Annual Report (ESEF) • Mar 15, 2023
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Accounting principles for the consolidated financial statements . . . . . . . . . 14 2. Net sales and accounting principles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 3. Other operating income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 4. Operating expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 5. Employee benefit expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .21 6. Depreciation, amortisation and impairment losses. . . . . . . . . . . . . . . . . . . . . . . . .21 7. Financial income and expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 8. Income taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 9. Earnings per share. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 10. Subsidiaries and associates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 11. Property, plant and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 12. Intangible assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .25 13. Leases. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .26 14. Carrying amounts of financial assets and financial liabilities by category. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .27 15. Impairment of assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .28 16. Investments in equity-accounted investees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29 17. Non-current receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29 18. Deferred tax assets and liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30 19. Trade and other receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31 20. Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31 21. Information about equity. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32 22. Share-based remuneration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33 23. Defined benefit pension plans. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34 24. Interest-bearing liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .35 25. Trade payables and other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36 26. Financial risk management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36 27. Other leases. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39 28. Contingencies and commitments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40 29. Related party transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40 30. Acquisitions and divested businesses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41 31. Legal proceedings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .41 32. Events after the balance sheet date. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .41 Distribution of ownership 31.12.2022 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42 Parent Company’s Income Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43 Parent Company’s Balance Sheet. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .43 Parent Company’s Cash Flow Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44 Notes to the Parent Company’s Financial Statements. . . . . . . . . . . . . . . . . . . . . . . . . . . . 45 Accounting principles for the parent company’s financial statements . . . . . . . . . . 45 Notes to the Parent Company’s Income Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46 Notes to the Parent Company’s Balance Sheet. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47 Other Notes of the Parent Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50 The Parent Company’s Notes Concerning Personnel and Company Organs 51 Key figures for the parent company.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51 The Board’s proposal for the distribution of profit, signatures of the Board’s report on operations and financial statements and auditor’s note . . . . . . . . . . . . . . 52 Auditor’s Report. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53 Independent Auditor’s Report on ESEF-Consolidated Financial Statements . 57 1 Table of Contents 2 Nurminen Logistics Plc Financial statements 2022 The Board’s Report on Operations The year 2022 was a year of changes, and due to the war in Ukraine and accelerating increase in costs, it required swift decisions on streamlining the cost structure, reallocating resources and expand- ing the market area. Net sales decreased by 13 per cent to EUR 122.5 million and the comparable net operating result was EUR 6.9 million. Rail services net sales decreased strongly after the onset of the war, and we reduced the container positions significantly as a result. Despite the considerable changes in the company’s business environment, the company managed to improve its equity ratio by 3 percentage points to 34.7 per cent. In early summer 2022, once it became clear that the war will be prolonged, we decided to wind down the direct railway connection between China and Finland and the reserved container position. In addition, we closed the Eastern traffic forwarding office in Vaa- limaa and the Vainikkala terminal, as well as the operations of the St. Petersburg office. At the same time, we sped up the opening of the Trans-Caspian route to serve traffic between China, Central Europe and the EU. In the autumn, we opened an office in Vienna to accelerate sales in Central Asian countries and Central Europe. We opened a new railway route in the Nordic countries. In Finland, we trimmed costs by reducing not only the container position, but also offices and the number of personnel. The adjust- ment measures resulted in non-recurring expenses of a total of EUR 3.5 million burdening the result. We managed to pass on the increase in costs caused by inflation fully to prices, and our pricing power remained good. The company’s unique position in railway logistics between Asia and the Nordic countries is bearing fruit and also facilitates future growth. Nurminen Logistics operates as both a railway operator and forwarder in international railway operations. There are only a few operators of this kind in Europe. Nurminen Logistics’ improved awareness and position in the international railway market have made it possible to open new routes with manageable risks and expansion of the market area into the other Nordic countries. The Nordic container traffic launched by the company has become important also from the point of view of security of supply in the current geopolitical situation. The Cargo business continued its positive development in 2022. Despite the end of Russian transit traffic, net sales in the Cargo business grew by 36 per cent to EUR 19.8 million. The growth in net sales accelerated towards the end of the year due to new customer accounts. The operating result reached a good level of 10%. The operational efficiency of the Cargo business improved further, and the implementation of our service concept continued in accordance with the strategy, focusing on customer accounts other than ware- housing customers. The Multimodal business in Sweden and starting Central European traffic succeeded well, and we have gained a foothold in the market where we will grow in 2023. The good development of the Baltic operations continued steadily throughout 2022. Net sales for July–December decreased by 35 per cent to EUR 50.8 million year-on-year and by 29 per cent compared to January–June. The decrease in net sales was due to the decreased demand for the Chinese and Asian container train business. Comparable oper- ating result for July–December amounted to EUR 2.2 million, or 4.4% of net sales. The comparable operating margin decreased slightly compared to January–June (6.5%), but excluding non-re- curring expenses, operations continued to be profitable. Market situation and future outlook The railway market between China and Europe developed favour- ably early in the year, but significantly slowed down soon after the war in Ukraine due to cargo volumes shifting to the route bypass- ing Russia. The Finnish domestic market was strong in the Cargo business, which is illustrated by the growth of the unit in spite of the end of the feed effects of railway traffic and transit traffic. The Baltic business environment remained stable. Nurminen Logistics estimates that the development of the logistics market relevant to the company will strengthen and the measures taken by the company in 2022 in cooperation with the acquisition of Operail Finland Oy will facilitate a positive development of the company’s business in 2023. Decreasing global freight volumes decreased the demand for ocean freight and lowered prices significantly during H2/2022. Train cargo volumes in traffic between the EU, Central Asia and China are growing, and changes in the sea freight market do not have an impact on train routes. We believe that the demand for rail freight will be increased by growth in the world economy and importance of environmental values, increasing interest rates and the success of China in accelerating economic growth following the COVID-19 lockdowns. Continued high interest rates and scarce financing will support the customers’ need for faster turnover of working capital and more accurate planning of deliveries, which will contribute to the demand for Nurminen Logistics’ services. Nurminen Logistics is in a strong position to grow rapidly in traffic along the Trans-Caspian route between Central Asia and the EU, because Nurminen is one of the few internationally known com- panies operating on the route. Improving the service level of the international trunk routes created during 2022 further also facili- tates growing the customer base in the Nordic countries and Cen- tral Europe. The strong Cargo business will be developed further, and we see opportunities for growth in both Finland and the Nordic countries in 2023. Nurminen Logistics is now strongly investing in railway services in Finland, and the acquisition of Operail Finland Oy facilitates growth and stable profitability in the next years, thanks to its long-term customer contracts. We see major opportunities in developing the offering, as Nurminen Logistics provides a completely new kind of customer insight as a railway company. Business review Nurminen Logistics’ profitability weakened due to a decrease in volumes in the direct Asia train connection, caused by the war in Ukraine. Moreover, profitability was significantly burdened by non-recurring adjustment measures taken in 2022. As international tension eases, we believe that interest in railway services will return, because their competitive advantages, such as low emissions, have not changed. Net sales from the Chinese and Asian container train business amounted to EUR 23.5 million in 2022. The Chinese and Asian container traffic operations account for 19 per cent (33%) of the Group’s net sales. The Multimodal business continued to be profitable throughout the year and net sales amounted to EUR 16.3 million. Multimodal ser- vices account for 13 per cent (8%) of the Group’s net sales. Net sales in the Cargo business grew by 36 per cent in 2022 and The Board’s Report on Operations 3 Nurminen Logistics Plc Financial statements 2022 The Board’s Report on Operations amounted to EUR 19.8 million. The growth in net sales acceler- ated towards the end of the year due to new customer accounts. The operating result reached a good level of 10%. Cargo services account for 16 per cent (10%) of the Group’s net sales. The good development of the Baltic operations continued steadily throughout 2022, and profitability was at a good level. The Baltic operations account for 51 per cent (48%) of the Group’s net sales. COVID-19 pandemic Nurminen Logistics’ development has been good, even though the impacts of the COVID-19 pandemic were still visible in China, reducing the demand in the Trans-Caspian route. Operating activi- ties and development projects progressed without major problems caused by the pandemic. Financial Position and Balance Sheet Cash flow from operating activities amounted to EUR +5.2 million. January–June accounted for EUR +4.9 million and July–December for EUR +0.3 million of the cash flow from operating activities. The change in working capital accounted for EUR +0.8 million of the cash flow from operating activities. Cash flow from investments was EUR -0.8 million. The cash flow from investing activities was impacted by investing in funds and investments in information systems and digitalisation. The cash flow from financing was EUR -5.3 million, with the most significant items being a total of EUR 1.9 million in dividends to non-controlling interests, EUR 1.2 million in repayment of equity to the shareholders of the parent company and EUR 2.0 million in loan payments. At the end of the review period, cash and cash equivalents amounted to EUR 6.1 million. Cash and cash equivalents attribut- able to the Baltic operations amount to EUR 4.7 million. The measurement of the assets in the financial statements is based on the going concern assumption and market prices, and the assets do not involve a risk of write-downs in the current situation. The management of the company estimates that the cash flow will cover the current business needs and liabilities for the next 12 months. The Group’s interest-bearing debt excluding IFRS 16 liabilities amounted to EUR 19.4 million. The liabilities according to IFRS 16 totalled EUR 9.5 million, of which EUR 7.0 million was connected to the land and civil defence shelter leases of the Vuosaari real estate company. The land lease liability does not have a negative impact on the value of the property. All of the buildings in the Vuosaari port area are located on plots leased from the City of Helsinki. Current interest-bearing liabilities of the company, a total of EUR 10.6 million, consist of bank loans of EUR 10.0 million and IFRS lease liabilities of EUR 0.6 million. Short-term bank loans include a loan of EUR 7.6 million from Ilmarinen, which will mature in June 2023. The company has started negotiations to renew this loan. Non-current interest-bearing liabilities are EUR 24.5 million, of which EUR 15.6 million consists of long-term debt and EUR 8.9 million is connected to lease liabilities according to IFRS 16. Long-term loans amount to EUR 15.6 million. Long-term loans include a loan of EUR 14.1 million taken out by Kiinteistö Oy Hel- singin Satamakaari 24 from Oma Savings Bank and a loan of EUR 1.5 million taken out by Nurminen Logistics Plc from Oma Savings Bank. The company’s equity amounted to EUR 24.1 million at the end of the year, while it was EUR 25.8 million at the end of the previous financial period. The equity ratio improved to 34.7% (31.7%) as a result of lightening the balance sheet. The balance sheet total was EUR 69.7 million (81.7). Capital Expenditure The Group’s gross capital expenditure during the review period amounted to EUR 0.4 million (EUR 0.3 million), accounting for 0.3% of net sales. Depreciation totalled EUR 2.8 million (EUR 3.0 million) , or 2.3% (2.1%) of net sales. Amortisation of right-of-use assets associated with IFRS 16 amounted to EUR 0.8 million (EUR 0.8 million). Group Structure The Group comprises the parent company, Nurminen Logistics Plc, as well as the following subsidiaries and associated companies, owned directly or indirectly by the parent (ownership, %): Nurminen Logistics Services Oy (100%), Kiinteistö Oy Kotkan Siikasaaren- tie 78 (100%), Kiinteistö Oy Luumäen Suoanttilantie 101 (100%), Kiinteistö Oy Vainikkalan Huolintatie 13 (100%), Kiinteistö Oy Hel- singin Satamakaari 24 (51%), Pelkolan Terminaali Oy (20%), OOO Nurminen Logistics (100%), Nurminen Maritime Latvia SIA (51%), Nurminen Maritime UAB (51%). NR Rail Oy was dissolved through liquidation proceedings in Janu- ary 2022 and RW Logistics Oy in December 2022. Personnel and Management At the end of the review period, the Group’s number of personnel stood at 141, compared to 140 on 31 December 2021. The number of employees working abroad was 36. Personnel expenses in 2022 totalled EUR 8.3 million (EUR 8.6 mil- lion in 2021). In September, Nurminen Logistics appointed Kai Simberg as a member of the Management Team and interim CFO for the dura- tion of CFO Iiris Pohjanpalo’s family leave. On 31 December 2022, the Management Team consisted of the following members: Olli Pohjanvirta, President and CEO; Kai Simberg, interim CFO; Tuo- mas Kansikas, COO, Multimodal business and Group support functions; Joonas Louho, VP, terminal business and ICT; and Suvi Kulmala, VP, Human Resources. In addition, during the financial period the Management Team included Olga Stepanova, VP Rail- way Operations and Country Manager Russia from 1 January 2022 to 1 June 2022 and Jonna Paasonen, CDO from 1 January 2022 to 26 September 2022. 4 Nurminen Logistics Plc Financial statements 2022 The Board’s Report on Operations Management transactions On 16 February 2022, Nurminen Logistics announced the transfer of 774,386 shares to President and CEO as part of the payment of the rewards of the CEO’s share-based incentive scheme. On 7 March 2022, Nurminen Logistics announced Chairman of the Board of Directors Irmeli Rytkönen’s subscription notification con- cerning 43,000 shares at a unit price of EUR 1.19 per share. On 30 March 2022, Nurminen Logistics announced CIO Petri Luu- rila’s subscription notification concerning 13,200 shares at an aver- age price of EUR 1.08 per share. On 31 March 2022, Nurminen Logistics announced Board member Juha Nurminen’s transfer notification concerning 176,212 shares. On 27 July 2022, Nurminen Logistics announced the remuneration in shares for the Board of Directors. Irmeli Rytkönen, Chairman of the Board of Directors subscribed for 38,023 shares, Juha Nur- minen, member of the Board of Directors subscribed for 19,011 shares, Olli Pohjanvirta, member of the Board of Directors sub- scribed for 19,011 shares, Victor Hartwall, member of the Board of Directors subscribed for 19,011 shares, Karri Koskela, member of the Board of Directors subscribed for 19,011 shares and Erja Sankari, member of the Board of Directors subscribed for 19,011 shares. Flagging notifications On 15 February 2022, Nurminen Logistics received a flagging noti- fication from Ilmarinen Mutual Pension Insurance Company, the direct holding of which decreased from a total of 15.12 per cent to 14.95 per cent as a result of an issue of shares without consid- eration by the company to itself, due to which the total number of shares in the company increased by 774,386 shares. All notifications have been disclosed as stock exchange releases and they are available on Nurminen Logistics’ website at www.nur- minenlogistics.com. 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 Jan - uary 2008. The total number of Nurminen Logistics Plc’s registered shares on 31 December 2022 was 78,101,654 and the registered share capital was EUR 4,214,521. The company has one share class and all the shares carry equal rights in the company. The com- pany name was Kasola Plc until 31 December 2007. The company was listed on the Helsinki Stock Exchange in 1987. Largest shareholders 31 December 2022 Number of shares Share of shares and votes Suka Invest Oy 12,635,655 16.18 Ilmarinen Mutual Pension Insurance Company 11,655,795 14.92 K. Hartwall Invest Oy Ab 8,105,390 10.38 Nurminen Juha Matti 6,508,047 8.33 Avant Tecno Oy 5,739,375 7.35 JN Uljas Oy 3,231,206 4.14 RailCap Ltd. 3,110,574 3.98 Verman Group Oy 2,524,297 3.23 Relander Pär-Gustaf 1,757,686 2.25 Cyberdyne Invest Oy 1,735,454 2.22 Ten largest shareholders total 57,003,479 72.98 Nominee-registered 856,109 1.10 Others 20,242,066 25.92 Total 78,101,654 100 Shareholders by type 31 December 2022 Number of shares % of total shares Private companies 39,706,892 51% Financial and insurance institutions 4,792,322 6% Public sector organisations 11,655,795 15% Households 20,860,673 27% Non-profit organisations 1,004 0% Foreign 228,859 0% Nominee-registered 856,109 1% Total 78,101,654 100% The trading volume of Nurminen Logistics Plc’s shares was 11,002,725 during the period from 1 January to 31 December 2022, representing 14.1% of the total number of shares. The value of the turnover was EUR 12,443 thousand. The lowest price during the period was EUR 0.56 per share and the highest EUR 2.07 per share. The closing price for the period was EUR 0.6 per share and the market value of the entire share capital was EUR 46,861 thou- sand, or EUR 46 822 thousand excluding own shares, at the end of the period. At the end of 2022, the company had 4,791 sharehold- ers. At the end of 2021, the number of shareholders stood at 4,095. At the end of 2022, the company held 65,262 of its own shares, corresponding to 0.08% of shares and votes. 5 Nurminen Logistics Plc Financial statements 2022 The Board’s Report on Operations According to the register of shareholders at 31 December 2022, the Board of Directors (including ownership of controlled entities) held 29.9% of Nurminen Logistics shares. Other members of the com- pany’s Management Team than President and CEO Olli Pohjanvirta did not hold shares on 31 December 2022. Board of Directors Shares Share of shares and votes Juha Nurminen 6,508,047 8.3 JN Uljas Oy 3,231,206 4.1 Total 9,739,253 12.5 Olli Pohjanvirta 1,424,413 1.8 RailCap Ltd. 3,110,574 4.0 VGK invest Oy 648,000 0.8 Total 5,182,987 6.6 Victor Hartwall 32,227 0.0 Oy Pallas Capital Ab 70,000 0.1 K Hartwall Invest Oy 8,105,390 10.4 Total 8,207,617 10.5 Irmeli Rytkönen 192,687 0.2 Karri Koskela 32,227 0.0 Erja Sankari 32,227 0.0 Total 23,386,998 29.9 Dividend policy The company’s Board of Directors has on 14 May 2008 determined the company’s dividend policy. According to it, Nurminen Logistics Plc aims to annually distribute as dividends approximately one-third of its net profit, provided that the company’s financial position allows this. Arrangements Related to Ownership and Exercise of Voting Rights No shareholder agreements related to holdings in Nurminen Logis- tics 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 the stock exchange release of 28 December 2008. According to the announcement, the members of the Board of Directors and Executive Board 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 con- sideration in conjunction with the demerger of John Nurminen Ltd, without prior written consent from the company's Board of Directors. Decisions made by the Annual General Meeting of Shareholders Nurminen Logistics Plc’s Annual General Meeting held on 11 April 2022 passed the following decisions: Adoption of the annual accounts and discharge from liability The General Meeting confirmed the company’s financial state- ments, reviewed the remuneration report of the administrative organs and discharged those accountable from liability for the Payment of dividend In accordance with the proposal by the Board of Directors, the General Meeting decided that the profit from the financial period ending on 31 December 2021 will be transferred to retained earn- ings and that shareholders will receive a repayment of equity from the reserve for invested unrestricted equity, EUR 0.0095 per each of the company’s 77,903,314 shares outstanding, totaling EUR 740,081.48. In addition, the General Meeting decided to authorise the Board of Directors to decide at their discretion on the repayment of equity from the reserve for invested unrestricted equity, at most EUR 0.0095 per share. Composition and remuneration of the Board of Directors The General Meeting resolved that the Board of Directors is com- posed of six members. The General Meeting re-elected the fol- lowing members to the Board of Directors: Irmeli Rytkönen, Olli Pohjanvirta, Juha Nurminen, Victor Hartwall, Erja Sankari and Karri Koskela. The General Meeting resolved that for the members of the Board elected at the Annual General Meeting for the term expiring at the close of the Annual General Meeting in 2023, the annual remuner- ation is paid as follows: annual remuneration of EUR 60,000 for the Chairman of the Board of Directors and EUR 30,000 for the other members of the Board of Directors. In addition, a meeting fee of EUR 1,500 per meeting for the Board and Board Committee meetings is paid to the Chairman of the Board of Directors, and EUR 1,000 to the other members of the Board per meeting of the Board and Board Committee. 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 Direc- tors may not dispose of shares received as annual remuneration before a period of three years has elapsed from receiving shares. Authorising the Board of Directors to decide on the issue 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 issue of shares and/or special rights entitling to shares as referred to in chapter 10, section 1 of the Finnish Limited Liability Compa- nies 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 7,700,000 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 com- mitment in, personnel. Nurminen Logistics’ share price development 1 January 2022–31 December 2022 0 20 40 60 80 100 120 Index: 1 January 2022 = 100 3 January 2022 3 February 2022 3 March 2022 3 April 2022 3 May 2022 3 June 2022 3 July 2022 3 August 2022 3 September 2022 3 October 2022 3 December 2022 3 November 2022 NLG1V OMX Helsinki Small Cap 6 Nurminen Logistics Plc Financial statements 2022 The Board’s Report on Operations The authorisation entitles the Board of Directors to decide on the share issue with or without payment. The authorisation for deciding on a share issue without payment also includes 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 held by 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 issues and the issues of special rights. The authorisation entitles the Board of Directors to decide on share issues, issues of option rights and other spe- cial 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 issues and/or issue of special rights. The authorisation remains valid until the end of the Annual General Meeting of 2023, yet no longer than until 30 June 2023. The authori- sation revokes any previous share issue authorisations currently valid. Auditor Ernst & Young Oy was elected the auditor of the company for the term ending at the close of the Annual General Meeting 2023. Environmental Factors Nurminen Logistics seeks environmentally friendly and efficient transport solutions as part of the development of its services. Research shows that the container train to China is the most eco- logical method of transporting goods between China and Europe. All services provided by the company in Finland are covered by a certified environmental management system that meets the require- ments of the ISO 14001:2004 standard. Long-Term Financial Objectives The Board of Directors has set the company’s long-term financial objectives. The long-term objectives of Nurminen Logistics 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%. During 2021, the Board of Directors set the objectives for 2021– 2023 based on the market outlook, the company’s market position and competitive advantage. The goal is to reach net sales of EUR 200 million and net operating result of a minimum of 9% of net sales. Financial guidance 2023 The company estimates that net sales for 2023 will amount to EUR 135–142 million and operating result to a minimum of EUR 10.0 million. The predicted growth in net sales and operating result is based on new customer contracts in acquired railway operations and the efficiency measures and international sales efforts carried out by Nurminen Logistics in 2022. Short-Term Risks And Uncertainties World trade weakening from the current situation as a consequence of the war in Ukraine may have a negative impact on the demand for the company’s services and thereby result. If the foreign trade of Finland, China or Sweden decreases, it will affect the demand for services. In the railway business, food supply-related fertilisers critical to the world or metals required for the green transition being subjected to Western sanctions would have a negative impact on the business of the acquired company Operail Finland Oy. The prolongation of the war in Ukraine and a permanent change in the international order may have a global impact on logistical routes. Such a change could harm the company’s Asian container train business. More detailed information about the risk information of the company can be found on the Investors page on Nurminen Logistics’ website at https://www.nurminenlogistics.com/investors/. Events After the Review Period On 13 January 2023, Nurminen Logistics announced that it will purchase the entire share capital of Operail Finland Oy with Finnish investors at a debt free transaction price of EUR 27.7 million. Nur- minen Logistics’ subsidiary North Rail Holding Oy, of which Nurmi- nen Logistics owns 79.8% and investors 20.2%, and Operail Hold- ing OÜ have signed a Sales and Purchase Agreement in which the parties have agreed that Operail Finland Oy will be transferred to the ownership of North Rail Finland Oy after the buyer has received the needed decisions of the authorities. On 14 February 2023, Nurminen Logistics announced that it had completed the transaction announced on 13 January 2023 to pur- chase the entire share capital of Operail Finland Oy with Finnish investors. After the purchase, Nurminen Logistics’ holding in North Rail Holding is 79.8%. The purchase was financed with new long- term debt financing instruments. On 14 February 2023, Nurminen Logistics announced preliminary information about its operating result for 2022 and financial guid- ance for 2023. On 6 March 2023, Nurminen Logistics announced that it strength- ens its management team to achieve growth targets and stream- line responsibilities. Two new management team members were appointed, Niko Orpana as Vice President, Multimodal & Bulk Ter- minal Operations as of 15 May 2023, and Vice President, Sales Marjut Linnajärvi being responsible for railway business and sales. Board of Directors’ proposal for profit distribution On 31 December 2022, the parent company’s distributable equity is EUR 30,938,118.26, of which the profit for the period amounted to EUR 453,583.04. The Board of Directors proposes that the Annual General Meeting authorise the Board of Directors to decide on dis- tributing a maximum of EUR 1.0 million as dividends at a separately announced date during 2023, should the company’s financial posi- tion allow. The remaining distributable assets will be retained in unrestricted equity. Corporate Governance Statement The Corporate Governance Statement of Nurminen Logistics Plc will be published on 15 March 2023 on the company’s website at https://nurminenlogistics.com/investors/. Board and Audit Committee Meetings The Board of Directors convened 22 times during the year 2022. The Audit Committee had three meetings. 7 Nurminen Logistics Plc Financial statements 2022 The Board’s Report on Operations Bridge calculation of comparable operating result EUR 1,000 1–12/2022 1–12/2021 Operating profit 3,408 9,625 Exceptional management incentives and enhancement measures 0 550 Non-recurring expenses related to containers and wagons 2,890 0 Personnel-related restructuring costs 149 0 Non-recurring expenses related to the Luumäki property 435 0 Comparable adjusted operating profit 6,882 10,175 Comparable adjusted operating profit is an alternative indicator defined by the European Securities Market Authority, ESMA. Group’s Key Figures 2020 2021 2022 Net sales, EUR 1,000 80,707 141,254 122,511 Change in net sales, % 16.4% 75.0% -13.3% Operating result (EBIT) EUR 1,000 -206 9,625 3,408 % of net sales -0.3% 6.8% 2.8% Result before taxes, EEUR 1,000 -2,438 7,825 1,925 % of net sales -3.0% 5.5% 1.6% Result for the financial year, EUR 1,000 -2,837 13,776 1,472 % of net sales -3.5% 9.8% 1.2% Return on equity (ROE), % -38.8% 69.5% 5.9% Return on investment (ROI), % -0.4% 16.7% 6.9% Equity ratio, % 20.9% 31.7% 34.7% Gearing, % 266.1% 115.9% 119.8% Gearing % excluding IFRS 16 189.4% 77.1% 80.0% Interest-bearing net debt, EUR 1,000 36,759 29,914 28,928 Interest-bearing net debt excluding IFRS 16, EUR 1,000 26,293 20,027 19,431 Interest-bearing net debt/EBITDA (12 months, rolling) 7.64 2.38 4.65 Gross investment on fixed assets, EUR 1,000 8,827 341 422 % of net sales 10.9% 0.2% 0.3% Balance sheet total, EUR 1,000 66,179 81,705 69,678 Average number of employees 163 145 141 Wages and salaries paid, EUR 1,000 8,430 8,558 8,262 Share key figures Earnings per share (EPS), EUR, undiluted -0.09 0.16 -0.01 Earnings per share (EPS), EUR, diluted -0.09 0.15 -0.01 Equity per share, EUR 0.05 0.20 0.17 Dividend per share, 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 0.016 0.00 Price per earnings (P/E) -5 12 -60 Number of shares adjusted for share issue (diluted), weighted average 44,652,887 77,843,064 77,961,285 Number of shares adjusted for share issue (diluted), at end of financial year 74,147,405 77,903,313 78,036,392 Number of shares adjusted for share issue (undiluted), weighted average 44,652,887 75,540,173 77,863,691 Number of shares adjusted for share issue (undiluted), at end of financial year 74,147,405 77,128,928 78,036,392 * The Board of Directors proposes that the Annual General Meeting authorise the Board of Directors to decide on distributing a maximum of EUR 1.0 million as dividends at a separately announced date during 2023, should the company’s financial position allow. Share price development Share price development – highest price 0.50 2.85 2.07 – lowest price 0.20 0.39 0.56 – average price 0.31 1.16 0.99 – closing share price at balance sheet date 0.45 1.96 0.60 Market capitalisation, MEUR 33.1 150.9 46.9 Number of shares traded 6,891,409 20,779,826 11,002,725 Shares traded, % of total number of shares 9.3% 25.0% 14.1% Number of shareholders 1,580 4,095 4,791 8 Nurminen Logistics Plc Financial statements 2022 The Board’s Report on Operations Calculation of key figures Return on equity (%) = Result for the period ×100 Equity (average of beginning and end of financial year) Capital employed = Balance sheet total – non-interest-bearing liabilities Return on capital employed (%) = Result for the year before taxes + interests and other financial expenses ×100 Capital employed (average of beginning and end of financial year) Equity ratio (%) = Equity ×100 Balance sheet total – advances received Gearing (%) = Interest-bearing liabilities – cash and cash equivalents ×100 Equity Gearing (%) excluding IFRS 16 = Interest-bearing liabilities excluding IFRS 16 - cash and cash equivalents ×100 Equity excluding IFRS 16 effect on equity (depreciation, rental expense and interest expense) Interest-bearing net debt = Interest-bearing liabilities – long-term interest bearing receivables – cash and cash equivalents Interest-bearing net debt excluding IFRS 16 = Interest-bearing liabilities excluding IFRS 16 – long-term interest bearing receivables – cash and cash equivalents Interest-bearing net debt / EBITDA (12 months, rolling) = Interest bearing debt – cash and cash equivalents EBITDA (12 months, rolling) Earnings per share (EPS) = Result attributable to equity holders of the parent company Weighted average number of outstanding ordinary shares Equity/share = Equity attributable to equity holders of the parent company Undiluted number of shares outstanding at the end of the financial year Dividend to earnings ratio, % = Dividend per share ×100 Earnings per share Effective dividend yield, % = Dividend per share ×100 Adjusted share price at the end of the financial year Price per earnings (P/E) = Share price at the end of the financial year Earnings per share Dividend per share = Dividend payable for the period Share-issue adjusted number of shares – own shares 10 Nurminen Logistics Plc Financial statements 2022 Consolidated financial statements Consolidated statement of comprehensive income, IFRS EUR 1,000 Note 1 Jan–31 1 Jan–31 Dec 2022 Dec 2021 NET SALES 2 122,51 1 141,254 Other operating income 3 93 282 Use of materials and supplies 4 -99,904 -1 13,785 Employee benefit expenses 5 -8,262 -8,558 Depreciation, amortisation and impairment losses 6 -2,813 -2,967 Other operating expenses 4 -8,217 -6,602 OPERATING RESULT 3,408 9,625 Financial income 7 809 248 Financial expenses 7 -2,294 -2,017 Share of profit of equity-accounted investees 16 2 -32 Total financial income and expenses and share of profit of equity-accounted investees -1,483 -1,800 RESULT BEFORE INCOME TAX 1,925 7,825 Income taxes 8 -453 5,951 RESULT FOR THE PERIOD 1,472 13,776 OTHER COMPREHENSIVE INCOME Other comprehensive income not to be reclassified to profit or loss in subsequent periods: Remeasurement of defined benefit plans 23 -53 0 Other comprehensive income to be reclassified to profit or loss in subsequent periods: Translation differences 2 -5 TOTAL COMPREHENSIVE INCOME FOR THE PERIOD 1,422 13,772 Result attributable to Equity holders of the parent company -1,041 1 1,798 Non-controlling interest 2,513 1,979 Total comprehensive income attributable to Equity holders of the parent company -1,092 1 1,793 Non-controlling interest 2,513 1,979 Earnings per share calculated from result attributable to equity holders of the parent company Earnings per share, undiluted, EUR 9 -0.01 0.16 Earnings per share, diluted, EUR 9 -0.01 0.15 The grouping of production costs has been changed, and, as a result, 4.2 million from the comparison period 2021 has been transferred from Other operating expenses to Use of materials and supplies. 11 Nurminen Logistics Plc Financial statements 2022 Consolidated financial statements Consolidated statement of financial position, IFRS EUR 1,000 Note 31 December 31 December 2022 2021 ASSETS Non-current assets Property, plant and equipment 11 35,751 37,157 Right-of-use assets 11,13 9,179 9,676 Goodwill 12,15 899 899 Other intangible assets 12 935 1,185 Investments in equity-accounted investees 16 176 174 Non-current receivables 17 349 21 Deferred tax assets 18 6,908 6,728 Non-current assets 54,196 55,839 Current assets Inventories 238 122 Trade and other receivables 19 9,098 18,709 Deferred tax assets based on the taxable income for the financial period 5 32 Cash and cash equivalents 20 6,141 7,003 Current assets 15,482 25,866 TOTAL ASSETS 69,678 81,705 EQUITY AND LIABILITIES Equity attributable to equity holders of the parent company 21 Share capital 4,215 4,215 Share premium reserve 86 86 Legal reserve 2,376 2,376 Reserve for invested unrestricted equity 35,591 36,838 Translation differences -6 -8 Retained earnings -29,368 -28,386 Equity attributable to equity holders of the parent company 12,894 15,121 Non-controlling interest 10 1 1,252 10,683 Total equity 24,147 25,804 LIABILITIES Non-current liabilities Other liabilities 25 108 106 Financial liabilities 24 15,568 25,106 Lease liabilities 24 8,947 9,21 1 Non-current liabilities 24,623 34,423 Current liabilities Deferred tax liabilities based on the taxable income for the financial period 41 253 Financial liabilities 24 10,004 1,924 Lease liabilities 24 550 676 Trade payables and other liabilities 25 10,314 18,624 Current liabilities, total 20,908 21,478 Liabilities, total 45,531 55,901 EQUITY AND LIABILITIES, TOTAL 69,678 81,705 12 Nurminen Logistics Plc Financial statements 2022 Consolidated financial statements Consolidated cash flow statement, IFRS EUR 1,000 1 January–31 1 Jan–31 Note December 2022 Dec 2021 Cash flow from operating activities PROFIT/LOSS FOR THE FINANCIAL PERIOD 1,472 13,776 Adjustments: Depreciation, amortisation and impairment losses 6 2,813 2,967 Unrealised foreign exchange gains (-) and losses (+) -7 -10 Other income (-) and expenses (+), non cash 177 685 Adjustments to financial income (–) or expenses (+) 7 1,485 1,768 Adjustments to income tax expense 8 453 -5,951 Other adjustments -2 42 Cash flow before changes in working capital 6,390 13,277 Changes in working capital: Increase (-) / decrease (+) in inventories -1 16 -34 Increase (-) / decrease (+) in non-interest bearing current receivables 9,512 -10,028 Increase (+) / decrease (-) in non-interest bearing current payables -8,594 6,987 Net cash from operating activities before financial items and taxes 7,192 10,202 Interest paid -1,021 -1,329 Interest received 66 23 Other financial items -210 -469 Income taxes paid -795 -556 Cash flow from operating activities 5,232 7,870 Cash flow from investing activities Purchases of property, plant and equipment and intangible assets -422 -341 Proceeds from property, plant and equipment and intangible assets 0 18 Other investments -353 0 Acquisition of subsidiaries 0 -173 Cash flow from investing activities -774 -497 Cash flow from financing activities Net change in factoring receivables and liabilities 0 517 Change in credit limit 466 -61 Proceeds from non-current borrowings 0 3 500 Repayment of non-current borrowings -1,977 -6,555 Repayment of equity -1,247 0 Repayment of lease liabilities -620 -644 Dividends paid / repayments of equity to minority shareholders -1,944 -1,129 Proceeds from share issue 0 -474 Cash flow from financing activities -5,323 -4,845 Net increase / decrease in cash and cash equivalents -866 2,529 Cash and cash equivalents at the beginning of the year 7,003 4,471 Net increase/decrease in cash and cash equivalents -866 2,529 Translation differences of net increase/ 4 3 decrease in cash and cash equivalents Cash and cash equivalents at the end of the period 6,141 7,003 13 Nurminen Logistics Plc Financial statements 2022 Consolidated financial statements Consolidated statement of changes in equity, IFRS EUR 1,000 Equity attributable to equity holders of the parent company Reserve for Share invested Trans- Non- Share pre- unre- lation con- cap- mium Legal stricted Equity differ- Retained trolling Total 1–12/2022 Note ital reserve reserve equity loans ences earnings Total interest equity Equity on 1 Jan 2022 4,215 86 2,376 36,838 0 -8 -28,386 15,121 10,683 25,804 Comprehensive income Result for the period -1,041 -1,041 2,513 1,472 Other comprehensive income Remeasurement of defined benefit plans 23 -53 -53 -53 Translation differences 2 2 2 Total comprehensive income for the period 2 -1,094 -1,092 2,513 1,422 Business transactions with shareholders Repayment of equity -1,247 -1,247 -1,247 Share remuneration 22 126 126 126 Other changes -13 -13 -13 Dividends 10 -1,944 -1,944 Total business transactions with shareholders -1,247 11 2 -1,135 -1,944 -3,079 Equity on 31 Dec 2022 4,215 86 2,376 35,591 0 -6 -29,368 12,894 1 1,253 24,147 EUR 1,000 Equity attributable to equity holders of the parent company Reserve for Share invested Trans- Non- Share pre- unre- lation con- cap- mium Legal stricted Equity differ- Retained trolling Total 1–12/2021 Note ital reserve reserve equity loans ences earnings Total interest equity Equity on 1 Jan 2021 4,215 86 2,376 35,550 1,250 -3 -39,494 3,980 9,833 13,814 Comprehensive income Result for the period 1 1,798 1 1,798 1,979 13,776 Other comprehensive income Translation differences -5 -5 -5 Total comprehensive income for the period -5 11,798 11,793 1,979 13,772 Business transactions with shareholders Share remuneration 22 -607 -607 -607 Other changes -83 -83 -83 Dividends 10 -1,129 -1,129 Total business transactions with shareholders -690 -690 -1,129 -1,819 Hybrid bond conversion to shares 21 1,288 -1,250 38 38 Equity on 31 Dec 2021 4,215 86 2,376 36,838 0 -8 -28,386 15,121 10,683 25,804 14 Nurminen Logistics Plc Financial statements 2022 Notes to the consolidated financial statements Notes to the consolidated financial statements, IFRS 1. Accounting principles for the while bringing that asset to the location and condition necessary for consolidated financial statements it to be capable of operating in the manner intended by manage- ment. Instead, an entity recognises the proceeds from selling such items, and the cost of producing those items, in profit or loss. The Basic information about the Group amendment did not result in adjustments to previously disclosed The business idea of Nurminen Logistics is to provide and produce figures at Nurminen Logistics. high-quality and customer competitiveness increasing logistics services in Finland and regular international railway line services. Other new or revised standards or interpretations or annual The Group’s parent company is Nurminen Logistics Plc. The par- improvements to standards which became effective for the report- ent company’ is domiciled in Helsinki, Finland, and its registered ing period that begun on 1 January 2022 did not have a signifi- address is Satamakaari 24, 00980 Helsinki, Finland. The parent cant impact on the consolidated financial statements of Nurminen company is listed on NASDAQ OMX Helsinki Stock Exchange. Logistics. Copies of the consolidated financial statements are available on Principles of Consolidation the internet internet at www.nurminenlogistics.com. The consoli- dated financial statements were authorised for issue by the Board Subsidiaries of Directors on 14 March 2023. According to the Finnish Limited The consolidated financial statements include the financial state- Liability Companies Act, shareholders have the right to approve ments of Nurminen Logistics Plc and those of all its subsidiaries. or reject the financial statements in the Annual General Meeting The subsidiaries are entities controlled by the parent company. held after the publication of the financial statements. The Annual Nurminen Logistics Plc controls an investee when it is exposed, or General Meeting also has the right to decide to amend the financial has rights, to variable returns from its involvement with the investee statements. and can affect those returns through its power over the investee. Subsidiaries acquired are included in the consolidated financial Basis of preparation the date that control ceases. statements from the acquisition date that control commences until The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards Acquired subsidiaries are accounted for by using the acquisition (IFRS) approved in European Union, in accordance with the IAS method. The consideration transferred, identifiable assets and lia- and IFRS standards and SIC and IFRIC interpretations effective bilities assumed of the acquired entity and are measured at their on 31 December 2022. International Financial Reporting Stan- fair values at the acquisition date. Goodwill arising on an acquisition dards are standards and interpretations adopted for application in is recognised as the excess of the aggregate of the consideration the European Union in accordance with the procedure laid down transferred, the amount of any non-controlling interests and previ- in regulation (EC) No 1606/2002 of the European Parliament and ously held equity interests in the acquiree, over the Group’s share Council. The notes to the consolidated financial statements are of the fair value of the net assets acquired at the acquisition date. also in accordance with the Finnish legislation on accounting and entities complementing the IFRS. The consideration transferred includes any assets transferred by The consolidated financial statements are prepared for the calendar the acquirer, liabilities incurred by the acquirer to former owners year, which is also the financial year of the parent company and of the acquiree and the equity interests issued by the acquirer, Group companies. measured at fair value. Any contingent consideration related to the business combination is measured at fair value at the acquisition The consolidated financial statements have been prepared on the date and it is classified as either liability or equity. Contingent con- historical cost basis except for the financial assets and financial sideration classified as liability is remeasured at its fair value at liabilities measured at fair value through profit or loss. each balance sheet date and the subsequent changes to fair value are recognised in profit or loss. Contingent consideration classi- The financial statements are presented in thousands of euro and fied as equity is not subsequently remeasured. The consideration the figures are rounded off to the nearest thousand, so the sum of transferred does not include any transactions accounted for sep- individually presented figures can deviate from the disclosed sums. arately 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 Application of new and revised IFRS standards in the periods in which costs are incurred and services rendered. All intra-group transactions, receivables and liabilities as well as The Group has applied the following amendments as of 1 January unrealised gains and profit distribution are eliminated in the con- 2022: solidation. Non-controlling interests are presented as a separate item under equity. • Annual improvements to IFRSs (2018–2020): Improvement to IFRS 9 Financial Instruments, effective for annual periods beginning Non-controlling interests on or after 1 January 2022. The improvement clarifies which fees an entity includes when it applies the ‘10 per cent’ test in assessing Any non-controlling interest in the acquiree is measured on an whether to derecognise a financial liability. An entity includes only acquisition-by-acquisition basis, either fair value at or at the fees paid or received between the borrower and the lender. non-controlling interest’s proportionate share of the acquiree’s iden- tifiable net assets. Changes in the parent company’s ownership • Improvements to IAS 16 Property, Plant and Equipment, effec- tive for annual periods beginning on or after 1 January 2022. The amendment prohibits deducting from the cost of an item of prop- the parent company retains control over the subsidiary. interest in a subsidiary are accounted for as equity transactions if erty, plant and equipment any proceeds from selling items produced The result for the financial year and items recognised in other com- prehensive income are allocated to the equity holders of the par- 15 Nurminen Logistics Plc Financial statements 2022 Notes to the consolidated financial statements ent company and non-controlling interests. Total comprehensive asset. The borrowing costs directly attributable to the acquisition or income is allocated to the equity holders of the parent company construction of an asset that necessarily takes a substantial period and non-controlling interests, even if that results in a deficit balance, to get ready for its intended use or sale, are capitalised as part of unless non-controlling interests have an exemption not to meet obli- the carrying amount of the asset. Subsequent costs are recognised gations which exceed non-controlling interests’ investment. Equity in the carrying amount of the item only if it is probable that future attributable to the non-controlling interest is presented separately economic benefits associated with the asset will flow to the Group under equity in the consolidated balance sheet. and its cost can be measured reliably. Other repair and mainte- nance costs are expensed as incurred. Associates Associates are companies in which the Group has significant influ- Property, plant and equipment are depreciated using the straight- ence. Significant influence generally arises when the Group holds line method over their estimated useful lives, which are the follow- ing: 20 to 50 per cent of a company’s voting power or the Group other- wise has significant influence but not power to govern the financial Buildings 30–40 years and operating policies of an entity. Associates are consolidated Transport equipment 5–8 years using the equity method. When the Group’s share of an associate’s Machinery and equipment 3–10 years losses exceeds the carrying amount of the interest, the interest is ICT equipment 3 years recognised at zero value in the balance sheet and recognition of further losses is discontinued, except to the extent that the Group Software 5–10 years has committed to settle the associate’s obligations. Investment in an associate includes goodwill arisen on acquisition. Unrealised Land is not depreciated. gains resulting from transactions between the Group and the asso- Recognition of depreciation on an item of property, plant and equip- ciate are eliminated to the extent of the interest in the associate. ment is discontinued when the item is classified as held for sale The Group’s share of an associate’s result for the financial year is in accordance with IFRS 5 standard. Non-current assets held for disclosed separately after financial items in the consolidated state- ment of comprehensive income. sale are measured at the lower of carrying amount and fair value less costs to sell. Gains and losses on the disposal of assets are reported as the difference between selling price and carrying Foreign Currency Transactions amount, and the gains and losses are included in other operating Items included in the financial statements of each subsidiary in the Group are determined using the currency reflecting the primary eco- income and expenses in the income statement. nomic environment of that subsidiary (“the functional currency”). Useful lives and residual values are reviewed at every balance The consolidated financial statements are prepared in euro which is sheet date. Changes in the future economic benefits to be received the functional and presentation currency of the parent company and from the items of property, plant and equipment are accounted for the presentation currency of the consolidated financial statements. by adjusting the useful lives and residual values of the items in question. Gains and losses arising from sale and disposal of prop- Foreign currency transactions of the Group companies are trans- lated into functional currencies using the exchange rates prevailing in other operating expenses. erty, plant and equipment are included in other operating income or at nated in foreign currency are translated using the balance sheet the transaction date. Monetary assets and liabilities denomi- Intangible assets date exchange rates and non-monetary assets and liabilities that are measured at historical cost are translated using the transaction Goodwill date exchange rates. Gains and losses arising from the translation Goodwill arising on business combinations is recognised as the are recognised in the consolidated statement of comprehensive excess of the aggregate of consideration the transferred, the income. amount of non-controlling interest in the acquiree and the value of any previously held equity over the interest fair value of the In and expenses for the income statements and for the statements of comprehensive income of those foreign Group companies whose the preparation of consolidated financial statements, income acquired net assets. Goodwill is not amortised but it is tested at least annually for impair- functional currency is not euro, are translated into euro by using ment. Goodwill is carried at historical cost less accumulated impair- the average exchange rate for the financial year and the balance ment losses. sheets are translated at the exchange rate at the balance sheet date. Translation differences arising from such translation are rec- ognised in equity. Retranslating the result and the total comprehen- Research and development costs Research costs are expensed in the financial year in which they are sive income for the financial year using different exchange rates incurred. Development costs are capitalised when certain criteria for the statement of comprehensive income and for the balance are met. sheet causes a translation difference recognised in Group’s equity, the change in this translation difference is recognised under other comprehensive income. Respectively, foreign currency differences Other intangible assets arising from the elimination the of costs of foreign subsidiaries, An intangible asset is recognised in the balance sheet only if its and from the retranslation of post-combination equity components cost can be measured reliably and it is probable that the expected in income. When a foreign operation is sold or is otherwise disposed subsequent periods, are recognised in other comprehensive to the Group. future economic benefits that are attributable to the asset will flow of, in part or in full, the accumulated foreign currency differences are recognised in the statement of comprehensive income as part An intangible asset is measured at historical cost less amortisa- of the gain or loss on sale for the disposed part. tion and any impairment losses. Group’s intangible assets include mainly IT software which is amortised on a straight-line basis over Property, plant and equipment 5 to 7 years. 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 16 Nurminen Logistics Plc Financial statements 2022 Notes to the consolidated financial statements Impairment of Intangible Assets and Financial assets at fair value through profit or loss Property, Plant and Equipment If a financial asset is not measured in accordance with the above The Group assesses, at every balance sheet date, if there are any criteria, it is measured at fair value, and changes in fair value are indications of impairment of property, plant and equipment or intan- recognised through profit or loss or they are measured at fair value gible assets. In case such indications exist, the asset’s recoverable through other comprehensive income. The company had fund amount is estimated. If the carrying amount of an asset exceeds income statement. investments in 2022, which have been valued at fair value in the its recoverable amount, the impairment loss is recognised 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. Credit risk assessment of financial assets In accordance with IFRS 9, Nurminen Logistics recognises expected As to goodwill, the recoverable amount is estimated at least annu- credit losses on cash classified at amortised cost. According to this ally irrespective of whether indications of impairment exist. Impair- model, expected loan losses based on an individual counterparty ment is assessed at a cash-generating unit level, i.e. at the lowest default risk assessment. The Group uses a simplified method for level for which there are separately identifiable, mainly indepen- recognising credit losses permitted by the standard, in which case dent cash flows. In impairment testing of goodwill, the recoverable the Group recognises the expected credit loss over the life of the amount is based on value in use, i.e. on the estimated discounted contract. The change in expected credit losses recorded at each future net cash flows. reporting date reflects the change in the credit risk of the financial assets from the initial recognition. A credit loss transaction is no At the recognition of the impairment loss the asset’s useful life is longer required to record a credit loss. Recognising the amount re-estimated. The recognised impairment loss is reversed if the of expected credit loss and a proactive provision for impairment is estimates used to determine the asset’s recoverable amount have based on the management’s best estimate of future credit losses. changed. The reversal of the impairment loss shall not exceed the Customer receivables and the related credit loss risk are actively carrying amount that would have been determined had no impair- monitored by the company, and decisions on measures to secure ment loss been recognised for the asset. An impairment loss on the receivables are made, if necessary. When the amount of provi- goodwill is never reversed. sion for credit loss is estimated on a case-by-case basis, any col- lateral or insurance, the customer’s financial position and previous Application of IFRS 9 payment behaviour are taken into consideration. Impairment policies are based on expected credit loss models. Financial assets are derecognised when the Group loses its con- Impairment models apply to cash and cash equivalents, such as rental, sales and factoring receivables and loan receivables. tractual right to receive cash flows or when it has transferred a sig- nificant part of the risks and rewards of ownership. An impairment loss is recognised immediately in profit or loss, depending on the Financial instruments item, either in other operating expenses or in financial items. Financial assets Financial assets of Nurminen Logistics are classified according to Cash and cash equivalents IFRS 9 into the following categories: financial assets at amortised Cash and cash equivalents comprise cash balances and bank cost and financial assets at fair value through profit or loss. The classification of financial assets is made at initial recognition of of three months or less at the acquisition date. accounts as well as highly liquid investments with original maturities 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. Financial liabilities The financial liabilities of Nurminen Logistics are classified to the Measurement of a financial asset at amortised cost requires the following categories: financial liabilities at fair value through profit or contractual cash flows to consist solely of interest and the repay- loss and financial liabilities measured at amortised cost (other finan- ment of principal (the so-called SPPI criterion). Compliance with cial liabilities). The former category includes derivatives entered into the SPPI criterion is assessed on a per-instrument basis. If the by the Group, to which hedge accounting is not applied and that SPPI criterion is not met, financial assets are measured at fair value are not financial guarantee contracts. They are classified as held- through profit or loss. for-trading instruments. The financial liabilities in this category are initially measured at fair value and are subsequently re-measured at Financial are assets classified as current assets if they have a their fair values. Gains and losses arising from derivatives’ fair value maturity of less than 12 months and are expected to be disposed changes, both unrealised and realised, are recognised in profit or of within 12 months. Otherwise, the item is presented as non-cur- rent assets. Transaction costs are included in the original carrying by discounting the instruments’ cash flows. loss in the period in which they occur. Fair values are determined amount of the financial assets in the case of an item measured at amortised cost. Purchases and sales of financial instruments Other financial liabilities are measured at fair value upon initial are recognised on the settlement date. The fair values of financial recognition. Transaction costs are included in the original carrying instruments are determined using discounted cash flows. amount. Subsequently other financial liabilities are measured at amortised cost using the effective interest rate method. Financial assets at amortised cost A financial liability is classified as current if the Group does not have An item of financial assets is measured at amortised cost if the busi- an unconditional right to defer settlement of the liability for at least ness model requires the collection of fixed or predetermined cash 12 months after the end of the reporting period. A financial liability flows. They consist of repayments of capital and interest on capital (or part of the liability) is not derecognised until the liability has 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 has been fulfilled or cancelled or is no longer effective. ceased to exist, that is, when the obligation identified in a contract typically recognises rental, factoring and trade receivables as well as loan receivables at amortised cost. 17 Nurminen Logistics Plc Financial statements 2022 Notes to the consolidated financial statements Revenue recognition principles Contract assets or contract liabilities – adaptation of IFRS 15 Due to the nature of the business, the company does not have contract assets or contract liabilities. The company’s revenue consists mainly of forwarding services, rail- way transport and terminal services. The company also receives income from short- and long-term warehousing services. Revenue Employee benefits is recognised as goods are assigned to customer or service is con- Pension arrangements cluded: as performance obligations are met and customer obtains The pension arrangements of Nurminen Logistics have been clas- the goods or services within the performance obligation. Revenue sified as defined contribution plans. is recognised with the same price that the company expects to be entitled to, with sales taxes and other possible compensations Payments to defined contribution plans are recognised as an deducted from the price. The prices for company’s services are fixed and generally contain no variable components. expense in the income statement in the period to which they relate. In defined contribution plans the Group pays fixed contributions into Revenue recognition principles have been described below: 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. Railway services The company provides international railway transport services with Defined benefit pension plans are insured by a life insurance various types of wagons in which the goods are delivered to desti- company, and in addition to the old-age pension benefit, the addi- nation. The contract price of trains or containers en route at the end tional pension insurance covers any survivor’s pension benefit and of the period is recognises as revenue over time, corresponding to burial grant benefit. Additional defined benefit pension obligations the time en route on the closing date relative to the total delivery are measured based on calculations by independent actuaries. time. The service is a singular contract obligation, which includes According to the measurement principles, assets are measured at transport service to the destination, and the contract price is allo- fair value on the closing date, costs according to the calculation cated in full to that obligation. method and recognised in profit or loss, in addition interest is rec- ognised in financial items and actuarial gains and losses caused by The principle of revenue recognition over time has been amended. the remeasurement of the defined benefit net debt in comprehen- It will be first applied concerning the trains or containers en route at sive income, and these items will not subsequently be reclassified the end of the 2022 financial year and thereafter half-yearly, based in profit or loss. The defined benefit pension plan is described in on the IFRS 15 criterion that the performance obligation is fulfilled more detail in Note 23. over time when performing a transport service, and the amendment does not have a material impact on result. Share-based payments Forwarding Starting from 2022, Nurminen Logistics has two share-based incen- tive programmes for the company’s key personnel: Performance Forwarding service agreement consists of actions necessary for Share Plan 2022–2026 and Restricted Share Plan 2022–2026. importing, exporting and customs duties. As whole they compile More details on the share-based incentive schemes are presented the concluded within a month from the signing of the agreement. The company recognises revenue from agreement price when the deliv- performance obligation towards customer, which is usually in Note 22. The rewards will be paid partly in Nurminen Logistics shares and ery orders connected to import or export have been received and partly in cash. The cash proportions of the rewards are intended for authority over the goods is transferred to customer or other party. covering taxes and tax-related expenses arising from the rewards The entire contract price is allocated to a single performance obli- to the participants. In general, no reward is paid if the participant’s gation. employment or director contract terminates before the reward pay- ment. Terminal services Terminal services consist of handling of goods at the arrival or The amount of remuneration paid based on the share-based incen- departure of goods. The definite content of service is defined at tive scheme will be cut if the maximum value for remuneration paid contract level. Terminal service agreement is an entity to which the contract price is allocated. The contract price is recognised when the work on handling goods has been completed. is reached. for the earning periods 2022–2024 set by the Board of Directors The Nurminen Logistics Management Team member is obliged to Warehousing services hold 50 per cent of the received net reward shares, until the total Warehousing services consist of renting space from terminal or ter - value of the Management Team member’s shareholding in Nurmi- minal area for short or long term holding of goods. The warehousing nen Logistics equals to 50 per cent of their annual base salary of agreement is an entity to which the contract price is allocated. Prof- the preceding year. Respectively, the CEO is obliged to hold 50 per its from warehousing services are recognised over the time during cent of the received net reward shares, until CEO´s shareholding the lease period for which the customer benefits from the service. in Nurminen Logistics equals to 100 per cent of the CEO´s annual Lease income is processed according to IFRS 15 standard when base salary of the preceding year. Such number of Nurminen Logis- the customer is not given control over the leased space. tics shares must be held as long as the membership in the Manage- ment Team or the position as the CEO continues. Contractual amounts recognised include Share-based transactions in paid cash arrangements in on the balance sheet which the company has granted the persons a right to future cash Trade receivables payments by granting them a right to shares that can be redeemed at the request of either the company or the employee. A liability Trade receivable is a transaction price to which the company has resulting from such an arrangement is measured at fair value at the an unconditional right end of each reporting period and on the day of settling the debt, and changes in fair value are recognised in profit or loss for the period in Trade receivables are non-interest bearing and are typically from 14 question. The benefits granted in the scheme are measured at fair to 60 days, corresponding to the average payment terms. value upon granting and expensed in the income statement over the vesting period. 18 Nurminen Logistics Plc Financial statements 2022 Notes to the consolidated financial statements Income taxes Right-of-use assets The income tax expense in the statement of comprehensive income Nurminen Logistics records the lease at the commencement date comprises the current tax, adjustments to previous periods’ taxes of the lease, i.e. the date on which the lessor transfers the asset to as well as changes in deferred taxes. Income taxes are recognised the control of the company. The property, plant and equipment are in profit or loss except when they relate to other comprehensive measured at cost less accumulated depreciation and impairment income or equity, while income taxes are recognised within the losses and adjusted for any subsequent revaluation of the lease respective items. Current tax is calculated based on taxable income liability. The original cost equals the original lease liability. The right- using tax rates enacted in each country. of-use assets are subject to impairment testing. Deferred tax assets and deferred tax liabilities are calculated for Application of facilitations and significant assumptions temporary differences between the amounts of assets and liabilities Nurminen Logistics does not treat short-term leases of less than 12 used for taxation purposes and the carrying amounts for financial months or low value assets as property, plant and equipment, but reporting purposes under IFRS. The principal temporary differences recognises the resulting rental expense in the income statement. arise from financial instruments measured at fair value through Contracts of minor value primarily include IT and office hardware, profit or loss and depreciation related to component accounting. company cars and small office spaces. Fixed-term leases are dealt Deferred taxes are measured at the tax rate that has been enacted with by the company within the term of a non-cancellable lease or substantially enacted by the reporting date. term and are subject to any subsequent option periods when the A deferred tax asset is recognised to the extent that it is probable company has reasonable assurance that they will be exercised. that future taxable profits will be available against which the tempo- The management exercises discretion in assessing the term of rary difference can be utilised. Deferred tax liabilities are recognised leases valid until further notice, which is based on the company’s in the statement of financial position in full. strategic situation and market conditions, as well as the costs that would be incurred if the leased commodity was replaced by another commodity. Tangible Assets and Leases IFRS 16 requires lessees to recognise all leases in the balance Leases in which Nurminen Logistics is the lessor are operating sheet on a right-of-use basis. Leased assets are treated during the lease term on the same basis as owner-occupied assets and the right-of-use assets recognised for them on the balance sheet line basis over the lease term. leases and are recognised in the income statement on a straight- are amortised based on the defined lease term. The debt based The remaining liabilities for leases that do not include property, plant on the present value of the rent is reduced as the rent is paid. The group’s right-of-use assets are comprised of the IFRS 16 lease as off-balance sheet liabilities. and equipment assets and lease liabilities are disclosed in Note 26 liabilities concerning land and water areas, buildings and machinery and equipment. Operating profit Because of its industry and business model, Nurminen Logistics pri- The operating profit is the total of sales and other operating income marily is the lessee in the contracts. The company primarily applies from which expenses for material and services, employee benefits the standard to leases on land areas, premises and terminal prop- and other operating expenses as well as depreciation, amortisa- erties, as well as terminal machinery and equipment. In determining tion and impairment losses on non-current assets are subtracted. the term of a lease, the company has exercised discretion in esti- Foreign currency differences arising from working capital items are mating the probability of exercising the extension options of leases included in the operating result, whereas foreign currency differ- and included the terms covered by the option in the term of the lease, if exercising the option is reasonably certain. financial income and expenses. ences from financial assets and financial liabilities are included in Leases are distinguished from service contracts using a control Hybrid bond model. When the arrangement includes a specific asset that is A hybrid bond is recognised in shareholders’ equity after equity under the control of the customer, it is a lease. The contract is rec- belonging to shareholders. The bond holders do not have any rights ognised in the balance sheet as a non-current asset and a liability equivalent to ordinary shareholders. The company has no contrac- arising therefrom. Service contracts are recognised as an expense tual obligation to repay the loan capital or the interest on the loan. in the income statement. The hybrid bond is initially recognised at fair value less transaction cost and subsequently the bond is measured at cost. If interest is Lease liabilities paid to the hybrid bond, it is recognised directly in retained earn- ings. At the commencement date of the agreement, Nurminen Logistics values the lease liability at the present value of the rent outstand- ing at that date. Payments include fixed rentals and residual value Accounting policies requiring guarantees less any available lease incentives. The company con- siders lease termination charges as part of the lease payments if it has considered the option to terminate during the lease term. VAT management discretion and key uncertainties associated with estimates is not included in the amount of the lease liability and management The preparation of IFRS financial statements requires the compa- and maintenance fees and other payments of a service nature are ny’s management to make certain estimates and assumptions and generally treated as an expense that cannot be capitalised in the discretion in the application of accounting principles. The estimates balance sheet. Interest expenses are recognised through profit or and assumptions made affect the reported amounts of assets and loss over the term of the lease and the right-of-use asset is amor- tised using the straight-line method over the term of the lease in the income statement. liabilities in the balance sheet as well as the income and expenses Rents are discounted using the company’s estimated incremental In business combinations fair values of the items of property, plant borrowing rate. The standard defines the incremental borrowing and equipment and intangible assets are estimated and the depre- rate as the interest that the lessee would have to pay on borrowing ciation and amortisation periods for the assets are determined. for the same period and with similar collateral to acquire the asset The determination of fair value of intangible assets is based on at the cost of the underlying asset. estimates about future cash flows to be generated by these assets. 19 Nurminen Logistics Plc Financial statements 2022 Notes to the consolidated financial statements Goodwill is tested for impairment annually. Management’s judgment tive date. New standards and amendments to existing standards must be used in determining the cash-generating units for goodwill coming into effect in the fiscal year starting 1.1.2023 or later are testing. The recoverable amounts of the cash-generating units are determined based on value in use. The preparation of these cal- the following: culations requires use of estimates. In calculation of value in use • Amendments to IAS 1 Presentation of Financial Statements and estimates are made about future cash flows and discount rate to be the Making Materiality Judgements statement, effective from 1 used. Estimates are based on budgets and forecasts, which contain January 2023. Significant accounting principles will be replaced some degree of uncertainty. with material accounting principles. The aim of the amendment is to help the company to present the accounting principles which The recognition and measurement of deferred taxes requires the company’s management to make estimates, especially in the case information. are material to understanding the company’s financial statements of a deferred tax asset recognised based on the Group companies’ losses or another temporary difference for which a deferred tax • Amendments to IAS 8 Accounting Policies, Changes in Accounting asset is recognised. Due to uncertainty regarding use of confirmed Estimates and Errors, effective from 1 January 2023. The amend- losses, the Group recognises deferred tax assets in the consoli- ments clarify the differences between accounting estimates and dated balance sheet by the principle of prudence. changes in accounting policies and the correction of errors. The amendment clarifies that the impacts of new information or change Property, plant and equipment as well as intangible assets are in measurement method on an accounting estimate are changes reviewed annually as to whether any indications exist that these assets might be impaired. If indications exist, the asset’s recover- able amount is estimated. in previous periods. in accounting estimates if they are not caused by correcting errors • Amendments to IAS 12 Income Taxes, effective from 1 January Items of property, plant and equipment as well as intangible assets 2023. Going forward, deferred taxes are recognised based on are depreciated and amortised over their estimated useful lives. assets and liabilities arising from a single transaction. The amend- The useful lives are reviewed regularly. The management reviews ments apply to transactions that occur on or after the beginning regularly, whether if certain items to be divested will not meet the of the earliest comparative period presented. The amendment criteria of IFRS 5 standard for probability of divestment of an asset restricts the scope of application of the initial recognition exemption within 12-month period from classifying these assets as non-current of deferred taxes so that it is no longer applied to transactions that assets held for sale. If indications exist, the asset is derecognised give rise to equal taxable and deductible temporary differences. It from non-current assets held for sale. applies to assets and liabilities arising from individual transactions, such as right-of-use assets and lease liabilities, or restoration obli- Estimates made in preparing the financial statements are based gation and corresponding asset if their deferred taxes are not equal. on the management’s best view and the information available at the on experience and other factors that are considered the best view balance sheet date. Estimates and assumptions are based presented as gross. In the balance sheet these can be netted, but in the notes they are in measuring such assets and liabilities, whose values cannot be • Amendments to IAS 1 Presentation of Financial Statements, effec- derived from other sources. The estimates concerning the future tive from 1 January 2024. The amendments clarified how an entity are based on assumptions that are regarded as the most probable classifies debt and other financial liabilities as current or non-current at the balance sheet date relating to the expected development of by clarifying, for example, what the right to postpone settling the the financial environment of Nurminen Logistics and assumptions debt at the end of the reporting period if it meets the defined con- about the development of sales and cost level. Actual results may ditions on the reporting date means. The probability of the Group differ from these estimates. exercising its right to postpone does not affect the classification of a liability as current or non-current. Estimates and underlying assumptions are reviewed continuously. The realisation of estimates and assumptions and the changes in The adoption of the standards listed above is not expected to have underlying factors are reviewed regularly by using both external and internal sources of information. Revisions to accounting estimates sequent periods. an impact on Nurminen Logistics Plc’s financial statements in sub- are recognised 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 recognised respectively Impacts of the COVID-19 pandemic The impacts of the COVID-19 pandemic are still visible in China, in the period in question and in future periods. reducing the demand in the Trans-Caspian route. The pandemic is not estimated to have a major impact on operational business and development projects. New and revised standards and interpretations War in Ukraine The International Accounting Standards Board has announced the following new or revised standards and interpretations, which the World trade weakening from the current situation as a consequence Group has not yet adopted but which are estimated to have an of the war in Ukraine may have a negative impact on the demand impact on the Group’s financial statements. The Group will apply for the company’s services and thereby result. In addition, in the each standard and interpretation as of its effective date or, if the railway business, food supply-related fertilisers critical to the world effective date is some other date than the first day of the accounting or metals required for the green transition being subjected to West- period, as of the beginning of the financial year following the effec- ern sanctions due to the war in Ukraine would have a negative impact on the business of the acquired company Operail Finland Oy. Auditing The interim reports and financial statements release for the 2022 financial year are unaudited. 20 Nurminen Logistics Plc Financial statements 2022 Notes to the consolidated financial statements 2. Net sales and accounting principles The effects of the IFRS 15 standard are described in the section on calculation principles. IFRS 15: recognition of sales income when the performance obligation has been satisfied EUR 1,000 1.1.–31.12.2022 1 Jan–31 Dec 2021 Recognised over time 4,465 3,969 Recognised at a specific time 118,047 137,286 Revenue from contracts with customers 122,511 141,254 Net sales are distributed geographically between Finland, Russia and the Baltics. Information on geographical areas 2022 EUR 1,000 Finland Russia Baltic countries Total Net sales 59,223 974 62,314 122,511 Non-current assets 53,822 13 362 54,196 Information on geographical areas 2021 EUR 1,000 Finland Russia Baltic countries Total Net sales 71,392 1,373 68,489 141,254 Non-current assets 55,575 4 260 55,839 The Chinese and Asian container traffic operations account for EUR 23.5 million (46.8), or 19 per cent (33%) of the Group’s net sales. Multimodal services account for EUR 16.3 million (11.2), or 13 per cent (8%) of the Group’s net sales. Cargo services account for EUR 19.8 million (14.6), or 16 per cent (10%) of the Group’s net sales. The Baltic operations account for EUR 62.3 million (68.5), or 51 per cent (48%) of the Group’s net sales. Information on biggest customers In 2022, the Group did not have any single customer exceeding 10% of the Group net sales. In 2021, 3. Other operating income the Group did not have any single customer exceeding 10% of the Group net sales. EUR 1,000 2022 2021 Gains from sale of property, plant and equipment 1 9 Rental income 43 255 Other items 50 18 Total 93 282 4. Operating expenses EUR 1,000 2022 2021 Use of materials and supplies 99,904 113,785 Expenses relating to short term low value leases 1,706 1,109 Administrative expenses 3,892 3,108 Other cost items 2,620 2,385 Total other operating expenses 8,217 6,602 The grouping of production costs has been changed, and, as a result, EUR 4.2 million from the comparison period 2021 has been trans- ferred from Other cost items to Use of materials and supplies. The repayments of lease liabilities in the cash flow from financing activities amounted to EUR 620 thousand in 2022 and EUR 644 thou- sand in 2021. 21 Nurminen Logistics Plc Financial statements 2022 Notes to the consolidated financial statements Auditor fees EUR 1,000 2022 2021 Auditing 152 152 Other services 10 31 Total 163 183 5. Employee benefit expenses EUR 1,000 2022 2021 Salaries and fees 6,920 6,662 Pension expenses, defined contribution plans 957 986 Pension expenses, defined benefit plans -12 0 Other social security costs 272 254 Share-based payments 126 655 Total 8,262 8,558 Information on the management remuneration is presented in Note 29. Related party transactions. Information on the share-based payments is presented in Note 22. Share-based payments. Personnel of the Group during the year on average 2022 2021 Total 141 145 6. Depreciation, amortisation and impairment losses Depreciation and amortisation by asset category: EUR 1,000 2022 2021 Intangible assets Intangible rights 3 0 Other capitalised long-term expenditure 334 387 Impairment losses 10 129 Total 347 517 Property, plant and equipment Buildings 1,601 1,570 Machinery and equipment 61 72 Other tangible assets 34 35 Total 1,696 1,676 Amortisation of right-of-use assets (IFRS 16) 770 774 Total 2,813 2,967 7. Financial income and expenses EUR 1,000 2022 2021 Financial income Interest income 70 23 Exchange rate gains 738 225 Total financial income 809 248 Financial expenses Interest expenses 980 998 Exchange rate losses 867 235 Financial expenses on lease liabilities (IFRS 16) 329 324 Other financial expenses 118 459 Total financial expenses 2,294 2,017 Items above the operating profit include exchange rate differences totalling EUR -318 thousand in 2022 and EUR -127 thousand in 2021. 22 Nurminen Logistics Plc Financial statements 2022 Notes to the consolidated financial statements 9. Earnings per share 2022 2021 Result attributable to the equity holders of the parent company (EUR 1,000) -1,041 11,798 Weighted average number of shares, undiluted 77,863,691 75,540,173 Earnings per share, undiluted, EUR -0.01 0.16 Result attributable to the equity holders of the parent company (EUR 1,000) -1,041 11,798 Weighted average number of shares, diluted 77,961,285 77,843,064 Earnings per share, diluted, EUR -0.01 0.15 8. Income taxes The income tax expense in the statement of comprehensive income consists of the following: EUR 1,000 2022 2021 Current tax expense -607 -777 Other direct taxes -2 0 Deferred taxes, net 157 6,728 Total -453 5,951 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%): EUR 1,000 2022 2021 Result before income tax 1,925 7,825 Corporate tax rate 20% 20% Income tax calculated using the Finnish corporate tax rate -385 -1,565 Adjustments Effect of tax rates used in foreign subsidiaries 507 233 Unrecognised deferred tax assets on losses -784 -1 Non-deductible expenses -45 -45 Use of previously unrecognised tax losses 78 496 Recognised deferred tax assets on losses 55 6,617 Other differences 121 216 Total adjustments -68 7,516 Income tax expense in the income statement -453 5,951 23 Nurminen Logistics Plc Financial statements 2022 Notes to the consolidated financial statements 10. Subsidiaries and associates The companies belonging to the Nurminen Logistics Group are the following: Subsidiaries Domicile Ownership (%) Share of votes (%) Nurminen Logistics Services 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% OOO Nurminen Logistics Russia 100.0% 100.0% Kiinteistö Oy Helsingin Satamakaari 24 Finland 51.0% 51.0% Nurminen Maritime Latvia SIA Latvia 51.0% 51.0% Nurminen Maritime UAB Lithuania 51.0% 51.0% NR Rail Oy was dissolved through liquidation proceedings in January 2022 and RW Logistics Oy in December 2022. Associates and joint ventures Domicile Ownership (%) Share of votes (%) Pelkolan Terminaali Oy Finland 20.0% 20.0% The Group has 3 subsidiaries with material non-controlling interests. The following is summarised financial information for the subsidiaries with material non-controlling interests. The information is before intra-Group eliminations. The profit assets of the Latvian subsidiary are 2,061 thousand euros. No deferred tax liabilities have been recorded for this, as profits will not be distributed in the foreseeable future. If the profits were distributed entirely as dividends, the tax effect would be 412 thousand euros. 2022 2021 Kiinteistö Kiinteistö Oy Helsingin Nurminen Nurminen Oy Helsingin Nurminen Nurminen Satamakaari Maritime Maritime Satamakaari Maritime Maritime EUR 1,000 24 Latvia SIA UAB Total 24 Latvia SIA UAB Total Summary of comprehensive income statement Net sales 2,570 34,068 28,246 64,884 2,491 16,699 51,791 70,981 Profit before taxes 299 1,573 3,844 5,717 68 57 4,666 4,790 Income taxes -17 29 578 590 -18 71 702 754 Comprehensive income 316 1,544 3,266 5,126 86 -14 3,964 4,035 Total comprehensive income attributable to NCI 155 757 1,602 2,513 42 -7 1,944 1,979 Summary of balance sheets Current assets 1,185 3,999 4,204 9,389 441 2,776 6,845 10,062 Non-current assets 39,964 179 183 40,325 39,995 115 145 40,255 Current liabilities 1,323 1,939 936 4,198 1,237 2,183 2,942 6,361 Non-current liabilities 22,251 0 131 22,382 21,940 14 30 21,984 Net assets 17,575 2,239 3,320 23,134 17,259 695 4,018 21,972 Equity attributable to NCI 8,527 1,098 1,628 11,252 8,372 341 1,970 10,683 Summary of cash flows Cash flow from operating activities 1,877 731 3,393 6,001 1,742 541 3,678 5,961 Cash flow from investing activities 0 -133 -122 -255 0 -62 -44 -106 Cash flow from financing activities -1,100 -40 -3,991 -5,131 -1,369 -240 -2,126 -3,734 Net increase/ decrease in cash and cash equivalents 778 557 -720 615 373 239 1,509 2,121 Dividends paid to NCI during the year 0 0 1,944 1,944 0 99 1,030 1,129 24 Nurminen Logistics Plc Financial statements 2022 Notes to the consolidated financial statements 11. Property, plant and equipment Machin- Land Land and Machin- ery and Prepay- and bodies Build- ery and equip- Other ments and bodies of water, ings, equip- ment, tangible acquisitions EUR 1,000 of water IFRS 16 Buildings IFRS 16 ment IFRS 16 assets in progress Total 2022 Cost at 1 January 247 8,978 47,163 8,032 17,275 1.780 881 106 84,462 Additions 49 141 208 10 173 582 Transfers between asset categories 29 34 13 -76 0 Disposals -61 -61 -122 Cost at 31 December 247 8,978 47,163 8,081 17,385 1,961 904 203 84,922 Accumulated depreciation and impairment losses at 1 January -422 -10,673 -7,631 -17,120 -1,062 -723 -37,631 Depreciation for the period -306 -1,601 -88 -61 -376 -34 -2,466 Accumulated depreciation for disposals and transfers 61 42 103 Accumulated depreciation and impairment losses at 31 December -727 -12,274 -7,720 -17,120 -1,395 -757 -39,993 Carrying amount at 1 Jan 2022 247 8,556 36,490 401 156 718 158 106 46,831 Carrying amount at 31 Dec 2022 247 8,251 34,889 362 265 566 147 203 44,929 Kiinteistö Oy Helsingin Satamakaari 24 was consolidated into the Group in accordance with IAS 16 Property, Plant and Equipment. Kiinteistö Oy Luumäen Suoanttilantie property, EUR 897 thousand, was previously categorised as held for sale. It was recategorised into fixed assets in 2021. The property has been leased out. 2021 Cost at 1 January 247 8,978 46,266 8,032 17,248 1,774 856 7 83,408 Additions 150 35 3 177 365 Transfer from IFRS 5 Non-current assets held for sale to property, plant and equipment 897 897 Transfers between asset categories -76 85 22 -79 -47 Disposals -48 -114 -162 Cost at 31 December 247 8,978 47,163 8,032 17,275 1,780 881 106 84,462 Accumulated depreciation and impairment losses at 1 January -116 -9,104 -7,558 -17,067 -728 -687 -35,260 Depreciation for the period -306 -1,570 -74 -72 -395 -35 -2,450 Accumulated depreciation for disposals and transfers 19 61 80 Accumulated depreciation and impairment losses at 31 December -422 -10,673 -7,632 -17,120 -1,062 -723 -37,631 Carrying amount at 1 Jan 2021 247 8,862 37,162 474 181 1,047 168 7 48,148 Carrying amount at 31 Dec 2021 247 8,556 36,490 401 156 718 158 106 46,831 25 Nurminen Logistics Plc Financial statements 2022 Notes to the consolidated financial statements 12. Intangible assets Other intangible EUR 1,000 Goodwill Intangible rights assets Total 2022 Cost at 1 January 6,171 838 5,597 12,606 Additions 26 72 98 Cost at 31 December 6,171 863 5,669 12,703 Accumulated depreciation and impairment losses at 1 January -5,271 -836 -4,415 -10,522 Depreciation for the period -3 -334 -337 Impairment losses -10 -10 Accumulated depreciation and impairment losses at 31 December -5,271 -839 -4,759 -10,869 Carrying amount at 1 Jan 2022 899 2 1,183 2,084 Carrying amount at 31 Dec 2022 899 24 911 1,834 2021 Cost at 1 January 6,171 838 5,728 12,736 Additions 11 11 Transfers between asset categories 100 100 Disposals -241 -241 Cost at 31 December 6,171 838 5,597 12,606 Accumulated depreciation and impairment losses at 1 January -5,271 -836 -4,055 -10,162 Depreciation for the period -387 -387 Impairment losses -129 -129 Accumulated depreciation for disposals and transfers 157 157 Accumulated depreciation and impairment losses at 31 December -5,271 -836 -4,415 -10,522 Carrying amount at 1 Jan 2021 899 2 1,673 2,574 Carrying amount at 31 Dec 2021 899 2 1,183 2,084 Information on goodwill impairment testing is provided in Note 15. Impairment of assets. 26 Nurminen Logistics Plc Financial statements 2022 Notes to the consolidated financial statements 13. Leases In consolidated statement of comprehensive income EUR 1,000 2022 2021 Payments for short-term or low value leases 4,007 4,633 Depreciation, amortisation and impairment losses 770 774 Operating profit 4,777 5,407 Financial expenses 329 324 Profit for the financial period 5,105 5,731 Payments for short-term or low value leases include container rents of EUR 2,545 thousand (2021: EUR 3,525 thousand). In consolidated statement of financial position EUR 1,000 Land and bodies of Machinery and Right-of-use Assets water Buildings equipment assets total 2022 Cost at 1 January 8,978 8,032 1,780 18,790 Additions 49 208 257 Disposals -61 -61 Transfers between asset categories 34 34 Cost at 31 December 8,978 8,081 1,961 19,021 Accumulated depreciation at 1 January -421 -7,631 -1,062 -9,115 Accumulated depreciation for disposals 42 42 Depreciation for the period -306 -88 -376 -770 Transfers between asset categories 0 Accumulated depreciation at 31 December -727 -7 720 -1,396 -9,842 Carrying amount at 1 Jan 2022 8,557 401 718 9,676 Carrying amount at 31 Dec 2022 8,251 362 566 9,179 2021 Cost at 1 January 8,978 8,032 1,774 18,784 Additions 35 35 Disposals -114 -114 Transfers between asset categories 85 85 Cost at 31 December 8,978 8,032 1,780 18,790 Accumulated depreciation at 1 January -116 -7,558 -728 -8,402 Accumulated depreciation for disposals 114 114 Depreciation for the period -306 -74 -395 -774 Transfers between asset categories -53 -53 Accumulated depreciation at 31 December -421 -7,631 -1,062 -9,115 Accumulated depreciation at 31 December -116 -7,558 -728 -8,402 Carrying amount at 1 Jan 2021 8,862 474 1,046 10,383 Carrying amount at 31 Dec 2021 8,557 401 718 9,676 EUR 1,000 2022 2021 Liabilities 1.1. 9,887 10,467 Additions 249 64 Disposals -639 -644 Other changes 0 0 31 December 9,497 9,887 Non-current lease liabilities 8,947 9,211 Current lease liabilities 550 676 Total 9,497 9,887 The maturity breakdown of lease liabilities is presented in Note 25. Impact of leases on the Group’s cash flows Net cash flow from operating activities -329 -324 Cash flow from financing activities -620 -644 Increase (+) / decrease (-) in cash and cash equivalents -949 -968 27 Nurminen Logistics Plc Financial statements 2022 Notes to the consolidated financial statements 14. Carrying amounts of financial assets and financial liabilities by category Financial Liabilities Carrying Assets measured assets valued measured at amounts in the EUR 1,000 Note at amortised cost at fair value amortised cost balance sheet 2022 Financial financial assets and liabilities according to IFRS 9 Long-term financial assets Non-current receivables 17 30 319 349 Short-term financial assets Trade and other receivables 19 9,098 9,098 Cash and cash equivalents 20 6,141 6,141 Long-term financial liabilities Interest-bearing liabilities 15,568 15,568 IFRS 16 lease liabilities 13 8,947 8,947 Short-term financial liabilities Interest-bearing liabilities 10,004 10,004 IFRS 16 lease liabilities 13 550 550 Trade payables 25 4,811 4,811 Nurminen Logistics Plc and Nurminen Logistics Services Oy have credit limits amounting to a maximum of EUR 3 million in Oma Säästöpankki Plc. As of 31 December 2022, EUR 466 thousand of the credit limit was used, included in short-term interest bearing liabilities. The limit was not in use in the financial statements of 31 December 2021. Financial assets valued at fair value have been measured according to level 1. Financial Liabilities Carrying Assets measured assets valued measured at amounts in the EUR 1,000 Note at amortised cost at fair value amortised cost balance sheet 2021 Financial financial assets and liabilities according to IFRS 9 Long-term financial assets Non-current receivables 17 21 21 Short-term financial assets Trade and other receivables 19 18,709 18,709 Cash and cash equivalents 20 7,003 7,003 Long-term financial liabilities Interest-bearing liabilities 25,106 25,106 IFRS 16 lease liabilities 13 9,211 9,211 Short-term financial liabilities Interest-bearing liabilities 1,924 1,924 IFRS 16 lease liabilities 13 676 676 Trade payables 25 7,675 7,675 After initial recognition, the Group’s cash and cash equivalents are classified as at fair value through profit or loss, amortised cost or financial assets and financial liabilities at fair value through other comprehensive income. The carrying amounts of these financial assets and liabilities substantially correspond to their fair values and are classified in level 2 of the fair value hierarchy. The following levels are used in measuring fair values: Level 1: Fair value is determined based on quotations from the market. Level 2: Fair value is determined using valuation techniques. Fair value means the value that can be determined from the market value of parts of a financial instrument or similar financial instruments; or a value that can be determined using valuation models and methods generally accepted in the financial markets, if the market value can be reliably determined using them. Level 3: Fair value is determined using valuation techniques in which the factors used have a significant effect on the recorded fair value and these factors are not based on observable market data. 28 Nurminen Logistics Plc Financial statements 2022 Notes to the consolidated financial statements 15. Impairment of assets Goodwill is tested for impairment annually, and if indications of impairment exist. The recoverable amount in the impairment testing calcu- lations 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. Starting from 2023, Nurminen Logistics Plc Group has two cash-generating units (CGUs): Operations in Finland and the Baltics (49% minority). Goodwill is allocated in full to business operations in Finland. Business in Russia was wound down in 2022 as a result of the war in Ukraine. The management estimates that the COVID-19 pandemic will not have a significant impact on the company’s impairment testing. EUR 1,000 Business in Finland 2022 2021 Goodwill on consolidation 899 899 Signals on possible depreciation of assets are regularly observed from information sources within and outside the Group. Such 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. Impairment test calculations on cash flow are based on budgets and strategic forecasts accepted by management for coming five years. For the time period after this forecast period (terminal value) estimated cash flows have been defined by using long term growth forecasts. Essential assumptions having an impact on defining values in use are connected to development of net sales and profitability, and to weighted average cost of capital (WACC) used in discounting cash flows. For the five-year time period the cash flow has been estimated to develop according to the company’s medium-term net sales and profit- ability goals. Sales increase and profitability level development have been estimated based on businesses recent development and gen- eral forecasts. 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 unit, which are based on budget for the year 2023 and long-term strategy approved by management. These are affected by market development in Finland and neighboring regions, planned growth in international railway service and actions to improve profitability in the company. The discount rate is based on industry average WACC after tax. The discount rate used is 8.72%. The corresponding pre-tax discount rate is 10.27%. Discount rate and impairment test calculation take into account market risks and capital intensity. The cost for equity affecting on WACC is consistent with the Group’s long-term targets. Net sales in the Finnish and Russian businesses was EUR 60.2 million in 2022. The net sales are expected to increase especially due to international cargo train traffic in 2023. The estimated annual increase in net sales (CAGR) over the years 2023–2027 averages 6.9%. The forecast average increase in net sales per year over the years 2023–2027 is 2.0 %. The operating margin for the underlying business is expected to improve up to the level of Group’s long-term target by the end of the estimation period. (The Group’s mid-term target is a minimum of 9%.) Tax rate of 20% has been used. CGU net sales and operating result 2020–2027 Actual (Finland-Russia) Forecast (Finland) 2020 2021 2022 2023 2024 2025 2026 2027 2027 Terminal value Net sales 35,253 72,765 60,197 77,737 79,307 80,913 82,554 84,231 85,073 Operating result -3,376 4,954 -2,041 10,693 11,032 11,379 11,734 12,495 12,643 Sensitivity analysis when one component changes: The management estimates that the most sensitive judgements relate to changes in terminal growth, profitability and WACC. Forecast period 2023–2027 Change Impact of change on recoverable amount • Terminal growth 1% Terminal growth -1%-point i.e. EUR -10.4 million terminal growth 0% • WACC 8.72% WACC +1 %-point i.e. WACC 9.72% EUR -13.7 million • Average EBIT 14.2% and EBITDA 17.5% EBITDA decrease 1%-point i.e. EUR -8.7 million average EBITDA 16.5% Based on the sensitivity analyses, the management evaluates that above mentioned essential judgements would not cause a situation in which the carrying amount of cash generating units would exceed the recoverable amount, and this would not cause impairment loss on goodwill in fiscal year 2023. The cash flow estimate is 2.8 times the CGU’s assets employed. 29 Nurminen Logistics Plc Financial statements 2022 Notes to the consolidated financial statements 16. Investments in equity-accounted investees EUR 1,000 2022 2021 At 1 January 174 205 Share of profit/loss for the year 2 -32 At 31 December 176 174 The equity-accounted investees (listed below) are not material for the Group. Registered office Ownership (%) Pelkolan Terminaali Oy Finland 20.0% The financial statements for the joint venture have been composed according to FAS, and they have been consolidated into Group accounts using the equity method. If the financial statements would be composed according to IFRS, the consolidation would not be substantially different from consolidation according to FAS. 17. Non-current receivables EUR 1,000 2022 2021 Financial assets at fair value through profit or loss 319 Other receivables 30 21 Total 349 21 The financial assets at fair value through profit or loss are Oma Säästöpankki funds. 30 Nurminen Logistics Plc Financial statements 2022 Notes to the consolidated financial statements 18. Deferred tax assets and liabilities Recognised Exchange 1 Jan in the income Divest- rate dif- 31 Decem- EUR 1,000 2022 statement ments ferences ber 2022 Movements in deferred taxes during 2022: Deferred tax assets: Confirmed losses 6,617 55 6,672 Lease liabilities 1,943 -98 6 1,851 From pension provisions -2 13 11 Intangible and tangible assets 88 80 9 177 Total 8,649 34 19 9 8,711 Netting of deferred taxes -1,921 -1,803 Deferred tax assets net 6,728 34 19 9 6,908 Deferred tax liabilities: Tangible assets 1,921 -123 6 1,804 Total 1,921 -123 6 0 1,804 Netting of deferred taxes -1,921 -1,803 Deferred tax liabilities net 0 -123 6 0 0 Recognised Exchange 1 Jan in the income Divest- rate dif- 31 Decem- EUR 1,000 2021 statement ments ferences ber 2021 Movements in deferred taxes during 2021: Deferred tax assets: Confirmed losses 6,617 6,617 Lease liabilities 2,069 -126 1,943 Intangible and tangible assets 88 88 Total 2,069 6,580 0 0 8,649 Netting of deferred taxes -2,069 -1,921 Deferred tax assets net 0 6,580 0 0 6,728 Deferred tax liabilities: Tangible assets 2,069 -148 1,921 Total 2,069 -148 1,921 Netting of deferred taxes -2,069 -1,921 Deferred tax liabilities net 0 -148 0 0 0 EUR 1,000 2022 2021 Deferred taxes Confirmed losses of Group companies for which no deferred tax assets have been recognised. 14,783 11,558 The confirmed losses will expire in 2022–2030 or later. Off-balance sheet deferred tax assets from losses in prior periods 2,957 2,312 The deferred tax assets include an item of EUR 6,672 thousand associated with unused tax losses of Nurminen Logistics Plc and Nurminen Logistics Services Oy. The measures taken in 2022 to reduce the railway business container position and reallocate the resources were the consequence of the war in Ukraine, and they burdened the result in the form of non-recurring expenses totalling EUR 3.5 million. As a result, Nurminen Logistics Services Oy’s result for 2022 was at a loss. Measures taken in 2022 to lighten the cost structure, together with the acquisition of Operail Finland Oy, facilitate positive development of the operating result starting from 2023. The company’s manage- ment assesses based on the strategy figures and comprehensive supplementary materials that the deferred tax assets recorded in the consolidated statement of financial position will likely be used, and according to the management’s estimate, the recognised deferred tax assets will be used by the end of 2026. In addition, the management estimates that the deferred tax assets not recognised in the balance sheet will be used by the end of 2027. 9 thousand euros of losses expired in 2022,of which deferred tax asset was 1 thousand euros. 31 Nurminen Logistics Plc Financial statements 2022 Notes to the consolidated financial statements The combined profit before tax for Nurminen Logistics Plc and Nurminen Logistics Services Oy was +3,114 thousand euros in 2021 and -2,087 thousand euros in 2022, and in the forecast period 2023-2027 an average of + 10,485 thousand euros per year. Sensitivity analysis when one component changes: Forecast period 2023–2027 Change Impact of change on recoverable amount No effect on the use of balance Forecast period average profit before Profit before taxes 90% of forecast sheet deferred tax assets tax is 10% less than estimated No effect on the use of off-balance sheet deferred tax assets The use of balance sheet deferred Forecast period average profit before Profit before taxes 85% of forecast tax assets is postponed by a year. tax is 15% less than estimated The use of off-balance sheet deferred tax assets is postponed by a year. The use of balance sheet deferred Forecast period average profit before Profit before taxes 80% of forecast tax assets is postponed by a year. tax is 20% less than estimated The use of off-balance sheet deferred tax assets is postponed by a year. Expiration of deferred tax assets: EUR 1,000 2023 2024 2025 2026 2027 2028 2029 2030 Later Deferred tax assets 1,191 691 786 950 347 709 1,051 761 186 19. Trade and other receivables EUR 1,000 2022 2021 Trade receivables 7,060 14,101 Prepaid expenses and accrued income 1,914 3,980 VAT receivables 111 625 Other receivables 12 3 Total 9,098 18,709 The company has booked a provision for bad debts in 2022 amounting to EUR 93 thousand (EUR 156 thousand in 2021) Trade and other receivables in currencies EUR 6,127 12,525 USD 2,944 4,982 RUB 27 1,202 9,098 18,709 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. The 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. 20. Cash and cash equivalents EUR 1,000 2022 2021 Cash and bank balances 6,141 7,003 Cash and cash equivalents in the balance sheet 6,141 7,003 Cash and cash equivalents in the cash flow statement equal to the cash and cash equivalents in the balance sheet. 32 Nurminen Logistics Plc Financial statements 2022 Notes to the consolidated financial statements 21. Information about equity The Board members of the parent company review the capital structure and gearing of the Group on regular basis. The mid- to long-term target for gearing has been set to less than 100. 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 119.8% at the end of 2022 and 115.9% at the end of and cost of capital. 2021. Equity management covers both equity and interest-bearing liabilities. The aim is to secure business continuity Reserve for invested Share capital, Share premium Legal reserve, unrestricted Number of thousands reserve, thou- thousands equity, thou- shares of euro sands of euro of euro sands of euro 31 December 2017 44,254,174 4,215 86 2,378 26,430 31 December 2018 44,254,174 4,215 86 2,378 26,430 Directed share issue 350,000 31 December 2019 44,604,174 4,215 86 2,378 26,430 Directed share issue in April 2020 120,000 29 Free share issue in September 2020 ** 143,539 Directed share issue in December 2020 *** 29,344,954 9,092 31 December 2020 74,212,667 4,215 86 2,376 35,550 Hybrid bond conversion to shares in July 2021 1,288 Directed free share issue in July 2021 105,728 31 December 2021 77,194,190 4,215 86 2,376 36,838 Directed free share issue in February 2022* 774,386 Repayment of equity in April 2022* -740 Directed free share issue in July 2022* 133,078 Repayment of equity in -507 September 2022* 31 December 2022 78,101,654 4,215 86 2,376 35,591 * directed share issue to the CEO, subscription price EUR 0.24 per share. There was a weighty financial reason for the company to deviate from the pre-emptive subscription right of the shareholders, as the share issue was part of the execution of the CEO’s long-term incentive plan. ** issue without consideration to the company itself, for the payment of remuneration to the Board of Directors *** directed share issue to Finnish investors, subscription price EUR 0.31692 per share. There was a weighty financial reason for the company to deviate from the pre-emptive subscription right of the shareholders, as the share issue best served the interests of the company and all shareholders and made real estate transaction in Vuosaari possible. * Ilmarinen Mutual Pension Insurance Company converted the remaining EUR 1.25 million hybrid bond into shares in summer 2021. Directed free share issue in July 2021. * Directed free share issue without consideration in February 2022. * Repayment of equity in April 2022. * Directed free share issue without consideration in July 2022. * Repayment of equity in September 2022 The company’s shares have no nominal value. The maximum share capital of the company is EUR 4,215 thousand. The company held 65,262 of its own shares at 31 December 2022. 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 amended Finnish Limited Liability Companies Act on 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. 33 Nurminen Logistics Plc Financial statements 2022 Notes to the consolidated financial statements 22. Share-based remuneration According to the resolution of the Annual General Meeting, 50 per cent of the annual remuneration of the members of the Board will be paid in the company’s shares in 2022. The share of Board members’ share awards recognised as an expense in the income statement was EUR 109 thousand euros in 2022. The number of shares transferred to the Board members was 133,078 based on the price on the payment date of 1 July 2022. On 4 July 2022, the Board of Directors of Nurminen Logistics Plc decided to create two new share-based incentive programs for the com- pany’s key personnel: a performance-based share bonus plan 2022–2026 and a share bonus plan to encourage commitment 2022–2026. The aim of the programs is to harmonize the goals of key personnel and the shareholders of Nurminen Logistics Plc and, thus, increase the company’s value in the long term, promote economic and efficient performance, as well as encourage commitment of key personnel to the company by offering them a competitive, performance-based earnings opportunity. Performance Share Plan 2022–2026 The Performance Share Plan 2022–2026 consists of three performance periods, covering the financial years of 2022–2024, 2023–2025 and 2024–2026 respectively. In the plan, the target group is given an opportunity to earn Nurminen Logistics shares based on achieving performance targets set by the Board of Directors. The Board of Directors decides on the plan’s performance criteria and targets to be set for each criterion at the beginning of a performance period. The potential rewards based on the plan will be paid after the end of each performance period. During the performance period 2022–2024, the following performance criteria are used as the basis for the reward: • Total Shareholder Return (TSR), weight 50% • Operative Cash Flow and Change in Net Working Capital, weight 50% • employee satisfaction (eNPS), a variable that can vary between 0.9 and 1.1. The gross rewards to be paid on the basis of the performance period 2022–2024 correspond to the value of an approximate maximum total of 500,000 Nurminen Logistics Plc shares. The Board of Directors has approved approximately 10 key employees as eligible for participating in the performance period 2022–2024. Restricted Share Plan 2022–2026 The Restricted Share Plan is intended to be used as a tool in specific situations seen necessary by the Board of Directors, for example ensuring retention of key talents, attracting new talent or other specific situations determined by the Board. The reward from the Restricted Share Plan 2022—2026 is based on a valid employment or director contract and the continuity of the employment or service. The plan is intended for selected key employees only, based on the decision by the Board of Directors. The rewards to be earned on the basis of the plan will be paid by the end of May 2024, 2025 or 2026 but in any event a minimum twelve months after the determination of the Reward. The gross rewards to be allocated during 2022–2026 on the basis of the restricted share plan correspond to the value of maximum 500,000 Nurminen Logistics Plc shares. The assumptions used in the accounting entries for the share-based remuneration plan are described in the following tables: Plan 2022–2024 Granting date 4 July 2022 Fair value of the share reward at the time of granting, EUR 0.69 Share price at the time of granting, EUR 0.77 Estimated dividends 0.08 Share price limit of the reward, EUR 3.00 Maximum number of shares paid 416,000 Earning period start date 4 July 2022 Earning period end date 30 April 2025 Persons 7 The value of the share at the time of granting, or the fair value of the share, is defined as follows: the value of the share at the time of granting is the share price of the granting date less estimated dividends paid during the earning period. The expense included in the income statement is specified in the following table: EUR 1,000 2022 Cost impact of share-based payments 17 The expense to be recognised in the 2023–2024 financial years was estimated at 31 December 2022 to be approximately EUR 95 thousand. The actual amount may differ from the estimate. 34 Nurminen Logistics Plc Financial statements 2022 Notes to the consolidated financial statements 23. Defined benefit pension plans Characteristics of the defined benefit pension plans The employer has promised an additional pension benefit to a group of employees. The additional pension arrangements result from a prior acquisition. In order to fulfil its promise, the employer has taken out additional pension insurance policies from a life insurance company. The arrangement is closed to new employees, and it covers 31 persons, none of whom are members of the Executive Board. In addition to the old-age pension benefit, the additional pension insurance policies include any survivor’s pension benefit and burial insurance. The insurance company collects insurance premiums annually from the employer. The insurance premium is primarily comprised of index increases paid on the earned benefits. The benefits paid after retirement are annually increased by the TyEL index specified in the insur- ance policies. The insurance company indemnifies the paid pensions with its own, yield-based index, and any deficit compared to the paid TyEL index is charged to the employer as an “index difference charge”. In addition, the pension premium includes a management expense component to cover the insurance company’s expenses for managing the plans. Depending on the insurance policy, 3.5% or a lower interest rate is used in calculating the insurance premiums. Risks relating to defined benefit plans Changes in the yield expectations of bonds. In the employer’s IFRS financial statements disclosures – in deviation from the national prac- tice – the obligation resulting from the pension promise is measured at market values. The pension obligation recognised for the additional pension insurance policies in the IFRS financial statements depends on the yield expectations of bonds issued by reputable companies at the closing date. If the yield expectation decreases, the pension obligation calculated according to IAS 19 increases. Because the employer is not liable for the investment risk, an increase in the yield expectation also affects the value of the assets corresponding to the pension obligation, determined under the principles of IAS 19. The value of the assets increases when the yield expectation decreases, which offsets the increase in the pension obligation. Inflation risk. The risk of inflation is taken into consideration in calculating the pension obligation. Inflation is an estimate of the long-term change in consumer prices. The inflation assumption used in the calculation is market-based, and its horizon must correspond with the average duration of the pension obligation. In accordance with the insurance policies, the pensions paid in the plan are tied to the TyEL index, changes in which depend on actual inflation (80%) and general wage index (20%). The employer is liable for the difference between the TyEL index and the index rebate granted by the insurance company. High inflation results in an increase in the pension obligation and thereby additional expenses for the employer. Mortality risk. If the pension benefit recipient’s actual lifetime is higher than expected, the insurance company covers the resulting risk. The Gompertz mortality model, used in the statutory pension system, is used in the IFRS calculations. Any change in the mortality model used by the insurance company will only be reflected in the employer’s future insurance premiums. Other risks. When a person with a paid-up policy retires, the final amount of the pension is revised, and this might result in additional costs to the employer. Moreover, in these cases where the benefits are tied to the TyEL index, index increases between the granting of a paid-up policy and start of the pension for which the employer is liable will only be charged in the year the pension is granted. Uncertainty of future cash flows. A sensitivity analysis as of the end of the reporting period is disclosed in IFRS reporting for each sig- nificant actuarial assumption, indicating how somewhat possible changes in the actuarial assumption would have affected the defined benefit pension obligation during the year. The pension obligation of the sensitivity analysis is calculated using the projected unit credit method. The sensitivity analysis only takes into consideration the impact of changes in actuarial assumptions on the pension obligation and corresponding assets so that a change in the assumptions does not have an effect on the insurance premiums paid during the year and taken into consideration in assets Defined benefit obligations EUR 1,000 2022 Cost of defined benefit plans Net interest (+expense/-income) 1 Defined benefit cost recognized in consolidated statement of income 1 Actuarial gains/losses Yield of the assets included in the plan, excluding items relating to net interest 24 Empirical changes 7 Recognised in comprehensive income, total remeasurement effect 31 In statement of financial position Current value of defined benefit obligations transferred to reserves 524 Fair value of plan assets -469 Net defined benefit debt 55 Changes in the fair value of plan assets Assets at 1 January 521 Interest income 18 Yield of assets, excluding interest income included in net interest expense -7 Employer’s contributions 12 Benefits paid -75 Assets at 31 December 469 35 Nurminen Logistics Plc Financial statements 2022 Notes to the consolidated financial statements Change in the current value of the plan obligation 2022 Obligation at 1 January 556 Expense based on work performance during the period 19 Interest expense 24 Fulfilment of the obligation -75 Obligation at 31 December 524 The estimated payments to defined benefit plans amount to EUR 13 thousand in 2023. Key actuarial assumptions 2022 Discount rate, % 3.5% Future pay increase, % 0.0% Insurance company’s customer rebate, % 0.0% Increase in benefits, % 2.9% Inflation, % 2.7% Sensitivity analysis of significant actuarial assumptions Possible changes in certain significant actuarial assumptions, should the other variables remain unchanged, would have had the following effect on the defined benefit obligation: Assumptions Change in 2022 assumption Discount rate 0.50% increase -18 0.50% decrease 19 Increase in benefits 0.50% increase 16 0.50% decrease -15 - an increase/decrease of 0.50% in the discount rate would result in a 3.4%/3.6% decrease/increase in the defined benefit obligation - an increase/decrease of 0.50% in the benefit increase assumption would result in a 3.1%/2.9% increase/decrease in the defined benefit pension obligation The sensitivity analysis presented above might not necessarily give a true view of the actual impacts of the changes. Should several assumptions change simultaneously, the combined effect of these changes might not be the same as the sum of individual changes. If the changes in the assumptions differ from the amounts described above, the effect on the defined benefit obligation will not necessarily be linear EUR 1,000 2022 Maturity distribution of non-discounted pension liability During the next 12 months 80 1–5 years 220 5–10 years 162 Over 10 years 244 Total 707 The average duration of the defined benefit obligation was 7 years at the end of the reporting period. 24. Interest-bearing liabilities EUR 1,000 2022 2021 Interest-bearing net liabilities Non-current interest-bearing liabilities 24,515 34,317 Current interest-bearing liabilities 10,554 2,600 Interest-bearing liabilities, total 35,068 36,917 Cash and cash equivalents 6,141 7,003 Interest-bearing net liabilities, total 28,928 29,914 Interest-bearing liabilities in currencies EUR 35,068 36,917 36 Nurminen Logistics Plc Financial statements 2022 Notes to the consolidated financial statements 25. Trade payables and other liabilities EUR 1,000 2022 2021 Current Trade payables 4,811 7,675 Advances received 148 284 Other liabilities 362 435 Accrued expenses 4,993 10,230 Total trade payables and other liabilities 10,314 18,624 Trade payables and other liabilities in currencies EUR 8,917 14,940 SEK 32 0 NOK 180 0 USD 1,177 3,023 RUB 6 661 10,314 18,624 Non-current Other liabilities 108 106 Non-current liabilities 108 106 The most significant items under accrued expense consist of operational accrued expenses of EUR 1,431 thousand in 2022 (EUR 4,971 thousand in 2021) and accrued personnel expenses of EUR 1,841 thousand in 2022 (EUR 1,251 thousand in 2021). 26. Financial Risk Management The goal of the Group’s risk management is to minimise the harmful effects of changes in the financial markets on the Group’s result and equity. The policy for managing financial risks is based on the main principles approved by the Board of Directors. The company’s finance department is responsible for daily risk management within the limits set by the Board. Currency risk Currency risk arises from foreign currency imports and exports, from the financing of foreign subsidiaries and from the translation of sub- sidiaries’ 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, part of an open exposure may be hedged. Foreign currency transaction risk exposure can be hedged if its countervalue exceeds EUR 500 thousand. Exposures 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 eco- nomic 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 the 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 three per cent of the balance sheet total. Interest rate risk Interest rate risks to the Group derive mainly through interest-bearing debts. The purpose of 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. 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 cash flow generated by the company will cover the current business needs and current liabilities for the next 12 months. The sufficiency of cash flows 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 measurement of the assets in the financial statements is based on the going concern assumption. If the forecasts do not materialise, it may be necessary to recognise impairment losses on assets. Credit risk The objective of credit risk management is to minimise losses which arise from the counterparty 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. The provision for credit losses is recognised in profit or loss. The Group has not applied hedge accounting for interest rates or currencies, nor has it used hedging instruments during 2022 and 2021. 37 Nurminen Logistics Plc Financial statements 2022 Notes to the consolidated financial statements 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 interest rate level has been assumed to be +/– 100 bps • At a time of negative reference interest rates, interest rate movements affect as diluted. In the analysis, reference interest rates are thought to be at least zero. Sensitivity analysis for variable interest rate loans 2022 EUR 1,000 31 December 2022 Income statement 100 bp Increase Decrease Total amount of variable interest rate loans 25,106 Variable interest rate instruments -204 204 Total effect -204 204 2021 EUR 1,000 31 December 2021 Income statement 100 bp Increase Decrease Total amount of variable interest rate loans 27,030 Variable interest rate instruments -265 Total effect -265 Market-based loans are raised mainly as variable interest rate loans. Nurminen Logistics hedges the interest rate risk of market-based loans by selecting the interest rate periods and with derivative instruments, mainly interest rate swaps. No interest rate swaps were used in 2022 and CURRENCY RISK 2021. In calculating the sensitivity to changes in exchange rates, the following assumptions have been used: • the change in the exchange rate has been assumed to be +/– 10% • other variables remain constant 2022 Trade receivables 10% Trade payables 10% EUR 1,000 USD decreases increases decreases increases Total currency items Trade receivables 2,944 Trade payables 2,566 Total effect -251 307 219 -267 2021 Trade receivables 10% Trade payables 10% EUR 1,000 USD decreases increases decreases increases Total currency items Trade receivables 4,982 Trade payables 3,023 Total effect -400 489 243 -297 Balance sheet exchange rate Exchange rates used 2022 2021 USD 1.07 1.13 38 Nurminen Logistics Plc Financial statements 2022 Notes to the consolidated financial statements LIQUIDITY RISK The contractual cash flows of loan instalments and interests at 31 December 2022 were the following: 1–3 4 months– 2–5 EUR 1,000 months 1 year years 5 years –> Loans from financial institutions 756 8,782 5,409 10,159 Credit limit 466 Lease liabilities 220 608 2,252 10,814 Trade payables 4,811 Interest to financial institutions 278 584 3.442 1.653 Total 6,531 9,974 11,102 22,626 The contractual cash flows of loan instalments and interests at 31 December 2021 were the following: 1–3 4 months– 2–5 5 years EUR 1,000 months 1 year years –> Loans from financial 557 1,367 15,789 9,316 institutions Lease liabilities 230 691 2,316 11,275 Trade payables 7,675 Interest to financial institutions 174 660 1,930 798 Total 8,636 2,718 20,035 21,390 The long-term loan from Ilmarinen includes the condition that the company pays 30% of free cash flow as premature repayments. According to the agreement, free cash flow is calculated by deducting financial expenses, loan repayments and working capital investments from the operational cash flow. The loan amount as at 31 December 2022 is EUR 7,644 thousand (as at 31 December 2021: EUR 7,644 thousand). The loan will mature in June 2023. The company has started negotiations to renew this loan. The EUR 5 million loan from Ilmarinen was repaid in November 2021. The group took out a new EUR 3.5 million loan with a fixed amor- tisation schedule from Oma Säästöpankki Oyj. The agreement includes a covenant that the credit rating of no individual group company can decrease below Alfa Rating A and the group equity ratio should be over 20% at each financial statement date during the loan period. Nurminen Logistics Plc and Nurminen Logistics Services Oy have credit limits amounting to a maximum of EUR 3 million in Oma Säästöpankki Plc. As of 31 December 2022, EUR 644 thousand of the limit was used, which is included in the short-term liabilities. The limit was not in use on 31 December 2021. Changes in long-term interest bearing debts Cash Cash 31 flows from flows from Other December 1 Jan 2022 additions disposals changes 2022 Long-term liabilities, interest bearing 25,106 0 0 -9,538 15,568 Long-term leasing liabilities, interest bearing 9,211 0 0 -264 8,947 Total 34,317 0 0 -9,802 24,515 Changes in short-term interest bearing debts Cash Cash 31 flows from flows from Other December 1 Jan 2022 additions disposals changes 2022 Short-term liabilities, interest bearing 1,924 466 -1,977 9,591 10,004 Long-term leasing liabilities, interest bearing 676 0 -620 494 550 Total 2,600 466 -2,598 10,085 10,554 39 Nurminen Logistics Plc Financial statements 2022 Notes to the consolidated financial statements Changes in long-term interest bearing debts Cash Cash 31 flows from flows from Other December 1 Jan 2021 additions disposals changes 2021 Long-term liabilities, interest bearing 28,918 3,500 -5,000 -2,312 25,106 Long-term leasing liabilities, interest bearing 9,829 0 0 -618 9,211 Total 38,747 3,500 -5,000 -2,931 34,317 Changes in short-term interest bearing debts Cash Cash 31 flows from flows from Other December 1 Jan 2021 additions disposals changes 2021 Short-term liabilities, interest bearing 1,846 0 -2,202 2,280 1,924 Long-term leasing liabilities, interest bearing 637 0 -644 683 676 Total 2,483 0 -2,845 2,963 2,600 CREDIT RISK Maximum exposure to credit risk EUR 1,000 2022 7,060 2021 14,101 Aging of trade receivables EUR 1,000 Not past due Past due less Past due Past due over Total than 30 days 30–120 days 120 days 2022 4,522 1,731 531 275 7,060 2021 11,915 1,592 445 149 14,101 Nurminen Logistics has no significant risk concentrations. 27. Other leases The Group as lessee Lease liabilities for off-balance sheet leases where the value of the asset group is insignificant or short-term: EUR 1,000 2022 2021 Less than one year 363 397 Between one year and five years 107 94 Total 470 491 In accordance with the IFRS 16 standard leases are recognised as fixed assets and lease liabilities in the consolidated balance sheet. Nurminen Logistics’ other leases mainly consist of different kinds of ICT equipment, office automation equipment, vehicles and smaller office premises. 40 Nurminen Logistics Plc Financial statements 2022 Notes to the consolidated financial statements 28. Contingencies and commitments EUR 1,000 2022 2021 Liabilities and contingent liabilities secured by corporate mortgages and pledges Loans from financial institutions 25,106 27,030 Customs duties and other guarantees 3,794 5,807 Interest-bearing accounts for which business mortgages have been given and subsidiary shares pledged Credit limit 3,000 3,000 Unused credit 2,534 3,000 Pledges given on own behalf Book value of pledged subsidiary shares 43,766 43,766 Mortgages given on own behalf Company mortgages 25,500 25,500 Real estate mortgages 25,125 25,125 The Group as lessor: lease guarantees for off-balance sheet leases Deposit guarantee from 1 April 2021 to 1 April 2023 and then until further notice 599 599 rental security Kiinteistö Oy Luumäen Suoanttilantie 101 29. Related party transactions The company’s 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 controlled by Board members EUR 1,000 2022 2021 Sales 18 577 Purchases 1,208 2,101 Current receivables 8 30 There are no liabilities from related parties at the balance sheet date. On 16 February 2022, Nurminen Logistics announced the transfer of 774,386 shares to President and CEO as part of the payment of the rewards of the CEO’s share-based incentive scheme. On 7 March 2022, Nurminen Logistics announced Chairman of the Board of Directors Irmeli Rytkönen’s subscription notification concerning 43,000 shares at a unit price of EUR 1.19 per share. On 30 March 2022, Nurminen Logistics announced CIO Petri Luurila’s subscription notification concerning 13,200 shares at an average price of EUR 1.08 per share. On 31 March 2022, Nurminen Logistics announced Board member Juha Nurminen’s transfer notification concerning 176,212 shares. On 27 July 2022, Nurminen Logistics announced the remuneration in shares for the Board of Directors. Irmeli Rytkönen, Chairman of the Board of Directors subscribed for 38,023 shares, Juha Nurminen, member of the Board of Directors subscribed for 19,011 shares, Olli Pohjanvirta, member of the Board of Directors subscribed for 19,011 shares, Victor Hartwall, member of the Board of Directors subscribed for of Directors subscribed for 19,011 shares. 19,011 shares, Karri Koskela, member of the Board of Directors subscribed for 19,011 shares and Erja Sankari, member of the Board EUR 1,000 2022 2021 CEO, the members of the Board and the Executive Board Salaries and other short-term employee benefits 1,133 985 Statutory pension payments 181 191 Post-employment benefits 0 2 Share-based remuneration 105 120 Total 1,419 1,298 41 Nurminen Logistics Plc Financial statements 2022 Notes to the consolidated financial statements The CEO has been paid a share-based reward partly in company shares (774,386 shares) and partly in cash (EUR 1,247 thousand). The cash share covers the taxes and tax-like charges resulting to the President and CEO from the remuneration. EUR 1,000 2022 2021 Salaries and fees President and CEO Olli Pohjanvirta 355 414 Members of the Board Alexey Grom (until 11 April 2022) 24 33 Juha Nurminen 41 38 Jukka Nurminen (until 12 April 2021) 0 26 Olli Pohjanvirta 26 53 Irmeli Rytkönen 83 58 Erja Sankari 47 15 Karri Koskela 41 15 Victor Hartwall 50 15 666 667 Members of the Board and the CEO owned 29.9% of company shares on 31 December 2022 either directly or indirectly through companies under their control. 30. Acquisitions and divested businesses There were no acquisitions or divestments during the financial year 2022. 31. Legal proceedings The lease agreement related to the Luumäki property has been terminated in January 2022. The tenant has disputed the agreement and has filed an application for a summons with the Helsinki district court in January 2022. According to the management’s assessment, the application for a summons is unfounded. The company does not consider the application to be successful, and, according to the management’s view, the trial will probably have a positive outcome. The lawsuit has no significant impact on the Group’s financial position. 32. Events after the balance sheet date On 13 January 2023, Nurminen Logistics announced that it was purchasing the entire share capital of Operail Finland Oy with Finnish investors at a debt free transaction price of EUR 27.7 million. Nurminen Logistics’ subsidiary North Rail Holding Oy, of which Nurminen Logistics owns 79.8% and investors 20.2%, and Operail Holding OÜ have signed a Sales and Purchase Agreement in which the parties have agreed that Operail Finland Oy will be transferred to the ownership of North Rail Finland Oy after the buyer has received the needed decisions of the authorities. On 14 February 2023, Nurminen Logistics announced that it had completed the transaction announced on 13 January 2023 to purchase the entire share capital of Operail Finland Oy with Finnish investors. After the purchase, Nurminen Logistics’ holding in North Rail Holding is 79.8%. The purchase was financed with new long-term debt financing instruments. On 14 February 2023, Nurminen Logistics announced preliminary information about its operating result for 2022 and financial guidance for 2023. On 6 March 2023, Nurminen Logistics announced that it strengthens its management team to achieve growth targets and streamline responsibilities. Two new management team members were appointed, Niko Orpana as Vice President, Multimodal & Bulk Terminal Oper- ations as of 15 May 2023, and Vice President, Sales Marjut Linnajärvi being responsible for railway business and sales. 42 Nurminen Logistics Plc Financial statements 2022 Distribution of ownership Distribution of ownership 31 December 2022 Number of shares Number of shareholders % of shareholders Number of shares % of total shares and votes 1–100 1,512 31.6% 66,402 0.09% 101–1,000 2,097 43.8% 990,113 1.27% 1,001–10,000 1,025 21.4% 3 ,133,913 4.01% 10,001–100,000 126 2.6% 3 ,488,980 4.47% 100,001–1,000,000 14 0.3% 5 ,194,618 6.65% over 1,000,000 16 0.3% 65 ,227,628 83.52% Total 4,790 100.0% 78 ,101,654 100% Nominee registered 8 0.17% 856,109 1.10% Largest shareholders 31 December 2022 Number of shares % of total shares and votes Suka Invest Oy 12,635,655 16.2 Ilmarinen Mutual Pension Insurance Company 11,655,795 14.9 K. Hartwall Invest Oy Ab 8,105,390 10.4 Nurminen Juha Matti 6,508,047 8.3 Avant Tecno Oy 5,739,375 7.4 JN Uljas Oy 3,231,206 4.1 Railcap Ltd 3,110,574 4.0 Verman Group Oy 2,524,297 3.2 Relander Pär-Gustaf 1,757,686 2.3 Cyberdyne Invest Oy H. G. Paloheimo Oy Assai Oy Pohjanvirta Olli Mikael Partnos Oy Jocer Oy Ab Kukkonen Tuomas Sakari VGK Invest Oy Vertanen Janne Olavi Nurminen Jukka Matias Nurminen Mikko Johannes Other 4,770 shareholders 1,735,454 1,652,312 1,603,218 1,424,413 1,217,182 1,176,132 1,150,892 648,000 631,075 619,546 615,838 10,359,567 2.2 2.1 2.1 1.8 1.6 1.5 1.5 0.8 0.8 0.8 0.8 13.3 Total 78,101,654 100.0 Shareholders by type 31 December 2022 Number of shares % of total shares and votes Private companies 39,706,892 50.8% Financial and insurance institutions 4,897,445 6.3% Public sector organisations 11,655,795 14.9% Households 20,860,673 26.7% Foreign 979,845 1.3% Non-profit organisations 1,004 0% Nominee-registered 856,109 1.1% Total 78,101,654 100% 43 Nurminen Logistics Plc Financial statements 2022 Parent company financial statements Parent Company’s Income Statement EUR 1,000 Note 2022 2021 NET SALES 1 3,716 3,434 Other operating income 2 3,159 3,209 Personnel expenses 3 -1,916 -2,961 Depreciation, amortisation and impairment losses 4 -374 -516 Other operating expenses 5 -5,747 -4,254 OPERATING RESULT -1,162 -1,088 Financial income and expenses 6 1,616 568 RESULT BEFORE APPROPRIATIONS AND TAXES 454 -520 Appropriations 7 3,840 Income taxes 8 1,342 RESULT FOR THE PERIOD 454 4,662 Parent Company’s Balance Sheet EUR 1,000 Note 2022 2021 ASSETS Non-current assets Intangible assets 1 1,257 1,378 Tangible assets 1 29 29 Investments 2 45,509 45,190 Total non-current assets 46,795 46,597 Current assets Non-current receivables 3.5 1,342 1,342 Current receivables 3 5,987 8,087 Cash in hand and at bank 41 404 Total current assets 7,371 9,834 TOTAL ASSETS 54,165 56,430 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 36,449 37,697 Retained earnings/loss 4 -5,965 -10,627 Profit (loss) for the period 4 454 4,662 Total equity 37,613 38,406 Liabilities Non-current liabilities Non-current liabilities 6 1,553 10,250 Current liabilities Current liabilities 7 14,999 7,774 Total liabilities 16,552 18,024 TOTAL EQUITY AND LIABILITIES 54,165 56,430 44 Nurminen Logistics Plc Financial statements 2022 Parent company financial statements Parent Company’s Cash Flow Statement EUR 1,000 Note 2022 2021 Cash flow from operating activities PROFIT/LOSS FOR THE FINANCIAL PERIOD 454 4,662 Adjustments: Depreciation, amortisation and impairment losses 4 374 516 Financial income (-) and expenses (+) 6 -1,616 -568 Income taxes 8 -1,342 Group contributions received 7 -3,840 Other income and expenses with no cash flow effect 1,262 Other adjustments -6 Cash flow before changes in working capital -788 684 Changes in working capital: Increase (-) / decrease (+) in non-interest bearing current receivables -1,740 1,188 Increase (+) / decrease (-) in non-interest bearing current payables -1,029 -1,011 Net cash from operating activities before financial items and taxes -3,557 862 Interest paid -332 -503 Dividends received from business 2,020 1,173 Interest received 197 185 Other financial items -67 -294 Cash flow from operating activities -1,739 1,423 Cash flow from investing activities Purchases of property, plant and equipment and intangible assets -271 -169 Proceeds from sale of property, plant and equipment and intangible assets 0 6 Acquisition of subsidiaries -173 Other investments -353 Cash flow from investing activities -623 -337 Cash flow from financing activities Proceeds from and repayment of non-current borrowings -1,856 Proceeds from and repayment of current borrowings and change in credit limit -594 Repayment of equity -1,247 Group contribution received 3,840 Cash flow from financing activities 1,999 -1,856 Change in cash and cash equivalents -363 -770 Cash and cash equivalents at the beginning of the year 404 1,174 Net increase/decrease in cash and cash equivalents -363 -770 Cash and cash equivalents at the end of the period 41 404 45 Nurminen Logistics Plc Financial statements 2022 Parent company financial statements 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 and amortisation. They are depreciated or amortised over their estimated useful lives, which are the following: • Intangible assets 3–5 years • Machinery and equipment 3–10 years • Other capitalised long-term expenditure 5–10 years • Goodwill 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 stated at their nominal value or at a lower probable value. Deferred taxes The company books the deferred taxes in the financial statements and they have been calculated for temporary differences between taxation and the financial statements using the tax rate for the following years confirmed at the time of financial statements. The balance sheet includes tax receivables from confirmed losses, which are booked in accordance with the precautionary principle (75% of confirmed losses). 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. Related party transactions During the financial year 2021, the company has invoiced rents from Skillpixels Oy worth EUR 1,200.00 (the company is controlled by the CEO). The company has also invoiced ticket expenses of EUR 1,123.85 from Russian Capital Management Oy (the company is controlled by the CEO). On the closing date, the company has EUR 1,488.00 of open receivables from Skillpixels Oy. 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. Number of shares and directed issues The company conducted two share issues during the financial year. The amount of shares is 78,101,654 after these transactions as at balance sheet date 31 December 2022. Number of shares 31 December 2021 77,194,190 Directed free share issue in February 2022 774,386 Directed free share issue in July 2022 133,078 31 December 2022 78,101,654 The company’s shares have no nominal value. The maximum share capital of the company is EUR 4,215 thousand. The company held 65,262 of its own shares at 31 Dec 2022. 46 Nurminen Logistics Plc Financial statements 2022 Parent company financial statements Notes to the Parent Company’s Income Statement EUR 1,000 2022 2021 1. Net sales Sale of services 3,716 3,434 Total 3,716 3,434 2. Other operating income Rental income 3,047 3,173 Others 112 36 Total 3,159 3,209 3. Disclosures for personnel and members of company organs Personnel expenses Salaries and fees -1,678 -2,705 Pension expenses and pension contributions -213 -222 Other social security costs -25 -34 Total -1,916 -2,961 4. Depreciation, amortisation and impairment losses Depreciation and amortisation according to plan Intangible rights -3 Other capitalised long-term expenditure -361 -387 Impairment losses -10 -129 Total -374 -516 5. Other operating expenses Other operating expenses -5,747 -4,254 Total -5,747 -4,254 Auditor fees Audit fees -88 -90 Other fees paid to auditors -7 -27 Total -95 -117 6. Financial income and expenses Dividend income Dividend income from Group companies 2,020 1,173 Total 2,020 1,173 Interest and other financial income Interest income from Group companies Interest and other financial income from others 197 1 184 Total 197 185 Interest and other financial expenses Impairment losses from non-current investments -33 Interest and other financial expenses to others -569 -789 Total -602 -789 Financial income and expenses total 1,616 568 7. Appropriations Group contributions received 3,840 5. Deferred taxes and 8. Income taxes Losses of parent company from previous financial years 10,456 8,948 Confirmed losses will expire in 2022–2029 Deferred tax assets on losses from previous financial years 1,342 1,790 Change in deferred tax liabilities 1,342 During the accounting period, EUR 9,095.25 of confirmed losses expired, of which the deferred tax asset accounted for EUR 1,363.84 (75%). 47 Nurminen Logistics Plc Financial statements 2022 Parent company financial statements Notes to the Parent Company’s Balance Sheet EUR 1,000 2022 2021 1. Property, plant and equipment and intangible assets Intangible rights: Cost at 1 January 149 149 Additions 26 Cost at 31 December 175 149 Accumulated planned amortisation at 1 Jan -148 -147 Depreciation for the period -3 Accumulated planned amortisation at 31 Dec -151 -148 Carrying amount at 31 Dec 24 2 Other capitalised long-term expenditure Cost at 1 January 3,144 3,191 Additions 178 83 Disposals -10 -129 Cost at 31 December 3,313 3,144 Accumulated planned amortisation at 1 Jan -1,921 -1,535 Depreciation for the period -361 -386 Accumulated planned amortisation at 31 Dec -2,283 -1,921 Carrying amount at 31 Dec 1,030 1,223 Prepayments and acquisitions in progress Cost at 1 January 153 7 Additions 228 224 Disposals and transfers between asset categories -178 -79 Cost at 31 December 202 153 Carrying amount at 31 Dec 202 153 Land area Cost at 1 January 22 22 Carrying amount at 31 Dec 22 22 Other tangible assets Cost at 1 January 9 9 Cost at 31 December 9 9 Accumulated planned amortisation at 1 Jan -1 -1 Depreciation for the period Accumulated planned amortisation at 31 Dec -1 -1 Carrying amount at 31 Dec 8 8 48 Nurminen Logistics Plc Financial statements 2022 Parent company financial statements EUR 1,000 2022 2021 2. Investments Holdings in Group companies Cost at 1 January 13,934 13,934 Additions Carrying amount at 31 Dec 13,934 13,934 Investments in reserve for invested unrestricted equity of Group companies Cost at 1 January 31,031 31,031 Additions Carrying amount at 31 Dec 31,031 31,031 Holdings in associates Cost at 1 January 204 204 Carrying amount at 31 Dec 204 204 Other shares and holdings Cost at 1 January 21 Additions 600 Disposals -281 21 Carrying amount at 31 Dec 340 21 Total 45,509 45,190 Registered office Share of ownership % Subsidiaries 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 UAB Lithuania 51 Kiinteistö Oy Helsingin Satamakaari 24 Finland 51 Associates and joint ventures Pelkolan Terminaali Oy Finland 20 NR Rail Oy was liquidated through the liquidation procedure in January 2022 and RW Logistics Oy in December 2022. 49 Nurminen Logistics Plc Financial statements 2022 Parent company financial statements EUR 1,000 2022 2021 3. Receivables Non-current Deferred tax assets 1,342 1,342 Total 1,342 1,342 Current Current receivables from Group companies 2,628 1,853 Group contribution receivables 3,840 Trade receivables 3,231 2,166 Other receivables 40 63 Total 5,899 7,923 Prepayments and accrued income Prepaid expenses 80 -132 Other receivables 8 32 Total 88 165 Total current receivables 5,987 8,087 4. Equity Share capital total 4,215 4,215 Share premium reserve 86 86 Legal reserve 2,374 2,374 Restricted shareholders’ equity total 6,675 6,675 Reserve for invested unrestricted equity 1 Jan. 37,697 36,408 Hybrid bond conversion to shares 1,288 Repayment of equity -1,247 Reserve for invested unrestricted equity 31 Dec. 36,449 37,697 Retained earnings -5,965 -10,627 Profit/loss for the financial period 454 4,662 Total unrestricted equity 30,938 31,732 Total equity 37,613 38,406 Distributable funds Reserve for invested unrestricted equity 36,449 37,697 Retained earnings -5,965 -10,627 Profit/loss for the financial period 454 4,662 Total 30,938 31,732 The company owns 65,262 of its own shares. 6. Non-current liabilities Non-current liabilities from others Loans from financial institutions 1,500 10,144 Other liabilities 53 106 Total 1,553 10,250 Total non-current liabilities 1,553 10,250 50 Nurminen Logistics Plc Financial statements 2022 Parent company financial statements EUR 1,000 2022 2021 7. Current liabilities Current liabilities to Group companies Trade payables 168 219 Other liabilities 4,063 4,121 Accrued expenses 7 Total 4,238 4,340 Current liabilities to others Interest-bearing liabilities Loans from financial institutions 9,103 1,000 Total 9,103 1,000 Non-interest bearing liabilities Trade payables 251 506 Other liabilities 89 148 Accrued expenses Employee benefit expense accruals 737 347 Interest accruals 198 30 Others 383 1,403 Total 1,658 2,434 Total current liabilities 14,999 7,774 Other Notes of the Parent Company EUR 1,000 2022 2021 Liabilities and contingent liabilities secured by corporate mortgages and pledges Loans from financial institutions 10,144 11,144 Customs duties and other guarantees 794 1,307 The loan from Ilmarinen includes the condition that the company pays 30% of free cash flow as premature repayments. According to the agreement, free cash flow is calculated by deducting financial expenses, loan repayments and working capital investments from the operational cash flow. The loan amount as at 31 December 2022 is EUR 7,644 thousand (as at 31 December 2021: EUR 7,644 thousand). The loan matures in June 2023, in this regard the company has started negotiations to renew the loan. The group took out a new EUR 3.5 million loan with a fixed amortisation schedule from Oma Säästöpankki Oyj during the previous financial year. The loan amount as at 31 December 2022 is EUR 2,500 thousand (as at 31 December 2021: EUR 3,500 thousand). The signed agreement with Oma Säästöpankki Oyj includes a covenant that the credit rating of no individual group company can decrease below Alfa Rating A and the equity ratio of the Group should not be under 20% at each financial statement date during the loan period. Interest-bearing accounts for which business mortgages have been given and subsidiary shares pledged Credit limit 1,000 1,000 Unused credit 541 1,000 Guarantees given on behalf of companies belonging to the same Group Book value of pledged subsidiary shares 43,766 43,766 Mortgages given on own behalf Company mortgages 15,500 15,500 Rental guarantees Deposit 1 April 2021–1 April 2023, after which can be resigned on a separate notice 599 599 Rental security Kiinteistö Oy Luumäen Suoanttilantie 101 Lease agreement has been terminated in January 2022. Rent liabilities Payable in next year 2,825 2,570 Payable later 12,627 14,137 Amounts payable under leases Payable in next year 88 106 Payable later 90 8 51 Nurminen Logistics Plc Financial statements 2022 Parent company financial statements The Parent Company’s Notes Concerning Personnel and Company Organs 2022 2021 Number of personnel Personnel, average 12 15 Personnel, at year-end 12 11 Salaries and fees paid to the management (EUR 1,000) Members of the Board of Directors and Managing Director 666 667 Defined benefit pension benefits The company has additional pension agreements based on a previous acquisition. The additional pension benefits concern 31 persons, none of whom is a member of the Executive Board. The average duration of the defined benefit obligation was 7 years at the end of the reporting period. The amount of the liability as at 31 December 2022 is EUR 49,772.00. Litigations The lease agreement related to the Luumäki property has been terminated in January 2022. The tenant has disputed the agreement and filed a lawsuit with the Helsinki District Court in January 2022. According to management’s assessment, the lawsuit is unfounded. The company does not consider the lawsuit to be successful, and according to the management’s view, the trial will probably have a positive outcome. The lawsuit has no significant impact on the group’s financial position. Key figures for the parent company Key figures for business 2020 2021 2022 Net sales, EUR 1,000 3,018 3,434 3,716 Operating result (EBIT) EUR 1,000 192 -1,088 -1,162 Adjusted operating result, (EBIT) EUR 1,000 174 % of net sales 6.4% -31.7% -31.3% Adjusted % of net sales 5.1% Result for the financial year, EUR 1,000 1,604 4,662 454 Adjusted result for the financial year, EUR 1,000 742 % of net sales 53.2% 135.8% 12.2% Adjusted % of net sales 21.6% Return on equity (ROE), % 5.9% 13.2% 1.2% Return on investment (ROI), % 5.4% 0.6% 2.2% Adjusted return on investment (ROI), % 3.2% Equity ratio, % 60.7% 68.1% 69.4% Gearing, % 36.4% 28.0% 28.1% Wages and salaries paid, EUR 1,000 1,389 2,705 1,678 Adjusted wages and salaries paid, EUR 1,000 1,443 Average number of employees 14 15 12 * Non-recurring remuneration for the 2021 financial year which, based on an estimate of Nurminen’s management, is not associated with normal business operations, has been taken into consideration in the adjusted key figure. ** Non-recurring remuneration, Group contribution and change in deferred tax liabilities have been taken into consideration in the adjusted key figure. 52 Nurminen Logistics Plc Financial statements 2022 Signatures on the financial statements and the report of the Board of Directors The Board’s proposal for the distribution of profit, signatures of the Board’s report on operations and financial statements and auditor’s note The Board’s Proposal For Profit Distribution The parent company’s distributable equity on 31 December 2022 is EUR 30,938,118.26, of which the profit for the period amounted to EUR 453,583.04. The Board of Directors proposes that the Annual General Meeting authorizes the Board of Directors to decide on distributing a maximum of EUR 1.0 million as dividends at a separately announced date during 2023, should the company’s financial position allow. The remaining distributable assets will be retained in unrestricted equity. All shares outstanding on the dividend payment record date, with the exception of the treasury shares held by the company, are entitled to dividend for 2022. Signatures of the Board’s report on operations and financial statements Helsinki 14.3.2023 Irmeli Rytkönen Olli Pohjanvirta Chair of the Board of Directors President and CEO Juha Nurminen Erja Sankari Karri Koskela Victor Hartwall Auditor’s note Auditor’s report has been issued today. Helsinki 14.3.2023 Ernst & Young Oy Authorised Public Accountant Firm Juha Hilmola Authorised Public Accountant 53 Nurminen Logistics Plc Financial statements 2022 Auditor’s report Auditor’s report To the Annual General Meeting of Nurminen Logistics Plc Report on the Audit of the Financial statements Opinion We have audited the financial statements of Nurminen Logistics Plc (business identity code 0109707-8) for the year ended 31 December 2022. The financial statements comprise the consolidated balance sheet, income statement, statement of comprehensive income, state- ment of changes in equity, statement of cash flows and notes, including a summary of significant accounting policies, as well as the parent company’s balance sheet, income statement, statement of cash flows and notes. In our opinion • the consolidated financial statements give a true and fair view of the group’s financial position as well as its financial performance and its cash flows in accordance with International Financial Reporting Standards (IFRS) as adopted by the EU. • he financial statements give a true and fair view of the parent company’s financial performance and financial position in accordance with the laws and regulations governing the preparation of financial statements in Finland and comply with statutory requirements. Our opinion is consistent with the additional report submitted to the Audit Committee. Basis for Opinion We conducted our audit in accordance with good auditing practice in Finland. Our responsibilities under good auditing practice are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the parent company and of the group companies in accordance with the ethical requirements that are applicable in Finland and are relevant to our audit, and we have fulfilled our other ethical responsibilities in accordance with these requirements. In our best knowledge and understanding, the non-audit services that we have provided to the parent company and group companies are in compliance with laws and regulations applicable in Finland regarding these services, and we have not provided any prohibited non-audit services referred to in Article 5(1) of regulation (EU) 537/2014. The non-audit services that we have provided have been disclosed in note 4 to the consolidated financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Key Audit Matters Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the current period. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. We have fulfilled the responsibilities described in the Auditor’s responsibilities for the audit of the financial statements section of our report, including in relation to these matters. Accordingly, our audit included the performance of procedures designed to respond to our assessment of the risks of material misstatement of the financial statements. The results of our audit procedures, including the procedures performed to address the matters below, provide the basis for our audit opinion on the accompanying financial statements. We have also addressed the risk of management override of internal controls. This includes consideration of whether there was evidence 54 Nurminen Logistics Plc Financial statements 2022 Auditor’s report of management bias that represented a risk of material misstate- ment due to fraud. Key Audit Matter How our audit addressed the Key Audit Matter Valuation of deferred tax assets Refer to note summary of significant accounting policies and note 18. As of balance sheet date 31 December 2022, the group had deferred tax assets arising from the unused tax losses carry forward amounting to 6,7 M€. The amount of deferred tax asset is material to financial statements. Management assessment related to the recognition of deferred tax assets and the likelihood of future income includes judgements relating to assumptions affected by future market and economic developments. Due to above mentioned judgmental factors, valuation of deferred tax assets was determined to be a key audit matter. When auditing deferred tax assets we evaluated company’s evidence that there will be future taxable income available to utilize the deferred tax assets As part of our audit procedures we • assessed the key assumptions in the calculations prepared by the management focusing on forecasted future economic development and the company’s ability to generate taxable income. • tested deferred tax assets including the assessment of recognizing judgmental tax positions. We reviewed the communication with tax authorities. • assessed disclosures related to deferred taxes.. Key Audit Matter How our audit addressed the Key Audit Matter Revenue Recognition We refer to the accounting principles for the consolidated financial statements in the note 1 of the consolidated financial statements, note 2 segment information and the note 19 trade and other receivables. Revenue recognition is considered as a key audit matter because revenues are a key financial performance measure which could create an incentive for revenues to be recognized prematurely. Relevant areas from the net sales perspective are accuracy of the recognized amounts and timing of revenue recognition. Revenue recognition was determined to be a key audit matter and a significant risk of material misstatement referred to in EU Regulation No 537/2014, point (c) of Article 10 (2). due to the identified risk of material misstatement in timely revenue recognition. Our audit procedures to address the risk of material misstatement included • the analysis of the revenue recogni- tion accounting policies and • comparison of revenue transactions to the supporting documentation in order to assess whether the require- ments for the revenue recognition have been met. In addition, we requested external trade receivable con- firmations, tested general ledger journal entries on a sample basis as well as performed analytical pro- cedures in order to identify abnormal entries. We also assessed the sufficiency of the revenue recog- nition disclosures in respect of the IFRS 15 standard. Key Audit Matter How our audit addressed the Key Audit Matter Valuation of subsidiary investments We refer to the accounting principles of the parent company and to the note 2 of the balance sheet of the parent company Valuation of subsidiary investments is considered as a key audit matter because of the judgment involved in the valuation process and because the subsidiary investments are significant to the parent company balance sheet. The carrying value of subsidiary investments as of the balance sheet date 31 December 2022 amounted to 45,5 million euros. These investments represented some 84 % of the total assets and some 121 % of the total equity. Valuation of subsidiary investment requires management to make an assessment whether • here are indicators that the investments are permanently impaired, andd • what the probable value of investments is at year-end. We involved EY valuation specialists to assist us in evaluating the methodologies, calculations and assumptions applied by the management in the valuation of parent company’s subsidiary investments. The assumptions applied by the management were compared to • approved budgets and long-term forecasts by the management, • information available in external sources, as well as • our independently calculated industry averages such as weighted average cost of capital used in discounting the cashflows. 55 Nurminen Logistics Plc Financial statements 2022 Auditor’s report Responsibilities of the Board of Directors and the Managing Director for the Financial Statements The Board of Directors and the Managing Director are responsible for the preparation of consolidated financial statements that give a true and fair view in accordance with International Financial Reporting Standards (IFRS) as adopted by the EU, and of financial statements that give a true and fair view in accordance with the laws and regulations governing the preparation of financial statements in Finland and comply with statutory requirements. The Board of Directors and the Managing Director are also responsible for such internal control as they determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the Board of Directors and the Managing Director are responsible for assessing the parent company’s and the group’s ability to continue as going concern, disclosing, as applicable, matters relating to going concern and using the going con- cern basis of accounting. The financial statements are prepared using the going concern basis of accounting unless there is an intention to liquidate the parent company or the group or cease operations, or there is no realistic alternative but to do so. Auditor’s Responsibilities for the Audit of the Financial Statements Our objectives are to obtain reasonable assurance on whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with good auditing practice will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of the financial statements. As part of an audit in accordance with good auditing practice, we exercise professional judgment and maintain professional skepticism throughout the audit. We also: • Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. • Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circum- stances, but not for the purpose of expressing an opinion on the effectiveness of the parent company’s or the group’s internal control. • Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management. • Conclude on the appropriateness of the Board of Directors’ and the Managing Director’s use of the going concern basis of accounting and based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the parent company’s or the group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the parent company or the group to cease to continue as a going concern. • Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events so that the financial statements give a true and fair view. • Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion. We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding inde- pendence, and communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards. From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication. 56 Nurminen Logistics Plc Financial statements 2022 Auditor’s report Other Reporting Requirements Information on our audit engagement We were first appointed as auditors by the Annual General Meeting on 12 April 2016, and our appointment represents a total period of uninterrupted engagement of 7 years. Other information The Board of Directors and the Managing Director are responsible for the other information. The other information comprises the report of the Board of Directors. Our opinion on the financial statements does not cover the other information. In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated. Our responsibility also includes considering whether the report of the Board of Directors has been prepared in accordance with the applicable laws and regulations. In our opinion, the information in the report of the Board of Directors is consistent with the information in the financial statements and the report of the Board of Directors has been prepared in accordance with the applicable laws and regulations. If, based on the work we have performed, we conclude that there is a material misstatement of the report of the Board of Directors, we are required to report that fact. We have nothing to report in this regard. Helsinki, 14 March 2023 Ernst & Young Oy Authorized Public Accountant Firm Juha Hilmola Authorised Public Accountant 57 Nurminen Logistics Plc Financial statements 2022 Auditor’s report Independent Auditor’s Report on Nurminen Logistics Oyj’s ESEF-Consolidated Financial Statements (Translation of the Finnish original) To the Board of Directors of Nurminen Logistics Oyj We have performed a reasonable assurance engagement on the iXBRL tagging of the consolidated financial statements included in the digital files 743700O69NCHTNEV0362-2022-12-31-fi.zip of Nurminen Logistics Oyj for the financial year 1.1.-31.12.2022 to ensure that the financial statements are marked/tagged with iXBRL in accordance with the requirements of Article 4 of EU Commission Delegated Regulation (EU) 2018/815 (ESEF RTS). Responsibilities of the Board of Directors and Managing Director The Board of Directors and Managing Director are responsible for the preparation of the Report of Board of Directors and financial state- ments (ESEF financial statements) that comply with the ESESF RTS. This responsibility includes: • preparation of ESEF-financial statements in accordance with Article 3 of ESEF RTS • tagging the consolidated financial statements included within the ESEF- financial statements by using the iXBRL mark ups in accor- dance with Article 4 of ESEF RTS • ensuring consistency between ESEF financial statements and audited financial statements The Board of Directors and Managing Director are also responsible for such internal control as they determine is necessary to enable the preparation of ESEF financial statements in accordance with the requirements of ESEF RTS. Auditor’s Independence and Quality Control We are independent of the company in accordance with the ethical requirements that are applicable in Finland and are relevant to the engagement we have performed, and we have fulfilled our other ethical responsibilities in accordance with these requirements. The auditor applies International Standard on Quality Control (ISQC) 1 and therefore maintains a comprehensive quality control system including documented policies and procedures regarding compliance with ethical requirements, professional standards and applicable legal and regulatory requirements. Auditor’s Responsibilities In accordance with the Engagement Letter we will express an opinion on whether the electronic tagging of the consolidated financial statements complies in all material respects with the Article 4 of ESEF RTS. We have conducted a reasonable assurance engagement in accordance with International Standard on Assurance Engagements ISAE 3000. The engagement includes procedures to obtain evidence on: • whether the tagging of the primary financial statements in the consolidated financial statements complies in all material respects with Article 4 of the ESEF RTS • whether the tagging of the notes to the financial statements and the entity identifier information in the consolidated financial statements complies in all material respects with Article 4 of the ESEF RTS • whether the ESEF-financial statements are consistent with the audited financial statements The nature, timing and extent of the procedures selected depend on the auditor’s judgement including the assessment of risk of material departures from requirements sets out in the ESEF RTS, whether due to fraud or error. We believe that the evidence we have obtained is sufficient and appropriate to provide a basis for our statement. Opinion In our opinion the tagging of the consolidated financial statement included in the ESEF financial statement of Nurminen Logistics Oyj for the year ended 31.12.2022 complies in all material respects with the requirements of ESEF RTS. Our audit opinion on the consolidated financial statements of Nurminen Logistics Oyj for the year ended 31.12.2022 is included in our Independent Auditor’s Report dated 14.3.2023. In this report, we do not express an audit opinion any other assurance on the consolidated financial statements. Helsinki 14.3.2023 Ernst & Young Oy Authorized Public Accountant Firm Juha Hilmola Authorized Public Accountant Head office Satamakaari 24 00980 Helsinki, Finland Tel. +358 10 545 00 [email protected] www.nurminenlogistics.com
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