Vaahto Group Interim Management Statement 1 January – 14 November 2014



Turnover from Vaahto Group’s continuing operations for January 1, 2014 to September 30, 2014 was 14.1 million euros (compared with 23.8 million euros for the corresponding period in the previous fiscal year), with an operating loss of 0.8 million euros (operating profit of 0.7 million euros). The Group’s order book for continuing operations on September 30, 2014 totaled 11.2 million euros (11.7 million euros).

Turnover from continuing operations stayed behind reference period. However, despite the challenging market situation, order book has grown during the year, being at the end of September 2014 almost at the same level than in the review period. Order book has increased especially due to the significant new orders received during the third quarter of the year.

Cost allocations related to classifications of continuing and discontinued operations are weakening the operating result of continuing operations. Group’s overhead costs are no longer allocated to discontinued operations.

Business Reporting

In February 2014, Vaahto Group announced to divest or discontinue operations of the unprofitable Paper Technology business in its entirety and to focus on the Process Technology business, in accordance to the group strategy.

On 3 September 2014, Vaahto Group announced to sell the Service-business belonging to Vaahto Paper Technology Ltd’s discontinued operations. The sale of the business was completed on 26 September 2014. Vaahto Paper Technology Ltd’s 47 employees in Tampere transferred to the new employer in the sale of the business. By the selling of the Service-business, Vaahto Group implemented the new strategy outlined by the Board of Directors.

On 30 June 2014, the Board of Directors resolved to present AP-Tela Oy as discontinued operations in the interim report. Thus, the entire Vaahto Paper Technology -segment has been sold or classified as discontinued operations. Vaahto Group reports in one segment, which consists of Vaahto Process Technology business.

The effect of discontinued operations on profit/loss is shown on its own line, separately from continuing operations. Earlier, the group’s overhead costs have been allocated also to operations now discontinued. As the costs will no longer be allocated to discontinued operations, they affect solely continuing operations. As the volume of the continuing operations reduces, the relative effect of these costs has increased. The group is currently adjusting its administrative costs.

Vaahto Process Technology

Vaahto Process Technology business includes all of the company’s continuing operations. Turnover of the business from 1 January to 30 September 2014 was 14.1 million euros (23.8 M euros) with an operating loss of 0.8 million euros (profit 0.7 M euros).

Vaahto Process Technology business is divided into two business areas: Japrotek Vessels and Stelzer Mixing Technology. Japrotek Vessels designs and manufactures demanding vessel structures for process industry as well as complete vessel and agitator combinations. Stelzer Mixing Technology focuses on the mixing technology for process industry and related maintenance services.

During the review period, Japrotek Vessels business area received signs of upturn in the markets. Order book has grown during the year and number of offers has remained on a good level. Improvement started to show especially on early fall when customers started to make investment decisions to their projects. Japrotek Vessels got new orders in September of which the most significant are delivery of a leaching autoclave to a customer in Finland and a crystallization plant to Kemira in Brazil. Deliveries are demanding process industry structures in which Japrotek’s expertise on titanium processing and insight into customer’s processes are at their best. The installations will both be handed over during the summer 2015. Orders are strengthening the order book of the business area and securing the employment situation at the Japrotek’s Pietarsaari factory.

Investment decisions of important markets for Stelzer Mixing Solutions business area were on a low level again on the third quarter of the year. Especially in the customer segment food industry investment decisions were postponed. However, the number of orders in the chemical industry was on a satisfying level. The situation improved on September when the number of orders slightly increased. Market situation in China has stayed unchanged continuing to be challenging. Situation is expected to improve in near future, investments in new production plants are announced already.

As resolved in February, the Group focuses on the Process Technology business. The deployment of the strategy has begun and continues in the latter half of the year. Japrotek Vessels will increase its focus on demanding process industry projects where vessel and agitator combinations are complemented with know-how of the customers’ process model. Stelzer Mixing Technology will focus on industrial mixing products and seek strong growth in new market areas as well as industrial segments. Japrotek Vessels will support its business also with the mixing know-how of Stelzer Mixing Technology. Japrotek and Stelzer will both specialize in their own specific product categories that complement each other, thus gaining synergy in production. This will both streamline the production and increase the volume by utilizing the Group’s existing resources.

Directed share issue

On 10 March 2014, the board of directors of Vaahto Group Plc resolved to issue up to 2,000,000 new shares in a directed share issue based on an authorization by the general meeting of shareholders on 10 April 2013.

In the share issue, the 10 largest shareholders had a subscription right. The basis for the deviation from the pre-emptive subscription right was, according to the resolution to issue shares, the strengthening of the company’s financial standing and the securing of the continuance of the company’s operations. In the share issue, Hannu Laakkonen subscribed for 1,000,000 shares and Mikko Laakkonen subscribed for 1,000,000 shares. The subscription price per share for all the shares was 0.52 euro. The subscription price was determined on the basis of bids received by the company.

The issued new shares have been registered with the Trade Register on 31 March 2014. Subsequent to the share issue, the total number of shares in the company and the number of votes carried by the shares is 5,977,360. The issued new shares represent 33.5% of the total amount of shares of the company. The issued new shares carry shareholder rights in the company from the date of registration with the Trade Register.

The subscribers have given the company an undertaking not to sell, transfer, donate, or otherwise dispose of the shares issued in the share issue within 180 calendar days from the registering of the shares with the trade register. The company will apply for the listing of the shares at the latest within one year from the issuance of the shares. In connection with the application, the company will publish a listing prospectus in accordance with the Finnish Securities Market Act and the EU Prospectus Regulation.


In the financial statements 2013, the equity of the parent company Vaahto Group Plc Oyj was negative by 4.3 million euros. The issue of the new shares in the first quarter of 2014 as well as the waiver of loans had a positive impact on the equity of the parent company. Along with the classification of AP-Tela Oy as discontinued operations on 30 June 2014, the parent company impaired the shares of AP-Tela, which lowered the equity of the parent company. Also, additional cost related to the divestments of the discontinued operations was booked. On 30 September 2014, the equity of the company was negative.

Authorization to decide on a share issue

On 15 April 2014, the Annual General Meeting authorized the Board to decide on an issue of new shares as well as option rights and other special rights entitling to shares referred to in Chapter 10 Section 1 of the Finnish Companies Act in one or several lots. The number of new shares issued would be no more than 10,000,000, including shares to be issued based on the special rights. The authorization is in effect until 31 May 2015, unless the General Meeting amends or cancels the authorization prior to that.

Financing and liquidity

After the financing negotiations, finished in December 2013, the Group was provided with a grace period for loans from financial institutions for 2014. Additionally, conditions of the financing agreement for 2014 were met during the first quarter and the Group received a debt relief totaling 3 million euros; 2.7 million euros for the parent company and 0.3 million euros for Vaahto Paper Technology Ltd.

Vaahto Group Plc Oyj announced on 29 October 2014 to file its subsidiary Vapate Oy (former Vaahto Paper Technology Ltd) for bankruptcy. The Board of Directors of the Vapate Oy has stated that the liabilities of the company are greater than its assets and the company is no longer able to meet its obligations. The loans of Vapate Oy mature in the bankruptcy. The parent company has secured loans for the financiers of the company. Negotiations with financiers have already begun on how to arrange the securities of the parent in such a way that the group’s continuing operations does not become endangered due to the securities.

The liquidity of the Group remains tight and includes significant risks. Sufficiency of the working capital is followed actively with cash flow forecasts. Negotiations with the financiers, planned divestments of the Paper Technology business together with the authorization of the Board of Directors to decide on a share issue if used, will support the improving of the Group’s financial position and liquidity.


During the period, the average number of personnel in the Group was 225 (265).

The CEO of Vaahto Group Plc Oyj Vesa Alatalo left the company on 31 August 2014. The Board of Directors appointed M.Sc. (Tech.) Topi Karppanen as acting CEO starting on 1 September 2014. Karppanen has been a member of the Board of Vaahto Group Plc Oyj since 2010.

Outlook for the fiscal year 2014

Global economy and business fluctuation of customer industries have a direct impact on the demand of the Vaahto Group’s products as well as its financial situation. Market situation has started to improve as the investment decisions by customers have increased. Especially order book for Japrotek Vessels business area has been growing. Recovery of the market situation is slow and the situation continues to be challenging. However, order book is expected to grow also during the last quarter of the year.

In accordance with the new strategy, the Group will focus on process industry and the deployment of the strategy is still ongoing. By the selling of the Service business on September 2014, Vaahto Group implemented the new strategy outlined by the Board of Directors. Focusing will become more visible also during the rest of the year. Streamlining of operations will also be continued. Group’s cost structure has been under scrutiny also in the third quarter. However, the effects of the changes are expected to become visible slower than expected, mainly from year 2015 onward. The operating profit of the Vaahto Group’s continuing operations is expected to be negative for the fiscal year 2014.


In Lahti on 14 November 2014


The Board of Directors


For additional information:

Topi Karppanen

CEO, Vaahto Group Plc Oyj

Tel. +358 40 5001957


Vaahto Group is a globally operating high technology company serving process industry.