2011-05-05 13:31:39 CEST
2011-05-05 13:32:34 CEST
REGLAMENTUOJAMA INFORMACIJA
Neomarkka - Interim report (Q1 and Q3)
NEO INDUSTRIAL'S INTERIM REPORT JANUARY -MARCH 2011
Sales growth in all sectors - beginning of year negative for Avilon
Neo Industrial Plc STOCK EXCHANGE RELEASE 5 May 2011 at 2.30 pm
NEO INDUSTRIAL'S INTERIM REPORT JANUARY -MARCH 2011
Sales growth in all sectors - negative beginning of year for Avilon
Comparable figures ( ) refer to last year's corresponding period unless
otherwise stated.
SUMMARY FOR THE FIRST QUARTER 2011
- The Group's net sales were EUR 31.6 (16.6) million.
- Operating result -7.2 (-2.3) million.
- Cable business net sales grew from the previous year by 47%, EUR 24.5 (16.6)
million.
- Cable business operating result was however negative, EUR -0.4 (-2.0) million.
- The domestic cable market was lively - business picked up also in Russia.
- Viscose Fibers business net sales were EUR 7.1 million.
- Viscose Fibers result was negative, EUR -6.6 million due to plant startup
costs as well as reduced capacity utilization due to temporary availability
problems of the main raw material.
- The demand situation for Avilon's fiber is very good - the factory's pulp
supply is secure and the production can continue to be increased.
- The Single Family Housing segment's net sales were EUR 22.5 million.
Profitability improved from the previous year. New orders received in Finland
grew 18%, sales also showed growth in the Baltic countries and Russia.
Managing Director Markku E. Rentto:
- Neo Industrial's first quarter of 2011 was negative as expected, but sales
grew in all sectors. The Cable division's market situation has improved
significantly and its first quarter net sales were very good. The production
reorganizing which had been straining the profitability of Reka Cables in
Finland were brought to conclusion. The sector is ready for market growth,
which we expect on the basis of both offer and order backlog at the end of
March.
Viscose fibers' first quarter in operation was eventful. Avilon's first steps
coincided with price increases and availability problems of dissolving pulp,
the main raw material for viscose fibers. Start of production was therefore
moved from December 2010 to mid January. As the factory started up and went
into production, Avilon prepared for a shutdown at the end of March due to a
shortage of pulp. Sourcing of pulp was again confirmed in April and the plant
resumed production on 21 April 2011. The main production line is now operating
at full capacity and pulp supplies are secured. After the initial difficulties,
Avilon's prospects look promising.
The Single Family Housing business, our associated company Finndomo, increased
new orders in Finland during the review period by almost 20%. A change in
strategy means Finndomo now focuses on the domestic market as well as the
Baltic countries and Russia. Cost controls continue in the group and
alternative options for operations in Sweden will be sought.
KEY FIGURES
1-3 /2011 1-3 /2010
Turnover, EUR million, of which 31.6 16.6
- Cable business 24.5 16.6
- Viscose Fibers 7.1 0.0
- Other operations 0.0 0.0
Operating result, EUR million, of which -7.2 -2.3
- Cable business -0.4 -2.0
- Viscose Fibers -6.6 0.0
- Other operations -0.3 -0.3
Profit or loss for the period, EUR million -7.5 -2.2
Earnings per share, EUR -1.26 -0.37
ROI, % -11.1 -2.5
Equity ratio, % 22.7 47.5
FINANCIAL RESULT, BALANCE SHEET AND FINANCING
Neo Industrial Group's net sales for January-March 2011 was EUR 31.6 (16.6)
million. Net income was a loss, EUR -7.2(-2.3) 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 reviewed period.
The Viscose Fibers business operating loss was EUR 6.6 million. The review
period was the segment's first quarter in which it had net sales (EUR 7.1
million).
The Cable business net sales rose significantly from the previous year to EUR
24.5 (16.6) million, but the result was a EUR 0.4 million loss, although less
than the previous year (EUR -2.0 million).
Net sales of the Single Family Housing business (EUR 22.5 million during the
review period) is not included in the Group's net sales figure but is described
in the business review. The segment has been reported from May 2010, so
comparative figures for 2010 are not yet reported for 2011. Neo Industrial's
Single Family Housing business share of the Finndomo group result is reported
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
117.1 (107.1) million. Neo Industrial's liquidity situation has been tight due
to start-up investment requirements for Avilon Ltd and the multiplicity of the
related financing arrangements, as well as sharp price increases of metals and
plastics 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 0.4 million of the bank
credit was unused on 3 March2011. Of the factoring facility, EUR 1.7 million
was unused. Avilon has EUR 6.0 million factoring credit, which was not used
during the review period.
This 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
The Cable business sales grew significantly in the first quarter. Business
segment net sales for January-March 2011 was EUR 24.5 (16.6) million, an
increase of 47%. Operating loss decreased to EUR -0.4 (-2.0) million. The loss
includes 0.3 million non-recurring charges from the already completed Reka
Cables domestic production restructuring started at the beginning of the last
quarter of 2010. The impact on 2010 profitability from the Riihimäki factory
breakdown insurance case is however still pending.
At the beginning of the year, the Cable market was vibrant, much improved from
the first quarter of the previous year, when the downturn was reflected in the
reduced demand. The biggest growth came from Finland and the Baltic countries
fueled by the growth in electricity wholesale markets. The company's offer and
order backlog at the end of the review period were both at a good level.
The Russian market was as good as Finland in the first quarter, but the
competitive situation remained tight. The abolishment of the duty-free status
of metals in Russia this year requires a change in Reka Cables operating model
and alternatives were examined during the review period. Russian operations
during the review period resulted in a positive operating result. The negative
trend that started in fall 2008 has been halted, and the outlook is positive
for the whole of 2011.
Raw material price increases and fluctuations still challenge the working
capital management of Reka Cables. Copper prices remain high, and aluminum
prices have risen even more than expected. Plastic raw material prices are
rising with the price of oil and will also be more expensive throughout. In
addition, the availability of raw materials remained challenging in some
places. Reka Cables strives to manage the situation with safeguards and good
working capital management. High demand in the first quarter gave Reka Cables
and the whole sector enhanced opportunities to increase prices to meet part of
the raw materials cost level.
The capacity of Reka Cables' Hyvinkää and Keuruu factories during the reporting
period was, in the main, effectively used. At the medium and high voltage cable
manufacturing plant in Riihimäki, utilization due to the seasonal nature of the
products was of lower than other factories, but like other factories, the level
of its offer backlog at the end of the period was good. In the early spring,
Reka Cables recruited more than 25 new employees to Finnish manufacturing
activities.
Net sales of associate company, telecommunications and fiber optic cables
manufacturer Nestor Cables Ltd was EUR 3.3 (3.2) million. Net sales increased
5% from the previous year's corresponding period. First quarter earnings were
still negative as a long and harsh winter season depressed demand for optical
fiber underground cables. The installation season is delayed for the same
reason, but full-year demand is expected to grow significantly.
Viscose Fibers
The Viscose Fibers business encompasses Avilon Oy, a Valkeakoski-based viscose
fiber plant that Neo Industrial acquired in the autumn of 2010. The Avilon Ltd
factory successfully started production on 13 January 2011. Net sales during
the review period were EUR 7.1 million. The operating result was a EUR -6.6
million loss. Start up costs increased with difficulties in raw material
availability and subsequent delay in start up from December 2010 to the middle
of January 2011 and, for the same reason, reduced capacity utilization in late
March.
The demand for dissolving pulp increased with the historical peak in the
shortage of cotton from November 2010 onwards. At the end of 2010, Avilon
secured the pulp deliveries for the first quarter, but by the end of March,
supplies could no longer be guaranteed. Since operation below capacity is not
economic, Avilon made the decision at the end of the review period to
temporarily halt production until the raw materials supply was secured. In this
context, Avilon decided to start co-determination negotiations with personnel
to adjust operations in case of any shutdown. Avilon also announced plans for a
second production line to launch in the third quarter. Neo Industrial announced
this on 30 March 2011.
Demand for Avilon's viscose fiber exceeded the supply capacity of the plant,
which is limited by the above mentioned dissolving pulp availability. Quality
of the plant's products has been excellent. Viscose fibers were delivered to
both old and new customers. Avilon sold about 4,200 tons of production during
January to March.
During the review period, Avilon also started manufacturing a special fire
retardant fiber product. The first deliveries were made to a U.S. customer and
test samples were also submitted in Europe. Fire retardant fiber demand
however, was low at the beginning of the year due to slow housing construction
in the U.S., the main market area. Fire retardant fiber applications are
however diversified and its use is growing in a number of areas with increased
fire safety legislation, leading to strong interest in Avilon's products. The
in-house developed technology of Avilon fire retardant fiber is less expensive
than competing solutions and a high performance product. Getting started in the
new heavily regulated, flame retardant textile market is, however, slower to
enter than the basic viscose fiber market.
During the review period, Avilon made an agreement with the Finnish Berner
company to supply sodium sulfate, a viscose manufacturing by-product, to Berner
for further processing. By-product sales represent EUR 1 to 2 million in sales
revenue annually.
Avilon's production of viscose fibers has significant growth expectations, as
viscose is the main substitute for cotton. Cotton cultivation is decreasing
leading to a global cotton shortage, which is expected to continue for at least
though to 2012. Estimates used by Avilon show that the demand for viscose
fibers in the total textile fiber market will grow 3.5% annually in the next
few years.
During the review period, Avilon's emission rights were sold in entirety.
Single Family Housing
Finndomo sales increased in January-March from the previous year and stood at
EUR 22.5 million. Finnish business development was very positive. New orders
received in Finland was also a positive development, new orders received at the
beginning of the year increased by 18% compared to the previous year. The
winter months are traditionally the weakest quarter from both the profit and
sales point of view.
Neo Industrial decided during the review period to make additional investment
in Finndomo together with the other principal owner. Neo Industrial's
proportion of the investment is EUR 2.8 million, which during the review period
is the form of a loan to be converted to an equity investment in the second
quarter.
Growth in the single family housing market leveled off during the second half
of 2010 and was only a couple of percent at the beginning of 2011, but the
sector's sales are expected to continue to grow 5-10% this year.
In the regional construction segment, the most significant events were the
Pakila single family house building permit approvals and winning the City of
Helsinki's Honkasuo area eco- and energy-efficient family house competition.
Finndomo will deliver the Pakila area houses during the fall of 2011. The
Honkasuo area is at the planning stage together with the city. Finndomo has
more than 300 family house projects in regional developments in Finland under
construction or planned.
Finndomo has sharpened its strategy during the period. The Finndomo group will
focus on the house business, project construction and development of sales in
Finland, Russia and the Baltic region. In the Baltics and Russia, the sales
efforts made according to the new strategy brought results already during the
review period. The company will also continue efforts to improve profitability.
Under the strategy, the Group's Swedish operations will undergo local corporate
reorganization, filed by Finndomo AB on 23 February 2011. Neo Industrial
announced this on the same day. Investigation into the possible sale of the
Swedish business has started. The corporate reorganization does not apply to
Finnish business.
MAJOR EVENTS AFTER THE REVIEW PERIOD
At the end of March, the Viscose Fiber business, Avilon, was prepared for a
longer temporary shutdown that was avoided as the company ensured its pulp
supply. Avilon production restarted on 21 April 2011 and temporary layoffs were
avoided. Negotiations to safeguard future pulp deliveries are ongoing. Neo
Industrial announced this on 20 April 2011.
INVESTMENTS
The Group's investments totaled EUR 0.5 (0.3) million, of which EUR 0.1 million
was allocated to the Cable business and EUR 0.4 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.
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 31 March 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 31.3.2011 31.3.2010
Company share capital (EUR) 24,082 000 24,082,000
A shares (20 votes/share) B shares (1 vote/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 92,727 63,487
A total of 94 506 (65 128) of the company's Class B shares traded on the NASDAQ
OMX Helsinki in January-March, which corresponded to 1.6% (1.1%) of the total
number of shares. The share price on 31.03.2011 was EUR 6.99 (7.45) per share,
and the period average exchange rate January-March was EUR 6.74, the lowest
quotation was EUR 5.51 (5.91) and the highest EUR 7.99 (8.20). The company's
market capitalization was valued at EUR 41.1 (44.3) million on 31 March 2011.
PURCHASING 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. The
Annual General Meeting on 30 March 2011 approved a new authorization.
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 given 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 31 March 2011, Neo Industrial had 12,380 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 March, the combined holding of the ten largest shareholders was
60.7% of the shares and 72.7% of the votes. On 31 March 2011, Members of the
Board, CEO and CFO directly owned and controlled a total of 2,951,917 Neo
Industrial B series shares.
PERSONNEL
During the review period, the Group employed an average number of 607 (512)
persons. At the end of March 2011, the Group had 625 (515) employees, of which
478 were in the Cable business and 133 in the Viscose Fibers business.
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, has not
materialized 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. 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, bring pressure to liquidity management. Reka Cables' Riihimäki
testing equipment failure in the summer of 2010 caused the company a reputation
risk, which the company is trying to control by bringing the flexibility of
production back to normal and ensuring good customer service.
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. The most important raw material is dissolving pulp.
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
Although results for the first quarter of 2011 are negative due to the cable
business seasonality and Avilon start up expenses, the Group's earnings outlook
for 2011 is positive.
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 expected to rise to be positive in 2011.
Viscose manufacturing industry was successfully launched at the beginning of
the year. As the bulk of the production start-up investments were made in 2010
and the first quarter of 2011, we expect the operating profit to be positive on
the second half of the year.
The market situation for the Single Family Housing business sector is expected
to continue to develop favorably. Finndomo's Finnish business operating margin
was positive for the second half of 2010 and restructuring has proceeded well.
Alternatives are being sought for the Swedish operations, currently under
corporate reorganization.
As net sales double in the beginning of the year, liquidity is critical and
requires special attention throughout the year. In order to ensure liquidity
and to allow strong growth, in addition to the financing and payment term
negotiations, actions will be taken to boost inventory turnover and free up
capital assets.
Helsinki, 5 May 2011
Neo Industrial Plc
Board of Directors
For additional information please contact:
Markku E. Rentto, Managing Director , tel. 020 720 9191
Sari Tulander, Financial Director, tel. 020 720 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 Helsinki Stock 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 1.1. - 31.3.2011 1.1. - 31.3.2010
--------------------------------------------------------------------------------
Turnover 31,615 16,603
Change in inventories of finished products 5,095 -732
and production in progress
Production for own use 14 37
Materials and services -33,933 -10,663
Personnel expenses -5,319 -3,163
Depreciation and impairment -1,275 -1,215
Other operating income and expenses -3,409 -3,124
-38,827 -18,860
Operating profit or loss -7,212 -2,257
Financial income 179 407
Financial expenses -850 -295
Share of the result of associates -1,669 0
Profit or loss before taxes -9,552 -2,146
Taxes 2,057 -98
Profit or loss for the period -7,495 -2,244
Profit or loss attributable to
Equity holders of the parent -7,531 -2,180
Minority interests 37 -64
-7,495 -2,244
Earnings per share attributable to the
shareholders of the parent (EUR)
before and after dilution, EUR -1.26 -0.37
Number of shares 5,928,483 5,956,873
CONSOLIDATED STATEMENT OF COMPREHENSIVE
INCOME
Profit or loss -7,495 -2,244
Other comprehensive items
Translation differences related to foreign 163 1,751
units
Total 163 1,751
Total comprehensive income -7,332 -494
Total comprehensive income attributable to
Equity holders of the parent -7,314 -531
Minority interest 37 37
-7,278 -494
Equity / share 4.39 7.31
CONSOLIDATED BALANCE SHEET (IFRS)
EUR 1,000 31.3.2011 31.12.2010
------------------------------------------------------------------------
ASSETS
Non-current assets
Goodwill 3,795 3,624
Other intangible assets 7,838 7,765
Tangible assets 42,902 43,719
Holdings in associates 3,000 4,668
Receivables 149 1
Derivative contracts 0 66
Deferred tax assets 5,153 3,040
Total non-current assets 62,837 62,883
Current assets
Inventories 22,720 17,529
Sales receivables and other receivables 26,775 19,880
Tax receivables from the profit 0 17
Derivative contracts 1,008 1,174
Other financial assets 2,900 2,894
Cash and cash equivalents 1,341 2,734
Total current assets 54,744 44,229
Total Assets 117,582 107,112
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 -599 -599
Translation differences -1,076 -1,239
Retained profit -18,969 -11,492
Other unrestricted equity 21,327 21,327
Equity attributable to shareholders of the parent 26,051 33,366
Minority interest 610 573
Total shareholders´ equity 26,661 33,939
Non-current liabilities
Deferred tax liabilities 4,034 4,047
Provisions 849 839
Interest-bearing liabilities 25,842 25,905
Non-interest-bearing liabilities 1,584 1,584
Current liabilities
Tax liabilities from the profit 98 24
Short-term interest-bearing liabilities 25,605 16,314
Accounts payable and other liabilities 32,908 24,459
Total liabilities 90,920 73,172
Shareholders' equity and liabilities 117,582 107,112
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
31.12.
2009
Transla 1,751 1,751 1,751
tion
differ
ences
Result -2,282 -2,282 37 -2,245
for
the
period
Dividen 0 0 0
ds paid
Acquire -22 -22 -22
d own
shares
Minorit 120 120 -219 -99
y
intere
st
Shareho 24,082 66 1,221 -403 -263 21,327 -2,470 43,560 1,263 44,823
lders'
equity
31.3.2
010
EUR A B C D E F G H I J
1,000
--------------------------------------------------------------------------------
Shareho 24,082 66 1,221 -599 -1,239 21,327 -11,491 33,366 573 33,939
lders'
equity
31.12.
2010
Transla 0 0 0
tion
differ
ences
Result 163 -7,478 -7,315 37 7,278
for
the
period
Dividen 0 0
ds paid
Acquire 0 0
d own
shares
Minorit 0 0
y
intere
st
Shareho 24,082 66 1,221 -599 -1,076 21,327 -18,969 26,051 610 26,661
lders'
equity
31.3.2
011
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
STATEMENT OF CASH FLOWS, IFRS
EUR 1,000 1.1. - 31.3.2011 1.1. - 31.3.2010
--------------------------------------------------------------------------------
Cash flows from operating activities
Payments received from operating activities 36,012 12,327
Payments paid on operating activities -41,686 -14,580
Paid interests and other financial expenses -515 97
Interests received and other financial 92 23
incomes
Direct taxes paid -1 -44
Net cash provided by operating activities -6,097 -2,176
Cash flows from investing activities
Investments in tangible assets
Sales of tangible assets -373 -249
Investments in intangible assets -164 -4
Loans granted -2,182 -250
Net cash provided by investing activities -2,719 -503
Cash flows from financing activities
Acquisition of own shares 0 -21
Increase in loans 7,669 1,109
Decrease in loans 0 -102
Payments of finance lease activities -257 -187
Net cash provided by financing activities 7,412 799
Change in cash and cash equivalents -1,404 -1,880
Cash and cash equivalents at beginning of 2,734 2,797
the period
Exchange rate differences 11 103
Change in cash and cash equivalents at the 1,341 1,020
end of 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.
During the review period, the Group adopted a new accounting principle due to
Avilon Ltd's treatment of 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 derecognized when they are submitted to cover
obligations or sold. Any gains or losses are recognized in the income
statement.
SEGMENT REPORTING
31.3.2011 Cable Viscose Single Eliminations and Group
Fibers Family other operations total
Housing
EUR 1,000
Turnover 24,485 7,130 0 0 31,615
Segment's operating -391 -6,570 0 0 -6,961
profit
Unallocated items 0 0 0 -251 -251
Operating profit -391 -6,570 0 -251 -7,212
Share of the result -1,669 -1,669
of associates
Unallocated items 914 914
Profit or loss for -6,150
the period
Assets
Segment's assets 83,041 19,856 3,000 105,896
Unallocated items 11,686 11,686
Total assets 83,041 19,856 3,000 11,686 117,582
Liabilities
Segment's 62,992 26,434 0 90,920
liabilities
Unallocated items 1,494
Total liabilities 62,992 26,434 0 1,494 90,920
Assets - 20,049 -6,579 3,000 10,191 26,661
liabilities
Investments 72 420 0 42 534
Depreciations -1,004 -266 0 -4 -1,274
31.3.2010 Cable Viscose Single Eliminations and Group
Fibers Family other operations total
Housing
EUR 1,000
Turnover 16,603 0 0 0 52,707
Segment's operating -1,958 0 0 -1,958
profit
Unallocated items -299 -299
Operating profit -1,958 0 0 -299 -2,257
Share of the result 0 0
of associates
Unallocated items 13 13
Profit or loss for -2,244
the period
Assets
Segment's assets 80,601 0 0 0 80,601
Unallocated items 13,709 13,709
Total assets 80,601 0 0 13,709 94,310
Liabilities
Segment's 55,519 0 0 0 55,519
liabilities
Unallocated items -6,032 -6,032
Total liabilities 55,519 0 0 -6,032 49,487
Assets - 25,082 0 0 19,740 44,822
liabilities
Investments 257 0 0 3 260
Depreciations -1,223 0 0 0 -1,223
Cable business turnover per product group 1-3/2011 1-3/2010
LV energy 10.4 7.0
Power cable 14.1 9.6
Others 24.5 16.6
Cable business turnover per sales area 1-3/2011 1-3/2010
EU-countries 20.1 13.2
Non-EU-countries 4.4 3.4
Total 24.5 16.6
The cable division's three largest customers are Onninen, Rexel and Sonepar.
Each accounted for more than 10% of net sales.
Cable business turnover per sales area 1-3/2011 1-3/2010
----------------------------------------------------------
EU-countries 1.5 0.0
Non-EU-countries 5.6 0.0
Total 7.1 0.0
ASSOCIATES ACQUIRED
Finndomo
In April 2010, Neo Industrial invested on 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
CHANGE IN NON-CURRENT ASSETS
EUR 1,000 01-03/2011 01-12/2010
-----------------------------------------------------------------
Book value at the beginning of the period 43,719 32,978
Investment 372 15,448
Decrease 0 -944
Depreciations -1,271 -4,224
Translation differences 82 461
Book value at the end of the period 42,902 43,719
CONTINGENT LIABILITIES
EUR 1,000 31.3.2011 31.12.2010
----------------------------------------------------------
Debts with corporate mortgages
Loans from financial institutions 10,379 10,520
Granted corporate mortgages 21,820 21,820
Debts with securities or guarantees
Loans from financial institutions 13,533 13,533
5,400 5,400
Book value of pledged securities 25,712 25,712
Granted guarantees 18,933 18,933
Other collaterals Guarantees and payment commitments 4,849 3,173
Debts with corporate mortgages 2,784 2,894
Loans from financial institutions 3,000 3,000
Commitments
Sales receivables, which were EUR 8.9 million on 31.3.2011 (EUR 6.0 million on
31.12.2010), are surety for factoring credit, which was EUR 7.8 million on
31.3.2011 (EUR 3.6 million on 31.12.2010)
INVESTMENT COMMITMENTS
Investment commitments on tangible non-current assets on 31 March 2011 were 0.1
million euros (0.4 million euros on 31 December 2010).
DERIVATIVE FINANCIAL INSTRUMENTS VALID ON THE BALANCE SHEET DATE
EUR 1,000 Positive Negative Current Current net Nominal Nominal
current current net values values values values
values values 31.3.2011 31.12.2010 31.3.2011 31.12.2010
--------------------------------------------------------------------------------
Currency
derivativ
es
Forward 0 -9 -9 -26 1,545 1,545
exchange
agreement
s
Raw
material
options
Metal 1,008 0 1,008 1,240 3,945 4,366
derivativ
es
--------------------------------------------------------------------------------
Total 1,008 -9
derivativ
es
Long-term derivatives deducted
Short-term 1,008 -9
share
RELATED PARTY EVENTS
Neo Industrial Plc and therefore Neo Industrial Group belongs to Reka Group.
Reka Ltd had a 50.76% (50.76%) holding of shares and 60.77% (60.77%) of votes.
RELATED PARTY EVENTS
Related party events with Reka group
EUR 1,000 1-3/2011 1-3/2010
--------------------------------------------------------------------------------
Sales 5 4
Other purchases -429 -349
Interest revenues 5 0
Sales receivables and other receivables at end of the period 1 495 1,344
Finance leases (activated on the balance sheet) -10 567 -8,301
Other debts at end of the period -5 -52
Other related party events
EUR 1,000 1-3/2011 1-3/2010
Interest revenues 50 29
Loan receivables 1 200 2 000
Sales receivables and other receivables at end of the period 50 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 (ROI) expenses
%
[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
(EPS), EUR of the parent
Number of shares adjusted for share issues
(average)
Equity/share, EUR = Shareholders´ equity - minority interest minus
deferred tax liabilities
Number of shares adjusted for share issues at the
end of the financial period
Comments made in this report that do not refer to actual facts that have
already taken place are future estimates.
Such estimates include expectations concerning market trends, growth and
profitability, and statements that include the terms believe', assume', will
be', or a similar expression. Since these estimates are based on current plans
and estimates, they involve risks and uncertainty factors which may lead to
results differing substantially from current statements. Such factors include
1) operating conditions, e.g. continued success in production and consequent
efficiency benefits, availability and cost of production inputs, demand for new
products, changing circumstances in respect of the acquisition of capital under
acceptable conditions; 2) circumstances in the sector such as the intensity of
demand for products, the competition, current and future market prices for the
Group's products and related pricing pressures, the financial situation of the
Group's customers and competitors, competitors' possible new competing products
and 3) the general economic situation such as economic growth in the Group's
main geographical market areas or changes in exchange rates and interest rates.
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