2023-06-08 13:00:00 CEST

2023-06-08 13:00:02 CEST


REGULATED INFORMATION

English
HLRE Holding Oyj - Interim report (Q1 and Q3)

HLRE Holding Plc´s interim report 1 February - 30 April 2023


 HLRE Holding Group

Report 1 February 2023 – 30 April 2023

Comparison figures in brackets refer to the corresponding period previous year.

Brief Look at February 2023 – April 2023

 

  • Q1 revenue decreased by 7% to EUR 25,9 EUR million (EUR 27,9 Million).
  • Q1 gross profit decreased to EUR 9,8 million (EUR 11,3 Million).
  • Q4 adjusted EBITDA was EUR 0,9 million (EUR 1,9 million).
  • Q4 net cash from operating activities was EUR 1,4 million (EUR -2,0 Million).

                   

 

 Key Figures

HLRE HOLDING GROUP                  

EUR Million

Feb 23 –Apr 23
Q1
Feb 22 –Apr 22
Q1
Feb 22 – Jan 23
Q1-Q4
Revenue 25,9 27,9 129,4
Gross profit 9,8 11,3 52,3
Gross margin,% 37,8 % 40,5 % 40,4 %
Adjusted EBITDA 0,9 1,9 10,8
EBIT -1,9 -0,5 2,5
Net cash from operating activities 1,4 -2,0 4,7

Company description

HLRE Holding Group (commonly known as Vesivek Group) is a leading provider of roof and roof product renovations offered primarily to detached and row houses in Finland and Sweden under the brand name Vesivek. In addition to roof and roof product installations, Vesivek provides underground drain renovations in eight locations in Finland. The Group also develops, manufactures, and sells high quality rainwater systems and roof safety products.

HLRE Holding Group operated in 14 locations in Finland and three locations in Sweden in April 2023 and employs around 800 employees currently on average. The Group has two in-house manufacturing facilities in Finland, steel roofing profile production in Pirkkala and manufacture of rainwater systems and roof safety products in Orimattila.

 

Management Overview of the first quarter

Q1 financial performance in roof and rainwater systems installation in Finland and roof renovation in Sweden were below forecasted. Underground drain renovation business in Finland performed close to forecast.

Group launched co-operation negotiations in Lahti unit in Finland in the beginning of January 2023. Co-operation negotiations completed on March 2023 leading termination of employment relationship of 12 persons no later than until the end of H12023 . As a result of the negotiations, the roof installation business of the Lahti unit will be discontinued during Q1/2023 and Vesivek Oy will continue in the Lahti economic area in the rainwater and roof safety business.  

At the beginning of April 2023, the Board of Directors of the Company issued a change negotiation proposal concerning the entire Kuopio unit of Vesivek Oy and Vesivek Salaojat Oy. Co-operation negotiations completed on the end of April 2023 leading termination of employment relationship of 7 persons no later than until the end of Q32023. As a result of the negotiations, the roof installation business of the Kuopio unit will be discontinued during Q1/2023 and Vesivek will continue in the Kuopio economic area only in the rainwater and roof safety and underground drain businesses.  

 

 

First quarter February 2023 - April 2023

Q1 revenue decreased by 7 % to EUR 25,9 Million (27,9 million). Short order backlog in roof installations in both Finland and Sweden led to inefficiency in installations and to weaker profitability. Gross profit was EUR 9,8 million (11,3 million) in Q12023.

Q1 reported EBITDA was EUR 0,0 million (1,5 million) and adjusted EBITDA EUR 0,9 million (1,9 million). Reported adjustments totaled to EUR 0,85 million including one-offs regarding restructuring costs in the businesses in Finland of EUR 0,6 million and other non-recurring costs of EUR 0,25 million. Impact of the adjustments to the operating cashflow in Q1 amounted to EUR 0,85 million (EUR 0,4 million).

Q1 net cash from operating activities was EUR 1,4 million (-2,0 million) mainly due to more effective management of working capital.  

 

Events after reporting date

HLRE Group Ltd and Vesivek Ltd issued a change negotiation initiative on 10th of May 2023. The negotiations concerned all employees of HLRE Group Ltd (excluding payroll personnel) and salaried employees of Vesivek Ltd (joint functions, unit management, sales personnel, profile production and workshop repair unit, excluding B2B sales personnel and site installation managers). Further, Oulu/Tornio, Nurmijärvi/Lohja, Kerava/Orimattila units were excluded .In the change negotiations the plans were to discuss about adapting and rearranging the operations in  HLRE Group Ltd and Vesivek Ltd to better meet the economic situation and weakened demand.

Negotiations completed on the end of May 2023. Final decisions about employment terminations and lay-offs will be concluded during June.

Group decided on May 2023 to close down the Oulu branch office in Tornio. Impact on personnel decrease is around 10 persons effective no later than end of July.

 

 

Outlook for the financial year 1 February 2023 – 31 January 2024

No outlook for the financial year 1 February 2023 – 31 January 2024.

 

Risks and uncertainties

The Group's revenues and operating profit are affected by general economic conditions, which are, in turn, influenced by many factors beyond the Group's control. The Group currently operates in Finland and Sweden. Currently, the majority of the Group's operations are located in Finland but growth in both markets, for example, by way of increasing market share and/or expanding the Group's product and service offering is an important factor in fulfilling the Group's strategic objectives. Respectively, the Group's revenue and operating profit are particularly susceptible to general economic conditions and perception of future general economic conditions in the Finnish and Swedish markets.

Uncertainty or adverse trends in general economic conditions could affect the Group's business and demand for the Group's products and services through, inter alia, affecting consumer confidence as well as through adverse impacts on the business activities of the Group's corporate clients purchasing the Group's rainwater systems and roof safety products. Importantly, the general economic conditions may adversely affect the level and cost of financing available to the Group's consumer and corporate clients to make investments in renovations and refurbishments. Moreover, increases in the costs of financing and decreases in the level of available financing may adversely affect the Group's ability to make investments and fulfil its strategic objectives and may have a material adverse effect on the Group's business, financial position and results. Through its manufacturing operations, the Group is furthermore exposed to the risk of fluctuations in certain commodity prices (such as steel, aluminium and wood) and energy prices (especially through fuel costs for vehicles) and increases in prices due to economic disruptions and changes in general market conditions may have an adverse effect on the Group's business, financial position and results. All of the factors mentioned above could harm the Group's operations and the Group cannot predict the ways in which the future economic environment and market conditions may affect the Group's operations.

In general, the frequency of accidents at construction sites is worth noticing and the Group operates in a business segment subject to extensive laws and regulations regarding the work environment. Despite required health and safety measures and, for example, the use of scaffoldings on its construction sites improving the safety of the personnel, the Group is exposed to the risk of, possibly even fatal, accidents at the workplace especially on its roof renovation sites but also at its manufacturing facilities. In addition to physical injuries, employees of the Group are exposed to risks related to hazardous substances as certain of the Groups renovation sites contain asbestos. Respectively, the Group must also comply with specific environmental regulations with respect to asbestos. Finnish legislation includes particularly stringent requirements for any activities involving asbestos and the safety requirements for such activities. Any failure to comply with the regulations concerning health and safety or asbestos related activities may result in liability for the Group and/or the Group’s permit being revoked. For example, if Group’s permit to handle asbestos would be revoked, the Group would need to stop all business activities relating to handling of asbestos and acquire the work through subcontractors. Moreover, all potential accidents and health impacts have an adverse effect on its personnel's well-being. The Group as an employer is exposed to the risks related to health and safety issues of its employees possibly resulting in reduced working capacity of employees.

The Group may, in the future, become in breach of financial covenants and other obligations in its financing agreements that constitute grounds for termination or acceleration. A failure by the Group to obtain necessary capital in the future, or obtaining financing on less favourable terms, may have an adverse effect on the Group's business, financial position and results. The Group issued a three-year senior secured bond in an amount of SEK 300 million (approximately EUR 28-30 million) in February 2021 including EUR 2 million Super Senior RCF maturing 6 months prior to the bond termination date.  A failure by the Group to refinance the bond and the SSRCF, or obtaining financing on substantially less favourable terms, have an adverse effect on the Group's business, financial position and results.

 

 

 

 

For more information

Jari Raudanpää, CFO

+358 40 566 6399

jari.raudanpaa@vesivek.fi

 

Condensed financial statements for the period ended 30 April 2023

Consolidated Statement of Comprehensive Income
 1000 EUR  1.2.2023-30.4.2023 1.2.2022-30.4.2022 1.2.2022-31.1.2023
REVENUE 25 907 27 931 129 455
Other operating income 282 356 1 064
Material and services -9 259 -9 888 -47 702
Employee benefits expense -11 185 -11 376 -49 747
Depreciation and amortisation -1 922 -1 949 -7 757
Other operating expenses -5 706 -5 549 -22 844
OPERATING PROFIT -1 883 -475 2 469
Finance income 83 153 2 018
Finance cost -1 073 -1 332 -4 450
Finance income and cost -990 -1 180 -2 432
PROFIT/LOSS BEFORE TAX -2 874 -1 655 36
Tax on income from operations 467 277 -374
PROFIT/LOSS FOR THE PERIOD -2 407 -1 378 -338
Profit attributable to:
Owners of the parent company -2 368 -1 376 -458
Non-controlling interests -39 -2 120
-2 407 -1 378 -338
Other comprehensive income:
Items that may be reclassified subsequently to profit or loss
Exchange differences on translating foreign operations 1 30 -147
Items that may be reclassified subsequently to profit or loss 1 30 -147
TOTAL COMPREHENSIVE INCOME -2 407 -1 348 -484
Total comprehensive income attributable to:
Owners of the parent company -2 368 -1 348 -591
Non-controlling interests -39 0 107
TOTAL -2 407 -1 348 -484
Consolidated Statement of Financial Position
 1000 EUR      30.4.2023 30.4.2022 31.1.2023
ASSETS
NON-CURRENT ASSETS
Goodwill 40 304 40 304 40 304
Intangible assets 764 712 976
Property, plant, equipment 25 036 26 050 26 261
Other non-current financial assets 48 48 48
Loan receivables 23 7 17
Non-current prepayments and accrued income (from others) 0 14 0
Deferred tax assets 625 405 235
NON-CURRENT ASSETS 66 801 67 540 67 841
CURRENT ASSETS
Inventories 15 351 18 207 15 756
Trade and other receivables 10 375 11 911 9 494
Loan receivables 53 625 625
Income tax receivable 475 236 158
Cash and cash equivalents 3 514 2 564 3 557
CURRENT ASSETS 29 767 33 542 29 394
ASSETS 96 568 101 082 97 235
EQUITY AND LIABILITIES
Owners of the parent company
Share capital 80 80 80
Reserve for invested unrestricted equity 18 002 18 002 18 002
Translation differences -150 11 -151
Retained earnings 7 146 8 560 9 511
Owners of the parent company 25 077 26 652 27 442
Non-controlling interests 33 -37 71
EQUITY 25 111 26 615 27 512
NON-CURRENT LIABILITIES
Finance and lease liabilities 23 831 50 951 50 349
Employee benefit obligation 427 422 427
Deferred tax liabilities 102 112 150
NON-CURRENT LIABILITIES 24 359 51 486 50 926
CURRENT LIABILITIES
Finance and lease liabilities 30 563 5 733 4 742
Other current liabilities 14 716 16 846 12 433
Derivatives 1 572 370 1 461
Income tax liabilities 246 33 161
CURRENT LIABILITIES 47 098 22 982 18 797
Liabilities 71 457 74 467 69 722
EQUITY AND LIABILITIES 96 568 101 082 97 235

Consolidated Statement of Cash Flows, indirect
 1000 EUR  1.2.2023-30.4.2023 1.2.2022-30.4.2022 1.2.2022-31.1.2023
Cash flows from operating activities
PROFIT/LOSS FOR THE PERIOD -2 407 -1 378 -338
Adjustments to the profit/loss for the period
Depreciation, amortisation and impairment 1 922 1 949 7 757
Financial income and expenses 915 768 3 437
Tax on income from operations -467 -277 374
Other adjustments 226 342 -1 051
Adjustments total 2 597 2 782 10 517
Working capital changes
Increase / decrease in inventories 405 -2 720 -394
Increase / decrease in trade and other receivables -538 -2 836 -429
Increase / decrease in trade payables 2 195 3 282 -934
Interest paid -675 -572 -2 483
Interest received 29 3 65
Other financial items -2 10 -203
Income taxes paid -204 -550 -776
Net cash from operating activities 1 399 -1 979 5 026
Cash flows from investing activities
Purchase of tangible and intangible assets -308 -411 -1 987
Proceeds from sale of tangible and intangible assets 112 200 245
Disposal of subsidiaries 0 0 8
Loans granted -10 0 -18
Proceeds from repayments of loans 4 2 21
Net cash used in investing activities -201 -208 -1 731
Cash flows from financing activities
Proceeds from sale of treasury shares 0 0 9
Proceeds from current borrowings 0 743 0
Repayment of current borrowings 0 -2 -6
Addition / deduction of current borrowings 0 4 0
Repayment of non-current borrowings 0 -1 0
Payment of lease liabilities -1 242 -1 195 -4 942
Net cash used in financing activities -1 242 -450 -4 938
Net change in cash and cash equivalents -43 -2 638 -1 644
Cash and cash equivalents, opening amount 3 557 5 201 5 201
Net increase/decrease in cash and cash equivalents -43 -2 638 -1 644
Effects of exchange rate fluctuations on cash held 0 0 0
Cash and cash equivalents 3 514 2 564 3 557
Cash and cash equivalents, other arrangements 0 0 0

Consolidated statement of changes in equity

 1000 EUR  Share capital Reserve for invested unrestricted equity Translation differences Retained earnings Total Non-controlling interests Total equity
EQUITY 1.2.2023 80 18 002 -151 9 511 27 442 71 27 512
Comprehensive income
Profit/loss for the period -2 368 -2 368 -39 -2 407
Other comprehensive income:
Translation differences 0 0 1 0 1 0 1
TOTAL COMPREHENSIVE INCOME 0 0 1 -2 368 -2 368 -39 -2 407
=DRAccountName(225409P,EN) 0 0 0 0 0 0 0
TOTAL EQUITY 30.4.2023 80 18 002 -150 7 142 25 074 33 25 107

Share capital Reserve for invested unrestricted equity Translation differences Accumulated earnings Total Non-controlling interests Total equity
               
EQUITY 1 Feb 2022 80 18002 -17 9935 28000 -37 27963
Comprehensive income              
Profit/loss for the period       -458 -458 120 -338
Other comprehensive income:              
Translation differences     -133   -133 -13 -147
TOTAL COMPREHENSIVE INCOME     -133 -458 -591 107 -484
Transactions with owners              
Acquisition of treasury shares              
Other changes       23 23 9 31
Total transactions with owners       23 23 9 31
Changes in ownership interests in subsidiaries              
Changes of non-controlling interests without change in control       10 10 -7 3
TOTAL EQUITY 31 Jan 2023 80 18002 -151 9510 27442 71 27512