Annual Report • Mar 22, 2024
Annual Report
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20
| BOARD OF DIRECTORS' REPORT | |
|---|---|
| 1 Jan–31 Dec 2023 | 3 |
| CONSOLIDATED FINANCIAL STATEMENTS (IFRS) | |
| Consolidated statement of comprehensive income | 12 |
| Consolidated statement of financial position | 13 |
| Consolidated statement of cash flows | 14 |
| Consolidated statement of changes in equity | 15 |
| Accounting policies used in the consolidated financial statements | 16 |
| Notes to the consolidated financial statement | 26 |
| Other infromation | 50 |
| PARENT COMPANY FINANCIAL STATEMENTS (FAS) | |
| Parent company's income statement | 59 |
| Parent company's balance sheet | 59 |
| Parent company's cash flow statement | 61 |
| Accounting principles of the parent company | 62 |
| Notes to the parent company's financial statements | 63 |
| Dividend proposal | 71 |
| Signatures for the financial statements and board of directors' report |
71 |
| Auditor´s report | 72 |
Honkarakenne Group's revenue (net sales) amounted to EUR 46.3 million (2022: EUR 71.7 million and in 2021: EUR 69.7 million). The Group's operating profit amounted to EUR -0.1 (4.2; 3.7) million, profit before taxes to EUR -0.3 (3.6; 3.6) million and earnings per share to EUR -0.04 (0.47; 0.56). The Board of Directors proposes to the Annual General Meeting that no dividend be paid for the financial year that ended on 31 December 2023 (2022: EUR 0.25). The Annual General Meeting also proposes that a repayment of capital of EUR 0.09 per share be distributed from the invested unrestricted equity fund. No capital repayment is paid on shares held by the parent company.
Compared to the previous year, the Group's operating environment remained challenging throughout the financial year. The Group's net sales for the financial year fell 37 per cent short of the previous year and amounted to EUR 46.3 (73.7) million. Compared with the corresponding period of the previous year, turnover in Finland decreased by 42 per cent and in exports by 23 per cent. The decrease in export turnover was mainly due to the fact that earlier sales to Russia could not yet be replaced by net sales in new export areas and lower turnover in the Japanese market. Net sales for the first half of the comparison year included the last project deliveries to Russia in the order and production process. Exports excluding Russia were almost on level with the previous year.
| Revenue distribution | Jan–Dec/2023 | Jan–Dec/2022 | |
|---|---|---|---|
| Finland | 69% | 74% | |
| Exports | 31% | 26% | |
| Total | 100% | 100% | |
| Revenue, EUR million | Jan–Dec/2023 | Jan–Dec/2022 | Change |
| Finland | 31.8 | 54.8 | -42% |
| Exports | 14.5 | 18.9 | -23% |
The Group's order book fell 35 percent short of the previous year's level and was EUR 18.8 million (29.0).
Finland also includes billet sales and the sale of process byproducts for recycling.
Exports include all other countries except Finland.
In Finland, net sales decreased by 42% as the construction and housing markets weakened significantly during the financial year 2023. The decrease was sharp throughout the year, both due to high cost and interest rate levels and the recession. Net sales amounted to EUR 31.8 million (54.8). Compared to previous years, the profitability of the consumer business increased, project lead times shortened and customer satisfaction improved.
Compared to the previous financial year, net sales decreased more in the consumer business than in the project business. In terms of sales, the second half of the year was better than the first in project construction. In recent years, nearly 100 school, day care and nursing home solutions have been delivered across Finland. In 2023, deliveries were made, for example, to Järvenpää, Vaasa, Vantaa, Lappeenranta, Nokia, Salo and Joensuu. The demand for and interest in healthy log care facilities has developed favourably.
At the beginning of the year, Honkarakenne and its founding contractor partners won the contract to build a new block of log apartment buildings and terraced houses in Järvenpää's new Anni-täti residential area. Due to a complaint, the town plan for the area has not yet been legally confirmed.
In the beginning of the year, Honka launched a new terraced house concept for founding contracting and in the autumn for the Honka MultiStorey™ concept development project. Honka MultiStorey™ offers a multistorey building instructions and a concept on how to make a safe, low-carbon log block of flats. The solution can be applied not only to residential blocks of flats but also to other types of buildings, such as offices, schools and hotels. Honka MultiStorey™ enables a combination of logs and concrete in multistorey construction.
Development of domestic demand is expected to increase from the previous year. There is still uncertainty in the market and if the recession is prolonged, it may negatively affect the decision to start building new leisure and especially detached houses.
Demand for exports was slow in the early part of the year and picked up slightly before the turn of the year. The order book decreased by 23% from the previous financial period and was EUR 14.5 million (18.9). The difference is mainly due to the net sales from the last deliveries to Russia during the comparison year and the weaker net sales accumulation in Japan. The largest single export deliveries consisted of project business deliveries to new leisure centres located in Asian region. These site deliveries included, for example, a hotel building with a recreational area reception building and individual holiday houses.
In exports we focused on collection development, acquiring new customers, customer meetings and participation in trade fairs and export events. Regional importer and agent activities were clarified and strengthened through new importers and local partners. After the end of the year, a new Honka sales office was opened in Stockholm.
The Japanese organization was strengthened with in-house architectural expertise, it invested in B2B sales and opened a new office and showroom in Tokyo. The subsidiary completed a comprehensive strategy work based on which the business will be developed further in the coming years.
The demand and net sales of project exports in the Asian region developed positively. A recovery can also be seen in other export regions, such as Germany. There is also uncertainty as to whether the demand will be reflected in new orders and deliveries and with what timing. Interest rates, inflation and construction costs have remained at relatively high levels in different export countries. The Group's exports to China are at a complete standstill and measures for its own agency are being assessed.
Freight deliveries, which toward the end of the year were directed to Asian regions had to be moved to longer routes away from the Suez Canal due to the instability of the region. This is to some extent reflected in longer delivery times and rising freight costs in exports. The spill-over effect may negatively impact new orders or shift deliveries forward.
The Group's operating result for the financial year was EUR -0.1 million (4.2) and profit before taxes was EUR -0.3 (3.6) million. Adjusted operating result was EUR +0.3 million (4.2) and adjusted result before taxes was EUR +0.2 million (3.6).
Non-recurring adjustment items include EUR 0.5 million in cost items allocated to the financial year as a result of change negotiations, which were arising from salary during the notice period and other costs related to redundancies.
Financial items include valuation of the Japanese yen EUR -0.5 million (-0.3) and repayment of other financial assets EUR +0.4 million (-0.3).
Production profitability weakened as production volumes decreased. Unit price costs increased, and they could not be fully covered by a decrease in the purchase price of raw materials.
In order to ensure the result for the financial year, the temporary lay-off and adjustment measures initiated in the previous financial year were continued starting at the beginning of the year. In addition, change negotiations leading to redundancies were conducted in the parent company. The negotiations, which ended in June, resulted in a total of 22 redundancies. In addition, a lay-off authorisation was sought from the negotiations, which allows personnel to be laid off as a short- or longer-term adjustment measure if necessary.
In addition to adjustment measures, the focus continued to be on promoting and implementing development projects in line with the strategy, as a result of which project profitability and customer experience have been improved. In the export focus markets, emphasis was placed on developing the sales and retail network and acquiring new customers.
| Group's key figures | Jan–Dec/2023 | Jan–Dec/2022 | Jan–Dec/2021 |
|---|---|---|---|
| Revenue (net sales), EUR million | 46.3 | 73.7 | 69.7 |
| Operating profit/loss, EUR million | -0.1 | 4.2 | 3.7 |
| Adjusted operating profit/loss, EUR million | 0.3 | 4.2 | 3.7 |
| Profit before taxes, EUR million | -0.3 | 3.6 | 3.6 |
| Adjusted profit before taxes, EUR million | 0.2 | 3.6 | 3.6 |
| Average number of employees | 183 | 190 | 178 |
| Average number of employees in | |||
| person-years | 174 | 183 | 170 |
| Undiluted earnings per share, EUR | -0.04 | 0.47 | 0.56 |
| Diluted earnings per share, EUR | -0.04 | 0.47 | 0.56 |
| Equity ratio, % | 64.3 | 66.6 | 60.7 |
| Return on equity, % | -1.4 | 15.8 | 21.0 |
| Equity per share, EUR | 2.79 | 3.10 | 2.88 |
| Gearing ratio, % | -18.2 | -53.8 | -51.3 |
Honkarakenne reports in accordance with the European Securities and Markets Authority's (ESMA) recommendation on alternative key figures (sometimes also called alternative performance measures). An alternative key figure is a financial key figure other than a financial key figure specified or designated in IFRS. The term 'adjusted' is therefore used instead of the previous term 'excluding non-recurring items'. The company classifies significant transactions regarded as affecting the comparison between reporting periods as adjustment items. These include, but are not limited to, significant restructuring costs, significant impairment losses or reversals, significant gains, and losses on disposals of assets, or other significant income or expenses that differ from ordinary activities.
The Group's key figures and their calculation formulas are presented in Note 33.
The Group's order book was 35% lower than last year and amounted to EUR 18.8 million (29.0). Order book refers to orders with a delivery date within the next 24 months. Some orders may have a financing or building permit condition.
At the end of 2023, Honkarakenne's financial position was good. The Group's equity ratio was 64.3% (66.6). Gearing was negative at -18.2% (-53.8). The Group's net financial liabilities amounted to EUR -3.0 million (-9.8), so the Group's liquid assets exceeded its financial liabilities. The Group's liquid assets including other financial assets were EUR 6.4 million (12.6). The Group's EUR 3.0 million (3.0) overdraft facility was not in use at the time of the financial statements.
The Group's gross investments in 2023 amounted to EUR 1.8 million (1.0), excluding right-of-use assets in accordance with the IFRS 16 standard and investment grants received.
The investments during the financial year focus mainly on replacement investments in the log line, gluer and laminated timber plane at the Karstula plant. Installation of the laminated timber plane began at the end of the year and implementation of the line was completed in early 2024. An export offer calculation module was introduced in the ERP system. The Customer 360 project was launched in the autumn, in connection with which a new customer management and project tracking system will be introduced during spring 2024.
During the financial period, we focused especially on developing product solutions for export markets and continued to focus on log structures suitable for larger public buildings in particular. Honkarakenne's log product project for public and large buildings was part of the Ministry of the Environment's Wood Building Programme, which had also granted funding for the project. Utilizing the solutions developed in the project, Honkarakenne developed and launched a multistorey construction concept in the autumn, with which Honka introduces the multistorey construction opportunities of logs to its builders more widely. Honka MultiStorey™ provides instructions and a concept on how to build a safe, low-carbon log block of flats. The solutions can be applied not only to residential blocks of flats but also to other types of buildings, such as offices, schools and hotels.
The aim of the project and program is to increase the use of wood in construction to promote climate targets. Wood is a renewable raw material and wood construction is part of sustainable use of forests.
The Group's R&D costs for the financial year were EUR 0.6 million (0.4), representing 1.3% (0.5) of net sales. The Group has not capitalised development costs during the financial period.
The risks and uncertainties of Honkarakenne relate to negative changes in the operating environment of the Group and its customers, increased costs of raw materials and components, their availability and the functioning of the overall supply chains. If demand falls from the current level in the operating environment and costs remain high, it may have significant effects on the Group's earnings development.
The economic uncertainty in the Group's operating environment is negatively reflected in business and consumer confidence. High inflation and persistently high interest rates continue to increase short-term economic risks.
The uncertainty of the military aggression initiated by Russia and all its effects on business are difficult to assess.
Replacing the order book lost in the Russian market area with other export markets may be prolonged or uncertain in the current global market situation. If the war is prolonged or expands it can have a considerable negative effect on the Group's business, financial position and operating profit.
The valuation of items in the balance sheet is based on the management's current estimates. Any changes to these estimates may affect the company's financial performance.
Eco-friendliness, longevity and energy efficiency are the strengths of log house construction. As a building material, renewable wood is an ecologically sustainable choice. As wood grows, it binds carbon dioxide, which is stored in the walls of a solid wood house for centuries. At the same time, as the new forest grows, it binds more carbon dioxide, which slows down climate change. For responsible consumers, choosing wood as a material for a house is an obvious way to take future generations into account.
Honkarakenne takes account of the environment by carefully utilising the wood raw material, saving energy, recycling waste and using recyclabes. In its operating policy, Honkarakenne is committed to sustainable forestry through the traceability of wood (PEFC), and wood is not purchased from areas covered by conservation programmes.
The new stricter energy regulations also require new log products, which have been and will continue to be developed at Honka. In many ways, the factory's operations aim for the best environmental outcome. Investments in research and development make it possible to introduce new environmentally friendly production technologies. ETA approval and thus the right to CE marking are part of ensuring the high-quality and environmentally friendly operation of Honkarakenne.
Environmental aspects are implemented at Honkarakenne as efficient production operations. Careful utilisation of raw materials, energy saving, utilisation of by-products and recycling of waste for recovery are part of responsible environmental activities. Honkarakenne uses low-quality sawn timber from production in its packaging, and wooden recyclable packaging materials are stamped in accordance with the EU standard. Some of the cut-off, second-quality and waste timber is used chipped for energy production. Honkarakenne's cutter chips are delivered for further utilisation as bedding for agricultural needs, and the surplus log chips generated in production are processed into chip wool.
Honkarakenne sorts and pre-processes packaging plastic films and plastic-based binding materials. Recycled materials are delivered for further processing. Other waste is sorted at the factories by variety
and delivered for recycling or post-storage. Waste transport agreements have been concluded with regional waste management companies.
The associated company Puulaakson Energia Oy produces all the thermal energy required in the Karstula factory. It also supplies thermal energy to the heating network of the municipality of Karstula. The power plant uses the by-products from the Karstula factory, such as bark, sawdust and dry chips, as fuel. Honkarakenne's holding in the company is 25.9%.
The aim of the strategy, which will be in force until the end of 2024, is to strengthen Honkarakenne Oyj's position as Finland's largest exporter of wooden buildings. With the new export-driven strategy, the Group is seeking to increase its net sales in the strategy period with a focus on profitability. The profitability objectives are based on process efficiency, while enhancing the customer and employee experience.
Honkarakenne Group's vision is to become the leader in environmentally friendly and healthy housing in our chosen market areas. The Group's mission is to improve the quality of people's lives and housing.
Honkarakenne's strategic objectives for the 2022–2024 period are:
To implement the strategy, the Group's key functions are undergoing various assessment and development projects that support the progress of the strategy. Due to the changed market situation, investments have been focused on increasing sales and projects that improve profitability. At the beginning of the year, the Customer Experience for Profitable Growth transformation program was implemented to reorganize the business to ensure a better customer experience and a more profitable business. In addition, market studies and projects concerning the renewal of partners and distribution channels are ongoing in the various export focus markets.
Sustainability is a key part of Honkarakenne's strategy. Honkarakenne Group is continuously developing its production, services and selection to enable healthier, more ecological and better-quality living. Our choices are guided by human and natural vitality. Honkarakenne's sustainability programme, 'We are building the future', is based on the changes we have identified in our operating environment, our ethical principles, recognised expectations of our staff and other stakeholders, and understanding the customer in our main markets. Responsible purchasing and eco-friendly production are at the core of our business, and we are constantly developing the health and safety of our houses.
As part of Honkarakenne's sustainability program, the parent company uses 100% guaranteed electricity produced with a renewable energy source with carbon dioxide emissions of 0 g/kWh in all its own locations.
Honkarakenne states that it does not consider long-term targets as market guidance for any particular year of the strategy period.
The core of the Honka brand is the close relationship with nature and Finnish happiness. Honka's yellow is the colour of hope and joy. Honka helps every customer realize the dreams that are important to them and Honka has the honour to convey the vitality of the northern forests.
The group had 169 (191; 186) employees at the end of the financial year. The Group's average number of personnel, measured in person-years, totalled 174 persons (183; 170) during the year. The number decreased by 9 persons from the comparison period. The Group employed an average of 183 (190; 178) people in 2023.
At the end of the financial year, the parent company had 163 (186; 181) employees, and the annual average was 177 (179; 173) employees. The number of employees in the parent company decreased mainly due to personnel reductions due to the decisions of the change negotiations.
Of Honkarakenne Oyj's personnel, 79% (80; 79) worked at the Karstula factory and 22% (20; 21) at other locations. Clerical employees and management accounted for 65% (63; 64) of the parent company's personnel. Women accounted for 22% (23; 22) of the parent company's personnel. At the end of the year, part-time employees accounted for 3% (2; 3) of all employees. Temporary employees accounted for 1% (4; 4).
Expenses arising from the Group's employee benefits totalled EUR 8.1 million in the financial year 2023. In the previous year, they were EUR 10.6 million and in 2021 they were EUR 10.1 million.
In its February meeting, the Board of Directors of the Group's parent company decided to reward all employees under the rules of the personnel fund established in December based on the good performance achieved in the financial year 2022. These bonuses were paid to the persons covered by the staff fund after the Annual General Meeting in April.
Due to low demand and weak market outlook, the parent company had to undergo change negotiations aimed at adjusting its personnel, which ended in June and eventually resulted in the termination of employment of 9 production employees and 13 salaried employees. In the same negotiations, the parent company sought authorization to lay off personnel for a short or longer period during the financial years 2023 and 2024, if the financial or production situation so requires.
As a result of the measures taken, personnel costs and other expences caused by redundancies totalling EUR 0.5 million were recognized in the parent company's result.
During the financial year, we strengthened our occupational safety culture and focused on preventive occupational safety measures, such as safety rounds, safety observations and corrective measures, as well as risk assessments. Compared to the previous year, the number of accidents at work decreased by half and amounted to three. As in the previous year, the occupational well-being survey was conducted at the end of the year. The number of responses received reached an excellent level and was 90% (83) and eNPS was 28.0 (39.9).
At the end of November, a joint personnel day was held, where we focused on being together, teambuilding and promoting the shared Honka spirit after a challenging year.
The company utilises a management system with ISO 9001 and ISO 14001 certifications.
In 2023, the members of Honkarakenne Oyj's Board of Directors were: Arto Halonen, Timo Kohtamäki, Maria Ristola, Kari Saarelainen, Kyösti Saarimäki (until 20.4.2023) and Antti Tiitola (since 20.4.2023). Kyösti Saarimäki has been the Chairman of the Board until 20.4.2023 and after that Timo Kohtamäki has been the Chairman of the Board.
Ernst & Young Oy, member of the Finnish Institute of Authorised Public Accountants, was reappointed as auditor of the company, with Elina Laitinen, APA, as chief auditor.
During the financial year Honkarakenne's Executive Group consisted of: Marko Saarelainen, President & CEO; Juha-Matti Hanhikoski, Vice President, Production; Eino Hekali, Vice President, Product; Maarit Jylhä, CFO; Petri Perttula, Business Vice President, Operations Finland; and Maarit Taskinen, Vice President, Operations Export.
The parent company of Honkarakenne Group is Honkarakenne Oyj, which is domiciled in Karstula. The company's production facility and headquarters are located in Karstula (Finland), and the company has a customer service centre and exhibition area in Tuusula (Finland). The company also has sales offices across Finland and a representative in Beijing, China.
The company's subsidiaries include Alajärven Hirsitalot Oy and Honka-Kodit Oy in Finland; Honka Japan Inc. in Japan; Honka Blockhaus GmbH in Germany, and Honkarakenne SARL in France. Honka Management Oy has been merged with the parent company at 30.11.2023.
Honkarakenne Group's operating companies include the parent company Honkarakenne Oyj (Finland), the subsidiaries Honka Japan Inc. (Japan) and Honka Blockhaus GmbH (Germany), and the associated company Puulaakson Energia Oy (25.9%). In addition, the consolidated financial statements include the subsidiaries Honkarakenne SARL (France), Alajärven Hirsitalot Oy and Honka-Kodit Oy.
Honkarakenne's Board of Directors decides annually on the management's bonuses. In 2023, the management bonus was three-tiered and tied to the budgeted operating margin. The first-tier bonus for the members of the Executive Group was a supplementary pension payment equivalent to one month's salary plus 5,000 of Honkarakenne Oyj's Series B shares for the President & CEO. The secondtier bonus consisted of the first-tier bonus and a cash bonus worth one month's salary plus 5,000 of Honkarakenne Oyj's Series B shares for the President & CEO. The scheme's third-tier bonus corresponded to the first and second-tier bonuses, a supplementary pension payment equivalent to one month's salary plus 5,000 of Honkarakenne Oyj's Series B shares for the President & CEO.
The pension scheme is a defined contribution plan.
Honkarakenne does not currently have a valid long-term incentive scheme for management.
The company has two series of shares, Series A and Series B, with different dividend and voting rights. From the distributable profit, EUR 0.20 will first be paid for Series B shares. Then EUR 0.20 will also be paid for Series A shares, after which the remaining profit will be distributed equally among all shares. A Series B share carries one (1) vote, and a Series A share carries twenty (20) votes.
| Shares | Votes | |
|---|---|---|
| Series A | 300,096 | 6,001,920 |
| Series B | 5,911,323 | 5,911,323 |
| Total | 6,211,419 | 11,913,243 |
Honkarakenne's share capital is EUR 9,897,936.00. The shares have no nominal value.
Honkarakenne did not acquire any of its own shares during the financial year. In April, Honkarakenne transferred 8,333 of the company's Series B shares to the company's President & CEO as part of the President & CEO's 2022 bonus. At the end of the financial year, the Group held 321,052 of its own Series B shares with an acquisition price of EUR 1,186,556.34. Treasury shares account for 5.17% of all the company's shares and 2.69% of all votes. The acquisition cost has been deducted from shareholders' equity in the consolidated financial statements.
Honkarakenne's Series B shares are listed on Nasdaq Helsinki Oy's Small Cap list under the trading symbol HONBS. At the balance sheet date, the share price was EUR 3.22. The highest price for the year was EUR 4.98 and the lowest EUR 2.85. At the end of the financial year, market capitalisation was at EUR 19.0 million (the value of Series B shares has been used for unlisted Series A shares). The trading value of B shares was EUR 2.9 million, and the related trading volume was 0.8 million shares.
| Key Figures per Share | 2023 | 2022 | 2021 | ||
|---|---|---|---|---|---|
| Earnings per share | EUR | -0.04 | 0.47 | 0.56 | |
| Dividend per share *) | EUR | 0.0 | 0.25 | 0.00 | |
| Dividend payout ratio | % | - | 53.0 | - | |
| Repayment of equity payout ratio |
% | 222.1 | - | 44.4 | |
| Effective dividend yield |
% | 0,0 | 5.8 | - | |
| Equity per share | EUR | 2.79 | 3.10 | 2.88 | |
| P/E ratio | -79.5 | 9.2 | 13.0 | ||
| SHARE PRICE DEVELOPMENT | |||||
| Highest share price of the year |
EUR | 4.98 | 7.72 | 8.48 | |
| Lowest share price of the year |
EUR | 2.85 | 3.72 | 4.11 | |
| Share price at balance sheet date |
EUR | 3.22 | 4.34 | 7.32 | |
| Market capitalisation **) |
EUR million | 19.0 | 25.5 | 43.0 | |
| Share turnover | trading value, EUR million | 2.9 | 7.7 | 25.1 | |
| trading volume, 1,000 pcs | 758 | 1,483 | 3,792 | ||
| % of total shares | 12.9 | 25.2 | 64.6 | ||
| ADJUSTED NUMBER OF SHARES | |||||
| at the end of the financial year, (1,000 pcs) | 5,890 | 5,887 | 5,877 | ||
| average during the period, (1,000 pcs) | 5,888 | 5,880 | 5,872 |
*) The Board of Directors' proposal for the 2023 financial year. **) The price of a B-share has been used as the value of an A-share.
At the end of the financial year, the company had a total of 5,279 shareholders, of which 9 were nominee-registered. The holdings of several investors can be managed through one nominee-registered shareholder
| Name | Series A | Series B | Total | |
|---|---|---|---|---|
| 1 | AKR-Invest Oy | 1,040,600 | 1,040,600 | |
| 2 | Saarelainen Oy | 136,275 | 509,190 | 645,465 |
| 3 | Saarelainen Marko Tapani | 25,470 | 346,300 | 371,770 |
| 4 | Honkarakenne Oyj | 321,052 | 321,052 | |
| 5 | Nordea Nordic Small Cap Fund | 251,457 | 251,457 | |
| 6 | Keskinäinen Työeläkevakuutusyhtiö Varma | 222,812 | 222,812 | |
| 7 | Ristola Arimo Kalervo | 20,000 | 82,135 | 102,135 |
| 8 | Skandinaviska Enskilda Banken Ab (Publ) Helsingin Sivukonttori (Nominee-reg.) |
96,454 | 96,454 | |
| 9 | Ruuska Pirjo Helena | 5,950 | 78,817 | 84,767 |
| 10 | Syrjänen Eva Annika Elisabeth | 81,382 | 81,382 | |
| 11 | Nordea Henkivakuutus Suomi Oy | 81,000 | 81,000 | |
| 12 | Etola Markus Eeriki | 80,000 | 80,000 | |
| 13 | Saarelainen Erja Anneli | 4,480 | 56,742 | 61,222 |
| 14 | Pim Partners Ab | 58,000 | 58,000 | |
| 15 | Ruponen Sonja Helena | 54,500 | 54,500 | |
| 16 | Yli-Krekola Antti Veikko | 53,277 | 53,277 | |
| 17 | Localbitcoins Holding Oy | 52,631 | 52,631 | |
| 18 | Savolainen Paul-Petteri | 48,807 | 48,807 | |
| 19 | Valkila Erkka Ilpo Eerik | 45,700 | 45,700 | |
| 20 | Saarelainen Mauri Olavi | 10,456 | 28,377 | 38,833 |
| 21 | Saarelainen Paula Sinikka | 11,703 | 24,958 | 36,661 |
| 22 | Saarelainen Hanna Miira Maria | 6,971 | 28,029 | 35,000 |
| 23 | Karhulahti Veikko Kalevi | 34,211 | 34,211 | |
| 24 | Saarelainen Sirkka Liisa | 31,900 | 31,900 | |
| 25 | Salmelin Simo Markku Juhani | 30,806 | 30,806 |
| Name | Series A | Series B | Total | |
|---|---|---|---|---|
| 26 | Privatum Oy | 29,000 | 29,000 | |
| 27 | Nieminen Jorma Juhani | 25,000 | 25,000 | |
| 28 | Saarelainen Merja Anita | 23,948 | 23,948 | |
| 29 | Tugent Oy | 22,899 | 22,899 | |
| 30 | Saarelainen Kari Matti | 5,950 | 16,118 | 22,068 |
| Shareholders | Number of shares |
% of all shares | Votes | % of votes | |
|---|---|---|---|---|---|
| Total foreign | 17 | 7,684 | 0.12 | 50,133 | 0.42 |
| Total nominee-regis tered (foreign) |
5 | 24,687 | 0.40 | 24,687 | 0.21 |
| Total nominee-regis tered (Finland) |
4 | 112,706 | 1.81 | 112,706 | 0.95 |
| Total | 26 | 145,077 | 2.34 | 187,526 | 1.57 |
| Number of shares issued |
6,211,419 | 100.0 | 11,913,243 | 100.0 |
| Number of shareholders |
% of all shareholders |
Number of shares |
% of all shares | |
|---|---|---|---|---|
| 1–100 | 2,763 | 52.3 | 106,902 | 1.7 |
| 101–500 | 1,648 | 31.2 | 417,090 | 6.7 |
| 501–1,000 | 460 | 8.7 | 356,707 | 5.7 |
| 1,001–5,000 | 326 | 6.2 | 685,423 | 11.0 |
| 5,001–10,000 | 31 | 0.6 | 238,872 | 3.8 |
| 10,001–50,000 | 34 | 0.6 | 744,460 | 12.0 |
| 50,001–100,000 | 10 | 0.2 | 703,233 | 11.3 |
| 100,001–500,000 | 5 | 0.1 | 1,269,226 | 20.4 |
| Over 500,001 | 2 | 00 | 1,686,065 | 27.1 |
| Total | 5,279 | 100.0 | 6,207,978 | 99.9 |
| Of which nominee-registered | 9 | 9 | 137,393 | 2.2 |
| Waiting list | 0 | 0 | 0 | 0 |
| Joint account | 3,441 | 0.1 | ||
| Number of shares issued | 6,211,419 | 100.0 |
| Number of shareholders |
% of all shareholders |
Number of shares |
% of all shares | |
|---|---|---|---|---|
| Companies | 145 | 2.7 | 2,356,359 | 37.9 |
| Financial and insurance | ||||
| institutions | 8 | 0.2 | 452,922 | 7.3 |
| Public entities | 1 | 0.0 | 222,812 | 3.6 |
| Households | 5,102 | 96.6 | 3,130,731 | 50.4 |
| Non-profit organisations | 6 | 0.1 | 6,421 | 0.1 |
| Foreign ownership | 17 | 0.3 | 38,733 | 0.6 |
| Grand total | 5,250 | 100.0 | 6,207,978 | 99.9 |
| Of which nominee-registered | 9 | 0.2 | 137,393 | 2.2 |
| Waiting list | 0 | 0 | 0.0 | |
| Joint account | 3,441 | 0.1 | ||
| Number of shares issued | 100.0 | 6,211,419 | 100.0 |
| Series A | Series B | Total | % of all shares | Votes | % of votes | |
|---|---|---|---|---|---|---|
| Board's shareholding |
5,950 | 20,758 | 26,708 | 0.43 | 139,758 | 1.17 |
| President & CEO's shareholding *) |
25,470 | 346,300 | 371,770 | 5.99 | 855,700 | 7.18 |
| Total | 31,420 | 367,058 | 398,478 | 6.42 | 995,458 | 8.36 |
*) incl. shareholdings of an underage child
The information provided on shareholders is based on the company's shareholder list maintained by Euroclear Finland Oy. Each nominee-registered shareholder has been entered in the share register as a single shareholder. The holdings of several investors can be managed through one nominee-registered shareholder.
During the financial year 2023, no flagging notifications have been received.
Honkarakenne's management transactions concerning the company's securities during the review period have been published as stock exchange releases and are available on Honkarakenne's website.
On 20 April 2023, the Annual General Meeting decided, that the company's Board of Directors is authorised to repurchase a maximum of 400,000 of the company's own B-shares with the company's unrestricted equity.
The Board of Directors also has the authorisation to decide on a share issue, either against payment or free of charge, and the issue of special rights, entitling to shares referred to in Chapter 10, Section 1 of the Limited Liability Companies Act, in one or more tranches.
Pursuant to the authorisation, the Board of Directors may issue new shares and/or dispose of a maximum of 1,500,000 of the old Series B shares held by the company, including those shares that may be issued under special rights.
Both authorisations will remain in force until the next Annual General Meeting but expire on 30 June 2024 at the latest.
If a Series A share is transferred to a shareholder other than the company's shareholder on basis other than inheritance, testament or matrimonial right, the Board must be notified of the transfer in writing. Within 30 days of receiving notification of the transfer, the Board of Directors has the right to redeem the Series A shares for the company at carrying amount according to the previous financial statements using the reserve fund or other assets exceeding the share capital. If the Series A shares are not redeemed for the company, the Board of Directors must immediately inform the shareholders holding the company's Series A shares of these matters. Holders of Series A shares have the right of redemption at the above-mentioned price within 30 days of the above-mentioned notice. If more than one shareholder wishes to exercise that right, the redeemable Series A shares are to be distributed among them based on their holding of Series A shares in the company or, if that is not possible, by drawing lots. The company's Series B shares are not subject to the right of redemption but are freely transferable.
Saarelainen Oy and certain private Honkarakenne Oyj shareholders within the Saarelainen family signed an amended shareholders' agreement on 17 February 2009. The parties to the agreement have agreed that the private shareholders will make an effort to exercise their voting rights unanimously at the company's General Meetings. If they are unable to reach consensus, the private shareholders will vote in favour of the position supported by Saarelainen Oy. According to the agreement, when electing representatives of the Saarelainen family to Honkarakenne Oyj's Board of Directors, the private shareholders must reach a unanimous decision. If a consensus cannot be reached, Saarelainen Oy's General Meeting will decide which family members are to be elected based on the majority of votes cast at the meeting.
According to the shareholders' agreement, the private shareholders undertake, with certain exceptions, not to sell or transfer their A-shares in Honkarakenne Oyj to any entity other than a private shareholder that has signed the agreement or Saarelainen Oy without first offering the shares they intend to sell or transfer to Saarelainen Oy, or a buyer appointed by Saarelainen Oy with a right of first refusal.
In addition to Saarelainen Oy, the agreement covers the following shareholders: Saarelainen Sinikka, Saarelainen Erja, Saarelainen Mauri, Ruuska Pirjo, Saarelainen Anita, Saarelainen Kari, Saarelainen Paula, Ruponen Helena, Saarelainen Jukka, Saarelainen Sari and Saarelainen Jari. The parties to the agreement, including their underage children, have a combined holding of 182,378 A-shares and 788,682 B-shares. The holding of all shares is 15.63%, and the share of all votes is 37.24%.
The Group's related parties consist of subsidiaries and associated companies; the company's management and the companies in which they exercise influence, as well as the persons covered by the Saarelainen shareholders' agreement, and the companies controlled by them. The management personnel considered to be related parties comprise the Board of Directors, President & CEO, and the company's Executive Group. The pricing of goods and services in transactions with related parties is based on market-based pricing.
During the financial year, ordinary transactions were made with related parties as follows: goods and services were sold to related parties for EUR 0.2 (0.7) million, and goods and services were purchased from related parties for EUR 0.4 (0.4) million. The financial statements include EUR 0.0 (0.0) million in liabilities to related parties and EUR 0.0 (0.0) million in receivables from related parties. At the balance sheet date, the parent company has receivables from subsidiaries of EUR 1.8 (2.4) million, and debts to subsidiaries of EUR 0.1 (0.1) million. No credit losses have been recognised on receivables from related parties in 2023 or 2022.
In 2023, Honkarakenne Oyj complied with the Finnish Limited Liability Companies Act and the Securities Market Association's Corporate Governance Code 2020 for Finnish listed companies. The Corporate Governance Statement for the financial period 1 Jan–31 Dec 2023 is provided separate from this Board of Directors' Report.
According to Honkarakenne's view, the Group's net sales in 2024 will be on the level of the previous year and amount to EUR 43-50 million. The Group's operating profit will be between EUR +/-0.0 and +0.5 million.
The company's outlook of the 2024 development is based on the existing order book, the expectation of challenges in the operating environment and on market development. Uncertainty about the development of the economic situation, high interest rates and weakened availability of financing may negatively affect demand from consumer and professional builders and their decision-making concerning construction, thus creating uncertainty in the starts of new construction projects.
At the beginning of February, the company signed an investment agreement related to the production line for non-settling logs. The total value of the investment is approximately EUR 1.7 million.
The parent company's equity according to the balance sheet 31 December 2023 is EUR 16,112,69.69, of which distributable assets amount to EUR 5,694,760.69. The parent company's loss for the financial year 1 Jan.-31 Dec. 2023 is EUR -223,343.50
The Board of Directors proposes to the Annual General Meeting that no dividend be paid for the financial year that ended on 31 December 2023. The Annual General Meeting also proposes that a repayment of capital of EUR 0.09 per share be distributed from the invested unrestricted equity fund. No capital repayment is paid on shares held by the parent company.
The Annual General Meeting of Honkarakenne Oyj will be held on Thursday, 18 April 2024 at 2:00 pm EET.
This report contains forward-looking statements that are based on the assumptions currently known to the company's management and the management's current decisions and plans. Although the management believes that the forward-looking assumptions are reasonable, there is no guarantee that they will prove to be correct.
| EUR 1,000 | Note | 1 Jan–31 Dec 2023 | 1 Jan–31 Dec 2022 |
|---|---|---|---|
| Revenue (net sales) | 1, 2 | 46,289 | 73,701 |
| Other operating income | 3 | 552 | 547 |
| Change in inventories of finished goods and work in progress | -1,199 | 74 | |
| Materials and services | -30,719 | -52,839 | |
| Employee benefits expenses | 4 | -8,083 | -10,574 |
| Depreciation | 6 | -2,220 | -2,099 |
| Other operating expenses | 7 | -4,762 | -4,641 |
| Operating profit/loss | -142 | 4,168 | |
| Financial income | 8 | 89 | 107 |
| Financial expenses | 8 | -250 | -746 |
| Share of profit of associated companies | 17 | 62 | |
| Profit/loss before taxes | -286 | 3,591 | |
| Income taxes | 9 | 47 | -819 |
| Net profit/loss for the financial year | -239 | 2,772 | |
| Other comprehensive income that may be subsequently trans | |||
| ferred to profit or loss: | |||
| Translation differences related to foreign subsidiaries | -63 | -46 | |
| Effect of merger | 16 | ||
| Comprehensive income for the financial year in total | -285 | 2,725 | |
| DISTRIBUTION OF THE RESULT FOR THE FINANCIAL YEAR | |||
| To the owners of the parent company | -239 | 2,772 | |
| To non-controlling interests | - | - | |
| -239 | 2,772 | ||
| DISTRIBUTION OF COMPREHENSIVE INCOME | |||
| To the owners of the parent company | -285 | 2,725 | |
| To non-controlling interests | - | - | |
| -285 | 2,725 | ||
| Earnings per share calculated from the profit/loss attributable to owners of the parent company: |
10 | ||
| basic earnings per share (EUR) | -0,04 | 0,47 | |
| diluted earnings per share (EUR) | -0,04 | 0,47 |
The company has two series of shares, Series A and Series B, which have different rights to dividends. From the distributable profit, EUR 0.20 will first be paid for Series B shares. Then EUR 0.20 will also be paid for Series A shares, after which the remaining profit will be distributed equally among all shares.
| EUR 1,000 | Note | 31.12.2023 | 31.12.2022 |
|---|---|---|---|
| NON-CURRENT ASSETS | |||
| Property, plant and equipment | 11 | 12,208 | 11,442 |
| Goodwill | 12 | 72 | 72 |
| Other intangible assets | 12 | 527 | 453 |
| Investments in associated | |||
| companies | 13 | 490 | 474 |
| Receivables | 15, 25 | 266 | 181 |
| Deferred tax assets | 16 | 1,067 | 1,016 |
| Total non-current assets | 14,632 | 13,638 | |
| CURRENT ASSETS | |||
| Inventories | 17 | 5,276 | 6,505 |
| Trade and other receivables | 18 | 3,760 | 3,801 |
| Income tax assets | 18 | 31 | - |
| Other financial assets | 14 | 1,028 | 6,798 |
| Cash and cash equivalents | 19 | 5,323 | 5,833 |
| Total current assets | 15,417 | 22,937 | |
| TOTAL ASSETS | 30,048 | 36,575 |
| EUR 1,000 | Note | 31.12.2023 | 31.12.2022 |
|---|---|---|---|
| EQUITY ATTRIBUTABLE TO OWNERS OF THE PARENT | |||
| Share capital | 20 | 9,898 | 9,898 |
| Share premium account | 20 | 520 | 520 |
| Invested unrestricted equity fund | 20 | 4,692 | 4,805 |
| Treasury shares | 20 | -1,187 | -1,221 |
| Translation differences | 20 | -46 | 17 |
| Retained earnings | 2,573 | 4,193 | |
| Total equity | 16,451 | 18,211 | |
| NON-CURRENT LIABILITIES | |||
| Deferred tax liabilities | 16 | 45 | 53 |
| Provisions | 22 | 277 | 377 |
| Financial liabilities | 21, 25 | 2,541 | 2,079 |
| Total non-current liabilities | 2,863 | 2,508 | |
| CURRENT LIABILITIES | |||
| Accounts payable and other liabilities | 23 | 9,915 | 14,688 |
| Current tax liabilities | 23 | -5 | 371 |
| Provisions | 22 | 10 | 50 |
| Current financial liabilities | 21, 25 | 812 | 746 |
| Total current liabilities | 10,732 | 15,855 | |
| Total liabilities | 13,595 | 18,363 | |
| TOTAL EQUITY AND LIABILITIES | 30,048 | 36,575 |
| EUR 1,000 | Note | 1 Jan–31 Dec 2023 | 1 Jan–31 Dec 2022 |
|---|---|---|---|
| CASH FLOWS FROM OPERATING ACTIVITIES | |||
| Profit/loss for the financial year | -239 | 2,772 | |
| Adjustments | |||
| Transactions not involving a payment transaction |
28 | 1,996 | 1,963 |
| Financial income and expenses | 8 | 160 | 639 |
| Gains on disposal of non-current assets | -8 | - | |
| Losses on disposal of non-current assets |
10 | - | |
| Taxes | 9 | -47 | 819 |
| Changes in working capital | |||
| Change in trade and other receivables | 81 | 1,271 | |
| Change in inventories | 1,229 | 11 | |
| Change in trade and other liabilities | -4,905 | -2,866 | |
| Other working capital adjustments | -12 | 32 | |
| Interest paid | -130 | -98 | |
| Other financial expenses | -96 | -134 | |
| Interest received | 48 | 10 | |
| Dividends received from operations | 1 | 14 | |
| Other financial income | 11 | 6 | |
| Taxes paid | -419 | 197 | |
| Net cash flow from operating activities | -2,319 | 4,639 |
| EUR 1,000 | Note | 1 Jan–31 Dec 2023 | 1 Jan–31 Dec 2022 |
|---|---|---|---|
| CASH FLOWS FROM INVESTING ACTIVITIES | |||
| Investments in property, plant and | |||
| equipment | -1,461 | -938 | |
| Investments in intangible assets | -162 | -198 | |
| Sale of property, plant and equipment | 8 | - | |
| Net cash flow from investing activities | -1,614 | -1,133 | |
| CASH FLOWS FROM FINANCING ACTIVITIES |
|||
| Repayments of long-term loans | 21 | -400 | -400 |
| Payments of lease liabilities | 21 | -450 | -369 |
| Payment of dividend | -1,471 | - | |
| Repayment of capital | - | -1,473 | |
| Net cash flow from financing activities | -2,323 | -2,240 | |
| Change in cash and cash equivalents | -6,255 | 1,266 | |
| Impact of exchange rate changes on cash and cash equivalents |
-386 | -237 | |
| Impact of stock exchange rate changes on cash and cash equivalents |
361 | -334 | |
| Change in cash and cash equivalents at the end of the financial year |
-6,280 | 695 | |
| Cash and cash equivalents at the end of | |||
| the financial year | 14, 19 | 6,350 | 12,631 |
| Cash and cash equivalents at the begin | |||
| ning of the financial year | 14, 19 | 12,631 | 11,935 |
| Change in cash and cash equivalents at the end of the financial year |
-6,280 | 695 |
| Equity attributable to owners of the parent | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| EUR 1,000 | Share capital |
Share premium account |
Invested unrestricted equity fund |
Treasury shares | Translation differences |
Retained earnings |
Total | Non-controlling interests |
Total equity |
| Equity on 1 January 2022 | 9,898 | 520 | 6,275 | -1,265 | 89 | 1,381 | 16,899 | - | 16,899 |
| COMPREHENSIVE INCOME | |||||||||
| Income for the financial year | - | - | - | - | - | 2,772 | 2,772 | - | 2,772 |
| Other comprehensive income items | |||||||||
| Translation difference | - | - | - | - | -72 | 25 | -46 | - | -46 |
| COMPREHENSIVE INCOME FOR THE FINANCIAL YEAR TOTAL |
- | - | - | - | -72 | 2,797 | 2,725 | - | 2,725 |
| Transactions with the owners | |||||||||
| Payment of dividend | - | - | -1,471 | - | - | - | -1,471 | - | -1,471 |
| Effect of share-based remuneration | - | - | - | 43 | - | 14 | 58 | - | 58 |
| Transactions with the owners in total | - | - | -1,471 | 43 | - | 14 | -1,413 | - | -1,413 |
| Equity on 31 December 2022 | 9,898 | 520 | 4,805 | -1,221 | 17 | 4,193 | 18,211 | - | 18,211 |
| Equity on 1 January 2023 | 9,898 | 520 | 4,805 | -1,221 | 17 | 4,193 | 18,211 | - | 18,211 |
| COMPREHENSIVE INCOME | |||||||||
| Income for the financial year | - | - | - | - | - | -239 | -239 | - | -239 |
| Other comprehensive income items | |||||||||
| Translation difference | -113 | 129 | 16 | 16 | |||||
| Effect of merger | - | - | - | - | -62 | -2 | -63 | - | -63 |
| COMPREHENSIVE INCOME FOR THE FINANCIAL YEAR TOTAL |
- | - | -113 | - | -62 | -112 | -285 | - | -285 |
| Transactions with the owners | |||||||||
| Payment of dividend | - | - | - | - | - | -1,473 | -1,473 | - | -1,473 |
| Effect of share-based remuneration | - | - | - | -35 | - | -35 | - | 0 | |
| Transactions with the owners in total | - | - | - | -35 | - | -1,507 | -1,473 | - | -1,473 |
| Equity on 31 December 2023 | 9,898 | 520 | 4,692 | -1,187 | -46 | 2,573 | 16,451 | - | 16,451 |
Honkarakenne Group (Honkarakenne) manufactures and sells log and solid-wood house packages as well as related design and construction services. The Group's parent company is Honkarakenne Oyj. The parent company is domiciled in Karstula, and its registered address is Hongantie 41, FI-43500 Karstula, Finland. Honkarakenne Oyj is a public limited company, and Honkarakenne Oyj's Series B shares are listed on Nasdaq Helsinki Oy's Small Cap list under the trading symbol HONBS.
A copy of the consolidated financial statements is available at www. honka.com or Honkarakenne Oyj's head office at the address above. At its meeting on 13 February 2024, Honkarakenne Oyj's Board of Directors approved the consolidated financial statements for issue. According to the Finnish Limited Liability Companies Act, shareholders have the opportunity to approve or reject the financial statements at the Annual General Meeting held after the issue.
The consolidated financial statements have been prepared in accordance with the International Financial Reporting Standards (IFRS) as well as the AS/IFRS standards and SIC and IFRIC interpretations in force on 31 December 2023. International Financial Reporting Standards refer to the standards and interpretations adopted for application in the EU in accordance with the procedure laid down in the Finnish Accounting Act and the regulations issued on the basis thereof in EU Regulation (EC) No. 1606/2002. The notes to the consolidated financial statements also comply with the requirements of Finnish accounting and community legislation supplementing the IFRS. The notes form an integral part of the financial statements.
The auditor has not certified or audited the 2022 ESEF financial statements prepared in accordance with the European Commission's technical regulatory standard to be published in accordance with Chapter 7, Section 5 of the Securities Markets Act.
When preparing the consolidated financial statements, management has had to make forward-looking estimates and assumptions as well as judgements in the application of the accounting principles. These estimates and decisions may affect the amounts of assets, liabilities, income, and expenses recognised during the reporting period and the contingent items presented. Although the management believes that the forward-looking estimates and assumptions are reasonable, there is no guarantee they will prove to be correct. It is possible that the actual results differ from the estimates used in the financial statements.
The consolidated financial statements include the parent company Honkarakenne Oyj and all the subsidiaries over which the parent company has control. A parent company has control over a company if it has, directly or indirectly, over 50 per cent of the voting rights or if it otherwise has the power to govern the company's operating activities or financial policies. The subsidiaries are fully included in the consolidated financial statements from the date on which the Group gains control. They will stop being included when the control ceases. Expenses directly related to the acquisition are recognised as an expense as incurred.
Honka Management Oy has been merged to the parent company at 30.11.2023. The merger has not have an impact to Groups financial result.
Business combinations are accounted for using the acquisition method. The consideration to be paid for the acquisition of the subsidiary includes transferred assets, the liabilities incurred by the previous owners and the equity interests issued by the Group. These have been measured at their fair values. Expenses directly attributable to business combinations are recognised in profit or loss, and they are not included in the consideration transferred. The consideration transferred includes the fair value of the asset or liability arising from the contingent consideration arrangement. Identifiable assets acquired, and liabilities and contingent liabilities assumed in a merger are measured at their fair values at the acquisition date. The non-controlling interest in the acquiree is recognised on an acquisition-specific basis at either fair value or the non-controlling interest's proportionate share of the acquiree's identifiable net assets included in the statement of financial position.
A possible contingent consideration is recognised at the fair value of the acquisition date. Subsequent changes in the fair value of a contingent consideration that is an asset or liability are recognised in profit or loss. If the contingent consideration is classified as equity, its carrying amount does not change and, when the consideration is subsequently paid, the related entries are made under equity.
Intra-group transactions, unrealised internal margins, internal receivables and liabilities and internal dividends have been eliminated from the consolidated financial statements. The distribution of profit for the financial year to the parent company's owners and the non-controlling interests is presented in the statement of comprehensive income. In the statement of financial position, non-controlling interests are included in the Group's total equity.
Associated companies are companies in which the Group has significant influence, but no full or shared control. Typically, it is considered significant influence when the Group has 20 per cent or more of the company's voting rights but no control over it.
In the consolidated financial statements, associated companies are included using the equity method. In the equity method, the share of the associated companies' result that is equivalent to the Group's holding is included in the consolidated statement of comprehensive income. If the Group's share of the associated company's losses exceeds the carrying amount of the investment, the investment is entered in the statement of financial position at zero value and the excess losses are not taken into account unless the Group is committed to fulfilling the associated companies' obligations.
Honkarakenne has two geographical operating segments, which have been combined into one reportable segment. Geographically, the sales are divided as follows: Finland and exports. Internal management reporting complies with the IFRS reporting, due to which separate reconciliations are not presented.
The preparation of consolidated financial statements in accordance with IFRS requires the Group's management to make estimates and assumptions as well as choices regarding the application of the Group's accounting principles. Even though these estimates are based on the management's best knowledge at the time, the actual results may differ from the estimates.
The most significant estimates are related to:
y estimation of income tax amounts,
y valuation of inventories,
Figures concerning the financial performance and position of Group companies are presented in the currency of each unit's primary operating environment (functional currency). The consolidated financial statements are presented in euros, which is the parent company's functional and presentation currency.
Foreign currency transactions are recognised in the functional currency at the exchange rate valid on the transaction date. Foreign currency monetary items have been translated into euros at the exchange rates valid on the balance sheet date. Gains and losses from foreign currency transactions and the translation of monetary items are recognised in the statement of comprehensive income. Foreign exchange gains and losses are presented under financial income and expenses in the statement of comprehensive income.
The statements of comprehensive income for Group companies that do not use the euro as their functional currency have been translated into euros using the average exchange rate for the financial year, while their statements of financial position have been translated using the exchange rate on the balance sheet date. Translating the result for the financial year at different exchange rates in the statement of comprehensive income and statement of financial position creates a translation difference recognised in equity, the change in which is presented in other comprehensive income items.
Translation differences from the elimination of the acquisition cost of subsidiaries that do not use the euro as their functional currency and the translation of equity items accrued after acquisition are recognised in the other comprehensive income items under translation differences. When such a subsidiary is sold, the accumulated translation difference is recognised in the statement of comprehensive income as part of the gain or loss on sale.
Revenue (net sales) includes the sales income from customer contracts related to the Group's primary business activities less indirect taxes and discounts granted. The transaction price expected from the customer is estimated at the beginning of the goods or services for sale.
The Group sells and manufactures log and solid-wood house packages as well as related design and construction services. In addition to house packages and construction services, the Group sells log billets and process by-products. The sales income related to Honkarakenne's primary business activities is presented as revenue. The income from the sale of other goods and services is presented under other operating income.
The time of recognition of sales income is based on the transfer of control of goods or a service to the customer. The customer is considered to have gained control when the customer is able to control the use of the goods or service and obtain related benefit. Honkarakenne has sales income that is recognised both at a specific date and over time.
Sales income from house packages, log billets, and by-products is recognised when control over the goods is transferred to the customer. As a rule, income from the sale of house packages, log billets, and by-products is recognised at a specific date. However, if several deliveries are made at different times, the income is recognised according to delivery when control over each delivery item is transferred to the customer.
Income from the sale of services is recognised either at a specific date or over time, depending on the service, the related terms of contract and the duration of the service. Sales income is recognised at a specific date in the case of customer contracts which include short-term services and in which control is transferred to the customer at a given time. Sales income is recognised over time in the case of customer contracts under which the asset is under the customer's control while Honkarakenne is creating or improving it. Such customer contracts may include both materials and services, or just services.
Honkarakenne recognises the income from the sale of customer contracts to be recognised over time by determining the degree of fulfilment of each contract. The Group considers that the degree of fulfilment describes the fulfilment of the entire performance obligation, i.e., the transfer of control over the performance under the contract. The Group uses an input-based method to determine the degree of fulfilment. In the method, the costs incurred are compared with estimated total costs (cost-based input method, percentage-of-completion method).
If it is not, for some reason, possible to determine the degree of fulfilment and the expenses are expected to be covered, sales income is only recognised to the extent to which expenses have incurred. If it is probable that the total cost of completing the item will exceed the transaction price obtained for the project, the predicted loss is recognised as an expense under provisions. If, at the time of reporting, the amount invoiced for the contract is lower than the sales income recognised on the basis of the project's degree of fulfilment, the difference is presented as a contractual adjustment item under trade and other receivables in the statement of financial position. If, at the time of reporting, the amount invoiced for the contract is higher than the sales in-come recognised on the basis of the project's degree of fulfilment, the difference is presented as a contractual liability under current liabilities in the Advances received section of the statement of financial position.
A breakdown of revenue and additional information on sales income recognised on the basis of customer contracts is presented in Note 2.
Other operating income includes gains on the sale of non-current assets and income not related to the primary business activities, such as lease income and government grants received as compensation for expenses incurred. Government grants received as compensation for expenses incurred are recognised as income in the same period as the expenses are recognised.
The Group's pension plans are mainly defined contribution plans. Payments made into defined contribution pension plans are recognised in the statement of comprehensive income during the financial year to which they apply. After this, the Group will no longer have any other obligations or payments for the year in question.
The Group applies IFRS 2 Share-Based Payments to all share-based payment transactions. Arrangements payable as equity instruments are measured at fair value at the time they are granted and recognised as an expense in the statement of comprehensive income on a straight-line basis at the time the right is created. Arrangements paid in cash are measured at fair value in each financial statement, and changes in the fair value of the liability are recognised in the statement of comprehensive income. The effect of the arrangement on profit or loss is presented in the statement of comprehensive income under employee benefit expenses.
A termination benefit is an expense for which the company does not receive compensation in the form of work performed. Termination benefits are recognised as expenses when the Group has made a decision to terminate the employee's employment. Any benefits that the Group has offered to promote voluntary redundancies are also recognised as expenses. Other liabilities related to termination benefits that are likely to arise under various regulations have been estimated at the balance sheet date and recognised as expenses and liabilities.
Research expenses are recognised as expenses in the statement of comprehensive income in the year in which they are incurred. Expenses related to the development of new products and processes have not been capitalised, as the future income from them will only be secured when the products enter the market.
On the start date of the lease, Honkarakenne values the lease liability at the present value of the rents that remain unpaid on that date. Lease payments included in the value of a lease liability consist of payments made during the lease for the right-to-use the underlying asset that have not been made by the start date of the lease. The payments include fixed lease payments less any lease incentives receivable and variable lease payments that depend on an index or a rate
Lease payments are discounted at the interest rate implicit in the lease if that rate is readily determinable. If the interest rate implicit in the lease is not readily determinable, the incremental borrowing rate may be used instead. According to the standard, the incremental borrowing rate is defined as the interest rate that a lessee would pay to borrow, for a similar period and with similar security, the funds required for obtaining an asset whose value equals the acquisition cost of the right-of-use asset in a similar economic environment.
At the time of the adoption of the standard, the interest rate implicit in Honkarakenne's current leases was not readily determinable, so future minimum rents were discounted using the estimated incremental borrowing rate. The company assesses the incremental borrowing rate once a year in connection with the preparation of the financial statements and applies it until the next financial statements.
Honkarakenne recognises the right-of-use asset arising from the lease on the start date of the lease, i.e., on the date on which the lessor makes the underlying asset available to Honkarakenne. Honkarakenne measures the right-of-use asset at the acquisition cost less any accumulated depreciation and impairment losses and adjusted for any remeasurement of the lease liability. The initial acquisition cost of the asset includes the initial amount of lease liability recognised and lease payments made by the start date less any incentives received, and initial direct costs incurred for the lease. In the acquisition costs, Honkarakenne also takes account of any costs related to the restoration of the underlying asset.
Honkarakenne does not recognise leases including low-value assets according to IFRS 16 in the statement of financial position. Instead, Honkarakenne recognises these leases on a time proportion basis as lease expenses in the statement of comprehensive income.
Honkarakenne does not recognise leases of less than 12 months, i.e., short-term leases according to IFRS 16, in the statement of financial position. Honkarakenne recognises these leases on a time proportion basis as lease expenses in the statement of comprehensive income. When determining whether the lease meets the criteria for a short-term lease, Honkarakenne assesses the length of the contract in the same way as with other contracts, i.e., taking into account possible extension and termination options and whether their exercise is reasonably certain. If the lease includes a purchase option, Honkarakenne does not consider it to be a short-term lease.
According to IFRS 16, the lessee must determine the lease period as a period during which the lease cannot be terminated, also taking account of any extension or termination options if their exercise has been assessed as reasonably certain. Honkarakenne has assessed the consideration of further options as part of the lease period on a lease-by-lease basis.
Honkarakenne has lease contracts valid until further notice, particularly for business premises. In the case of premises for which the lease is valid until further notice, the length of the lease period is based on an estimate on the length of the lease period provided by Honkarakenne's management. The estimate takes account of, for example, significant improvements made to the leased property during the lease period, expenses related to the termination of the lease and the importance of the asset to Honkarakenne's operations, taking into account the property's specificity, location and availability of suitable alternatives. Management will reassess the length
of the lease period in the future to ensure that the lease period reflects the conditions at the time of the review.
Operating profit consists of the revenue and other operating income, plus or minus any change in inventories of finished goods and work in progress, plus production for own use and minus materials and services, employee benefit expenses, depreciation and impairment and other operating expenses.
Interest expenses are recognised as expenses in the statement of comprehensive income.
The following are recognised as income taxes in the Group's statement of comprehensive income: accrual-based taxes calculated on the basis of the Group companies' taxable profit for the financial year, tax adjustments for previous financial years and the change in deferred tax liabilities and assets. The tax effect related to items recognised directly in equity is recognised in equity accordingly. The tax based on taxable income for the financial year is calculated on the taxable income in accordance with the tax rate of each country.
Deferred tax is calculated on temporary differences between the carrying amount and taxable value using either the tax rate valid at the balance sheet date or a known, fixed tax rate that will enter into force later. Deferred tax liabilities are not recognised in the case of an initially recognised asset or liability that does not arise from a business combination and whose recognition does not affect the financial result or taxable income at the time of the transaction. Deferred tax assets are only recognised to the extent that it is probable that there will be future taxable income, against which the temporary difference can be utilised. The probability is assessed using estimated taxable income based on Honkarakenne's business plans and budgets. The conditions for recognising a deferred tax asset are assessed at the end of each reporting period.
The most significant timing differences arise from unused tax losses, the difference between the useful life of property, plant and equipment and tax depreciation, the recognition policy for construction-related projects, provisions and leases accounted for in accordance with IFRS16. Tax-deductible losses have been taken into account as tax assets to the extent that the company is likely to be able to utilise them in the coming years. Deferred tax liabilities are only recognised for the undistributed profits of subsidiaries if the tax payment can be considered to be realised in the foreseeable future.
Government grants related to the acquisition of tangible or intangible assets are recognised as deductions from the carrying amount of tangible assets, and grants are recognised as minor depreciations over the useful life of the asset.
Government grants received as compensation for costs incurred are recognised as other operating income or as a deduction in the period during which the costs are recognised as expenses.
The Group's tangible assets largely consist of land, buildings, machinery and equipment. In the statement of financial position, they are measured at the original acquisition cost less accumulated depreciation and any impairment losses. The acquisition cost of the assets manufactured by the Group includes materials as well as direct labour costs and other direct costs due to the completion of the asset for its intended use. If a tangible asset consists of several parts with different useful lives, the parts are treated as separate assets. Regular maintenance and repair costs are expensed when they incur. Significant improvement or additional investments are recognised as part of the asset's acquisition cost and depreciated over the remaining useful life of the main asset if it is probable that future economic benefits associated with the investment will flow to the Group.
Tangible assets are depreciated on a straight-line basis over their estimated useful lives, from the time they are available for use. Land is not depreciated.
The estimated useful lives of property, plant and equipment:
Gains and losses on decommissioning and disposal of tangible assets are recognised in the statement of comprehensive income through profit and loss. Capital gains or losses are measured as the difference between the sales price and residual value. Gains on the decommissioning and disposal of tangible assets are included in other operating income. If the sales price of the product does not cover the remaining residual value of the asset, the residual value is adjusted through impairment.
Goodwill is the total amount by which the consideration transferred, the non-controlling interest and the previously owned holdings exceed the fair value of the acquired subsidiary's identifiable net assets at the acquisition date. Goodwill is tested annually for impairment. For this purpose, goodwill is allocated to cash-generating units. Goodwill is measured at initial acquisition cost less any impairment losses. Impairment losses are recognised as an expense in the statement of comprehensive income. The carrying amount of goodwill allocated to the divested company or business is treated as capital gain or loss.
An intangible asset is initially recognised in the statement of financial position at acquisition cost when the acquisition cost can be determined reliably, and it is expected that the intangible asset will generate economic benefits for the Group. The acquisition cost of an intangible asset comprises its purchase price and all costs directly attributable to bringing the asset to its working condition for its intended use. Intangible assets with a known or estimated limited useful life are depreciated on a straight-line basis over their useful lives as an expense in the statement of comprehensive income. Depreciation begins when the asset is ready for use. No expenses are recognised for intangible assets with an indefinite useful life, instead they are tested for impairment annually or when necessary. The Group does not currently have any intangible assets with an indefinite useful life.
Acquired IT systems and licences are capitalised at acquisition cost and the cost of software deployment. The acquisition cost is depreciated on a straight-line basis over the estimated useful lives of the information systems and licences.
The estimated useful lives of intangible assets:
Subsequent expenditure on intangible assets is only capitalised when it increases the Group's future economic benefit from the said assets beyond the initially estimated level of performance. Otherwise, the expense is recognised as an expense in the statement of comprehensive income when it incurs.
At each balance sheet date, Honkarakenne Group assesses whether there is any indication of the impartment of an asset. If there is such indication, the asset's recoverable amount is estimated. The recoverable amount is assessed annually for the following assets, regardless of whether there is any indication of impairment: goodwill, intangible assets with an indefinite useful life and intangible assets in progress. The need for impairment is examined at the level of cash-generating units. The recoverable amount is the asset's fair value less the costs of disposal or a higher value in use.
In determining the value in use, the estimated future cash flows are discounted to their present value using discount rates that reflect the time value of money and the specific risks associated with the asset. If it is not possible to calculate recoverable future cash flows for an individual asset, the recoverable amount is determined for the cash-generating unit to which the asset belongs.
An impairment loss is recognised when the carrying amount of an asset exceeds its recoverable amount. An impairment loss is immediately recognised in the statement of comprehensive income and is first allocated to goodwill allocated to the cash-generating unit and then to other assets on a straight-line basis. Impairment losses on assets other than goodwill are reversed if there has been a change in circumstances and evaluation criteria and the recoverable amount of the asset has increased since the impairment loss was recognised. However, impairment losses are not reversed beyond the carrying amount the asset would have if no impairment loss had been recognised. The calculation of recoverable amounts requires the use of estimates.
Inventories are valued at the lower of acquisition cost or net realisable value. The net realisable value is the estimated sales price in the ordinary course of business, less the estimated costs of completion and the estimated necessary sales expenses. The value of materials and supplies is mainly determined using the calculation of the moving average price and the FIFO method (first in, first out). The moving average price includes all direct costs of the acquisition.
In addition to the acquisition cost of materials and direct labour costs and other direct costs, the acquisition cost of manufactured inventories includes variable production overheads and general expenses. The carrying amount of inventory plots is reduced if they are expected to be sold at less than their acquisition cost. The net realisable value of inventory plots is based on their market price. Inventories are written down for obsolete items.
Financial Assets
In the Group, financial assets at fair value through profit or loss include all derivative contracts that do not qualify for hedge accounting. Such derivative contracts include the Group's currency, interest and commodity derivatives. Derivatives are recognised at fair value based on quoted market prices and generally accepted valuation models. Changes in fair value are recognised in accordance with the purpose of the derivative, either under financial items or other operating income and expenses. Honkarakenne has not applied hedge accounting and has not made a decision to start hedge accounting in accordance with IFRS 9. In 2023, the Group has not had any valid derivative contracts.
At the balance sheet date, the Group had EUR 1.0 (6.8) million of financial assets at fair value through profit or loss.
Financial assets at fair value through other comprehensive income are non-derivative financial assets that are held for the collection of contractual cash flows and sale of financial assets and whose cash flows are comprised solely of capital and interest payments. This could include the Group's short-term financial market investments. Changes in fair value are recognised in other comprehensive income, except for impairment losses and interest income and exchange differences recognised using the effective interest method, which are recognised as financial items through profit or loss.
This category also includes the Group's equity investments in shares and shareholdings to the extent that these investments have not been placed in another category on the basis of the business model.
Financial assets valued at amortised cost are non-derivative financial assets that are held for the collection of contractual cash flows and whose cash flows are comprised solely of capital and interest payments. This category also includes trade receivables and other receivables in the consolidated statement of financial position. The financial assets in this category are initially recognised at fair value plus transaction costs and valued at their amortised acquisition cost using the effective interest method. Profit or loss on a financial asset valued at amortised cost is recognised through profit or loss when the asset is derecognised from or impaired in the statement of financial position.
Cash and cash equivalents consist of cash, bank account balances and liquid financial market investments with an original maturity of three months or less. Cash and cash equivalents include financial assets valued at amortised cost.
The impairment model for financial assets is based on expected credit losses, which take account of the customer's credit risk. The simplified procedure for expected credit losses is applied to trade receivables and assets based on customer contracts in accordance with IFRS 15, and receivables are classified according to their maturity date and the estimated impairment is assessed by category.
In addition, at each balance sheet date, the Group assesses whether there is objective evidence of a financial asset item or group of financial assets becoming impaired. If there is substantiated evidence of impairment, the recoverable amount of the financial asset, which is the fair value of the item, is estimated and an impairment loss is recognised to the extent that the carrying amount exceeds the recoverable amount. Impairment losses are recognised as an expense in the statement of comprehensive income. Significant financial difficulties of the debtor, probability of bankruptcy and default or delay in payment for more than 90 days are evidence of a financial asset's possible impairment.
Financial liabilities are initially recognised at fair value on the settlement dates less transaction costs. Later, all financial liabilities, except derivative instruments, are valued at amortised acquisition cost using the effective interest method.
In the Group, financial liabilities at fair value through profit or loss include all derivative contracts that do not qualify for hedge accounting. Honkarakenne has not applied hedge accounting and has not made a decision to start hedge accounting in accordance with IFRS 9. In 2023, the Group has not had any valid derivative contracts.
The Group has both long-term and short-term financial liabilities, which may be interest-bearing or non-interest-bearing. Financial liabilities are derecognised from the statement of financial position when the related obligations have ceased.
If the Group's parent company or its subsidiaries acquire shares in the parent company, the Group's equity is deducted by the amount of the consideration paid plus transaction costs. If the purchased treasury shares are resold or reissued, the consideration received is recognised in equity.
Provisions are recognised when the Group has a current legal or constructive obligation as a result of a past event, and it is probable that an outflow of economic benefits will be required to settle the obligation and a reliable estimate of the amount of the obligation can be measured reliably. Provisions may be related to guarantees, onerous contracts, litigation, environmental and tax risks or restructuring.
Warranty provisions are recognised when a product under warranty is sold. The amount of the warranty provision is based on empirical information on actual warranty expenses. A provision is recognised for an onerous contract when the expenses necessary to meet the obligations exceed the benefits to be received from the contract. A dispute provision is recognised for disputes and legal proceedings when the company's management estimates that the transfer of financial resources from the company is probable, and the amount of the obligation can be estimated reliably. A restructuring provision is recognised when a detailed and appropriate plan has been prepared for restructuring and the relevant parties have been informed of the arrangement, thus giving sufficient reason to expect the restructuring to take place. The recognised provision is the best estimate of costs required for the fulfilment of the existing obligation on the balance sheet date.
A contingent liability is a potential obligation that arises from past events and whose existence will only be confirmed by the occurrence of an uncertain event beyond the Group's control. Contingent liabilities also include existing obligations that are unlikely to require the fulfilment of payment obligations or the amount of which cannot be reliably determined. No provisions are recognised for contingent liabilities. They are presented in the Notes to the Financial Statements.
Contingent assets arise from unplanned or other unforeseen events that may result in an economic benefit to the Group. Contingent assets are not recognised in the financial statements. Instead, they are presented in the Notes to the Financial Statements.
The dividend proposed by the Board of Directors of the Group's parent company is included in retained earnings in the consolidated statement of financial position and the dividend is recognised for the financial year during which the Annual General Meeting decides on the distribution of dividends.
Earnings per share are calculated by dividing the profit for the financial year attributable to the parent company's shareholders with the weighted average of outstanding shares. Treasury shares are deducted from the issued shares. Diluted earnings per share are calculated from earnings per share plus the effect of potential ordinary shares on earnings for the financial year and the weighted average number of shares.
A discontinued operation is a part of a Group that has been disposed of or classified as held for sale and that meets one of the following conditions:
It is a significant separate business unit or a unit representing a geographical area.
It is part of a single coordinated plan to dispose of a separate key business area or geographical operating segment.
It is a subsidiary acquired solely for the purpose of reselling it.
The result of discontinued operations is presented as a separate item in the consolidated statement of comprehensive income. Assets from discontinued operations and the related items recognised in other comprehensive income, as well as liabilities included in the disposal group, are presented in the statement of financial position separately from other items.
The Group does not currently have any items classified as discontinued operations.
As of 1 January 2023, the Honkarakenne Group has applied the following new standards and amendments to standards:
y Amendments to IAS 1, IAS 8 and IAS 12. The amendments to IAS 1 specify the classification of liabilities into current and non-current. Amendments to IAS 12 Income Taxes require companies to recognise deferred taxes at the initial recognition of lease payments and depreciation obligations if they result in equal temporary tax differences. IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors, amendment clarifies the amount and application of accounting estimates.
The changes have not had a significant impact on the consolidated financial statements.
In 2024 and thereafter, the Group will adopt the following new and revised standards and interpretations issued by the IASB. The changes are not expected to have a significant impact on the Group's reporting.
y Amendments to IFRS 16 Leasing contracts: The amendment clarifies the requirements for determing lease liabilities in sales and leaseback situations. According to the Group's estimate, the change will not have a significant impact on the consolidated financial statements.
Honkarakenne Group has two geographical operating segments, which have been combined into one reportable segment in accordance with IFRS 8.12. The Group monitors sales and operations in two different market areas: Finland and Exports. Honkarakenne has combined the sales areas into one reportable segment, as the economic characteristics and products sold are similar in all market areas. The President & CEO acts as the Group's chief operating decision-maker.
Internal management reporting complies with the IFRS accounting principles, due to which separate reconciliations are not presented. The internal management reporting is used for monitoring the development of operations on the basis of business areas that are based on geographical markets. Internal management reporting serves goal setting and budget monitoring and is thus a management tool and not an actual external financial indicator.
Geographically, the Group's sales are divided as follows: Finland and exports.
Finland also includes billet sales and the sale of process by-products for recycling
Exports include all other countries except Finland.
Revenue is presented according to the location of the customer and assets according to the location of assets.
Honkarakenne Group's external revenue accrue from a wide customer base. Revenue from significant individual customers in accordance with IFRS 8 totalled EUR 2.4 million in 2023 and EUR 3.9 million in 2022.
| Distribution of revenue | 2023 | 2022 |
|---|---|---|
| Finland | 69 % | 74 % |
| Export | 31 % | 26 % |
| Total | 100 % | 100 % |
| Revenue (EUR 1,000) | 2023 | 2022 | % change |
|---|---|---|---|
| Finland | 31,759 | 54,795 | -42 % |
| Export | 14,530 | 18,906 | -23 % |
| Total | 46,289 | 73,701 | -37 % |
| Non-current assets (EUR 1,000) | 2023 | 2022 | |
| Finland | 13,190 | 12,521 | |
| Export | 375 | 101 | |
| Total | 13,564 | 12,622 |
| Date of revenue recognition (EUR 1,000) | Finland | Exports | Total |
|---|---|---|---|
| Specific date | 30,872 | 14,530 | 45,402 |
| Over time | 887 | - | 887 |
| Total | 31,759 | 14,530 | 46,289 |
| Date of revenue recognition (EUR 1,000) | Finland | Exports | Total |
|---|---|---|---|
| Specific date | 53,513 | 18,906 | 72,419 |
| Over time | 1,282 | - | 1,282 |
| Total | 54,795 | 18,906 | 73,701 |
The payments of most items recognised over time are tied to specific stages of physical levels of completion. Income receivables of an item recognised over time is recognised if the item's invoicing is less than the revenue (net sales) recorded on the basis of the item's progress. Income receivables are recognised as trade receivables as the target is making progress and reaches an agreed physical level of completion that triggers invoicing. Similarly, received prepayments are recognised if the invoicing of an item recognised over time exceeds the revenue (net sales) recorded on the basis of the item's progress.
Received prepayments are recognised as revenue (net sales) as the item's rate of completion increases and latest when the item is completed. The completion time of the items depends on their extent. When prepayments are received and the item is progressing, the ratio of fulfilled payment obligations and received prepayments changes.
| EUR 1,000 | 2023 | 2022 |
|---|---|---|
| Total of items to be recognised over time but not yet transferred | 887 | 1,282 |
| Trade receivables | ||
| Trade receivables | 2,265 | 2,843 |
| Receivables from customer contracts where the fulfillment rate exceeds the prepayments received |
8 | 31 |
| Total trade receivables | 2,273 | 2,875 |
| Sales expenses | 767 | 1,062 |
| Total | 3,926 | 5,219 |
| EUR 1,000 | 2023 | 2022 |
|---|---|---|
| Advance payments received in excess of contract performance | ||
| Advance payments received | 4,405 | 9,072 |
| Advance payments received for items recognised as income over time (gross) |
33 | 130 |
| Total advance payments received in excess of contract performance |
4,439 | 9,202 |
| Total | 4,439 | 9,202 |
| EUR 1,000 | 2023 | 2022 |
|---|---|---|
| Recognised sales income based on liabilities included in contracts | ||
| at the beginning of the period | 33 | 125 |
| EUR 1,000 | Within one year |
Within two years |
|---|---|---|
| 100 % | 0 % | |
| Total amount of transaction price allocated to long-term cus tomer-project contracts that have been entirely and partly |
||
| unfulfilled | 86 | - |
The table shows the sold order volume and its recognition in subsequent years.
| EUR 1,000 | 2023 | 2022 |
|---|---|---|
| Rental income | 42 | 32 |
| Capital gains on property, plant and equipment | 8 | - |
| Compensation from representatives | 155 | 12 |
| Usage fees received | - | 23 |
| Marketing cooperation | - | 4 |
| Annual compensation | - | 34 |
| Received remuneration for work | 10 | 37 |
| Grants received | 76 | 254 |
| Other operating income | 260 | 151 |
| Total | 552 | 547 |
| Total | 8,083 | 10,574 |
|---|---|---|
| Other personnel expenses | 268 | 443 |
| Pension contributions, defined contribution plans | 1,256 | 1,517 |
| Share awards | 16 | 58 |
| Wages and salaries | 6,543 | 8,557 |
| EUR 1,000 | 2023 | 2022 |
| Average number of employees in the Group in person-years | 2023 | 2022 |
|---|---|---|
| White-collar employees | 114 | 122 |
| Blue-collar employees | 60 | 62 |
| Total | 174 | 183 |
| Average number of employees in the Group | 2023 | 2022 |
| White-collar employees | 118 | 125 |
| Blue-collar employees | 65 | 65 |
| Total | 183 | 190 |
Research and development expenses totalled TEUR 602 in 2023 (TEUR 361 in 2022).
| (EUR 1,000) | 2023 | 2022 |
|---|---|---|
| INTANGIBLE ASSETS | ||
| Intangible rights | 237 | 200 |
| Total | 237 | 200 |
| PROPERTY, PLANT AND EQUIPMENT | ||
| Buildings and structures | 382 | 396 |
| Buildings and structures, right of use | 455 | 355 |
| Machinery and equipment | 1,090 | 1,100 |
| Machinery and equipment, right of use | 23 | 26 |
| Other tangible assets | 33 | 22 |
| Total | 1,983 | 1,898 |
| Total depreciation and impairment | 2,220 | 2,099 |
| EUR 1,000 | 2023 | 2022 |
|---|---|---|
| Voluntary personnel expenses | 436 | 366 |
| Lease payments | 156 | 175 |
| Credit losses *) | -85 | -16 |
| Sales and marketing expenses | 1,490 | 1,450 |
| Expert services | 490 | 413 |
| Premises costs | 416 | 370 |
| IT expenses | 803 | 922 |
| Insurance | 116 | 109 |
| Other operating expenses | 940 | 852 |
| Total | 4,762 | 4,641 |
| Auditor's fees (EUR 1,000) | 2023 | 2022 |
| Tax advice | 65 | 58 |
| Other services | 29 | - |
| Total | 93 | 58 |
| Financial income (EUR 1,000) | 2023 | 2022 |
|---|---|---|
| Other interest and financial income | 61 | 11 |
| Exchange rate gains | 28 | 95 |
| Total | 89 | 107 |
| Financial expenses (EUR 1,000) | 2023 | 2022 |
|---|---|---|
| Interest expenses on financial loans recognised at amortised cost | -65 | -57 |
| Change in value of financial instruments at fair value through profit or loss |
361 | -334 |
| Other financial expenses | -9 | -0 |
| Exchange rate losses | -465 | -312 |
| FINANCIAL EXPENSES, RIGHT-OF-USE ASSETS | ||
| Interest expenses | -72 | -42 |
| Total | -250 | -746 |
| Total financial income and expenses | -160 | -639 |
All interest expenses are recognised as expenses in the statement of comprehensive income.
| EUR 1,000 | 2023 | 2022 |
|---|---|---|
| Tax based on taxable income for the financial year | -11 | -414 |
| Taxes in previous financial years | -3 | -10 |
| Other direct taxes | -1 | -33 |
| Change in deferred tax assets and liabilities for the accounting period |
62 | -362 |
| Total | 47 | -819 |
| EUR 1,000 | 2023 | 2022 |
|---|---|---|
| Profit before taxes | -286 | 3,591 |
| Deferred tax at the parent company's tax rate | 57 | -718 |
| Effect of different tax rates in foreign subsidiaries | -38 | -5 |
| Tax-free income | 60 | 74 |
| Non-deductible expenses | -2 | -2 |
| Change in deferred tax assets | -45 | -140 |
| Share of results in associated companies, tax effect | 3 | 9 |
| Other direct taxes | - | -33 |
| Taxes for previous financial years | -3 | -10 |
| Other items | 16 | 7 |
| Taxes in the statement of comprehensive income | 47 | -819 |
| Effective tax rate % | 16,6 | 22,8 |
Undiluted earnings per share is calculated by dividing the profit for the financial year attributable to the parent company's shareholders with the weighted average of outstanding shares.
| EUR 1,000 | 2023 | 2022 |
|---|---|---|
| Net profit/loss for the financial year | -239 | 2,772 |
| Minority interest | - | - |
| Profit/loss for the financial year attributable to the parent company's owners |
-239 | 2,772 |
| Average number of shares (1,000 pcs) | 5,888 | 5,880 |
| Diluted average number of shares (1,000 pcs) | 5,888 | 5,880 |
| Undiluted earnings per share (EPS), EUR | -0.04 | 0.47 |
| Diluted earnings per share (EPS), EUR | -0.04 | 0.47 |
The company has two series of shares, Series A and Series B, which have different rights to dividends. From the distributable profit, EUR 0.20 will first be paid for Series B shares. Then EUR 0.20 will also be paid for Series A shares, after which the remaining profit will be distributed equally among all shares.
| EUR 1,000 | Land and water | Buildings and structures |
Buildings and structures, right of use |
Machinery and equipment |
Machinery and equip ment, right of use |
Other tangible assets | Advance payments and acqui sitions in progress |
Total |
|---|---|---|---|---|---|---|---|---|
| Acquisition cost 1 Jan | 908 | 16,673 | 2,884 | 28,767 | 127 | 2,819 | 440 | 52,618 |
| Translation differences (+/-) | -0 | -4 | - | -13 | - | - | - | -18 |
| Increase | - | 121 | 1,395 | 510 | 6 | 109 | 735 | 2,876 |
| Reclassifications | - | - | - | - | - | - | - | - |
| Decrease | - | -12 | - | -2 | - | - | 104 | -118 |
| Acquisition cost 31 Dec | 908 | 16,778 | 4,279 | 29,262 | 132 | 2,928 | 1,071 | 55,358 |
| Accumulated depreciation | ||||||||
| 1 Jan | - | -13,498 | -1,340 | -23,594 | -101 | -2,642 | - | -41,176 |
| Translation differences (+/-) | - | 1 | - | 5 | - | - | - | 5 |
| Accumulated deprecia tion on deductions and transfers |
- | 3 | - | 1 | - | - | - | 4 |
| Depreciation for the finan cial year |
- | -382 | -455 | -1,090 | -23 | -33 | - | -1,983 |
| Accumulated depreciation 31 Dec |
- | -13,876 | -1,795 | -24,679 | -124 | -2,675 | - | -43,150 |
| Carrying amount 31 Dec | 908 | 2,901 | 2,484 | 4,583 | 8 | 253 | 1,071 | 12,208 |
The recoverable amount is determined at fair value less the cost of selling, and it is based on the management's estimate.
| EUR 1,000 | 2023 | 2022 |
|---|---|---|
| Depreciation of leased assets | -478 | -381 |
| Interest expense on leases | -72 | -42 |
| Expenses related to short-term and low-value leases | -156 | -175 |
| Total in the statement of comprehensive income | -706 | -598 |
| EUR 1,000 | Land and water | Buildings and structures |
Buildings and structures, right of use |
Machinery and equipment |
Machinery and equip ment, right of use |
Other tangible assets | Advance payments and acqui sitions in progress |
Total |
|---|---|---|---|---|---|---|---|---|
| Acquisition cost 1 Jan | 908 | 16,572 | 2,568 | 28,619 | 124 | 2,676 | - | 51,466 |
| Translation differences (+/-) | -0 | -3 | - | -5 | - | - | - | -9 |
| Increase | - | 104 | 492 | 156 | 5 | 143 | 440 | 1,340 |
| Reclassifications | - | - | - | - | - | - | - | - |
| Decrease | - | - | -175 | -2 | -2 | - | - | -179 |
| Acquisition cost 31 Dec | 908 | 16,673 | 2,884 | 28,767 | 127 | 2,819 | 440 | 52,618 |
| Accumulated depreciation | ||||||||
| 1 Jan | - | -13,103 | -985 | -22,499 | -76 | -2,621 | - | -39,282 |
| Translation differences (+/-) | - | 0 | - | 2 | - | - | - | 3 |
| Accumulated deprecia tion on deductions and transfers |
- | - | - | 2 | - | - | - | 2 |
| Depreciation for the finan cial year |
- | -396 | -355 | -1,100 | -26 | -22 | - | -1,898 |
| Accumulated depreciation 31 Dec |
- | -13,498 | -1,340 | -23,594 | -101 | -2,642 | - | -41,176 |
| Carrying amount 31 Dec | 908 | 3,175 | 1,544 | 5,173 | 26 | 177 | 440 | 11,442 |
The recoverable amount is determined at fair value less the cost of selling, and it is based on the management's estimate.
| EUR 1,000 | Goodwill | Immaterial rights | Other intangible assets | Total |
|---|---|---|---|---|
| Acquisition cost 1 Jan | 72 | 6,004 | 2,101 | 8,177 |
| Translation differences (+/-) | - | - | -4 | -4 |
| Increase | - | 170 | 142 | 312 |
| Decrease | - | - | - | - |
| Transfers between items | - | - | - | - |
| Acquisition cost 31 Dec | 72 | 6,174 | 2,240 | 8,485 |
| Accumulated depreciation 1 Jan | - | -5,558 | -2,094 | -7,652 |
| Translation differences (+/-) | - | - | 4 | 4 |
| Accumulated depreciation on | ||||
| deductions | - | - | - | - |
| Depreciation for the financial year | - | -234 | -3 | -237 |
| Accumulated depreciation 31 Dec | -5,792 | -2,094 | -7,886 | |
| Carrying amount 31 Dec | 72 | 382 | 145 | 599 |
| EUR 1,000 | Goodwill | Immaterial rights | Other intangible assets | Total |
|---|---|---|---|---|
| Acquisition cost 1 Jan | 72 | 5,850 | 2,106 | 8,028 |
| Translation differences (+/-) | - | - | -5 | -5 |
| Increase | - | 154 | - | 154 |
| Decrease | - | - | - | - |
| Transfers between items | - | - | - | - |
| Acquisition cost 31 Dec | 72 | 6,004 | 2,101 | 8,177 |
| Accumulated depreciation 1 Jan | - | -5,361 | -2,095 | -7,456 |
| Translation differences (+/-) | - | - | 4 | 4 |
| Accumulated depreciation on | ||||
| deductions | - | - | - | - |
| Depreciation for the financial year | - | -197 | -4 | -200 |
| Accumulated depreciation 31 Dec | - | -5,558 | -2,094 | -7,652 |
| Carrying amount 31 Dec | 72 | 446 | 7 | 525 |
In accordance with IAS 36, consolidated goodwill is not amortised. Instead, it is tested annually for impairment. Goodwill is allocated to the 10% share in Honka Blockhaus GmbH acquired by Honkarakenne Oyj in 2003. No impairment losses have been recognised on goodwill in 2006–2023.
| EUR 1,000 | 2023 | 2022 |
|---|---|---|
| Honka Blockhaus | 72 | 72 |
The calculated cash flow forecasts are based on strategies prepared and approved by management that cover a period of five years. The discount rate used in the testing is 6.8% (6.6% in 2022), and its sensitivity in relation to the calculations has been tested with different ranges. The calculation of discounted cash flows requires forecasts and assumptions concerning factors such as market growth, prices and volume development.
| Honka Blockhaus | Honka Blockhaus | |
|---|---|---|
| Projection parameters used | 2023 | 2022 |
| Discount rate (pre-tax WACC) | 6.8 % | 6.6 % |
| Terminal growth | 2 % | 2 % |
| Fixed operating expenses, average annual | ||
| growth | 2 % | 2 % |
| EUR 1,000 | 2023 | 2022 |
|---|---|---|
| At the beginning of the financial year | 474 | 425 |
| Share of result for the financial year | 17 | 46 |
| Decrease | - | 3 |
| At the end of the financial year | 490 | 474 |
| EUR 1,000 | 2023 | 2022 |
|---|---|---|
| PUULAAKSON ENERGIA OY, KARSTULA | ||
| Holding, % | 25.9 | 25.9 |
| Assets | 2,449 | 2,505 |
| Liabilities | 639 | 676 |
| Revenue (net sales) | 1,417 | 1,547 |
| Profit/loss | 64 | 177 |
| EUR 1,000 | 2023 | 2022 |
|---|---|---|
| Other securities: financial securities | 1,028 | 6,798 |
| Total | 1,028 | 6,798 |
Other financial assets have been valued at fair value through profit and loss. Other financial assets include listed funds, due to which the presented valuation is classified as a value in accordance with fair value hierarchy level 1.
Classification of financial assets and liabilities by measurement category is presented in Note 25.
| EUR 1,000 | Non-current loan receivables | Other non-current receivables | Total |
|---|---|---|---|
| Acquisition cost 1 Jan | 232 | 30 | 232 |
| Translation differences (+/-) | -15 | - | -15 |
| Increase | 137 | - | 137 |
| Decrease | -6 | -30 | 6 |
| Acquisition cost 31 Dec | 347 | - | 347 |
| Accumulated impairment 1 Jan | -81 | - | -81 |
| Cumulative impairment losses | - | - | - |
| Impairment during the financial year | - | - | - |
| Accumulated impairment 31 Dec | -81 | - | -81 |
| Carrying amount 31 Dec | 266 | - | 266 |
| EUR 1,000 | Non-current loan receivables | Other non-current receivables | Total |
|---|---|---|---|
| Acquisition cost 1 Jan | 139 | 29 | 168 |
| Translation differences (+/-) | -4 | - | -4 |
| Increase | 97 | 2 | 99 |
| Decrease | - | - | - |
| Acquisition cost 31 Dec | 232 | 30 | 262 |
| Accumulated impairment 1 Jan | -81 | - | -81 |
| Cumulative impairment losses | - | - | - |
| Impairment during the financial year | - | - | - |
| Accumulated impairment 31 Dec | -81 | - | -81 |
| Carrying amount 31 Dec | 151 | 30 | 181 |
The carrying amount corresponds to the management's view of the fair value, and it is the maximum amount of credit risk excluding the fair value of guarantees.
Classification of financial assets and liabilities by measurement category is presented in Note 25.
| EUR 1,000 | 1.1.2023 | Recognised in profit or loss | Exchange rate differences | 31.12.2023 |
|---|---|---|---|---|
| Tax losses carried forward | 113 | -29 | - | 84 |
| Temporary differences | 903 | 82 | -3 | 982 |
| Total | 1,016 | 53 | -3 | 1,067 |
| EUR 1,000 | 1.1.2022 | Recognised in profit or loss | Exchange rate differences | 31.12.2022 |
|---|---|---|---|---|
| Tax losses carried forward | 487 | -374 | - | 113 |
| Temporary differences | 995 | -88 | -5 | 903 |
| Total | 1,483 | -461 | -5 | 1,016 |
Temporary differences mainly consist of the parent company's unused depreciation and the tax receivables from the elimination of the internal margin on inventories. In connection with the preparation of the financial statements, the management has carefully viewed the valuation of tax receivables recognised for losses. The recognised tax assets are based on the management's view of future development.
If result does not develop as expected, it is possible that the tax assets will not be utilised in time and will have to be written down.
The risks are described in more detail in Notes 26 and 29.
| Tax receivables recognised for losses carried forward and losses that need to be carried forward expire (EUR 1,000) |
2023 | 2022 |
|---|---|---|
| No expiry date | 84 | 113 |
| Total | 84 | 113 |
| Deferred tax assets are allocated to (EUR 1,000) | 2023 | 2022 |
| Parent | 935 | 878 |
| German subsidiary | 84 | 113 |
| Japanese subsidiary | 48 | 25 |
| Total | 1,067 | 1,016 |
| EUR 1,000 | 2023 | 2022 |
|---|---|---|
| Land write-downs (parent company) | 637 | 637 |
| Leasing contracts | 510 | 325 |
| Total | 1,147 | 962 |
| EUR 1,000 | 1.1.2023 | Recognised in profit or loss | 31.12.2023 |
|---|---|---|---|
| Temporary differences | 53 | -8 | 45 |
| Total | 53 | -8 | 45 |
| EUR 1,000 | 1.1.2022 | Recognised in profit or loss | 31.12.2022 |
|---|---|---|---|
| Temporary differences | 157 | -104 | 53 |
| Total | 157 | -104 | 53 |
No deferred tax liabilities have been recognised on the undistributed profits of subsidiaries, because the investment is permanent.
Deferred tax tax liability from leasing contracts is 500,000.
| EUR 1,000 | 2023 | 2022 |
|---|---|---|
| Work in progress | 3,119 | 3,031 |
| Finished products | 938 | 2,407 |
| Other inventories | 1,218 | 1,067 |
| Total | 5,276 | 6,505 |
Expenses of EUR 233 thousand (EUR 159 thousand in 2022) were recognised during the reporting period, reducing the carrying amount of inventories to their net realisable value.
Other inventories mainly consist of plots.
| EUR 1,000 | 2023 | 2022 |
|---|---|---|
| LOAN AND OTHER RECEIVABLES | ||
| Trade receivables | 1,971 | 2,492 |
| Receivables from associated | ||
| companies | 48 | 20 |
| Loan receivables | 34 | 20 |
| Other receivables | 639 | 46 |
| ACCRUED INCOME | ||
| Accrued income | 1,067 | 1,222 |
| Tax receivables based on the taxable | ||
| profit for the financial year | - | - |
| Total | 3,760 | 3,801 |
The impairment model for financial assets is based on expected credit losses, which take account of the customer's credit risk. The simplified procedure for expected credit losses is applied to trade receivables, and trade receivables are classified according to their maturity date and the estimated impairment is assessed by category.
In addition, at each date of the statement of financial position, the Group assesses whether there is objective evidence of a trade receivable or group of financial assets becoming impaired. If there is substantiated evidence of impairment, the recoverable amount of the financial asset, which is the fair value of the item, is estimated and an impairment loss is recognised to the extent that the carrying amount exceeds the recoverable amount. Impairment losses are recognised as an expense in the income statement. Significant financial difficulties of the debtor, probability of bankruptcy and default or delay in payment for more than 90 days may be considered evidence of a financial asset's possible impairment.
For determining the expected credit losses, trade receivables have been categorised on the basis of their maturity.
| EUR 1,000 | Expected credit losses, on average |
|---|---|
| Not due | 0 % |
| Overdue by less than 30 days | 0 % |
| Overdue by 31–60 days | 0 % |
| Overdue by 61–90 days | 0 % |
| Overdue by 91–120 days | 10 % |
| Overdue by 121–180 days | 20 % |
| Overdue by 181–365 days | 50 % |
| Overdue by over 366 days | 50 % |
| Gross carrying amount on 31 Dec 2023 | 2,122 |
| Expected credit loss | -154 |
| Carrying amount, net, on 31 Dec 2023 | 1,968 |
The carrying amount corresponds to the management's view of the fair value and maximum amount of credit risk.
| EUR 1,000 | 2023 | Impairment recognised |
Net 2023 |
2022 | Impairment recognised |
Net 2022 |
|---|---|---|---|---|---|---|
| Not due | 718 | - | 718 | 1,289 | -0 | 1,289 |
| Overdue by less than 30 days | 970 | - | 970 | 615 | - | 615 |
| Overdue by 31–60 days | 36 | - | 36 | 69 | - | 69 |
| Overdue by 61–90 days | 75 | - | 75 | 210 | - | 210 |
| Overdue by 91–120 days | 16 | -2 | 14 | 108 | -11 | 97 |
| Overdue by 121–180 days | 6 | -1 | 5 | 51 | -10 | 41 |
| Overdue by 181–365 days | 48 | -24 | 24 | 142 | -71 | 71 |
| Overdue by over 366 days | 254 | -127 | 127 | 410 | -290 | 119 |
| Total | 2,122 | -154 | 1,968 | 2,894 | -382 | 2,512 |
Impairment losses on trade receivables have been recognised in Finland and Germany.
Classification of financial assets and liabilities by measurement category is presented in Note 25.
40
HONKARAKENNE Board of directors' report and financial statements 2023
| EUR 1,000 | 2023 | 2022 |
|---|---|---|
| Cash and bank account | 5,323 | 5,833 |
| Total | 5,323 | 5,833 |
Classification of financial assets and liabilities by measurement category is presented in Note 25.
The risks are described in more detail in Notes 26 and 29.
| 1,000 pcs | Number of Class A shares | Number of Class B shares | Total number of shares |
|---|---|---|---|
| 31.12.2021 | 300 | 5,911 | 6,211 |
| 31.12.2022 | 300 | 5,911 | 6,211 |
| 31.12.2023 | 300 | 5,911 | 6,211 |
Honkarakenne Oyj's shares are divided into Class A and Class B shares, with Class A shares numbering at less than 300,000 and no more than 1,200,000, and Class B shares no less than 2,700,000 and no more than 10,800,000. Each Class A share carries 20 votes and Class B share one vote in a General Meeting.
From the distributable profit, EUR 0.20 will first be paid for Class B shares. Then EUR 0.20 will also be paid for Class A shares, after which the remaining profit will be distributed equally among all shares.
The shares have no nominal value. All shares that have been issued have been paid in full.
On 31 December 2023, the parent company held 351,052 Class B shares (43,135 on 31 December 2022). On 31 December 2023, the Group held 321,052 Class B shares (329,385 on 31 December 2022).
After the balance sheet date, the Board proposed to the General Meeting that a dividend of EUR 0.25 per share will be distributed for the financial year 2022. No dividend is distributed to the shares held by the parent company, and the rest of the profits are left in equity.
Payments received for share subscriptions during the validity of the old Limited Liability Companies Act (Act no. 734 of 29 September 1978) and during 2003 or later have been recognised in the share capital and share premium account in accordance with the terms and conditions of the arrangement, less transaction expenses.
The invested unrestricted equity fund includes other equity-type investments and the share subscription price to the extent that it is not included in the share capital according to an explicit decision.
The translation difference fund includes translation differences arising from the translation of the financial statements of foreign units.
The Board of Directors of Honkarakenne Oyj decided to 21.3.3023 from a new short-term incentive plan for the Management Team. This incentive plan included a share-based incentive for the CEO. Then incentive plan applied to 2023, it was three-tiered and tied to the Group's EBITDA. When the EBITDA target was reached, the CEO's share-based reward was 5,000-15,000 class B shares of Honkarakenne Oyj.
The Board of Directors of Honkarakenne Oyj decided to 31.3.3023 from a new short-term incentive plan for the Management Team. This incentive plan included a share-based incentive for the CEO. Then incentive plan applied to 2022, it was three-tiered and tied to the Group's EBITDA. When the EBITDA target was reached, the CEO's share-based reward was 5,000-15,000 class B shares of Honkarakenne Oyj.
The share-based rewards based on the incentive plan will be paid after the approval of the financial statements, if the CEO's employment is valid until further notice at the time of payment.
In accordance with the 2022 incentive plan, EUR 34.8 thousand of the transfer of 8,333 shares has been recognised as retained earnings in the Group's retained earnings in the financial statements for 2023. In accordance with the 2021 incentive plan, 10,000 Honkarakenne Oyj class B shares were transferred to the CEO in 2022. Of these shares, EUR 24.5 thousand were recognised in the financial statements for 2022.
| EUR 1,000 | 2023 | 2022 |
|---|---|---|
| NON-CURRENT | ||
| MFI loans | 400 | 800 |
| Lease liabilities | 2,141 | 1,279 |
| Total | 2,541 | 2,079 |
| CURRENT | ||
| MFI loans | 400 | 400 |
| Lease liabilities | 412 | 346 |
| Total | 812 | 746 |
Non-current MFI loans does not include overdrafts.
| Reconciliation of financial liabilities (EUR 1,000) | Current liabilities | Non-current liabilities | Financial lease liabilities | Total |
|---|---|---|---|---|
| 31.12.2021 | 400 | 1,200 | 1,675 | 3,275 |
| Withdrawals / additions to loans | - | - | 319 | 319 |
| Loan repayments | -400 | -400 | -369 | -1,169 |
| Other non-fee changes | 400 | - | - | 400 |
| 31.12.2022 | 400 | 800 | 1,625 | 2,825 |
| Withdrawals / additions to loans | - | - | 1,430 | 1,430 |
| Loan repayments | -400 | -400 | -502 | -1,302 |
| Other non-fee changes | 400 | - | - | 400 |
| 31.12.2023 | 400 | 400 | 2,553 | 3,353 |
The carrying amount corresponds to the management's view of the fair value.
The following table presents the contractual maturity analysis. The figures are undiscounted and include both interest payments and principal repayments.
| EUR 1,000 | Balance sheet value | Cash flow *) | 2024 | 2025 | 2026 | 2027 | 2028 | 2029+ |
|---|---|---|---|---|---|---|---|---|
| MFI loans | 800 | 849 | 437 | 412 | - | - | - | - |
| Lease liabilities | 2,553 | 3,070 | 502 | 458 | 350 | 220 | 220 | 1,319 |
| Trade and other liabilities | 6,412 | 6,412 | 6,412 | - | - | - | - | - |
| Total | 9,766 | 10,331 | 7,352 | 870 | 350 | 220 | 220 | 1,319 |
| EUR 1,000 | Balance sheet value | Cash flow *) | 2023 | 2024 | 2025 | 2026 | 2027 | 2028+ |
|---|---|---|---|---|---|---|---|---|
| MFI loans | 1,200 | 1,261 | 434 | 420 | 407 | - | - | - |
| Lease liabilities | 1,625 | 3,360 | 509 | 457 | 415 | 220 | 220 | 1,539 |
| Trade and other liabilities | 11,873 | 11,873 | 11,873 | - | - | - | - | - |
| Total | 14,698 | 16,494 | 12,816 | 877 | 822 | 220 | 220 | 1,539 |
*) Contractual cash flows from contracts that are settled on a gross basis.
The Group had no valid derivative contracts on 31 December 2023 or 31 December 2022.
The sensitivity analysis contains the financial liabilities included in the statement of financial position on 31 December 2023. One percentage point has been assumed as the change in interest rates. The interest rate position is assumed to be interest-bearing financial liabilities and receivables as well as interest rate swaps at the balance sheet date, with all agreements remaining valid unchanged throughout the year.
| MEUR | 2023 | 2022 |
|---|---|---|
| Income statement | Income statement | |
| Interest rate change +/- 1% | +/- 34 | +/- 24 |
The Group's financial loans have floating rates.
Interest rate on financial loans 5.63–6.669% (2022: 1.5–4.21%).
No interest rate swaps were valid on 31 December 2023 or 31 December 2022.
The average interest rate for financial loans is 6.14% (2022: 3.38%).
Lease liabilities have been discounted using an interest rate of 2.085–4.36% (2022: 2.085–4.36%).
| Warranty | Provisions due to |
Restruc turing |
Other | ||
|---|---|---|---|---|---|
| EUR 1,000 | provision | disputes | provision | provisions | Total |
| 31.12.2021 | 316 | 50 | 7 | 168 | 541 |
| Additions to provisions | 60 | - | - | - | 60 |
| Deductions for provisions |
- | - | -7 | -168 | -175 |
| 31.12.2022 | 377 | 50 | - | - | 427 |
| Deductions for | |||||
| provisions | -99 | -40 | - | - | -139 |
| 31.12.2023 | 277 | 10 | - | - | 288 |
| EUR 1,000 | 2023 | 2022 | |||
| Non-current provisions | 278 | 377 | |||
| Current provisions | 10 | 50 | |||
| Total | 288 | 427 |
The Group provides a warranty for its products. Any defects discovered in the products during the warranty period will be repaired at the Group's expense, or the customer is given a new, corresponding product. The warranty provision is based on earlier years' experience of defective products.'
The Group had no significant unresolved disputes on 31 December 2023 (two on 31 December 2023). The provision is expected to be realised in the next few years.
Other provisions include a loss provision for a construction project
| EUR 1,000 | 2023 | 2022 |
|---|---|---|
| CURRENT LIABILITIES | ||
| Accounts payable | 2,179 | 2,329 |
| Other liabilities | 376 | 342 |
| Advances received from customers | 4,439 | 9,202 |
| Other accruals | 2,922 | 2,815 |
| Total | 9,915 | 14,688 |
The carrying amount of liabilities corresponds to their fair value. The payment terms of the trade liabilities are in line with standard payment terms for companies.
The main items in accruals consist of accrued employee-related expenses and interest expenses.
The Group did not have any valid currency derivatives or interest rate swaps on 31 December 2023 or 31 December 2022.
| EUR 1,000 | 2023 | 2022 |
|---|---|---|
| Tax liabilities based on taxable income for the financial | ||
| year | -5 | 371 |
The Group's functional currency is the euro. Major foreign currency assets and liabilities are in Japanese yen.
| EUR 1,000 | 2023 | 2022 |
|---|---|---|
| NON-CURRENT ASSETS | ||
| Loans and other receivables | 360 | 231 |
| CURRENT ASSETS | ||
| Other financial assets | 5,176 | 4,249 |
| Trade and other receivables | 275 | 165 |
| CURRENT LIABILITIES | ||
| Non-interest-bearing liabilities | 1,076 | 914 |
| NET FOREIGN CURRENCY RECEIVABLES AND LIABILITIES | 4,735 | 3,731 |
| NET CURRENCY RISK | 4,735 | 3,731 |
The table below shows the strengthening or weakening of the euro against the Japanese yen when all other factors remain unchanged. The percentage change is assumed to be +/- 10%. The sensitivity analysis is based on yen-denominated assets and liabilities at the end of the reporting period, factoring in forward exchange contracts but not other forecast items. Net investments in foreign subsidiaries have not been included in the sensitivity analysis. The change would have been mainly due to exchange rate variations in yen-denominated receivables and liabilities.
| EUR 1,000 | 2023 | 2022 | ||
|---|---|---|---|---|
| Change percentage | + 10 % | - 10 % | + 10 % | - 10 % |
| Impact on the result after taxes | 344 | -421 | 271 | -332 |
'The calculation and estimation of likely changes are based on assumptions about regular market and business conditions.
The financial risks have been defined, explained in Note 26 about the management of financial risks.
| MEASUREMENT CATEGORY (IFRS 9) EUR 1,000 | Financial assets valued at amortised cost |
Financial assets at fair value through profit or loss |
Financial liabilities valued at amortised cost |
Balance sheet value |
Fair value | Note |
|---|---|---|---|---|---|---|
| NON-CURRENT FINANCIAL ASSETS | ||||||
| Non-current receivables | 266 | - | - | 266 | 266 | 15 |
| CURRENT FINANCIAL ASSETS | ||||||
| Trade and other receivables | 3,760 | - | - | 3,760 | 3,760 | 18 |
| Other financial assets | - | 1,028 | - | 1,028 | 1,028 | 14 |
| Cash and cash equivalents | 5,323 | - | - | 5,323 | 5,323 | 19 |
| Total financial assets by measurement category | 9,349 | 1,028 | - | 10,377 | 10,377 | |
| NON-CURRENT FINANCIAL LIABILITIES | ||||||
| Interest-bearing liabilities | - | - | 2,541 | 2,541 | 2,541 | 21 |
| CURRENT FINANCIAL LIABILITIES | ||||||
| Interest-bearing liabilities | - | - | 812 | 812 | 812 | 21 |
| Accounts payable and other liabilities | - | - | 9,910 | 9,910 | 9,910 | 23 |
| Total financial liabilities by measurement category | - | - | 13,263 | 13,263 | 13,263 |
| MEASUREMENT CATEGORY (IFRS 9) EUR 1,000 | Financial assets valued at amortised cost |
Financial assets at fair value through profit or loss |
Financial liabilities valued at amortised cost |
Balance sheet value |
Fair value | Note |
|---|---|---|---|---|---|---|
| NON-CURRENT FINANCIAL ASSETS | ||||||
| Non-current receivables | 181 | - | - | 181 | 181 | 15 |
| CURRENT FINANCIAL ASSETS | ||||||
| Trade and other receivables | 3,800 | - | - | 3,800 | 3,800 | 18 |
| Other financial assets | - | 6,798 | - | 6,798 | 6,798 | 14 |
| Cash and cash equivalents | 5,833 | - | - | 5,833 | 5,833 | 19 |
| Total financial assets by measurement category | 9,814 | 6,798 | - | 16,612 | 16,612 | |
| NON-CURRENT FINANCIAL LIABILITIES | ||||||
| Interest-bearing liabilities | - | - | 2,079 | 2,079 | 2,079 | 21 |
| CURRENT FINANCIAL LIABILITIES | ||||||
| Interest-bearing liabilities | - | - | 746 | 746 | 746 | 21 |
| Accounts payable and other liabilities | - | - | 15,059 | 15,059 | 15,059 | 23 |
| Total financial liabilities by measurement category | - | - | 17,884 | 17,884 | 17,884 |
In its business operations, the Group is exposed to various financial risks. The aim of risk management is to minimise the adverse effects of financial market changes on the Group's result. The main financial risks include currency risk, interest rate risk, credit risk, liquidity risk and covenant risk. The Group's financing is centralised in the parent company. The parent company's finance department is responsible for managing the financial risks in accordance with the operating principles approved by the Board.
Exchange rate fluctuations may adversely affect the Group's business performance. Honkarakenne operates internationally and is thus exposed to transaction risks arising from different currency positions and risks that arise when investments made in subsidiaries in different currencies are translated into the parent company's functional currency.
The Group hedges against currency risks by mainly using the euro as the transaction currency in both sales and purchases. The Group's most significant foreign currency is the Japanese yen. In 2023, yen-denominated revenue accounted for 3% of the Group's revenue. The parent company can hedge 0–60% of its estimated yen-denominated revenue for the financial year.
There were no open forward exchange contracts in the financial statements on 31 December 2023. Honkarakenne does not apply hedge accounting to the forward exchange contracts it uses and has not made a decision to start hedge accounting.
Although Honkarakenne uses financial instruments to manage its currency risks, future exchange rates may adversely affect the Group's business, financial position, business performance and future outlook.
The Group's yen-denominated receivables and liabilities and the sensitivity analysis are presented in Note 24 to the financial statements on 31 December 2023.
Interest rate fluctuations may adversely affect Honkarakenne's business performance.
Honkarakenne Group's income and operating cash flows are largely independent of market rate fluctuations. The Group is exposed to fair value interest rate risk, which is mainly related to the loan portfolio. The Group can take out loans with either fixed or variable interest rates and use interest rate swaps to hedge against the effects of interest rate changes. The interest rate risk to the Group's loans is also affected by the interest margin charged by financial institutions, calculated in addition to the reference rate.
A significant rise in interest rates could have a negative impact on private consumption. In addition, an increase in interest rates may have a significantly adverse effect on the price of financing and the Group's current financial expenses. Honkarakenne closely monitors interest rate developments and actively seeks to manage its interest rate risk. Although the Group is taking active measures to manage such potential developments, failure to manage these risks could have a significantly adverse effect on Honkarakenne's business, financial position, business performance, future outlook and share prices.
All the Group's MFI loans have a variable interest rate. There were no valid interest rate swaps on 31 December 2023.
Interest rates and the effect of their fluctuations are described in Note 21.
The age distribution of trade receivables is presented in Note 18 to the financial statements on 31 December 2023.
Credit loss risk is managed through prepayments, bank guarantees and export letters of credit. Sales regions are responsible for the credit risk related to trade receivables. In the event of a possible payment default, the Group will make an effort to negotiate a payment programme or use a collection agency to obtain the payment. The maximum amount of credit risk to the Group's trade receivables corresponds to the carrying amount of trade receivables on 31 December 2023. Although the Group is taking active measures to manage the credit risk, failure to manage these risks could have an adverse effect on Honkarakenne's business and financial position.
The impairment model for financial assets in accordance with IFRS 9 Financial Instruments is based on expected credit losses, which take into account the customer's credit risk. The simplified procedure for expected credit losses is applied to trade receivables, and trade receivables are classified according to their maturity date and the estimated impairment is assessed by category.
In addition, at each end of reporting period, the Group assesses whether there is objective evidence of a trade receivable or group of financial assets becoming impaired. If there is substantiated evidence of impairment, the recoverable amount of the financial asset, which is the fair value of the item, is estimated and an impairment loss is recognised to the extent that the carrying amount exceeds the recoverable amount. Impairment losses are recognised as an expense in the statement of comprehensive income. Significant financial difficulties of the debtor, probability of bankruptcy and default or delay in payment for more than 90 days may be considered evidence of a financial asset's possible impairment.
Derivative contracts are only concluded with banks with good credit rating. The maximum amount of credit risk to the Group's financial assets other than trade receivables corresponds to the carrying amount of these other financial assets in the statement of financial position.
At the end of reporting period on 31 December 2023, the Group did not have any valid derivative contracts, nor a year earlier.
In order for Honkarakenne to be able to implement its strategy, the Group needs a positive cash flow. The increase in cash flow must be based on growth in the sales of existing products and Honkarakenne's success in launching new, productive products and distribution channels. If Honkarakenne is unable to generate sufficient cash flows to support these operations or to obtain sufficient funding on acceptable terms of contract, this can have a significantly adverse effect on Honkarakenne's business, financial position, business performance and future outlook.
For short-term working capital needs, Honkarakenne has a bank account limit of EUR 3.0 million. At the end of reporting period on 31 December 2023, the limit was not in use, nor was it a year ago. The Bank have the right to terminate bank account limits with a short notice period if Honkarakenne's solvency deteriorates substantially or if there is some other business-related reason for it.
The Group strives to continuously assess and monitor the amount of financing required for business operations so that the Group has sufficient liquid funds to finance operations and repay maturing loans. The aim is to guarantee the availability and flexibility of financing not only by means of liquid assets but also overdraft limits and using several financial institutions to obtain financing.
The maturity table for financial liabilities is presented in Note 21. The figures are undiscounted and include both interest payments and principal repayments.
The Group has no significant investments in listed shares, so the market price fluctuations of these shares do not pose a material price risk.
| Mortgages and guarantees on own behalf (EUR 1,000) | 2023 | 2022 |
|---|---|---|
| Real estate mortgages | 6,000 | 6,000 |
| Guarantees on own behalf | 2,062 | 2,956 |
| Total | 8,062 | 8,956 |
Business and real estate mortgages have been provided as collateral for MFI loans. These loans mature in 2023–2025.
Guarantees on own behalf are for advance payments and construction contracting.
| EUR 1,000 | 2023 | 2022 |
|---|---|---|
| MFI loans | 800 | 1,200 |
| Total | 800 | 1,200 |
| EUR 1,000 | 2023 | 2022 |
|---|---|---|
| Off-balance-sheet lease liabilities maturing within less than 12 months |
90 | 93 |
| Off-balance-sheet lease liabilities maturing within 1–5 years |
60 | 99 |
| Total | 150 | 193 |
Other operating leases concern copiers, printers and vehicles.
The Group did not have any valid currency derivatives or interest rate swaps on 31 December 2023 or 31 December 2022.
| Transactions not involving a payment transaction (EUR 1,000) | 2023 | 2022 |
|---|---|---|
| Depreciation | 2,220 | 2,099 |
| Change in provisions | -135 | -131 |
| Share of profit of associated companies | -17 | -62 |
| Share-based payments | 16 | 58 |
| Total | 2,085 | 1,963 |
The Group's risks can be divided into strategic, operational, damage and financial risks. Risk assessment has factored in the probability of occurrence and impact.
Strategic risks are related to the nature of the business and concern, for example, changes in the Group's operating environment and market situation; raw material availability; changes in legislation; the business in general; the reputation of the company, brands, and raw material; and large investments.
Global cyclical fluctuations affect consumer behaviour and purchasing power in all market areas where the Group operates. Any reduction of demand from the current level may also affect the Group's sales and profitability. The situation will be responded by better management of goods flows, adjusting the number of personnel in various positions, taking more intensive marketing measures, closing down unprofitable outlets, changing pricing and generally improving efficiency. Although the Group is taking active measures to manage costs, failure to manage these risks could have a significantly adverse effect on Group's business, financial position, business performance, future outlook and share prices.
The uncertainty of the military aggression initiated by Russia and all its effects on business are difficult to assess. Replacing the lost order book with other export markets may be prolonged or uncertain in the current global market situation. If the war is prolonged or expands it can have a considerable negative effect on the Group's business and financial position.
The economic uncertainty in the Group's operating environment is negatively reflected in business and consumer confidence. The short-term economic risks are further increased by fluctuations in inflation, ist slow decline and interest rates that remain high. In addition, the price of energy, some raw materials and construction costs cause economic uncertainty.
An economic downturn may also affect the value of plots, shares and properties held by the parent company. The parent company requests an external party to estimate the value of its properties every 3 to 5 years.
In terms of raw material acquisition, the goal with critical raw materials and subcontracted products is to use multiple suppliers to ensure uninterrupted operations and minimise the additional costs of raw materials and product components caused by distruptions. Honkarakenne also increases the availability of wood by using the raw material as fully as possible and taking account of its specific requirements in product development. Honkarakenne strives to manage competitive risks related to raw materials by means of continuous product development, a strong overall concept, with an efficient but responsible purchasing operation, and brand.
The majority of wood houses manufactured by Honkarakenne are sold to Finland, Asia and Europe. Should any new regulations, unexpected taxes, customs duties, fees concerning income from the local market and export restrictions, or other restrictions be imposed by states within these markets, the effects could be negative on the Group's business or financial position. The risk caused by Ukrainian war is minimized by investing in the Group's other market areas.
Construction regulations and standards, particularly concerning energy consumption and fire safety, may affect business profitability.
Regulatory risks are prepared against in the long term by ensuring that Honkarakenne's products conform with local regulations in cooperation with partner network. Honkarakenne will acquire the necessary approvals for its products in all target countries. In particular, the development is keeping a close eye on the development of and responses to changes in energy regulations.
Strategic risks are consiered to include the sustainability of the Group's governance model and reporting principles. Honkarakenne Group adheres to the Corporate Governance recommendation for companies listed on Nasdaq Helsinki. The Group believes that governance in line with the Corporate Governance recommendation, with clearly defined personal responsibilities, rights, obligations and reporting principles, the key elements and principles of which are also expressed publicly, will maintain trust in the Honkarakenne Group and its management.
Saarelainen Oy and certain private Honkarakenne Oyj shareholders within the Saarelainen family signed an amended shareholders' agreement on 17 February 2009. Parties committed to the shareholders' agreement hold 15.63% (15.56%) of all Group's parent company's shares, commanding 37.24% (36.52%) of all votes. Together, Saarelainen Oy and private shareholders of the Saarelainen family control a significant percentage of the parent company's voting rights. Concentration of ownership may in certain situations reduce the influence of other shareholders in the parent company.
Operational risks include both financial and operational risks. Financial risks concern goodwill, intangible rights, deferred tax assets, ability to pay dividends and taxation. Risks related to operational activities are related to products, distribution channels, personnel, operations, and processes.
According to the statement of financial position on 31 December 2023, the Group had EUR 1.1 (1.0) million in deferred tax assets, EUR 0.1 (0.1) million in goodwill and EUR 0.5 (0.5) million in other intangible assets. Changes in the market situation may also result in risks relating to impairment of deferred tax assets, goodwill, and intangible rights. Goodwill and other intangible assets with indefinite useful lives are not amortised on a straight-line basis but are tested annually for impairment. For this purpose, goodwill is allocated to units that create cash flows or, in the case of associated companies, goodwill is included in the acquisition cost of the associated company.
The cash flow forecasts used for goodwill impairment testing and the evaluation of deferred tax assets are based on the financial forecasts of Group's management. It is possible that the assumptions related to cash flow forecasts will not be realised, as a result of which the ensuing goodwill and deferred tax asset impairments may have an adverse effect on the Group's business performance and financial position.
Deferred tax assets in the consolidated balance sheet as of 31.12.2023 include an item of EUR 0.2 (0.1) million related to unused losses to be confirmed or confirmed for tax purposes. Deferred tax assets recognised on the basis of losses confirmed in taxation include an item of EUR 0.1 (0.1) million that has no maturity date.
In the Group's view, deferred tax assets recorded in the statement of financial position can be utilised using the future estimated taxable income for the following years based on Honkarakenne's business plans.
If the result does not develop as expected, it is possible that the tax assets will not be utilised in time and will have to be written down. This may have an adverse effect on the Group's business, business performance or financial position.
Should future tax inspections reveal any deviations resulting in tax adjustment and possible increases and fines, it could have an adverse effect on the Group's performance and financial position.
The Group operates in several market areas and is subject to many countries' tax regulations.
Product liability risks are reduced by developing products that are as safe as possible. Product liability risk is hedged at Group level with insurance.
Honkarakenne's operational risks are related to consequences of human activities, the company's internal processes or external events. Operational risks related to factory operations are minimised with systematic development, for example. The launch of new manufacturing techniques and production lines involves cost and capacity risks. Efforts are made to protect against them through
careful planning work and staff training. Dependence on key suppliers may increase the Group's material costs, the costs of machinery and their spare parts, or affect production. Operational disruptions may also be related to changes in distribution channels and logistics systems. Contractual risks are part of operational risks.
The Group's business is based on functional and reliable information systems. Risks related to these are managed by having duplicated critical information systems, by careful selection of partners and by standardising workstation models and software and information security procedures. In accordance with the nature of the Group's business, trade receivables and inventories are significant items in the statement of financial position. Credit loss risk related to trade receivables is managed through the Group's prepayment policies, guarantees and letter of credit terms.
The Group's expertise concerns business processes that include marketing, sales, design, product development, production and logistics, and necessary support functions, such as information management, finance, human resources and communications. Significant, unplanned reduction of competence or weakened ability of the personnel to renew themselves is a risk. The Group constantly strives to increase the core and other significant competencies of its staff by providing opportunities for on-the-job learning and training, and by recruiting skilled new staff if necessary.
At Group level, non-life and business interruption insurance for fixed assets is managed centrally with the aim of comprehensive insurance coverage for financial losses caused by the realisation of any risks of machine breakdowns, fires, etc. In addition, all critical production lines have an automatic sprinkler system in case of fire. Damage
risks also include occupational health and safety risks, environmental risks, and accident risks. As part of its overall risk management, the Group reviews its insurance coverage regularly. Although insurance is taken to cover any risks that are financially or otherwise sensible to cover by that means, the realisation of damage risks may nevertheless result in personal injury, property damage or business interruption.
Honkarakenne's capital consists of equity and debt. The aim of capital management is to support business by ensuring operating conditions and increasing shareholder value. The company's capital structure goal is to keep the equity ratio above 35 per cent, taking account of the economic operating environment. The company's distribution of capital to shareholders consists of dividends, repayment of capital and repurchase of treasury shares.
| MEUR | 2023 | 2022 |
|---|---|---|
| Net financial liabilities | -3.0 | -9.8 |
| Total equity | 16.5 | 18.2 |
| Total net liabilities and equity | 13.5 | 8.4 |
| Equity ratio (%) | 64.3 | 64.3 |
| Gearing (%) | -18.2 | -53.8 |
The Group's related-parties consist of subsidiaries and associated companies; the company's management and the companies in which they exercise influence, as well as the persons covered by the Saarelainen shareholders' agreement and the companies controlled by them. The management personnel considered to be related-parties comprise the Board of Directors, President & CEO, and the company's Executive Group.
| Company | Domestic | Holding and share of voting rights (%) |
|---|---|---|
| Honkarakenne Oyj (parent company) | Finland | |
| Honka Blockhaus GmbH | Germany | 100 |
| Honka Japan Inc. | Japan | 100 |
| Honkarakenne SARL | France | 100 |
| Alajärven Hirsitalot Oy | Finland | 100 |
| Honka-Kodit Oy | Finland | 100 |
Honka Management Oy merged with parent company in November.
| Company | Domicile | Holding (%) |
|---|---|---|
| Puulaakson Energia Oy | Karstula, Finland | 25.9 |
| 2023 (EUR 1,000) | Sales | Purchases | Receivables | Liabilities |
|---|---|---|---|---|
| Associated companies | 191 | 294 | 24 | - |
| Key management personnel | 4 | - | - | - |
| Other related-parties | 32 | 72 | 1 | |
| Total | 227 | 366 | 25 | - |
| 2022 (EUR 1,000) | Sales | Purchases | Receivables | Liabilities |
| Associated companies | 259 | 334 | 20 | 49 |
| Key management personnel | 372 | - | 28 | - |
| Other related-parties | 51 | 106 | 2 | - |
The pricing of goods and services in transactions with associated companies is based on market-based pricing.
No credit losses were recognised on receivables from related-parties in 2023 or 2022.
| EUR 1,000 | 2023 | 2022 |
|---|---|---|
| Salaries and other short-term employee benefits | 929 | 916 |
| Post-employment benefits | 250 | 202 |
| Share-based benefits | 39 | 58 |
| Total | 1,218 | 1,175 |
Post-employment benefits include the cost of both statutory and voluntary pension schemes. The pension schemes are defined contribution plans.
| EUR 1,000 | 2023 | 2022 |
|---|---|---|
| STATUTORY PENSIONS | ||
| President & CEO | 51 | 55 |
| Other members of the Group's Executive Group | 84 | 81 |
| Total statutory pensions | 135 | 135 |
| SUPPLEMENTARY PENSION SCHEME | ||
| President & CEO | 42 | 41 |
| Other members of the Group's Executive Group | 73 | 56 |
| Total supplementery pension scheme | 115 | 97 |
| Total post-employment benefits | 250 | 232 |
| EUR 1,000 | 2023 | 2022 |
|---|---|---|
| President & CEO | 301 | 272 |
| Other members of the Group's Executive Group | 500 | 479 |
| Members of the Board of Directors | 140 | 138 |
| Total | 941 | 889 |
| SALARIES AND REMUNERATION OF BOARD MEMBERS | ||
| Kohtamäki Timo, Chairman since 20 April 2023 | 36 | 24 |
| Saarimäki Kyösti, Chariman until 20 April 2023 | 14 | 42 |
| Saarelainen Kari | 24 | 24 |
| Ristola Maria | 24 | 24 |
| Halonen Arto | 24 | 24 |
| Antti Tiitola, member since 20 April 2023 | 18 | - |
| Total | 140 | 138 |
No specific agreement has been made regarding the retirement age of Honkarakenne's President & CEO. The basic pension is based on a defined contribution plan, in addition to which the President & CEO, like all Executive Group members, shall have a defined contribution arrangement, the expenses of which are specified under the section describing benefits after the termination of the employment relationship.
Honkarakenne Oyj's President & CEO's period of notice is 6 months, in addition to which he or she will receive compensation equivalent to 6 months' salary if the termination occurs on the company's initiative.
Honkarakenne reports in accordance with the European Securities and Markets Authority's (ESMA) recommendation on alternative key figures (sometimes also called alternative performance measures). An alternative key figure is a financial key figure other than a financial key figure specified or designated in IFRS. Following the recommendation, the term 'adjusted' is used instead of the previous term 'excluding non-recurring items'. The company classifies significant transactions regarded as affecting the comparison between reporting periods as adjustment items. These include, but are not limited to, significant restructuring costs, significant impairment losses or reversals of fixed assets, significant gains and losses on disposals of assets, or other significant income or expenses that differ from ordinary activities.
In Honkarakenne's view, the alternative key figures provide significant additional information concerning Honkarakenne to management, investors, securities market analysts and other parties on Honkarakenne's result, financial standing and cash flows, and are often used by analysts, investors and other parties. Return on equity, equity ratio, net financial liabilities and gearing are presented as supplementary key figures, as they are, in the company's view, useful indicators of Honkarakenne's ability to obtain financing and pay off its debts. In addition, gross investments and research and development expenses provide additional information on the needs related to cash flows from Honkarakenne's operating activities. The calculation formulas for the key figures are presented after the key figures.
| Economic indicators | 2023 | 2022 | 2021 | 2020 | 2019 | |
|---|---|---|---|---|---|---|
| Revenue (net sales) | EUR million | 46.3 | 73.7 | 69.7 | 52.9 | 47.6 |
| Operating profit | EUR million | -0.1 | 4.2 | 3.7 | 3.1 | 3.4 |
| % of revenue (net sales) | -0.3 | 5.7 | 5.3 | 5.8 | 7.1 | |
| Adjusted operating profit | EUR million | 0.32 | 4.17 | 3.70 | 3.40 | 3.38 |
| % of revenue (net sales) | 0.7 | 5.7 | 5.3 | 6.4 | 7.1 | |
| Profit before taxes | EUR million | -0.29 | 3.59 | 3.60 | 2.91 | 3.21 |
| % of revenue (net sales) | -0.6 | 4.9 | 5.2 | 5.5 | 6.8 | |
| Adjusted operating profit before taxes | EUR million | 0.17 | 3.59 | 3.60 | 3.24 | 3.32 |
| % of revenue (net sales) | 0.4 | 4.9 | 5.2 | 6.1 | 6.8 | |
| Return on equity | % | -1.4 | 15.8 | 21.0 | 20.7 | 20.5 |
| Return on investment | % | 0.1 | 17.1 | 18.5 | 17.4 | 17.7 |
| Equity ratio | % | 64.3 | 66.6 | 60.7 | 56.2 | 55.9 |
| Net financial liabilities | EUR million | -3.0 | -9.8 | -8.7 | -3.3 | -1.9 |
| Gearing ratio | % | -18.2 | -53.8 | -51.3 | -22.8 | -14.8 |
| Gross investment *) | EUR million | 1.8 | 1.0 | 1.3 | 4.1 | 3.2 |
| % of revenue (net sales) | 3.9 | 1.4 | 1.9 | 7.7 | 6.8 | |
| Research and development expenditure EUR million | 0.6 | 0.4 | 0.5 | 0.2 | 0.3 | |
| % of revenue (net sales) | 1.3 | 0.5 | 0.7 | 0.4 | 0.5 |
| Economic indicators | 2023 | 2022 | 2021 | 2020 | 2019 | |
|---|---|---|---|---|---|---|
| Order volume | EUR million | 18.8 | 29.0 | 52.4 | 39.8 | 27.6 |
| Staff on average | 183 | 190 | 178 | 168 | 155 | |
| KEY FIGURES PER SHARE | ||||||
| Earnings per share | EUR | -0.04 | 0.47 | 0.56 | 0.48 | 0.40 |
| Dividend per share **) | EUR | 0.00 | 0.25 | 0.00 | 0.00 | 0.00 |
| Dividend/result | % | - | 53.0 | - | - | - |
| Repayment of equity payout ratio | % | 222.0 | - | 44.4 | 37.5 | 30.2 |
| Effective dividend yield | % | 0.0 | 5.8 | - | - | - |
| Equity per share | EUR | 2.79 | 3.10 | 2.88 | 2.49 | 2.14 |
| P/E ratio | -79.5 | 9.2 | 13.0 | 8.9 | 10.6 | |
| SHARE PRICE DEVELOPMENT | ||||||
| Highest share price of the year | EUR | 4.98 | 7.72 | 8.48 | 4.43 | 4.28 |
| Lowest share price of the year | EUR | 2.85 | 3.72 | 4.11 | 2.32 | 1.98 |
| Share price at the balance sheet date | EUR | 3.22 | 4.34 | 7.32 | 4.28 | 4.20 |
| Market value of capital stock ***) | EUR million | 19.0 | 25.5 | 43.0 | 25.1 | 24.6 |
| Share exchange | VALUE OF TRADING, EUR MILLION | 2.9 | 7.7 | 25.1 | 10.5 | 5.8 |
| trading volume (1,000 pcs) | 758 | 1,483 | 3,792 | 2,918 | 2,076 | |
| percentage of total shares | 12.9 | 25.2 | 64.6 | 49.8 | 35.5 | |
| ADJUSTED NUMBER OF SHARES ****) | ||||||
| at the close of the period (1,000 pcs) | 5,890 | 5,887 | 5,877 | 5,862 | 5,847 | |
| average for the period (1,000 pcs) | 5,888 | 5,880 | 5,872 | 5,856 | 5,847 |
*) Gross investments are presented without right-of-use assets in accordance with IFRS 16 and received investment grants. In 2023 and 2022, there were no investment grants. The investment grants received in 2021 were 0.8 million euros and 2020 0.3 million euros.
**) Board's proposal
***) The price of a B-share has been used as the value of an A-share
****) The company's own shares have been deducted
| Return on equity,% | ||
|---|---|---|
| -- | -------------------- | -- |
Profit/loss for the period x 100 Total equity, average
Profit/loss before taxes x 100 Equity + financial liabilities, average
Total equity Statement of financial position total – x 100 advances received
Interest-bearing financial liabilities – cash and cash equivalents x 100 Total equity
Dividend per share x 100
Dividend payout ratio,%
Profit for the period attributable to equity holders of the parent Average number of outstanding shares
Earnings per share
Dividend per share x 100 Quotation on the balance sheet date
Equity attributable to owners of the parent company Number of shares outstanding at the close of period
Share price at the balance sheet date
Earnings per share
Net financial liabilities
Interest-bearing financial liabilities – cash and cash equivalents
| EUR 1,000 | 1 Jan–31 Dec 2023 | 1 Jan–31 Dec 2022 |
|---|---|---|
| REVENUE (NET SALES) | 46,126 | 74,993 |
| Increase (+) or decrease (-) in inventories of finished goods and work in progress |
-1,754 | -1,962 |
| Other operating income | 423 | 283 |
| Materials and services | ||
| Raw materials and consumables | ||
| Purchases during the financial year | -21,972 | -38,540 |
| External services | -8,851 | -14,273 |
| Personnel expenses | -7,934 | -10,310 |
| DEPRECIATION AND IMPAIRMENT | ||
| Depreciation and amortization according to plan | -1,710 | -1,696 |
| Other operating expenses | -4,303 | -4,250 |
| Operating profit/loss | 24 | 4,246 |
| FINANCIAL INCOME AND EXPENSES | ||
| Income from group undertakings | 0 | 331 |
| Income from participating interests | 13 | - |
| Other interest income and other financial income | 88 | 126 |
| Interest and other financial expenses | -539 | -385 |
| Profit/loss before appropriations and taxes | -414 | 4,318 |
| INCOME TAXES | ||
| Income taxes paid | -4 | -364 |
| Change in deferred tax assets | 195 | -311 |
| Net profit/loss for the financial year | -223 | 3,642 |
| Assets (EUR 1,000) | 31.12.2023 | 31.12.2022 |
|---|---|---|
| NON-CURRENT ASSETS | ||
| INTANGIBLE ASSETS | ||
| Intangible rights | 524 | 446 |
| Total intangible assets | 524 | 446 |
| TANGIBLE ASSETS | ||
| Land and water | 928 | 928 |
| Buildings and structures | 3,240 | 3,608 |
| Machinery and equipment | 4,484 | 5,138 |
| Other tangible assets | 253 | 177 |
| Advance payments and acquisitions in progress | 1,071 | 440 |
| Total tangible assets | 9,975 | 10,291 |
| INVESTMENTS | ||
| Holdings in Group companies | 318 | 354 |
| Investments in associates | 387 | 387 |
| Other receivables from Group companies | 980 | 980 |
| Total Investments | 1,684 | 1,721 |
| Total non-current assets | 12,184 | 12,458 |
| Assets (EUR 1,000) | 31.12.2023 | 31.12.2022 |
|---|---|---|
| CURRENT ASSETS | ||
| Inventories | ||
| Work in progress | 2,881 | 2,919 |
| Finished products/goods | 1,873 | 3,588 |
| Other inventories | 816 | 816 |
| Total inventories | 5,570 | 7,324 |
| RECEIVABLES | ||
| Non-current receivables | ||
| Receivables from Group companies | - | 851 |
| Loan receivables | - | 30 |
| Deferred tax assets | 195 | - |
| Total non-current receivables | 195 | 881 |
| Current receivables | ||
| Trade receivables | 1,851 | 2,484 |
| Receivables from Group companies | 559 | 551 |
| Receivables from associated companies | 48 | 20 |
| Other receivables | 624 | 39 |
| Accrued income | 1,031 | 1,210 |
| Total current receivables | 4,114 | 4,304 |
| Other financial assets | 1,000 | 7,132 |
| Cash and bank | 4,122 | 3,999 |
| Total current assets | 15,001 | 23,640 |
| TOTAL ASSETS | 27,185 | 36,098 |
| Equity and liabilities (EUR 1,000) | 31.12.2023 | 31.12.2022 |
|---|---|---|
| SHAREHOLDERS' EQUITY | ||
| Share capital | 9,898 | 9,898 |
| Share premium account | 520 | 520 |
| Invested unrestricted equity fund | 4,692 | 4,692 |
| Retained earnings | 1,226 | -28 |
| Profit/loss for the period | -223 | 3,642 |
| Total shareholders' equity | 16,113 | 18,725 |
| Obligatory provisions | ||
| Other obligatory provisions | 261 | 393 |
| LIABILITIES | ||
| Non-current liabilities | ||
| Loans from financial institutions | 400 | 800 |
| Total non-current liabilities | 400 | 800 |
| Current liabilities | ||
| Loans from financial institutions | 400 | 400 |
| Advances received | 4,614 | 10,094 |
| Trade payables | 2,160 | 2,296 |
| Amounts owed to Group companies | 57 | 57 |
| Other payables | 280 | 615 |
| Accrued liabilities | 2,900 | 2,718 |
| Total current liabilities | 10,411 | 16,180 |
| Total liabilities | 10,811 | 16,980 |
| TOTAL EQUITY AND LIABILITIES | 27,185 | 36,098 |
| EUR 1,000 | 2023 | 2022 |
|---|---|---|
| CASH FLOW FROM OPERATING ACTIVITIES | ||
| Income for the financial year | -223 | 3,642 |
| Adjustments | ||
| Depreciation and impairment | 1,710 | 1,696 |
| Other non-fee income and expenses | -132 | -106 |
| Financial income and expenses | 439 | -72 |
| Other adjustments | -225 | 686 |
| Cash flow before change in working capital | 1,568 | 5,847 |
| Change in working capital | ||
| Change in current trade receivables | 193 | 729 |
| Change in inventories | 1,754 | 2,005 |
| Change in current liabilities | -5,638 | -4,890 |
| Cash flow from operating activities before financial | ||
| items and taxes | -2,123 | 3,691 |
| Interest paid and payments on other operating expenses |
-154 | -208 |
| Dividends received from operations | 0 | 344 |
| Interest received from operations | 101 | 24 |
| Taxes paid | -314 | 313 |
| Cash flow from operating activities | -2,489 | 4,164 |
| Change in cash | -6,009 | 276 |
|---|---|---|
| Cash and cash equivalents at the beginning of the financial year |
11,131 | 10,855 |
| Cash and cash equivalents at the end of the financial year |
5,122 | 11,131 |
| Change in cash and cash equivalents | -6,009 | 276 |
| Impact of merger | 230 | - |
| Impact of exchange rate changes on cash and cash equivalents |
-361 | -177 |
| Change in cash and cash equivalents | -5,879 | 453 |
| Cash flow from financing activities | -1,944 | -2,583 |
| Repayment of capital (-) | - | -1,542 |
| Repayment of dividend | -1,544 | |
| Repayment of long-term loans | -400 | -1,041 |
| CASH FLOW FROM FINANCING ACTIVITIES | ||
| Cash flow from investing activities | -1,445 | -1,128 |
| Repayment of loans granted | 30 | - |
| Disposal of tangible and intangible assets | 8 | - |
| Investments grants received | ||
| Investments in tangible and intangible assets | -1,484 | -1,128 |
| CASH FLOW FROM INVESTING ACTIVITIES | ||
| EUR 1,000 | 2023 | 2022 |
Honka Management has merged to the parent company at 30.11.2023. The reasons for the merger are to reorganise the Group structure, reduce unnecessary administration, improve operational efficiency and achive cost savings.
Fixed assets have been capitalised at direct acquisition cost. Buildings and structures include revaluations made in accordance with the previously valid Accounting Act, and the grounds for these revaluations are assessed annually.
Planned depreciation has been calculated on a straight-line basis using the useful economic life estimated based on the acquisition cost of fixed assets. In the category 'Machinery and equipment', the useful life of new factory production lines is 8 years.
| Intangible rights | 5–10 years |
|---|---|
| Goodwill | 5 years |
| Buildings and structures | 10–30 years |
| Machinery and equipment | 3–12 years |
| Other tangible assets | 3–10 years. |
The value of items included in inventories has been determined with the FIFO method at moving average price or at the probable replacement or disposal price, whichever is lower.
Sales income from primary business activities less discounts granted and VAT are recognised in the revenue. Sales income is recognised based on deliveries.
The company's derivatives include forward exchange contracts and interest rate swaps. Forward exchange contracts are used to hedge against predicted cash flow changes in foreign-currency sales. Forward exchange contracts are used to hedge against 0–60% of the company's predicted foreign-currency cash flows for the next 12 months.
Interest rate swaps are used to change the interest rates of the company's MFI loans from variable to fixed rates. Interest rate swaps are defined with a maximum original maturity of 10 years, and interest rates are redefined at three to six month intervals.
Derivatives are measured at fair value in the financial statements. Changes in fair value are recognised through profit or loss in other financial income and expenses. At the balance sheet date, the company had no valid derivative contracts.
The employees' statutory pension cover has been taken care of via pension insurance companies.
Deferred tax liabilities or assets are calculated for temporary differences between taxation and the financial statements using the tax rate for the following years established at the balance sheet date. The balance sheet includes the deferred tax liabilities in their entirety and the deferred tax assets at their estimated value.
Foreign-currency receivables and liabilities have been translated into euros using the exchange rate valid at the balance sheet date.
| EUR 1,000 | 2023 | 2022 |
|---|---|---|
| Finland | 31,759 | 54,795 |
| Exports | 14,367 | 20,198 |
| Total | 46,126 | 74,993 |
| EUR 1,000 | 2023 | 2022 |
|---|---|---|
| Rental income | 42 | 32 |
| Funds received | 77 | 64 |
| Other operating income | 305 | 187 |
| Total | 423 | 283 |
| Personnel expenses (EUR 1,000) | 2023 | 2022 |
|---|---|---|
| Wages and salaries | 6,385 | 8,404 |
| Pension costs | 1,320 | 1,499 |
| Social costs | 229 | 406 |
| Total | 7,934 | 10,310 |
| AVERAGE NUMBER OF PERSONNEL | ||
| White-collar employees | 112 | 121 |
| Blue-collar employees | 65 | 65 |
| Total | 177 | 186 |
| AVERAGE NUMBER OF PERSONNEL IN PERSON-YEARS | ||
| White-collar employees | 109 | 118 |
| Blue-collar employees | 60 | 62 |
| Total | 169 | 179 |
| Management salaries and fees (TEUR) | 2023 | 2022 |
|---|---|---|
| President & CEO and Board members | 441 | 410 |
| President & CEO's salaries and remuneration | 301 | 272 |
| SALARIES AND REMUNERATION OF BOARD MEMBERS | ||
| Saarimäki Kyösti, Chairman of the Board until 20 April 2023 | 14 | 42 |
| Kohtamäki Timo, Chairman of the Board since 20 April 2023 | 36 | 24 |
| Saarelainen Kari | 24 | 24 |
| Ristola Maria | 24 | 24 |
| Halonen Arto | 24 | 24 |
| Antti Tiitola member since April 20 2023 | 18 | - |
| Total | 140 | 138 |
| Transactions with related parties (EUR 1,000) | 2023 | 2022 |
|---|---|---|
| Purchases from related parties | 366 | 440 |
| Sales to related parties | 227 | 682 |
| Receivables from related parties | 25 | 49 |
| Liabilities to related parties | - | 49 |
The company's related parties consist of subsidiaries and associated companies; the company's management and any companies in which they exercise influence; and those involved in the Saarelainen shareholder agreement and any companies controlled by them. The management personnel considered to be related parties comprise the Board of Directors, President & CEO, and the company's Executive Group.
Related-party transactions are ordinary market-based transactions.
| Depreciation and amortisation according to plan (EUR 1,000) | 2023 | 2022 |
|---|---|---|
| Intangible rights | 234 | 197 |
| Buildings and structures | 376 | 394 |
| Machinery and equipment | 1,067 | 1,083 |
| Other tangible assets | 33 | 22 |
| Total depreciation | 1,710 | 1,696 |
| EUR 1,000 | 2023 | 2022 |
|---|---|---|
| Audit fees | 65 | 58 |
| Other fees | 4 | - |
| Total | 69 | 58 |
| EUR 1,000 | 2023 | 2022 |
|---|---|---|
| Dividends from Group companies | - | 331 |
| Dividends from others | 0 | 0 |
| Dividends from associates | 13 | 13 |
| Interest income | 82 | 20 |
| Interest expenses | -65 | -75 |
| Other financial expenses | -9 | -0 |
| Exchange rate gains/losses | -460 | -217 |
| Total | -439 | 72 |
| EUR 1,000 Taxes paid |
2023 -4 |
2022 -364 |
|---|---|---|
| Change in deferred tax assets | 195 | -311 |
| Total | 191 | -675 |
| EUR 1,000 | Intangible rights | Other long-term expenditure | Intangible assets total |
|---|---|---|---|
| Acquisition cost 1 Jan | 6,003 | 2,091 | 8,094 |
| Increase | 312 | - | 312 |
| Decrease | - | - | - |
| Transfers between items | - | - | - |
| Acquisition cost 31 Dec | 6,315 | 2,091 | 8,406 |
| Accumulated depreciation 1 Jan | -5,557 | -2,091 | -7,647 |
| Accumulated depreciation on deductions | - | - | - |
| Depreciation for the financial year | -234 | - | -234 |
| Impairments | - | - | - |
| Accumulated depreciation 31 Dec | - 5,791 | -2,091 | -7,882 |
| Carrying amount 31 Dec | 524 | - | 524 |
| EUR 1,000 | Intangible rights | Other long-term expenditure | Intangible assets total |
|---|---|---|---|
| Acquisition cost 1 Jan | 5,849 | 2,091 | 7,940 |
| Increase | 154 | - | 154 |
| Decrease | - | - | - |
| Transfers between items | - | - | - |
| Acquisition cost 31 Dec | 6,003 | 2,091 | 8,094 |
| Accumulated depreciation 1 Jan | -5,360 | -2,091 | -7,451 |
| Accumulated depreciation on deductions | - | - | - |
| Depreciation for the financial year | -197 | - | -197 |
| Impairments | - | - | - |
| Accumulated depreciation 31 Dec | -5,557 | -2,091 | -7,647 |
| Carrying amount 31 Dec | 446 | - | 446 |
| EUR 1,000 | Land and water | Buildings and structures | Machinery and equipment | Other tangible assets | Advance payments and acquisitions in progress |
Tangible assets total |
|---|---|---|---|---|---|---|
| Acquisition cost 1 Jan | 904 | 16,632 | 28,402 | 2,857 | 440 | 49,236 |
| Increase | - | 8 | 412 | 109 | 631 | 1,160 |
| Decrease | - | - | - | - | - | - |
| Transfers between items | - | - | - | - | - | |
| Acquisition cost 31 Dec | 904 | 16,640 | 28,815 | 2,966 | 1,071 | 50,396 |
| Accumulated depreciation 1 Jan | - | -13,494 | -23,264 | -2,681 | - | -39,438 |
| Accumulated depreciation on deductions | - | - | - | - | - | - |
| Depreciation for the financial year | - | -376 | -1,067 | -33 | - | -1,476 |
| Impairments | - | - | - | - | - | - |
| Accumulated depreciation 31 Dec | - | -13,870 | 24,331 | -2,713 | - | -40,914 |
| Revaluations | 24 | 470 | - | - | - | 494 |
| Carrying amount 31 Dec | 928 | 3,240 | 4,484 | 253 | 1,071 | 9,975 |
| EUR 1,000 | Land and water | Buildings and structures | Machinery and equipment | Other tangible assets | Advance payments and acquisitions in progress |
Tangible assets total |
|---|---|---|---|---|---|---|
| Acquisition cost 1 Jan | 904 | 16,528 | 28,252 | 2,714 | - | 48,398 |
| Increase | - | 104 | 151 | 143 | 440 | 838 |
| Decrease | - | - | - | - | - | - |
| Transfers between items | - | - | - | - | - | - |
| Acquisition cost 31 Dec | 904 | 16,632 | 28,402 | 2,857 | 440 | 49,236 |
| Accumulated depreciation 1 Jan | - | -13,099 | -22,181 | -2,659 | - | -37,938 |
| Accumulated depreciation on deductions | - | - | - | - | - | - |
| Depreciation for the financial year | - | -394 | -1,083 | -22 | - | -1,499 |
| Impairments | - | - | - | - | - | - |
| Accumulated depreciation 31 Dec | - | 13,494 | -23,264 | -2,681 | - | -39,438 |
| Revaluations | 24 | 470 | - | - | - | 494 |
| Carrying amount 31 Dec | 928 | 3,608 | 5,138 | 177 | 440 | 10,291 |
The recoverable amount is determined at fair value less the cost of selling, and it is based on the management's estimate.
| TEUR | Holdings in Group companies | Investments in associated companies |
Other receivables from Group companies |
Total investments |
|---|---|---|---|---|
| Acquisition cost 1 Jan | 354 | 387 | 980 | 1,721 |
| Increase | - | - | - | - |
| Decrease | -36 | - | - | -36 |
| Impairment reversals | - | - | - | - |
| Acquisition cost 31 Dec | 318 | 387 | 980 | 1,684 |
| Carrying amount 31 Dec | 318 | 387 | 980 | 1,684 |
On 31 December 2023, the parent company had a long-term capital loan receivable of EUR 980 thousand from the German subsidiary, which has been valued at acquisition cost.
Management expects the German subsidiary to grow over the coming years. The German subsidiary's balance sheet figures have been valued on the basis of future cash flows as per its business plan.
Honka Management Oy has merged to the parent company at 30.11.2023.
Investments 2022
| TEUR | Holdings in Group companies | Investments in associated companies |
Other receivables from Group companies |
Total investments |
|---|---|---|---|---|
| Acquisition cost 1 Jan | 354 | 387 | 980 | 1 721 |
| Increase | - | - | - | - |
| Decrease | - | - | - | - |
| Impairment reversals | - | - | - | - |
| Acquisition cost 31 Dec | 354 | 387 | 980 | 1 721 |
| Carrying amount 31 Dec | 354 | 387 | 980 | 1 721 |
On 31 December 2022, the parent company had a long-term capital loan receivable of EUR 980 thousand from the German subsidiary, which has been valued at acquisition cost. The German company's equity at the balance sheet date on 31 December 2022 is EUR 292 thousand negative without the capital loan.
Management expects the German subsidiary to grow over the coming years. The German subsidiary's balance sheet figures have been valued on the basis of future cash flows as per its business plan.
| Group companies | Parent company's and Group's holding and voting rights |
|---|---|
| Honka Blockhaus GmbH, Germany | 100 % |
| Honka Japan Inc., Japan | 100 % |
| Honkarakenne SARL, France | 100 % |
| Alajärven Hirsitalot Oy, Alajärvi, Finland | 100 % |
| Honka-Kodit Oy, Tuusula, Finland | 100 % |
| Associated companies | Parent company's and Group's holding and voting rights |
|---|---|
| Puulaakson Energia Oy, Karstula, | |
| Finland | 25,9 % |
Other inventories comprise EUR 84 (84) thousand in timeshares and EUR 733 (775) thousand in land areas. Other inventories have been valued at either their acquisition cost or fair market value, whichever is lower.
| Receivables maturing in more than one year (EUR 1,000) | 2023 | 2022 |
|---|---|---|
| Loan receivables | - | 30 |
| Loan receivables from a former management company | - | 851 |
| Total | - | 881 |
Key items for which no deferred tax assets have been recognised
| EUR 1,000 | 2023 | 2022 |
|---|---|---|
| Land area write-offs in 2010-2017 | 637 | 637 |
| Deferred tax on shelf depreciation | 669 | 713 |
| Total | 1,305 | 1,350 |
| (EUR 1,000) | 2023 | 2022 |
|---|---|---|
| Trade receivables | 559 | 447 |
| Other receivables | 13 | 105 |
| Total | 572 | 551 |
| 148 | |
|---|---|
| 767 | 1,062 |
| 2023 | 2022 |
| 264 |
| EUR 1,000 | 2023 | 2022 |
|---|---|---|
| Other securities: financial securities | 1,000 | 7,132 |
| Total | 1,000 | 7,132 |
| EUR 1,000 | 2023 | 2022 |
|---|---|---|
| Share capital 1 Jan | 9,898 | 9,898 |
| Share capital 31 Dec | 9,989 | 9,898 |
| Share premium account 1 Jan | 520 | 520 |
| Share premium account 31 Dec | 520 | 520 |
| Total restricted equity | 10,418 | 10,418 |
| Invested unrestricted equity fund 1 Jan | 4,692 | 6,235 |
| Repayment of capital | - | -1,542 |
| Invested unrestricted equity fund 31 Dec | 4,692 | 4,692 |
| Profit/loss from previous financial years 1 Jan | 3,642 | -28 |
| Repayment of dividend | -1,544 | |
| Shares transferred in the merger | -844 | |
| Profit/loss for the financial year | -233 | 3,642 |
| Profits/loss 31 Dec | 1,002 | 3,614 |
| Unrestricted equity | 5,695 | 8,307 |
| Total equity | 16,113 | 18,725 |
Calculation on distributable equity 31 Dec
| EUR 1,000 | 2023 | 2022 |
|---|---|---|
| Profit from previous financial years | 1,226 | -28 |
| Profit/loss for the financial year | -233 | 3,642 |
| Invested unrestricted equity fund | 4,692 | 4,692 |
| Total | 5,695 | 8,307 |
| EUR 1,000 | 2023 | 2022 |
|---|---|---|
| Profit from previous financial years | 1,226 | -28 |
| Profit/loss for the financial year | -223 | 3,642 |
| Total | 1,002 | 3,614 |
The parent company's shares are divided into the following share classes:
| votes | pcs | |
|---|---|---|
| Total A-shares (20 votes/share) | 6,001,920 | 300,096 |
| Total B-shares (1 vote/share) | 5,911,323 | 5,911,323 |
| Total A- and B-shares | 11,913,243 | 6,211,419 |
| EUR 1,000 | 2023 | 2022 |
|---|---|---|
| Warranty provision | 251 | 343 |
| Provisions due to disputes | 10 | 50 |
| Total | 261 | 393 |
The company gives a warranty on its products. During the warranty period, any product defects are repaired at the company's expense or the customer is provided with an equivalent new product. Warranty provisions are based on the number of defective products in earlier years.
The company had no significant ongoing disputes at 31 Dec 2023.
Other provisions include a loss provision for a construction project.
| Liabilities to Group companies (EUR 1,000) | 2023 | 2022 |
|---|---|---|
| Other liabilities | 57 | 57 |
| Total | 57 | 57 |
| Material items in accrued liabilities (EUR 1,000) | 2023 | 2022 |
|---|---|---|
| Salaries and compensation, including personnel expenses | 1,503 | 1,826 |
| Sales commissions | 248 | - |
| Accrued purchase invoices | 136 | 32 |
| Accrued after-costs | 725 | 775 |
| Other accrued expenses | 288 | 85 |
| Total | 2,900 | 2,718 |
Debts and liabilities secured with real estate mortgages, business mortgages and pledged share
| EUR 1,000 | 2023 | 2022 |
|---|---|---|
| Loans from financial institutions | 800 | 1,200 |
| Total | 800 | 1,200 |
Collateral provided for the above
| Total | 6,000 | 6,000 |
|---|---|---|
| Real estate mortgages | 6,000 | 6,000 |
| EUR 1,000 | 2023 | 2022 |
| EUR 1,000 | 2023 | 2022 |
|---|---|---|
| On own behalf | 2,062 | 2,970 |
| Total | 2,062 | 2,970 |
| EUR 1,000 | 2023 | 2022 |
|---|---|---|
| Payable in the next financial year | 116 | 116 |
| Payable later | 95 | 103 |
| Total | 211 | 218 |
Translation from Finnish original
The Board of Directors proposes to the Annual General Meeting that no dividend be paid for the financial year that ended on 31 December 2023. The Annual General Meeting also proposes that a repayment of capital of EUR 0.09 per share be distributed from the invested unrestricted equity fund. No capital repayment is paid on shares held by the parent company.
Tuusula 13th February 2024
| Timo Kohtamäki | Antti Tiitola | Kari Saarelainen |
|---|---|---|
| Chairman of the Board | Member of the Board | Member of the Board |
| Arto Halonen | Maria Ristola | Marko Saarelainen |
| Member of the Board | Member of the Board | President & CEO |
| The Auditors' Note A report on the audit performed has been issued today. |
Kuopio 13th February 2024
Ernst & Young Oy Authorized Public Accountant Firm
Elina Laitinen Authorized Public Accountant
(Translation of the Finnish original)
To the Annual General Meeting of Honkarakenne Oyj
We have audited the financial statements of Honkarakenne Oyj (business identity code 0131529-0) for the year ended on December 31st, 2023. The financial statements comprise the consolidated balance sheet, statement of comprehensive income, statement of changes in equity, statement of cash flows and notes, including material accounting policy information, as well as the parent company's balance sheet, income statement, statement of cash flows and notes.
Our opinion is consistent with the additional report submitted to the Board of Directors.
We conducted our audit in accordance with good auditing practice in Finland. Our responsibilities under good auditing practice are further described in the Auditor's Responsibilities for the Audit of Financial Statements section of our report.
We are independent of the parent company and of the group companies in accordance with the ethical requirements that are applicable in Finland and are relevant to our audit, and we have fulfilled our other ethical responsibilities in accordance with these requirements.
In our best knowledge and understanding, the non-audit services that we have provided to the parent company and group companies are in compliance with laws and regulations applicable in Finland regarding these services, and we have not provided any prohibited non-audit services referred to in Article 5(1) of regulation (EU) 537/2014. The non-audit services that we have provided have been disclosed in note 7 to the consolidated financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the current period. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
We have fulfilled the responsibilities described in the Auditor's responsibilities for the audit of the financial statements section of our report, including in relation to these matters. Accordingly, our audit included the performance of procedures designed to respond to our assessment of the risks of material misstatement of the financial statements. The results of our audit procedures, including the procedures performed to address the matters below, provide the basis for our audit opinion on the accompanying financial statements.
We have also addressed the risk of management override of internal controls. This includes consideration of whether there was evidence of management bias that represented a risk of material misstatement due to fraud.
| We addressed the risk of material misstatement relating to reve Revenue recognition nue recognition by performing e.g. the following audit procedures: We refer to the Group´s accounting policies concerning revenue Auditor's Responsibilities for the Audit of the Financial y We assessed the application of group's accounting policies recognition and note 2 Statements over revenue recognition and compared the group's The Group manufactures and sells log house packages, pro accounting policies relating to revenue recognition with vides log house construction services and sells log billets and applicable accounting standards. by-products arisen during the manufacturing process. Revenue y We tested the revenue recognized. Our testing included from sales of products and services is recognized when the con tracing the information to agreements and consignment trol associated with the goods or services have been transferred notes and/or to acceptance documents as well as to payment to the buyer either over time or at a point in time. documents. As revenue is a Key Performance Indicator in the Group, there y We tested the cutoff of revenue with tests of details on a could exist an incentive to recognize revenue before control transaction level both sides of the balance sheet date. has been transferred. Revenue recognition is a significant risk of y We performed substantive analytical procedures over ers taken on the basis of the financial statements. material misstatement referred to in EU regulation No 537/2014, |
Key Audit Matter | How our audit addressed the Key Audit Matter | there is an intention to liquidate the parent company or the group |
|---|---|---|---|
| y We assessed the appropriateness of the group's disclosures in respect of revenues. cism throughout the audit. We also: |
point (c) of Article 10 (2) due to risk of timely revenue recognition. | revenue and | or cease operations, or there is no realistic alternative but to do so. Our objectives are to obtain reasonable assurance on whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assur ance, but is not a guarantee that an audit conducted in accordance with good auditing practice will always detect a material misstate ment when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in aggregate, they could reasonably be expected to influence the economic decisions of us As part of an audit in accordance with good auditing practice, we exercise professional judgment and maintain professional skepti |
The Board of Directors and the Managing Director are responsible for the preparation of consolidated financial statements that give a true and fair view in accordance with International Financial Reporting Standards (IFRS) as adopted by the EU, and of financial statements that give a true and fair view in accordance with the laws and regulations governing the preparation of financial statements in Finland and comply with statutory requirements. The Board of Directors and the Managing Director are also responsible for such internal control as they determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the Board of Directors and the Managing Director are responsible for assessing the parent company's and the group's ability to continue as going concern, disclosing, as applicable, matters relating to going concern and using the going concern basis of accounting. The financial statements are prepared using the going concern basis of accounting unless
We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence and communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.
From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor's report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.
We were first appointed as auditors by the Annual General Meeting on April 13th, 2018, and our appointment represents a total period of uninterrupted engagement of six years.
The Board of Directors and the Managing Director are responsible for the other information. The other information comprises the report of the Board of Directors.
Our opinion on the financial statements does not cover the other information.
In connection with our audit of the financial statements, our responsibility is to read the other information identified above and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated. With respect to report of the Board of Directors, our responsibility also includes considering whether the report of the Board of Directors has been prepared in accordance with the applicable laws and regulations.
In our opinion, the information in the report of the Board of Directors is consistent with the information in the financial statements and the report of the Board of Directors has been prepared in accordance with the applicable laws and regulations.
If, based on the work we have performed on the other information that we obtained prior to the date of this auditor's report, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.
Ernst & Young Oy
Authorized Public Accountant Firm
Authorized Public Accountant
HONKARAKENNE Board of directors' report and financial statements 2023
76
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