The net sales of Viisnurk AS for the 1st quarter of 2007 were 66.7 mil. kroons/4.3 mil. euros (53.0 mil. kroons/3.4 mil. euros during the same period in 2006) and the net profit amounted to 7.5 mil. kroons/0.5 mil. euros (1.8 mil. kroons/0.1 mil. euros during the same period in 2006). As of the end of March 2007 the total assets of Viisnurk amounted to 161.2 mil. kroons/10.3 mil. euros (31.3.2006: 157.6 mil. kroons/10.1 mil. euros). The liabilities of the company accounted for 51% (31.3.2006: 59%) thereof, i.e. 81.9 mil. kroons/5.2 mil. euros (31.3.2006: 92.3 mil. kroons/5.9 mil. euros). The turnover of the Furniture Division in the 1st quarter of 2007 amounted to 33.7 mil. kroons/2.2 mil. euros (32.0 mil. kroons/2.0 mil. euros during the same period in 2006) and the profit amounted to 2.7 mil. kroons/171 thou. euros (1.2 mil. kroons/78 thou. euros during the same period in 2006). The turnover of the Building Materials Division in the 1st quarter of 2007 amounted to 33.0 mil. kroons/2.1 mil. euros (21.0 mil. kroons/1.3 mil. euros during the same period in 2006) and the profit amounted to 5.9 mil. kroons/378 thou. euros (1.7 mil. kroons/106 thou. euros during the same period in 2006). The profit of the Divisions does not reflect the general administrative costs of the corporation in the amount of 512 thou. kroons/33 thou. euros (498 thou. kroons/32 thou euros during the same period in 2006) and the financial expenses of 584 thou. kroons/37 thou. euros (540 thou. kroons/35 thou. euros during the same period in 2006) that have been recorded in the report of business segments as unallocated expenses. Forecast and development 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 will increase 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. In the 4th quarter of 2006 renovation works of the building for Isotex lines were started and the works are being carried out according to the plans. Increasing the production capacity of Isotex products helps the company to improve sales margins and give the existing production a higher value. Although the factory producing building boards is working on full capacity, we have not been able to produce in advance finished goods for the period of repairs and vacations in summer (mainly in July) which means lower sales and profits for that time as compared to the previous quarter. 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 | -------------------------------------------------------------------------------- | | 3 m 2007 | 3 m 2006 | 3 m 2007 | 3 m 2006 | -------------------------------------------------------------------------------- | Furniture Division | 33,705 | 32,017 | 2,668 | 1,221 | -------------------------------------------------------------------------------- | Building Materials | 33,038 | 21,026 | 5,918 | 1,658 | | Division | | | | | -------------------------------------------------------------------------------- | TOTAL | 66,743 | 53,043 | 8,586 | 2,879 | -------------------------------------------------------------------------------- | Unallocated expenses | | | (512) | (498) | -------------------------------------------------------------------------------- | OPERATING PROFIT | | | 8,074 | 2,381 | -------------------------------------------------------------------------------- | Net financial costs | | | (584) | (540) | -------------------------------------------------------------------------------- | NET PROFIT | | | 7,490 | 1,841 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Th EUR | Net sales | Profit | -------------------------------------------------------------------------------- | | 3 m 2007 | 3 m 2006 | 3 m 2007 | 3 m 2006 | -------------------------------------------------------------------------------- | Furniture Division | 2,154 | 2,046 | 171 | 78 | -------------------------------------------------------------------------------- | Building Materials | 2,112 | 1,344 | 378 | 106 | | Division | | | | | -------------------------------------------------------------------------------- | TOTAL | 4,266 | 3,390 | 549 | 184 | -------------------------------------------------------------------------------- | Unallocated expenses | | | (33) | (32) | -------------------------------------------------------------------------------- | OPERATING PROFIT | | | 516 | 152 | -------------------------------------------------------------------------------- | Net financial costs | | | (37) | (35) | -------------------------------------------------------------------------------- | NET PROFIT | | | 479 | 117 | -------------------------------------------------------------------------------- Furniture Division The three-month net sales of Viisnurk AS Furniture Division were 33.7 mil. kroons/2.2 mil. euros (2006: 32.0 mil. kroons/2.0 mil. euros) and the economic result 2.7 mil. kroons/171 thou. euros (2006: 1.2 mil kroons/78 thou. euros) as a profit. As compared to the previous year the turnover of the division has increased by 1.6 mil. kroons/99 thou. euros and the profit by 1.4 mil. kroons/93 thou. euros. The Furniture Division's three-month sales in the company's basic target markets in Finland and Russia have proceeded according to the plans and as compared to 2006 the sales have increased considerably. The Division has increased the sales of higher margin furniture that is based on the birch timber up to 94% in the accounting period (2006: 90%). Thus, the share of pine furniture was 6% (2006: 10%) and the market demand in the respective sector is decreasing. The company intends to further increase the share of birch furniture. 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 three months this year the retail sale has increased by 68% as compared to the same period last year. Building Material Division The three-month net sales of the Building Materials Division amounted to 33.0 mil. kroons/2.1 mil. euros and profit to 5.9 mil. kroons/378 thou. euros. In the same period of the last year, the turnover of the division totalled 21.0 mil. kroons/1.3 mil. euros and the net profit 1.7 mil. kroons/106 thou. euros. 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 The results of the 1st quarter of 2007 have most been influenced by the sales success of Isoplaat wind protection boards in Scandinavia. The demand for wind protection boards is increasing in the domestic market as well. In other neighbouring markets, especially in Latvia and Russia, the sales of floor boards has increased. Wind protection boards were the product group with the largest share in the sales of building boards. Interior Finishing Boards Sales volumes and results of Isotex interior finishing boards have increased due to the new range of products and changes in the image of the trademark. The new logo and image were launched in the 4th quarter of the previous year in order to mark the broader product range. In March ceiling panels with new patterns were introduced in Finland and Estonia helping to strengthen our leading positions in the above markets even more. Ceiling panels comprised 80% (73% in 2006) and wall panels 20% (27% in 2006) of the sales of interior finishing boards. Sales of Isotex interior finishing boards comprised 37% of the total sales of the division in 2007. Interior finishing boards are being produced since 1996 and they are sold 100% under the company's own trademark Isotex. 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 3rd quarter in 2007. The works related to building the line are being carried out according to the plans. The new production line enables to increase the volume of Isotex products 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. During 3 months 2007 investments into technology totalled 31 thou. kroons/2 thou. euros and into buildings 368 thou. kroons/24 thou. euros. At the same period of 2006 investments into technology totalled 1.3 mil. kroons/81 thou. euros and into buildings 2.0 mil. kroons/126 thou. euros. Consolidated balance sheet -------------------------------------------------------------------------------- | | Th EEK | Th EEK | Th EUR | Th EUR | -------------------------------------------------------------------------------- | | 31.3.2007 | 31.12.2006| 31.3.2007 | 31.12.2006 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Cash and bank | 13,303 | 13,138 | 850 | 840 | -------------------------------------------------------------------------------- | Receivables and | 32,202 | 26,629 | 2,058 | 1,702 | | prepayments | | | | | -------------------------------------------------------------------------------- | Inventories | 46,584 | 44,970 | 2,978 | 2,874 | -------------------------------------------------------------------------------- | Total current assets | 92,089 | 84,737 | 5,886 | 5,416 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Other shares and issues | 1 | 1 | 0 | 0 | -------------------------------------------------------------------------------- | Investment property | 10,295 | 10,295 | 658 | 658 | -------------------------------------------------------------------------------- | Tangible fixed assets | 58,302 | 57,534 | 3,726 | 3,677 | -------------------------------------------------------------------------------- | Intangible fixed assets | 500 | 650 | 32 | 42 | -------------------------------------------------------------------------------- | Total fixed assets | 69,098 | 68,480 | 4,416 | 4,377 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | TOTAL ASSETS | 161,187 | 153,217 | 10,302 | 9,793 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Debt obligations | 17,905 | 19,409 | 1,144 | 1,241 | -------------------------------------------------------------------------------- | Payables and prepayments | 32,259 | 30,230 | 2,062 | 1,932 | -------------------------------------------------------------------------------- | Short-term provisions | 176 | 221 | 11 | 15 | -------------------------------------------------------------------------------- | Total current liabilities | 50,340 | 49,860 | 3,217 | 3,188 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Non-current debt | 28,511 | 28,511 | 1,822 | 1,822 | | obligations | | | | | -------------------------------------------------------------------------------- | Non-current provisions | 3,047 | 3,047 | 195 | 195 | -------------------------------------------------------------------------------- | Total non-current | 31,558 | 31,558 | 2,017 | 2,017 | | liabilities | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Total liabilities | 81,898 | 81,418 | 5,234 | 5,205 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Share capital at nominal | 44,991 | 44,991 | 2,875 | 2,875 | | value | | | | | -------------------------------------------------------------------------------- | Issue premium | 11,332 | 11,332 | 724 | 724 | -------------------------------------------------------------------------------- | Statutory capital reserve | 4,499 | 4,499 | 288 | 288 | -------------------------------------------------------------------------------- | Retained profits | 10,977 | (1,810) | 702 | (116) | -------------------------------------------------------------------------------- | Net profit for the year | 7,490 | 12,787 | 479 | 817 | -------------------------------------------------------------------------------- | Total equity | 79,289 | 71,799 | 5,068 | 4,588 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | TOTAL LIABILITIES AND | 161,187 | 153,217 | 10,302 | 9,793 | | EQUITY | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | | Th EEK | Th EEK | Th EUR | Th EUR | -------------------------------------------------------------------------------- | | 1st | 1st | 1st | 1st | | | quarter | quarter | quarter | quarter | | | 2007 | 2006 | 2007 | 2006 | | | | (adjusted)| | (adjusted) | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | REVENUE | 66,743 | 53,043 | 4,266 | 3,390 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Cost of goods sold | (50,979) | (45,329) | (3,258) | (2,897) | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Gross profit | 15,764 | 7,714 | 1,008 | 493 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Distribution costs | (7,108) | (4,837) | (454) | (309) | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Administrative expenses | (512) | (498) | (33) | (32) | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Other operating income | 45 | 73 | 3 | 5 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Other operating expenses | (115) | (71) | (8) | (5) | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Operating profit | 8,074 | 2,381 | 516 | 152 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Financial income and | (584) | (540) | (37) | (35) | | financial expenses | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | NET PROFIT FOR THE PERIOD | 7,490 | 1,841 | 479 | 117 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Basic earnings per share | 1.66 | 0.41 | 0.11 | 0.03 | -------------------------------------------------------------------------------- | Diluted earnings per share | 1.66 | 0.41 | 0.11 | 0.03 | -------------------------------------------------------------------------------- Einar Pähkel CFO +372 447 8331 einar.pahkel@viisnurk.ee