2017-08-15 09:00:19 CEST
2017-08-15 09:00:19 CEST
BIRTINGARSKYLDAR UPPLÝSNINGAR
Aspo - Half Year financial report
Aspo Group half year financial report, January 1 to June 30, 2017
ASPO PLC HALF YEAR FINANCIAL REPORT August 15, 2017, at 10:00 a.m.
ASPO GROUP HALF YEAR FINANCIAL REPORT, JANUARY 1 TO JUNE 30, 2017
Aspo: increased net sales and operating profit
(Figures from the corresponding period in 2016 are presented in brackets.)
January-June 2017
- Aspo's net sales amounted to EUR 242.8 (214.7) million
- Operating profit stood at EUR 9.5 (8.1) million.
- The operating profit of ESL Shipping stood at EUR 6.1 (5.1) million, the
operating profit of Leipurin was EUR 1.0 (0.9) million, the operating profit of
Telko amounted to EUR 4.7 (5.3) million, and the operating profit of Kauko stood
at EUR -0.4 (-0.6) million. The operating profit of other operations stood at
EUR -1.9 (-2.6) million.
- Profit for the period stood at EUR 8.0 (5.7) million.
- Earnings per share increased by 31% and were EUR 0.21 (0.16).
- The net cash from operating activities during the first half of the year was
EUR 3.5 (-11.0) million.
April-June 2017
- Aspo's net sales increased to EUR 123.8 (116.2) million.
- Operating profit improved and stood at EUR 5.1 (4.8) million.
- Profit for the quarter stood at EUR 4.1 (3.4) million.
- The operating profit of ESL Shipping increased to EUR 3.1 (2.9) million. The
operating profit of Telko decreased to EUR 2.4 (3.0) million. The operating
profit of Leipurin improved to EUR 0.6 (0.4) million. The operating profit of
Kauko improved to EUR 0.1 (-0.3) million.
- Earnings per share were EUR 0.08 (0.09).
- The first installment of the EUR 0.42 dividend decided by the Annual
Shareholders' Meeting, EUR 0.21 per share, was paid. The second installment will
be paid in November.
- The first of the two most environmentally friendly dry cargo vessels in the
world was named ms Viikki. The vessel will start operating in the Baltic Sea
during the first half of 2018.
- The euro-denominated net sales in eastern markets have continued to increase:
Telko grew by 6% and the Leipurin bakery raw materials by 17%.
- Leipurin celebrated its 100 years of operation in June. The profitability of
Leipurin improved in the second quarter.
Aspo specifies its guidance for 2017
New guidance: Aspo's operating profit will be EUR 23-26 (20.4) million in 2017.
Previous guidance: Aspo's operating profit will be EUR 22-27 (20.4) million in
2017.
KEY FIGURES
4-6/ 4-6/ Change 1-6/ 1-6/ Change 1-12/
2017 2016 % 2017 2016 % 2016
Net sales, MEUR 123.8 116.2 6.5 242.8 214.7 13.1 457.4
Operating profit, MEUR 5.1 4.8 6.3 9.5 8.1 17.3 20.4
Operating profit, % 4.1 4.1 3.9 3.8 4.5
Profit before taxes, MEUR 4.4 3.9 12.8 8.6 6.5 32.3 17.4
Profit for the period,
MEUR 4.1 3.4 20.6 8.0 5.7 40.4 15.9
Earnings per share, EUR 0.08 0.09 -11.1 0.21 0.16 31.3 0.49
Net cash from operating
activities, MEUR 6.7 -4.0 267.5 3.5 -11.0 131.8 16.2
Equity per share, EUR 3.41 3.44 3.75
Return on equity, % (ROE) 14.6 11.0 14.6
Equity ratio,% 32.9 33.4 37.4
Gearing, % 113.7 115.0 89.8
ESL Shipping, operating
profit, MEUR 3.1 2.9 6.9 6.1 5.1 19.6 12.6
Leipurin, operating
profit, MEUR 0.6 0.4 50.0 1.0 0.9 11.1 2.0
Telko, operating profit,
MEUR 2.4 3.0 -20.0 4.7 5.3 -11.3 10.1
Kauko, operating profit,
MEUR 0.1 -0.3 133.3 -0.4 -0.6 33.3 -0.1
General outlook for 2017
General uncertainty in the markets has decreased. Industrial production is
expected to increase in the main market areas of Aspo's business operations
during 2017. Raw material prices are expected to remain low. In Russia, the
national economy and industrial production have turned into growth. Political
risks have, however, increased, which may have a rapid impact on the operating
environment or weaken free trade in the long term.
AKI OJANEN, CEO OF ASPO GROUP:
"I'm pleased with how Aspo's net sales have grown and operating profit improved
in the second quarter.
Aspo is a conglomerate that gathers its earnings from operations that serve
industrial clients. The positive economic trend that began in fall 2016 has
continued, which has so far particularly benefited ESL Shipping and Telko's
western markets. Companies are usually getting benefit from early stage of
cycle.
The turn of the eastern markets and the positive trend that began in the Russian
economy in 2017 have initially been reflected in the value of the ruble, which
is stronger than in the comparative period. The turn has a particularly positive
impact on the long-term expectations of Telko and Leipurin. The strong growth in
our volumes in the eastern markets is a good sign of our future performance
potential.
The net sales of ESL Shipping increased, and profitability improved from the
comparative period. The the transportation capacity utilization of Supramax
vessels has been ensured for the rest of the year with new contracts for the
Canadian Arctic, among other things. The transportation volumes continue to grow
in the Baltic Sea, and the shipping company has signed renewable bioenergy
transportation contracts.
Leipurin improved its profitability. The earlier reported turn in the
profitability of the bakery machine operations shows already in the figures for
the second quarter, but the return to normal profitability will not be fully
visible until the second half of the year. We expect the profitability of
Leipurin to improve further towards the target level during the second half of
the year.
Kauko achieved positive operating profit in the second quarter, with all of the
earnings generated in Finland. The new contracts for the application operations
within mobile knowledge work, are proof of the success of earlier investments,
and of development that is in line with the strategy.
Telko's net sales continued to grow particularly in the eastern markets, despite
the decrease in prices. Relative profitability in the east decreased due to
factors such as changes in exchange rates. The profitability improvement
measures that have been launched, such as the enhancement of the logistics
network and improvement of cost-efficiency, particularly in Russia, already
showed results by the end of the period under review. The full impact will be
visible in the fourth quarter.
Costs not included in the Group's business operations have decreased to the
target level in accordance with the set objectives.
During the first half of the year, earnings per share increased by 31% and were
EUR 0.21 (0.16). We have succeeded in generating growth and improving the
efficiency of operations.
Aspo expects the positive trend to continue. As a result of better visibility,
we specify our guidance from the previous operating profit estimate of EUR
22-27 million to the new operating profit estimate of EUR 23-26 million (20.4)."
ASPO GROUP
NET SALES
Net sales by segment
4-6/2017 4-6/2016 Change 1-6/2017 1-6/2016 Change 1-12/2016
MEUR MEUR % MEUR MEUR % MEUR
ESL Shipping 19.5 16.7 16.8 38.4 32.9 16.7 71.4
Leipurin 30.1 28.8 4.5 59.5 55.0 8.2 112.7
Telko 65.7 62.2 5.6 129.3 111.6 15.9 240.3
Kauko 8.5 8.5 0.0 15.6 15.2 2.6 33.0
Other operations 0.0 0.0 - 0.0 0.0 - 0.0
Total 123.8 116.2 6.5 242.8 214.7 13.1 457.4
There is no considerable inter-segment net sales.
Net sales by market area
4-6/2017 4-6/2016 Change 1-6/2017 1-6/2016 Change 1-12/2016
MEUR MEUR % MEUR MEUR % MEUR
Finland 40.5 37.7 7.4 80.7 71.8 12.4 149.4
Scandinavia 13.1 12.6 4.0 26.1 23.4 11.5 47.5
Baltic
countries 14.0 12.6 11.1 26.8 24.6 8.9 50.4
Russia, Ukraine +
other CIS
countries 40.1 38.1 5.2 79.4 64.7 22.7 145.6
Other
countries 16.1 15.2 5.9 29.8 30.2 -1.3 64.5
Total 123.8 116.2 6.5 242.8 214.7 13.1 457.4
In the second quarter, net sales increased in all Aspo's market areas. Absolute
growth in euros was the highest in Finland, while relative growth was highest in
the Baltic region. Net sales in Finland were accelerated by the increased sales
of solar energy equipment by Kauko and the positive development in the sales of
other operating segments. In the Baltic region, the sales were increased by
machine deliveries by Leipurin and the steady increase of sales in other
operating segments. Increased sales of Telko's chemicals and the stronger ruble
resulted in higher sales in Russia, Ukraine and other CIS countries.
EARNINGS
Operating profit by segment
4-6/2017 4-6/2016 Change 1-6/2017 1-6/2016 Change 1-12/2016
MEUR MEUR % MEUR MEUR % MEUR
ESL Shipping 3.1 2.9 6.9 6.1 5.1 19.6 12.6
Leipurin 0.6 0.4 50.0 1.0 0.9 11.1 2.0
Telko 2.4 3.0 -20.0 4.7 5.3 -11.3 10.1
Kauko 0.1 -0.3 133.3 -0.4 -0.6 33.3 -0.1
Other operations -1.1 -1.2 8.3 -1.9 -2.6 26.9 -4.2
Total 5.1 4.8 6.3 9.5 8.1 17.3 20.4
Earnings per share
Earnings per share of the first half of the year were EUR 0.21 (0.16). Equity
per share was EUR 3.41 (3.44).
Financial targets
Aspo's objective is to reach an average return on equity of over 20%, gearing of
up to 100% and an operating profit of 7% with the current structure by 2020.
The operating profit rate for the second quarter 2017 was 4.1% (4.1), return on
equity was 14.6% (11.0), and gearing was 113.7% (115.0).
OUTLOOK FOR 2017
The growth of global economy is expected to continue in 2017. The general
uncertainty and poor economic situation in eastern growth markets that are
important to Aspo have been replaced by a positive economic trend. However, it
is difficult to predict future development in Russia, Ukraine and other CIS
countries. Exchange rates are expected to continue to fluctuate heavily.
The price of oil is likely to remain at the current level. In general, the
prices of production raw materials are expected to remain low. The Group aims to
continue to increase its market shares profitably in the strategically important
eastern growth markets. Industrial production is expected to increase in the
main market areas of Aspo's business operations during 2017. While international
dry cargo prices are expected to remain low, the shipping company has secured
its capacity utilization through long-term agreements. The capacity utilization
of the Supramax vessels has been ensured for 2017, with one of the vessels
operating in the Baltic Sea and the other in the Canadian Arctic. The result of
the Leipurin machine operations is positive, and it is returning to the normal
level.
ASPO'S BUSINESS OPERATIONS
ESL SHIPPING
ESL Shipping is the leading dry bulk cargo company in the Baltic Sea region. At
the end of the review period, the company's fleet consisted of 14 vessels, of
which the company owned 13 in full and one was leased.
4-6/2017 4-6/2016 Change % 1-6/2017 1-6/2016 Change % 1-12/2016
Net sales,
MEUR 19.5 16.7 16.8 38.4 32.9 16.7 71.4
Operating
profit, MEUR 3.1 2.9 6.9 6.1 5.1 19.6 12.6
Operating
profit, % 15.9 17.4 15.9 15.5 17.6
ESL Shipping's service range is based on the company's ability to operate
efficiently and reliably in the arctic ice regions and to load and unload
vessels at sea. During the second quarter, the company's vessels have mainly
operated in contract traffic in the Baltic Sea and in Northern Europe, and also
performed loading and unloading operations at sea. Transportation operations in
the Baltic Sea and the North Sea are mainly based on long-term customer
agreements and established customer relationships.
The general market prices of dry bulk cargo saw a decrease nearly throughout the
second quarter, but turned up at the end of the review period. In the long term
evaluation the cargo prices are still on a low level.
Net sales of ESL Shipping for April-June increased significantly to EUR 19.5
(16.7) million. The biggest reasons for the acceleration of net sales were the
improved contract coverage and the resulting efficient operating model, and the
overall revival of industrial demand that has allowed efficient operation of all
vessels. Transportation volumes increased in all customer segments compared to
the comparative period. The cargo volume carried by ESL Shipping in the second
quarter amounted to 2.8 (2.4) million tons.
Operating profit for April-June increased from the comparative period to EUR
3.1 (2.9) million. The operating profit rate was good at 16% (17). The contracts
signed by the shipping company for Supramax vessels on the transportation of raw
materials of steel industry from Finland to the Central European market,
together with the demand that has picked up since the previous year, allowed the
efficient operation of these vessels in a region best suited for them. In the
second quarter, Supramax vessels' operations were clearly profitable despite the
scheduled dockage of one of the two vessels.
Two vessel units underwent scheduled dockage in the second quarter. Loading and
unloading of large ocean liners at sea was more active than in the previous
year, and operation succeeded well.
At the end of the period under review, the first of the two most environmentally
friendly bulk cargo vessels in the world was named ms Viikki. The name continues
the shipping company's tradition of naming their vessels after Helsinki
districts. The 160-meter LNG vessel of 26,000 dwt produces more than 50% less
carbon dioxide emissions than the previous vessel generation. Together with
Macgregor, part of Cargotec, the shipping company is developing and testing an
autonomous cargo processing solution for the vessels to further improve the
safety and efficiency of operations at port.
Construction of the sister vessel of ms Viikki continues according to schedule,
and the vessel will be named in September. The vessels begin operations in the
Baltic Sea in the first half of the next year. As was previously stated, the
vessels will further improve the profitability of the shipping company.
Cooperation with Sinotrans & CSC Jinling Shipyard has progressed well. The
vessel-building project is part of the Bothnia Bulk project, partly funded by
the EU, which aims to reduce the environmental impacts of the existing sea route
between Luleå, Oxelösund and Raahe. The EU supports energy-efficiency and
environmental investments in ships. The vessels have been designed in Finland,
and European suppliers deliver approximately 60% of their equipment.
The shipping company has negotiated the manning of its new vessels and the
possibility to have the vessels under the Finnish flag with shipping trade
unions. The parties have negotiated an agreement that enables at least the first
vessel to be registered in Finland. In order to secure competitiveness in the
long term and the availability of a competent crew, the company has also agreed
to expand the mixed crews of its current vessels through natural employee
turnover and the new job opportunities offered by the new vessels. The agreed
arrangement is expected to improve cost competitiveness in stages, already
during this year. In the period under review, one vessel had mixed crew in
accordance with the agreement.
Net sales of ESL Shipping in the first half of the year increased by 17% to EUR
38.4 (32.9) million. Operating profit increased nearly 20% to EUR 6.1 (5.1)
million.
Outlook for ESL Shipping for 2017
Market cargo prices of large dry cargo vessels are at a higher level than in the
previous year, but remain low over the long term. Market forecasts for the cargo
levels of the rest of the year depend on the price development of raw materials.
The positive economic trend prevailing in the shipping company's main market
area is expected to reflect positively to the demand of transportation.
Not many new dry cargo vessels have been ordered since 2015, which is expected
to improve the balance between demand and supply in the coming years. In the
future, the trend will be accelerated by the tighter environmental regulations
set for shipping operations, which may reduce the use of older vessels. However,
many older orders will be delivered to the market this year, particularly in the
Supramax class.
Most of the shipping company's transportation capacity utilization has been
secured in the Baltic Sea and Northern Europe through long-term agreements. The
profitable employment of one of the two shipping company's Supramax vessels in
the Baltic Sea until the end of this year has been secured through an agreement
covering this year. During the second half of the year, the company continues
operations in the Arctic similarly to the previous years, with one of the
Supramax vessels transporting ore from Baffinland, Canada, to Europe.
Transportations for the steel industry are expected to continue on a positive
trend or remain at the same level, but annual maintenance outages and the
increased need of customers to optimize their inventory levels may affect the
transportation volumes during the final part of the year.
In the fall, the shipping company will continue biofuel transportation to
Stockholm as in the previous years. The biofuel transportation market in the
Baltic Sea is expected to grow significantly in the next few years, and the
shipping company is currently negotiating several related projects. In the
second half of the year, total transportation volumes for the energy industry
are expected to be higher than during the previous year due to the increased
demand for the transportation of both biofuels and coal. Coal is mainly used in
combined heat and power production.
Demand for the loading and unloading of large vessels at sea is expected to be
at a normal level.
In 2017, one vessel will be docked in the third quarter as planned in addition
to the two vessel units already docked.
The shipping company is investigating the possibility of launching new
operations in the Baltic Sea during the fall in a smaller vessel class. In the
operating model that is new to the shipping company, vessels will be leased from
the market and included in the transportation volume of ESL Shipping. The
volumes particularly sought after include renewable bioenergy, recycling raw
materials such as recycled fuel or steel, wood-based products and grain. The new
operating model will allow the company to expand into new vessel classes with no
major capital investments.
LEIPURIN
Leipurin is a unique provider of solutions for bakery and confectionery
products, the food industry and the out of home (OOH) market. The solutions
offered by Leipurin range, for example, from product development, recipes, raw
materials, training and equipment all the way to the design of sales outlets. As
part of its full-range services, Leipurin designs, delivers and maintains
production lines for the baking industry, baking units and other machinery and
equipment required in the food industry. Leipurin uses leading international
manufacturers as its raw material and machinery supply partners. Leipurin
operates in Finland, Russia, the Baltic countries, Poland, Ukraine, Kazakhstan
and Belarus.
4-6/2017 4-6/2016 Change % 1-6/2017 1-6/2016 Change % 1-12/2016
Net sales,
MEUR 30.1 28.8 4.5 59.5 55.0 8.2 112.7
Operating
profit, MEUR 0.6 0.4 50.0 1.0 0.9 11.1 2.0
Operating
profit, % 2.0 1.4 1.7 1.6 1.8
The consumer price level for food products in Finland evened out during the
second quarter, but the price level has gone up in the eastern markets. For
example in Russia, the prices of bread and bakery products increased by
approximately 4%. The prices of raw materials important to Leipurin have
increased slightly from the comparative period.
The market of industrial packed bread continues to decrease in the west, whereas
the market of in-store bakeries and baking units has continued to increase. In
the eastern market, the demand for products in the higher price categories
remains lower than in the previous years. The snack product market is increasing
in all market areas. The Russian national economy, which is important for
Leipurin, has turned to an upward trend, and the decline of consumer purchasing
power has stopped.
Net sales of Leipurin for April-June increased from the comparative period to
EUR 30.1 (28.8) million. Growth was strongest in the eastern markets and in the
machine operations. Operating profit increased from the comparative period to
EUR 0.6 (0.4) million. The operating profit rate 2.0% (1.4) for the quarter did
not achieve the target level. Profitability was improved particularly by the
machine operations.
Net sales of bakery raw materials in Russia, Ukraine and other CIS countries
increased in the second quarter by 17% to EUR 7.7 (6.6) million. The operating
profit rate was 7% (7). Net sales in the eastern markets, including machine
sales, increased by approximately 6% to EUR 8.1 (7.7) million. The operating
profit rate was 6% (6).
Net sales of the machine operations increased by 30% as a result of deliveries
of the company's own machine production and the operations were clearly
profitable. Net sales of principal equipment decreased, but the operations were
more profitable than in the comparative period due to the high proportion of
commission-based sales. At the end of the period under review, the order book
for 2017 was at a good level.
In the Finnish raw material sales, net sales to artisan and OOH customers
continued to grow, while sales to industrial sectors decreased mostly due to
lower sales volumes in the meat industry sector. On the whole, net sales of
bakery raw materials in Finland remained below the comparative period's level.
In the Baltic region and Poland, sales to large industrial customers decreased
from the comparative period. Despite increased sales to artisan and OOH
customers, net sales remained below the comparative period's level.
Despite the decreased net sales in the western markets, the profitability for
bakery raw materials improved from the comparative period. Investments in growth
and new business operations slowed down the development of the operating profit.
During the period under review, a cafeteria in test baking operations was opened
in Tapiola, shopping center Ainoa, to support OOH operations. After the period
under review, the fresh ice cream bar G'lato Fresco was opened in Helsinki, in
the shopping center Forum. The two sites act as conceptual model sites for the
entire operating area of Leipurin.
The Russian economic crisis at the end of 2014 cut off machine sales to Russia.
Leipurin turned to new market areas in Europe and outside Europe. At the
beginning of 2017, the order book for Leipurin's own production reached a record
level, and the machine operations has achieved stable profitability with
increasing delivery volumes.
Net sales of Leipurin increased by 8% during the first half of the year to EUR
59.5 (55.0) million. The operating profit increased compared to the
corresponding period in the previous year, being EUR 1.0 (0.9) million. Net
sales in Russia, Ukraine and other CIS countries increased by 19% to EUR 16.4
(13.8) million. Profitability in this market area remained at the comparative
period's level and was 6% (6).
Outlook for Leipurin for 2017
The market situation is expected to remain challenging in key markets of
Leipurin. The market position is expected to remain strong in the industrial
baking sector in Finland, Russia and the Baltic countries. The net sales and
operating profit of Leipurin are expected to increase in 2017.
The weakening of economic situation in Russia is estimated to have stopped, and
the purchase power of consumers is expected to gradually improve. The local
procurement of bakery raw materials has been increased in Russia to replace
imported raw materials. The purpose is to respond to changes in demand by
developing a product range with more competitive prices, and to respond to the
domestic food campaign currently in progress in Russia. The aim is to increase
the proportion of local raw materials. Local procurement has been decentralized
and, currently, there are already dozens of significant regional production
partners. Leipurin will maintain high profitability in the region, strengthen
its market position, and look for growth in the bread and pastry sectors.
The OOH market is a significant operating area for Leipurin, and the company
will continue to grow in the OOH market, particularly in Finland and western
markets, where Leipurin will respond to increased demand from chain clients such
as cafés.
In machine operations, investments in machinery and equipment are expected to
increase in Finland and the Baltic countries. In addition, a moderate increase
in investments is expected in Russia. Leipurin's machine operations will
continue to strengthen the agent network in Western Europe and the Middle East.
Leipurin will continue to develop the productivity and production processes of
the bakery machinery manufacturing operations. As a result of the improved
competitiveness of machine operations and the redirection of sales, the order
book of machine operations is at a good level, extending to spring 2018 in some
areas. The improved order book ensures that the profitability of machine
operations will improve in 2017.
TELKO
Telko is a leading expert and supplier of plastic raw materials and industrial
chemicals. Business is based on representation of the best international
principals and on the expertise of the personnel. Telko has subsidiaries in
Finland, the Baltic countries, Scandinavia, Poland, Russia, Belarus, Ukraine,
Kazakhstan, Azerbaijan and China.
4-6/2017 4-6/2016 Change % 1-6/2017 1-6/2016 Change % 1-12/2016
Net sales,
MEUR 65.7 62.2 5.6 129.3 111.6 15.9 240.3
Operating
profit, MEUR 2.4 3.0 -20.0 4.7 5.3 -11.3 10.1
Operating
profit, % 3.7 4.8 3.6 4.7 4.2
Due to the overall improvement in the economy and the positive turn of the
national economy in Russia, the market environment has improved from the
comparative period in the countries where Telko operates. Of Telko's markets,
the turn of economic trends has been particularly prominent in the western
markets for example in Finland, and has resulted in new customer relationships
and higher production volumes of existing customers.
In the second quarter, the price of oil went down, which also decreased the
prices of the raw materials sold by Telko compared to the previous quarter. The
price level of industrial chemicals also decreased from the previous quarter,
but remained above the level of the comparative period.
In April-June, net sales of Telko increased from the comparative period to EUR
65.7 (62.2) million. The growth of sales was limited by decreasing sales prices.
The operating profit decreased in the second quarter to EUR 2.4 (3.0) million.
The operating profit rate 3.7% (4.8) did not achieve the target level. Profit
was undermined by weakened profitability in the eastern markets, brought about
by the increased costs resulting especially from the stronger value of the
Russian ruble. Of the market areas, the eastern markets increased their relative
proportion of Telko's net sales. The Russian economy shows an increasing amount
of signs of recovery. Net sales in Russia, Ukraine and other CIS countries
increased by 6% to EUR 30.4 (28.6) million. The operating profit rate in this
market area was below 5%, which is below the target level.
Compared to the comparative period, the stronger value of the ruble increased
the Russian company's euro-denominated fixed costs. The stronger ruble also
affected negatively the sales margin during the second quarter, particularly in
the area of warehouse sales, as some inventory raw materials sold had been
bought at a weaker rate of ruble. Telko's relative profitability in the eastern
market improved compared to the first quarter. In the second quarter, Telko
launched a program to lower the fixed costs and to improve efficiency in its
Russian operations. The cost savings will be in full effect starting from the
fourth quarter.
The net sales of the chemicals business increased, and its profitability
remained at the level of the comparative period. Due to decreasing prices, net
sales of the plastics business decreased slightly compared to the comparative
period, and profitability weakened.
Net sales of Telko increased by 16% during the first half of the year to EUR
129.3 (111.6) million. The operating profit decreased compared to the
corresponding period in the previous year, being EUR 4.7 (5.3) million. Net
sales in Russia, Ukraine and other CIS countries increased from the previous
year by 23% to EUR 59.1 (47.9) million. Profitability for this area decreased;
however, Telko's profitability improved in the western markets.
Outlook for Telko for 2017
The Russian economy has taken a turn to the positive, and industrial production
has turned onto an upward trend. The price of oil, which is the main raw
material used in the production of the raw materials that Telko sells, has
decreased and remains at a low level. The price of oil is not expected to
increase to any significant extent in 2017. The economic development in Finland
and other western markets is expected to continue on a positive trend, which is
estimated to reflect positively to the demand for the raw materials sold by
Telko. In Denmark, Telko's important Korean plastics raw material principal is
currently in the process of acquiring one of Telko's important clients as its
direct client. The change will weaken Telko's result in Denmark considerably. If
no agreement can be reached with the principal, Telko will replace it with
another raw material supplier.
As announced previously, Telko has looked into the potential of launching
operations in the Middle East. Iran has extensive petrochemical industry, but
the market lacks many special products. Significant distribution business
opportunities exist in the sale of these products. Telko has investigated the
prerequisites for operating in Iran, as well as limitations to operations and
the trade sanctions in force. According to a survey, Telko has good
prerequisites for operating in Iran in raw material procurement and sales to
local industry. Registration of Telko's company in Iran was completed in July,
and a country manager has been hired to launch operations in Tehran. The
operations in Iran will have no significant impact on Telko's business
performance in 2017. Telko believes, however, that significant potential for the
future exists.
Telko will expand its cooperation with BP-Castrol, and starts the representation
of Marine lubricants for shipping companies in Finland in the third quarter of
the year.
The profitability program launched in Russia is expected to lower fixed costs
while retaining regional presence and local operations at all Russian sites. The
profitability program will improve Telko's profitability starting from the
fourth quarter of the year.
KAUKO
Kauko is a specialist in demanding mobile knowledge work environments. It
supplies the best tools, solutions for improving productivity and services for
securing effective use for the needs of industries, logistics, healthcare sector
and the authorities. Kauko solutions combine customized applications, devices
and services. Its product range also includes products that improve energy
efficiency. Kauko has companies in Finland and Germany.
4-6/2017 4-6/2016 Change % 1-6/2017 1-6/2016 Change % 1-12/2016
Net sales,
MEUR 8.5 8.5 0.0 15.6 15.2 2.6 33.0
Operating
profit, MEUR
*) 0.1 -0.3 133.3 -0.4 -0.6 33.3 -0.1
Operating
profit, % 1.2 -3.5 -2.6 -3.9 -0.3
*) 1-6/2017 includes a EUR 0.3 million impairment loss of receivables related to
previously divested business operations
Kauko's net sales remained at the level of the comparative period and were EUR
8.5 million (8.5). The operating profit for the second quarter was positive at
EUR 0.1 (-0.3) million.
The net sales and profitability of Kauko's main businesses improved
significantly compared to the comparative period. Net sales of mobile knowledge
work, including information technology deliveries to the health care sector,
increased compared to the comparative period. In Germany, Kauko introduced a
computer that it designed for the health care sector. First customer deliveries
took place in June. The German business continued to make a loss. Application
operation's contract base grew.
Net sales of energy-efficiency equipment increased significantly despite the
delivery difficulties of solar energy equipment suppliers, which forced Kauko to
postpone customer deliveries to the next quarter. Profitability of air source
heating products decreased compared to the comparative period. No income was
recognized from project deliveries to China during the second quarter, unlike
during the comparative period. A new project delivery agreement was signed in
China during the period under review. Revenue from the agreement will be
recognized in the second half of the year.
Net sales of Kauko in the first half of the year increased by 3% to EUR 15.6
(15.2) million. The operating result was EUR -0.4 million (-0.6), which included
a EUR -0.3 million impairment of commission receivables, related to the
previously divested Industrial business.
Outlook for Kauko for 2017
The net sales and profitability of total solutions for mobile knowledge work are
expected to improve. Kauko is a provider of integrated and customized total
solutions, combining application, hardware and other services. The number of
orders for application business is expected to increase. In the application
business, the revenue is only recognized after the total delivery; an average
delivery takes 6-8 months.
Service operations will be expanded by shifting more focus on total solutions.
In the long-term market estimate for rugged computers, sales of laptops are
expected to decrease, while the sales of rugged tablets are expected to
increase. Kauko holds a particularly strong market position in the sector of
rugged tablet computers for demanding environments.
Kauko provides the healthcare sector with various mobile IT solutions to improve
the efficiency of the nursing staff's work. The new computer introduced by Kauko
for the healthcare sector enables the start of sales to other OEM channels
outside Kauko's regular market area.
In the energy sector, solar energy is expected to show strong growth. The rapid
development of the Finnish market has resulted in delays also in Kauko's
deliveries as component suppliers have not been able to deliver.
In 2015, Kauko divested its Industrial operations in Shanghai, China, among
others. Kauko will consider the future development of its current Chinese
operations during fall 2017.
OTHER OPERATIONS
Other operations include Aspo Group's administration, the financial and ICT
service center, and a small number of other functions not covered by business
units.
4-6/2017 4-6/2016 Change % 1-6/2017 1-6/2016 Change % 1-12/2016
Net sales,
MEUR 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Operating
profit, MEUR -1.1 -1.2 8.3 -1.9 -2.6 26.9 -4.2
The operating profit of other operations was negative and amounted to EUR -1.1
(-1.2) million. The operating profit was improved by increased cost efficiency
of other operations.
FINANCING
The Group's cash and cash equivalents amounted to EUR 18.4 million (12/2016: EUR
22.6 million). The consolidated balance sheet included a total of EUR 137.0
million in interest-bearing liabilities (12/2016: EUR 125.4 million). The
average interest rate of interest-bearing liabilities was 1.8% at the end of the
review period (12/2016:1.8%). Non-interest-bearing liabilities totaled EUR 82.4
million (12/2016: EUR 69.8 million).
Aspo Group's gearing was 113.7% (12/2016: 89.8%) and its equity ratio was 32.9%
(12/2016: 37.4%). At the end of the second quarter of 2016, gearing was 115.0%
and the equity ratio was 33.4%. In the second quarter, equity was decreased by
dividend of EUR 12.9 million, of which EUR 6.4 million was distributed.
The Group's net cash from operating activities in January-June increased from
the comparative period to EUR 3.5 (-11.0) million. During the review period, the
change in net working capital was EUR -9.4 (-22.7) million. Net cash from
investing activities totaled EUR -11.2 (-2.1) million. Net cash from investing
activities was for the most part related to advance payments for vessels. The
Group's free cash flow was EUR -7.7 (-13.1) million.
The total amount of committed revolving credit facilities signed between Aspo
and its main financing banks was EUR 40 million at the end of the review period.
The revolving credit facilities remained fully unused at the end of the review
period. Aspo's commercial paper program of EUR 80 million remained fully unused
at the end of the review period. In 2017, a financing agreement of EUR 20
million will fall due.
On May 27, 2016, Aspo issued a new hybrid bond of EUR 25 million. The fixed
coupon rate of the bond is 6.75% per annum. The bond has no specified maturity
date, but the company may exercise an early redemption option after four years
of its issuance date.
Aspo has hedged its interest rate risk by means of interest rate swaps. Their
fair value on June 30, 2017 was EUR -0.5 (-0.8) million. The financial
instruments are on level 2 of the fair value hierarchy.
Aspo Group has hedged its currency-denominated cash flows associated with the
acquisition of new vessels using currency forward agreements, to which hedge
accounting is applied. The nominal value of these currency forward agreements
was EUR 29.3 million, and their fair value was EUR -0.7 (-0.3) million on June
30, 2017. The financial instruments are on level 2 of the fair value hierarchy.
INVESTMENTS
The Group's investments were EUR 4.7 (1.6) million, consisting mainly of advance
payments for new vessels ordered by ESL Shipping, and dockings to be
capitalized.
Investments by segment, acquisitions excluded
4-6/2017 4-6/2016 Change 1-6/2017 1-6/2016 Change 1-12/2016
MEUR MEUR % MEUR MEUR % MEUR
ESL Shipping 4.6 1.2 283.3 11.2 1.6 600.0 5.0
Leipurin 0.1 0.1 0.0 0.2 0.1 100.0 0.3
Telko 0.0 0.3 -100.0 0.3 0.5 -40.0 1.4
Kauko 0.0 0.0 - 0.1 0.0 - 0.0
Other operations 0.0 0.0 - 0.0 0.0 - 0.2
Total 4.7 1.6 193.8 11.8 2.2 436.4 6.9
PERSONNEL
Personnel by segment, period-end
6/2017 6/2016 Change % 12/2016
ESL Shipping 236 226 4.4 226
Leipurin 323 316 2.2 322
Telko 286 268 6.7 280
Kauko 47 48 -2.1 42
Other operations 25 23 8.7 25
Total 917 881 4.1 895
At the end of the period, Aspo Group had 917 employees (881). The number of
personnel has increased in ESL Shipping operations, in Telko's companies in
Russia, Ukraine and other CIS countries, and Leipurin test cafeterias in
Finland. The number of personnel in other operations has been increased, for
example, to build digitalization solutions.
Rewarding
In 2015, the Board of Directors of Aspo Plc approved a share-based incentive
plan for about 30 persons. The plan includes three earnings periods, the
calendar years 2015, 2016 and 2017. The Board of Directors will decide on the
plan's performance criteria and required performance levels for each criterion
at the beginning of each earnings period.
The reward from the earnings period 2015 was based on the Group's earnings per
share (EPS). In 2016, on the basis of the 2015 earnings period, employees
included in the plan received 88,970 treasury shares as a share-based reward, as
well as cash equaling the value of the shares, at most, in order to pay taxes.
In accordance with the rules of incentive plans a total of 5,275 treasury
shares, originally granted on the basis of share-based incentive plans, were
returned to Aspo due to ended contracts of employment in 2016.
The reward from the 2016 earnings period was based on the Group's earnings per
share (EPS). In March 2017, on the basis of the 2016 earnings period, employees
included in the plan received 25,740 treasury shares as a share-based reward, as
well as cash equaling the value of the shares, at most, in order to pay taxes.
The reward from the 2017 earnings period will be based on the Group's earnings
per share (EPS). The possible reward from the 2017 earnings period will be paid
in 2018, partly in treasury shares and partly in cash to cover any taxes and
tax-related costs arising from the reward. At most 112,000 treasury shares will
be granted, and the amount paid in cash will correspond, at most, to the value
of the shares on the payment date.
RISKS AND RISK MANAGEMENT
Uncertainty of the global economic outlook has decreased, and financial risks in
Aspo's market areas have continued to reduce. Global political risks are
estimated to have increased. Operating conditions have stabilized, and improved
in some areas. National economies in western countries are growing, and the
economy of Finland, Aspo's important home market, is growing strongly. Eastern
economies have stopped their decline and, in Russia, the increase in oil prices
has supported economic recovery. In Russia, inflation has continued to slow
down, and consumption demand and investments are growing. Cargo prices increased
during the first quarter, but returned to their previous level in the second
quarter.
The turn for the better can be seen as lower risks in all of Aspo's businesses.
Uncertainties are increased by potential additional economic sanctions by the
USA. They are not, however, expected to have a direct impact on Aspo's
businesses. However, any rapid changes in international politics, exchange rates
or commodities markets may have an impact on the demand and competitiveness of
the products of Aspo's companies. Growth in eastern and western markets was
still strained by low demand for investment assets. However, there are signs of
an increase. Investments have increased in Russia, although the majority of them
are targeted at the energy sector.
Strategic risks
In addition to western markets, Aspo operates in areas where economic trends may
quickly become negative or positive, as a result of which there may be
significant changes in business preconditions.
Russian import and export operations have increased significantly in the first
part of the year. In Ukraine, the consumers' confidence in the economy has
improved, and consumption demand has turned onto an upward trend after a period
of strong decline. The Russian economy has also stabilized and inflation has
continued to decelerate. According to estimates, the Russian economy will
increase during this year. Deteriorated consumption demand has affected all
trade, but the increase of nominal wages and the improved confidence of
consumers predict a rise in consumption. No signs of decrease were visible any
more in the financing market and payments in Russia and Ukraine. Companies are
more willing to make investments, even though the sale of investment assets has
still slowed down by the buyers' caution.
The promotion of local production has increased the volume of raw materials and
items produced in Russia in industrial production, despite the decrease in
quality. This may reduce the position of imported raw materials in the value
chain and lower the margin level, but an increase in import volumes may add to
the demand of foreign raw materials and, correspondingly, reduce related risks
for Aspo.
Political uncertainty within the Eurozone has decreased, but global political
risks have increased, which may have a rapid impact on Aspo's operating
environment or weaken free trade in the long term. The economic and political
situation in Aspo's market areas may have made it more difficult to make
structural changes as part of Aspo's strategy. The situation may continue
unchanged, but, as the economic and political pressure alleviates, it may change
completely and rapidly.
Economic sanctions or other obstacles arising from the economic or political
situation in Russia may, in part, reduce transportation volumes originating from
Russia and the demand for unloading services for large ocean liners at sea may
reduce. In Finland and the rest of Europe, social pressures to reduce the use of
coal in energy production have increased, which will reduce coal transportation
volumes in the future. Correspondingly, the transportation volumes of
replacement energy products will increase. Due to this change, it is difficult
to estimate their future transportation volumes. The low level of international
freight indices and the global increase in the number of vessels, particularly
in large size categories, have increased uncertainty over the long-term
profitability of shipping companies. Nevertheless, there are signs of a slight
increase in freight indices and of a decrease in the number of vessels in the
long term.
Strategic risks may be caused by deterioration of global economic conditions,
the political atmosphere, and the outlook and production choices of industrial
customers. Decisions on energy production structures affected by the
environmental policy and other political choices may cause changes in industry
and energy production that may decrease the use of fossil fuels and increase the
use of alternative forms of energy. The flow of goods in the Baltic Sea may
change as a result of steel production, cost structures, changes in the customer
structure, such as centralization of ownership, or for other reasons. These
changes may have negative consequences on operations as the need for
transportation decreases, but they can also be seen as significant
opportunities. As a result of low cargo prices in international shipping,
competition over cargoes may also become fiercer in the Baltic Sea. Mild and
iceless winters may also increase competition. In order to improve its
competitive position, ESL Shipping is building new low-emission vessels with a
higher fuel economy for this region and customer base.
Strategic risks are influenced by long-term changes in cargo prices, the
building of new ships and the removal of others from the markets, investment
trends, and changes in trade structures, especially in western markets. In
eastern markets, risks are increased by such factors as political instability,
social structures or their lack of reaction to the difficulties encountered by
business operations. The accumulation and discharge of investments may cause
long-term changes in the competitive situation and customer behavior. Trade in
eastern and western markets may suffer from restrictions on free trade, as a
result of which there may be a decrease in sales of goods and services.
Rapid changes in economic structures may cause risks due to changes in the
customer or principal structure or technologies, and due to unused opportunities
that require a quick response. Disruptive changes may be very rapid. Aspo's
strategic risks are evened out by the distribution of business operations over
four segments, its engagement in business operations in a broad geographical
area, and its ability to react quickly to changing situations.
Operational risks
Economic uncertainty in Aspo's operating environment has decreased during the
review period. However, operational risks have remained unchanged. These include
risks related to supply chains and persons.
The focus of Aspo's growth has for long been on emerging market areas, where
risks decelerating growth are affected by factors such as exchange and interest
rates, the level of and changes in the global market prices of raw materials,
industrial and commercial investments, customer liquidity, changes in
legislation and import regulations, and the inactivity, lack of neutrality or
corruption of public authorities.
Economic growth and, alternatively, any decrease in production may have an
impact on demand for raw materials. Political and economic instability is
disturbing commercial activities and, if the situation continues, the growth of
Aspo's business operations may slow down. Consumer behavior and confidence are
also reflected in risks associated with B-to-B customers and their risk levels.
The growth opportunities presented by emerging markets are encouraging interest
among competitors in starting or expanding business operations in these areas.
The challenging emerging markets and the escalated situation in Ukraine have
also caused competitors to withdraw from these markets, which has created new
potential for Aspo's businesses, increased their market shares and, in some
business areas, even improved profitability temporarily.
Hedging against exchange rate changes is not possible in all conditions and,
especially, at all times. Changes in exchange rates may lower the results and
equity on the balance sheet as a result of translation differences. Then again,
changes in exchange rates may also strengthen the result and balance sheet. As
changes in credit loss risks are diversified across businesses and customers,
Aspo's businesses have not been subjected to any significant credit losses
related to their customers, even though credit loss risks have increased.
Principal risks have materialized through unreceived commission returns.
Sales margins may be reduced and financial claims related to deliveries may
emerge if Aspo's products are not suited for the customers' production processes
or don't have the right technical properties. Operative risks have also been
increased by computer-related crime, malware and the increased number of fraud
attempts. If realized, these risks may mean financial losses for Aspo. Aspo has
appropriate information security and internal training arrangements, but
individual cases may occur due to the decentralized structure of operations.
The quantity and probability of the Group's loss risks are regularly assessed. A
bidding process was arranged for general insurance policies and the amounts
insured were updated in 2016. The amounts insured are sufficient in view of the
scope of Aspo's operations, but insurance companies may restrict the validity of
insurance policies as a result of risks increasing for various reasons, such as
military operations.
Internal control and risk management
One of the responsibilities of Aspo's Audit Committee is to monitor the
efficiency of the Group's internal supervision, internal audits, and risk
management systems. The Audit Committee monitors the risk management process and
carries out necessary measures to prevent strategic risks in particular. In
accordance with the internal control principles approved by the Board of
Directors, risk management is part of Aspo's internal control, and its task is
to ensure the implementation of the Group's strategy, development of financial
results, shareholder value, dividend payment ability, and continuity in business
operations. The operational management of the businesses is responsible for risk
management. The management is responsible for specifying sufficient measures and
their implementation, and for monitoring and ensuring that the measures are
implemented as part of day-to-day operational control. Risk update for the Group
has been carried out within a year. Risk management is coordinated by Aspo's
CFO, who reports to the Group CEO.
Aspo Group's financing and financing risk management are centralized in the
parent company, in accordance with the financing policy approved by the Board of
Directors.
A more detailed account of the risk management policy and the most significant
risks has been published on the company's website. More detailed information on
financing risks can be found in the notes to the financial statements.
SHARE CAPITAL AND SHARES
Aspo Plc's share capital on June 30, 2017 was EUR 17,691,729.57 and the total
number of shares was 30,975,524 of which the company held 370,486 shares; that
is, 1.2% of the share capital. Aspo Plc has one share series. Each share
entitles the shareholder to one vote at the shareholders' meeting. Aspo's share
is quoted on Nasdaq Helsinki Oy's Mid Cap segment under industrial products and
services.
During January-June 2017, a total of 1,699,284 Aspo Plc shares with a market
value of EUR 14.9 million were traded on Nasdaq Helsinki, in other words, 5.5%
of the stock changed hands. During the review period, the share price reached a
high of EUR 9.16 and a low of EUR 8.20. The average price was EUR 8.80 and the
closing price at period-end was EUR 9.05. At the end of the review period, the
market value excluding treasury shares was EUR 277.0 million.
The number of Aspo Plc shareholders was 9,135 at period-end. A total of 914,454
shares, or 3.0% of the share capital, were nominee registered or held by non-
domestic shareholders.
DECISIONS AT THE SHAREHOLDERS' MEETING
Dividend
The Annual Shareholders' Meeting of Aspo Plc on April 5, 2017, approved the
payment of a dividend totalling EUR 0.42 per share in accordance with the Board
of Directors' proposal.
The dividend will be paid in two installments. The payment date for the first
installment of EUR 0.21 per share was April 18, 2017.
The second installment of EUR 0.21 per share will be paid in November 2017 to
shareholders who are registered in the shareholders' register maintained by
Euroclear Finland Ltd on the record date. At its meeting to be held on October
26, 2017, the Board of Directors will decide on the record and payment dates of
the second installment, in accordance with the rules of the Finnish book-entry
securities system. According to the current system, the dividend record date
would be October 30, 2017 and the payment date would be November 6, 2017.
Board of Directors and Auditor
The Annual Shareholders' Meeting re-elected LL.M., MBA Mammu Kaario, M.Sc.
(Econ.) Mikael Laine, LL.M. Roberto Lencioni, B.Sc. (Econ.), eMBA Gustav Nyberg,
D.Sc. (Econ.) Salla Pöyry and M.Sc. (Tech.) Risto Salo to the Board of
Directors. At the Board's organizing meeting held after the Annual Shareholders'
Meeting, Gustav Nyberg was elected as Chairman of the Board and Roberto Lencioni
as Vice-Chairman. At the meeting the Board also decided to appoint Mammu Kaario
Chairman of the Audit Committee and Mikael Laine, Salla Pöyry and Risto Salo as
committee members.
The Authorized Public Accountant firm Ernst & Young Oy was elected as company
auditor.
Board authorizations
Authorization of the Board of Directors to decide on the acquisition of treasury
shares
The Annual Shareholders' Meeting on April 5, 2017 authorized the Board of
Directors to decide on the acquisition of no more than 500,000 of the treasury
shares using the unrestricted equity of the company representing about 1.6% of
all the shares in the company. The authorization includes the right to accept
treasury shares as a pledge.
The shares shall be acquired through public trading, for which reason the shares
are acquired otherwise than in proportion to the share ownership of the
shareholders and the consideration paid for the shares shall be the market price
of the Aspo's share in public trading at Nasdaq Helsinki Ltd at the time of the
acquisition. Shares may also be acquired outside public trading for a price
which at most corresponds to the market price in public trading at the time of
the acquisition. In connection with the acquisition of the treasury shares,
derivative, share lending, or other agreements that are normal within the
framework of capital markets may take place in accordance with legislative and
regulatory requirements.
The authorization includes the Board's right to resolve on a directed repurchase
or the acceptance of shares as a pledge, if there is a compelling financial
reason for the company to do so as provided for in Chapter 15, section 6 of the
Finnish Limited Liability Companies Act. The shares shall be acquired to be used
for the financing or execution of corporate acquisitions or other transactions,
for execution of the company's share-ownership programs or for other purposes
determined by the Board.
The decision to acquire or redeem treasury shares or to accept them as pledge
shall not be made so that the shares of the company in the possession of, or
held as pledges by the company and its subsidiaries would exceed 10% of all
shares. The authorization will remain in force until the Annual Shareholders'
Meeting in 2018 but not more than 18 months from the approval at the
Shareholders' Meeting.
The Board of Directors shall decide on any other matters related to the
acquisition of treasury shares and/or accepting them as a pledge.
The authorization supersedes the authorization for the acquisition of treasury
shares and/or accepting them as a pledge which was granted to the Board of
Directors by the Annual Shareholders' Meeting on April 7, 2016.
Authorization of the Board of Directors to decide on a share issue of treasury
shares
The Annual Shareholders' Meeting on April 9, 2015 authorized the Board of
Directors to decide on a share issue, through one or several instalments, to be
executed by conveying treasury shares. An aggregate maximum amount of 900,000
shares may be conveyed based on the authorization. The authorization will remain
in force until September 30, 2018.
The Board of Directors has used the authorization in 2016 and granted 88,970
treasury shares to employees included in the earnings period 2015 of the share-
based incentive plan 2015-2017. On March 27, 2017 the Board of Directors granted
25,740 treasury shares to employees included in the earnings period 2016.
Authorization of the Board of Directors to decide on a rights issue
The Annual Shareholders' Meeting on April 9, 2015. authorized the Board of
Directors to decide on a rights issue for consideration. The authorization is
proposed to include the right of the Board of Directors to decide on all of the
other terms and conditions of the conveyance and thus also includes the right to
decide on a directed share issue, in deviation from the shareholders' pre-
emptive right, if a compelling financial reason exists for the company to do so.
The total number of new shares to be offered for subscription may not exceed
1,500,000. The authorization will remain in force until September 30, 2018. The
Board of Directors has not used the authorization.
LEGAL PROCEEDINGS
On February 27, 2015, the Helsinki District Court announced its judgement in the
case between ESL Shipping and the Finnish State regarding fairway dues levied
during the years 2001-2004. According to the judgement, the Finnish State will
be required to refund to ESL Shipping approximately EUR 3,0 million in
accordance with the company's claim, as well as legal expenses and interest. The
State lodged an appeal against the District Court's judgement and, in its ruling
issued on August 8, 2016, the Court of Appeal overruled the Helsinki District
Court's judgement and dismissed ESL Shipping's legal action as time-barred. The
company has applied for a leave to appeal from the Supreme Court.
The shipping company won legal proceedings against Indian ABG Shipyard
concerning the compensation payable for repairs made to m/s Alppila during the
warranty period. The vessel was delivered to ESL Shipping in 2011. According to
the ruling of the arbitration court, ABG Shipyard was required to refund the
repair expenses and interest to ESL Shipping according to the company's claims.
The impact of ruling will be taken into account during the financial year over
which the imposed payment is received.
Helsinki August 15, 2017
ASPO PLC
Board of Directors
ASPO GROUP CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
4-6/2017 4-6/2016
MEUR % MEUR %
Net sales 123.8 100.0 116.2 100.0
Other operating income 0.7 0.6 0.5 0.4
Materials and services -91.6 -74.0 -85.3 -73.4
Employee benefit expenses -10.6 -8.6 -10.5 -9.0
Depreciation, amortization and impairment losses -3.0 -2.4 -2.9 -2.5
Other operating expenses -14.2 -11.5 -13.2 -11.4
Operating profit 5.1 4.1 4.8 4.1
Financial income and expenses -0.7 -0.6 -0.9 -0.8
Profit before taxes 4.4 3.6 3.9 3.4
Income taxes -0.3 -0.2 -0.5 -0.4
Profit for the period 4.1 3.3 3.4 2.9
Other comprehensive income
Items that may be reclassified to profit or loss in
subsequent periods:
Translation differences -2.7 1.8
Cash flow hedges -1.9 1.0
Income tax on other comprehensive income 0.1 -0.1
Other comprehensive income for the period, net of taxes -4.5 2.7
Total comprehensive income -0.4 6.1
Profit attributable to shareholders 4.1 3.4
Total comprehensive income attributable to shareholders -0.4 6.1
Earnings per share, EUR 0.08 0.09
Diluted earnings per share, EUR 0.08 0.09
1-6/2017 1-6/2016 1-12/2016
MEUR % MEUR % MEUR %
Net sales 242.8 100.0 214.7 100.0 457.4 100.0
Other operating income 1.0 0.4 0.6 0.3 1.2 0.3
Materials and services -179.7 -74.0 -155.6 -72.5 -334.7 -73.2
Employee benefit expenses -20.9 -8.6 -20.6 -9.6 -40.0 -8.7
Depreciation, amortiziation and
impairment losses -6.0 -2.5 -5.7 -2.7 -11.6 -2.5
Other operating expenses -27.7 -11.4 -25.3 -11.8 -51.9 -11.3
Operating profit 9.5 3.9 8.1 3.8 20.4 4.5
Financial income and expenses -0.9 -0.4 -1.6 -0.7 -3.0 -0.7
Profit before taxes 8.6 3.5 6.5 3.0 17.4 3.8
Income taxes -0.6 -0.2 -0.8 -0.4 -1.5 -0.3
Profit for the period 8.0 3.3 5.7 2.7 15.9 3.5
Other comprehensive income
Items that may be reclassified to profit
or loss in subsequent periods:
Translation differences -1.4 1.5 3.2
Cash flow hedges -2.5 -0.7 1.4
Income tax on other comprehensive income 0.1 0.0 -0.1
Other comprehensive income for the
period, net of taxes -3.8 0.8 4.5
Total comprehensive income 4.2 6.5 20.4
Profit attributable to shareholders 8.0 5.7 15.9
Total comprehensive income attributable
to shareholders 4.2 6.5 20.4
Earnings per share, EUR 0.21 0.16 0.49
Diluted earnings per share, EUR 0.21 0.16 0.49
ASPO GROUP CONSOLIDATED BALANCE SHEET
6/2017 6/2016 Change 12/2016
MEUR MEUR % MEUR
Assets
Intangible assets 8.7 10.1 -13.9 9.4
Goodwill 42.0 42.7 -1.6 42.6
Tangible assets 119.4 113.8 4.9 113.3
Available-for-sale financial assets 0.2 0.2 0.0 0.2
Receivables 3.7 3.6 2.8 4.9
Total non-current assets 174.0 170.4 2.1 170.4
Inventories 62.2 65.7 -5.3 56.7
Accounts receivable and other receivables 68.2 62.6 8.9 60.0
Cash and cash equivalents 18.4 19.3 -4.7 22.6
Total current assets 148.8 147.6 0.8 139.3
Assets classified as held for sale 0.9
Total assets 323.7 318.0 1.8 309.7
Equity and liabilities
Share capital 17.7 17.7 0.0 17.7
Other equity 86.6 87.6 -1.1 96.8
Total equity 104.3 105.3 -0.9 114.5
Loans and overdraft facilities 125.8 111.0 13.3 116.6
Other liabilities 4.5 5.3 -15.1 4.6
Total non-current liabilities 130.3 116.3 12.0 121.2
Loans and overdraft facilities 11.2 29.4 -61.9 8.8
Accounts payable and other liabilities 77.9 67.0 16.3 65.2
Total current liabilities 89.1 96.4 -7.6 74.0
Total equity and liabilities 323.7 318.0 1.8 309.7
ASPO GROUP CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
A = Share capital F = Translation differences
B = Share premium G = Retained earnings
C = Fair value reserve H = Total
D = Other reserves
E = Treasury shares
MEUR A B C D E F G H
Equity Jan. 1, 2017 17.7 4.3 1.0 37.0 -2.3 -18.6 75.4 114.5
Comprehensive income:
Profit for the period 8.0 8.0
Translation differences -1.4 -1.4
Cash flow hedges* -2.4 -2.4
Total comprehensive income -2.4 -1.4 8.0 4.2
Transactions with owners:
Dividend payment -12.9 -12.9
Interest on hybrid instrument -1.8 -1.8
Share-based incentive plan 0.2 0.1 0.3
Total transactions
with owners 0.2 -14.6 -14.4
Equity June 30, 2017 17.7 4.3 -1.4 37.0 -2.1 -20.0 68.8 104.3
Equity Jan. 1, 2016 17.7 4.3 -0.3 31.9 -2.7 -21.8 73.5 102.6
Comprehensive income:
Profit for the period 5.7 5.7
Translation differences 1.5 1.5
Cash flow hedges* -0.7 -0.7
Total comprehensive income -0.7 1.5 5.7 6.5
Transactions with owners:
Dividend payment -12.5 -12.5
Change in hybrid instruments 9.6 -1.1 8.5
Share-based incentive plan 0.4 -0.2 0.2
Transfer of reserves 0.2 -0.2 0.0
Total transactions
with owners 9.8 0.4 -14.0 -3.8
Equity June 30, 2016 17.7 4.3 -1.0 41.7 -2.3 -20.3 65.2 105.3
* net of taxes
ASPO GROUP CONSOLIDATED CASH FLOW STATEMENT
1-6/2017 1-6/2016 1-12/2016
MEUR MEUR MEUR
CASH FLOWS FROM OPERATING ACTIVITIES
Operating profit 9.5 8.1 20.4
Adjustments to operating profit 7.2 5.8 11.6
Change in working capital -9.4 -22.7 -10.6
Interest paid -3.2 -1.7 -3.7
Interest received 0.6 0.3 0.4
Income taxes paid -1.2 -0.8 -1.9
Net cash from operating activities 3.5 -11.0 16.2
CASH FLOWS FROM INVESTING ACTIVITIES
Investments in tangible and intagible assets -2.1 -2.1 -5.0
Advance payments for vessels -9.4 -1.3
Proceeds from sale of tangible assets 0.1 0.2
Proceeds from sale of available-for-sale financial
assets 0.2
Net cash from investing activities -11.2 -2.1 -6.1
CASH FLOWS FROM FINANCING ACTIVITIES
Change in current loans 2.4 17.1 -3.5
Proceeds from non-current loans 15.6 0.2 7.2
Repayments of non-current loans -6.2 -4.9 -6.7
Repayments of hybrid instrument -15.7 -20.3
Hybrid instrument, interests -1.7 -0.6 -0.9
Proceeds from hybrid instrument issue 24.8 24.8
Dividends distributed -6.4 -12.5 -12.5
Net cash from financing activities 3.7 8.4 -11.9
Change in cash and cash equivalents -4.0 -4.7 -1.8
Cash and cash equivalents Jan. 1 22.6 23.9 23.9
Translation differences -0.2 0.1 0.5
Cash and cash equivalents at period-end 18.4 19.3 22.6
ASPO GROUP ASSETS AND LIABILITIES BY SEGMENT
Segments' assets, MEUR
6/2017 6/2016 12/2016
ESL Shipping 128.6 120.3 121.1
Leipurin 61.2 60.5 62.8
Telko 87.9 90.4 78.1
Kauko 22.4 22.3 20.0
Unallocated items 23.6 24.5 27.7
Total 323.7 318.0 309.7
Segments' liabilities, MEUR
6/2017 6/2016 12/2016
ESL Shipping 9.7 9.4 9.2
Leipurin 14.6 11.4 14.3
Telko 37.8 34.6 32.0
Kauko 7.4 8.5 5.4
Unallocated items 149.9 148.8 134.3
Total 219.4 212.7 195.2
ACCOUNTING PRINCIPLES
Aspo Plc's interim report has been prepared in accordance with the principles of
IAS 34 Interim Financial Reporting. As of January 1, 2017, Aspo applies certain
new or amended IFRS standards and IFRIC interpretations as described in the
2016 financial statements. The adoption of these new or amended standards has
not had any substantial impact on the reported figures. In other respects, the
same accounting principles have been adopted as in the consolidated financial
statements on December 31, 2016. The information in this report is unaudited.
Aspo Plc adopts the guidance on alternative key figures issued by the European
Securities and Market Authority (ESMA). In addition to IFRS figures, the company
releases other commonly used key figures which are mainly derived from the
statement of comprehensive income and balance sheet. According to the
management, key figures clarify the picture drawn by the statement of
comprehensive income and balance sheet of Aspo's financial performance and
financial position. The calculation formulas of key figures have been described
on page 70 of the Year 2016 report.
Aspo will continue to prepare for the adoption of the new IFRS 15 and IFRS 9
standards, starting from January 1, 2018. The expected impact of these standards
on consolidated financial statements is described in more detail in the
financial statements on pages 40-41 of the Year 2016 report. As the project
proceeds, Aspo will specify its evaluation on the impact later during 2017.
SEGMENT REPORTING
Aspo Group's operating segments are ESL Shipping, Leipurin, Telko and Kauko.
Other operations consists of Aspo Group's administration, the financial and ICT
service center, and a small number of other functions not covered by business
units.
The Group reports its net sales on the basis of the following geographical
division: Finland; Scandinavia; the Baltic countries; Russia, Ukraine and other
CIS countries; and other countries.
PRESS AND ANALYST CONFERENCE
A press and analyst conference will be arranged today, Tuesday August 15, 2017
at 14.00 at the Akseli Gallen-Kallela cabinet at Hotel Kämp, Pohjoisesplanadi
29, 00100 Helsinki.
FINANCIAL INFORMATION IN 2017
Aspo Plc will publish the next financial report:
- interim report for January-September on Thursday, October 26, 2017.
Helsinki, August 15, 2017
ASPO PLC
Aki Ojanen Arto Meitsalo
CEO CFO
For more information: Aki Ojanen, 09 521 4010, 0400 106 592, aki.ojanen
(a)aspo.com
DISTRIBUTION:
Nasdaq Helsinki
Key media
www.aspo.com
Aspo is a conglomerate that owns and develops businesses in Northern Europe and
growth markets focusing on demanding B-to-B customers. The aim of our strong
corporate brands - ESL Shipping, Leipurin, Telko and Kauko - is to be the market
leaders in their sectors. They are responsible for their own operations,
customer relationships and the development of these. Together they generate
Aspo's goodwill. Aspo's Group structure and business operations are developed
persistently without any predefined schedules.
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