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annual report 2012

nynas takes oil further.

let us show you how!

Nyn

as AB

An

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al Rep

ort 2012

We ➜ Refine ➜ Develop ➜ Specialise Our customer ➜ Insulate ➜ Bind ➜ Lubricate ➜ Dissolve

You ➜ Read ➜ Work ➜ Drive ➜ Live

our customers’ products create a world full of nynas

Nynas is an international company that has a wide-ranging logistic process for naphthenic specialty oils and bitumen. Thanks to a global network with depots, vessels and road tankers, it is possible to meet the market’s stringent requirements of safety, service and cost effectiveness.

fROm RaW maTeRIaL TO cuSTOmeR

fROm SOuRce Of OIL TO cuSTOmeRHere you can follow the steps that must be taken before the finished product reaches the end-customer.

OIL IS exTRacTeDIn the area around lake Maracaibo in Venezuela, heavy, viscous crude oils are produced. nynas’ refineries have been adapted to refining these types of crude oils, which are extremely suitable for both bitumen and naphthenic specialty oils.

TaNkeR TO euROpepuerto Miranda is close to the sound that leads out into the Caribbean. It is here that the crude oil is loaded for delivery to nynas’ refineries in europe. each tanker usually carries approximately 65,000 tonnes of crude oil. on an annual basis, approximately 35 tankers transport Venezuelan crude oil to the refineries in nynäshamn, Dundee, antwerp and Gothenburg.

cRuDe OIL BecOmeS DISTILLaTe In this case the crude oil arrives in Gothenburg. In the distillation tower the crude oil is divided into various fractions that are suitable for continued processing. at the upper part of the tower, light fractions, called distillates, are extracted to become naphthenic specialty oils.

BY TaNkeR TO NYNäSHamNthe distillate is shipped to nynäshamn where it is hydrotreated in order to eliminate non-required molecules. a chemical transformation also takes place which means that the oils meet very stringent demands in terms of function and health properties. one of the results of this process is a component for transformer oil.

ON TO aNTWeRpthe component from nynäshamn is shipped to antwerp. the product is prepared there by mixing according to a specific recipe. the resulting trans-former oil, nytro libra, is then ready for delivery.

BY TaNkeR TO SINgapOReSome of the transformer oil is shipped to Singapore to be stored in a depot where nynas is renting storage capacity. the products are then delivered to the customers by road tanker.

DeLIveRY TO THe cuSTOmeRSome deliveries are made to aBB’s facility in the tuas industrial zone in Singapore where distribution transformers are manufactured. each completed transformer is filled with 9,000–22,000 litres of oil, depending on its capacity.

TRaNSfORmeR OIL TO SINgapORe.

this is a translation of the Swedish annual report. In the event of any differences between the Swedish and english version, the Swedish version prevails.

Illus

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pOLYmeR-mODIfIeD BITumeN (pmB) TO NORWaY

DeLIveRY TO THe cuSTOmeR pMB was deliveried to Skanska, among others, for the production of asphalt pavements to Gardermoen airport outside oslo.pMB provides the asphalt with higher resistance to heavy loads and flexibility even at low temperatures.

cRuDe OIL IS exTRacTeD there are a few north Sea crude oils that match nynas’ production. Most are from an oil field around 150 kilometres north east of the Scottish port of aberdeen.

BY TaNkeR TO NYNäSHamN the crude oil is collected from the platforms by special vessels, called shuttle tankers. one vessel every three months carries approximately 80,000 tonnes of crude oil from the north Sea fields to the refinery in nynäshamn.

THe cRuDe OIL IS RefINeDWhen the north Sea oil arrives at nynäshamn, it is stored in caverns. From there, it is pumped to tanks that are used for feeding the distillation plant. Distil-lation produces distillate for the manufacture of specialty oils, bitumen components and products for fuel manufacture.

BY TaNkeR aROuND THe SWeDISH cOaSTSome of the heavy bitumen component is shipped to Gothenburg. nynas has its own vessels to transport bitumen, primarily in northern europe.

THe RefINeRY IN gOTHeNBuRgSeveral types of pMB, polymer modified bitumen are manufactured in Gothen burg. Depending on customer requirements, the necessary compo-nents are blended with polymers, which among other things makes the binder more flexible at low temperatures.

BY ROaD TaNkeR TO NORWaYa large proportion of bitumen transport operations take place by sea, but in most cases road tankers are used for the final transport to the customer plants. transports must live up to the strictest safety and quality requirements.

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NYNAS ANNUAL REPORT 2012

nynas in brief 2the year in brief 3

From the president 4Strategies and objectives 6

Global trends 8our products 10

production 12Supply chain 14

Sustainability 16environment 18

Safety 20employees 22

research and development 24risk management 26

Corporate governance 31Board of Directors 35

Group Management 36Multi-year overview 37Financial statements 38accounting policies 48

notes 54proposed distribution of profit 82

audit report 83nynas history 84

Word list 86Definitions 87

the Board of Directors and Ceo of nynas aB (publ), company reg. no. 556029-2509, hereby submit its annual report for the 2012 financial year for the parent Company and the Group.

the annual accounts and the conso-lidated financial statements were approved for issuance by the board of directors on 29 april 2013.

the consolidated income statement and balance sheet and the parent company income statement and balance sheet will be subject to adoption by the annual general meeting on 29 april 2013.

The annual Report including the audit Report comprises pages 3, 6–81.

Board of Director’s report comprises pages 3, 6–36.

as an international group active in a global market, nynas must be able to follow and parry the macroeconomic changes that constantly arise, fluctuations that create both challenges and opportunities.

”

cONTeNT

nynas r&D require extensive technical knowledge and under-standing of the customer’s business areas. the ultimate goal is for nynas to always stay one step ahead and have products ready to meet new requirements when they come.

Read moRe on page 8

Read moRe on page 14

Read moRe on page 24

nynas has a strong position, both geographically and in terms of our products. For our naphthenic products we have signed several new contracts in asia and we expect higher sales than last year. Staffan Lennström, From the President, page 4-5

”

Service level, delivery performance and cost efficiency are crucial for nynas’ competitiveness. Consequently, nynas works continuously to develop and improve the supply chain, from crude purchase to customer.

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keY fIguReS1)

Group

MSeK 2012 2011

Sales 24, 471 23,223

operating result 237 586

result before tax -52 454

net profit -34 313

Cash flow before financing activities 353 -1 343

Capital expenditure, gross 477 907

return on equity, % -6 9

equity/asset ratio, % 36 35

Interest-bearing debt 4,072 3,942

average number of employees 881 871

Bitumen 42% Naphthenic specialty oils 30%Fuel 10%Crude oil/other 18%

NET SALES PER PRODUCT

1)For definitions see page 87.

NYNaS IN BRIef

Nynas: a different oil company

The company’s specialisation sets Nynas apart from most other oil companies, which are larger and primarily offer oil as a source of energy in the form petrol and other fuels. Today Nynas is a leading partner within areas such as transformer oils for the world’s grids and environmentally sound oils for tyre production. Nynas sells naphthenic specialty oils in large parts of the world. In recent years, Nynas has opened offices and distribution terminals in rapidly growing markets such as China, South Korea, India, Russia and several Latin American countries. In Western Europe, Nynas is also one of the leading suppliers of bitumen for production of asphalt.

Nynas is a leader in a relatively narrow niche within the oil industry, but what the company does is visible everywhere around it. Roads, roofs, tubes, tyres, rubber, flooring, paint and magazines are just a few of the thousands of everyday objects that in some way contain Nynas oils. Although specialty oils and bitumen are a small part of the oil market, today Nynas is a large group with sales offices in over 30 countries and a global distributor network. Sales exceed SEK 20 billion and over 90 per cent of sales are exported.

Nynas has two international owners, both of which are focused on the oil industry, the Venezuelan oil company Petroleos de Venezuela and Finnish Neste Oil.

Nynas has changed considerably since it was founded over 80 years ago. Once a Swedish oil company, with production of everything from petrol and diesel to fuel oil and lubricants, it is now a leading international group specialised in naphthenic specialty oils and bitumen.

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THe YeaR IN BRIef

The year in brief

•ThepriceofoilincreasedatthebeginningoftheyeartoUSD120/bbl,thenfell sharply during the summer to uSD 88/bbl and rose once again during the autumn to uSD 110/bbl, in part due to the political turmoil in the Middle east.

•Thecontinuedweakglobaleconomyresultedinreduceddemandinmany sectors, including the european automotive industry which is an important end user of naphthenic specialty oils. the positive trend in the market for transformer oils continued however and in october an all-time high monthly sales volume was achieved by nynas for this product group. Despite the recession nynas achieved a total sales volume for naphtenics specialty oils in 2012 which was in line with the 2011 level.

•Weakdemand,shrinkingmarginsandcontinuedconsolidationlefttheirmark on the european bitumen market once again in 2012. However, the Scandinavian bitumen market developed relatively well and nynas also achieved a strengthened position in the important uK market.

•TheresultafternetfinancialitemswasSEK-52million(454).

•Theequity/assetsratiowas36percent(35).

•Inautumn2012,Nynasinauguratedanewsulphurrecoveryunitinnynäshamn. the investment of about SeK 600 million will help to increase production reliability and reduce nynas’ environmental impact.

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2008-2012, SEK millionNET SALES

2009 2010 2011 2012 -100

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RESULT AFTER FINANCIAL ITEMS

2009 2010 2011 2012

-1,500

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2008–2012, SEK million

CASH FLOW BEFORE FINANCING ACTIVITIES

2009 2010 2011 2012

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When we summarize the results for 2012, I must conclude that, even though our sales grew, for the first time in a long time we are reporting a negative result. and this is the result even though we have succeeded better than ever before in terms of safety, reliability, reduced energy consumption and improved crude yields.

fROm THe pReSIDeNT

We hAve Also succeeded in reducing working capital, in terms of both inventory and payment periods. Despite the net loss of SEK 34 million, we achieved a positive cash flow of about SEK 350 million.

The financial downturn in the developed world became both broader and deeper than we anticipated.Many key industrial custom-ers did not operate at full speed during the year, while infrastructure investments were put on hold while waiting for better times, which affected both volumes and prices.The delayed takeover of Shell’s base oil plant in Harburg entailed extra expenses during the year. High oil prices during the spring and lower prices during peak season also had a negative impact on the result.

Repairs after the fire at the Nynäshamn refinery in autumn 2011 were completed in March 2012. The costs were extensive, but were mainly covered by insurance. However, arranging deliveries to our customers during this period was a major challenge. We managed to do this largely without disruptions, but the price was high logistics costs.

The result for 2012 was not according to expectations, but it is important to note that Nynas is still a strong Group with a clear growth strategy for naphthenic specialty oils. For 2013, we expect to receive approval from the EU for the takeover of the refinery at Harburg. We are confident in the measures we’ve taken to reduce commodity exposure, increase cost effectiveness and that the new sales contracts both in Naphthenics and Bitumen will give us an acceptable profit in 2013.

market outlookWithin bitumen, production has been

adapted for better capacity utilisation. The

the transformer oil market remained strong. upgrades of the electricity grid, expansion of wind power, particularly in europe, and the continued industrialisation of China, India and South america, create growing demand. ”

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Scandinavian markets did relatively well in 2012 and we strengthened our positions in the important UK market. Improving our prof-itability in the continental bitumen market, however, continues to be a challenge for which we are seeking a satisfactory solution.

For our naphthenic specialty oils, the market for transformer oil remained strong. Upgrades of the electricity grid, expansion of wind power, particularly in Europe, and the continued indus-trialisation of China, India and South America, create growing demand.

The situation for those of our products that go to the automotive industry was not as encour-aging. Cutbacks mainly within the European motor vehicle industry had a negative impact on Nynas. About 40 per cent of the production of naphthenic products is used in this industry, for example, greases as well as tyre and metalwork-ing oils. The total sales volume of naphthenic specialty oils in 2012 was largely the same as in 2011, which, considering the economy rep-resents a good approval rating for our global sales and technical service organisation. Investments for the futureStringent environmental and safety require-ments represent technical and cost challenges for small refineries, leading to an ongoing con-solidation within the industry. In recent years we have carried out purposeful infrastructure investments aimed at achieving improved envi-ronmental performance, more efficient produc-tion, higher availability and better safety. In autumn 2012, we inaugurated a new sulphur recovery unit in Nynäshamn. The previously completed hydrogen plant and other imple-mented improvements in Nynäshamn now serve as an excellent base on which to build for the future.

future confidenceMarket trends for 2013 remain uncertain. We expect to sell more bitumen in the Nordic market compared with 2012, while we see a weaker market in the UK and continued intense competition on the continent. However, Nynas has a strong position, both geographically and in terms of our products. For our naphthenic products we have signed several new contracts in Asia and we expect higher sales than last year. We also hope that the European automo-tive industry will have recovered somewhat from its current deep dip during the second half of the year.

Irrespective of market trends, the foundation has been laid for our success in our access to talented and motivated employees. We are therefore pleased that in addition to continu-ously assisting our employees to grow and securing our skills base, we now also see a new, more international and from several perspec-tives also diverse generation of leaders stepping forward. I am extremely confident that we have the right skills and a good organisation that can meet customer requirements, now and in the future.

Nynas drives developments, technically and environmentally. We refine oil and contribute to a more sustainable society. We generate benefit and value for our customers. We are where it’s happening.

Staffan Lennström, CEO

”In recent years we have carried out purposeful infrastructure investments aimed at achieving improved environmental performance, more efficient production, higher availability and better safety.”

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Nynas has strongly focused on two product areas for a long time: naphthenic specialty oils, which are used in a wide array of industrial applications, from cooling of transformers to tyre production and ink, and bitumen, mainly used as a binder in asphalt.

STRaTegY aND OBjecTIveS

Over time, Nynas has built up extensive knowledge of the businesses and specific needs of its customers, which has formed the foundation of many years of collabo-ration. Based on its technical expertise, Nynas can therefore help its customers to develop their operations and business, while continuing to be a strong and viable enterprise.

The Board of Directors of the Group has adopted an overarching strategy that serves as the basis of planning, governance and con-trol at Nynas.

Nynas bases its operations on five major strategic approaches.

1: growth within naphthenic specialty oilsNynas has a strong position as a supplier of naphthenic specialty oils on the global market. Other than the underlying industrial growth around the world, especially in Asia and Latin America, an increase in demand can be expected in this niche market for several reasons.

Increased environmental requirements will entail increased demand since naphthenic oils can replace previously used hazardous products.

As a result of current technological develop-ments in the production of paraffinic specialty oils, the new generation of these products lack some of the properties previously provided by refinery technology. For example, because of the change in the solvent properties of these oils, new areas of application will open where the special properties of naphthenic specialty oils can provide advantages.

Nynas also has a leading role as a supplier of transformer oil, a product area that benefits from the expansion of the transmission and distribution of electric power in countries such as Brazil, India and China, as well as by the need to update and expand the electricity grids in the western world in pace, for example, with the expansion of wind power.

The Group has a strong marketing and service organisation and is ready to take advantage of this growth. Nynas’ potential to grow in this market has been limited by its available production capacity. However, as a result of the planned acquisition of the base oil plant in Harburg and its planned reconstruction, this limitation will disappear.

example: One market segment which Nynas has grown in 2012 is tyre oils. Here naphthenic specialty oils replace the previously used aro-matic extracts. The change in technology is driven by more stringent health, safety, and environmental requirements placed on the end product, car tyres.

2: Strong position in bitumen marketBitumen is a mature market in western Europe, with limited growth in volume. The market is regional and Nynas’ goal is to be the leading player in those markets in which it is active.

Consequently the Company consistently works to provide a broad range of products focused on developing product properties that can provide customers with added value. Upgraded products such as emulsions and polymer-modified products provide customers with opportunities to create asphalt products with higher wear resistance and improved noise suppression. The possibility of supplying bitumen that can be used in asphalt with lower paving temperatures is another area that will strengthen the market-leading role.

example: Despite the reduced total sales volume, Nynas has increased its deliveries of polymer-modified bitumen in the Nordic market

3: Balanced supply of raw materialsWhen producing both naphthenic specialty oils and bitumen, the selection of raw materials is critical to achieving the desired product prop-erties. Economical production also depends on matching purchases of raw materials to demand. Demand for bitumen is more seasonal, unlike the more even demand for naphthenic specialty oils.

To meet these challenges Nynas must develop material solutions that optimally address these requirements. The Group also has a respon-sibility as a supplier to many customers and it is crucial to develop the various raw material options to reduce vulnerability to disruptions in the supply chain.

The goal is to ensure that no single supplier is responsible for more than 50 per cent of total raw material deliveries to the Group.

example: Despite a serious fire at the Nynäshamn plant in autumn 2011, the Group succeeded in meeting customer needs during the first half of 2012 by changing planned pro-duction and raw material selection for the Group’s other plants.

4: Optimal use of production equipmentNynas’ manufacturing processes are capital-intensive and presume high capacity utilisa-tion. Nynas’ products are also important input materials in the customers’ operations, placing high demands for reliability on production.

In recent years the Group has invested major resources in equipment and personnel, mainly relating to the facilities in Nynäshamn, with the ambition of increasing reliability and capacity.

The investment program of about SEK 2 bil-lion over the past five years is now beginning to pay off. During the year the Nynäshamn plant reported outstanding results.

example: During the year a new sulphur recovery plant was completed in Nynäshamn. When the plant starts operations in early 2013, the refinery’s environmental performance will improve. Measures have been taken to remove the previous limit on capacity related to sulphur recovery.

5: customer focus and efficiencyNynas always strives to maintain a strong customer focus and to have an effective organisation to support this objective. The organisational structure consists of a customer-driven sales and marketing organisation sup-

7


ported by competent central support functions. Other conditions for successful marketing include an efficient flow of goods and inten-sive product flow research and development.

example: During the year, Nynas signed a long-term lease for two new custom-designed bitumen ships. This strategy will ensure the Group’s ability to meet customer demands for reliable delivery, especially in the Nordic region, with an array of delivery locations along the coasts.

Objectives and governanceNynas’ financial objective is to ensure long-term profitability and increased asset value. This objective has been formulated as an expected return on capital employed of at least 13 per cent over a business cycle. Another objective is for the debt/equity ratio to fall within the

Goal 2012 reSult 2012 Goal 2013

INjuRY fRequeNcY (trI=total reCorDaBle InJurIeS per MIllIon WorKInG HourS)

6,0 4,3

the cornerstone for the on-going work to improve security is the Group HSSe & Q policy. this initiative, combined with the ongoing internal safety programme, led to improved results for 2012.

4,5

ReLIaBILITY Of NYNäSHamN’SSpecIaLTY OIL pRODucTION(ratIo oF tIMe WItH approVeD CapaCItyanD QualIty)

95 per cent 95 per cent

In recent years major investments have been carried out to create safer, more flexible, cost-effective, reliable and environmentally sound production facilities. as a result nynas achieved its reliability goal for 2012.

95 per cent

INcReaSeD SaLeS vOLume fOR SpecIaLTY OILS

850 kton 696 kton

the 2012 target was not achieved due to the general economic downturn and the delay of the planned takeover of the Harburg refinery.

800 kton

eaRNINgS BefORe INTeReST, Tax, DepRecIaTION aND amORTISaTION (eBITDa)

SeK 1,206 million

SeK 581 million

the 2012 target was not achieved due to the general economic downturn, volatile raw material costs and the effects of the autumn 2011 nynäshamn fire. the goal for 2012 was also based on the increased production capacity that would be obtained through the takeover of the refinery in Harburg, Germany. the delay for this deal prevented any increase in capacity during 2012.

eBItDa SeK 1 098 million

gOaL

interval of 50 to 90 per cent. See page 37, key financial ratios for the outcome for the year.

The Group’s objectives are linked to one or more of the five strategic approaches. The goals are evaluated and revised annually to ensure their relevance for the business.

In addition to the Group’s overarching financial and operational objectives, the business areas and production organisation have their own detailed goals linked to their respective busi-ness areas on a more delegated and local level.

The group’s operational objectives for 2012:• Reducedfrequencyofpersonalinjuries(Total

Recordable Injuries, TRI) • Increasedreliabilityofspecialtyoilproduction

inNynäshamn(ReliabilityNynäshamnNSPPlant)

• Increasedsalesvolumeforspecialtyoils• Increasedearningsbeforeinterest,deprecia-

tionandtax(EBITDA)

The goal to reduce the number of accidents is linked to Nynas’ focus on employees and their importance for the operation. It is also essential for achieving the other objectives related to efficiency, reliability and safety. The reliability goal is further linked to targets for increased production capacity, in itself a requirement for growth, a high EBITDA, as well as a higher return on capital employed and lower debt/equity ratio.

During the year the nynäshamn plant reported very good result on reliability.

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as an international group active in a global market, Nynas must be able to follow and parry the macroeconomic changes that constantly arise, fluctuations that create both challenges and opportunities.The challenges include rising oil prices and the recession, while opportunities entail developing new and safer products with better environ-mental performance, thereby strengthening Nynas’ leading market position.

gLOBaL TReNDS

The global economic downturn that began in 2008-2009 continued in 2012. The year was characterised by low or negative growth in many areas and major financial concerns mainly in southern Europe, but also in the important US market. As the financial crisis deepened, both business investments and private consumption continued to decline, causing the manufactur-ing and engineering industries to further reduce the production rate. For Nynas, these reduced production volumes led to lower demand for products such as specialty oils used for input material to produce metal processing oils and tyres in the automotive industry.

cost saving measuresIn addition, many of the infrastructure invest-ments often used by the public sector as countercyclical measures failed to materialise

during the year. Several European governments approved major cost saving measures, which affected both Nynas and other European bitu-men suppliers.

Oil prices were volatile; after a sharp decline during the summer when the price fell below USD 90 per barrel, prices rose once again during the autumn, in part as a consequence of the political turmoil in the Middle East. A high oil price increases the amount of Nynas’ tied up capital. The Group continuously takes measures to reduce inventories and thus tied up capital. Oil price trends have a strong impact on market prices in the segments where Nynas is active. Nynas can therefore largely offset higher raw material costs in its pricing, though some time lag is always involved, which can temporarily affect the operating result.

agecom produtos de petroleo in Brazil, which manufactures products such as industrial lubricants, uses several base oils from nynas.

OIL pRIce DeveLOpmeNT, uSD 1)

1) Average monthly price for Brent in USD/barrel.

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201220112010200920082007

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New opportunitiesRequirements for better environmental per-formance and improved energy efficiency, combined with new technological advances, drive product development. A new generation of base oil refineries is taking over, creating new opportunities for the naphthenic specialty oils niche.

As a highly specialised company, Nynas differs substantially from most other players in the refinery industry.The majority of the approximately 901) million barrels of crude oil extracted daily around the world is used to produce different types of fuels. Only a few per cent is used in applications that take advantage of oil’s unique ability to lubricate, bind and protect. For Nynas, the fuel that is always part of the result when crude oil is refined is purely a sidestream. Instead, Nynas works to maximally optimise the proportion of naphthenic specialty oils and bitumen extracted from the oil.

global economicsDemand for naphthenics specialty oil is linked in part to the global economic cycle. Reduced industrial production generally translates into a reduced need for base oils to be used in industrial lubricants and metalworking oils. Similarly, fewer manufactured cars results in a reduced need for tyre oils.Meanwhile, the economy does not have the same impact on the long-term expansion of the electricity grid to the handle growth and continuing indus-trialisation in areas such as India, China and South America. Consequently the market for transformer oils continues to develop positively.Nynas is the market leader in this product area and in October 2012 Nynas’ monthly sales of transformer oils achieved an all-time high.

In terms of competition, Nynas meets both large international oil companies, and smaller, more niche-oriented local companies specialis-ing in naphthenic and paraffinic oils.For exam-

adtek in Malaysia uses nynas’ process oil for production of adhesives for hygiene products such as diapers.

ple, China has a large domestic market which is served in part by local and national producers.

market consolidationThe European bitumen sector has been hit hard by the financial downturn. Reduced investment in new construction and maintenance over the past three years has sharply pushed down total demand, leading to excess capacity, declining margins and on to a further consolidation of the market. More and more of Nynas’ Euro-pean competitors, both regionally and nation-ally, have chosen to leave the product area either completely or by partially shutting down production facilities. The result could be an under-capacity once demand rises again, since restarting the closed facilities can be costly.

Nynas has a strong market position, espe-cially in northern Europe and the UK, and

has chosen to improve the efficiency of the organisation, facilities, and supply chain to be well represented and equipped to meet surging demand.

Improved propertiesDevelopment of bitumen types with improved properties as requested by customers, such as greater durability, better noise suppression and better recyclability is another path that Nynas can take to maintain its margins and market position in today’s shrinking market.

the manufacturing process for various types of synthetic rubber takes advantage of the high purity and solubility of nynas oils.

1) EIA, US Energy Information Administration.

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Nynas’ products are all based on crude oil, but have very different character-istics. The crude oil is processed into the naphthenic specialty oils that are used to insulate transformers, lubricate wind turbines or give car tyres a reduced rolling resistance and into bitumen, which is the binder in the asphalt used to surface our roads. The key to success is knowledge of customers’ activities and requirements.

OuR pRODucTS

1) the respective products’ share of the part of turnover that includes bitumen and naphthenic specialty oils.

proDuCt uSe SHare oF turnoVer1)

2012 2011

electrical insulation and cooling of electrical transformers

20% 18%oils for the chemical and technical

manufacturing industry. are included in industrial rubber, printing ink, adhesives and thermo plastics, for example. 7% 7%

Component in cutting fluids for metalworking, hydraulic oils, greases and other industrial lubricants. 10% 12%

used as plasticisers in the rubber compounds used to make car tyres

4% 5%Binder for aggregates, making up

asphalt for road surfacing

55% 55%roofing felt and special appli-

cations such as anti-corrosion protection

4% 4%

TRANsfoRmeR oils

PRocess oils

BAse oils

TyRe oils

BITumeN: INDuSTRIaL appLIcaTIONS

BITumeN: BINDeRReguLaR, exTRa aND pRemIum

na

pHte

nIC

SB

Itu

Men

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GEOGRAPHICAL MARKET BuSIneSS DrIVerS CUSTOMERS

Global customers expansion of electricity grids in developing countries

new investments and upgrading of electricity grids in europe and in the uS

transition to new energy sources

transformer manufacturerselectricity companies electricity producers

Global customers the demand for advanced customised products is opening new markets where the levels of service and expertise are the key to success.

In particular the chemical and process industries

Global customers Global changes in the technology to produce paraffinic base oils are opening up new opportunities for naphthenic specialty oils.

Industrial manufacturers of lubri-cants, cutting fluids and hydraulic oils

Global customers, uSa, europe, asia

environmental legislationMore stringent performance requirements

of the end-product

polymer manufacturers with tyre manufacturers as end-customers; tyre manufacturers directly

northern europe, uK, nordic region publicly financed expansion and up grading of road networks and infrastructure

technology development in the road construction industry

More stringent requirements of the per-formance and technology development of asphalt surfacing

Building and construction com-panies

northern europe, uK, nordic region Building and maintenance trends, competitive position in relation to alternative technical solutions

Manufacturers of roofing felt, pipes, etc.

Process oils

Base oils

Tyre oilsBitumen

Transformer oils

proDuCt uSe SHare oF turnoVer1)

2012 2011

electrical insulation and cooling of electrical transformers

20% 18%oils for the chemical and technical

manufacturing industry. are included in industrial rubber, printing ink, adhesives and thermo plastics, for example. 7% 7%

Component in cutting fluids for metalworking, hydraulic oils, greases and other industrial lubricants. 10% 12%

used as plasticisers in the rubber compounds used to make car tyres

4% 5%Binder for aggregates, making up

asphalt for road surfacing

55% 55%roofing felt and special appli-

cations such as anti-corrosion protection

4% 4%

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The refineries comprise the core of Nynas’ activities. This is where crude oil is processed into the naphthenic specialty oils that are used for various purposes and then sold on the global market, as well as into the bitumen used to maintain and expand the North european infrastructure.

maNufacTuRINg

Nynas owns three refineries; the original is located in Nynäshamn, which has also given the Group its name, and the other two are in Gothenburg, also in Sweden, and in Dundee, Scotland. Nynas also runs another refinery in Eastham, UK, as a joint venture with Shell. Additional production resources have been secured through supply contracts with other refineries, mainly in Three Rivers, Texas, USA, on Curacao in the West Indies and in Antwerp, Belgium.

When the crude oils chosen for production are processed, the result is divided into three categories: naphthenic specialty oils, bitu-men and the side stream fuel. Nynas strives to achieve an optimal outcome of either specialty oils or bitumen, while keeping the proportion consisting of fuel as small as possible. It is desir-able to adapt production to the seasons to meet higher demand for bitumen during the warmer months when it is appropriate to lay asphalt, while demand for naphthenic specialty oils remains more even throughout the year. Consequently, Nynas production facilities must be flexible with respect to use of raw materials.

expanded capacityProduction of the naphthenic specialty oils, Nynas’ fastest growing product area, takes place primarily in Nynäshamn, Sweden, sup-plemented by supply contracts in Curacao and Three Rivers. Subject to the European Commis-sion’s approval, in 2013 Nynas will expand its production capacity for naphthenic specialty oils through the takeover of the Hamburg-Harburg refinery in northern Germany.

Bitumen, for which there is currently a large production capacity surplus in the market in Western Europe, is produced in Gothenburg, Eastham, Dundee, Antwerp and Nynäshamn. Parts of the market, mainly in Finland are sup-plied by the refinery in Finnish Naantali, which is owned by Neste Oil.

In the autumn of 2011 a large fire broke out in the Nynäshamn refinery, which halted parts of production.After herculean efforts, recon-struction was completed just five months later and full operation was resumed. During the stoppage, available production capacity in Gothenburg and Dundee was successfully used to meet customer demand.

environmental adaptationIn recent years major investments have been carried out in the refineries, primarily in Nynäshamn. The purpose has been to create safer, more flexible, cost-effective, reliable and environmentally sound production facilities. The Nynäshamn plant for production of the hydrogen used in the hydrotreating process was commissioned in 2010 and since 2011 has run on natural gas, which replaced the petroleum naphtha previously used as a raw material.Now that it runs on natural gas, this plant has reduced operating costs, improved reliability and increased production capacity, while significantly decreasing carbon dioxide (CO2)emissions.

In autumn 2012, Nynas inaugurated a new sulphur recovery unit, also in Nynäshamn. The investment of about SEK 600 million will help to increase production reliability and reduce Nynas’ environmental impact. The plant can be run in combination with the previous sulphur recovery unit, which will increase the availability of the refinery since two units can now back each other up.

InvestmentsThe continued basic investment need to main-tain operations and meet established safety and environmental requirements is about SEK 300 million per year. Studies are underway to identify opportunities for productivity gains in Nynäshamn, based on modifications of existing processing facilities.

Regarding the planned takeover of the Har-burg refinery, plans for the necessary conver-

nynas has its own refineries in nynäshamn and Gothenburg in Sweden, and in Dundee, Scotland. an additional refinery in eastham, uK, is operated as a joint venture with Shell. nynas also has supply contracts with other refineries, including in the uS, Belgium and the West Indies.

13


NYNaS RefINeRIeS

2012 Nynäshamn gothenburg Dundee eastham 50%

production naphthenics specialty oil, kton 399 - - -

production Bitumen, kton 373 318 186 589

reliability nSp/Distillation % 95 100 92 94

Base investments, MSeK 76 36 12 n/a

capITaL expeNDITuReS IN fIxeD aSSeTS, mSek

Group 2008 2009 2010 2011 2012

Base 226 249 262 307 161

Dedicated 267 478 260 600 316

Total 493 727 522 907 477

sion are now ready. The integration initiative to incorporate the refinery into Nynas’ production will be able to begin immediately once the EU grants approval. Nynas expects it will be able to start the takeover of production in a first step about six months after approval.

evaluationProduction at Nynas’ own refineries and plants is evaluated monthly based on established metrics known as Key Performance Indicators (KPI).Themetricsincludeavailability,produc-tion and cost levels, accident rates as a measure of safety and environmental impact. The KPIs are evaluated and revised annually in order to be relevant for the operations.

In autumn 2012, nynas inaugurated a new sulphur recovery unit in nynäshamn. the investment of about SeK 600 million will help to increase production reliability and reduce nynas’ environmental impact. ” nynas uses the unique attributes of oil to lubricate, bind and insulate in order to create new and innovative customised products for purposes such as manufacturing of seals and gaskets.

14


One key to success for Nynas lies in its access to the right crude oil and other raw material, as well as access to a distribution network to ensure delivery of the right products in the right quantities and on time to demanding customers, wherever they may be located around the world.

SuppLY cHaIN

Service level, delivery performance and cost efficiency are crucial for Nynas’ com-petitiveness. Consequently, Nynas works continuously to develop and improve the supply chain, from crude purchase to customer.

To reduce dependence on individual suppliers and to streamline logistics, in recent years the company has intensified the search for alterna-tive types of crude oil and feedstock. Different crude oils from locations such as Brazil, Australia and the North Sea have been identified, evalu-ated and assessed before undergoing test runs in Nynas’ facilities and finally being processed on a routine basis.

Access to raw materials with the right proper-ties is a necessity in order for Nynas products to achieve the product characteristics that the market demands, while meeting stringent safety and environmental performance requirements. Nynas also strives to use the raw materials effi-ciently, in order to achieve an optimal mix of bitumen and naphthenic specialty oils and fin-ished products, at any given time—overall and based on the seasons.

specialty oilsNaphthenic specialty oils are mainly produced at the Nynas refinery in Nynäshamn, as well as on Curacao in the Netherlands Antilles and at Three Rivers in the US. The finished naphthenic oils are shipped from the refineries via the global network to storage points in Antwerp, Houston and Singapore – and from there to depots and on to the customer. To reduce the need for transport, in some cases different specialty oils can be blended into customer-specific products on site at the depots. During the year, Nynas started to develop the network to prepare for larger volumes of naphthenic specialty oils.

BitumenNynas’ bitumen market consists of northern and western Europe, including the UK and the Baltic and Nordic countries.

Bitumen is produced in Nynäshamn, as well as in Gothenburg, Dundee and Eastham. Since bitumen must be kept warm while being transported to prevent it from hardening and becoming unusable, an efficient logistics system is crucial. Meanwhile, rigorous safety and environ mental requirements place demands on both vehicles and facilities. Sea freight is preferable for longer journeys and during the year Nynas added two new ships customised specifically for bitumen transport to its fleet.

forecasts crucialThe volatile price of oil and seasonal varia-tions in demand for the different products place great demands on Nynas’ ability to make accurate sales forecasts. Time cycles are long for transports from the crude oil supplier to the production facility and then on to the customer, which can create higher inventory costs. Nynas forecasts are based on substantial knowledge about the customers’ operations and a long-term relationship based on trust.

To address the high and volatile price of oil, Nynas continuously works to reduce its tied up capital by striving, as far as is possible, to minimise its inventory of both crude oil and finished products, without jeopardising deliv-ery performance. As a result of this strategy, Nynas was able to reduce its inventory volumes in both 2012 and 2011. These efforts will con-tinue in 2013.

During the year, nynas signed a lease for two new custom-designed bitumen ships.

20082007

kTONINVENTORY VOLUMES IN DECEMBER

2009 2010 2011 2012

0

200

400

600

800

1,000

1,200

15


nynas continually works to improve the supply chain all the way to the customer.

Service level, delivery performance and cost efficiency are crucial for nynas’ competitiveness.”

16


Nynas works with crude oil as its main raw material. Since it is a finite resource Nynas is always searching for ways to use it as intelligently as possible. The Nynas business model is to upgrade as much of the crude oil as possible to produce specialty oils and bitumen, products with a long lifetime, and to reduce the amount of fuel products produced intended for rapid combustion.

SuSTaINaBILITY

For the Group, it is also important for all steps in the process – from transportation of crude oil through the production process and out to the distribution chain to customers – to be carried out efficiently and with the aspiration to continuously reduce energy consumption and environmental impact. A continuous and highly practical sustainability strategy is therefore an important aspect of Nynas’ operations.

ReplacementFor Nynas products, the focus is on improving the ability of the products to meet customer needs. But Nynas takes the use of crude oil one step forward by developing products featuring excellent product characteristics while catering to the growing need to replace unhealthy prod-ucts in various applications, such as in tyre oils.

To do so, the Group must always understand the customer’s business and needs while keep-ing up with both technological developments and changes in legislation. It is important to stay one step ahead and offer solutions and products that meet or exceed customer requirements.

focusat nynas Sustainable Development means

developing and implementing strategies

that ensure growth of shareholder value

while proactively taking care of all stake-

holders needs; specifically protecting and

sustaining human and natural resources

for future generations. Sustainability work at Nynas involves different focus areas in different parts of the company. However, the work is coordinated at the Group level, both to ensure that the work follows common guidelines and so that implemented initiatives have a clear and accepted place in the overall structure. The Sustainability Policy adopted in 2012 is both a comprehensive policy document and an important part of this work.

Nynas develops products with new and better functional and environmental characteristics.

This policy refers to both the Group HSSE-Q policyandtheCodeofConduct(adoptedin2011), which addresses human rights, purchas-ing controls, and relationship with competitors. The code also expresses an active policy against bribery and other corruption. The code of con-duct supports transparency and openness in relation to Nynas’ various stakeholder groups.

common basisThe aim is to create a consistent approach that stimulates new in-house initiatives for sustain-ability work, using a common base. It is also important that the work is carried out on a commercial basis and at a pace that enables the Group to continue to achieve positive growth.

Practical implementation is largely delegated, since it is guided by customer needs, which differ among the various product areas.This strategy allows Nynas to focus on its own busi-ness while supporting its customers, thereby facilitating sustainable product use.

As a result of this decentralised model, to date sustainability initiatives have reached dif-ferent levels in different parts of the Group. The naphthenic specialty oils product area focuses on issues pertaining to health and the environment in relation to use of products such as tyre oils, cutting fluids and greases. One example is the update of the generic life cyclestudy(LCI)nowunderwayforbaseoils.In the Bitumen product area, work focuses on products that allow reduced energy consump-tion and increased recycling rates.

SafetyNynas’ pursuit of cost efficiency is in line with its ambition to embrace environmental considera-tions regarding transports. For example, longer transports are usually carried out by sea. Both land and sea-based transport, like storage in depots, are subject to stringent safety require-ments. In 2012 Nynas was able to replace older

17


Focus on collaborationnynas is a participant in responsible Care, the chemical industry’s work programme for continuous improvement in health and safety, environment and quality. nynas has also endorsed the programme for sustainable development drawn up by the International Chamber of Commerce (ICC). a large part of the development work takes place in different industry organisa-tions that seek to develop better products, for example within ConCaWe, the european oil companies’ organisation for issues related to the environment, health and safety.

ships with two new vessels with long-term contracts for bitumen transportation, both with the highest safety classification.

RelevanceIn 2013 Nynas plans to establish a number of old and new Key Performance Indicators (KPIs)forsustainabilitywork.TheKPIsinvolvesustainability initiatives in the Environment, Management and Social subareas.The relevance and targets for the established KPIs will be revised regularly.

From an international perspective, Nynas has chosen to actively participate in CON-CAWE(ConservationofCleanAirandWaterinEurope), the European oil companies’ organisa-tion for health, environment and safety, which enables Nynas to pursue industry issues on a European basis.

nynas must always understand the customer’s business and needs while keeping up with both technological developments and changes in legislation.”

18


Nynas conducts activities that place great demands on continual investments and environmental initiatives in order to prevent or reduce emissions to air and water as far as possible, and to eliminate any risk of accident.

eNvIRONmeNT

productivity and to improve the environmental performance of the plant. Nynas was an early adopter of biofuels for its steam production, while other investments have involved sulphur recovery and water treatment. Major efforts have also been made to clean up historical contaminants from earlier processes.

Nynas’ current environmental permit for operations in Nynäshamn was activated in 2010, when the Group commissioned the new hydrogen plant.The partial ruling issued in 2009, which was part of the permit process, included 18 conditions and twelve probation conditions, five of which were to be reported by 2012 and four in 2014.

In 2012 the environmental court issued a new partial ruling based on the studies carried out by Nynas. The partial ruling addresses Nynas’ energy management at the plant. The ruling also requires reporting to the permit authority every three years regarding the con-tinued energy-saving measures the Group intends to take.

energy savingThe Group has undertaken to implement seven measures that collectively are expected to provide energy savings of six MW annu-ally in Nynäshamn. These measures include minimisingflaring(burning)offuelgas,animproved maintenance program for steam traps, improved heat integration in the distil-lation plant and implementation of an energy management system.

In autumn 2012, a new sulphur recovery unit was commissioned which, in addition to better performance, also provides higher reliability in production, greater capacity and an increased rate of recovery. The unit can be run in parallel with the existing older unit and they are also linked in a common newly installed tail gas unit that further increases the purification level. The expansion of the water treatment plant in Nynäshamn continued.The new parts of the plant, including a biofilter, will be commissioned in stages in 2012-2013.

Nynas runs three refineries under its own management – in Nynäshamn and Gothen-burg in Sweden, and in Dundee Scotland. The operations are required to hold permits and are subject to Swedish and Scottish environmental legislation.

As part of an environmental assessment before, for example, increasing production or building a new plant, an environmental impact statement must be prepared to describe what will be done and how the planned operations or measures will affect people and the environment. The description and an application are submitted in Sweden to the Land and Environment Court, which issues permits. After an inquiry to inter-ested parties for comment, the court takes a decision and announces the environmen-tal judgement or permit decision. In Dundee operations are similarly regulated by the Scottish Environment Protection Agency, which issues permits for operation and production. nynas

has established cooperation agreements with

other refineries. Because nynas doesn’t have

full insight into how the environmental work is

conducted at these refineries, the information

in the environment section is limited to plants

owned by nynas.

complex processThe complex and thorough permit process often takes several years to complete in practice. Interlocutory judgements regarding approved emissions levels, for example, or orders for con-tinued or new studies are therefore submitted on an ongoing basis.

Nynas’ permits cover production of bitumen, distillate and naphthenic specialty oils. Bitumen and distillate is produced at all Nynas refineries, while naphthenic specialty oils are produced at the Nynäshamn plant and in partner refineries around the world.

NynäshamnIn recent years Nynas has carried out major investments in Nynäshamn, both to increase

19


archaeaThe pilot tests that Nynas previously carried out regarding the bio-degradation of oil residues using bacteria and Archaea have been suc-cessful.The results have been reported to the permit authority. The Group is now waiting for a permit to use the method to restore the areasJ3/J4(acidsludgedepot)andP(sedimentin interception dam).

Nynas reported on its examination of the oleaginous sediments on the seabed outside the refinery to the Land and Environment Court in 2012. However, the planned expansion of the cargo port at Norviksudden in Nynäshamn will require more studies to further explore the effects, if any, of ship movements and propeller wash on the sediment.

gothenburgThe refinery in Gothenburg produces bitumen, special products containing bitumen and various types of distillate. The refinery is currently under-going extensive modifications aimed at improv-ing production capacity, mainly within upgraded bitumen products. Meanwhile, investigations are underway regarding possible measures to reduce energy consumption and emission levels.

Beginning at the end of 2011, new and more stringent interim conditions apply for the opera-tion, particularly concerning the level of contami-nation of the wastewater released from the plant. The partial ruling issued in 2010 contained a total of eight investigation provisions, six of which are now being investigated by Nynas.The investiga-tions included management of volatile organic compounds(VOCs)fromtheplant’scaverns,analyses of processed wastewater, improvements to the process water treatment plant, procedures for handling product leakage and the results of the ongoing energy efficiency initiatives.

All six studies were submitted to the Land and Environment Court in April 2012. Comments were received from the referral authorities and from the Environmental Court and as a result Nynas conducted additional analyses of the outgoing purified process water. Nynas must

also provide additional information and clari-fications regarding a number of questions that must be submitted to the Land and Environment Court by 29 March 2013.

environment permitA partial ruling from the spring of 2010 included the condition that the refinery should switch to using natural gas as fuel. An application to modify this condition was sent to the Land and Environment Court in July 2012. The applica-tion was approved in January 2013, thereby removing the requirements to use natural gas. Instead, Nynas now has a permit to use low-sulphurfuel(containingamaximumof0.05per cent sulphur), which provides the same low emissions of sulphur and nitrogen oxides as natural gas, but at a lower total cost.

An additional application for an environmental permit has been initiated. The permit is for man-agement of “leak water”, i.e. water that leaks into the caverns that Nynas uses to store crude oil. The application was submitted to the Land and Environment Court at the end of December 2012.

DundeeThe refinery in Dundee was founded back in 1931 and Nynas took over the operation in 1992. The plant mainly produces bitumen products for the Scottish market, as well as distillate, some of which are shipped to Nynäshamn for further refinement.

As in the Swedish plants, Nynas conducts continual systematic initiatives to achieve more environmentally sound and sustainable produc-tion. Such initiatives include investments in the production plant and in training employees.

The Dundee plant has a separate local policy forHSSE&Q(Health,Safety,Security,Environ-ment & Quality). The operation also has both localandGroup-wideKPIs(KeyperformanceIndicators) that are regularly followed up and revised. Nynas is working at the same time to restore the lands adversely affected by the activi-ties carried out by previous owners for decades before Nynas took over the plant.

Depots and emulsion plantsNynas operates several bitumen depots and emul-sion plants in Sweden. Although handling takes place in controlled systems, leakage may occur. Consequently, extensive safety and action plans are required. Nynas has its own depots in Holm-sund, Västerås, Kalmar and Söderhamn. Based on the volumes of bitumen handled, most of the depots have been assessed either as B-facilities, which require permits under the Swedish envi-ronmental code, or as C-facilities, which are only subject to a notification requirement.

Outside Sweden Nynas has bitumen or emul-sion plants in countries such as Denmark, Esto-nia, Norway and Poland. In most cases, Nynas is responsible for ensuring compliance with environ mental legislation also in these locations.

DepOTS aND emuLSION pLaNTS IN SWeDeNclassification Responsible organisation

DepotsHolmsund B nynasKalmar B nynasVästerås B nynasSöderhamn C nynasHärnösand C nynasSödertälje - third partyMalmö - third partynorrköping - third partyrya Waiting for new permit 2013 nynas

emulsion plantVästerås B nynaspiteå C nynas

nynas intervention programmes in nynäshamn will provide annual energy savings of 6 MW.

20


Nynas is actively engaged in preventive safety work. This initiative is a natural consequence of Nynas’ operations, in which crude oil, bitumen and advanced specialty oils are handled or produced every day, after which they are shipped by land, sea or rail to customers worldwide. If incorrectly handled, the substances and products Nynas works with can cause material injuries and pollution, while posing health risks to employees and nearby residents.

SafeTY

The ongoing improvement initiative is based on the Group-wide HSSE & Q Policy (Health, Safety, Security, Environment & Quality) adopted in 2010. The ultimate aim of the policy, combined with the “Observe-Think-Act” internal safety pro-gramme, establishment of networks and special newsletters, is to create a strong internal culture that prevents and elimi-nates risk factors.

Initiatives, targets and results are reported in KeyPerformanceIndicators(KPIs)suchasacci-dent rate for employees and subcontractors, amount of carbon emissions from operations, or number of incidents related to process safety and transportation.

For several years, the company has focused its efforts as much as possible on improving working methods concerning process safety; that is, preventing and stopping leaks, spills, fires and other incidents which can cause personal injury or environmental damage in various ways.

group priorityIn2012theProcessSafetyAccident(PSA)rate amounted to 3.1 accidents per million working hours, at par with the established targetof3.5,butstillhigherthan2011(1.6).To reduce the number of incidents, the Group continues to implement its overall framework for inspections, maintenance, work permits and risk analysis. Nynas is also working according to the OECD Corporate Governance for Process Safety Self-Assess-ment, which requires Nynas management to become increasingly involved in safety work and further underscores how HSSE issues affect the entire Group.

In production, the use of special KPIs with a focus on process safety will be ramped up, while a new network will be formed to focus on process safety education for all process engineers in the Group.

Safety is no accidentSince most injuries are the result of slipping and falls, Nynas is conducting an information and education campaign under the theme “Slips, trips and falls” to increase awareness of these particular injury risks.

Within the bitumen market area, a customer-focused project called “Safety is no accident” is in progress for safer loading and unload-ing at refineries, depots and the customers’ receiving sites.

In addition, all transport-related accidents and incidents must be reported and evaluated. More serious accidents must be reported within 24 hours, after which they are investigated by special internal investigators. Other accidents must be reported within 48 hours.

Nynas works consistently to increase the reporting rate with respect to various types of incidents, at the same time that use of internal investigators is improving. A simplified process for managing low-risk incidents was introduced during the year. The more incidents that are reported, the better the base for statistical analyses of injury risks, while opportunities for active efforts to prevent accidents increase.

Since most injuries are the result of slipping and falls, Nynas is conducting an information and education campaign under the theme “Slips, trips and falls” to increase awareness of these particular injury risks.

21


In 2012 the total number of reported injuries fell to 4.3 per million working hours (9.2). as a comparison it can be mentioned that the average rate for the european oil companies that belong to the cooperative organisation Concawe was 3.6 accidents in 2011. the reason that

nynas’ outcome is slightly higher is that the accident rate for contractors is still high. In 2012, 8.8 accidents per million working hours were reported (16.3). Improving safety for contractors has been and remains a priority.

Fewer injuries

During 2012 nynas total recordable Injuries (trI) rate decreased from 9.2 to 4.3 incidents per million working hours. Improved safety for own employees as well as cont-ractors continues to rate high on the priority list.

22


Nynas develops and manufactures products meeting stringent customer requirements. To be able to meet these requirements, Nynas must have motivated, well-educated employees, with great knowledge of the business and needs of our customers. The work that Nynas initiated to promote the company as an exciting and attractive workplace resulted in an improved position in an external survey conducted during the year on how young people view the group as an employer.

empLOYeeS

Nynas has a strong market orientation, which is also demonstrated in the three core values – Dedication, Cooperation and Proactivity – that govern Nynas’ work.The Group’s support functions work together with the business operations to achieve greater synergies and better resource utilisation in all areas.Common procedures and working methods applied in areas such as recruitment, compensation, skills development and management support are important tools for the future develop-ment of the Group.

The Group is active in an international industry and on the global market. Consequently, the Group has a long-term strategy to increase cultural and ethnic diversity among employees. The work also includes increasing diversity and the proportion of female employees in executive positions.

One way to achieve these objectives is to apply strategic recruitment methods from an international perspective and based on expertise and experience. The activities of

the management groups thus have a growing international component with directly report-ing managers at different levels. Job rotation, which provides Group employees with the opportunity to switch between different duties, activities and geographic placements, not only enhances skills, but also contributes towards increased diversity and understanding.

people DayDuring the year Nynas continued to carry out leadership development initiatives for current and newly appointed managers, to support them in their daily work and to clarify their managerial responsibilities. To ensure the avail-ability of specialists, a separate career path for specialists was implemented.

One important tool in the continuous develop ment work is the “People Day” concept, in which corporate management and business area management jointly review and iden-tify potential leaders, specialists and other employees in order to properly support them in their continued professional and leadership development.

Men 71% Women 29 %

RATIO MEN/WOMEN

empLOYeeS BY geOgRapHIc aRea

number of employees at year-end 2012 2011

Sweden 448 450

uK 188 186

rest of europe 138 139

uSa 19 19

rest of the world 88 77

Total 881 871

facts employeesDuring financial year 2012, more than 100 recruit-ment processes were carried out, including about 20 external recruitments.the increase mainly took place in the naphthenic specialty oils business area, as well as in production.

23


DeDIcaTIONMeans that everyone does their best in every situation. this entails taking responsibility towards customers, colleagues and society in general, and that we never compromise in terms of safety, health, the environment or quality.

nynas’ values

cOOpeRaTION Concerns our passion to cooperate and to perform tasks together. this is based on everyone trusting and supporting each other. this creates a corporate culture that encourages cross-border meetings, job rotation and training.

pROacTIvITYMeans thinking ahead and being open to creativity and new ideas. By continuously seeking new solutions and opportunities for our customers, and becoming involved in their needs, we can continue to be at the forefront of developments.

nynas is an international group with 49 per cent of employees outside Sweden, of wich 25 per cent are employed outside europe.

24


market demands, like societal demands and expectations regarding safety and environmental issues, are constantly changing. That is why every year Nynas invests extensively in research on the various properties of oils and bitumen, to further develop existing products and to develop new specialty oils and bitumen products.

ReSeaRcH aND DeveLOpmeNT

The work is mainly conducted in-house in its own laboratories, but Nynas also collaborates with Swedish and foreign universities and research institutions with varying focuses. Students, researchers and postgraduate students are tasked with writing theses, dissertations, or actively working on various projects.

The overall mission of research and develop-ment at Nynas is to analyse how changing market and regulatory requirements affect the customer and thus Nynas’ products and activities, now and in the future. Extensive technical knowledge and understanding of the customer’s business areas are essential. The ultimate goal is for Nynas to always stay one step ahead and have products ready to meet the different requirements when they come.

One example of Nynas’ ability to do just this is the emulsion technology that was patented in 1992. The technology makes it possible to produce asphalt in a better way that requires much less heat than normal before paving (coldmix).Today,manyyearslater,interestinthis technology is rapidly growing in response to demands from customers and authorities.

Basic researchNynas divides its research into basic research and applied research. In basic research, scien-tists are investigating areas such as the complex composition of oils at the molecular level to provide a basis for assessing health and envi-ronmental properties, or to evaluate how an oil or bitumen ages in an environment that simulates how it will be used.

In applied research, scientists are exploring the properties of various crude oils to evaluate whether and how these oils may benefit the Group and its customers.

Since the chemical composition of crude oils varies among different deposits, Nynas has to identify the crude oils, or mixtures of

different crude oils, that provide the desired product characteristics and the best return for the naphthenic specialty oils and bitumen product areas.

This work serves as the foundation for active and successful product development and also provides the cutting-edge expertise necessary to provide customers with top-quality tech-nical support. Practical tests and analyses are mainly carried out in the Nynäshamn laboratories.

close to customersThe applied research focuses on optimising the properties of the existing products in bitumen and naphthenic specialty oils – and on develop-ing new products for new applications. Here Nynas has access to a process laboratory, which includes a “mini-refinery” with several small-scale distillation and hydrotreatment plants in both pilot and microscale.

It is not uncommon to develop products in close cooperation with customers, who often request highly specific product features and quality levels.The technical expertise of our employees and their knowledge of both the business and customer needs are crucial for Nynas’ success.

Both the technical properties of the prod-uct and the environmental, health and safety (HSSE)aspectsareimportantparameterswhendeveloping new products.

ReacHThe Group is a member of CONCAWE, an industry organisation that jointly documents all products and product groups in compli-ancewith theEU’sREACH (Registration,Authorisation and Restriction of Chemicals) directive. Under this directive, all chemicals and substances used in the EU must be reg-istered, assessed for risk and authorised with the purpose of protecting human health and the environment.

nynas is dedicated to providing service and technical support to assist the customer in production and efforts to ensure high quality, which is appreciated by customers such as adtek in Malaysia.

25

nynaS ÅrSreDoVISnInG 2012

The development work Nynas has carried out involving naphthenic specialty oils has been successful on several fronts, both technologi-cally and in terms of HSSE. One example is the new transformer oils used to cool the advanced transformers included in the modern electricity grid; another is the naphthenic tyre oils, which are rapidly replacing the hazardous highly aro-maticoils(HAoils)previouslyusedinthetyreand rubber industry.

performanceIn bitumen, Nynas is working to improve prod-ucts that provide greater added value for the customer. Therefore Nynas is committed to creating different types of bitumen, essential for developing asphalt products with higher performance in terms of wear resistance, noise reduction, and improved recyclability. These properties, as well as those that make it possible to lay asphalt at lower temperatures, provide customers with great advantages, and they are also beneficial from the perspective of HSSE. For Nynas, products with a greater added value entail an opportunity to maintain the sales mar-gins in a bitumen market with weak demand.

Both the technical properties of the product and the environmental, health and safety (HSSe) aspects are important parameters when developing new products. nynas oils are included as a component in various types of glues and adhesives.

It is not uncommon to develop products in close cooperation with customers, who often request highly specific product features and quality levels. The technical expertise of our employees and their knowledge of both the business and customer needs are crucial for Nynas’ success. ”

26


as a consequence of the major and international operations of Nynas, the group is also exposed to financial risks. The Board of Directors is responsible for determining the group’s finance policy that includes guidelines, objectives and frameworks for Treasury and Risk management, within the group.

RISk maNagemeNT

Nynas Treasury and Risk Management has been 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 as part of its normal business activities, and to optimise the Group’s net financials.

Nynas Treasury and Risk Management sup-ports the subsidiaries with loans, placement opportunities and currency transactions. It also acts as adviser on financial issues. The function conducts internal banking activities and is located at the head office in Sweden. The internal bank also operates the company’s netting system and handles the Group’s cash management.

Nynas Treasury and Risk Management also conducts payment advisory services and handles the Group’s global credit insurance.

Nynas has the customary insurance pro-gramme for the Group’s property and liability risks. As a natural element of the Group’s dif-ferent activities, continuous damage-limitation measures are conducted. This work sets the standards for the required levels of protection, in order to limit the probability of major claims.

To support the management of risk exposure from volatility of oil prices, exchange and inter-est rates, the CEO has appointed a Hedging Committee.

The Group’s CFO chairs the committee, which also includes four other members with a good understanding of Nynas’ business model. The committee meets on a monthly basis, reviews and approves the measures proposed by Nynas Treasury and Risk Management.

The Hedging Committee’s responsibilities and authority are as follows:• Toanalyseandprotectagainstinterest-rate

and currency risks, as well as commodity price risks, in accordance with the Group’s financial policy as defined by the Board of Directors.

• TostayinformedaboutandmanageNynas’exposure to the financial risks, first and fore-most oil price fluctuations and currency expo-sure, in particular USD, GBP and EUR.

The reports on the following pages adhere to the reporting requirements laid down in IFRS (IFRS7andIAS39).

27


RISk eXPosuRe commeNT

liquidity and refinancing risk

liquidity and refinancing risk is the risk of difficulty in refinanc-ing mature loans, and the risk that payment obligations cannot be fulfilled as a consequence of insufficient liquidity.

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

at the turn of the year approximately 40 per cent (approximately 37) of the Group’s assets were financed with external loans, wherefore great importance is attached to minimising the financing risk associated with the Group’s borrowing. It is furthermore also sought to avoid dependence on individual financing sources, and to adopt a conserva-tive approach in the choice of counterparties on the placement of any surplus liquidity. to reduce this financing risk, most of nynas’ known credit requirement is covered by long-term credit facilities and loans. In november 2011, a new syndicated stand-by credit line for eur 750 million was agreed. the term of the credit facility is five years. the management closely monitors the forecasts for the Group’s net liabilities in order to monitor the liquidity risk and cov-enants, since nynas’ bitumen activities are highly subject to seasonal fluctuations and the working capital increases significantly during the summer months. the loan agreement includes financial terms, called Financial Covenants. the terms include the following key ratios, cash flow/interest payments, net debt/equity, net debt/working capital and adjusted equity. the third quarter 2012 one of the financial covenants were breached. nynas received a waiver until final agreement on re-financing was settled. effect on the refinancing per 31 January 2013, on the bond loans and the syndicated stand-by credit line re the inter-est rate amounts to approximately 1% unit compared to previous periods. During 2012 the international credit rating agency uC granted nynas highest rating on credit standing.

currency risk

Currency risk concerns the fluctu-ations in exchange rates that, in different ways, affect the result for the year, other comprehen-sive income, and the company’s competitiveness:•Theresultfortheyearisaffected when sales and purchas-ing are denominated in different currencies (transaction risk).•Theresultfortheyearisaffected when assets and liabili-ties are denominated in different currencies (conversion risk).•Theresultfortheyearisaffected when subsidiaries’ results denominated in differ-ent currencies are converted to Swedish kronor (conversion risk).•Othercomprehensiveincomeisaffected when subsidiaries’ net assets denominated in differ-ent currencies are converted to Swedish kronor (conversion risk).

nynas handles the currency risks occurring in accordance with the descriptions given in the follow-ing sections. there have been no changes in the handling of the currency risk compared to previous years.

2011 currency

Recog-nised

liabilities

pro-gramme

size

average remaining

credit term (years)

Bond issue uSD 719 719 2.9


Syndicated stand-by credit line eur 2,673 6,709 5.0

other bank loansMiscel-laneous 103 - -

Total borrowing 3,894 7,827 4.8

2012 profroma, remaining loan term after final agreement on refinancing 31 january 2013

2012 currency

Recog-nised

liabilities

pro-gramme

size

average remaining

credit term (years)



Syndicated stand-by credit line eur 2,944 6,462 4.0

other bank loansMiscel-laneous 30 - -

Total borrowing 4,010 7,499 3.8

28



currency risk:transaction risk

nynas’ transaction exposure, i.e. the Group’s net currency flows, amounted to SeK 4,852 million in 2012 (SeK 2,914 million).

Net flows in foreign currency, mSek nynas has significant foreign currency flows, primarily in uSD, eur 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.

currency risk:Conversion risk

the equity of nynas’ foreign subsidiaries must not normally entail any significant conversion risk as the objective is to bal-ance the subsidiary’s assets and liabilities in foreign currencies. the result of a foreign sub-sidiary is converted to Swed-ish 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 capital, are converted to Swedish kronor at the exchange rate on the bal-ance sheet date. on 31 December the Group’s net assets in subsidiaries denominated in foreign currency totalled SeK 1,425 million (SeK 1,185 million).

Net assets in foreign currency, mSek

The group’s borrowing by currency, mSek

In order to avoid conversion risk in the subsidiaries’ 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 deriva-tives, in order to minimise the conver-sion 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.

AUD

133173

291290

962840

11162

912890

370363

-5,819-7,648

148178

DKK EUR GBP NOK PLN USD Other

20112012

SEK

-1 569

-927

-1 322

-1 365

-679

-1 379

-298

-315

-26

-25

EUR GBPUSD Other

20112012

2012 2011

GBp 648 417

CHF 195 181

uSD 135 135

SGD 37 85

Brl 86 64

pln 51 64

DKK 23 32

noK 35 30

eeK 31 28

other 184 149

Total 1,425 1,185

29



currency risk:Currency sensitivity

In order to gain the full picture of how currency fluctuations af-fect 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 compre-hensive income has a currency exposure that relates to the size of the net assets. In addition to the net assets, other comprehen-sive income is affected by cur-rency 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 result for the year.

the most obvious exposure is the nordic bitumen winter-fill programme in order to cover the following year’s sales that mainly take place in the summer months. the value of the specific inventory varies with the oil price and 2012/2013 totalled approximately SeK 400 million. a currency fluctuation in the SeK/uSD rate by SeK 0.10 would therefore affect the result by approximately +/- SeK 4 million.

Forward foreign exchange contracts are used to hedge obvious currency exposure. nynas are not using hedge accounting.

interest rate risk

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 per cent change in interest rates.

the average borrowing during the year was approximately SeK 5,129 million (3,931). a 1 per cent change in interest rates would therefore change the pre-tax profit /loss by +/- SeK 51 million (39). at the close of the financial year borrowing totalled SeK 4,009.8 million (3,894.4). a 1 per cent change in interest rates would therefore change the pre-tax profit /loss by +/- SeK 40 million (39).

fixed interest rates and fixed interest periods, Sek million.

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 portfolio must lie between 6 and 36 months. as the table shows, the average fixed interest period for nynas borrow-ing’ was 13 months (18) at the close of the financial year, taking due account of the derivatives used. the Group’s average interest rate, including other loans and the effects of interest rate swap agree-ments, was 3.6 per cent (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 issues are hedged with currency interest rate swaps, which are classified as fair value and cash flow hedges. this entails that changes in the fair value of the derivative are recognised in the result for the year, and that the loan is recognised at fair value, while any changes in the fair value of the loan are also recognised in the result for the year. the derivatives that are cash flow hedges are subject to terms that exactly 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 the result for the year.

2012

excluding effects of

deriva-tives

effective interrest

rate, %

fixed interest period, months

Including effects of

deriva-tives

effective interest rate, %

fixed interest period,

months*

Recog- nised

liabilities

Bond issue 6.2 20 2.3 1 666

Bond issue 6.2 41 4.0 42 370

Syndicated stand-by credit line 3.2 3 3,2 3 2,944

other bank loans 5.6 - 5.6 - 30

Interest rate swaps - - 1.9 11 -

Total borrowing 4.0 7 3.6 13 4,010

2011

excluding effects of

deriva-tives

effective interrest

rate, %

fixed interest period, months

IIncluding effects of

deriva-tives

effective interest rate, %

fixed interest period, month*

Recog- nised

liabilities

Bond issue 6.1 31 3.3 1 719

Bond issue 6.2 51 4 53 399

Syndicated stand-by credit line 4.1 3 4.1 3 2,673

other bank loans 2.5 - 2.5 - 103

Interest rate swaps - - 2.5 16 -

Total borrowing 4.6 12 3.8 18 3,894

* Information on fixed interest period based on refinancing that was agreed on 31 January 2013.

30



credit risk

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:•Financialcreditrisk•Creditriskinaccountsreceivable

Total credit risk – financial intruments 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 expo-sure to the financial sector is limited to the non-realised positive result occurring in derivative contracts. at the close of the financial year the value of these contracts totalled SeK 46 million (89). Via its ongoing sales nynas is exposed to credit risk in outstanding accounts receivable. 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 per cent 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 1,382.0 million (1,721.6). these were written down by a total of SeK -14 million (-8). age analyses of accounts receivable as of 31 December are presented in note 18.

commodity price risk

nynas’ financial and opera-tive risks on commodities are mainly concentrated on crude oil delivery, crude oil price, fixed-price agreements and electricity. the price risk on these is partly hedged by taking out financial contracts. the oil price fluctuated during the year from an initial Brent price of uSD 110/bbl, its highest listing in april at uSD 120/bbl, its lowest listing in May at 88 uSD/bbl and a closing price of uSD 109/bbl at year-end.

the commodity’s price risk is set off 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.

Inventory volume, ktonnes per month 2012

around 70 per cent of the Group’s commodity and product requirement is imported from the Venezuelan state oil company petroleos de Venezuela (pDVSa). pDVSa has been a half-owner of nynas since 1986, although the business relationship between the companies dates back to the late 1920s. the existing crude oil agreement was renegotiated during 2011 and runs for five years. the cooperation is assessed to be stable, but work is ongoing to increase the flex-ibility of supply of raw material. other important suppliers of raw material and products are Chevron, Valero and neste oil. Inventory of oil products totalled 611 ktonnes at the close of the financial year (719 ktonnes). a uSD 20/tonne price change would thus affect the profit /loss by approximately +/- SeK 80 million. In order to reduce obvious price exposure, for example crude oil purchased during the winter with low stock turnover rate, oil price swaps are used, which are not classified as hedge accounting and totalled 10 ktonnes at the close of the year, with a market value of SeK -43 million. nynas also concludes fixed price contracts with customers. these fixed price contracts are hedged with oil price swaps and are classified 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 the turn of the year the hedging totalled 85 ktonnes and the market value of the derivative contracts was SeK 291 million.

1 2 3 4 5 6 7 8 9 10 11 120

500

1,000

1,500

1 2 3 4 5 6 7 8 9 10 11 120

1,000

2,000

3,000

4,000

5,000

mSek 2012 2011

accounts receivable 1,382.0 1,721.6

Cash and cash equivalents 738.9 249.6

non-realised gains on derivates 45.7 89.4

Total 2,166.6 2,060.6

Inventory value, MSeK per month 2012

31


cORpORaTe gOveRNaNce

governance structure of Nynas aB:

BUSINESS AREAS/FUNCTIONS

SHAREHOLDERSvia the

ANNUAL 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.

AUDIT COMMITTEEMonitors the

Company’s financial accounting and

reporting. Reviews the internal control system.

BOARD OF DIRECTORSConsiders and adopts decisions

on overall issues concerning the Group and oversees the

work of the CEO.

CEOManages the Company on

the basis of the internal and external corporate

governance instruments.

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 the Board of Directors

• Finance policy• HSSE&Q policy

AUDITORAudits the Company’s Annual Report, book-keeping, management and internal controls.

INCENTIVE COMPENSATION COMMITTEE

Monitors the terms of compensation and employ-ment of the CEO and senior

executives. Reviews proposed major personnel and

organisational changes.

PROJECT REVIEW COMMITTEE

Prepares decisions of the Board of Directors concerning major strategic and structural

projects and thereafter monitors the implementation

and achieved results of the projects.

32


ShareholdersNynas 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 per cent 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 67.5 million and the listed value is SEK 1,000 per share. One share gives entitlement to one vote at annual and extraordinary generel 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 imme-diately be offered to shareholders for redemption by written notice to the Company’s Board of Directors. In the same way, the shareholders’ agreement stipulates that each shareholder 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 auditors and decides their remuneration. The Annual General Meeting also adopts the resolutions to approve the

Income Statement and Statement of Financial Position, the distribu-tion 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 DirectorsThe Board of Directors shall consist of four to eight ordinary members, and two employee representatives. 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 management of the activi-ties 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 wich 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 ongoing follow-up of the activities during the year. It is the responsibility of the Board of Directors to ensure 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 2012, five Board meetings were held. In addition to approval of budgets and major investments, the work in 2012 focused on structure and financing 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 Project Review Committee and the Incentive Compensa-tion Committee.

•TheobjectiveoftheAuditCommitteeistorepresenttheBoardofDirectors 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 informed of the audit of the Annual Report and the Consolidated Annual Report, review and monitor the impartiality and independence of the audi-tors, 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 moni-toring 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 reported to the Board of Directors on an ongoing basis. In 2012 three meetings were held.

•TheobjectiveoftheIncentiveCompensationCommitteeistorepresentthe Board of Directors in matters concerning the terms of compensation and employment of the CEO, and the executives reporting directly to the CEO, on the basis of the principles adopted by the Annual Gen-eral Meeting and the policies adopted. The Committee also reviews proposed major personnel or organisational changes. The Incentive Compensation Committee must report on its work to the Board of Directors on an ongoing basis. In 2012 two meetings were held.

33


•TheobjectiveoftheProjectReviewCommitteeistoreviewproposalsfrom the Company’s management concerning major strategic and structural projects. The Committee also follows up and approves the implementation 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 2012 four meetings were held.

auditorsExternal auditorAt the 2012 Annual General Meeting the authorised public accounting firm Ernst & Young AB was elected as the Company’s external auditor up to and including 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 State-ments 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 astheInternationalFinancialReportingStandards(IFRS).

The audit is furthermore reported on an ongoing basis in the course of the year to the Board of respective company and to the CEO and Execu-tive Committe of the Group. See note 7 concerning the remuneration paid to the auditors.

ceO and group executive committeeThe 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 define 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 ongoing basis.

The CEO is assisted by a Group Executive Committee that consists of the executives responsible for the business areas and staff functions. Nynas’ activities are structured as four business areas. 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 Committe and adopts decisions in consultation with the other executives. At the close of 2012 there were nine members of the Group Executive

Committe. The Group Executive Committe meets on a monthly basis to consider the Group’s financial development, joint Group develop-ment projects, management and competence provision, and other strategic issues.

Risk managementRisk Management 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 five other members with a sound knowledge and understanding of Nynas’ business model.

external corporate governance instrumentsThe external corporate governance instruments that determine the framework for Nynas’ corporate governance consist of the Swedish Companies Act, Annual Accounts Act and other relevant acts. The Swed-ish 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. Sound corporate governance is fundamental to Nynas, and the objective is to ensure sound and adequate corporate governance of the Company.

Internal corporate governance instrumentsThe binding internal corporate governance instruments are the Articles of Association adopted by the Annual General Meeting and the Work-ing procedures 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 committees nominated by Nynas’ Board of

Directors, as well as the finance policy. In addition to these corporate governance instruments there is also

an internal management system that includes a number of policies and binding rules stating guidelines and instructions for the Group’s activi-ties and employees.

These include regulations for compliance with competition legislation, policies that prohibit bribery and other corruption, and operative manuals that lay down accounting and reporting regulations.

In addition to the overall policies, key working processes and instruc-tions are also defined.

34


Reporting structureNynas’ financial reporting system provides information 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 accu-mulated 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 ongoing basis throughout the year updated forecasts of the result for the full year are prepared.

The reporting includes Income Statements and Statements of Financial Position, cash flow reports, sales statistics, key ratios and appropriate KPIs.

The Group publishes an Annual Report in accordance with both Swed-ish legislation and the IFRS standards.

PRODUCT AREAS

BUSINESS AREAS

FUNCTIONS

BITUMENSUPPORTFUNCTIONS

Bitumen Continental

Manufacturing

Finance

Bitumen Marketing

Business Development

Total QualityManagement

Human Resources

Communication

Bitumen Business Development

SupplyChain

Bitumen

Bitumen Nordic

Bitumen UK Naphthenics

Naphthenics

35


BOaRD Of DIRecTORS

eulogio Del pino, born 1956Vice president, exploration and production pDVSaelected in 2012, Chairman of the Board of Directors since 2012nationalitet: Venezuelan

tuomas Hyyryläinen, born 1977Senior Vice president Strategy, neste oilelected in 2012nationality: Finnish

roland Bergvik, born 1967employee representativeappointed in 2010nationality: Swedish

Matti lievonen, born 1958president and Ceo, neste oilelected in 2009, Vice Chairman of the Board of Directors since 2012nationality: Finnish

alfredo Calderon, born 1959General Manager International Commerce, pDVSaelected in 2012nationality: Venezuelan

antonio Suarez torres, f. 1955Independent oil & energy professionalelected in 2012nationality: Spanish

John launiainen, born 1954Director portfolio Development, neste oilelected in 2011nationality: Finnish

ygor Martinez, born 1962General Manager, pDV europeelected in 2012nationality: Venezuelan

auditorJan Birgersson, born 1954. authorised public accountantauditor in charge of the nynas Group since 2008Ceo, ernst & young aB since 2008present and previous customer assignments include Svensk exportkredit, aBB, Investor, Siemens, adecco Group (Switzerland), Kinnevik, nynas, Scania, tetra laval and trygg-Hansa

pia ovrin, born. 1966employee representativeappointed in 2013nationality: Swedish

36


gROup execuTIve cOmmITTe

Staffan lennström, born 1950president and Ceoeducation: Msc, applied physics, MBa previous experience: executive Vice president Borealis. Managing Director north Sea petrochemicals. Marketing Director Statoil petrokemi. production Manager esso petrochemicals.employed since: 2005In current position: 2005nationality: Swedish

Martin Carlson, born 1950Director Business Development education: MSc Chemistryprevious experience: process engineer laboratory Manager. project Director nynäshamn nSp2. technical Director and refining Director, Bitumen Supply and technical.employed since:1975In current position: 2007nationality: Swedish

per Dahlstedt, born 1959Vice president naphthenicseducation: MSc Industrial engineering and Managementprevious experience: Supply Chain Director naphthenics. Business Develop ment Director naphthenics. Sales Director naphthenics, outside europe.employed since: 1985In current position: 2006nationality: Swedish

rolf allgulander, born 1962Vice president Manufacturingeducation: MSc Chemistry, MBaprevious experience:Site Manager Borealis Kallo. Cracker Manager Borealis portugal. production Manager Borealis Stenungsund.employed since:2007In current position: 2007nationality: Swedish

russell Childs, born 1954Vice president Bitumeneducation: university studies Financeprevious experience: Vice president-Bitumen Continental & uK. Ceo nynas uK aB. Vice president, Supply Chain and planning. CFo nynas uK aB. Financial accountant, tarmac roadstone Holdnings.employed since: 1992In current position: 2008nationality: British

Simon Day, born 1967Director Supply Chaineducation: MSc Chemistry, MBaprevious experience: Ceo, nynas uS Inc. Head of Marketing electrical Industry naphthenics. Head of Business Develop ment and planing naphthenics. Head of planing, estham, nynas Bitumen uK. refinery engineer, Stanlow refinery, Shell uKemployed since:1996 In current position: 2006nationality: British

ewa Beskow, born 1957Director Human resourceseducation: MSc metallurgyprevious 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: 2006In current position: 2006nationality: Swedish

Dan Daggenfelt, born 1956CFoeducation: MSc Industrial engineering and Managementprevious experience: Vice president-Bitumen nordic, nynas aB. Various positions in nynas within Controlling, Supply Chain and Sales..employed since: 1983In current position: 2008nationality: Swedish

Hans Östlin, born 1961Director Communicationeducation: Berghs School of Communication. IHM Business School.previous experience: Various positions in marketing and communications at Itt Flygt and nynas. Senior consultant at rita platzer pr.employed since: 2006In current position: 2006nationality: Swedish

37

NyNas aNNual RepoRt 2012

MULTI-YEAR OVERVIEW

(SEK millions) 2012 2011 2010 2009 2008

INCOME STATEMENT AND STATEMENT OFCOMPREHENSIVE INCOME

Net sales 24,471 23,223 20,579 20,150 23,307

Operating expenses -23,886 -22,354 -19,602 -19,159 -22,354

Depreciation -338 -309 -306 -271 -271

Share of profit/loss of joint ventures -10 26 10 91 -21

OPERATING RESULT 237 586 681 811 661

Net financial items -289 -132 -71 -158 -185

PROFIT BEFORE TAX -52 454 610 653 477

Tax 18 -141 -189 -178 -122

PROFIT FOR THE YEAR -34 313 421 474 355

STATEMENT OF FINANCIAL POSITION

Fixed assets 3,833 3,899 3,297 3,167 2,820

Inventories 3,426 4,060 3,622 3,330 3,173

Current receivables 2,042 2,507 1,751 1,858 2,761

Cash & cash equivalents and short-term investments 739 250 243 269 323

ASSETS 10,040 10,716 8,913 8,625 9,077

Equity 3,652 3,724 3,438 3,042 2,907

Long-term interest-bearing liabilities 63 3,840 2,335 2,232 2,310

Long-term non-interest-bearing liabilities 647 735 801 767 613

Current interest-bearing liabilities 4,010 102 256 106 1,412

Current non-interest-bearing liabilities 1,669 2,315 2,084 2,479 1,835

EQUITY AND LIABILITIES 10,040 10,716 8,913 8,625 9,077

STATEMENT OF CASH FLOWS

Cash flow from operating activities 322 535 708 954 627

Changes in working capital 376 -989 -490 1,454 -1,575

CASH FLOW FROM OPERATING ACTIVITIES 698 -454 218 2,408 -948

Cash flow from investing activities -344 -889 -540 -724 -488

CASH FLOW AFTER INVESTING ACTIVITIES 353 -1,343 -322 1,684 -1,436

Proceeds from borrowings, repayment of borrowings 136 1,368 278 -1,375 1,886

Dividend 0 0 0 -363 -371

CHANGE IN CASH & CASH EQUIVALENTS 489 25 -44 -54 79

CASH & CASH EQUIVALENTS AT END OF YEAR 739 250 225 269 323

KEY FINANCIAL RATIOS

NET SALES 24,471 23,223 20,579 20,150 23,307

of which outside Sweden, % 89 90 89 91 89

RETURN ON CAPITAL EMPLOYED, % 3 8 11 12 12

RETURN ON EQUITY, % -6 9 14 14 12

EQUITY/ASSETS RATIO, % 36 35 39 35 32

INTEREST COVERAGE RATIO, times 0.8 3.6 6.1 6.1 2.8

INVESTMENTS 477 907 522 727 493

CURRENT RATIO 1.1 2.8 2.4 2.1 2.0

DEBT/EQUITY RATIO, times 0.9 1.0 0.7 0.7 1.2

38


GROUP INCOME STATEMENT AND STATEMENT OF COMPREHENSIVE INCOME

GROUP

(SEK millions) Note 2012 2011

INCOME STATEMENT

Net sales 2 24,470.8 23,222.7

Cost of sales 3 -21,674.8 -20,109.5

GROSS RESULT 2,796.1 3,113.3

Other income and value changes 3 7.7 14.5

Distribution costs 3 -2,476.9 -2,385.4

Administrative expenses 3 -253.7 -261.5

Share of profit/loss of joint ventures 15 -9.5 26.1

Other operating income 4 713.2 503.1

Other operating expenses 4 -540.2 -424.3

OPERATING RESULT 2,3,4,5,6,7,8 236.6 585.8

Finance income 9 99.6 44.0

Finance costs 9 -388.1 -176.5

NET FINANCIAL ITEMS -288.5 -132.5

PROFIT BEFORE TAX -51.9 453.3

Tax 10 17.6 -140.8

PROFIT FOR THE YEAR -34.3 312.5

STATEMENT OF COMPREHENSIVE INCOME

Profit for the year -34.3 312.5

Other comprehensive income:

Translation differences -46.4 -7.6

Currency hedges 27.3 -1.5

Income tax associated with currency hedges -7.2 0.4

Cash flow hedges -10.0 -11.5

Income tax associated with cash flow hedges -1.0 -6.3

Other Comprehensive Income for the year, net after tax -37.4 -26.5

COMPREHENSIVE INCOME -71.7 286.0

Attributable to owners of the Parent -71.7 286.0

EARNINGS PER SHAREThe calculation of earnings per share is based on profit attributable to equity-holders of the Parent Company. The average number of shares in 2012 and 2011 was 67,532.

2012 2011

Profit for the year

Number of shares Per share

Profit for the year


Earnings per share -34.3 67,532 -508 312.5 67,532 4,628

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.

39



GROUP

(SEK millions) Note 2012-12-31 2011-12-31

ASSETS

FIXED ASSETS

INTANGIBLE ASSETS

Goodwill 12 8.1 8.1

Supply contracts/customer lists 12 3.7 9.3

Computer software 12 81.1 106.2

TOTAL INTANGIBLE ASSETS 92.9 123.7

TANGIBLE ASSETS

Land and buildings 13 276.0 257.0

Plant and machinery 13 2,215.2 2,093.8

Equipment 13 124.5 132.5

Construction in progress 13 908.6 865.4

TOTAL TANGIBLE ASSETS 3,524.3 3,348.7

FINANCIAL ASSETS

Investments in associates 15 76.4 224.3

Derivative instruments 26 , 27 - 61.3

Other long-term receivables 16 19.1 36.4

Deferred tax assets 10 120.4 104.6

TOTAL FINANCIAL ASSETS 215.9 426.6

TOTAL FIXED ASSETS 3,833.1 3,898.9

CURRENT ASSETS

Inventories 17 3,426.1 4,059.7

Accounts receivable 18, 26 1,382.0 1,721.6

Receivables from joint ventures 29 0.5 -

Derivative instruments 26 , 27 45.7 28.1

Tax receivables 96.5 159.4

Other current receivables 26 282.8 332.7

Prepayments and accrued income 19, 26 234.5 265.5

Cash and cash equivalents 20, 26 738.9 249.6

TOTAL CURRENT ASSETS 6,207.0 6,816.6

TOTAL ASSETS 10,040.1 10,715.5

40



GROUP


EQUITY AND LIABILITIES

EQUITY, GROUP

Share capital 67.5 67.5

Reserves -90.2 -52.8

Retained earnings, incl. profit for the year 3,674.8 3,709.1

TOTAL EQUITY 21 3,652.1 3,723.7

LONG-TERM LIABILITIES

INTErEST-BEArING LIABILITIES

Liabilities to credit institutions 24, 26 - 3,792.0

Provisions for pensions 22 62.5 47.9

TOTAL LONG-TERM INTEREST-BEARING LIABILITIES 62.5 3,839.9

NON-INTErEST-BEArING LIABILITIES

Other long-term liabilities 20.7 19.1

Derivative instruments 26 , 27 58.0 20.4

Deferred tax liability 10 301.2 450.9


Other provisions 23 250.1 241.1

TOTAL LONG-TERM NON-INTEREST-BEARING LIABILITIES 638.5 734.9

TOTAL LONG-TERM LIABILITIES 701.1 4,574.8

CURRENT LIABILITIES

INTErEST-BEArING LIABILITIES

Liabilities to credit institutions 24, 26 4,009.8 102.4

TOTAL CURRENT INTEREST-BEARING LIABILITIES 4,009.8 102.4


Accounts payable 26 377.0 666.2

Liabilities to joint ventures 29 167.0 119.5

Derivative instruments 26, 27 39.6 38.5

Tax liabilities 123.3 85.5

Other current liabilities 26 147.4 105.0

Accrued liabilities and deferred income 25, 26 814.6 1,275.8


TOTAL CURRENT NON-INTEREST-BEARING LIABILITIES 1,677.2 2,314.6

TOTAL CURRENT LIABILITIES 5,687.0 2,416.9

TOTAL EQUITY AND LIABILITIES 10,040.1 10,715.5

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

41


STATEMENT OF CHANGES IN EQUITY

GROUP

ShareCapital

Cash flowHedges

CurrencyHedges

Translation Reserve

Retained Earnings

TotalEquity

EQUITY AT 01.01.11 67.5 -10.1 7.2 -23.4 3,396.6 3,437.8

Profit for the year - - - - 312.5 312.5

Other comprehensive income - -17.8 -1.1 -7.6 - -26.5

COMPREHENSIVE INCOME -17.8 -1.1 -7.6 312.5 286.0

CLOSING EQUITY AT 31.12.11 67.5 -27.9 6.1 -31.0 3,709.1 3,723.7

Profit for the year - - - - -34.3 -34.3

Other comprehensive income - -11.1 20.1 -46.4 - -37.4

COMPREHENSIVE INCOME - -11.1 20.1 -46.4 -34.3 -71.7

Dividend paid - - - - - -

CLOSING EQUITY AT 31.12.12 67.5 -39.0 26.2 -77.4 3,674.8 3,652.1

42


CASH FLOW STATEMENT

GROUP

(SEK millions) Not 2012 2011

OPERATING ACTIVITIES

Profit after financial items -51.9 453.3

Reversal of non-cash items 30 429.2 263.5

Taxes paid -55.7 -182.1

CASH FLOW FROM OPERATING ACTIVITIES BEFORE CHANGES IN WORKING CAPITAL 321.7 534.7

WORKING CAPITAL

Operating receivables (increase -) 439.1 -746.7

Inventories (increase -) 573.1 -443.2

Operating liabilities (increase +) -636.2 200.8

CHANGES IN WORKING CAPITAL 376.0 -989.1

CASH FLOW FROM OPERATING ACTIVITIES BEFORE 697.6 -454.4

INVESTING ACTIVITIES

Acquisition of intangible assets -7.7 -39.3

Acquisition of tangible fixed assets -469.3 -867.6

Investment in financial assets -0.1 -0.5

Disposal/reduction of financial assets 132.6 18.8

CASH FLOW FROM INVESTING ACTIVITIES -344.4 -888.7

FINANCING ACTIVITIES

Proceeds from borrowings 156.7 1,361.5

Repayment of borrowings - -

Dividend paid - -

CASH FLOW FROM FINANCING ACTIVITIES 156.7 1,361.5

CASH FLOW FOR THE YEAR 510.0 18.5

CASH & CASH EQUIVALENTS AT BEGINNING OF YEAR 249.6 225.1

Exchange differences -20.7 6.0

CASH & CASH EQUIVALENTS AT END OF YEAR 20 738.8 249.6

NOTES TO THE CASH FLOW STATEMENTThe Group received interest of SEK 99.6 (44.0) million and paid interest of SEK 291.1 (168.0) million during the year.

43


INCOME STATEMENT AND STATEMENT OFCOMPREHENSIVE INCOME

PARENT COMPANY

(SEK millions) Note 2012 2011

INCOME STATEMENT

Net sales 32 17,548.7 17,132.9

Cost of sales 33 -16,330.0 -15,856.0

GROSS RESULT 1,218.7 1,277.0

Other income and value changes 33 7.7 14.5

Distribution costs 33 -1,275.9 -1,230.6

Administrative expenses 33 -149.7 -169.4

Other operating income 34 604.6 436.2

Other operating expenses 34 -426.8 -353.2

OPERATING RESULT 32,33,34,35,36,37,38 -21.4 -25.6

Finance income 39 364.7 194.9

Finance costs 39 -458.0 -174.0

NET FINANCIAL ITEMS -93.2 20.9

PROFIT/LOSS AFTER FINANCIAL ITEMS -114.6 -4.7

Appropriations 40 267.7 83.1

PROFIT BEFORE TAX 153.1 78.4

Tax 41 -11.4 9.5

PROFIT FOR THE YEAR 141.7 87.9

STATEMENT OF COMPREHENSIVE INCOME

Profit for the year 141.7 87.9

Other comprehensive income:

Cash flow hedges -10.0 -11.5

Income tax associated with cash flow hedges -1.0 -6.4

Other Comprehensive Income for the year, net after tax -11.1 -17.8

COMPREHENSIVE INCOME 130.6 70.1

44


BALANCE SHEET

PARENT COMPANY


ASSETS

FIXED ASSETS

INTANGIBLE ASSETS

Computer software 42 80.7 105.7

TOTAL INTANGIBLE ASSETS 80.7 105.7

TANGIBLE ASSETS

Land and buildings 43 207.4 182.2

Plant and machinery 43 2,094.1 1,959.7

Equipment 43 89.9 91.2

Construction in progress 43 895.5 856.0

TOTAL TANGIBLE ASSETS 3,287.0 3,089.1

FINANCIAL ASSETS

Investments in Group companies 44 920.1 920.0

Derivative instruments 27, 55 - 61.3

Other long-term receivables 45 0.0 0.0

Deferred tax assets 41 40.5 45.5

TOTAL FINANCIAL ASSETS 960.7 1,026.8

TOTAL FIXED ASSETS 4,328.3 4,221.6

CURRENT ASSETS

INVENTOrIES 46 2,438.6 2,538.6

CUrrENT rECEIVABLES

Accounts receivable 47, 55 523.5 586.5

Receivables from Group companies 55 964.7 1,523.8


Tax receivables 56.1 106.9

Other current receivables 55 87.2 178.9

Prepayments and accrued income 48, 55 162.0 122.7

TOTAL CURRENT RECEIVABLES 1,839.2 2,547.0

CASH & CASH EQUIVALENTS 49, 55 631.8 510.4

TOTAL CURRENT ASSETS 4,909.6 5,596.0

TOTAL ASSETS 9,237.9 9,817.6

45


PARENT COMPANY


EQUITY AND LIABILITIES

EQUITYShare capital 67.6 67.5

Statutory reserve 96.0 96.0

TOTAL RESTRICTED EQUITY 163.7 163.6

Retained earnings 1,258.5 1,181.6

Profit for the year 141.7 87.9

TOTAL UNRESTRICTED EQUITY 1,400.2 1,269.5

TOTAL EQUITY 50 1,563.8 1,433.1

UNTAXED RESERVES 40 1,304.1 1,571.8

LONG-TERM LIABILITIESINTErEST-BEArING LIABILITIES

Liabilities to credit institutions 53, 55 - 3,791.5

Liabilities to Group companies 0.2 0.2


136.0 3,920.8


Other long-term liabilities 20.4 18.8


Provisions for deferred taxes 41 3.7 0.7


TOTAL LONG-TERM NON-INTEREST-BEARING LIABILITIES 324.3 268.7

TOTAL LONG-TERM LIABILITIES 460.3 4,189.5

CURRENT LIABILITIESINTErEST-BEArING LIABILITIES

Liabilities to credit institutions 53, 55 3,986.2 79.8

Liabilities to Group companies 866.7 732.1

TOTAL CURRENT INTEREST-BEARING LIABILITIES 4,852.9 811.9


Accounts payable 55 200.4 396.7

Liabilities to joint ventures 29 - 3.3

Liabilities to Group companies 55 103.0 214.3


Tax liabilities 12.6 15.1

Other current liabilities 55 27.8 13.1

Accrued liabilities and deferred income 54, 55 665.2 1,106.5


TOTAL CURRENT NON-INTEREST-BEARING LIABILITIES 1,056.8 1,811.4

TOTAL CURRENT LIABILITIES 5,909.7 2,623.2

TOTAL EQUITY AND LIABILITIES 9,237.9 9,817.6

MEMORANDUM ITEMS

Pledged assets 56 75.0 75.0

Contingent liabilities 56 59.7 157.9

46


STATEMENT OF CHANGES IN EQUITY

PARENT COMPANY

ShareCapital

Cash flowHedges

Retained Earnings

TotalEquity

EQUITY AT 01.01.11 67.5 29.1 1,266.5 1,363.1

Profit for the year - - 87.9 87.9

Other comprehensive income - -17.8 - -17.8

COMPREHENSIVE INCOME -17.8 87.9 70.1

Group contribution 0.0

CLOSING EQUITY AT 31.12.11 67.5 11.3 1,354.4 1,433.3

Profit for the year - - 141.7 141.7

Other comprehensive income - -11.1 - -11.1

COMPREHENSIVE INCOME - -11.1 141.7 130.6

CLOSING EQUITY AT 31.12.12 67.5 0.2 1,496.1 1,563.8

Share capital at 31 Dec 2012 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 2012.

47


STATEMENT OF CASH FLOW

PARENT COMPANY

(SEK millions) Not 2012 2011

OPERATING ACTIVITIES

Profit after financial items -114.6 -4.7

Reversal of non-cash items 58 285.2 220.0

Taxes paid 48.4 -50.9

CASH FLOW FROM OPERATING ACTIVITIES BEFORE CHANGES IN WORKING CAPITAL 219.0 164.3

WORKING CAPITAL

Operating receivables (decrease +) 710.9 -641.7

Inventories (increase -) 100.0 1.6

Operating liabilities (increase +) -755.7 148.6

CHANGES IN WORKING CAPITAL 55.3 -491.6

CASH FLOW FROM OPERATING ACTIVITIES BEFORE 274.3 -327.3

INVESTING ACTIVITIES

Acquisition of intangible assets -7.7 -39.3

Acquisition of tangible fixed assets -446.5 -844.0

Investment in financial assets - -0.1

Disposal/reduction of financial assets - 1.3

CASH FLOW FROM INVESTING ACTIVITIES -454.1 -882.0

FINANCING ACTIVITIES

Proceeds from borrowings 312.4 1,253.3

CASH FLOW FROM FINANCING ACTIVITIES 312.4 1,253.3

CASH FLOW FOR THE YEAR 132.6 44.0

CASH & CASH EQUIVALENTS AT BEGINNING OF YEAR 510.4 454.0


CASH & CASH EQUIVALENTS AT END OF YEAR 49 631.8 510.4

NOTES TO THE CASH FLOW STATEMENTThe Parent Company received dividends of SEK 261.1 million and interest income of SEK 103.6 (60.0) million, while interest expenses amounted to SEK 330.1 million (164.8).

48


SIGNIFICANT ACCOUNTING POLICIES 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 registered office is in Stockholm. The address of the Head Office is Lindetorpsvägen 7, SE-121 63 Johanneshov.

Nynas AB is 49.999 per cent owned by Neste Oil AB, reg. no. 556232-3906, registered office Stockholm, Sweden, and 50.001 per cent 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 financial statements were approved for issue by the Board on 29 April 2013. 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 meeting to be held on 29 April 2013.

Basis of preparationThe financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) and interpretations issued by the Interna-tional Financial Reporting Interpretations Committee (IFRIC) as adopted by the EU. In addition, 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 Company and the Group. Consequently, the financial statements are presented in Swedish kronor. All amounts are stated in SEK mil-lions 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 liabili-ties 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 manage-ment to make critical judgments, accounting estimates and assumptions which affect the application 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 application 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 Significant 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.

New or amended IASB standards and IFRIC interpretations which came into effect in 2012 are presented below.IFRS 7 Financial instruments: Disclosures – amendment. The amendment requires additional quantitative and qualitative disclosures when derecognising financial instruments in the balance sheet.

IAS 12 Income Taxes – amendment. Calculation of deferred tax on investment properties carried at fair value will be based on tax effects at sale.

The application of these standards and interpretations has not had any effect on the Group’s financial statements.

ACCOUNTING POLICIES

The accounting policies and calculation methods are therefore unchanged from those applied in the preparation of the 2012 financial statements, except where described below.

New and amended standards and interpretations that are expected to have an effect on the group’s financial statements but are not yet effectiveNo new or interpretations have been applied early.

IFRS 7 Financial instruments: Disclosures – amendment. Amendment intro-duces new disclosure requirements for offsetting financial assets and financial liabilities. The amendments become effective 1 January 2013 and will also apply to interim reports

IFRS 9 Financial instruments: Classification and measurement of financial li-abilities. IFRS 9 Intended to replace IAS 39 and to date subprojects on recognition and measurement of financial assets and financial liabilities have been published.The standard has not yet been adopted by the EU and the timetable for adoption is not currently available. IFRS 9 will be effective at the earliest for annual periods commencing on or after 1 January 2015. The Group is waiting for all parts of the standard to be adopted before assessing the effects of implementation.

IFRS 10 Consolidated Financial Statements and IAS 27 Consolidated and Separate Financial Statements. IFRS 10 is effective for annual periods commencing on or after 1 January 2013. The EU has approved it with effect 1 January 2014. IFRS 10 replaces the section of IAS 27 relating to the presentation of consolidated finan-cial statements. IFRS 10 has also superseded SIC 12 Special Purpose Entities. The rules on presentation of consolidated financial statements have not changed. The amendment 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. Retrospective application is required in accordance with IAS 8 with certain modifications. The Group will apply the standard from 1 January 2013, but it is not expected to affect the Group’s or the Parent Company’s financial statements.

IFRS 11 Joint arrangements. IAS 28 Investments in Associates and Joint Ven-tures. IFRS 11 is effective for annual periods commencing on or after 1 January 2013. The EU has approved it with effect 1 January 2014. IFRS 11 deals with the accounting for joint arrangements, defined as a contractual arrangement whereby two or more parties have joint control. Joint arrangements identify 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 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 standard is to be applied with a modified retrospective approach. The Group will apply the standard from 1 January 2013, but it is not expected to affect the financial statements for the Group or the Parent Company.

IFRS 12 Disclosure of Interests in Other Entities. IFRS 12 is effective for annual periods commencing on or after 1 January 2013. The EU has approved it with effect 1 January 2014. Companies 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 statements if management were to change their opinion regarding consolidation of the entities in question. Retrospective application is required in accordance with IAS 8. The Group will apply this standard from 1 January 2013.

IFRS 13 Fair Value Measurement. IFRS 13 is effective for annual periods commenc-ing on or after 1 January 2013. IFRS 13 contains uniform rules for measurement of fair value where other standards require recognition or disclosure of the fair value of assets and liabilities. The standard aims to ensure that measurement of fair value becomes more consistent and less complex by providing a precise definition of fair value and a single source of fair value measurement and disclosure requirements for use across IFRSs. Retrospective application is required in accordance with IAS

49


8. The Group will apply this standard from 1 January 2013.IAS 1 Presentation of Items of Other Comprehensive Income – amendment. IAS

1 is effective for annual periods commencing on or after 1 July 2012. The amended standard changes the grouping disclosure of items of other comprehensive income into those that will and will not subsequently be reclassified into profit and loss. The proposal only affects the presentation, not the content of OCI. Retrospec-tive application is required in accordance with IAS 8. The Group will apply the amendment from 1 January 2013.

IAS 19 Employee Benefits - amendment. The amendments to IAS 19 are effec-tive for annual periods commencing on or after 1 January 2013. The proposal involves significant changes to the reporting of defined benefit pension plans. One of the changes is the discontinuation of the approach that allowed actuarial gains and losses exceeding the corridor to be deferred. These will be required to be recognised immediately as income or expense in Other Comprehensive Income. Moreover, the rate applied when calculating the pension liability is also used when calculating the return on pension assets. All revaluations shall be reported in Other comprehensive income (no reclassification), for example actuarial gains and losses and the difference between actual and expected return on pension assets. Disclosure requirements include the results of a sensitivity analysis that indicates the influence of certain assumptions on the outcome of the pension valuation. Retrospective application is required in accordance with IAS 8. The Group will apply the amendment from 1 January 2013. The amendment will affect the Nynas Group, as the corridor approach was previously applied. Nynas has assessed the impact this will have on the financial statements and found that the PRI liability will increase to about SEK 94 million and effect after tax is reported in Equity. Adjustments have been made to 2012 as a comparison year in the annual report for 2013. At the reporting date, 31 December 2012, total unrecognised actuarial losses on pension liabilities amounted to SEK 110 million.

IAS 27 Consolidated and Separate Financial Statements; Accounting and disclosure in legal entity of subsidiaries, joint arrangements, associates and unconsolidated structured entities. Date of entry into force, see above under IFRS 10.

IAS 28 Holdings in associates; Investments in associates and Joint ventures de-scribes application of the equity method regarding accounting of both associates and joint ventures. Date of entry into force, see above under IFRS 10.

IAS 32 Financial instruments Classification - amendment. The amendmentinserts a clarification in the “Application Guidance” regarding offsetting of financial as-sets and financial liabilities. The amendments become effective 1 January 2014.

Annual improvements of IFRSs 2009-2011. Minor changes and clarifications of five standards, including IAS 1 Presentation of financial statements, clarifying the disclosures required if more than one comparison period is presented in the calculations or if an adjusted opening balance sheet for the comparative period is presented. The amendments become effective 1 January 2013. The EU has not yet approved the amendments.

Nynas is currently evaluating the potential impact of the above resolved but not yet implemented, new and amended standards.

SIGNIFICANT ACCOUNTING POLICIES APPLIED

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 per cent of the voting power or has some other form of control.

The consolidated financial statements are prepared using the acquisition method, which means the acquisition of a subsidiary is treated as a transaction through which the Group indirectly acquires the subsidiary’s assets and assumes its liabili-ties. 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 investment in a joint venture cor-responds 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 the consolidated income statement. Dividends from joint ventures are not included in the Group’s profit for the year. The Group’s share of joint ventures’ taxes is included in tax expenses.

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 statement items are translated using the average rate for the period in which the item occurred.

Foreign currencyFuNCTioNal CuRRENCy aNd REPoRTiNg CuRRENCyItems 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 statements are presented in Swedish kronor, which is the Group’s reporting currency.

TRaNSaCTioNS aNd balaNCE SHEET iTEmSForeign currency transactions are translated into the functional currency using the exchange rates prevailing at the transaction date. Foreign currency monetary assets and liabilities are translated at the closing rate. Exchange gains and losses on translation of these transactions 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.

gRouP ComPaNiESThe financial results of Group companies whose functional currency is not Swedish kronor are translated as follows:

Assets and liabilities, including goodwill and other fair value adjustments, are translated using the exchange rate prevailing at the reporting date.

Income and expenses are translated into SEK using the average rate.Exchange differences arising on translation are recognised in other compre-

hensive income.The 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.

Segment reportingAs Nynas AB’s shares and debt instruments are not subject to public trading, there is no formal requirement to disclose segment information. Accordingly, Nynas AB has elected not to apply IFRS 8 Operating Segments.

Accounting policies – Income statementREvENuE RECogNiTioNRecognised revenue is the fair value of the consideration received or receivable

50


from goods sold or services rendered in the course of the Group’s ordinary activi-ties, excluding VAT, discounts and returns, and after elimination 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 signifi-cant 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 inter-est method.

dividendDividend income is recognised when the right to receive payment is established.

TaXESIncome tax consists of current tax and deferred tax. Current tax and deferred tax for Swedish and foreign Group companies are reported in the income state-ment. Taxes are recognised in the income statement except when the underlying transaction is recognised directly in OCI for the year, in which case the related tax effect is also recognised in OCI. Group entities are liable to pay taxes under current legislation in their own countries.

The balance sheet liability method is used to report income taxes. This means that deferred tax liabilities and assets are reported for all temporary differences, i.e. the difference between the carrying amounts and tax bases of assets and liabilities, and of tax loss carryforwards. Deferred tax assets on temporary differences and deferred tax assets arising from the carryforward of unused tax losses are only recognised to the extent that it is probable that they will be recoverable in future periods. The assessment of such probability is based on Nynas’s business plans. Deferred tax assets and receivables are calculated on the basis of the tax rates enacted or substantively enacted by the reporting date. Effects of changes to applicable tax rates are recognised in the period in which the change is enacted.

Accounting policies – Statement of financial positionFixed assets, liabilities and provisions are essentially amounts that are expected to be used, recovered or paid more than twelve months after the reporting date. Current assets and liabilities consist essentially of amounts that are expected to be used, recovered or paid within twelve months of the balance sheet date.

Tangible assetsTangible fixed assets are recognised as an asset in the balance sheet when it is probable that future economic benefits 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 depreciation and impairment losses. Cost comprises the purchase price and any costs directly at-tributable 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 2-5 %

Land improvements 3.75-5%

Plant & machinery and equipment

- Processing facilities 5-10%

- Tanks 2.5-10%

- Plant & machinery and equipment 5-20%

Equipment

- Office equipment and computers 10-33%

- Other equipment 10-20%

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.

Intangible assetsgoodwillGoodwill arises when the cost of a business combination exceeds the fair value of the acquired identifiable assets and liabilities according to the acquisition analysis. Goodwill 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 ex-pected 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 acquisition 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 capitalised. 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 assetsAmortisation 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 10-14%

Trademarks 20%

Computer software 10-33%

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 report-ing date to establish whether there is any indication of impairment. If any such indication exists, the asset is tested for impairment.

51


An impairment loss is recognised if the asset’s recoverable 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 indi-cation 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 deter-mined (net of depreciation) had no impairment loss been recognised for the asset.

Financial instrumentsFinancial instruments reported under assets in the statement of financial position include cash & cash equivalents, accounts receivable, shares, loan receivables and derivative instruments. Financial instruments reported under liabilities and equity include accounts payable, loan liabilities and derivative instruments.

Recognition of financial assets and liabilitiesA financial asset or liability is recognised in the statement 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 offset and the net amount presented in the statement of financial position when, and only when, the Com-pany 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 measurement Financial 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 instrument is classified according to the purpose for which it was acquired. The categories determine how a financial instrument is measured subsequent to initial recognition, 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 recognition. 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 contracts, 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 calculated based on the effective interest method used at initial recognition.

At each reporting date, Nynas assesses whether there is any objective indica-tion 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 provision for impairment of accounts receivable is rec-ognised when there is objective evidence that the Group will not be able to col-lect all amounts due under the original terms and conditions of the receivables.

The provision for doubtful debts is based on an individual assessment of each customer, taking into consideration the customer’s ability to pay, expected fu-ture 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 (excluding 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 previously recognised impairment loss is reversed and credited to Distribution costs.

Cash & cash equivalentsCash & cash equivalents consist of cash, demand deposits 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 changes 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 comprehensive 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.

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 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.

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 fi-nancial liabilities, which means they are recognised at amortised cost using the effective interest method.

52


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 inception, document the hedging relationship, the Company’s risk management objective and its strategy for undertaking 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 foreign 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 a separate component of equity. The ineffective portion 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 transactions, 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 accumulated 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-interest 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, 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 measured at the lower of cost, using the first-in/first-out method, and net realisable value. For self-constructed goods, cost comprises direct manu-facturing costs and a reasonable proportion of indirect manufacturing costs.

Employee benefitsPost-employment benefitsNynas reports employee benefits in accordance with IAS 19 Employee Benefits.

The Group has defined contribution and defined benefit pension plans. Pension costs for defined contribution 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 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. The discount rate used is the reporting date interest rate for corporate bonds of a term consistent with the Group’s pension obligations.

Actuarial gains and losses arise when an assumption is changed or the actual outcome differs from the assumed outcome. Net actuarial gains and losses are recognised in profit or loss to the extent that they exceed the 10 per cent corridor. The corridor’s ceiling is the higher of the present value of the defined benefit obligation and the fair value of plan assets. The portion of the actuarial gains or losses that exceeds the corridor’s ceiling by more than 10 per cent is recognised in profit or loss.

The net portion of the calculated gains and losses exceeding the corridor’s ceil-ing is recognised over the average expected remaining period of employment of the employees, with effect from the year following the present financial year. Defined benefit pension plans are calculated by an independent external actuary.

Defined benefit pension liabilities recognised in the statement of financial posi-tion are the present value of the defined benefit obligation at the reporting date minus the value of the plan assets, with adjustments for unrecognised actuarial gains and losses and unrecognised past service costs.

When there is a difference between how pension expense is determined in a legal entity and the Group, a provision or receivable for payroll tax based on this difference is recognised. The provision or receivable is not discounted to the present value.

CollectumThe obligation for retirement pension and family pension for employees in Sweden is covered partly by insurance with Collectum. In accordance with the statement of the Swedish Financial Accounting Standards Council’s Emerging Issues Task Force, UFR 6, this is a multi-employer defined benefit plan. For the 2012 financial year, the Company did not have access to sufficient information 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.

Contingent liabilitiesA contingent liability is recognised when a possible obligation arises from past events and whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events or when it is not probable that an outflow of resources will be required to settle the obligation or the amount of the obligation cannot be measured with sufficient reliability.

No material liabilities are expected to arise from these contingent liabilities, over and above the amounts set aside.

Items affecting comparabilityThe effect of special events and significant transactions on each income state-ment heading is specified. Examples of such special events and transactions are gains and losses on the disposal of significant fixed assets, impairment losses and restructuring costs.

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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. 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 exceptions described below.

Employee benefits/defined benefit plansWhen calculating the defined benefit pension plans, the Parent Company applies the rules contained in the Swedish Pension Obligations Vesting Act and the Swedish Financial 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 shareholder contributions in ac-cordance with RFR 2.

Shareholder contributions are recognised directly in the recipient’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 recognised under finance income in the income statement.

Group contributions paid to subsidiaries are recognised as an investment or, depending on the relationship between tax expense (income) and accounting profit, in the income statement.

Investments in group companiesInvestments in Group companies are recognised at cost less any impairment losses. Dividends received are recognised as income, while repayments of contributed 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 Company applies an exemption from the provisions of IAS 39 permitted by the Swedish Financial Accounting Standards Council.

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 CONTENTS

GrOUPNote 1 Significant accounting policies and accounting estimates

Note 2 Information by geographical market and sales revenues by category

Note 3 Costs itemised by nature of expense

Note 4 Other operating income/expenses

Note 5 Employees, personnel expenses and remuneration of senior executives

Note 6 Depreciation/amortisation of tangible and intangible assets

Note 7 Auditors’ fees and other remuneration

Note 8 Operating leases

Note 9 Net financial items

Note 10 Taxes

Note 11 Earnings per share

Note 12 Intangible assets

Note 13 Tangible assets

Note 14 Investments in Group companies

Note 15 Investments in associates and joint ventures

Note 16 Other long-term receivables

Note 17 Inventories

Note 18 Accounts receivable

Note 19 Prepayments and accrued income

Note 20 Cash and cash equivalents

Note 21 Equity

Note 22 Provisions for pensions

Note 23 Other provisions

Note 24 Liabilities to credit institutions

Note 25 Accrued liabilities and deferred income

Note 26 Financial assets and liabilities measured at fair value

Note 27 Financial risk management, supplementary information

Note 28 Pledged assets and contingencies

Note 29 Related party disclosures

Note 30 Adjustments for non-cash items

Note 31 Events after the reporting date

PArENT COmPANyNote 32 Information by geographical market and sales revenues by

category

Note 33 Costs itemised by nature of expense

Note 34 Other operating income/expenses

Note 35 Employees, personnel expenses and remuneration of senior executives

Note 36 Depreciation/amortisation of tangible and intangible assets

Note 37 Auditors’ fees and other remuneration

Note 38 Operating leases

Note 39 Net financial items

Note 40 Appropriations

Note 41 Taxes

Note 42 Intangible assets

Note 43 Tangible assets

Note 44 Investments in Group companies

Note 45 Other long-term receivables

Note 46 Inventories

Note 47 Accounts receivable

Note 48 Prepayments and accrued income

Note 49 Cash and cash equivalents

Note 50 Equity

Note 51 Provisions for pensions

Note 52 Other provisions

Note 53 Liabilities to credit institutions

Note 54 Accrued liabilities and deferred income

Note 55 Financial assets and liabilities measured at fair value

Note 56 Pledged assets and contingencies

Note 57 Related party disclosures

Note 58 Adjustments for non-cash items

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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 environ-mental legislation and the emergence of new cleaning up technology are factors that may affect the size of the provision. Consequently, 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 test-ing 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 specified 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 consistent with the Group’s average remaining term of the obligation, 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.

NOTE 2. Information by geographical market and sales

Nynas specialises in the production and marketing of specialty oil products. The Group’s production is largely based on upgrading heavy crude oil to produce bitumen and naphthenic specialty oils. Bitumen is mainly used as a binding agent in asphalt road construction, but is also used in various industrial applications. Naphthenic specialty products are highly refined mineral oils with unique physi-cal and chemical properties, and are used in a number of fields. They function as insulating and cooling elements in electric transformers; they are also an impor-tant component in rubber manufacture and a raw material in the production of a number of industrial products such as lubricants and printing inks.

SALES REVENUES BY GEOGRAPHICAL MARKET

2012 2011

Nordic Region 5,768.3 5,423.4

United Kingdom 6,867.5 5,862.6

Rest of Europe 7,544.5 7,912.3

North America 397.5 411.9

Other 3,893.0 3,612.6

TOTAL 24,470.8 23,222.7

NOTES TO THE FINANCIAL STATEMENTS – GROUP (Amounts in SEK million unless otherwise stated)

TOTAL ASSETS BY GEOGRAPHICAL MARKET

2012 2011


United Kingdom 902.6 1,098.2

Rest of Europe 424.6 1,102.5


Other 914.3 751.1

TOTAL 10,040.1 10,715.5

INVESTMENTS BY GEOGRAPHICAL MARKET

2012 2011

Nordic Region 455.2 884.0

United Kingdom 17.7 16.8

Rest of Europe 1.7 2.0


Other 1.6 3.4

TOTAL 476.9 906.6

SALES REVENUES BY CATEGORY

2012 2011

Sale of goods, external 24,294.1 23,170.2

Revenue from services 176.7 52.5

TOTAL 24,470.8 23,222.7

NOTE 3. Costs itemised by nature of expense

2012 2011

Raw materials 19,877.2 17,965.3

Transport and distribution costs 1,761.7 1,718.8

Manufacturing expenses 1,352.1 1,382.8

Costs for employee benefits (note 5) 743.5 720.8

Depreciation, amortisation, impairment (notes 12, 13, 14, 17) 323.2 294.4

Other expenses 340.0 659.7

TOTAL 24,397.7 22,741.8

Gains and losses on realised cash flow hedges (oil) are transferred from equity to the income statement and classified as raw materials. The total amount relating to cash flow hedges before tax in comprehensive income is SEK 0 (-11.5) million. SEK 11.5 (7.2) million of this amount was transferred to raw materials in the income statement.

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NOTE 4. Other operating income/expenses

OTHER OPERATING INCOME

2012 2011

Exchange gains on operating receivables/liabilities 310.3 359.8

Insurance compensation 359.0 100.2

Other service revenue 43.9 43.1

TOTAL 713.2 503.1

OTHER OPERATING EXPENSES

2012 2011

Costs related to fire in Nynäshamn 204.5 64.8

Exchange losses on operating receivables/liabilities 335.7 359.5

TOTAL 540.2 424.3

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 environmental damage or personal injury. However, there was extensive material damage, and repair costs are estimated to be at least SEK 270 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 31 December 2012. The compensation corresponds to the additional repair costs and expenditure Nynas had at the reporting date and about 80 per cent of this amount was settled with the insurance companies per 31 December 2012.

See also note 19.

NOTE 5. Employees, personnel expenses and remuneration of senior

The average number of employees, with wages, salaries, other remuneration, social security contributions and pension costs, is shown in the tables below.

AVERAGE NUMBER OF EMPLOYEES2012 2011

PARENT men women Total men women Total

Sweden 321 127 448 321 129 450

TOTAL PARENT 321 127 448 321 129 450

2012 2011

INCOME men women Total men women Total

Sweden 321 127 448 321 129 450

TOTAL SWEDEN 321 127 448 321 129 450

United Kingdom 165 23 188 163 23 186

Belgium 22 32 54 26 34 60

Poland 15 4 19 14 4 18

Estonia 17 3 20 17 3 20

Spain 3 3 6 3 3 6

Germany 6 6 12 5 7 12

France 11 3 14 7 3 10

Denmark 7 1 8 7 1 8

Finland 4 1 5 4 1 5

USA 10 9 19 9 10 19

Other countries 46 42 88 39 38 77

TOTAL OUTSIDE SWEDEN 306 127 433 294 127 421

TOTAL GROUP 627 254 881 615 256 871

EMPLOYEE BENEFIT COSTS, GROUP

2012 2011

Wages, salaries and other benefits 527.3 505.3

Pension costs, defined benefit (see also note 22) 35.5 40.5

Pension costs, defined contribution (see also note 22) 44.6 40.9

Other post-employment benefits 0.3 1.9

Social security contributions 135.8 132.1

TOTAL GROUP 743.5 720.8

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REMUNERATION AND OTHER BENEFITS SENIOR EXECUTIVES

2012 2011

GROUPPresident

& CEOOther senior

executives TotalPresident

& CEOOther senior

executives Total

Basic salary 5.7 11.7 17.4 5.7 11.1 16.7

Variable pay 1.4 2.1 3.5 1.4 1.8 3.2

Other benefits 0.2 0.5 0.7 0.2 0.5 0.7

Social security contributions 2.3 4.3 6.6 2.3 3.6 5.8

Pension costs 4.4 3.5 7.9 5.1 3.6 8.7

TOTAL 14.0 22.1 36.1 14.7 20.5 35.2

1) Nynas Group Management 2012 (not including CEO), Rolf Allgulander, Martin Carlson, Simon Day, Dan Daggenfelt, Per Dahlstedt, Ewa Beskow, Russell Childs, Hans Östlin1) Nynas Group Management 2011 (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.

GrOUP PrESIDENT & CEOThe President’s employment contract is for 1 year and may be terminated on either side on 3 months notice before contractual periods ends. If not terminated, the contract is automatically prolonged by 1 year.

GENDER DISTRIBUTION IN MANAGEMENT

Female representation, % 2012 2011

Board 17.2 17.5

Executive Board 11.1 11.1

NOTE 6. Depreciation/amortisation of tangible and intangible assets

DEPRECIATION/AMORTISATION BY FUNCTION

Intangible Tangible

2012 2011 2012 2011

Cost of sales 7.1 6.6 257.5 222.9

Distribution costs 7.0 7.3 18.7 20.6

Administrative expenses 20.1 23.5 12.8 13.4

TOTAL 34.2 37.5 289.1 256.9

DEPRECIATION/AMORTISATION BY TYPE OF ASSET

2012 2011

Supply contracts/customer lists 5.5 5.5

Computer software 28.6 32.0

Buildings 9.0 8.6

Land improvements 6.5 4.9

Plant and machinery 241.9 212.9

Equipment 31.6 30.6

TOTAL 323.3 294.4

TOTAL RECOGNISED DEPRECIATION 323.3 294.4

NOTE 7. Auditors’ fees and other remuneration

AUDIT FEES2012 2011

Ernst & Young

Annual audit 6.1 6.0

Other audit services 0.6 0.1

Tax advisory services 3.0 1.3

Other services 0.4 12.1

Other auditors



NOTE 8. Operating leases

PAYMENTS UNDER NON-CANCELLABLE OPERATING LEASES

2012 2011

Payments during the financial year 296.5 295.1

Agreed future payments

Within one year 281.6 257.0

2 – 5 years 674.1 548.2

6 years and thereafter 193.0 180.2

In 2012 Nynas AB had four bitumen carriers on bareboat charters, were of two during the latter part of the bitumen season 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.

58


NOTE 9. Net financial items

2012 2011

Interest income, bank deposits 40.7 11.4

Interest income, associates 2.3 1.0

Interest income, derivative instruments (actual interest rates and changes in value) 56.6 31.5

TOTAL FINANCE INCOME 99.6 44.0

Of which total interest income attributable to items carried at amortised cost 43.0 12.5

Interest expense, loans and bank overdrafts -275.3 -132.2

Interest expense, derivative instruments (actual interest rates and changes in value) -45.8 -32.4

Interest expense, PRI pension obligations -5.6 -5.5

Net exchange differences -24.4 14.0

Other finance costs -55,0 -20.4

TOTAL FINANCE COSTS -388.1 -176.5

Of which total interest expense attributable to items carried at amortised cost -262.9 -137.7

TOTAL NET FINANCIAL ITEMS -288.5 -132.5

NOTE 10. Taxes

2012 2011

Current tax -148.4 -133.7

Tax attributable to Joint Venture 3.6 -

Current tax, prior years -2.5 -11.7

Deferred tax 164.9 4.7

TOTAL 17.6 -140.8

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:

2012 2011

Result before tax -51.9 453.3

Tax according to Parent Company’s applicable tax rate 13.6 -119.2

Effect of different tax rates for foreign subsidiaries 10.4 5.5

Tax effect of:

Other non-deductible expenses -8.4 -12.3

Other non-taxable income 2.6 6.7

Effect of future changed corporate income tax in Sweden 44.5 -

Adjustment of current tax in respect of prior years -2.5 -11.7

Increase in loss carry-forwards without corresponding capitalisation of deferred tax -51.4 -7.8

Tax attributable to Joint Venture 3.6 -

Currency 2.6 -

Other 2.6 -2.0

Recognised tax expense 17.6 -140.8

Standard rate of income tax, % 26% 26%

Effective tax rate, % 34% 31%

DEFERRED TAX ASSETS AND LIABILITIES

Assets Liabilities Net

2012 2011 2012 2011 2012 2011

Land and buildings 0.0 0.0 1.4 2.0 -1.4 -2.0

Machinery and equipment 14.7 14.5 272.8 337.0 -258.1 -322.5

Inventories 1.3 0.5 0.0 43.2 1.3 -42.7

Other operating receivables/liabilities 52.3 59.0 0.8 0.6 51.4 58.4

Untaxed reserves (excluding excess depreciation) - - 0.0 60.9 0.0 -60.9

Pension liabilities 0.0 0.0 3.5 6.8 -3.5 -6.8

Tax loss carryforwards 29.6 30.2 0.0 0.0 29.6 30.2

TOTAL 97.8 104.2 278.6 450.5 -180.8 -346.3

Offsets 22.6 0.4 22.6 0.4 - -

TOTAL 120.4 104.6 301.2 450.9 -180.8 -346.3

CHANGE IN DEFERRED TAX ON TEMPORARY DIFFERENCES DURING YEAR

Opening Balance

Recognised inincome statement

Recognised directly in equity

Exchangedifferences

ClosingBalance

Land and buildings -2.0 0.6 - - -1.4

Machinery and equipment -322.5 64.4 - - -258.1

Inventories -42.7 44.0 0.0 - 1.3

Other operating receivables/liabilities 58.4 -7.6 1.0 -0.4 51.4

Untaxed reserves (excluding excess depreciation) -60.9 60.9 - - 0.0

Pension liabilities -6.8 3.3 - - -3.5

Tax loss carryforwards 30.2 -0.6 0.0 - 29.6

TOTAL -346.3 164.9 1.0 -0.4 -180.8

Deferred tax assets are recognised for the carryforward of unused tax losses to the extent that it is probable that future taxable profit will be available against which they can be utilised. The Group did not recognise deferred tax assets of SEK 95.0 (50.0) million in respect of losses amounting to SEK 280 (179) million, which can be utilised against future taxable profit. All of the SEK 95.0 million is available for use in the future indefinitely.

59


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 2012 and 2011 was 67,532.

2012 2011

Profit for the year


Profit for the year


Earnings per share -34.3 67,532 -508 312.5 67,532 4,628

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

NOTE 12. Intangible assets

2012 GoodwillSupply contracts/

Customer listsComputersoftware

Other intang.assets/ Trademarks

Total Intangible Assets

Opening cost 275.4 336.1 360.4 1.6 973.5

Acquisitions - - 7.7 - 7.7

Reclassifications - - -4.2 - -4.2

Translation differences - -4.2 -0.5 - -4.7

Closing cost 275.4 331.9 363.5 1.6 972.3

Opening regular depreciation -264.0 -198.1 -227.5 -1.6 -691.2

Translation differences - 6.3 0.4 - 6.7

Depreciation for the year - -5.5 -28.6 - -34.2

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

Opening impairment -3.3 -128.7 -26.7 - -158.7

Translation differences - -2.2 - - -2.2

Closing impairment -3.3 -130.9 -26.7 - -160.9

Closing residual value 8.1 3.7 81.1 0.0 92.9

2011 GoodwillSupply contracts/

Customer listsComputersoftware

Other intang.assets/ Trademarks

Total Intangible Assets

Opening cost 275.4 334.6 323.5 1.6 935.1

Acquisitions - - 39.3 - 39.3

Reclassifications - - -2.1 - -2.1

Translation differences - 1.5 -0.3 - 1.2

Closing cost 275.4 336.1 360.4 1.6 973.5

Opening regular depreciation -264.0 -191.6 -194.2 -1.6 -651.4

Depreciation reclassifications - - -1.6 - -1.6

Translation differences - -1.0 0.2 - -0.8

Depreciation for the year - -5.5 -32.0 - -37.5

Closing regular depreciation -264.0 -198.1 -227.5 -1.6 -691.2

Opening impairment -3.3 -128.3 -26.7 - -158.3

Translation differences - -0.4 - - -0.4

Closing impairment -3.3 -128.7 -26.7 - -158.7

Closing residual value 8.1 9.3 106.2 0.0 123.7

60


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:

2012 2011

Switzerland 0.0 3.5

United Kingdom 3.7 5.9

Austria 3.7 3.7

Estonia 4.4 4.4

TOTAL 11.8 17.4

The recoverable amount for cash-generating units is determined by calculating the value in use. These calculations use estimated future cash flows, which are based on financial budgets/long-term plans that have been approved by management 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: Gor-don’s formula is used for projects over SEK 10 million, while for smaller projects a standard factor of six times the unrestricted cash flow for the final year of the forecast period is used.

Significant assumptions used to calculate the value in use:

2012 2011

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.

These assumptions have been used to analyse each CGU. Management have deter-mined the budgeted gross margin based on previous results and their expectations of market development. 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.

NOTE 13. Tangible assets

2012 BuildingsMachinery and

machinery EquipmentConstruction

in progressTotal

Tangible assets

Opening cost 406.7 4,885.5 479.8 901.4 6,673.5

Adjusted cost - - -0.6 - -0.6

Acquisitions 19.3 20.1 7.0 422.9 469.3

Disposals 0.0 -0.1 -16.0 - -16.2

Reclassifications 16.4 345.6 21.7 -379.5 4.2

Translation differences -3.6 -9.9 -3.7 -0.2 -17.4

Closing cost 438.8 5,241.3 488.1 944.6 7,112.7

Opening regular depreciation -149.7 -2,769.5 -348.2 - -3,267.4

Depreciation adjustment - - 0.6 - 0.6

Disposals 0.0 0.1 11.4 - 11.5

Depreciation reclassifications - - 0.0 - 0.0

Translation differences 2.4 7.6 2.9 - 12.9

Depreciation for the year -15.5 -241.9 -31.6 - -289.0

Closing regular depreciation -162.8 -3,003.7 -364.9 0.0 -3,531.4

Closing residual value 276.1 2,237.5 123.2 944.6 3,581.3

Opening impairment - -22.3 0.9 -36.0 -57.4

Impairment for the year - 0.0 0.4 - 0.4

Closing impairment - -22.3 1.3 -36.0 -57.0


Of which carrying amount, Sweden 207.4

61


2011 BuildingsMachinery and

machinery EquipmentConstruction

in progressTotal

Tangible assets

Opening cost 435.8 4,511.5 449.2 420.6 5,817.1

Adjusted cost - -0.6 -1.4 - -2.0

Acquisitions 11.3 208.6 20.8 626.5 867.2

Disposals 0.0 -6.1 -7.1 - -13.3

Reclassifications -39.4 169.1 18.2 -145.7 2.1

Translation differences -0.9 3.0 0.1 0.0 2.2

Closing cost 406.7 4,885.5 479.8 901.4 6,673.5


Depreciation adjustment 0.0 0.8 1.9 - 2.7

Disposals - 3.9 6.2 - 10.1

Depreciation reclassifications -7.0 8.1 0.5 - 1.6

Translation differences 0.7 -2.8 -0.2 - -2.3




Opening impairment - -22.4 0.9 -22.7 -44.2

Impairment for the year - 0.1 - -13.3 -13.2




NOTE 14. Investments in group companies

2012 2011

Opening cost 920.1 920.0

Purchases - 0.1

Closing cost 920.1 920.1

62


NOTE 14. continue

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 AB 1) 556366-1957 Stockholm 1,000 100 SEK 100

Nynas Ltd, UK 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

Nynas (South Africa) (Pty) Ltd, South Africa 97/13041-07 Johannesburg 100 100 ZAR 0

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

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

Nynas Naphthenics Yaglari Ticaret Ltd pcs, Turkey 632 011 3964 Istanbul 38,489 99.99 TRL 4,808

Nynas Bitumes SA, France 1) B 349837419 Bobigny 2,494 99.76 EUR 303

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 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 77,003

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 50

TOTAL INVESTMENTS IN GROUP COMPANIES 920,082

OPERATING GROUP COMPANIES OVER AND ABOVE THOSE DIRECTLY OWNED BY PARENT COMPANY:

(SEK thousands) Reg. no. Reg’d office Number of shares % Holding Currency Carrying amount

Nynas Naphthenics Ltd, UK 2450786 Guildford 10,000 100 GBP 105

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

Nynas NV 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

1) Dormant

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.

63


NOTE 15. Investments in associates and joint ventures

GROUP Reg. no. Reg’d office Number of shares % Holding Currency Carrying amount

Eastham Refinery Ltd, UK 2205902 London 5,000,000 50 GBP 224.3

Share in equity of Eastham Refinery Ltd accounted for using equity method -147.9

TOTAL INVESTMENTS IN ASSOCIATES 76,4

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

Eastham Refinery Ltd, UK 293.2 216.8 2,143.6 -7.6

2012 2011

Opening balance 224.3 200.3

Profit for the year -7.6 19.9

Dividend -136.4 -

Translation differences -3.9 4.1

Closing balance 76.4 224.3

NOTE 16. Other long-term receivables

2012 2011


Amounts advanced 0.1 3.2

Amounts received -16.1 -13.9

Translation differences -1.2 -0.2

Closing balance 19.1 36.4

Other long-term receivables consist primarily of a partnership with Valero in the USA, in which Nynas participated in the rebuilding of the naphthenics operations at Valero’s Three Rivers refinery. In return, Nynas is entitled to purchase products from the units concerned at a reduced price. The amounts advanced are reported as a long-term receivable which will be reduced as products are purchased from Valero.

NOTE 17. Inventories

2012 2011

Raw materials 675.7 1,307.8

Semi-finished products 457.1 413.6

Finished products 2,293.3 2,338.3

TOTAL 3,426.1 4,059.7

Inventories are measured at the lower of cost, using the first-in/first-out method, and net realisable value.

NOTE 18. Accounts receivable

2012 2011

Accounts receivable, not due 929.6 1,177.5

Provision for impairment of accounts receivable -13.8 -7.9

NOT DUE ACCOUNTS RECEIVABLE, NET 915.8 1,169.6

Age analysis of past due accounts receivable

0-90 days 435.6 527.0

91–180 days 9.6 11.6

Over 180 days 21.0 13.4

TOTAL OVERDUE ACCOUNTS RECEIVABLES 466.2 552.0

The Group has recognised a loss of SEK 13.8 (7.9) million for impairment of accounts receivable. The change relates mainly to a reduction in doubtful debts in Spain (7.0) the UK (SEK 2.6 million) and Sweden (SEK 1.7 million). The loss is reported under distribution costs in the income statement.

NOTE 19. Prepayments and accrued income

2012 2011

Rent 4.5 4.4

Charter hire 32.3 4.1

Pension premiums 5.0 1.9

Purchases of raw materials, semi-finished and finished goods - 109.5

Forward contracts, currency 1.1 2.1

Software licences 7.3 7.2


Prepaid reinsurance 18.1 15.0

Other prepayments 66.1 26.3

TOTAL 234.5 265.5

Insurance compensation NOTE 4.

64


NOTE 20. Cash & cash equivalents

2012 2011

Cash and bank balances 738.9 249.6

Cash & cash equivalents recognised 738.9 249.6

The above items have been classified as cash & cash equivalents on the follow-ing basis:* they are subject to an insignificant risk of changes in value* they can readily be converted into cash* they have a maturity of no more than three months from the date of acquisition

The Group’s cash & cash equivalents comprise its deposits in the Group’s com-mon bank accounts and other bank accounts, including currency accounts and funds in transit.

NOTE 21. Equity

2012 2011

SPECIFICATION OF EQUITY ITEM ’RESERVES’TRANSLATION RESERVE AND CURRENCY HEDGES

Opening translation reserve and currency hedges -24.9 -16.3

Translation reserve and currency hedges for the year -26.3 -8.7

Closing translation reserve and currency hedges -51.1 -24.9

HEDGING RESERVE

Opening hedging reserve -27.9 -10.1

Cash flow hedges recognised in income statement, cost of sales 27.9 10.1

Cash flow hedges recognised in OCI -39.0 -27.9

Closing hedging reserve -39.0 -27.9

TOTAL RESERVES

Opening reserves -52.8 -26.3

Changes in reserves during the year -37.4 -26.5

Closing reserves -90.2 -52.8

RESERvESTranslation reserveThe translation reserve covers all exchange differences arising on the translation of the financial statements of foreign entities which are presented in a currency other than the Group’s presentation currency.

The Parent Company and Group present their financial statements in Swedish kronor.

Hedging reserveThe hedging reserve comprises the effective portion of the cumulative net change in the fair value of a cash flow hedging instrument attributable to hedged transac-tions that have not yet occurred.

RETaiNEd EaRNiNgSRetained earnings and net profit for the year include accumulated 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

Change in total number of shares 2012 2011

Opening number 67,532 67,532

Change during the year 0 0

CLOSING NUMBER 67,532 67,532

CLASS OF SHARE2012 2011

Number of shares Per cent


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 2012 is SEK 0 (0) per share. Based on the number of shares at 31 December 2012, this represents a total dividend of SEK 0 million.

CaPiTal maNagEmENTThe Group’s equity, which is defined as total recognised equity, amounted to SEK 3,652 (3,724) million at the end of the year.

The return on equity was -6 (9) per cent. 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 accord-ing to Nynas’s strategy by means of self-financing and payment of dividends to shareholders as adopted by the annual general meeting.

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 benefit plans cover retirement pension and survivors’ pension.

The obligation reported in the balance sheet is derived from the defined benefit plans. The largest plans are in Sweden, the United Kingdom and Belgium. 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 on page 65. Net actuarial gains and losses are recognised in profit or loss to the extent that they exceed the 10 per cent corridor. The corridor’s ceiling is 10 per cent of the higher of the present value of the defined benefit obligation and the fair value of plan assets. The net portion of the calculated gains and losses exceeding the corridor’s ceiling is recognised over the average expected remaining period of employment of the employees, with effect from the year following the present financial year. In accordance with IAS 19, the discount rate is determined by reference to market yields on high quality corporate bonds that are traded in a deep market and by reference to the Swedish mortgage bond market. Consequently, it is management’s view that the

65


discount rate applied reflects the time value of money and provides a fair present value with regard to the Group’s pension obligations. Defined benefit pension plans are calculated by an independent external actuary.

In the case of a multi-employer defined benefit plan, sufficient information cannot be obtained to calculate Nynas’s share in this plan, and the plan has been reported as a defined contribution plan. In Nynas’s case, this relates to the ITP pension plan which is administered via Collectum. However, the majority of the Swedish plan for salaried employees (ITP) is funded by pension provisions, which are covered by credit insurance with Försäkringsbolaget Pensionsgaranti (FPG) and managed by a Swedish multi-employer institution, Pensionsregistreringsinstitutet (PRI).

Premiums to Alecta amounted to SEK 7,5 (6,2) million. A surplus or deficit at Alecta may result in a refund to the Group or lower or higher future premiums. At the end of the year, Alecta’s surplus, in the form of a collective consolidation level, was 129 (113) per cent. The consolidation level is the market value of Alecta’s assets as a percentage of its insurance obligations, calculated in accordance with Alecta’s actuarial assumptions.

Nynas’s forecast payment of pensions in relation to defined benefit plans, both funded and unfunded, amounts to SEK 33.2 (30.0) million for 2013.

As of 1 January 2013 it will no longer be possible to hold unrecognised actuarial losses outside the accounts following a revision to IAS 19. Please refer to page 49 for the effects this will have on the Nynas Group.

REPORTED AS PROVISIONS FOR PENSIONS IN THE STATEMENT OF FINANCIAL POSITION

2012 2011

Present value of funded obligations 697.0 624.2

Present value of unfunded obligations 218.9 201.4

Total present value of obligations 916.0 825.6

Fair value of plan assets -749.7 -710.4

Limits on access 14.7 23.5

Unrecognised actuarial losses -110.0 -87.4

NET LIABILITY RECOGNISED 71.0 51.3

Portion of pension liability recognised as provisions for pensions 71.0 51.3

CHANGE IN PRESENT VALUE OF DEFINED BENEFIT OBLIG ATION

2012 2011

Present value of defined benefit obligation at beginning of year 825.6 757.7

Benefits paid -45.1 -29.2

Current service cost 27.0 25.3

Interest expense 36.9 36.5

Net actuarial losses during year 73.2 26.7


Curtailments 10.0 3.0

PRESENT VALUE OF DEFINED BENEFIT OBLIGATION AT END OF YEAR 916.0 825.6

COSTS RECOGNISED IN INCOME STATEMENT2012 2011

Defined benefit pension plans:

Benefits earned (paid in by employer) 27.0 25.3

Interest expense 36.9 36.5

Expected return on plan assets -39.7 -42.9

Net actuarial losses during year 20.0 25.8

Past service cost 0.0 0.0

Curtailments and settlements -8.8 -4.3

TOTAL COST OF DEFINED BENEFIT PAYMENTS RECOGNISED IN INCOME STATEMENT 35.5 40.5

Defined contribution pension plans:

Costs for defined contribution plans 44.6 40.9

TOTAL PENSION EXPENSE 80.0 81.4

CHANGE IN NET DEBT DURING THE YEAR2012 2011


Exchange differences 6.4 -2.5

Net expense in income statement 35.5 40.5

Return/reimbursement on plan assets 14.1 -4.9

Reimbursement from retirement benefit plan 4.6 2.3

Employee contributions 4.3 4.3

Pension payments -45.1 -29.2

TOTAL 71.0 51.3

Pension expenses and other defined benefit payments are reported in the income statement under cost of sales (SEK 28.7 million), distribution costs (SEK 24.2 mil-lion) and administrative expenses (SEK 27.1 million).

The interest portion of pension costs and the return on plan assets are reported under finance income and finance costs.

66


The main actuarial assumptions used (in %) are as follows: 2012 2011

Sweden uK belgium Sweden uK belgium

Discount rate 3.4 4.6 3.3 3.5 5.1 4.8

Expected return on plan assets 3.4 5.5 3.3 3.5 6.0 3.8

Future salary increases 2.5 N/A 4.0 2.5 N/A 4.0

Future pension increases 1.8 3.0 2.0 2.0 3.0 2.0

Expected remaining service period 13.0 N/A 20.0 13.0 N/A 20.0

The expected return on plan assets in each country is calculated by reference to the historical return and on the basis of management’s assessment of future development.

CHANGE IN FAIR VALUE OF PLAN ASSETS DURING THE YEAR

2012 2011

Fair value of plan assets at beginning of year 710.4 697.7

Expected return on plan assets 39.7 42.9

Actuarial gains and losses for the year, net 30.0 -40.2


Employer contributions 19.5 25.7

Other 0.0 0.0

Payment of pension benefits -37.6 -22.6

FAIR VALUE AT END OF YEAR 749.7 710.4

PLAN ASSETS2012 2011

Shares and participating interests 383.3 352.9

Other interest-bearing securities 206.1 200.0

Bank deposits 50.5 49.3

FAIR VALUE OF PLAN ASSETS 640.0 602.3

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

ACTUAL RETURN 2012 2011

Actual return on plan assets 69.7 2.7

MULTI-YEAR SUMMARY RECOGNISED IN STATEMENT OF FINANCIAL POSITION

2012 2011 2010 2009 2008

Present value of defined benefit obligation 916.0 825.6 757.7 769.3 621.6

Fair value of plan assets -749.7 -710.4 -697.7 -632.3 -485.4

DEFICIT IN PLAN 166.3 115.2 60.0 137.0 136.2

NOTE 23. Other provisions

2012 2011


Provisions for the year 1.5 1.8

Change of remediation principle - -28.5


Amounts utilised during year -7.9 -44.7

TOTAL 258.4 265.1

Provisions expected to be utilised after more than 12 months 250.1 241.1

These provisions relate to estimated environmental liabilities 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/Interception dams (SEK 26 million) and J3/J4 (SEK 230 million), which are not present value calculations.

The Land FarmRemediation of the Land Farm area was completed at 31 December 2010. Final covering of the permanent land fill is dependent on subsidence in the area, but is expected to take place around 2015.

The total cost of the Land Farm project has considerably exceeded the estima-tion made during preparation of the 2008 annual financial statements. This is partly because the extent of contamination was previously under-estimated and partly because the geological conditions at the site were more complex than initial ground surveys had indicated.

The final cost of remediation was approx. SEK 151 million at 31 December 2010. The remaining cost for covering the land fill has been estimated at SEK 22 million by an external party.

Lagoon/Interception Dams A definitive action plan has been submitted to the Land and Environment Court. The plan proposes that both the lagoon and interception dams be treated in the same way, with suction dredging followed by purification at a treatment plant at the refinery using a combination of micro-organisms (archaea and bacteria). Remediation costs were calculated at SEK 26 million by an external party, excluding costs for the construction of the treatment plant. A decision on the remediation was not expected before 2013.

67


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 established method involves collection, neu-tralisation and transportation for disposal. The method is not problem-free, as, even after processing, the materials are unlikely to be released from regulatory control. As an alternative, a method involving final incineration of the materials has also been studied.

A definitive action plan has been submitted to the Land and Environment Court. To ensure a good working environment during removal of the materials, they are stabilised using a limestone vibration technique. They are then dug up using conventional methods and processed by adding water to form a liquid mixture. The mixture is then treated biologically with archaea and bacteria. Over 90 per cent of the organic contaminants are decomposed into carbon dioxide and water. The cost of remediation has been calculated by an external party at approx. SEK 230 million. The Group is now waiting for a permit to use the method to restore the areas J3/J4 and the Lagoon/Interception Dams

Other environment-related activities at Nynäshamn, Gothenburg, Dundee and terminalsSee the environment section on page 18.

Environment liabilities or other environment-related measures will be made as costs for planned measures become concrete and are quantified.

All costs associated with the remediation project have been calculated using the present value method.

NOTE 24. Liabilities to credit institutions

In November 2011, a new syndicated stand-by credit line of EUR 750 million was arranged. The term of the credit facility is five years. In this connection the syndi-cated stand-by credit line for EUR 150 million maturing in 2012 was redeemed. The other committed credit facilities were also concluded in connection with the new syndicated credit facility.

A private placement loan from US investors was issued in September 2006. The loan total is USD 140 million and the fixed-rate periods are 8 and 10 years. USD 90 million has been swapped to a variable SEK interest rate and USD 50 million to a fixed SEK interest rate. Currency interest rate swaps have terms that exactly match the bonds’ maturities.

The loan agreement includes financial terms (see the Risk management section) and one of the financial terms in the loan agreement was violated in the third quar-ter of 2012. Nynas received conditional permission (known as “waivers”) for the period until the entire recapitalisation was completed in the end of January 2013.

Pending completion, long-term interest-bearing liabilities of SEK 3,980 million per the balance sheet date were reclassified as the short-term portion of interest-bearing liabilities

2012 2011


Loans from credit institutions - 3,792.0

TOTAL 0.0 3,792.0

CURRENT LIABILITIES

Loans from credit institutions 3,986.2 8.2

Overdraft facilities 23.6 94.2

TOTAL 4,009.8 102.4

GRAND TOTAL 4,009.8 3,894.4

2012

Year issued/maturity Description of loan

Interest, %

Cur-rency

Nominal amount (lo-

cal currency)

Amounts in SEK

millions

CUrrENT LIABILITIESVariable-rate loans

2012/2013 Bond issue 2.27 USD 90.0 666.0

2012/2013 Bond issue 2.26 USD 50.0 370.0

2012/2013 Stand-by credit line ( €750) 3.22 USD 50.0 313.6

2012/2013 Stand-by credit line ( €750) 3.46 GBP 30.0 302.9

2012/2013 Stand-by credit line ( €750) 2.74 EUR 50.0 414.7



2012/2013 Stand-by credit line ( €750) 4.46 SEK 1,000.0 1,000.0

2012/2013 Bank loans 7.65 RUB 14.0 3.0

2012/2013 Bank loans 8.35 RUB 8.0 1.7

2012/2013 Bank loans 8.50 RUB 8.0 1.7

2012/2013 Overdraft 23.6

TOTAL 4,009.8

2011


Interest, %

Cur-rency

Nominal amount (lo-

cal currency)

Amounts in SEK

millions

LONG-TErM LIABILITIESVariable-rate loans

2006/2014 Bond issue 3.28 USD 90.0 718.6

2006/2016 Bond issue 3.29 USD 50.0 399.1





2011/2016 Stand-by credit line ( €750) 4.57 SEK 300.0 300.0



TOTAL 3,792.0

2011


Interest, %

Cur-rency

Nominal amount (lo-

cal currency)

Amounts in SEK

millions


2011/2012 Bank loans 5.80 RUB 14.0 3.0

2011/2012 Bank loans 6.05 RUB 8.0 1.8

2011/2012 Bank loans 6.40 RUB 16.0 3.4

2011/2012 Factoring 0.0

2011/2012 Overdraft 94.2

2011/2012 Other bank facilities 0.0

TOTAL 102.4

68


MATURITY OF EXTERNAL INTEREST-BEARING LIABILITIES AT 31 DEC 2011

2013 4,009.8

TOTAL 4,009.8

MATURITY OF EXTERNAL INTEREST-BEARING LIABILITIES AT 31 DEC 2011

2012 102.4

2013 and thereafter 3,792.0

TOTAL 3,894.4

THE GROUP HAS THE FOLLOWING UNUSED CREDIT FACILITIES:

2012 2011

Variable interest

Uncommitted 536.0 427.9

Committed

- expires within one year 3,012.0 3,573.8

- expires after one year - -

TOTAL 3,548.0 4,001.7

NOTE 25. Accrued liabilities and deferred income

2012 2011

Purchases of raw materials, semi-finished and finished goods 451.5 782.1

Accrued salaries/holiday pay 96.6 99.3

Accrued interest 41.7 17.2

Shipping costs 37.8 25.1

Discounts 27.3 25.7

Import duty 1.0 3.2

Accrued investment costs 23.0 83.8

Deferred income – bitumen - 46.0

Other 135.7 193.4

TOTAL 814.6 1,275.8

NOTE 26. Financial assets and liabilities measured at fair value

Financial assets and liabilities in the statement of financial position 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 designated as hedged items, are measured at amortised cost.

Fair value disclosures are not required when the carrying amount is an accept-able 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 140 million, carry fixed USD interest rates. However, these loans have been hedged with currency interest rate swaps. USD 90 million has been swapped to a variable SEK interest rate and USD 50 million to a fixed SEK interest rate. Both are included in hedge accounting, with USD 90 million representing fair value hedging and USD 50 million cash flow hedging. The carrying amount and fair value amount to SEK 1,036.1 (1,117.7 ) million. 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 identical 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 measured on the basis of the price of the holdings at the reporting date.

derivative instrumentsThe fair value of foreign exchange 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 discounting 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 represent 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:

69


2012

Derivatives used in hedge

accountingDerivatives

held for tradingLoans and

receivablesOther financial

liabilitiesTotal carrying

amount

Non-financial assets and

liabilitiesTotal

balance sheetFair

amount

Accounts receivable - - 1,382.0 - 1,382.0 - 1,382.0 1,382.0

Short-term derivatives 18.2 27.5 - - 45.7 - 45.7 45.7

Other current receivables - - - - 0.0 282.8 282.8 282.8

Prepaid expenses and accrued income - - - - 0.0 234.5 234.5 234.5

Cash and cash equivalents - - 738.9 - 738.9 - 738.9 738.9

FINANCIAL ASSETS 18.2 27.5 2,120.9 0.0 2,166.6 517.3 2,683.9 2,683.9

Short-term liabilities to credit institutions - - - 4,009.8 4,009.8 - 4,009.8 4,009.8

Accounts payable - - - 377.0 377.0 - 377.0 377.0

Long-term derivatives 26.8 31.2 - - 58.0 - 58.0 58.0

Short-term derivatives - 39.6 - - 39.6 - 39.6 39.6

Other current liabilities - - - - 0.0 147.4 147.4 147.4

Accrued liabilities and deferred income - - - - 0.0 814.6 814.6 814.6

FINANCIAL LIABILITIES 26.8 70.8 0.0 4,386.7 4,484.3 962.0 5,446.4 5,446.4

2011

Derivatives used in hedge

accountingDerivatives

held for tradingLoans and

receivablesOther financial

liabilitiesTotal carrying

amount

Non-financial assets and

liabilitiesTotal

balance sheetFair

amount

Long-term derivatives 61.3 - - - 61.3 - 61.3 61.3

Accounts receivable - - 1,721.6 - 1,721.6 - 1,721.6 1,721.6


Other current receivables - - - - 0.0 332.7 332.7 332.7

Prepaid expenses and accrued income - - - - 0.0 265.5 265.5 265.5

Cash and cash equivalents - - 249.6 - 249.6 - 249.6 249.6

FINANCIAL ASSETS 78.1 11.3 1 971,2 0.0 2,060.5 598.2 2,658.8 2,658.8

Long-term liabilities to credit institutions - - - 3,792.0 3,792.0 - 3,792.0 3,792.0

Short-term liabilities to credit institutions - - - 102.4 102.4 - 102.4 102.4

Accounts payable - - - 666.2 666.2 - 666.2 666.2

Long-term derivatives 20.4 - - - 20.4 - 20.4 20.4


Other current liabilities - - - - 0.0 105.0 105.0 105.0

Accrued liabilities and deferred income - - 46.0 - 46.0 1,229.8 1,275.8 1,275.8

FINANCIAL LIABILITIES 35.6 23.2 46.0 4,560.6 4,665.5 1,334.8 6,000.3 6,000.3

70


NOTE 27. Financial risk management, supplementary information

MARKET VALUATION OF DERIVATIVE FINANCIAL INSTRUMENTS

2012 2011

Interest rate swaps -71.0 42.4

Currency swaps 10.3 -14.2

Oil price swaps 8.9 2.3

TOTAL DERIVATIVE ASSETS AND LIABILITIES -51.8 30.5

NOMINAL VALUE OF DERIVATIVE FINANCIAL INSTRUMENTS

iNTEREST RaTE iNSTRumENTS 2012 2011

Interest rate swaps

Maturity of less than 1 year 855.8 655.8

Maturity of 2-4 years 1,564.4 1,764.4

Maturity of 5 or more years 200.0 200.0

TOTAL 2,620.2 2,620.2

Currency instruments

Forward exchange contracts -38.4 -1,716.5

TOTAL -38.4 -1,716.5

Commodity instruments

Oil price swaps 248.0 -836.7

TOTAL 248.0 -836.7

NOTE 28. Pledged assets and contingencies

2012 2011

FLOATING CHARGES

Security for liabilities to credit institutions 75.0 75.0

TOTAL 75.0 75.0

Guarantees 115.0 116.7

Other guarantees and contingent liabilities 2.7 2.6

TOTAL 117.8 119.3

A future closure of operations within the Group may involve a requirement for decontamination and restoration works. However, this is considered to be well into the future and the future expenses cannot be calculated reliably.

NOTE 29. Related party disclosures

Information on remuneration of the Board and key management personnel can be found in note 5.

Petroleos the Venezuela S.A.. (PDVSA) is the ultimate owner of 50 per cent of the shares in Nynas AB. The Nynas Group purchases approx. 76 per cent of its crude oil 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.

2012 2011

Purchases, crude 9,167.9 9,046.2

Purchases, base oils 674.0 703.4

Purchases, leasing/services - 0.6

Sales revenue 6.2 1.6

Accounts receivable 2.4 6.8

Accounts payable 10.0 348.5

71


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.

2012 2011

Purchases, bitumen 835.5 987.2


Purchases, fuel/distillates 37.3 14.8

Purchases, leasing/services 21.5 26.6




Nynas owns 50 per cent of the shares in Eastham Refinery Ltd (ERL); the other 50 per cent is owned by Shell. ERL purchases the majority of its crude oil from Nynas AB , according to the contractual price formula.

NyNaS ab: 2012 2011

Sales revenue – Nynas AB from ERL 2,531.4 2,192.8

Purchases, leasing/services 11.5 5.7

Accounts receivable 0.2 -

Accounts payable - 3.3

Nynas UK AB purchases bitumen and distillates from ERL (50 per cent 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 refiner in North West Europe; prices for distillate products reflect the FOB prices for similar products delivered in bulk to non-related customers in North West Europe (ARA area).

Nynas UK AB also provides administration and weighbridge operation services to ERL, which are charged at cost.

NyNaS uK ab: 2012 2011

Purchases, bitumen 1,486.7 1,286.9

Purchases, crude 39.5 -

Purchases, fuel 655.2 539.7


Service revenue 3.3 3.1



NOTE 30. Adjustments for non-cash items

2012 2011

Share of profit/loss of associates 12.1 -24.6

Depreciation and impairment of assets 341.9 321.9

Unrealised exchange differences and oil forward contracts 62.7 23.7

Disposals of fixed assets - 2.8

Provisions for pensions 18.8 11.1

Other provisions -6.3 -71.4

TOTAL 429.2 263.5

NOTE 31. Events after the reporting date

In December 2011 Nynas entered into an agreement with Shell to take over full control and responsibility for a base oil refinery and associated facilities in Harburg, Germany. The agreement is a 25-year lease contract.

Agreement is subject to European Commission approval for the applicable competition laws. The Company filed in February 2013 the final application for approval of the agreement.

Provided that the Commission gives its approval will Nynas then swiftly to take over parts of the refinery including some equipment for special oil.

The agreement with Shell means that the entire plant will subsequently refined into a complete specialty oil refinery.

Within a period of about two years, Nynas will then assume responsibility for the entire facility.

During the third quarter 2012 one of the covenants in the loan agreement was breached. Nynas received conditional consent (waiver) for the period up until the recapitalization was completed in late January 2013.

72


NOTES TO THE FINANCIAL STATEMENTS – PARENT COMPANY(Amounts in SEK million unless otherwise stated)

NOTE 32. Information by geographical market and sales revenues by category

Nynas specialises in the production and marketing of specialty oil products. The Group’s production is largely based on upgrading heavy crude oil to produce bitumen and naphthenic specialty oils. Bitumen is mainly used as a binding agent in asphalt road construction, but is also used in various industrial applications. Naphthenic specialty products are highly refined mineral oils with unique physi-cal and chemical properties, and are used in a number of fields. They function as insulating and cooling elements in electric transformers; they are also an impor-tant component in rubber manufacture and a raw material in the production of a number of industrial products such as lubricants and printing inks.

SALES REVENUES BY GEOGRAPHICAL MARKET

2012 2011


United Kingdom 3,917.5 3,785.3

Rest of Europe 5,143.0 5,848.3


Other 3,252.4 2,764.6

TOTAL 17,548.7 17,132.9

PURCHASES AND SALES GROUP COMPANIES

2012 2011

Purchases 15% 14%

Sales 43% 48%

NOT 33. Costs itemised by nature of expense

2012 2011

Raw materials 15,059.3 14,238.3

Transport and distribution costs 1,083.5 1,039.6

Manufacturing expenses 968.6 977.9

Costs for employee benefits (note 35) 422.0 424.7

Depreciation, amortisation, impairment (notes 42,43,44,46) -281.3 -254.0

Other expenses 495.8 815.0

TOTAL 17,747.9 17,241.5

Gains and losses on realised cash flow hedges (oil) are transferred from equity to the income statement and classified as raw materials.

NOTE 34. Other operating income/expenses

OTHER OPERATING INCOME

2012 2011

Exchange gains on operating receivables/liabilities 213.3 299.6


Other service revenue 32.3 36.4

TOTAL 604.6 436.2

OTHER OPERATING EXPENSES

2012 2011

Costs related to fire in Nynäshamn 204.5 64.8

Exchange losses on operating receivables/liabilities 222.3 288.4

TOTAL 426.8 353.2

NOTE 35. Employees, personnel expenses and remuneration of senior executives

The average number of employees, with wages, salaries, other remuneration, social security contributions and pension costs, is shown in the tables below.

AVERAGE NUMBER OF EMPLOYEES2012 2011

PARENT men women Total men women Total

Sweden 321 127 448 321 129 450

TOTAL PARENT 321 127 448 321 129 450

WAGES, SALARIES AND SOCIAL SECURITY CONTRIBUTIONS2012 2011

PARENT

Senior Executives

(7 individuals)other

Employees Total

Senior Executives

(7 individuals)other

Employees Total

Sweden

Salaries and other benefits 17.7 259.4 277.1 17.2 257.5 274.7

(of which bonuses) 3.0 4.2 7.2 2.7 4.1 6.8

Social security contributions 13.8 131.2 145.0 13.5 136.5 150.0

(of which pension costs) 7.7 40.5 48.1 8.1 47.1 55.2

TOTAL PARENT 31.5 390.5 422.0 30.8 394.1 424.7

73


GENDER DISTRIBUTION IN MANAGEMENT PARENT

Female representation, % 2012 2011

Board 0.0 0.0

Executive Board 14.3 14.3

NOTE 36. Depreciation/amortisation of tangible and intangible assets

DEPRECIATION/AMORTISATION BY FUNCTION

Intangible Tangible

2012 2011 2012 2011

Cost of sales 7.1 6.6 229.7 197.5

Distribution costs 1.1 1.4 15.0 15.6

Administrative expenses 20.1 23.6 8.3 9.3

TOTAL 28.3 31.6 253.0 222.4

DEPRECIATION/AMORTISATION BY TYPE OF ASSET

2012 2011

Computer software 28.3 31.6

Buildings 6.8 6.3

Land improvements 3.6 2.0

Plant and machinery 222.6 194.7

Equipment 20.0 19.4

TOTAL 281.3 254.0

Difference between recognised depreciation and regular depreciation: -33.1 130.4

TOTAL RECOGNISED DEPRECIATION 248.2 384.4

NOTE 37. Auditors’ fees and other remuneration

AUDIT FEES2012 2011

Ernst & Young



Tax advisory services - 0.8

Other auditors


NOTE 38. Operating leases

PAYMENTS UNDER NON-CANCELLABLE OPERATING LEASES

2012 2011

Payments during the financial year 193.6 212.6

Agreed future payments

Within one year 194.1 178.0

2 – 5 years 505.9 359.7

6 years and thereafter 150.9 133.8

In 2012 Nynas AB had four bitumen carriers on bareboat charters, were of two during the latter part of the bitumen season and two special oil carriers on time charters.

The Parent Company does not have any material agreements classified as fi-nance leases.

NOTE 39. Net financial items

2012 2011

Interest income, bank deposits 1) 47.1 28.1

Interest income, derivative instruments (actual interest rates and changes in value) 56.6 31.5

Dividends from Group companies 261.1 135.2

TOTAL FINANCE INCOME 364.7 194.9

Of which total interest income attributable to items carried at amortised cost 47.1 28.1

Interest expense, loans and bank overdrafts 2) -254.4 -128.9

Interest expense, derivative instruments (actual interest rates and changes in value) -45.8 -32.4

Interest expense, PRI pension obligations -5.6 -5.5

Net exchange differences 10.4 4.7

impairment of shares in subsidiary -117.4

Other finance costs -45.3 -12.0

TOTAL FINANCE COSTS -458.0 -174.0

Of which total interest expense attributable to items carried at amortised cost -259.9 -134.3

TOTAL NET FINANCIAL ITEMS -93.2 20.9

1) Parent’s interest income from Group companies is 32.8 (19.0)2) Parent’s interest expense from Group companies is -6.8 (-4.6)

74


NOTE 40. Appropriations

APPROPRIATIONS 2012 2011

Change in obsolescence reserve 3.0 0.0

Difference between recognised depreciation and regular depreciation 33.1 -130.4

Change in tax allocation reserve 231.7 213.5

TOTAL 267.7 83.1

UNTAXED RESERVES 2012 2011

Accumulated accelerated depreciation 1,230.9 1,264.0

Inventory obsolescence reserve 73.2 76.2

Tax allocation reserve, income year 2007 - -

Tax allocation reserve, income year 2008 - 25.2

Tax allocation reserve, income year 2009 - -



TOTAL 1,304.1 1,571.8

NOTE 41. Taxes

2012 2011

Current tax -0.1 -

Current tax, prior years -2.3 -1.7

Deferred tax -9.0 11.2

TOTAL -11.4 9.5

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:

2012 2011

Result before tax 153.1 78.4

Tax according to Parent Company’s applicable tax rate -40.3 -20.6

Tax effect of:

Dividends from subsidiaries 68.7 35.6

Impairment of shares in subsidiary -30.9 -

Other non-deductible expenses -3.6 -3.8

Other non-taxable income 1.2 -

Effect of future changed corporate income tax in Sweden -5.0 -

Adjustment of current tax in respect of prior years -2.3 -1.7

Other 0.8 0.0

Recognised tax expense -11.4 9.5

Standard rate of income tax, % 26% 26%

Effective tax rate, % 7% -12%

DEFERRED TAX ASSETS AND LIABILITIES

Assets Liabilities Net

2012 2011 2012 2011 2012 2011

Other operating receivables/liabilities 40.5 45.5 3.7 0.7 36.8 44.8

TOTAL 40.5 45.5 3.7 0.7 36.8 44.8

CHANGE IN DEFERRED TAX ON TEMPORARY DIFFERENCES DURING YEAR

Closing balance

Recognised in income statement

Recognised directly in equity

Exchange differences

Closing balance

Other operating receivables/liabilities 44.8 -9.0 1.0 - 36.8

TOTAL 44.8 -9.0 1.0 - 36.8

No tax losses have arisen in the parent company since the previous year.

75


NOTE 42. Intangible assets

2012 Goodwill Computer softwareOther intang.assets/

Trademarks Total Intangible assets

Opening cost 14.2 342.3 1.5 358.0

Acquisitions - 7.7 - 7.7

Reclassifications - -4.4 - -4.4

Closing cost 14.2 345.5 1.5 361.2

Opening regular depreciation -10.9 -209.9 -1.5 -222.3

Depreciation for the year - -28.3 - -28.3

Closing regular depreciation -10.9 -238.1 -1.5 -250.5

Opening impairment -3.3 -26.7 - -30.0

Closing impairment -3.3 -26.7 - -30.0

Closing residual value 0.0 80.7 0.0 80.7

2011 Goodwill Computer softwareOther intang.assets/

Trademarks Total Intangible assets

Opening cost 14.2 306.7 1.5 322.4

Acquisitions - 39.3 - 39.3

Reclassifications - -3.7 - -3.7

Closing cost 14.2 342.3 1.5 358.0

Opening regular depreciation -10.9 -178.2 -1.5 -190.6

Depreciation for the year - -31.6 - -31.6

Closing regular depreciation -10.9 -209.9 -1.5 -222.3

Opening impairment -3.3 -26.7 - -30.0

Closing impairment -3.3 -26.7 - -30.0

Closing residual value 0.0 105.7 0.0 105.7

NOTE 43. Tangible assets

2012 BuildingsPlant

and machinery EquipmentConstruction

in progressTotal

tangible assets

Opening cost 275.9 4,278.1 329.2 869.3 5,752.4

Acquisitions 19.3 19.8 3.7 403.7 446.5

Reclassifications 16.4 337.2 15.0 -364.2 4.4

Closing cost 311.6 4,635.1 347.8 908.8 6,203.3





Opening impairment - -24.9 - -13.3 -38.2

Impairment for the year - - - - 0.0



Of which carrying amount, Sweden 207,5

76


2011 BuildingsPlant

and machinery EquipmentConstruction

in progressTotal

tangible assets

Opening cost 318.9 3,911.0 303.4 379.3 4,912.6

Acquisitions 11.3 208.4 15.7 608.5 844.0

Disposals 0.0 -5.6 -2.2 - -7.9

Reclassifications -54.2 164.3 12.2 -118.6 3.7

Closing cost 275.9 4,278.1 329.2 869.3 5,752.4



Disposals - 4.4 2.0 - 6.3

Closing regular depreciation -93.7 -2,293.4 -238.0 - -2,625.1


Opening impairment - -24.9 - - -24.9

Impairment for the year - - - -13.3 -13.3

Closing impairment - -24.9 - -13.3 -38.2



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

NOTE 44. Investments in group companies

2012 2011

Opening cost 920.0 919.9

Purchases - 0.1

Closing cost 920.0 920.0

List of Group Companies, see note 14.

NOTE 45. Other long-term receivables

2012 2011

Opening balance - 1.4

Amounts received - -1.4

Closing balance - 0.0

NOTE 46. Inventories

2012 2011

Raw materials 527.2 728.0

Semi-finished products 457.1 413.6

Finished products 1,454.3 1,397.0

TOTAL 2,438.6 2,538.6

Inventories are measured at the lower of cost, using the first-in/ first-out method, and net realisable value.

77


NOTE 47. Accounts receivable

2012 2011

Accounts receivable, not due 396.9 485.3

Provision for impairment of accounts receivable -1.7 -1.9

NOT DUE ACCOUNTS RECEIVABLE, NET 395.3 483.3

Age analysis of past due accounts receivable

0-90 days 113.3 95.1

91–180 days 0.4 0.0

Over 180 days 14.5 8.2

TOTAL OVERDUE ACCOUNTS RECEIVABLES 128.2 103.2

The Parent Company has recognised an impairment loss of SEK 1.7 (1.9) million on accounts receivable. The loss is reported under distribution costs in the income statement.

NOTE 48. Prepayments and accrued income

2012 2011

Rent 2.8 2.2

Charter hire 32.3 4.1

Pension premiums 5.0 1.9


Software licences 7.2 7.2

Other prepayments 14.5 12.3

TOTAL 162.0 122.7

NOTE 49. Cash & cash equivalents

2012 2011

Cash and bank balances 631.8 510.4

Cash & cash equivalents recognised 631.8 510.4

The above items have been classified as cash & cash equivalents on the following basis:* they are subject to an insignificant risk of changes in value* they can readily be converted into cash* they have a maturity of no more than three months from the date of acquisition

The Parent Company’s cash & cash equivalents comprise its deposits in the Group’s common bank accounts and its own bank accounts.

NOTE 50. Equity

DISTRIBUTION OF SHARE CAPITAL

Change in total number of shares 2012 2011

Opening number 67,532 67,532

Change during the year 0 0

CLOSING NUMBER 67,532 67,532

CLASS OF SHARE2012 2011



Class A 33,765 50% 33,765 50%

Class B 33,767 50% 33,767 50%

TOTAL 67,532 100% 67,532 100%

RESTRiCTEd RESERvESRestricted reserves may not be reduced by distribution of dividends.

uNRESTRiCTEd EQuiTyRetained earnings Retained 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 reserve (if applicable) constitute total unrestricted equity, in other words the amount available for distribution to shareholders.

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 on in the table on page 78. Net actuarial gains and losses are recognised in profit or loss to the extent that they exceed the 10 per cent corridor. The corridor’s ceiling is 10 per cent of the higher of the present value of the defined benefit obligation and the fair value of plan assets. The net portion of the calculated gains and losses exceeding the corridor’s ceiling is recognised over the average expected remaining period of employment of the employees, with effect from the year following the present financial year. Defined benefit pension plans are calculated by an independent external actuary.

In the case of a multi-employer defined benefit plan, sufficient 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 ofthe Swedish plan for salaried employees (ITP) is funded by pension provisions, which are covered by credit insurance with Försäkringsbolaget Pensionsgaranti (FPG) and managed by a Swedish multi-employer institution, Pensionsregistreringsinstitutet (PRI).

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 83.4 (77.7) million, which corresponds to the value of the obligations.

78


RECONCILIATION OF REVISED PENSION LIABILITY2012 2011

Present value of pension obligations, wholly or partly funded 3.5 4.3

Fair value of pension benefit plan assets -16.6 -16.0

Surplus in pension benefit plan -13.0 -11.6

Present value of obligations relating to unfunded pension plans 135.8 129.1

Unrecognised surplus in pension benefit plan 13.0 11.6

NET LIABILITY RECOGNISED 135.8 129.1

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 4.2 per cent (4,5).

CHANGE IN NET DEBT2012 2011

Net debt at beginning of year 129.1 114.0

Cost recognised in income statement 12.7 20.6

Pension payments -6.1 -5.5

NET DEBT AT END OF YEAR 135.8 129.1

Payments relating to defined benefit plans are expected to amount to SEK 6.3 million in 2013.

PENSION EXPENSE FOR THE PERIOD2012 2011

Book reserve pensions 1.1 9.6

Interest expense (calc. discount effect) 5.6 5.5

COST OF BOOK RESERVE PENSIONS 6.6 15.1

Pensions through insurance:

Insurance premiums 37.7 31.0

Recognised net cost arising from pensions excl. tax 44.4 46.1

Dividend tax on pension funds 0.5 0.5

Payroll tax on pension costs 9.7 8.7

PENSION EXPENSE FOR THE YEAR 54.6 55.3

Percentage return on pension benefit plan assets 1.8% 2.4%

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

2012 2011

Shares and participating interests 8.2 6.4

Other interest-bearing securities 5.7 5.9

Bank deposits 2.7 3.6

TOTAL 16.5 15.9

Pension benefit plan assets do not include any securities issued by Nynas AB or assets used by Nynas AB.

NOTE 52. Other provisions

2012 2011


Provisions for the year 1.5 -

Amounts utilised during year -3.8 -36.9

Change of remediation principle - -28.5

TOTAL 250.4 252.7

Provisions expected to be utilised after more than 12 months 242.1 228.7

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/interception dams (SEK 26 million) and J3/J4 (SEK 230 million), which are not present value calculations. See note 23 for description.

All costs associated with the remediation project have been calculated using the present value method.

NOTE 53. Liabilities to credit institutions

In November 2011, a new syndicated stand-by credit line of EUR 750 million was arranged. The term of the credit facility is five years. In this connection the syndi-cated stand-by credit line for EUR 150 million maturing in 2012 was redeemed. The other committed credit facilities were also concluded in connection with the new syndicated credit facility.

A private placement loan from US investors was issued in September 2006. The loan total is USD 140 million and the fixed-rate periods are 8 and 10 years. USD 90 million has been swapped to a variable SEK interest rate and USD 50 million to a fixed SEK interest rate.

Currency interest rate swaps have terms that exactly match the bonds’ maturities. The loan agreement includes financial terms (see the Risk management section)

and one of the financial terms in the loan agreement was violated in the third quarter of 2012. Nynas received conditional permission (known as “waivers”) for the period until the entire recapitalisation was completed in the end of January 2013. Pending completion, long-term interest-bearing liabilities of SEK 3,980 million per the balance sheet date were reclassified as the short-term portion of interest-bearing liabilities

79


2012 2011


Loans from credit institutions - 3,791.5

TOTAL 0.0 3,791.5

CURRENT LIABILITIES

Loans from credit institutions 3,986.0 8.2

Overdraft facilities 0.2 71.6

TOTAL 3,986.2 79.8

GRAND TOTAL 3,986.2 3,871.3

2012


Interest, %

Cur-rency

Nominal amount (local

currency)

Amounts in SEK

millions


2012/2013 Bond issue 2.27 USD 90.0 666.0

2012/2013 Bond issue 2.26 USD 50.0 370.0






2012/2013 Stand-by credit line ( €750) 4.46 SEK 1,000.0 1000.0

2012/2013 Bank loans 7.65 RUB 14.0 3.0

2012/2013 Bank loans 8.35 RUB 8.0 1.7

2012/2013 Bank loans 8.50 RUB 8.0 1.7

2012/2013 Overdraft 0.2

TOTAL 3,986.2

2011


Interest, %

Cur-rency


currency)

Amounts in SEK

millions

LONG-TErM LIABILITIES Variable-rate loans

2006/2014 Bond issue 3.28 USD 90.0 718.6

2006/2016 Bond issue 3.29 USD 50.0 399.1








TOTAL 3,791.5

2011


Interest, %

Cur-rency


currency)

Amounts in SEK

millions

CUrrENT LIABILITIES Variable-rate loans

2011/2012 Bank loans 5.80 RUB 14.0 3.0

2011/2012 Bank loans 6.05 RUB 8.0 1.8

2011/2012 Bank loans 6.40 RUB 16.0 3.4

2011/2012 Factoring 0.0

2011/2012 Overdraft 71.6

2011/2012 Other bank facilities 0.0

TOTAL 79.8

NOTE 54. Accrued liabilities and deferred income

2012 2011

Purchases of raw materials, semi-finished and finished goods 430.7 757.8

Accrued salaries/holiday pay 79.5 81.5

Accrued interest 41.4 17.2

Shipping costs 32.2 15.4

Accrued investment costs 23.0 83.8

Accrued customer receipts - 46.0

Other 58.3 104.8

TOTAL 665.2 1,106.5

80


NOTE 55. Financial assets and liabilities measured at fair value

See note 26 for a description of the measurement and calculation of fair value.

2012Derivatives used in hedge accounting

Derivatives held for trading

Loans and receivables

Other financial liabilities

Total carrying amount

Non-financial as-sets and liabilities

Total balance sheet

Accounts receivable - - 523.5 - 523.5 - 523.5

Receivables from Group companies - - 964.7 - 964.7 - 964.7

Short-term derivatives 18.2 27.5 - - 45.7 - 45.7

Other current receivables - - - - 0.0 87.2 87.2

Prepaid expenses and accrued income - - 0.0 - 0.0 162.0 162.0

Cash and cash equivalents - - 631.8 - 631.8 - 631.8

FINANCIAL ASSETS 18.2 27.5 2,120.0 0.0 2,165.7 249.2 2,415.0

Short-term liabilities to credit institutions - - - 3,986.2 3,986.2 - 3,986.2

Long-term liabilities to Group companies - - - 0.2 0.2 - 0.2

Current i-b liabilities to Group companies - - - 866.7 866.7 - 866.7

Current non-i-b liabilities to Group companies - - - 103.0 103.0 - 103.0

Accounts payable - - - 200.4 200.4 - 200.4

Long-term derivatives 58.0 - - - 58.0 - 58.0

Short-term derivatives - 39.6 - - 39.6 - 39.6

Other current liabilities - - - - 0.0 27.8 27.8

Accrued liabilities and deferred income - - - - 0.0 665.2 665.2

FINANCIAL LIABILITIES 58.0 39.6 0.0 5,156.5 5,254.2 693.0 5,947.1

2011Derivatives used in hedge accounting

Derivatives held for trading

Loans and receivables

Other financial liabilities

Total carrying amount

Non-financial as-sets and liabilities

Total balance sheet


Accounts receivable - - 586.5 - 586.5 - 586.5

Receivables from Group companies - - 1,523.8 - 1,523.8 - 1,523.8


Other current receivables - - - - 0.0 178.9 178.9

Prepaid expenses and accrued income - - 0.1 - 0.1 122.6 122.7

Cash and cash equivalents - - 510.4 - 510.4 - 510.4

FINANCIAL ASSETS 78.1 11.3 2,620.8 0.0 2,710.2 301.5 3,011.7

Long-term liabilities to credit institutions - - - 3,791.5 3,791.5 - 3,791.5

Short-term liabilities to credit institutions - - - 79.8 79.8 - 79.8

Long-term liabilities to Group companies - - - 0.2 0.2 - 0.2

Current i-b liabilities to Group companies - - - 732.1 732.1 - 732.1

Current non-i-b liabilities to Group companies - - - 214.3 214.3 - 214.3

Accounts payable - - - 396.7 396.7 - 396.7



Other current liabilities - - - - 0.0 13.1 13.1

Accrued liabilities and deferred income - - 46.0 - 46.0 1,060.5 1,106.5

FINANCIAL LIABILITIES 35.6 23.2 46.0 5,214.6 5,319.4 1,073.6 6,393.0

81


NOTE 56. Pledged assets and contingencies

2012 2011

FLOATING CHARGES

Security for liabilities to credit institutions 75.0 75.0

TOTAL 75.0 75.0

Sureties for Group companies 20.0 105.1

Guarantees 37.0 50.2

Other guarantees and contingent liabilities 2.7 2.6

TOTAL 59.7 157.9

A future closure of operations within the Group may involve a requirement for decontamination and restoration works. However, this is considered to be well into the future and the future expenses cannot be calculated reliably.

NOTE 57. Related party disclosures

Information on remuneration of the Board and key management personnel can be found in note 5.

Petroleos the Venezuela S.A.. (PDVSA) is the ultimate owner of 50 per cent of the shares in Nynas AB. The Nynas Group purchases approx. 76 per cent of its crude oil 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.

2012 2011

Purchases, crude 9,167.9 9,046.2






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.

2012 2011

Purchases, bitumen 142.5 271.5


Purchases, fuel/distillates 37.3 14.8





Nynas owns 50 per cent of the shares in Eastham Refinery Ltd (ERL); the other 50 per cent is owned by Shell. ERL purchases the majority of its crude oil from Nynas AB, according to the contractual price formula.

NyNaS ab: 2012 2011

Sales revenue – Nynas AB from ERL 2,531.4 2,192.8


Accounts receivable 0.2 -

Accounts payable - 3.3

NOTE 58. Adjustments for non-cash items

2012 2011

Depreciation and impairment of assets 281.3 267.3

Unrealised exchange differences and oil forward contracts -0.4 1.4

Disposals of fixed assets - 1.5

Provisions for pensions 6.6 15.1

Other provisions -2.3 -65.4

TOTAL 285.2 220.0

82


The Group’s equity at the end of the financial year amounts to SEK 3,652 million. The Board proposes that the available profits of SEK 1,400,183,750 in the Parent

Company be distributed as follows:

DIVIDEND TO SHAREHOLDERS:

Total dividend 0

Carried forward 1,400,183,750

SEK 1,400,183,750

PROPOSED DISTRIBUTION OF PROFIT

Stockholm, 29 April 2013

matti lievonen Eulogio del PinoChairman of the Board

john launiainen

ygor martinez Tuomas Hyyryläinen alfredo Calderon

antonio Suarez Torres Roland bergvik Pia ovrin

Staffan lennströmPresident & CEO

Our Audit Report was submitted on 29 April 2013.

Ernst & Young AB

jan birgersonAuthorised Public Accountant

83


To the annual meeting of the shareholders of Nynas AB (Publ)

Reg. no 556029-2509

Report on the annual accounts and consolidated accountsWe have audited the annual accounts and consolidated accounts of

Nynas AB (Publ) for the year 2012. The annual accounts and consolidated

accounts of the company are included in the printed version of this docu-

ment on pages 3, 6–83.

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 responsible for the

preparation and fair presentation of these annual accounts in accordance

with the Annual Accounts Act and of the consolidated accounts in ac-

cordance 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 responsibilityOur responsibility is to express an opinion on these annual accounts

and consolidated accounts based on our audit. We conducted our audit

in accordance with International Standards on Auditing and generally

accepted auditing standards in Sweden. Those standards require that

we comply with ethical requirements 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 in-

volves 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 appropriateness of accounting poli-

cies used and the reasonableness of accounting estimates made by the

Board of Directors and the Managing Director, as well as evaluating the

overall presentation of the annual accounts and consolidated accounts.

We believe that the audit evidence we have obtained is sufficient and

appropriate to provide a basis for our audit opinions.

OpinionsIn 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 company as of 31 December 2012 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

AUDIT REPORT

as of 31 December 2012 and of their financial performance 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 administration report is consistent with the other parts

of the annual accounts and consolidated accounts.

We therefore recommend that the annual meeting of shareholders

adopt the income statement and balance sheet for the parent company

and the group.

Report on other legal and regulatory requirementsIn addition to our audit of the annual accounts and consolidated 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 2012.

responsibilities of the Board of Directors and the Managing DirectorThe 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 responsibilityOur 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 ap-

propriations of the company’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 ad-

dition 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 sufficient and

appropriate to provide a basis for our opinions.

OpinionsWe recommend to the annual meeting of shareholders that the profit

be appropriated in accordance with the proposal in the statutory ad-

ministration report and that the members of the Board of Directors and

the Managing Director be discharged from liability for the financial year.

Stockholm, 29 April 2013

Ernst & Young AB

Jan Birgerson

Authorized Public Accountant

84


NYNAS THROUGH THE YEARS

1928The 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 work-force has to wrestle with plenty of problems, in the very first year they deliver petrol, paraffin, fuel oil and lubricating oil.

1931A 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.

1950sThe network of petrol stations is expanded. Nynas is the first company in Sweden to have catalytic reformation. This means that petrol can be produced with a significantly higher octane level.

1956The refinery in Gothenburg is completed.

1967–69Major 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.

85


1986The state-owned Venezuelan oil company Petroleos de Venezuela acquires 50% 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 Investerings bank and Axel Johnson AB – 50 per cent of the shares in total. This means that 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.

1990 The lubricant business is sold to Statoil. Nynas’ business is now based on two pillars: bitumen and naphthenic 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 optimized supply chain.

1985Nynas signs a crude oil agreement with Petroleos de Venezuela (PDVSA). This guarantees feed-stock supplies, which is a prerequisite for managing the transition into an international specialty oil company.

86


aSPHalTAsphalt is a mixture of aggregates (stone), sand, filler and bitumen, which is an oil-based binder. Traditionally asphalt is produced in specialist production 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 applications. However, the recipe of the asphalt mixture needs to be designed according to the type of application.

bENCH SCalE uNiTNynas bench scale unit is a copy of a hydrogenation plant. Using a miniature unit it is possible to test and develop new products, and also to evaluate new crude oils and catalysts before starting up full scale production.

biTumENBitumen 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 EmulSioNBitumen 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 special-ist 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.

CaTalyST aNd HydRoTREaTmENT TECHNologyNaphthenic specialty oils are made in a hydrotreatment facility. Hydrotreatment gives the oil the various qualities demanded by customers, including different levels of viscosity at various temperatures, the ease with which it mixes with other products and its environmental characteristics.

Cold miX TECHNologyAsphalt is traditionally mixed at elevated temperatures. This softens the bitu-men (reduces its viscosity) sufficiently to allow mixing, coating of aggregate and placing of the material. Bituminous emulsions reduce the viscosity of the binder without the need for elevated temperatures. Techniques using these processes are commonly referred to as ’cold mix’. These types of asphalt mixtures can have many benefits including lower energy use/ CO 2 emissions, greater opportunity to include recycled materials etc.

CRudE oilUnprocessed oil is called crude oil. It is a mixture of thousands of hydrocarbonsand 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.

CuRRENT RaTioCurrent assets divided by current liabilities.

dEbT/EQuiTy RaTioInterest-bearing liabilities including interest-bearing pension liabilities, less cash& cash equivalents divided by equity.

dowNSTREamThe downstream oil sector refers to the refining of crude oil, and the sale and-distribution of natural gas and products derived from crude oil.

EQuiTy/aSSETS RaTioEquity as a percentage of total assets at year-end.

HydRogEN gaS FaCiliTyA lot of hydrogen gas is required to manufacture naphthenic specialty oils. The hydrogen needed for hydrotreatment is produced in special hydrogen produc-tion facilities.

iNTEREST CovERagE RaTioProfit after net financial items plus interest expenses divided by interest expenses.

lNgIf the temperature is lowered to minus 162 degrees Celsius, natural gas is con-densed into liquid and its volume reduced 600 times. Condensed natural gas is called liquefied natural gas (LNG) and accounts for some 20 per cent of world trade in natural gas.

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 preset targets. The most common international standard is ISO, e.g., the ISO 9000 series for quality management. This includes processes, guidelines and job descriptions 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 hy-drotreatmentor 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.

PERFoRmaNCE PRogRammERe-alignment of bitumen product portfolio into categories Regular, Extra and Premium. The result of close cooperation with our customers and re-aligning to meet the customers’ needs for long-term, cost effective solutions with value added.

PolymER modiFiEd biTumENBitumen softens as it is heated or when placed under slow/heavy loading stresses. At high ambient temperatures it can flow and deform; under freezing conditions it can be brittle and crack. The addition of selected polymers to bitumen can reduce these effects, which will increase the life expectancy of the asphalt.

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.

RETuRN oN CaPiTal EmPloyEdProfit after net financial items plus interest expense as a percentage of total assets less non-interest-bearing current liabilities.

WORD LIST

87


SEmi-HoT aSPHalT PRoduCTioNWhen semi-hot asphalt mixes are produced a soft binder is used, which makes it possible for paving to be undertaken at a significantly lower temperature than with hot mix asphalt. This produces environmental benefits and also means that the surface has better flexibility and healing capacity.

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 traditionally 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 resist-ance 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 environmental risks. Emissions arise from many sources includ-ing factories, animals, industrial processes and storage of organic compounds.

RETuRN oN CaPiTal EmPloyEdProfit after net financial items plus interest expense as a percentage of total assets less non-interest-bearing current liabilities

RETuRN oN EQuiTyProfit after net financial items less current tax as percentage of average equity

EQuiTy/aSSETS RaTioEquity as a percentage of total assets at year-end

iNTEREST CovERagE RaTioProfit after net financial items plus interest expenses divided by interest expenses

CuRRENT RaTioCurrent assets divided by current liabilities

dEbT/EQuiTy RaTioInterest-bearing liabilities, including interest-bearing pension liabilities, less cash & cash equivalents divided by equity

DEFINITIONS

Production: Oxenstierna & PartnersPrint: Åtta45

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Nynas ABBox 10700

(Visting adress: Lindetorpsvägen 7)SE-121 29 Stockholm

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www.nynas.com

Phone: +46 8 602 12 00

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