NURMINEN LOGISTICS PLC’S INTERIM REPORT 1 JANUARY - 30 SEPTEMBER 2015

Nurminen Logistics Plc                                                 Interim report 5 November 2015 at 1:00 p.m.

Nurminen Logistics key figures 1 January - 30 September 2015

  • Net sales were EUR 34.2 million (2014: EUR 40.8 million).
  • Reported operating result was EUR -1.3 million (EUR -0.1 million).
  • Operating margin was -3.9% (-0.3%).
  • Operating result excluding non-recurring items was EUR -1.2 million (EUR 0.1 million).
  • EBT was EUR -3.1 million (EUR -1.8 million).
  • Net result was EUR -3.2 million (EUR -2.0 million).
  • Earnings per share, undiluted: EUR -0.24 (EUR -0.18).
  • Earnings per share, diluted: EUR -0.24 (EUR -0.18).
  • The company’s cash flow from operations was EUR 1,097 thousand (EUR -1,336 thousand).

Third quarter 1 July - 30 September 2015

  • Net sales were EUR 11.1 million (2014: EUR 12.6 million).
  • Reported operating result was EUR 0.0 million (EUR 0.2 million).
  • Operating margin was 0.0% (1.9%).
  • Operating result excluding non-recurring items was EUR 0.0 million (EUR 0.2 million).
  • EBT was EUR -0.9 million (EUR -0.4 million).
  • Net result was EUR -1.0 million (EUR -0.4 million).
  • Earnings per share, undiluted: EUR -0.07 (EUR -0.04).
  • Earnings per share, diluted: EUR -0.07 (EUR -0.04).
  • The company’s cash flow from operations was EUR 61 thousand (EUR 842 thousand).

Nurminen Logistics Plc announced on 11 September 2015 that the company has concluded an agreement for selling Nurminen Logistics Heavy Oy’s shares to Transport Company Ville Silvasti Oy. Share transaction has been validated on 30 September 2015 and the responsibility of Nurminen Logistics Heavy’s operations will be transferred to Transport Company Ville Silvasti as of 1 October 2015. The transaction has no significant impact on Nurminen Logistics’ result in 2015 or on Group’s consolidated balance sheet. The operations of Nurminen Logistics Heavy Oy have been taken into account in full in the interim report for the third quarter.

MARKO TUUNAINEN, PRESIDENT AND CEO:

“The development of the company’s operating result and net sales in the third quarter varied greatly between business units.

The demand for forwarding services remained at a good level in Finland during the review period, and the service area’s net sales and result remained good. Favourable trends in the flow of goods, particularly through the Vuosaari harbour, along with new clients and previously implemented efficiency improvement measures give reason for confidence regarding the continued positive development of Forwarding and Value Added Services business unit’s Finnish operations. The operating result of the unit’s Baltic companies, however, declined substantially compared to both the previous quarters and the previous year. Business environment of the Baltic companies is expected to remain challenging during the rest of the year.

The demand for the Railway Logistics business unit’s services was weak in Finland during the review period. The poor demand for the Finnish forestry and mechanical engineering industries in Russia had a negative impact on the unit’s net sales and result. The development of railway transport within Russia was more stable during the review period, but the significantly depreciated rouble had a negative impact on the reported net sales. Fluctuations in the value of the rouble have a significant effect on the Railway Logistics business unit’s net sales and result, and the future development of the rouble exchange rate is difficult to predict.

The Special Transports and Projects business unit’s special transport business was in line with targets during the review period, while the postponement of project start-ups weighed down the result of the project business. Nurminen Logistics Heavy Oy, the Group’s subsidiary operating in the special transport and project business, was sold in a share transaction finalised on 1 October 2015. The project business remains under Nurminen Logistics’ ownership, although its net sales were low during the review period. The order backlog of previously agreed projects has not yet been realised as the projects are on hold until the general investment climate improves, particularly in the CIS countries.

The company continues rationalizing its cost structure and profitability of all offices and services are monitored thoroughly. The company’s financial position remained moderate in spite of the challenging business environment. Previously concluded new property agreements and efficiency improvement measures have strengthened the company’s cash flow,” says Marko Tuunainen, President and CEO.

MARKET SITUATION IN THE REVIEW PERIOD

The third quarter of 2015 was weaker than the previous two quarters with respect to market conditions. The economic situation in Russia and the global demand for capital goods, in China, for example, was weaker than in the first half of the year. This was reflected as a decline in Finnish exports, even compared to the low levels recorded last year. However, exports of pulp and cardboard, in particular, remained at a good level and the company has a strong position and good clients in this segment.

NET SALES AND FINANCIAL PERFORMANCE 1 JANUARY – 30 SEPTEMBER 2015

The net sales for the review period amounted to EUR 34.2 million (2014: EUR 40.8 million), which represents a decrease of 16% compared to 2014. The reported operating result was EUR -1,328 (-115) thousand. The operating result includes non-recurring items of EUR -127 (-174) thousand. The comparative operating result was therefore EUR -1,201 (59) thousand. The non-recurring items in the review period were related to reductions in personnel.

The depreciation of the Russian rouble during the review period increased the company’s financial items by EUR 58 thousand. This exchange rate loss had no cash flow impact.

Railway Logistics

The Railway Logistics business unit’s net sales for the review period amounted to EUR 9,664 (2014: 14,124) thousand and the operating result was EUR 58 (972) thousand. The operating result includes non-recurring items of EUR -60 (-85) thousand. The comparative operating result was therefore EUR 118 (1,057) thousand. The operating result includes exchange rate gains on internal purchase invoices at the amount of EUR 0.2 million. The net sales and operating result of the Railway Logistics business unit showed a significant year-on-year decline in the review period, particularly due to lower transport volumes in traffic between Finland and Russia, as well as the weak rouble. The depreciation of the rouble had a negative impact of EUR 2.7 million on net sales and a negative impact of EUR 0.6 million on the operating result compared to the corresponding period last year.

Special Transports and Projects

The Special Transports and Projects business unit’s net sales for the review period amounted to EUR 5,131 (2014: 6,234) thousand and the operating result was EUR 76 (143) thousand. The operating result includes non-recurring items of EUR 0 (0) thousand. The comparative operating result was therefore EUR 76 (143) thousand. The business unit’s net sales declined significantly due to a decrease in volumes in project transport. Substantial fluctuations in volumes are typical of the project business. The decline in volumes had an impact on the operating result, which nevertheless showed a clear profit due to efficiency improvement measures in production operations.

Forwarding and Value Added Services

The net sales of the Forwarding and Value Added Services business unit for the review period amounted to EUR 19,791 (2014: 20,918) thousand and the operating result was EUR -1,462 (-1,230) thousand. The operating result includes non-recurring items of EUR -67 (-89) thousand. The comparative operating result was therefore EUR -1,395 (-1,141) thousand. The business unit’s net sales and operating result declined year-on-year, primarily due to weaker demand among the Group’s subsidiaries in the Baltic countries. The development of the net sales and result of the Baltic companies has been substantially lower than in the previous year due to the difficult market situation and the uncertainty caused by Russia. The net sales of the Baltic companies decreased by EUR 0.7 million, while their operating result declined by EUR 0.5 million year-on-year. The break-bulk cargo business at the Vuosaari terminal was at a higher level than in the comparison period, and pulp, paper and forest industry volumes at the Vuosaari terminal grew compared to both the previous quarter and the comparison period. Demand for services at the Kotka, Hamina and Luumäki terminals was weaker than in the comparison period. Demand for forwarding services remained stable.

NET SALES BY UNIT 1-9/2015 1-9/2014 1-12/2014
EUR 1,000
Railway Logistics 9,664 14,124 17,935
Special Transports and Projects 5,131 6,234 7,794
Forwarding and Value Added Services 19,791 20,918 27,778
Eliminations -354 -453 -734
Total 34,232 40,823 52,774

OPERATING RESULT BY UNIT 1-9/2015 1-9/2014 1-12/2014
EUR 1,000
Railway Logistics 58 972 2,686
Special Transports and Projects 76 143 163
Forwarding and Value Added Services -1,462 -1,230 -1,521
Total -1,328 -115 1,328

NET SALES AND FINANCIAL PERFORMANCE 1 JULY - 30 SEPTEMBER 2015

The net sales for the third quarter amounted to EUR 11.1 million (2014: EUR 12.6 million), which represents a decrease of 11% compared to 2014. The reported operating result was EUR 1 (234) thousand. The operating result includes non-recurring items of EUR 0 (0) thousand. The operating result for the third quarter was improved by unrealised exchange rate gains resulting from the depreciation of the Russian rouble by EUR 0.9 million.

The net sales of Railway Logistics declined year-on-year, primarily due to the depreciation of the rouble. The decline in net sales was also attributable to lower volumes between Finland and Russia. Compared to the corresponding period last year, the value of the rouble had a negative impact of EUR 0.9 million on net sales and a positive impact of EUR 0.3 million on the operating result.

The net sales of the Special Transports and Projects increased compared to the corresponding period in 2014. The business unit’s operating result also improved due to growth in special transport services and the lower proportion of the project business.

In Forwarding and Value Added Services, net sales and the operating result declined in the third quarter year-on-year. The unfavourable development of the result was primarily attributable to the weak demand of the Baltic companies, which was due to the difficult market situation and the uncertainty caused by Russia. The net sales of the Baltic companies decreased by EUR 0.3 million, while their operating result declined by EUR 0.2 million year-on-year. The profit development of the business unit’s Finnish operations was good during the review period, particularly due to the improved profitability of the Vuosaari terminal.

NET SALES BY UNIT 7-9/2015 7-9/2014 Change
EUR 1,000
Railway Logistics 3,007 4,005 -998
Special Transports and Projects 1,882 1,673 209
Forwarding and Value Added Services 6,360 6,960 -600
Eliminations -114 -71 -43
Total 11,135 12,567 -1,432

OPERATING RESULT BY UNIT 7-9/2015 7-9/2014 Change
EUR 1,000
Railway Logistics 898 468 430
Special Transports and Projects -26 -58 33
Forwarding and Value Added Services -871 -175 -696
Total 1 234 -233

OUTLOOK

Nurminen Logistics expects its market conditions during the end of the year to be similar to the third quarter.

Nurminen Logistics expects its net sales, operating result without exchange rate changes and earnings per share to decline significantly from the 2014 levels. The main reasons for decline in net sales are sale of Nurminen Logistics Heavy Oy’s shares and the depreciation of the rouble. If realised, the planned fleet sales will have a positive impact on cash flow and financial position. The effect of fleet sales on the result depends on the rouble exchange rate at the time of the transaction. The predictability of the operating result involves significant uncertainty due to the development of the rouble exchange rate in the end of the year. Exchange rate fluctuations have a significant impact on the reported net sales and operating result.

The company’s long-term goal is to grow at a faster rate than the market, on average by over 15% per year. Going forward, over 50% of net sales will come from the growth markets of Russia and its neighbouring countries. The company’s further long-term goals are to improve profitability, achieve an operating profit level of 10 per cent and return on equity of 20 per cent.

SHORT-TERM RISKS AND UNCERTAINTIES

A significant decline of the Finnish economy and the Russian economy compared to the current situation would have a negative impact on the company’s operations and result. The company has already taken steps to react to the Ukrainian crisis, which means that the further escalation of the crisis would only impact the company through the weakening of the Finnish economy and the Russian economy. Significant fluctuations in the rouble exchange rate have an impact on the Group’s reported result and financial position.

More detailed information about risk management can be found on Investors page on Nurminen Logistics’ website www.nurminenlogistics.com.

The company has received a total of 32 subsequent levy decisions from the National Board of Customs’ Eastern District Office in Lappeenranta, which state that the company and VG Cargo Plc, which has filed for bankruptcy, are liable to pay import taxes from the year 2009. The company’s liability for the import taxes is, at a maximum, EUR 0.5 million. The company does not consider itself liable for the aforementioned import taxes and has not recorded provisions for the associated costs. If there is a case for subsequent levy, the company’s view is that the levy should primarily be directed at the bankruptcy estate of VG Cargo Plc and be paid from its valid customs guarantee. The company has filed an appeal with the Helsinki District Court against the subsequent levy decisions made by the National Board of Customs.

FINANCIAL POSITION AND BALANCE SHEET

The company’s cash flow from operations was EUR 1,097 thousand. Cash flow from investments was EUR 267 thousand. Cash flow from financing activities amounted to EUR 1,891 thousand.

At the end of the review period, cash and cash equivalents amounted to EUR 4,790 thousand. The company’s financial position is moderate. The company’s financial position has improved as a result of the sale of Nurminen Logistics Heavy Oy and the property arrangement and share issue announced on 4 June 2015. If realised, the planned wagon fleet sales will stabilize company’s financial position. Liquidity remained satisfactory in the review period.

On 27 February 2015, Nurminen Logistics signed a 12-month financing agreement relating to its continuing business operations with its financing banks. The financing agreement includes covenants that are assessed on a quarterly basis.

The covenants of the Group’s loans from financial institutions, namely the ratio of net debt to operating margin and the equity ratio, were breached as of the interim report date of 30 September 2015. The Group has received a commitment from its creditors confirming that the breach of the covenants in the third quarter will not have any consequences on the Group. The company is negotiating long-term financing method which will enable the development of operations.

Nurminen Logistics Plc has agreed with Ilmarinen Mutual Pension Insurance Company on an arrangement concerning the lease payment schedule of terminals located at the Vuosaari harbor as well as in Luumäki, Niirala and Vainikkala. A proportion of leases allocated for years 2015–2021 will, as an advanced payment, be paid to Ilmarinen by means of 13.5 million euro loans granted by Ilmarinen to the company. The rest of the originally agreed lease will yet be paid during the lease period. As part of the agreement related to the lease payments, Nurminen Logistics Plc arranged a 1.7 million euro share issue. The Board of Directors of Nurminen Logistics Plc decided on a directed share issue in order to allow the immediate implementation of the agreement and to minimize the arrangement costs. The decision on the share issue is based on the authorization granted by the Annual General Meeting of Shareholders on 7 April 2015.

In the share issue, a maximum total of 1,416,668 new shares in the company were offered, in deviation from the shareholders’ pre-emptive right, for subscription to certain members of the Board of Directors and the President and CEO of the company and/or the companies, in which they exercise control. The shares were subscribed as follows: Juha Nurminen and JN Uljas Oy, in which he exercises control, 1,291,667 shares in total, and Jukka Nurminen, Tero Kivisaari and Russian Capital Management Oy, in which Olli Pohjanvirta exercises control, each 41,667 shares.

The Group’s interest-bearing debt totalled EUR 33.0 million, while net interest-bearing debt amounted to EUR 28.2 million. The agreement with Ilmarinen Mutual Pension Insurance Company signed in June concerning the lease payment schedule of terminals located at the Vuosaari harbor as well as in Luumäki, Niirala and Vainikkala increased company’s long-term net interest-bearing debt by EUR 13.5 million.

The balance sheet total was EUR 56.0 million and the equity ratio was 15.3%.

CHANGES IN THE TOP MANAGEMENT

The Board of Directors of Nurminen Logistics Plc has elected Mr. Marko Tuunainen (M. Sc. Econ.) as President and CEO of the Company. Mr. Tuunainen started in his new position on 1 August 2015. This information was published in a stock exchange release on 23 June 2015.

Markku Puolanne, Michael Karjagin and Risto Holopainen have been appointed the new members of the Management Team of Nurminen Logistics Plc.

Markku Puolanne, aged 42, has been appointed the new Chief Financial Officer (CFO) and member of the Management Team of Nurminen Logistics. Puolanne has been working as a Group Financial Controller of the company. Before joining Nurminen Logistics, Markku Puolanne has acted among others as CFO and Group Financial Controller of subsidiary of the SRV Yhtiöt Plc in St. Petersburg (area of responsibility: Russia and Baltics) and as a Business Controller in Mesvac.

Michael Karjagin, aged 47, has been appointed the Vice President of Nurminen Logistics’s Forwarding business line and member of the Management Team of Nurminen Logistics. Karjagin has been working in the company as a Director of Forwarding business line and as a Sales Director last three years.

Risto Holopainen, aged 51, has been appointed the Vice President of Nurminen Logistics’s Terminal and Value Added Services business line and member of the Management Team of Nurminen Logistics. Holopainen has worked with Nurminen Logistics in different roles since 2002. As Director of Terminal and Value Added Services business line Holopainen has been working from 2013.

Maija Dietrich, aged 37, has been appointed the Vice President of Nurminen Logistics’ Railway Logistics business unit. Previously Dietrich was acting as HR and Development Director of Nurminen Logistics. Dietrich will continue in the Management Team.

This information was published in a stock exchange release on 7 September 2015.

Vice President of Nurminen Logistics responsible for Special Transports and Projects, Hannu Vuorinen, transferred to Transport Company Ville Silvasti Oy as of 1 October 2015 in the connection of sale of Nurminen Logistics Heavy Oy. This information was published in a stock exchange release on 11 September 2015.

CAPITAL EXPENDITURE

The Group’s gross capital expenditure during the review period amounted to EUR 360 (459) thousand, accounting for 1.1% of net sales. Depreciation totalled EUR 1.6 (1.9) million, or 4.7% of net sales.

GROUP STRUCTURE

During the review period Nurminen Logistics Plc sold its associated company Team Lines Estonia Oü (20.3%). The Group comprises the parent company, Nurminen Logistics Plc, as well as the following subsidiaries and associated companies, owned directly or indirectly by the parent (ownership, %): RW Logistics Oy (100%), Nurminen Logistics Services Oy (100%), Nurminen Logistics Heavy Oy (100%), Nurminen Logistics Finland Oy (100%), Nurminen Maritime Latvia SIA (51%), Pelkolan Terminaali Oy (20%), OOO Nurminen Logistics (100%), ZAO Terminal Rubesh (100%), Nurminen Logistics LLC (100%), UAB Nurminen Maritime (51%), Nurminen Maritime Eesti AS (51%) and Team Lines Latvia SIA (23%).

PERSONNEL

At the end of the review period the Group’s number of personnel stood at 211, compared to 233 on 31 December 2014. The number of employees working abroad was 46.

The Railway Logistics unit had 26 employees, the Special Transports and Projects unit had 19 employees and the Forwarding and Value Added Services unit had 153 employees. Management and administrative personnel comprised 13 employees.

SHARES AND SHAREHOLDERS

The trading volume of Nurminen Logistics Plc’s shares was 293,904 during the period from 1 January to 30 September 2015. This represented 2.0% of the total number of shares. The value of the turnover was EUR 368,358. The lowest price during the review period was EUR 0.98 per share and the highest EUR 1.66 per share. The closing price for the period was EUR 1.13 per share and the market value of the entire share capital was EUR 16,356,083 at the end of the period.

At the end of the review period the company had 622 shareholders.

In 30 September 2015 the company held 20,275 of its own shares, corresponding to 0.2% of votes.

DECISIONS MADE BY THE EXTRAORDINARY GENERAL MEETING OF SHAREHOLDERS

Nurminen Logistics Plc's Extraordinary General Meeting of Shareholders held on 24 August 2015 made the following decisions:

The remuneration of the Chairman of the Board of Directors

The Extraordinary General Meeting of Shareholders resolved that the remuneration of the Chairman of the Board will be EUR 10,000 per month plus car benefit with the maximum value of EUR 1,600 per month and telephone benefit in addition to the remuneration agreed upon in the Annual General Meeting on 7 April 2015.

The Annual General Meeting of Shareholders on 7 April 2015 resolved that for the Chairman of the Board remuneration level will be as follows: annual remuneration of EUR 40,000 and a meeting fee of EUR 1,000 per meeting for the Board and Board Committee meetings.

Composition and the number of members of the Board of Directors

The Extraordinary General Meeting of Shareholders resolved that the number of members of the Board of Directors will be five until the end of the next Annual General Meeting and thus complementing the Board of Directors with one member. The Extraordinary General Meeting of Shareholders elected Olli Pohjanvirta as a Board Member and to be chosen as the Chairman of the Board of Directors. The current Chairman of the Board of Directors Tero Kivisaari would continue as a Member of the Board of Directors. The Chairman’s duties include, in addition to managing the Board of Directors, promoting projects in line with the company’s strategy, especially in the rail transport market as well as taking care of financing and investor relations.

DECISIONS MADE BY THE ANNUAL GENERAL MEETING OF SHAREHOLDERS

Nurminen Logistics Plc's Annual General Meeting of Shareholders held on 7 April 2015 made the following decisions:

Adoption of the financial statements and resolution on the discharge from liability

The Annual General Meeting of Shareholders confirmed the company's financial statements and the Group's financial statements for the financial period 1 January 2014 - 31 December 2014 and released the Board of Directors and the President and CEO from liability.

Payment of dividend

The Annual General Meeting of Shareholders approved the Board's proposal that no dividend shall be paid for the financial year 1 January 2014 - 31 December 2014.

Composition and remuneration of the Board of Directors

The Annual General Meeting of Shareholders resolved that the Board of Directors shall consist of four (4) ordinary members. The Annual General Meeting of Shareholders re-elected the following ordinary members to the Board of Directors: Tero Kivisaari, Juha Nurminen, Jukka Nurminen and Alexey Grom. In its organising meeting immediately following the Annual General Meeting of Shareholders, the Board of Directors elected Tero Kivisaari as the Chairman of the Board. The Board of Directors also appointed an Audit Committee. The members of the Audit Committee are Jukka Nurminen and Alexey Grom.

The Annual General Meeting of Shareholders resolved that for the members of the Board elected at the Annual General Meeting for the term ending at the close of the Annual General Meeting in 2016 remuneration level will be as follows: annual remuneration of EUR 40,000 for the Chairman and EUR 20,000 for the other members. In addition, a meeting fee of EUR 1,000 per meeting for the Board and Board Committee meetings shall be paid for each member of the Board living in Finland and EUR 1,500 per meeting for a member of the Board living outside Finland. 50 per cent of the annual remuneration will be paid in the form of Nurminen Logistics Plc’s shares and the remainder in money. A member of the Board of Directors may not transfer shares received as annual remuneration before a period of three years has elapsed from receiving shares.

Authorising the Board of Directors to decide on the issuance of shares as well as the issuance of options and other special rights entitling to shares

Annual General Meeting authorised the Board to decide on issuance of shares and/or special rights entitling to shares pursuant to chapter 10 section 1 of the Finnish Companies Act.

Based on the aforesaid authorisation the Board of Directors is entitled to release or assign, either by one or several resolutions, shares and/or special rights up to a maximum equivalent of 20,000,000 new shares so that aforesaid shares and/or special rights can be used, e.g., for the financing of company and business acquisitions corporate and business trading or for other business arrangements and investments, for the expansion of owner structure, paying of remuneration of the Board members and/or for the creating incentives for, or encouraging commitment in, personnel.

The authorisation gives the Board the right to decide on share issue with or without payment. The authorisation for deciding on a share issue without payment also includes the right to decide on the issue for the company itself, so that the authorisation may be used in such a way that in total no more than one tenth (1/10) of all shares in the company may from time to time be in the possession of the company and its subsidiaries.

The authorisation includes the right whereby the Board of Directors is entitled to decide of all other issues of shares and special rights. Furthermore, the Board of Directors is entitled to decide on share issues, option rights and other special rights, in every way, as the same as General Meeting could decide. The authorisation also includes right to decide on directed issues of shares and/or special rights.

The authorisation shall remain in force until 30 April 2016.

Auditor

KPMG Oy Ab, Authorised Public Accountant audit-firm, was re-elected as Nurminen Logistics Plc's auditor. Mr. Ari Eskelinen, APA, acts as the responsible auditor. The auditor's term ends at the end of the first Annual General Meeting following the election. Auditor’s fee will be paid in accordance with the auditor´s invoice accepted by the company.

DIVIDEND POLICY

The company’s Board of Directors has on 14 May 2008 determined the company’s dividend policy, according to which 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.

AUTHORISATIONS GIVEN TO THE BOARD

Authorising the Board of Directors to decide on the issuance of shares as well as the issuance of options and other special rights entitling to shares

Annual General Meeting authorised the Board to decide on issuance of shares and/or special rights entitling to shares pursuant to chapter 10 section 1 of the Finnish Companies Act.

Based on the aforesaid authorisation the Board of Directors is entitled to release or assign, either by one or several resolutions, shares and/or special rights up to a maximum equivalent of 20,000,000 new shares so that aforesaid shares and/or special rights can be used, e.g., for the financing of company and business acquisitions corporate and business trading or for other business arrangements and investments, for the expansion of owner structure, paying of remuneration of the Board members and/or for the creating incentives for, or encouraging commitment in, personnel.

The authorisation gives the Board the right to decide on share issue with or without payment. The authorisation for deciding on a share issue without payment also includes the right to decide on the issue for the company itself, so that the authorisation may be used in such a way that in total no more than one tenth (1/10) of all shares in the company may from time to time be in the possession of the company and its subsidiaries.

The authorisation includes the right whereby the Board of Directors is entitled to decide of all other issues of shares and special rights. Furthermore, the Board of Directors is entitled to decide on share issues, option rights and other special rights, in every way, as the same as General Meeting could decide. The authorisation also includes right to decide on directed issues of shares and/or special rights.

The authorisation shall remain in force until 30 April 2016.

OTHER EVENTS DURING THE REVIEW PERIOD

Closing of the sale of Nurminen Logistics Heavy’s shares

Nurminen Logistics Plc announced on 30 September 2015 that share transaction that was announced on 11 September 2015 has been validated on 30 September 2015 and the responsibility of Nurminen Logistics Heavy’s operations will be transferred to Transport Company Ville Silvasti as of 1 October 2015. This arrangement will strengthen Nurminen Logistics’ financial structure, clarify company’s service offering and provide even better opportunities for developing core business operations. The transaction has no significant impact on Nurminen Logistics’ result in 2015 or on Group’s consolidated balance sheet.

Nurminen Logistics Plc to sell its subsidiary Nurminen Logistics Heavy Oy

Nurminen Logistics Plc announced on 11 September 2015 that Nurminen Logistics Plc has concluded an agreement for selling Nurminen Logistics Heavy Oy’s shares to Transport Company Ville Silvasti Oy. Senior Vice President of Nurminen Logistics responsible for Special Transports and Projects and a member of Management Team, Hannu Vuorinen will stay in Nurminen Logistics Heavy in the transaction. The project business that earlier belonged to Nurminen Logistics Heavy will remain with Nurminen Logistics. No changes will be made to the ownership of the handling hall for heavy goods at Vuosaari terminal either, but the hall will remain in the ownership of Nurminen Logistics.

This arrangement will strengthen Nurminen Logistics’ financial structure, clarify company’s service offering and provide even better opportunities for developing core business operations. In future, we will focus on providing forwarding, terminal and value added services in Finland’s most important import and export ports and border-crossing points, on railway logistics in Finland, Russia and CIS area and on project transport business.

Nurminen Logistics Heavy will move into the possession of Transport Company Ville Silvasti on 1 October 2015. With the transaction, Ville Silvasti will become the largest company in Finland to offer special transport services. The transaction has no significant impact on Nurminen Logistics’ result in 2015.

Changes in Nurminen Logistics’ Board of Directors

Nurminen Logistics Plc announced on 7 September 2015 that Olli Pohjanvirta has been elected as a chairman of the Board of Directors. Previously Pohjanvirta has acted as a President and CEO and as a chairman of the Board of the company. Former chairman of the Board Tero Kivisaari will continue as a member of the Board.

Change in Nurminen Logistics Plc’s number of shares

Nurminen Logistics Plc announced on 31 July 2015 that the Board of Directors has on 8 July 2015 resolved to issue 100,000 new shares in the company to the company without consideration. The shares to be issued shall be used for the payment of the remuneration of the Board members and/or for the creation of incentives for, or encouraging commitment in, personnel and therefore there is especially weighty financial reason for the afore-mentioned share issue.

After shares have been registered in the Trade Register, the total number of shares in Nurminen Logistics Plc increased to 14,574,410 and the total number of votes remained unchanged and is 14,474,410.

Notice for Nurminen Logistics Plc’s Extraordinary General Meeting

On 31 July 2015, the company announced that notice is given to the shareholders of Nurminen Logistics Plc to the Extraordinary General Meeting to be held on Monday, 24 august 2015 at 1:00 p.m. at the address Satamakaari 24, 00980 Helsinki, Finland.

Nurminen Logistics has sold 70 covered wagons

On 2 April 2015, the company announced plans to enhance the efficiency of its wagon fleet in Russia by selling part of the fleet. In line with this plan, in July the company sold 70 of its oldest covered wagons, which were manufactured in 2005–2006.

Nurminen Logistics to issue new shares in the company to the company without consideration

Nurminen Logistics Plc announced on 8 July 2015 that the shareholders of the Company have on 7 April 2015 authorised the Board of Directors to decide on issuance of shares and/or special rights entitling to shares pursuant to chapter 10 section 1 of the Finnish Companies Act. Based on the aforesaid authorisation the Board of Directors is entitled to release or assign, either by one or several resolutions, shares and/or special rights up to a maximum equivalent of 20,000,000 new shares so that aforesaid shares and/or special rights can be used, e.g., for the financing of company and business acquisitions corporate and business trading or for other business arrangements and investments, for the expansion of owner structure, paying of remuneration of the Board members and/or for the creating incentives for, or encouraging commitment in, personnel.

Pursuant to the aforementioned authorization, the Board of Directors has on 8 July 2015 resolved to issue 100,000 new shares in the company to the company without consideration. The shares to be issued shall be used for the payment of the remuneration of the Board members and/or for the creation of incentives for, or encouraging commitment in, personnel and therefore there is especially weighty financial reason for the afore-mentioned share issue.

Disclosure notification under chapter 2, section 9 of the Securities Market Act

Nurminen Logistics Plc announced on 1 July 2015 that it has received the following disclosure notifications of changes in portions of holdings, pursuant to the Securities Markets Act.

JN Uljas Oy has announced to Nurminen Logistics Plc that as a part of the 4th June 2015 announced directed share issue, JN Uljas Oy subscribed 1,250,000 new shares which are now registered in the Trade Register. Due to the above mentioned transaction JN Uljas Oy's portion of Nurminen Logistics Plc's total number of shares and voting rights has increased over 20 per cent (1/5). JN Uljas Oy's share capital now comprises 3,099,388 Nurminen Logistics Plc's shares which are equivalent to 21.4% of Nurminen Logistics Plc's share capital and voting rights. Before the transaction JN Uljas Oy's share capital comprised 1,849,388 shares (14.2% shares and votes).

JN Uljas Oy (business ID 0717307-8) is a company controlled by member of Nurminen Logistics Plc’s Board of Directors Juha Nurminen. In addition Juha Nurminen controls directly or indirectly Nurminen Logistics Plc's shares and votes as follows: Juha Nurminen owns directly 5,575,546 shares (38.5% of the share capital and votes).

Nurminen Logistics Plc nominates new President and CEO

Nurminen Logistics Plc announced on 23 June 2015 that the Board of Directors of Nurminen Logistics Plc has elected Mr. Marko Tuunainen (M. Sc. Econ.) as President and CEO of the Company. Mr. Tuunainen has previously acted in the Company as SVP, Forwarding and Value added services business line. Mr. Tuunainen will start in the position of the President and CEO 1 August 2015 and will continue in his previous role in addition to other duties. The current Nurminen Logistics Plc's President and CEO Olli Pohjanvirta will act in his current position until 31 July 2015. After this Mr. Pohjanvirta will continue in the Company as a support for the new CEO until further notice. The Board of Directors is proposing to nominate Mr. Pohjanvirta as a new member of the Board.

Payment Arrangement for Terminal Leases and Directed Share Issue in Nurminen Logistics Plc

Nurminen Logistics Plc announced on 4 June 2015 that the company has agreed with Ilmarinen Mutual Pension Insurance Company on an arrangement concerning the lease payment schedule of terminals located at the Vuosaari harbor as well as in Luumäki, Niirala and Vainikkala. A proportion of leases allocated for years 2015–2021 will, as an advanced payment, be paid to Ilmarinen by means of 13.5 million euro loans granted by Ilmarinen to the company. The rest of the originally agreed lease will yet be paid during the lease period. As part of the agreement related to the lease payments, Nurminen Logistics Plc will arrange a 1.7 million euro share issue. The Board of Directors of Nurminen Logistics Plc has decided on a directed share issue in order to allow the immediate implementation of the agreement and to minimize the arrangement costs. The decision on the share issue is based on the authorization granted by the Annual General Meeting of Shareholders on 7 April 2015.

In the share issue, a maximum total of 1,416,668 new shares in the company were offered, in deviation from the shareholders’ pre-emptive right, for subscription to certain members of the Board of Directors and the President and CEO of the company and/or the companies, in which they exercise control. The shares were subscribed as follows: Juha Nurminen and JN Uljas Oy, in which he exercises control, 1,291,667 shares in total, and Jukka Nurminen, Tero Kivisaari and Russian Capital Management Oy, in which Olli Pohjanvirta exercises control, each 41,667 shares.

The share subscription price is EUR 1.20 per share. The share subscription price is based on the share price level of the company’s share, rounded up to the nearest full ten cents. The trade volume weighted average quotation of the company’s share in NASDAQ OMX Helsinki Ltd during 27 April–26 May 2015 is EUR 1.18 per share. The share subscription price will be credited to the reserve of the company’s invested unrestricted equity.

Nurminen Logistics Plc’s co-determination negotiations concluded

Nurminen Logistics Plc announced on 31 March 2015 its plans to adapt its operations in Finland regarding rail terminal services and forwarding services and in Russia regarding rail transport services. The co-determination negotiations in its subsidiary Nurminen Logistics Services Oy have been concluded. The personnel reductions in Finland are 6 lay-offs and 3 shifts to part-time employment. In Russia the personnel reductions are 4 lay-offs. By these measures Nurminen Logistics is preparing for decreased paper export volumes by rail to Russia. There is no increase in export volumes to Russia to be seen in 2015. This information was published in a stock exchange release on 28 April 2015.  

CFO Ari Viinikkala has resigned from Nurminen Logistics Plc

Nurminen Logistics announced on 13 April 2015 that Mr. Ari Viinikkala has resigned from his position as Nurminen Logistics Plc’s Chief Financial Officer and member of the Executive Board. He will leave his position in August 2015.

Nurminen Logistics plans to sell its railway wagons in Russia

Nurminen Logistics announced on 2 April 2015 its plans to enhance operation of the wagon fleet in Russia by selling a part of its wagons. Wagons for sale are not operating under fixed customer contracts, but they are operating in the spot market. Released financial funds will improve company's tightened financial position and the company will be able to efficiently develop its operation of leased wagon fleet in the growing segment of tank wagons. The company’s goal is to finalize this transaction during the second quarter of 2015.

Nurminen Logistics adjusts its operations in Finland and Russia

Nurminen Logistics announced on 31 March 2015 that it starts co-determination negotiations in its subsidiary Nurminen Logistics Services Oy. The company is planning to adapt its operations in Finland regarding rail terminal services and forwarding services and in Russia regarding rail transport services. According to preliminary estimates, the need for personnel reduction is estimated to be 9 man-years in Luumäki, Vartius, Imatra and Niirala. In Russia the adjustment requirement is estimated to be 4 man-years. By these measures Nurminen Logistics is preparing for decreased paper export volumes by rail to Russia. There is no increase in export volumes to Russia to be seen in 2015.  

Nurminen Logistics starts co-determination negotiations on the restructuring of the Group Communication function

Nurminen Logistics announced on 23 February 2015 that Nurminen Logistics is planning to implement cost savings by restructuring the Group Communication function. The planned cost savings aim to improve the cost structure of the Group Administration.

On 18 March 2015, the company announced that the negotiations have been concluded, and as an outcome of this, the Group Communication function’s work is reduced by 1.5 FTE.

EVENTS AFTER THE REVIEW PERIOD

The company had no significant events after the review period.

Disclaimer

Certain statements in this bulletin are forward-looking and are based on the management's current views. Due to their nature, they involve risks and uncertainties and are susceptible to changes in the general economic or industry conditions.

Nurminen Logistics Plc

Board of Directors

For more information, please contact: Marko Tuunainen, President and CEO, tel. +358 10 545 7011

DISTRIBUTION
NASDAQ OMX Helsinki
Major media
www.nurminenlogistics.com

Nurminen Logistics is a listed company established in 1886 that offers logistics services. The company provides high-quality forwarding, cargo handling and value added services as well as railway transports and related to it project transport services to its customers. The main market areas of Nurminen Logistics are Finland, Russia and its neighbouring countries.

TABLES

Tables concerning business units are presented in the verbal part of the interim report.

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME 1-9/2015 1-9/2014 1-12/2014
EUR 1,000    
NET SALES 34 232 40 823 52 774
Other operating income 139 401 465
Materials and services -15 727 -19 393 -24 600
Employee benefit expenses       -7 901 -8 413 -11 146
Depreciation, amortisation and impairment losses -1 606 -1 903 -2 351
Other operating expenses -10 466 -11 629 -13 813
OPERATING RESULT -1 328 -115 1 328
Financial income 108 77 82
Financial expenses -1 842 -1 657 -3 298
Share of profit in equity-accounted investees -24 -65 -57
RESULT BEFORE TAX -3 085 -1 760 -1 945
Income taxes   -88 -255 -396
PROFIT / LOSS FOR THE PERIOD -3 173 -2 015 -2 341
Other comprehensive income
Other comprehensive income to be reclassified to profit or loss in subsequent periods:
Translation differences -155 -2 041 -7 842
Other comprehensive income for the period after tax -155 -2 041 -7 842
TOTAL COMPREHENSIVE INCOME FOR THE PERIOD -3 329 -4 056 -10 183
Result attributable to
Equity holders of the parent company -3 252 -2 326 -2 793
Non-controlling interest 69 311 453
Total comprehensive income attributable to
Equity holders of the parent company -3 397 -3 799 -10 636
Non-controlling interest 69 307 453
EPS undiluted -0,24 -0,18 -0,21
EPS diluted -0,24 -0,18 -0,21

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME 7-9/2015 7-9/2014 Change
EUR 1,000    
NET SALES 11 135 12 567 -1 432
Other operating income 51 153 -102
Materials and services -5 197 -5 822 625
Employee benefit expenses       -2 870 -2 691 -179
Depreciation, amortisation and impairment losses -582 -618 36
Other operating expenses -2 536 -3 356 820
OPERATING RESULT 1 234 -233
Financial income 32 70 -38
Financial expenses -960 -656 -304
Share of profit in equity-accounted investees 0 -18 18
RESULT BEFORE TAX -927 -370 -557
Income taxes   -32 -33 0
PROFIT / LOSS FOR THE PERIOD -959 -403 -557
Other comprehensive income:
Other comprehensive income to be reclassified to profit or loss in subsequent periods:
Translation differences -2 126 -1 563 -563
Other comprehensive income for the period after tax -2 126 -1 563 -563
TOTAL COMPREHENSIVE INCOME FOR THE PERIOD -3 086 -1 966 -1 120
Result attributable to
Equity holders of the parent company -962 -495 -466
Non-controlling interest -8 93 -101
Total comprehensive income attributable to
Equity holders of the parent company -3 077 -2 058 -1 019
Non-controlling interest -9 93 -101
EPS undiluted -0,07 -0,04 -0,03
EPS diluted -0,07 -0,04 -0,03

CONSOLIDATED STATEMENT OF FINANCIAL POSITION 30.9.2015 30.9.2014 31.12.2014
EUR 1,000    
ASSETS
Non-current assets
Property, plant and equipment 15 825 27 987 23 360
Goodwill 9 516 9 516 9 516
Other intangible assets 241 388 345
Investments in equity-accounted investees 126 165 173
Receivables 9 222 35 35
Deferred tax assets 593 894 608
NON-CURRENT ASSETS 35 525 38 985 34 037
Current assets
Trade and other receivables 10 185 11 722 9 648
Current tax receivables 128 67 83
Cash and cash equivalents 4 790 1 916 1 530
Assets of disposal group classified as held for sale 5 412 0 0
CURRENT ASSETS 20 515 13 704 11 262
ASSETS TOTAL 56 040 52 689 45 299
EQUITY AND LIABILITIES
Share capital 4 215 4 215 4 215
Other reserves 21 355 19 655 19 655
Translation differences -7 643 -5 034 -7 679
Retained earnings -9 740 -2 746 -6 349
Non-controlling interest 383 691 833
EQUITY, TOTAL 8 569 16 781 10 674
Non-current liabilities
Deferred tax liability 470 383 426
Other liabilities 346 515 350
Financial liabilities 27 899 13 448 13 200
NON-CURRENT LIABILITIES 28 716 14 347 13 977
Current liabilities
Current tax liabilities 56 98 127
Financial liabilities 5 133 9 629 8 592
Trade payables and other liabilities 13 567 11 834 11 930
CURRENT LIABILITIES 18 755 21 561 20 649
TOTAL LIABILITIES 47 471 35 908 34 625
TOTAL EQUITY AND LIABILITIES 56 040 52 689 45 299

CONDENSED CONSOLIDATED CASH FLOW STATEMENT EUR 1,000 1-9/2015 1-9/2014 1-12/2014
CASH FLOW FROM OPERATING ACTIVITIES
Profit/Loss for the period -3 173 -2 015 -2 341
Gains and losses on disposals of property, plant and equipment and other non-current assets -132 -205 -19
Depreciation, amortisation and impairment losses 1 606 1 903 2 351
Unrealised foreign exchange gains and losses 25 364 1 530
Other adjustments 1 509 1 298 -901
Paid and received interest -1 062 -954 -1 294
Taxes paid -157 -241 -349
Changes in working capital 2 482 -1 488 575
Cash flow from operating activities 1 097 -1 336 -448
CASH FLOW FROM INVESTING ACTIVITIES
Proceeds from sale of property, plant and equipment and intangible assets 1 146 923 -490
Investments in property, plant and equipment and intangible assets -383 -437 758
Proceeds from sale of other investments 4 0 0
Given loans -500 0 0
Cash flow from investing activities 267 486 268
CASH FLOW FROM FINANCING ACTIVITIES
Share issue for cash 1 700 63 63
Changes in liabilities 545 -631 -1 556
Dividends paid / repayments of equity -354 -178 -178
Cash flow from financing activities 1 891 -745 -1 670
CHANGE IN CASH AND CASH EQUIVALENTS 3 255 -1 638 -2 022
Cash and cash equivalents at beginning of period 1 530 3 553 3 553
Cash and cash equivalents at end of period 4 790 1 915 1 530

A= Share capital
B= Share premium reserve
C= Legal reserve
D= Reserve for invested unrestricted equity
E= Share issue
F= Translation differences
G= Retained earnings
H= Non-controlling interest
I = Total

STATEMENT OF CHANGES IN EQUITY 1-9/2015 EUR 1,000 A B C D E F G H I
Equity 1.1.2015 4215 86 2378 17190 0 -7679 -6349 833 10674
Result for the period 0 0 0 0 0 0 -3242 69 -3173
Total comprehensive income for the period / translation differences 0 0 0 0 0 36 -191 0 -155
Other changes 0 0 0 1700 0 0 43 0 1743
Equity 30.9.2015 4215 86 2378 18890 0 -7643 -9739 383 8569

STATEMENT OF CHANGES IN EQUITY 1-9/2014 EUR 1,000 A B C D E F G H I
Equity 1.1.2014 4215 86 2378 17127 0 -4193 720 558 20891
Result for the period 0 0 0 0 0 0 -2326 311 -2015
Total comprehensive income for the period / translation differences 0 0 0 0 0 -841 -1200 0 -2041
Other changes 0 0 0 63 0 0 60 0 123
Equity 30.9.2014 4215 86 2378 17190 0 -5034 -2746 691 16781

MOVEMENTS IN FIXED ASSETS

Movements in fixed assets Tangible Intangible Total
EUR 1,000
Book value 1.1.2015 23 351 9 870 33 221
Additions 326 34 360
Disposals -922 0 -922
Depreciation, amortisation and impairment losses -1 402 -147 -1 549
Exchange rate differences -115 0 -115
Book value 30.9.2015 21 238 9 757 30 995

Movements in fixed assets Tangible Intangible Total
EUR 1,000
Book value 1.1.2014 31 492 10 046 41 539
Additions 442 18 459
Disposals -748 0 -748
Depreciation, amortisation and impairment losses -1 690 -160 -1 850
Exchange rate differences -1 509 0 -1 509
Book value 30.9.2014 27 987 9 904 37 891

RELATED PARTY TRANSACTIONS

The related parties comprise the members of the Board of Directors and Executive Board of Nurminen Logistics and companies in which these members have control. Related parties are also deemed to include shareholders with direct or indirect control or substantial influence.

Related party transactions 1-9/2015
EUR 1,000    
Sales 6
Purchases 202
Current liabilities 0

KEY FIGURES

KEY FIGURES 1-9/2015 1-9/2014 1-12/2014
Gross capital expenditure, EUR 1,000 360 459 506
Personnel 224 244 241
Operating margin % -3,9 % -0,3 % 2,5 %
Share price development
Share price at beginning of period 0,99 1,60 1,60
Share price at end of period 1,13 1,40 0,99
Highest for the period 1,66 1,72 1,73
Lowest for the period 0,98 1,36 0,98
Eguity/share EUR 0,57 1,23 0,75
Earnings/share (EPS) EUR, undiluted -0,24 -0,18 -0,21
Earnings/share (EPS) EUR, diluted -0,24 -0,18 -0,21
Equity ratio % 15,29 31,85 23,56
Gearing % 329,60 126,10 189,80

OTHER LIABILITIES AND COMMITMENTS

Contingencies and commitments, EUR 1,000 30.9.2015 30.9.2014 31.12.2014
Mortgages given 11 000 11 000 11 000
Book value of pledged subsidiary shares and -loan receivables 50 605 52 434 52 434
Other contingent liabilities 11 269 12 056 11 976
Rental obligations 73 497 62 357 60 131

ACCOUNTING POLICIES

The interim financial information has been prepared in accordance with IAS 34 'Interim Financial Reporting'. The IFRS recognition and measurement principles as described in the annual financial statements for 2014 have also been applied in the preparation of the interim financial information. Other adopted new and amended IFRS-standards and interpretations have not had significant impact on reported figures.

All figures have been rounded and consequently the sum of individual figures can deviate from the presented sum figure. Key figures have been calculated using exact figures. This interim report is unaudited.

Calculation of Key Figures

Equity ratio (%) =

Equity 
______________________________________ X 100
Balance sheet total – advances received 
 

Earnings per share (EUR) =

Result attributable to equity holders of the parent company 
_________________________________________________________ 
Weighted average number of ordinary shares outstanding
 

Equity per share (EUR) =

Equity attributable to equity holders of the parent Company
________________________________________
Undiluted number of shares outstanding at the end of the financial year

Gearing (%) =

Interest-bearing liabilities - cash and cash equivalents
____________________________________________ X 100
Equity

About Us

Nurminen Logistics is a listed company established in 1886 that offers logistics services. The company provides high-quality forwarding, cargo handling and value added services as well as railway transports and related to it project transport services to its customers. The main market areas of Nurminen Logistics are Finland, Russia and its neighbouring countries.

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