Jump to content

One-off items weighed down on the result for the period – Vapo Groups Financial Statements 1.5.2015–30.4.2016

The financial year in figures:

  • Group turnover in the financial year 1 May 2015–30 April 2016 was EUR 459.8 million (EUR 486.9 million during the period 1 May 2014–30 April 2015).
  • The operating margin (EBITDA) was EUR 43.1 million, or 9.4% of turnover (EUR 74.7 million, 15.3%).
  • The operating result was EUR 8.6 million, or 1.9% of turnover (EUR 36.9 million, 7.6%). The operating result includes one-off expenses of EUR 8.9 million (one-off gains of EUR 2.5 million).
  • The operating result for the Group’s continuing business operations, excluding one-off items and the effect of divested businesses, was EUR 19.4 million (EUR 29.5 million).
  • The pre-tax return on invested capital (ROIC, previous 12 months) was 1.2% (5.4%).
  • Free cash flow before taxes was EUR 60.7 million (EUR -25.1 million).
  • Gross investments were EUR 38.5 million, ratio to depreciation 1.1 (EUR 88.4 million, 2.3).
  • Net investments were EUR 21.9 million, ratio to depreciation 0.6 (EUR 67.1 million, 1.7).
  • The equity ratio on 30 April 2016 was 37.6% (37.8%).
  • Interest-bearing net debt on 30 April 2016 was EUR 366.6 million (EUR 393.1 million).
  • The ratio of interest-bearing net debt to operating margin (net debt/EBITDA, previous 12 months) on 30 April 2016 was 8.5 (5.3).
  • 10.4 TWh of energy peat was delivered (10.5 TWh). 

Tomi Yli-Kyyny, CEO, on the financial year: one-off items weighed down on the result for the period 

Vapo Group’s result for the financial year fell into loss-making territory, which was a disappointment. Peat production in summer 2015 was substantially lower than usual, and the weather in the 2015–2016 heating season in Finland was substantially warmer than the long-term average. These two factors had a negative impact in excess of EUR 10 million on the Group’s result. Vapo Oy carried out two significant restructuring measures during the financial year. In January 2016, the company sold Vapo Timber Oy, a non-core business. During the winter, the company carried out a major renewal of its operating model to revise the operation and management of Vapo Oy’s energy value chain in order to correspond with the current demand for energy peat. A key driver of the renewal was the need to improve the company’s competitiveness by creating broader and more flexible roles in the organisation in a market situation where peat is barely used at all in the production of condensing power. The divestment of the sawmill business and the one-off expenses associated with the renewal of the operating model had a combined negative impact of nearly EUR 10 million on operating profit. 

While the operating result was weak, the company’s free cash flow (before taxes and financial expenses) was at an excellent level, enabling higher-than-anticipated debt repayments. 

Vapo Oy is entering the new financial year as a substantially more cost-efficient energy company. The company’s strategy is to shift its focus from just the sale of fuels and heating towards more comprehensive energy solutions and new digital added value services. One such example is the operations centre completed in Vantaa’s Tikkurila district, which is already being used to operate over ten power and heating plants—both Vapo’s own and those of its customers—as well as several district heating networks. 

The operations of Vapo Ventures, the Group’s new business development unit, developed favourably during the financial year. Vapo Ventures’ first internal start-up, Vapo Clean Waters Oy, was incorporated and began its operations at the end of the financial year.  In addition, Vapo Fibers, a unit that creates new business from peat fibre and other natural fibres, began its operations at the beginning of May. These new start-ups are aimed at creating new industrial business based on Vapo’s competencies and extensive peat resources on a relatively rapid schedule. The company’s goal is to introduce the first commercial applications of peat fibre to the market within the new financial year. 

With respect to the operating environment, a positive factor worth noting is that the reduction of peat tax and increase in subsidies for fuel wood, which were decided by Finland’s previous government, were put into effect in spring 2016. This provides much-needed continuity for the future planning of customers who use domestic fuels. 

However, the planned new limits on particle emissions represent a significant concern for large-scale (over 50 MW) Finnish combustion plants that use biofuels. The Industrial Emissions Directive LCP BREF document (Large Combustion Plant Best Available Technique Reference Document), which is currently in the draft stage, proposes substantially tougher limits on emissions arising from the combustion of biomass and peat. The use of domestic fuels is being promoted at the EU level, and it seems likely that countries that produce coal will have less strict emissions limits on their domestic brown coal, while Finland, Ireland and Sweden would not be granted a similar relaxation of emissions limits on domestic peat. It would be costly for Finland as a nation to become a driftwood when it comes to the LCP BREF regulations or policies concerning the next emissions trading period or the sustainability criteria governing the use of wood for energy. It is essential for Finland to be successful in these significant energy industry lobbying projects.

Consolidated key figures

MEUR

1-4/2016

1-4/2015

5/2015-4/2016

5/2014-4/2015

1/2013-4/2014

Turnover

182.6

195.1

459.8

486.9

847.4

Operating profit (EBIT)

18.1

26.0

8.6

36.9

50.1

% of turnover

9.9

13.3

1.9

7.6

5.9

Operating profit (EBIT) before impairments

12.8

26.8

9.4

37.6

53.9

% of turnover

7.0

13.8

2.1

7.7

6.4

Profit/loss for the period

10.0

19.6

-4.4

19.8

22.4

   Operating margin (EBITDA)

20.7

35.5

43.1

74.7

110.9

+/- Change in working capital

31.5

0.7

39.6

-32.7

-27.5

   – Net investments

-10.1

-31.1

-21.9

-67.1

-21.6

Free cash flow before taxes

42.1

5.1

60.7

-25.1

61.9

Gross investments

11.9

33.6

38.5

88.4

57.5

Return on invested capital % *

1.2

5.4

3.8

Return on invested capital % before impairments *

1.4

5.5

4.4

Return on equity % *

-1.5

6.6

1.3

Balance sheet total

795.0

838.2

786.9

Shareholders’ equity

288.2

304.4

305.2

Interest-bearing net debt

366.6

393.1

329.0

Equity ratio %

37.6

37.8

40.2

Interest-bearing net debt/operating margin

8.5

5.3

4.4

Gearing %

127.2

128.7

110.3

Average number of employees

914

961

1091

*) Previous 12 months

The financial year 1.1.2013–30.4.2014 was 16 months long.

For further information, please contact:

–        Tomi Yli-Kyyny, CEO, Vapo Oy tel. +358 20 790 5605
–        Suvi Kupiainen, CFO, Vapo Oy, tel. +358 20 790 5516
–        Ahti Martikainen, Director, Communications and Public Affairs, Vapo Oy, 
         tel. +358 20 790 5608