Financial results, 12 months 2006
The twelve-month net sales of Viisnurk AS in 2006 were 227.4 mil. kroons/14.5
mil. euros (218.7 mil. kroons/14.0 mil. euros during the same period in 2005)
and the net profit amounted to 12.8 mil. kroons/817 thou. euros (9.5 mil.
kroons/608 thou. euros in 2005). The total assets of Viisnurk amounted to 153.2
mil. kroons (9.8 mil euros) at the end of December 2006. The liabilities of the
company accounted for 53% thereof, i.e. 81.4 mil. kroons (5.2 mil. euros).
The turnover of the Furniture Division in 2006 amounted to 132.8 mil. kroons/8.5
mil. euros (122.1 mil. kroons/7.8 mil. euros during the same period in 2005) and
the profit amounted to 9.5 mil. kroons/610 thou. euros (4.8 mil. kroons/308
thou. euros in 2005).
The turnover of the Building Materials Division in 2006 amounted to 94.6 mil.
kroons/6.0 mil. euros (96.4 mil. kroons/6.2 mil. euros during the same period in
2005) and the profit amounted to 11.7 mil. kroons/746 thou. euros (13.9 mil.
kroons/889 thou. euros in 2005).
The profit of the Divisions does not reflect the general administrative costs of
the corporation in the amount of 5.4 mil. kroons/346 thou. euros and the
financial expenses of 2.6 thou. kroons/165 thou. euros that have been recorded
in the report of business segments as unallocated expenses.
4th quarter of 2006
The net sales of the 4th quarter of the accounting year amounted to 66.8 mil.
kroons/4.3 mil. euros (52.8 mil. kroons/3.4 mil. euros in 2005) and the net
profit amounted to 4.4 mil. kroons/281 thousand euros (2.3 mil. kroons/148
thousand euros in 2005).
The results of the fourth quarter of the company compared to the fourth quarter
of 2005 have improved both in the Furniture Division and the Building Materials
Division.
The turnover of the Furniture Division in the 4th quarter of 2006 amounted to
40.6 mil. kroons/2.6 mil. euros (32.5 mil. kroons/2.1 mil. euros during the same
period in 2005) and the profit amounted to 3.3 mil. kroons/209 thou. euros (342
thou. kroons/22 thou. euros in 2005).
The turnover of the Building Materials Division in the 4th quarter of 2006
amounted to 26.2 mil. kroons/1.7 mil. euros (20.3 mil. kroons/1.3 mil. euros
during the same period in 2005) and the profit amounted to 3.1 mil. kroons/198
thou. euros (2.8 mil. kroons/178 thou. euros in 2005).
According to the valuation report issued on 04 December 2006 of an independent
real estate company the estimated market value of the properties located in
Niidu street, Pärnu, as at 04 December 2006 amounted to 110,130,000
kroons/7,038,590 euros (estimated market value of properties on 31 December 2005
amounted to 57,800,000 kroons/3,694,093 euros). At 31 December 2006, the
carrying amount of the same properties was EEK 7,664,368 (€489,842) and it is
not changed during the year. The valuation of property does not affect company's
profit - real estate investments are balanced on original value.
Forecast and development
On 26 February 2007 Supervisory Board recalled Toivo Kuldmäe from Management
Board and elected Einar Pähkel, Andres Kivistik and Erik Piile as the new
Members of the Management Board. In Supervisory board meeting on 27 February
2007 Andres Kivistik appointed the Chairman of Management Board until 31
December 2007, when Supervisory Board will review the situation.
In 4th quarter AS Viisnurk signed the contract of property development of land
plot in Pärnu Rääma street.
According to the strategy of developing the retail sale of the Furniture
Division an international retail chain of furniture stores in our neighbouring
markets operating under the trademark Skano shall be created. The company will
plan to open on 2nd quarter of 2007 three stores in Lithuania and prepares to
enter into Russian and Ukrainian market. Upon creating the retail unit Viisnurk
AS entered the business area of the retail of furniture and furnishing materials
that is operated by a private limited company Skano, registered on 1 September
2003. Viisnurk AS holds 100% of the shares of Skano OÜ.
The production unit of the Furniture Division has concentrated on producing
wooden home furniture. The trademark of the Division's own products is Skano.
The Building Materials Division increased the production capacity of Isotex
interior finishing boards as products of higher level of refinement and higher
margin by installing a new production line to satisfy the increased demand in
existing markets and to enter new markets. On 4th quarter of 2006 company
started renovation of building necessary for new Isotex line. Increasing the
production capacity of Isotex products helps the company to improve sales
margins and give the existing production a higher value.
The Building Materials Division produces two categories of products:
softboard-based building boards for insulation and soundproofing, and interior
finishing boards for walls and ceilings. The trademarks of the Division's
products are Isoplaat (building board) and Isotex (interior finishing boards).
Divisional review:
--------------------------------------------------------------------------------
| (Th EEK) | Net sales | Profit |
--------------------------------------------------------------------------------
| | 2006 | 2005 | 2006 | 2005 |
--------------------------------------------------------------------------------
| Furniture Division | 132,823 | 122,105 | 9,540 | 4,817 |
--------------------------------------------------------------------------------
| Building Materials | 94,581 | 96,443 | 11,674 | 13,910 |
| Division | | | | |
--------------------------------------------------------------------------------
| Terminated business | 0 | 162 | 0 | 345 |
| activities | | | | |
--------------------------------------------------------------------------------
| TOTAL | 227,404 | 218,710 | 21,214 | 19,072 |
--------------------------------------------------------------------------------
| Unallocated expenses | | | (5,414) | (6,232) |
--------------------------------------------------------------------------------
| OPERATING PROFIT | | | 15,800 | 12,840 |
--------------------------------------------------------------------------------
| Net financial costs | | | (2,575) | (3,322) |
--------------------------------------------------------------------------------
| PROFIT BEFORE TAXES | | | 13,225 | 9,518 |
--------------------------------------------------------------------------------
| Prepaid income tax | | | (438) | 0 |
--------------------------------------------------------------------------------
| NET PROFIT | | | 12,787 | 9,518 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| (Th EUR) | Net sales | Profit |
--------------------------------------------------------------------------------
| | 2006 | 2005 | 2006 | 2005 |
--------------------------------------------------------------------------------
| Furniture Division | 8,489 | 7,804 | 610 | 308 |
--------------------------------------------------------------------------------
| Building Materials | 6,045 | 6,164 | 746 | 889 |
| Division | | | | |
--------------------------------------------------------------------------------
| Terminated business | 0 | 10 | 0 | 22 |
| activities | | | | |
--------------------------------------------------------------------------------
| TOTAL | 14,534 | 13,978 | 1,356 | 1,219 |
--------------------------------------------------------------------------------
| Unallocated expenses | | | (346) | (398) |
--------------------------------------------------------------------------------
| OPERATING PROFIT | | | 1,010 | 821 |
--------------------------------------------------------------------------------
| Net financial costs | | | (165) | (213) |
--------------------------------------------------------------------------------
| PROFIT BEFORE TAXES | | | 845 | 608 |
--------------------------------------------------------------------------------
| Prepaid income tax | | | (28) | 0 |
--------------------------------------------------------------------------------
| NET PROFIT | | | 817 | 608 |
--------------------------------------------------------------------------------
Furniture Division
The twelve-month net sales of Viisnurk AS Furniture Division were 132.8 mil.
kroons (8.5 mil. euros) and the economic result 9.5 mil. kroons (610 thousand
euros) as a profit. As compared to the previous year the turnover of the
division has increased by 10.7 mil. kroons (685 thou. euros) and the profit by
4.7 mil. kroons (302 thou. euros).
The Furniture Division's twelve-month sales in the company's basic target
markets in Finland and Russia have proceeded according to the plans and as
compared to 2005 the sales have increased considerably. The Division has
increased the sales of higher margin furniture that is based on the birch timber
up to 91% (79% in 2005) in the accounting period. Thus, the share of pine
furniture was 9% (21% in 2005) and the market demand in the respective sector is
decreasing. The company intends to further increase the share of birch
furniture.
The range of products of furniture lines with higher profitability was expanded
within the product portfolio of the Furniture Division in the fourth quarter. At
the same time, developing new product lines continued both among the division's
own brands and for new subcontractors. The new furniture lines were introduced
in various markets in fourth quarter in 2006 and it will continue in the
beginning of 2007. Additional opportunities for increasing sales in the existing
markets are created through the above activities as well as the preconditions
for entering new markets. Among potential markets the division sees an
opportunity to increase sales in Great Britain and Eastern and Central Europe.
The retail sale of the Furniture Division shows a rising tendency. Within twelve
months this year the retail sale has increased by 56% as compared to the same
period last year; the increase in the fourth quarter was 68% as compared to the
respective period in 2005.
Building Materials Division
The twelve-month net sales of the Building Materials Division amounted to 94.6
mil. kroons (6.0 mil. euros) and profit to 11.7 mil. kroons (746 thou. euros).
In the same period of the last year, the turnover of the division totalled 94.5
mil. kroons (6.2 mil. euros) and the net profit 13.9 mil. kroons (889 thou.
euros). The results of the twelve months were influenced by extreme weather
conditions in the beginning of the year and the fire in May. These negative
facts had an one-time affect for the results of the division.
Since the beginning of the third quarter production volumes, sales and
profitability of the division have improved rapidly and the factory is working
on full capacity in order to satisfy the increased demand. In addition, active
selling has been initiated in the eastern market - Russia and the Ukraine as
well as Latvia and Lithuania.
Building Boards
Among Isoplaat building boards the demand of wind protection board in the
internal market has leaped ahead. The commencement of direct marketing in
Finland (as one of the principal markets), which was planned for the first
quarter of this year, achieved success in the third and fourth quarter by
selling under our trademark in all of the most significant retail chains. The
sales of flooring boards have also increased, especially in our neighbouring
markets. Wind protection boards were the product group with the largest share in
the sales of building boards.
Within the nine months of 2006 the division has increased the share of products
sold under its own trademark Isoplaat up to 90% (64% in 2005) of the total sales
of building boards; in addition, it has increased the share of direct marketing
as compared to sales through intermediaries. It allows for better margins and
increases sustainability in the long-term perspective.
This year the division took its building boards to new eastern markets with
large potential - Russia and the Ukraine.
Interior Finishing Boards
Sales volumes and results of Isotex internal finishing boards were on planned
levels both on the internal and external markets. At the end of the third
quarter an updated and larger choice of wall panels was introduced to the market
helping further strengthen its leading position in the markets and creating
better opportunities for entering new markets. At the same time development
activities for introducing new ceiling panels to the market in the 2007
continued. Ceiling panels comprised 73% and wall panels 27% of the sales of
interior finishing boards.
Within nine months this year the division has increased the share of Isotex
interior finishing boards as products of higher level of refinement and higher
margin up to 37% of the sales of the division (35% in 2005). Interior finishing
boards are being produced since 1996 and they are sold 100% under the company's
own trademark Isotex.
Together with building boards interior finishing boards have also been taken to
eastern markets where both product groups have a good perspective. Offering
larger volume more actively is limited by the present production capacity.
Investments
In the retail business of the division activities were initiated in the fourth
quarter to expand the retail business to our neighbouring markets according to
the strategy. The expansion of retail business includes opening new stores
offering home furniture and furnishing materials in various Eastern European
markets.
In order to satisfy the increased demand in the existing markets and to enter
the markets of Russia and the Ukraine, the Supervisory Board of Viisnurk AS has
approved the decision to increase the production capacity of interior finishing
boards via opening the second production line. The estimated total cost of the
investment shall be 10 mil. Kroons (639 thou. euros) and the planned deadline
for implementing the line is the beginning of the third quarter in 2007. The new
production line enables to increase the volume of products from 39% to 55% of
the net sales of the Building Materials Division. Increasing the production
capacity of Isotex products helps the company to improve sales margins and give
the existing production a higher value.
--------------------------------------------------------------------------------
| Consolidated Balance | | | | |
| Sheet | | | | |
--------------------------------------------------------------------------------
| | Th EEK | Th EEK | Th EUR | Th EUR |
--------------------------------------------------------------------------------
| | 31.12.2006 | 31.12.2005 | 31.12.2006 | 31.12.2005, |
| | | (adjusted) | | (adjusted) |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Cash and bank | 13,138 | 5,552 | 840 | 355 |
--------------------------------------------------------------------------------
| Short-term financial | 0 | 6,785 | 0 | 434 |
| investments | | | | |
--------------------------------------------------------------------------------
| Receivables and | 26,628 | 25,749 | 1,702 | 1,645 |
| prepayments | | | | |
--------------------------------------------------------------------------------
| Inventories | 44,971 | 42,161 | 2,874 | 2,695, |
--------------------------------------------------------------------------------
| Total current assets | 84,737 | 80,247 | 5,416 | 5,129 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Long-term financial | 1 | 1 | 0 | 0 |
| investments | | | | |
--------------------------------------------------------------------------------
| Investment property | 10,294 | 15,521 | 658 | 992 |
--------------------------------------------------------------------------------
| Tangible fixed assets | 57,535 | 58,235 | 3,677 | 3,722 |
--------------------------------------------------------------------------------
| Intangible fixed | 650 | 1,818 | 42 | 116 |
| assets | | | | |
--------------------------------------------------------------------------------
| Total fixed assets | 68,480 | 75,575 | 4,377 | 4,830 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| TOTAL ASSETS | 153,217 | 155,822 | 9,793 | 9,959 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Debt obligations | 19,409 | 8,909 | 1,240 | 569 |
--------------------------------------------------------------------------------
| Payables and | 29,974 | 32,353 | 1,916 | 2,069 |
| prepayments | | | | |
--------------------------------------------------------------------------------
| Short-term provisions | 478 | 176 | 31 | 11 |
--------------------------------------------------------------------------------
| Total current | 49,861 | 41,438 | 3,187 | 2,649 |
| liabilities | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Non-current debt | 28,511 | 47,920 | 1,822 | 3,063 |
| obligations | | | | |
--------------------------------------------------------------------------------
| Non-current | 3,046 | 3,268 | 195 | 209 |
| provisions | | | | |
--------------------------------------------------------------------------------
| Total non-current | 31,557 | 51,188 | 2,017 | 3,272 |
| liabilities | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Total liabilities | 81,418 | 92,626 | 5,204 | 5,921 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Share capital | 44,991 | 44,991 | 2,875 | 2,875 |
| (nominal value) | | | | |
--------------------------------------------------------------------------------
| Issue premium | 11,332 | 11,332 | 724 | 724 |
--------------------------------------------------------------------------------
| Statutory capital | 4,499 | 4,499 | 288 | 288 |
| reserve | | | | |
--------------------------------------------------------------------------------
| Retained profits | (1,810) | (7,144) | (115) | (457) |
--------------------------------------------------------------------------------
| Net profit for the | 12,787 | 9,518 | 817 | 608 |
| year | | | | |
--------------------------------------------------------------------------------
| Total equity | 71,799 | 63,196 | 4,589 | 4,038 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| TOTAL LIABILITIES AND | 153,217 | 155,822 | 9,793 | 9,959 |
| EQUITY | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Consolidated Income | | | | |
| Statement | | | | |
--------------------------------------------------------------------------------
| Thousand EEK | | | | |
--------------------------------------------------------------------------------
| | 4th quarter | 4th | 12 months | 12 months |
| | | quarter | | |
--------------------------------------------------------------------------------
| | 2006 | 2005 | 2006 | 2005 |
| | | (adjusted) | | (adjusted) |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| RETURN ON SALES | 66,768 | 52,842 | 227,404 | 218,710 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Cost of production | (53,123) | (43,287) | (184,526) | (180,840) |
| sold | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Gross profit | 13,645 | 9,555 | 42,878 | 37,870 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Marketing expenses | (6,853) | (5,689) | (21,258) | (20,473) |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| General administrative | (1,082) | (1,646) | (5,414) | (6,232) |
| expenses | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Other income | 74 | 298 | 526 | 2,722 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Other expenses | (513) | 566 | (932) | (1,047) |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Operating profit | 5,271 | 3,084 | 15,800 | 12,840 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Financial income and | (870) | (759) | (2,575) | (3,322) |
| financial expenses | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Profit before taxes | 4,401 | 2,325 | 13,225 | 9,518 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Prepaid income tax | 0 | 0 | (438) | 0 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| NET PROFIT FOR THE | 4,401 | 2,325 | 12,787 | 9,518 |
| PERIOD | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Basic earnings per | 0.98 | 0.52 | 2.84 | 2.12 |
| share | | | | |
--------------------------------------------------------------------------------
| Diluted earnings per | 0.98 | 0.52 | 2.84 | 2.12 |
| share | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Consolidated Income | | | | |
| Statement | | | | |
--------------------------------------------------------------------------------
| Thousand EUR | | | | |
--------------------------------------------------------------------------------
| | 4th quarter | 4th | 12 months | 12 months |
| | | quarter | | |
--------------------------------------------------------------------------------
| | 2006 | 2005 | 2006 | 2005 |
| | | (adjusted) | | (adjusted) |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| RETURN ON SALES | 4,267 | 3,377 | 14,534 | 13,978 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Cost of production | (3,395) | (2,767) | (11,793) | (11,558) |
| sold | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Gross profit | 872 | 610 | 2,741 | 2,420 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Marketing expenses | (438) | (364) | (1,359) | (1,308) |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| General administrative | (69) | (104) | (346) | (398) |
| expenses | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Other income | 5 | 19 | 34 | 174 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Other expenses | (33) | 36 | (60) | (67) |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Operating profit | 337 | 197 | 1,010 | 821 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Financial income and | (56) | (49) | (165) | (213) |
| financial expenses | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Profit before taxes | 281 | 148 | 845 | 608 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Prepaid income tax | 0 | 0 | (28) | 0 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| NET PROFIT FOR THE | 281 | 148 | 817 | 608 |
| PERIOD | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Basic earnings per | 0.06 | 0.03 | 0.18 | 0.14 |
| share | | | | |
--------------------------------------------------------------------------------
| Diluted earnings per | 0.06 | 0.03 | 0.18 | 0.14 |
| share | | | | |
--------------------------------------------------------------------------------
Einar Pähkel
CFO
+372 447 8331
einar.pahkel@viisnurk.ee