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2008-07-22 10:00:00 CEST 2008-07-22 10:00:00 CEST REGULATED INFORMATION Tulikivi Oyj - Interim report (Q1 and Q3)Interim report 01-06/2008Tulikivi Corporation Interim report 22 July, 2008 at 11.00 Interim report 1-6/2008 - The Tulikivi Group's second-quarter sales were EUR 17.1 (17.4) million and profit before taxes was EUR 0.7 (0.7) million. - The Group's sales during the period were EUR 31.6 million (EUR 36.6 million, 1-6/2007) and profit before taxes was EUR 0.2 (1.3) million. Earnings per share amounted to EUR 0.00 (0.03). Cash flow from operating activities was EUR 1.0 (-2.1) million. - The order backlog at the end of the period amounted to EUR 7.7 (9.1) million. - General economic uncertainty has increased, and full- year sales are thus expected to fall slightly short of the previous year's level. Downscaling measures are anticipated to yield an improvement in earnings. Managing Director Heikki Vauhkonen: “In the first half of 2008, the fireplace market was primarily driven by two trends. Housing construction has declined substantially in many of our market areas, but the concurrent surge in energy prices has increased demand for our products in all territories. The decline in housing construction in the first part of the year has impacted on fireplace demand in Finland, Germany, Estonia and the USA. Higher energy prices support demand for fireplaces in Central Europe in particular. The Russian fireplace market is gaining momentum thanks primarily to the growth in low-rise building construction. Deliveries of lining stones to heater manufacturers were at a very weak level in the spring. Rising energy prices have made German consumers take a greater interest in fireplace purchases. This means that lining stone demand will be slightly more brisk in the autumn - the traditional season for purchases - than in the spring. Demand for natural stone has remained solid. In addition, the company has gained market share, particularly in interior decoration stones. The company's downscaling measures have progressed according to plan. These measures will yield significant profitability improvements in the current market conditions.” Sales and result The Group's sales amounted to EUR 31.6 million (EUR 36.6 million in January-June 2007). The Fireplaces Business posted sales of EUR 26.2 (31.4) million, the Natural Stone Products Business sales of EUR 4.4 (4.0) million and Other Operations sales of EUR 1.0 (1.2) million. The decline in sales of lining stones accounted for the most significant share of the reduction in the sales of the Fireplaces Business. Sales in Finland accounted for EUR 17.7 (18.7) million, or 56.0 (51.1) per cent, of total sales. Exports accounted for EUR 13.9 (17.9) million. The largest countries for exports were France and Belgium. The Group's operating profit was EUR 0.6 (1.5) million. The Fireplaces Business posted an operating profit of EUR 2.2 (3.0) million and the Natural Stone Products Business had an operating profit of EUR 0.3 (0.3) million and Other Operations an operating loss of EUR 1.9 (1.8) million. The Group's profit before taxes was EUR 0.2 (1.3) million. Earnings per share were EUR 0.00 (0.03). The Group has downscaled costs and personnel to match the scope of operations. The Group's second-quarter sales were EUR 17.1 million (EUR 17.4 million in April-June 2007) and profit before taxes was EUR 0.7 (0.7) million. Financing and investments Cash flow from operating activities before investments amounted to EUR 1.0 (-2.1) million. The Group's net financial expenses were EUR 0.4 (0.2) million. Net financial expenses were decreased by the change in the fair value of interest rate swaps, EUR 0.1 million. The equity ratio was 42.2 per cent (42.8 per cent at June 30, 2007). The ratio of interest-bearing net debt to equity, or gearing, was 76.7 (74.6) per cent. Current ratio was 1.8 (1.6). Equity per share amounted to EUR 0.70 (0.76). The Group's investments were EUR 1.2 (3.2) million during the review period. The major investments made during the review period comprised the opening of new quarries as well as conversion and replacement investments made in fireplace production. R&D expenditure totalled EUR 0.9 (0.8) million, representing about 2.9 (2.3) per cent of sales. Of this amount, EUR 0.1 (0.0) million was capitalized in the balance sheet. The main thrust in product development was on the development of fireplace combustion technology. Personnel The Group employed an average of 570 (711) people during the reporting period. Salaries and bonuses during the review period totalled EUR 9.0 (11.4) million. The Tulikivi Group has an incentive plan that includes a share-based incentive plan for key personnel and an incentive pay scheme for all personnel. The share-based incentive plan includes three earning periods: the calendar years 2008, 2009 and 2010. The potential reward from this plan for earning period 2008 will be based on the Group's profit after financial items and cash flow from operating activities. The potential reward for earning period 2008 will be paid partly in the form of the company's Series A shares and partly in cash in 2009. A maximum total of 120,000 Tulikivi Corporation Series A shares and a cash payment corresponding to the value of the shares will be paid as rewards on the basis of earning period 2008. The managing director may receive no more than 22,500 of these shares. A maximum total of about 360,000 Series A shares and a cash payment corresponding to the value of the shares will be paid as rewards on the basis of the entire share-based incentive plan. The incentive pay scheme is based on the achievement of the Group's earnings, productivity and personal targets. Resolutions of the Annual General Meeting Dividends Tulikivi Corporation's Annual General Meeting, held on April 17, 2008, resolved to pay a dividend of EUR 0.0450 on the Series A share and EUR 0.0433 on the Series K share. The dividend payout date was April 29, 2008. Administrative bodies Bishop Ambrosius, Juhani Erma, Eero Makkonen, Maarit Toivanen-Koivisto, Heikki Vauhkonen, Reijo Vauhkonen and Matti Virtaala were elected to the Board of Directors of the parent company and business subsidiaries. The Board elected Matti Virtaala as its chairman from amongst its number. The firm of independent public accountants KPMG Oy Ab, based in Helsinki, was elected as the auditor. Share buyback authorization The Annual General Meeting authorized the Board to acquire the company's own shares as proposed by the Board. Authorization to decide on share issues and conveying the company's own shares in possession of the company and the right to issue special rights which give entitlement to shares as defined in Chapter 10, Article 1 of the Companies Act The Annual General Meeting authorized the Board of Directors to decide on issuing new shares and conveying the company's own shares in its possession as proposed by the Board of Directors. The authorization also includes the right to issue special rights, as defined in Chapter 10, Article 1 of the Companies Act, which entitle to subscribe for shares against payment or by setting off the receivable. Risks and uncertainties The Group's risks are divided into strategic and operational risks, damage, casualty and loss risks and financial risks. Strategic risks include risks related to the Group's raw material reserves, amendments to laws and decrees, and market position. Operational risks are related to, but not limited to, products, distribution channels and processes. For more information on risks, see the 2007 Annual Report. The Group's near-term risks are related to the demand for lining stone products and the decline in the volume of housing construction. Should these risks materialize, they might have a material impact on earnings and cash flows during the present year. Outlook for the future Housing construction is on the wane in many market areas. However, demand for heat-retaining fireplaces is supported by the surge in energy prices. The outlook for the demand for lining stones has improved somewhat since the spring. Due to the mounting general economic uncertainty, full-year sales are expected to fall slightly short of the previous year's level. Downscaling measures are anticipated to yield an improvement in earnings. The strategic objectives set for the Tulikivi Group are: annual organic growth of 5 per cent in the long term, return on investment of over 20 per cent and the improvement of relative profitability by two percentage points per year. Sales growth and return on investment will fall short of these objectives during the present year, mainly due to the decline in fireplace demand. Segment reporting The Group's business segments are the Fireplaces Business, Natural Stone Products Business and Other Operations. The Fireplaces Business includes soapstone and ceramic fireplaces sold under the Tulikivi and Kermansavi brands and also soapstone lining for heater manufacturers. The Natural Stone Products Business includes interior decoration stone products for households and stone deliveries to construction sites. Other Operations includes expenses that are not allocated to the Group's other segments, tax and financial expenses, as well as sales of ceramic utensils and the expenses of this business. Tables CONSOLIDATED INCOME STATEMENT MEUR 1-6/ 1-6/Change, 1-12/ 4-6/ 4-6/Change 2008 2007 % 2007 2008 2007 % Sales 31.6 36.6 -13.6 69.9 17.1 17.4 -1.9 Other operating income 0.4 0.3 0.6 0.2 0.2 Increase/decrease in inventories in finished goods and in work in progress 0.0 2.1 2.1 0.3 0.9 Production for own use 0.4 0.5 1.1 0.3 0.4 Raw materials and consumables 6.3 7.4 14.2 3.5 3.5 External services 4.8 5.2 11.1 2.8 2.7 Personnel expenses 11.7 14.5 27.1 6.3 7.0 Depreciation and amortisation 2.7 2.7 5.7 1.4 1.3 Other operating expenses 6.3 8.2 14.7 3.1 3.6 Operating profit 0.6 1.5 -63.4 1.0 0.8 0.8 4.6 Percentage of sales 1.8 4.2 1.4 4.8 4.5 Finance income 0.2 0.2 0.2 0.1 0.1 Finance expense -0.6 -0.4 -1.0 -0.2 -0.2 Share of the profit of associated company 0.0 0.0 0.0 4.4 0.0 Profit before income tax 0.2 1.3 -87.2 0.2 0.7 0.7 9.5 Percentage of sales 0.5 3.6 0.2 4.4 3.9 Income tax expenses -0.1 -0.4 0.2 -0.2 -0.2 Profit for the period 0.1 0.9 -88.9 0.4 0.6 0.5 13.6 Earnings per share attributable to the equity holders of the parent company, EUR basic and diluted 0.00 0.03 0.01 0.01 0.01 CONSOLIDATED BALANCE SHEET MEUR 06/08 06/07 12/07 ASSETS Non-current assets Property, plant and equipment Land 1.1 1.1 1.1 Buildings 8.3 8.8 8.6 Machinery and equipment 11.4 13.6 12.7 Other tangible assets 1.3 1.3 1.4 Intangible assets Goodwill 4.3 4.3 4.3 Other intangible assets 11.2 10.9 11.1 Investment properties 0.2 0.2 0.2 Available-for-sale investments 0.1 0.1 0.1 Receivables Deferred tax assets 0.9 0.6 1.0 Total non-current assets 38.8 40.9 40.5 Current assets Inventories 12.6 12.9 12.7 Trade receivables 6.1 7.7 5.3 Current income tax receivables 0.6 0.5 0.1 Other receivables 0.9 2.1 0.5 Cash and cash equivalents 2.5 2.0 3.8 Total current assets 22.7 25.2 22.4 Total assets 61.5 66.1 62.8 EQUITY AND LIABILITIES Equity Share capital 6.3 6.3 6.3 Share premium fund 7.4 7.4 7.4 Translation difference -0.1 -0.1 Retained earnings 12.4 14.6 14.0 Total equity 26.0 28.3 27.6 Non-current liabilities Deferred income tax liabilities 2.2 3.1 2.3 Provisions 0.9 0.8 0.9 Interest-bearing debt 19.7 17.5 17.7 Other debt 0.3 0.4 0.3 Total non-current liabilities 23.1 21.8 21.2 Current liabilities Trade and other payables 9.7 10.5 9.4 Current income tax liabilities 0.1 Current provisions 0.1 0.7 Short-term interest-bearing debt 2.6 5.5 3.8 Total current liabilities 12.4 16.0 14.0 Total liabilities 35.5 37.8 35.2 Total equity and liabilities 61.5 66.1 62.8 CONSOLIDATED CASH FLOW STATEMENT MEUR 01-06/ 01-06/ 01-12/ 2008 2007 2007 Cash flows from operating activities Profit for the period 0.1 0.9 0.4 Adjustments: Non-cash transactions 2.7 2.7 5.5 Interest expenses and income and taxes 0.5 0.6 0.6 Change in working capital -1.2 -4.8 -1.8 Interest paid and received and taxes paid -1.1 -1.5 -2.2 Net cash flow from operating activities 1.0 -2.1 2.5 Cash flows from investing activities Investment in property, plant and equipment and intangible assets -1.4 -3.2 -5.7 Grants received for investments and sales of property, plant and equipment 0.1 0.2 1.4 Loans granted -0.1 Net cash flow from investing activities -1.4 -3.0 -4.3 Cash flows from financing activities Proceed from borrowings 2.0 7.0 8.5 Repayment of borrowings -1.2 -1.4 -4.4 Dividends paid -1.7 -3.4 -3.4 Net cash flow from financing activities -0.9 2.2 0.7 Change in cash and cash equivalents -1.3 -2.9 -1.1 Cash and cash equivalents at beginning of period 3.8 4.9 4.9 Cash and cash equivalents at end of period 2.5 2.0 3.8 STATEMENT OF CHANGES IN EQUITY MEUR Share Share Trans- Retained Total capital premium lation earnings fund diff. Equity 1 January 2008 6.3 7.4 -0.1 14.0 27.6 Translation differences 0.0 0.0 Profit for the period 0.1 0.1 Dividends paid -1.7 -1.7 Equity 30 June 2008 6.3 7.4 -0.1 12.4 26.0 Equity 1 January 2007 6.3 7.4 0.0 17.0 30.7 Translation differences 0.0 0.0 Items recognised directly in equity -0.1-0.1 Profit for the period 0.9 0.9 Dividends paid -3.3 -3.3 Equity 30 June 2007 6.3 7.4 0.0 14.5 28.2 BUSINESS SEGMENTS 01-06/ 01-06/ 1-12/ MEUR 2008 2007 2007 Sales 31.6 36.6 69.9 Fireplaces business 26.2 31.4 59.7 Natural stone products business 4.4 4.0 7.4 Other operations 1.0 1.2 2.8 Operating profit 0.6 1.5 1.0 Fireplaces business 2.2 3.0 4.4 Natural stone products business 0.3 0.3 0.4 Other operations -1.9 -1.8 -3.8 BUSINESS SEGMENTS QUARTERLY MEUR Q2/ Q1/ Q4/ Q3/ Q2/ Q1/ 2008 2008 2007 2007 2007 2007 Sales 17.0 14.6 16.8 16.5 17.4 19.2 Fireplaces business 14.2 12.0 14.4 13.9 14.7 16.7 Natural stone products business 2.4 2.0 1.7 1.7 2.1 1.9 Other operations 0.4 0.6 0.7 0.9 0.6 0.6 Operating profit 0.9 -0.3 -0.9 0.4 0.7 0.8 Fireplaces business 1.8 0.4 0.5 0.9 1.5 1.5 Natural stone products business 0.1 0.2 0.0 0.1 0.2 0.1 Other operations -1.0 -0.9 -1.4 -0.6 -1.0 -0.8 KEY FINANCIAL RATIOS AND SHARE RATIOS 1-6/08 1-6/07 3-4/08 3-4/07 1-12/ 07 Earnings per share, EUR 0.00 0.03 0.01 0.01 0.01 Equity per share, EUR 0.70 0.76 0.70 0.76 0.74 Return on equity, % 0.8 6.4 8.2 3.3 1.2 Return on investments, % 3.0 7.0 7.8 7.4 2.5 Equity ratio, % 42.2 42.8 43.9 Net indebtness ratio, % 76.7 74.6 64.7 Current ratio 1.8 1.6 1.6 Gross investments, MEUR 1.2 3.2 5.7 Gross investments, % of sales 3.9 8.7 8.1 Research and development costs, MEUR 0.9 0.8 1.6 %/sales 2.9 2.3 2.3 Outstanding orders (30 June), MEUR 7.7 9.1 6.9 Average number of staff 570 711 682 Rate development of shares, EUR Lowest share price, EUR 1.37 2.82 1.53 Highest share price, EUR 1.88 3.75 3.75 Average share price, EUR 1.51 3.17 2.69 Closing price, EUR 1.43 2.92 1.56 Market capitalization at the end of period, 1000 EUR 53116 108460 57945 (Supposing that the market price of the K-share is the same as that of the A-share) Number of shares traded, (1000 pcs) 1 215 2 696 5 369 % of total amount of A-shares 4.4 9.8 19.4 Number of shares average 37143970 37143970 37143970 Number of shares 30 June 37143970 37143970 37143970 NOTES TO THE INTERIM REPORT This interim report has been prepared in accordance with International Financial Reporting Standard IAS 34 Interim Financial Reporting. In preparing of this interim report, Tulikivi has applied same accounting policies as in the 2007 financial statements, with the exception of the following new/amended standards that the group has adopted as from January 1, 2008: - IFRIC 12 Service Concession Arrangements - IFRIC 14, IAS 19 The Limit and Defined Benefit Assets, Minimum Funding Requirements and their Interaction The changes have no material effect on Tulikivi's interim report. The key figures presented in the Interim Report have been calculated using the same formulas as the latest financial statement 2007. The formulas can be found on page 63 of the 2007 Annual Report. Income taxes MEUR 01-06/ 01-06/ 01-12/07 08 07 Taxes for the current and previous reporting periods 0.0 -0.4 -1.1 Deferred taxes -0.1 0.1 1.3 Total -0.1 -0.3 0.2 Collateral and securities given and other commitments MEUR 6/2008 6/2007 12/ 2007 Mortgages and pledges given 26.3 28.9 26.3 Derivatives Interest rate swaps; nominal value 11.0 8.3 7.4 fair value 0.2 0.2 0.1 The fair value of derivatives is the gain or loss for closing the contract based on market rates at the balance sheet date. Unused credit commitments stood at EUR 5 million at the end of the review period. Provisions and contingent liabilities The Group's non-current provisions are an environmental provision of EUR 0.4 million and a warranty provision of EUR 0.5 million. Current provisions include a restructuring provision recognized in 2007, which was raised by EUR 0.1 million during the review period. EUR 0.7 million of the restructuring provision has been used and it stood at EUR 0.1 million at the end of the review period. On the basis of the Mining Act and environmental legislation, the Tulikivi Group has landscaping obligations that must met when operating the quarries and after quarries and plants are eventually shut down. Provisions and contingent liabilities are itemized in greater detail in notes 24. Provisions and 33. Other contingent liabilities in the 2007 consolidated financial statements. Share capital Share capital by share series Number % of % of Share, of shares shares voting EUR of rights share capital K-shares(10 votes) 9 540 000 25.7 77.6 1 621 800 A-shares (1 vote) 27 603 970 74.3 22.4 4 692 675 Total June 30, 2008 37 143 970 100.0 100.0 6 314 475 There have been no changes in Tulikivi Corporation´s share capital during the period. According to the articles of association the dividend paid for Series A shares shall be 0.0017 EUR higher than the dividend paid on Series K shares. The Series A share is listed on the OMX Nordic Exchange Helsinki Oy. On June 30, 2008, the company had 4465 shareholders. 7.3 per cent of all shares were nominee registered or in foreign ownership. No flagging notifications were made to the company during the review period. Board authorizations The Annual General Meeting of April 17, 2008 authorized the Board of Directors to acquire the company's own shares. A maximum of 2,760,397 Series A shares in the company and 954,000 Series K shares in the company can be bought back. The authorization is valid until the 2009 Annual General Meeting. In addition, the Board of Directors has an authorization to decide on issuing new shares and the conveyance of own shares in the company's possession. New shares can be issued or own shares held by the company conveyed amounting to a maximum of 5,520,794 Series A shares and 1,908,000 Series K shares. The authorization is valid until the 2009 Annual General Meeting. At the end of the review period, the company did not hold any of its own shares. Related party transactions 1000 EUR 6/2008 6/2007 Sales of goods and services -sales of goods and services to associated companies 12 1 Purchases of goods and services -purchases of goods and services from associated companies 44 24 Transactions with key management - leases from related parties 61 51 Transactions with other related parties Tulikivi Corporation is a founder member of the Finnish Stone Research Foundation. The company has leased offices and storages from the property owned by the Foundation and North Karelia Educational Federation of Municipalities. The rent paid for these facilities was EUR 64 thousand (62 thousand)in the period. The rent corresponds with the market rents. The sales of services to foundation were EUR two thousand (EUR two thousand) in the period. Tulikivi Corporation granted the Foundation a long-term loan of one hundred thousand euros during the review period. Largest shareholders on 30 June 2008 Name of shareholder Shares Proportion of total vote Vauhkonen Reijo 4 164 327 24.3 % Vauhkonen Heikki 3 003 887 24.1 % Elo Eliisa 2 957 020 5.9 % Virtaala Matti 2 421 300 12.6 % Mutual Pension Insurance Company Ilmarinen 1 902 380 1.5 % Mutanen Susanna 1 643 800 7.2 % Vauhkonen Mikko 797 700 3.6 % Paatero Ilkka 718 430 0.6 % Nuutinen Tarja 674 540 3.5 % Investment Fund Phoebus 608 140 0.5 % Other shareholders 18 252 446 16.2 % The interim report has not been audited. The companies included in the Group are the parent company Tulikivi Corporation, Kivia Oy, AWL-Marmori Oy, Tulikivi U.S. Inc. and OOO Tulikivi. Group companies include also Uuni Vertriebs GmbH and The New Alberene Stone Company, Inc., which are dormant. The parent company has a fixed place of business in Germany, Tulikivi Oyj Niederlassung Deutschland. The Group has interests in associated companies Stone Pole Oy and Leppävirran Matkailukeskus Oy. TULIKIVI CORPORATION Board of Directors Matti Virtaala Chairman of the Board Distribution: OMX Nordic Exchange Helsinki Oy Central Media www.tulikivi.com Additional information: Tulikivi Corporation, 83900 Juuka, tel. +358-207-636 000, www.tulikivi.com - Chairman of the Board of Directors Matti Virtaala - Managing Director Heikki Vauhkonen |
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