HONKARAKENNE OYJ INTERIM REPORT 11 NOVEMBER 2010 3:00 PM
HONKARAKENNE OYJ'S INTERIM REPORT, 1 JANUARY - 30 SEPTEMBER 2010
SUMMARY
July-September 2010
- Honkarakenne Group's consolidated net sales for the third quarter of the year
amounted to EUR 15.0 million (EUR 12.0 million), an increase of 25% on the
previous year's corresponding period
- Operating profit was EUR 0.2 million (EUR -1.4 million). Operating profit
without non-recurring items was EUR 0.6 million
- Profit before taxes was EUR 0.1 million (EUR -1.5 million)
- Earnings per share amounted to EUR 0.02 (EUR -0.41)
January-September 2010
- Honkarakenne Group's consolidated net sales for January-September 2010
amounted to EUR 43.1 million (EUR 39.6 million), an increase of 9% on the
previous
year's corresponding period
- Operating profit was EUR 0.9 million (EUR -1.8 million). Operating profit
without non-recurring items was EUR 2.0 million
- Profit before taxes was EUR 0.2 million
- Earnings per share amounted to EUR 0.03 (EUR -0.52)
The net sales of the entire year is expected to increase slightly from the level
of the previous year, and the Group aims at a profitable result during the
financial year. The earnings forecast has not changed from what it was before.
The timing of deliveries in the last quarter of 2010 is the greatest risk to the
achievement of the profit target. It is characteristic of construction work at
the end of the year that orders are sometimes postponed by some weeks by
customers because of weather conditions.
At the end of the third quarter, the order book was 14% smaller than at the same
time the previous year.
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| KEY FIGURES | 7-9/ | 7-9/ | 1-9/ | 1-9/ | change | 1-12/ |
| | 2010 | 2009 | 2010 | 2009 | % | 2009 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Net sales, MEUR | 15.0 | 12.0 | 43.1 | 39.6 | 9 | 52.3 |
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| Operating profit/loss, | 0.2 | -1.4 | 0.9 | -1.8 | | -3.0 |
| MEUR | | | | | | |
--------------------------------------------------------------------------------
| Operating profit before | 0.6 | | 2.0 | | | |
| non-recurring items, MEUR | | | | | | |
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| Profit/loss before taxes, | 0.1 | -1.5 | 0.2 | -2.1 | | -3.7 |
| MEUR | | | | | | |
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| Average number of | | | 304 | 368 | | 351 |
| personnel | | | | | | |
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| Earnings/share (EPS), EUR | 0.02 | -0.41 | 0.03 | -0.52 | | -1.05 |
--------------------------------------------------------------------------------
| Equity ratio, % | | | 39 | 31 | | 29 |
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| Return on equity, % | | | 1 | -13 | | -26 |
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| Shareholders' | | | 3.4 | 4.0 | | 3.5 |
| equity/share, EUR | | | | | | |
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| Gearing, % | | | 82 | 136 | | 149 |
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Esa Rautalinko, President and CEO of Honkarakenne Oyj, in connection with the
interim report:
"The third quarter was satisfactory for Honkarakenne. The development of net
sales compared to the previous year significantly exceeded our expectations in
the 'Other countries' sales area. In Finland and Far East, the development met
our expectations, but the net sales for the Central European market did not
reach the expected level.
The profit for the third quarter was brought down by the bankruptcy of
Timberheart, a former associated company of Honkarakenne. Honkarakenne had loan
guarantees on behalf of Timberheart also direct loans and sales receivables for
a total of EUR 0.4 million. This has been reported as an expenditure in the
third quarter. In addition, one old sales receivable of EUR 0.2 million had to
be written off by Honkarakenne.
The focus of the third quarter was the same as in the previous quarter, to
promote sales while taking care to follow through on the improvement programme.
The Group aims to achieve cost savings of around EUR 5 million this year. The
efficiency measures of the improvement programme and the increase in sales have
had a combined effect of around EUR 3.1 million during the first three quarters.
The economic recession has made the buying behaviour of customers take on a very
short-term character. As a result, the growth of the order book has not reached
the desired level during the third quarter. It is difficult to make accurate
forecasts on the Group's activity, as the customers' orders are typically
confirmed only just before the last possible moment. To ensure its
competitiveness despite the fluctuations in sales and production, Honkarakenne
has decided to invite representatives of its employees to negotiations under the
act on co-operation within undertakings. The co-operation negotiations will
discuss the authorising of temporary lay-offs of a maximum of 90 days during
2011.”
NET SALES
Honkarakenne Group's consolidated net sales for January-September 2010 was EUR
43.1 million, compared to EUR 39.6 million in the same period the previous year.
Honkarakenne Group's consolidated net sales for the third quarter of 2010 was
EUR 15.0 million, compared to EUR 12.0 million in the same period the previous
year. The net sales for the third quarter increased by EUR 3.0 million; they
were 25% higher than in the previous year. The net sales in Finland increased by
EUR 1.8 million (32% higher than in the previous year). Net export sales
increased by EUR 1.2 million (19% higher than in the previous year).
Geographical distribution of net sales:
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| DEVELOPMENT OF SALES | | | | |
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| Distribution of net | 1-9/| 1-9/ | | | | |
| sales, % | 2010 | 2009 | | | | |
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| Finland | 50% | 47% | | | | |
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| Central Europe | 20% | 25% | | | | |
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| Far East | 9% | 10% | | | | |
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| Other countries | 21% | 18% | | | | |
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| Total | 100% | 100% | | | | |
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| | | | | | | |
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| Net sales, 1000 | 7-9/| 7-9/| change | 1-9/ | 1-9/ | change |
| euros | 2010 | 2009 | % | 2010 | 2009 | % |
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| Finland | 7,546 | 5,700 | 32% | 21,635 | 18,696 | 16% |
--------------------------------------------------------------------------------
| Central Europe | 3,205 | 4,053 | -21% | 8,738 | 9,968 | -12% |
--------------------------------------------------------------------------------
| Far East | 970 | 466 | 108% | 3,847 | 4,026 | -4% |
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| Other countries | 3,293 | 1,754 | 88% | 8,875 | 6,874 | 29% |
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| Total | 15,014 | 11,973 | 25% | 43,095 | 39,564 | 9% |
--------------------------------------------------------------------------------
The figures for 'Central Europe' comprise Germany and France as well as the rest
of Europe. The figures for 'Far East' comprise Japan and Mongolia. The figures
for 'Other countries' comprise the CIS countries, the USA and Estonia.
DEVELOPMENT OF PROFIT AND PROFITABILITY
Operating profit in January-September was EUR 0.9 million (EUR -1.8 million).
Profit before taxes was EUR 0.2 million (EUR -2.1 million). In the third quarter
of the year, the profit is brought down by EUR 0.4 million by the bankruptcy of
Timberheart. It is also brought down by the write-off of a sales receivable of
EUR 0.2 million.
The calculations below present the change in operating profit from 2009 to 2010.
--------------------------------------------------------------------------------
| Operating profit 2009 | -1.8 |
--------------------------------------------------------------------------------
| Write-off of goodwill included in the profit and loss | 0.4 |
| statement for 2009 | |
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| Improvement programme and increase in sales | 3.1 |
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| Other items | 0.3 |
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| Operating profit 2010 without non-recurring items | 2.0 |
--------------------------------------------------------------------------------
| Non-recurring items | -1.1 |
--------------------------------------------------------------------------------
| Operating profit 2010 | 0.9 |
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Of the non-recurring items, EUR 0.4 million are related to the Timberheart
bankruptcy, EUR 0.7 to the execution of the improvement programme. Of the
non-recurring items related to the improvement programme, 41% are related to
severance compensation, 40% to the implementation of efficiency-improving
projects and 19% to financing arrangements.
FINANCING AND INVESTMENTS
The financial position of the Group is satisfactory. The equity ratio stood at
39% (31%) and interest-bearing net liabilities at EUR 13.5 million (EUR 19.3
million). EUR 2.7 million of the interest-bearing net liabilities carries a 25%
minimum equity ratio covenant term until 30 September 2010, after which the
minimum is 30%. Group liquid assets totalled EUR 1.4 million (EUR 2.7 million).
The Group also has a EUR 10.0 million bank overdraft facility, EUR 3.1 million
of which had been drawn on at the end of the report period (EUR 6.8 million).
Gearing stood at 82% (136%). The Group's capital expenditure in
January-September totalled EUR 0.4 million (EUR 2.2 million). The financial
position of the Group is expected to remain at a satisfactory level.
MARKET DEVELOPMENT
Based on a report commissioned by RTS Oy, Finnish log house production is
expected to grow by 8% this year. The figure includes production for Finland and
for overseas export.
PRODUCTS AND MARKETING
In Finland, Honkarakenne made changes to enhance profitability according to the
improvement programme, especially to its vacation house models. The changes
concentrated on the development of industrial production efficiency of the
models and on the improvement of product quality as well as design.
In Far East, the main measure was a marketing campaign targeted at the sales
network, which was intended to expedite the sales process.
In Central Europe, an increase in sales was aimed at by focusing sales
activities on large project sites.
In the Other countries area, measures were continued to serve the luxury and
premium customers especially. In addition, measures were taken to strengthen the
sales network in Russia's neighbouring states particularly.
RESEARCH AND DEVELOPMENT
In the third quarter, Honkarakenne's R&D activities have concentrated on the
creation of new energy-efficient model ranges, especially for the residential
house market. Honkarakenne will unveil the new energy solutions during the
fourth quarter of the year.
In January-September, the Group's R&D expenditures were EUR 0.4 million (EUR 0.3
million), which was 0.9% of the net sales (0.7%). The Group has not activated
development costs during the reporting period.
STAFF
At the end of September, the Group employed 304 (368) people on average. This is
64 less than at the same time in the previous year.
CORPORATE GOVERNANCE
Honkarakenne Oyj observes the corporate governance code for listed companies
issued by the Finnish Securities Market Association. The company's website,
www.honka.com/investors, provides more information on the corporate governance
systems.
FUTURE OUTLOOK
The aim for 2011 is growth in all market areas.
The Group's order book totalled EUR 17.3 million at the end of September. At the
same time previous year it was EUR 20.1 million. The Order book includes orders
whose delivery date is within the next 24 months. Some orders may feature
conditions related to building permits or financing. At the end of the third
quarter, the order book was 14% smaller than at the same time in the previous
year.
FORTHCOMING RISKS AND UNCERTAINTIES
The timing of deliveries in the last quarter of 2010 is the greatest uncertainty
factor concerning the achievement of the profit target. It is characteristic of
construction work at the end of the year that orders are sometimes postponed by
a few weeks by customers because of weather conditions.
Due to seasonal fluctuation, the order book is weak in relation to fixed costs.
This creates pressure for cost controls.
The Group has one significant concentration of credit risks in sales
receivables, concerning the open sales receivables of one importer. No provision
for doubtful debt has been made for this. The new sales made with this importer
have been paid according to the agreed terms. Deliveries to the importer have
continued, and the risks with the open sales receivables have not increased. A
payment plan agreement related to the matter was signed during the second
quarter of the year.
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 interim report has been prepared in line with the IFRS principles of
bookkeeping and assessment, but it does not meet all of the requirements of
standard IAS 34 (Interim Financial Reporting). The interim report should be read
together with the accounts for 2009. The figures have not been examined by the
auditor.
OUTLOOK FOR 2010
The net sales of the entire year are expected to increase slightly from the
level of the previous year, and the Group aims at a profitable result during the
financial year. The timing of deliveries in the last quarter of 2010 is the
greatest uncertainty factor concerning the achievement of a profitable result.
It is characteristic of building work at the end of the year that orders are
sometimes postponed by a few weeks by customers because of weather conditions.
HONKARAKENNE OYJ
Board of Directors
Further information:
Esa Rautalinko, President and CEO,
tel. +358 400 740 997, esa.rautalinko@honka.com or
Mikko Jaskari, CFO, tel. +358 (0)400 535 337, mikko.jaskari@honka.com
This and previous releases are available for viewing on the company's website at
www.honka.com/investors.
DISTRIBUTION
NASDAQ OMX Helsinki
Key media
Financial Supervisory Authority
www.honka.com
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| CONSOLIDATED STATEMENT OF | | | | | |
| COMPREHENSIVE INCOME | | | | | |
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| (unaudited) | 7-9 | 7-9 | 1-9 | 1-9 | 1-12 |
| | /2010 | /2009 | /2010 | /2009 | /2009 |
--------------------------------------------------------------------------------
| (MEUR) | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Net sales | 15.0 | 12.0 | 43.1 | 39.6 | 52.3 |
--------------------------------------------------------------------------------
| Other operating income | 0.2 | 0.2 | 0.8 | 0.6 | 1.6 |
--------------------------------------------------------------------------------
| Change in inventories | 0.6 | -1.4 | 1.1 | -2.0 | -2.0 |
--------------------------------------------------------------------------------
| Production for own use | 0.0 | 0.0 | 0.0 | 0.1 | 0.1 |
--------------------------------------------------------------------------------
| Materials and services | -9.6 | -5.7 | -25.0 | -20.3 | -28.5 |
--------------------------------------------------------------------------------
| Employee benefit expenses | -2.4 | -3.2 | -9.1 | -10.1 | -13.2 |
--------------------------------------------------------------------------------
| Depreciations | -0.9 | -1.4 | -2.8 | -3.2 | -4.1 |
--------------------------------------------------------------------------------
| Other operating expenses | -2.7 | -1.8 | -7.3 | -6.4 | -9.1 |
--------------------------------------------------------------------------------
| Operating profit/loss | 0.2 | -1.3 | 0.9 | -1.8 | -3.0 |
--------------------------------------------------------------------------------
| Financial income and | -0.0 | -0.2 | -0.6 | -0.2 | -0.6 |
| expenses | | | | | |
--------------------------------------------------------------------------------
| Share of associated | -0.1 | 0.0 | -0.0 | -0.1 | -0.2 |
| companies' profit | | | | | |
--------------------------------------------------------------------------------
| Profit/loss before taxes | 0.1 | -1.5 | 0.2 | -2.1 | -3.7 |
--------------------------------------------------------------------------------
| Taxes | 0.0 | 0.1 | -0.0 | 0.3 | -0.0 |
--------------------------------------------------------------------------------
| Profit/loss for the | 0.1 | -1.5 | 0.2 | -1.9 | -3.7 |
| period | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Other comprehensive | | | | | |
| income: | | | | | |
--------------------------------------------------------------------------------
| Translation differences | 0.0 | 0.0 | 0.2 | 0.1 | 0.0 |
--------------------------------------------------------------------------------
| Total comprehensive | 0.1 | -1.5 | 0.4 | -1.8 | -3.7 |
| income for the period | | | | | |
| | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Attributable to: | | | | | |
--------------------------------------------------------------------------------
| Equity holders of the | -0.1 | -1.5 | 0.4 | -1.8 | -3.7 |
| parent | | | | | |
--------------------------------------------------------------------------------
| Minority interest | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 |
--------------------------------------------------------------------------------
| | -0.1 | -1.5 | 0.4 | -1.8 | -3.7 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Earnings/share (EPS), EUR | | | | | |
--------------------------------------------------------------------------------
| Basic | 0.02 | -0.41 | 0.03 | -0.52 | -1.05 |
--------------------------------------------------------------------------------
| Diluted | 0.02 | -0.41 | 0.03 | -0.52 | -1.05 |
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| CONSOLIDATED BALANCE SHEET | 30.9.2010 | 30.9.2009 | 31.12.2009 |
| (unaudited) | | | |
--------------------------------------------------------------------------------
| (MEUR) | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Assets | | | |
--------------------------------------------------------------------------------
| Non-current assets | | | |
--------------------------------------------------------------------------------
| Property, plant and equipment | 22.1 | 25.1 | 24.3 |
--------------------------------------------------------------------------------
| Goodwill | 0.1 | 0.1 | 0.0 |
--------------------------------------------------------------------------------
| Other intangible assets | 1.1 | 1.5 | 1.3 |
--------------------------------------------------------------------------------
| Investments in associated companies | 1.9 | 2.2 | 2.1 |
--------------------------------------------------------------------------------
| Other investments | 0.4 | 0.2 | 0.2 |
--------------------------------------------------------------------------------
| Receivables | 0.1 | 0.2 | 0.3 |
--------------------------------------------------------------------------------
| Deferred tax assets | 1.5 | 1.6 | 1.5 |
--------------------------------------------------------------------------------
| | 27.2 | 30.9 | 29.7 |
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| Current assets | | | |
--------------------------------------------------------------------------------
| Inventories | 10.7 | 10.3 | 9.4 |
--------------------------------------------------------------------------------
| Trade and other receivables | 8.5 | 8.1 | 7.5 |
--------------------------------------------------------------------------------
| Cash and bank receivables | 1.4 | 2.7 | 1.7 |
--------------------------------------------------------------------------------
| | 20.6 | 21.1 | 18.6 |
--------------------------------------------------------------------------------
| Total assets | 47.9 | 52.0 | 48.4 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| | 30.9.2010 | 30.9.2009 | 31.12.2009 |
--------------------------------------------------------------------------------
| Shareholders' equity and | | | |
| liabilities | | | |
--------------------------------------------------------------------------------
| Equity attributable to equity | | | |
| holders | | | |
| of the parent | | | |
--------------------------------------------------------------------------------
| Capital stock | 9.9 | 7.5 | 7.5 |
--------------------------------------------------------------------------------
| Share premium | 0.5 | 0.5 | 0.5 |
--------------------------------------------------------------------------------
| Reserve fund | 5.3 | 5.3 | 5.3 |
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| Unrestricted equity reserve | 1.9 | | |
--------------------------------------------------------------------------------
| Translation differences | 0.2 | 0.0 | 0.0 |
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| Retained earnings | -1.5 | 1.9 | -1.0 |
--------------------------------------------------------------------------------
| | 16.3 | 14.2 | 12.3 |
--------------------------------------------------------------------------------
| Minority share | 0.2 | 0.0 | 0.0 |
--------------------------------------------------------------------------------
| Total equity | 16.5 | 14.2 | 12.3 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Non-current liabilities | | | |
--------------------------------------------------------------------------------
| Deferred tax liabilities | 0.9 | 0.8 | 0.8 |
--------------------------------------------------------------------------------
| Provisions | 0.4 | 0.4 | 0.4 |
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| Intrest bearing debt | 11.1 | 19.3 | 15.6 |
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| Non-intrest bearing debt | 0.0 | 0.7 | 1.0 |
--------------------------------------------------------------------------------
| | 12.4 | 21.1 | 17.8 |
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| Current liabilities | | | |
--------------------------------------------------------------------------------
| Trade and other payables | 15.1 | 13.9 | 14.3 |
--------------------------------------------------------------------------------
| Tax liabilities | 0.0 | 0.0 | 0.0 |
--------------------------------------------------------------------------------
| Intrest bearing debt | 3.9 | 2.7 | 4.0 |
--------------------------------------------------------------------------------
| | 19.0 | 16.6 | 18.3 |
--------------------------------------------------------------------------------
| Total liabilities | 31.4 | 37.7 | 36.0 |
--------------------------------------------------------------------------------
| Total equity and liabilities | 47.9 | 52.0 | 48.4 |
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--------------------------------------------------------------------------------
| STATEMENT OF CHANGES IN EQUITY | |
| (unaudited) | |
--------------------------------------------------------------------------------
| 1000 | Equity attributable to equity holders of the | | | |
| EUR | parent | | | |
--------------------------------------------------------------------------------
| | a) | b) | c) | d) | e) | f) | g) | Total | h) | Total |
| | | | | | | | | | | equity|
| | | | | | | | | | | |
--------------------------------------------------------------------------------
| Total | 7.498 | 520| 5.3 | | 27 | -1.124| 3.819| 16.056| 9 | 16.065|
| equity | | | 16 | | | | | | | |
| 1.1.200 | | | | | | | | | | |
| 9 | | | | | | | | | | |
--------------------------------------------------------------------------------
| Purchas | | | | | | -14 | | -14 | | -14 |
| e of | | | | | | | | | | |
| own | | | | | | | | | | |
| shares | | | | | | | | | | |
--------------------------------------------------------------------------------
| Total | | | | | 37 | |-1.865| -1828 | | -1.828|
| compreh | | | | | | | | | | |
| ensive | | | | | | | | | | |
| income | | | | | | | | | | |
| for the | | | | | | | | | | |
| period | | | | | | | | | | |
--------------------------------------------------------------------------------
| Total | 7.498 | 520| 5.3 | | 64 | -1.138| 1.954| 14.214| 9 | 14.224|
| equity | | | 16 | | | | | | | |
| 30.9.20 | | | | | | | | | | |
| 09 | | | | | | | | | | |
--------------------------------------------------------------------------------
| | a) | b) | c) | d) | e) | f) | g) | Total | h) | Total |
| | | | | | | | | | | equit |
| | | | | | | | | | | y |
--------------------------------------------------------------------------------
| Total | 7.498 | 52 | 5.3 | | 29 | -1.138| 82 | 12.307| 9 |12.316 |
| equity | | 0 | 16 | | | | | | | |
| 1.1.201 | | | | | | | | | | |
| 0 | | | | | | | | | | |
--------------------------------------------------------------------------------
| Share | 2.400| | | 1.0 | | | | 3.480 | | 3.480 |
| issue | | | 80 | | | | | | |
------------------------------------------------------------------------------
| Managem | | | | 816 | | -816 | | | 203 | 203 |
| ent | | | | | | | | | | |
| Incenti | | | | | | | | | | |
| ve plan | | | | | | | | | | |
-------------------------------------------------------------------------------
| Repurch | | | | | | -182 | | -182 | | -182 |
| ase of | | | | | | | | | | |
| own | | | | | | | | | | |
| shares | | | | | | | | | | |
--------------------------------------------------------------------------------
| Proceed | | | | | | 758 | -414 | 344 | | 344 |
| s from | | | | | | | | | | |
| sale of | | | | | | | | | | |
| own | | | | | | | | | | |
| shares | | | | | | | | | | |
--------------------------------------------------------------------------------
| Total | | | | | 220 | | 160 | 380 | 0 | 380 |
| compreh | | | | | | | | | | |
| ensive | | | | | | | | | | |
| income | | | | | | | | | | |
| for the | | | | | | | | | | |
| period | | | | | | | | | | |
--------------------------------------------------------------------------------
| Total | 9.898 | 520| 5.3 | 1.8 | 249 | -1.378| -172 | 16.330| 211 | 16.540|
| equity | | | 16 | 96 | | | | | | |
| 30.9.20 | | | | | | | | | | |
| 10 | | | | | | | | | | |
--------------------------------------------------------------------------------
a) Share capital
b) Premium fund
c) Reserve fund
d) Unrestricted equity reserve
e) Translation difference
f) Own shares
g) Retained earnings
h) Minority interest
--------------------------------------------------------------------------------
| CONSOLIDATED CASH FLOW STATEMENT | 1.1.- | 1.1.- | 1.1.- |
| (Unaudited) | 30.9.2010 | 30.9.2009 | 31.12.2009 |
--------------------------------------------------------------------------------
| (MEUR) | | | |
--------------------------------------------------------------------------------
| Cash flow from operations | 1.6 | 1.3 | 1.4 |
--------------------------------------------------------------------------------
| Cash flow from investments, net | -0.5 | -1.1 | -1.1 |
--------------------------------------------------------------------------------
| Total cash flow from financing | -1.4 | 0.9 | -0.2 |
--------------------------------------------------------------------------------
| Share issue | 3.5 | | |
--------------------------------------------------------------------------------
| Increase in credit capital | | 5.6 | 6.3 |
--------------------------------------------------------------------------------
| Decrease in credit capital | -5.0 | -4.5 | -6.2 |
--------------------------------------------------------------------------------
| Other financial items | 0.1 | -0.3 | -0.3 |
--------------------------------------------------------------------------------
| Change in liquid assets | -0.2 | 1.1 | 0.1 |
--------------------------------------------------------------------------------
| Liquid assets at the beginning of | 1.7 | 1.6 | 1.6 |
| period | | | |
--------------------------------------------------------------------------------
| Liquid assets at the end of | 1.4 | 2.7 | 1.7 |
| period | | | |
--------------------------------------------------------------------------------
NOTES TO THE REPORT
Calculation methods
This interim report has been prepared in line with the IFRS principles of
bookkeeping and assessment, but it does not meet all of the requirements of
standard IAS 34 (Interim Financial Reporting). The interim report should be read
together with the accounts for 2009. The new revised standards or
interpretations effective as of 1 January 2010 have no bearing on the figures
presented for the report period. The figures have not been examined by the
auditor.
Honkarakenne has one operating segment, the manufacture, sales and marketing of
log houses, under the Honka brand. Geographically, the sales of the Group are
divided as follows: Finland, Central Europe, Far East, and other countries. The
internal reporting of the management is in line with IFRS reporting. For this
reason, separate reconciliations are not presented.
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| TANGIBLE ASSETS | Tangible |
--------------------------------------------------------------------------------
| (MEUR) | assets |
--------------------------------------------------------------------------------
| (Unaudited) | |
--------------------------------------------------------------------------------
| Acquisition cost 1.1.2010 | 66.9 |
--------------------------------------------------------------------------------
| Translation difference (+/-) | 0.4 |
--------------------------------------------------------------------------------
| Increase | 0.4 |
--------------------------------------------------------------------------------
| Decrease | -0.3 |
--------------------------------------------------------------------------------
| Transfers between balance sheet items | -0.0 |
--------------------------------------------------------------------------------
| Acquisition cost 30.09.2010 | 67.4 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Accumulated depreciation 1.1.2010 | -42.7 |
--------------------------------------------------------------------------------
| Translation difference (+/-) | -0.2 |
--------------------------------------------------------------------------------
| Disposals and reclassifications | 0.1 |
--------------------------------------------------------------------------------
| Depreciation for the period | -2.4 |
--------------------------------------------------------------------------------
| Accumulated depreciation 30.09.2010 | -45.2 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Book value 1.1.2010 | 24.3 |
--------------------------------------------------------------------------------
| Book value 30.09.2010 | 22.1 |
--------------------------------------------------------------------------------
Own shares
Honkarakenne Oyj has not acquired its own shares during the report period. In
connection with the directed issue in January, the company sold some of the
equity B shares that it held to a restricted circle of the company's key
personnel. The number of shares sold was 118,500 at EUR 2.90 per share.
During the second quarter, the Board of Directors of Honkarakenne Oyj decided on
a new incentive plan directed to the members of the Honkarakenne Executive
Group. On the basis of authorization granted by the General Meeting of
Shareholders, the company's Board of Directors decided on an issue of 220,000
shares with payment. In the share issue, 220,000 Honkarakenne's new B shares
were issued for subscription by Honka Management at the price of EUR 3.71 per
share, in derogation from the shareholders' pre-emptive subscription rights. In
addition, the executives within the incentive plan acquired 49,000 Honkarakenne
B shares in the name of the established limited company Honka Management Oy.
Through the implementation of the plan, the members of the Executive Group hold
5.2% of all Honkarakenne's shares and 2.47% of all Honkarakenne's votes. As
Honka Management Oy will be consolidated to the overall figures of the
Honkarakenne Group, the acquisition expenses of these shares have been entered
in the Group's financial statement as a deduction to the Group's equity.
At the end of the report period, the Group held 364,385 of its Honkarakenne B
shares with a total purchase price of EUR 1,377,609.57. These shares represent
7.05% of the company's capital stock and 3.35% of all votes.
--------------------------------------------------------------------------------
| CONTINGENT LIABILITIES | | | |
--------------------------------------------------------------------------------
| (Unaudited) | 30.9.2010 | 30.9.2009 | 31.12.2009 |
--------------------------------------------------------------------------------
| MEUR | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| For own loans | | | |
--------------------------------------------------------------------------------
| - Mortgages | 26.3 | 25.5 | 25.7 |
--------------------------------------------------------------------------------
| - Pledged shares | | 0.4 | |
--------------------------------------------------------------------------------
| - Other quarantees | 1.6 | 2.5 | 3.3 |
--------------------------------------------------------------------------------
| For others | | | |
--------------------------------------------------------------------------------
| - Guarantees | 0.7 | 1.1 | 0.8 |
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| Leasing liabilities | 0.6 | 0.9 | 0.8 |
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| Rent liabilities | 0.0 | 0.1 | 0.1 |
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| Nominal values of forward | 3.5 | 0.8 | - |
| exchange contracts | | | |
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| Derivative contracts | 0.4 | 0.3 | 0.3 |
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Events in the circle of acquaintances
The Group's circle of acquaintances consists of subsidiaries. associated
companies and the company's management. The management included in the circle of
acquaintances comprises the Board of Directors, CEO and the company's executive
group.
During the second quarter, equipment transactions worth TEUR 18.2 were made with
acquaintances.
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| KEY INDICATORS | | 1-9 | 1-9 | 1-12 |
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| (Unaudited) | | 2010 | 2009 | 2009 |
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| Earnings/share (EPS) | eur | 0.03 | -0.52 | -1.05 |
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| Return on equity | % | 1.1 | -13.1 | -26.3 |
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| Equity ratio | % | 38.9 | 30.8 | 28.8 |
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| Shareholders | eur | 3.4 | 4.0 | 3.5 |
| equity/share | | | | |
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| Net debt | MEUR | 13.5 | 19.3 | 18.4 |
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| Gearing | % | 81.8 | 135.8 | 149.0 |
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| Gross investments | MEUR | 0.4 | 2.2 | 2.5 |
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| | % of net sales | 1.0 | 5.5 | 4.8 |
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| Order book | MEUR | 17.3 | 20.1 | 23.0 |
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| Average number of | Staff | 143 | 179 | 170 |
| personnel | | | | |
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| | Workers | 161 | 189 | 181 |
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| | Total | 304 | 368 | 351 |
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Due to the issue of new shares, the historical indicators by share have been
corrected using the following formula: average number of shares x 1.01.
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| CALCULATION OF KEY INDICATORS | |
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| | Profit for the period attributable to equity | |
| | holders of parent | |
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| Earnings/share | ----------------------------------------- | |
| (EPS) | | |
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| | Average number of outstanding shares | |
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| | Profit before taxes - taxes | |
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| Return on equity % | ----------------------------------------- | x 100 |
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| | Total equity, average | |
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| | Total equity | |
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| Equity ratio, % | ----------------------------------------- | x 100 |
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| | Balance sheet total - advances received | |
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| Net debt | Interest-bearing debt - cash and cash | |
| | equivalents | |
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| | Interest-bearing debt - cash and cash | |
| | equivalents | |
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| Gearing, % | ----------------------------------------- | x 100 |
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| | Total equity | |
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| | Shareholders' equity | |
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| Shareholders | ----------------------------------------- | |
| equity/share | | |
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| | Number of shares outstanding at end of period |
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