Annual / Quarterly Financial Statement • Feb 16, 2024
Annual / Quarterly Financial Statement
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Reka Industrial Plc
Reka Industrial Plc | Financial Statement Release 2023 1
Year 2023 was a time for renewal for Reka Industrial. The corporate sale of Reka Cables Ltd to Nexans Group was completed at the end of April and during the year Reka Industrial's Board and management concentrated on strategy work, which was launched as a result of the change. Reka Industrial's sole industrial segment to continue is Reka Rubber, which is one of the leading manufacturers of industrial rubber products in Northern Europe. Rubber
segment invested in improving productivity and supporting future growth during the year.
The sale of shares of Reka Cables Ltd, agreement signed in November 2022 with Nexans Group, was completed at the end of April 2023. As a result of the corporate sale, a EUR 31.0 million sales profit was recorded in other operating income. After the corporate sale, Reka Industrial paid off its Green Bond and bank loans in Finland.
With the corporate sale, active investment work began by mapping and finding suitable investment products. During the ongoing strategy process, Reka Industrial's funds are mainly invested in low-risk investments and short-term deposits. On 31 December 2023 Group's cash and cash equivalents were in total EUR 38.5 million.
In 2023, Rubber segment's turnover remained stable and was EUR 30.6 million (30.6). EBITDA was EUR 1.2 million (2.6). Several key recruitments were made in the Rubber segment during the year, especially in sales, product development and procurement to support future growth. Profitability was affected by the increase in labor, material, component and service costs and the delay in transferring the cost increases to customer prices.
In order to support growth and productivity of the Polish production unit, the Rubber segment initiated a transfer of mold product manufacturing made with injection technology from Poland to Finland at the end of 2022. The transfer was completed in the spring 2023 and the Polish production unit concentrates on the manufacturing of black hoses and silicone hoses. To increase the capacity of manufacturing black hoses the Rubber segment ordered a new extrusion line to the production unit in Poland. The price of the new line is EUR 1.3 million and the line is expected to be in production use by the end of July 2024. In addition to the extrusion line investment there are plans for smaller investments and efficiency measures both in Finland and Poland to support growth and productivity.
In 2023, Rubber segment invested in growth and clarifying the roles of factories created good conditions for the development of productivity and capacity growth. Investments and recruiting will continue also during the current year. However, the general economic situation and uncertainty are reflected in the order volumes and shortened order lead times oh the Rubber segment's customers.
The Rubber segment has a strong position in its selected market segments and the delivery capability of its factories is good.
The company's strategy process is ongoing.
The company's strategy process continues. During the strategy process company's funds are mainly invested in low-risk investments and short-term deposits. In 2024, Rubber segment emphasizes increasing productivity and investing in future growth.
| 2023 | 2022 | 2021 | |
|---|---|---|---|
| Turnover, EUR million | 91.6 | 202.9 | 158.1 |
| EBITDA, EUR million | 37.6 | 15.2 | 11.3 |
| Operating profit, % | 39.7 | 5.0 | 3.5 |
| Result for the period, EUR million | 34.5 | 9.0 | 1.0 |
| IAS 19 corrected ROI, % | 64.5 | 23.5 | 15.4 |
| IAS 19 corrected Return on Equity, % | 76.8 | 32.3 | 11.5 |
| IAS 19 corrected Gearing, % | -62.2 | 125.2 | 190.0 |
| IAS 19 corrected Equity ratio, % | 80.4 | 22.8 | 21.4 |
| Earnings per share | 5.77 | 1.50 | 0.17 |
| Gross investments, EUR million | 1.6 | 5.8 | 4.1 |
The turnover and result of Reka Cables for January – April 2023 is included in the financial figures of Reka Industrial Group. In the figures for the comparison years 2022 and 2021, Reka Cables is included for the entire accounting periods.
The Reka Industrial Group (Reka Industrial) uses alternative key figures in its financial reporting in accordance with the guidelines of the European Securities and Markets Authority (ESMA).
According to Reka Industrial's interpretation, alternative key figures in accordance with ESMA's guidelines include EBITDA, Operating profit, IAS 19 corrected Return on Equity (ROE), IAS 19 corrected Gearing, IAS 19 corrected Equity ratio, IAS 19 corrected Return on Investment (ROI) and Gross Investments.
Reka Industrial publishes key figures without IAS 19 defined benefit pension liabilities, because changes in the discount rate affect IAS 19 figures.
Reka Industrial presents alternative key figures so that the effects of IAS 19 recognition of defined benefit pension liabilities are eliminated from the result and balance sheet items of the key figures. The entries of the IAS 19 defined benefit plan in the income statement are presented below the operating result as a separate item before the share of the result of associated companies. In this way, the development of Reka Industrial's operational business can be better monitored.
The Financial Statement release is unaudited.
With the corporate sale of Reka Cables, Reka Industrial's industrial business consists of Reka Rubber Ltd's business and there is one segment, the Rubber segment.
In 2023, the Rubber segment's turnover was EUR 30.6 million (30.6). EBITDA was EUR 1.2 million (2.6). The Rubber segment has made several key person recruitments in order to support growth in the future. Key recruitments were made especially in sales, product development and procurement.
In order to support growth and to support the productivity of the Polish production unit, the Rubber segment initiated a transfer of mold product manufacturing made with injection technology from Poland to Finland at the end of 2022. The transfer was completed in the spring 2023 and the Polish production unit concentrates on the manufacturing of black hoses and silicone hoses. To increase the capacity of manufacturing black hoses the Rubber segment ordered a new extrusion line to the production unit in Poland. The price of the new line is EUR 1.3 million and the line is expected to be in production use by the end of July 2024. In addition to the extrusion line investment, there are plans for smaller investments and efficiency measures both in Finland and Poland to support the growth and productivity increases.
Inflation was reflected in higher costs for labour, materials, components and services. There is a clear delay in transferring increased costs to customer prices.
Reka Industrial announced on 10 November 2022 that it had signed an agreement with the Nexans Group on the sale of shares in Reka Cables Ltd. With the agreement, Reka Industrial's Cable segment ended and Reka Cables Ltd and its subsidiaries were classified as a discontinued operations.
The corporate sale was completed at the end of April 2023 and therefore the January - April financial figures of Reka Cables Ltd have been included in the Group figures.
In the Financial Statements, Reka Industrial presents the income statement separately for both continuing and discontinued operations and for the entire Group.
January – June 2023 the turnover of Reka Cables was EUR 61.0 million and EBITDA was EUR 5.9 million.
The Balance sheet total at the end of the financial year was EUR 71.6 million. On 31 December 2022, the Balance sheet totalled EUR 87.1 million.
At the end of the financial year 2023 Group's cash and cash equivalents totalled EUR 38.5 million (0.8). Other cash equivalents are invested mainly in low-risk investments and short-term deposits.
At the end of the financial year Group's interest-bearing liabilities were EUR 6.0 million (27.6), of which other than finance lease liabilities were EUR 0.7 million (17.5).
| EUR million | Continuing operations |
Discon tinued op erations |
Total |
|---|---|---|---|
| Lease liabilities | 5.3 | 0.0 | 5.3 |
| Other interest-bearing liabilities | 0.7 | 0.0 | 0.7 |
| Total | 6.0 | 0.0 | 6.0 |
| 2022: EUR million |
Continu ing opera tions |
Discontin ued oper ations |
Total |
|---|---|---|---|
| Lease liabilities | 5.6 | 4.5 | 10.1 |
| Other interest-bearing liabilities | 11.9 | 5.6 | 17.5 |
| Total | 17.5 | 10.1 | 27.6 |
The EUR 10 million Green Bond issued by Reka Industrial Plc in 2019 was denominated in euros and taken into account in liabilities of continuing operations. The original maturity date of the bond was 6 December 2024. Due to the sale of Reka Cables Ltd the security of the Green Bond given by Reka Cables Ltd was substituted and released by giving an account pledge by Reka Industrial Plc. Reka Industrial Plc also notified of the early redemption of the Green Bond. The redemption was carried out according to the terms and conditions of the Green Bond in May 2023. On the redemption date Reka Industrial Plc paid the redemption price equal to 101.25 per cent of outstanding nominal amount of the notes together with the accrued but unpaid interest in accordance with the terms and conditions of the Green Bond. Reka Industrial Plc used existing liquidity reserves to finance the redemption.
The interest-bearing liabilities of continuing operations are presented separately in the Balance sheet. Interest-bearing liabilities of discontinued operations are included in liabilities related to non-current assets held for sale in the Balance sheet on 31 December 2022.
Some of the interest-bearing liabilities involve financial covenants. All covenants were fulfilled at the time of the financial statements. More information about the financial covenants is provided in the notes.
Since 2016, Reka Rubber has been part of the chemical industry's Responsible Care programme, through which the company is committed to sustainability in its industry. The aim of the Responsible Care programme is to develop activities and achieve excellent level in environmental, safety and health issues by working together with different groups and investing in transparent and open interaction.
Reka Rubber assesses its level of sustainability through the EcoVadis system. EcoVadis is an independent and international sustainability assessment system, in which a company's labour practices, ethics, environmental responsibility and sustainable supply chain are being reviewed. In 2022, Reka Rubber achieved bronze level rating.
The sustainability work is also supported by an ISO 14001 certified environmental management system and ISO 9001 certified quality management system. Reka Rubber has the required environmental permits.
At the end of 2019 Reka Industrial started transformation to increase energy efficiency and reduce CO2 emissions in the Cable segment. Financing was implemented with a Green Bond and the measures targeted Reka Cables. As a result of the project Reka Cables became first carbon neutral cable producer (scope 1 and 2) as of 1 November 2021 and by the end of 2022 Reka Cables' energy efficiency had improved 7.3 percent since the comparison year 2017.
For Reka Rubber, climate actions means reducing emissions and improving energy efficiency in the company's own operations. Reka Rubber has calculated the carbon footprint of its own operations, which it strives to reduce by consuming emission-free electricity and improving energy efficiency of its own operations. At the same time, the aim is to influence factors affecting air quality.
Climate and environment related issues require investments and development efforts to reduce own carbon footprint as well as to meet the growing demands of customers.
Reka Rubber's factories use CO2 -free electricity and solar panels have been installed at the factory in Aura. The solar panels produce approximately 90.000 kilowatt hours energy in one year. At the Polish factory, the lightning has been replaced by LED lights. The last installations of LED lights at the Aura factory will be completed in 2024.
Reka Rubber is unable to influence to the CO2 percentage of the gas used at the factory in Poland, but the oil used in steam production at the Aura factory will be replaced. Survey of alternatives is underway. In addition, actions to improve energy efficiency have been made and several different projects are ongoing.
Rubber segment strives to reduce the amount of rubber waste in proportion to production tonnes through material selection, process development and technical supports.
For Reka Industrial, sustainability means not only climate and environmental perspective, but also responsibility for the company's personnel. The company takes care of its personnel's working conditions, employees' rights and respect for human rights. Reka Industrial wants to be a safe and efficient work environment, where personnel's social, physical and mental wellbeing is taken into account. The company also wants to develop the competence of its personnel and encourages and commits them to excellent performance. Also business partners are required to have the same values and actions.
Part of the Group's financing is tied to a reference interest rate and part to a fixed interest rate. The rise in reference interest rates increased the total interest costs both for the financing of trade receivables and for traditional loans. Reference rates are actively monitored and updated in the Group's forecasts and plans.
Inflation was reflected in higher costs for labour, materials, components and services. The increase in the costs and the high level of inflation in Poland accelerated some production arrangements and efficiency measures. Changes and efficiency measures are also being carried out at the factories in Finland. There is still a delay in transferring the costs into customer prices.
Reka Industrial sold the shares of Reka Cables Ltd to Nexans Group on 26 April 2023. Impacts of the sale are described in more detail in the note Discontinued operations. There were no other material corporate sales, acquisitionsor divestments during the financial year.
Reka Industrial Corporation is the parent company of the Group, whose actual business company is Reka Rubber Ltd. Reka Industrial Plc is domiciled in Hyvinkää.
On 31 December 2023, Reka Industrial had 10,405 shareholders (10,322). The largest shareholder, Reka Ltd, held 50.2 percent (50.2) of the shares and 65.4 percent (65.4) of the votes. Reka Industrial Plc is therefore part of the Reka Group. Reka Ltd is domiciled in Juupajoki.
On 31 December 2023, the combined holding of the ten largest shareholders was 58.6 percent (60.14) of the shares and 72.6 percent (72.3) of the votes.
On 31 December 2023, the members of the Board, the Managing Director and CFO owned a total of 3,280,994 (2,971,834) Reka Industrial Plc's B shares directly and through their controlled entities.
Reka Industrial's financial risks include currency, interest rate, commodity, liquidity, credit, and investment risks. Financial risks and the related protection measures are described in more detail in the notes to the Financial Statements. The company's future risk factors are related to the investments activities and the development of its business segments.
The financial situation in the euro area and political uncertainties may have an effect on the purchase amounts and the launch of new projects of the customers in the Rubber segment. The availability of employees, employee turnover and absences may pose challenges to the growth of operations. Risks can be mitigated by developing employer image, active recruiting and taking care of the health and safety of the employees.
The increase in the price and availability of energy may directly and indirectly affect the market.
In 2023, the Group invested a total of EUR 0.9 million (EUR 1.5) in research and product development. Of the investments EUR 0.5 million was allocated to the continuing operations and EUR 0.4 million to the discontinued operations. During the financial period, a total of EUR 0.0 million (EUR 0.3) of the development costs of new products and product families were activated in the balance sheet.
In January-December 2023, the Group's continuing operations employed an average of 305 people (290). Including discontinued operations, the average number of employees in January-December was 398 (573 in 2022 and 563 in 2021).
The Group paid a total of EUR 13.3 million (21.0 million in 2022 and 20.1 million in 2021) in performance based salaries and fees in 2023.
Reka Industrial's Annual General Meeting was held on 24 May 2023, in Hyvinkää.
The AGM approved the financial statements for the 2022 accounting period and granted the Company's Board and the Managing Director discharge from liability for the 2022 accounting period.
The AGM resolved, in accordance with the Board's proposal, that for the financial period 1.1.2022-31.12.2022 a dividend of 0.20 per share will be paid.
In accordance with the Board's proposal, the Annual General Meeting decided to approve the company's 2022 remuneration report. According to the Companies Act, the decision is advisory.
The AGM approved the proposed annual remuneration of EUR 25,000 for the members of the Board of Directors, EUR 50,000 for the chairman of the Board and EUR 2,500 for the committee members. No separate meeting fees to be paid. The AGM approved that the members of the Board are compensated for their travel expenses.
Circa 40 per cent of the annual remuneration will be paid with the shares of the company. Conversion into the shares will be carried out based on the average share price of the company's class B-share in May 2023 and the shares will be handed over in June 2023.
The AGM resolved that the auditors' fees be paid as per invoice based on competitive bidding of accounting services.
The AGM approved, in accordance with the shareholders' proposal, that the number of members of the Board shall be six (6) and re-elected the following persons to the Board: Leena Saarinen, chairman, Matti Hyytiäinen, deputy chairman and Markku E. Rentto, member of the Board and Päivi Marttila, Eeva Raita and Ville Tolvanen as new members of the Board. No deputy members were elected.
The AGM elected, in accordance with the shareholders' proposal, Authorized Public Accountants KPMG Ltd, with Authorized Public Accountant Jukka Rajala as responsible auditor, as the Company's auditor for a term that expires at the end of the Annual General Meeting of 2024.
The AGM authorized, in accordance with the Board of Director's proposal, the Board of Directors to decide on the acquisition of the Company's own shares with assets from the Company's unrestricted equity. The shares will be acquired through trading arranged by Nasdaq Helsinki in accordance with its rules, and the consideration to be paid for the shares to be acquired must be based on market price. The Company may acquire B class shares directly by a contractual trade, provided that the number of class B shares to be acquired via contractual trade is at least 15,000 and that the consideration to be paid for the shares is equal to the prevailing market price in Nasdaq Helsinki at the time of the acquisition. When carrying out acquisitions of the Company's own shares, derivatives, stock lending and other agreements customary to the capital markets may be entered into within the limits set by law and regulations.
The authorization entitles the Board of Directors to also decide on a directed acquisition in a proportion other than that of the shares held by the shareholders, provided the Company has a weighty reason for this as defined in the Finnish Companies Act.
The maximum number of class B shares to be acquired may not exceed a total of 588,076. The amount corresponds to approximately 9.77 per cent of all the shares in the Company and in total 10.0 per cent of the Company's class B shares.
The Board of Directors is entitled to decide on all other matters pertaining to acquiring of the Company's own shares. The authorization is proposed to remain in force until the next Annual General Meeting, however not later than November 24, 2024. The authorization replaced the authorization given by the previous Annual General Meeting on April 6, 2022, to repurchase and pledge the company's own shares.
In accordance with the Board's proposal, the Annual General Meeting authorized the Board to decide on handover of own shares. The amount of shares to be handed over in total can be maximum 588,076 B shares, which corresponds to approximately 9.77 per cent of all the shares of the Company and in total 10.0 per cent of the Company's class B shares, depending on the situation on the date of the notice. The authorization entitles the Board of Directors to decide on all other conditions for the handover of shares, including the right to deviate from the shareholders' pre-emptive subscription right.
The authorization is valid until the next Annual General Meeting. The authorization replaces the authorization given by the previous Annual General Meeting on April 6, 2022, for the handover of own shares.
The duties of the Audit Committee include monitoring the company's financial position, overseeing financial reporting, assessing the adequacy and appropriateness of internal control and risk management, assessing compliance with laws and regulations, and communicating with the auditor, and reviewing the auditor's reports. The Audit Committee reports to the Board. If no Audit Committee has been appointed, the functions are carried out by the Board of Directors. The members of Reka Industrial Plc's Audit Committee was Ari Järvelä and Leena Saarinen until the AGM 2023 and since the AGM 2023 the Board has taken care of the duty. In 2023 Audit Committee reviewed business risks, balance sheet values, financing and liquidity, and the effect of business acquisitions on reporting. The management of internal audit measures focused on ensuring continuity and managing process and ICT risks.
Reka Industrial Plc´s share capital is divided into A- and B-shares. Of the shares, 139,600 are Series A shares with 20 votes per share and 5,880,760 are Series B shares with one vote per share. The total share capital of all the company's shares at the end of 2023 was EUR 24,081,440 and the number of shares was 6,020,360. The total number of votes of the company's shares was 8,672,760, of which 2,792,000 were A shares and 5,880,760 were B shares.
On 31 December 2023 the total number of shares includes 37,150 B-shares held by Reka Industrial Plc. The holding presents 0.6 percent of the company´s share capital and 0.4 percent of the votes. The company held no A-shares. The Articles of Association do not contain redemption provisions. There are no shareholder agreements. Reka Industrial Plc´s B-shares (REKA) are listed on the NASDAQ Helsinki stock exchange.
| Company shares | 31/12/2023 | 31/12/2022 | 31/12/2021 |
|---|---|---|---|
| Company share capital (EUR) | 24,081,440 | 24,081,440 | 24,081,440 |
| A-shares (20 votes per share) | 139,600 | 139,600 | 139,600 |
| B-shares (1 vote per share) | 5,880,760 | 5,880,760 | 5,880,760 |
| Total | 6,020,360 | 6,020,360 | 6,020,360 |
| B-shares held by the company | 37,150 | 47,504 | 79,253 |
A total of 1,117,484 (1,606,982 in 2022) of the company's B shares were traded on NASDAQ Helsinki Ltd, corresponding to 19.0 (27.3) percent of the number of shares and EUR 7.2 (7.5) million. The share price on December 31, 2023, was EUR 6.40 (5.74) and the average exchange rate for the financial year was EUR 6.47 (4.67). The lowest share price for the year was EUR 5.64 (2.86) and the highest was EUR 7.68 (6.24). The market value of the company's share capital on December 31, 2023, was EUR 38.3 million (December 31, 2022, EUR 34.1 million and December 31, 2021, EUR 23.0 million).
| Key figures per share (A and B shares) | 31/12/2023 | 31/12/2022 | 31/12/2021 |
|---|---|---|---|
| Equity per share, EUR | 9.23 | 3.56 | 1.88 |
| Earnings per share (EPS), EUR | 5.76 | 1.50 | 0.17 |
| Dividend/share, EUR | 2.00 | 0.20 | 0.09 |
| Dividend/earnings, % | 34.73 % | 13.36 % | 54.36 % |
| Effective dividend yield, % | 31.25 % | 3.48 % | 2.33 % |
| Price/earnings (P/E) | 1.11 | 3.80 | 23.40 |
| Share performance, EUR | |||
| - average share price |
6.47 | 4.67 | 3.84 |
| - lowest price |
5.64 | 2.86 | 3.19 |
| - highest price |
7.68 | 6.24 | 4.75 |
| - price at the end of the period |
6.40 | 5.74 | 3.87 |
| Key figures per share (A and B shares) | 31/12/2023 | 31/12/2022 | 31/12/2021 |
|---|---|---|---|
| Trading, number of shares | 1,117,484 | 1,606,982 | 1,477,487 |
| Trading, % Adjusted weighted average number of shares |
19.0 % | 27.3 % | 25.1 % |
| during the period | 6,020,360 | 6,020,360 | 6,020,360 |
| A-shares | 139,600 | 139,600 | 139,600 |
| B-shares Adjusted number of shares at the end of the |
5,880,760 | 5,880,760 | 5,880,760 |
| period | 6,020,360 | 6,020,360 | 6,020,360 |
| A-shares | 139,600 | 139,600 | 139,600 |
| B-shares | 5,880,760 | 5,880,760 | 5,880,760 |
On 31 December 2023, the company held a total of 37,150 own B shares. Reka Industrial did not exercise its authorization to acquire the company´s own shares.
Reka Industrial Plc has used the authorization to transfer treasury B-shares against or without payment. In the financial period of 2023 Reka Industrial Plc has paid remuneration to the Board of Directors and Managing Director with a total of 10,354 shares.
Reka Industrial aims to distribute at least 30 percent of its net earnings as dividends.
There have not been any major events after the end of the financial period.
On 31 December 2023, the parent company's distributable funds were EUR 20,965,526.40, of which the result for the period was EUR 19,151,673.01. The Board of Directors proposes to the Annual General Meeting that a dividend of EUR 2.00 per share will be paid. A dividend of EUR 0.20 per share was paid for the financial year 2022. In 2023, in addition to the dividend, a return of capital of EUR 0.20 per share was paid.
A notice to Reka Industrial's Annul General Meeting will be published later.
Hyvinkää 16 February 2024
Reka Industrial Plc Board of Directors
| Continuing | Discontinued | Group in | Continuing | Discontinued | Group in | |
|---|---|---|---|---|---|---|
| operations | operations | total | operations | operations | total | |
| EUR 1,000 | 1/1-31/12/2023 | 1/1-31/12/2023 | 1/1-31/12/2023 | 1/1-31/12/2022 | 1/1-31/12/2022 | 1/1-31/12/2022 |
| Turnover | 30 ,583 | 61,006 | 91,589 | 30,475 | 172,385 | 202,860 |
| Change in inventories of finished products and production in progress |
-683 | 3,225 | 2,542 | 458 | 1,235 | 1,693 |
| Production for own use | 0 | 4 | 4 | 0 | 67 | 67 |
| Other operating income | 31,635 | 46 | 31,681 | 2,327 | 187 | 2,514 |
| Materials and services | -15,582 | -49,006 | -64,588 | -17,322 | -137,494 | -154,816 |
| Personnel expenses | -10,057 | -5,901 | -15,958 | -8,735 | -16,584 | -25,319 |
| Depreciation and impairment | -1,317 | 0 | -1,317 | -1,278 | -3,751 | -5,029 |
| Other operating expenses | -4,203 | -3,433 | -7,636 | -3,021 | -8,791 | -11,811 |
| -208 | -55,065 | -55,273 | -27,570 | -165,131 | -192,701 | |
| Operating result | 30,375 | 5,941 | 36,316 | 2,905 | 7,254 | 10,159 |
| Financial income | 1,752 | 180 | 1,932 | -136 | 668 | 532 |
| Financial expenses | -1,429 | -1,532 | -2,961 | -847 | -3,710 | -4,557 |
| IAS19 defined benefit plans | 16 | -231 | -215 | 3,571 | 0 | 3,571 |
| Share of the result of associated companies | 0 | 24 | 24 | 338 | 96 | 434 |
| Result before taxes | 30,713 | 4,383 | 35,096 | 5,831 | 4,308 | 10,139 |
| Taxes | 49 | -661 | -612 | -347 | -814 | -1,161 |
| Result for the period | 30,762 | 3,721 | 34,483 | 5,484 | 3,494 | 8,978 |
| Continuing | Discontinued | Group in | Continuing | Discontinued | Group in | |
|---|---|---|---|---|---|---|
| operations | operations | total | operations | operations | total | |
| EUR 1,000 | 1/1-31/12/2023 | 1/1-31/12/2023 | 1/1-31/12/2023 | 1/1-31/12/2022 | 1/1-31/12/2022 | 1/1-31/12/2022 |
| Profit or loss attributable to | ||||||
| Shareholders of the parent | 30,762 | 3,721 | 34,483 | 5,484 | 3,494 | 8,978 |
| Non-controlling interest | 0 | 0 | 0 | 0 | 0 | 0 |
| 30,762 | 3,721 | 34,483 | 5,484 | 3,494 | 8,978 | |
| Earnings per share attributable to the shareholders of the parent, continuing operations |
||||||
| before dilution, EUR | 5.14 | 0.00 | 5.14 | 0.92 | 0.00 | 0.92 |
| after dilution, EUR | 5.14 | 0.00 | 5.14 | 0.92 | 0.00 | 0.92 |
| Earnings per share attributable to the shareholders of the parent, discontinued operations |
||||||
| before dilution, EUR | 0.00 | 0.62 | 0.62 | 0.00 | 0.58 | 0.58 |
| after dilution, EUR | 0.00 | 0.62 | 0.62 | 0.00 | 0.58 | 0.58 |
| Earnings per share attributable to the shareholders of the parent |
||||||
| before dilution, EUR | 5.14 | 0.62 | 5.76 | 0.92 | 0.58 | 1.50 |
| after dilution, EUR | 5.14 | 0.62 | 5.76 | 0.92 | 0.58 | 1.50 |
| Number of shares | 5,983,210 | 5,983,210 | 5,983,210 | 5,972,856 | 5,972,856 | 5,972,856 |
| Continuing | Discontinued | Group in | Continuing | Discontinued | Group in | |
|---|---|---|---|---|---|---|
| operations | operations | total | operations | operations | total | |
| EUR 1,000 | 1/1-31/12/2023 | 1/1-31/12/2023 | 1/1-31/12/2023 | 1/1-31/12/2022 | 1/1-31/12/2022 | 1/1-31/12/2022 |
| Result for the period |
30,762 | 3,721 | 34,483 | 5,484 | 3,494 | 8,978 |
| Other comprehensive items that may subsequently be reclassified to statement of income |
||||||
| Translation differences related to foreign units |
171 | 0 | 171 | -41 | 0 | -41 |
| Change in the value of open customer derivatives Taxes of items that may subsequently reclassified to state |
0 | 440 | 440 | 0 | -1,054 | -1,054 |
| ment of income | 0 | -88 | -88 | 0 | 211 | 211 |
| Total Other comprehensive items that are not subsequently reclassified to statement of income |
171 | 352 | 523 | -41 | -843 | -884 |
| Items related to remeasurements of net defined liabilities | 2,201 | -580 | 1,621 | 2,866 | 0 | 2,866 |
| Taxes of items that are not subsequently reclassified to statement of income |
-440 | 116 | -324 | -573 | 0 | -573 |
| Total | 1,761 | -464 | 1,297 | 2,293 | 0 | 2,293 |
| Total comprehensive income | 32,694 | 3,609 | 36,303 | 7,736 | 2,651 | 10,387 |
| Total comprehensive income attributable to |
||||||
| Shareholders of the parent | 32,694 | 3,609 | 36,303 | 7,736 | 2,651 | 10,387 |
| Non-controlling interests | 0 | 0 | 0 | 0 | 0 | 0 |
| 32,694 | 3,609 | 36,303 | 7,736 | 2,651 | 10,387 |
| EUR 1,000 | 31/12/2023 | 31/12/2022 |
|---|---|---|
| ASSETS | ||
| Non-current assets | ||
| Other intangible assets | 2,645 | 3,213 |
| Tangible assets | 3,602 | 2,938 |
| Right-of-use assets | 2,903 | 3,278 |
| Other shares and holdings | 766 | 0 |
| Guarantee capital investment | 8,000 | 8,000 |
| IAS19 pension receivable | 6,491 | 4,270 |
| Deferred tax assets | 1,660 | 1,201 |
| Total non-current assets | 26,066 | 22,900 |
| Current assets | ||
| Inventories | 3,816 | 4,445 |
| Sales receivables and other recievables Tax receivables from the profit for the financial |
3,031 | 4,799 |
| year | 192 | 154 |
| Other cash equivalents | 38,131 | 0 |
| Cash and cash equivalents | 319 | 802 |
| Total current assets | 45,489 | 10,200 |
| Non-current assets held for sale | 0 | 53,994 |
| Total assets | 71,555 | 87,094 |
| EUR 1,000 | 31/12/2023 | 31/12/2022 |
|---|---|---|
| SHAREHOLDERS' EQUITY AND LIABILITIES | ||
| Shareholders' equity |
||
| Share capital | 24,081 | 24,081 |
| Premium fund | 66 | 66 |
| Reserve fund | 1,221 | 1,221 |
| Own shares | -136 | -174 |
| Translation differences | 14 | -157 |
| Retained profit | 29,523 | -4,224 |
| Other unrestricted equity | 436 | 436 |
| Equity attributable to shareholders of the parent |
55,205 | 21,250 |
| Non-contorlling interests | 0 | 0 |
| Total shareholders' equity | 55,205 | 21,250 |
| Non-current liabilities | ||
| Deferred tax liabilities | 2,003 | 1,122 |
| Provisions | 2,021 | 1,987 |
| Financial liabilities | 0 | 8,376 |
| Lease liabilities | 4,818 | 5,171 |
| Other liabilities | 33 | 10 |
| Current liabilities | ||
| Tax liabilities from the profit | 185 | 882 |
| Provisions | 2,400 | 302 |
| Financial liabilities | 677 | 3,556 |
| Lease liabilities | 487 | 424 |
| Accounts payable and other liabilities | 3,726 | 5,129 |
| Total liabilities | 16,349 | 26,960 |
| Liabilities related to non-current assets held | ||
| for sale | 0 | 38,884 |
| Total shareholders' equity and liabilities | 71,555 | 87,094 |
| EUR 1,000 | Share capital |
Premium fund |
Reserve fund |
Own shares |
Transla tion dif ferences |
Other un restricted equity |
Retained profit |
Share holders' equity to the share holders of the parent |
Non-cont rolling in terest |
Total sha rehol ders' equity |
|---|---|---|---|---|---|---|---|---|---|---|
| Shareholders' equity 31/12/2021 |
24,081 | 66 | 1,221 | -287 | -116 | 436 | -14,149 | 11,253 | 0 | 11,253 |
| Comprehensive income | ||||||||||
| Result for the period | 8,978 | 8,978 | 0 | 8,978 | ||||||
| Other comprehensive items | ||||||||||
| Items related to remeasurements of net defined benefit liability |
2,866 | 2,866 | 2,866 | |||||||
| Taxes of net defined liability | -573 | -573 | -573 | |||||||
| Total | 2,293 | 2,293 | 2,293 | |||||||
| Derivatives | -1,054 | -1,054 | -1,054 | |||||||
| Taxes of derivatives | 211 | 211 | 211 | |||||||
| Translation differences | -41 | -41 | -41 | |||||||
| Total | -41 | -843 | -884 | -884 | ||||||
| Total comprehensive income | -41 | 10,428 | 10,387 | 10,387 | ||||||
| Other change | 25 | 25 | 25 | |||||||
| Transactions with the owners | ||||||||||
| Dividends paid | -535 | -535 | -535 | |||||||
| Payments by own shares | 113 | 7 | 120 | 120 | ||||||
| Total transactions with the owners | 113 | -528 | -415 | -415 | ||||||
| Shareholders' equity 31/12/2022 |
24,081 | 66 | 1,221 | -174 | -157 | 436 | -4,224 | 21,250 | 21,250 |
| EUR 1,000 | Share capital |
Premium fund |
Reserve fund |
Own shares |
Transla tion diffe rences |
Other un restricted equity |
Retained profit |
Share holders' equity to the share holders of the parent |
Non-cont rolling in terests |
Total share holders' equity |
|---|---|---|---|---|---|---|---|---|---|---|
| Shareholders' equity 31/12/2022 |
24,081 | 66 | 1,221 | -174 | -157 | 436 | -4,224 | 21,250 | 21,250 | |
| Comprehensive income | ||||||||||
| Result for the period | 34,483 | 34,483 | 34,483 | |||||||
| Other comprehensive items | ||||||||||
| Items related to remeasurements of net defined benefit liability |
1,621 | 1,621 | 1,621 | |||||||
| Taxes of net defined liability | -324 | -324 | -324 | |||||||
| Total | 1,297 | 1,297 | 1,297 | |||||||
| Derivatives | 440 | 440 | 440 | |||||||
| Taxes of derivatives | -88 | -88 | -88 | |||||||
| Translation differences | 171 | 171 | ||||||||
| Total | 171 | 352 | 523 | 523 | ||||||
| Total comprehensive income | 171 | 36,132 | 36,303 | 36,303 | ||||||
| Other change | 3 | 3 | 3 | |||||||
| Transactions with the owners | ||||||||||
| Dividends paid/return of equity | -2,389 | -2,389 | -2,389 | |||||||
| Payments by own shares | 38 | 38 | 38 | |||||||
| Total transactions with the owners | 38 | -2,389 | -2,350 | -2,350 | ||||||
| Shareholders' equity 31/12/2023 |
24,081 | 66 | 1,221 | -136 | 14 | 436 | 29,523 | 55,205 | 55,205 |
| EUR 1,000 | 1/1-31/12/2023 | 1/1-31/12/2022 |
|---|---|---|
| Cash flows from operating activities | ||
| Payments received from operating activities | 93,345 | 206,598 |
| Payments paid on operating activities | -90,324 | -192,087 |
| Paid interests and other financial expenses | -2,619 | -4,152 |
| Interests received and other financial incomes | 1,702 | 92 |
| Direct taxes paid | -1,314 | -522 |
| Net cash provided by operating activities | 791 | 9,929 |
| Cash flows from investments | ||
| Sale of shares of subsidiaries | 54,181 | 0 |
| Investments in tangible assests | -1,441 | -3,612 |
| Sales of tangible assets | 16 | 6,247 |
| Sales of associated company shares | 0 | 1,757 |
| Investments in other assets | -1,138 | -5,700 |
| Net cash provided by investing activities | 51,618 | -1,308 |
| Cash flows from financing activities | ||
| Increase in loans | 849 | 5,566 |
| Decrease in loans | -14,949 | -8,860 |
| Payments on lease activities |
-1,013 | -1,967 |
| Dividends paid/return on equity | -2,389 | -539 |
| Net cash provided by financing activities | -17,502 | -5,800 |
| Change in cash and cash equivalents at the end of the period | 34,906 | 2,822 |
| Cash and cash equivalents at the beginning of the period | 802 | 767 |
| Exchange rate differences | -15 | -31 |
| Cancellation of elimination of cash and cash equivalents related to discontinued operations | 2,756 | -2,756 |
| Cash and cash equivalents at the end of the period | 38,449 | 802 |
Reka Industrial Corporation is the parent company in the Group, whose actual business company is Reka Rubber Ltd.
In addition to Finland, the Group operates in Poland.
The parent company is domiciled in Hyvinkää. Reka Industrial Plc's address is Kankurinkatu 4-6, 05800 Hyvinkää. Reka Industrial Plc's B shares are listed on NASDAQ Helsinki.
The Reka Industrial Group is part of the Reka Group. Reka Ltd, the parent company of the Reka Group, is domiciled in Juupajoki. Reka Ltd's address is Salokunnantie 590, 35550 Salokunta.
The general accounting policies are described in this section. Detailed accounting policies and descriptions of decisions based on management's judgement and management's use of estimates are presented later for each item of the financial statements. Accounting policies are marked with light green.
These interim financial data have been prepared in accordance with the IAS 34 Interim Reports standard and the IAS standards as well as SIC and IFRIC interpretations effective on 31 December 2023. International financial standards refer to standards and the related interpretations that are laid down in the Finnish Accounting Act and regulations based on the Finnish Accounting Act and that have been approved in accordance with the EU Regulation (EC) No 1606/2002. The group has not applied any new or amended standard or interpretation before its effective date.
Financial Statement release and Interim reports are unaudited.
The new standard for insurance contracts will help investors and others better understand insurers' risk exposure, profitability and financial position. This standard replaces IFRS 4 standard.
The amendments to IFRS 17 alleviate mismatches in comparative information arising from the different transition requirements of IFRS 9 and IFRS 17. The amendments also allow the comparative information about financial assets to be presented in a manner that is more consistent with the requirements in IFRS 9 Financial Instruments. This standard has no effect on company's reporting.
The amendments clarify the application of materiality to disclosure of accounting policies.
The amendments clarify how companies should distinguish changes in accounting policies from changes in accounting estimates, with a primary focus on the definition of and clarifications on accounting estimates.
The amendments narrow the initial recognition exemption (IRE) and clarify that the exemption does not apply to transactions such as leases and decommissioning obligations which give rise to equal and offsetting temporary differences.
The amendments give relief from accounting for deferred taxes arising from the OECD's (Organisation for Economic Co-operation and Development)
Reka Industrial Plc | Financial Statement Release 2023 18
international tax reform and require new disclosures to compensate for the potential loss of information resulting from the relief. Reka Industrial Group falls below the value limits and therefore this change has no effect on Group's reporting.
Since 2016, Reka Rubber has been part of the chemical industry's Responsible Care programme, through which the company is committed to sustainability in its industry. The aim of the Responsible Care programme is to develop activities and achieve excellent level in environmental, safety and health issues by working together with different groups and investing in transparent and open interaction.
Reka Rubber assesses its level of sustainability through the EcoVadis system. EcoVadis is an independent and international sustainability assessment system, in which a company's labour practices, ethics, environmental responsibility and sustainable supply chain are being reviewed. In 2022, Reka Rubber achieved bronze level rating.
The sustainability work is also supported by an ISO 14001 certified environmental management system and ISO 9001 certified quality management system. Reka Rubber has the required environmental permits.
At the end of 2019 Reka Industrial started a transformation to increase energy efficiency and reduce CO2 emissions in Cable segment. Financing was implemented with a Green Bond and the measures targeted Reka Cables. As a result of the project Reka Cables became first carbon neutral cable producer (scope 1 and 2) as of 1 November 2021 and by the end of 2022 Reka Cables' energy efficiency had improved 7.3 percent since the comparison year 2017.
For Reka Rubber, climate actions means reducing emissions and improving energy efficiency in the company's own operations. Reka Rubber has calculated the carbon footprint of its own operations, which it strives to reduce by consuming emission-free electricity and improving energy efficiency of its own operations. At the same time, the aim is to influence factors affecting air quality.
Climate and environment related issues require investments and development efforts to reduce own carbon footprint as well as to meet the growing demands of customers.
Reka Rubber's factories use CO2 -free electricity and solar panels have been installed at the factory in Aura. The solar panels produce approximately 90.000 kilowatt hours energy in one year. At the Polish factory, lightning has been replaced by LED lights. The last installations of LED lights at the Aura factory will be completed in 2024.
Reka Rubber is unable to influence to the CO2 percentage of the gas used at the factory in Poland, but the oil used in steam production at the Aura factory will be replaced. Survey of alternatives is underway. In addition, actions to improve energy efficiency have been made and several different projects are ongoing.
Rubber segment strives to reduce the amount of rubber waste in proportion to production tonnes through material selection, process development and technical supports.
For Reka Industrial, sustainability means not only climate and environmental perspective, but also responsibility for the company's personnel. The company takes care of its personnel's working conditions, employees' rights and respect for human rights. Reka Industrial wants to be a safe and efficient work environment, where personnel's social, physical and mental wellbeing is taken into account. The company also wants to develop the competence of its personnel and encourages and commits them to excellent performance. Also business partners are required to have the same values and actions.
Part of the Group's financing is tied to a reference interest rate and part to a fixed interest rate. The rise in reference interest rates increased the total interest costs both for the financing of trade receivables and for traditional loans. Reference rates are actively monitored and updated in the Group's forecasts and plans.
Inflation was reflected in higher costs for labour, materials, components and services. The increase in the costs and the high level of inflation in Poland accelerated some production arrangements and efficiency measures. Changes and efficiency measures are also being carried out at the factories in Finland. There is still a delay in transferring the costs into customer prices.
The preparation of the financial statements in accordance with IFRS requires management to make estimates and assumptions that affect the valuation of
the reported assets and liabilities and other information, such as contingent assets and liabilities and the recognition of income and expenses in profit or loss. Although these estimates are based on management's best knowledge of current events and actions, actual results may differ from the estimates. Management estimates are marked with light blue.
The most important items, which require management estimates and assumptions, and which may include uncertainty, are impairment testing of goodwill, customer relationship appreciation, deferred tax assets of unused tax losses and interest expenses, discount rate and definition of length in lease periods in IFRS 16 handling, processing of pensions and related contracts, effects on provisions given, handling of rental loss provision and net realisable value of inventories. Detailed descriptions of decisions based on management's judgement and management's use of estimates are presented later at each item of the financial statements.
The Group's management makes judgements concerning the adoption and application of the accounting policies for the financial statements. The management has used its judgement in selecting and applying the accounting policies, for example, classification of leases and processing of pension agreements.
The consolidated financial statements have been prepared based on original cost, except for the following items, which have been recognized at fair value: derivative contracts, cash and cash equivalents and other financial assets.
All changes in open customer-specific hedges are booked to equity. Other changes in the value of derivatives are recognized through the income statement. Derivatives that hedge net sales are included in net sales. Changes in metal derivatives hedging customer orders and changes in raw-material purchase hedging for periods less than 12 months are included in material purchases. Longer-term raw-material purchase hedging is included in financial income and/or expenses. Customer-specific commodity derivatives and segment-specific currency hedging have been recognized under each segment. Other derivatives are recognized in other operations and eliminations.
Cash and cash equivalents consist of cash and bank accounts, deposits and other short-term investments. Cash and cash equivalents are recognized in cash flow statement as cash and cash equivalents. Cash and bank accounts and deposits maturing less than 3 months are recognized in cash and cash
equivalents in the balance sheet. Bank deposits maturing in more than 3 months, other deposits maturing in less than 12 months and short-term investments are recognized in other cash equivalents in the balance sheet.
IAS 1 standard Presentation of Financial Statements does not define operating result. The Group has defined operating result as follows: the net amount formed by deducting from the net sales the purchase costs adjusted by the change in the stocks of non-finished and finished goods as well as expenses for production for personal use. Deductions from the net sales also include expenses arising from employee benefits without IAS 19 defined benefit pension arrangements related items, depreciation, amortization and any impairment losses. Other operating incomes and expenses are also taken into account. Other items than those stated above are presented below operating result. Exchange rate differences and changes in fair value of derivatives are included in operating result, if they arise from business-related items. Otherwise they are recognized in financial items. Operating profit is also referred to as operating profit or operating loss, depending on the situation.
IAS 1 standard does not define EBITDA. The Group has defined EBITDA as follows: EBITDA is the net amount that is formed when depreciation and any impairment losses are added to the operating profit.
Reka Industrial sold the shares of Reka Cables Ltd to Nexans Group on 26 April 2023. Impacts of the sale are described in more detail in the note Discontinued operations. There were no other material divestments or acquisitions during the financial year.
On November 10, 2022, Reka Industrial signed agreement with Nexans Group regarding the sale of all outstanding shares of Reka Cables Ltd. With the signing of the agreement, Reka Industrial's Cable segment ended and Reka Cables Ltd and its subsidiaries were classified as discontinued operations. The purchase price for the shares was EUR 53 million. The transaction was conditional to the approval of the Extraordinary General Meeting and approvals of authorities. The Extraordinary General meeting approved the transaction on 15 December 2022. The authorities approved the transaction in April 2023.
Locked box interest was paid for the purchase price until 31 March 2023. The Corporate sale was completed on 26 April 2023. Therefore the financial result and cash flows of discontinued operations are reported in Reka Industrial's financial figures for the period of four months, 1 January – 30 April 2023.
Assets and liabilities related to discontinued operations are presented separately on their own lines in the balance sheet as assets classified as held for sale until sale. The result of discontinued operations is reported separately from the income and expenses of continuing operations in the consolidated income statement. Differentiation in the income statement has been implemented in its own columns. Intragroup income and expenses between continuing and discontinued operations have been eliminated.
| The result of discontinued operations, EUR 1,000 | 1/1-30/4/2023 | 1/1-31/12/2022 |
|---|---|---|
| Turnover | 61,006 | 172,385 |
| Change in inventories of finished products and pro duction in progress |
3,225 | 1,235 |
| Production for own use | 4 | 67 |
| Other operating income | 46 | 187 |
| Materials and services | -49,006 | -137,494 |
| Personnel expenses | -5,901 | -16,584 |
| Depreciation and impairment | 0 | -3,751 |
| Other operating expenses | -3,433 | -8,791 |
| -55,065 | -165,131 | |
| Operating result | 5,941 | 7,254 |
| Financial income | 180 | 668 |
| Financial expenses | -1,532 | -3,710 |
| Share of the result of associated companies | 24 | 96 |
| IAS 19 items | -231 | 0 |
| Result before taxes | 4,383 | 4,308 |
| Taxes | -661 | -814 |
| Result for the period | 3,721 | 3,494 |
| Profit or loss attributable to | ||
| Shareholders of the parent | 3,721 | 3,494 |
| Non-controlling interest | 0 | 0 |
| 3,721 | 3,494 |
| The effect of discontinued operations on the bal ance sheet, EUR 1,000 |
30/4/2023 | 31/12/2022 |
|---|---|---|
| ASSETS | ||
| Non-current assets | ||
| Consolidated goodwill | 3,252 | 3,252 |
| Other intangible assets | 1,954 | 1,684 |
| Tangible assets | 16,597 | 16,492 |
| Right-of-use assets | 3,614 | 3,614 |
| Holdings in associates | 3,775 | 1,115 |
| Receivables | 40 | 40 |
| Deferred tax assets | 847 | 387 |
| Total non-current assets | 30,079 | 26,586 |
| Current assets | ||
| Inventories | 25,555 | 23,166 |
| Sales receivables and other receivables | 3,971 | 1,033 |
| Tax receivables from the profit for the financial year | 57 | 57 |
| Derivative contracts | 291 | 395 |
| Other financial assets | 524 | 1,490 |
| Cash and cash equivalents | 3,022 | 1,267 |
| Total current assets | 33,420 | 27,408 |
| Total assets | 63,499 | 53,994 |
| The effect of discontinued operations on the bal ance sheet, EUR 1,000 |
30/4/2023 | 31/12/2022 |
|---|---|---|
| LIABILITIES | ||
| Non-current liabilities | ||
| Deferred tax liabilities | 516 | 549 |
| Provisions | 1,488 | 1,370 |
| Financial liabilities | 292 | 365 |
| Lease liabilities | 1,924 | 2,568 |
| IAS 19 pension liability | 2,789 | 1,920 |
| Total non-current liabilities | 7,009 | 6,772 |
| Current liabilities | ||
| Tax liabilities from the profit | 546 | 92 |
| Financial liabilities | 2,618 | 5,199 |
| Lease liabilities | 1,959 | 1,982 |
| Derivative contracts | 369 | 914 |
| Accounts payable and other liabilities | 27,852 | 23,925 |
| Total current liabilities | 33,344 | 32,111 |
| Total liabilities | 40,353 | 38,884 |
| Cash flow from discontinued operations, EUR 1, 000 |
1/1-30/4/2023 | 1/1-31/12/2022 |
|---|---|---|
| Cash flows from operating activities | 2,974 | 8,036 |
| Cash flows from investments | 7,796 | -3,032 |
| Cash flows from financing activities | -9,981 | -2,483 |
| Cash flow for the financial year | 789 | -2,521 |
Reka Industrial Group's industrial business segment is Rubber industry. All other operations are categorized as Other operations and eliminations.
As the Group's highest operational decision-maker, the Board of Directors evaluates the segment's performance and makes decisions about the resources allocated to the segment.
Accounting policy of segment information
In accordance with IFRS 8, segment-specific reporting is based on the internal management reporting. Turnover by product group and sales area are presented as complementary information. Companies not belonging to Rubber segment, other derivatives and unallocated items as well financial liabilities related to acquiring businesses are recognized in Other operations and eliminations.
| EUR 1,000 | Rubber | Other operations and eliminations |
Group in total | EUR 1,000 | Rubber | Other operations and eliminations |
Group in total |
|---|---|---|---|---|---|---|---|
| Turnover | 30,576 | 61,013 | 91,589 | Turnover | 30,592 | 172,268 | 202,860 |
| EBITDA | 1,227 | 36,407 | 37,633 | EBITDA | 2,559 | 12,630 | 15,188 |
| Unallocated items | -3,150 | -3,150 | Unallocated items | -6,210 | -6,210 | ||
| Result before taxes | 35,096 | Result before taxes | 10,139 | ||||
| Result for the period | 34,483 | Result for the period | 8,978 | ||||
| Assets | Assets | ||||||
| Segment's assets | 17,892 | 53,663 | 71,555 | Segment's assets | 18,114 | 68,980 | 87,094 |
| Total assets | 17,892 | 53,663 | 71,555 | Total assets | 18,114 | 68,980 | 87,094 |
| Liabilities | Liabilities | ||||||
| Segment's liabilities | 8,995 | 7,355 | 16,349 | Segment's liabilities | 11,941 | 53,903 | 65,844 |
| Total liabilities | 8,995 | 7,355 | 16,349 | Total liabilities | 11,941 | 53,903 | 65,844 |
| Assets – liabilities |
8,897 | 46,308 | 55,205 | Assets – liabilities |
6,172 | 15,078 | 21,250 |
| Investments | 1,108 | 455 | 1,562 | Investments | 950 | 4,845 | 5,795 |
| Depreciations | 1,317 | 1,317 | Depreciations | 5,029 | 5,029 |
| Segment's liabilities | 11,941 | 53,903 | 65,844 |
|---|---|---|---|
| Total liabilities | 11,941 | 53,903 | 65,844 |
| Assets – liabilities |
6,172 | 15,078 | 21,250 |
| Investments | 950 | 4,845 | 5,795 |
| Depreciations | 5,029 | 5,029 | |
| Rubber segment's turnover by product group, EUR million |
1-12/2023 | 1-12/2022 |
|---|---|---|
| Moulded | 9.7 | 10.3 |
| Hoses | 17.2 | 16.3 |
| Other | 3.6 | 4.0 |
| Total | 30.6 | 30.6 |
| Rubber segment's turnover by sales area, EUR million |
1-12/2023 | 1-12/2022 |
| EU-countries | 27.1 | 27.5 |
| Non-EU-countries | 3.5 | 3.1 |
| Total | 30.6 | 30.6 |
Taken all market areas into the consideration the largest customer group ́s share of the Group ́s turnover was 14.9 %. Other individual customer ́s share of the Group ́s turnover was under 10 %.
On 31 December 2023, non-current assets other than financial instruments and deferred taxes were EUR 24.4 million (21.7), of which EUR 21.8 million were located in Finland and EUR 2.6 million in Poland.
Income related to other than normal business is recognized as other operating income. Such items are, for example, proceeds from sales of items of property and equipment and intangible assets, revenue recognition of fair acquisition, rental income, subsidies received and government grants.
| EUR 1,000 | 2023 | 2022 |
|---|---|---|
| Gain on the sale of fixed assets | 9 | 1,436 |
| Subsidies received | 31 | 101 |
| Rental income | 185 | 168 |
| Gain on the sale of fixed assets, sale of shares of Reka Cables Ltd |
31,035 | 0 |
| Other income | 420 | 810 |
| Total | 31,681 | 2,514 |
The gain on the sale of shares of Reka Cables Ltd is presented in its own line. Other gains on the sales of fixed assets in 2023 consist of sales of machinery and equipment.
Costs of liabilities are recognized as expenses in income statement in the financial period during which they have incurred. Direct transaction costs related to a specified loan, are included in the original allocated acquisition costs of a financial liability and are noticed as interest costs by using the effective interest method. The unrealized and realized exchange rate differences relating to financing are recognized in financial income and expenses.
Interest income is recognized using the effective interest method or according to given market valuation. Interest income consists of interest revenue of guarantee capital investments, loan receivables and deposits as well as realized and unrealized revenues of other cash equivalents. Dividend income is recognized when the right to receive the dividend is established.
| EUR 1,000 | 2023 | 2022 |
|---|---|---|
| Interest revenues | 836 | 92 |
| Changes in the fair value of financial assets | 831 | 0 |
| Exchange rate differences | 266 | 440 |
| Total | 1,932 | 532 |
| EUR 1,000 | 2023 | 2022 |
|---|---|---|
| Interest expenses | -405 | -1,100 |
| Interest expenses on lease liabilities | -441 | -374 |
| Exchange rate differences | -335 | -761 |
| Financial expenses on sales receivable | -1,283 | -1,926 |
| Other financial expenses | -496 | -397 |
| Total | -2,961 | -4,557 |
| Total exchange rate differences | -70 | -321 |
The entries of the IAS 19 defined benefit plan in the income statement are presented below the operating result as a separate item before the share of the result of associated companies.
| EUR 1,000 | 2023 | 2022 |
|---|---|---|
| Pension costs – Defined benefit plans |
-427 | 4,539 |
| Interest expenses – Defined benefit plans |
158 | -77 |
| Taxes – Defined benefit plans |
54 | -893 |
| Total | -215 | 3,571 |
The positive pension cost in 2022 resulted mainly from changes in the discount rate used and IFRS 5 reclassification.
| EUR 1,000 | 2023 | 2022 |
|---|---|---|
| Acquisition costs 1/1 | 10,781 | 61,217 |
| Increase | 1,069 | 3,573 |
| Decrease | -215 | -5,448 |
| Transfers to assets classified as held for sale | 0 | -48,561 |
| Exchange rate differences | 163 | 0 |
| Acquisition costs 31/12 | 11,799 | 10,781 |
| Accumulated depreciation and impairment 1/1 | 7,846 | 37,659 |
| Depreciation | 351 | 3,214 |
| Decrease | 0 | -958 |
| Transfers to assets classified as held for sale | 0 | -32,068 |
| Accumulated depreciation and impairment 31/12 | 8,197 | 7,846 |
| Book value 1/1 | 2,938 | 23,556 |
| Book value 31/12 | 3,602 | 2,938 |
| EUR 1,000 | 2023 | 2022 |
|---|---|---|
| Acquisition costs 1/1 | 7,977 | 12,089 |
| Increase | 118 | 6,066 |
| Transfers to assets classified as held for sale | -71 | -10,189 |
| Acquisition costs 31/12 | 8,024 | 7,977 |
| Accumulated depreciation and impairment 1/1 | 4,698 | 7,915 |
| Depreciation | 423 | 3,227 |
| Transfers to assets classified as held for sale | 0 | -6,574 |
| Impairment | 0 | 130 |
| Accumulated depreciation and impairment 31/12 | 5,121 | 4,698 |
| Book value 1/1 | 3,278 | 4,175 |
| Book value 31/12 | 2,903 | 3,278 |
Long-term investments or investments where the repayment depends on the other party are recognized in non-current investments. Guarantee capital investments are long-term investments and they support Reka Pension fund's solvency.
Guarantee capital investment is a strategic investment in the Reka Pension fund and it is recognized at fair value through other items in comprehensive income. In Financial Statements 2023, guarantee capital investment's fair value is estimated to correspond to the amount of the original investment and to the amount of investment received through the sale of the shares of Reka Cables Ltd in 2023. The investment has been described in more detail in note 3.4. Related-party events.
In 2022 Reka Rubber Ltd made a guarantee capital investment of EUR 5.7 million and in 2019 Reka Cables Ltd made a guarantee capital investment of EUR 2.3 million in the Reka Pension Fund. The guarantee capital investment supports the solvency of the pension fund. The interest paid on the guarantee capital investment is 4 % p.a.
When Reka Cables Ltd joined Nexans Group at the end of April 2023, the EUR 2.3 million guarantee capital investment made by Reka Cables Ltd remained at the Reka Industrial Group.
Investment are recognized at fair value when the Group becomes party to the contract. The value of investments are updated using third-party market value reports.
Gains and losses arising from changes in fair value are recognized in financial income and/or expenses.
Money market deposits are recognized at nominal value in the balance sheet and interest revenue is recognized in interest receivables. Escrow accounts are recognized at nominal value.
| EUR 1,000 | Positive current values |
Nega tive cur rent val ues |
Current net val ues 2023 |
Current net val ues 2022 |
Nominal values 2023 |
Nominal values 2022 |
|---|---|---|---|---|---|---|
| Investments | ||||||
| Mandatum -funds Lähi-Tapiola - |
10,535 | 10,535 | 0 | 10,000 | 0 | |
| funds Aristoi -financial |
10,267 | 10,267 | 0 | 10,000 | 0 | |
| management Money market |
3,028 | 3,028 | 0 | 3,000 | 0 | |
| deposits | 10,300 | 10,300 | 0 | 10,300 | 0 | |
| Escrow -account | 4,000 | 4,000 | 0 | 4,000 | 0 | |
| Total | 38,131 | 0 | 38,131 | 0 | 37,300 | 0 |
Investments included in financial assets have been valued using third-party market value reports (hierarchy level 2).
Funds are interest investments related to corporate loans and short-term interests. Aristoi -financial management is an investment portfolio including money market deposits, investments in bonds (companies and state) and other commodities. Withdrawal from the funds is possible within 2 banking days.
| EUR 1,000 | 2023 | 2022 |
|---|---|---|
| Cash and bank | 319 | 802 |
Ways to ensure liquidity and sufficient funding include in addition to negotiations on financing and payment terms, measures to improve inventory turnover and freeing up capital from assets.
The Group aims to continuously evaluate and monitor the amount of financing required by its business operations to ensure that the Group has sufficient liquid funds to finance operations and repay loans.
The Group uses the sale of accounts receivables as a part of optimising circulation of working capital and controlling liquidity risk.
The financial covenants (Equity ratio and loan servicing margin) of the financing in the Polish subsidiary were met with at the balance sheet date. The Group has not other financial covenants.
| EUR1,000 | Balance sheet va lue |
Cash flow | Less than 1 year |
1 - 2 years |
2 - 5 years |
More than 5 years |
|---|---|---|---|---|---|---|
| 31/12/2023 Repayable bank loans |
8 | 8 | 8 | 0 | 0 | 0 |
| Loan limits Regression of sales receivables |
642 26 |
642 26 |
642 26 |
0 0 |
0 0 |
0 0 |
| Lease liabilities Accounts payable and other liabilities |
5,305 3,726 |
7,071 3,726 |
823 3,726 |
1,560 0 |
2,154 0 |
2,534 0 |
| Total | 9,707 | 11,474 | 5,226 | 1,560 | 2,154 | 2,534 |
| EUR 1,000 | Balance sheet va lue |
Cash flow | Less than 1 year |
1 - 2 years |
2 - 5 years |
More than 5 years |
|---|---|---|---|---|---|---|
| 31/12/2022 Repayable bank loans |
2,409 | 2,409 | 2,400 | 8 | 0 | 0 |
| Account limits Regression of sales |
881 | 881 | 881 | 0 | 0 | 0 |
| receivables | 274 | 274 | 274 | 0 | 0 | 0 |
| Bond | 7,230 | 7,230 | 0 | 7,230 | 0 | 0 |
| Other loans | 1,138 | 1,138 | 0 | 1,138 | 0 | 0 |
| Lease liabilities Accounts payable |
5,595 | 7,728 | 779 | 1,251 | 2,247 | 3,452 |
| and other liabilities | 5,139 | 5,139 | 5,129 | 10 | 0 | 0 |
| Total | 22,667 | 24,800 | 9,464 | 9,637 | 2,247 | 3,452 |
The figures are undiscounted and include both interest payments and principal payments.
The guarantees of the Group's purchase commitments or debts, as well as other commitments that are not recorded in the balance sheet, are presented in this note.
| EUR 1,000 | 31/12/2023 | 31/12/2022 |
|---|---|---|
| Loans from financial institutes | 677 | 7,549 |
| Bond | 0 | 7,230 |
| Granted business mortgages | 1,800 | 27,800 |
| Granted real estate mortgages | 1,900 | 8,900 |
| Book value of pledged securities | 0 | 8,969 |
| Granted guarantees | 0 | 3,148 |
| Guarantees and payment commitments | 0 | 1,220 |
The amount of corporate mortgages on December 31, 2023 was EUR 1.8 million.
One million euros of corporate mortgages are held by the financier but available to the company, if necessary.
On December 31, 2023 the investment commitments for tangible fixed assets amounted to EUR 1.2 million (3.3).
On December 31, 2023, commitments to rental agreements of less than 12 months or low value totaled EUR 0.1 million (0.9).
The Group ́s related parties include the subsidiaries and associated companies, other companies belonging to the Reka Group, Reka Pension Fund, the Group ́s Board of Directors and their close family members as well as management group and their close family members. Related parties also include companies, that have ownership connection through the owner who has significant decision power, or that belong to the related-party companies via the management or board members. The Group's management group consists of the CEO and CFO.
Reka Industrial Plc, and therefore also the Reka Industrial Group, belong to the Reka Group. Reka Ltd has a 50.16 percent holding of shares and a 65.36 percent holding of votes in Reka Industrial Plc.
Transactions with the Reka Group:
| EUR1,000 | 1-12/2023 | 1-12/2022 |
|---|---|---|
| Other purchases | -562 | -847 |
| Other income | 7 | 5 |
| Guarantee commissions Sales receivables and other receivables at the end of |
-18 | -70 |
| the period | 168 | 556 |
Reka Ltd has earlier guaranteed financing and other agreements of the Reka Industrial Group. Reka Industrial paid a guarantee commission for guarantees.
The Reka Industrial Group uses the Reka Group level finance and supporting systems as well as related licenses and virtual servers.
Transactions with Reka Pension fund:
| EUR 1,000 |
1-12/2023 | 1-12/2022 |
|---|---|---|
| Purchase of real estate | 0 | 6,200 |
| Paid pension expenses | -1,494 | -2,721 |
| Rental expenses | -639 | -289 |
| Financial income | 320 | 92 |
| Financial expenses | 0 | -4 |
| Guarantee capital investment | 8,000 | 8,000 |
| Other debts at the end of the period | 47 | 240 |
| Other receivables at the end of the period | 27 | 92 |
Reka Group's pension insurances were transferred into Reka's Pension Fund on 31 December 2015. Because of the transfer, pension liabilities of Reka Industrial Group have been processed in IFRS through benefit-based calculation.
In 2022 Reka Rubber Ltd made a guarantee capital investment of EUR 5.7 million and in 2019 Reka Cables Ltd made a guarantee capital investment of EUR 2.3 million in Reka Pension Fund. The guarantee capital investment supports the solvency of the pension fund. The interest on the guarantee capital investment is 4 % p.a.
When Reka Cables Ltd joined Nexans Group at the end of April 2023, the EUR 2.3 million guarantee capital investment made by Reka Cables Ltd remained at Reka Industrial Group. In case Reka Cables Ltd would leave Reka Pension Fund in the future and if in such case Reka Pension Fund would charge any exit fee, the fee will be paid by Reka Industrial Group. Relating to the possible exit fee, there is an expense provision of EUR 2.3 million in the balance Sheet of the Group.
Transactions with associated companies:
| EUR 1,000 | 1-12/2023 | 1-12/2022 |
|---|---|---|
| Sales | ||
| Nestor Cables Ltd | 0 | 21 |
| Other purchases | ||
| Nestor Cables Ltd | 0 | 187 |
| Leasing rents | ||
| Riihimäen Kaapelitehdas Ltd | 396 | 1,119 |
Nestor Cables Ltd was sold in July 2022.
Leasing rents to Riihimäen Kaapelitehdas Ltd consisted of rents paid by Reka Cables Ltd. Reka Cables Ltd belonged to the Reka Industrial Group until the end of April 2023.
Riihimäen Kaapelitehdas Ltd is a limited liability company that owns a property in Riihimäki where Reka Cables Ltd is the tenant. The other owners of Riihimäen Kaapelitehdas Ltd are Riihimäen Tilat ja Kehitys and Metsämarkka 1 Ltd.
Management fringe benefits and other related-party transactions:
| EUR 1,000 | 2023 | 2022 |
|---|---|---|
| Salaries and other short-term fringe benefits | 952 | 829 |
| Pension benefits, defined contribution plans | 121 | 112 |
| Total | 1,073 | 940 |
The Group's Board of Directors and management group have been defined as key management personnel of the company.
The members of the Board are paid an annual remuneration in accordance with the decision of the Annual General Meeting. Travel expenses are paid according to the invoice. The members of the Board have no pension agreements with the company. Some of the fees may be paid in shares as decided by the Annual General Meeting. Payments in shares are always announced separately.
The Annual General Meeting in 2023:
Due to Reka Industrial's ownership structure, member of the Board of Directors can be a member of the Board of Directors in subsidiaries and get compensation. In addition, the Board of Directors can decide of separate remuneration, when member of the Board of Directors is taking additional measures and time for implementing an important company project (financing, acquisition, contract).
Transactions with other related parties:
| EUR 1,000 | 1-12/2023 | 1-12/2022 |
|---|---|---|
| Rental incomes | 10 | 8 |
| Other purchases | 17 | 18 |
Other related parties consist of companies that have an ownership relationship through the owner who has significant decision power, or that belong to the related-party companies via the management or board members or their close family members.
The Group has no other significant transactions, receivables or liabilities or guarantees with related parties.
IAS 19 corrected result for the period
Shareholders' equity excluding effects of IAS 19 bookings (average)
Shareholders' equity + non-controlling interest excluding effects of IAS 19 bookings
Balance sheet total – advances received excluding effects of IAS 19 bookings
Interest-bearing liabilities – cash and cash equivalents, liquid financial and investment securities
Shareholders' equity + non-controlling interest excluding effects of IAS 19 bookings
IAS 19 corrected result before taxes + interest and other financial expenses
[Balance sheet total – obligatory provisions and non-interest-bearing liabilities excluding effects of IAS 19 bookings (average)]
The net amount formed when from the net sales are deducted the purchase costs adjusted by the change in the stocks of non-finished and finished goods as well as expenses for production for personal use. Also deducted from the net sales are expenses arising from employee benefits without IAS 19 defined benefit pension arrangements related items, depreciation, amortization and any impairment losses. Other operating incomes and expenses are also taken into account.
New investments made to tangible and intangible assets and Right-of-Use assets.
The net amount that is formed when depreciation and any impairment losses are added to the operating profit
Profit for the period attributable to equity holders of the parent Numbers of shares adjusted for share issues (average)
Shareholders' equity – non-controlling interest Number of shares adjusted for share issues at the end of the period
Dividend per share, EUR Dividend for the period Number of shares adjusted for share issues at the end of the period
Effective dividend yield, % Dividend / share Share price adjusted for share issues at the end of the period
Share price adjusted for share issues at the end of the period Earnings / share
(Number of B shares – own B shares) x share price at the end of the period + number of A shares x average share price
| EUR 1,000 |
2023 | 2022 | 2021 |
|---|---|---|---|
| Result for the period in Financial Statements | 34,483 | 8,978 | 986 |
| IAS 19 eliminations | 215 | -3,571 | 725 |
| Result for the period in IAS 19 adjusted Perfor mance Measures |
34,699 | 5,407 | 1,711 |
| IAS 19 effect on non-interest-bearing liabilities | 0 | 0 | 4,979 |
| IAS 19 effect on Shareholders' equity | 2,962 | 1,880 | -3,983 |
| IAS 19 effect on Balance sheet total | 6,491 | 1,880 | 996 |
| Shareholders' equity in Financial Statements | 55,205 | 21,250 | 10,090 |
| IAS 19 eliminations | -2,962 | -1,880 | 3,983 |
| Shareholders' equity in IAS 19 adjusted Perfor | |||
| mance Measures | 52,244 | 19,370 | 14,073 |
| Balance sheet total in Financial Statements | 71,555 | 87,094 | 72,237 |
| IAS 19 eliminations | -6,491 | -1,880 | -996 |
| Balance sheet total in IAS 19 adjusted Performance | |||
| Measures | 65,064 | 85,214 | 71,241 |
All comments in this report that do not refer to actual facts are future estimates. Such estimates include expectations concerning market trends, growth and profitability as well as statements including the words "believe", "assume" or "will be" or a similar expression. Since these estimates are based on current plans and estimates, they involve risks and uncertainty factors that may cause the actual results to differ substantially from current statements. Among other things, such factors include 1) operating conditions, such as continued success in production and the ensuing efficiency benefits, availability and cost of production inputs, demand for new products and changes in circumstances affecting the acquisition of capital under acceptable conditions; 2) sector-specific circumstances, such as the intensity of demand for products, the competition, current and future market prices for the Group's products and related pricing pressures, the financial situation of the Group's customers and competitors and competitors' possible new products; and 3) the general economic situation, such as economic growth in the Group's main market areas and change in exchange rates and interest rates.
Reka Industrial Plc
Reka Industrial Plc | Financial Statement Release 2023 32 Kankurinkatu 4–6 05800 Hyvinkää
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