ENEDO PLC Half year financial report August 12th, 2022 at 9.45 a.m.
ENEDO PLC PUBLISHES HALF YEAR FINANCIAL REPORT JANUARY 1 – JUNE 30, 2022
January – June 2022 in brief
- Net sales increased 15% and was EUR 20,9 million (EUR 18,1 million)
- Adjusted EBITDA positive with EUR 1,3 million (EUR -0,6 million)
- Adjusted operating profit EUR -0,2 million (EUR -2,3 million)
- Profit/loss for the period, EUR -1,3 million (EUR -0,4 million)*
- Orderbook increased to EUR 35,4 million (EUR 16,0)
- Turnaround program executed, savings in expenses EUR 1,4 million compared to H1 2021
- On July 1, 2022 Inission AB has increased ownership in Enedo to 80,43 % and is preparing a mandatory public tender for remaining part of the shares in Enedo Plc.
The figures in the release are presented from continuing operations unless otherwise noted.
| 1-6/22 | 1-6/21 | 1-12/21 | |
| Key indicators, EUR million | 6mo | 6mo | 12mo |
| Net Sales | 20,9 | 18,1 | 36,4 |
| Power Supplies | 13,0 | 11,4 | 23,4 |
| Led Drivers | 5,2 | 4,5 | 9,2 |
| Power Systems | 2,6 | 2,2 | 3,9 |
| Adjusted EBITDA | 1,3 | -0,6 | -0,8 |
| EBITDA | 1,0 | -1,2 | -3,2 |
| Adjusted operating profit/loss | -0,2 | -2,3 | -4,2 |
| Operating profit/loss | -0,5 | -2,9 | -6,6 |
| Profit/loss before taxes* | -1,3 | -0,4 | -4,6 |
| Earnings per share, EUR* | -0,02 | -0,01 | -0,08 |
| Solvency ratio, % | 10,4 | 27,1 | 14,9 |
| Net Gearing, % | 337,7 | 58,5 | 173 |
| Cash flow from operating activities | -3,1 | -1,8 | -3,3 |
*1-6/2021 figures include gross EUR 3,3 million benefit from loan cancellation as part of the completed loan arrangement and related transaction expenses EUR 0,4 million. Net impact EUR 2,9 million. | |||
| Key indicators Half year, EUR million | H1/2022 | H2/2021 | H1/2021 |
| Net Sales | 20,9 | 18,3 | 18,1 |
| Adjusted EBITDA | 1,3 | -0,2 | -0,6 |
| EBITDA | 1,0 | -2,0 | -1,2 |
| Adjusted operating profit/loss | -0,2 | -1,9 | -2,3 |
| Operating profit/loss | -0,5 | -3,7 | -2,9 |
| 1-6/22 | 1-6/21 | 1-12/21 | |
| ADJUSTED OPERATING PROFIT/LOSS, EUR million | 6mo | 6mo | 12mo |
| Operating profit/loss | -0,5 | -2,9 | -6,6 |
| Adjustments in operating profit/loss | |||
| Resctructuring costs related to personnel | 0,3 | 1,6 | |
| Cloud based ERP implementation expenses | 0,3 | ||
| Provision related to a claim | 0,1 | 0,2 | 0,2 |
| Sale of a subsidiary | 0,3 | ||
| Provision for bad debt | 0,2 | ||
| Adjustments in operating profit/loss Total | 0,3 | 0,6 | 2,4 |
| Adjusted operating profit/loss Total | -0,2 | -2,3 | -4,2 |
| 1-6/22 | 1-6/21 | 1-12/21 | |
| ADJUSTED EBITDA, EUR million | 6mo | 6mo | 12mo |
| EBITDA | 1,0 | -1,2 | -3,2 |
| Adjustments in EBITDA | |||
| Resctructuring costs related to personnel | 0,3 | 1,6 | |
| Cloud based ERP implementation expenses | 0,3 | ||
| Provision related to a claim | 0,1 | 0,2 | 0,2 |
| Sale of a subsidiary | 0,3 | ||
| Provision for bad debt | 0,2 | ||
| Adjustments in EBITDA Total | 0,3 | 0,6 | 2,4 |
| Adjusted EBITDA Total | 1,3 | -0,6 | -0,8 |
Estimate of financial development in 2022
The company has decided to continue the policy of not to give an estimate for 2022 financial development.
Mikael Fryklund, Enedo President and CEO
Enedo’s first half net sales of EUR 20,9 million inreased EUR 2,8 million or 15% compared to last year. Our financial performance improved according to plans and the Adjusted Ebitda was positive with 1,3 million EUR, an improvement of 2,5 million EUR compared to H1 2021. The improved financial performance is due to our high order stock which enables the growth in net sales and due to the executed turnaround program which has heavily decreased our expenses. The order intake has continued strong during H1 2022. The global shortage of components continues to impact our performance negatively and has decreased the net sales due to missing components and increased our inventories and thereby our liquidity situation has remained challenging.
The Power Supplies product category’s net sales increased to EUR 13,0 million with an increase of EUR 1,6 million, 14%, compared to net sales of EUR 11,4 million in H1 2021. The growth in orderbook has continued strong.
The Led Drivers product category's net sales were EUR 5,2 million, an increase of EUR 0,7 million, 16%, compared to H1 2021. The increase of the Led Drivers product category was mainly driven by the continued strong demand by our customers in sport stadium and public environment businesses.
The net sales of the Power Systems product category increased with EUR 0,4 million and was EUR 2,6 million, 15%, compared to H1 2021 The order intake of Power Systems product category has continued strong which has increased the orderbook from H1 2021.
Actions to improve our logistic procedures have continued through H1 2022, and further actions will be taken during H2 2022. The scouting for external EMS partners to improve the service to our clients continues.
On July 1, 2022 Inission AB has increased ownership in Enedo to 80,43 % and is currently preparing a mandatory public tender for remaining part of the shares in Enedo Plc. This transaction will further improve the co-operation between Enedo & Inission and will further enable synergies and co-operation. Becoming a subsidiary of Inission will also strengthen our financial capabilities.
January-June net sales, ebitda and operating profit
Net sales were EUR 20,9 million (EUR 18,1 million).
Ebitda turned positive during H1 2022 with EUR 1,0 million compared to negative ebitda of EUR 1,2 million in the comparison period. Operating loss decreased to EUR -0,5 million from EUR -2,9 in the comparison period, an improvement of EUR 2,4 million.
Business environment
The overall demand in the power supply services market continued good despite the war in Ukraine and continued lock-downs in China and other countries. This has affected electronics industry globally. The rising inflation and cost of manufacturing as well as shortages in component availability has continued through the reporting period.
Enedo is working in close co-operation with the suppliers and customers to keep adequate inventory levels to mitigate the risks regarding the global component shortage. While growing inventories decrease the risk of component availability, it has at the same time caused challengies in our working capital financing.
Short-term risks and uncertainties
General economic developments may affect the company's business environment. The war in Ukraine has led increasing risks on economic growth which if continued may effect the demand for Enedo’s products. Covid-19 is still effecting to uncertainty in the industry and, depending on the development of the pandemic, may have potential effects on our customers' ability to operate
Certain business risk are related to the success of key customers' products in the market. The progress of Enedo's product development projects depends in part on the schedules of customers' own projects. In addition, the fluctuations in demand typical of the market cause rapid changes in Enedo's business.
A substantial risk is the required improvements of production planning and procurement procedures in Tunis and capacity constraints in respect of machine capacity, which in a growing market with shortage of components makes the situation even more challenging. Improvement actions are taking place in this respect.
Due to the nature of the business, Enedo is subject to claims, of which the final solution cannot be predicted. Based on current information, there are no claims that are expected to have a material impact on the Group's financial position.
The delivery times of the components required by the company are partly long and there may be difficulties in obtaining certain components from time to time, which may affect the delivery capacity. Covid-19 has also increased the level of uncertainty in each country, which may affect our delivery capacity.
There are some risks related to the adequacy of financing, and the company aims to manage these risks by actively planning and implementing diverse options. In December 2021, the company signed a EUR 5.0 million loan arrangement with a loan period of 9 months. The company does not expect to be able to repay the loan by maturity using its cash flow from operating activities. Due to the current strong order backlog and the reduced expenses under the turnaround program, the company will seek either to agree with the lender on an extension of the loan period or negotiate a new loan with another financial institution. According to the terms of the loan arrangement, Inission AB has guaranteed the repayment of the loan if none of the above two alternatives are implemented by September 30, 2022. In May 2022 Enedo has signed a shareholderloan with 3 biggest shareholders with a maturity date of 30 September 2022. Enedo is currently evaluating the alternatives regarding the Eur 5,0 million loan and the shareholder loan of Eur 1,95 million in co-operation with our new parent company Inission AB.
The war in Ukraine
The war in Ukraine has caused economic and geopolitical uncertainty globally. Economic bans concerning various goods and components are restricting the availability of raw materials and drive cost increases in supply chains all over the world.
As a consequence of the EU bans to Russia Enedo has suspended all deliveries to Russia since the bans became effective. Enedo’s export to Russia has earlier been around 1% of the total annual net sales.
Due to significant uncertainties related to export and receivables from Russia Enedo has recorded a write off of Eur 0,15 million on receivables from our customers in Russia.
Covid-19
Throughout the review period, we have continued to take active internal measures to ensure the health of our employees and continuity of business. We have implemented internal guidelines and followed the guidelines of the local authorities in each country. Our management team monitors the development of Covid-19 and responds to changes immediately when necessary.
As the Covid-19 pandemic continues and business environment adjusts to the situation, it is challenging to differentiate the effects of the pandemic from other factors influencing business. Global recovery from Covid-19 has resulted in a global shortage of critical components in the market impacting lead-times and thereby our business growth.
Investments and product development
Investments in the Group's operations during the financial year were EUR 0,9 million (EUR 1,3 million), of which product development capitalizations accounted for EUR 0,6 million (EUR 0,7 million). At the end of the review period, capitalized product development costs in the balance sheet were EUR 4,1 million (EUR 4,9 million).
During the review period, there was no impairment on the capitalized product development costs (EUR 0,2 million).
In total, product development costs during H1 2022 were EUR 1,9 million (EUR 2,2 million), of which EUR 0,6 million (EUR 0,7 million) were capitalized in the balance sheet and EUR 1,3 million (EUR 1,5 million) were recognized as expenses which was 6,1 % (8,3 %) of net sales.
Financing
The net interest-bearing liabilities were EUR 12,1 million (EUR 5,1 million) at the end of the financial period. The net interest-bearing liabilities include EUR 0,5 million (EUR 0,8 million) of IFRS 16 lease liabilities. Main reason for increased net interest bearing liabilities has been the funds used to execute our restructuring program and the increased levels of inventories due to high order stock and measures to ensure component availability due to global component shortage.
The cash flow from operating activities during the review period was EUR -3,1 million (EUR -1,8 million). The negative cash flow was mainly caused by increased need for working capital and payments regarding the dismissal costs in Italy of around Eur 1,1 million. The cash flow after investing activities was EUR -4,0 million (EUR -3,1 million). The Group's solvency ratio was 10,4 % (27,1 %), net gearing 337,7% (58,5%) and the closing balance sheet was EUR 32,3 million (EUR 32,5 million).
The cash position without undrawn credit facilities totaled EUR 1,4 million (EUR 3,6 million). At the end of the period, the Group had EUR 0,1 million (EUR 1,0 million) of undrawn credit facilities excluding factoring limits.
Enedo signed a new loan of EUR 5,0 million at the end of December 2021 and the loan is fully raised by the end of March 2022. Most of the MEUR 1,5 million raised during H1 2022 was used to finance the Turnaround program and to amortize other short term loans.
In May 20, 2022 Enedo signed a shareholder bridge loan agreement in the amount of Eur 1 950 000 including a convertible component in the total amount of EUR 650 000 to the Lenders. The due date of the loan is 30th of September 2022 and the conversion right of Eur 0,10 per share can only be used if the loan is not repaid at due date.
The above mentioned EUR 5,0 million and Eur 1,95 million loan arrangements have a maturity date of 30th September 2022. The company has started a process to either prolong the maturity dates or negotiate a new loan with another loan provider to repay the loans with increased loan amount and longer maturities. The company is currently evaluating the alternatives with it’s new parent company Inission AB.
On May 20, 2022 Enedo informed about the plan to organize an extraordinary shareholder’s meeting to arrange a share issue to increase the liquidity and the equity of the company. After becoming a subsidiary of Inission AB this plan has been removed and the liquidity planning will be instead done as part of the Inission Group.
ENEDO PLC
Board of Directors
For further information please contact Mr. Mikael Fryklund, CEO, tel. +358 40 500 6864,
On 12th of August at 13:00–14:00
DISTRIBUTION
Nasdaq Helsinki Oy
Principal media
Enedo
Enedo is a European designer and producer of high-quality electronic power supplies and systems for critical equipment even in the most demanding environments. Enedo´s mission is to make electricity better – more reliable, more secure, more energy efficient – and just right to fit its purpose. Enedo´s three main product categories are Led Drivers, Power supplies and Power Systems. In 2021 the group´s revenue was EUR 36,4 million. Enedo has 330 employees and its main functions are located in Finland, Italy, Tunisia and USA. The group´s head office is in Finland and parent company Enedo Oyj is listed on Nasdaq Helsinki Oy.
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