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
jari.raudanpaa@vesivek.fi
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
Attachments
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HLRE Holding Oyj -Q32023 FINAL.pdf
