Quarterly Report • May 4, 2023
Quarterly Report
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Stockholm, Sweden, 4 May 2023
| EUR million | Jan-Mar 2023 | Jan-Mar 2022 Jan-Dec 2022 | |
|---|---|---|---|
| Net sales | 188.4 | 184.0 | 823.6 |
| Net sales growth, % | 2.4% | 1.1% | 1.4% |
| Adjusted EBITDA | 2.4 | 5.1 | 27.8 |
| Adjusted EBITA2) | -5.5 | -2.4 | -1.9 |
| Adjusted EBITA margin, % | -2.9% | -1.3% | -0.2% |
| Adjusted EBITA2), segments | -2.1 | 0.7 | 9.9 |
| Adjusted EBITA margin, %, segments | -1.2% | 0.4% | 1.4% |
| Operating result (EBIT) | -11.6 | -2.5 | -2.0 |
| Return on operative capital employed (ROCE), % | -7.9% | 17.4% | -3.5% |
| Net working capital | -5.4 | -6.7 | -21.0 |
| Net debt | 158.4 | 135.8 | 125.5 |
| Number of employees, average | 5,103 | 5,031 | 5,053 |
1) Organic growth is adjusted for currency effects.
2) Eltel follows the profitability of segments with adjusted EBITA, which does not include restructuring costs and other items affecting comparability. Eltel has changed its terminology in Q1 2023 from operative EBITA to adjusted EBITA for the purpose of additional clarity and alignment with market practice. Please see pages 24–25 for definitions of the key ratios.
The year has started strong in terms of organic growth and new contracts signed. Organic growth in the segments was 7.2%, and 2.4% for the Group, which shows that last year's strong sales activities have been translated into delivered volumes. Additionally, we signed new contracts worth about EUR 244 million, more than double the volume compared to Q1 2022. While this shows our ability to secure new business, we are aware of the uncertainty relating to the future investment levels of telecom operators, which may impact our growth going forward.
As we indicated after the difficult last quarter of 2022, we foresaw the profitability challenges continuing into the first part of 2023. However, even though the difficulties were anticipated, and the fact that the first quarter is usually our weakest, we are still disappointed with our adjusted EBITA margin of -1.2% for the segments and -2.9% for the Group. Denmark and Sweden continued to improve their results and contributed positively, while the weak profitability in Norway and Finland burdened the overall results. We will continue to work on the underlying issues to drive profitability in the upcoming quarters.
Finland generated good growth, but increased costs and certain unfavorable contracts in Power Services affected the results. Sweden delivered very strong growth with a 19.2% increase in net sales in local currency. This marks the sixth consecutive quarter of top-line growth and the third quarter with a positive result for the country unit. In Norway, reduced and delayed volumes resulted in overcapacity and inefficiency. Meanwhile, Denmark had a very strong start to the year with a 20.5% revenue increase and a robust profitability at 6.1% adjusted EBITA margin.
The cost savings program that was initiated in December 2022, with a focus on Norway and Finland, has been implemented during the quarter. The program is estimated to provide savings of EUR 10 million on annual basis and it incurred a restructuring cost of EUR 6.1 million. The program included reducing the workforce by approximately 150 fulltime employees, optimizing subcontractor usage, closing selected offices, and reducing the number of vehicles. We expect to see the first effects of the program in the coming months. However, it is worth noting that we have also experienced a general increase in our cost base due to inflation and recent salary increases associated with the reached collective agreements in the Nordic countries.
After the reporting period, we have improved our financial position by issuing a EUR 25 million hybrid bond. The instrument is the first sustainability-linked hybrid bond in the Nordics, which highlights our commitment to integrating sustainability into our financing structure and showcases how sustainability is at the core of our operations.
Recently, we signed a contract in Finland to build our first large-scale solar park. This strategic move marks our expansion into the renewable energy sector and represents a significant milestone for Eltel.
As we navigate in the challenging markets, we remain focused on driving growth, reducing costs, and enhancing our sustainability efforts to ensure long-term and sustainable profitability for our company.
Eltel is a leading service provider for communication and power networks. Operations are conducted in the Nordic countries, Poland, Germany and Lithuania within country-based organizations that have full responsibility for their financial results. Within Power, Eltel provides maintenance of power grids, upgrades and project work to national transmission system operators and distribution network owners. Within Communication, Eltel provides similar services to telecom operators and other owners of communication networks.
Eltel's markets are characterized by a high concentration of customers and competitors offering similar products and services.
Through our strategy, we build the foundation for investing in sustainable profitable growth. This involves:
The strategy will enable Eltel to continue to develop, grow and invest in order to ensure long-term value creation for the company, its shareholders and society at large.
| Group adjusted EBITA margin | 5% |
|---|---|
| Annual growth | 2–4% |
| Leverage | 1.5–2.5x net debt/adjusted EBITDA |
| Dividend payout | Subject to leverage target |
| EUR million | Jan-Mar 2023 |
Jan-Mar 2022 |
Jan-Dec 2022 |
|---|---|---|---|
| Net sales | 188.4 | 184.0 | 823.6 |
| Adjusted EBITDA | 2.4 | 5.1 | 27.8 |
| Adjusted EBITA | -5.5 | -2.4 | -1.9 |
| Items affecting comparability | -6.1 | - | - |
| EBIT | -11.6 | -2.5 | -2.0 |
| Net result | -15.1 | -4.4 | -14.9 |
| Key ratios | |||
| Net sales growth, % | 2.4% | 1.1% | 1.4% |
| Organic growth1), % in segments | 7.2% | 0.2% | 1.8% |
| Currency translation effect in net sales, MEUR | -6.9 | -0.1 | -9.3 |
| Adjusted EBITA margin, % | -2.9% | -1.3% | -0.2% |
| Tax rate, % | -3.8% | -4.1% | -30.5% |
| Earnings per share after dilution, EUR | -0.10 | -0.03 | -0.10 |
1) Organic growth is adjusted for currency effects.
Net sales increased by 2.4% to EUR 188.4 million (184.0). In segments net sales increased by EUR 4.8 million. Organic net sales in segments, adjusted for currency effects, increased by 7.2%. The growth was driven by increased volumes in Denmark, Sweden and Finland. In Norway and Other business net sales decreased.
Adjusted EBITDA decreased to EUR 2.4 million (5.1). Adjusted EBITA decreased to EUR -5.5 million (-2.4) and the adjusted EBITA margin was -2.9% (-1.3). Adjusted EBITA in segments was EUR -2.1 million (0.7) and the margin was -1.2% (0.4). Improved performance in Denmark and Sweden was offset by challenges in Finland and Norway. In Other business, adjusted EBITA was EUR -1.0 million (-0.6).
Items affecting comparability comprised a restructuring charge that amounted to EUR 6.1 million (0.0). Following reductions in customer investments and result deterioration in Norway and Finland, a restructuring and cost savings program was communicated in connection with the Q4 2022 report. The actions were finalized during the first quarter of 2023. The restructuring included reduction in the workforce by approximately 150 full-time employees, termination and wind down of certain customer agreements, closing of selected locations and reducing fleet to adjust to the needs of the current operations.
For further information regarding net sales and adjusted EBITA development, refer to the respective sections on the segments.
EBIT amounted to EUR -11.6 million (-2.5).
Net financial expenses increased to EUR 2.9 million (1.8), mainly due to change in interest cost.
Tax costs amounted to EUR 0.6 million (0.2) representing the tax cost in countries with profits. No deferred tax assets were booked for countries with losses in the period. The effective tax rate was -3.8% (-4.1).
Net result for the period was EUR -15.1 million (-4.4). Earnings per share were EUR -0.10 (-0.03).
| EUR million | Jan-Mar 2023 |
Jan-Mar 2022 |
Jan-Dec 2022 |
|---|---|---|---|
| Finland | 64.3 | 58.8 | 290.1 |
| Sweden | 48.8 | 43.9 | 193.8 |
| Norway | 32.2 | 41.6 | 176.8 |
| Denmark | 21.8 | 18.1 | 74.3 |
| Sum segments | 167.2 | 162.4 | 735.0 |
| Other business | 22.7 | 23.5 | 99.4 |
| Eliminations | -1.5 | -1.9 | -10.8 |
| Total net sales | 188.4 | 184.0 | 823.6 |
| EUR million | Jan-Mar 2023 |
Jan-Mar 2022 |
Jan-Dec 2022 |
|---|---|---|---|
| Finland | -2.3 | 0.9 | 8.2 |
| Sweden | 0.5 | -1.8 | -1.0 |
| Norway | -1.6 | 1.4 | 2.1 |
| Denmark | 1.3 | 0.2 | 0.6 |
| Sum segments | -2.1 | 0.7 | 9.9 |
| Other business | -1.0 | -0.6 | -4.0 |
| Group functions | -2.4 | -2.6 | -7.8 |
| Total adjusted EBITA | -5.5 | -2.4 | -1.9 |
| EUR million | Jan-Mar 2023 |
Jan-Mar 2022 |
Jan-Dec 2022 |
|---|---|---|---|
| Finland | -3.6% | 1.6% | 2.8% |
| Sweden | 1.0% | -4.1% | -0.5% |
| Norway | -4.9% | 3.4% | 1.2% |
| Denmark | 6.1% | 0.9% | 0.9% |
| Sum segments | -1.2% | 0.4% | 1.4% |
| Other business | -4.2% | -2.4% | -4.0% |
| Total adjusted EBITA margin, % | -2.9% | -1.3% | -0.2% |
Eltel's main operations in the four Nordic countries are presented as segments. In Q1 2023, the segments represented 89% of the net sales.
Management follows segment results by adjusted EBITA, which does not include items affecting comparability. Items affecting comparability include expenses recognized in Q1 2023 for restructuring and rightsizing activities aiming to adjust the capacity of Eltel's operations.
Other business includes High Voltage Poland, Smart Grids Germany, Lithuania as well as closing activities for Power Transmission International.
Net sales by segment
| EUR million | Jan-Mar 2023 |
Jan-Mar 2022 |
Jan-Dec 2022 |
|---|---|---|---|
| Net sales | 64.3 | 58.8 | 290.1 |
| Adjusted EBITA1) | -2.3 | 0.9 | 8.2 |
| Number of employees, average | 1,503 | 1,491 | 1,498 |
| Key ratios | |||
| Net sales growth, % | 9.4% | -3.2% | -3.2% |
| Adjusted EBITA margin, % | -3.6% | 1.6% | 2.8% |
1) Excluding restructuring costs
Net sales increased by EUR 5.5 million, or 9.4%, to EUR 64.3 million (58.8), mainly driven by a strong fiber market which generated larger volumes.
Adjusted EBITA decreased to EUR -2.3 million (0.9). The adjusted EBITA margin was -3.6% (1.6). Although the underlying profitability in Communication was stable, increased costs and certain unfavorable agreements in Power Services deteriorated the result.
As part of the restructuring and cost savings program, Eltel Finland has terminated certain customer agreements, reduced the workforce by 47 full-time employees, closed selected facilities and reduced the number of vehicles.
On 23 March, it was announced that Eltel Finland has signed a one-year continuation to its current agreement with the Finnish telecommunications company Elisa. The contract includes a significant expansion of fiber-to-the-home (FTTH) construction and is worth about EUR 32 million.
After the reporting day, on 3 May, it was announced that Eltel and the Finnish energy company Helen have signed an agreement for the delivery of a large-scale solar park in Lohja, Finland. The move into the solar PV market is a milestone for Eltel, supporting the company's continued expansion into the renewable energy sector. The contract is worth about EUR 3.1 million.
| EUR million | Jan-Mar 2023 |
Jan-Mar 2022 |
Jan-Dec 2022 |
|---|---|---|---|
| Net sales | 48.8 | 43.9 | 193.8 |
| Adjusted EBITA | 0.5 | -1.8 | -1.0 |
| Number of employees, average | 992 | 912 | 919 |
| Key ratios | |||
| Net sales growth, % | 11.3% | 6.9% | 6.4% |
| Organic growth1), % | 19.2% | 10.3% | 11.6% |
| Currency translation effect in net sales, MEUR | -3.5 | -1.4 | -9.5 |
| Adjusted EBITA margin, % | 1.0% | -4.1% | -0.5% |
1) Adjusted for currency effects.
Net sales increased by EUR 4.9 million, or 11.3%, to EUR 48.8 million (43.9). Currency effects had a negative impact of EUR 3.5 million. Organic growth in local currency was 19.2%. The strong growth was mainly attributable to increased volumes in fiber and Smart Grids.
Adjusted EBITA improved to EUR 0.5 million (-1.8). The adjusted EBITA margin was 1.0% (-4.1). Progress came from increased volumes and operational optimizations.
On 7 February, it was announced that Eltel Sweden and the Armed Forces continue an existing collaboration for another four years based on an option in a current agreement. Estimated order value for the extension is SEK 250 million, about EUR 22 million.
| EUR million | Jan-Mar 2023 |
Jan-Mar 2022 |
Jan-Dec 2022 |
|---|---|---|---|
| Net sales | 32.2 | 41.6 | 176.8 |
| Adjusted EBITA1) | -1.6 | 1.4 | 2.1 |
| Number of employees, average | 916 | 938 | 938 |
| Key ratios | |||
| Net sales growth, % | -22.5% | 22.5% | 10.2% |
| Organic growth2), % | -14.6% | 17.9% | 9.4% |
| Currency translation effect in net sales, MEUR | -3.3 | 1.6 | 1.4 |
| Adjusted EBITA margin, % | -4.9% | 3.4% | 1.2% |
1) Excluding restructuring costs. 2) Adjusted for currency effects.
Net sales decreased by EUR 9.4 million, or 22.5%, to EUR 32.2 million (41.6). Currency effect was EUR -3.3 million. Organic growth in local currency was -14.6%. Main reasons were lower volumes due to reduced, and partly delayed, customer investments.
Adjusted EBITA decreased to EUR -1.6 million (1.4). The adjusted EBITA margin decreased to -4.9% (3.4). The decrease is a consequence of reduced volumes which led to overcapacity and inefficiency.
As part of the restructuring and cost savings program, the workforce was reduced by 100 full-time employees, certain customer agreements have been terminated, selected facilities have been closed and the number of vehicles has been reduced.
On 30 January, it was announced that Eltel Norway has entered into a three-year frame agreement for fiber work and Fixed Wireless Access (FWA) with a new customer, Viken Fiber, one of Norway's largest fiber companies. The three-year agreement is worth about NOK 180‒200 million, about EUR 17‒19 million.
After the reporting period, on 13 April, it was announced that Eltel Norway and Telenor, Norway's largest provider of telecommunications and digital services, have extended their collaboration for an additional year based on an option in the current agreement. The estimated order value for the option year is about NOK 800–1000 million, about EUR 70–90 million.
| EUR million | Jan-Mar 2023 |
Jan-Mar 2022 |
Jan-Dec 2022 |
|---|---|---|---|
| Net sales | 21.8 | 18.1 | 74.3 |
| Adjusted EBITA | 1.3 | 0.2 | 0.6 |
| Number of employees, average | 500 | 475 | 484 |
| Key ratios | |||
| Net sales growth, % | 20.5% | -30.8% | -15.5% |
| Organic growth1), % | 20.5% | -30.8% | -15.5% |
| Currency translation effect in net sales, MEUR | 0.0 | 0.0 | 0.0 |
| Adjusted EBITA margin, % | 6.1% | 0.9% | 0.9% |
1) Adjusted for currency effects.
Net sales increased by EUR 3.7 million, or 20.5%, to EUR 21.8 million (18.1). The large increase came from higher volumes in ongoing contracts.
Adjusted EBITA increased to EUR 1.3 million (0.2). The adjusted EBITA margin was 6.1% (0.9). The strong performance stemmed from increased volumes, operational improvements and higher pricing.
| Jan-Mar | Jan-Mar | Jan-Dec | |
|---|---|---|---|
| EUR million | 2023 | 2022 | 2022 |
| Net sales | 22.7 | 23.5 | 99.4 |
| Adjusted EBITA | -1.0 | -0.6 | -4.0 |
| Number of employees, average | 1,039 | 1,067 | 1,071 |
Other business includes High Voltage Poland, Smart Grids Germany, Lithuania as well as closing activities for Power Transmission International.
Net sales decreased by EUR 0.8 million to EUR 22.7 million (23.5) due to a shift of scope to smaller projects and services in High Voltage Poland.
Adjusted EBITA decreased to EUR -1.0 million (-0.6). High Voltage Poland had a negative adjusted EBITA of EUR -1.5 million (-1.3). Margins in Smart Grids Germany remained on a high level. In Power Transmission International all projects are operationally closed. Administrative closing processes and related costs continue to impact the result.
| Jan-Mar | Jan-Mar | Jan-Dec | |
|---|---|---|---|
| EUR million | 2023 | 2022 | 2022 |
| EBIT | -11.6 | -2.5 | -2.0 |
| Depreciation and amortization | 7.9 | 7.6 | 29.8 |
| EBITDA | -3.7 | 5.1 | 27.8 |
| Changes in working capital | -11.3 | -9.8 | 4.6 |
| Total financial expenses and taxes | -7.6 | -3.1 | -12.5 |
| Adjustment for gain/loss on sales of assets | 0.0 | 0.0 | -0.1 |
| Other | -1.1 | -0.9 | -3.4 |
| Cash flow from operating activities | -23.7 | -8.8 | 16.4 |
| Cash flow from investing activities | -1.3 | -0.7 | -3.9 |
| Cash flow from financing activities | -0.3 | -2.5 | 3.1 |
| Net change in cash and cash equivalents | -25.4 | -11.9 | 15.5 |
| Cash and cash equivalents at beginning of period | 47.9 | 32.3 | 32.3 |
| Foreign exchange rate effect | -1.0 | 0.4 | 0.1 |
| Cash and cash equivalents at end of period | 21.5 | 20.8 | 47.9 |
Condensed consolidated statement of cash flows is presented on page 17.
Cash flow from operating activities was EUR -23.7 million (-8.8). Main items included EBITDA EUR -3.7 million (5.1), change in net working capital EUR -11.3 million (-9.8), financial items EUR -4.0 million (-0.6) and income taxes EUR -3.7 million (-2.5). Cash flow from financial items and income taxes is impacted by timing differences between income statement and payments.
Cash flow has historically displayed a strong seasonal pattern, with weaker cash flow recorded during the period until the end of the third quarter due to higher production activity. Eltel's net working capital level is also impacted by remaining working capital-intensive projects, mainly in High Voltage Poland. These projects, and delays in them, result in continued tie up of substantial working capital and are expected to create volatility in the net working capital also going forward.
Net cash flow from investing activities was EUR -1.3 million (-0.7) consisting of net capital expenditure on machinery and equipment.
Cash flow from financing activities was EUR -0.3 million (-2.5). Utilization of short-term financing increased by EUR 5.0 million (reduction of 5.5). Payments of lease liabilities amounted to EUR 5.3 million (5.5). In 2022 Eltel drew a EUR 35.0 million term loan and repaid the remaining old term loan of EUR 27.0 million. Eltel also issued and purchased shares in accordance with a long-term incentive program, which had a cash flow impact of EUR 1.0 million and EUR -1.0 million, respectively.
Equity at the end of the period was EUR 192.8 million (226.3) and total assets were EUR 602.8 million (609.8). The equity ratio was 34.9% (39.7).
| EUR million | 31 Mar 2023 |
31 Mar 2022 |
31 Dec 2022 |
|---|---|---|---|
| Interest-bearing debt | 129.6 | 102.3 | 125.1 |
| Leasing liabilities | 49.5 | 53.5 | 47.8 |
| Allocation of effective interest to | |||
| periods | 0.8 | 0.7 | 0.5 |
| Less cash and cash equivalents | -21.5 | -20.8 | -47.9 |
| Net debt | 158.4 | 135.8 | 125.5 |
| EUR million | 31 Mar 2023 |
31 Mar 2022 |
31 Dec 2022 |
| Non-current interest-bearing debt | 22.4 | 34.5 | 34.7 |
| Current interest-bearing debt | 107.2 | 67.8 | 90.4 |
| Total interest-bearing debt | 129.6 | 102.3 | 125.1 |
| Non-current leasing liabilities | 31.6 | 35.1 | 31.0 |
| Current leasing liabilities | 17.9 | 18.4 | 16.8 |
| EUR million | 31 Mar 2023 |
Maturity |
|---|---|---|
| Term loan, current | 12.0 | Apr 2023-Mar 2024 |
| Term loan, non-current | 2.0 | Apr 2024-Sep 2024 |
| Term loan, non-current | 21.0 | Jan 2025 |
| Revolving credit facility | 90.0 | Jan 2025 (+ extension options until Jan 2027) |
| Account overdrafts | 15.0 | Jan 2025 (+ extension options until Jan 2027) |
| Total committed credit | ||
| facilities | 140.0 | |
| Commercial paper program | 150.0 | N/A |
Available liquidity reserves, including the committed revolving credit facility, account overdrafts and cash and cash equivalents, amounted to EUR 74.5 million (125.8). Additional to the committed facilities, the Group also has access to short-term debt capital markets via a commercial paper program of EUR 150 million. On 31 March 2023, EUR 42.5 million (67.5) of the commercial paper program and EUR 52.0 million (0.0) of the revolving credit facility were utilized.
On 31 March 2023, the commercial guarantees issued by the banks and other financial institutions on behalf of the Group amounted to EUR 81.4 million (88.7).
The high inflation impacts Eltel across its cost base, including fuel and material prices as well as availability and cost of subcontractors and employees. Mitigating actions have been taken and Eltel has agreements in place to recover parts of the cost increases with most of its largest customers. However, there is a risk the degree of compensation does not fully cover the inflationary impact.
The current market volatility and the unpredictability of the volume of customer investments may have a negative impact on Eltel's net sales. There is a risk the restructuring and cost savings program taken in Q1 2023 is not sufficient to restore our profitability.
Eltel has faced significant profitability challenges in its High Voltage business in Poland, partly due to cost increases and the impact of the war in Ukraine on sourcing of materials and subcontractors. Restructuring of the business is ongoing, but there is a risk of negative results also going forward.
There is a risk that the covenants under the existing financing agreement are not met. Seasonal variation in Eltel's operations and related working capital build-up may also expose the company to liquidity risk.
The market interest rates have increased significantly in recent periods. This has led to a higher discount rate (WACC) used in the impairment calculations and consequently to a risk of goodwill impairment. Eltel follows any triggering events throughout the year and impairment test is conducted in case of any indicators of impairment.
For additional information regarding risks and uncertainties, please refer to Eltel's 2022 Annual Report which was published on 30 March 2023 and is available on Eltel's website at www.eltelgroup.com.
On 30 January 2023, it was announced that Eltel Norway has entered into a three-year frame agreement for fiber work and Fixed Wireless Access (FWA) with a new customer, Viken Fiber, one of Norway's largest fiber companies. The three-year agreement is worth about NOK 180‒200 million, about EUR 17‒19 million.
On 7 February 2023, it was announced that Eltel Sweden and the Armed Forces continue an existing collaboration for another four years based on an option in a current agreement. Estimated order value for the four-year extension is SEK 250 million, about EUR 22 million.
On 23 March 2023, it was announced that Eltel Finland has signed a one-year continuation to its current agreement with the Finnish telecommunications company Elisa. The contract includes a significant expansion of fiber-to-the-home (FTTH) construction and is worth about EUR 32 million.
After the reporting period, on 13 April 2023, it was announced that Eltel Norway and Telenor, Norway's largest provider of telecommunications and digital services, have extended their collaboration for an additional year based on an option in the current agreement. The estimated order value for the option year is about NOK 800–1000 million, about EUR 70–90 million.
On 3 May 2023, it was announced that Eltel and the Finnish energy company Helen have signed an agreement for the delivery of a large-scale solar park in Lohja, Finland. The move into the solar PV market is a milestone for Eltel, supporting the company's continued expansion into the renewable energy sector. The contract is worth about EUR 3.1 million.
During the quarter, no significant transactions took place between Eltel and related parties.
Eltel's businesses are generally characterized by seasonal patterns and cyclicality of the project business that adds volatility to net sales, adjusted EBITA and cash flow. Seasonality is normally driven by a number of factors, including weather conditions, the timing of customer order placements and completion of work phases. The Eltel Group has historically reported higher revenues and operating profit in the second half of the year. Cash flow has historically displayed a strong seasonal pattern, with weaker cash flow recorded during the period until the end of the third quarter due to higher production activity. At the end of the year, as production volumes decrease, cash flow has normally been stronger. For more details, please refer to quarterly key financial figures for the Group on page 19.
On 6 April 2023, Eltel AB issued subordinated sustainabilitylinked hybrid capital securities in the aggregate principal amount of EUR 25 million (the "hybrid bond"). The hybrid bond is classified as equity and it is subordinated to the company's other debt obligations. The hybrid bond has no maturity date, but Eltel has the right to redeem it at socalled reset date in July 2026 and at every interest payment date thereafter. The hybrid bond is sustainability-linked, and a premium of up to 1.2% of the principal amount is paid at redemption if the sustainability targets measured at 31 December 2025 are not met.
Analysts and media are invited to participate in the Q1 2023 interim report briefing on 4 May 2023 at 10:00 am CEST where Eltel's President and CEO Håkan Dahlström and CFO Saila Miettinen-Lähde will host a presentation. A combined webcast and teleconference as well as the presentation will be available at www.eltelgroup.com/investors.
Saila Miettinen-Lähde, CFO Phone: +358 40 548 3695, [email protected]
Elin Otter, Director, Communications and Investor Relations Phone: +46 72 59 54 692, [email protected]
This information is information that Eltel AB is obliged to make public pursuant to the EU Market Abuse Regulation. The information was submitted for publication, through the agency of the contact person set out above, at 08:00 CEST on 4 May 2023.
Stockholm, Sweden, 4 May 2023
Håkan Dahlström, President and CEO
The information in this interim report has not been reviewed by the company's auditors.
| Jan-Mar | Jan-Mar | Jan-Dec | |
|---|---|---|---|
| EUR million | 2023 | 2022 | 2022 |
| Net sales | 188.4 | 184.0 | 823.6 |
| Cost of sales | -178.1 | -167.0 | -748.9 |
| Gross profit | 10.3 | 17.0 | 74.7 |
| Other income | 0.6 | 0.3 | 0.9 |
| Selling and administrative expenses | -22.3 | -19.8 | -77.2 |
| Other expenses | -0.2 | -0.0 | -0.4 |
| Operating result (EBIT) | -11.6 | -2.5 | -2.0 |
| Financial income | 0.2 | 0.0 | 0.2 |
| Financial expenses | -3.1 | -1.8 | -9.6 |
| Net financial expenses | -2.9 | -1.8 | -9.5 |
| Result before taxes | -14.5 | -4.3 | -11.4 |
| Taxes | -0.6 | -0.2 | -3.5 |
| Net result | -15.1 | -4.4 | -14.9 |
| Attributable to: | |||
| Equity holders of the parent | -15.1 | -4.4 | -15.0 |
| Non-controlling interest | 0.0 | 0.0 | 0.1 |
| Earnings per share (EPS) | |||
| Basic, EUR | -0.10 | -0.03 | -0.10 |
| Diluted, EUR | -0.10 | -0.03 | -0.10 |
| EUR million | Jan-Mar 2023 |
Jan-Mar 2022 |
Jan-Dec 2022 |
|---|---|---|---|
| Net profit for the period | -15.1 | -4.4 | -14.9 |
| Other comprehensive income: | |||
| Items that will not be reclassified to profit and loss | |||
| Revaluation of defined benefit plans, net of tax | 2.0 | 1.6 | 7.8 |
| Items that may be subsequently reclassified to profit and loss | |||
| Net investment hedges, net of tax | - | 0.1 | -0.0 |
| Currency translation differences | -5.5 | 1.2 | -9.1 |
| Total | -5.5 | 1.2 | -9.1 |
| Other comprehensive income/loss for the period, net of tax | -3.5 | 2.9 | -1.3 |
| Total comprehensive income/loss for the period | -18.6 | -1.6 | -16.2 |
| Total comprehensive income/loss attributable to: | |||
| Equity holders of the parent | -18.6 | -1.6 | -16.2 |
| Non-controlling interest | 0.0 | 0.0 | 0.1 |
| EUR million | 31 Mar 2023 |
31 Mar 2022 |
31 Dec 2022 |
|---|---|---|---|
| ASSETS | |||
| Non-current assets | |||
| Goodwill | 251.7 | 265.5 | 256.0 |
| Intangible assets | 34.5 | 38.7 | 35.3 |
| Property, plant and equipment | 10.5 | 11.1 | 10.7 |
| Right-of-use assets | 47.5 | 52.3 | 46.5 |
| Deferred tax assets | 26.5 | 18.4 | 16.3 |
| Financial assets | 10.8 | 1.2 | 7.1 |
| Total non-current assets | 381.4 | 387.2 | 371.9 |
| Current assets | |||
| Inventories | 25.9 | 17.4 | 24.8 |
| Trade and other receivables | 174.1 | 184.5 | 177.1 |
| Cash and cash equivalents | 21.5 | 20.8 | 47.9 |
| Total current assets | 221.4 | 222.6 | 249.8 |
| TOTAL ASSETS | 602.8 | 609.8 | 621.7 |
| EQUITY AND LIABILITIES | |||
| Equity | |||
| Equity attributable to shareholders of the parent | 185.4 | 218.6 | 204.0 |
| Non-controlling interest | 7.4 | 7.7 | 7.4 |
| Total equity | 192.8 | 226.3 | 211.3 |
| Non-current liabilities | |||
| Interest-bearing debt | 22.4 | 34.5 | 34.7 |
| Leasing liabilities | 31.6 | 35.1 | 31.0 |
| Retirement benefit obligations | 6.0 | 11.3 | 6.0 |
| Deferred tax liabilities | 20.6 | 10.6 | 10.3 |
| Provisions | 2.6 | 4.4 | 2.6 |
| Other non-current liabilities | 0.6 | 0.7 | 0.6 |
| Total non-current liabilities | 83.9 | 96.5 | 85.2 |
| Current liabilities | |||
| Interest-bearing debt | 107.2 | 67.8 | 90.4 |
| Leasing liabilities | 17.9 | 18.4 | 16.8 |
| Provisions | 8.7 | 3.3 | 3.3 |
| Advances received | 51.0 | 40.1 | 50.6 |
| Trade and other payables | 141.5 | 157.3 | 164.1 |
| Total current liabilities | 326.2 | 286.9 | 325.2 |
| Total liabilities | 410.1 | 383.5 | 410.4 |
| TOTAL EQUITY AND LIABILITIES | 602.8 | 609.8 | 621.7 |
| EUR million | Jan-Mar 2023 |
Jan-Mar 2022 |
Jan-Dec 2022 |
|---|---|---|---|
| Cash flow from operating activities | |||
| Operating result (EBIT) | -11.6 | -2.5 | -2.0 |
| Adjustments: | |||
| Depreciation and amortization | 7.9 | 7.6 | 29.8 |
| Gain/loss on sales of assets | 0.0 | 0.0 | -0.1 |
| Defined benefit pension plans | -0.9 | -0.8 | -3.3 |
| Other non-cash adjustments | -0.3 | -0.1 | -0.1 |
| Cash flow from operations before interests, taxes and changes in working capital | -4.8 | 4.1 | 24.2 |
| Interest and other financial expenses paid, net | -4.0 | -0.6 | -7.8 |
| Income taxes received/paid | -3.7 | -2.5 | -4.7 |
| Total financial expenses and taxes | -7.6 | -3.1 | -12.5 |
| Changes in working capital: | |||
| Trade and other receivables | 0.8 | 8.2 | 8.7 |
| Trade and other payables | -10.9 | -17.7 | 3.8 |
| Inventories | -1.2 | -0.3 | -7.9 |
| Changes in working capital | -11.3 | -9.8 | 4.6 |
| Net cash from operating activities | -23.7 | -8.8 | 16.4 |
| Cash flow from investing activities | |||
| Purchases of property, plant and equipment (PPE) | -1.3 | -0.7 | -4.1 |
| Proceeds from sale of property, plant and equipment (PPE) | - | - | 0.2 |
| Net cash from investing activities | -1.3 | -0.7 | -3.9 |
| Cash flow from financing activities | |||
| Proceeds from issuance of share capital | - | 1.0 | 1.0 |
| Acquisition of own shares | - | -1.0 | -1.0 |
| Proceeds from long-term financial liabilities | - | 35.0 | 35.0 |
| Proceeds from short-term financial liabilities | 16.6 | 3.0 | 76.5 |
| Payments of short-term financial liabilities | -11.5 | -8.5 | -60.0 |
| Payments of financial liabilities, term loans | - | -27.0 | -27.0 |
| Payments of lease liabilities | -5.3 | -5.5 | -21.6 |
| Dividends to non-controlling interest | - | - | -0.4 |
| Change in non-liquid financial assets | 0.0 | 0.5 | 0.6 |
| Net cash from financing activities | -0.3 | -2.5 | 3.1 |
| Net change in cash and cash equivalents | -25.4 | -11.9 | 15.5 |
| Cash and cash equivalents at beginning of period | 47.9 | 32.3 | 32.3 |
| Foreign exchange rate effect | -1.0 | 0.4 | 0.1 |
| Cash and cash equivalents at end of period | 21.5 | 20.8 | 47.9 |
| Equity attributable to shareholders of the parent | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| EUR million | Share capital |
Other paid-in capital |
Accumulated losses |
Revaluation of defined benefit plans, net of tax |
Hedging reserve |
Currency translation |
Total | Non controlling interest |
Total equity |
| Equity at 1 Jan 2023 | 159.6 | 489.9 | -381.2 | -31.1 | 10.9 | -44.0 | 204.0 | 7.4 | 211.3 |
| Total comprehensive income for the period | - | - | -15.1 | 2.0 | - | -5.5 | -18.6 | 0.0 | -18.6 |
| Transactions with owners: | |||||||||
| Equity-settled share-based payment | - | - | 0.0 | - | - | - | 0.0 | - | 0.0 |
| Total transaction with owners | - | - | 0.0 | - | - | - | 0.0 | - | 0.0 |
| Equity at 31 Mar 2023 | 159.6 | 489.9 | -396.3 | -29.0 | 10.9 | -49.6 | 185.4 | 7.4 | 192.8 |
| Equity attributable to shareholders of the parent | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| EUR million | Share capital |
Other paid-in capital |
Accumulated losses |
Revaluation of defined benefit plans, net of tax |
Hedging reserve |
Currency translation |
Total | Non controlling interest |
Total equity |
| Equity at 1 Jan 2022 | 158.8 | 490.6 | -366.2 | -38.9 | 10.9 | -35.0 | 220.2 | 7.7 | 227.9 |
| Total comprehensive income for the period | - | - | -4.4 | 1.6 | 0.1 | 1.2 | -1.6 | 0.0 | -1.6 |
| Transactions with owners: | |||||||||
| Share capital reduction | -0.2 | 0.2 | - | - | - | - | - | - | - |
| Proceeds from shares issued | 1.0 | - | - | - | - | - | 1.0 | - | 1.0 |
| Purchase of own shares | - | -1.0 | - | - | - | - | -1.0 | - | -1.0 |
| Equity-settled share-based payment | - | - | 0.0 | - | - | - | 0.0 | - | 0.0 |
| Total transaction with owners | 0.7 | -0.7 | 0.0 | - | - | - | 0.0 | - | 0.0 |
| Equity at 31 Mar 2022 | 159.6 | 489.9 | -370.7 | -37.3 | 11.0 | -33.8 | 218.6 | 7.7 | 226.3 |
| Equity attributable to shareholders of the parent | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| EUR million | Share capital |
Other paid-in capital |
Accumulated losses |
Revaluation of defined benefit plans, net of tax |
Hedging reserve |
Currency translation |
Total | Non controlling interest |
Total equity |
| Equity at 1 Jan 2022 | 158.8 | 490.6 | -366.2 | -38.9 | 10.9 | -35.0 | 220.2 | 7.7 | 227.9 |
| Total comprehensive income for the period | - | - | -15.0 | 7.8 | 0.0 | -9.1 | -16.2 | 0.1 | -16.2 |
| Transactions with owners: | |||||||||
| Share capital reduction | -0.2 | 0.2 | - | - | - | - | - | - | - |
| Proceeds from shares issued | 1.0 | - | - | - | - | - | 1.0 | - | 1.0 |
| Purchase of own shares | - | -1.0 | - | - | - | - | -1.0 | - | -1.0 |
| Equity-settled share-based payment | - | - | 0.0 | - | - | - | 0.0 | - | 0.0 |
| Dividends paid to non-controlling interests | - | - | - | - | - | - | - | -0.4 | -0.4 |
| Total transaction with owners | 0.7 | -0.7 | 0.0 | - | - | - | 0.0 | -0.4 | -0.4 |
| Equity at 31 Dec 2022 | 159.6 | 489.9 | -381.2 | -31.1 | 10.9 | -44.0 | 204.0 | 7.4 | 211.3 |
| EUR million | Jan-Mar 2023 |
Jan-Mar 2022 |
Jan-Dec 2022 |
Rolling 12-mon |
|---|---|---|---|---|
| Net sales | 188.4 | 184.0 | 823.6 | 828.0 |
| Net sales growth, % | 2.4 | 1.1 | 1.4 | 1.7 |
| Adjusted EBITDA | 2.4 | 5.1 | 27.8 | 25.1 |
| Adjusted EBITA | -5.5 | -2.4 | -1.9 | -4.9 |
| Adjusted EBITA margin, % | -2.9 | -1.3 | -0.2 | -0.6 |
| Adjusted EBITA, segments | -2.1 | 0.7 | 9.9 | 7.1 |
| Adjusted EBITA margin, %, segments | -1.2 | 0.4 | 1.4 | 1.0 |
| Items affecting comparability | -6.1 | - | - | -6.1 |
| EBITDA | -3.7 | 5.1 | 27.8 | 19.0 |
| Operating result (EBIT) | -11.6 | -2.5 | -2.0 | -11.1 |
| EBIT margin, % | -6.2 | -1.4 | -0.2 | -1.3 |
| Result after financial items | -14.5 | -4.3 | -11.4 | -21.7 |
| Net result for the period | -15.1 | -4.4 | -14.9 | -25.6 |
| Earnings per share EUR, basic and diluted | -0.10 | -0.03 | -0.10 | -0.16 |
| Return on equity (ROE), %1) | -12.2 | 1.4 | -6.8 | -12.2 |
| Return on operative capital employed (ROCE), %1) | -7.9 | 17.4 | -3.5 | -7.9 |
| Leverage ratio1) | 6.3 | 3.1 | 4.5 | 6.3 |
| Net working capital | -5.4 | -6.7 | -21.0 | -5.4 |
| Number of personnel, average | 5,103 | 5,031 | 5,053 | 5,071 |
| Jan-Mar | Oct-Dec | Jul-Sep | Apr-Jun | Jan-Mar | |
|---|---|---|---|---|---|
| EUR million | 2023 | 2022 | 2022 | 2022 | 2022 |
| Net sales | 188.4 | 224.0 | 207.0 | 208.6 | 184.0 |
| Net sales growth, % | 2.4 | -1.0 | 6.8 | -0.8 | 1.1 |
| Adjusted EBITDA | 2.4 | 3.3 | 11.5 | 7.9 | 5.1 |
| Adjusted EBITA | -5.5 | -4.0 | 4.1 | 0.5 | -2.4 |
| Adjusted EBITA margin, % | -2.9 | -1.8 | 2.0 | 0.2 | -1.3 |
| Adjusted EBITA, segments | -2.1 | -1.8 | 6.6 | 4.4 | 0.7 |
| Adjusted EBITA margin, %, segments | -1.2 | -0.9 | 3.6 | 2.4 | 0.4 |
| Items affecting comparability | -6.1 | - | - | - | - |
| EBITDA | -3.7 | 3.3 | 11.5 | 7.9 | 5.1 |
| Operating result (EBIT) | -11.6 | -4.0 | 4.1 | 0.4 | -2.5 |
| EBIT margin, % | -6.2 | -1.8 | 2.0 | 0.2 | -1.4 |
| Result after financial items | -14.5 | -7.9 | 2.0 | -1.2 | -4.3 |
| Net result for the period | -15.1 | -7.7 | -0.3 | -2.6 | -4.4 |
| Earnings per share EUR, basic and diluted | -0.10 | -0.05 | -0.00 | -0.02 | -0.03 |
| Return on equity (ROE), %1) | -12.2 | -6.8 | -1.4 | -0.5 | 1.4 |
| Return on operative capital employed (ROCE), %1) | -7.9 | -3.5 | 10.2 | 13.5 | 17.4 |
| Leverage ratio1) | 6.3 | 4.5 | 4.3 | 3.3 | 3.1 |
| Net working capital | -5.4 | -21.0 | 26.3 | -12.1 | -6.7 |
| Number of personnel, average | 5,103 | 5,079 | 5,053 | 5,050 | 5,031 |
1) Calculated on a rolling 12-month basis.
Please see pages 24–25 for definitions of the key ratios.
This condensed interim report has been prepared in accordance with IAS 34 Interim Financial Reporting and applicable regulations in the Swedish Annual Accounts Act. The accounting principles adopted are the same with those of the Group's and the Parent Company's annual financial statements for the year ended 31 December 2022 except for the following amendment that is effective from 1 January 2023: Deferred Tax related to Assets and Liabilities arising from a Single Transaction (amendment to IAS 12). The amendment requires companies to recognize gross amount of deferred tax assets and liabilities on transactions, such as leases. The group has previously netted the deferred tax impact on leases and the impact of the amendment as of 1 January 2023 has been an increase of deferred tax assets of EUR 10.2 million and deferred tax liabilities of EUR 9.9 million on right-of-use assets and lease liabilities. There was no impact on equity.
On 6 April 2023 Eltel issued subordinated sustainability-linked hybrid capital securities (the "hybrid bond"). The instrument has no maturity date and, if no dividends are distributed, the payment of interest can be deferred in perpetuity. The hybrid bond will be classified as an equity instrument and recognized at fair value less transaction cost.
| EUR million | Jan-Mar 2023 |
Jan-Mar 2022 |
Jan-Dec 2022 |
|---|---|---|---|
| Finland | 64.3 | 58.8 | 290.1 |
| Sweden | 48.8 | 43.9 | 193.8 |
| Norway | 32.2 | 41.6 | 176.8 |
| Denmark | 21.8 | 18.1 | 74.3 |
| Other business1) | 22.7 | 23.5 | 99.4 |
| Eliminations | -1.5 | -1.9 | -10.8 |
| Net sales, total | 188.4 | 184.0 | 823.6 |
1) Other business includes High Voltage Poland, Smart Grids Germany, Lithuania as well as closing activities for Power Transmission International. Other business is not considered a segment.
| EUR million | Jan-Mar 2023 |
Jan-Mar 2022 |
Jan-Dec 2022 |
|
|---|---|---|---|---|
| Finland | Communication | 24.2 | 20.6 | 113.0 |
| Power | 40.1 | 38.2 | 177.2 | |
| Sweden | Communication | 40.0 | 36.9 | 166.2 |
| Power | 8.8 | 6.9 | 27.6 | |
| Norway | Communication | 32.2 | 41.5 | 176.3 |
| Power | 0.1 | 0.1 | 0.5 | |
| Denmark | Communication | 16.4 | 13.5 | 55.9 |
| Power | 5.5 | 4.6 | 18.3 | |
| Other business | Communication | 3.8 | 3.1 | 15.8 |
| Power | 18.8 | 20.4 | 83.3 | |
| Other operations | 0.0 | 0.0 | 0.3 | |
| Eliminations | -1.5 | -1.9 | -10.8 | |
| Net sales, total | 188.4 | 184.0 | 823.6 |
Internal net sales consist mainly of net sales from Communication in Lithuania, reported in Other business. There are no material internal net sales in any of the segments.
| EUR million | Jan-Mar 2023 |
Jan-Mar 2022 |
Jan-Dec 2022 |
|---|---|---|---|
| Communication | 115.2 | 114.1 | 517.9 |
| Power | 73.2 | 70.0 | 305.6 |
| Other operations | 0.0 | 0.0 | 0.3 |
| Net sales, total | 188.4 | 184.0 | 823.6 |
| EUR million | Jan-Mar 2023 |
Jan-Mar 2022 |
Jan-Dec 2022 |
|---|---|---|---|
| Project delivery | 45.2 | 47.0 | 164.9 |
| Upgrade services | 94.8 | 91.5 | 437.4 |
| Maintenance | 48.4 | 45.4 | 221.3 |
| Net sales, total | 188.4 | 184.0 | 823.6 |
| Jan-Mar | Jan-Mar | Jan-Dec | |
|---|---|---|---|
| EUR million | 2023 | 2022 | 2022 |
| Adjusted EBITA by segment | |||
| Finland | -2.3 | 0.9 | 8.2 |
| Sweden | 0.5 | -1.8 | -1.0 |
| Norway | -1.6 | 1.4 | 2.1 |
| Denmark | 1.3 | 0.2 | 0.6 |
| Sum segments | -2.1 | 0.7 | 9.9 |
| Other business | -1.0 | -0.6 | -4.0 |
| Group functions | -2.4 | -2.6 | -7.8 |
| Adjusted EBITA, Group | -5.5 | -2.4 | -1.9 |
| Restructuring | -6.1 | - | - |
| Total items affecting comparability in EBITA | -6.1 | - | - |
| Amortization of acquisition-related intangible asset | - | -0.1 | -0.1 |
| Operating result (EBIT) | -11.6 | -2.5 | -2.0 |
| Financial expenses, net | -2.9 | -1.8 | -9.5 |
| Result before taxes | -14.5 | -4.3 | -11.4 |
The Q1 2023 results include a EUR 6.1 million restructuring charge. Following reductions in customer investments and result deterioration in Norway and Finland, a restructuring and cost savings program was communicated in connection with the Q4 2022 report. The actions were finalized during the first quarter of 2023. The restructuring included reduction in the workforce by approximately 150 full-time employees, termination and wind down of certain customer agreements, closing of selected locations and reducing fleet to adjust to the needs of the current operations.
| Personnel by segment | Jan-Mar 2023 |
Jan-Mar 2022 |
Jan-Dec 2022 |
|---|---|---|---|
| Finland | 1,503 | 1,491 | 1,498 |
| Sweden | 992 | 912 | 919 |
| Norway | 916 | 938 | 938 |
| Denmark | 500 | 475 | 484 |
| Other business | 1,039 | 1,067 | 1,071 |
| Group functions | 152 | 148 | 143 |
| Total personnel, average | 5,103 | 5,031 | 5,053 |
| Total personnel, end of period | 5,108 | 5,023 | 5,063 |
| EUR million | 31 Mar | 31 Mar | 31 Dec |
|---|---|---|---|
| 2023 | 2022 | 2022 | |
| Committed order backlog | 517.9 | 490.9 | 468.2 |
Committed order backlog in Eltel is defined as the total value of committed purchase orders received but not yet recognized as net sales. It does not include frame agreements unless a binding purchase order has been received. Committed order backlog is therefore the best measure of unsatisfied performance obligations according to IFRS 15 Revenue from contracts with customers. The currency impact in committed order backlog at 31 March 2023 was EUR -18.0 million.
| EUR million | 31 Mar 2023 |
31 Mar 2022 |
31 Dec 2022 |
|---|---|---|---|
| Inventories | 25.9 | 17.4 | 24.8 |
| Trade and other receivables | 174.1 | 184.5 | 177.1 |
| Provisions | -11.3 | -7.7 | -5.9 |
| Advances received | -51.0 | -40.1 | -50.6 |
| Trade and other payables | -141.5 | -157.3 | -164.1 |
| Other | -1.6 | -3.4 | -2.3 |
| Net working capital | -5.4 | -6.7 | -21.0 |
| Intangible assets excluding acquisition-related allocations | 8.2 | 11.5 | 8.9 |
| Property, plant and equipment | 10.5 | 11.1 | 10.7 |
| Right-of-use assets | 47.5 | 52.3 | 46.5 |
| Operative capital employed | 57.0 | 68.2 | 45.1 |
| EUR million | 31 Mar 2023 |
31 Mar 2022 |
31 Dec 2022 |
|---|---|---|---|
| Non-current provisions | 2.6 | 4.4 | 2.6 |
| Current provisions | 8.7 | 3.3 | 3.3 |
| Total provisions | 11.3 | 7.7 | 5.9 |
| EUR million | 31 Mar 2023 |
31 Mar 2022 |
31 Dec 2022 |
| 1 Jan | 5.9 | 8.6 | 8.6 |
| Changes: | |||
| Restructuring provisions | 3.9 | - | - |
| Other provisions | 1.5 | -0.9 | -2.7 |
| Balance at the end of reporting period | 11.3 | 7.7 | 5.9 |
| EUR million | 31 Mar 2023 |
31 Mar 2022 |
31 Dec 2022 |
|---|---|---|---|
| Trade receivables | 68.5 | 76.9 | 82.6 |
| Contract assets | 83.4 | 89.4 | 73.3 |
| Total assets related to contracts with customers | 151.9 | 166.3 | 155.9 |
| Advances received from contracts with customers | 44.9 | 40.1 | 45.2 |
| Total liabilities related to contracts with customers | 44.9 | 40.1 | 45.2 |
Trade receivables and contract assets are included in the trade and other receivable line in the above net working capital table. Advances received from contracts with customers represent contract liabilities.
| 31 Mar | 31 Mar | 31 Dec | |
|---|---|---|---|
| EUR million | 2023 | 2022 | 2022 |
| Deferred tax assets | 26.5 | 18.4 | 16.3 |
| Deferred tax liabilities | -20.6 | -10.6 | -10.3 |
| Net deferred tax assets | 5.9 | 7.8 | 6.0 |
The increase in the gross amounts of deferred tax assets and liabilities relates to recognition of deferred taxes for Right-of-use assets and leasing liabilities according to amendment in IAS 12 that became effective on 1 January 2023. There were no changes in deferred tax assets for losses carried forward in Q1 2023. In December 2022, gross amount of EUR 10.5 million (12.9) was recognized, of which EUR 5.6 million (5.9) related to operations in Sweden. Deferred tax assets are recognized for tax loss carry forwards to the extent that the utilization against current year taxable profits and future taxable profits is probable. The future taxable profit estimate is based on current business plans approved by management.
| Right-of-use assets | 31 Mar | 31 Mar | 31 Dec |
|---|---|---|---|
| EUR million | 2023 | 2022 | 2022 |
| Buildings | 22.0 | 31.1 | 25.0 |
| Machinery and equipment | 25.5 | 21.2 | 21.5 |
| Total | 47.5 | 52.3 | 46.5 |
| Changes in the right-of-use assets during the period | 31 Mar | 31 Mar | 31 Dec |
|---|---|---|---|
| EUR million | 2023 | 2022 | 2022 |
| 1 Jan | 46.5 | 53.3 | 53.3 |
| Additions | 10.5 | 5.3 | 19.2 |
| Depreciations | -6.1 | -5.5 | -21.8 |
| Other | -3.3 | -0.8 | -4.1 |
| Balance at the end of period | 47.5 | 52.3 | 46.5 |
| Leasing liabilities | 31 Mar | 31 Mar | 31 Dec |
| EUR million | 2023 | 2022 | 2022 |
|---|---|---|---|
| Non-current | 31.6 | 35.1 | 31.0 |
| Current | 17.9 | 18.4 | 16.8 |
| Total | 49.5 | 53.5 | 47.8 |
| Derivative financial instruments | 31 Mar 2023 | 31 Mar 2022 | 31 Dec 2022 | |||
|---|---|---|---|---|---|---|
| EUR million | Nominal values |
Net fair values |
Nominal values |
Net fair values |
Nominal values |
Net fair values |
| Foreign exchange rate derivatives | 21.5 | 0.0 | 40.5 | -0.4 | 39.7 | 0.0 |
| Total | 21.5 | 0.0 | 40.5 | -0.4 | 39.7 | 0.0 |
Financial assets recognized at fair value through profit and loss comprise solely derivatives. Fair values of the derivative instruments are based on market values (level 2 observable input information) at balance sheet date.
The carrying amount of financial assets and financial liabilities is a reasonable approximation of their fair value. Changes in the market interest rates are reflected in the future interest flows of interest-bearing debt within a short period.
| Earnings per share | Jan-Mar 2023 |
Jan-Mar 2022 |
Jan-Dec 2022 |
|---|---|---|---|
| Net result attributable to equity holders of the parent | -15.1 | -4.4 | -15.0 |
| Weighted average number of common shares, basic | 156,736,781 | 156,649,081 | 156,699,058 |
| Weighted average number of common shares, diluted | 156,736,781 | 156,733,828 | 156,789,278 |
| Earnings per share EUR, basic | -0.10 | -0.03 | -0.10 |
| Earnings per share EUR, diluted | -0.10 | -0.03 | -0.10 |
Eltel applies ESMA's (European Securities and Markets Authority) guidelines for alternative performance measures (APM). In addition to the financial measures defined in IFRS, certain key figures, which qualify as alternative performance measures (APMs) are presented to reflect the underlying business performance, facilitate analysis of the Group's development as followed by Group Management and enhance comparability from period to period. The definition of these key figures is presented below and relevant information enabling reconciliations to IFRS measures can be found in connection with relevant parts of the report. These APMs should not be considered as a substitute for measures in accordance with IFRS.
| IFRS key ratios | ||
|---|---|---|
| Earnings per share (EPS) | Net result attributable to equity holders of the parent Weighted average number of ordinary shares |
|
| Alternative performance measures (APMs) | ||
| Key Figure | Definition and reason for use | Reference |
| Eltel has changed its terminology in Q1 2023 from operative EBITA to adjusted EBITA for the purpose of additional clarity and alignment with the market practice. |
||
| Adjusted EBITA and -margin, % are used by management to measure business and segment profitability and exclude items affecting comparability. Income statement line items below adjusted EBITA are not allocated to segments. |
||
| Adjusted EBITA and -margin | Adjusted EBITA: Operating result before acquisition-related amortizations and items affecting comparability |
Reconciliation of segment results |
| Adjusted EBITA margin, %: Adjusted EBITA x 100 Net sales |
||
| Adjusted EBITA and -margin, % for segments represent the sum of segments: Finland, Sweden, Norway and Denmark. |
||
| Items for specific events which management does not consider to form part of the ongoing operative business. |
||
| Items affecting comparability | These include capital gains and/or losses and transaction costs related to divestments and acquisitions, restructuring and resizing expenses and other items that according to Eltel's management's assessment are not related to normal business operations. |
Reconciliation of segment results |
| EBITDA and adjusted EBITDA |
EBITDA is operating result (EBIT) before depreciations and amortizations. Adjusted EBITDA excludes items affecting comparability. Adjusted EBITDA is used in calculating the leverage ratio. |
Cash flow, key figures, quarterly key figures |
| Operating result (EBIT) and -margin% are used to measure profitability before interest and taxes. |
Income statement | |
| EBIT margin | EBIT margin, %: EBIT x 100 Net sales |
|
| Return on equity (ROE), % represents the rate of return that shareholders receive on their investments. |
||
| Return on equity (ROE), % | Return on equity (ROE), %1): | Income statement and balance sheet |
| Net result x 100 Total equity (average over the reporting period) |
1) Calculated on a rolling 12-month basis.
| Key figure | Definition and reason for use | Reference |
|---|---|---|
| Operative capital employed is the amount of net operating assets the business uses in its operations. |
||
| Operative capital employed and |
Return on operative capital employed (ROCE), % represents how effectively total net operating assets are used in order to generate return in the operating business. |
Net working capital |
| Operative capital employed: Return on operative capital Net working capital + Intangible assets excluding goodwill and acquisition employed (ROCE), % related allocations + Property, plant and equipment and Right-of-use assets |
and operative capital employed |
|
| Return on operative capital employed (ROCE), %1): Adjusted EBITA x 100 Operative capital employed (average over the reporting period) |
||
| Net debt and leverage ratio | Net debt represents Eltel's indebtedness. It is used to monitor capital structure and financial capacity. It is also used in calculating the leverage ratio. The leverage ratio is defined as covenant in Eltel's financing agreement. Net debt: Interest-bearing debt - cash and cash equivalents Net debt |
Interest-bearing liabilities and net debt |
| Leverage ratio1): Adjusted EBITDA |
||
| Net working capital | Net working capital is used to follow the amount of short-term running capital needed for the business to operate. Used also as a factor to calculate operative capital employed. Net working capital: |
Net working capital and operative capital |
| Net of inventories, trade and other receivables, provisions, advances received and trade and other payables, excluding items in these balance sheet items that are not considered to form part of operative working capital: derivative valuations and income tax liabilities. |
employed | |
| Committed order backlog | Committed order backlog is the total value of committed orders received but not yet recognized as sales. It does not include frame agreements unless a binding purchase order has been received. It is the best measure of unsatisfied performance obligations according to IFRS 15 Revenue from contracts with customer. |
1) Calculated on a rolling 12-month basis.
Eltel AB is the ultimate parent company of Eltel Group. The operational and strategic management functions of Eltel Group are centralized in Eltel AB but it has no operative business activities. Eltel AB owns and governs the shares related to Eltel Group and its risks are mainly attributable to the value and activities of its subsidiaries. The interim report for the parent company is prepared in accordance with the chapter 9, Interim report, in the Swedish Annual Accounts Act.
| EUR million | Jan-Mar 2023 |
Jan-Mar 2022 |
Jan-Dec 2022 |
|---|---|---|---|
| Net sales | - | - | 2.5 |
| Administrative expenses | -1.5 | -1.0 | -7.3 |
| Operating result | -1.5 | -1.0 | -4.8 |
| Interest and other financial income | 5.1 | 5.4 | 21.5 |
| Interest and other financial expenses | -0.8 | -0.9 | -1.9 |
| Net financial items | 4.3 | 4.5 | 19.6 |
| Result after financial items | 2.8 | 3.5 | 14.8 |
| Group contributions given | - | - | -14.5 |
| Net result | 2.8 | 3.5 | 0.3 |
| EUR million | 31 Mar 2023 |
31 Mar 2022 |
31 Dec 2022 |
|---|---|---|---|
| ASSETS | |||
| Non-current assets | |||
| Financial assets | |||
| Shares in Group companies | 68.3 | 68.3 | 68.3 |
| Long-term loans receivable from Group companies | 480.7 | 508.5 | 475.6 |
| Intangible assets | 0.0 | 0.0 | 0.0 |
| Non-current assets | 549.0 | 576.9 | 543.9 |
| Current assets | |||
| Trade and other receivables | 0.4 | 0.3 | 1.3 |
| Cash pool receivable | 4.3 | 0.0 | 4.4 |
| Cash and cash equivalents | 0.1 | 0.1 | 0.1 |
| Current assets | 4.8 | 0.4 | 5.8 |
| TOTAL ASSETS | 553.8 | 577.3 | 549.7 |
| EQUITY AND LIABILITIES | |||
| Restricted equity | |||
| Share capital | 159.6 | 159.6 | 159.6 |
| Statutory reserve | 0.7 | 0.7 | 0.7 |
| Restricted equity | 160.3 | 160.3 | 160.3 |
| Non-restricted equity | |||
| Retained earnings | 285.3 | 284.9 | 284.9 |
| Net result for the period | 2.8 | 3.5 | 0.3 |
| Non-restricted equity | 288.1 | 288.4 | 285.3 |
| Total equity | 448.3 | 448.7 | 445.5 |
| Current liabilities | |||
| Debt | 42.3 | 67.3 | 33.3 |
| Liabilities to Group companies | 62.4 | 60.3 | 70.3 |
| Trade and other payables | 0.8 | 1.0 | 0.5 |
| Current liabilities | 105.5 | 128.6 | 104.2 |
| Total liabilities | 105.5 | 128.6 | 104.2 |
| TOTAL EQUITY AND LIABILITIES | 553.8 | 577.3 | 549.7 |
At year-end, Eltel had secured its debt obligations towards the banks by share and intragroup loan pledges and floating charges over certain assets of the Group, all on customary terms and conditions.
| EUR million | Equity-settled | ||||
|---|---|---|---|---|---|
| 1 Jan 2023 |
share-based payment |
Net result | 31 Mar 2023 |
||
| Share capital | 159.6 | - | - | 159.6 | |
| Statutory reserve | 0.7 | - | - | 0.7 | |
| Non-restricted equity | 285.3 | 0.0 | 2.8 | 288.1 | |
| Total | 445.5 | 0.0 | 2.8 | 448.3 |
As of 31 March 2023, the total number of registered and outstanding shares of Eltel amounts to 158,231,081, whereof 156,736,781 are ordinary shares and 1,494,300 are class C shares. The number of votes in Eltel amounts to 156,886,211 and the registered share capital amounts to EUR 159,575,695.
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Visiting address: Adolfsbergsvägen 13, Bromma POB 126 23, SE-112 92 Stockholm, SWEDEN Corp. id no. 556728-6652
tel. +46 8 585 376 00 [email protected] www.eltelgroup.com www.eltelnetworks.com
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