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, 2011
Helsinki, 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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