Moving forward for
over 60 years
And thinking ahead to the next 60
exelcomposites.com
CONTENTS
INFORMATION TO SHAREHOLDERS
Financial reporting and Annual
General Meeting 2021
Exel Composites publishes the following financial reports
in 2021:
●
Financial Statements Release 2020: 18 February 2021
●
Business Review January-March: 30 April 2021
●
Half-year Financial Report January-June: 20 July 2021
●
Business Review January-September: 4 November 2021
The Annual Financial Report, Corporate Governance
Statement and Remuneration Report for 2020 are
available at the company’s website
www.exelcomposites.com.
The Annual General Meeting will be held on 23 March 2021
at 09:00 EET in Exel Composites’ premises at Mäkituvantie
5, 01510 Vant aa, Finland. Shareholders of the company
may participate in the meeting and exercise their
shareholders’ rights only through a proxy presentative
designated by the company as well as by posing
counterproposals and questions in advance. Proxy
representatives must see to the voting in advance on
behalf of shareholders.
After the Annual General Meeting, on 23 March 2020 at
10:30 EET, Exel Composites will hold an online event for
shareholders, where the resolutions made at the General
Meeting and the review by the President and CEO will be
presented. Instructions to register to this event are
presented in the notice to Exel Composites’ Annual
General Meeting under Section C item 5 and at the
company’s website www.exelcomposites.com.
Dividend proposal
The Board of Directors proposes that a dividend of EUR
0.20 (0.18) per share be paid for the financial year 2020.
The dividends’ record date is 25 March 2021 and payment
date 1 April 2021.
EXEL COMPOSITES
ANNUAL
FINANCIAL
REPORT
2020
EXEL
COMPOSITES
IN
BRIEF
| 4
EXEL COMPOSITES IN BRIEF
At Exel Composites, we use over 60 years’ experience to solve challenges and help customers save resources. Our forward-
thinking composite solutions made with continuous manufacturing technologies serve customers in a wide range of industries
around the world. You can find our products used in applications from wind power and transportation to building and
infrastructure.
Our collaborative approach and global footprint set us apart from our competition. We use our expertise to help customers
reduce weight, improve performance and energy efficiency and decrease total lifetime costs. We want to be the first choice
for sustainable composite solutions globally.
Headquartered in Finland, Exel Composites employs approximately 650 forward-thinking professionals around the world and
is listed on Nasdaq Helsinki. To find out more about our offering and company please visit
exelcomposites.com
.
EXEL COMPOSITES
ANNUAL
FINANCIAL
REPORT
2020
EXEL
COMPOSITES
IN
BRIEF
| 5
Reasons to invest in Exel Composites
Optimally positioned
within a growing market
Technology leadership creates
competitive advantage
Global operations
enable global customers
Diversified portfolio
reduces risk
Learn more about Exel as an investment at our website
exelcomposites.com
Long-term financial targets
GROWTH
Revenue growth
2x market growth
1)
PROFITABILITY
Adjusted operating profit
margin >10%
CAPITAL EFFICIENCY
Return on capital employed
> 20%
FINANCIAL POSITION
Net gearing
≤ 80%
1)
the global composites market is, according to
customer industry, region and source, between
2%-5% in volume in the coming years.
Financial targets are considered over a business cycle. Potential acquisitions may impact the long-term financial targets. According to the
company’s dividend policy, Exel Composites’ ambition is to distribute a minimum of 40% of net income in dividends, when permitted by the
financial structure and growth opportunities.
EXEL COMPOSITES
ANNUAL
FINANCIAL
REPORT
2020
CEO
REVIEW
| 6
CEO REVIEW
The year 2020 ended strongly for Exel Composites. The
adjusted operating profit as well as revenue increased
compared to 2019. In addition, our order intake improved
resulting in a strong order backlog driven by an improved
underlying demand at the end of 2020. Operating cash
flow in 2020 increased compared to the previous year.
Overall, Exel has so far mitigated the impacts of the
Covid-19 pandemic well. The health and safety of our
employees, customers and business partners is a priority
for Exel Composites. For the most part, operations at our
factories were close to normal throughout the year within
the limits of the implemented safety measures. Many of
our manufacturing units are located far from densely
populated areas, which has reduced the impact of the
pandemic on the company. Due to preventive and
mitigating actions, we have not suffered from significant
shortfalls in staffing or materials due to the pandemic. I
am particularly happy to see that our strategy based on
diversified customer industries and regions has supported
us in these difficult times and reduced the impact of the
sudden drop of demand that happened with some of our
clients.
In the full year 2020, the volume increase in Defense and
Wind Power made a significant positive contribution to
Group revenue. I am very satisfied with these results as
they reflect the successful execution of our strategy.
Wind Power is one of our strategic focus areas and
continues to grow as our largest customer industry. Other
strategic focus areas grew too: Camouflage net support
poles in the Defense customer industry as well as
conductor core applications in the Infrastructure industry
are good examples of how extensive R&D over several
years yields results. The conductor core application is the
outcome of determined long-term product development
and a technological break-through that can increase
power transmission capacity. The camouflage net support
poles, on the other hand, are an example of how we have
been able to leverage our global footprint and cross-
selling within the Group. These customer industries have
remained more or less resilient during the Covid-19
pandemic. Transportation, on the other hand, has clearly
been negatively impacted by the pandemic and revenue in
the customer industry declined in 2020.
Geographically, revenue in 2020 showed strong growth in
the region Asia-Pacific , while revenue in Europe increased
slightly. In the region North America, revenue declined
across nearly all customer industries mainly due to the
Covid-19 pandemic.
Despite the impacts of the pandemic on many fronts,
adjusted operating profit increased by 36% in 2020
compared to 2019. The strong improvement reflects the
impact from the cost savings program completed in 2019,
an overall favorable sales mix and operational efficiency
improvements implemented during the year across the
Group. We were also able to leverage our position as a
growing global buyer in a materials market weakened by
the pandemic.
2020 will remain in history as an exceptional year in many
ways. The pandemic continues to cast a shadow over the
global business environment also in 2021 although
vaccination programs are expected to relieve the
situation. Despite the pandemic, we start 2021 in a good
position supported by a high order backlog. I warmly
thank our employees for a job well done, and our
customers and other stakeholders for outstanding
cooperation. Stay healthy and safe, and let’s make 2021
an even better year!
Riku Kytömäki
President and CEO
“Extensive R&D over several
years has yielded results.”
“Our strategy based on a
diversified customer
industries and regions has
strongly supported us in
these difficult times.”
“In 2020 adjusted operating
profit increased by 36%
compared to the previous
year.”
EXEL COMPOSITES
ANNUAL
FINANCIAL
REPORT
2020
CEO
REVIEW
| 7
EXEL COMPOSITES
ANNUAL
FINANCIAL
REPORT
2020
KEY
FIGURES
2020
| 8
73.1
86.3
96.6
103.8
108.6
2016
2017
2018
2019
2020
2.6
6.3
5.0
7.2
9.7
2016
2017
2018
2019
2020
23.5
19.5
28.1
15.5
10.2
5.3
6.5
Buildings and
infrastructure
Equipment and other
industries
Wind power
Machinery and electrical
Transportation
Defense
Telecommunications
0.02
0.36
0.03
0.20
0.45
2016
2017
2018
2019
2020
62.8
18.0
24.0
3.8
Europe
North America
Asia-Pacific
Rest of the world
1.7
14.8
4.4
8.6
14.1
2016
2017
2018
2019
2020
KEY FIGURES 2020
Revenue ,
EUR million
Adjusted operating profit,
EUR million
Revenue by customer industry,
EUR million
Earnings per share,
EUR
Revenue by region,
EUR million
Return on capital employed,
%
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ANNUAL
FINANCIAL
REPORT
2020
BOARD
OF
DIRECTORS’
REPORT
| 9
BOARD OF DIRECTORS’ REPORT
Business model
Exel Composites provides forward-thinking composite
solutions made with continuous manufacturing
technologies to customers in a wide range of industries
around the world. Our products are used in several
industries from cleaning equipment to power generation
and transmission.
Composites are materials composed by two or more
component materials that do not mix. In Exel Composites’
vocabulary, composites mean fiber reinforced plastics.
We use predominantly glass and carbon fibers as
reinforcements of a resin, which in more technical terms
is called a matrix. Different types of plastics can be used
as a matrix, and additives, such as colorants, UV-
stabilizers or anti-bacterial additives, can be used for
additional properties. Combining different types of
reinforcements and matrix materials gives the desired
chemical, physical or mechanical properties to the
resulting composite.
Exel’s manufacturing, R&D and sales network covers all
main markets i.e. Europe, Asia and North America. We
use our over 60 years of expertise to help customers
reduce weight, improve performance and decrease the
total lifetime costs of the end product. Exel wants to be
the first choice for sustainable composite solutions
globally.
Our customers are typically original equipment
manufacturers, system integrators or distributors. There
are seven main customer industries: Buildings and
Infrastructure, Equipment and Other industries, Wind
Power, Machinery and Electrical, Transportation, Defense
and Telecommunications.
Exel Composites in the value chain
SUPPLY CHAIN
●
Raw material producers
●
Suppliers of indirect
materials
●
Service providers
MANUFACTURING
●
Pultrusion
●
Pullwinding
●
Filament winding
●
Continuous lamination
CUSTOMER
●
Original equipment
manufacturers
●
System integrators
●
Distributors
END
USER
●
User of the final
product
Example
A provider of fiberglass from
which Exel buys
reinforcement fibers
necessary for the
manufacturing process
Further processing:
●
Machining
●
Painting
●
Coating
Example
A machine builder that buys
composite parts manufactured by
Exel, installs them into a machine,
which is then sold to a paper mill
Example
A forestry company
that produces paper
or cardboard in its
factory
The products produced by Exel are most often
components of the customer’s end product. The product
portfolio includes for example profiles, tubes and
laminates, which are almost without exception customer
tailored. Products are designed in close dialogue with the
customer to solve one or more specific challenges, be it
achieving a lighter, stronger or stiffer solution. This high
level of tailoring increases customer commitment and is
reflected in Exel’s typically long-term customer
relationships.
Exel Composites’ core expertise lies in chemistry,
materials science as well as cost-efficient and repeatable
manufacturing processes. The main manufacturing
technology utilized by Exel is pultrusion, where resin-
impregnated fibers are pulled through a mold and
hardened with heat. The final products are cut to a
specified length or wound on a roll at the end of the
production line. Other key methods include pullwinding,
which is a combination of pultrusion and filament
winding, as well as continuous lamination. In all these
technologies production is continuous and high in volume
in proportion to used manhours. These manufacturing
technologies are applicab le to any shapes from poles and
tubes to profiles with complex shapes and cavities. Exel
also has further processing capabilities to supply complete
composite solutions including machining and coating.
Exel’s strategy includes expanding into new and growing
production technologies as well as into new and growing
EXEL COMPOSITES
ANNUAL
FINANCIAL
REPORT
2020
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DIRECTORS’
REPORT
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applications where composite materials can be used and
where their unique characteristics are beneficial.
Exel Composites’ global supply chain sources its raw
materials from multiple sources from various countries
and continents. The main raw material categories are
fiber reinforcements and matrix systems. Fiber
reinforcements typically are carbon fiber and fiberglass
but also other fibers, such as polyester, aramid or natural
fibers can be used. Matrix systems include for example
polyester, epoxy and vinyl ester resins.
Climate-related risks and opportunities impact Exel
Composites’ business model on various levels. Exel
actively aims to reduce the negative impact of its own
operations on climate and the environment. The
composites we produce also help reduce the
environmental impact of the end product. For Exel, this is
an opportunity to contribute to the mitigation of climate
change and global warming.
Market environment
The composites market is fragmented. Whereas Exel
Composites is not a large company, it is nevertheless a
leading company in the field of pultrusion and the only
pultrusion company with significant presence on all major
markets: Europe, Asia and North America. This global
presence differentiates Exel from its competitors and
enables head to head competition with global suppliers of
traditional materials. According to industry associations,
such as JEC and Lucintel, the 82 billion-dollar annual
volume of composites is only 1% of the huge global
materials market, which is dominated by steel, plastic
and aluminum. Furthermore, pultruded composites
market represents less than 5% of the total composites
market. Exel Composites sees growth potential for
composites as a material as well as for pultrusion as a
production technology within the composites market. The
average annual growth rate estimated for the global
composites market is, according to customer industry,
region and source, between approximately 2%–5% in
volume in the coming years.
Exel’s business portfolio is diversified across a variety of
customer industries and regions, which reduces the
impact of sudden fluctuations within the portfolio. The
factors and time span driving demand differ between
customer industries as well as regions. This was
demonstrated particularly during the Covid-19 pandemic,
the impacts of which Exel has mitigated relatively well so
far.
Exel Composites’ strategy is to focus on high growth
industries, such as Wind Power, Transportation as well as
Buildings and Infrastructure. The Transportation industry
is a large user of composites, although hard hit in 2020 by
the Covid-19 pandemic especially in Europe. Buildings and
Infrastructure applications also present many
opportunities for pultruded composites. On the other
hand, the Wind Power industry shows the strongest
growth and was less impacted by the pandemic in 2020
due to the longer-term nature of wind power investments.
Geographically, Asia and China are the largest and the
fastest-growing markets globally. Although China alone
continues to represent a major growth market, recent
economic and political uncertainty connected with the
country have slightly reduced the market’s growth rate
expectations. The North American market is the second
largest composites market globally in terms of value and
growth. Growth is expected to be slower in the mature
European market, which already today is behind Asia and
North America in size.
In the short-term, the Covid-19 pandemic has caused
uncertainty in the global business environment and
cautiousness among customers. This impacted the demand
and deliveries during 2020, although underlying demand
across all customer industries improved towards the end
of the year.
Exel Composites estimates that during 2020,
the company’s market position within the global
pultrusion market has improved. Exel’s revenue increased
particularly in the Wind Power customer industry.
In the long-term, interest towards composite materials is
steadily growing, supported by global megatrends such as
rapid urbanization, sustainability, and longer life cycles.
The main benefits of composites include lightness, energy
efficiency, durability and the need for less maintenance
and replacement. For example, increased energy
efficiency requirements within the transportation industry
and the increased utilization of anti-corrosive materials in
the construction industry drive increased use of
composites. Exel’s ambition is to leverage on these trends
and mitigate the negative impacts of climate change by
offering its customers sustainable composite products that
respond to this demand.
Order intake and order backlog
Order intake for the financial year 2020 was EUR 115.4
million (110.7), which is an increase of 4.2% compared to
the previous year. The Group’s order backlog on 31
December 2020 increased to EUR 36.5 million (30.4).
Revenue
Group revenue for the financial year 2020 amounted to
EUR 108.6 million (103.8) and increased
by 4.6% compared
to the previous year. Revenue was impacted by effects of
delivery volumes by 3.7%, sales mix by 1.9% and exchange
rates by -1.0%.
Defense and Wind Power made a significant positive
contribution to the Group revenue increase. In the
Transportation customer industry revenue declined mainly
due to the pandemic. Geographically, revenue increased
in the regions Asia-Pacific and Europe. In the region North
America, revenue declined across nearly all customer
industries mainly due to the Covid-19 pandemic.
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2020
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Operating profit
Operating profit in the financial year 2020 increased
to
EUR 9.4 million (5.1), 8.7% (4.9) of revenue. Adjusted
operating profit* was EUR 9.7 million (7.2), 8.9% (6.9) of
revenue. The
profit impact of the cost savings program
completed in 2019, an overall favorable sales mix and
operational efficiency improvements across the Group
were the main factors behind the improvement.
Items affecting comparability amounted to a total of
EUR 0.3 (2.1) million.
The Group’s net financial expenses in 2020 were EUR -2.3
million (-1.2). Profit before taxes was EUR 7.1 million
(3.9) and profit after taxes EUR 5.4 million (2.4).
Adjusted operating profit*
EUR thousand
2020
2019
Operating profit
9,417
5,087
Restructuring costs
0
1,259
Impairment losses and reversals
0
0
Costs related to planned or realized business acquisition and disposal
291
814
Sale of intangible and tangible assets
0
0
Expenses related to changes in legislation or legal proceedings
0
0
Adjusted operating profit
9,708
7,160
* Excluding material items affecting comparability, such as restructuring costs, impairment losses and reversals, and costs
related to planned or realized business acquisitions or disposals.
Financial position
Net cash flow from operating activities for the financial
year 2020 was EUR 14.0 million (9.0). The capital
expenditure on fixed assets amounted to EUR 13.2 million
(6.3). Net cash flow from investing activities amounted to
EUR -12.8 million (-6.1) and net cash flow before
financing activities amounted to EUR 1.2 million (2.9).
EUR 7.5 million
of the investments were related to the
construction of the new manufacturing facility in Austria.
At the end of the financial year, the Group’s liquid assets
stood at EUR 12.0 million (6.9). Total depreciation,
amortization and impairment of non-current assets during
the financial year amounted to EUR 5.9 million (5.6).
The Group’s consolidated total assets at the end of the
financial year 2020 were EUR 96.8 million (85.4). Interest-
bearing liabilities, including lease liabilities, amounted to
EUR 43.1 million (37.2). Net interest-bearing liabilities
were EUR 31.2 million (30.2). Current interest-bearing
liabilities totaled EUR 30.3 million. EUR 21.5 million of
current interest-bearing liabilities were commercial
papers. To secure the payment of commercial papers, the
company had at the end of the financial year unused,
non-current (over 12 months) revolving credit facilities for
EUR 26.7 million.
Equity at the end of the financial year 2020 was EUR 28.9
million (26.3) and equity ratio 30.2% (30.9). Net gearing
ratio was 107.9% (114.9). Fully diluted total earnings per
share were EUR 0.45 (0.20). Return on capital employed
was 14.1% (8.6). Return on equity was 19.5% (9.2).
Exel Composites acquired 70% of Nanjing Jianhui
Composite Materials in October 2016 and the acquisition
was completed in April 2017. The acquisition agreement
included a call and put option under which Exel
Composites was expected to acquire the remaining 30%
earliest three years after the closing. In December 2020,
Exel Composites was notified that the seller will exercise
the put option effective 1 January 2021, leading to the
payment of the remaining 30% stake during the first
quarter of 2021. The estimated remaining purchase price,
which includes a variable component depending, among
other things, on the profit development of the business, is
approximately EUR 3.6 million. The total acquisition price
of the company thus amounts to EUR 8.8 million. The
entire remaining purchase price is booked as a liability in
the Group balance sheet and the payment will therefore
have no impact on the Group income statement.
The Covid-19 pandemic has had limited impact on Group
liquidity and cash situation. At the end of 2020, the Group
had committed credit limits to secure financing of all
foreseen investments, which provide for an adequate
liquidity buffer also in 2021.
During the year, Exel Composites received Covid-19
related financial assistance under local governmental
schemes in Great Britain, Austria, China and Australia. In
2020, these grants amounted to EUR 0.8 million.
Research and development
Research and development costs for 2020 totaled EUR 2.9
million (2.9), representing 2.7% (2.7) of revenue.
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Business development and
strategy implementation
In June 2020, the Board of Directors conducted its annual
strategy review and reconfirmed Exel’s strategy to 2022.
The main strategic focus areas as well as the company’s
long-term financial targets and dividend policy remained
unchanged. Exel Composites’ long-term financial targets
include revenue growth exceeding twice the market
growth, adjusted operating profit margin exceeding 10%,
return on capital employed exceeding 20%, and net
gearing approximately at 80% or below.
Exel also updated its vision and purpose statements during
the year. Our purpose is to solve challenges and help
customers save resources. Our vision is to be the first
choice for sustainable composite solutions globally.
Exel Composites’ strategy is based on scalable
applications, chosen growth initiatives, expanding our
global footprint and technology offering and on improving
operational efficiency.
The strategic priorities for 2020 included stabilizing the
profitability of the business unit in the United States,
consolidation of the organization in China, operational
efficiency improvements in the European manufacturing
units and focusing on growth initiatives. Sustainability was
integrated even more closely into all Exel’s business and
operations. In 2020, we introduced the Circular Economy
initiative, through which we commit to significantly
improve the Group’s environmental footprint within the
next few years.
Exel Composites’ growth initiatives focus on Wind power,
Transportation, and Buildings and Infrastructure customer
industries, which all continued in 2020. These industries
are large markets where growth is driven by material
replacement and technology change. Wind power has
grown in the past couple of years into Exel’s largest
customer industry and in 2020 represented approximately
a fourth of Group revenue. The offering for Buildings and
Infrastructure, which is the second largest customer
industry, was expanded in 2020 with new products
introduced for the large conductor core market, among
others.
Strengthening our existing key customers portfolio and
multiplying successful applications present globally
scalable opportunities. For example, revenue in the
Defense customer industry grew significantly in 2020 due
to the volume increase of camouflage net support poles.
The construction of the new manufacturing facility in
Austria was completed according to plan and was move-in
ready in the beginning of 2021. The total cost of the
project amounted to EUR 8.5 million, including the plot
acquired in 2019 (EUR 1.0 million). According to our
growth strategy, the significant new capacity will respond
in the long-term to increasing demand in Central Europe
and strengthens Exel’s position in this market area. It also
enables leveraging the Austrian unit’s strong R&D
capabilities and university cooperation.
Exel Composites strategy
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The actions to improve profitability in the business unit in
the United States progressed as planned despite the
short-term impacts of the Covid-19 pandemic. Operational
efficiency improvements were initiated also in the
business unit in Belgium in order to improve the unit’s
profitability and offset the negative impacts of the Covid-
19 pandemic.
Impacts of the Covid-19
pandemic in 2020
Operations
Covid-19 pandemic impacted Exel Composites’ operations
during 2020. In the beginning of the year, the Chinese
factories were shut down for four weeks (including the
Chinese New Year celebration). The manufacturing
facilities in the United States and Great Britain operated
with reduced capacity during parts of the year due to
governmental restrictions and low production volumes. In
addition, all our factories have managed customer
demand related challenges, including shutdowns of
customer factories, which caused operational
inefficiencies especially in the above-mentioned units.
Towards the end of the year, our factories operated close
to normal within the limits of the implemented safety
measures.
Raw material supply and logistics operated normally
during the year despite the pandemic. Minor challenges in
specific raw material categories and personal protection
equipment supplies in the first half of the year were
solved through consolidated Group purchases and finding
alternative suppliers or technical solutions. The increased
need for personal protection equipment, additional
cleaning and isolation measures also caused some extra
costs.
Financial standing
Order intake during the year suffered from Covid-19
related uncertainty and cautiousness among our
customers. A few customers requested to postpone
deliveries of orders, which impacted timings of revenues
and profits during the year. Underlying demand across all
customer industries improved, however, towards the end
of the year.
The Group’s liquidity and cash situation during the year
was good, and the Covid-19 pandemic has had limited
impact on Group liquidity. The Group had existing
committed credit limits to secure financing of all
investments in 2020 and they provide for a comfortable
liquidity buffer also in 2021.
Exel conducted the impairment testing according to the
normal schedule in the fourth quarter of 2020. The testing
did not result in a change of valuation in goodwill and
intangible assets.
During the financial year 2020, Exel Composites received
Covid-19 related financial assistance under local
governmental schemes in Great Britain, Austria, China
and Australia, which amounted to EUR 0.8 million.
Our response in relation to the Covid-19
pandemic
The health and safety of our employees, customers and
business partners is a priority for Exel Composites. Across
the Group, strict safety and hygiene instructions were
implemented early in the year in accordance with the
instructions of local health authorities. Online meetings
and remote work were preferred, whenever possible. On
site measures included keeping safety distances, use of
facial masks, body temperature controls, and re-
organization of shifts to ensure business continuity in case
of infections or quarantines. International travelling,
travelling between sites as well as customer visits
required management permission and were limited to
minimum. External visits to sites were also reduced to
minimum. Continuous internal communication on Covid-19
related concerns was emphasized through a variety of
channels. Situation updates, safety measures, and best
practices were continuously monitored at top
management level and between units.
Many of our manufacturing units are located far from
densely populated areas, which has reduced the impact of
the pandemic on the company. During the year, several
employees within our organization have been in official or
preventive quarantines, yet there were only a few
confirmed Covid-19 cases in the Group.
Given the continued uncertainty related to the Covid-19
pandemic, close monitoring of the situation continues a
priority for us. Close and continuous interaction is
maintained with customers, suppliers and business
partners in order to ensure timely reaction to new
developments.
Major near-term risks and
uncertainties
Exel Composites’ most significant near-term business risk
is related to customer concentration, where a notable
portion of revenue comes from certain key customers.
Specifically, the revenue generated from sales to the
Group’s largest client, operating in the wind power
industry, has increased rapidly. This has significantly
increased the dependency on this business and the related
downside risk. Furthermore, a rapid increase of raw
material prices could in the short term negatively impact
the company’s profitability, even if in the longer term it
would improve the competitiveness of composite
materials.
In the short-term, the Covid-19 pandemic has caused
uncertainty in the global business environment and
cautiousness among customers. This has impacted demand
and deliveries during the year. Underlying demand across
all customer industries has, however, improved towards
the end of 2020. The situation remains dependent, among
other things, on the development of the pandemic and
the speed and impact of vaccinations across the world.
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The company has made significant investments in the
recent years, the latest one being the acquisition
Diversified Structural Composites, DSC in the USA. The
future estimates made at the time of these investments
and acquisitions may not materialize as planned, which
may trigger a need to adjust the values of the purchased
assets in the company’s balance sheet.
The risk management and risks related to the operation of
Exel Composites are described in detail in the Corporate
Governance Statement for 2020 and at the company’s
website www.exelcomposites.com.
Governance and AGM 2020
The Annual General Meeting, AGM, of Exel Composites Plc
held on 20 March 2020 approved the Board of Directors’
proposal to distribute a dividend of EUR 0.18 per share for
the financial year 2019. The dividend was paid on 31
March 2020 .
The AGM authorized the Board of Directors to repurchase
the Company’s own shares by using unrestricted equity.
The maximum amount to be acquired is 600,000 shares.
The authorization is valid until 30 June 2021.
The AGM elected Petri Helsky, Reima Kerttula, Helena
Nordman-Knutson , Jouko Peussa and Kirsi Sormunen as
members of the Board of Directors. The AGM re-elected
Reima Kerttula as Chairman of the Board of Directors.
In 2020 the Nomination Board comprised persons
nominated by the four largest shareholders as of 30
September 2020 as well as the Chairman of the Board of
Directors acting as expert member: Malin Björkmo
(Handelsbanken Fonder), Kalle Saariaho (OP Fund
Management Company), Olli Viitikko (Sijoitusrahasto
Taaleritehdas Mikro Markka), Caroline Sjösten (Swedbank
Robur Fonder) and Reima Kerttula, Chairman of the Board
of Directors, as expert member. The AGM of Exel
Composites has elected a permanent Shareholders’
Nomination Board, which purpose is to prepare proposals
concerning the Board members and their remuneration for
the General Meeting.
Ernst & Young, Authorized Public Accountants, with
Johanna Winqvist -Ilkka, APA, as principal auditor, were
elected to serve as company auditor in the AGM in 2020.
At the end of 2020, the Group Management Team of Exel
Composites consisted of the following persons: President
and CEO Riku Kytömäki, CFO Mikko Kettunen, SVP
Operations Callum Gough, SVP Human Resources Tiina
Bies, SVP Business Unit Manager, Belgium Kari Loukola,
SVP Business Development Mikko Rummukainen, SVP R&D
and Technology Kim Sjödahl and SVP Sales and Marketing
Olli Tevä .
Incentive programs
Exel Composites’ short-term incentive program covers all
employees. Office employees receive a monthly salary
and an annual bonus tied to the achievement of annually
established goals emphasizing growth and profitability.
Production employees are also eligible for incentive
compensation. Their annual bonus is mainly based on
factory profitability and production related performance
indicators.
The Group has long-term incentive programs for the
President and CEO and the Group Management Team and
selected key employees of the company. The aim of the
programs is to combine the objectives of the shareholders
and the executives in order to increase the value of the
company, to commit the executives to the company and
to offer the executives a competitive reward program.
The Board of Directors makes the decision on the program
annually.
In February 2020, Exel Composites announced the
continuation of a share-based long-term incentive
program for the top management of the company. The
2020 performance-based plan is part of the share-based
long-term incentive program published on 4 May 2017.
Similarly to the previous programs within this plan, the
performance targets applied to the plan that commenced
at the beginning of 2020 are adjusted operating profit
(EBIT) and the total shareholder return of the company’s
share (TSR).
More information on remuneration and Exel Composites’
Remuneration Policy is available at
www.exelcomposites.com.
Share and share performance
Exel Composites’ share is listed on Nasdaq Helsinki Ltd in
the Industrials sector.
On 31 December 2020 , Exel Composites’ share capital was
EUR 2.1 million and the number of shares was 11,896,843.
There were no changes in the share capital during the
financial year.
During the financial year, Exel Composites held a total of
67,150 of its own shares which are part of the share-based
long-term incentive program for the top management.
On 31 December 2020 , the share price closed at EUR 7.38.
During the review period, the average share price was
EUR 5.55, the highest share price EUR 7.38 and the lowest
share price EUR 3.40.
A total of 4,820,621 shares were traded at Nasdaq
Helsinki Ltd., which represents 40.8% of the average
number of shares. On 31 December 2020 Exel Composites’
market capitalization was EUR 87.3 million (76.6). Total
shareholder return (TSR) in 2020 was 19.1% (69.2).
Shareholders and disclosures
Exel Composites had a total of 6,349 (5,506) shareholders
on 31 December 2020 .
During the financial year Exel Composites received no
flagging notifications in accordance with the Finnish
Securities Market Act regarding changes in shareholdings.
According to the company’s shareholder register held by
Euroclear Finland Oy, at the end of 2020 Exel Composites’
two largest shareholders were nominee registers managed
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by Skandinaviska Enskilda Banken AB (11.9%) and Nordea
Bank Abp (9.0%).
On 31 December 2020, 0.99% (0.84) of the shares and
votes of the Company were owned or controlled, directly
or indirectly by the Presi dent and CEO and the members
of the Board of Directors.
Information on the company’s shareholders is available on
the corporate website at www.exelcomposites.com.
Significant related-party
transactions
In 2020, no significant related-party transactions were
conducted between the Group and its related parties.
Events after the reporting
period
Exel Composites continues the long-term incentive
program for top management
In February 2021, the Board of Directors of Exel
Composites decided on the continuation of the share-
based long-term incentive program for the top
management of Exel Composites. The 2021 performance-
based plan is part of the share-based long-term incentive
program published on 4 May 2017. Similarly to the
previous programs within this plan, the performance
targets applied to the plan commencing at the beginning
of 2021 are adjusted operating profit (EBIT) and the total
shareholder return of the company’s share (TSR).
Payment of the remaining purchase price related to the
acquisition of Nanjing Jianhui
In December 2020, Exel Composites was notified that the
seller will exercise their put option effective 1 January
2020, leading to the payment of the remaining 30% stake
during the first quarter of 2021. The estimated remaining
purchase price, which includes a variable component
depending, among other things, on the profit
development of the business, is approximately EUR 3.6
million. The total acquisition price of the company thus
amounts to EUR 8.8 million. The entire remaining
purchase price is booked as a liability in Group balance
sheet and the payment will therefore have no impact on
the Group income statement.
Guidance for the full year 2021
Exel Composites expects revenue and adjusted operating
profit in 2021 to increase compared to 2020.
Board proposal for dividend
distribution
According to Exel Composites’ financial targets and
dividend policy, the company’s ambition is to distribute a
minimum of 40% of net income in dividends, when
permitted by the financial structure and growth
opportunities.
At the end of the financial year 2020, Exel Composites
Plc’s distributable funds totaled EUR 12.9 million, of
which profit for the financial year accounted for EUR 3.5
million.
The Board has decided to propose to the Annual General
Meeting that a dividend of EUR 0.20 (0.18) per share be
paid for the financial year 2020, which is 44.1% of net
income.
As a basis for its proposal, the Board of Directors has
made an assessment of the Group’s financial position and
ability to meet its commitments, as well as the Group’s
outlook and investment requirements. The Board
considers the proposed dividend well-balanced given the
prospects, the capital requirements and the risks of the
Group’s business activities.
The Board of Directors has decided to propose the record
date for dividends to be 25 March 2021. If the Annual
General Meeting approves the Board’s proposal, it is
estimated that the dividend will be paid on 1 April 2021.
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Sustainability and corporate responsibility
Statement on non-financial information
Exel is committed to responsible and sustainable
operations through its corporate values: customer
focused, integrity, One Exel, caring and innovative.
Sustainability is an important part of Exel Composites’
business, products and solutions.
Exel Composites’ material sustainability topics are the
following:
●
Environmental responsibility
: Responsible products,
responsible operations
●
Social responsibility
: Responsible employer, health and
safety, diversity and nondiscrimination, human rights in
own operations and supply chain
●
Corporate Governance
: Corporate responsibility
governance and compliance, anti-corruption and bribery
The company’s currently valid material sustainability
topics have been defined based on an internal materiality
analysis and validated by the Group Management Team as
well as the Board of Directors of the company. Exel’s
material sustainability topics are reviewed annually and
revalidated as part of the regular process for reporting on
financial and non-financial information.
Exel Composites uses the Nasdaq ESG (Environment, Social
and Governance) Guide as reference for reporting non-
financial information. In 2020, Nasdaq named Exel
Composites as a ‘Nasdaq ESG Transparency Partner’. The
information is not assured by an external party but
reviewed by the auditors of the company for consistency
as part of the Board of Directors’ Report and the audit of
the financial statements.
Exel Composites is also committed to the Responsible
care-program for the chemical industry. The main themes
of the program are a sustainable use of natural resources,
a sustainable and safe production and products, the work
community’s wellbeing, and an open interaction and
cooperation. The results of the program are evaluated
based on indicator data, which is collected annually.
Exel Composites’ solutions serve customers in a wide
range of industries around the world. Our products are
used in several industries from cleaning equipment to
power generation and transmission. Exel’s main
stakeholders include customers, employees, business
partners and suppliers, shareholders, the financial
market, authorities, industrial associations and general
community. The company’s business model is described in
further detail on page 9.
The main risks related to the company, including risks
related to sustainability, are evaluated by Exel’s Board of
Directors on a quarterly basis as part of its risk assessment
process. A description of the company’s risk management
process and main risks is available at the company’s
website and as part of the Corporate Governance
Statement 2020, which is also available at the company’s
website at www.exelcomposites.com.
Value creation and impact for Exel Composites’ stakeholders in 2020
(EUR million, unless otherwise stated)
SOCIAL
ENVIRONMENTAL
FINANCIAL
Employees
Composites help save resources and
reduce the environmental impact of the
end product
Composites are used in sustainability
enhancing technologies and solutions
Responsible use of chemicals
Operational focus on circular economy
40.4%
Reused waste
-11.8%
Change in amount of composite waste
per ton produced
Customers
Shareholders
30.8
Salaries and social costs
108.6
Revenue
2.1
Dividends paid
8.1
Number of accidents per million
hours worked (LTI)
2.9
Research and
development
0.45
Earnings per
share, EUR
Community
Business partners
1.8
Income taxes
61.9
Purchased materials and services and
other operating expenses
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Material sustainability topics and key activities in 2020
ENVIRONMENTAL RESPONSIBILITY
Responsible products
Safe and reliable products that help save
resources
●
Meeting or exceeding customers’ safety and quality specifications, passed
customer audits and participation in customer sustainability programs
●
Wind power as Exel’s largest customer industry
●
Participation and cooperation with industry associations
Responsible operations
Decreasing the environmental and climate
impact of own operations
●
Circular Economy initiative and actions to reduce the amount of composite
waste and surplus material, recycling and reuse
●
Continued measurement and actions to reduce energy consumption and
improving energy efficiency
●
Research and participation in projects for the reuse of composite waste
SOCIAL RESPONSIBILITY
Responsible employer
Talent management and Exel as an
inspiring and fulfilling workplace
●
Initiative to map out key competences in the organization
●
Performance Development Reviews (PDR) in the Group
●
Development of HR processes including PDR and on-boarding
●
Employee trainings
●
Cooperation with local communities, local universities and technology
centers
Diversity and non-discrimination
Fair and respectful treatment of all
●
Zero tolerance policy on discrimination incidents
●
Continued enforcement of corporate values and Code of Conduct
Health and safety
Safe environment to employees and
neighbors
●
Safety measures across the Group related to the Covid-19 pandemic
●
Reducing LTI, safety improvements in all units
●
Actions to reduce VOC (volatile organic compounds) emissions, continuous
monitoring and actions to improve breathing air quality
●
Safety trainings and communication
●
Regular safety audits and inspections, active work by local Health & Safety
Committees at all sites
Human rights in own operations
and supply
Support and respect for human rights
●
Nine remote supplier audits conducted
CORPORATE GOVERNANCE
Corporate responsibility
governance and compliance
High standards of integrity and ethical
business principles
●
Continued enforcement of corporate values, Code of Conduct and Supplier
Code of Conduct
Anti-corruption and bribery
Zero tolerance for bribery or corruption
●
Continued enforcement of corporate values, Code of Conduct and Supplier
Code of Conduct
●
“Report misconduct”-channel to report Code of Conduct violations or
observations
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Environmental responsibility
Exel Composites is committed to decreasing the impact of
its own operations on the environment, as well as to
making products that contribute to decreasing custom ers’
environmental footprint. Sustainability and mitigating
climate change are global megatrends that increase
composites demand in the long-term.
Exel Composites’ Quality, Environmental, Health and
Safety (QEHS) Policy, Chemical Policy as well as the Group
Code of Conduct and Supplier Code of Conduct guide the
company’s measures related to quality and environmental
impact. The company’s operations are governed by
national environmental permits and complies with the
requirements of the standards ISO 9001:2015 (quality
management), ISO 14001:2015 (environmental
management), ISO 45001:2017 (occupational health and
safety) and ISO 26000 (social responsibility).
Exel Composites actively participates in the work of
industry associations. This is an important way to ensure
being up to date on the latest developments in
environmental matters, activities to mitigate climate
change, advances in environmenta l technology and new
regulatory measures. Through its participation, Exel can
also promote work related to standards for composites,
building and structural design, such as the Eurocode. In
addition to local composites associations, Exel is a
member in EPTA, European Pultrusion Technology
Association, EuCIA, European Composites Industry
Association, and American Composites Manufacturers
Association, ACMA.
Exel Composites’ environmental as well as sustainability
matters are assessed as part of an overall group-wide
quality management system. It is the responsibility of the
Group Management Team to continuously develop and
implement the system. Environmental impact, energy
consumption, the use of raw materials and the amount of
waste are monitored monthly on a Group level.
Environmental risks are also assessed on factory level
during inspections and controls conducted by national
authorities and certification audits. According to Exel
Composites’ risk assessment, fires, emissions, and
chemical leakages into the water or ground present the
biggest environmental risks. These risks are mitigated
through pre-emptive safety measures, such as regular
employee trainings, safety equipment and gear, sprinkler
systems as well as safe storing of risky chemicals.
Responsible products
Safe and reliable products that help save
resources through energy and material
efficienc ies, durability, as well as reduced
maintenance requirements
Customers are at the center of all Exel Composites’
business decisions and not meeting the agreed
requirements could have negative impact on the
company ’s business and its reputation. Customer
satisfaction is regularly evaluated using for example the
Net Promoter Score-method (NPS) and customer surveys.
Ensuring the safety of all chemicals used in its products is
a priority for Exel Composites. Many of our customers
require us to comply with their Supplier Code of
Conducts. Our customers also audit Exel against their
sustainability, quality and safety requirements. In
addition, Exel participates in sustainability programs
invited by Exel’s customers. The purpose of these
programs is to ensure a common approach to
sustainability topics.
Saving resources with composites
The biggest impact of Exel Composites’ products on the
environment and climate is after the manufacturing
phase, during the use of the end-product. Because of
their lightness, mechanical properties and durability,
composites provide for longer life cycles and improved
performance, thus lowering the overall environmental
impact of the end-product. Composites are often lighter
than alternative materials. They can result in lower
installation and maintenance costs, easier handling and
lower energy consumption over the lifecycle of the
product. Furthermore, composites are non-corrosive with
a long life span, which reduces the need for maintenance
and replacement.
A reliable life cycle assessment for composites covering
the whole lifecycle is challenging as they often are only
one part of an end-product that consists of several
components and materials. An EuCIA developed tool helps
calculate objectively the environmental impact of a
composite product for the manufacturing phase, i.e.
‘cradle to gate’. It is being increasingly used by Exel.
Due to properties such as lightness and energy efficiency,
composites are also used in sustainability enhancing
technologies and solutions, such as wind power and
electric cars, among other. In 2020, wind power
continued to grow as Exel’s largest customer industry.
Demand in this customer industry is driven by regulations
aiming to reduce the impact of climate change and
favoring sustainable energy sources. In addition, the
average size of new wind turbines is growing, yielding to
requirements of longer and stiffer wind turbine blades.
Exel’s composite solutions to wind turbine manufacturers
enable the design of lighter and bigger rotor blades as
well as improved energy efficiency even with low winds.
In 2020, Exel also joined a project led by the University of
Aachen in Germany, where companies from different
fields cooperate to investigate the impact of composites
and other materials on the weight, performance and cost
of the battery casing used in electric cars.
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Responsible operations
Decreasing environmental and climate impact
of own operations through waste management ,
energy efficiency and reduced emissions
Energy efficiency and emissions
Exel’s greenhouse gas emissions from own operations are
mostly carbon dioxide that is formed in the company’s
own use of fuels, transportation of materials and external
power production as well as heating. Sourcing of raw
materials is as local and close to the manufacturing unit
as possible, which reduces emissions from transportation.
Exel Composites’ long-term target is to reduce its total
use of energy proportional to production. The primary
energy source is electrical energy. In addition to
production, heating has a major impact on the total
energy usage as Exel’s largest production sites are
situated in northern locations. Energy use is actively
measured. Consumption is reduced through measures such
as continuous improvements in all units related to
operational efficiency, the use of bio-fuel operated
heating systems, heat recovering air exchange equipment,
heat pumps, LED lighting and inverter-controlled drives,
where applicable. In 2020, our unit in Great Britain joined
the British Plastics Federation in a two-year scheme to
reduce energy consumption. In the new manufacturing
facility in Austria, energy efficiency, waste management
as well as health and safety issues have been widely
considered already throughout the design phase.
Production KPI’s
2020
2019
2018
1)
Energy usage, GWh
21.4
22.1
19.9
Energy usage, change from previous year, %
-2.8
11.0
6.3
Energy usage in proportion to production, change from previous year, %
-3.5
-17.0
-15.0
Energy usage is impacted mainly by the number of manufacturing units and
their geographical location (i.e. heating need) as well as production load
Composite waste per ton produced, change from previous year, %
-11.8
-5.3
26.6
The amount of composite waste is dependent on the product mix
Reused waste, %
40.4
33.7
43.3
Possibilities to reuse composite waste vary from country to country.
1)
financial year.
Waste management
The main operational efficiency goal for Exel Composites
is to reduce operational or composite waste, which is
inevitably generated as part of the regular production
process. Exel has a waste management plan and
continuously monitors and aims to reduce the amount of
waste produced. The amount is dependent on the product
mix and is therefore volatile. As products are mostly
developed “on-demand” in close cooperation with
customers, the use of raw materials is as efficient as
possible. Factors such as product design and complexity,
size of production batches and the quality of raw
materials also contribute to the amount of surplus.
Continuous dialogue with the customer in the early design
stages is therefore critical from a quality and production
point of view as well as from a waste management
perspective .
Exel is committed to reusing and recycling surplus
materials from own production to prevent landfilling, for
example, by reusing surplus resin mixes whenever
possible. Where logistically, technologically and
economically possible, composite waste goes to recycling.
This means, for example, grinding composite waste to be
used as raw material in the production of cement, which
is possible already today for example in Central Europe. In
Finland, the volumes of surplus usable as raw material
have been too low and distances too long for it to be
economically viable. In 2020, Exel joined a project,
coordinated by the Finnish Plastics Federation and
starting in 2021, that aims to find a solution to this
challenge. Our business unit in the United States
partnered in 2020 with a local carbon fiber recycling
company. The unit also invested in a new acetone
reclaiming system, which reduces surplus acetone as well
as the need for new acetone. In Austria, acetone is also
recycled, and the unit’s acetone usage and consumption
were evaluated in 2020.
The composite waste that cannot be recycled is recycled
through combustion where possible. In Central Europe,
among others, incineration of waste is widely used, but
not currently feasible in the northern location. Other than
composite waste is recycled whenever possible.
In 2020, Exel Composites introduced a Group-wide
Circular Economy initiative through which we commit to
significantly improving the environmental footprint of our
own operations. The initiative involves several focus
areas, the first one of which targets to significantly
reduce the amount of waste going to landfill. In addition,
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the aim is to recycle all recyclable waste and find
innovative ways to reuse or repurpose production waste.
The initiative also aims to instill a continuous waste
reduction culture across the Group. Engaging employees
and customers alike in the process, as well as researching
current industry best practices, are also important
aspects of the initiative.
Climate-related risks and opportunities
RISKS
OPPORTUNIT IES
POLICY AND LEGAL
●
Regulation, which radically reduces consumption
in general.
●
Regulation changes impacting composite
production specifically, e.g. regarding chemicals
or their risk classification.
●
Regulation hampering adaptation to composites or
delays in the implementation of favorable
standards.
●
Regulatory differences in Europe, America and
Asia.
PRODUCTS AND SERVICES
●
Composites are non-toxic, durable and maintenance-free
products, and therefore climate friendly. A composite
product does not leak or emit anything into the air or the
ground.
●
Regulations mitigating climate change increase demand for
composites.
●
Climate friendly product design and use in customer
acquisition.
●
Leveraging and expanding collaboration with research centers
and universities.
TECHNOLOGICAL
●
Favoring other materials and not considering the
climate-impact on the full lifecycle of the end
product.
●
Potential new, climate friendlier production
technologies e.g. solvent -free technologies.
RESOURCE EFFICIENCY
●
Increasing energy efficiency.
●
Innovation in recycling and reuse of composites.
●
Increasing the use of bio-based raw materials.
●
Climate-friendly developments in production technology, e.g.
closed bath impregnation of fibers.
MARKET AND REPUTATION
●
Reputational risk due to the challenging recycling
of pultruded composites.
●
Reputational risk due to misunderstanding
composites as merely “plastics”.
MARKETS
●
Increasing demand of products that mitigate climate change.
●
Building awareness about the benefits of composites and
production technologies used by Exel.
●
Expanding into new applications and industries where
possibilities of composites are yet unveiled.
PHYSICAL
●
Extreme weather conditions that cause
interruptions in production or in the supply chain.
Climate-related risks and opportunities both could potentially have a significant financial impact on Exel Composites’
business in terms of revenue gain or loss, unexpected expenditures or investments requirements. Climate-related risks could
also impact the valuation of Exel’s assets or ability to obtain financing.
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Social responsibility
Responsible employer
General HR management
Talent management and Exel as an inspiring
and fulfilling workplace
Human resources at Exel Composites focuses on individual
and team performance, employee development,
increased personal engagement and retention, as well as
improved attractiveness as an employer. Human resources
are managed through the company’s corporate values,
Code of Conduct, the HR policy and the people strategy.
Talent management
The main components of Exel Composites’ talent
management include recruitment, on-boarding,
performance management and appraisal, succession
planning as well as exit processes.
The annual Performance Development Review (PDR)
process enables employees together with their manager
to identify areas of their professional development. The
development of the PDR process continued in 2020,
focusing especially on blue-collar employees. A pilot
project was initiated in Finland in connection to this.
Technology leadership creates competitive advantage for
Exel, and maintaining and developing employees’
expertise is critical especially within R&D. In 2020, an
initiative was kicked off to map out and secure key R&D
competences required to achieve Exel’s strategic targets.
A similar analysis is planned also across other functions.
Professional development in Exel follows a 70-20-10
model where most of the learning is in-house on the job,
20% is through Professional development in Exel follows a
70-20-10 model where most of the learning is in-house on
the job, 20% is through role exchange and mentoring, and
10% is learning through external training programs. In
2020, many of the training programs were organized
online due to Covid-19 pandemic related travel
restrictions. In this manner, Group-wide trainings such as
the “My role in OneExel” program nevertheless took place
as planned. This two-year program was introduced to
deepen the collaboration between R&D and sales teams in
their dialogue with the customer. In 2020, all managers in
Finland also participated in a leadership training.
exchange and mentoring, and 10% is learning through
external training programs. In 2020, many of the training
programs were organized online due to Covid-19
pandemic related travel restrictions. In this manner,
Group-wide trainings such as the “My role in OneExel”-
program took nevertheless place as planned. This two-
year program was introduced to deepen the collaboration
between R&D and sales teams in their dialogue with the
customer. In 2020, all managers in Finland also
participated in a leadership training.
Employee development and good on-boarding processes to
new employees play a key role in employee retention.
The development of on-boarding processes across the
Group continued in 2020 with special focus on blue
collars. The work included the introduction of buddy
programs and detailed process descriptions regarding
safety topics. The ambition is to have unified on-boarding
processes with common elements Group-wide.
Exel as an inspiring and fulfilling workplace
Exel Composites aims to be an inspiring and fulfilling
workplace for its employees. In 2020, Exel Composites
conducted an employee satisfaction survey in the business
unit in Finland, which represents a third of all Group
employees. The purpose was to understand employees’
views concerning Exel as an employer, communication
within the company and employee satisfaction in general.
The implementation of the action points based on the
results started in 2020 and continues in 2021 both in
Finland and elsewhere in the Group. The employee
satisfaction survey is planned to be conducted also in the
remaining Group locations.
Exel Composites’ has an important social role as a local
employer and supporter of regional vitality as most of the
Group’s manufacturing units are located in small towns.
Exel supports local communities for example through
small donations to local associations and non-political
activities. In 2020, the Joensuu unit in Finland donated
old floorball sticks to a local school and collaborated with
a local foundation for disabled persons. Through this
collaboration a group of disabled persons in rehabilitation
were given the assembly of some 60,000 Exel
manufactured broom shafts. In return they received a
monetary contribution to their recreational activities.
Exel also cooperates with local universities and chambers
of commerce, among others, to increase awareness of
Exel as a company and as an attractive employer as well
as of the composites industry in general. The new
manufacturing site in Kapfenberg, Austria, is an important
investment and opportunity also for the local community.
In 2020, Exel continued its cooperation with universities,
research institutes and technology centers in Finland,
Belgium, Italy, UK and Austria.
In 2020, Exel Composites updated its visual brand
identity, which can be seen for example in the new
corporate website. Along the entirely new facility in
Austria, also other Group locations received facelifts and
interior design elements were incorporated in the spirit of
the Circular Economy initiative.
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Employee-related KPIs
2020
2019
2018
Number of employees, on average
665
660
647
Number of employees, end of period
674
648
675
Employees' age, average
43
43
44
Employees with permanent contract, %
97.5
98.8
97.1
Employees with temporary contract, %
2.5
1.2
2.9
Number of years at Exel, average
8.4
8.0
8.8
Employee turnover, %
18.9
25.6
20.4
Male/ female, %
79.3
/
20.7
80.0
/
20.0
78.0
/
22.0
Top management (Board of Directors, Group Management Team),
male/female, %
76.9
/
23.1
76.9
/
23.1
83.3
/
16.7
Employees per region, %
Gender diversity, %
Age distribution, %
Diversity and non-discrimination
Fair and respectful treatment of all
Exel Composites’ corporate values and Code of Conduct
state that everybody shall be treated with fairness,
respect and dignity in the workplace and beyond by
management and fellow employees. Exel follows a zero
tolerance policy for discrimination. All employees are
expected to report any discriminant behavior or other
Code of Conduct violations using for example the “Report
misconduct” channel.
Diversity is encouraged and respected in the work place,
all recruiting decisions as well as in the composition of
the company’s Board of Directors. The shareholders’
Nomination Board follows the company’s principles of
diversity in making their proposal to the Annual General
Meeting regarding members to Exel Composites’ Board of
Directors, paying attention to the members’ expertise,
know-how and viewpoint as well as age and gender. The
tasks of the Nomination Board include the annual revision
and suggestion of changes, if necessary, to the principles
of diversity of the Board of Director.
EXEL COMPOSITES
ANNUAL
FINANCIAL
REPORT
2020
BOARD
OF
DIRECTORS’
REPORT
| 23
Health and safety
Safe environment through focus on preventive
actions, training , air quality and chemical
safety
The health and safety of our employees, customers and
business partners is a priority for Exel Composites. The
health and safety issues are an integral part of responsible
management, and all the sites of the Group have a safety
organization with defined responsibilities. It is important
for Exel that health and safety issues are taken care of
together with the employees, monitored and developed.
The management of health and safety issues is based on
identified risks and guided through the global Quality,
Environmental, Health and Safety (QEHS) Policy, the
company’s Chemical Policy, as well as the ISO 45001 and
ISO 26000 standards.
Our response in relation to Covid-19 pandemic
The health and safety of our employees, customers and
business partners is a priority for Exel Composites. Across
the Group, strict safety and hygiene instructions were
implemented early in the year in accordance with the
instructions of local health authorities in order to stop the
spreading of the Covid-19 pandemic. Online meetings and
remote work were preferred, whenever possible. On site
measures included keeping safety distances, use of facial
masks, body temperature controls, and re-organization of
shifts to ensure business continuity in case of infections or
quarantines. International travelling, travelling between
sites as well as customer visits required management
permission and were limited to minimum. External visits
to sites were also reduced to minimum. Continuous
internal communication on Covid-19 related concerns was
emphasized through a variety of channels. Situation
updates, safety measures, and best practices were
continuously monitored at top management level and
between units.
Many of our manufacturing units are located far from
densely populated areas, which has reduced the impact of
the pandemic on the company. During the year, several
employees within our organization have been in official or
preventive quarantines, yet there were only a few
confirmed Covid-19 cases in the Group.
Given the continued uncertainty related to the Covid-19
pandemic, close monitoring of the situation continues a
priority for us.
Safety KPI’s
2020
2019
2018
2016
2015
Lost time injuries, LTI 1)
8.1
10.8
16.9
20.1
31.3
Reports on unsafe conditions
976.0
1,175.0
996.0
890.0
1,063.0
1)
Accident prevention and communication
The core of Exel Composites' health and safety efforts lies
on preventive measures and regular safety trainings as
well as reporting based on active risk assessments as well
as internal and external evaluations.
Reducing lost time injuries (LTI) was in 2020, as in the
past years, a focus area. LTI is one of the main key
performance indicators used for monitoring health and
safety issues. Every LTI is inspected and reported to the
top management as well as other units to ensure the
lessons learned are used to prevent accidents elsewhere.
Near-miss and unsafe condition reporting is used for
accident prevention in all factories. In potential accident
situations, immediate corrective and protective actions
are always done in cooperation with local authorities to
minimize harm or danger to the environment or people.
Internal LTI targets are always set to be challenging. In
2020, the accident rate continued to improve year on
year, and we reached an all-time low. Our unit in the
United States celebrated two years with no LTI and also in
Belgium, Austria and in one of our Chinese units there
were no accidents in 2020.
In 2020, monthly safety audits, daily safety patrols as well
as regular internal and external safety inspections at the
facilities were carried out across the Group’s production
units. In addition to Covid-19 related measures,
continuous health and safety improvements were made
during the year. These included for example investments
in equipment, better cleanliness and order in production
areas, improved lighting, more safety instructions, etc. In
Finland, lifting methods and equipment were reviewed
and replaced to ensure even safer operation. In Austria,
new safety containers for safe chemical storing were
taken into use with shorter and thus safer handling
distances. All local Health & Safety Committees continued
their active work with safety topics, preventive wellness
and employee wellbeing.
Regular safety awareness , training for all employ ees and
communication across all units continued during the year
as part of normal operations. In addition to hygiene and
safety instructions due to the Covid-19 pandemic, other
regular training topics included fire drills, fire
extinguishing, monitoring of breathing air quality, first
aid, evacuation, working with dangerous chemicals and
communication in accident situations. All new employees
are trained on the first day as part of their on-boarding
EXEL COMPOSITES
ANNUAL
FINANCIAL
REPORT
2020
BOARD
OF
DIRECTOR
S’
REPORT
| 24
process. Due to the Covid-19 pandemic, the trainings
were provided online or in a video format. In the business
unit in the United States, a regular E-Safety training
program was implemented for all existing and new team
members, including safety information related to the
pandemic. All employees and visitors alike are provided
with safety instructions and appropriate safety gear
whenever in factory premises.
Air quality and chemical safety
A variety of chemicals are used at Exel Composites in the
production process, which are strictly controlled by a
Group-wide Chemical Policy. More than half of the
employees are in daily contact with dangerous or
flammable chemicals in their work. The main
occupational health and safety risks relate to the
possibility of fire or health problems due to allergies or
long-term exposure.
The chemical handling processes and personal protection
equipment at Exel are designed and allowed for chemicals
that are non-toxic, non-carcinogenic and non-mutagenic
chemicals only. The Group is continuously vigilant about
updates in listings of chemical Substances of Very High
Concern, such as in the REACH and RoHS declarations, in
order to ensure it stays ahead of regulations. In addition,
the use of less hazardous substitutes is proactively
researched. In Austria, for example, a suitability study
was initiated in 2020 in order to substitute a used
hydrogen peroxide by a less-hazardous material.
The manufacturing of composites with generally available
raw materials also entails emitting volatile organic
compounds (VOC). Exel regularly monitors and conducts
tests on its VOC emissions, such as styrene, and invests in
reducing them in order to always be within the permitted
levels as required by local legislation and regulations.
Monitoring air quality and VOC emissions as well as
efficient ventilation in all sites is an important part of
health and safety. In the new Austrian manufacturing
facility, efficient styrene and dust extraction systems,
among others, ensure improved performance and less
emissions.
Employees use regularly inspected safety gear including
safety shoes, a uniform with chemical resistant gloves,
ear and eye protection, as well as respiratory protection
as necessary. Employees’ health is also monitored through
regular medical checks. Styrene exposure is monitored
through mandelic acid tests based on urine samples.
Necessary measures are taken if any high or increased
levels are found. Reviewing personal working methods and
ensuring appropriate use of personal protective
equipment is usually enough as a corrective measure.
Also, other actions such as smaller resin baths have been
seen to decrease styrene emissions.
Exel’s suppliers too are required to commit to safety and
to taking all necessary steps in their operations in order to
avoid damage to people or the environment. Suppliers
receive the Supplier Code of Conduct as part of their
agreement with Exel.
Human rights in own operations and supply
Support and respect for human rights
Exel Composites’ corporate values and Code of Conduct
state that the company supports and respects the
protection of human rights in all its operations, including
its supply chain, and follows global human and labor
rights conventions. No form of forced or child labor is
tolerated in the Group, nor from any of its business
partners or third parties associated with the Group.
New employees get familiarized with Exel’s Code of
Conduct already during the recruitment process and agree
to it as part of their employment contract. Employees are
encouraged to report any human rights or other Code of
Conduct violations using for example the “Report
misconduct” channel.
The majority of Exel’s own manufacturing units are
located in countries where the risk for human rights
violations is generally considered low. The possible risks
in relation to these are mitigated through dedicated local
supply chain organizations as well as through regular
group management members’ visits and reviews.
The Group sources components and materials for its
manufacturing processes from multiple sources and
multiple countries. Most of the company’s supply chain is
composed of large, international manufacturers or their
distributors that often have established processes and
high sustainability standards and therefore are considered
low risk in relation to human rights violations. These
suppliers and manufacturers are systematically audited
also by several other customers than Exel, as well as
other stakeholders. All suppliers are chosen with care and
based on objective factors such as quality, reliability,
delivery and price, in addition to ethical standards and
sustainability.
Exel Composites has a Supplier Code of Conduct which has
the purpose of confirming that suppliers comply with
Exel’s requirements regarding human rights and other
Code of Conduct topics, appropriate legislation and
regulations, including chemical safety.
Exel Composites conducts supplier audits primarily
through factory visits where an initial self-assessment is
verified. The audit topics include human rights, employee
health and safety, monitoring of dangerous particles,
among others. Audited suppliers are selected based on
purchase volume, the criticality of the supplier as well as
its location. In case of violations action is taken either to
allow time for corrective action or to terminate the
relationship. In 2020, a total of nine key suppliers were
audited on a global level resulting in some minor feedback
items to be followed up. Due to the travel restrictions in
connection with the Covid-19 pandemic, the audits were
conducted mostly online and using verification methods
not requiring travel.
There were no reported human rights violations in Exel’s
own operations or within the company’s supply chain in
2020.
EXEL COMPOSITES
ANNUAL
FINANCIAL
REPORT
2020
BOARD
OF
DIRECTORS’
REPORT
| 25
Corporate Governance
Corporate responsibility governance and
compliance
High standards of integrity and ethical business
principles
Exel Composites is committed to exercising high standards
of integrity and following ethical business principles
through its corporate values, Anti-Corruption Policy and
Code of Conduct. The Board of Directors is Exel
Composites’ highest governance body in relation to
sustainability issues and is responsible for the
management of the company and governs risk
management through a risk management policy. In 2020,
all Board members were confirmed independent of the
company and its major shareholders.
The Board of Directors makes quarterly risk assessments
as part of the review and approval process of each set of
business reviews, half year financial reports and annual
financial statements. Risk factors are also considered in
connection with any future guidance disclosed by the
company. The material sustainability topics are validated
by the Board of Directors and the related reporting of
Exel Composites is annually reviewed alongside the
publication of the company’s Annual Financial Report and
signed by the Board of Directors.
Discussion and internal trainings about the company
values, the Code of Conduct, and what it means to act in
accordance with them, is an important element of good
governance and the “OneExel” culture. New employees
get to view the Code of Conduct already as part of their
recruitment process and it is part of their employment
contract. An anonymous and confidential “Report
misconduct” channel is available at the company’s
website.
Anti-corruption and bribery
Zero tolerance
Exel Composites does not tolerate bribery or corruption in
any form as stated in its Code of Conduct, Supplier Code
of Conduct and Anti-Corruption Policy. Any violations
could constitute serious damage to Exel’s business and
reputational loss, and the company follows a zero
tolerance policy concerning corruption in all countries of
operation. Employees are expected to report any Code of
Conduct violations or observations using for example the
“Report misconduct” channel.
In 2020, the company was not informed of any incidents
of corruption. There were no pending legal cases
regarding corruption brought against the company or its
employees. The company received two Code of Conduct
notifications through the “Report misconduct” channel,
which were duly investigated.
Corporate Governance Statement
Exel Composites issues a Corporate Governance Statement
for the financial year 2020, prepared in accordance with
the Finnish Corporate Governance Code issued by the
Securities Market Association, effective as of 1 January
2020. The Corporate Governance Statement is issued
separately from the Board of Directors’ Report. Further
information concerning corporate governance matters is
available at Exel Composites’ website at
www.exelcomposites.com.
EXEL COMPOSITES
ANNUAL
FINANCIAL
REPORT
2020
KEY
INDICATORS
2016
-
2020
| 26
KEY INDICATORS 2016-2020
Key indicators illustrating financial trends
2020
2019
2018
2017
2016
IFRS 2)
IFRS 2)
IFRS 2)
IFRS 2)
IFRS 2)
Revenue
108,595
103,784
96,608
86,255
73,079
Operating profit
9,417
5,087
2,217
6,081
649
% of revenue
8.7
4.9
2.3
7.1
0.9
Adjusted operating profit
9,708
7,160
5,018
6,319
2,621
% of revenue
8.9
6.9
5.2
7.3
3.6
Profit before provisions and income taxes
7,124
3,885
1,705
5,335
678
% of revenue
6.6
3.7
1.8
6.2
0.9
Total assets
96,800
85,352
74,558
64,380
53,075
Return on equity %
19.5
9.2
1.4
15.1
0.7
Return on capital employed, %
14.1
8.6
4.4
14.8
1.7
Equity ratio, %
30.2
30.9
34.7
44.8
51.3
Net gearing, %
107.9
114.9
96.3
30.3
12.2
Capital expenditure
13,220
6,262
9,598
9,974
3,129
% of revenue
12.2
6.0
9.9
11.6
4.3
Research and development costs
2,884
2,859
2,835
1,876
1,747
% of revenue
2.7
2.7
2.9
2.2
2.4
Average personnel
665
660
647
532
479
Personnel at year end
674
648
675
568
455
Share data
2020
2019
2018
2017
2016
IFRS 2)
IFRS 2)
IFRS 2)
IFRS 2)
IFRS 2)
Earnings per share (EPS), EUR
0.45
0.20
0.03
0.36
0.02
Adjusted earnings per share (EPS), EUR 1)
0.45
0.20
0.03
0.36
0.02
Equity per share, EUR
2.44
2.23
2.18
2.43
2.27
Dividend per share, EUR 3)
0.20
0.18
0.18
0.30
0.10
Payout ratio, %
44.07
88.8
550.6
84.5
600.3
Effective yield of shares, %
2.71
2.78
4.50
4.57
1.99
Price/earnings (P/E)
16.26
32.00
122.40
18.40
301.35
Price to book ratio, (P/B)
3.02
2.91
1.83
2.69
2.21
1) Adjusted for the dilution of option rights
2) From continuing operations
3) Board proposal for AGM 2021
EXEL COMPOSITES
ANNUAL
FINANCIAL
REPORT
2020
COMPUTATION
FORMULAE
| 27
COMPUTATION FORMULAE
Return on equity, %
net income + provisions
x 100
equity + minority interest + voluntary provisions
Return on capital employed, %
profit before provisions and income taxes + interest and other financial expenses
x 100
total assets less non-interest-bearing liabilities (average)
Equity ratio, %
equity + minority interest + voluntary provisions
x 100
total assets less advances received
Net gearing, %
net interest-bearing liabilities (= interest-bearing liabilities less liquid assets)
x 100
equity
Earnings per share (EPS), EUR
profit before provisions and income taxes less income taxes +/- minority interest
average adjusted number of shares in the financial period
Equity per share, EUR
equity + voluntary provisions
adjusted number of shares on closing date
Dividend per share, EUR
dividend for the financial period
adjusted number of shares on closing date
Payout ratio, %
dividend per share
x 100
earnings per share (EPS)
Effective yield of shares, %
dividend per share x 100
x 100
adjusted average share price at year end
Price/earnings (P/E), %
adjusted average share price at year end
x 100
earnings per share
Price to book ratio, (P/B)
total number of shares on closing date excluding treasury shares x share price at year end
equity without non-controlling interests
Adjusted operating profit
Operating profit - material items affecting comparability (restructuring costs, impairment losses and reversals, costs
related to planned or realized business acquisitions or disposals, etc.)
EXEL COMPOSITES
ANNUAL
FINANCIAL
REPORT
2020
COMPUTATION
FORMULAE
| 28
Thinking of going
lighter, faster,
or higher?
So are we.
exelcomposites.com
EXEL COMPOSITES
ANNUAL
FINANCIAL
REPORT
2020
AUDITED
FINANCIAL
STATEMENTS
| 29
AUDITED FINANCIAL STATEMENTS
CONSOLIDATED FINANCIAL STATEMENTS .....................................................................................................30
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS...................................................................................34
PARENT COMPANY FINANCIAL STATEMENTS........... .......................................................................................62
NOTES TO THE PARENT COMPANY FINANCIAL STATEMENTS ...............................................................................65
EXEL COMPOSITES
ANNUAL
FINANCIAL
REPORT
2020
AUDITED
FINANCIAL
STATEMENTS
| 30
CONSOLIDATED COMPREHENSIVE INCOME
STATEMENTS
For the financial year starting on 1 January and ending on 31 December
EUR thousands
Notes
2020
2019
Revenue
5
Other operating income
7
Increase (+) / Decrease (-) in inventories of finished goods and work in progress
-892
Materials and services
-41,883
-42,537
Employee benefit expenses
9
-30,807
-31,110
Depreciation
11
-5,845
-5,608
Impairment
11
-9
-8
Other operating expenses
8, 10
-20,062
-20,960
Operating profit
Financial income
17
Financial expenses
16
-3,676
-1,792
Profit before tax
Income taxes
15
-1,755
-1,488
Profit/loss for the period
Other comprehensive income to be reclassified to profit or loss in
subsequent periods:
Exchange differences on translating foreign operations
15
-665
Other comprehensive income to be reclassified to profit or loss in
subsequent periods, net of tax:
-665
Items that will not be reclassified to profit or loss:
Defined benefit plan actuarial gains (+) / losses (-), net of tax
15
-34
-40
Total comprehensive income
Profit/loss attributable to:
Equity holders of the parent company
Comprehensive income attributable to:
Equity holders of the parent company
Total earnings per share, basic and diluted, EUR
13
EXEL COMPOSITES
ANNUAL
FINANCIAL
REPORT
2020
AUDITED
FINANCIAL
STATEMENTS
| 31
CONSOLIDATED STATEMENT OF FINANCIAL
POSITION
As at the end of the financial year
EUR thousands
Notes
2020
2019
ASSETS
Non-current assets
Goodwill
18
Other intangible assets
18
Tangible assets
19
Right-of-use assets
19
Other non-current assets
20
Deferred tax assets
14
Total non -current assets
Current assets
Inventories
21
Trade and other receivables
22
Cash at bank and in hand
23
Total current assets
Total assets
EQUITY AND LIABILITIES
31
Share capital
Other reserves
Invested unrestricted equity fund
Translation differences
Retained earnings
Profit for the period
Equity attributable to the equity holders of parent company
Total equity
Non-current liabilities
Interest -bearing liabilities
24, 29
Non-current lease liabilities
Non-current interest-free liabilities
25
Deferred tax liabilities
14
Total non -current liabilities
Current liabilities
Interest -bearing liabilities
24
Current lease liabilities
Trade and other current liabilities
25
Income tax payable
25
Total current liabilities
Total equity and liabilities
EXEL COMPOSITES
ANNUAL
FINANCIAL
REPORT
2020
AUDITED
FINANCIAL
STATEMENTS
| 32
CONSOLIDATED STATEMENT OF CASH FLOWS
For the financial year starting on 1 January and ending on 31 December
EUR thousands
Notes
2020
2019
Cash flow from operating activities
Profit for the period
Non-cash adjustments to reconcile profit to net cash flow
34
Change in working capital
Cash flow generated by operations
Interest paid
-625
-737
Interest received
Other financial items
-1,368
-586
Income taxes paid
-1,266
-2,362
Net cash flow from operating activities
Cash flow from investing activities
Purchase of non-current assets
-13,081
-6,147
Proceeds from sale of non-current assets
Net cash flow from investing activities
-12,849
-6,087
Cash flow before financing activities
Cash flow from financing activities
Proceeds from long -term borrowings
Change in short-term loans
Instalments of lease liabilities
-1,275
-1,196
Dividends paid
-2,129
-2,216
Net cash flow from financing activities
-901
Change in liquid funds
Liquid funds at the beginning of period
Exchange rate fluctuations on liquid funds
-415
Liquid funds at the end of period
Total cash outflow for leases was EUR
) thousand.
EXEL COMPOSITES
ANNUAL
FINANCIAL
REPORT
2020
AUDITED
FINANCIAL
STATEMENTS
| 33
CONSOLIDATED STATEMENT OF CHANGES IN
SHAREHOLDERS’ EQUITY
As at the end of the financial year
EUR thousands
Share capital
Invested
unrestricted
equity fund
Translation
differences
Retained
earnings
Total
2019
Balance at the beginning of the period
Comprehensive result
Defined benefit plan actuarial gains (+) / loss (-), net of tax
-40
-40
Dividend
-2,131
-2,131
Share-based payments reserve
Correction to previously issued financial statements 1)
-301
-301
Balance at the end of the period
2020
Balance at the beginning of the period
Comprehensive result
-665
Defined benefit plan actuarial gains (+) / loss (-), net of tax
-34
-34
Other items
Dividend
-2,133
-2,133
Treasury shares
Share-based payments reserve
-42
-42
Balance at the end of the period
1) Corrections related to taxations and inventory valuations of previous years.
EXEL COMPOSITES
ANNUAL
FINANCIAL
REPORT
2020
AUDITED
FINANCI
AL
STATEMENTS
| 34
NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS
All figures in the notes are in EUR thousands unless otherwise stated. Significant accounting principles are described in
connection to the relevant note.
The consolidated financial statements of Exel Composites Plc for the year ended 31 December were authorized for issue in
accordance with a resolution of the Board of Directors on 17 February 2021. Final decision to adopt, change or reject the
financial statements is made by shareholders in Annual General Meeting on 23 March 2021.
Exel Composites’ official consolidated financial statements have been published in accordance with the ESEF-directive in
XHTML format including XBRL tags on the primary statements. The audit firm Ernst & Young Oy has issued an independent
auditor’s reasonable assurance report on Exel Composites’ ESEF Financial Statements. In addition, a pdf version on the
consolidated financial statements is available at the company’s website at www.exelcomposites.com.
Exel Composites provides forward-thinking composite
solutions made with continuous manufacturing
technologies to customers in a wide range of industries
around the world. The company’s products are used in
several industries from cleaning equipment to power
generation and transmission.
The company uses its over 60 year’s expertise to help
customers reduce weight, improve performance and
decrease the total lifetime costs of the end product. Exel
wants to be the first choice for sustainable composite
solutions globally. The company’s manufacturing, R&D
and sales network covers all main markets i.e. Europe,
Asia and North America.
The Group’s factories are located in Austria, Belgium,
China, Finland, the United Kingdom and USA. Exel
Composites' share is listed in the Small Cap segment of
the Nasdaq Helsinki Ltd. in the Industrials sector.
Name of reporting entity or other means of identification from
end of preceding reporting period
Explanation of change in name of reporting entity or other
means of identification
Domicile of entity
Legal form of entity
Country of incorporation
Address of registered office of entity
Principal place of business
Description of nature of entity's operations and principal
activities
Name of parent entity
Name of ultimate parent of group
The consolidated financial statements have been
prepared on a historical cost basis, with the exception of
available-for-sale investment securities and certain other
financial assets and financial liabilities that have been
measured at fair value.
NOTE 1 CORPORATE INFORMATION
NOTE 2 BASIS OF PREPARATION
EXEL COMPOSITES
ANNUAL
FINANCIAL
REPORT
2020
AUDITED
FINANCIAL
STATEMENTS
| 35
The consolidated financial statements are presented in
euros and all values are rounded to the nearest thousand
except where otherwise indicated.
Statement of Compliance
The consolidated financial statements of Exel Composites
Plc have been prepared in compliance with International
Financial Reporting Standards (IFRS), applying IAS and
IFRS standards, as well as SIC and IFRIC interpretations, as
adopted by the European Union, valid on 31 December
2020. The notes to the consolidated financial statements
are also in compliance with the Finnish Accounting and
Companies Acts.
Basis of Consolidatio n
Exel Composites’ consolidated financial statements
include the accounts of the parent company Exel
Composites Plc and its subsidiaries as at 31 December
each year. Subsidiaries are viewed as companies in which
it owns, directly or indirectly, over 50% of the voting
rights or in which it is in a position to govern the financial
and operating policies of the entity. The Group has
control over an entity when it has a participation in the
entity and is exposed to or has right to its variable
revenues and can influence the revenues by using its
control over the entity. Subsidiaries are fully consolidated
from the date that Exel Composites acquired control and
are no longer consolidated from the date that control
ceases. Where necessary, the accounting principles of
subsidiaries have been changed to ensure consistency with
the accounting principles of the Group. The financial
statements of the subsidiaries are prepared for the same
reporting period as the parent company, using consistent
accounting policies.
Acquisitions of companies are accounted for using the
purchase method. The cost of an acquisition is measured
at fair value over the assets given up, shares issued or
liabilities incurred or assumed at the date of acquisition.
The excess acquisition cost over the fair value of net
assets acquired is recognized as goodwill.
All intra-group balances, income and expenses, unrealized
gains and losses and dividends resulting from intra-group
transactions are eliminated in full.
If the Group loses control over a subsidiary, it:
●
Derecognizes the assets and liabilities of the subsidiary;
●
Derecognizes the carrying amount of non-controlling
interest;
●
Derecognizes the cumulative translation differences,
recorded in equity;
●
Recognizes the fair value of the consideration received;
●
Recognizes the fair value of any investment retained;
●
Recognizes any surplus or deficit in profit or loss, and
●
Reclassifies the parent’s share of components previously
recognized in other comprehensive income to profit or
loss.
When compiling the opening IFRS balance sheet, Exel
Composites has applied the exemption provided by IFRS 1
related to business combinations. This means that the
assets and liabilities of subsidiaries have not been
assessed retroactively at their market value. Instead, they
have been included in the balance sheet on the transition
date in an amount in accordance with earlier financial
accounting practice. The Group has no affiliated
companies or joint ventures.
Non-controlling interest is deducted from shareholders’
equity and presented as a separate item in the balance
sheet. Similarly, it is presented as a separate item in the
consolidated financial statements. The share of losses
attributable to the holders of non-controlling interest was
debited to non-controlling interest in the consolidated
balance sheet up to the full value of the non-controlling
interest prior to 1 January 2010. The Group had no non-
controlling interests in 2020 and 2019.
NOTE 3 CHANGES IN ACCOUNTING POLICIES ANS DISCLOSURES
Standards and standard amendments issued during 2020
financial period
●
IFRS 3 Definition of a Business
●
Amendments to references to the conceptual framework
●
IAS 1 ja IAS 8 Definition of Material
●
IFRS 9, IAS 39 ja IFRS 7 Interest rate benchmark reform
●
IFRS 16 Covid-19 related rent concessions
had no impact on Group’s financial statements.
The standards and standard amendments that are issued,
but not effective, up to the date of issuance of the
Group’s financial statements are listed below. The Group
intends to adopt these standards and amendments, if
applicable, when they become effective. Based on
preliminary analysis, the standards are not expected to
materially impact on the Group’s financial statements.
New standards
●
IFRS 17 Insurance Contracts
Amendments to standards
●
IFRS 9, IAS 39 ja IFRS 7 Interest rate benchmark reform,
phase 2.
●
IFRS 3 amendments updating a reference
●
IAS 37 amendments regarding onerous contracts
●
2018-2020 annual improvements cycle
●
IAS 16 amendments regarding proceeds before intended
use
●
IFRS 17 amendments to address concerns and
implementation challenges
●
IAS 1 Classification of Liabilities as Current or Non-
current
EXEL COMPOSITES
ANNUAL
FINANCIAL
REPORT
2020
AUDITED
FINANCIAL
STATEMENTS
| 36
The preparation of the Group’s consolidated financial
statements may require the use of judgments, estimates
and assumptions that affect the reported amounts of
assets and liabilities and the disclosure of contingent
assets and liabilities at the end of the reported period and
the reported amounts of revenues and expenses during
the reporting period. Although these estimates are based
on management’s best knowledge of current events and
actions, actual results may ultimately differ from those
estimates. The preparation of impairment tests requires
the use of estimates.
Estimates and assumptions
The key assumptions concerning the future and other key
sources of estimation uncertainty at the balance sheet
date, that have a significant risk of causing a material
adjustment to the carrying amounts of assets and
liabilities within the next financial year are discussed
below.
Impairment of non-financial assets
The Group assesses whether there are any indicators of
impairment for all non-financial assets at each reporting
date. Goodwill and other indefinite life intangibles are
tested for impairment annually and at other times when
such indicators exist. Other non-financial assets are
tested for impairment when there are indicators that the
carrying amounts may not be recoverable.
When calculations of impairment of non-financial assets
are undertaken, management must estimate the expected
future cash flows from the asset or cash-generating unit
and choose a suitable discount rate in order to calculate
the present value of those cash flows. Further details,
including sensitivity analysis of key assumptions, are given
in Note 26.
Deferred tax assets
Deferred tax assets are recognized for all unused tax
losses to the extent that it is probable that taxable profit
will be available against which the losses can be utilized.
Significant management judgment is required to
determine the amount of deferred tax assets that can be
recognized, based on the likely timing and level of future
taxable profits together with the future tax planning
strategies. Further details are given in Note 14.
Pension and other post-employment benefits
The cost of defined benefit pension plans is determined
using actuarial valuations. The actuarial valuation
involves making assumptions about discount rates,
expected rates of return on assets, future salary
increases, mortality rates and future pension increases.
Due to the long-term nature of these plans, such
estimates are subject to significant uncertainty.
Determining the fair value of assets in business
combinations
In major corporate mergers the Group has employed the
services of an outside advisor in assessing the fair value of
tangible assets. For tangible assets comparisons have
been made with the market prices of similar assets and an
estimate made about impairment caused by the acquired
asset’s age, wear and other related factors. The
determination of the fair value of tangible assets is based
on estimates of cash flows related to the asset.
ACCOUNTING PRINCIPLE: Revenue recognition
Revenue is recognized to the extent that it is probable that the economic benefits will flow to the Group and the revenue
can be reliably measured. Sales of products are recognized as income in accordance with IFRS 15 when the performance
obligation is satisfied. The performance obligation is satisfied when the goods have been delivered to the customer
according to the agreed delivery terms. In most cases this happens when the goods leave the factory. In case according to
agreed delivery terms risks and rewards as well as control over the goods are transferred to the customer only when the
goods have been delivered to the customer, then revenue is recognized only when the customer has received the goods.
Revenue comprises the invoiced value for the sale of goods and services net of indirect taxes, sales adjustment and
exchange rate differences. Distribution costs for products to be sold are included in the income statement as other
operating expenses. Interest income is recognized using the effective interest rate method and dividend income when the
right to the dividend has been created.
NOTE 4 SIGNIFICANT ACCOUNTING JUDGEMENTS, ESTIMATES AND
ASSUMPTIONS
NOTE 5 SEGMENT INFORMATION
EXEL COMPOSITES
ANNUAL
FINANCIAL
REPORT
2020
AUDITED
FINANCIAL
STATEMENTS
| 37
Operating segment s
The Group has one operating segment, Exel Composites.
Geographical information
The Group’s geographical information is given for Europe,
North America, Asia-Pacific (APAC) and Rest of World.
Revenue of geographical distribution is presented
according to the customer’s location, while assets are
presented according to the location of the assets.
Revenue outside the Group according to location of customers
2020
2019
Europe
62,757
62,076
North America
18,022
22,407
Asia-Pacific
24,022
17,600
Rest of world
3,795
1,701
Total
108,595
103,784
Revenue from the biggest customer amounted to EUR 21,240 (19,694) thousand in 2020. The revenue of the biggest customer
was reported under the Wind power customer industry.
Total assets according to geographic location
2020
2019
Europe
50,834
40,939
North America
12,185
12,612
Asia-Pacific
33,782
31,801
Rest of world
0
0
Total
96,800
85,352
Capital expenditure according to geographic location
2020
2019
Europe
11,962
5,283
North America
504
435
Asia-Pacific
754
544
Rest of world
0
0
Total
13,220
6,262
EXEL COMPOSITES
ANNUAL
FINANCIAL
REPORT
2020
AUDITED
FINANCIAL
STATEMENTS
| 38
NOTE 6 EXCHANGE RATES
NOTE 7 OTHER OPERATING INCOME
ACCOUNTING PRINCIPLE: Foreign currency translation
The Group’s consolidated financial statements are presented in euros, which is also the parent company’s functional
currency. Each entity in the Group determines its own functional currency and items included in the financial statements
of each entity are measured using that functional currency.
The income statements of independent foreign subsidiaries are translated into euros at the average exchange rates for the
financial year and the assets and liabilities are translated at the exchange rate of the balance sheet date. The reporting
date exchange rates are based on exchange rates published by the European Central Bank for the closing date. The
average exchange rate is calculated as an average of each month’s average rates from the European Central Bank.
Exchange differences arising on the translation are recognized in other comprehensive income. When a foreign operation
is sold, the component of other comprehensive income relating to that particular foreign operation is recognized in the
income statement.
Foreign currency exchange gains and losses related to business operations and translating monetary items have been
entered in the income statement. Foreign exchange differences from business operations are included in other items
above profit for the year. Foreign exchange differences from foreign currency loans and cash at bank are included in
financial items.
2020
2019
2020
2019
Country
Currency
Average rate
Average rate
Closing rate
Closing rate
Australia
AUD
1.65539
1.61059
1.58960
1.59950
UK
GBP
0.88921
0.87731
0.89903
0.85080
China
RMB
7.87084
7.73388
8.02250
7.82050
USA
USD
1.14128
1.11958
1.22710
1.12340
Hong Kong
HKD
8.85168
8.77243
9.51420
8.74730
ACCOUNTING PRINCIPLE: Government grants
Government grants are recognized where there is reasonable assurance that the grant will be received and all attaching
conditions will be complied with. When the grant relates to an expense item, it is recognized as an income over the period
necessary to match the grant on a systematic basis to the costs that it is intended to compensate. When the grant relates
to an asset, it is recognized as deferred income and released to the income statement over the expected useful life of the
relevant asset by equal annual installments.
During 2020, the Group received 787 thousand euros of Covid-19 related grants. 129 thousand euros is included in Other
operating income and 658 thousand euros is deducted directly from the corresponding operating costs.
2020
2019
Insurance compensations
36
19
Grants
172
152
Rental income
15
18
Exel Sports lisencing
0
105
Other operating incomes
97
94
Total
320
387
EXEL COMPOSITES
ANNUAL
FINANCIAL
REPORT
2020
AUDITED
FINANCIAL
STATEMENTS
| 39
In 2020, the Group received Covid-19 related grants for a total of EUR 787 thousand, of which EUR 129 thousand are included
in Other operating income. EUR 658 thousand have been deducted from the expenses eligible for the grants.
2020
2019
Audit fees
235
201
Tax consultation provided by the Audit company
41
12
Other services provided by the Audit company
14
63
Rents on leases with short lease period
214
268
Rents on leases for assets with low value
4
11
Other rental expenses
29
84
Impairment on non-current assets and losses on asset sales
219
158
Other variable operating expenses
10,742
11,057
Other operating expenses
8,564
9,107
Total
20,062
20,960
2020
2019
Wages and salaries
25,587
25,320
Pension costs – defined contribution schemes
2,119
2,369
Pension costs – defined benefit schemes
15
22
Other employee benefits
3,087
3,398
Total
30,807
31,110
2020
2019
Average number of personnel
665
659
ACCOUNTING PRINCIPLE: Research and development
Research costs are expensed as incurred. Costs incurred from development projects, which are often connected with the
design and testing of new or advanced products, are recorded in the balance sheet as intangible assets from the time that
the product can be technically achieved, it can be utilized commercially, and the product is expected to create a
comparable financial benefit. Other development costs are recorded as expenses. Capitalized development costs are
amortized on a straight-line basis beginning from the commercial production of the product during the period they are
effective, yet no longer than five years.
There were no capitalized development costs during 2020 and 2019.
The income statement includes research and development costs entered as costs amounting to EUR 2,884 (2,851) thousand in
2020. These costs are included in the income statement under Employee Benefit Expenses and Other Operating Expenses.
NOTE 8 OTHER OPERATING EXPENSES
NOTE 9 EMPLOYEE BENEFIT EXPENSES
NOTE 10 RESEARCH AND DEVELOPMENT EXPENDITURE
EXEL COMPOSITES
ANNUAL
FINANCIAL
REPORT
2020
AUDITED
FINANCIAL
STATEMENTS
| 40
ACCOUNTING PRINCIPLE: Impairment of non-financial assets
At each reporting date, the Group evaluates whether there are indications of impairment in any asset item. If impairment
is indicated, the recoverable amount of the asset is estimated. An asset’s recoverable amount is the higher of an asset’s
or cash-generating unit’s (CGU) fair value less costs to sell and its value in use and is determined for an individual asset,
unless asset does not generate cash inflows that are largely independent of those from other assets or group of assets.
Where the carrying amount of an asset or CGU exceeds its recoverable amount, the asset is considered impaired and is
written down to its recoverable amount.
In addition, the recoverable amount is assessed annually for the following items regardless of whether there are
indications of impairment: goodwill; intangible assets that have an unlimited economic lifespan; and assets under
construction.
Depreciation and amortization of assets
2020
2019
Intangible assets
867
863
Tangible assets
231
224
1,233
1,170
3,396
3,207
119
145
Total
5,845
5,608
Impairment and write-down of assets
2020
2019
Intangible assets
1
0
Tangible assets
8
8
Total
9
8
ACCOUNTING PRINCIPLE: Dividends
Dividends paid by the Group are recognized for the financial year in which the shareholders have approved payment of the
dividend.
The Annual General Meeting held on 20 March 2020
approved the Board’s proposal to distribute a dividend of
EUR 0.18 per share for the financial year 2019.
The Annual General Meeting held on 21 March 2019
approved the Board’s proposal to distribute a dividend of
EUR 0.18 per share for the financial year 2018.
Following the balance sheet date, the Board of Directors
has proposed for approval at the Annual General Meeting
that a dividend of EUR 0.20 per share be paid for the
financial year 2020.
NOTE 11 DEPRECIATION , AMORTIZATION AND IMPAIRMENT
NOTE 12 DIVIDENDS PER SHARE
EXEL COMPOSITES
ANNUAL
FINANCIAL
REPORT
2020
AUDITED
FINANCIAL
STATEMENTS
| 41
NOTE 13 EARNINGS PER SHARE
NOTE 14 DEFERRED TAX ASSETS AND DEFERRED TAX LIABILITIES
ACCOUNTING PRINCIPLE: Earnings per share
The undiluted earnings per share is calculated by dividing the profit for the period belonging to the shareholders of the
parent company by the weighted average of shares in issue, not including shares purchased by the Company itself and that
are presented as own shares. The weighted average number of shares used to calculate the diluted earnings per share
includes the diluting effect of outstanding stock options during the period. The result for the financial year is not adjusted
since the subscription of dilutive shares does not involve any compensation to be recognized in the income statement.
2020
2019
Profit for the financial year attributable to ordinary equity holders of the parent company, EUR
thousands
5,368
2,397
Weighted average number of outstanding shares during the financial year, 1,000 shares
11,828
11,820
Basic and diluted earnings per share, EUR/share
0.45
0.20
ACCOUNTING PRINCIPLE: Deferred taxes
Deferred taxes are calculated for all temporary differences between accounting and taxation using the tax rates valid at
the closing date. The largest temporary differences arise from the depreciation of tangible assets, valuations in the fair
value in the balance sheets of acquired companies at the time of acquisition, revaluations of certain non-current reserves,
reservations for pension schemes and post-retirement benefits, unused tax losses, and differences in net wealth between
fair value and taxable value in connection with acquisitions.
Deferred tax assets have been recorded to the extent that it is probable that taxable profit will be available against which
the temporary difference can be utilized will materialize in the future. Deferred income tax is determined using tax rates
that have been enacted or substantially enacted by the balance sheet date.
Deferred tax assets in 2020
1
January
Recognized in
income statement
Recognized in
shareholders’ equity
Exchange rate
differences
31
December
Intercompany profit in inventory
36
-4
0
33
Intercompany profit in fixed assets
150
-20
-2
128
Losses
1,163
376
-73
1,465
Other temporary differences
535
-106
0
-7
421
Offset with deferred tax liabilities
-506
153
-353
IFRS16
0
43
43
Net deferred tax assets
1,379
442
0
-83
1,737
Deferred tax liabilities in 2020
1
January
Recognized in
income statement
Recognized in
shareholders’ equity
Exchange rate
differences
31
December
Accumulated depreciation
83
40
123
Other temporary differences
709
-97
-22
591
Offset with deferred tax assets
-506
153
-353
IFRS16
0
0
0
Net deferred tax liabilities
287
96
0
-22
361
EXEL COMPOSITES
ANNUAL
FINANCIAL
REPORT
2020
AUDITED
FINANCIAL
STATEMENTS
| 42
Deferred tax assets in 2019
1
January
Recognized in
income statement
Recognized in
shareholders’ equity
Exchange rate
differences
31
December
Intercompany profit in inventory
5
31
0
36
Intercompany profit in fixed assets
93
55
2
150
Losses
619
543
1
1,163
Other temporary differences
514
1
13
6
535
Offset with deferred tax liabilities
-484
-22
-506
Net deferred tax assets
747
609
13
10
1,379
Deferred tax liabilities in 2019
1
January
Recognized in
income statement
Recognized in
shareholders’ equity
Exchange rate
differences
31
December
Accumulated depreciation
66
17
83
Other temporary differences
581
113
15
709
Offset with deferred tax assets
-484
-22
-506
Net deferred tax liabilities
163
108
0
15
287
Some deferred tax items related to the earlier accounting
periods have been recorded directly to the equity. The
Group had taxable net losses on 31 December 2020 of EUR
15,766 (15,094) thousand, of which the Company has
recorded deferred tax assets of EUR 1,465 (1,163)
thousand that are available for offset against future
taxable profits of the companies in which the losses
arose.
IAS 12 Income Tax, cumulated tax losses
Group’s subsidiary in USA has cumulated tax losses in
2018, 2019 and 2020. The Group has estimated the long-
term profitability of the subsidiary in USA and concluded
that future profits will cover the deferred tax assets
booked on the 2019 and 2020 taxable losses of the
subsidiary. The Group has booked EUR 589 thousand of
deferred tax receivables on the losses of the business unit
in the USA. Tax losses can be carried forward indefinitely.
The old China subsidiary has cumulated tax losses from
2016 to 2020. The Group’s decision to reorganize the
operations of the two manufacturing units in China gives
certainty to utilize the accumulated tax losses in the
coming years. The Group has booked EUR 876 thousand of
deferred tax receivables on the losses of the old China
unit. Losses for an accounting period can be carried
forward for the next 10 years.
The Group has significant tax losses also in its subsidiaries
in Australia and Germany. Both subsidiaries are now
profitable but the profits are rather small. Group has
reviewed the possibility to utilize the tax losses and
decided that it will not book deferred tax assets on these
tax losses at this point. In both countries tax losses can be
carried forward indefinitely.
ACCOUNTING PRINCIPLE: Taxes
Group taxes consist of taxes based on Group companies’ results for the financial year, adjustments to taxes related to
previous years and the change in deferred income taxes.
The tax expenses on the income statement are formed from the tax based on the taxable income for the financial year
and deferred taxes. The tax expenses are recorded in the income statement except for the items recorded directly into
shareholders’ equity, when the tax impact is recorded also as an equivalent part of shareholders’ equity. The taxes for the
financial year are calculated from the taxable income according to the valid tax rate in each country. Taxes are adjusted
by the possible taxes related to previous financial years.
Revenues, expenses and assets are recognized net of the amount of sales tax except where the sales tax incurred on a
purchase of assets or services is not recoverable from the taxation authority. Receivables and payables are stated with the
amount of sales tax included.
NOTE 15 INCOME TAXES
EXEL COMPOSITES
ANNUAL
FINANCIAL
REPORT
2020
AUDITED
FINANCIAL
STATE
MENTS
| 43
2020
2019
Income tax based on taxable income for the financial year
2,234
1,944
Income taxes from previous financial periods
-133
142
Deferred taxes
-346
-598
Total income taxes reported in the income statement
1,755
1,488
Income tax recognized in other comprehensive income 2020
Before tax
Tax effect
After tax
Exchange differences on translating foreign operations
-665
0
-665
Defined benefit plan actuarial gains (+) / losses (-)
-46
11
-34
Total
-711
11
-699
Income tax recognized in other comprehensive income 2019
Before tax
Tax effect
After tax
Exchange differences on translating foreign operations
529
0
529
Defined benefit plan actuarial gains (+) / losses (-)
-54
13
-40
Total
475
13
489
Income tax reconciliation
2020
2019
Profit before taxes
7,124
3,885
Consolidated income taxes at Group's domestic tax rate (20%)
1,425
777
Impact of different tax rates of foreign subsidiaries
341
49
Tax -exempt income and non-deductible expenses
108
63
Tax at source booked as cost
0
129
Income taxes for prior years
-133
142
Effect of deferred tax assets not recognized
-162
420
Other items
177
-93
Income tax recognized in consolidated income statement
1,755
1,488
Effective tax rate
24.6
38.3
ACCOUNTING PRINCIPLE: Borrowing costs
Borrowing costs directly attributable to the acquisition, construction or production of an asset that necessarily takes a
substantial period of time to get ready for its intended use or sale are capitalized as part of the cost of the respective
assets. All other borrowing costs are expensed in the period they occur. Borrowing costs consist of interest and other costs
that an entity occurs in connection with the borrowing of funds.
For the years ending 31 December 2020 and 2019, the Group had no assets where the borrowing costs would have been
capitalized.
NOTE 16 FINANCIAL EXPENSES
EXEL COMPOSITES
ANNUAL
FINANCIAL
REPORT
2020
AUDITED
FINANCIAL
STATEMENTS
| 44
2020
2019
Interest expenses on debts and borrowings
675
604
Interest expenses on lease liabilities
92
110
Foreign exchange losses
2,538
649
Change in fair value of financial assets recognized at fair value through profit or loss (from derivatives)
0
0
Other finance expenses
372
428
Total finance expenses
3,676
1,792
Exchange differences for sales (exchange rate loss EUR -108 thousand) and purchases (exchange rate loss EUR -1 thousand)
are entered in the income statement in the appropriate sales and purchase accounts.
2020
2019
Interest income on loans and receivables
138
8
Dividend income
2
2
Foreign exchange gains
1,239
564
Change in fair value of financial assets recognized at fair value through profit or loss
0
15
Other finance income
4
0
Total finance income
1,383
589
ACCOUNTING PRINCIPLE: Intangible assets
Intangible assets acquired separately are measured on initial recognition at cost. The cost of intangible assets acquired in
a business combination is its fair value at the date of acquisition. Following initial recognition, intangible assets are
carried at cost less any accumulated amortization and any accumulated impairment losses. Internally generated intangible
assets, excluding capitalized development costs, are not capitalized and expenditure is reflected in the income statement
in the year in which the expenditure is incurred.
The useful life of intangible assets is either finite or indefinite. Intangible assets with finite lives are amortized over the
useful life and assessed for impairment whenever there is indication that the intangible asset may be impaired.
Intangible assets are amortized on a straight-line basis over their estimated useful lives as follows:
●
Development
costs
3
-
5
years
●
Other long-term costs 3-8 years
●
Other intangible assets 3-8 years
●
Customer relationships 10 years
Intangible assets with indefinite useful lives are not amortized but are tested for impairment annually, either individually
or at the cash generating unit level.
Computer software
Costs associated with the development and maintenance of computer software are generally recorded as expenses. Costs
that improve or expand the performance of computer software to the extent that the performance is higher than
originally is considered as a property item improvement and is added to the original acquisition cost of the software.
Capitalized computer software development costs are expensed and amortized on a straight-line basis during the period
they are financially effective.
Other intangible assets
The acquisition costs of patents, trademarks and licenses are capitalized in intangible assets and depreciated on a
straight-line basis during their useful lives.
NOTE 17 FINANCIAL INCOME
NOTE 18 INTANGIBLE ASSETS
EXEL COMPOSITES
ANNUAL
FINANCIAL
REPORT
2020
AUDITED
FINANCIAL
STATEMENTS
| 45
The Group has no internally created intangible assets.
Goodwill
2020
2019
Acquisition cost at 1 January
19,093
18,866
Additions
0
0
Exchange rate differences
-370
227
Acquisition cost at 31 December
18,724
19,093
Accumulated amortization and impairment at 1 January
-6,122
-6,110
Impairment charge
0
0
Exchange rate differences
-5
-12
Accumulated amortization and impairment at 31 December
-6,127
-6,122
Book value at 1 January
12,972
12,756
Book value at 31 December
12,597
12,972
Other intangible assets
2020
2019
Acquisition cost at 1 January
5,547
6,124
Additions
220
18
Disposals
-13
-649
Transfers between asset groups
0
0
Exchange rate differences
-16
54
Acquisition cost at 31 December
5,737
5,547
Accumulated amortization at 1 January
-4,664
-5,129
Amortization for the period
-135
-129
Impairment charge and write-downs
-1
0
Disposals
13
638
Exchange rate differences
-7
-45
Accumulated amortization at 31 December
-4,793
-4,664
Book value at 1 January
883
996
Book value at 31 December
944
883
Other long-term expenses
2020
2019
Acquisition cost at 1 January
7,225
7,277
Additions
3
67
Disposals
0
-1,005
Transfers between asset groups
402
852
Exchange rate differences
-155
35
Acquisition cost at 31 December
7,475
7,225
Accumulated amortization at 1 January
-3,795
-4,063
Amortization for the period
-732
-734
Disposals
0
1,005
Exchange rate differences
58
-3
Accumulated amortization at 31 December
-4,469
-3,795
Book value at 1 January
3,430
3,213
Book value at 31 December
3,004
3,430
EXEL COMPOSITES
ANNUAL
FINANCIAL
REPORT
2020
AUDITED
FINANCIAL
STATEMENTS
| 46
NOTE 19 PROPERTY, PLANT AND EQUIPMENT
ACCOUNTING PRINCIPLE: Property, plant and equipment
Property, plant and equipment is stated in the balance sheet at historical cost less accumulated straight-line depreciation
according to the expected useful life, benefits received, and any impairment losses.
Planned depreciation is calculated on a straight-line basis to write off the acquisition cost of each fixed asset up to its
residual value over the asset’s expected useful life. Land areas are not depreciated. For other tangible fixed assets,
depreciation is calculated according to the following expected useful lives:
●
Buil
dings
5
-
20
years
●
Machinery
5
-
15
years
●
Equipment
3
-
5
years
If the book value of an asset item exceeds the estimated amount recoverable in the future, its book value is adjusted
immediately to correspond with the amount recoverable in the future.
Routine maintenance and repair expenditure is recognized as an expense. Expenditure on significant modernization and
improvement projects are recognized in the balance sheet if they are likely to increase the future economic benefits
embodied in the specific asset to which they relate. Modernization and improvement projects are depreciated on a
straight-line basis over their expected useful lives.
Depreciation on tangible fixed assets is discontinued when a tangible fixed asset meets the criteria of “held-for-sale”
according to IFRS 5 ”Non-current Assets Held for Sale and Discontinued Operations”.
Gains or losses on disposal or decommissioning of tangible fixed assets are calculated as the difference of the net
proceeds obtained and the balance sheet value. Capital gains and losses are included in the income statement in the item
operating profit.
Exel Composites (Group) has applied the IFRS16 Leases –standard since 1 January 2019. Lease liabilities arising from lease
and rental agreements along with corresponding right-of-use assets are stated in the balance sheet accordingly. The Group
has used the recognition exemption where lease contracts are not stated in the balance sheet, if the value of the
underlying asset is less than approx. 5,000 euros and/or if the lease period is 12 months or less. For lease contracts with
no set end date and with termination or extension options, the Group has determined the lease term by making an
assessment using best available information.
A significant part of the Group’s lease liability stated in the balance sheet according to IFRS16 comes from lease contracts on
factory buildings in Europe, China and USA. In addition to these, the Group’s balance sheet has lease contracts on small
production and office equipment and vehicles.
The discount rate used is the average rate on the Group’s external loans, which was 2.271% at the time of initial adoption
and 1.070% from 1 January 2020, or if stated in the lease contract the internal rate of the contract.
The Group had no assets held for sale.
Land and water areas
2020
2019
Acquisition cost at 1 January
1,834
857
Additions
0
956
Disposals
0
0
Transfer between asset groups
0
0
Exchange rate differences
-31
21
Acquisition cost at 31 December
1,803
1,834
Accumulated amortization at 1 January
-270
-253
Impairment charge and write-downs
-8
-8
Exchange rate differences
11
-8
Accumulated amortization at 31 December
-266
-270
Book value at 1 January
1,564
603
Book value at 31 December
1,537
1,564
EXEL COMPOSITES
ANNUAL
FINANCIAL
REPORT
2020
AUDITED
FINANCIAL
STATEMENTS
| 47
Buildings and structures
2020
2019
Acquisition cost at 1 January
7,568
8,277
Additions
6,719
40
Disposals
0
-806
Transfer between asset group
206
0
Exchange rate differences
-77
57
Acquisition cost at 31 December
14,416
7,568
Accumulated amortization at 1 January
-5,297
-5,845
Amortization for the period
-231
-224
Impairment charge and write-downs
0
0
Disposals
0
806
Exchange rate differences
40
-34
Accumulated amortization at 31 December
-5,488
-5,297
Book value at 1 January
2,271
2,432
Book value at 31 December
8,927
2,271
Buildings and structures, right-of-use assets
2020
2019
Acquisition cost at 1 January
5,588
4,397
Additions
275
1,141
Disposals
-603
0
Transfer between asset group
0
0
Exchange rate differences
-234
50
Acquisition cost at 31 December
5,026
5,588
Accumulated amortization at 1 January
-1,167
0
Amortization for the period
-1,233
-1,170
Impairment charge and write-downs
0
0
Disposals
383
0
Exchange rate differences
74
3
Accumulated amortization at 31 December
-1,942
-1,167
Book value at 1 January
4,421
0
Book value at 31 December
3,084
4,421
Machinery and equipment
2020
2019
Acquisition cost at 1 January
55,434
55,917
Additions
3,226
1,968
Disposals
-2,942
-5,337
Transfers between asset groups
2,630
2,591
Exchange rate differences
-694
295
Acquisition cost at 31 December
57,654
55,434
Accumulated amortization at 1 January
-42,442
-43,895
Amortization for the period
-3,396
-3,207
Impairment charge and write-downs
0
0
Disposals
2,643
4,830
Exchange rate differences
359
-170
Accumulated amortization at 31 December
-42,836
-42,442
Book value at 1 January
12,992
12,021
Book value at 31 December
14,818
12,992
EXEL COMPOSITES
ANNUAL
FINANCIAL
REPORT
2020
AUDITED
FINANCIAL
STATEMENTS
| 48
Machinery and equipment, right-of-use assets
2020
2019
Acquisition cost at 1 January
417
330
Additions
1
86
Disposals
-76
0
Transfers between asset groups
0
0
Exchange rate differences
-6
1
Acquisition cost at 31 December
336
417
Accumulated amortization at 1 January
-145
0
Amortization for the period
-119
-145
Impairment charge and write-downs
0
0
Disposals
76
0
Exchange rate differences
3
0
Accumulated amortization at 31 December
-186
-145
Book value at 1 January
272
0
Book value at 31 December
150
272
Advance payments and construction in progress
2020
2019
Acquisition cost at 1 January
1,280
1,574
Additions
3,053
3,213
Transfers between asset groups
-3,377
-3,503
Disposals
-44
-9
Exchange rate differences
-2
6
Acquisition cost at 31 December
911
1,280
Book value at 1 January
1,280
1,574
Book value at 31 December
911
1,280
The other non-current assets consist mainly of connection fees and telephone shares.
2020
2019
Book value at 1 January
104
89
Decreases
-55
0
Change in fair value
0
15
Book value at 31 December
48
104
ACCOUNTING PRINCIPLE: Inventories
Inventories are valued in the balance sheet either at the acquisition cost or at the net realizable value, whichever is
lower. The acquisition cost is determined using the weighted average price method. The acquisition cost of finished and
incomplete products comprises raw materials, direct costs of labor, other direct costs and the appropriate portion of the
variable general costs of manufacture and fixed overhead at the ordinary rate of operations, but it does not include
borrowing costs. The net realizable value is the estimated selling price in ordinary business operations less the estimated
expenditure on product completion and sales.
NOTE 20 OTHER NON-CURRENT ASSETS
NOTE 21 INVENTORIES
EXEL COMPOSITES
ANNUAL
FINANCIAL
REPORT
2020
AUDITED
FINANCIAL
STATEMENTS
| 49
2020
2019
Raw materials
7,643
7,583
Work in progress
2,869
3,564
Finished products and goods
5,670
5,731
Total inventories
16,182
16,878
During 2020 an expense of EUR 30 (137) thousand was recognized to reduce the book value of inventories to their net
realizable value.
ACCOUNTING PRINCIPLE: Financial assets
Financial assets are classified within the scope of IFRS 9 as financial assets at amortized cost, at fair value through profit
or loss, at fair value through other comprehensive income or as derivatives designated as hedging instruments in an
effective hedge, as appropriate. The Group determines the classification of its financial assets at initial recognition.
The Group’s financial assets include cash and short-term deposits, trade and other receivables, and derivative financial
instruments.
Loans and receivables are non-derivative financial assets with fixed or determinable payments, originated or acquired,
that are not quoted in an active market, not held for trading, and not designated on initial recognition as assets at fair
value through profit or loss or as held-for-sale. Loans and receivables are measured at amortized cost. They are included
in the statement of financial position under trade receivables and other receivables as either current or non-current assets
according to their nature; they are considered non-current assets if they mature after more than 12 months. The losses
arising from impairment are recognized in the income statement in finance costs.
“Held-to-maturity financial assets” include non-derivative financial assets with fixed or determinable payments and fixed
maturities when the Group has the positive intention and ability to hold them to maturity. After initial measurement held-
to-maturity investments are measured at amortized cost using the effective interest method, less impairment. The Group
did not have any held-to-maturity investments during the years ended 31 December 2020 and 2019.
A financial asset is derecognized when:
●
The rights to receive cash flows from the asset have expired
●
The Group has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay received
cash flows in full without material delay to a third party under a pass-through arrangement.
Trade receivables
Trade receivables are recorded in the balance sheet at their original invoice amount.
An impairment of trade receivables is recognized in accordance with IFRS 9. The Group applies the simplified approach
allowed by IFRS 9 as the accounts receivable does not contain significant financing component. To measure the lifetime
expected credit losses trade receivables have been grouped based on credit risk characteristics and aging category.
Expected credit losses have been measured based on historical loss rates adjusted by forward looking estimates and
individual assessment.
2020
2019
Trade receivables
17,895
17,519
Deferred income
617
692
Other receivables
2,136
997
Tax receivables
238
770
Total receivables
20,887
19,978
During the 2020 financial year credit losses of EUR -55 (-186) thousand were recorded, consisting of actual credit losses
amounting to EUR -133 (61) thousand and change in the bad debt provision amounting to EUR 78 (-247) thousand covering all
overdue trade receivables which are over 90 days overdue.
NOTE 22 TRADE AND OTHER RECEIVABLES
EXEL COMPOSITES
ANNUAL
FINANCIAL
REPORT
2020
AUDITED
FINANCIAL
STATEMENTS
| 50
Ageing analysis of trade receivables as at 31 December
Past due but not impaired
Total
Neither past due
nor impaired
<30 days
30-60 days
61-90 days
2020
17,895
9,483
6,551
1,025
836
2019
17,519
10,083
6,532
515
389
All receivables past due over 90 days were impaired and provisions were made in the income statement.
ACCOUNTING PRINCIPLE: Cash and short-term deposits
Cash and short-term deposits in the statement of financial position comprise cash at banks and in hand and short-term
deposits with an original maturity of three months and less. Credit accounts connected with Group accounts are included
in current interest-bearing liabilities and are presented as net amounts, as the Group has a legal contractual right of set-
off to make payment or otherwise eliminate the amount owed to creditors either in whole or in part.
Cash and cash equivalents are recorded at the original amount in the statement of financial position.
Cash assets and short-term deposits consist of cash-in-hand and bank accounts, which amounted to EUR 11,974 (6,930)
thousand.
ACCOUNTING PRINCIPLE: Financial liabilities
Financial liabilities within the scope of IFRS 9 are classified as financial liabilities at amortized cost, at fair value through
profit or loss, at fair value through other comprehensive income or as derivatives designated as hedging instruments in an
effective hedge. The Group determines the classification of its financial liabilities at initial recognition. The Group’s
financial liabilities include trade and other payables, bank overdrafts, loans and borrowings and derivative financial
instruments.
Finance lease liabilities are initially recognized at fair value. All financial liabilities, excluding derivative liabilities, are
later valued at amortized cost using the effective interest rate method. Financial liabilities are included in non-current
and current liabilities, and they may be either interest -bearing or non-interest-bearing.
Non-current interest-bearing loans and borrowings
2020
2019
Loans from financial institutions
9,800
10,564
Lease liabilities
2,332
3,549
Pension loans
751
690
Total
12,883
14,803
Current interest -bearing loans and borrowings
2020
2019
Loans from financial institutions
28,886
20,833
Lease liabilities
1,089
1,262
Cheque account with overdraft facility
284
264
Total
30,258
22,360
NOTE 23 CASH AND CASH EQUIVALENTS
NOTE 24 INTEREST-BEARING LOANS AND BORROWINGS
EXEL COMPOSITES
ANNUAL
FINANCIAL
REPORT
2020
AUDITED
FINANCIAL
STATEMENTS
| 51
EUR 21.5 million of current interest -bearing liabilities were commercial papers. To secure the payment of commercial
papers, the company had at the end of the financial year unused, non-current (over 12 months) revolving credit facilities for
EUR 26.7 million.
Maturity of non-current interest-bearing liabilities (other than lease liabilities)
2020
2019
2021
0
0
2022
700
7,064
2023
700
0
2024
4,200
0
2025
4,200
3,500
Later
751
690
Total
10,551
11,255
Among interest-bearing loans EUR 2,852 (6,231) thousand has been converted to fixed interest rates through interest rate
swap agreements in 2020.
Maturity of non-current lease liabilities
2020
2019
2021
0
0
2022
966
1,243
2023
763
974
2024
481
762
2025
43
463
Later
79
107
Total
2,332
3,549
ACCOUNTING PRINCIPLE: Provisions
A provision is recognized in the balance sheet when the Group has a legal or actual obligation on the basis of a prior
event, the materialization of the payment obligation is probable and the size of the obligation can be reliably estimated
and requires a financial payment or causes a financial loss. If compensation for a share of the obligation can be received
from a third party, the compensation is recorded as a separate asset item, but only when it is practically certain that said
compensation will be received.
The Group recognizes a provision against loss-making agreements if the benefits of an agreement are expected to be
smaller than the unavoidable costs required to fulfill the obligations of the agreement.
A provision for restructuring is recognized when the Group has prepared a detailed and formal restructuring plan and
restructuring has either commenced or the plan has been announced publicly. The provisions are valued at their present
value of costs required to cover the obligation.
2020
2019
Trade payables
10,124
10,619
Accrued expenses
9,816
8,624
Advance payments
1,072
267
Other current interest-free liabilities
2,172
1,536
Non-current interest-free liabilities
573
553
Total
23,758
21,600
NOTE 25 TRADE AND OTHER NON-INTEREST-BEARING LIABILITIES
EXEL COMPOSITES
ANNUAL
FINANCIAL
REPORT
2020
AUDITED
FINANCIAL
STATEMENTS
| 52
Goodwill acquired through business combinations has been arisen from the following cash generating units (CGU):
Distribution of goodwill
2020
2019
Finland
135
135
Belgium
209
209
Austria
688
688
China
3,956
4,302
USA
763
833
Exel Composites Group
6,847
6,805
Total
12,597
12,972
Impairment tests are made annually on goodwill and
intangible assets with an indefinite economic live. On the
closing date the Exel Composites Group had no intangible
assets with an unlimited economic live.
The calculation of value-in use is most sensitive to
following assumptions:
●
Sales margin -%
●
Discount rates
●
Growth rate used to extrapolate cash flows beyond the
budget period.
The Group makes a so-called two-step Goodwill
impairment where CGU level goodwill is tested first and
thereafter Group level goodwill. The Group has allocated
goodwill to group and smaller cash-generating units. The
impairment of cash-generating units is tested by
comparing the recoverable amounts to the carrying
amounts. The recoverable amount of cash-generating
units is determined based on calculations of value in use,
which are based on discounted future cash flows. Future
cash flows are based on the continual use of the item and
forecasts made by management for the coming years.
Forecasts for periods further ahead in the future have
been calculated on the assumption of annual growth of 1%
on the industry in the long term. Sales margin levels used
in the forecasts are expected to remain on average at the
current level.
Discount rate is defined to reflect the effect of the
different business risks on the expected return on equity.
The cost of liabilities is defined according to the existing
credit portfolio. The calculation of the average cost of
capital takes into account the Group’s targeted capital
structure, as well as the effect of debt on the cost of
Group equity. The discount rate after taxes used in the
calculations was on average 7.8% (6.7).
On the basis of the impairment test, the recoverable
amount of all cash-generating units exceeded the
corresponding balance sheet values. In the USA, Great
Britain and Belgium business units as well as in the old
China factory, the recoverable amounts are most sensitive
to future growth rate, sales margin and discount rate
assumptions.
The sensitivity analysis of goodwill impairment tests
indicates that if the group revenue declines more than
4% (6) there would be a situation where the recoverable
value would not exceed the carrying amount.
Alternatively, the revenue margin must decline over
1% (2) or average discount rate to increase to over 10.0%
(9.1).
Testing assumptions used for the USA, Great Britain and
Belgium business units as well as for the old China factory
included 1% growth rate for the future years and discount
rate varied depending on the business unit between 7.6%
and 11.2%. Sales margin is forecasted to improve in all
above-mentioned business units as a result of
implemented structural savings as well as due the
reduced negative impact of Covid-19 pandemic.
Depending on the business unit a decrease by 0.2 – 0.8
percentage points from the current level in annual growth
rate or by 0.3 – 0.9 percentage points in sales margin or
alternatively an increase by 0.7 – 1.7 percentage points in
discount rate would result in goodwill or other asset
write-down need.
NOTE 26 IMPAIRMENT TESTING OF GOODWILL AND INTANGIB LES WITH
INDEFINITE LIVES
EXEL COMPOSITES
ANNUAL
FINANCIAL
REPORT
2020
AUDITED
FINANCIAL
STATEMENTS
| 53
NOTE 27 FINANCIAL RISK MANAGEMENT
ACCOUNTING PRINCIPLE: Derivative financial instruments and hedging
Derivative contracts are recorded initially as an acquisition cost equal to their fair value. Following their acquisition
derivative contracts are valued according to their fair value.
Profits and losses that are generated from the valuation of fair value are recorded according to the intended use of the
derivative contract. The Group does not apply hedge accounting as described by IFRS 9. As a result, all value changes are
recognized in profit or loss. The Group has entered into interest rate swap agreements to convert non-current floating
rate financial liabilities to fixed interest rates. Derivative financial instruments are presented in Note 28. Derivatives are
recorded in the balance sheet as accrued expenses and deferred income.
Hedges for net investments in foreign units are recorded in the same way as cash-flow hedges. A hedge on a foreign
subsidiary’s equity is recorded in shareholders’ equity in the same way as the exchange rate difference in shareholders’
equity.
The Group did not hedge its net foreign investments exposure during 2020 or 2019.
The Group is exposed to a number of financial risks in its
business operations. The objective of financial risk
management is to protect against unfavorable changes in
the financial markets and thus secure the Group’s planned
profit development. The main financial risks include the
foreign exchange risk, interest rate risk, liquidity and
refinancing risk, and credit risk. The Group uses forward
agreements and currency options, currency loans, interest
rate options and interest rate swaps.
Foreign currency risk
The Group operates internationally and is thus exposed to
various transactions risks caused by currency positions and
risks that are generated when investments made in
different currencies are converted into the parent
company’s operating currency. In addition to the euro
(EUR), the main currencies are the Australian dollar
(AUD), the British pound (GBP), the US dollar (USD), the
Chinese renminbi (RMB) and the Hong Kong dollar (HKD).
Foreign exchange risks are generated by commercial
transactions, from monetary items in the assets and
liabilities and from net investments in foreign
subsidiaries. The objective of foreign exchange risk
management is to protect the operating result and
shareholders’ equity against foreign exchange rate
fluctuations.
The only invoicing currencies used are either the unit’s
functional currency or currencies generally used in export
sales. The currency flows of subsidiaries are protected on
a per company basis against the functional currency of
each company. The operating units are responsible for
hedging against their own foreign exchange risks.
Currency positions are assessed at their net amount in
each currency generally for the following 12-month
period. Currency flows are protected as needed by
forward agreements and currency options.
The Group’s translation exposure in main currencies at the end of the financial year was as follows:
Net investment
2020
2019
AUD
3,404
3,101
GBP
6,717
7,216
RMB
13,596
6,736
HKD
2,018
5,274
USD
-5,589
-4,496
The Group’s sensitivity to main currencies when all other variables are constant is the following (as at the end of the
financial year):
2020
AUD
GBP
RMB
HKD
USD
Increase in currency rate vs. EUR, %
5%
5%
5%
5%
5%
Effect on equity, EUR
170
336
680
101
-279
2019
AUD
GBP
RMB
HKD
USD
Increase in currency rate vs. EUR, %
5%
5%
5%
5%
5%
Effect on equity, EUR
155
361
337
264
-225
EXEL COMPOSITES
ANNUAL
FINANCIAL
REPORT
2020
AUDITED
FINANCIAL
STATEMENTS
| 54
Interest rate risk
The Group’s currency-denominated borrowings are in the functional currencies of Group companies. The nominal values of
interest-bearing liabilities (lease liabilities excluded) on 31 December were divided to the currencies as follows:
Currency
thousands
%
EUR
36,868
93%
USD
2,852
7%
Non-current loans have adjustable rates of interest, but
they are partially protected against interest rate risks by
converting them to fixed interest rates through interest
rate swaps. At the balance sheet date, the Group had
interest swap contracts with notional value of EUR 2,852
thousand, where the Group pays 3.018% fixed interest.
The Group does not use the hedge accounting to the
interest swap or option contracts.
The Group’s exposure to the risk of changes in the market
interest rates relates primarily to the Group’s loans. The
effect of one percentage point in the interest rates on 31
December was EUR 397 (324) thousand.
Liquidity and funding risk
The Group aims to ensure adequate liquidity under all
circumstances and to optimize the use of liquid assets in
financing business operations. In addition, the objective is
to minimize net interest costs and bank charges. The
excess cash is held in liquid instruments. In addition to
cash reserves and interest rate investments, the Group
had unused, committed credit limits on 31 December 2020
amounting to EUR 26.7 million. Committed credit limits
secure the repayment of short-term liabilities, such as
commercial papers.
The Finance Department sees to it that a sufficient
number of different financing sources are available, and
that the maturity schedule of foreign loans is managed.
The parent company’s Finance Department centrally
manages the Group’s refinancing and its management.
The Group’s internal debt ratios exist primarily directly
between the parent company and its subsidiaries.
The tools employed for managing liquidity are credit-
bearing Group accounts, credit limits and commercial
papers.
The table below summarizes the maturity profile of the Group’s financial liabilities at the end of the financial year based on
contractual undiscounted payments.
2020
On demand
Less than
3 months
3-12
months
1-5
years
> 5
years
Total
Interest -bearing liabilities
18,783
11,475
12,053
830
43,140
Trade and other current payables
23,846
23,846
2019
On demand
Less than
3 months
3-12
months
1-5
years
> 5
years
Total
Interest -bearing liabilities
18,279
4,081
14,006
798
37,163
Trade and other current payables
21,046
21,046
Credit and counterparty risk
The Group’s business operations are based for the most
part on established and reliable customer relationships
and the industry’s generally accepted terms of
agreement. The payment period for invoices is generally
14 – 60 days. The background of new customers is
assessed, for example by obtaining credit information.
The Group has no significant credit risk concentrations, as
the customer base is broad and distributed geographically
between the Group’s operating countries. Credit risks
related to trade receivables are monitored by the
business units. Approximately half of the Group’s trade
receivables are secured with credit insurance.
Counterparty risk refers to a situation in which a
contracting party is unable to fulfill its contractual
obligations. Derivative instruments and cash reserve
investments are only employed with counterparties that
have a good credit rating. At the end of 2020, the Group’s
only counterparties were financial institutions.
The Group’s maximum credit risk is the amount of the
financial assets in the end of the financial year. The aging
of the trade receivables is presented in Note 22.
Capital management
The objective of the Group’s capital management is to
ensure that it maintains strong credit worthiness and
healthy capital ratios in order to support its business and
maximize shareholder value.
The Group monitors capital using a net gearing ratio,
which is net interest-bearing debt divided by
shareholders’ equity. The Group includes in net interest-
bearing debt the loans and borrowings less cash and cash
equivalents.
EXEL COMPOSITES
ANNUAL
FINANCIAL
REPORT
2020
AUDITED
FINANCIAL
STATEMENTS
| 55
The Company pursues a strategy to improve capital
employment turnover rates in order to improve
profitability and cash flow.
2020
2019
Interest -bearing liabilities
43,140
37,163
Cash and cash equivalents
11,974
6,930
Net interest -bearing liabilities
31,167
30,234
Shareholders’ equity
28,880
26,302
Net gearing, %
107.9
114.9
2020
2019
Operating leases
Not later than one year
22
32
Other liabilities
253
6
ACCOUNTING PRINCIPLE: Valuation and impairment of financial assets and derivative financial instruments
The Group assesses on each reporting date whether there is any objective evidence that a financial asset or group of
financial assets is impaired. A financial asset is deemed to be impaired if, and only if, there is objective evidence of
impairment as a result of one or more events that has occurred after the initial recognition of the asset and that loss
event has an impact on the estimated future cash flows of the financial asset that can be reliably estimated.
Derivative financial instruments are recorded in the balance sheet at their fair values, defined as the amount at which the
instruments could be exchanged between willing parties in a current transaction, other than in a liquidation or forced
sale.
Net fair values and nominal values of financial assets and liabilities
2020
2020
2019
2019
Net fair
value
value
Net fair
value
value
Trade and other receivables
20,887
20,887
19,978
19,978
Cash and cash equivalents
11,974
11,974
6,930
6,930
Interest rate swap agreements
-40
2,852
-117
6,231
Bank loans
38,340
38,686
31,483
31,398
Current credit facilities
284
284
264
264
Trade and other payables
23,846
23,846
21,046
21,046
Changes in the fair value of derivative financial instruments are recognized in the income statement in financial gains and
losses.
NOTE 28 CONTINGENT LIABILITIES
NOTE 29 FAIR VALUES OF FINANCIAL ASSETS AND LIABILITIES
EXEL COMPOSITES
ANNUAL
FINANCIAL
REPORT
2020
AUDITED
FINANCIAL
STATEMENTS
| 56
ACCOUNTING PRINCIPLE: Pensions and other post-employment benefits
The Group’s pension schemes comply with each country’s local regulations and practices. Some of the pension schemes in
the Group apply defined benefit pension schemes where the pension benefits, disability benefits and employment
termination benefits are defined. Pension benefits are based generally on the period of employment and salary over a
fixed period for each employee. Pension contributions are funded through payments to insurance companies. In addition,
the Group has defined-contribution plans.
In defined benefit pension plans, the present value of future pension payments on the closing date is presented less the
fair value of the plan-related assets on the closing date. Pension liabilities are calculated by independent actuaries. The
pension liability is determined according to the projected unit credit method: the pension liability is discounted to the
present value of estimated future cash flows using the interest rate which is equal to the interest rate of government or
corporate bonds with maturities corresponding to the maturity of the pension liability. Pension costs are recorded in the
income statement as an expense with costs periodized over the employees’ time of service based on actuarial calculations
carried out annually. Actuarial gains and losses are recognized in full as a component of other comprehensive income.
In defined-contribution schemes, pension contributions are paid to insurance companies, after which the Group no longer
has other payment obligations. The Group’s contributions to defined-contribution schemes are entered in the financial
period to which the payments relate.
The Group operates a number of defined benefit and
contribution pension schemes throughout the world.
The most significant pension scheme in Finland is the
statutory Finnish employee pension scheme (TyEL)
according to which benefits are directly linked to the
employee’s earnings. The TyEL pension scheme is
arranged with insurance companies. The disability share
of the TyEL pension scheme is recognized as a defined
benefit scheme.
Pension schemes elsewhere than in Finland include both
defined benefit and defined contribution pension
schemes.
Amounts recognized in the income statement
2020
2019
Pension cost for the financial year
2,119
2,352
Differences in benefit schemes
15
22
Total included in personnel expenses
2,133
2,374
Amounts recognized in the balance sheet
2020
2019
At the beginning of financial period
690
613
Pension expenses in the income statement
15
22
Defined benefit plan actuarial gains (+) / losses (-)
46
54
At the end of financial period
751
690
NOTE 30 PENSION AND OTHER POST-EMPLOYMENT OBLIGATIONS
EXEL COMPOSITES
ANNUAL
FINANCIAL
REPORT
2020
AUDITED
FINANCIAL
STATEMENTS
| 57
ACCOUNTING PRINCIPLE: Share capital
Ordinary shares are included in shareholders’ equity. Expenses incurred directly from new share issues are recorded in
shareholders’ equity as a reduction of received payments.
Number of shares
(1,000)
Share capital
Invested
unrestricted
equity fund
Total
1.1.
2019
11,897
2,141
2,539
4,681
31.12
.
2019
11,897
2,141
2,539
4,681
31.12
.
2020
11,897
2,141
2,539
4,681
Authorizations by the AGM
Repurchase and/or the acceptance as pledge of the
company’s own shares
On 20 March 2020 the Annual General Meeting authorized
the Board of Directors to repurchase and/or accept as
pledge of the company’s own shares as follows:
The amount of own shares to be repurchased and/or
accepted as pledge on the basis of the authorization shall
not exceed 600,000 shares in total, which corresponds to
approximately 5.0 per cent of all the shares in the
company. Only the unrestricted equity of the company
can be used to repurchase own shares based on the
authorization.
Own shares can be repurchased at a price formed in
public trading on the date of the repurchase or otherwise
at a price formed on the market.
The Board of Directors decides on how own shares will be
repurchased and/or accepted as pledge. Shares can be
repurchased using, inter alia, derivatives. Own shares can
be repurchased otherwise than in proportion to the
shareholdings of the existing shareholders (directed
repurchase). The Board of Directors shall decide on other
terms of the share repurchase and/or acceptance as
pledge.
Shares may be repurchased to be used as consideration in
possible acquisitions or in other arrangements that are
part of the company’s business, to finance investments,
as part of the company’s incentive program or to be
retained, otherwise conveyed or cancelled by the
company.
The authorization cancels the authorization given to the
Board of Directors by the General Meeting 2019 to decide
on the repurchase and/or acceptance as pledge of the
company’s own shares.
The authorization is effective until the end of the next
Annual General Meeting, however no longer than until 30
June 2021.
Exel Composites held 67,150 own shares at the end of
2020, which have been repurchased to be used as part of
the company’s incentive program.
Issuance of shares and special rights entitling to shares
On 21 March 2019 the Annual General Meeting authorized
the Board of Directors to decide on the issuance of shares
and special rights entitling to shares referred to in
Chapter 10, Section 1 of the Companies Act as follows:
The amount of shares to be issued on the basis of the
authorization may be a maximum of 1,189,684 new
shares, which corresponds to approximately 10.0 per cent
of all shares in the company, and/or a maximum of
600,000 Company’s own shares.
The Board of Directors decides on all the conditions of the
issuance of shares and of special rights entitling to shares.
The issuance of shares and of special rights entitling to
shares may be carried out in deviation from the
shareholders’ pre-emptive rights (directed issue).
The shares to be issued based on the authorization can be
used as consideration in possible mergers and acquisitions
and other business arrangements, to finance investments
or as a part of the Company’s incentive program for
personnel.
The authorization cancels the authorization given to the
Board of Directors by the General Meeting on 17 March
2016 to decide on the issuance of shares as well as special
rights entitling to shares.
The authorization is effective until 30 June 2022.
These authorizations were not exercised in 2020.
NOTE 31 SHARE CAPITAL
EXEL COMPOSITES
ANNUAL
FINANCIAL
REPORT
2020
AUDITED
FINANCIAL
STATEMENTS
| 58
NOTE 32 LONG-TERM COMPENSATION
ACCOUNTING PRINCIPLE: Long-term compensation
The Group has long-term incentive programs for the President and CEO and the Group Management Team and selected key
employees of the Company. The aim of the programs is to combine the objectives of the shareholders and the executives
in order to increase the value of the Company, to commit the executives to the Company and to offer the executives a
competitive reward program based on holding the Company’s shares. The Board of Directors makes the decision on the
program annually.
The cost of the programs will be accounted for as operating expenses during the duration of the programs.
On 31 December 2020 the Group had three share-based
long-term incentive programs:
The 2018 plan
incentive program for the earning period 2018-2020 and is
targeted at approximately 15 executives. The President
and CEO and the members of the Group Management
Team are included in the target group of the 2018
incentive program. 75% of the potential share-based
performance reward is based on cumulative adjusted
operating profit (EBIT) and 25% on total shareholder
return of the company’s share (TSR). The potential share
reward is payable in 2021. The maximum number of
shares to be paid under this individual plan is 122,000
shares, of which President and CEO’s share is 33,973
shares. Estimated payout (to be confirmed in March 2021)
is 6,832 shares.
The 2019 plan
incentive program for the earning period 2019-2021 and is
targeted at approximately 20 executives. The President
and CEO and the members of the Group Management
Team are included in the target group of the 2019
incentive program. 75% of the potential share-based
performance reward is based on cumulative adjusted
operating profit (EBIT) and 25% on total shareholder
return of the company’s share (TSR). The potential share
reward is payable in 2022. The maximum number of
shares to be paid under this individual plan is 196,000
shares, of which President and CEO’s share is 50,000
shares.
The 2020 plan
incentive program for the earning period 2020-2022 and is
targeted at approximately 20 executives. The President
and CEO and the members of the Group Management
Team are included in the target group of the 2020
incentive program. 75% of the potential share-based
performance reward is based on cumulative adjusted
operating profit (EBIT) and 25% on total shareholder
return of the company’s share (TSR). The potential share
reward is payable in 2023. The maximum number of
shares to be paid under this individual plan is 125,000
shares, of which President and CEO’s share is 32,000
shares.
The 2017 program
, the earning period of which ended in
2019, was based on a long-term monetary incentive
program and was targeted at 16 executives for the
earning period 2017-2019. The President and CEO and the
members of the Group Management Team were included
in the target group of the 2017 incentive program. 75% of
the potential share-based performance reward was based
on cumulative operating profit (EBIT) and 25% on total
shareholder return of the company’s share (TSR). The
maximum number of shares to be paid under this
individual plan in 2020 was 153,700 shares, of which
President and CEO’s share was 42,800 shares. In 2020, a
total reward of 21,331 shares (9,850 in shares and 11,481
in cash) was paid out under the 2017 plan to 16
executives. The President and CEO’s share of the reward
was 6,079 (3,039 in shares and 3,040 in cash). The shares
were acquired at an average price of EUR 3.77 per share
on 17 March 2020.
The profit and loss of 2020 includes EUR 88 thousand of
costs related to these incentive programs.
The administration of the share-based incentive plan and
the acquisition of shares are conducted through an
arrangement made with Evli Awards Management Oy
(EAM) as per the decision of the Board of Directors on 12
June 2017 and according to the stipulations of the
Companies Act for financing the purchase of own shares
(the Finnish Companies Act, Chapter 13,Section 10,
Subsection 2) relating to incentive plans. As a part of this
arrangement EAM founded EAM EXL1V Holding Oy (Holding
company) which acquires the shares with Exel’s funding
and according to the agreement. These shares will be
delivered to the employees according to the Exel’s share
plan terms and conditions. The Holding company is owned
by the EAM in legal terms, but according to the
agreement Exel has control over the company and acts as
the principal, whereas EAM is an agent through the
Holding company. This control arising from contractual
terms means, that the Holding company is consolidated
into the group’s IFRS financial statements as a structured
entity.
No reward will be paid to an executive based on the 2018,
2019 and 2020 programs described above, if his or her
employment or service with the Company ends before the
reward payment unless the executive is leaving the
Company due to retirement or unless the Board decides
otherwise. The programs also include a one-year lock-up
period, and the restriction on leaving the Company is
extended to the end of the lock-up.
EXEL COMPOSITES
ANNUAL
FINANCIAL
REPORT
2020
AUDITED
FINANCIAL
STATEMENTS
| 59
NOTE 33 DISTRIBUTABLE FUNDS
NOTE 34 CASH FLOW FROM BUSINESS OPERATIONS
NOTE 35 RELATED -PARTY TRANSACTIONS
The parent company’s distributable funds on 31 December 2020 were EUR 12,906 thousand.
Non-cash adjustments to the result for the financial year
2020
2019
Depreciation, impairment charges and write-offs
6,021
5,740
Taxes
1,755
1,488
Financial expenses
3,584
1,681
Interest expenses on lease liabilities
92
110
Financial income
-1,390
-589
Other adjustments
68
-19
Total
10,131
8,411
Exel Composites’ related parties include the controlling
parent company, all companies belonging the Exel
Composites Group as well as Exel Composites’ Board of
Directors, President and CEO, Group Management Team
and executives of the parent company and subsidiaries.
The company evaluates and monitors transactions
concluded between the company and its related parties to
ensure that any conflicts of interest are appropriately
taken into account in the decision-making process.
In 2020, no significant related-party transactions were
conducted between the Group and its related parties.
The Group’s parent company and subsidiary relationships
Name of subsidiary
Domicile
Group share of
holding
Group control
EAM EXL1V Holding
Finland
0
100
Exel GmbH
Germany
100
100
Exel Composites N.V.
Belgium
100
100
Exel Composites GmbH
Austria
100
100
Exel Composites (Nanjing) Co. Ltd.
China
100
100
Exel Composites (Australia) Pty. Ltd.
Australia
100
100
Pacific Composites Ltd.
Australia
100
100
Pacific Composites (Europe) Ltd.
UK
100
100
Fibreforce Composites Ltd.
UK
100
100
Pacific Composites Ltd.
New Zealand
100
100
Exel Composites Store Ltd.
Finland
100
100
Exel Composites (HK) Holding Limited
Hong Kong
100
100
Nanjing Jingheng Composite Material Co. Ltd.
China
100
100
Jianhui FRP Trading Co. Limited
Hong Kong
100
100
Exel Composites USA Holdings Inc.
USA
100
100
Diversified Structural Composites Inc.
USA
100
100
The ultimate parent company is Exel Composites Plc.
EXEL COMPOSITES
ANNUAL
FINANCIAL
REPORT
2020
AUDITED
FINANCIAL
STATEMENTS
| 60
Management remuneration
Senior management accrued salaries, fees and bonuses
2020
2019
President and CEO
376
324
Members of the Board of Directors
173
175
Total
549
499
Salaries and fees per person
President and CEO and Board of Directors
2020
2019
Riku Kytömäki
President and CEO
376
324
Reima Kerttula
Chairman (as of 17 March 2016, member until 17 March 2016)
57
62
Petri Helsky
Member (as of 17 March 2016)
29
29
Helena Nordman-Knutson
Member (as of 4 April 2017)
29
29
Jouko Peussa
Member (as of 17 March 2016)
29
28
Kirsi Sormunen
Member (as of 20 March 2020)
28
0
Maija Strandberg
Member (until 20 March 2020)
1
27
Total
549
499
The accrued pension costs of President and CEO amounted to EUR 82 (81) thousand. The President and CEO's pension plan is
pursuant to the employment pension legislation.
The holdings of the senior management on 31 December 2020
Number of shares and votes
2020
2019
Riku Kytömäki
President and CEO
71,588
64,610
Reima Kerttula
Chairman (as of 17 March 2016, member until 17 March 2016)
21,561
16,900
Petri Helsky
Member (as of 17 March 2016)
7,911
5,743
Helena Nordman-Knutson
Member (as of 4 April 2017)
6,769
4,601
Jouko Peussa
Member (as of 17 March 2016)
7,911
5,743
Kirsi Sormunen
Member (as of 20 March 2020)
2,168
1,876
Maija Strandberg
Member (until 20 March 2020)
0
2,725
Total
117,908
102,198
EXEL COMPOSITES
ANNUAL
FINANCIAL
REPORT
2020
AUDITED
FINANCIAL
STATEMENTS
| 61
Exel Composites continues the long-term incentive
program for top management
In February 2021, the Board of Directors of Exel
Composites decided on the continuation of the share-
based long-term incentive program for the top
management of Exel Composites. The 2021 performance-
based plan is part of the share-based long-term incentive
program published on 4 May 2017. Similarly to the
previous programs within this plan, the performance
targets applied to the plan commencing at the beginning
of 2021 are adjusted operating profit (EBIT) and the total
shareholder return of the company’s share (TSR).
Payment of the remaining purchase price related to the
acquisition of Nanjing Jianhui
In December 2020, Exel Composites was notified that the
seller will exercise their put option effective 1 January
2020, leading to the payment of the remaining 30% stake
during the first quarter of 2021. The estimated remaining
purchase price, which includes a variable component
depending, among other things, on the profit
development of the business, is approximately EUR 3.6
million. The total acquisition price of the company thus
amounts to EUR 8.8 million. The entire remaining
purchase price is booked as a liability in Group balance
sheet and the payment will therefore have no impact on
the Group income statement.
NOTE 36 EVENTS AFTER THE REPORTING PERIOD
EXEL COMPOSITES
ANNUAL
FINANCIAL
REPORT
2020
AUDITED
FINANCIAL
STATEMENTS
| 62
PARENT COMPANY INCOME STATEMENT
For the financial year starting on 1 January and ending on 31 December
EUR
Notes
2020
2019
Revenue
37
39,273,004.88
33,617,576.33
Variation in inventories of finished goods and work in progress
115,402.29
403,106.37
Other operating income
38
3,242,894.14
3,242,326.25
Materials and services
39
-18,546,639.74
-15,458,617.87
Personnel expenses
40
-13,688,365.14
-13,092,118.92
Depreciation, amortization and reduction in value
41
-2,229,572.23
-1,919,057.25
Other operating expenses
42
-5,036,042.08
-4,812,564.94
Operating profit / loss
3,130,682.12
1,980,649.97
Financial income
44
2,470,869.65
1,676,341.29
Financial expenses
44
-2,129,006.74
-908,624.46
Profit/ loss before appropriations and taxes
3,472,545.03
2,748,366.80
Appropriations
45
417,117.69
-85,851.61
Income taxes
46
-435,278.19
-365,291.46
Other direct taxes
-114.74
0.00
Profit/ loss for the period
3,454,269.79
2,297,223.73
EXEL COMPOSITES
ANNUAL
FINANCIAL
REPORT
2020
AUDITED
FINANCIAL
STATEMENTS
| 63
PARENT COMPANY BALANCE SHEET
As at the end of the financial year
EUR
Notes
2020
2019
ASSETS
Non-current assets
Intangible assets
47
2,200,770.50
2,156,593.25
Tangible assets
48
7,511,078.84
6,761,279.88
Investments
49
22,106,301.47
20,895,813.67
Total non -current assets
31,818,150.81
29,813,686.80
Current assets
Inventories
51
7,080,407.51
7,070,276.43
Current receivables
52
31,127,708.87
22,314,801.45
Cash at bank and in hand
19,294.48
371,662.41
Total current assets
38,227,410.86
29,756,740.29
TOTAL ASSETS
70,045,561.67
59,570,427.09
EQUITY AND LIABILITIES
Capital and reserves
Share capital
53
2,141,431.74
2,141,431.74
Other reserves
53
2,539,278.34
2,539,278.34
Retained earnings/loss
53
6,912,472.85
6,744,593.86
Profit/loss for the period
53
3,454,269.79
2,297,223.73
Total equity
15,047,452.72
13,722,527.67
Appropriations
54
0.00
417,117.69
Liabilities
Non-current liabilities
55
9,800,000.00
10,564,417.55
Current liabilities
56
45,198,108.95
34,866,364.18
Total liabilities
54,998,108.95
45,430,781.73
TOTAL EQUITY AND LIABILITIES
70,045,561.67
59,570,427.09
EXEL COMPOSITES
ANNUAL
FINANCIAL
REPORT
2020
AUDITED
FINANCIAL
STATEMENTS
| 64
PARENT COMPANY CASH FLOW STATEMENT
For the financial year starting on 1 January and ending on 31 December
EUR thousands
2020
2019
Cash flows from operating activities
Profit/loss for the period
3,454
2,297
Adjustments to profit/loss for the period
1,968
1,571
Cash flow before working capital changes
5,422
3,869
Working capital changes
825
-1,109
Operating cash flow before financial items and taxes
6,247
2,760
Interest and other financial expenses paid relating to operating activities
-758
-698
Dividends received
949
931
Interests received
249
35
Income taxes paid
162
-703
Net cash flow from operating activities (A)
6,849
2,325
Cash flows from investing activities
Purchase of tangible and intangible assets
-3,024
-2,643
Proceeds from sale of tangible and intangible assets
2
0
Purchased subsidiary shares
-1,215
0
Proceeds from sale of investments
54
0
Net cash flow from investing activities (B)
-4,183
-2,643
Cash flow from financing activities
Proceeds from short -term borrowings
8,181
13,836
Repayment of short-term borrowings
-16,070
-12,333
Proceeds from long -term borrowings
7,000
1,000
Dividends and other distribution of profit paid
-2,129
-2,128
Net cash flow from financing activities (C)
-3,018
375
Net increase (+) / decrease (-) in cash and cash equivalents (A + B + C)
-352
56
Cash and cash equivalents at beginning of period
372
315
Cash and cash equivalents at end of period
19
372
EXEL COMPOSITES
ANNUAL
FINANCIAL
REPORT
2020
AUDITED
FINANCIAL
STATEMENTS
| 65
NOTES TO THE PARENT COMPANY FINANCIAL
STATEMENTS
(All figures in EUR thousands unless otherwise stated)
NOTE 37 REVENUE BY MARKET AREA
NOTE 38 OTHER OPERATING INCOME
NOTE 39 MATERIALS AND SERVICES
NOTE 40 PERSONNEL
2020
2019
Europe
31,097
28,021
North America
6,445
3,935
Asia-Pacific
1,471
1,549
Rest of world
260
113
Total
39,273
33,618
2020
2019
Service invoicing from Group companies
3,195
3,175
Other operating income
48
67
Total
3,243
3,242
Service invoicing from Group companies was previously presented as an adjustment to Other Operating Expenses. Now presented in Other
Operating Income. Comparative figures adjusted accordingly by EUR 3 175 thousand.
2020
2019
Purchases during financial period
-17,780
-15,454
Change in inventories
-103
242
External services
-664
-247
Total
-18,547
-15,459
Average number of personnel during the financial year
2020
2019
Office employees
86
86
Production employees
142
141
Total
228
227
Personnel expenses
2020
2019
Wages and salaries
-11,524
-10,960
Pension expenses
-1,713
-1,733
Other social security expenses
-452
-400
Total
-13,688
-13,092
EXEL COMPOSITES
ANNUAL
FINANCIAL
REPORT
2020
AUDITED
FINANCI
AL
STATEMENTS
| 66
Wages, salaries and other remuneration of directors and management
2020
2019
President and CEO
-376
-324
Members of the Board of Directors
-173
-175
Total
-549
-499
The accrued pension costs of President and CEO amounted to EUR 82 (81) thousand. The President and CEO's pension plan is pursuant to
the employment pension legislation.
Tangible and intangible assets are recognized in the balance sheet at cost less depreciation according to plan. Cost includes
variable expenditure relating to the acquisition and production of the assets. Grants received are deducted from the cost.
Depreciation according to plan is calculated using the straight-line method based on the useful life of the assets.
Depreciation is started at the moment when the asset is taken into use.
Planned depreciation periods
●
Buil
dings
and
structures
5
-
2
0
years
●
Machinery
and
equipment
5
-
8
years
●
Other
capitalized
expenditure
5
-
8
years
●
Goodwill
10
years
●
Other
intangible
assets
5
years
Planned depreciation, amortization and reduction in value
2020
2019
Depreciation according to plan
-2,230
-1,919
Total
-2,230
-1,919
2020
2019
Real estate, machinery and equipment expenses
-1,441
-1,257
External services, insurances and IT expenses
-2,401
-1,810
Other operating expenses
-1,194
-1,746
Total
-5,036
-4,813
Service invoicing from Group companies was previously presented as an adjustment to Other Operating Expenses. Now presented in Other
Operating Income. Comparative figures adjusted accordingly by EUR 3 175 thousand.
Authorized Public Accountants, Ernst & Young
2020
2019
Audit of financial statements
-89
-65
Engagements referred to in the Auditing Act, 1.1,2§
-5
-4
Other fees
-8
-35
Total
-102
-103
NOTE 41 DEPRECIATION , AMORTIZATION AND REDUCTION IN VALUE
NOTE 42 OTHER OPERATING EXPENSES
NOTE 43 AUDITOR’S FEES
EXEL COMPOSITES
ANNUAL
FINANCIAL
REPORT
2020
AUDITED
FINANCIAL
STATEMENTS
| 67
2020
2019
Income from Group companies
1,347
929
Income from other investments held as non-current assets
From others
56
2
1,403
931
Other interest income and other financial income
From Group companies
403
539
From others
665
206
1,068
745
Total financial income
2,471
1,676
Interest and other financial expenses
To Group companies
-76
-85
To others
-2,053
-824
-2,129
-909
Total financial expenses
-2,129
-909
Total financial income and expenses
342
768
2020
2019
Change in cumulative accelerated depreciation
417
-86
Total
417
-86
2020
2019
Income taxes from ordinary activities
-430
-388
Income tax relating to previous financial years
-5
23
Total
-435
-365
Intangible
assets
Other long-term
expenses
Advance
payments
Total
Acquisition cost at 1 January
731
4,356
0
5,087
Additions
15
0
0
15
Transfer between items
199
402
0
601
Acquisition cost at 31 December
946
4,758
0
5,703
Accumulated amortization and impairment at 1 January
-704
-2,225
0
-2,929
Amortization for the period
-15
-558
0
-572
Accumulated amortization and impairment at 31
December
-720
-2,783
0
-3,502
Book value at 1 January
26
2,131
0
2,157
Book value at 31 December
226
1,975
0
2,201
NOTE 44 FINANCIAL INCOME AND EXPENSES
NOTE 45 APPROPRIATIONS
NOTE 46 INCOME TAXES
NOTE 47 INTANGIBLE ASSETS
EXEL COMPOSITES
ANNUAL
FINANCIAL
REPORT
2020
AUDITED
FINANCIAL
STATEMENTS
| 68
NOTE 48 TANGIBLE ASSETS
NOTE 49 INVESTMENTS
NOTE 50 COMPANIES OWNED BY PARENT COMPANY
Land and
waters
Buildings
Machinery and
equipment
Advance
payments and
construction in
progress
Total
Acquisition cost at 1 January
90
3,505
16,064
1,228
20,887
Additions
0
0
41
3,025
3,066
Disposals
0
0
-35
-44
-78
Transfer between items
0
206
2,526
-3,333
-601
Acquisition cost at 31 December
90
3,711
18,596
876
23,273
Accumulated depreciation and impairment at 1 January
0
-2,386
-11,740
0
-14,127
Accumulated depreciation of disposals and transfers
0
0
20
0
20
Depreciation for the period
0
-159
-1,498
0
-1,657
Accumulated depreciation and impairment at 31
December
0
-2,546
-13,217
0
-15,763
Book value at 1 January
90
1,119
4,325
1,228
6,761
Book value at 31 December
90
1,165
5,379
876
7,511
Group companies
Other shares and
holdings
Total
Acquisition cost at 1 January
20,843
53
20,896
Additions
1,215
0
1,215
Disposals
0
-5
-5
Acquisition cost at 31 December
22,058
48
22,106
Book value at 1 January
20,843
53
20,896
Book value at 31 December
22,058
48
22,106
Shares in subsidiaries
Name of company
Registration
country
Owned by the
parent company
Parent company
control
EAM EXL1V Holding
Finland
0
100
Exel GmbH
Germany
100
100
Exel Composites N.V.
Belgium
100
100
Exel Composites GmbH
Austria
100
100
Exel Composites (Nanjing) Co. Ltd.
China
100
100
Exel Composites (Australia) Pty. Ltd.
Australia
100
100
Pacific Composites (Europe) Ltd.
UK
100
100
Exel Composites Store Oy
Finland
100
100
Exel Composites (HK) Holding Limited
Hong Kong
100
100
Jianhui FRP Trading Co. Limited
Hong Kong
100
100
Exel Composites USA Holdings Inc.
USA
100
100
All Group companies are consolidated in the parent company's consolidated financial statements.
EXEL COMPOSITES
ANNUAL
FINANCIAL
REPORT
2020
AUDITED
FINANCIAL
STATEMENTS
| 69
2020
2019
Raw materials and consumables
3,421
3,524
Work in progress
2,118
2,213
Finished products/ goods
816
775
Other inventories
725
558
Total
7,080
7,070
Receivables from Group companies
2020
2019
Trade receivables
5,069
4,213
Loan receivables
19,479
13,233
Other receivables
400
0
Total
24,948
17,446
Receivables from others
2020
2019
Trade receivables
4,920
3,638
Other receivables
1,209
609
Prepayments and accrued income
51
622
Total
6,179
4,869
Total current receivables
31,128
22,315
Deferred tax assets amounting to EUR 33 (125) thousand have not been booked from cumulative depreciation exceeding the maximum tax
depreciations by EUR 164 (627) thousand.
Material items included in prepayments and accrued income
2020
2019
Tax receivables
20
618
Other receivables
31
4
Total
51
622
NOTE 51 INVENTORIES
NOTE 52 CURRENT RECEIVABLES
EXEL COMPOSITES
ANNUAL
FINANCIAL
REPORT
2020
AUDITED
FINANCIAL
STATEMENTS
| 70
2020
2019
Restricted equity
Share capital 1 January
2,141
2,141
Share capital 31 December
2,141
2,141
Total restricted equity
2,141
2,141
Unrestricted equity
Reserve for invested unrestricted equity fund 1 January
2,539
2,539
Reserve for invested unrestricted equity fund 31 December
2,539
2,539
Retained earnings 1 January
9,042
8,883
Distribution of dividends
-2,129
-2,128
Correction of a previous financial year error
0
-11
Retained earnings 31 December
6,912
6,745
Profit/loss for the financial year
3,454
2,297
Total unrestricted equity
12,906
11,581
Total equity
15,047
13,723
Calculation of distributable unrestricted equity 31 December
2020
2019
Profit from previous financial years
6,912
6,745
Profit /loss for the financial year
3,454
2,297
Reserve for invested unrestricted equity fund
2,539
2,539
Total
12,906
11,581
2020
2019
Cumulative accelerated depreciation
0
417
Total
0
417
Liabilities to others
2020
2019
Loans from financial institutions
9,800
10,564
Total
9,800
10,564
Total non -current liabilities
9,800
10,564
NOTE 53 EQUITY
NOTE 54 APPROPRIATIONS
NOTE 55 NON-CURRENT LIABILITIES
EXEL COMPOSITES
ANNUAL
FINANCIAL
REPORT
2020
AUDITED
FINANCIAL
STATEMENTS
| 71
Liabilities to Group companies
2020
2019
Loan from Group companies
3,391
4,799
Trade payables
1,235
669
Total
4,626
5,467
Liabilities to others
2020
2019
Loans from financial institutions
29,169
21,098
Advances received
1,056
267
Trade payables
2,947
2,372
Other liabilities
591
598
Accruals and deferred income
6,809
5,065
Total
40,572
29,399
Current liabilities total
45,198
34,866
Material items included in accruals and deferred income
2020
2019
Accrued personnel expenses
2,865
2,342
Other accruals and deferred income
3,944
2,723
Total
6,809
5,065
Derivative financial instruments
Interest rate risk
The Company’s long-term loans are exposed to interest rate risk, which is why the Company has tied part of its loans to fixed
interest rates with interest rate swaps, which expire in 2014 – 2021.
2020
2020
2019
2019
Fair value
Nominal value
Fair value
Nominal value
Interest rate swaps
-40
2,852
-117
6,231
Changes in the fair value of derivative financial instruments are recognized in the income statement in financial income and
expenses.
NOTE 56 CURRENT LIABILITIES
NOTE 57 FINANCIAL INSTRUMENTS
EXEL COMPOSITES
ANNUAL
FINANCIAL
REPORT
2020
AUDITED
FINANCIAL
STATEMENTS
| 72
Credit facilities
2020
2019
Total amount of credit granted
32,300
32,300
In use
3,537
521
Pension liabilities
The pension liabilities are covered via the insurance company as prescribed by legislation.
Leasing liabilities
2020
2019
Payable during the following financial year
10
11
Total
10
11
Commitments on behalf of Group companies
2020
2019
Other guarantees
978
0
Guaranteed debt
0
0
Distribution of share ownership on 31 December 2020
%
Private companies
12.8
Financial and insurance institutions
45.0
Public sector entities
4.0
Non-profit organizations
0.5
Households
37.0
Foreign
0.7
21.1
Distribution of share ownership on 31 December 2020
Number of shares
Number of
shareholders
Percentage of
shareholders
Total number of
shares
Percentage of
total number of
shares
1 - 1,000
5,517
86.90
1,464,379
12.31
1,001 – 10,000
745
11.73
2,009,069
16.89
10,001 – 50,000
64
1.01
1,171,583
9.85
over 50,000
23
0.36
7,251,812
60.96
NOTE 58 COMMITMENTS AND CONTINGENT LIABILITIES
NOTE 59 SHARE OWNERSHIP
EXEL COMPOSITES
ANNUAL
FINANCIAL
REPORT
2020
AUDITED
FINANCIAL
STATEMENTS
| 73
Information on shareholders on 31 December 2020
Shareholder
Number of shares
Percentage of
shares and votes
Skandinaviska Enskilda Banken AB (Nominee Registered)
1,410,179
11.9
Nordea Bank ABP (Nominee Registered)
1,074,741
9.0
Sijoitusrahasto Taaleritehdas Mikro Markka
800,000
6.7
OP-Finland Small Firms Fund
598,259
5.0
Danske Invest Finnish Equity Fund
546,650
4.6
OP-Suomi Mikroyhtiöt - Erikoissijoitusrahasto
438,119
3.7
Phoebus Fund
311,348
2.6
Sijoitusrahasto Säästöpankki Pienyhtiöt
288,710
2.4
Nelimarkka Heikki Antero
242,836
2.0
Ilmarinen Mutual Pension Insurance Company
242,733
2.0
Other Nominee Registered
29,599
0.2
Others
5,913,669
49.7
Total
11,896,843
100.0
Share price
EUR
2020
2019
2018
2017
2016
Average price
5.55
4.54
5.40
6.00
5.05
Lowest price
3.40
3.92
3.98
4.84
4.71
Highest price
7.38
6.76
7.28
7.85
6.85
Share price at the end of financial year
7.38
6.48
4.00
6.57
5.02
Market capitalization, EUR million
87.3
76.6
47.3
77.7
59.7
Share trading
2020
2019
2018
2017
2016
Number of shares traded
4,820,621
6,048,492
2,513,383
4,244,520
3,080,024
% of the average number of shares
40.8
50.8
21.1
35.8
25.9
Number of shares
2020
2019
2018
2017
2016
Average number
11,827,648
11,819,843
11,819,843
11,862,199
11,896,843
Number at end of financial year
11,829,693
11,819,843
11,819,843
11,819,843
11,896,843
Exel Composites Plc’s share was quoted on Helsinki Stock
Exchange I List from 19 October 1998 to 1 May 2000. As
from 2 May 2000, Exel Composites Plc’s share has been
quoted on Helsinki Exchange Main List. Exel Composites
Plc’s share was split on 21 April 2005. Exel Composites
Plc’s share is listed on Nasdaq Helsinki.
NOTE 60 SHAREHOLDERS
NOTE 61 SHARE PRICE AND TRADING
EXEL COMPOSITES
ANNUAL
FINANCIAL
REPORT
2020
PROPOSAL
FOR
DISTRIBUTION
OF
PROFIT
| 74
PROPOSAL FOR DISTRIBUTION OF PROFIT
Exel Composites Plc’s distributable funds amount to EUR 12,906,020.98, of which the profit for the financial year is EUR
3,454,269.79.
The Board of Directors proposes to the General Meeting that the distributable funds are allocated as follows:
- Dividend EUR 0.20 per share
2,379,368.60
- To be retained in equity, EUR
10,526,652.38
12,906,020.98
Signatures of the Financial Statements and the Report of the Board of
Directors
Vantaa, 17 February 2021
Reima Kerttula
Chairman of the Board of Directors
Helena Nordman-Knutson
Member of the Board of Directors
Petri Helsky
Member of the Board of Directors
Kirsi Sormunen
Member of the Board of Directors
Jouko Peussa
Member of the Board of Directors
Riku Kytömäki
President and CEO
Auditors' note
An auditor's report based on the audit performed has been issued today.
Vantaa, 17 February 2021
Ernst & Young
Authorized Public Accountants
Johanna Winqvist -Ilkka
Authorized Public Accountant
EXEL COMPOSITES
ANNUAL
FINANCIAL
REPORT
2020
AUDITOR’S
REPORT
| 75
AUDITOR’S REPORT
(Translation of the Finnish original)
To the Annual General Meeting of Exel Composites Plc
Report on the Audit of the
Financial Statements
Opinion
We have audited the financial statements of Exel
Composites Plc (business identity code 1067292-7) for the
year ended 31 December, 2020. The financial statements
comprise the statement of comprehensive income,
consolidated balance sheet, statement of cash flows,
statement of changes in equity and notes, including a
summary of significant accounting policies, as well as the
parent company’s income statement, balance sheet,
statement of cash flows and notes.
In our opinion
●
the consolidated financial statements give a true and
fair view of the group’s financial position as well as its
financial performance and its 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 financial statements in
Finland and comply with statutory requirements.
Our opinion is consistent with the additional report
submitted to the Board of Directors.
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 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.
In our best knowledge and understanding, the non-audit
services that we have provided to the parent company
and group companies are in compliance with laws and
regulations applicable in Finland regarding these services,
and we have not provided any prohibited non-audit
services referred to in Article 5(1) of regulation (EU)
537/2014. The non-audit services that we have provided
have been disclosed in note 8 to the consolidated
financial statements.
We believe that the audit evidence we have obtained is
sufficient and appropriate to provide a basis for our
opinion.
Key Audit Matters
Key audit matters are those matters that, in our
professional judgment, were of most significance in our
audit of the financial statements of the current period.
These matters were addressed in the context of our audit
of the financial statements as a whole, and in forming our
opinion thereon, and we do not provide a separate
opinion on these matters.
We have fulfilled the responsibilities described in the
Auditor’s responsibilities for the audit of the financial
statements
these matters. Accordingly, our audit included the
performance of procedures designed to respond to our
assessment of the risks of material misstatement of the
financial statements. The results of our audit procedures,
including the procedures performed to address the
matters below, provide the basis for our audit opinion on
the accompanying financial statements.
We have also addressed the risk of management override
of internal controls. This includes consideration of
whether there was evidence of management bias that
represented a risk of material misstatement due to fraud.
EXEL COMPOSITES
ANNUAL
FINANCIAL
REPORT
2020
AUDITOR’S
REPORT
| 76
KEY AUDIT MATTER
HOW OUR AUDIT ADDRESSED THE KEY AUDIT
MATTER
Valuation of Goodwill
We refer to notes 4, 18 and 26.
Goodwill amounted to 12,6 million euros as of 31
December 2020 comprising 13,0 % of total assets and 43,6
% of equity (2019: 13,0 million euros, 15,2 % of total
assets and 49,3 % of equity).
Valuation of goodwill was a key audit matter because
●
the assessment process related to the annual
impairment test is complex and judgmental;
●
the process contains significant estimates and
assumptions relating to market or economic conditions
extending to the future; and
●
because of the significance of the goodwill to the
financial statements.
There are a number of assumptions used to determine the
value-in-use, including revenue growth, operating margin
before depreciation and amortization and discount rate
applied on cash-flows. Estimated values-in-use may vary
significantly when the underlying assumptions are
changed and the changes in above-mentioned individual
assumptions may result in an impairment of goodwill.
Our audit procedures in connection with the valuation of
goodwill included involving valuation specialists to assist
us in evaluating the assumptions and methodologies by
the management.
Audit procedures included comparing the management’s
assumptions to externally derived data and to our own
expectations. In particular those relating to the weighted
average cost of capital used to discount the cash-flows.
In addition, we tested the accuracy of the impairment
calculations prepared by the management, compared the
historical forecasting of the group with actual outcome
and compared projections to the latest budgets approved
by the board. We also compared the sum of discounted
cash flows to the market capitalization of Exel
Composites and evaluated the adequacy of the disclosures
in note 26 such as information given with regards to the
sensitivity analysis as well as whether a reasonably
probable change in key assumptions could result in an
impairment.
Revenue Recognition
We refer to note 5.
Revenue is recognized when the control of the underlying
products has been transferred to the customer.
Revenue is a key performance measure which could
create an incentive for revenue to be recognized before
the risks and rewards as well as control over the goods
have been transferred.
Revenue recognition was determined to be a key audit
matter and a significant risk of material misstatement
referred to in EU Regulation No 537/2014, point (c) of
Article 10(2).
Our audit procedures to address the risk of material
misstatement relating to timing of revenue recognition
included among others:
●
Analysis of the accounting principles applied as well as
comparing them to the IFRS standards;
●
Testing of internal controls addressing the timing of the
revenue recognition, including general IT controls over
the most significant IT applications;
●
Substantive analytical procedures and test of details,
and
●
Evaluation of the disclosures provided on revenues.
EXEL COMPOSITES
ANNUAL
FINANCIAL
REPORT
2020
AUDITOR’S
REPORT
| 77
Resp onsibilities 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 consolidated financial
statements that give a true and fair view in accordance
with International Financial Reporting Standards (IFRS) as
adopted by the EU, and 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
misstatement, whether due to fraud or 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 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 cease operations, or there is no
realistic alternative but to do so.
Auditor’s Responsibilities for the Audit of
Financial Statements
Our objectives are to obtain reasonable assurance on
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 aggregate, they could reasonably be
expected to influence the economic decisions of users
taken on the basis of the 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.
We also provide those charged with governance with a
statement that we have complied with relevant ethical
requirements regarding independence, and communicate
with them all relationships and other matters that may
reasonably be thought to bear on our independence, and
where applicable, related safeguards.
From the matters communicated with those charged with
governance, we determine those matters that were of
most significance in the audit of the financial statements
of the current period and are therefore the key audit
matters. We describe these matters in our auditor’s
report unless law or regulation precludes public disclosure
about the matter or when, in extremely rare
circumstances, we determine that a matter should not be
communicated in our report because the adverse
consequences of doing so would reasonably be expected
to outweigh the public interest benefits of such
communication.
Other Reporting Requirements
Information on our audit engagement
We were first appointed as auditors by the Annual General
Meeting on April 6, 2007 and our appointment represents
a total period of uninterrupted engagement of 14 years.
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
and the information included in the Annual Report but
EXEL COMPOSITES
ANNUAL
FINANCIAL
REPORT
2020
AUDITOR’S
REPORT
| 78
does not include the financial statements and our
auditor’s report thereon. We have obtained the report of
the Board of Directors prior to the date of this auditor’s
report, and the Annual Report is expected to be made
available to us after that date.
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
identified above 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.
With respect to report of the Board of Directors, 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 on the other
information that we obtained prior to the date of this
auditor’s report, we conclude that there is a material
misstatement of this other information, we are required
to report that fact. We have nothing to report in this
regard.
Opinions based on assignment of the Board of
Directors
We support that the financial statements and the
consolidated financial statements should be adopted. The
proposal by the Board of Directors regarding the use of
the profit shown in the balance sheet is in compliance
with the Limited Liability Companies Act. We support that
the Members of the Board of Directors and the President
and CEO of the parent company should be discharged
from liability for the financial period audited by us.
Helsinki 17 February 2021
Ernst & Young Oy
Authorized Public Accountant Firm
Johanna Winqvist -Ilkka
Authorized Public Accounta
EXEL COMPOSITES
ANNUAL
FINANCIAL
REPORT
2020
|
79
INDEPENDENT AUDITOR’S REPORT ON EXEL COMPOSITES PLC’S ESEF-
CONSOLIDATED FINANCIAL STATEMENTS
(Translation of the Finnish original)
To the Board of Directors of Exel Composites Oyj
We have performed a reasonable assurance engagement
on the iXBRL tagging of the consolidated financial
statements included in the digital files
743700205JAMGM80QD88-2020-12-31_fin of Exel
Composites Oyj for the financial year 1 January 2020 – 31
December 2020 to ensure that the financial statements
are tagged with iXBRL in accordance with the
requirements of Article 4 of EU Commission Delegated
Regulation (EU) 2018/815 (ESEF RTS).
Respon sibilities of the Board of Directors and
Managing Director
The Board of Directors and Managing Director are
responsible for the preparation of the Report of Board of
Directors and financial statements (ESEF financial
statements) that comply with the ESESF RTS. This
responsibility includes:
●
preparation of ESEF-financial statements in accordance
with Article 3 of ESEF RTS
●
tagging the consolidated financial statements included
within the ESEF- financial statements by using the iXBRL
marks in accordance with Article 4 of ESEF RTS
●
ensuring consistency between ESEF financial statements
and audited financial statements
The Board of Directors and Managing Director are also
responsible for such internal control as they determine is
necessary to enable the preparation of ESEF financial
statements in accordance the requirements of ESEF RTS.
Auditor’s Independence and Quality Control
We are independent of the company in accordance with
the ethical requirements that are applicable in Finland
and are relevant to the engagement we have performed,
and we have fulfilled our other ethical responsibilities in
accordance with these requirements.
The auditor applies International Standard on Quality
Control (ISQC) 1 and therefore maintains a comprehensive
quality control system including documented policies and
procedures regarding compliance with ethical
requirements, professional standards and applicable legal
and regulatory requirements.
Auditor’s Responsibilities
In accordance with the Engagement Letter we will express
an In accordance with the Engagement Letter we will
express an opinion on whether the electronic tagging of
the consolidated financial statements complies in all
material respects with the Article 4 of ESEF RTS. We have
conducted a reasonable assurance engagement in
accordance with International Standard on Assurance
Engagements ISAE 3000.
The engagement includes procedures to obtain evidence
on:
●
whether the tagging of the consolidated financial
statements complies in all material respects with Article
4 of the ESEF RTS
●
whether the ESEF-financial statements are consistent
with the audited financial statements
The nature, timing and extent of the procedures selected
depend on the auditor’s judgement including the
assessment of risk of material departures from
requirements sets out in the ESEF RTS, whether due to
fraud or error.
We believe that the evidence we have obtained is
sufficient and appropriate to provide a basis for our
opinion.
Opinion
In our opinion the tagging of the consolidated financial
statement included in the ESEF financial statement of
Exel Composites Oyj for the year ended 31 December 2020
complies in all material respects with the requirements of
ESEF RTS.
Our audit opinion on the consolidated financial
statements of Exel Composites Oyj for the year ended 31
December 2020 is included in our Independent Auditor’s
Report dated 17 February 2021. In this report, we do not
express an audit opinion or any other assurance on the
consolidated financial statements.
Helsinki 25 February 2021
Ernst & Young Oy
Authorized Public Accountant Firm
Johanna Winqvist -Ilkka
Authorized Public Accountant
