2008-08-06 08:00:00 CEST

2008-08-06 08:13:18 CEST


REGULATED INFORMATION

English Finnish
Martela Oyj - Interim report (Q1 and Q3)

MARTELA CORPORATION'S INTERIM REPORT, 1 JANUARY - 30 JUNE, 2008


MARTELA CORPORATION  INTERIM REPORT  6.8.2008 AT 9.00 a.m.              


MARTELA CORPORATION'S INTERIM REPORT, 1 JANUARY - 30 JUNE, 2008                 

Net revenue for January-June was EUR 69.4 million (60.2), an increase of 15.2   
per cent. Operating profit was EUR 5.1 million (4.2), including non-recurring   
income from the sale of assets totalling EUR 0.7 million (2.8). The             
equity-to-assets ratio was 49.8 per cent (45.3) and gearing was 1.3 per cent    
(31.2).                                                                         

It is expected that the net revenue for 2008 will exceed last year's level, and 
that the whole year's operating profit before non-recurring items will be better
than the previous year.                                                         

Key figures                                                                     

--------------------------------------------------------------------------------
|                          |     4-6 |     4-6 |     1-6 |      1-6 |     1-12 |
--------------------------------------------------------------------------------
|                          |    2008 |    2007 |    2008 |     2007 |     2007 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Revenue                  |    33.3 |    30.4 |    69.4 |     60.2 |    128.4 |
--------------------------------------------------------------------------------
| Change in revenue %      |     9.7 |    11.6 |    15.2 |     11.4 |      7.3 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Operating profit         |     1.6 |     1.3 |     4.4 |      1.4 |      5.8 |
| excluding non-recurring  |         |         |         |          |          |
| items                    |         |         |         |          |          |
--------------------------------------------------------------------------------
| Operating profit %       |     4.9 |     4.3 |     6.3 |      2.4 |      4.5 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Return on investment, %  |         |         |    23.7 |     20.4 |     19.6 |
--------------------------------------------------------------------------------
| Return on equity, %      |         |         |    23.0 |     23.2 |     19.8 |
--------------------------------------------------------------------------------
| Equity to asset ratio, % |         |         |    49.8 |     45.3 |     46.7 |
--------------------------------------------------------------------------------
| Gearing, %               |         |         |     1.3 |     31.2 |     16.0 |
--------------------------------------------------------------------------------
| Average staff            |         |         |     680 |      648 |      663 |
--------------------------------------------------------------------------------
| Revenue/employee         |         |         |   102.1 |     93.0 |    193.7 |
--------------------------------------------------------------------------------


Accounting policies                                                             

The interim report has been prepared in accordance with IAS 34, Interim         
Financial Reporting, as approved by the EU.                                     


Market                                                                          

The demand for office furniture continued to grow in 2007 and in the first      
half-year of 2008. Office construction is expected to continue to be lively in  
the second half of 2008.                                                        


Group structure                                                                 

There were no changes in Group structure during the review period or the        
comparison period.                                                              


Segment reporting                                                               

Martela has a single primary segment, namely the furnishing of offices and      
public spaces. Net revenue and result are as recorded in the consolidated       
financial statements. The Group's secondary reporting segment is its customers  
by geographical location.                                                       


Net revenue                                                                     

Net revenue for January-June grew to EUR 69.4 million (60.2), an increase of    
15.2 per cent. The large projects carried out during the first quarter          
contributed to this growth. Net revenue for the second quarter grew to EUR 33.3 
million (30.4), an increase of 9.7 per cent. Growth was particularly strong in  
Finland, and in Poland and its neighbouring areas.                              

During the first half-year, performance in Scandinavia was not according to plan
and net revenue decreased by 12.5 per cent.                                     

Invoicing by main market areas                                                  

--------------------------------------------------------------------------------
|                         |     4-6 |     4-6 |      1-6 |      1-6 |     1-12 |
--------------------------------------------------------------------------------
|                         |    2008 |    2007 |     2008 |     2007 |     2007 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Finland                 |    23.5 |    20.7 |     49.5 |     40.3 |     85.8 |
--------------------------------------------------------------------------------
| Scandinavia             |     5.2 |     5.9 |     10.9 |     12.4 |     26.4 |
--------------------------------------------------------------------------------
| Poland and surrounding  |     3.4 |     2.7 |      6.5 |      4.9 |     11.1 |
| areas                   |         |         |          |          |          |
--------------------------------------------------------------------------------
| Other areas             |     1.1 |     1.0 |      2.4 |      2.7 |      5.4 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Total                   |    33.2 |    30.3 |     69.3 |     60.3 |    128.7 |
--------------------------------------------------------------------------------

Change in invoicing and proportion of consolidated invoicing                    

--------------------------------------------------------------------------------
|                  |    1-6 |    1-6 |        |          |    1-12 |           |
--------------------------------------------------------------------------------
|                  |   2008 |   2007 | Change | Percenta |    2007 | Percentag |
|                  |        |        |        |       ge |         |         e |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Finland          |   49.5 |   40.3 | 22.7 % |   71.4 % |    85.8 |    66.7 % |
--------------------------------------------------------------------------------
| Scandinavia      |   10.9 |   12.4 |  -12.5 |   15.7 % |    26.4 |    20.5 % |
|                  |        |        |      % |          |         |           |
--------------------------------------------------------------------------------
| Poland and       |    6.5 |    4.9 | 33.7 % |    9.4 % |    11.1 |     8.6 % |
| surrounding      |        |        |        |          |         |           |
| areas            |        |        |        |          |         |           |
--------------------------------------------------------------------------------
| Other areas      |    2.4 |    2.7 | -9.0 % |    3.5 % |     5.4 |     4.2 % |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Total            |   69.3 |   60.3 | 14.9 % |  100.0 % |   128.7 |   100.0 % |
--------------------------------------------------------------------------------


Consolidated result                                                             
                                                                                
The consolidated result for the second quarter was according to plan and the    
operating profit was EUR 1.7 million (2.6). The result was increased by EUR 0.1 
million in non-recurring income from the sale of assets (1.3).                  

The result for the first half-year was a clear improvement and the operating    
profit was EUR 5.1 million (4.2). This includes EUR 0.7 million (2.8) in        
non-recurring income from the sale of assets. The sales gain recognised in early
2008 relates to the sale of land in Poland. The operating profit excluding      
non-recurring items was EUR 4.4 million (1.4). This year, profit has developed  
positively in Finland, and in Poland and its neighbouring areas. A decrease in  
net revenue in Scandinavia has negatively affected the area's profit            
performance.                                                                    

Profit before taxes rose to EUR 4.8 million (3.9), and profit after taxes was   
EUR 3.5 million (3.0).                                                          

The operating profit percentage excluding non-recurring items was 6.3 per cent  
(2.4).                                                                          


Financial position                                                              

The Group's financial position remained stable. At the end of the review period,
net interest-bearing liabilities were EUR 13.0 million (15.4), and the net debt 
was EUR 0.4 million (8.4). At the beginning of 2008, the net debt was EUR 4.7   
million. At the end of the review period, gearing was 1.3 per cent (31.2) and   
the equity-to-assets ratio was 49.8 per cent (45.3%) Net financial expenses were
EUR -0.3 million (-0.3).                                                        

Cash flow from operating activities in January-June was EUR 6.3 million (5.0).  

The end-of-period balance sheet total was EUR 63.0 million (59.9).              


Capital expenditure                                                             

The Group's gross capital expenditure for January-June was EUR 1.6 million (1.8)
and mainly concerned production replacements and IT investments. Of the capital 
expenditure for the comparison period in 2007, EUR 0.7 million was attributable 
to the ownership rearrangement at the Bodafors plant, as a result of which the  
long-term lease liability for the part leased back by Martela was activated in  
the consolidated balance sheet in accordance with the IFRS.                     


Staff                                                                           

In January-June, the group employed an average of 680 (648) persons,            
representing growth of 4.9 per cent. At the end of June, the Group employed 723 
(689) persons.		                                                                

Average staff by region                                                         

--------------------------------------------------------------------------------
|                              |           1-6 |           1-6 |          1-12 |
--------------------------------------------------------------------------------
|                              |          2008 |          2007 |          2007 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Finland                      |           518 |           516 |           518 |
--------------------------------------------------------------------------------
| Scandinavia                  |            73 |            67 |            71 |
--------------------------------------------------------------------------------
| Poland                       |            89 |            65 |            74 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Group total                  |           680 |           648 |           663 |
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Product development and collection                                              

Product development and collection management are the responsibility of two     
Group-level organisations: the Office product line, responsible for workstation 
furniture, and the Surroundings product line, responsible for furniture for     
surroundings and other public spaces.                                           
                                                                                
Exhibited at Martela's stand at the Stockholm Furniture Fair in February were   
new products representing both product lines, as well as two fascinating new    
concepts. The exhibited new pieces of workstation furniture were the James task 
chair designed by Iiro Viljanen and the Pinta ES, the newest member of the Pinta
range, by Pekka Toivola and Iiro Viljanen. The surroundings furniture displayed 
for the first time featured the Skybar chair designed by Geir Sætveit and the   
Movie sofa by Rane Vaskivuori. The concepts presented by Martela in Stockholm   
were favourably received; both the Mybox desk by Iiro Viljanen and the Book     
shelf/space divider by Pekka Toivola aroused discussion and interest, as had    
been hoped for.                                                                 
                                                                                
At the Milan Furniture Fair in April, Martela set up its own exhibition with the
theme “under THE tree”. The exhibition was named after The Tree space divider,  
designed by Professor Eero Aarnio.                                              


Shares                                                                          

During January-June, 483,137 (969,714) of the company's A shares were traded on 
the OMX Nordic Exchange Helsinki, corresponding to 13.6 per cent (27.3) of all A
shares. The higher trading figure of the comparison period in 2007 was due      
partly to the acquisition of shares by Evli Alexander Management Oy for the     
three-year share-based incentive system. At that time, 143,166 shares were      
acquired for EUR 1.2 million in cash.                                           

The value of trading during the review period was EUR 4.4 million (8.3), and the
share price was EUR 8.35 at the beginning and EUR 8.40 at the end of the period.
During January-June the share price was EUR 10.05 at its highest and EUR 7.32 at
its lowest. At the end of June, equity per share was EUR 7.65 (6.62).           

Treasury shares                                                                 

The company did not purchase any Martela shares for the treasury in             
January-June. On 30 June 2008, Martela owned 67,700 Martela A shares, purchased 
at an average price of EUR 10.65. Martela's holding of treasury shares amounts  
to 1.6 per cent of all shares and 0.4 per cent of all votes.                    


2008 Annual General Meeting                                                     

The Annual General Meeting was held on 1 April 2008. The meeting approved the   
financial statements and discharged the responsible parties from liability for  
the 2007 financial year. The AGM decided, in accordance with the Board of       
Directors' proposal, to distribute a dividend of EUR 0.50 per share, totalling  
EUR 2,043,950. Heikki Ala-Ilkka, Tapio Hakakari, Heikki Martela, Pekka Martela, 
Jori Keckman and Jaakko Palsanen were elected as members of the Board of        
Directors for the next term. KPMG Oy Ab, a firm of Authorised Public            
Accountants, was elected as the company's auditor.                              

The AGM also approved the Board of Directors' proposals, detailed in the meeting
notice, to authorise the Board to acquire and/or dispose of the company's own   
shares.                                                                         

Furthermore, the AGM decided, in accordance with the Board of Directors'        
proposal, to amend the company's Articles of Association pursuant to the new    
Companies' Act which entered into force on 1 September, 2006.                   

The new Board of Directors convened after the Annual General Meeting and elected
Heikki Ala-Ilkka as Chairman and Pekka Martela as Vice Chairman.                


Post-balance sheet events                                                       

No significant events requiring reporting have taken place since the            
January-June period and operations have continued according to plan.            


Short-term risks                                                                

The greatest risk to profit performance is related to the continuation of       
general economic growth and the consequent overall demand for office furniture. 
The price trend of purchased materials and components also affects the          
short-term outlook.                                                             

The company's 2007 annual report presents the risks related to Martela's        
business operations in more detail.                                             


Outlook for 2008                                                                

The overall outlook for 2008 is still favourable. The outlook is supported,     
among other things, by the solid growth of sales and profit early in the year   
and the general positive trend in office construction. It is expected that the  
whole year's operating profit before non-recurring items will be better than the
previous year.                                                                  
                                                                                
GROUP INCOME STATEMENT (EUR 1000)                                               

                                  2008     2006     2008      2007       2007   
                                   1-6      1-6      4-6       4-6       1-12   
                                                                                
Revenue                         69.419   60.240   33.329    30.373    128.445   
Other operating income           0.981    2.961    0.252     1.280      3.023   
Employee benefits expenses     -16.248  -14.557   -8.368    -7.589    -28.723   
Operating expenses             -47.615  -42.839  -22.773   -20.705    -91.236   
Depreciation and impairment     -1.456   -1.564   -0.722    -0.788     -3.231   

Operating profit/loss            5.081    4.241    1.719     2.571      8.278   

Financial income and expenses   -0.262   -0.320   -0.073    -0.154     -0.726   

Profit/loss before taxes         4.818    3.921    1.645     2.417      7.552   

Income tax                      -1.332   -0.910   -0.555    -0.704     -2.165   

Profit/loss for the period       3.487    3.011    1.091     1.713      5.387   

Basic earnings per share, eur     0.85     0.74     0.26      0.42       1.32   
Diluted earnings per share, eur   0.85     0.74     0.26      0.42       1.32   


GROUP BALANCE SHEET (EUR 1000)         30.6.2008     31.12.2007    30.06.2007   

ASSETS                                                                          

Non-current assets                                                              
 Intangible assets                         0.654          0.633         0.773   
 Tangible assets                          14.148         14.151        14.286   
 Investments                               0.039          0.053         0.054   
 Deferred tax assets                       0.246          0.240         0.246   
 Pension receivables                       0.035          0.035         0.018   
 Receivables                               0.630          0.623         0.000   
 Investment properties                     0.600          1.203         1.175   
Total                                     16.353         16.938        16.552   

Current assets                                                                  
 Inventories                              13.601         13.635        15.088   
 Receivables                              20.425         23.536        21.322   
 Financial assets at fair value            2.033          2.004         1.979   
 through profit and loss                                                        
 Cash and cash equivalents                10.538          7.686         4.940   
Total                                     46.597         46.861        43.329   

Total assets                              62.950         63.800        59.881   
                                                                                
EQUITY AND LIABILITIES			                                                       

Equity attributable to shareholders                                             
of the parent                                                                   
 Share capital                             7.000          7.000         7.000   
 Share premium account                     1.116          1.116         1.116   
 Other reserves                            0.117          0.117         0.117   
 Translation differences                  -0.085         -0.129        -0.143   
 Retained earnings                        23.671         22.060        19.704   
 Treasury shares                          -0.721         -0.721        -0.721   
 Share-based incentives                    0.157          0.067         0.000   
Total                                     31.255         29.510        27.073   
						   
Non-current liabilities                                                         
 Interest-bearing liabilities              9.280         10.453        11.558   
 Deferred tax liability                    1.486          1.553         0.529   
Total                                     10.766         12.006        12.087   

Current liabilities                                                             
 Interest-bearing                          3.710          3.969         3.800   
 Non-interest bearing                     17.218         18.315        16.922   
Total                                     20.928         22.284        20.722   

Total liabilities                         31.695         34.290        32.808   

Equity and liabilities, total             62.950         63.800        59.881   


STATEMENT OF CHANGES IN EQUITY (EUR 1000)                                       

Equity attributable to equity holders of the parent                             

                                                                                
                                                                                
                   Share    Share   Other    Trans.  Retained  Treasury    Total
                   capital  premium reserves diff.   earnings    shares         
                            account                  and share-                 
                                                     based inc.                 

01.01.2007         7.000    1.116   0.117   -0.129     17.542    -0.721   24.925
Translation diff.                           -0.014                        -0.014
Other change                                            0.173              0.173
Profit/loss for                                                                 
the period                                              3.011              3.011
Total rec. income                                                               
and expense                                 -0.014      3.184              3.170
Dividends                                              -1.022             -1.022
30.06.2007         7.000    1.116   0.117   -0.143     19.704    -0.721   27.073




1.1.2008           7.000    1.116   0.117   -0.129     22.127    -0.721   29.510
Translation diff.                            0.044                         0.044
Other change                                            0.258              0.258
Profit/loss for                                                                 
the period                                              3.487              3.487
                                                                                
Total rec. income                                                               
and expense                                  0.044      3.745              3.789
                                                                                
Dividends                                              -2.044             -2.044
30.06.2008         7.000    1.116   0.117   -0.085     23.828    -0.721   31.255



CONSOLIDATED CASH FLOW STATEMENT (EUR 1000)                                     
                                                   2008        2007        2007 
                                                    1-6         1-6        1-12 
Cash flows from operating activities                                            

Cash flow from sales                             71.396      64.122     130.833 
Cash flow from other operating income             0.277       0.243       0.550 
Payments on operating costs                     -64.227     -59.012    -121.090 

Net cash from operating activities                                              
before financial items and taxes                  7.446       5.353      10.294 

Interest paid                                    -0.378      -0.374      -0.842 
Interest received                                 0.117       0.021       0.082 
Other financial items                            -0.020      -0.005      -0.021 
Dividends received                                   -        0.001       0.001 
Taxes paid                                       -0.897      -0.025       0.382 

Net cash from operating activities (A)            6.268       4.972       9.895 


Cash flows from investing activities                                            
                                                                                
                                                                                
Capital expenditure on tangible and                                             
intangible assets                                -1.321      -0.989      -2.256 
Proceeds from sale of tangible and                                              
intangible assets                                 1.492       3.877       2.028 
Proceeds from sale of shares in subsidiaries         -           -        2.150 
Loans granted                                        -       -1.193      -1.193 
Repayments of loans receivables                   0.022       0.011       0.011 

Net cash used in investing activities (B)         0.193       1.706       0.740 

Cash flows from financing activities                                            

Proceeds from short-term loans                       -           -        0.976 
Repayments of short-term loans                   -0.482      -0.355      -1.704 
Repayments of long-term loans                    -1.190      -2.296      -3.108 
Dividends paid and other profit distribution     -1.972      -1.022      -1.022 

Net cash used in financial activities (C)        -3.644      -3.672      -4.858 
                                                                                
                                                                                
Change in cash and                                                              
cash equivalents (A+B+C)                          2.817       3.006       5.778 
(+ increase, - decrease)                                                        


Cash and cash equivalents at the beginning of                                   
period                                            9.691       3.911       3.911 
Translation differences                           0.063       0.002       0.002 
Cash and cash equivalents at the end of period   12.571       6.919       9.691 


SEGMENT REPORTING                                                               

One primary segment has been defined for Martela, namely the furnishing of      
offices and public places. The revenue and result are as recorded in the        
consolidated financial statements. The Group's secondary reporting segment has  
been defined according to the geographical location of customers.               


TANGIBLE ASSETS 1.1-30.6.2008                                                   

                         Land   Buildings   Machinery   Other     Work in       
                        areas             & equipment   tangibles progress      
                                                                                

Acquisitions            0.000       0.020       0.823     0.005      0.569      
                                                                                
Decreases               0.000      -0.008      -0.126     0.000      0.000      



TANGIBLE ASSETS 1.1-30.6.2007                                                   

                         Land   Buildings   Machinery   Other     Work in       
                        areas             & equipment   tangibles progress      
                                                                                

Acquisitions            0.000       0.688       0.565     0.006      0.328      
                                                                                
Decreases              -0.614      -0.988      -0.022     0.000      0.000      


                                                                                
RELATED PARTY AND SHARE-BASED INCENTIVE PROGRAMME                               

The CEO and the group's management and some key-persons are included in a long- 
term incentive scheme, extending from 2007 to the end of 2009.                  
                                                                                


KEY FIGURES/RATIOS                                                              
                                                   2008        2007        2007 
                                                    1-6         1-6        1-12 

Operating profit/loss                             5.081       4.241       8.278 
 - in relation to revenue                           7.3         7.0         6.4 
Profit/loss before taxes                          4.818       3.921       7.552 
 - in relation to revenue                           6.9         6.5         5.9 
Profit/loss for the period                        3.487       3.011       5.387 
 - in relation to revenue                           5.0         5.0         4.2 
Basic earnings per share, eur                      0.85        0.74        1.32 
Diluted earnings per share, eur                    0.85        0.74        1.32 
Equity/share, eur                                  7.65        6.62        7.22 
Equity ratio                                       49.8        45.3        46.7 
Return on equity *                                 23.0        23.2        19.8 
Return on investment *                             23.7        20.4        19.6 
Interest-bearing net-debt, eur million              0.4         8.4         4.7 
Gearing ratio                                       1.3        31.2        16.0 
Capital expenditure, eur million                    1.6         1.8         3.2 
- in relation to revenue, %                         2.3         3.0         2.5 

Personnel at the end of period                      723         689         655 
Average personnel                                   680         648         663 
Revenue/employee, eur thousand                    102.1        93.0       193.7 


Key figures are calculated according to formulae as presented in Annual Report  
2007.                                                                           
* When calculating return on equity and return on investment the profit/loss for
the period has been multiplied in interim reports.                              



CONTINGENT LIABILITIES                                                          
                                              30.6.2008   31.12.2007  30.6.2007 

Mortgages and shares pledged                     18.841      18.851      18.916 
Guarantees                                        0.000       0.000       0.104 
Other commitments                                 0.322       0.317       0.314 

RENTAL COMMITMENTS                                9.989      10.674      11.701 


DEVELOPMENT OF SHARE PRICE                         2008        2007        2007 
                                                    1-6         1-6        1-12 

Share price at the end of period, EUR              8.40        9.10        8.35 
Highest price, EUR                                10.05        9.56       10.35 
Lowest price,  EUR                                 7.32        6.39        6.39 
Average price, EUR                                 9.04        8.53        8.64 


This interim report has not been audited                                        


Helsinki, August 5, 2008                                                        

Martela Oyj                                                                     
Board of Directors                                                              
Heikki Martela                                                                  
CEO                                                                             

For more information, please contact                                            
Heikki Martela, CEO, tel. +358 50 502 4711                                      
Mats Danielsson, Finance Director, tel. +358 50 394 8575                        

Distribution                                                                    
OMX Nordic Exchange                                                             
Main news media                                                                 
www.martela.com

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