Stock Exchange release February 6, 2008 11:14:22 AM CET

Metso Corporation's Financial Statements Release 2007 part 2/2

 

 

 

 

 
 

 

 

 
 

 

 

 

 
 

 
 

 

 

 

 

 
 

 
 

 

 
 

SHARE IN PROFITS OF ASSOCIATED COMPANIES

 

 

 
 
 
 

 
 

 

 
 

 
 
 

 

 
 
 

 
 

 
 

 
 

 
Notes to the Financial Statements Release
 
This Financial Statements Release has been prepared in accordance with IAS 34 'Interim Financial Reporting'. The same accounting policies have been applied as in the annual financial statements.
 

 
 
Changes in accounting policies and new accounting standards
 
Prior to 2007 Metso had applied the corridor method in recognizing the actuarial gains and losses related to its defined post-employment schemes. Under the corridor method, the accumulated actuarial gains and losses are expensed over the expected average remaining working lives of employees in the plan.
 
At the beginning of 2007, Metso adopted the amendment to IAS19 'Employee benefits', which permits the recognition of all actuarial gains and losses in the period in which they occur outside the income statement directly in shareholders' equity. This policy was adopted to improve the transparency of Metso's financial statements. The comparative figures are also presented correspondingly. The change in accounting policy decreased the shareholders' equity, net of tax, by EUR 24 million in 2006 (EUR 27 million in 2005) and increased the pension liability by EUR 34 million at December 31, 2006 (EUR 40 million at December 31, 2005).
 
 
IFRS 8
In November 2006, IASB issued IFRS 8 'Operating Segments', which requires the company to adopt the 'management approach' to reporting on the financial performance of its operating segments. Thus, the information to be reported would be what management uses internally for evaluating segment performance. Metso is currently evaluating the effects to its financial statements, however, it expects the standard not to impact its current segment  structure.
 
IFRS 8 is effective for annual financial statements for periods beginning on or after January 1, 2009. Earlier adoption is permitted.
 
Metso will apply the standard for the financial year beginning on January 1, 2009.
 
 
IFRIC 14
IASB has published IFRIC 14, 'IAS 19 - The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction'. The interpretation is applied to post-employment defined benefit plans and other long-term defined benefit plans under IAS 19, if the plan includes minimum funding requirements. The interpretation also clarifies the criteria for recognition of an asset on future refunds or reductions in future contributions. Metso does not expect the new requirements to have a material impact to its financial statements.
 
IFRIC 14 is effective for annual financial statements for periods beginning on or after January 1, 2008. The interpretation is still subject to endorsement by the European Union.
 
Pending on endorsement by the European Union, Metso should apply the standard for the financial year beginning on January 1, 2008.
 
 
IAS 1 (Revised)
 
IASB has published IAS 1 (Revised) 'Presentation of Financial Statements'. The revised standard is aimed at improving users' ability to analyse and compare the information given in financial statements by separating changes in equity of an entity arising from transactions with owners from other changes in equity.
 
IAS 1 (Revised) is effective for annual financial statements for periods beginning on or after January 1, 2009. The standard is still subject to endorsement by the European Union.
 
Provided the standard is endorsed by the Europen Union before the end of 2008, Metso will apply the standard for the financial year beginning on January 1, 2009.
 
 
IFRS 3 (Revised)
 
IASB has published IFRS 3 (Revised), 'Business combinations'. The revised standard continues to apply the acquisition method to business combinations, with some significant changes, such as expensing of transaction costs. In addition, all payments to purchase a business are to be recorded at fair value at the acquisition date, with some contingent payments subsequently remeasured at fair value through income. Goodwill may be calculated based on the parent's share of net assets or it may include goodwill related to the minority interest. Metso is currently evaluating the effects to its financial statements.
 
IFRS 3 (Revised) is effective for annual financial statements for periods beginning on or after July 1, 2009. The standard is still subject to endorsement by the European Union.
 
Provided the revision receives the endorsement by the European Union, Metso will apply the standard for the financial year beginning on January 1, 2010.
 
IAS 23 (Amended)
 
IASB has published Amendment to IAS 23 'Borrowing Costs', which requires an entity to capitalize borrowing costs directly attributable to the acquisition, construction or production of qualifying asset as part of the cost of that asset. A qualifying asset can be intended for its own use (self-constructed asset) or for sale. The option of immediately expensing those borrowing costs will be removed. The amendment does not change the accounting policy applied by the group to self-constructed assets and therefore, should not have material impact on the group's financial statements, however the implementation of the amendment to qualifying assets for sale is under review and its effects are being evaluated by Metso.
 
The amendment is effective for annual periods beginning on or after January 1, 2009. The standard is still subject to endorsement by the European Union.
 
Provided the amendment receives the endorsement by the European Union, Metso will apply the standard for the financial year beginning on January 1, 2009.
 
 
 
IAS 27 (Revised)
 
IASB has published IAS 27 (Revised), 'Consolidated and separate financial statements'. The revised standard requires the effects of all transactions with non-controlling interests to be recorded in equity if there is no change in control. They will no longer result in goodwill or gains and losses. The standard also specifies the accounting when control is lost. Any remaining interest in the entity is remeasured to fair value and a gain or loss is expensed. Metso is currently evaluating the effects to its financial statements.
 
IAS 27 (Revised) is effective for annual financial statements for periods beginning on or after July 1, 2009. The standard is still subject to endorsement by the European Union.
 
Provided the revision receives the endorsement by the European Union, Metso will apply the standard for the financial year beginning on January 1, 2010.
 
 
Shares traded on the Helsinki and New York Stock Exchanges
 
The number of Metso Corporation shares traded on the OMX Nordic Exchange Helsinki during 2007 was 350 million shares, equivalent to a turnover of EUR 14,508 million. The share price on December 31, 2007 was EUR 37.33, and the average trading price for the year was EUR 41.43. The highest quotation during the review period was EUR 49.95 and the lowest EUR 34.06.
 
The trading of Metso ADSs (American Depositary Shares) on the New York Stock Exchange was terminated on September 14, by which time approximately 6 million Metso ADSs, equivalent to a turnover of USD 344 million, had been traded since the beginning of 2007. The highest price of Metso's ADS in the United States in 2007 was USD 70.62, and the lowest USD 46.18. At the end of the year, the price of an ADS was USD 53.70. Each ADS represents one share.
 
 
Disclosures of changes in holdings
 
Only one disclosure of a change in holdings was received during the year. J.P. Morgan Chase & Co. announced that the funds they managed held 6,996,732 Metso shares/ADSs on February 12, 2007 corresponding to 4.94 percent of the paid up share capital of Metso.
 
 
Metso Corporation
 
 
Olli Vaartimo                                         Kati Renvall
Executive Vice President and CFO                      Vice President, Corporate Communications
 
Distribution:
OMX Nordic Exchange Helsinki
The media
www.metso.com
 
For further information, please contact:
Jorma Eloranta, President and CEO, Metso Corporation, tel. +358 (0)204 84 3000
Olli Vaartimo, Executive Vice President and CFO, Metso Corporation, tel. +358 (0)204 84 3010
Johanna Sintonen, Vice President, Investor Relations, Metso Corporation, tel. +358 (0)204 84 3253
 
It should be noted that certain statements herein which are not historical facts, including, without limitation, those regarding expectations for general economic development and the market situation, expectations for customer industry profitability and investment willingness, expectations for company growth, development and profitability and the realization of synergy benefits and cost savings, and statements preceded by "expects", "estimates", "forecasts" or similar expressions, are forward-looking statements. These statements are based on current decisions and plans and currently known factors. They involve risks and uncertainties which may cause the actual results to materially differ from the results currently expected by the company.
 
Such factors include, but are not limited to:
(1) general economic conditions, including fluctuations in exchange rates and interest levels which influence the operating environment and profitability of customers and thereby the orders received by the company and their margins
(2) the competitive situation, especially significant technological solutions developed by competitors
(3) the company's own operating conditions, such as the success of production, product development and project management and their continuous development and improvement
(4) the success of pending and future acquisitions and restructuring.
 
 
 
Metso is a global engineering and technology corporation with 2006 net sales of approximately EUR 5 billion. Its more than 26,000 employees in more than 50 countries serve customers in the pulp and paper industry, rock and minerals processing, the energy industry and selected other industries.
www.metso.com