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2011-11-11 12:30:38 CET 2011-11-11 12:31:35 CET REGULATED INFORMATION Neomarkka - Interim report (Q1 and Q3)CORRECTION: NEO INDUSTRIAL'S INTERIM REPORT FOR JANUARY 1 TO SEPTEMBER 30, 2011Helsinki, Finland, 2011-11-11 12:30 CET (GLOBE NEWSWIRE) -- Neo Industrial Plc STOCK EXCHANGE RELEASE November 11, 2011, at 13:30 EET Neo Industrial clarifies its Interim Report published yesterday at 2.00 pm. The tables on the Report were not in readable format and are corrected in the enclosed version of the Report. Neo Industrial Plc STOCK EXCHANGE RELEASE November 10, 2011, at 2:00 p.m. NEO INDUSTRIAL'S INTERIM REPORT FOR JANUARY 1 TO SEPTEMBER 30, 2011 Comparable figures (in parentheses) refer to the corresponding period in 2010 unless otherwise stated. SUMMARY FOR JANUARY-SEPTEMBER 2011 - The Neo Industrial Group's net sales were EUR 95.2 million (59.7 million). - Operating result was EUR -12.1 million (-3.9 million), largely due to the Viscose Fibers segment. - Net sales for the Cable segment grew considerably to EUR 78.3 million (59.7 million). - Operating result for the Cable segment was EUR -2.4 million (-2.7 million). - Net sales for the Viscose Fibers segment were EUR 16.9 million. - Operating result for the Viscose Fibers segment was EUR -8.9 million. - Net sales for the Single Family Housing segment were EUR 67.4 million (79.1 million), with the segment showing an overall operating loss for the review period. SUMMARY FOR JULY-SEPTEMBER 2011 - The Neo Industrial Group's net sales were EUR 27.4 million (20.6 million). - Operating result was EUR -2.9 million (0.1 million). - Net sales for the Cable segment were EUR 25.4 million (20.6 million). - Operating result for the Cable segment decreased to EUR -1.5 million (0.7 million). - Cable sales grew in Finland and the Baltic countries. - Net sales for the Viscose Fibers segment were EUR 1.9 million. The segment's production plant was shut down for almost the entire period. - Operating result for the Viscose Fibers segment was EUR -1.1 million. - Net sales for the Single Family Housing segment were EUR 17.1 million (32.5 million), with the segment showing an overall operating loss for the review period. Managing Director Markku E. Rentto: - The third quarter of 2011 was challenging. The Cable segment increased its net sales significantly and its operative profitability improved, but its overall profitability decreased, suffering from the decline in metal prices and the machinery breakdown during the third quarter. The machinery has been fixed, and with metal prices increasing, we believe the rest of the year will be profitable. The Cable segment's good results in October support this expectation. In the Viscose Fibers segment, Avilon Ltd has been under a market-related production curtailment shutdown since July. Still ongoing, the shutdown is reflected in the segment's net sales and profitability. In September, Avilon's market-related difficulties resulted in such a tight liquidity situation that the company filed a petition for corporate reorganization in order to secure its long-term operating conditions. Avilon's petition was accepted at the beginning of October, and the corporate reorganization plan is in progress. Despite the challenges, the Viscose Fibers segment continues to prepare for the future, making good progress in the sales negotiations on technology licenses, for example. The outlook for Avilon's specialty products is promising, and production will begin as soon as other operating conditions have been secured. Finndomo, the company that constitutes Neo Industrial's Single Family Housing segment, recorded lower sales than those in the comparison period. With consumer confidence increasing, however, the low interest rates and favorable cost development lay a solid foundation for the sale of prefabricated homes. The company's new management has launched effective development projects related to business operations and customer service. These projects will further improve Finndomo's range of products and services. KEY FIGURES 7-9/2011 7-9/2010 1-9/2011 1-9/2010 Net sales (EUR million) 27.4 20.6 95.2 59.7 - Cable 25.4 20.6 78.3 59.7 - Viscose Fibers 1.9 0.0 16.9 0.0 - Other operations and eliminations 0.0 0.0 0.0 0.0 Operating result (EUR million) -2.9 0.1 -12.1 -3.9 - Cable -1.5 0.7 -2.4 -2.7 - Viscose Fibers -1.1 -0.3 -8.9 -0.3 - Other operations and eliminations -0.3 -0.3 -0.8 -0.9 Result for the period (EUR million) -4.7 -0.7 -16.3 -4.3 Earnings per share, EUR -0.64 -0.08 -2.56 -0.69 ROI, % -19.8 -3.8 Equity ratio, % 21.3 38.7 NET SALES, OPERATING RESULT, BALANCE SHEET AND FINANCING The Neo Industrial Group's net sales for January-September 2011 were EUR 95.2 million (59.7 million). The Group's operating result was EUR -12.1 million (-3.9), largely because of market-related difficulties and the launch of the Viscose Fibers segment in early 2011. The Viscose Fibers segment's net sales for January-September were EUR 16.9 million. The segment's operating result was EUR -8.9 million. The Cable segment's net sales grew considerably to EUR 78.3 million (EUR 59.7 million). The segment's operating result was EUR -2.4 million (-2.7). The Single Family Housing segment's net sales were EUR 67.4 million for January-September. This figure is not included in the Neo Industrial Group's net sales. It is, however, reported in the segment-specific reviews. The Single Family Housing segment has only been reported since May 2010, which means that comparison figures will not be reported until 2012. Neo Industrial's share of the Finndomo Group, which constitutes the Single Family Housing segment, is reported under “Share of the result of associates” in the consolidated income statement. At the end of the review period, the balance sheet total stood at EUR 119.8 million (105.5 million). Neo Industrial's liquidity situation has been tight throughout the review period due to the launch of production in the Viscose Fibers segment and the complexity of the related financial arrangements as well as market fluctuation and the considerable rise in the price of the raw materials used by the Cable segment. Reka Cables' working capital is financed with a revolving bank credit of EUR 6.0 million and a factoring credit of EUR 9.5 million as well as a sale of accounts receivable facility of up to EUR 3.5 million. On September 30, 2011, EUR 0.1 million of the revolving bank credit was unused. Of the factoring credit, EUR 1.0 million was unused, and of the sale of accounts receivable facility, EUR 1.4 million was unused. On September 30, 2011, EUR 2.2 million of Avilon's revolving bank credit was used, as was EUR 1.7 million of its factoring credit, both of which have been discontinued because of the corporate reorganization of Avilon. 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 statements for 2010. During the review period, the Group adopted new accounting principles for Avilon's emission rights. Emission rights received are recognized as intangible assets and deferred income. These principles are described in more detail under “Accounting policies” in “Notes to the consolidated financial statements.” MAJOR EVENTS DURING THE REVIEW PERIOD Cable Net sales for the Cable segment for January-September were EUR 78.3 million (EUR 59.7 million). Compared with the corresponding period in 2010, the segment recorded a growth of 31 percent. Its operating result was EUR -2.4 million (-2.7 million). Net sales for July-September were EUR 25.4 million (20.6 million), and the operating result was EUR -1.5 million (0.7 million). In the third quarter of 2011, profitability decreased largely because of the decline in metal prices, which had a direct effect on the market value of open metal derivatives. Furthermore, the segment's profitability suffered from the breakdown of a copper wire drawing machine at Reka Cables' plant in Keuruu. In addition to the Keuruu factory, the production unit in question delivers copper wire to other plants. The four-week breakdown resulted in lost sales and delayed deliveries in all of the segment's plants in Finland. The delivery difficulties continued beyond the end of the third quarter. Reka Cables will apply for interruption insurance compensation for the machinery breakdown in Keuruu. The compensation is estimated at EUR 0.8 million and is recognized accordingly. Growth in the Cable segment came to an end in the third quarter of 2011, but Reka Cables recorded an increase in sales as well as increased production volumes in all of its plants in Finland compared with the corresponding period in 2010. Demand was lively, especially in Finland, among wholesalers and contractors alike. In other Nordic countries, sales did not develop as expected. Sales continued at a good level in the Baltic countries after the second quarter. The company's quotation base and order backlog were at good levels at the end of the review period, but the machinery breakdown is still affecting deliveries. In the Russian cable market, the third quarter is typically the slowest period of the year. The market situation for the Cable segment's units in Russia remained weak after the second quarter. The competition continued to be tough, and the price level for power cables remained low. The Russian units showed a loss in the third quarter, but the last quarter of 2011 is expected to be profitable. Raw material prices remained volatile in the third quarter. Reka Cables strives to manage the situation with safeguards and good working capital management. The availability of metal raw materials was good, but that of plastic raw materials proved to be challenging at times. The segment's companies also include Nestor Cables, a manufacturer of telecommunications and fiber-optic cable. In January-September 2011, the company's net sales were EUR 24.1 million (22.5 million). The company showed a loss in the review period. The uncertain financial market affected customers' investment decisions, and cable projects were postponed until 2012. Viscose Fibers Net sales for the Viscose Fibers segment for January-September 2011 were EUR 16.9 million. Its operating result was EUR -8.9 million (-0.3 million). The segment showed a loss for the following reasons: the start-up costs of the production plant; the postponement of the launch of production from December 2010 until mid-January 2011; difficulty in the availability of dissolving pulp and the related decline in the capacity utilization rate toward the end of the first quarter; the maintenance shutdown in early April; as well as the deterioration of the market situation in July and the production curtailment shutdown that ensued. Net sales for the Viscose Fibers segment for July-September were EUR 1.9 million. Its operating result was EUR -1.1 million (-0.3 million). The market for fire-retardant viscose fiber, Avilon's specialty product, deteriorated with the United States housing market throughout the period, contrary to what customers indicated in the first half of the year. In early 2011, Avilon lost some of its market share in fire-retardant fibers due to difficulties in the availability of dissolving pulp. In May, Avilon introduced what is known as PPV technology, which is used for converting paper-grade pulp into raw material suitable for viscose production. This technology has permanently solved the problems related to raw materials. At the time, however, the market situation had already turned unfavorable. The deterioration of the market for fire-retardant fiber was the main reason for Avilon's production curtailment shutdown, which began in July, and for the company filing a petition for corporate reorganization in September. Because of the high quality of Avilon's fire-retardant fiber, customer interest is strong, and the company has quickly established itself as a credible player in the United States. During the third quarter, Avilon served its customers by selling fire-retardant fiber stock that had been manufactured before the shutdown. The current stock is likely to be sold out by the end of the year. The market for standard viscose fibers began to revive in late August with customers' decreasing stock levels. The price of dissolving pulp is expected to remain at such a high level that using paper-grade pulp, a more cost-efficient option, as its primary raw material will provide Avilon a clear competitive edge in the future. The PPV technology, which makes it possible to use paper-grade pulp, has attracted great interest in the field. License sales were negotiated actively in August and September. In addition to the PPV technology, the Viscose Fibers segment's portfolio includes the carbamate technology, which is under development, as well as new applications for fire-retardant fiber. Avilon's expectations of increased demand for specialty products and new production technologies for pulp-based textile fibers have improved with growing customer interest. Avilon has a good position in the market for fire-retardant fibers, and the company's range of specialty products will be expanded to cover new areas. During the review period, Avilon and the Finnish company SilverPhasE announced their letter of intent on producing anti-microbial viscose fiber. Neo Industrial issued a stock exchange release on the matter on September 22, 2011. Production at the Valkeakoski plant will be relaunched as soon as it is deemed to be profitable; that is, as soon as sufficient demand for specialty products and financing for the relaunch have been secured. The plans related to the corporate reorganization procedure will be finalized by February 6, 2012, and the decision about the completion of the reorganization program will be made on August 30, 2012. The reorganization procedure will not prevent production from being relaunched. During the review period, Avilon held emission rights, all of which it sold. Some of these rights will not be used during 2011 and have been recognized as revenue. Emission rights used by Avilon are recognized as a cost provision, and the company must later buy back at least some of the emission rights it sold. Single Family Housing Net sales for Finndomo, the company that constitutes Neo Industrial's Single Family Housing segment, for January-September were EUR 67.4 million (79.1 million). Net sales for July-September decreased to EUR 17.1 million (32.5 million). Finndomo showed a loss in all quarters. The figures from 2010 include the company's business operations in Sweden, which were divested during the review period. The corporate reorganization of Finndomo AB in Sweden was completed in the third quarter of 2011. Related to the reorganization, Finndomo recognized a total of EUR 2.7 million of write-offs of accounts receivable. Neo Industrial's share of the amount recognized as a cost is the same as its share of ownership: 30.3 percent. In addition, Finndomo has liquidated real estate and plots and collected accounts receivable, which has freed up capital. This process will continue in the fourth quarter. In line with its new strategy, Finndomo is focusing on its core business, the production and sale of prefabricated homes in Finland, Russia and the Baltic countries. Consumer uncertainty about economic development in the eurozone was reflected in the demand for prefabricated homes in the third quarter, as it was earlier in the year. Sales were lower than those in 2010 throughout the sector. During the third quarter, the company increasingly invested in improving customer service and expanding the scope of its deliveries, as more and more customers are interested in turnkey solutions. With this in mind, Finndomo introduced a new maintenance concept in the fall. This additional service ensures sufficient levels of maintenance and technical functionality for prefabricated homes, in addition to comfortable living. Finndomo also further specified its regional building concept in the third quarter. Instead of acting as both a developer and a contractor, which ties down capital and resources, Finndomo will focus on developing residential areas with wooden homes and act as a modular home and component supplier in regional building projects. MAJOR EVENTS AFTER THE REVIEW PERIOD The District Court of Pirkanmaa accepted Avilon Ltd's petition for corporate reorganization on October 6, 2011, and the preparation of the reorganization plan began. Neo Industrial issued a stock exchange release on the matter on October 6, 2011. Sari Tulander, CFO of Neo Industrial Plc, was appointed Managing Director of Avilon Ltd. Heikki Hassi will continue as Managing Director of Carbatec Ltd, focusing on research and development operations. Neo Industrial issued a stock exchange release on the matter on October 21, 2011. INVESTMENTS In January-September 2011, the Neo Industrial Group's investments totaled EUR 4.8 million (12.5 million), of which EUR 0.1 million was related to the Cable segment and EUR 4.7 million to the Viscose Fibers segment. The Group's long-term leases of real estate are recognized as provisions of fixed assets in accordance with IFRS. During the review period, Neo Industrial made an additional investment of slightly less than EUR 3 million in Finndomo. This investment 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. On September 30, 2011, its total share capital was EUR 24,082,000, and the number of shares was 6,020,360. The total number of shares includes 91,727 B shares owned by Neo Industrial. The holding represents 1.5 percent of the company's share capital and 1.1 percent of the votes. The company holds no A shares. Neo Industrial Plc's B shares (NEO1V) are listed on NASDAQ OMX Helsinki. Company shares Sep 30, 2011 Sep 30, 2010 Company share capital (EUR) 24,082,000 24,082,000 A shares (20 votes per share) 139,600 139,600 B shares (1 vote per share) 5,880,760 5,880,760 Total 6,020,360 6,020,360 B shares held by the company 91,727 91,877 In January-September 2011, a total of 284,139 (334,444) of Neo Industrial's B shares were traded on NASDAQ OMX Helsinki, representing 4.8 percent (5.7 percent) of the total number of shares. At the end of trading on September 30, 2011, the share price was EUR 4.25 (8.05), and the average share price for January-September was EUR 7.22 (7.48). The lowest quotation in January-September was EUR 3.50 (5.51), and the highest was EUR 9.43 (9.43). The company's market capitalization was valued at EUR 24.9 million (47.3 million) on June 30, 2011. ACQUISITION AND DISPOSAL OF OWN SHARES During the review period, Neo Industrial did not exercise the authorizations of the general meetings of June 10, 2009, and June 9, 2010, nor the new authorization of the Annual General Meeting of March 30, 2011, to acquire the company's own shares. The Group decided to dispose of its own shares through a trading program. The first 1,000 shares traded at EUR 8.00 per share on June 23, 2011, after which Neo Industrial held a total of 91,727 of its own shares. ANNUAL GENERAL MEETING AND CORPORATE GOVERNANCE Neo Industrial Corporation's Annual General Meeting was held in Helsinki on March 30, 2011. The Annual General Meeting approved the Board of Directors' proposal that the Board consist of six members. The following members were appointed: Matti Lainema (Chairman), Pekka Soini (Deputy Chairman), Ilpo Helander, Risto Kyhälä, Taisto Riski and Raimo Valo. A separate stock exchange release about the Annual General Meeting's decisions was issued on March 30, 2011. The members of Neo Industrial's previous audit committee were Ilpo Helander, Taisto Riski and Pekka Soini. The members of Neo Industrial's new audit committee are Taisto Riski, Pekka Soini and Raimo Valo. The new committee was established on March 30, 2011. 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 and Alnus Ltd as well as Carbatec Ltd and its subsidiaries and associated companies. Carbatec Ltd is Avilon Ltd's parent company. Neo Industrial Plc is domiciled in Hyvinkää. On September 30, 2011, Neo Industrial had 12,291 shareholders. The largest shareholder, Reka Ltd, held 50.76 percent of the shares and 65.77 percent of the votes. Neo Industrial Plc is therefore part of the Reka Group. Reka Ltd is domiciled in Hyvinkää. At the end of September 2011, the combined holding of the ten largest shareholders was 61.2 percent of the shares and 72.9 percent of the votes. The Members of the Board, CEO and CFO directly owned and controlled a total of 2,960,618 Neo Industrial B shares on September 30, 2011. PERSONNEL In January-September 2011, the Group employed an average of 607 (567) people. At the end of September 2011, the Group had 611 employees (572), of whom 463 represented the Cable segment and 133 represented the Viscose Fibers segment. The rest worked in Neo Industrial's administration. RISKS AND UNCERTAINTY FACTORS Neo Industrial's financial risks include currency, interest rate, commodity, liquidity, credit and investment market risks. Financial risks and the related protection measures are described in more detail in notes to the 2010 financial statements. The company's future risk factors are related to the business development of its portfolio companies. The Group's liquidity situation is tight. Previously promised funding, which was connected to the decision about Avilon's acquisition and start-up, did not materialize within the agreed-upon timetable. In addition, it has not been possible to use part of Avilon Ltd's financing solution, because the related loan guarantee by the municipality is still pending appeal. Having suffered from liquidity problems, Avilon filed a petition for corporate reorganization in September. The petition was accepted after the review period. The purpose of the reorganization is to secure the company's long-term operating conditions. Currently, Avilon's uncertainty factors are related to securing sufficient demand for specialty products, so that relaunching production at the plant will be profitable, and to ensuring sufficient funding for the relaunch. The Viscose Fibers segment is a new business subject to the risks associated with any business start-up. Its main risks include market and competitor development and currency fluctuations as well as fluctuations in the price of raw materials. These considerations also affect liquidity management. In the Cable segment, the liquidity situation has tightened because of the increase in metal prices, increased net sales and stricter payment terms in particular. The most significant risks are related to market development as well as fluctuations in the price of raw materials and currencies. Along with the increased volume of operations, the fluctuation in metal prices will increase the need for working capital in operational activities. Combined with strong seasonal fluctuation, this adds pressure to liquidity management. Neo Industrial believes in the growth and development of the Russian cable market. The company has made significant investments in making use of business opportunities in Russia. The investments entail the risk that growth in Russia will not meet expectations. The Group continues to benefit from the internal audit made in 2009 by its audit committee of risks related to its operations in Russia. In the Single Family Housing segment, the most significant risks are related to the development of demand and the competition situation as well as the production capacity utilization rate and fluctuations in the price of raw materials. NEAR-TERM OUTLOOK The global economy currently causes significant uncertainty, which may affect all of Neo Industrial's business areas. In the Viscose Fibers segment, demand and price development are difficult to predict. The decision to relaunch production depends on the demand for high-margin specialty products as well as on securing sufficient funding. The segment's result in the second half of 2011 will be affected by the market situation, the continuing shutdown and the progress of the new technology business. Neo Industrial predicts that the segment's result for the full year will be unprofitable. In the Cable segment, the market situation improved toward the end of 2010, as did profitability. In addition, significant reorganization measures related to production, which caused non-recurring expenses, were completed during the review period. The Cable segment is expected to regain profitability during the last quarter of 2011. The segment's good results in October supports this expectation. In the Single Family Housing segment, the market situation toward the end of the year is worse than what was predicted in early 2011. Finndomo divested operations and property that were not part of its core business and burdened its profitability. This will improve Finndomo's economic outlook. Throughout the year, the company has paid special attention to liquidity. To ensure liquidity and to facilitate strong growth in the different segments, Neo Industrial has carried out negotiations on financing and payment terms as well as boosted inventory turnover and freed up capital assets. To support its funding, Neo Industrial is currently in the process of acquiring a bond from the financial market. Helsinki, November 10, 2011 Neo Industrial Plc Board of Directors More information: Markku E. Rentto, Managing Director, tel. 020 720 9191 Sari Tulander, CFO, tel. 020 720 9192 www.neoindustrial.fi Neo Industrial Plc is a Finnish industrial investment and development company. Its strategy is to invest in synergistic companies, develop them through active ownership and improve the return on invested capital through dividend streams and increase in value. Neo Industrial's B share is listed on the main market of NASDAQ OMX Helsinki. 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 7/1-9/30/ 7/1-9/30/ 1/1-9/30/ 1/1-9/30/ 2011 2010 2011 2010 -------------------------------------------------------------------------------- Net sales 27,355 20,596 95,235 59,680 Change in inventories of -2,326 781 1,744 -1,570 finished products and production in progress Production for own use 2 3 18 31 Materials and services -20,791 -15,388 -81,663 -41,183 Personnel expenses -4,418 -3,465 -14,912 -10,170 Depreciation and impairment -1,300 -1,611 -4,225 -3,580 Other operating income -1,437 -794 -8,282 -7,074 and expenses -30,270 -20,472 -107,319 -63,546 Operating profit -2,916 123 -12,084 -3,866 Financial income 471 232 722 1,511 Financial expenses -1,891 -272 -3,765 -1,773 Share of the result of associates -599 -388 -4,161 -647 Profit before taxes -4,935 -304 -19,288 -4,775 Taxes 282 -381 2,974 497 Result for the period -4,653 -686 -16,314 -4,277 Profit attributable to Equity holders of the parent -3,803 -499 -15,288 -4,105 Minority interests -850 -186 -1,026 -172 -4,653 -686 -16,314 -4,277 Earnings per share attributable to the shareholders of the parent (EUR) Before and after -0.64 -0.08 -2.56 -0.69 dilution, EUR Number of shares 5,929,483 5,928,483 5,929,483 5,928,483 CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (IFRS) Result -4,653 -686 -16,314 -4,277 Other comprehensive items Translation differences related to -687 -739 -604 1,340 foreign units Total -687 -739 -604 1,340 Total comprehensive income -5,340 -1,425 -16,918 -2,937 Total comprehensive income attributable to Shareholders of the parent -4,490 -1,238 -15,892 -2,711 Minority interests -850 -186 -1,026 -226 -5,340 -1,425 -16,918 -2,937 Equity per share (EUR) 4.34 6.88 CONSOLIDATED BALANCE SHEET (IFRS) EUR 1,000 9/30/2011 12/31/2010 ------------------------------------------------------------------------ ASSETS Non-current assets Goodwill 3,469 3,624 Other intangible assets 11,036 7,765 Tangible assets 40,452 43,719 Holdings in associates 11,606 4,668 Receivables 17 1 Derivative contracts 0 66 Deferred tax assets 6,031 3,040 Total non-current assets 72,611 62,883 Current assets Inventories 19,297 17,529 Sales receivables and other receivables 23,672 19,880 Tax receivables from the profit 5 17 Derivative contracts 30 1,174 Other financial assets 3,139 2,894 Cash and cash equivalents 1,051 2,734 Total current assets 47,194 44,229 Total assets 119,805 107,112 SHAREHOLDERS' EQUITY AND LIABILITIES Shareholders' equity Share capital 24,082 24,082 Premium fund 66 66 Reserve fund 1,221 1,221 Own shares -591 -599 Translation differences -1,843 -1,239 Retained profit -26,089 -11,492 Other unrestricted equity 28,902 21,327 Equity attributable to shareholders of the parent 25,748 33,366 Minority interests -252 573 Total shareholders' equity 25,495 33,939 Non-current liabilities Deferred tax liabilities 3,943 4,047 Provisions 872 839 Interest-bearing liabilities 24,084 25,905 Non-interest-bearing liabilities 1,425 1,584 Current liabilities Tax liabilities from the profit 6 24 Short-term interest-bearing liabilities 31,101 16,314 Accounts payable and other liabilities 32,880 24,459 Total liabilities 94,310 73,172 Shareholders' equity and liabilities 119,805 107,112 CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY (IFRS) EUR A B C D E F G H I J 1,000 -------------------------------------------------------------------------------- Shareho 24,082 66 1,221 -382 -2,013 21,327 -308 43,993 1,445 45,437 lders' equity Dec 31, 2009 Transla 1,340 1,340 1,340 tion differ ences Result -4,078 -4,078 -226 -4,304 for the period Dividen -1,483 -1,483 -1,483 ds paid Acquisi -213 -213 -213 tion of own shares Minorit -59 -59 59 0 y intere sts Shareho 24,082 66 1,221 -594 -673 21,327 -5,928 39,501 1,278 40,778 lders' equity Sep 30, 2010 EUR A B C D E F G H I J 1,000 -------------------------------------------------------------------------------- Shareho 24,082 66 1,221 -599 -1,239 21,327 -11,49 33,366 573 33,939 lders' 1 equity Dec 31, 2010 Result -604 -15,28 -15,89 -1,026 -16,91 for 8 2 9 the period Acquisi 8 8 8 tion of own shares Minorit 691 691 201 892 y intere sts Share 7,575 7,575 7,575 of change s in associ ates Shareho 24,082 66 1,221 -591 -1,843 28,902 -26,08 25,748 -252 25,496 lders' 9 equity Jun 30, 2011 Explanation of codes: 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 Total shareholders' equity Shareholders' equity in Finndomo was strengthened during the review period. In addition to an equity investment by Finndomo's principal owners, the company's reserve for invested non-restricted equity increased by EUR 25 million. Neo Industrial's share of this increase is 30.3 percent, amounting to EUR 7.6 million. STATEMENT OF CASH FLOWS, IFRS EUR 1,000 1/1-9/30/2011 1/1-9/30/2010 -------------------------------------------------------------------------------- Cash flows from operating activities Payments received from operating activities 95,140 55,930 Payments for operating activities -102,839 -56,623 Paid interest and other financial expenses -1,828 -836 Interest received and other financial income 1,079 473 Direct taxes paid -26 -35 Net cash provided by operating activities -8,474 -1,092 Cash flows from investments Subsidiaries and new business acquisition 0 -6,146 Investments in tangible fixed assets -984 -2,950 Investments in intangible fixed assets -6,935 -324 Proceeds from sale of other investments 0 224 Withdrawals from other financial funds -250 6,912 Loans granted 0 -324 Loan repayments 2,019 0 Net cash provided by investing activities -6,150 -2,608 Cash flows from financing activities Sale of own shares 8 -207 Increase in loans 14,489 7,762 Decrease in loans -750 -867 Payments of finance lease activities -773 -445 Dividends paid 0 -1,483 Net cash provided by financing activities 12,974 4,760 Change in cash and cash equivalents -1,650 1,060 Cash and cash equivalents at the beginning of the 2,734 3,000 period Exchange rate differences -33 96 Cash and cash equivalents at the end of the period 1,051 4,156 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS This report has been prepared in accordance with IAS 34 requirements for interim reports. ACCOUNTING POLICIES This interim report has been prepared in accordance with the same principles as the financial statement for 2010. In the first quarter of 2011, the Group adopted new accounting principles for Avilon's emission rights. Emission rights received are recognized as intangible assets and deferred income. Emission rights are valued at current fair value or other probable value. If the market value of the emission rights drops significantly below the book value and the decline is considered to be permanent, the impairment loss is recognized under rights that 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. Expenses corresponding to actual emissions are recognized in the income statement under other operating expenses and appear in the balance sheet reserves. Emission rights that will not be used during the review period are recognized at the time that they are deemed to be surplus. Emission rights and related provisions are derecognized when they are sold or submitted to cover obligations. Any gains or losses are recognized in the income statement. SEGMENT INFORMATION Sep 30, 2011 Cable Viscose Single Family Eliminations Group Fibers Housing and other total EUR 1,000 operations Net sales 78,345 16,919 0 -44 95,220 Segment's operating -2,448 -8,880 0 0 -11,328 profit Unallocated items 0 0 0 -756 -756 Operating profit -2,448 -8,880 0 -756 -12,084 Share of the result -4,161 -4,161 of associates Unallocated items -69 -69 Result for the -16,314 period Assets Segment's assets 74,156 24,639 11,606 110,401 Unallocated assets 9,404 9,404 Total assets 74,156 24,639 11,606 9,404 119,805 Liabilities Segment's 55,943 33,798 0 89,741 liabilities Unallocated 4,570 4,570 liabilities Total liabilities 55,943 33,798 0 4,570 94,310 Assets less 18,213 -9,159 11,606 4,834 25,495 liabilities Investments 122 4,668 0 3,031 7,821 Depreciations -3,483 -727 0 -15 -4,225 Sep 30, 2010 Cable Viscose Single Family Eliminations Group Fibers Housing and other total EUR 1,000 operations Net sales 59,680 0 0 0 59,680 Segment's operating -2,676 -287 0 -2,963 profit Unallocated items -903 0 -903 Operating profit -2,676 -287 -903 0 -3,866 Share of the result 0 -646 -646 of associates Unallocated items 235 235 Result for the -4,277 period Assets Segment's assets 83,951 8,750 0 0 92,701 Unallocated assets 14,662 -1,903 12,759 Total assets 83,951 8,750 14,662 -1,903 105,461 Liabilities Segment's 57,446 6,495 4,400 68,340 liabilities Unallocated 11,203 -14,859 -3,656 liabilities Total liabilities 57,446 6,495 15,603 -14,859 64,684 Assets less 26,506 2,255 -940 12,956 40,777 liabilities Investments 4,383 8,090 0 0 12,473 Depreciations -3,562 -17 0 0 -3,579 Cable segment's net sales by product group, EUR million 1-9/2011 1-9/2010 LV energy 26.5 20.6 Power cable 51.8 39.1 Total 78.3 59.7 Cable segment's net sales by sales area, EUR million 1-9/2011 1-9/2010 EU countries 67.9 46.9 Non-EU countries 10.4 12.8 Total 78.3 59.7 The Cable segment's three largest customers are the Onninen Group, Rexel Group and Sonepar Group, each of which represents more than 10 percent of the segment's net sales. Viscose Fibers segment's net sales by sales area, EUR 1-9/2011 1-9/2010 million -------------------------------------------------------------------------------- EU countries 3.7 0.0 Non-EU countries 13.2 0.0 Total 16.9 0.0 CHANGE IN NON-CURRENT ASSETS EUR 1,000 1-9/2011 1-12/2010 -------------------------------------------------------------- Book value at the beginning of the period 43,719 32,978 Investments 765 15,448 Decrease -35 -944 Depreciations -3,546 -4,224 Translation differences -451 461 Book value at the end of the period 40,452 43,719 CONTINGENT LIABILITIES EUR 1,000 9/30/2011 12/31/2010 ---------------------------------------------------------------- Debts secured against business mortgages, securities or guarantees Loans from financial institutions 22,217 24,053 Loans to others 7,907 5,400 Granted business mortgages 41,820 21,820 Book value of pledged securities 25,885 25,712 Granted guarantees 29,634 18,933 Other collateral Guarantees and payment 3,516 3,173 commitments Security deposits 3,139 2,894 Mortgages 4,700 3,000 COMMITMENTS The factoring credit was secured by a total of EUR 12.6 million of receivables on September 30, 2011 (EUR 6.0 million on December 31, 2010). The factoring credit stood at EUR 10.2 million on September 30, 2011 (EUR 3.6 million on December 31, 2010). INVESTMENT COMMITMENTS Investment commitments for tangible fixed assets amounted to EUR 0.65 million on September 30, 2011 (EUR 0.4 million on December 31, 2010). DERIVATIVE CONTRACTS EUR 1,000 Positive Negativ Current net Current net Nominal Nominal current e values values values values values curren 9/30/2011 12/31/2010 9/30/201 9/30/2010 t 1 values -------------------------------------------------------------------------------- Currency derivativ es Forward 0 0 0 -26 0 1,545 exchange agreement s Option 0 -12 -12 0 3,000 0 contracts Raw material options Metal 29 -575 -546 1,240 3,969 4,366 derivativ es -------------------------------------------------------------------------------- Total 29 -587 -558 derivativ es Long-term derivative s deducted Short-term 29 -587 share RELATED PARTY EVENTS Neo Industrial Plc, and therefore also Neo Industrial Group, belongs to the Reka Group. Reka Ltd has a 50.76 (50.76) percent holding of shares and 60.77 (60.77) percent of votes. RELATED PARTY TRANSACTIONS Transactions with the Reka Group EUR 1,000 1-9/2011 1-9/2010 ----------------------------------------------------------- Sales 16 10 Dividends 0 -764 Other purchases -1,305 -1,098 Other income 0 14 Interest revenues 10 14 Sales receivables and other receivables 1,404 1,363 at the end of the period Finance leases -14,922 -10,983 (activated on the balance sheet) Other debts at the end of the period 0 -72 Other related party transactions EUR 1,000 1-9/2011 1-9/2010 Interest revenues 73 108 Loan receivables 0 2,000 Sales receivables and other receivables 0 118 at the end of the period The Managing Director of Neo Industrial has significant controlling power in SAV-Rahoitus Plc. Other related parties consist of companies that are connected to the company through an owner that has significant controlling power. Transactions with other related parties consist of transactions with SAV Rahoitus Plc. Loan receivables consist of short-term corporate loans that were made in 2009 after comparing different options of investing cash funds to gain higher revenues than those from fixed-term deposits. The loans have collateral. CALCULATION OF KEY FINANCIAL INDICATORS Return on = Profit before taxes + interest and other financial x 100 investment expenses / [Balance sheet total - obligatory provisions (ROI), % and non-interest-bearing liabilities] (average) Equity = Shareholders' equity + minority interest less deferred x 100 ratio, % tax liabilities / Balance sheet total - advances received Earnings = Profit for the period belonging to equity holders of the per share parent company / Number of shares adjusted for share (EPS), EUR issues (average) Equity per = Shareholders' equity - minority interest less deferred share, EUR tax liabilities / Number of shares adjusted for share issues at the end of the financial period All comments in this report that do not refer to actual facts are future estimates. Such estimates include expectations concerning market trends, growth and profitability as well as statements including the words “believe,” “assume” or “will be” or a similar expression. Since these estimates are based on current plans and estimates, they involve risks, and uncertainty factors may cause the actual results to differ substantially from current statements. Among other things, such factors include: 1) availability and cost of production inputs, demand for new products, changes in circumstances affecting the acquisition of capital under acceptable conditions, and operating conditions, such as continued success in production and the ensuing efficiency benefits; 2) sector-specific circumstances, 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, and competitors' possible new products; and 3) the general economic situation, such as economic growth in the Group's main market areas or changes in exchange rates and interest rates. |
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