped with satellite positioning and a control system by which the machine operator can build very precisely using three-dimensional material. The production method increases efficiency,

improves quality and reduces material waste. The work machine also serves as a measuring device in quality assurance, which reduces the measurement work associated with the traditional way of working in this work stage.

Model-based material can be distributed wirelessly to the work machines through a centralised server solution. The machines are in constant contact with the server, so their location and operation can also be accurately monitored online from any point. Out in the field, supervisors can use mobile

devices to utilise the material collected on the server, such as cross-sectional diagrams of structural models and the actual measurement points of the working machines.

The modelling of construction planning material also brings other benefits for design and construction projects. With models, it is possible, even before implementation, to visually examine the functionality and compatibility of structures and to calculate the necessary amounts of materials needed for different purposes. In that way, the end result of design is more error-free and fewer surprises are encountered out in the field.

In 2015, Destia had more than 50 model-based construction projects ongoing and, in road and railway maintenance, mobile data acquisition and reporting play an even more extensive role. In these services, with subcontractors included, we have more than 2,000 users of mobile data acquisition. Through wireless data transfer extending to the equipment and with various mobile devices, we can collect a wide variety of information on production and then transmit it to the servers for analysis. The information can be used, for example, for planning, monitoring and documenting maintenance measures, the supervision of working time and in a wide range of reports for different user groups.

In addition to utilising digital solutions in design and production, we have targeted our investments into practical methodology and technology development. Prime examples of this include the development of the fleet and the equipment used in railway maintenance and road maintenance, as well as solutions that improve the safety and quality of concrete construction.

NEW EXPERTISE NEEDED IN DIGITAL FUNCTIONSIncreasing digitalisation sets new challenges for the expertise of our personnel and sub-contractors. Expertise related to the utilisa-tion of information models and site automa-tion is an area we are focusing on in terms of skills development. In order to train new gen-erations of experts, we cooperate closely with colleges and organisations in the field. We aim to be a specialist and reliable partner for colleges, developing training in the sector and offering interesting jobs, both for student summer workers and for young graduates.

We are also actively involved in the development of the entire Finnish infrastructure industry. We have been involved in developing customer practices in the infrastructure sector, by participating, for example, in the activities of the infrastructure modelling forum buildingSMART Finland.

ELEMENTS OF DESTIA’S PRODUCT DEVELOPMENT

Model-based production

Mobile production data acquisition

Production-oriented development of methods and technology


INFORMATION MODEL-BASED PLANNING AND CONSTRUCTION

At the site of the multilevel interchange on National Road 8 at Luostarinkylä in Rauma, we are implementing a design-and-build (DB) project making effi-cient use of information models and automation. As pioneers in information model-based construction, at this site we have taken the method further than anywhere else in Finland, while gathering valuable experience for the further development of the method.

The information model is maintained and updated in

a cloud-based system

Real-time monitoring helps in quality

assurance

The site is planned as a 3D information model

Work machine control systems utilise the plan and update the

realised outcomes into the information model

The customer receives precise documentation about the project implemented

READ MORE

NEW TOOLS AT USE ON A DESTIA PROJECT IN RAUMA



SOCIAL PARTICIPATION AND COMMUNICATIONS

ACTIVE PARTICIPATION IN SOCIETY

We are involved in the operation of various associations and organisations in order to promote the handling of and decision-mak-ing transparently matters important to our business. We participate in the activities of associations and organisations in the energy, construction, road building and service sec-tors, for example. In these, we exert influ-ence both as a company and through per-sonal memberships. Every Destia employee has the right to participate in social issues. The starting point of our participation is that our representative should be actively in-volved in the activities of the association, preferably as a member of the board, a rele-vant working group or some other body. We do not support political or religious organisa-tions.

DESTIA’S MEMBERSHIPS IN ASSOCIATIONS AND ORGANISATIONS• Finnish Energy Industries• FinNuclear Association• Infra Contractors Association in Finland• Association of Finnish Advertisers• Finnish Tunnelling Association• Service Sector Employers Palta• Nordic Road Council Finnish Division

• Pohjois-Suomen Rakennusklusteri Ry (Construction cluster of Northern Finland)

• BuildingSMART Finland• Finnish Quality Association• Finnish Road Association• Finnish Association Of Consulting Firms

Skol• Tieveteraanit ry (Road veterans)• General Industry FederationAlso memberships in different regional chambers of commerce to promote local networking.

CORRECT, ADEQUATE AND TIMELY INFORMATIONCommunications are part of all of Destia’s operations. Our communications culture is based on diverse interaction and active dia-logue with our stakeholders. We communi-cate openly, reliably and without delay.

We communicate to our personnel about matters concerning them openly, honestly and without delay, and each Destia employ-ee has an opportunity to make a difference, provide feedback and make themselves heard.

The goal of internal communications is to help Destia employees understand the basic

messages of our strategy, vision, mission and corporate values.

We measure internal communications on the basis of grades given in annual employee satisfaction surveys for communications and the understandability of messages related to the strategy. In the 2015 employee survey, on a scale of 1 to 5, the staff graded their own understanding of the company’s strategy 3.9 (3.8 in 2014). Destia’s internal communica-tions were graded 3.5 (3.5).

In 2015, we updated our intranet service. The new Desnet intranet reaches all our employees regardless of their location and offers them a channel to produce and share information. In summer 2015, our summer workers acted as so-called "desnetters", de-scribing their work experiences and projects around Finland with the help of photos and videos.

In 2015, we also continued our Ilme devel-opment programme, which aims at making our work and expertise visible at our work-sites and their surroundings. We also added social media channels to our communica-tions portfolio and have used them actively since autumn 2015. At the end of the year, we launched our renewed website, Destia.fi.

The aim of our external communications is to present Destia as an attractive, interesting and competitive company.

We want to create good relations with the media, and to help their representatives al-ways find the most knowledgeable experts for their enquiries.

Our bond issued in the summer was listed on the Helsinki Stock Exchange on 17 June 2015. As an issuer of a publicly-traded se-curity, we observe regular and constant duty of disclosure to a limited extent. At the same time we also created a new financial commu-nication policy.

This report, which combines annual and responsibility reporting, is our second cor-porate responsibility report under the G4 guidelines of the Global Reporting Initiative. We continue to further develop our respon-sible operations and corporate responsibility reporting.

READ MOREDisclosure policy for financial communications


http://www.destia.fi/en/destia/key-financials/disclosure-policy-for-financial-communications.html

GRI CONTENT INDEX 2015Code GRI Standard Disclosures Reporting

GENERAL STANDARD DISCLOSURESStrategy and Analysis

G4-1 Statement from the most senior decision-maker of the organisation

CEO’s review

G4-2 Description of key impacts, risks and opportunities

Strategy and targetsOperating environmentDestia and the opportunities created by megatrends

Organisational Profile

G4-3 Name of the organisation Destia

G4-4 Primary brands, products, and ser-vices

Destia's business operations

G4-5 Report the location of the organisa-tion’s headquarters

Vantaa, Finland

G4-6 Number of countries where the or-ganisation operates, and names of countries where either the organisa-tion has significant operations or that are specifically relevant to the sus-tainability topics covered in the report

Destia's business operations

G4-7 Nature of ownership and legal form Management and Corporate Governance

G4-8 Markets served Destia's business operations

G4-9 Scale of the organisation Key figures

G4-10 Total number of employees by employment contract and gender

Total number of employees 31.12.2015: 1,492 (1,429)of which permanent 1,403 (1,354) and temporary 89 (75)of which full-time 1,424 (1,407) and part-time 68 (22)of which men 1,280 (1,213) and women 212 (216).Due to the business transaction with Mitta Oy 98 em-ployees from survey, drilling and laboratory services were transferred to Mitta Oy’s services as old employees on 1 January 2016.

G4-11 Percentage of total employees cov-ered by collective bargaining agree-ments

All Destia employees are covered by collective bargaining agreements, with the expection of those who based on their employer role are outside the agreements' scope.

G4-12 Organisation's supply chain Procurement and partnerships

G4-13 Significant changes during the report-ing period regarding the organisa-tion’s size, structure, ownership, or its supply chain

No significant changes.

G4-14 If and how the precautionary ap-proach or principle is addressed by the organisation

The precautionary approach is addressed according to leg-islation and contractor's requirements.

G4-15 Externally developed economic, environmental and social charters, principles, or other initiatives to which the organisation subscribes or which it endorses

Safety

Code GRI Standard Disclosures Reporting

G4-16 Memberships of associations and national or international advocacy organisations

Social participation and communications

Identified Material Aspects and Boundaries

G4-17 Entities included in the organisation’s consolidated financial statements or equivalent documents

Destia Group Plc is Destia Ltd’s parent company, which was established in connection with the ownership ar-rangement of Destia, and which owns 100% of Destia Ltd’s shares. The financial statements report on the finan-cial _development of Destia Group for 1 January 2015–31 December 2015. The comparative figures concerning the financial year are Destua subgroup's figures from the year 2014. As for Destia Group the comperative figures only exist from the third and fourth quarter of the year 1 July 2014–31 December 2014.

G4-18 Process for defining the report con-tent and the Aspect Boundaries

Destia complies with the Global Reporting Initiative, version G4, guidelines for core-level reporting. Corporate respon-sibility reporting is incorporated into Destia’s annual report. In addition, a GRI compilation has been carried out on the year 2015.

G4-19 Identified Material Aspects Destia and corporate responsibility

G4-20 Aspect Boundary within the organi-sation

Destia Group Plc

G4-21 Aspect Boundary outside the organ-isation

No data collected from outside Destia's organisation.

G4-22 Restatements of information provided in previous reports

No significant changes.

G4-23 Significant changes from previous reporting periods in the Scope and Aspect Boundaries

The report shows time series for several indicators, and no significant changes have taken place.

Stakeholder Engagament

G4-24 List of stakeholder groups engaged by the organisation

Customers and clients, owner, personnel, subcontractors and partners, infrastructure users, neighbours, authorities, decision-makers.

G4-25 Basis for identification and selection of stakeholders

Destia and corporate responsibility

G4-26 Approach to stakeholder engagement Destia is a Finnish infrastructure and construction service company that seeks to create a living environment that works better. Ethical guidelines and operating principles form the basis of our stakeholder engagement. Responsi-bility is part of Destia’s corporate culture. It also means up-holding high ethical standards in the activities of the com-pany’s Board of Directors, management, other employees and cooperation partners. Ethical activities are founded on Destia’s values, vision and strategy.Destia and corporate responsibility

G4-27 Key topics and concerns raised through stakeholder engagement


27DESTIA’S YEAR 2015 CORPORATE RESPONSIBILITY FINANCIAL STATEMENTSCORPORATE GOVERNANCEGRI


Report Profile

G4-28 Reporting period Year 2015.

G4-29 Date of most recent previous report Destia's annual report 2014 was published on 3 March, 2015.

G4-30 Reporting cycle Yearly

G4-31 Contact point for questions regarding the report or its contents

[email protected]

G4-32 GRI content index GRI content index

G4-33 Policy and current practice with re-gard to seeking external assurance for the report

The corporate responsibility report has not been externally assured.

GOVERNANCEGovernance Structure and Composition

G4-34 Governance structure Board of Directors and its Committees

G4-35 Process for delegating authority for economic, environmental and social topics

Report of the Board of Directors (Financial Statements)

G4-36 Executive-level position(s) with re-sponsibility for economic, environ-mental and social topics


G4-38 Composition of the highest govern-ance body and its committees

Board of Directors

G4-39 Report whether the Chair of the high-est governance body is also an exec-utive officer

Board of Directors and its Committees

G4-40 Nomination and selection processes for the highest governance body and its committees


G4-41 Processes for the highest governance body to ensure conflicts of interest are avoided and managed


Highest Governance Body’s Role in Setting Purpose, Values, and Strategy

G4-42 Highest governance body's role in the development, approval, and updating of the organisation’s purpose, value or mission statements, strategies, policies, and goals


Highest Governance Body’s Role in Risk Management

G4-45 Highest governance body’s role in the identification and management of risks and opportunities

Risk Management


G4-46 Highest governance body’s role in reviewing the effectiveness of the organisation’s risk management pro-cesses


G4-47 Frequency of the highest governance body’s review of risks and opportu-nities

Risk Management

Highest Governance Body’s Role in Sustainability Reporting

G4-48 Approval of the sustainability report The corporate responsibility report is approved by Destia's CEO.

Remuneration and Incentives

G4-51 Remuneration policies for the high-est governance body and senior executives

Board of Directors and its CommitteesDestia’s CEO and Management Team

G4-52 Process for determining remuneration

Report of the Board of Directors (Financial Statements)

Ethics and Integrity

G4-56 Values, principles, standards and norms of behavior such as codes of conduct and codes

Destia’s values: Achieving goals fairly, boldly and skillfully.Destia's ethical guidelines (destia.fi/en)

G4-57 Mechanisms for seeking advice on ethical and lawful behavior

Destia's ethical guidelines (destia.fi/en)

G4-58 Mechanisms for reporting concerns about unethical or unlawful behavior

Destia's ethical guidelines (destia.fi/en)

SPECIFIC STANDARD DISCLOSURESDisclosures on Management Approach (DMA)

Generic Disclosure on Management Approach


ECONOMICEconomic Performance

G4-EC1 Direct economic value generated and distributed

Division of financial benefit by stakeholder group in 2015. Customers; 2015 revenue MEUR 462.8 (431.5), Suppliers; Materials and services from external subcontractors MEUR 324.7 (284.2), Personnel; Salaries and remuneration MEUR 71.5 (71.1), Public sector; Taxes and tax-like payments MEUR 0.5 (2.4), Pension and indirect personnel costs MEUR 16.7 (16.1), Investors; Financial costs MEUR 4.3 (5.7) and Investments; Gross investments MEUR 9.2 (8.0).

Procurement Practices

G4-EC9 Proportion of spending on local suppliers at significant locations of operation

Procurement and partnershipsIn the year 2015 the overall purchases totalled MEUR 320.5 (263.4) from which xxx were purchased from foreign suppli-ers. In the year 2015 1.5% (2.9%) of the overall purchases were purchased from foreign suppliers.


mailto:tiedotus%40destia.fi?subject=





ENVIRONMENTALMaterials

G4-EN1 Materials used by weight or volume Use of soil and aggregates 3.2 million tonnes in the year 2015 (2.9 million tonnes in 2014). Destia uses salt approx-imately 60,000–90,000 tonnes per year for preventing slip-pery and dusty conditions.

Energy

G4-EN3 Energy consumption within the organisation

Destia's own fules consumption 5.4 million litres in the year 2015 (5.5 million litres in 2014, 6.4 million litres in 2013, 7.4 million litres in 2012). Destia’s own electricity consumption 4,228 megawatts in the year 2015 (4,160 megawatts in 2014, 4,423 megawatts in 2013, 4,400 megawatts in 2012).Destia has an agreeement with Oulun Sähkönmyynti Oy, a company which focuses its electricity supply strongly on electricity produced by domestic and renewable raw mate-rials. Electricity supply from Oulun Sähkönmyynti is approx-imately as follows: Renewable energy sources (e.g. wood, biomass, water, wind) 20.4%, Fossil energy sources (e.g. peat, coal, natural gas, oil) 38.8%, Nuclear power 40.8%

G4-EN5 Energy intensity 421 gigajoule/turnover (MEUR) (453 gigajoule in 2014)

Biodiversity

G4-EN11 Operational sites owned, leased, managed in, or adjacent to, protected area(s) of high biodiversity value out-side protected areas

29 sites

Emissions

G4-EN15 Direct greenhouse gas emissions (scope 1)

Direct greenhouse gas emissions from Destia's own en-ergy consumption 14,820 tonnes in the year 2015 (15,039 tonnes in 2014).

G4-EN17 Other indirect greenhouse emissions (scope 3)

Carbon dioxide emissions from business travel 2,475 tonnes in the year 2015 (2,416 tonnes in 2014).

Effluents and Waste

G4-EN24 Total number and volume of signifi-cant spills

No significant spills.

Products and Services

G4-EN27 Extent of impact mitigation of envi-ronmental impacts of products and services

Environment


Compliance

G4-EN29 Monetary value of significant fines and total number of non-monetary sanctions for non-compliance with environmental laws and regulations

Criminal charges have been brought against three Destia’s employees over environmental offences. The proceedings are based on the view that the employees are guilty of en-vironmental offences at the Harjula soil area in Mäntsälä between autumn 2010 and summer 2012. In addition, the prosecutor requests that Destia Ltd be set a corporate fine of at least 50 thousand euro and be ordered to lose the fi-nancial proceeds of crime, some 580 thousand euro. Destia denies the claims made. In summer 2012, on its own initia-tive the company informed the environmental authority that soil had by mistake been taken from outside the extraction area covered by the valid permit, but from property owned by the company. The environmental authority was notified immediately when the mistake had been detected. The environmental authority filed a request for investigation in January 2013.

Environmental Grievance Mechanisms

G4-EN34 Number of grievances about environ-mental impacts filed, addressed, and resolved thourgh formal grievance mechanisms

We collect feedback on environmental issues via our web-site and from our projects. In 2015 we received 25 feed-backs (30 in 2014) regarding Destia's operations and which required measures to be taken. The required measures have been started.

SOCIALLABOR PRACTICES AND DECENT WORK

Employment

G4-LA1 Total number and rates of new em-ployee hires and employee turnover by age group, gender and region

In the year 2015 Destia employed in average 1,505 persons (1,502 in 2014). Employee exit of permanent personnel was 9.1% (11.8% in 2014) and hiring rate was 12.7% (10.3% in 2014).Skilled and thriving Destia personnel

Labor/Management Relations

G4-LA4 Minimum notice periods regarding operational changes

Co-determination negotiations comply with the times defined in collective agreements and by law.

Occupational Health and Safety

G4-LA6 Type of inury and rates of injury, occupational diseases, lost days, and absenteeism, and total number of work-related fatalities, by region and by gender

Safety



Training and Education

G4-LA9 Average hours of training per year per employee by gender and by employ-ee category

During 2015 114 persons participated in strategic "Tosi-Toimi" trainings. 19% of them were female and 81% male. In total 391 persons participated in qualification trainings. 10% of them were female and 90% male.

G4-LA11 Percantage of employees receiv-ing regular performance and career development reviews

All Destia employees go through performance evaluation as well as performance and target review discussions.In year 2015, 87% of Destia employees had a performance and target review discussion with their superior.

Diversity and Equal Opportunity

G4-LA12 Composition of governance bodies and breakdown of employess per em-ployee category according to gender, age group, minority group member-ship, and other indicators of diversity

Destia's Board of Directors comprises of seven members, with one female member. The average age of members in the year 2015 was 51.6 years. In the year 2015 Destia's Management Team comprised of eight members, of which two were female. The average age was 48.1 years.Skilled and thriving Destia personnel

Labor Practices Grievance Mechanisms

G4-LA16 Number of grievances about labor practices filed, addressed, and re-solved through formal grievance mechanisms

1,108 safety observations were reported in year 2015. No violances against of ethical guidelines related to work-ing conditions were brought to internal audit's attention.

SOCIETYAnti-corruption

G4-SO3 Total number and percentage of op-erations assessed for risks related to corruption and the significant risks identified

All Destia's business and group units have reviewed Destia's ethical guidelines. No significant risks identified.

G4-SO4 Communication and training on anti- corruption policies and procedures

Review of the ethical guidelines is part of every Destia employees' familiarisation to work.

G4-SO5 Confirmed incidents of corruption and actions taken

No confirmed incidents of corruption

Public Policy

G4-SO6 Total value of political contributions by country and recipient/beneficiary

No political contributions paid.

Anti-competitive Behavior

G4-SO7 Total number of legal actions for anti- competitive behavior, anti-trust, and monopoly practices and their outcomes

No legal actions related to anti-competitive behavior, cartels and monopoly practices.

Compliance

G4-SO8 Monetary value of signicant fines and total number of non-monetary sanc-tion for non-compliance with laws and regulations

In the year 2015 there were no fines or non-monetary sanc-tions against Destia related to non-compliance with laws and regulations.


PRODUCT RESPONSIBILITYCustomer Health and Safety

G4-PR2 Total number of incidents of non-compliance with regulations and voluntary codes concerning the health and safety impacts of products and services

In the collected project feedback the result for the ques-tion "How safety aspects are considered in the project?" was 4.0 (4.0) on the scale of 1–5. There were no significant deviations from safety mentioned in the project feedback.

Product and Service Labeling

G4-PR5 Results of surveys measuring customer satisfaction

Customer satisfaction

Compliance

G4-PR9 Monetary value of significant fines for non-compliance with laws and regu-lations concerning the provision and use of products and services

In the year 2015 there were no significant fines for non-compliance with law and regulations concerning the use of products and services.


DESTIA’S MATERIAL ASPECTS IN RELATION TO THE GRI G4 RESPONSIBILITY ASPECTSASPECT CONSISTENT WITH THE GRI G4 RELEVANT ASPECT FOR DESTIAECONOMIC RESPONSIBILITYEconomic Performance Profitable business operations

Procurement Practices Cooperation in the supply chainRealisation of services

ENVIRONMENTAL RESPONSIBILITYMaterials Environment

Energy Environment

Biodiversity Environment

Emissions Environment

Effluents and Waste Environment

Products and Services EnvironmentRealisation of servicesNew solutions and development of the field

Compliance EnvironmentSafetyRealisation of servicesEthical business operations

Environmental Grievance Mechanisms EnvironmentEthical business operations

ASPECT CONSISTENT WITH THE GRI G4 RELEVANT ASPECT FOR DESTIASOCIAL RESPONSIBILITYLabor practices and decent work

Employment Skilled and thriving Destia personnel

Labor and Management Relations Skilled and thriving Destia personnelInternal and external business communications

Occupational Health and Safety Skilled and thriving Destia personnelSafetyCooperation in the supply chain

Training and Education Skilled and thriving Destia personnelCooperation in the supply chain

Diversity and Equal Oppurtunity Skilled and thriving Destia personnel

Labor Practices Grievance Mechanisms Skilled and thriving Destia personnelEthical business operations

Society

Anti-corruption Ethical business operationsCooperation in the supply chain

Public Policy Participating in society

Anti-competitive Behaviour Ethical business operationsCooperation in the supply chainInternal and external business communications

Compliance Ethical business operationsCooperation in the supply chainInternal and external business communications

PRODUCT RESPONSIBILITYCustomer Health and Safety Safety

Realisation of services

Product and Service Labelling Customer satisfaction

Compliance Realisation of services


3232

Destia Group Plc is a Finnish public limited liabil-ity company, with registered office in Vantaa. The Company’s administration and management com-ply with the Finnish Limited Liability Companies Act, the company’s Articles of Association and the valid Corporate Governance Code of the Securi-ties Market Association applicable to Finnish listed companies. In the statement for year 2015 Destia applies the statement from 2010, but when appli-cable also reporting principles set out in the new Corporate Governance Code 2015 This statement concerns the parent company – Destia Group Plc and where applicable, Destia Group (hereinafter re-ferred to as Destia). Destia departs from the Cor-porate Governance Code, in accordance with the “comply or explain” principle, as described herein. Destia’s Financial Statements, including the Annu-al Report, are published on the Destia website at www.destia.fi. This statement is not a part of the official Annual Report and will be published on the aforesaid Destia website.

The Corporate Governance Code for Finnish listed companies can be found at http://www.cgfinland.fi.

Departure from the Corporate Governance Code recommendationDestia departures from the Corporate Governance Codes recommendations with regard to preparation of the proposal for the Composition of the Board of Directors, invitation to the General Meeting, ar-rangement of the Meeting and its prescribed times as well as those participating therein due to the fact that Destia has only one shareholder. Due to the specific purpose of the Advisory Committee it consists of only two Board members and it does not have a charter.

GENERAL MEETINGThe Annual General Meeting is held each year within six months after the end of the financial period. An Extraordinary General Meeting is held if required by the decision-making process. At the Annual General Meeting matters according to the Articles

of Association and other possible proposals to the General Meeting are handled.

The most important matters respective to the decision-making power of the General Meeting are:• deciding on the number of Board members• electing the Chair and members of the Board• deciding on remuneration and financial benefits

for the Board and members of its committees• deciding on the appointment of auditor and his/

her remuneration• approving the financial statements• resolution on the discharge of the members of

the Board of Directors and the President and CEO from liability

• amending the Company’s Articles of Association• deciding on the raising of share capital• deciding on the distribution of corporate assets,

such as profit distribution.

General Meetings are convened by the Company Board of Directors. The invitation is provided to the one and only shareholder. The shareholder repre-sentative is granted power of attorney for the task at hand. Minutes of the General Meeting are kept and archived at the Company headquarters. The Company informs on the decisions made at the General Meeting in its published announcements.

BOARD OF DIRECTORS AND ITS COMMITTEES Board of DirectorsAccording to Destia Group Plc Articles of Associ-ation, the Company has a Board of Directors con-sisting of three to eight (3–8) members. The General Meeting appoints all Board members in addition to appointing the Chair of the Board. The term of the Board members lasts from appointment until the end of the next Annual General Meeting. The Board of Directors has a quorum, when at least half of its members are present. In the event of a tie vote, the Chair shall cast the deciding vote.

At present, the Board of Directors has seven members. On 17 March 2015, the General Meet-ing appointed Arto Räty (Chair), Panu Routila (Vice Chair), Marcus Ahlström, Jacob af Forselles, Matti

Mantere and Solveig Törnroos-Huhtamäki as mem-bers of the Board of Directors. Destia Group Plc’s shareholder passed on 30 September 2015 an unanimous resolution and elected Tero Telaranta as a new member to the Board of Directors. The new Board members have been introduced to the operations of the company. All Board members are independent of the Company and of the owner, with the following exceptions: Jacob af Forselles and Tero Telaranta, who are not independent in their relationship to the Company’s shareholder. Arto Räty is not independent of the Company nor the owner as of 18 May 2015 and Panu Routila has not been independent of the shareholder 1 January – 30 October 2015. The Board has conducted an annual evaluation of the Board’s operations and working methods in 2015. The results of the evaluation have been provided to Destia’s shareholder.

Charter of the Board of DirectorsIn accordance with the Companies Act and the Company’s Articles of Association, the Board of Directors is charged with certain tasks and duties.

The Board represents the shareholders of the Company and its duty is to promote the best inter-est of the Company and its shareholder. The Board is responsible for the administration and the proper organisation of the operations of the Company. The Board of Directors ensures that the control of the Company’s accounting and financial management is adequately arranged.

In accordance with the Charter, the duties and tasks of the Board of Directors are as follows:

a) to ensure that the Company is managed ac-cording to sound business principles and that the reporting, controls and risk management are adequate;

b) to ensure that the Company’s and the Group’s financial statements, interim reports and the an-nual report are prepared in accordance with the legislation, and to make a proposal to the General Meeting on the use of distributable profits of the Company;

c) to propose to the General Meeting the matters that shall be decided upon by the shareholders, excluding proposal for appointment and remu-nerating the Board members and Chair;

d) to attend to such administrative matters that have not been entrusted to the President and CEO;

e) to appoint and dismiss the President and CEO and the possible Deputy CEO, and to determine their compensations and other material terms of their contracts;

f) after consultation with the President and CEO to appoint and dismiss the executive officers re-porting to the President and CEO and the internal auditor of the Company and to determine their compensations;

g) to approve the Company’s strategy and to over-see its implementation;

h) to establish the organisational and business structure at the Group’s executive level;

i) to approve the Group’s financial and operative targets, annual business plan and budget and to oversee the performance of the same;

j) to approve the Group’s annual investment plan as well as all investment proposals exceeding the President and CEO’s mandate to invest;

k) to approve the Company’s Finance policy and to determine the President and CEO’s mandate for short-term borrowing, and to decide upon long-term borrowing as proposed by the President and CEO;

l) to decide upon establishing subsidiaries and upon material changes affecting the same, mergers and acquisitions, investments and di-vestments of real estate and other substantial

DESTIA CORPORATE GOVERNANCE STATEMENT 2015

DESTIA’S YEAR 2015 CORPORATE RESPONSIBILITY GRI FINANCIAL STATEMENTSCORPORATE GOVERNANCE

http://www.destia.fi/en/home.html

http://cgfinland.fi/en/

3333

fixed assets as well as using properties as col-lateral and providing collateral for subsidiary or third- party obligations;

m) to approve tenders, sponsorship and non-pro-duction-based service and acquisition agree-ments, that exceeds the President and CEO’s mandate as stated in Charter of Destia Group for approval and authorization, appendix 1;

n) to establish the principles in respect of the Group’s personnel policy and to approve the Company’s personnel’s and its management’s incentive programmes, short and long term in-centive structures and the persons included in the same as well as the remuneration to be paid on the basis of these systems;

o) to approve the Group’s ethical guidelines and working methods;

p) to ensure that the Group’s internal control is ad-equately arranged;

q) to ensure that the internal audit function is ade-quately arranged and that the internal audit key principles for auditing work have been defined;

r) to evaluate the independence of the members and to report which of them are independent of the Company and which are independent of the shareholder;

s) to approve the Charter of the Board of Directors and to establish the Committees of the Board and their compositions and charters; and

t) to attend to any matter that does not according to the law belong to the General Meeting, provid-ed that the Chair of the Board together with the President and CEO have agreed upon bringing the matter to the Board’s attention or provided that a Board member has brought the matter to the Board’s attention by informing the Chair in advance.

Meetings and compensationAs a rule, the Board of Directors convenes once a month. During 1 January – 31 December 2015, the Board of Directors convened 11 times. The Board members’s attendance in Board and Committee meetings in 2015 is presented in the list above.

In 2015, the following compensation for the members of the Board of Directors of Destia Group Plc was decided at the General Meeting:• monthly compensation for the Chair: EUR 3,300;• monthly compensation for the Vice Chair: EUR

3,300 between 1 January – 17 March 2015 and EUR 1,800 as of 17 March 2015;

• monthly compensation for the Chairs of Com-mittees: EUR 1,800; and

• monthly compensation for Board member: EUR 1,500.

• In addition to the monthly compensation, all members of the Board shall be paid EUR 600 each as a participation fee for every Board and committee meeting.

• No monthly nor participation compensations shall be paid to Board members representing the shareholder.

• The Board members daily allowances and travel expenses are reimbursed in accordance with the general travel policy of Destia.

Compensation paid to the members of Destia Group Plc Board of Directors 1 January – 31 December 2015

Arto Räty € 49,800.00

Marcus Ahlström € 23,250.00

Jacob af Forselles -

Matti Mantere € 28,200.00

Panu Routila € 4,800.00

Tero Telaranta -

Solveig Törnroos-Huhtamäki € 31,650.00

In addition to the above-mentioned compensation, EUR 2,830.05 in consulting fees was paid to a firm which is a related party to Matti Mantere under a separate agreement.

The Chairman of the Board is also participant of a long term incentive program arranged by AC Infra Oy, which is the parent company of Destia Group Plc. The program is for years 2015–2018 and corresponds to Destia long term incentive program for Destia key persons. AC Infra Oy is responsible for any possible remuneration to the Chair based on said program.

Board committeesTwo permanent committees assist the Board of Di-rectors of Destia Group Plc by preparing matters: the Audit Committee, and the HR Committee. Dur-ing its annual organisational meeting, the Board of Directors decides on the members of the permanent committees, both of which consist of at least three members. The Chairs of the Committees are chosen by the Board of Directors. Committee members are appointed for the duration of the Board term. At their discretion, the committees may make use of outside advisers to assist them in their tasks. The Board of Directors confirms the central duties and charters of the committees. Furthermore, an Advi-sory Committee consisting of two Board members was assisting the Board during the year.

Audit CommitteeThe Audit Committee assists the Board of Direc-tors in its supervising and control duty. The Audit Committee does not make independent decisions, but its purpose is to prepare matters related to the Company’s finances and controls as well as main-tain contact with external auditors and the internal audit function. The Committee regularly reports on its activities to the Board of Directors. A Charter has been approved for the Audit Committee.

Members of the Audit Committee must have an expertise in accounting, bookkeeping, external auditing, internal auditing or accounting practices, in addition to which they must be independent of the Company.

In accordance with the Charter, the Audit Com-mittee is responsible for:• monitoring the reporting process of financial

statements;• supervising the financial reporting process;• monitoring the efficiency of the company’s inter-

nal control, internal audit and risk management systems;

• reviewing the description of the main features of the internal control and risk management sys-tems in relation to the financial reporting process, which is included in the Company’s Corporate Governance Statement;

Board member

Participation in Board meetings

in 2015

Participation in Committee meetings in 2015

Audit Committee HR Committee

AdvisoryCommittee

Arto Räty 11/11 1/1 4/4 1/2

Marcus Ahlström 9/9 6/6 - -

Jacob af Forselles 10/11 6/6 3/3 -

Matti Mantere 11/11 - 4/4 2/2

Panu Routila 9/11 - 0/1 -

Tero Telaranta 4/4 - 1/1 -

Solveig Törnroos-Huhtamäki 11/11 7/7 - -


3434

• monitoring the statutory audit of the financial statements and consolidated financial state-ments;

• evaluating the independence of the statutory au-ditor and audit firm, particularly the provision of related services to the Company; and

• preparing the proposal for resolution on the elec-tion of the auditor.

In addition to the above-mentioned duties, the Committee is also responsible for:• monitoring the financial position of the Company;• approval of the internal audit charter;• revision of the plans and reports of the internal

audit function;• contacts with the external auditor and revision

of reports that the auditor prepares for the Audit Committee; and

• giving its opinion on possible mergers and ac-quisitions in respect of the valuation of the com-panies as well as risk management.

The above list of the Audit Committee’s duties is not exhaustive. The Audit Committee may address an-other matter or task, considered to be necessary for the purpose of monitoring internal control, financial reporting, supervision of laws and regulations, or assessment or control of risk management.

The Audit Committee was composed of Solveig Törnroos-Huhtamäki as Chair and Jacob af For-selles and Arto Räty as members 1 January – 17 March 2015 and Solveig Törnroos-Huhtamäki as Chair and Marcus Ahlström and Jacob af Forselles as members as of 17 March 2015. All Audit Com-mittee members were independent of the Company and, with the exception of Jacob af Forselles, also independent in their relationship to the Company’s shareholder.

The Audit Committee convened 7 times dur-ing 1 January – 31 December 2015. The auditor with principal responsibility also participated in the Committee meetings as well as the internal auditor when deemed necessary. The members’ attend-

ance in Audit Committee meetings can be found in the list earlier.

HR committeeThe HR Committee (until 17 March 2015 the name of the Committee was Nomination and Remuner-ation Committee) assists the Board of Directors in performing tasks related to the nomination and compensation of the President and CEO and oth-er Company management. The Committee has no independent decision-making powers, but its purpose is to, among other things, prepare nomina-tions for the President and CEO and other Company management as well as address matters involving compensation and development of the same. The committee is also responsible for preparing the principles of the compensation and incentive sys-tems. The Committee reports on its activities to the Board of Directors. A Charter has been approved for the HR Committee.

In accordance with the Charter, the key duties of the HR Committee are:• preparation of matters pertaining to the appoint-

ment of the President and CEO and other execu-tives as well as the identification of their possible successors;

• preparation of matters pertaining to the remuner-ation and other financial benefits of the President and CEO and other executives;

• preparation of matters pertaining to the remuner-ation schemes of the Company;

• evaluation of the remuneration of the President and CEO and other executives as well as seeing to it that the remuneration schemes are appro-priate;

• preparation of the annual evaluation of the Board’s operations and working methods; and

• monitor the level of executive management com-pensation in peer companies.

The above list of the HR Committee’s duties is not exhaustive. The Committee may take some other task under preparation involving compensation and nomination matters.

The Nomination and Remuneration Committee was composed of Panu Routila (Chair) with Matti Mantere and Arto Räty as members 1 January –17 March 2015. The HR Committee was composed of Arto Räty (Chair) with Jacob af Forselles and Matti Mantere as members as of 17 March 2015. Furthermore, Tero Telaranta was a member of the HR Committee as of 30 September 2015.

The HR Committee convened 4 times during 1 January – 31 December 2015. The members’ at-tendance in HR Committee meetings can be found in the list earlier.

Advisory CommitteeThe Advisory Committee assists the Board of Di-rectors and the company management in certain business projects defined during its establishment. The Advisory Committee consists of the Board members Matti Mantere and Arto Räty. In addition to that an external advisor attends the Committee meetings when deemed necessary. The Advisory Committee convened twice in 2015. The Committee does not have a charter. The members’ attendance in Advisory Committee meetings can be found in the list earlier.

PRESIDENT AND CEO AND MANAGEMENT TEAMThe duty of Destia Group Plc’s President and CEO is to lead the Company’s business operations and administration with the focus on Group’s interest and strategy in accordance with the Limited Liability Companies Act and the instructions and directives issued by the Board of Directors. The President and CEO is not a member of Destia Group Plc Board of Directors.

The relationship of the President and CEO with Destia is stipulated in an executive agreement ap-proved by the Board of Directors. Hannu Leinonen has served as President and CEO of Destia since 1 October 2009.

The President and CEO is assisted by Destia’s Management Team. In addition to the President and CEO, the Management Team consists as of 1 Janu-

ary 2016 of the Executive Vice Presidents for busi-ness units, CFO, General Counsel, Executive Vice President HR, Executive Vice President Corporate Planning as well as the personnel representative. The Management Team is in charge of the Group’s business structure, management systems and gen-eral planning and reporting systems. The President and CEO and Destia’s Management Team prepare the Group’s strategic plans, significant mergers and acquisitions and investments for the Board of Direc-tors as well as oversee their implementation and risk management. Under the leadership of the President and CEO, the Management Team is also responsi-ble for the implementation of measures concerning the budget approved by the Board of Directors, in accordance with instructions. The President and CEO informs the Board of Directors about the de-velopment of the company’s business and financial situation. A Charter has been approved for Destia’s Management Team. The Management Team con-venes regularly. The President and CEO oversees the flow of information between the Board of Di-rectors and the Management Team.

In 2015, Destia Management Team comprised President and CEO Hannu Leinonen, CFO Pirkko Salminen and Executive Vice Presidents Minna Heinonen, Jouni Karjalainen, Pasi Kailasalo, Jukka Raudasoja, Marko Vasenius and Seppo Ylitapio. Jouko Korhonen served as personnel representative in the Management Team.

At the beginning of 2015 the Company Develop-ment Team was established comprising of Destia Management Team members, Directors of the Sup-port Functions as well as other Directors deemed to be appropriate from time to time. The Company Development Team convened quarterly to handle critical matters relating to Destia’s strategy.

Key compensation principles for the President and CEO and other Company managementAll personnel are included in the Company’s incen-tive system. The compensation criteria of the incen-tive system are based on the financial objectives


3535

of the Group, operational business units and pro-jects in addition to the goals agreed during annual personal development discussions. The basis for incentive compensation is found in the objectives of the Group’s strategy period. The Board of Di-rectors approves the compensation criteria for the incentive system.

In addition to this, there is a separate instant reward, which is used in awarding excellent per-formance involving objectives not included in the general objectives of the incentive system.

On 30 September 2015, Destia’s Board of Direc-tors decided on a bonus scheme for 2016 cover-ing all personnel. The bonus scheme forms a part of the overall personnel remuneration scheme. The bonus scheme brings a supportive, in-house co-operation and strategy enhancing control and reward element to compensation. The scheme will support and develop the Company’s profitability and operating conditions. The target group for the new bonus scheme is comprised of five different personnel groups: 1) personnel working on Destia’s projects, 2) Project Managers, 3) support function personnel and business unit support personnel 4) Unit directors and 5) Directors in Business Units.

On 30 October 2014, Destia’s Board of Direc-tors decided to introduce a new long term incen-tive program for years 2014-2018 with an intention to engage certain key employees and to offer a competitive remuneration for them. The terms and participants of the long term incentive program are decided by the Board of Directors. There are ap-proximately 75 persons included in the program. Earning period is 2014–2018 and earning criteria is an increase in the Company’s value. Earning criteria are same for all program participants. The criteria are defined on group level and they are different from the ones in the annual bonus scheme. The earned incentive shall be paid as monetary reward during 2019 at the latest.

The Group Human Resources function is re-sponsible for the remuneration system and its functions. The Management Team’s salaries and remuneration are approved by the Board of Direc-

tors on the basis of preparations made by the HR Committee.

Remuneration of the President and CEOThe executive agreement between the Company and President and CEO, in which the remuneration principles are agreed, was signed on 2 December 2014.

Salary and benefits of President and CEO were altogether EUR 453,840 between 1 January and 31 December 2015. Based on 2014 bonus scheme President and CEO has been paid EUR 142,380 and based on 2015 bonus scheme he shall be paid EUR 208,747.

The aggregate remuneration of President and CEO consists of fixed monthly salary, annual vari-able bonus reward and long term incentive reward. Annual bonus reward is 60 per cent of fixed annual salary at maximum.

Annual bonus scheme 2016 criteria for President and CEO are based on group level financial targets (95 per cent) and occupational safety targets (5 per cent). Long term incentive criteria for President and CEO correspond to the ones described above in respect of the current long term incentive program.

The retirement age of President and CEO is 63 years according to his executive agreement. Pen-sion is based on Employees Pensions Act and ad-ditional pension insurance taken by the Company. Annual premium of the additional pension insurance was EUR 129,672 during 2015.

Term of notice of President and CEO executive agreement is 12 months for both parties. In case the Company terminates the agreement, President and CEO is entitled to receive compensation cor-responding to 12 months’ salary in addition to 12 months’ salary paid during the notice period.

The Company has taken accident, life, travel and medical expense insurances for President and CEO, amounting altogether EUR 23,628 for 2015. Beside that the Company pays his ADSL connection with annual fee of EUR 370.60 during 2015.

Compensation for other managementThe aggregate remuneration of the members of the Group Management Team consists of fixed month-ly salary, annual variable bonus reward and long term incentive reward. Annual bonus reward of each Management Team member corresponds to his/her five (5) months’ salary at maximum.

Salary and benefits of the Management Team members were altogether EUR 1,045,080 during 2015. Based on 2014 bonus scheme the Manage-ment Team members have been paid EUR 137,386 and based on 2015 bonus scheme they shall be paid altogether EUR 152,000.

One member of the Management Team has ad-ditional pension insurance corresponding to the one President and CEO has. Annual premium thereof was EUR 50,472 during 2015.

KEY ELEMENTS OF INTERNAL CONTROL AND RISK MANAGEMENT SYSTEMS RELATED TO FINANCIAL REPORTING PROCESSESIn accordance with the Limited Liability Companies Act, the Board of Directors ensures that account-ing and asset management are properly controlled. The President and CEO ensures that company accounting is in compliance with the legislation and asset management is handled reliably. Group management ensures that applicable legislation and decisions made by the Board are observed in everyday Group operations and that the Group’s risk management is handled in a suitable manner.

Internal controlInternal control is an integral part of the Group’s corporate governance system. The Destia Board of Directors and its Audit Committee supervise and control the efficiency of the internal control process, internal auditing and risk management at the highest level. The practical implementation and daily management of internal control are the re-sponsibility of the Group’s operative management. Internal control is part of the daily operations and is based on Destia’s values, processes, practices, specifications and guidelines as well as its financial

reporting system. Internal control is an integral part of Destia’s business processes as well as the steer-ing, risk management and supervision of business operations. The objective of internal control is to ensure the reliability of Group financial reporting, the efficiency and performance of operations, and compliance with applicable legislation and other regulations. It is also to ensure that Destia’s asset management is handled in a reliable manner.

Destia has specified an internal control frame of reference, which is based on the internationally approved COSO internal control model.

Destia has a set of ethical guidelines, which were approved by its Board of Directors at the beginning of 2010. The Group’s set of internal decision-mak-ing and approval guidelines is clearly defined, and is part of Destia Group’s Charter. The operating mod-els and processes described in the Destia operat-ing system contain guidelines related to business operations. The organizational structure of Destia is supporting internal control. Destia’s centralized functions are implementing controls within their responsibility areas. Destia’s personnel have role based descriptions describing responsibilities in more details. Internal control point of view has also been taken into account when differentiating roles and defining their responsibilities.

Control measures are specified for business pro-cesses, which are controlled by the process stake-holders and operative management. In addition to this, proactive automatic control measures are also included in Group systems.

The Group’s finance department is primarily re-sponsible for the financial reporting control process. Control is enhanced by business-specific control responsibilities. Alongside laws and other regula-tions, generally accepted accounting principles and other company related directives are observed in financial reporting. The objective is to ensure that the Group’s financial reporting is done in a reliable manner and that the Company’s published financial reports provide essential, accurate information on the financial situation of the Group. For the purpose of financial reporting, Destia has an operative re-


3636

porting system, according to which comprehensive data on the Group’s financial status and its devel-opment is generated on a monthly basis for use by management. Information is delivered on a regular basis to Destia’s Board of Directors and its Audit Committee, as well as to the operative management of the operational business units.

The Group’s financial management and oper-ational controls are supported and co-ordinated by the Group’s financial administration and Con-troller function. Guidelines for financial reporting are complied with in the Group financial reporting process. Destia financial reporting process is com-prised of internal and external accounting. Internal accounting focuses on the monitoring, forecast-ing and analysis of Group result development, while external accounting and reporting is based on Destia’s application of EU-approved IFRS ac-counting standards. The Annual Report and Group parent company financial statements are prepared in accordance with the Finnish Accounting Act as well as Accounting Standards Board guidelines and statements.

Internal auditingThere is an independent internal audit at Destia, reporting to the President and CEO and Audit Com-mittee. The internal audit supports the fulfilment of the supervision obligation of the Board of Directors. The Board of Directors has approved the internal audit charter. Destia’s internal audit function assists the management in implementing and developing the internal control process and risk management, in addition to supporting the organisation in achiev-ing its objectives. The internal audit function ad-heres to international professional standards and operates in co-operation with auditors.

Risk managementRisk management is an essential part of the Group’s corporate governance. The objective of Destia’s risk management is to prevent factors which, if real-ised, would endanger the achievement of business goals, as well as to strengthen elements that have a supportive impact on business operations. As

the highest-level party responsible for risk manage-ment, Destia’s Board of Directors has approved the risk management policy in which the principles for risk management are defined. Assisted by Destia’s Management Team, the President and CEO is re-sponsible for the Group’s risk management as a whole and monitors the same.

Risk management is included as part of Destia’s strategy process. The major risks related to strategy implementation are identified and evaluated as part of the strategy work. Responsibilities and measures are assigned to major risks in order to control them. Destia’s major risks and risk chart, which includes risk management actions and responsibilities, is handled by the Company’s Board of Directors at least once a year. Destia’s major risks are monitored and risk chart is re-evaluated based on identified changes and reported to the Audit Committee at least once every six months. Changes in the risk chart are reported to the Board of Directors.

Operational business unit directors identify the risks encountered in their respective business op-erations as well as plan and mitigate them. The operational business units report their most signif-icant risks to the President and CEO as part of the monthly reporting.

Project managers are responsible for the risk management of their projects’ tendering and im-plementation phase in accordance with project management procedures. Project-based risk man-agement covers all key phases of the project. In each phase, risks are identified, their significance is assessed, and measures, responsibilities and schedules are agreed upon. The impact of risks on the achievement of financial objectives is ad-dressed on a monthly basis in connection with project reporting.

Management of Destia’s financing risks is out-lined in a Finance Policy separately approved by the Board of Directors. A summary of measures taken to protect the Company against financing risks is prepared on a quarterly basis. In accordance with the Finance Policy, management of the Group’s fi-nancing risks comprehends protective measures

against risks involving liquidity, currency, interest, counterparties, credit and commodities.

Destia classifies risks as market and operating environment risks, operational risks and damage risks as well as economical and financial risks.

RELATED PARTIESDestia has defined its related party relationships for the financial statements 2015. Destia has evaluated and monitored transactions concluded between the company and its related parties and ensured that any conflict of interest have been taken into account appropriately in the decision-making process of the company. In the inspection conducted for financial year 2015 no transactions that would be material to the company or deviate from the company’s normal business operations were found, transactions not made on market equivalent terms were either found.

INSIDER ADMINISTRATIONDestia Group Plc Bond was listed on Helsinki stock on 17 June 2015 (Nasdaq Helsinki Ltd.). Ac-cordingly a company-specific insider register was established insiders being in accordance with the Securities Market Act the members of the Board, the CEO and auditor with main responsibility. Destia has furthermore established that insiders are in ad-dition to the above mentioned among others the members of the Management Team. Destia’s com-pany-specific insider register is non-public and the information about insiders is therefore not published on Destia’s website.

Destia’s Board of Directors has approved Destia’s insider guidelines, which contain guidelines for permanent and project-specific insiders as well as the organisation and procedures of the compa-ny’s insider controls. These guidelines comply with the Nasdaq Helsinki Guidelines for Insiders of Listed Companies. Destia’s insider guidelines have been distributed to all insiders. Destia’s insider adminis-tration as well as the main principles of restrictions and regulations applying to insiders are described in these guidelines.

The Legal Affairs monitors the compliance with the insider guidelines and maintains the insider reg-ister. Destia’s silent period starts after each quarter ends, and lasts until the publication of the financial statements release or the interim report. During this period the insiders are not allowed to trade with Destia Group Plc Bond securities.

EXTERNAL AUDITIn accordance with the Company’s Articles of As-sociation, the Company has one auditor, which should be an auditing firm approved by the Central Chamber of Commerce. The term of the auditor is one financial year, ending at the conclusion of the following Annual General Meeting.

The Audit Committee prepares the Board pro-posal for company auditor to be presented at the General Meeting. The General Meeting appoints the auditor.

The Company auditors report to the Company Board of Directors, the Audit Committee and the President and CEO at least twice during the year. The auditors provide the Company’s shareholder with the statutory audit report required by law in connection with the annual financial statements at the Annual General Meeting.

KPMG Oy Ab was appointed as the auditor for 2015 in the Annual General Meeting, with Virpi Halonen (Authorized Public Accountant) serving as auditor with principal responsibility. The compensa-tion paid to the auditors is itemised in the Financial Statements 2015.


3737

ARTO RÄTYborn 1955 Member of the Board 1 Jul 2014– and Chair 17 Mar 2015–, Chair of HR Committee and Member of Advisory CommitteeNot independent of the company nor the shareholderLieutenant General (not active duty)

Key working experience Fortum Corporation: Senior Vice President, Corporate Affairs and Communications 29 Feb 2016–; Ministry of Defence, Finland: Permanent Secretary 2011–2015; Defence Command, Operations: Deputy Chief of Staff 2009–2010; Army Command: Chief of Staff 2008–2009; Ministry of Defence, National Defence Policy Unit: Director 2004–2008; National Defence Courses: Director 2003–2004; Pori Brigade (MecBde): Com-mander 2000–2002; KFOR, Kosovo, Finnish Battalion: Commander 2000; Defence Staff, International Divi-sion: Deputy Chief of Division 1997–2000; NATO HQ, SHAPE PCC: Assistant Military Attaché and NATO Liaison Officer 1994–1997; Defence Staff, Operations Division: Senior Staff Officer 1992–1994Key positions of trust Destia Group Oyj: Vice Chairman 1 Jul 2014–17 Mar 2015; Destia Ltd: Vice Chairman 1 Jul 2014–2 Dec 2014; AC Cleantech Growth Fund I: Member of the Board 2010–; National Defence Foundation: Member of the Board 2011–; Urlus Foundation: Member of the Board 2011–; National Emergency Supply Council: Member of the Board 2011–; STRATU: Finnish Foun-dation for the Support of Strategic Research: Member of the Board 2011–; VITAKO: Society for Viipuri School of Economics: Member of the Board 2012–

MARCUS AHLSTRÖMborn 1982 Member of the Board 17 Mar 2015–, Member of the Audit CommitteeIndependent of the company and the shareholderM.Sc (Econ.)

Key working experienceFinnlines Plc: Business Controller 2013–; EY Oy (for-mer Ernst & Young Oy): Senior analyst, Transaction advisory services (TAS) 2011–2013; Assurance servic-es, Senior assistant 2010–2011 and Auditor assistant 2007–2010

Key positions of trustAntti Ahlström Perilliset Oy: Member of Supervisory board 2014–; Zeropoint Oy: Member of the Board 2014–; GD Promotions: Member of the Board 2012–; Nyland nations reservofficerare r.f: Member of the Board 2004–2007 and Chairman of the Board 2005–2007

JACOB AF FORSELLESborn 1973Member of the Board 1 Jul 2014–, Member of HR Committee, Member of Audit CommitteeIndependent of the company but not independent of the shareholderM.Sc (Econ.), LL.M

Key working experience Ahlström Capital Oy: Acting CEO 1 Nov 2015-31 Jan 2016; Ahlström Capital Oy: Chief Investment Officer 2015–; Ahlström Capital Oy: Investment Director, Head of Industrial Investments 2008–2014; Viola Capital Ltd: Partner 2006–2008; Mandatum & Co Ltd: Partner 2003–2005; Mandatum & Co Ltd: Associate Director 2002–2005; Mandatum & Co Ltd: Analyst 1998–2002; CapMan Capital Management Ltd: In-vestment Analyst 1998Key positions of trust A. Ahlström Kiinteistöt Oy: Chairman of the Board 2 Nov 2015–; Destia Ltd: Member of the Board 1 Jul 2014–2 Dec 2014; AC Cleantech Management Ltd: Member of the Board 23 Apr 2012–29 Oct 2015 and Chairman of the Board 30 Oct 2015–; Life Annuity In-stitution Hereditas: Member of the Board 01/2010–Enics AG: Member of the Board 22 Oct 2015–

MATTI MANTEREborn 1945Member of the Board 1 Jul 2014–, Member of HR Committee and Member of Advisory CommitteeIndependent of the company and the shareholderM.Sc. (Eng.)

Key working experience Lemminkäinen Group: Senior Adviser 2009–31 Jan 2010; Lemminkäinen Group: numerous positions 1975–2010; Lemcon Oy: Managing Director 1991–2008, retired 2009

Key positions of trust Deep Lead Oy: Member of the Board 2008–2012 Chairman of the Board 2012–2015; Destia Ltd: Mem-ber of the Board 1 Feb 2010-2 Dec 2014; Eera Oy: Senior Adviser 2010–; Tahko-Chalet Oy: Member of the Board 2010–; ManMax Oy: Member of the Board 2010–; Fenestra Oy: Member of the Board 2007–2009; Security of Supply / Confederation of Finnish Con-struction Industries RT / Construction pool commit-tee, Member 2000-2006 and Chairman 2006–2010; Confederation of Finnish Industries (EK): Economic policy committee member 2005–2007; Several foreign subsidiaries of Lemminkäinen Oyj: Chairman & Mem-ber 1992–2009; Confederation of Finnish Construc-tion Industries RT International committee: Chairman 1996–1999; Finnish-Russian construction technology transfer committee: Chairman 1995–1997

PANU ROUTILAborn 1964 Member of the Board 1 Jul 2014– Vice-Chair of the BoardIndependent of the company and the shareholderM.Sc. (Econ.)

Key working experience Konecranes Plc: President and CEO 1 Nov 2015–; Ahlström Capital Oy: President and CEO 2008–31 Oct 2015; Kuusakoski Group, Alteams Oy: CEO 2002–2007; Outokumpu Group, Drawn Copper Prod-ucts: Director 1997–2001; Outokumpu Group, Drawn Copper Products: Controller 1995–1997; Partek Morin SA: CFO 1992–1995; Partek Concrete International: Controller 1991–1992; Partek Group: various Manag-er positions 1986–1991; Nokia Oy: Systems analyst 1985–1986Key positions of trust Destia Group Oyj: Chairman of the Board 1 Jul 2014–17 Mar 2015; Destia Ltd: Chairman of the Board 1 Jul 2014–2 Dec 2014; Ahlstrom Corporation: Member of the Board 25 Mar 2014–26 Jan 2015, Chairman of the Board 26 Jan 2015–; ÅR Packaging Group AB: Member of the Board 25 Aug 2011–24 Jun 2014; Vice Chairman 24 Jun 2014–31 Oct 2015; AC Clean-tech Management Oy: Chairman of the Board 18 Jun 2010–31 Oct 2015; Enics AG: Member of the Board 23 Apr 2009–22 Apr 2010, Chairman of the Board 22 Apr 2010–; Vacon Oyj: Member of the Board 23 Mar 2010–27 Mar 2013, Chairman of the Board 27 Mar 2010–12 Jan 2015; Ripasso Energy AB: Member of the Board 7 Dec 2009–31 Oct 2015

TERO TELARANTAs.1971Member of the Board 30 Sep 2015–, Member of HR CommitteeIndependent of the company but not independent of the shareholderM.Sc. (Eng.), M.Sc. (Econ.)

Key working experienceAhlström Capital Oy: Director, Industrial investments 2015–; Corob: CEO 2013–2015; CPS Color: EVP, equipment 2012-2013; Cargotec Corporation: SVP, Tail Lifts 2008-2012; Cargotec Corporation: SVP, Cor-porate Development 2007-2008; Cargotec Corpora-tion: VP, Corporate Development 2006-2007; Bain & Company: Manager 1998-2006Key positions of trustÅR Packaging Group AB: Member of the Board 1 Oct 2015–

SOLVEIG TÖRNROOS- HUHTAMÄKIMember of the Board 1 Jul 2014–, Chair of Audit CommitteeIndependent of the company and the shareholderM.Sc. (Econ.), former Authorised Public Accountant in Finland and Sweden

Key working experience KPMG Oy Ab: Authorised Public Accountant 1986–31 March 2010. Experience of managing audits of listed companies and international and other large com-panies; KPMG Oy Ab: Partner 1989–2009, Member of Management Board 1991–2002, Partner in charge of Audit Quality and Risk Management 1991–1995, Head of Helsinki´s audit groups 1995–1997, Head of a business segment 1997–2001; Price Waterhouse Oy: Auditor 1979–1986Key positions of trust Finnish Hospital Clowns Association: Member of the Board Apr 2015–; The business department of the Finnish Forest Centre’s business unit OTSO: Member 9 Dec 2014-; Chair of Audit Committee Feb 2015–; Talvivaaran Kaivososakeyhtiö Oyj: Member of the Board 12 Jun 2014-; Chair of Audit Committee Jun 2015–; Destia Ltd: Member of the Board 2 Dec 2009-2 Dec 2014; Vice Chairman Mar 2014-Jun 2014; KPMG Oy Ab: Member of the Board 2002–2006, Chairman of the risk management steering committee 2003–2006

BOARD OF DIRECTORS


3838

HANNU LEINONEN born 1962President and CEO, 2009–Chairman of Group Management Team, 2009–M.Sc. (Eng.)

Key working experienceYIT Corporation: President and CEO 2006–2008; YIT Primatel Ltd: President 2001–2005; Sonera Telecom: Director 1999–2001; Sonera Oyj: Director, Network Services 1996–1999; Skanska Oy: Procurement Man-ager 1994–1996; Haka Oy: Procurement Manager 1992–1994Key positions of trustIlmarinen: Member of the Board 13 Nov 2012–; Ilmari-nen: Member of the Supervisory Board 17 Apr–13 Nov 2012; Onninen Oy: Member of the Board 2010–; SRV-Yhtiöt Oyj: Member of the Board 2009

LAURA AHOKAS born 1970Executive Vice President, Human Resources 2012–, Member of Management Team 2012, 2016–Member of Extended Man-agement Team / Develop-ment Team 2013–2015M.Sc. (Econ.)

Key working experienceRamirent Finland Oy: HR Manager 2007–2011; GE Healthcare: HR Manager 2005–2007

HEIDI ERHA born 1981Executive Vice President, Consulting Services 2016–, Executive Vice President, Business Development and Operational Excellence 2015–, Member of Manage-ment Team 2016–Process Owner, Customer Process, 2015–M.Sc. (Econ.)

Key working experienceDestia Ltd: Development Manager, Customer Process and Strategic Planning 2014; Destia Ltd: Development Manager, Sales support 2008–2013; VTT: Business

Developer 2006–2008; Mercantile Ltd.: Marketing co-ordinator 2005–2006

MINNA HEINONEN born 1967Executive Vice President, Southern Finland 2015–, Member of Management Team since 2011–LL.M.

Key working experienceDestia Ltd: Executive Vice President, Special Con-struction 2013–2014; Destia Ltd: Executive Vice Presi-dent, Rock since 2011–2012; Destia Ltd: Unit Director, Aggregates 2009–2010; Destia Ltd: Legal Counsel 2008; The Finnish Road Enterprise: Legal Counsel 2001–2007

PASI KAILASALO born 1971Executive Vice President, East-ern Finland 2011–, Member of Management Team since 2011–, Process Owner, Construction Services 2013–M.Sc. (Eng.); MEng.

Key working experienceDestia Ltd: Project Manager, Infra Construction, Eastern Finland 2008–2010; The Finnish Road Enter-prise: Project Manager, RES / Special Construction 2004–2008; Elisa Oyj / Oy Radiolinja Ab: Manager 2001–2004; Rakennus Oy Lemminkäinen: Site Manag-er 1994–2001

KIMMO LAAKSOLA born 1954Personnel Representative in the Management Team 1 Jul 2011–31 Dec 2013, 2016–Full-time Steward since 2010Master Builder

Key working experienceDestia Ltd: Manager, Work Welfare 2010; Destia Ltd: Development Manager 2008–2009; The Finnish Na-tional Road Enterprise: Full-time Steward 2002–2008; The Finnish National Road Enterprise: HR Consultant, Southern Finland 2001; The Finnish National Road Administration, Production: Manager, Guidance Sys-tem 1997–2000; The Finnish National Road Admin-

istration: Various Planning and Construction tasks 1982–1996

AKI MARKKOLA born 1966General Counsel 2010–Member of Management Team 2010–2012, 2016–Member of Extended Man-agement Team / Develop-ment Team 2013–2015LL.M.

Key working experienceEADS Secure Networks Oy: Senior Legal Counsel 2006–2010; Raisio Plc: Legal Counsel 2001–2006; Wärtsilä Finland Oy: Legal Counsel 2000–2001; Finn-ish Defence Forces: Legal Advisor 1998–2000; Kemi-joki Oy: Legal Affairs 1992–1997

PIRKKO SALMINEN born 1957CFO 2008– Member of Management Team 2007–M.Sc. (Econ.)

Key working experienceThe Finnish Road Enterprise: CFO 2007; Gutta Oy: Manager 2006–2007; Citycon Oyj: CFO 2003–2005; Stockmann plc: Treasurer 1995–2003; Ahlcorp Oy: Treasurer Manager 1992–1995Key positions of trustFinavia Oyj: Member of the Board and Chairman of Audit Committee 2012–16 Dec 2015

MARKO VASENIUS born 1972Executive Vice President, Western Finland 2013– Member of Management Team 2011–MEng.

Key working experienceDestia Ltd: Executive Vice President, South West-ern Finland 2011–2012; Destia Ltd: Unit Director, Infra Maintenance, Southern Finland 2008–2010; The Finnish Road Enterprise: Unit Manager, Häme 2005–2008; The Finnish Road Enterprise: Controller, Southern Finland 2002–2005; The Finnish Road Enter-prise: Operations Planner, Tampere Unit 2001–2002;

The Finnish Road Enterprise: Engineer, Tampere Unit 1998–2001

TIMO VIKSTRÖM born 1968Executive Vice President, Corporate Planning, 2016–Member of Management Team, 2016–B.Sc (eng.), eMBA

Key working experienceDestia Group Plc: Senior Vice President, M&A 2015; Lemminkäinen Plc: Executive Vice President and Member of Group’s Executive Team, Director Scan-dinavia 2013–2014 and CEO Lemminkäinen Sverige AB 2014; Lemminkäinen International Ltd: CEO Lem-minkäinen Norge AS 2013; Lemminkäinen Internation-al Ltd: Senior Vice President, Paving in International operations 2011–2012; Lemminkäinen Infra Ltd: Di-rector, Paving Domestic and International operations 2009–2010; Lemminkäinen Infra Ltd: Development director and manager 2005–2008; Lemcon Ltd: De-sign and project manager 2001–2004; Finnish Road Administration: Owner of the procurement process, Procuring authority 1997–1998 and 1999–2001; Swedish Road Administration: Project Manager 1998; Finnish Road Administration: Project and Site Manag-er 1990–1996

SEPPO YLITAPIO born 1973Executive Vice President, Northern Finland 2013– Member of Management Team 2011–, Process Owner, Maintenance Services 2013–MEng.

Key working experienceDestia Ltd: Executive Vice President, Western Finland and Cap of the North 2012; Destia Ltd: Executive Vice President, Western Finland 2011; Destia Ltd: Unit Director, Infra Maintenance, Northern Finland 2008–2010; The Finnish Road Enterprise: Manager, Winter Maintenance Management Centre / Operations Planner 2007–2008; The Finnish Road Enterprise: Senior Advisor, Winter Maintenance Management Centre / Site Manager 2005–2007; The Finnish Road Enterprise: Project Manager, Consulting Services, Geo Survey Services 2001–2005

MANAGEMENT TEAM 1 JAN 2016


39

DESTIA GROUP’S FINANCIAL STATEMENTS 2015 CONTENTS

FINANCIAL STATEMENTSReport of the Board of Directors .............................................40Consolidated income statement and consolidated statement of comprehensive income, IFRS .............................44Consolidated balance sheet, IFRS ..........................................45Consolidated cash flow statement, IFRS ................................46Consolidated statement of changes in equity, IFRS ................47

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS1 Accounting principles ......................................................482 Operating segments.........................................................533 Divested business operations ..........................................534 Revenue ...........................................................................545 Construction contracts ....................................................546 Materials and services .....................................................547 Other operating income and expenses ............................548 Depreciation .....................................................................549 Impairments .....................................................................5510 Employee benefits ...........................................................5511 Development expenses....................................................5512 Financial income and expenses .......................................5513 Income taxes....................................................................5614 Earnings per share ...........................................................5615 Property, plant and equipment .........................................5716 Goodwill ...........................................................................5817 Impairment tests ..............................................................5818 Other intangible assets ....................................................5919 Acquisitions......................................................................5920 Financial assets held as available for sale .......................6021 Inventory ..........................................................................6022 Accounts and other receivables .......................................6023 Cash and cash equivalents ..............................................6124 Deferred tax assets and liabilities ....................................6125 Equity ...............................................................................6226 Financial liabilities ............................................................6327 Other liabilities .................................................................6428 Accounts payable and other non-interest-bearing liabilities ...........................................................................6429 Long-term incentive schemes ..........................................6430 Pension obligations ..........................................................6531 Provisions ........................................................................6632 Financial risk management ..............................................6633 Other lease agreements ...................................................6934 Contingent liabilities and assets ......................................6935 Related party transactions ...............................................7036 Events after the reporting period .....................................70

Group`s key figures ..................................................................71Parent company income statement, FAS ................................72Parent companyt balance sheet, FAS .....................................73Parent company cash flow statement .....................................74Notes to financial statements, Parent company, FAS ..............75Board of Director´s proposal on the use of distributable assets ......................................................................................79Auditor’s report ........................................................................80

DESTIA’S YEAR 2015 CORPORATE RESPONSIBILITY FINANCIAL STATEMENTSGRI CORPORATE GOVERNANCE

40

Operating environmentThe Finnish economy, which continued to weaken, affected the infrastructure sector in the operating environment of the whole construction sector dur-ing 2015. The challenging market situation was ev-ident not only in the fierce competition for projects but also the exceptionally low level of prices quoted. There were also fewer major projects than before put out to tender.

Infrastructure demand was, however, moderate, and during the year several projects in both the public and private sectors were started or put out to tender. Despite the decline in the total market, basic demand in the infrastructure field is created by the large projects planned for the next few years in the public-sector project programme.

According to an October forecast by the Con-federation of Finnish Construction Industries (RT), the volume of construction will decline by 1% in 2015. RT predicts that in the near future the situ-ation in the infrastructure construction will remain somewhat uncertain; several large projects are end-ing and there are no major projects on the horizon to compensate for the decline. Furthermore, the state is transferring its infrastructure funding from investments to fundamental road maintenance and reducing the repair backlog. RT predicts moderate growth of about 2% for 2016.

According to the construction confidence indi-cators published by the Confederation of Finnish Industries EK, construction business confidence weakened slightly in December but were still on a reasonably good level and clearly better than at the beginning of the year. The order book can be described as being slightly weaker than normal. In November, the Finnish construction confidence indicator was somewhat better than the average for EU countries.

According to Statistics Finland, the costs of the civil engineering industry fell by 1.7% from Decem-ber 2014 to December 2015. The annual change in costs varied by sub-index from -12.4% in surfacing to 1.7% in concrete structures. The decrease in the total index was particularly affected by the lowered prices of bitumen, fuels and energy in December

last year. The fall in costs was mitigated by a rise in labour costs.

IFRS financial statementsThe consolidated financial statements and related comparative data were prepared in accordance with the International Financial Reporting Stand-ards (IFRS). In June 2015, Destia Group Plc listed on the main list of Nasdaq Helsinki Oy a MEUR 65 bond targeted at institutional investors. Therefore, the Group has adopted IFRS 8 Operating Segments compliant reporting.

Destia’s business operations comprise servic-es covering the entire life cycle of the road and track network and other infrastructure projects from design through implementation to maintenance. Destia’s business structure is based on consistent business processes. Due to the nature and admin-istrative structure of the company’s business, the operating segment reported is the entire Group.

Destia Group Plc was established 22 April 2014, in connection with the ownership arrangement of Destia Ltd. Comparative figures for Destia Group Plc and Destia Group excluding balance sheet exist only from the second half of the year, 1 July–31 December 2014.

Order book and new ordersDestia’s operations in customer and sales work developed positively during the year. Our share of private-sector customers increased both in terms of numbers and revenue. The order book at the end of last year was clearly bigger than at the end of the previous year and is spread over more years than previously.

The order book at the end of December was MEUR 717.4 (628.2). In comparison with the end of 2014, the order book increased by 14.2%.

The most significant new contracts valued at no less than three million euros and signed during the year: • The construction of the access roads for the E18

Hamina bypass in Hamina, completed in October 2015

REPORT OF THE BOARD OF DIRECTORS 2015• Renovation project for the dam of the Imatra

hydroelectric power plant, will be completed in December 2018

• Maintenance Area 12 track and safety equipment maintenance in 2015–2020

• Maintenance services for spare bridge equipment of the Finnish Transport Agency from 2015 to 2020

• Upgrading of National Road 8 at Nousianen, will be completed in December 2016

• Eskola−Ylivieska superstructure contract 2, will be completed by the end of 2017.

• Upgrading of National Road 77 at Viitasaari be-tween Taimoniemi and Keitele, will be completed in October 2017.

• Maintenance Area 8 (Eastern Finland) track and safety equipment maintenance in 2015–2020.

• Regional main road contracts: Sodankylä, Lapua, Puolanka, Kemijärvi–Posio, Parkano and Porvoo, 2015−2018.

• Upgrading of Main Road 148 at Kerava, will be completed by the end of 2016.

• North Savo bridge repair contract, will be com-pleted in December 2016.

• Factory area maintenance contract in Raahe, 2015−2020.

• Construction of an overtaking lane on the Hämeenkyrö section of National Road 3, com-pleted in November 2015.

• A DB (design and build) project for the upgrading of National Road 8 at Luostarinkylä in Rauma, will be completed in November 2016.

• Construction and maintenance of municipal en-gineering at Varkaus, 2016−2023.

• Construction of a bioproducts factory area at Äänekoski, completed in November 2015.

• E18 Koskenkylä−Kotka motorway maintenance 2015−2020

• Apron extension at Helsinki Airport, will be com-pleted in 2019

• Juva area-wide maintenance contract 2015−2020 (conditional on a decision by the Market Court, owing to an appeal)

• The earthworks and installation work for a natural gas pipeline in Pori, will be completed in May 2016

• Construction of a raw wood terminal at Patokan-gas, will be completed in October 2016

• Preparatory work at a nuclear power plant area in Pyhäjoki, will be completed in March 2016

• Bridge maintenance and repair contract in Uusi-maa, 2016-2017

• Preliminary earthworks at the nuclear power plant area in Pyhäjoki, will be completed in July 2017

Destia was chosen to carry out stage 3 of the Na-tional Road 14 project in central Savonlinna, the Laitaatsalmi deep-water channel. The tender de-cision was appealed and the appeal procedure is ongoing.

Revenue developmentDestia Group’s revenue in the financial year it was MEUR 462.8 (7–12/2014: 261.8).

In the financial year other operating income amounted to MEUR 8.1 (1.7). In addition to a busi-ness transaction, this mainly includes sales income from fixed assets and sales and rental profit from property.

Result developmentDestia’s operating profit for the financial period was MEUR 12.9 (12.5). The Group’s result for the finan-cial period was MEUR 6.7 (5.5).

Operating profit for the financial period includes a total of MEUR 5.1 in sales profits from business and property transactions. The operating profit for the reference year was encumbered by MEUR 2.2 of costs, and the result for the reference year was encumbered by MEUR 4.7 of costs, which relate to the acquisition and financial arrangements of Destia’s shares.

Destia Group’s income taxes in the financial year totalled MEUR 1.9 (1.9).

Balance sheet, cash flow and financingTotal assets on Destia’s balance sheet were MEUR 266.3 (264.6) at the end of the reporting period. Return on investments (ROI) was 9.4% (9.2), equity ratio was 31.2% (29.4), and gearing was 32.6% (42.4).


41

As a result of seasonality and successful work-ing capital management, operating cash flow de-veloped well at the end of 2015. Owing to the sea-sonality of construction, the demand for working capital is at its greatest in the second and third quarters. In the fourth quarter, cash flow again turned positive. The cash flow of the financial year comprised operating cash flow of MEUR +10.8, in-vestment cash flow of MEUR -2.1 and financial cash flow of MEUR -3.5. Financial cash flow includes the amortisation by MEUR 2.0 of hybrid loans in accordance with the decision made at the Annual General Meeting and interest payments of about MEUR 1.5.

The financial position of the Group remained moderate. The financial assets on the balance sheet were MEUR 42.9 at the end of the financial year (37.7). The amount of interest-bearing liabilities re-mained at the same level as at the end of 2014, and was MEUR 66.8. Of all loans, 0.3% was short-term and 99.7% long-term. Interest-bearing net liabilities were MEUR 23.9 (29.1).

Destia subgroup’s Commercial Paper pro-gramme of MEUR 150 was not used in the financial period, nor was it used in the reference period. For the needs of financing working capital, the company also has at its disposal an unsecured short-term

financing limit of MEUR 10.0, which was unused at the end of the financial year.

The MEUR 65 bond released to institutional in-vestors by Destia Group Plc on 19 June 2014 was listed on the Helsinki Stock Exchange maintained by Nasdaq Helsinki Oy in June. On 17 June 2015, the Financial Supervisory Authority approved the bond’s prospectus. This bond is unsecured and will mature in full in June 2019. The loan coupon has a variable interest rate based on the three-month Eu-ribor rate, and the loan margin is 4.5%. It is hedged in the Group by means of an interest rate swap up to the time of its maturity.

Consolidated shareholders’ equity includes equity hybrid loans from Ahlström Capital Group 27.0 million euros (29.0) and interest rate on loans is 10%. The amortisation and interest payments of hybrid loans are decided by the Annual General Meeting on a proposal by the Board of Directors. From 2015 onwards, interest costs are recorded as they are paid, adjusted by the effect of tax on the results of previous financial years.

Shares, share capital and equityThe registered share capital of Destia Group Plc is EUR 80,000 and its total number of shares is

Destia Group Destia Group

Group’s key figures (IFRS), MEUR 1–12/2015 7–12/2014

Revenue 462.8 261.8

Operating profit 12.9 12.5

% of revenue 2.8 4.8

Result for the period 6.7 5.5


Return on investment, % 9.4 9.2

Earnings per share, EUR 56.14 53.77

Equity ratio, % 31.2 29.4

Net gearing, % 32.6 42.4

Average personnel 1,505 1,502

Occupational accidents resulting in absence from work * 7.6 9.3

Order book at the end of period 717.4 628.2

* Occupational accidents of Destia´s own personnel per one million working hours

80,000. The company is 100% owned by AC Infra Oy, which is part of the Ahlström Capital Group.

Destia Group’s equity also includes an invested unrestricted equity fund of MEUR 38.0 and hybrid loans totalling MEUR 27.0 from Ahlström Capital and AC Infra Oy.

Destia Group Plc’s group contribution to Ahl-ström Capital in the 2015 financial year was MEUR 2.3.

Investments and divestmentsIn the financial year, Destia Group’s gross invest-ments were MEUR 9.2 (72.5), which amounted to 2.0% (27.7%) of revenue. The investments were mainly fleet investments and the acquisition of the share capital of Destia Ltd in the reference year.

On 23 November 2015, Destia concluded the sales of its measuring, drilling and laboratory ser-vices to Mitta Oy. The sale of these businesses clarified Destia’s business portfolio, strengthened the balance sheet and created better conditions for developing and growing of core operations. The transaction was concluded on 31 December 2015.

PersonnelDestia’s number of personnel during the financial year was 1,505 (1,502). At the end of December, the number of personnel was 1,492 (1,429), of whom 1,403 (1,354) were permanent and 89 (75) temporary employees. Due to the seasonality of the business, the number of personnel varies during the year, peaking in the summer. As a result of the trans-action concluded with Mitta Oy, 98 people working in measuring, drilling and laboratory services were transferred to the service of Mitta Oy on 1 January 2016 as old employees.

New collective agreements for infrastructure industry employees and salaried personnel were signed on 27 February 2014. Both agreements are valid from 1 April 2014, and the contractual period for both agreements consists of two contractual periods: 1 April 2014–31 January 2016 and 1 Feb-ruary 2016–31 January 2017.

On 30 September 2015, Destia’s Board of Di-rectors decided on the structure and principle of a bonus scheme for 2016 covering all personnel. The numerical objectives of the bonus scheme were confirmed on 16 December 2015. The bonus scheme forms part of the overall personnel reward scheme. The bonus scheme brings a supportive,

in-house co-operation- and strategy-enhancing control and reward element to compensation. The scheme will support the development of the com-pany’s profitability and operating conditions. The target group for the new bonus scheme is com-prised of five different personnel groups: 1) person-nel working on Destia projects; 2) work supervisors; 3) support function personnel and business unit support personnel; 4) business unit managers, and 5) Executive Vice Presidents.

On 30 October 2014, Destia Group Plc’s Board of Directors decided to adopt a new long-term management incentive scheme for 2014−2018. The purpose of the scheme is to commit certain key per-sons to the company and offer them a competitive bonus system. The Board of Directors decides on the long-term incentive scheme and the persons covered by it. The scheme covers some 75 persons. The earnings period is 2014–2018, and the earnings criterion is the value increase of the company. The criteria for the long-term incentive scheme are the same for all people belonging to the scheme. These criteria apply to the whole Group and differ from the bonus scheme criteria. Remuneration accumulated in the earnings period will be paid in cash no later than in 2019. Based on the scheme, a cost of MEUR 1.6 was entered for 2015, after which the balance sheet includes a total liability of MEUR 2.7 in relation to the incentive scheme.

In 2015 personnel costs were MEUR 88.2 (86.9), which amounted to 19.1% (20.1) of revenue. The costs include MEUR 5.3 (5.6) in performance and incentive bonuses for all personnel.

In the financial year, the annual personnel sur-vey was carried out by an external organisation for which the response rate was 76% (78%). The results of the survey continued to show positive development and are on a good level. The overall average of the survey of 3.81 (3.79) was up from the previous year and was higher than the average for similar companies. The results were processed together with the personnel and, based on them, development measures were prepared for each unit.

Human resources development in the year gone by remained Destia’s strategic area of focus. Goal-oriented customer work was promoted by means of the annual Tositoimi training. Investments in occupational safety were continued and Destia achieved a new record in occupational safety for the third consecutive time. Our accident frequency was


42

7.6 occupational accidents per one million working hours. In projects, the improvement of occupational safety has also been evident as an increase in the number of safety observations made and in good feedback received from customers and industrial safety authorities. Safety observations have signifi-cantly helped in the prevention of accidents.

In 2015, we initiated and advanced several in-ternal development projects aimed at digitalising functions. One of our greatest efforts has been the Voima project, in which we are harmonising our op-erating practices and building tools to support our business. In 2016, the Voima development project will proceed to commissioning.

Organisational structure and managementIn 2015, Destia’s operations were divided into four regional business units: Southern Finland, Western Finland, Eastern Finland and Northern Finland, as well as the national Consulting Services business unit.

The business of the regional business units in-cludes the construction and maintenance of traf-fic routes, industrial and traffic environments and the complete living environment, as well as the services of the winter maintenance management centre, Kelikeskus. The Rock Construction, Rail-way Construction and Maintenance, Aggregates and Fleet business units are part of the regional business units.

The national business unit, Consulting Servic-es, took care of design, surveying and international consultancy.

In 2015, the following support functions sup-ported the business units: Economics & Financ-ing, Legal Services, Human Resources (Personnel), Large Project Sales and Development, Business Development and Operational Excellence.

In 2015, Destia’s Management Team com-prised President & CEO Hannu Leinonen, CFO Pirkko Salminen, Director Jouni Karjalainen, and Executive Vice Presidents Minna Heinonen, Pasi Kailasalo, Jukka Raudasoja, Marko Vasenius and Seppo Ylitapio, and personnel representative Jouko Korhonen.

In December 2015, the decision was made to reorganise the organisation from 1 January 2016. In 2016, Destia’s organisation will still comprise four regional business units, Southern Finland, Western Finland, Eastern Finland and Northern Finland, as

well as the national Consulting Services and sup-port functions.

From the beginning of the year, Heidi Erha was appointed Executive Vice President of the Con-sulting Services business unit and a member of the Management Team. Erha will also continue to be responsible for Business Development and Operational Excellence. On 1 January 2016, Jukka Raudasoja was transferred to special management functions.

In 2016, five support functions serve as sup-port for business: Economics & Financing, Human Resources (Personnel), Legal Services, Corporate Planning and Business Development and Opera-tional Excellence.

At the beginning of 2016, the functions of Large Project Sales and Development were transferred to the newly-established Corporate Development unit. From the beginning of the year, Timo Vikström was appointed Executive Vice President of the Corpo-rate Planning unit and a member of the Manage-ment Team. Jouni Karjalainen will continue in his present role, reporting to Timo Vikström.

As of 1 January 2016, Destia’s Management Team comprises President & CEO Hannu Leinon-en who will serve as Chairman, with the members being HR Director Laura Ahokas, Legal Affairs Man-ager Aki Markkola, CFO Pirkko Salminen, Director Jouni Karjalainen, and Executive Vice Presidents Timo Vikström, Heidi Erha, Minna Heinonen, Pasi Kailasalo, Marko Vasenius and Seppo Ylitapio, and personnel representative Kimmo Laaksola.

Decisions of the Annual General MeetingDestia Group’s Annual General Meeting held on 17 March 2015 confirmed the company’s financial statements for 2014 and discharged the members of the Board of Directors and the President & CEO from liability for the accounting period 1 January–31 December 2014. The Annual General Meeting de-cided, as proposed by the Board of Directors, that no dividends or capital repayment be paid for the accounting period ending 31 December 2014, but that MEUR 2 be paid to amortise the hybrid loans, and that MEUR 1.5 of accrued interest on the hybrid loans also be paid.

The meeting decided that the number of board members would be six and elected Arto Räty as Chairman of the Board. Jacob af Forselles, Matti Mantere, Panu Routila and Solveig Törnroos-Hu-

htamäki were re-elected as the other members of the Board of Directors. Marcus Ahlström was elect-ed as a new member of the board.

The Board of Directors elected Panu Routila as Vice Chairman at its organising meeting. Two per-manent committees were appointed to support the work of the Board of Directors: a Human Resources Committee and an Audit Committee. Arto Räty was elected Chairman and Jacob af Forselles and Matti Mantere as the members of the Human Resourc-es Committee. Solveig Törnroos-Huhtamäki was elected as Chairperson of the Audit Committee, and Marcus Ahlström and Jacob af Forselles and as members. The Board of Directors also established an assisting committee, which assists the Board and management in certain business projects. Of the members of the Board of Directors, Matti Man-tere and Arto Räty are members of the assisting committee.

The Annual General Meeting decided to keep the compensations of the Board members unchanged, with the exception of the compensation paid to the Chairperson of the Audit Committee, which was raised to the same level as that paid to the Vice-Chairperson. However, remuneration will not be paid to the representatives of the company’s shareholders serving as members of the Board of Directors.

By a unanimous decision of Destia Group Plc’s shareholders, Tero Telaranta was appointed a new board member as of 30 September 2015. Telaranta serves as Investment Director at Ahlström Capital Oy. Destia’s board elected Telaranta as a member of the HR Committee.

All Board members are independent of the com-pany and in relation to the owner with the following exceptions: Jacob af Forselles and Tero Telaranta are not independent in relation to the company’s shareholder, Arto Räty is not independent in relation to the company and to the company’s shareholder as of 18 May 2015, and Panu Routila has been inde-pendent in relation to the company’s shareholders since 1 November 2015.

KPMG Oy Ab served as Destia Group Plc’s au-ditor in the 2015 financial year. Virpi Halonen (Au-thorized Public Accountant) served as the auditor with principal responsibility.

Litigation and disputesOn 20 August 2015, the Court of Appeal decided to uphold the verdict of the district court concerning the sale of surplus materials. In November 2012, Destia submitted to the authorities an investigation request regarding the sale of surplus and demolition material for personal benefit at one of its railway sites. In August 2014, Helsinki District Court sen-tenced three persons to imprisonment which was suspended and one person to a fine. The court ruled that the value of the property misappropriated from Destia and the Finnish Transport Agency, totalling €163,500, must be repaid as requested. Two of the convicted appealed the verdict of the district court at the Court of Appeal. None of the convicted peo-ple works for Destia anymore.

In December 2015, criminal charges were brought against three Destia employees over envi-ronmental offences. The proceedings are based on the view that the employees are guilty of environ-mental offences at the Harjula soil area in Mäntsälä between autumn 2010 and summer 2012. In ad-dition, the prosecutor requests that Destia Ltd be set a corporate fine of at least 50 thousand euro and be ordered to lose the financial proceeds of crime, some 580 thousand euro. Destia denies the claims made. In summer 2012, on its own initiative the company informed the environmental authority that soil had by mistake been taken from outside the extraction area covered by the valid permit, but from property owned by the company. The envi-ronmental authority was notified immediately when the mistake had been detected. The environmental authority filed a request for investigation in January 2013.

On 16 December 2015, the Market Court gave its decision in the case concerning the unsuitable actions in business of Suomen Maastorakentajat Oy when it utilised tender documents produced by Destia in its own commercial tendering. The deci-sion of the Market Court forbids Suomen Maas-torakentajat from continuing with or repeating such actions, on pain of a €100,000 fine. The temporary injunction issued by the Market Court on 25 Febru-ary 2015 concerning the same case has now been repealed. Suomen Maastorakentajat is obliged to pay to Destia slightly over €40,000 plus interest in court costs arising from the case. The decision is not yet legally binding.


43

In the Metro construction projects, Destia has disputes about contract payments with Länsimetro Oy. At the end of 2015, Destia initiated a lawsuit against Länsimetro at Espoo District Court and Länsimetro responded with a countersuit.

Short-term risks and uncertainties Destia classifies risks as market and operating envi-ronment risks, operational risks, financial risks and damage risks.

Concerning the market and operating environ-ment risks, fluctuation in the economy and uncer-tainty in the market situation are particularly causing a significant risk for Destia’s business. Both public and private sector investments in infrastructure construction are decreasing, which is reflected in the competitive situation in the industry. The com-petitive situation in Destia’s core business areas continues to be fierce. Success in tendering for regional main road maintenance contracts as well as large contracts is of paramount importance. New forms of tendering have emerged in the tendering for major public projects, which require a new kind of expertise.

The fluctuation in the price of oil-based com-modities causes uncertainty with regard to the profitability of the company. The risk is being pre-vented by monitoring and assessing the commodity price development, by ensuring key procurements economically from a project perspective, and by hedging the price risks using derivative instruments.

In the management of risks caused by the op-erating environment, it is essential to focus on the selected business areas, and to ensure the opera-tional cost-efficiency, solidity, as well as readiness to react in varying situations.

The most significant operational risks concern project management and profitability. Uncertainty is being created by the potential fluctuation of input prices and the ability to manage project risks. The key factors in project management are an efficient process from tender calculation to implementation, cost monitoring, ensuring resources and developing project management expertise.

Destia has invested in the reliable financial re-porting, which is a requirement for the identification and assessment of financial risks. The reliability of financial reports is ensured through monitoring and by developing control methods. Risks are also as-sociated with the updating of the Group’s ERP sys-

tem, on part of which the company is carrying out separate risk assessment and monitoring.

The Destia subgroup’s freedom from net liabili-ties has significantly reduced financial risks. Finan-cial risks related to the financing of the parent com-pany, Destia Group Plc, are managed in accordance with the treasury policy.

In Destia’s damage risk management, the key factors are proactive project management proce-dures, investments in occupational safety and en-suring adequate insurance cover.

Corporate responsibilityDestia’s vision is to be the number one choice for its customers and the number one in infrastructure in Finland, which requires responsible operations, both from the company and from those who work with it. Destia divides its corporate responsibility into financial, social and environmental responsi-bility. These fields are further split into materiality aspects which, in addition to the ethical guidelines, also control the implementation of responsibility in the daily work of the Group.

In corporate responsibility reporting, Destia fol-lows the reporting guidelines of Global Reporting Initiative (GRI) and its G4 version at the core level. As part of its corporate responsibility, Destia is-sues an annual report, which also contains a GRI compilation.

Environmental issuesDestia holds the international combined ISO 9001 and 14001 quality and environmental certificate concerning all contracting services, or services for infrastructure construction and maintenance consulting, aggregates, and railways. In the finan-cial year, operational focus was placed on eco-ef-ficiency, use of natural resources and materials, consumption of fuels and energy, operational en-vironmental safety, and consideration for the are-as near locations where Destia operates. Destia’s environmental issues are reported more closely in the annual report.

Research and developmentDestia divides its product development into three areas: model-based production, production mo-bile information collection and production-oriented method and technology development. During the financial year, Destia proceeded with the devel-

opment of methods and equipment that improve productivity and safety, and it had ongoing more than 50 model-based construction projects.

R&D costs totalled MEUR 0.9 (0.5). Also ongo-ing were several significant development projects aimed at digitalising the company’s operations. The most significant of these was an enterprise resource planning (ERP) system development project. The development costs of these activities were MEUR 1.5 (0.6).

Destia’s research and development activity is re-ported more closely in the company’s annual report.

Corporate Governance StatementDestia Group Plc’s Corporate Governance State-ment will be published in the company’s 2015 an-nual report on Destia’s website at www.destia.fi.

Events following the reporting periodNo events.

Growth strategy and financial objectivesThe Board of Directors has ratified Destia’s strate-gy for 2014−2022 and the financial objectives for the 2014−2016 business planning period. The key focus of the strategy is to grow profitably on the infrastructure market through good customer work, by making good use of in-house expertise and by developing it.

Based on this, the Board confirmed the follow-ing financial objectives for the 2014−2016 business planning period:• Average growth in revenue of 5% per year• Operating profit of 4% by the end of 2016• Return on investment of 15% by the end of 2016• Equity ratio of 40% by the end of 2016

In autumn 2016, the financial targets will be updated for the business planning period 2017-2019. Based on the information available currently, it seems likely that the financial objectives will not be reached in 2016.

Large road projects requiring special expertise and infrastructure maintenance constitute Destia’s core business. In accordance with its strategy, in the financial year just concluded the company succeed-ed in increasing the volume of private sector orders in its order book, which shows that the development of customer and sales work has been fruitful. In the year just ended, Destia concluded a contract for the

first project to be carried out based on the alliance model, the apron expansion contract at Helsinki Airport. In this project, which will be implemented in a particularly demanding working environment, Destia will utilise its diverse infrastructure exper-tise. In the railway business, Destia has achieved a significant intermediate target, now that half of the maintenance contracts on Finland’s railway network are taken care of by the company.

Outlook for 2016 The operating environment for the infrastructure field and the whole construction sector remains challenging and competition for projects continues to be tough. Demand for projects, however, will re-main moderate owing to several large private sector projects and to extra funding announced by the State for infrastructure projects, fundamental road maintenance and a reduction in the repair backlog.

Together with the development of customer and sales work, the order book provides a good basis for 2016. At the beginning of the year, the margin content of the order book did not contain contract-related compensation opportunities, for which reason the order book margin is lower than the previous year. The order book coupled with the measures that have been taken towards improving customer work and project management provide a solid foundation for maintaining good profitability and cash flow.

Market guidance for 2016Destia’s revenue for 2016 is expected to grow, and operating profit is expected to fall short of the pre-vious year.

Proposal by the Board on the use of distributable assets Destia Group Plc’s FAS-compliant profit for the fi-nancial year was EUR 3,051,660.32, which is pro-posed to be recorded on the profits and losses ac-count. Destia Group Plc’s distributable assets total EUR 35,884,803.10, including the EUR 38,000,000 in the invested unrestricted equity fund.

Destia Group Plc’s Board of Directors proposes to the Annual General Meeting that no dividend or repayment of capital be paid for the financial period that ended on 31 December 2015.


44

EUR 1,000 Note 1 Jan–31 Dec 2015 1 July–31 Dec 2014

Revenue 4, 5 462,758 261,780

Other operating income 7 8,144 1,698

Materials and services 6 324,683 176,732

Employee related expenses 10 88,161 46,903

Depreciations 8 9,085 4,715

Other operating expenses 7 36,105 22,663

Operating profit 12,868 12,465

Financial income 12 130 30

Financial expense 12 4,343 5,063

Profit before taxes 8,655 7,432

Income taxes 13 1,934 1,944

Result for the period 6,721 5,487

EUR 1,000 Note 1 Jan–31 Dec 2015 1 July–31 Dec 2014

Other comprehensive income including tax effects

Items that will not be reclassified to profit or loss

Items resulting from remeasurement of the defined benefits-based net liability (or asset item) 1,979 -1,512

1,979 -1,512

Items that may be subsequently reclassified to profit or loss

Translation differences from foreign subsidiaries 1 -1

Cash flow hedges -158 -907

-157 -908

Other comprehensive income net of tax 1,823 -2,420

Comprehensive income for the financial year 8,543 3,068

Result for the period and comprehensive income for the period belong to the parent company shareholders

CONSOLIDATED INCOME STATEMENT AND CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME, IFRS


45

EUR 1,000 Note 31/12/15 31/12/14

ASSETS

Non-current assets

Property, plan and equipment 15 54,583 56,829

Goodwill 16 82,829 83,154

Other intangible assets 18 2,203 1,723

Financial assets available-for-sale 20 2,116 2,083

Deferred tax assets 24 2,778 3,739

Non-current assets, total 144,509 147,529

Current assets

Inventory 21 17,544 19,876

Accounts and other receivables 22 61,335 59,555

Cash and cash equivalents 23 42,867 37,650

Current assets, total 121,746 117,081

Assets, total 266,256 264,610

EUR 1,000 Note 31/12/15 31/12/14

EQUITY AND LIABILITIES

Equity attributable to equity holders of the parent company 25

Share capital 80 80

Invested unrestricted free equity fund 38,000 38,000

Hybrid loans 27,000 29,000

Other items -1,064 -908

Retained earnings 9,281 2,493

Equity, total 73,297 68,666

Non-current liabilities

Deferred tax liabilities 24 1,549 956

Pension liabilities 30 186 2,750

Provisions 31 13,157 13,801

Financial liabilities 26 64,916 64,399

Other liabilities 27, 29 2,708 1,100

Non-current liabilities, total 82,517 83,006

Current liabilities

Accounts and other payables 28 73,264 75,303

Provisions 31 5,461 5,941

Financial liabilities 26 392 471

Advances received 31,326 31,224

Current liabilities, total 110,442 112,938

Equity and liabilities, total 266,256 264,610

CONSOLIDATED BALANCE SHEET, IFRS


46

CONSOLIDATED CASH FLOW STATEMENT, IFRS

EUR 1,000 1 Jan–31 Dec 2015 1 July–31 Dec 2014

CASH FLOWS FROM OPERATING ACTIVITIES

Cash receipts from customers 465,760 262,555

Expenses paid to suppliers and personnel -450,216 -239,667

Interest paid -3,429 -1,678

Dividends received 3

Interest received 63 38

Other financial items -362 -993

Tax paid -1,069 -2,275

Net operating cash flow 10,751 17,980

CASH FLOWS FROM INVESTING ACTIVITIES

Investments in intangible and tangible assets -8,827 -4,874

Sale of intangible and tangible assets 6,808 2,212

Subsidiary shares acquired -87,532

Investments in other assets -440

Proceeds from the sale of other investments 406

Net investment cash flow -2,053 -90,194

EUR 1,000 1 Jan–31 Dec 2015 1 July–31 Dec 2014

CASH FLOWS FROM FINANCING ACTIVITIES

Rights issue 80

Investment in Invested unrestriced free equity fund 38,000

Increase in non-current debt (+) 65,000

Increase in non-current financial instrument classified as equity instruments (+) 17,000

Decrease in non-current financial instrument classified as equity instruments (-) -2,000

Increase in short-term financing (+) 9,000

Decrease in short-term financing (-) -15,781

Interests and other financial items paid -1,482 -3,426

Net financial cash flow -3,482 109,873

Change in cash and cash equivalents 5,216 37,659

Cash and cash equivalents at the beginning of the financial year 37,650

Effect of exhange rate changes 1 -9

Cash and cash equivalents at the end of the financial year 42,867 37,650


47

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY, IFRSEquity attributable to equity holders of the parent company

EUR 1,000 Share capitalHedge instrument

fund

Invested non-restricted

equity fund Hybrid loansTranslation differences

Retained earnings Total

Equity 1 July 2014

Other comprehensive income



Translation differences -1 -1


Items resulting from redefinition of the benefits-based net liability (or asset item) -1,512 -1,512

Comprehensive profit and loss for the financial year, total -907 -1 3,976 3,068

Transactions with owner after 1 July 2014

Rights issue 80 80

Investment in invested unrestricted free equity fund 38,000 38,000

Hybrid loans 29,000 29,000

Interest on hybrid loans -1,482 -1,482

Equity total 31 Dec 2014 80 -907 38,000 29,000 -1 2,493 68,666

Equity attributable to equity holders of the parent company

EUR 1,000 Share capitalHedge instrument

fund

Invested non-restricted

equity fund Hybrid loansTranslation differences

Retained earnings Total

Equity 1 Jan 2015 80 -907 38,000 29,000 -1 2,493 68,666




Translation differences 1 1


Items resulting from redefinition of the benefits-based net liability (or asset item) 1,979 1,979

Comprehensive profit and loss for the financial year, total -158 1 8,700 8,543

Transactions with owner

Amortisation of hybrid loan -2,000 -2,000

Group contribution to Ahlström Capital Oy -2,300 -2,300

Other changes 388 388

Equity total 31 Dec 2015 80 -1,064 38,000 27,000 9,281 73,297


48

BASIC INFORMATION ABOUT THE GROUPDestia Group Plc was established on 22 April 2014 in connection with the ownership arrangement of Destia Ltd and owns 100% of Destia Ltd’s shares. The Destia Group has continued the business operations of Destia subgroup (Destia). Destia is a Finnish infrastructure and construction service company, which plans, builds and maintains traffic routes and industrial and traffic environments as well as complete living environments. Our services cover the whole spectrum, from overground op-erations to subterranean construction. The Group mainly operates in Finland.

The Group’s parent company is Destia Group Plc. The parent company is located in Vantaa, c/o Destia Oy, PO BOX 206, 01301 Vantaa. Destia Group Plc is owned by AC Infra Oy, which is part of the Ahlström Capital Group.

A copy of the Consolidated Financial Statements is available at www.destia.fi or from Destia Ltd’s head office at Neilikkatie 17, 01300 Vantaa.

On 11 February 2016, Destia Group Plc’s Board of Directors authorised these financial statements for issue in their entirety. Under the Finnish Limited Liability Companies Act, shareholders may approve or reject the financial statements at the General Meeting held following their publication. The Gen-eral Meeting may also take the decision to amend the financial statements.

1. ACCOUNTING PRINCIPLES

Basis of accountingThe Destia Group’s consolidated financial state-ments were prepared in accordance with the In-ternational Financial Reporting Standards (IFRS) and the preparation abided by the International Ac-counting Standard (IAS) and International Financial Reporting Standards (IFRS) as well as the inter-pretations by the Standing Interpretations Com-mittee (SIC) and International Financial Reporting Interpretations Committee (IFRIC) in force as at 31 December 2014. The International Financial Report-ing Standards refer to the standards approved in

the Finnish Accounting Act and provisions issued by virtue of it to be adopted in the EU in accordance with the procedure regulated by the EU regulation (EC) no 1606/2002 and the subsequent interpre-tations. The notes to the consolidated financial statements are also in line with the requirements of the Finnish accounting and Community legislation supplementing the IFRS regulations. As the Des-tia Group Plc was established in connection with the ownership arrangement of Destia, comparative figures do not exist for the Destia Group except for the latter half of the year.

The consolidated financial statements and its notes report on the financial development of the Destia Group from 1 Jan to 31 Dec 2015 and, with regard to the prior period, from 1 Jul to 31 Dec 2014.

The Consolidated Financial Statements were prepared under the historical cost convention, with the exception of assets held for sale, financial as-sets and liabilities recognised at fair value through profit or loss, and fair value hedges, which are measured at fair value. The Consolidated Financial Statements are presented in thousands of euros.

Preparing the Consolidated Financial State-ments in accordance with IFRS requires manage-ment to make certain estimates and have infor-mation relating to the decisions the management has taken. Information relating to these decisions, used in the application of the Group’s accounting policies, and which significantly affect the amounts recognised in the financial statements, is given in the section entitled ‘Accounting policies requiring management judgement and the main factors of uncertainty connected with the estimates made’.

Basis of consolidation

SubsidiariesSubsidiaries are entities controlled by the Group. The Group controls an entity when it is exposed to, or has rights to, variable returns from its involve-ment with the entity and has the ability to affect those returns through its power over the entity.

Intra-Group shareholdings are eliminated using the acquisition method. The consideration trans-ferred, the acquired company’s identifiable assets and liabilities are measured at fair values. Expenses relating to the acquisition are recognised as costs. The consideration transferred does not include transactions treated separately from the acquisi-tion. Their effect is accounted for through profit or loss at the time of the acquisition. Any contingent consideration is measured at its fair value at the acquisition date, and is classed either as a liability or equity. Contingent consideration classed as a liability is measured at fair value at each reporting date, and the resulting profit or loss is recognised through profit and loss or as other comprehensive income. Contingent consideration, which has been classified as equity is not remeasured. Acquired subsidiaries are consolidated from the date the Group has acquired control, and transferred sub-sidiaries until that control ceases. All of the Group’s internal commercial transactions, receivables, lia-bilities, unrealised gains and internal profit distri-bution are eliminated on consolidation. Unrealised losses are not eliminated if the loss is due to im-pairment. Changes to the parent company’s share of ownership in the subsidiaries that do not lead to a loss of control are treated as equity accounted transactions.

Joint arrangementsJoint arrangements are arrangements in which two or more parties have joint control. Joint control is the contractually agreed sharing of control of an ar-rangement, which exists only when decisions about the relevant activities require the unanimous con-sent of the parties sharing control. Joint arrange-ments are either a joint operation or a joint venture.

A joint venture is an arrangement in which the group has rights to the net assets of the arrange-ment, whereas in a joint function, the group has rights concerning the assets and obligations con-cerning the liabilities related to the arrangement. The group’s consortia are joint operations from which the group has consolidated its own assets,

liabilities, earnings and costs, as well as its own share of joint assets, liabilities, earnings and costs.

Changes to items denominated in foreign exchangeThe results and financial position of the units in the Group are denominated in the currency at the unit’s main operating environment (‘functional currency’). The numbers in the Consolidated Financial State-ments are presented in euros, which is both the functional and presentation currency of the Group’s parent company.

Commercial transactions denominated in foreign exchangeCommercial transactions denominated in a foreign currency are converted to in the functional cur-rency at the rate on the date of the transaction. For practical reasons, a rate that approximates the actual rate at the date of the transaction is often used. Monetary items denominated in a foreign currency are converted to the functional currency using the closing rate at the end of the reporting period. Non-monetary items denominated in a for-eign currency, and which are measured at fair val-ue, are converted to the functional currency using the exchange rates at the date on which fair value is measured. Otherwise, non-monetary items are measured at the exchange rate on the date of the transaction.

Gains and losses from commercial transactions denominated in a foreign currency and changes to monetary items are recorded through profit or loss. Exchange rate gains and losses from the business operation are included in equivalent items above operating profit. Exchange rate gains and losses from loans denominated in foreign currencies are included as financial income and expenses, to the extent that these loans are effective in protecting net investment in foreign units. These exchange rate differences are recognised in other compre-hensive income, and accumulated exchange rate differences are disclosed in separate component

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS


49

of equity, until the foreign unit is partially or wholly disposed of.

Conversion of the financial statements of foreign companies in the GroupItems in the statements of comprehensive income including the income statements of foreign group companies are converted to euros at the exchange rates on the dates on which the commercial trans-actions take place, while the numbers in the balance sheets are converted using the exchange rates on the date on which the reporting period ends. The translation of the profit and loss items, causes a translation difference in equity on the balance sheet due to the different foreign exchange rates used. This difference is recorded in ‘Other comprehensive profit and loss items’. Translation differences arising from the elimination of the acquisition cost of for-eign subsidiaries and the conversion of equity items accumulating after an acquisition are recognised in other comprehensive income. If a subsidiary is sold wholly or partially, the accumulated translation differences are reclassified to profit or loss as part of the profit or loss from sales.

Property, plant and equipmentProperty, plant and equipment are measured at cost less accumulated depreciation and impair-ment losses.

A cost comprises the expenditure incurred di-rectly from acquiring an item of property, plant and equipment, including the costs of dismantling or moving the asset based on the initial estimate, and of restoring the location to its original state, if the organisation has such an obligation. The costs of an asset that have been produced by the company itself includes the costs of materials, direct costs relating to employee benefits and other direct costs of preparing the asset for its intended use. When preparation of an asset for its intended purpose or sale requires a good deal of time, the direct borrow-ing costs of its acquisition, construction or produc-tion are capitalised as part of its acquisition costs.

If an asset consists of more than one part, and the lifespan of these parts vary in length, each part is accounted for as a separate commodity. In such cases, expenditure for the replacement of the part is capitalised and any book value remaining when

that replacement takes place is derecognised. Ex-penditure incurred at a later date is only included in the book value of a property, plant and equipment only if it is probable that the future economic bene-fits associated with the expenditure will flow to the group and the acquisition cost of the commodity can be reliably determined. Other repair and main-tenance costs are recognised as incurred. Assets are depreciated during their estimated useful life on a straight-line basis. The exception to this is areas of soil, depreciation on which is calculated according to expected use. No depreciation is cal-culated for land.

Estimated useful lives are as follows:• Buildings: 10–40 years• Machinery and equipment: 3–20 years• Other items of property, plant and equipment:

according to use

An asset’s residual value and its useful life are re-viewed at the end of each financial year, at the very least, and, where necessary, are adjusted to reflect the changes that have taken place with regard to the expectations of its future economic benefit. When a tangible fixed asset is classified as held for sale in accordance with IFRS 5 Non-current Assets Held for Sale and Discontinued Operations, asset is no longer subject to depreciation. The gains and losses from the sale of decommissioned property, plant and equipment or their disposal are recognised in profit and loss.

Government grantsGovernment/public subsidies are recorded through profit and loss when there is a reasonable assur-ance that they will be received. Subsidies that have been received as payments against already realised costs are recognised through profit or loss in the period in which the subsidy is received. Subsidies are presented in other operating income.

Intangible assets

GoodwillGoodwill is recognised at the amount by which the consideration transferred exceeds the Group’s share of identifiable fair value net assets for an acquired company on the date it is acquired. No

deprecation is recognised on goodwill (or any other intangible assets with indefinite useful lives), it is tested annually for potential impairment. For this purpose, goodwill is allocated to the relevant group of cash-generating units. Goodwill is measured at cost less accumulated impairment losses.

Research and development expenditureResearch expenditure is recognised through profit or loss. Development expenditure incurred from the planning of new or more advanced procedures and concepts is capitalised as intangible assets in the balance sheet from the time when they are technically feasible, can be commercially exploited and can be expected to generate probable future economic benefits. Capitalised development costs include the material, labour and testing costs which are directly incurred when preparing the commod-ity for its intended purpose. Previously amortised development costs are no longer recognised at a later date. Amortisation begins when the asset is available for use. Assets under development are tested annually for impairment. After initial recogni-tion, capitalised development costs are measured at the cost less accumulated amortisation and im-pairment.

Other intangible assetsAn intangible asset is entered on the balance sheet at its original acquisition cost, when the cost can be reliably determined and where the Group expects it is likely that future significant benefit from the asset will flow to the group.

Intangible assets with a finite useful lives are amortised on a straight-line basis through profit or loss over their known or estimated useful life.The estimated useful lives for other intangible as-sets are: • Computer software: 5 years• Other intangible rights: 5 years

InventoryInventory is measured at the lower of acquisition cost or net realisable value. The acquisition cost is determined using the weighted average cost formu-la. The acquisition cost of finished goods and work in process inventories consists of the raw materials, expenses incurred from direct work, other direct ex-

penses, an appropriate share of the variable general costs of manufacture and fixed general costs at a normal level of activity. The net realisable value is the estimated selling price in the ordinary course of business less the estimated costs necessary for completion and the to realise a yield.

Lease agreements

The Group as lesseeLease agreements relating to property, plant and equipment, under which the Group has substantially all the risks and rewards of ownership, are classified as finance lease agreements.

An asset acquired through a finance lease agree-ment is entered on the balance sheet at inception of the lease at the lower of fair value of the leased asset and the present value of the minimum lease payments.

An asset acquired through a finance lease agree-ment is depreciated over the shorter of its useful life or within the lease term. Lease payments are apportioned between the finance charge and the reduction of the outstanding liability so that the fi-nance charge is allocated to each period during the lease term to produce a constant periodic rate of interest on the remaining balance of the liability. Rental obligations are included in financial liabilities.

Leases where a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. Payments made under operating leases are charged to the income statement on a straight-line basis over the period of the lease.

The Group as lessorAssets let by the Group are included as property, plant and equipment on the balance sheet. They are depreciated during their useful life in the same way as equivalent items of property, plant and equipment which are used by the Group. Revenue from lease agreements is charged to the income statement on a straight-line basis over the period of the lease.

Impairment of tangible and intangible assetsAt the end of each reporting period ends, the Group assesses whether there are indications that an asset


50

is impaired. If there is evidence of impairment, an estimate is made of the assets recoverable amount. In addition, an estimate is made each year for the following: goodwill, intangible assets with an indef-inite useful life and intangible assets in progress.

Evidence of impairment is examied for each cash generating unit, i.e. at the lowest unit level, which is mainly independent of the other units and whose cash flows can be distinguished from the cash flows of equivalent units. The recoverable amount is the greater of the fair value of the asset less costs of sale or its value in use. The value in use is the present value of future net cash flows expected to be derived from an asset or cash-gen-erating unit. Discounting has been performed in accordance with IAS 36.

An impairment loss is recognised when the car-rying amount of an asset is greater than its recov-erable amount. An impairment loss is recognised directly through profit or loss. If the impairment loss is allocated to a group of cash-generating units, it is first applied to reduce the goodwill of the group of the cash-generating units. When an impairment loss is being entered, the useful life of the asset being depreciated is re-assessed. An impairment loss for an asset, other than goodwill, is reversed if there has been a change in the values used to determine the recoverable amount on the asset. Impairment losses, however, cannot be reversed to the extent that the asset’s carrying amount would be greater than of no impairment loss had been recognised. Under no circumstances can impairment losses recognised for goodwill be reversed.

Employee benefits

Pension obligationsPension schemes are classified as defined benefit plans or defined contribution plans. Under the de-fined contribution plan the Group pays fixed contri-butions into a separate unit. The Group has no legal or constructive obligation to increase contributions if the organisation in receipt of the contributions is unable to pay the relevant pension benefits. All schemes that do not fulfil these conditions are de-fined benefit plans. Contributions made into defined contribution plans are recognised through profit or

loss in the financial year in which the obligation arises.

The Group’s obligations regarding defined ben-efit plans are calculated separately for each plan by using the projected unit credit method.

Pension expenses are recognised as costs on the basis of authorised actuarial calculations for the length of service of personnel. When the present value of a pension obligation is being calculated, the discount rate used is the return on high-qual-ity bonds issued by companies, and if that is not available, the interest on state debentures. The ma-turity of bonds and debentures corresponds to the maturity of the pension obligation being calculated. From the present value of a pension obligation on a balance sheet is subtracted the assets included in the pension plan measured at fair value at the end of reporting period and the non-vested past service costs.

Past service costs are recognised on the straight-line basis through profit or loss for the pe-riod in which they are vested. If the benefits are vested directly, they are recognised as direct costs.

Provisions and contingent liabilitiesProvisions are recognised when the Group has a present legal or constructive obligation as a result of past events, it is probable that an outflow of re-sources will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation. Provisions are stated at the present value of the liability. Provisions are determined by discounting the expected future cash flows that reflects current market assessment of the time value of the money and risks specific to the liability. If the Group expects a provision to be reimbursed, by a third party the reimbursement is recognised as a separate asset if it is virtually certain that reim-bursement will be received.

A warranty provision is recognised when a pro-ject covered under a guarantee clause is delivered. The amount of the warranty provision is based on an experience-based estimate of the guarantee costs likely to be incurred.

The Group recognises a provision for onerous contracts when the expected benefits to be derived from a contract are less than the unavoidable costs of meeting obligations under it.

A reorganisation provision is recognised when the Group has drawn up a detailed reorganisation plan, started to implement the plan and reported the matter.

A provision associated with environmental ob-ligations is recognised when the Group has an ob-ligation based either on environmental legislation or the Group’s principles of environmental respon-sibility and which relates to the decommissioning of a production plant, landscaping responsibilities, repairing environmental damage or moving equip-ment from one location to another.

A contingent liability is a possible obligation arising as a result of past events and whose ex-istence will be confirmed only when an uncertain event takes place not wholly within the control of the entity. Contingent liabilities may also be regarded as present obligations that are unlikely to require fulfil-ment of a payment obligation, or a reliable estimate of the amount of the obligation cannot be made. A contingent liability is presented in the Notes to the Financial Statements.

Income tax for the current period and deferred taxesTax expenses comprise tax based on taxable in-come for the period and deferred tax. Income tax is recognised through profit or loss, except for taxes related to items recognised directly in equity or the comprehensive income, tax is recognised in the relevant items. Tax for the current period is calculated using the income tax rate effective in each country. Deferred taxes are calculated on all temporary differences between the carrying amount and tax base. However, no deferred tax liability is recognised if it arises from the initial recognition of an asset or liability in a transaction which is not a business combination and at the time of the trans-action affects neither accounting profit or taxable profit.

Deferred tax liability is recognised for invest-ments in subsidiaries, except to the extent that the Group is able to control the timing of the reversal of the temporary difference and it is not probable that the temporary difference will not resolve in the foreseeable future.

The most significant temporary differences arise from the depreciation of property, plant and equip-

ment, the measurement of derivative contracts at fair value, defined benefit pension plans and unused tax losses.

Deferred taxes are calculated using the statutory tax rates or the tax rates which have been approved in practice by the end of reporting period. Deferred tax assets are recognised to the extent that it is probable that taxable profit will be available against which the temporary difference can be utilised.

Revenue recognitionSales (Turnover) are presented in such a way that the revenue from the sales of goods and services at fair value are recognised and adjusted to allow for indirect taxes, discounts and exchange rate dif-ferences for sales in foreign currencies.

Construction contractsThe revenue and costs associated with the con-struction contract are recognised as such with refer-ence to the stage of completion, when the outcome of the project can be estimated reliably. The stage of completion is determined for each project as the percentage of costs incurred the review date com-pared with the total estimated costs for the project.

Expenditure that relates to a project which has not been entered as income, is recognised as long-term projects in progress under inventory. If the expenditure incurred and recognised gains exceed the amount invoiced for the project, the difference is shown under accounts and other receivables on the balance sheet. If the expenditure incurred and recognised gains are less than what is invoiced for the project, the difference is shown under accounts payable and other liabilities. When the outcome of a construction contract cannot be estimated reliably, the contract costs are recognised as expense in the period in which they are incurred, and revenue is recognised only to the extent of contract costs incurred that it is probable will be recoverable. If it is probable that the total expenditure incurred in completing the project will exceed total revenue from it, the expected loss is recognised as an ex-pense immediately.

Sold goods and servicesRevenue from the sale of goods is recognised when the significant risks, rewards and effective control


51

associated with the ownership of the goods have been transferred to the buyer. As a general rule, this takes place at the time of the delivery in accord-ance with the terms of the contract. Revenue from services is recognised as revenue in the financial year in which the service is delivered.

Interest and dividendsInterest received is recognised using the effective interest rate method. Dividend income is recognised when the right to receive payment is established.

Non-current assets held for sale and discontinued operationsNon-current assets (or a disposal group) and assets and liabilities relating to discontinued operations are classified as held for sale, if their carrying amount will be recovered principally through the sale of the assets rather than through continuing use. For this to be the case, the sale must be highly probable, the asset (or disposal group) must be available for immediate sale in its present condition, subject only to terms that are usual and customary, the management must be committed to selling and the sale should be expected to qualify for recognitionas a completed sale within one year from the date of classification.

Immediately prior to classification, the assets held as for sale or assets and liabilities of a dispos-able group are measured in accordance with the IFRS standards to be applied. From the time of the classification, assets held for sale (or a disposable group) are measured at the lower of their carrying amount or fair value less the expenditure incurred from their sale. Depreciation of these assets ceases at the time of classification as held for sale.

Assets included in a disposable group - and not under in the scope of the IFRS 5 valuation rules - and liabilities (in a disposable group) continue to be measured in accordance with the IFRS standards after the classification date.

A discontinued operation is a component of the Group which has been disposed of or which has been classified as held for sale, and which meets the following conditions: it is a significant separate business unit or unit representing a geographical area of operations, part of a coordinated plan re-lating to the disposal of a separate major line of

business or geographical area of operations, or a subsidiary acquired exclusively with a view to re-sale. The financial result for discontinued operations is recognised as its single amount in the Group’s statement of comprehensive income. Assets held for sale, disposable groups, items recognised in other comprehensive income relating to assets held for sale, and liabilities included in a disposable group are presented in the balance sheet separately from other items.

Financial assets and liabilities

Financial assetsThe Group classifies financial assets in the following categories: financial assets at fair value through profit or loss, held-to-maturity investments, loans and receivables and available-for-sale financial as-sets. The classification depends on the purpose of the acquisition of the financial assets, and they are classified upon initial recognition.

Transaction costs are included in the carrying amount of financial assets, in case of an item that is not measured at fair value through profit or loss. All purchases and sales of financial assets are rec-ognised on the trade date, which is the date that the Group commits itself to purchase or sell an asset. The derecognition of financial assets when following conditions are met: the Group has lost the contractual rights to the cash flows, or when it has transferred substantially risks and rewards of ownership outside the Group.

Financial assets at fair value through profit or loss category include financial assets acquired to be held for trading, or financial assets, which are upon initial recognition designated as at fair value through profit or loss (use of fair value option). The latter includes financial assets which are part of a group of financial assets, financial liabilities or both that are managed based on fair values. It may also include financial assets containing one or more embedded derivatives that modify the contractual cash flows significantly. In this case the entire hy-brid contract may be designated as at fair value through profit or loss. Financial assets designated upon initial recognition as at fair value through profit or loss shall not be reclassified after initial recog-nition. Financial assets held for trading are mainly

acquired to control changes in short-term market prices. Derivatives that are not financial guarantee contracts or do not qualify for hedge accounting are classified as held for trading. Derivatives that are held for trading and financial assets maturing within 12 months are included in current assets.

Group items are measured at fair value, based on the quoted market prices at the end of the re-porting period. The fair values of interest rate swaps are determined as the present value of future cash flows and foreign exchange forward contracts are measured at the exchange rates at the end of the reporting period. When measuring derivatives and other financial instruments that are not held for trading, the Group usually uses approved valua-tion methods and discounted values for future cash flows. Both unrealised and realised gains and losses from changes in fair value are recognised through profit or loss when they occur.

Loans and other receivables are non-derivative assets with fixed or determinable payments. They are not quoted in active markets and the Group does not hold them for trading or classify them as available-for-sale at initial recognition. Loans and other receivables are stated at amortised cost using the effective interest rate method. Loans and other receivables are presented as current or non-current financial assets depending on their nature, the latter with a maturity greater than 12 months.

Available-for-sale financial assets are non-de-rivative financial assets specifically that are des-ignated as available for sale or not designated in any other. They are included in non-current assets, except if they are to be held for under 12 months from the last day of the reporting period, in which case they are included in current assets.

Available-for-sale financial assets may consist of shares and interest-bearing investments. They are measured at fair value or, when fair value can-not be reliably measured, at cost. The fair value of an investment is determined with reference to its buying rate. If there are no quoted rates for availa-ble-for-sale financial assets, the Group applies var-ious valuation methods which include, for example, references to recent trades between independent bodies, discounted cash flows or valuations for other similar instruments. Information obtained from the markets is generally used for valuations

as opposed to using pricing factors determined by the Group itself, which are used as little as possible.

Changes in the fair value of available-for-sale financial assets are recognised in other compre-hensive income, and are presented in the fair value fund, with consideration being given to tax conse-quences. The cumulative gain or loss is reclassified from other comprehensive income to profit or loss when an investment is sold or its value is impaired so that an impairment loss on the investment should be recognised. Interest on available-for-sale debt instruments is recognised in finance income using the effective interest rate method.

Cash and cash equivalentsCash and cash equivalents comprise cash bal-ances, call deposits and other short-term highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value. The items classified as cash and cash equivalents have a ma-turity of no more than twelve months from the time of acquisition.

Impairment of financial assetsThe Group reviews at each reporting date wheth-er there is any objective indication that a financial asset or group of financial assets is impaired. If the fair value of investments is significantly lower than the acquisition cost and period determined by the Group, this is an indication of an impair-ment of financial assets available-for-sale. If any such indication exists, the previously recognised impairment loss in fair value reserve is recognised in the income statement. An impairment loss on an available-for-sale equity instrument shall not be reversed through profit or loss. An impairment loss on an interest rate instrument is, however, reversed through profit or loss.

The Group recognises an impairment loss on accounts receivables, when there is objective evi-dence that a receivable is not fully collectible. The borrower’s significant financial difficulties, proba-bility of a bankruptcy, default of payment or delay in payment exceeding 90 days are considered as indications of impairment loss on a accounts re-ceivable.


52

Financial liabilitiesFinancial liabilities are recognised at fair value upon initial recognition. Transaction costs are included in the initial carrying amount of financial liabilities measured at amortised cost. Subsequently, finan-cial liabilities, except for derivative financial liabil-ities, are measured at amortised cost using the effective interest rate method. Financial liabilities are classified in non-current and current liabilities. Financial liabilities are classified as current unless the Group has an unconditional right to defer settle-ment of the liability within at least 12 months from the reporting date.

Borrowing costs are recognised as costs in the period in which they are incurred. Commissions associated with loan commitments are recognised as transaction costs to the extent that it is probable that the entire loan commitment or part of it will be drawn. In such a case, the commission is entered in the balance sheet until the loan is drawn. The commission associated with loan commitments is recognised as part of the transaction costs. If the loan commitment is unlikely to be drawn, the com-mission is recognised as an advance payment for a liquidity service and is amortised over the period of the loan commitment.

Derivative financial instruments and hedge accountingDerivatives are initially measured at fair value on the date the derivative contract is entered into and are subsequently measured at fair value. Gains and losses resulting from measurement at fair value are treated in the accounts in the way specified by the purpose of the derivative instrument. If the deriv-atives are used for hedging purposes, hedge ac-counting is applied and the derivatives are effective hedging instruments, the profit and loss effects of the fair value changes of the derivative instruments are presented uniformly with the hedged item. When entered into, derivative financial instruments are treated as fair value hedges of receivables, liabilities or fixed commitments, or, in the case of curren-cy exchange risk, as cash flow hedges, cash flow hedges for an anticipated and highly likely commer-cial transaction, or as hedges of net investments in a foreign unit. Derivative financial instruments may

also be treated as instruments that do not meet the hedge accounting criteria.

When a hedging relationship is entered into, the relationship between the item being hedged and the hedging instrument, as well as the objectives of the Group’s risk management and the hedging strategy are documented. The effectiveness is as-sessed prospectively as well as retrospectively, and at least every time the financial accounts are being prepared. The Group documents the effectiveness of qualifying derivatives by examining their ability to offset changes to the fair value of the hedged item or cash flows.

Cash flow hedgingThe change in the fair value of the effective portion of derivative instruments qualifying for cash flow hedge is recognised in other comprehensive in-come and presented in the hedge fund under equity (in Other funds). The gains and losses accumulated in equity from hedging instruments are reclassified to profit or loss when the hedged item impacts the profit or loss. Gains and losses from derivatives hedging an anticipated sale in a foreign currency are recognised as sales adjustments when the sale takes place. The ineffective portion of a derivative instrument is recognised in other operating income and expenses. If a hedged, anticipated commercial transaction leads to the recognition of an asset not included in financial assets, such as a tangible fixed asset, the gains and losses accumulated in equity are reclassified as an adjustment to the acquisition cost of that asset. When a derivative financial instru-ment acquired for cash flow hedging matures or is sold, or when the conditions of hedge accounting are no longer met, the gain or loss from the deriva-tive instrument remains under equity until such time as the anticipated commercial transaction takes place. However, if that is no longer expected to happen, the gain or loss under equity is directly reclassified to profit or loss.

Other hedging instruments where hedge ac-counting does not applyEven if certain hedging relationships meet the re-quirements of effective hedging set for the Group’s risk management, hedge accounting may not ap-ply to them. Such instruments include derivatives

hedging a commodity risk in connection with op-erations and some derivatives hedging currency risks. Changes on their fair values are recognised in other business revenue and costs in accord-ance with the Group’s established practice. In the balance sheet, these commodity risk and foreign currency accounts receivable / accounts payable derivatives are presented in current receivables or liabilities. The fair values for hedging instruments are presented in Notes to the Financial Statements under Fair values for financial assets and liabilities. Changes in the hedge fund are presented in Notes to the Financial Statements under Equity, in the section Other funds.

Share capitalOrdinary shares are presented as share capital. Ex-penditure relating to the issue or acquisition of own equity instruments are presented as an allowance account under equity.

Operating profitIAS 1 Presentation of Financial Statements does not define operating profit. The Group has defined it as follows: operating profit is the net sum obtained after adding other operating income to revenues and then deducting purchasing costs adjusted by the change in stocks of finished products and work in progress, the costs incurred for own-use man-ufacture, costs from employee benefits, deprecia-tion, amortisation and any impairment losses, and other operating expenses. All other income state-ment items are presented under operating profit. Exchange rate differences and changes in the fair value of derivatives are included in operating profit if they arise from items connected with business operations; otherwise they are entered in financing items. In its tables and texts, the Group uses both the term ‘operating result’ and ‘operating profit’.

Key estimates and assuptions and accounting policies requiring judgementThe preparation of the consolidated financial state-ments in conformity with IFRS requires estimates and assumptions regarding future from manage-ment even though actual outcomes may differ from the estimates. In addition, the application of the accounting principles requires judgement.

Accounting policies requiring judgement by management Group management makes decisions regarding the selection and application of accounting policies. This applies in particular to those cases in which the IFRS standards in effect provide the opportunity to choose between alternative accounting, valuation or presentation methods.

Sources of estimation uncertaintyThe estimates made in connection with preparing the financial statements reflect the best judgement of the management at the end of reporting period. These estimates are based on prior experience and assumptions regarding future developments, which are regarded as most likely at the reporting date, for example, to expected trends in the Group’s economic operating environment in terms of rev-enue and costs. The Group regularly monitors the realisation of these estimates and assumptions and any changes to underlying factors with the busi-ness units through internal and external information sources. Any changes in estimates and assump-tions are recognised in the financial statements of the period during which such adjustments are made.

The key assumptions regarding the future and the main sources of estimation uncertainty at the end of reporting period, which pose a significant risk of resulting in a a material adjustment to the carrying amounts of the Group’s assets and liabili-ties within the next financial year, are given below. Group management regards these particular areas of the financial statements as crucial. Application of these accounting policies requires the utilisation of significant estimates and assumptions.

Impairment testingThe Group performs annual impairment testing of goodwill, intangible assets in progress and in-tangible assets having an indefinite useful life. In-dications of impairment are evaluated in the way described above in the accounting policies. The recoverable amounts of cash-generating units have been defined on the basis of value in use calcula-tions. Preparation of these calculations, involve the use of estimates.


53

Revenue recognitionAs described in the revenue recognition policies, the contract revenue and contract costs associ-ated with construction contract are recognised as revenue and expenses by reference to the stage of completion, when the outcome of the project can be reliably estimated. Recognition associated with the stage of completion is based on estimates of expected revenue and expenses of the project and reliable measurement of project progress. If estimates of the project’s outcome change, the rec-ognised revenue and profit/loss are amended in the period in which the change can be estimated for the first time. Any loss expected from a construction contract is directly recognised as an expense.

TaxWhen tax is recognised, management’s most es-sential estimate relates to the criteria for recording deferred tax assets. When a tax-deductible tempo-rary difference dissolves, it results in less taxable income in subsequent financial period. The most common temporary difference relates to between taxation and accounts is a loss in taxation. Man-agement has to estimate whether future taxable profits will be available against which such losses can be used. A deferred tax asset is only recognised on losses to the extent that there is an estimated income to be generated in subsequent financial periods, against which the company can use its tax losses.

Employee benefitsThe factors used to calculate employee benefit obli-gations that require the management’s assessment are connected, for example, to an estimate of the expected return on plan assets in defined benefit pension plans, determining the discount rate used to calculate the pension cost and obligation for the financial year, forecasting future trends in pay, the expected rise in pension costs, expected lengths of service of personnel, and inflation trends.

ProvisionsWhen recognising provisions, the management has to assess whether there is a legal or constructual obligation for which the payment is probable. In addition, they have to assess the amount of the

obligation and estimate the time when it is realised. The obligation is recognised as a provision in the financial statements in case it can be measured reliably.

As of 1 January 2015, the Group has applied the following new and amended standards and interpretations: IAS 19 Amendment to Employee Benefits - Defined Benefit Plans: Employee Contributions. The amend-ments clarify the accounting treatment under IAS 19 in respect of defined benefit plans that involve contributions from employees or third parties to-wards the cost of benefits. The amendments to this standard have not affected the consolidated financial statements.

The annual improvements made to IFRS stand-ards 2010-2012 and 2011-2013. The impacts of the changes vary by standard, but are not significant.

Application of the new and amended IFRS standardsIASB has published the following new or revised standards, which the Group has not yet applied. The Group will adopt them from the effective date of each standard and interpretation or, if the effective date is not the first day of a financial period, from the start of the financial period following the effective date. In the opinion of the Group, other standards or interpretations published by IASB but not listed here will have no impact on the future consolidated financial statements. The standards have not been approved by the EU.

IAS 1 Amendment to Disclosure Initiative, con-cerning the presentation of accounting principles and notes in financial statements (in force from 1 January 2016 and financial periods beginning thereafter).

IFRS 15 Revenue from Contracts with Custom-ers (in force from 1 January 2018 or from financial periods beginning thereafter). This new standard includes a five-stage set of guidelines on the rec-ognition of revenue received based on customer contracts, and replaces the present IAS 18 and IAS 11 standards and related interpretations. The recognition of revenue may take place within a pe-riod of time or at a certain point in time, and the key criterion is the transfer of control. The standard

also increases the number of notes to the financial statements. The Group will assess the impact of this standard.The standard has not been approved for application in the EU.

IFRS 9 Financial Instruments and amendments thereto (in force from 1 January 2018 or from fi-nancial periods beginning thereafter). This new standard replaces the present IAS 39 Financial Instruments: Recognition and Measurement. IFRS 9 amends the classification and measurement of financial assets and includes, for the assessment of the impairment of financial assets, a new model based on expected credit losses. For the most part, the classification and measurement of financial li-abilities meets the requirements of the present IAS 39. In terms of hedge accounting, there are still three types. More risk positions than previously can be included under hedge accounting and the prin-ciples of hedge accounting have been combined with risk management. The Group will assess the possible impact of this standard.

2. OPERATING SEGMENTS

In June 2015, Destia Group Plc listed on the stock exchenge of of Nasdaq Helsinki Oy through a MEUR 65 bond targeted at institutional investors. As a result, the Group has adopted IFRS 8 Oper-ating Segments reporting.

The chief operating decision-maker, Destia’s Board of Director (the Board), makes all major op-erative decisions. The HR Committee, the Audit Committee and the Board’s Advisory Committee, as well as the Chairperson of the Board together with the CEO, prepare and present proposals to the Board, on which the Board decides.

Destia’s business operations comprise of ser-vices covering the entire life cycle of the road and track network and other infrastructure projects from design through to implementation and upon maintenance. Destia’s business structure is based on consistent business processes. Due to the na-ture and administrative structure of the company’s business, the operating segment reported is the entire Group.

The largest customer groups whose income is at least 10 per cent of the Group’s total revenue are:• the Finnish Transport Agency MEUR 109.8,

• the Centre for Economic Development, Transport and the Environment (ELY Centres) MEUR 154.5.

3. DIVESTED BUSINESS OPERATIONS

The sales of Destia’s measuring, drilling and labo-ratory services to Mitta Oy was concluded on 31 December 2015. As a result of the sale, 98 people working in the measuring, drilling and laboratory services were transferred to the service of Mitta Oy on 1 January 2016 as old employees.

The profit on this sale has been recorded as other operating income and a MEUR 0.3 decreases related to the sale of the laboratory services has been made in Destia’s goodwill.

No businesses were divested in 2014.


54

4. REVENUE

EUR 1,000 2015 1 July–31 Dec 2014

Revenue, materials 15,805 11,498

Revenue, services 27,965 17,245

Revenue, construction contracts 418,988 233,036

Revenue, total 462,758 261,780

5. CONSTRUCTION CONTRACTS

EUR 1,000 2015 1 July–31 Dec 2014

Aggregate amount of costs incurred and recognised profits (less recognised losses) 744,439 233,036

Advance payments received for ongoing projects 29,893 30,462

6. MATERIALS AND SERVICES

EUR 1,000 2015 1 July–31 Dec 2014

Purchases during the financial year 74,949 45,058

Change in inventory 2,332 2,311

External services 247,402 129,363

Materials and services, total 324,683 176,732

7. OTHER OPERATING INCOME AND EXPENSES

EUR 1,000 2015 1 July–31 Dec 2014

Profits from the sale of tangible assets, intangible assets and operations 5,167 891

Rental and other income 2,977 807

Other operating income, total 8,144 1,698

Losses from the sale of tangible and intangible assets 3 313

Rental expenses 5,057 2,007

Voluntary personnel expenses 3,406 2,214

Other fixed costs 27,639 18,129

Other operating expenses, total 36,105 22,663

Auditing expenses

Audit fees 80 61

Other services 46 2

Auditing expenses, total 126 62

8. DEPRECIATION

EUR 1,000 2015 1 July–31 Dec 2014

Despreciation by asset type

Depreciation of property, plant and equipment

Buildings and structures 643 345

Buildings and structures, financial lease 219 114

Machinery and equipment 6,533 3,562

Other tangible assets 981 350

Amortisation of intangible assets

Intangible rights 708 345

Depreciation and amortisation charges, total 9,085 4,715


55

9. IMPAIRMENTS

In 2015 and 2014 no impairments were made.Goodwill impairments are covered in Notes 16 and 17.

10. EMPLOYEE BENEFITS

EUR 1,000 2015 1 July–31 Dec 2014

Wages and salaries 71,453 37,935

Pension expenses, defined contribution arrangements 12,486 6,688

Pension expenses, defined benefit arrangements -89 30

Other personnel-related expenses 4,312 2,249

Employee related expenses, total 88,161 46,903

Information about employee benefits to the management is provided in Note 35, Related parties. Information about defined benefit pension arragements is provided in Note 30.

2015 1 July–31 Dec 2014

Average personnel

Waged employees 538 560

Clerical employees 966 942

Average personnel, total 1,505 1,502

Personnel at the end of the financial year 1,492 1,429

11. DEVELOPMENT EXPENSES

The total expenses relating to the Group´s development activities in 2015 came to MEUR 0.9 (2014: 0.5 MEUR). The Group has not capitalised its development expenses on the balance sheet.

12. FINANCIAL INCOME AND EXPENSES

EUR 1,000 2015 1 July–31 Dec 2014

Financial income

Dividends from financial assets held as available-for-sale 3

Changes in value of financial assets and liabilities recognised at fair value through profit and loss 64

Interest income from loans and other receivables 63 30

Total 130 30

Financial expenses

Interest expense from financial liabilities recognised at amortised cost 3,413 3,415

Changes in value of financial assets and liabilities recognised at fair value through profit and loss 253

Interest expense on financial leasing contracts 19 12

Other financial expenses 911 1,383

Total 4,343 5,063

Financial income and expenses, total -4,213 -5,033

Information about financing is provided in Note 32.


56

13. INCOME TAXES

EUR 1,000 2015 1 July–31 Dec 2014

Tax based on taxable income for the period 282 2,862

Taxes from previous periods 257

Deferred taxes 1,395 -917

Total 1,934 1,944

Comprehensive income items include EUR 39 thousand (2014: EUR 227 thousand) of deferred tax income which is arising on the cash flow hedging and deferred tax expenses of EUR 495 (2014: EUR 378 thousand deferred tax income) on defined benefit pension arrangements.

Reconciliation of the tax expense and taxes calculated using the Group`s domestic tax rate (20%)

EUR 1,000 2015 1 July–31 Dec 2014

Result before taxes 8,655 7,432

Taxes calculated using domestic tax rate 1,731 1,486

Different tax rates for foreign subsidiaries -15 7

Tax effect of tax-free items 119 -19

Tax effect of non-deductible items -158 469

Taxes from previous periods 257

Income taxes, total 1,934 1,944

14. EARNINGS PER SHARE

Basic earnings per share is calculated by dividing the net profit for the financial year attributable to the owners of the parent company, which is deducted by the interest on the hybrid loan adjusted for tax, with the weighted average of the shares.

EUR 1,000 2015 1 July–31 Dec 2014

Result for the financial year attributable to the parent company´s shareholders (EUR 1,000) 6,721 5,487

Accumulated interest of hybrid loans -2,787 -1,482

Tax effect 557 296

Net effect 4,491 4,302

Weighted average number of shares during the financial year (1,000) 80 80

Earnings per share (EUR/share) 56.14 53.77

The Group has no diluting instruments that would convert to ordinary shares.


57

15. PROPERTY, PLANT AND EQUIPMENT

EUR 1,000Land and water

areasBuildings and

structures

Buildings and structures, financial

leasingMachinery and

equipmentOther tangible

assets

Advance payments and construction in

progress Total

Acquisition cost 1 Jan 2015 2,440 6,734 690 29,593 21,279 457 61,193

Increases 27 67 54 5,138 929 2,596 8,812

Decreases -49 -168 -2,317 -9 -2,542

Transfers between items -1,061 -1,061

Acquisition cost on 31 Dec 2015 2,419 6,634 744 32,414 22,199 1,993 66,402

Accumulated depreciation on 1 Jan 2015 -345 -107 -3,562 -350 -4,364

Accrued depreciation for decreases and transfers 27 895 922

Depreciation -643 -219 -6,533 -981 -8,377

Accumulated depreciation on 31 Dec 2015 -961 -326 -9,200 -1,331 -11,819

Carrying amount 31 Dec 2015 2,419 5,673 417 23,214 20,868 1,993 54,583

EUR 1,000Land and water

areasBuildings and

structures

Buildings and structures, financial

leasingMachinery and

equipmentOther tangible

assets

Advance payments and construction in

progress Total

Acquisition cost 1 Jul 2014

Subsidiary acquisition 2,403 6,457 644 25,358 18,638 645 54,146

Increases 38 300 52 4,343 2,641 1,357 8,730

Decreases -26 -7 -1,603 -1,636

Transfers between items 3 1,495 -1,545 -47

Acquisition cost on 31 Dec 2014 2,440 6,734 690 29,593 21,279 457 61,193

Accumulated depreciation on 1 Jul 2014

Accrued depreciation for decreases and transfers 7 7

Depreciation -345 -114 -3,562 -350 -4,371

Accumulated depreciation on 31 Dec 2014 -345 -107 -3,562 -350 -4,364

Carrying amount 31 Dec 2014 2,440 6,390 583 26,031 20,929 457 56,829


58

16. GOODWILL

EUR 1,000 Goodwill

Acquisition cost 1 Jan 2015 83,154

Decreases -326

Acquisition cost 31 Dec 2015 82,829

Carrying amount 31 Dec 2015 82,829

EUR 1,000 Goodwill


Subsidiary acquisition 83,154

Acquisition cost 31 Dec 2014 83,154


17. IMPAIRMENT TESTS Impairment tests are performed annually on goodwill, by comparing the carrying amount of goodwill with the estimated value of its group of cash-flow-producing units. In addition, impairment testing is performed whenever there are any indications of impairment. An impairment loss is recorded if the carrying amount of the net assets allocated to the group of cash-flow-producing units (including goodwill) is greater than the estimated value of the group of cash-flow-producing units.

In 2014 and 2015, Destia Groups’ business units’ goodwill was included in Destia subgroup’s business entity:

MEUR 31 Dec 2015 31 Dec 2014

Destia subgroup 82.8 83.2

At the end of 2014 and 2015, impairment tests were performed on the Destia subgroup. Based on these tests, no impairment was recorded.

The estimated value of the group of cash-flow-producing units that have goodwill are based on calculations using assumptions.

The estimated value is determined by discounting the future cash flows generated by the units to the present value based on the assuption that the assets are continuously in use.

The calculation of working values is based on the following key assumptions:The cash flows used in the calculations are based on the 2016 budget which is approved by the Board in December and on the business plan for 2017-2018, drawn up in the autumn. These include the existing order book. The cash flows for future financial years were extrapolated using a terminal growth rate of 1.9% (1.8% in 2014), which reflects both the expected average growth rate and the effect of inflation. In the 2015 testing, the operating margin of the terminal year was normalised to correspond to the average of the above-mentioned years. Cash flows were discounted using the discounted interest rate specified after taxes. The discounted interest rates are based on the weighted average cost of capital (WACC).

Discounted interest rates (after taxes) used in 2015: 7.13% (2014: 7.53%)

The WACC has been determined using following assumptions:- Risk-free interest rate: The Finnish government 30-year risk-free interest rate on 31 December 2015

(10-year Finnish government bond, 31 December 2014- The liability profit requirement (before taxes) and the country-specific market risk premium, which is

the marginal for the company’s bond issued.- The control group’s market-based beta (the beta coefficient reflects the sensitivity of the value in

relation to value changes in the industry)

Sensitivity analyses for impairment testing:The estimated valuation of the Destia subgroup’s group of cash-flow-producing units exceeds the book value by MEUR 189.0 (2014: 88.4). The key assumptions used in the sensitivity analysis are related to the earnings before interest, taxes, depreciation and amortisation (EBITDA), the discounting interest rate and the working capital. When the other assumptions remain unchanged, an unfavourable change of more than three percentage points in Destia subgroup’s assumed EBITDA would require goodwill to be impaired. Similarly, when other assumptions remain unchanged, an unfavourable change of more than eight percentage points in the discounting interest rate would require goodwill to be impaired.


59

18. OTHER INTANGIBLE ASSETS

EUR 1,000 Intangible rightsAdvance

payments Total

Acquisition cost 1 Jan 2015 2,063 4 2,068

Increases 141 10 151

Decreases -24 -24

Transfers between items 1,061 1,061

Acquisition cost on 31 Dec 2015 3,241 14 3,256

Accumulated depreciation on 1 Jan 2015 -345 -345

Depreciation -708 -708

Accumulated depreciation on 31 Dec 2015 -1,053 -1,053

Carrying amount 31 Dec 2015 2,188 14 2,203

EUR 1,000 Intangible rightsAdvance

payments Total

Acquisition cost 1 July 2014 Acquisition of subsidiary 2,014 10 2,024

Decreases -4 -4

Transfers between items 54 -6 47

Acquisition cost on 31 Dec 2014 2,063 4 2,068

Accumulated depreciation on 1 July 2014

Depreciation -345 -345

Accumulated depreciation on 31 Dec 2014 -345 -345

Carrying amount 31 Dec 2014 1,718 4 1,723

19. ACQUISITIONS In 2015, no businesses were acquired. Acquisitions 2014

Subsidiary acquisitionOn 1 July 2014, the Group acquired the entire share capital of Destia Ltd through a share transaction. Destia is a Finnish infrastructure and construction service company, which builds, maintains and designs traffic routes, traffic and industrial environments and complete living environments. Our services cover the whole spectrum, from comprehensive overground operations to subterranean construction. Destia Ltd and its subsidiaries operate mainly in Finland.

The transaction was financed by the Ahlström Capital Group’s MEUR 38 invested unrestricted free equity fund and MEUR 29 of equity hybrid loans. In addition, a MEUR 65 bond was issued on 19 June 2014.

The operating profit for the financial year includes by the MEUR 2.2 of costs, which relate to the acquisition and financial arrangements of Destia’s shares, while the result for the financial year includes MEUR 4.7 of these costs.

The calculation of the purchase cost is final, and the entire amount of the acquisition cost that exceeds the sum total of net assets has been recognised as goodwill. Goodwill stands at MEUR 83.

Fair values at the acquisition date 2014

Assets

Property, plant and equipment 54

Other intangible assets 4

Inventory 22

Accounts and other receivables 59

Deferred tax assets 2

Cash and cash equivalents 50

Assets total 192

Liabilities

Financial liabilities 8

Accounts and other payables 100

Provisions 17

Deferred tax liability 1

Repayment of capital to the state on 1 July 42

Liabilities, total 167

Net assets 25

Goodwill 83

Net assets 25

Total acquisition cost 108


60

20. FINANCIAL ASSETS HELD AS AVAILABLE FOR SALE

EUR 1,000Shares and equity holdings, unlisted

Acquisition cost 1 Jan 2015 2,083

Increases 440

Decreases -406

Acquisition cost on 31 Dec 2015 2,116


EUR 1,000Shares and equity holdings, unlisted


Subsidiary acqusition 2,083

Acquisition cost on 31 Dec 2014 2,083


21. INVENTORY

EUR 1,000 2015 2014

Materials and supplies 17,544 19,876

Inventory, total 17,544 19,876

22. ACCOUNTS AND OTHER RECEIVABLES

EUR 1,000 2015 2014

Accounts receivables 47,489 40,695

Other receivables 1,091 1,397

Accrued income 12,755 17,462

Accounts and other receivables, total 61,335 59,555

Age distribution of accounts receivables and bad debts

EUR 1,000 2015 Bad debts Net 2015

Not past due 42,613 42,613

Due

Less than 30 days 4,033 4,033

30–60 days 180 180

61–90 days 20 20

More than 90 days 28 -615 643

Accounts receivables, total 46,874 -615 47,489

Age distribution of accounts receivable and items recorded as impairment losses

EUR 1,000 2014 Bad debts Net 2014

Not past due 36,826 36,826

Due

Less than 30 days 2,268 2,268

30–60 days 1,254 1,254

61–90 days 336 336

More than 90 days 552 540 12

Accounts receivables, total 41,235 540 40,695

The Group has recorded bad debts of EUR -615 thousand (2014: losses 540 thousand) on accounts receivable. There are no significant credit risk concentrations related to accounts receivables.

The balance sheet values of accounts receivables best reflect to the maximum amount of credit risk related to them.

Other risks related to accounts receivables are described in Note 32. The fair values of receivables correspond to their carrying amounts.

The most significant accrued income items consist of percentage-of-completion receivables and sales allocations of EUR 8,680 thousand (2014: EUR 14,761 thousand) and other items of EUR 4,074 thousand (2014: EUR 2,701 thousand).


61

23. CASH AND CASH EQUIVALENTS

EUR 1,000 2015 2014

Cash in hand and at banks 42,867 37,650

Cash and cash equivalents, total 42,867 37,650

Cash and cash equivalents in the cash flow statement correspond to those presented in the balance sheet.The balance sheet value of cash and cash equivalents best corresponds to the maximum amount of credit risk related to them.

24. DEFERRED TAX ASSETS AND LIABILITIES

Movement in deferred tax assets 2015

EUR 1,000 1 Jan 2015In income statement

In other comprehensive

income 31 Dec 2015

Tax losses carried forward 1,292 -1,292

Pension benefits 550 -18 -495 37

Other allocation differences 1,671 804 2,475

Hedge instrument fund 227 39 266

Total 3,739 -506 -455 2,778

Tax losses carried forward for which deferred tax assets have not been recorded 1,484

No deferred tax assets have been recorded for Destia Sverige AB. Destia Sverige AB´s losses will not expire.

Movement in deferred tax liabilities 2015

EUR 1,000 1 Jan 2015In income statement


income In equity 31 Dec 2015

Depreciation differences and voluntary provisions 493 -201 291

Other allocation differences 463 1,091 -296 1,258

Total 956 890 -296 1,549

Movement in deferred tax assets 2014

EUR 1,000 1 July 2014In income statement


income 31 Dec 2014

Tax losses carried forward 1,292 1,292

Pension benefits 166 6 378 550

Other allocation differences 1,648 23 1,671

Hedge instrument fund 227 227

Total 1,814 1,320 605 3,739

Tax losses carried forward for which deferred tax assets have not been recorded 1,452

No deferred tax assets have been recorded for Destia Sverige AB. Destia Sverige AB´s losses will not expire.

Movement in deferred tax liabilities 2014

EUR 1,000 1 July 2014In income statement


income 31 Dec 2014

Depreciation differences and voluntary provisions 267 226 493

Other allocation differences 286 177 463

Total 553 403 956


62

25. EQUITY

Other items

EUR 1,000 Number of shares Share capitalInvested non-restricted

equity fund Hybrid loans Translation differences Hedge instrument fund

1 Jan 2015 80,000 80 38,000 29,000 -1 -907

Translation differences 1

Cash flow hedging -158

Amortisation of equity hybrid loan -2,000

31 Dec 2015 80,000 80 38,000 27,000 -1,064

Other items

EUR 1,000 Number of shares Share capitalInvested non-restricted

equity fund Hybrid loans Translation differences Hedge instrument fund

1 Jul 2014

Increases 80,000 80 38,000 29,000 -1 -907

31 Dec 2014 80,000 80 38,000 29,000 -1 -907

Information on shares and share capitalThe Destia Group Plc has one share type. The maximum number of shares is 80 thousand. The share capital of the Destia Group Plc is MEUR 0,08. The shares have no nominal value.

In connection with the trade of Destia Ltd’s shares on 1 July 2014, the transaction was financed by Ahlström Capital Group’s MEUR 38 investment in the invested unrestricted free equity fund and MEUR 29 of equity hybrid loans. Furthermore, on 19 June 2014 a MEUR 65 bond was issued which, in June 2015, was listed on the Nasdaq Helsinki main list on the Helsinki Oy Stock Exchange. The bond is presented in Note 26.

Invested non-restricted equity fundThe invested non-restricted equity fund includes equity-like investments and the share subscription price to the extent to which it is not recorded in the share capital by explicit decision.

Hybrid loansEquity hybrid loans are loans issued by the owner, which are items comparable to equity.

The amortisation and interest payments of equity hybrid loans are decided at the Annual General Meeting based on a proposal by the Board of Directors. From 2015 onwards, interest expenses are recorded as they are paid, adjusted for the effect of taxation on the results of previous financial years.

In order of priority, the loans are last after all other loans.

Equity includes equity hybrid loans from Ahlström Capital which are valued at MEUR 27 (2014: MEUR 29). Interest on the loans is 10%.

Other itemsTranslation differencesTranslation differences includes the differences resulting from the translation of foreign subsidiaries.

Hedge instrument fundHedge instrument fund include the effective portion of the changes in fair value of derivative instruments used in cash flow hedging.


63

26. FINANCIAL LIABILITIES

EUR 1,000 2015 2014

Bonds loans 63,335 62,854

Financial lease liabilities 251 412

Financial liabilities recognised at fair value through profit or loss 1,331 1,133

Non-current financial liabilities, total 64,916 64,399

Financial lease liabilities 194 209

Financial liabilities recognised at fair value through profit or loss 198 262

Current financial liabilities, total 392 471

Financial lease liabilities - total amount of minimun lease payments

Maturing within one year 220 245

Maturing within more than one year and less than five years 246 415

Total 466 660

Financial leasing liabilities - present value of minimum lease payments

Maturing within one year 194 209

Maturing within more than one year and less than five years 251 412

Total 445 620

Future financial expenses -21 -40

Total amount of financial lease liabilities 445 620

The MEUR 65 bond released to institutional investors by the Destia Group Plc on 19 June 2014 was listed on the Helsinki Stock Exchange, which is maintained by Nasdaq Helsinki Oy in June 2015.

On 17 June 2015, the Financial Supervisory Authority approved the bond’s prospectus. This bond is unsecured and will mature in full in June 2019. The bond coupon has a variable interest rate based on the three-month Euribor rate and the bond margin is 4.5%. It is hedged in the Group by means of an interest rate swap up to the time of its maturity.

Group’s carrying amount of financial assets and liabilities

EUR 1,000 2015 2014

Financial assets

Financial assets available-for-sale

Financial assets available-for-sale (level 3) 2,116 2,083

Financial assets at fair value through profit or loss

Current

Accounts and other receivables (level 2) 48,580 42,093

Cash and cash equivalents (level 2) 42,867 37,650

Financial liabilities

Financial liabilities at fair value through profit or loss

Interest rate swaps, in hedge accounting (level 2) 1,331 1,133

Other derivatives, not in hedge accounting (level 2) 198 262

Financial liabilities valued at amortized cost

Non-current

Bonds, interest-bearing (level 2) 63,335 62,854

Financial lease liability, interest-bearing (level 2) 251 412

Current

Financial lease liability, interest-bearing (level 2) 194 209

Accounts payables and other liabilities (level 2) 75,176 77,444

The carrying value equals the fair value. The levels adopted in fair value accounting are:Level 1: Exchange traded securities with quoted prices in active marketsLevel 2: Fair value determined by observable parameters.Level 3: Fair value determined by non-observable parameters.


64

27. OTHER LIABILITIES

EUR 1,000 2015 2014

Non-current other liabilities 2,708 1,100

28. ACCOUNTS PAYABLE AND OTHER NON-INTEREST-BEARING LIABILITIES

EUR 1,000 2015 2014

Accounts payable 32,207 36,085

Other non-interest bearing liabilities 11,643 10,135

Accrued expenses 29,413 29,083

Accounts payable and other non-interest-bearing liabilities, total 73,264 75,303

The most significant items in accrued expenses are personnel expenses of EUR 18,972 thousand (2014: 19,769 thousand), accounts payables allocations EUR 5,232 thousand (2014: EUR 5,446 thousand), group contribution of 2,300 thousand (2014: null EUR) and other allocations of 2,909 thousand (2014: EUR 3,868 thousand).

29. LONG-TERM INCENTIVE SCHEMES

On 30 October 2014, Destia Group Plc’s Board of Directors decided on a new personnel long-term incentive scheme for 2014−2018. The purpose of the scheme is to commit certain key persons to the company and offer them a competitive reward scheme. The Board of Directors decides on the long-term incentive scheme and the persons covered by it. The scheme covers some 75 persons. The earnings period is 2014–2018, and the earnings benchmark is the value increase of the company. The benchmark for the long-term incentive scheme are the same for all people belonging to the scheme. These benchmark apply to the whole Group and differ from the bonus scheme benchmark. Remuner-ation accumulated in the earnings period will be paid in cash in 2019, latest.

The Group has noted the synthetic option arrangement granted to the Chairman of the Board by AC Infra Oy in 2015.

In 2015, the effect on personnel costs of the long-term incentive scheme, including the synthetic option arrangement of AC Infra Oy, was MEUR 1.7. (MEUR 1.1) and the scheme-related liability on the balance sheet was MEUR 2.7 (MEUR 1.1).


65

30. PENSION OBLIGATIONS

In addition to the statutory pension insurance (TyEL), Destia Ltd has a defined benefit pension arrangement in place for those employees, whose employment began before 1993. The additional pension safeguards the level of pension earned before 1995 and the individual age of retirement, as in other cases of the incorporation of public utilities.

The retirement age of the defined benefit pension plan varies between 60 and 65.

In the defined benefit pension plan , the amount of funds reflects the share of the obligations for which the insurance company is liable and this is calculated at the same discounted interest rate as the obligation. The assets included in the arrangement include 100% acceptable insurance policies. The company’s liability is mainly the effect of the employee pension index on the obligation.

In 2014, calculation of the pension obligation and corresponding assets was done on the so-called net principle basis. In 2015, the gross principle was used whereby the pension obligation and corrspond-ing assets of the pension recipients and paid-up policies are presented in full.

EUR 1,000 20151 July–31 Dec

2014

Expenses based on work performance during the period 4 3

Net interest 50 12

Costs in the income statement 53 15

Items resulting from redefinition -2,474 1,890

Costs in the comprehensive income statement before taxes -2,421 1,905

Present value of obligation 29,287 11,128

Fair value of assets included in the arrangement -29,101 -8,378

Net liability/asset on the balance sheet (-) 31 Dec 186 2,750

Present value of obligation at start of period 11,128 8,795

Expenses based on work performance during the period 4 3

Interest expenses 706 159

Actuarial profit (-)/loss (+)

from changes in financial assumptions -3,678 2,287

from changes in demographic assumptions -713 -381

from experience-based changes 24,120 1,391

Fulfilling an obligation -925

Benefits paid -1,442 -202

Company arrangements -836

Present value of obligation 31 Dec 29,287 11,128

EUR 1,000 20151 July–31 Dec

2014

Fair value of assets included in the arrangement at the beginning of the period 8,378 7,950

Interest yield 656 146

Yield of assets included in the arrangement excluding items belonging to interest expense/yield 22,203 1,408

Fulfilling obligations -925

Benefits paid -1,442 -202

Payments made in to the arrangement


Fair value of assets included in the arrangement 31 Dec 29,101 8,378

Liabilities on the balance sheet at the beginning of the period 2,750 845

Costs in the income statement 53 15

Payments made in to the arrangement

Reclassification of items into OCI -2,474 1,890


Liabilities on the balance sheet 31 Dec 186 2,750

Actuarial assumptions

Discounting interest rate, % 2,50% 2,00%

Pay rises, % 1,70% 0,00%

Pension rises, % 1,44% 2,00%

Sensitivity analysis

The table below shows the effects on the net liability from changes in the assumptions

Discounting interest rate change +0.25% -6 -105

Discounting interest rate change -0.25% 6 111

Pay rises +0.25% 28 0

Pay rises -0.25% -28 0

Change in pension rises +0.25% 978 1,326

Change in pension rises -0.25% -946 -1,189

When calculating the sensitivity, it is assumed that the other assumptions remain unchanged.The duration based on the weighted average life of the obligation is 13.5 years.Destia Ltd’s estimate of the defined benefit pension arrangements it will pay in 2016 is EUR nil euros.


66

31. PROVISIONS

EUR 1,000Guarantee provisions

Environmental provisions

Other provisions Total

1 Jan 2015 3,959 10,398 5,385 19,742

Increase in provisions 956 70 3,989 5,015

Expensed provisions -674 -39 -3,640 -4,352

Reversals of unused provisions -1,366 -2 -658 -2,026

Effect of discounting 20 219 239

31 Dec 2015 2,894 10,648 5,076 18,618

EUR 1,000Guarantee provisions

Environmental provisions

Other provisions Total

1 July 2014 4,114 8,021 5,356 17,492

Increase in provisions 1,108 1,369 2,477

Expensed provisions -328 -14 -1,242 -1,585

Reversals of unused provisions -1,174 -116 -98 -1,388

Effect of discounting 238 2,506 2,745

31 Dec 2014 3,959 10,398 5,385 19,742

EUR 1,000 2015 2014

Non-current provisions 13,157 13,801

Current provisions 5,461 5,941

Total 18,618 19,742

Guarantee provisionsGuarantee provisions have been made to cover any obligations during the warranty period of contrac-tual agreements. They are based on experiences from previous years.

Environmental provisionsThe Group has land areas that it is obliged to restore to their original condition.The present value of estimated landscaping costs has been capitalised as part of the cost of the areas and presented as a provision. The discounting factor used in determining the present value is 0,77 %.In addition, the Group has a provision for cleaning contaminated land area, in connection with clean-ing a former asphalt plant in the capital region.

Other provisionsOther provisions include dispute and litigation provisions of MEUR 0.8 (2014: MEUR 0.7), project loss provisions of MEUR 3.1 (2014: MEUR 3.7) and other provisions of MEUR 1.2 (2014: MEUR 1.0) of which 0.4 (2014: MEUR 0.5) is related to personnel.

32. FINANCIAL RISK MANAGEMENT

In the normal course of business, the Group is exposed to a number of financial risks. The objective of the Group’s risk management is to minimise the adverse effects of changes in the financial markets on the Group’s earnings. The primary types of financial risks are foreign exchange currency risk, interest rate risk and commodity risk. The Group’s financial policy determines the guidelines and practices for the Group’s financial activities. The Group’s general principles of risk management and financial policy are approved by the Board of Directors, and their practical implementation is the responsibility of the Group Chief Financial Officer and the centralised Finance and Treasury unit together with the business units. The Group’s Finance and Treasury unit identifies and assesses the risks and acquires the instruments required for protection against them in close co-operation with the operational units. Hedging transactions are carried out in accordance with the financing policy approved by the Board of Directors. The Group performs risk management through the use of forward exchange contracts, foreign currency loans, interest rate swaps and commodity derivatives. Financial risks are reported quarterly to Audit Committee and to the Board of Directors. Internal and external audits monitor Group compliance with financial policy.

Credit riskThe Destia Group’s credit risk consists of the credit risk of accounts receivables related to the busi-ness operations and of the counterparty credit risk related to other financial instruments. The man-agement of the credit risk relating to accounts receivables aims to increase the amount of advances received and to assess the customer’s creditworthiness in good time during the tendering process, enabling assessment of the collateral amount, the instrument and the eligibility of the collateral offered that may be needed. The Group’s credit risk is managed by the business unit controllers in accord-ance with instructions prepared by the Finance and Treasury unit. The Group has no significant credit risk concentrations related to accounts receivables.

The counterparty credit risk related to other financial instruments is generated when Destia invests assets in money market instruments offered by other companies, public organisations or financial institutions. The risk is related to the counterparty of the contract not being able to fulfil its contractual obligations. Counterparty credit risk is managed via counterparty limits. Counterparty limits are only determined for counterparties deemed to be solvent and have a good credit rating. Select counterpar-ties are set maximum limits in euros and maximum maturity limits. The counterparty and counterparty limits are approved by the Group’s Board of Directors.

The maximum amount of the Group´s credit risk corresponds to the carrying amount of financial as-sets at the end of the financial year.

The age distribution of accounts receivables is presented in Note 22.


67

Liquidity riskLiquidity risk management aims at ensuring that the Group is able to fulfil its financial obligations at all times. Annual cash flow forecasts are prepared for the next three years during strategy planning, and monthly forecasts are made for the next year during budgeting process. In addition, liquidity planning is carried out daily. In the long term, the aim is to secure liquidity by means of persistent, proactive financing arrangements and the establishment of short-term financing limits. According to the Group’s operational instructions, cash assets must be invested in liquid money market instruments to ensure flexibility.

The following table shows the maturity distribution of the Group’s financial liabilities. The amounts have not been discounted, and they include both interest payments and capital repayments.

31 Dec 2015Balance sheet

valueContractual based

cash flows Less than 1 year 1–2 year 2–3 year 3–4 year More than 4 years

Maturity distribution of financial liabilities

Loans from financial institutions 65,000 -75,694 -2,953 -2,958 -3,126 -66,657

Accounts payable and other liabilities 43,850 -43,850 -43,850

Total 108,850 -119,544 -46,803 -2,958 -3,126 -66,657

Maturity distribution of derivative liabilities

Interest rate swaps 1,331 -1,032 -420 -384 -217 -10

Commodity derivatives 198 -198 -198

Total 1,529 -1,230 -618 -384 -217 -10

31 Dec 2014Balance sheet

valueContractual based

cash flows Less than 1 year 1–2 year 2–3 year 3–4 year More than 4 years

Maturity distribution of financial liabilities

Loans from financial institutions 65,000 -79,246 -3,071 -3,095 -3,145 -3,260 -66,674

Accounts payable and other liabilities 46,221 -46,221 -46,221

Total 111,221 -125,467 -49,292 -3,095 -3,145 -3,260 -66,674

Maturity distribution of derivative liabilities

Interest rate swaps 1,133 -800 -272 -256 -197 -82 8

Commodity derivatives 262 -262 -262

Total 1,395 -1,062 -534 -256 -197 -82 8

The tables do not include financial leasing liabilities, for which additional information is provided in Note 26.


68

Foreign exchange rate riskForeign exchange rate risk refers to the uncertainty of changes in foreign exchange rate as the result, balance sheet and cash flows. The international operations of Destia Group are minor at this stage and so the amounts affected by foreign exchange rate risk, or foreign exchange positions, are small and the foreign exchange rate risk is low. The Group’s foreign exchange rate risk is managed in a centralised manner by the Finance and Treasury unit. The aim is to direct the foreign exchange rate risk at the Parent Company by invoicing foreign subsidiaries in their domestic currency. The Group’s internal loans are also in the debtor’s domestic currency. The foreign exchange rate risk grows as international operations increase, making it necessary to assess the risk via foreign exchange position calculations. Position calculations are separately prepared for currency cash flows and balance sheet items determined in foreign currencies.

According to the Group´s financial policy, the foreign exhange risk must be covered to at least 50 and at most 100 per cent, using forward exchange and option contracts or foreign currency loans as hedging instruments. Hedging operations are directed at cash flows and balance sheet items separately. Currency derivatives may only be used for hedging purposes.The efficiency of hedging must be measured monthly. The Group does not apply IAS 39 hedge accounting to currency hedging.

The Group does not have any significant outstanding foreign exchange positions. At the end of the financial year there were no open foreign exchange position in provisions (2014: in NOK worth MNOK 3.6) which have not been hedged.

The Group’s assets and liabilities in foreign currencies on the last day of the year under review were as follows:

2015 2014

EUR 1,000 USD SEK NOK USD SEK

Current assets

Accounts and other receivables 42 140 15

Cash and cash equivalents 128 5 151 101

Current liabilities

Accounts payable and other liabilities 7 5 8

Other provisions 393

Total 163 5 -393 286 108

Forward exchange contracts

Position, total 163 5 -393 286 108

The table below shows how the Group’s equity is affected if the euro strengthens or weakens against the Norwegian krone, the United States dollar or the Swedish krona while the other factors remain unchanged. The sensitivity analysis is based on assets and liabilities in foreign currencies on the last day of the year under review.

2015 2014

EUR 1,000 USD SEK NOK USD SEK

Percentage change 10% 10% 10% 10% 10%

Effect on profit after taxes 13 0 -31 23 9

Effect on equity

Interest rate risk Interest rate risk is the risk of market interest rates affecting the Group’s interest expenses and profits. The Group’s interest rate risk primarily consists of the interest rate risk of the external loan portfolio. The interest rate risk is managed by spreading the Group’s loans and investments across various maturities on the one hand and variable and fixed-rate instruments on the other. The risk of the loan and investment portfolio is determined by interest position calculations. According to the Group’s financial policy, interest rate risk must be covered 100 per cent, using short- or long-term forward rate or future contracts, interest rate option contracts or interest rate swaps. Interest rate derivatives may only be used for hedging purposes. The Group’s interest rate risk is cordinated with Ahlström Capital and managed in a centralised manner by the Finance and Treasury unit.

At the year end, the Group has hedged its variable interest rate loan portfolio through interest rate swaps. The Group applies the cash flow hedging accounting principles under IAS 39 to these interest rate swaps.

Hybrid loans are not part of interest rate risk management.

The table below shows the Group’s interest position on the last day of the year under review:

EUR 1,000 2015 2014

Variable-rate

Financial liabilities 65,000 65,000

Net 65,000 65,000

Interest rate swaps 65,000 65,000

Variable-rate position, total 0 0

The Group has no fixed-rate financial assets or liabilities.


69

Effect of interest rate changes on the Group’s result and equityThe table below shows how the Group’s equity is affected if the interest rates increase or decrease and the other factors remain unchanged. The sensitivity analysis is based on the interest position on the last day of the year under review, which includes MEUR 65 interest rate swap.

EUR 1,000 2015 2014

Change +/-0,5% +/-0,5%

Effect on profit after taxes

Effect on equity 1,711 1,194

Commodity risk In its operations, Destia Group is exposed to commodity risk related to commodity price fluctuations. Destia’s significant commodity risks are determined in connection with tendering. The necessary hedging procedures are planned on a project-specific basis through co-operation between the business units and Finance and Treasury unit.

Monthly rolling hedging of diesel is being done for a period of 12 months. The hedging rate is 27% from average yearly purchases.

Management of capitalThe purpose of enhancing Destia’s use of capital is to speed up the incoming cash flow and slow down the outgoing cash flow. The efficient use of capital is ensured by efficient, safe and profitable in-vestments or use of existing assets. Efficiency is also safeguarded by improving the terms of payment in contractual negotiations, by efficiently managing payment transactions with the help of cash flow forecasts, and by utilising an efficient bank account network and programme as well as up-to-date accounts payable and receivable activities.

EUR 1,000 2015 2014

Equity 73,297 68,666

Balance sheet total 266,256 264,610

Advances received 31,326 31,224

Equity ratio 31,2% 29,4%

33. OTHER LEASE AGREEMENTS Group as lesseeOther lease agreements include, for example, leases for premisies and fleet.The average term of the lease agreements are between 1–7 years.Minimun leases paid on the basis of non-cancellable lease agreements:

EUR 1,000 2015 2014

Within one year 3,046 3,314

Within more than one year and less than five years 5,439 2,589

After more than five years 904 13

Total 9,389 5,916

During the financial year, lease expenses of EUR 3,479 thousand (2014: EUR 1,819 thousand) for other lease agreements were recorded through profit and loss.

34. CONTINGENT LIABILITIES AND ASSETS

EUR 1,000 2015 2014

Guarantees and contingent liabilities

Business mortgage 39,000

Bank guarantees 94,796 79,301

Interest liabilities accured from equity hybrid loans 2,787

Disputes and litigation The Group has on-going disputes related to projects, which have been provided for to the extent that the Group deems the disputes substantial and the claims justified.


70

35. RELATED PARTY TRANSACTIONS

The Group’s related parties include its subsidiaries, Ahlström Capital Oy and its subsidiaries, joint ventures and associated companies (including AC Infra Oy).

In addition, the related parties includes the members of the Board and of the Management Team, including the President & CEO and their family members. EUR 2,300 was paid for consultancy to one company owned by a Member of the Board. In 2015, companies belonging to the Ahlström Capital Group also had EUR 343.4 thousand of billing and EUR 12.3 thousand of purchases. MEUR 2.0 of amortisation and MEUR 0.9 in interest were paid on interest liabilities to AC Infra Oy accrued from equity hybrid loans, and interest of MEUR 0.6 was paid to Ahlström Capital Oy. The amount of hybrid loans on 31 December 2015 was MEUR 15.0 (2014: MEUR 17.0) to AC Infra Oy and MEUR 12.0 (2014: MEUR 12.0) to Ahlström Capital Oy. In 2015, MEUR 2.3 in Group contributions was granted to Ahlström Capital Oy, which was recorded both in equity and as a liability.

The President & CEO and members of the Management Team belong to the long-term management incentive scheme, described in Note 29.

The Group´s parent company and subsidiary relations in the year 2015 were as follows:

Company City Country

Group´s share of ownership and votes%

Parent company´s share

of ownership and votes%

31 Dec 2015

Destia Group Plc, parent company Vantaa Finland

Destia Ltd, parent company of the subgroup Vantaa Finland 100 100

Destia Ltd, subsidiaries

Destia Eesti AS Estonia 100 100

Turgel Grupp AS Estonia 100 100

Destia Rail Oy Kouvola Finland 100 100

Destia Sverige AB Sweden 100 100

Destia International Oy Vantaa Finland 100 100

Finnroad Oy Vantaa Finland 100 100

Consortia have also been established for large and long-term projects, which also involves external parties.

Management´s employee benefits

EUR 1,000 2015 1 July–31 Dec

2014

Salaries and other short-term employee benefits 1,944 1,326

Total 1,944 1,326

Salaries and remuneration:

President & CEO 596 298

Members of the Board of Directors 138 46

It has been agreed that the retirement age of the President & CEO is 63.

36. EVENTS AFTER THE REPORTING PERIOD Nothing to report.


71

GROUP’S KEY FIGURES, IFRS

Destia Group Destia Group

MEUR 2015 1 July–31 Dec 2014

Revenue 462.8 261.8

Change from previous year, % * 7.2

Operating profit for the period 12.9 12.5


Result for the period 6.7 5.5


EBITDA 1) 22.0 19.1


Gross investments 9.2 72.5


Balance sheet total 266.3 264.6

Equity 73.3 68.7

Equity ratio, % 2) 31.2 29.4

Net gearing, % 3) 32.6 42.4

Interest-bearing liabilities 66.8 66.8

Current Ratio 4) 1.1 1.0

Quick Ratio 5) 1.2 1.0

Return on equity, % 6) 9.5 8.0

Return on investment, % 7) 9.4 9.2

Earnings per share, EUR ** 56.14 53.77

Equity per share, EUR** 916.21 858.32

Average personnel 1,505 1,502

Occupational accidents resulting in absence from work *** 7.6 9.3

Order book 717.4 628.2

Research and development expenses 0.9 0.5

% of other operating expenses 2.6 2.1

* The comparative figure is the revenue figure from the Destia subgroup MEUR 431.5 in 2014.** The profit for the financial period belonging to he shareholders of the parent company of Destia Group Plc, deducted by the interest on the hybrid loan adjusted for tax, divided vased on the weighted average of the shares. Destia Group Plc has 80,000 shares.*** Occupational accidents per one milloin working hours.

Formulas:1) Operating profit + depreciation, amortisation and impairment losses.In 2014, EBITDA adjusted by non-recurring items related to acquisition2) (Equity/(balance sheet total - advances received))*1003) (Interest-bearing liabilities - cash and cash equivalents and held-to-maturity investments/equity)*1004) (Inventories + liquid assets) / current liabilities5) Financial assets without receivables from uncompleted contracts / current liabilities without advance payments6) (Result for the period/average equity)*100 (opening and closing balance)7) (Result before taxes + interest costs and other financial expenses/(invested capital average)*100 (balance sheet total - non-interest-bearing liabilities - provisions, opening and closing balance)

Under items 6 and 7 the value of equity and the balance sheet values of 31 December 2014 have been used as the balance sheet values on Destia Group


72

EUR 1,000 1 Jan–31 Dec 2015 22 Apr–31 Dec 2014

Revenue 1,659 600

Personnel expenses

Salaries and wages 1,189 230

Pension expenses 373 41

Other personnel expenses 38 7

Personnel expenses 1,601 278

Other operating expenses 723 1,611

Operating result -665 -1,289

Financial income and expenses

Interest income from Group companies 432 1 482

Interest income 0

Interest expenses to Group companies 2,787 1,482

Interest expenses 3,354 3,353

Other financial expenses 510 334

Financial income and expenses -6,219 -5,169

Profit/loss before extraordinary items -6,884 -6,459

Extraordinary items

Group contributions received 13,000

Group contributions granted 2,300

Extraordinary items 10,700

Profit/loss before taxes 3,816 -6,459

Income and deferred taxes -764 1,292

Profit/loss for the financial year 3,052 -5,167

DESTIA GROUP PLC, INCOME STATEMENT, FAS


73

EUR 1,000 31 Dec 2015 31 Dec 2014

ASSETS

NON-CURRENT ASSETS

INVESTMENTS

Holdings in Group companies 109,352 109,352

Investments, total 109,352 109,352

NON-CURRENT ASSETS TOTAL 109,352 109,352

CURRENT ASSETS

RECEIVABLES

Receivables from Group companies 21,944


Deferred tax assets 768 1,292

Prepaid expenses and accrued income 8

Receivables, total 24,405 3,913

Cash and cash equivalents 185 15,975

CURRENT ASSETS TOTAL 24,590 19,888

ASSETS TOTAL 133,942 129,240

DESTIA GROUP PLC, BALANCE SHEET, FAS

EUR 1,000 31 Dec 2015 31 Dec 2014

EQUITY AND LIABILITIES

EQUITY

Share capital 80 80

Reserve for invested non-restricted equity 38,000 38,000

Retained earnings -5,167

Profit/loss for the period 3,052 -5,167

Equity total 35,965 32,913

LIABILITIES


Loans classified as equity 27,000 29,000

Bonds 65,000 65,000

Non-current liabilities, total 92,000 94,000

Current liabilities

Accounts receivables 4 496

Liabilities to Group companies 5,158 1,482

Other liabilities 46 44

Accrued expenses and deferred income 770 305

Current liabilities, total 5,977 2,327

LIABILITIES TOTAL 97,977 96,327

EQUITY AND LIABILITIES TOTAL 133,942 129,240


74

EUR 1,000 1 Jan–31 Dec 2015 22 Apr–31 Dec 2014

CASH FLOWS FROM OPERATING ACTIVITIES

Cash receipts from customers 1,353 600

Cash paid to suppliers of goods/services and to personnel -2,398 -2,233

Net cash flow before financial items and taxes -1,045 -1,633

Interest paid on operating activities -4,852 -3,243

Interest income on operating activities 105

Other financial items from operating activities -30 -1,877

Net cash flows from operating activities -5,822 -6,753

CASH FLOWS FROM INVESTING ACTIVITIES

Subsidiary shares acquired -97,352

Loans granted -11,500

Proceeds from repayment of loans 3,531

Net cash flows from investing activities -7,969 -97,352

CASH FLOWS FROM FINANCING ACTIVITIES

Rights issue 80

Investment in invested non-restricted equity fund (+) 38,000

Increase in non-current loans (+) 65,000

Increase in equity instruments (+) 17,000

Decrease in equity instrument (-) -2,000

Net cash flows from financing activities -2,000 120,080

Net financial cash flow from financial activities -15,790 15,975

Cash and cash equivalents at the end of the financial period 185 15,975

Cash and cash equivalents at the beginning of the financial period 15,975

-15,790 15,975

DESTIA GROUP PLC, CASH FLOW STATEMENT, FAS


75

Accounting principlesDestia Ltd’s parent company is Destia Group Plc, which was established in connection with the ownership arrangement of Destia and which owns 100% of Destia Ltd’s shares. Destia Group Plc’s financial statements for the financial year 2015 and comparative figures 2014 (22 April−31 December 2014) have been prepared in accordance with the Finnish Accounting Act. Destia Group prepared its consolidated financial statements in accordance with the accounting principles of the International Financial Reporting Standards (IFRS).

Measurement of investmentsInvestments have been valued at acquisition cost.

Financial assetsFinancial assets have been valued at acquisition price, or at the expected market value if this is lower than the acquisition cost.

Financial liabilitiesInterest from equity-instruments has been recognised by using the accrual basis.

Derivative instrumentsThe fair value of derivative contracts used to hedge cash flows to be generated in future financials years has been recognised as an off-balance-sheet-liability.

Group contributionsGroup contributions have been recovered as extraordinary items in the income statement.

PensionsPersonnel pensions have been ensured by means of insurance with an external pension insurance company. Pension expenses have been recorded as expenses in the year they were incurred.

Related partiesThe Group´s related parties include its parent company, subsidiaries and Ahlström Capital Oy and its subsidiaries, joint ventures and associates. In addition, Related parties include the members of the Board and of the Management Team, including the President & CEO and their family members.

NOTES TO FINANCIAL STATEMENTS, DESTIA GROUP PLC, FAS


76

EUR 1,000 2015 2014

Revenue

Revenue from Group companies 1,659 600

Revenue, total 1,659 600

Average number of personnel 4

Personnel at the end of the financial year 4 3

Management salaries and wages

President and CEO 596 36

Members of the Board of Directors 138 8

Management salaries and wages, total 734 44

Auditor’s fees

Audit expense 2 2

Auditor’s fees, total 2 2

Other operating expenses

Travel expenses 11

Administrative expenses 553 1,581

Insurances 47 29

Other operating expenses 112

Other operating expenses, total 723 1,611

EUR 1,000 2015 2014

Financial income

Interest income from Group companies 432

Financial income, total 432

Financial expenses

Interest expenses

To Group companies 2,787 1,482

To others 3,354 3,353

Financial expenses, total 6,141 4,835

Other financial expenses

Collateral fees 52

Other borrowings costs 481 279

Other financial expenses 30 3

Other financial expenses, total 510 334

Income tax and deferred tax

Income taxes -240

Change in deferred tax asset -524 1,292

Income tax and deferred tax, total -764 1,292

NOTES TO INCOME STATEMENT, DESTIA GROUP PLC, FAS


77

NOTES CONCERNING ASSETS IN THE BALANCE SHEET, DESTIA GROUP PLC, FAS

EUR 1,000 2015 2014

Non-current assets

Investments

Holdings in Group companies 1.1.2015 (1.7.2014) 109,352 109,352

Holdings in Group companies 31.12. 109,352 109,352

Current assets

Receivables from Group companies

Accounts receivables 7

Loans receivables 8,610

Accrued income 327

Group contributions receivable 13,000

Receivables from Group companies, total 21,944

Receivables


Accrued income 8

Receivables, total 1,694 2,621

Deferred tax assets

Deferred tax assets 768 1,292

EUR 1,000 2015 2014

Equity and liabilities

Equity

Restricted equity

Share capital 1 Jan (22 Apr 2014) 80 80

Share capital 31 Dec 80 80

Restricted equity, total 80 80

Invested non-restricted equity

Fund for invested non-restricted equity 1 Jan (1 July 2014) 38,000 38,000

Fund for invested non-restricted equity 31 Dec 38,000 38,000

Retained earnings

Retained earnings 1 Jan -5,167

Retained earnings 31 Dec -5,167


Non-restricted equity, total 35,885 32,833

Equity, total 35,965 32,913

Calculation regarding distributable equity

Invested non-restricted equity fund 38,000 38,000

Retained earnings -5,167


Distributable non-restricted equity, total 35,885 32,833


78

NOTES CONCERNING ASSETS IN THE BALANCE SHEET, DESTIA GROUP PLC, FASShares and shareholders

Registered Shareholder % Share capital, EUR

22 Apr 2014 AC Infra Oy (Ahlström Capital) 100 80,000

EUR 1,000 2015 2014


Non-current liabilites

Bonds 65,000 65,000

Loans classified as equity 27,000 29,000

Non-current liabilites, total 92,000 94,000

Current liabilities

Liabilities to Group companies

Accounts payable 71

Accrued interests 2,787 1,482

Group contribution liabilities 2,300

Liabilities to Group companies, total 5,158 1,482

Accounts payable 4 496

Other liabilities 46 44

Material items relating to accrued expenses and deferred income

Accrued interest 94 110

Personnel related accruals 436 195

Other accruals and deferred income 240

Accruals and deferred income, total 770 305

EUR 1,000 2015 2014

Guarantees and contingent liabilities

Lease contracts

Payable during the following financial year 29

Payable in later years 20

Derivative contracts

Interest derivatives

Nominal value 65,000 65,000

Fair value -1,331 -1,133

Nominal values and fair values are presented as net amounts. The fair value is an estimate of the gains and losses that would have been realised, if the derivative contracts had been terminated at the balance sheet date.


79

PROPOSAL BY THE BOARD ON THE USE OF DISTRIBUTABLE ASSETS

Destia Group Plc`s FAS compliant profit for the financial year was EUR 3,051,660.32, which is proposed to be recorded on the profits and losses account. Destia Group Plc`s distributable assets total EUR 35,884,803.10 including the EUR 38,000,000 in the invested unrestricted equity fund.

The Destia Group Plc`s Board of Directors proposes to the General Meeting that no dividend be paid for the financial year that ended on 31 December 2015.

Signatures to the financial statements Vantaa, 11 February 2016

Marcus Ahlström Tero Telaranta

Panu Routila Jacob af Forselles

Arto Räty Solveig Törnroos-Huhtamäki

Matti Mantere Hannu Leinonen President and CEO

Auditor´s Note

An auditor´s report based on the audit performed has been issued today.

Helsinki, 11 February 2016

KPMG Oy Ab

Virpi HalonenAuthorized Public Accountant


80

To the Annual General Meeting of Destia Group PlcWe have audited the accounting records, the finan-cial statements, the report of the Board of Directors, and the administration of Destia Group Plc for the year ended 31 December, 2015. The financial state-ments comprise the consolidated income statement and consolidated statement of comprehensive in-come, consolidated balance sheet, consolidated statement of changes in equity, consolidated cash flow statement and notes to the consolidated finan-cial statements, as well as the parent company’s balance sheet, income statement, cash flow state-ment and notes to the financial statements.

Responsibility of the Board of Directors and the President and CEOThe Board of Directors and the President and CEO are responsible for the preparation of consolidated financial statements that give a true and fair view in accordance with International Financial Reporting Standards (IFRS) as adopted by the EU, as well as for the preparation of financial statements and the report of the Board of Directors that give a true and fair view in accordance with the laws and reg-ulations governing the preparation of the financial statements and the report of the Board of Directors in Finland. The Board of Directors is responsible for the appropriate arrangement of the control of the company’s accounts and finances, and the Pres-ident and CEO shall see to it that the accounts of the company are in compliance with the law and that its financial affairs have been arranged in a reliable manner.

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

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

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

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

Opinion on the consolidated financial statementsIn our opinion, the consolidated financial state-ments give a true and fair view of the financial po-sition, financial performance, and cash flows of the group in accordance with International Financial Reporting Standards (IFRS) as adopted by the EU.

Opinion on the company’s financial statements and the report of the Board of DirectorsIn our opinion, the financial statements and the re-port of the Board of Directors give a true and fair view of both the consolidated and the parent com-pany’s financial performance and financial position in accordance with the laws and regulations govern-ing the preparation of the financial statements and the report of the Board of Directors in Finland. The information in the report of the Board of Directors is consistent with the information in the financial statements.

Helsinki, 11 February 2016KPMG Oy Ab

Virpi HalonenAuthorized Public Accountant

AUDITOR’S REPORT

This document is an English translation of the Finnish auditor’s report. Only the Finnish version of the report is legally binding.


DESTIA Neilikkatie 17, P.O.Box 206FI-01301 Vantaa, Finland

www.destia.fi/enTel. +358 20 444 [email protected]

Date post:	08-Nov-2020
Category:	Documents
Upload:	others
View:	0 times
Download:	0 times

Annual Report 2015 BUILDING THE BIGGER PICTURE...1/4 Earthworks began in the Kala-satama centre 2/4...

Documents