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2008-10-22 08:00:00 CEST 2008-10-22 08:00:01 CEST REGULATED INFORMATION Martela Oyj - Interim report (Q1 and Q3)MARTELA CORPORATION'S INTERIM REPORT, 1 JANUARY - 30 SEPTEMBER, 2008MARTELA CORPORATION INTERIM REPORT 22.10.2008 at 09.00 a.m. MARTELA CORPORATION'S INTERIM REPORT, 1 JANUARY - 30 SEPTEMBER, 2008 Net revenue for January-September was EUR 100.1 million (91.5), an increase of 9.4 per cent. Operating profit was EUR 7.0 million (5.7), including gains from the sale of assets totalling EUR 0.7 million (2.6). The equity-to-assets ratio was 53.1 per cent (46.0) and gearing was 0.5 per cent (38.9). It is expected that net revenue for the entire year 2008 will exceed last year's level and that operating profit excluding non-recurring items will be better than last year. Key figures -------------------------------------------------------------------------------- | | 7-9 | 7-9 | 1-9 | 1-9 | 1-12 | -------------------------------------------------------------------------------- | EUR million | 2008 | 2007 | 2008 | 2007 | 2007 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Net revenue | 30.7 | 31.2 | 100.1 | 91.5 | 128.4 | -------------------------------------------------------------------------------- | Change in revenue % | -1.8 | 8.4 | 9.4 | 10.3 | 7.3 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Operating profit | 1.9 | 1.6 | 6.3 | 3.1 | 5.8 | | excluding non-recurring | | | | | | | items | | | | | | -------------------------------------------------------------------------------- | Operating profit % | 6.2 | 5.0 | 6.3 | 3.4 | 4.5 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Return on investment, % | | | 21.9 | 18.0 | 19.6 | -------------------------------------------------------------------------------- | Return on equity, % | | | 19.1 | 18.7 | 19.8 | -------------------------------------------------------------------------------- | Equity to asset ratio, % | | | 53.1 | 46.0 | 46.7 | -------------------------------------------------------------------------------- | Gearing, % | | | 0.5 | 38.9 | 16.0 | -------------------------------------------------------------------------------- | Average staff | | | 684 | 654 | 663 | -------------------------------------------------------------------------------- | Revenue/employee (EUR | | | 146.3 | 139.8 | 193.7 | | 1.000) | | | | | | -------------------------------------------------------------------------------- Accounting policies The interim report has been prepared in accordance with IAS 34, Interim Financial Reporting, as approved by the EU. Market The demand for office furniture has been good during the first three quarters of 2008. New office construction has slowed down from 2007 and fewer building permits have been granted than last year, too. 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. 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 100.1 million (91.5), an increase of 9.4 per cent. Large projects carried out during the first quarter contributed to this growth. Net revenue for the third quarter increased to EUR 30.7 million (31.2), showing a decrease of 1.8 per cent. Growth was particularly strong in Finland, and in Poland and its neighbouring areas. Financial performance in Scandinavia has not been according to plan this year, with net revenue decreasing 20.1 per cent. Invoicing by main market areas -------------------------------------------------------------------------------- | | 7-9 | 7-9 | 1-9 | 1-9 | 1-12 | -------------------------------------------------------------------------------- | EUR million | 2008 | 2007 | 2008 | 2007 | 2007 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Finland | 22.4 | 20.7 | 71.9 | 61.0 | 85.8 | -------------------------------------------------------------------------------- | Scandinavia | 4.5 | 6.8 | 15.3 | 19.2 | 26.4 | -------------------------------------------------------------------------------- | Poland and surrounding | 2.9 | 2.4 | 9.5 | 7.3 | 11.1 | | areas | | | | | | -------------------------------------------------------------------------------- | Other areas | 1.0 | 1.4 | 3.4 | 4.1 | 5.4 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Total | 30.8 | 31.3 | 100.1 | 91.6 | 128.7 | -------------------------------------------------------------------------------- Change in invoicing and percentage of consolidated invoicing -------------------------------------------------------------------------------- | | 1-9 | 1-9 | | | 1-12 | | -------------------------------------------------------------------------------- | EUR million | 2008 | 2007 | Change | Percenta | 2007 | Percentag | | | | | | ge | | e | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Finland | 71.9 | 61.0 | 17.8 | 71.8 % | 85.8 | 66.7 % | -------------------------------------------------------------------------------- | Scandinavia | 15.3 | 19.2 | -20.1 | 15.3 % | 26.4 | 20.5 % | -------------------------------------------------------------------------------- | Poland and | 9.5 | 7.3 | 29.7 | 9.5 % | 11.1 | 8.6 % | | surrounding | | | | | | | | areas | | | | | | | -------------------------------------------------------------------------------- | Other areas | 3.4 | 4.1 | -16.1 | 3.4 % | 5.4 | 4.2 % | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Total | 100.1 | 91.6 | 9.3 | 100.0 % | 128.7 | 100.0 % | -------------------------------------------------------------------------------- Consolidated result The consolidated result for the third quarter was according to plan and the operating profit was EUR 1.9 million (1.5). The result for the January-September period shows clear improvement and the operating profit was EUR 7.0 million (5.7). This includes EUR 0.7 million (2.6) in non-recurring income from the sale of assets. The sales gain recognised in early 2008 relates to the sale of land in Poland. The operating profit excluding non-recurring items was EUR 6.3 million (3.1). Profit development has been positive in Finland, and in Poland and its neighbouring areas in 2008. In Scandinavia, a decrease in net revenue has negatively affected the area's profit development. Profit before taxes rose to EUR 6.6 million (5.2), and profit after taxes was EUR 4.4 million (3.7). The operating profit excluding non-recurring items was 6.3 per cent of net revenue (3.4%). Financial position The Group's financial position has still strengthened. At the end of the review period, net interest-bearing liabilities were EUR 11.8 million (15.9), and net debt was EUR 0.1 million (10.8). At the beginning of 2008, net debt was EUR 4.7 million. At the end of the review period, gearing was 0.5 per cent (38.9) and the equity-to-assets ratio was 53.1 per cent (46.0%) Net financial expenses were EUR -0.5 million (-0.5). The net cash generated by operating activities in January-September was EUR 7.3 million (3.0). During the period under review, the company decided to launch a project to reduce working capital. We expect the project to produce results mainly in 2009. The end-of-period balance sheet total was EUR 60.8 million (60.6). Capital expenditure The Group's gross capital expenditure totalled EUR 2.3 million (2.3) in January-September. The capital expenditure mainly concerned production replacements and IT investments. Of the capital expenditure for the comparison period in 2007, EUR 0.7 million was attributable to the ownership rearrangement at the Bodafors plant, as a result of which the long-term lease liability for the part leased back by Martela was activated in the consolidated balance sheet in accordance with the IFRS. Staff In January-September, the Group employed an average of 684 (654) persons, representing growth of 4.6 per cent. At the end of September, the Group employed 673 (644) persons. Average staff by region -------------------------------------------------------------------------------- | Average staff by region | | | | -------------------------------------------------------------------------------- | | 1-9 | 1-9 | 1-12 | -------------------------------------------------------------------------------- | | 2008 | 2007 | 2007 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Finland | 522 | 520 | 518 | -------------------------------------------------------------------------------- | Scandinavia | 72 | 67 | 71 | -------------------------------------------------------------------------------- | Poland | 90 | 67 | 74 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Group total | 684 | 654 | 663 | -------------------------------------------------------------------------------- Product development and collection Product development and collection management are the responsibility of two Group-level organisations: the Office product line, which is responsible for workstation furniture, and the Surroundings product line, which is responsible for surroundings and other public-space furniture. At the Stockholm Furniture Fair in February, Martela exhibited new products representing both product lines, as well as two fascinating new concepts. The exhibited new pieces of workstation furniture were the James task chair designed by Iiro Viljanen and the Pinta ES, the newest member of the Pinta range, by Pekka Toivola and Iiro Viljanen. New surroundings furniture displayed for the first time featured the Skybar chair designed by Geir Sætveit and the Movie sofa by Rane Vaskivuori. The concepts presented by Martela in Stockholm were favourably received; both the Mybox desk by Iiro Viljanen and the Book shelf/space divider by Pekka Toivola aroused discussion and interest, as had been hoped for. At the Milan Furniture Fair in April, Martela set up its own exhibition with the theme ‘under THE tree'. The exhibition was named after The Tree space divider, designed by Professor Eero Aarnio. Shares During January-September, 625,159 (1,080,853) of the company's A shares were traded on NASDAQ OMX Helsinki, corresponding to 17.6 per cent (30.4) of all A shares. The higher trading figure of the comparison period in 2007 was due partly to the acquisition of shares by Evli Alexander Management Oy for the three-year share-based incentive system. At that time, 143,166 shares were acquired for EUR 1.2 million. The value of trading was EUR 5.5 million (9.3), and the share price was EUR 8.35 at the beginning of the year and EUR 7.52 at the end of the period. During January-September the share price was EUR 10.05 at its highest and EUR 7.32 at its lowest. At the end of September, equity per share was EUR 7.87 (6.80). On 23 May 2008, Nordea Investment Fund Company Finland Ltd announced that its holding in Martela Oyj fell to 0.57 per cent following a share transaction made on 22 May, 2008. Treasury shares The company did not purchase any of its own shares in January-September. On 30 September 2008, Martela owned a total of 67,700 Martela A shares, 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 0.4 per cent of all votes. 2008 Annual General Meeting The Annual General Meeting was held on 1 April 2008. The meeting approved the financial statements and discharged the responsible parties from liability for the 2007 financial year. The AGM decided, in accordance with the Board of Directors' proposal, to distribute a dividend of EUR 0.50 per share, totalling EUR 2,043,950. Heikki Ala-Ilkka, Tapio Hakakari, Heikki Martela, Pekka Martela, Jori Keckman and Jaakko Palsanen were elected as members of the Board of Directors for the next term. KPMG Oy Ab, Authorised Public Accountants, was elected as the company's 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. Furthermore, the AGM decided, in accordance with the Board of Directors' proposal, to amend the company's Articles of Association pursuant to the new Companies' Act, which entered into force on 1 September, 2006. The new Board of Directors convened after the Annual General Meeting and elected Heikki Ala-Ilkka as Chairman and Pekka Martela as Vice Chairman. 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 risks The greatest risk to profit performance is related to the continuation of general economic growth and the consequent overall demand for office furniture. The price trends of purchased materials and components also affect the short-term outlook. The 2007 annual report presents the risks related to Martela's business operations in more detail. Outlook for 2008 The overall outlook for 2008 is still favourable, thanks to, among other things, the positive trend in sales and profit. The operating profit excluding non-recurring items is expected to be better in 2008 than in 2007. GROUP INCOME STATEMENT (EUR 1000) 2008 2007 2008 2007 2007 1-9 1-9 7-9 7-9 1-12 Revenue 100.076 91.453 30.657 31.213 128.445 Other operating income 1.141 2.955 0.160 -0.006 3.023 Employee benefits expenses -23.070 -20.889 -6.822 -6.332 -28.723 Operating expenses -68.802 -65.417 -21.188 -22.578 -91.236 Depreciation and impairment -2.312 -2.406 -0.856 -0.842 -3.231 Operating profit/loss 7.032 5.696 1.951 1.455 8.278 Financial income and expenses -0.457 -0.544 -0.195 -0.224 -0.726 Profit/loss before taxes 6.575 5.152 1.757 1.231 7.552 Income tax -2.141 -1.451 -0.808 -0.541 -2.165 Profit/loss for the period 4.435 3.701 0.948 0.690 5.387 Basic earnings per share, eur 1.08 0.91 0.23 0.17 1.32 Diluted earnings per share, eur 1.08 0.91 0.23 0.17 1.32 GROUP BALANCE SHEET (EUR 1000) 30.9.2008 31.12.2007 30.09.2007 ASSETS Non-current assets Intangible assets 0.718 0.633 0.748 Tangible assets 13.841 14.151 13.936 Investments 0.039 0.053 0.054 Deferred tax assets 0.245 0.240 0.247 Pension receivables 0.035 0.035 0.018 Receivables 0.630 0.623 0.000 Investment properties 0.600 1.203 1.174 Total 16.108 16.938 16.177 Current assets Inventories 13.505 13.635 13.654 Receivables 19.537 23.536 25.650 Financial assets at fair value 2.031 2.004 1.987 through profit and loss Cash and cash equivalents 9.588 7.686 3.137 Total 44.661 46.861 44.428 Total assets 60.770 63.800 60.605 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 0.117 0.117 0.117 Translation differences -0.093 -0.129 -0.136 Retained earnings 24.552 22.060 20.376 Treasury shares -0.721 -0.721 -0.721 Share-based incentives 0.210 0.067 0.050 Total 32.181 29.510 27.802 Non-current liabilities Interest-bearing liabilities 8.989 10.453 11.215 Deferred tax liability 1.477 1.553 1.070 Total 10.466 12.006 12.285 Current liabilities Interest-bearing 2.777 3.969 4.711 Non-interest bearing 15.346 18.315 15.807 Total 18.123 22.284 20.518 Total liabilities 28.589 34.290 32.803 Equity and liabilities, total 60.770 63.800 60.605 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 and share- based inc. 01.01.2007 7.000 1.116 0.117 -0.129 17.542 -0.721 24.925 Translation diff. -0.007 -0.007 Other change 0.205 0.205 Profit/loss for 3.701 3.701 the period Total rec. income -0.007 3.906 3.899 and expense Dividends -1.022 -1.022 30.09.2007 7.000 1.116 0.117 -0.136 20.426 -0.721 27.802 1.1.2008 7.000 1.116 0.117 -0.129 22.127 -0.721 29.510 Translation diff. 0.036 0.036 Other change 0.244 0.244 Profit/loss for 4.435 4.435 the period Total rec. income and expense 0.036 4.679 4.715 Dividends -2.044 -2.044 30.09.2008 7.000 1.116 0.117 -0.093 24.762 -0.721 32.181 CONSOLIDATED CASH FLOW STATEMENT (EUR 1000) 2008 2007 2007 1-9 1-9 1-12 Cash flows from operating activities Cash flow from sales 102.768 91.484 130.833 Cash flow from other operating income 0.392 0.331 0.550 Payments on operating costs -93.953 -88.166 -121.090 Net cash from operating activities before financial items and taxes 9.207 3.649 10.294 Interest paid -0.544 -0.564 -0.842 Interest received 0.175 0.033 0.082 Other financial items -0.048 -0.022 -0.021 Dividends received - 0.001 0.001 Taxes paid -1.500 -0.070 0.382 Net cash from operating activities (A) 7.289 3.027 9.895 Cash flows from investing activities Capital expenditure on tangible and intangible assets -1.928 -1.623 -2.256 Proceeds from sale of tangible and intangible assets 1.602 4.068 2.028 Proceeds from sale of shares in subsidiaries - - 2.150 Loans granted - -1.193 -1.193 Repayments of loans receivables 0.022 0.011 0.011 Net cash used in investing activities (B) -0.303 1.263 0.740 Cash flows from financing activities Proceeds from short-term loans - 0.965 0.976 Repayments of short-term loans -0.627 -0.424 -1.704 Repayments of long-term loans -2.506 -2.599 -3.108 Dividends paid and other profit distribution -1.972 -1.022 -1.022 Net cash used in financial activities (C) -5.105 -3.080 -4.858 Change in cash and cash equivalents (A+B+C) 1.881 1.210 5.778 (+ increase, - decrease) Cash and cash equivalents at the beginning of period 9.691 3.911 3.911 Translation differences 0.048 0.003 0.002 Cash and cash equivalents at the end of period 11.619 5.125 9.691 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 1.1-30.9.2008 Land Buildings Machinery Other Work in areas & equipment tangibles progress Acquisitions 0.000 0.028 2.003 0.021 -0.132 Decreases 0.000 -0.008 -0.127 0.000 0.000 TANGIBLE ASSETS 1.1-30.9.2007 Land Buildings Machinery Other Work in areas & equipment tangibles progress Acquisitions 0.000 1.009 0.797 0.059 0.130 Decreases -0.616 -0.991 -0.027 0.000 0.000 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. KEY FIGURES/RATIOS 2008 2007 2007 1-9 1-9 1-12 Operating profit/loss 7.032 5.696 8.278 - in relation to revenue 7.0 6.2 6.4 Profit/loss before taxes 6.575 5.152 7.552 - in relation to revenue 6.6 5.6 5.9 Profit/loss for the period 4.435 3.701 5.387 - in relation to revenue 4.4 4.0 4.2 Basic earnings per share, eur 1.08 0.91 1.32 Diluted earnings per share, eur 1.08 0.91 1.32 Equity/share, eur 7.87 6.80 7.22 Equity ratio 53.1 46.0 46.7 Return on equity * 19.1 18.7 19.8 Return on investment * 21.9 18.0 19.6 Interest-bearing net-debt, eur million 0.1 10.8 4.7 Gearing ratio 0.5 38.9 16.0 Capital expenditure, eur million 2.3 2.3 3.2 - in relation to revenue, % 2.3 2.5 2.5 Personnel at the end of period 673 644 655 Average personnel 684 654 663 Revenue/employee, eur thousand 146.3 139.8 193.7 Key figures are calculated according to formulae as presented in Annual Report 2007. * When calculating return on equity and return on investment the profit/loss for the period has been multiplied in interim reports. CONTINGENT LIABILITIES 30.9.2008 31.12.2007 30.9.2007 Mortgages and shares pledged 17.055 18.851 18.929 Guarantees 0.000 0.000 0.100 Other commitments 0.267 0.317 0.314 RENTAL COMMITMENTS 9.399 10.674 11.016 DEVELOPMENT OF SHARE PRICE 2008 2007 2007 1-9 1-9 1-12 Share price at the end of period, EUR 7.52 9.31 8.35 Highest price, EUR 10.05 10.35 10.35 Lowest price, EUR 7.32 6.39 6.39 Average price, EUR 8.85 8.62 8.64 This interim report has not been audited Helsinki, 21 October 2008 Martela Corporation Board of Directors Heikki Martela CEO Additional information Heikki Martela, CEO, tel. +358 50 502 4711 Mats Danielsson, Finance Director, tel. +358 50 394 8575 Distribution NASDAQ OMX Nordic Main news media www.martela.com |
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