MARTELA CORPORATION STOCK EXCHANGE RELEASE 23.4.2008 at 9.00 a.m.
MARTELA CORPORATION'S INTERIM REPORT, 1 JANUARY - 31 MARCH, 2008
Net revenue for January-March was EUR 36.1 million (30.0), an increase of 20.8
per cent. Growth was particularly strong in the Finnish and Polish markets.
Operating profit was EUR 3.4 million (1.7), including gains from the sale of
assets totalling EUR 0.6 million (1.6). The equity-to-assets ratio was 47.2 per
cent (44.7) and gearing was 7.7 per cent (45.5).
It is expected that net revenue for 2008 will exceed last year's level, and that
the whole year's operating profit before non-recurring items will be better than
last year.
Key figures
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| | 1-3 | 1-3 | 1-12 |
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| | 2008 | 2007 | 2007 |
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| Revenue | 36.1 | 30.0 | 128.4 |
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| Change in revenue % | 20.8 | 11.2 | 7.3 |
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| Operating profit excluding | 2.8 | 0.1 | 5.8 |
| non-recurring items | | | |
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| Operating profit % | 7.7 | 0.3 | 4.5 |
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| Return on investment, % | 31.1 | 16.3 | 19.6 |
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| Return on equity, % | 32.2 | 20.7 | 19.8 |
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| Equity to asset ratio, % | 47.2 | 44.7 | 46.7 |
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| Gearing, % | 7.7 | 45.5 | 16.0 |
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| Average staff | 660 | 629 | 663 |
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| Revenue/employee | 54.7 | 47.5 | 193.7 |
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Accounting policies
The financial statements have been prepared in compliance with IFRS recognition
and measurement policies. The accounting policies applied are the same as those
applied in the 2007 financial statements.
Market
The demand for office furniture continued to grow in 2007 and in the first
quarter of 2008. Office construction is expected to continue to be lively in
2008.
Group structure
There were no changes in Group structure during the review period or the
comparison period.
Segment reporting
Martela has a single primary segment, namely the furnishing of offices and
public spaces. The net revenue and result are as recorded in the consolidated
financial statements. The Group's secondary reporting segment is its customers
by geographical location.
Net revenue
Net revenue for January-March grew to EUR 36.1 million (30.0), an increase of
20.8 per cent. The large projects carried out during the first quarter
contributed to this growth.
Invoicing by main market areas
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| | 1-3 | 1-3 | 1-12 |
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| | 2008 | 2007 | 2007 |
--------------------------------------------------------------------------------
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| Finland | 26.0 | 19.6 | 85.8 |
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| Scandinavia | 5.7 | 6.5 | 26.4 |
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| Poland and surrounding areas | 3.1 | 2.2 | 11.1 |
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| Other areas | 1.3 | 1.7 | 5.4 |
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| Total | 36.1 | 30.0 | 128.7 |
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Change in invoicing and proportion of consolidated invoicing
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| | 1-3 | 1-3 | | | 1-12 | |
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| | 2008 | 2007 | Change | Percentag | 2007 | Percentag |
| | | | | e | | e |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Finland | 26.0 | 19.6 | 32.6 % | 72.0 % | 85.8 | 66.7 % |
--------------------------------------------------------------------------------
| Scandinavia | 5.7 | 6.5 | -13.1 | 15.7 % | 26.4 | 20.5 % |
| | | | % | | | |
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| Poland and | 3.1 | 2.2 | 43.4 % | 8.6 % | 11.1 | 8.6 % |
| surrounding areas | | | | | | |
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| Other areas | 1.3 | 1.7 | -21.7 | 3.7 % | 5.4 | 4.2 % |
| | | | % | | | |
--------------------------------------------------------------------------------
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| Total | 36.1 | 30.0 | 20.3 % | 100.0 % | 128.7 | 100.0 % |
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Consolidated result
The consolidated result for the first quarter was a clear improvement and the
operating profit was EUR 3.4 million (1.7). This includes EUR 0.6 million (1.6)
in non-recurring income from the sale of assets. The sales gain recognised in
early 2008 relates to the sale of land in Poland. The operating profit excluding
non-recurring items was EUR 2.8 million (0.1). Profit before taxes rose to EUR
3.2 million (1.5), and profit after taxes was EUR 2.4 million (1.3).
The operating profit percentage excluding non-recurring items was 7.7 per cent
(0.3%).
Financial position
The Group's financial position remained stable. At the end of the review
period, net interest-bearing liabilities were EUR 13.9 million (16.4), and the
net debt was EUR 2.3 million (11.5). At the beginning of 2008, the net debt was
EUR 4.7 million. At the end of the review period, gearing was 7.7 per cent
(45.5) and the equity-to-assets ratio was 47.2 per cent (44.7). Net financial
expenses were EUR -0.2 million (-0.2).
Cash flow from operating activities in January-March was EUR 2.7 million (2.6).
The end-of-period balance sheet total was EUR 63.5 million (56.7).
Capital expenditure
The Group's gross capital expenditure for January-March was EUR 0.9 million
(1.3) and mainly concerned production replacements and IT investments. Of the
capital expenditure for the comparison period in 2007, EUR 0.7 million was
attributable to the ownership rearrangement at the Bodafors plant, as a result
of which the long-term lease liability for the part leased back by Martela was
activated in the consolidated balance sheet in accordance with the IFRS.
Staff
In January-March, the Group employed an average of 660 (629) persons,
representing growth of 4.9 per cent. At the end of March, the Group employed 659
persons.
Average staff by region
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| | 1-3 | 1-3 | 1-12 |
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| | 2008 | 2007 | 2007 |
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| Finland | 503 | 501 | 518 |
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| Scandinavia | 74 | 64 | 71 |
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| Poland | 83 | 64 | 74 |
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| Group total | 660 | 629 | 663 |
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Product development and collection
Product development and collection management are the responsibility of two
Group-level organisations: the Office product line, responsible for workstation
furniture, and the Surroundings product line, responsible for furniture for
surroundings and other public spaces.
Exhibited at Martela's stand at the Stockholm Furniture Fair in February were
new products representing both product lines, as well as two fascinating new
concepts. The exhibited new pieces of workstation furniture were the James task
chair designed by Iiro Viljanen and the Pinta ES, the newest member of the Pinta
range by Pekka Toivola and Iiro Viljanen. The surroundings furniture displayed
for the first time featured the Skybar chair designed by Geir Sætveit and the
Movie sofa by Rane Vaskivuori. The concepts presented by Martela in Stockholm
were favourably received; both the Mybox desk by Iiro Viljanen and the book
shelf/space divider by Pekka Toivola aroused discussion and interest, as had
been hoped for.
At the Milan Furniture Fair in April, Martela set up its own exhibition with the
theme "under THE Tree". The exhibition was named after The Tree space divider,
designed by Professor Eero Aarnio.
Shares
During January-March, 137,640 (670,567) of the company's A shares were traded on
the OMX Nordic Exchange Helsinki, corresponding to 3.9 per cent (18.9) of all A
shares. The higher trading figure of the comparison period in 2007 was due
partly to the acquisition of shares by Evli Alexander Management Oy for the
three-year share-based incentive system. At that time, 143,166 shares were
acquired for EUR 1.2 million in cash.
The value of trading during the review period was EUR 1.1 million (5.5), and the
share price was EUR 8.35 at the beginning and EUR 8.56 at the end of the period.
During the review period the share price was EUR 8.78 at its highest and EUR
7.36 at its lowest. At the end of March, equity per share was EUR 7.33 (6.18).
Treasury shares
The company did not purchase any Martela shares for the treasury in
January-March. On 31 March 2008, Martela owned 67,700 Martela A shares,
purchased at an average price of EUR 10.65. Martela's holding of treasury shares
amounts to 1.6 per cent of all shares and 0.4 per cent of all votes.
2008 Annual General Meeting
The Annual General Meeting was held on 1 April 2008. The meeting approved the
financial statements and discharged the responsible parties from liability for
the 2007 financial year. The AGM decided, in accordance with the Board of
Directors' proposal, to distribute a dividend of EUR 0.50 per share, totalling
EUR 2,043,950. Heikki Ala-Ilkka, Tapio Hakakari, Heikki Martela, Pekka Martela,
Jori Keckman and Jaakko Palsanen were elected as members of the Board of
Directors for the next term. KPMG Oy Ab, a firm of Authorised Public
Accountants, was elected as the company's Auditor.
The AGM also approved the Board of Directors' proposals, detailed in the meeting
notice, to authorise the Board to acquire and/or dispose of the company's own
shares.
Furthermore, the AGM decided, in accordance with the Board of Directors'
proposal, to amend the company's Articles of Association pursuant to the new
Companies' Act which entered into force on 1 September, 2006.
The new Board of Directors convened after the Annual General Meeting and elected
Heikki Ala-Ilkka as Chairman and Pekka Martela as Vice Chairman.
Post-balance sheet events
No significant events requiring reporting have taken place since the
January-March period and operations have continued according to plan.
Short-term risks
The greatest risk to profit performance is related to the continuation of
general economic growth and the consequent overall demand for office furniture.
The price trend of purchased materials and components also affects the
short-term outlook.
The company's 2007 annual report presents the risks related to Martela's
business operations in more detail.
Outlook for 2008
The overall outlook for 2008 is still favourable. The outlook is supported,
among other things, by the solid growth of sales and profit early in the year
and the general positive trend in office construction. It is expected that the
whole year's operating profit before non-recurring items will be better than
last year.
GROUP INCOME STATEMENT (EUR 1000)
2008 2007 2007
1-3 1-3 1-12
Revenue 36.090 29.867 128.445
Other operating income 0.729 1.681 3.023
Employee benefits expenses -7.880 -6.968 -28.723
Operating expenses -24.842 -22.134 -91.236
Depreciation and impairment -0.734 -0.776 -3.231
Operating profit/loss 3.362 1.670 8.278
Financial income and expenses -0.189 -0.166 -0.726
Profit/loss before taxes 3.173 1.504 7.552
Income tax -0.777 -0.206 -2.165
Profit/loss for the period 2.396 1.298 5.387
Basic earnings per share, eur 0.59 0.32 1.32
Diluted earnings per share, eur 0.59 0.32 1.32
GROUP BALANCE SHEET (EUR 1000) 31.3.2008 31.3.2007 31.12.2007
ASSETS
Non-current assets
Intangible assets 0.682 0.744 0.633
Tangible assets 14.279 15.414 14.151
Investments 0.054 0.054 0.053
Deferred tax assets 0.242 0.550 0.240
Pension receivables 0.035 0.018 0.035
Receivables 0.623 0.000 0.623
Investment properties 0.600 1.160 1.203
Total 16.514 17.940 16.938
Current assets
Inventories 13.015 12.680 13.635
Receivables 22.420 21.167 23.536
Financial assets at fair value
through profit and loss 2.003 1.961 2.004
Cash and cash equivalents 9.559 2.909 7.686
Total 46.997 38.717 46.861
Total assets 63.511 56.656 63.800
EQUITY AND LIABILITIES
Equity attributable to shareholders
of the parent
Share capital 7.000 7.000 7.000
Share premium account 1.116 1.116 1.116
Other reserves 0.117 0.117 0.117
Translation differences -0.045 -0.192 -0.129
Retained earnings 22.379 17.935 22.060
Treasury shares -0.721 -0.721 -0.721
Share-based incentives 0.100 0.000 0.067
Total 29.946 25.255 29.510
Non-current liabilities
Interest-bearing liabilities 10.160 12.452 10.453
Deferred tax liability 1.521 0.149 1.553
Total 11.681 12.601 12.006
Current liabilities
Interest-bearing 3.717 3.904 3.969
Non-interest bearing 18.167 14.896 18.315
Total 21.884 18.800 22.284
Total liabilities 33.565 31.401 34.290
Equity and liabilities, total 63.511 56.656 63.800
STATEMENT OF CHANGES IN EQUITY (EUR 1000)
Equity attributable to equity holders of the parent
Share Share Other Trans. Retained Treasury Total
capital premium reserves diff. earnings shares
account and share-
based inc.
01.01.2007 7.000 1.116 0.117 -0.129 17.542 -0.721 24.925
Translation diff. -0.063 -0.063
Profit/loss for
the period 1.298 1.298
Other change 0.117 0.117
Total rec. income
and expense -0.063 1.415 1.352
Dividends -1.022 -1.022
31.03.2007 7.000 1.116 0.117 -0.192 17.935 -0.721 25.255
1.1.2008 7.000 1.116 0.117 -0.129 22.127 -0.721 29.510
Translation diff. 0.084 0.084
Profit/loss for
the period 2.396 2.396
Other change 0.000
Tot rec. income
and expense 0.084 2.396 2.480
Dividends -2.044 -2.044
31.03.2008 7.000 1.116 0.117 -0.045 22.479 -0.721 29.946
CONSOLIDATED CASH FLOW STATEMENT (EUR 1000)
2008 2007 2007
1-3 1-3 1-12
Cash flows from operating activities
Cash flow from sales 36.816 33.969 130.834
Cash flow from other operating income 0.729 0.086 0.550
Payments on operating costs -34.793 -31.282 -121.090
Net cash from operating activities
before financial items and taxes 2.753 2.773 10.294
Interest paid -0.169 -0.157 -0.842
Interest received 0.051 0.011 0.082
Other financial items -0.016 0.005 -0.021
Dividends received 0.000 0.000 0.001
Taxes paid 0.075 -0.006 0.381
Net cash from operating activities (A) 2.694 2.626 9.895
Cash flows from investing activities
Capital expenditure on tangible and
intangible assets -0.174 -0.297 -2.256
Proceeds from sale of tangible and
intangible assets 0.000 2.307 2.028
Proceeds from sale of shares in subsidiaries 0.000 0.000 2.150
Loans granted 0.000 -1.203 -1.193
Repayments of loans receivables 0.023 0.000 0.011
Net cash used in investing activities (B) -0.152 0.808 0.740
Cash flows from financing activities
Proceed from short-term loans 0.000 0.000 0.976
Repayments of short-term loans -0.233 -0.268 -1.704
Repayments of long-term loans -0.456 -1.255 -3.108
Dividends paid and other profit distribution 0.000 -0.939 -1.022
Net cash used in financial activities (C) -0.689 -2.462 -4.858
Change in cash and
cash equivalents (A+B+C) 1.853 0.972 5.778
(+ increase, - decrease)
Cash and cash equivalents at the beginning of
period 9.691 3.911 3.911
Translation differences 0.018 -0.013 0.002
Cash and cash equivalents at the end of period 11.562 4.870 9.691
SEGMENT REPORTING
One primary segment has been defined for Martela, namely the furnishing of
offices and public places. The revenue and result are as recorded in the
consolidated financial statements. The Group's secondary reporting segment has
been defined according to the geographical location of customers.
Tangible assets 1.1-31.3 2008
Land Buildings Machinery Other Work in
areas & equipment tangibles progress
Acquisitions 0.000 0.001 0.451 0.000 0.329
Decreases -0.000 -0.000 -0.004 -0.000 -0.000
Tangible assets 1.1-31.3 2007
Land Buildings Machinery Other Work in
areas & equipment tangibles progress
Acquisitions 0.000 0.669 0.282 0.001 0.167
Decreases -0.591 -2.943 -0.033 -0.000 -0.000
RELATED PARTY AND SHARE-BASED INCENTIVE PROGRAMME
The CEO and the group's management and some key-persons are included in a long-
term incentive scheme, extending from 2007 to the end of 2009.
KEY FIGURES/RATIOS
2008 2007 2007
1-3 1-3 1-12
Operating profit/loss 3.362 1.670 8.278
- in relation to revenue % 9.3 5.6 6.4
Profit/loss before taxes 3.173 1.504 7.552
- in relation to revenue % 8.8 5.0 5.9
Profit/loss for the period 2.396 1.298 5.387
- in relation to revenue % 6.6 4.4 4.2
Basic earnings per share, eur 0.59 0.32 1.32
Diluted earnings per share, eur 0.59 0.32 1.32
Equity/share, eur 7.33 6.18 7.22
Equity ratio 47.2 44.7 46.7
Return on equity * 32.2 20.7 19.8
Return on investment * 31.1 16.3 19.6
Interest-bearing net-debt, eur million 2.3 11.5 4.7
Gearing ratio 7.7 45.5 16.0
Capital expenditure, eur million 0.9 1.3 3.2
- in relation to revenue % 2.5 4.2 2.5
Personnel at the end of period 659 628 655
Average personnel 660 629 663
Revenue/employee, eur thousand 54.7 47.5 193.7
Key figures are calculated according to formulae as presented in Annual Report
2007.
* When calculating return on equity and return on investment the profit/loss for
the period has been multiplied in Interim reports.
CONTINGENT LIABILITIES
31.3.2008 31.3.2007 31.12.2007
Mortgages and shares pledged 15.673 19.418 15.673
Guarantees 0.000 0.103 0.000
Other commitments 0.318 0.318 0.317
RENTAL COMMITMENTS 10.240 9.615 10.674
DEVELOPMENT OF SHARE PRICE 2008 2007 2007
1-3 1-3 1-12
Share price at the end of period, EUR 8.56 9.00 8.35
Highest price, EUR 8.78 9.56 10.35
Lowest price, EUR 7.36 6.39 6.39
Average price, EUR 8.20 8.25 8.64
This interim report has not been audited
Helsinki, April 22, 2008
Martela Corporation
Board of Directors
Heikki Martela
CEO
For more information, please contact
Heikki Martela, CEO, tel. +358 50 502 4711
Distribution
OMX Nordic Exchange
Main news media
www.martela.com
