2011-08-04 13:10:44 CEST
2011-08-04 13:11:39 CEST
REGULATED INFORMATION
Neomarkka - Interim report (Q1 and Q3)
NEO INDUSTRIAL'S INTERIM REPORT 1 JANUARY - 30 JUNE 2011
Neo Industrial Plc STOCK EXCHANGE RELEASE 4 August 2011 at
14:00
NEO INDUSTRIAL'S INTERIM REPORT 1 JANUARY - 30 JUNE 2011
Comparable figures ( ) refer to last year's corresponding period unless
otherwise stated.
SUMMARY FOR THE FIRST HALF 2011
- The Group's net sales were EUR 67.9 (39.1) million.
- Operating result EUR -9.2 (-4.0) million, mainly due to the launch of the
viscose business.
- Cable business net sales grew by 35 %, EUR 52.9 (39.1) million.
- Cable business reduced its operating loss; EUR -0.9 (-3.4) million.
- Viscose Fibers business net sales were EUR 15.0 million.
- Viscose Fibers result was negative, EUR 7.8 million.
- The Single Family Housing segment's net sales were EUR 50.2 (46.6) million,
the result still at a loss.
SUMMARY FOR THE SECOND QUARTER 2011
- The Group's net sales were EUR 36.3 (22.5) million.
- Operating result EUR -2.0 (-1.7) million.
- Cable business net sales EUR 28.4 (22.5) million.
- Cable business operating result EUR -0.5 (-1.4) million.
- The cable market in all Nordic countries was active, sales grew also in the
Baltics.
- Viscose Fibers business net sales EUR 7.9 million.
- Viscose business loss was reduced by technology innovation to EUR -1.2
million.
- Single Family Housing business net sales was EUR 27.7 (32.5) million.
- Finndomo decided to divest its Swedish operations.
Managing Director Markku E. Rentto:
- For our businesses, the second quarter of 2011 was better than the first one.
Both Cable and Viscose businesses increased their net sales and profitability
improved in both. The Cable market is thriving, with cable business operational
activities already profitable in the second quarter.
The Viscose business continues an eventful journey. The second quarter started
with a maintenance shutdown due to dissolving pulp availability problems. The
Avilon factory started up again 21 April 2011 at full capacity, but the
overheated market situation caused a longer and still ongoing shutdown in July.
In addition to production however, Avilon activities also include research and
development activities. In the spring, Avilon announced a technological
innovation, which not only solves the factory's raw material supply, is also
important for new business. License sales are already being negotiated. In line
with its strategy, Avilon is becoming a technological pioneer in its field.
Sales for the Single Family Housing business, our associated company Finndomo,
fell in the second quarter typical for the time of year and comparable to
previous years. Finndomo's Board has decided to divest the company's Swedish
operations, and related arrangements are underway. In the future, Finndomo can
fully concentrate on its operations in Finland, the Baltic countries and
Russia. We expect Finndomo's profitability to improve towards the end of the
year.
KEY FIGURES
4-6/2011 4-6/2010 1-6 /2011 1-6 /2010
Turnover, EUR million, of which 36.3 22.5 67.9 39.1
- Cable business 28.4 22.5 52.9 39.1
- Viscose Fibers 7.9 0.0 15.0 0.0
- Other operations and eliminations 0.0 0.0 0.0 0.0
Operating result, EUR million, of -2.0 -1.7 -9.2 -4.0
which
- Cable business -0.5 -1.4 -0.9 -3.4
- Viscose Fibers -1.2 0.0 -7.8 0.0
- Other operations -0,3 -0,3 -0,5 -0.6
Profit or loss for the period, EUR -4.2 -1.3 -11.7 -3.6
million
Earnings per share, EUR -0.66 -0.24 -1.92 -0.60
Return on invested capital,% (ROI) -15.4 -4.0
Equity ratio, % 23.4 44.0
FINANCIAL RESULT, BALANCE SHEET AND FINANCING
Neo Industrial Group's net sales for January-June 2011 were EUR 67.9 (39.1)
million. Net income for the period remained negative, EUR -9.2 (-4.0) million.
The main reason for the negative result was the establishment of the Viscose
Fibers business. Avilon's launching costs included the delay of start up from
December 2010 to the middle of January 2011, as well as difficulties in raw
material availability and the associated reduction of capacity utilization at
the end of the first quarter and the maintenance shutdown early April.
The Viscose Fibers business net sales for January-June 2011 were EUR 15.0
million. The business activity's loss was EUR 7.8 million.
The Cable business net sales during the period rose significantly from the
previous year to EUR 52.9 (39.1) million, but the result was a loss of EUR 0.9
(-3.4) million.
Net sales of the Single Family Housing business (EUR 50.2 million January-June
2011) are not included in the Group's net sales figure but are described in the
business review. The segment has been reported from May 2010, so comparative
figures for 2010 are not reported in 2011. Neo Industrial's Single Family
Housing business share of the Finndomo group result is recorded in the
Consolidated Income Statement under the item “Share of the result of
associates”.
At the end of the period under review, the balance sheet total stood at EUR
128.8 (107.1) million. Neo Industrial's liquidity situation has been tight due
to the Viscose Fibers business productions start-up and the multiplicity of the
related financing arrangements, as well as sharp price increases of raw
materials in the Cable business.
Reka Cables' working capital is financed with a revolving bank credit of EUR
6.0 million and factoring credit of 9.5 million. EUR 0.2 million of the bank
credit was unused on 30 June 2011. Of the factoring facility, EUR 1.4 million
was unused. Avilon has revolving bank credit of EUR 2.2 million which was fully
utilized and a EUR 6.0 million factoring credit, of which EUR 3.3 million was
not used as of 30 June 2011.
This unaudited report has been prepared in accordance with IAS 34 requirements
for interim reports. The same principles have been followed as in the financial
statement for 2010. During the review period, the Group adopted new accounting
principles for handling Avilon Ltd's emission rights. Emission rights received
are recognized as intangible assets and deferred income. The handling of
emission rights is described further in the interim report accounting policies
section.
MAJOR EVENTS DURING THE REVIEW PERIOD
Cable business
Net sales for January-June 2011 were EUR 52.9 (39.1) million, a growth of 35%.
Operating loss decreased to EUR -0.9 (-3.4) million. The second quarter loss
(EUR -0.5 million) reflects the insurance compensation (EUR 1.9 million) from
the 2010 Riihimäki machinery breakdown, which was EUR 0.2 million less than
predicted, amortized in both the first and second quarters. The business'
operational activities were profitable in the second quarter.
Cable business sales grew significantly in the second quarter. Cable market
demand was lively throughout the Nordic and Baltic countries. Sales in Finland
to wholesalers, contractors and utilities increased. Reka Cables increased its
domestic market share slightly. At the end of the period, the company's
quotation base was good and the order backlog towards the holiday season is
typically lower than the end of March.
The Russian market situation for medium voltage cables during the second
quarter was still rather weak, and the competitive situation continued to be
tight. Sales of special cables although increased. Cable business units in
Russia provided a positive operating result during the review period.
Raw material price increases and fluctuations still challenge Reka Cables. All
metal commodity prices were declining in the spring, but began to rise again in
June. Also availability of raw materials remained challenging in some places.
Reka Cables strives to manage the situation with safeguards and good working
capital management. All of the Reka Cables' units in Finland increased volumes
from the previous year.
Net sales (January- June) of associate company, telecommunications and fiber
optic cables manufacturer, Nestor Cables Ltd was EUR 11.9 (10.1) million. Net
sales rose nearly 20% compared to last year, in particular the optical fiber
cable market recovered. The second quarter results were positive, but the
entire result for the period was still negative.
Viscose Fibers
Net sales of the Viscose Fibers business was, January-June, EUR 15.0 million.
The business result was a EUR 7.8 million loss due to production start-up
costs. Start-up expenses included the Avilon factory start-up, transition of
the start from December 2010 to mid-January 2011, difficulties in the
availability of dissolving pulp and the resultant reduced capacity utilization
at the end of the first quarter and maintenance shutdown in early April.
The Avilon factory was down for the first three weeks of April for maintenance
and shortage of dissolving pulp. During the outage Avilon developed and
installed production technology that significantly reduces raw material costs.
The operating loss was reduced significantly in the second quarter thanks to
the new technology. May was Avilon's first profitable month.
Suspended production due to the dissolving pulp shortage recommenced after a
maintenance shutdown as one production line started up at full capacity on 21
April 2011. Avilon solved the raw material supply problem with its own
technological innovation and is thus no longer dependent on the dissolving pulp
main raw material. The new technology is a revolutionary innovation in the
field of fiber. It is becoming a strategic new business for the company and is
now commercialized through licensing. Neo Industrial announced the innovation
on 19 May 2011.
Viscose fiber demand in the first quarter exceeded supply, but in the second
quarter a fall in viscose fiber prices followed market overheating.
For Avilon specialty products, fire retardant fiber, the demand was rather weak
in the second quarter due to the low level of residential construction in the
U.S, the main market area. Fire retardant fiber applications are however
diversifying, and its use will grow with the development safety standards,
which creates a strong interest in Avilon products. Avilon has rapidly achieved
credibility for fire retardant fiber in the United States.
During the review period, Avilon's emission rights were sold in entirety. The
measure had no immediate effect on earnings.
Single Family Housing
In the Single Family House segment, Finndomo's net sales for January-June was
EUR 50.2 (46.6) million. Net sales declined in April-June from the previous
year and amounted to EUR 27.7 (32.5) million, which does not include the share
of operations in Sweden during June. The result was a loss in both quarters
primarily because of the Swedish business unit viability. In the beginning of
the year, domestic sales were lower in the whole sector than the previous year,
which was reflected also Finndomo's order book.
Finndomo's Board has decided to divest the company's Swedish operations, and
related arrangements are underway. It is possible that there will be later
realized liabilities from the Swedish company, the size of which will be
specified in the next interim report.
In the future, the Finndomo group will include the parent company of Finndomo
(Sonkajärvi and Hartola house factories), and its subsidiaries: Finndomo
Rakennus Oy (project construction), Finndomo Ikkunat Oy (Haukipudas window
factory), Lagerholm Finnsauna Ltd (indoor sauna and a garden cottage factory in
Ruotsinpyhtää), Finndomo Invest Oy and OOO Finndomo Rus (sales office in St.
Petersburg) and Suomen Kotiasunnot Oy (this company is not functioning during
the current fiscal year).
Finndomo's shareholders' equity was strengthened during the review period by
additional investments from the principal shareholders and other measures to a
total of EUR 32.7 million. Neo Industrial's additional investment was converted
into an equity investment during the review period. The owners' equity stakes,
in addition to the Company's invested unrestricted equity fund, increased by
EUR 25.0 million. The effect of this procedure for Neo Industrial's EUR 7.6
million, takes into account the interim balance sheet and statement of changes
in shareholders' equity. The Swedish operations detachment results in an income
statement impact to share of associates' profit of EUR -1.5 million, which is
based on the Swedish operations' fair value allocation at the time of the
Finndomo acquisition in 2010 and the reduction in balance sheet values.
Detached house deliveries started in Finndomo's regional construction project
in Pakila during the review period. The company will deliver 16 homes to the
Pakila area, and has more than 300 family house projects in regional low rise
developments under construction or planned in Finland.
MAJOR EVENTS AFTER THE REVIEW PERIOD
Neo Industrial changed its category in the Global Industry Classification
Standard at the Nasdaq OMX Helsinki as of 1 July 2011. The company's new sector
is the stock exchange's Small Cap/Industrials industry, which represents the
company's current activities better than the previous financial industrial
classification. Neo Industrial announced the change in the classification on 29
June 2011.
The Viscose Fibers business, Avilon Ltd, temporarily shut down production at
the end of July due to viscose fiber's poor market situation. Neo Industrial
announced this on 12 July 2011.
In July, Reka Cables carried out an IFRS voluntary arrangement whereby part of
the company's accounts receivable and the associated funding will no longer
appear in the Neo Industrial's balance sheet. The arrangement does not reduce
the Reka Cables factoring credit.
Avilon started its technology business at the end of July. The technology that
converts paper grade pulp into suitable raw material for viscose manufacture,
announced in May, has raised strong interest in the market. Avilon is currently
negotiating license sales with potential buyers. Neo Industrial announced this
on 2 August 2011.
INVESTMENTS
The Group's investments during the period totaled EUR 3.9 (0.8) million, of
which EUR 0.1 million was allocated to the Cable business and EUR 3.8 million
to the Viscose Fibers business. The Group's long-term leases of real estate are
taken into account according to IFRS under the provisions of fixed assets. Neo
Industrial also made a slightly less than EUR 3 million additional investment
in Finndomo during the review period, which was converted into an equity
investment during the second quarter.
SHARES AND SHARE CAPITAL
Neo Industrial Plc's share capital is divided into A and B shares. The total
share capital including all shares stood at EUR 24,082,000 on 30 June 2011 and
the number of shares was 6,020,360. The number of shares includes 92,727 B
shares owned by Neo Industrial. The holding represents 1.5% of the company's
share capital and 1.1% of the votes. The company held no A shares. Neo
Industrial Corporation B-shares (NEO1V) are listed on the NASDAQ OMX Helsinki
Stock Exchange's Main List.
Company shares 30.6.2011 30.6.2010
Company share capital (EUR) 24,082,000 24,082,000
A shares (20 votes/share) 139,600 139,600
B shares (1 vote/share) 5,880,760 5,880,760
Total 6,020,360 6,020,360
B shares held by the company 91,727 87,517
A total of 222 336 (222 167) of the company's Class B shares traded on the
NASDAQ OMX Helsinki in January-June, which corresponded to 3.7% (3.7%) of the
total number of shares. The share price on 30 June 2011 was EUR 8.05 (5.91) per
share, and the period average exchange rate January-June was EUR 7.48 (6.85),
the lowest quotation was EUR 5.51 (5.91) and the highest EUR 9.43 (8.20). The
company's market capitalization was valued at EUR 47.3 (37.6) million on 30
June 2011.
REPURCHASE AND ASSIGNMENT OF OWN SHARES
During the period, Neo Industrial did not exercise the authorizations of the
general meetings (10 June 2009 and 9 June 2010) to repurchase shares and the
Annual General Meeting on 30 March 2011 approved a new authorization.
The Group decided to release its own shares to the market through a trading
program. The first 1, 000 shares traded at EUR 8.0 on 23 June 2011, after which
the Neo Industrial holdings of own shares amounted to 91 727 shares.
ANNUAL GENERAL MEETING AND CORPORATE GOVERNANCE
The company's Annual General Meeting was held in Helsinki on 30 March 2011.
The AGM confirmed the number of Board members is six (6) and re-appointed the
following members to the Board of Directors: Matti Lainema (Chairman), Pekka
Soini (Deputy Chairman), and as members, Ilpo Helander, Risto Kyhälä, Taisto
Riski and Raimo Valo.
Decisions from the AGM were announced in a separate release on 30 March 2011.
Neo Industrial's audit committee members are Ilpo Helander, Taisto Riski and
Pekka Soini. The company's new, 30 March 2011 constituted audit committee
members are Taisto Riski, Pekka Soini and Raimo Valo.
The company's Managing Director is Markku E. Rentto
GROUP STRUCTURE AND SHAREHOLDERS
Neo Industrial Plc is the parent company of the group, which includes the Neo
Industrial wholly owned subsidiaries Novalis Plc, Alnus Ltd, as well as
Carbatec Ltd. and its subsidiaries and associated companies. Carbatec Ltd is
Avilon Ltd's parent company. The domicile of Neo Industrial is Hyvinkää.
On 30 June 2011, Neo Industrial had 12 325 shareholders. The company's largest
shareholder, Reka Ltd, held 50.76% of shares and 65.77% of votes. Neo
Industrial Plc is thus part of the Reka Group. Reka Ltd is domiciled in
Hyvinkää.
At the end of June 2011, the combined holding of the ten largest shareholders
was 60.9% of the shares and 72.8% of the votes. Members of the Board, CEO and
CFO directly owned and controlled a total of 2 953 817 Neo Industrial B series
shares on 30 June 2011.PERSONNEL
During the review period, the Group employed an average number of 606 (518)
persons. At the end of June, the number of personnel was 616 (516).
RISKS AND UNCERTAINTY FACTORS
Neo Industrials financial risks are currency, interest rate, commodity,
liquidity, credit and investment market risks. Financial risks and protection
measures are described in more detail in notes to the financial statements. The
company's future risk factors are related to the business development of the
portfolio companies.
The Group's liquidity situation is tight. Previously promised funding,
connected to the decision on Avilon's acquisition and start-up, did not
materialize within the agreed timetable. In addition, it has not been possible
to take up part of Avilon Ltd's financing solution because the related loan
guarantee by the municipality is still pending appeal. The market price of the
Viscose Fiber business's main raw material, dissolving pulp, rose almost
vertically at the end of 2010 and remained at a high level during the review
period. During the second quarter, Avilon significantly reduced the raw
material risk associated with dissolving pulp with its own technological
innovation. The Cable business liquidity is particularly tight due to copper
price increases.
The Cable business's most significant risks are related to market development
as well as raw material prices and currency fluctuations. Elevated metals
prices and strong volume growth will increase the need for working capital
required for operational activities. This, together with strong seasonal
fluctuations brings pressure to liquidity management.
Neo Industrial believes in the Russian cable market growth and development, and
has invested substantially in Russia's business potential. Investments include
the risk that Russia's growth does not materialize as expected. The Group
continues to benefit from the internal audit made in 2009 by the Audit
Committee of risks of the Russian business.
Viscose Fibers is a new business that is subject to the risks associated with
any business start-up. The main risks of the sector are market and competitor
development, currency fluctuations and raw material price fluctuations and
availability. These considerations also make demands on liquidity management.
For the Single Family Housing business, the main risks of the industry are
demand and competitor development, production capacity and utilization level,
raw material price fluctuations and success of the restructuring.
NEAR-TERM OUTLOOK
The global economy currently causes significant uncertainty, which may affect
all of Neo Industrials' business areas.
Viscose Fiber manufacturing business was launched at the beginning of the year
and the bulk of the production startup investments were made in 2010 and the
first quarter of 2011. Avilon's technological innovation had a positive effect
on profitability already in the second quarter. The business' near-term demand
and pricing situation, however, is quite unpredictable. The second half
earnings will be affected by the market and the current shutdown duration in
addition to the business progress of the new technology.
The Cable industry market conditions and profitability improved at the end of
2010. Additionally, significant, non-recurring expenses caused by production
reorganization have been completed during the review period. Cable business
operating profit is estimated to rise in 2011 to be positive.
The end of the year market situation for the Single Family Housing business is
likely to be weaker than forecast at the start of the year. For Finndomo's
Finnish operations, operating margins were positive already in the second half
of 2010, and Finndomo's Board has decided to divest the Swedish operations, a
drain on the profitability. This gives Finndomo the conditions for a more
profitable end of year.
As net sales grew strongly in the beginning of the year, liquidity was critical
and continues to require special attention throughout the year. To ensure
liquidity and to allow strong growth, measures will be taken to boost inventory
turnover and free up capital assets in addition to financing and payment term
negotiations.
Helsinki 4 August 2011
Neo Industrial Plc
Board of Directors
For additional information:
Markku E. Rentto, Managing Director , tel. +358 20 720 9191
Sari Tulander, Financial Director, tel. +358 20 720 9192
www.neoindustrial.fi
Neo Industrial Plc's strategy is to invest mainly in industrial companies with
similar synergic benefits. The aim of investments is with active ownership to
develop the purchased companies and establish additional value. Returns are
sought through both dividend flow and an increase in value. Neo Industrial's B
shares are listed on the NASDAQ OMX HelsinkiStock Exchange.
Neo Industrial's segments are Cable (Reka Cables, Expokabel, Nestor Cables),
Viscose Fibers (Avilon) and Single Family Housing (Finndomo).
CONSOLIDATED INCOME STATEMENT (IFRS)
EUR 1,000 1/4-30/6/ 1/4-30/6/ 1/1-30/6/ 1/1-30/6/
2011 2010 2011 2010
--------------------------------------------------------------------------------
Turnover 36 266 22 482 67 881 39 085
Change in inventories of finished -1 024 -1 619 4 070 -2 351
products and production in progress
Production for own use 1 -9 16 28
Materials and services -26 939 -15 132 -60 872 -25 795
Personnel expenses -5 175 -3 543 -10 494 -6 706
Depreciation and impairment -1 650 -754 -2 924 -1 969
Other operating income and expenses -3 436 -3 156 -6 845 -6 281
-38 222 -24 213 -77 049 -43 074
Operating profit or loss -1 957 -1 732 -9 168 -3 989
Financial income 72 872 251 1 279
Financial expenses -1 023 -1 206 -1 874 -1 501
Share of the result of associates -1 893 -259 -3 562 -259
Profit or loss before taxes -4 802 -2 325 -14 353 -4 470
Taxes 635 977 2 692 879
Profit or loss for the period -4 167 -1 348 -11 661 -3 592
Profit or loss attributable to
Equity holders of the parent -3 953 -1 426 -11 485 -3 606
Minority interests -213 78 -177 14
-4 167 -1 348 -11 661 -3 592
Earnings per share attributable to
the shareholders of the parent
(EUR)
before and after dilution, EUR -0,66 -0,24 -1,92 -0,60
Number of shares 5 929 483 5 932 843 5 929 483 5 932 843
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
EUR 1,000 1/4-30/6/2 1/4-30/6/2 1/1-30/6/ 1/1-30/6/2
011 010 2011 010
Profit or loss -4 167 -1 348 -11 661 -3 592
Other comprehensive items
Translation differences related -80 328 83 2 079
to foreign units
Total -80 328 83 2 079
Total comprehensive income -4 247 -1 019 -11 578 -1 513
Total comprehensive income
attributable to
Equity holders of the parent -4 033 -1 199 -11 402 -1 629
Minority interest -213 180 -177 115
-4 247 -1 019 -11 578 -1 513
Equity / share 5,01 6,84
CONSOLIDATED BALANCE SHEET (IFRS)
EUR 1,000 30/6/2011 31/12/2010
------------------------------------------------------------------------
ASSETS
Non-current assets
Goodwill 3 483 3 624
Other intangible assets 11 020 7 765
Tangible assets 41 754 43 719
Holdings in associates 11 664 4 668
Receivables 41 1
Derivative contracts 66
Deferred tax assets 5 809 3 040
Total non-current assets 73 771 62 883
Current assets
Inventories 23 340 17 529
Sales receivables and other receivables 26 756 19 880
Tax receivables from the profit 5 17
Derivative contracts 579 1 174
Other financial assets 3 139 2 894
Cash and cash equivalents 1 220 2 734
Total current assets 55 038 44 229
Total Assets 128 809 107 112
SHAREHOLDERS' EQUITY AND LIABILITIES
Shareholder's equity
Share capital 24 082 24 082
Premium fund 66 66
Reserve fund 1 221 1 221
Own shares -591 -599
Translation differences -1 156 -1 239
Retained profit -22 795 -11 492
Other unrestricted equity 28 902 21 327
Equity attributable to shareholders of the parent 29 729 33 366
Minority interest 475 573
Total shareholders´ equity 30 204 33 939
Non-current liabilities
Deferred tax liabilities 4 118 4 047
Provisions 882 839
Interest-bearing liabilities 26 963 25 905
Non-interest-bearing liabilities 1 530 1 584
Current liabilities
Tax liabilities from the profit 4 24
Short-term interest-bearing liabilities 29 151 16 314
Accounts payable and other liabilities 35 958 24 459
Total liabilities 98 606 73 172
Shareholders' equity and liabilities 128 809 107 112
EUR A B C D E F G H I J
1,000
--------------------------------------------------------------------------------
-
Shareh 24 082 66 1 221 -382 -2 013 21 327 -308 43 993 1 445 45
437
olders
'
equit
y
31/12
/2009
Transl 2 079 2 079 2
079
ation
diffe
rences
Result -3 707 -3 707 115 -3
592
for
the
perio
d
Divide -1 483 -1 483 -1
483
nds
paid
Acquir -188 -188
-188
ed own
share
s
Minori -84 -84 84
ty
inter
est
Shareh 24 082 66 1 221 -569 66 21 327 -5 582 40 610 1 644 42
254
olders
'
equit
y
30/6/
2010
EUR A B C D E F G H I J
1,000
--------------------------------------------------------------------------------
-
Shareh 24 082 66 1 221 -599 -1 239 21 327 -11 491 33 366 573 33
939
olders
'
equit
y
31/12
/2010
Transl
ation
diffe
rences
Result 83 -11 485 -11 402 -177 -11
579
for
the
perio
d
Divide
nds
paid
Acquir 8 8
8
ed own
share
s
Minori 182 182 78
260
ty
inter
est
Share 7 575 7 575 7
575
of
assoc
iated
compa
ny
chang
es
Shareh 24 082 66 1 221 -591 -1 156 28 902 -22 795 29 729 475 30
204
olders
'
equit
y
30/6/
2011
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY (IFRS)
Letter code explanations:
A Share capital
B Premium fund
C Reserve fund
D Own shares
E Translation differences
F Other unrestricted equity
G Retained profit
H Total
I Minority interest
J Shareholders' equity
Associated company Finndomo's equity was confirmed. The majority owners' equity
stakes, in addition to the Company's invested unrestricted equity fund,
increased by EUR 25.0 million. Of this, Neo Industrial's share of 30.3%
totalled 7.6 million.
STATEMENT OF CASH FLOWS, IFRS
EUR 1,000 1/1.-30/6/201 1/1.-30/6/201
1 0
Cash flows from operating activities
Payments received from operating activities 66 163 32 308
Payments paid on operating activities -75 532 -33 389
Paid interests and other financial expenses -1 125 -644
Interests received and other financial incomes 225 873
Direct taxes paid -31 -3
Net cash provided by operating activities -10 300 -855
Cash flows from investing activities
Subsidiaries and new business acquisition -6 000
Investments in tangible fixed assets -626 -777
Investments in intangible assets -6 360 -4
Withdrawals from other financial funds 6 926
Loans granted -250
Loan repayments 1 858 0
Net cash flow provided by investing activities -5 128 -104
Cash flows from financing activities
Acquisition of own shares -187
Sale of own shares 8
Increase in loans 15 527 5 079
Decrease in loans -1 117 -867
Payments of finance lease activities -516 -372
Dividends paid -1 483
Net cash flow provided by financing activities 13 902 2 170
Change in cash and cash equivalents -1 525 1 210
Cash and cash equivalents at beginning of the 2 734 3 000
period
Exchange rate differences 11 154
Change in cash and cash equivalents at the end of 1 220 4 364
the period
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
This report has been drawn up in accordance with IAS 34 requirements for
interim reports.
ACCOUNTING POLICIES
The interim report applies the same principles as in the financial statement
for 2010.
In the first quarter of 2011, the Group introduced a new accounting principle
regarding Avilon Ltd's emission rights. Emission rights received are recognized
as intangible assets and deferred income. Emission rights are valued at current
fair or otherwise probable value. If the emission rights market value drops
significantly below the book value and the decline is considered permanent, it
is recognized as an impairment loss, which the Group does not intend to use
internally. Deferred revenue is recognized in other operating income during the
period for which the corresponding rights are granted. Actual emissions are
corresponding expenses in the income statement under other operating expenses
and appear in the balance sheet reserves. Emission rights and related
provisions are derecognised when they are submitted to cover obligations or
sold. Any gains or losses are recognized in the income statement.
SEGMENT REPORTING
30/6/2011 Cable Viscose Single Eliminations and Group
Fibers Family other operations total
Housing
EUR 1,000
Turnover 52 903 14 997 67 900
Segment's operating -910 -7 762 -8 672
profit
Unallocated items -497 -497
Operating profit -910 -7 762 -497 -9 168
Share of the result -3 562 -3 562
of associates
Unallocated items 1 069 1 069
Profit or loss for -11 661
the period
Assets
Segment's assets 80 510 27 315 11 664 119 489
Unallocated items 9 320 9 320
Total assets 80 510 27 315 11 664 9 320 128 809
Liabilities
Segment's 58 266 36 116 94 381
liabilities
Unallocated items 4 223 4 223
Total liabilities 58 266 36 116 4 223 98 605
Assets - 22 245 -8 800 11 664 5 096 30 205
liabilities
Investments 112 3 794 3 024 6 930
Depreciations -2 328 -586 -10 -2 924
30/6/2010 Cable Viscose Single Eliminations and Group
Fibers Family other operations total
Housing
EUR 1,000
Turnover 39 085 39 085
Segment's operating -3 434 -3 434
profit
Unallocated items -555 -555
Operating profit -3 434 -555 -3 989
Share of the result -259 -259
of associates
Unallocated items 656 656
Profit or loss for -3 592
the period
Assets
Segment's assets 81 097 5 741 86 838
Unallocated items 9 189 9 189
Total assets 81 097 5 741 9 189 96 027
Liabilities
Segment's 53 776 53 776
liabilities
Unallocated items -3 -3
Total liabilities 53 776 -3 53 773
Assets - 27 321 5 741 9 192 42 254
liabilities
Investments 839 839
Depreciations -1 969 -1 969
Cable business turnover per product group 1-6/2011 1-6/2010
LV energy 18,2 13,7
Power cable 34,7 25,4
Total 52,9 39,1
Cable business turnover per sales area 1-6/2011 1-6/2010
EU-countries 43,9 31,4
Non-EU-countries 9,0 7,7
Total 52,9 39,1
The cable division's three largest customers are Onninen, Rexel and Sonepar,
which each accounted for more than 10% of net sales.
Viscose Fiber business turnover per sales area 1-6/2011 1-6/2010
------------------------------------------------------------------
EU-countries 3,4 0,0
Non-EU-countries 11,6 0,0
Total 15,0 0,0
ASSOCIATES ACQUIRED
Finndomo
In April 2010, Neo Industrial invested in a 30% share of prefabricated single
family house manufacturer Finndomo Ltd.
Below is the purchase price allocation calculation.
EUR 1,000 Share of Fair value and Fair value
acquirees recalculation
book value adjustments
---------------------------------------
--------------------------------------
-----------------------------------------------------------------------------
Net assets acquired
Intangible assets 104 4,787 4,891
Tangible assets 8,032 1,099 9,131
Inventories 8,157 0 8,157
Deferred tax receivables 732 3,878 4,610
Current receivables 3,986 0 3,986
Cash in hand and at bank 803 0 803
Available for sale assets 19 1,416 1,435
Provisions -10 0 -10
Current liabilities -12,397 0 -12,397
Non-current liabilities -18,204 0 -18,204
Deferred tax liabilities -162 -1,905 -2,067
Total net assets acquired 337
Share of the net assets of associates 337
Goodwill 5,663
Total cost of acquisition 6,000
CHANGES IN NON-CURRENT ASSETS
EUR 1,000 01-06/2011 01-12/2010
-----------------------------------------------------------------
Book value at the beginning of the period 43 719 32 978
Investment 491 15 448
Decrease 0 -944
Depreciations -2 547 -4 224
Translation differences 91 461
Book value at the end of the period 41 754 43 719
PLEDGED ASSETS AND CONTINGENT LIABILITIES
EUR 1,000 30.6.2011 31.12.2010
----------------------------------------------------------
Debts with corporate mortgages
Loans from financial institutions 10 294 10 520
Granted corporate mortgages 21 820 21 820
Debts with securities or guarantees
Loans from financial institutions 13 533 13 533
Liabilities to others 5 400 5 400
Book value of pledged securities 25 712 25 712
Granted guarantees 18 933 18 933
Other collateral
Guarantees and commitments 4 808 3 173
Security deposits 3 139 2 894
Mortgages 3 000 3 000
COMMITMENTS
Factoring of credit secured by the respective receivables, which on 30/6/2011
was EUR 16.9 (6.0) million. Factoring credit 30/6/2011 was EUR 10.8 (3.6)
million.
INVESTMENT COMMITMENTS
Investment commitments for tangible fixed assets on 30/06/2011 amounted to EUR
0.8 (1.3) million.
DERIVATIVES
EUR 1,000 Positive Negative Current Current Nominal Nominal
current current net net values values
values values value value 30.6.2011 31.12.2010
30.6.201 31.12.20
1 10
--------------------------------------------------------------------------------
Currency
derivative
s
Forward -3 -3 -26 1 510 1 545
exchange
agreements
Raw
material
options
Metal 579 579 1 240 5 476 4 366
derivative
s
--------------------------------------------------------------------------------
Total 579 -3
derivative
s
Long-term derivatives deducted
Short-term 579 -3
share
RELATED PARTY EVENTS
Neo Industrial Plc and therefore Neo Industrial Group belongs to Reka Group.
Reka Ltd had a 50.76% holding of shares and 65.77% of votes.
RELATED PARTY TRANSACTIONS
Related party transactions with Reka group
EUR 1,000 1-6/2011 1-6/2010
--------------------------------------------------------------------------------
Sales 19 12
Dividends -764
Other purchases -860 -688
Sales receivables and other receivables at end of the period 1 460 1 167
Finance leases (activated on the balance sheet) -15 180 -8 113
Other liabilities at end of the period -1 -128
Other related party transactions
EUR 1,000 1-6/2011 1-6/2010
Interest revenues 72 56
Loan receivables 150 2 000
Sales receivables and other receivables at end of the period 21 8
The Managing Director of Neo Industrial has significant controlling power in
SAV Rahoitus Plc.
Other related parties consist of companies that have connection through owner
having significant controlling power. Transactions with other related parties
consist of transactions with SAV Rahoitus Plc. Loan receivables consist of
short-term corporate loans, which have been made in 2009 after comparing
different possibilities to invest cash funds with better revenues than what
could be got with temporal bank deposits. Loans have collaterals.
CALCULATION OF KEY FIGURES
Return on = Profit before taxes + interest and other financial x 100
investment expenses
(ROI) %
[Balance sheet total - obligatory provisions and
non-interest bearing liabilities] (average)
Equity ratio, % = Shareholders' equity + minority interest minus x 100
deferred tax liabilities
Balance sheet total - advances received
Earnings/share = Profit for the period belonging to equity holders of
(EPS), EUR the parent
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
Those statements in this report that are not actual facts are forward-looking
estimates. Such estimates include expectations concerning the development of
the market, growth and profitability expectations and statements containing the
words "believe,""expects,""will" or similar expressions. Since these
estimates are based on current plans, estimates and projections, they involve
risks and uncertainties, which may lead to the actual results to materially
differ from those in such 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.
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