Interim / Quarterly Report • Aug 3, 2023
Interim / Quarterly Report
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Half Year Financial Report January - June 2023
Reka Industrial Plc | Half Year Financial Report 2023 1
Near-term outlook : In 2023 EBITDA is expected to be around EUR 38 million.
November 2022 signed agreement with Nexans Group the corporate sale of Reka Cables Ltd was completed end of April 2023. As a result of corporate sale EUR 31.0 million sales profit was recorded.
After the corporate sale Reka Industrial plc has paid back the redemption of its Green Bond and all its financial bank loans in Finland.
Reka Industrial Plc has strategy process in progress. Target is to communicate about the progress of strategy work during the first half year of 2024. During the strategy work the funds are invested mainly to low risk investments and short-term deposits.
The turnover and result January – April 2023 of Reka Cables is included to the 2023 financial figures of Reka Industrial. Due to that and due to recognition of corporate sale in the first half of the year the turnover and result between H1 and H2 will differ substantially, as the turnover of the second half of the year consists only from Rubber segment.
2023 is for Rubber segment year of investments for the future growth. The recruitments already made and still to be made as well all investments aim for the growth in the future. Rubber segment has strong position in selected market segments. Delivery performance of all factories is good.
We publish the key figures without IAS 19 defined benefit pension liability entries, as changes in the discount rate fluctuate the IAS 19 figures.
The Finnish Competition and Consumer Authority gave its approval regarding the sale of all outstanding shares in Reka Industrial Plc´s wholly owned subsidiary Reka Cables Ltd to Nexans Group. As announced on 10 November 2022, the transaction was conditional to the approval of the Extraordinary General Meeting and approvals of authorities. The Extraordinary General meeting approved the transaction on 15 December 2022.
The sale of the shares of Reka Cables Ltd was completed on 26 April 2023. Jukka Poutanen, the Managing Director of Reka Industrial Plc and Reka Cables Ltd, joined as Managing Director of Reka Cables Ltd to Nexans Group following the completion of the sale of Reka Cables Ltd.
Reka Industrial Plc successfully issued in 2019 EUR 10 million Green Bond. The proceeds from the Green Bond has been used in accordance with the Green Bond Framework to eligible assets that are compatible with the product offering of Reka Cables Ltd and to the development of Reka Cables Ltd's production and production facilities to improve its efficiency and sustainability. Part of the proceeds have been used for refinancing purposes.
A separate investor letter was published in March. The original maturity date of the bond was 6 December 2024. In connection with the sale of Reka Cables Ltd the security of the Green Bond given by Reka Cables Ltd was substituted and released by giving an account pledge by Reka Industrial Plc. Reka Industrial Plc also notified that it will of the early redemption of the Green Bond. The redemption was carried out according to the terms and conditions of the Green Bond in May 2023. On the redemption date Reka Industrial Plc paid the redemption price equal to 101.25 per cent of outstanding nominal amount of the notes together with any accrued but unpaid interest in accordance with the terms and conditions of the Green Bond. Reka Industrial Plc used existing liquidity reserves to finance the redemption.
The Extraordinary General Meeting 15 December 2022 authorized as proposed by the Board of Directors that EUR 0.20 per share will be distributed to shareholders from the company's unrestricted equity after the completion of the corporate sale of Reka Cables Ltd. The Extraordinary General Meeting authorized the Board of Directors to decide the record and payment dates of the distribution from the nonrestricted equity, however having the payment date within a month from completion of the corporate sale of Reka Cables Ltd.
The Board of Directors of Reka Industrial Plc decided the record date to be 15 May 2023 and payment date to be 23 May 2023.
M. Sc. (Econ.) Sari Tulander was appointed as President and CEO of Reka Industrial Plc starting 11 May 2023. Tulander has been CFO of the company since May 2007 and continues as CFO of the Group.
Figures in brackets refer to the same period a year earlier, unless otherwise stated. The half year financial report is unaudited.
| 1-6/2023 | 1-6/2022 | 1-12/2022 |
|---|---|---|
| 78.1 | 100.8 | 202.9 |
| 38.1 | 6.7 | 15.2 |
| 48.0 | 3.8 | 5.0 |
| 34.8 | 1.5 | 9.0 |
| 5.81 | 0.26 | 1.50 |
| 0.6 | 0.1 | 9.9 |
| 80.5 | 16.2 | 23.5 |
| 74.0 | 16.2 | 22.8 |
Reka Industrial presents alternative key figures so that the effects of IAS 19 recognition of defined benefit pension liabilities are eliminated from the key figures' income and balance sheet items in order to better monitor the development of operations.
The entries of the IAS 19 defined benefit plan in the income statement are presented below the operating result as a separate item before the share of the result of associated companies. In this way, the development of Reka Industrial's business can be better monitored.
The Group´s turnover was EUR 78.1 million (100.8 million). EBITDA was EUR 38.1 million (6.7 million) and operating result was EUR 37.4 million (3.8 million). The result for the review period was EUR 34.8 million (1.5 million). The financial figures of Reka Cables Ltd has been noticed until end of April 2023. As a result of corporate sale of Reka Cables Ltd EUR 31.0 million sales profit was recorded.
At the end of the review period the interest-bearing liabilities were EUR 6.3 (31 December 2022 27.6) million, of which other than finance lease liabilities were EUR 0.9 (31 December 2022 17.5) million.
The EUR 10 million Green Bond issued by Reka Industrial Plc in 2019 was denominated in euros and taken into account in liabilities of continuing operations. The original maturity date of the bond was 6 December 2024. Due to the sale of Reka Cables Ltd the security of the Green Bond given by Reka Cables Ltd was substituted and released by giving an account pledge by Reka Industrial Plc. Reka Industrial Plc also notified that it will of the early redemption of the Green Bond. The redemption was carried out according to the terms and conditions of the Green Bond in May 2023. On the redemption date Reka Industrial Plc paid the redemption price equal to 101.25 per cent of outstanding nominal amount of the notes together with any accrued but unpaid interest in accordance with the terms and conditions of the Green Bond. Reka Industrial Plc used existing liquidity reserves to finance the redemption.
The Group´s interest-bearing liabilities to external parties on 30 June 2023:
| EUR million | Continuing operations |
Discontinued operations |
Total |
|---|---|---|---|
| Lease liabilities | 5.3 | - | 5.3 |
| Other interest bearing liabilities |
0.9 | - | 0.9 |
| Total | 6.3 | - | 6.3 |
The Group´s interest-bearing liabilities to external parties on 31 December 2022:
| EUR million | Continuing operations |
Discontinued operations |
Total |
|---|---|---|---|
| Lease liabilities Other interest bearing |
5.6 | 4.5 | 10.1 |
| liabilities | 11.9 | 5.6 | 17.5 |
| Total | 17.5 | 10.1 | 27.6 |
The balance sheet total at the end of the review period was EUR 71.8 million. On 31 December 2022 the balance sheet totalled at EUR 87.1 million.
Our sustainability actions are guided by the UN Sustainable Development Goals. Sustainable development is based on energy efficiency, the circular economy, and the production and use of renewable energy.
Sustainability and building a sustainable future are a key part of our strategy. We are committed to the UN Sustainable Development Goals, which to support we have set environmental goals.
The share of electricity in energy use is increasing, especially in vehicles and industry. Wind and solar power will help to reduce CO2 emissions from energy production, save natural resources and achieve a carbon-neutral future. Reka Rubber, which participates in solutions for the vehicle industry, is involved in the electrification of the vehicle industry. Reka Rubber is a manufacturer of small and mediumsized series of rubber components for the vehicle and mechanical engineering industries.
Reducing CO2 emissions and measures to achieve carbon neutrality have been emphasized in recent years. In addition to calculating the carbon footprint, processes, technologies and products are actively developed to reduce the carbon footprint.
Our production plants use green electricity and efforts are made to reduce the carbon footprint in
production facilities, production processes and product development. Solar panels were installed to Aura production plant in spring 2023.
In the future, climate-related issues will require investments and development effort both to reduce one's own carbon footprint and to meet the growing demands of customers.
The war in Ukraine has been reflected in a general increase in the prices of metal parts as the total supply decreases. The war in Ukraine has also been reflected in matters related to personnel, as there are Ukrainians working especially at our production plant in Poland.
Part of the Group's financing is tied to a reference interest rate, part to a fixed interest rate. The rise in reference interest rates has increased the total interest costs both for the financing of trade receivables and for traditional loans. Reference rates are actively monitored and updated to the Group's forecasts and plans. Since bank loans in Finland were paid during spring 2023, this will reduce the impact of a rise in reference rates to the financial costs in the future.
Inflation can be seen as an increase in the cost of both labour and materials and components and services. The price of electricity is partially protected at the Finnish production plants, but the Polish production plant's energy costs clearly increased in 2023. In 2022, the electricity price of the Polish production plant was fixed and the price increase therefore did not affect the year 2022. The increase in the price of electricity and the high level of inflation in Poland accelerate some production arrangements and efficiency measures. Change and efficiency measures are also being carried out at the factories in Finland. In the rubber industry, suppliers have added an electricity surcharge to their charges. The electric surcharge has also been used in
the customer interface of the rubber industry. There is still a delay in getting the costs into customer prices.
The COVID-19 is still affecting as high level of sick leaves as personnel with related symptoms has stayed home to eliminate the possible infection risk.
The rubber industry will continue to be Reka Industrial's industrial business segment.
The rubber segment´s turnover was EUR 17.1 million (EUR 15.9 million). EBITDA was EUR 1.3 million (EUR 1.4 million).
The rubber segment has made several key person recruitments. Especially to the sales, product development and procurement more skilful persons have been recruited.
In order to support growth and to support the productivity of the Polish production unit, the rubber segment initiated the
transfer of mold product manufacturing made with injection technology from Poland to Finland at the end of 2022. The transfer is now completed and the Polish production unit concentrate on manufacturing of black hoses and silicone hoses.
To increase the capacity of manufacturing black hoses the rubber segment ordered new extrusion line to the factory in Poland. The price of the new line is EUR 1.3 million and the line is expected to be in production use by the end of July 2024. In addition to the extrusion line investment there are plans for smaller capex both in Finland and Poland to support the growth and productivity increases.
Reka Industrial announced on 10 November 2022 that it had signed an agreement with the Nexans Group on the sale of shares in Reka Cables Ltd. With the agreement, Reka Industrial's Cable segment ended and Reka Cables Ltd and its subsidiaries were classified as a discontinued operations.
The corporate sale was completed at the end of April 2023 and therefore the January - April financial figures of Reka Cables ltd has been noticed in the Group figures.
Reka Industrial presents the income statement separately for both continuing and discontinued operations and for the entire Group. Therefore, the essential issues related to Reka Cables' business are described below.
January – June 2023 the turnover of Reka Cables was EUR 61.0 million and EBITDA was EUR 5.9 million.
The industry's key raw materials are copper, aluminum and plastics. During the review period, price fluctuations for copper and aluminum have been significant. The prices of plastics have risen strongly, and availability has become more difficult.
In the beginning of the year, the price of copper was EUR 7,858 per tonne and the price of aluminum was EUR 2,212 per tonne. In the end of April 2023, the price of copper was EUR 8,037 per tonne and the price of aluminum was EUR 2,135 per tonne.
At its highest point, the daily price of copper during January – April 2023 was EUR 8,718 per tonne in January, and at its lowest in March, at EUR 7,672 per tonne. The price of aluminum has been at its highest in March, when it was EUR 2,435 per tonne, and its lowest in April, when it was EUR 2,068 per tonne.
During the review period the investments totalled to EUR 0.9 (1.5) million of which the investments to rubber business were EUR 0.5 (0.3) million the investments of discontinued operations January – June were EUR 0.4 million.
In January – June 2023 the Group employed an average of 491 (588) people. At the end of the review period, the personnel of the Group was 309 (590), of which 307 (285) represented the Rubber segment.
The Annual General Meeting (AGM) of Reka Industrial Plc was held on 24 May 2023, in Hyvinkää.
The AGM approved the financial accounts for the 2022 accounting period and granted the Company's Board and the Managing Director discharge from liability for the 2022 accounting period.
The AGM resolved, that for the financial period 1.1.2022-31.12.2022 a dividend of 0,20 per share will be paid.
In accordance with the Board of Directors' proposal, the Annual General Meeting decided to approve the company's 2022 remuneration report. According to the Companies Act, the decision is advisory.
The AGM approved the proposed annual (12 months) remuneration of EUR 25,000 for the members of the Board of Directors, EUR 50,000 for the chairman of the Board and EUR 2,500 for the committee members. No separate meeting fees to be paid. The AGM approved that the members of the Board are compensated for their travel expenses.
Circa 40 per cent of the annual remuneration will be paid with the shares of the company. Conversion into the shares will be carried out based on the average share price of the company's class B-share in May 2023 and the shares will be handed over in June 2023.
The AGM resolved that the auditors' fees be paid as per invoice based on competitive bidding of accounting services.
The AGM approved, in accordance with the shareholders' proposal, that the number of members of the Board shall be six (6) and elected the following persons to the Board: Leena Saarinen, chairman; Matti Hyytiäinen, deputy chairman and Markku E. Rentto, Päivi Marttila, Eeva Raita and Ville Tolvanen as members of the Board. No deputy members were elected.
The AGM elected, in accordance with the shareholders' proposal, Authorized Public Accountants KPMG Ltd, with Authorized Public Accountant Jukka Rajala as responsible auditor, as the Company's auditor for a term that expires at the end of the Annual General Meeting of 2024.
The AGM authorized, in accordance with the Board of Director's proposal, the Board of Directors to decide on the acquisition of the Company's own shares with assets from the Company's unrestricted equity. The shares will be acquired through trading arranged by Nasdaq Helsinki in accordance with its rules, and the consideration to be paid for the shares to be acquired must be based on market price. The Company may acquire B class shares directly by a contractual trade, provided that the number of class B shares to be acquired via contractual trade is at least 15,000 and that the consideration to be paid for the shares is equal to the prevailing market price in Nasdaq Helsinki at the time of the acquisition. When carrying out acquisitions of the Company's own shares, derivatives, stock lending and other agreements customary to the capital markets may be entered into within the limits set by law and regulations.
The authorization entitles the Board of Directors to also decide on a directed acquisition in a proportion other than that of the shares held by the shareholders, provided the Company has a weighty reason for this as defined in the Finnish Companies Act.
The maximum number of class B shares to be acquired may not exceed a total of 588,076. The amount corresponds to approximately 9.77 % of all the shares in the Company and in total 10,0 % of the Company's class B shares.
The Board of Directors is entitled to decide on all other matters pertaining to acquiring of the Company's own shares.
The authorization is in force until the next Annual General Meeting, however not later than November 24, 2024. The authorization replaces the authorization given by the previous Annual General Meeting on April 6, 2022, to repurchase and pledge the company's own shares.
In accordance with the proposal, the Annual General Meeting authorized the Board of Directors to decide on handover of own shares. The amount of shares to be handed over in total can be maximum 588,076 B shares, which corresponds to approximately 9.77 % of all the shares of the Company and in total 10.0 % of the Company's class B shares, depending on the situation on the date of the notice. The authorization entitles the Board of Directors to decide on all other conditions for the handover of shares, including the right to deviate from the shareholders' pre-emptive subscription right.
The authorization is valid until the next Annual General Meeting. The authorization replaces the authorization given by the previous Annual General Meeting on April 6, 2022, for the handover of own shares.
Reka Industrial Plc´s share capital is divided into Aand B-shares. The total share capital of all the company´s shares at the end of June 2023 was EUR 24,081,440 and the number of the shares 6,020,360. The total number of shares includes 37,150 B-shares held by Reka Industrial Plc. The holding represents 0.6 % of the company´s share capital and 0.4 % of the votes. The company held no A-shares. Reka Industrial Plc´s B-shares (REKA) are listed on the exchange list of NASDAQ Helsinki.
| Company shares | 30/6/2023 | 30/6/2022 |
|---|---|---|
| Company share capital (EUR) | 24,081,440 | 24,081,440 |
| A-shares (20 votes per share) | 139,600 | 139,600 |
| B-shares (1 vote per share) | 5,880,760 | 5,880,760 |
| Total | 6,020,360 | 6,020,360 |
| B-shares held by the company | 37,150 | 48,105 |
On January-June 2023, a total of 683,249 (610,841) of the company's B shares were traded on NASDAQ Helsinki Ltd, representing 11.6 % (10.4) of the total number of shares. At the end of trading on June 2023 the share price was EUR 6.20 (3.26) and the average share price for the review period was EUR 6.61 (3.63). The lowest quotation in January-June was EUR 5.64 (2.86), with the highest being EUR 7.68 (4.19). The company's market capitalisation was valued at EUR 37.2 million (19,5) on 30 June 2023.
Reka Industrial did not exercise its authorization to acquire the company´s own shares.
Reka Industrial Plc is parent company in the Group, whose actual business company at 30 June 2023 is Reka Rubber Ltd. Reka Industrial Plc is domiciled in Hyvinkää.
At the end of the review period, Reka Industrial had 10,287 shareholders (10,506). The largest shareholder, Reka Ltd, held 50.16 % of the shares and 65.4 % of the votes. Reka Industrial Plc is therefore part of the Reka Group. Reka Ltd is domiciled in Juupajoki.
At the end of June 2023, the combined holding of the ten largest shareholders was 61.2 % of the shares and 73.0 % of the votes. The members of the Board of Directors, the Managing Director and the CFO directly and through their controlled corporations owned and controlled on June 30, 2023 a total of 3,280,994 (2,965,814) of Reka Industrial's B shares.
Reka Industrial's financial risks include currency, interest rate, commodity, liquidity, credit, and investment risks. Financial risks and the related protection measures are described in more detail in notes to the financial statements. The company's future risk factors are related to the development of investment operations and its business segments.
The financial situation in euro area and political uncertainties may have effect on purchase amount of the customers in rubber business as well to the start of new projects. The availability of employees poses challenges to the growth of operations. In the Polish plant in particular, staff turnover and the relative share of sick leave are high and require active and multichannel recruitment and measures to manage absences.
The increase in the price and availability of energy may directly and indirectly affect the market.
There have not been any major events after the end of the review period.
In 2023 EBITDA is expected to be around EUR 38 million.
Hyvinkää, 3 August 2023
Reka Industrial Plc Board of Directors
Further information: Sari Tulander, President and CEO, tel. +358 44 044 1015
| Discontinu | Discontinu | |||||
|---|---|---|---|---|---|---|
| Continuing operations |
ed operations |
Group in total |
Continuing operations |
ed operations |
Group in total |
|
| 1/1- | 1/1- | 1/1- | 1/1- | 1/1- | 1/1- | |
| EUR 1,000 | 30/6/2023 | 30/6/2023 | 30/6/2023 | 30/6/2022 | 30/6/2022 | 30/6/2022 |
| Turnover | 17,058 | 61,006 | 78,064 | 15,842 | 85,005 | 100,848 |
| Change in inventories of finished products and |
||||||
| production in progress | -366 | 3,225 | 2,859 | -35 | 6,671 | 6,636 |
| Production for own use | 0 | 4 | 4 | 0 | 31 | 31 |
| Other operating income | 31,492 | 46 | 31,537 | 108 | 101 | 209 |
| Materials and services | -8,692 | -49,006 | -57,698 | -8,150 | -74,248 | -82,398 |
| Personnel expenses | -5,325 | -5,901 | -11,226 | -4,731 | -8,247 | -12,978 |
| Depreciation and impairment | -674 | 0 | -674 | -719 | -2,155 | -2,874 |
| Other operating expenses | -1,998 | -3,433 | -5,431 | -1,284 | -4,406 | -5,690 |
| 14,436 | -55,065 | -40,628 | -14,811 | -82,253 | -97,064 | |
| Operating result | 31,494 | 5,941 | 37,435 | 1,031 | 2,753 | 3,784 |
| Financial income | 279 | 180 | 459 | -61 | 358 | 297 |
| Financial expenses | -791 | -1,532 | -2,323 | -334 | -1,714 | -2,049 |
| IAS 19 defined benefit plans Share of the result of |
1 | -231 | -229 | -427 | 0 | -427 |
| associated companies | 0 | 24 | 24 | 338 | 45 | 383 |
| Result before taxes | 30,984 | 4,383 | 35,366 | 547 | 1,441 | 1,988 |
| Taxes | 63 | -661 | -598 | -115 | -333 | -488 |
| Result for the period | 31,046 | 3,721 | 34,768 | 432 | 1,108 | 1,540 |
| Profit or loss attributable to | ||||||
| Shareholders of the parent | 31,046 | 3,721 | 34,768 | 432 | 1,108 | 1,540 |
| Non-controlling interests | 0 | 0 | 0 | 0 | 0 | 0 |
| 31,046 | 3,721 | 34,768 | 432 | 1,108 | 1,540 | |
| Earnings per share attributable to the shareholders of the parent, continuing operations |
||||||
| before dilution, EUR | 5.19 | 0.00 | 5.19 | 0.07 | 0.00 | 0.07 |
| after dilution, EUR | 5.19 | 0.00 | 5.19 | 0.07 | 0.00 | 0.07 |
| Earnings per share attributable to the shareholders of the parent, discontinued operations |
||||||
| before dilution, EUR | 0.00 | 0.62 | 0.62 | 0.00 | 0.19 | 0.19 |
| after dilution, EUR | 0.00 | 0.62 | 0.62 | 0.00 | 0.19 | 0.19 |
| Earnings per share attributable to the shareholders of the parent |
||||||
| before dilution, EUR | 5.19 | 0.62 | 5.81 | 0.07 | 0.19 | 0.26 |
| after dilution, EUR | 5.19 | 0.62 | 5.81 | 0.07 | 0.19 | 0.26 |
| Number of shares | 5,983,210 | 5,983,210 | 5,983,210 | 5,972,255 | 5,972,255 | 5,972,255 |
| Continuing operations 1/1- |
Discontinued operations |
Group in total 1/1 - |
Continuing operations 1/1- |
Discontiued operations 1/1- |
Group in total 1/1- |
|
|---|---|---|---|---|---|---|
| EUR 1,000 | 30/6/2023 | 1/1-30/6/2023 | 30/6/2023 | 30/6/2022 | 30/6/2022 | 30/6/2022 |
| Result Other comprehensive items that may subsequently reclassified to statement of income Translation differences |
31,046 | 3,721 | 34,768 | 432 | 1,108 | 1,540 |
| related to foreign units Change in the value of |
126 | 0 | 126 | -15 | 0 | -15 |
| open customer derivatives Taxes of items that may subsequently reclassified |
0 | 440 | 440 | 0 | -2,469 | -2,469 |
| to statement of income | 0 | -88 | -88 | 0 | 494 | 494 |
| Total | 126 | 352 | 477 | -15 | -1,975 | -1,991 |
| Other comprehensive items that are not subsequently reclassified to statement of income Items related to remeasurements of net |
||||||
| defined benefit liability Taxes of items that are not subsequently reclassified |
-472 | -580 | -1,052 | 9,290 | 0 | 9,290 |
| to statement of income l | 94 | 116 | 210 | -1,858 | 0 | -1,858 |
| Total Other comprehensive |
-378 | -464 | -842 | 7,432 | 0 | 7,432 |
| items total Total comprehensive |
-252 | -113 | -365 | 7,417 | -1,975 | 5,441 |
| income Total comprehensive income attributable to |
30,794 | 3,609 | 34,403 | 7,849 | -867 | 6,981 |
| Shareholders of the parent | 30,794 | 3,609 | 34,403 | 7,849 | -867 | 6,981 |
| Non-controlling interests | 0 | 0 | 0 | 0 | 0 | 0 |
| 30,794 | 3,609 | 34,403 | 7,849 | -867 | 6,981 |
| EUR 1,000 | 30/6/2023 | 30/6/2022 |
|---|---|---|
| ASSETS | ||
| Non-current assets | ||
| Goodwill | 0 | 3,252 |
| Other intangible assets | 2,901 | 4,926 |
| Tangible assets | 3,296 | 23,448 |
| Right-of-use assets | 3,033 | 3,347 |
| Holdings in associates | 0 | 1,064 |
| Other shares and holdings | 766 | 0 |
| Guarantee capital investment | 8,000 | 2,300 |
| Other receivables | 0 | 40 |
| IAS19 pension receivable | 3,800 | 3,776 |
| Deferred tax assets | 1,821 | 2,075 |
| Total non-current assets | 23,616 | 44,228 |
| Current assets | ||
| Inventories | 4,353 | 33,513 |
| Sales receivables and other receivables | 3,267 | 11,433 |
| Tax receivables from the profit for the financial year | 26 | 248 |
| Derivative contracts | 0 | 181 |
| Other cash equivalents | 40,100 | 2,946 |
| Cash and cash equivalents | 415 | 1,402 |
| Total current assets | 48,161 | 49,723 |
| Non-current assets held for sale | 0 | 955 |
| Total assets | 71,778 | 94,907 |
| SHAREHOLDERS' EQUITY AND LIBILITIES | 30/6/2023 | 30/6/2022 |
| Shareholder's equity | ||
| Share capital | 24,082 | 24,082 |
| Premium fund | 66 | 66 |
| Reserve fund | 1,221 | 1,221 |
| Own shares | -136 | -174 |
| Translation differences | -31 | -132 |
| Retained profit | 27,690 | -7,680 |
| Other unrestricted equity | 436 | 436 |
| Equity attributable to shareholders of the parent | 53,327 | 17,819 |
| Non-controlling interest | 0 | 0 |
| Total shareholders´ equity | 53,327 | 17,819 |
| Non-current liabilities | ||
| Deferred tax liabilities | 1,661 | 2,198 |
| Provisions | 2,175 | 3,588 |
| Financial liabilities | 0 | 12,981 |
| Lease liabilities | 4,924 | 4,107 |
| Other liabilities | 70 | 96 |
| Derivative contracts | 0 | 227 |
| Current liabilities | ||
| Tax liabilities from the profit | 972 | 631 |
| Provisions | 2,451 | 201 |
| Financial liabilities | 931 | 13,806 |
| Lease liabilities | 421 | 1,603 |
| Derivative contracts | 0 | 1,889 |
| Accounts payable and other liabilities | 4,845 | 35,761 |
| Total liabilities | 18,450 | 77,088 |
| Total shareholders´ equity and liabilities | 71,778 | 94,907 |
| EUR 1,000 | A | B | C | D | E | F | G | H | I | J | K | L |
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Shareholders´ equity 31/12/2021 | 24,082 | 66 | 1,221 | -287 | -116 | 635 | 428 | 436 | -15,212 | -11,253 | 0 | -11,253 |
| Comprehensive income | ||||||||||||
| Result for the period | 8,978 | 8,978 | 0 | 8,978 | ||||||||
| Other comprehensive items Items related to remeasurements of net defined benefit liability |
2,866 | 2,866 | 2,866 | |||||||||
| Taxes of net defined liability | -573 | -573 | -573 | |||||||||
| Total | 2,293 | 2,293 | 2,293 | |||||||||
| Derivatives | -1,054 | -1,054 | -1,054 | |||||||||
| Taxes of derivatives | 211 | 211 | 211 | |||||||||
| Total | -843 | -843 | -843 | |||||||||
| Translation differences | -41 | -41 | -41 | |||||||||
| Total comprehensive income | -41 | 2,293 | -843 | 8,978 | 10,387 | 0 | 10,387 | |||||
| Other change | 25 | 25 | 25 | |||||||||
| Transactions with the owners | ||||||||||||
| Dividends and return of equity | -535 | -535 | -535 | |||||||||
| Payments by own shares | 113 | 7 | 120 | 120 | ||||||||
| Total transactions with the owners | 113 | -528 | -415 | 0 | -415 | |||||||
| Shareholders´ equity 31/12/2022 | 24 082 | 66 | 1 221 | -174 | -157 | 2,928 | -415 | 436 | -6,737 | 21,250 | 0 | 21,250 |
| EUR 1,000 | A | B | C | D | E | F | G | H | I | J | K | L |
| Shareholders´ equity 31/12/2022 | 24,082 | 66 | 1,221 | -174 | -157 | 2,928 | -415 | 436 | -6,737 | 21,250 | 0 | 21,250 |
| Comprehensive income | ||||||||||||
| Result for the period | 34,768 | 34,768 | 0 | 34,768 | ||||||||
| Other comprehensive items Items related to remeasurements of net defined benefit liability |
-1,052 | -1,052 | -1,052 | |||||||||
| Taxes of net defined liability | 210 | 210 | 210 | |||||||||
| Total | -842 | -842 | -842 | |||||||||
| Derivatives | 440 | 440 | 440 | |||||||||
| Taxes of derivatives | -88 | -88 | -88 | |||||||||
| Total | 352 | 352 | 352 | |||||||||
| Translation differences | 126 | 126 | 126 | |||||||||
| Total comprehensive income | 126 | -842 | 352 | 34,768 | 34,403 | 0 | 34,403 | |||||
| Other change | 25 | 25 | 25 | |||||||||
| Transactions with the owners | ||||||||||||
| Dividends and return of equity | -2,389 | -2,389 | -2,389 | |||||||||
| Payments by own shares | 38 | 38 | 38 | |||||||||
| Total transactions with the owners | 38 | -2,389 | -2,350 | 0 | -2,350 | |||||||
| Shareholders´ equity 30/6/2023 | 24,082 | 66 | 1,221 | -136 | -31 | 2,086 | -63 436 |
25,667 | 53,327 | 0 | 53,327 |
Explanations for the letter codes:
F Pension liability IAS 19 G Fair value fund H Other unrestricted equity I Retained earnings J Shareholders´ equity to the shareholders of the parent K Non-controlling interest
L Total shareholders´ equity
| EUR 1,000 | 1/1-30/6/2023 | 1/1-30/6/2022 |
|---|---|---|
| Cash flows from operating activities | ||
| Payments received from operating activities | 83,609 | 102,168 |
| Payments paid on operating activities | -79,755 | -100,228 |
| Paid interests and other financial expenses | -2,249 | -1,788 |
| Interests received and other financial incomes | 366 | 92 |
| Direct taxes paid | -315 | -140 |
| Net cash provided by operating activities | 1,656 | 105 |
| Cash flows from investments | ||
| Tytäryhtiöosakkeiden myynti | 54,181 | 0 |
| Investments in tangible assets | -793 | -1,564 |
| Sales of tangible assets | 0 | -4 |
| Investments in other assets | -1,138 | 0 |
| Net cash provided by investing activities | 52,250 | -1,568 |
| Cash flows from financing activities | ||
| Increase in loans | 275 | 11,796 |
| Decrease in loans | -14,076 | -5,294 |
| Payments of finance lease activities | -747 | -904 |
| Dividends/return of equity paid | -2,389 | -535 |
| Net cash provided by financing activities | -16,937 | 5,063 |
| Change in cash and cash equivalents at the end of the period | 36,970 | 3,601 |
| Cash and cash equivalents at beginning of the period | 802 | 767 |
| Exchange rate differences | -13 | -20 |
| Cancellation of elimination of cash and cash equivalents related to discontinued operations |
2,756 | 0 |
| Cash and cash equivalents at the end of the period | 40,515 | 4,348 |
• Cash flow statement includes both continuing and discontinued operations.
This unaudited interim report has been prepared in accordance with IAS 34 requirements for interim reports. This interim report has been prepared in accordance with the same principles as the financial statements for 2022. The Group has adopted following new or amended IAS/IFRS standards and interpretations effective from January 1, 2023, but these do not have essential effect on the financial statements.
Our sustainability actions are guided by the UN Sustainable Development Goals. Sustainable development is based on energy efficiency, the circular economy, and the production and use of renewable energy.
Sustainability and building a sustainable future are a key part of our strategy. We are committed to the UN Sustainable Development Goals, which to support we have set environmental goals.
The share of electricity in energy use is increasing, especially in vehicles and industry. Wind and solar power will help to reduce CO2 emissions from energy production, save natural resources and achieve a carbon-neutral future. Reka Rubber, which participates in solutions for the vehicle industry, is involved in the electrification of the vehicle industry. Reka Rubber is a manufacturer of small and mediumsized series of rubber components for the vehicle and mechanical engineering industries.
Reducing CO2 emissions and measures to achieve carbon neutrality have been emphasized in recent years. In addition to calculating the carbon footprint, processes, technologies and products are actively developed to reduce the carbon footprint.
Our production plants use green electricity and efforts are made to reduce the carbon footprint in
production facilities, production processes and product development. Solar panels were installed to Aura production plant in spring 2023.
In the future, climate-related issues will require investments and development effort both to reduce one's own carbon footprint and to meet the growing demands of customers.
The war in Ukraine has been reflected in a general increase in the prices of metal parts as the total supply decreases. The war in Ukraine has also been reflected in matters related to personnel, as there are Ukrainians working especially at our production plant in Poland.
Part of the Group's financing is tied to a reference interest rate, part to a fixed interest rate. The rise in
reference interest rates has increased the total interest costs both for the financing of trade receivables and for traditional loans. Reference rates are actively monitored and updated to the Group's forecasts and plans. Since bank loans in Finland were paid during spring 2023, this will reduce the impact of a rise in reference rates to the financial costs in the future.
Inflation can be seen as an increase in the cost of both labour and materials and components and services. The price of electricity is partially protected at the Finnish production plants, but the Polish production plant's energy costs clearly increased in 2023. In 2022, the electricity price of the Polish production plant was fixed and the price increase therefore did not affect the year 2022. The increase in the price of electricity and the high level of inflation in Poland accelerate some production arrangements and efficiency measures. Change and efficiency measures are also being carried out at the factories in Finland. In the rubber industry, suppliers have added an electricity surcharge to their charges. The electric surcharge has also been used in
the customer interface of the rubber industry. There is still a delay in getting the costs into customer prices.
The COVID-19 is still affecting as high level of sick leaves as personnel with related symptoms has stayed home to eliminate the possible infection risk.
There were no material business acquisitions during the review period January – June 2023. Reka Inudstrial sold the shares of Reka Cables Ltd to Nexans Group on 26 April 2023. Impacts of the sale are described in more detail in note Discontinued opeartions. There were no other material sales during the review period.
On November 10, 2022, Reka Industrial signed agreement with Nexans Group regarding the sale of all outstanding shares of Reka Cables Ltd. With the
signing of the agreement, Reka Cables Ltd and its subsidiaries were classified as discontinued operation.
The purchase price for the shares was EUR 53 million. Locked box interest was paid for the purchase price until 31 March 2023. The Corporate sale was completed on 26 April 2023. Therefore the financial result and cash flows of discontinued operations is reported in Reka Industrial financial figures for the period of four months, 1 January – 30 April 2023.
| The result of discontinued operations, EUR 1,000 | 1/1-30/4/2023 | 1/1-31/12/2022 |
|---|---|---|
| Turnover Change in inventories of finished products and |
61,006 | 172,385 |
| production in progress | 3,225 | 1,235 |
| Production for own use | 4 | 67 |
| Other operating income | 46 | 187 |
| Materials and services | -49,006 | -137,494 |
| Personnel expenses | -5,901 | -16,584 |
| Depreciation and impairment | 0 | -3,751 |
| Other operating expenses | -3,433 | -8,791 |
| -55,065 | -165,131 | |
| Operating result | 5,941 | 7,254 |
| Financial income | 180 | 668 |
| Financial expenses | -1,532 | -3,710 |
| Share of the result of associated companies | 24 | 96 |
| IAS 19 defined benefit plans | -231 | 0 |
| Result before taxes | 4,383 | 4,308 |
| Taxes | -661 | -814 |
| Result for the period | 3,721 | 3,494 |
| Profit or loss attributable to | ||
| Shareholders of the parent | 3,721 | 3,494 |
| Non-controlling interests | 0 | 0 |
| 3,721 | 3,494 |
| Cash flow from discontinued operations, EUR 1,000 | 1/1-30/4/2023 | 1/1-31/12/2022 |
|---|---|---|
| Cashflows from operating activities | 2,974 | 8,036 |
| Cash flows from investments | 7,796 | -3,032 |
| Cash flows from financing activities | -9,981 | -2,483 |
| Cash flow for the period | 789 | -2,521 |
| The effect of sales on the financial position, EUR 1,000 | 30/4/2023 |
|---|---|
| Sold assets Consolidated goodwill |
3,252 |
| Other intangible assets | 1,954 |
| Tangible assets | 16,597 |
| Right-of-use assets | 3,614 |
| Holdings in associates | 3,775 |
| Receivables | 40 |
| Deferred tax assets | 847 |
| Inventories | 25,555 |
| Sales receivables and other receivables | 3,971 |
| Tax receivables from the profit for the financial year | 57 |
| Derivative contracts | 291 |
| Other financial assets | 524 |
| Cash and cash equivalents | 3,022 |
| Total sold assets | 63,499 |
| Sold liabilities | |
| Deferred tax liabilities | 516 |
| Provisions | 1,488 |
| Financial liabilities | 292 |
| Lease liabilities | 1,924 |
| IAS19 pension liability | 2,789 |
| Tax liabilities from the profit | 546 |
| Financial liabilities | 2,618 |
| Lease liabilities | 1,959 |
| Derivative contracts | 369 |
| Accounts payable and other liabilities | 27,852 |
| Total sold liabilities | 40,353 |
| Sold net assets | 23,146 |
| 30/4/2023 | |
| Received compensation in cash | 55,650 |
| Sold net assets | -23,146 |
| Other items related to the sales | -1,469 |
| Capital gain of discontinued operations | 31,035 |
Reka Industrial Group's industrial business segment is rubber industry. All other operations are categorised to Other operations and eliminations.
| 30/6/2023 | Eliminations and other |
||
|---|---|---|---|
| EUR 1,000 | Rubber | operations | Group |
| Turnover | 17,055 | 61,009 | 78,064 |
| EBITDA | 1,296 | 36,813 | 38,109 |
| Unallocated items Result before taxes Result for the period |
-3,342 | -3,342 35,366 34,768 |
|
| Assets Segment´s assets Total assets |
18,332 18,332 |
53,445 53,445 |
71,778 71,778 |
| Liabilities Segment´s liabilities Total liabilities |
10,601 10,601 |
7,850 7,850 |
18,450 18,450 |
| Assets - Liabilities | 7,731 | 45,596 | 53,327 |
| Investments Depreciations |
467 | 430 674 |
897 674 |
| 30/6/2022 | Eliminations and other |
||||
|---|---|---|---|---|---|
| EUR 1,000 | Rubber | operations | Group | ||
| Turnover | 15,943 | 84,904 | 100,848 | ||
| EBITDA | 1,445 | 5,213 | 6,658 | ||
| Unallocated items Result before taxes Result for the period |
-5,118 | -5,118 1,988 1,540 |
|||
| Assets | |||||
| Segment´s assets | 18,330 | 76,576 | 94,907 | ||
| Total assets | 18,330 | 76,576 | 94,907 | ||
| Liabilities | |||||
| Segment´s liabilities | 8,695 | 68,393 | 77,088 | ||
| Total liabilities | 8,695 | 68,393 | 77,088 | ||
| Assets - Liabilities | 9,635 | 8,185 | 17,819 | ||
| Investments | 275 | 1,273 | 1,547 | ||
| Depreciations | 2,874 | 2,874 |
| Rubber segment´s turnover by product group, EUR million | 1-6/2023 | 1-6/2022 |
|---|---|---|
| Moulded | 5.6 | 5.4 |
| Hoses | 9.5 | 8.1 |
| Other | 2.0 | 2.4 |
| Total | 17.1 | 15.9 |
| Rubber segment´s turnover by sales area, EUR million | 1-6/2023 | 1-6/2022 |
| EU-countries | 13.3 | 14.5 |
| Non-EU-countries | 3.8 | 1.4 |
| Total | 17.1 | 15.9 |
Taken all market areas into the consideration the largest customer group ́s share of the Group ́s turnover was 17.5 %. Other individual customer ́s share of the Group ́s turnover was under 10 %.
| EUR 1,000 | 1-6/2023 | 1-6/2022 |
|---|---|---|
| Subsidies received | 29 | 58 |
| Rental income | 90 | 82 |
| Gain of the sale of fixed assets, sale of shares of Reka Cables Ltd | 31,035 | 0 |
| Other income | 383 | 68 |
| Total | 31,537 | 209 |
| EUR 1,000 | 1-6/2023 | 1-6/2022 |
|---|---|---|
| Short-term variable compensation | -183 | -117 |
| Other variable compensation | -423 | -544 |
| Rental expenses total | -606 | -661 |
| Machinery and property maintenance costs | -1,837 | -2,192 |
| Sales and marketing expenses | -721 | -499 |
| Voluntary personnel expenses | -542 | -449 |
| Other expenses | -1,723 | -1,889 |
| Total | -5,431 | -5,690 |
| EUR 1,000 | 1-6/2023 | 1-6/2022 |
|---|---|---|
| Book value at the beginning of the period | 6,216 | 27,731 |
| Investments | 522 | 1,542 |
| Depreciation | -362 | -2,441 |
| Translation differences | -47 | -37 |
| Book value at the end of the period | 6,329 | 26,795 |
| EUR 1,000 | 30/6/2023 | 30/6/2022 |
|---|---|---|
| Loans from financial institutions | 931 | 16,044 |
| Bond | 0 | 7,194 |
| Granted business mortgages | 1,800 | 27,800 |
| Granted real estate mortgages | 1,900 | 19,093 |
| Book value of pledged securities | 0 | 8,969 |
| Granted guarantees | 0 | 4,408 |
| Guarantees and payment commitments | 2,000 | 2,006 |
On June 30, 2023, the investment commitments for tangible assets amounted to EUR 1.0 million (EUR 3.4 million on June 30, 2022).
| EUR 1,000 | Positive current values |
Negative current values |
Current net values 30/6/2023 |
Current net values 31.12.2022 |
Nominal values 30/6/2023 |
Nominal values 31/12/2022 |
|---|---|---|---|---|---|---|
| Currency derivatives Forward exchange agreements |
0 | 0 | 0 | 353 | ||
| Raw material options | ||||||
| Metal derivatives | 0 | 0 | 0 | -872 | 0 | 13,768 |
| Total derivatives | 0 | 0 | 0 | -519 | 0 | 13,768 |
The Group ́s related parties include the subsidiaries and associated companies, other companies belonging to the Reka Group, Reka Pension Fund, the Group ́s Board of Directors and their close family members as well as management group and their close family members. Also related parties include companies, that have ownership connection through the owner who has significant decision power, or that belong to the related-party companies via the management or board members. Reka Cables Ltd with its subsidiaries belonged to the Reka Industrial Group until the end of April 2023.
Reka Industrial Plc, and therefore also the Reka Industrial Group, belong to the Reka Group. Reka Ltd has a 50.16 percent holding of shares and a 65.36 percent holding of votes.
| EUR 1,000 | 1-6/2023 | 1-6/2022 |
|---|---|---|
| Other purchases | -388 | -499 |
| Other income | 3 | 2 |
| Guarantee commissions | -22 | -70 |
| Sales receivables and other receivables at end of the period | 209 | 521 |
| Other debts at the end of the period | 0 | 36 |
Reka Ltd has guaranteed financing and other agreements of the Reka Industrial Group. Reka Industrial pays a guarantee commission for guarantees. At the end of the review period there were no guarantees.
The Reka Industrial Group uses the Reka Group level finance and supporting systems as well as related licenses and virtual servers..
| EUR 1,000 | 1-6/2023 | 1-6/2022 |
|---|---|---|
| Paid pension expenses | -1,130 | -1,270 |
| Rental expenses | -360 | -121 |
| Financial income | 162 | 46 |
| Guarantee capital investment | 8,000 | 2,300 |
| Other debts at the end of the period | 351 | 247 |
| Other receivables at the end of the period | 0 | 46 |
Reka Group's pension insurances were transferred into Reka's Pension Fund on 31 December 2015. Because of the transfer, pension liabilities of Reka Industrial Group have been processed in IFRS through benefit-based calculation.
In 2022 Reka Rubber Ltd made a guarantee capital investment of EUR 5.7 million and in 2019 Reka Cables Ltd made a guarantee capital investment of EUR 2.3 million in Reka Pension Fund. The guarantee capital investment supports the solvency of the pension fund. The interest on the guarantee capital investment is 4 % p.a.
When Reka Cables Ltd joined Nexans Group at the end of April 2023, remained the EUR 2.3 million guarantee capital investment made by Reka Cables Ltd to the seller i.e. Reka Industrial Group. In case Reka Cables Ltd would leave Reka Pension Fund in future and if in such case Reka Pension Fund would charge any exit fee, the fee will be paid by Reka Industrial Group. Relating the possible exit fee there is expense provision of EUR 2.3 million at the Balance Sheet of the Group.
| EUR 1,000 | 1-6/2023 | 1-6/2022 |
|---|---|---|
| Sales | ||
| Nestor Cables Ltd | 0 | 21 |
| Other purchases | ||
| Nestor Cables Ltd | 0 | 187 |
| Leasing rents | ||
| Riihimäen Kaapelitehdas Ltd | 0 | 543 |
| Liabilities | ||
| Nestor Cables Ltd | 0 | 100 |
Nestor Cables Ltd was sold in July 2022.
Riihimäen Kaapelitehdas Ltd is a limited liability company that owns a property in Riihimäki where Reka Cables Ltd is the tenant. Reka Cables Ltd owns part of the shares of Riihimäen Kaapelitehdas Ltd and the leasing rents are taken into account in the end of April 2023. The other owners of Riihimäen Kaapelitehdas Ltd are Riihimäen Tilat ja Kehitys and Reka Pension Fund.
| EUR 1,000 | 1-6/2023 | 1-6/2022 |
|---|---|---|
| Rental incomes | 4 | 4 |
| Other purchases | 3 | 5 |
Other related parties consist of companies that have an ownership relationship through the owner who has significant decision power, or that belong to the related-party companies via the management or board members or their close family members.
The Group has no other significant transactions, receivables or liabilities or guarantees with related parties.
| IAS 19 corrected Return on investment (ROI) % |
= | Profit before taxes + interest and other financial expenses / x 100 [Balance sheet total – obligatory provisions and non-interest bearing liabilities] (average) |
|---|---|---|
| IAS 19 corrected Equity ratio, % |
= | Shareholders´equity + non-controlling interest excluding x 100 effects of IAS 19 bookings / Balance sheet total – advances received excluding effects of OAS 19 bookings |
| Earnings per share (EPS), EUR |
= | Profit for the period attributable to equity holders of the parent company/ Numbers of shares adjusted for share issues (average) |
| Operating profit | = | the net amount formed when from the net sales are deducted the purchase costs adjusted by the change in the stocks of non-finished and finished goods as well as expenses for production for personal use. Also deducted from the net sales are expenses arising from employee benefits without IAS 19 defined benefit pension arrangements related items, depreciation, amortization and any impairment losses. |
| EBITDA | = | the net amount that is formed when depreciation and any impairment losses are added to the operating result |
All comments in this report that do not refer to actual facts are future estimates. Such estimates include expectations concerning market trends, growth and profitability as well as statements including the words "believe", "assume" or "will be" or a similar expression. Since these estimates are based on current plans and estimates, they involve risks and uncertainty factors that may cause the actual results to differ substantially from current statements.
Among other things, such factors include 1) operating conditions, such as continued success in production and the ensuing efficiency benefits, availability and cost of production inputs, demand for new products and changes in circumstances affecting the acquisition of capital under acceptable conditions; 2) sector-specific circumstances, such as the intensity of demand for products, the competition, current and future market prices for the Group's products and related pricing pressures, the financial situation of the Group's customers and competitors and competitors' possible new products; and 3) the general economic situation, such as economic growth in the Group's main market areas and change in exchange rates and interest rates.
Kankurinkatu 4-6 05800 Hyvinkää Reka Industrial Plc
Reka Industrial Oyj www.rekaindustrial.fi Kankurinkatu 4-6 05800 Hyvinkää
www.rekaindustrial.fi
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