2011-11-04 08:30:00 CET
2011-11-04 08:30:09 CET
REGULATED INFORMATION
Tiimari Oyj Abp - Interim report (Q1 and Q3)
TIIMARI PLC'S INTERIM REPORT 1 January to 30 September 2011
TIIMARI PLC Interim Report 4 November 2011 at 09:30 a.m.
TIIMARI PLC'S INTERIM REPORT 1 January to 30 September 2011
THE STRENGTHENING OF GROUP'S EQUITY DURING THE THIRD QUARTER IMPROVED THE
GROUP'S LIQUIDITY AND STRENGTHENED EQUITY RATIO SIGNIFICANTLY
The subscription rights issue and directed share issue in September 2011
resulted in a EUR 34.1 million net increase in equity, raising the equity ratio
to 42.5% (4.2% on 30 June 2011) and net gearing improved to 43.5 % (1 417 % on
30 June 2011).
Tiimari Group's revenue for the first nine months of the year was 2.3 % lower
than a year ago.
Tiimari Group's revenue for the third quarter of the year was 2.5 % higher than
a year ago. The operating profit for the third quarter was lower than during
the comparison period and estimated due the clearance sale of discontinued
items to clearance sales and problems with the availability and sufficiency of
products.
THE THIRD QUARTER OF 2011 IN BRIEF
- Revenue grew by 2.5% to EUR 15.8 million (15.4)
- Gross margin was EUR 8.2 million (8.1), equalling 52.2% (52.8%)
- EBITDA was EUR -4.1 million (-2.8)
- Operating profit (EBIT) was EUR -4.6 million (-3.6)
- Income before taxes was EUR -10.3 million (-4.2)*
- Earnings per share (EPS) were EUR -0.50 (-0.24)*
REVIEW PERIOD (9 MONTHS) 2011 IN BRIEF
- Revenue fell by 2.3% to EUR 44.8 million (45.9)
- Gross margin was EUR 23.8 million (26.1), equalling 53.1% (56.9%)
- EBITDA was EUR -11.9 million (-6.9)
- Operating profit (EBIT) was EUR -13.6 million (-9.4)
- Income before taxes was EUR -20.3 million (-10.9)*
- Earnings per share (EPS) were EUR -1.13 (-0.65)*
- Equity ratio was 42.5% (21.3%)
-Net gearing ratio was 43.5 % (237.6 %)
-Interest-bearing net liabilities were EUR 13.5 (38.7)
* As a result of the share issues, EUR 4.9 million of non-recurring costs were
included in other financing costs in the consolidated financial statement in
accordance with IAS 32 and 39 and IFRIC 19. The cost had no impact on cash
flow, consolidated statements of cash flow and the Group's shareholders'
equity.
The figures in this Interim Report are unaudited.
GROUP KEY FINANCIAL
FIGURES
EUR 1 000
7-9/11 7-9/10 Chg % 1-9/11 1-9/10 Chg % 1-12/10
REVENUE 15 763 15 382 2,5 % 44 825 45 866 -2,3 % 75 797
GROSS PROFIT 8 234 8 120 1,4 % 23 815 26 081 -8,7 % 43 834
EBITDA -4 098 -2 830 -44,8 % -11 891 -6 949 -71,1 % -2 571
OPERATING PROFIT -4 596 -3 620 -27,0 % -13 592 -9 352 -45,3 % -12 613
EARNINGS PER SHARE -0,50 -0,24 -106,3 % -1,13 -0,65 -74,5 % -0,89
EUR
SOLVENCY RATIO 42,5 % 21,3 % 18,9 %
GEARING 43,5 % 237,6 % 208,5 %
AVERAGE NUMBER OF 635 568 11,8 % 592 579 2,2 % 591
PERSONNEL
TIIMARI OUTLOOK FOR 2011
Due to the weaker than expected third-quarter profit development Tiimari adjust
the full-year forecast of EBITDA provided in the Interim Report for the second
quarter of 2011.
We estimate that during 2011, the declining trend in Tiimari's revenue,
reported on a monthly basis, will cease and that Tiimari's full-year EBITDA for
2011 will be negative (2010:EUR -1.3 million) and significantly lower than last
year .The revenue of Gallerix is forecast to grow and its EBITDA is anticipated
to be positive and better than in 2010 (2010:EUR 0.1 million).
We estimate earlier that during 2011, the declining trend in Tiimari's revenue,
reported on a monthly basis, will cease and that Tiimari's full-year EBITDA for
2011 will be negative (2010:EUR -1.3 million) and lower than last year. The
revenue of Gallerix is forecast to grow and its EBITDA is anticipated to be
positive and better than in 2010 (2010: EUR 0.1 million).
COMMENTS FROM THE MANAGING DIRECTOR
The Group's extensive financial restructuring process was completed during the
third quarter. As a result of the restructuring, the company's equity ratio
improved considerably, annual financial expenses will decrease and new capital
was raised for the improvement of the company's business. However, it will take
a few months to recover from the challenging financial situation of the first
part of the year, after which the company's operating models are expected to
return to normal.
In the third quarter, the company started to gradually implement its new
strategy. Starting in July, purchases from the Far East were increased, four
new stores were opened in Finland and the Tiimari chain's marketing concepts in
particular were updated. Many development projects targeted at 2012 were
launched, relating to product group management, product ranges and a new store
concept. In accordance with its new strategy, Gallerix continued taking over
franchise shops.
The Tiimari segment's declining trend in sales is ceasing. In the latter part
of the third quarter in August and September, sales developed positively with
the exception of the Juhla (“Party”) range, which was launched on a large scale
last year and is now being refocused. The number of customers at Finnish
Tiimari shops has generally continued to increase since August. Problems with
the availability and sufficiency of products and the clearance sale of
discontinued items have still had a negative impact on total sales and gross
profit. The clearance sale will continue till the end of 2011.
The Gallerix chain's sales trend continued to be positive in the third quarter.
In particular, this was due to the increased number of shops operated directly
by Gallerix.
The current fourth quarter is critical for the company's full-year performance.
The holiday seasons of the fourth quarter (Halloween and Christmas) usually
account for about 40 % of the company's annual revenue.
GROUP REVENUE AND PROFIT DEVELOPMENT
When assessing Tiimari group's revenue and profit development in the review
period, it must be kept in mind that they are strongly influenced by seasonal
changes. Because of this, Tiimari's result for the first three quarters has
traditionally been non-profitable and the result for the fourth quarter
significantly profitable in comparison.
Group revenue for the review period 1 January to 30 September 2011 fell by 2.3
% to EUR 44.8 million (45.9). In the third quarter, revenue increased by 2.5%
to EUR 15.8 million (15.4). The Group's declining trend in revenue is showing
signs of improvement. In the last two quarters, revenue has increased by 5.6%
year-on-year.
In the review period 1 January to 30 September 2011, the gross margin fell to
EUR 23.8 million (26.1), equalling 53.1% (58.9%). The gross margin for the
third quarter was 52.2% (52.8%). Problems with the availability and sufficiency
of products and the clearance sale of discontinued items have had a negative
impact on gross profit. The clearance sale will continue till the end of 2011.
EBITDA for the review period 1 January to 30 September 2011 fell to EUR -11.9
million (-6.9). The Group's EBITDA for the third quarter was EUR -4.1 million
(-2.8). Tiimari Group's most important cost items are personnel and rental
costs. They have accounted for about 80 % of the Group's fixed costs. The
Group's fixed costs in the review period 1 January to 30 September 2011
increased by 8 % and personnel costs by 10 % year-on-year. For Gallerix,
personnel costs for the first nine months of 2011 increased by 42 %, due to the
increased number of shops operated directly by Gallerix. The Tiimari segment's
costs increased by 4.7%.
The operating profit for the review period 1 January to 30 September 2011
decreased to EUR -13.6 million (-9.4).The Group's third quarter operating
profit declined to EUR -4.6 million (-3.6).
Net financial expenses during the review period 1 January to 30 September 2011
were EUR -6.7 million (-1.6). In the third quarter, net financial expenses
amounted to EUR -5.7 million (-0.6). They included a non-recurring cost of EUR
4.9 million resulting from the share issues, recognised in other financial
expenses in accordance with IAS 32 and 39 and IFRIC 19. This cost had no impact
on cash flow and the Group's shareholders' equity. However, the cost influenced
the result before taxes, the profit for the period and the performance-based
key figures. Net income for the review period 1 January to 30 September 2011
was EUR -20.3 million (-10.7), and earnings per share were EUR -1.13 (-0.65).
Earnings per share for the third quarter were EUR -0.50 (-0.24).
Tiimari group's result for the review period 1 January to 30 September 2011
included about EUR 1.6 million of non-recurring costs (2.95). Of the
non-recurring costs, EUR 1.4 million had an effect on the company's EBITDA and
EUR 0.2 million on depreciation. In addition, as a result of the share issues,
EUR 4.9 million of non-recurring costs recognised in accordance with IAS 32 and
39 and IFRIC 19 had an effect on the company's financial expenses.
Tiimari group's result for the third quarter included a total of EUR 0.5
million in non-recurring costs (2.95). Of the non-recurring costs, EUR 0.3
million were related to an equalisation premium, EUR 0.1 million to costs
resulting from personnel changes in the company management and EUR 0.1 million
to transfers of the business operations of Gallerix franchise shops. In
addition, as a result of the share issues, EUR 4.9 million of non-recurring
costs recognised in accordance with IAS 32 and 39 and IFRIC 19 had an effect on
the company's financial expenses.
REVENUE AND PROFIT DEVELOPMENT BY OPERATING SEGMENT
The Tiimari Group comprises two leading retail shop concepts, Tiimari and
Gallerix. They are reported as separate segments. In addition, the Others
segment includes common expenses for the Group (i.a. senior management).
TIIMARI
The Tiimari segment comprises all the Tiimari concept shops in Finland and the
Baltic countries. The segment revenue for the review period 1 January to 30
September 2011 declined by 7.3 % to EUR 34.1 million (36.8). The Tiimari
segment's gross margin for the review period 1 January to 30 September 2011 was
EUR 19.0 million (EUR 22.4 million), representing 55.6% (60.9%) of revenue. In
early 2011 the gross margin percentage was lower than during the comparison
period because of changes in the distribution of sales, higher realised
purchase prices and, simultaneously, lower sales prices partly due to clearance
sales. The Tiimari segment's revenue for the third quarter was EUR 12.2 million
and gross margin for the third quarter was EUR 6.7 million (7.0), representing
55.1 % (56.0%) of revenue.
The Tiimari segment's EBITDA for the review period 1 January to 30 September
2011 decreased to EUR -10.5 million (-5.6). In the third quarter, the Tiimari
segment's EBITDA was EUR -3.2 million (-2.3). The operating profit for this
segment in the review period decreased to EUR -11.6 million (-7.2). EBITDA and
the operating profit was undermined by a decrease in sales in comparison with
the corresponding period last year as well as by a simultaneous decline in
margins.
On 30 September 2011, the number of stores operated by the company was 191
(185), of which 172 (166) were in Finland.
GALLERIX
The Gallerix segment comprises the Gallerix concept shops in Sweden. In
accordance with Gallerix's strategy, the company has continued to increase the
number of shops operated directly by Gallerix. The goal is to increase
shop-specific sales, harmonise the product ranges in the shops and increase the
proportion of centralised purchasing and in this way to improve the
profitability of the entire chain. A strategic goal is to increase the number
of retail shops operated directly by Gallerix. On 30 September 2011, Gallerix
operated a total of 35 shops (11 shops on 30 September 2010,14 shops on 31
December 2010) and franchise entrepreneurs operated 48 shops.
Following the transition, revenue and gross profits of the Gallerix segment
have developed favourably. However, at the same time personnel and rental
expenses and the inventory level have increased.
Gallerix's revenue for the review period 1 January to 30 September 2011 rose by
18.4 % to EUR 10.7 million (9.1). In Gallerix retail shops, comparable sales
development in local currency was 1.9 % for the first nine months of the year.
Gallerix's revenue for the third quarter was EUR 3.6 million (2.9).
The Gallerix segment's gross margin improved during the review period 1 January
to 30 September 2011 to EUR 4.8 million (3.6), representing 44.9% (39.9%) of
revenue. The improvement in gross margin resulted mainly from the increased
number of shops operated directly by Gallerix and the decrease in the number of
franchise shops. The Gallerix segment's gross margin for the third quarter was
EUR 1.5 million (1.1), representing 42.4 % (37.5 %) of revenue.
The Gallerix segment's EBITDA for the review period 1 January to 30 September
2011 was EUR -0.7 million (-0.3). The decrease was a result of costs related to
the acquisition and taking over of franchise shops. The Gallerix segment's
EBITDA for the third quarter was EUR -0.7 million (-0.3).
The Gallerix segment's operating profit declined to EUR -1.2 million (EUR -1.0
million) during the review period 1 January to 30 September 2011, representing
-11.6% (-10.6%) of revenue. The Gallerix segment's operating profit for the
third quarter was EUR -0.7 million (0.5).
OTHERS
Other operations include common expenses for the Group and senior management
(Board of Directors, Managing Director and Chief Financial Officer). All
operating and personnel costs related to business management were allocated to
the segments in the review period 1 January to 30 September 2011. No revenue
was recorded for Other operations during the period. The costs of Other
operations decreased year-on-year and amounted to EUR 0.8 million (1.2). The
costs of Other operations for the third quarter were EUR 0.17 million (0.25).
BALANCE SHEET, FINANCIAL POSITION AND CASH FLOW
In the third quarter, the company arranged a directed share issue and a rights
issue, which strengthened the Group's equity by EUR 34.1 million in net terms.
EUR 10.0 million of the subscription payments relating to the subscriptions
made in the rights issue was paid in cash and EUR 3.0 million was paid by
offsetting loan receivables from the company. As a result of the directed
issue, the company's interest-bearing liabilities decreased by EUR 21.9
million. The subscription price of new shares was entered in the invested
unrestricted equity reserve. The Group's equity ratio strengthened, reaching
42.5% on 30 September 2011, compared with 18.9% on 31 December 2010. The
Group's equity was EUR 31.1 million on 30 September 2011, compared with EUR
12.5 million on 31 December 2010. Equity was decreased by the loss for the
review period 1 January to 30 September 2011. Equity per share was EUR 0.08 on
30 September 2011, compared with EUR 0.76 on 31 December 2010.
The Group's non-current assets on 30 September 2011 amounted to EUR 44.2
million, a decrease of EUR 1.6 million compared with EUR 45.8 million on 31
December 2010. The decrease resulted mainly from the depreciation according to
plan.
The net working capital for the Group on 30 September 2011 was EUR 6.7 million,
compared with EUR -1.6 million on 31 December 2010. The net working capital is
affected by the seasonal fluctuations in the operations, so that there is an
increase during the year and a reduction by the end of the financial year.
Because of the seasonal fluctuation, net working capital is not comparable to
the situation on 31 December 2010.
The Group's non-current liabilities on 30 September 2011 amounted to EUR 8.0
million, a decrease of EUR 13.7 million compared with EUR 21.6 million on 31
December 2010. Non-current liabilities were particularly decreased by the EUR
11.0 million repayment of non-current interest-bearing loans from financial
institutions within the directed share issue in September 2011. The Group's
current liabilities on 30 September 2011 totalled EUR 34.1 million, compared
with EUR 31.9 million on 31 December 2010. Interest-bearing non-current
liabilities decreased EUR -14.0 million. Interest-bearing current liabilities
increased by EUR 5.7 million to EUR 17.4 million, compared with EUR 11.7
million on 31 December 2010. This was due to the increase in seasonal financing
needed to finance the seasonal increase in working capital.
The Group's interest-bearing net liabilities on 30 September 2011 amounted to
EUR 13.5 million, compared with EUR 26.0 on 31 December 2010. The decrease was
mainly a result of the directed share issue which was arranged in September
2010 and used for conversion of EUR 21.9 million in interest-bearing
liabilities to equity. The Group's gearing on 30 September 2011 was 43.5%,
compared with 208.5% on 31 December 2010.
The covenants of the bank financing agreement renewed in connection with the
company's financial restructuring in September 2011 were met on 30 September
2011. The parties have agreed that the levels of the financing agreement
covenants for the period 2011-2014 will be specified by 31 December 2011.
In order to strengthen its financial position, Gallerix negotiated additional
debt financing of EUR 0.3 million in the third quarter.
Cash flow from operations in the review period 1 January to 30 September 2011
was EUR -21.3 million (-15.1).The negative figure resulted from the
non-profitability of business operations and changes in working capital. Cash
flow from investing activities in the review period 1 January to 30 September
2011 was EUR -0.2 million (-0.7). Cash flow from financing in the review period
1 January to 30 September 2011 was EUR 25.7 million (15.3). A total of EUR 13.0
million worth of new shares was subscribed in the rights issue in September
2011 and EUR 21.9 million worth of new shares was subscribed in the directed
share issue. Funds acquired from the directed issue were used for the repayment
of the company's interest-bearing liabilities. As a result of the rights issue
in September, the Group's cash and cash equivalents increased by EUR 4.2 and
totalled EUR 5.8 million on 30 September, compared with EUR 1.6 million on 31
December 2010.
On 30 September 2011, the company had EUR 0.2 million of unused credit
facilities based on the company's debt financing agreement valid on 30
September 2011. The company announced on 10 June 2011 that it is considering
and investigating the option to sell the Gallerix business in order to improve
the financial situation.
INVESTMENTS
No significant investments were made during the period. The Group's investments
in the review period amounted to EUR 0.2 million (EUR 0.5 million).
The Tiimari segment's investments were EUR 0.1 million (0.5) in the review
period 1 January to 30 September 2011 and EUR 0.1 million (0.2) in the third
quarter. The Gallerix segment's investments were EUR 0.1 million (0.0) in the
review period 1 January to 30 September 2011 and EUR 0.0 million (0.0) in the
third quarter.
PERSONNEL
The average number of personnel in the review period 1 January to 30 September
2011 was 592 (582).The numbers have been altered to reflect the share of
full-time employees.The majority of the shop personnel are part-time
employees.Tiimari Retail Ltd is the biggest employer in the Group, employing
470 (440) people on 30 September 2011.
SHARES AND SHARE CAPITAL
Tiimari shares are subject to public trading on the NASDAQ OMX Helsinki Plc
stock exchange.The closing price of a Tiimari share on 30 September 2011 was
EUR 0.10 (1.28), and the market value of the company was EUR 40.4 million
(21.1).The company's share capital on 30 September 2011 was EUR 7,686,200 and
the number of shares was 404,275,522. A total of 387,800,767 new shares were
subscribed in the rights issue and directed share issue in September 2011. The
subscription price of new shares was entered in the invested unrestricted
equity reserve. Thus, the share capital remained unchanged. At the end of the
review period, the company did not hold any of its own shares.
DECISIONS OF THE EXTRAORDINARY MEETING OF TIIMARI PLC'S SHAREHOLDERS ON 1 JULY
2011 (Stock Exchange Release, 1 July 2011, www.tiimari.com)
In accordance with the Board of Directors' proposal, the Extraordinary Meeting
of Tiimari Plc's Shareholders held on 1 July 2011 authorised the Board of
Directors to decide on the issuance of a maximum of 428,969,771 new shares in
two share emissions.The authorisation corresponded to approximately 2,600 per
cent of the total number of the company's registered shares at the time of
deciding on the authorisation.The purpose of the authorisation was to
strengthen the company's balance sheet and financial position and ensure the
continuation of the company's business operations, and it covered the share
emissions arranged in September 2011, relating to the company's refinancing
plan published on 10 June 2011.
The Extraordinary Meeting of Shareholders held on 1 July 2011 also made the
decision to elect Hannu Ryöppönen, Juha Mikkonen, Alexander Rosenlew, Benedict
Wrede and Mia Åberg to the company's Board of Directors.The decision regarding
the change in the composition of the Board of Directors was conditional and
required the company to complete the emissions (as defined in the authorisation
given by the Extraordinary Meeting of Shareholders on 1 July 2011) by 31
October 2011.
SHARE ISSUES
Under the authorisation received on 1 July 2011 from the Extraordinary Meeting
of Shareholders, on 30 August 2011 Tiimari Plc's Board of Directors decided on
the arrangement and conditions of a rights issue amounting to a maximum of EUR
14.8 million and a directed share issue amounting to a maximum of EUR 23.8
million. EUR 13.0 million worth of new shares were subscribed in the rights
issue and EUR 21.9 million worth of new shares were subscribed in the directed
issue. Before the share emissions, the number of the shares totalled 16,474,755
and after the share emissions 404,275,522 (Stock Exchange Release, 27 September
2011 www.tiimari.com)
BOARD OF DIRECTORS
The Extraordinary Meeting of Shareholders held on 1 July 2011 decided to elect
Hannu Ryöppönen, Juha Mikkonen, Alexander Rosenlew, Benedict Wrede and Mia
Åberg to the company's Board of Directors. The decision ceased to be
conditional and the change in the composition of the Board became effective on
29 September 2011. In its organisation meeting, the new Board of Directors
elected Benedict Wrede as its chairman and Juha Mikkonen as its vice chairman.
Benedict Wrede was elected chairman of the Appointment and Remuneration
Committee of the Board and Alexander Rosenlew and Mia Åberg were elected
members of this committee. Juha Mikkonen was elected chairman of the Audit
Committee and Benedict Wrede and Mia Åberg were elected members.
MANAGEMENT
The Board of Directors appointed Niila Rajala, MBA, (born 1964) as the new
Managing Director of Tiimari Plc as of 17 May 2011. Chief Financial Officer Kai
Järvikare resigned on 31 August 2011 (Stock Exchange Release, 13 June 2011,
www.tiimari.com). On 12 September 2011, the Board appointed Jarmo Kanervo,
M.Sc. Econ., (born 1954) as Tiimari Plc's acting CFO and member of the
Management Group.The appointment was temporary, lasting until the company had
recruited a new permanent CFO.On 25 October 2011, the company decided to
appoint Jarmo Kanervo as the Chief Financial Officer.
SHORT-TERM BUSINESS-RELATED RISKS AND UNCERTAINTIES
The Group's revenue and results development, financial position and cash flows
are affected by several uncertainties related to the business operations. The
main risks relate to the following factors:
-- failure in the development or implementation of company strategy may have a
negative effect on the company's future growth and profitability and
endanger the continuation of business operations
-- unsuccessful measures to develop business operations, sales and
profitability in accordance with the new business operations plan
-- choosing product ranges that do not meet consumers' expectations and
failure in renewals of store concept
-- seasonal fluctuations in income and cash flow
-- exchange rate fluctuations
-- problems relating to the availability of products and the reliability of
the supply chain (logistics and product flow risks)
-- exposure of the company to impairment of goodwill and intangible assets
-- decline in the general financial situation and consumer demand in the
company's geographic operating areas
-- general changes in interest rates
-- unsuccessful liquidity and refinancing risk management
The operational risks and uncertainties of the company have been presented in
more detail in the registration document and securities notes for the rights
issue and directed share issue, dated 30 August 2011, and in the 2010 financial
statements, and no significant changes in risks have occurred since.
EVENTS AFTER THE PERIOD UNDER REVIEW
On 12 September 2011, the Board of Directors appointed Jarmo Kanervo, M.Sc.
Econ., as the company's acting CFO, and on 25 October 2011 the Board appointed
him as the company's Chief Financial Officer.
The company and the company's main financier bank have agreed that the levels
of financing covenants for the financial period ending on 31 December 2011 and
future financial periods will be specified by the partners by 31 December 2011.
Board of Directors
TiimariPlc
Further information:
Managing Director, Niila Rajala, +358 (0)3 812911, niila.rajala@tiimari.fi
Chief Financial Officer, Jarmo Kanervo, +358 (0)3 812911,
jarmo.kanervo@tiimari.fi
Distribution:
NASDAQ OMX Helsinki
important news media
www.tiimari.com
Tiimariplc is a listed company.The Group consists of two retail store concepts:
Tiimari and Gallerix.The concepts operate around 300 shops in five countries
around the Baltic Sea region. Both concepts are forerunners in their respective
fields.
NOTES TO THE FINANCIAL STATEMENTS, 1 JANUARY 2011-30 SEPTEMBER 2011
Basis of preparation
This Interim Report was prepared in accordance with the IFRS accounting
standards, but in the preparation all IAS 34 standard requirements have not
been fulfilled. As of the beginning of the financial year, the company has
implemented new or revised IFRS standards and IFRIC interpretations, as
described in the financial statements of 2010. The implementation of these new
and revised standards and interpretations does not have an impact on the
figures reported. Otherwise, the same accounting principles and calculation
methods as in the previous annual financial statements have been applied.
The preparation of financial statements in accordance with IFRS requires
Tiimari's management to use estimates and assumptions that affect amounts of
assets and liabilities at the time of the preparation as well as amounts of
income and expenses in the financial period. Inventory valuation is based on
regular stocktaking which is the foundation for the management of the goods
flow process. As a general rule, shops do not order goods directly but their
inventories are replenished automatically through the logistics system.
Time-based mechanical devaluations (30 months 25%, 36 months 50% and 42 months
100%) were abandoned in the beginning of this year as we moved into
comprehensive product life cycle management in a systematic goods flow process.
Specific write-offs are made, when necessary.
Furthermore, discretion is needed in the application of financial statement
accounting principles. Estimates and assumptions are based on knowledge at the
time of the Interim Report and consequently include risks and uncertainties.
Actual results may differ from the estimates and assumptions made. The figures
in the income statement and the balance sheet are for the entire Group. The sum
of individual figures may deviate from the presented total figures as the
figures in this document have been rounded. This Interim Report is unaudited.
CONSOLIDATED INCOME STATEMENT
eur 1 000 7-9/2011 7-9/2010 1-9/2011 1-9/2010 1-12/201
0
SALES 15 763 15 382 44 825 45 866 75 797
Cost of goods sold -7 529 -7 262 -21 010 -19 785 -31 963
Gross profit 8 234 8 120 23 815 26 081 43 834
Gross profit, % 52 % 53 % 53 % 57 % 58 %
Other operating income 36 248 835 1 184 961
Employee
benefit costs -5 808 -4 365 -16 039 -14 506 -20 544
Depreciation -498 -739 -1 701 -2 351 -3 124
Goodwill impairment 0 -52 0 -52 -6 918
Other operating expenses -6 561 -6 833 -20 502 -19 708 -26 822
--------------------------------------------------------------------------------
OPERATING PROFIT -4 596 -3 620 -13 592 -9 352 -12 613
Operating profit, % -29 % -24 % -30 % -20 % -17 %
Financial income 0 28 629 214 266
Financial expenses -5 665 -605 -7 376 -1 767 -2 499
--------------------------------------------------------------------------------
Net financial income -5 665 -577 -6 747 -1 553 -2 233
INCOME BEFORE TAXES -10 261 -4 198 -20 338 -10 905 -14 845
Taxes 15 164 43 251 192
--------------------------------------------------------------------------------
NET INCOME FOR THE PERIOD -10 245 -4 034 -20 295 -10 654 -14 653
================================================================================
Equity holders of the company -10 245 -4 034 -20 295 -10 654 -14 653
Earnings per share
for profit attributable
to the equity holders of the
company
Total -0,50 -0,24 -1,13 -0,65 -0,89
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
NET INCOME FOR THE PERIOD -10 245 -4 034 -20 295 -10 654 -14 653
Translation diffrences -17 191 -117 544 656
Comprehensive income
for the period net of tax -10 262 -3 843 -20 412 -10 110 -13 997
================================================================================
Comprehensive income for the period attributable
to:
Equity holders of the company -10 262 -3 843 -20 412 -10 110 -13 997
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
eur 1 000
30.9.2011 30.9.2010 31.12.2010
ASSETS
Goodwill 25 809 32 702 25 877
Other intangible assets 14 827 15 803 15 496
Tangible assets 3 391 4 529 4 275
Other financial assets 104 105 104
Receivables 5 0 5
Deferred tax assets 29 29 29
---------------------------------
Total non-current assets 44 165 53 167 45 785
Inventories 19 556 17 499 14 435
Trade and other receivables 3 633 3 426 4 168
Cash and bank 5 777 2 301 1 626
---------------------------------
Total current assets 28 966 23 226 20 229
TOTAL ASSETS 73 131 76 392 66 013
=================================
SHAREHOLDERS' EQUITY AND LIABILITIES
Equity attributable to equity holders of parent company
Share capital 7 686 7 686 7 686
Invested unrestricted equity reserve 57 116 23 011 23 011
Translation differences -124 -119 -7
Retained earnings -33 588 -14 290 -18 229
---------------------------------
TOTAL SHAREHOLDERS' EQUITY 31 090 16 288 12 461
LIABILITIES
Deferred tax liabilities 5 655 5 678 5 740
Interest-bearing liabilities 1 850 22 194 15 859
Provisions 449 31 31
---------------------------------
Total non-current liabilities 7 954 27 903 21 630
Interest bearing liabilities 17 436 18 812 11 743
Account payable and other payable 16 471 13 389 20 180
Provisions 180 0 0
---------------------------------
Total current liabilities 34 088 32 201 31 923
TOTAL LIABILITIES 42 042 60 104 53 553
TOTAL SHAREHOLDERS' EQUITY AND LIABILITIES 73 131 76 392 66 013
=================================
Consolidated Statement of Cash Flows
EUR 1 000
1-9/2011 1-9/2010 1-12/2010
Cash flow from operations
Profit/loss for financial period -20 295 -10 654 -14 653
Adjustments:
Depreciation and impairment 1 701 2 403 10 043
Gain (+) and loss (-) on sale of fixed assets -8 7
Financial income and expenses 6 746 1 554 2 247
Taxes -43 -251 -192
Other adjustments 10 39 77
Change in working capital:
Change in inventories -5 195 -2 260 834
Change in short-term receivables 499 464 472
Change in short term liabilities -3 707 -5 491 501
Change in provisions 599
Interest paid -553 -611 -1 018
Dividends received 4 5
Interest income received 1 7 13
Other financing items -970 -273 -782
Taxes paid -95 -59 -8
--------------------------------------------------------------------------------
Net cash flow from operations -21 305 -15 127 -2 459
Cash flow from investment activities
Investments in
tangible and intangible assets -246 -512 -665
Capital gains from tangible and intangible 8 1 2
assets
Loans granted -202
Repayment of loan receivables -202
Income on sale of investments 1
--------------------------------------------------------------------------------
Net cash flow from investments -238 -713 -864
Cash flow from financing activities
Proceeds from share issue 9 255
Short-term loans, increase 14 536 8 000
Short-term loans, decrease -1 000 9
Long-term loans, increase 3 000
Short-term loans, net change 7 500 2 133
Payment of lease liabilities -87 -193 -241
--------------------------------------------------------------------------------
Net cash flow from financing 25 704 15 316 1 892
Change in liquid assets 4 161 -524 -1 431
Liquid assets, beginning of review period 1 626 3 024 3 024
Effect of exchange rate changes on liquid -10 -198 34
assets
Liquid assets, end of review period 5 777 2 302 1 626
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
EUR 1 000
Attributable to the equity holders of the company
--------------------------------------------------------------------------------
-
Share Invested Translatio Retained Total
capita unrestricted n earnings
l equity reserve difference
s
--------------------------------------------------------------------------------
Shareholders' equity 7 686 23 011 -663 -3 667 26 366
1.1.2010
--------------------------------------------------------------------------------
Comprehensive income
--------------------------------------------------------------------------------
for the period 544 -10 654 -10 110
--------------------------------------------------------------------------------
Share based payments 31 31
--------------------------------------------------------------------------------
Equity on 30.9.2010 7 686 23 011 -119 -14 290 16 287
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Shareholders' equity 7 686 23 011 -7 -18 229 12 461
1.1.2011
--------------------------------------------------------------------------------
Comprehensive income
--------------------------------------------------------------------------------
for the period -117 -20 295 -20 412
--------------------------------------------------------------------------------
Directed share issue 21 850 21 850
--------------------------------------------------------------------------------
Rights issue 13 052 13 052
--------------------------------------------------------------------------------
Expenses on share issues -797 -797
--------------------------------------------------------------------------------
Calculated exp. on share 4 870 4 870
issues (IAS 32 ja 39,
IFRIC 19)
--------------------------------------------------------------------------------
Equity portion of 56 56
convertible capital
loan
--------------------------------------------------------------------------------
Share based payments 10 10
--------------------------------------------------------------------------------
Equity on 30.9.2011 7 686 57 116 -124 -33 588 31 090
--------------------------------------------------------------------------------
SEGMENT INFORMATION
NET SALES
eur 1 000 2011 2010 2011 2010 2010
7-9 7-9 1-9 1-9 1-12
Tiimari 12 191 12 540 34 142 36 840 61 924
Gallerix 3 576 2 877 10 738 9 066 13 914
Other operations 0 47 0 356 376
Eliminations -3 -82 -54 -396 -416
Group 15 763 15 382 44 825 45 866 75 797
EBITDA
eur 1 000 2011 2010 2011 2010 2010
7-9 7-9 1-9 1-9 1-12
Tiimari -3 244 -2 299 -10 476 -5 580 -1 330
Gallerix -683 -284 -677 -293 135
Other operations -171 -247 -737 -1 076 -1 376
Group -4 098 -2 830 -11 891 -6 949 -2 571
OPERATING PROFIT
eur 1 000 2011 2010 2011 2010 2010
7-9 7-9 1-9 1-9 1-12
Tiimari -3 525 -2 869 -11 556 -7 240 -10 435
Gallerix -884 -473 -1 246 -962 -724
Other operations -186 -279 -789 -1 150 -1 455
Group -4 596 -3 621 -13 592 -9 352 -12 613
DEPRECIATION AND GOODWILL IMPAIRMENT
eur 1 000 2011 2010 2011 2010 2010
7-9 7-9 1-9 1-9 1-12
Tiimari 281 570 1 080 1 660 9 105
Gallerix 201 189 569 669 859
Other operations 15 32 52 74 79
Group 498 791 1 701 2 403 10 042
CAPITAL EXPENDITURE
eur 1 000 2011 2010 2011 2010 2010
7-9 7-9 1-9 1-9 1-12
Tiimari 82 206 104 475 622
Gallerix 2 30 138 32 33
Other operations 0 0 0 10 10
Group 84 236 242 517 665
NET SALES BY GEOGRAPHICAL
AREA
eur 1 000 2011 2010 2011 2010 2010
7-9 7-9 1-9 1-9 1-12
Finland 11 481 11 827 32 152 34 559 58 384
Sweden 3 579 2 874 10 786 9 371 14 258
Other countires 703 681 1 887 1 936 3 156
Group 15 763 15 382 44 825 45 866 75 797
INTANGIBLE ASSETS
eur 1 000 30.9.2011 30.9.20 31.12.2010
10
Book value at 1 January 41 373 49 401 49 402
Changes in exchange rates -158 585 777
Additions 85 134 184
Depreciation and impairment -855 -1 615 -8 879
Disposals and intra-balance 192 0 -111
sheet transfer
Book value at the end of 40 637 48 505 41 373
period
TANGIBLE ASSETS
eur 1 000 30.9.2011 30.9.20 31.12.2010
10
Book value at 1 January 4 275 4 904 4 904
Changes in exchange rates -19 50 262
Additions 157 373 481
Depreciation and impairment -826 -788 -1 131
Disposals and intra-balance -196 -10 -241
sheet transfer
Book value at the end of 3 391 4 529 4 275
period
CHANGES IN PROVISIONS 1.1.2011 Additio Used 30.9.2011
ns provisions
Changes in provisions,
non-current
Other provisions (shop 31 418 0 449
rents, personnel)
Changes in provisions,
current
Other provisions (shop 0 317 -137 180
rents, personnel)
------------------------------------------------------------------------
Total 31 735 -137 629
KEY FINANCIAL FIGURES
2011 2010 2011 2010 2010
7-9 7-9 1-9 1-9 1-12
Net sales 15 763 15 382 44 825 45 866 75 797
EBITDA -4 098 -2 829 -11 891 -6 949 -2 571
Operating profit -4 596 -3 620 -13 592 -9 352 -12 613
Profit/loss for the -10 245 -4 034 -20 295 -10 654 -14 653
financial period
Earnings per share, EUR -0,5 -0,24 -1,13 -0,65 -0,89
Shareholders' equity per 0,08 0,99 0,76
share, EUR
Solvency ratio 42,5 % 21,3 % 18,9 %
Gearing 43,5 % 237,6 % 208,5 %
Net working capital 6 718 7 536 -1 551
Operating cash flow -20 540 -13 558 -1 429
Net Interest-bearing 13 509 38 705 25 976
liabilities
Balance sheet total 73 131 76 392 66 013
Average number of shares 20 690 16 475 17 895 16 475 16 475
(pcs)
CONTINGENT LIABILITIES
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
30.9.2011 30.9.2010 31.12.2010
--------------------------------------------------------------------------------
Loans from financial institutions
--------------------------------------------------------------------------------
against the following securities 17 035 25 000 11 632
--------------------------------------------------------------------------------
Corporate mortgages 31 137 31 137 31 137
--------------------------------------------------------------------------------
Pledged shares 1 476 1 476
--------------------------------------------------------------------------------
Other own liabilities
--------------------------------------------------------------------------------
Bank quarantees 2 714 2 758 2 891
--------------------------------------------------------------------------------
Other liabilities 5 5 5
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Leasing liabilities
--------------------------------------------------------------------------------
Due within one year 22 55 80
--------------------------------------------------------------------------------
Due after one year 25 38 48
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
OTHER RENT LIABILITIES
--------------------------------------------------------------------------------
Due within one year 14 965 13 822 15 534
--------------------------------------------------------------------------------
Due after one year 22 789 18 814 26 182
--------------------------------------------------------------------------------
Other rent liabilities is covered by a provision of EUR 0.6 million. The amount
of remaining provision at the end of the period under review is EUR 0.5
million.
--------------------------------------------------------------------------------
-
NOMINAL AMOUNTS OF DERIVATIVES 30.9.2011 30.9.2010 31.12.2010
--------------------------------------------------------------------------------
Forward exchange contracts 0 177 0
MARKET VALUE VS. NOMINAL AMOUNTS OF 30.9.2011 30.9.2010 31.12.2010
DERIVATIVES
--------------------------------------------------------------------------------
Forward exchange contracts 0 -13 0
Foreign exhange contracts have been valued at market value on reporting day.
Tiimari has not open foreign exchange contracts at the end of the period under
review.
Tiimari does not apply hedge accounting and the effect of the derivatives
has been booked directly in the income statement.
RELATED PARTY TRANSACTIONS
During the period under review a financial expense of EUR 330 thousand accrued
to the company from the convertible capital loans granted to the related party
companies. The expenses were divided as follows:
Interests on convertible capital loans 7-9/2011 1-9/2011 1-12/2010
(EUR 1 000)
--------------------------------------------------------------------------------
Hannu Krook 1 4 5
--------------------------------------------------------------------------------
Pecun Inc. (Hannu Ryöppönen) 1 4 5
--------------------------------------------------------------------------------
St. James's International Ltd (Sven-Olof 1 4 5
Kulldorff)
--------------------------------------------------------------------------------
Virala Oy (parent company of Atine Group Oy) 95 272 216
--------------------------------------------------------------------------------
Assetman Oy (Juha Mikkonen) 16 46 38
--------------------------------------------------------------------------------
Total 114 330 269
--------------------------------------------------------------------------------
During the period under review financial expenses accrued to the company from
financing received from related parties as follows:
-- Virala Oy Ab was paid a guarantee fee of EUR 75 thousand on 27 September
2011
-- Tiimari raised a EUR 3.0 million bridge financing from Unioca Partners Oy
during July-August and paid that financing back on 27 September 2011.
Tiimari paid an arrangement fee of EUR 100 thousand and interests of EUR 98
thousand to Unioca Partners Oy relating to this bridge financing.
During the period under review persons and companies belonging to related
parties subscribed company's shares in directed share issue and rights issue as
follows:
Related party subscriptions (EUR 1 000) Directed share Rights issue
issue
--------------------------------------------------------------------------------
Pecun Inc. (Hannu Ryöppönen) 160 -
--------------------------------------------------------------------------------
Assetman Oy (Juha Mikkonen) 780 1 127
--------------------------------------------------------------------------------
Unioca Partners Oy 4 600 3 454
--------------------------------------------------------------------------------
St. James's International Oy (Sven-Olof 60 -
Kulldorff)
--------------------------------------------------------------------------------
Oy Rosaco Ab (Alexander Rosenlew) - 54
--------------------------------------------------------------------------------
Niila Rajala - 75
--------------------------------------------------------------------------------
Total 5 600 4 710
--------------------------------------------------------------------------------
FLAGGINGS
Virala Oy Ab and its subsidiary Atine Group Oy, both of which belong to the
Virala Group, announced on 10 June 2011 that they had agreed on selling all
Tiimari shares and convertible capital loans held by them to Unioca Partners Oy
(Stock Exchange Release 10 June 2011). The realization of the transactions was
announced with a stock exchange release published on 13 June 2011 (Stock
Exchange Release 13 June 2011). As a result of the transactions, Virala Group's
ownership in Tiimari fell below the flagging threshold of 1/20.
Unioca Partners Oy (“Unioca”) announced on 10 June 2011 that it had agreed on
buying all Tiimari convertible capital loans held by Virala Oy Ab and all
Tiimari shares held by Atine Group Oy and Vessilä Oy Ab. The realization of the
transactions was announced with a stock exchange release published on 13 June
2011 (Stock Exchange Release 13 June 2011). As a result of the transactions,
Unioca's portion of Tiimari's shares and votes exceeded the flagging threshold
of 1/5.
Unioca announced on 10 June 2011 that it had given a subscription guarantee and
a subscription commitment relating to Tiimari's planned share issues, as a
result of which Unioca's ownership in Tiimari could exceed the flagging
threshold of 2/3 (Stock Exchange Release 10 June 2011). Unioca announced on 27
September 2011 that, as a result of the share subscriptions and trades made in
connection with the share issues, it holds a total of 260,347,076 Tiimari
shares, i.e. 64.40 % of Tiimari's shares and votes after the new shares have
been registered into the trade register. Thus Unioca's portion of Tiimari's
shares and votes exceeded the flagging threshold of 1/2 (Stock Exchange release
27 September 2011).
Assetman Oy announced on 10 June 2011 that it had given a subscription
commitment relating to Tiimari's planned share issues, as a result of which
Assetman Oy's ownership in Tiimari could fall below the flagging threshold of
1/10 (Stock Exchange Release 10 June 2011). Assetman announced on 27 September
2011 that, as a result of the share subscriptions and trades made in connection
with the share issues, it holds a total of 37,100,408 Tiimari shares, i.e. 9.18
% of Tiimari's shares and votes after the new shares have been registered into
the trade register. Thus Assetman's portion of Tiimari's shares and votes fell
below the flagging threshold of 1/2 (Stock Exchange release 27 September 2011).
10 MAJOR SHAREHOLDERS on 30 September 2011 Shares Shares %
Unioca Partners Oy 260 347 076 64,40
Varma Mutual Pension Insurance Company 38 042 727 9,41
Assetman Oy 37 100 408 9,18
Belgrano Investment Oy 18 375 396 4,55
Baltiska Handels A.B. 14 326 128 3,54
Ryöppönen Hannu Ragnvald 1 937 777 0,48
Rajala Niila Pekka 1 780 091 0,44
Suomen Bestand Oy 1 335 016 0,33
Mattila Rauno 1 085 520 0,27
Primate Oy 750 000 0,19
CALCULATION OF KEY FINANCIAL RATIOS
Gross margin = Revenue - materials and supplies *)
EBITDA = Operating profit + depreciation and amortisation
Earnings/share (EPS), EUR = Earnings before tax - income taxes / issue-adjusted
average number of shares for the fiscal year
Shareholders' equity / share, EUR = Equity attributable to the equity holders of
the parent company / issue-adjusted number of shares at the end of the fiscal
year
Equity ratio % = Shareholders' equity * 100 / Total assets - prepayments
received
Gearing ratio % = Interest-bearing liabilities - cash and cash equivalents * 100
/ Shareholders' equity
Interest-bearing net liabilities = Interest-bearing liabilities - cash and cash
equivalents
Net working capital = Inventory + short-term non-interest-bearing receivables -
short-term non-interest-bearing liabilities
Operating cashflow = EBITDA - increase in net working capital - capital
expenditure
*) In Gallerix franchising activities further charged rental payments are
reduced from gross margin.
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