2014-02-28 08:30:03 CET
2014-02-28 08:30:07 CET
REGULATED INFORMATION
Vaahto Group Plc Oyj - Financial Statement Release
REVIEW OF VAAHTO GROUP’S FINANCIAL STATEMENTS FOR 1 JANUARY–31 DECEMBER 2013
Helsinki, Finland, 2014-02-28 08:30 CET (GLOBE NEWSWIRE) -- REVIEW OF VAAHTO
GROUP PLC OYJ'S FINANCIAL STATEMENTS 28 FEBRUARY 2014 AT 09:30
REVIEW OF VAAHTO GROUP'S FINANCIAL STATEMENTS FOR 1 JANUARY-31 DECEMBER 2013
Development of business operations
Vaahto Group's turnover from continuing operations during the period ending in
December 2013 was 36.5 M euros (comparative: 30.4 M euros) and operating profit
1.0 M (operating loss of 4.1 M euros). Turnover increased by 60% in relation to
an annualized reference figure, and the operating result improved
significantly. The improvement in profitability is due to cost savings and an
increase in order volumes. The Group's order backlog was 6.4 M euros (20.1 M
euros) at the closing of the financial year. The period under review is 12
months long, while the reference figures cover 16 months.
By decision of the Extraordinary Meeting of Shareholders, the financial year of
Vaahto Group was changed to run from 1 January to 31 December starting in 2013.
Previous financial years ran from 1 September to 31 August. For this reason the
financial year 2011-2012 was extended to cover 16 months, from 1 September 2011
to 31 December 2012. Hence, the reference data in the financial statements for
2013 refer to 16 months.
Vaahto Process Technology
Vaahto Process Technology's turnover was 32.2 M euros (24.0 M euros), and the
result showed an operating profit of 2.6 M euros (an operating loss of 0.7 M
euros).
Vaahto Process Technology's market situation in the vessel business was good at
the beginning of the period under review but tightened somewhat toward its end.
Japrotek Oy Ab delivered a significant order to Sasol Technology in South
Africa. Most of that order's value was booked in as income for 2013. The order
involved the design, manufacture, and installation of eight large vessel
structures. This project is expected to be complete in the first quarter of the
2014 financial year.
The market situation for Japrotek Oy Ab's vessel business remains difficult,
but the offer book for 2014 is solid and additional orders from the existing
customers have been agreed.
Vaahto Process Technology's market situation in the agitator business was good,
and new orders were received steadily over the course of the period. In
December 2013, Stelzer Rührtechnik International GmbH delivered its largest
order ever, to an Asian chemical company. The order was for 1,200 kW agitators
intended for high‑technology polymer production. Involving a comprehensive
delivery, the challenging nature of this order required world-class project
expertise and product development. The agitators were manufactured in Germany,
at Stelzer's Warburg plant.
The profitability of the agitator business unit is nearly in line with the
objectives set, and the outlook for the current financial year is good.
Vaahto Paper Technology
Vaahto Paper Technology's turnover from continuing operations was 4.5 M euros
(6.4 M euros) and the operating loss of 0.8 M euros (operating loss of 3.4 M
euros). The division's result was very weak.
The operating loss from discontinued operations was 4.4 M euros (operating loss
-2.3 M euros). This operating loss includes the cost from both the sale of
business and discontinued operations. The sale price of the business is not yet
final; it includes items to be specified later.
In the 2012 financial statement, the Group described the sale of Vaahto Paper
Technology's project-business unit and the spare-parts and small-project
operations belonging to the company's service unit as discontinued operations.
This business was sold to Gebr. Bellmer GmbH Maschinenfabrik in April 2013. All
projects in progress at the time of the sale were transferred to the buyer.
Completed projects that are within their warranty period remain with Vaahto
Paper Technology Ltd. All estimated liabilities associated with the completion
of these projects are included in the balance sheet under “Operations for
sale.”
Vaahto Group intends to divest or discontinue operations of the unprofitable
Paper Technology business in its entirety. The Board of Directors is
considering various options for the discontinued Paper Technology business, the
primary option being a sale of the business. The Service unit of Vaahto Paper
Technology Oy is presented in the profit and loss statement as discontinued
operations and on the balance sheet as assets and liabilities for sale. AP-Tela
Oy, which belongs to Paper Technology -division, is shown under continuing
operations.
The effect of discontinued operations on profit/loss is shown on its own line,
separate from continued operations.
Financing and liquidity
The cash flow from the Group's business operations was -2,4 M euros (-4,4 M
euros), and the Group's net financing costs came to 1.0 M euros (1.2 M euros).
The cash flow from investments made during the financial year was 0.3 M euros
(-1.0 M euros). The Group's consolidated balance sheet total was 23.6 M euros
(30.5 M euros).
Loans from credit-institutions entail re-payment covenants linked to the
Group's solvency ratio. The year-end accounts of 31 December 2013 are in
breach of a covenant, but the Group received assurance from the creditors in
question at the close of the 2013 financial period that no consequences of the
breach would arise for the Group.
The financing negotiations of Vaahto Group were concluded on 18 December 2013.
The final agreement provides the Group companies with a grace period for
receivables of credit institutions for 2014. In addition to the further 2.0 M
euros provided by certain shareholders, the financiers of the Group also waived
repayment of loans amounting to 1 M euros: 0.83 M euros for the parent company
and 0.17 M euros for Vaahto Paper Technology Ltd. These amounts are shown in
the financial items of the financial statement.
Moreover, the Group's financiers agreed to waive loans totaling 2 M euros,
provided that certain conditions of the financing agreement are met. While the
Company is likely to meet the conditions set for that waiver during the first
quarter of 2014, the financiers will honor the waiver even after the first
quarter, when the conditions are met. The financing arrangement includes a
further commitment by the financiers to waive loans totaling 1 M euros,
provided that the Company can raise at least 1 M euros in new equity by means
of a share issue. Conditional waiver of loans totaling 3 M euros from the
financial arrangement reached, planned divestment of Paper Technology and
Board's plans for a new share issue, will, once they have been realized,
clarify the new, strategy-driven direction and support the financial positionand liquidity of the Group.
However, the Group's liquidity remains low and the financing will suffice only
if the management's plans succeed and profitability improves.
Investments
The Group's capital expenditure during the period under review came to 0.9 M
euros (1.3 M euros). Most of the investments went toward asphalting of the
grounds of the Hollola production plant: in total, 0.6 M euros. The other
investments consisted mostly of machine and equipment investments for Vaahto
Paper Technology's Service business.
Environmental affairs
The financial period saw the conclusion of the work required by the company's
environmental permit for the processing of drainage water on the courtyard of
the Hollola plant.
Research and development
The Group's research and development activities focused on the expansion of
Vaahto Paper Technology's range of service products. The scope of research and
development activities remained at the previous financial year's level.
Human resources
The average number of personnel employed by the Group during the period under
review was 256 (333). In total, 181 of these people were employed in continuing
operations. With the sale of the Projects unit on 15 April 2013, 56 people
working in business operations in Hollola and 16 in Tampere transferred to
Bellmer.
Risks and uncertainty factors
Demand for Vaahto Group's products is highly dependent on economic developments
and other trends in both the global economy and the Group's main customer
industries. The risks created by fluctuations in demand are addressed through
adaptation of the Group's sales operations to current trends in the relevant
market areas and customer industries.
Large-scale projects entail the risk of inaccurate assessment of project costs
and other risks inherent to projects in the tender stage, which may cause a
project's financial result to be lower than expected. To keep the risks
involved in large-scale projects under control, the Group employs several
means, such as multiple quality-management systems, profitability analyses,
operation guidelines, and approval procedures.
The objective of the efforts to manage the Group's financing risks is to
minimize the negative impact of changes in financial markets on the Group's
result and to ensure the availability of internal and external funding on
competitive terms.
The risk of property losses, consequential losses, and liability losses caused
by business operations is addressed by means of appropriate insurance
arrangements.
The most significant risks associated with continued operations center on the
liquidity and solvency of Vaahto Group, on meeting the conditions set by its
financiers, on the adequacy of the development measures aimed at increasing
profitability, and on the development of customers' demand and market
situations.
A cash flow forecast extending through February 2015 was prepared to assess the
sufficiency of the Group's working capital. That forecast indicates that the
working capital will cover the needs of the coming 12 months, provided that the
profitability goals set are reached. However the working capital situation will
be tight and its adequacy shall be actively monitored.
Negotiations with Group's main financiers on financial restructuring are
scheduled for fall 2014.
Equity capital
The financial statements of 31 December 2013 include depreciation of 11.1 M
euros declared by the parent company, Vaahto Group Plc Oyj, for its
subordinated loans to subsidiary Vaahto Paper Technology Ltd. This entry leaves
the equity capital of Vaahto Group Plc Oyj at negative 4.3 M euros. On account
of the operating loss, also the equity of Vaahto Paper Technology Ltd is
negative. The Trade Register has been duly notified of the negative equities.
After the close of the financial year, the Board of Directors of Vaahto Group
Plc Oyj announced that, to strengthen Vaahto Group's financial position, it
intends to issue new shares in the first half of 2014. The Board is also
considering various options for divestment of the Paper Technology business,
with the primary option being sale of the business. The financial arrangements
made and planned are described under “Financing and liquidity.”
The Annual General Meeting held on 10 April 2013 authorized the Board of
Directors to decide on the issuing of new shares in one or more tranches. The
maximum number of shares that may be issued is 2,000,000. The authorization is
valid until 31 May 2014.
The Board of Directors has no authorization to issue convertible bonds or
warrant bonds or for purchasing or transferring the Group's own stock.
Deferred tax liabilities and receivables
In total, 0.3 M euros of value adjustments for deferred tax receivables from
confirmed business losses and deferred depreciations have been booked for the
2013 financial period. After this, the Group has no further deferred tax
receivables.
Administration
The Annual General Meeting held on 10 April 2013 nominated the following
persons as members of the Vaahto Group Plc Oyj Board of Directors:
Reijo Järvinen, chairman
Sami Alatalo, deputy chairman
Topi Karppanen, member
Mikko Vaahto, member
Vaahto Group's CEO during the period under review was Ari Viinikkala.
After the close of the financial year, Vesa Alatalo was appointed as CEO from
16 January 2014 onward.
The Group's accounts have been audited by certified auditing company Ernst &
Young Oy. The head auditor was Panu Juonala, Certified Public Accountant.
The Company follows the 2010 Corporate Governance Code issued for companies
listed on the NASDAQ OMX Helsinki exchange. A report on the Group management
and steering system is available on the Group's Web site.
Development prospects
Demand for Vaahto Group's products and its financial situation both are highly
dependent on global economic developments and other trends affecting its
customer industries.
Vaahto Paper Technology's market situation remains uncertain. The market
situation for Vaahto Process Technology is expected to be more stable.
The financing arrangement reached with our financiers, including a conditional
waiver of loan repayments, planned divestment of the Paper Technology business,
and the Board's planned share issue, will, once they have been realized,
strengthen the strategy of focusing on the Process Technology business and
support the financial position and liquidity of the Group.
The operating result from Vaahto Group's continuing operations in 2014 is
expected to be positive.
The year-end accounts have been drafted under the going-concern assumption.
This requires that the Company in 2014 reaches the result and profitability
objectives set in the management forecasts and be able to obtain additional
financing and renegotiate the payment terms for its liabilities.
Developments since the end of the financial year
Vesa Alatalo was appointed as CEO of Vaahto Group Plc Oyj, with effect from 16
January 2014.
On 3 February 2014, Vaahto Group Plc Oyj announced a plan to strengthen its
strategy focusing on Process Technology's operations. The Group engages in
process technology business through subsidiaries, Japrotek Oy Ab and Stelzer
Rührtechnik International GmbH. In line with the strategy change initiated in
spring 2013, Vaahto Group intends to divest the unprofitable Paper Technology
business. The Board of Directors is considering various options for
discontinuation of the associated operations and capital, with the primary
option being sale of the relevant business.
Distribution of profit
The parent company made a business loss of 8,120,359.08 euros, and the company
has no distributable funds.
The Board of Directors proposes to the General Meeting that no dividends be
distributed and that the loss be covered with funds from the profit account.
The General Meeting of Shareholders
The General Meeting of Shareholders of Vaahto Group Plc Oyj will be held in
Sibelius Hall, Lahti, on 15 April 2014, at 13:00.
Vaahto Group's interim management statement
Instead of an interim report for the first quarter of the 2014 financial year,
Vaahto Group Plc Oyj will publish the Interim Management Statement on 16 May
2014.
VAAHTO GROUP CONSOLIDATED FIGURES
CONSOLIDATED 1.1.-31.12.2013 % of 1.9.2011-31.12.2012 % of
STATEMENT OF 12 turn- 16 turn-
COMPREHENSIVE months over months over
INCOME, IFRS
1000 EUR
CONTINUING OPERATIONS
NET TURNOVER 36 516 30 369
Change in finished
goods and work
in progress 1 873 -1 499
Production
for own use -101 -270
Other operating
income 65 93
Share of results of
affiliated companies 25
Material and
services 18 225 16 010
Employee benefits
expenses 9 853 12 585
Depreciations 739 1 564
Other operating
expenses 5 038 6 216
OPERATING PROFIT
OR LOSS 953 2,6 -4 120 -13,6
Financing income 1 107 61
Financing expenses -1 122 -1 263
PROFIT BEFORE TAXES 939 2,6 -5 321 -17,5
Tax on income
from operations -630 -2 257
PROFIT OR LOSS
FOR THE PERIOD,
CONTINUING
OPERATIONS 309 0,8 -7 579 -25,0
DISCONTINUING
OPERATIONS
Profit or loss for the
period,
discontinuing operations -4 399 -2 347
PROFIT OR LOSS
FOR THE PERIOD -4 090 -9 926
OTHER COMPREHENSIVE
INCOME:
Translation
differences -10 38
OTHER COMPREHENSIVE
INCOME, NET OF TAX -10 38
TOTAL COMPREHENSIVE
INCOME -4 099 -9 888
TOTAL COMPREHENSIVE
INCOME ATTRIBUTABLE
Equity holders of the -4 090 -9 926
parent
Earnings per share calculated on profit attributable
to equity holders of the parent:
EPS continuing operations
undiluted, euros/share 0,08 -2,19
diluted, euros/share 0,08 -2,19
EPS discontinuing
operations
undiluted, euros/share -1,11 -0,68
diluted, euros/share -1,11 -0,68
EPS
undiluted, euros/share -1,03 -2,68
diluted, euros/share -1,03 -2,68
Average number of
shares (1000 shares):
undiluted 3 977 3 977
diluted 3 977 3 977
CONSOLIDATED 31.12.2013 31.12.2012
BALANCE SHEET,IFRS
1000 EUR
ASSETS
NON-CURRENT ASSETS:
Intangible assets 60 233
Goodwill 1 692 1 692
Tangible assets 5 241 7 596
Shares in affiliated
companies 74 83
Available for sale
investments 35 43
Non-current trade
and other
receivables 3
Deferred tax asset 271
NON-CURRENT ASSETS 7 102 9 921
CURRENT ASSETS:
Inventories 2 788 5 783
Trade receivables
and other
receivables 6 992 6 531
Current receivables
for revenue recognised
in part prior to
project completion 1 727 1 293
Cash and bank 129 400
CURRENT ASSETS 11 637 14 007
NON-CURRENT ASSETS
HELD FOR SALE 4 886 6 557
TOTAL ASSETS 23 624 30 484
CONSOLIDATED 31.12.2013 31.12.2012
BALANCE SHEET, IFRS
1000 EUR
EQUITY AND
LIABILITIES
SHAREHOLDERS'
EQUITY:
Share capital 2 872 2 872
Share premium
account 6 6
Fair value reserve and
other reserves 5 063 5 063
Translation
differences 48 56
Retained earnings -14 251 -10 160
SHAREHOLDERS'
EQUITY -6 262 -2 163
NON-CURRENT LIABILITIES:
Deferred
tax liability 649 699
Long-term
liabilities,
interest-bearing 11 763 3 608
Non-current
provisions 362 395
NON-CURRENT
LIABILITIES 12 774 4 701
CURRENT LIABILITIES:
Short-term
liabilities,
interest-bearing 6 758 14 045
Trade payables and
other liabilities 7 787 10 662
Tax liability,
income tax 200 264
CURRENT LIABILITIES 14 745 24 971
LIABILITIES OF DISPOSAL
GROUP HELD FOR SALE
Interest-bearing
liabilities held for sale 573
Interest-free
liabilities held for sale 2 367 2 402
LIABILITIES OF DISPOSAL
GROUP HELD FOR SALE 2 367 2 975
TOTAL EQUITY AND
LIABILITIES 23 624 30 484
KEY FIGURES, IFRS 2013 2011-2012
Shareholders'
equity per share,
euros -1,57 -0,54
Earnings per
share, euros 1) -1,03 -2,15
Equity ratio % neg. neg.
Gross investments 869 1 289
Total average
number of
personnel 256 333
Order backlog at
the end of the fiscal
period 2) 6 401 20 111
1) Earnings per share (EPS) includes also profit/loss of the discontinuing
operations.
EPS for the period 2011-2012 has been calculated by converting the profit or
loss
to correspond the profit or loss for 12
months.
2) Continuing operations. The amount of contract revenue recognized as
income has been deducted from the order backlog.
OTHER LIABILITIES 31.21.2013 31.12.2012
1000 EUR
Bank guarantees:
Bank guarantee
limits total 6 163 8 860
Bank guarantee
limits used 4 598 7 405
Lease liabilities,
excluded financial
lease liabilities:
Current lease
liabilities 266 272
Lease liabilities
maturing
in 1-5 years 276 296
Total 541 568
Rent liabilities:
Current lease
liabilities 792 804
Lease liabilities
maturing
in 1-5 years 3 166 3 216
Later 1 885 2 144
Total 5 843 6 164
Other liabilities:
Granted guarantees
to customers and
creditors 730
Guarantees granted
to secure bank
guarantee limits 4 110 8 860
Guarantees granted
to secure bank
guarantees 315
Guarantees granted
to secure bank loans 3 580 3 780
Guarantees granted
to secure guarantee
insurances 2 175 750
Guarantees granted
to secure trial
guarantees 1 500
Guarantees granted
to secure rent
guarantees 400 400
Other liabilities 427
Total 10 692 16 335
Derivative contracts:
Currency forward agreements are as a rule used to
hedge
against exchange rate risks. The currency forward agreements
have been used to protect receivables and future
assets.
Interest rate agreements are used to hedge against
the
changes of the interests.
The derivative agreements of the group are booked according
to IAS 39: Financial instruments. Derivative agreements are
initially recognized at their purchase cost
which is
equivalent to the fair value and they are
subsequently
remeasured at fair value.
Fair values Nominal Fair Fair Fair
of derivative value value, value, value
agreements pos. neg. total
31.12.2013
1000 EUR
Interest rate swap
agreements 2 986 0 -94 -94
Fair values of derivative agreements are determined by using
the market prices for the equivalent agreements on the day of
the closing of the accounts. Fair values state for the income
or expenses the group would book if the derivative agreements
were closed at the end of the fiscal period.
CONSOLIDATED FLOW 1.1.-31.12.2013 1.9.2011-31.12.2012
OF FUNDS 12 16
STATEMENT, IFRS months months
1000 EUR
Flow of funds
from operations:
Adjustments -146 2 876
Change in working
capital 1 418 587
Financial income and
expenses and taxes 459 2 080
Flow of funds from
operations -2 359 -4 382
Flow of funds from
investments:
Investments in
tangible and
intangible assets -869 -1 289
Increase caused by the
change in the Group
structure -18
Income from sales
of tangible and
intangible assets 1 188 319
Payments of loans 8
Flow of funds from
investments 320 -980
Flow of funds from
financial items:
Issue of shares 1 861
Withdrawals of
short-term loans 244 2 946
Payments of
short-term loans -597 -1 136
Withdrawals of
long-term loans 3 430 3 000
Payments of
long-term loans -1 308 -1 684
Flow of funds from
financial items 1 769 -4 987
Change of liquid
funds -270 -375
Figures are in thousand euros unless stated otherwise. Figures are unaudited.
Lahti 28 February 2014
VAAHTO GORUP PLC OYJ
Board of Directors
Information:
Vesa Alatalo, CEO, Vaahto Group Plc Oyj +358 40 7268 923
www.vaaahto.fi
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