2007-10-23 08:00:01 CEST
2007-10-23 08:00:01 CEST
REGULATED INFORMATION
Martela Oyj - Quarterly report
MARTELA OYJ INTERIM REPORT, 1 JANUARY-30 SEPTEMBER 2007
Net revenue for January-September was EUR 91.5 million (82.9), an increase of
10.3 per cent. Growth was especially robust in the Swedish, Norwegian and Polish
markets. Profit before taxes was EUR 5.2 million (1.0), including a total of EUR
2.6 million (0.5) in non-recurring income. The equity-to-assets ratio was 46.0
per cent (41.0) and gearing was 38.9 per cent (63.5).
It is expected that net revenue for 2007 will exceed last year's level and that
the operating profit before non-recurring items will be better than last year.
Accounting policies
The Interim Report has been prepared in compliance with IFRS recognition and
measurement principles. The same accounting policies have been applied as in the
2006 financial statements.
Market
The demand for office furniture began to grow in 2006 and this trend has
continued in 2007. No significant changes are expected in the market during the
rest of the year. In the Nordic countries the sector has experienced a number of
mergers and acquisitions involving venture capital investors in recent years.
These changes are not expected to have a material effect on Martela's
competitive position in the short term, at least.
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. The 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-September grew to EUR 91.5 million (82.9), an increase
of 10.3 per cent. Net revenue for the third quarter increased to EUR 31.2
million (28.8), an increase of 8.3 per cent.
Invoicing by main market areas, January-September
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| | 1-9 2007 | % | 1-9 2006 | % | Change % |
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| Finland | 61.0 | 66.6 % | 57.0 | 68.6 % | 7.1 % |
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| Scandinavia | 19.2 | 21.0 % | 15.9 | 19.2 % | 20.8 % |
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| Other regions | 11.4 | 12.4 % | 10.1 | 12.2 % | -12.9 % |
| 1) | | | | | |
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| Total | 91.6 | 100.0 % | 83.0 | 100.0 % | 10.4 % |
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1) The Polish market accounts for more than one half of the invoicing under
"Other regions". The growth in Poland was 50 per cent.
Quarterly invoicing by main market areas
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| | 4/05 | 1/06 | 2/06 | 3/06 | 4/06 | 1/07 | 2/07 | 3/07 |
--------------------------------------------------------------------------------
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| Finland | 20.6 | 19.0 | 18.4 | 19.5 | 26.1 | 19.6 | 20.7 | 20.7 |
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| Scandinavia | 5.3 | 5.1 | 4.6 | 6.2 | 6.4 | 6.5 | 5.9 | 6.8 |
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| Other regions | 3.5 | 2.8 | 4,3 | 3.0 | 4.3 | 3.9 | 3.7 | 3.8 |
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| Total | 29.5 | 26.9 | 27.3 | 28.8 | 36.8 | 30.0 | 30.3 | 31.3 |
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Consolidated result
The consolidated result continued to improve according to plan in the third
quarter. The January-September profit before taxes increased to EUR 5.2 million
(1.0). This includes EUR 2.6 million (0.5) in non-recurring income from the sale
of property. Of this, EUR 1.6 million was recognised in the first quarter and
was mostly from the sale of the Bodafors plant. Ownership of the Bodafors plant
was divested and roughly 50 per cent of its surface area was leased back on a
long-term lease. The property at our Oulu facilities was also divested in the
second quarter. Operations in Oulu will continue under a long-term lease. The
operating profit for January-September excluding non-recurring items was EUR 3.1
million (1.1), which was 3.4 per cent (1.3) of net revenue.
Result by quarter-year
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| | 4/05 | 1/06 | 2/06 | 3/06 | 4/06 | 1/07 | 2/07 | 3/07 |
--------------------------------------------------------------------------------
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| Revenue | 29.3 | 26.9 | 27.2 | 28.8 | 36.8 | 29.9 | 30.4 | 31.2 |
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| Other | 0.5 | 0.2 | 0.6 | 0.1 | 0.5 | 1.7 | 1.3 | 0.0 |
| income | | | | | | | | |
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| Operating | 1.4 | -0.1 | 0.9 | 0.8 | 2.8 | 1.7 | 2.6 | 1.4 |
| profit | | | | | | | | |
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| Operating | 4.6 % | -0.2 % | 3.2 % | 2.9 % | 7.7 % | 5.6 % | 8.5 % | 4.7 % |
| profit % | | | | | | | | |
--------------------------------------------------------------------------------
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| Profit | 1.2 | -0.3 | 0.6 | 0.7 | 2.7 | 1.5 | 2.4 | 1.3 |
| before | | | | | | | | |
| taxes | | | | | | | | |
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Capital expenditure
The Group's gross capital expenditure for January-September was EUR 2.3 million
(1.2). Of this, EUR 0.7 million was attributable to the sale of the Bodafors
plant, as a result of which the long-term lease liability for the part leased
back has been activated in the consolidated balance sheet in accordance with the
IFRS. The remaining capital expenditure concerned production replacements and IT
investments.
Staff
At the end of the review period, the Group employed 644 (629) persons. In
January-September, the Group employed an average of 654 (622) persons,
representing growth of 5.1 per cent.
Average staff by region
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| | 1-9/07 | 1-9/06 | Change % |
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| Finland | 520 | 499 | 4.2 % |
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| Scandinavia | 67 | 71 | -5.6 % |
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| Poland | 67 | 52 | 28.8 % |
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| Group total | 654 | 622 | 5.1 % |
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Staff by quarter-year
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| | 4/05 | 1/06 | 2/06 | 3/06 | 4/06 | 1/07 | 2/07 | 3/07 |
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| Average staff | 593 | 611 | 632 | 636 | 632 | 629 | 660 | 664 |
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| Staff at end of | 604 | 600 | 660 | 629 | 632 | 628 | 689 | 644 |
| period | | | | | | | | |
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| Revenue/person, | 49.5 | 44.0 | 43.0 | 45.3 | 58.3 | 47.5 | 46.0 | 47.0 |
| EUR 1,000 | | | | | | | | |
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Temporary labour employed in the summer months by the Finnish units raises the
figures for the second and third quarters.
Product development
Several new products were launched during the review period. The launch of the
new Pinta family of work desks took place in February at the Stockholm Furniture
Fair. With the introduction of the new products, Martela's current range of
desks is mostly identical on all markets. At the Stockholm Furniture Fair we
also presented ways to influence acoustics with furnishings and materials and
introduced new chairs. In April, we took part in the Milan Furniture Fair for
the first time, with furnishing solutions for surroundings. We introduced, for
example, Stefan Lindfors' Menu chair and Samuli Naamanka's Sides chair.
Finance
The net cash generated by operating activities in January-September was EUR 3.0
million (0.4). The cash flow from investing activities was EUR 1.3 million
positive as a result of the sale of property. EUR 1.2 million in loans were
granted to Alexander Management Oy to finance the acquisition of shares for a
three-year share-based incentive system. Interest-bearing liabilities decreased
by EUR 1.2 million from the beginning of the year, and totalled EUR 15.9 million
(19.2) at the end of the review period. Liquid assets amounted to EUR 5.1
million (4.8) at the end of the period. The equity-to-assets ratio rose to 46.0
per cent (41.0) and gearing improved correspondingly to 38.9 per cent (63.5).
Cash flows by quarter-year
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| | 4/05 | 1/06 | 2/06 | 3/06 | 4/06 | 1/07 | 2/07 | 3/07 |
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| Cash flows | 2.2 | 2.6 | 0.0 | -2.1 | 0.4 | 2.6 | 2.3 | -1.9 |
| from | | | | | | | | |
| operations | | | | | | | | |
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| Cash flows | -0.2 | -0.1 | 0.2 | 0.1 | 0.9 | 0.8 | 0.9 | -0.4 |
| from | | | | | | | | |
| investing | | | | | | | | |
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| Cash flows | -1.3 | -1.0 | -1.0 | 1.2 | -2.2 | -2.5 | -1.2 | 0.6 |
| from | | | | | | | | |
| financing | | | | | | | | |
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| Change in | 0.6 | 1.5 | -0.7 | -1.0 | -0.9 | 1.0 | 2.0 | -1.8 |
| liquid | | | | | | | | |
| assets | | | | | | | | |
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| Liquid assets | 4.4 | 5.0 | 6.5 | 5.7 | 4.8 | 3.9 | 4.9 | 6.9 |
| at | | | | | | | | |
| start of | | | | | | | | |
| period | | | | | | | | |
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| Liquid assets | 5.0 | 6.5 | 5.7 | 4.8 | 3.9 | 4.9 | 6.9 | 5.1 |
| at end of | | | | | | | | |
| period | | | | | | | | |
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Shares
During January-September, 1,080,853 (549,675) of the company's A shares were
traded on the OMX Nordic Exchange in Helsinki, corresponding to 30.4 per cent
(15.5) of all A shares. The value of trading was EUR 9.3 million (3.8). The
increase was partly caused by the acquisition of shares in the first quarter by
Alexander Management Oy for the three-year share-based incentive system. A total
of 143,166 shares were acquired for EUR 1.2 million in cash. The value of a
share was EUR 6.50 at the beginning of the year and EUR 9.31 at the end of the
period. During the review period the share price was EUR 10.35 at its highest
and EUR 6.39 at its lowest. At the end of September, equity per share was EUR
6.8 (5.6).
Treasury shares
The company did not purchase any of its own shares in January-September. On 30
September, 2007, Martela owned 67,700 of its own A shares, which had been
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 corresponds to 0.4 per cent of all
votes.
2007 Annual General Meeting
The Annual General Meeting of Martela Oyj was held on Tuesday, 20 March, 2007.
The AGM adopted the Financial Statements and discharged those responsible for
the accounts from further liability. The AGM decided, in accordance with the
Board of Directors' proposal, to distribute a dividend of EUR 0.25 per share.
The AGM appointed Heikki Ala-Ilkka, Tapio Hakakari, Jori Keckman, Heikki
Martela, Pekka Martela and Jaakko Palsanen to the Board of Directors, and
elected Matti Lindström as the staff representative and Raimo Santala as his
deputy. Reino Tikkanen, Authorised Public Accountant, was elected as the auditor
of the company, with KPMG Oy Ab as the deputy 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.
The new Board of Directors convened after the Annual General Meeting and elected
Heikki Ala-Ilkka as Chairman and Pekka Martela as Deputy Chairman.
Share-based incentive system
On 14 February 2007, Martela's Board of Directors decided on a share-based
incentive system for key personnel for 2007-2009. The number of A shares that
can be earned through the system depends on the attainment of targets. The
maximum bonus for the whole system is 153,000 Martela Oyj A shares and cash to
the amount needed to cover taxes and similar charges, estimated to approximate
the value of the shares to be paid. The company has outsourced management of the
incentive system to Alexander Management Oy, which acquired all the necessary
shares from the OMX Nordic Exchange in Helsinki during the first quarter with a
EUR 1.2 million loan granted by Martela.
Post-balance sheet events
No significant events requiring reporting have taken place since the
January-September period and operations have continued according to plan.
Short-term risk
The greatest risk to the profit development is related to the continuation of
economic growth and the consequent overall demand for office furniture. The
price trend of materials and components also affects short-term risks. The 2006
annual report presents the risks related to Martela's business operations in
more detail.
Outlook for 2007
The overall outlook for 2007 is still favourable and both net revenue and
operating profit are expected to develop according to the targets and
preliminary estimates. It is expected that the operating profit for the year
before non-recurring items will be better than last year.
No significant non-recurring items from property or other rearrangements as
occurred in the first half-year, are anticipated in the rest of 2007.
GROUP INCOME STATEMENT (EUR 1000)
2007 2006 2007 2006 2006
1-9 1-9 7-9 7-9 1-12
Revenue 91.453 82.882 31.213 28.808 119.727
Other operating income 2.955 0.861 -0.006 0.077 1.429
Employee benefits expenses -20.889 -19.189 -6.332 -5.875 -27.562
Operating expenses -65.417 -60.428 -22.578 -21.351 -85.763
Depreciation and impairment -2.406 -2.464 -0.842 -0.819 -3.332
Operating profit/loss 5.696 1.662 1.455 0.840 4.499
Financial income and expenses -0.544 -0.655 -0.224 -0.168 -0.798
Profit/loss before taxes 5.152 1.007 1.231 0.671 3.701
Income tax -1.451 -0.493 -0.541 -0.162 -0.977
Profit/loss for the period 3.701 0.514 0.690 0.510 2.723
Basic earnings per share, eur 0.9 0.1 0.2 0.1 0.7
Diluted earnings per share, eur 0.9 0.1 0.2 0.1 0.7
GROUP BALANCE SHEET (EUR 1000) 30.9.2007 31.12.2006 30.09.2006
ASSETS
Non-current assets
Intangible assets 0.748 0.662 0.657
Tangible assets 13.936 15.784 17.017
Investments 0.054 0.062 0.065
Deferred tax assets 0.247 0.776 1.264
Pension obligations 0.018 0.018 -
Investment properties 1.174 1.166 1.146
Total 16.177 18.468 20.149
Current assets
Inventories 13.654 11.938 11.450
Receivables 25.650 24.792 19.128
Financial assets at fair value 1.987 1.943 1.927
through profit and loss
Cash and cash equivalents 3.137 1.968 2.866
Total 44.428 40.641 35.371
Total assets 60.605 59.109 55.520
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 0.119 0.121 0.119
Translation differences -0.138 -0.133 -0.132
Retained earnings 20.426 17.542 15.333
Treasury shares -0.721 -0.721 -0.721
Total 27.802 24.925 22.715
Non-current liabilities
Interest-bearing liabilities 11.215 12.844 13.994
Deferred tax liability 1.070 0.175 0.213
Other non-current liabilities - - -
Pension obligations - - 0.001
Total 12.285 13.019 14.208
Current liabilities
Interest-bearing 4.711 4.271 5.232
Non-interest bearing 15.807 16.894 13.364
Total 20.518 21.165 18.596
Total liabilities 32.803 34.184 32.804
Equity and liabilities, total 60.605 59.109 55.520
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
01.01.2006 7.000 1.116 0.117 -0.108 15.432 -0.721 22.836
Translation diff. 0.002 -0.024 -0.022
Profit/loss for 0.514 0.514
the period
Total rec. income 0.002 -0.024 0.514 0.492
and expense
Dividends paid -0.613 -0.613
30.09.2006 7.000 1.116 0.119 -0.132 15.333 -0.721 22.715
1.1.2007 7.000 1.116 0.121 -0.133 17.542 -0.721 24.925
Translation diff. -0.002 -0.005 -0.007
Profit/loss for 3.701 3.701
the period
Other change 0.205 0.205
Total rec. income
and expense -0.002 -0.005 3.906 3.899
Dividends paid -1.022 -1.022
30.09.2007 7.000 1.116 0.119 -0.138 20.426 -0.721 27.802
CONSOLIDATED CASH FLOW STATEMENT (EUR 1000)
2007 2006 2006
1-9 1-9 1-12
Cash flows from operating activities
Cash flow from sales 91.484 82.072 114.537
Cash flow from other operating income 0.331 0.261 0.364
Payments on operating costs -88.166 -81.348 -113.292
Net cash from operating activities
before financial items and taxes 3.649 0.985 1.609
Interest paid -0.564 -0.470 -0.691
Interest received 0.033 0.029 0.048
Other financial items -0.022 -0.077 -0.084
Dividends received 0.001 0.002 0.003
Taxes paid -0.070 -0.022 -0.018
Net cash from operating activities (A) 3.027 0.447 0.867
Cash flows from investing activities
Capital expenditure on tangible and
intangible assets -1.623 -0.482 -1.840
Proceeds from sale of tangible and
intangible assets 4.068 0.705 2.992
Loans granted -1.193 - -
Repayments of loans receivables 0.011 - 0.006
Net cash used in investing activities (B) 1.263 0.223 1.158
Cash flows from financing activities
Proceeds from short-term loans 0.965 1.791 1.783
Repayments of short-term loans -0.424 -0.335 -1.546
Proceed from long-term loans - - -
Repayments of long-term loans -2.599 -1.673 -2.689
Dividends paid and other profit distribution -1.022 -0.613 -0.613
Net cash used in financial activities (C) -3.080 -0.830 -3.065
Change in cash and
cash equivalents (A+B+C) 1.210 -0.160 -1.041
(+ increase, - decrease)
Cash and cash equivalents at the beginning of
period 3.911 4.963 4.963
Translation differences 0.003 -0.010 -0.010
Cash and cash equivalents at the end of period 5.125 4.793 3.911
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
2007 2006 2006
1-9 1-12 1-9
Acquisitions 1.995 2.210 0.837
Decreases -1.634 -2.374 -0.461
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. This incentive
scheme is based on the group's combined profit performance for the period
2007-2009. The company has outsourced management of the bonus system to
Alexander Management Oy, which acquired all the necessary shares from the OMX
Nordic Exchange in Helsinki during the first quarter with a EUR 1.2 million
loan granted by Martela. In January-September 2007, the estimated amount of the
bonus, EUR 123 thousand, has been booked in costs.
KEY FIGURES/RATIOS
2007 2006 2006
1-9 1-9 1-12
Operating profit/loss 5.696 1.662 4.499
- in relation to revenue 6.2 2.0 3.8
Profit/loss before taxes 5.152 1.007 3.701
- in relation to revenue 5.6 1.2 3.1
Profit/loss for the period 3.701 0.514 2.723
- in relation to revenue 4.0 0.6 2.3
Basic earnings per share, eur 0.9 0.1 0.7
Diluted earnings per share, eur 0.9 0.1 0.7
Equity/share, eur 6.8 5.6 6.1
Equity ratio 46.0 41.0 42.4
Return on equity * 18.7 3.0 11.4
Return on investment * 18.0 5.5 11.0
Interest-bearing net-debt, eur million 10.8 14.4 13.2
Gearing ratio 38.9 63.5 53.0
Capital expenditure, eur million 2.3 1.2 1.8
- in relation to revenue, % 2.5 1.4 1.5
Personnel at the end of period 644 629 632
Average personnel 654 622 626
Revenue/employee, eur thousand 139.8 133.3 191.3
Key figures are calculated according to formulae as presented in Annual Report
2006.
* When calculating return on equity and return on investment the profit/loss for
the period has been multiplied in interim reports.
CONTINGENT LIABILITIES
30.9.2007 31.12.2006 30.9.2006
Mortgages and shares pledged 15.673 20.739 20.609
Guarantees 0.100 0.115 0.114
Other commitments 0.314 0.323 0.286
RENTAL COMMITMENTS 11.016 9.753 9.937
DEVELOPMENT OF SHARE PRICE 2007 2006 2006
1-9 1-9 1-12
Share price at the end of period, EUR 9.31 7.00 6.50
Highest price, EUR 10.35 8.16 8.16
Lowest price, EUR 6.39 5.99 5.99
Average price, EUR 8.62 6.97 6.82
This interim report has not been audited
Helsinki, October 22, 2007
Martela Oyj
Board of Directors
Heikki Martela
CEO
For more information, please contact
Heikki Martela, CEO, tel. +358 50 502 4711
Distribution
Helsinki Exchanges
Main news media
www.martela.com
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