Componenta’s Auditor’s Report for the financial period 1.1- 31.12.2015

The Auditor of Componenta Corporation has today issued the following Auditor’s Report for the financial period 1.1 - 31.12.2015.

In addition to the standard format text the report includes an Emphasis of Matter paragraph.

“Auditor’s Report (Translation from the Finnish Original)

To the Annual General Meeting of Componenta Oyj

We have audited the accounting records, the financial statements, the report of the Board of Directors and the administration of Componenta Oyj for the year ended 31 December, 2015. The financial statements comprise the consolidated statement of financial position, income statement, statement of comprehensive income, statement of changes in equity and statement of cash flows, and notes to the consolidated financial statements, as well as the parent company’s balance sheet, income statement, cash flow statement and notes to the financial statements.

Responsibility of the Board of Directors and the Managing Director

The Board of Directors and the Managing Director 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 regulations 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 Managing Director 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 Responsibility

Our responsibility is to express an opinion on the financial statements, on the consolidated financial statements and on the report of the Board of Directors based on our audit. The Auditing Act requires that we comply with the requirements of professional ethics. We conducted our audit in accordance with good auditing practice in Finland. Good auditing 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 Managing Director are guilty of an act or negligence which may result in liability in damages towards the company or whether they have violated the Limited Liability Companies Act or the articles of association of the company.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures 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 control 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 circumstances, 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 Statements

In our opinion, the consolidated financial statements give a true and fair view of the financial position, 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 Directors 

In our opinion, the financial statements and the report of the Board of Directors give a true and fair view of both the consolidated and the parent company’s financial performance and financial position in accordance with the laws and regulations governing 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.

Emphasis of Matter

We draw attention to the accounting principles of the consolidated financial statements, according to which the company’s financial performance has fallen short of its targets due to poorer developments than expected in productivity, high quality-related costs, and tight liquidity over a long period. According to the accounting principles of the consolidated financial statements the targeted cost savings have not been achieved as expected and the company’s liquidity and working capital were tight at the end of 2015 and early in 2016. As described in the accounting principles of the consolidated financial statements, the net result for the period includes significant write-down losses on non-current assets and deferred tax assets due to the impact of the measures in the reorganisation of business operations arising from the strategy being drawn up, and the inherent uncertainty factors relating to them. Company also states in the accounting principles of the consolidated financial statements that during the financial year it has not complied with certain terms of the Nordic syndicated loan agreement and that the so called standstill agreement with the parties of the syndicated loan is in force until the end of April 2016. Failure to comply with certain terms of the syndicated loan agreement and cross default terms have resulted in certain long-term borrowings being classified to current liabilities in the company’s balance sheet.

As described in more detail in the accounting principles of the consolidated financial statements, the Board of Directors and Management consider that the company is able to reorganize its business operations and the financing arrangements during 2016 and to continue as a going concern. As such, the Board of Directors and Management believe that going concern basis of presentation in the financial statements is appropriate. In our opinion, the success of the measures described above to reorganize business operations and the success of the financing arrangements in a manner described in the accounting principles to the consolidated financial statements are such uncertainties that may cast significant doubt on the Company’s and its subsidiaries’ ability to continue as a going concern.

Our opinion is not qualified in respect of this matter.

Helsinki 11 March 2016

PricewaterhouseCoopers Oy
Authorised Public Accountants

Samuli Perälä
Authorised Public Accountant” 

Helsinki, 11 March 2016

COMPONENTA CORPORATION

Markku Honkasalo
CFO

For more information, please contact:

Markku Honkasalo
CFO
tel. +358 10 403 2710

Componenta is a metal sector company with international operations and production plants located in Finland, Turkey, the Netherlands and Sweden. The net sales of Componenta were EUR 495 million in 2015 and its share is listed on Nasdaq Helsinki. The Group employs approx. 4,250 people. Componenta specializes in supplying cast and machined components and total solutions made of them to its global customers, who are manufacturers of vehicles, machines and equipment.