HONKARAKENNE OYJ HALF YEAR FINANCIAL REPORT, 1 JANUARY – 30 JUNE 2020
HONKARAKENNE OYJ HALF YEAR FINANCIAL REPORT 20 August 2020 at 9:30 a.m.
HONKARAKENNE OYJ HALF YEAR FINANCIAL REPORT, 1 JANUARY – 30 JUNE 2020
REVENUE (NET SALES) INCREASED, PROFIT IMPROVEMENT BY EFFICIENCY
Revenue (net sales) for the first half of 2020 grew by 4 per cent and amounted to MEUR 22.6 (H1 2019: MEUR 21.7). Both operating profit and profit before taxes improved compared to the corresponding period of the previous year. The operating profit increased by 17 per cent and was MEUR 1.0 (H1 2019: MEUR 0.9). Profit before taxes increased by 17 per cent and was MEUR 1.0 (H1 2019: MEUR 0.8).
January - June 2020
· Honkarakenne Group's revenue (net sales) January-June amounted to MEUR 22.6 (MEUR 21.7 in H1 2019), representing an increase over the same period the previous year of 4%.
· The operating result was MEUR 1.0 (MEUR 0.9). Adjusted operating result was MEUR 1.0 (MEUR 0.9).
· The profit before taxes was MEUR 1.0 (MEUR 0.8).
· Earnings per share amounted to EUR 0.12 (EUR 0.09).
Honkarakenne issues outlook for 2020.
Honkarakenne’s view is that revenue (net sales) in 2020 will be on par with previous year. Adjusted profit before taxes is however weaker than previous year.
Basis for the outlook
The company's outlook for 2020 is based on the existing order book and the view on market development. Deliveries towards the end of the year include project deliveries and deliveries for project orders may typically be subject to last moment changes and delivery re-scheduling. In addition, the effects of the corona situation on order intake and deliveries, particularly in Asia and Europe, weakens our outlook. Investments in business development towards the end of the year will lower the full-year result.
Previous outlook
In April, Honkarakenne issued a profit warning and announced that it would not issue new guidance for 2020 because it is difficult to estimate the duration of the uncertainty and all the effects on business caused by the coronavirus pandemic.
At the end of June, the Group’s order book stood at MEUR 29.2, as compared to MEUR 28.2 a year earlier. At the end of June, the order book was 4% higher than a year earlier.
Figures in parentheses refer to the corresponding period of the previous year, unless stated otherwise.
KEY INDICATORS 1-6/
2020 1-6/
2019 1-12/
2019
Revenue (net sales), MEUR 22.6 21.7 47.5
Operating profit/loss, MEUR 1.0 0.9 3.4
Adjusted operating profit/loss, MEUR 1.0 0.9 3.4
Profit/loss before taxes, MEUR 1.0 0.8 3.2
Adjusted profit/loss before taxes, MEUR 1.0 0.8 3.2
Average number of personnel 166 153 155
Personnel in person-years, average 145 136 139
Earnings/share (EPS), EUR *) 0.12 0.09 0.40
Equity ratio, % 52 51 56
Return on equity, % 5 5 20
Equity/share, EUR *) 2.15 1.83 2.14
Gearing, % 10 6 -15
Marko Saarelainen, President and CEO of Honkarakenne Oyj, in connection with the half year financial report:
“Revenue (net sales) developed favourably in Finland and saw year-on-year improvement of 11 per cent. The favourable trend in sales of detached houses has continued. Our holiday home collection was revamped in early 2020, and the new collection has attracted interest in the market. Demand for daycare centres has remained on par with last year, but interest in schools has increased and a rise in the number of log schools is expected. The efficiency-boosting measures taken in the order-supply chain and sales process are now beginning to show: our operations are now more efficient and we are paying even more attention to our customer experience. We have developed and strengthened our service business, and commercialised new service models. Further enhancements to our domestic sales network are still being made.
Although revenue (net sales) in Exports fell by 12 per cent, the order book was higher at the end of June than it had been a year earlier. The coronavirus pandemic, combined with industrial action from the Industrial Union, led to the postponement of export deliveries during the first half of the year. The unfavourable impacts of the coronavirus are particularly visible in Asia. Although some export projects have been temporarily halted, we have been able to continue with projects and regional construction in Russia in cooperation with our local partner.
The Group’s revenue (net sales) was 4 per cent higher than a year before. Both operating profit and profit before taxed improved compared to the corresponding period previous year. Operating profit increased by 18 per cent and profit before taxes increased by 17 per cent. Profit increases show that our efficiency-boosting efforts have succeeded.”
REVENUE (NET SALES)
Honkarakenne changed its reporting at the beginning of 2020 and revenue (net sales) data is now divided into two segments: Finland and Exports. Revenue (net sales) data for both last year and the first half of 2020 is presented below, as per the new segment divisions.
The Group’s first half year revenue (net sales) in 2020 increased by 4% to MEUR 22.6 (MEUR 21.7).
Geographical distribution of revenue (net sales):
Distribution of revenue
(net sales), % 1-6/2020 1-6/2019 1-12/2019
Finland 71 % 67 % 66 %
Exports 29 % 34 % 34 %
Total 100 % 100 % 100 %
Revenue (net sales), MEUR 1-6/2020 1-6/2019 change%
Finland 16.1 14.5 11 %
Exports 6.5 7.3 -12 %
Total 22.6 21.7 4 % 7-12/2019 1-12/2019
Finland 16.8 31.3
Exports 9.0 16.3
Total 25.8 47.5
Finland also includes billet sales and sale of process byproducts for recycling.
Exports includes all other countries except Finland.
At the end of June, the Group’s order book stood at MEUR 29.2, as compared to MEUR 28.2 a year earlier. At the end of June, the order book was 4% higher than a year earlier. The order book includes orders whose delivery date falls within the next 24 months. Some orders may involve terms and conditions relating to financing or building permits.
TRENDS IN PROFIT AND PROFITABILITY
Honkarakenne’s operating profit and profit before taxes developed favourably. Operating profit for the January-June period was MEUR 1.0 (0.9) and profit before taxes was MEUR 1.0 (0.8). There were no adjustment items during the review period or year before. These improvements in profit indicate that our operations are now more efficient.
FINANCING AND INVESTMENTS
The financial position of the Group remained good during the report period. At the end of June, the Group’s equity ratio was 52% (51%) and gearing was 10% (6%).
At the end of the review period, the Group’s net financial liabilities stood at MEUR 1.2 (0.6). Liquid assets totalled MEUR 3.7 (3.1). The Group also has a MEUR 4.5 (4.5) bank overdraft facility, which was not in use at the close of either this period or the previous one.
The Group’s capital expenditure totalled MEUR 2.2 (MEUR 2.7), excluding right-of-use assets as defined in IFRS 16.
Investments in the Karstula factory have progressed, although the coronavirus situation has caused some delays in equipment deliveries and installations. The modernised production line is now expected to be in use and up to speed by the end of 2020.
PRODUCTS AND MARKET AREAS
*In Finland*, revenue (net sales) developed favourably and saw a year-on-year improvement of 11 per cent. The favourable trend in sales of detached houses has continued. Our holiday home collection was revamped in early 2020, and the new collection has attracted interest in the market. Demand for daycare centres has remained on par with last year, but interest in schools has increased and a rise in the number of log schools is expected. The efficiency-boosting measures taken in the order-supply chain and sales process are now beginning to show: our operations are now more efficient and we are paying even more attention to our customer experience. The service business has been developed and strengthened, and new service models have been commercialised. Further enhancements to the sales network are being made.
Although revenue (net sales) *in Exports* fell by 12 per cent, the order book was higher at the end of June than it had been a year earlier. The coronavirus pandemic, combined with industrial action from the Industrial Union, led to the postponement of export deliveries during the first half of the year. The unfavourable impacts of the coronavirus are particularly visible in Asia. Although some export projects have been temporarily halted, we have been able to continue with projects and regional construction in Russia in cooperation with our local partner.
THE SEASONAL NATURE OF OUR BUSINESS
Honkarakenne operates in an industry with a noticeably seasonal nature. In Finland in particular, construction is weighted towards the summer months, meaning that more deliveries are made during the summer and autumn than during the winter season. We seek to balance out the seasonal nature of our business with a variety of marketing measures, such as marketing campaigns scheduled for the winter season.
In 2020, Honkarakenne conducted co-operation negotiations in preparation for seasonal variations that are typical in our industry. It was agreed that employees would work shorter weeks.
RESEARCH AND DEVELOPMENT
In the January–June period, the Group's R&D expenditure totalled MEUR 0.1 (0.1), representing 0.5% of revenue (net sales) (0.6%). The Group did not capitalise any development expenditure during the report period.
PERSONNEL
In the first half of the year, the Group’s number of personnel grew, especially in the case of white-collar employees. During the first half of the year, the Group employed a total of 145 (136) people on average in terms of person-years, and a total of 166 (153) people on average in terms of employment contracts.
EXECUTIVE GROUP
In May, the company announced that Jari Fröberg (Vice President, Production) would be leaving the company. Otherwise, there were no changes to the Executive Group. The Executive Group now consists of Marko Saarelainen (President & CEO), Leena Aalto (Vice President, Finance and CFO), Sanna Huovinen (Vice President, Marketing), and Jari Noppa (Vice President, Finland).
HONKARAKENNE OYJ’S ANNUAL GENERAL MEETING, BOARD OF DIRECTORS, AND AUDITORS
The Annual General Meeting of Honkarakenne Oyj was held at the company’s office in Tuusula on 29 May 2020. The AGM approved the parent company's and the consolidated Financial Statements, and discharged the members of the Board of Directors and the CEO from liability for 2019. The AGM decided not to pay a dividend for the 2019 financial year. In addition the AGM decided that a repayment of capital of EUR 0.12 per share be distributed from the invested unrestricted equity fund.
Timo Kohtamäki, Arimo Ristola, Helena Ruponen, Kari Saarelainen and Kyösti Saarimäki were re-elected as Board members. At the Board's constituent meeting, Arimo Ristola was elected Chairman of the Board. At the same meeting, the Board decided that it will not establish committees.
The AGM re-elected Ernst & Young Oy, a firm of authorised public accountants, as the company’s auditor with Authorised Public Accountant Elina Laitinen as principal auditor.
AUTHORISATIONS OF THE BOARD OF DIRECTORS
On 29 May 2020, the AGM decided that the Board of Directors will be authorised to acquire a maximum of 400,000 of the company’s own B shares with assets included in the company’s unrestricted equity. In addition, the AGM authorised the Board to decide on a rights issue or bonus issue and on granting special rights to shares referred to in Section 1 of Chapter 10 of the Limited Liability Companies Act in one or more instalments. By virtue of the authorisation, the Board may issue a maximum total of 1,500,000 new shares and/or relinquish old B shares held by the company, including those shares that can be issued by virtue of special rights. Both authorisations will remain in force until the next Annual General Meeting, however expiring at the latest on June 30, 2021.
SHARES, SHARE CAPITAL AND OWN SHARES
During the review period, the total number of Honkarakenne Oyj shares amounted to 6 211 419, of which 300 096 were Series A shares and 5 911 323 Series B shares. The company’s share capital remained unchanged and was EUR 9 897 936.00. Each B share carries one (1) vote and each A share carries twenty (20) votes. Hence, Honkarakenne’s shares in aggregate at the end of the review period carried a total of 11 913 243 votes.
Honkarakenne’s Series B shares are quoted in the Small Cap list of NASDAQ OMX Helsinki Ltd under the short name HONBS. In January-June, the highest price of the Series B share in trading was EUR 4.42 and the lowest EUR 2.42. The closing price was EUR 3.20. The value of trading in Series B shares was MEUR 6.5 with a turnover of 1.9 million shares.
In June, Honkarakenne surrendered 15 000 of its Honkarakenne B shares to the company’s CEO as part of the CEO’s 2019 management bonus. At the end of the report period, the Group held 349 385 of its Honkarakenne B shares with a total purchase price of EUR 1 309 260.25. These shares represent 5.62 per cent of all the company's shares and 2.93 per cent of all votes. The purchase cost of the shares has been deducted from shareholders' equity in the consolidated financial statements.
FLAGGINGS
During the review period, the company received the following flagging notification pursuant to Section 9(5) of the Securities Market Act: on 29 May 2020, the number of Honkarakenne Oyj shares owned by Saarelainen Oy rose to more than 10 per cent of all shares.
CORPORATE GOVERNANCE
Honkarakenne Oyj follows the Limited Liability Companies Act and the Finnish Corporate Governance Code 2020 for listed companies issued by the Finnish Securities Market Association. The company’s website, www.honka.com, provides more information on the corporate governance systems.
NEAR-TERM RISKS AND UNCERTAINTIES
Demand for Honkarakenne’s products is significantly affected by the general economic trends, exchange rates, consumers’ confidence in their own finances and competition in the industry. If demand falls sharply, this could have significant impacts on the company’s earnings trend.
The coronavirus pandemic is creating uncertainty in all of the company’s market areas. The duration of the uncertainty arising from the coronavirus pandemic and all its effects on the company’s business are difficult to gauge, but the pandemic may have significant impacts on Honkarakenne’s business.
The assessment of amounts in the statement of financial position is based on current assessments by the management. If these assessments are changed, this may result in changes to the company’s result.
EVENTS AFTER THE REVIEW PERIOD
Honkarakenne does not have any significant events after the review period to report on.
REPORTING
This report contains statements that relate to the future, and these statements are based on hypotheses that the company's management hold currently as well as on the decisions and plans that are currently in place. Although the management believes that the hypotheses relating to the future are well-founded, there is no guarantee that the said hypotheses will prove to be correct.
This half-year financial report has been drafted in accordance with IAS 34. The half-year financial report should be read together with the 2019 financial statements. This half-year financial report has been drafted in accordance with the same accounting principles applied in the 2019 financial statements, with the exception of standards and interpretations that have come into force on 1 January 2020 or thereafter. The new standards or interpretations effective as of 1 January 2020 did not have a material impact on the figures presented for the review period.
The half-year financial report has not been audited and the figures have not been examined by the auditor.
Figures in parentheses refer to the corresponding period of the previous year, unless stated otherwise.
Honkarakenne complies with the Guidelines on Alternative Performance Measures (APM) issued by the European Securities and Markets Authority (ESMA). An APM is a financial measure of performance other than a financial measure defined or specified in IFRS. For this reason, the term “adjusted” is used instead of “without non-recurring items”. As adjustment items, the company classifies significant business transactions that are considered to affect comparisons between different reporting periods. Such transactions include significant reorganisation expenses, significant impairment losses or reversals thereof, significant capital gains and losses on assets, and other significant non-customary income or expenses.
OUTLOOK FOR 2020
Honkarakenne issues outlook for 2020.
Honkarakenne’s view is that revenue (net sales) in 2020 will be on par with previous year. Adjusted profit before taxes is however weaker than previous year.
Previous outlook
In April, Honkarakenne issued a profit warning and announced that it would not issue new guidance for 2020 because it is difficult to estimate the duration of the uncertainty and all the effects on business caused by the coronavirus pandemic.
BASIS FOR THE NEW OUTLOOK
The company's outlook for 2020 is based on the existing order book and the view on market development. Deliveries towards the end of the year include project deliveries and deliveries for project orders may typically be subject to last moment changes and delivery re-scheduling. In addition, the effects of the corona situation on order intake and deliveries, particularly in Asia and Europe, weakens our outlook. Investments in business development towards the end of the year will lower the full-year result.
HONKARAKENNE OYJ
Board of Directors
Further information:
Marko Saarelainen, President and CEO, tel. +358 (0)40 542 0254, marko.saarelainen@honka.com or
Leena Aalto, Vice President - Finance, CFO, tel. +358 (0)40 769 4590, leena.aalto@honka.com
This and previous releases are available for viewing on the company’s website at www.honka.com.
DISTRIBUTION
NASDAQ OMX Helsinki
Key media
Financial Supervisory Authority
www.honka.com
Under its Honka® brand, Honkarakenne manufactures high-quality, healthy and ecological detached houses, holiday homes and public buildings using Finnish solid wood. The company has delivered 85,000 buildings to more than 50 countries. House packages are made in Finland, the companys’s own factory is located in Karstula, Finland. In 2019, the Honkarakenne Group had revenue (net sales) of MEUR 47.5, of which exports accounted for 34%. www.honka.com
*CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME*
Unaudited 1-6
/2020 1-6
/2019 1-12
/2019
MEUR
*Revenue (net sales)* *22.6* *21.7* *47.5*
Other operating income 0.2 0.1 0.4
Change in inventories 0.9 1.3 -0.2
Materials and services -14.9 -15.2 -30.0
Employee benefit expenses -4.3 -4.2 -8.3
Depreciations, amortisation and impairment -0.9 -0.8 -1.8
Other operating expenses -2.6 -2.1 -4.2
*Operating profit/loss* *1.0* *0.9* *3.4*
Financial income 0.1 0.1 0.1
Financial expenses -0.1 -0.2 -0.3
Share of associated companies' result 0.0 0.1 0.0
*Profit/loss before taxes* *1.0* *0.8* *3.2*
Taxes -0.3 -0.3 -0.9
*Profit/loss for the period* *0.7* *0.5* *2.3*
Other comprehensive income
Translation differences 0.0 0.1 0.1
*Total comprehensive*
*income for the period * *0.7* *0.6* *2.4*
Result for the period attributable to Equity holders of the parent 0.7 0.5 2.3 Non-controlling interest 0.0 0.0 0.0 *0.7* *0.5* *2.3*
Comprehensive income attributable to Equity holders of the parent 0.7 0.6 2.4 Non-controlling interest 0.0 0.0 0.0 *0.7* *0.6* *2.4*
Calculated from the result for the period attributable to equity holders of parent Earnings/share (EPS):
Basic, EUR 0.12 0.09 0.40
Diluted, EUR 0.12 0.09 0.40
Honkarakenne Oyj has two series of shares: A shares and B shares, which have different right to dividend. Profit distribution of 0.20 EUR per share will be paid first for B shares, then 0.20 EUR per share for A shares, followed by equal distribution of remaining profit distribution between all shares.
*CONSOLIDATED STATEMENT OF FINANCIAL POSITION *
Unaudited 30.6.2020 30.6.2019 31.12.2019
MEUR
*Assets*
*Non-current assets*
Property, plant and equipment 13.0 12.3 11.6
Goodwill 0.1 0.1 0.1
Other intangible assets 0.4 0.2 0.3
Investments in associated companies 0.3 0.3 0.3
Receivables 0.1 0.1 0.1
Deferred tax assets 1.5 2.0 1.6 *15.4* *15.0* *14.0*
*Current assets*
Inventories 5.4 6.0 4.4
Trade and other receivables 4.8 3.3 2.4
Cash and cash equivalents 3.7 3.1 7.1 *13.9* *12.4* *13.9*
*Total assets* *29.3* *27.4* *27.9*
*Equity and liabilities* 30.6.2020 30.6.2019 31.12.2019
*Equity attributable to owners*
*of the parent*
Share capital 9.9 9.9 9.9
Share premium account 0.5 0.5 0.5
Fund for invested unrestricted equity 7.4 8.0 8.0
Own shares -1.3 -1.4 -1.4
Translation differences 0.2 0.2 0.2
Retained earnings -4.1 -6.5 -4.7 *12.6* *10.7* *12.5*
Non-controlling interests 0.0 0.0 0.0
*Total equity* *12.6* *10.7* *12.5*
*Non-current liabilities*
Deferred tax liability 0.1 0.1 0.1
Provisions 0.2 0.2 0.2
Financial liabilities 4.1 2.9 4.4 *4.4* *3.2* *4.7*
*Current liabilities*
Trade and other payables 11.3 12.2 9.6
Current tax liabilities 0.1 0.3 0.1
Provisions 0.1 0.1 0.2
Current financial liabilities 0.8 0.9 0.8 *12.3* *13.5* *10.7*
*Total liabilities* *16.7* *16.7* *15.4*
*Total equity and liabilities* *29.3* *27.4* *27.9*
*CONSOLIDATED STATEMENT OF CHANGES IN EQUITY*
abridged
Unaudited
EUR thousand Equity attributable to owners of the parent a) b) c) d) e) f) Yht. g) Total equity
*Equity *1.1.2019** *9898* *520* *8034* *102* *-1382* *-7046* *10126* *5* *10131*
Profit/loss for the period 509 509 509
Translation difference 61 61 61
Other items 6 6 -5 1
*Equity* 30.6.2019** *9898* *520* *8034* *163* *-1382* *-6531* *10702* ** *10702*
Equity attributable to owners of the parent a) b) c) d) e) f) Yht. g) Total equity
*Equity** 1.1.2020* *9898* *520* *8034* *164* *-1382* *-4696* *12539* *12539*
Profit/loss for the period 673 673 673
Translation difference 7 7 7
Repayment of capital -611 -611 -611
Effect of share rewards 72 -61 12 12
*Equity** 30.6.2020* *9898* *520* *7424* *171* *-1309* *-4083* *12620* ** *12620*
a) Share capital
b) Share premium account
c) Fund for invested unrestricted equity
d) Translation difference
e) Own shares
f) Retained earnings
g) Non-controlling interests
*CONSOLIDATED STATEMENT OF CASH FLOWS*
abridged
Unaudited 1.1.-
30.6.2020 1.1.-
30.6.2019
1.1.-
31.12.2019
MEUR
Cash flow from operating activities -0.1 2.1 5.0
Cash flow from investing activities, net -2.2 -2.6 -3.1
Total cash flows from financing activities -1.0 -0.4 1.1 Proceeds from borrowings 0.0 0.0 2.0 Repayment of borrowings -0.2 -0.2 -0.5 Repayment of lease liabilities -0.2 -0.2 -0.4 Repayment of capital -0.6 0.0 0.0
Change in cash and cash equivalents -3.3 -1.0 3.0
Cash and cash equivalents at the beginning of period 7.1 4.1 4.1
Cash and cash equivalents at the close of period 3.7 3.1 7.1
*NOTES TO THE REPORT*
Accounting policies
This half-year financial report has been drafted in accordance with IAS 34. The half-year financial report should be read together with the 2019 financial statements. This half-year financial report has been drafted in accordance with the same accounting principles applied in the 2019 financial statements, with the exception of standards and interpretations that have come into force on 1 January 2020 or thereafter.
The half-year financial report has not been audited and the figures have not been examined by the auditor. The figures in the release are rounded, so the sum of individual figures may differ from the amount shown.
New standards and interpretations
The new standards or interpretations effective as of 1 January 2020 did not have a material impact on the figures presented for the review period.
Alternative Performance Measures
Honkarakenne complies with the Guidelines on Alternative Performance Measures (APM) issued by the European Securities and Markets Authority (ESMA). An APM is a financial measure of performance other than a financial measure defined or specified in IFRS. For this reason, the term “adjusted” is used instead of “without non-recurring items”. As adjustment items, the company classifies significant business transactions that are considered to affect comparisons between different reporting periods. Such transactions include significant reorganisation expenses, significant impairment losses or reversals thereof, significant capital gains and losses on assets, and other significant non-customary income or expenses.
In Honkarakenne’s view, Alternative Performance Measures provide significant additional information to management, investors, securities analysts and other parties on Honkarakenne’s result of operations, financial position and cash flows, and are frequently used by analysts, investors and other parties. Return on equity, equity ratio, net financial liabilities and gearing are presented as supplementary key figures, as in the company’s view they are useful indicators for assessing Honkarakenne’s ability to acquire financing and pay its debts. In addition, gross investments and R&D expenditure provide additional information on needs related to Honkarakenne’s cash flow from operating activities.
Segments
Since the beginning of 2020, Honkarakenne has had two geographical operating segments that have been combined into one segment for reporting purposes. Geographically, sales are divided as follows: Finland and Exports. As management’s internal reporting complies with IFRS reporting, separate reconciliations are not presented.
Property, plant and equipment
Unaudited
MEUR 30.6.2020 30.6.2019 31.12.2019
Cost at the beginning of the period 47.5 49.1 49.1
Increase 2.2 5.0 5.4
Disposals -0.1 -0.9 -6.9
Cost at the end of the period 49.6 53.2 47.5
Accumulated depreciation at the beginning of the period -35.9 -41.0 -41.0
Accumulated depreciation of disposals 0.1 0.9 6.9
Depreciation for the period -0.8 -0.8 -1.8
Accumulated depreciation at the end of period -36.6 -40.9 -35.9
Carrying amount at the beginning of the period 11.6 8.1 8.1
Carrying amount at the end of the period 13.0 12.3 11.6
Contingent liabilities
Unaudited 30.6.2020 30.6.2019 31.12.2019
MEUR
For own loans
- Mortgages 8.1 8.1 8.1
- Other quarantees 2.5 2.4 2.5
Off-balance sheet lease contracts 0.1 0.0 0.0
Events with related parties
The Group’s related parties consist of subsidiaries and associated companies; the company's management and any companies in which they exert influence; and those involved in the Saarelainen shareholder agreement and any companies controlled by them. The management personnel considered to be related parties comprise the Board of Directors, President & CEO, and the company's Executive Group. The pricing of goods and services in transactions with related parties conforms to market-based pricing.
During the report period, ordinary business transactions with related parties were made as follows: sales of goods and services to related parties amounted to MEUR 0.1 (0.1) and purchases from related parties to MEUR 0.3 (0.3). At the end of the review period, receivables from related parties amounted to MEUR 0.0 (0.0) and liabilities to related parties to MEUR 0.0 (0.0).
*Key indicators* 1-6/ 1-6/ 1-12/
Unaudited 2020 2019 2019
Earnings/share (EPS) euro 0.12 0.09 0.40
Return on equity % 5 5 20
Equity ratio % 52 51 56
Equity/share euro 2.15 1.83 2.14
Net financial liabilities MEUR 1.2 0.6 -1.9
Gearing % 10 6 -15
Gross investments MEUR 2.2 2.7 3.2 % of revenue (net sales) 10 12 7
Order book MEUR 29.2 28.2 27.6
Average number of personnel White-collar 94 85 87 Blue-collar 72 68 66 Total 166 153 155
Personnel in person-years, average White-collar 90 80 83 Blue-collar 56 56 57 Total 145 136 139
Adjusted number of shares (’000) At period-end 5862 5847 5847 Average during period 5850 5847 5847
Gross investments are presented without IFRS 16 right-of-use assets.
Own shares held by the Group are excluded from the number of shares.
*Calculation of key indicators* Profit / loss for the period attributable to owners of parent
Earnings/share (EPS): -------------------------------------------------------------------------- Average number of outstanding shares Profit / loss before taxes – taxes
Return on equity %: -------------------------------------------------------------------------- x 100 Total equity, average Equity attributable to the owners of the parent at the end of reporting period
Equity/share: -------------------------------------------------------------------------- Number of outstanding shares at the end of the reporting period Total equity
Equity ratio, %: -------------------------------------------------------------------------- x 100 Balance sheet total - advances received
Net financial liabilities Financial liabilities – cash and cash equivalents Financial liabilities – cash and cash equivalents
Gearing, %: -------------------------------------------------------------------------- x 100 Total equity