HLRE Holding Plc´s interim report 1 August -31 October 2022
HLRE Holding Group
Report 1 February – 31 October 2022
Comparison figures in brackets refer to the corresponding period previous year.
Aug – Oct 2022 in short
- Q3 revenue equalled to EUR 40,4 million (EUR 40,3 million).
- Q3 gross profit increased by 3% to EUR 18,2 million (EUR 17,7 million).
- Q3 adjusted EBITDA decreased to EUR 6,9 million (EUR 7,2 million).
- Q3 operating profit was EUR 5,0 million (EUR 5,1 million).
- Q3 net cash from operating activities was EUR 7,1 million (EUR 9,5 million).
February – Oct 2022 in short
- Q1-Q3 revenue decreased by 2% to EUR 101,0 million (EUR 103,4 million).
- Q1-Q3 gross profit decreased by 4% to EUR 41,4 million (EUR 43,2 million).
- Q1-Q3 adjusted EBITDA decreased to EUR 10,5 million (EUR 12,2 million).
- Q1-Q3 operating profit was EUR 4,2 million (EUR 4,8 million).
- Q1-Q3 net cash from operating activities was EUR 4,8 million (EUR 11,1 million).
Key Figures
HLRE HOLDING GROUP IN MEUR IFRS | Aug-Oct 2022 | Aug -Oct 2021 | Feb-Oct 2022 | Feb-Oct 2021 | Feb 2021-Jan 2022 | |||||
Revenue | 40,4 | 40,3 | 101,0 | 103,2 | 130,4 | |||||
Gross profit | 18,2 | 17,7 | 41,4 | 43,2 | 55,3 | |||||
Gross margin | 45,1 % | 43,9 % | 41,0 % | 41,9 % | 42,4 % | |||||
Adjusted EBITDA | 6,9 | 7,2 | 10,5 | 12,2 | 13,8 | |||||
EBIT | 5,0 | 5,1 | 4,2 | 4,8 | 4,4 | |||||
Net cash from operating activities | 7,1 | 9,5 | 4,8 | 11,1 | 7,3 |
Company description
HLRE Holding Group (commonly known as Vesivek Group) is a leading provider of roof and roof product renovations offered primarily to detached and row houses in Finland and Sweden under the brand name Vesivek. In addition to roof and roof product installations, Vesivek provides underground drain renovations in five locations in Finland. The Group also develops, manufactures, and sells high quality rainwater systems and roof safety products.
HLRE Holding Group operates currently in 17 locations in Finland and three locations in Sweden and employs more than 850 employees in average. The Group has two in-house manufacturing facilities in Finland, steel roofing profile production in Pirkkala and manufacture of rainwater systems and roof safety products in Orimattila.
Management Overview of the third quarter
Group`s business environment continued to be challenging on the third quarter due to the increased geopolitical risks related to the crisis in Ukraine and the high inflation especially in building materials and energy. Increasing general uncertainty influenced on the demand for the Vesivek’s services both in Finland and Sweden in Q3. Group balanced inventory levels between decreasing demand and uncertainty on short-term material availability during Q3 and total inventory levels ended up on downtrend at the end of Q3. However, Group is still likely to continue to hold somewhat higher inventory levels compared to normal levels in order to ensure delivery capability and is at the same time regularly investigating all information available on the market demand.
Third quarter 2022
The Q3 revenue equaled to EUR 40,4 million (40,3 million) and gross profit increased to EUR 18,2 million (17,7 million). Reported EBITDA was EUR 6,8 million (7,1 million) and adjusted EBITDA was EUR 6,9 million (7,2 million). Reported adjustments totaled to EUR 0,1 million (EUR 0,1 million) in Q3 including legal and leadership development project costs. lmpacts of the adjustments to the operating cashflow in Q3 amounted to EUR 0,1 million (EUR 0,1 million). Q3 net cash from operating activities was EUR 7,1 million (9,5 million).
Q1-Q3 2022
The Q1-Q3 revenue decreased to EUR 101,0 million (103,4 million) and gross profit decreased to EUR 41,4 million (43,2 million). Reported EBITDA decreased to EUR 10,0 million (10,7 million). Adjusted EBITDA decreased to EUR 10,5 million (12,2 million). Reported adjustments totaled to EUR 0,6 million (EUR 1,5 million) in Q1-Q3 including legal and financial advisory costs for the bond listing to Stockholm stock exchange in February 2022 of EUR 0,15 million, other legal costs of EUR 0,2 million and a leadership development project cost of EUR 0,25 million. Impact of the adjustments to the operating cashflow in Q1-Q3 amounted to EUR 0,6 million (EUR 0,5 million). Net cash from operating activities decreased compared to the same period previous year and was EUR 4,8 million (11,0 million) due to the cash flow effect of the weaker business performance especially on the roof and roof product renovations in Finland and the negative working capital changes compared to Q1-Q3 2021, EUR -2,3 million (1,7 million), and the higher net finance and tax expenses.
Outlook for the financial year 1 February 2022 – 31 January 2023
No outlook for the financial year 1 February 2022 – 31 January 2023.
Risks and uncertainties
The Group's revenues and operating profit are affected by general economic conditions, which are, in turn, influenced by many factors beyond the Group's control. The Group currently operates in Finland and Sweden. Currently, the majority of the Group's operations are located in Finland but growth in both markets, for example, by way of increasing market share and/or expanding the Group's product and service offering is an important factor in fulfilling the Group's strategic objectives. Respectively, the Group's revenue and operating profit are particularly susceptible to general economic conditions and perception of future general economic conditions in the Finnish and Swedish markets.
Uncertainty or adverse trends in general economic conditions could affect the Group's business and demand for the Group's products and services through, inter alia, affecting consumer confidence as well as through adverse impacts on the business activities of the Group's corporate clients purchasing the Group's rainwater systems and roof safety products. Importantly, the general economic conditions may adversely affect the level and cost of financing available to the Group's consumer and corporate clients to make investments in renovations and refurbishments. Moreover, increases in the costs of financing and decreases in the level of available financing may adversely affect the Group's ability to make investments and fulfil its strategic objectives and may have a material adverse effect on the Group's business, financial position and results. Through its manufacturing operations, the Group is furthermore exposed to the risk of fluctuations in certain commodity prices (such as steel, aluminium and wood) and energy prices (especially through fuel costs for vehicles) and increases in prices due to economic disruptions and changes in general market conditions may have an adverse effect on the Group's business, financial position and results. All of the factors mentioned above could harm the Group's operations and the Group cannot predict the ways in which the future economic environment and market conditions may affect the Group's operations.
In general, the frequency of accidents at construction sites is worth noticing and the Group operates in a business segment subject to extensive laws and regulations regarding the work environment. Despite required health and safety measures and, for example, the use of scaffoldings on its construction sites improving the safety of the personnel, the Group is exposed to the risk of, possibly even fatal, accidents at the workplace especially on its roof renovation sites but also at its manufacturing facilities. In addition to physical injuries, employees of the Group are exposed to risks related to hazardous substances as certain of the Groups renovation sites contain asbestos. Respectively, the Group must also comply with specific environmental regulations with respect to asbestos. Finnish legislation includes particularly stringent requirements for any activities involving asbestos and the safety requirements for such activities. Any failure to comply with the regulations concerning health and safety or asbestos related activities may result in liability for the Group and/or the Group’s permit being revoked. For example, if Group’s permit to handle asbestos would be revoked, the Group would need to stop all business activities relating to handling of asbestos and acquire the work through subcontractors. Moreover, all potential accidents and health impacts have an adverse effect on its personnel's well-being. The Group as an employer is exposed to the risks related to health and safety issues of its employees possibly resulting in reduced working capacity of employees.
The Group may, in the future, become in breach of financial covenants and other obligations in its financing agreements that constitute grounds for termination or acceleration. A failure by the Group to obtain necessary capital in the future, or obtaining financing on less favourable terms, may have an adverse effect on the Group's business, financial position and results.
For more information
Jari Raudanpää, CFO
+358 40 566 6399
HLRE Holding Oyj
2611405-7
Consolidated Statement of Comprehensive Income | |||||
1000 EUR | 1.8.-31.10.2022 | 1.2.2022-31.10.2022 | 1.8.-31.10.2021 | 1.2.2021-31.10.2021 | 1.2.2021-31.1.2022 |
REVENUE | 40 362 | 101 039 | 40 276 | 103 158 | 130 352 |
Other operating income | 249 | 878 | 279 | 745 | 1 063 |
Material and services | -14 849 | -37 527 | -14 314 | -36 792 | -45 375 |
Employee benefits expense | -12 831 | -37 002 | -13 522 | -38 701 | -50 257 |
Depreciation and amortisation | -1 890 | -5 764 | -1 970 | -5 890 | -7 855 |
Other operating expenses | -6 070 | -17 428 | -5 600 | -17 756 | -23 572 |
OPERATING PROFIT | 4 970 | 4 196 | 5 148 | 4 764 | 4 356 |
Finance income | 1 049 | 1 076 | -111 | 449 | 1 146 |
Finance cost | -1 053 | -2 999 | -1 389 | -3 171 | -4 148 |
Finance cost - net | -4 | -1 923 | -1 500 | -2 722 | -3 003 |
PROFIT/LOSS BEFORE TAX | 4 966 | 2 273 | 3 648 | 2 042 | 1 353 |
Income tax expense | -805 | -566 | -604 | -455 | -663 |
PROFIT/LOSS FOR THE PERIOD | 4 161 | 1 708 | 3 044 | 1 587 | 691 |
Profit attributable to: | |||||
Owners of the parent company | 3 769 | 1 411 | 2 787 | 1 437 | 623 |
Non-controlling interests | 392 | 296 | 258 | 150 | 68 |
4 161 | 1 708 | 3 044 | 1 587 | 691 | |
Other comprehensive income: | |||||
Items that may be reclassified subsequently to profit or loss | |||||
Exchange differences on translating foreign operations | -88 | -79 | 28 | 22 | -54 |
Items that may be reclassified subsequently to profit or loss | -88 | -79 | 28 | 22 | -54 |
TOTAL COMPREHENSIVE INCOME | 4 073 | 1 628 | 3 072 | 1 608 | 637 |
Total comprehensive income attributable to: | |||||
Owners of the parent company | 3 688 | 1 339 | 2 811 | 1 456 | 574 |
Non-controlling interests | 385 | 289 | 260 | 152 | 63 |
4 073 | 1 628 | 3 072 | 1 608 | 637 |
Consolidated Statement of Financial Position | |||
1000 EUR | 31.10.2022 | 31.10.2021 | 31.1.2022 |
ASSETS | |||
NON-CURRENT ASSETS | |||
Goodwill | 40 304 | 40 304 | 40 304 |
Intangible assets | 858 | 723 | 657 |
Property, plant, equipment | 25 952 | 25 769 | 27 188 |
Other non-current financial assets | 48 | 48 | 48 |
Loan receivables | 22 | 18 | 7 |
Other non-current receivables | 0 | 39 | 26 |
Deferred tax assets | 168 | 406 | 169 |
NON-CURRENT ASSETS | 67 352 | 67 308 | 68 400 |
CURRENT ASSETS | |||
Inventories | 17 137 | 13 416 | 15 464 |
Trade receivables and other receivables | 13 031 | 12 880 | 9 859 |
Cash and cash equivalents | 5 342 | 11 307 | 5 201 |
CURRENT ASSETS | 35 509 | 37 603 | 30 524 |
ASSETS | 102 861 | 104 911 | 98 923 |
EQUITY AND LIABILITIES | |||
Owners of the parent company | 29 372 | 28 868 | 26 227 |
Non-controlling interests | 252 | 52 | -37 |
EQUITY | 29 625 | 28 919 | 27 963 |
NON-CURRENT LIABILITIES | |||
Non-current liabilities, interest-bearing | 50 538 | 51 752 | 51 197 |
Non-current interest-free liabilities | 422 | 389 | 422 |
Deferred tax liabilities | 106 | 117 | 216 |
NON-CURRENT LIABILITIES | 51 066 | 52 258 | 51 834 |
CURRENT LIABILITIES | |||
Current interest-bearing liabilities | 4 755 | 4 269 | 4 633 |
Current interest-free liabilities | 17 415 | 19 465 | 14 494 |
CURRENT LIABILITIES | 22 170 | 23 735 | 19 126 |
Liabilities | 73 236 | 75 992 | 70 960 |
EQUITY AND LIABILITIES | 102 861 | 104 911 |
98 923
|
Consolidated Statement of Cash Flows, indirect | |||||
1000 EUR | 1.8.2022-31.10.2022 | 1.8.2021-31.10.2021 | 1.2.2022-31.10.2022 | 1.2.2021-31.10.2021 | 1.2.2021-31.1.2022 |
Cash flows from operating activities | |||||
PROFIT/LOSS FOR THE PERIOD | 4 161 | 3 044 | 1 708 | 1 587 | 691 |
Adjustments to the profit/loss for the period | 2 678 | 3 744 | 8 184 | 10 038 | 12 566 |
Working capital changes | 1 170 | 3 287 | -2 264 | 1 716 | -2 382 |
Cash flow from operating activities before finance and taxes |
8008 | 10075 | 7628 | 13341 | 10874 |
Finance income and expense | -749 | -424 | -2 089 | -1 831 | -2 880 |
Income taxes paid | -137 | -183 | -747 | -472 | -661 |
Net cash from operating activities | 7 122 | 9 468 | 4 792 | 11 038 | 7 333 |
Cash flows from investing activities | |||||
Purchase of tangible and intangible assets | -707 | -771 | -1 445 | -1 590 | -3 160 |
Proceeds from sale of tangible and intangible assets | 59 | 186 | 277 | 330 | 326 |
Acquisition of subsidiaries, net of cash acquired | 0 | 0 | 0 | -194 | -201 |
Addition / deduction of loan receivables | -13 | -65 | -9 | 195 | 273 |
Addition / deduction of cash equivalents | -21 | 10 | -21 | 10 | 0 |
Net cash used in investing activities | -681 | -640 | -1 190 | -1 249 | -2 762 |
0 | 0 | ||||
Cash flows from financing activities | 0 | 0 | |||
Proceeds from issue of share capital | 0 | 0 | 0 | 0 | 0 |
Capital investment by non-controlling interests | 0 | 0 | 0 | 0 | 0 |
Purchase of treasury shares | 0 | 0 | 0 | 0 | -28 |
Proceeds from sale of treasury shares | 9 | 0 | 9 | 78 | 78 |
Proceeds from current borrowings | -411 | 0 | 0 | 0 | 0 |
Repayment of current borrowings | 0 | -3 | -6 | -25 817 | -25 820 |
Addition / deduction of current borrowings | 3 | -1 | -7 | 0 | 8 |
Proceeds from non-current borrowings | 72 | 0 | 210 | 28 781 | 29 045 |
Repayment of non-current borrowings | 2 | -125 | 1 | 17 | 29 |
Payment of lease liabilities | -1 251 | -1 123 | -3 668 | -3 758 | -4 900 |
Net cash used in financing activities | -1 576 | -1 252 | -3 461 | -701 | -1 588 |
0 | 0 | ||||
Net change in cash and cash equivalents | 4 865 | 7 576 | 141 | 9 088 | 2 982 |
0 | 0 | ||||
Cash and cash equivalents, opening amount | 477 | 3 731 | 5 201 | 2 219 | 2 219 |
Net increase/decrease in cash and cash equivalents | 4 865 | 7 576 | 141 | 9 088 | 2 982 |
Effects of exchange rate fluctuations on cash held | 0 | 0 | 0 | 0 | |
0 | 0 | ||||
Cash and cash equivalents | 5 342 | 11 307 | 5 342 | 11 307 | 5 201 |
Cash and cash equivalents, other arrangements | 0 | 0 | 0 | 0 | 0 |
Consolidated Statement of Changes in Equity
Attributable to owners of the Company
1000 EUR | Share capital | Reserve for invested unrestricted equity | Translation differences | Accumulated earnings | Total | Non-controlling interests | Total equity |
EQUITY 1 Feb 2022 | 80 | 18 002 | -17 | 9 935 | 28 000 | -37 | 27 963 |
Adjusted equity | 80 | 18 002 | -17 | 9 935 | 28 000 | -37 | 27 963 |
Comprehensive income | |||||||
Profit/loss for the period | 1 411 | 1 411 | 296 | 1 708 | |||
Other comprehensive income: | |||||||
Translation differences | 0 | 0 | -97 | 25 | -72 | -7 | -79 |
TOTAL COMPREHENSIVE INCOME | 0 | 0 | -97 | 1 436 | 1 339 | 289 | 1 628 |
Transactions with owners | |||||||
Other changes | 0 | 0 | 0 | 15 | 15 | 5 | 20 |
Total transactions with owners | 0 | 0 | 0 | 15 | 15 | 8 | 23 |
TOTAL EQUITY 31 Oct 2022 | 80 | 18 002 | -114 | 11 395 | 29 381 | 252 | 29 633 |
1000 EUR | Share capital | Reserve for invested unrestricted equity | Translation differences | Accumulated earnings | Total | Non-controlling interests | Total equity |
EQUITY 1 Feb 2021 | 3 | 18079 | 32 | 9310 | 27423 | 93 | 27515 |
Comprehensive income | |||||||
Profit/loss for the period | 623 | 623 | 68 | 691 | |||
Other comprehensive income: | |||||||
Translation differences | -49 | -49 | -5 | -54 | |||
TOTAL COMPREHENSIVE INCOME | -49 | 623 | 574 | 63 | 637 | ||
Transactions with owners | |||||||
Acquisition of treasury shares | -28 | -28 | -28 | ||||
Sale of treasury shares | 102 | 102 | 102 | ||||
Reclassifications | 78 | -78 | |||||
Other changes | -62 | -62 | -15 | -77 | |||
Total transactions with owners | 78 | -78 | 11 | 11 | -15 | -3 | |
Changes in ownership interests in subsidiaries | |||||||
Changes of non-controlling interests without change in control | -7 | -7 | 1 | -6 | |||
Changes with change in control | 0 | 0 | 0 | -180 | -180 | ||
TOTAL EQUITY 31 Jan 2022 | 80 | 18002 | -17 | 9937 | 28000 | -37 | 27963 |
Use of Alternative Performance Measures
Alternative Performance Measures (APM) are financial measures of historical or future financial performance, financial position, or cash flows, other than financial measures defined or specified in the applicable financial reporting framework. HLRE Group reports the financial measures [Gross profit], [Gross margin] and [Adjusted EBITDA] in its quarterly reports, which are not financial measures as defined in IFRS. The Group believes that the alternative performance measures provide significant additional information on HLRE’s results of operations, financial position and cash flows The APMs are used consistently over time and accompanied by comparatives for the previous periods.
Gross profit= Revenues – cost of goods sold
Gross margin (%) = Gross profit in relation to Revenue
EBITDA = Operating profit (EBIT) + Depreciation + Amortization
EBITDA % = EBITDA in relation to Revenue
Adjusted EBITDA = EBITDA - EBITDA Adjustments
Adjusted EBITDA % = (EBITDA - EBITDA Adjustments) / Revenue
Operating profit (EBIT) % = Operating profit in relation to Revenue
EBITDA adjustments = IFRS loss of sale and lease back arrangement, advisory and other transaction costs related to re-financing and other non-recurring costs
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