Nurminen Logistics Plc Interim report 6 May 2011 9.00 a.m.
REVIEW PERIOD IN BRIEF
Review period 1 January - 31 March 2011
- Net sales were EUR 17.7 million (2010: EUR 15.4 million).
- Reported operating result was EUR -0.6 million (EUR -0.2 million).
- Operating margin was -3.6% (-1.3%).
- Operating result excluding non-recurring items was EUR -0.6 million (EUR -0.6 million).
- EBT was EUR -0.9 million (EUR -0.4 million).
- Net result was EUR -1.1 million (EUR 0.0 million).
- Earnings per share: -0.09 Euros (-0.01 Euros).
MARKET SITUATION 1 JANUARY – 31 MARCH 2011
The market situation developed varyingly during the review period. Finnish foreign trade and Nurminen Logistics' most important market, trade between Finland and the CIS countries, developed favourably. However, the competitive situation was challenging especially due to increase of the Russian railway tariffs. The increase had a negative effect on price competitiveness of railway transports.
In railway transports both demand and volumes grew compared to 2010. The special and heavy transportation market did not develop as positively as expected although the demand situation was better than in the first quarter of 2010. The harbour logistics market remained challenging.
Demand of the forest industry improved compared to 2010. Demand of mechanical engineering industry remained moderate although the price competition was still intense.
TURNOVER AND FINANCIAL PERFORMANCE 1 JANUARY– 31 MARCH 2011
The net sales for the review period amounted to EUR 17.7 (2010: 15.4) million. Compared to the corresponding period last year the increase of the net sales was 15.0%. Reported operating result was EUR -634 (-200) thousand. The decrease was 217%. Operating result includes non-recurring items of EUR 0 (+434) thousand. Therefore, comparable operating result was EUR -634 (-634) thousand. The non-recurring item in 2010 was a result of the company's decision to give up its purchase option and first refusal right to the logistics centre in Vuosaari as published on 18 June 2009. The company has a long-term lease agreement in Vuosaari.
The growth of net sales was based on the recovery of demand especially in the rail transport exports from Finland to CIS countries. Also the demand of mechanical engineering industry's clientele developed positively in all market segments. In the company's harbour logistics services the development was varying. In Kotka and Hamina the transit volumes to CIS countries are still on a low level. In Vuosaari the volumes started to grow during the review period as a result of new customer agreements.
Operating result developed slightly weaker than expected. This is mainly due to the increase of the losses of the Vuosaari logistics centre. The increase of the losses was due to the changes in the customer structure and increase in lease costs of the logistics centre. The lease of the Vuosaari logistics centre increased in the review period according to the lease agreement by EUR 0.1 million compared to the corresponding period in 2010. In the review period the operating loss of the Vuosaari logistics centre was EUR 1.0 (0.7) million. Also the intense price competition of special and heavy transport affected profitability negatively. The operating profit of the company's operations in the Baltic countries weakened as expected by EUR 0.3 million compared to the strong first quarter of 2010.
The personnel cost savings based on the results of the co-determination negations held in 2010 were in the review period EUR 0.2 million.
The appreciation of the Russian rouble during the review period increased the company's financial result by EUR 0.1 million.
OUTLOOK
The company's outlook published in the financial statement release on 25 February 2011 is unchanged.
The net sales of the company are expected to increase by approximately 10% in 2011 compared to 2010. The company's operating result is expected to be slightly better than in 2010.
The company’s unchanged long-term goal is to increase its net sales annually by approximately 20% on average, including acquisitions, and to reach an operating profit level of over 7%. The general economic situation is assessed to delay achieving of the growth objectives in the short term.
The company is actively following the structural changes in the logistics market as well as acquisition opportunities.
SHORT-TERM RISKS AND UNCERTAINTIES
Over-capacity of Finnish ports intensifies the price competition of the market. The company operates in Vuosaari, Kotka and Hamina harbours and therefore the volume development of those harbours is relevant to the company. Volume development is effected, among other things, by development of the transit trade that decreased during the recession. Its outlook is unclear at the moment.
The railway tariff changes of different countries might affect the price competitiveness of rail transports significantly. In addition, price competition situation might burden the company's profitability also in the future. Weaker than expected volume growth of foreign trade would burden the development of the company's net sales and profitability.
FINANCIAL POSITION AND BALANCE SHEET
Company’s cash flow from operations was EUR 923 thousand. Cash flow from investments was EUR -66 thousand. Cash flow from financing activities amounted to EUR -1,323 thousand.
At the end of the review period, cash and cash equivalents amounted to EUR 2,098 thousand. Liquidity weakened towards the end of the review period but remained satisfactory.
Group’s interest bearing debt was EUR 31.1 million and correspondingly the net interest bearing debt was EUR 29.0 million.
Balance sheet totaled EUR 73.9 million and equity ratio was 40.5%.
CAPITAL EXPENDITURE
The Group's gross capital expenditure for review period amounted to EUR 109 (47) thousand, accounting for 0.6% of net sales. Depreciation totaled EUR 1.1 (1.1) million, or 6.1% of net sales.
GROUP STRUCTURE
The Group comprises the parent company, Nurminen Logistics Plc, as well as the following subsidiaries and associated companies, owned directly or indirectly by the parent (ownership, %): RW Logistics Oy (100 %), JN Ferrovia Oy (100 %), OOO John Nurminen, St. Petersburg (100 %), OOO John Nurminen, Moscow (100 %), Nurminen Maritime Latvia SIA (51 %), Pelkolan Terminaali Oy (20 %), ZAO Irtrans (100 %), OOO Huolintakeskus (100 %), OOO John Nurminen Terminal (100 %), ZAO Terminal Rubesh (100 %), Nurminen Logistics LLC (100 %), UAB Nurminen Maritime (51 %), Nurminen Maritime Eesti AS (51 %), CMA CGM Latvia SIA (23 %), CMA CGM Estonia Oü (23 %), Team Lines Latvia SIA (23 %) and Team Lines Estonia Oü (20,3 %).
PERSONNEL
At the end of the review period the Group staff was 333 (339 on 31 December 2010). The number of personnel working abroad was 69. Management and administrative staff numbered to 26.
SHARE-BASED INCENTIVE PLAN FOR THE GROUP PERSONNEL
The Board of Directors of Nurminen Logistics Plc has approved on 7 March 2011 a share-based incentive plan for the Group key personnel. The plan was described in stock exchange release published on 7 March 2011.
SHARES AND SHAREHOLDERS
The trading volume of Nurminen Logistics Plc's shares was 302,439 in 1 January - 31 March 2011. This represented 2.35% of the total number of shares. The value of the turnover was EUR 806,139. The lowest price for the period was EUR 2.40 per share and the highest EUR 3.00 per share. The closing price for the period was EUR 2.60 per share and the market value of the entire share capital EUR 33,484,043.
At the end of the review period Nurminen Logistics Plc had 462 shareholders.
The company owns 705 of its own shares, which represent 0.005% of the votes in the company.
DECISIONS OF THE ANNUAL GENERAL MEETING
Nurminen Logistics Plc's Annual General Meeting of Shareholders held on 6 April 2011 made the following decisions:
Adoption of the financial statements and resolution on the discharge from liability
The Annual General Meeting of Shareholders confirmed the company's financial statements and the Group's financial statements for the financial period 1 January 2010 – 31 December 2010 and released the Board of Directors and the Managing Directors from liability.
Payment of dividend
The Annual General Meeting of Shareholders approved the Board's proposal that no dividend shall be paid for the financial year 1 January 2010 - 31 December 2010.
Composition and remuneration of the Board of Directors
The Annual General Meeting of Shareholders resolved that the Board of Directors shall consist of six (6) ordinary members. The Annual General Meeting of Shareholders re-elected the following ordinary members to the Board of Directors: Olli Pohjanvirta, Juha Nurminen, Jukka Nurminen, Eero Hautaniemi and Tero Kivisaari. Jan Lönnblad was elected as a new member of the Board of Directors. In its organising meeting immediately following the Annual General Meeting of Shareholders, the Board of Directors elected Olli Pohjanvirta as the Chairman of the Board. The Board of Directors also appointed an Audit Committee. The members of the Audit Committee are Eero Hautaniemi and Jukka Nurminen.
The Annual General Meeting of Shareholders resolved that the remuneration level for the members of the Board elected at the Annual General Meeting for the term ending at the close of the Annual General Meeting in 2012 will remain unchanged and will be paid as follows: annual remuneration of EUR 27,000 for the Chairman, EUR 18,000 for the Vice Chairman and EUR 13,500 for the other members. Additionally a meeting fee of EUR 700 per meeting shall be paid for each member of the Board. 50 per cent of the annual remuneration will be paid in the form of Nurminen Logistics Plc's shares and the remainder in money. A member of the Board of Directors may not transfer shares received as annual remuneration before a period of three years has elapsed from receiving shares.
Authorising the Board of Directors to decide on the repurchase of the company's own shares
Annual General Meeting authorised the Board to decide on the repurchasing a maximum of 30,000 of the company's shares. The authorisation will be used for the paying of remuneration of the Board members. The own shares may be repurchased pursuant to the authorisation only by using unrestricted equity. The price payable for the shares shall be based on the price of the company's shares in public trading. The own shares may be repurchased in deviation from the proportional shareholdings of the shareholders (directed repurchase). The authorisation includes the right whereby the Board is authorised to decide on all other matters related to the acquisition of own shares.
The authorisation remains in force until 30 April 2012.
Authorising the Board of Directors to decide on the issuance of shares as well as the issuance of options and other special rights entitling to shares
Annual General Meeting authorised the Board to decide on issuance of shares and/or special rights entitling to shares pursuant to chapter 10 section 1 of the Finnish Companies Act.
Based on the aforesaid authorisation the Board is entitled to release or assign, either by one or several resolutions, shares and/or special rights up to a maximum equivalent of 20,000,000 new shares so that aforesaid shares and/or special rights can be used, e.g., for the financing of company and business acquisitions corporate and business trading or for other business arrangements and investments, for the expansion of owner structure, paying of remuneration of the Board members and/or for the creating incentives for, or encouraging commitment in, personnel.
The authorisation gives the Board the right to decide on share issue with or without payment. The authorisation for deciding on a share issue without payment also includes the right to decide on the issue for the company itself, so that the number of shares granted to the company is no more than one tenth of all shares of the company.
The authorisation includes the right whereby the Board is entitled to decide of all other issues of shares and special rights. Furthermore, the Board is entitled to decide on share issues, option rights and other special rights in every way similarly as the Annual General Meeting could decide on these. The authorisation also includes right to decide on directed issues of shares and/or special rights.
The authorisation remains in force until 30 April 2012.
Auditor
KPMG Oy Ab, Authorised Public Accountant audit-firm, was re-elected as Nurminen Logistics Plc's auditor. Mr Lasse Holopainen acts as the responsible auditor. The auditor's term ends at the end of the first Annual General Meeting following the election. Auditor’s fee and costs will be paid in accordance with their invoice.
DIVIDEND POLICY
Company’s board has on 14 May 2008 determined company’s dividend policy, according to which Nurminen Logistics Plc aims to, in case company’s financial policy so allows, annually distribute as dividends approximately one third of its net profit.
AUTHORISATIONS GIVEN TO THE BOARD
Authorising the Board of Directors to decide on the repurchase of the company's own shares
Annual General Meeting authorised the Board to decide on the repurchasing a maximum of 30,000 of the company's shares. The authorisation will be used for the paying of remuneration of the Board members. The own shares may be repurchased pursuant to the authorisation only by using unrestricted equity. The price payable for the shares shall be based on the price of the company's shares in public trading. The own shares may be repurchased in deviation from the proportional shareholdings of the shareholders (directed repurchase). The authorisation includes the right whereby the Board is authorised to decide on all other matters related to the acquisition of own shares.
The authorisation remains in force until 30 April 2012.
Authorising the Board of Directors to decide on the issuance of shares as well as the issuance of options and other special rights entitling to shares
Annual General Meeting authorised the Board to decide on issuance of shares and/or special rights entitling to shares pursuant to chapter 10 section 1 of the Finnish Companies Act.
Based on the aforesaid authorisation the Board is entitled to release or assign, either by one or several resolutions, shares and/or special rights up to a maximum equivalent of 20,000,000 new shares so that aforesaid shares and/or special rights can be used, e.g., for the financing of company and business acquisitions corporate and business trading or for other business arrangements and investments, for the expansion of owner structure, paying of remuneration of the Board members and/or for the creating incentives for, or encouraging commitment in, personnel.
The authorisation gives the Board the right to decide on share issue with or without payment. The authorisation for deciding on a share issue without payment also includes the right to decide on the issue for the company itself, so that the number of shares granted to the company is no more than one tenth of all shares of the company.
The authorisation includes the right whereby the Board is entitled to decide of all other issues of shares and special rights. Furthermore, the Board is entitled to decide on share issues, option rights and other special rights in every way similarly as the Annual General Meeting could decide on these. The authorisation also includes right to decide on directed issues of shares and/or special rights.
The authorisation remains in force until 30 April 2012.
EVENTS AFTER THE REVIEW PERIOD
The Board of Directors of Nurminen Logistics Plc appointed on 6 April 2011 Mr Topi Saarenhovi, M.Sc. (Tech.), the new President and CEO of the company. Saarenhovi (born 1967) started in his new position on 1 May 2011. Mr Antti Sallila, who was the Acting CEO of Nurminen Logistics Plc during 25 November 2010 – 30 April 2011 continues his duties as the CFO of the company.
Disclaimer
Certain statements in this bulletin are forward-looking and are based on the management's current views. Due to their nature, they involve risks and uncertainties and are susceptible to changes in the general economic or industry conditions.
NURMINEN LOGISTICS PLC
Board of Directors
For more information, please contact Topi Saarenhovi, President and CEO (tel. +358 10 545 2431)
DISTRIBUTION
NASDAQ OMX Helsinki
Major media
www.nurminenlogistics.com
Nurminen Logistics provides high-quality logistics services, such as railway transports, terminal services, forwarding and special and heavy transports.
The company has collected logistics know-how from three centuries, starting in 1886. Nurminen Logistics' main market areas are Finland, the Baltic Sea region, Russia and other Eastern European countries. The company's share is listed on NASDAQ OMX Helsinki.
TABLES
| CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME | 1-3/2011 | 1-3/2010 | 1-12/2010 |
| EUR 1,000 | |||
| NET SALES | 17 691 | 15 388 | 69 682 |
| Other operating income | 41 | 437 | 1 492 |
| Materials and services | -9 011 | -6 796 | -33 229 |
| Employee benefit expenses | -3 463 | -3 633 | -15 433 |
| Depreciation and impairment | -1 077 | -1 108 | -4 466 |
| Other operating costs | -4 816 | -4 488 | -18 664 |
| OPERATING RESULT | -634 | -200 | -618 |
| Financial income | 56 | 769 | 1 865 |
| Financial expenses | -443 | -214 | -2 679 |
| Share of profit in associates | 81 | 64 | 359 |
| RESULT BEFORE TAX | -940 | 419 | -1 072 |
| Income taxes | -195 | -403 | -957 |
| PROFIT / LOSS FOR THE PERIOD | -1 135 | 16 | -2 029 |
| Other comprehensive income: | |||
| Translation differences | 289 | 1 644 | 788 |
| Other comprehensive income for the period after tax | 289 | 1 644 | 788 |
| TOTAL COMPREHENSIVE INCOME FOR THE PERIOD | -846 | 1 660 | -1 241 |
| Net result attributable | |||
| To equity holders of the parent | -1 208 | -170 | -2 884 |
| To non-controlling interest | 73 | 186 | 855 |
| Total comprehensive income attributable to | |||
| To equity holders of the parent | -919 | 1 474 | -2 096 |
| To non-controlling interest | 73 | 186 | 855 |
| EPS undiluted | -0,09 | -0,01 | -0,22 |
| EPS diluted | -0,09 | -0,01 | -0,22 |
| CONSOLIDATED BALANCE SHEET | 31.3.2011 | 31.3.2010 | 31.12.2010 |
| EUR 1,000 | |||
| ASSETS | |||
| Non-current assets | |||
| Property, plant, equipment | 44 114 | 47 930 | 44 617 |
| Goodwill | 9 516 | 9 516 | 9 516 |
| Intangible assets | 740 | 950 | 818 |
| Investments in associates | 578 | 562 | 651 |
| Other long-term receivables | 714 | 765 | 714 |
| Deferred tax asset | 812 | 881 | 760 |
| NON-CURRENT ASSETS | 56 475 | 60 604 | 57 075 |
| Current assets | |||
| Trade receivables and other receivables | 15 297 | 18 600 | 14 507 |
| Cash and bank | 2 098 | 2 595 | 2 563 |
| CURRENT ASSETS | 17 395 | 21 195 | 17 070 |
| ASSETS TOTAL | 73 870 | 81 799 | 74 145 |
| EQUITY AND LIABILITIES | |||
| Share capital | 4 215 | 4 215 | 4 215 |
| Other reserves | 18 580 | 19 189 | 18 291 |
| Retained earnings | 6 018 | 10 156 | 7 373 |
| Non-controlling interest | 1 066 | 1 256 | 993 |
| SHAREHOLDERS' EQUITY | 29 879 | 34 816 | 30 872 |
| Long-term liabilities | |||
| Deferred tax liability | 436 | 349 | 414 |
| Interest-free liabilities | 740 | 936 | 733 |
| Interest-bearing liabilities | 21 852 | 27 716 | 23 317 |
| NON-CURRENT LIABILITIES | 23 028 | 29 001 | 24 464 |
| Current liabilities | |||
| Short-term interest-bearing liabilities | 9 252 | 6 380 | 9 227 |
| Trade payables and other liabilities | 11 711 | 11 602 | 9 582 |
| CURRENT LIABILITIES | 20 963 | 17 982 | 18 809 |
| TOTAL LIABILITIES | 43 991 | 46 983 | 43 273 |
| TOTAL EQUITY AND LIABILITIES | 73 870 | 81 799 | 74 145 |
| CONDENSED CONSOLIDATED CASH FLOW STATEMENT | 1-3/2011 | 1-3/2010 | 1-12/2010 |
| CASH FLOW FROM OPERATING ACTIVITIES | |||
| Profit/Loss for the period | -1 135 | 16 | -2029 |
| Adjustments to reconcile profit | -38 | 8 | 18 |
| Depreciation and amortisation | 1 077 | 1 108 | 4466 |
| Unrealised foreign exchange wins and losses | -37 | -1 026 | -1069 |
| Other adjustments | 537 | 805 | 2259 |
| Paid and received interest | -294 | -476 | -1809 |
| Taxes paid | -226 | -316 | -682 |
| Changes in working capital | 1 039 | -448 | 1734 |
| Cash flow from operating activities | 923 | -329 | 2888 |
| CASH FLOW FROM INVESTING ACTIVITIES | |||
| Proceeds from sales of other investments | 0 | 0 | 4 |
| Proceeds from sales of fixed assets | 43 | 76 | 80 |
| Investments in tangible and intangible assets | -109 | -47 | -849 |
| Cash flow from investing activities | -66 | 29 | -765 |
| CASH FLOW FROM FINANCING ACTIVITIES | |||
| Acquisition of own shares | 0 | 0 | -56 |
| Changes in liabilities | -1 323 | 657 | -860 |
| Dividends paid | 0 | 0 | -923 |
| Cash flow from financing activities | -1 323 | 657 | -1839 |
| CHANGE IN CASH AND CASH EQUIVALENTS | -465 | 357 | 325 |
| Cash and cash equivalents at beginning of period | 2 563 | 2 238 | 2238 |
| Cash and cash equivalents at end of period | 2 098 | 2 595 | 2563 |
A= Share capital
B= Share premium account
C= Reserve fund
D= Unrestricted equity reserve
E= Translation differences
F= Retained earnings
G= Non-controlling interest
H= Total
| STATEMENT OF CHANGES IN EQUITY 1-3/10 EUR 1,000 | A | B | C | D | E | F | G | H |
| Shareholders' equity at beginning | 4215 | 89 | 2374 | 19238 | -4140 | 9737 | 1072 | 32585 |
| Other changes | 0 | 0 | 0 | 0 | 0 | 589 | -2 | 587 |
| Total comprehensive income for the period | 0 | -2 | 0 | 0 | 1630 | -170 | 186 | 1644 |
| Shareholders' equity 31.3.2010 | 4215 | 87 | 2374 | 19238 | -2510 | 10156 | 1256 | 34816 |
| STATEMENT OF CHANGES IN EQUITY 1-3/11 EUR 1,000 | A | B | C | D | E | F | G | H |
| Shareholders' equity at beginning | 4215 | 86 | 2378 | 19178 | -3352 | 7373 | 993 | 30872 |
| Other changes | 0 | 0 | 0 | 0 | 0 | -147 | 0 | -147 |
| Total comprehensive income for the period | 0 | 0 | 0 | 0 | 289 | -1208 | 73 | -846 |
| Shareholders' equity 31.3.2011 | 4215 | 86 | 2378 | 19178 | -3063 | 6018 | 1066 | 29879 |
SEGMENT INFORMATION
The figures of the operating segment are equal to the Group’s figures.
Related party transactions
The related parties comprise the members of the Board of Directors and Executive Board of Nurminen Logistics and companies in which these members have control. Related parties are also deemed to include shareholders with direct or indirect control or substantial influence.
| Related party transactions | 1-3/2011 |
| EUR 1,000 | |
| Sales | 7 |
| Expenses | 197 |
| Financial expenses | 32 |
| Trade payables and other liabilities | 2 543 |
| Long-term liabilities | 1 907 |
KEY FIGURES
| KEY FIGURES | 1-3/2011 | 1-3/2010 | 1-12/2010 |
| Gross capital expenditure, EUR 1,000 | 109 | 47 | 849 |
| Personnel | 333 | 339 | 344 |
| Operating margin % | -3,6 % | -1,3 % | -0,9 % |
| Share price development | |||
| Share price at beginning of period | 2,89 | 3,35 | 3,35 |
| Share price at end of period | 2,60 | 3,55 | 2,89 |
| Highest for the period | 3,00 | 3,73 | 3,73 |
| Lowest for the period | 2,40 | 3,30 | 2,81 |
| Eguity/share EUR | 2,32 | 2,70 | 2,40 |
| Earnings/share (EPS)EUR | -0,09 | -0,01 | -0,22 |
| Equity ratio % | 40,45 | 42,54 | 41,64 |
OTHER LIABILITIES AND COMMITMENTS
| Contingent liabilities, 1,000 eur | 31.3.2011 | 31.3.2010 | 31.12.2010 |
| Mortgages given | 3 000 | 0 | 3 000 |
| Other contingent liabilities | 10 780 | 10 780 | 10 780 |
| Rent liabilities | 82 770 | 76 125 | 84 470 |
Accounting policies
The interim financial information has been prepared in accordance with IAS 34
'Interim Financial Reporting'. The IFRS recognition and measurement principles as described in the annual financial statements for 2010 have also been applied in the preparation of the interim financial information, with the changes mentioned below. Other adopted new and amended IFRS-standards and interpretation have not had significant impact on reported figures.
The Group has applied e.g. the following revised and amended standards as of 1
January 2011:
Amendment to IAS 32 Financial Instruments: Presentation - Classification of rights issues. The amendment relates to accounting (classification) for share, option or rights issues denominated in a foreign currency.
IFRIC 19 Extinguishing Financial Liabilities with Equity Instruments. The interpretation clarifies accounting treatment in cases where a company renegotiates a financial liability, and as a result issues equity instruments to the creditor to extinguish all or part of the financial liability.
Revised IAS 24 Related Party Disclosures. The definition of a related party is clarified and certain disclosure requirements for government related entities are changed.
All figures have been rounded and consequently the sum of individual figures can deviate from the presented sum figure. Key figures have been calculated using exact figures. This Interim Report is unaudited.
Calculation of Key Figures
Equity ratio (%) =
Total equity
______________________________________ x 100
Total assets – advances received
Earnings per share (EUR) =
Profit for the period attributable to equity holders of the parent company
_________________________________________________________ x 100
Number of shares (average during the period)
Equity per share (EUR) =
Equity
________________________________________ x 100
Number of shares at the end of the period