HONKARAKENNE OYJ FINANCIAL STATEMENTS BULLETIN 2020
18 February 2021 at 9:00 a.m.
HONKARAKENNE OYJ'S FINANCIAL STATEMENTS BULLETIN 1 JANUARY - 31 DECEMBER 2020
Revenue (net sales) increased, and adjusted profit before taxes was at the previous year's level — the order book grew significantly in the second half of the year.
SUMMARY
Honkarakenne's revenue (net sales) increased by EUR 5.3 million and were 11 per cent higher than in the previous year. Adjusted operating profit and adjusted profit before taxes were at the same level as the year before. At the end of 2020 the order book was EUR 39.8 million, i.e. 44 per cent higher than at the end of the previous year.
January - December 2020
- The Honkarakenne Group's revenue (net sales) for January-December amounted to EUR 52.9 million (EUR 47.5 million in 2019). Revenue (net sales) increased by 11% compared to the previous year.
- The operating result was EUR 3.1 million (3.4) and the adjusted operating result was EUR 3.4 million (3.4).
- Profit before taxes was EUR 2.9 million (3.2) and the adjusted profit before taxes was EUR 3.2 million (3.2).
- Earnings per share were EUR 0.48 (0.40).
July - December 2020
- Honkarakenne Group's revenue (net sales) for July-December amounted EUR 30.3 million (EUR 25.8 million in 2019). Revenue (net sales) increased by 17% compared to the previous year.
- Operating profit was EUR 2.1 million (2.6). Adjusted operating profit was EUR 2.4 million (2.6).
- Profit before taxes was EUR 1.9 million (2.4). Adjusted profit before taxes was EUR 2.3 million (2.4).
- Earnings per share were EUR 0.37 (0.31).
The Board of Directors proposes to the Annual General Meeting that no dividend be paid for the financial year ended 31 December 2020. In addition, the Board of Directors proposes that a repayment of capital of EUR 0.18 per share be distributed from the invested unrestricted equity fund.
Honkarakenne’s outlook is that revenue (net sales) will increase in 2021 and profit before taxes will be higher than in the previous year.
At the end of December, the Group's order book stood at EUR 39.8 million, which is 44% higher than the order book of EUR 27.6 million in the corresponding period of the previous year. The order book includes orders whose delivery date falls within the next 24 months. Some orders may involve terms and conditions relating to financing or building permits.
| KEY FIGURES | 7–12/ 2020 | 7–12/ 2019 | 1-12/ 2020 | 1-12/ 2019 | ||
| Revenue (net sales), MEUR | 30.3 | 25.8 | 52.9 | 47.5 | ||
| Operating profit / loss, MEUR | 2.1 | 2.6 | 3.1 | 3.4 | ||
| Adjusted operating profit / loss, MEUR | 2.4 | 2.6 | 3.4 | 3.4 | ||
| Profit / loss before taxes, MEUR | 1.9 | 2.4 | 2.9 | 3.2 | ||
| Adjusted profit / loss before taxes, MEUR | 2.3 | 2.4 | 3.2 | 3.2 | ||
| Average number of employees | 171 | 156 | 168 | 155 | ||
| Average number of employees in person-years | 161 | 142 | 153 | 139 | ||
| Earnings per share, EUR | 0.37 | 0.31 | 0.48 | 0.40 | ||
| Equity ratio,% | 56 | 56 | ||||
| Return on equity,% | 21 | 20 | ||||
| Equity / share, EUR | 2.49 | 2.14 | ||||
| Gearing ratio,% | -23 | -15 |
Honkarakenne Oyj's CEO Marko Saarelainen commented on the financial statements bulletin as follows:
“Honkarakenne's sales have developed well despite the global pandemic, and this is particularly evident in the high volume of orders. We invested in digital marketing in our main market areas, and successfully replaced traditional customer interaction in sales with communication via digital channels and remote connections. The order book at the end of 2020 was almost EUR 40 million, i.e. 44 per cent higher than a year before.
Revenue (net sales) from Finland increased. Both our consumer business and project business grew. Interest is continuously growing in logs as a building material and their use has clearly increased at project and area-plan construction sites. We also invested in developing our collections and launched new, impressive flagship models.
Revenue (net sales) in terms of exports remained at the same level as in the previous year. The pandemic had a negative effect on export markets during most of the year. Activity at project sites repeatedly ground to a halt due to the consequent closures and restrictions. The negative effects were most pronounced in Asia, particularly China and Japan. Positive performance on the Russian market was gratifying. Revenue (net sales) in Russia were higher than in the previous year.
In research and development, we focused on developing fire safety solutions and models for public buildings and integrating a smart building system with an HVAC system for log houses. Production development at the Karstula plant continued throughout the year and a new production line was introduced in December despite delays caused by the pandemic.”
REVENUE (NET SALES)
In 2020, the Honkarakenne Group's revenue (net sales) increased by 11 per cent to EUR 52.9 million (47.5). The Group's revenue (net sales) in the second half of 2020 increased by 17 per cent to EUR 30.3 million (25.8).
Geographical breakdown of revenue (net sales):
| DEVELOPMENT IN REVENUE (NET SALES) | |||||||
| Breakdown of revenue (net sales), % | 1-12 /2020 | 1-12 /2019 | |||||
| Finland | 70% | 66% | |||||
| Export | 30% | 34% | |||||
| Total | 100% | 100% | |||||
| Revenue (net sales), MEUR | 7-12 /2020 | 7-12 /2019 | % change | 1-12 /2020 | 1-12 /2019 | % change | |
| Finland | 20.8 | 16.8 | 24% | 36.9 | 31.3 | 18% | |
| Export | 9.5 | 9.1 | 5% | 16.0 | 16.3 | -2% | |
| Total | 30.3 | 25.8 | 17% | 52.9 | 47.5 | 11% | |
Finland also includes billet sales and the sale of process byproducts for recycling.
Exports include all other countries except Finland.
At the end of December, the Group's order book was 44% higher than a year before. The order book was EUR 39.8 million at the end of the year and EUR 27.6 million in the corresponding period of the previous year.
DEVELOPMENT OF PROFIT AND PROFITABILITY
The operating result for July-December was EUR 2.1 million (2.6) and the result before taxes was EUR 1.9 million (2.4). The adjusted operating result for July-December was EUR 2.4 million (2.6) and the adjusted result before taxes was EUR 2.3 million (2.4).
The operating result for the entire year 2020 was EUR 3.1 million (3.4) and the result before taxes was EUR 2.9 million (3.2). The adjusted operating result for the entire year 2020 was EUR 3.4 million (3.4) and the adjusted result before taxes was EUR 3.2 million (3.2).
In 2020, adjustment items amounted to EUR 0.3 million (0.0), consisting of production reorganisation costs. Reorganisation costs consisted of salary and other personnel costs related to the notice period for redundancies.
Profit development and profitability were positively affected by growth in net sales, especially in Finland and Russia. The annual result was burdened by higher marketing investments and additions to the salaried employees of organisation.
FINANCING AND INVESTMENT
At the end of the review period, Honkarakenne's financial position was strong, with the Group's equity ratio being 56% (56%). The gearing ratio was negative and was -23% (-15%). The Group's net financial liabilities were EUR -3.3 (-1.9) million, i.e. the Group's liquid assets exceeded financial liabilities. Liquid assets amounted to EUR 7.0 million (7.1). In addition, the Group has an overdraft facility of EUR 3.0 (4.5) million, which was not in use at the end of this financial year or the previous financial year.
In 2020, the company continued with the production line modernisation begun in the previous year, which was reflected in investments. Progress was made with this investment despite delays, due to the pandemic, in the delivery and installation of equipment for the new production line. The renewed production line began operating in late 2020. Some additional investments will be made in the new line in 2021. Investments in production have received support from the European Regional Development Fund (ERDF) and the Sustainable Growth and Jobs 2014-2020 - Finnish Structural Funds programme.
The Group's gross investments in 2020 were EUR 4.1 million (3.2), excluding right-of-use assets in accordance with IFRS 16 and received investment grants. The largest investments were made in developing production, and the company developed several systems for streamlining operations.
PRODUCTS AND MARKET AREAS
Revenue (net sales) developed positively in Finland. Both full-year, and second-half revenue (net sales) in particular, grew significantly compared to the previous year. Both our consumer business and project business grew. Interest has continued to grow in logs as a building material, which can be seen in the increasingly frequent preference for logs on housing cooperative and holiday home construction sites. In addition, tenders for school construction increasingly involve log buildings. There is clear growth in wood construction, which has also been taken into account in zoning. We added impressive flagship models and efficient room layout and residential solutions to our collection. In Finland, marketing focused on influencer marketing, in particular, and digital marketing was developed. Development of both service packages and the dealer network continued. The end-of-year order book in Finland was significantly higher than a year before.
In exports, full-year revenue (net sales) decreased by 2 per cent, but revenue (net sales) in the second half of the year were 5 per cent higher than for 2019. All market areas were affected throughout most of the year by the coronavirus epidemic, with some project sites being repeatedly brought to a standstill by the related closures and restrictions. The negative effects were most pronounced in Asia, particularly China and Japan. The Russian market developed better than expected and revenue (net sales) in Russia were higher than in the previous year. In terms of marketing, we developed our digital marketing, and in sales replaced our traditional customer interaction with contacts via digital channels and remote connections. Despite the coronavirus, export order volumes were significantly higher than in the preceding year.
SEASONAL NATURE OF OUR BUSINESS
Honkarakenne operates in a clearly seasonal industry. In Finland in particular, construction is concentrated in the summer season, with more deliveries in the summer and autumn than in the winter season. The company uses various marketing measures and export activities to balance seasonality.
In 2020, Honkarakenne conducted co-operation negotiations in preparation for the seasonal variations typical of the industry. It was agreed that employees would work shorter weeks.
RESEARCH AND DEVELOPMENT
In research and development, we particularly focused on developing fire safety solutions and models that enable the construction of public buildings from logs, and on solutions that integrate smart building systems with HVAC systems for log houses.
The Group's R&D expenditure in January-December totalled 0.4% of revenue (net sales) (0.5%). The Group did not capitalise any research and development costs during the financial year.
EMPLOYEES
Measured in person-years, the Group had an average of 153 employees (139) during the year. This represented an increase of 14 employees compared to the corresponding period of the previous year. The Group employed an average of 168 (155) people in 2020. At the end of the year, the Group had 168 (158) employees.
In October 2020, the company announced the start of co-operation negotiations related to a planned reorganisation of production. In December, after the end of the negotiations, the company made a decision on the reorganisation, content and scope of production. During the reorganisation, the company dismissed 11 employees and subjected 15 employment contracts to redundancy-based provisional changes.
EXECUTIVE GROUP
There were several changes in the company's executive group in 2020. In May, the company announced that Vice President, Production Jari Fröberg was leaving the company. In December, it announced that Jari Noppa, Vice President, Consumer Business, Finland and Sweden, would leave Honkarakenne and Marko Saarelainen, President and CEO, would take charge of sales of both domestic and export operations until further notice. At the same time, in December, the company announced that Plant Manager Juha-Matti Hanhikoski (36) had been appointed Honkarakenne's Vice President, Production and a member of the Executive Group.
At the end of 2020, Honkarakenne's Executive Group consisted of: Marko Saarelainen, President and CEO; Leena Aalto, Vice President, Finance - CFO; Juha-Matti Hanhikoski, Vice President, Production; and Sanna Huovinen, Vice President, Marketing. In January 2021, Honkarakenne announced that Vice President, Finance - CFO Leena Aalto was taking up a position with another organisation. Leena Aalto will continue as Vice President, Finance - CFO until the end of February 2021.
HONKARAKENNE CORPORATION'S 2020 ANNUAL GENERAL MEETING, BOARD OF DIRECTORS AND AUDITORS
Honkarakenne Oyj's Annual General Meeting was held at Honkarakenne's Tuusula office on 29 May 2020. The Annual General Meeting approved the financial statements of the parent company and the Group and discharged the members of the Board of Directors and the President and CEO from liability for 2019. The Annual General Meeting decided that no dividend be distributed for the financial year 2019. In addition, the Annual General Meeting decided that a repayment of capital of EUR 0.12 per share be distributed from the invested unrestricted equity fund.
Timo Kohtamäki, Arimo Ristola, Helena Ruponen, Kari Saarelainen and Kyösti Saarimäki were re-elected to the company's Board of Directors. At the Board's inaugural meeting, Arimo Ristola was elected Chairman of the Board. At the same meeting, the Board decided not to set up committees.
Ernst & Young Oy was re-elected as the auditor, with Elina Laitinen, Authorised Public Accountant, as the principal auditor.
AUTHORISATIONS OF THE BOARD OF DIRECTORS
On 29 May 2020, the Annual General Meeting decided that the Board of Directors be authorised to buy back a maximum of 400,000 of the company's own B shares with the company's unrestricted equity. In addition, the Annual General Meeting authorised the Board of Directors to decide on a share issue, either against payment or free of charge, and the issuance of special rights, entitling to shares referred to in Chapter 10, Section 1 of the Limited Liability Companies Act, in one or more tranches. Pursuant to the authorisation, the Board of Directors may issue new shares and/or dispose of a maximum of 1,500,000 of the old class B shares held by the company, including those shares that may be issued under special rights. However, both of these authorisations shall be valid until the next Annual General Meeting, but expire on 30 June 2021 at the latest.
SHARES, SHARE CAPITAL AND TREASURY SHARES
During the review period, Honkarakenne Oyj's total number of shares was 6,211,419 of which 300,096 are Class A shares and 5,911,323 were Class B shares. The company's share capital did not change and was EUR 9,897,936.00. Each Class B share confers one (1) vote and each Class A share confers twenty (20) votes, so the total number of votes conferred by all Honkarakenne shares during the review period was 11,913,243.
Honkarakenne's Class B shares are listed on Nasdaq Helsinki Oy's Small Cap list under the trading symbol HONBS. The highest price of the listed B share was EUR 4.43, the lowest EUR 2.32 and the closing price for the review period was EUR 4.28. The trading value of the B share was EUR 10.5 million and the trading volume was 2.9 million shares.
Honkarakenne did not acquire any of its own shares during the review period. In June, Honkarakenne transferred 15,000 of the company's Class B shares to the company's President and CEO as part of the President and CEO's 2019 performance bonus. At the end of the review period, the Group held 349,385 of its own Class B shares with an acquisition price of EUR 1,309,260.25. Own shares account for 5.62% of all the company's shares and 2.93% of all votes. The purchase cost has been deducted from shareholders’ equity in the consolidated financial statements.
FLAGGING NOTIFICATIONS
During the financial year 2020, Honkarakenne received a notification pursuant to Chapter 9, Section 5 of the Securities Markets Act, according to which the number of Honkarakenne Oyj shares owned by Saarelainen Oy had increased to more than 10 percent on 29 May 2020.
CORPORATE GOVERNANCE
In 2020, Honkarakenne Oyj complied with the Finnish Corporate Governance Code 2020 issued by the Finnish Securities Market Association. More information on corporate governance is available on the company's website at www.honka.fi.
SHORT-TERM RISKS AND UNCERTAINTIES
Demand for Honkarakenne's products is significantly affected by general economic development, exchange rates and consumer confidence in household finances, as well as competition in the industry. If demand falls sharply, it may have a significant impact on the company's earnings development.
The coronavirus pandemic is causing uncertainty in all of the company's market areas. The duration of the uncertainty caused by the coronavirus pandemic, and its combined effects on business, are difficult to assess, but the pandemic may have significant effects on Honkarakenne's business.
Valuation of items on the balance sheet is based on the management's current estimates. If these estimates change, this may have an impact on the company's result.
REPORTING
This release contains forward-looking statements that are based on the assumptions currently known to the company's management and on the management's current decisions and plans. Although the management believes that its forward-looking assumptions are reasonable, there is no assurance that they will prove to be correct.
The financial statements bulletin has not been audited and the figures presented are unaudited.
Figures in parentheses refer to the corresponding period a year earlier, unless otherwise stated.
Honkarakenne reports in accordance with the European Securities and Markets Authority's (ESMA) recommendation on alternative key ratios (APM). An alternative key ratio is a financial ratio that is different from a financial ratio defined or designated in IFRS. The term “adjusted” is therefore used instead of the previous term “excluding non-recurring items”. The company classifies significant transactions regarded as affecting the comparison between reporting periods as adjustment items. These include, but are not limited to, significant restructuring costs, significant impairment losses or reversals, significant gains and losses on disposals of assets, or other significant income or expenses that are different from ordinary activities.
This bulletin has been prepared in accordance with IAS 34. The release should be read in conjunction with the 2019 financial statements. The financial statements for 2020 have been prepared in accordance with the same accounting principles as the annual financial statements for 2019, except for the standards and interpretations that came into force on or after 1 January 2020. The revised standards and interpretations that came into force on 1 January 2020 have not had a significant effect on the figures presented during the review period.
EVENTS AFTER THE FINANCIAL YEAR
In January 2021, Honkarakenne announced that Vice President, Finance - CFO Leena Aalto was taking up a position with another organisation. Leena Aalto will continue as Vice President, Finance - CFO until the end of February 2021.
Honkarakenne has no other significant reportable events after the financial year.
BOARD OF DIRECTORS’ PROPOSAL FOR THE DISTRIBUTION OF PROFITS
The parent company has no distributable earnings, but the parent company's distributable equity is EUR 4.2 million. The parent company's profit for the financial year is EUR 2.8 million.
The Board of Directors proposes to the Annual General Meeting that no dividend be paid for the financial year ended 31 December 2020. In addition, the Board of Directors proposes that a repayment of capital of EUR 0.18 per share be distributed from the invested unrestricted equity fund.
OUTLOOK FOR 2021
Honkarakenne’s outlook is that revenue (net sales) will increase in 2021 and profit before taxes will be higher than in the previous year.
GROUNDS FOR THE OUTLOOK
The company's view of developments in 2021 is based on the existing order volume and its view of market development, as well as the development measures taken in the company.
GENERAL MEETING
Honkarakenne Oyj's Annual General Meeting will be held on Friday, 16 April 2021 at 2 p.m.
HONKARAKENNE OYJ
Board of Directors
For more information:
Marko Saarelainen, President and CEO, tel. +358 (0)40 542 0254, marko.saarelainen@honka.com or
Leena Aalto, Vice President, Finance - CFO, tel. +358 (0)40 769 4590, leena.aalto@honka.com
This and previous releases can be found on the company's website www.honka.com/en/investors/.
Honkarakenne will publish the Board of Directors' report and financial statements for 2020 in its entirety and a separate corporate governance statement in week 12 at the latest, on the company's website at www.honka.fi. The half-year report for 2021 will be published on 26 August 2021.
DISTRIBUTION
Nasdaq Helsinki Oy
Main media
Financial supervision
www.honka.com
Honkarakenne Ltd supplies high-quality, healthy and ecological log homes, holiday homes and public buildings. Its buildings are made from Finnish solid wood under the Honka® brand. The company has delivered 85,000 buildings to over 50 countries. We manufacture our home packages in Finland, at our own factory located in Karstula. In 2020, Honkarakenne Group's consolidated net sales totalled EUR 52.9 million, of which exports accounted for 30%. www.honka.com
| CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME | ||||
| Unaudited | 7-12 /2020 | 7-12 /2019 | 1-12 /2020 | 1-12 /2019 |
| MEUR | ||||
| Revenue (net sales) | 30.3 | 25.8 | 52.9 | 47.5 |
| Other operating income | 0.3 | 0.2 | 0.5 | 0.4 |
| Change in inventories | -0.8 | -1.5 | 0.1 | -0.2 |
| Work performed for own purposes and capitalised | 0.0 | 0.0 | 0.0 | 0.0 |
| Materials and services | -19.8 | -14.9 | -34.6 | -30.0 |
| Employee benefit expenses | -4.9 | -4.0 | -9.3 | -8.3 |
| Depreciations and amortisation | -0.9 | -1.0 | -1.8 | -1.8 |
| Impairment | 0.0 | 0.0 | 0.0 | 0.0 |
| Other operating expenses | -2.1 | -2.0 | -4.7 | -4.2 |
| Operating profit/loss | 2.1 | 2.6 | 3.1 | 3.4 |
| Financial income | 0.1 | 0.0 | 0.1 | 0.1 |
| Financial expenses | -0.2 | -0.2 | -0.3 | -0.3 |
| Share of profit/loss in associates | 0.0 | -0.1 | 0.0 | 0.0 |
| Profit/loss before taxes | 1.9 | 2.4 | 2.9 | 3.2 |
| Taxes | 0.2 | -0.6 | -0.1 | -0.9 |
| Profit/loss for the period | 2.1 | 1.8 | 2.8 | 2.3 |
| Other comprehensive income: | ||||
| Translation differences | -0.1 | 0.0 | -0.1 | 0.1 |
| Total comprehensive income for the period | 2.1 | 1.8 | 2.8 | 2.4 |
| Result for the period attributable to | ||||
| Equity holders of the parent | 2.1 | 1.8 | 2.8 | 2.3 |
| Non-controlling interest | 0.0 | 0.0 | 0.0 | 0.0 |
| 2.1 | 1.8 | 2.8 | 2.3 | |
| Comprehensive income attributable to | ||||
| Equity holders of the parent | 2.1 | 1.8 | 2.8 | 2.4 |
| Non-controlling interest | 0.0 | 0.0 | 0.0 | 0.0 |
| 2.1 | 1.8 | 2.8 | 2.4 | |
| Calculated from the result for the period attributable to equity holders of parent Earnings/share (EPS): | ||||
| Basic, EUR | 0.37 | 0.31 | 0.48 | 0.40 |
| Diluted, EUR | 0.37 | 0.31 | 0.48 | 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 STATEMENT OF FINANCIAL POSITION Unaudited | 31.12.2020 | 31.12.2019 |
| MEUR | ||
| Assets | ||
| Non-current assets | ||
| Property, plant and equipment | 13.7 | 11.6 |
| Goodwill | 0.1 | 0.1 |
| Other intangible assets | 0.5 | 0.3 |
| Investments in associated companies | 0.3 | 0.3 |
| Receivables | 0.1 | 0.1 |
| Deferred tax assets | 1.7 | 1.6 |
| 16.3 | 14.0 | |
| Current assets | ||
| Inventories | 4.6 | 4.4 |
| Trade and other receivables | 4.3 | 2.4 |
| Income tax receivables | 0.4 | 0.0 |
| Cash and cash equivalents | 7.0 | 7.1 |
| 16.3 | 13.9 | |
| Total assets | 32.6 | 27.9 |
| Equity and liabilities | 31.12.2020 | 31.12.2019 |
| Equity attributable to owners of the parent | ||
| Share capital | 9.9 | 9.9 |
| Share premium account | 0.5 | 0.5 |
| Invested unrestricted equity fund | 7.3 | 8.0 |
| Own shares | -1.3 | -1.4 |
| Translation differences | 0.1 | 0.2 |
| Retained earnings | -1.9 | -4.7 |
| 14.6 | 12.5 | |
| Non-controlling interests | 0.0 | 0.0 |
| Total equity | 14.6 | 12.5 |
| Non-current liabilities | ||
| Deferred tax liability | 0.2 | 0.1 |
| Provisions | 0.3 | 0.2 |
| Financial liabilities | 3.0 | 4.4 |
| 3.4 | 4.7 | |
| Current liabilities | ||
| Trade and other payables | 13.5 | 9.6 |
| Current tax liabilities | 0.0 | 0.1 |
| Provisions | 0.4 | 0.2 |
| Current financial liabilities | 0.8 | 0.8 |
| 14.6 | 10.7 | |
| Total liabilities | 18.0 | 15.4 |
| Total equity and liabilities | 32.6 | 27.9 |
| STATEMENT OF CHANGES IN EQUITY Abridged Unaudited | |||||||||||||||||||||
| EUR thousand | Equity attributable to owners of the parent | ||||||||||||||||||||
| a) | b) | c) | d) | e) | f) | Total | g) | Total equity | |||||||||||||
| Total equity 1.1.2019 | 9898 | 520 | 8034 | 102 | -1382 | -7046 | 10126 | 5 | 10131 | ||||||||||||
| Profit/loss for the period | 2321 | 2321 | 2321 | ||||||||||||||||||
| Translation differences | 63 | 63 | 63 | ||||||||||||||||||
| Redemption of minority interest | 5 | 5 | -5 | 0 | |||||||||||||||||
| Share based incentive scheme | 24 | 24 | 24 | ||||||||||||||||||
| Total equity 31.12.2019 | 9898 | 520 | 8034 | 164 | -1382 | -4696 | 12539 | 0 | 12539 | ||||||||||||
| EUR thousand | Equity attributable to owners of the parent | ||||||||||||||||||||
| a) | b) | c) | d) | e) | f) | Total | g) | Total equity | |||||||||||||
| Total equity 1.1.2020 | 9898 | 520 | 8034 | 164 | -1382 | -4696 | 12539 | 0 | 12539 | ||||||||||||
| Profit/loss for the period | 2814 | 2814 | 2814 | ||||||||||||||||||
| Translation differences | -54 | -54 | -54 | ||||||||||||||||||
| Return of capital | -703 | -703 | -703 | ||||||||||||||||||
| Share based incentive scheme | 72 | -45 | 28 | 28 | |||||||||||||||||
| Total equity 31.12.2020 | 9898 | 520 | 7331 | 111 | -1309 | -1927 | 14623 | 0 | 14623 | ||||||||||||
a) Share capital
b) Share premium account
c) Invested unrestricted equity fund
d) Translation differences
e) Own shares
f) Retained earnings
g) Non-controlling interests
| CONSOLIDATED STATEMENT OF CASH FLOWS Abridged Unaudited | 1.1.- 31.12.2020 | 1.1.- 31.12.2019 |
| MEUR | ||
| Cash flow from operating activities | 6.0 | 5.0 |
| Cash flow from investing activities, net | -3.7 | -3.1 |
| Total cash flows from financing activities | -2.4 | 1.1 |
| Proceeds from borrowings | 0.0 | 2.0 |
| Repayment of borrowings | -1.3 | -0.5 |
| Other financial items | -0.4 | -0.4 |
| Return of capital | -0.7 | 0.0 |
| Change in cash and cash equivalents | -0.1 | 3.0 |
| Effect of exchange rate changes | 0.1 | -0.0 |
| Cash and cash equivalents at the beginning of the year | 7.1 | 4.1 |
| Cash and cash equivalents at the close of the year | 7.0 | 7.1 |
NOTES TO THE REPORT
Accounting policies
This financial statement release has been drafted in accordance with IAS 34. The financial statements release should be read together with the 2019 financial statement. The financial statements have been drafted in accordance with the same accounting principles applied in the 2019 financial statements, with the exception of standards and interpretations that have come into force on 1 January 2020 or thereafter. The effect of new standards and interpretations is described in more detail below under “new standards and interpretations.”
This financial statement release has not been audited and the figures have not been examined by the auditor.
The figures presented in the release have been rounded, so the sum of individual figures may differ from the amount shown.
Unless otherwise stated, figures in parentheses refer to the corresponding period of the previous year.
New standards and interpretations
New standards and interpretations that have come into force on 1 January 2020 or thereafter have not affected the figures presented during the review period.
Alternative Performance Measures
Honkarakenne complies with the Guidelines on Alternative Performance Measures (APM) issued by the European Securities and Markets Authority (ESMA). An APM is a financial measure of performance other than a financial measure defined or specified in IFRS. For this reason, the term “adjusted” is used instead of “without non-recurring items”. As adjustment items, the company classifies significant business transactions that are considered to affect comparisons between different reporting periods. Such transactions include significant reorganisation expenses, significant impairment losses or reversals thereof, significant capital gains and losses on assets, and other significant non-customary income or expenses.
In Honkarakenne’s view, Alternative Performance Measures provide significant additional information to management, investors, securities analysts and other parties on Honkarakenne’s result of operations, financial position and cash flows, and are frequently used by analysts, investors and other parties. Return on equity, equity ratio, net financial liabilities and gearing are presented as supplementary key figures, as in the company’s view they are useful indicators for assessing Honkarakenne’s ability to acquire financing and pay its debts. In addition, gross investments and R&D expenditure provide additional information on needs related to Honkarakenne’s cash flow from operating activities.
Segments
From the beginning of 2020, Honkarakenne has two geographical operating segments that will be combined into one reportable segment. Geographically, sales are divided as follows: Finland and Exports. The internal reporting of the management is in line with IFRS reporting. For this reason, separate reconciliations are not presented.
Other notes to the report
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 financial year, ordinary business transactions with related parties were made as follows: sales of goods and services to related parties amounted to MEUR 0.2 (MEUR 0.2) ) and purchases from related parties to MEUR 0.4 (MEUR 0.5). Financial statements of the Group include MEUR 0.0 (MEUR 0.0) liabilities to related parties and MEUR 0.1 (MEUR 0.0) receivables from related parties. In 2020 or 2019 no bad debts were recognised from related parties.
In 2010 and 2011, the parent company Honkarakenne Oyj granted a long-term loan total of MEUR 0.9 to Honka Management Oy. The parent company has made write-offs of MEUR 0.3 in 2018 on this loan, but the write-offs was reversed in 2019. The write-offs or reverse of write-offs had no effect on the consolidated financial statements.
| Property, plant and equipment | ||
| Unaudited | ||
| MEUR | 31.12.2020 | 31.12.2019 |
| Cost 1.1. | 47.5 | 49.1 |
| Increase | 3.8 | 5.4 |
| Disposals | -0.3 | -6.9 |
| Cost 31.12. | 51.0 | 47.5 |
| Accumulated depreciation 1.1. | -35.9 | -41.0 |
| Accumulated depreciation of disposals | 0.2 | 6.9 |
| Depreciation for the period | -1.6 | -1.8 |
| Accumulated depreciation 31.12. | -37.3 | -35.9 |
| Carrying amount 1.1. | 11.6 | 8.1 |
| Carrying amount 31.12. | 13.7 | 11.6 |
Own shares
Honkarakenne has not acquired its own shares during the report period. In June, Honkarakenne transferred 15,000 of the company's Class B shares to the company's President and CEO as part of the President and CEO's 2019 performance bonus. At the end of the report period, the Group held 349,385 of its Honkarakenne Class B shares with a total purchase price of EUR 1,309,260.25. These shares represent 5.62% of the company's all shares and 2.93% of all votes. The purchase cost has been deducted from shareholders' equity in the consolidated financial statements.
| Contingent liabilities | |||||
| Unaudited | 31.12.2020 | 31.12.2019 | |||
| MEUR | |||||
| For own loans | |||||
| - Mortgages | 6.0 | 8.1 | |||
| - Other quarantees | 4.7 | 2.5 | |||
| Off-balance sheet lease contracts | 0.1 | 0.0 | |||
| Key indicators | |||||
| 1-12/ | 1-12/ | ||||
| Unaudited | 2020 | 2019 | |||
| Earnings/share (EPS) | euro | 0.48 | 0.40 | ||
| Return on equity | % | 21 | 20 | ||
| Equity ratio | % | 56 | 56 | ||
| Shareholders equity/share | euro | 2.49 | 2.14 | ||
| Net financial liabilities | MEUR | -3.3 | -1.9 | ||
| Gearing | % | -23 | -15 | ||
| Gross investments | MEUR | 4.1 | 3.2 | ||
| % | 8 | 7 | |||
| Order book | MEUR | 39.8 | 27.6 | ||
| Average number of personnel | White-collar | 97 | 87 | ||
| Blue-collar | 71 | 68 | |||
| Total | 168 | 155 | |||
| Personnel in person-years, average | White-collar | 93 | 83 | ||
| Blue-collar | 60 | 57 | |||
| Total | 153 | 139 | |||
| Adjusted number of shares (’000) | At period-end | 5862 | 5847 | ||
| Average during period | 5856 | 5847 | |||
Gross investments are presented without IFRS 16 right-of-use assets and investment grants received.
Own shares held by the Group are excluded from the number of shares.
| Calculation of key indicators | ||
| Profit / loss for the period attributable to owners of parent | ||
| Earnings/share (EPS): | ---------------------------------------------------------------------------- | |
| Average number of outstanding shares | ||
| Profit / loss before taxes – taxes | ||
| Return on equity %: | ---------------------------------------------------------------------------- | x 100 |
| Total equity, average | ||
| Owners’ equity | ||
| Owners equity/share: | ---------------------------------------------------------------------------- | |
| Number of outstanding shares at the end of period | ||
| Total equity | ||
| Equity ratio, %: | ---------------------------------------------------------------------------- | x 100 |
| Statement of financial position total - advances received | ||
| Net financial liabilities: | Financial liabilities – cash and cash equivalents | |
| Financial liabilities – cash and cash equivalents | ||
| Gearing, %: | ---------------------------------------------------------------------------- | x 100 |
| Total equity | ||