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2007-10-23 08:00:01 CEST 2007-10-23 08:00:01 CEST REGULATED INFORMATION Martela Oyj - Quarterly reportMARTELA OYJ INTERIM REPORT, 1 JANUARY-30 SEPTEMBER 2007Net 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 -------------------------------------------------------------------------------- | | 1-9 2007 | % | 1-9 2006 | % | Change % | -------------------------------------------------------------------------------- | Finland | 61.0 | 66.6 % | 57.0 | 68.6 % | 7.1 % | -------------------------------------------------------------------------------- | Scandinavia | 19.2 | 21.0 % | 15.9 | 19.2 % | 20.8 % | -------------------------------------------------------------------------------- | Other regions | 11.4 | 12.4 % | 10.1 | 12.2 % | -12.9 % | | 1) | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Total | 91.6 | 100.0 % | 83.0 | 100.0 % | 10.4 % | -------------------------------------------------------------------------------- 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 -------------------------------------------------------------------------------- | | 4/05 | 1/06 | 2/06 | 3/06 | 4/06 | 1/07 | 2/07 | 3/07 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Finland | 20.6 | 19.0 | 18.4 | 19.5 | 26.1 | 19.6 | 20.7 | 20.7 | -------------------------------------------------------------------------------- | Scandinavia | 5.3 | 5.1 | 4.6 | 6.2 | 6.4 | 6.5 | 5.9 | 6.8 | -------------------------------------------------------------------------------- | Other regions | 3.5 | 2.8 | 4,3 | 3.0 | 4.3 | 3.9 | 3.7 | 3.8 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Total | 29.5 | 26.9 | 27.3 | 28.8 | 36.8 | 30.0 | 30.3 | 31.3 | -------------------------------------------------------------------------------- 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 -------------------------------------------------------------------------------- | | 4/05 | 1/06 | 2/06 | 3/06 | 4/06 | 1/07 | 2/07 | 3/07 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Revenue | 29.3 | 26.9 | 27.2 | 28.8 | 36.8 | 29.9 | 30.4 | 31.2 | -------------------------------------------------------------------------------- | Other | 0.5 | 0.2 | 0.6 | 0.1 | 0.5 | 1.7 | 1.3 | 0.0 | | income | | | | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Operating | 1.4 | -0.1 | 0.9 | 0.8 | 2.8 | 1.7 | 2.6 | 1.4 | | profit | | | | | | | | | -------------------------------------------------------------------------------- | Operating | 4.6 % | -0.2 % | 3.2 % | 2.9 % | 7.7 % | 5.6 % | 8.5 % | 4.7 % | | profit % | | | | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Profit | 1.2 | -0.3 | 0.6 | 0.7 | 2.7 | 1.5 | 2.4 | 1.3 | | before | | | | | | | | | | taxes | | | | | | | | | -------------------------------------------------------------------------------- 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 -------------------------------------------------------------------------------- | | 1-9/07 | 1-9/06 | Change % | -------------------------------------------------------------------------------- | Finland | 520 | 499 | 4.2 % | -------------------------------------------------------------------------------- | Scandinavia | 67 | 71 | -5.6 % | -------------------------------------------------------------------------------- | Poland | 67 | 52 | 28.8 % | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Group total | 654 | 622 | 5.1 % | -------------------------------------------------------------------------------- Staff by quarter-year -------------------------------------------------------------------------------- | | 4/05 | 1/06 | 2/06 | 3/06 | 4/06 | 1/07 | 2/07 | 3/07 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Average staff | 593 | 611 | 632 | 636 | 632 | 629 | 660 | 664 | -------------------------------------------------------------------------------- | Staff at end of | 604 | 600 | 660 | 629 | 632 | 628 | 689 | 644 | | period | | | | | | | | | -------------------------------------------------------------------------------- | Revenue/person, | 49.5 | 44.0 | 43.0 | 45.3 | 58.3 | 47.5 | 46.0 | 47.0 | | EUR 1,000 | | | | | | | | | -------------------------------------------------------------------------------- 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 -------------------------------------------------------------------------------- | | 4/05 | 1/06 | 2/06 | 3/06 | 4/06 | 1/07 | 2/07 | 3/07 | -------------------------------------------------------------------------------- | Cash flows | 2.2 | 2.6 | 0.0 | -2.1 | 0.4 | 2.6 | 2.3 | -1.9 | | from | | | | | | | | | | operations | | | | | | | | | -------------------------------------------------------------------------------- | Cash flows | -0.2 | -0.1 | 0.2 | 0.1 | 0.9 | 0.8 | 0.9 | -0.4 | | from | | | | | | | | | | investing | | | | | | | | | -------------------------------------------------------------------------------- | Cash flows | -1.3 | -1.0 | -1.0 | 1.2 | -2.2 | -2.5 | -1.2 | 0.6 | | from | | | | | | | | | | financing | | | | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Change in | 0.6 | 1.5 | -0.7 | -1.0 | -0.9 | 1.0 | 2.0 | -1.8 | | liquid | | | | | | | | | | assets | | | | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Liquid assets | 4.4 | 5.0 | 6.5 | 5.7 | 4.8 | 3.9 | 4.9 | 6.9 | | at | | | | | | | | | | start of | | | | | | | | | | period | | | | | | | | | -------------------------------------------------------------------------------- | Liquid assets | 5.0 | 6.5 | 5.7 | 4.8 | 3.9 | 4.9 | 6.9 | 5.1 | | at end of | | | | | | | | | | period | | | | | | | | | -------------------------------------------------------------------------------- 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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