Boreo Plc, FINANCIAL STATEMENTS BULLETIN JAN. 1 TO DEC. 31, 2024

February 13, 2025 at 9:00 EET

A decent year-end for a challenging year

October-December 2024

• Net sales grew by 6% to EUR 39.2 million (2023: 37.1).
• Operational EBIT was at the level of the comparison period at EUR 2.1 million (2023: 2.1) and accounted for 5.3% of net sales (2023: 5.6%).
• EBIT increased to EUR 1.7 million (2023: 1.2).
• The profit for the period under review improved to EUR 0.9 million (2023: 0.3).
• Net cash flow from operating activities increased significantly and was EUR 7.1 million (2023: EUR 2.1 million), which was positively impacted by successful working capital reduction.
• Operational EPS was EUR 0.25 (2023: 0.25).
• EPS was EUR 0.13 (2023: 0.00).

January-December 2024

• Net sales decreased by 17% to EUR 134.0 million (2023: 161.3).
• Operational EBIT declined by 28% to EUR 6.8 million (2023: 9.5) and accounted for 5.1% of net sales (2023: 5.9%).
• EBIT was EUR 4.1 million (2023: 6.3).
• The profit for the full year totaled EUR 1.2 million (2023: 2.8).
• Net cash flow from operating activities was EUR 12.0 million (2023: 11.6).
• Operational EPS was EUR 0.51 (2023: 1.40).
• EPS was EUR -0.30 (2023: 0.47).
• Net debt relative to operational EBITDA of the previous 12 months was 2.8 (2023: 2.5 and 3.3 at the end of the previous quarter).
• Return on capital employed was 7.9% (2023: 11.0% and 7.9% at the end of the previous quarter).

The Board of Directors’ dividend distribution proposal

The distributable assets of the parent company Boreo Plc on December 31, 2024, were EUR 27.0 million, of which the profit for 2024 is EUR 12.4 million.

Boreo’s aim is to pay an annually increasing dividend per share, considering capital allocation priorities. In the short term, however, the company’s objective is to strengthen its financial position and thus ensure the implementation of its growth strategy also going forward. As a result, the Board of Directors of the company proposes to the Annual General Meeting that no dividend will be paid for the financial year that ended on December 31, 2024.

Financial guidance and business model

Boreo's primary objective is sustainable long-term profit generation. This is achieved with a business model that is based on the acquisition and ownership of great entrepreneurial companies with the ability to generate sustainable long-term earnings growth and strong cash flows. The profits generated by the portfolio of companies are re-invested back to operations or to acquisitions with attractive expected returns on capital. The decentralized operating structure promoting a culture of ownership and release of entrepreneurial energy is a core pillar of the company's business concept and sustainable earnings growth is ensured through the support and coaching of companies and the personnel.

Boreo’s focus is on earnings growth with attractive return on capital. The company's long-term strategic financial targets are:

• Minimum 15% average annual operational EBIT growth
• Minimum 15% Return on Capital Employed (ROCE)
• Net debt to operational EBITDA between 2 and 3 (including acquired businesses as if they had been held for 12 months at the reporting date)

Boreo’s dividend policy is to pay an annually increasing dividend per share, considering capital allocation priorities.

The above-mentioned strategic financial objectives still serve as the company's financial guidelines. In line with its guidance policy, the company does not give separate short-term financial guidance. 

Group's key figures

* Calculated in accordance with the calculation principles established with financiers. The formula for calculating the indicator is presented later in this report.

**The effect of the interest rate of the hybrid bond recorded in equity adjusted by the tax effect is considered in the calculation of the EPS starting from 2022. In Q4 2024, this net effect was EUR 0.19 per share, in Q1-Q4 2024, the net effect was EUR 0.70 per share, in Q4 2023, it was EUR 0.12 per share, and in Q1-Q4 2023, it was EUR 0.44 per share.

Q4/2024 - CEO Kari Nerg:

2024: A challenging year

2024 was a challenging year for the company. Due to weak demand, especially in our companies operating in Finland and the Baltic region, the Group's net sales decreased from EUR 161 million to EUR 134 million. Despite the decrease in net sales, we achieved a reasonable operational EBIT of EUR 6.8 million (5.1% of net sales) during the year. Profitability was supported by the gross margin, which increased from 28% to 30%, and fixed costs which were approximately EUR 2 million lower than in the previous year. In addition to securing profitability, we succeeded in generating EUR 12.0 million cash flow from operating activities, which was stronger than in the year before and affected by a EUR 4.7 million decrease in working capital. As a result of the weak financial performance, net debt to operating EBITDA for the last 12 months increased from 2.5 to 2.8 and return on capital employed (ROCE) decreased from 11% to 7.9%.

Due to the company's weakened financial position we focused in 2024 on developing the existing company portfolio, instead of acquisitions which are important for the company’s long-term value creation. In addition to the companies' long-term development measures, from spring 2024 onwards we implemented the 'Back to Growth’ -Plan, which consisted of measures related to securing profitability, reducing working capital and managing leverage. The achieved decent profitability and strong cash flow are good signs of the functionality of our decentralized management model and our ability to react quickly to changes in the operating environment. I would therefore like to thank all Group personnel for their efforts during the year.

We published an updated strategy in the spring 2024, in which we focus on ownership and acquisition of entrepreneurial companies that have the ability to generate sustainable earnings growth, strong cash flow and high return on capital. Despite our long-term ownership objective, we are prepared to consider structural actions for companies which do not demonstrate their ability to achieve the targets we have set for them over the medium term.

Q4 2024: Decent performance in a continued challenging market

The last quarter of 2024 was in line with our expectations and net sales returned to growth after several weak quarters. Net sales grew by 6%, operational EBIT was at the level of the comparison period (EUR 2.1 million) and net cash flow from operating activities was very strong at EUR 7.1 million. Efficiency measures implemented during the year supported profitability. The gross margin weakened from previous quarters due to an increase of large lower-margin deliveries. In particular, the excellent results of Signal Solutions Nordic (SSN) and Milcon supported the Group’s improved financial performance during the review period.

Reasonable earnings outlook for 2025

At the end of 2024, market conditions continued as similar to the third quarter, with signs of a significant improvement in the general economic situation and our customers' demand outlook lacking. The order books of our companies decreased slightly from the end of the third quarter of the year, but were significantly higher at the end of the year than in the comparison period. We expect the first quarter of 2025 to be modest in terms of earnings, reflecting historical seasonality, but the implemented efficiency measures and reasonable order books to support profitability in the current year.

Our goal is to return the company to a growth path and we aim at gradually improving profitability and strengthening the Group's financial position during 2025.

Boreo Plc’ financial reporting in 2025:

Financial Statements Bulletin for 2024: February 13, 2025 at 9:00 am The Financial Statements Bulletin is available on the company’s website after publication at: www.boreo.com/investors.

A webcast where CEO Kari Nerg and CFO Jesse Petäjä present the Financial Statements Bulletin will be held on the same day at 11:00 am EET. The presentation is in English and questions can be asked after the presentation. The presentation material is available before the webcast on Boreo's website: www.boreo.com/investors.

You can watch the webcast at: https://boreo.events.inderes.com/q4-2024. The event will be recorded and the recording will be available after the event at:  www.boreo.com/investors.

Interim report 1-3/2025: April 29, 2025
Half-year report 1-6/2025: August 6, 2025
Interim report 1-9/2025: October 29, 2025

The Annual Report and the Financial Statements Jan. 1 - Dec. -31, 2024 will be published in week 11. 

Vantaa, February 13, 2025

BOREO PLC

Board of Directors

Additional information:

Kari Nerg
CEO
tel +358 44 341 8514

Jesse Petäjä
CFO
tel +358 40 706 9450

Distribution:
NASDAQ Helsinki Ltd
Financial Supervisory Authority
Principal media

www.boreo.com

Boreo in brief:

Boreo is a company listed on Nasdaq Helsinki that creates value by owning, acquiring and developing small and medium-sized companies in the long-term. Boreo's business operations are organized into two business areas: Electronics and Technical Trade.

Boreo's primary objective is sustainable long-term profit generation. This is achieved with a business model that is based on the acquisition and ownership of great entrepreneurial companies with the ability to generate sustainable long-term earnings growth and strong cash flows.  The profits generated by the portfolio of companies are re-invested back to operations or to acquisitions with attractive expected returns on capital. The decentralized operating structure promoting a culture of ownership and release of entrepreneurial energy is a core pillar of the company's business concept and sustainable earnings growth is ensured through the support and coaching of companies and the personnel.

The Group's net sales in 2024 were EUR 134 million and it employs over 300 people in seven countries. The company’s headquarter is in Vantaa.