HONKARAKENNE OYJ FINANCIAL STATEMENT RELEASE 11 February 2016 at 09:30 a.m.
HONKARAKENNE OYJ’S FINANCIAL STATEMENT RELEASE 1 JANUARY – 31 DECEMBER 2015
SUMMARY
Net sales for 2015 saw a year-on-year contraction of 14 per cent. Net sales fell in both Finland & Baltics and Russia & CIS, but increased in Global Markets. The result before taxes remained in the red. Net sales for the fourth quarter fell by 14 per cent on the corresponding period of the previous year. At year-end, the Group's order book was 20 per cent higher than at the end of the previous year. Sales of detached homes in Finland in particular contributed to this rise.
October - December 2015
- Honkarakenne Group's consolidated net sales for the last quarter of the year amounted to MEUR 9.9 (MEUR 11.5 in 2014), representing a decrease over the same period the previous year of 14 %
- Operating profit/loss was MEUR -0.1 (MEUR -0.3). Operating profit/loss without non-recurring items was MEUR 0.2 (MEUR -0.1)
- Loss before taxes was MEUR -0.3 (MEUR -0.4)
- Earnings per share amounted to EUR -0.02 (EUR -0.04)
Year 2015
- Honkarakenne Group’s consolidated net sales for the entire year was MEUR 39.1 (45.5), representing a decrease over the same period the previous year of 14 %
- Operating loss was MEUR -1.1 (MEUR -2.2). Operating loss before non-recurring items was MEUR -0.2 (MEUR -2.0)
- Loss before taxes was MEUR -1.7 (MEUR -2.5)
- Earnings per share amounted to EUR -0.23 (EUR -0.40)
The Board of Directors proposes to the Annual General Meeting that no dividend be paid for the financial year ended 31 December 2015.
Honkarakenne expects net sales for 2016 to remain at the same level as in the previous year. Due to the development measures, the result before non-recurring items and taxes is expected to improve.
At the end of December, the Group's order book stood at MEUR 15.0, up 20 % on the corresponding period of the previous year, when it stood at MEUR 12.5. 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.
It is currently more difficult to acquire funding from financial markets. Some of the company’s loans carry a 30 per cent equity ratio covenant term. At the end of the year the equity ratio stood at 37 % (37 %).
| KEY INDICATORS |
10–12/ 2015 |
10–12/ 2014 |
1-12/ 2015 |
1-12/ 2014 |
||
| Net sales, MEUR | 9.9 | 11.5 | 39.1 | 45.5 | ||
| Operating profit/loss, MEUR | -0.1 | -0.3 | -1.1 | -2.2 | ||
| Operating profit excluding non-recurring items, MEUR | 0.2 | -0.1 | -0.2 | -2.0 | ||
| Profit/loss before taxes, MEUR | -0.3 | -0.4 | -1.7 | -2.5 | ||
| Average number of personnel | 135 | 151 | 139 | 161 | ||
| Personnel in person-years, average | 108 | 119 | 115 | 146 | ||
| Earnings/share | -0.02 | -0.04 | -0.23 | -0.40 | ||
| Equity ratio, % | 37 | 37 | ||||
| Return on equity, % | -13 | -20 | ||||
| Shareholders' equity/share, EUR | 1.61 | 1.80 | ||||
| Gearing, % | 81 | 92 |
Marko Saarelainen, President and CEO of Honkarakenne Oyj, in connection with the financial statement release:
“The trend in net sales in Finland fell from previous year. I am, however, satisfied with the outlook for Finland in 2016. The trade in detached houses in particular looks promising. In 2015, we signed over 60 per cent more deals for detached homes than in the previous year, and sales of detached houses in Finland have been the most significant contributing factor to our improved order book. The order book for vacation homes is also higher than last year.
The market has been difficult in Russia and, in particular, CIS countries. Taking the market situation into account, our sales in Russia have weathered the financial crisis well due to our strong market position. Although sales in Russia have fallen, Russia's net sales for 2015 were at the same level as in 2013, before the crisis in Ukraine.
Net sales in Global Markets grew thanks to favourable trends in project sales.
Compared to the previous year the change in operating result without non-recurring items was negatively impacted by the decline of 6.4 million euros in net sales and positively impacted by the 3 million euros development programme implemented by the Group as well as benefits due to the modernization work at Karstula Mill carried out in previous years.
We have engaged in cooperation with the Chinese authorities to establish standards for log construction in China. Our goal is to obtain an acceptance for Honkarakenne products during the first half of 2016 – we would then be the only accepted supplier of log buildings in China. Only accepted suppliers are allowed to participate in public sector projects. In September 2015, the Chinese government announced a programme in which China will be promoting wood construction for ecological reasons.”
NET SALES
Honkarakenne Group’s net sales for the year 2015 decreased by 14 per cent to MEUR 39.1 (MEUR 45.5).
The Group’s last-quarter net sales in 2015 decreased by 14 per cent to MEUR 9.9 (MEUR 11.5).
Geographical distribution of net sales:
| DEVELOPMENT OF SALES | ||||||
|
Distribution of net sales, % |
1-12 /2015 |
1-12 /2014 |
||||
| Finland & Baltics | 42 % | 48 % | ||||
| Russia & CIS | 31 % | 31 % | ||||
| Global Markets | 28 % | 20 % | ||||
| Total | 100 % | 100 % | ||||
| Net sales, MEUR |
10-12 /2015 |
10-12 /2014 |
% change |
1-12 /2015 |
1-12 /2014 |
% change |
| Finland & Baltics | 3.0 | 4.6 | -35 % | 16.3 | 22.0 | -26 % |
| Russia & CIS | 5.0 | 4.2 | 19 % | 12.0 | 14.3 | -16 % |
| Global Markets | 1.9 | 2.6 | -27 % | 10.8 | 9.3 | 17 % |
| Total | 9.9 | 11.5 | -14 % | 39.1 | 45.5 | -14 % |
Finland & Baltics includes the following countries: Finland, Estonia, Latvia and Lithuania.
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 15.0 at the end of December. In the previous year at the same time period it was MEUR 12.5.
TRENDS IN PROFIT AND PROFITABILITY
The operating loss in 2015 was MEUR -1.1 (MEUR -2.2) and the result before taxes MEUR -1.7 (MEUR -2.5). The result includes MEUR 0.8 (MEUR 0.2) in non-recurring expenses relating to the CEO's severance pay, personnel redundancies, and write-offs.
For the period January–December, the operating loss excluding non-recurring items was MEUR -0.2 (MEUR -2.0). Compared to the previous year the change in operating result without non-recurring items was negatively impacted by the decline of 6.4 million euros in net sales and positively impacted by the 3 million euros development programme implemented by the Group as well as benefits due to the modernization work at Karstula Mill carried out in previous years.
FINANCING AND INVESTMENTS
The financial position of the Group was satisfactory at the end of the report period. The equity ratio stood at 37 % (37 %) and net financial liabilities at MEUR 6.5 (MEUR 8.2). MEUR 1.9 (MEUR 2.0) of the financial liabilities carries a 30 % equity ratio covenant term. Group liquid assets totalled MEUR 1.1 (MEUR 1.0). The Group also has a MEUR 7.8 (MEUR 8.0) bank overdraft facility, MEUR 2.5 of which had been drawn on at the end of the report period (MEUR 4.2). Gearing stood at 81 % (92 %).
The Group’s capital expenditure on fixed assets totalled MEUR 0.1 (MEUR 0.9), while the Group’s depreciations and amortisation totalled MEUR 2.0 (MEUR 2.2). The Alajärvi Mill property was transferred to non-current assets held for sale.
PRODUCTS AND MARKETING
In Finland & Baltics, Honkarakenne continued to invest in increasing sales of detached houses. Particular efforts were made in developing the collection. For the second year in a row, a Honkarakenne model was voted as Finland's best detached house in a competition on the rakentaja.fi website. Myrskytuuli won the competition in 2015 and Lounatuuli in 2014. At the Vantaa Housing Fair, Honkarakenne launched the Savu collection, which is especially designed for small urban plots. Towards the end of the fair, Honkarakenne also unveiled the new modular Pa-La collection, whose modifiability facilitates clients’ house design. In 2015, Honkarakenne signed over 60 per cent more deals for detached homes than in the previous year. Sales of detached homes have been a significant contributing factor in order book growth.
Favourable trends were seen in advance sales of vacation homes towards the end of the year, and the order book for vacation homes ended the year on a higher level than in 2014.
In Russia & CIS, Honkarakenne continued to work on area development projects in Russia with a local dealer. In Russia, construction is increasingly focusing on area development projects in which several Honkarakenne houses are implemented in a single area.
The market has been difficult in Russia and, in particular, CIS countries. Russia's economic situation, the price of oil, and exchange rate fluctuations were also reflected in the market for Honkarakenne products in Russia. Taking the market situation into account, Russian sales have weathered the financial crisis well due to our strong market position. Although sales in Russia have fallen, Russia's net sales for 2015 were at the same level as in 2013, before the crisis in Ukraine. Honkarakenne is keeping a close eye on developments in Russia.
In Global Markets, net sales were up on the previous year. The most significant factor contributing to this growth comprised successful project sales in Africa in particular.
Development work in a future growth area – China – continued. Honkarakenne has engaged in cooperation with the Chinese authorities to establish standards for log construction in China. The goal is to obtain an acceptance for Honkarakenne products during the first half of 2016 – the company would then be the only accepted supplier of log buildings in China. Only accepted suppliers are allowed to participate in public sector projects. In September 2015, the Chinese government announced a programme in which China will be promoting wood construction for ecological reasons.
RESEARCH AND DEVELOPMENT
R&D focused on the special characteristics of detached house sales. Honkarakenne introduced a corner solution for the urban environment that is a complete departure from the cross corners seen in traditional log houses. This will significantly increase Honka’s sales opportunities.
In addition, the company's R&D continued to focus on the special features of the Chinese market in sales of Honkarakenne's log houses.
In the January–December period, the Group's R&D expenditure totalled MEUR 0.4 (MEUR 0.5), representing 0.9 % of net sales (1.0 %). The Group did not capitalise any development expenditure during the financial year.
PERSONNEL
In terms of person years, the Group employed a total of 115 (146) people in average in 2015, representing a year-on-year decrease of 31.
In 2015 the Group employed 139 (161) people on average. By the end of the year, the Group employed 134 (148) people.
In November, the Group conducted negotiations under the act on co-operation within undertakings that resulted in temporary lay-offs of maximum 90 days for all clerical and managerial employees in Finland until the end of May 2016. In August–September, the Group also conducted negotiations under the act on co-operation within undertakings that resulted in temporary lay-offs of maximum 90 days for all production employees in Finland until the end of May 2016.
MANAGEMENT
Honkarakenne streamlined its management during the third quarter. President and CEO Marko Saarelainen took greater responsibility for customer work and is in charge for all sales areas.
Mika Koivisto, former Vice President of Business Area Finland and Peter Morinov, former Vice President of Business Area Russia and CIS, moved to Sales Manager positions inside the company but did not continue as members of the company’s management team. Pekka Elo, former Vice President of Business Area Global Markets, did not continue working with the company.
President and CEO Mikko Kilpeläinen was relieved of his duties at the end of March. The company's CFO Mikko Jaskari was the acting President and CEO until Marko Saarelainen was appointed as Honkarakenne's President and CEO at the end of the second quarter.
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.
At the end of 2015, payouts from the share scheme were assessed as zero for the entire performance period 2013- 2016, and any amounts previously recognised for the scheme were cancelled. This resulted in a total cost reduction of EUR 33 thousand.
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.
It is currently more difficult to acquire funding from financial markets. Some of the company’s loans carry a 30 % equity ratio covenant term. At the end of the year the equity ratio stood at 37 % (37 %). If the company's sales do not develop as expected, it is possible that the terms of the covenant will be broken during the first half of the year. The company has launched negotiations on new loan financing with banks and potential other financiers.
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.
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 financial statement release has been drafted in accordance with IAS 34. The principles adhered to in preparing the annual financial statements 2014 also apply to this financial statement release but new and amended IFRS standards and interpretations effective in 2015 have been applied. Amended standards and interpretations effective from the beginning of year 2015 have no bearing on the figures presented for the report period.
The figures have not been examined by the auditor.
EVENTS AFTER THE REVIEW PERIOD
No significant events.
PROPOSAL OF THE BOARD OF DIRECTORS ON THE USE OF PROFIT FUNDS
The parent company has no distributable funds and no funds can be allocated as profits. The parent company posted a MEUR -1.6 loss for the financial year.
The Board of Directors proposes to the Annual General Meeting that no dividend be paid for the financial year ended 31 December 2015.
THE OUTLOOK FOR 2016
Honkarakenne expects net sales for 2016 to remain at the same level as in the previous year. Due to the development measures, the result before non-recurring items and taxes is expected to improve.
GENERAL MEETING
The Annual General Meeting of Honkarakenne Oyj will be held at the company’s headquarters in Tuusula on Friday 15 April 2016 at 2:00 pm.
HONKARAKENNE OYJ
Board of Directors
Further information:
Marko Saarelainen, President and CEO, tel. +358 40 542 0254, marko.saarelainen@honka.com
or
Mikko Jaskari, CFO 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.
Honkarakenne will publish the Directors’ Report and Financial Statements for 2015 as well as a separate Corporate Governance Statement on the company’s website at www.honka.com latest in week 12. Interim Reports for 2016 will be published on 4 May 2016, 4 August 2016 and 27 October 2016.
DISTRIBUTION
NASDAQ OMX Helsinki
Key media
Financial Supervisory Authority
www.honka.com
| CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME | ||||
| unaudited | 10-12 /2015 | 10-12 /2014 | 1-12 /2015 | 1-12 /2014 |
| MEUR | ||||
| Net sales | 9.9 | 11.5 | 39.1 | 45.5 |
| Other operating income | 0.2 | 0.1 | 0.3 | 0.5 |
| Change in inventories | 0.0 | -1.8 | -0.6 | -2.1 |
| Materials and services | -6.4 | -6.0 | -24.8 | -29.2 |
| Employee benefit expenses | -1.7 | -2.0 | -7.5 | -8.3 |
| Depreciations and amortisation | -0.5 | -0.6 | -2.0 | -2.2 |
| Impairment | -0.2 | -0.0 | -0.3 | -0.0 |
| Other operating expenses | -1.4 | -1.4 | -5.3 | -6.4 |
| Operating profit/loss | -0.1 | -0.3 | -1.1 | -2.2 |
| Financial income | 0.0 | 0.1 | 0.2 | 0.1 |
| Financial expenses | -0.2 | -0.2 | -0.8 | -0.5 |
| Share of associated companies' result | -0.0 | -0.0 | -0.1 | -0.0 |
| Profit/loss before taxes | -0.3 | -0.4 | -1.7 | -2.5 |
| Taxes | 0.2 | 0.2 | 0.6 | 0.6 |
| Profit/loss for the period | -0.1 | -0.2 | -1.1 | -1.9 |
| Other comprehensive income | ||||
| Translation differences | 0.0 | -0.1 | 0.2 | -0.0 |
|
Total comprehensive income for the period |
-0.0 | -0.3 | -0.9 | -2.0 |
| Result for the period attributable to | ||||
| Equity holders of the parent | -0.1 | -0.2 | -1.1 | -1.9 |
| Non-controlling interest | -0.0 | -0.0 | -0.0 | -0.0 |
| -0.1 | -0.2 | -1.1 | -1.9 | |
| Comprehensive income attributable to | ||||
| Equity holders of the parent | -0.0 | -0.3 | -0.9 | -2.0 |
| Non-controlling interest | -0.0 | -0.0 | 0.0 | 0.0 |
| -0.0 | -0.3 | -0.9 | -2.0 | |
|
Calculated from the result for the period attributable to equity holders of parent Earnings/share (EPS), EUR |
||||
| Basic | -0.02 | -0.04 | -0.23 | -0.40 |
| Diluted | -0.02 | -0.04 | -0.23 | -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 |
31.12.2015 |
31.12.2014 |
| MEUR | ||
| Assets | ||
| Non-current assets | ||
| Property, plant and equipment | 11.4 | 14.5 |
| Goodwill | 0.1 | 0.1 |
| Other intangible assets | 0.2 | 0.3 |
| Investments in associated companies | 0.2 | 0.3 |
| Receivables | 0.2 | 0.2 |
| Deferred tax assets | 2.7 | 2.1 |
| 14.8 | 17.5 | |
| Current assets | ||
| Inventories | 4.2 | 4.9 |
| Trade and other receivables | 3.7 | 4.5 |
| Cash and bank receivables | 1.1 | 1.0 |
| 9.1 | 10.4 | |
| Non-current assets held for sale | 1.0 | 0.0 |
| Total assets | 24.9 | 27.9 |
| Shareholders' equity and liabilities | 31.12.2015 | 31.12.2014 |
|
Equity attributable to equity holders of the parent company |
||
| Share capital | 9.9 | 9.9 |
| Share premium account | 0.5 | 0.5 |
| Fund for invested unrestricted equity | 6.5 | 6.5 |
| Own shares | -1.4 | -1.4 |
| Translation differences | -0.0 | -0.2 |
| Retained earnings | -7.8 | -6.6 |
| 7.8 | 8.7 | |
| Non-controlling interests | 0.2 | 0.2 |
| Total equity | 8.0 | 8.9 |
| Non-current liabilities | ||
| Provisions | 0.2 | 0.3 |
| Financial liabilities | 4.5 | 7.4 |
| 4.8 | 7.7 | |
| Current liabilities | ||
| Trade and other payables | 8.6 | 8.8 |
| Current tax liabilities | 0.1 | 0.0 |
| Provisions | 0.3 | 0.6 |
| Current financial liabilities | 3.1 | 1.8 |
| 12.1 | 11.3 | |
| Liabilities of non-current assets held for sale | 0.1 | 0.0 |
| Total liabilities | 16.9 | 19.0 |
| Total equity and liabilities | 24.9 | 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 1.1.2014 |
9898 | 520 | 6444 | -197 | -1382 | -4710 | 10573 | 211 | 10784 | ||||
| Profit/loss for the period | -1936 | -1936 | -7 | -1942 | |||||||||
| Translation difference | -18 | -18 | -18 | ||||||||||
| Directed share issue | 90 | 90 | 90 | ||||||||||
| Management incentive plan | 7 | 7 | 7 | ||||||||||
|
Total equity 31.12.2014 |
9898 | 520 | 6534 | -215 | -1382 | -6638 | 8716 | 204 | 8920 | ||||
| Equity attributable to equity holders of the parent | |||||||||||||
| a) | b) | c) | d) | e) | f) | Total | g) | Total equity | |||||
|
Total equity 1.1.2015 |
9898 | 520 | 6534 | -215 | -1382 | -6638 | 8716 | 204 | 8920 | ||||
| Profit/loss for the period | -1095 | -1095 | 0 | -1095 | |||||||||
| Translation difference | 189 | 189 | 189 | ||||||||||
| Management incentive plan | -23 | -23 | -23 | ||||||||||
|
Total equity 31.12.2015 |
9898 | 520 | 6534 | -27 | -1382 | -7757 | 7786 | 204 | 7990 | ||||
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 abridged unaudited |
1.1.- 31.12.2015 |
1.1.- 31.12.2014 |
| MEUR | ||
| Cash flow from operating activities | 1.8 | -0.8 |
| Cash flow from investing activities, net | -0.1 | -1.3 |
| Total cash flows from financing activities | -1.6 | -0.2 |
| Share issue | 0.0 | 0.1 |
| Proceeds from borrowings | 0.2 | 3.0 |
| Repayment of borrowings | -1.7 | -3.1 |
| Other financial items | -0.1 | -0.1 |
| Change in cash and cash equivalents | 0.1 | -2.3 |
| Cash and cash equivalents at the beginning of period | 1.0 | 3.2 |
| Cash and cash equivalents at the close of period | 1.1 | 1.0 |
NOTES TO THE REPORT
Accounting policies
This financial statement release has been drafted in accordance with IAS 34. The principles adhered to in preparing the annual financial statements 2014 also apply to this financial statement release but new and amended IFRS standards and interpretations effective in 2015 have been applied. Amended standards and interpretations effective from the beginning of year 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 a company established in 2010 by members of company’s Executive Group, 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 |
| Additions | 0.1 |
| Transferred to non-current assets held for sale | -14.9 |
| Disposals | -0.1 |
| Cost 31.12.2015 | 51.0 |
| Accumulated depreciation 1.1.2015 | -51.4 |
| Transferred to non-current assets held for sale | 13.9 |
| Disposals | 0.1 |
| Depreciation for the period | -1.9 |
| Impairment | -0.3 |
| Accumulated depreciation 31.12.2015 | -39.6 |
| Carrying amount 1.1.2015 | 14.5 |
| Carrying amount 31.12.2015 | 11.4 |
The Alajärvi Mill property was transferred to non-current assets held for sale.
Non-recurring expenses
The result for the financial year includes MEUR 0.8 (MEUR 0.2) in non-recurring expenses relating to the CEO's severance pay, personnel redundancies, and write-offs.
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 | 31.12.2015 | 31.12.2014 |
| MEUR | ||
| For own loans | ||
| - Mortgages | 25.7 | 25.7 |
| - Other quarantees | 1.9 | 2.1 |
| Rental liabilities | 0.3 | 0.4 |
| Leasing liabilities | 0.2 | 0.4 |
| Nominal values of forward exchange contracts | 1.8 | 1.7 |
| Derivative contracts | 0.2 | 0.3 |
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 409 thousand and purchases from related parties amounted to EUR 415 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 was recognised in 2014 and in 2015 for this loan in the parent company, the total amount of these impairments is MEUR 0.4.
| KEY INDICATORS | |||||||
| 1-12 | 1-12 | ||||||
| Unaudited | 2015 | 2014 | |||||
| Earnings/share (EPS) | euro | -0.23 | -0.40 | ||||
| Return on equity | % | -13 | -20 | ||||
| Equity ratio | % | 37 | 37 | ||||
| Shareholders equity/share | euro | 1.61 | 1.80 | ||||
| Net financial liabilities | MEUR | 6.5 | 8.2 | ||||
| Gearing | % | 81 | 92 | ||||
| Gross investments | MEUR | 0.1 | 0.9 | ||||
| % of net sales | 0.2 | 2.1 | |||||
| Order book | MEUR | 15.0 | 12.5 | ||||
| Average number of personnel | Clerical | 71 | 90 | ||||
| Workers | 68 | 71 | |||||
| Total | 139 | 161 | |||||
|
Personnel in person-years, average |
Clerical | 63 | 81 | ||||
| Workers | 51 | 66 | |||||
| Total | 115 | 146 | |||||
|
Adjusted number of shares (’000) |
At period-end | 4847 | 4847 | ||||
| Average during period | 4847 | 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 liabilities: | Financial liabilities – cash and cash equivalents | ||||||
| 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 | |||||||