AI assistant
Robit Oyj — Interim / Quarterly Report 2018
Aug 16, 2018
3337_rns_2018-08-16_13a1c8e7-4dd9-4094-9080-cbdaae63a861.html
Interim / Quarterly Report
Open in viewerOpens in your device viewer
ROBIT PLC INTERIM REPORT JANUARY - JUNE 2018: ROBIT PLC NET SALES AT LEVEL OF COMPARATIVE PERIOD - INTEGRATION OF ACQUISITIONS AND EXCHANGE RATES DEPRESSED GROWTH AND PROFITABILITY
ROBIT PLC INTERIM REPORT JANUARY - JUNE 2018: ROBIT PLC NET SALES AT LEVEL OF COMPARATIVE PERIOD - INTEGRATION OF ACQUISITIONS AND EXCHANGE RATES DEPRESSED GROWTH AND PROFITABILITY
ROBIT PLC STOCK EXCHANGE RELEASE 16 AUGUST 2018 AT 12.00 P.M.
ROBIT PLC INTERIM REPORT JANUARY - JUNE 2018: ROBIT PLC NET SALES AT LEVEL OF
COMPARATIVE PERIOD - INTEGRATION OF ACQUISITIONS AND EXCHANGE RATES DEPRESSED
GROWTH AND PROFITABILITY
Robit PLC Interim Report 1 January - 30 June 2018 (unaudited).
In the text H1 refers to the review period 1 January - 30 June 2018 and H2
refers to the review period 1 July - 31 December 2018.
January - June 2018 summary
* Net sales EUR 43.1 million (H1/2017: 42.6), change of +1.1%
* EBITDA EUR -0.9 million (H1/2017: 1.3), change of -171.8 %
* Comparable EBITDA EUR 0.1 million (H1/2017: 2.9), change of -97.6 %
* EBITA EUR -3.2 million (H1/2017: -0.8).
* Comparable EBITA EUR -2.2 million (H1/2017: 0.8).
* Operating profit as percentage of net sales (EBIT %) was -8.4 (H1/2017:
-3.0).
* Review period net income EUR -4.4 million (H1/2017: -1.9).
* Operating cash flow EUR +1.1 million (H1/2017 0.1)
* Earnings per share at the end of the review period -0.21 euros (H1/2017:
-0.11).
* Equity ratio at the end of the review period H1 55.2 % (H1/2017: 56.9).
+--------------------------------+-------+-------+--------+------+
|Key financials |H1 2018|H1 2017|Change %| 2017 |
+--------------------------------+-------+-------+--------+------+
|Net sales, EUR 1.000 |43 100 |42 645 | 1,1 % |88 222|
| | | | | |
|EBITDA, EUR 1.000 | -948 | 1 320 |-171,8 %|1 626 |
| | | | | |
|Adjusted EBITDA*, EUR 1.000 | 69 | 2 908 |-97,6 % |3 500 |
| | | | | |
|EBITA, EUR 1.000 |-3 186 | -824 |286,7 % |-2 734|
| | | | | |
|Adjusted EBITA*, EUR 1.000 |-2 169 | 764 |-384,0 %| -861 |
| | | | | |
|Adjusted EBITA, percent of sales|-5,0 % | 1,8 % | |-1,0 %|
| | | | | |
|EBIT, EUR 1.000 |-3 616 |-1 288 |180,7 % |-3 640|
| | | | | |
|EBIT, percent of sales |-8,4 % |-3,0 % | |-4,1 %|
| | | | | |
|Result for the period, EUR 1.000|-4 370 |-1 898 |130,2 % |-5 190|
+--------------------------------+-------+-------+--------+------+
*) H1 2018 items affecting comparability were restructuring costs of EUR 1.0
million.
H1 2017 items affecting comparability: costs of EUR 1.3 million for changing
stock exchange listing and share issue, and advisory fees of EUR 0.3 million
pertaining to business acquisitions. Further information about comparable items
is given in paragraph 4.2 of the accounting principles.
FUTURE OUTLOOK
According to Robit's revised guidance on 15 June 2018 euro-denominated EBITA for
year 2018 (without items affecting comparability) will be slightly lower than
the level of previous year 2017 provided that the market demand stays at the
current level and there are no unpredictable market disruptions.
Previous guidance was: According to Robit's estimation, EBITA as percentage of
net sales for year 2018 (without items affecting comparability) will improve
significantly from the EBITA level of year 2017 provided that the market demand
stays at the current level and there are no unpredictable market disruptions
CEO MIKA VIRTANEN:
The most important targets of Robit are profitable growth and networking capital
improvement. The company's net sales in the review period was at the same level
as in the comparative period, falling short of the company's 15% target for
organic growth However, at comparable currency exchange rates, growth in net
sales was 8%, which is clearly faster than the growth rate for the consumables
market. Top Hammer business continued to grow significantly faster than the
market (+18%). Instead the sales for the Down The Hole business took a negative
turn compared to the comparative period (-9%), although Robit's piling market
segment developed positively.
Production at the new automated production facility in Korea started up during
the review period, strengthening the company's delivery reliability and boosting
production volumes in the future. Through-put times at the new factory are
already shorter than at the old facility.
Profitability during the review period did not reach target levels. The company
has made business acquisitions in support of its growth strategy and getting
these onto a profitable growth track has taken longer than anticipated.
Profitability was hampered by items affecting comparability arising from the
restructuring carried out in 2018. The restructuring measures focused on
balancing capacity and integrating the business acquisitions. These actions and
the reorganisation of operations will improve profitability in the future.
Profitability was also still affected by the measures to ensure delivery
reliability relating to the commissioning of the Korean facility, through which
the company sought to safeguard deliveries to our customers throughout the
changeover period. During the review period two factories were operating in
Korea, resulting in a heavier cost structure than normal. The old factory in
Korea was closed in June.
As part of its growth strategy the company is rationalising and developing its
product portfolio and service offering. Robit is clarifying its brand offering
and strengthening its best-known brand, Robit. The Halco business will continue
as a separate brand.
The restructuring measures support the implementation of the growth strategy
with our distributors. The investments and measures taken in the supply chain
during the review period will support profitability and improve working capital
turnover. The net cash flow turned positive during the review period.
MARKET REVIEW
Robit's business operations focus mainly on four market segments: mining,
construction, tunnelling and well-drilling. The company has five market areas:
Americas, Asia, Australasia, East and EMEA.
In the mining market, activity regarding equipment investments was at good level
and was also stable in consumables. New mines continued to account for just a
small part of the potential consumables market. In this segment Africa saw the
best development in sales.
Market demand in the construction industry was also at a good level, especially
in the EMEA area. Construction projects in the East area contributed positively
to net sales.
Tunnelling developed most positively in Australasia and EMEA.
The well-drilling market was active in the Nordic countries. Demand in major
countries for Robit in the Middle East was at a low level.
DEVELOPING THE OFFERING
Robit's Top Hammer product range has been further developed by expanding the new
generation Evolution Bit product range. Customer feedback on these button bits
has been extremely positive. Robit has also already made good progress in
testing the new Top Hammer tube product offering. These new products, to be
launched in the third quarter, will expand the market potential of Robit's
offering for underground mines.
Growth for the Top Hammer products was restricted by the delay in the
commissioning of the new Korean rod product manufacturing facility.
Sales of the DTH offering, which has grown significantly through acquisitions,
developed well in the infrastructure construction related piling segment.
Developments in DTH product sales to new markets for open-pit mining and
underground mines have still not resulted in a significant share of the
company's overall sales. However, the company managed to secure new DTH
reference customers in open-pit-mining and underground mining. These customers
form a basis for Robit to continue the development of the sales of DTH products
in new geographic regions. During the review period Robit expanded its offering
with Rotary bit products. This is a new growth opportunity for the company.
Development of the Digital Services offering continued with key customers. The
company believes that this has considerable business potential for the coming
years.
REVENUE AND FINANCIAL PERFORMANCE
+----------------------------------------------+-------+-------+--------+------+
| |H1 2018|H1 2017|Change %| 2017 |
+----------------------------------------------+-------+-------+--------+------+
|Net Sales, EUR 1.000 | 43 100| 42 645| 1,1 %|88 222|
| | | | | |
|Net Sales growth, percent | 1,1 %|102,3 %| |37,7 %|
| | | | | |
|Gross margin, EUR 1.000 | 12 566| 14 987| -16,2 %|28 557|
| | | | | |
|Gross margin, percent of sales | 29,2 %| 35,1 %| |32,4 %|
| | | | | |
|EBITDA, EUR 1.000 | -948| 1 320|-171,8 %| 1 626|
| | | | | |
|EBITDA, percent of sales | -2,2 %| 3,1 %| | 1,8 %|
| | | | | |
|Adjusted EBITDA, EUR 1.000 | 69| 2 908| -97,6 %| 3 500|
| | | | | |
|Adjusted EBITDA, percent of sales | 0,2 %| 6,8 %| | 4,0 %|
| | | | | |
|EBITA, EUR 1.000 | -3 186| -824| 286,7 %|-2 734|
| | | | | |
|EBITA, percent of sales | -7,4 %| -1,9 %| |-3,1 %|
| | | | | |
|Adjusted EBITA, EUR 1.000 | -2 169| 764|-384,0 %| -861|
| | | | | |
|Adjusted EBITA, percent of sales | -5,0 %| 1,8 %| |-1,0 %|
| | | | | |
|EBIT, EUR 1.000 | -3 616| -1 288| 180,7 %|-3 640|
| | | | | |
|EBIT, percent of sales | -8,4 %| -3,0 %| |-4,1 %|
| | | | | |
|Result for the period, EUR 1.000 | -4 370| -1 898| 130,2 %|-5 190|
| | | | | |
|Result for the period, percent of sales |-10,1 %| -4,5 %| |-5,9 %|
| | | | | |
|Earnings per share (EPS), EUR | -0,21| -0,11| | -0,27|
| | | | | |
|Return on equity (ROE), percent | -4,9 %| -2,6 %| |-7,3 %|
| | | | | |
|Return on capital employed (ROCE), percent | -3,7 %| -0,3 %| |-5,8 %|
| | | | | |
|Adjusted return on capital employed (ROCE), | | | | |
|percent | -2,9 %| 1,1 %| |-4,2 %|
| | | | | |
|Net interest-bearing debt, EUR 1.000 | 12 881| -3 922|-428,4 %| 7 752|
| | | | | |
|Equity ratio, percent | 55,2 %| 56,9 %| |57,6 %|
| | | | | |
|Net gearing, percent | 15,2 %| -4,1 %| | 8,4 %|
| | | | | |
|Gross investments, EUR 1.000 | 4 102| 5 856| -30,0 %|13 341|
| | | | | |
|Gross investments, percent of sales | 9,5 %| 13,7 %| |15,1 %|
| | | | | |
|Gross investments, excl.acquisition, EUR 1.000| 4 102| 3 654| 12,3 %|11 139|
| | | | | |
|R&D costs, EUR 1.000 | 911| 772| 18,1 %| 1 482|
| | | | | |
|R&D costs, percentage of sales | 2,1 %| 1,8 %| | 1,7 %|
| | | | | |
|Average number of employees | 310| 294| 5,4 %| 296|
| | | | | |
|Number of employees at the end of period | 290| 325| -10,8 %| 329|
+----------------------------------------------+-------+-------+--------+------+
*) H1 2018 items affecting comparability were restructuring costs EUR 1.0
million. H1 2017 items affecting comparability: costs of EUR 1.3 million for
changing stock exchange listing and share issue, and advisory fees of EUR 0.3
million pertaining to business acquisitions.
The group's net sales for the review period totalled EUR 43.1 million (42.6),
growth of 1.1% compared to the comparative period.
EUR 18.9 million (16.1) of net sales in the review period came from the Top
Hammer business and EUR 24.2 million (26.5) from the Down the Hole business. Net
sales for the Digital Services business remain small as it continues to focus
primarily on developing reference cases with key customers.
EUR 16.7 million (14.7) of net sales came from the EMEA region, EUR 11.3 million
(12.7) from Australia, EUR 5.6 million (6.1) from Asia, EUR 6.6 million (7.0)
from the Americas, and EUR 2.9 million (2.2) from the East.
EBIT for the review period was EUR -3.6 million (-1.3). This was -8.4 % (-3.0)
of the review period net sales. EBITA was EUR -3.2 million (-0.8). Comparable
EBITA was EUR -2.2 million (0.8), which is -5.0% (1.8) of net sales. Items
affecting comparability are restructuring costs due to structural and business
model changes at several group companies.
Net financial expenses totalled EUR 0.9 million (H1/2017: costs of 0.8), and EUR
0.3 million of this was interest expenses and EUR 0.6 million exchange rate
losses. The result before taxes was EUR -4.5 million
(-2.1) and taxes were EUR 0.2 million (0.2). The impact of exchange rate
differences on business operations was negative during the review period.
FINANCIAL TARGETS
According to Robit's outlook, which it revised on 15 June 2018, relative EBITA
profitability in euros (excluding items affecting comparability) for 2018 will
be slightly lower than in the previous year, if market demand remains at its
current level and no unforeseen disturbances occur in the market.
Previous guidelines were: relative EBITA profitability for 2018 (excluding items
affecting comparability) will improve considerably from the 2017 level, if
market demand remains at its current level and no unforeseen disturbances occur
in the marketplace.
In line with its strategy the company is aiming to grow. Growth is targeted with
an average annual organic growth rate of at least 15% over the cycle.
The long-term strategic goal is to achieve an EBITA marginal of over 13% over
the economic cycle. To achieve this the company has made changes to its
operative structures during the review period. The benefits of these are
expected to be partially realised already in the second half of 2018 and fully
during 2019.
The company intends to manage its working capital more efficiently whilst
maintaining its ability to serve customers effectively globally in the chosen
market segments.
FINANCING AND INVESTMENTS
The group's net cash flow from operations in the review period totalled EUR 1.1
million (0.1). Changes in working capital had an impact of EUR 2.2 million (-
0.2).
The change in working capital during the review period from the closing figures
for the annual financial statements were mainly caused by the EUR 5.5 million
increase in non-interest-bearing debts and growth in inventories of EUR 3.7
million. Trade receivables were down EUR 0.4 million.
Net working capital was EUR 39.2 million (39.6) at the end of the review period.
The net cash flow for investment activities was EUR -4.1 million (-5.9). Gross
investments in production during the review period totalled EUR 4.1 million
(5.9). EUR 3.2 million of these were for the new Korean production facility.
The net cash flow from financing activities was EUR -5.6 million (49.8),
comprising the payment of dividends and net changes in loans.
At the end of the review period the group had liquid assets totalling EUR 33.6
million (54.7) and interest-bearing financing loans totalling EUR 46.5 million
(51.5). Interest-bearing net debt was EUR 12.9 million (-3.9)
The group's equity at the end of the review period was EUR 85.0 million (95.7).
The group's equity ratio was 55.2% (56.9%) and its net debt to equity ratio
(gearing) was 15.2% (-4.1%).
The company failed to meet the terms of the covenant (interest bearing net loans
/ operating margin) on its long-term loans. The investor has agreed on 30 June
2018 to allow the violation of the condition. Because of this violation, loans
of EUR 26 million which become payable in more than 12 months' time are still
reported as short-term loans. When the company has negotiated new covenant
terms, which take in to account the changes in reporting figures caused by IFRS
16 regulations, loans that mature in more than 12 months will be presented under
long-term liabilities.
Depreciation totalled EUR 2.7 million (2.6). EUR 0.4 million of this related to
depreciation arising from business acquisitions and divestments.
FUTURE OUTLOOK
Robit's goal is to grow faster than the market. Developing the product offering,
alongside the company's growing own distribution network and improved
distributor network, provides good growth prospects. A professional, effective
and customer-oriented distributor network is even more vital for the company's
future organic growth. By providing more comprehensive deliveries the company
can give customers better service. These factors create a good foundation on
which to build and strengthen the company's market share and position in the
market.
The company will continue to look in to potential business acquisitions as part
of the global trend of consolidation in the industry.
According to Robit's revised guidance on 15 June 2018 euro-denominated EBITA for
year 2018 (without items affecting comparability) will be slightly lower than
the level of previous year 2017 provided that the market demand stays at the
current level and there are no unpredictable market disruptions.
Previous guidance was: According to Robit's estimation, EBITA as percentage of
net sales for year 2018 (without items affecting comparability) will improve
significantly from the EBITA level of year 2017 provided that the market demand
stays at the current level and there are no unpredictable market disruptions
PERSONNEL AND MANAGEMENT
During the review period the company began cost-cutting measures affecting the
entire organisation. The structural changes planned have resulted in a reduction
in personnel that in total affects 60 people. At the end of the review period
the company's personnel numbered 290 (325) of which 77% (73%) were located
outside Finland.
During the review period the company formed a new management team. As from 14
March 2018 the company's management team comprises: CEO Mika Virtanen, EVP Tommi
Lehtonen, CFO Ilkka Miettinen, Head of Supply Chain Jukka Pihamaa and Head of HR
Jaana Rinne.
SHARE-BASED INCENTIVE SCHEME
In April 2017 Robit's Board of Directors decided on a share-based incentive
scheme for the group's management and key personnel. The scheme is divided into
two parts: the Performance Share Plan and the Matching Share Plan. The aim is to
combine the objectives of shareholders and participants in the scheme with the
company's long-term objectives. This will grow company value and increase
personnel commitment to the company whilst offering scheme participants a
competitive reward scheme that is based on increasing the company's profit and
increasing share value. With the Matching Share Plan, one year after making an
investment each participant in the scheme receives number of shares
corresponding to the amount they invested, and after three year earning period
up to a maximum of five times the number of shares, provided the company's
objectives for sales growth and earnings per share have been met. For the 2017
programme there are currently 18,672 basic shares for which share rewards will
be paid in September 2018.
In June 2018 Robit's Board of Directors decided on a new share-based incentive
scheme for the group's management and key personnel. The scheme is divided into
two parts: the Performance Share Plan and the Matching Share Plan. With the
Matching Share Plan, three years after making an investment each participant in
the scheme receives number of shares corresponding to the amount they invested
minus their personal tax deduction. In addition after three year earning period
the person can receive shares, which is related to company defined objectives
for sales growth and earnings per share. In the new scheme 24,000 shares are
participating. The Performance Share Plan will grant maximum of 136,000 shares
issued provided the company's objectives for growth and profitability
development are met.
RESOLUTIONS OF THE ANNUAL GENERAL MEETING
On 28 March 2018 Robit Plc's Annual General Meeting approved the proposed
financial statements for 1 January - 31 December 2017 and decided that a
dividend of EUR 0.10 per share would be distributed. The dividend date of record
was 3 April 2018 and payment date 10 April 2018.
The AGM decided to discharge the members of the Board of Directors and the CEO
from liability.
The AGM decided that the Board of Directors would comprise six members. The
following were re-elected to the Board: Tapio Hintikka, Mammu Kaario, Hannu-
Kalle Reponen and Harri Sjöholm, and Heikki Allonen and Kai Seikku were elected
as new members. Heikki Allonen was elected Chairman of the Board of Directors.
Board member Matti Kotola stepped down as a member of the Board.
Authorised Public Accountants Ernst & Young Oy were elected as the company's
auditor, with Authorised Public Accountant Mikko Järventausta as Chief Auditor.
The AGM authorised the Board of Directors to decide on using the company's
unrestricted equity to acquire a maximum of 2,108,390 of the company's shares in
one or several instances. The maximum number of shares that can be acquired is
equal to 10% of all shares in the company at the time of the notice to the AGM
being given. However, the company and its subsidiaries cannot at any time own
more than 10% of the total shares of the company. This authorisation entitles
the purchase of shares only using available unrestricted equity. The previous
authorisation given to the Board on 20 April 2017 to acquire shares was revoked.
This authorisation is valid until the end of the next Annual General Meeting,
and in any case until 30 June 2019 at the latest.
The AGM authorised the Board of Directors to decide on the issuing of shares and
of special rights entitling to shares, as referred to in chapter 10 §1 of the
Limited Liability Companies Act, in one or several instances and with or without
consideration. The number of shares to be issued, including shares issued on the
basis of special rights, can be a maximum of 3,000,000 shares, which is the
equivalent of around 14% of all shares in the company at the time of notice to
the AGM being given. The Board can decide to issue new shares or to release
shares currently owned by the company. The authorisation is in force until the
end of the next AGM, and in any case until 30 June 2019 at the latest. The
authorisation revokes previous, unused authorisations to issue shares, options
or other special rights to obtain shares.
CHANGES IN GROUP STRUCTURE
During the review period the company has established a new company, Robit Asia
Limited in Hong Kong, and has purchased the remaining 49% of shares in Halco
Brighouse Limited.
OTHER EVENTS DURING THE REVIEW PERIOD
The constituent meeting of the company's Board of Directors was held on 28 March
2018, when the Board elected members for the following committees from among its
members: remuneration committee, nomination committee, work committee and audit
committee. The following were elected to the remuneration committee: Heikki
Allonen (chair), Mammu Kaario and Kai Seikku. The following were elected to the
nomination committee: Heikki Allonen (chair), Kai Seikku and Harri Sjöholm. The
following were elected to the working committee: Heikki Allonen (chair), Kalle
Reponen and Tapio Hintikka. The following were elected to the audit committee:
Mammu Kaario (chair), Kalle Reponen and Kai Seikku. In addition Mammu Kaario was
elected as vice-chairman of the Board.
The company reorganised its management team on 14 March 2018. The management
team comprises Mika Virtanen (CEO), Tommi Lehtonen (EVP), Ilkka Miettinen (CFO),
Jukka Pihamaa (Head of Supply Chain) and Jaana Rinne (Head of HR).
On 14 March 2018 the company completed the structural and operating model
changes it had announced on 29 January 2018. The company moved from being a
matrix organisation to a linear organisational model. With the new
organisational model the company seeks to bring its expertise and decision
making closer to its customers' business, offering faster and more effective
implementation. As part of reforming the structural and operating models, the
company will also invest in improving the effectiveness and increasing the
flexibility of the supply chain. The company also announced it would begin cost-
cutting measures affecting the entire organisation globally. As a result of the
structural changes the company announced it would be cutting 60 jobs worldwide
during 2018. This brings annual savings of over EUR 3 million.
On 8 February 2018 the company opened a major production facility near Seoul in
South Korea, which will enable it to meet more effectively the growing demand
for the Top Hammer line of rods and shanks. The total investment in the facility
was around EUR 10 million.
On 29 January 2018 the company's Board of Directors purchased the remaining
shares in its subsidiary Halco Brighouse Ltd. that were owned by the company's
management. The purchase price for the shares was around GBP 0.075 million
(around EUR 0.86 million).
On 29 January 2018 the Board formed an audit committee and at its constituent
meeting after the AGM chose the following Board members for the committee: Mammu
Kaario (chair), Hannu-Kalle Reponen and Kai Seikku.
On 18 January 2018 the company appointed Tommi Lehtonen (b. 1970) as Robit Plc's
Executive Vice President.
According to Robit's revised guidance on 15 June 2018 euro-denominated EBITA for
year 2018 (without items affecting comparability) will be slightly lower than
the level of previous year 2017 provided that the market demand stays at the
current level and there are no unpredictable market disruptions.
Previous guidance was: According to Robit's estimation, EBITA as percentage of
net sales for year 2018 (without items affecting comparability) will improve
significantly from the EBITA level of year 2017 provided that the market demand
stays at the current level and there are no unpredictable market disruptions
SHARES AND SHARE TURNOVER
On 30 June 2018 the company had 21,083,900 shares. On 30 June 2018 the company
had 2 387 shareholders.
The company holds 86,320 of its own shares (0.4% of total shares). On 30 June
2018 the market value of the company's shares was EUR 103 million (share price
EUR 4.90).
EVENTS AFTER THE REVIEW PERIOD
There are no significant events to report as of 16 August 2018.
RISKS AND BUSINESS UNCERTAINTIES
The risks and uncertainties to which the company is exposed relate to any
changes in the company's business environment, and to global economic and
political developments.
Other uncertainties include fluctuations in currency exchange rates, the
functioning and commissioning of new information systems, successful integration
of acquisitions, risks relating to delivery reliability and logistics, and IPR
risks. Changes in the tax and customs regulations of export countries can hamper
the company's export sales or affect its profitability. Risks relating to data
security and cyber threats may also have a harmful impact on Robit's business
operations. Any changes in the business environment may have a negative impact
on our customers' payment behaviour and may increase the risk of legal
procedures and demands as well as disputes relating to Robit's products and
other operations.
Lempäälä, 16 August 2018
Robit Plc
CEO Mika Virtanen
Board of Directors
For further information, please contact:
Mika Virtanen, CEO
+358 40 832 7583
[email protected]
The information presented above includes statements about future prospects.
These relate to events or the company's economic development in the future. In
some cases such statements can be recognised by their use of conditional words
(such as "may", "expected", "estimated", "believed", "predicted" and so on) or
other similar expressions. Statements such as these are based on assumptions and
factors that Robit's management have at their disposal and on current decisions
and plans. There is always risk and uncertainty attached to any statements
regarding future events because they pertain to events and depend on factors
that are not possible to predict with certainty. For this reason future results
may differ even significantly from figures expressed or assumed in statements
about future prospects.
SUMMARY OF FINANCIAL STATEMENTS
CONSOLIDATED STATEMENT OF COMPREHENSIVE
INCOME
EUR thousand 1 Jan - 30 Jun 1 Jan - 30 Jun 1 Jan - 31 Dec
2018 2017 2017
Net sales 43 100 42 645 88 222
Other operating income 364 110 1 482
Materials and services -27 673 -23 503 -50 609
Employee benefit expense -10 841 -9 059 -18 943
Depreciation,
amortization and -2 668 -2 608 -5 267
impairment
Other operating expenses -5 898 -8 872 -18 526
EBIT (Operating profit) -3 616 -1 288 -3 640
Finance income and
costs
Finance income 1 283 639 1 333
Finance cost -2 197 -1 475 -3 758
Finance income and costs -915 -836 -2 425
net
Profit before income tax -4 530 -2 124 -6 065
Income taxes
Current taxes 0 -210 -238
Change in deferred taxes 161 435 1 113
Income taxes 160 226 875
Result for the period -4 370 -1 898 -5 190
Attributable to:
Owners of the parent -4 370 -1 898 -5 190
Non-controlling interest 0 0 0
-4 370 -1 898 -5 190
Other comprehensive
income
Items that may be
reclassified to profit
or loss in subsequent
periods:
Translation differences -670 -986 -1 301
Other comprehensive -670 -986 -1 301
income, net of tax
Total comprehensive -5 040 -2 884 -6 492
income
Attributable to:
Owners of the parent -5 040 -2 884 -6 492
Non-controlling interest 0 0 0
-5 040 -2 884 -6 492
Earnings per share
attributable to the
owners of the parent
during the year:
Basic and diluted -0,21 -0,11 -0,27
earnings per share
* Changes in inventories of finished goods and work in progress are included in
Materials and services- figures and Work performed by the Group and capitalized
are included in Other operating expenses.
CONSOLIDATED BALANCE SHEET
EUR thousand 30-Jun-18 30-Jun-17 31-Dec-17
ASSETS
Non-current assets
Goodwill 24 509 25 573 25 029
Other intangible assets 7 593 8 314 8 088
Property, plant and equipment 27 750 20 901 26 280
Loan receivables 567 376 517
Other receivables 3 153 3
Deferred tax assets 2 285 1 078 1 903
Total non-current assets 62 707 56 395 61 820
Current assets
Inventories 33 223 32 726 30 141
Account and other receivables 24 949 24 338 25 921
Loan receivables 14 31 17
Income tax receivable 172 27 139
Cash and cash equivalents 33 589 54 698 42 172
Total current asset 91 948 111 819 98 391
Total assets 154 655 168 214 160 211
EUR thousand 30-Jun-18 30-Jun-17 31-Dec-17
EQUITY AND LIABILITIES
Equity
Share capital 705 705 705
Share premium 202 202 202
Reserve for invested unrestricted equity 82 502 82 436 82 502
Cumulative translation difference -1 827 -842 -1 157
Retained earnings 7 800 15 059 15 057
Profit for the year -4 370 -1 898 -5 190
Total equity attributable to owners of the 85 011 95 661 92 118
parent
Total equity 85 011 95 661 92 118
Liabilities
Non-current liabilities
Borrowings 6 602 42 340 3 511
Deferred tax liabilities 2 464 1 938 2 241
Employee benefit obligations 1 223 1 178 988
Total non-current liabilities 10 289 45 456 6 740
Current liabilities
Borrowings 39 869 9 122 46 413
Advances received 574 330 324
Income tax liabilities -59 195 70
Account payables and other liabilities 18 971 17 449 14 546
Total current liabilities 59 355 27 096 61 353
Total liabilities 69 643 72 553 68 093
Total equity and liabilities 154 655 168 214 160 211
CONSOLIDATED STATEMENT OF CASH FLOWS
EUR thousand 1 Jan - 30 Jun 1 Jan - 30 Jun 1 Jan - 31 Dec
2018 2017 2017
Cash flows from
operating activities
Profit before income tax -4 530 -2 124 -6 065
Adjustments
Depreciation,
amortization and 2 668 2 608 5 267
impairment charges
Finance income and 936 836 2 425
finance costs
Share-based payments to 33 0 19
employees
Loss (+) / Gain (-) on
sale of property, plant 5 0 110
and equipment
Disposals (+) on sale of
property, plant and 32 145 525
equipment
Other non-cash 264 0 703
transactions
Cash flows before
changes in working -594 1 465 2 983
capital
Change in working
capital
Increase (-) in account 411 -2 276 -3 714
and other receivables
Increase (-) / decrease -3 683 -2 212 -1 753
(+) in inventories
Increase (+) in account 5 453 4 333 2 247
and other payables
Cash flows from
operating activities 1 586 1 309 -238
before financial items
and taxes
Interest and other -397 -557 -1 010
finance expenses paid
Interest and other 35 173 146
finance income received
Income taxes paid -155 -849 -926
Net cash inflow
(outflow) from operating 1 069 76 -2 027
activities
Cash flows from
investing activities
Purchases of property, -3 522 -3 253 -10 155
plant and equipment
Purchases of intangible -460 -761 -1 494
assets
Proceeds from the sale
of property, plant and 27 0 424
equipment
Proceeds from loan -146 361 86
receivables
Acquisition of
subsidiaries, net of 0 -2 202 -2 202
cash acquired
Net cash inflow
(outflow) from investing -4 102 -5 856 -13 341
activities
Cash flows from
financing activities
Proceeds from share 0 47 962 46 709
issues, net of expenses
Proceeds from loans 0 6 000 11 314
Repayments of loans -3 100 -3 532 -10 811
Change in bank -125 1 072 2 070
overdrafts
Payment of finance lease -211 -130 -701
liabilities
Distribution of dividend -2 100 -1 578 -1 599
Net cash inflow
(outflow) from financing -5 536 49 794 46 982
activities
Net increase (+) /
decrease (-) in cash and -8 568 44 014 31 613
cash equivalents
Cash and cash
equivalents at the 42 172 10 519 10 519
beginning of the
financial year
Exchange gains/losses on
cash and cash -15 164 40
equivalents
Cash and cash
equivalents at end of 33 589 54 698 42 172
the year
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Cumula-
Reserve for tive
EUR thousand Share Share invested transla- Retained Total
capital premium unrestricted tion earnings
equity diffe-
rence
Equity at 705 202 32 368 144 16 638 50 057
1.1.2017
Profit for the -1 898 -1 898
period
Other
comprehensive
income
Translation -986 -986
differences
Total
comprehensive -986 -1 898 -2 884
changes
Dividend -1 579 -1 579
distribution
Halco share 1 797 1 797
issue
Share issue 48 270 48 270
Total
transactions
with owners, 0 0 50 067 0 -1 579 48 488
recognized
directly in
equity
Equity at 705 202 82 435 -842 13 161 95 661
30.6.2017
Cumula-
Reserve for tive
EUR thousand Share Share invested transla- Retained Total
capital premium unrestricted tion earnings
equity diffe-
rence
Equity at 705 202 82 502 -1 157 9 868 92 120
1.1.2018
Profit for the -4 370 -4 370
period
Other
comprehensive
income
Translation -670 -670
differences
Total
comprehensive -670 -4 370 -5 040
changes
Dividend -2 100 -2 100
distribution
Share-based
payments to 33 33
employees
Total
transactions
with owners, 0 0 0 0 -2 067 -2 067
recognized
directly in
equity
Equity at 705 202 82 502 -1 827 3 431 85 013
30.6.2018
NOTES
Contents
- Scope and principles of the interim report
- Implementation of new IFRS standards
- IFRS standards to be adopted at a later date
- Key figures and calculation
- Breakdown of turnover
- Financing arrangements
- Changes to property, plant and equipment
- Impairment testing
- Commitments and contingent liabilities
- Business acquisitions
- Derivatives
- SCOPE AND PRINCIPLES OF THE INTERIM REPORT
This interim report has been prepared in accordance with the IAS 34 standard for
interim financial reporting and using the same principles as for the annual
financial statement. This interim report has not been audited.
All figures in the summarised financial statement have been rounded to the
nearest figure, therefore the sum of reported figures may not exactly match
those presented.
- IMPLEMENTATION OF NEW IFRS STANDARDS
IFRS 15
IFRS 15 replaces IAS 18, which relates to sales contracts of goods and services,
and IAS 11, which relates to long-term construction projects. Since 1 January
2018 Robit has applied the new IFRS 15 Revenue from Contracts with Customers
standard. IFRS 15 includes a five-step model for recognising revenue from
customer contracts. According to IFRS 15 revenue is reported as income up to the
amount that is expected to be received from the customer in return for a product
or service. The revenue is recorded as income when either control of the product
or the service has been transferred to the customer. Recognition of revenue
occurs either over time or at a point in time.
The implementation of the new standard has not affected the date of recognition
or the presentation in the balance sheet. At Robit the new standard does not
affect the measuring or timing of sales entries.
When Robit supplies consumables, the sales revenue is recognised at the time
that control of the goods is transferred to the customer, normally meaning at
the time of delivery. Aftersales support services are recognised over time at
the point when the customer simultaneously receives and uses the service Robit
supplies.
IFRS 9
The IFRS 9 Financial Instruments standard replaces the IAS 39 classification and
measuring models and contains new instructions for classifying and measuring
financial assets and liabilities, a new model based on expected credit losses
for measuring impairment of financial assets, and new requirements for general
hedge accounting.
Under IAS 39, impairment of sales revenue was recorded when there was reasonable
evidence that the entity in question is not going to receive their due
receivables. In implementing IFRS 9 the group applied a simplified impairment
model for "expected credit losses" from trade receivables. According to the new
model a provision for expected credit loss is recorded at a value that
corresponds to the expected credit losses. The new impairment model is based on
forward-looking information and on previous experiences and current
expectations.
The implementation of IFRS 9 has not had a significant impact on the
classification or measuring of financial assets or the recording of impairment
on sales receivables or other financial receivables.
IFRS 2
As from 30 June 2018 Robit will be applying the amended standard IFRS 2:
Classification and Measurement of Share-based Payment Transactions. The amended
standard clarifies the quantifying and reporting of the cash part of share-based
transactions. When a company has agreed upon the net principle, so that it is
committed to withhold and pay the taxes due from share bonuses on behalf of the
recipient of the bonus, the entire value of the reward is to be recorded as a
reward paid in shares. As a result of the IFRS 2 amendment the tax consequences
of the new 2018 share-based rewards scheme are recorded as own capital. Since
the 2017 share-based incentive scheme does not adhere to the net principle the
changes to the IFRS 2 standard do not affect earlier entries.
- IFRS STANDARD TO BE ADOPTED AT A LATER DATE
IFRS 16
IFRS 16 specifies the principles by which leases are recorded and measured, how
they are presented in the financial statements and what information about them
is presented. As a result almost all rental or leasing agreements are recorded
in the balance sheet as there will no longer be differentiation between
operative rental agreements and finance leasing contracts. According to the new
standard an asset (the right to use the asset that has been leased) is recorded,
as is a financial debt corresponding to the payment of lease or rental. The only
exceptions will be rental agreements relating to short-term rental of low value
assets.
In 2018 the group has begun the commissioning stage of the IFRS 16 project. The
group intends to implement IFRS 16 using a simplified retrospective application
approach when implementation begins on 1 January 2019, which means that
reference periods will not be adjusted.
4.1 KEY FIGURES
+------------------------------------------+----------+----------+----------+
|CONSOLIDATED KEY FIGURES | H1 2018 | H1 2017 | 2017 |
+------------------------------------------+----------+----------+----------+
|Net sales, EUR 1.000 | 43 100| 42 645| 88 222|
| | | | |
|EBIT, EUR 1.000 | -3 616| -1 288| -3 640|
| | | | |
|EBIT, percent of sales | -8,4 %| -3,0 %| -4,1 %|
| | | | |
|Earnings per share (EPS), EUR | -0,21| -0,11| -0,27|
| | | | |
|Return on equity (ROE), percent | -4,9 %| -2,6 %| -7,3 %|
| | | | |
|Return on capital employed (ROCE), percent| -3,7 %| -0,3 %| -5,8 %|
| | | | |
|Equity ratio, percent | 55,2 %| 56,9 %| 57,6 %|
| | | | |
|Net gearing, percent | 15,2 %| -4,1 %| 8,4 %|
| | | | |
|Gross investments, EUR 1.000 | 4 102| 5 856| 13 341|
| | | | |
|Gross investments, percent of sales | 9,5 %| 13,7 %| 15,1 %|
| | | | |
|Number of shares |21 083 900|21 083 900|21 083 900|
| | | | |
|Own shares | 86 320| 94 674| 86 320|
| | | | |
|Percentage of total shares | 0,41 %| 0,45 %| 0,41 %|
+------------------------------------------+----------+----------+----------+
4.2 CONSOLIDATING ALTERNATIVE KEY FIGURES
Robit presents alternative key figures to supplement the key figures given in
the group's financial statements, balance sheets and cash flow statements that
have been drawn up according to IFRS standards. Robit considers that the
alternative figures give significant extra insight into the result of Robit's
operations, its financial position and cash flows. These figures are often used
by analysts, investors and other parties.
Alternative key figures should not be studied apart from the key figures
according to IFRS or instead of them. Not all companies calculate their
alternative key figures in the same way, so Robit's alternative figures may not
be directly comparable to those presented by other companies, even if they carry
the same headings.
The following events affect comparability: costs relating to being listed on the
stock exchange and share issue, acquisition costs and business restructuring
costs.
EBITDA and comparable
EBITDA
EUR thousand 1 Jan - 30 Jun 1 Jan - 30 Jun 1 Jan - 31 Dec
2018 2017 2017
EBIT -3 616 -1 288 -3 640
Depreciation and 2 668 2 608 5 267
amortisation
EBITDA -948 1 320 1 626
Items affecting
comparability
Expenses of list change 1 290 1 290
and share issue
M&A expenses 298 469
Restructuring expenses 1 017 0 115
Items affecting 1 017 1 588 1 874
comparability in total
Comparable EBITDA 69 2 908 3 500
EBITA
EUR thousand 1 Jan - 30 Jun 1 Jan - 30 Jun 1 Jan - 31 Dec
2018 2017 2017
EBIT -3 616 -1 288 -3 640
Amortizations of -429 -464 907
acqusitions
EBITA -4 045 -1 752 -2 733
EBIT -3 616 -1 288 -3 640
Items affecting
comparability
Expenses of list change 1 290 1 290
and share issue
M&A expenses 298 467
Restructuring expenses 1 017 115
Comparable EBIT -2 599 300 -1 768
Amortizations of 429 464 907
acqusitions
Comparable EBITA -2 169 764 -861
4.3 Calculation of key figures
Operating profit + depreciation and
EBITDA* = amortisation
Operating profit + amortisation of
EBITA = goodwill
Profit (loss) for the financial year
Earnings per share ---------------------------------------
(EPS), euros = Amount of shares adjusted with the
share issue (average during the
financial year)
Profit (loss) for the
financial year
Return on equity, % =--------------------------x 100
Equity (average during
the financial year)
Profit before appropriations and taxes + interest
expenses and other financing expenses
Return on capital ---------------------------------------------------
employed (ROCE), % = Equity (average during the financial year) + x 100
interest-bearing financial liabilities (long-term
and short-term loans from financial institutions,
average during the financial period)
Net interest-bearing Long-term and short-term loans from financial
debt = institutions - cash and cash equivalents - short-
term financial securities
Equity
Equity ratio, % =------------------------x 100
Balance sheet total -
advances received
Net interest-bearing
Gearing, % = financial liabilities x 100
------------------------
Equity
- BREAKDOWN OF TURNOVER
Entries are recorded according to IFRS 15 in the same way for each business unit
and market area.
NET SALES
Net sales by product
area
EUR thousand 1 Jan - 30 Jun 1 Jan - 30 Jun 1 Jan - 31 Dec
2018 2017 2017
Top Hammer 18 940 16 114 38 183
Down the Hole 24 151 26 458 49 979
Digital services 9 73 61
Total 43 100 42 645 88 222
Net sales by market
area
EUR thousand 1 Jan - 30 Jun 1 Jan - 30 Jun 1 Jan - 31 Dec
2018 2017 2017
Europe, Middle East and 16 656 14 683 32 299
Africa
North and South America 6 617 6 991 15 328
Asia 5 635 6 121 11 344
Australasia 11 250 12 660 24 737
Russia and CIS 2 941 2 190 4 515
countries
Total 43 100 42 645 88 222
- FINANCING ARRANGEMENTS
Robit Plc failed to meet the terms of the covenant for its long-term loans
(interest-bearing net loans / operating margin) on 31 December 2017. For this
reason, EUR 28 million of loans which become payable in over 12 months' time are
reported as short-term loans. The investor has agreed to allow the violation of
the covenant.
Robit Plc failed to meet the terms of the covenant on its long-term loans
(interest-bearing net loans / operating margin) on 30 June 2018. The investor
has agreed to allow the violation of the covenant. Permission has not been
extended further than a 12-month period because the company's key figures used
in determining covenant levels will change as the company implements the IFRS
16 standard for lease accounting. For this reason, loans totalling EUR 26
million, which fall due in over 12 months' time, are also presented in short-
term liabilities.
Borrowings/Loans/Interest-bearing loans
EUR thousand 30-Jun-18 30-Jun-17 31-Dec-17
Non-current borrowings
Loans from credit institutions 4 949 41 512 1 818
Other loans 736 735 637
Finance lease liabilities 916 93 1 056
Total non-current borrowings 6 602 42 340 3 511
Current borrowings
Loans from credit institutions 35 269 4 871 41 606
Other loans 68 0 75
Bank overdrafts 4 522 3 657 4 647
Finance lease liabilities 10 593 85
Total current borrowings 39 869 9 122 46 413
Total borrowings 46 470 51 462 49 924
- CHANGES IN PROPERTY, PLANT AND EQUIPMENT
EUR thousand 30-Jun-18 30-Jun-17 31-Dec-17
Cost at the beginning of period 37 482 23 797 23 797
Acquisition of subsidiaries 0 3 765 3 472
Additions 3 531 3 224 11 126
Disposals -944 -316 -810
Reclassifications -8 -170 648
Exchange differences -301 -610 -751
Cost at the end of period 39 760 29 690 37 482
Accumulated depreciation and impairment at the -11 202 -7 186 -7 186
beginning of period
Depreciation -1 826 -1 917 -3 672
Disposals 912 171 285
Reclassifications 0 0 -795
Exchange differences 106 143 166
Accumulated depreciation and impairment at the -12 010 -8 789 -11 202
end of period
Net book amount at the beginning of period 26 280 16 611 16 611
Net book amount at the end of period 27 750 20 901 26 280
- IMPAIRMENT TESTING
Robit's net sales and profitability have not developed as expected during the
review period. There is therefore an increased level of uncertainty about the
value of the company's goodwill. Impairment testing will be carried out during
the second half of 2018, when the impacts of changes to cost structures can be
better estimated. At the point of reporting, 30 June 2018, the company's market
capitalisation is greater than its net assets.
9. COMMITMENTS AND CONTINGENT LIABILITIES
EUR thousand 30-Jun-18 30-Jun-17 31-Dec-17
Guarantees and mortgages given on own behalf 46 025 46 025 46 025
Pledged bank accounts 0 0 0
Other guarantee liabilities 517 646 517
Total 46 542 46 671 46 542
Operating lease commitments
EUR thousand 30-Jun-18 30-Jun-17 31-Dec-17
No later than 1 year 1 154 589 1 455
Later than 1 year and no later than 5 years 3 030 1 345 3 957
Later than 5 years 2 016 2 595 3 066
Total 6 200 4 529 8 478
- ACQUISITIONS
ACQUISITIONS IN 2018
Robit did not make any business acquisitions during the review period but the
company did purchase the remaining 49 percent of shares in Halco Brighouse Ltd.,
which it now fully owns. The company has already been consolidated into the
group's 2017 financial statement according to 100 percent ownership.
During the review period the company founded a subsidiary in Hong Kong (Robit
Asia Ltd).
ACQUISITIONS IN 2017
In February 2017 Robit acquired shares in Halco's English companies, 51percent
of Halco Brighouse Ltd and 100 percent of Halco Drilling Tools Ltd. A new
subsidiary, Robit LLC, was also established in the USA, which purchased Halco's
USA's capital assets and inventory.
In addition, the company founded a subsidiary in Kazakhstan (TOO Robit).
- DERIVATIVES
The company's Board of Directors has approved the company's financial policies
and on that basis the company has begun to hedge its most significant financial
positions. Hedging did not yet have a significant impact during the reporting
period.
PRESS CONFERENCES
A press conference in connection with the publication of this interim report
will be held for analysts, investors and media representatives in Helsinki on
16 August 2018 at 2 pm Finnish time. The press conference will be held at
Tapahtumatalo Bank.
Doors open half an hour before the conference. The conference will be in
English.
The press conference will be held by the company's CEO and CFO. The interim
report will be presented, including a market review, key events in the first
half-year and the result.
Questions can be posed before the event via e-mail [email protected] or
during the presentation.
The presentation can also be streamed live online at www.31415.fi/robit3 or
alternatively www.3141.fi/robit3. Streaming does not require registration.
Presentation material and video of the presentation will be available after the
press conference at https://www.robitgroup.com/?investor=financial-information.
FINANCIAL REPORTING SCHEDULE IN 2018
The company will publish its net sales figures for the period 1 January 2018 -
30 September 2018 on Thursday 18 October 2018.
Further information:
Mika Virtanen, CEO
+358 40 832 7583
[email protected]
Robit is a global growth company that sells drilling consumables globally to its
customers in the following market segments: mining, construction and
contracting, tunnelling and well drilling. The company's offering is divided
into three product and service areas: Top Hammer, Down The Hole and Digital
Services. The company has 19 own sales and warehousing facilities around the
world and an active sales network across 115 countries. Robit has production
facilities in Finland, South Korea, Australia, England and the USA.
Distribution:
Nasdaq Helsinki Oy
Key media
www.robitgroup.com
[]
Attachments: