IT’S AmAzINg hOw fAR A dROP Of OIL cAN TAkE YOU · AmAzINg hOw fAR A dROP Of OIL cAN TAkE YOU....

N Y N A S A N N U A L R E P O RT 2 0 1 4

IT’S AmAzINg hOw fAR

A dROP Of OIL cAN

TAkE YOU

3NYNAS ANNUAL REPORT 2014

2014 in brief 4

Nynas overview 6

Message from the President 16

Directors’ Report:

Economic environment 18

Nynas’ strategy 19

Group result 21

Financial position 22

Bitumen 24

Naphthenics 25

Sustainability

Taking oil further 26

Environment 28

Safety 32

Research and development 34

Human resources 35

ANNUAL REPORTcONTENTS

Financial risk management 38

Corporate governance 45

Board of Directors 49

Group Executive Committee 50

Content financial statements 51

Multi-year overview 52

Accounting policies 63

Notes 72

Proposed distribution of profit 109

Auditor’s report 110

Glossary 112

Definitions 113

Nynas history 114

4 NYNAS ANNUAL REPORT 2014

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2014 IN BRIEf

Total sales volume increased 9 percent.

Operating result before depreciation (EBITDA) and excluding non-recurring items reached SEK 1,336 million (533).

As a consequence of the dramatic fall in oil prices in the second half of 2014, unrealised hedge gains of SEK 510 million and an inventory write down of SEK -219 million are included in the EBITDA.

. Net income improved to SEK 279 million (-305).

Return on average capital employed (12 months rolling), reached 13 percent.

Successful launch of a four-year SEK 650 million corporate bond.


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2014 2013 2012 2011 2010

Net sales 22,522 19,527 24,471 23,223 20,579

Operating result before depreciation (EBITDA)1 1,336 533 655 1,032 1,077

Net income before tax 466 -285 -52 454 610

Net income 279 -305 -34 313 421

Cash flow from operating activities 534 174 698 -454 218

Cash flow after financing activities -11 -31 353 -1,343 -322

Cash capital expenditures 546 227 477 907 522

Net debt 3,421 3,406 3,457 3,692 2,347

Working capital 3,654 3,606 3,720 4,236 3,289

Return on average capital employed (12 months rolling), % 1

13 2 4 10 12

Return on equity, % 8 -12 -6 9 14

Equity to assets ratio, % 30 34 35 35 39

Number of full-time employees 854 872 881 871 866

1) Excluding non-recurring items

FINANCIAL OVERVIEW


SIgNIfIcANT PROgRESS TOwARdS

STRENghTENINg OUR BITUmEN

ANd NAPhThENIc SPEcIALTY OIL

BUSINESSES position.


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First year of operation of Harburg base oil plant in Germany without any problems.

NSP (naphthenic specialty products) Refinery reliability at all-time high, best ever in Nynäshamn at 97 percent.

Record NSP sales in China..

Singapore hub for NSP fully operational.

Closing of loss-making Continental Europe bitumen business.

Dundee refinery converted into bitumen depot.

Nynas bitumen UK distribution outsourced.

New bitumen supply terminal in Drammen, Norway.


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Nynas is a global company with a strong position in niche markets. The specialisation in NSP (naphthenic specialty products) and bitumen sets Nynas apart from most other oil companies, which offer oil as a source of energy.

Nynas’ core competence is to refine heavy crude oil into a balanced mix of long lasting, high performance specialty products for sustainable use.

Nynas is the leading brand and global market leader in NSP (naphthenic specialty products) and a market leader in bitumen in the European market where it operates.

Nynas’ products support growth in infrastructure and touch the lives of nearly everyone every day through their presence in roads, roofs, running shoes, adhesives, rubber, paint, magazines and lubricants, which are just some of the thousands of everyday objects that contain Nynas oils.


NYNAS PROdUcES

SUSTAINABLEPROdUcTS

OUTSIdE ThE fOcUS Of

mAjOR OIL cOmPANIES


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Dissolving

The high solubility of nynas oils is an advan-tage when manufac-

turing various types of synthetic rubber and compounds used to

make car tyres.

insulaTing anD cooling

Transformer oils are used in electrical applications, for insulation and cooling of power and distribution

transformers.

The range of NSP (naphthenic specialty products)

include highly processed oils whose outstanding

properties make them suitable for a wide range

of applications. The oils are highly soluble, ideal

for use at low temperatures and they comply

with stringent environmental requirements.

NAPhThENIcS


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wlubricaTing

nynas base oils are used as a component in cutting fluids for metal-working,

hydraulic oils, greases and other industrial

lubricants.

PuriFYing

nynas’ ability to purify oils and attain

a colourless product is in high demand for many chemical and technical

applications such as for adhesives and

printing inks.


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binDing

bitumen binders are used for asphalt applications

in construction and main-tenance of motorways, runways and bridges.

We are continuously developing

bitumen and its performance in

a wide range of applications. Our

long-standing focus on bituminous

binders has earned us the reputation

of being the bitumen specialist.

BITUmEN


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ProTecTing

nynas’ bitumen products are used for

roofing felt and various anti-corrosion applica-

tions such as pipe insulation.


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cLOSE TO OUR cUSTOmERS

curaçao Partner refinery

Antwerpen Partner

refinery

Nynäshamn refinery

ERL refinery50 % ownership

gothenburg refinery

Naantali Partnerrefinery

harburg refinery


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w An own sales network established, with

offices all around the world.

Four refineries and access to additional supplies through long term supply agreements.

Global distribution of naphthenic specialty oils through three hubs and 20 depots.

15 own bitumen supply points plus access to another 18 third party supply points across northern Europe, each with its own blending facilities.

Nynas refineries

Partner refineries

Sale Offices

Depots

Naantali Partnerrefinery


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2014 has been a good year for Nynas. Following

two years with negative results, we managed to

turn around our business performance in 2014.

The operational result before non-recurring items

amounted to SEK 1,336 million (533) whereby the

net profit was positive again with SEK 279 million

(-305) – and this in a year where the overall economic

conditions were far from ideal.

We did see some moderate growth in the western

economies but a significant slow-down in Asia.

On top of that the various conflicts in the world

negatively impacted on our sales. In the second half

of the year crude oil prices fell from above 100 USD

/ bbl (Brent) to below 50 USD / bbl, a collapse similar

to the one experienced in 2008. This also did not

help demand as customers expecting falling product

prices postponed their purchases as much as possible.

Given the time lag from purchasing our feedstocks

to finally selling and invoicing the finished product

to our customers, plus the additional delay with

which raw material price changes translate to

finished product price adjustments, we are carrying

a large price exposure on our inventory of feed-

stocks, intermediate and finished products. As a

consequence we have decided to consistently

hedge this price exposure. The rules for reporting

the financial impact of such derivate instruments

are governed by the IFRS. As our accounting and

reporting systems in 2014 did not yet allow us to use

what is called “hedge accounting”, last year’s 2014

earnings include the benefit of unrealised hedge

effects, whilst the adverse effect in the operational

business will occur in 2015. The positive net effect

before tax of these hedges and corresponding

inventory write-offs included per year end amounts

to approximately SEK 290 million in 2014.

Why am I spending so much time on this particular

issue which might seem a bit “technical”?

First of all, our hedging strategy, even though it comes

at a cost, was right last year. Without an appropriate

hedging policy in place price changes of the magnitude

seen in recent years can not only destroy the operating

result of many months but put the whole enterprise

at risk.

Secondly, given the above mentioned positive

EBITDA effect in 2014 and the corresponding neg-

ative effect in our operational business that will

partially occur in 2015, the quarterly comparisons

when reporting our 2015 results will look somewhat

distorted. As a consequence we will aim to improve

and upgrade our internal systems to move to hedge

accounting as per IAS39, and therefore mitigate the

profit and loss effect of using such derivatives.

Having said this, 2014 was still a very successful

year and I would like to take this opportunity to

thank all of our staff for their commitment and con-

tribution to this turnaround.

Contribution from our regionsAll businesses and regions contributed to this excellent

result, manufacturing once again had a year with high

availability and reliability of the production units and our

internal restructuring program delivered the targeted

cost savings. The only area where we did not manage

to achieve an improvement in our performance was

in the “Bitumen Continental” business. The Benelux

and northern French markets continue to be heavily

oversupplied with correspondingly suppressed margins,

and there is no improvement in the short-term outlook.

We have therefore decided to close that business and a

social plan was agreed with the workforce and unions

in December last year. Nevertheless, we will endeavor

to supply bitumen to those customers in the area

who value Nynas’ superior bitumen quality. Other key

restructuring activities were the conversion of Dundee

refinery into a depot as well as the outsourcing of our

“2014 has beena good year for nynas”


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UK bitumen fleet to a specialist transport company. And

last but not least on January 1st we finally took over

the base oil plant of the Shell refinery in Hamburg

and integrated it into our supply network.

Looking aheadLooking ahead we see continued growth in Asia and

South America even though at a somewhat more

moderate pace. However, even in a mature Europe

the competitive landscape is suddenly changing faster

than anticipated presenting new possibilities for

Nynas. There have been a number closures of so called

simple “Group I” base oil refineries in previous years,

but in 2014 alone 4 new closures were announced

with more rumored to come given the poor refinery

economics in the light of heavy oversupply of

higher quality “Group II” and “Group III” base oils.

However, for a number of applications “Group I”

quality attributes are needed, and Nynas’ naphthenic

specialties are well placed to fill that gap. The bitumen

competitive environment will also change in a number

of years following the announcement of at least two

projects in Europe to build new cokers that will absorb

feedstock that today finds its way into the bitumen

pool. Also here Nynas will be well placed with its high

quality bitumen.

As a consequence the main focus in 2015 will lie

on improving our production units in terms of qual-

ity and quantity. This year we will have two refinery

shutdowns starting with Nynäshamn in late spring

with a turnaround lasting approximately 40 days.

During the autumn both parts of the Harburg site

will commence their shutdowns, the base oil plant

south of the river Elbe as well as the crude oil refinery

on the north side of the river that will transfer from

Shell to Nynas on January 1, 2016. The conversion of

the northern part from a fuel refinery into specialty

products refinery will mark a step change in Nynas’

production capacity and enhance the supply security

for our customers.

Both projects in Nynäshamn and Harburg are sig-

nificantly improving our production footprint in terms

of quantity and quality for our NSP (naphthenic specialty

products) and bitumen businesses paving the way for

future growth in 2016 and beyond.

Gert Wendroth,

President and CEO

18 NYNAS ANNUAL REPORT 2014 DIRECTORS’ REPORT

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ECONOMIC ENVIRONMENTThe world economy grew moderately during 2014 at 3.3 percent. The mature western markets developed quite unevenly with the US and UK economies gaining momentum while the Eurozone remained behind expectations. Asian growth was once again driven by China growing slightly lower than expected at 7.4 percent while Japan´s economy remained stagnant. Political unrest in several areas around the world had an additional negative impact on the overall economic recovery.

Unemployment was down slightly and is now at pre crisis levels

around 5.5 percent, while global inflation was relatively moderate at

3.8 percent, as the recent decline in commodity prices kept inflation at

low levels.

In particular, the plummeting price of crude oil and consequently other

oil products was unexpected for many. High crude oil prices of about

USD 100 per barrel between 2011 and 2014 has led to a significant

increase in unconventional oil and gas extraction methods. Extraction

from shale formations and oil sands in the US and Canada has grown

significantly, while at the same time the slowdown in economic activity

reduced the demand for oil. As the leading OPEC member, Saudi Arabia

was not prepared to reduce production crude oil prices halved between

June 2014 and the end of the year.

A significant strengthening of the US dollar in the second half of 2014

coincided with the fall in oil price. The improving economy in the US

and continued overall weakness in Europe has accelerated the dollar’s

strength against the euro, a trend that has continued into 2015.

0

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40

60

80

100

120

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan

The statistics illustrates the monthly aver-age crude oil prices of the OPEC (Organi-zation of Petroleum Exporting Countries) basket for the period between January 2014 and January 2015. The OPEC basket is a weighted average of prices for petroleum blends produced by OPEC countries. It is used as an important benchmark for crude oil prices. In July 2014, the average price of the OPEC basket was at some 105.6 US dollars per barrel.

MONThly AVERAgE CRUdE OIl PRICES Of ThE OPEC bASKET fROM JANUARy 2014 TO JANUARy 2015

Source: IMF, Reuters, Statista and the OPEC.

19DIRECTORS’ REPORT NYNAS ANNUAL REPORT 2014

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NyNAS’ STRATEgy

The market for NSP (naphthenic specialty prod-

ucts) is truly a global one and Nynas is one of a few

companies with its own extensive sales and distribu-

tion network around the world. This makes Nynas

the leading brand globally in NSP (naphthenic spe-

cialty products), focusing on four key product areas:

ElECTRICAl: Transformer oils for insulation and

cooling of transformers

CHEMICAl: Process oils in the chemical and

technical manufacturing industry

lUbRICANT: base oils for metal working and

industrial lubricants

TyRE: Tyre oils to help tyre manufacturers meet

the highest environmental and technical standards.

Demand for these products is expected to increase

in the coming years due to economic development

particularly in Asia and South America, and also due

to a shift in supply with producers of simple Group I

paraffinic products exiting the market.

bitumen is a more local business, as it is not eco-

nomical to transport the product longer distances.

Therefore, Nynas concentrates on the key markets

around its bitumen refineries in Northern Europe,

where it enjoys a healthy market position.

Nynas’ current position and the outlook for both

product groups translates into Nynas’ strategy:

“More naphthenics and profitable bitumen”.

What does that mean for Nynas and its customers?The basis for this strategy consists of two key elements:

CUSTOMER FOCUS:– Skilled sales and customer service staff in

all key markets Nynas operates in

– Personalised contact: Nynas’ staff has a face and a name

– Technical product and application support globally

– Customer driven R&D

RElIAblE PRODUCT SUPPly:– Continued investments in existing production

units

– Acquisition of Harburg refinery to add new capacity and increase supply security

– Well established and further growing global NSP (naphthenic specialty products) supply network

– Proximity to our bitumen customers (33 own and third party supply points)

– Stable but flexible raw material supply

Nynas’ strategy is underpinned by the Nynas Code

of Conduct and a respective set of policies. These

More naphthenics

and profitable

bituMen

CUSTOMER FOCUS

RElIAblE PRODUCT

SUPPly

Nynas Code of Conduct and policies

Nynas refines heavy crude oil into two key product streams: NSP (naphthenic specialty products) and bitumen products.


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govern the company’s approach to growing share-

holder value whilst responding to all stakeholders’

interests.

GoalsThe Nynas strategy translates into short- and medium-

term business plans. The Group Executive Committee

monitors progress using a number of financial and

operational key performance indicators (KPIs). This is

done through:

meetings every second week with the Group

Executive Committee

monthly reporting internally and to the board

of Directors

“deep dive”sessions of the Group Executive

Committee regarding individual topics such as

HSSE, sustainability, human resources,

investment projects, and risk management.

The financial KPIs include EbITDA (earnings before

interest, depreciation and taxes) as a key measure

for short-term profitability and ROACE (return

on average capital employed) as an indicator for

longer-term profitability. Equally important is the

monitoring of working capital development and

the net debt to equity ratio.

The operational KPIs focus primarily on the per-

formance of our production units with reliability

and off spec production measures, as well as on

our HSSE performance.

In 2014 Nynas continued its efforts to improve

reliability and cost efficiency in it´s manufacturing

operations. These efforts have paid off, with sever-

al new production records set. Production reliability

increased since 2005 from below 90 percent to 97

percent in 2014. Reliability is defined as the per-

centage of time the unit is operating and producing

on-spec products.

Confirming an already established trend of con-

tinuous improvements, 2014 was the third year in a

row with very high reliability figures. The improved

performance is the result of strong focus on pro-

duction performance by all staff and supported by

a major investment program.

Key GrOUP KPIs 2014 2013 2012 2011 2010

EbITDA (before non-recurring items) in SEK million 1,336 533 655 1,032 1,077

Return on average capital employed in % 10 -1 4 9 13

Return on average capital employed in %, rolling 12 months 1 13 2 4 10 12

Net debt/equity ratio in % 100 106 97 99 69

Net working capital in SEK million 3,654 3,606 3,720 4,236 3,289

NSP off spec production rate in % 3 4 5 13 13

Total recordable injuries (TRIF) 5.5 5.4 4.3 9.2 4.9

1) Excluding non-recurring items.

21DIRECTORS’ REPORT NyNAS ANNUAl REPORT 2014

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gROUP RESUlTThe year was characterised by stronger business activity resulting in increased operating profit.

earningsThe stronger business activity during 2014 resulted in increased oper-

ating profit of SEK 775 million (-22). better overall margins and higher

bitumen volumes compared to previous year are the main reasons for

the improved performance. Results were impacted by a SEK -219 million

(0) inventory write down caused by the dramatic drop in oil prices which

was more than offset by SEK 510 (-14) million from unrealised market

valuation gains from oil and currency derivatives and SEK -172 million

(-157) for restructuring measures.

The non-recurring charge for restructuring measures of SEK -172 million

relates mainly to the closure of the Nynas NV Continental Europe bitumen

business and restructuring costs incurred by the internal efficiency program.

Net income improved and was positive with SEK 279 million (-305).

Net financial itemsNet financial items for the year amounted to SEK -308 million (-264) of

which SEK -224 million (-176) is related to net interest expenses. The

higher net interest expenses are explained by unrealised market valua-

tion on interest rate swaps.

TaxesIncome taxes increased to SEK -188 million (-20). The effective tax rate

including non-deductible non-recurring items was 40 percent (-7). The

effective tax rate has been impacted by the restructuring reserve and

operational losses in Nynas NV, giving tax losses for the year of SEK

87 million without corresponding capitalisation of deferred tax assets.

returnsReturn on average capital employed, (12 months rolling) was 13 percent

(2) and return on equity was 8 percent (-12).

NET SAlES ANd OPERATINg RESUlT

rev/op.pro�t

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Net sales Operating result

Capital Employed Return on average capital employed (12 months rolling)

RETURN ON AVERAgE CAPITAl EMPlOyEd ANd CAPITAl EMPlOyEd

cap

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fINANCIAl POSITIONNynas operates in an industry in which long-term value creation is achieved through improvements in productivity, cost control and investments in production capacity.

Cash flowCash flow from operating activities amounted to SEK

534 million (174), positively impacted by the higher

EbITDA earning compared to previous year. Cash

flow from investments, acquisitions and divestments

was SEK -545 million (-205) where the higher 2014

investment level accounts for most of the deviation

compared to previous year.

At the end of the year, cash and cash equivalents

amounted to SEK 898 million (938). Net debt was

unchanged at SEK 3,421 million.

FinancingIn 2014 Nynas issued a corporate bond in the Nordic

bond market, raising SEK 650 million with a four year

duration. The bond is listed on Nasdaq Stockholm. In

addition to this Nynas has a credit facility of EUR 750

million and a USD 50 million bond facility. At year-end

52 percent of these facilities were utilised. The loan

agreements include financial terms, called financial

covenants. The covenants include the following key

ratios: cash flow/interest payments, net debt/equity,

net debt/working capital and adjusted equity. At

year end all covenants were fulfilled.

long-term interest bearing liabilities includes defined

pension obligations of SEK 368 million. Due to the

drop in the discount rate an actuarial loss has been

accounted for amounting to SEK 119 million which

less deferred tax of SEK 31 million has been rec-

ognised in other comprehensive income.

Working capitalManagement of working capital is a focus area since

Nynas’ bitumen activities are highly seasonal with

large working capital requirements during the sum-

mer months. Net working capital increased by SEK

48 million compared to year end 2013, explained by

larger inventory and by higher current assets coming

from unrealised gains on oil hedge derivates.

CASh flOW fROM OPERATINg ACTIVITIES

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-400

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cashflow/invest

2010 2011 2012 2013 2014

NET dEbT ANd WORKINg CAPITAl

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SEK million

netdebt/WC

2010 2011 2012 2013 2014

Net Debt Working Capital

INVESTMENTS

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cashflow/invest

2010 2011 2012 2013 2014


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equity Equity at year end amounted to SEK 3,425 million (3,218). The equity ratio

was 30 percent (34).

Fixed assetsCombined with the investment in the Harburg refinery in Hamburg,

Nynas has undertaken significant investments to increase the reliability,

productivity and flexibility of its manufacturing operations.

Going forward Nynas has a strong platform to increase its supply of NSP

(naphthenic specialty products) volumes, with the increased capacity com-

ing from the Harburg Refinery. The Harburg Refinery gives Nynas increased

control over production by reducing dependency on external suppliers.

Capital expendituresTotal capital expenditures amounted to SEK 546 million (227). The

investments in ongoing business totaled to SEK 368 million. This was an

increase with SEK 141 million compared to previous year, increase mainly

driven by the investments in a bitumen depot in Drammen, Norway and

preparations for the maintenance stop in Nynäshamn scheduled for spring

2015 in line with the 4–5 year cycle presently required by the authorities.

Cash acquisition expenditures during the year was SEK 178 million (0)

and was related to the first payment of the southern part of the Harburg

Refinery.

AcquisitionsNynas has entered into an agreement with Shell to acquire a major part

of the Harburg refinery. The transaction comprises two phases. Phase

one covers the sale of the southern part, base Oil Manufacturing Plant

(bOMP). Phase two covers the sale of the northern part of the refinery.

The takeover of the southern part took place on January 1, 2014. From

that date Nynas took full responsibility for the operations of the bOMP.

At this point all relevant Shell staff working at the bOMP was transferred

to Nynas (approx. 80 employees). The takeover of the northern part

is currently scheduled to take place between December 31, 2015 and

January 1, 2016, subject to fulfilment of terms and conditions by the

parties, see note 31.


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Overall demand in 2014 developed well and in

line with expectations for the competitive Nordic

markets. Sales volume in Norway reached an all-

time high and Denmark, Finland and the baltics

registered increased sales volumes compared to the

previous year. Sales volumes in Sweden remained

almost unchanged. Sales in the UK and Ireland

increased overall, positively impacted by the general

economic recovery. Upgraded products and in

particular emulsions showed strong performance

as more customers look to use surface treatment

as a maintenance technique. Sales in Continental

Europe declined as an effect of the decision to close

the bitumen business, which was announced in

September. Nynas will continue to supply bitumen

to customers in the Continental European market

who value Nynas’ quality product. Overall in the

fourth quarter sales were favourably impacted by

the mild weather conditions, particularly in the

Nordic countries. In the UK the year started strong

and October, traditionally one of the busiest months

of the year, was no exception in 2014.

Net sales increased to SEK 11,342 million (11,101)

for the full year, reflecting the positive volume

development more than offsetting the decline in

sales seen in Continental Europe. EbITDA excluding

non-recurring items for the year amounted to

SEK 325 million (115), negatively impacted by the

operating loss in Continental Europe and year-end

write down of inventory. The impact of the inventory

write down was compensated by unrealised hedge

gains from market valuation of derivatives.

bITUMEN

bITUMEN PROdUCTS EXTERNAl NET SAlES1

bITUMEN SAlES by PROdUCT CATEgORy

binders for asphalt production 94%SEK 8,907 million

Industrial applications 6% SEK 573 million

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Overall global sales volumes in 2014 remained

at the same level as in 2013, however there were

important shifts between regions and countries.

While European total sales were flat in most countries,

with France and Spain impacted by the weak

economic situation and Ukraine sharply down due to

the political situation, these were offset by increased

German sales bringing the total for the region slightly

above 2013 levels. The Americas experienced an

overall decline with sales in South America negatively

impacted mainly by brazil due to the World Cup and

presidential election. North American sales declined

due to the cancelled supply agreement with the

US Three Rivers refinery. In Asia-Middle East-Africa

sales showed a healthy increase led by China that

continued to grow at record rates and also Korea

showed good growth. Nynas increased its footprint in

Sub-Saharan Africa with increased sales in East and West

Africa. In terms of industry segment impact on volume

the most noteworthy was the increase in automotive

production, followed by chemicals.

The sharp drop in oil prices in the fourth quarter

led to sales declines in all three regions as customers

postponed purchases in anticipation of further price

reductions.

Net sales for the full year increased to SEK 11,828

million (9,705) mainly due to the positive currency

impact from a weaker Swedish krona. EbITDA

increased to SEK 961 million (564) explained mainly

by currency and also margins.

NAPhThENICS

NAPhThENIC PROdUCTS EXTERNAl NET SAlES 1

NAPhThENICS SAlES by PROdUCT CATEgORy

Transformer oils 43.7% SEK 3,076 million

Process oils 17.0% SEK 1,194 million

base oils 23.9%

SEK 1,682 million

Tyre oils 15.4% SEK 1,086 million

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2010 2011 2012 2013 2014

1) excluding sale of fuel


SUST

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Y

Our core business is to maximise the upgrading

of crude oil to specialty long lasting naphthenic oils

and bitumen products whilst minimising the volume

of fuel products produced.

The backbone of Nynas’ approach to sustainable

development is its dedicated Policy for Sustainable

Development introduced in 2012. The policy takes a

holistic view, supporting Nynas’ existing social, envi-

ronmental and economic policies while strengthen-

ing the focus on sustainability.

The purpose of Nynas’ Policy for Sustainable

Development is to facilitate a progressive approach

towards “developing and implementing strategies,

ensuring growth of shareholder value while proac-

tively taking care of all stakeholder needs; specifi-

cally protecting and sustaining human and natural

resources for future generations”.

Our Policy for Sustainable Development strenght-

ens the interdependance of our sustainability related

policies:

ECONOmIC: Procurement Policy, Competition

Compliance Policy

SOCIAL: People and Human Rights Policy, Global

Anti-bribery & Anti-corruption Policy

ENvIRONmENTAL: HSSE & Q (Health, Safety,

Security, Environment & Quality Policy)

Policy implementation is supported by an internal

Notes for Guidance document. This has been devel-

oped to support interpretation of policy intent into

operational action. The ongoing development of spe-

cific Group KPIs and business targets are intended to

facilitate delivery.

Nynas’ holistic approach focuses on adopting work

practices that make a positive contribution to sustain-

able development so that together with our custom-

ers and suppliers we can:

align on principles of sustainable development

reduce use of natural resources

reduce GHG emissions

improve the environmental, economic and social

aspects of our products and their use

promote transparency and open dialogue to

stimulate engagement with all stakeholders,

specifically employees, customers, suppliers and

local communities

continuously improve the material aspects of

our sustainable development performance

through the development of KPIs and operational

target setting.

In the following sections Environment, Safety, R & D,

Human resources and Risk management we focus on

the importance of competence, continuous training

and providing career paths to our employees, our

approach to new product development and the

importance we put on the environment, health and

safety and overall risk management.

Taking Oil furTher

nynas differs from a typical oil company. More than 80 percent of its products are non-fuel products. Since oil is a finite resource nynas focuses on manufacturing products, which deliver lasting value; promoted as ‘taking oil further’.

nYnaS DeVelOPS PrODuCTS WiTh lOng

laSTing Value


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Environmental legislationWhen the Industrial Emissions Directive (IED) came

into effect in 2013 new rules became applicable

regarding industrial emissions. The IED brought

stricter requirements regarding application of the

best available technology and the reporting of pol-

lutants. So-called BAT (Best Available Techniques)

conclusions are used when establishing permit stip-

ulations and all operations must report annually on

how they are complying with the BAT conclusions

and on any actions that will be taken to meet the

requirements in the event of non-compliance.

The BAT conclusions are listed in the BREF (BAT ref-

erence document) documents for various operations.

A new BREF document for refineries was adopted

and published in October 2014. Nynas must demon-

strate compliance with this BREF document’s BAT

conclusions within four years of publication. Any

gaps will be identified during 2015 and necessary

measures will be evaluated and planned accordingly.

Another IED requirement is to produce a status

report on pollutants in the ground and groundwater

in the areas in which the operations are located. The

status report will subsequently serve as a benchmark

on the day that operations are closed down. A status

report must be submitted by no later than four years

after the BAT conclusions are published. Efforts are

underway to ensure that Nynas is complying with

the requirements stipulated in the BAT conclusions,

and to draft documentation for the status report.

These efforts will continue in 2015.

NYNÄSHAMN REFINERY, SWEDENThe refinery in Nynäshamn manufactures bitumen

and naphthenic oils. Environmental investments and

actions during 2014 were as follows:

Pressure-vacuum valves were installed on all

crude tanks to reduce vOC emissions.

New pumps with increased pumping capacity were

installed in the pump station of the wastewater

treatment plant to ensure capacity to handle fire

water-runoff and exceptionally heavy rainfall.

The intention was to start covering the area

of Land Farm landfill, but the material had not

settled enough to initiate this action, which will

be completed by 2016.

Previously implemented actions (steam generated

from biofuels and a shift to natural gas as a raw

material for the production of hydrogen) have 2014

reduced the total CO2 emissions from the refinery by

approximately 74,000 tonnes between 2004 and

2014. Potential activities to achieve further reduc-

tions have been identified and are being evaluated.

measurements are performed on an annual basis

to estimate the magnitude of vOC emissions and

to assess the potential need for measures to reduce

emissions. Previous measurements have indicated

deficiencies in the seal of the floating roof in one tank.

These deficiencies will be corrected during 2015.

An energy plan for 2013–2015 was submitted to

the inspecting authority on December 30, 2012 (as

stipulated in the environmental permit). The plan for

2014 includes for instance improvements regarding

the insulation of tanks and pipes, where two projects

for upgrading of insulation have been completed,

as well as improved reporting of energy utilisation

for each facility. The energy plan also includes daily

operating activities, such as reducing the amount of

fuel gas being flared and reducing boiler blowdown.

In 2013, responses to the Land and Environment

Court regarding the remediation of the J3/J4, P and E2

areas were submitted on several occasions. The Court

hearings were held on December 4–5, 2013 and April

9, 2014. The court’s decisions were published on June

18, 2014 and appeals were submitted by the Swedish

Agency for marine and Water management and a pri-

vate individual. The Court of Appeal decided to accept

the appeal regarding E2 and reject all other appeals.

As no appeals were submitted regarding the decision

by the Court of Appeal, the decision by the Land and

Environment Court to allow Nynas to carry out the

remediation of J3/J4 and P according to the plan sub-

mitted by Nynas is now final and legally binding.

A new partial judgment regarding emissions to air

enVirOnMenTal MeaSureS ThrOughOuT The Year


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(vOCs and sulphur) was received on April 10, 2013.

The Swedish Environmental Protection Agency appealed

one of the sulphur stipulations (stipulation 9b, which

pertains to the level of sulphur recovery efficiency

in the sulphur recovery facility). The decision by the

Court of Appeal was published on February 28,

2014 and confirms the decision given by the Land

and Environment Court in April 2013 with a minor

change in wording, but no change in the definition

or level.

Proposals for stipulations and reports pertaining to

emission levels to water and management of fire water

runoff have been submitted to the Land and Environ-

ment Court and the review process has been initiated.

GotHENbuRG REFINERY, SWEDENNynas manufactures bitumen, specialised products

containing bitumen, and various types of distillates

at the Gothenburg, Sweden refinery. An environ-

mental permit was granted in a partial ruling in 2010

to increase the throughput to 800 kilotons of crude

oil per year, including requirements on fulfilling and

investigating various environmental stipulations.

A number of investigations as well as actions have

been carried out in recent years with the aim of re-

ducing various types of emissions to air, ground and

water, and to minimise waste. The result of the inves-

tigations is another partial ruling from 2013.

After some amendments a number of final stipula-

tions as well as new investigations have been received

such as:

Limiting the sulphur content in the fuel to a max-

imum of 0.05 percent. This resulted in a signifi-

cant reduction in SO2 and NOx emissions.

Reducing vOCs from the oil pumping and storage

in the A and B caverns. A project to install a

vapour combustion unit for the reduction of gases

from the caverns has been started. The facility

should be in operation by July 1, 2016 at the latest

and will reduce vOCs by more than 95 percent.

Implementing environmental management of

tanks including taking care of fire fighting water.

This will be compliant through the use of impervious

surfaces and controlled ducts that run off to a reten-

tion basin. The project is ongoing.

Performing additional studies including the toxicity

of the effluent water. A number of studies

are ongoing.

The company should assess potential energy con-

servation measures and report on these by 2016.

A permit was obtained on march 18, 2014 to purify

water leaking from the caverns and then release the

purified water into the rock between Nynas caverns

A and B, provided that some new conditions, such as

in-line oil in water measurements, are fulfilled.

The soil in the ground around the caverns has

been remediated due to an overflow of crude oil,

which occurred in the late 1990s.

HARbuRG REFINERY, GERMANYNynas produces naphthenic and paraffinic special-

ty oils at the Harburg refinery located in Hamburg

Germany. During 2014 activities were carried out to

run the refinery more efficiently and to reduce the

amount of energy used. These are some examples:

Temperatures are now regulated to the minimum

necessary level.

Production is in defined design and operating

windows.

O2 value in the flue gas is controlled and regulated

Focus is on efficient use of steam.

Process equipment was changed to more energy

efficient alternatives.

Energy consuming equipment not in use is disabled

Energy saving lamps have been installed.

Regular maintenance and inspection of plants

and equipment have been carried out.

During 2014 Nynas invested in the installation of inde-

pendent overfill protection on ten tanks in accordance

with the Federal Control of Pollution Act.

The main changes relating to Harburg’s environ-

mental permit were as follows:

export line for naphthenic distillates added in

accordance with § 15 BImSchG (Federal Control

of Pollution Act)

independent overfill protection installed at ten

tanks in accordance with § 15 (Federal Control of

Pollution Act).


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ENvIRONmENTAL DATA NYNAS REFINERIES

the environmental data reported are part of the data the company reports to the authorities.

More information on targets and outcome for previous years is also available on nynas.com.

NYNÄSHAMN REFINERY ActuAl 2014

lIMItS AccoRDING to ENvIRoNMENtAl pERMItS

production 0.99 mtonnes crude 1.8 mtonnes

Emission

Oil to water 0.18 mg/l (total 0.25 tonnes) 5 mg/l

SO2 269 tonnes 500 tonnes

NOx 41 tonnes 125 tonnes

vOCs ~1 180 tonnes (measured in 2011)* –

CO2

** 137 441 tonnes

Energy utilisation 17 010 tonnes of fuel oil8 570 270 m3 of gas (internal gas)61 911 mWh electricity172 GWh steam (purchased)127 GWh steam (produced)

GotHENbuRG REFINERY ActuAl 2014


production 0.450 mtonnes crude 0.800 mtonnes crude

Emission

Oil to water (nonpolaric hydrocarbon) average

1.2 mg/l 3 mg/l

SO2

9 tonnes –

NOx 20 tonnes –

vOCs ~ 70 tonnes –

CO2

** 28 344 tonnes

Energy utilisation 8 583 tonnes of fuel oil391 tonnes of gas20 100 mWh electricity

–

*) Too few measurements to be able to report total emissions during 2014.

Results for measurements during three days in 2014 was 107 kg/h.

**) CO2 emissions from the production units.

**) CO2 emissions from trhe production units.


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HARbuRG REFINERY ActuAl 2014


production 348 086 tonnes NSP + PSP33 253 tonnes slack wax15 302 tonnes bitumen

–

Emission

Oil to water 0* –

SO2 7. 843 tonnes –

NOx 40. 852 tonnes –

vOCs n/a –

CO2

** 42 539 tonnes –

Energy utilisation

Fuel gas import 4 567 tonnes = 63 626 mWh

Fuel gas export 189 tonnes = 2 968 mWh

Fuel gas mass burned 16 386 tonnes = 269 436 mWh

Fuel gas production 12 008 tonnes = 209 078 mWh

HP steam import: 134 856 mWh

Electricity 6 Kv import 56 439 mWh

Hot water consumption import 42 890 mWh

*) All oil containing wastewater has been routed to the wastewater treatment plant at the Shell site.

**) CO2 emissions from the production units.


SAFE

TY

ObSerVe, Think anD aCT

While safety at nynas remains as critical as ever, the 2014 results indicate that there is still a way to go to achieve top marks. in line with this, safety focus was elevated towards the end of the year.

every single accident is one too many at Nynas.

The group-wide Health, Safety, Security, Environment

& Quality (HSSE&Q) policy is designed to create a

strong internal culture that prevents and eliminates

risks in the workplace. many safety improvement

activities have been performed to reduce the number

of injuries and accidents.

In 2014, the total number of recordable injuries

per million working hours (TRIF) was 5.5. This was

above the 2014 target of 4.5 and slightly higher than

the 5.4 TRIF in 2013.

During the year, videos with important safety les-

sons were made available to staff in multiple lan-

guages. Line management safety walks and audits

were also increased towards the end of the year to

help improve the safety culture.

Such initiatives are designed to make Nynas a more

mindful organisation.

Nynas’ “Observe, think and act” programme focuses

on safety behaviour, being observant of potential risks

and knowing how to mitigate them.

This safety programme will become compulsory

for every employee and contractor in 2015.

In 2014, a leadership safety improvement project

was started to get all managers committed to safety.

The project includes training activities for managers

and requires performing safety walks and holding

HSSE meetings.

SafeTY


SAFE

TY

The following types of accidents are tracked monthly

through Key Performance Indicators (KPIs):

Personal injuries, Lost Time Accidents, Restricted

Work cases and medical Treatment cases

Process Safety Accidents (Loss of containment as

unwanted consequence)

Transport Accidents (Accidents during loading,

transport and unloading).

Each accident is investigated, in many cases by spe-

cially trained investigators. Direct and indirect causes

are determined and corrective and preventative actions

are taken.

Nynas benchmarks personal injuries and process

safety accidents (PSAs) with CONCAWE (Conserva-

tion of Clean Air and Water in Europe). Transport

accidents are benchmarked with ECTA (European

Chemical Transport Association)

Nynas also works in accordance with the OECD

Corporate governance for process safety: Guidance

for senior leaders in high hasard industries. This guid-

ance, designed for senior decision makers in organi-

sations, has been communicated to the Nynas board.

Total Recordable Injuries (TRIs) include the following

types of injuries:

Lost Time Accidents (LTA) is an instantaneous

bodily defect whereby the individual is physically

or mentally unable to work on a scheduled day or

shift resulting in at least one day off the job, not

counting the day of the accident.

medical Treatment Case (mTC) is a work-related

injury, which requires the attention of a medical

practitioner.

Restricted Workday Injury (RWI) is a work-related

injury which causes the injured person to be

assigned to other work on a temporary basis or

to work less than full time at his or her normal job.

Sick leave (excluding Harburg) was a relatively low

2.3 percent globally.

0

0.5

1.0

1.5

2.0

PER MILLIONWORKING HOURS

PrOCeSS SafeTY aCCiDenTS (PSa)

2010 2011 2012 2013 2014

In 2014, after an analysis of the process safety accidents (PSA) reporting, it was identified that Nynas had in the past incorrectly reported PSAs as Tier – 1 when they were in fact Tier – 2 accidents.

TranSPOrT aCCiDenTS

0

5

10

15

20

25


TOTal reCOrDable injurieS

0

2

4

6

8

10


2010 2011 2012 2013 2014 2010 2011 2012 2013 2014


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raiSing The barDeveloping new oils and optimising products and applications to make them more sustainable are at the core of nynas’ research and development. The company has a long tradition when it comes to bitumen and naphthenic specialty oils, with the expertise to deliver added value to customers.

nynas has its own R&D unit and laboratories

focused on product development, optimising Nynas

refineries and supporting the company’s long-term

strategic goals. The R&D team consists of experts in

bitumen and naphthenic products, solutions, and

applications. They regularly share their knowledge

in customer seminars and industry papers. About 20

such articles were published in 2014.

The group also shares its expertise with a number

of universities and research institutions in the US and

Europe including the KTH Royal Institute of Technol-

ogy in Stockholm, where Nynas sponsors and men-

tors PhD students. Supporting research initiatives

helps Nynas remain at the forefront when it comes

to developments in the field.

In the KTH collaboration funding has been provid-

ed for research into cold paving technology based on

bitumen emulsions. Bitumen binders are developed

that can be used to lay asphalt at lower temperatures.

This will make it possible to reduce energy utilisation,

lower CO2 emissions and offer a safer, cleaner work

environment for those constructing roads. In 2014 the

results of more than 20 years of road testing based

on this Nynas cold paving technology were completed

and published. The results demonstrate that the bitu-

men binder has held up well, indicating that it is pos-

sible to combine the sustainability targets of reduced

energy demand and durable performance.

Already today, Nynas’ focus on sustainability has led to

more durable, long-life products. The recently devel-

oped Endura D1 bitumen product helps reduce noise

and eliminate water on roads for a safer and quieter

user experience.

During the year Nynas successfully developed and

launched several transformer oil grades adapted to

meet local specifications, in addition to a high vis-

cosity grade process oil for applications such as tyres.

To optimise the use of new crude oils, perform

product development, support process design of

investments and work with trouble shooting, highly

qualified Nynas researchers carry out simulations in

the Nynas Protech laboratory. Located in Nynäshamn,

Sweden, this “mini refinery” has several small-

scale distillation and hydrotreater units. In 2014 an

additional hydrotreater unit was added to the lab.

This will help with complex simulations including

the newly added Harburg production. Today Nynas

have access to seven full-scale hydrotreaters in three

different locations.

Product development within process oils is per-

formed at Nynas’ Technology Centre in Nynäshamn.

In 2014 a new application lab for adhesives was

added to the centre.

Nynas is a member of industry organisation CONCAWE, which documents all products and product groups in compliance with the EU’s REACH (Registration, Authorisation and Restriction of Chemicals) directive. Under this directive, all chemicals and sub-stances used in the EU must be registered, assessed for risk and authorised for the purpose of protecting human health and the environment. Nynas takes a very active role in promoting high standards by supporting the work of REACH through expertise.

reSearCh anD DeVelOPMenT


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OPPOrTuniTieS TO grOWintegrating the new harburg site and developing leadership within the company were among the main priorities in 2014. nynas managed to make headway in both of these areas.

core valuesNynas aims to employ a diverse mix of people with various competences,

but one thing they should all share in common is the ability to contrib-

ute to and strengthen the Nynas culture. This is a culture of dedication,

cooperation and proactivity, stemming from the company’s heritage as

a family owned company. These are also Nynas’ three core values.

DEDICATION: Doing one’s best in every situation and taking responsibility

for customers, colleagues and society in general. Nynas employees never

compromise on safety, health, the environment or quality.

COOPERATION: Cooperation, mutual trust and support, which creates

a corporate culture that encourages cross-border and cross-functional

meetings, job rotation and training.

PROACTIvITY: By thinking ahead, being open to new ideas and contin-

uously seeking new solutions and opportunities with, and for custom-

ers, Nynas can continue to be at the forefront of developments.

An attractive workplaceNynas is a value-driven company where there is freedom to develop and

many opportunities to work abroad. It comprises a very international

group, with 51 percent of its employees outside of Sweden, of which

11 percent are employed outside Europe. The company benefits from

this diversity by gaining a better understanding of other cultures and

behaviours. This in turn helps in communications with customers and

others. The international environment, along with a flexible approach is

one of the keys to the company’s high retention level.

cooperation at the core when integrating HarburgTo facilitate cooperation in the integration of Harburg, Human Resources

conducted workshops in cross-cultural communication which was well

received and allowed for a successful integration so far. Male-female ratio, top management.

men67%

Women 33%

Male-female ratio at Nynas.

men66%

Women 34%

Number of full time employees as of December 2014.

854

Employees by geographical area for Sweden, UK, Germany, Rest of Europe (ROE) and Rest of the World (ROW).

ROE 12%

ROW 11%

Sweden 49%

UK 16%

Germany 11%

huMan reSOurCeS


EmPL

OY

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Chian Yaw worked for British

and American multinationals in

the chemical and petrochemical

industries, before starting at

Nynas in 2008. He has a Bach-

elor’s Degree in Chemical Engi-

neering and a master’s Degree in

Business Administration.

“I was attracted to Nynas for

three main reasons: Nynas’ spe-

cialisation in naphthenic specialty

oils; its lean organisation with a

very flat management system;

and the opportunity to work for a

Scandinavian corporation for the

first time.

When I started in Singapore,

there were only three people in

a shared service office. Today, we

have almost 13 people in our own

Singapore office and we are pro-

jected to grow and recruit more.

I like the diversified culture

within the organisation. In

Singapore, we have a term called

‘rojak’ which means ‘mixture’.

In fact, Nynas Singapore is like a

melting pot with different people

from different backgrounds,

cultural orientations and beliefs

working under the same roof.

When I first joined Nynas, I was

handling South East Asia (exclud-

ing malaysia) sales within NSP

(naphthenic specialty products).

Joakim Garpsater is a mechanical

engineer with a degree from the

KTH, Stockholm’s Royal Institute

of Technology. He began his

career at Nynas as a full-time

consultant in 2005 and has been

a Nynas employee since 2010.

Today he works at the refinery in

Nynäshamn, Sweden.

“I liked Nynas right away and

the company’s friendly culture

and interesting assignments.

The time at Nynas has given me

plenty of chances for personal

development and learning. I

started working at Nynas as a

mechanical designer but have

had the opportunity to develop

into other areas such as project

management, process know-

ledge and maintenance strategy.

I will now move on to a manage-

ment role and a role related to

work environment issues.

The culture here is really

Chian YaWhead of TechDMS for the electrical and lubricants industries, Singapore

jOakiM garPSaTerMaintenance Coordination Managernynäshamn, Sweden

anDré zuM hingSTe,hr Managerharburg, germany

EmPLOYEES TELL THEIR STORIES

Today, I have another challeng-

ing role as the Head of Technical

Development and market Support

(TechDmS) for the Electrical and

Lubricants Industries, covering

Asia Pacific. Developing and

growing sales in Asia has helped

me to nurture and grow too.”

familiar and upfront which gives

employees the confidence to

express new ideas and improve-

ments. I also think there is a

special ‘Nynas spirit’, a culture

of working together and a will

to help each other out. I don’t

think you will find that in every

workplace.

After comparing workplaces

with friends from my time at uni-

versity I would say that Nynas is

a unique employer. The company

gives you lots of responsibilities

but at the same time a lot of

opportunities. I would definitely

recommend working at Nynas.

Here you will be given interesting

assignments, opportunities to

develop and great colleagues.”

With the acquisition of the Shell

refinery in Harburg, Germany,

Nynas began the task of hiring

and integrating employees into

Nynas in 2014. These efforts will

continue in the coming years.

Coming to Nynas from Shell

was a big adjustment, says HR

manager André zum Hingste,

adding that Nynas handled the

processes in a very professional

manner. “I very much appreciate

the speed of handling tasks and

solving problems at Nynas,” he

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says, adding that they got off

to an excellent start with good

support from Swedish colleagues

and good preparation when it

came to equipment, IT solutions

and more.

“Our colleagues in Sweden

were very helpful and we always

had the feeling that everyone

understood the challenges and

wanted to make it a success. The

welcome event in the second

week was the perfect way to

come into contact with the new

colleagues and was a very good

opportunity to learn more about

Nynas and the Swedish culture.”

Among the other integra-

tion efforts were workshops

in intercultural training and

English language training for the

German-speaking staff. This par-

ticular initiative will be expanded

further in the near future.

“Good communication along

with the right skills, good rela-

tionships and strong motivation

from employees have been the

key factors to making the inte-

gration successful,” says André.

takeover. Since then, he has been

nominated as a “value Hero” for

his good work with integrating

the Harburg refinery into Nynas.

“It was a difficult situation for

all Harburg employees after the

Shell announcement in 2009

of the future options for the

Harburg refinery. This changed

however with the EU approval of

Nynas and the new way forward

for the Harburg refinery.

One of the challenges after-

wards was to convert the Shell

refinery into a Nynas refinery. I

think we managed it in a good

way and the performance was

what Nynas expected. We ful-

filled most of the requirements

from the first day onwards.

At Nynas you are, for the most

part, directly involved in the pro-

cesses and in the changes. I like

this way of working because you

have a direct influence on your

own future and in the growth

of the company. It is also an

open and flexible company with

opportunities to grow.

At the beginning of 2014 we

had a Swedish-Nynas culture and

a German-Shell culture. Since

then I think we have all learned

from each other and now the

differences are not so big. The

result is from my point of view a

really good mixture within Nynas.

segments, before being relocated

to Singapore.

“I was relocated to Singapore

as a Technical Coordinator and

in the beginning I covered all

four of our segments (Chemical

Industry/Tyres/Electrical Industry/

Lubricants). After two years I

became responsible for Electrical

and Lubricants in the Asia and

Pacific region. In 2014 I moved

back to Sweden and took over

the challenging role as Technical

manager for the ELI group in

October. I think I will learn and

develop a lot from this role.

What I like about working

at Nynas is the possibility to

develop, the good colleagues,

and the very varying tasks. I also

like working at a global company

and the fact that at Nynas you

are trusted to do your work.

As I mentioned it was after just

two years at the company that I

moved to Singapore and it’s still

a bit hard to believe that they

trusted me that much! I think

that Nynas puts a lot of effort

into its personnel.

I would say that we live our

values of ‘Cooperation, Dedica-

tion and Proactivity’ very well,

while also having a lot of fun.”

linnéa bergelDTechnical Manager electrical industrynynäshamn

ThOrSTen riebeSehlPlanning & Scheduling leadharburg, germany

Linnéa Bergeld has a master of

Science in Chemistry from Karl-

stad University in Sweden. She

started at Nynas in 2009, and for

the next couple of years learned

a great deal about the compa-

ny’s naphthenic specialty oils

After 28 years at Shell, Thorsten

Riebesehl made the shift to

Nynas on January 1, 2014, with

the Harburg South (Phase 1)

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FINANCIAL RISKMANAGEMENT

The Nynas group is exposed to financial risks. These risks are managed in accordance with the Group’s finance policy as defined by the Board of Directors.

Nynas Group Treasury department has been

established as the functional organisation in the

parent company where most of the Group’s financial

risks are handled. The function conducts internal

banking activities, with the primary task to control

and manage the financial risks to which the company

is exposed as part of the company’s normal business

activities, and to optimise the Group’s financial net.

The treasury department supports the subsidiaries

with loans, cash management, currency and hedge

transactions.

The internal bank also operates the company’s

netting system and handles the Group’s cash man-

agement. Treasury operations also conduct payment

advisory services and handle the Group’s credit

insurance.

Nynas has an insurance to cover the Group’s property

and liability risks. As a natural element of the Group’s

different activities, continuous loss prevention work and

loss mitigation measures are conducted. This work sets

the standards for the required levels of protection, in

order to limit the probability of major claims.

The reports on the following pages adhere to the

reporting requirements laid down in IFRS.


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LIquIDITy AND REFINANCING RISK EXPOSURE

Liquidity and refinancing risk is the risk of difficulty

in refinancing loans maturing, and the risk that

payment obligations cannot be fulfilled as a conse-

quence of insufficient funds.

Average terms to maturity of outstanding loans, size of programme and remaining maturity, nominal SEK

COMMENT

2014 Currency

Recog-nised

liabilities

Pro-gramme

size

Average remaining

credit time (years)

Bond issue SEK 638 650 3.6

Bond issue USD 465 465 1.8

Syndicated stand-by credit line

EUR 2,832 7,045 1.9

Other bank loans Miscellaneous 16 – –

TOTAL BORROWING 3,951 8,160 2.0

2013 Currency

Recog-nised

liabilities

Pro-gramme

size

Average remaining

credit time (years)



Syndicated stand-by credit line

EUR 3,142 6,644 3.0

Other bank loans Miscellaneous 24 – –

TOTAL BORROWING 4,169 7,647 2.8

At the turn of the year approximately 34

percent (approximately 44) of the Group’s

assets were financed with external loans.

To reduce financing risk, most of Nynas’

known credit requirement is covered by

long-term credit facilities. Dependence

on individual financing sources, is actively

reduced and a conservative approach on

counterparties for placement of any surplus

liquidity is applied. To reduce financing risk,

most of Nynas’ known credit requirement is

covered by long-term credit facilities.

In November 2011, a syndicated stand-by

credit line for EUR 750 million was signed.

The term of the credit facility is five years.

In 2014 Nynas issued a corporate bond in

the Nordic bond market raising 650 million

SEK in borrowing for a four-year period.

The bond is listed on Nasdaq Stockholm.

The management closely monitors the fore-

casts for the Group’s net liabilities in order

to monitor the liquidity risk and covenants,

since Nynas’ bitumen activities are highly

subject to seasonal fluctuations and the

working capital increases significantly dur-

ing the summer months.

The loan agreements includes financial

terms, called Financial Covenants. The cov-

enants include the following key ratios, cash

flow/interest payments, net debt/ equity, net

debt/working capital and adjusted equity.

At the turn of the year all covenants were

fulfilled.


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CuRRENCy RISK

CuRRENCy RISK TransacTion risk

EXPOSURE

Nynas’ transaction exposure, i.e. the Group’s net cur-

rency flows, amounted to SEK 3,601 million in 2014

(SEK 4,852 million).

Net flows in foreign currency, SEK million.

Currency risk concerns the fluctuations

in exchange rates that, in different ways,

affect the result for the year, other com-

prehensive income, and the company’s

competitiveness:

The result for the year is affected when

sales and purchasing are denominated

in different currencies (transaction risk).


assets and liabilities are denominated in

different currencies (conversion risk).


subsidiaries’ results denominated in

different currencies are converted to

Swedish kronor (conversion risk).

Other comprehensive income is affected

when subsidiaries’ net assets denominat-

ed in different currencies are converted

to Swedish kronor (conversion risk).

Nynas handles the currency risks occurring

in accordance with the descriptions given

in the following sections. There have been

no changes in the handling of the currency

risk compared to previous years.

-8,000

-7,000

-6,000

-5,000

-4,000

-3,000

-2,000

-1,000

0

1,000

2,000

20142013

AUD DDK EUR GBP NOK PLN USD OTHER

COMMENT, TRANSACTION RISK

Nynas has significant foreign currency

flows, primarily in USD, EUR, GBP and

NOK. For example, the Group buys crude

oil in USD and sells products in other local

currencies, and is thereby exposed to

fluctuations in exchange rates. It is in the

nature of the oil industry that changes in

exchange rates are passed on in the prices

charged to customers. This reduces the

currency risk, albeit with a certain time lag.

This also applies to Nynas.


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CuRRENCy RISK conVErsion risk

EXPOSURE

The equity of Nynas’ foreign subsidiaries must not

normally entail any significant conversion risk as the

objective is to balance the subsidiary’s assets and

liabilities in foreign currencies. The result of a foreign

subsidiary is converted to Swedish kronor on the

basis of the average exchange rate for the period in

which the result was achieved, which means that

the Group’s result is exposed to conversion risk.

The net assets, i.e. usually the subsidiary’s own capi-

tal, are converted to Swedish kronor at the exchange

rate on the balance sheet date.

On December 31 the Group’s net assets in subsidiar-

ies denominated in foreign currency totalled SEK

1,317 million (SEK 1,266 million).

Net assets in foreign currency, SEK million.

-3,200

-2,800

-2,400

-2,000

-1,600

-1,200

-800

-400

0

2014 2013

GBP 846 609

CHF 3 31

USD 130 125

SGD 74 56

BRL 126 82

PLN 52 48

DKK 22 39

NOK 57 54

Other 8 222

TOTAL 1,317 1,266

The Group’s borrowing by currency, SEK million

20142013

COMMENT, CONVERSION RISK

In order to avoid conversion risk in the sub-

sidiaries’ balance sheets they are financed

in the local currency via the internal bank.

The currency risk incurred by the internal

bank as a consequence is handled with

the help of various derivatives, in order

to minimise the conversion risk. Nynas’

policy is in significant respects to hedge

net assets in foreign subsidiaries, excluding

the tax effect. Forward foreign exchange

contracts are predominantly used to hedge

net assets. Any impairment is recognised in

the result for the year.

SEK USD EUR GBP OTHER


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CuRRENCy RISK cUrrEncY sEnsiTiViTY

EXPOSURE

In order to gain the full picture of how currency fluctuations

affect the Group’s operating result account should be taken of

both the transaction risk and the subsidiaries’ operating results

in the respective currencies, and the actual hedging. The Group’s

other comprehensive income has a currency exposure that relates

to the size of the net assets. In addition to the net assets, other

comprehensive income is affected by currency risk since certain

derivative contracts are subject to hedge accounting, which

entails that the changes in the market value of these contracts

are carried directly to other comprehensive income, instead of to


The most obvious exposure is in the inventory. The value of the

specific inventory varies with the dollar price and in 2014 the

inventory value on average was approximately SEK 3,926 million

(3,990), with the main part hosted in Nynas AB. A currency fluc-

tuation in the SEK/USD rate by SEK 0.10 would therefore affect

the result by approximately +/- SEK 40 million.

INTEREST RATE RISK EXPOSURE

Interest rate risk is the risk that

changes in market interest

rates will adversely affect the

Group’s net interest income.

How quickly an interest rate

change affects net interest

depends on the liabilities’

fixed interest period. Nynas

measures the interest rate risk

as the change in the next 12

months on a 1 percent change

in interest rates.

The average borrowing during the year was approximately SEK 4,308 million (4,478). A 1 percent

change in interest rates would therefore change the pre-tax profit/loss by +/- SEK 43 million (45). At

the close of the financial year borrowing totalled SEK 3,951 million (4,169). A 1 percent change in

interest rates would therefore change the pre-tax profit/loss by +/- SEK 39 million (42).

COMMENT, CURRENCY SENSITIVITY

Forward foreign exchange contracts are used to hedge obvious currency exposure.

Nynas are not applying hedge accounting.

Fixed interest rate and fixed interest periods, SEK million.

2014SEK million

Effective interest rate, %

Fixed interest period, month



Recog-nised

liabilities

Bond issue 7.2 20 4.0 21 465

Bond issue 8.0 3 8.0 3 638

Syndicated stand-by credit line 3.2 2 3.2 2 2,832

Other bank loans 1.5 – 1.5 – 16

Interest rate swaps – – 0.8 8 –

TOTAL BORROWING 4.4 4 5.1 17 3,951

2013SEK million

Bond issue 7.2 9 2.0 1 644

Bond issue 7.2 31 4.0 32 358





Excluding effects of derivatives

including effects of derivatives


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Fixed interest rate and fixed interest periods, SEK million.

2014SEK million





Recog-nised

liabilities

Bond issue 7.2 20 4.0 21 465

Bond issue 8.0 3 8.0 3 638





2013SEK million

Bond issue 7.2 9 2.0 1 644

Bond issue 7.2 31 4.0 32 358





CREDIT RISK EXPOSURE

The Group’s commercial and financial transactions entail

credit risks in relation to Nynas’ counterparties. Credit risk

or counterparty risk is the risk of losses if the counterparty

defaults on its obligations.

The credit risk to which Nynas is exposed can be divided

into two categories:

Financial credit risk

Credit risk in accounts receivable

COMMENT, INTEREST RATE RISK

COMMENT, CREDIT RISK

The Group’s interest rate risk arises mainly

via borrowing. Interest rate swap agree-

ments are used to achieve the required

fixed interest periods. Nynas’ average fixed

interest period for the Group’s debt port-

folio must lie between 6 and 36 months.

As the table shows, the average fixed

interest period for Nynas borrowing’ was

17 months (9) at the close of the financial

year, taking due account of the derivatives

used. The Group’s average interest rate, in-

cluding other loans and the effects of inter-

est rate swap agreements, was 5.1 percent

(3.8). Hedge accounting is applied when

there is an effective link between hedged

loans and interest rate swaps. Changes in

market interest rates can therefore also

affect other comprehensive income. Bond

loans in foreign currency are hedged with

currency interest rate swaps, which are

classified as cash flow hedges.

The derivatives that are cash flow hedges

are subject to terms that match those of

the loans, so that the cash flow effects of

the loans and derivatives occur in the same

period and cancel each other out. Changes

in the fair value of cash flow hedges are

recognised directly in other comprehensive

income. Any impairment is recognised in


SEK million 2014 2013

Accounts receivable 1,593.1 1,574.8

Cash and cash equivalents 898.0 937.6

Non-realised gains on derivates 688.7 47.1

Non-realised losses on derivates -247.1 -79.8

TOTAL 2,932.7 2,479.7

With regard to the financial credit risk,

Nynas has concluded an agreement with

the Company’s most important banks

concerning, among other things, the right

to set off assets and liabilities arising as

a consequence of financial transactions,

called an ISDA agreement. This entails

that the Company’s counterparty exposure

to the financial sector is limited to the

non-realised positive and negative result

occurring in derivative contracts. At the

close of the financial year the current net

value of these contracts totalled SEK 442

million (-33) and by approx. 60 percent of

the outstanding value was secured through

margin call.

Via its ongoing sales Nynas is exposed to

credit risk in outstanding accounts receiv-

able. This risk is reduced with the help of

credit insurance. The terms of the credit

insurance require well-established routines

to determine credit limits, follow-up and

reporting of late payments. There are

established internal routines to determine

limits that are not granted by the insurance

company. No deliveries take place before

a limit has been approved. On average,

approximately 90 percent of outstanding

accounts receivable are covered by credit

insurance. Historically, losses on accounts

receivable have never exceeded SEK 15

million per year on an overall basis. The

total gross value of outstanding accounts

receivable as of 31 December was SEK

1,593 million (1,575). These were written

down by a total of SEK -18 million (-15).

Age analyses of accounts receivable as of

December 31 are presented in note 18.


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CoMMoDITy pRICE RISK EXPOSURE

Nynas’ financial and operative risks on commodities

are mainly crude oil delivery, crude oil price, fixed

price agreements and electricity.

The price risk on these is partly hedged by taking

out financial contracts. Nynas’ management of

crude oil price exposure was changed in 2014,

by significantly increasing the hedged inventory

volumes. The oil price fluctuated during the

year from an initial Brent price of USD 108/bbl,

its highest listing in June at USD 115/bbl, and a

closing price of USD 55/bbl at year-end.

The commodity’s price risk is off-set by the impact on the result of any change

in commodity prices. The Group purchases crude oil at current market price. It

is in the nature of the oil industry that changes in world market prices for oil are

passed on in the prices charged to customers, which reduces the oil price risk,

albeit with a certain time lag. This also applies to Nynas.

0

200

400

600

800

1,000

0

1,000

2,000

3,000

4,000

5,000

Inventory volume, ktonnes per month 2014

Inventory value, SEK million per month 2014

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

COMMENT, COMMODITY PRICE RISK

Around 52 percent of the Group’s

commodity and product requirement is

imported from the Venezuelan state oil

company Petroleos de Venezuela (PDVSA).

PDVSA has been a 50 percent owner

of Nynas since 1986, and the business

relationship between the companies dates

back to the late 1920s.

The existing crude oil agreement was

amended in December 2013 for a new

period of five years. The cooperation is

assessed to be stable, but work is ongoing

to increase the flexibility of supply of raw

material. Other important suppliers of raw

material and products are Chevron and

Neste Oil. Inventory of oil products totalled

838 ktonnes at the close of the financial

year (574 ktonnes). A USD 20/tonne price

change would thus affect the profit/loss by

approximately +/- SEK 130 million. In order

to reduce price exposure, oil price swaps

are used, which are not classified as hedge

accounting and totalled 417 ktonnes at

the close of the year, with a market value

of SEK -1,738 million (-1,325). Nynas

also concludes fixed price contracts with

customers. These fixed price contracts are

hedged with oil price swaps and are classi-

fied as a non hedging relationship, which

means that any changes in the value of

the derivative are recognised in the result

for the year. At year end the fixed price

hedging totalled 50 ktonnes (49) and the

market value of the derivative contracts

was SEK 167 million (185).


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Shareholders Nynas AB, company reg. no, 556029-2509, domiciled

in Stockholm, is owned 49.999 per cent by Neste

Oil AB, company reg. no. 556232-3906, domiciled

in Stockholm, Sweden, and 50.001 percent by PDV

Europa B.V., company reg. no. 27133447 domiciled

in The Hague, the Netherlands.

Neste Oil AB is part of a Group in which Neste Oil Oyj,

company reg. no. FI 18523029, Espoo, Finland, is the

parent company. PDV Europa B.V, is part of a Group in

which Petróleos de Venezuela S.A., company reg. no.

73023, Caracas, Venezuela, is the parent company.

The total number of shares issued is 67,532, of which

33,765 are Class A shares and 33,767 are Class B

shares. The share capital is SEK million 67.5 and the

listed value is SEK 1,000 per share. One share gives

entitlement to one vote at annual and extraordinary

General Meetings. There are no restrictions to the

number of votes that each shareholder may cast at

General Meetings. No share may be transferred to

any entity that is not already a shareholder in the

company. The share must immediately be offered to

shareholders for redemption by written notice to the

CoRpoRATEGovERNANCE

GovERnAnCE StRuCtuRE oF nynAS AB

important external instruments• Swedish Companies Act• Swedish Book-keeping Act• Swedish Annual Accounts Act• IFRS• Environmental permits

important internal instruments• Articles of Association• Working procedures for the

Board of Directors• Internal management system

Policies adopted by theBoard of Directors• Finance policy• HSSE&Q policy

BuSinESS AREAS/FunCtionS

AuDitoRAudits the Company’s

Annual Report, book-

keeping, management

and internal controls.

SHAREHolDERS via theAnnuAl GEnERAl mEEtinGThe Company’s supreme decision-

making authority. Adopts the

approval of the Annual Report,

discharge of responsibility,

distribution of profit, changes to

Articles of Association and elects

Board of Directors and Auditors.

CEoManages the Company on the basis

of the internal and external corporate

governance instruments.

inCEntivEComPEnSAtion CommittEEMonitors the terms of compensation

and employment of the CEO and

senior executives. Reviews proposed

major personnel and organisational

changes.

PRoJECt REviEW CommittEEPrepares decisions of the Board of

Directors concerning major strategic

and structural projects and thereafter

monitors the implementation and

achieved results of the projects.

BoARD oF DiRECtoRSConsiders and adopts decisions on

overall issues concerning the Group

and oversees the work of the CEO.

AuDit CommittEEMonitors the Company’s financial

accounting and reporting. Reviews

the internal control system.


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Company’s Board of Directors. In the same way, the

shareholders’ agreement stipulates that each share-

holder may as a maximum exercise the voting rights

for 33,765 shares.

The shareholders’ right to adopt decisions concerning

Nynas’ affairs is exercised at the Annual General

Meeting, which is the Company’s highest decision-

making authority. The Annual General Meeting is

usually held in the second quarter of the financial year.

If necessary, extraordinary General Meetings may be

convened. The Annual General Meeting adopts the

Articles of Association and the shareholders elect

the members of the Board of Directors at the Annual

General Meeting.

The Annual General Meeting also elects the au-

ditors and decides their remuneration. The Annual

General Meeting adopts the resolutions to approve

the Income Statement and Statement of Financial

Position, the distribution of the Company’s profits,

and the discharge of the members of the Board of

Directors and the CEO of their responsibilities.

Board of Directors the composition of the Board of Directors The Board of Directors shall consist of four to eight

ordinary members, and two employee representa-

tives. Each party also has the right to nominate the

same number of deputy members of the Board. Of

the ordinary members and deputy members, who

shall be elected at a Shareholders’ Meeting, owners

of class A shares shall be entitled to appoint half the

number and the owners of class B shares half the

number accordingly. The CEO is not member of the

Board of Directors.

the work and responsibility of the Board of DirectorsThe Board of Directors is responsible for the manage-

ment of the activities in the interests of the Company

and all shareholders, in accordance with the external

and internal corporate governance instruments. The

framework is the documented working procedures of

the Board which are adopted annually by the Board

of Directors.

Working procedures govern the work of the Board

of Directors, as well as the division of responsibility

between the Board of Directors and the CEO. The

Board of Directors monitors the work of the CEO via

on-going follow-up of the activities during the year.

It is the responsibility of the Board of Directors to en-

sure that effective systems are in place for follow-up

and control of the Company’s activities, that there

are satisfactory internal control procedures, and that

internal corporate governance instruments have

been determined. The responsibility also includes

determining the objectives and strategy, deciding on

major acquisitions and divestments of companies, or

other major investments, deciding placements and

loans, and to adopt the Company’s Finance Policy.

In addition to the constituent meeting the Board of

Directors holds at least three ordinary meetings per

year. In 2014, seven Board meetings were held. In

addition to approval of budgets and major invest-

ments projects, the work in 2014 focused on struc-

tural issues.

The CEO presents issues to the Board of Directors

and states the grounds for the proposed decisions.

Other Group officers attend meetings of the Board

of Directors as required in order to present particular

issues.

In order to fulfil its obligations more effectively the

Board of Directors has established three committees

from among its members: the Audit Committee, the

Incentive Compensation Committee and the Project

Review Committee.

The objective of the Audit Committee is to represent

the Board of Directors and to monitor the Company’s

financial reporting, and to monitor the effectiveness

of the Company’s internal controls, internal audit and

risk management. The Committee must keep itself in-

formed of the audit of the Annual Report and the Con-

solidated Annual Report, review and monitor the im-

partiality and independence of the auditors, and assist

in the preparation of proposals for the Annual General

Meeting’s decision on the election of auditors.

The Audit Committee must also represent the Board

of Directors by supporting and monitoring the Group’s

work on the overall coordination of the Group’s risk

management. The results of the Audit Committee’s

work in the form of observations, recommendations

and proposed decisions and measures must be report-

ed to the Board of Directors on an on-going basis. In

2014, three meetings were held.

The objective of the Incentive Compensation Com-

mittee is to represent the Board of Directors in matters

concerning the terms of compensation and employ-

ment of the CEO, and the executives reporting directly

to the CEO, on the basis of the principles adopted by

the Annual General Meeting and the policies adopted.

The Committee also reviews proposed major


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personnel or organisational changes. The Incentive

Compensation Committee must report on its work

to the Board of Directors on an on-going basis. In

2014, five meetings were held.

The objective of the Project Review Committee is

to review proposals from the Company’s management

concerning major strategic and structural projects. The

Committee also follows up and approves the imple-

mentation of specific projects as determined by the

Board of Directors. The Project Review Committee

must report on its work to the Board of Directors on

an ongoing basis. In 2014, three meetings were held.

Auditors External auditor At the 2012 Annual General Meeting the authorised

public accounting firm Ernst & Young AB was elected

as the Company’s external auditor up to and includ-

ing the 2015 Annual General Meeting. The auditor in

charge is Authorised Public Accountant Jan Birgerson.

The audit is reported to the shareholders as an

Auditors’ Report. This constitutes a recommendation

to the shareholders for their approval at the Annual

General Meeting to adopt the Income Statements

and Statements of Financial Position of the Parent

Company and the Group, the distribution of the

profit of the Parent Company, and the discharge of

the members of the Board of Directors and the CEO

from their responsibilities. The audit is conducted in

accordance with the Swedish Companies Act and

good auditing practice, which means that the audit

is planned and performed on the basis of knowledge

of the activities, current development and strategies

of the Nynas Group. The audit services among other

things include inspection of compliance with the

Articles of Association, the Companies Act and the

Annual Accounts Act, as well as the International

Financial Reporting Standards (IFRS).

The audit is furthermore reported on an on-going

basis in the course of the year to the Board of respec-

tive company and to the CEO and Executive Committee

of the Group. See note 7 concerning the remunera-

tion paid to the auditors.

CEo and group executive committee The Managing Director of Nynas AB, who is also the

Group President and CEO, manages Nynas’ activities

in accordance with the external and internal corporate

governance instruments. The framework consists of

the annually stated Working procedures for the Board

of Directors, which also defines how responsibilities

are divided between the Board and the Chief Executive

Officer. The CEO is responsible for and reports on

the development in the Company to the Board of

Directors on an on-going basis. The CEO is assisted

by a Group Executive Committee that consists of the

executives responsible for the business areas and staff

functions. Nynas has a structure with strong focus on

business responsibility, combined with support from

clear shared Group functions and processes. The CEO

leads the work of the Group Executive Committee

and adopts decisions in consultation with the other

executives. At the close of 2014 there were ten

members of the Group Executive Committee. The

Group Executive Committee meets on a monthly basis

to consider the Group’s financial development, Group

development projects, management and competence

provision, and other strategic issues.

Group treasury Group Treasury is established as the functional

organisation in the Parent Company where most of

the Group’s financial risks are handled. The function’s

primary task is to contribute to value creation by

managing the financial risks to which the Company

is exposed in its normal business activities. To support

the work of handling risk exposure the CEO has

appointed a Hedging Committee. The Committee

is chaired by Nynas’ CFO and also includes other

members with a good knowledge and understanding

of Nynas’ business model.

External corporate governance instruments The external corporate governance instruments

that determine the framework for Nynas’ corpo-

rate governance consist of the Swedish Companies

Act, Annual Accounts Act and other relevant acts.

The Swedish Code of Corporate Governance must

be applied by Swedish limited liability companies

whose shares are listed in a regulated market. Nynas’

ownership structure therefore does not require the

Company to observe the Code. Good corporate gov-

ernance is fundamental to Nynas, and the objective is

to ensure solid and adequate corporate governance

of the Company.

Nynas AB is not a listed public limited company

and therefore not required to comply with the

Swedish Corporate Governance Code, however in

all material respects Nynas adheres to the Code

with the following exceptions in section III, Rules

for Corporate Governance:


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The shareholders’ meeting Sub sections 1.3 and 1.4: Nynas does not have a

nomination committee as the two sole shareholders

have agreed to discuss nominations and related mat-

ters directly between themselves thereby performing

the same function, and participate with their appointed

representatives at the annual general meeting.

Sub section 1.7: Minutes of the annual general

meeting and subsequent extraordinary meetings

are not posted on Nynas’ web site as the two

shareholders agree they have sufficient access to all

minutes and further relevant information.

Appointment and remuneration of the board and the statutory auditor Sub section 2: Nynas does not have a nomination

committee since the two sole shareholders have

agreed to discuss nominations and related matters

directly between themselves thereby performing

the same function.

The size and composition of the board Sub section 4.6: As a consequence of the fact

that Nynas does not have a nomination committee

it cannot technically comply with this section that

describes which information is to be provided to

the nomination committee.

Board procedures Sub sections 7.3 and 7.5: The audit committee is not

fully compliant as regards composition and meeting

structure. The shareholders have agreed to appoint

members of the audit committee with relevant financial

experience that represent the two shareholders.

Evaluation of the board of directors and the chief executive officer Section 8: Regular and systematic evaluation of the

performance of the board is not done. The evaluation

of board members is carried out independently by

the respective shareholder. Subsequently, the (vice)

chairman of the board discusses the outcome with

the individual board members.

Remuneration of the board and executive management Sub sections 9.7 and 9.8 are not applicable since

Nynas does not have a share incentive scheme.

Information on corporate governance The rules in sub section 10 regarding information

on corporate governance are only relevant to

companies which shares are listed; hence the rules

are not applicable to Nynas.

internal corporate governance instruments The binding internal corporate governance instru-

ments are the Articles of Association adopted by the

Annual General Meeting and the Working proce-

dures for Nynas’ Board of Directors adopted by the

Board of Directors, the instructions for the CEO of

Nynas, instructions for the financial reporting to the

Board of Directors, the instructions for the commit-

tees nominated by Nynas’ Board of Directors, as well

as the Finance Policy.

In addition to these corporate governance instru-

ments there is also an internal management system that

includes a number of policies and binding rules stating

guidelines and instructions for the Group’s activities

and employees. The most important policy document

is Nynas Code of Conduct, which for instance includes

regulations for compliance with competition legislation,

policies that prohibit bribery and corruption, policy on

people and human rights, policy on information man-

agement and policy on health, safety, security, environ-

mental and quality.

Reporting structure Nynas’ financial reporting system provides informa-

tion for both the external and internal reporting of

results. Reporting adheres to Swedish accounting

legislation and the recommendations concerning

IFRS, the International Financial Reporting Standards.

The financial results are followed up on a monthly

basis and the accumulated result is compared to the

budget and the result for the previous year. There

is follow-up at Group as well as business area and

function level. On an on-going basis throughout the

year updated forecasts of the result for the full year

are prepared. The reporting includes Income State-

ments and Statements of Financial Position, cash

flow reports, sales statistics, key ratios and appro-

priate KPIs. The Group publishes an Annual Report

in accordance with both Swedish legislation and the

IFRS standards.


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pia ovrin Born 1966. Employee representative. Appointed in 2013. Nationality: Swedish.

BOARD OF DIRECTORS

Roland Bergvik Born 1967. Employee representative. Appointed in 2010. Nationality: Swedish.

Michiel Boersma Born 1947. Independent Oil & Energy Professional. Elected in 2014. Nationality: Dutch.

AuDIToRJan Birgerson Born 1954. Authorised Public Accountant at Ernst & Young AB. Auditor in charge of the Nynas Group since 2008. Board Member in Ernst & Young AB. Present and previous customer assignments include Svensk Exportkredit, ABB, Investor, Siemens, Adecco Group (Switzerland), Kinnevik, Nynas, Scania, Tetra Laval.

orlando Chacin Born 1953. Vice Chairman of the board, Director of Internal PDVSA Board. Elected in 2015.Nationality: Venezuelan.

Matti Lievonen Born 1958. Chairman of the Board, President and CEO, Neste Oil. Elected in 2009. Chairman of the Board of Directors since 2014.Nationality: Finnish.

John Launiainen Born 1954. Director Portfolio Development,Neste Oil. Elected in 2011.Nationality: Finnish.

Tuomas HyyryläinenBorn 1977. Senior Vice President Strategy, Neste Oil. Elected in 2012. Nationality: Finnish.

Angel MartinezBorn 1959. Executive Director, PDVSA Commerce and Supply. Elected in 2015. Nationality: Venezuelan.

Ivan orellana Born 1952. Head of PDV Europa B.V. Elected in 2013.Nationality: Venezuelan.

Antonio Suarez Torres Born 1955. Independent Oil & Energy Professional. Elected in 2012.Nationality: Spanish.


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GROUP EXECUTIVE COMMITTEE

Gert WendrothBorn 1958. President and CEO. Education: Master Degree in Economics, University of Hamburg MBA, University of Bradford UK. Previous experience: Chief Executive Officer H&R AG, Managing Director, euroShell Deutschland GmbH, various positions in the Shell Group. Employed since: 2014.In current position: 2014.Nationality: German.

Simon Day Born 1967. Vice President Naphthenics.Education: MSc Chemistry, MBA. Previous experience: Director Supply Chain, CEO, Nynas US Inc, Head of Marketing, Electrical Industry Naph-thenics, Head of Business Development and Planning Naphthenics, Head of Planning, Eastham, Nynas Bitumen UK, Refinery engineer, Stanlow Refinery, Shell UK. Employed since:1996. In current position: 2014. Nationality: British.

peter Bäcklund Born 1956. Business Area Director Bitumen Nordic. Education: University degree in Economics, Business Administration & Marketing. Previous experience: Managing Director, Nynas GmbH, Market Manager, Electrical Industry/Lubricant Industry, Manager Nynas Insulating Oil Management. Employed since: 1986. In current position: 2008.Nationality: Swedish.

Hans Östlin Born 1961. Director Communication. Education: Berghs School of Commu-nication. IHM Business School. Previous experience: Various posi-tions in marketing and communica-tions at ITT Flygt and Nynas, Senior consultant at Rita Platzer PR. Employed since: 2006In current position: 2006.Nationality: Swedish.

Rolf Allgulander Born 1962. Vice President Manufacturing. Education: MSc Chemistry, MBA. Previous experience: Site Manager, Borealis, Kallo, Cracker Manager, Borealis Portugal, Production Manager, Borealis Stenungsund. Employed since: 2007. In current position: 2007. Nationality: Swedish.

Jim ChristieBorn 1960. Business Area Director Bitumen UK. Education: HND Civil Engineering. Previous experience: Sales Director Nynas UK, various commercial roles within Nynas, Sales Manager Colas. Employed since: 1994. In current position: 2008. Nationality: British.

Ewa Beskow Born 1957. Director Human Resources. Education: MSc Metallurgy. Previous experience: Director Human Resources, SVP World wide, Director Human Resources, VSM Group, Vice President Human Resources, Volvo Car Corporation, Engine Division, Director Human Resources Uddeholm Tooling. Employed since: 2006. In current position: 2006. Nationality: Swedish.

Bo Askvik Born 1958. CFO.Education: MBA in Business Administration and Finance, Stockholm School of Economics. Previous experience: CFO in Sapa, Intrum Justitia, Sanitec, PA Resources, and various finance positions in Nordstjernan, Östgöta Enskilda Bank, Neste, Borealis and TeliaSonera. Employed since: 2014. In current position: 2014. Nationality: Swedish.

Martin Carlson Born 1950. Director Business Development. Education: MSc Chemistry. Previous experience: Process Engineer, Laboratory Manager, Project Director, Nynäshamn NSP2, Technical Director and Refining Director, Bitumen Supply and Technical. Employed since:1975.In current position: 2007.Nationality: Swedish.

Anders Nilsson Born 1968. Director Supply Chain. Education: MSc Mathematics, MBA Industrial & Financial Economics. Previous experience: Sales Director Europe, Naphthenics Supply Chain Manager, Naphthenics, Swedish Railways, Lecturer in Mathematics, Technical University Luleå. Employed since: 1985. In current position: 2014. Nationality: Swedish.


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NoTE GRoup pAGE

1 Significant accounting policies and accounting estimates

72

2 Segment information 73

3 Costs itemised by nature of expense 74

4 Other operating income/expenses 745 Employees, personnel expenses and

remuneration of senior executives 75

6 Depreciation/amortisation of tangible and intangible assets

76

7 Auditors’ fees and other remuneration 76

8 Operating leases 76

9 Net financial items 77

10 Taxes 77

11 Earnings per share 78

12 Intangible assets 79

13 Tangible assets 80

14 Investments in Group companies 81

15 Investments in associates and joint ventures 83

16 Other long-term receivables 83

17 Inventories 83

18 Accounts receivable 84

19 Prepayments and accrued income 84

20 Cash and cash equivalents 84

21 Equity 85

22 Provisions for pensions 86

23 Other provisions 89

24 Liabilities to credit institutions 90

25 Accrued liabilities and deferred income 91

26 Financial assets and liabilities 92

27 Financial risk management, supplementary information 93

28 Pledged assets and contingencies 94

29 Related party disclosures 94

30 Adjustments for non-cash items 95

31 Business combinations 95

32 Events after the reporting date 95

FINANCIAL REpoRTS pAGE

Group

Income statement and statement of comprehensive income

52

Statement of financial positions 54

Statement of changes in equity 56

Cash flow statement 57

Parent Company

Income statement and statement of comprehensive income

58

Balance sheet 59

Statement of changes in equity 61

Statement of cash flow 62

Accounting policies 63

NoTE pARENT CoMpANy pAGE

33 Information by geographical market and sales revenues by category

96

34 Costs itemised by nature of expense 96

35 Other operating income/expenses 96

36 Employees, personnel expenses and remuneration of senior executives

97

37 Depreciation/amortisation of tangible and intangible assets

97

38 Auditors’ fees and other remuneration 98

39 Operating leases 98

40 Net financial items 98

41 Appropriations 99

42 Taxes 99

43 Intangible assets 100

44 Tangible assets 100

45 Investments in Group companies 101

46 Inventories 101

47 Accounts receivable 102

48 Prepayments and accrued income 102

49 Cash and cash equivalents 102

50 Equity 102

51 Provisions for pensions 103

52 Other provisions 104

53 Liabilities to credit institutions 105

54 Accrued liabilities and deferred income 106

55 Financial assets and liabilities 106

56 Pledged assets and contingencies 107

57 Related party disclosures 108

58 Adjustments for non-cash items 108


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SEK million 2014 2013 2012 2011 2010

INCOME STATEMENT AND STATEMENT OF COMPREHENSIVE INCOME

Net sales 22,522 19,527 24,471 23,223 20,579

Operating expenses -21,368 -19,120 -23,886 -22,354 -19,602

Depreciation -404 -450 -338 -309 -306

Share of profit/loss of joint ventures 24 22 -10 26 10

OPERATING RESULT 775 -21 237 586 681

Net financial items -308 -264 -289 -132 -71

NET INCOME BEFORE TAX 466 -285 -52 454 610

Tax -188 -20 18 -141 -189

NET INCOME FOR THE YEAR 279 -305 -34 313 421

STATEMENT OF FINANCIAL POSITION

Fixed assets 4,265 3,652 3,862 3,899 3,297

Inventories 3,548 3,039 3,426 4,060 3,622

Current receivables 2,828 1,926 2,042 2,507 1,751

Cash & cash equivalents and short-term investments 898 937 739 250 243

ASSETS 11,538 9,554 10,069 10,716 8,913

Equity 3,425 3,218 3,557 3,724 3,438

Long-term interest-bearing liabilities 4,303 3,675 187 3,840 2,335

Long-term non-interest-bearing liabilities 633 595 639 735 801

Current interest-bearing liabilities 16 669 4,010 102 256

Current non-interest-bearing liabilities 3,161 1,398 1,677 2,315 2,084

EQUITY AND LIABILITIES 11,538 9,554 10,069 10,716 8,913

STATEMENT OF CASH FLOWS

Cash flow from operating activities 692 50 322 535 708

Changes in working capital -158 124 376 -989 -490

CASH FLOw FROM OPERATING ACTIVITIES 534 174 698 -454 218

Cash flow from investing activities -545 -206 -344 -889 -540

CASH FLOw AFTER INVESTING ACTIVITIES

-11 -31 353 -1,343 -322

Proceeds from borrowings, repayment of borrowings -29 230 136 1,368 278

Dividend 0 0 0 0 0

CHANGE IN CASH & CASH EQUIVALENTS -40 199 489 25 -44

CASH & CASH EQUIVALENTS AT END OF YEAR 898 938 739 250 225

KEY FINANCIAL RATIOS

Operating result before depreciation (EBITDA) 1 1,336 533 655 1,032 1,077

Net debt 3,421 3,406 3,457 3,692 2,347

working capital 3,654 3,606 3,720 4,236 3,289

Return on average capital employed (12 months rolling), % 1

13 2 4 10 12

Return on average capital employed, % 10 -1 4 9 13

Return on equity, % 8 -12 -6 9 14

Equity to assets ratio, % 30 34 35 35 39

Number of full-time employees 854 872 881 871 866

MULTI-YEAR OVERVIEw

1) Excluding non-recurring items


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GROUP

SEK million Note 2014 2013

INCOME STATEMENT

Net sales 2 22,522.3 19,527.0

Cost of sales 3 -19,636.3 -16,975.1

GROSS RESULT 2,886.1 2,551.9

Other income and value changes 3 509.7 -14.0

Distribution costs 3 -2,527.6 -2,371.8

Administrative expenses 3 -188.5 -201.9

Share of profit/loss of joint ventures 15 24.2 21.6

Other operating income 4 344.7 283.3

Other operating expenses 4 -274.1 -290.9

OPERATING RESULT 2, 3, 4, 5, 6, 7, 8 774.4 -21.8

Finance income 9 59.5 64.4

Finance costs 9 -367.6 -328.4

NET FINANCIAL ITEMS -308.1 -263.9

NET INCOME BEFORE TAX 466.4 -285.8

Tax 10 -187.5 -19.6

NET INCOME FOR THE YEAR 278.9 -305.3

STATEMENT OF COMPREHENSIVE INCOME

Net income for the year 278.9 -305.3

Other comprehensive income:

Items that will be reclassified to the income statement

Translation differences 139.0 -45.8

Currency hedges -145.9 -7.3

Income tax associated with currency hedges 32.1 1.6

Cash flow hedges -11.1 -4.1

Income tax associated with cash flow hedges 2.4 0.9

TOTAL AMOUNT THAT WILL BE RECLASSIFIED TO THE INCOME STATEMENT

16.5 -54.7

Items that will not be reclassified to the income statement

Actuarial loss pensions -118.9 27.6

Income tax associated with actuarial loss pensions 30.8 -6.6

TOTAL AMOUNT THAT WILL NOT BE RECLASSIFIED TO THE INCOME STATEMENT

-88.2 21.0

Other Comprehensive Income for the year, net after tax -71.6 -33.7

COMPREHENSIVE INCOME 207.3 -339.0

Attributable to owners of the Parent 207.3 -339.0


EARNINGS PER SHARE

The calculation of earnings per share is based on profit attributable to equity-holders of the Parent Company.

The average number of shares in 2014 and 2013 was 67,532.

2014 2013

Profit for the year

Numbers of shares

Per share

Profit for the year

Numbers of shares

Per share

Earnings per share 278.9 67,532 4,130 -305.3 67,532 -4,521

As Nynas does not have, and did not have during the year, any outstanding convertible and subscription warrant programmes, no dilution effects arose during calculation of earnings per share.


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GROUP

SEK million Note 2014-12-31 2013-12-31

ASSETS

FIXED ASSETS

INTANGIBLE ASSETS

Goodwill 12 8.1 8.1

Supply contracts/customer lists 12 0.0 1.6

Computer software 12 47.4 63.7

TOTAL INTANGIBLE ASSETS 55.4 73.3

TANGIBLE ASSETS

Land and buildings 13 298.1 252.0

Plant and machinery 13 2,892.4 2,689.8

Equipment 13 102.0 129.7

Construction in progress 13 490.3 256.1

TOTAL TANGIBLE ASSETS 3,782.8 3,327.6

FINANCIAL ASSETS

Investments in associates 15 87.2 74.0

Derivative instruments 37.5 –

Other long-term receivables 16 3.8 1.5

Deferred tax assets 10 298.3 175.5

TOTAL FINANCIAL ASSETS 426.8 251.0

TOTAL FIXED ASSETS 4,265.1 3,651.9

CURRENT ASSETS

Inventories 17 3,547.7 3,038.9

Accounts receivable 18, 26 1,593.1 1,574.8

Receivables from joint ventures 29 0.3 0.3

Derivative instruments 26, 27 688.7 47.1

Tax receivables 52.0 47.5

Other current receivables 26 275.1 147.0

Prepayments and accrued income 19, 26 218.3 109.1

Cash and cash equivalents 20, 26 898.0 937.6

TOTAL CURRENT ASSETS 7,273.2 5,902.4

TOTAL ASSETS 11,538.3 9,554.3



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SEK million Note 2014-12-31 2013-12-31

EQUITY AND LIABILITIES

EQUITY

Share capital 67.5 67.5

Reserves -291.1 -219.4

Retained earnings, incl. net income for the year 3,648.4 3,369.5

TOTAL EQUITY 21 3,424.9 3,217.7

INTErEST-BEArING LIABILITIES

Liabilities to credit institutions 24, 26 3,935.0 3,500.2

Provisions for pensions 22 368.1 174.3

TOTAL LONG-TERM INTEREST-BEARING LIABILITIES 4,303.1 3,674.5

NON-INTEREST-BEARING LIABILITIES

Other long-term liabilities 35.0 21.6


Deferred tax liability 10 309.0 227.9


Other provisions 23 251.5 265.6

TOTAL LONG-TERM NON-INTEREST-BEARING LIABILITIES

633.4 595.2

TOTAL LONG-TERM LIABILITIES 4,936.5 4,269.7

INTEREST-BEARING LIABILITIES

Liabilities to credit institutions 24, 26 16.2 669.0

TOTAL CURRENT INTEREST-BEARING LIABILITIES 16.2 669.0


Accounts payable 26 679.4 693.1

Liabilities to joint ventures 29 18.8 12.6


Tax liabilities 78.2 71.4

Other current liabilities 26 373.8 117.2

Accrued liabilities and deferred income 25, 26 1,323.2 384.9


TOTAL CURRENT NON-INTEREST-BEARING LIABILITIES

3,160.7 1,397.9

TOTAL CURRENT LIABILITIES 3,176.9 2,066.9

TOTAL EQUITY AND LIABILITIES 11,538.3 9,554.3

For information on the Group’s pledged assets and contingent liabilities, see Note 28.



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SEK millionShare

Capital

Defined BenefitPension

PlansCash flow

HedgesCurrency

HedgesTranslation

reserveretained Earnings

Total Equity

EQUITY AT 31 DEC 2012 67.5 -95.4 -39.0 26.2 -77.4 3,674.8 3,556.7

Net income for the year – – – – – -305.3 -305.3

Other comprehensive income – 21.0 -3.2 -5.7 -45.8 – -33.7

COMPREHENSIVE INCOME – 21.0 -3.2 -5.7 -45.8 -305.3 -339.0

CLOSING EQUITY AT 31 DEC 2013 67.5 -74.4 -42.2 20.5 -123.2 3,369.5 3,217.7

Net income for the year – – – – – 278.9 278.9

Other comprehensive income – -88.2 -8.7 -113.8 139.0 – -71.7

COMPREHENSIVE INCOME – -88.2 -8.7 -113.8 139.0 278.9 207.2

DIVIDEND PAID – – – – – – –

CLOSING EQUITY AT 31 DEC 2014 67.5 -162.6 -50.9 -93.3 15.8 3,648.4 3,424.8

STATEMENT OF CHANGES IN EQUITY


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OPERATING ACTIVITIES

Profit after financial items 466.4 -285.7

Reversal of non-cash items 30 378.0 453.3

Taxes paid -152.4 -117.7

CASH FLOW FROM OPERATING ACTIVITIES BEFORE CHANGES IN WORKING CAPITAL

691.9 49.9

wORKING CAPITAL

Operating receivables -871.0 12.4

Inventories -404.7 359.7

Operating liabilities 1,118.1 -247.7

CHANGES IN WORKING CAPITAL -157.6 124.4

CASH FLOW FROM OPERATING ACTIVITIES 534.3 174.3

INVESTING ACTIVITIES

Acquisition of intangible assets -8.7 -6.2

Acquisition of tangible fixed assets -537.0 -220.8

Investment in financial assets - 0.0

Disposal/reduction of financial assets 0.4 21.5

CASH FLOW FROM INVESTING ACTIVITIES -545.3 -205.5

FINANCING ACTIVITIES

Proceeds from borrowings – 176.1

Change in pension liability 71.1 –

Amortisations of borrowings -217.9 –

CASH FLOW FROM FINANCING ACTIVITIES -146.8 176.1

CASH FLOW FOR THE YEAR -157.8 144.9

CASH & CASH EQUIVALENTS AT BEGINNING OF YEAR 937.6 738.8

Exchange differences 118.3 53.9

CASH & CASH EQUIVALENTS AT END OF YEAR 20 898.0 937.6

NOTES TO THE CASH FLOw STATEMENTThe Group received interest of SEK 59.5 (64.4) million and paid interest of SEK 283.1 (240.8) million during the year.

CASH FLOw STATEMENT


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PARENT COMPANY


INCOME STATEMENT

Net sales 33 18,401.3 14,799.6

Cost of sales 34 -17,003.9 -13,746.9

GROSS RESULT 1,397.4 1,052.7

Other income and value changes 34 509.7 -14.0

Distribution costs 34 -1,390.3 -1,260.3

Administrative expenses 34 -88.3 -118.2

Other operating income 35 332.2 172.3

Other operating expenses 35 -203.6 -175.1

OPERATING RESULT 33, 34, 35, 36, 37, 38, 39 557.0 -342.5

Finance income 40 328.2 413.7

Finance costs 40 -593.2 -363.6

NET FINANCIAL ITEMS -265.0 50.1

PROFIT/LOSS AFTER FINANCIAL ITEMS 292.0 -292.4

Appropriations 41 345.7 339.2

NET INCOME BEFORE TAX 637.8 46.8

Tax 42 -95.5 47.4

NET INCOME FOR THE YEAR 542.3 94.2

STATEMENT OF COMPREHENSIVE INCOME

Net income for the year 542.3 94.2

Other comprehensive income:

Cash flow hedges -11.1 -4.1

Income tax associated with cash flow hedges 2.4 0.9

Other comprehensive income for the year, net after tax -8.7 -3.2

COMPREHENSIVE INCOME 533.6 91.0



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ASSETS

FIXED ASSETS

INTANGIBLE ASSETS

Computer software 43 46.8 63.5

TOTAL INTANGIBLE ASSETS 46.8 63.5

TANGIBLE ASSETS

Land and buildings 44 235.0 201.2

Plant and machinery 44 2,397.4 2,619.7

Equipment 44 73.3 95.9

Construction in progress 44 415.5 253.2

TOTAL TANGIBLE ASSETS 3,121.2 3,170.0

FINANCIAL ASSETS

Investments in Group companies 45 1,022.6 1,054.4

Derivative instruments 37.5 –

Other long-term receivables 2.1 0.0

Deferred tax assets 42 141.0 87.6

TOTAL FINANCIAL ASSETS 1,203.2 1 142.0

TOTAL FIXED ASSETS 4,371.2 4,375.5

CURRENT ASSETS

INVENTORIES 46 2,553.1 2,137.4

CURRENT RECEIVABLES

Accounts receivable 47, 55 749.4 696.9

Receivables from Group companies 55 1,487.3 1,186.7


Tax receivables 16.3 17.1

Other current receivables 55 39.5 78.7

Prepayments and accrued income 48, 55 111.2 57.9

TOTAL CURRENT RECEIVABLES 3,092.3 2,084.4

CASH & CASH EQUIVALENTS 49, 55 670.3 690.2

TOTAL CURRENT ASSETS 6,315.7 4,912.0

TOTAL ASSETS 10,686.9 9,287.5

BALANCE SHEET


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EQUITY AND LIABILITIES

EQUITY

Share capital 67.6 67.6

Statutory reserve 96.0 96.0

TOTAL RESTRICTED EQUITY 163.7 163.7

Retained earnings 1,482.5 1,396.9

Net income for the year 542.3 94.2

TOTAL UNRESTRICTED EQUITY 2,024.8 1,491.2

TOTAL EQUITY 50 2,188.4 1,654.8

UNTAXED RESERVES 41 618.7 964.9

LONG-TERM LIABILITIES


Liabilities to credit institutions 53, 55 3,935.0 3,500.2

Liabilities to Group companies 0.2 0.2


4,087.8 3,643.4


Other long-term liabilities 24.6 21.5


Provisions for deferred taxes 42 145.0 0.3


Total long-term non-interest-bearing liabilities 444.1 337.6

TOTAL LONG-TERM LIABILITIES 4,531.9 3,981.0

CURRENT LIABILITIES


Liabilities to credit institutions 53, 55 13.8 646.9

Liabilities to Group companies 950.8 1,015.2

TOTAL CURRENT INTEREST-BEARING LIABILITIES 964.6 1,662.1


Accounts payable 55 442.2 536.1

Liabilities to Group companies 55 281.2 106.0


Tax liabilities 13.1 13.4

Other current liabilities 55 275.7 26.1

Accrued liabilities and deferred income 54, 55 1,072.5 255.9


TOTAL CURRENT NON-INTEREST-BEARING LIABILITIES 2,383.2 1,024.7

TOTAL CURRENT LIABILITIES 3,347.8 2,686.8

TOTAL EQUITY AND LIABILITIES 10,686.8 9,287.5

MEMORANDUM ITEMS

Pledged assets 56 – –

Contingent liabilities 56 377.2 88.1

BALANCE SHEET


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SEK millionShare

CapitalStatutoryreserves

Cash Flow Hedges

retained Earnings

Total Equity

EQUITY AT 31 DEC 2012 67.5 96.0 0.2 1,400.1 1,563.8

Net income for the year – – – 94.2 94.2

Other comprehensive income – – -3.2 – -3.2

COMPREHENSIVE INCOME – – -3.2 94.2 91.0

CLOSING EQUITY AT 31 DEC 2013 67.5 96.0 -3.0 1,494.3 1,654.8

Net income for the year – – – 542.3 542.3

Other comprehensive income – – -8.7 – -8.7

COMPREHENSIVE INCOME – – -8.7 542.3 533.7

CLOSING EQUITY AT 31 DEC 2014 67.5 96.0 -11.7 2,036.6 2,188.5

Share capital at 31 Dec 2014 consisted of 67,532 shares, including 33,765 Class A shares and 33,767 Class B shares.

This is unchanged from the previous year.

The Board proposes a dividend of SEK 0 (0) per share for the year 2014.

STATEMENT OF CHANGES IN EQUITY


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OPERATING ACTIVITIES

Profit after financial items 292.0 -292.4

Reversal of non-cash items 58 369.0 268.4

Taxes paid -0.9 36.8

CASH FLOW FROM OPERATING ACTIVITIES BEFORE CHANGES IN WORKING CAPITAL

660.2 12.8

wORKING CAPITAL

Operating receivables -1,071.4 -275.3

Inventories -415.6 301.1

Operating liabilities 1,908.0 -23.5

CHANGES IN WORKING CAPITAL 421.0 2.4

CASH FLOW FROM OPERATING ACTIVITIES 1,081.3 15.2

INVESTING ACTIVITIES

Acquisition of intangible assets -8.2 -0.1

Acquisition of tangible fixed assets -249.7 -207.1

Investment in financial assets – -134.2

CASH FLOW FROM INVESTING ACTIVITIES -257.9 -341.4

FINANCING ACTIVITIES

Proceeds from borrowings – 319.7

Amortisations of borrowings -907.2 –

CASH FLOW FROM FINANCING ACTIVITIES -907.2 319.7

CASH FLOW FOR THE YEAR -83.9 -6.6

CASH & CASH EQUIVALENTS AT BEGINNING OF YEAR 690.2 631.8

Exchange differences 63.9 65.0

CASH & CASH EQUIVALENTS AT END OF YEAR 49 670.3 690.2

NOTES TO THE CASH FLOw STATEMENT

The Parent Company received dividends of SEK 242.3 million and interest income of SEK 85.9 (98.0) million,

while interest expenses amounted to SEK 282.3 million (245.8).

STATEMENT OF CASH FLOw


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General informationNynas Group comprises the Parent Company Nynas AB

(publ), its subsidiaries and holdings in joint ventures. The

Parent Company is incorporated in Sweden and its reg-

istered office is in Stockholm. The address of the Head

Office is Lindetorpsvägen 7, SE-121 63 Johanneshov.

Nynas AB is 49.999 percent owned by Neste Oil AB,

reg. no. 556232-3906, registered office Stockholm,

Sweden, and 50.001 percent by PDV Europa B.V., reg.

no. 27133447, registered office The Hague, Netherlands.

Neste Oil AB is part of a group in which Neste Oil Oyj, reg.

no. FI 18523029 with registered office in Espoo, Finland,

is the ultimate parent. PDV Europa B.V. is part of a group

in which Petróleos de Venezuela S.A., reg. no. 73023,

registered office Caracas, Venezuela, is the ultimate parent.

The annual accounts and consolidated annual finan-

cial statements were approved for issue by the Board

on 28 April 2015. The consolidated income statement

and statement of financial position and the Parent

Company’s income statement and balance sheet will

be presented for adoption at the annual general meet-

ing to be held on 28 April 2015.

Basis of preparationThe financial statements have been prepared in accor-

dance with International Financial Reporting Standards

(IFRS) and interpretations issued by the IFRS Interpreta-

tions Committee (IFRIC) as adopted by the EU. In addi-

tion, RFR 1 Supplementary Accounting Rules for Groups,

issued by the Swedish Financial Reporting Board, have

been applied.

The Parent Company applies the same accounting

policies as the Group, except in the cases described

below in the section entitled “The Parent Company’s

Accounting Policies”.

The Parent Company’s functional currency is SEK,

which is also the reporting currency for the Parent Com-

pany and the Group. Consequently, the financial state-

ments are presented in Swedish kronor. All amounts are

stated in SEK millions unless otherwise indicated.

Assets and liabilities are measured at historical cost,

apart from certain financial assets and liabilities, which

are measured at fair value. Financial assets and liabilities

measured at fair value consist of derivative instruments

classified as financial assets at fair value through profit

or loss and available-for-sale financial assets.

Preparation of financial statements in compliance with IFRS

requires management to make critical judgments, account-

ing estimates and assumptions which affect the applica-

tion of the accounting policies and the carrying amounts of

assets, liabilities, income and expense. The actual outcome

may differ from these estimates and assumptions.

Estimates made by management during the appli-

cation of IFRS which have a significant effect on the

financial statements, and assumptions that may result

in material adjustments to the following year’s financial

statements are described in more detail in Note 1 Signif-

icant accounting estimates.

The accounting estimates and assumptions are reviewed

regularly. Changes in accounting estimates are recognised

in the period of the change if the change only affects

that period. Changes are recognised in the period of the

change and future periods if the change affects both.

The policies below have been applied consistently for

all presented years unless otherwise stated.

Changes in accounting principlesNew or amended IASB standards and IFRIC interpretations which came into effect in 2014 are presented below.Following new and amended standards is used by the

Group as of January 1st 2014.

IFRS 10 Consolidated Financial Statements. The stan-

dard concerns how to determine whether control

exists and whether an entity should be consolidated.

IFRS 10 also includes a number of clarifications on

application of the new definition of control. IFRS 10

replaces the section of IAS 27 relating to the presen-

tation of consolidated financial statements. The rules

on presentation of consolidated financial statements

have not changed. The standard has not affected the

Group’s financial statements.

IFRS 11 Joint arrangements. The standard deals with

the accounting for joint arrangements, defined as a

contractual arrangement whereby two or more parties

have joint control. The standard identifies two types

of joint arrangements: joint operations where owners

have rights and obligations to assets and liabilities, as

well as joint ventures, where the owners have rights to

AccOUNTiNG POliciEs


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the net assets. In joint operations, the partners report

their respective assets, liabilities, income and expenses.

In joint ventures, the equity method is applied. The stan-

dard has not affected the financial statements of Nynas.

IFRS 12 Disclosure of Interests in Other Entities. Com-

panies with holdings in subsidiaries, associates, joint

arrangements and unconsolidated structured entities

shall disclose such interests in accordance with IFRS12.

The purpose of this information is to enable users of

financial statements to evaluate the effects of these

interests on the company’s financial statements and

the risks associated with these interests. The purpose

of the information is also to increase understanding

of what impact it would have on the financial state-

ments if management were to change their opinion

regarding consolidation of the entities in question.

The standard has led to some additional disclosures.

IAS 27 Separate Financial Statements. The section

relating to the presentation of consolidated financial

statements has been moved to IFRS 10.

IAS 28 Holdings in associates; Investments in associ-

ates and Joint ventures describes application of the

equity method regarding accounting of both associ-

ates and joint ventures.

IAS 32 Financial instruments Classification – amend-ment. The amendment inserts a clarification in the

“Application Guidance” regarding offsetting of finan-

cial assets and financial liabilities. The amendment has

not affected Nynas financial statements.

New and amended standard and interpretations that are expected to have an effect on the group’s financial statements but are not yet effective.No new or changed standards or interpretations have

been applied early.

FRS 9 Financial instruments. The standard will replace IAS 39 Financial Instruments: Recognition and

Measurement. It contains rules for classification and

measurement of financial assets and liabilities where

today’s four categories will be replaced by three.

Moreover the standard contains rules for impairment

of financial instruments, where future expected losses

shall be considered, and hedge accounting which will

be more linked to the internal risk management. The

standard shall be applied from 2018 but has not yet

been endorsed by EU.

IFRS 15 Revenue from Contracts with Customers. The standard deals with the accounting for revenue

from contracts as well as sale of certain non-financial

assets. It will replace IAS 11 Construction Contracts

and IAS 18 Revenue and related interpretations and

contains considerably more detailed guidance. The

standard shall be applied from 2017 but has not yet

been endorsed by EU.

Nynas is currently evaluating the potential impact of

the above resolved but not yet implemented, new and

amended standards.

No other of IFRS or IFRIC-interpretations, that not

have become effective yet, will be expected to have any

significant impact on the Nynas Group.

Basis of consolidationThe consolidated financial statements cover the Parent

Company and all subsidiaries. Subsidiaries are entities

in which the Parent Company directly or indirectly owns

more than 50 percent of the voting power or has some

other form of control.The consolidated financial statements are prepared

using the acquisition method, which means the acqui-

sition of a subsidiary is treated as a transaction through

which the Group indirectly acquires the subsidiary’s

assets and assumes its liabilities. Identifiable acquired

assets and assumed liabilities in a business acquisition

are measured initially at their fair value on the acquisition

date. Transaction costs attributable to the acquisition are

recognised as incurred.

With effect from the acquisition date, the acquiree’s

income and expenses, identifiable assets and liabilities,

and any intangible assets, such as supply contracts,

customer lists and goodwill, are included in the

consolidated accounts. Subsidiaries are deconsolidated

from the date on which control ceases.

The accounting policies for subsidiaries have been

adapted where necessary, in order to ensure consistent

application of the Group’s policies.

Joint venturesHoldings in joint ventures, in which the Group has joint

control, are accounted for using the equity method.

This means that the carrying amount of the invest-

ment in a joint venture corresponds to the Group’s share

of the joint venture’s equity, and any residual value of

fair value adjustments. The Group’s share of the joint

venture’s profit after financial items, adjusted for any

amortisation or reversals of fair value adjustments, is

reported under Share of profit/loss of joint ventures in


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the consolidated income statement. Dividends from

joint ventures are not included in the Group’s profit for

the year.

Foreign branchesThe functional currency is the local currency of the

country in which the branch operates. Translation into

Swedish kronor takes place in accordance with IAS 21.

Balance sheet items are translated using the closing rate,

while income statements items are translated using the

average rate for the period in which the item occurred.

Foreign currencyFunctional currency and reporting currency Items included in the financial statements of the various

entities in the Group are reported in the currency used in

the economic environment in which the entity operates

(functional currency). The consolidated financial state-

ments are presented in Swedish kronor, which is the

Group’s reporting currency.

Foreign currency transactionsForeign currency transactions are translated into the

functional currency using the exchange rates prevail-

ing at the transaction date. Foreign currency monetary

assets and liabilities are translated at the closing rate.

Exchange gains and losses on translation of these trans-

actions are recognised in profit or loss. Exchange gains

and losses on operating receivables and liabilities are

reported under operating result, while gains and losses

on financial receivables and liabilities are reported under

financial items.

Financial statements of foreign operations The assets and liabilities of foreign operations, includ-

ing goodwill and fair value adjustments arising on

consolidation, are translated from the foreign oper-

ation’s functional currency to the Group’s reporting

currency, SEK, at foreign exchange rates prevailing

at the balance sheet date. Revenues and expenses of

foreign operations are translated to SEK at average

rates that approximate the foreign exchange rates

prevailing at each of the transaction dates. Transla-

tion differences arising from the translation of the

net investment in foreign operations are recognised

in other comprehensive income and are accumulat-

ed in a separate component of equity, a translation

reserve. When the foreign operation is divested, the

accumulated translation differences attributable to

the divested foreign operation are reclassified from

equity to profit or loss for the year as a reclassification

adjustment at the date on which the profit or loss on

the divestment is recognised.

Net investments in foreign currencyThe Parent Company has taken positions in foreign

currencies in order to hedge the majority of its net

investments in foreign subsidiaries against exchange

rate changes. Exchange differences on these positions

have been recognised directly in the Group’s other

comprehensive income for the year, taking into account

the tax effect, to the extent that they correspond to

translation differences recognised during the year

Reporting of operating segments and geographical marketReporting of operating segmentsNynas’s business is organised in a manner that allows the

Group’s chief operating decision maker, meaning the

CEO, to monitor results and capital employed generated

by the various products in the Group. Each operating seg-

ment has a Business Area Manager that is responsible for

day-to-day activities and who regularly reports to the CEO

regarding the results of the operating segment’s work and

the need for resources. Since the CEO monitors the busi-

ness’s result and decides on the distribution of resources

based on the products the Group manufactures and sells

and the services it provides, these constitute the Group’s

operating segments.

The Group’s operations are organised in two business

areas, Bitumen and Naphthenics based on products.

The market organisation also reflects this structure. In

accordance with IFRS 8, segment information is pre-

sented only on the basis of the consolidated financial

statements.

Segment results, assets and liabilities include only

those items that are directly attributable to the segment

and the relevant portions of items that can be allocated

on a reasonable basis to the segments.

Group staff functions and Group-wide functions

are allocated based on those items that are directly

attributable to the segment and the relevant portion that

can be allocated on a reasonable basis to the segments,

unallocated items for functions are reported under Other.

Items where the accounting method differs between the

Business Areas and the Group are also reported under the

heading Other. The market valuation of some financial

derivative instruments used to manage oil and currency

risks are reported under, Other, until such time as the

underlying flows are reflected in the Income Statement

and distributed between the respective segments.

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income, gains on disposal of financial investments, in-

terest expense, losses on the disposal of financial invest-

ments, income tax expense.

Reporting of geographical market Sales figures are based on the country in which the cus-

tomer is located. Assets and investments are reported in

the location of the asset.

Revenue recognitionRecognised revenue is the fair value of the consider-

ation received or receivable from goods sold or services

rendered in the course of the Group’s ordinary activities,

excluding VAT, discounts and returns, and after elimi-

nation of intra-group transactions. Revenue is classified

as follows:

Sale of goods Revenue from the sale of goods is recognised when the

goods are supplied to the customer under the terms

of sales, and therefore in the period in which the sig-

nificant risks and rewards of ownership of the product

have transferred to the buyer.

Interest incomeInterest income is recognised over the relevant period

using the effective interest method.

Dividend Dividend income is recognised when the right to receive

payment is established.

Income taxesIncome tax comprises current and deferred tax. Income

tax is recognised in profit or loss for the year except when

the underlying transaction is recognised in other compre-

hensive income. In these cases, the associated tax effects

are recognised in other comprehensive income. Current

tax is the expected tax payable on the taxable income

for the year, using tax rates enacted at the balance sheet

date, and any adjustment to tax payable in respect of pre-

vious years. Current tax liabilities are offset against current

tax receivables and deferred tax assets are offset against

deferred tax liabilities when the entity has a legal right to

offset these items. Deferred tax is recognised based on

temporary differences between the carrying amounts of

assets and liabilities for financial reporting purposes and

their value for tax purposes. Deferred taxes are measured

at their nominal amount and based on the expected man-

ner of realisation or settlement of the carrying amount of

the underlying assets and liabilities, using tax rates and

fiscal regulations enacted or substantively enacted at the

balance sheet date. Deferred tax assets relating to deduct-

ible temporary differences and tax loss carry-forwards are

recognised only to the extent that it is probable they can be

utilised against future taxable profits.

Tangible assetsTangible fixed assets are recognised as an asset in the bal-

ance sheet when it is probable that future economic ben-

efits associated with the asset will flow to the Company

and the cost can be measured reliably. Tangible fixed

assets are recognised at cost less accumulated deprecia-

tion and impairment losses. Cost comprises the purchase

price and any costs directly attributable to the asset.

Parts of tangible fixed assets with different useful lives are

treated as separate components of tangible fixed assets.The carrying amount of a tangible fixed asset is

derecognised on its disposal, or when no future economic

benefits are expected from its use or disposal. The gain

or loss arising from the disposal of a tangible fixed asset

is the difference between the selling price and the asset’s

carrying amount less direct costs to sell.

Basis of depreciation for tangible fixed assetsDepreciation of tangible fixed assets is based on original

cost less any residual value. Depreciation takes place on

a straight-line basis over the useful life of the asset. The

Group applies component depreciation, which means

depreciation is based on the estimated useful lives of

components. The residual values and useful lives of

assets are reviewed annually.

Buildings over 20–50 years

Land improvements over 20–25 years

Plant & machinery and equipment

– Processing facilities over 10–20 years

– Tanks over 10–40 years

– Plant & machinery and equipment over 5–20 years

Equipment

– Office equipment and computers over 3–10 years

– Other equipment over 5–10 years

LeasesThe Group applies IAS 17 when classifying leases as

finance leases or operating leases. A lease is classified as

an operating lease when it does not transfer substantially

all the risks and rewards incidental to ownership.

Payments made under operating leases are recognised

as an expense on a straight-line basis over the lease term.

The Group does not have any significant finance leases.


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Intangible assetsGoodwillA number of production and information systems have

Goodwill arises when the cost of a business combination

exceeds the fair value of the acquired identifiable assets

and liabilities according to the acquisition analysis. Good-

will has arisen from business combinations, resulting

in increased profitability on integration into the Nynas

Group. Goodwill has an indefinite useful life and is tested

for impairment annually and when required.

For impairment testing, goodwill is allocated to the

cash generating units expected to benefit from the

business combination in which the goodwill item arose.

Supply contracts/customer listsSupply contracts and customer relationships acquired

in a business combination are recognised at the acqui-

sition date fair value. Supply contracts and customer

relationships have a finite useful life and are recognised

at cost less accumulated amortisation and impairment.

Amortisation takes place on a straight-line basis over

the life of the supply contract or customer relationship.

Computer softwareA number of production and information systems have

been capitalised. Direct external and internal expenditure

on the development of software for internal use is capi-

talised. Expenditure on pilot studies, training and regular

maintenance is recognised as an expense as it is incurred.

The value of intangible assets is reviewed at least once a year.

If an asset’s carrying amount exceeds its recoverable amount,

it is written down to the recoverable amount immediately.

The useful life of information systems developed

internally is between five and ten years. Software relating

to production planning and logistics optimisation has

an estimated useful life of ten years.

Basis of amortisation for intangible assets Amortisation of intangible assets is based on original

cost less any residual value. Depreciation takes place on

a straight-line basis over the useful life of the asset.

Goodwill –

Supply contracts/customer lists over 7–10 years

Trademarks over 5 years

Computer software over 3–10 years

Impairment of tangible fixed assets and intangible assetsThe carrying amounts of the Group’s goodwill and

depreciable assets are tested for impairment annually

or whenever there is an indication that a particular

asset may be impaired. The Group’s depreciable assets

are reviewed at each reporting date to establish whether

there is any indication of impairment. If any such indication

exists, the asset is tested for impairment.

An impairment loss is recognised if the asset’s recov-

erable amount, i.e. the higher of value in use and net

realisable value, is lower than the carrying amount.

When calculating value in use, future cash flows are

discounted using a pre-tax discount rate that reflects

the current market view of risk-free interest and risk

specific to the asset.

Reversal of impairment lossesImpairment losses recognised for assets are reversed if

there is no longer an indication of impairment and there

has been a change in the assumptions on which the

estimate of recoverable amount was based. However,

goodwill impairment is never reversed.

An impairment loss is only reversed to the extent

that the asset’s carrying amount after the reversal does

not exceed the carrying amount that would have been

determined (net of depreciation) had no impairment

loss been recognised for the asset.

Financial instrumentsFinancial instruments reported under assets in the state-

ment of financial position include cash & cash equiva-

lents, accounts receivable, shares, loan receivables and

derivative instruments. Financial instruments reported

under liabilities and equity includes accounts payable,

loan liabilities and derivative instruments.

Recognition of financial assets and liabilitiesA financial asset or liability is recognised in the state-

ment of financial position when the Company becomes

a party to the instrument’s contractual terms. Accounts

receivable are recognised when an invoice has been

sent. A liability is recognised when the counterparty has

performed and there is a contractual obligation to pay,

even if an invoice has not yet been received. Accounts

payable are recognised when invoices are received.

A financial asset is derecognised when the rights

to receive benefits have been realised, expired or the

Company loses control over them. The same applies to

a component of a financial asset. A financial liability is

derecognised when the contractual obligation has been

settled or extinguished in some other way. The same

applies to a component of a financial liability.

A financial asset and a financial liability may be off-

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financial position when, and only when, the Company

has a legally enforceable right to set off the recognised

amounts and the Company intends either to settle on

a net basis, or to realise the asset and settle the liability

simultaneously.

Purchases and sales of financial assets are recognised

on the trade date (the commitment date).

Classification and measurementFinancial instruments are initially recognised at cost,

namely the instrument’s fair value plus transaction

costs, apart from derivatives for which transaction

costs are recognised immediately. A financial instru-

ment is classified according to the purpose for which it

was acquired. The categories determine how a financial

instrument is measured subsequent to initial recogni-

tion, as described below.

Financial assets at fair value through profit or lossThis category consists of two sub-categories: financial

assets held for trading and other financial assets the

Company designated in this category on initial recogni-

tion. Nynas only has holdings in the first sub-category

and these are derivatives with a positive value that are

not used for hedge accounting under IFRS. Derivatives

in this category are measured at fair value, with any

changes in fair value recognised in profit or loss.

These include derivatives used in financial hedging,

but which do not qualify for hedge accounting under

IFRS, and consist of foreign exchange forward con-

tracts, oil forward contracts and interest rate swaps.

Loans and receivablesLoans and receivables are non-derivative financial

assets with fixed or determinable payments that are

not quoted in an active market. These assets are

measured at amortised cost. Amortised cost is calcu-

lated based on the effective interest method used at

initial recognition.

At each reporting date, Nynas assesses whether

there is any objective indication that a loan is impaired.

Loans are assessed individually. Objective evidence may

include significant financial difficulties experienced by the

issuer or debtor, a breach of contract, such as a default

or delayed payment of interest or principal, and/or the

probability that the borrower will enter into bankruptcy

or some other financial reconstruction. Impairment losses

on loans are recognised in operating expenses under

distribution costs.

Receivables are recognised at original invoice amount

less an allowance for uncollectible amounts. A provi-

sion for impairment of accounts receivable is recognised

when there is objective evidence that the Group will not

be able to collect all amounts due under the original

terms and conditions of the receivables.

The provision for doubtful debts is based on an individu-

al assessment of each customer, taking into consideration

the customer’s ability to pay, expected future risk and the

value of security received. As accounts receivable have

short expected settlement terms, the value is recognised at

a nominal amount without discounting. When a receivable

cannot be collected, it is written off against the impairment

account for accounts receivable. Impairment of accounts

receivable is reported under distribution costs.

For loans and receivables, impairment is calculated as

the difference between the asset’s carrying amount and

the present value of estimated future cash flows (exclud-

ing future credit losses that have not arisen), discounted

at the financial asset’s original effective interest rate.

If, in a subsequent period, there is an indication

that an impairment loss may have decreased and

this can be objectively related to an event occurring

after the impairment loss was recognised (such as an

improvement in the debtor’s credit rating), the pre-

viously recognised impairment loss is reversed and

credited to Distribution costs.

Cash and cash equivalentsCash & cash equivalents consist of cash, demand depos-

its with banks and similar institutions and short-term

deposits with an original maturity of 3 months or less,

which are subject to an insignificant risk of changes

in value.

Available for sale financial assetsAvailable-for-sale financial assets are financial assets that

are either designated in this category or not classified

in any of the other categories. Holdings of shares and

participating interests are reported here.

Financial assets in this category are measured at fair

value, with any fair value changes recognised in other

comprehensive income. Accumulated fair value chang-

es are recognised in a separate component of equity.

However, changes relating to impairment, interest on

debt instruments, dividend income and exchange gains

or losses on monetary items are recognised in profit or

loss. On disposal of an asset, accumulated profit/loss is,

as previously, recognised in the statement of compre-

hensive income under profit/loss for the year. If a reliable

estimation of fair value is not possible, the holding is

measured at cost less any impairment.


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Financial liabilities at fair value through profit or lossThis category consists of two sub-categories: financial

liabilities held for trading and other financial liabilities

the Company designated in this category on initial

recognition. Nynas only has holdings in the first sub-

category and these are derivatives with a negative value

that are not used for hedge accounting under IFRS.

Derivatives in this category are measured at fair value,

with any changes in fair value recognised in profit or loss.

These include derivatives not used in financial hedg-

ing, but which do not qualify for hedge accounting

under IFRS, and consist of foreign exchange forward

contracts, oil forward contracts and interest rate swaps.

Other financial liabilitiesAccounts payable and loan liabilities are classified as other

financial liabilities. Accounts payable have short expected

settlement terms and are measured at nominal amounts

with no discounting. Loan liabilities are classified as other

financial liabilities, which means they are recognised at

amortised cost using the effective interest method.

Derivatives and hedge accountingDerivatives include forward contracts (oil and foreign

exchange forward contracts) and swaps (currency and

interest rate swaps) to hedge the risks associated with

interest rate and foreign currency fluctuations and

changing oil prices. Changes in the value of derivative

financial instruments are recognised in profit or loss

based on the purpose for which the instruments were

acquired. If hedge accounting is not applied, changes

in the fair value of derivatives are recognised as income

or expense in operating profit or loss or in net financial

items based on the purpose for which the derivative

instrument was acquired and whether its use relates to

an operating item or a financial item.

If hedge accounting is not applied when using

interest rate and currency swaps, the interest coupon

is recognised as interest expense, while other value

changes are recognised as other finance income or

other finance costs.

To qualify for hedge accounting under IFRS, Nynas is

required is to formally designate the hedge at its incep-

tion, document the hedging relationship, the Company’s

risk management objective and its strategy for under-

taking the hedge. Nynas also documents how it plans

to assess, at the inception of the hedge and on an

ongoing basis, the hedging instrument’s effectiveness

in offsetting fair value or cash flow changes in the

hedged item. Gains and losses attributable to hedges

are recognised in profit or loss at the same time as

gains or losses attributable to the hedged items.

Recognition of derivative instruments and hedging measuresHedging of net investmentsInvestments in foreign subsidiaries (net assets including

goodwill) have been partially hedged by means of for-

eign exchange forward contracts. The effective portion

of changes in the fair value of derivative instruments

designated as hedges of a net investment is recognised

in other comprehensive income and accumulated in

the translation reserve in equity. The ineffective por-

tion is recognised directly in profit or loss. Cumulative

gains and losses in equity are recycled into profit or loss

through other comprehensive income on disposal of

the foreign operation.

Cash flow hedgesCash flow hedges are used to hedge fixed-price trans-

actions, for which oil forward contracts are used, and

to hedge financial loan liabilities with variable interest

rates, for which interest rate swaps are used.

The effective portion of changes in the fair value of

derivative instruments designated as cash flow hedges

is recognised in other comprehensive income and accu-

mulated in a separate component of equity.

The gain or loss attributable to the ineffective portion

is recognised immediately in profit or loss. Amounts

accumulated in equity are recycled into profit or loss

through other comprehensive income in the periods

when the hedged item affects profit or loss (e.g., when

the forecast sale that is hedged takes place).

When a hedging instrument expires or is sold, or

when a hedge no longer meets the hedge accounting

criteria, amounts accumulated in equity are retained in

equity and not taken to profit or loss until the forecast

transaction occurs and is recognised. If the forecast

transaction is no longer expected to occur, gains and

losses deferred in other comprehensive income must be

taken to profit or loss immediately.

Fair value hedgesInterest rate swaps are used to hedge the exposure to

changes in the fair value of the Company’s fixed-inter-

est liabilities. With hedge accounting, the hedged risk in

the hedged item is also remeasured at fair value. Gains

or losses from remeasuring the hedging instrument, the

derivative and the change in value of the hedged risk

are recognised under net financial items.

If the hedge no longer qualifies for hedge accounting,


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any adjustment to the carrying amount of a hedged item

for which the effective interest method is used shall be

amortised to profit or loss over the remaining maturity.

InventoriesInventories are stated at the lower of cost and net re-

alisable value, with due consideration of obsolescence.

Net realisable value is the estimated selling price in the

ordinary course of business, less the estimated costs of

completion and selling expenses.

Cost is based on the first-in/first-out (FIFO) principle

and includes expenditure incurred in acquiring the inven-

tories and bringing them to their existing location and

condition. In the case of manufactured inventories and

work in progress, cost includes an appropriate share of

overheads based on normal operating capacity.

Employee benefitsPost-employment benefitsThe Group has defined contribution and defined ben-

efit pension plans. Pension costs for defined contri-

bution plans are recognised in the income statement

as employees render service. Pension obligations are

measured on an undiscounted basis, as all these plans

fall due within twelve months.

The Group’s net defined benefit obligation is

determined separately for each plan, based on company-

specific actuarial assumptions. These include assessments

of future salary increases, rate of inflation, mortality,

attrition rate and changes in the income base amount.

Pension obligations are discounted to their present value.

Net actuarial gains and losses and the difference

between the actual return and the discount rate for

pension plan assets will be recognised in Other com-

prehensive income.

The calculation of defined benefit pension plans has

been done in accordance with the “Project Unit Cred-

it method” by an independent external actuary. The

discount rate on first-rate corporate bonds is used in

those countries where there is a functional market for

such bonds (in Sweden the rate is determined with ba-

sis in the market rate of mortgaged-backed bonds as

this is comparable with high quality corporate bonds).

Other countries are using the Government bonds as

basis for the rate.

Defined benefit pension liabilities recognised in the

statement of financial position are the present value

of the defined benefit obligation at the reporting date

minus the present value of the plan assets. Special

payroll tax will be included in the pension provision.

The obligation for retirement pension and family pen-

sion for employees in Sweden is covered partly by insur-

ance with Collectum. In accordance with the statement

of the Swedish Financial Accounting Standards Council’s

Emerging Issues Task Force, UFR 10, this is a multi-

employer defined benefit plan. For the 2014 financial

year, the Company did not have access to sufficient infor-

mation to enable it to report this plan as a defined benefit

plan. Consequently, the ITP pension plan insured through

Collectum is reported as a defined contribution plan.

ProvisionsA provision is recognised in the statement of financial

position when the Group has a present obligation

(legal or constructive) as a result of a past event and it is

probable that an outflow of resources will be required

to settle the obligation, and a reliable estimate can be

made of the amount. Where the effect of the time value

of money is material, the amount of a provision shall

be calculated as the present value of the expenditures

required to settle the obligation. The provisions are

mainly related to restructuring and environmental

obligations.

RestructuringA provision for restructuring is recognised when the

Group has approved a detailed and formal restructur-

ing plan, and the restructuring has either commenced

or has been announced publicly. No provision is posted

for future operating costs.

Onerous contractsA provision for onerous contracts is recognised when

the expected benefits to be derived by the Group are

lower than the unavoidable cost of meeting its obliga-

tions under the contract.

Contingent liabilitiesA contingent liability is a potential undertaking that

derives from events which have occurred and whose

incidence is only confirmed by one or more uncertain

future events. A contingent liability can also be an ex-

isting undertaking that has not been reported in the

Balance Sheet because it is unlikely that an outflow of

resources will be required or because the size of the

undertaking cannot be calculated. See note 28.

Accounting policies – parent companyThe Parent Company prepares its financial statements in

accordance with the Swedish Annual Accounts Act and

the Swedish Financial Accounting Standards Council’s

recommendation RFR 2, Accounting for Legal Entities.


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RFR 2 requires the Parent Company, as a legal entity, to

prepare its annual financial statements in compliance

with all the IFRS and IFRIC interpretations adopted by

the EU, to the extent possible within the framework

of the Swedish Annual Accounts Act and the Swedish

Pension Obligations Vesting Act, and taking into

account the relationship between tax income/expense

and accounting profit.

Nynas AB applies the same recognition criteria and

accounting policies as the Group, apart from the excep-

tions described below.

Employee benefits/defined benefit plansWhen calculating the defined benefit pension plans, the

Parent Company applies the rules contained in the Swed-

ish Pension Obligations Vesting Act and the Swedish Finan-

cial Supervisory Authority’s regulations to the extent that

they are required for tax deductibility. The main differences

from IAS 19 relate to determination of the discount rate

and the fact that the defined benefit obligation is based on

the present salary level, without taking into account future

salary increases, and that all actuarial gains and losses are

recognised immediately in profit or loss.

TaxesUntaxed reserves are recognised inclusive of deferred

tax liability in the Parent Company. In the consolidated

financial statements, untaxed reserves are divided into

deferred tax liability and equity.

Group contributions and shareholder contributionsThe Company reports Group contributions and share-

holder contributions in accordance with RFR 2. Share-

holder contributions are recognised directly in the recipi-

ent’s equity and capitalised in the contributor’s shares and

participating interests, to the extent that no impairment

has been identified.

Group contributions received from subsidiaries are rec-

ognised under finance income in the income statement.

Group contributions paid to subsidiaries are recognised

as an investment.

Investments in group companiesInvestments in Group companies are recognised at

cost less any impairment losses. Dividends received

are recognised as income, while repayments of con-

tributed capital reduce the carrying amount.

Financial guaranteesThe Parent Company’s financial guarantees consist

mainly of sureties in favour of subsidiaries.

Financial guarantees mean that the Company has an

obligation to reimburse the holder of a debt instrument

for losses it incurs because a specified debtor fails to

make payment when due under the contractual terms.

When reporting financial guarantees, the Parent Com-

pany applies an exemption from the provisions of IAS

39 permitted by the Swedish Financial Reporting Board.

The exemption relates to financial guarantees issued

in favour of subsidiaries, associates and joint ventures.

The Parent Company reports financial guarantees as a

provision in the balance sheet when the Company has

an obligation, and an outflow of resources is likely to be

required to settle the obligation.


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NOTES TO THE FINANCIAL STATEMENTS – GROUP(AMOUNT IN TABLES IN SEk MILLION, UNLESS OTHERWISE STATED)

NOTE 1. SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES

Provision for future environmental programmesNynas has two refineries and a number of bitumen terminals

requiring operating permits under Swedish environmental

law. The refineries in Dundee and Eastham – the latter jointly

owned with another party – are operated under the United

Kingdom’s national environmental laws.

Future restoration costs associated with the operations’

environmental impacts may be difficult to establish, both in

terms of size and timing. Changes in environmental legisla-

tion and the emergence of new cleaning up technology are

factors that may affect the size of the provision. Consequent-

ly, the provision may need to be adjusted in the future, which

may have a material effect on future financial results. See

also note 23.

Measurement of tax loss carryforwardsThe measurement of tax loss carryforwards in an entity is

based on an assessment of whether they can be utilised in the

foreseeable future. In particular, tax loss carryforwards have

been measured in Belgium. See the values reported in note 10.

Impairment of intangible assetsWhen Nynas calculates a cash generating unit’s recoverable

amount when testing goodwill and supply contracts/customer

lists for impairment, a number of assumptions regarding future

conditions and estimates of parameters are made. These are

described in note 12.

Assumptions in the calculation of pension provisionsThe actuarial assessment of pension obligations and pension

costs is based on the actuarial assumptions which are spec-

ified in note 22. A change to any of these assumptions may

have a considerable effect on the estimated retirement benefit

obligation and pension costs. The discount rate is determined

by reference to the return on a mortgage bond of a term con-

sistent with the Group’s average remaining term of the obliga-

tion, which for Nynas is 30 years.

The assumptions described in note 22 do not deviate

significantly from what is perceived as normal practice in the

Swedish market.

DisputesNynas conducts domestic and international operations and is

occasionally involved in disputes and legal proceedings arising

in the course of these operations. These disputes and legal

proceedings are not expected, either individually or collectively,

to have any significant not expected, either individually or

collectively, to have any significant negative impact on Nynas’s

operating profits, profitability or financial position, over and

above that detailed below.


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INvESTMENTS BY GEOGRAPHICAL MARkET 2014 2013

Nordic Region 246.5 211.0

Europe 298.5 13.4

Americas 0.5 1.2

Other 0.2 2.0

TOTAL 545.7 227.6

SALES REvENUES BY CATEGORY 2014 2013

Sale of goods, external 22,321.0 19 495,2

Revenue from services 201.3 31,8

TOTAL 22,522.3 19 527,0

NOTE 2. SEGMENT INFORMATION

2.1 Information on business segmentsFor additional information, please refer to “General accounting principles” for segment reporting.

2.2 Information by geographical market and sales revenues by category

SALES REvENUES BY GEOGRAPHICAL MARkET 2014 2013

Nordic Region 5,516.3 5,528.0

Europe 12,846.1 9,812.3

Americas 1,444.4 1,611.7

Other 2,715.5 2,575.0

TOTAL 22,522.3 19,527.0

TOTAL ASSETS BY GEOGRAPHICAL MARkET 2014 2013


Europe 1,959.4 1,583.2

Americas 559.3 480.6

Other 893.5 482.1

TOTAL 11,538.3 9,554.3

Naphthenics Bitumen Other Elimination Group

2014 2013 2014 2013 2014 2013 2014 2013 2014 2013

NET SALES

External sales 9,875.5 7,628.5 10,494.8 10,298.6 2,151.9 1,600.0 – – 22,522.3 19,527.0

Internal sales 1,952.1 2,077.1 846.8 801.9 9,731.8 9,544.7 -12,530.8 -12,423.7 0.0 0.0

Net sales total 11,827.6 9,705.6 11,341.7 11,100.4 11,883.8 11,144.7 -12,530.8 -12,423.7 22,522.3 19,527.0

Operating result before depreciation

961.9 564.4 324.8 115.2 -121.7 -242.7 – – 1,165.0 436.8

Depreciation/amortisation and impairment

-280.8 -279.7 -72.0 -77.0 -28.8 -95.4 – – -381.6 -452.0

Depreciation joint venture – – -8.9 -6.6 – – – – -8.9 -6.6

Operating result 681.1 284.7 243.9 31.6 -150.5 -338.2 – – 774.4 -21.8

Net financing costs -308.1 -263.9

Income tax for the year -187.3 -19.6

Net income for the year 278.9 -305.3

OThER DISCLOSURES

Fixed assets 3,238.2 2,748.7 595.9 652.2 430.9 251.0 – – 4,265.1 3,651.9

Inventory and current receivables

4,776.9 3,382.7 1,755.3 1,576.4 -157.0 5.7 – – 6,375.2 4,964.8

Assets in capital employeed 8,015.2 6,131.4 2,351.2 2,228.6 273.9 256.7 – – 10,640.3 8,616.7

Other liabilities incl provisions 2,185.6 1,283.5 1,593.9 713.2 14.6 -3.5 – – 3,794.1 1,993.2

Total capital employeed 5,829.6 4,847.9 757.3 1,515.4 259.3 260.3 – – 6,846.2 6,623.6


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NOTE 3. COSTS ITEMISED BY NATURE OF EXPENSE

NOTE 4. OThER OPERATING INCOME AND EXPENSES

2014 2013

Raw materials 17,555.4 15,147.5

Transport and distribution costs 1,759.8 1,696.9

Manufacturing expenses 1,559.5 1,412.2

Costs for employee benefits (note 5) 785.7 710.2

Depreciation, amortisation, impairment (notes 12, 13,) 381.6 437.5

Other income and value changes -509.7 14.0

Other expenses 310.4 144.4

TOTAL 21,842.7 19,562.7

During 2014 (2013) no realised gains and losses from cash flow-

hedges (oil) were re-classified to raw materials in the income.

Other income and value changes consists of unrealised gains and

losses from oil and currency derivatives of 509.7 (-14.0).

OTHER OPERATING INCOME 2014 2013

Exchange gains on operating receivables/liabilities

317.3 225.4

Insurance compensation – 10.9

Other service revenue 27.4 47.0

TOTAL 344.7 283.3

OTHER OPERATING EXPENSES 2014 2013

Costs related to fire in Nynäshamn – 10.9

Exchange losses on operating receivables/liabilities -274.1 280.0

TOTAL -274.1 290.9

In 2011 Nynas implemented its largest maintenance shut-

down to date at the refinery in Nynäshamn. On resumption

of operations, a fire broke out but did not cause any environ-

mental damage or personal injury. however, there was exten-

sive material damage, and repair costs are estimated to be at

SEK 280 million.

The Company was also affected by a loss of revenue and

additional costs incurred as a direct result of the fire. Nynas has

insurance cover in place for both types of damage, and insurance

revenue of SEK 359 million was recognised at December 31, 2012

and SEK 11 million at December 31, 2013.

The compensation is settled to 100 percent with the insur-

ance companies during 2013.

See also note 19.


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The average number of employees, with wages, salaries, other remuneration, social security contributions and pension costs, is

shown in the tables below.

2014 2013

AvERAGE NUMBER OF EMPLOYEES Men Women Total Men Women Total

PARENT

Sweden 303 134 437 316 137 453

TOTAL PARENT 303 134 437 316 137 453

INCOME

Sweden 303 134 437 316 137 453

TOTAL SWEDEN 303 134 437 316 137 453

United Kingdom 122 20 142 157 23 180

Belgium 19 28 47 19 31 50

Poland 12 4 16 12 4 16

Estonia 14 3 17 17 3 20

Spain 3 3 6 3 3 6

Germany 83 17 100 7 6 13

France 9 3 12 10 3 13

Denmark 6 1 7 6 1 7

Finland 3 2 5 3 1 4

USA 3 4 7 8 3 11

Other countries 49 41 90 44 45 89

TOTAL OUTSIDE SWEDEN 323 126 449 286 123 409

TOTAL GROUP 626 260 886 602 260 862

EMPLOYEE BENEFIT COSTS, GROUP 2014 2013

Wages, salaries and other benefits 579.8 504.8

Pension costs, defined benefit (see also note 22) 32.0 40.2

Pension costs, defined contribution (see also note 22) 32.1 32.6

Other post-employment benefits 0.0 0.0

Social security contributions 141.8 132.6

TOTAL GROUP 785.7 710.2

REMUNERATION AND OTHER BENEFITS, SENIOR EXECUTIvES, GROUP

2014 2013

President& CEO

Other senior

executives TotalPresident

& CEO

Other senior

executives Total

Basic salary 5.3 14.6 19.9 5.7 11.8 17.5

Variable pay 0.0 0.7 0.7 0.0 1.0 1.0

Other benefits 0.1 0.5 0.6 0.2 0.5 0.7

Social security contributions 1.7 4.3 6.0 1.9 3.5 5.4

Pension costs 2.2 6.0 8.2 4.2 5.8 10.0

TOTAL 9.3 26.1 35.4 12.0 22.6 34.6

Nynas Group Management 2014 (not including CEO), Rolf Allgulander, Martin Carlson, Simon Day, Per Dahlstedt up to 2014-09-14, Dan Daggenfelt up to 2014-09-30, Bo Askvik from 2014-10-01, Anders Nilsson from 2014-09-15, Ewa Beskow, Jim Christie, Peter Bäcklund, hans Östlin.

Nynas Group Management 2013 (not including CEO), Rolf Allgulander, Martin Carlson, Simon Day, Dan Daggenfelt, Per Dahlstedt, Ewa Beskow, Russell Childs, hans Östlin.

No Board fees or other Board remuneration were paid.

NOTE 5. EMPLOYEES, PERSONNEL EXPENSES AND REMUNERATION OF SENIOR EXECUTIVES


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NOTE 6. DEPRECIATION AND AMORTISATION OF TANGIBLE AND INTANGIBLE ASSETS

Intangible Tangible

DEPRECIATION AND AMORTISATION BY FUNCTION 2014 2013 2014 2013

Cost of sales 4.1 5.5 309.1 317.0

Distribution costs 1.9 3.1 37.4 16.9

Administrative expenses 20.6 22.6 6.8 11.2

TOTAL 26.6 31.2 353.2 345.2

DEPRECIATION AND AMORTISATION BY TYPE OF ASSET 2014 2013

Supply contracts/customer lists 1.7 2.0

Computer software 24.9 29.2

Buildings 10.0 9.7

Land improvements 8.4 6.5

Plant and machinery 309.1 300.1

Equipment 25.8 29.0

TOTAL 379.9 376.6

TOTAL RECOGNISED DEPRECIATION 379.9 376.6

NOTE 7. AUDITORS’ FEES AND OThER REMUNERATION

AUDIT FEES 2014 2013

Ernst & Young AB

Annual audit 6.6 5.7

Other audit services 0.9 0.6

Tax advisory services 3.1 2.5

Other services 0.5 0.3

OThER AUDITORS



NOTE 8. FEES FOR OPERATING LEASES

PAYMENTS UNDER NON-CANCELLABLE OPERATING LEASES 2014 2013

Payments during the financial year 357.0 347.3

AGREED FUTURE PAYMENTS

Within one year 341.9 315.1

2–5 years 635.7 508.9

6 years and thereafter 231.7 190.5

Group president & CEOFrom March 3, 2014 Nynas Group has appointed Gert

Wendroth as new President. Termination of employment in

relation to the President requires 6 months notice by either

party. In the event of involuntary termination of employ-

ment, the President is entitled to termination benefits corres-

ponding to 12 months’ salary.

> Cont. NOTE 5

GENDER DISTRIBUTION IN MANAGEMENT 2014 2013

Female representation, %

Board 23.7 20.7

Group Management 10.0 11.1

In 2014 Nynas AB had four bitumen carriers on bareboat char-

ters and two special oil carriers on time charters.

The leases have different conditions and include a right of

extension. Tanker trucks are leased in the UK. Other operating

leases relate mainly to tanks and leased premises.

The Group does not have any material agreements classified

as finance leases.


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NOTE 9. NET FINANCIAL ITEMS

2014 2013

Interest income, bank deposits 8.3 17.2

Interest income, associates 0.7 0.7

Interest income, derivative instruments (actual interest rates and changes in value) 50.5 46.5

TOTAL FINANCE INCOME 59.5 64.4

Of which total interest income attributable to items carried at amortised cost 9.0 17.9

Interest expense, loans and bank overdrafts -201.4 -214.3

Interest expense, derivative instruments (actual interest rates and changes in value) -72.6 -21.5

Interest expense, PRI pension obligations -8.5 -5.7

Net exchange differences 12.3 -16.3

Other finance costs* -97.5 -70.6

TOTAL FINANCE COSTS -367.6 -328.4

Of which total interest expense attributable to items carried at amortised cost -209.9 -220.0

TOTAL NET FINANCIAL ITEMS -308.1 -263.9

*) Mainly relates to up front fee.

NOTE 10. TAXES

2014 2013

Current tax -186.4 -119.1

Tax attributable to Joint Venture* -5.0 -2.9

Current tax prior years -0.1 -2.6

Deferred tax 4.0 105.1

TOTAL -187.5 -19.6

*) Refer to ERL note 15

Tax on the Group’s profit before tax differs from the theoretical figure that would have resulted from a weighted average rate

for the results in the consolidated companies as follows:

2014 2013

Result before tax 466.4 -285.7

Tax according to Parent Company’s applicable tax rate -102.6 62.9

Effect of different tax rates for foreign subsidiaries 3.2 -4.4

Tax effect of:

Other non-deductible expenses -5.6 -13.9

Other non-taxable income 3.0 1.7

Adjustment of current tax in respect of prior years -0.1 -2.6

Increase in loss carryforwards without corresponding capitalisation of deferred tax -87.2 -58.3

Tax attributable to Joint Venture 0.0 -2.9

Currency 0.0 0.6

Other 1.8 -2.7

RECOGNISED TAx ExPENSE -187.5 -19.6

Standard rate of income tax, % 22 22

Effective tax rate, % 40 -7


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DEFERRED TAX ASSETS AND LIABILITIES Assets Liabilities Net

2014 2013 2014 2013 2014 2013

Land and buildings 0.0 0.0 10.2 1.4 -10.2 -1.4

Machinery and equipment 13.9 8.9 151.1 200.2 -137.2 -191.3

Inventories 13.3 0.0 2.6 26.2 10.7 -26.2

Other operating receivables/liabilities

92.3 60.8 145.0 0.9 -52.7 59.9

Pension liabilities 47.2 20.9 0.0 0.0 47.2 20.9

Tax loss carryforwards 131.5 85.7 0.0 0.0 131.5 85.7

TOTAL 298.2 176.3 308.9 228.7 -10.7 -52.4

Offsets 0.1 -0.8 0.1 -0.8 – –

TOTAL 298.3 175.5 309.0 227.9 -10.7 -52.4

CHANGE IN DEFERRED TAX ON TEMPORARY DIFFERENCES DURING YEAR

OpeningBalance

Recognised in income statement

Recognised directly in

equityExchange

differencesClosingBalance

Land and buildings -1.4 1.6 -10.4 – -10.2

Machinery and equipment -191.3 54.1 – – -137.2

Inventories -26.2 36.9 – – 10.7

Other operating receivables/liabilities 59.9 -115.5 2.4 0.5 -52.7

Pension liabilities 20.9 -18.8 45.1 – 47.2

Tax loss carryforwards 85.7 45.8 – – 131.5

TOTAL -52.5 4.0 37.1 0.5 -10.7

The Group did not recognise deferred tax assets of SEK 258 million (158) in respect of losses amounting to SEK 759 million (465),

which can be utilised against future taxable profit. All of the SEK 258 million is available for use in the future indefinitely.

NOTE 11. EARNINGS PER ShARE

The calculation of earnings per share is based on profit attributable to equity-holders of the Parent Company.

The average number of shares in 2014 and 2013 was 67,532.

2014 2013

Profit for the year

Number of shares Per share

Profit for the year

Number of shares Per share

Earnings per share 278.9 67,532 4,130 -305.3 67,532 -4,521

As Nynas does not have, and did not have during the year, any outstanding convertible and subscription warrant programmes,

no dilution effects arose during calculation of earnings per share.

> Cont. NOTE 10


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NOTE 12. INTANGIBLE ASSETS

2014 Goodwill

Supply contracts/

Customer listsComputer software

Other intang.assets/

Trademarks

TotalIntangible

Assets

Opening cost 275.4 333.5 375.4 1.6 985.8

Acquisitions – – 4.3 – 4.3

Reclassifications – – 4.4 – 4.4

Translation differences – 11.1 1.5 0.0 12.6

CLOSING COST 275.4 344.6 385.6 1.6 1,007.2

Opening regular depreciation -264.0 -202.6 -285.1 -1.6 -753.3

Translation differences – -14.5 -1.4 0.0 -16.0

Depreciation for the year – -1.7 -24.9 – -26.6

CLOSING REGULAR DEPRECIATION -264.0 -218.8 -311.5 -1.6 -795.9

Opening impairment -3.3 -129.3 -26.7 – -159.3

Translation differences – 3.5 0.0 – 3.5

CLOSING IMPAIRMENT -3.3 -125.8 -26.7 – -155.8

CLOSING RESIDUAL vALUE 8.1 0.0 47.4 0.0 55.5

2013

Opening cost 275.4 331.9 363.5 1.6 972.3

Acquisitions – – 0.1 – 0.1

Reclassifications – – 11.6 – 11.6

Translation differences – 1.6 0.2 0.0 1.8

CLOSING COST 275.4 333.5 375.4 1.6 985.8

Opening regular depreciation -264.0 -197.4 -255.7 -1.6 -718.7

Translation differences – -3.2 -0.2 0.0 -3.4

Depreciation for the year – -2.0 -29.2 – -31.2

CLOSING REGULAR DEPRECIATION -264.0 -202.6 -285.1 -1.6 -753.3

Opening impairment -3.3 -130.9 -26.7 – -160.9

Translation differences – 1.6 – – 1.6

CLOSING IMPAIRMENT -3.3 -129.3 -26.7 – -159.3

CLOSING RESIDUAL vALUE 8.1 1.6 63.7 0.0 73.3

2014 2013

United Kingdom 0.0 1.6

Austria 3.7 3.7

Estonia 4.4 4.4

TOTAL 8.1 9.7

Impairment testing of goodwill and customer lists/supply contractsGoodwill, customer lists and supply contracts are allocated to

the Group’s cash generating units (CGUs) identified for each

country in which the Group operates.

Goodwill, customer lists/supply contracts are allocated as

follows:

The recoverable amount for cash-generating units is deter-

mined by calculating the value in use. These calculations use

estimated future cash flows, which are based on financial bud-

gets/long-term plans that have been approved by manage-

ment and which cover a five-year period.

The cash-flows after this five-year period are extrapolated

using an estimated growth rate. Beyond the forecast period,

Nynas estimates a residual value: Gordon’s formula is used for

projects over SEK 10 million, while for smaller projects a stan-

dard factor of six times the unrestricted cash flow for the final

year of the forecast period is used.


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Significant assumptions used to calculate the value in use:

2014 2013

Gross margin, %* 2.5 2.5

Rate of growth, %** 2.0 2.0

Discount rate, %*** 9.4 9.4

* Budgeted gross margin.

** Weighted average rate of growth used to extrapolate cash flows outside budget period.

*** Pre-tax discount rate used in present value calculation of projected future cash flows.

NOTE 13. TANGIBLE ASSETS

2014 BuildingsPlant and

machinery EquipmentConstruction

in progress

TotalTangible

assets

Opening cost 428.3 5,961.2 522.5 292.1 7,204.1

Adjusted cost – – -0.2 – -0.2

Acquisitions 13.6 475.8 7.0 287.3 783.8

Disposals 18.8 -0.5 -1.3 – 17.0

Reclassifications 47.0 15.5 -11.0 -55.9 -4.4

Translation differences 9.8 71.1 18.5 2.7 102.1

CLOSING COST 517.5 6,523.0 535.5 526.3 8,102.3

Opening regular depreciation -165.0 -3,200.1 -391.8 – -3,756.9

Depreciation adjustment – – 0.1 – 0.1

Disposals -19.6 3.0 0.9 – -15.7

Depreciation reclassifications 0.2 -0.6 0.4 – 0.0

Translation differences -3.2 -45.7 -14.3 – -63.2

Depreciation for the year -18.4 -309.1 -25.8 – -353.3

CLOSING REGULAR DEPRECIATION -206.0 -3,552.5 -430.6 0.0 -4,189.0

CLOSING RESIDUAL vALUE 311.5 2,970.6 104.9 526.3 3,913.3

Opening impairment -11.8 -71.5 -0.8 -36.0 -120.2

Impairment for the year – 0.0 -1.8 – -1.8

Translation differences -1.6 -6.6 -0.3 0.0 -8.6

CLOSING IMPAIRMENT -13.4 -78.2 -2.9 -36.0 -130.5


Of which carrying amount, Sweden 235.0

> Cont. NOTE 12

These assumptions have been used to analyse each CGU. Man-

agement have determined the budgeted gross margin based

on previous results and their expectations of market develop-

ment. The weighted average rate of growth used corresponds

to the forecasts in sectoral reports. The discount rates used are

pre-tax rates and reflect business-specific risks.


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in progress

TotalTangible

assets

Opening cost 438.8 5,241.3 488.1 944.6 7,112.7

Adjusted cost – – 0.0 – 0.0

Acquisitions 0.4 9.0 4.4 211.4 225.2

Disposals -18.8 -103.8 -5.1 – -127.7

Reclassifications 5.6 811.6 34.8 -863.6 -11.6

Translation differences 2.3 3.1 0.3 -0.2 5.4

CLOSING COST 428.3 5,961.2 522.5 292.1 7,204.1


Depreciation adjustment – – -0.1 – -0.1

Disposals 15.9 103.5 4.3 – 123.8

Depreciation reclassifications – 1.8 -1.8 – 0.0

Translation differences -2.0 -1.7 -0.3 – -4.0


CLOSING REGULAR DEPRECIATION -165.0 -3,200.1 -391.8 0.0 -3,756.9


Opening impairment – -22.3 1.3 -36.0 -57.0

Impairment for the year -11.8 -47.2 -2.0 – -61.1

Translation differences – -2.0 -0.1 – -2.1

CLOSING IMPAIRMENT -11.8 -71.5 -0.8 -36.0 -120.2

CLOSING RESIDUAL vALUE 252.0 2,689.8 129.7 256.1 3327.6


NOTE 14. ShARES IN GROUP COMPANIES

2014 2013

Opening cost 1,054.3 920.1

Purchases – 179.8

Write down -31.7 -45.5

CLOSING COST 1,022.6 1,054.3

GROUP COMPANIES: (SEk thousands) Reg. no Reg’d office

Number of shares

% Holding Currency

Carrying amount

Nynas UK AB, Sweden 556431-5314 Stockholm 1,000 100 SEK 625,176

Nynas Oil Import AB 556726-8841 Stockholm 1,000 100 SEK 100

Nynäs AB1 556366-1957 Stockholm 1,000 100 SEK 100

Nynas Ltd, U.K 02359113 London 7,647,888 100 GBP 92,305

Nynas Insurance Company Ltd, Bermuda

#11005 hamilton 91,800 100 SEK 8,349

Nynas A/S, Denmark A/S 66679 Copenhagen 1,000 100 DKK 36,461

Nynas A/S, Norway 962022316 Drammen 5,400 100 NOK 9,397

AS Nynas, Estonia 10028991 Tallinn 13,600 100 EEK 5,891

Nynas SA, France 328o31232ooo49 Bobigny 10,994 99.95 EUR 2,872

Nynas Petroleo SA, Spain esa78474475 Madrid 49,916 100 EUR 4,534

Nynas Srl, Italy 1249541 Milan 50,000 100 EUR 1,850

Nynas Gmbh, Germany DE121304433 Düsseldorf 1 100 EUR 2,105

Nynas (hong Kong) Ltd, hong Kong

473858 hong Kong 5,000 100 hKD 44

Nynas (Australia) Pty Ltd, Australia

ACN076.139.029 Brisbane 10,000 100 AUD 54

Nynas Sp. z o.o., Poland KRS:0000106219 Szczecin 430 100 PLN 1,614

> Cont. NOTE 13

1) dormant


NO

TES

(SEk thousands) Reg. no Reg’d officeNumber of

shares%

Holding CurrencyCarrying amount

Nynas (South Africa) (Pty) Ltd, South Africa

97/13041-07 Johannesburg 100 100 ZAR 0

Nynas do Brasil Ltda, Brasil 02331563/0001 São Paolo 10,000 100 BRL 584

Nynas Canada Inc, Canada 870209335 Toronto 10,000 100 CAD 1,001

Nynas Naphthenics Yaglari Ticaret Ltd Sti, Turkey

632 011 3964 Istanbul 38,489 99.99 TRL 4,808

Nynas Mexico SA, Mexico NME010316RF1 Mexico City 50,000 100 MXN 2,968

Nynas Servicios SA, Mexico NSE010316NM1 Mexico City 50,000 100 MXN 57

Nynas Argentina SA, Argentina 30707778209 Buenos Aires 15,000 100 ARS 191

Nynas Technol handels Gmbh, Austria

FN219950 Graz 1 100 EUR 323

Nynas Petroleum Shanghai Co, Ltd, China

315137 Shanghai 1 100 CNY 2,071

Nynas Naphthenics (M) SDN BhD, Malaysia

581235-V Malaysia 100,000 100 MYR 245

Nynas Baltic Sweden AB, Sweden 556625-4511 Stockholm 1,000 100 SEK 265

Nynas Belgium AB, Sweden 556613-4473 Stockholm 1,000 100 SEK 0

Nynas NV, Belgium 893.286.262 Zaventem 1 0.01 EUR 0

Nynas PTE, Ltd, Singapore 200723567N Singapore 36,720 100 SEK 217

Nynas AG, Switzerland Ch-170.3.025.994-5 Zug 79,998 99.99 ChF 0

Nynas USA, Inc, USA 800197875 Delaware 100 100 USD 36,693

Nynas OY, Finland 1834987-6 Vantaa 100 100 EUR 125

PT Nynas Indonesia, Indonesia 21.069.383.4-417.000 Jakarta 150,000 100 IDR 1,258

Nynas Naphthenics Private Ltd, India

US1109Mh2009FTLI95149 Mumbai 1,000,000 100 INR 753

Nynas Co, Ltd, Korea 110111-4222173 Seoul 10,000 100 KRW 314

Svensk Petroleum Förvaltnings AB

556067-8459 Stockholm 109 10.9 SEK 0

Nynas Germany AB 556858-4170 Stockholm 500 100 SEK 179,860

TOTAL INvESTMENTS IN GROUP COMPANIES 1,022,585

OPERATING GROUP COMPANIES OvER AND ABOvE THOSE DIRECTLY OWNED BY PARENT COMPANY:

Reg. no Reg’d officeNumber of

shares%


Nynas Naphthenics Ltd, U.K 2450786 Guildford 10,000 100 GBP 105

Nynas Limited Liability Company 1087746838464 Moscow 10,000 100 SEK 6,439

Nynas NV, Belgium 893.286.262 Zaventem 11,090 99.99 EUR 0

Nynas Bitumen Limited 982640 Cheshire 1,000,000 100 GBP 0

highway Emulsions Limited 2643238 Cheshire 2 100 GBP 0

Nynas Verwaltungs Gmbh hRA 117766 hamburg 25,000 100 EUR 25

Nynas Gmbh & Co KG hRA 114916 hamburg 1 100 EUR 20,001

Nynas has three foreign branches. Nynas UK AB has a branch in the UK and Nynas NV in Belgium has branches in Germany and France.

> Cont. NOTE 14


NO

TES

NOTE 15. INVESTMENTS IN ASSOCIATES AND JOINT VENTURES

GROUP Reg. no Reg’d officeNumber of

shares%


Eastham Refinery Ltd, UK 2205902 London 5,000,000 50 GBP 74.0

Share in equity of Eastham Refinery Ltd

Accounted for using equity method 13.2

TOTAL INvESTMENTS IN ASSOCIATES 87.2

GROUP’S INTEREST IN THE ASSOCIATE ERL Assets Liabilities Income Profit

Eastham Refinery Ltd, UK 197.5 107.9 150.5 19.0

2014 2013

Opening balance 74.0 76.4

Profit for the year 19.0 17.1

Dividend -18.1 -21.3

Translation differences 12.3 1.8

CLOSING BALANCE 87.2 74.0

NOTE 16. OThER LONG-TERM RECEIVABLES

2014 2013

Opening balance 1.5 19.1

Amounts to be received 2.3 -17.6

CLOSING BALANCE 3.8 1.5

NOTE 17. INVENTORIES

2014 2013

Raw materials 703.5 603.0

Semi-finished products 496.9 394.3

Finished products 2,347.4 2,041.6

TOTAL 3,547.7 3,038.9

Amounts relating to impairment losses on inventories are

reported under costs of goods sold and are SEK 198,3 (0) million.

Inventories are stated at the lower of cost and net realisable

value, with due consideration of obsolescence.

As price of oil fell sharply in the final quarter of 2014, some

of Nynas’s inventories have been remeasured at net realisable

value. The write-down relates mainly to goods for sale in the

categories fuel and bitumen.


NO

TES

FactoringThe Group have applied factoring for a limit part of the invoicing.

At year end 2014, the part used as Factoring is approximately

8 percent.

Accounts receivable lossesThe Group has recognised a loss of SEK 18.1 million (15) for

impairment of accounts receivable. The change relates mainly to

a reduction in doubtful debts in Spain (SEK 7.6 million), the UK

(SEK 3.0 million), Sweden (SEK 2.7 million) and Australia (SEK

1.3 million). The loss is reported under distribution costs in the

income statement.

NOTE 19. PREPAYMENTS AND ACCRUED INCOME

2014 2013

Rent 7.1 5.7

Charter hire 63.5 29.8

Pension premiums 12.6 6.3

Forward contracts, currency – 0.2

Software licences 4.6 7.1

Other prepayments 130.3 60.1

TOTAL 218.1 109.1

Insurance compensation, please see Note 4.

NOTE 20. CASh AND CASh EQUIVALENTS

2014 2013

Cash and bank balances 898.0 792.3

Restricted cash account 0.0 145.3

Cash and cash equivalents recognised 898.0 937.6

The Group’s cash and cash equivalents comprise its deposits in

the Group’s common bank accounts and other bank accounts,

including currency accounts and funds in transit.

On December 31, 2013, SEK 145 million was transferred to

a restricted cash account (Shell account). The amount referes

to the payment of the harburg refinery. Take over occurred of

January 1, 2014.

NOTE 18. ACCOUNTS RECEIVABLE

2014 2013

Accounts receivable, not due 1,148.3 1,187.6

Provision for impairment of accounts receivable -18.1 -15.0

NOT DUE ACCOUNTS RECEIvABLE, NET 1,130.2 1,172.5

Age analysis of past due accounts receivable

0–90 days 398.8 352.2

91–180 days 17.4 15.8

Over 180 days 46.7 34.3

TOTAL OvERDUE ACCOUNTS RECEIvABLES 462.9 402.3

TOTAL ACCOUNTS RECEIvABLES 1,593.1 1,574.8


NO

TES

ReservesTranslation reserveThe translation reserve covers all exchange differences arising

on the translation of the financial statements of foreign enti-

ties which are presented in a currency other than the Group’s

presentation currency.

The Parent Company and Group present their financial state-

ments in Swedish kronor.

Hedging reserveThe hedging reserve comprises the effective portion of the cumula-

tive net change in the fair value of a cash flow hedging instrument

attributable to hedged transactions that have not yet occurred.

Retained earningsRetained earnings and net profit for the year include accumu-

lated net profits of the Parent Company and its subsidiaries

and associates.

Share capitalIn accordance with Nynas AB’s articles of association, share

capital shall amount to a minimum of SEK 52,000,000 and a

maximum of SEK 208,000,000. All shares are fully paid and

carry equal voting power and an equal share in the Company’s

assets. Two classes of share are issued – A shares, maximum

SEK 103,999,000. and B shares, maximum SEK 104,001,000.

Share capital comprises SEK 33,765,000 in A shares and SEK

33,767,000 in B shares.

The par value per share is SEK 1,000.

DISTRIBUTION OF SHARE CAPITAL 2014 2013

ChANGE IN TOTAL NUMBER OF ShARES

Opening number 67,532 67,532

Change during the year 0 0

CLOSING NUMBER 67,532 67,532

2014 2013

Class of shareNumber of

shares %Number of

shares %

Class A 33,765 50 33,765 50

Class B 33,767 50 33,767 50

TOTAL 67,532 100 67,532 100

A dividend is proposed by the Board in accordance with the

Swedish Companies Act and is adopted by the annual general

meeting. The proposed, but not yet adopted, dividend for 2014

is SEK 0 (0) per share. Based on the number of shares at Decem-

ber 31, 2014, this represents a total dividend of SEK 0 million.

Capital managementThe Group’s equity, which is defined as total recognised equity,

amounted to SEK 3,425 million (3,218) at the end of the year.

The return on equity was 8 (-12) percent.

Nynas has defined a financial goal of securing long-term

growth and maximising the value of its assets. The Board

has given the Nynas management group scope for growth

and development according to Nynas’s strategy by means of

self-financing and payment of dividends to shareholders as

adopted by the annual general meeting.

NOTE 21. EQUITY

SPECIFICATION OF EQUITY ITEM ’RESERvES’ TRANSLATION RESERvE AND CURRENCY HEDGES 2014 2013

Opening translation reserve and currency hedges -102.7 -51.1

Translation reserve and currency hedges for the year 25.2 -51.6

CLOSING TRANSLATION RESERvE AND CURRENCY hEDGES -77.5 -102.7

hEDGING RESERVE AND ACTUARIAL RESULT PENSION

Opening hedging reserve -116.6 -134.4

Actuarial gains and losses from pensions recognised in OCI -88.2 21.0

Cash flow hedges recognised in income statement, cost of sales 42.2 39.0

Cash flow hedges recognised in OCI -50.9 -42.2

CLOSING hEDGING RESERvE -213.5 -116.6

TOTAL RESERVES

Opening reserves -219.3 -185.5

Changes in reserves during the year -71.7 -33.8

CLOSING RESERvES -291.0 -219.3


NO

TES

NOTE 22. PROVISIONS FOR PENSIONS

The Group’s employees, former employees and their survivors

may be covered by defined contribution and defined benefit

plans relating to post-employment benefits. The defined bene-

fit plans cover retirement pension and survivors’ pension.

For the defined contribution plans, continous payments to

authority and to independent bodies is done therefore they

take over the obligations towards the employees.

The obligation reported in the balance sheet is derived from

the defined benefit plans. The largest plans are in Sweden, the

United Kingdom, Belgium and Germany. The plans are covered

by a re-insured provision in the balance sheet and by pension

benefit plans and funds. The calculations are based on the pro-

jected unit credit method using the assumptions shown in the

table on page 88.

Calculations of defined benefit plans have been done by an

independent external actuary.

Nynas’s forecast payment of pensions in relation to defined

benefit plans, both funded and unfunded, amounts to SEK

36.3 million (35.8) for 2015.

The pension cost and other defined benefit remunerations is

to be find in the income statement under the headings Cost of

Goods Sold SEK 32.1 million (31.5), sales cost SEK 19.9 million

(19.7) and administration cost SEK 12.1 million (21.6). The inter-

est part in the pension cost together with the part of the return

on plan assets that not is accounted for in Other comprehen-

sive income will be shown in the financial income/expenses.

SwedenLabourer comprise by the SAF / LO plan which is a defined

contribution pension plan based on collective agreements and

is comprehended by several employers within several branches.

White-collar workers is comprises by the ITP plan, which also is

based on collective agreements and comprise several employers

within several branches. The ITP plan have two parts, the ITP1, a

defined contribution pension plan which is valid for employees

born 1979 or later, as well as ITP2, a defined contribution pen-

sion plan which is valid for employees born before 1979. The

major part of the ITP2 plan is managed by Nynas i their own

management within the FPG / PRI system. The financing take

place through a provision which is safeguarded by a credit in-

surance in Försäkringsbolaget PRI Pension guarantee. One part

of the ITP2 plan is safeguarded through an insurance within

Alecta (see below). In Nynas AB, there is in excess of above

obligations other defined benefit obligations applied to indi-

vidual pensions agreements to earlier employees and pensions

to senior executives.

Some of the white-collar workers in Sweden is safeguarded

by the ITP2 plan defined benefit pension obligations for age-

and family pension (alternative family pension) through an

insurance by Alecta. According to a statement from Swedish

Financial Reporting Board, UFR 3 the classification for ITP plans,

which is financed by insurance by Alecta, is this a defined ben-

efit plan that comprise several employers. For the financial year

2014 (as in 2013) the company did not have access to all infor-

mation to be able to disclose their proportional share of the ob-

ligation of the plan, the plan assets and the cost of administra-

tion, which result in that it has not been possible to account for

the plan as a defined benefit plan. The pension plan ITP2 which

is safeguarded through an insurance by Alecta is therefore

accounted as a defined contribution plan. The premium for the

defined benefit age- and family pension is individual and cal-

culated based on salary, earlier earned pension and expected

remaining period of service. Expected fee for next reporting

period for ITP2 insurances that is effected in Alecta amount to

SEK 7.4 million (7.3).

The collective consolidation level consist of the market value

on the assets in Alecta, in percent of insurance obligations cal-

culated in accordance with the insurance technical methods and

assumptions by Alecta, which not correspond with IAS 19. The

collective consolidation level shall normally be allowed to vary

between 125 and 155 percent. If the collective consolidation

level in Alecta will be below 125 percent or exceed 155 per-

cent shall action be taken in purpose to make assumptions so

the consolidation level will revert to the normal interval. At low

consolidation level one action can be to increase the agreed fee

for new take out and / or increase of existing benefits. At high

consolidation level one action can be to implement premium

reductions. At the end of the year, Alecta’s surplus, in the form

of a collective consolidation level, was 143 (148) percent.

UkThe Nynas UK Pension Scheme is a career average defined

benefit plan which is a registered pension scheme under the

Finance Act 2004. The Scheme operates under trust law and

is administered by the Trustees on behalf of the members in

accordance with the terms of the Trust Deed and Rules and

relevant legislation. The Scheme´s assets are held by the trust.

Annual increases on benefits in payment are dependent on

inflation so the main uncertainties affecting the level of benefits

payable under the Scheme are future inflation levels (including

the impact of inflation on future salary increases) and the actual

longevity.

The main risk the Company runs in respect of the Scheme

is that additional contributions are required if the investment

returns are not sufficient to pay for the benefits (which will

be influenced by the factors mentioned above). The level of

equity returns will be a key determinant of overall investment

return; the investment portfolio is also subject to a range of

other risks typical of the asset classes held, in particular credit

risk on bonds.


NO

TES

> Cont. NOTE 22

REPORTED AS PROvISIONS FOR PENSIONS IN THE STATEMENT OF FINANCIAL POSITION Sweden Uk Belgium Germany Total

Present value of funded obligations 55.8 864.7 50.6 – 971.0

Fair value of plan assets -76.1 -875.5 -49.5 – -1,001.2

Deficit/(surplus) of funded plans -20.4 -10.9 1.1 – -30.2

Present value of unfunded obligations 269.3 0.0 0.7 124.6 394.6

Total deficit/(surplus) in defined benefit plans 249.0 -10.9 1.7 124.6 364.4

Effects of minimum funding requirements/asset ceiling 0.0 3.6 0.0 0.0 3.6

NET LIABILITY RECOGNISED IN BALANCE ShEET 249.0 -7.2 1.7 124.6 368.1

Portion of pension liability recognised as provisions for pensions

249.0 – 1.7 124.6 375.3

Portion recognised as financial fixed asset 0.0 -7.2 – – -7.2

2013

Sweden Uk Belgium Germany Total

Present value of funded obligations 53.7 691.8 55.0 – 800.4

Fair value of plan assets -82.5 -714.1 -44.9 – -841.6

Deficit/(surplus) of funded plans -28.8 -22.3 10.0 – -41.2

Present value of unfunded obligations 207.1 – 0.9 – 208.0

Total deficit/(surplus) in defined benefit plans 178.3 -22.3 10.9 – 166.9

Effects of minimum funding requirements/asset ceiling – 7.4 – – 7.4

NET LIABILITY RECOGNISED IN BALANCE ShEET 178.3 -14.9 10.9 – 174.3

Portion of pension liability recognised as provisions for pensions

207.1 – 10.9 – 218.0

Portion recognised as financial fixed asset -28.8 -14.9 – – -43.7

CHANGE IN PRESENT vALUE OF DEFINED BENEFIT OBLIGATION 2014 2013

Present value of defined benefit obligation at beginning of year 1,077.7 921.5

Current service cost 33.8 29.8

Interest cost/(credit) 46.4 37.7

(Gain)/loss on part service cost, curtailment and settlement -37.9 –

Special payroll tax in income 3.5 3.7

(Gain)/loss on changes in demographic assumptions – 31.1

(Gain)/loss on changes in financial assumptions 150.5 15.9

Experience (gain)/loss 2.9 -0.4

Special payroll tax related to remeasurements 8.2 -7.0

Employee contributions 5.2 4.9

Benefits paid -32.1 -34.6

Payments of special payroll tax 0.2 -2.3

Exchange rate (gain)/loss 107.3 8.1

PRESENT vALUE OF DEFINED BENEFIT OBLIGATION AT END OF YEAR 1,365.6 1,008.4

COSTS RECOGNISED IN INCOME STATEMENT 2014 2013

Defined benefit pension plans:

Current service cost 33.8 29.8


(Gain)/loss on part service cost, curtailment and settlement -37.9 –

Special payroll tax 3.5 3.8

Other 2.3 2.5

TOTAL COST OF DEFINED BENEFIT PAYMENTS RECOGNISED IN INCOME STATEMENT

10.3 41.7

Defined contribution pension plans:

Costs for defined contribution plans 32.1 32.6

TOTAL PENSION ExPENSE RECOGNISED IN INCOME STATEMENT 42.4 74.3

2014


NO

TES

EXPENSES RECOGNISED IN OTHER COMPREHENSIvE INCOME 2014 2013

Return on plan assets in excess of the amount included in interest cost/(credit)

-41.2 -58.1

(Gain)/loss on changes in demographic assumptions – 31.1

(Gain)/loss on changes in financial assumptions 150.5 15.5

Experience (gain)/loss 2.9 -0.4

Change in assets ceiling in excess of the amount included in interest cost/(credit)

-4.5 -8.6

Special payroll tax related to remeasurements 8.2 -7.0

TOTAL ExPENSES FOR DEFINED BENEFIT REMUNERATION RECOGNISED IN OThER COMPREhENSIvE INCOME

115.9 -27.5

The main actuarial assumptions used (in %) are as follows:

2014 2013

Sweden Uk Belgium Germany Sweden Uk Belgium Germany

Discount rate 2.8 3.8 2.3 2.3 4.1 4.4 3.5 3.7

Future salary increases

2.4 N/A 4.0 2.5 2.5 N/A 4.0 2.5

Future pension increases

1.4 3.1 2.0 1.8 1.8 3.4 2.0 1.8

Expected remain-ing service period

12.0 N/A 18.3 – 12.0 N/A 18.8 –

CHANGE IN FAIR vALUE OF PLAN ASSETS DURING THE YEAR 2014 2013

Fair value of plan assets at beginning of year 841.6 749.6


Return on plan assets in excess of the amount included in interest cost/(credit) 41.2 58.1

Administrative costs -2.3 -2.1

Employer contributions 14.9 19.8

Employee contributions 5.2 4.9

Benefits paid -40.2 -30.4


FAIR vALUE AT END OF YEAR 1,001.2 841.6

PLAN ASSETS 2014 2013

Shares and participating interests 559.3 465.6

Interest-bearing securities 325.3 263.0

Property Sweden 7.5 6.9

Insurance 49.5 –

Cash and cash equivalents, bank deposit 59.5 61.1

FAIR vALUE OF PLAN ASSETS 1,001.2 796.6

Plan assets do not include any securities issued by Nynas AB or assets used by Nynas AB.

> Cont. NOTE 22

Life expectancy

Swedish FFFS

2007:31

Uk standard SAPS table multiplied

by 105% for men and 108% for

women

Belgian Mortality

table MR/FR

German Mortality

table Richttafeln

Heubeck 2005 G

(statutory)

Swedish FFFS

2007:31

Uk standard SAPS table multiplied

by 105% for men and

108% for women

Belgian Mortality

table MR/FR

German Mortality

table Richttafeln

Heubeck 2005 G

(statutory)

Duration 18 20 16 32 17 20 17 –


NO

TES

> Cont. NOTE 22

CHANGE OF ASSET CEILING 2014 2013

Opening balance, asset ceiling 7.4 14.7

Interest cost/(credit) 0.0 -2.2

Change in asset ceiling, other than Interest cost/(credit) -4.5 -5.3


CLOSING BALANCE, ASSET CEILING 3.6 7.4

ACTUAL RETURN 2014 2013

Actual return on plan assets 78.8 91.4

SENSITIvITY ANALYSIS IMPACT OF THE BENEFIT OBLIGATION, 2014 (+Increase/-Decrease), country

Significant actuarial assumptions

SwedenPresent

valueSweden

%

UkPresent

valueUk%

BelgiumPresent

valueBelgium

%

Germany Present

valueGermany

%

Discount rate +0.5% 294.6 -9 787.5 -9 46.9 -8 106.9 -14

Discount rate -0.5% 362.4 10 950.3 10 56.0 9 145.9 17

Life expectancy +1 year 341.8 5 891.2 3 0.0 0 127.3 2

NOTE 23. OThER PROVISIONS

Provision for environmental

obligationProvision for restructuring

Provision for other

obligations Total

Balance at 31 December 2013 254.8 49.6 – 304.4

Provisions made during the year 10.5 135.6 256.4 402.5

Provisions used during the year -4.0 -21.1 – -25.1

Unutilised provision reversed during the year – -6.9 – -6.9

Translation differences 0.2 8.9 7.6 16.8

BALANCE AT 31 DECEMBER 2014 261.5 166.1 264.1 691.7

of which current 11.6 166.1 262.6 440.3

of which non-current 249.9 – 1.5 251.4

Provision for restructuringA provision for restructuring is recognised when the Group

has approved a detailed and formal restructuring plan and the

restructuring has either commenced or has been announced

publicly. Future operating costs are not provided for. The pro-

vision made during 2014 relates mainly to the closing of Nynas

NV and its Continental bitumen business.

Other provisionsOther provisions include provisions for onerous contract within

the scope of Nynas AB operations in Belgium of SEK 21 million

the other part relates to the take over of the harburg refinery,

committed consideration but not paid and to its amount still

preliminary and subject to fulfilment of terms and conditions by

the parties.

Environmental related provisionsEnvironmental related provisions include provisions for envi-

ronmental remediation measures related to the Group’s sites,

mainly in Sweden (Nynäshamn, Gothenburg), Wandre in Belgium,

Köge in Denmark and Dundee in Scotland.

The provision for Sweden is a contingent liability as defined

in Chapter 10 of the Swedish Environmental Code, and relates

to after-treatment costs for pollution resulting from refining

and depot operations. The provision in Nynäshamn consists of

three parts – the Land Farm (SEK 22 million), Lagoon/Catch

basins (SEK 23 million) and J3/J4 (SEK 246 million).

The Land FarmRemediation of the Land Farm area was completed at December

31, 2010. Final covering of the permanent land fill is dependent

on subsidence in the area, but is expected to take place in 2016.

The final cost of remediation was approximately SEK 151 mil-

lion at December 31, 2013. The remaining cost for covering the

land fill has been estimated at SEK 22 million.

Sensitivity analysis have been done on above actuarial changes

since the Group consider that the changes can have major

impact on the benefit obligation.

Further more it is very most likely that the changes of the

assumptions occures. Estimations have been done by analys-

ing every changes separately. If there should be any relation

between the assumptions, the estimations have not been taken

this into consideration.

The assumption of a decrease in life expectancy is seen as

limit and therefore it has not been estimated int he sensitivity

analysis.


NO

TES

LONG-TERM LIABILITIES 2014 2013

Loans from credit institutions 3,935.0 3,500.2

TOTAL 3,935.0 3,500.2

CURRENT LIABILITIES

Loans from credit institutions – 644.6

Overdraft facilities 16.2 24.4

TOTAL 16.2 669.0

GRAND TOTAL 3,951.2 4,169.2

2014LONG-TERM LIABILITIES Year issued/maturity

Description of loan Interest, % Currency

Nominal amount

(local currency)

Recognised amounts

in SEk million

Variable-rate loans

2006/2016 Bond issue 3.92 USD 50.0 465.0

2014/2018 Bond issue 7.76 SEK 650.0 638.3

2011/2016 Stand-by credit line (€ 750) 3.30 EUR 70.0 647.8






TOTAL 3,935.0

CURRENT LIABILITIESYear issued/maturity

Variable-rate loans

2013/2014 Overdraft 16.2

TOTAL 16.2

NOTE 24. LIABILITIES TO CREDIT INSTITUTIONS

Nynas launched a corporate bond in 2014 in the Nordic bond

market, borrowing 650 million SEK over a four-year period, with

the main purpose of replacing a USD 90 million private place-

ment bond. The bond is listed on Nasdaq Stockholm.

In November 2011, a syndicated stand-by credit line of EUR 750

million was arranged. The term of the credit facility is five years.

A private placement bond from US investors was issued in Sep-

tember 2006. The outstanding bond total is USD 50 million

with a fixed-rate period of 10 years, that has been swapped

to a fixed SEK interest rate. Currency interest rate swaps have

terms that exactly match the bonds’ maturities.

> Cont. NOTE 23

Lagoon/Catch basinsRemediation of the contaminated sediments in the lagoon

and catch basins are planned to be completed in 2025. The

sediments will be treated in the same treatment plant as the

acid tar in J3/J4 using a combination of micro-organisms

(archaea and bacteria). Remediation costs were calculated at

SEK 26 million partly by an external party, excluding costs for

the construction of the treatment plant.

J3/J4The J3 and J4 areas contain acid tar. Similar materials are also found

at a number of old refineries in Europe and around the world. They

are difficult to deal with due to their high acid content. The estab-

lished method involves collection, neutralisation and transportation

for disposal. The method is not problem-free, as, even after pro-

cessing, the materials are unlikely to be released from regulatory

control. Incineration of the materials has been approved by the

Land and Environment Supreme Court.

To ensure a good working environment during removal of the

materials, they are stabilised using a limestone vibration tech-

nique. They are then dug up using conventional methods and

processed by adding water to form a liquid mixture. The mix-

ture is then treated biologically with archaea and bacteria. Over

90 percent of the organic contaminants are decomposed into

carbon dioxide and water. Remediation of J3/J4 is planned to

be completed in 2025. The cost of remediation has been partly

calculated by an external party at approx. SEK 246 million.

Other environment-related activities at Nynäshamn, Gothenburg,

Dundee and terminals. See the environment section on page 26–31.

Environment liabilities or other environment-related mea-

sures will be made as costs for planned measures become con-

crete and are quantified.

All costs associated with the remediation project have been

calculated using the present value method.


NO

TES

NOTE 25. ACCRUED LIABILITIES AND DEFERRED INCOME

2014 2013

Purchases of raw materials, semi-finished and finished goods 851.4 16.4

Accrued salaries/holiday pay 121.2 94.2

Accrued interest 28.2 34.0

Shipping costs 55.6 64.9

Discounts 1.7 8.9

Accrued investment costs 37.8 37.7

Other 227.4 128.7

TOTAL 1,323.2 384.9

2013LONG-TERM LIABILITIESYear issued/maturity

Description of loan Interest, % Currency

Nominal amount

(local currency)

Recognised amounts in SEk million

Variable-rate loans

2006/2016 Bond issue 3.92 USD 50.0 358.2








TOTAL 3,500.2


Variable-rate loans

2006/2014 Bond issue 2.3 USD 90.0 644.6

2013/2014 Bank loans 8.0 RUB 12.0 2.3

2013/2014 Overdraft 22.1

TOTAL 669.0

MATURITY OF EXTERNAL INTEREST-BEARING LIABILITIES AT 31 DEC 2014

2015-12-31 16.2

2016 and thereafter 3,935.0

TOTAL 3,951.2

MATURITY OF EXTERNAL INTEREST-BEARING LIABILITIES AT 31 DEC 2013

2014-10-17 669.0

2015 and thereafter 3,500.2

TOTAL 4,169.2

THE GROUP HAS THE FOLLOWING UNUSED CREDIT FACILITIES: 2014 2013

Variable interest

Uncommitted 602.6 473.8

Committed

– expires within one year 0.0 0.0

– expires after one year 3,691.4 2,994.4

TOTAL 4,294.0 3,468.2

> Cont. NOTE 24


NO

TES

NOTE 26. FINANCIAL ASSETS AND LIABILITIES

Financial assets and liabilities in the statement of financial posi-

tion are measured at fair value, apart from loans and receivables

and other financial liabilities not designated as hedged items.

Loans and receivables and other financial liabilities not designat-

ed as hedged items, are measured at amortised cost.

Fair value disclosures are not required when the carrying

amount is an acceptable approximation of the fair value. This

applies to other items in the categories loans and receivables

and other financial liabilities.

The Group’s long-term bond issues, nominal value USD 50

million, carry fixed USD interest rates. however, this loan has

been hedged with currency interest rate swap to a fixed SEK

interest rate. The loan is included in hedge accounting, with

cash flow hedging. The carrying amount and fair value amount

to SEK 465.2 million (1,002.8 ). The Group’s other long-term

credit liabilities carry variable interest rates. Accordingly, the

fair value corresponds to the carrying amount.

Fair value measurementFair value is determined based on a three-level hierarchy.

Level 1 is based on quoted prices in active markets for iden-

tical assets or liabilities.

Level 2 is based on inputs other than quoted prices included

in level 1 that are observable for the asset or liability, either

directly or indirectly.

Level 3 is based on inputs for the asset or liability that are not

based on observable market data.

For Nynas, all financial instruments are measured according

to Level 2.

Measurement of fair valueListed holdingsThe fair value of instruments quoted in an active market is mea-

sured on the basis of the price of the holdings at the reporting date.

Derivative instrumentsThe fair value of foreign exchange contracts and oil contracts

is measured on the basis of quoted prices where available. If

quoted prices are not available, the fair value is measured by

discounting the difference between the contracted forward

rate and the forward rate that can be subscribed for on the

reporting date for the remaining contract period. This is done

using the risk-free rate of interest based on government bonds.

The fair value of interest rate swaps is measured by discount-

ing the estimated future cash flows according to the contract’s

conditions and due dates based on the market rate.

Interest-bearing liabilitiesThe fair value is measured by discounting future cash flows of

principal and interest using the current market interest rate for

the remaining term.

Current receivables and liabilitiesFor current receivables and liabilities with a remaining term of

less than 12 months, the carrying amount is considered to rep-

resent a reasonable approximation of the fair value. Current

receivables and liabilities with a term of more than 12 months

are discounted when the fair value is measured.

The fair values and carrying amounts of financial assets and

liabilities are shown in the table:

2014

Derivativesused in hedge

accounting

Derivatives held fortrading

Loansand

receivables

Other financial liabilities

Totalcarrying amount

Non-financial

assets andliabilities

Totalbalance

sheetFair

value

Long-term derivatives 37.5 – – – – – 37.5 37.5

Account receivablesre-ceivables

– – 1,593.1 – 1,593.1 – 1,593.1 1,593.1

Short-term derivatives 0.0 688.7 – – 688.7 – 688.7 688.7

Other current receivables

– – – – 0.0 275.1 275.1 275.1

Prepaid expenses and accrued income

– – – – 0.0 218.3 218.3 218.3

Cash and cash equivalents

– – 898.0 – 898.0 – 898.0 898.0

FINANCIAL ASSETS 37.5 688.7 2,491.1 0.0 3,217.3 493.4 3,710.7 3,710.7

Long-term liabilities to credit institutions

– – – 3,935.0 3,935.0 – 3,935.0 3,935.0

Short-term liabilities to credit institutions

– – – 16.2 16.2 – 16.2 16.2

Accounts payable – – – 679.4 679.4 – 679.4 679.4

Joint venture liabilities – – – 18.8 18.8 – 18.8 18.8

Long-term derivatives – 35.3 – – 35.3 – 35.3 35.3


Other current liabilities – – – – 0.0 373.8 373.8 373.8

Accrued liabilities and deferred income

– – – – 0.0 1,323.2 1,323.2 1,323.2

FINANCIAL LIABILITIES 38.9 243.5 0.0 4,649.4 4,931.8 1,697.0 6,628.8 6,628.8


NO

TES

NOTE 27. FINANCIAL RISK MANAGEMENT, SUPPLEMENTARY INFORMATION

MARkET vALUATION OF DERIvATIvE FINANCIAL INSTRUMENTS (NET vALUES) 2014 2013

Interest rate swaps -23.1 -92.2

Currency swaps -112.4 0.4

Oil price swaps 579.2 -17.4

TOTAL DERIvATIvE ASSETS AND LIABILITIES 443.7 -109.3

NOMINAL vALUE OF DERIvATIvE FINANCIAL INSTRUMENTS

INTEREST RATE INSTRUMENTS

Interest rate swaps

Maturity of less than 1 year 1,800.0 1,555.8

Maturity of 2–4 years 2,514.4 864.4

Maturity of 5 or more years – –

TOTAL 4,314.4 2,420.2

Currency instruments

Forward exchange contracts -124.2 605,6*

TOTAL -124.2 605,6

Commodity instruments

Oil price swaps -1,571.5 -1,140.3

TOTAL -1,571.5 -1,140.3

* The figure for 2013 has been corrected.

> Cont. NOTE 26

2013


accounting


Loansand

receivables



Non-financial


Totalbalance

sheetFair

value

Accounts receivable – – 1,574.8 – 1,574.8 – 1,574.8 1,574.8


Other current receivables – – – – – 147.0 147.0 147.0

Prepaid expenses and accrued income – – – – – 109.1 109.1 109.1

Cash and cash equivalents – – 937.6 – 937.6 – 937.6 937.6

FINANCIAL ASSETS 13.4 33.8 2,512.5 0.0 2,559.6 256.1 2,815.7 2,815.7

Long-term liabilities to credit institutions – – – 3,500.2 3,500.2 – 3,500.2 3,500.2

Short-term liabilities to credit institutions – – – 669.0 669.0 – 669.0 669.0

Accounts payable – – – 693.1 693.1 – 693.1 693.1

Joint venture liabilities – – – 12.6 12.6 – 12.6 12.6

Long-term derivatives 76.6 – – – 76.6 – 76.6 76.6


Other current liabilities – – – – – 117.2 117.2 117.2

Accrued liabilities and deferred income – – – – – 384.9 384.9 384.9

FINANCIAL LIABILITIES 105.6 50.8 0,0 4,874.9 5,031.4 502.1 5,533.5 5,533.5


NO

TES

NOTE 28. PLEDGED ASSETS AND CONTINGENCIES

2014 2013

FLOATING ChARGES

Security for liabilities to credit institutions 0.0 0.0

TOTAL 0.0 0.0

Guarantees 430.2 148.9

Other guarantees and contingent liabilities 3.0 2.9

TOTAL 433.2 151.8

NOTE 29. RELATED PARTY DISCLOSURES

Information on remuneration of the Board and key manage-

ment personnel can be found in note 5.

Petroleos the venezuela S.A. (PDvSA) is the ultimate

owner of 50 percent of the shares in Nynas AB. The Nynas

Group purchases approx. 84 percent of its crude oil volumes

from PDVSA. Crude oil and base oil prices are governed by

formula based multi-year supply contracts.

Prices reflect the prices that would be charged under a con-

tract with a non-related party.

2014 2013

Purchases, crude 8,088.0 7,906.5

Purchases, base oils 450.4 568.8

Sales revenue -0.4 20.9

Accounts receivable 19.3 22.0

Accounts payable 16.2 36.3

Neste Oil Oyj (Neste Oil) is the ultimate owner of 50 per-

cent of the shares in Nynas AB. The Nynas Group purchases

bitumen and other oil products from Neste Oil. Nynas sells fuel

and services to Neste. All transactions are conducted at current

market prices.

2014 2013

Purchases, bitumen 1,062.2 999.6


Purchases, fuel/distillates 7.2 7.5

Purchases, leasing/services 41.5 26.7

Sales revenue 676.2 636.8



Nynas UK AB purchases bitumen and distillates from Eastham Refinery Ltd (ERL) (50 percent of ERL’s total production). The

purchase price for bitumen reflects the price that would be

charged under a term contract with an established bitumen re-

finer in North West Europe; prices for distillate products reflect

the FOB prices for similar products delivered in bulk to non-re-

lated customers in North West Europe (ARA area).

From 1 of January, ERL acts as a tolling unit and the ownership

of crude, bitumen and destillates remains within Nynas UK AB.

Nynas UK AB pays a tolling fee to ERL for this service based on

a contractual price. Nynas UK AB also provides administration

and weighbridge operation services to ERL, which are charged

at cost.

NYNAS UK AB 2014 2013


Service revenue 3.6 3.0



A future closure of operations within the Group may involve a

requirement for decontamination and restoration works. how-

ever, this is considered to be well into the future and the future

expenses cannot be calculated reliably.

DisputesNynas UK AB received a decision from the Swedish Tax Author-

ity 1 th December 2014 that pensions payments made to Nynas

UK Pension Scheme during financial year 2008 don´t qualify as

pension cost and cannot be seen as tax deductible. The deci-

sion is appealed to a Swedish Administrative Court.


NO

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NOTE 32. EVENTS AFTER ThE REPORTING DATE

No important events has taken place after the reporting period.

NOTE 30. SUPPLEMENTARY INFORMATION TO ThE CASh FLOW STATEMENT

2014 2013

Share of profit/loss of associates -22.9 -19.9

Dividends associates 16.4 –

Depreciation and impairment of assets 388.8 456.6

Unrealised exchange differences and oil forward contracts -133.8 -36.1

Provisions for pensions – 9.0

Other provisions 129.4 43.7

TOTAL 378.0 453.3

NOTE 31. ACQUISITION AND DIVESTMENT OF OPERATIONS

Harburg RefineryNynas has entered into an agreement with Shell to acquire

majority of the harburg refinery by way of an asset trans-

fer agreement. The project is significant improving Nynas

production footprint in terms of quantity and quality for

our NSP (naphthenics specialty products) and bitumen busi-

ness. During 2014 total production out of harburg Refinery

amounts to 396 ktonnes.

The scope of the transfer comprises two phases. Phase 1

covers the sale of the southern section, Base Oil Manufac-

turing Plant (BOMP). Phase 2 covers the sale of the north-

ern part of the refinery. The takeover of the southern section

took place on January 1, 2014. At this time Nynas took full

control and responsibility for the operations of the BOMP. At

the takeover all relevant Shell staff working at the BOMP was

transferred to Nynas (approx. 80 employees). Nynas made a

cash payment of SEK 67 million at January 1, 2014 and then

further SEK 45 million during the year in relation to an amount

of products sold.

The takeover of the northern part is preliminary scheduled to

take place on January 1, 2016, subject to fulfilment of terms and

conditions by the parties, if conditions being fulfilled payment of

the main remaining part will be performed.

Acquisitions-related expensesAcquisitions-related expenses amounted to EUR 6.8 million

and relates to consultant fees in conjunction with mainly

due diligence work. These expenses were recognised under

operating result.

PROFORMA 31 of December 2014, SEk millionHarburg

Refinery – South 1)Harburg

Refinery – North 2)Harburg Refinery

COST OF COMBINATION

Cash consideration 112 – 112

Commitment consideration 241 109 350

TOTAL COST OF COMBINATION 353 109 462

FAIR vALUE OF NET ASSETS ACQUIRED

Property, plant and equipment 415 244 659

Deferred tax assets 15 – 15

Total assets acquired 430 244 674

Provisions for pensions -77 -135 -212

Total liabilities assumed -77 -135 -212

TOTAL FAIR vALUE OF NET ASSETS ACQUIRED 353 109 462

Goodwill – – –

1) Acquired on January 1, 2014.

2) Expected acquire date January 1, 2016.


NO

TES

SALES REVENUES BY GEOGRAPHICAL MARKET 2014 2013


Europe 10,643.8 7,697.4

Americas 1,242.2 998.8

Other 2,157.0 2,457.4

TOTAL 18,401.3 14,799.6

PURCHASES AND SALES GROUP COMPANIES

Purchases, % 4 15

Sales, % 52 55

NOTE 34. COSTS ITEMISED BY NATURE OF EXPENSE

2014 2013

Raw materials 15,302.9 12,564.0

Transport and distribution costs 1,172.6 1,095.6

Manufacturing expenses 1,406.3 969.4

Costs for employee benefits (note 36) 415.5 426.1

Depreciation, amortisation, impairment (notes 43, 44) -323.1 -341.4

Other income and value changes -509.7 14.0

Other expenses 508.3 411.7

TOTAL 17,972.8 15,139.3

NOTE 35. OTHER OPERATING INCOME/EXPENSES

2014 2013

OTHER OPERATING INCOME

Exchange gains on operating receivables/liabilities 308.0 132.9

Insurance compensation – 10.9

Other service revenue 24.2 28.5

TOTAL 332.2 172.3

OTHER OPERATING EXPENSES

Costs related to fire in Nynäshamn – 10.9

Exchange losses on operating receivables/liabilities -203.6 164.2

TOTAL -203.6 175.1

NOTE 33. INFORMATION BY GEOGRAPHICAL MARKET AND SALES REVENUES BY CATEGORY

NOTES TO THE FINANCIAL STATEMENTS– PARENT COMPANY

During 2014 (2013) no realised gains and losses from cash flow

hedges (oil) were re-classified to raw materials in the Income

statement.

Other income and value changes consists of unrealised gains

and losses from oil and currency derivatives of 509.7 (-14.0)


NO

TES

The average number of employees, with wages, salaries, other remuneration, social security contributions and pension costs is

shown in the tables below.

2014 2013

AVERAGE NUMBER OF EMPLOYEES Men Women Total Men Women Total

PARENT

Sweden 303 134 437 316 137 453

TOTAL PARENT 303 134 437 316 137 453

WAGES, SALARIES AND SOCIAL SECURITY CONTRIBUTIONS

Senior Executives

(7 individuals)

OtherEmployees Total

Senior Executives

(7 individuals)

OtherEmployees Total

PARENT

Sweden

Salaries and other benefits 18.1 265.7 283.8 15.6 264.8 280.4

(of which bonuses) 0.6 12.7 13.3 0.8 4.0 4.8

Social security contributions 13.2 118.5 131.6 14.7 131.1 145.7

(of which pension costs) 7.5 25.3 32.7 9.8 38.0 47.8

TOTAL PARENT 31.3 384.2 415.5 30.2 395.9 426.1

GENDER DISTRIBUTION IN MANAGEMENT PARENT 2014 2013

Board, female rep., % 0,0 0.0

Executive Board, female rep., % 12.5 14.3

NOTE 37. DEPRECIATION AND AMORTISATION OF TANGIBLE AND INTANGIBLE ASSETS

Intangible Tangible

DEPRECIATION AND AMORTISATION BY FUNCTION 2014 2013 2014 2013

Cost of sales 4.1 5.5 278.1 290.4

Distribution costs 0.2 0.8 14.1 14.8

Administrative expenses 20.5 22.6 6.1 7.3

TOTAL 24.9 28.9 298.3 312.5

DEPRECIATION AND AMORTISATION BY TYPE OF ASSET 2014 2013

Computer software 24.9 28.9

Buildings 7.7 7.5

Land improvements 5.8 3.7

Plant and machinery 270.4 280.2

Equipment 14.4 21.0

TOTAL 323.1 341.3

Difference between recognised depreciation and regular depreciation: -282.1 -330.2

TOTAL RECOGNISED DEPRECIATION 41.1 11.2

NOTE 36. EMPLOYEES, PERSONNEL EXPENSES AND REMUNERATION OF SENIOR EXECUTIVES


NO

TES

NOTE 38. AUDITORS’ FEES AND OTHER REMUNERATION

AUDIT FEES 2014 2013

Ernst & Young AB



OThER AuDITORS


NOTE 39. FEES FOR OPERATING LEASES

PAYMENTS UNDER NON-CANCELLABLE OPERATING LEASES 2014 2013

Payments during the financial year 217.4 202.4

AGREED FUTURE PAYMENTS

Within one year 209.0 194.3

2–5 years 383.0 383.1

6 years and thereafter 229.2 187.8

In 2014 Nynas AB had four bitumen carriers on bareboat charters and two special oil carriers on time charters.

The Parent Company does not have any material agreements classified as finance leases.

NOTE 40. NET FINANCIAL ITEMS

2014 2013

Interest income, bank deposits 1 35.3 51.5

Interest income, derivative instruments (actual interest rates and changes in value) 50.6 46.5

Dividends from Group companies 242.3 315.7

TOTAL fINANCE INCOmE 328.2 413.7

Of which total interest income attributable to items carried at amortised cost 35.3 51.5

Interest expense, loans and bank overdrafts 2 -201.7 -205.4

Interest expense, derivative instruments (actual interest rates and changes in value) -72.6 -21.5

Interest expense, PRI pension obligations -8.5 -5.7

Net exchange differences -191.9 -7.3

Impairment of shares in subsidiary -31.4 -45.5

Other finance costs -87.1 -78.1

TOTAL fINANCE COSTS -593.2 -363.6

Of which total interest expense attributable to items carried at amortised cost -210.1 -211.1

TOTAL NET fINANCIAL ITEmS -265.0 50.1

1) Parent’s interest income from Group companies is 31.3 (37.6)2) Parent’s interest expense from Group companies is -5.2 (-7.7)


NO

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NOTE 41. APPROPRIATIONS

APPROPRIATIONS 2014 2013

Change in obsolescence reserve 64.1 9.0

Difference between recognised depreciation and regular depreciation 281.6 330.2

Change in tax allocation reserve – –

TOTAL 345.7 339.2

UNTAXED RESERVES

Accumulated accelerated depreciation 618.7 900.8

Inventory obsolescence reserve – 64.1

TOTAL 618.7 964.9

NOTE 42. TAXES

2014 2013

Current tax – –

Current tax, prior years -1.7 -2.2

Deferred tax -93.8 49.6

TOTAL -95.5 47.4

Tax on the Group’s profit before tax differs from the theoretical figure

that would have resulted from a weighted average rate for the results

in the consolidated companies as follows:

2014 2013

Result before tax 637.8 46.8

Tax according to Parent Company’s applicable tax rate -140.3 -10.3

Tax effect of:

Dividends from subsidiaries 53.3 69.5

Impairment of shares in subsidiary -6.9 -10.1

Other non-deductible expenses -3.6 -1.4

Other non-taxable income 0.0 0.5

Adjustment of current tax in respect of prior years -1.7 -2.2

Other 3.7 1.3

RECOGNISED TAx ExPENSE -95.5 47.3

Standard rate of income tax, % 22 22

Effective tax rate, % 15 -101

DEFERRED TAX ASSETS AND LIABILITIES

Assets Liabilities Net

2014 2013 2014 2013 2014 2013

Other operating receivables/liabilities 90.2 46.1 145.0 0.3 -54.8 45.8

Tax loss carryforwards 50.8 41.5 – – 50.8 41.5

TOTAL 141.0 87.6 145.0 0.3 -4.0 87.3

CHANGE IN DEFERRED TAX ON TEMPORARY DIFFERENCES DURING YEAR

Openingbalance

Recognised in income statement

Recognised directly in

equityExchange

differencesClosingbalance

Other operating receivables/liabilities 45.8 -103.0 2.4 – -54.8

Tax loss carryforwards 41.5 9.3 – – 50.8

TOTAL 87.3 -93.7 2.4 – -4.0

Tax losses in the parent company are from fiscal year 2013 and 2014.


NO

TES

NOTE 43. INTANGIBLE ASSETS

2014 GoodwillComputersoftware

Other intang. assets/

Trademarks

TotalIntangible

assets

Opening cost 14.2 357.3 1.5 373.0

Acquisitions – 3.8 – 3.8

Reclassifications – 4.4 – 4.4

CLOSING COST 14.2 365.4 1.5 381.1

Opening regular depreciation -10.9 -267.1 -1.5 -279.5

Depreciation for the year – -24.9 – -24.9

CLOSING REGuLAR DEPRECIATION -10.9 -291.9 -1.5 -304.3

Opening impairment -3.3 -26.7 0.0 -30.0

CLOSING ImPAIRmENT -3.3 -26.7 0.0 -30.0

CLOSING RESIDuAL vALuE 0.0 46.8 0.0 46.8

2013 GoodwillComputersoftware

Other intang. assets/

Trademarks

TotalIntangible

assets

Opening cost 14.2 345.5 1.5 361.2

Acquisitions – 0.1 – 0.1

Reclassifications – 11.6 – 11.6

CLOSING COST 14.2 357.3 1.5 373.0

Opening regular depreciation -10.9 -238.1 -1.5 -250.5

Depreciation for the year – -28.9 – -28.9

CLOSING REGuLAR DEPRECIATION -10.9 -267.1 -1.5 -279.5

Opening impairment -3.3 -26.7 0.0 -30.0

CLOSING ImPAIRmENT -3.3 -26.7 0.0 -30.0

CLOSING RESIDuAL vALuE 0.0 63.5 0.0 63.5

NOTE 44. TANGIBLE ASSETS



in progress

TotalTangible

assets

Opening cost 316.6 5,440.9 374.8 266.5 6,398.9

Acquisitions 0.5 36.3 4.9 212.1 253.8

Reclassifications 46.8 11.8 -13.1 -49.9 -4.4

CLOSING COST 363.9 5,489.0 366.6 428.8 6,648.3

Opening regular depreciation -115.4 -2,796.3 -278.9 0.0 -3,190.6


CLOSING REGuLAR DEPRECIATION -128.9 -3,066.7 -293.3 0.0 -3,488.9

CLOSING RESIDuAL vALuE 235.0 2,422.3 73.3 428.8 3,159.3

Opening impairment – -24.9 – -13.3 -38.2

CLOSING ImPAIRmENT 0.0 -24.9 0.0 -13.3 -38.2




NO

TES



in progress

TotalTangible

assets

Opening cost 311.6 4,635.1 347.8 908.8 6,203.3

Acquisitions -0.6 8.4 0.9 198.4 207.2

Reclassifications 5.6 797.4 26.1 -840.7 -11.6

CLOSING COST 316.6 5,440.9 374.8 266.5 6,398.9



CLOSING REGuLAR DEPRECIATION -115.4 -2,796.3 -278.9 0.0 -3 190.6


Opening impairment – -24.9 – -13.3 -38.2

CLOSING ImPAIRmENT 0.0 -24.9 0.0 -13.3 -38.2



Accumulated accelerated depreciation is accounted for under untaxed reserves in the Parent Company.

2014 2013

Opening cost 1,054.4 920.0

Purchases – 179.8

Write down -31.6 -45.5

CLOSING COST 1,022.7 1,054.2

List of Group Companies, see note 14.

NOTE 46. INVENTORIES

2014 2013

Raw materials 557.1 453.0

Semi-finished products 496.9 394.3

Finished products 1,499.2 1,290.2

TOTAL 2,553.1 2,137.4

> Cont. NOTE 44

Amounts relating to impairment losses on inventories are reported

under costs of goods sold and are SEK 101.6 (0) million.

Inventories are measured at the lower of costs, using the first

in/first-out method (FIFO), and net realisable value.

The price of oil fell sharply in the final quarter of 2014, this

meant that some of Nynas’s inventories have been remeasured

at net realisable value. The write-down relates mainly to goods

for sale in the category fuel and bitumen.

NOTE 45. SHARES IN GROUP COMPANIES


NO

TES

NOTE 48. PREPAYMENTS AND ACCRUED INCOME

2014 2013

Rent 5.3 4.3

Charter hire 63.5 29.8

Pension premiums 5.7 6.3

Software licences 4.6 7.1

Other prepayments 32.1 10.4

TOTAL 111.2 57.9

NOTE 49. CASH AND CASH EQUIVALENTS

2014 2013

Cash and bank balances 670.3 609.7

Shells account – 80.5

CASh AND CASh EquIvALENTS RECOGNISED 670.3 690.2

The Parent Company’s cash and cash equivalents comprise its

deposits in the Group’s common bank accounts and its own

bank accounts.

NOTE 50. EQUITY

DISTRIBUTION OF SHARE CAPITAL 2014 2013

CHANGE IN TOTAL NUMBER OF SHARES

Opening number 67,532 67,532

Change during the year 0 0

CLOSING NumBER 67,532 67,532

FactoringThe Parent company have applied factoring for a limit part of

the invoicing. At year end 2014, the part used as Factoring is

approximately 5 percent.

Account receivables lossesThe Parent Company has recognised an impairment loss of SEK

2.7 million (1.3) on accounts receivable. The loss is reported

under distribution costs in the income statement.

NOTE 47. ACCOUNTS RECEIVABLE

2014 2013

Accounts receivable, not due 629.5 574.6

Provision for impairment of accounts receivable -2.7 -1.3

NOT DuE ACCOuNTS RECEIvABLE, NET 626.8 573.3

AGE ANALYSIS OF PAST DUE ACCOUNTS RECEIVABLE

0–90 days 92.4 107.2

91–180 days 3.6 5.4

Over 180 days 26.6 10.9

TOTAL OvERDuE ACCOuNTS RECEIvABLES 122.6 123.5

TOTAL ACCOuNTS RECEIvABLES 749.2 696.9


NO

TES

Restricted reservesRestricted reserves may not be reduced by distribution of dividends.

Unrestricted equityRetained earnings comprises the previous year’s unrestricted

equity after transfers to the statutory reserve and dividend

payments.

Retained earnings, net profit for the year and the fair value re-

serve (if applicable) constitute total unrestricted equity, in other

words the amount available for distribution to shareholders.

> Cont. NOTE 50

NOTE 51. PROVISIONS FOR PENSIONS

The Parent Company’s employees, former employees and

their survivors may be covered by defined contribution and

defined benefit plans relating to post-employment benefits.

The defined benefit plans cover retirement pension, survivor’s

pension and healthcare.

The obligation reported in the balance sheet is derived from

the defined benefit plans. The plans are covered by a re-insured

provision in the balance sheet and by pension benefit plans and

funds. The calculations are based on the projected unit credit

method using the assumptions shown in the table below.

The rate used to discount should be determined by reference

to market yields at the balance sheet date on high quality

corporate bonds. A premium for a longer duration have also

been added with basis in the pension obligation duration.

Defined benefit pension plans are calculated by an independent

external actuary.

In the case of a multi-employer defined benefit plan, suffi-

cient information cannot be obtained to calculate the Parent

Company’s share in this plan, and the plan has been reported

as a defined contribution plan. In the Parent Company’s case,

this relates to the ITP pension plan which is administered via

Collectum. However, the majority of the Swedish plan for sal-

aried employees (ITP) is funded by pension provisions, which

are covered by credit insurance with Försäkringsbolaget Pen-

sionsgaranti (FPG) and managed by a Swedish multi-employer

institution, Pensionsregistreringsinstitutet (PRI).

The Parent Company’s forecast payment of pensions in relation to

defined benefit plans, both funded and unfunded, amounts to SEK

13.0 million (12.2) for 2015.

The Parent Company’s provisions for pensions mainly consist of

ITP, and are covered via Försäkringsbolaget Pensionsgaranti (FPG)

or other insurance institutions. Payments have also been made

to endowment insurance policies. The value of these insurance

policies at the end of the year was SEK 101.5 million (88.6), which

corresponds to the value of the obligations.

RECONCILIATION OF REVISED PENSION LIABILITY 2014 2013

Present value of pension obligations, wholly or partly funded 0.0 0.2

Fair value of pension benefit plan assets 0.0 -13.4

Surplus in pension benefit plan 0.0 -13.3

Present value of obligations relating to unfunded pension plans 152.6 142.9

Unrecognised surplus in pension benefit plan 0.0 13.3

NET LIABILITY RECOGNISED 152.6 143.0

The amount allocated to the pension provision is calculated in

accordance with the Swedish Pension Obligations Vesting Act.

This method differs from the IFRS project unit credit method,

mainly in that it does not take into account expected salary

or pension increases; instead, the calculation is based on the

salary or pension level on the reporting date. The discount rate

according to PRI is 5.8 percent (4.1).

CHANGE IN NET DEBT 2014 2013

Net debt at beginning of year 142.9 135.8

Cost recognised in income statement 15.9 13.6

Pension payments -6.2 -6.4

NET DEBT AT END Of YEAR 152.6 142.9

Payments relating to defined benefit plans are expected to amount to SEK 6.3 million in 2015.

2014 2013

CLASS OF SHARENumber of

shares %Number of

shares %

Class A 33,765 50 33,765 50

Class B 33,767 50 33,767 50

TOTAL 67,532 100 67,532 100


NO

TES

Provision for restructuringA provision for restructuring is recognised when the Group

has approved a detailed and formal restructuring plan and the

restructuring has either commenced or has been announced

publicly. Future operating costs are not provided for. The pro-

vision made during 2014 relates mainly to the Group internal

efficiency program.

Other provisionsOther provisions include provisions for onerous contract within

the scope of Nynas AB operations in Belgium of SEK 21 million

the other part relates to the take over of the Harburg refinery,

committed consideration but not paid and to its amount still

preliminary and subject to fulfilment of terms and conditions

by the parties.

Environmental related provisionsThe provision for Sweden is a contingent liability as defined in

Chapter 10 of the Swedish Environmental Code, and relates to

after-treatment costs for pollution resulting from refining and

depot operations.

The provision in Nynäshamn consists of three parts – the Land

Farm (SEK 22 million), Lagoon/Catch basins (SEK 23 million) and

J3/J4 (SEK 246 million), see note 23 for description.

All costs associated with the remediation project have been

calculated using the present value method.

NOTE 52. OTHER PROVISIONS

Provision for environmental

obligationProvision for restructuring

Provision for other

obligations Total

Balance at 31 December 2013 246.5 – – 246.5

Provisions during the year 8.2 18.5 21.5 48.2

Provisions used during the year -4.0 – – -4.0

BALANCE AT 31 DECEmBER 2014 250.7 18.5 21.5 290.7

of which current 11.4 18.5 21.5 51.4

of which non-current 239.3 – – 239.3

PENSION EXPENSE FOR THE PERIOD 2014 2013

Book reserve pensions 1.2 1.5

Interest expense (calc, discount effect) 8.5 5.7

COST Of BOOK RESERvE PENSIONS 9.7 7.2

Pensions through insurance:

Insurance premiums 31.1 40.5

Recognised net cost arising from pensions excl. tax 40.8 47.7

Dividend tax on pension funds 0.4 0.3

Payroll tax on pension costs 10.5 10.4

PENSION ExPENSE fOR ThE YEAR 51.7 58.4

Percentage return on pension benefit plan assets, % 0.0 1.7

Interest income is reported under net financial items, while other costs are reported under operating expenses.

FAIR VALUE OF PENSION BENEFIT PLAN ASSETS BY CLASS OF ASSET 2014 2013

Shares and participating interests – 8.7

Other interest-bearing securities – 3.7

Bank deposits – 0.9

TOTAL 0.0 13.3

Pension benefit plan assets do not include any securities issued by Nynas AB or assets used by Nynas AB.

> Cont. NOTE 51


NO

TES

2014 2013

LONG-TERM LIABILITIES

Loans from credit institutions 3,935.0 3,500.2

TOTAL 3,935.0 3,500.2

CURRENT LIABILITIES

Loans from credit institutions – 644.6

Overdraft facilities 13.8 2.3

TOTAL 13.8 646.9

GRAND TOTAL 3,948.8 4,147.1

2014 LONG-TERM LIABILITIES

Year issued/maturityDescription

of loan Interest, % Currency

Nominal amount

(local currency)

Recognised amounts in SEK million

Variable-rate loans

2006/2016 Bond issue 3.92 USD 50.0 465.0

2014/2018 Bond issue 7.76 SEK 650.0 638.3







TOTAL 3,935.0


Variable-rate loans

2013/2014 Overdraft 13.8

13.8

2013 LONG-TERM LIABILITIES

Year issued/maturityDescription

of loan Interest, % Currency

Nominal amount

(local currency)

Recognised amounts in SEK million

Variable-rate loans

2006/2016 Bond issue 3.92 USD 50.0 358.2








TOTAL 3,500.2

Nynas launched a corporate bond in 2014 in the Nordic bond

market, borrowing SEK 650 million over a four-year period, with

the main purpose of replacining a USD 90 million private placing

loan. The bond is listed on Nasdaq Stockholm.

In November 2011, a syndicated stand-by credit line of EUR

750 million was arranged. The term of the credit facility is five

years. A private placement bond from US investors was issued

in September 2006. The outstanding loan total is USD 50 mil-

lion with a fixed-rate period of 10 years, swapped to a fixed

SEK interest rate.

Currency interest rate swaps have terms that exactly match

the bonds’ maturities.

NOTE 53. LIABILITIES TO CREDIT INSTITUTIONS


NO

TES

NOTE 54. ACCRUED LIABILITIES AND DEFERRED INCOME

2014 2013

Purchases of raw materials, semi-finished and finished goods 839.1 8.1

Accrued salaries/holiday pay 90.6 78.4

Accrued interest 28.2 34.0

Shipping costs 48.6 57.7

Accrued investment costs 36.9 37.3

Other 29.1 40.3

TOTAL 1,072.5 255.9

NOTE 55. FINANCIAL ASSETS AND LIABILITIES

See note 26 for a description of the measurement and calculation of fair value.

2014


accounting


Loansand

receivables



Non-financial


Totalbalance

sheet

Long-term derivatives 37.5 – – – 37.5 – 37.5

Account receivable – – 749.4 – 749.4 – 749.4

Receivables from Group companies

– – 1,487.3 – 1,487.3 – 1,487.3

Short-term derivatives _ 688.7 – – 688.7 – 688.7

Other current receivables – – – – _ 39.5 39.5


– – – – _ 111.2 111.2

Cash and cash equivalents – – 670.3 – 670.3 – 670.3

fINANCIAL ASSETS 37.5 688.7 2,907.0 _ 3,633.2 150,7 3,783.9


– – – 3,935.0 3,935.0 – 3,935.0


– – – 13.8 13.8 – 13.8

Long-term liabilities to Group companies

– – – 0.2 0.2 – 0.2

Current i-b liabilities to Group companies

– – – 950.8 950.8 – 950.8

Current non-i-b liabilities to Group companies

– – – 281.2 281.2 – 281.2

Accounts payable – – – 442.2 442.2 – 442.2

Long-term derivatives – 35.3 – – 35.3 – 35.3

Short-term derivatives 38.9 208.2 – – 247.1 – 247.1

Other current liabilities – – – – - 275.7 275.7


– – – – - 1,072.5 1,072.5

fINANCIAL LIABILITIES 38.9 243.5 – 5,623.3 5,905.7 1,348.2 7,253.9

> Cont. NOTE 53


Variable-rate loans

2006/2014 Bond issue 1.98 USD 90.0 644.6

2013/2014 Bank loans 8.0 RUB 12.0 2.3

2013/2014 Overdraft –

646.9


NO

TES

2013


accounting


Loansand

receivables



Non-financial


Totalbalance

sheet

Accounts receivable – – 696.9 – 696.9 – 696.9

Receivables from Group companies

– – 1,186.7 – 1,186.7 – 1,186.7


Other current receivables – – – – 0.0 78.7 78.7


– – – – 0.0 57.9 57.9

Cash and cash equivalents – – 690.2 – 690.2 – 690.2

fINANCIAL ASSETS 13.4 33.8 2,573.8 0.0 2,621.0 136.6 2,757.5


– – – 3,500.2 3,500.2 – 3,500.2


– – – 646.9 646.9 – 646.9

Long-term liabilities to Group companies

– – – 0.2 0.2 – 0.2

Current i-b liabilities to Group companies

– – – 1,015.2 1,015.2 – 1,015.2

Current non-i-b liabilities to Group companies

– – – 106.0 106.0 – 106.0

Accounts payable – – – 536.1 536.1 – 536.1

Long-term derivatives 76.6 – – – 76.6 – 76.6


Other current liabilities – – – – 0.0 26.1 26.1


– – – – 0.0 255.9 255.9

fINANCIAL LIABILITIES 105.6 50.8 – 5,804.6 5,961.0 282.0 6,243.0

NOTE 56. PLEDGED ASSETS AND CONTINGENCIES

2014 2013

FLOATING CHARGES

Security for liabilities to credit institutions – –

TOTAL 0.0 0.0

Sureties for Group companies 23.0 41.7

Guarantees 351.2 43.6

Other guarantees and contingent liabilities 3.0 2.9

TOTAL 377.2 88.1

> Cont. NOTE 55

A future closure of operations within the Group may involve a

requirement for decontamination and restoration works. How-

ever, this is considered to be well into the future and the future

expenses cannot be calculated reliably.


NO

TES

Information on remuneration of the Board and key manage-

ment personnel can be found in note 5.

Petroleos the Venezuela S.A. (PDVSA) is the ultimate

owner of 50 percent of the shares in Nynas AB. The Nynas Group

purchases approx. 84 percent of its crude oil volumes from

PDVSA. Crude oil and base oil prices are governed by formula

based multi-year supply contracts. Prices reflect the prices that

would be charged under a contract with a non-related party.

2014 2013

Purchases, crude 8,088.0 7,906.5


Sales revenue -0.4 20.9



Neste Oil Oyj (Neste Oil) is the ultimate owner of 50 per-

cent of the shares in Nynas AB. The Nynas Group purchases

bitumen and other oil products from Neste Oil. Nynas sells fuel

and services to Neste. All transactions are conducted at current

market prices.

2014 2013

Purchases, bitumen 231.9 141.0


Purchases, fuel/distillates 7.2 7.5


Sales revenue 676.2 636.8



NOTE 58. SUPPLEMENTARY INFORMATION TO THE CASH FLOW STATEMENT

2014 2013

Depreciation and impairment of assets 355.2 341.3

Unrealised exchange differences and oil forward contracts -39.9 -76.3

Provisions for pensions 9.6 7.2

Other provisions 44.1 -3.9

TOTAL 369.0 268.4

NOTE 57. RELATED PARTY DISCLOSURES


NO

TES

PROPOSED DISTRIBUTION OF PROFITThe Group’s equity at the end of the financial year amounts to SEK 3,425 million.

The Board proposes that the available profits of SEK 2,024,779,544 in the Parent Company be distributed

as follows:

DIVIDEND TO SHAREHOLDERS:

Total dividend 0

Carried forward 2,024,779,544

SEK 2,024,779,544

The Annual Accounts have been prepared in accordance with generally accepted accounting principles in Sweden

and that the Consolidated Accounts have been prepared in accordance with EU-approved International Financial

Reporting Standards, IFRS.

The Annual Accounts and the Consolidated Accounts give a true and fair view of the Parent Company’s and the

Group’s financial position and results of operations.

The Directors’ Report for the Group and the Parent Company give a true and fair overview of the Group’s and the

Parent Company’s operations, position and results and describes the material risks and uncertainties faced by the

Parent Company and the companies that make up the Group.

Stockholm, April 28, 2015

Orlando Chacin Matti Lievonen John Launiainen

Chairman of the Board

Iván Orellana Tuomas Hyyryläinen Angel Martinez

Antonio Suarez Torres Michiel Boersma Pia Ovrin

Roland Bergvik

Gert Wendroth

President and CEO

Our Audit Report was submitted on April 28, 2015

Ernst & Young AB

Jan Birgerson

Authorised Public Accountant


AU

DIT

OR

’S R

EPO

RT

AUDITOR’S REPORT

To the annual meeting of the shareholders of Nynas AB (Publ)

Reg. no 556029-2509.

Report on the annual accounts and consolidated accounts We have audited the annual accounts and consolidated accounts

of Nynas AB (Publ) for the year 2014. The annual accounts and

consolidated accounts of the company are included in the

printed version of this document on pages 18–109.

Responsibilities of the Board of Directors and the Managing Director for the annual accounts and consolidated accountsThe Board of Directors and the Managing Director are respon-

sible for the preparation and fair presentation of these annual

accounts in accordance with the Annual Accounts Act and of

the consolidated accounts in accordance with International

Financial Reporting Standards, as adopted by the EU, and the

Annual Accounts Act, and for such internal control as the Board

of Directors and the Managing Director determine is necessary

to enable the preparation of annual accounts and consolidated

accounts that are free from material misstatement, whether

due to fraud or error.

Auditor’s responsibility Our responsibility is to express an opinion on these annual ac-

counts and consolidated accounts based on our audit. We con-

ducted our audit in accordance with International Standards on

Auditing and generally accepted auditing standards in Sweden.

Those standards require that we comply with ethical require-

ments and plan and perform the audit to obtain reasonable

assurance about whether the annual accounts and consolidated

accounts are free from material misstatement.

An audit involves performing procedures to obtain audit

evidence about the amounts and disclosures in the annual

accounts and consolidated accounts.

The procedures selected depend on the auditor’s judgement,

including the assessment of the risks of material misstatement

of the annual accounts and consolidated accounts, whether

due to fraud or error. In making those risk assessments, the

auditor considers internal control relevant to the company’s

preparation and fair presentation of the annual accounts and

consolidated accounts 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 appropri-

ateness of accounting policies used and the reasonableness of

accounting estimates made by the Board of Directors and the

Managing Director, as well as evaluating the overall presenta-

tion of the annual accounts and consolidated accounts.

We believe that the audit evidence we have obtained is suffi-

cient and appropriate to provide a basis for our audit opinions.

Opinions In our opinion, the annual accounts have been prepared in

accordance with the Annual Accounts Act and present fairly, in

all material respects, the financial position of the parent com-

pany as of 31 December 2014 and of its financial performance

and its cash flows for the year then ended in accordance with

the Annual Accounts Act. The consolidated accounts have

been prepared in accordance with the Annual Accounts Act

and present fairly, in all material respects, the financial position

of the group as of 31 December 2014 and of their financial per-

formance and cash flows for the year then ended in accordance

with International Financial Reporting Standards, as adopted by

the EU, and the Annual Accounts Act. The statutory adminis-


AU

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tration report is consistent with the other parts of the annual

accounts and consolidated accounts.

We therefore recommend that the annual meeting of share-

holders adopt the income statement and balance sheet for the

Parent Company and the income statement and the statement

of financial position for the Group.

Report on other legal and regulatory requirements In addition to our audit of the annual accounts and consolidat-

ed accounts, we have also audited the proposed appropriations

of the company’s profit or loss and the administration of the

Board of Directors and the Managing Director Nynas AB (Publ)

for the year 2014.

Responsibilities of the Board of Directors and the Managing Director The Board of Directors is responsible for the proposal for

appropriations of the company’s profit or loss, and the Board

of Directors and the Managing Director are responsible for

administration under the Companies Act.

Auditor’s responsibility Our responsibility is to express an opinion with reasonable

assurance on the proposed appropriations of the company’s

profit or loss and on the administration based on our audit.

We conducted the audit in accordance with generally accepted

auditing standards in Sweden. As a basis for our opinion on

the Board of Directors’ proposed appropriations of the com-

pany’s profit or loss, we examined whether the proposal is in

accordance with the Companies Act.

As a basis for our opinion concerning discharge from liability,

in addition to our audit of the annual accounts and consolidated

accounts, we examined significant decisions, actions taken and

circumstances of the company in order to determine whether

any member of the Board of Directors or the Managing Director

is liable to the company.

We also examined whether any member of the Board of

Directors or the Managing Director has, in any other way,

acted in contravention of the Companies Act, the Annual

Accounts Act or the Articles of Association.

We believe that the audit evidence we have obtained is suf-

ficient and appropriate to provide a basis for our opinions.

Opinions We recommend to the annual meeting of shareholders that

the profit be appropriated in accordance with the proposal

in the statutory administration report and that the members

of the Board of Directors and the Managing Director be dis-

charged from liability for the financial year.

Stockholm, April 28, 2015

Ernst & Young AB

Jan Birgerson

Authorised Public Accountant


GLO

SSA

RY

& D

EFIN

ITIO

NS

ASPHALT Asphalt is a mixture of aggregates

(stone), sand, filler and bitumen, which

is an oil-based binder. Traditionally

asphalt is produced in specialist pro-

duction units at elevated temperatures

and is commonly referred to as hot mix

asphalt. Asphalt is a versatile material

and can be used for all paving applica-

tions. However, the recipe of the asphalt

mixture needs to be designed according

to the type of application.

BITUMEN Bitumen is a dark brown or black

viscous mixture of various hydrocarbons

derived from the distillation of oil; it also

occurs naturally in geological deposits.

Bitumen forms the asphalt ’glue’ or

binder and influences the performance

of the asphalt.

BITUMEN EMULSION Bitumen is not soluble in water. Bitumen

emulsion is a fine dispersion of very small

bitumen droplets in water. The dispersion

is created using reagents and specialist

production equipment. Compared with

normal bitumen, bitumen emulsion has

a low viscosity at ambient temperature

and can be applied warm or cold. The

bitumen and water separate during

application and this allows the bitumen

properties to develop.

CRUDE OIL Unprocessed oil is called crude oil. It is

a mixture of thousands of hydrocarbons

and its chemical composition alters

depending on the origin of the oil.

Consequently, the qualities of crude oil

may vary, which in turn determines the

products that can be produced from it.

HYDROGEN GAS FACILITY A lot of hydrogen gas is required to

manufacture naphthenic specialty oils.

The hydrogen needed for hydrotreat-

ment is produced in special hydrogen

production facilities.

LUBRICANTA substance used in machinery for

lubrication between movable parts to

reduce friction and wear. Lubricants

also contribute to cooling, sealing,

protection against corrosion and noise

reduction.

MANAGEMENT SYSTEMA management system helps to guide

the business towards present targets.

The most common international stan-

dard is ISO, e.g., the ISO 9000 series

for quality management. This includes

processes, guidelines and job descrip-

tions to ensure there is clear information

about what has to be done, when, how

and by whom.

NAPHTHENIC SPECIALTY OILSProducts that are highly refined from

heavy naphthenic crude oil, through

hydrotreatment or solvent extraction.

They offer good characteristics with

regard to high solvency and excellent

low temperature properties. They are

mainly used by electrical, lubricant and

chemical industries.

OILThe oil used at the world’s refineries was

formed between 50 and 500 million

years ago when sediments of dead

plants and animals were exposed to high

pressure and heat deep in the earth.

REACHThe new European chemicals legislation,

which stipulates that all chemical sub-

stances manufactured and imported by

companies in the EU must be registered.

REFINERYIndustrial facility where crude oil is

divided into different parts (fractions)

through distillation and then further

processed into finished products. A

refinery consists of a certain range

of process units depending on what

type of products are intended to be

produced.

TRANSFORMERThe task of transformers is to handle

the transformation from one voltage

to another. Most transformers are oil

cooled. In addition to transferring heat

from the transformer coil, transformer

oil act as an insulating liquid, thereby

stopping electrical discharges.

TYRE OILSHighly aromatic oils (HA oils) have tradi-

tionally been used for processing rubber

compounds when manufacturing tyres.

However, these contain carcinogenic

hydrocarbons. The EU has banned all use

of HA oils in car tyres as from 2010. The

transition to environmentally sound tyre

oils represents a total market of around

1.2 million tonnes.

VISCOSITYViscosity is a property of liquids that

denotes their “thickness” or internal

resistance to flowing and can be viewed

as a measure of friction. Syrup, for

example, has higher internal friction than

water, i.e. it has higher viscosity.

VOCVolatile Organic Compounds (VOC) is

a collective term for a large number of

organic compounds that under ambient

conditions can be present in gaseous

form and may pose health or environ-

mental risks. Emissions arise from many

sources including factories, animals,

industrial processes and storage of

organic compounds.

Glossary


GLO

SSA

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& D

EFIN

ITIO

NS

RETURN ON AVERAGE CAPITAL EMPLOYEDProfit after financial items plus interest

expense as percentage of average

total assets less non-interest-bearing

liabilities.

RETURN ON AVERAGE CAPITAL EMPLOYED (12 MONTHS ROLLING) Operating result excluding non-recur-

ring items as percentage of average

total assets less non-interest-bearing

liabilities, 12 months rolling.

RETURN ON EqUITYProfit after net financial items less cur-

rent tax as percentage of average equity.

EqUITY/ASSETS RATIOEquity as a percentage of total assets at

year-end.

DEBT/EqUITY RATIOInterest-bearing liabilities, including

interest-bearing pension liabilities,

less cash and cash equivalents divided

by equity.

DEFINITIoNs


HIS

TOR

Y

The refinery in Nynäshamn is built. In October 1928 the first vessel carrying crude oil docks, and in December they fire up the steam boilers. Even though the workforce has to wrestle with plenty of problems, in the very first year they deliver petrol, paraffin, fuel oil and lubricating oil.

A new cracking plant is built in Nynäshamn.

This also marks the beginnings of the

national network of petrol stations that

Nynas was to operate over the next 50 years.

The network of petrol stations is expanded. Nynas is the first com-pany in Sweden to have catalytic reformation. This means that petrol can be produced with a significantly higher octane level.

The refinery in Gothenburg is

completed.

Major investments in increasing bitumen capacity at the refinery in Nynäshamn, e.g. new vacuum dis-tillation is commissioned for heavy Venezuelan crude. Several depots are built along the Swedish coast, and two tankers are acquired to transport products to the depots.

1981Swedish Shell acquires all

of the petrol stations as well as the subsidiaries that sell fuel oil. At the

same time the workforce at Nynas declines

from 2 000 to around 1 500.

NyNasTHroUGH

THE yEars

1985Nynas signs a crude oil agree-ment with Petroleos de Vene-zuela (PDVSA). This guarantees feedstock supplies, which is aprerequisite for managing the transition into an international specialty oil company.

1986The state-owned Venezuelan oil

company Petroleos de Venezuela acquires 50 percent of the shares.

Nynas is now guaranteed the crude oil deliveries required to continue

its international expansion.

1989The Finnish group Neste acquires the shares held by Sveriges Investeringsbank and Axel Johnson AB – 50 percent of the shares in total. This means that Nynas now has two owners who are both focused on the oil industry. At the same time the founder, the Johnson Group, finally parts with the company it created.

1928

1950s

1931

1956

1967–1969


HIS

TOR

Y

1990The lubricant businessis sold to Statoil. Nynas’business is now based ontwo pillars: bitumen andnaphthenic specialty oils.

1992Nynas acquires the British

company Briggs Oil for around SEK 700 million. The acquisition gives Nynas two new refineries:

one in Dundee and one in Eastham.

2002New crude oils are tested to

increase feedstock flexibility. This gives opportunities for

further product development as well as a more optimised

supply chain.

2003To meet demand without increasing production capacity, a partnership project is initiated with the oil company Petroplus. The agreement means that Petroplus buys the refinery in Antwerp while at the same time Nynas is guaranteed continued bitumen deliveries from Antwerp.

2003–2005An important stage in

Naphthenics’ global expansion is the partnership with the American refineries Three Rivers (2003–2013)

and Houston Refining (2005–2008). This results in increased

capacity without expensive investments, and the new volumes can also be integrated directly into

Nynas’ global supply systems.

2008–2009Growth in Asia really takes off, while at the same time a global tyre oil campaign is launched. To achieve a better local presence, new sales offices are opened in Russia, South Korea and Indonesia.

2010A new hydrogen plant is commis-sioned in Nynäshamn, an invest-

ment of around SEK 800. million. The following year, the plant starts to be run on natural gas instead of

naphtha, cutting carbon dioxide emissions by 20 000 tonnes a year.

2013Nynas received approval from the

European Commission to take over production and responsibility for the base oil plant and associated production units at the Harburg refinery in Hamburg, Germany.

The new production plant will be a core site for Nynas with an annual

production of specialty oils up to 350 000 tonnes. This represents a

forty percent increase in the compa-ny’s supply capability of naphthenic

specialty oils.

2014Nynas takes on full control and responsibility for the base oil manufacturing plant at the Harburg refinery in Germany. The remaining part of the Harburg refinery will be transferred to Nynas 2016.

2012A modern sulphur recovery plant is opened in Nynäshamn at a cost of SEK 600 million. This marks an important step in improving the refinery’s reliability and reduces emissions from sulphur recovery to one fifth.

Nynas aB

Box 10700 • Visiting address: Lindetorpsvägen 7 • SE-121 29 Stockholm Sweden • www.nynas.com • Phone: +46 8 602 12 00

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IT’S AmAzINg hOw fAR A dROP Of OIL cAN TAkE YOU · AmAzINg hOw fAR A dROP Of OIL cAN TAkE YOU....

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