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2008-11-10 17:56:15 CET 2008-11-10 17:57:16 CET REGULATED INFORMATION Neomarkka - Interim report (Q1 and Q3)NEOMARKKA GREW IN RUSSIA STRONG DECREASE OF METAL PRICES AND DELAYED INSTALLATIONS OF DOMESTICPRODUCTION LINES AFFECTED THE RESULTNeomarkka Plc INTERIM REPORT 10.11.2008 at 6.45 PM 1(16) INTERIM REPORT 1.1. - 30.9.2008 NEOMARKKA GREW IN RUSSIA STRONG DECREASE OF METAL PRICES AND DELAYED INSTALLATIONS OF DOMESTIC PRODUCTION LINES AFFECTED THE RESULT -------------------------------------------------------------------------------- | KEY FIGURES | 7-9/ | 7-9/ | 1-9/ | 1-9/ | | | 2008 | 2007 | 2008 | 2007 | -------------------------------------------------------------------------------- | Turnover, EUR million, of which | 31.3 | 22.8 | 90.3 | 37.0 | -------------------------------------------------------------------------------- | - Cable business turnover | 31.1 | 23.3 | 91.0 | 31.9 | -------------------------------------------------------------------------------- | - Gains and losses from trade of | 0.2 | -0.6 | -0.7 | 5.1 | | financial assets | | | | | -------------------------------------------------------------------------------- | Operating profit, EUR million, of | -0.2 | -1.2 | 3.3 | 3.6 | | which | | | | | -------------------------------------------------------------------------------- | - Cable business | 0.1 | -0.5 | 5.1 | -0.5 | -------------------------------------------------------------------------------- | - Trade of financial assets | -0.3 | -0.7 | -1.6 | 4.1 | -------------------------------------------------------------------------------- | Profit for the financial year EUR | -0.8 | -1.1 | 0.4 | 1.8 | | million | | | | | -------------------------------------------------------------------------------- | Earnings per share EUR | -0.12 | -0.19 | 0.08 | 0.29 | -------------------------------------------------------------------------------- Return on investment (ROI) during period under review was 3.5 % (3.7%). Equity ratio is 48.7 % (50.3 %). Neomarkka has executed the new strategy since June 2007. All financial figures are not fully comparable to the corresponding period of the previous year, because the business operations have changed substantially. The acquired OAO Expocable´s financial figures have been taken into the account in cable business segment reporting starting from 1 August 2008. Reka Cables (Reka Cables Ltd and its subsidiaries) belong to the cable business segment and has been part of Neomarkka Group since 1.6.2007. These financial figures of Reka Cables are comparable: -------------------------------------------------------------------------------- | REKA CABLES | 1-9/ | 1-9/ | | | 2008 | 2007 | -------------------------------------------------------------------------------- | Turnover, EUR million | 90.1 | 72.2 | -------------------------------------------------------------------------------- | Operating profit, EUR million | 5.8 | 4.2 | -------------------------------------------------------------------------------- MAJOR EVENTS DURING THE PERIOD UNDER REVIEW Industrial private equity investments; Cables The turnover and operating profit of Reka Cables increased also during the third quarter. However, the growth was limited by the delayed and prolonged installations of the Riihimäki medium- and high voltage factory machines. The changes needed for the installation of the machines decreased the available production capacity of medium- and high voltage products. Orders were postponed and partly also cancelled. The delay has caused also turbulence in the production process. Operating profit includes quality costs amounting to EUR 0.8 million. The prices of the metals (copper and aluminium) have been very volatile. The rapid price decrease of metals in September affected the stock valuation diminishing the operating profit in September by EUR 1.0 million. In August Neomarkka bought majority of the shares of Russian cable manufacturer. OAO Expocable is producing special cables e.g. for the use of oil and gasworks. The company is situated next to the power cable factory of Reka Cables. The acquisition expanded the coverage of Neomarkka´s cable business in Russia and enabled the development of the factory area in Podolsk. The total investment decision of close to EUR 20 million was made to develop the cable production in Russia. The amount includes machinery and equipment purchases, enlargement of the production buildings, changes in the factory area and the acquisition of OAO Expocable. Russia´s share of the turnover during the period under review was EUR 11.4 million (EUR 2.2 million). Despite the strong growth the sales has suffered due to the delays of Riihimäki production plant. The St. Petersburg market area has been entered also by medium voltage products. On the other hand major projects in Moscow area have been postponed due to the financial situation. Capacity problems limit new order intake for the rest of the year regarding some products. The associated company Nestor Cables Ltd´s planned delivery capability of fibre optic telecommunication cables was reached only at the end of the second quarter. Also the installations of the machines needed for the copper cables have been delayed and during the implementation there have been material losses. The demand has been lower during the third quarter due to the fact that customers have lowered their stock levels. The delay of installations is shown in the financial result. The loss has been included in the Group result according to share of ownership (30%). Investments in securities During the third quarter of the year, the gains and losses from the financial assets were slightly positive. However, the gains and losses from the financial assets during the period under review were negative and the segment made operating losses. Neomarkka has detached from the bonds issued by Nordea Bank Plc on 30 June 2008. The costs incurred from the detach made earlier than what was agreed in the agreements has been included to the financial figures. The market risk of the investments in securities is very low because Neomarkka does not have shares or share related derivatives in the investment portfolio. The funds are mainly invested in temporal deposits. Regarding ownership relating private equity, no changes were made during the period. NEOMARKKA SHARES; PRICES AND VOLUMES TRADED Neomarkka Plc's B shares are listed on the NASDAQ OMX Helsinki. The closing price at the end of the review period was EUR 9.00 (EUR 9.65) per share. On 31 December 2007 the price was EUR 9.79 per share. The share turnover in the review period was 339,309 (2,263,490) shares. The lowest B share quotation was EUR 7.90 (EUR 7.78) and the highest quotation was EUR 10.50 (EUR 9.85). FINANCIAL RESULT, BALANCE SHEET AND FINANCING The interim report has been drawn up in accordance with the IAS 34 requirements for interim reports. Same principles for drawing up consolidated financial statements have been followed as in the financial statement 2007. The minority interests have been taken into the consideration. The exchange rate differences of the long term intra-group loans are handled in translation differences. The interim report is unaudited. FINANCIAL RESULT The consolidated turnover totalled EUR 90.3 million in the review period, consisting of the turnover of the cable business and the gains and losses from the trade of financial assets. The turnover of the cable business totalled EUR 91.0 million (EUR 31.9 million). The gains and losses from the trade of financial assets totalled EUR -0.7 million (EUR 5.1 million) in the review period. Operating profit for the review period was EUR 3.3 million (EUR 3.6 million), of which the operating profit of the cable business was EUR 5.1 million (EUR -0.5 million). The operating loss of the trade of financial assets was EUR -1.6 million (operating profit EUR 4.1 million). The net result for the review period was EUR 0.4 million (EUR 1.8 million). Earnings per share were EUR 0.08 (EUR 0.29). BALANCE SHEET AND FINANCING At the end of the review period the balance sheet totalled EUR 117.1 million (EUR 120.2 million). At the end of the review period, the equity per share was EUR 9.49 (10.04) and the equity ratio was 48.7% (50.3%). The growth of cable business requires financing of the working capital. Therefore the check account limit of Reka Cables has been increased to EUR 6.0 million. Reka Cables has also the factoring credit limit of EUR 7.5 million. The delays in the start-up process of the associated company Nestor Cables Ltd are seen in the financing situation of the company. Check account limits are in use and further financing possibilities are being surveyed to be able to have more flexibility in the monthly variations. The business operations start-up is financed with both own and external capital. The liquidity situation of the Group is good. INVESTMENTS The investments made in the review period relate to the cable business, totalling EUR 16.1 million of which the acquisition of the majority of the share capital of OAO Expocable was EUR 7.3 million (EUR 37.0 million of which purchase of Reka Cables was EUR 27.0 million). Long-term leases have been recognised as fixed assets under IFRS. Shareholders' meeting and governance The Annual General Meeting (AGM) was held on 11 June 2008. The AGM resolved to accept the Annual Report, the Financial Statement and the Consolidated Financial Statements from fiscal period 2007 and accepted the proposal of the Board of Directors to pay dividend of EUR 0.50 per share. From the financial year 2006 a dividend of EUR 0.30 per share was paid. The AGM discharged the Board of Directors and the Managing Director for fiscal period 2007. The AGM resolved to elect five members to the Board of Directors of Neomarkka Plc and re-elected the following members: Jorma Wiitakorpi as chairman of the Board, Matti Lainema as vice chairman and as members Ilpo Helander, Taisto Riski and Pekka Soini. The AGM authorized the Board of Directors to acquire the company´s own shares and to decide on the issue of shares and special rights entitling to shares as proposed. As external auditor for the fiscal period 2008 the AGM elected Deloitte & Touche Ltd, Authorized Public Accountants, having Hannu Mattila, APA, as main auditor. Taisto Riski and Matti Laimema, members of the Board of Directors, are the members of the Audit Committee. The Managing Director of Neomarkka Plc is Markku E. Rentto. PERSONNEL The Group employed an average of 367 people (135). Group personnel numbered 540 on 30 September 2008, of which 537 were in the cable business. GROUP STRUCTURE AND SHAREHOLDERS Neomarkka Plc is the parent company in a Group that includes the fully owned subsidiaries Novalis Plc and Alnus Ltd with their subsidiaries. The domicile of the parent company is Hyvinkää. At the end of the review period, Neomarkka Plc had 12,705 (13,132) shareholders. The biggest shareholder Reka Ltd had a 50.76% (50.76%) interest at the end of the review period, with 65.77% (65.77%) of all votes. Neomarkka Plc is thus part of the Reka Group. Reka Ltd's domicile is Hyvinkää. At the end of the review period, the aggregate ownership of the ten largest shareholders was 60.05% (59.59%) of all shares and 72.18% (71.90%) of all votes. MAJOR EVENTS AFTER THE REVIEW PERIOD The installations and tests of machinery at the Riihimäki factory have been continued. Major part of the installations have been finished but the last part of the machinery of the production line and some machines enabling the widening of the high voltage product sortiment will be installed during the last months of the year. The delay of machinery installations in Riihimäki has affected to the timetable of the extension and changes to Russian production plants buildings and machinery. The extension project in Russia will proceed fully after the extension in Riihimäki has been finished. Reka Cables Ltd has started the co-operation negotiations on 11 November 2008 concerning factories in Hyvinkää and in Keuruu due to the seasonal fluctuations. More detailed need for lay-offs and length of lay-offs will be specified during the negotiations. Possible adjustments will start earliest on 3 December 2008. The volatility of metal prices has continued. The situation in the financial markets shows in economy and the demand of cables has decreased at least instantaneously. The world metal reserves have grown and prices of both aluminium and copper have further decreased. The need to downsize these reserves has tightened the competition. Reka Cables Ltd has paid back its loan to the Nordic Investment Bank. At the end of September the loan in the balance sheet was EUR 1.3 million. Regarding investments in securities, assets have been invested in short-term investments. ASSESSMENT OF UNCERTAINTY FACTORS AND BUSINESS RISKS The main financial risks of Neomarkka are currency, interest rate, commodity, liquidity, credit and investment market-risks. These financial risks and their hedging measures are explained further in notes to the financial statement for year 2007. In accordance with the updated strategy in 2007, future risk factors are more closely tied to trends in the business operations of a small number of portfolio companies and to normal business risks. The previous strategy based Neomarkka's risk on a widely distributed market risk. The most significant risks at Reka Cables and OAO Expocable are the fluctuation in raw material costs and more rapid changes in the volume of orders than in the past. In order to be aware of the risks and prepare for them, Reka Cables Ltd has carried out an extensive risk-charting process. The company believes that the cable markets in Russia will grow and develop and has invested heavily in exploiting the business opportunities there. These investments include a risk that the growth in Russia will not take place according to expectations. Nestor Cables Ltd's business carries cable business risks and the risks involved in starting up a new company. Comments made in this report that do not refer to actual facts that have already taken place are future estimates. Such estimates include expectations concerning market trends, growth and profitability, and statements that include the terms ‘believe', ‘assume', ‘will be', or a similar expression. Since these estimates are based on current plans and estimates, they involve risks and uncertainty factors which may lead to results differing substantially from current statements. Such factors include 1) operating conditions, e.g. continued success in production and consequent efficiency benefits, availability and cost of production inputs, demand for new products, changing circumstances in respect of the acquisition of capital under acceptable conditions; 2) circumstances in the sector such as the intensity of demand for products, the competition, current and future market prices for the Group's products and related pricing pressures, the financial situation of the Group's customers and competitors, competitors' possible new competing products and 3) the general economic situation such as economic growth in the Group's main geographical market areas or changes in exchange rates and interest rates. PROSPECTS FOR THE NEAR FUTURE The volatility of metal prices has continued. The prices of metals have decreased substantially since July 2008, 40% in copper and 30% in aluminium. The prices of the metals at the end of the year are estimated to be roughly at the level of today. The situation in the financial markets shows in economy and the demand of cables has decreased at least instantaneously. At this moment it is difficult to safely estimate the length and volume of the decrease of demand for building related cables. In the previous interim report it was stated that due to the production facilities in Russia and the expansion of the Riihimäki production facilities the turnover of industrial activities will exceed EUR 120 million and that there will be increase in profitability. The delay of machinery installations in Riihimäki will cause EUR 10 million loss of turnover. Therefore the turnover is estimated to be somewhat less than EUR 120 million. The operative business profit before metal write offs is estimated to remain at the level of year 2007. The adverse effects of only write offs of metals have by now risen to EUR 2 million and the result is estimated to be significantly below the result of the last year and the goal. Majority of Neomarkka´s investments in securities are in capital secured short term investments. -------------------------------------------------------------------------------- | CONSOLIDATED INCOME STATEMENT (IFRS) | | | | -------------------------------------------------------------------------------- | | 7-9/ | 7-9/ | 1-9/ | 1-9/ | -------------------------------------------------------------------------------- | EUR 1,000 | 2008 | 2007 | 2008 | 2007 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Industrial business | 31,043 | 23,347 | 90,980 | 31,890 | | turnover | | | | | -------------------------------------------------------------------------------- | Gains and losses from the | 237 | -557 | -703 | 5,077 | | trade of financial assets | | | | | -------------------------------------------------------------------------------- | Turnover | 31,280 | 22,790 | 90,277 | 36,967 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Change in inventories of | -1,700 | -563 | 4,245 | -1,417 | | finished products and | | | | | | production in progress | | | | | -------------------------------------------------------------------------------- | Production for own use | 58 | 1 | 116 | 11 | -------------------------------------------------------------------------------- | Materials and services | -21,750 | -17,517 | -69,845 | -23,231 | -------------------------------------------------------------------------------- | Personnel expenses | -3,916 | -2,892 | -11,269 | -4,109 | -------------------------------------------------------------------------------- | Depreciation and | -972 | -836 | -2,776 | -1,117 | | impairment | | | | | -------------------------------------------------------------------------------- | Other operating income | -3,171 | -2,218 | -7,402 | -3,529 | | and expenses | | | | | -------------------------------------------------------------------------------- | | -31,451 | -24,025 | -86,931 | -33,392 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Operating profit | -171 | -1,235 | 3,346 | 3,575 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Financial income | 212 | 0 | 383 | 0 | -------------------------------------------------------------------------------- | Financial expenses | -457 | -481 | -1,828 | -1,464 | -------------------------------------------------------------------------------- | Share of the result of | -279 | 0 | -566 | 0 | | associates | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Profit before taxes | -695 | -1,716 | 1,335 | 2,111 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Taxes | -105 | 597 | -908 | -343 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Profit for the period | -800 | -1,119 | 427 | 1,768 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Allocation of profit for | | | | | | the period | | | | | -------------------------------------------------------------------------------- | To equity holders of the | -710 | -1,119 | 511 | 1,768 | | parent | | | | | -------------------------------------------------------------------------------- | To minority interest | -90 | 0 | -84 | 0 | -------------------------------------------------------------------------------- | | -800 | -1,119 | 427 | 1,768 | -------------------------------------------------------------------------------- | Earnings per share | -0.12 | -0.19 | 0.08 | 0.29 | | calculated on the profit | | | | | | attributable to equity | | | | | | holders of the parent | | | | | | after and before | | | | | | dilution, EUR | | | | | -------------------------------------------------------------------------------- | Number of shares | 6,020,360 | 6,020,360 | 6,020,360 | 6,020,360 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | CONSOLIDATED BALANCE SHEET (IFRS) | | | -------------------------------------------------------------------------------- | EUR 1,000 | 30.9.2008 | 31.12.2007 | -------------------------------------------------------------------------------- | A s s e t s | | | -------------------------------------------------------------------------------- | NON-CURRENT ASSETS | | | -------------------------------------------------------------------------------- | Goodwill | 4,669 | 4,527 | -------------------------------------------------------------------------------- | Other intangible non-current assets | 7,278 | 3,479 | -------------------------------------------------------------------------------- | Tangible non-current assets | 33,812 | 23,916 | -------------------------------------------------------------------------------- | Holdings in associates | 486 | 1,004 | -------------------------------------------------------------------------------- | Deferred tax assets | 597 | 204 | -------------------------------------------------------------------------------- | TOTAL NON-CURRENT ASSETS | 46,842 | 33,130 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | CURRENT ASSETS | | | -------------------------------------------------------------------------------- | Inventories | 23,309 | 16,815 | -------------------------------------------------------------------------------- | Financial assets recognised at fair | 20,670 | 37,034 | | value through profit and loss | | | -------------------------------------------------------------------------------- | Available-for-sale financial assets | 4,001 | 4,001 | -------------------------------------------------------------------------------- | Sales receivables and other receivables | 19,493 | 12,154 | -------------------------------------------------------------------------------- | Cash in hand and at bank | 2,819 | 3,268 | -------------------------------------------------------------------------------- | TOTAL CURRENT ASSETS | 70,292 | 73,271 | -------------------------------------------------------------------------------- | T o t a l a s s e t s | 117,134 | 106,401 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | S h a r e h o l d e r s´e q u i t y a n | | | | d l i a b i l i t i e s | | | -------------------------------------------------------------------------------- | SHAREHOLDERS´ EQUITY | | | -------------------------------------------------------------------------------- | Share capital | 24,082 | 24,082 | -------------------------------------------------------------------------------- | Premium fund | 66 | 66 | -------------------------------------------------------------------------------- | Reserve fund | 1,221 | 1,221 | -------------------------------------------------------------------------------- | Translation differences | -133 | -145 | -------------------------------------------------------------------------------- | Retained profit | 10,063 | 11,971 | -------------------------------------------------------------------------------- | Other unrestricted equity | 21,327 | 21,327 | -------------------------------------------------------------------------------- | Profit for the period | 511 | 1,153 | -------------------------------------------------------------------------------- | Equity attributable to equity holders of | 57,137 | 59,675 | | the parent | | | -------------------------------------------------------------------------------- | Minority interest | -72 | 0 | -------------------------------------------------------------------------------- | Total shareholders´ equity | 57,065 | 59,675 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | LONG-TERM LIABILITIES | | | -------------------------------------------------------------------------------- | Deferred tax liabilities | 3,103 | 2,091 | -------------------------------------------------------------------------------- | Provisions | 1,331 | 540 | -------------------------------------------------------------------------------- | Interest-bearing liabilities | 22,453 | 22,512 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | SHORT-TERM LIABILITIES | | | -------------------------------------------------------------------------------- | Tax liabilities from the profit | 253 | 198 | -------------------------------------------------------------------------------- | Short-term interest-bearing liabilities | 14,379 | 4,999 | -------------------------------------------------------------------------------- | Accounts payable and other liabilities | 18,549 | 16,386 | -------------------------------------------------------------------------------- | TOTAL LIABILITIES | 60,069 | 46,726 | -------------------------------------------------------------------------------- | S h a r e h o l d e r s´e q u i t y a | 117,134 | 106,401 | | n d l i a b i l i t i e s | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | BALANCING ACCOUNT OF SHAREHOLDERS´EQUITY (IFRS) | -------------------------------------------------------------------------------- | EUR | Share | Pre | Rese | Trans- | Other | Retai | Total | Mino | Share- | | 1,000 | capit | -mi | r-ve | lation | unres | -ned | | -rit | holder | | | al | um | fund | differ | -tric | profi | | y | s´ | | | | fun | | -ences | -ted | t | | inte | equity | | | | d | | | equit | | | -res | total | | | | | | | y | | | t | | -------------------------------------------------------------------------------- | Share- | 24,08 | 66 | 1,22 | | 21,32 | 13,77 | 60,47 | | 60,473 | | holder | 2 | | 1 | | 7 | 7 | 3 | | | | s´ | | | | | | | | | | | equity | | | | | | | | | | | 31.12. | | | | | | | | | | | 2006 | | | | | | | | | | -------------------------------------------------------------------------------- | Change | | | | | | | 0 | | 0 | | s | | | | | | | | | | -------------------------------------------------------------------------------- | Profit | | | | | | 1,768 | 1,768 | | 1,768 | | for | | | | | | | | | | | the | | | | | | | | | | | finan- | | | | | | | | | | | cial | | | | | | | | | | | year | | | | | | | | | | -------------------------------------------------------------------------------- | Total | | | | | | 1,768 | 1,768 | 0 | 1,768 | | return | | | | | | | | | | | s and | | | | | | | | | | | costs | | | | | | | | | | | during | | | | | | | | | | | the | | | | | | | | | | | period | | | | | | | | | | -------------------------------------------------------------------------------- | Divi-d | | | | | | -1,80 | -1,80 | 0 | -1,806 | | ends | | | | | | 6 | 6 | | | | paid | | | | | | | | | | -------------------------------------------------------------------------------- | Minori | | | | | | | 0 | 0 | 0 | | ty | | | | | | | | | | | intere | | | | | | | | | | | st | | | | | | | | | | -------------------------------------------------------------------------------- | Share- | 24,08 | 66 | 1,22 | 0 | 21,32 | 13,73 | 60,43 | 0 | 60,435 | | holder | 2 | | 1 | | 7 | 9 | 5 | | | | s´ | | | | | | | | | | | equity | | | | | | | | | | | 30.9. | | | | | | | | | | | 2007 | | | | | | | | | | -------------------------------------------------------------------------------- | EUR | Share | Pre | Rese | Trans- | Other | Retai | Total | Mino | Share- | | 1,000 | capit | -mi | r-ve | lation | unres | -ned | | -rit | holder | | | al | um | fund | differ | -tric | profi | | y | s´ | | | | fun | | -ences | -ted | t | | inte | equity | | | | d | | | equit | | | -res | total | | | | | | | y | | | t | | -------------------------------------------------------------------------------- | Share- | 24,08 | 66 | 1,22 | -145 | 21,32 | 13,12 | 59,67 | | 59,675 | | holder | 2 | | 1 | | 7 | 4 | 5 | | | | s´ | | | | | | | | | | | equity | | | | | | | | | | | 31.12. | | | | | | | | | | | 2007 | | | | | | | | | | -------------------------------------------------------------------------------- | Change | | | | 12 | | -51 | -39 | | -39 | | s | | | | | | | | | | -------------------------------------------------------------------------------- | Profit | | | | | | 511 | 511 | | 511 | | for | | | | | | | | | | | the | | | | | | | | | | | finan- | | | | | | | | | | | cial | | | | | | | | | | | year | | | | | | | | | | -------------------------------------------------------------------------------- | Total | | | | 12 | | 460 | 472 | | 472 | | return | | | | | | | | | | | s and | | | | | | | | | | | costs | | | | | | | | | | | during | | | | | | | | | | | the | | | | | | | | | | | period | | | | | | | | | | -------------------------------------------------------------------------------- | Divi-d | | | | | | -3,01 | -3,01 | | -3,010 | | ends | | | | | | 0 | 0 | | | | paid | | | | | | | | | | -------------------------------------------------------------------------------- | Minori | | | | | | | 0 | -72 | -72 | | ty | | | | | | | | | | | intere | | | | | | | | | | | st | | | | | | | | | | -------------------------------------------------------------------------------- | Share- | 24,08 | 66 | 1,22 | -133 | 21,32 | 10,57 | 57,13 | -72 | 57,065 | | holder | 2 | | 1 | | 7 | 4 | 7 | | | | s´ | | | | | | | | | | | equity | | | | | | | | | | | 30.9. | | | | | | | | | | | 2008 | | | | | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | CONSOLIDATED CASH FLOW STATEMENT (IFRS) | 1.1.-30.9. | 1.1.-30.9. | | EUR 1,000 | 2008 | 2007 | -------------------------------------------------------------------------------- | OPERATING ACTIVITIES | | | -------------------------------------------------------------------------------- | Payments received from operating activities | 116,751 | 181,208 | -------------------------------------------------------------------------------- | Payments paid on operating activities | -102,514 | -122,989 | -------------------------------------------------------------------------------- | Paid interests and other financial expenses | -1,295 | -2,016 | -------------------------------------------------------------------------------- | Interests received and other financial | 226 | 265 | | incomes | | | -------------------------------------------------------------------------------- | Direct taxes paid | -1,502 | -1,135 | -------------------------------------------------------------------------------- | Total operating activities | 11,669 | 55,333 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | INVESTING ACTIVITIES | | | -------------------------------------------------------------------------------- | Acquisition of subsidiaries and new | -7,110 | -26,909 | | business | | | -------------------------------------------------------------------------------- | Investments in tangible assets | -7,362 | -5,931 | -------------------------------------------------------------------------------- | Total investing activities | -14,472 | -32,840 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | FINANCING ACTIVITIES | | | -------------------------------------------------------------------------------- | Increase in loans | 7,084 | 22,018 | -------------------------------------------------------------------------------- | Decrease in loans | -1,307 | -43,000 | -------------------------------------------------------------------------------- | Payments of financial leasing | -464 | -168 | -------------------------------------------------------------------------------- | Dividends paid | -2,956 | -1,783 | -------------------------------------------------------------------------------- | Total financing activities | 2,357 | -22,933 | -------------------------------------------------------------------------------- | | | | -------------------------------------------------------------------------------- | CASH FLOW FOR THE PERIOD | -449 | -440 | -------------------------------------------------------------------------------- | Liquid funds at beginning of the period | 3,268 | 3,324 | -------------------------------------------------------------------------------- | LiQUID FUNDS AT END OF PERIOD | 2,819 | 2,884 | -------------------------------------------------------------------------------- NOTES TO THE ACCOUNTS The interim report has been drawn up in accordance with the IAS 34 requirements for interim reports. The interim report is unaudited. PRINCIPLES FOR DRAWING UP THE INTERIM REPORTS Neomarkka has applied the same principles for drawing up the interim reports as in the financial statement 2007. The minority interests have been taken into the consideration. The exchange rate differences of the long term intra-group loans are handled in translation differences. SEGMENT INFORMATION -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | 30.9.2008 | -------------------------------------------------------------------------------- | EUR 1,000 | -------------------------------------------------------------------------------- | | Investment | Industrial | Others and | Total | | | in | Investment; | elim. | | | | securities | cables | | | -------------------------------------------------------------------------------- | Industrial business | | 90,980 | | 90,980 | | turnover | | | | | -------------------------------------------------------------------------------- | Gains and losses from | -703 | | | -703 | | the trade of financial | | | | | | assets | | | | | -------------------------------------------------------------------------------- | Turnover | -703 | 90,980 | | 90,277 | -------------------------------------------------------------------------------- | Segment operating | -1,642 | 5,113 | | 3,471 | | profit | | | | | -------------------------------------------------------------------------------- | Unallocated items | | | -125 | -125 | -------------------------------------------------------------------------------- | Operating profit | | | | 3,346 | -------------------------------------------------------------------------------- | Share of the result of | | -566 | | | | associates | | | | -566 | -------------------------------------------------------------------------------- | Unallocated items | | | | -2,353 | -------------------------------------------------------------------------------- | Profit for the | | | | 427 | | financial year | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Segment assets | 25,686 | 88,555 | 2,893 | 117,134 | -------------------------------------------------------------------------------- | Unallocated assets | | | | 0 | -------------------------------------------------------------------------------- | Total assets | 25,686 | 88,555 | 2,893 | 117,134 | -------------------------------------------------------------------------------- | | | | | | -------------------------------------------------------------------------------- | Segment liabilities | 569 | 22,019 | 649 | 23,237 | -------------------------------------------------------------------------------- | Unallocated | | | 36,832 | 36,832 | | liabilities | | | | | -------------------------------------------------------------------------------- | Total liabilities | 569 | 22,019 | 37,481 | 60,069 | -------------------------------------------------------------------------------- | | | | | | -------------------------------------------------------------------------------- | Assets - Liabilities | 25,117 | 66,536 | -34,588 | 57,065 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Investments | 0 | 7,964 | 789 | 8,753 | -------------------------------------------------------------------------------- | Depreciations | -16 | -2,760 | 0 | -2,776 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | 30.9.2007 | -------------------------------------------------------------------------------- | EUR 1,000 | -------------------------------------------------------------------------------- | | Investment | Industrial | Others and | Total | | | in | Investment; | elim. | | | | securities | cables | | | -------------------------------------------------------------------------------- | Industrial business | | 31,890 | | 31,890 | | turnover | | | | | -------------------------------------------------------------------------------- | Gains and losses from | 5,077 | | | 5,077 | | the trade of financial | | | | | | assets | | | | | -------------------------------------------------------------------------------- | Turnover | 5,077 | 31,890 | | 36,967 | -------------------------------------------------------------------------------- | Segment operating | 4,123 | -548 | | 3,575 | | profit | | | | | -------------------------------------------------------------------------------- | Unallocated items | | | | 0 | -------------------------------------------------------------------------------- | Operating profit | | | | 3,575 | -------------------------------------------------------------------------------- | Share of the result of | | | | 0 | | associates | | | | | -------------------------------------------------------------------------------- | Unallocated items | | | | -1,807 | -------------------------------------------------------------------------------- | Profit for the | | | | 1,768 | | financial year | | | | | -------------------------------------------------------------------------------- | | | | | | -------------------------------------------------------------------------------- | Segment assets | 42,995 | 73,729 | | 116,724 | -------------------------------------------------------------------------------- | Unallocated assets | | | 3,472 | 3,472 | -------------------------------------------------------------------------------- | Total assets | 42,995 | 73,729 | | 120,196 | -------------------------------------------------------------------------------- | | | | | | -------------------------------------------------------------------------------- | Segment liabilities | 2,084 | 20,821 | | 22,905 | -------------------------------------------------------------------------------- | Unallocated | | | 36,856 | 36,856 | | liabilities | | | | | -------------------------------------------------------------------------------- | Total liabilities | 2,084 | 20,821 | | 59,761 | -------------------------------------------------------------------------------- | | | | | | -------------------------------------------------------------------------------- | Assets - Liabilities | 40,911 | 52,908 | -33,384 | 60,435 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Investments | 0 | 5,493 | 4,444 | 9,937 | -------------------------------------------------------------------------------- | Depreciations | -16 | -1,101 | 0 | -1,117 | -------------------------------------------------------------------------------- TURNOVER AND PROFIT IF OAO EXPOCABLE HAD BEEN FROM THE BEGINNING OF THE YEAR If OAO Expocable had been acquired at the beginning of the financial period and thus the figures would have been taken into account the whole period 1 Jan -30 Sep 2008, the turnover in Neomarkka Group would have been EUR 92.7 million and the profit for the period EUR 0.2 million. -------------------------------------------------------------------------------- | changes in tangible NON-CURRENT assets | | | -------------------------------------------------------------------------------- | EUR 1,000 | 1-9/2008 | 1-12/2007 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Book value at beginning of period | 23,916 | 51 | -------------------------------------------------------------------------------- | Investment | 7,208 | 11,061 | -------------------------------------------------------------------------------- | Increase through company acquisition | 4,942 | 17,114 | -------------------------------------------------------------------------------- | Decrease | 0 | -2,489 | -------------------------------------------------------------------------------- | Depreciations | -2,254 | -1,821 | -------------------------------------------------------------------------------- | BOOK VALUE AT END OF PERIOD | 33,812 | 23,916 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | CONTINGENT LIABILITIES | | | -------------------------------------------------------------------------------- | EUR 1,000 | 30.9.2008 | 31.12.2007 | -------------------------------------------------------------------------------- | Debts, on behalf of corporate mortgages | | | | are given | | | -------------------------------------------------------------------------------- | Loans from financial institutions | 6,432 | 7,891 | -------------------------------------------------------------------------------- | Granted corporate mortgages | 15,000 | 15,000 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Debts, on behalf of securities or | | | | guarantees are given | | | -------------------------------------------------------------------------------- | Loans from financial institutions | 12,456 | 13,033 | -------------------------------------------------------------------------------- | Book value of pledged securities | 26,987 | 26,987 | -------------------------------------------------------------------------------- | Granted guarantees | 12,456 | 13,033 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | OTHER COLLATERALS | | | -------------------------------------------------------------------------------- | Guarantees | 1,624 | 120 | -------------------------------------------------------------------------------- Payment commitments: Reka Cables Ltd has made a commitment to the raw material acquisitions of its subsidiary ZAO Reka Cables. The sales receivables concerned are security for the factoring credit. On 30 September 2008 the factoring credit in use was EUR 6.7 million and the sales receivables as collateral for the credit were EUR 7.8 million. Concerning the acquisition of Reka Cables the parties to the deal have agreed on an adjustment to the purchase price on the basis of the trend in the average operating margin of Reka Cables in 2007 and 2008. At the most, the price can be raised or lowered by EUR 3.5 million. INVESTMENT COMMITMENTS Investment commitments on tangible current assets on 30 September 2008 totalled EUR 1.3 million (30 September 2007 EUR 7.8 million). The investment commitments are related to the cable business. DERIVATIVE CONTRACTS -------------------------------------------------------------------------------- | EUR 1,000 | 30.9.2008 | 31.12.2007 | -------------------------------------------------------------------------------- | Nominal values | | | -------------------------------------------------------------------------------- | Interest derivatives | | | -------------------------------------------------------------------------------- | Interest rate ceiling derivatives | 9,800 | 9,800 | -------------------------------------------------------------------------------- | Interest rate swaps | 15,667 | 0 | -------------------------------------------------------------------------------- | Foreign exchange derivatives | | | -------------------------------------------------------------------------------- | Currency forward agreements | 9,351 | 0 | -------------------------------------------------------------------------------- | Commodity derivatives | | | -------------------------------------------------------------------------------- | Price hedging for metals | 937 | 1,119 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Fair values | | | -------------------------------------------------------------------------------- | Interest derivatives | | | -------------------------------------------------------------------------------- | Interest rate ceiling derivatives | 50 | 27 | -------------------------------------------------------------------------------- | Interest rate swaps | -201 | 0 | -------------------------------------------------------------------------------- | Foreign exchange derivatives | | | -------------------------------------------------------------------------------- | Currency forward agreements | 35 | 0 | -------------------------------------------------------------------------------- | Commodity derivatives | | | -------------------------------------------------------------------------------- | Price hedging for metals | -150 | -36 | -------------------------------------------------------------------------------- The loans of the Group have been partly hedged with interest rate derivatives. A interest rate ceiling of 4.5% has been acquired for the EUR 3 million loan for three years and of 4.7% for the EUR 6.8 million loan for three years. The original interest rate base for the hedged EUR 3 million loan is the 6-month Euribor and that for the EUR 6.8 million loan the 12-month Euribor. In addition there are interest rate protections by using 1 year interest rate swaps. -------------------------------------------------------------------------------- | RELATED PARTY EVENTS (REKA GROUP) | -------------------------------------------------------------------------------- | EUR 1,000 | 1-9/2008 | 1-9/2007 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Sales to Reka Group | 91 | 5 | -------------------------------------------------------------------------------- | Dividends to Reka Group | -1,528 | -587 | -------------------------------------------------------------------------------- | Acquisition of Reka Cables Ltd | 0 | -25,803 | -------------------------------------------------------------------------------- | Other purchases from Reka Group | -796 | -3,721 | -------------------------------------------------------------------------------- | Sales receivables and other receivables at end of | 348 | 0 | | period | | | -------------------------------------------------------------------------------- | Non-current debts (financial leases) at end of | -8,155 | -5,294 | | period | | | -------------------------------------------------------------------------------- | Other debts at end of period | -34 | -1 | -------------------------------------------------------------------------------- | Guarantees given | 0 | 0 | -------------------------------------------------------------------------------- | Guarantees received | 1,327 | 1,768 | -------------------------------------------------------------------------------- Guarantees received include the quarantee given by Reka Ltd for a Reka Cables Ltd´s loan from the Nordic Investment Bank. This loan has been paid back in November 2008. ACQUISITION OF OAO EXPOCABLE In a share transaction completed on 4 August 2008 Neomarkka bought a majority of the shares of OAO Expocable. The price is paid in cash in two parts. First part (80%) was paid in September 2008. The rest of the price will be paid at the beginning of year 2009. In addition to the price for the shares, the acquisition price includes expert fees and taxes. The following assets and liabilities were recognised on the acquisition under IFRS 3 in related to the acquired 81.27% share of the share capital. The purchase price allocation and opening balance on 1 August 2008 are preliminary. -------------------------------------------------------------------------------- | EUR 1,000 | Acquiree´s | Fair value | Fair value | | | carrying amount | adjustments | | | | before | | | | | combination | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Net assets acquired | | | -------------------------------------------------------------------------------- | Intangible assets | 0 | 4,136 | 4,136 | -------------------------------------------------------------------------------- | Tangible assets | 171 | 4,771 | 4,942 | -------------------------------------------------------------------------------- | Inventories | 668 | 0 | 668 | -------------------------------------------------------------------------------- | Current receivables | 238 | 0 | 238 | -------------------------------------------------------------------------------- | Cash in hand and bank | 130 | 0 | 130 | -------------------------------------------------------------------------------- | Short term liabilities | -862 | 0 | -862 | -------------------------------------------------------------------------------- | Deferred tax liability | 0 | -2,138 | -2,138 | -------------------------------------------------------------------------------- | Total | | | 7,113 | -------------------------------------------------------------------------------- | goodwill arising on | | | 139 | | acquisition | | | | -------------------------------------------------------------------------------- | total consideration, | | | 7,252 | | satisfied by cash | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Net cash outflow arising | | | | | on acquisition: | | | | -------------------------------------------------------------------------------- | Cash consideration, expert fees and taxes | -7,252 | -------------------------------------------------------------------------------- | Cash and cash equivalents acquired | 130 | -------------------------------------------------------------------------------- | Net cash outflow arising | | | -7,122 | | on acquisition: | | | | -------------------------------------------------------------------------------- FINANCIAL ASSETS RECOGNISED AT FAIR VALUE THROUGH PROFIT AND LOSS -------------------------------------------------------------------------------- | EUR 1,000 | Book value | Book value | | | 30.9.2008 | 31.12.2007 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Hedge funds or securities based on | | | | hedge funds | | | -------------------------------------------------------------------------------- | Ind eQ Active 4024 bonds / Nordea | 0 | 5,254 | -------------------------------------------------------------------------------- | Ind eQ Active 4025 bonds / Nordea | 0 | 15,756 | -------------------------------------------------------------------------------- | Total | 0 | 21,010 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Money market funds and deposits | | | -------------------------------------------------------------------------------- | Nordea Pro Euro Korko Kasvu | 1,818 | 4,143 | -------------------------------------------------------------------------------- | Interest rate warrants | 0 | 1,853 | -------------------------------------------------------------------------------- | Certificate of deposits | 18,852 | 10,076 | -------------------------------------------------------------------------------- | Total | 20,670 | 16,073 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Derivatives | | | -------------------------------------------------------------------------------- | Interest derivatives; interest rate | 50 | 27 | | ceilings | | | -------------------------------------------------------------------------------- | Interest derivatives; interest rate | -201 | 0 | | swaps | | | -------------------------------------------------------------------------------- | Total | -151 | 27 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Total financial assets recognised at | 20,519 | 37,109 | | fair value through profit and loss | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | AVAILABLE-FOR-SALE FINANCIAL ASSETS | Book value | Book value | | EUR 1,000 | 30.9.2008 | 31.12.2007 | -------------------------------------------------------------------------------- | Private Equity | | | | -------------------------------------------------------------------------------- | Oulun Puhelin Holding Plc | | 3,081 | 3,081 | -------------------------------------------------------------------------------- | Lännen Teletieto Ltd | | 920 | 920 | -------------------------------------------------------------------------------- | Total available-for-sale financial | 4,001 | 4,001 | | assets | | | -------------------------------------------------------------------------------- CALCULATION OF KEY FIGURES -------------------------------------------------------------------------------- | Return on | = | Profit before taxes + interest and other | x 100 | | investment | | financial expenses / | | -------------------------------------------------------------------------------- | (ROI) % | | [Balance sheet total - provisions and | | | | | non-interest bearing liabilities] | | | | | (average) | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Equity ratio, | = | Shareholders' equity + minority interest | x 100 | | % | | minus deferred tax liabilities / | | -------------------------------------------------------------------------------- | | | Balance sheet total - advances received | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Earnings per | = | Profit for the period belonging to parent company | | share (EPS), | | owners / | -------------------------------------------------------------------------------- | EUR | | Number of shares adjusted for share | | | | | issues (average) | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Equity/share, | = | Shareholders´ equity - minority interest minus | | EUR | | deferred tax liabilities / | -------------------------------------------------------------------------------- | | | Number of shares adjusted for share | | | | | | issues at the end of the financial | | | | | | period | | | -------------------------------------------------------------------------------- Helsinki 10.11.2008 Neomarkka Plc Board of Directors pp. Sari Tulander CFO FURTHER INFORMATION: Markku E. Rentto, Managing Director, tel. +358 207 209 190 Sari Tulander, CFO, tel. +358 207 209 192 DISTRIBUTION NASDAQ OMX Helsinki Main media www.neomarkka.fi |
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