Published March 27, 2020
Updated May 7, 2020
What measures has Aspo taken to protect its employees and ensure business continuity?
The safety of our employees is paramount to us.
On March 16, all Aspo Group businesses switched to teleworking to the maximum extent possible. This is how we strive to protect the health of our own employees, our customers and other stakeholders. Traveling abroad for work purposes is prohibited. Mandatory trips, such as ESL Shipping's ship maintenance, are done with caution. Domestic travel is also avoided, and all but the most critical customer meetings are handled remotely. Customer meetings are arranged with greater caution to minimize the risk of infection.
Despite these special arrangements, the business has continued to operate normally and our staff has adapted well to the new operating methods. We monitor Covid 19 cases daily and, to our delight, of the approximately one thousand Aspo Group employees none have been diagnosed with the disease.
Under exceptional circumstances, Aspo has further strengthened its management model, and both the Group Executive Committee and the Board of Directors meet regularly on a weekly basis. In addition, communication between management teams and Country Managers has been intensified in our businesses so that we can respond as quickly as possible to any changes in the market environment. All of these meetings are also remotely organized.
What is the impact of the coronavirus pandemic on Aspo Group's businesses?
The global coronavirus pandemic and related measures are causing significant changes in Aspo's business environment. Aspo is an industrial conglomerate and we estimate the timing and magnitude of the potential economic impact of the pandemic to vary by business segment. Aspo announced its Q1 2020 earnings on May 5, 2020, and you can read the full Q1 2020 interim report here.
Aspo's businesses have so far suffered relatively little from the weakened market situation caused by the coronavirus, but during the second quarter the company estimates that the market situation will deteriorate in all its business segments. Restrictions on movement and work enforced by various countries reduce the demand for products and transport services, hamper Telko's and Leipurin’s sales operations and slow down the movement of ESL Shipping's vessels, especially in ports. The pace of the market recovery and its timing after the coronavirus pandemic is difficult to predict, so the market outlook for the second half of 2020 cannot be estimated either.
All of the Group's businesses have responsibilities related to security of supply and it is therefore of paramount importance that we are able to safeguard the working conditions of our personnel, and ensure the efficiency of our supply chain and the operational reliability of our shipping business.
Even in exceptional times, Aspo's multidisciplinary structure and operating model provide security to ensure business continuity. Business risk is reduced, among other things, by the fact that Aspo's cash flows are divided into different business segments with different customer base and different cycles. Aspo has business operations in 18 countries, which also contributes to risk diversification.
How is Aspo’s liquidity position?
Aspo Group’s liquidity position is good. Aspo announced its Q1 2020 earnings on May 5, 2020, and the Group’s cash and cash equivalents totaled EUR 27.0 million at the end of Q1. In addition, the amount of committed revolving credit facilities signed between Aspo and its main financing banks was EUR 40 million at the end of the period, and the revolving credit facilities were fully unused.
The Group’s net cash flow from operating activities in January–March increased clearly from the comparative period to EUR 13.9 (1.9) million. The effect of the change in working capital to net cash from operating activities was EUR 3.8 (-7.9) million, with Telko’s improved inventory management having a positive impact on its improvement. As a result of low investment levels, the Group’s free cash flow increased to EUR 13.3 (-1.1) million.
There are no significant investments planned for 2020. You can read the full Q1 2020 interim report here.
After the end of the review period, Aspo issued a new hybrid bond of EUR 20 million with a fixed interest rate of 8.75 percent. The hybrid bond does not have a specified maturity date, but the company is entitled to redeem it for the first time in May 2022. At the same time, Aspo repurchased its hybrid bond of EUR 25 million (with an interest rate of 6.75%) at EUR 18.4 million. The repurchase was conditional on the issuance of a new hybrid bond. The unpurchased part, EUR 6.6 million, will be repaid on May 27, 2020.
What were the decisions of the Aspo Annual Shareholders’ Meeting?
The Annual Shareholders’ Meeting was held in Helsinki on May 4, 2020, using exceptional arrangements. Due to restrictions and recommendations resulting from the coronavirus pandemic, the company’s Board of Directors decided to change the original meeting date and place to protect the safety of the participants. As a result of changes in market conditions due to the pandemic, the company’s Board of Directors decided to change its original proposal for the distribution of profit given in conjunction with the financial statements release.
The Annual Shareholders' Meeting of Aspo Plc held on May 4, 2020, approved the company's and consolidated financial statements 2019 and discharged the members of the Board of Directors and the CEO from the liability. The shareholders approved the payment of a dividend totalling EUR 0.11 per share. The dividend will be paid to shareholders who are registered in the shareholders' register maintained by Euroclear Finland Oy on the record date of May 6, 2020. The dividend is paid on May 13, 2020.
In addition, the Annual Shareholders’ Meeting authorized the Board of Directors to decide on a payment of dividend in the maximum amount of EUR 0.11 per share, through one or several installments, at a later time when Aspo can more precisely estimate the effects of COVID-19 pandemic to the company’s business. The authorization is valid until the next Annual Shareholders’ Meeting. The company will separately disclose the possible dividend decision by the Board of Directors and in the same connection confirm the appropriate record and payment dates.
The Annual Shareholders’ Meeting also approved the Company’s Remuneration Policy and the amendment to the Charter of the Shareholder’s Nomination Board, as proposed by the Board of Directors and the Nomination Board.
We actively monitor developments in our operating environment and will report significant changes immediately if those occur.