2015-05-07 08:30:00 CEST
2015-05-07 08:30:03 CEST
REGULATED INFORMATION
Honkarakenne Oyj - Interim report (Q1 and Q3)
HONKARAKENNE OYJ’S INTERIM REPORT, 1 JANUARY – 31 MARCH 2015
HONKARAKENNE OYJ INTERIM REPORT 7 May 2015 at 9:30 a.m.
HONKARAKENNE OYJ'S INTERIM REPORT, 1 JANUARY - 31 MARCH 2015
SUMMARY
In the first quarter net sales saw a year-on-year decline of 35%. The operating
result without non-recurring items improved by MEUR 0.1 to MEUR -1.2 (MEUR
-1.3). Accounting for non-recurring items, the operating result weakened by
MEUR 0.3 to MEUR -1.6 (MEUR -1.3).
January - March 2015
-- Honkarakenne Group's net sales for the first quarter of the year amounted
to MEUR 5.8 (MEUR 8.9 in 2014),
representing a decrease over the same period the previous year of 35%
-- The operating result was MEUR -1.6 (MEUR -1.3) which includes MEUR 0.5
non-recurring management reorganization costs.
Operating result without non-recurring items improved to MEUR -1.2 (MEUR
-1.3)
-- The loss before taxes was MEUR -2.0 (MEUR -1.3).
-- Earnings per share amounted to EUR -0.33 (EUR -0.21).
According the Honkarakenne's view net sales may decline in 2015 from previous
year due to the situation in Russia. The result before non-recurring items and
taxes is estimated to improve due to the development programme initiated by the
Group.
At the end of March, the Group's order book stood at MEUR 16.6, down 11% on the
corresponding period of the previous year, when it amounted to MEUR 18.7. The
order book refers to orders whose delivery date falls within the next 24
months. Some orders may include terms and conditions relating to financing or
building permits.
KEY INDICATORS 1-3/ 1-3/ 1-12/
2015 2014 2014
Net sales, MEUR 5.8 8.9 45.5
Operating profit/loss, MEUR -1.6 -1.3 -2.2
Operating profit before non-recurring items, MEUR -1.2 -1.3 -2.0
Profit/loss before taxes, MEUR -2.0 -1.3 -2.5
Average number of personnel 145 173 161
Personnel in person-years, average 93 160 146
Earnings/share (EPS), EUR -0.33 -0.21 -0.40
Equity ratio, % 32 37 37
Return on equity, % -20 -10 -20
Shareholders' equity/share, EUR 1.51 2.00 1.80
Gearing, % 117 88 92
Mikko Jaskari, acting President and CEO of Honkarakenne Oyj, in connection with
the interim report: "The weak market situation in Finland and uncertainty in Russian market is
reflected in the development of net sales. The trend in consolidated net sales
fell significantly short of the previous year. This was largely due to
Honkarakenne's weak order book at the turn of the year. Compared to the turn of
the year, our order book has developed more favourably and is now only 11%
behind the previous year.
Honkarakenne has made substantial investments in the development of detached
house sales, which are increasing as planned. On the design front, a
Honkarakenne model was voted as Finland's best detached house on the
rakentaja.fi website for the second year running. This year, the winner was
Honka's Myrskytuuli model. In addition to good model designs, Honkarakenne's
products are an excellent fit for the growing demand for healthy living.
In Russia & CIS, the markets are characterised by uncertainty about the general
economic situation, which has slowed down customers' decision-making. The trend
in the exchange rate of the rouble became more favourable for Honkarakenne
towards the end of the quarter, which will alleviate the situation.
Sales in Global Markets focused on finalising larger project sales.
Honkarakenne's President and CEO Mikko Kilpeläinen was relieved of his duties
at the end of the quarter. A new President and CEO is being sought."
NET SALES
The Group's first-quarter net sales in 2015 decreased by 35 per cent to MEUR
5.8 (MEUR 8.9).
Geographical distribution of net sales:
DEVELOPMENT OF SALES
Distribution of 1-3/2015 1-3/2014
net sales, %
Finland & Baltics 40 % 49 %
Russia & CIS 32 % 27 %
Global Markets 28 % 24 %
Total 100 % 100 %
Net sales, MEUR 1-3/2015 1-3/2014 change % 1-12/2014
Finland & Baltics 2.3 4.4 -48 % 22.0
Russia & CIS 1.9 2.4 -21 % 14.3
Global Markets 1.6 2.1 -23 % 9.3
Total 5.8 8.9 -35 % 45.5
Finland & Baltics includes the following countries: Finland, Estonia, Latvia
and Lithuania. It includes also Process waste sales for recycling.
Russia & CIS includes the following countries: Russia, Azerbaijan, Kazakhstan,
Ukraine and other CIS countries.
Global Markets includes other countries than above-mentioned.
The Group's order book stood at MEUR 16.6 at the end of March. In the previous
year at the same time period it was MEUR 18.7.
TRENDS IN PROFIT AND PROFITABILITY
The operating result without non-recurring items for the January-March period
was MEUR -1.2 (MEUR -1.3) and the result before taxes was MEUR -2.0 (MEUR
-1.3).
Although net sales were lower than last year, the operating result without
non-recurring items improved on the previous year. The major factor behind this
is the Group's ongoing development programme, which seeks to achieve annual
cost-savings of MEUR 3.
FINANCING AND INVESTMENTS
The financial position of the Group was satisfactory at the end of the report
period. The equity ratio stood at 32% (37%) and net financial liabilities at
MEUR 8.8 (MEUR 8.7). MEUR 2.6 (MEUR 3.1) of the financial liabilities carries a
30% equity ratio covenant term. Group liquid assets totalled MEUR 1.2 (MEUR
1.4). The Group also has a MEUR 7.8 (MEUR 8.0) bank overdraft facility, MEUR
4.8 of which had been drawn on at the end of the report period (MEUR 4.6).
Gearing stood at 117% (88%).
The Group's capital expenditure on fixed assets totalled MEUR 0.0 (MEUR 0.2).
MARKET DEVELOPMENT
According to a report commissioned by RTS Oy, Finnish log house production is
expected to decline by 12% in 2015. This figure includes both production for
the Finnish market and exports.
PRODUCTS AND MARKETING
In Finland & Baltics, detached house sales developed as planned. In previous
years, Honkarakenne made substantial investments in healthy detached houses,
which are now clearly starting to yield fruit. A Honkarakenne model was voted
as Finland's best detached house on the rakentaja.fi website for the second
year running. This year, the winner was Honka's Myrskytuuli model, while last
year's top house was the Lounatuuli model.
In Russia & CIS, the markets are characterised by uncertainty about the general
economic situation, which has slowed down customers' decision-making. The trend
in the exchange rate of the rouble became more favourable for Honkarakenne
towards the end of the quarter.
In Global Markets, sales focused on finalising larger project sales.
RESEARCH AND DEVELOPMENT
Thanks to R&D efforts, the construction of Honkarakenne's first zero-corner
house, which is particularly well-suited to urban architecture, was started in
the first quarter of the year. Development work focusing on the special
features of the Chinese market continued.
In the January-March period, the Group's R&D expenditure totalled MEUR 0.1
(MEUR 0.1), representing 1.5% of net sales (1.1%). The Group did not capitalise
any development expenditure during the report period.
STAFF
During the first quarter, the Group employed a total of 93 (160) people on
average in terms of person-years. The Group had an average of 145 (173)
employees during the first quarter, representing a year-on-year decrease of 28.
On the basis of the negotiations under the act on co-operation within
undertakings that were concluded in December 2014, the company is authorised to
temporarily lay off clerical and managerial employees for a maximum of 90 days
until the end of December 2015. On the basis of the negotiations concluded in
February 2015, the company can temporarily lay off workers for 90 days until
the end of September 2015.
CHANGE IN MANAGEMENT
President and CEO Mikko Kilpeläinen was relieved of his duties at the end of
March. The company's CFO Mikko Jaskari is the acting President and CEO. A new
President and CEO is being sought.
LONG-TERM INCENTIVE PLAN
In the second quarter of 2013, the Board of Directors decided on a long-term
share-based incentive plan for members of the Executive Group. The performance
period of the new plan began on 1 January 2013 and will end on 31 December
2016. The potential reward for the performance period is based on the
cumulative earnings per share (EPS) for 2013 - 2016 and on the average return
on capital employed (ROCE) for 2013 - 2016. Any rewards for the performance
period 2013 - 2016 will be paid partly as B shares and partly in cash in 2017.
The rewards to be paid on the basis of the performance period will correspond
to a total maximum of about 340,000 B shares, including the amount to be paid
in cash.
During report period the amount of allocated shares decreased by 8,058 (+5,315)
shares. These allocated shares are recognized as follows: -19 (16) thousand
euros employee benefit expenses, -1 (2) thousand euros in taxes and in deferred
tax assets and -13 (8) thousand euros directly in retained earnings.
HONKARAKENNE OYJ'S 2015 ANNUAL GENERAL MEETING, BOARD OF DIRECTORS, AND AUDITORS
The Annual General Meeting of Honkarakenne Oyj was held at the company's
headquarters in Tuusula on 17 April 2015. The AGM approved the parent company's
and the consolidated Financial Statements, and discharged the members of the
Board of Directors and the CEO from liability for 2014. The AGM decided not to
pay a dividend for the 2014 financial year.
Hannu Krook, Anita Saarelainen, Mauri Saarelainen and Arto Tiitinen were
re-elected to the company's Board of Directors. Kati Rauhaniemi and Jukka
Saarelainen were elected as new members. At the Board's constituent meeting,
Arto Tiitinen was elected Chairman of the Board and Mauri Saarelainen was
elected as Deputy Chairman. At the same meeting, the Board decided to establish
a Remuneration and Nomination Committee. The following directors were elected
as members of the committee: Arto Tiitinen (as Chairman of the Committee),
Anita Saarelainen and Mauri Saarelainen.
PricewaterhouseCoopers Oy, member of the Finnish Institute of Authorised Public
Accountants, was re-appointed as auditor of the company, with Maria Grönroos,
APA, as chief auditor.
OWN SHARES AND AUTHORISATIONS OF THE BOARD OF DIRECTORS
Honkarakenne has not acquired its own shares during the report period. At the
end of the report period, the Group held 364,385 of its Honkarakenne B shares
with a total purchase price of EUR 1,381,750.23. These shares represent 6.99 %
of the company's all shares and 3.34 % of all votes. The purchase cost has been
deducted from shareholders' equity in the consolidated financial statements.
On 17 April 2015, the AGM decided that the Board of Directors will be
authorised to acquire a maximum of 400,000 of the company's own B shares with
assets included in the company's unrestricted equity. In addition, the AGM
authorised the Board to decide on a rights issue or bonus issue and on granting
special rights to shares referred to in Section 1 of Chapter 10 of the Limited
Liability Companies Act in one or more instalments. By virtue of the
authorisation, the Board may issue a maximum total of 1,500,000 new shares
and/or relinquish old B shares held by the company, including those shares that
can be issued by virtue of special rights. Both authorisations will remain in
force until the next Annual General Meeting, however expiring at the latest on
June 30, 2016.
CORPORATE GOVERNANCE
Honkarakenne Oyj follows the Limited Liability Companies Act and the Finnish
Corporate Governance Code, 1 October 2010, for listed companies issued by the
Finnish Securities Market Association. The company's website, www.honka.com,
provides more information on the corporate governance systems.
FORTHCOMING RISKS AND UNCERTAINTIES
Russia is one of Honkarakenne's major business territories. The Ukrainian
crisis, the trend in the price of oil and strong exchange rate fluctuations
currently cause instability in the Russian market. This might have major
impacts on Honkarakenne's operations.
The assessment of amounts in the balance sheet is based on current assessment
by the management. If these assessments are changed, this may result in changes
to the Group's result.
It is currently more difficult to acquire funding from the financial markets.
REPORTING
This report contains statements that relate to the future, and these statements
are based on hypotheses that the company's management hold currently as well as
on the decisions and plans that are currently in place. Although the management
believes that the hypotheses relating to the future are well-founded, there is
no guarantee that the said hypotheses will prove to be correct.
This interim report release has been drafted in line with IFRS recognition and
valuation principles. However, not all of the requirements of IAS 34 have been
complied with in its drafting. The interim report should be read together with
the 2014 financial statements. The figures have not been examined by the
auditor.
THE OUTLOOK FOR 2015
According the Honkarakenne's view net sales may decline in 2015 from previous
year due to the situation in Russia. The result before non-recurring items and
taxes is estimated to improve due to the development programme initiated by the
Group.
HONKARAKENNE OYJ
Board of Directors
Further information:
Mikko Jaskari, acting President and CEO, tel. +358 400 535 337,
mikko.jaskari@honka.com
This and previous releases are available for viewing on the company's website
at www.honka.com. Next Interim Reports for 2015 will be published on 6 August
2015 and 29 October 2015.
DISTRIBUTION
NASDAQ OMX Helsinki
Key media
Financial Supervisory Authority
www.honka.com
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
unaudited 1-3 1-3 1-12
/2015 /2014 /2014
MEUR
Net sales 5.8 8.9 45.5
Other operating income 0.1 0.1 0.5
Change in inventories 0.6 -0.6 -2.1
Materials and services -4.2 -5.4 -29.2
Employee benefit expenses -2.2 -2.0 -8.3
Depreciations and amortisation -0.5 -0.5 -2.2
Impairment -0.0 -0.0 -0.0
Other operating expenses -1.2 -1.6 -6.4
Operating profit/loss -1.6 -1.3 -2.2
Financial income 0.1 0.0 0.1
Financial expenses -0.5 -0.1 -0.5
Share of associated companies' result 0.0 0.0 -0.0
Profit/loss before taxes -2.0 -1.3 -2.5
Taxes 0.4 0.3 0.6
Profit/loss for the period -1.6 -1.0 -1.9
Other comprehensive income
Translation differences 0.2 0.0 -0.0
Total comprehensive -1.4 -1.0 -2.0
income for the period
Result for the period attributable to
Equity holders of the parent -1.6 -1.0 -1.9
Non-controlling interest 0.0 -0.0 -0.0
-1.6 -1.0 -1.9
Comprehensive income attributable to
Equity holders of the parent -1.4 -1.0 -2.0
Non-controlling interest 0.0 -0.0 -0.0
-1.4 -1.0 -2.0
Calculated from the result for the period attributable to
equity holders of parent
Earnings/share (EPS), EUR
Basic -0.33 -0.21 -0.40
Diluted -0.33 -0.21 -0.40
Honkarakenne Oyj has two series of shares: A shares and B shares, which have
different right to dividend. Profit distribution of 0.20 EUR per share will be
paid first for B shares, then 0.20 EUR per share for A shares, followed by
equal distribution of remaining profit distribution between all shares.
CONSOLIDATED BALANCE SHEET
Unaudited
31.3.2015 31.3.2014 31.12.2014
MEUR
Assets
Non-current assets
Property, plant and equipment 14.0 15.6 14.5
Goodwill 0.1 0.1 0.1
Other intangible assets 0.3 0.5 0.3
Investments in associated companies 0.3 0.3 0.3
Receivables 0.2 0.2 0.2
Deferred tax assets 2.5 1.8 2.1
17.4 18.5 17.5
Current assets
Inventories 5.6 6.4 4.9
Trade and other receivables 3.7 5.7 4.5
Cash and bank receivables 1.2 1.4 1.0
10.5 13.6 10.4
Total assets 27.9 32.1 27.9
Shareholders' equity and liabilities 31.3.2015 31.3.2014 31.12.2014
Equity attributable to equity holders
of the parent company
Share capital 9.9 9.9 9.9
Share premium account 0.5 0.5 0.5
Fund for invested unrestricted equity 6.5 6.5 6.5
Own shares -1.4 -1.4 -1.4
Translation differences 0.0 -0.2 -0.2
Retained earnings -8.3 -5.7 -6.6
7.3 9.7 8.7
Non-controlling interests 0.2 0.2 0.2
Total equity 7.5 9.9 8.9
Non-current liabilities
Deferred tax liabilities 0.0 0.0 0.0
Provisions 0.3 0.5 0.3
Financial liabilities 9.0 8.5 7.4
9.3 9.0 7.7
Current liabilities
Trade and other payables 9.0 10.9 8.8
Current tax liabilities 0.1 0.1 0.0
Provisions 1.0 0.5 0.6
Current financial liabilities 1.0 1.6 1.8
11.1 13.1 11.3
Total liabilities 20.4 22.1 19.0
Total equity and liabilities 27.9 32.1 27.9
STATEMENT OF CHANGES IN EQUITY
abridged
Unaudited
EUR thousand Equity attributable to equity holders of
the parent
a) b) c) d) e) f) Total g) Total
equity
Total equity 9898 520 6444 -197 -1382 -4710 10573 211 10784
1.1.2014
Profit/loss for the -1011 -1011 0 -1011
period
Translation 15 15 15
difference
Directed share 90 90 90
issue
Management 8 8 8
incentive plan
Total equity 9898 520 6534 -182 -1382 -5715 9674 211 9886
31.3.2014
1000 eur Equity attributable to equity holders
of
the parent
a) b) c) d) e) f) Total g) Total
equity
Total equity 9898 520 6534 -215 -1382 -6638 8716 204 8920
1.1.2015
Profit/loss for the -1610 -1610 0 -1610
period
Translation 215 215 215
difference
Management -13 -13 -13
incentive plan
Total equity 9898 520 6534 0 -1382 -8260 7308 205 7513
31.3.2015
a) Share capital
b) Share premium account
c) Fund for invested unrestricted equity
d) Translation difference
e) Own shares
f) Retained earnings
g) Non-controlling interests
CONSOLIDATED STATEMENT OF CASH FLOWS 1.1.- 1.1.- 1.1.-
abridged 31.3.2015 31.3.2014 31.12.2014
unaudited
MEUR
Cash flow from operating activities -0.6 -1.8 -0.8
Cash flow from investing activities, net -0.0 -0.8 -1.3
Total cash flows from financing activities 0.8 0.8 -0.2
Share issue 0.0 0.1 0.1
Proceeds from borrowings 0.8 3.0 3.0
Repayment of borrowings 0.0 -2.2 -3.1
Other financial items -0.0 -0.1 -0.1
Change in cash and cash equivalents 0.3 -1.8 -2.3
Cash and cash equivalents at the beginning of 1.0 3.2 3.2
period
Cash and cash equivalents at the close of 1.2 1.4 1.0
period
NOTES TO THE REPORT
Accounting policies
This interim report release has been drafted in line with IFRS recognition and
valuation principles. However, not all of the requirements of IAS 34 have been
complied with in its drafting. The interim report should be read together with
the 2014 financial statements. The new revised standards or interpretations
effective as of 1 January 2015 have no bearing on the figures presented for the
report period. The figures have not been examined by the auditor.
Honka Management Oy, which is owned by the senior management of Honkarakenne
Oyj and was established in 2010, is included in the consolidated financial
statements due to the terms and conditions of the shareholder agreement
concluded between it and Honkarakenne Oyj.
Honkarakenne has three geographical operating segments that have been combined
into one segment for reporting purposes. Geographically, sales are divided as
follows: Finland & Baltics, Russia & CIS and Global Markets. The internal
reporting of the management is in line with IFRS reporting. For this reason,
separate reconciliations are not presented.
Property, plant and equipment
Unaudited Property, plant and
equipment
MEUR
Cost 1.1.2015 65.9
Translation differences (+/-) 0.0
Increase 0.0
Disposals -0.0
Cost 31.3.2015 65.9
Accumulated depreciation 1.1.2015 -51.4
Translation differences (+/-) -0.0
Accumulated depreciation of disposals and 0.0
reclassifications
Depreciation for the period -0.5
Accumulated depreciation 31.3.2015 -51.9
Carrying amount 1.1.2015 14.5
Carrying amount 31.3.2015 14.0
Own shares
Honkarakenne has not acquired its own shares during the report period. At the
end of the report period, the Group held 364,385 of its Honkarakenne B shares
with a total purchase price of EUR 1,381,750.23. These shares represent 6.99 %
of the company's all shares and 3.34 % of all votes. The purchase cost has been
deducted from shareholders' equity in the consolidated financial statements.
Contingent liabilities
Unaudited 31.3.2015 31.3.2014
MEUR
For own loans
- Mortgages 25.7 25.7
- Other quarantees 2.6 2.5
Rental liabilities 0.4 0.6
Leasing liabilities 0.3 0.2
Nominal values of forward exchange contracts 1.5 1.3
Derivative contracts 0.3 0.4
Events with related parties
The Group's related parties consist of subsidiaries and associated companies;
the company's management and any companies in which they exert influence; and
those involved in the Saarelainen shareholder agreement and any companies
controlled by them. The management personnel considered to be related parties
comprise the Board of Directors, President & CEO, and the company's Executive
Group. The pricing of goods and services in transactions with related parties
conforms to market-based pricing.
During the report period, ordinary business transactions with related parties
were made as follows: sales of goods and services to related parties amounted
to EUR 111 thousand and purchases from related parties amounted to EUR 153
thousand. In 2010 and 2011, Honkarakenne Oyj granted long-term loans totalling
MEUR 0.9 to Honka Management Oy, which is owned by the company's senior
management. An impairment amounting EUR 364 thousand was recognised in 2014 for
this loan in the parent company.
KEY INDICATORS
1-3 1-3 1-12
Unaudited 2015 2014 2014
Earnings/share (EPS) euro -0.33 -0.21 -0.40
Return on equity % -20 -10 -20
Equity ratio % 32 37 37
Shareholders equity/share euro 1.51 2.00 1.80
Net financial liabilities MEUR 8.8 8.7 8.2
Gearing % 117 88 92
Gross investments MEUR 0.0 0.2 0.9
% of net sales 0 3 2
Order book MEUR 16.6 18.7 12.5
Personnel in person-years, average Clerical 77 101 90
Workers 68 73 71
Total 145 173 161
Personnel in person-years, average Clerial 57 88 81
Workers 34 73 66
Total 93 160 146
Adjusted number of shares ('000) At period-end 4847 4847 4847
Average during period 4847 4819 4840
Calculation of key indicators
Profit for the period attributable to equity
holders of parent
Earnings/share (EPS: ------------------------------------------------
Average number of outstanding shares
Result before taxes - taxes
Return on equity %: ------------------------------------------------ x 100
Total equity, average
Total equity
Equity ratio, %: ------------------------------------------------ x 100
Balance sheet total - advances received
Net financial Financial liabilities - cash and cash equivalents
liabilities:
Financial liabilities - cash and cash equivalents
Gearing, % ------------------------------------------------ x 100
Total equity
Shareholders' equity
Shareholders ------------------------------------------------
equity/share:
Number of outstanding shares at the close of period
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