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2007-08-07 08:00:00 CEST 2007-08-07 08:00:00 CEST REGULATED INFORMATION Martela Oyj - Quarterly reportMARTELA OYJ'S INTERIM REPORT, 1 JANUARY - 30 JUNE 2007Revenue 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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