Sievi Capital Plc’s Financial Statements Release for 1 January–31 December 2022
Sievi Capital Plc
Stock Exchange Release 28 February 2023 at 8:00 am EET
Sievi Capital Plc’s Financial Statements Release for 1 January–31 December 2022
Sievi Capital initiated a change in strategy, the target companies had an eventful year
This is the summary of the Financial Statements Release for 2022. The full Financial Statements Release is attached to this release and is also available on the company’s website at www.sievicapital.fi
Operating profit was EUR -1.6 (1.9) million
Net profit for the period was EUR -1.3 (3.3) million
Earnings per share (undiluted and diluted) were EUR -0.02 (0.06)
Indoor Group completed the acquisition of franchisee-operated Sotka stores
Nordic Rescue Group ceased its rescue lift business
Sievi Capital initiated a change in strategy to transform into a conglomerate
Sievi Capital refinanced a loan of EUR 10.0 million
Operating profit was EUR -10.1 (20.2) million
Net profit for the period was EUR -8.2 (18.4) million
Earnings per share (undiluted and diluted) were EUR -0.14 (0.32)
Net asset value per share at the end of the review period was EUR 1.47 (1.61)
Return on equity was -9.2% (21.6%)
Gearing at the end of the review period was 14.9% (8.6%)
Figures in parentheses are reference figures from the corresponding period in the previous year, unless indicated otherwise. The figures in the Financial Statements Release are audited, unless indicated otherwise. Sievi Capital does not consolidate the data of its subsidiaries into Group-level calculations line item by line item but recognises investments in the companies at fair value through profit or loss.
Proposal for the distribution of profit
The Board of Directors proposes to the Annual General Meeting that no dividend be distributed for the past financial period. The profit distribution proposal of the Board of Directors takes into account the company’s liquidity situation at the time of making the profit distribution proposal, expected cash flows during the new year and the investments required by the change in strategy.
CEO Jussi Majamaa:
“Sievi Capital and its target companies had an eventful year in 2022. Due to factors including the war in Ukraine, inflation and rising interest rates, the market environments of the target companies were exceptional in many respects and, consequently, there were differences in financial performance between the target companies. For KH-Koneet Group, Logistikas and HTJ, net sales and EBITDA increased substantially from the previous year. At the same time, Indoor Group and Nordic Rescue Group had a very challenging year and their financial performance was weak. In 2022, we also prepared Sievi Capital’s change in strategy to initiate our transformation into a conglomerate.
The focus of the target companies in 2022 was on growth and increasing operational efficiency. KH-Koneet Group had a strong year overall, with its net sales and EBITDA increasing substantially year-on-year. The focus of KH-Koneet Group’s growth was once again in Sweden, where the company also grew through the acquisition of Törnells Maskinuthyrning in April. In the autumn, KH-Koneet Group improved the efficiency of its operations in Sweden by streamlining its operating locations and organisation. HTJ carried out its first acquisition under Sievi Capital’s ownership by acquiring Infrap, a company specialising in infrastructure and industrial construction services, in May. In addition, Logistikas continued its strong growth and signed new complete outsourcing agreements.
Indoor Group had a very challenging year due to weaker demand and cost pressures. The company streamlined its chain management during the review period and, going forward, will carry on its business without franchisee-operated stores. Indoor Group also conducted change negotiations due to the weakened market environment and the company’s financial performance. The change negotiations were completed near the end of the year. Nordic Rescue Group also had a difficult year. The company’s financial performance has been trending downwards for some time now, particularly due to the loss-making rescue lift business. Late in the year under review, the company decided to cease the manufacturing of rescue lifts, and the company will now operate without the Vema Lift business. At the same time, the fire engine manufacturers Saurus and Sala Brand are healthy and profitable businesses, and Nordic Rescue Group’s operations will be a on a stronger foundation going forward.
The exceptional and variable business environments of our target companies, along with the changes in the interest rate environment, were reflected in the unrealised changes in the values of investments, which were negative as a whole in 2022. During the review period, we did not make any exits from our target companies and we did not receive any income in the form of dividends or capital repayments, which meant that our return on equity for 2022 was also negative at -9.2%. Despite not earning cash flow income, we maintained our gearing below the threshold specified in our targets. Gearing was 14.9% at the end of the review period. We carried out a refinancing arrangement in December and used the new loan to pay off previous loans that would have been due in October 2023.
Sievi Capital’s strategy work was one of the key themes of the year, and we worked on our strategy throughout the year. In December, we announced that we will begin our transformation into a conglomerate in 2023. The medium-term objective is to become an industrial group built around the KH-Koneet Group’s business and to divest other target companies in line with previous strategy. The development of the other target companies will continue normally, and we will assess opportunities such as acquisition targets in accordance with the business plan for each company. We will not, however, make any new initial investments. The new strategy will lead to a significant change in our reporting. When the amendments to the Articles of Association related to the change in strategy are adopted by the Annual General Meeting, our current reporting as an IFRS investment entity will cease, and we will consolidate our financial figures as a conglomerate. We believe that this will make the actual value of the business portfolio more transparent. Our journey of transformation is only in its early stages. It will take time and require investments from us. Nevertheless, we are confident that our chosen path is the right direction for the company and it will also reward our shareholders.”
As a result of the change in strategy announced on 15 December 2022, Sievi Capital will transform from a private equity investment company into a conglomerate during 2023. Sievi Capital’s strategy will no longer include making private equity investments in new industries. The medium-term objective is to become an industrial group built around the KH-Koneet Group’s business and to divest other target companies in line with previous investment strategy. For Sievi Capital’s other investments, the active development of the companies’ business operations will continue. Exit planning and the assessment of exit opportunities for the other investments will also continue.
Sievi Capital does not consolidate the figures of its subsidiaries into Group-level calculations line item by line item. Instead, investments in the companies are recognised at fair value through profit or loss. Changes in the fair values of the investments have a material impact on Sievi Capital’s results. In addition to the target companies’ own development, factors that influence the development of the fair values of the investments include, for instance, the general development of different sectors and national economies as well as changes in their outlooks, the development of stock market and interest rates and other factors beyond Sievi Capital’s control. The COVID-19 pandemic and impacts of the war in Ukraine also increase uncertainty in projections of future development.
The financial target for Sievi Capital’s private equity investment activities is a return on equity of at least 13%, the achievement of which the company considers to be realistic in the long term. Due to the nature of the business, the company’s short-term result development is subject to volatility that is difficult to predict. Therefore, Sievi Capital does not provide an estimate of the development of its result in 2023. Sievi Capital’s new strategy and financial targets will be discussed in more detail at the Capital Markets Day to be held in autumn 2023.
Results presentation webcast
Sievi Capital will organise a webcast in Finnish for analysts, investors and the media on 28 February 2023 at 1:00 pm EET. You can follow the live webcast at https://sievicapital.videosync.fi/q4-2022-result
The presentation material will be available later on the same day on Sievi Capital’s website and a recording of the webcast at the latest a day later.
SIEVI CAPITAL PLC
CEO Jussi Majamaa, tel. +358 400 412 127
Nasdaq Helsinki Ltd
Sievi Capital is a partner for Finnish entrepreneurs. We are on a transformation journey from a private equity investment company into a conglomerate. Our medium-term objective is to become an industrial group built around the business of our target company KH-Koneet Group. Sievi Capital’s share is listed on Nasdaq Helsinki.