CORRECTION: NEO INDUSTRIAL'S INTERIM REPORT FOR JANUARY 1 TO SEPTEMBER 30, 2011

Helsinki, Finland, 2011-11-11 12:30 CET (GLOBE NEWSWIRE) -- Neo Industrial Plc STOCK EXCHANGE RELEASE             November 11, 2011, at 13:30 EET

Neo Industrial clarifies its Interim Report published yesterday at 2.00 pm. The tables on the Report were not in readable format and are corrected in the enclosed version of the Report.

Neo Industrial Plc STOCK EXCHANGE RELEASE             November 10, 2011, at 2:00 p.m.

NEO INDUSTRIAL’S INTERIM REPORT FOR JANUARY 1 TO SEPTEMBER 30, 2011

Comparable figures (in parentheses) refer to the corresponding period in 2010 unless otherwise stated.

SUMMARY FOR JANUARY–SEPTEMBER 2011
 

- The Neo Industrial Group’s net sales were EUR 95.2 million (59.7 million).

- Operating result was EUR -12.1 million (-3.9 million), largely due to the Viscose Fibers segment.

- Net sales for the Cable segment grew considerably to EUR 78.3 million (59.7 million).

- Operating result for the Cable segment was EUR -2.4 million (-2.7 million).

- Net sales for the Viscose Fibers segment were EUR 16.9 million.

- Operating result for the Viscose Fibers segment was EUR -8.9 million.

- Net sales for the Single Family Housing segment were EUR 67.4 million (79.1 million), with the segment showing an overall operating loss for the review period.

SUMMARY FOR JULY–SEPTEMBER 2011
 

 - The Neo Industrial Group’s net sales were EUR 27.4 million (20.6 million).

- Operating result was EUR -2.9 million (0.1 million).

- Net sales for the Cable segment were EUR 25.4 million (20.6 million).

- Operating result for the Cable segment decreased to EUR -1.5 million (0.7 million).

- Cable sales grew in Finland and the Baltic countries.

- Net sales for the Viscose Fibers segment were EUR 1.9 million. The segment’s production plant was shut down for almost the entire period.

- Operating result for the Viscose Fibers segment was EUR -1.1 million.

- Net sales for the Single Family Housing segment were EUR 17.1 million (32.5 million), with the segment showing an overall operating loss for the review period.

Managing Director Markku E. Rentto:

- The third quarter of 2011 was challenging. The Cable segment increased its net sales significantly and its operative profitability improved, but its overall profitability decreased, suffering from the decline in metal prices and the machinery breakdown during the third quarter. The machinery has been fixed, and with metal prices increasing, we believe the rest of the year will be profitable. The Cable segment’s good results in October support this expectation.

In the Viscose Fibers segment, Avilon Ltd has been under a market-related production curtailment shutdown since July. Still ongoing, the shutdown is reflected in the segment’s net sales and profitability. In September, Avilon’s market-related difficulties resulted in such a tight liquidity situation that the company filed a petition for corporate reorganization in order to secure its long-term operating conditions. Avilon’s petition was accepted at the beginning of October, and the corporate reorganization plan is in progress.

Despite the challenges, the Viscose Fibers segment continues to prepare for the future, making good progress in the sales negotiations on technology licenses, for example. The outlook for Avilon’s specialty products is promising, and production will begin as soon as other operating conditions have been secured.

Finndomo, the company that constitutes Neo Industrial’s Single Family Housing segment, recorded lower sales than those in the comparison period. With consumer confidence increasing, however, the low interest rates and favorable cost development lay a solid foundation for the sale of prefabricated homes. The company’s new management has launched effective development projects related to business operations and customer service. These projects will further improve Finndomo’s range of products and services.

KEY FIGURES

	7–9/2011	7–9/2010	1–9/2011	1–9/2010
Net sales (EUR million)	27.4	20.6	95.2	59.7
- Cable	25.4	20.6	78.3	59.7
- Viscose Fibers	1.9	0.0	16.9	0.0
- Other operations and eliminations	0.0	0.0	0.0	0.0
Operating result (EUR million)	-2.9	0.1	-12.1	-3.9
- Cable	-1.5	0.7	-2.4	-2.7
- Viscose Fibers	-1.1	-0.3	-8.9	-0.3
- Other operations and eliminations	-0.3	-0.3	-0.8	-0.9
Result for the period (EUR million)	-4.7	-0.7	-16.3	-4.3
Earnings per share, EUR	-0.64	-0.08	-2.56	-0.69
ROI, %			-19.8	-3.8
Equity ratio, %			21.3	38.7

NET SALES, OPERATING RESULT, BALANCE SHEET AND FINANCING

The Neo Industrial Group’s net sales for January–September 2011 were EUR 95.2 million (59.7 million). The Group’s operating result was EUR -12.1 million (-3.9), largely because of market-related difficulties and the launch of the Viscose Fibers segment in early 2011.

The Viscose Fibers segment’s net sales for January–September were EUR 16.9 million. The segment’s operating result was EUR -8.9 million.

The Cable segment’s net sales grew considerably to EUR 78.3 million (EUR 59.7 million). The segment’s operating result was EUR -2.4 million (-2.7).

The Single Family Housing segment’s net sales were EUR 67.4 million for January–September. This figure is not included in the Neo Industrial Group’s net sales. It is, however, reported in the segment-specific reviews. The Single Family Housing segment has only been reported since May 2010, which means that comparison figures will not be reported until 2012. Neo Industrial’s share of the Finndomo Group, which constitutes the Single Family Housing segment, is reported under “Share of the result of associates” in the consolidated income statement.

At the end of the review period, the balance sheet total stood at EUR 119.8 million (105.5 million). Neo Industrial’s liquidity situation has been tight throughout the review period due to the launch of production in the Viscose Fibers segment and the complexity of the related financial arrangements as well as market fluctuation and the considerable rise in the price of the raw materials used by the Cable segment.

Reka Cables’ working capital is financed with a revolving bank credit of EUR 6.0 million and a factoring credit of EUR 9.5 million as well as a sale of accounts receivable facility of up to EUR 3.5 million. On September 30, 2011, EUR 0.1 million of the revolving bank credit was unused. Of the factoring credit, EUR 1.0 million was unused, and of the sale of accounts receivable facility, EUR 1.4 million was unused. On September 30, 2011, EUR 2.2 million of Avilon’s revolving bank credit was used, as was EUR 1.7 million of its factoring credit, both of which have been discontinued because of the corporate reorganization of Avilon.

This unaudited report has been prepared in accordance with IAS 34 requirements for interim reports. The same principles have been followed as in the financial statements for 2010. During the review period, the Group adopted new accounting principles for Avilon’s emission rights. Emission rights received are recognized as intangible assets and deferred income. These principles are described in more detail under “Accounting policies” in “Notes to the consolidated financial statements.”

MAJOR EVENTS DURING THE REVIEW PERIOD

Cable

Net sales for the Cable segment for January–September were EUR 78.3 million (EUR 59.7 million). Compared with the corresponding period in 2010, the segment recorded a growth of 31 percent. Its operating result was EUR -2.4 million (-2.7 million). Net sales for July–September were EUR 25.4 million (20.6 million), and the operating result was EUR -1.5 million (0.7 million). In the third quarter of 2011, profitability decreased largely because of the decline in metal prices, which had a direct effect on the market value of open metal derivatives. Furthermore, the segment’s profitability suffered from the breakdown of a copper wire drawing machine at Reka Cables’ plant in Keuruu. In addition to the Keuruu factory, the production unit in question delivers copper wire to other plants. The four-week breakdown resulted in lost sales and delayed deliveries in all of the segment’s plants in Finland. The delivery difficulties continued beyond the end of the third quarter. Reka Cables will apply for interruption insurance compensation for the machinery breakdown in Keuruu. The compensation is estimated at EUR 0.8 million and is recognized accordingly.

Growth in the Cable segment came to an end in the third quarter of 2011, but Reka Cables recorded an increase in sales as well as increased production volumes in all of its plants in Finland compared with the corresponding period in 2010. Demand was lively, especially in Finland, among wholesalers and contractors alike. In other Nordic countries, sales did not develop as expected. Sales continued at a good level in the Baltic countries after the second quarter. The company’s quotation base and order backlog were at good levels at the end of the review period, but the machinery breakdown is still affecting deliveries.

In the Russian cable market, the third quarter is typically the slowest period of the year. The market situation for the Cable segment’s units in Russia remained weak after the second quarter. The competition continued to be tough, and the price level for power cables remained low. The Russian units showed a loss in the third quarter, but the last quarter of 2011 is expected to be profitable.

Raw material prices remained volatile in the third quarter. Reka Cables strives to manage the situation with safeguards and good working capital management. The availability of metal raw materials was good, but that of plastic raw materials proved to be challenging at times.

The segment’s companies also include Nestor Cables, a manufacturer of telecommunications and fiber-optic cable. In January–September 2011, the company’s net sales were EUR 24.1 million (22.5 million). The company showed a loss in the review period. The uncertain financial market affected customers’ investment decisions, and cable projects were postponed until 2012.

Viscose Fibers

Net sales for the Viscose Fibers segment for January–September 2011 were EUR 16.9 million. Its operating result was EUR -8.9 million (-0.3 million). The segment showed a loss for the following reasons: the start-up costs of the production plant; the postponement of the launch of production from December 2010 until mid-January 2011; difficulty in the availability of dissolving pulp and the related decline in the capacity utilization rate toward the end of the first quarter; the maintenance shutdown in early April; as well as the deterioration of the market situation in July and the production curtailment shutdown that ensued. Net sales for the Viscose Fibers segment for July–September were EUR 1.9 million. Its operating result was EUR -1.1 million (-0.3 million).

The market for fire-retardant viscose fiber, Avilon’s specialty product, deteriorated with the United States housing market throughout the period, contrary to what customers indicated in the first half of the year. In early 2011, Avilon lost some of its market share in fire-retardant fibers due to difficulties in the availability of dissolving pulp. In May, Avilon introduced what is known as PPV technology, which is used for converting paper-grade pulp into raw material suitable for viscose production. This technology has permanently solved the problems related to raw materials. At the time, however, the market situation had already turned unfavorable. The deterioration of the market for fire-retardant fiber was the main reason for Avilon’s production curtailment shutdown, which began in July, and for the company filing a petition for corporate reorganization in September.

Because of the high quality of Avilon’s fire-retardant fiber, customer interest is strong, and the company has quickly established itself as a credible player in the United States. During the third quarter, Avilon served its customers by selling fire-retardant fiber stock that had been manufactured before the shutdown. The current stock is likely to be sold out by the end of the year.

The market for standard viscose fibers began to revive in late August with customers’ decreasing stock levels. The price of dissolving pulp is expected to remain at such a high level that using paper-grade pulp, a more cost-efficient option, as its primary raw material will provide Avilon a clear competitive edge in the future.

The PPV technology, which makes it possible to use paper-grade pulp, has attracted great interest in the field. License sales were negotiated actively in August and September. In addition to the PPV technology, the Viscose Fibers segment’s portfolio includes the carbamate technology, which is under development, as well as new applications for fire-retardant fiber. Avilon’s expectations of increased demand for specialty products and new production technologies for pulp-based textile fibers have improved with growing customer interest.

Avilon has a good position in the market for fire-retardant fibers, and the company’s range of specialty products will be expanded to cover new areas. During the review period, Avilon and the Finnish company SilverPhasE announced their letter of intent on producing anti-microbial viscose fiber. Neo Industrial issued a stock exchange release on the matter on September 22, 2011. Production at the Valkeakoski plant will be relaunched as soon as it is deemed to be profitable; that is, as soon as sufficient demand for specialty products and financing for the relaunch have been secured. The plans related to the corporate reorganization procedure will be finalized by February 6, 2012, and the decision about the completion of the reorganization program will be made on August 30, 2012. The reorganization procedure will not prevent production from being relaunched.

During the review period, Avilon held emission rights, all of which it sold. Some of these rights will not be used during 2011 and have been recognized as revenue. Emission rights used by Avilon are recognized as a cost provision, and the company must later buy back at least some of the emission rights it sold.

Single Family Housing

Net sales for Finndomo, the company that constitutes Neo Industrial’s Single Family Housing segment, for January–September were EUR 67.4 million (79.1 million). Net sales for July–September decreased to EUR 17.1 million (32.5 million). Finndomo showed a loss in all quarters. The figures from 2010 include the company’s business operations in Sweden, which were divested during the review period.

The corporate reorganization of Finndomo AB in Sweden was completed in the third quarter of 2011. Related to the reorganization, Finndomo recognized a total of EUR 2.7 million of write-offs of accounts receivable. Neo Industrial’s share of the amount recognized as a cost is the same as its share of ownership: 30.3 percent. In addition, Finndomo has liquidated real estate and plots and collected accounts receivable, which has freed up capital. This process will continue in the fourth quarter.

In line with its new strategy, Finndomo is focusing on its core business, the production and sale of prefabricated homes in Finland, Russia and the Baltic countries.

Consumer uncertainty about economic development in the eurozone was reflected in the demand for prefabricated homes in the third quarter, as it was earlier in the year. Sales were lower than those in 2010 throughout the sector.

During the third quarter, the company increasingly invested in improving customer service and expanding the scope of its deliveries, as more and more customers are interested in turnkey solutions. With this in mind, Finndomo introduced a new maintenance concept in the fall. This additional service ensures sufficient levels of maintenance and technical functionality for prefabricated homes, in addition to comfortable living.

Finndomo also further specified its regional building concept in the third quarter. Instead of acting as both a developer and a contractor, which ties down capital and resources, Finndomo will focus on developing residential areas with wooden homes and act as a modular home and component supplier in regional building projects.

MAJOR EVENTS AFTER THE REVIEW PERIOD

The District Court of Pirkanmaa accepted Avilon Ltd’s petition for corporate reorganization on October 6, 2011, and the preparation of the reorganization plan began. Neo Industrial issued a stock exchange release on the matter on October 6, 2011.

Sari Tulander, CFO of Neo Industrial Plc, was appointed Managing Director of Avilon Ltd. Heikki Hassi will continue as Managing Director of Carbatec Ltd, focusing on research and development operations. Neo Industrial issued a stock exchange release on the matter on October 21, 2011.

INVESTMENTS

In January–September 2011, the Neo Industrial Group’s investments totaled EUR 4.8 million (12.5 million), of which EUR 0.1 million was related to the Cable segment and EUR 4.7 million to the Viscose Fibers segment. The Group’s long-term leases of real estate are recognized as provisions of fixed assets in accordance with IFRS.

During the review period, Neo Industrial made an additional investment of slightly less than EUR 3 million in Finndomo. This investment was converted into an equity investment during the second quarter.

SHARES AND SHARE CAPITAL

Neo Industrial Plc’s share capital is divided into A and B shares. On September 30, 2011, its total share capital was EUR 24,082,000, and the number of shares was 6,020,360. The total number of shares includes 91,727 B shares owned by Neo Industrial. The holding represents 1.5 percent of the company’s share capital and 1.1 percent of the votes. The company holds no A shares. Neo Industrial Plc’s B shares (NEO1V) are listed on NASDAQ OMX Helsinki.

Company shares	Sep 30, 2011	Sep 30, 2010
Company share capital (EUR)	24,082,000	24,082,000
A shares (20 votes per share)	139,600	139,600
B shares (1 vote per share)	5,880,760	5,880,760
Total	6,020,360	6,020,360
B shares held by the company	91,727	91,877

In January–September 2011, a total of 284,139 (334,444) of Neo Industrial’s B shares were traded on NASDAQ OMX Helsinki, representing 4.8 percent (5.7 percent) of the total number of shares. At the end of trading on September 30, 2011, the share price was EUR 4.25 (8.05), and the average share price for January–September was EUR 7.22 (7.48). The lowest quotation in January–September was EUR 3.50 (5.51), and the highest was EUR 9.43 (9.43). The company’s market capitalization was valued at EUR 24.9 million (47.3 million) on June 30, 2011.

ACQUISITION AND DISPOSAL OF OWN SHARES

During the review period, Neo Industrial did not exercise the authorizations of the general meetings of June 10, 2009, and June 9, 2010, nor the new authorization of the Annual General Meeting of March 30, 2011, to acquire the company’s own shares.

The Group decided to dispose of its own shares through a trading program. The first 1,000 shares traded at EUR 8.00 per share on June 23, 2011, after which Neo Industrial held a total of 91,727 of its own shares.

ANNUAL GENERAL MEETING AND CORPORATE GOVERNANCE

Neo Industrial Corporation’s Annual General Meeting was held in Helsinki on March 30, 2011.

The Annual General Meeting approved the Board of Directors’ proposal that the Board consist of six members. The following members were appointed: Matti Lainema (Chairman), Pekka Soini (Deputy Chairman), Ilpo Helander, Risto Kyhälä, Taisto Riski and Raimo Valo.

A separate stock exchange release about the Annual General Meeting’s decisions was issued on March 30, 2011.

The members of Neo Industrial’s previous audit committee were Ilpo Helander, Taisto Riski and Pekka Soini. The members of Neo Industrial’s new audit committee are Taisto Riski, Pekka Soini and Raimo Valo. The new committee was established on March 30, 2011.

The company’s Managing Director is Markku E. Rentto.

GROUP STRUCTURE AND SHAREHOLDERS

Neo Industrial Plc is the parent company of the Group, which includes the Neo Industrial wholly owned subsidiaries Novalis Plc and Alnus Ltd as well as Carbatec Ltd and its subsidiaries and associated companies. Carbatec Ltd is Avilon Ltd’s parent company. Neo Industrial Plc is domiciled in Hyvinkää.

On September 30, 2011, Neo Industrial had 12,291 shareholders. The largest shareholder, Reka Ltd, held 50.76 percent of the shares and 65.77 percent of the votes. Neo Industrial Plc is therefore part of the Reka Group. Reka Ltd is domiciled in Hyvinkää.

At the end of September 2011, the combined holding of the ten largest shareholders was 61.2 percent of the shares and 72.9 percent of the votes. The Members of the Board, CEO and CFO directly owned and controlled a total of 2,960,618 Neo Industrial B shares on September 30, 2011.

PERSONNEL

In January–September 2011, the Group employed an average of 607 (567) people. At the end of September 2011, the Group had 611 employees (572), of whom 463 represented the Cable segment and 133 represented the Viscose Fibers segment. The rest worked in Neo Industrial’s administration.

RISKS AND UNCERTAINTY FACTORS

Neo Industrial’s financial risks include currency, interest rate, commodity, liquidity, credit and investment market risks. Financial risks and the related protection measures are described in more detail in notes to the 2010 financial statements. The company’s future risk factors are related to the business development of its portfolio companies.

The Group’s liquidity situation is tight. Previously promised funding, which was connected to the decision about Avilon’s acquisition and start-up, did not materialize within the agreed-upon timetable. In addition, it has not been possible to use part of Avilon Ltd’s financing solution, because the related loan guarantee by the municipality is still pending appeal. Having suffered from liquidity problems, Avilon filed a petition for corporate reorganization in September. The petition was accepted after the review period. The purpose of the reorganization is to secure the company’s long-term operating conditions. Currently, Avilon’s uncertainty factors are related to securing sufficient demand for specialty products, so that relaunching production at the plant will be profitable, and to ensuring sufficient funding for the relaunch.

The Viscose Fibers segment is a new business subject to the risks associated with any business start-up. Its main risks include market and competitor development and currency fluctuations as well as fluctuations in the price of raw materials. These considerations also affect liquidity management.

In the Cable segment, the liquidity situation has tightened because of the increase in metal prices, increased net sales and stricter payment terms in particular. The most significant risks are related to market development as well as fluctuations in the price of raw materials and currencies. Along with the increased volume of operations, the fluctuation in metal prices will increase the need for working capital in operational activities. Combined with strong seasonal fluctuation, this adds pressure to liquidity management.

Neo Industrial believes in the growth and development of the Russian cable market. The company has made significant investments in making use of business opportunities in Russia. The investments entail the risk that growth in Russia will not meet expectations. The Group continues to benefit from the internal audit made in 2009 by its audit committee of risks related to its operations in Russia.

In the Single Family Housing segment, the most significant risks are related to the development of demand and the competition situation as well as the production capacity utilization rate and fluctuations in the price of raw materials.

NEAR-TERM OUTLOOK

The global economy currently causes significant uncertainty, which may affect all of Neo Industrial’s business areas.

In the Viscose Fibers segment, demand and price development are difficult to predict. The decision to relaunch production depends on the demand for high-margin specialty products as well as on securing sufficient funding. The segment’s result in the second half of 2011 will be affected by the market situation, the continuing shutdown and the progress of the new technology business. Neo Industrial predicts that the segment’s result for the full year will be unprofitable.

In the Cable segment, the market situation improved toward the end of 2010, as did profitability. In addition, significant reorganization measures related to production, which caused non-recurring expenses, were completed during the review period. The Cable segment is expected to regain profitability during the last quarter of 2011. The segment’s good results in October supports this expectation.

In the Single Family Housing segment, the market situation toward the end of the year is worse than what was predicted in early 2011. Finndomo divested operations and property that were not part of its core business and burdened its profitability. This will improve Finndomo’s economic outlook.

Throughout the year, the company has paid special attention to liquidity. To ensure liquidity and to facilitate strong growth in the different segments, Neo Industrial has carried out negotiations on financing and payment terms as well as boosted inventory turnover and freed up capital assets. To support its funding, Neo Industrial is currently in the process of acquiring a bond from the financial market.

Helsinki, November 10, 2011

Neo Industrial Plc

Board of Directors

More information: Markku E. Rentto, Managing Director, tel. 020 720 9191

Sari Tulander, CFO, tel. 020 720 9192

www.neoindustrial.fi

Neo Industrial Plc is a Finnish industrial investment and development company. Its strategy is to invest in synergistic companies, develop them through active ownership and improve the return on invested capital through dividend streams and increase in value. Neo Industrial’s B share is listed on the main market of NASDAQ OMX Helsinki.

Neo Industrial’s segments are Cable (Reka Cables, Expokabel, Nestor Cables), Viscose Fibers (Avilon) and Single Family Housing (Finndomo).

CONSOLIDATED INCOME STATEMENT (IFRS)

 

EUR 1,000	7/1–9/30/2011	7/1–9/30/2010	1/1–9/30/2011	1/1–9/30/2010
Net sales	27,355	20,596	95,235	59,680
Change in inventories of finished products and production in progress	-2,326	781	1,744	-1,570
Production for own use	2	3	18	31
Materials and services	-20,791	-15,388	-81,663	-41,183
Personnel expenses	-4,418	-3,465	-14,912	-10,170
Depreciation and impairment	-1,300	-1,611	-4,225	-3,580
Other operating income and expenses	-1,437	-794	-8,282	-7,074
	-30,270	-20,472	-107,319	-63,546
Operating profit	-2,916	123	-12,084	-3,866
Financial income	471	232	722	1,511
Financial expenses	-1,891	-272	-3,765	-1,773
Share of the result of associates	-599	-388	-4,161	-647
Profit before taxes	-4,935	-304	-19,288	-4,775
Taxes	282	-381	2,974	497
Result for the period	-4,653	-686	-16,314	-4,277
Profit attributable to
Equity holders of the parent	-3,803	-499	-15,288	-4,105
Minority interests	-850	-186	-1,026	-172
	-4,653	-686	-16,314	-4,277
Earnings per share attributable to the shareholders of the parent (EUR)
Before and after dilution, EUR	-0.64	-0.08	-2.56	-0.69
Number of shares	5,929,483	5,928,483	5,929,483	5,928,483
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (IFRS)
Result	-4,653	-686	-16,314	-4,277
Other comprehensive items
Translation differences related to foreign units	-687	-739	-604	1,340
Total	-687	-739	-604	1,340
Total comprehensive income	-5,340	-1,425	-16,918	-2,937
Total comprehensive income attributable to
Shareholders of the parent	-4,490	-1,238	-15,892	-2,711
Minority interests	-850	-186	-1,026	-226
	-5,340	-1,425	-16,918	-2,937
Equity per share (EUR)			4.34	6.88

CONSOLIDATED BALANCE SHEET (IFRS)

EUR 1,000	9/30/2011	12/31/2010
ASSETS
Non-current assets
Goodwill	3,469	3,624
Other intangible assets	11,036	7,765
Tangible assets	40,452	43,719
Holdings in associates	11,606	4,668
Receivables	17	1
Derivative contracts	0	66
Deferred tax assets	6,031	3,040
Total non-current assets	72,611	62,883
Current assets
Inventories	19,297	17,529
Sales receivables and other receivables	23,672	19,880
Tax receivables from the profit	5	17
Derivative contracts	30	1,174
Other financial assets	3,139	2,894
Cash and cash equivalents	1,051	2,734
Total current assets	47,194	44,229
Total assets	119,805	107,112
SHAREHOLDERS’ EQUITY AND LIABILITIES
Shareholders’ equity
Share capital	24,082	24,082
Premium fund	66	66
Reserve fund	1,221	1,221
Own shares	-591	-599
Translation differences	-1,843	-1,239
Retained profit	-26,089	-11,492
Other unrestricted equity	28,902	21,327
Equity attributable to shareholders of the parent	25,748	33,366
Minority interests	-252	573
Total shareholders’ equity	25,495	33,939
Non-current liabilities
Deferred tax liabilities	3,943	4,047
Provisions	872	839
Interest-bearing liabilities	24,084	25,905
Non-interest-bearing liabilities	1,425	1,584
Current liabilities
Tax liabilities from the profit	6	24
Short-term interest-bearing liabilities	31,101	16,314
Accounts payable and other liabilities	32,880	24,459
Total liabilities	94,310	73,172
Shareholders’ equity and liabilities	119,805	107,112

 CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY (IFRS)

EUR 1,000	A	B	C	D	E	F	G	H	I	J
Shareholders’ equity Dec 31, 2009	24,082	66	1,221	-382	-2,013	21,327	-308	43,993	1,445	45,437
Translation differences					1,340			1,340		1,340
Result for the period							-4,078	-4,078	-226	-4,304
Dividends paid							-1,483	-1,483		-1,483
Acquisition of own shares				-213				-213		-213
Minority interests							-59	-59	59	0
Shareholders’ equity Sep 30, 2010	24,082	66	1,221	-594	-673	21,327	-5,928	39,501	1,278	40,778
EUR 1,000	A	B	C	D	E	F	G	H	I	J
Shareholders’ equity Dec 31, 2010	24,082	66	1,221	-599	-1,239	21,327	-11,491	33,366	573	33,939
Result for the period					-604		-15,288	-15,892	-1,026	-16,919
Acquisition of own shares				8				8		8
Minority interests							691	691	201	892
Share of changes in associates						7,575		7,575		7,575
Shareholders’ equity Jun 30, 2011	24,082	66	1,221	-591	-1,843	28,902	-26,089	25,748	-252	25,496

 
Explanation of codes:

A Share capital

B Premium fund

C Reserve fund

D Own shares

E Translation differences

F Other unrestricted equity

G Retained profit

H Total

I Minority interest

J Total shareholders’ equity

Shareholders’ equity in Finndomo was strengthened during the review period. In addition to an equity investment by Finndomo’s principal owners, the company’s reserve for invested non-restricted equity increased by EUR 25 million. Neo Industrial’s share of this increase is 30.3 percent, amounting to EUR 7.6 million. 

STATEMENT OF CASH FLOWS, IFRS

EUR 1,000	1/1–9/30/2011	1/1–9/30/2010
Cash flows from operating activities
Payments received from operating activities	95,140	55,930
Payments for operating activities	-102,839	-56,623
Paid interest and other financial expenses	-1,828	-836
Interest received and other financial income	1,079	473
Direct taxes paid	-26	-35
Net cash provided by operating activities	-8,474	-1,092
Cash flows from investments
Subsidiaries and new business acquisition	0	-6,146
Investments in tangible fixed assets	-984	-2,950
Investments in intangible fixed assets	-6,935	-324
Proceeds from sale of other investments	0	224
Withdrawals from other financial funds	-250	6,912
Loans granted	0	-324
Loan repayments	2,019	0
Net cash provided by investing activities	-6,150	-2,608
Cash flows from financing activities
Sale of own shares	8	-207
Increase in loans	14,489	7,762
Decrease in loans	-750	-867
Payments of finance lease activities	-773	-445
Dividends paid	0	-1,483
Net cash provided by financing activities	12,974	4,760
Change in cash and cash equivalents	-1,650	1,060
Cash and cash equivalents at the beginning of the period	2,734	3,000
Exchange rate differences	-33	96
Cash and cash equivalents at the end of the period	1,051	4,156

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

This report has been prepared in accordance with IAS 34 requirements for interim reports.

ACCOUNTING POLICIES

This interim report has been prepared in accordance with the same principles as the financial statement for 2010. In the first quarter of 2011, the Group adopted new accounting principles for Avilon’s emission rights. Emission rights received are recognized as intangible assets and deferred income. Emission rights are valued at current fair value or other probable value. If the market value of the emission rights drops significantly below the book value and the decline is considered to be permanent, the impairment loss is recognized under rights that the Group does not intend to use internally. Deferred revenue is recognized in other operating income during the period for which the corresponding rights are granted. Expenses corresponding to actual emissions are recognized in the income statement under other operating expenses and appear in the balance sheet reserves. Emission rights that will not be used during the review period are recognized at the time that they are deemed to be surplus. Emission rights and related provisions are derecognized when they are sold or submitted to cover obligations. Any gains or losses are recognized in the income statement.

SEGMENT INFORMATION

Sep 30, 2011	Cable	Viscose Fibers	Single Family Housing	Eliminations and other	Group total
EUR 1,000				operations
Net sales	78,345	16,919	0	-44	95,220
Segment’s operating profit	-2,448	-8,880	0	0	-11,328
Unallocated items	0	0	0	-756	-756
Operating profit	-2,448	-8,880	0	-756	-12,084
Share of the result of associates			-4,161		-4,161
Unallocated items				-69	-69
Result for the period					-16,314
Assets
Segment’s assets	74,156	24,639	11,606		110,401
Unallocated assets				9,404	9,404
Total assets	74,156	24,639	11,606	9,404	119,805
Liabilities
Segment’s liabilities	55,943	33,798	0		89,741
Unallocated liabilities				4,570	4,570
Total liabilities	55,943	33,798	0	4,570	94,310
Assets less liabilities	18,213	-9,159	11,606	4,834	25,495
Investments	122	4,668	0	3,031	7,821
Depreciations	-3,483	-727	0	-15	-4,225
Sep 30, 2010	Cable	Viscose Fibers	Single Family Housing	Eliminations and other	Group total
EUR 1,000				operations
Net sales	59,680	0	0	0	59,680
Segment’s operating profit	-2,676	-287	0		-2,963
Unallocated items			-903	0	-903
Operating profit	-2,676	-287	-903	0	-3,866
Share of the result of associates	0		-646		-646
Unallocated items				235	235
Result for the period					-4,277
Assets
Segment’s assets	83,951	8,750	0	0	92,701
Unallocated assets			14,662	-1,903	12,759
Total assets	83,951	8,750	14,662	-1,903	105,461
Liabilities
Segment’s liabilities	57,446	6,495	4,400		68,340
Unallocated liabilities			11,203	-14,859	-3,656
Total liabilities	57,446	6,495	15,603	-14,859	64,684
Assets less liabilities	26,506	2,255	-940	12,956	40,777
Investments	4,383	8,090	0	0	12,473
Depreciations	-3,562	-17	0	0	-3,579

 

Cable segment’s net sales by product group, EUR million	1–9/2011	1–9/2010
LV energy	26.5	20.6
Power cable	51.8	39.1
Total	78.3	59.7
Cable segment’s net sales by sales area, EUR million	1–9/2011	1–9/2010
EU countries	67.9	46.9
Non-EU countries	10.4	12.8
Total	78.3	59.7

The Cable segment’s three largest customers are the Onninen Group, Rexel Group and Sonepar Group, each of which represents more than 10 percent of the segment’s net sales. 

Viscose Fibers segment’s net sales by sales area, EUR million	1–9/2011	1–9/2010
EU countries	3.7	0.0
Non-EU countries	13.2	0.0
Total	16.9	0.0

 CHANGE IN NON-CURRENT ASSETS

EUR 1,000	1–9/2011	1–12/2010
Book value at the beginning of the period	43,719	32,978
Investments	765	15,448
Decrease	-35	-944
Depreciations	-3,546	-4,224
Translation differences	-451	461
Book value at the end of the period	40,452	43,719

CONTINGENT LIABILITIES

EUR 1,000	9/30/2011	12/31/2010
Debts secured against business mortgages, securities or guarantees
Loans from financial institutions	22,217	24,053
Loans to others	7,907	5,400
Granted business mortgages	41,820	21,820
Book value of pledged securities	25,885	25,712
Granted guarantees	29,634	18,933
Other collateral
Guarantees and payment commitments	3,516	3,173
Security deposits	3,139	2,894
Mortgages	4,700	3,000

 COMMITMENTS              

The factoring credit was secured by a total of EUR 12.6 million of receivables on September 30, 2011 (EUR 6.0 million on December 31, 2010). The factoring credit stood at EUR 10.2 million on September 30, 2011 (EUR 3.6 million on December 31, 2010).   
      
INVESTMENT COMMITMENTS

Investment commitments for tangible fixed assets amounted to EUR 0.65 million on September 30, 2011 (EUR 0.4 million on December 31, 2010).

DERIVATIVE CONTRACTS

EUR 1,000	Positive current values	Negative current values	Current net values 9/30/2011	Current net values 12/31/2010	Nominal values 9/30/2011	Nominal values 9/30/2010
Currency derivatives
Forward exchange agreements	0	0	0	-26	0	1,545
Option contracts	0	-12	-12	0	3,000	0
Raw material options
Metal derivatives	29	-575	-546	1,240	3,969	4,366
Total derivatives	29	-587	-558
Long-term derivatives deducted
Short-term share	29	-587

RELATED PARTY EVENTS

Neo Industrial Plc, and therefore also Neo Industrial Group, belongs to the Reka Group. Reka Ltd has a 50.76 (50.76) percent holding of shares and 60.77 (60.77) percent of votes.

RELATED PARTY TRANSACTIONS 

Transactions with the Reka Group

EUR 1,000	1–9/2011	1–9/2010
Sales	16	10
Dividends	0	-764
Other purchases	-1,305	-1,098
Other income	0	14
Interest revenues	10	14
Sales receivables and other receivables at the end of the period	1,404	1,363
Finance leases (activated on the balance sheet)	-14,922	-10,983
Other debts at the end of the period	0	-72

Other related party transactions

EUR 1,000	1–9/2011	1–9/2010
Interest revenues	73	108
Loan receivables	0	2,000
Sales receivables and other receivables at the end of the period	0	118

The Managing Director of Neo Industrial has significant controlling power in SAV-Rahoitus Plc.

Other related parties consist of companies that are connected to the company through an owner that has significant controlling power. Transactions with other related parties consist of transactions with SAV Rahoitus Plc. Loan receivables consist of short-term corporate loans that were made in 2009 after comparing different options of investing cash funds to gain higher revenues than those from fixed-term deposits. The loans have collateral.

CALCULATION OF KEY FINANCIAL INDICATORS

Return on investment (ROI), %	=	Profit before taxes + interest and other financial expenses / [Balance sheet total - obligatory provisions and non-interest-bearing liabilities] (average)	x 100
Equity ratio, %	=	Shareholders’ equity + minority interest less deferred tax liabilities / Balance sheet total - advances received	x 100
Earnings per share (EPS), EUR	=	Profit for the period belonging to equity holders of the parent company / Number of shares adjusted for share issues (average)
Equity per share, EUR	=	Shareholders’ equity - minority interest less deferred tax liabilities / Number of shares adjusted for share issues at the end of the financial period

All comments in this report that do not refer to actual facts are future estimates. Such estimates include expectations concerning market trends, growth and profitability as well as statements including the words “believe,” “assume” or “will be” or a similar expression. Since these estimates are based on current plans and estimates, they involve risks, and uncertainty factors may cause the actual results to differ substantially from current statements.

Among other things, such factors include: 1) availability and cost of production inputs, demand for new products, changes in circumstances affecting the acquisition of capital under acceptable conditions, and operating conditions, such as continued success in production and the ensuing efficiency benefits; 2) sector-specific circumstances, such as the intensity of demand for products, the competition, current and future market prices for the Group’s products and related pricing pressures, the financial situation of the Group’s customers and competitors, and competitors’ possible new products; and 3) the general economic situation, such as economic growth in the Group’s main market areas or changes in exchange rates and interest rates.