The tax increase decreased demand for peat more than anticipated
VAPO OY’S FINANCIAL STATEMENTS (extended to 16 months) 1 January 2013–30 April 2014
January–April
- Group turnover in the January–April period was EUR 230.7 million (EUR 251.2 million in the same period in 2013).
- Operating margin (EBITDA) was EUR 32.1 million, or 13.9% of turnover (EUR 36.6 million, 14.6%).
- The operating result was EUR 18.4 million, or 8.0% of turnover (EUR 24.3 million, 9.7%). The operating result includes one-off items of EUR -7.5 million (EUR 1.1 million).
- Free cash flow before taxes was EUR 57.1 million (EUR 49.1 million).
- Gross investments were EUR 17.8 million (EUR 4.2 million).
- Net investments were EUR 6.6 million (EUR 3.7 million).
- 4.9 TWh of energy peat was delivered (5.5 TWh).
January 2013–April 2014
- Group turnover in the financial year 1 January 2013–30 April 2014 was EUR 847.4 million (EUR 652.9 million in 1 January–31 December 2012).
- Operating margin (EBITDA) was EUR 110.9 million, or 13.1% of turnover (EUR 52.2 million, 7.5%).
- The operating result was EUR 50.1 million, or 5.9% of turnover (EUR 9.2 million, 1.4%). The operating result includes one-off items of EUR -9.7 million (EUR 15.3 million).
- The pre-tax return on invested capital (ROIC, previous 12 months) was 3.9% (1.4%).
- Free cash flow before taxes was EUR 54.2 million (EUR 64.2 million).
- Gross investments were EUR 65.0 million, ratio to depreciation 1.2 (EUR 48.0 million, 1.1).
- Net investments were EUR 29.1 million, ratio to depreciation 0.5 (EUR 26.9 million, 0.6).
- The equity ratio on 30 April 2014 was 39.4% (36.9%).
- Interest-bearing net debt on 30 April 2014 was EUR 329.0 million (EUR 355.9 million).
- The ratio of interest-bearing net debt to operating margin (net debt / EBITDA, previous 12 months) on 30 April 2014 was 4.4 (6.8).
- 15.9 TWh of energy peat was delivered (14.8 TWh).
Tomi Yli-Kyyny, CEO: The company’s solvency has strengthened and responsibility measures in peat production have been effective
Vapo Oy’s financial year was changed from the traditional calendar year to 1 May–30 April. The change was made because it allows the key factors affecting the Group’s result, namely the peat production season and the following heating season, to be allocated to the same financial year. This review reports the figures of the extended financial year 1 January 2013–30 April 2014 and presents the figures of the previous verified financial year 1 January–31 December 2012 as comparison.
We have resolutely strengthened our balance sheet by disposing of non-core holdings, enhancing the recycling of capital and improving operational profitability. We will continue to invest in water treatment and sustainable peat production to ensure continuity of operations. We seek a pre-tax ROIC of more than seven per cent. In the past financial year, the return on invested capital was 3.9 per cent (1.4%).
All of Vapo Oy’s business areas, with the exception of Peat Products, improved both their absolute and relative profitability. All of the Group’s businesses reported profit in the last tertial of the financial year.
The Group’s turnover in the extended financial year was EUR 847.4 million (EUR 652.9 million in 1 January–31 December 2012) and the operating profit was EUR 50.1 million (EUR 9.2 million). The most significant changes affecting the volumes and profitability of the business areas took place in the Peat Products and Vapo Timber Oy business areas.
In summer 2013, peat production was successful in terms of both quality and quantity. Nevertheless, demand for energy peat was exceptionally low during the financial year. Despite the fact that the reporting period was four months longer, the sales of energy peat remained at the same level as in the shorter reference period. At the end of the financial year, Vapo had more than seven TWh of unsold energy peat stocked. The most significant reason for this was the energy tax on peat that increased dramatically at the beginning of 2013. Due to this, coal was a more competitive fuel than peat on the coast and in many inland locations as well. This applies especially to electricity generation and partly to combined heat and power generation.
The past winter was exceptionally warm, which clearly decreased demand for heat and also kept the market prices for electricity at a low level.
In the sawn timber market, the demand in Finland still remained weak, but the export of sawn timber clearly picked up as of the end of 2013, which also increased Vapo Timber Oy’s volumes and improved profitability.
During the past financial year, we carried out two significant corporate arrangements on the grounds of operational synergies made possible by them. In January 2014, Vapo Timber Oy sold the Hankasalmi sawmill to Versowood Oy. After the transaction, Vapo Timber Oy continues to develop the operations of the Lieksa and Nurmes sawmills. Synergies between the Hankasalmi sawmill and the sawmills of North Karelia were not extensive enough, whereas Versowood estimates to gain synergy benefits as a result of the transaction. In Sweden, Vapo and the Lantmännen group merged their pellet business operations. The new company is the market leader in wood pellet production in Sweden. The operations transferred to the joint venture included our subsidiary Neova AB’s pellet operations in Sweden and the corresponding Lantmännen Agroenergi AB business operations in Sweden and Latvia. Vapo Group has a 50% share in the joint venture. The merger was approved by the EU’s competition authorities in May 2014. Synergies yielded by the merger promote our competitiveness in the Swedish market.
The strengthening of the balance sheet and the improved operational efficiency are reflected especially in the net debt/EBITDA ratio. Despite there being much more capital tied up in peat stocks than in the reference period and despite having paid a dividend of EUR 10 million, our equity ratio at the end of the period was 39.4 per cent (36.9% on 31 December 2012) and the net debt / EBITDA ratio was 4.4 (6.8).
With regard to profitability over a longer term, we face two major challenges. In case the price of coal remains at its current low level, peat taxation must be decreased in order for this domestic form of energy, together with wood, to be able to compete with imported fuels. The decision to refrain from the future tax increase, made in the Government discussion on spending limits in spring 2014, is not enough – instead, peat taxation must be returned to the 2012 level. Another factor affecting the sector significantly is the ongoing amendments to the legislation that regulates permits. The legislation must be clear and unambiguous and make permit processes smoother in order to enable Finland’s adequate self-sufficiency in energy in future. Vapo is committed to responsible peat production by investing significantly in the reduction of reducing emissions to watercourses. In new production areas, Vapo is committed to reducing the load on watercourses when compared to the situation before peat production was started.
Consolidated key figures
|
MEUR |
1–4/2014 |
1–4/2013 |
1/2013–4/2014 |
1–12/2012 |
1–12/2011 |
|
|
|
|
|
|
|
|
Turnover |
230.7 |
251.2 |
847.4 |
652.9 |
705.0 |
|
Operating profit (EBITA) |
18.4 |
24.3 |
50.1 |
9.2 |
-44.3 |
|
% of turnover |
8.0 |
9.7 |
5.9 |
1.4 |
-6.3 |
|
Operating profit (EBITA) before impairments |
21.5 |
11.9 |
53.9 |
9.8 |
-6.9 |
|
% of turnover |
9.3 |
4.7 |
6.4 |
1.5 |
-1.0 |
|
Result for the period |
5.4 |
18.8 |
22.4 |
6.1 |
-41.5 |
|
|
|
|
|
|
|
|
Operating margin (EBITDA) |
32.1 |
36.6 |
110.9 |
52.2 |
39.5 |
|
+/- Change in working capital |
18.4 |
8.7 |
-27.5 |
38.9 |
62.1 |
|
– Net investments |
6.6 |
3.7 |
-29.1 |
-26.9 |
-81.2 |
|
Free cash flow before taxes |
57.1 |
49.1 |
54.2 |
64.2 |
20.5 |
|
Gross investments |
17.8 |
4.2 |
65.0 |
48.0 |
94.5 |
|
Return on invested capital % *) |
|
|
3.9 |
1.4 |
-6.1 |
|
Return on invested capital % before impairments *) |
|
|
4.4 |
1.4 |
-0.9 |
|
Return on equity % * |
|
|
1.2 |
2.1 |
-12.8 |
|
|
|
|
|
|
|
|
Balance sheet total |
|
|
786.9 |
801.7 |
862.8 |
|
Shareholders’ equity |
|
|
298.6 |
288.5 |
279.3 |
|
Interest-bearing net debt |
|
|
329.0 |
355.9 |
416.7 |
|
Equity ratio % |
|
|
39.4 |
36.9 |
33.3 |
|
Interest-bearing net debt/operating margin |
|
|
4.4 |
6.8 |
10.5 |
|
Gearing % |
|
|
110.3 |
123.4 |
145.8 |
|
|
|
|
|
|
|
|
Average number of employees |
|
|
1,091 |
1,154 |
1,226 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
*) Previous 12 months |
|
|
|
|
|
Peat Products
The business area includes the energy and environmental peat business operations in Finland, Sweden and the Baltic countries.
The turnover of the Peat Products business area in the extended financial year 1 January 2013–30 April 2014 was EUR 264.2 million (EUR 220.5 million in 1 January–31 December 2012). The operating result for the period was EUR 56.8 million (EUR 32.4 million). The operating result includes one-off items of EUR 8.0 million. Gross investments totalled EUR 38.6 million (EUR 25.4 million).
The energy peat tax increase from EUR 1.90 to EUR 4.90 per MWh at the beginning of 2013 decreased demand by nearly a third. Turnover from energy peat was EUR 235.5 million (EUR 183.2 million) and the operating result was EUR 52.1 million (EUR 32.0 million). Energy peat deliveries totalled 15.9 TWh (14.8 TWh). Of this, deliveries in Finland were 14.1 TWh (13.0 TWh), in Sweden 1.4 TWh (1.3 TWh) and in the Baltic countries 0.4 TWh (0.5 TWh). Illustrative of the decrease in the demand for energy peat is that the financial year reported here includes 1.5 heating seasons whereas the reference period includes one heating season.
Turnover from environmental peat was EUR 34.9 million (EUR 37.2 million) and the operating result was EUR 4.7 million (EUR 3.7 million).
When compared to the previous season, peat production in summer 2013 was successful as a whole, which improved the operating result and, following a difficult season last year, there is now a sufficient amount of high-quality energy and environmental peat available. Investments focused mainly on improving water treatment systems and on upgrading production areas and production machinery.
Wood Fuels
The business area includes the forest fuel and pellet business operations in Finland, Sweden, Estonia, Poland and Denmark.
The turnover of the business area in the extended financial year 1 January 2013–30 April 2014 was EUR 182.1 million (EUR 165.4 million in 1 January–31 December 2012). The operating result for the period was EUR 2.8 million (EUR -8.1 million). The operating result includes one-off items of EUR -0.4 million (EUR 3.4 million). Gross investments were EUR 1.3 million (EUR 0.9 million).
Turnover from forest fuels and sawmill industry by-products was EUR 69.5 million (EUR 65.2 million) and the operating result was EUR 1.2 million (EUR -2.7 million). 3,359 GWh of forest fuels were sold (3,183 GWh). Of this, 2,911 GWh was sold in Finland (2,222 GWh) and in the Baltic countries and Sweden a total of 449 GWh (961 GWh).
Turnover from pellets was EUR 113.0 million (EUR 100.2 million) and the operating result was EUR 1.5 million (EUR -5.4 million). The Group’s pellet deliveries totalled 603,000 tonnes (560,000 tonnes). Pellet sales during the financial year spread among the market areas as follows: 221,000 tonnes/1,060 GWh were sold in Finland (146,000 tonnes/701 GWh) and 333,000 tonnes/1,600 GWh in Sweden (230,000 tonnes/1,100 GWh). In Poland, pellet sales were 13,000 tonnes (61,000 tonnes) and in Denmark, 36,000 tonnes (123,000 tonnes). When peat pellets were included within the scope of peat taxation, their demand plummeted in Finland.
In Finland, demand for wood fuels is increasing as energy companies are starting to use renewable fuels to an increasing extent. Nevertheless, there are major regional variations in demand and its growth. In the Nordic countries, the consumer segment is not growing whereas growth can be expected in the large-customer segment and industrial heat production.
In Sweden, the pellet business operations of Lantmännen Agroenergi AB and Vapo’s subsidiary Neova AB were transferred into a jointly owned company. The joint venture started its operations in June 2014.
Heat and Power
The business area has operations in Finland, Sweden and the Baltic countries. During the past financial year, the Polish heating business operations were discontinued.
The turnover of the business area in the extended financial year 1 January 2013–30 April 2014 was EUR 143.9 million (EUR 105.5 million in 1 January–31 December 2012). The operating result for the period was EUR 9.3 million (EUR -0.6 million). The operating result includes one-off items of EUR -2.5 million (EUR -3.0 million). Gross investments totalled EUR 15.1 million (EUR 7.0 million).
The exceptionally warm winter 2013–2014 reduced demand for heat and steam. Deliveries of heat and steam to customers totalled 2,292 GWh (1,795 GWh). Electricity sales were 172 GWh (112 GWh). In Finland, a total of 1,676 GWh of heat and steam were supplied (1,293 GWh) and 172 GWh of electricity was sold (112 GWh). In Sweden, a total of 579 GWh of heat and steam were supplied (475 GWh) and in the Baltic countries, 37 GWh (27 GWh).
Of the heat, steam and electricity produced by the business area, 56% (53%) were produced from wood fuels, 33% (32%) from peat and 11% (14%) from other fuels. The peat tax increase and the lowering of wood chip production subsidies that took place in Finland in 2013 increased the cost level and created pressure to raise the prices of heat and steam. For their part, the low electricity prices impaired profitability.
Kekkilä Group
Kekkilä operates in the international market and has production in Finland, Sweden, Estonia and Norway.
The turnover of the Kekkilä Group in the extended financial year 1 January 2013–30 April 2014 was EUR 125.7 million (pro forma: EUR 92.1 million on 31 December 2012, unaudited). The operating result for the period was EUR 1.8 million (pro forma: EUR 3.8 million). The operating result includes one-off items of EUR -1.7 million (pro forma: EUR 3.9 million). The result for the reference period in 2012 includes a EUR 2.6 million insurance indemnity for the fire at the Eurajoki agricultural peat plant and an increase of EUR 0.4 million in the peatland after-use reserve. The establishment of the Kekkilä Group generated allocated goodwill, and depreciations related to this allocated goodwill impair the result for the period by EUR 1.5 million (EUR 0.0 million). Gross investments totalled EUR 6.3 million (EUR 28.9 million).
During the financial year, the turnover of the consumer business was EUR 65.1 million (EUR 43.7 million), the turnover of the professional growing business was EUR 35.9 million (EUR 26.2 million), the turnover of the landscaping business was EUR 15.1 million (EUR 12.9 million) and the turnover of the environmental management business was EUR 7.8 million (EUR 8.1 million).
The extended financial year includes two consumer business sales seasons, which increases the relative turnover and operating result when compared to a 12-month financial year. The 2013 horticultural season in consumer markets was exceptionally short, which decreased turnover. In spring 2014, the season was unusually early, and consequently, some of the turnover that is normally generated in May was already generated in March–April.
At the beginning of the financial year, the price of peat raw material was exceptionally high due to the poor peat production situation in summer 2012. Peat production in summer 2013 was more successful, which has contributed to offsetting the increase in product costs caused by the previous season. In the Norwegian consumer market, profitability is being eroded by import of finished products
and raw peat from Sweden and Estonia.
Vapo Timber Oy
After Vapo Timber Oy sold the business operations, fixed assets and inventories of the Hankasalmi sawmill unit to Versowood Oy on 1 January 2014, Vapo Timber Oy’s business operations include the Kevätniemi and Nurmes sawmills. All of the Hankasalmi sawmill’s personnel transferred to the new owner with unchanged terms of employment.
Vapo Timber Oy’s turnover in the extended financial year 1 January 2013–30 April 2014 was EUR 179.7 million (EUR 112.5 million in 1 January–31 December 2012). The operating result for the period was EUR -5.2 million (EUR -10.9 million). The operating result includes one-off items of EUR -0.9 million (EUR 1.0 million). Gross investments were EUR 3.2 million (EUR 2.9 million).
Deliveries of sawn timber in the period from January 2013 to April 2014 were 733,000 cubic metres (491,000 m3).
In Finland, the demand for sawn timber is still low, but the fact that construction activity in Europe is picking up and demand in the North African market has remained stable predicts an improvement in the result of the sawmill business. However, this requires the continuation of problem-free raw material supply with regard to both domestic timber and timber imported from Russia.
Other activities
The impact of group administration and other business activities on the operating result of the extended financial year 1 January 2013–30 April 2014 was EUR -17.0 million (EUR -6.7 million in 1 January–31 December 2012). The operating result includes one-off items of EUR -7.0 million (EUR -0.7 million). Gross investments totalled EUR 3.7 million (EUR 0.7 million).
The targets set in the EU’s climate and energy strategy did not contain targets for renewable traffic fuels. Consequently, Vapo Oy’s Board of Directors decided to interrupt the preparations for the Kemi biodiesel project in February 2014. The impact of Forest BtL Oy on the result of the period was EUR -5.5 million (EUR -0.6 million).
Mustankorkea Oy’s turnover in the extended financial year 1 January 2013–30 April 2014 was EUR 13.4 million (EUR 9.8 million in 1 January–31 December 2012) and the operating result was EUR 2.9 million (EUR 2.1 million).
Developments by business segment
Turnover by segment
|
MEUR |
1–4/2014 |
1–4/2013 |
Change % |
1/2013–4/2014 |
1–12/2012 |
Change % |
|
Peat Products |
77.7 |
89.0 |
-12.7 |
264.2 |
220.5 |
19.8 |
|
Energy peat |
75.2 |
80.7 |
-6.8 |
235.5 |
183.2 |
28.5 |
|
Environmental peat |
8.7 |
8.3 |
4.7 |
34.9 |
37.2 |
-6.3 |
|
Wood Fuels |
47.9 |
62.9 |
-23.9 |
182.1 |
165.4 |
10.1 |
|
Forest fuels |
18.6 |
21.5 |
-13.2 |
69.5 |
65.2 |
6.5 |
|
Pellets |
29.3 |
41.7 |
-29.8 |
113.0 |
100.2 |
12.8 |
|
Heat and Power |
42.5 |
48.5 |
-12.3 |
143.9 |
105.5 |
36.4 |
|
Kekkilä Group |
35.7 |
30.0 |
19.2 |
125.7 |
92.1 |
36.5 |
|
Vapo Timber Oy |
40.6 |
38.3 |
6.0 |
179.7 |
112.5 |
59.7 |
|
Others |
2.8 |
2.8 |
-0.3 |
13.4 |
9.8 |
36.1 |
|
Forest BtL |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
|
Mustankorkea |
2.8 |
2.8 |
-0.3 |
13.4 |
9.8 |
36.1 |
|
Group administration & shared by businesses |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
|
Inter-segment turnover |
-16.6 |
-20.3 |
18.1 |
-61.6 |
-52.9 |
-16.3 |
|
Total |
230.7 |
251.2 |
-8.2 |
847.4 |
652.9 |
29.8 |
Turnover by segment includes internal sales to other segments.
Operating result by segment
|
MEUR |
1–4/2014 |
1–4/2013 |
Change % |
1/2013–4/2014 |
1–12/2012 |
Change % |
|
Peat Products |
16.7 |
20.8 |
-19.7 |
56.8 |
32.4 |
23.9 |
|
Energy peat |
16.1 |
19.7 |
-18.6 |
52.1 |
32.0 |
12.5 |
|
Environmental peat |
0.6 |
1.0 |
-40.8 |
4.7 |
3.7 |
10.9 |
|
Wood Fuels |
2.8 |
0.7 |
306.3 |
2.8 |
-8.1 |
99.4 |
|
Forest fuels |
1.5 |
0.2 |
544.3 |
1.2 |
-2.7 |
90.7 |
|
Pellets |
1.3 |
0.5 |
184.9 |
1.5 |
-5.4 |
103.8 |
|
Heat and Power |
4.7 |
7.0 |
-33.2 |
9.3 |
-0.6 |
907.2 |
|
Kekkilä Group |
1.7 |
0.8 |
96.0 |
1.8 |
3.8 |
-97.9 |
|
Vapo Timber Oy |
0.6 |
-3.1 |
118.8 |
-5.2 |
-10.9 |
47.2 |
|
Others |
-8.2 |
-3.1 |
-169.3 |
-17.0 |
-6.7 |
-29.4 |
|
Forest BtL |
-4.1 |
-0.5 |
-702.1 |
-5.5 |
-0.6 |
-119.6 |
|
Mustankorkea |
0.7 |
0.2 |
227.8 |
2.9 |
2.1 |
7.0 |
|
Group administration & shared by businesses |
-4.8 |
-2.8 |
-74.8 |
-14.4 |
-8.2 |
-16.8 |
|
Eliminations |
0.2 |
1.1 |
-82.9 |
1.6 |
-0.8 |
286.5 |
|
Total |
18.4 |
24.3 |
-24.3 |
50.1 |
9.2 |
246.0 |
When calculating the operating result for a segment, the Group’s internal business transactions have been valued at market price.
Cash flow, investments and financing
Free cash flow before taxes was EUR 54.2 million (EUR 64.2 million). The operating margin (EBITDA) was EUR 110.9 million (EUR 52.2 million), and working capital increased, reducing cash flow by EUR 27.5 million (in 2012, working capital decreased by EUR 38.9 million). Net investments were EUR 29.1 million (EUR 26.9 million).
Gross investments in the past financial year were EUR 65.0 million or 120 per cent of the amount of depreciation (EUR 48.0 million, 114%). The year’s most significant investments were related to reducing emissions to watercourses by peat production. The gross investments are broken down as follows: the Peat Products business area EUR 38.6 million, the Wood Fuels business area EUR 1.3 million, the Heat and Power business area EUR 15.1 million, Vapo Timber Oy EUR 3.2 million and the Kekkilä Group EUR 6.3 million. Other investments by the Group were EUR 3.7 million.
Interest-bearing net debt at the end of the financial year was EUR 329.0 million (EUR 355.9 million). Interest-bearing net debt includes a EUR 5 million convertible bond issued by Vapo’s subsidiary. The ratio of interest-bearing net debt to operating margin (net debt/EBITDA) on 30 April 2014 was 4.4 (6.8 on 31 December 2012). Short-term interest-bearing debt was EUR 92.0 million (EUR 124.2 million). The equity ratio at the end of the financial year was 39.4 per cent (36.9% on 31 December 2012) and the gearing ratio was 110.3 per cent (123.4%). The consolidated balance sheet total was EUR 786.9 million (EUR 801.7 million). Group net financing items were EUR -17.2 million
(EUR -6.4 million). Net financing items were 2.0 per cent of turnover (1.0%).
Changes in the organisation
The new operating model was adopted at the beginning of the financial year 2013. In the new organisation, Vapo Oy has three business areas: Vapo Peat Products, headed by Pasi Koivisto, Vapo Wood Fuels, headed by Juhani Ylä-Sahra, and Vapo Heat and Power, headed by Markus Hassinen.
Jyrki Vainionpää was appointed Vapo Oy’s Chief Operating Officer as of 1 April 2014. He is responsible for Vapo Oy’s regional organisation. Vainionpää is also a member of Vapo Oy’s Management Team. Before his current position, he worked as Vapo Oy’s Chief Financial Officer.
Suvi Kupiainen was appointed Vapo Oy’s Chief Financial Officer as of 1 April 2014. She is also a member of Vapo Oy’s Management Team. Kupiainen joined Vapo from Vapo Timber Oy.
Changes in the Group structure and internal restructuring
In February 2014, Vapo Oy’s Board of Directors decided to freeze the Kemi biodiesel project, and Forest BtL Oy’s operations have been interrupted.
The merger of Neova AB’s wood pellet business operations and Lantmännen Agroenergi AB, a company operating in Sweden and Latvia, was set out in February 2014 and approved by the EU’s competition authorities in May 2014. The company started its operations at the beginning of June 2014. In future, the result of the joint venture will be included in Vapo’s financial statements as an associated company.
In January 2014, Vapo Timber Oy sold the Hankasalmi sawmill to Versowood Oy.
In November 2013, Vapo Oy sold Seda AS, its Latvian subsidiary, to Kalloveen BVBA, a Belgian/Dutch company. Seda AS is one of the largest producers of agricultural peat in Latvia.
In Norway, Hasselfors Garden AS acquired Høstekompaniet DA, a limited partnership owning peat production rights, with an agreement signed on 17 October 2013. Hasselfors Garden AS acquired 99 per cent of the company and Andøytorv AS one per cent of the company. The company acquired has peat production rights to a total area of 22 hectares.
On 3 October 2013, the Group’s Swedish subsidiary Neova AB acquired Brostorpsmossen AB, a company owning peat production rights. The company acquired has peat production rights to a total area of 225 hectares.
On 1 March 2013, Vapo Oy turned the Salo power plant into an independent company, Salon Energiatuotanto Oy.
In May 2012, Vapo Oy agreed the sale of Mustankorkea Oy to the City of Jyväskylä. On the consolidated balance sheet, the external assets and debts of Mustankorkea Oy have been separated out as assets and available-for-sale assets and debts in line with IFRS. The transaction has been appealed and it has not yet been concluded.
In line with the Group’s strategic policies, Vapo Oy has decided to withdraw from the Polish market and has placed its subsidiary Vapo SP zo.o. in liquidation in January 2014.
Change in the financial year
In October, the Extraordinary General Meeting approved the proposal about changing the financial year and extending the current financial year to a 16-month period ending on 30 April 2014. The financial year will change from the current calendar year to the period 1 May–30 April and the company will also move from quarterly reporting to tertial reporting. Thanks to the change in the financial year, production in the core businesses, production costs and the proceeds from products and services sold are now allocated to the same financial year, which clarifies operative and financial management of operations.
In future, the first tertial of the year will begin on 1 May and end on 31 August. This period includes peat production and preparations for the heating season. The second tertial of the year (1 September–31 December) and the third tertial of the year (1 January–30 April) cover the heating season. This change in the financial year and the tertial reporting support the seasonal fluctuations in the businesses.
Natural seasonal fluctuation in activities
The sales volumes of the Peat Products and Heat and Power business areas are heavily dependent on seasonal temperatures. Changes in the weather also have a significant impact on the Kekkilä Group’s consumer business in the consumer sector. This results in seasonal fluctuations in sales.
The warm weather during the financial year and low electricity prices have decreased demand for district heat, energy peat and electricity. The Kekkilä Group’s result is improved by the fact that there were two consumer business sales seasons in the same financial year.
Thanks to good weather conditions, the start of peat production was record-breaking early in April.
Personnel
On 30 April 2014, Vapo Group employed 1,091 persons (1,154 persons on 31 December 2012). Vapo Oy sold its equipment production unit in Haukineva, Seinäjoki to Peatmax Oy of Tampere in October 2013, and 13 of the unit’s 15 employees transferred to Peatmax Oy with unchanged terms of employment. In January 2014, Vapo Oy sold Vapo Timber Oy’s Hankasalmi sawmill to Versowood Oy, and the 89 employees of the sawmill transferred to the new owner with unchanged terms of employment.
During the financial year 1 January 2013–30 April 2014, the Group’s codetermination committee convened three times and the company-specific codetermination committees convened two times each. The Supervisory Board, in which the personnel has three representatives, convened five times during the financial year.
Financial Statements and Board of Directors’ Report (pdf)
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