Raute’s adjusted financial information for the financial year 2017 due to the adoption of the new IFRS 15 standard

RAUTE CORPORATION STOCK EXCHANGE RELEASE 23 MARCH 2018 at 2:45 p.m.


RAUTE’S ADJUSTED FINANCIAL INFORMATION FOR THE FINANCIAL YEAR 2017 DUE TO THE ADOPTION OF THE NEW IFRS 15 STANDARD

Raute Group has adopted the new IFRS 15 standard Revenue from Contracts with Customers as an accounting principle for the consolidated financial statements as of January 1, 2018. Raute will not make use of the allowances under the retrospective approach. In other respects, Raute has applied, to the restated comparison data for 2017 presented in this release, the same accounting principles as in the 2017 financial statements. The adoption process has been described in the 2017 financial statements under Net Sales. The presented comparison data for 2017 have not been audited.

The adoption of the standard did not significantly affect the Group’s result and balance sheet position. The Group’s restated key figures for 2017 have been presented in the table below. Detailed numerical information on the adoption of the standard is presented in the PDF file attached to this release.

However, the new standard may have a significant impact on revenue recognition in future, if a large future contractual entity does not meet the criteria for a performance obligation to be satisfied over time or if the contractual entity, for a reason specified in the contract, gives rise to distinct performance obligations.

New accounting principle

The IFRS 15 standard is part of Raute Group’s accounting principles for the consolidated financial statements as of January 1, 2018.

According to the IFRS 15 standard, the revenue is recognized when or as control of the transferred goods or service passes to the customer. When determining the time of revenue recognition, it is assessed whether control of the goods or service subject to the performance obligation passes over time or at a point in time. This criterion is applied by following a five-step model: (1) identification of the contract, (2) identification of the performance obligation, (3) determining the transaction price, (4) allocation of the transaction price to the performance of obligations and (5) recognition of revenue.

Of Raute’s products and services, performance obligations to be satisfied over time under the IFRS 15 standard include, as a general rule, project deliveries and modernizations that are treated as long-term projects and recognized based on the percentage of completion method, designed and tailored to the needs of the customer. These performance obligations do not have the alternative use referred to in the IFRS 15 standard and they still form one performance obligation. The company applies to performance obligations to be satisfied over time the same principle as in the percentage of completion method (proportion of costs incurred to the estimated costs of the project).

An exception to the above-mentioned general rule are the individual long-term projects recognized based on the percentage of completion method in which the customer has not committed to paying the incurred costs and a sufficient margin in situations where the customer unilaterally interrupts the performance of the contract or when the customer is unable to meet its contractual obligations. Going forward, these individual projects will be treated as performance obligations to be satisfied at a point in time. As for these exceptional cases, the adoption of the IFRS 15 standard changes the time of recognition to a later point in time. Based on current estimates, the number of these projects has been and will be limited.

In addition to the exceptional long-term projects mentioned above, the performance obligations to be satisfied at a point in time under the IFRS 15 standard include individual standard product deliveries and other technology services, such as, for example, maintenance, spare parts, training and digital services. The product-related performance obligations will continue to be recognized based on the delivery terms and the service-related performance obligations when the service has been provided to the customer. The IFRS standard does not change the allocation principle for these performance obligations or their time of recognition.

RAUTE CORPORATION
Arja Hakala
Chief Financial Officer


ATTACHMENT: Tables, pdf file
The restated data presented in the tables have not been audited.

FURTHER INFORMATION:
Ms. Arja Hakala, CFO, Raute Corporation, tel. +358 400 710 387

DISTRIBUTION:
Nasdaq Helsinki Ltd, main media, www.raute.com

RAUTE IN BRIEF:
Raute is a technology and service company that operates worldwide. Raute’s customers are companies operating in the wood products industry that manufacture veneer, plywood, LVL (Laminated Veneer Lumber) and lumber. The technology offering covers the entire production process of veneer, plywood and LVL and special measurement equipment for lumber. As a supplier of mill-scale projects, Raute is a global market leader both in the plywood and LVL industries. Additionally, Raute’s full-service concept includes technology services ranging from spare parts deliveries to regular maintenance and equipment modernizations. Raute’s head office is located in the Nastola area of Lahti, Finland. Its other production plants are in Kajaani, Finland, the Vancouver area of Canada, in the Shanghai area of China and in Pullman, WA, USA. Raute’s net sales in 2017 were EUR 148.6 million. The Group’s headcount at the end of 2017 was 704. More information on the company can be found at www.raute.com.