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2011-03-07 10:45:00 CET 2011-03-07 10:45:04 CET REGULATED INFORMATION Tiimari Oyj Abp - Financial Statement ReleaseTiimari Plc: DECLINE IN SALES CUT THE PROFITABILITY IMPACT OF THE EFFICIENCY MEASURESTiimari Plc Stock Exchange Release on the Annual Statement 7th March 2011 at 11:45 DECLINE IN SALES CUT THE PROFITABILITY IMPACT OF THE EFFICIENCY MEASURES THE YEAR 2010 IN BRIEF - Turnover declined 6% to EUR 75.8 million (80.6) - % Gross profit in comparative numbers: 59% (60) - EBITDA EUR -2.6 million (-3.1) - EBITDA without non-recurring items: EUR 0.4 million (0.0) (Refer to the breakdown in the Group key figures) - Operating profit before amortizations (EBITA): EUR -5.7 million (-6.7) - Operating profit (EBIT): EUR -12.6 million (-8.2) - Adjusted cash flow from operations was EUR 2.3 million (Refer the breakdown in the Group key figures) - Net interest-bearing loans grew to EUR 26.0 million (22.6) and net gearing grew to 208.5 % (86) - Equity ratio was 18.9% (34.7%) - Earnings per share: -0.89 (-0.73) - Equity / share EUR 0.76 (1.79) THE FOURTH QUARTER 2010 IN BRIEF - Turnover declined 7.5% to EUR 29.9 million (32.4) - % Gross profit in comparative numbers: 59% (60) - EBITDA: EUR 4.4 million (3.7) - EBITDA without non-recurring items: EUR 4.4 million (6.8) - Operating profit before amortizations (EBITA): EUR 3.6 million (2.6) - Operating profit before amortizations and non-recurring items: 3.6 million (5.7) - Operating profit: EUR -3.3 million (1.2) - Earnings per share: EUR -0.24 (0.05) OUTLOOK FOR THE BUSINESS SECTOR AND TIIMARI IN 2011 We estimate that the growth in national economies will support moderate growth for the whole retail sector in 2011, particularly in Sweden, but, with some delay, also in Finland and later on in the Baltic states. The customer activity of Gallerix in Sweden grew in the course of the year 2010 in particular. We estimate that during 2011, the declining trend in Tiimari's turnover, reported on a monthly basis, will cease and that Tiimari's operating profit for the entire year 2011 will be positive. The turnover of Gallerix is estimated to grow and its operating profit is anticipated to be positive and better than in 2010. As announced in release on 30 December 2010 about the Standstill Agreement the company identifies during the first half of 2011 structural and financial options to strengthen its balance sheet, and these solutions may have a significant impact on performance throughout the year. HANNU KROOK, CEO: Discontinuing unprofitable business activities with negative cash flows played a pivotal role in the profit improvement program in 2010. The focus of the operational development was on improving the efficiency of shop activities and cost structures. Our long-term goal is to decrease the proportion that the personnel and rental expenses represent in our turnover. On the basis of the earnings improvement program and the rationalization of activities we have slimmed down our cost structure quite significantly and nearly doubled the turnover of our current assets. The cost savings from the earnings improvement program were carried out in accordance with our plans and the level of current assets was lower than year before. Tiimari's annual profit improved from previous year, but was lower than we expected due to weaker Christmas sales than in the previous year. Christmas sales remained below the target mainly due to the fact that the purchases of many of the key products were too small. Some 60% of the decline in the last quarter decreased the margin, weakened the operating profit correspondingly and significantly cut down on the positive effect which we had gleaned from making the cost structure more efficient. Tiimari's sales margin in euros has been declining as a result of the negative trend in the number of customers, caused by price increases and changes in our product offering. To turn the negative development in the number of customers around, we, in October, lowered the prices of 640 products in our basic product range as part of our new pricing structure based on permanently low-priced products. Tiimari is perceived as an inexpensive store in the minds of the consumers, so I believe that the permanently low prices will work to increase the number of customers and the sales as a result. Another important factor in setting growth on the right track is the development of our product range. We will endeavor to return our product offering closer to Tiimari's roots, and offer our customers in the future humorous, different, and unusual products - at the right price. Work on the Tiimari brand has continued in parallel with effecting the changes. Customer loyalty among Tiimari's active customers is strong. We strongly believe that the results of the launch of the new product range will soon become evident in the development of customer visits and sales growth. Our investments last year were rather moderate and made to increase the operational efficiency. These included the modernization of the goods flow control system, the launch of an inventory system, measures to improve payments and shop investments for the launch of a holiday product offering. On the 30th of December 2010, the company concluded a so-called Standstill agreement with financial institutions which had granted Tiimari financing on the terms of interest-bearing outside capital for the period ending on the 30th of December 2011. This is to stabilize the Group's financial situation and liquidity during 2011. The continuation of financing while the Standstill agreement is in force is not tied to the realization of the covenants related to the key economic figures agreed upon in financing agreements. As the January and February sales particularly in Finland were less than expected, the financing situation of the company continues to be challenging. GOING CONCERN The Group's Financial Statement was prepared according to the going concern principle with the assumption that the operations of the company will continue for 12 months. Furthermore, the principle presupposes that the company is able to execute the realization of assets and the payment of loans through its ordinary business activities. Tiimari's economic situation is challenging. The going concern principle is based on the business operations plan approved by the Board of Directors and on the new financing plan. The company has adopted measures to identify structural and financing options to strengthen its balance sheet on an accelerated schedule as was announced in connection of the publication of the Standstill agreement on the 30th of December 2010. FOR ADDITIONAL INFORMATION, CONTACT Hannu Krook, CEO, phone +358-3-812 911, hannu.krook@tiimari.fi Kai Järvikare, CFO, phone +358-44-712 9475, kai.jarvikare@tiimari.fi Tiimari has today published a report on its management and control system for the year 2010. The report can be read at the Company web site www.tiimari.fi. THE FOURTH QUARTER The Group's turnover for the fourth quarter declined by 7.5% to EUR 29.9 million (32.4). The decline in the turnover decreased profitability, resulting in an operating profit before amortizations and non-recurring items of EUR 3.6 million (5.7). In the fourth quarter, Tiimari recorded a goodwill impairment in the Tiimari business operations amounting to EUR 6.9 million with no effect on the cash flow. The operating profit for the period under review was EUR -3.3 million (1.2). The financing costs remained at the previous year's level at EUR 0.7 million (0.7) The results for the period under review declined to EUR -3.9 million (0.9). The total earnings per share was EUR -0.24 (0.05). SEGMENTS The turnover for the Tiimari segment in the fourth quarter was EUR 25.1 million (28.0) with a decline of EUR 2.9 million on the previous year. During the period under review, the number of shops on average was twenty lower than a year ago. Operating profit before amortizations and without non-recurring items was EUR 4.3 million (7.2), of which the most significant item was recording the goodwill impairment loss for the business operations. The turnover in the Gallerix segment in the period under review grew by EUR 0.4 million to EUR 4.8 million (4.4). The growth in the turnover was largely a result of developments in the currency rate of the Swedish krona. With comparative exchange rates, the turnover would have declined 0.4%. The operating profit was EUR 0.3 million (-0.2). IMPAIRMENT The units which contain Goodwill are tested annually for potential impairment. The reporting structure used in the monitoring of the Group's business operations did not change during 2010. Units generating cash flow, which have a Goodwill value, are: Tiimari and Gallerix On the basis of the calculations, an impairment of EUR 6.9 million was recorded in Tiimari's goodwill in the last quarter of 2010. After this Tiimari's goodwill equates to EUR 23.8 million. On the basis of the calculations, there is no need to record a goodwill impairment regarding Gallerix. Gallerix's goodwill in its business operations is EUR 2.1 million. In the Impairment testing, the Goodwill of a unit, carrying amount, is compared with the recoverable amount. The discretion and estimates of the company management play a pivotal role in preparing goodwill impairment calculations. If the recoverable amount is lower than the carrying amount entered as a book value in the balance sheet, the difference is recognized as an impairment which decreases the profit. The recoverable amount of is either the fair value less cost to sell or the value-in-use, whichever is the higher of the two. The recoverable amount used in the Impairment testing is the value-in-use which is calculated using the discounted present value of the future cash flows expected to arise from the continuing use of an asset, and from its disposal at the end of its useful life. The cash flow estimate for Tiimari is based on budgeted one percent growth for 2011. The nominal turnover in 2008 of EUR 71.1 million (which had the margin of 63.8%) would be reached in 2014(turnover EUR 71.4 million). This would mean an annual growth of 4.5% in 2012, 2013, and 2014. The terminal growth assumption is 3%. In 2010 the margin was 63.6%, in 2011 the expectation is 63.0%, in 2012 the expectation is 63.0%, in 2013 the expectation is 62.4%, in 2014 the expectation is 62.0% with the terminal expectation at 61.6%. The growth of fixed costs is expected to be an average of 2% per annum. The pre-tax discount rate used was 10.51% (9.08%). The cash flow estimate for Gallerix is based on budgeted 0.7% growth for the year 2011. In 2011, 2012, and 2014 the annual growth is assumed to be 5.5%. The terminal growth expectation is 1.4%. The margin was 35.8% in 2010, with an expectation of 36.0%. On average, the growth in fixed costs is expected to be 2% per annum. The pre-tax discount rate used was 10.51% (9.08%). The increase of Gallerix pre-tax discount rate is due to the fact of using the same discount rate as for Tiimari. In the sensitivity analysis for Tiimari, a pre-tax discount rate of 11.51% would lead to the goodwill impairment being EUR 3.6 million higher. The corresponding growth percentages of 0.5%, 4%, 4%, 4% and the terminal growth of 2.5% would lead to a goodwill impairment of a EUR 8.5 million. In the sensitivity analysis for Gallerix, a pre-tax discount rate of 11.51% would not lead to goodwill impairment. The discount rate value of 16.56% would lead to discounted cash flow equivalent to book value. The corresponding growth percentages 0.2%, 5%, 5%, 5% and terminal growth of 0.9% would not lead to goodwill impairment. The discounted cash flow would equal book value with corresponding growth rates of -0.77%, 3.99%, 3.99%, 3.99%, and the terminal of -0.15%. FINANCING On the 30th of December 2010, the company concluded a so-called Stand-still agreement with the financial institutions which had granted Tiimari financing on the terms of interest-bearing outside capital for the period ending on the 30th of December 2011. This is intended to stabilize the Group's financial situation and liquidity during 2011. The continuation of financing while the Standstill agreement is in force is not tied to the realization of the covenants related to the realization of the key economic figures agreed upon in financing agreements. Standstill Agreement requires measures regarding capital structure, corporate structure and other activities related to the securing of long-term funding. THE FINANCIAL PERIOD IN BRIEF Tiimari's turnover declined along with the decline in the number of customers and was EUR 75.8 million (80.6). The profitability of the company did not reach its goals as a result of the decline in turnover. The decreased turnover lowered the margin in particular. The actual decline in sales decreased the intended impact of the actual cost cuts on the operating margin. Gross margin without non-recurring items improved to EUR 0.4 million (0.0) and the operating profit before amortizations(EBITA) was EUR -5.7 million (-6.7). The operating profit (EBIT) totaled EUR -12.6 million (-8.2). Adjusted operating cash flow from the business operations was EUR 2.3 million. The financing situation of the Group was strengthened by a convertible capital loan of EUR 3.0 million issued on 30th December 2010. THE GROUP'S KEY FIGURES More about the key figures as well as the figures are available in the notes to the Financial Statement. REVENUE DEVELOPMENT OF THE GROUP Tiimari's revenue fell by 6% to EUR 75.8 million (80.6). Gross operating margin before non-recurring times was EUR 0.4 million (0.0). The operating profit of EUR -2.6 million (-3.1) contained non-recurring expenses of EUR 3.0 million (3.1). (Refer to the breakdown in the key figures of the Group.) Net financing expenses were EUR 2.2 million (3.1). The actual strengthening of the equity structure and the decline in the general interest rate at the end of 2009 decreased the interest expenses, but additional costs were incurred due to the reorganization of financing during the financial period. Taxes for the financial period were EUR 0.2 million (0.5), mainly due to the reduction of deferred tax liabilities related to purchasing price allocations. The results for the financial period were EUR -14.7 million (-10.8) Earnings per share in the financial period was EUR -0.89 (-0.73). SEGMENTS The Group is comprised of two business segments: Tiimari and Gallerix. The Tiimari segment consists of shops in line with the Tiimari retail shop concept with purchasing, logistics and marketing support functions in Finland and the Baltic states. The Gallerix segment consists of franchising operations in line with the Gallerix retail shop concept and its own shops in Sweden. The figures reported from the business segments also include income statement and balance sheet items caused by the purchase of the companies, that is to say, the depreciation related to historical cost conventions, intangible assets and goodwill. TIIMARI The revenue for the Tiimari segment fell by 7.4% to EUR 61.9 million (66.9). Revenue development deteriorated especially in Finland and the Baltic states. Tiimari completed its withdrawal from markets outside Finland and the Baltic states. The gross margin was EUR -1.3 million (-0.4). The gross margin was weakened by the sales campaigns aimed at cutting down the product range. Tiimari has focused on a renewal of its product offering. Like for like sales of Tiimari's operations in Finland in 2010 was EUR 58.3 million EUR (59.6) and index was 97.9. At the close of the financial period, Tiimari had 186 shops (209) and the average number during the financial period was 187 (207). Number of shops during the financial period Dec 2010 Dec 2009 --------------------------------------------------------------- Finland 167 171 --------------------------------------------------------------- Estonia 13 16 --------------------------------------------------------------- Latvia 4 4 --------------------------------------------------------------- Lithuania 2 2 --------------------------------------------------------------- Norway 0 0 --------------------------------------------------------------- Poland 0 10 --------------------------------------------------------------- Russia 0 0 --------------------------------------------------------------- Sweden 0 6 --------------------------------------------------------------- Total shops 186 209 --------------------------------------------------------------- Investments during the financial period were EUR 0.6 million (1.1). The investments were mainly focused on the inventory system and logistics development. The average number of employees in the segment during the financial period was 553 (648). The figure is calculated on the basis of normal working hours. GALLERIX Gallerix's turnover totaled EUR 13.9 million (13.4). With unchanged currency rates Gallerix's revenue declined 0.4%. The gross margin grew to EUR 0.1 million (-0.5). The average number of employees in the segment during the financial period was 36 (61). OTHERS The other segment comprises Group Management. The segment revenue was EUR 0.4 million (1.0) and the operating profit EUR -1.5 million (-2.5). The number of staff at the end of the period under review was 2 (2), the average number during the financial period was 2 (10). The capital expenditure of the segment was EUR 0.0 million (0.0). FINANCING The Group's net working capital decreased to EUR -1.6 million (0.3). The inventory level declined by EUR 0.6 million to EUR 14.4 million (15.0). Short-term receivables totaled EUR 4.1 million (3.4) up by EUR 0.7 million. Short-term non-interest bearing liabilities totaled EUR 20.1 million (18.1). Long-term assets totaled EUR 45.8 million (54.5). The decline in long-term assets is accounted for by an impairment of EUR 6.9 million in the Tiimari goodwill. STANDSTILL AGREEMENT In accordance with the Standstill agreement, checking account limits amounting to EUR 7.5 million were in use at the end of the year, as opposed to the previous year. In the Financial Statement, these would amount to EUR 3.4 million gross in assets and in short-term loans to EUR 7.5 million. These items are expressed in net sums in the Financial Statement so that the liquid assets show zero and the short-term loans, EUR 4.1 million. In accordance with the Standstill agreement, EUR 2.5 million of the EUR 3.0 million capital loan would be assigned to the long-term interest-bearing outside capital and the rest EUR 0.5 million imputed to the equity. In the Financial Statement, the items are not entered in the balance sheet. These items have been recorded as an event after the financial year. FINANCING SITUATION The long-term interest-bearing outside capital decreased by EUR 6.3 million to EUR 15.9 million (22.2). The equity ratio was 18.9% (34.7) and the net gearing, 208.5%. The amount of interest bearing liabilities at the end of the financial period was EUR 26.0 million (22.6). Of these, EUR 15.9 million (22.2) were long-term. The total amount of capital loans was EUR 4.7 (4.7). Cash and bank totaled EUR 1.6 million (3.0) at the end of the financial period. The decrease in cash and bank is accounted for by the fact the total available checking account limit in accordance with the Standstill agreement is not entered in them. The cash available amounts to EUR 3.4 million more than recorded in the balance sheet. The net operating cash flow was EUR -2.5 million (3.8) and cash flow from investment activities was EUR -0.9 million (-0.8). Investments in tangible assets were EUR 0.8 million (1.3) and business acquisitions were EUR 0.0 million (0.0). Sales of fixed assets totaled EUR 0.1 million (0.5). The debt financing includes loan covenants governing the company's financial position, cash flow, EBITDA, and capital expenditure levels. EBITDA requirements are monitored on a quarterly basis. Those financing the interest-bearing outside capital and the company concluded a so-called Standstill agreement on the 30th of December 2010 which is in force until the 30th of December 2011, during which time the covenants of the loan do not apply. The Group operations are characterized by seasonality and the first quarters of the financial period have usually been non-profitable, with the results and cash flow accumulating mostly during the last quarter. Therefore, the financial position is still strained and to balance this, a significant increase in operational profitability compared to 2010 is required. Considering the financing situation and the company's financial position, the Board decided to propose to the Annual General Meeting that no dividend be paid for 2010. STAFF The average number of staff in the Group during the period under review was 591 (730) and, at the end of the period under review, 667 (894). Of these 556 (704) were in Finland. The Group employs, as is typical of its operations, a large number of part-time employees. In addition to its permanent staff, in Finland temporary staff has been used due to the seasonality of operations and during holiday periods. CHANGES IN MANAGEMENT Veijo Heinonen, MSc in Economics, was nominated as the Business Manager for Tiimari on 16th March. Kai Järvikare, PhD in Economics, took up the position of Tiimari's CFO on 26th July 2010. Memme Ilmakunnas began work as Tiimari's Purchasing Director 23rd August 2010. Markku Breider, the Director for Shop Operations, and Anne Söderholm, Director for Marketing, and Jaakko Syrjänen, Director for Development, terminated their employment with the company during the reorganization of the Group management. Maija Elenius, Financial Manager, left to pursue her own business interests and Anna Seppälä, Director of Logistics, started her maternity leave. CORPORATE GOVERNANCE Tiimari complies with the Corporate Governance Code for Finnish listed companies of the Securities Market Association. A separate report on the Corporate Governance is available at the Group web site www.tiimari.com. Tiimari also complies with the guidelines on insiders published by Nasdaq OMX Helsinki Plc and the standards of the Financial Supervisory Authority. BUSINESS RELATED RISKS AND UNCERTAINTIES The Group's revenue and results development is affected by several uncertainties related to the business operations. The main risks relate to the following factors: - the financial situation is tight, which may give rise to business continuity risks - the costs associated for acquiring capital are difficult to predict - the measures taken to increase financial flexibility as announced on 30.12.2011 consists of elements whose realization is difficult to anticipate - the development of general consumer demand and its deterioration especially in Finland and Sweden - the actual sales can greatly differ from the forecast as well as success in operational development and profitability improvement in the activities initiated: renewal of product offering and elimination of non-profitable operations - the periodization accumulating the seasonal operative cash flow and its impact on the financial position, loan covenants as well as the predictability of both cash flow and results - the development of foreign exchange rates for goods purchased outside the euro currency area and the gross margin received on these goods - the choice of business premises in the long-term - the availability of seasonal products and the functionality of the supply chain - the general development of salaries, rents and transport expenses - the valuation of goodwill and the Tiimari and Gallerix brands - general changes in interest rates The Company is involved as a defendant and a plaintiff in certain ongoing property and rental agreement-related disputes as well as in one other contract termination related dispute. The Financial Statement does not include any significant reservations for these because according to the management's assessment the Company does not have any compensation liabilities. Nor have the claims presented by the Company have been recognized in the Financial Statement. THE ENVIRONMENT The Tiimari Group does not have any manufacturing operations hence the operations are not subject to any significant environmental risks or impacts. The environmental impact of the supply chain is minimized by optimizing delivery rates from external suppliers as well as to the company's own shops. The costs related to managing and minimizing environmental risks are related to standard business operations and are therefore not monitored separately. SHARES Tiimari's share capital at the end of the review period was EUR 7,686,200. The number of shares and votes assigned to them was 16,474,755. Further information on shares and share ownership is reported in the notes of the parent company's Financial Statement. The Extraordinary General Meeting 19th October 2009 authorized the Board to decide on a maximum issue of a 4,000,000 shares and/or releasing special rights entitled to shares in accordance with Chapter 10 §1 of the Finnish Companies Act in one or several installments. The authorization is valid until 30th April 2013. The Board used the authorization 30th December 2010 after issuing a convertible capital loan of three million whereby the number of company shares can, as a result of the conversion of loan installments, increase with a maximum of 3,125,000 new shares. CONVERTIBLE CAPITAL LOAN 2009 In accordance with the decision taken by the Extraordinary General Meeting 19th October 2009, the Company issued a convertible capital loan. The loan amount was EUR 4,980,000. The loan was divided into EUR 60,000 loan obligations, its issue price was 100%, interest rate 8% per annum and the loan is convertible at an approximate conversion rate of EUR 1.4746. The number of company shares can, as a result of the conversion of the loan obligations, increase by a maximum of 3,377,173 new shares. The conversion rate is the weighted average price of the share traded on Nasdaq OMX Helsinki Plc during between 22nd September and 7th October 2009, increased by five percent. The year-end accumulated interest of the loan will be paid from the distributable funds of Tiimari Plc after the confirmation of the Financial Statement on 31st March. No part of the loan has been converted into shares during the financial period. CONVERTIBLE CAPITAL LOAN 2011 Tiimari's Board of Directors decided, on account of the authorization granted by the Extraordinary General Meeting 30th December 2010, to launch a three-million convertible capital loan. The amount of the loan is EUR 3,000,000 and the entire sum has a subscription guarantee. The loan was divided into EUR 25,000 obligations, its issue price was 100%, interest rate 9% and the loan is convertible at an approximate conversion rate of EUR 0.96. The number of company shares can, as a result of the conversion of the loan obligations, increase by a maximum of 3,125,000 new shares. OPTION ARRANGEMENTS On 24th April 2009, the Board issued the total of 480,000 option rights to the new Board members chosen at the Annual General Meeting and the newly appointed Managing Director to commit them to the company and as incentives. The option rights are divided into five series and their exercise period is split between 1st June 2009 and 30th April 2014. The issue prices are series-specific and range from EUR 1.35 to 1.84. No options were exercised during the financial period. OWN SHARES The Board does not have authorization to acquire or sell own shares. SHARE PRICES Tiimari's share is listed on Nasdaq OMX Helsinki Ltd small cap list. Tiimari's share price at the end of the financial period was EUR 0.88 (on 31st December 2009 it was EUR 1.29). The market value was EUR 14.5 million (on 31st December 2009 it was 21.3). The number of shareholders at the end of the financial period was 2,780 (2,818). Other information related to shares, shareholders and share ownership can be found in the notes to the parent company's Financial Statement. CHANGES IN OWNERSHIP During the financial period the Company was informed of the following changes in the share ownership of share holders: - Virala Ltd (group, theoretical maximum number) 3/10 and (may exceed the limit should Virala Ltd be allocated loan installments from the convertible capital loan issued 30th December 2010 to the maximum number in accordance with the subscription commitments and if Virala Ltd later convert all the loan installments from the capital loans issued by Tiimari Plc.) ANNUAL GENERAL MEETING 30th March 2010 (stock exchange release 30th March 2010, www.tiimari.com) The Annual General Meeting of Tiimari Plc, held today, confirmed the Financial Statement for 2009 and discharged the Board and the CEO from liability. In accordance with the Board's proposal, the General Meeting decided that the loss for the period of EUR -12,565,636.92 be recorded in retained earnings and that no dividend be paid. It was decided that the Board include six members. Hannu Ryöppönen, Sven-Olof Kulldorff, Juha Mikkonen, Markku Pelkonen, Alexander Rosenlew and Sissi Silvàn, as a new member, were elected to the Board. It was decided that the members of the Board shall receive the following remunerations: - the chairman of the Board will receive EUR 2,400 a month - the vice chairman of the Board will receive EUR 1,800 a month - other members of the Board will receive EUR 1,200 a month - for the meetings of the Board committees, a separate sum of EUR 100 per meeting shall be paid Travel and accommodation costs are paid in accordance with the Company's expenses remuneration policies. KPMG Ltd was elected as the Group Auditor, who named Sixten Nyman, APA, as the auditor with the primary responsibility. It was decided that the auditor's remuneration be paid against his reasonable invoice. The General Meeting authorized the Board to decide on the acquisition of a maximum of 500,000 own shares. The shares can be acquired using free equity in a proportion other than the share holders' proportion of ownership in a public trading arranged by NASDAQ OMX Helsinki Ltd at a market price. Shares can be acquired for the purpose of developing the Company's capital structure, for financing acquisitions or other arrangements needed to develop the Company's business activities, for financing investments, for executing commitment and incentive systems of the personnel, or for otherwise retaining, transferring on or canceling them in a manner and to the extent to be determined by the Board. The General Meeting, in accordance with the Board's proposal, decided to change section 9 in the company's Articles of Association so that it would comply with requirements of the Finnish Companies Act on the schedule for sending invitations to a General Meeting. The invitation to a General Meeting must be sent at least three weeks prior to the meeting and nine days prior to the date of record of the General Meeting. THE BOARD AND BOARD COMMITTEES The Board elected Hannu Ryöppönen as its chairman and Juha Mikkonen as vice chairman. Hannu Ryöppönen was elected chairman of the Appointment and Remuneration Committee of the Board and Alexander Rosenlew and Juha Mikkonen were elected members of this committee. Juha Mikkonen was elected chairman of the Audit Committee and Hannu Ryöppönen and Sissi Silvàn were elected members. EVENTS AFTER THE PERIOD UNDER REVIEW The convertible capital loan of three million, issued by Tiimari Plc on 20th December 2010, was oversubscribed during the subscription period which ended on 31st January 2011. As a result of the oversubscription, the subscription of Virala Oy Ab, which had given a subscription guarantee to the Company, was cut according to the subscription guarantee terms so that in the final allocation, Virala Oy Ab was allocated the total of EUR 1.9 million of the loan, others who had given subscription guarantees, a total of EUR 0.85 million, and other subscribers, EUR 0.25 million. TIIMARI'S STOCK EXCHANGE RELEASES in 2011 Tiimari will publish three interim reports in 2011: - interim report January-March on 6th May 2011 - interim report January-June on 12th August 2011 - interim report January-September on 4th November 2011 BOARD'S PROPOSAL TO THE GENERAL MEETING At the end of the financial period the parent company distributable shareholder's equity was EUR 4,502,066.86 (15,480,231.76). The Board proposes to the Annual General Meeting that the loss for the period 2010 of EUR -10,978,164.90 be left as retained earnings and that no dividend be paid. THE ANNUAL GENERAL MEETING 2011 Tiimari Plc's Annual General Meeting will be held at the Radisson Blue Seaside Hotel, Ruoholahdenranta 3, Helsinki, on the 30th of March 2011 starting at 1.00 pm. Tiimari Plc The Board FINANCIAL STATEMENT IN BRIEF AND NOTES TO THE FINANCIAL STATEMENT This stock exchange release was prepared following the recording and drafting principals of IFRS, but not all requirements according the IAS 34 (Interim Reports) were observed. Apart from the additions described below, Tiimari has applied the same drafting principles as it did in drafting the 2009 annual report. The stock exchange release is unaudited. On 1st Jan 2010 Tiimari started using the following revised and amended IFRS standards: REVISED IFRS 3 BUSINESS COMBINATIONS The revised standards affect the amount of goodwill recognized on an acquisition, as well as the gains on disposal of businesses. Expenses from acquisitions, e.g., expert fees, are classified in the profits and losses in accordance with the IFS 3 standard as an item having an impact on the results. The conditional purchase price is recognized at its market value and its later change is recorded as an item with an impact on the results. The share of owners with no voting rights can be recognized per acquisition either at their market value or as a relative share of the net assets of the acquisition. AMENDED IAS 27 CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS The amended standards impact the accounting of progressive acquisitions and progressive divestments. If the parent company retains the control of a subsidiary, changes in the ownership interest in a subsidiary are recognized directly within Group's equity, and no goodwill or gains or losses to be recorded in the results are generated. If the control of the subsidiary is lost, the possible remaining investment is recognized at its market value with an impact on the result. AMENDED IFRS 2 SHARE-BASED PAYMENT The amendment clarifies the scope of IFS 2 application: An entity which receives products or services must abide by the IFRS 2 standard even if the company did not have an obligation to make necessary cash-settled share-based payment transactions. IMPROVEMENTS MADE TO THE IFRS STANDARDS - COLLECTION OF STANDARD AMENDMENTS (APRIL 2009) The standards amendment collection in Improvements Made to the Standards (April 2009) has had an impact on the segment reports so that the segments' assets are not reported in the notes. Additionally, the amendments specify further how the additional purchase price of an acquisition executed during the validity of the old IFRS 3 standard is to be treated, according to which the Group has entered the additional purchase price against the goodwill. The other new or revised standards or amended interpretations thereof were not deemed relevant as far as the Group is concerned. All figures presented in the report are rounded up. That is why the sums of individual figures may deviate from what they really are. USING THE ASSESSMENTS The drafting of the Financial Statement, according to IFRS, necessitates the use of the Management's estimates and assumptions, which will have a bearing on the amounts of the assets and liabilities, on reporting the conditional assets and liabilities as well as on the amounts of earnings and expenses. Though the estimates are based on the Management's best possible current understanding, it is possible that the actual results will deviate from the values used in the Financial Statement. DISCONTINUED OPERATIONS There were no discontinued operations in the Tiimari Group during the financial year 2010. The comparative figures of financial year 2009 include discontinued operations. CONSOLIDATED INCOME STATEMENT eur 1000 10-12/1 10-12/0 1-12/10 1-12/09 0 9 REVENUE 29 931 32 374 75 797 80 623 Material and services -12 178 -15 766 -31 963 -35 083 Gross margin 17 753 16 608 43 834 45 540 Gross margin-% 59 51 58 56 Other operating income 184 994 961 1 833 Tiimari total personnel expenses -6 038 -6 203 -20 544 -22 085 Depreciation and amortisation -773 -1 059 -3 124 -3 635 Impairment 0 -566 0 -614 Impairment on goodwill -6 866 -882 -6 918 -882 Other operating expenses -7 521 -7 734 -26 822 -28 354 OPERATING PROFIT -3 261 1 157 -12 613 -8 198 Operating profit % -11 4 -17 -10 Financing income 52 2 266 50 Financing expenses -732 -674 -2 499 -3 186 Net financing expenses -680 -672 -2 233 -3 136 PROFIT/LOSS BEFORE TAX -3 940 486 -14 845 -11 334 Tax on income from operations 57 396 192 544 PROFIT/LOSS FOR THE PERIOD -3 883 882 -14 653 -10 790 Profit / loss for the period attributable to: Shareholders' of the parent company -3 883 882 -14 653 -10 790 Earnings per share calculated on profit attributable to equity holders of the parent company: EPS undiluted and diluted (EUR) -0,24 0,05 -0,89 -0,73 CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME NET INCOME FOR THE PERIOD -3 883 882 -14 653 -10 790 Translation diffrences 112 -100 656 282 Comprehensive income for the period net of -3 771 782 -13 997 -10 508 tax Comprehensive income for the period attributable to: Equity holders of the parent company -3 771 782 -13 997 -10 508 CONSOLIDATED STATEMENT OF FINANCIAL POSITION eur 1 000 31.12.2010 31.12.2009 ASSETS Goodwill 25 877 32 525 Intangible assets 15 496 16 876 Property, plan, equipment 4 275 4 904 Available-for-sale investments 104 104 Non-current Receivables 5 5 Non-current trade and other receivables 0 30 Deferred tax asset 29 29 NON-CURRENT ASSETS 45 785 54 472 Inventories 14 435 15 044 Trade receivables and other recivables 4 133 3 395 Tax Receivable, income tax 35 59 Cash and bank 1 626 3 024 CURRENT ASSETS 20 229 21 523 ASSETS 66 013 75 994 SHAREHOLDERS' EQUITY AND LIABILITIES Shareholder's equity attributable to parent company shareholders Share capital 7 686 7 686 Fair value reserve and other reserves 23 011 23 011 Translation differences -7 -663 Retained earnings -18 229 -3 667 EQUITY 12 461 26 366 LIABILITIES Deferred tax liability 5 740 5 834 Non-current liabilities, interest-bearing 15 859 22 203 Non-current provisions 31 31 NON-CURRENT LIABILITIES 21 630 28 067 Current interest-bearing liabilities 11 743 3 398 Trade Payables and Other Liabilities 20 119 18 103 Tax liability, income tax 61 60 CURRENT LIABILITIES 31 923 21 561 TOTAL LIABILITIES 53 553 49 628 EQUITY AND LIABILITIES 66 013 75 994 CONSOLIDATED STATEMENT OF CASH FLOWS eur 1 000 1-12/2010 1-12/2009 Cash flow from operations Profit/loss for financial period -14 653 -10 790 Adjustments: Depreciation and impairment 10 043 5 131 Gain (+) and loss (-) on sale of fixed assets 7 -542 Financial income and expenses 2 247 3 135 Taxes -192 -544 Other adjustments 77 -86 Change in working capital: Change in inventories 834 8 476 Change in short-term receivables 472 772 Change in short term liabilities 501 1 002 Interest paid -1 018 -2 191 Interest income received 13 22 Other financing expenses paid -782 -706 Taxes paid -8 85 Net cash flow from operations -2 459 3 764 Cash flow from investment activities Investments in tangible and intangible assets -665 -1251 Capital gains from tangible and intangible assets 2 520 Repayment of loan receivables -202 -52 Income on sale of investments 1 1 Net cash flow from investments -864 -782 Cash flow from financing activities Proceeds from share issue 6 089 Long-term loans, increase 8 480 Long-term loans, decrease -1 000 Short-term loans, net change 2 133 -15 342 Payment of lease liabilities -241 -421 Net cash flow from financing 1 892 -2 193 Change in liquid assets -1 431 789 Liquid assets, beginning of review period 3 024 2 188 Effect of exchange rate changes on liquid assets 34 48 Liquid assets, end of review period 1 626 3 024 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY eur 1 000 Attributable to the equity holders of the company Share Distributab Own Translation Retained Total capita le equity share difference earning l fund s s s Shareholders' 7 686 16 921 -55 -945 6 836 30 443 equity 1.1.2009 Comprehensive 282 -10 790 -10 508 income for the period Annulment of own 55 -55 0 shares Share based 41 41 payments Share issue 6 089 6 089 Equity portion of 292 292 convertible capital loan Other items 9 9 Equity on 7 686 23 011 0 -663 -3 667 26 366 31.12.2009 Shareholders' 7 686 23 011 0 -663 -3 667 26 366 equity 1.1.2010 Comprehensive 656 -14 653 -13 997 income for the period Share based 41 41 payments Other items 50 50 Equity on 7 686 23 011 0 -7 -18 229 12 461 31.12.2010 SEGMENT INFORMATION NET SALES eur 1 000 2010 2009 2010 2009 10-12 10-12 1-12 1-12 Tiimari 25 084 28 021 61 924 66 902 Gallerix 4 848 4 395 13 914 13 396 Other operations 20 37 376 972 Eliminations -20 -79 -416 -648 Group 29 931 32 374 75 797 80 623 OPERATING PROFIT eur 1 000 2010 2009 2010 2009 10-12 10-12 1-12 1-12 Tiimari -3 195 1 881 -10 435 -4 478 Gallerix 238 -197 -724 -1 266 Other operations -305 -526 -1 455 -2 454 Group -3 261 1 157 -12 613 -8 198 DEPRECIATION AND GOODWILL IMPAIRMENT eur 1 000 2010 2009 2010 2009 10-12 10-12 1-12 1-12 Tiimari 7 445 2 268 9 105 4 112 Gallerix 190 218 859 808 Other operations 5 22 79 211 Group 7 639 2 507 10 042 5 131 CAPITAL EXPENDITURE eur 1 000 2010 2009 2010 2009 10-12 10-12 1-12 1-12 Tiimari 147 355 622 1 076 Gallerix 1 -45 33 161 Other operations 0 0 10 14 Group 148 310 665 1 251 NET SALES BY GEOGRAPHICAL AREA eur 1 000 2010 2009 2010 2009 10-12 10-12 1-12 1-12 Finland 23 825 25 810 58 384 61 277 Sweden 4 887 4 885 14 258 14 577 ROW 1 220 1 680 3 156 4 769 Group 29 931 32 374 75 797 80 623 INTANGIBLE ASSETS eur 1 000 31.12.2010 31.12.2009 Book value at 1 January 49 402 52 237 Changes in exchange rates 777 602 Additions 184 498 Depreciation and impairment -8 879 -3 650 Disposals and intra-balance sheet -111 -284 transfer Book value at the end of period 41 373 49 402 TANGIBLE ASSETS eur 1 000 31.12.2010 31.12.2009 Book value at 1 January 4 904 5 616 Changes in exchange rates 262 3 Additions 481 932 Depreciation and impairment -1 131 1 595 Disposals and intra-balance sheet -241 -3 243 transfer Book value at the end of period 4 275 4 904 KEY FINANCIAL FIGURES 2010 2009 2010 2009 10-12 10-12 1-12 1-12 Net sales 29 931 32 374 75 797 80 623 EBITDA 4 378 3 098 -2 571 -3 067 Operating profit -3 261 1 157 -12 613 -8 198 Profit/loss for the financial period -3 883 882 -14 653 -10 790 Earnings per share, EUR -0,24 0,05 -0,89 -0,73 Shareholders' equity per share, EUR 0,76 1,79 Solvency ratio 18,9 % 34,7 % Gearing 208,5 % 85,6 % Net working capital -1 551 336 Operating cash flow -1 429 5 932 Net Interest-bearing liabilities 25 976 22 577 Balance sheet total 66 013 75 994 Average number of shares (1000 pcs) 16 475 16 475 16 475 14 749 NON-RECURRING ITEMS M€ 2010 2009 EBIT -12,6 -8,2 Depreciation and amortisation 3,1 3,6 Impairment 6,9 1,5 Depreciation, amortisation and impairment in total 10,0 5,1 EBITDA -2,6 -3,1 Non-recurring items Other operating income 0,0 0,5 Materials and services -1,0 -2,8 Personnel expenses -0,9 -0,2 Other operating expenses -1,1 -0,5 Non-recurring items in total -3,0 -3,1 Operative EBITDA 0,4 0,0 OPERATIVE EBITDA IMPROVEMENT 0,4 ADJUSTED CASH FLOW FROM OPERATIONS Cash flow from operations -2 460 Interest paid 1 018 Dividends received -6 Interest received -7 Other financial items 782 Business taxes paid 8 Non-recurring expenses 2 950 ADJUSTED CASH FLOW FROM OPERATIONS 2 285 CONTINGENT LIABILITIES 31.12.2010 31.12.2009 Loans from financial institutions against the following securities 11 632 9 500 Real estate mortgages 0 0 Corporate mortgages 31 137 31 137 Pledged shares 1 476 1 476 Other own liabilities Bank quarantees 2 891 2 821 Other liabilities 5 5 Leasing liabilities Due within one year 80 133 Due after one year 48 115 OTHER RENT LIABILITIES Due within one year 15 534 12 147 Due after one year 26 182 13 687 As part of the profit-improvement programme rent negotiations were held and contract lengths were extended. This increases the amount of liabilities. RELATED PARTY TRANSACTIONS (EUR 1 000) 1-12 2010 1-12 2009 Managing Director remuneration 231 444 Board remuneration 107 112 Management Group remuneration 548 606 Interest paid on capital loan (paid 31 March for period 26 Oct 09 - 31 Mar 10 Hannu Krook 3 Hannu Ryöppönen 3 Sven-Olof Kulldorff 3 Virala Oy Ab (Atine Group Oy parent company) 103 Assetman Oy 18 Baltiska Handels A.B. 9 Total 138 MAJOR SHAREHOLDERS Shares Shares % Major shareholders 31.12.2010 Atine Group Oy 3 293 000 19,99 Assetman Oy 1 740 645 10,57 Varma Mutual Pension Insurance Company 828 912 5,03 Primate Oy 825 000 5,01 Ilmarinen Mutual Pension Insurance Company 789 221 4,79 Baltiska Handels A.B. 716 483 4,35 Sijoitusrahasto Aktia Capital 600 000 3,64 Kargol Oy Ab 570 985 3,47 Vessilä Oy Ab 544 731 3,31 Cumasa Oy 407 625 2,47 |
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