2007-08-07 08:00:00 CEST
2007-08-07 08:00:00 CEST
REGULATED INFORMATION
Martela Oyj - Quarterly report
MARTELA OYJ'S INTERIM REPORT, 1 JANUARY - 30 JUNE 2007
Revenue in January-June was EUR 60.2 million (54.1), an increase of 11.4 per
cent. The growth was especially robust in the Swedish, Norwegian and Polish
markets. Profit before taxes was EUR 3.9 million (0.3), including a total of
EUR 2.8 million (0.5) in non-recurring income. The equity-to-assets ratio was
45.3 per cent (40.2) and gearing was 31.2 per cent (56.3). Profit is expected
to continue improving in the second half-year.
Accounting policies
The interim report has been prepared in accordance with IAS 34, Interim
Financial Reporting, as approved by the EU.
Market
Demand for office furniture began to grow in 2006 and this trend has continued
in 2007. In the Nordic countries, venture capital investors have actively
acquired companies in the sector lately. 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 revenue and result are as recorded in the consolidated
financial statements. The Group's secondary reporting segment is based on the
geographical location of customers.
Revenue
Revenue in January-June increased to EUR 60.2 million (54.1), representing
growth of 11.4 per cent. Growth continued to be especially strong in the
Swedish, Norwegian and Polish markets.
Invoicing by main market areas, January-June
1-6/07 % 1-6/06 % Change %
Finland 40.3 66.9 % 37.4 69.0 % + 7.8 %
Scandinavia 12.4 20.6 % 9.7 17.9 % +28.3 %
Other regions 1) 7.6 12.5 % 7.1 13.2 % + 5.9 %
Total 60.3 100.0 % 54.3 100.0 % +11.2 %
1) The Polish market accounts for more than half of the invoicing under "Other
regions". Growth in Poland was 33 per cent.
Quarterly invoicing by main market areas
2/05 3/05 4/05 1/06 2/06 3/06 4/06 1/07 2/07
Finland 17.0 17.0 20.6 19.0 18.4 19.5 26.1 19.6 20.7
Scandinavia 4.3 5.5 5.3 5.1 4.6 6.2 6.4 6.5 5.9
Other regions 2.9 2.5 3.5 2.8 4.3 3.0 4.3 3.9 3.7
Total 24.2 25.0 29.5 26.9 27.3 28.8 36.8 30.0 30.3
Growth in each of the first two quarters of the year was 11.5 per cent and 11.0
per cent respectively compared with the corresponding quarters a year before.
Consolidated result
The consolidated result continued to improve according to plan in the second
quarter. The January-June profit before taxes increased to EUR 3.9 million
(0.3). This includes EUR 2.8 million (0.5) in non-recurring income from the
sale of property. Of this, EUR 1.6 million was recognised in the first quarter,
most of which was 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 also continue under a
long-term lease.
The operating profit for January-June excluding non-recurring items was EUR 1.4
million (0.3), which was 2.4 per cent (0.6) of revenue.
Result by quarter-year
2/05 3/05 4/05 1/06 2/06 3/06 4/06 1/07 2/07
Revenue 24.1 25.0 29.3 26.9 27.2 28.8 36.8 29.9 30.4
Other income 0.1 0.1 0.5 0.2 0.6 0.1 0.5 1.7 1.3
Operating profit -0.9 1.3 1.4 -0.1 0.9 0.8 2.8 1.7 2.6
Operating profit % -3.7% 5.1% 4.6% -0.2% 3.2% 2.9% 7.7% 5.6% 8.5%
Profit before -0.9 1.1 1.2 -0.3 0.6 0.7 2.7 1.5 2.4
taxes
Capital expenditure
The Group's gross capital expenditure for January-June was EUR 1.8 million
(0.8). Of this, EUR 0.7 million was attributable to the ownership
rearrangements at 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
mainly concerned production replacements and IT investments.
Staff
At the end of the review period, the Group employed 689 (660) persons. In
January-June, the Group employed an average of 648 (616) persons, representing
growth of 5.2 per cent.
Average staff by region 1-6/07 1-6/06 Change %
Finland 516 492 + 4.9 %
Scandinavia 67 72 - 6.9 %
Poland 65 52 + 25.0 %
Group total 648 616 + 5.2 %
Staff by quarter-year
3/05 4/05 1/06 2/06 3/06 4/06 1/07 2/07
Average staff 613 593 611 632 636 632 629 660
Staff at end of period 600 604 600 660 629 632 628 689
Revenue/person, EUR 1,000 40.8 49.5 44.0 43.0 45.3 58.3 47.5 46.0
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 introduced 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 essentially 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-June was EUR 5.0
million (2.6). The cash flow from investing activities was EUR 1.7 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 1.8 million from the start of the year, totalling EUR 15.4
million (18.2) at the end of the review period. Liquid assets amounted to EUR
6.9 million (5.7) at the end of the period. The equity-to-assets ratio improved
to 45.3 per cent (40.2) and gearing improved correspondingly to 31.2 per cent
(56.3).
Cash flows by quarter-year
3/05 4/05 1/06 2/06 3/06 4/06 1/07 2/07
Cash flows from operations -1.3 2.2 2.6 0.0 -2.1 0.4 2.6 2.3
Cash flows from investing -0.5 -0.2 -0.1 0.2 0.1 0.9 0.8 0.9
Cash flows from financing -0.4 -1.3 -1.0 -1.0 1.2 -2.2 -2.5 -1.2
Change in liquid assets -2.2 0.6 1.5 -0.7 -1.0 -0.9 1.0 2.0
Liquid assets on 1 January 6.5 4.4 5.0 6.5 5.7 4.8 3.9 4.9
Liquid assets on 30 June 4.4 5.0 6.5 5.7 4.8 3.9 4.9 6.9
Shares
During January-June, 969,714 (372,925) of the company's A shares were traded on
the Helsinki Stock Exchange, corresponding to 27.3 per cent (10.5) of all A
shares. The value of trading was EUR 8.3 million (2.6). The increase was
partly caused by the acquisition of shares 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 9.10 at the end of the period. During the review
period the share price was EUR 9.56 at its highest and EUR 6.39 at its lowest.
At the end of June, equity per share was EUR 6.6 (5.4).
Treasury shares
Martela did not purchase any of its own shares for the treasury in the first
half of 2007. On 30 June, 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 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 Helsinki Stock Exchange during the first quarter with
a EUR 1.2 million loan granted by Martela.
Organisation
Anders Olsson has been appointed Director of the Sweden and Norway business
unit and Managing Director of Martela AB as of 6 August, 2007.
Torsten Hästö, Group Financial and Administration Director has been appointed
Director, Business Development as of 8 August 2007.
Mats Danielsson, M.Sc. (Econ.) has been appointed Director, Finance and
Administration (CFO).
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 risks to improved profit performance in the rest of the year are
estimated to relate to the price trend of materials and components. In
addition, unexpected changes in general economic trends in the main markets may
rapidly lead to substantial changes in overall demand in the sector.
The year so far and outlook for the rest of 2007
The revenue and result for the first half of 2007 developed in accordance with
the targets and preliminary estimates. Revenue is expected to increase towards
the end of the year as in previous years, but growth will be more moderate than
in the first half. It is expected that profit performance will continue to
improve and 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
1-6 1-6 4-6 4-6 1-12
Revenue 60.240 54.074 30.373 27.206 119.727
Other operating income 2.961 0.784 1.280 0.568 1.429
Employee benefits expenses -14.557 -13.314 -7.589 -6.833 -27.562
Operating expenses -42.839 -39.077 -20.705 -19.239 -85.763
Depreciation and impairment -1.564 -1.645 -0.788 -0.830 -3.332
Operating profit/loss 4.241 0.822 2.571 0.872 4.499
Financial income and expenses -0.320 -0.487 -0.154 -0.244 -0.798
Profit/loss before taxes 3.921 0.336 2.417 0.629 3.701
Income tax -0.910 -0.332 -0.704 -0.296 -0.977
Profit/loss for the period 3.011 0.004 1.713 0.333 2.723
Basic earnings per share, eur 0.7 0.0 0.4 0.1 0.7
Diluted earnings per share, eur 0.7 0.0 0.4 0.1 0.7
GROUP BALANCE SHEET (EUR 1000) 30.6.2007 31.12.2006 30.06.2006
ASSETS
Non-current assets
Intangible assets 0.773 0.662 0.616
Tangible assets 14.286 15.784 17.649
Investments 0.054 0.062 0.068
Deferred tax assets 0.246 0.776 1.422
Pension obligations 0.018 0.018 -
Investment properties 1.175 1.166 1.458
Total 16.552 18.468 21.213
Current assets
Inventories 15.088 11.938 11.652
Receivables 21.322 24.792 16.713
Financial assets at fair value 1.979 1.943 2.909
through profit and loss
Cash and cash equivalents 4.940 1.968 2.825
Total 43.329 40.641 34.099
Total assets 59.881 59.109 55.312
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 -0.145 -0.133 -0.143
Retained earnings 19.704 17.542 14.823
Treasury shares -0.721 -0.721 -0.721
Total 27.073 24.925 22.194
30.6.2007 31.12.2006 30.06.2006
Non-current liabilities
Interest-bearing liabilities 11.558 12.844 14.323
Deferred tax liability 0.529 0.175 0.230
Other non-current liabilities - - -
Pension obligations - - 0.001
Total 12.087 13.019 14.554
Current liabilities
Interest-bearing 3.800 4.271 3.903
Non-interest bearing 16.922 16.894 14.661
Total 20.722 21.165 18.564
Total liabilities 32.808 34.184 33.118
Equity and liabilities, total 59.881 59.109 55.312
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 -0.035 -0.033
Profit/loss for 0.004 0.004
the period
Total rec. income 0.002 -0.035 0.004 -0.029
and expense
Dividends paid -0.613 -0.613
30.06.2006 7.000 1.116 0.119 -0.143 14.823 -0.721
22.194
1.1.2007 7.000 1.116 0.121 -0.133 17.542 -0.721 24.925
Translation diff. -0.002 -0.012 -0.014
Profit/loss for 3.011 3.011
the period
Other change 0.173 0.173
Total rec. income
and expense -0.002 -0.012 3.184
3.170
Dividends paid -1.022 -1.022
30.06.2007 7.000 1.116 0.119 -0.145 19.704 -0.721 27.073
CONSOLIDATED CASH FLOW STATEMENT (EUR 1000)
2007 2006 2006
1-6 1-6 1-12
Cash flows from operating activities
Cash flow from sales 64.122 55.373 114.537
Cash flow from other operating income 0.243 0.205 0.364
Payments on operating costs -59.012 -52.458 -113.292
Net cash from operating activities
before financial items and taxes 5.353 3.120 1.609
Interest paid -0.374 -0.340 -0.691
Interest received 0.021 0.017 0.048
Other financial items -0.005 -0.171 -0.084
Dividends received 0.001 0.002 0.003
Taxes paid -0.025 -0.002 -0.018
Net cash from operating activities (A) 4.972 2.627 0.867
Cash flows from investing activities
Capital expenditure on tangible and
intangible assets -0.989 -0.560 -1.840
Proceeds from sale of tangible and
intangible assets 3.877 0.681 2.992
Loans granted -1.193 - -
Repayments of loans receivables 0.011 - 0.006
Net cash used in investing activities (B) 1.706 0.122 1.158
Cash flows from financing activities
Proceeds from short-term loans - 0.203 1.783
Repayments of short-term loans -0.355 -0.287 -1.546
Proceed from long-term loans - - -
Repayments of long-term loans -2.296 -1.267 -2.689
Dividends paid and other profit distribution -1.022 -0.613 -0.613
Net cash used in financial activities (C) -3.672 -1.964 -3.065
Change in cash and
cash equivalents (A+B+C) 3.006 0.784 -1.041
(+ increase, - decrease)
Cash and cash equivalents at the beginning of
period 3.911 4.963 4.963
Translation differences 0.002 -0.013 -0.010
Cash and cash equivalents at the end of period 6.919 5.734 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
1-6 1-12 1-6
Acquisitions 1.587 2.210 0.685
Decreases -1.624 -2.374 -0.076
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
Helsinki Stock Exchange during the first quarter with a EUR 1.2 million loan
granted by Martela. During the first half of 2007, the estimated amount of the
bonus, EUR 50 thousand, has been booked in costs.
KEY FIGURES/RATIOS
2007 2006 2006
1-6 1-6 1-12
Operating profit/loss 4.241 0.822 4.499
- in relation to revenue 7.0 1.5 3.8
Profit/loss before taxes 3.921 0.336 3.701
- in relation to revenue 6.5 0.6 3.1
Profit/loss for the period 3.011 0.004 2.723
- in relation to revenue 5.0 0.0 2.3
Basic earnings per share, eur 0.7 0.0 0.7
Diluted earnings per share, eur 0.7 0.0 0.7
Equity/share, eur 6.6 5.4 6.1
Equity ratio 45.3 40.2 42.4
Return on equity * 23.2 0.0 11.4
Return on investment * 20.4 4.3 11.0
Interest-bearing net-debt, eur million 8.4 12.5 13.2
Gearing ratio 31.2 56.3 53.0
Capital expenditure, eur million 1.8 0.8 1.8
- in relation to revenue, % 3.0 1.6 1.5
Personnel at the end of period 689 660 632
Average personnel 648 616 626
Revenue/employee, eur thousand 93.0 87.8 191.3
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
30.6.2007 31.12.2006 30.6.2006
Mortgages and shares pledged 15.673 20.739 20.631
Guarantees 0.104 0.115 0.112
Other commitments 0.314 0.323 0.308
RENTAL COMMITMENTS 11.701 9.753 11.092
DEVELOPMENT OF SHARE PRICE 2007 2006 2006
1-6 1-6 1-12
Share price at the end of period, EUR 9.10 6.19 6.50
Highest price, EUR 9.56 8.16 8.16
Lowest price, EUR 6.39 5.99 5.99
Average price, EUR 8.53 7.10 6.82
This interim report has not been audited
Helsinki, August 6, 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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