2021-02-26 12:15:00 CET
2021-02-26 12:15:16 CET
REGULATED INFORMATION
Delete Group Oyj - Financial Statement Release
A STRONG FINISH TO A CHALLENGING YEAR
DELETE GROUP OYJ Stock Exchange Release 26 February 2021 at 1.15 p.m. (EET)
Financial Statements Bulletin January–December 2020 (IFRS, IAS 34, unaudited)
A STRONG FINISH TO A CHALLENGING YEAR
Demolition Services is reported in this report in accordance with IFRS 5 “Assets
Held for Sale and Discontinued Operations” and is not included in the financials
for continuing operations. More information is in the notes section.
KEY POINTS: OCTOBER–DECEMBER 2020
· Net sales decreased by 3% to EUR 32.4 (Q4 2020: 33.5) million
· EBITDA increased by EUR 0.5 million to EUR 2.2 (1.7) million
· EBIT increased by EUR 0.4 million to EUR -1.1 (-1.5) million
· Operative cash flow increased by EUR 2.2 million to EUR 9.6 (7.4) million
· Remaining Demolition Services was divested in January 2021
· Consolidated equity has been increased by EUR 34.8 million as a result of
successful financing restructuring in February 2021, being (pro forma) EUR 32.9
million at year end.
KEY POINTS: JANUARY–DECEMBER 2020
· Net sales decreased by 13% to EUR 116.8 (133.7) million
· EBITDA decreased by EUR -3.5 million to EUR 9.0 (12.5) million
· EBIT decreased by EUR 3.9 million to EUR -4.1 (-0.2) million
· Operative cash flow increased by EUR 7.1 million to EUR 8.8 (1.7) million
· Net debt decreased by 4% to EUR 118.3 (122.7) million
· Demolition Services businesses in Sweden were divested in March 2020
KEY FIGURES
[][][]
10 10 Change 1-12/2 1-12/2 Change
-12/20 -12/20 020 019
20 19
Net sales, MEUR 32.4 33.5 -3% 116.8 133.7 -13%
EBITDA[1)], MEUR 2.2 1.7 30% 9.0 12.5 -28%
Adjusted[2)] EBITDA, MEUR 4.8 2.6 84% 13.6 14.0 -3%
Adjusted EBITDA, % of sales 15.0% 7.8% 7.1% 11.6% 10.4% 1.2% pts
pts
EBIT, MEUR -1.1 -1.5 23% -4,1 -0.2 -2104%
Adjusted EBIT, MEUR 1.5 -0.5 377% 0.5 1.3 -62%
Adjusted EBIT, % of sales 4.7% -1.6% 6.3% 0.4% 1.0% -0.5% pts
pts
Profit (-loss) for the -1.6 -2.3 33% -10.2 -9.4 -8%
period, continued operations
MEUR
Profit (-loss) for the -23.4 -33.5 30% -30.2 -41.4 27%
period, MEUR
Operative cash flow, MEUR 9.6 7.4 30% 8.8 1.7 415%
Net debt[3)], MEUR 118.3 122.7 -4% 118.3 122.7 -4%
Post emergency services and firestop installation services have been
reclassified from Assets held for sale to Continued Operations (Cleaning
Services) in 2020. Comparative 2019 financials in the table above have been
reclassified accordingly.
Information about the formulas and Alternative Performance Measures are
presented in the notes section of this Financial Statements Bulleting. All the
figures presented are statutory unless stated otherwise..
OUTLOOK FOR 2021
The demand for Cleaning Services and Recycling Services are expected to
gradually recover in 2021. The Group’s efficiency and productivity are expected
to improve compared to the previous year.
Delete Group’s continued operations’ operating profit is expected to improve in
2021.
Due to the COVID-19 pandemic, the outlook contains more uncertainty than usual
and is based on the assumption that there are no material changes in the
operating environment or scheduled work postponements or cancellations due to
the pandemic.
TOMMI KAJASOJA, CEO OF DELETE GROUP:
“As expected, our profitability improved in the fourth quarter despite the
somewhat soft market demand, enabled by our internal productivity and efficiency
actions. The suppressed market conditions gradually improved in the fourth
quarter, but they were yet not up to the normal level.
2020 was a challenging year for Delete, but despite the COVID-19 driven demand
decline, we managed to improve our relative adjusted EBITDA. The improvements
required a strong effort from the organisation under the circumstances of
declining sales, tightening market pricing and some customer losses due to it.
We would like to thank our customers, investors and our skilled staff for the
continued confidence shown in us.
We completed two key efforts, with partially overlapping purposes, when we
announced the sale of our remaining Demolition Services business in Finland and
restructuring of our financing structure in December, both formally completed in
the first quarter of 2021. As a result, we are now aligned to execute our
strategy of becoming a focused and leading environmental services provider in
the Nordics, with a lowered exposure on projects. In addition, we have
reinforced our capital structure and equity position by EUR 34,8 million after
the year end, when a consent was reached with our bondholders regarding the
restructuring of our financing structure.
In the fourth quarter, net sales of Cleaning Services declined by 1% due to a
lower level of daily assignments activity than in the previous year, mainly in
the industrial segment. Responding to the lower demand, we managed to plan and
execute resourcing efficiently, partially enabled by temporary layoffs. As a
result, our EBITDA in the fourth quarter improved.
Recycling Services’ net sales declined by 10% in the fourth quarter, mainly due
to the pandemic-related slowdown of incoming waste volumes and as communicated
previously a large customer’s decision to insource their waste processing during
early 2020. The operative performance remained at a good level in Recycling
Services; however, the reported operating profit declined on the back of a
considerable increase in waste cost provisions. Our recycling plants are
currently in good operational shape and production processes are functioning
well, which is expected to improve our financial performance in 2021.
In addition to optimising the operative resources in a suppressed market, our
efficiency actions taken in 2020 decreased our administrative costs. Excluding
non-recurring items mainly related to divestment and financing projects, the
administrative costs decreased by over 40% for the full year, with further
actions being prepared. In order to secure operational capabilities, we have
continued our fleet maintenance programmes according to schedule.
The Demolition Services divestment was announced in December and completed in
January 2021. While the sales price was somewhat disappointing, it was a fair
reflection of the recent trading and uncertainties in the segment. Furthermore,
the divestment allows us to focus on executing our environmental services
focused strategy in 2021 and onward, hence we are no longer actively pursuing a
sale of our Recycling Services business.
We will continue to enforce tight cost and cash flow controls and prepare
ourselves for quick manoeuvring with health & safety as well as efficiency
aspects in mind should COVID-19-related issues interfere with the planned 2021
first half assignments. We will continue to follow the health & safety
precautions every day, protecting not only our employees but also our customers
and partners with whom we are in contact. Throughout the pandemic, we have
sustained a fully operational team with the ability to execute all tasks as
usual.”
OPERATING ENVIRONMENT
Cleaning services
The overall demand for cleaning services has been impacted by COVID-19 to some
degree, but the underlying long-term core demand is relatively resilient and
stable. Customers continue to demand capabilities to handle increasingly complex
assignments with high-quality environmental, health & safety standards, which
favours large professional players like Delete Group.
Recycling services
Increasing environmental awareness continues to drive improvements and new
regulations, such as EU’s 70% recycling target by 2020 and the landfill ban on
construction and demolition waste. Regulatory development in the EU Circular
Economy Action plan and national legislation as well as generally increasing
sustainability awareness continue to support the growing demand for recycling
services. The market demand for recycled fuel (REF) has continued at a low but
stabilised level and is expected to develop favourably through 2021.
NET SALES
In the fourth quarter, Delete Group’s net sales of continuing operations were
EUR 32.4 (33.5) million, representing a year-on-year decline of 3%. While the
general demand was gradually recovering, the COVID-19 implications were still
apparent.
The net sales of Cleaning Services were EUR 27.3 (27.6) million, declining by
1%. The shutdown season was longer than in a normal year, extending well into
the fourth quarter, which mitigated some of the softness in general demand for
daily works, especially in the industrial segment.
Recycling Services’ net sales declined by 10% to EUR 6.5 (7.2) million showing
gradual recovery after the even weaker second and third quarters, affected by
the COVID-19-related temporary slowdown, which covered the majority of the
decline. Loss of a key customer earlier in 2020, which decided to insource its
waste processing, also had an adverse effect on the sales volume.
The Group’s net sales in January–December amounted to EUR 116.8 (133.7) million.
The decline of 11% is mainly caused by COVID-19- driven lower demand for daily
maintenance services for the industrial cleaning segment, postponed shutdowns
and the COVID-19-related slowdown of waste volumes, but also to some degree due
to some customer losses during the year on the back of tightening competition
and pricing in addition to the Recycling Services’ key customer insourcing
decision.
NET SALES BY SEGMENT
MEUR 10-12/2020 10-12/2019 Change 1-12/2020 1-12/2019 Change
Cleaning Services 27.3 27.6 -1% 98.6 110.7 -11%
Recycling Services 6.5 7.2 -10% 23.4 28.1 -17%
Eliminations -1.3 -1.2 5% -5.2 -5.1 3%
Group total 32.4 33.5 -3% 116.8 133.7 -13%
Post emergency services and firestop installation services have been
reclassified from Demolition Services to Cleaning Services in 2020. Comparative
2019 sales have been reclassified accordingly.
FINANCIAL PERFORMANCE
The Group’s adjusted operating profit (EBIT) during the fourth quarter of 2020
improved considerably, by EUR 2.1 million from the previous year to EUR 1.5 (
-0.5) million. The adverse volume effect of declined sales was surpassed by
improved productivity and lower cost base for Administration.
In the fourth quarter, Cleaning Services’ EBIT-% improved to 7% (4%) enabled by
productivity and efficiency control improvements, despite the slightly declined
sales. Productivity was well managed by operational resource planning and
temporary layoffs.
Recycling Services’ operational performance continued at an improved level in
the fourth quarter. However, the reported result of -10% (5%) EBIT, was
considerably affected by increased waste disposal cost provision on the back of
unit cost level increases for stored REF produced in previous periods.
The Group’s adjusted EBIT for January–December 2020 amounted to EUR 0.5 (1.3)
million. The Group’s adjusted EBIT was negatively impacted by Cleaning Services’
profitability, which suffered from the low sales due to postponed shutdowns and
lower than normal daily assignment demand. Due to lower volumes and considerable
increases in the REF inventory cost provision, Recycling Services’ adjusted
profitability decreased from the previous year, while reduced administration
cost base had a positive impact on the Group’s adjusted EBIT. Affecting
comparability, non-recurring items such as costs for divestment processes and
restructuring of the financing, increased from previous year by EUR 3.1 million
to EUR 4.6 million, of which majority is reported under Administration.
EBITDA BY SEGMENT
MEUR 10-12/2020 10-12/2019 Change 1-12/2020 1-12/2019 Change
Cleaning Services 4.4 3.1 40% 14.5 17.7 -18%
Recycling Services 0.4 1.0 -59% 2.6 3.3 -21%
Administration -2.6 -2.5 -6% -8.1 -8.6 -5%
Group total 2.2 1.7 30% 9.0 12.5 -28%
EBIT BY SEGMENT
MEUR 10-12/2020 10-12/2019 Change 1-12/2020 1-12/2019 Change
Cleaning Services 2.0 1.2 72% 5.3 9.9 -47%
Recycling Services -0.6 0.4 -278% 0.6 0.7 -176%
Administration -2.5 -3.0 16% -8.8 -10.8 19%
Group total -1.1 -1.5 -23% -4.1 -0.2 -2104%
Post emergency services and firestop installation services have been
reclassified from Demolition Services to Cleaning Services in 2020. Comparative
2019 profitability have been reclassified accordingly.
In October–December, net financial expenses amounted to EUR -0.9 (-1.7) million
and in January–December to EUR -6.6 (-8.4). The decrease was mainly related to
an unrealised favourable SEK exchange rate translation effect on intercompany
lending. In October–December, profit before taxes amounted to EUR -2.0 (-3.6)
million and in January–December to EUR -10.6 (-9.4) million. In
October–December, enabled by deferred tax assets on net loss tax credits, the
income taxes had a favourable effect and amounted to EUR 0.5 (1.2) million and
in January–December to 0.5 (-0.0) million. In October–December, the net result
for the financial period for continuing operations amounted to EUR -1.6 (-2.3)
million and in January–December to EUR -10.2 (-9.4) million.
In October–December, the net result for the financial period including assets
held for sale amounted to EUR -23.4 (-31.6) million and in January–December to
EUR -30.2 (-42.1) million mainly affected by an asset impairment for the assets
held for sale of EUR -20.3 million.
FINANCING AND FINANCIAL POSITION
In October–December, cash flow from operating activities was EUR 9.6 (7.4)
million and for January–December EUR 8.8 (1.7) million. The increase in the
fourth quarter, and full year accordingly, was positively affected by adopted
factoring (non-recourse) financing, which at year end had an impact of EUR 3.9
million as reduced net working capital.
Delete Group’s cash and cash equivalents at the end of December 2020 including
cash in assets held for sale were EUR 7.8 (5.2) million. Before the completion
of the financial restructuring measures in February 2021, the Group’s interest
-bearing debt was EUR 126.0 (118.3) million, consisting mainly of a EUR 119.8
million secured notes, a EUR 4.0 million drawn revolving credit (SSRCF) and
lease liabilities. At year end, the Group had undrawn revolving credit
facilities of EUR 3.0 million to be used for general corporate purposes,
acquisitions and capital expenditure. The SSRCF’s quarterly maintenance covenant
for debt leverage of drawn RCF over adjusted EBITDA was complied with at the end
of December 2020.
At the end of December 2020, the Group’s net debt amounted to EUR 118.3 (122.4)
million, decreasing mainly due to improved cash flow.
The balance sheet total at the end of December 2020 was EUR 161.5 (195.7)
million, decreasing mainly because of an asset impairment of EUR -20.3 million
for the Assets held for sale. Property, plant and equipment totalled EUR 31.2
(34.5) million decreasing on the back of deferred capital expenditure in 2020.
The equity ratio[5)] before the successful capital restructuring in February
2020 was -1.2% (14.5%).
Under IFRS 5, assets held for sale are included in the Group’s balance sheet,
but are compiled and reported under separated specified line items. After an
impairment of EUR 20,3 million to the net asset value, the assets amounted to
EUR 17.0 million and EUR 8,1 million of liabilities. IFRS 5 implications are
reported in more detail in the notes section of this Financial Statements
Bulletin.
After the reporting period, the Group successfully completed the financial
restructuring measures announced on 16 December, with significant reduction of
interest bearing debt and new share capital raised with a net impact of EUR 35
million improved consolidated equity. The financial restructuring measures are
described in more detail in section Key events after reporting period.
Key 10 10-12/2019 Change 1-12/2020 1-12/2019 Change
figures -12/202
0
Return on -240.1% -74.9% -165% pts -229.9% -85.4% -144.5% pts
Equity, %
Net debt, 118.3 122.4 -3% 118.3 122.4 -3%
MEUR
Equity -1.2% 14.5% -15.7% pts -1.2% 14.5% -15.7% pts
ratio, %
PERSONNEL
Delete Group’s continuing operations employed 744 (739) people at the end of
December 2020. The average number of personnel in 2020 was 714 (703) in 2020.
CHANGES IN THE MANAGEMENT
The Extraordinary General Meeting of Delete held on 9 January 2020 appointed
Martin Forss, M. Sc. (Econ.), as a new member of the Board of Directors.
Convening after the Extraordinary General Meeting, the Board of Directors
meeting elected Mr Forss as the Chairman of the Board. The appointment followed
Åsa Söderström Winberg’s, M. Sc. (Econ.), request to release her from the duties
as the Chairman of Delete’s Board of Directors.
The Annual General Meeting of Delete Group Oyj Shareholders held on 8 April 2020
re-elected Martin Forss, Åsa Söderström Winberg, Ronnie Neva-aho and Christian
Schmidt-Jacobsen as members of Board of Directors. Convening after the Annual
General Meeting, the Board of Directors elected Martin Forss as its chairman.
In November 2020, Delete Group appointed from within the organisation Henri
Pesonen (M. Sc. Econ., born -82), and Raimo Huhtala (B. Eng., Electrical
engineering, born -61) as new members of Delete’s Management Team.
Composition of the Group Management Team as of 12 November 2020:
· Tommi Kajasoja, CEO
· Ville Mannola, CFO
· Janika Vilkman, General Counsel
· Henri Pesonen, Business Area Director, Recycling Services
· Raimo Huhtala, Business Area Director, Cleaning Services, Finland
· Peter Revay, Business Area Director, Cleaning Services, Sweden
CAPITAL EXPENDITURE AND CORPORATE TRANSACTIONS
In October-December 2020, capital expenditure in intangible and tangible assets
excluding acquisitions was EUR 0.5 (1.9) million. In January–December, capital
expenditure in intangible and tangible assets was EUR 2.1 (5.2) million. Capital
expenditure was low partially due to deferred maintenance investments in
preparation for COVID-19 related liquidity assurance.
On 5 March 2020, Delete Group announced it had completed the divestment of
Delete Heavy Demolition AB, a group company operating in the group’s Demolition
Services business area in Sweden. The transaction was completed by way of Delete
Sweden AB selling all shares in Delete Heavy Demolition AB to Lotus Maskin &
Transport AB.
On 13 March 2020, Delete Group announced it had completed the divestment of
Delete Special Demolition AB, a group company operating in the group’s
Demolition Services business area in Sweden. The transaction was completed by
way of Delete Sweden AB selling all shares in Delete Special Demolition AB to
Demox AB.
On 12 December 2020, Delete announced that Delete Finland Oy, a group company of
the Delete Group, had entered into an agreement regarding the divestment of
Delete Demolition Oy, a subsidiary operating in the Demolition Services business
area to Lotus Maskin & Transport AB. The Transaction was completed in January
2021. More information about the transaction can be found in section Key events
after reporting period.
There were no acquisitions during January–December.
R&D EXPENDITURE
In January–December 2020, R&D-related expenditure was immaterial and was related
to minor development of processes and tools.
KEY EVENTS AFTER THE REPORTING PERIOD
Delete Group announced on 16 December 2020 a restructuring proposal to the
noteholders of the senior secured notes issued by Delete Group Oyj. The
restructuring proposal included certain amendments to the terms and conditions
of Delete Group Oyj's senior secured notes, including a write-down the principal
of the notes with approximately EUR 24.8 million and an extension of the
maturity of the notes with three years, which were subject to certain
conditions. The conditions included, among others, an immediate redemption of
the notes in an aggregate amount of EUR 15 million and new equity investments by
Delete's shareholders in an aggregate amount of at least EUR 10 million as well
as further redemptions of EUR 10 million by the funds obtained from receivables
sold under Delete Group's (non-recourse) factoring arrangement in two
instalments of EUR 5 million.
On 15 January 2021, Delete announced the successful completion of a written
procedure regarding the senior secured notes, as proposed on 16 December 2020.
On 16 January 2021, an Extraordinary General Meeting of Delete Group Oyj
approved a new share issue of EUR 10 million, in order to raise capital for a
partial redemption of the outstanding notes, as required in the amended Terms
and Conditions, approved by the noteholders on 15 January.
On 29 January 2021, Demolition Services in Finland was divested with a purchase
price of EUR 7.3 million to Lotus Maskin & Transport AB.
On 5 February 2021, Delete announced that the conditions for effectiveness of
the amendments to the terms and conditions of its secured notes were satisfied
with the amendments to the Terms and Conditions becoming effective on the same
date, 5 February 2021.
On 12 February 2021, Delete made a EUR 20 million partial redemption of the
notes, consisting of the required EUR 15 million redemption as well as the first
EUR 5 million instalment to be made from the factoring proceeds, in accordance
with the amended Terms and Conditions and the conditions for such amendments,
financed by the new share issue, factoring proceeds and proceeds from the sale
of Demolition Services in Finland.
On 12 February 2021, Delete’s new super senior revolving credit facility (SSRCF)
with Collector Bank AB became effective, replacing the existing SSRCF with
Nordea Bank Plc. Nordea Bank Plc will continue to provide an EUR 2,000,000
guarantee facility to Delete.
The restructuring measures described above which took place in January-February
2021 are together referred to as the Restructuring.
On 25 February 2021, Delete issued a pro forma balance sheet of the restructured
balance sheet, where the net interest-bearing liabilities were reduced by EUR
44,8 million from 118.8 million to EUR 73.5 million and the Equity increased by
EUR 34,8 million from EUR -1.9 million to EUR 32.9 million and Equity ratio
improved from -1.2% to 23%.
The following unaudited pro forma financial information (‘pro forma
information’, ‘pro forma’) is presented to illustrate the impact of the
Restructuring on the results of operations and financial position of Delete
Group, had the Restructuring taken place as of 31 December 2020. This pro forma
information is presented for illustrative purposes only and is not a part of the
IAS 34 Financial Statements standard. The purpose of the pro forma information
is to illustrate the effects of the Restructuring, had they taken place at the
dates presented in this pro forma. Therefore, the pro forma information does not
illustrate the actual results of operations or financial position of Delete nor
the results of operations or financial position of Delete in the future. The pro
forma adjustments are based upon available information and assumptions. There is
no certainty that the assumptions used in the compilation of the pro forma
information will prove to be correct. The unaudited pro forma information has
been compiled in accordance with the Commission Regulation (EC) No 980/2019
appendix 20.
CONDENSED
CONSOLIDATED
PRO FORMA
STATEMENT OF
FINANCIAL
POSITION,
UNAUDITED
TEUR Reported Pro Pro forma
forma
adjust.
ASSETS 31.12.2020 31.12.2020
Total non 122 711 122 711
-current
assets
Current
assets
Trade and 12 673 -1 157 11 516
other
receivables
Cash and 7 752 14 7 766
cash
equivalents
Other 1 392 1 392
current
assets
Total 21 817 -1 143 20 674
current
assets
Assets held 16 952 -16 952 0
for sale
Total assets 161 481 -18 095 143 385
TEUR Reported Pro Pro forma
forma
adjust.
EQUITY AND 31.12.2020 31.12.2020
LIABILITIES
Equity
Reserve for 69 661 10 001 79 662
invested
non
-restricted
equity
Profit and -30 248 24 780 -5 468
loss for
the year
Other -41 329 -41 329
equity
Total equity -1 916 34 781 32 865
Non-current
liabilities
Interest 0 65 000 65 000
-bearing
financial
liabilities
Other non 9 569 9 569
-current
liabilities
Current
liabilities
Interest 114 084 -109 780 4 304
-bearing
financial
liabilities
Other 31 647 31 647
current
liabilities
Total 155 300 -44 780 110 520
liabilities
Liabilities 8 096 -8 096 0
to assets
held for
sale
Total equity 161 480 -18 095 143 385
and
liabilities
Pro forma adjustments:
1) Total current assets: EUR 1.1 million including increases of EUR 10.0 million
from new share capital and EUR 8.9. of divestment proceeds and cash from the
divested entity and decreases of EUR 20.0 million from partial repayment of the
senior secured notes
2) Assets held for sale: EUR 17.0 million write-off of divested assets, offset
by cash received as sale proceeds
3) Total equity: EUR 34.8 million includes EUR 10.0 million of new invested
capital and EUR 24.8 million from an equal write-off to the senior secured notes
4) Non-current liabilities: EUR 65.0 million increase from a reclassification of
the senior secured notes from current liabilities to non-current due to maturity
extension of the notes to April 2024
5) Current liabilities: EUR -109.8 million reduction of which EUR 65.0 million
reclassified as non-current liabilities due to the maturity extension of the
notes, EUR 20.0 million as partial repayment of the notes and EUR 24.8 million
of debt write-off.
6) Liabilities to assets held for sales: EUR 8.1 million write-off of divested
liabilities, offset by cash received as sale proceeds
SUMMARY OF SIGNIFICANT RISKS AND RISK MANAGEMENT
Delete Group conducts an extensive annual risk assessment analysis and, as a
result of which, risk management capabilities are updated and reviewed and
approved by the Board of Directors.
The Group’s key risks are divided into strategic, operative and financing risks.
Operational risks are mainly related to uncertainty and a lack of visibility due
to COVID-19, project execution and the integration of acquired businesses, both
in terms of quality and financially. The Group's business operations also
inherently involve risks, such as environmental, health and safety risks, as
well as dependence on suppliers and clients. The internal control environment is
under constant development to improve preventative measures.
Financing risks are mainly related to refinancing, credit and liquidity, all of
which may be further affected by COVID-19- related uncertainties.
Other uncertainties are related to the market environment as well as the
successful implementation of the Group’s transformation strategy, including
risks related to the outcome of the operational improvement plan for increased
profitability, uncertainty related to capturing synergies and risks related to
targeted bolt-on acquisitions, personnel and recruitments.
The Group has not identified other relevant changes that can be expected to have
a significant influence on the business, given the risks mentioned hereinabove,
at the end the fourth quarter in 2020.
SHARES AND SHAREHOLDERS
At year end 2020, the number of registered shares in Delete Group Oyj is
10,858,595 P-shares and 3,089,649 C-shares. Each share carries one vote. The
Group is owned by Ax DEL Oy (87% of the shares) and a group of key employees and
other minority investors (13%). The Group does not hold any of its own shares.
ANNUAL GENERAL MEETING AND BOARD AUTHORISATIONS IN EFFECT
The Annual General Meeting of Delete Group Oyj Shareholders held on 8 April 2020
adopted the Financial Statements and discharged the members of the Board of
Directors and the CEO from liability for the financial year 1 January–31
December 2019. The Annual General Meeting resolved that no dividend will be paid
for the fiscal year 2019.
Martin Forss, Åsa Söderström Winberg, Ronnie Neva-aho and Christian Schmidt
-Jacobsen were re-elected as members of Board of Directors. Convening after the
Annual General Meeting, the Board of Directors elected Martin Forss as its
chairman.
KPMG Oy Ab was elected to continue as the Auditor of the company and Teemu
Suoniemi, Authorised Public Accountant, will act as the Principal Auditor.
The Chairman of the Board will be paid EUR 50,000 and the Board members EUR
22,000 as remuneration for 2020. The appointed members of the Audit Committee
and the Project Committee will be paid EUR 4,000 as additional remuneration and
the appointed members of the Remuneration Committee EUR 2,000. Axcel
Management’s Christian Schmidt-Jacobsen will not be paid remuneration. It was
resolved that the remuneration for the Auditor shall be paid according to the
Auditor's invoice.
THE BOARD'S PROPOSAL TO THE ANNUAL GENERAL MEETING
The consolidated net profit for the year 2020 including assets held for sale
totalled EUR -30.2 million, and the net profit of the parent company was EUR
-19.9 million. The parent company’s distributable funds on 31 December 2020
totalled EUR 48.0 million.
The Board of Directors will propose to the Annual General Meeting, for no
dividend to be paid.
STATEMENT OF ACCOUNTING POLICIES FOR FINANCIAL STATEMENTS BULLETIN
This Financial Statements bulletin has been prepared according to the IAS 34
standard. The same accounting standards have been used as in the Financial
Statements.
Delete Group Oyj complies with half-yearly reporting according to the Finnish
Securities Markets Act and discloses interim reviews for the first three and
nine month’s periods of the year, in which key information regarding the
company’s financial situation and development will be presented. The financial
information presented in this Financial Statements bulletin is unaudited.
FINANCIAL CALENDAR 2021
Delete Group Oyj will publish the interim review January–March 2021 on 14 May
2021, the half year financial report January–June 2021 on 20 August 2021 and the
interim review January–September 2021 on 17 November 2021.
ALTERNATIVE PERFORMANCE MEASURES USED IN FINANCIAL REPORTING
Delete Group Oyj has adopted the guidelines of the European Securities and
Market Authority (ESMA) on Alternative Performance Measures. In addition to the
IFRS-based key figures, the company will publish certain other generally used
key figures that may, as a rule, be derived from the profit and loss statement
and balance sheet. The calculation of these figures is presented below.
According to the company’s view, these key figures supplement the profit and
loss statement and balance sheet, providing a better picture of the company’s
financial performance and position.
MEUR 10–12/2020 10–12/2019 1–12/2020 1–12/2019
EBIT -1.1 -1.5 -4.1 -0.2
Adjustments 2.6 0.9 4.6 1.5
Adjusted EBIT 1.5 -0.5 0.5 1.3
MEUR 10–12/2020 10–12/2019 1–12/2020 1–12/2019
EBITDA 2.2 1.7 9.0 12.5
Adjustments 2.6 0.9 4.6 1.5
Adjusted EBITDA 4.8 2.6 13.6 14.0
FORMULAS
[1)] EBITDA = operating profit + depreciation and amortisation costs
[2)] Adjustment definition: adjustments are material items outside the ordinary
course of business affecting comparability, e.g. acquisition related expenses,
restructuring related expenses and other material extraordinary costs.
[3) ]Net debt[ ]= interest bearing liabilities, lease liabilities and instalment
credit liabilities – cash and cash equivalent assets
[4) ]Organic growth: net sales from acquired businesses are considered inorganic
for 12 months after the acquisition, and not accounted for contributing to
organic growth for the said period.
[5) ]Equity ratio = equity / (assets - prepayments)
[6)] Net working capital = other than cash and cash equivalent current assets –
other than net debt related current liabilities
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Amounts in thousands of euros
Continuing operations
CONDENSED NOTES
Accounting policies
This Financial Statements Bulletin has been prepared according to the IAS 34
Interim Financial Reporting -standard. Delete Group Oyj complies with half
-yearly reporting according to the Finnish Securities Markets Act and discloses
interim reviews for the first three- and nine-month periods of the year, in
which key information regarding the company’s financial situation and
development will be presented. The financial information presented in this
Financial Statements bulletin is unaudited.
The accounting policies, which are applied in this Financial Statements Bulletin
are the same as those applied in the annual financial statements.
Assets held for sale and discontinued operations
In November 2019, Delete Group announced that it was exploring opportunities to
sell all or part of the Demolition Services business. The company has received
the required approvals for the divestments from the creditors and the sales was
announced on 16 December 2020 (completed in January 2021).
The Demolition Services business is reported in this report in accordance with
IFRS 5 “Assets Held for Sale and Discontinued Operations” and is not included in
the financial statements for continuing operations. The figures in the statement
of income and the items related to it, including comparison figures, have been
stated to show the discontinued operations separately from continuing
operations.
The net assets of the discontinued Demolition Services have been revaluated at
year end 2020 according to the agreed sale price, resulting in a EUR 20.3
million write-off to net assets with an equal adverse effect on discontinued
operations’ operating profit, Group’s net profit and the Group’s equity
accordingly.
Operating profit (EBIT)
Operating profit (EBIT) consists of sales and other operating income less the
costs of materials and services, costs of employee benefits and other operating
expenses as well as depreciation, amortisation and impairment losses. Exchange
rate differences resulting from working capital items are included in the
operating profit.
Financing
At year end 2020, Delete had initiated a written procedure to amend certain
terms and conditions of its outstanding senior secured notes, most notably a
three year extension of maturity and a partial EUR 24.8 million write-down of
the debt, conditional to a partial redemption of the notes and certain other
requirements. The process was successfully completed in February 2021, as
described in more detail under section Key events after the reporting period. As
the process was not yet completed at the Financial Statement’s’ date 31
December, Delete’s senior secured notes of EUR 109.8 million were reported as
current liabilities, maturing 19 April 2021.
SEGMENT REPORT
The Group has two reportable segments, Industrial Cleaning Services and
Recycling Services, which are the Group’s business areas. The reporting segments
have been aggregated from the group’s three operating segments: the operating
segments for Industrial Cleaning Services in Finland and Sweden have been
combined as a reportable segment as they are considered to be similar and having
similar economic characteristics. Demolition Services, which was previously
reported as a reportable segment, has been classified as discontinued
operations.
The Industrial Cleaning Services segment consists of a comprehensive industrial
service offering as well as property services, such as high-power vacuuming and
blowing services, industrial shutdown and maintenance, exposure vacuuming of
sewers and well emptying, industrial cleaning, blast cleaning services and
washing and cleaning of facades.
The Recycling Services Segment provides services such as recycling and waste
processing, reception of oily waste, open large waste container services and
crushed concrete in the Helsinki metropolitan area and in the Tampere region.
Segment information is based on IFRS accounting principles applied in the group,
and it is consistent with the group’s internal reporting.
The measure of profit or loss for the reportable segment is operating profit,
which is regularly reviewed by the Group’s management team to make decisions
about resources to be allocated to the segment and to assess its performance.
Administration costs are not allocated to segments but are presented separately.
Segment assets and liabilities are not presented as these are not regularly
monitored by the management team.
There is not a single external customer amounting to 10 per cent or more of the
Group’s revenues. Any transactions between segments are based on market prices.
Post emergency services and firestop installation services have been
reclassified from Demolition Services to Cleaning Services in 2020. Comparative
2019 profitability has been reclassified accordingly.
REVENUE STREAMS
BUSINESS COMBINATIONS
Delete Group had no business combinations during 2020. Sweden’s Demolition
business was divested in March 2020 and Finnish Demolition business in January
2021.
CHANGES IN INTANGIBLE ASSETS
CHANGES IN TANGIBLE ASSETS
CLASSIFICATION OF FINANCIAL ASSETS AND LIABILITIES
KEY EVENTS AFTER THE REPORTING PERIOD
Delete Group announced on 16 December 2020 a restructuring proposal to the
noteholders of the senior secured notes issued by Delete Group Oy. The
restructuring proposal included certain amendments to the terms and conditions
of Delete Group Oyj's senior secured notes, including a write-down the principal
of the notes with approximately EUR 24.8 million and an extension of the
maturity of the notes with three years, which were subject to certain
conditions. The conditions included, among others, an immediate redemption of
the notes in an aggregate amount of EUR 15 million and new equity investments by
Delete's shareholders in an aggregate amount of at least EUR 10 million as well
as further redemptions of EUR 10 million by funds obtained from receivables sold
under Delete Group's (non-recourse) factoring arrangement in two instalments of
EUR 5 million.
On 15 January 2021, Delete announced the successful completion of a written
procedure regarding the senior secured notes, as proposed on 16 December 2020.
On 16 January 2021, an Extraordinary General Meeting of Delete Group Oyj
approved a new share issue of EUR 10 million, in order to raise capital for a
partial redemption of the outstanding notes, as required in the amended Terms
and Conditions, approved by the noteholders on 15 January.
On 29 January 2021, Demolition Services in Finland was divested with a purchase
price of EUR 7.3 million to Lotus Maskin & Transport AB.
On 5 February 2021, Delete announced that the conditions for effectiveness of
the amendments to the terms and conditions of its secured notes were satisfied
with the amendments to the Terms and Conditions becoming effective on the same
date, 5 February 2021.
On 12 February 2021, Delete made a EUR 20 million partial redemption of the
notes, consisting of the required EUR 15 million redemption as well as the first
EUR 5 million instalment to be made from the factoring proceeds, in accordance
with the amended Terms and Conditions and the conditions for such amendments,
financed by the new share issue, factoring proceeds and proceeds from the sale
of Demolition Services in Finland.
On 12 February 2021, Delete’s new super senior revolving credit facility (SSRCF)
with Collector Bank AB became effective, replacing the existing SSRCF with
Nordea Bank Plc. Nordea Bank Plc will continue to provide an EUR 2,000,000
guarantee facility to Delete.
The restructuring measures described above which took place in January-February
2021 are together referred to as the Restructuring.
On 25 February 2021, Delete issued a pro forma balance sheet of the restructured
balance sheet, where the net interest-bearing liabilities were reduced by EUR 45
million from 118.8 million to EUR 73.5 million and the Equity increased by EUR
35 million from EUR -1.9 million to EUR 32.9 million and Equity ratio improved
from -1.2% to 23%.
The following unaudited pro forma financial information (‘pro forma
information’, ‘pro forma’) is presented to illustrate the impact of the
Restructuring on the results of operations and financial position of Delete
Group, had the Restructuring taken place as of 31 December 2020. This pro forma
information is presented for illustrative purposes only and is not a part of the
IAS 34 Financial Statements standard. The purpose of the pro forma information
is to illustrate the effects of the Restructuring, had they taken place at the
dates presented in this pro forma. Therefore, the pro forma information does not
illustrate the actual results of operations or financial position of Delete nor
the results of operations or financial position of Delete in the future. The pro
forma adjustments are based upon available information and assumptions. There is
no certainty that the assumptions used in the compilation of the pro forma
information will prove to be correct. The unaudited pro forma information has
been compiled in accordance with the Commission Regulation (EC) No 980/2019
appendix 20.
CONDENSED
CONSOLIDATED
PRO FORMA
STATEMENT OF
FINANCIAL
POSITION,
UNAUDITED
TEUR Reported Pro Pro forma
forma
adjust.
ASSETS 31.12.2020 31.12.2020
Total non 122 711 122 711
-current
assets
Current
assets
Trade and 12 673 -1 157 11 516
other
receivables
Cash and 7 752 14 7 766
cash
equivalents
Other 1 392 1 392
current
assets
Total 21 817 -1 143 20 674
current
assets
Assets held 16 952 -16 952 0
for sale
Total assets 161 481 -18 095 143 385
TEUR Reported Pro Pro forma
forma
adjust.
EQUITY AND 31.12.2020 31.12.2020
LIABILITIES
Equity
Reserve for 69 661 10 001 79 662
invested
non
-restricted
equity
Profit and -30 248 24 780 -5 468
loss for
the year
Other -41 329 -41 329
equity
Total equity -1 916 34 781 32 865
Non-current
liabilities
Interest 0 65 000 65 000
-bearing
financial
liabilities
Other non 9 569 9 569
-current
liabilities
Current
liabilities
Interest 114 084 -109 780 4 304
-bearing
financial
liabilities
Other 31 647 31 647
current
liabilities
Total 155 300 -44 780 110 520
liabilities
Liabilities 8 096 -8 096 0
to assets
held for
sale
Total equity 161 480 -18 095 143 385
and
liabilities
Pro forma adjustments:
1) Total current assets: EUR 1.1 million including increases of EUR 10.0 million
from new share capital and EUR 8.9. of divestment proceeds and cash from the
divested entity and decreases of EUR 20.0 million from partial repayment of the
senior secured notes
2) Assets held for sale: EUR 17.0 million write-off of divested assets, offset
by cash received as sale proceeds
3) Total equity: EUR 34.8 million includes EUR 10.0 million of new share capital
and EUR 24.8 million from an equal write-off to the senior secured notes
4) Non-current liabilities: EUR 65.0 million increase from a reclassification of
the senior secured notes from current liabilities to non-current due to maturity
extension of the notes to April 2024
5) Current liabilities: EUR 109.8 million reduction of which EUR 65.0 million
reclassified as non-current liabilities due to the maturity extension of the
notes, EUR 20.0 million as partial repayment of the notes and EUR 24.8 million
of debt write-off
6) Liabilities to assets held for sales: EUR 8.1 million write-off of divested
liabilities, offset by cash received as sale proceeds
Delete Group Oyj
Board of Directors
FOR FURTHER INFORMATION
Ville Mannola, CFO of Delete Group Oyj
E-mail: ville.mannola@delete.fi
Tel. +358 400 357 767
Tommi Kajasoja, CEO of Delete Group Oyj
E-mail: tommi.kajasoja@delete.fi
Appointment requests via Helena Karioja, tel. +358 40 662 7373
www.delete.fi
DELETE GROUP IN BRIEF
Delete Group is one of the leading environmental service providers in the
Nordics. After the Demolition Sale, the group offers business-critical client
services, which require specialist competences and specialized equipment through
two business areas: Industrial Cleaning Services and Recycling Services. Delete
was formed in 2010 through the combination of Toivonen Yhtiöt and Tehoc and was
acquired by private equity investor Axcel in 2013. Since 2011, Delete has made
over 34 acquisitions within the cleaning services and demolition segments.
The Group is headquartered in Helsinki and employs approximately 700
professionals at over 35 locations in Finland and Sweden after the Demolition
Sale.
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