AI Terminal
Nurminen Logistics Oyj
Annual Report • Mar 6, 2020
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Annual Report
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FINANCIAL STATEMENTS AND THE BOARD'S REPORT ON OPERATIONS
2019
Head Office Satamakaari 24, FI-00980 Helsinki, Finland Tel. +358 10 545 00 www.nurminenlogistics.com
Contents
| The Board's Report on Operations . | 4 |
|---|---|
| Consolidated Statement of Comprehensive Income, IFRS . | 9 |
| Consolidated Statement of Financial Position, IFRS10 | |
| Consolidated Balance Sheet, IFRS 16 Impact . | 11 |
| Consolidated Cash Flow Statement, IFRS12 | |
| Consolidated Cash Flow Statement, Impact of IFRS 16 . | 12 |
| Consolidated Statement of Changes in Equity, IFRS . | 13 |
| Notes to the Consolidated Financial Statements, IFRS . | 14 |
| 1. The accounting principles for the consolidated financial statements . | 14 |
| 2. Segment information . | 20 |
| 3. Other operating income20 | |
| 4. Other operating expenses20 | |
| 5. Employee benefit expenses21 | |
| 6. Depreciation, amortisation and impairment losses . | 21 |
| 7. Financial income and expenses . | 21 |
| 8. Income tax expense . | 22 |
| 9. Earnings per share22 | |
| 10. Subsidiaries and associates23 | |
| 11. Property, plant and equipment24 | |
| 12. Intangible assets25 | |
| 13. Carrying amounts of financial assets and financial | |
| liabilities by category . | 26 |
| 14. Impairment of assets . | 26 |
| 15. Equity-accounted investees . | 28 |
| 16. Non-current receivables28 | |
| 17. Deferred tax assets and liabilities . | 28 |
| 18. Trade and other receivables . | 29 |
| 19. Cash and cash equivalents . | 29 |
| 20. Equity disclosures . | 30 |
| 21. Share-based payments30 | |
| 22. Financial liabilities . | 31 |
| 23. Trade payables and other liabilities . | 31 |
| 24. Financial risk management . | 32 |
| 25. Other leases . | 35 |
| 26. Contingencies and commitments . | 35 |
| 27. Related party transactions36 | |
| 28. Acquisitions and divested businesses36 | |
| 29. Events after the balance sheet date . | 36 |
| Parent Company's Income Statement . | 37 |
| Parent Company's Balance Sheet37 | |
| Parent Company's Cash Flow Statement . | 38 |
| Notes to the Parent Company's Financial Statements . | 39 |
| Notes to the Income Statement40 | |
| Notes to the Balance Sheet . | 41 |
| Other notes . | 44 |
| Notes Regarding Personnel and Company Organs . | 44 |
| Signing of the Financial Statements and the Board's Report on Operations . 45 | |
| Group's Key Figures . | 46 |
| Calculation of Key Figures . | 47 |
| Distribution of ownership . | 48 |
The Board's Report on Operations
Despite good work for developing organization and processes the year 2019 was not satisfactory for Nurminen Logistics. Net sales decreased to EUR 69.3 million (EUR 78.9 million) mainly due to Baltics and changes in business model in Russia. Adjusted the operating result was negative. The turnaround work in the business operations in Finland, that begun in the second half of the year, and progress on profitability on China cargo train towards the end of the year limited operating loss. No significant property investments were made during the financial period.
Differences between business operations by service and region within the Group were quite high. Bi-monthly cargo train service between Vuosaari, Finland and Hefei, China had positive development and increasing filling rate during autumn. We managed to increase filling rate especially in the westbound trains which simultaneously improved profitability of the service. The investments for ramping up this service heavily weighted down on the operating result. Nurminen Logistics expects the business operations in Finland to provide significantly stronger cash flow during 2020 as the cargo train service to China grows and sales increase. Cargo train service provides notable added volume to cargo and forwarding services.
Demand for freight forwarding services slightly decreased during the second half of 2019 as the volumes of international trade to Finland were in decline. Nurminen Logistic Services Oy responded to this development by acquiring PFC Nordic Oy, which expanded the service portfolio and customer base of the group especially in the maritime freight forwarding. Forwarding services' net sales increased and profitability slightly increased in comparison to previous year.
Business performance in the Baltic countries continued at a good level. Operations in cargo services developed positively excluding Helsinki area. Vuosaari cargo services operates on a high cost level in comparison to net sales development. Due to the high cost level, operations were streamlined by operative realignment and by starting a process improvement program to continue the turnaround work of 2019, and the projects within the improvement program will be concluded in 2020. The program will utilize the functions of the renewed ERP system.
Nurminen Logistics has had cashflow negative business operations in Finland during the year 2019. Due to the adoption of IFRS 16 from the beginning of 2019, and the new growth forecasts for the coming years, the company recognized impairment loss of EUR 5.3 million on goodwill. The write down has a significant negative impact on the company's equity ratio.
We adjusted the operations of the company with changes made after the co-determination procedures. We continued our efforts to improve the efficiency of our core businesses by reorganizing our responsibilities for operational management and the Helsinki production organization. We started ramp down of the Luumäki terminal and discontinued the operations of our subsidiary in Estonia. We are in the process of exploring possibilities for reducing real estate liabilities connected to the Vuosaari terminal during 2020, and new utilization opportunities for the property.
Our customers increasingly appreciate complete service solutions for supply chain management. The reliability and ease of use of these services are key demand drivers. Nurminen Logistics responds to these customer needs by itself and through partnerships. Sales team was doubled during the second half of 2019. Co-operation with customers and intensive sales work are central to 2020 financial performance development. Nurminen Logistics strives to become increasingly customer oriented and to become more active partner in our customer's processes. Our new IT-systems will increase the efficiency of our operations and improve our services.
The Market Situation in the Review Period and the Future Outlook
The economic growth and business cycle remained unchanged in Finland for the second half of 2019. Price decreases in the forest industry had negative impact on business operations of Nurminen Logistics in comparison to previous years.
Several industrial customers in the technology sector reported production records in 2019 even though generally growth in the technology industry can be characterized as stagnant. Especially the wheeled machines market in 2019 in all business lines (mining, forestry, harbor).
The volume index for chemical industry reached plateau in 2019 after years of increasing. The trend for new orders continued slight increase that slowed down towards the end of the year.
Increasing environmental awareness and appreciation for agile supply chains manifested especially in increasing bookings on China cargo train service. In future the Nurminen Logistics will deliver solutions to a wider range of customers for the whole width of supply chain management. As the economy in China continues to grow faster than in Europe its relative importance for the foreign trade for Finland which creates opportunities to the cargo train service.
| Adjusted EBIT | ||
|---|---|---|
| EUR 1,000 | 1.1.–31.12. 2019 |
1.1.–31.12. 2018 |
| EBIT | –8,517 | –6,046 |
| Profit and loss on sales and acquisitions Expenses from the verdict by the supreme court regarding |
642 | |
| case on employment Impairment loss on Luumäki terminal |
137 548 |
|
| Impairment loss on goodwill | 5,271 | |
| Adjusted EBIT | –1,919 | 921 |
Net sales amounted to EUR 69.3 million (EUR 78.9 million), decreasing 12.1 per cent from prior year. EBIT decreased, mainly due to impairment loss on goodwill by EUR 5.3 million, to EUR –8.5 million (EUR –6.0 million). Adjusted net sales amounted to EUR 69.3 million (EUR 78.9 million). Adjusted EBIT decreased to EUR –1.9 million (EUR 0,9 million).
Adjusted EBIT excludes loss on disposal of the Niirala terminal EUR 0.6 million, loss on disposal of the shares in the Russian company ZAO Rubesh EUR 0.1 million, expenses from the verdict by the supreme court regarding case on employment EUR 0.1 million, impairment loss on Luumäki terminal totaling EUR 0.5 million and impairment loss on goodwill EUR 5.3 million, in total EUR 6.6 million. No adjustments to the comparable result were made during the reporting period.
Net sales in railway logistics increased compared to previous year. The growth in net sales was mainly due to year's most important project, the integration of regular China cargo train service into Nurminen Logistics' operations and commercial activities. The profitability clearly increased towards the end of the year. Overall the cargo train service operated at loss during the review period. In the Q4 of 2019 the import trains operated at profit. For the export trains the service ramp-up is proceeding according to the plan. Establishing the train route was significant effort and weighted heavily upon the EBIT of the company. The ramp-up cost for the cargo block train service, instead of being activated, have been accounted as expenses in the income statement for the period in which they are incurred.
Volumes in the project logistics and chemical transport continued steady and profitable.
Nurminen Logistics' freight forwarding remained profitable. To increase growth and to add diversity to service portfolio Nurminen Logistics Services Oy executed an acquisition in accordance to its strategy in which PFC Nordic Oy, a growing company with high quality service, became part of freight forwarding business by Nurminen Logistics. Freight forwarding net sales increased from the prior year and profitability improved slightly. Slowdown in both import to and export from Finland was visible in the demand for the services during the last quarter of the year.
Cargo services net sales decreased compared to previous year. The adjusted EBIT remained on the prior year's level. During the review period, cargo services were unprofitable due to low utilization rate at Vuosaari terminal. In Kotka, utilization rate was on good level and services profitable.
From the beginning of May 2019, Nurminen Logistics rearranged real estate by discharging real estate obligations and clarifying financial situation of the company. Of the included real estate property, the Niirala terminal was sold during the review period. The sales amounted to EUR 0.6 million operating loss. The remaining Sale- and lease back arrangements with Ilmarinen Mutual Pension Insurance Company were concluded in advance in July. The aim is to continue removal of such real estate which is not in support of the core businesses of the company and to also reduce the level of strategic real estate cost.
Nurminen Logistics divested its Russian based train wagons and related business in late 2018. The new business is based on leasing and brokering train wagons. Russian subsidiary OOO Nurminen Logistics' net sales and profitability decreased year-on-year due to change in business concept. The company's result was slightly positive during the review period.
Baltic companies' net sales decreased as the transit traffic volumes declined. Simultaneously profitability increased. Baltic operations' profitability is on a good level.
Nurminen Logistics updated its strategy at the end of the spring 2019. The aim is to turn company's development so that it will accumulate value for company's shareholders. The strategy is based on turn-around -program which has three corner stones:
1) Increasing the profitability of company's core business' by renewing company's commercial plan and improving internal processes. The necessary actions have been divided into several sub-projects, which are supported by the ERP system, and the digital development stemming from it. The renewal of commercial plan aims to diversify company's customer portfolio, to increase Nurminen Logistics' participation at the customer's operations and to improve the margin of service portfolio. Company's diverse portfolio, well defined key products and new IT-platforms enable integration with customer's operations and create a strong basis for this. Operational improvements enable increasing volumes without increasing fixed costs.
- 2) Further increasing the number of services provided by developing the cargo block train to China, with increasing volume and scheduled train arrival and departure frequency. The goal is to reach profitability threshold in volume during the H1 of 2020.
- 3) Actively seeking to recognize and remain ready to act upon possible beneficial acquisition opportunities that will support company's current business. The acquisition of PCF Nordic Ltd was accomplished in accordance with this strategy point.
The actions based on the strategy renewal continued as turnaround work during the autumn 2019. This work continues in accordance with business prerequisites. Company strategy is to be updated during the spring 2020.
Tero Vauraste became the President and CEO of the company on 6 December 2019 and Ville Iho stepped down to work elsewhere. Ari Penttinen, SVP Forwarding and Terminal Services left the company on 19 August 2019. On 11 December the company announced that Iiris Pohjanpalo will become CFO from the 1 January 2020.
Effect of IFRS 16 on the Result for the Period
The company adopted the IFRS 16 standard as of 1 January 2019. Implementation has affected to income statement, balance sheet and cash flow statement and related key figures. The company implemented the standard with modifications. For this reason, the comparison figures for 2018 have not been restated in accordance with the new standard. The key difference of IFRS 16 in comparison with the previous standard is that operative leases are capitalized for the complete duration of lease agreements. The new standard has following impact: on the balance sheet, liabilities relating to leases are discounted on the balance sheet as of 1 January 2019 and right of use assets are booked to long term assets. Short-term and low value lease agreements are excluded from capitalization. Corresponding lease costs are derecognized from income statement and replaced with depreciation and financing expense of underlying asset and liability. IFRS 16 standard has had EUR 1.3 million positive impact on EBIT and EUR 0.1 million positive impact on net result 2019. Use of right depreciation amounted to EUR 3.9 million and financial expenses to EUR 1.2 million. The change is described in more detail in the sections on the consolidated statement of financial position, consolidated cash flow and notes to the consolidated financial statements.
Financial Position and Balance Sheet
Cash flow from operating activities amounted to EUR 0.5 million. Cash flow from investing activities totaled EUR –0.1 million. Cash flow from investing actiivties was impacted by investments in IT-systems and digitalization EUR 0.7 million, divestments of Niirala terminal and ZAO Rubesh subsidiary and acquisition PFC Nordic Oy, in total EUR 0.6 million. Cash flow from financing activities amounted to EUR –7.8 million. Implementation of IFRS 16 -standard affected the affected the consolidated cash flow. The change is described in more detail in the consolidated cash flow section.
At the end of the review period, cash and cash equivalents amounted to EUR 4.1 million of which EUR 0.5 million had separate designated purpose which has been determined in co-operation with Ilmarinen Mutual Pension Insurance Company. Cash and cash equivalents attributable to the Baltic operations amount to EUR 2.7 million.
The financial statements have been prepared assuming business continuity. The management of the company estimates that the operating cash flow generated by the company covers the current business needs and current liabilities for the next 12 months.
Current interest-bearing liabilities of the company, total of EUR 3.0 million, consist of financial leasing liabilities of EUR 2.3 million and factoring debt of EUR 0.7 million. The company's non-current interest-bearing liabilities are EUR 39.9 million, of which EUR 26.9 million are in connection with leases capitalized in accordance with IFRS 16 standard. Long term loans amount to EUR 13.0 million. These loans from Ilmarinen amounting to EUR 13.0 million are due in June 2023. A partial payment of EUR 0.5 million to loan from Ilmarinen was paid in November 2019 in advance.
The Group's interest-bearing liabilities totaled EUR 42.9 million and the net interest-bearing debt amounted to EUR 38.9 million. The company has an equity-based hybrid bond from Ilmarinen, amounting to EUR 1.5 million.
The balance sheet total was EUR 52.1 million, and the equity ratio was 1.5 %. The equity ratio excluding the effect of IFRS 16 was 2.8 %.
Capital Expenditure
The Group's gross capital expenditure during the review period amounted to EUR 0.7 million (EUR 0.7 million), accounting for 1% of net sales. Depreciation totaled EUR 5.2 (1.8) million, or 7.5% (2.3) of net sales. In accordance to IFRS 16 standard, use of rights depreciation amounted to EUR 3.9 million.
Group Structure
RW Logistics, a subsidiary of Nurminen Logistics Plc, sold the share in the Russian company ZAO Terminal Rubesh to Metsäliitto Cooperative during the review period. The Latvian associated company Team Lines Latvia SIA has discontinued its operations. Nurminen Maritime Estonia AS has discontinued its operations.
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, %): Nurminen Logistics Services Oy (100%), RW Logistics Oy (100%), PFC Nordic Oy (100%), Kiinteistö Oy Kotkan Siikasaarentie 78 (100%), Kiinteistö Oy Luumäen Suoanttilantie 101 (100%), Kiinteistö Oy Vainikkalan Huolintatie 13 (100%), NR Rail Oy (51%), Pelkolan Terminaali Oy (20 %), OOO Nurminen Logistics (100 %), Nurminen Maritime Latvia SIA (51%), UAB Nurminen Maritime (51%) and Nurminen Maritime Eesti AS (51%).
Personnel and Management
At the end of the review period, the Group had 176 employees, compared with 172 on 31 December 2018. The number of employees working abroad was 31. Personnel expenses in 2019 totaled EUR 9.2 million (EUR 9.0 million).
On 31 December 2019, Nurminen Logistics' Management Team consisted of the following members: Tero Vauraste, President and CEO, Teppo Talvinko, CFO (interim CEO until 18 March 2019), Mikko Järvinen, SVP Sales and Petri Luurila, CIO. In addition, the Management Team included Ville Iho, previous CEO, from 15 March until 5 December 2019 and Ari Penttinen, SVP Forwarding and Terminal Services in Finland until 19 August 2019.
Management Transactions
On 21 March 2019, Nurminen Logistics Plc was informed that Russian Capital Management Oy, a company under the control of Chairman of the Board of Directors Olli Pohjanvirta, had purchased 42,000 shares at a price of EUR 0.3487 per share.
On 25 October the company announced the remuneration in shares for the Board of Directors. Juha Nurminen, member of the Board of Directors subscribed for 41,071 shares, Jukka Nurminen, member of the Board of Directors subscribed for 41,071 shares, Irmeli Rytkönen member of the Board of Directors subscribed for 41,071 shares, Olli Pohjanvirta, the Chair of the Board of Directors subscribed for 82,143 shares, Alexey Grom, member of the Board of Directors subscribed for 41,071 shares and Hannu Leinonen, member of the Board of Directors subscribed for 35,714 shares.
Shares and Shareholders
Nurminen Logistics Plc's share has been quoted on the main list of Nasdaq Helsinki Ltd under the current company name since 1 January 2008. The total number of Nurminen Logistics Plc's registered shares is 44,604,174 and the registered share capital is EUR 4,214,521. The company has one share class and all shares carry equal rights in the company. The company name was Kasola Oyj until 31 December 2007. The company was listed on the Helsinki Stock Exchange in 1987.
The trading volume of Nurminen Logistics Plc's shares was 1,802,568 during the period from 1 January to 31 December 2019. This represented 4.0% of the total number of shares. The value of the turnover was EUR 549,000. The lowest price during the review period was EUR 0.26 per share and the highest EUR 0.44 per share. The closing price for the period was EUR 0.27 per share and the market value of the entire share capital was EUR 11,865,000 at the end of the period.
At the end of the 2019 financial year the company had 1,320 shareholders. At the end of 2018 the number of shareholders stood at 1,215.
At the end of 2019 the company held 106,333 of its own shares, corresponding to 0.2% of votes.
According to register of shareholders at 31 December 2019 the Board of Directors and management of the company ( including ownership of controlled entities) owned Nurminen Logistics shares as follows:
| THE BOARD OF DIRECTORS | SHARES | % |
|---|---|---|
| Juha Nurminen | 8,689,814 | |
| Olli Pohjanvirta | 3,248,195 | |
| Jukka Nurminen | 1,055,625 | |
| Alexey Grom | 176,115 | |
| Irmeli Rytkönen | 61,309 | |
| Hannu Leinonen | 143,714 | |
| 13,374,772 | 30,0 |
Dividend Policy
The company's Board of Directors has on 14 May 2008 determined the companys dividend policy, according to which Nurminen Logistics Plc aims annually distribute as dividends approximately one third of its net profit, provided that the company's financial position allows it.
Shareholder Agreements Related to Ownership and the Exercise of Voting Rights
No shareholder agreements related to ownership in Nurminen Logistics Plc and the exercise of voting rights have been brought to the company's attention with the exception of the announcement that was published in stock exchange release on 28 December 2007. According to the announcement, the members of the Board of directors and Management Team have undertaken not to sell or otherwise transfer shares in John Nurminen Ltd owned by them on this date and the company's shares received as demerger consideration in conjunction with the demerger of John Nurminen Ltd without the advance written consent of the Board of Directors of the company.
Decisions Made by the Annual General Meeting of Shareholders
Nurminen Logistics Plc's Annual General Meeting held on 12 April 2019 passed the following decisions:
Adoption of the annual accounts and resolution on discharge from liability
The General Meeting adopted the annual accounts, including the consolidated annual accounts for the financial year 1 January 2018 − 31 December 2018 and discharged the members of the Board of Directors, the President and CEO and the interim President and CEO from liability.
Payment of dividend
The General Meeting approved the Board's proposal that no dividend shall be paid for the financial year 1 January 2018 − 31 December 2018.
Composition and remuneration of the Board of Directors
The General Meeting resolved that the Board of Directors is composed of six members. The General Meeting re-elected the following members to the Board of Directors: Olli Pohjanvirta, Juha Nurminen, Jukka Nurminen, Irmeli Rytkönen and Alexey Grom and elected Hannu Leinonen as a new member of the Board of Directors.
The General Meeting resolved that for the members of the Board elected at the General Meeting for the term expiring at the close of the Annual General Meeting in 2020, the remuneration is paid as follows: annual remuneration of EUR 40,000 for the Chairman and EUR 20,000 for the other members of the Board.
In addition, a meeting fee of EUR 1,000 per meeting for the Board and Board Committee meetings is paid for each member of the Board living in Finland and EUR 1,500 per meeting for a member of the Board living outside Finland. Of the annual remuneration, 50 per cent will be paid in Nurminen Logistics Plc's shares and the rest in cash. A member of the Board of Directors may not dispose shares received as annual remuneration before a period of three years has elapsed from receiving shares. In addition, the Chairman of the Board will be paid a remuneration of EUR 7,500 per month as well as a car benefit with a maximum value of EUR 1,600 per month and telephone benefit.
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
The Annual General Meeting authorised the Board to decide on the issuance of shares and/or special rights entitling to shares as referred to in chapter 10, section 1 of the Finnish Limited Liability Companies Act.
Based on the authorisation, the Board of Directors is entitled to issue or transfer, 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 could be used, e.g., for financing of company and business acquisitions or for financing of other business arrangements and investments, for the expansion of the ownership structure, paying of remuneration of the Board members and/or for the creating incentives for, or encouraging commitment in, personnel.
The authorisation entitles the Board of Directors to decide on the share issuance with or without payment. The authorisation for deciding on a share issuance without payment includes also the right to decide on the share issue for the company itself, so that the authorisation may be used in such a way that in total no more than one tenth (1/10) of all shares in the company may from time to time be in the possession of the company and its subsidiaries.
The authorisation includes the Board of Director's right to decide on all other terms and conditions of the share issuances and the issuances of special rights. The authorisation entitles the Board of Directors to decide on share issuances, issuances of option rights and other special rights entitling to shares in every way to the same extent as could be decided by the General Meeting, including the Board of Director's right to decide on directed share issuances and/or issuance of special rights.
In case of issuances of shares and/or special rights entitling to shares in deviation of the pre-emptive rights of shareholders and in issuance of shares without payment, the subscription price per share shall not be lower than the volume weighted average price of the company's share during the three months' period preceding the decision of the Board of Directors. However, this restriction regarding the subscription price is not applied in case the Board of Directors decides on the directed share issue or share issue without payment or directed issuance of special rights entitling to shares relating to paying of remuneration of the Board members and/or creating incentives for, or encouraging commitment in, personnel.
The authorisation is valid until 30 April 2020 and the authorisation does not revoke the authorisation granted to the Board of Directors by the Extraordinary General Meeting on 17 July 2017 on the issuance of shares as well as the issuance of options and other special rights entitling to shares.
Election of the auditor and resolution on their remuneration
Ernst & Young Oy was elected the auditor of the company for the term ending at the close of the Annual General Meeting 2020. Antti Suominen, Authorised Public Accountant, acts as the principal auditor. The auditor's fee will be paid in accordance with the auditor's invoice accepted by the company.
Environmental Factors
Nurminen Logistics seeks environmentally friendly and efficient transport solutions as part of the development of its services. All services provided by the company in Finland are covered by a certified environmental management system meeting the requirements of the ISO 140001:2004 standard.
Long Term Financial Target
The Board of Directors has set Nurminen Logistics' long-term financial objectives. The objectives of the company are to achieve a growth rate that is higher than that of the markets in general, a net operating profit level of 7% and a return on equity of 12%.
Short-Term Risks and Uncertainties
In case the world trade would slow down there would be negative impact on the demand for the services offered by the company and on the operating result. Decrease in foreign trade in Finland would influence demand. Foreign trade with Russia, which is important for the company, has been increasing for the last few years, but towards the end of 2019 there were signs of a slowdown. Should the slowdown continue, it might influence demand.
Possible pandemic or large epidemic occurrences might impact the market areas especially in China. These may also influence the Finnish foreign trade by reducing the customer service needs and the company's revenues. Changes in the political situation of the China cargo block train transit countries or challenges of the capacity of rail network utilization, could influence the operating circumstances of the cargo train. Trade policy risks may affect the business operations. Competition is expected to intensify with a potential impact on unit revenue.
Labor market disturbances may influence customers' production volumes. Furthermore, the demand on services as well as supply chain functionality especially in harbors may be affected.
In case profitability improvement efforts in core businesses and sales growth in China cargo train service should advance at a slower pace than expected, there might be negative impacts on the result and financial position of the company.
More detailed information about risk information of the company can be found on the Investors page on Nurminen Logistics' website www.nurminenlogistics.com.
Events After the Review Period
The company announced 28 January 2020 on issuance of shares for the long-term incentive plan for the CEO, in which the CEO may purchase maximum of 180,00 shares at price of EUR 0.28 per share.
The company announced on 17 January 2020 that it initiated co-determination negotiation considering the personnel of Finnish subsidiaries in order to prepare for possible decline of goods flow due to labor marker disturbances in manufacturing industries and other client industries. The co-determination negotiations were concluded on 4 February 2020. As the labor market disturbances ceased the company was not required to establish any adjusting arrangements with the personnel.
The company announced on 4 March 2020 that it recognizes a write down of EUR 5,3 million on goodwill impacting negatively on equity ratio. The company has reached an agreement with financiers regarding the abandonment of covenant terms on equity ratio.
Board of Directors' Proposal for Profit Distribution
Based on the financial statements as at 31 December 2018, the parent company's distributable equity is EUR 14,847,850. The Board of Directors proposes to the Annual General Meeting that no dividend shall be distributed for the financial year 2019.
Corporate Governance Statement
The Corporate Governance Statement of Nurminen Logistics Plc will be published on 6 March 2020 on the company's website at www.nurminenlogistics.com.
Board and Audit Commitee Meetings
The Board of Directors convened thirteen times during the year 2019. The Audit Committee had five meetings.
Consolidated Statement of Comprehensive Income, IFRS
| 1,000 EUR Note |
1–12 / 2019 | 1–12 / 2018 | |
|---|---|---|---|
| NET SALES | 2 | 69,340 | 78,874 |
| Other operating income | 3 | 64 | 109 |
| Materials and services | –50,418 | –56,826 | |
| Employee benefit expenses | 5 | –9,196 | –9,025 |
| Depreciation, amortisation and impairment losses | 6 | –11,044 | –1,817 |
| Loss on disposal of Russian subsidiary | –6,224 | ||
| Other operating expenses | 4 | –7,262 | –11,135 |
| OPERATING RESULT | –8,517 | –6,046 | |
| Financial income | 7 | 12 | 58 |
| Financial expenses | 7 | –2,382 | –1,387 |
| Share of profit of equity-accounted investees 15 |
25 | –21 | |
| –2,346 | –1,351 | ||
| RESULT BEFORE INCOME TAX | –10,864 | –7,397 | |
| Income tax expense | 8 | –570 | –414 |
| RESULT FOR THE YEAR | –11,433 | –7,811 | |
| OTHER COMPREHENSIVE INCOME | |||
| Other comprehensive income to be reclassified to | |||
| profit or loss in subsequent periods: | |||
| Translation differences | –41 | 7,567 | |
| TOTAL COMPREHENSIVE INCOME FOR THE YEAR | –11,474 | –243 | |
| Result attributable to | |||
| Equity holders of the parent company | –12,903 | –8,804 | |
| Non-controlling interest | 1,470 | 993 | |
| Total comprehensive income attributable to | |||
| Equity holders of the parent company | –12,944 | –1,237 | |
| Non-controlling interest | 1,470 | 993 | |
| Earnings per share calculated from result attributable | |||
| to equity holders of the parent company | |||
| Earnings per share, undiluted, euro | –0.29 | –0.20 | |
| Earnings per share, diluted, euro | –0.29 | –0.20 |
Consolidated Statement of Financial Position, IFRS
| 1,000 EUR Note |
31 Dec 2019 | 31 Dec 2018 |
|---|---|---|
| ASSETS | ||
| Non-current assets | ||
| Property, plant and equipment 11 |
35,810 | 8,757 |
| Goodwill 12,14 |
899 | 5,970 |
| Other intangible assets 12 |
1,933 | 1,390 |
| Investments in equity-accounted investees 15 |
209 | 194 |
| Receivables 16 |
244 | 2,639 |
| Deferred tax assets 17 |
14 | |
| Non-current assets, total | 39,095 | 18,964 |
| Current assets | ||
| Inventories | 87 | 81 |
| Trade and other receivables 18 |
7,822 | 10,952 |
| Cash and cash equivalents 19 |
4,187 | 11,514 |
| Non-current assets held for sale | 897 | |
| Current assets, total | 12,993 | 22,547 |
| TOTAL ASSETS | 52,088 | 41,511 |
| EQUITY AND LIABILITIES | ||
| Equity attributable to holders of the parent company 20 |
||
| Share capital | 4,215 | 4,215 |
| Share premium reserve | 86 | 86 |
| Other reserves | 28,808 | 28,808 |
| Translation differences | –6 | 35 |
| Retained earnings | –35,497 | –22,616 |
| Hybrid bond | 1,500 | 1,500 |
| Equity attributable to holders of the parent company | –894 | 12,028 |
| Non-controlling interest | 1,695 | 1,123 |
| Equity, total | 802 | 13,151 |
| LIABILITIES | ||
| Non-current liabilities | ||
| Deferred tax liabilities 17 |
24 | 28 |
| Other liabilities 23 |
212 | 328 |
| Financial liabiliites 22 |
39,900 | 13,600 |
| Non-current liabilities, total | 40,136 | 13,956 |
| Current liabilities | ||
| Current tax liabilities | 237 | 366 |
| Financial liabilities 22 |
3,102 | 5,252 |
| Trade payables and other liabilities 23 |
7,811 | 8,786 |
| Current liabilities, total | 11,150 | 14,404 |
| Liabilities, total | 51,287 | 28,360 |
| EQUITY AND LIABILITIES, TOTAL | 52,088 | 41,511 |
Consolidated Balance Sheet, IFRS 16 Impact
| 1,000 EUR | 31.12.2018 IAS 17 |
Impact | 1.1.2019 IFRS 16 |
|---|---|---|---|
| ASSETS | |||
| Non-current assets | |||
| Property, plant and equipment | 8,757 | 35,465 | 44,222 |
| Goodwill | 5,970 | 5,970 | |
| Other intangible assets | 1,390 | 1,390 | |
| Investments in equity-accounted investees | 194 | 194 | |
| Receivables | 2,639 | –2,322 | 317 |
| Deferred tax assets | 14 | 14 | |
| NON-CURRENT ASSETS | 18,964 | 33,142 | 52,106 |
| Current assets | |||
| Inventories | 81 | 81 | |
| Trade and other receivables | 10,952 | –2,047 | 8,905 |
| Cash and cash equivalents | 11,514 | 11,514 | |
| CURRENT ASSETS | 22,547 | –2,047 | 20,500 |
| ASSETS TOTAL | 41,511 | 31,095 | 72,606 |
| EQUITY AND LIABILITIES | |||
| Share capital | 4,215 | 4,215 | |
| Other reserves | 28,894 | 28,894 | |
| Translation differences | 35 | 35 | |
| Retained earnings | –22,616 | –22,616 | |
| Non controlling interest | 1,123 | 1,123 | |
| Hybrid loan | 1,500 | 1,500 | |
| EQUITY TOTAL | 13,151 | 13,151 | |
| Non-current liabilities | |||
| Deferred tax liability | 28 | 28 | |
| Other liabilities | 328 | 328 | |
| Financial liabilities | 13,600 | 28,819 | 42,419 |
| NON-CURRENT LIABILITIES | 13,956 | 28,819 | 42,774 |
| Current liabilities | |||
| Current tax liabilities | 366 | 366 | |
| Financial liabilities | 5,252 | 2,276 | 7,528 |
| Trade payables and other liabilities | 8,786 | 8,786 | |
| CURRENT LIABILITIES | 14,404 | 2,276 | 16,680 |
| TOTAL LIABILITIES | 28,360 | 31,095 | 59,455 |
| TOTAL EQUITY AND LIABILITIES | 41,511 | 31,095 | 72,606 |
Consolidated Cash Flow Statement, IFRS
| 1,000 EUR | Note | 1–12/2019 | 1–12/2018 |
|---|---|---|---|
| Cash flow from operating activities | |||
| PROFIT/LOSS FOR THE YEAR | –11,433 | –7,811 | |
| Adjustments for: | |||
| Depreciation, amortisation & impairment losses | 6 | 11,044 | 1,990 |
| Other income (–) and expenses (+), non cash | –1,258 | 984 | |
| Financial income (–) and expenses (+) Divestment of Russian subsidiary |
2,371 | 1,165 7,638 |
|
| Income taxes | 8 | 570 | 414 |
| Other adjustments | –69 | –214 | |
| Cash flow before changes in working capital | 1,224 | 4,168 | |
| Working capital changes: | |||
| Increase (–) / decrease (+) in inventories | –6 | –15 | |
| Increase (–) / decrease (+) in non-interest bearing current receivables | 2,435 | 551 | |
| Increase (+) / decrease (–) in non-interest bearing current payables | –1,249 | –4,271 | |
| Net cash from operating activities before financial items and taxes | 2,403 | 433 | |
| Interest paid | –1,746 | –585 | |
| Interest received | 1 | ||
| Other financial items Income taxes paid |
–199 | –186 –492 |
|
| Net cash from operating activities | 458 | –830 | |
| Cash flow from investing activities | |||
| Purchases of property, plant and equipment and intangible assets | –727 | –746 | |
| Divested subsidiary shares | 28 | 756 | 6,927 |
| Purchases of subsidiary shares | –110 | ||
| Proceeds from other investments | 16 | ||
| Investments to equity accounted investments | –173 | ||
| –81 | 6,024 | ||
| Cash flow from financing activities | |||
| Net change in factoring receivables and liabilities | 13 | 367 | |
| Proceeds from current borrowings | –544 | –253 | |
| Repayment of non-current borrowings | –500 | –144 | |
| Repayment of finance lease liabilities | –5,869 | –367 | |
| Dividends paid / repayments of equity | –937 | –1,116 | |
| Net cash used in financing activities | –7,837 | –1,512 | |
| Net increase / decrease in cash and cash equivalents | –7,460 | 3,682 | |
| Cash and cash equivalents at the beginning of the year | 11,514 | 7,832 | |
| Translation differences of cash and cash | |||
| equivalents at the beginning of the year | |||
| Net increase / decrease in cash and cash equivalents | –7,460 | 3,682 | |
| Translation differences of net increase / decrease | |||
| in cash and cash equivalents | |||
| Cash and cash equivalents at the end of the year | 19 | 4,054 | 11,514 |
Consolidated Cash Flow Statement, Impact of IFRS 16
| 1,000 EUR | IAS 17 | Impact | IFRS 16 |
|---|---|---|---|
| Cash flow from operating activities | –1,867 | 2,325 | 458 |
| Cash flow from investing activities | –81 | –81 | |
| Cash flow from financing activities | –5,512 | –2,325 | –7,837 |
| Net increase / decrease in cash and cash equivalents | –7,460 | –7,460 |
Consolidated Statement of Changes in Equity, IFRS
| 1,000 EUR | Note | Equity attributable to equity holders of the parent company | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| 1–12/2018 | Share capital |
Share premium reserve |
Legal reserve |
Reserve for invested unre stricted equity |
Hybrid bonds |
Transla tion dif ferences |
Retained earnings |
Total | Non-con trolling interest |
Total equity |
|
| Equity on 1 Jan 2018 Comprehensive income |
4,215 | 86 | 2,378 | 26,430 | 1,500 | –7,511 | –13,689 | 13,409 | 1,261 | 14,670 | |
| Result for the year | –8,804 | –8,804 | 993 | –7,811 | |||||||
| Other comprehensive income |
|||||||||||
| Translation differences | 7,546 | 21 | 7,567 | 7,567 | |||||||
| Total comprehensive income for the year |
35 | –8,783 | –1,237 | 993 | –244 | ||||||
| Business transactions | |||||||||||
| with share holders | |||||||||||
| Interest on hybrid | |||||||||||
| loan after taxes | –48 | –48 | –48 | ||||||||
| Issue of shares | 70 | 70 | 70 | ||||||||
| Other changes | –166 | –166 | –15 | –181 | |||||||
| Dividends | –1,116 | –1,116 | |||||||||
| Total business | |||||||||||
| transactions with | |||||||||||
| share holders | –144 | –144 | –1,131 | –1,275 | |||||||
| Equity on 31 Dec 2018 | 4,215 | 86 | 2,378 | 26,430 | 1,500 | 35 | –22,615 | 12,029 | 1,123 | 13,151 |
| 1,000 EUR | Note | Equity attributable to equity holders of the parent company | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| 1–12/2019 | Share capital |
Share premium reserve |
Legal reserve |
Reserve for invested unre stricted equity |
Hybrid bonds |
Transla tion dif ferences |
Retained earnings |
Total | Non-con trolling interest |
Total equity |
|
| Equity on 1 Jan 2019 | 4,215 | 86 | 2,378 | 26,430 | 1,500 | 35 | –22,615 | 12,029 | 1,123 | 13,151 | |
| Comprehensive income |
|||||||||||
| Result for the year | –12,903 | –12,903 | 1,470 | –11,433 | |||||||
| Other comprehensive income |
|||||||||||
| Translation differences | –41 | –41 | –41 | ||||||||
| Total comprehensive income for the year |
–6 | –12,903 | –12,944 | 1,470 | –11,474 | ||||||
| Business transactions with share holders |
|||||||||||
| Interest on hybrid | |||||||||||
| loan after taxes | –48 | –48 | –48 | ||||||||
| Share renumeration | 70 | 70 | 70 | ||||||||
| Other changes | 39 | 39 | |||||||||
| Dividends | –937 | –937 | |||||||||
| Total business | |||||||||||
| transactions with share holders |
22 | 22 | –898 | –876 | |||||||
| Equity on 31 Dec 2019 | 4,215 | 86 | 2,378 | 26,430 | 1,500 | –6 | –35,498 | –893 | 1,696 | 802 |
Notes to the Consolidated Financial Statements, IFRS
1. THE ACCOUNTING PRINCIPLES FOR THE CONSOLIDATED FINANCIAL STATEMENTS
Basic information about the Group
The business idea of Nurminen Logistics is to provide and produce high-quality and customer competitiveness increasing logistics services in Finland, Russia and direct regular railway cargo services between Finland and China. The parent company of the Group is Nurminen Logistics Plc. The parent company is domiciled in Helsinki, Finland, and its registered address is Satamakaari 24, Helsinki.
Copies of the consolidated financial statements are available in internet at www.nurminenlogistics.com. The consolidated financial statements were authorized for issue by the Board of Directors on 6 March 2019. According to the Finnish Limited Liability Companies Act, shareholders have the right to approve or reject the financial statements in the Annual General Meeting held after the publication of the financial statements. The Annual General Meeting also has the right to decide to amend the financial statements.
Basis of preparation
The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS), in accordance with the IAS and IFRS standards and SIC and IFRIC interpretations effective on 31 December 2019. International Financial Reporting Standards are standards and interpretations adopted for application in the European Union in accordance with the procedure laid down in regulation (EC) No 1606/2002 of the European Parliament and Council. The notes to the consolidated financial statements are also in accordance with the Finnish Accounting Act and Ordinance and the Limited Liability Companies Act complementing the IFRS.
The consolidated financial statements have been prepared on the historical cost basis except for the financial assets and financial liabilities measured at fair value through profit or loss.
The financial statements are presented in thousands of euro.
Adaptation of new and reviewed IFRS standards
As from 1 January 2019 the Group has applied the following amendments to standards that did not have a significant impact on the consolidated financial statements:
• IFRS 16 Leases (effective for annual reporting periods beginning on or after 1 January 2019). IFRS 16 provides a comprehensive model for identifying and accounting for lease arrangements, both for lessees and lessors. The standard superseded the existing IAS 17 Leases and related interpretations. Under IFRS 16, the distinction between a lease and a service agreement is based on whether the lessee has control of the identified asset.
IFRS 16 amends the accounting for leases by requiring lessees also to recognize operating leases as a liability for payment of the lease and a related right if the lessee has control over the use of the leased asset over the term of the agreement and is irrevocable. The standard provides for relief from the need to recognize short-term contracts of up to 12 months or low value assets.
Nurminen Logistics has adopted IFRS 16 using the modified retrospective approach, so the benchmark data has not been restated. Due to its industry and business model, Nurminen Logistics primarily acts as a lessee for the leases. The company applies the standard mainly to leases of premises and terminal warehouses, terminal machines and equipment. In determining the duration of a lease, the company has used its judgment in estimating the likelihood of exercise of the options on the lease and has included the periods covered by the option at the lease term if it is probable that the option will be exercised. The Company applies the reliefs provided by IFRS 16 and excludes leases of up to 12 months and low value assets from the balance sheet. Low value contracts mainly include IT and office equipment, company cars and small office space.
The cumulative effect of the adaption to IFRS 16 has been recognized as an adjustment to the opening balance sheet for 2019. The adaption of the standard will affect comparability of financial information, accounting policies, reported amounts and balance sheet ratios such as gearing and equity ratio. The adaption of the standard increased fixed assets and interest-bearing liabilities of the company. In the income statement, instead of rental expenses, the company recognizes depreciation on fixed assets and interest expenses on lease liabilities. The effect of leases treated in accordance with IFRS 16 is not even over the contract period but is negative at the beginning of the contract period and positive at the end of the period due to the interest rate on the lease liability. IFRS 16 has a positive impact of EUR 1.3 million on operating profit and a positive impact of EUR 0.1 million on the result for the financial year 2019.
The remaining liabilities of leases for which a non-current asset and lease liability are not recognized, are disclosed as off-balance sheet liabilities in the notes.
Unlike lessee accounting, the requirements for recognizing lessors' leases in IFRS 16 are largely based on the requirements of the current IAS 17 standard.
Principles of Consolidation
Subsidiaries
The consolidated financial statements include the financial statements of Nurminen Logistics Plc and those of all its subsidiaries. The subsidiaries are entities controlled by the parent company. The Group controls an investee when it is exposed, or has rights, to variable returns from its involvement with the investee and can affect those returns through its power over the investee. Subsidiaries acquired are included in the consolidated financial statements from the acquisition date that control commences until the date that control ceases.
Acquired subsidiaries are accounted for by using the acquisition method. The consideration transferred, identifiable assets and liabilities assumed of the acquired entity and are measured at their fair values at the acquisition date. Goodwill arising on an acquisition is recognized as the excess of the aggregate of the consideration transferred, the amount of any non-controlling interests and previously held equity interests in the acquiree, over the Group's share of the fair value of the net assets acquired at the acquisition date.
The consideration transferred includes any assets transferred by the acquirer, liabilities incurred by the acquirer to former owners of the acquiree and the equity interests issued by the acquirer, measured at fair value. Any contingent consideration related to the business combination is measured at fair value at the acquisition date and it is classified as either liability or equity. Contingent consideration classified as liability is remeasured at its fair value at each balance sheet date and the subsequent changes to fair value are recognized in profit or loss. Contingent consideration classified as equity is not subsequently remeasured. The consideration transferred does not include any transactions accounted for separately from the acquisition, which are treated in conjunction with the acquisition in profit or loss. All acquisition-related costs, with the exception for costs to issue debt or equity securities, are expensed in the periods in which costs are incurred and services rendered.
All intra-group transactions, receivables and liabilities as well as unrealized gains and profit distribution are eliminated in the consolidation. Non-controlling interests are presented as a separate item under equity.
Non-controlling Interests
Any non-controlling interest in the acquiree is measured on an acquisition-by-acquisition basis, either at fair value or at the non-controlling interest's proportionate share of the acquiree's identifiable net assets. Changes in the parent company's ownership interest in a subsidiary are accounted for as equity transactions if the parent company retains control over the subsidiary.
The result for the financial year and items recognized in other comprehensive income are allocated to the equity holders of the parent company and non-controlling interests. Total comprehensive income is allocated to the equity holders of the parent company and non-controlling interests, even if that results in a deficit balance, unless non-controlling interests have an exemption not to meet obligations which exceed non-controlling interests' investment. Equity attributable to the non-controlling interest is presented separately under equity in the consolidated balancesheet.
Associates
Associates are companies in which the Group has significant influence. Significant influence generally arises when the Group holds 20 to 50 per cent of a company's voting power or the Group otherwise has significant influence but not power to govern the financial and operating policies of an entity. Associates are consolidated using the equity method. When the Group's share of an associate's losses exceeds the carrying amount of the interest, the interest is recognized at zero value in the balance sheet and recognition of further losses is discontinued, except to the extent that the Group has committed to settle the associate's obligations. The interest in an associate includes goodwill arisen on acquisition. Unrealized gains resulting from transactions between the Group and the associate are eliminated to the extent of the interest in the associate. The Group's share of an associate's result for the financial year is disclosed separately after financial items in the consolidated statement of comprehensive income.
Foreign Currency Transactions
Items included in the financial statements of each subsidiary in the Group are determined using the currency reflecting the primary economic environment of that subsidiary ("the functional currency"). The consolidated financial statements are prepared in euro which is the functional and presentation currency of the parent company and the presentation currency of the consolidated financial statements.
Foreign currency transactions of the Group companies are translated into functional currencies using the exchange rates prevailing at the transaction date. Monetary assets and liabilities denominated in foreign currency are translated using the balance sheet date exchange rates and non-monetary assets and liabilities that are measured at historical cost are translated using the transaction date exchange rates. Gains and losses arising from the translation are recognized in the consolidated statement of comprehensive income.
In preparation of consolidated financial statements income and expenses for the income statements and for the statements of comprehensive income of those foreign Group companies, whose functional currency is not euro, are translated into euro by using the average exchange rate for the financial year and the balance sheets are translated at the exchange rate at the balance sheet date. Translation differences arising from such translation are recognized in equity. Retranslating the result and the total comprehensive income for the financial year using different exchange rates for the statement of comprehensive income and for the balance sheet causes a translation difference recognized in Group's equity, the change in this translation difference is recognized under other comprehensive income. Respectively, foreign currency differences arising from the elimination of the costs of foreign subsidiaries, and from the retranslation of post-combination equity components in subsequent periods, are recognized in other comprehensive income. When a foreign operation is sold or is otherwise disposed of, in part or in full, the accumulated foreign currency differences are recognized in the statement of comprehensive income as part of the gain or loss on sale for the disposed part.
Property, Plant and Equipment
Items of property, plant and equipment are carried at historical cost less accumulated depreciation and impairment losses. The cost includes all expenditure directly attributable to the acquisition of the asset. The borrowing costs directly attributable to the acquisition or construction of an asset that necessarily takes a substantial period to get ready for its intended use or sale, are capitalized as part of the carrying amount of the asset. Subsequent costs are recognized in the carrying amount of the item only if it is probable that future economic benefits associated with the asset will flow to the Group and its cost can be measured reliably. Other repair and maintenance costs are expensed as incurred.
Property, plant and equipment are depreciated using the straightline method over their estimated useful lives, which are the following:
| Buildings | 30–40 years |
|---|---|
| Transport equipment | 5–8 years |
| Machinery and equipment | 3–10 years |
| IT equipment | 3 years |
| Software | 5–10 years |
Land is not depreciated. Recognition of depreciation on an item of property, plant and equipment is discontinued when the item is classified as held for sale.
Useful lives and residual values are reviewed at every balance sheet date. Changes in the future economic benefits to be received from the items of property, plant and equipment are accounted for by adjusting the useful lives and residual values of the items in question. Gains and losses arising from sale and disposal of property, plant and equipment are included in other operating income or in other operating expenses.
Intangible Assets
Goodwill
Goodwill arising on business combinations is recognized as the excess of the aggregate of the consideration transferred, the amount of non-controlling interest in the acquiree and the value of any previously held equity interest over the fair value of the acquired net assets.
Goodwill is not amortized but it is tested at least annually for impairment. Goodwill is carried at historical cost less accumulated impairment losses.
Research and development costs
Research costs are expensed in the financial year in which they are incurred. Development costs are capitalized when certain criteria are met. Due to the nature of its operations the company did not have separate research and development costs in its income statement in 2018 and 2017.
Other intangible assets
An intangible asset is recognized in the balance sheet only if its cost can be measured reliably and it is probable that the expected future economic benefits that are attributable to the asset will flow to the Group.
An intangible asset is measured at historical cost less amortization and any impairment losses. Group's intangible assets include mainly IT software which is amortized on a straight-line basis over 5 to 10 years.
Impairment of Intangible Assets and Property, Plant and Equipment
The Group assesses, at every balance sheet date, if there are any indications of impairment of property, plant and equipment or intangible assets. In case such indications exist, the asset's recoverable amount is estimated. If the carrying amount of an asset exceeds its recoverable amount, the impairment loss is recognized in the income statement. The recoverable amount of an asset is the higher of its fair value less costs to sell and its value in use.
As to goodwill, the recoverable amount is estimated at least annually irrespective of whether indications of impairment exist. Impairment is assessed at a cash-generating unit level, i.e. at the lowest level for which there are separately identifiable, mainly independent cash flows. In impairment testing of goodwill, the recoverable amount is based on value in use, i.e. on the estimated discounted future net cash flows.
At the recognition of the impairment loss the asset's useful life is re-estimated. The recognized impairment loss is reversed if the estimates used to determine the asset's recoverable amount have changed. The reversal of the impairment loss shall not exceed the carrying amount that would have been determined had no impairment loss been recognized for the asset. An impairment loss on goodwill is never reversed.
Application of IFRS 9
Impairment policies are based on expected credit loss models. Impairment models apply to cash and cash equivalents, such as rental, sales and factoring receivables and loan receivables.
Financial Instruments
Financial assets
Financial assets of Nurminen Logistics are classified according to IFRS 9 into the following categories: financial assets at amortized cost and financial assets at fair value through profit or loss. The classification of financial assets is made at initial recognition of financial assets and is based on the business model applied by the company for the holding of financial assets and the nature of contractual cash flows.
Measurement of a financial asset at amortized cost requires the contractual cash flows to consist solely of interest and the repayment of principal (the so-called SPPI criterion). Compliance with the SPPI criterion is assessed on a per-instrument basis. If the SPPI criterion is not met, financial assets are measured at fair value through profit or loss.
Financial assets are classified as current assets if they have a maturity of less than 12 months and are expected to be disposed of within 12 months. Otherwise, the item is presented as non-current assets. Transaction costs are included in the original carrying amount of the financial assets in the case of an item measured at amortized cost. Purchases and sales of financial instruments are recognized on the settlement date. The fair values of financial instruments are determined using discounted cash flows.
Financial assets at amortized cost
An item of financial assets is measured at amortized cost if the business model requires the collection of fixed or predetermined cash flows. They consist of repayments of capital and interest on capital and arise when the Group provides loans or provides products and services directly to debtors. If an item of financial assets does not meet the above conditions, it is measured at fair value. The Group typically recognizes rental, factoring and trade receivables as well as loan receivables at amortized cost.
Financial assets at fair value through profit or loss
If a financial asset is not measured according to the above criteria, it is measured at fair value and changes in fair value are recognized through profit or loss. The company had no financial assets at fair value through profit or loss in 2019.
Impairment or Credit Risk Assessment of Financial Assets
In accordance with IFRS 9, Nurminen Logistics recognizes expected credit losses on cash classified at amortized cost. According to this model, expected loan losses based on an individual counterparty default risk assessment. The Group uses a simplified method for recognizing credit losses permitted by the standard, in which case the Group recognizes the expected credit loss over the life of the contract. The change in expected credit losses recorded at each reporting date reflects the change in the credit risk of the financial assets from the initial recognition. A credit transaction is no longer required to record a credit loss.
Financial assets are derecognized when the Group loses its contractual right to receive cash flows or when it has transferred a significant part of the risks and rewards of ownership. An impairment loss is recognized immediately in profit or loss, depending on the item, either in other operating expenses or in financial items.
Cash and Cash Equivalents
Cash and cash equivalents comprise cash balances and bank accounts as well as highly liquid investments with original maturities of three months or less at the acquisition date.
Financial Liabilities
The financial liabilities of Nurminen Logistics are classified to the following categories: financial liabilities at fair value through profit or loss and financial liabilities measured at amortized cost (other financial liabilities). The former category includes derivatives entered into by the Group, to which hedge accounting is not applied and that are not financial guarantee contracts. They are classified as held-for-trading instruments. The financial liabilities in this category are initially measured at fair value and are subsequently re-measured at their fair values. Gains and losses arising from derivatives' fair value changes, both unrealized and realized, are recognized in profit or loss in the period in which they occur. Fair values are determined by discounting the instruments' cash flows.
Other financial liabilities, which mainly consist of Group's finance lease liabilities, are measured at fair value upon initial recognition. Transaction costs are included in the original carrying amount. Subsequently other financial liabilities are measured at amortized cost using the effective interest rate method.
A financial liability is classified as current if the Group does not have an unconditional right to defer settlement of the liability for at least 12 months after the end of the reporting period. A financial liability (or part of the liability) is not derecognized until the liability has ceased to exist, that is, when the obligation identified in a contract has been fulfilled or cancelled or is no longer effective.
Revenue Recognition Principles – Adaptation of New and Reviewed IFRS 15 Standard
Company's revenue consists mainly of forwarding services, rail way transport and terminal services. Company receives income also from short- and long-term warehousing services. Revenue is recognized as goods are assigned to customer or service is concluded: as performance obligations are met and customer obtains the goods or services within the performance obligation. Revenue is recognized with the same price that the company expects to be entitled to, with sales taxes and other possible compensations deducted from the price. The prices for company's services are fixed and generally contain no alterable components.
For the adaptation of IFRS 15 -standard carries no significant effect on Nurminen Logistics Plc's revenue recognition and consolidation principles the revenue recognition principles from period 2017 are not presented. More information on those is available from the Annual Report 2017.
Revenue recognition principles have been described below:
Forwarding services
Forwarding service agreement consists of actions necessary for importing, exporting and customs duties. As whole they compile the performance obligation towards customer, which is usually concluded within a month from the signing of the agreement. Company recognizes revenue from agreement price when the delivery orders connected to import or export have been received and authority over the goods is transferred to customer or other party. Complete contract price is addressed on one performance obligation.
Railway services
The company provides international railway transport services with various types of wagons in which the goods are delivered to destination. Company recognizes revenue from agreement price when the delivery is complete at the arrival of the goods to destination. The service has singular contract obligation, which includes transport service to the destination, and the contract price is addressed to that obligation.
Terminal services
Terminal services consist of handling of goods at the arrival or departure of goods. The definite content of service is defined on contract level. Terminal service agreement is an entity to which the contract price is addressed to. The contract price is recognized when the work on handling goods has been completed.
Warehousing services
Warehousing services consist of renting space from terminal or terminal area for short or long term holding of goods. Warehousing agreement is an entity to which the contract price is addressed to. Profit from warehousing services are recognized over the time during the lease period for which the customer benefits from the service. Lease income is processed according to IFRS 15 -standard when customer is not given control over the leased space.
Contractual Amounts Recognized in the Balance Sheet
Trade receivables
Trade receivable is a transaction price that company has an unconditional right.
Trade receivables are non-interest bearing and are typically from 14 to 60 days corresponding the average payment terms.
Contract assets or contract liabilities
Due to the nature of the business, Nurminen Logistics does not have contract assets or contract liabilities.
Employee Benefits
Pension arrangements
The pension arrangements of Nurminen Logistics have been classified as defined contribution plans. Payments to defined contribution plans are recognized as an expense in the income statement in the period to which they relate. In defined contribution plans the Group pays fixed contributions into a separate entity. The Group has no legal or constructive obligation to pay further amounts in case the separate entity receiving the contributions fails to pay out the pension benefits.
Share-based payments
Such arrangements in which the Group has granted its employees a right to a future cash payment by granting the employees a right to shares that are redeemable, either at the Group's or an employee's demand, are accounted for as cash-settled sharebased payments. The liability arising from such arrangement is remeasured at fair value at each reporting date and at the settlement date and the changes in fair value are recognized in profit or loss in the period in which the changes occur. The benefits granted in this arrangement are measured at fair value at their grant date and expensed on a straight-line basis over the vesting period.
Income Taxes
The income tax expense in the statement of comprehensive income comprises the current tax, adjustments to previous periods' taxes as well as changes in deferred taxes. Income taxes are recognized in profit or loss except when they relate to other comprehensive income or equity, while income taxes are recognized within the respective items. Current tax is calculated based on taxable income using tax rates enacted in each country.
Deferred tax assets and deferred tax liabilities are calculated for temporary differences between the amounts of assets and liabilities used for taxation purposes and the carrying amounts for financial reporting purposes under IFRS. The principal temporary differences arise from financial instruments measured at fair value through profit or loss and depreciation related to component accounting. Deferred taxes are measured at the tax rate that has been enacted or substantially enacted by the reporting date.
A deferred tax asset is recognized to the extent that it is probable that future taxable profits will be available against which the temporary difference can be utilized. Deferred tax liabilities are recognized in the statement of financial position in full.
Tangible Assets and Leases
IFRS 16 requires lessees to recognize all leases in the balance sheet on a right-of-way basis. Leased assets are treated during the lease term on the same basis as owner-occupied assets and are recognized in the balance sheet on a straight-line basis. The debt based on the present value of the rent is reduced as the rent is paid.
Leases are distinguished from service contracts using a control model. When the arrangement includes a specific asset that is under the control of the customer, it is a lease. The contract is recognized in the balance sheet as a non-current asset and a liability arising therefrom. Service contracts are recognized as an expense in the income statement.
Lease liabilities
At the commencement date of the agreement, Nurminen Logistics values the lease liability at the present value of the rent outstanding at that date. Payments include fixed rentals and residual value guarantees less any available lease incentives. The company considers lease termination charges as part of the lease payments if it has considered the option to terminate during the lease term. VAT is not included in the amount of the lease liability and management and maintenance fees and other payments of a service nature are generally treated as an expense that cannot be capitalized in the balance sheet.
Rents are discounted using the company's estimated additional credit interest. The standard defines the interest rate for a supplementary loan as the interest that the lessee would have to pay on borrowing for the same period and with similar collateral to acquire the asset at the cost of the underlying asset.
Right of use assets
Nurminen Logistics records the lease at the commencement date of the lease, i.e. the date on which the lessor transfers the asset to the control of the company. The property, plant and equipment are measured at cost less accumulated depreciation and impairment losses and adjusted for any subsequent revaluation of the lease liability. The original cost equals the original lease liability. In the future, fixed assets will also be subject to impairment testing.
Application of facilitations and significant assumptions
Nurminen Logistics does not treat short-term leases of less than 12 months or low value assets as property, plant and equipment, but recognizes the resulting rental expense in the income statement. Fixed-term leases are dealt with by the company within the term of a non-cancellable lease term and are subject to any subsequent option periods when the company has reasonable assurance that they will be exercised. Leases of indefinite duration are considered by the company to be subject to incentives based on a notice period of less than 6 months.
Leases in which Nurminen Logistics is the lessor are operating leases and are recognized in the income statement on a straightline basis over the lease term.
The remaining liabilities for leases that do not include a property, plant and equipment and lease liabilities are disclosed in Note 25 as off-balance sheet liabilities.
Sale and Leaseback
If a sale and leaseback arrangement result in a finance lease, the gain on the sale of the asset leased back is recognized as a liability and amortized over the lease term. If a sale and leaseback arrangement result in an operating lease and the sale is established at fair value, any profit or loss is recognized immediately. The company had no remaining sale and leaseback arrangements on 31 December 2019.
Operating Profit
The operating profit is the total of sales and other operating income from which expenses for material and services, employee benefits and other operating expenses as well as depreciation, amortization and impairment losses on non-current assets are subtracted. Foreign currency differences arising from working capital items are included in the operating result, whereas foreign currency differences from financial assets and financial liabilities are included in financial income and expenses.
Hybrid Bond
A hybrid bond is recognized in shareholders' equity after equity belonging to shareholders. The bond holders do not have any rights equivalent to ordinary shareholders. The company has no contractual obligation to repay the loan capital or the interest on the loan. The hybrid bond is initially recognized at fair value less transaction cost and subsequently the bond is measured at cost. If interest is paid to the hybrid bond, it is recognized directly into retained earnings.
Accounting Policies Requiring Management Judgement and Assumptions Driving Uncertainties in Estimates
The preparation of the financial statements in conformity with IFRS requires the management to make estimates, assumptions and judgments in the application of the accounting policies. The estimates and assumptions made affect the reported amounts of assets and liabilities in the balance sheet as well as the income and expenses in the income statement.
In business combinations fair values of the items of property, plant and equipment and intangible assets are estimated and the depreciation and amortization periods for the assets are determined. The determination of fair value of intangible assets is based on estimates about future cash flows to be generated by these assets.
Goodwill is tested for impairment annually. Management's judgment must be used in determining the cash-generating units for goodwill testing. The recoverable amounts of the cashgenerating units
are determined based on value in use. The preparation of these calculations requires use of estimates. In calculation of value in use estimates are made about future cash flows and discount rate to be used. Estimates are based on budgets and forecasts, which contain some degree of uncertainty.
Due to uncertainty regarding use of confirmed losses the Group has not recorded deferred tax assets in the consolidated balance sheet.
Property, plant and equipment as well as intangible assets are reviewed annually as to whether any indications exist that these assets might be impaired. If indications exist, the asset's recoverable amount is estimated.
Items of property, plant and equipment as well as intangible assets are depreciated and amortized over their estimated useful lives. The useful lives are reviewed regularly. The management reviews regularly, whether if certain items to be divested will not meet the criteria of IFRS 5 -standard for probability of divestment of an asset within 12-month period from categorizing these assets as longterm assets to be divested. Should these assets fail to meet the criteria for long-term assets to be divested they are to be written out from the category.
Estimates made in preparing the financial statements are based on the management's best view and the information available at the balance sheet date. Estimates and assumptions are based on experience and other factors that are considered the best view in measuring such assets and liabilities, whose values cannot be derived from other sources. The estimates concerning the future are based on assumptions that are regarded as the most probable at the balance sheet date relating to the expected development of the financial environment of Nurminen Logistics and assumptions about the development of sales and cost level. Actual results may differ from these estimates.
Estimates and underlying assumptions are reviewed continuously. The realization of estimates and assumptions and the changes in underlying factors are reviewed regularly by using both external
and internal sources of information. Revisions to accounting estimates are recognized in the period in which the estimates are revised if the revision affects only the period in question. If the revision to accounting estimate affects both the period in which the estimate is revised and future periods, the revision is recognized respectively in the period in question and in future periods.
Adoption of Other New and Revised IFRS Standards
The IASB has published the following new or revised standards and interpretations that the Group has not yet applied. The Group will adopt these standards as of the effective date of each of the
standards, or if the effective date is not the first day of the financial year, as of the beginning of the next financial year following the effective date.
- Yearly improvements on IFRS-standards during 2015–2017 (applicable on financial review periods staring from 1 January 2019 and onwards). The less important and less urgent changes made through Annual Improvements -process are ensembled to one and executed annually.
- Changes to IFRS 9 -standard: Prepayment Features with Negative Compensation (applicable on financial review periods starting on January 1, 2019 and onwards). Change covers two topics: Which financial assets may be appreciated as sequenced costs and how to calculate financial debt changes. This change to standard has no significant effect on consolidated financial statement of Nurminen Logistics.
- IFRIC 23 Uncertainty over Income Tax Treatments (applicable on financial review periods starting on 1 January 2019 and onwards). Interpretation clarifies accounting and appreciation according to IAS 12 in situations in which there is uncertainty over income tax treatment. In these circumstances the company is required to account and appreciate revenue and liabilities into income taxes or deferred taxes based on requirements for income (or loss) chargeable with tax, tax base, unused tax losses, unused tax refunds and tax rates according to IAS 12, as it has been stated in the standard.
Other standard changes not listed here are not expected to have effect on group financial statement.
2. SEGMENT INFORMATION
Nurminen Logistics reports net sales by geographical areas.
IFRS 15: Revenue recognision
| 1,000 EUR | 1.1.–31.12.2019 | 1.1.–31.12.2018 |
|---|---|---|
| Over the Period | 3,292 | 3,415 |
| At one point of time | 66,048 | 75,459 |
| Revenue from customer contracts, Total | 69,340 | 78,874 |
The group has analysed IFRS 15. Standard with its implications has been described above in accounting principles section.
Information on geographical areas 2019
| 1,000 EUR | Finland | Russia | Baltic countries | Total |
|---|---|---|---|---|
| Net sales | 31,050 | 19 | 38,271 | 69,340 |
| Non-current assets | 38,962 | 1 | 131 | 39,095 |
Information on geographical areas 2018
| 1,000 EUR | Finland | Russia | Baltic countries | Total |
|---|---|---|---|---|
| Net sales | 30,488 | 3,852 | 44,534 | 78,874 |
| Non-current assets | 18,371 | 399 | 194 | 18,964 |
Information on major customers
Revenue from any single customer did not exceed 10 % from the Group revenue in 2019. The group's revenues from Kazzinc were EUR 15,000 thousand in 2018 (19% from group net sales).
3. OTHER OPERATING INCOME
| 1,000 EUR | 2019 | 2018 |
|---|---|---|
| Gains from sale of property, plant and equipment | 25 | |
| Rent income | 21 | 21 |
| Other items | 43 | 63 |
| Total | 64 | 109 |
4. OTHER OPERATING EXPENSES
| 1,000 EUR | 2019 | 2018 |
|---|---|---|
| Losses on sales and disposals of property, plant and equipment | 8 | |
| Expenses relating to premises | 6,502 | |
| Expenses relating to short term low value leases | 1,575 | |
| Administrative expenses | 3,527 | 2,358 |
| Other cost items | 2,160 | 2,268 |
| Total | 7,262 | 11,135 |
Auditor fees
| 1,000 EUR | 2019 | 2018 |
|---|---|---|
| Audit fees | 116 | 80 |
| Other services | 20 | 54 |
| Total | 136 | 134 |
5. EMPLOYEE BENEFIT EXPENSES
| 1,000 EUR | 2019 | 2018 |
|---|---|---|
| Wages and salaries | 7,739 | 7,442 |
| Pension expenses, defined contribution plans | 1,127 | 1,111 |
| Other social security costs | 261 | 402 |
| Share-based payments | 70 | 70 |
| Total | 9,196 | 9,025 |
Information on the management remuneration is presented in note 27. Related party transactions. Information on the share-based payments is presented in note 21. Share-based payments.
Personnel of the Group during the year in average
| 2019 | 2018 | |
|---|---|---|
| Total | 176 | 177 |
6. DEPRECIATION, AMORTISATION AND IMPAIRMENT LOSSES
Depreciation and amortisation by asset category:
| 1,000 EUR | 2019 | 2018 |
|---|---|---|
| Intangible assets | ||
| Intangible rights | 1 | 7 |
| Other intangible assets | 313 | 122 |
| Impairment losses on goodwill | 5,271 | |
| Total | 5,585 | 129 |
| Property, plant and equipment | ||
| Buildings | 908 | 1,122 |
| Machinery and equipment | 111 | 557 |
| Right-of-use assets | 3,888 | |
| Impairment losses on non-current assets held for sale | 548 | |
| Other tangible assets | 2 | 10 |
| Total | 5,459 | 1,688 |
7. FINANCIAL INCOME AND EXPENSES
| 1,000 EUR | 2019 | 2018 |
|---|---|---|
| Financial income | ||
| Interest income | 10 | 7 |
| Exchange rate gains | 2 | 41 |
| Other financial income | 9 | |
| Total financial income | 11 | 58 |
| Financial expenses | ||
| Interest expenses | 1,006 | 998 |
| Exchange rate losses | 27 | 13 |
| Financial expenses on lease liabilities (IFRS 16) | 1,164 | |
| Other financial expenses | 186 | 376 |
| Total financial expenses | 2,382 | 1,387 |
Items above the operating result includes exchange rate differences totalling EUR -37 thousand in 2019 (EUR 26 thousand in 2018).
8. INCOME TAX EXPENSE
The income tax expense in the statement of comprehensive income consists of the following:
| 1,000 EUR | 2019 | 2018 |
|---|---|---|
| Current tax expense | 567 | 451 |
| Other direct taxes | 2 | 41 |
| Deferred taxes, net | –78 | |
| Total | 570 | 414 |
The reconciliation between the income tax expense recognised in the consolidated statement of comprehensive income and the taxes calculated using the Finnish corporate tax rate (20,0 %):
| 1,000 EUR | 2019 | 2018 |
|---|---|---|
| Profit before income tax | –10,864 | –7,397 |
| Tax | 20 % | 20 % |
| Income tax calculated using the Finnish corporate tax rate | 2,173 | 1,479 |
| Effect of tax rates used in foreign subsidiaries | –178 | –124 |
| Unrecognised deferred tax assets on losses | –1,832 | –496 |
| Impairment losses, goodwill | –1,054 | |
| Non-deductible losses related to subsidiary, Russia | –1,483 | |
| Non-deductible expenses | 55 | |
| Other differences | 266 | 210 |
| Total adjustments | –2,743 | –1,893 |
| Income tax expense in the statement of comprehensive income | –570 | –414 |
9. EARNINGS PER SHARE
| 2019 | 2018 | |
|---|---|---|
| Result attributable to the equity holders of the parent company (1,000 EUR) | –12,903 | –8,804 |
| Interest on the hybrid bond | 48 | 48 |
| Weighted average number of shares, undiluted | 44,304,976 | 44,072,693 |
| Earnings per share, undiluted, euro | –0.29 | –0.20 |
| Result attributable to the equity holders of the parent company (1,000 EUR) | –12,903 | –8,804 |
| Weighted average number of shares, diluted | 44,304,976 | 44,072,693 |
| Earnings per share, diluted, euro | –0.29 | –0.20 |
Hybrid bond EUR 1.5 million from Ilmarinen has not been effective on dilution due to the negative result.
Information on Earnings per share, see also note 24. Financial risk management.
10. SUBSIDIARIES AND ASSOCIATES
The companies belonging to Nurminen Logistics are the following:
| Subsidiaries | Domicile | Ownership (%) | Share of the voting power (%) |
|---|---|---|---|
| RW Logistics Oy | Finland | 100.0 % | 100.0 % |
| Nurminen Logistics Services Oy | Finland | 100.0 % | 100.0 % |
| PFC Nordic Oy | Finland | 100.0 % | 100.0 % |
| Kiinteistö Oy Kotkan Siikasaarentie 78 | Finland | 100.0 % | 100.0 % |
| Kiinteistö Oy Luumäen Suoanttilantie 101 | Finland | 100.0 % | 100.0 % |
| Kiinteistö Oy Vainikkalan Huolintatie 13 | Finland | 100.0 % | 100.0 % |
| Nurminen Maritime Latvia SIA | Latvia | 51.0 % | 51.0 % |
| UAB Nurminen Maritime | Lithuania | 51.0 % | 51.0 % |
| Nurminen Maritime Estonia AS | Estonia | 51.0 % | 51.0 % |
RW Logistics, a subsidiary of Nurminen Logistics Plc, sold the share in the Russian company ZAO Terminal Rubesh in May 2019. Nurminen Logistics Services Oy bought shares and business of PFC Nordic Oy in August 2019.
| Associates and joint ventures | Domicile | Ownership (%) | Share of the voting power (%) |
|---|---|---|---|
| NR Rail Oy | Finland | 51,0 % | 51,0 % |
| Pelkolan Terminaali Oy | Finland | 20,0 % | 20,0 % |
Group has following 3 subsidiaries with material non-controlling interests.
| Company | Country of incorporation |
Group ownership (%) | Group share of voting rights (%) |
|---|---|---|---|
| Nurminen Maritime Latvia SIA | Latvia | 51,0 % | 51,0 % |
| UAB Nurminen Maritime | Lithuania | 51,0 % | 51,0 % |
| Nurminen Maritime Estonia AS | Estonia | 51,0 % | 51,0 % |
The following is summarised financial information for the subsididiaries with material non-controlling interests. The information is before inter-company eliminations with other companies in the Group. Liquidation of Nurminen Maritime Estonia AS has begun.
| Baltic companies | |||
|---|---|---|---|
| 1,000 EUR | 2019 | 2018 | |
| Summary of comprehensive income staments | |||
| Net sales | 38,271 | 44,534 | |
| Profit before taxes | 3,566 | 2,386 | |
| Income tax | 566 | 359 | |
| Total comprehensive income | 2,999 | 2,027 | |
| Total comprehensive income attributable to NCI | 1,470 | 993 | |
| Summary of balance sheets | |||
| Current assets | 5,775 | 5,977 | |
| Non-current assets | 131 | 149 | |
| Current liabilities | 2,490 | 3,784 | |
| Non-current liabilities | 41 | 49 | |
| Net assets | 3,375 | 2,293 | |
| Net assets attributable to NCI | 1,695 | 1,123 | |
| Summary of cash flows | |||
| Cash flow from operating activities | 2,458 | 2,065 | |
| Cash flow from investing activities | –30 | 11 | |
| Cash flow from financing activities | –1,919 | –2,065 | |
| Net increase in cash and cash equivalents | 509 | 11 | |
| Dividends paid to NCI during the year | 937 | 1,009 |
11. PROPERTY, PLANT AND EQUIPMENT
| 1,000 EUR | Land and water areas |
Buildings | Machinery and equip ment |
Other tangi ble assets |
Prepay ments and assets under construction |
Total |
|---|---|---|---|---|---|---|
| 2019 | ||||||
| Cost at 1 January | 147 | 15,707 | 17,207 | 701 | 165 | 33,926 |
| Impact of the application | ||||||
| of the IFRS 16 standard | 1,971 | 32,039 | 1,456 | 35,465 | ||
| Additions | 106 | 324 | 429 | |||
| Disposals | –3,268 | –165 | –3,433 | |||
| Effect of movements | ||||||
| in exchange rates | 52 | 52 | ||||
| Cost at 31 December | 2,223 | 44,529 | 18,987 | 701 | 66,438 | |
| Accumulated depreciation and | ||||||
| impairment losses at 1 January | –7,695 | –16,792 | –683 | –25,170 | ||
| Depreciation for the year | –55 | –4,370 | –483 | –2 | –4,910 | |
| Impairment losses, | ||||||
| assets held for sale | –548 | –548 | ||||
| Accumulated depreciation | ||||||
| and impairment losses | ||||||
| at 31 December | –55 | –12,613 | –17,275 | –686 | –30,628 | |
| IFRS 16 implementation | ||||||
| increased depreciation by EUR 3,888 thousand in 2019. |
||||||
| Carrying amount at 1.1. 2019 | 147 | 8,012 | 415 | 18 | 165 | 8,757 |
| Carrying amount at 31.12.2019 | 2,168 | 31,916 | 1,710 | 15 | 35,810 | |
Luumäki premises were classified as assets held for sale in 2019. Thus, disposals on buildings EUR 3.268 thousand include the value of Luumäki buildings totaling EUR 897 thousand. Depreciation for the year EUR 4.370 thousand include Luumäki depreciation amounting to EUR 205 thousand.
| 147 | 15,779 | 18,764 | 739 | 1,096 | 36,525 | |
|---|---|---|---|---|---|---|
| 105 | 533 | 638 | ||||
| –14 | –1,662 | –38 | –1,464 | –3,178 | ||
| –59 | –59 | |||||
| 147 | 15,707 | 17,207 | 701 | 165 | 33,926 | |
| –6,573 | –16,235 | –674 | –23,482 | |||
| –1,122 | –557 | –9 | –1,688 | |||
| 147 | 9,206 | 2,529 | 65 | 1,096 | 13,042 | |
| 147 | 8,012 | 415 | 18 | 165 | 8,757 | |
| –7,695 | –16,792 | –683 | –25,170 |
Non-current assets held for sale
Luumäki premises were classified as assets held for sale in 2019 based on plan discontinue its operative use. The total area of warehouse and logistics terminal is 12,228 m2 and is located at Suoanttilantie 101, Luumäki. Luumäki was previously classified as asset in CGU comprising of Finnish and Russian businesses.
Terminal is on sale as the premises are no longer relevant to Nurminen Logistics business. Terminal is recognised at fair value. Impairment loss of EUR 548 thousand on the property was recognised on 31.12.2019 and is based on external real estate valuation. The value of the asset after the impairment loss is EUR 897 thousand. The terminal is being actively marketed for sale and the sale is probable within year 2020 and its sale is not expected to impact the result.
| 1,000 EUR | Non-current assets held for sale 2019 | |||||
|---|---|---|---|---|---|---|
| Statement of financial position | ||||||
| Non-current assets / Property, plant and equipment | ||||||
| Current assets | 0 | |||||
| Liabilities | 0 | |||||
| Statement of comprehensive income | ||||||
| Impairment losses on assets held for sale | 548 |
12. INTANGIBLE ASSETS
| Other intangible | |||||
|---|---|---|---|---|---|
| 1,000 EUR | Goodwill | Intangible rights | assets | Total | |
| 2019 | |||||
| Cost at 1 January | 5,970 | 836 | 4,743 | 11,549 | |
| Additions | 201 | 5 | 852 | 1,058 | |
| Cost at 31 December | 6,171 | 841 | 5,595 | 12,607 | |
| Accumulated amortisation and | |||||
| impairment losses at 1 January | –835 | –3,354 | –4,189 | ||
| Depreciation for the year | –1 | –313 | –314 | ||
| Impairment losses | –5,271 | –5,271 | |||
| Accumulated amortisation and | |||||
| impairment losses at 31 December | –5,271 | –836 | –3,667 | –9,774 | |
| Carrying amount at 1 January 2019 | 5,970 | 1 | 1,389 | 7,360 | |
| Carrying amount at 31 December 2019 | 899 | 5 | 1,928 | 2,831 | |
| 2018 | |||||
| Cost at 1 January | 8,970 | 838 | 3,279 | 13,087 | |
| Additions | 1,464 | 1,464 | |||
| Disposals | –3,000 | –2 | –3,002 | ||
| Cost at 31 December | 5,970 | 836 | 4,743 | 11,549 | |
| Accumulated amortisation and | |||||
| impairment losses at 1 January | –835 | –3,225 | –4,060 | ||
| Depreciation for the year | –129 | –129 | |||
| Accumulated amortisation and | |||||
| impairment losses at 31 December | –835 | –3,354 | –4,189 | ||
| Carrying amount at 1 January 2018 | 8,970 | 4 | 54 | 9,028 | |
| Carrying amount at 31 December 2018 | 5,970 | 1 | 1,389 | 7,360 |
Information on goodwill impairment testing is provided in note 14. Impairment of assets.
13. CARRYING AMOUNTS OF FINANCIAL ASSETS AND FINANCIAL LIABILITIES BY CATEGORY
| 1,000 EUR | Note | Assets measured at amortised cost |
Liabilities measured at amortised cost |
Carrying amounts in the balance sheet |
|---|---|---|---|---|
| 2019 | ||||
| Long-term financial assets | ||||
| Other receivables | 16 | 244 | 244 | |
| Short-term financial assets | ||||
| Trade receivables and | ||||
| other receivables | 18 | 7,822 | 7,822 | |
| Cash and cash equivalents | 19 | 4,187 | 4,187 | |
| Non-current assets held for sale | 897 | |||
| Long-term financial liabilities | ||||
| Interest bearing liabilities | 22 | 13,041 | 13,041 | |
| IFRS 16 lease liabilities | 26,859 | 26,859 | ||
| Short-term financial liabilities | ||||
| Interest bearing liabilities | 22 | 781 | 781 | |
| IFRS 16 lease liabilities | 2,321 | 2,321 | ||
| Trade payables | 23 | 4,466 | 4,466 |
Financial financial assets and liabilities for 2018 according to IFRS 9.
| 1,000 EUR | Note | Assets measured at amortised cost |
Liabilities measured at amortised cost |
Carrying amounts in the balance sheet |
|---|---|---|---|---|
| 2018 | ||||
| Financial assets and liabilities according to IAS 39 | ||||
| Long-term financial assets | ||||
| Other receivables | 16 | 2,639 | 2,639 | |
| Short-term financial assets | ||||
| Trade receivables and | ||||
| other receivables | 18 | 10,952 | 10,952 | |
| Cash and cash equivalents | 19 | 11,514 | 11,514 | |
| Long-term financial liabilities | ||||
| Interest bearing liabilities | 22 | 13,600 | 13,600 | |
| Short-term financial liabilities | ||||
| Interest bearing liabilities | 22 | 5,252 | 5,252 | |
| Trade payables | 23 | 4,917 | 4,917 |
The carrying amounts of these financial assets and financial liabilities are in essentially equivalent to their fair values and are classified to tier 2 on the fair value hierarchy.
14. IMPAIRMENT OF ASSETS
Goodwill is tested for impairment annually, and if indications of impairment exist. The recoverable amount in the impairment testing calculations is determined based on value in use.
An impairment loss is recognised if the carrying amount of the assets allocated to a cash-generating unit, including goodwill, is higher than the unit's recoverable amount. The recoverable amount of each cash-generating unit is determined by discounting the estimated future cash flows of the unit.
Goodwill is allocated for cash generating units (CGUs) for impairment testing. Nurminen Logistics Plc has two CGUs: operations in Finland and Russia, and operations in Baltics (49 % minority). Senior management monitors the results and allocates resources at the Group level. Goodwill is allocated to business operations in Finland.
GROUP GOODWILL
| Group goodwill 1,000 EUR |
Business operations in Finland |
|||
|---|---|---|---|---|
| 2019 | 2018 | |||
| 899 | 5,970 |
Signals on possible depreciation of assets are regularly observed from information sources within and outside the Group. These signals can be for example unexpected deviations from key assumptions in Group reporting. In addition to this the signals can be changes in competition or other circumstances in the market, or new regulations or concessions that have an impact on various business fields.
Cash flow from Finnish business has been negative in 2019. The cash flow forecast for Finnish and Russian businesses has been revised during 2019. The revised cash flow forecasts result in enterprise value of EUR 38.787 thousand at the end of 2019 where as the tested value of assets amount to EUR 44.058 thousand. The difference, EUR 5.271 thousand was recognised during the financial year as impairment loss. After the impairment loss write down, goodwill assigned to Finnish business amounts to EUR 899 thousand.
Impairment test calculations on negative cash flow are based budgets and strategic forecasts accepted by management from the previous five years. For the time period after this forecast period (terminal value) estimated cash flows have been defined by using long term growth forecasts.
For the five-year time period the cashflow has been estimated to develop according to company's medium length turnover and viability goals. Sales increase and profitability level development have been estimated based on businesses recent development and general forecasts. Enterprise value is based on assumptions related to net sales and profitability development, and the rate used as weighted average cost of capital (WACC) deployed in discounting cash flows. In 2019 the adoption of IFRS 16 standard has had EUR 1.3 million positive impact on EBIT. Terminal value is based on 1% growth in cash flow. The cash flow forecast is based on turnover and profitability forecasts made for each business sector, which are based on budget for the year 2020 and long-term strategy approved by management. These are affected by market development in Finland, Russia and neighboring regions, planned growth in regular railway service between Finland and China and actions to improve profitability in the company.
Discount rate is based on industry average WACC after tax. Used discount rate is 9.47%. Discount rate and impairment test calculation take in account market risks and capital intensity. The cost for equity affecting on WACC is consistent with Group's long-term targets. Net sales in Finnish and Russian businesses was 31.1 million euros. The net sales are expected to increase especially due to railway service between Finland and China during the year 2020. Increase in net sales over the years 2020 – 2024 averages 6.9%. Increase in net sales per year over the years 2021–2024 is 3.4%. EBIT for the underlying business is expected to improve up to the level of Group's long-term target. (Group's long-term target is 7%.) Tax rate of 20% has been used.
| CGU, net sales and EBIT 2017–2024 |
Actuals | Estimates | |||||||
|---|---|---|---|---|---|---|---|---|---|
| CGU | 2017 | 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | 2024 | 2024 Terminal |
| Sales | 36,109 | 34,340 | 31,069 | 37,977 | 39,441 | 40,782 | 42,171 | 43,463 | 43,897 |
| EBIT | –660 | –2,322* | –6,192** | –1,148 | –453 | 65 | 610 | 4,080 | 4,143 |
* EBIT is adjusted to exclude loss on disposal of the shares of Russian subsidiary OOO Nurminen Logistics, EUR 6.6 million. ** EBIT is adjusted to exclude impairment loss on goodwill as well as losses on disposal of Niirala terminal
and of the share in the Russian company ZAO Terminal Rubesh, EUR 5.9 million in total.
Sensitivity analysis when one component changes:
Management evaluates that the most sensitive judgements relate to changes in terminal growth, profitability and WACC.
| Forecast period 2020–2024 | Change | Impact |
|---|---|---|
| • Terminal growth 1 % | Terminal growth -1 %-point i.e. terminal growth 0 % |
Additional impairment loss of EUR 2,9 million |
| • WACC 9,47 % | WACC + 1 %-point i.e. WACC 10,47 % | Additional impairment loss of EUR 4,0 million |
| • Average EBIT 1,4 % ja EBITDA 12,8 % | EBITDA decrease 1 %-point i.e. average EBITDA 11,8 % |
Additional impairment loss of EUR 4,1 million |
15. EQUITY-ACCOUNTED INVESTEES
| 1,000 EUR | 2019 | 2018 |
|---|---|---|
| At 1 January | 194 | 232 |
| Share of profit / loss for the year | 25 | –21 |
| Dividends | –15 | |
| Translation differences / other changes | –10 | –2 |
| At 31 December | 209 | 194 |
The equity-accounted investees (listed below) are not material for Group.
| Domicile | Ownership (%) | |
|---|---|---|
| Pelkolan Terminaali Oy | Finland | 20.0 % |
| NR Rail Oy | Finland | 51.0 % |
16. NON-CURRENT RECEIVABLES
| 1,000 EUR | 2019 | 2018 |
|---|---|---|
| Other receivables | 244 | 2,639 |
| Total | 244 | 2,639 |
Non-current other receivables in 2018 are pre-rental of the properties to Ilmarinen. Due to the application of the IFRS 16 standard, receivables related to right of use assets are booked to property, plant and equipment.
17. DEFERRED TAX ASSETS AND LIABILITIES
| 1,000 EUR | 1 Jan. 2019 | Recognised in the income statement |
Divest ments |
Exchange rate diffe rences |
31 Dec 2019 |
|---|---|---|---|---|---|
| Movements in deferred taxes during year 2019: | |||||
| Deferred tax assets: | |||||
| Cumulative depreciation and amortisation difference | 14 | –14 | |||
| Total | 14 | –14 | |||
| Deferred tax liabilities: | |||||
| Cumulative depreciation and amortisation difference | 1 | 1 | |||
| Other items | 26 | –3 | 23 | ||
| Total | 28 | –3 | 24 |
| 1,000 EUR | 1 Jan. 2018 | Recognised in the income statement |
Divest ments |
Exchange rate diffe rences |
31 Dec 2018 |
|---|---|---|---|---|---|
| Movements in deferred taxes during year 2018: | |||||
| Deferred tax assets: Component depreciation and |
|||||
| sales profit of spare parts Total |
567 567 |
–550 –550 |
–2 –2 |
14 14 |
|
| Deferred tax liabilities: | |||||
| Cumulative depreciation and amortisation difference Timing differences and temporary differences / |
1 | 1 | |||
| reversal of deductible goodwill amortisation | 266 | –266 | |||
| Other items | 117 | –78 | –13 | 26 | |
| Total | 385 | –78 | –279 | 28 |
| 1,000 EUR | 2019 | 2018 |
|---|---|---|
| Deferred taxes | ||
| Losses of Group companies from previous financial years | 37,422 | 32,693 |
| Confirmed losses expires in 2020-2028 | ||
| Deferred tax assets on losses from previous financial years | 7,484 | 6,539 |
The confirmed losses have not been recognised in the balance sheet in deferred tax assets. In addition, the Group has approximately EUR 2,174 thousand of unrecognised deferred tax assets, relating to deductible goodwill from internal reorganisations. Deferred tax assets have not been recognised in the Consolidated Statement of Financial Position, based on management's judgement.
18. TRADE AND OTHER RECEIVABLES
| 1,000 EUR | 2019 | 2018 |
|---|---|---|
| Trade receivables | 6,439 | 6,552 |
| Prepaid expenses and accrued income | 647 | 3,691 |
| VAT receivables | 640 | 340 |
| Other receivables | 96 | 370 |
| Total | 7,822 | 10,952 |
| Trade and other receivables in currencies | ||
| Euro | 6,240 | 9,514 |
| US Dollar | 1,581 | 1,436 |
| Russian Rouble | 1 | 2 |
| 7,822 | 10,952 |
The most significant items under prepaid expenses and accrued income, EUR 2.047 thousand in 2018, consists of pre-rental for year 2019 to Ilmarinen. In 2019 prepaid expenses and accrued income no longer include pre-rentals due to the application of the IFRS 16 standard.
The carrying amounts of current receivables best represent the maximum exposure to credit risk, excluding fair value of any collaterals, in the case other party to an agreement fail to discharge an obligation concerning financial instruments. Trade and other receivables do not contain any significant concentrations of credit risk. The carrying amounts of trade and other current receivables are in essentially equivalent to their fair values.
19. CASH AND CASH EQUIVALENTS
| 1,000 EUR | 2019 | 2018 |
|---|---|---|
| Cash and bank balances | 4,054 | 11,514 |
| Cash and cash equivalents in the balance sheet | 11,514 |
Cash and cash equivalents in the cash flow statement equal to the cash and cash equivalents in the balance sheet.
20. EQUITY DISCLOSURES
The Board members of the parent company review the capitalstructure, gearing and cost of debt of the Group on regular basis. No target has been set for the gearing, but the Board of the parent company may take measures, if development of the gearing is unfavourable. Gearing calculated from the consolidated statement of financial position of the Group was 4 849,1 % in the end of 2019 and 55,8 % in the end of 2018.
| Number of shares |
"Share capital, thousands of euro" |
"Share premium reserve, thousands of euro" |
"Legal reserve, thousands of euro" |
"Reserve for invested unrestricted equity, thousands of euro" |
|
|---|---|---|---|---|---|
| 31 Dec2017 | 44,254,174 | 4,215 | 86 | 2,378 | 26,430 |
| 31 Dec2018 | 44,254,174 | 4,215 | 86 | 2,378 | 26,430 |
| Directed issue | 350,000 | ||||
| 31 Dec2019 | 44,604,174 | 4,215 | 86 | 2,378 | 26,430 |
The company's shares have no nominal value.
The maximum share capital of the company is EUR 4.215 thousand.
The company held 106 333 of its own shares at 31 Dec 2019.
Reserves included in equity
Share premium reserve
The share premium reserve comprises both share issue gains arisen in the years 1997–2006, less transaction costs, as well as gains from sales of own shares.
Legal reserve
The share issue gains accrued from those share issues carried out before the entry into force of the Finnish Limited Liability Companies Act , i.e. prior to 1 September 2006, have been recognised in the legal reserve.
Reserve for invested unrestricted equity
The reserve for invested unrestricted equity comprises the share issue gains arisen from the directed share issues.
Nurminen Logistics has EUR 1.5 million hybrid bond from Ilmarinen that can be, in accordance to loan terms, changed to company shares. Hybrid bond was signed with Ilmarinen at 18 June 2017. Terms of the bond have been described more detailed in section 24.
21. SHARE-BASED PAYMENTS
Remuneration in shares for the members of the Board was EUR 70,000 in 2019.
22. FINANCIAL LIABILITIES
| 1,000 EUR | 2019 | 2018 |
|---|---|---|
| Long-term | ||
| Long-term loans from financial institutions | 13,041 | 13,549 |
| Lease liabilities | 26,859 | 51 |
| Total | 39,900 | 13,600 |
| Non-current | ||
| Loans from financial institutions | 781 | 1,011 |
| Lease liabilities | 2,321 | 4,241 |
| Total | 3,102 | 5,252 |
| Interest-bearing liabilities in currencies | ||
| EUR | 43,002 | 18,853 |
23. TRADE PAYABLES AND OTHER LIABILITIES
| 1,000 EUR | 2019 | 2018 |
|---|---|---|
| Current | ||
| Trade payables | 4,466 | 4,917 |
| Other liabilities | 766 | 692 |
| Accrued expenses and deferred income | 2,580 | 3,177 |
| Total trade payables and other liabilities | 7,811 | 8,786 |
| Trade payables and other liabilities in currencies | ||
| Euro | 6,618 | 6,913 |
| US Dollar | 1,129 | 1,828 |
| Russian Rouble | 61 | 44 |
| SEK | 3 | |
| 7,811 | 8,786 | |
| Non-current | ||
| Other liabilities | 212 | 328 |
| Total non-current liabilities | 212 | 328 |
The most significant items under accrued expenses, EUR 495 thousand in 2019 (2018 EUR 1 062 thousand) consists of periodization of operative expenses and personnel expenses EUR 1 000 thousand in 2019 (2018 EUR 1 100 thousand).
24. FINANCIAL RISK MANAGEMENT
The objective of the Group's risk management is to minimise the adverse effects by the changes in financial markets on the Group's result and equity. The policy for managing financial risks is based on the main principles of finance approved by the Board of Directors. The finance department is responsible for the daily risk management within the limits set by the Board of Directors.
Currency risk
Currency risk arises from foreign currency imports and exports, from the financing of foreign subsidiaries and from translation of subsidiaries' equity in foreign currency.
The Group manages the currency risk inherent in cash flows by keeping foreign currency income and expense cash flows in the same currency, and by matching them simultaneously to the extent possible. If matching is not possible, a part of an open position may be hedged.
Foreign currency transaction risk position can be hedged if the counter value of currency exceeds EUR 500,000. Positions greater than EUR 2 million are hedged 50–110 %. Foreign currency risk of the net translation exposure can be hedged 25–75 %. Instruments used in hedging include forward contracts and plain vanilla options. Exotic options are forbidden. The hedge ratio is considered based on the current economic trends and the predicted currency prospects as well as the functionality of each currency's hedge market. In extraordinary hedging market circumstances the company may deviate from guidelines above.
Currency amounts in bank accounts should be kept as small as possible without disturbing payment transactions. The amount of cash and cash equivalents denominated in foreign currencies may not exceed one per cent of the total of the balance sheet.
Interest rate risk
Interest rate risks to the Group derive mainly through interest-bearing debts. The purpose of the interest rate risk management is to diminish the effect of market interest rate movements on cash flows from financing. Hedging instruments may include forward rate agreements and interest rate futures, interest rate swaps and interest collar agreements.
The EUR 5 million loan from Ilmarinen includes condition that company shall pay extra 20% profit share of the confirmed annual report net result when the loan is unshortened. The profit share decreases linearily with installments. See INTEREST RATE RISK / Sensitivity analysis for interest rate risk.
Liquidity risk
The purpose of liquidity risk management is to ensure sufficient financing in all situations. Funds required for about two weeks' payment transactions will be reserved as a buffer for liquidity of payment transactions. The Group aims to guarantee the availability and flexibility of financing by using a number of financial institutions and financing methods in raising finance.
The financial statements are based on the principle of business continuity. The company's management estimates that the operating cash flow generated by the company covers the current business needs and current liabilities for the next 12 months. Sufficiency of operative cash flow is subject to risks if estimates deviate considerably from expectations. If the Group is unable to secure sufficient long term financing arrangements, the continuity of operations can be at risk.
The valuation of assets is based on the going concern assumption. If cash flow estimates do not realize according to plan, demand for impairment losses on assets may arise. Impairment losses impact negatively on equity ratio. The company has reached an agreement with financiers regarding the abandonment of covenant terms on equity ratio. The EUR 8 million loan from Ilmarinen includes condition on profit share related to free cash flow. See LIQUIDITY RISK.
Cash and cash equivalents at hand strengthened in February 2020 due to dividends received from Baltic business operations. The company expects EUR 0.3 million dividend payment during the second quarter of the year 2020, increasing the cash at hand. At year end, the company recognized certain non-current assets held for sale for which divestment process is ongoing. In addition, the company signed amendment contract with Ilmarinen regarding rent agreement on Vuosaari premises. The amendment agreement enables the company to postpone rental payments at will for maximum of six months between March 2020 and March 2021. The postponed rent payments are due in March 2023 the latest.
Credit risk
The objective of credit risk management is to minimise losses which arise from other party neglecting their obligations. The Group manages the counterparty risk based on the customer credit rating and engages in active debt collection, when necessary.
The Group has made ECL measurement analysis according to IFRS 9. It has recognized estimated credit losses through income statement.
The Group has not applied hedge accounting during 2019 and 2018.
INTEREST RATE RISK
Sensitivity analysis for interest rate risk
In calculating the sensitivity to changes in the interest rate level the following assumptions have been used:
- the change in the exchange rate has been assumed to be +/– 10%
- At a time of negative reference interest rates interest rate movements affect as diluted. In the analyse reference interest rates are though to be at least zero.
Sensitivity analysis for variable interest rate loans
| 2019 | ||||
|---|---|---|---|---|
| 1,000 EUR | 31 Dec 2019 | Income statement 100 bp | ||
| Increase | Decrease | |||
| Total amount of variable interest rate loans | 13,707 | |||
| Variable interest rate instruments | –137 | 0 | ||
| Total effect | –137 | 0 |
| 2018 | ||||
|---|---|---|---|---|
| 1,000 EUR | 31 Dec 2018 Income statement 100 bp |
|||
| Increase | Decrease | |||
| Variable interest rate instruments | 14,510 | |||
| Variable interest rate instruments | –145 | 0 | ||
| Total effect | –145 | 0 |
Market-based loans are raised mainly as variable interest rate loans. Nurminen Logistics hedges from interest rate risk of market-based loans by electing the interest rate periods and with derivative instruments, mainly with interest rate swaps. No interest rate swops were used in 2019 and 2018. The EUR 5 million loan from Ilmarinen includes condition that company shall pay extra 20% profit share of the confirmed annual report net result when the loan is unshortened. The profit share decreases linearily with installments.
Profit share is calculated for each financial year based on the loan capital unpaid on 30 June. If the net result is negative, Nurminen Logistics is not obliged to payment. The profit share of the loan is regarded as interest (financial expense), not as dividend.
CURRENCY RISK
In calculating the sensitivity to changes in the exchange rate the following assumptions have been used:
- the change in the exchange rate has been assumed to be +/– 10%
- other variables remain constant
| 2019 | |||||
|---|---|---|---|---|---|
| Trade receivables 10 % | Trade payables 10 % | ||||
| 1,000 EUR | USD | Decreases | Increases | Decreases | Increases |
| Total currency items | |||||
| Trade receivables | 1,776 | ||||
| Trade payables | 1,268 | ||||
| Total effect | –144 | 176 | 103 | –125 |
| 2018 | |||||
|---|---|---|---|---|---|
| Trade receivables 10 % | Trade payables 10 % | ||||
| 1,000 EUR | USD | Decreases | Increases | Decreases | Increases |
| Total currency items | |||||
| Trade receivables | 1,708 | ||||
| Trade payables | 2,097 | ||||
| Total effect | –136 | 166 | 166 | –203 |
| Balance sheet exchange rate |
||
|---|---|---|
| Exchange rates used | 2019 | 2018 |
| USD | 1.12 | 1.15 |
LIQUIDITY RISK
The contractual cash flows of loan instalments and interests at 31 December 2019 were the following :
| 1,000 EUR | 1–3 months | 4 months–1 year | 2–5 years | 5 years -> |
|---|---|---|---|---|
| Loans from financial institutions | 13,041 | |||
| Lease liabilities incl. interest | 886 | 2,524 | 15,764 | 16,848 |
| Trade payables | 4,466 | |||
| Interest | 66 | 441 | 1,199 | |
| Total | 5,417 | 2,965 | 30,004 | 16,941 |
The contractual cash flows of loan instalments and interests at 31 December 2018 were the following :
| 1,000 EUR | 1–3 months | 4 months–1 year | 2–5 years | 5 years -> |
|---|---|---|---|---|
| Loans from financial institutions |
13,500 | |||
| Finance lease liabilities |
154 | 3,800 | 338 | |
| Trade payables | 4,917 | |||
| Interest | 93 | 717 | 1,758 | 19 |
| Total | 5,164 | 4,518 | 15,596 | 19 |
The EUR 8.0 million loan from Ilmarinen includes condition that the company pays premature repayments 30% of free cash flow. According to agreement, free cash flow is calculated by deducting financial expences, loan repayments and working capital investment from the operative cash flow. Free cash flow is calculated based on the consolidated financial statements every six months until the end of the agreement.
The EUR 5 million loan from Ilmarinen includes condition that company shall pay extra 20% profit share of the confirmed annual report net result when the loan is unshortened. The profit share decreases linearily with installments.
Nurminen Logistics completed the issuance of a EUR 1.5 million convertible hybrid bond to Ilmarinen in the year 2019. The convertible hybrid bond may be converted to a maximum of 5.330,000 shares in the company in accordance with the terms and conditions of the convertible hybrid bond. The convertible hybrid bond bears a fixed interest rate of 4.00 per cent per annum until 31 December 2020, and thereafter, the fixed interest rate of 8.00 per cent per annum, unless otherwise provided in its terms and conditions. The convertible hybrid bond has no maturity date, but the company is entitled to redeem it at any time in accordance with its terms and conditions.
Changes in long term interest bearing depts
| 1 Jan 2019 | Additionals, IFRS 16 |
Disposals | Other changes | 31 Dec 2019 | |
|---|---|---|---|---|---|
| Long-term liabilities, interest bearing | 13,549 | –508 | 13,041 | ||
| Long-term leasing liabilities, | |||||
| interest bearing | 51 | 31,485 | –4,358 | –319 | 26,859 |
| Total | 13,600 | 31,485 | –4,866 | –319 | 39,900 |
A partial payment of EUR 0.5 million of the originally EUR 8.5 million loan from Ilmarinen was paid in November 2019 in advance.
Changes in short term interest bearing depts
| 1 Jan 2019 | Additionals, IFRS 16 |
Disposals | Other changes | 31 Dec 2019 | |
|---|---|---|---|---|---|
| Short-term liabilities, interest bearing | 1,011 | –230 | 781 | ||
| Short-term finance lease liabilities | 4,241 | 2,321 | –4,241 | 2,321 | |
| Total | 5,252 | 2,321 | –4,471 | 3,102 |
CREDIT RISK
| Maximum exposure to credit risk | 1,000 EUR |
|---|---|
| 2019 | 6,439 |
| 2018 | 6,922 |
Aging of trade receivables
| 1,000 EUR | Not past due | Past due less than 30 days |
Past due 30–120 days |
Past due over 120 days |
Total |
|---|---|---|---|---|---|
| 2019 | 4,408 | 1,731 | 300 | 6,439 | |
| 2018 | 5,329 | 1,061 | 162 | 6,552 |
Nurminen Logistics has no significant concentrations of credit risk.
25. OTHER LEASES
The Group as lessee
Future minimum lease payments under non-cancellable operating leases are as follows:
| 1,000 EUR | 2019 | 2018 |
|---|---|---|
| Less than one year | 627 | 4,514 |
| Between one and five years | 437 | 15,812 |
| More than five years | 28,281 | |
| Total | 1,064 | 48,606 |
Leases in scope of the 1.1.2019 adopted IFRS 16 standard are recognised as right of use assets in property, plant and equipment and as lease liabilities. Otherwise Nurminen Logistics leases as a lessee mainly IT equipment, office automation equipment, vehicles and cargo handling machines used in terminals.
| Rent liabilities, EUR 1,000, IFRS 16 bridge calculation | 1.1.2019 |
|---|---|
| Rent liabilities 31.12.2018 | 48,606 |
| Vuosaari's revaluation | –9,109 |
| Finance leasing | –1,029 |
| Short term, low value | –695 |
| Other corrections and increases | 1,385 |
| Nominal value 1.1.2019 | 39,158 |
| Discounting | 4 % |
| Present value of capitalised rent liabilities | 31,095 |
26. CONTINGENCIES AND COMMITMENTS
| 1,000 EUR | 2019 | 2018 |
|---|---|---|
| Liabilities for which business mortgages have been given and subsidiary shares pledged | ||
| Loans from financial institutions | 13,707 | 14,511 |
| Mortgages given | 15,500 | 15,500 |
| Book value of pledged subsidiary shares | 23,352 | 10,108 |
| Group has given business mortgages amounting to EUR 8.5 million and | ||
| pledged second mortgages amounting to EUR 7.0 million for loans. | ||
| Other commitments | ||
| Customs duties and other guarantees | 5,999 | 6,014 |
Group has pledged business mortgages amounting to EUR 7.0 million, Nurminen Logististics Services Oy shares with book value of EUR 23.4 million, and deposits of EUR 0.1 million on custom duties and other guarantees needed for continuous operations.
27. RELATED PARTY TRANSACTIONS
Nurminen Logistics' related parties include the members of the Board of Directors and those of the Management Team as well as companies under their control. Related parties are also those shareholders that have direct or indirect control or significant influence in the Group. The business transferred to new John Nurminen in the demerger of John Nurminen Ltd is also considered to be related party.
Related party transactions with companies under control of Board members
| 1,000 EUR | 2019 | 2018 |
|---|---|---|
| Sales | 17 | 142 |
| Purchases | 284 | 173 |
| Management remuneration | ||
| EUR | 2019 | 2018 |
| CEO, the members of the Board and the Executive Board | ||
| Salaries and other short-term employee benefits | 718,807 | 989,242 |
| Statutory pension payments | 85,276 | 96,970 |
| Benefits due after termination of employment contract | 127,857 | 29,138 |
| Share-based payments | 80,500 | 140,653 |
| Total | 1,012,440 | 1,256,003 |
| Salaries and wages | ||
| CEO | ||
| Tero Vauraste | 22,785 | |
| Ville Iho | 169,523 | |
| Marko Tuunainen | 84,000 | 430,366 |
| Interim CEO | ||
| Teppo Talvinko | 7,571 | 4,636 |
| Members of the Board | ||
| Alexey Grom | 24,500 | 23,000 |
| Tero Kivisaari ( till 6 October 2017) | 6,000 | |
| Hannu Leinonen (from 12 April 2019) | 10,000 | |
| Juha Nurminen | 30,500 | 24,500 |
| Jukka Nurminen | 34,500 | 23,500 |
| Olli Pohjanvirta | 157,845 | 151,915 |
| Irmeli Rytkönen (from 11 April 2018) | 35,500 | 8,500 |
| Kari Savolainen (till 11 April 2019) | 24,500 | 8,500 |
| 601,225 | 680,917 |
Members of the Board and management own 30 % of company shares on 31 December 2019. The company has made a management service agreement with Russian Capital Management Oy, controlled by Olli Pohjanvirta. Agreement has been valid 1 November 2018 – 31 May 2019 having monthly fee of EUR 16.5 thousand.
28. ACQUISITIONS AND DIVESTED BUSINESSES
The group sold shares of ZAO Terminal Rubesh in May 2019 and acquired PFC Nordic Oy in August 2019.
PFC Nordic Oy's liquid assets at acquisition date amounted to EUR 89 thousand, short term receivables EUR 293 thousand and short term liabilities EUR 385 thousand.
PFC Nordic Oy Net sales for the financial year 2019 amounted to EUR 3.234 thousand, EBIT for the financial year 2019 totaled EUR 2 thousand, and profit for the period EUR 1 thousand. Acquisition price totaled EUR 200 thousand of which EUR 75 thousand was earn-out based.
29. EVENTS AFTER THE BALANCE SHEET DATE
The company announced 28 January 2020 on issuance of shares for the long-term incentive plan for the CEO, in which the CEO may purchase maximum of 180,00 shares at price of EUR 0.28 per share.
The company announced on 17 January 2020 that it initiated co-determination negotiation considering the personnel of Finnish subsidiaries in order to prepare for possible decline of goods flow due to labor marker disturbances in manufacturing industries and other client industries. The co-determination negotiations were concluded on 4 February 2020. As the labor market disturbances ceased the company was not required to establish any adjusting arrangements with the personnel.
The company announced on 4 March 2020 that it recognizes a write down of EUR 5,3 million on goodwill impacting negatively on equity ratio. The company has reached an agreement with financiers regarding the abandonment of covenant terms on equity ratio.
Parent Company's Income Statement
| 1,000 EUR | Note | 2019 | 2018 |
|---|---|---|---|
| NET SALES | 1 | 2,203 | 2,192 |
| Other operating income | 2 | 457 | 46 |
| Employee benefit expenses | 3 | –1,435 | –1,425 |
| Depreciation, amortisation and impairment losses | 4 | –842 | –1,139 |
| Other operating expenses | 5 | –1,727 | –43 |
| OPERATING RESULT | –1,345 | –369 | |
| Financial income and expenses | 6 | –2,579 | –7,460 |
| RESULT BEFORE EXTRAORDINARY ITEMS | –3,924 | –7,828 | |
| Group Contribution | 90 | ||
| Taxes | –1 | 67 | |
| RESULT FOR THE YEAR | –3,835 | –7,761 |
Parent Company's Balance Sheet
| 1,000 EUR | Note | 2019 | 2018 |
|---|---|---|---|
| ASSETS | |||
| Non-current assets | |||
| Intangible assets | 1 | 1,902 | 1,348 |
| Property, plant and equipment | 1 | 29 | 7,614 |
| Investments | 2 | 28,667 | 18,137 |
| Total non-current assets | 30,598 | 27,099 | |
| Current assets | |||
| Non-current receivables | 3 | 802 | 2,618 |
| Current receivables | 3 | 8,771 | 9,944 |
| Cash and cash equivalents | 1,377 | 9,079 | |
| Total current assets | 10,950 | 21,641 | |
| TOTAL ASSETS | 41,548 | 48,740 | |
| EQUITY AND LIABILITIES | |||
| Equity | |||
| Share capital | 4 | 4,215 | 4,215 |
| Share premium reserve | 4 | 86 | 86 |
| Other reserves | |||
| Legal reserve | 4 | 2,374 | 2,374 |
| Reserve for invested unrestricted equity | 4 | 27,079 | 27,079 |
| Retained earnings | 4 | –8,397 | –736 |
| Profit / loss for the financial year | 4 | –3,835 | –7,761 |
| Total equity | 21,522 | 25,257 | |
| Non-current liabilities | |||
| Capital loan | 1,500 | 1,500 | |
| Deferred tax liabilities | 23 | ||
| Other non-current liabilities | 6 | 13,213 | 13,597 |
| Current liabilities | |||
| Current liabilities | 7 | 5,289 | 8,385 |
| Total liabilities | 20,025 | 23,483 | |
| TOTAL EQUITY AND LIABILITIES | 41,548 | 48,740 |
Parent Company's Cash Flow Statement
| 1,000 EUR | 2019 | 2018 |
|---|---|---|
| Cash flow from operating activities | ||
| PROFIT / LOSS FOR THE YEAR | –3,835 | –7,761 |
| Adjustments | ||
| Depreciation, amortisation and impairment losses | 842 | 1,242 |
| Gains (–) and losses (+) on sale of non-current assets | 576 | 8,378 |
| Financial income (–) and expenses (+) | 2,579 | –1,143 |
| Taxes | –1 | –67 |
| Other adjustments | –78 | 1,099 |
| Cash flow before changes in working capital | 83 | 1,747 |
| Changes in working capital | ||
| Current non-interest bearing receivables, increase (–) / decrease (+) | 122 | –151 |
| Current liabilities, non-interest bearing, increase (+) / decrease (–) | –1,666 | –569 |
| Net cash from operating activities before financial items and taxes | –1,461 | 1,028 |
| Interest paid | –534 | –539 |
| Dividends received | 974 | 1,940 |
| Interest received | 436 | 181 |
| Other financial items | –38 | –91 |
| Net cash from operating activities | –622 | 2,519 |
| Cash flow from investing activities | ||
| Investments in property, plant and equipment and intangible assets | –691 | –572 |
| Proceeds from subsidiary shares | 690 | 7,011 |
| Proceeds from equity accounted investments | 16 | |
| Investments in subsidiaries | –138 | |
| Payments to acquire equity accounted investments | –103 | |
| Loans granted | –2,559 | –2,538 |
| Net cash used in investing activities | –2,699 | 3,814 |
| Cash flow from financing activities | ||
| Payments of non-current liabilities | –555 | |
| Proceeds from current liabilities | 138 | 600 |
| Repayments of current liabilities | –4,098 | –3,292 |
| Net cash used in financing activities | –4,514 | –2,692 |
| Change in cash and cash equivalents | –7,835 | 3,641 |
| Cash and cash equivalents at the beginning of the year | 9,079 | 5,438 |
| Change in cash and cash equivalents | –7,835 | 3,641 |
| Cash and cash equivalents at year-end | 1,244 | 9,079 |
Notes to the Parent Company's Financial Statements
Accounting principles for the parent company's financial statements
The financial statements of Nurminen Logistic Plc are prepared in accordance with Finnish Accounting Standards (FAS).
Measurement of non-current assets
Items of property, plant and equipment and intangible assets are carried at cost less the planned depreciation / amortisation. They are depreciated / amortised over their estimated useful lives, which are the following:
- Intangible assets 3–5 years Machinery and equipment 3–10 years
- Goodwill 5–10 years Other capitalised long-term expenditure 5–10 years
The company's subsidiary shares and other shares in the investments in non-current assets are valued at acquisition cost or, if lower, at fair value. The fair value that are used as the basis for the valuation of subsidiary shares is based on management's valuation calculations of future cash flows of subsidiaries.
Measurement of receivables
Receivables are measured at the lower of nominal and estimated probable value.
Pensions
Pension costs are presented in accordance with national legislation in each country. The pension security of the Finnish personnel has been arranged through external pension insurance companies.
Foreign currency items
Foreign currency receivables and liabilities are translated into euro at the closing rate at the balance sheet date. The exchange rate differences arising from forward contracts entered into for hedging purposes have been adjusted against the exchange rate differences arisen from the corresponding hedged items.
Leases
Lease payments are accounted for as rental costs. Lease payments due in the future years under the agreements are presented under contingencies and commitments.
Capital loan
The capital loan holders do not have any rights equivalent to ordinary shareholders. The company has no contractual obligation to repay the loan capital or the interest on the loan. If interest is paid to the capital bond, it is recognised in the income statement.
Notes to the Income Statement
| 1,000 EUR | 2019 | 2018 |
|---|---|---|
| 1. Net sales | ||
| Sale of services | 2,203 | 2,192 |
| Total | 2,203 | 2,192 |
| 2. Other operating income | ||
| Rent income | 457 | 4 |
| Other items | 42 | |
| Total | 457 | 46 |
| 3. Disclosures for personnel and members of company organs | ||
| Employee benefit expenses | ||
| Wages and salaries | –1,292 | –1,290 |
| Pension expenses and pension contributions | –129 | –102 |
| Other social security costs | –14 | –32 |
| Total | –1,435 | –1,425 |
| 4. Depreciation, amortisation and impairment losses | ||
| Planned depreciation and amortisation: | ||
| Intangible rights | –6 | |
| Other capitalised long-term expenditure | –299 | –105 |
| Property, plant, Machinery and equipment | –543 | –1,029 |
| Total | –842 | –1,139 |
| 5. Other operating expenses | ||
| Other operating expenses | –1,727 | –43 |
| Total | –1,727 | –43 |
| Auditors' fees | ||
| Audit fees | –76 | –55 |
| Other fees paid to auditors | –20 | –37 |
| Total | –97 | –92 |
| 6. Financial income and expenses | ||
| Dividend income | ||
| Dividend income from Group companies | 974 | 1,940 |
| Total | 974 | 1,940 |
| Interest and other financial income | ||
| Interest from group companies | 436 | 181 |
| Interest and other financial income from others | 1 | 10 |
| Total | 436 | 190 |
| Interest and other financial expenses | ||
| Loss from sale of subsidiary shares | –8,509 | |
| Impairment losses on investments | –2,992 | |
| Interest to group companies | –11 | –5 |
| Interest and other financial expenses to others | –985 | –1,076 |
| Total | –3,989 | –9,589 |
| Total financial income and expenses | –2,579 | –7,460 |
Notes to the Balance Sheet
| 1. Property, plant and equipment and intangible assets Intangible rights: Cost at 1 Jan 148 148 Cost at 31 Dec 148 148 Accumulated planned amortisation at 1 Jan 147 146 Amortisation for the year 1 Accumulated planned amortisation at 31 Dec 147 147 Carrying amount at 31 Dec 1 1 Other capitalised long-term expenditure Cost at 1 Jan 2,206 754 Additions 852 1,452 Cost at 31 Dec 3,058 2,206 Accumulated planned amortisation at 1 Jan 858 749 Amortisation for the year 299 109 Accumulated planned amortisation at 31 Dec 1,157 858 Carrying amount at 31 Dec 1,901 1,347 Land area Cost at 1 Jan 17 17 Additionals 4 Carrying amount at 31 Dec 22 17 Sale and lease back assets Cost at 1 Jan 13,756 13,756 Disposals and transfers between items –13,756 Cost at 31 Dec 13,756 Accumulated planned amortisation at 1 Jan 6,333 5,305 Disposals and transfers between items –6,876 Amortisation for the year 543 1,029 Accumulated planned amortisation at 31 Dec 6,333 Carrying amount at 31 Dec 7,423 Other tangible assets Cost at 1 Jan 9 9 Cost at 31 Dec 9 9 Accumulated planned depreciation at 1 Jan 1 1 Accumulated planned depreciation at 31 Dec 1 1 Carrying amount at 31 Dec 8 8 Prepayments and unfinished acquisitions Cost at 1 Jan 165 1,046 Additions 655 Decreases –165 –1,536 Cost at 31.12. 165 |
1,000 EUR | 2019 | 2018 |
|---|---|---|---|
| Carrying amount at 31 Dec | 165 |
| 1,000 EUR | 2019 | 2018 |
|---|---|---|
| 2. Investments | ||
| Holdings in Group companies | ||
| Cost at Jan 1 | 208 | 15,606 |
| Transfers between items | 5,492 | |
| Decreases | –15,398 | |
| Write down of shares | –609 | |
| Carrying amount at Dec 31 | 5,091 | 208 |
| Investments in reserve for invested unrestricted equity of Group companies | ||
| Cost at Jan 1 | 10,100 | 10,100 |
| Additions | 15,531 | |
| Write down of shares | –2,279 | |
| Carrying amount at Dec 31 | 23,352 | 10,100 |
| Holdings in associates | ||
| Cost at Jan 1 | 308 | 308 |
| Write down of shares | –104 | |
| Carrying amount at Dec 31 | 204 | 308 |
| Other shares and holdings | ||
| Cost at Jan 1 | 21 | 21 |
| Carrying amount at Dec 31 | 21 | 21 |
| Capital loan receivable at Jan 1 | 7,500 | 7,500 |
| Additions | 950 | |
| Transfer to reserve for invested unrestricted equity | –8,450 | |
| Capital loan receivable at Dec 31 | 7,500 | |
| Total | 28,667 | 18,137 |
| Domicile | Share of ownership % |
|
|---|---|---|
| Subsidiaries | ||
| RW Logistics Oy | Finland | 100 |
| Nurminen Logistics Services Oy | Finland | 100 |
| Kiinteistö Oy Kotkan Siikasaarentie 78 | Finland | 100 |
| Kiinteistö Oy Luumäen Suoanttilantie 101 | Finland | 100 |
| Kiinteistö Oy Vainikkalan Huolintatie 13 | Finland | 100 |
| OOO Nurminen Logistics | Russia | 100 |
| Nurminen Maritime Latvia SIA | Latvia | 51 |
| Nurminen Maritime Estonia AS | Estonia | 51 |
| Nurminen Maritime UAB | Lithuania | 51 |
| Associates and joint ventures | ||
| NR Rail Oy | Finland | 51 |
| Pelkolan Terminaali Oy | Finland | 20 |
| 1 000 EUR | 2019 | 2018 |
|---|---|---|
| 3. Receivables | ||
| Non-current | ||
| Advance payments | 802 | 2,618 |
| Yhteensä | 802 | 2,618 |
| Current | ||
| Current receivables from Group companies | ||
| Trade receivables | 2 | 986 |
| Other receivables | 6,931 | 6,774 |
| Total | 6,932 | 7,760 |
| Trade receivables | 8 | |
| Prepayments and accrued income | ||
| Ilmarinen prepaid leases | 1,742 | 2,047 |
| Other accrued income | 97 | 129 |
| Prepayments and accrued income | 1,838 | 2,177 |
| Total | 1,838 | 2,184 |
| Total current receivables | 8,771 | 9,944 |
| 4. Equity | ||
| Share capital total | 4,215 | 4,215 |
| Share premium reserve | 86 | 86 |
| Legal reserve | 2,374 | 2,374 |
| Restricted equity | 6,675 | 6,675 |
| Reserve for invested unrestricted equity at 1 Jan | 27,079 | 27,079 |
| Reserve for invested unrestricted equity at 31 Dec | 27,079 | 27,079 |
| Retained earnings | –8,297 | –736 |
| Changes to previous financial periods | –100 | |
| Profit / loss for the year | –3,835 | –7,761 |
| Unrestricted equity | 14,848 | 18,582 |
| Equity total | 21,522 | 25,257 |
| Distributable funds | ||
| Reserve for invested unrestricted equity | 27,079 | 27,079 |
| Retained earnings | –8,397 | –736 |
| Profit / loss for the year | –3,835 | –7,761 |
| Total | 14,848 | 18,582 |
| The company owns 106,333 of its own shares | ||
| 5. Deferred taxes | ||
| Deferred tax assets on losses | 2,982 | 2,709 |
| Deferred tax receivables have not been recorded in the | ||
| parent company's separate financial statements. | ||
| Deferred tax liabilities have been recorded in the balance. | ||
| 6. Non-current liabilities | ||
| Deferred taxes | 23 | |
| Interest-bearing liabilities | ||
| Capital loan | 1,500 | 1,500 |
| Loans from financial institutions | 13,000 | 13,500 |
| Other liabilities | 236 | 97 |
| Total | 14,736 | 15,097 |
| Total non-current liabilities | 14,736 | 15,097 |
| 1,000 EUR | 2019 | 2018 |
|---|---|---|
| 7. Current liabilities | ||
| Current liabilities to Group companies | ||
| Trade payables | 32 | 4 |
| Other liabilities | 3,837 | 2,911 |
| Accrued expenses and deferred income | 34 | |
| Total | 3,903 | 2,915 |
| Interest-bearing liabilities | ||
| Interest bearing sale and lease back loans | 4,098 | |
| Other liabilities | 74 | 101 |
| Non-interest bearing liabilities | ||
| Trade payables | 625 | 579 |
| Other liabilities | 271 | 162 |
| Accrued expenses and deferred income | ||
| Employee benefit expense accruals | 296 | 334 |
| Other items | 119 | 196 |
| Total | 1,386 | 5,470 |
| Total current liabilities | 5,289 | 8,385 |
Other notes
| 1,000 EUR | 2019 | 2018 |
|---|---|---|
| Liabilities for which business mortgages have been given and subsidiary shares pledged |
||
| Loans from financial institutions | 13,000 | 14,511 |
| Mortgages given | 15,500 | 11,500 |
| Book value of pledged subsidiary shares | 23,352 | 10,108 |
| Collaterals given on behalf of Group companies | ||
| Book value of pledged subsidiary shares | 23,352 | 10,108 |
| Other commitments | ||
| Customs duties and other guarantees | 599 | 614 |
| Rental obligations | ||
| Payable in next year | 119 | 4,165 |
| Payable after that | 159 | 43,914 |
| Amounts payable under leases | ||
| Payable in next year | 68 | 64 |
| Payable after that | 108 | 39 |
Notes Regarding Personnel and Company Organs
| 2019 | 2018 | |
|---|---|---|
| The number of personnel | ||
| Personnel, average | 15 | 15 |
| Personnel, at year-end | 14 | 13 |
| Management remuneration (1,000 EUR) | ||
| The Board of Directors and CEO | 601 | 681 |
Signing of the Financial Statements and the Board's Report on Operations
Helsinki 6 March 2020
Olli Pohjanvirta Juha Nurminen Chairman of the Board
Alexey Grom Jukka Nurminen
Hannu Leinonen Irmeli Rytkönen
Tero Vauraste Interim CEO
An auditor's report on the general audit has been given today.
Helsinki 6 March 2020
Ernst & Young Oy
Antti Suominen Authorized Public Accountant
Group's Key Figures
Key figures for business
| 2017 | 2018 | 2019 | |
|---|---|---|---|
| Net sales, EUR 1,000 | 75,772 | 78,874 | 69,340 |
| Increase in net sales, % | 51.6 % | 4.1 % | –12.1 % |
| Operating result (EBIT), EUR 1,000 | 1,691 | –6,046 | –8,517 |
| % of net sales | 2.2 % | –7.7 % | –12.3 % |
| Result before taxes, EUR 1,000 | 275 | –7,397 | –10,864 |
| % of net sales | 0.4 % | –9.4 % | –15.7 % |
| Result for the financial year, EUR 1,000 | –243 | –7,811 | –11,433 |
| % of net sales | –0.3 % | –9.9 % | –16.5 % |
| Return on equity (ROE), % | –2.3 % | –56.2 % | –163.9 % |
| Return on investment (ROI), % | 4.1 % | –18.1 % | –22.4 % |
| Equity ratio % | 30.8 % | 31.7 % | 1.5 % |
| Gearing % | 78.4 % | 55.8 % | 4849.1 % |
| Gross investments, EUR 1,000 | 1,624 | 709 | 722 |
| % of net sales | 2.1 % | 0.9 % | 1.0 % |
| Balance sheet total, EUR 1,000 | 47,587 | 41,511 | 52,088 |
| Average number of employees | 188 | 177 | 175 |
| Wages and salaries paid, EUR 1,000 | 8,921 | 9,025 | 9,196 |
| Share key figures | |||
| Earnings per share (EPS), EUR, undiluted | –0.04 | –0.20 | –0.29 |
| Earnings per share (EPS), EUR, diluted | –0.04 | –0.20 | –0.29 |
| Equity per share, EUR | 0.33 | 0.27 | –0.02 |
| Dividend per share (adjusted), EUR | 0.00 | 0.00 | 0.00 |
| Dividend per share (nominal), EUR | 0.00 | 0.00 | 0.00 |
| Dividend to earnings ratio, % | 0.0 % | 0.0 % | 0.0 % |
| Effective dividend yield, % | 0.0 % | 0.0 % | 0.0 % |
| Repayment of equity per share, EUR | 0.00 | 0.00 | 0.00 |
| Price per earnings (P/E) | –14 | –1 | –2 |
| Number of shares adjusted for share issue, weighted average | 29,253,069 | 44,072,693 | 44,304,976 |
| Number of shares adjusted for share | |||
| issue, at end of financial year | 43,937,865 | 44,251,414 | 44,538,914 |
| Share price development | |||
| Share price development | |||
| Highest price | 0.71 | 0.60 | 0.44 |
| Lowest price | 0.40 | 0.24 | 0.26 |
| Average price | 0.55 | 0.50 | 0.30 |
| Share price at balance sheet date | 0.55 | 0.25 | 0.27 |
| Market capitalisation, MEUR | 24.3 | 11.0 | 11.9 |
| Number of shares traded | 4,677,332 | 3,634,035 | 1,802,568 |
| Shares traded, % of total number of shares | 10.6 % | 8.2 % | 4.0 % |
| Number of shareholders | 1,193 | 1,215 | 1,320 |
Calculation of Key Figures
| Result for the year | ||
|---|---|---|
| Return on equity, % = | Equity (average of beginning and end of financial year) | ×100 |
| Capital employed = | Balance sheet total - non-interest bearing liabilities | |
| Return on capital employed, % = | Result for the year before taxes + interest and other financial expenses | ×100 |
| Capital employed (average of beginning and end of financial year) | ||
| Equity ratio, % = | Equity | ×100 |
| Balance sheet total - advances received | ||
| Interest-bearing liabilities - cash and cash equivalents | ×100 | |
| Gearing, % = | Equity | |
| Result attributable to equity holders of the parent company | ||
| Earnings per share (EPS) = | Weighted average number of ordinary shares outstanding | |
| Equity attributable to equity holders of the parent company | ||
| Equity per share = | Undiluted number of shares outstanding at the end of the financial year | |
| Dividend per share | ||
| Dividend per earnings, % = | Earnings per share | ×100 |
| Effective dividend yield, % = | Dividend per share | |
| Adjusted share price at the end of the financial year | ×100 | |
| Share price at the end of the financial year | ||
| Price per earnings (P/E) = | Earnings per share | |
| Adjusted operating profit (EBIT) = | Operating profit without certain items affecting to the comparability |
Items affecting to the comparability are transactions that have significance to understand Nurminen Logistics financial development when comparing reporting period to previous periods. These items may include: 1) sales gains and losses and transaction costs related to sales and purchases 2) exceptional write offs 3) restructuring costs 4) Other items and transactions that are not belonging to normal business according to Nurminen Logistics management.
The company has abandoned "comparable EBIT" -concept. Comparable EBIT and comparable net sales are from a time period during which business structure and capital intensity at Russia were significant and currency translation differences held more significance for the company. It has been estimated that now established "adjusted EBIT"-concept provides the reader with better understanding on the business and its development.
Distribution of ownership
| Number of shares | Number of shareholders |
% of shareholders |
Number of shares |
% of total shares and votes |
|---|---|---|---|---|
| 1–100 | 296 | 22,4 | 13,752 | 0 |
| 101–1,000 | 526 | 39,8 | 250,975 | 1 |
| 1,001–10,000 | 404 | 30,6 | 1,335,448 | 3 |
| 10,001–100,000 | 67 | 5,1 | 1,885,816 | 4 |
| 100,001–1,000,000 | 18 | 1,4 | 6,695,685 | 15 |
| yli 1,000,000 | 9 | 0,7 | 34,422,498 | 77 |
| Total | 1,320 | 100,0 | 44,604,174 | 100 |
| Registered in the name of nominee | 5 | 772,405 | 2 |
Largest shareholders
| Number of shares | % of total shares and votes |
|
|---|---|---|
| Keskinäinen Eläkevakuutusyhtiö Ilmarinen | 8,780,000 | 19.7 |
| Nurminen Juha Matti | 5,640,426 | 12.6 |
| Suka Invest Oy | 5,169,588 | 11.6 |
| K. Hartwall Invest Oy Ab | 3,837,838 | 8.6 |
| Avant Tecno Oy | 3,446,392 | 7.7 |
| JN Uljas Oy | 3,049,388 | 6.8 |
| Ruscap Oy | 2,163,962 | 4.9 |
| Hisinger-Jägerskiöld Eva Constance | 1,279,279 | 2.9 |
| Nurminen Jukka Matias | 1,055,625 | 2.4 |
| Tuuli Markku Juhani | 953,850 | 2.1 |
| Nurminen Mikko Johannes | 870,108 | 2.0 |
| VGK Invest Oy | 769,597 | 1.7 |
| Lassila Satu Maaria | 648,000 | 1.5 |
| Hälläväliä Oy | 437,446 | 1.0 |
| Tuunainen Marko Juhani | 381,367 | 0.9 |
| Sjöblom Katri Pauliina | 349,256 | 0.8 |
| Vuorinen Hannu Markku | 334,642 | 0.8 |
| Altonen Manu Veikko | 283,000 | 0.6 |
| ETL Invest Oy | 270,483 | 0.6 |
| Relander Pär-Gustaf | 254,415 | 0.6 |
| Other 1,173 shareholders | 4,629,512 | 10.4 |
| Total | 44,604,174 | 100.0 |
Shareholders by type
| Number of shares | % of total shares and votes |
|
|---|---|---|
| Private companies | 17,807,098 | 40 |
| Financial institutions | 2,198,372 | 5 |
| Public sector organisations | 8,780,000 | 20 |
| Households | 14,864,681 | 33 |
| Foreign | 180,615 | 0 |
| Non-profit organizations | 1,003 | 0 |
| Registered in the name of nominee | 772,405 | 2 |
| Total | 44,604,174 | 100 |
Head Office Satamakaari 24, FI-00980 Helsinki, Finland Tel. +358 10 545 00 www.nurminenlogistics.com