PLC UUTECHNIC GROUP OYJ REVIEW OF FINANCIAL STATEM

Helsinki, Finland, 2017-02-27 08:00 CET (GLOBE NEWSWIRE) -- PLC UUTECHNIC GROUP OYJ REVIEW OF FINANCIAL STATEMENTS FOR 1 JANUARY–31 DECEMBER 2016

Uutechnic Group’s turnover for the financial year 2016 amounted to EUR 36.4 million (8.9 million), and its operating result was EUR 0.9 million (1.2 million). Uutechnic Group’s order book stood at EUR 15.9 million (11.7 million) at the end of the financial year. The earnings per share from continuing operations was EUR 0.01 (0.03).

The business arrangement carried out in the financial year 2015 was recognized as a reverse acquisition in the Group’s IFRS financial statements. For this reason, the comparison figures for the previous financial year presented in the consolidated financial statements of 31 December 2016 are figures consisting of Uutechnic Oy’s 12-month figures and the figures for the rest of the Group (formerly Vaahto Group) for a period of two months. As applicable, the combined figures for Uutechnic Oy, Japrotek Oy Ab, Stelzer Rührtechnik Int. GmbH and AP-Tela Oy—the Group units engaged in business operations—are presented as comparable figures for 2015.

OUTLOOK

The Group seeks to be a globally known and preferred cooperation partner with a good financial standing in selected product and market segments. The Group pursues growth organically while also considering opportunities for growth through acquisitions.

The main objective for 2017 is to improve the Group’s profitability. Based on the strong order book, the Group’s turnover is expected to continue to grow and operating profit is expected to improve compared to the previous year, particularly in the second half of the year.

Another key objective is to grow the mixing technology business and strengthen its significance as a success factor for the Group. The main focus in the mixing technology business in 2017 is investing in sales and marketing as well as finalizing the reorganization of operations. These measures are aimed at improving profitability and creating a foundation for a substantial increase in turnover.

BUSINESS REPORTING

Uutechnic Group focuses on improving the competitiveness of its customers by providing advanced process technology and a unique service concept worldwide. Its product range includes agitators, pressure vessels, process and storage tanks, reactors and heat exchangers, as well as different types of long welded and machined axially symmetrical parts, such as rolls, cylinders, pipes and cones.

The Group’s main industries are hydrometallurgy and the mining, pulp, paper and food industries, as well as the fertilizer industry and other chemical industries, and environmental technology.

Plc Uutechnic Group Oyj, the parent company of Uutechnic Group, is listed on Nasdaq Helsinki. The Group’s subsidiaries are wholly owned by the parent company. The parent company is responsible for the Group’s management, strategic planning, financial administration, IT, financing and HR management. The Group’s business operations are carried out by the subsidiaries: AP-Tela Oy, Japrotek Oy Ab, Uutechnic Oy and Stelzer Rührtechnik International GmbH.

All of the Group’s business operations are reported under one segment.

Mixing technology business

The recently concluded financial year was the first under the new Group structure. At the end of June, the Group announced its decision to centralize its mixing technology business in Finland. The manufacturing of Jamix agitators was relocated from Pietarsaari to Uutechnic Oy’s factory in Uusikaupunki at the beginning of September.  In a move related to the centralisation of the mixing technology business, the Group’s sales company Steva Oy was merged with Uutechnic Oy at the end of June and Steva’s personnel were transferred to Uutechnic Oy. The centralisation of operations was aimed at clarifying the structure of the business in Finland and improving productivity.

Restructuring operations between Uutechnic Oy and Stelzer GmbH in the mixing technology business began in earnest in the fourth quarter. The first concrete measure was to divide manufacturing capacity between the companies during the latter part of the year. Integration planning and implementation will continue in the financial year 2017.

Immediately after the end of the financial year, the Group announced it is strengthening its competence in the mixing technology business in line with the Group’s strategy by appointing PhD (Eng) Jussi Vaarno as Vice President and a member of the Group Management Team starting from 16 January 2017. At the same time, the Group announced that its objective is to grow the mixing technology business and strengthen its significance as a success factor for the Group.

At the end of the financial year, the Group announced it had received an order for a complete delivery of a leaching autoclave and agitators to Norilsk Nickel’s Harjavalta plant. This represented the first significant order for a complete delivery in line with Uutechnic Group’s strategy, with Japrotek Oy Ab delivering the leaching autoclave and Uutechnic Oy delivering the autoclave agitators.

During the financial year, the mixing technology business had a strong focus on new customer acquisition; for example, by signing new international representation agreements in Poland, China, Singapore, Malaysia and Indonesia, and by participating in international fairs and exhibitions. The Group has also sought new markets in regions including Latin America.

Vessel business

For Japrotek Oy Ab, the financial year was a period of major challenges and opportunities. The heavily loss-making business was restored to profitability and the result for the financial year showed a substantial profit due to higher turnover as well as various measures implemented by the company. The cost reduction targets set at the start of the financial year were achieved.

The automation of production and centralising the manufacture of agitators in Uusikaupunki made it possible to rationalise and streamline vessel manufacturing processes. Cost savings were achieved by, among other things, enhancing the efficiency of the subcontracting chain and expanding it. In design, the company’s own expertise was strengthened by recruiting more personnel, and a design system development project was launched to reduce costs. Cooperation between the Group companies was strengthened in both design and manufacture.

The vessel business saw its order book improve after a challenging start to the year, and the Group received several significant orders. Some of the deliveries will extend all the way to 2018.

Roll and pipe business

AP Tela Oy’s order book was at a record high during the financial year. The company invested in, among other things, increasing its inside turning capacity, managing production load and acquiring more processing and warehousing space.

The largest delivery during the financial year consisted of the design and manufacture of 27 massive drying cylinders. The delivery was made in the fourth quarter of 2016. The project ended up being loss-making and it also had significant negative impacts on other projects. Consequently, AP-Tela’s operating result was substantially in the red. AP-Tela started co-determination negotiations at the end of the financial year to adjust its operations.

NEW ORDERS AND ORDER BOOK 

Uutechnic Group’s order book stood at EUR 15.9 million (11.7 million) at the end of the financial year, up 36.1% year-on-year. The order book extends to 2018.

TURNOVER AND PROFITABILITY

Uutechnic Group’s turnover for the financial year 2016 amounted to EUR 36.4 million (8.9 million), and its operating result was EUR 0.9 million (1.2 million). The comparative combined turnover of the Group’s operating subsidiaries in the previous financial year was EUR 30.6 million.

Finland represented approximately 48% of the Group’s turnover, including indirect exports. The rest of Europe accounted for 40% of turnover, while Asia represented 9%, South America 2% and North America 2%.

The Group’s weaker-than-expected operating result was affected by losses made on a significant project in AP-Tela Oy as well as the project’s impacts on other manufacturing operations. In spite of the challenges related to the manufacture of the new product, the project was delivered to the customer as agreed. With the exception of AP-Tela, the Group companies achieved a positive operating result.

The efficiency improvement programmes started by the Group in the previous financial year, aiming at total savings of EUR 1.5 million compared to 2015, were implemented as planned. The Group will continue to review and streamline processes.

FINANCIAL STANDING AND LIQUIDITY

At the end of the financial year, Uutechnic Group’s balance sheet total stood at EUR 23.7 million (22.2 million). The Group’s interest-bearing liabilities totalled EUR 5.1 million (5.5 million), including EUR 2.0 million in subordinated loans. The Group’s cash flow from operations for the financial year was EUR 0,8 million (1,4 million).

At the end of the financial year, the Group’s equity ratio was 78.2% (68.0%) and net gearing was 30.9% (50.5%). Return on investment (ROI) for the financial year was 2.8% (13.6%), and return on equity (ROE) was 7.2% (12.4%).

Non-current assets on Uutechnic Group’s balance sheet totalled EUR 11.7 million (11.1 million).

EQUITY

The Group’s equity stood at EUR 10.5 million (9.5 million) at the end of the financial year.

Loans granted by two shareholders, totalling EUR 2.0 million, were converted into unsecured subordinated loans in conjunction with a financing arrangement in 2015. These loans are subordinated loans in accordance with chapter 12 of the Limited Liability Companies Act, and their capital repayments and interest payments must meet the conditions provided in the Act. The loans will be repaid as a one-off payment on 31 December 2019. However, the company is entitled to pay early. The annual interest rate on the outstanding loan capital is 4%. Of the total loan capital, EUR 1 million involves a specific right of exchange. To the extent that loan capital remains unpaid on 31 December 2017, the creditors are entitled to convert EUR 1 million of the capital, in part or in full, into shares in the company at a value of EUR 0.25. This right of exchange is based on the authorisation to issue shares that was approved by the company’s Annual General Meeting on 14 April 2015.

RESEARCH, PRODUCT DEVELOPMENT AND INVESTMENTS

The Group’s research and product development activities were focused on the design and implementation of customised customer solutions. The expenses are recognised as an annual cost.

The Group’s investments in fixed assets for the financial year totalled EUR 1.0 million (0.04 million). The investments primarily involved equipment purchases as well as processing and warehousing space.

PERSONNEL

At the end of the financial year, Uutechnic Group had 195 (179) employees, of whom 84 (75) were white collar and 111 (104) were blue collar. Of the employees, 131 worked in Finland and 64 in Germany.

AUTHORISATION TO ISSUE SHARES

In accordance with the proposal of the Board of Directors, the Annual General Meeting of 28 April 2016 authorised the Board of Directors to resolve on the issue of at most 10,000,000 new shares or special rights entitling to shares, with at most 1,000,000 of these allocated to the Group’s personnel and Board of Directors.

SHARE ISSUES

On 6 June 2016, the Board of Directors of Plc Uutechnic Group Oyj resolved on a directed issue of at most 1,000,000 new shares. According to the resolution, at most 800,000 shares would be offered to the personnel and at most 200,000 shares would be offered to the Board of Directors. The subscription period of the share issue ended on 12 August 2016 and the Board of Directors approved the subscription of 542,000 new shares. The subscription price per share was EUR 0.50. The new shares subscribed in the share issue represented approximately 1.0 per cent of all shares and votes in the company. The members of the company’s Board of Directors subscribed in full the shares offered to them.

BOARD OF DIRECTORS, MANAGEMENT AND AUDITORS

On 28 April 2016, the Annual General Meeting re-elected Sami Alatalo (Vice Chairman) and Jouko Peräaho (Chairman) and elected Hannu Kottonen and Kristiina Lagerstedt as new Board members. The new members are independent of the company and its major shareholders.

Martti Heikkilä has served as the Group’s CEO since 1 December 2015.

Ernst & Young, Authorised Public Accountants, served as the Group’s auditor, with Osmo Valovirta, APA, as the principal auditor.

The Company adheres to the Finnish Corporate Governance Code 2015 for listed companies (Nasdaq Helsinki). The Group publishes its Corporate Governance Statement as part of its annual report and on its website at www.uutechnicgroup.fi .

REMARKABLE RISKS AND UNCERTAINTY FACTORS AND THEIR MANAGEMENT

The demand for Uutechnic Group’s products is dependent on trends and developments in the global economy and the Group’s customer industries, which poses a general external risk to its operations. The Group seeks to mitigate the risks arising from changes in demand by targeting its sales operations in line with current trends in various market areas and customer industries.

According to the Board of Directors of the Group’s parent company, other significant risks and uncertainty factors to which the Group is exposed are related to at least the following aspects:

• Turning the Group’s previously loss-making units into profitable units or maintaining the profitability of units requires further improvements in competitiveness and the achievement of sufficient operating volumes.

• The Group will continue to implement consolidation processes and pursue identified synergies to improve profitability. It is possible that not all of the identified synergies will be achieved, or that processes will fail.    

• The Group aims to grow organically as well as through acquisitions. There is no certainty that the Group will be able to find suitable candidates for acquisition, obtain the financing required for acquisitions or acquire businesses on satisfactory terms.    

• The acquisition prices paid in the context of business combinations and the goodwill generated by them also involve risks. The Group’s calculations to test goodwill are based on financial forecasts and assumptions prepared by the management.

• Part of the Group’s business operations consist of major or large project deliveries. Extensive and complicated projects involve the risk that the future costs and any other risks related to the delivery cannot be estimated sufficiently accurately in the bidding phase. In such cases, the result of the project may prove weaker than expected. In contracts for extensive projects, the claims for compensation for delayed delivery or deficient performance may be significant.

• Unfavourable changes in the financial markets may have an effect on the Group’s result and the availability of equity and debt financing on competitive terms. Uncertainty in the international economy may lead to payment delays and an increased risk of credit losses.

The Group seeks to protect itself against risks using all measures that can reasonably be implemented. These include, among other things, measures aimed at improving profitability and productivity, training for employees, guidelines and instructions, insurance policies, critical examination of the terms and conditions of commercial agreements and the systematic monitoring and development of operations.

EVENTS AFTER THE END OF THE FINANCIAL YEAR

On 2 January 2017, the company announced that Nordea Bank Finland will transfer its market-making for Plc Uutechnic Group Oyj to Nordea Bank AB (publ) due to the merger of Nordea Bank Finland and its parent company Nordea Bank AB (publ).

Also on 2 January 2017, Uutechnic Group announced it is strengthening its competence in the mixing technology business in line with the Group’s strategy by appointing Jussi Vaarno PhD (Eng) as Vice President and a member of the Group Management Team starting from 16 January 2017. Uutechnic Group’s objective is to grow the mixing technology business and strengthen its significance as a success factor for the Group.

On 19 January 2017, the company announced that AP-Tela Oy, a subsidiary of Uutechnic Group, had concluded co-determination negotiations. The negotiations were based on the restructuring of operations and on financial and production-related reasons. The negotiations concerned the company’s entire personnel. It was decided that the number of employees would be adjusted according to the company’s financial situation and order book. Terminations of employment contracts will concern three persons and temporary layoffs will last 90 days at most.

THE BOARD’S PROPOSAL FOR THE DISTRIBUTION OF DIVIDEND

The parent company’s profit for the financial year was EUR 0.7 million. At the end of the financial year, the parent company’s distributable funds stood at EUR 10.4 million. The Board of Directors proposes to the Annual General Meeting that no dividend be paid and the profit for the period be transferred to the retained earnings account.

ANNUAL GENERAL MEETING

The Annual General Meeting of Plc Uutechnic Group Oyj will be held at the Scandic Park Hotel in Helsinki on 30 March 2017 at 1:00 p.m.

KEY FIGURES FOR THE FINANCIAL STATEMENTS OF UUTECHNIC GROUP

The figures are presented in thousands of euros (EUR 1,000), unless otherwise mentioned. The figures are unaudited.

The business arrangement carried out in the Group in 2015 was recognised as a reverse acquisition in the Group’s IFRS financial statements. For this reason, the comparison figures are figures consisting of Uutechnic Oy’s 12-month figures and the figures for the rest of the Group (formerly Vaahto Group) for a period of two months.

In Uusikaupunki February 27, 2017

PLC UUTECHNIC GROUP OYJ

The Board of Directors

Uutechnic Group is focused on improving the competitiveness of its customers by providing them advanced equipment technology and unique service concept worldwide. The product range includes agitators, different types of pressure vessels, process- and storage tanks, reactors and heat exchangers. Additionally different types of long welded and machined axially symmetrical parts as rolls, cylinders, tubes and cones.

The main industries are hydrometallurgy, mining-, pulp and paper-, food-, fertilizer-, other chemical industries and environmental technology.

Plc Uutechnic Group’s subsidiaries are AP-Tela Oy, Japrotek Oy Ab, Uutechnic Oy and Stelzer Rührtechnik International GmbH.

         Further information:          Jouko Peräaho, chairman of the Board of Directors +358 500 740 808