2017-10-26 09:00:16 CEST
2017-10-26 09:00:16 CEST
REGULATED INFORMATION
Aspo - Interim report (Q1 and Q3)
Aspo Group interim report, January 1 to September 30, 2017
ASPO PLC INTERIM REPORT October 26, 2017, at 10:00 a.m.
ASPO GROUP INTERIM REPORT, JANUARY 1 TO SEPTEMBER 30, 2017
Aspo Q3: Operating profit increased to EUR 7.1 (6.0) million
(Figures from the corresponding period in 2016 are presented in brackets.)
January-September 2017
- Aspo's net sales amounted to EUR 370.0 (332.9) million
- Operating profit stood at EUR 16.6 (14.1) million.
- The operating profit of ESL Shipping stood at EUR 9.4 (8.5) million, the
operating profit of Leipurin was EUR 2.4 (1.3) million, the operating profit of
Telko amounted to EUR 7.8 (7.6) million, and the operating profit of Kauko stood
at EUR -0.2 (-0.1) million. The operating result of other operations stood at
EUR -2.8 (-3.2) million.
- Profit for the period stood at EUR 13.9 (10.7) million.
- Earnings per share increased by 25% and were EUR 0.40 (0.32).
- Net cash from operating activities during January-September was EUR 5.7 (-
2.5) million.
July-September 2017
- Aspo's net sales increased to EUR 127.2 (118.2) million.
- Operating profit improved and stood at EUR 7.1 (6.0) million.
- Profit for the quarter stood at EUR 5.9 (5.0) million.
- The operating profit of ESL Shipping stood at EUR 3.3 (3.4) million. The
operating profit of Telko increased to EUR 3.1 (2.3) million. The operating
profit of Leipurin improved to EUR 1.4 (0.4) million. The operating profit of
Kauko decreased to EUR 0.2 (0.5) million.
- Earnings per share were EUR 0.19 (0.16).
- The second of the two most environmentally friendly dry cargo vessels in the
world was named ms Haaga. Both of the vessels named this year can use biogas,
liquefied natural gas or diesel in their energy production. The vessels will
start operations in the Baltic Sea during the first half of 2018.
- The operating profit of Leipurin improved significantly to EUR 1.4 (0.4)
million.
- Telko improved its profitability, and its operating profit stood at EUR 3.1
(2.3) million.
Payment of dividends
- The first installment of the EUR 0.42 dividend decided by the Annual
Shareholders' Meeting, EUR 0.21 per share, was paid in April. The second
installment, EUR 0.21 per share, will be paid on November 6, 2017.
Aspo's guidance remains unchanged
Aspo's operating profit will be EUR 23-26 (20.4) million in 2017.
KEY FIGURES
7-9/ 7-9/ Change 1-9/ 1-9/ Change 1-12/
2017 2016 % 2017 2016 % 2016
Net sales, MEUR 127.2 118.2 7.6 370.0 332.9 11.1 457.4
Operating profit, MEUR 7.1 6.0 18.3 16.6 14.1 17.7 20.4
Operating profit, % 5.6 5.1 4.5 4.2 4.5
Profit before taxes, MEUR 6.4 5.2 23.1 15.0 11.7 28.2 17.4
Profit for the period,
MEUR 5.9 5.0 18.0 13.9 10.7 29.9 15.9
Earnings per share, EUR 0.19 0.16 18.8 0.40 0.32 25.0 0.49
Net cash from operating
activities, MEUR 2.2 8.5 -74.1 5.7 -2.5 328.0 16.2
Equity per share, EUR 3.54 3.59 3.75
Return on equity, % (ROE) 16.7 13.4 14.6
Equity ratio, % 33.6 35.6 37.4
Gearing, % 109.7 103.8 89.8
ESL Shipping, operating
profit, MEUR 3.3 3.4 -2.9 9.4 8.5 10.6 12.6
Leipurin, operating
profit, MEUR 1.4 0.4 250.0 2.4 1.3 84.6 2.0
Telko, operating profit,
MEUR 3.1 2.3 34.8 7.8 7.6 2.6 10.1
Kauko, operating profit,
MEUR 0.2 0.5 -60.0 -0.2 -0.1 -100.0 -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 or strengthen. In
Russia, the national economy and industrial production have turned into growth.
However, general political risks have increased, which may have a rapid impact
on the operating environment or reduce free trade in the long term.
AKI OJANEN, CEO OF ASPO GROUP, COMMENTS ON THE THIRD QUARTER
"Aspo's strong result development continued during the third quarter. I am
pleased that all of our businesses did well, and our operating profit increased
to EUR 7.1 (6.0) million during the third quarter, even though the Russian
market and global sea freight markets, which are important to Aspo, are still on
their way to returning to the normal market situation. Our activities aimed at
reaching Aspo's long-term financial targets by 2020 are only partially visible.
Our financial performance improved notably in January to September, and our
earnings per share have grown even stronger than our operating profit.
In spring 2017, Aspo shifted to a practice of paying dividends in two
installments. This practice will help Aspo to improve its cash flow management,
produce steadier cash flow to our shareholders and reduce volatility of the
share price. Aspo will pay the second installment of the dividend for the 2016
financial year, EUR 0.21 per share, in November 2017.
Leipurin made the biggest leap in terms of results. We announced earlier that
Leipurin will return to its normal profit level as a result of realigned
operations. The significantly improved operating profit of Leipurin during the
third quarter is an indication of the ability of the new management and
personnel of Leipurin to make determined changes in business and to succeed, for
example, in the challenging Russian markets, as well as the positive turnaround
in the profitability of machinery operations.
Of Aspo's businesses, the operating profit of ESL Shipping were close to the
comparative period, at EUR 3.3 (3.4) million, and its operating profit rate was
18%. The goal of ESL Shipping is to have an operating profit rate of 20-24% in
2020.
Telko has grown into Aspo's largest business. During the economic recession in
the EU and the economic crisis in Russia, Telko focused on its regional strategy
in the east, on expanding its operations to new countries with transition
economies, on improving its efficiency, and on offering added-value products in
the western markets. Telko's net sales have shown a strong increase, while its
results have been strained by the company's investments, for example, as a
result of increased personnel costs. During the third quarter, Telko's results
were already satisfactory, driven by positive development. Its operating profit
increased to EUR 3.1 million, including EUR 0.4 million in costs arising from
the discontinued terminal project in St. Petersburg, Russia, and Telko's
personnel arrangements. Profitability increased, especially in the eastern
markets, where Telko has, for example, invested in improving the efficiency of
logistics.
Kauko, our smallest business, has streamlined its operations. The mobile
knowledge work unit has continued to focus on the development of total
solutions, and the separate energy-efficiency equipment unit has grown
significantly since Kauko concentrated on an increase in the solar power markets
at the correct time. Kauko's structure will be even more streamlined after
Chinese operations are discontinued later this year."
ASPO GROUP
NET SALES
Net sales by segment
7-9/2017 7-9/2016 Change 1-9/2017 1-9/2016 Change 1-12/2016
MEUR MEUR % MEUR MEUR % MEUR
ESL Shipping 18.3 17.9 2.2 56.7 50.8 11.6 71.4
Leipurin 29.9 27.0 10.7 89.4 82.0 9.0 112.7
Telko 67.3 63.8 5.5 196.6 175.4 12.1 240.3
Kauko 11.7 9.5 23.2 27.3 24.7 10.5 33.0
Other operations 0.0 0.0 - 0.0 0.0 - 0.0
Total 127.2 118.2 7.6 370.0 332.9 11.1 457.4
There is no considerable inter-segment net sales.
Net sales by market area
7-9/2017 7-9/2016 Change 1-9/2017 1-9/2016 Change 1-12/2016
MEUR MEUR % MEUR MEUR % MEUR
Finland 39.4 38.9 1.3 120.1 110.7 8.5 149.4
Scandinavia 11.2 12.0 -6.7 37.3 35.4 5.4 47.5
Baltic
countries 15.3 13.1 16.8 42.1 37.7 11.7 50.4
Russia, Ukraine +
other CIS
countries 43.2 38.9 11.1 122.6 103.6 18.3 145.6
Other
countries 18.1 15.3 18.3 47.9 45.5 5.3 64.5
Total 127.2 118.2 7.6 370.0 332.9 11.1 457.4
During the third quarter, net sales increased in all Aspo's market areas, apart
from Scandinavia. Absolute growth, measured in euros, was highest in Russia,
Ukraine and other CIS countries, and relative growth in the "Other countries"
market area. In Scandinavia, net sales decreased as a result of lower
transportation volumes in the steel industry, as customers reduced the stock
levels of their raw materials.
EARNINGS
Operating profit by segment
7-9/2017 7-9/2016 Change 1-9/2017 1-9/2016 Change 1-12/2016
MEUR MEUR % MEUR MEUR % MEUR
ESL Shipping 3.3 3.4 -2.9 9.4 8.5 10.6 12.6
Leipurin 1.4 0.4 250.0 2.4 1.3 84.6 2.0
Telko 3.1 2.3 34.8 7.8 7.6 2.6 10.1
Kauko 0.2 0.5 -60.0 -0.2 -0.1 -100.0 -0.1
Other operations -0.9 -0.6 -50.0 -2.8 -3.2 12.5 -4.2
Total 7.1 6.0 18.3 16.6 14.1 17.7 20.4
Earnings per share
Earnings per share were EUR 0.40 (0.32) for January-September. Equity per share
was EUR 3.54 (3.59).
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 January-September was 4.5% (4.2), return on equity
was 16.7% (13.4), and gearing was 109.7% (103.8).
FUTURE OUTLOOK
The global economy is expected to continue its growth. The general uncertainty
and weak 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. Economic growth in the EU,
and particularly in Finland, has accelerated, and export volumes have increased
significantly. This positive trend is expected to continue.
The price of oil is likely to remain at the current level. 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 businesses. International dry cargo prices are expected to
remain low or to increase, and the shipping company has secured the use of its
capacity through long-term agreements.
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 16 vessels, of
which the company owned 13. One vessel is operated under a long-term lease
agreement and, starting from the middle of September, two smaller vessels have
been time-chartered.
7-9/2017 7-9/2016 Change % 1-9/2017 1-9/2016 Change % 1-12/2016
Net sales,
MEUR 18.3 17.9 2.2 56.7 50.8 11.6 71.4
Operating
profit, MEUR 3.3 3.4 -2.9 9.4 8.5 10.6 12.6
Operating
profit, % 18.0 19.0 16.6 16.7 17.6
The competitive edge of ESL Shipping is based on the company's ability to
operate efficiently and reliably in arctic ice regions and to load and unload
ships at sea. During the third 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. One of the two Supramax
vessels has operated from the Canadian arctic region to Europe.
General market prices of dry bulk cargo increased during the third quarter.
However, cargo prices are still on a quite low level compared with the long-term
average.
Net sales of ESL Shipping in July-September increased to EUR 18.3 (17.9)
million. Transportation volumes in the steel industry decreased significantly
from the comparative period, as customers reduced their raw material stock
levels. Transportation volumes in other customer sectors increased or remained
unchanged. During the third quarter, the cargo volume carried by ESL Shipping
was at the same level as in the comparative period, i.e. 2.8 (2.8) million tons.
The operating profit in July-September of EUR 3.3 (3.4) million was at a similar
level as in the comparative period. The operating profit rate remained at a good
level, at 18% (19). The Supramax vessels produced positive results during the
third quarter, while the profitability of one vessel in arctic operations
decreased as a result of the weakening of the contractual currency, the US
dollar. One vessel unit underwent a scheduled docking in the third quarter.
During the review period, two vessels underwent exceptional maintenance at port
due to equipment breakage and damage caused by the port operator, as a result of
which the number of off hire days was higher than in the comparative period.
Loading and unloading of large ocean liners at sea was significantly more active
than in the previous year, and operations succeeded well. In early fall, there
have been bottlenecks at loading ports for the energy industry, which have
caused longer waiting times than in the comparative period and decreased the
efficiency of energy transportation.
As part of its growth strategy, the shipping company launched new operations at
the end of the review period in the Baltic Sea and the North Sea regarding a
smaller vessel class. These operations support the flexible customer service
offered to existing customers, regardless of the transportation batch size, and
enable the shipping company to expand its customer portfolio to new customers
and material flows. In the operating model that is new to the shipping company,
vessels will be chartered from the market for the transportation volumes. The
most sought-after volumes include renewable bioenergy, recycled raw materials,
such as recycled energy fuel or steel, wood-based products and grain. The new
operating model allows ESL Shipping to expand into new vessel classes with no
major capital investments. The model enables a customer-driven operating method
and flexible fleet management. When expanded, the operating model will tie up
less capital and increase the operating profit, while it may decrease the
operating profit rate.
At the end of the review period, one of the shipping company's two new dry bulk
cargo vessels, which are the most environmentally friendly vessels in the world,
was named ms Haaga, following the tradition of naming vessels for places in
Helsinki. The 160-meter LNG vessel of 26,000 dwt produces more than 50% less
carbon dioxide emissions than the previous vessel generation. These new vessels
named this year will improve the shipping company's profitability and, for
example, their unique autonomous load-handling solution will improve safety and
efficiency at port even further.
The construction of these vessels is proceeding as planned, and they will start
operating in the Baltic Sea during the first half of 2018. 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
equipment suppliers account for roughly 60 percent of the total value of the
vessel investments.
The shipping company has negotiated the manning of its new vessels and the
opportunity 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. During the review period, one vessel was assigned with a mixed
crew, in addition to the vessel that received a mixed crew during the previous
quarter.
The net sales of ESL Shipping in January-September increased by 12% to EUR 56.7
(50.8) million. The operating profit increased by 11% to EUR 9.4 (8.5) million.
Outlook for ESL Shipping
The market cargo prices of large dry cargo vessels are at a higher level than in
the previous year. Economies in the shipping company's main market areas are
expected to develop positively.
In the vessel classes operated by ESL Shipping, only a few dry cargo vessels
have been ordered from shipyards, as a result of which the balance between
supply and demand is expected to improve in the coming years. In the future, the
trend will be accelerated by the stricter environmental regulations set for
shipping operations, which may reduce the use of older vessels, particularly in
the Baltic Sea.
Most of the shipping company's transportation capacity utilization has been
secured in the Baltic Sea and Northern Europe through long-term agreements. At
the end of the year, demand for loading and unloading operations for large ocean
liners at sea, a segment very important to the shipping company, is expected to
be higher than in the comparative period. 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. During the
rest of the year, total transportation volumes for the energy industry are
expected to be higher than during the previous year as a result of the increased
demand for the transportation of both biofuels and coal.
Regardless of the high general demand in the steel industry, transportation
volumes are expected to decrease at the end of the year from the previous year
due to annual maintenance schedules and customers' growing need to optimize
their stock levels. In the long term, transportation volumes are expected to
return to normal.
According to its strategy, the shipping company will continue to expand its
customer base, in particular to customer transportation, where both the
company's range of different cargos and its operating area can be expanded. The
new operations of smaller time-chartered vessels will be expanded during the
rest of the year.
In the final quarter of 2017, one vessel will be docked for maintenance.
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.
7-9/2017 7-9/2016 Change % 1-9/2017 1-9/2016 Change % 1-12/2016
Net sales,
MEUR 29.9 27.0 10.7 89.4 82.0 9.0 112.7
Operating
profit, MEUR 1.4 0.4 250.0 2.4 1.3 84.6 2.0
Operating
profit, % 4.7 1.5 2.7 1.6 1.8
*) 7-9/2017 and 1-9/2017 include a sales gain of EUR 0.4 million from the
divestment of the meat industry raw materials business
The consumer price level for food products in Finland remained unchanged during
the third quarter, but the price level has gone up in the eastern markets. The
prices of raw materials important to Leipurin increased slightly from the
comparative period.
The market for 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 markets, demand for products in the higher price
categories remains lower than in the previous years due to the financial crisis.
A change has taken place in Russia, as a result of which bakeries are no longer
responsible for retail bread wastage; instead, any unsold bread is covered by
the retail industry. This change has significantly reduced the manufacture of
packed bread. The snack product market is increasing in all market areas. The
Russian national economy, which is important to Leipurin, has turned to an
upward trend, the rate of inflation has decreased, the decline in consumer
purchasing power has stopped, and retail volumes have continued their recovery.
The net sales of Leipurin in July-September increased from the comparative
period, to EUR 29.9 (27.0) million. Growth was strongest in the eastern markets
and in the bakery machinery operations. The operating profit increased from the
comparative period to EUR 1.4 (0.4) million, including a sales gain of EUR 0.4
million from the divestment of the meat industry raw materials business. The
operating profit rate during the quarter improved to 4.7% (1.5). Profitability
was particularly improved by machinery operations and eastern markets.
The net sales of bakery raw materials in Russia, Ukraine and other CIS countries
increased in the third quarter by 13%, to EUR 7.4 (6.5) million. The operating
profit rate was 8% (8). Net sales in the eastern markets, including machinery
sales, increased by approximately 15% to EUR 8.3 (7.2) million. The operating
profit rate was approximately 7% (7).
In the Finnish raw material operations, net sales to artisan and OOH customers
continued to increase, while sales to industrial sectors decreased, mainly due
to the business divestment completed at the end of August, in which Leipurin
divested its meat industry raw materials business to MP Maustepalvelut Oy. This
divestment has an impact of approximately EUR 4 million per year on the net
sales of Leipurin. On the whole, the net sales of bakery raw materials in
Finland increased from the comparative period. In the western markets, sales to
the OOH sector increased, while they decreased to the industrial sector.
Investments in growth and new business operations slowed down the development of
the operating profit of raw material operations in the western markets. During
the third quarter, the G'lato Fresco fresh ice cream gelateria was opened at the
Forum shopping mall in Helsinki to support the OOH business. G'lato Fresco,
together with the two cafés opened previously in Espoo relating to test bakery
operations, acts as a conceptual model site for the entire Leipurin operating
area.
The net sales of machinery operations increased by nearly 90% as a result of
increased Leipurin's own machine production and boosted sales of principal
equipment. The Russian economic crisis at the end of 2014 cut off machinery
sales to Russia. The company turned to new market areas in Europe and outside
Europe. At the beginning of 2017, the order book for the company's own
production reached a record level, and the machinery operations has stabilized
the profitability level of its operations. The number of deliveries increased
during the third quarter. At the end of the review period, the order book was at
a good level, extending to the first half of 2018.
The net sales of Leipurin in January-September increased by 9%, to EUR 89.4
(82.0) million. The operating profit increased significantly, to EUR 2.4 (1.3)
million, including a sales gain of EUR 0.4 million from the divestment of the
meat industry raw materials business. Net sales in Russia, Ukraine and other CIS
countries increased by 18% to EUR 24.7 (20.9) million. Profitability in this
market area remained at the comparative period's level, at 6% (6).
Outlook for Leipurin
The market situation is expected to remain challenging in Leipurin's key
markets. The market position is expected to remain strong in the industrial
baking sector in Finland, Russia and the Baltic region. Leipurin's net sales and
operating profit will increase in 2017.
The weakening of the economic situation in Russia is estimated to have stopped,
and consumer purchasing power is expected to improve. The local procurement of
bakery raw materials has been increased in Russia to replace imported raw
materials. The aim 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 even further. 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 area of growth for Leipurin. Leipurin will
continue to invest in the OOH market, particularly in Finland and the western
markets, where Leipurin is responding to the growing demand of, for example,
chain customers, such as cafés.
In machinery operations, equipment investments of bakeries are expected to
increase in Finland and the Baltic countries. In addition, a moderate increase
in investments is expected in Russia. Leipurin's machinery operations will
continue to strengthen the sales and agent network in Western Europe and the
Middle East. Leipurin will continue to develop the profitability and production
processes of own machine production. As a result of the improved competitiveness
of machinery operations and realigned sales, customers of machinery operations
now also come from food industries other than the bakery industry. The increase
in Leipurin's own machine production is significantly driven by the need of
customers to cool or freeze products in their production processes.
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, China and Iran.
7-9/2017 7-9/2016 Change % 1-9/2017 1-9/2016 Change % 1-12/2016
Net sales,
MEUR 67.3 63.8 5.5 196.6 175.4 12.1 240.3
Operating
profit, MEUR 3.1 2.3 34.8 7.8 7.6 2.6 10.1
Operating
profit, % 4.6 3.6 4.0 4.3 4.2
The general development in the market environment has continued to be positive
in Telko's operating countries. In particular, the Russian economy is growing,
and investments have turned to an increase. The prices of plastics increased
throughout the third quarter, and those of chemicals remained high. There were
problems in the availability of some chemicals, partly due to weather conditions
in the southern coastal area of the USA.
The net sales of Telko in July-September grew by 6% from the comparative period,
to EUR 67.3 (63.8) million. This increase was affected, for example, by price
levels that were higher than in the comparative period. The net sales increased
mainly in the western markets and Ukraine. During the third quarter, Telko began
the representation of BP-Castrol's Marine lubricants for shipping companies in
Finland.
The operating profit in July-September increased to EUR 3.1 (2.3) million. The
operating profit rate was 4.6% (3.6). Profitability improved significantly in
the eastern markets, in particular. In the second quarter, Telko launched a
program to lower fixed costs and to improve efficiency in its Russian
operations. This program already had a partial impact on the results of the
third quarter. The operating profit for the third quarter include EUR 0.4
million in costs arising from the discontinued terminal project in St.
Petersburg, Russia, and Telko's personnel arrangements. The terminal project
will not be carried out as planned previously, as Telko is able to increase its
logistical efficiency and capacity by using an external partner. Negotiations
with different potential partners are in progress. Of Telko's market areas, the
relative proportion of the eastern markets in Telko's net sales remained at the
comparative period's level at nearly 50%. Net sales increased in the eastern
markets, and the profitability of both plastics and industrial chemicals
improved. Net sales in Russia, Ukraine and other CIS countries increased by 7%,
to EUR 33.5 (31.4) million. The operating profit rate in this market area was
less than 5%, but it improved significantly as a result of activities carried
out.
The net sales of Telko in January-September grew by 12%, to EUR 196.6 (175.4)
million. This increase was affected by an increase in volumes, and price levels
that were higher than in the comparative period. The operating profit in
January-September stood at EUR 7.8 (7.6) million, including EUR 0.4 million in
costs arising from the discontinued terminal project in St. Petersburg, Russia,
and Telko's personnel arrangements. Net sales in Russia, Ukraine and other CIS
countries increased by 17%, to EUR 92.6 (79.3) million.
Tomi Tanninen (M.Sc. Econ.) started as the new CFO of Telko on September
1, 2017.
Outlook for Telko
Industrial economic development is expected to continue to be positive in all of
Telko's market areas. The increase in industrial production in the western
markets is expected to increase the production capacity of Telko's customer
companies, which will have a positive impact on Telko's operations. Once the
national economies in Russia, Kazakhstan, Belarus and Ukraine have recovered,
operating conditions in the market area are expected to improve, which will have
a positive impact on customer companies. Telko's regional strategy in Russia and
local units in metropolises will enable growth in the forthcoming years. The
program to improve the efficiency of operations in Russia will improve Telko's
profitability during the second half of the year, and will have a full impact on
the operating profit starting from the first quarter of 2018.
The prices of raw materials sold by Telko are expected to remain high, on
average, during the rest of the year. Problems with the availability of some
chemicals are expected to continue, which may cause a slight decrease in sales
during the final quarter.
Telko has shown that it is able to grow quickly and profitably in emerging
markets. As planned, Telko has started operations in the Middle East in order to
acquire raw materials and start to sell special technical products. The
operations of Telko Middle East, Telko's subsidiary in Iran, are expected to
start by the end of the year, once the official import and export permit has
been obtained. However, the subsidiary is not expected to have any significant
impact on the net sales or operating profit of Telko in 2017.
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's key market areas are Finland and Germany.
7-9/2017 7-9/2016 Change % 1-9/2017 1-9/2016 Change % 1-12/2016
Net sales,
MEUR 11.7 9.5 23.2 27.3 24.7 10.5 33.0
Operating
profit, MEUR
*) 0.2 0.5 -60.0 -0.2 -0.1 -100.0 -0.1
Operating
profit, % 1.7 5.3 -0.7 -0.4 -0.3
*) 1-9/2017 includes a EUR 0.3 million impairment loss of receivables related to
previously divested business operations
In the third quarter, the net sales of Kauko grew by 23% from the comparative
period, to EUR 11.7 (9.5) million. This growth is mainly affected by project
operations in China and an increase in the net sales of energy-efficiency
equipment. The net sales of energy-efficiency equipment particularly increased
in solar power deliveries. The net sales of mobile knowledge work decreased, as
the net sales in the comparative period included a significant delivery to the
state administration. The operating profit for the third quarter stood at EUR
0.2 (0.5) million. The operating profit decreased as a result of investments in
mobile knowledge work.
Operations developed as expected, driven by an increase in orders for project
sales in the applications business and the positive development of computer
sales to the healthcare sector. During the review period, CliniQ XiM, Kauko's
first computer model designed and manufactured in Germany for the healthcare
sector, fulfilling the product safety requirements set for the EU area, was
certified. Sales can be launched during the fourth quarter. Investments in
organizational development and additional recruitment for the applications
business reduced the development of profitability.
Sales of energy-efficiency equipment developed positively compared with the
comparative period. Solar power systems experienced the fastest growth. Kauko
holds a significant market share in solar power systems in the Finnish
residential sector. Investments for growth are particularly targeted at larger
systems, and Kauko has signed partnership agreements, for example, with major
energy suppliers.
The net sales of Kauko grew by 11% in January-September to EUR 27.3 (24.7)
million. The operating result was EUR -0.2 (-0.1) million, including a EUR -0.3
million impairment of commission receivables related to the previously divested
Industrial business.
The net sales of mobile knowledge work in January-September stood at EUR 13.0
(13.8) million. The net sales of energy-efficiency equipment increased by 51%
from the comparative period, to EUR 11.5 (7.6) million, with growth coming
especially from solar power systems. The net sales of project operations in
China stood at EUR 2.8 (3.3) million.
Outlook for Kauko
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.
Service operations will be expanded by shifting more focus on total solutions.
According to long-term estimates, the sale of laptops will decrease and the sale
of rugged tablets, a sector important to Kauko, will increase in the markets for
rugged computers. 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 allows launching sales also to other OEM channels
outside Finland. After the review period, Kauko received certification for the
second and more powerful computer model designed for the healthcare sector in
accordance with the EU product safety standard.
In the energy sector, the solar power market is expected to continue its strong
growth, and Kauko aims to expand its operations to larger solar power systems,
in addition to its position as the market leader in residential systems. Kauko
has signed partnership agreements with major energy providers.
In 2015, Kauko divested its Industrial business in Shanghai, China. It has also
decided to discontinue its project operations in Beijing during the fourth
quarter. The termination of the operations is not expected to have any
significant impact on the result of Kauko. After discontinuing its operations in
China, Kauko will have operations in Finland and Germany.
In spring 2017, Kauko took legal action in civil court against two individuals
who worked in leading positions in the mobile knowledge work unit that provides
IT solutions for the healthcare sector due to breaches of the non-solicitation
and non-compete clauses.
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.
7-9/2017 7-9/2016 Change % 1-9/2017 1-9/2016 Change % 1-12/2016
Net sales,
MEUR 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Operating
profit, MEUR -0.9 -0.6 -50.0 -2.8 -3.2 12.5 -4.2
The operating profit of other operations was negative and amounted to EUR -0.9
(-0.6) million, being higher than targeted.
FINANCING
The Group's cash and cash equivalents amounted to EUR 19.7 million (12/2016: EUR
22.6 million). The consolidated balance sheet included a total of EUR 138.6
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
81.2 million (12/2016: EUR 69.8 million).
Aspo Group's gearing was 109.7% (12/2016: 89.8%) and its equity ratio was 33.6%
(12/2016: 37.4%). At the end of the third quarter of 2016, gearing was 103.8%
and the equity ratio was 35.6%.
The Group's net cash from operating activities in January-September increased
from the comparative period to EUR 5.7 (-2.5) million. During the review period,
the change in net working capital was EUR -16.3 (-21.6) million. Net cash from
investing activities totaled EUR -13.7 (-3.1) 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 -8.0 (-5.6) 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. EUR 4 million of Aspo's EUR 80 million commercial paper program were in
use. In 2017, a fully unused revolving credit facility of EUR 20 million will
fall due. In 2018, a total of EUR 16 million in financing agreements will fall
due.
On May 27, 2016, Aspo issued a 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 September 30, 2017 was EUR -0.5 (-0.7) 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 28.1 million, and their fair value was EUR -1.4 (-0.5) million on
September 30, 2017. The financial instruments are on level 2 of the fair value
hierarchy.
INVESTMENTS
The Group's investments were EUR 3.1 (1.5) million, consisting mainly of advance
payments for new vessels ordered by ESL Shipping, and dockings to be
capitalized.
Investments by segment, acquisitions excluded
7-9/2017 7-9/2016 Change 1-9/2017 1-9/2016 Change 1-12/2016
MEUR MEUR % MEUR MEUR % MEUR
ESL Shipping 3.0 1.0 200.0 14.2 2.6 446.2 5.0
Leipurin 0.0 0.0 - 0.2 0.1 100.0 0.3
Telko 0.1 0.3 -66.7 0.4 0.8 -50.0 1.4
Kauko 0.0 0.0 - 0.1 0.0 - 0.0
Other operations 0.0 0.2 -100.0 0.0 0.2 -100.0 0.2
Total 3.1 1.5 106.7 14.9 3.7 302.7 6.9
PERSONNEL
Personnel by segment, period-end
9/2017 9/2016 Change % 12/2016
ESL Shipping 237 225 5.3 226
Leipurin 317 320 -0.9 322
Telko 286 269 6.3 280
Kauko 46 51 -9.8 42
Other operations 25 23 8.7 25
Total 911 888 2.6 895
At the end of the review period, Aspo Group had 911 (888) employees. The number
of personnel has increased in ESL Shipping, in Telko's companies in Russia,
Ukraine and other CIS countries, and Leipurin's 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
The global economic outlook has improved, and economic growth will reduce
financial risks associated with Aspo's market areas. However, political tension
has increased globally, and locally in different market areas. Aspo's operating
conditions have stabilized, and already taken a turn for the better in some
areas. It is positive that the decrease in eastern economies has stopped and the
recovery of the Russian economy has continued, while western economies are
making good progress. In Russia, inflation has continued to slow down, and
consumption demand and investments are growing. Cargo prices of vessels
increased throughout the third quarter.
Risks in all of Aspo's businesses have decreased as a result of improved
operating conditions. 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 limited by low demand for investment assets. However,
it has already increased. Investments have increased in Russia, although the
majority of them are targeted at the energy sector. Private consumption has also
gone up in Russia, which is expected to boost imports. As there have been no
structural changes in the economy, no rapid growth is expected in Russia.
Strategic risks
Russian exports and imports of goods increased significantly during the first
part of the year, and the state of the economy in Ukraine has improved on nearly
all counts. The Russian economy has also stabilized and inflation has
decelerated. According to estimates, Russian GDP will increase by 1.5% during
this year. Deteriorated consumption demand in the long term has affected all
trade, but the increase in nominal wages and the improved consumer confidence in
the economy predict a rise in consumption. This can already be seen in
statistics. 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 is still slowed down by
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 risks have increased globally, which may have a rapid impact on Aspo's
operating environment or reduce 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. 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 future
transportation volumes. The extended 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 reasonable 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 economics, the
political atmosphere, and the outlook and production choices of industrial
customers. Decisions on energy production structures affected by environmental
policy and other political choices 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, ice-free winters may also increase
competition. In order to improve its competitive position, ESL Shipping is
building new, low-emission vessels with better fuel economy for this region and
customer base. These will also be able to operate in ice conditions.
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.
In addition to western markets, Aspo operates in areas where economic trends may
turn rapidly, which could significantly change the prevailing operating
conditions.
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, goods and services, and persons.
For a long time, the focus of Aspo's growth has been on emerging market areas,
where risks decelerating growth are affected by factors such as exchange rate
fluctuations 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 inactivity, bias
or corruption among 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
in war areas.
Internal control and risk management
One of the responsibilities of Aspo's Audit Committee is to monitor the
efficiency of the Group's internal control, 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 management of operations. 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 financial 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 has been published on the company's website. More detailed information on
financial risks can be found in the notes to the financial statements.
SHARE CAPITAL AND SHARES
Aspo Plc's share capital on September 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-September 2017, a total of 2,309,598 Aspo Plc shares with a
market value of EUR 20.4 million were traded on Nasdaq Helsinki, in other words,
7.5% 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
8.84 and the closing price at period-end was EUR 8.99. At the end of the review
period, the market value excluding treasury shares was EUR 275.1 million.
The number of Aspo Plc shareholders was 9,133 at period-end. A total of 842,279
shares, or 2.7% 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 on November 6, 2017 to shareholders who are
registered in the shareholders' register maintained by Euroclear Finland Ltd on
the record date October 30, 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 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 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 installments, 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.
Telko has initiated a process at the Administrative Court concerning the tax
increase imposed by Finnish Customs related to batches of material that Telko
imported in 2013 and 2014. Telko considers the charges imposed by Finnish
Customs to be unfounded. The charges of EUR 1.7 million were recognized as
expenses in 2015.
Helsinki October 26, 2017
ASPO PLC
Board of Directors
ASPO GROUP CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
7-9/2017 7-9/2016
MEUR % MEUR %
Net sales 127.2 100.0 118.2 100.0
Other operating income 0.7 0.6 0.3 0.3
Materials and services -94.9 -74.6 -88.1 -74.5
Employee benefit expenses -9.9 -7.8 -9.3 -7.9
Depreciation, amortization and impairment losses -3.0 -2.4 -2.9 -2.5
Other operating expenses -13.0 -10.2 -12.2 -10.3
Operating profit 7.1 5.6 6.0 5.1
Financial income and expenses -0.7 -0.6 -0.8 -0.7
Profit before taxes 6.4 5.0 5.2 4.4
Income taxes -0.5 -0.4 -0.2 -0.2
Profit for the period 5.9 4.6 5.0 4.2
Other comprehensive income
Items that may be reclassified to profit or loss in
subsequent periods:
Translation differences -0.7 -0.4
Cash flow hedges -0.8 -0.1
Income tax on other comprehensive income 0.0 0.0
Other comprehensive income for the period, net of taxes -1.5 -0.5
Total comprehensive income 4.4 4.5
Profit attributable to shareholders 5.9 5.0
Total comprehensive income attributable to shareholders 4.4 4.5
Earnings per share, EUR 0.19 0.16
Diluted earnings per share, EUR 0.19 0.16
1-9/2017 1-9/2016 1-12/2016
MEUR % MEUR % MEUR %
Net sales 370.0 100.0 332.9 100.0 457.4 100.0
Other operating income 1.7 0.5 0.9 0.3 1.2 0.3
Materials and services -274.6 -74.2 -243.7 -73.2 -334.7 -73.2
Employee benefit expenses -30.8 -8.3 -29.9 -9.0 -40.0 -8.7
Depreciation, amortiziation and
impairment losses -9.0 -2.4 -8.6 -2.6 -11.6 -2.5
Other operating expenses -40.7 -11.0 -37.5 -11.3 -51.9 -11.3
Operating profit 16.6 4.5 14.1 4.2 20.4 4.5
Financial income and expenses -1.6 -0.4 -2.4 -0.7 -3.0 -0.7
Profit before taxes 15.0 4.1 11.7 3.5 17.4 3.8
Income taxes -1.1 -0.3 -1.0 -0.3 -1.5 -0.3
Profit for the period 13.9 3.8 10.7 3.2 15.9 3.5
Other comprehensive income
Items that may be reclassified to profit
or loss in subsequent periods:
Translation differences -2.1 1.1 3.2
Cash flow hedges -3.3 -0.8 1.4
Income tax on other comprehensive income 0.1 0.0 -0.1
Other comprehensive income for the
period, net of taxes -5.3 0.3 4.5
Total comprehensive income 8.6 11.0 20.4
Profit attributable to shareholders 13.9 10.7 15.9
Total comprehensive income attributable
to shareholders 8.6 11.0 20.4
Earnings per share, EUR 0.40 0.32 0.49
Diluted earnings per share, EUR 0.40 0.32 0.49
ASPO GROUP CONSOLIDATED BALANCE SHEET
9/2017 9/2016 Change 12/2016
MEUR MEUR % MEUR
Assets
Intangible assets 8.3 9.7 -14.4 9.4
Goodwill 42.0 42.6 -1.4 42.6
Tangible assets 119.7 112.8 6.1 113.3
Available-for-sale financial assets 0.2 0.2 0.0 0.2
Receivables 4.2 3.7 13.5 4.9
Total non-current assets 174.4 169.0 3.2 170.4
Inventories 66.5 59.4 12.0 56.7
Accounts receivable and other receivables 67.6 64.3 5.1 60.0
Cash and cash equivalents 19.7 18.6 5.9 22.6
Total current assets 153.8 142.3 8.1 139.3
Total assets 328.2 311.3 5.4 309.7
Equity and liabilities
Share capital 17.7 17.7 0.0 17.7
Other equity 90.7 92.1 -1.5 96.8
Total equity 108.4 109.8 -1.3 114.5
Loans and overdraft facilities 114.6 109.5 4.7 116.6
Other liabilities 4.3 5.1 -15.7 4.6
Total non-current liabilities 118.9 114.6 3.8 121.2
Loans and overdraft facilities 24.0 23.1 3.9 8.8
Accounts payable and other liabilities 76.9 63.8 20.5 65.2
Total current liabilities 100.9 86.9 16.1 74.0
Total equity and liabilities 328.2 311.3 5.4 309.7
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 13.9 13.9
Translation differences -2.1 -2.1
Cash flow hedges* -3.2 -3.2
Total comprehensive income -3.2 -2.1 13.9 8.6
Transactions with owners:
Dividend payment -12.9 -12.9
Interest on hybrid instrument -2.2 -2.2
Share-based incentive plan 0.2 0.2 0.4
Total transactions
with owners 0.2 -14.9 -14.7
Equity Sept. 30, 2017 17.7 4.3 -2.2 37.0 -2.1 -20.7 74.4 108.4
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 10.7 10.7
Translation differences 1.1 1.1
Cash flow hedges* -0.8 -0.8
Total comprehensive income -0.8 1.1 10.7 11.0
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 0.1 -0.1 0.0
Total transactions
with owners 9.7 0.4 -13.9 -3.8
Equity Sept. 30, 2016 17.7 4.3 -1.1 41.6 -2.3 -20.7 70.3 109.8
* net of taxes
ASPO GROUP CONSOLIDATED CASH FLOW STATEMENT
1-9/2017 1-9/2016 1-12/2016
MEUR MEUR MEUR
CASH FLOWS FROM OPERATING ACTIVITIES
Operating profit 16.6 14.1 20.4
Adjustments to operating profit 10.6 8.7 11.6
Change in working capital -16.3 -21.6 -10.6
Interest paid -4.3 -2.7 -3.7
Interest received 0.8 0.3 0.4
Income taxes paid -1.7 -1.3 -1.9
Net cash from operating activities 5.7 -2.5 16.2
CASH FLOWS FROM INVESTING ACTIVITIES
Investments in tangible and intagible assets -3.1 -3.1 -5.0
Advance payments on vessels -11.4 -0.1 -1.3
Proceeds from sale of tangible assets 0.2 0.1 0.2
Proceeds from sale of available-for-sale financial
assets 0.2
Sale of business operations 0.4
Net cash from investing activities -13.7 -3.1 -6.1
CASH FLOWS FROM FINANCING ACTIVITIES
Change in current loans 5.2 10.8 -3.5
Proceeds from non-current loans 15.6 0.1 7.2
Repayments of non-current loans -7.2 -6.7 -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 5.5 0.2 -11.9
Change in cash and cash equivalents -2.5 -5.4 -1.8
Cash and cash equivalents Jan. 1 22.6 23.9 23.9
Translation differences -0.4 0.1 0.5
Cash and cash equivalents at period-end 19.7 18.6 22.6
ASPO GROUP ASSETS AND LIABILITIES BY SEGMENT
Segments' assets, MEUR
9/2017 9/2016 12/2016
ESL Shipping 128.9 120.2 121.1
Leipurin 60.7 59.9 62.8
Telko 87.7 83.2 78.1
Kauko 25.8 23.4 20.0
Unallocated items 25.1 24.6 27.7
Total 328.2 311.3 309.7
Segments' liabilities, MEUR
9/2017 9/2016 12/2016
ESL Shipping 10.1 9.3 9.2
Leipurin 15.0 12.3 14.3
Telko 33.3 32.0 32.0
Kauko 9.3 7.6 5.4
Unallocated items 152.1 140.3 134.3
Total 219.8 201.5 195.2
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 has continued its preparations for the adoption of the new IFRS 15 and IFRS
9 standards, starting from January 1, 2018. The estimated impact of these
standards on the consolidated financial statements is described in more detail
on pages 40-41 of the 2016 financial statements. On the basis of analyses
conducted during adoption projects, the adoption of these standards will not
have any significant impact on the consolidated statement of comprehensive
income or the consolidated balance sheet, compared with currently valid
standards. Regarding the adoption of the IFRS 15 standard, Aspo will apply a
fully retrospective approach applying practical expedients allowed by the
standard. The adoption will not have any significant impact on figures already
reported for 2017. However, net sales will be reported in more diverse ways in
the future, also regarding comparative information from 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, Thursday October
26, 2017 at 14.00 at the Eino Leino cabinet at Hotel Kämp, Pohjoisesplanadi
29, 00100 Helsinki.
Helsinki, October 26, 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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