KH Group Plc’s Half-Year Report 1 January–30 June 2023
KH Group Oyj
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KH Group Oyj
KH Group Plc Stock Exchange Release 17 August 2023 at 8:00 am EEST
KH GroupPlc’s Half-Year Report 1 January–30 June 2023
Change in strategy is progressing as planned,the divestment of Logistikas was completed in June
This is the summary of the Half-Year Report for January–June 2023. The full Half-Year Report is attached to this release and is also available on the company’s website at www.khgroup.com.
Change of strategy, company name and reporting practices
Based on the change in strategy announced on 15 December 2022, Sievi Capital Plc transformed its operations from a private equity investment company into a conglomerate on 4 May 2023 by a decision of the Annual General Meeting. In connection with this, the company’s name was changed to KH Group Plc. The trading code of the share was previously SIEVI and was changed to KHG as a result of the change of the trade name on 10 May 2023.
KH Group’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’s business. The development of other business areas will continue in the same way as before, and the aim is to divest them in line with the previous investment strategy.
KH Group did not previously consolidate the data of its subsidiaries into Group-level calculations line item by line item, but recognised investments in the companies at fair value through profit and loss. Starting from 1 May 2023, the Group has consolidated its subsidiaries into the income statement and balance sheet line item by line item. More information on the change in accounting principles and its significant effects on the reported figures is provided in the tables section.
The following unaudited pro forma financial figures have been prepared for illustrative purposes only. The pro forma figures aim to illustrate the result of the segments and the Group if the change in investment entity status had taken place on 1 January 2022, and the companies that were part of the group structure on 30 June 2023 had been consolidated into the income statement line item by line item for the periods 1 January–31 December 2022 and 1 January–30 June 2023.
The unaudited pro forma figures are based on the subsidiaries’ audited financial statements for the financial year 2022 and on unaudited accounting figures for the periods 1 January–30 June 2022 and 1 January–30 June 2023.
The segment and consolidated income statement comments have been prepared on the basis of pro forma figures, unless otherwise stated. The section "Pro forma financial information" in the report presents more detailed accounting policies and reconciliations between reported and pro forma figures. KH Group has not prepared pro forma figures for balance sheet and cash flow items.
KH Group, April–June 2023 pro forma
Net sales amounted to EUR 105.9 (116.1) million.
Operating profit was EUR 1.2 (2.9) million.
Lauri Veijalainen became the CEO of KH Group and Indoor Group after the end of the review period, on 1 August 2023. Ville Nikulainen will start as the new CFO of KH Group on 1 September 2023.
KH Group divested its holdings in Logistikas.
Nordic Rescue Group signed a financing agreement concerning changes and follow-on investments.
KH Group, January–June 2023 pro forma
Net sales amounted to EUR 209.0 (215.7) million.
Operating profit was EUR 2.3 (2.4) million.
KH Group January–June 2023 reported IFRS
Net sales amounted to EUR 72.1 (-) million. The figures include net sales accumulated in May–June.
Operating profit was EUR -9.3 (-5.3) million.
Net profit for the period was EUR -5.4 (-4.3) million.
Earnings per share (undiluted and diluted) were EUR -0.06 (-0.07).
Equity per share at the end of the review period was EUR 1.51 (1.53).
Return on equity for rolling 12 months was -10.5% (3.5%).
Gearing at the end of the review period was 187.1% (13.0%)
Gearing excluding lease liabilities was 80.6% (12.8%).
CEO Lauri Veijalainen:
“I took up my post as KH Group’s and Indoor Group’s CEO on 1 August 2023. The implementation of KH Group’s change in strategy has progressed according to plan. In the second quarter, we continued our preparations for the changes in reporting, we divested the Logistikas business, and we worked on other measures required by the change in strategy. Sievi Capital’s name was changed on 4 May 2023 to KH Group, and we also created a new visual identity for the company. Following a change in reporting, our review now presents figures consolidated line item by line item for the first time. The changes to our reporting improve the transparency of our business operations for investors and other stakeholders.
Our consolidated pro forma net sales declined slightly year-on-year, as did our operating profit. Net sales and operating profit decreased for KH-Koneet and Indoor Group. Activity in the machine dealership market slowed somewhat, which had a negative impact on KH-Koneet’s net sales. Nevertheless, the demand for rental machinery has remained good. Indoor Group’s sales during the spring did not meet expectations, and the furniture market is still struggling with cautious consumer demand. For HTJ and Nordic Rescue Group, proforma net sales and operating profit improved during the comparable period. HTJ’s performance was supported by the growth of the project portfolio and the acquisitions made in 2022–2023. Nordic Rescue Group’s business now has a much healthier foundation after the Group exited the loss-making rescue lift business at the end of last year. The demand for rescue vehicles in Finland and Sweden has remained stable.
The divestment of Logistikas was completed at the end of June, and the company and the items related to the divestment are therefore reported as a discontinued operation. The debt-free selling price was EUR 23.5 million, with KH Group’s share after the deduction of net debt and the transaction costs amounting to EUR 11.9 million. The cash proceeds from the sale were used to pay back the parent company’s bank loan in full after the end of the review period, and the proceeds will also be used for investments required by the change in strategy.
This autumn, we will continue our development efforts in our business areas, many of which are focusing on operational efficiency. At the same time, we will continue to move forward with KH Group’s change in strategy as planned.”
Financial performance
KH Group, Pro forma key figures
The accounting principles applied in preparing the pro forma figures and reconciliations are presented later in the report under “Pro forma financial figures”.
EUR million
4–6/2023
4–6/2022
1–6/2023
1–6/2022
1–12/2022
Net sales
105.9
116.1
209.0
215.7
441.3
Pro forma EBITDA (1)
9.5
11.0
18.9
17.5
43.1
EBITDA, %
9.0%
9.5%
9.0%
8.1%
9.8%
Pro forma operating profit (EBIT)
1.2
2.9
2.3
2.4
12.2
Operating profit (EBIT), %
1.1%
2.5%
1.1%
1.1%
2.8%
Pro forma profit before taxes
-2.3
0.9
-3.9
-1.1
4.5
(1) EBITDA = operating profit + depreciation and amortisation
KH Group, April–June, pro forma
KH Group’s pro forma net sales amounted to EUR 105.9 (116.1) million, representing a year-on-year decline of 9%. Net sales increased in HTJ and Nordic Rescue Group, and decreased in KH-Koneet and Indoor Group. Operating profit for the review period came to EUR 1.2 (2.9) million. Of the segments, KH-Koneet, HTJ and Nordic Rescue Group had positive operating profit, while Indoor Group recorded a loss. The parent company’s share of the operating profit for the review period was EUR -0.8 (-0.5) million. The increase in the parent company’s operating expenses was partially due to project expenses associated with the change in strategy, which totalled EUR 0.2 million for the review period.
KH Group, January–June, pro forma
KH Group’s net sales decreased by 3% to EUR 209.0 (215.7) million. Net sales increased in HTJ and Nordic Rescue Group and decreased in KH-Koneet and Indoor Group. Operating profit was positive in all business segments except Indoor Group. Of the segments, Nordic Rescue Group improved its operating profit year-on-year and returned to profitability. The parent company’s share of the operating profit for the review period was EUR -1.4 (-1.1) million. The increase in the parent company’s operating expenses was partially due to project expenses associated with the change in strategy, which amounted to EUR 0.3 million for the review period.
Events after the review period
During the review period, the parent company had a bank loan of EUR 10.0 million. The bank loan was repaid in full after the review period, at the beginning of July. Cash proceeds from the Logistikas divestment were used to repay the loan. Following the repayment of the loan, the Group’s parent company has no loans from financial institutions.
KH Group’s new CEO, Lauri Veijalainen, took up his post after the end of the review period, at the beginning of August. Starting from 1 August 2023, Veijalainen will also act as the CEO of the subsidiary Indoor Group, and he will also participate in the work of the boards of directors of KH Group’s subsidiaries.
Ville Nikulainen has been appointed as the CFO of KH Group Plc as of 1 September 2023. Mr. Nikulainen previously served as the Interim CEO of KH Group between March and July 2023. He has an extensive and international work experience from financial, managerial, and board of directors duties. KH Group informed earlier this year that the CFO Tuomas Joensuu will leave the company in September to move to a new position outside the company.
Future outlook
KH Group’s medium-term objective is to become an industrial group built around the KH-Koneet business and to divest other business areas in line with previous strategy. At the same time, active developments will continue with regard to the other business areas. Exit planning and the assessment of exit opportunities for the other business areas will also continue.
In accordance with KH Group’s current financial guidance practices, the company does not issue a separate Group-level financial guidance. KH Group’s strategy and financial targets will be presented in more detail at the Capital Markets Day to be held before the end of 2023.
Results presentation webcast
KH Group will organise a webcast in Finnish for analysts, investors and the media on 17 August 2023 at 1:00 pm EEST. You can follow the live webcast at https://khgroup.videosync.fi/h1-2023
The webcast recording and the presentation material will be available on KH Group’s website later on the same day.
KH GROUP PLC
FURTHER INFORMATION: CEO Lauri Veijalainen, tel. +358 46 876 1648 CFO Tuomas Joensuu, tel +358 50 491 0981
Sievi Capital is now a conglomerate with a new name KH Group. Our four business areas are leading players in their sectors in B2B products and services and consumer trade. The objective of our strategy change is to focus on the business of the earth-moving machinery supplier KH-Koneet. KH Group’s share is listed on Nasdaq Helsinki.
