Vapo Group 1 January–31 December 2020 Interim Report and Full-Year Financial Statements

Reassessment of strategy as the operating environment changes

September–December 2020

• Group turnover in September–December 2020 was EUR 162.1 million (EUR 163.6 million in September–December 2019)
• The operating margin (EBITDA) was EUR -4.5 million (EUR 18.6 million), or -2.8% (11.4%) of turnover
• The comparable EBITDA was EUR 15.5 million (EUR 21.0 million). EBITDA includes non-recurring expense items related to the closure of peatlands and the divestment of the subsidiary Nevel totalling EUR -20.0 million (EUR -2.4 million)
• The operating result (EBIT) was EUR -121.4 million (EUR -35.1 million).
• The comparable EBIT was EUR 0.8 million (EUR 5.7 million). In addition to the aforementioned items, EBIT includes non-recurring items related to write-downs of energy peat assets totalling EUR -122.2 million (EUR -40.8 million)
• Earnings per share were EUR -4,014 (EUR -1,074)
• Free cash flow before taxes was EUR -9.7 million (EUR 10.4 million)
• Investments amounted to EUR 33.2 million (EUR 31.5 million).

The sale of Vapo’s subsidiary Nevel was closed on 28 January 2021 and Vapo will recognise a tax-free sales profit of approximately EUR 490 million in the result for the first third of the financial year 2021.

January–December 2020

 Group turnover in January–December 2020 was EUR 544.9 million (EUR 533.7 million in January–December 2019)

• The operating margin (EBITDA) was EUR 53.8 million (EUR 78.9 million), or 9.9% (14.8%) of turnover
• The comparable EBITDA was EUR 74.2 million (EUR 75.5 million). EBITDA includes non-recurring expense items related to the closure of peatlands and the divestment of the subsidiary Nevel totalling EUR -20.4 million (EUR +3.4 million)
• The operating result (EBIT) was EUR -95.3 million (EUR -11.2 million)
• The comparable EBIT was EUR 27.5 million (EUR 27.0 million). In addition to the aforementioned items, EBIT includes non-recurring items related to write-downs of energy peat assets totalling EUR -122.8 million (EUR -38.2 million)
• Earnings per share were EUR -3,712 (EUR -667)
• The pre-tax return on invested capital (pre-tax ROIC) was -14.0% (-1.7%)
• Free cash flow before taxes was EUR 39.6 million (EUR 17.1 million)
• Investments amounted to EUR 76.6 million (EUR 79.8 million)
• The equity ratio on 31 December 2020 was 27.9% (42.9%)
• Interest-bearing net debt on 31 December 2020 was EUR 327.7 million (EUR 315.2 million)
• The ratio of interest-bearing net debt to operating margin (net debt/EBITDA) on 31 December 2020 was 6.1 (4.0)

The comparison figures for January–December are unaudited.

 

The financial year in figures:	1 January–31 December 2020	1 January–31 December 2019	1 May–31 December 2019
Turnover, EUR million	544.9	533.7	297.7
Operating margin/EBITDA, EUR million	53.8	78.9	37.0
Operating result/EBIT, EUR million)	-95.3	-11.2	-40.4
Comparable operating profit excluding non-recurring items, EUR million	27.5	27.0	-2.5
Profit/loss for the period, EUR million	-108.1	-19.3	-40.2
Earnings per share	-3,712	-667	-1,320
Pre-tax return on invested capital, %	-14.0	-1.7	-1.7
Free cash flow before taxes, EUR million	39.6	17.1	21.0
Equity ratio %	27.9	42.9	42.9
Interest-bearing net debt/operating margin	6.1	4.0	4.0
Energy peat deliveries (TWh)	7.0	9.1	4.4
Wood fuel deliveries (TWh)	3.2	3.6	2.1
Heating deliveries (TWh)	1.5	1.6	0.7
Accident frequency*	7.2	6.7	6.7

*) Accident frequency=number of accidents requiring a visit to occupational health services/million working hours

 

EUR million	Comparable 2020	Items affecting comparability	Total
Items affecting comparability
Gains/losses on disposals		1.3
Impairment		-1.5
Restructuring		-7.3
Other items		-12.8
EBITDA	74.2	-20.4	53.8
Gains/losses on disposals		1.8
Impairment		-104.2
Operating profit	27.4	-122.8	-95.3
Financial income and expenses	-12.5		-12.5
Profit/loss before taxes	14.9	-122.8	-107.8
Income taxes	-0.3		-0.3
Profit/loss for the period	14.7	-122.8	-108.1

 

Vesa Tempakka

Reassessment of strategy as the operating environment changes

Vapo has successfully executed its Group strategy defined in 2019. The cornerstones of the strategy have been to grow the Group’s business in the international growing media market targeted at professional growers, launch new high added-value products refined from peat based on Vapo’s own research and product development activities and, in the energy business, achieve a purposeful transition from the role of fuel supplier to a provider of infrastructure services for municipalities and industrial operators. The aim of the strategy has been for the aforementioned business areas to compensate for the decline in turnover, operating margin and cash flow caused by the falling demand for energy peat.

The price of emission rights settling at a level of above EUR 30 reduced the use of energy peat in Finland in 2019 by approximately one-fifth. The extensive political debate around energy peat and the increase in taxes on energy peat introduced in autumn 2020 have together led to a situation where, according to the current view, the use of energy peat will reduce by half from the 2019 level already the year 2023.

Vapo has continued to re-evaluate its strategy in response to the declining demand for energy peat. The sharp decline in demand will also lead to the Group’s cash flow in the next few years not being sufficient to support the international growth strategy in the growing media market, the necessary higher value adding product development investments and the production investments required by new products and the energy business. The declining demand for energy peat also forced Vapo to recognise a write-down of approximately EUR 100 million on its energy peat reserves in autumn 2020 as well as recognise expenses associated with continuing obligations related to decommissioned peatlands. These measures taken weakened company assets significantly. As the outcome of this evaluation, Vapo decided to sell its heat and power business to Ardian. The transaction price was approximately EUR 656 million, which will enable Vapo to strengthen its balance sheet to move forward with the investments required by Kekkilä-BVB and new businesses.

Even a strong balance sheet will not compensate for the decrease in cash flow in the next few years caused by the divestment of Nevel and the declining demand for energy peat, as the new businesses will only start to bring in significant turnover after 2023. During the past two years, the Group has improved its operational efficiency by about EUR 30 million. The Group also commenced a new cost saving programme at the beginning of 2021 with a target of achieving approximately EUR 25 million in additional savings over the next two to three years.

 

2020 was a year of accelerated change

The most significant and unexpected change in 2020 was the COVID-19 pandemic. As consumers in all markets switched to remote work, they had more time for recreational activities. This was reflected in an exceptional increase in the demand for gardening products in the consumer segment. The demand for products targeted at professional growers also increased after an initial shock in the spring. The turnover of Vapo’s Grow&Care division increased year-on-year by nearly 20 per cent, approximately EUR 50 million. The division’s comparable operating margin was EUR 34 million, representing an increase of nearly EUR 11 million compared to the previous year. Nevertheless, COVID-19 also presented challenges to business operations. Cross-border logistics became more difficult and production facilities, offices and laboratories were forced to implement a variety of special arrangements that resulted in delays and additional costs. New customer acquisition was also complicated by the travel restrictions.

The year 2020 will be remembered as a watershed in Vapo’s history. The year was the warmest on record in Vapo’s operating countries. This was reflected in a very sharp decline in turnover in the fuel and energy businesses. In the fuel business, challenges were created not only by the declining demand for energy peat but also the low price of natural gas, which incentivised large pellet customers to switch from pellets to natural gas. Consequently, there was a decline in the turnover of Vapo’s Energy division of EUR -40 million and operating margin reduction of nearly -50 per cent

A third significant development during the year was the completion of Vapo’s first activated carbon production facility in Ilomantsi. The production facility is scheduled to be in commercial operation by summer 2021. The COVID-19 pandemic and delivery difficulties with the primary equipment supplier have caused delays in commissioning the production facility.

The Group’s free cash flow improved year-on-year. The most significant reasons behind this were the successful cost saving programme, income of approximately EUR 10 million earned from the sale of land areas and measures taken to improve the turnover of capital.

On the whole, the Group’s financial performance during the year was almost satisfactory in difficult circumstances. The Group’s turnover was two per cent higher than in the previous year and the comparable operating margin was nearly at the previous year level. Due to write-downs associated with the decommissioning of peatlands and the recognition of costs related to the continuing obligations concerning the peatlands, the full-year operating result showed a substantial loss.

In the area of corporate responsibility, we have made good progress towards our main targets. The target we set last year of reducing the Group’s CO₂ emissions by half by 2025 will be achieved ahead of schedule. As regards social responsibility, I wish to highlight our good performance in the international Great Place to Work assessment. The employee confidence index increased by 5 per cent year-on-year and was 68. This is an excellent result in a highly exceptional operating environment in which the employees have had to adopt new operating practices and demonstrate a great deal of flexibility to enable us to meet the expectations of our customers.

However, the changes are not finished. They are only just beginning. This year, we will continue to execute our strategy in our selected growth areas. Over the next few years, our aim is to make up for the turnover and profitability that were lost as a result of the divestment of Nevel.  The next two years will be challenging, but I am confident that the stronger balance sheet we will be working with following the divestment of Nevel in January 2021 and the measures we have begun during the past few years will make our ambitious targets achievable.

Vapo in brief

Vapo is an international conglomerate whose businesses promote clean, local and water-conserving food production, supply local fuels and provide heating and steam production solutions. Vapo Group also develops new products for the purification of contaminated environments and creates well-being by providing jobs, recycling and by creating comfortable living environments.

Vapo Group also includes the subgroup Kekkilä-BVB, which is the European market leader in growing media products. The company produces garden soils, mulches and fertilisers for professional growers, consumers and landscapers in Finland under the Kekkilä brand, in Sweden under the Hasselfors Garden brand and in the Netherlands under the BVB Substrates brand.

Vapo is also a leading bioenergy company in Finland, Sweden and Estonia. The product and service selection developed for Vapo’s energy customers consists of local fuels, such as peat, pellets and forest fuels as well as added value services related to energy production. Vapo is an important part of the local energy infrastructure in all of its markets.

For the entire financial year 2020, Vapo also owned the subsidiary Nevel, which has combined heat and power plants and approximately 150 heating plants. The divestment of Nevel was announced on 2 November 2020 and the transaction was closed on 28 January 2021. Vapo announced that it will recognise a sales profit of approximately EUR 490 million from the sale of Nevel in T1/2021.

Vapo Group’s New Businesses division develops new business solutions based on the strengths of the Group companies. The Group’s latest higher added value business is Activated Carbons, which aims to make a quick entry into the growing international market for technical carbons. The new higher added value businesses currently in development by the Group also include Vapo Refinery, which focuses on separating other useful minerals from peat before its use in growing media and activated carbon products.

Vapo Group had an average of 1,031 employees during the financial year. At the end of the financial year, Vapo Group had 1,018 employees. The company also employs hundreds of local contractors in the fuel production and supply chain.

More information about the company: www.neova-group.com.

Board of Directors’ report 1 January–31 December 2020

Operating environment

Vapo Group’s operating environment was unpredictable in 2020. In Finland, Sweden and Estonia, it was the warmest year on record. This was reflected in a substantial decrease in fuel and energy deliveries. Wholesale electricity prices in the Nordic electricity markets were the lowest in 14 years. In addition to the warm weather, the operating environment was influenced by the pandemic that broke out in spring 2020 and led to a global macroeconomic downturn.  The economic slump reduced the demand for energy among industrial customers and decreased the prices of oil and natural gas. The decline in the price of natural gas was the most relevant to Vapo Group, as natural gas and pellets are competing fuels for many large-scale plants.

The early spring and warm weather had a favourable impact on the Group’s business in other areas. In the gardening industry, the peak season of product deliveries began exceptionally early.

The single most significant phenomenon that affected the Group as a whole was the global COVID-19 pandemic that broke out in spring 2020. The need to prepare for the pandemic and prevent infections caused a number of special measures across the Group. When the pandemic began, the Group immediately implemented precautionary measures at least at the level recommended by the authorities in each operating country. The number of personnel at office properties was restricted from March onwards. For all jobs that can be performed remotely, remote work was recommended for the rest of the year. At the same time, all non-essential movement at the Group’s production plants, heat and power plants and other operating locations was restricted to the bare minimum level. Vapo Group was successful in its measures to combat the pandemic. During the year, only a very small proportion of the Group’s approximately 1,000 employees contracted COVID-19. Remote work forced the organisation to quickly adopt various changes in work and meeting procedures. The transition from in-office work to digital remote work went smoothly in spite of it having to be carried out very quickly.

One very significant external factor for Vapo Group during the year consisted of changes in the operating environment related to the Energy business. Over a period of two years, the price of emission rights has increased from less than EUR 10 per tonne of carbon to the current level of over EUR 30. For 1 MWh of energy produced from energy peat, this means an additional cost of more than EUR 12 in addition to the energy tax.

The increase in the price of emission rights alone has reduced the use of energy peat much faster than the target set by the Finnish Government of halving the use of energy peat by 2030. The political debate around energy peat was more active than ever during the year.

In spite of Vapo, many other energy sector operators and the Finnish Forest Industries Federation repeatedly stating that the energy peat industry does not require additional measures to reduce the use of energy peat, the Finnish Government decided to double the taxes on energy peat starting from January 2021. This decision had the immediate effect of further steepening the decline in the demand for energy peat.

Vapo Group

The Group’s result for the financial year 1 January–31 December 2020 declined substantially year-on-year and amounted to EUR -108.1 million. The result for the financial year was weighed down by significant non-recurring write-downs of approximately EUR 100 million and the related recognition of non-recurring expenses, mainly arising from obligations associated with the energy peat business, as well as the costs arising from the divestment of the subsidiary Nevel. The write-downs and the recognition of the related costs were caused by the accelerated decline in the demand for energy peat and the consequent significant decline in future energy peat production. This also led to the recognition of costs related to the premature decommissioning of production sites as well as future environmental obligations related to the sites in question. The advisory fees related to the Nevel divestment were also recognised as expenses for the financial year 2020. The estimated profit of approximately EUR 490 from the sale of the subsidiary Nevel will be recognised in T1/2021 as previously announced because the transaction was completed on 28 January 2021. In the financial statements, Nevel is treated as an asset held for sale.

Turnover grew by 2% year-on-year to EUR 544.9 million (EUR 533.7 million). The increase in turnover was mainly attributable to Kekkilä-BVB achieving sales growth of nearly 20 per cent compared to the previous year.

The Group’s operating result was EUR -95.3 million. The comparable operating result remained on a par with the previous year at EUR 27.5 million. The previous financial year’s comparable operating result excluding non-recurring items was EUR 27.0 million. The comparable result remaining on a par with the previous year was attributable to the strong demand for Kekkilä-BVB products and the efficiency improvement measures taken throughout the Group. The result was negatively affected by the exceptionally warm year and the steep decline in the demand for energy peat, which also made it necessary to terminate a number of production subcontracting agreements.

The measures taken to increase the efficiency of working capital were reflected in a substantial improvement in operating cash flow (free cash flow before financial items and taxes), which amounted to EUR 39.6 million (EUR 17.1 million) for the financial year.

The Group’s key figures declined during the financial year due to the write-downs of energy peat assets, costs recognised in relation to the continuing obligations associated with decommissioned peatlands and the costs incurred from the Nevel divestment. The Group’s equity ratio stood at 27.9 per cent (41.5%) at the end of the financial year, while the ratio of net debt to operating margin was 6.1 (4.0).

The COVID-19 pandemic affected the Group’s divisions in very different ways. The pandemic had barely any direct effects on the Energy division.  It merely delayed pending or planned new customer projects due to visits to Vapo’s own plants and customer plants being restricted to a minimum.

In the Grow&Care division, the pandemic closed borders and initially complicated transport operations in Central Europe and Scandinavia right as the professional growing season was beginning.  The pandemic also interrupted the Group’s actions aimed at opening new export markets in China and the US for several months.

The most surprising effect of the pandemic was the very strong growth in the demand for gardening products in the amateur grower segment. When people switched to remote work and nearly all recreational activities were restricted, gardening as a hobby saw unprecedented growth in Sweden, Finland and Central Europe. The warm spring boosted the start of the season, and the peak season in the gardening business remained exceptionally strong throughout the summer. There were even difficulties in meeting market demand in the case of certain products.

The pandemic delayed and complicated the construction of the activated carbon production facility in Ilomantsi. A large number of workers from different countries worked construction and installation jobs at the site. Preventing infections required various special arrangements and the precautionary quarantine measures delayed construction to some extent. In addition, our main equipment supplier has had significant delays in deliveries, which have delayed the schedule of the project as a whole. In our product development activities, the most significant negative impact of the pandemic was having to stop or slow down the operations of our product development laboratories in Central Europe when the pandemic was at its worst.

Due to the uncontrollable decline in the demand for energy peat, Vapo commenced a cost saving programme in the autumn and carried out write-downs of approximately EUR 100 million, mainly allocated to prematurely decommissioned peat production areas and their undepreciated infrastructure.

The rapid decline in the demand for energy peat forced Vapo to assess its business strategy in light of the changed circumstances. To ensure its ability to respond to the balance sheet challenges created by write-downs and continue to execute its chosen growth strategy in the international growing media markets and new businesses, Vapo Group sold Nevel – a subsidiary that focuses mainly on energy infrastructure and operates in Finland, Sweden and Estonia – to Ardian.

Developments by business segment

The reporting segments comprise the Group’s divisions in accordance with Vapo’s management model. Vapo Group’s reporting segments are Energy, Grow&Care, New Businesses and other activities.

Energy

The Energy division is responsible for the energy and fuel solutions provided by Vapo Group in Finland, Sweden and Estonia. We provide energy producers with peat, wood and pellet fuels as well as the most advanced remote operation services in the industry. We serve our pellet customers through our own sales service as well as our online store. Under the Nevel brand, we produce heat and steam as a service for our industrial and municipal customers at six power plants and approximately 150 heating plants. For our consumer customers, we supply district heating in more than 35 district heating networks. The division’s turnover for the financial year that ended in December 2020 amounted to EUR 245.9 million, with renewable biofuels and energy solutions representing more than half of this total.

The global COVID-19 pandemic was a phenomenon that had an impact on the entire Group in 2020. For the Energy division, the direct impacts of the pandemic were minor.  2020 was the warmest year on record in Vapo’s Energy division’s operating countries – Finland, Sweden and Estonia – and this was reflected in a substantial decrease in fuel and energy deliveries. In the fuel business, challenges were created not only by the declining demand for energy peat but also the low price of natural gas. Wholesale electricity prices in the Nordic electricity markets were the lowest in 14 years. Turnover in the final third of the financial year (September–December) was EUR 85.6 million (EUR 103.7 million). The operating result for the reporting period was EUR -103.1 million (EUR -27.0 million). Investments amounted to EUR 8.0 million (EUR 21.6 million).

Turnover for the full financial year was EUR 245.9 million (EUR 149.1 million). The operating result was EUR -90.6 million (EUR -39.4 million). The operating result includes non-recurring items in the amount of EUR -111.9 million (EUR -38.9 million).  The significant non-recurring items mainly consisted of write-downs of energy peat production areas and expenses recognised in relation to the continued environmental obligations associated with those areas.

The decline in the demand for energy peat continued. The declining demand was reflected in peat deliveries in the final third of the year, as they were nearly 30 per cent lower than in the comparison period. The extensive political debate around energy peat, the increase in taxes on energy peat introduced in autumn 2020 and other decisions that have reduced the competitiveness of energy peat have together led to a situation where, according to the current view, the use of energy peat will reduce by half from the 2019 level in a matter of just a few years. Due to the decline in the demand for energy peat, the Group had to recognise a write-down of approximately EUR 100 million on its energy peat assets in the final third of 2020 as well as recognise non-recurring costs of approximately EUR 14 million related to ongoing obligations associated with peatlands.  The warm weather and lower price of natural gas, in turn, reduced the demand for wood chips and pellets. The year-on-year decrease in total fuel deliveries was approximately 26 per cent in the final third of the year and 20 per cent for the year as a whole.

Vapo Oy announced in June 2020 that it will begin mapping out strategic options for its heat and power businesses incorporated as Nevel. In November 2020, Vapo announced it would sell its heat and power business to the French company Ardian. The competition authorities approved the transaction at the end of 2020 and the transaction was closed in January 2021. The year being the warmest on record had a direct impact on Nevel Group’s business, with heating deliveries declining by approximately 7 per cent in the final third of the year and 5 per cent for the year as a whole.

 

Energy	9–12/2020	9–12/ 2019	Change	1–12/ 2020	1–12/ 2019	Change	5–12/ 2019
Turnover (EUR million)	85.6	103.7	-17.4%	245.9	289.5	-15.1%	149.1
Operating profit (EUR million)	-103.1	-27.0	-281.7%	-90.6	-12.0	-655.0%	-39.4
Investments (EUR million)	8.0	21.6	-62.9%	21.1	56.8	-62.9%	30.3
Number of employees	362	351	3.1%	371	364	1.9%	366
Energy sales, peat (GWh)	2,170	3,093	-29.9%	6,992	9,058	-22.8%	4,360
Energy sales, other fuels (GWh)	1,157	1,374	-15.8%	3,161	3,600	-12.2%	2,126
Heat and steam sales (GWh)	547	585	-6.5%	1,521	1,601	-5.0%	668

Grow&Care

The Grow&Care division’s Kekkilä-BVB is Europe’s leading and most versatile growing media operator in the professional grower, landscaping and consumer segments.  We specialise in the development, production and marketing of high-quality growing media, mulches and fertilisers for landscapers, professional growers, distributors and home gardeners. In addition, peat is supplied as bedding peat to horse farms, cattle farms, pig farms and poultry producers. As the world’s largest producer of agricultural peat, we supply agricultural peat as a raw material for further processing around the world, and responsibility is an integral part of all of our activities.

The division’s well-known brands, Kekkilä Garden and Hasselfors Garden, offer products to home gardeners and landscapers in the Nordic countries and Estonia. In the Central European markets, our consumer products are sold under the Jardino and Florentus brands and under retailers’ private labels. In the professional growing media business, the BVB Substrates and Kekkilä Professional brands are focused not only on the home markets but also the global markets with exports to more than 100 countries.

Turnover in the final third of the financial year (September–December) was EUR 77.0 million (EUR 60.0 million). The operating result was EUR -6.0 million (EUR -4.8 million). The result for the reporting period includes non-recurring items in the amount of EUR -2.3 million (EUR -1.5 million). The division’s gross investments were EUR 10.8 million (EUR 8.5 million).

Turnover for the full financial year grew by nearly 20 per cent year-on-year and amounted to EUR 299.9 million (EUR 250.2 million). The significant year-on-year growth in turnover was mainly attributable to the exceptional demand caused by COVID-19, especially in the consumer and raw material businesses. The exceptional circumstances have forced people to stay home, giving them more time and opportunities to focus on gardening.

The operating result doubled to EUR 14.0 million (EUR 7.0 million). The result for the financial year included non-recurring expenses in the amount of EUR -1.6 million (EUR -2.6 million). At comparable figures, the consumer and raw material businesses saw significant growth due to the exceptional demand caused by COVID-19. The exceptional circumstances caused the most challenges to our professional grower business, where growth compared to the previous year was lower than expected. The division’s gross investments were EUR 25.4 million (EUR 14.0 million).

 

Grow&Care	9–12/ 2020	9–12/2019	Change	1–12/ 2020	1–12/ 2019	Change	5–12/ 2019
Turnover (EUR million)	77.0	60.0	28.3%	299.9	250.2	19.8%	150.1
Operating profit (EUR million)	-6.0	-4.8	-25.2%	14.0	7.0	101.4%	-0.5
Investments (EUR million)	10.8	8.5	27.0%	25.4	14.0	81.5%	11.2
Number of employees	540	524	3.0%	545	559	-2.5%	547

 

New Businesses

The New Businesses division creates new products and innovations based on the Group’s competencies and raw material resources as well as emerging customer needs. The goal is to produce sustainable new business that will increase our shareholder value in the long run. Vapo Ventures also coordinates the Group’s innovation and IPR activities.

Vapo’s multi-year Refinery product development programme was granted significant financial support by Business Finland at the start of the year. The funding enabled Vapo to allocate additional research resources to the chemical refining of organic wetland biomass to produce humic acids, waxes, resins and other valuable materials. The humus project targeted at the biostimulant market progressed to the development of commercial products, test cultivation in cooperation with customers and preliminary planning for a production facility.

In the Carbons business, construction began in spring 2019 in Ilomantsi on a strategically significant production facility to process activated carbon. The production facility is scheduled to be mechanically completed in early spring 2021 and in commercial production by summer 2021. The employment effect of the construction stage is more than 100 person-years and the constant employment effect of the first stage of the facility, including the supply and production chain, is roughly 50 persons. Vapo’s activated carbon products will be sold under the Novactor brand. The demand for the products is estimated to be very strong and the first commercial agreements are promising.

The pandemic has delayed and complicated the construction of the activated carbon production facility in Ilomantsi. A large number of workers from different countries have worked construction and installation jobs at the site. Preventing infections has required various special arrangements and the precautionary quarantine measures have delayed construction to some extent. In addition, our main equipment supplier has had significant delays in deliveries, which have delayed the schedule of the project as a whole.

The operating loss for the final third of the financial year was EUR -1.6 million (EUR -1.0 million). Gross investments were EUR 14.4 million (EUR 5.4 million).

The operating loss for the full financial year was EUR -3.3 million (EUR -1.6 million). Gross investments were EUR 28.0 million (EUR 7.1 million).

 

New Businesses	9–12/ 2020	9–12/2019	Change	1–12/ 2020	1–12/ 2019	Change	5–12/ 2019
Turnover (EUR million)	0.8	0.4	104.0%	2.4	1.8	32.4%	0.0
Operating profit (EUR million)	-1.6	-1.0	-52.2%	-3.3	-2.0	-65.3%	-1.6
Investments (EUR million)	14.4	5.4	166.1%	28.0	9.4	198.6%	7.1
Number of employees	29	20	46.8%	26	18	15.8%	19

Other activities

The other activities segment consists of costs that are not allocated to the Vapo Group’s business units. These costs are related to the Group’s administrative activities, supply chain management, M&A activities and support functions.

The other activities segment’s effect on the operating result in September–December was EUR -10.9 million (EUR -2.3 million).

The other activities segment’s effect on the operating result for the full financial year was EUR -15.0 million (EUR 0.9 million). This is significantly influenced by a non-recurring item of EUR -10.0 million that is mainly attributable to costs associated with the Nevel divestment.  The figure for the comparison year includes EUR 4.9 million in revenue recognised in August 2019 related to discontinued business operations.

 

Other	9–12/ 2020	9–12/ 2019	Change	1–12/ 2020	1–12/ 2019	Change	5–12/ 2019
Turnover (EUR million)	0.0	0.0	-31.0%	0.1	0.1	1.0%	0.1
Operating profit (EUR million)	-10.9	-2.3	-365.3%	-15.0	-12.1	-24.0%	0.9
Number of employees	87	115	2.0%	90	113	15.1%	117

Geographical information

 

1–12/2020 (EUR 1,000)	Turnover by country	Long-term assets	Investments
Finland	267,983	176,133	46,446
Sweden	84,531	178,194	5,053
The Netherlands	74,060	99,357	12,059
Germany	34,512	2,350	1,011
Estonia	11,131	31,564	12,019
Other Nordic countries	3,060	–	–
Other European countries	36,899	587	–
North and South America	8,484	–	–
Other countries	24,254	–	–
Group total	544,913	488,185	76,588

Cash flow, investments and financing

The Group’s free cash flow before taxes for the period 1 January–31 December 2020 amounted to EUR 39.6 million (EUR 17.1 million). Free cash flow was significantly improved by measures to increase the efficiency of working capital. The change in working capital affected cash flow by EUR 44.8 million (EUR 10.3 million).

Gross investments in the financial year were EUR 76.6 million (EUR 79.8 million), or 162.3 per cent of the amount of depreciation (156%). The most significant investments during the financial year were allocated to the start-up of the Carbons business. Investments were also allocated to capacity expansion, energy efficiency investments and reducing the use of fossil fuels in the heat and power business as well as environmental protection and field maintenance in the peat production business. Net investments (gross investments – asset sales) totalled EUR 59.1 million (EUR 58.9 million).

The Group’s liquidity remained good during the financial year in spite of the money market disruptions caused by the COVID-19 pandemic. All financial obligations were fulfilled in accordance with the relevant agreements. The Group redeemed EUR 20.1 million of its hybrid notes prematurely in accordance with a release issued on 26 June 2020. Interest-bearing net debt at the end of the financial year amounted to EUR 327.7 million (EUR 315.2 million). The ratio of interest-bearing net debt to operating margin (net debt/EBITDA) on 31 December 2020 was 6.1 (4.0). The operating margin was weighed down by non-recurring items totalling EUR 20 million, consisting mainly of cost provisions allocated to peat production in relation to the continued obligations pertaining to decommissioned peatlands as well as advisory fees reserved for the Nevel transaction.

Short-term interest-bearing debt amounted to EUR 58.1 million (EUR 46.5 million). The equity ratio at the end of the financial year was 27.9 per cent (42.9%). Of Vapo’s long-term interest-bearing debt, 17 per cent is covered by a covenant related to the company’s equity ratio. Vapo met the covenants and other terms associated with financing agreements at the end of the review period, taking into account the waiver agreements concluded with financing partners, pursuant to which the Group’s equity ratio can temporarily fall below 35% (but remain above 25%). The equity ratio was substantially influenced by significant non-recurring write-downs related to peat production. The Group’s equity ratio subsequently returned to a level above 35% following a profit recognised on the sale of Nevel Oy’s shares in January 2021. Bonds also include a change of control clause but they do not include a financial covenant.

The consolidated balance sheet total was EUR 758.5 million (EUR 829.3 million). The Group’s net financing items were EUR -12.5 million (EUR -7.8 million). Net financing items were -2.3% (-2.6%) of turnover. Net gearing was 158.0% (93.4%).  Net gearing was negatively affected by significant write-downs associated with peat production. Later, the sale of shares in the subsidiary Nevel Oy reduced the gearing ratio in January 2021 to a level substantially below the level reported for the financial year 2019.

Natural seasonal fluctuation in activities

The Group’s Energy business is cyclical to a significant extent due to seasonal variation in the demand for heating. The temperatures during the financial year were historically warm, which led to a substantial reduction in the sales of heating and fuels. The final third of the year, from September to December, is usually a significant heating season in our operating countries.

The Grow&Care division’s growing media business is also sensitive to seasonal fluctuations, with demand peaking from late spring to early summer. In September–December, sales are mostly focused on products sold to professional growers, while the retail channels play a larger role in the spring–summer season. Growing media raw material sales are more stable throughout the year.

Notable risks and uncertainty factors

Regulation

The total consumption of energy peat in Finland amounted to 15,640 TWh in 2019. The Government Programme sets out a goal of halving the use of energy peat by 2030. Based on a demand forecast collected by Vapo Oy from its customers, this halving will happen as soon as 2023. In 2025, energy peat consumption is estimated to be only 4,630 TWh, which would put peat consumption at less than 30% of the volume seen in 2019.

Vapo’s energy peat sales fell below EUR 100 million for the first time in 2020. The year-on-year decline in energy peat sales was approximately 20% for the second consecutive year. The most significant reasons behind this decline include energy peat taxes being increased from EUR 3.00 to EUR 5.70 effective from the start of the year and the price of emission rights, which rose from approximately EUR 27 per tonne of carbon in autumn 2020 to as much as EUR 38 per tonne of carbon. The price of emission rights per one MWh of energy produced from energy peat now exceeds EUR 12.

Energy peat has been primarily replaced by wood. Unfortunately, the wood it has been replaced by is increasingly imported wood chips, which are transported to Finland from Russia and on ships from further away. At the current tax levels and prevailing prices of emission rights, energy peat is a substantially more expensive fuel for customers than wood chips and pulp wood. The price of energy peat is already approaching the price of large-diameter wood.

Risks related to agricultural peat

With respect to agricultural peat, there are signs of political moves in Europe towards tighter regulation. The most significant threats to the agricultural peat business include restrictions on the use of peat, unexpected changes in legislation concerning peat and more negative attitudes towards the use of peat in the retail sector.

To manage these risks, t is essential to provide transparent information on the environmental impacts of the use of peat and for the industry to actively produce and share objective information and emphasise peat’s role in greenhouse farming and global food production. The active promotion of recycling solutions and responsible peat production methods as well as the restoration of peat production areas play a very important role in the general acceptability of the use of peat.

Risks in the activated carbon business

The most significant risk related to the activated carbon business concerns the successful commissioning of the first production facility in Ilomantsi before summer 2021. This involves a mechanical functional risk as well as end product quality risk.

Vapo’s peat-based raw material for activated carbon, sold under the Novactor brand, also involves an approval risk related to the non-fossil requirement. However, the production facility in Ilomantsi is designed to have the capacity to use other raw materials for the production of activated carbon, if necessary.

Market risks

Vapo’s businesses are subject to significant market risks related to end product demand as well as the prices and availability of raw materials.

The demand for wood-based raw materials has grown significantly in the international markets as customers seek environmentally friendly alternatives. Imports of wood-based raw materials from outside of Europe have also increased. As the market grows, the availability of appropriately priced raw material in relation to the price of the end product plays a key role in ensuring competitiveness. The pellet market is also affected by Brexit and the potential subsequent reshaping of the UK’s energy and climate policy as well as changes and disturbances in international trade.

Weather risks

Weather is a risk that has extensive effects on Vapo’s business. In winter, the temperature affects the customers’ fuel requirements. In spring, the weather conditions also determine the timing of the peak season in the gardening trade, which affects the profit performance for the full year. During summer, the effects of weather concern the production volumes and quality of wood fuels and environmental products.

In summer 2020, peat production went as planned in Finland, Sweden and Estonia.

Damage risks

Damage risks include occupational safety risk, property risk, interruption risk and environmental risk. Vapo aims to prevent damage risks through proactive risk management measures and by reacting quickly to any observed hazards. Risks that cannot be managed by the company’s own actions are insured where possible. The goal is to continuously promote a positive culture of occupational safety and asset protection throughout the organisation. Extensive investments in changing the organisation’s safety culture are already being reflected in a reduced number of accidents and lower accident frequency as well as an increase in safety observations and related improvement measures throughout Vapo Group.

Financing and commodity risks

The company manages its financing risk and maintains liquidity by balancing the proportional share of short-term and long-term loans and the repayment schedules of long-term loans. In addition, the risk related to the availability and price of financing is managed by diversifying fundraising between different banks and financial instruments.

The company’s main financial risks are currency risk, interest rate risk and liquidity risk. The Group treasury, guided by the financial policy ratified by the Board of Directors, is responsible for identifying and managing financial risks. The Group’s risk management tools include currency derivatives, currency swaps, foreign currency loans and commodity derivatives.

Research and development

The Group’s research and development investments during the financial year 1 January–31 December 2020 amounted to EUR 27.2 million (EUR 10.7 million), which corresponds to 5.0 per cent of turnover (3.5%). Research and development activities were focused on supporting the company’s strategic renewal in all of the Vapo Group companies.

The New Businesses division develops and commercialises Vapo’s new businesses based on the company’s strengths, emerging customer needs, raw material resources, competencies and networks. The aim is to find solutions based on the sustainable use of natural resources to increase the refining rate and produce new products and services. One example is Vapo Novactor, an initiative focused on activated carbon products that has already progressed to the business stage. The division is also responsible for the Group’s innovation and IPR management.

The Vapo Refinery product development programme aims to accumulate international turnover through the use of peatland biomass. High value-added products made of peat and moss carry enormous future potential because of the worldwide need for new ways to promote sustainable food production and water and air purification as well as to replace harmful chemicals, oil-based products and plastics. In the Vapo Refinery vision, raw materials and side stream products are comprehensively utilised in accordance with the circular economy principle.

The Group’s innovation and IPR strategy are geared towards the Group’s goal of developing its existing businesses and creating new business. The strategy also governs the management and protection of tangible and intellectual property developed by the Group. The key measures include developing the competence of the personnel, fostering a culture of innovation and taking proactive measures to protect intellectual property.

Environmental responsibility

Vapo is committed to continuously improving its operations and developing its environmental efforts. We want to be recognised as a responsible and sustainable company wherever we operate. Vapo Group’s long-term sustainability targets and environmental strategy were updated and approved in 2019: we will reduce our emissions to waterways as well as our climate emissions, use natural resources sustainably, improve material efficiency, reduce waste and ensure that our offices are environmentally friendly. Each of Vapo’s businesses has an annually updated environmental programme in accordance with the environmental strategy. The environmental programmes specify the most significant aspects of environmental responsibility along with annual environmental targets. We also provided an online course on the management of environmental matters to all of our personnel, with 408 employees (38% of the Group’s personnel) completing the course in 2020.

We developed a peat sustainability concept particularly for use by our new businesses. This included documenting peat production methods, obligations and monitoring in Finland, Sweden and Estonia. Last year, we submitted six new certification applications to the Responsibly Produced Peat (RPP) organisation. When these applications have been approved, Vapo’s RPP-certified peat sites will expand from 548 hectares to 3,319 hectares to respond to the needs of Kekkilä-BVB’s customers.

We continued to carry out self-initiated environmental impact inspections at peat production areas. Contractors in Vapo’s Finnish peat production operations inspected water treatment structures in four-week intervals during the production season. In addition, 14 (17) environmental inspectors recruited for the summer season inspected water treatment methods and other aspects related to environmental permit conditions at all operating locations currently in production. In 2020, Centres for Economic Development, Transport and the Environment made 119 (120) inspection visits to Vapo’s peat production sites in Finland.

By using continuously operating measurement devices, Vapo Group has accumulated extensive data over time and from several regions regarding water quality and the environmental load of peat production. The data has enabled accurate quantitative analyses that were used in a study conducted by the University of Tampere and Vapo in 2020 to assess the accuracy of the currently used monitoring method – manual sample-taking – in evaluating emissions. The study showed a strong correlation for manual and continuous measurement (0.96 for CODMn, i.e. humus, and 0.90 for solid matter), indicating that the currently used emission monitoring method based on manual sample-taking is a highly reliable method for determining the annual emissions of peat production. As part of the study, a method based on a learning algorithm was also developed to optimise the timing of sample-taking and make the assessment of annual emissions as accurate as possible given a certain number of measurements per year. Based on the study, the optimal measurement times are in spring and autumn when the flow rates are the highest. When the site-specific flow rate can be determined on a continuous basis, 3–6 correctly timed measurements provide a reliable estimate of the overall environmental load at most production areas. The data obtained from the study enables us to achieve significant cost savings in monitoring environmental load while maintaining a high level of accuracy and reliability.

In accordance with its environmental permit application principles, Vapo only applies for new production permits for ditched peatlands. Vapo Group’s (Finland, Sweden, Estonia) environmental investments in peat production areas in 2020 amounted to EUR 0.3 million (EUR 0.8 million) and were primarily related to improving and building water treatment structures at peat production sites.  Excluding Vapo’s own personnel’s input, environmental protection costs for the financial year amounted to EUR 14.4 million (EUR 16.1 million). The costs primarily consisted of the maintenance of water treatment structures in peat production and impact monitoring.

Vapo Group’s active peat production areas (Finland, Sweden, Estonia) in summer 2020 totalled approximately 29,200 (40,600) hectares, with Finland accounting for 20,550 (33,500) hectares of the total, including stacking areas. A total of 374 (454) hectares of new peatlands became ready for production in Finland and 8,700 (5,289) hectares were released from production by the end of the financial year. In Sweden, 204 (76) hectares of peat production areas were released from production.

Vapo moved to the post-production after-care stage at just over 100 peat production areas and the closure of production areas at peatlands was one of the key projects in the Group’s peat operations in 2020. The reasons behind the transition included the declining demand for energy peat and our customers shifting increasingly from fossil fuels to biofuels. 

A total of 1,156 (453) hectares of areas owned by Vapo Group were transferred to other land use methods from peat production operations in Finland during the financial year.  A total of 754 (356) hectares were assigned for forestation and 402 (97) hectares for building wetlands. In addition, a significant amount of land was sold, with the new owner deciding on the subsequent use. A total of 3,836 (1,145) hectares of areas released from peat production were returned to land owners. The company prepares for the subsequent maintenance of cutaway areas by means of an environmental provision that covers the costs associated with post-production obligations. During the financial year, Vapo sold 1,063 hectares of peatlands of significant nature value to the Finnish State for conservation purposes.

In 2020, Vapo Group continued its own power and heating plants’ multi-year development programme aimed at reducing oil consumption and improving energy efficiency. Renewable fuels currently account for 67% of all fuels used: 61% (46%) in Finland, 97% (94%) in Sweden and 18% (7%) in Estonia. Nevel Oy is committed to increasing the share of renewable fuels to more than 75% by the end of 2021. The use of domestic fuels remained unchanged from the previous year at Nevel Oy’s energy production plants in Finland. During the reporting period, the company invested in energy efficiency and increasing its capacity of using biofuels in all of its operating countries.

General Meetings

Vapo Oy’s Annual General Meeting was held in Helsinki on 19 March 2020. The AGM adopted the financial statements and consolidated financial statements for the financial year 1 May 2019–31 December 2019 and discharged the members of the Supervisory Board, the Board of Directors and the CEO from liability. The AGM resolved to distribute a dividend for the financial year ended 31 December 2019 amounting to EUR 133.00 per share, or EUR 3.99 million in total. The payment dates were 27 March 2020 for the first half of the dividend and 18 June 2020 for the second half.

The AGM confirmed the number of members of the Supervisory Board as ten. Juha Sipilä was elected as Chairman, with Heikki Miilumäki as Vice Chairman. Antti Häkkänen, Eero Kubin, Esko Kurvinen, Tommi Lunttila, Mauri Peltokangas, Jenni Pitko, Piritta Rantanen and Tiina Snicker were elected as members.

The AGM confirmed the number of members of the Board of Directors as eight. Jan Lång continues as Chairman, with Markus Tykkyläinen as Vice Chairman. Tuomas Hyyryläinen, Kirsi Puntila, Minna Smedsten and Maija Strandberg were re-elected to the Board of Directors. Stefan Damlin and Vesa Hätilä were elected to the Board of Directors as new members.

The audit firm KPMG Oy Ab was elected as the auditor.

​​​​​​​​​​​​​​Number of employees

The Group employed an average of 1,018 (1,009) persons in the final third of the financial year. The average number of employees for the full financial year was 1,031 (1,050). 

Employees by segment, average

 

	1–12/2020	5–12/2019
Energy	371	366
Grow&Care	545	547
New Businesses	26	19
Other	90	117
Total	1,031	1,050

The codetermination committees of Vapo Oy and Kekkilä Oy met twice, as planned, during the financial year to discuss current topics. Employees are also represented on Vapo’s Supervisory Board. The Supervisory Board met three times during the financial year.

Occupational safety

Vapo Group’s safety team manages and develops our “safety first!” culture to prevent safety deviations and accidents through effective risk reduction, training and the provision of support to the business functions. In 2020, Vapo Group’s accident frequency (LTA1f: lost-time accidents per million working hours) increased slightly compared to the previous year and was 7.2 (6.7). The accident frequency increased mainly in the Group’s fuel businesses in Finland as well as peat production. A significant improvement was achieved in the Netherlands, where the accident frequency decreased by 40% (compared to the previous year). Most of our accidents – and serious accidents in particular – took place in production operations. During the past three years, 23% of the incidents were classified as serious accidents or serious near misses (19 incidents out of 81). However, none of these came close to a fatal accident, and 55% of the total number of accidents did not lead to lost time.

To improve and harmonise our safety culture, we focused on safety training in 2020. At the Group level, 97% of all operational employees completed an internal “Safety first!” online course, and 87% of operational employees also received external safety training. We also monitor accidents involving contractors in our operations and conduct accident investigations in cooperation with them. Due to travel restrictions caused by COVID-19, the number of safety observations decreased by 15% and amounted to 3,986 (4,709).

Vapo Group has zero tolerance for inappropriate conduct and discrimination, and all nine incidents reported during the year were reviewed without delay. 

Vapo Group participated in the Great Place to Work personnel survey for the second time in October 2020. This enabled us to compare our scores with the previous year’s results. Our Trust Index was 68%, representing an increase of five percentage points compared to 2019. This is a significant step on our journey to becoming one of the best places to work in Europe by 2030. The response rate remained at the same high level of 79 per cent, indicating strong commitment among employees to develop Vapo’s corporate culture. The statement “All things considered, I would say this is a great place to work” received a positive response from 75% (69%) of the personnel.

​​​​​​​Changes in organisational structure

1 May 2020: the merger of CleanWaters Oy into Vapo Oy was confirmed, 20 May 2020: Nevel Eesti OÜ:n shares were transferred in exchange for share-based consideration to Salon Energiantuotanto Oy and 31 October 2020: Salon Energiantuotanto Oy’s merger into Nevel Oy was confirmed.

Board of Directors’ proposal for the distribution of profits

​​​​​​​The Board of Directors proposes to the General Meeting to be convened on 30 March 2021 that Vapo Oy’s result for the financial year, EUR

-124,139,477.60, be recorded as a change in retained earnings, after which the distributable funds available to the General Meeting amount to EUR 15,848.259,19.

​​​​​​​In line with its dividend policy, Vapo Oy distributes as dividends, on average, 50 per cent of the annual profit shown in the financial statements. There have been substantial changes in the company’s financial position after the end of the financial year related to the divestment of Nevel. The Board of Directors proposes to the General Meeting that no dividend will be for the financial year 1 January–31 December 2020.

Events after the review period

On 28 January 2021, Vapo announced it had closed the sale of its wholly-owned subsidiary Nevel Oy to Ardian. Nevel provides industry and municipalities with advanced infrastructure solutions in Finland, Sweden and Estonia. The transaction was announced on 2 November 2020 and the competition authorities in Finland and Sweden approved the transaction by 23 December 2020. On the same day, just before the sale of Nevel, Nevel acquired 100% ownership of Nevel Lämpövoima Ky, which was previously an associated company of Nevel.

The debt-free acquisition price (enterprise value) of the transaction was EUR 656 million. Vapo will recognise a tax-free sales profit of approximately EUR 490 million in the result for the first third of 2021.

In addition, as a result of the closing of the transaction, Nevel Oy’s CEO was relieved of his duties in Vapo’s Group Management Team.

Future outlook

Vapo Group is one of the world’s largest producers of energy peat and peat for growing media. The company holds an important role in ensuring Finland’s self-sufficiency in energy and the security of supply. Nevertheless, political decisions have a material impact on the profitability of nearly all of the company’s businesses and therefore affect the company’s ability to invest in higher-added-value production. The funds obtained from the sale of the heat and power company Nevel give Vapo the opportunity to continue its strong transformation from a former conglomerate and energy company into Europe’s leading producer of growing media through Kekkilä-BVB and a facilitator of cleaner water and air through the Novactor activated carbon business.

In the new financial year, the Kekkilä-BVB subgroup will again invest in developing its product selection and the profitable growth of its international sales in the professional, consumer grower and landscaping businesses. The Group intends to expand its distribution network into new markets in line with its strategy while increasing its cooperation with its existing comprehensive network of customers in its home markets in Europe.

Vapo will continue to implement measures in line with its strategy to increase the competence of its personnel and achieve market-leading customer service. This includes the development of comprehensive solutions for our energy customers. At the same time, the company will continue to increase the efficiency of its business processes in order to improve profitability. The demand for energy peat as a fuel is expected to continue to decline, while the demand for bioenergy is expected to see strong growth.

Vapo will continue the commercialisation of new business operations in the Carbons business as well as the researching of further new business initiatives in Vapo Ventures. The construction of Carbons’ first production facility for manufacturing technical carbons is progressing as planned in Ilomantsi and it is expected to become operational in before the summer. Vapo Ventures has a strong focus on cooperation with other industry participants to promote its project as effectively as possible in collaboration with interested partners. 

​​​​​​​During the previous financial year, Vapo also started the development of its own wind power projects. Further progress will be made in 2021 on the first projects.

Consolidated key figures

 

MEUR	9–12/2020	9–12/2019	1–12/2020	5–12/2019	5/2018–4/2019
Turnover	162.1	163.6	544.9	297.7	460.8
Operating profit (EBIT)	-121.4	-35.1	-95.3	-40.4	33.3
% of turnover	-74.9	-21.5	-17.5	-13.6	7.2
Operating profit (EBIT) before impairment	-18.6	3.8	7.4	-1.5	33.5
% of turnover	-11.5	2.3	1.4	-0.5	7.3
Profit/loss for the period	-121.5	-32.2	-108.1	-40.2	25.2
Operating margin (EBITDA)	-4.5	18.6	53.8	37.0	74.1
+/- Change in working capital	21.2	10.3	44.8	10.3	-45.7
– Net investments	-26.3	-18.6	-59.1	-26.3	-50.7
Free cash flow before taxes	-9.7	10.4	39.6	21.0	-22.3
Gross investments	-33.2	-31.5	-76.6	-42.8	-62.7
Return on invested capital % *			-14.0	-1.7	5.4
Return on invested capital % before impairment *			1.1	4.1	5.4
Return on equity % *			-34.9	-5.2	7.0
Balance sheet total			758.5	829.3	805.8
Shareholders’ equity			207.4	343.5	404.0
Interest-bearing net debt			327.7	315.2	265.6
Equity ratio %**			27.9	42.9	51.3
Interest-bearing net debt/operating margin			6.1	4.0	3.4
Gearing %			158.0	93.4	65.8
Average number of employees			1,031	1,050	869
*) Previous 12 months
**) In calculating the equity ratio, the capital loan on the balance sheet was calculated as shareholders’ equity

For further information, please contact: 

• Vesa Tempakka, CEO, Vapo Oy, tel. +358 40 072 6727
• Jarmo Santala, CFO, Vapo Oy, tel. +358 40 801 9191
• Ahti Martikainen, Director, Group Communications & Public Relations, Vapo Oy, tel. +358 40 680 4723