HLRE Holding Group
		Illustrative Statement
Parent		HLRE Holding Oyj
Group		HLRE Holding Group
Address		Jasperintie 273
Domicile		Pirkkala
DomicileOfEntity		Pirkkala
Y-id		2611405-7
LEI		743700UNWAM0XWPHXP50
		No changes
LegalFormOfEntity		PLC
CountryOfIncorporation		Finland
PrincipalPlaceOfBusiness		Pirkkala
DescriptionOfNatureOfEntitysOperationsAndPrincipalActivities		Construction
NameOfUltimateParentOfGroup		HLRE Holding Oyj

 

 

	Financial Statements 2022
	1.2.2021-31.1.2022
		Contents		page
		Board of Directors´ Report
		Consolidated Financial Statement
			Consolidated Statement of Comprehensive Income
			Consolidated Statement of Financial Position
			Consolidated Statement of Changes in Equity
			Consolidated Statement of Cash Flows, indirect
		Information about the consolidated financial statements
			1. Accounting principles
			2. Management judgement and sources of uncertainty
		Key information relating to income statement
			3. Segment information
			4. Revenue
			5. Other operating income
			6. Operating expenses
		Personnel
			7. Employee benefits expense
			8. Information about key management personnel (incl. key management's shareholdings) and share-based payments schemes
		Assets and liabilities used in business operations
			9. Goodwill and other intangible assets, including impairment testing
			10. Property, plant and equipment and leases
			11. Inventories
			12. Trade and other receivables
			13. Other current liabilities
		Capital structure and financing
			14. Net debt
			15. Loand and financial assets
			16. Financial income and expenses
			17. Management of financial risks
			18. Shareholders' equity
			19. Capital risk management
		Other notes
			20. Group structure
			21. Taxes
			22. Related party transactions
			23. Long-term employee benefits
			24. Commitments and contingent liabilties
			25. New IFRS-standards that will enter into force at a later date
			26. Events after the reporting date
		Parent company Income Statement
		Parent company Balance Sheet
		Parent company notes
		Signatures
		Auditor´s report

 

 

	HLRE Holding Group
	Board of Directors´ Report
		FINANCIAL PERIOD 1 FEBRUARY 2021–31 JANUARY 2022
		GENERAL
		The HLRE Holding Group (commonly referred to as the Vesivek Group in customer and marketing communications) is a fast-growing and evolving small and terraced real estate company focused on roof and drainage renovation, product development, manufacturing, sales and installation of rainwater systems and roof safety products. The Group operates in Finland and Sweden under the Vesivek brand.
		In January 2022, the HLRE Holding Group operated in 17 (18) locations in Finland and three (three) in Sweden. The Group’s head office and sheet metal roofing factory are located in Pirkkala, Finland, and the product development and manufacture of rainwater management systems and roof safety products and corporate sales function in Orimattila, Finland. The Group’s customers include consumers, housing companies, construction companies and public-sector organisations.
		In the consumer business, the Vesivek Group is the leading service company in the industry in Finland, delivering roofs with accessories and installation services from its own factory. The Group’s service offering includes the customer promise “Weather protection in just one day,” which is made possible by the in-house supply chain from product development to installation and the conceptualised business model. The majority share of a company engaged in the drainage business in Finland, acquired as part of the Group, strengthens the Group’s service offering in the market for the renovation of single-family houses.
		The Nesco Group, which designs, develops, fabricates and sells roof and roof safety products, includes the companies Nesco Invest Oy, Nesco Oy and Tuusulan Peltikeskus Oy. Nesco Oy is a Finnish company that designs, manufactures and sells rainwater management systems and roof safety products. Tuusulan Peltikeskus Oy is a Finnish company that sells rainwater management systems and roof safety and sheet metal products to consumers and construction companies, operating in the municipality of Tuusula in the Greater Helsinki region.
		EUR 1000	1 February 2021-31 January 2022	1 February 2021-31 January 2022	Change
		Revenue	130351,5	107263,0	21,5 %
		EBITDA	12210,9	10007,9	19,3 %
		Pfort or loss for the financial year	690,5	-10,0	7005,3 %
		Equity ratio	0,3	0,3	-6,9 %
		Cash flow from operating activities	7332,4	7192,4	1,9 %
		Personnel on average	850,0	755,0	12,6 %
		Gross capital ecpenditure	-4011,0	-1592,4	151,9 %
		MAJOR EVENTS DURING THE FINANCIAL PERIOD
		The Group's revenue for the financial year increased from EUR 107.3 million in the previous financial year to EUR 130.4 million (approx. 21.5%). In particular, the growth in revenue was driven by the acquisition of a majority stake in the company Salaojakympit Oy in February 2021 (the name was changed to Vesivek Salaojat Oy in February 2021), the development of the Swedish company’s business and, in Finland, growth in the roof installation business and product sales roof safety and rainwater systems.
		The Group reorganised its financing on 12 February 2021. In connection with the reorganisation of financing, the Group’s parent company HLRE Holding Oy issued a secured three-year SEK 300 million bond that includes an option of increasing the total loan, when separately agreed conditions are met, by a maximum total of SEK 100 million to a maximum total of SEK 400 million in one or more tranches. The Company repaid the loans associated with the bank loan agreed with Danske Bank A/S Finland Branch with interest and expenses and redeemed the equipment included in the leaseback agreement signed with Danske Finance Oy on 12 April 2019 at the agreed residual value with the funds borrowed with the bond. The bond is a non-amortising bullet loan, and it involves a leverage covenant (ratio of net debt to EBITDA), which the company met at the time of signing the financial statements. The bond has been listed on the Open Market segment of the Frankfurt Stock Exchange since February 2021 and was listed on the Stockholm Stock Exchange corporate bond list after the end of the financial year on 8 February 2022.
		In February 2021, in connection with the reorganisation of financing, the group company Vesivek Oy acquired a 71.63% holding in Salaojakympit Oy, a company controlled by the Group’s CEO. The Group’s CEO acquired a holding of 71.63% in Salaojakympit Oy on 28 February 2020. In February 2021, Salaojakympit Oy was renamed to Vesivek Salaojat Oy. Vesivek Salaojat Oy is a company engaged in installing underdrains, and the regions of Ostrobothnia, Vaasa region, Central Ostrobothnia, Central Finland, Pirkanmaa, Kuopio and Uusimaa generate a significant share of its revenue. The drainage business is carried out from the same locations and under the same operational unit and area management as Vesivek Oy, so the synergy benefits are clear.
		The operations of the Kokkola location of Vesivek Oy and Vesivek Salaojat Oy ceased in autumn 2021. During the financial year, Vesivek Oy’s Oulu unit opened an office in Tornio, aiming to focus on roof and rainwater system installations near the northern Swedish border all the way to the Kalix region. Vesivek Salaojat Oy launched drainage operations at both the Kerava and Seinäjoki units during the financial year.
		The Group’s company installing roof renovations in Finland, Vesivek Oy, migrated to mainly scaffolding-based roofing installations already during the 2019 financial year. Scaffolding, or work platforms, around a building function as fall protection and improve occupational safety, ergonomics and installation efficiency, as the work can be performed from the correct height without reaching. The scaffolding also protects the yard and access routes from any materials falling from the roof. During the financial year 2019, scaffolding work was mainly subcontracted, whereas in 2020, Vesivek Oy insourced scaffolding work at eight units in Finland and insourced scaffolding work in three more units in Finland units during the financial year 2021. At the end of the financial year 2022, all Finnish units carrying out roof installation work will carry out scaffolding by themselves either in whole or in part, and strengthening in-house scaffolding activities will continue to be a systematic goal in the coming years.
		In spring 2020, the COVID-19 pandemic rapidly erupted, and its social and economic impacts have been significant in places, with increasing uncertainty and decreased visibility. The Group took immediate action in Finland and Sweden to safeguard the adequacy of the companies’ cash reserves, operating prerequisites and business. All locations improved safety by adopting guidelines, updating the operating models and discontinuing common morning meetings and coffee breaks to minimise physical encounters. These operating models have been continued during the extended pandemic during the financial year 2022 in all units in Finland and Sweden, monitoring the current infection situation in each area and the guidelines and recommendations issued by the local authorities.
		In particular, the last quarter of the financial year was challenging in terms of the pandemic in Finland and Sweden. The installation units had to be made smaller and in many respects the units operated understaffed during the last quarter of the financial year. The units had to react very quickly to unplanned changes due to sick leaves and act quickly according to the updated instructions and plans.
		CHANGES IN GROUP STRUCTURE
		In February 2021, Vesivek Oy acquired a holding of 71.63% in Salaojakympit Oy, a company controlled by the Group’s CEO. The Group’s CEO acquired a holding of 71.63% in Salaojakympit Oy on 28 February 2020. In February 2021, Salaojakympit Oy was renamed to Vesivek Salaojat Oy. Vesivek Salaojat Oy became part of the roofing, roof safety and drainage installation business.
		ESTIMATE OF MAJOR RISKS AND UNCERTAINTIES
		The HLRE Holding Group assesses risks annually with the aim of minimising risks and better foreseeing them.
		The Group’s growth and development are strongly linked with the growth and development of sales and success in internationalisation, and failure in them might have direct or indirect impacts on the Group’s business and growth opportunities or development of its profitability. In addition to the above, the Group’s business operations are exposed to personnel-related risks, such as risks relating to the recruitment and retention of skilled personnel. The Group’s business is exposed to occupational safety risks at the construction sites, which also includes a risk of potential procedures by the authorities or legal proceedings. In addition, the Group is exposed to international price fluctuations and production bottlenecks for the commodities it uses in its business, such as steel, aluminium and wood.
		The Group’s business is exposed to seasonality which can be balanced by a service portfolio comprised of different product categories and extensive geographical distribution in Finland and through internationalisation. Moreover, the most significant business uncertainties are associated with risks relating to partners, such as the most significant suppliers, opening of new locations and their development, success in concept development and maintaining the concept.
		Expansion into other countries involves several risks associated with foreseeing consumer needs, preferences and behaviour in the target markets, among other factors. Expansion into other countries involves the risk of the company’s conceptualised business model not establishing a position in the market and securing an established customer base. The company’s conceptualised business model can also be non-compliant with the local building regulations, customs or prevailing practices. The possible failure of the launch of new concepts, such as the drainage business concept, would incur costs to the company and have a material adverse impact on the company’s brand, financial position and business performance.
		At the end of the financial year 2022, goodwill on the HLRE Holding Group’s balance sheet amounted to EUR 40.3 million. It increased by approximately EUR 0.9 million as a result of the acquisition of a majority holding in Salaojakympit Oy in February 2021. Each year, the HLRE Holding Group tests goodwill for impairment and, if necessary, whenever there are indications that the value of the assets does not exceed their goodwill. During the financial year, HLRE Holding did not observe indications of not being able to recover the amount corresponding to the book value. Should there be negative changes in the profit and growth development of the HLRE Holding Group, this could lead to impairment of goodwill, which could have an unfavourable impact on the operating result and equity of the HLRE Holding Group.
		The well-being of customers, partners and employees has also been a priority for the Group in the prolonged COVID-19 pandemic. The Group complies with the guidelines issued by the local health authorities in all of its locations to mitigate the pandemic. The Group has taken special measures according to its plan to ensure the safety of its customers and personnel and the continuity of its products and services in the exceptional situation caused by COVID-19.
		During the financial year, COVID-19 caused challenges to the Group’s business operations, and the last quarter of the financial year in particular was challenging in terms of infections in Finland and Sweden. The units had to react to unplanned changes due to sick leaves and they complied with updated and revised instructions, plans and regional regulations issued by the authorities.
		In addition to the above and other normal business risks, the Group is not aware of material risks affecting its operations. The Group’s revenue for the financial period from 1 February 2022 to 31 January 2023 is expected to grow and profitability to remain at least at the level of the financial period ended on 31 January 2022. The Group’s growth will be generated from the increased efficiency of Vesivek Oy’s existing locations in Finland and the acquisition of Salaojakympit Oy (currently operating as Vesivek Salaojat Oy) in February 2021. Moreover, growth in the Swedish subsidiary is believed to accelerate the growth of the Group during the financial year.
		RISK MANAGEMENT
		In its risk management, the HLRE Holding Group aims to be as systematic as possible as part of normal business processes. The Group has a risk management policy approved and followed up by the management team, supporting the achievement of strategic objectives and ensuring the continuity of business operations. The Group’s risk management policy focuses on managing both risks associated with business opportunities and risks threatening the achievement of the Group’s objectives. The management team analyses and assesses the most essential risks in terms of their probability and significance.
		The review of business risks is part of the HLRE Holding Group’s management system. Risks are classified into strategic, operational, financial and damage risks. Strategic business risks are associated with customer relationships, competitors’ actions, political risks, brand, product and concept development, as well as investments. Operational risks are associated with shortcomings or errors in the company’s operations or systems or external risks, such as legislation or unexpected decisions or policies of the legal system or authorities, or changes in raw material prices or supply issues. Financial risks are associated with changes in the interest and foreign exchange markets, refinancing and counterparty and trade receivable risks. Damage risks can cause accidents, property damage, interruptions in production, environmental impacts or liability for damages.
		The risk management process aims to identify and assess the risks, after which measures are planned and implemented with regard to each risk. The measures can include avoiding the risk, mitigating it by different means, transferring the risk through insurance policies or contractually, or taking the risk in a managed and conscious manner. Control functions or measures refer to verifying procedures that mitigate risks and ensure that risk management measures are taken.
		The HLRE Holding Group does not have a separate risk management function; the associated responsibilities follow the organisational distribution of responsibilities. The company’s management team regularly reviews the risks. The company’s Board of Directors and its Audit Committee review the most significant risks and related measures at least once a year in conjunction with the strategy process.
		PERSONNEL
		At the end of the financial year, the number of personnel amounted to 821 (780), an increase of 41 persons or 5.3 per cent. The Group personnel averaged 850 (755) FTE, an increase of 95 employees, or 12.6 per cent. The Group’s employee benefit expenses totalled EUR 50.3 (41.0) million, up EUR 9.3 million or 22.6 per cent. The increase in the number of employees consisted mainly of the acquisition of Salaojakympit Oy and organic growth in Finland and Sweden.
		BOARD OF DIRECTORS
		In accordance with article 10 of the Articles of Association of the Group’s parent company HLRE Holding Oy, the company’s administration and appropriate organisation of operations is seen to by a Board of Directors with a minimum of three (3) and a maximum of ten (10) actual members according to the resolution of a general meeting of shareholders. The term of office of the Board members expires at the close of the next Annual General Meeting after their election.
		At the company's Annual General Meeting on 14 April 2021, Pentti Tuunala, Kimmo Riihimäki, Ari Haapakoski, Timo Pirskanen, Mika Uotila and Anu Syrmä were re-elected as members of the Board of Directors. In its first meeting on 14 April 2021, the Board of Directors elected Pentti Tuunala as its Chair.  In its meeting on 14 April 2021, the Board of Directors decided to elect Timo Pirskanen, Pentti Tuunala and Mika Uotila from among its number to continue as members of the Audit Committee and elected Timo Pirskanen as the Chair of the Audit Committee.
		During the financial year 1 February 2021–31 January 2022, the Board of Directors convened 14 times. The attendance rate of the Board members was 98%. The Audit Committee convened 4 times during the financial period 1 February 2021–31 January 2022 with an attendance rate of 100%. Some of the meetings took place as Teams meetings due to the pandemic. Risk analyses related to the COVID-19 pandemic and associated monitoring were still on the Board’s agenda.
		REMUNERATION OF BOARD MEMBERS
		The Annual General Meeting of the Group’s parent company HLRE Holding Oy resolved on 14 April 2021 that EUR 1,000.00 per month be paid as compensation to each Board member independent of the company and its major shareholders. If a Board member is employed by a company belonging to the HLRE Holding group of companies or by Sentica Partners Oy, they are paid no compensation for Board membership. No separate fee is paid for Board or committee meetings.
		Furthermore, the Annual General Meeting resolved that each Board member will be compensated for reasonable travel expenses against receipts in accordance with the practices of the HLRE Holding Group.
		MANAGEMENT TEAM
		The Company’s Management Team, which has been in existence since November 2018, was dissolved in July 2021 and at its meeting on 28 October 2021, the Board of Directors confirmed the new Management Team of the Company as follows: Kimmo Riihimäki, CEO; Anu Lapiolahti, HR Director; Jari Raudanpää, CFO; Jari Lehtola, Managing Director of Vesivek Oy and Vesivek Salaojat Oy; Pasi Heikkonen, Managing Director of Nesco Oy; Jani Jylhä, Managing Director of Vesivek Sverige AB. The management team convenes regularly.
		AUDITING
		The Annual General Meeting of 14 April 2021 resolved to appoint PricewaterhouseCoopers Oy as the company’s auditor for the financial year 1 February 2021–31 January 2022, with Markku Launis, Authorised Public Accountant, as the auditor with main responsibility.
		CHANGE IN COMPANY FORM
		At its meeting on 14 April 2021, the Annual General Meeting resolved, in accordance with the proposal of the Board of Directors, that the Company’s legal form be changed to a public limited company and its business name be changed to HLRE Holding Oyj.
		INCREASE IN SHARE CAPITAL
		At its meeting on 14 April 2021, the Annual General Meeting decided, in accordance with the proposal of the Board of Directors, to increase the share capital from EUR 2,500 to EUR 80,000 by way of a reserve from the invested non-restricted equity reserve.
		COMPANY STRUCTURE AND SHAREHOLDING
		The Group’s parent company HLRE Holding Oyj is owned by funds managed by funds owned the Finnish private equity company Sentica Partners Oy and key personnel of the Group.
		At the end of the financial period, HLRE Holding Oyj’s share capital entered in the Trade Register amounted to EUR 80,000. At the end of the financial year, the number of HLRE Holding Oyj shares was 16,626,723. The company has one series of shares, and each share confers one vote at a general meeting. All shares confer equal rights to dividends and other distribution of assets. At the end of the financial year, the company had a total of 40 shareholders. The company transferred a total of 50,000 treasury shares held by the company to the Group’s key employees during the financial year. At the end of the financial period, the company held 27,550 treasury shares.
		The Board of Directors has no valid authorisations granted by the general meeting to repurchase shares or issue shares or grant other special rights entitling to shares referred to in chapter 10, section 1 of the Limited Liability Companies Act.
		BOARD OF DIRECTORS’ PROPOSAL CONCERNING THE USE OF THE COMPANY’S NON-RESTRICTED SHAREHOLDERS’ EQUITY
		The Group's parent company HLRE Holding Oyj’s profit for the financial year was EUR -2,147.27. The Board of Directors proposes that the profit for the financial period be recognised as a change in profit and loss, after which distributable funds of EUR 18,991,547.37 will be available to the General Meeting. The Board of Directors’ proposal to the general meeting is that no dividends be distributed.
		MAJOR EVENTS AFTER THE FINANCIAL PERIOD
		On 12 February 2021, the Group issued a three-year covered bond of SEK 300 million, which has been listed on the Open Market segment of the Frankfurt Stock Exchange since February 2021. The terms of the bond stipulate that the bond must also be listed on a regulated market within one year of issue. The bond was listed on the Stockholm Stock Exchange corporate bond list on 8 February 2022.
		The Group’s operating environment is subject to uncertainty caused by the impairment of the general security situation in Europe and the COVID-19 pandemic and its development. The sudden deterioration in the general security situation at the end of February has increased uncertainty and caused a significant increase in the prices of raw materials and energy. The prolongation of the pandemic contributes to uncertainty in consumers’ lives, and it has impacts on disposable income, purchase choices and consumer behaviour, among other things. These can present both challenges and opportunities to the development of the Group’s business.
		COVID-19 infections and the resulting exposure situations have remained relatively high in Finland and Sweden since the end of the reporting period. The Group has further tightened its COVID-19 guidelines further in relation to break facilities at the locations and use of face masks indoors, receiving visitors in the company’s premises and internal meetings. The units actively monitor the official regional COVID-19 guidelines and associated updates and changes. In addition, the Group has prepared plans for reacting and adjusting operations to the current COVID-19 situation.

 

 

	HLRE Holding Group
	Consolidated Statement of Comprehensive Income
		1000 EUR	Footnote	Note	1.2.2021-31.1.2022		1.2.2020-31.1.2021
	HLRE Holding Group
		REVENUE		4	130 352		107 263
		Other operating income		5	1 063		1 080
		Material and services		6	-45 375		-36 755
		Employee benefits expense		7	-50 257		-41 006
		Depreciation and amortisation		6	-7 855		-7 600
		Other operating expenses		6	-23 572		-20 573
		OPERATING PROFIT			4 356		2 408
		Finance income		16	1 146		345
		Finance costs		16	-4 148		-2 436
		Finance income and costs total			-3 003		-2 091
		PROFIT/LOSS BEFORE TAX			1 353		317
		Tax on income from operations		21	-663		-327
	PROFIT/LOSS FOR THE PERIOD				691		-10
	Profit attributable to:
		Owners of the parent company			623		-53
		Non-controlling interests			68		43
					691		-10
		Items that may be reclassified subsequently to profit or loss
		Exchange differences on translating foreign operations			-54		45
	TOTAL COMPREHENSIVE INCOME				637		35
	Total comprehensive income attributable to:
		Owners of the parent company			574		-12
		Non-controlling interests			63		47
					637		35
		1) This means the share of associates’ other comprehensive income attributable to owners of the associates, ie it is after tax and non-controlling interests in the associates. In this example, the other comprehensive income of associates consists only of items that will not be subsequently reclassified to profit or loss. Entities whose associates’ other comprehensive income includes items that may be subsequently reclassified to profit or loss are required by paragraph 82A(b) to present that amount in a separate line.

 

 

	HLRE Holding Group
	Consolidated Statement of Financial Position
		1000 EUR	Footnote	Note	31.1.2022		31.1.2021
	ASSETS
	NON-CURRENT ASSETS
		Goodwill		9	40 304		39 437
		Intangible assets		9	657		787
		Property, plant, equipment		10	27 188		26 632
		Other non-current financial assets			48		48
		Loan receivables		15	7		9
		Non-current prepayments and accrued income (from others)		15	26		0
		Deferred tax assets		21	169		50
		NON-CURRENT ASSETS			68 400		66 963
	CURRENT ASSETS
		Inventories		11	15 464		11 105
		Trade and other receivables		12	9 598		9 494
		Loan receivables		15	63		625
		Tax Receivable, income tax			198		0
		Cash and cash equivalents			5 201		2 219
		CURRENT ASSETS			30 524		23 443
	ASSETS				98 923		90 406
	EQUITY AND LIABILITIES
	Owners of the parent company
		Share capital		18	80		3
		Unrestricted equity reserve		18	18 002		18 079
		Translation differences		18	-17		31
		Retained earnings		18	9 935		9 309
		Owners of the parent company			28 000		27 422
	Non-controlling interests				-37		93
	EQUITY				27 963		27 515
	NON-CURRENT LIABILITIES
		Finance and lease liabilities		15	51 197		21 445
		Employee benefit obligation		15	422		389
		Deferred tax liabilities		21	216		395
		NON-CURRENT LIABILITIES			51 834		22 229
	CURRENT LIABILITIES
		Finance and lease liabilities		15	4 633		29 809
		Other current liabilities		13	13 528		10 590
		Derivatives		15	484		34
		Income tax liabilities			482		229
		CURRENT LIABILITIES			19 126		40 662
	Liabilities				70 960		62 891
	EQUITY AND LIABILITIES				98 923		90 406

 

 

	HLRE Holding Group
	Consolidated Statement of Changes in Equity					Attributable to owners of the Company
			1000 EUR		Note	Share capital	Unrestricted equity reserve	Translation differences	Retained earnings	Total	Non-controlling interests	Total equity
					18
	EQUITY 1.2.2020					3	18 079	-10	9 333	27 404	45	27 449
	Comprehensive income
		Profit/loss for the period							-53	-53	43	-10
		Other comprehensive income:
			Translation differences			0	0	42	0	42	4	46
	TOTAL COMPREHENSIVE INCOME					0	0	42	-53	-11	47	36
	Transactions with owners
		Sale of treasury shares				0	0		30	30	0	30
	Total transactions with owners					0	0		30	30	0	30
	TOTAL EQUITY 31.1.2021					3	18 079	31	9 309	27 423	93	27 515
						Attributable to owners of the Company
			1000 EUR		Note	Share capital	Unrestricted equity reserve	Translation differences	Retained earnings	Total	Non-controlling interests	Total equity
					18
	EQUITY 1.2.2021					3	18 079	31	9 309	27 423	93	27 515
	Comprehensive income
		Profit/loss for the period							623	623	68	691
		Other comprehensive income:
			Translation differences			0	0	-49	0	-49	-5	-54
	TOTAL COMPREHENSIVE INCOME					0	0	-49	623	574	63	637
	Transactions with owners
		Acquisition of treasury shares							-28	-28	0	-28
		Sale of treasury shares				0	0		102	102	0	102
		Reclassifications				78	-78		-24	-24	0	-24
		Other changes				0			-38	-38	-15	-53
	Total transactions with owners					78	-78		11	11	-15	-3
	Changes in ownership interests in subsidiaries
		Changes in ownership interest without loss of control				0	0		-7	-7	1	-6
		Changes in ownership interest with loss of control									-179	-180
	TOTAL EQUITY 31.1.2022					80	18 002	17	9 935	28 000	-37	27 963

 

 

	HLRE Holding Group
	Consolidated Statement of Cash Flows, indirect
		1000 EUR	Footnote	Note	1.2.2021-31.1.2022		1.2.2020-31.1.2021
	Cash flows from operating activities
		PROFIT/LOSS FOR THE PERIOD			691		-10
		Adjustments to the profit/loss for the period
		Depreciation, amortisation and impairment		6	7 855		7 600
		Financial income and expenses		16	3 633		2 257
		Tax on income from operations		21	663		327
		Other adjustments			415		-360
		Adjustments total			12 565		9 825
	Working capital changes
		Increase / decrease in inventories		11	-4 278		-918
		Increase /decrease in trade and other receivables		12	1 137		-825
		Increase / decrease in trade payables		13	784		1 111
		Interest paid		16	-2 469		-1 706
		Interest received		16	21		16
		Other financial items		16	-432		-121
		Income taxes paid		21	-687		-180
	Net cash from operating activities				7 332		7 192
	Cash flows from investing activities
		Purchase of tangible and intangible assets		9,10	-3 160		-1 592
		Proceeds from sale of tangible and intangible assets		9,10	326		91
		Acquisition of subsidiaries, net of cash acquired		9,20	-201		0
		Purchase of investments		9,17	0		-3
		Loans granted to related parties			0		-590
		Loans granted			-27		-31
		Proceeds from repayments of loans			298		56
	Net cash used in investing activities				-2 762		-2 069
	Cash flows from financing activities
		Purchase of treasury shares			-28		0
		Proceeds from sale of treasury shares			78		30
		Repayment of current borrowings		15	-25 820		-2 050
		Addition / deduction of current borrowings			8		3
		Proceeds from non-current borrowings		15	29 074		0
		Repayment of non-current borrowings		15	0		-2 596
		Payment of lease liabilities			-4 900		-4 003
	Net cash used in financing activities				-1 588		-8 616
	Net change in cash and cash equivalents				2 982		-3 492
		Cash and cash equivalents, opening amount		15	2 219		5 711
		Net increase/decrease in cash and cash equivalents			2 982		-3 492
		Cash and cash equivalents		15	5 201		2 219

 

 

	HLRE Holding Group
		Notes to the consolidated financial statements
		INFORMATION ABOUT THE CONSOLIDATED FINANCIAL STATEMENTS
		These consolidated financial statements are the financial statements of a group of companies comprised of HLRE Holding Oyj, Business ID 2611405-7 (hereinafter referred to as “HLRE Holding”, “the Company” or “the parent company”) and its subsidiaries, which are jointly referred to as “HLRE”, “HLRE Group” or “the Group”.
		The parent company of the Group is domiciled in Pirkkala, and its registered address is Jasperintie 273, FI-33960 Pirkkala, Finland. A copy of the financial statements is available from the address Jasperintie 273, FI-33960 Pirkkala, Finland.
		These consolidated financial statements include the consolidated statement of comprehensive income, consolidated balance sheet, consolidated cash flow statement and statement of changes in equity for the financial years ended 31 January 2022 and 31 January 2021 and notes thereto. The Company’s Board of Directors approved the consolidated financial statements for publication on 12 April 2022.
		In accordance with the Finnish Limited Liability Companies Act, shareholders can adopt or reject the financial statements at a general meeting of shareholders held after their publication. The general meeting has the right to amend the consolidated financial statements.
		1.     Accounting principles
		The consolidated financial statements have been prepared in accordance with the International Financial Reporting Standards (IFRS) and interpretations published by the IFRS Interpretations Committee (IFRS IC) applied by companies reporting under the IFRS standards as approved for application in the European Union. The notes to the financial statements also meet the requirements of the Finnish legislation on accounting and companies which supplement the IFRS.
		The measurement of assets and liabilities is based on cost, with the exception of certain financial assets and liabilities (derivative instruments and financial assets at fair value through profit or loss), which are measured at fair value.
		The consolidated financial statements are presented as thousands of euros, unless otherwise specified, and the numbers are rounded off to the nearest thousand. Because of this, the sum of individual figures can deviate from the reported total. The operating currency of the Company is the euro, which is also the reporting currency of the Company and Group. The assets included in the financial statements of the subsidiaries included in the Group are measured in the currency of the primary operating environment of each subsidiary.
		Translation of items denominated in foreign currencies
		Transactions denominated in foreign currencies are translated into EUR at the exchange rates of the transaction dates, or if the items have been re-measured, at the exchange rates of the measurement dates. Foreign exchange gains and losses arising from sales and purchase payments associated with actual business operations are recognised above operating profit, and financing-related exchange rate differences are recognised in financial items in the income statement.
		The assets and liabilities of the Swedish subsidiary are translated into EUR at the exchange rate of the closing date. The income and expenses of the Swedish subsidiary are translated into EUR at the average exchange rate for the financial year. Translation differences arising from the translation of a subsidiary’s financial statements are recognised in other comprehensive income, and they are accumulated in a separate Translation differences item under shareholders’ equity.
		In its financial statements, the HLRE Holding Group focuses on information that it considered to be relevant to its stakeholders and other readers of the financial statements. The notes to the consolidated financial statements are divided into six sections, with each section containing the related relevant accounting principles. These sections are information about the consolidated financial statements, key information relating to profit, personnel, assets and liabilities used in business operations, capital structure and financing, and other notes. The purpose of this presentation method is to provide the reader with a clear idea of the Group’s financial position and result and the chosen accounting principles.
		2.     Management discretion and sources of uncertainty
		Preparing the consolidated financial statement requires the management to use estimates and assumptions that have impacts on applying the accounting principles and amounts of assets, liabilities, income and expenses recognised in the financial statements. Significant estimates or discretionary decisions are reviewed in the following notes:
		·         impairment of goodwill, note 9
		·         leases, note 10
		·         measurement of inventories, note 11
		·         impairment of trade receivables, Note 17
		·         Accounting for the acquisition of Salaojakympit Oy, Note 20
		The estimates and discretionary decisions are continuously reviewed. They are based on prior experience and other factors, such as expectations of future events with potential financial impacts on the company and which are considered to be reasonable under the circumstances in question.
		In spring 2020, the COVID-19 pandemic rapidly erupted, and its social and economic impacts have been significant in places, with increasing uncertainty and decreased visibility. The Group took immediate action in Finland and Sweden to safeguard the adequacy of the companies’ cash reserves, operating prerequisites and business. All locations improved safety by adopting guidelines, updating the operating models and discontinuing common morning meetings and coffee breaks to minimise physical encounters. These operating models have been continued during the extended pandemic during the financial year 2022 in all units in Finland and Sweden, monitoring the current infection situation in each area and the guidelines and recommendations issued by the local authorities.
		In particular, the last quarter of the financial year was challenging in terms of the pandemic in Finland and Sweden. The installation units had to be made smaller and in many respects the units operated understaffed during the last quarter. The units had to react very quickly to unplanned changes due to sick leaves and act according to the updated instructions and plans.
		At the end of the financial year 2022, goodwill on the HLRE Holding Group’s balance sheet amounted to EUR 40.3 (39.5) million. The acquisition of a majority holding in Salaojakympit Oy during the financial year increased the goodwill by EUR 0.9 million.  Each year, the HLRE Holding Group tests goodwill for impairment and, if necessary, whenever there are indications that the value of the assets does not exceed their goodwill. During the financial year, HLRE Holding did not observe indications of not being able to recover the amount corresponding to the book value. Should there be negative changes in the profit and growth development of the HLRE Holding Group, this could lead to impairment of goodwill, which could have an unfavourable impact on the operating result and equity of the HLRE Holding Group.
		KEY INFORMATION RELATING TO INCOME STATEMENT
		This section discloses information that is relevant to understanding the Group’s result of the financial period and performance.
		3.     Segment information
		The Board of Directors of HLRE Holding is the Group’s highest operational decision-making body, and operating segments have been specified based on the information reviewed by the Board of Directors in order to allocate resources and assess the profitability of business operations. The Board of Directors manages the HLRE Group as a single integrated business aggregate, and therefore HLRE has a single operating and reporting segment.
		The profitability of the business aggregate is estimated internally in accordance with the Finnish Accounting Standards (FAS) based on revenue, EBITDA and operating profit. In FAS-compliant internal reporting, EBITDA is defined as operating profit before depreciation, amortisation and impairment.
		EUR 1,000	FAS	Adjustments	IFRS
		Consolidated income statement	1 February 2021-31 January 2022		1 February 2021-31 January 2022	Consolidated statement of comprehensive income
		Revenue	130,352		130,352
		EBITDA (*)	8,127
		Depreciation, amortisation, and impairment	-2,948	-4,907	-7,855	Depreciation, amortisation, and impairment
		Operating profit	5,179	-823	4,356	Operating profit
					-3,003	Financial income and expenses
					1,353	Profit (loss) before taxes
					-663	Income taxes
					691	Profit or loss for the financial period
		EUR 1,000	FAS	Adjustments	IFRS
		Consolidated income statement	1 February 2020-31 January 2021		1 February 2020-31 January 2021	Consolidated statement of comprehensive income
		Revenue	107,263		107,263
		EBITDA (*)	4,973
		Depreciation, amortisation, and impairment	-2,635	-4,965	-7,611	Depreciation, amortisation, and impairment
		Operating profit	2,338	70	2,408	Operating profit
					-2,091	Financial income and expenses
					317	Profit (loss) before taxes
					-327	Income taxes
					-10	Profit or loss for the financial period
		(*) FAS EBITDA = FAS operating profit + FAS depreciation, amortisation and impairment
		The most significant differences between the Group’s net result reported internally in accordance with FAS and HLRE’s profit and loss for the financial period reported according to IFRS are comprised of the following item:
		·  The Group’s depreciation, amortisation and impairment reported according to FAS does not include the amortisation of right-of-use assets included in the reported depreciation, amortisation and impairment. The depreciation and amortisation in internal FAS-compliant reporting does not include amortisation of goodwill.
		4.     Revenue
		The revenue of the HLRE Holding Group is primarily generated by roofing and roof product installations for single-family homes and housing companies pursuant to the service concept developed by the Company, as well as project and direct sales of rainwater management systems and roof safety products. The entire service chain – product development, manufacturing, sales and installation – is managed in-house by the Group.
		The “Weather protection in just one day” installation for a single-family home pursuant to the service concept is realised in two days in the best-case scenario. A two-day roofing renovation is made possible by skilled installation assisted by a crane, in which each work phase is planned and assigned in advance and the work phases have been prepared, as well as by a proprietary sheet metal roofing factory.
		In addition, the Group acquired a majority holding in a company carrying out drainage renovations for small sites in Finland in February 2021. Drainage consists of a carefully considered installation concept for single-family houses and housing companies. With the help of the service package concept, the drainage renovation of a single-family house is carried out in an average of 3–5 days.
		This acquisition is discussed in more detail in section 20 of the financial statements.
		In Finland, receivables from roofing, roof product and drainage installations in accordance with the consumer service concept are primarily allocated to Laatutili. Laatutili is a renovation loan granted by the OP bank. Using a Laatutili loan, the customer can pay for the roofing renovation in a single interest-free and expense-free instalment with a term of payment of 30 days or over a longer repayment period as monthly instalments agreed separately with the OP bank. The term of payment for installations not realised under the Laatutili facility is 10 days. In direct sales, the term of payment varies from 14 to 30 days, depending on the customer.
		The Group’s IFRS-compliant principles of revenue recognition are described in more detail under “Revenue: Accounting principle” on page 20 of these financial statements.
		Breakdown of revenue by country for the financial year ended 31 January 2022
		During the financial year ended 31 January 2022, the HLRE Holding Group operated in Finland and Sweden. The Swedish roofing renovation business was launched in the Stockholm region in 2016, and the Company’s second Swedish location was opened in the summer of 2018. The third location in Sweden was opened in Flen in the Stockholm region spring 2019. In 2021, Vesivek Oy's Oulu unit expanded its operations to Tornio, where the focus is on providing roof renovation services to northern Sweden up to the Kalix area. In addition, a marginal share of the Group’s revenue came from direct sales of Nesco Oy’s products to the Baltic countries and Russia:
		1000 EUR	1.2.2021-31.1.2022	SHARE   %	1.2.2020-31.1.2021	SHARE   %	DIFF.
		Finland	109672	84,1 %	90577	84,4 %	19095
		Sweden	20055	15,4 %	16092	15,0 %	3963
		Baltic countries and Russia	625	0,5 %	594	0,6 %	31
		TOTAL	130352	100,0 %	107263	100,0 %	23089
		Of the Group’s revenue for the financial year 1 February 2021–31 January 2022, Finland accounted for approximately 84% (84%), Sweden for approximately 15% (15%) and export sales to the Baltic countries and Russia for 0.5% (0.6%).
		The Group’s non-current assets totalled EUR 68.4 million (EUR 67.1 million) on 31 January 2022, of which Sweden accounted for EUR 3.4 million (EUR 3.0 million) in euros.
		Assets and liabilities based on contracts with customers
		The trade and other receivables on the balance sheet include EUR 674 (509) thousand of non-invoiced revenue recognition based on the percentage of completion of roof and drainage renovations. Non-invoiced receivables are short-term by nature and typically due during the next reporting period.  The trade and other payables include EUR 0 (29) thousand of liabilities based on volume discounts and EUR 95 (36) thousand of advance payments from customers.
		Accounting principle
		The revenue of the HLRE Group was primarily generated from the sales of roofing, drainage and rainwater management systems and roof safety products and their installations during the financial year, as well as drainage renovations following the acquisition early in the financial year. The performance obligations are clearly identifiable in the customer contracts and orders.
		IFRS 15 Revenue from Contracts with Customers includes a five-step guideline on the recognition of sales income which determines the amount and timing of recognising sales income. A sale is recognised based on the transfer of control, either over time or at a point in time. When calculating revenue, sales income is adjusted for indirect taxes and discounts.
		Roofing and roof product installations include the products and their installation service. Typically, the products are customised based on the customer’s needs, such as the dimensions of roofs, in conjunction with the installation. The customer has ordered turnkey delivery of a functional roof solution from the Company, which constitutes a single performance obligation. The installation takes place very quickly, usually over a few days, and the corresponding sale is recognised at a point in time once the turnkey delivery has been made.
		Drainage for single-family houses consists of a carefully considered installation concept, including the installation of drainage products and ground and yard work. With the help of the service package concept, the drainage renovation of a single-family house can be carried out in an average of 3–5 days in thawed soil. The company has a very limited number of larger sites that take from a few weeks to slightly over a month to complete.
		In winter, the drainage service package is divided into two deliveries made at different times: when the soil is not thawed, drainage work taking on average a few days, and finishing work in the yard in thawed soil. Finishing works carried out in thawed soil are mainly carried out within one day and their share of the total delivery of the drainage project is invoiced when the finishing work is completed. The customer may choose to carry out the finishing work on the yard themselves, in which case the drainage will be carried out quickly with one project during the non-thawed soil period and fully invoiced when the work is completed. The performance obligations are clearly identifiable in the customer contracts and orders.
		With regard to product sales, individual products constitute a performance obligation, and the sale is recognised as revenue at a single point in time when control is transferred to the customer. Typically, this takes place at the time of delivery when the significant risks and benefits associated with ownership have been passed on to the buyer and the HLRE Holding Group does not have factual control over the sold goods and when receiving consideration is probable. The account receivable is recognised in connection with revenue recognition of the sale, because the Company is thereafter entitled to a payment that is only conditional on the passage of time. Because the performance obligations are fulfilled over a very short period or at a single point in time when control is transferred as described above, the Company makes use of the exemption allowed by the standard to not report the transaction price allocated to the remaining performance obligations.
		The terms of payment of sold products are primarily less than 30 days.
		Key management judgements and estimates
		The Company’s management uses customer project-specific judgment to determine the recognition principle and to assess whether revenue has been recognised for the appropriate period at each balance sheet date, taking into account materiality. Although performance obligations are met and revenue is recognised at one point in time as a rule, materiality analysis is applied at each balance sheet date, which relates to whether larger projects in progress should be recognised according to the percentage of completion.

 

 

			HLRE Holding Group
300000P	-1		1.     Other operating income	5.     Other operating income
300220P	-1
				Other operating income			1 February 2021–31 January 2022		1 February 2020–31 January 2021
374999P	-1			Gain on disposal of property, plant and equipment and intangible assets			109		138
370989P	-1			Rental income			119		103
371100	-1			Provision income			565		438
371000P	-1			Other operating income			272		401
377989P	-1			Other operating income			1 063		1 080
				Other operating income is comprised of rent income from owned premises leased to external parties, insurance indemnities received, sales of recycling materials and bank commissions from Laatutili customer financing.
				6.     Operating expenses
									*)Amended
				Material and services			1 February 2021–31 January 2022		1 February 2020–31 January 2021
403989P	-1			Purchases during the period		6	-40 934		-31 034
363989P	-1			Change in inventories of finished goods and work in progress			1 005		-130
364989P	-1			Work performed for own purposes and capitalised			24		32
443989P	-1			Change in inventories of materials			3 257		1 045
445989P	-1			External services			-8 728		-6 668
445999P	-1			Material and services			-45 375		-36 755
				*) Comparative information concerning the income statement and balance sheet presented in the financial statements for the period from 1 February 2020 to 31 January 2021 has been restated as a result of the accounting treatment of the configuration and customisation costs of the systems implemented as cloud services pursuant to the IFRS Interpretations Committee (IFRIC) decision of April 2021. See Note 9.
				External services are comprised of scaffolding subcontracting expenses to a significant extent and, as of the beginning of the financial year 2022, of subcontracting costs associated with transports of the drainage business. In the financial year 2022, Vesivek Oy further expanded scaffolding work as part of its in-house operations, and the aim is to continue insourcing as planned over the next few years.
				The company grants roof installations a fixed five-year installation warranty. Because the costs relating to repairs under warranty have not been significant, the company has not recognised a related provision.
				The company also grants a limited five-year installation warranty for drainage installations. Moreover, the costs of repairs under the installation warranty have not been significant and the company has not entered a provision for them.
				Depreciation, amortisation and impairment
				Amortisation according to plan			1 February 2021–31 January 2022		1 February 2020–31 January 2021
102150P	1			Development expenses			-17		-5
103150P	1			Intangible rights			-139		-169
107150P	1			Other intangible assets			-2		-5
670000P	-1			Amortisation, intangibles (excl. goodwill and right-of-use)			-159		-179
				Depreciation according to plan
112150P				Buildings and structures			-2747		-2692
				Machinery and equipment			-4927		-4718
130150P	1			Other tangible assets			-19		-23
671000P	-1			Depreciation, tangibles (excl. right-of-use)			-7693		-7432
				Other operating expenses
	-1			Costs for premises			-1 241		-1 150
700539	-1			Machinery and equipment expenses			-6 543		-5 603
700560	-1			Marketing costs			-3 705		-3 319
761989P	-1			Other operating costs			-12 082		-10 277
761989P	-1			Other operating expenses			-23 572		-20 349
				The other biggest unspecified items are optional personnel expenses of EUR 2,056 thousand (EUR 1,805 thousand) and kilometre allowances and per diems of EUR 2,368 thousand (EUR 1,863 thousand).
				Auditor's fees
704400P	-1			Statutory auditing			-91		-70
704420P	-1			To auditor: Other fees and services			-61		0
	-1						-152		-70
				PERSONNEL
				This section provides information about how the HLRE Holding Group rewards its personnel and key managers. The section includes information about employee benefits and related party information relating to the key personnel as follows:
				·         Employee benefit expenses
				·         Information about key managers
				7.     Employee benefit expenses
				The employee benefit expenses and other personnel expenses are as follows:
				1000eur			1 February 2021–31 January 2022		1 February 2021–31 January 2022
503989P	-1			Salaries and fees			-40 202		-33 583
				Pension expenses, defined contribution plans			-6 757		-4 632
				Other employee benefit			-3 298		-2 791
641999P	-1						-50 257		-41 006
				Total personnel expenses increased by slightly over 22% during the financial year compared to the previous financial year.
				Wages and salaries are mainly comprised of monthly salaries, hourly wages and performance bonuses paid to the employees. The employees are entitled to extensive occupational health care services, and some of the employees have company cars and phone benefits. In addition to statutory insurance, the employees are covered by leisure-time accident insurance.
				In spring 2020, the Finnish government decided to lower the employment pension contributions of employers temporarily by 2.6 percentage points due to the COVID-19 pandemic. The decrease was in force from 1 May to 31 December 2020 with regard to  employer’s statutory insurance contributions (“TyEL”) paid between May and December 2020. The decrease will be compensated for by increasing the employer’s pension contribution share in 2022–2025.
				In Sweden, the government compensated employers for a certain proportion of sick pay starting from April 2020 in conjunction with the COVID-19 pandemic. The compensation has been a certain proportion of actual costs of sick leave, depending on their amount. The total compensation in the financial year 2022 was approximately EUR 58 (55) thousand.
				Other social security contributions mainly include other social security expenses apart from pension expenses.
				The Group has a reward scheme based on years of service. In accordance with the rewards for years of service, employees are paid a lump-sum reward for having worked a certain number of years as follows.
				Liability and expense calculations relating to rewards for years of service pursuant to IAS 19 as Note 23. The calculations also include a forecast for the next financial year.
				Accounting principle
				Short-term benefits
				Short-term employee benefits include wages and salaries, including fringe benefits and annual holiday pay to be paid within 12 months, and bonus and performance rewards connected to profit or personal performance. Short-term employee benefits are recognised in other liabilities with regard to work performed by the closing date and measured at the value expected to be paid once the liabilities are settled.
				Post-employment benefits
				The pension arrangements of the HLRE Holding Group are defined contribution plans. A defined contribution plan is a pension arrangement under which the Group makes fixed payments to a separate unit and has no legal or factual obligation to make additional payments if the said unit does not have adequate funds for paying all benefits relating to work performed during the current and previous financial years to all employees. Payments made to defined contribution plans are recognised directly through comprehensive income for the period to which the payments are connected.
				Other long-term benefits
				Other long-term employee benefits include leaves associated with long service or sabbaticals, anniversary benefits or other benefits relating to long service and long-term unemployment benefits.
				8.    Information about key managers (incl. managers’ shareholdings) and share-based retention schemes
				Remuneration of key management personnel
				The Company’s Board of Directors appoints the CEO and the Deputy CEO and decides on the terms and conditions of their employment. The Board of Directors confirms the wages and other benefits paid to the management team based on the CEO’s proposal and the principles of remuneration of the Company’s other senior management
				The wages and salaries and other taxable benefits paid to the CEO and rest of the Group’s management team for the financial year ended 31 January 2022 are presented below. The compensation paid is comprised of fixed monthly salary and fringe benefits.
				1000eur			1 February 2021–31 January 2022		1 February 2021–31 January 2022
				Remuneration of the CEO
				Salary, other remuneration and benefits			127		128
				Pension expenses - defined contribution plans			10		6
				Total			137		134
				Remuneration of the group managing team (excluding the CEO)
				Salary, other remuneration and benefits			436		502
				Pension expenses - defined contribution plans			80		75
				Total			516		577
				Remuneration of Board members			45		27
				Key management and Board of Directors total			698		738
				The employment contract of CEO Kimmo Riihimäki can be terminated with a period of notice of three (3) months by either party. If the Company terminates the contract, the Company pays the CEO an amount corresponding to the total wages for three (3) months as a lump-sum compensation.
				Kimmo Riihimäki is subject to a 24-month non-competition and non-solicitation clause, with a related contractual penalty of EUR 100,000 for each breach by the CEO. If the losses incurred by the Company exceed the above-mentioned contractual penalty, the CEO must compensate the amount of the loss in full.
				The CEO contract will expire at the latest upon the retirement of Kimmo Riihimäki. The CEO’s retirement age is 65.
				The members of the Group management team have periods of notice of three or six months. They are entitled to severance pay. In addition, the members of the management team are bound by non-competition and non-solicitation clauses with contractual penalties.
				HLRE Holding Oy realised share issues and transfers of treasury shares directed at the Group’s key personnel in 2014–2022. At the end of the financial year 1 February 2020–31 January 2021, the company decided on a directed transfer of treasury shares, wherein the company’s managers and other key employees were offered a total of 107,550 treasury shares to purchase at a price of EUR 1 per share.  The purchase price of the shares is considered to be equal to the fair value of the shares at the time of purchase. At the end of the financial period 1 February 2020–31 January 2021, the company had 77,550 treasury shares. The company’s key personnel acquired a total of 50,000 of these during the financial period 1 February 2021–31 January 2022. At the end of the financial period 1 February 2021–31 January 2022, the company held 27,550 treasury shares.
				Because the key employees’ share purchases took place at fair value and at the same price as the share subscriptions of the company’s other shareholders, the schemes do not include a benefit pursuant to IFRS 2 and no expense has been recognised for them.
				The key employees’ shareholdings include an obligation to work. The Company has the right, but not an obligation, to redeem the shares at the lower of original subscription prices of the share issues or fair price specified in the shareholder agreement in case of resignations of the key employees. During the comparison period, the company exercised its redemption right and redeemed a total of 27,550 shares at a subscription price of EUR 1 per share from three key employees.
				Because HLRE Holding Oyj or its subsidiary have no contractual obligation or prior established practice to redeem shares from leavers, the arrangement is classified as an equity-settled arrangement under IFRS.
				A share-based retention scheme has also been realised with the key personnel of Vesivek Sverige AB so that three key persons at Vesivek Sverige AB have holdings in Vesivek Sverige AB.
				The shareholdings of Board members, the CEO and members of the management team in the Group’s parent company HLRE Holding Oyj on 31 January 2022 are presented in the following table:
				Management shareholdings
				The management held shares on 31 January 2022 as follows:
							31 January 2022		31 January 2021
				Management shareholdings			Shares	%	Shares	%
				CEO			5 547 826	33	5 547 826	33
				Other management team members			21 873		111 767	1

 

 

	HLRE Holding Group
	ASSETS AND LIABILITIES USED IN BUSINESS OPERATIONS
	This section provides information about the assets used in business operations and liabilities incurred due to the Group’s business operations.
	·         Goodwill and other intangible assets, including impairment testing
	·         Property, plant and equipment
	·         Trade and other receivables
	·         Trade and other payables
	9.    Goodwill and other intangible assets, including impairment testing
	The table below presents changes in goodwill and other intangible assets:
	1000 EUR	Development expenses	Intangible rights	Other intangible assets	Advance payments for intangible assets	Goodwill	Total
	Cost 1.2.2021	144	1 396	21	107	39 437	41 105
	Business combinations	0	0	0	0	867	867
	Additions	0	10	0	19	0	29
	Disposals	-54	0	0	0	0	-54
	Reclassifications	-4	4	0	0	0	0
	Cost 31.1.2022	85	1 410	21	126	40 304	41 946
	Cumulative amortisation and impairment 1.2.2021	-62	-799	-19		0	-879
	Cumulative amortisation on disposals and reclassifications	54	0	0		0	54
	Amortisation	-17	-139	-2		0	-159
	Cumulative amortisation and impairment 31.1.2022	-25	-939	-21		0	-985
	Carrying amount 1.2.2021	81	808	4	107	39 437	40 437
	Carrying amount 31.1.2022	60	471	0	126	40 304	40 961
	1000 EUR	Development expenses	Intangible rights	Other intangible assets	Advance payments for intangible assets	Goodwill	Total
	Cost 1.2.2020	75	1 359	21	148	39 437	41 040
	Additions	0	38	0	52	0	90
	Disposals	0	-4	0	-21	0	-25
	Reclassifications	69	4	0	-73	0	0
	Cost 31.1.2021	144	1 396	21	107	39 437	41 105
	Cumulative amortisation and impairment 1.2.2020	-57	-644	-12		0	-713
	Cumulative amortisation on disposals and reclassifications	0	2	0		0	0
	Amortisation	-5	-157	-5		0	-167
	Cumulative amortisation and impairment 31.1.2021	-62	-799	-17		0	-879
	Carrying amount 1.2.2020	17	716	10	148	39 437	40 327
	Carrying amount 31.1.2021	81	597	4	107	39 437	40 226
	Intangible rights and other intangible assets are comprised of information systems and patents, trademarks and design rights applied for by group companies. Of the goodwill on the consolidated balance sheet, the majority arose in conjunction with the acquisition of Hämeen Laaturemontti Oy in 2014, when a fund managed by Sentica Partners Oy acquired a majority holding in what was then Hämeen Laaturemontti Oy, the current Vesivek Oy. The goodwill increased when HLRE Group Oy acquired the shares in the Nesco Invest group of companies in 2016. In February 2021, in connection with the reorganisation of financing, the Group company Vesivek Oy acquired a 71.63% holding in Salaojakympit Oy, a company controlled by the company’s CEO. The company’s CEO acquired a holding of 71.63% in Salaojakympit Oy on 28 February 2020. In February 2021, Salaojakympit Oy was renamed to Vesivek Salaojat Oy. The acquisition generated goodwill of approximately EUR 0.9 million. Vesivek Salaojat Oy's business was merged into the roof and roof safety product business.
	Accounting principle
	Goodwill
	Goodwill arises from the acquisition of subsidiaries, and it corresponds to the amount by which the acquisition cost exceeds the Group’s share of the net fair value of the assets and liabilities of the acquisition. For impairment testing, goodwill is allocated to cash-generating units or groups of units which are expected to benefit from the acquisition of the businesses resulting in the goodwill. Goodwill is tested for impairment annually or more frequently, if events or changes in circumstances indicate any impairment. The book value of the cash-generating unit with goodwill is compared to the recoverable amount, which is the higher of value of use or fair value less costs of sale. Any impairment loss is firstly allocated to goodwill and secondarily to other assets proportionally. Goodwill impairment losses recognised through profit or loss are not reversed.
	Other intangible assets
	Other intangible assets are recognised on the balance sheet when the asset is in the Company’s control, it is expected to yield future economic benefit to the Company and the acquisition cost of the asset can be reliably determined. The intangible asset is initially recognised at cost, which includes the purchase price and any direct expenses incurred due to the asset. Intangible assets are reported on the balance sheet at cost less accumulated amortisation and impairment. Intangible assets are amortised using the straight-line method over the economic useful life of the asset. The appropriateness of the amortisation times the methods is assessed at each closing date.
	Research and development costs are recognised as expenses when internally developed intangible assets do not meet the criteria for capitalisation. An intangible asset resulting from development activities is capitalised when the product development project is likely to generate future economic benefits to the company and the products are estimated to be technically feasible and commercially viable.
	The economic useful lives of the Company’s intangible assets are as follows:
	In the HLRE Holding Group, information systems are amortised over 5 years and patents/trademarks over 10 years, while development expenses are amortised over 5 years.
	In April 2021, the IFRS Interpretations Committee (IFRIC) issued a final agenda decision on the accounting treatment of the costs of configuring and customising the systems implemented as cloud services (IAS 38 Intangible Assets). The Group has analysed the impact of the agenda decision on the accounting principles applicable to the expenditure on the introduction of the financial information system project implemented in the financial years 2021 and 2022. As a result of the analysis, based on the agenda decision, the Group recognises a total of EUR 307 thousand of previously capitalised expenditure on intangible assets as an expense, of which EUR 83 thousand for the financial year 2022 and EUR 224 thousand for the financial year 2021 retrospectively.
	Goodwill impairment testing
	Key discretionary decisions and estimates
	Key assumptions used in testing goodwill for impairment
	The management makes significant estimates and discretionary decisions in determining the level at which goodwill is tested and whether there are indications of the impairment of goodwill.
	According to the management’s view, the acquisition price exceeding the acquired net assets was paid for the business and business idea as a whole, and therefore it considers that the goodwill must be tested at the level of Vesivek Oy and Vesivek Salaojat Oy (roofing, roof safety and drainage product installations in Finland), which is a cash-generating unit in Finland, and at the level of the Nesco subgroup (manufacturing of rainwater management systems and roof safety products), which is managed as a separate operation and cash-generating entity.
	Determining the recoverable amount of a cash-generating unit is based on value in use calculations, which require the use of estimates. The calculations use cash flow projections based on budgets and estimates approved by the management for a five-year period. The cash flow projections are based on the Group’s actual results and the management’s best estimates of future sales, development of costs, general market conditions and applicable tax rates. The years after the projected period are extrapolated using a growth estimate of 2%. The estimated future net cash flows are discounted to their current value when estimating the recoverable amount based on the pre-tax weighted average cost of capital. The weighted average cost of capital illustrates the current market view of the time value of money and risks associated with the tested units
	The management tests the impacts of changes in significant assumptions by making sensitivity analyses as described below in this note. In these IFRS financial statements, goodwill is reported for the most recent closing date and the one preceding it, 31 January 2022 and 31 January 2021.
	The table below presents the allocation of goodwill to the Group’s cash-generating units: The acquisition of a majority holding in the company Salaojakympit Oy (renamed to Vesivek Salaojat Oy in February 2021) increased the goodwill of the cash-generating roofing, roof safety and underground drain installation unit by EUR 867 thousand:
	Thousands of euros			31.1.2022	31.1.2021
	Installation of roof and rainwater systems and underground drain renovations in Finland			35 434	34 567
	Production of rainwater systems and roof safety products			4 870	4 870
	The key assumptions used in the value in use calculations are as follows:
	2022			EBITDA in 5 years period of time, %	Long term EBITDA, %	Discount rate before taxes, %	Long term growth factor, %
	Installation of roof and rainwater systems and underground drain renovations in Finland			6,8	6	9,6	2,0
	Production of rainwater systems and roof safety products			14,7	14,5	9,6	2,0
	2021			EBITDA in 5 years period of time, %	Long term EBITDA, %	Discount rate before taxes, %	Long term growth factor, %
	Installation of roof and rainwater systems and underground drain renovations in Finland			8,8	10,0	9,6	2,0
	Production of rainwater systems and roof safety products			14,8	14,5	9,6	2,0
	The profitability (measured by EBITDA) of CGU2 producing rainwater systems and roof safety products is expected to remain roughly at the same level as in previous years over a period of 5 years, before declining slightly in the long term thereafter.
	With regard to CGU 1 installing roof and roof safety products, in the latest financial year 2022 calculations, 5-year profitability (measured by EBITDA) will decrease to 6.8% (8.8%) and long-term profitability to 6.0% (10.0%). With regard to CGU 1, the profitability levels of the calculations have been reduced in the latest calculation, reflecting the lower profitability levels achieved in the past few years.
	Sensitivity analysis
	No impairment loss was recognised for the reported financial years as a result of the tests for impairment. The recoverable amount exceeded the book value on 31 January 2022 by EUR 3 million with regard to roofing, roof safety and underground drain installations in Finland and by EUR 17 million with regard to the manufacturing of rainwater management systems and roof safety products (31 January 2021: by EUR 28 million with regard to roofing and roof safety product installations in Finland and by EUR 18 million with regard to the manufacturing of rainwater management systems and roof safety products).
	The management has prepared sensitivity analyses of the key factors, and based on the analyses, the recoverable amounts equal the book value if the assumptions change one by one:
				31.1.2022	31.1.2021
	Installation of roof and rainwater systems and undergound drain renovations in Finland
	Change in discount rate, percentage points			0,2 %	2,7 %
	Decrease in EBITDA, percentage points			-0,6 %	-3,2 %
	Production of rainwater systems and roof safety products
	Change in discount rate, percentage points			5,0 %	6,8 %
	Decrease in EBITDA, percentage points			-6,5 %	-7,7 %
	Possible and significant changes in the value of the key assumptions are as follows:
	1. The COVID-19 pandemic will be prolonged and the effects will be greater than predicted in the next financial year. In this case, the projected recovery of revenue and the return to profitability would be postponed. The effects would not be long-term.
	2. The recruitment of new staff will become more difficult and the turnover of existing staff will increase. Growth in revenue would slow down and costs could increase significantly if wages were to be raised. Wage increases would probably be at least partly passed on to prices, as the whole sector would be affected by the problems.
	3. Inflation raises costs without it being possible to pass them to prices in full. In this case, profitability could be lower than forecast for a longer period of time. The effect would be perhaps about 1–2 percentage points in the margins.

 

 

	HLRE Holding Group
	10.    Property, plant and equipment and leases
	1000 EUR	Land and water	Buildings and structures	Machinery and equipment	Other tangible assets	Advance payments and work in progress	Total
	Cost 1.2.2021	319	20 860	36 067	316	539	58 101
	Translation differences	0	-81	-163	0	0	-244
	Business combinations	0	0	2 087	0	0	2 087
	Additions	0	2 526	5 890	8	777	9 201
	Disposals	0	-984	-8 073	0	0	-9 057
	Reclassifications	0	0	1 119	0	-1 119	0
	Cost 31.1.2022	319	22 322	36 925	324	197	60 087
	Cumulative amortisation and impairment 1.2.2021	0	-10 569	-20 615	-286		-31 469
	Translation differences	0	46	75	0		121
	Cumulative amortisation on disposals and reclassifications	0	494	5 376	0		5 870
	Amortisation	0	-2 747	-4 651	-19		-7 418
	Impairment	0	-3	0	0		-3
	Cumulative amortisation and impairment 31.1.2022	0	-12 778	-19 816	-305		-32 899
	Carrying amount 1.2.221	319	10 292	15 452	30	539	26 632
	Carrying amount 31.1.2022	319	9 544	17 109	19	197	27 188
	1000 EUR	Land and water	Buildings and structures	Machinery and equipment	Other tangible assets	Advance payments and work in progress	Total
	Cost 1.2.2020	319	19 254	34 447	313	739	55 071
	Translation differences	0	89	193	0	0	282
	Additions	0	1 655	2 497	3	582	4 737
	Disposals	0	-137	-1 852	0	0	-1 989
	Reclassifications	0	0	781	0	-781	0
	Cost 31.1.2021	319	20 860	36 067	316	539	58 101
	Cumulative amortisation and impairment 1.2.2020	0	-7 923	-17 424	-263		-25 610
	Translation differences	0	-48	-74	0		-122
	Cumulative amortisation on disposals and reclassifications	0	94	1 601	0		1 695
	Amortisation	0	-2 692	-4 718	-23		-7 432
	Cumulative amortisation and impairment 31.1.2021	0	-10 569	-20 615	-286		-31 469
	Carrying amount 1.2.2020	319	11 331	17 023	50	739	29 461
	Carrying amount 31.1.2021	319	10 292	15 452	30	539	26 632
	Accounting principle
	Property, plant and equipment is initially recognised at original cost, which includes the purchase price and other direct costs of acquisition needed to bring the asset into operating condition and the place where it functions as intended. The assets are recognised on the balance sheet at cost less accumulated amortisation and impairment. Leased tangible assets are treated in the same way as purchased assets in accounting. Repair and maintenance costs are expensed as they are incurred
	Depreciation and amortisation is recognised using the straight-line method by allocating the cost to the estimated economic useful lives of the assets. The economic useful lives of assets are reviewed on each closing date and amended, as necessary.
	Depreciation and amortisation times by asset category:
	Buildings and structures	10-40 years
	Machinery and equipment	3-12 years
	Other tangible assets	5-10 years
	Capital gains and losses on the sale of property, plant and equipment are included in other operating income or expenses on the statement of comprehensive income.

 

 

	HLRE Holding Group
		Leases
		Right-of-use assets*			31.1.2022		31.1.2021
		Buildings			6 826		7 320
		Vehicles			5 902		4 082
					12 728		11 402
		* included in balance sheet item Property, plant and equipment
		Lease liabilities*			31.1.2022		31.1.2021
		Current lease liability			4 612		4 005
		Non-current lease liability			8 297		7 380
					12 909		11 385
		* included in balance sheet items current and non-current finance and lease liabilities

 

 

	HLRE Holding Group
	Changes in right-of-use assets during the financial year:
	1000 EUR	Buildings and structures, right-of-use	Machinery and equipment, right-of-use	Total
	Cost 1.2.2021	15 418	7 523	22 941
	Translation differences	-81	-81	-161
	Business combinations	0	1 923	1 923
	Additions	2 526	2 693	5 219
	Disposals	-984	-1 338	-2 322
	Cost 31.1.2022	16 880	10 720	27 599
	Cumulative amortisation and impairment 1.2.2021	-8 098	-3 441	-11 540
	Translation differences	46	40	87
	Cumulative amortisation on disposals and reclassifications	494	1 108	1 602
	Amortisation	-2 496	-2 524	-5 020
	Cumulative amortisation and impairment 31.1.2022	-10 054	-4 818	-14 872
	Carrying amount 1.2.2021	7 320	4 082	11 402
	Carrying amount 31.1.2022	6 826	5 902	12 728
	1000 EUR	Buildings and structures, right-of-use	Machinery and equipment, right-of-use	Total
	Cost 1.2.2020	13 840	7 076	20 916
	Translation differences	89	86	175
	Additions	1 626	1 719	3 345
	Disposals	-137	-1 358	-1 495
	Cost 31.1.2021	15 418	7 523	22 941
	Cumulative amortisation and impairment 1.2.2020	-5 707	-2 631	-8 338
	Translation differences	-48	-36	-84
	Cumulative amortisation on disposals and reclassifications	94	1 148	1 242
	Amortisation	-2 437	-1 923	-4 359
	Cumulative amortisation and impairment 31.1.2021	-8 098	-3 441	-11 540
	Carrying amount 1.2.2020	8 133	4 445	12 578
	Carrying amount 31.1.2021	7 320	4 082	11 402
	Included in profit and loss statement		1 February 2021–31 January 2022	1 February 2021–31 January 2022
	1000 eur
	Depreciation of right-of-use assets
	Buildings		-2 496	-2 437
	Vehicles		-2 524	-1 923
	Interest expense (included in finance cost)		-360	-418
	Expense relating to short-term leases (included in other expenses)		-489	-2 240
	Expense relating to  leases of low-value assets that are		-97	-79
	not short-term leases (included in other expenses)
	Cash outflow for lease agreements during the financial year 2022 totaled to EUR 6 388 (7 968) thousand.
	Non-current assets pledged as collateral
	Information about the Group’s non-current assets pledged as collateral is provided in note 15.
	Accounting principle
	The Group has leased diverse properties and vehicles. Leases on properties are usually made for a fixed term of 3 or 5 years, in which case the lease cannot be cancelled, including an option to extend the lease for a corresponding period of 3 or 5 years. The terms and conditions of the leases are negotiated on a case-by-case basis, and they involve various conditions. The lease agreements include no covenants, but the leased assets may not be used as collateral for loans. Leases on vehicles usually have a term of three years
	A right-of-use asset and corresponding lease liability are recognised for leases when the leased asset is available to the Group to use. The right-of-use asset is comprised of the amount of the lease liability at the original value and rents paid by the start of the lease less incentives received in associated with the lease, initial direct expenses and any restoration expenses. Paid rents are divided into liabilities and financial expenses. The financial expense is recognised through profit or loss over the lease term so that the interest rate of the remaining liability balance is the same for each period. The right-of-use asset is amortised using the straight-line method over the shorter of its economic useful life or lease term.
	Payments associated with short-term leases of leases of low-value assets are expensed in equal instalments. Leases with a maximum lease term of 12 months are considered to be short-term. Short-term leases primarily concern scaffolding and machines or lifting equipment used occasionally in production. Low-value assets are primarily comprised of office equipment.
	Key management judgements and estimates
	The duration of leases on business premises are annually measured at the management group level. The Group’s strategy is defined for a period of three years, and the management team estimates whether the leased business premises will be suitable for the Group’s use for the entire coming strategy period. With regard to leases valid until further notice, the property’s lease term in calculating lease liabilities is considered to be the strategy period of 3 years or any shorter period if moving out of the current premises before the end of the strategy period is considered to be necessary. Any extension periods of fixed-term leases based on options are only taken into account if using them involves economic benefits or if exercising the extension option is otherwise reasonably certain.
	In discounting the current value of rents, the interest rate used is the actual interest rate on additional credit using the Group’s overdraft facility.

 

 

	HLRE Holding Group
		11.    Inventories
		1000 EUR			1.2.2021-31.1.2022		1.2.2020-31.1.2021
		Raw materials and consumables			8 948		7 279
		Work in progress			2 707		774
		Finished goods			3 809		3 052
		Inventories			15 464		11 105
		Accounting principle
		Materials and supplies, work in progress and finished products are recognised at the lesser of cost or net realisable value. The cost of inventories includes all purchase costs, costs of production and other expenses incurred due to bringing the inventories to their current location and condition. Purchase costs include purchase price, import duties and other taxes, transport and handling costs and other expenses directly caused by the procurement of finished products, materials and services. The costs of production of inventories include direct expenses incurred due to materials and labour and appropriate share of variable and fixed overhead expenses, the latter of which are allocated based on normal operating capacity. The measurement of acquisition cost is based on the FIFO method.
		Key management judgements and estimates
		The measurement of inventories requires the management to make estimates and management judgements associated particularly with obsolescence and recognition of inventories at net realisable value based on expected selling prices, in addition to which the management estimates the general development of prices in the Company’s key markets. The net realisable value is the estimated actual selling price in ordinary business less estimated expenses required to complete the goods and realise the sale.
		12.    Trade and other receivables
		1000 EUR			1.2.2021-31.1.2022		1.2.2020-31.1.2021
		Trade receivables			7 213		6 824
		Other receivables			101		87
		Current prepayments and accrued income (from others)			2 284		2 583
					9 598		9 494
		The maturity of trade receivables and the principles for measuring impairment are disclosed in Note 17 Financial risk management.
		Accrued income is mainly comprised of advance payments of social security contributions and uninvoiced revenue recognitions pursuant to the percentage of completion of roofing renovations for housing companies in progress.
		The book values of current trade and other receivables are considered approximate to their fair values. This is due to their short-term nature.
		Accounting principle
		The receivables are amounts that the Group expects to receive from other parties. Trade receivables are generated by sales of goods and services in ordinary business operations. Trade and other receivables are initially measured at fair value pursuant to the invoice sent to the customer, after which they are measured at the amount considered to be received from the customer (amortised cost). After initial recognition, trade and other receivables are measured at amortised cost less impairment losses. A simplified model for trade receivables has been applied, as described in Note 17.
		13.    Other current liabilities
		1000 EUR			1.2.2021-31.1.2022		1.2.2020-31.1.2021
		Current advances received, interest- free			95		36
		Current trade payables, interest-free			7 453		5 122
		Current liabilities to others, interest-free			3 177		3 149
		Current accrued liabilities to others, interest-free			2 803		2 283
					13 528		10 590
		Accrued charges are primarily comprised of amortised personnel expenses, interest liabilities and allocated purchases.
		The book values of other current liabilities are considered to approximate to their fair values because the liabilities are short-term by nature.
		Accounting principle
		Trade payables are obligations to make a payment for goods or services procured from suppliers or service providers as part of ordinary business operations. Trade payables are initially measured at fair value and subsequently measured at amortised cost using the effective interest method.

 

 

	HLRE Holding Group
		14.    Net debt
		1000eur			31.1.2022		31.1.2021
		Non-current liabilities, interest-bearing			47 338		18 169
		Current interest-bearing liabilities			4 633		29 809
		Cash and cash equivalents			-5 201		-2 219
					46 770		45 760
		Net debt reconciliation
			Cash and cash equivalents	Lease liability within one year	Lease liability after one year	Loan repayments within one year	Loan repayments after one year	Total
		Net debt 1.2.2021	2 219	-4 005	-7 380	-25 805	-10 789	-45 760
		Cash flow	2 982	4 900		25 812	-29 074	4 620
		Increase		-1 105	-4 097			-5 202
		Exchange rate adjustments		55			1 086	1 141
		Business combinations		-488	-1 434	-11		-1 933
		Other changes		-3 985	4 614	-2	-264	363
		Net debt 31.1.2021	5 201	-4 628	-8 297	-6	-39 041	-46 771
			Cash and cash equivalents	Lease liability within one year	Lease liability after one year	Loan repayments within one year	Loan repayments after one year	Total
		Net debt 1.2.2021	5711	-3908	-8 529	-4 616	-36 582	-47 924
		Cash flow	-3492	4003		4 646		5 157
		Increase		-548	-2 683			-3 231
		Exchange rate adjustments		-83				-83
		Other changes		-3469	3 832	-25 835	25 793	321
		Net debt 31.1.2021	2 219	-4 005	-7 380	-25 805	-10 789	-45 760
		15.    Loans and financial assets
		1000eur			31.1.2022		31.1.2021
		Non-current loans from financial institutions			28 000		0
		Non-current capital loan liabilities			250		0
		Non-current trade payables, interest-bearing			2		0
		Non-current loans from related parties			10 789		10 789
		Non-current lease liability			8 297		7 380
		Capitalised interests			3 858		3 276
		Non-current liabilities, interest-bearing			51 197		21 445
		Current loans from financial institutions			6		25 805
		Current trade payables, interest-bearing			15		0
		Current lease liability			4 612		4 005
		Current interest-bearing liabilities			4 633		29 809
		Loans from financial institutions and other financing
		The liabilities associated with the secured EUR 46,000,000 loan agreed by the Company with Danske Bank A/S Finland Branch on 22 February 2016 were repaid in full in conjunction with the reorganisation of financing on 12 February 2021. At the same time, the Company redeemed the equipment concerned by the leaseback agreement with Danske Finance Oy in full at the residual value according to the leaseback agreement.
		In connection with the reorganisation of financing, the Group’s parent company HLRE Holding Oy (renamed to HLRE Holding Oyj in February 2021) issued a secured three-year SEK 300 million bond that includes an option of increasing the total loan by a maximum total of SEK 100 million to a maximum total of SEK 400 million in one or more tranches. The issuance of additional loans requires that the Group’s ratio of net debt to adjusted EBITDA does not exceed 3.00/2.75/2.50 one/two/three years after the original issue of the bond.
		The bond is an amortisation-free bullet loan, and it includes a leverage covenant, according to which the Group’s ratio of net debt to adjusted IFRS EBITDA must not exceed 5.0/4.5/4.0 one/two/three years after the issue of the bond. The Company met the terms and conditions of the financing covenant at the time of signing the financial statements. The interest rate on the bond is variable 3-month STIBOR + 6.60%, with the reference interest rate limited to 0.00%. The bond has been listed on the Open Market segment of the Frankfurt Stock Exchange since February 2021 and on the Stockholm Stock Exchange regulated corporate bond list as of 8 February 2022.
		In addition to the issue of the bond, the Company agreed on a secured EUR 2,000,000 overdraft facility with Danske Bank A/S Finland Branch on 12 February 2021. The overdraft facility involves a leverage financial covenant similar to the terms and conditions of the bond, according to which the Group’s ratio of net debt to adjusted IFRS EBITDA must not exceed 5.0/4.5/4.0 one/two/three years after the issue of the bond. The Company met the terms and conditions of the financing covenant at the time of signing the financial statements.
		The following shares have been pledged as collateral for the bond and overdraft facility: HLRE Group Oy, Vesivek Oy, Vesivek Sverige AB and Nesco Oy. Furthermore, the following internal loans have been pledged as collateral for the bond agreement:
		Loan granted by HLRE Holding Oyj to HLRE Group Oy totalling EUR 11,996,333
		Loan granted by HLRE Holding Oyj to Vesivek Oy totalling EUR 1,442,609
		Loan granted by HLRE Holding Oyj to Nesco Invest Oy totalling EUR 8,446.71
		Loan granted by HLRE Holding Oyj to Nesco Oy totalling EUR 4,510,442
		The following business mortgages have been confirmed and pledged as collateral for the bond and overdraft facility:
		HLRE Group Oy		EUR 57,200,000
		Vesivek Oy		EUR 57,200,000
		Nesco Invest Oy		EUR 57,200,000
		Nesco Oy		EUR 57,200,000
		Vesivek Sverige AB		SEK 20,000,000
		The following real estate mortgages have been pledged as collateral for the bond and overdraft facility:
		Nesco Oy Orimattila production plant		EUR 13,673,200
		Vesivek Oy industrial hall in Lieto		EUR 46,800,000
		Shareholder loan
		The Group has shareholder loans from the parent company’s shareholders. At the end of the financial year 2022, the amount of shareholder loans was EUR 10.8 million. The interest accrued on the loans totalled EUR 3.9 million pursuant to the coupon rate of 6.00% p.a. The terms and conditions of the shareholder loan were renegotiated already during the financial year so that interest will be paid together with the principal at the latest when the bond issued during the financial year falls due. Therefore, the interest is classified as part of non-current liabilities.
		The shareholder loans are subordinated to the bond, bank loans and other loans with regard to repayment and interest. The shareholder loans have no collateral.
		Accounting principle
		The Group’s financial liabilities are classified as financial liabilities at amortised cost or financial liabilities at fair value through profit or loss. A financial liability is presented as current unless the Group has an unconditional right to defer the settlement of the liability for at least 12 months after the balance sheet date. The financial liability is derecognised when the liability has ceased to exist, i.e. when the obligation specified in the agreement has been fulfilled or revoked or its validity has expired.
		The loans taken out by the Group are classified as financial liabilities measured at amortised cost. They are initially measured at fair value less transaction costs. After initial recognition, the loans are measured at amortised cost using the effective interest method. The book value of bank loans is considered to be equal to their fair value because the interest level is considered to match the market interest level.
		Financial assets
		EUR1000			31.1.2022		31.1.2021
		Non-Current
		Other non-current financial assets			48		48
		Loan receivables			7		9
					56		58
		Current
		Loan receivables			63		625
		Cash and cash equivalents			5 201		2 219
					5 265		2 844
		Loan receivables are comprised of loans granted by the Company to its employees, loan granted to the Group’s CEO and loans granted to Vesivek Salaojat Oy (formerly Salaojakympit Oy). Loan receivables are measured at amortised cost. Related party loans are described in more detail in note 22.
		Other investments include the company’s investments in other companies (both listed and unlisted shares).
		Accounting principle
		The Group’s financial assets are classified into the following categories: financial assets at amortised cost and financial assets at fair value through profit or loss. The classification of financial assets is based on their cash flow properties and business models used for their management, and recognised on the value date.
		Loan receivables are measured at amortised cost using the effective interest method. The expected credit losses of these items are estimated on a case by case basis. Losses are recognised in expected credit losses over 12 months or expected credit losses over the entire life, based on whether the credit risk has significantly increased.
		Trade and other receivables are described in more detail in note 12, and they are measured at amortised cost. The associated credit risk and impairment matrix used in determining credit losses are described in note 17.
		Investments are measured at fair value. Realised and unrealised changes in fair value are recognised in financial income and expenses.
		Cash and cash equivalents are comprised of cash and demand deposits.
		Derivative instruments
		With regard to the currency hedging of the SEK 300 million bond, the Group’s Board of Directors approved the currency hedging proposed by Nordea Finland Branch to the Audit Committee at its meeting on 24 September 2021. This is a loss-limited forward contract. The company hedged SEK 200 million of the SEK 300 million bond, with the hedging rate of 10.16 while the bond was issued at a rate of 10.13. The structure consists of a synthetic forward (bought and sold option at the same rate) and a bought option. The structure is zero-cost in that the hedge did not have a cash impact at the time of its conclusion.
		The fair value of the SEK 200 million currency hedge was EUR -484.3 thousand on 31 January 2022.
		Accounting principle
		All derivate instruments are classified as financial assets and liabilities measured at fair value through profit or loss. Derivatives are measured at fair value. Both realised and unrealised gains and losses from the measurement of derivatives at fair value are recognised in financial income and expenses in the statement of comprehensive income. Hedge accounting is not applied to derivatives.
		Measurement of fair value
		Financial instruments measured at fair value are classified in accordance with the following fair value hierarchy: instruments for which there is a publicly quoted price in an active market (level 1), instruments for which there is another observable direct or indirect price than a quoted price pursuant to level 1 (level 2) and instruments for which there is no observable market price (level 3). These instruments measured at fair value include financial assets and liabilities measured at fair value through profit or loss.
		The price of listed shares is based on their quoted price (Level 1) and of unlisted shares on the measurement method (Level 3). The price of derivatives is based on discounted cash flows and is included in Level 2 of the fair value hierarchy.

 

 

	HLRE Holding Group
		16.    Finance income and costs
		Unrealised gain at fair value, derivatives			34		109
		Interest income			10		28
		Foreign exchange gain			1 101		208
		Other finance income			2		0
	Finance income	Finance income			1 146		345
		Interest on borrowings from others			-2 923		-1 746
		Interest expenses on lease			-360		-418
		Unrealised loss from a change in the fair value of financial assets and liabilities			-484		0
		Foreign exchange loss			-123		-130
		Other financial cost			-258		-142
	Finance cost	Finance cost			-4 148		-2 436
		Finance income and cost			-3 003		-2 091
		Accounting principle
		Financial expenses are comprised of interest expenses on bank loans, overdraft facilities and other loans and lease liabilities, exchange rate differences in financial activities and realised and unrealised changes in the values of currency and interest rate derivatives.
		Loan-related transaction expenses are expensed to the income statement using the effective interest method. The effective interest is the interest rate using which the estimated payments during the loan period lare discounted to the net book value of the financial liability. The calculation takes into account all fees and transaction expenses paid by the contracting parties.
		Interest income is recognised using the effective interest method. If a loan receivable has become credit on account of a credit event, the effective interest rate is applied to the net carrying amount of the financial asset (after deduction of the loss allowance). Foreign exchange gains and losses from financing activities are reported in financial income or expenses.

 

 

	HLRE Holding Group
		17.    Management of financial risks
		The Group has a risk management policy approved by the Board of Directors and management team that is monitored by the Board of Directors and its Audit Committee. The risk management process aims to identify and assess the risks, after which measures are planned and implemented. The measures can include avoiding the risk, mitigating it by different means, transferring the risk through insurance policies or contractually, or taking the risk in a managed and conscious manner. The Company’s Board of Directors and its Audit Committee review the most significant risks and related measures annually in conjunction with the strategy process.
		The management of the HLRE Holding Group’s financial risks is seen to by the Group’s treasury functions in co-operation with the persons responsible for purchasing and other business functions. The Group’s treasury function is comprised of the CEO, CFO and financial and accounting manager, and it has operated in accordance with instructions given by the Board of Directors and Audit Committee. The operational management of the Group’s treasury functions is centralised with the Group’s financial administration. The purpose of the treasury function is to ensure that the Company has adequate funds for engaging in business activities at all times without restrictions and minimise financing costs.
		The treasury function of the HLRE Holding Group is responsible for the monitoring and operational management of the Group’s treasury functions and general financial position associated with financing, including each subsidiary’s financial risk exposures. The management of each subsidiary is responsible for managing their respective treasuries in accordance with the instructions laid down in the financial policy. Ultimately, the Board of Directors of HLRE Holding Oy also co-ordinates financial matters pursuant to the financial policy.
		Liquidity risk
		The Group’s business operations have been developed into year-round operations in recent years. However, it is not possible to completely get rid of the seasonality of the business, which can cause short-term liquidity risks. The treasury function controls the Group’s liquidity risk by foreseeing the Group’s need for financing and thereby aims to ensure the flexibility, availability and temporal balance of financing. At the same time, adequate unused overdraft facilities are continuously maintained to avoid the Group from breaching any withdrawal limits or covenants associated with its overdraft facility.
		The liquidity reserve is comprised of the Group’s cash and cash equivalents and unused overdraft facilities. The financial administration of the HLRE Holding Group manages the Group’s liquidity instruments.
		The cash and cash equivalents of the HLRE Holding Group totalled EUR 5,201 thousand on 31 January 2022 (31 January 2021: EUR 2,219 thousand). Furthermore, the HLRE Holding Group had binding overdraft facilities on 31 January 2022 with a total unused credit of EUR 2,000 thousand. The overdraft facilities are continuously available.
		On 12 February 2021, the company issued a SEK 300 million 3-year, floating rate, secured non-amortising bond. The Company repaid the bank loans agreed with Danske Bank A/S Finland Branch together with interest and expenses and redeemed the equipment included in the leaseback agreement signed with Danske Finance Oy in 2019 with the funds borrowed with the bond. The bond will be repaid in one instalment on its date of maturity. The amortisation-free loan makes it easier to manage the liquidity of seasonal business compared to a regularly amortised loan, because instalments are not paid; only the interest specified in the bond is paid on a quarterly basis. In addition, the Company agreed on a secured EUR 2,000,000 overdraft facility with Danske Bank A/S Finland Branch on 12 February 2021, replacing the previous EUR 5,000,000 overdraft facility. The bond and overdraft facility involve financial covenants, which are described in note 15. Additional information about the bond and overdraft facility is provided in note 15.
		The management monitors the covenants and reports on them to the creditor on a quarterly basis. A breach of the covenants can result in increased financial expenses or the calling-in of the bank loans and overdraft facilities.
		The tables below present the Group’s financial liabilities broken down into categories based on the remaining contractual maturities. The loans include both interest-bearing loans and the overdraft facility:
		Maturities of contracts of financial liabilities 31 January 2022
		1000 EUR	No more than 12 months	Over 1 year and no more than 2 years	Over 2 years and no more than 5 years	Over 5 years	Total	Book value
		Trade payables	7 468	2			7 470	7 470
		Lease liabilities	4 887	4 330	3 898	323	13 438	12 909
		Bonds	1 888	1 888	29 077		32 853	28 000
		Shareholder loans			15 964		15 964	14 648
		Derivatives					0	484
		Maturities of contracts of financial liabilities 31 January 2021
		1000 EUR	No more than 12 months	Over 1 year and no more than 2 years	Over 2 years and no more than 5 years	Over 5 years	Total	Book value
		Trade payables	5 122				5 122	5 122
		Lease liabilities	4 237	3 522	3 862	177	11 798	11 385
		Loans from financial instritutions	25 391	797			26 187	25 805
		Shareholder loans			16 067		16 067	14 065
				31 Jan 2022		31 Jan 2021
		1000 EUR	Fair value hierarchy level	Carrying amount	Fair value	Carrying amount	Fair value
		Financial liabilities
		Loans from financial institutions	2			25 805	25 805
		Bonds	2	28 000	28 359
		Shareholder loans	2	14 648	14 189	14 065	13 490
		Derivatives	2	484	484
		Credit risk and counterparty risk
		Cash and cash equivalents as well as unpaid receivables from customers involve credit risk. The credit risk associated with cash and cash equivalents is minor because the counterparties are banks with high credit ratings from international rating agencies.
		The Group’s credit loss policy defines the creditworthiness requirements for customers. The Group only grants credit to companies with appropriate credit ratings, and consumer customers in Finland are primarily directed to use the Laatutili service.
		Vesivek Oy and Vesivek Salaojat Oy offer their consumer customers the Laatutili facility granted by the OP bank. Laatutili is a renovation loan. Using a Laatutili loan, the customer can pay for the roofing or drainage renovation in a single interest-free and expense-free instalment with a term of payment of 30 days or over a longer repayment period as separately agreed monthly instalments. The loan is granted by OP cooperative banks, and after payment is received from the bank, the Company no longer has interest in the receivable. The bank only grants a Laatutili loan if the customer’s credit rating is in order.
		With regard to trade receivables and contractual assets, a simplified model in which the estimated amount of credit losses is based on the expected credit losses over the life of the receivables is used. Examples of events leading to impairment include severe financial problems of the debtor, the debtor’s probable bankruptcy or other financial arrangement.
		The HLRE Holding Group applies a simplified procedure for recognising an impairment concerning expected credit losses, according to which impairment is based on lifetime expected credit losses for all trade receivables. For determining the expected credit losses, trade receivables are grouped based on shared credit risk charasteristics past due status. The impairment concerning the loss on 31 January is determined as a combination of a statistical model and case-specific analysis. Receivables from financing companies (Laatutili from OP Bank, Santander) is deducted from the balance of trade receivables in the calculation because the associated credit risk is insignificant.
		31.1.2022            1000 eur	Not due	Up to 30 days	31 to 60 days	61 to 90 days	91 to 120 days	Over 120 days	Total
		Expected loss rate	0,26 %	1,85 %	4,09 %	20,00 %	40,00 %	70,00 %
		Gross carrying amount	5 628	367	68	53	74	211	6 401
		Loss allowance provision, VAT 0%	12	5	2	9	24	119	171
		31.1.2021            1000 eur	Not due	Up to 30 days	31 to 60 days	61 to 90 days	91 to 120 days	Over 120 days	Total
		Expected loss rate	0,07 %	0,76 %	1,40 %	20,00 %	40,00 %	70,00 %
		Gross carrying amount	6 236	430	316	44	86	70	7 181
		Loss allowance provision, VAT 0%	4	3	4	7	28	39	84
		Credit losses, 1000eur			2022	2021
		At 1 February			84	140
		Increase in loss allowance recognised in profit or loss during the period			408	8
		Receivables written off during the period as uncollectible			-321	-66
		At 31 January			171	82
		Key management judgements and estimates
		The management has applied judgement and made assumptions in assessing whether the value of overdue receivables has been impaired. In its estimates, the management has aimed to also take macroeconomic factors into consideration, including the impacts of COVID-19.
		Market risk – interest rates
		Interest rate risk is defined as an uncertainty associated with the result of the HLRE Group caused by fluctuation in interest rates. Therefore, HLRE’s exposure to interest rate risk is due to its interest-bearing loans, which are variable-rate (with the exception of lease liabilities). The goal pursuant to the financial policy is to minimise the impact of changes in interest rates on the Group's annual result and financial position while aiming to optimise net financing within the defined risk limits.
		The SEK 300 million 3-year, non-amortising bond issued by the company in February is a floating-rate bond. By the time of signing the financial statements, future interest payments were not hedged.
		Foreign exchange risk
		The Group engages in business activities in Finland and Sweden. The Group is exposed to SEK-related transaction and translation risk. The transaction risk associated with the Swedish subsidiary is primarily comprised of trade receivables and payables emerging in its operational business activities. Translation risk arises when the parent company’s investments in the Swedish subsidiary are converted into euros.
		In February 2021, the company issued a SEK 300 million 3-year, non-amortising bond. The company has hedged SEK 200 million of this bond. The currency derivative contract was entered into in autumn 2021 and it is valid until the end of the maturity of the loan. The Group aims to finance a significant part of the unhedged portion of the bond, SEK 100 million, during the maturity period with SEK-denominated positive cash flow from Vesivek Sverige AB and a positive cash flow from the roofing installation business carried out by the Oulu Tornio office in northern Sweden.
		Transaction risk
		Transaction risk emerges from the commercial transactions and payments of the subsidiaries denominated in currencies other than the unit’s operating currency and when the associated incoming and outgoing cash flows differ in terms of amounts or timing.
		The Swedish subsidiary purchases the goods associated with installation activities to a significant extent in euros, internally profile production steel sheets, rainwater management systems, externally timber and other supplies included in the concept. During the financial year ended 31 January 2022, approximately EUR 3.5 million of the Swedish subsidiary’s purchases of approximately EUR 5.4 million were made in euros.
		The SEK-denominated trade payables and other current liabilities in the financial statements amounted to SEK 29 million (SEK 24 million), trade and other current receivables to SEK 29 million (SEK 25 million) and cash and cash equivalents to SEK 9.3 million (SEK 0.0 million). Had the SEK/EUR exchange rate been 10% weaker during the financial year, the profit for the financial year would have been EUR 0.4 million lower (EUR 0.3 million lower).
		Vesivek Oy’s Oulu unit sells and installs roofing and rainwater management systems to Northern Sweden, and the said sales/receivables are denominated in SEK. Vesivek Oy also has a SEK-denominated bank account. The other Group companies do not have significant external purchases, sales, receivables or liabilities in currencies other than the operating currency in each country
		1000 eur
		Foreign exchange gain and loss		1 February 2021–31 January 2022		1 February 2020–31 January 2021
		Foreign exchange gain, realized			1 103		209
		Foreign exchange loss, realized			-180		-121
					923		88
		Translation risk
		Translation risk covers the effects caused by the conversion of the Swedish subsidiary’s figures into EUR-denominated figures for consolidation purposes. Sweden accounted for approximately 15 per cent of the Group’s business operations for the most recent financial year. Approximately 85–90% of the Group's foreign exchange flows are in euro, which is the home currency of all subsidiaries and businesses, except for the Swedish subsidiary Vesivek Oy and Tornio unit’s installation operations in northern Sweden.
		Commodity risk
		The COVID-19 pandemic has increased the risk relating to the availability and delivery times of commodities, mainly steel. This has been managed by forecasting future purchase needs with suppliers and increasing the Group’s inventories of certain critical products. With regard to steel, price risk has been managed by fixing purchase prices quarterly for the next 3 months, and a mention of an increase in selling prices due to increases in raw material costs has been added to the Group’s sales agreements
		The HLRE Holding Group did not have commodity derivatives during the financial year.

 

 

	HLRE Holding Group
		18.    Shareholders' equity
		Shareholders:
		Sentica Buyout IV -funds	8 783 695		52,8 %
		Kimmo Riihimäki	5 497 826		33,1 %
		Other key persons	2 045 507		12,3 %
		Other shareholders	272 145		1,6 %
		Own shares	27 550		0,2 %
			16 626 723		100 %
		The total number of shares in HLRE Holding Oy did not change during the financial year 1 February 2021–31 January 2022.
		Share capital
		The share capital is comprised of ordinary shares. The parent company has one series of shares, and all shares confer equal rights to dividends. Each share confers one vote at a general meeting. All shares issued by the parent company have been paid in full. The shares have no nominal value.
		At its meeting on 14 April 2021, the Annual General Meeting decided, in accordance with the proposal of the Board of Directors, to increase the share capital from EUR 2,500 to EUR 80,000 by way of a reserve from the invested non-restricted equity reserve.
		Reserve for invested unrestricted equity
		In accordance with the Finnish Limited Liability Companies Act, the subscription price for new shares is recognised in share capital, unless the decision on the share issue orders it to be recognised in full or part in the reserve for invested unrestricted equity. The invested non-restricted equity reserve can also be accumulated without a share issue.
		The increase in share capital decided by the Company at its Annual General Meeting on 14 April 2021 was implemented as reserve increase of EUR 77,500 from the reserve for invested non-restricted equity reserve.
		Dividends
		The Board of Directors’ proposal to the general meeting is that no dividends be distributed for the financial year. No dividends were distributed for the comparison period.
		Translation differences
		Translation differences resulting from the translation of the financial statements of a foreign subsidiary are recognised in other comprehensive income and accumulated in the separate shareholders’ equity reserve as described in note 20. The accumulated amount is recognised through profit or loss when the net investment is divested.
		Accounting principle
		The Group’s shareholders’ equity is comprised of share capital, invested non-restricted equity reserve, translation difference sand retained earnings. Changes in treasury shares are recognised in retained earnings. Expenses incurred directly due to the issue of new shares are reported less taxes in shareholders’ equity as a decrease in income from share issue.
		19.    Capital risk management
		The Group monitors the shareholders’ equity and net debt on the consolidated balance sheet. Net debt is calculated by deducting cash and cash equivalents from current and non-current interest-bearing liabilities, as calculated in note 14. The Group aims to grow further both in Finland and internationally in the next couple of years and maintain a flexible capital structure, which makes it possible to implement the growth strategy. The investments required by growth and seasonal fluctuations in business and thereby changes in liquidity and net working capital require flexible financing solutions and active liquidity management.
		After the end of the financial year, the Company issued a three-year secured non-amortising bond of SEK 300 million on 12 February 2021. In addition, the Company agreed on a secured EUR 2,000,000 overdraft facility with Danske Bank. Additional information about the bond and overdraft facility is provided in note 15.
		The most important monitored external capital indicator is the ratio of interest-bearing net debt to rolling 12-month EBITDA (leverage).  According to the leverage financial covenant, the Group’s ratio of net debt to adjusted IFRS EBITDA must not exceed 5.0/4.5/4.0 one/two/three years after the issue of the bond. The Company met the terms and conditions of the financing covenant at the time of signing the financial statements.

 

 

	HLRE Holding Group
		OTHER NOTES
		This section includes information that the Group has to disclose to comply with the financial standards but are not considered to be significant from the point of view of understanding the Group’s financial position and result:
		·         Group structure and preparation of the consolidated financial statements
		·         Taxes
		·         Related party transactions
		·         Commitments and contingent liabilities
		·         New reporting standards and reporting standards that will enter into force at a later date
		·         Events after the reporting date
		20.    Group structure
		Name of entity	Place of business	Ownership interest held by the group % 31.1.2022	Ownership interest held by the group % 31.1.2021	Principal activities
		HLRE Group Oy	PIrkkala	100	100	Administration and financial services
		Vesivek Oy	Pirkkala	100	100	Roof renovations
		Vesivek Sverige AB	Ruotsi	91	91	Roof renovations
		Nesco Invest Oy	Orimattila	100	100	Other technical services
		Nesco Oy	Orimattila	100	100	Manufacture of rainwater management systems and roof safety products
		Tuusulan Peltikeskus Oy	Tuusula	100	100	Sheet metal work
		Vesivek Salaojat Oy	Pirkkala	72		Drainage renovations
		The share capital of the subsidiaries is exclusively comprised of ordinary shares held by the Group, and the holding corresponds with the voting rights held by the Group. The companies’ country of registration is also their primary operating country.
		In February 2021, in connection with the reorganisation of financing, the group company Vesivek Oy acquired a 71.63% holding in Salaojakympit Oy, a company controlled by the Group’s CEO. The Group’s CEO acquired a holding of 71.63% in Salaojakympit Oy on 28 February 2020. On 1 April 2021, Salaojakympit Oy was renamed to Vesivek Salaojat Oy. Vesivek Salaojat Oy is a company engaged in installing underdrains, and the regions of Ostrobothnia, Vaasa region, Central Ostrobothnia, Central Finland, Pirkanmaa, Kuopio and Uusimaa generate a significant share of its revenue. Salaojat operates in the same property as Vesivek Oy, under the same management of the area and unit.
		Fair values of acquired assets and liabilities assumed at time of acquisition:
		1000 EUR			Fair values recognised upon consolidation
		Cash and cash equivalents			206
		Trade and other receivables			1 292
		Inventories			123
		Rakennukset ja rakennelmat			0
		Machinery and equipment			2 087
		Deferred tax receivable			215
		Aineettomat oikeudet			0
		Total assets			3 922
		Trade and other payables			-1 997
		Current interest-bearing liabilities			-499
		Non-current interest-bearing liabilities			-2 069
		Total liabilities			-4 565
		Acquired net assets			-643
		Non-controlling interests			-179
		Goodwill arising from acquisition			867
		The Group recognises the non-controlling interests in the acquired entity as a proportion of the non-controlling interests in the identifiable assets of the acquired entity. The non-controlling interests' relative share of the net identifiable assets of the acquired entity was EUR -182.3 thousand.
		Cash flow impact of acquisition:
		Paid in cash			406
		Cash and cash equivalents of the acquired company			-206
		Cash flow impact			200
		Accounting principle
		Subsidiaries are consolidated into the consolidated financial statements in full starting from the time of acquisition, which is the date on which HLRE obtains control, and consolidation continues until control ceases to exist. HLRE has control if it is exposed or entitled to variable income by being a party to the investment and can influence this income by exercising its power over the investment.
		HLRE uses the acquisition method in consolidating business operations. Intra-Group transactions, balances and unrealised gains from transactions between Group companies are eliminated. Also unrealised losses are eliminated, unless the transaction provides evidence of impairment of the value of the transferred asset.
		Subsidiaries’ results and shareholders’ equity attributable to non-controlling interests are reported as a separate income in the consolidated income statement, statement of comprehensive income, statement of changes in equity and balance sheet.
		Transactions realised with non-controlling interests which do not lead to losing control are treated as transactions with owners. A change in holding leads to an adjustment of the book values of the holdings of the Group and non-controlling interests. The difference between the adjustment of non-controlling interests and consideration paid or received is recognised in a separate reserve under shareholders’ equity attributable to owners.

 

 

	HLRE Holding Group
		21.    Taxes
		1000 EUR			31.1.2022		31.1.2021
		Tax on income from operations			-738		-234
		Tax for previous accounting periods			-4		-14
		Deferred taxes			79		-122
		Income tax			-663		-370
		The reconciliation of the tax expense entered in the consolidated income statement and taxes calculated using the Finnish tax rate (20% for all financial years) is as follows:
		1000 eur			1.2.2021-31.1.2022		1.2.2020-31.1.2021
		Accounting profit before taxes			1 353		530
		Tax calculated at the parent company’s tax rate of 20%			-271		-106
		Effect of different tax rates in foreign subsidiaries			-4		-9
		Tax-free income included in the accounting profit			4		1
		Non-deductible expenses included in the accounting profit			-391		-176
		Tax for previous accounting periods			-4		-14
		Losses for which no deferred tax asset is recognised			1		-66
		Tax expense on profit and loss statement			-663		-370

 

 

	HLRE Holding Group
	18. Shareholders' equity
	1000 EUR	1.2.2021	Translation differences +/-	Changes through income statement	Recorded directly into equity	Changes through business arrangements	31.1.2022
	Deferred tax asset
	Inventories, internal margin	177	-1	19	0	0	195
	Provision for credit losses	17	0	17	0	0	34
	Unused tax loss	0	0	-10	0	179	169
	Other items	144	0	111	43	36	333
	Total	337	-1	138	43	215	731
	1000 EUR	1.2.2021	Translation differences +/-	Changes through income statement	Recorded directly into equity	Changes through business arrangements	31.1.2022
	Deferred tax liability
	Property, plant and equipment	482,0	-5,0	124,0	0,0	0,0	601,0
	Other items	241,0	0,0	-65,0	0,0	0,0	176,0
	Total	723,0	-5,0	59,0	0,0	0,0	777,0
	Deferred tax on balance sheet
	Deferred tax asset						169
	Deferred tax liability						216
	Net deferred tax liability						47
	1000 EUR	1.2.2020	Translation differences +/-	Changes through income statement	Recorded directly into equity	Changes through business arrangements	31.1.2021
	Deferred tax asset
	Inventories, internal margin	197	1	-22	0	0	177
	Provision for credit losses	28	0	-11	0	0	17
	Other items	144	0	0	0	0	144
	Total	369	1	-33	0	0	337
	1000 EUR	1.2.2020	Translation differences +/-	Changes through income statement	Recorded directly into equity	Changes through business arrangements	31.1.2021
	Deferred tax liability
	Property, plant and equipment	389	0	93	0	0	482
	Other items	245	0	-4	0	0	241
	Total	634	0	89	0	0	723
	Deferred tax on balance sheet
	Deferred tax asset						7
	Deferred tax liability						395
	Net deferred tax liability						388
	On 31 January 2022, the Group had confirmed tax losses carried forward of EUR 1,378,097.32 for which no deferred tax assets have been recognised because the Group is not likely to accumulate taxable income against which the losses could be utilised. These losses will expire in 2025.
	On 31 January 2022, the Group had related party interest carry forward of EUR 4,131,172 for which no deferred tax assets have been recognised because the Group is not, for the time being, considered to be likely that such carry forward will be utilised
	Accounting principle
	The income taxes for the financial year include taxes based on the taxable income for the period and deferred taxes. The taxes based on the taxable income for the period concern the financial year under review and they are based on tax rates prescribed or practically enacted by the closing date. The calculation of taxes based on the taxable income for the period is based on valid tax regulations in the countries in which the Company operates and accrues taxable income. The tax based on the taxable income for the period also includes adjustments concerning previous periods.
	Deferred taxes are measured based on the tax rates (and legislation) prescribed or practically enabled by the closing date and which are expected to be applied when the deferred tax asset in question is realised or the deferred tax liability is paid
	A deferred tax liability is recognised in full for all taxable temporary differences, unless the Group can order the time of cancellation of the temporary difference and the temporary difference is not likely to be cancelled in the foreseeable future. Deferred tax assets are recognised for tax-deductible temporary differences only to the amount that it is probable that the temporary difference will be cancelled in the future and there is taxable income available against which the temporary difference can be utilised.
	Deferred tax assets and liabilities are offset against each other when the Group has a legally enforceable right to offset the tax assets and liabilities based on the taxable income for the period and when the deferred tax assets and liabilities are connected to income taxes charged by the same taxation authority from the same taxable entity or different taxable entities when the asset and liability are to be realised on a net basis.

 

 

	HLRE Holding Group
		22.    Related party transactions
		The related parties of the HLRE Holding Group include the Group’s parent company and subsidiaries. The related parties also include members of the Board of Directors and Group management team, any deputy members and secretary, the CEO and any Deputy CEO, their family members and their controlled entities.
		Related party transactions are treated in accordance with the related party guideline approved by the Board of Directors of HLRE Holding Oyj. The Company’s Board of Directors always decides on significant transactions with HLRE Holding Oyj and its related parties.
		The subsidiaries are described in note 20 Group structure and remuneration of the management is disclosed in note 8 Information about key managers.
		The following transactions have been realised with related parties:
		1000 eur
		With entities controlled by key management			31.1.2022		31.1.2021
		Sales of goods and services			52		86
		Purchases of goods and services			190		287
		Repayment of lease liability			1289		1167
		Interest expense on lease liability			76		91
		Trade receivables			0		328
		Interest receivables			0		12
		Trade payables			4		0
		With shareholders and key management			31.1.2022		31.1.2021
		Loan receivables			0		250
		Non-current liabilities			10 789		10 789
		Interest liabilities			3 832		3 276
		Interest expense			647		649
		During the previous financial year, a loan of EUR 250 thousand was granted to the Group CEO. The loan granted to the CEO fell due for payment in full on 31 July 2021.  The loan to the CEO was interest-free.
		The Group company Vesivek Oy acquired a 71.63% holding in Salaojakympit Oy from the company’s CEO in February 2021 at a purchase price of EUR 400 thousand. There is no earn-out associated with the transaction.
		The remuneration of key managers is reported in note 8 Information about key managers.
		Shareholder loans included in non-current liabilities are reported in note 15. Loans and financial assets
		23.    Long-term employee benefits
		The Vesivek Group has a years of service reward scheme according to which an employee is entitled to additional pay amounting to pay for 1–3 weeks when the years of service pursuant to the bonus scheme are fulfilled. The accumulated benefits are determined annually based on calculations by actuaries. Any actuarial gains and losses are recognised through profit or loss in employee benefit expenses.
		1000 eur			31.1.2022		31.1.2021
		Employee benefit obligation
		Balance sheet:
		Defined benefit obligation			337		311
		Statutory employee benefit expense			84		78
		Employee benefit obligation			421		389
		Opening net balance sheet liability			311		287
		Items recognized in operating profit:
		Expense (+)/income (-) recognised in Profit or Loss			87		111
		Business combinations			16
		Actuarial gains (-) or losses (+)			0		0
		Interest expense			0		0
		Contributions paid			-77		-87
		Net defined benefit liability in balance sheet			337		311
		Assummptions and census data statistics
		Discount rate			0,5 %		0,0 %
		Rate of inflation			2,0 %		1,1 %
		Rate of salary increase			2,5 %		1,7 %
		Employee turnover			15,0 %		15,0 %
		The Group anticipates that it will pay EUR 74 thousand relating to years of service benefits during the financial year ending on 31 January 2023.

 

 

	HLRE Holding Group
		24.    Commitments and contingent liabilities
		Guarantees given and contingent liabilities
		Accounting principle
		A contingent liability is a possible obligation arising due to previous events, the existence of which is only confirmed when an event beyond the control of the Group is realised. Also an obligation that probably does not require fulfilling a payment obligation or the amount of which cannot be reliably determined is considered to be a contingent liability.
		25.    New IFRS-standards and standards that will enter into force at a later date
		The IASB has made amendments to IAS 1 Presentation of Financial Statements and IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors, according to which a consistent definition of “material” will be applied in all IFRS standards and the conceptual framework of financial reporting, it is clarified when information is material and include guidelines on immaterial information.
		The IASB has also amended the hedge accounting requirements included in IFRS 9, IFRS 7 and IAS 39 to alleviate the impacts of the uncertainty associated with the reform of inter-bank offered rates (IBOR) on hedging relationships, which are directly influenced by the uncertainty associated with the IBOR reform. The amendment also increases the requirements for notes concerning the hedging relationships impacted by the IBOR reform.
		As a result of the COVID-19 pandemic, IASB made amendments to IFRS 16 Leases in May 2020, granting lessees an optional practical expedient.
		IASB has amended the IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16 standards so that companies can easier take the changes resulting from the IBOR reform in financial statements reporting.
		According to the Group’s current estimate, the amendments will not have impacts on the Group’s future financial statements, and it will continue its assessment of the impact of the amendments.
		26.    Events after the reporting date
		The Group’s operating environment is subject to uncertainty caused by the COVID-19 pandemic and its development. The pandemic affects consumers’ lives, and it has impacts on disposable income, purchase choices and consumer behaviour, among other things. These can present both challenges and opportunities to the development of the Group’s business.
		COVID-19 infections and thereby situations resulting in exposures have continued to affect the return to a normal operating environment in both Finland and Sweden after the reporting period. Group companies have had a significant number of employee infections after the end of the reporting period. The Group has further tightened its COVID-19 guidelines further in relation to break facilities at the locations and use of face masks indoors, receiving visitors in the company’s premises and internal meetings. In addition, the Group has prepared plans for reacting and adjusting operations to the current COVID-19 situation.
		After the reporting period, the Company's Board of Directors decided to merge Nesco under the Vesivek brand. Since 1981, Nesco Oy has been manufacturing rainwater and roof safety products in Finland. Its business serves a wide range of construction professionals. The Vesivek Group has owned Nesco since 2016, and as a result of the decision, Nesco started using the Vesivek brand and its name changed to Vesivek Tuotteet Oy on 4 April 2022.

 

 

	HLRE Holding Oyj
		Parent company’s income statement, FAS
		1000 EUR	Note	1.2.2021-31.1.2022		1.2.2020-31.1.2021
		REVENUE		472		285
		Employee benefits expense		-185		-176
		Depreciation, amortisation and impairment		-24		-24
		Other operating expenses		-284		-68
		OPERATING PROFIT (LOSS)		-21		17
		Finance income and expense
		Finance income		3 529		772
		Finance expense		-3 510		-657
		PROFIT (LOSS) BEFORE TAXES		-2		132
		Income taxes		0		-26
		PROFIT (LOSS) FOR THE PERIOD		-2		106

 

 

	HLRE Holding Oyj
		Parent company’s balance sheet
		1000 EUR		Note	31.1.2022		31.1.2021
		ASSETS
		NON-CURRENT ASSETS
		Intangible assets			46		70
		Investments			19 803		19 803
		NON-CURRENT ASSETS			19 848		19 872
		CURRENT ASSETS
		Non-current receivables			33 888		7 700
		Current receivables			9 034		5 642
		Cash and cash equivalents			61		141
		CURRENT ASSETS			42 984		13 483
		ASSETS			62 832		33 355
		EQUITY AND LIABILITIES
		EQUITY
		Share capital			80		3
		Other reserves
		Unrestricted equity reserve			18 002		18 079
		Retained earnings			992		837
		Profit/loss for the period			-2		106
		EQUITY			19 072		19 024
		LIABILITIES
		Non-current liabilities			39 391		10 989
		Current liabilities			4 370		3 341
		LIABILITIES			43 760		14 331
		EQUITY AND LIABILITIES			62 832		33 355

 

 

	HLRE Holding Oyj
		Parent company’s notes
		The financial statements of HLRE Holding Oyj have been prepared in accordance with the Finnish Accounting Act. The financial statements have been prepared in accordance with the requirements set for micro-enterprises (Government Decree on the information presented in the financial statements of a small undertaking and micro-undertaking, chapters 2 and 3).
		1.     Notes concerning the personnel and members of governing organs
		EUR 1000
		Personnel expenses		1 February 2021–31 January 2022		1 February 2020–31 January 2021
		Wages, salaries and fees		-172		-161
		Pension expenses		-10		-8
		Other social security contributions		-3		-8
		Total		-185		-176
		Management salaries, fees and fringe benefits
		CEO		127		128
		Board members		45		27
		Total		172		155
		Number of personnel
		Average during the financial year		1		1
		2.     Other operating expenses and auditors’ fees
		EUR 1000		1 February 2021–31 January 2022		1 February 2020–31 January 2021
		Financial administration services		0		-11
		Statutory auditing		-27		-15
		To auditor: Other fees and services		-44		0
		Legal and consulting services		-165		0
		Other operating expenses		-48		-42
				-284		-68
		3.      Financial income and expenses
		EUR 1000		1 February 2021–31 January 2022		1 February 2020–31 January 2021
		Other internal interest income		2 446		772
		Foreign exchange gain		1 082		0
		Finance income		3 529		772
		Interest on borrowings from Group companies		0		-7
		Interest on borrowings from others		-2 540		-649
		Other finance expense for other liabilities		-940		0
		Foreign exchange loss		-29		0
		Finance cost		-3 510		-657
		Finance income and expense		19		116
		4.     Direct taxes
		EUR 1000		1 February 2021–31 January 2022		1 February 2020–31 January 2021
		Tax on income from operations		0		-26
				0		-26
		5.     Intangible assets
		EUR 1000	Intangible rights			Total
		Cost 1 February 2021		116		116
		Cost 31 January 2022		116		116
		Accumulated depreciation, amortisation and impairment 1 February 2021		-46		-46
		Depreciation and amortisation		-24		-24
		Accumulated depreciation, amortisation and impairment 31 January 2022		-70		-70
		Carrying amount 31 January 2022		46		46
		Carrying amount 31 January 2021		70		70
		6.     Investments
		EUR 1000		Participations in group companeis		Total
		Acquisition cost on 1 February 2021		19,803		19,803
		Acquisition cost on 31 January 2022		19,803		19,803
		Carrying amount 31 January 2022		19,803		19,803
		Carrying amount 31 January 2021		19,803		19,803
		7.     Non-current receivables
		EUR 1000		31 January 2022		31 January 2021
		Non-current loan receivables from Group companies		33 888		7 700
		8.     Current receivables
		EUR 1000		31 January 2022		31 January 2021
		Receivables from group companeis
		Intra-group trade receivables		115		-87
		Interest receivable on intra-group loans		6 448		5 678
		Intra-group bank account receivable		2 454		0
		Receivables from others
		Other receivables		0		34
		Accrued income		17		17
				9 034		5 642
		9.     Shareholders' equity
		EUR 1000		31 January 2022		31 January 2021
		Restricted shareholders' equity
		Share capital		80		3
		Total restricted equity at the end of the financial year
		Non-restricted shareholders' equity
		Unrestricted equity reserve		18 002		18 079
		Retained earnings, opening amount		942		807
		Acquisition of treasury shares		-28		0
		Sale of treasury shares		78		30
		Profit/loss for the period		-2		106
		Total non-restricted shareholders’ equity at the end of the financial year		18 992		19 022
		The Board of Directors’ proposal to the general meeting is that no dividends be distributed.
		10.     Non-current liabilities
		EUR 1000		31 January 2022		31 January 2021
		Bonds		28 601		0
		Liabilities to related parties		10 789		10 789
				39 391		10 789
		11.     Current liabilities
		EUR 1000		31 January 2022		31 January 2021
		Liabilities to group companeis
		Intra-group trade payables		2		2
		Interest receivable on intra-group loans		0		7
		Liabilities to others
		Trade payables		8		24
		Other liabilities		22		5
		interest liabilities		4 246		3 276
		Other accrued liabilities		91		0
		Income tax liability		0		26
				4 370		3 341
		12.     Guarantees and contingent liabilities
		HLRE Holding Oyj has pledged 2,500 shares in the subsidiary HLRE Group Oy as collateral for the secured financing arrangement of SEK 300,000,000 concerning the Group. In addition, part of intra-Group receivables are pledged as collateral.
		The following business mortgages have been confirmed and pledged as collateral for the bond and overdraft facility:
		HLRE Group Oy		EUR 57,200,000
		Vesivek Oy		EUR 57,200,000
		Nesco Invest Oy		EUR 57,200,000
		Nesco Oy		EUR 57,200,000
		Vesivek Sverige AB		SEK 20,000,000
		The following real estate mortgages have been pledged as collateral for the bond and overdraft facility:
		Nesco Oy Orimattila production plant		EUR 13,673,200
		Vesivek Oy industrial hall in Lieto		EUR 46,800,000
		The fair value of the derivative in the financial statements is EUR -484 thousand and the nominal value SEK 200 million.
		Calculation formulas for key figures
		Equity ratio	100 * Shareholders’ equity/Balance sheet total - Advance payments received
		EBITDA	Operating profit + Depreciation, amortisation and impairment

 

 

		Signatures to the financial statements and report of the Board of Directors
		Pirkkala, 12 April 2022
		Board of Directors of HLRE Holding Oy
									x

 

 

		HLRE Holding Group
		Auditor´s report
			Auditor’s Report (Translation of the Finnish Original)
			To the Annual General Meeting of HLRE Holding Oyj
			Report on the Audit of the Financial Statements
			Opinion
			In our opinion
			·  the consolidated financial statements give a true and fair view of the group’s financial position and financial performance and cash flows in accordance with International Financial Reporting Standards (IFRS) as adopted by the EU
			·  the financial statements give a true and fair view of the parent company’s financial performance and financial position in accordance with the laws and regulations governing the preparation of the financial statements in Finland and comply with statutory requirements.
			What we have audited
			We have audited the financial statements of HLRE Holding Oyj (business identity code 2611405-7) for the financial period for the year ended 31 January 2022. The financial statements comprise:
			· the consolidated balance sheet, statement of comprehensive income, statement of changes in equity, statement of cash flows and notes, including a summary of significant accounting policies
			·  the parent company’s balance sheet, income statement and notes.
			Basis for Opinion
			We conducted our audit in accordance with good auditing practice in Finland. Our responsibilities under good auditing practice are further described in the Auditor’s Responsibilities for the Audit of Financial Statements section of our report.
			We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
			Independence
			We are independent of the parent company and of the group companies in accordance with the ethical requirements that are applicable in Finland and are relevant to our audit, and we have fulfilled our other ethical responsibilities in accordance with these requirements.
			Responsibilities of the Board of Directors and the Managing Director for the Financial Statements
			The Board of Directors and the Managing Director are responsible for the preparation of financial statements that give a true and fair view in accordance with the laws and regulations governing the preparation of financial statements in Finland and comply with statutory requirements. The Board of Directors and the Managing Director are also responsible for such internal control as they determine is necessary to enable the preparation of financial statements that are free from material missatement, whether due to fraud of error.
			In preparing the financial statements, the Board of Directors and the Managing Director are responsible for assessing the parent company’s and the group’s ability to continue as a going concern, disclosing, as applicable, matters relating to going concern and using the going concern basis of accounting. The financial statements are prepared using the going concern basis of accounting unless there is an intention to liquidate the parent company or the group or to cease operations, or there is no realistic alternative but to do so.
			Auditor’s Responsibilities for the Audit of the Financial Statements
			Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with good auditing practice will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
			As part of an audit in accordance with good auditing practice, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:
			·   Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
			·  Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the parent company’s or the group’s internal control.
			·  Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
			·   Conclude on the appropriateness of the Board of Directors’ and the Managing Director’s use of the going concern basis of accounting and based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the parent company’s or the group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial statements or, if such disclosures  are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the parent company or the  group to cease to continue as a going concern.
			·   Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events so that the financial statements give a true and fair view.
			·   Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the group to express an opinion on the consolidated financial statements. We are responsible for the direction,supervision and performance of the group audit. We remain solely responsible for our audit opinion.
			We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
			Other Reporting Requirements
			Other Information
			The Board of Directors and the Managing Director are responsible for the other information. The other information comprises the report of the Board of Directors.
			Our opinion on the financial statements does not cover the other information.
			In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated. Our responsibility also includes considering whether the report of the Board of Directors has been prepared in accordance with the applicable laws and regulations.
			In our opinion, the information in the report of the Board of Directors is consistent with the information in the financial statements and the report of the Board of Directors has been prepared in accordance with the applicable laws and regulations.
			If, based on the work we have performed, we conclude that there is a material misstatement of the report of the Board of Directors, we are required to report that fact. We have nothing to report in this regard.
			Tampere
			PricewaterhouseCoopers Oy
			Authorised Public Accountants
			Markku Launis
			Authorised Public Accountant (KHT)

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