2017-02-15 10:00:37 CET
2017-02-15 10:00:37 CET
REGULATED INFORMATION
Aspo - Financial Statement Release
Aspo Group Financial Statement Release, January 1 to December 31, 2016
ASPO Plc FINANCIAL STATEMENT RELEASE February 15, 2017, at 11:00
a.m.
ASPO GROUP FINANCIAL STATEMENT RELEASE, JANUARY 1 TO DECEMBER 31, 2016
Aspo Q4: Net sales increased, operating profit improved
(Figures from the year 2015 are presented in brackets.)
January-December 2016
- Aspo's net sales amounted to EUR 457.4 (445.8) million.
- Operating profit stood at EUR 20.4 (20.6) million.
- Profit for the period was EUR 15.9 (19.8) million.
- Earnings per share were EUR 0.49 (0.61).
- The operating profit of ESL Shipping stood at EUR 12.6 (14.7) million. The
operating profit of Leipurin was EUR 2.0 (2.4) million. The operating profit of
Telko stood at EUR 10.1 (10.4) million and the operating profit of Kauko was EUR
-0.1 (-1.2) million.
- Net cash from operating activities was EUR 16.2 (25.0) million
The 2015 operating profit and profit for the period include items that affect
comparability as presented in the table of key figures below.
October-December 2016
- Aspo's net sales amounted to EUR 124.5 (122.1) million.
- Operating profit stood at EUR 6.3 (6.2) million.
- Profit for the quarter was EUR 5.2 (3.7) million.
- Earnings per share were EUR 0.17 (0.11).
- The operating profit of ESL Shipping stood at EUR 4.1 (4.5) million. The
operating profit of Leipurin was EUR 0.7 (0.4) million. The operating profit of
Telko stood at EUR 2.5 (1.9) million and the operating profit of Kauko was EUR
0.0 (0.6) million.
October-December 2015 operating profit and profit for the period include items
that affect comparability as presented in the table of key figures below.
- Net sales in Russia, Ukraine and other CIS countries increased by 21% during
the fourth quarter from the comparative period, being record-high at EUR 42.0
(34.7) million.
- Telko's net sales increased by 21% and operating profit improved to EUR 2.5
(1.9) million during the fourth quarter. The most significant reason for this
improvement was the general increase in western markets which accelerated
towards the end of the year and the improved profitability.
- During the period under review, ESL Shipping received a decision on the EU's
funding for energy efficiency and environmental investments of at most EUR 5.9
million, of which the company received EUR 2.1 million during the fourth
quarter.
- Aspo specified its financial targets on November 24, 2016, so that the aim is
to reach the targets by 2020. ESL Shipping expects to reach an operating profit
level of 20-24% by 2020.
Guidance for 2017
Aspo's operating profit will be EUR 22-27 (20.4) million in 2017.
The Board of Directors' dividend proposal
The Board of Directors proposes that EUR 0.42 (0.41) per share be paid in
dividends for the 2016 financial year, and that the dividend be paid in two
installments, in April and in November.
Further information about the dividend proposal can be found under "Dividend
proposal".
General outlook for 2017
Uncertainty in markets has decreased. Industrial production is expected to grow
in the main market areas of Aspo's businesses in 2017. Prices of raw materials
are expected to remain low. In Russia, the national economy and industrial
production are estimated to turn into growth. Political risks have increased,
which may quickly affect the operating environment or decrease free trade in the
long term.
KEY FIGURES
10-12/ 10-12/ Change 1-12/ 1-12/ Change
2016 2015 % 2016 2015 %
Net sales, MEUR 124.5 122.1 2.0 457.4 445.8 2.6
Operating profit, MEUR *) 6.3 6.2 1.6 20.4 20.6 -1.0
Operating profit, % 5.1 5.1 4.5 4.6
Profit before taxes, MEUR **) 5.7 3.9 46.2 17.4 21.3 -18.3
Profit for the period, MEUR **) 5.2 3.7 40.5 15.9 19.8 -19.7
Earnings per share, EUR 0.17 0.11 54.5 0.49 0.61 -19.7
Net cash from operating
activities, MEUR 18.7 14.3 30.8 16.2 25.0 -35.2
Equity per share, EUR 3.75 3.36
Return on equity, % (ROE) 14.6 19.1
Equity ratio,% 37.4 33.8
Gearing, % 89.8 101.4
ESL Shipping, operating profit,
MEUR 4.1 4.5 -8.9 12.6 14.7 -14.3
Leipurin, operating profit, MEUR 0.7 0.4 75.0 2.0 2.4 -16.7
Telko, operating profit, MEUR *) 2.5 1.9 31.6 10.1 10.4 -2.9
Kauko, operating profit, MEUR *) 0.0 0.6 -100.0 -0.1 -1.2 91.7
Items affecting comparability
*) The operating profit 1-12/2015 includes an impairment loss of EUR 1.3 million
related to Kauko goodwill, and EUR 0.6 million in charges imposed on Telko by
Finnish Customs and related advisor fees, of which EUR 0.2 million were
recognized in the fourth quarter.
**) The profit 1-12/2015 includes an impairment loss of EUR 1.3 million related
to Kauko goodwill, a sales gain of EUR 4.9 million recognized in financial items
and EUR 2.0 million in charges imposed by Finnish Customs and related advisor
fees, of which EUR 1.6 million were recognized in the fourth quarter.
AKI OJANEN, CEO OF ASPO GROUP, COMMENTS ON THE FOURTH QUARTER AND THE FINANCIAL
YEAR:
"All in all, 2016 was a good and dynamic year. The growth of Aspo's net sales
and operating profit accelerated during the second half of the year. We expect
this positive development to continue and our financial guidance for 2017
estimates the operating profit to be EUR 22-27 (20.4) million in 2017.
We developed the management of our subsidiaries on many levels. Their Boards of
Directors were strengthened, Mikko Laavainen was appointed Managing Director of
Leipurin Plc, starting from March 1, 2016, Kauko revised its identity in
accordance with its strategy, and Telko invested in its regional strategy and
both expanded and grew heavily in eastern markets. ESL Shipping received a
decision on an EU funding of at most EUR 5.9 million for energy efficiency and
environmental investments in vessels. The company carried out extensive
groundwork for the future development of its results.
The shipping company faced an exceptionally challenging operating environment in
2016. Unhealthy levels of international cargo prices also reduced the results of
ESL Shipping. Even though other vessel categories improved their profitability,
the losses produced by Supramax vessels during the spring and summer reduced the
full-year results. However, the operating profit of EUR 4.1 (4.5) million
produced during the fourth quarter can be regarded as a good achievement,
considering the market situation. We estimate that the productivity of Supramax
vessels is higher in 2017 than what it was in 2016.
Telko was able to significantly improve its net sales and profitability during
the fourth quarter. We already saw in the spring that the decline in the Russian
economy had stopped and expected the market situation to improve. Telko's strong
investments in growth paid off in the eastern markets in the form of an increase
in net sales of 26%. Its operating profit improved during the quarter to EUR
2.5 (1.9) million. Telko improved its profitability, particularly in the western
markets.
The profitability of Leipurin is far from its potential, even though its
operating profit improved during the fourth quarter to EUR 0.7 (0.4) million.
Leipurin continued its strong growth in Russia, where its profitability remained
high, with the operating profit rate being approximately 9%. Machine operations
produced a loss in 2016. Heavy investments in improving the competitiveness of
machine operations and entering new market areas resulted in a record-high order
book at the end of the year, which ensures that the result of machine operations
can develop positively in 2017.
Aspo's administrative costs reached the target level in 2016. The improved
outlook for different businesses and the higher cost efficiency enable us to be
determined and move forward in 2017 towards reaching our financial targets by
2020."
ASPO GROUP
NET SALES
Net sales by segment
10-12/2016 10-12/2015 Change 1-12/2016 1-12/2015 Change
MEUR MEUR % MEUR MEUR %
ESL Shipping 20.6 19.9 3.5 71.4 76.2 -6.3
Leipurin 30.7 31.5 -2.5 112.7 117.8 -4.3
Telko 64.9 53.6 21.1 240.3 215.3 11.6
Kauko 8.3 17.1 -51.5 33.0 36.5 -9.6
Other operations 0.0 0.0 - 0.0 0.0 -
Total 124.5 122.1 2.0 457.4 445.8 2.6
There is no considerable inter-segment net sales.
Net sales by market area
10-12/2016 10-12/2015 Change 1-12/2016 1-12/2015 Change
MEUR MEUR % MEUR MEUR %
Finland 38.7 38.8 -0.3 149.4 147.7 1.2
Scandinavia 12.1 11.6 4.3 47.5 51.8 -8.3
Baltic
countries 12.7 12.6 0.8 50.4 50.4 0.0
Russia, Ukraine +
other
CIS countries 42.0 34.7 21.0 145.6 128.3 13.5
Other countries 19.0 24.4 -22.1 64.5 67.6 -4.6
Total 124.5 122.1 2.0 457.4 445.8 2.6
The market area of Russia, Ukraine and other CIS countries increased its net
sales by 21% during the fourth quarter, making it the largest market area. At an
annual level, net sales grew by 13.5% in the market area. In October-December,
net sales in the market area of other countries fell by 22.1%, which can be
explained by the timing of Kauko's project deliveries to China in the fourth
quarter of 2015.
EARNINGS
Operating profit by segment
10-12/2016 10-12/2015 Change 1-12/2016 1-12/2015 Change
MEUR MEUR % MEUR MEUR %
ESL Shipping 4.1 4.5 -8.9 12.6 14.7 -14.3
Leipurin 0.7 0.4 75.0 2.0 2.4 -16.7
Telko 2.5 1.9 31.6 10.1 10.4 -2.9
Kauko 0.0 0.6 -100.0 -0.1 -1.2 91.7
Other operations -1.0 -1.2 16.7 -4.2 -5.7 26.3
Total 6.3 6.2 1.6 20.4 20.6 -1.0
Earnings per share
Earnings per share were EUR 0.49 (0.61) during the financial year. Equity per
share was EUR 3.75 (3.36). The result for the comparative period was
significantly improved by a sales gain of EUR 4.9 million recognized in
financial items through the sale of shares in Alandia Insurance owned by ESL
Shipping. Its effect on earnings per share was approximately EUR 0.16.
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 financial year was 4.5% (4.6), return on
equity was 14.6% (19.1), and gearing was 89.8% (101.4).
OUTLOOK FOR 2017
Global economic growth is expected to speed up in 2017. General uncertainty and
a poor economic situation in eastern growth markets that are important areas for
Aspo have turned into growth. However, the future development of Russia, Ukraine
and other CIS countries is difficult to estimate. The values of currencies are
expected to continue to fluctuate heavily.
Oil prices are expected to remain at their low level. In general, prices of
production raw materials are expected to remain low. The Group will continue to
increase its market share profitably in the strategically important eastern
growth markets. Industrial production is expected to grow in the main market
areas of Aspo's businesses in 2017. While international dry cargo prices are
expected to remain low, the shipping company has secured the use of its capacity
mainly through long-term agreements. It has been ensured that one Supramax
vessel will operate in the Baltic Sea area in 2017, which significantly reduces
the volume of spot traffic. The loss-producing machine operations of Leipurin
will turn to produce a profit as a result of the record-high order book.
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 year, the company's fleet consisted of 14 vessels, of which the
company owned 13 in full and one was leased.
10-12/2016 10-12/2015 Change % 1-12/2016 1-12/2015 Change %
Net sales, MEUR 20.6 19.9 3.5 71.4 76.2 -6.3
Operating
profit, MEUR 4.1 4.5 -8.9 12.6 14.7 -14.3
Operating
profit, % 19.9 22.6 17.6 19.3
ESL Shipping's service range is based on the company's ability to operate
effectively and reliably in Nordic ice regions and to load and unload vessels at
sea. During the last quarter, ESL Shipping's vessels mainly operated in the
Baltic Sea and Northern Europe, and offered loading and unloading services at
sea. Transportation operations in the Baltic Sea and the North Sea are based on
long-term customer agreements and established customer relationships.
The general market prices of dry bulk cargo increased at the end of 2016, while
they are still low when evaluated in the long term. During the fourth quarter,
the shipping company signed an annual agreement with a Russian steel company on
the transportation of iron pellets to European markets, using a Supramax vessel.
Key factors for the agreement include the excellent ice strengthening of ESL
Shipping's vessels and their ability to handle loads independently. The
transportation volume of renewable bioenergy was higher than estimated. The
results of the Supramax vessels turned to produce a profit during the fourth
quarter. One vessel was docked as scheduled during the fourth quarter.
ESL Shipping's net sales in the fourth quarter increased to EUR 20.6 (19.9)
million as a result of transportation volumes that were higher than in the
comparative period and increased ship fuel prices. The strengthened US dollar
increased the euro-denominated prices of fuel. Profitability remained high,
considering the market situation, and operating profit was EUR 4.1 (4.5)
million.
Loading and unloading operations for large ocean liners at sea were at a normal
level during the fourth quarter. The occasionally difficult weather conditions
during the period extended the duration of operations and reduced the
profitability of loading and unloading operations, compared with the comparative
period.
The volume of cargo carried by ESL Shipping in October-December amounted to 3.2
(3.1) million tons. Transportation volumes for the steel industry were at the
comparative period's level, whereas transportation volumes for the energy
industry increased from the comparative period, both in terms of renewable
energy and coal.
ESL Shipping maintained its high profitability in 2016, regardless of the
exceptionally challenging market environment at the beginning of the year, with
operating profit being EUR 12.6 (14.7) million. The shipping company's net sales
decreased in January-December to EUR 71.4 (76.2) million. This decrease was
affected heavily by the historically difficult market situation involving large
dry bulk cargo vessels at the beginning of the year, which forced the shipping
company's Supramax vessels to operate in the loss-producing spot market. On an
annual level, the Supramax vessels produced a small loss, regardless of the good
fourth quarter. However, their profitability was much higher than on average in
the market. The volume of cargo carried by ESL Shipping in 2016 amounted to
10.7 (11.1) million tons. On an annual level, the decrease in volume was mainly
caused by the distances traveled by the Supramax vessels, which were longer than
in the comparative period.
The shipping company's newbuilding project of two of the world's first LNG-
fueled handy-size dry bulk cargo vessels has proceeded according to schedule,
and its cooperation with the shipyard of Sinotrans & CSC Jinling has been
productive. The new vessels will start operating in the Baltic Sea in the first
half of 2018.
The new vessels will operate in the northern Baltic Sea, improving the
efficiency of the transportation chain and significantly reducing the
environmental load of operations. The EU supports energy-efficiency and
environmental investments in ships. ESL Shipping will receive funding of at most
EUR 5.9 million in 2016-2019, of which EUR 2.1 million was paid during the
fourth quarter. In addition to ESL Shipping, the Bothnia Bulk project involves
SSAB Europe Oy, Luleå Hamn AB, Oxelösunds Hamn AB, Raahen Satama Oy and Raahen
Voima Oy. The EU funding has been awarded from the Connecting Europe Facility
Transport instrument.
Outlook for ESL Shipping for 2017
During the past six months, the market cargoes of large dry cargo vessels have
increased notably from the historically low level of a year ago, while they are
expected to remain fairly low in 2017. As not many new dry cargo vessels have
been ordered, the balance between demand and supply is expected to improve in
the next few years. Changes are also accelerated by tighter environmental
regulations on shipping that may reduce the availability of the oldest tonnage
in the future. Most of the shipping company's transportation capacity has been
secured in the Baltic Sea and Northern Europe through long-term agreements.
Similarly, the profitable employment of one of the shipping company's two
Supramax vessels has already been secured for the current year through a long-
term agreement in the Baltic Sea region.
Transportation volumes for the steel industry are expected to improve or remain
unchanged. The seasonal variation in demand may require that the capacity of the
pusher-barge system be adapted later in spring, similarly to previous years.
Demand in the mining and metal industries may increase, partly as a result of
increased raw material prices.
Transportation volumes for the energy industry are expected to be higher than in
the previous year, which is mainly attributable to the growing demand for the
transportation of biofuels. Transportation volume of coal is expected to remain
at the previous year's level and its use will focus on the co-production of
power and heat, the volumes of which are easier to estimate. The shift is due to
the poor profitability of the production of condensate power and the previously
announced closings of condensate power plants.
Demand for loading and unloading services for large ocean liners at sea is
expected to be high. If required, the shipping company will adapt its capacity
in accordance with variation in demand and the needs of any new customer groups
by chartering additional external capacity. The company aims to continue its
operations in arctic areas, as in previous years.
According to its strategy, the shipping company will continue to expand its
customer base, in particular, to customer transportation, where the load range
and the company's operating area can be increased while utilizing the
independent load handling capability and the exceptionally high ice
strengthening of its vessels. In 2017, four ship units will be docked as
planned.
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.
10-12/2016 10-12/2015 Change % 1-12/2016 1-12/2015 Change %
Net sales, MEUR 30.7 31.5 -2.5 112.7 117.8 -4.3
Operating profit,
MEUR 0.7 0.4 75.0 2.0 2.4 -16.7
Operating profit,
% 2.3 1.3 1.8 2.0
Prices of raw materials that are important to Leipurin remained at the
comparative period's level.
The net sales of Leipurin in October-December were short of the comparative
period, totaling EUR 30.7 (31.5) million. The operating profit grew to EUR 0.7
(0.4) million. The operating profit rate during the quarter was 2.3% (1.3%).
The net sales decreased in bakery machine operations and significantly in raw
material operations in Poland. The net sales of bakery raw materials grew by
18% in Russia, Ukraine and other CIS countries, while the operating profit rate
fell to 7%. The net sales of bakery raw materials grew in Finland, mainly
because of artisanal and OOH customer accounts.
The increase in operating profit in October-December is mainly attributable to
the growth of net sales in eastern markets in terms of bakery raw materials and
the improved profitability of machine operations. Machine operations turned to
produce a profit after a long loss-producing period which started from the steep
decline in the Russian ruble.
During the fourth quarter, net sales in Russia, Ukraine and other CIS countries,
including machine sales, increased by 5% to EUR 9.6 (9.1) million, with the
operating profit rate being approximately 7% (7%).
The full-year net sales of Leipurin stood at EUR 112.7 (117.8) million, and
operating profit was EUR 2.0 (2.4) million. The net sales generated in Russia,
Ukraine and other CIS countries totaled EUR 30.6 million (30.6). The net sales
of raw material operations remained at the previous year's level. The net sales
of machine operations fell, producing a loss in 2016. Investments associated
with the implementation of the new strategy reduced the operating profit.
Mikko Laavainen started as the Managing Director of Leipurin Plc on March
1, 2016.
Outlook for Leipurin for 2017
The market situation is expected to remain unchanged in the key markets of
Leipurin. The company's market position is expected to remain strong in the
industrial baking sector in Finland, the Baltic countries and Russia, and its
net sales and operating profit are expected to improve.
Russia's poor economic situation is estimated to turn into growth, and the
purchasing power of consumers is expected to improve. The local procurement of
bakery raw materials has increased in Russia to replace imported raw materials.
This aims to respond to changes in demand by developing a product range with
more competitive prices and to the ongoing campaign to favor domestic products
in Russia. The aim is to increase the proportion of local raw materials above
50%. Local procurement has been decentralized and there are already dozens of
significant local production partners. In this market area, Leipurin will
maintain its high profitability, strengthen its market position and seek growth
in the bread, confectionery and OOH sectors.
The OOH market is a significant new area for Leipurin, and the company will
continue its growth in this sector, particularly in Finland and the western
markets.
In machine operations, machine investments are expected to increase in Finland
and the Baltic countries. In addition, a moderate increase in investments is
expected in Russia. In terms of machine operations, Leipurin will continue to
strengthen its agent network in Western Europe and the Middle East.
The company's strong investments in the improved profitability of machine
operations and expansion of sales into new market areas produced a record-high
order book at the end of the year, which ensures that the result of machine
operations will develop positively 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.
10-12/2016 10-12/2015 Change % 1-12/2016 1-12/2015 Change %
Net sales, MEUR 64.9 53.6 21.1 240.3 215.3 11.6
Operating profit,
MEUR *) 2.5 1.9 31.6 10.1 10.4 -2.9
Operating profit, % 3.9 3.5 4.2 4.8
*) The operating profit of the year 2015 includes EUR 0.6 million in charges
imposed by Finnish Customs and related advisor fees, of which EUR 0.2 million
were recognized in the fourth quarter.
The prices of plastic raw materials continued to decrease during the fourth
quarter, while the prices of chemicals essential to Telko increased during the
quarter.
In the fourth quarter, Telko's net sales grew by 21% to EUR 64.9 million (53.6).
Operating profit improved to EUR 2.5 million (1.9). The most significant reason
for this increase in the operating profit was the improved profitability in
western markets. The operating profit rate increased from the corresponding
period in the previous year.
In Russia, Ukraine and other CIS countries, net sales increased during the
fourth quarter by 26% compared with the comparative period. The operating profit
decreased notably, with the operating profit rate being clearly below 5%. The
Russian ruble, a currency important to Telko, strengthened by approximately 9%
from the previous quarter, which temporarily reduced the profitability of the
Russian unit. Main reasons for this poor profitability were the relatively
larger proportion of volume products from net sales, compared with the western
markets, and decrease in their prices. In addition, changes in exchange rates
between the sale and procurement of products temporarily reduced the
profitability of products sold in eastern markets. Furthermore, strategic
investments in the local sales network covering the whole of Russia increased
costs. However, this investment following the regional growth strategy is
expected to have a positive impact on net sales and operating result in Russia.
In the eastern markets, the operating environment continued to be a challenging
one in 2016, even though the increase in oil prices strengthened the value of
the ruble nearly throughout the year and also improved Russia's economic
outlook. In the western markets, improvements in the operating environment
supported demand, which increased profitability in the area.
In 2016, net sales increased to a record-high level at EUR 240.3 (215.3)
million. The increase in the net sales accelerated towards the end of the year
and the full-year net sales grew by 12%, regardless of the prices of plastic and
industrial chemical raw materials being lower than on average. The increase in
the net sales was mainly attributable to new customer accounts, new principals
and growth in sales volumes. In 2016, operating profit stood at EUR 10.1 (10.4)
million.
Net sales in the eastern markets grew by 16% in 2016, amounting to EUR 110.8
(95.5) million. Telko's net sales grew by 13% in Russia, by 18% in Ukraine and
by 5% in the western markets. Sales volumes of plastics and chemicals grew both
in the east and the west. In the western markets, the operating profit and the
operating profit rate increased, while they fell in the eastern markets.
Outlook for Telko for 2017
The prices of oil and petrochemical products are expected to remain low. The
expected positive recovery of the eastern markets supports Telko's profitability
development in the region. Telko's financial development in the western markets
is expected to recover during 2017.
In addition to growth, Telko focuses on improving its relative profitability.
Increasing the proportion of technical products of a higher value will improve
relative profitability, especially in the western markets. Telko will continue
to operate in the eastern markets in accordance with its regional strategy by
establishing and strengthening its regional units. Telko will investigate
possible new operating countries in growth markets in the east and Middle East.
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.
10-12/2016 10-12/2015 Change % 1-12/2016 1-12/2015 Change %
Net sales, MEUR 8.3 17.1 -51.5 33.0 36.5 -9.6
Operating profit,
MEUR*) 0.0 0.6 -100.0 -0.1 -1.2 91.7
Operating profit,
% 0.0 3.5 -0.3 -3.3
*) In 2015, the operating profit included a EUR 1.3 million goodwill impairment
loss recognized in the first quarter.
Total sales of computers decreased in Finland from the comparative period.
However, sales of special rugged computers and tablets designed for demanding
mobile knowledge work increased during 2016. In terms of decentralized energy
production, the sales of solar power systems, in particular, have increased, and
this increase is expected to continue.
Kauko's net sales fell by 52% in the fourth quarter, amounting to EUR 8.3 (17.1)
million. During the comparative period, the net sales and operating profit were
increased by project deliveries in China. Operating profit stood at EUR 0.0
(0.6) million. The net sales of mobile knowledge work fell slightly from the
comparative period, while the operating profit, including deliveries to
healthcare sector, produced positive results. The net sales of energy-efficiency
equipment grew.
IT deliveries to the healthcare sector decreased clearly, net sales fell and the
operations produced a loss during the fourth quarter. Key employees resigned
from the organization of mobile IT units delivered to hospitals in Finland and
Germany. Kauko will investigate and identify whether the non-compete clause has
been breached and whether confidential positions have been misused. The
organizational changes reduced the net sales of the unit during the fourth
quarter. Reorganizations have been made in Finland and Germany.
In 2016, Kauko's net sales fell by 10%, amounting to EUR 33.0 (36.5) million.
Operating result stood at EUR -0.1 (-1.2) million. During the comparative
period, operating result decreased due to the divestment of the Industrial
business, in conjunction with which Aspo assessed the goodwill of the Kauko
segment, and recognized an impairment loss of EUR 1.3 million.
In 2016, the sale of energy-efficiency equipment developed well, compared with
the comparative period. Solar power systems showed the fastest growth. The sale
of air source heat pumps was at the level of the comparative period. Project
deliveries in China fell clearly from the comparative period, due to the smaller
number of projects.
In the spring, the name Kaukomarkkinat was changed to Kauko, and the company
underwent revised its identity and completely changed its customer
communications in accordance with the new strategy. According to its new
strategy, Kauko continued to expand its service range and invested in the
development and sale of solutions for demanding mobile knowledge work. In
addition, the company launched new business development projects that required
the recruitment of new technical and commercial specialists and the further
development of internal operating models.
Outlook for Kauko for 2017
The net sales and profitability of solutions for mobile knowledge work are
expected to improve. Kauko offers effectively integrated and customized complete
solutions that combine application, hardware and other services. Application
operations, in particular, are expected to improve their profitability. Service
operations will be expanded by making a stronger shift towards complete
solutions. In the markets of rugged computers, the sale of laptops is expected
to decrease and the sale of tablets to increase. Kauko offers different mobile
IT solutions for healthcare sector to improve the efficiency of the nursing
staff. Kauko's German-built computer is expected to be available for sale during
the first quarter. This new computer allows sales to other OEM channels, as
well.
The market of decentralized energy production solutions is expected to continue
its growth, especially with regard to solar power. The order book is at an
exceptionally good level.
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.
10-12/2016 10-12/2015 Change % 1-12/2016 1-12/2015 Change %
Net sales, MEUR 0.0 0.0 0.0 0.0 0.0 0.0
Operating profit,
MEUR -1.0 -1.2 16.7 -4.2 -5.7 26.3
The operating profit of other operations was EUR -1.0 (-1.2) million for the
fourth quarter and EUR -4.2 (-5.7) million for the financial year. The cost
efficiency of other operations rose to the target level during the financial
year.
FINANCING
The Group's cash and cash equivalents amounted to EUR 22.6 (23.9) million. The
consolidated balance sheet included a total of EUR 125.4 (127.9) million in
interest-bearing liabilities. The average rate of interest-bearing liabilities
was 1.8% (1.7%) at the end of the financial year. Non-interest-bearing
liabilities totaled EUR 69.8 (74.3) million.
Aspo Group's gearing was 89.8% (101.4%) and its equity ratio was 37.4% (33.8%).
The Group's net cash from operating activities in January-December stood at EUR
16.2 (25.0) million. During the financial year, the change in working capital
was EUR -10.6 (-4.2) million. Working capital was tied, in particular, to the
strong growth of Telko. Net cash from investing activities totaled EUR -6.1 (-
9.9) million and was affected positively by the EU subsidy of EUR 2.1 million
received by ESL Shipping. During the comparative period, the net cash from
investing activities was positively affected by a sales gain of EUR 4.9 million
from Alandia shares. The Group's free cash flow (net cash from operating
activities + net cash from investing activities) was EUR 10.1 (15.1) million.
In November, ESL Shipping Ltd signed vessel financing agreements of EUR 50
million to finance its newbuilding projects.The loan period of the two separate
agreements is seven years, and the repayment schedule includes a grace period of
three years and a payback profile corresponding to a loan period of 12 years.
The financing agreements will be fully used after the completion of the vessels,
no later than in 2018. The new agreements extend the average maturity of Aspo
Group's financing and, on their part, reduce the average interest rate of
financing. In June, Aspo signed a revolving credit facility agreement of EUR 20
million. Its maturity is three years, and the agreement replaced an expiring
revolving credit facility agreement of the same amount.
On May 27, 2016, Aspo issued a new hybrid bond of EUR 25 million, treated as
equity in the consolidated balance sheet. 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. In
May 2016, Aspo issued a tender offer to redeem EUR 15.4 million of the EUR 20
million hybrid bond issued in November 2013. The remaining capital of EUR 4.6
million was redeemed on November 18, 2016, in compliance with the terms and
conditions of the loan.
The amount of committed revolving credit facilities signed between Aspo and its
main financing banks stood at EUR 40 million at the end of the financial year.
At the end of the year, the revolving credit facilities remained fully unused. A
revolving credit facility EUR 20 million will mature in 2017. Aspo's EUR 80
million commercial paper program remained fully unused.
Aspo has hedged its interest rate risk by means of an interest rate swap. Its
fair value on December 31, 2016 was EUR -0.6 (-0.7) million. The financial
instrument is 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 36.2 million, and their fair value was EUR 1.7 (0.1) million on December
31, 2016. The financial instrument is on level 2 of the fair value hierarchy.
INVESTMENTS
In 2016, the Group's investments stood at EUR 6.9 (15.1) million, mainly
consisting of ESL Shipping's ship docking and maintenance investments, and
advance payments for the shipping company's upcoming LNG-fueled dry cargo
vessels. The EU supports energy-efficiency and environmental investments in
ships. ESL Shipping will receive, at most, EUR 5.9 million in subsidies in
2016-2019, of which EUR 2.1 million was paid during the fourth quarter. In
addition, investments were increased by the takeover of Telko's new business
operation in Finland.
Investments by segment, acquisitions excluded
10-12/2016 10-12/2015 Change 1-12/2016 1-12/2015 Change
MEUR MEUR % MEUR MEUR %
ESL Shipping 2.4 9.7 -75.3 5.0 13.2 -62.1
Leipurin 0.2 0.1 100.0 0.3 0.5 -40.0
Telko 0.6 0.4 50.0 1.4 1.0 40.0
Kauko 0.0 0.0 - 0.0 0.1 -100.0
Other operations 0.0 0.2 -100.0 0.2 0.3 -33.3
Total 3.2 10.4 -69.2 6.9 15.1 -54.3
PERSONNEL
Personnel by segment, year-end
12/2016 12/2015 Change %
ESL Shipping 226 223 1.3
Leipurin 322 299 7.7
Telko 280 265 5.7
Kauko 42 46 -8.7
Other operations 25 24 4.2
Total 895 857 4.4
At the end of the year Aspo Group had 895 employees (857). The number of
personnel has increased as a result of the expansion of Leipurin and Telko in
the east.
Rewarding
Aspo Group applies a profit bonus system which was adopted in 2013. The profit
bonus system applied to Finnish personnel is linked with the personnel fund so
that the bonus can be invested in the personnel fund or withdrawn in cash. The
long-term goal of the funding system is that the personnel will become a
significant shareholder group in the company. All persons working at Aspo
Group's Finnish companies are members of the personnel fund.
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 in order to pay taxes.
The reward from the 2016 earnings period was based on the Group's earnings per
share (EPS). On the basis of the 2016 earnings period, employees included in the
plan will receive 26,040 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 due to ended contracts of employment.
RESEARCH AND DEVELOPMENT
Aspo Group's R&D focuses, according to the nature of each segment, on developing
operations, procedures and products as part of the customer-specific operations,
which means that the development inputs are included in normal operational costs
and are not itemized.
ENVIRONMENT
Aspo Group's operations do not have any significant environmental impact. The
Group companies follow Aspo's environmental policy with the main principle of
continuously improving operations. Throughout its operations, Aspo supports the
principles of sustainable development.
Aspo looks after the environment by taking initiatives and continuously
monitoring the laws and recommendations connected to its operation and any
revisions to these. Aspo wants to be a pioneer in all of its operations and also
anticipates future developments in environmental regulations.
RISKS AND RISK MANAGEMENT
Aspo's operating environment remained a highly challenging one throughout the
year. In general, the economy of each of Aspo's operating countries decreased
throughout the year, but at the end of the year there were signs of recovery in
different areas. In western countries, national economies are growing slowly,
while the decline has slowed down in the east. During the fourth quarter,
imports in Russia, a country important to Aspo, turned into an increase and the
full-year increase in oil prices strengthened the ruble. In Russia, the rate of
inflation stopped at the 2012 level during the fourth quarter and, in
particular, the prices of food products are increasing more slowly than in
previous years.
Cargo prices increased slowly throughout the year. A slow turn for the better
can also be seen in decreasing risks in all of Aspo's businesses. Nevertheless,
quick changes in international politics, exchange rates or commodities markets
may have an impact on demand for and the competitiveness of products of Aspo's
companies. Growth in eastern and western markets was still limited by the slow
demand for investment assets.
Strategic risks
In addition to the western markets, Aspo operates in areas where financial
development may quickly become negative or positive, as a result of which there
may be significant changes in business preconditions.
Due to an increase in the prices of imported products in Russia and Ukraine,
consumer demand slowed down and the economy contracted. During the fourth
quarter, the Russian economy only contracted to a small extent and inflation
slowed down significantly. According to estimates, the Russian economy will
start growing during 2017. Slower consumption demand has affected trade, but the
increase in nominal salaries gives signs of growing consumption. No signs of
further decline were visible in the financial markets and payments in Russia and
Ukraine. Companies are more eager to make investments, while caution still slows
down the sale of investment commodities.
In Russia, the impact of increased prices of imported goods and financial
sanctions has been reduced through the means of local procurement and
production. An increasing volume of raw materials and goods produced in Russia
has been entered into use by the industry, regardless of their lower quality.
This may reduce the position of imported raw materials in the value chain and
the margin level. However, an increase in import volumes may correspondingly
reduce related risks faced by Aspo.
Political risks have increased, which may quickly affect Aspo's operating
environment or decrease free trade in the long term. The weaker economic and
political situation in Aspo's market areas may have made it more difficult to
implement the structural changes defined in Aspo's strategy. This situation may
continue unchanged, but, if the economic and political pressure alleviates, it
may be reversed fairly quickly.
Financial sanctions or any other obstacles caused by the current situation in
Russia may, in part, reduce transportation volumes from Russia and there may be
a decrease in unloading services for large ocean liners at sea. The social
objective to reduce the consumption of coal in energy production in Finland and
the rest of Europe has increased in significance, which may reduce the need to
transport coal. Correspondingly, the need for replacement energy products may
increase transportation. For these reasons, it is difficult to estimate future
transportation volumes. The low level of international cargo indices and a
global increase in vessels, especially in larger size categories, have increased
uncertainty over the long-term profitability of shipping companies, even though
there are signs of stabilization in cargo indices and the number of vessels.
In addition to the internationally poor economic situation and the political
atmosphere, strategic risks are caused by the outlook and production solutions
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 consolidation, or other reasons. These changes may
have negative consequences on operations as the need for transportation
decreases, but they may also be seen as significant opportunities. As a result
of low cargo prices in international shipping, competition over cargoes may also
intensify in the Baltic Sea and also because of mild and iceless winters. To
improve its competitive position, ESL Shipping is building new low-emission
vessels with a high fuel economy suitable for this area and for customers
operating in this area.
Strategic risks are affected by long-term changes in cargo prices, investment
trends, and changes in trade structures, especially in western markets. In the
eastern markets, risks are increased by such factors as political instability,
social structures or the lack of any reaction to the difficulties encountered by
business operations. Any accumulation and discharge of investments in the long
term may cause changes in the competitive situation and customer behavior.
Rapid changes in financial structures may cause risks due to changes in the
customer or principal structure or technologies, and due to unutilized
opportunities that require a quick response. 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
Even though economic uncertainty in Aspo's operating environment decreased
during the period under review, operational risks have remained unchanged. These
include risks related to supply chains and individuals.
The focus of Aspo's growth has for long been on emerging market areas, where
risks that decelerate growth are affected by factors such as the exchange and
interest rates, level of and changes in the global market prices for raw
materials, industrial and commercial investments, customer liquidity, changes in
legislation and import regulations, and inactivity or non-neutrality of the
authorities or corruption.
Economic growth and, alternatively, any decrease in production may have an
impact on demand for raw materials in the eastern markets. Political and
economic instability makes commercial activities more difficult and, if the
situation prolongs, it may also decelerate the growth of Aspo's businesses.
Consumer behavior is also reflected in the risks generated through B-to-B
customers and their risk levels. The growth opportunities presented by emerging
markets boost interest among competitors in launching or expanding business in
these areas. The challenging emerging markets and the escalated situation in
Ukraine have also caused competitors to withdraw from the area, which has
created new potential for Aspo's businesses, increased their market shares and,
in some business areas, even improved profitability. The competition has
returned to normal level, for example, in Ukraine.
Hedging against exchange rate changes is not possible in all situations, and
especially without interruptions. Changes in exchange rates may weaken results
and also reduce equity on the balance sheet as a result of translation
differences. On the other hand, changes in exchange rates may strengthen results
and the 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, even though credit loss risks have increased.
The quantity and probability of the Group's loss risks are assessed regularly. A
bidding process was launched for non-life insurance 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 for
example 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 each business 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 management of operations. The risks of Telko
and ESL Shipping were re-assessed during the fourth quarter, and those of other
businesses will be updated at the beginning of 2017. 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 treasury policy approved by the Board of
Directors.
A more detailed account of the risk management policy and the most significant
risks is available 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 December 31, 2016 was EUR 17,691,729.57 and the
total number of shares was 30,975,524 of which the company held 396,226 shares;
that is 1.3% 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-December 2016, a total of 2,490,725 Aspo Plc shares with a market
value of EUR 17.3 million were traded on Nasdaq Helsinki, in other words, 8.0%
of the shares changed hands. During January-December 2016, the share price
reached a high of EUR 8.21 and a low of EUR 6.00. The average price was EUR
6.95 and the closing price at year-end was EUR 8.18. At the end of the year, the
market value excluding treasury shares was EUR 250.1 million.
The number of Aspo Plc shareholders was 9.236 at year-end. A total of 697.919
shares, or 2.3% of the share capital, were nominee registered or held by non-
domestic shareholders.
Aspo Plc's new trading code (stock symbol) in Nasdaq Helsinki is ASPO.
Previously it was ASU1V. The new trading code was effective on June 27, 2016.
Flagging notification
On May 31, 2016 shareholder Tatu Vehmas informed that Aatos Vehmas and Liisa
Vehmas have authorized him to use the voting rights of Aspo shares owned by them
so that his share of the voting rights in Aspo Plc has increased above five per
cent (5%).
DIVIDEND PROPOSAL
The Board of Directors proposes that EUR 0.42 (0.41) per share be paid in
dividends for the 2016 financial year and that no dividend be paid for treasury
shares held by Aspo Plc. The parent company's distributable funds totaled EUR
31,495,378.54, of which the profit for the financial year amounted to EUR
12,804,309.73. There are a total of 30,579,298 shares entitling to dividends on
the publication date of this financial statement release.
The dividend will be paid in two installments. The first installment of EUR 0.21
per share will be paid to shareholders who are registered in the shareholders'
register maintained by Euroclear Finland Oy on the record date of April
7, 2017. The Board of Directors proposes that the dividend be paid on 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 Oy 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.
If Euroclear Finland Oy adopts the new core system before the meeting of the
Board of Directors, the dividend is expected to be paid a few days earlier.
Before the Board of Directors implements the resolution of the Annual
Shareholders' Meeting, the Board of Directors must, in accordance with the
Finnish Companies Act, assess whether the company's solvency and/or financial
position has changed after the resolution of the Annual Shareholders' Meeting so
that the requirements for dividend distribution in the Finnish Companies Act are
no longer fulfilled. It is a prerequisite for the implementation of the
resolution of the Annual Shareholders' Meeting that the requirements in the
Finnish Companies Act are fulfilled.
MANAGEMENT AND AUDITORS
In 2016, the Annual Shareholders' Meeting re-elected to the Board of Directors
LL.M, MBA Mammu Kaario, LL.M. Roberto Lencioni, B.Sc. (Econ.), eMBA Gustav
Nyberg and M.Sc. (Tech.) Risto Salo and M.Sc. (Econ.) Mikael Laine and D.Sc.
(Econ.) Salla Pöyry were elected as new members of 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 Roberto Lencioni
Chairman of the Audit Committee and Mammu Kaario, Mikael Laine and Salla Pöyry
as committee members.
In 2016, the Board of Directors arranged 11 meetings, of which four were
teleconferences. The average participation rate was 99%.
eMBA Aki Ojanen has acted as the CEO of the company.
The authorized public accountant firm Ernst & Young Oy has been the company's
auditor. Harri Pärssinen, APA, has acted as the auditor in charge.
DECISIONS OF THE SHAREHOLDERS' MEETINGS
Dividend
The Annual Shareholders' Meeting of Aspo Plc on April 7, 2016, approved the
payment of a dividend totaling EUR 0.41 per share according to the Board's
proposal. The dividend's payment date was April 18, 2016.
Shareholders' Nomination Board
The Annual Shareholders' Meeting decided to establish a permanent Shareholders'
Nomination Board to prepare proposals to the Annual Shareholders' Meeting for
the election and remuneration of the members of the Board of Directors and the
remuneration of the Board committees. In addition, the Meeting adopted the
Charter of the Shareholders' Nomination Board.
Board authorizations
Authorization of the Board of Directors to decide on the acquisition of treasury
shares
The Annual Shareholders' Meeting on April 7, 2016 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. The authorization includes
the right to accept treasury shares as a pledge. The authorization will remain
in force until the Annual Shareholders' Meeting in 2017 but not more than 18
months from the approval at the Shareholders' Meeting. The Board of Directors
has not used the authorization.
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 on March 18, 2016 and granted
88,970 treasury shares to employees included in the earnings period 2015 of the
share-based incentive plan 2015-2017.
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.
PROPOSALS OF THE NOMINATION BOARD TO THE SHAREHOLDERS' MEETING
The Shareholders' Nomination Board consists of the representatives of the four
largest shareholders. According to the list of shareholders as of August
31, 2016, the following representatives of the largest shareholders were members
of the Nomination Board which prepared proposals for the Annual Shareholders'
Meeting 2017: Tatu Vehmas, Chairman (Vehmas family); Veronica Timgren (Nyberg
family, including Oy Havsudden Ab); Reima Rytsölä (Varma Mutual Pension
Insurance Company); and Mikko Mursula (Ilmarinen Mutual Pension Insurance
Company). In addition, Gustav Nyberg, Chairman of Aspo Board of Directors, has
acted as an expert member of the Nomination Board.
The Nomination Board of Aspo Plc's shareholders proposes to the Annual
Shareholders' Meeting of Aspo Plc to be held on April 5, 2017 that the Board of
Directors will have six members.
Members of the Board
The Nomination Board proposes that Mammu Kaario, Mikael Laine, Roberto Lencioni,
Gustav Nyberg, Salla Pöyry and Risto Salo, current members of the company's
Board of Directors, be re-elected as members of the Board of Directors for the
term closing at the end of the Annual Shareholders' Meeting 2018.
Remuneration paid to the members of the Board
The Nomination Board proposes that members of the Board of Directors receive the
following monthly remuneration:
* EUR 2,700 per month for members of the Board of Directors (EUR 2,400 per
month in 2016)
* 1.5 × the remuneration paid to ordinary members, i.e. EUR 4,050 per month,
for the Vice Chairman (EUR 3,600 per month in 2016)
* 2 × the remuneration paid to ordinary members, i.e. EUR 5,400 per month, for
the Chairman (EUR 15,500 per month for the full-time Chairman in 2016)
The Nomination Board proposes that the meeting fees paid to members of the Audit
Committee remain unchanged, i.e. EUR 700 per meeting. However, the Nomination
Board proposes that 1.5 × the meeting fee paid to members of the Audit Committee
be paid to the Chairman of the Audit Committee, i.e. EUR 1,050 per meeting (EUR
700 per meeting in 2016). If the Chairman of the Audit Committee is also the
Vice Chairman or the Chairman of the Board of Directors, the Nomination Board
proposes that the fee paid to the Chairman of the Audit Committee is the same as
that paid to members of the Audit Committee. Board members having a full-time
position in an Aspo Group company are not paid a fee.
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 February 15, 2017
ASPO Plc
Board of Directors
ASPO GROUP CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
10-12/2016 10-12/2015
MEUR % MEUR %
Net sales 124.5 100.0 122.1 100.0
Other operating income 0.3 0.2 0.2 0.2
Materials and services -91.0 -73.1 -88.7 -72.6
Employee benefit expenses -10.1 -8.1 -10.4 -8.5
Depreciation, amortization and impairment
losses -3.0 -2.4 -2.9 -2.4
Other operating expenses -14.4 -11.6 -14.1 -11.5
Operating profit 6.3 5.1 6.2 5.1
Financial income and expenses -0.6 -0.5 -2.3 -1.9
Profit before taxes 5.7 4.6 3.9 3.2
Income taxes -0.5 -0.4 -0.2 -0.2
Profit for the period 5.2 4.2 3.7 3.0
Other comprehensive income
Items that may be reclassified to profit or
loss in subsequent periods:
Translation differences 2.1 -2.8
Cash flow hedges 2.2 0.2
Available-for-sale financial assets 0.0
Reclassification 0.0
Income tax on other comprehensive income -0.1 0.0
Other comprehensive income for the period, net
of taxes 4.2 -2.6
Total comprehensive income 9.4 1.1
Profit attributable to shareholders 5.2 3.7
Total comprehensive income attributable to
shareholders 9.4 1.1
Earnings per share, EUR 0.17 0.11
Diluted earnings per share, EUR 0.17 0.11
1-12/2016 1-12/2015
MEUR % MEUR %
Net sales 457.4 100.0 445.8 100.0
Other operating income 1.2 0.3 1.2 0.3
Materials and services -334.7 -73.2 -318.2 -71.4
Employee benefit expenses -40.0 -8.7 -41.0 -9.2
Depreciation, amortization and impairment losses -11.6 -2.5 -12.5 -2.8
Other operating expenses -51.9 -11.3 -54.7 -12.3
Operating profit 20.4 4.5 20.6 4.6
Financial income and expenses -3.0 -0.7 0.7 0.2
Profit before taxes 17.4 3.8 21.3 4.8
Income taxes -1.5 -0.3 -1.5 -0.3
Profit for the period 15.9 3.5 19.8 4.4
Other comprehensive income
Items that may be reclassified to profit or loss
in subsequent periods:
Translation differences 3.2 -5.8
Cash flow hedges 1.4 0.3
Available-for-sale financial assets 1.8
Reclassification -4.9
Income tax on other comprehensive income -0.1 0.6
Other comprehensive income for the period, net
of taxes 4.5 -8.0
Total comprehensive income 20.4 11.8
Profit attributable to shareholders 15.9 19.8
Total comprehensive income attributable to
shareholders 20.4 11.8
Earnings per share, EUR 0.49 0.61
Diluted earnings per share, EUR 0.49 0.61
ASPO GROUP CONSOLIDATED BALANCE SHEET
12/2016 12/2015 Change
MEUR MEUR %
Assets
Other intangible assets 9.4 11.1 -15.3
Goodwill 42.6 42.7 -0.2
Tangible assets 113.3 116.4 -2.7
Available-for-sale financial assets 0.2 0.2 0.0
Receivables 4.9 3.8 28.9
Total non-current assets 170.4 174.2 -2.2
Inventories 56.7 48.4 17.1
Accounts receivable and other receivables 60.0 58.3 2.9
Cash and cash equivalents 22.6 23.9 -5.4
Total current assets 139.3 130.6 6.7
Total assets 309.7 304.8 1.6
Equity and liabilities
Share capital 17.7 17.7 0.0
Other equity 96.8 84.9 14.0
Total equity 114.5 102.6 11.6
Non-current liabilities 121.2 121.1 0.1
Current liabilities 74.0 81.1 -8.8
Total equity and liabilities 309.7 304.8 1.6
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, 2016 17.7 4.3 -0.3 31.9 -2.7 -21.8 73.5 102.6
Comprehensive income:
Profit for the period 15.9 15.9
Translation differences 3.2 3.2
Cash flow hedges* 1.3 1.3
Total comprehensive income 1.3 3.2 15.9 20.4
Transactions with owners:
Dividend payment -12.5 -12.5
Change in hybrid instruments 5.0 -1.2 3.8
Share-based incentive plan 0.4 -0.2 0.2
Transfer of reserves 0.1 -0.1 0.0
Total transactions
with owners 5.1 0.4 -14.0 -8.5
Equity Dec. 31, 2016 17.7 4.3 1.0 37.0 -2.3 -18.6 75.4 114.5
Equity Jan. 1, 2015 17.7 4.3 1.9 32.0 -3.4 -16.0 67.6 104.1
Comprehensive income:
Profit for the period 19.8 19.8
Translation differences -5.8 -5.8
Cash flow hedges* 0.3 0.3
Available-for-sale financial assets* -2.5 -2.5
Total comprehensive income -2.2 -5.8 19.8 11.8
Transactions with owners:
Dividend payment -12.2 -12.2
Interest on hybrid instrument -1.4 -1.4
Share-based incentive plan 0.7 -0.4 0.3
Transfer of reserves -0.1 0.1 0.0
Total transactions
with owners -0.1 0.7 -13.9 -13.3
Equity Dec. 31, 2015 17.7 4.3 -0.3 31.9 -2.7 -21.8 73.5 102.6
* net of taxes
ASPO GROUP CONSOLIDATED CASH FLOW STATEMENT
1-12/2016 1-12/2015
MEUR MEUR
CASH FLOWS FROM OPERATING ACTIVITIES
Operating profit 20.4 20.6
Adjustments to operating profit 11.6 13.4
Change in working capital -10.6 -4.2
Interest paid -3.7 -3.1
Interest received 0.4 0.6
Income taxes paid -1.9 -2.3
Net cash from operating activities 16.2 25.0
CASH FLOWS FROM INVESTING ACTIVITIES
Investments in tangible and intagible assets -5.0 -5.5
Advance payments for vessels -1.3 -9.2
Proceeds from sale of tangible assets 0.2 0.1
Proceeds from available-for sale financial assets 4.9
Subsidiaries acquired, contigent consideration -0.3
Business operations and subsidiaries sold 0.1
Net cash from investing activities -6.1 -9.9
CASH FLOWS FROM FINANCING ACTIVITIES
Change in current loans -3.5 -21.9
Proceeds from non-current loans 7.2 61.0
Repayments of non-current loans -6.7 -35.4
Repayments of hybrid instrument -20.3
Hybrid instrument, interests -0.9 -1.4
Proceeds from hybrid instrument issue 24.8
Dividends distributed -12.5 -12.2
Net cash from financing activities -11.9 -9.9
Change in cash and cash equivalents -1.8 5.2
Cash and cash equivalents Jan. 1 23.9 19.3
Translation differences 0.5 -0.6
Cash and cash equivalents at year-end 22.6 23.9
ASPO GROUP ASSETS AND LIABILITIES BY SEGMENT
Segments' assets, MEUR
12/2016 12/2015
ESL Shipping
Leipurin 121.1 123.8
Telko 62.8 61.8
Kauko 78.1 65.7
Unallocated items 20.0 26.8
Total 27.7 26.7
309.7 304.8
Segments' liabilities, MEUR
12/2016 12/2015
ESL Shipping 9.2 11.0
Leipurin 14.3 14.9
Telko 32.0 27.1
Kauko 5.4 12.6
Unallocated items 134.3 136.6
Total 195.2 202.2
ASPO GROUP CONTINGENT LIABILITIES
12/2016 12/2015
MEUR MEUR
Collateral for own debt:
Mortgages given 104,5 104.5
Guarantees 40.3 45.9
Other contingent liabilities 38.1 37.2
Operating lease rentals payable 23.6 24.8
Guarantees given on behalf of joint ventures 0.2
Derivative contracts, fair values, net
-Currency forwards 1.7 0.1
-Interest rate swaps -0.6 -0.7
ACCOUNTING PRINCIPLES
Aspo Plc's financial statement release has been prepared in accordance with the
principles of IAS 34 Interim Financial Reporting. As of January 1, 2016, Aspo
applies certain new or amended IFRS standards and IFRIC interpretations as
described in the 2015 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, 2015. The information in this
report is unaudited.
Aspo Plc has adopted 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 2015 report.
SEGMENT REPORTING
Aspo Group's operational 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, Wednesday February
15, 2017 at 14.00 at the Paavo Nurmi cabinet at Hotel Kämp, Pohjoisesplanadi
29, 00100 Helsinki.
ANNUAL SHAREHOLDERS' MEETING
The Aspo Plc Annual Shareholders' Meeting is scheduled to be held on Wednesday,
April 5, 2017, at 14.00 in Helsinki.
FINANCIAL INFORMATION IN 2017
Aspo's financial statement will be published on March 15, 2017 at the latest in
Finnish and in English. You can read and order the report on our website at
www.aspo.com.
In 2017, Aspo Plc will publish two interim reports and a half year financial
report:
- interim report for January-March on Tuesday, May 9, 2017
- half year financial report for January-June on Tuesday, August 15, 2017
- interim report for January-September on Thursday, October 26, 2017.
Helsinki, February 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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