Continuing growth, strategy progressing after a challenging year

                                                       DELETE GROUP OYJ

 

Financial Statements Bulletin January–December 2021 (IFRS, IAS 34, unaudited)

 

CONTINUING GROWTH, STRATEGY PROGRESSING AFTER A CHALLENGING YEAR

 

Demolition Services is reported in this report in accordance with IFRS 5 “Assets Held for Sale and Discontinued Operations” and is not included in the financials for continuing operations. More information is available in the notes section.

 

KEY POINTS: OCTOBER–DECEMBER 2021

 

         Net sales increased by 2% to EUR 33.1 (Q4 2020: 32.4) million

         EBITDA increased by EUR 0.2 million to EUR 2.4 (2.2) million

         EBIT increased by EUR 0.1 million to EUR -1.0 (-1.1) million

         Operative cash flow amounted to EUR 2.2 (9.6) million

         Loss-making non-core business W-Tech Entreprenad AB was divested in December

         Cost base restructuring following Demolition Services divestment was completed

 

KEY POINTS: JANUARY–DECEMBER 2021

 

         Net sales increased by 12% to EUR 131.3 (116.8) million

         EBITDA increased by EUR 0.9 million to EUR 9.9 (9.0) million

         EBIT increased by EUR 1.0 million to EUR -3.1 (-4.1) million

         Operative cash flow increased by EUR 5.1 million to EUR 13.9 (8.8) million

         Group equity increased by EUR 22.0 million to EUR 20.1 (-1.9) million

         Net debt decreased by EUR 46.3 million to EUR 72.0 (118.3) million

         Remaining Demolition Services business was divested in January 2021

 

KEY FIGURES

 

 

10-12/2021

10-12/2020

Change

1-12/2021

1-12/2020

Change

Net sales, MEUR

33.1

32.4

2%

131.3

116.8

12%

EBITDA1), MEUR

2.4

2.2

9%

9.9

9.0

10%

Adjusted2) EBITDA, MEUR

4.1

4.9

-14%

13.0

13.6

-4%

Adjusted EBITDA, % of sales

12.5%

15.0%

-2.5ppt

9.9%

11.6%

-1.7ppt

EBIT, MEUR

-1.0

-1.1

-9%

-3.1

-4.1

-23%

Adjusted2) EBIT, MEUR

0.7

1.5

-52%

0.0

0.5

-94%

Adjusted EBIT, % of sales

2.2%

4.7%

-2.5ppt

0.0%

0.4%

-0.4ppt

Profit (-loss) for the period, continued operations MEUR

-3.6

-2.0

-126%

14.0

-10.6

238%

Profit (-loss) for the period, MEUR

-3.6

-23.4

1,272%

11.9

-30.2

415%

Operative cash flow, MEUR

2.2

9.6

-77%

13.9

8.8

58%

Net debt3), MEUR

72.0

118.3

-39%

72.0

118.3

-39%

 

Post Emergency Services and Firestop Installation Services have been reclassified from Assets held for sale to Continuing operations (Cleaning Services) in 2020. Comparative 2020 financials in the table above have been reclassified accordingly.

Information about the formulas and Alternative Performance Measures are presented in the notes section of this Financial Statements Bulletin. All figures presented are statutory unless stated otherwise.

 

OUTLOOK FOR 2022

 

The underlying demand for Cleaning Services and Recycling Services is expected to grow in 2022. Delete Group’s efficiency and productivity are expected to improve compared to the previous year.

 

Delete Group’s operating profit is expected to improve in 2022.

 

Due to the coronavirus pandemic and the geopolitical developments, the outlook contains more uncertainty than usual and is based on the assumption that there are no material changes in the operating environment, postponements of scheduled work, or cancellations due to the pandemic.

 

 

SIRPA OJALA, CEO OF DELETE GROUP:

 

“Delete’s year 2021 included good underlying development, but we are not satisfied with the operating result, suppressed by issues in a sizable one-off shutdown in the second quarter.  The strong growth in 2021 was enabled by some industrial maintenance shutdowns postponed from 2020 and a number of signed new customer agreements.

 

In the Cleaning Services business, our net sales increased by 12 per cent. The growth was enabled by the above-mentioned maintenance shutdown, but we also signed a number of new contracts with both new and old customers who have returned to cooperate with us. The performance was positive, especially in Sweden, where the underlying profitability developed well. Unfortunately, the overall profitability of Cleaning Services decreased in 2021, suppressed considerably by the difficult one-off shutdown executed in the second quarter. The overall demand for cleaning services has been impacted by the coronavirus pandemic, but it is gradually recovering, and the underlying long-term core demand is relatively resilient and stable.

 

Recycling Services’ net sales increased by 7 per cent from the previous year and performance improved significantly. The growth was enabled by the gradually recovering market, new customer acquisitions and expansion of the services offering in waste exit quotas. The profitability grew on the back of efficiency improvements in production, an active and improved REF market and strengthened production controls. The coronavirus pandemic still had some negative effect on the recycling volumes, compared to pre-pandemic levels in 2019, but the market is gradually returning to normal.

 

During 2021, Delete’s corporate and capital structure, organisation, and management have been tuned in line with our strategy. At the beginning of the year, the financial restructuring and the divestment of Demolition Services were completed, and at the end of the year, the group completed a divestment of the remaining part of the non-core project business in Sweden. We also finalised the cost base restructuring that followed the Demolition Services divestment, with additional annualised savings of EUR 1.5 million.

 

Today, Delete is a stronger company than before with all the basics in order: we have a professional and committed staff, and the company's growth prospects for both the Cleaning- and Recycling Services businesses are supported by the ever-increasing importance of sustainability and responsibility. The responsibility and safety work we do is bearing fruit. In 2021, we received top marks in supplier evaluations.

 

Looking forward, we believe our customers will continue to demand capabilities to handle increasingly complex assignments with high-quality environmental, health and safety standards, which favours large professional players like Delete Group. The significant number of new contracts with both new and old customers reflects satisfaction with our level of service. This year, we will focus on being able to provide even better services, targeting genuine partnerships with our customers, which enables us to work together and develop our customers' processes and increase their efficiency. As a result of our daily work, we enable a well-functioning and cleaner society.

 

In addition to focusing on strong customer relationships in 2022, we will focus on keeping up the positive and can-do attitude of our personnel. Despite some uncertainty related to the coronavirus pandemic, and the geopolitical uncertainties, we expect the underlying demand for Cleaning Services and Recycling Services to grow and our efficiency and productivity to improve compared to the previous year.”

 

 

OPERATING ENVIRONMENT

 

Cleaning services

 

The overall demand for cleaning services has been impacted to some degree by the coronavirus pandemic, but it is gradually recovering and the underlying long-term core demand is relatively resilient and stable. Customers continue to demand capabilities to handle increasingly complex assignments with high-quality environmental, health and safety standards, which favours large professional players like Delete Group with the ability to deliver also in difficult times.

 

Recycling services

 

Regulatory development in the EU Circular Economy Action plan and national legislation, as well as generally increasing sustainability awareness, continue to support the growing demand for recycling services. The market demand for recycled fuel (REF) has stabilised and is expected to grow through 2022, driven by the increased use of alternative fuels. The effects of the coronavirus pandemic are gradually easing up. There is currently some uncertainty related to building material supply shortages affecting our customers’ operations to some degree.

 

 

NET SALES

 

In the fourth quarter, Delete Group’s net sales were EUR 33.1 (32.4) million, representing year-on-year growth of 2%, with Recycling Services contributing to the positive development. The coronavirus pandemic still had some negative effect on the sales volumes, compared to pre-pandemic levels in 2019, but the market is gradually returning to normal.

 

Cleaning Services’ net sales of EUR 27.1 (27.3) million was on the previous year’s level. The stable development was a fair result, considering the relatively high fourth quarter 2020 volumes, which were the result of catching up on pandemic related postponed assignments.

 

Recycling Services’ net sales grew by 9% to EUR 7.0 (6.5) million. The growth was enabled by the gradually recovering market, new customer acquisitions and expansion of the services offering in waste exit quotas.

 

The Group’s net sales in January–December amounted to EUR 131.3 (116.8) million. The growth of 12% was enabled by the second quarter performance on the back of the aforementioned non-recurring sizable shutdown, while the first quarter was slightly behind the previous year due to a harsh winter hindering demand for outdoor services, and the third and fourth quarters were on similar level to the previous year.

 

NET SALES BY SEGMENT

MEUR

10-12/2021

10-12/2020

Change

1-12/2021

1-12/2020

Change

Cleaning Services

27.1

27.3

0%

110.2

98.6

12%

Recycling Services

7.0

6.5

9%

25.0

23.4

7%

Eliminations

-1.1

-1.3

-14%

-3.8

-5.2

-26%

Group total

33.1

32.4

2%

131.3

116.8

12%

 

Post Emergency Services and Firestop Installation Services have been reclassified from Demolition Services to Cleaning Services in 2020. Comparative 2020 sales have been reclassified accordingly.

 

 

FINANCIAL PERFORMANCE

 

The Group’s adjusted operating profit (EBIT) during the fourth quarter of 2021 decreased by EUR -0.8 million from the comparison period to EUR 0.7 (1.5) million, not accounting for the favourable pro forma effects of the completed efficiency programme related to the divestment of the Demolition Business. The Group’s reported operating profit increased slightly in the fourth quarter to EUR -1.0 (-1.1) million.

 

The recently implemented ICT system change in Finland has been successful, and some additional improvements are still being developed.

 

In December 2021, the Group completed a divestment of the remaining part of the non-core project business in Sweden by selling W-Tech Entreprenad AB. The divested W-Tech business has been loss making and reported under discontinued businesses as a non-recurring item for the periods since the disposal decision in August 2021, amounting to EUR 0.6 million EBITDA in August–December and EUR 1.3 million for the full year (pro forma).

 

In the fourth quarter, Cleaning Services’ EBIT percentage was 3% (7%), suppressed by the losses of the divested W-Tech Entreprenad AB. The EBIT percentage was also negatively impacted by restructuring costs, while the related savings were not yet effective in the fourth quarter.

 

Recycling Services’ performance continued at an improved level in the fourth quarter with an EBIT percentage of 6% (-10%). The profitability improved on the back of production efficiency improvements implemented during 2020, an active and improved REF market and strengthened production controls.

 

Administration costs were on a slightly lower level than in the comparison period, not yet reflecting the majority of the effects of the efficiency programme related to the divestment of the Demolition Business. The completed efficiency programme related to the divestment of the Demolition Business has a pro forma effect of EUR 1.5 million, consisting mainly of support functions’ reorganisation, redundancies and cost benefits related to changes to ICT systems.

 

The Group’s adjusted EBIT for January–December 2021 amounted to EUR 0.0 (0.5) million and EBIT to EUR -3.1 (-4.1) million. The fair underlying development in 2021 was considerably suppressed by the aforementioned large one-off maintenance shutdown, with issues in field efficiency and higher than anticipated resourcing costs, affected to a high degree by additional subcontracting needs to service the expanded scope.

 

EBITDA BY SEGMENT

MEUR

10-12/2021

10-12/2020

Change

1-12/2021

1-12/2020

Change

Cleaning Services

3.3

4.4

-26%

12.5

14.5

-14%

Recycling Services

1.3

0.4

218%

5.1

2.6

95%

Administration

-2.2

-2.6

17%

-7.7

-8.1

6%

Group total

2.4

2.2

9%

9.9

9.0

10%

 

 

EBIT BY SEGMENT

MEUR

10-12/2021

10-12/2020

Change

1-12/2021

1-12/2020

Change

Cleaning Services

0.7

2.0

-63%

2.7

5.3

-48%

Recycling Services

0.5

-0.6

172%

2.0

-0.6

449%

Administration

-2.2

-2.5

12%

-7.8

-8.8

10%

Group total

-1.0

-1.1

-9%

-3.1

-4.1

23%

 

Post Emergency Services and Firestop Installation Services have been reclassified from Demolition Services to Cleaning Services in 2020. Comparative 2020 profitability has been reclassified accordingly.

 

In October–December, net financial expenses amounted to EUR -2.6 (-0.9) million, consisting mainly of interest costs, write-offs of the divested W-Tech Entreprenad AB assets, and unrealised currency exchange rate losses. In January–December, net financial expenses amounted to EUR 17.1 (6.6) million, favourably affected by the EUR 24.8 million write-down of the nominal value of senior secured notes. Gross financial expenses were EUR -7.0 (-6.6) million.

 

In October–December, profit before taxes amounted to EUR -3.6 (-2.0) million and in January–December to EUR 14.0 (-10.6) million. In January–December, the net result for the financial period for continuing operations amounted to EUR 14.0 (-10.2) million, affected by the write-down of the nominal value of senior secured notes.

 

In January–December, the net result for the financial period amounted to EUR 11.9 (-30.2) million.

 

 

FINANCING AND FINANCIAL POSITION

 

In October–December, cash flow from operating activities was EUR 2.2 (9.6) million, with most of the year-on-year difference coming from the commenced factoring arrangement in 2020. Non-recourse factoring of receivables, introduced in the fourth quarter of 2020, had an impact of EUR -3.7 million on the fourth quarter cash flow from operating activities. In January–December, cash flow from operating activities was EUR 13.9 (-0.8) million with the non-recourse factoring contributing approximately EUR 9.4 million.

 

Delete Group’s cash and cash equivalents at the end of December 2021 were EUR 5.2 (7.8) million. The Group’s interest-bearing debt was EUR 79.4 (126.0) million, consisting mainly of EUR 60.0 million secured notes, an EUR 8.0 million drawn revolving credit (SSRCF) and lease liabilities of EUR 10.1 million. At the end of December, the Group had drawn EUR 8.0 million out of the EUR 10.0 million SSRCF facility, used for general corporate purposes, acquisitions, and capital expenditure.

 

At year end 2021, the only measured covenant for the senior secured notes and the SSRCF was complied with, leverage being below 5.0x, after allowed pro forma EBITDA adjustments for divested W-Tech Entreprenad AB losses (EUR 0.7 million) and pro forma EBITDA effects of the efficiency programme related to the divestment of the Demolition Business (EUR 1.5 million).

 

At the end of December 2021, the Group’s net debt amounted to EUR 72.0 (118.2) million. The decrease was mainly due to the financial restructuring completed in February 2021 with the following main items:

 

  • The bond maturity was extended by three years to 19 April 2024.
  • The bond nominal value was written off by EUR 24.8 million in February 2021.
  • The bond was partially repaid by EUR 20.0 million in February 2021 and further by EUR 5.0 million on 14 May 2021.
  • The repayment was funded by EUR 10.0 million newly raised equity in February 2021, EUR 5.0 million from Demolition Services divestment proceeds, and EUR 5.0+5.0 million by factoring proceeds.

 

The significant reduction of interest-bearing debt and new share capital raised in the first quarter 2021 had a net impact of EUR 34.8 million on improved consolidated equity, and the amount of the notes outstanding decreased from EUR 109.8 million to EUR 60.0 million.

 

On 14 April 2021, the SSRCF limit was increased by EUR 3 million to EUR 10 million.

 

On 30 April 2021, Delete announced that it had reached a factoring threshold of EUR 10 million. A committed EUR 5 million partial redemption of the notes due in 2024 was carried out on 14 May 2021, lowering the notes’ nominal value further down to EUR 60 million.

 

After the reporting period, in January 2022, Delete extended its SSRCF facility with Collector Bank to February 2023, with the existing terms.

 

The balance sheet total at the end of December 2021 was EUR 126.8 (161.5) million, decreasing mainly because of the sale of W-Tech Entreprenad AB and the related impairment of assets and the financial restructuring. Property, plant and equipment totalled EUR 24.7 (31.2) million, decreasing due to deferred capital expenditure during the coronavirus pandemic period. The equity ratio5) at the end of December 2021 improved to 15.8% (-1.2%).

 

Since the completion of the Demolition Services divestment on 29 January 2021, Delete Group no longer carries assets classified under IFRS 5. IFRS 5 implications are reported in more detail in the notes section of this Financial Statements Bulletin. W-Tech Entreprenad AB, divested on 30 December 2021, is not classified as an IFRS 5 asset, but after the divestment decision, the result has been reported as adjustment item to EBITDA in August–December.

 

Key figures

10-12/2021

10-12/2020

Change

1-12/2021

1-12/2020

Change

Return on Equity, %

-16.4%

-239.1%

255.5ppt

-16.4%

-239.1%

255.5ppt

Net debt, MEUR

72.0

118.3

-39%

72.0

118.3

-39%

Equity ratio, %

15.8%

-1.2%

17.0ppt

15.8

-1.2%

17.0ppt

 

 

PERSONNEL

 

Delete Group employed 643 (714) people at the end of December 2021. The average number of personnel in 2021 was 667 (744).

 

CHANGES IN MANAGEMENT

Sirpa Ojala replaced Tommi Kajasoja as Delete’s CEO on 1 November 2021.

 

Group Management Team member Janika Vilkman re-joined Delete and was appointed General Counsel after the reporting period on 1 February 2022.

Composition of the Group Management Team as of 1 January 2022:

  • Sirpa Ojala, CEO
  • Ville Mannola, CFO
  • Janika Vilkman, General Counsel
  • Peter Revay, Country Manager, Sweden

 

CAPITAL EXPENDITURE AND CORPORATE TRANSACTIONS

 

In October–December 2021, capital expenditure in intangible and tangible assets, excluding acquisitions, was EUR 0.3 (0.5) million, and in January–December 2021, EUR 1.8 (2.1) million. Capital expenditure was relatively low, partially due to deferred maintenance investments in preparation for coronavirus pandemic-related liquidity assurance.

 

On 29 January 2021, Delete Finland Oy, a group company of the Delete Group, sold all its shares in Delete Demolition Oy, a fully owned subsidiary operating in the Demolition Services business area, to Lotus Maskin & Transport AB for a purchase price of EUR 7.3 million. After the transaction, Delete Group no longer operates in Demolition services business.

 

On 29 December 2021, Delete Sweden AB, a group company of the Delete Group, sold all its shares in loss making non-core business W-Tech Entreprenad AB, a fully owned subsidiary with a negative sales price.

 

There were no acquisitions during January–December 2021.

 

 

R&D EXPENDITURE

 

In January–December 2021, R&D-related expenditure was immaterial and related to minor developments of processes and tools.

 

 

KEY EVENTS AFTER THE REPORTING PERIOD

 

Management team member, General Counsel Janika Vilkman, re-joined Delete on 1 February 2022.

 

 

SUMMARY OF SIGNIFICANT RISKS AND RISK MANAGEMENT

 

Delete Group conducts an extensive annual risk assessment analysis, as a result of which, risk management capabilities are updated and reviewed and approved by the Board of Directors.

 

The Group’s key risks are divided into strategic, operational, and financing risks.

 

Operational risks are mainly related to uncertainty and a lack of visibility and resourcing due to the coronavirus pandemic, geopolitical developments in Europe, project execution, and the integration of acquired businesses, both in terms of quality and financially. The Group's business operations also inherently involve risks, such as environmental, health and safety risks, as well as dependence on suppliers and clients. The internal control environment is under constant development to improve preventative measures.

 

Financing risks are mainly related to refinancing, credit and liquidity, all of which may be further affected by coronavirus pandemic-related uncertainties.

 

Other uncertainties are related to the market environment and inflation of costs, especially for energy and fuel, as well as the successful implementation of the Group’s transformation strategy, including risks related to the outcome of the operational improvement plan for increased profitability, uncertainty related to capturing synergies, and risks related to targeted bolt-on acquisitions, personnel, and recruitments.

 

The Group has not identified other relevant changes that can be expected to have a significant influence on the business, given the risks mentioned herein, at the end the fourth quarter in 2021.

 

 

SHARES AND SHAREHOLDERS

 

At the end of the fourth quarter 2021, the number of registered shares in Delete Group Oyj was 1,085,859,500 P-shares and 308,964,900 C-shares. Each share carries one vote. The Group is owned by Ax DEL Oy (86% of the shares) and a group of key employees and other minority investors (14%). The Group does not hold any of its own shares.

 

 

ANNUAL GENERAL MEETING AND BOARD AUTHORISATIONS IN EFFECT

 

The Annual General Meeting of Delete Group Oyj Shareholders held on 13 April 2021 adopted the Financial Statements for the financial year 1 January–31 December 2020 and discharged the members of the Board of Directors and the CEO from liability. The Annual General Meeting resolved that no dividend will be paid for the fiscal year 2020.

 

Martin Forss, Åsa Söderström Winberg, Ronnie Neva-aho and Christian Schmidt-Jacobsen were re-elected as members of Board of Directors. Convening after the Annual General Meeting, the Board of Directors elected Martin Forss as its chairman.

 

KPMG Oy Ab was elected to continue as the auditor of the company and Teemu Suoniemi, Authorised Public Accountant, will act as the principal auditor. The Group’s auditor KPMG appointed a new principal auditor for Delete Group, Ari Eskelinen, CPA, effective from 30 June 2021.

 

The Chairman of the Board will be paid EUR 50,000 and the Board members EUR 22,000 as remuneration for 2021. The appointed members of the Audit Committee and the Project Committee will be paid EUR 4,000 as additional remuneration, and the appointed members of the Remuneration Committee EUR 2,000. No remuneration shall be paid for the representatives of Axcel Management A/S. It was resolved that the remuneration for the auditor shall be paid against an invoice.

 

 

THE BOARD'S PROPOSAL TO THE ANNUAL GENERAL MEETING

 

The consolidated net profit for the year 2021 including assets held for sale totalled EUR

-12.0 million, and the net profit of the parent company was EUR 25.4 million. The parent company’s distributable funds on 31 December 2021 totalled EUR 83.4 million.

The Board of Directors will propose to the Annual General Meeting that no dividend will be paid.

 

 

STATEMENT OF ACCOUNTING POLICIES FOR FINANCIAL STATEMENTS BULLETIN

This Financial Statements Bulletin has been prepared according to the IAS 34 standard. The same accounting standards have been used as in the Financial Statements.

Delete Group Oyj complies with half-yearly reporting according to the Finnish Securities Markets Act and discloses interim reviews for the first three and nine month periods of the year, in which key information regarding the company’s financial situation and development will be presented. The financial information presented in this Financial Statements bulletin is unaudited.

 

 

FINANCIAL CALENDAR 2022

 

Delete Group Oyj will publish the interim review for January–March 2022 on 19 May 2022, the half-year financial report for January–June 2022 on 24 August 2022 and the interim review for January–September 2022 on 11 November 2022.

 

 

ALTERNATIVE PERFORMANCE MEASURES USED IN FINANCIAL REPORTING

 

Delete Group Oyj has adopted the guidelines of the European Securities and Market Authority (ESMA) on Alternative Performance Measures. In addition to the IFRS-based key figures, the company will publish certain other generally used key figures that may, as a rule, be derived from the profit and loss statement and balance sheet. The calculation of these figures is presented below. According to the company’s view, these key figures supplement the profit and loss statement and balance sheet, providing a better picture of the company’s financial performance and position.

 

MEUR

10–12/2021

10–12/2020

1–12/2021

1–12/2020

EBIT

-1.0

-1.1

-3.1

-4.1

Adjustments

1.8

2.7

3.2

4.6

Adjusted EBIT

0.7

1.5

0.0

0.5

 

MEUR

10–12/2021

10–12/2020

1–12/2021

1–12/2020

EBITDA

2.4

2.2

9.9

9.0

Adjustments

1.8

2.7

3.2

4.6

Adjusted EBITDA

4.1

4.9

13.0

13.6

 

MEUR

10–12/2021

10–12/2020

1–12/2021

1–12/2020

Restructuring & Relocation

0.9

0.7

1.1

1.3

Operating systems

0.0

0.0

0.1

0.0

Disputes and litigation

0.2

0.0

0.2

0.2

Corporate transactions

0.0

2.0

0.6

3.0

Discontinued businesses*

0.6

0.0

0.8

0.0

Other

0.1

-0.1

0.4

0.0

Adjusting items

1.8

2.7

3.2

4.6

 

*) The discontinued businesses are reported as adjustment items from the time of the disposal decision. For the period January–December, the total EBITDA effect is EUR 1.3 million.

 

FORMULAS

 

1) EBITDA = operating profit + depreciation and amortisation costs

2) Adjustment definition: adjustments are material items outside the ordinary course of business affecting comparability, such as acquisition related expenses, restructuring related expenses and other material extraordinary costs

3) Net debt = interest-bearing liabilities, lease liabilities and instalment credit liabilities – cash and cash equivalent assets

4) Organic growth: net sales from acquired businesses are considered inorganic for 12 months after the acquisition, and not accounted for as contributing to organic growth for the said period

5) Equity ratio = equity / (assets – prepayments)

6) Net working capital = other than cash and cash equivalent current assets – other than net debt related current liabilities



CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

Amounts in thousands of euros

Continuing operations

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CONDENSED NOTES

Accounting policies

This Financial Statements Bulletin has been prepared according to the IAS 34 Interim Financial Reporting standard. Delete Group Oyj complies with half-yearly reporting according to the Finnish Securities Markets Act and discloses interim reviews for the first three- and nine-month periods of the year, in which key information regarding the company’s financial situation and development will be presented. The financial information presented in this Financial Statements Bulletin is unaudited.

 

The accounting policies, that are applied in this Financial Statements Bulletin are the same as those applied in the annual financial statements.

 

The changes in the IFRS standard have had no material effect on Delete Group’s financial reporting. The Group has not adopted new IFRS standards affecting reporting during 2021.

 

IFRIC’s new agenda decision regarding cloud computing and related guidance for capitalisation of certain implementation costs has been implemented in Group accounting principles during 2021 with no material effect on Delete Group’s financial reporting.

 

Assets held for sale and discontinued operations

 

The Demolition Services business is reported in this report in accordance with IFRS 5 “Assets Held for Sale and Discontinued Operations” and is not included in the Financial Statements Bulletin for continuing operations. The figures in the statement of income and the items related to it, including comparison figures, have been stated to show the discontinued operations separately from continuing operations.

 

On 29 January 2021, Delete Finland Oy, a group company of the Delete Group, sold all  its shares in Delete Demolition Oy, a fully owned subsidiary operating in the Demolition Services business area, to Lotus Maskin & Transport AB for a purchase price of EUR 7.3 million. After the transaction, Delete Group no longer operates in the Demolition Services business. Any post-transaction costs related to Demolition Services are reported under IFRS 5 during 2021.

 

 

 

 

Operating profit (EBIT)

 

Operating profit (EBIT) consists of sales and other operating income less the costs of materials and services, costs of employee benefits and other operating expenses as well as depreciation, amortisation and impairment losses. Exchange rate differences resulting from working capital items are included in the operating profit.

 

Financing

 

On 16 December 2020, Delete Group announced a restructuring proposal to the noteholders of the senior secured notes issued by Delete Group Oyj. The restructuring proposal included certain amendments to the terms and conditions of Delete Group Oyj’s senior secured notes, including a write-down the the principal of the notes by approximately EUR 24.8 million and an extension of the maturity of the notes by three years, which were subject to certain conditions. The conditions included, among other things, an immediate redemption of the notes in an aggregate amount of EUR 15 million and new equity investments by Delete’s shareholders in an aggregate amount of at least EUR 10 million as well as further redemptions of EUR 10 million by the funds obtained from receivables sold under Delete Group’s (non-recourse) factoring arrangement in two instalments of EUR 5 million each.

 

On 15 January 2021, Delete announced the successful completion of a written procedure regarding the senior secured notes, as proposed on 16 December 2020.

 

On 16 January 2021, an Extraordinary General Meeting of Delete Group Oyj approved a new share issue of EUR 10 million, in order to raise capital for a partial redemption of the outstanding notes, as required in the amended Terms and Conditions, approved by the noteholders on 15 January 2021.

 

On 29 January 2021, Demolition Services in Finland was divested with a purchase price of EUR 7.3 million to Lotus Maskin & Transport AB.

 

On 5 February 2021, Delete announced that the conditions for effectiveness of the amendments to the terms and conditions of its secured notes were satisfied, with the amendments to the Terms and Conditions becoming effective on the same date, 5 February 2021.

 

On 12 February 2021, Delete made a EUR 20 million partial redemption of the notes, consisting of the required EUR 15 million redemption and the first EUR 5 million instalment to be made from the factoring proceeds, in accordance with the amended Terms and Conditions and the conditions for such amendments, financed by the new share issue, factoring proceeds, and proceeds from the sale of Demolition Services in Finland.

 

On 12 February 2021, Delete’s new super senior revolving credit facility (SSRCF) with Collector Bank AB became effective, replacing the existing SSRCF with Nordea Bank Plc. Nordea Bank Plc will continue to provide a EUR 2.0 million guarantee facility to Delete.

 

On 14 April 2021, the SSRCF limit was increased by EUR 3 million to EUR 10 million.

 

On 30 April 2021, Delete announced that it had reached a factoring threshold of EUR 10 million. A committed EUR 5 million partial redemption of the notes due 2024 was carried out on 14 May 2021, lowering the notes’ nominal value further to EUR 60 million.

After the reporting period, in January 2022, Delete extended it’s SSRCF facility to February 2023, with the existing terms, with Collector Bank.

 

 

SEGMENT REPORT

 

The Group has two reportable segments, Industrial Cleaning Services and Recycling Services, which are the Group’s business areas. The reporting segments have been aggregated from the group’s three operating segments: the operating segments for Industrial Cleaning Services in Finland and Sweden have been combined as a reportable segment as they are considered to be similar and have similar economic characteristics. Demolition Services, which was previously reported as a reportable segment, has been classified as discontinued operations.

 

The Industrial Cleaning Services segment consists of a comprehensive industrial service offering, as well as property services, such as high-power vacuuming and blowing services, industrial shutdown and maintenance, exposure vacuuming of sewers and well emptying, industrial cleaning, blast cleaning services, and washing and cleaning of facades.

 

The Recycling Services segment provides services such as recycling and waste processing, reception of oily waste, open large waste container services, and crushed concrete in the Helsinki metropolitan area and in the Tampere region.

 

Segment information is based on IFRS accounting principles applied in the Group, and it is consistent with the Group’s internal reporting.

 

The measure of profit or loss for the reportable segment is operating profit, which is regularly reviewed by the Group’s management team to make decisions about resources to be allocated to the segment and to assess its performance.

 

Administration costs are not allocated to segments but are presented separately. Segment assets and liabilities are not presented, as these are not regularly monitored by the management team.

 

One external customer exceeded 10 per cent share of Group revenues in 2021, due to a non-recurring sizable shut-down. Any transactions between segments are based on market prices.

 

Post emergency services and firestop installation services have been reclassified from Demolition Services to Cleaning Services in 2020. Comparative 2020 profitability has been reclassified accordingly.

 

 

 

 

REVENUE STREAMS

 

 

 

 

BUSINESS COMBINATIONS

 

Delete Group had no business combinations during 2021. The Finnish Demolition business was divested in January 2021 and W-Tech Entreprenad AB in December 2021.

 

   

CHANGES IN INTANGIBLE ASSETS

 

 

 

 

 

CHANGES IN TANGIBLE ASSETS

 

 

 

 

CLASSIFICATION OF FINANCIAL ASSETS AND LIABILITIES

 

 

 

 

 

 

 

KEY EVENTS AFTER THE REPORTING PERIOD

 

Management team member, General Counsel Janika Vilkman, re-joined Delete on 1 February 2022.

 

 

 

 

Delete Group Oyj

Board of Directors

 

 

 

FOR FURTHER INFORMATION

 

Ville Mannola, CFO of Delete Group Oyj

E-mail: ville.mannola@delete.fi

Tel. +358 400 357 767

 

Sirpa Ojala, CEO of Delete Group Oyj

E-mail: sirpa.ojala@delete.fi

Appointment requests via Helena Karioja, tel. +358 40 662 7373

 

www.delete.fi

 

 

DELETE GROUP IN BRIEF

 

Delete Group is one of the leading providers of environmental services in the Nordic countries, a specialist that works for a better functioning and cleaner society. We provide our customers in the industrial sector, construction and real estate and the public sector with cleaning and recycling services that are critical to their operations. We maintain security of supply by helping the industry to optimise its production, and cities and municipalities to keep the infrastructure in good condition and the living environment comfortable. We receive, recycle and handle waste safely, reliably and responsibly.

 

In 2021, our net sales were EUR 131 million. The Group is headquartered in Helsinki and employs approximately 650 professionals in more than 33 locations in Finland and Sweden.

 

Delete Group Oyj Financial Statements Bulletin 2021