TIIMARI PLC INTERIM REPORT 14 November 2008 at 16.00 TIIMARI PLC INTERIM REPORT 1 JANUARY - 30 SEPTEMBER 2008 (Unaudited) TIIMARI CONTINUED TO INVEST IN GROWTH. RESULT OF THE ENTIRE YEAR EXPECTED TO REMAIN BELOW 2007 LEVEL. KEY FIGURES FOR THE PERIOD Net sales grew by 20% totalling MEUR 51.9 (43.3), the sales of the third quarter being MEUR 18.1 (14.1). Operating profit for the review period was MEUR -5.3 (-2.3) and MEUR -2.0 (-0.9) for the third quarter. Earnings per share for the review period were EUR -0.76 (-0.40). The average number of employees for the period under review was 680 (562). The agreement on acquiring the Swedish franchising business was finalised and the operations were consolidated with the Tiimari business in Sweden as of 1 September 2008. Tiimari has continued its expansion, and investments in new stores have been made especially in Russia's St. Petersburg and in Poland. Tiimari's capital expenditure during the period under review amounted to MEUR 2.9 (0.8). MANAGING DIRECTOR KRISTINA ILLI: "Tiimari's operations during the review period were characterised by the integration of Gallerix operations, closing of the Kokkola factory as well as taking in-house the previously outsourced financial management of the group. All these factors resulted in considerable extra expenditure during the review period, which will be cease during the final quarter. Expansion to Russia and Poland, along with the expansion of the Gallerix concept in Finland, required investments and measures to speed up the launch of operations, both of which had a significant cost effect during the period under review. Integration of the Swedish business, closing of the Kokkola unit, insourcing of financial management and the new inventory valuation practice resulted in additional expenses of over MEUR 2 in the review period. Net financing costs increased both due to acquisitions and the growth in interest rates. Even though the impact of the cost increase arising from these projects does not extend to the final quarter, it is probable that the negative cumulative cost effect cannot be offset during the current financial year. The cost savings will materialise in their entirety during 2009. After the review period, operations under the Tiimari concept were launched in Lithuania by opening the first store in Vilnius. The period saw also the emergence of a new retail concept Paperazzi, specialising in paper and crafts products. The stationary retail concept is very successful in multiple markets and we believe it will be a success in Finland and throughout Tiimari's operating area. The Paperazzi concept utilises Tiimari's solid retail and purchasing and logistics expertise. The first Paperazzi stores will be opened in Turku and Helsinki in November. Tiimari has a stable basis to respond to the deteriorating economic situation from and will have the short-term focus on sales growth through the existing retail network and the priority of expansion investments in targets with quick impact. Improved profitability is sought by ensuring the realisation of synergies arising from acquisitions as well as further streamlining the cost structure. In addition to the above, cash flow improvements are also pursued through increased inventory turnover. Tiimari Plc's profits will accrue mainly during the final quarter as in earlier years." TIIMARI GROUP'S NET SALES AND PROFITS Tiimari group's net sales grew by 20% totalling MEUR 51.9 (43.3) in the review period. EBITDA was MEUR -2.9 (-0.7) and operating profit MEUR -5.3 (-2.3). Net sales for the third quarter of the year amounted to MEUR 18.1 (14.8). EBITDA was MEUR -1.1 (-0.4) and operating profit MEUR -2.0 (-0.9). During the review period, Tiimari closed down the Kokkola factory and focused on the integration of the business in Sweden. Expenses related to these measures resulted in costs of approximately MEUR 0.5 in the review period. The previously outsourced financial management charges and overlapping costs during the insourcing of the respective functions resulted in extra costs of roughly another MEUR 0.5. Revision of the inventory valuation practice in 2007 resulted in MEUR 1.1 higher materials costs in the period under review. Investments in international business growth weighed the operating profit down by MEUR 0.5 in the early stages of internationalisation. The negative profit impact was mainly due to expansion in Russia, being partly attributable to the operations in Poland. The impact of the acquisition of Gallerix on the net sales for the review period amounted to MEUR 9.1, affecting the operating profit by MEUR -0.7. A total of MEUR 0.4 of amortization related to the purchase price allocation are included in the operating profit. Net financial expenses during the period under review amounted to MEUR 2.5 (2.0). Financial expenses were increased by the growth in interest rates and the financing of acquisitions realized in the second half of 2007, as well as international expansion projects. Taxes for the review period were recognised in accordance with the prudence principle and no tax claims were recognised for the accumulated losses. The tax effect of the third quarter was thus MEUR -0.9. The result for the period under review was MEUR -7.8 (-4.0), the result for the second quarter of the year being MEUR -3.9 (-1.2). Earnings per share totalled EUR -0.76 (-0.40). BUSINESS OPERATIONS TIIMARI RETAIL Net sales of the Tiimari Retail segment grew by 22% during the review period, totalling MEUR 51.1 (41.9), the operating profit accounting for MEUR -5.5 (-2.0) or -11% (-5) of the net sales. Net sales for the third quarter of the year were MEUR 17.7 (14.6) and the operating profit MEUR -2.1 (-0.7). Of the net sales for the segment, MEUR 38.3 (38.4) was generated in Finland, accounting for 75% (92) of the sales of the segment. MEUR 38.2 of the sales of the segment was generated in Tiimari stores and MEUR 0.2 in Gallerix stores in Finland. The increase in domestic net sales was negatively impacted by the renovation of four shopping centres used by Tiimari. Overseas net sales increased to MEUR 12.7 (3.4). The operations of international business units developed as planned, except for Russia, where business started slower than planned. Net sales for the operations under the Gallerix concept, which was acquired in the last quarter of 2007, were MEUR 9.1, of which MEUR 8.9 was generated in Sweden. Operating profit of the segment remains below that of the comparison period. The group adopted a new inventory valuation practice as of July 2007. The impact of the valuation recognition of the review period totalled MEUR 1.5 (0.4). Tiimari focused both on the development of operations and international expansion. Related expenses weigh down the operating profit, as the new stores will reach the target sales level gradually. The franchising business in Sweden was acquired in September and consolidated in the financial statements as of the beginning of September. The purchase price of MEUR 0.9 consisted of liabilities and offset Tiimari receivables from the seller. Goodwill arising on the acquisition is referable to the administrative and logistics synergies of the Swedish operations as well as the development of operations to reflect the Tiimari concept in Finland. Net sales for September were MEUR 0.2, the operating profit totalling MEUR -0.1. Preliminary purchase price allocation of the acquisition is presented in the tables attached. The segment's investments into fixed assets other than business acquisitions amounted to MEUR 1.9 (0.5) and consisted mainly of expenses related to the opening of stores in Poland and Russia and store renewals in Finland. The business of both the concepts under the segment is very seasonal with a major share of the net sales being generated and earnings accrued in the final quarter. In 2007, 60% of the net sales for the year, excluding the effect of Gallerix during the last quarter, were generated during the first three quarters. Integration of the operations of Gallerix International AB, which was acquired in late 2007, with the Tiimari Retail operations has progressed according to plan. The coordination of purchasing and integration of information systems was completed. In addition, Tiimari expects to achieve savings through the harmonisation of purchasing contracts and the utilisation of Maritii Oy's logistics operations. At the end of the period under review, Tiimari Retail had 194 stores operated by the company (178). In Finland, one store was closed and new stores opened in Pori, Rauma and Kuopio during the period. The second store was opened in St. Petersburg, Russia in addition to the two new stores in Poland. In Sweden, two franchise stores under the Gallerix concept were transferred to the group. A central part of Tiimari's strategy is to increase the number of stores and to develop the retail concepts. The acquisition of the Gallerix concept created new opportunities for business growth. During the review period, Tiimari developed a new stationary retail concept, called Paperazzi. The first concept stores will be opened in Turku and Helsinki in November. Tiimari's various concepts have synergies and promote each other. Tiimari Retail will become an increasingly lucrative partner for shopping centres and other store facility leaseholders through the combined appeal of three vibrant concepts. The combination of the concepts also strengthens the prerequisites for growth in the Baltic area, Poland, Sweden and Russia. Number of stores -------------------------------------------------------------------------------- | | 09/2008 | 09/2007 | -------------------------------------------------------------------------------- | Finland | 158 | 156 | -------------------------------------------------------------------------------- | Estonia | 14 | 14 | -------------------------------------------------------------------------------- | Latvia | 4 | 4 | -------------------------------------------------------------------------------- | Norway | 1 | 1 | -------------------------------------------------------------------------------- | Poland | 7 | 3 | -------------------------------------------------------------------------------- | Russia | 2 | 0 | -------------------------------------------------------------------------------- | Sweden | 8 | | -------------------------------------------------------------------------------- | Stores operated by the company, total | 194 | 178 | -------------------------------------------------------------------------------- | Franchise stores | | | -------------------------------------------------------------------------------- | Finland | 4 | 6 | -------------------------------------------------------------------------------- | Sweden | | 10 | -------------------------------------------------------------------------------- | Tiimari stores, total | 198 | 194 | -------------------------------------------------------------------------------- | Gallerix stores | | | -------------------------------------------------------------------------------- | Finland | 2 | | -------------------------------------------------------------------------------- | Sweden | 12 | | -------------------------------------------------------------------------------- | Stores operated by the company, total | 14 | | -------------------------------------------------------------------------------- | Franchise stores | | | -------------------------------------------------------------------------------- | Sweden | 79 | | -------------------------------------------------------------------------------- | Gallerix stores, total | 93 | | -------------------------------------------------------------------------------- | Tiimari Retail stores, total | 291 | 194 | -------------------------------------------------------------------------------- At the end of the review period, the number of employees was 671 (521). TIIMORE Net sales for the Tiimore segment for the period under review were MEUR 0.8 (1.4) and the operating profit was MEUR 0.0 (-0.3). Net sales for the second quarter were MEUR 0.2 (0.2), the operating profit totalling MEUR ‑0.2 (-0.3). Tiimore invested in enhanced marketing and sales activities as well as organisational development. In accordance with the strategy of Tiimore, the product assortment has been expanded and internal manufacturing was discontinued as the Kokkola unit was closed in the first quarter of the year and the premises were sold. The sales price for the premises was MEUR 1.1. The gain on the sale of approximately MEUR 0.9 is included in the operating profit. Expenses related to the discontinuance of operations weighed down the operating profit in the period under review. Ville Linna joined Tiimore Oy as the Managing Director in the beginning of September. The segment did not have any notable capital expenditure in the period. At the end of the period under review, the number of employees of the segment was 13 (37). TIIMARI GROUP'S BALANCE SHEET, FINANCIAL POSITION AND CASH FLOW Net working capital of the group amounted to MEUR 17.0, being MEUR 20.2 at the end of the equivalent period in 2007 and MEUR 15.4 at the end of the year 2007. The business acquisition made in Sweden increased the working capital by MEUR 0.9 at the end of the review period. Gallerix's share of the net working capital at the end of 2007 was MEUR 1.1 and MEUR 1.9 at the end of the review period. Gallerix was not included in the figures of the comparison period. The level of inventories was increased by MEUR 2.0 from that at the turn of the year, the total trade receivables decreasing by MEUR 2.1. Current non-interest-bearing liabilities decreased by MEUR 2.7 from the turn of the year. In Finland, the company continued the program for improved working capital efficiency, the primary goal of which is an increased level of inventory turnover. The reduction of working capital will have a material impact on the company's financial situation in the future. Long-term assets totalled MEUR 63.9 (62.0 at the end of 2007). At the end of September, Tiimari Plc's shareholders' equity was increased through a directed issue with the assets accrued through subscriptions on the last day of the review period resulting in a MEUR 3.1 increase in liquid assets and shareholders' equity. Solvency ratio was 34% (36%) and net gearing 123% (122%), the equivalent figures at the end of 2007 being 41% and 79%, respectively. Key financial figures were affected by the strong seasonality of the group's business, which has an impact on both the total working capital and accrual of earnings. In the period under review, total interest-bearing liabilities increased by MEUR 10.4, and loan drawals were used for financing working capital as well as business expansion. Net cash flow from operations was MEUR -9.4 (-7.7). The main revenue inflow takes place during the last quarter. SHORT-TERM RISKS AND UNCERTAINTIES The most significant factors causing uncertainty for Tiimari business operations are due to changes in the overall consumer demand and in the competitive environment, as well as the development of demand in the company's new market areas. Our success in obtaining good business locations will have a major effect on the development of both sales and profits. Other major risks relate to the development of the purchase price levels and the reliability of the supply chain. Tiimari strives to be prepared for changes in consumer demand by understanding the consumer, by constantly developing its retail concepts, and by implementing new and innovative business solutions. The turbulent financial markets and downturn in the general economic situation will further increase the financial uncertainties. Weakening demand may impair the development of Tiimari's sales and have a negative affect on the company's future cash flows. However, the downturn in the overall economic situation has traditionally had a proportionately minor impact on Tiimari's retail sales. PERSONNEL In the period under review, the average number of employees for the group was 680 (562), and the number of personnel at the end of the period was 699 (559). Of the employees, 500 worked in Finland. The employee count was increased by business acquisitions and opening of new stores. SHARE CAPITAL AND TREASURY SHARES Tiimari's share capital on 30 September 2008 was EUR 7,686,200. The number of shares and the voting rights related thereto was 10,311,070. On 29 September 2008, the Board of Directors used its authorisation for share issues by emitting 1,000,000 new shares for institutional and professional investors. The major subscribers were Atine Group Oy and Varma Mutual Pension Insurance Company. The subscription price of the shares was EUR 3.10. The entire subscription price was paid on September 30 and was recognised in the distributable equity fund. New shares will become subject to trading during the last quarter. Tiimari Plc has had two stock option schemes. The scheme for 2005 has been closed because its terms were not met. In the stock option scheme for 2006, a total of 200,000 shares can be subscribed for, and the subscription period commences on September 1 2009. At the end of the review period, the number of treasury shares held by the company was 11,850. The number of shares has not changed since the beginning of the period. The shares held by the company account for 0.11% of share capital and voting rights. A dividend of EUR 0.16 per share totalling 1,647,875.20 euros was paid for the financial year 2007. The reconciliation date for dividend distribution was April 9 2008, and the dividend was paid on April 17 2008. SHARE PRICES Tiimari's shares are quoted on the NASDAQ OMX Helsinki Ltd in the small cap group. At the end of the review period, the price of Tiimari's share was EUR 3.28 (4.87 on December 31 2007). The market value of the share capital was MEUR 33.8 (50.2 on December 31 2007). The number of shareholders at the end of the review period was 2,552 (2,596 on December 31 2007). NOTICE PURSUANT TO THE FINNISH SECURITIES MARKETS ACT, CHAPTER 2, SECTION 10 REGARDING CHANGE IN OWNERSHIP The company has received information that Varma Mutual Pension Insurance Company's (Varma) share of ownership has exceeded the one twentieth (1/20) flagging limit after Varma subscribed for 322,580 new shares in the company's directed share issue, decided on and fully subscribed by September 29 2008. Varma's holding before the directed issue: 375,000 Tiimari Plc shares with a 3.637% share of capital and voting rights. Varma's holding of the shares and voting rights exceeds one-twentieth (1/20) after the share issue: 697,580 Tiimari Plc shares with a 6.167% share of capital and voting rights. The company has received information that Baltiska Handels A.B.'s share of ownership has fallen below the flagging limit after Tiimari's directed share issue, decided on and fully subscribed by September 29 2008. Baltiska Handels A.B. owns 516,483 Tiimari Plc shares. Before the directed share issue, the company's share of capital and voting rights was 5.002%, thus exceeding one twentieth (1/20) of the total. After the share issue, Baltiska Handels A.B.'s share of capital and voting rights will be 4.57%, remaining thus below one twentieth (1/20) of the total. TIIMARI ANNUAL GENERAL MEETING 2008 Tiimari Plc Annual General Meeting held on April 4 2008 approved the 2007 financial statements. The Annual General Meeting decided that a dividend of EUR 0.16 per share or a total of 1,647,875.20 be paid. The Annual General Meeting discharged the Board of Directors and the Managing Director from liability for the financial year 2007. It was decided that the Board of Directors shall consist of seven members, the members elected to the Board being Arja Hautanen, Erik Helin, Teppo Kauppila, Kirsti Lindberg-Repo, Juha Mikkonen, Alexander Rosenlew and Peter Seligson. KPMG Oy Ab was elected as the company auditor, which in turn appointed the Authorised Public Accountant Sixten Nyman as the principal auditor. Under a decision by the Annual General Meeting, the Board of Directors was authorised to decide on assigning an aggregate maximum of 1,000,000 new shares in the form of a share issue or special rights (including stock options) entitling to shares pursuant to Chapter 10, Section 1 of the Finnish Companies Act in one or more tranches. The Board of Directors may decide to issue either new shares or the company's treasury shares that may be in the company's possession. The proposed maximum amount of the authorisation represents approximately 9.7% of all company shares on the date on which the invitation to the Annual General Meeting was published. The authorisation is used for financing and implementing potential acquisitions or other arrangements, consolidating the company's balance sheet and financial situation, for implementing staff engagement and incentive compensation systems or for any other purposes determined by the Board of Directors. The authorisation covers the right of the Board of Directors to decide on any and all terms and conditions of share issues and the issuing of special rights pursuant to Chapter 10, Section 1 of the Finnish Companies Act, including the right to identify the beneficiaries of shares or of special rights entitling to shares and to determine the amount of consideration. The authorisation shall thus entitle the Board of Directors to directed issues of shares or special rights i.e. to a deviation from the shareholders' pre-emptive right subject to the provisions of the applicable law. The authorisation revokes all previous authorisations and remains in force until the next Annual General Meeting. ORGANISATION MEETING OF THE BOARD OF DIRECTORS In its organisation meeting, the Board of Directors elected Peter Seligson as the Chairman. Juha Mikkonen was elected as the chairman of the Audit Committee with Teppo Kauppila and Peter Seligson as committee members. The Board of Directors elected Peter Seligson to chair the Nominating and Compensation committee and appointed Alexander Rosenlew and Arja Hautanen as committee members. EVENTS AFTER THE PERIOD UNDER REVIEW In October, a Lithuanian subsidiary, UAB Tiimari was established. The first store was opened in Vilnius in the beginning of November. In October, one new store was opened in Tallinn, Estonia and two new stores in St. Petersburg, Russia. PROSPECTS The nature of the business of Tiimari group is mainly defensive, and it has traditionally not been sensitive to economical fluctuations. The company's sales for the last quarter have thus far developed well and exceeded in October the level of the equivalent period in 2007 by 4%. The scope of overseas operations is more extensive than a year ago, which will increase sales as compared to the previous year. Net sales of Gallerix were consolidated with the figures of the group for the last two months of the comparison year. The group has focused strongly on business development and expansion. This priority, together with the increased financial expenses, weighed down the result of the period under review. Compared with 2007, the financial expenses will remain at a higher level also during the fourth quarter. The development projects will bring savings in the last quarter, but this favourable profit effect is not expected to offset the deviation from the result of the first three quarters of the year as compared with the previous financial year. The profit before tax of the entire financial year is expected to remain below the 2007 level. Kristina Illi Managing Director Tiimari Plc This Interim Report was prepared in accordance with IAS 34 standard (Interim Financial Reporting) and the same accounting policies and methods of computation as in the financial statements for 2007. All figures in the accounts have been rounded and consequently the sum of individual figures may deviate from the presented total figure. The figures in the tables are presented in thousands of euros. Tiimari Plc has adopted the IFRS 8 standard (Operating Segments) as of January 1 2008, which will affect the notes to the financial statements. Use of Estimates: The preparation of financial statements in accordance with IFRS requires the management to use estimates and assumptions that affect reported amounts of assets and liabilities on the balance sheet, disclosure of contingent assets and liabilities and the amount of income and expenses. Although the estimates are based on the management's best knowledge of current events and actions, actual results may ultimately differ from the estimates used. The valuation principles for inventories were revised on 1 July 2008. Previously, inventories were depreciated in their entirety after a storage time of 30 months, but impairment is now staggered as follows: 30 months 25%, 36 months 25% and 42 months 50%. Were the same practice adopted in the beginning of the year, the impairment of inventories would amount to MEUR 0.7. The product sale price has on average covered both the original acquisition cost and cost of sales. Tiimari's business is characterised by seasonality with the profits being generated largely during the final quarter. Regular goodwill impairment testing is thus carried out towards the end of each year. Goodwill shall be tested earlier during the year in case of an indication of significant changes to the expected cash flows of a cash-generating unit arising from occurrences in business operations or in the operating environment. Adoption of the amended and new International Financial Reporting Standards (IFRS) as of January 1 2008: - IFRIC 11 IFRS 2 - Group Treasury Share Transaction - IFRIC 12 Service Concession Agreements - IFRIC 13 Customer Loyalty Programmes - IFRIC 14 IAS 19 - The Limit on Defined Benefit Asset, Minimum Funding Requirements and their Interaction The adoption of the amended and revised standards and interpretations has no material effect on the Interim Report. CONSOLIDATED PROFIT AND LOSS ACCOUNT -------------------------------------------------------------------------------- | PROFIT AND LOSS | | | | | | | ACCOUNT | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | EUR 1000 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | | 2008 | 2007 | 2008 | 2007 | 2007 | | | 7-9 | 7-9 | 1-9 | 1-9 | 1-12 | -------------------------------------------------------------------------------- | Net sales | 18 054 | 14,805 | 51,920 | 43,279 | 74,570 | -------------------------------------------------------------------------------- | Other operating | 262 | 9 | 1,275 | 171 | 347 | | income | | | | | | -------------------------------------------------------------------------------- | Change in | 162 | 352 | 757 | -509 | -1,269 | | inventories | | | | | | -------------------------------------------------------------------------------- | Materials and | -5,686 | -6,865 | -19,722 | -16,876 | -28,206 | | supplies | | | | | | -------------------------------------------------------------------------------- | Employee benefit | -4,759 | -3,519 | -13,863 | -11,114 | -15,708 | | costs | | | | | | -------------------------------------------------------------------------------- | Depreciation | -971 | -534 | -2,449 | -1,645 | -2,402 | -------------------------------------------------------------------------------- | Other operating | -9,106 | -5,161 | -23,218 | -15,615 | -23,003 | | costs | | | | | | -------------------------------------------------------------------------------- | Operating | -2,044 | -913 | -5,301 | -2,309 | 4,329 | | profit/loss | | | | | | -------------------------------------------------------------------------------- | Financial income | -939 | -634 | -2,485 | -1,974 | -2,747 | | and expenses | | | | | | -------------------------------------------------------------------------------- | Profit/loss before | -2,983 | -1,547 | -7,786 | -4,283 | 1,582 | | taxes | | | | | | -------------------------------------------------------------------------------- | Income taxes | -896 | 303 | 0 | 303 | 1,580 | -------------------------------------------------------------------------------- | Profit/loss for | -3,879 | -1,244 | -7,786 | -3,980 | 3,162 | | the review period | | | | | | -------------------------------------------------------------------------------- | Parent company's | -0.38 | -0.13 | -0.76 | -0.40 | 0.32 | | shareholders' | | | | | | | profit, earnings | | | | | | | per share | | | | | | -------------------------------------------------------------------------------- CONSOLIDATED BALANCE SHEET -------------------------------------------------------------------------------- | BALANCE | | | | -------------------------------------------------------------------------------- | ASSETS | 30.9.2008 | 30.9.2007 | 31.12.2007 | -------------------------------------------------------------------------------- | Goodwill | 38,348 | 32,987 | 37,385 | -------------------------------------------------------------------------------- | Other intangible assets | 20,420 | 15,009 | 19,760 | -------------------------------------------------------------------------------- | Tangible assets | 4,484 | 3,408 | 4,650 | -------------------------------------------------------------------------------- | Other financial assets | 105 | 114 | 114 | -------------------------------------------------------------------------------- | Receivables | 198 | 79 | 100 | -------------------------------------------------------------------------------- | Deferred tax assets | 299 | 1,584 | 30 | -------------------------------------------------------------------------------- | Total non-current assets | 63,855 | 53,181 | 62,039 | -------------------------------------------------------------------------------- | Inventories | 27,449 | 24,934 | 25,473 | -------------------------------------------------------------------------------- | Trade and other receivables | 3,830 | 4,222 | 6,877 | -------------------------------------------------------------------------------- | Liquid assets | 3,951 | 1,273 | 2,852 | -------------------------------------------------------------------------------- | Total current assets | 35,230 | 30,429 | 35,202 | -------------------------------------------------------------------------------- | Assets available for sale | 0 | 0 | 124 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | TOTAL ASSETS | 99,085 | 83,610 | 97,365 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | SHAREHOLDERS' EQUITY AND | | | | | LIABILITIES | | | | -------------------------------------------------------------------------------- | Parent company's shareholders' | | | | -------------------------------------------------------------------------------- | equity | | | | -------------------------------------------------------------------------------- | SHAREHOLDERS' EQUITY | 33,276 | 30,462 | 39,667 | -------------------------------------------------------------------------------- | LIABILITIES | | | | -------------------------------------------------------------------------------- | Deferred tax liabilities | 6,596 | 5,642 | 6,692 | -------------------------------------------------------------------------------- | Interest-bearing liabilities | 27,870 | 24,602 | 28,220 | -------------------------------------------------------------------------------- | Provisions | 41 | 27 | 23 | -------------------------------------------------------------------------------- | Total non-current liabilities | 34,507 | 30,271 | 34,935 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Interest-bearing current | 17,025 | 13,708 | 5,787 | | liabilities | | | | -------------------------------------------------------------------------------- | Provisions | 0 | 22 | 8 | -------------------------------------------------------------------------------- | Accounts payable and other | 14,278 | 9,147 | 16,968 | | liabilities | | | | -------------------------------------------------------------------------------- | Tax liabilities | 0 | 0 | 0 | -------------------------------------------------------------------------------- | Total current liabilities | 31,302 | 22,877 | 22,763 | -------------------------------------------------------------------------------- | TOTAL LIABILITIES | 65,809 | 53,148 | 57,698 | -------------------------------------------------------------------------------- | TOTAL SHAREHOLDERS' EQUITY AND | 99,085 | 83,610 | 97,365 | | LIABILITIES | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- CHANGES TO THE GROUP'S SHAREHOLDERS' EQUITY -------------------------------------------------------------------------------- | | | Distribu | | | | | | | | - | | | | | -------------------------------------------------------------------------------- | | | table | | | | | -------------------------------------------------------------------------------- | | Share | equity | Own | Transl. | Retained | | -------------------------------------------------------------------------------- | SHAREHOLDERS' | capita | fund | share | differenc | earnings | Total | | EQUITY | l | | s | e | | | -------------------------------------------------------------------------------- | 1.1.2008 | 7,686 | 13,821 | -55 | -219 | 18,434 | 39,667 | -------------------------------------------------------------------------------- | Transl. | | | | -59 | | -59 | | difference from | | | | | | | | conversion | | | | | | | -------------------------------------------------------------------------------- | Profit for the | | | | | -7,787 | -7,787 | | period | | | | | | | -------------------------------------------------------------------------------- | Total | 0 | 0 | 0 | -59 | -7,787 | -7,846 | | recognised | | | | | | | | income and | | | | | | | | expenses | | | | | | | -------------------------------------------------------------------------------- | Share issue | | 3,100 | | | | 3,100 | -------------------------------------------------------------------------------- | Distribution of | | | | | -1,648 | -1,648 | | dividend | | | | | | | -------------------------------------------------------------------------------- | Other changes | | | | | 2 | 2 | -------------------------------------------------------------------------------- | 30.9.2008 | 7,686 | 16,921 | -55 | -278 | 9,001 | 33,276 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | | | Distribu | | | | | | | | - | | | | | -------------------------------------------------------------------------------- | | | table | | | | | -------------------------------------------------------------------------------- | | Share | equity | Own | Transl. | Retained | | -------------------------------------------------------------------------------- | SHAREHOLDERS' | capita | fund | share | differenc | earnings | Total | | EQUITY | l | | s | e | | | -------------------------------------------------------------------------------- | 1.1.2007 | 7,686 | 11,558 | -55 | -27 | 16,729 | 35,891 | -------------------------------------------------------------------------------- | Transl. | | | | 16 | | 16 | | difference from | | | | | | | | conversion | | | | | | | -------------------------------------------------------------------------------- | Profit for the | | | | | -3,981 | -3,981 | | period | | | | | | | -------------------------------------------------------------------------------- | Total | | | | 16 | -3,981 | -3,965 | | recognised | | | | | | | | income and | | | | | | | | expenses | | | | | | | -------------------------------------------------------------------------------- | Distribution of | | | | | -1,477 | -1,477 | | dividend | | | | | | | -------------------------------------------------------------------------------- | Other changes | | | | | 13 | 13 | -------------------------------------------------------------------------------- | 30.9.2007 | 7,686 | 11,558 | -55 | -11 | 11,284 | 30,462 | -------------------------------------------------------------------------------- CONSOLIDATED CASH FLOW STATEMENT -------------------------------------------------------------------------------- | Cash flows from operations | 1.9.2008 | 1.9.2007 | 1.12.2007 | -------------------------------------------------------------------------------- | Result for the period | -7,786 | -3,981 | 3,162 | -------------------------------------------------------------------------------- | Adjustments: | | | | -------------------------------------------------------------------------------- | Depreciation and impairment | 2,449 | 1,644 | 2,402 | -------------------------------------------------------------------------------- | Financial income and expenses | 2,485 | 1,973 | 2,747 | -------------------------------------------------------------------------------- | Taxes | 0 | -303 | -1,580 | -------------------------------------------------------------------------------- | Other adjustments | -1,366 | -135 | 1,757 | -------------------------------------------------------------------------------- | Change in working capital: | | | | -------------------------------------------------------------------------------- | Change in short-term receivables | 3,445 | -190 | -2,540 | -------------------------------------------------------------------------------- | Change in inventories | -731 | 271 | 164 | -------------------------------------------------------------------------------- | Change in short-term liabilities | -4,954 | -4,858 | 1,888 | -------------------------------------------------------------------------------- | Interests paid | -2,578 | -1,962 | -3,079 | -------------------------------------------------------------------------------- | Interest income received | 93 | 66 | 193 | -------------------------------------------------------------------------------- | Taxes paid | -431 | -227 | 173 | -------------------------------------------------------------------------------- | Net cash flow from operations | -9,374 | -7,702 | 5,287 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Cash flows from investment | | | | | activities | | | | -------------------------------------------------------------------------------- | Investments in tangible and | -2,509 | -811 | -2,697 | | intangible assets | | | | -------------------------------------------------------------------------------- | Business acquisitions | -435 | 0 | -4,645 | -------------------------------------------------------------------------------- | Capital gains from tangible and | 1,111 | 6,680 | 6,818 | | intangible assets | | | | -------------------------------------------------------------------------------- | Repayments on loan receivables | -89 | 55 | -650 | -------------------------------------------------------------------------------- | Additional purchase price | 0 | -1,500 | -1,500 | -------------------------------------------------------------------------------- | Net cash flow from investments | -1,922 | 4,424 | -2,674 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Cash flows from financing | | | | | activities | | | | -------------------------------------------------------------------------------- | Share issue | 3,100 | | | -------------------------------------------------------------------------------- | Long-term loans, drawals | 0 | 6,500 | 12,229 | -------------------------------------------------------------------------------- | Long-term loans, repayments | -322 | -2,975 | -5,098 | -------------------------------------------------------------------------------- | Change in short-term loans | 11,238 | -5,820 | -13,732 | -------------------------------------------------------------------------------- | Dividends paid | -1,648 | -1,477 | -1,477 | -------------------------------------------------------------------------------- | Net cash flow from financing | 12,368 | -3,772 | -8,078 | -------------------------------------------------------------------------------- | Change in liquid assets | 1,072 | -7,050 | -5,465 | -------------------------------------------------------------------------------- | Liquid assets, beginning of period | 2,852 | 8,323 | 8,323 | -------------------------------------------------------------------------------- | Liquid assets in the acquired | 26 | | | | business | | | | -------------------------------------------------------------------------------- | Effects of exchange rate changes on | 1 | 0 | -6 | | liquid assets | | | | -------------------------------------------------------------------------------- | Liquid assets, end of period | 3,951 | 1,273 | 2,852 | -------------------------------------------------------------------------------- KEY FINANCIAL FIGURES -------------------------------------------------------------------------------- | | 2008 | 2007 | 2007 | -------------------------------------------------------------------------------- | | 1-9 | 1-9 | 1-12 | -------------------------------------------------------------------------------- | Net sales | 51,920 | 43,279 | 74,570 | -------------------------------------------------------------------------------- | Operating profit/loss | -5,301 | -2,309 | 4,329 | -------------------------------------------------------------------------------- | Profit/loss for the review | -7,786 | -3,980 | 3,162 | | period | | | | -------------------------------------------------------------------------------- | Earnings per share, EUR | -0.76 | -0.40 | 0.32 | -------------------------------------------------------------------------------- | Shareholders' equity per | 3.23 | 3.09 | 3.85 | | share, EUR | | | | -------------------------------------------------------------------------------- | Solvency ratio | 33.6 % | 36.4 % | 40.8 % | -------------------------------------------------------------------------------- | Gearing | 123.0 % | 121.6 % | 78.5 % | -------------------------------------------------------------------------------- | Balance sheet total | 99,085 | 83,610 | 97,365 | -------------------------------------------------------------------------------- | Average number of shares | 10,311 | 9,848 | 9,909 | | (1,000 pcs) | | | | -------------------------------------------------------------------------------- | Interest-bearing net | 40,944 | 37,037 | 31,155 | | liabilities | | | | -------------------------------------------------------------------------------- The diluted and undiluted earnings per share are identical, because the company has no equity instruments that could potentially dilute earnings per share. The key financial figures are calculated using the same methods of computation as in the previous financial statements. The rules are specified in the Annual Report of 2007. IMPACT OF ACQUISITIONS ON THE CONSOLIDATED BALANCE SHEET In September, Tiimari acquired the Swedish franchise business activities under the Tiimari concept from Roponen Detaljisthandel AB. The acquisition covers eight stores in Sweden. Net sales of Roponen Detaljisthandel AB were MEUR 3.6 in 2007, the operating profit totalling MEUR ‑0.6. The number of personnel transferred to Tiimari in the acquisition was 32. Were the acquisition made in the beginning of the review period, Tiimari's net sales would have amounted to MEUR 53.4 and the operating loss would have been MEUR -5.8. No part of the purchase price was allocated to intangible assets. Goodwill arising on the acquisition is referable to the synergies of the Swedish operations as well as the growth opportunities of the Tiimari concept in Sweden. Synergies are expected to be created through the integration of administration, coordination of logistics as well as the management of business locations. Because the balance sheet values are considered as equivalent to fair values, only the fair values are presented below. PRELIMINARY PURCHASE PRICE ALLOCATION -------------------------------------------------------------------------------- | Cash consideration | 0 | -------------------------------------------------------------------------------- | Costs attributable to the acquisition cost | 0 | -------------------------------------------------------------------------------- | Liabilities set off | 369 | -------------------------------------------------------------------------------- | Value of acquired asset | -502 | -------------------------------------------------------------------------------- | GOODWILL | 870 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | SPECIVFICATION OF ACQUIRED ASSETS: | -------------------------------------------------------------------------------- | Intangible fixed assets | 0 | -------------------------------------------------------------------------------- | Tangible fixed assets | 93 | -------------------------------------------------------------------------------- | Inventories | 1,245 | -------------------------------------------------------------------------------- | Receivables | 398 | -------------------------------------------------------------------------------- | Liquid assets | 26 | -------------------------------------------------------------------------------- | Deferred tax liabilities | 0 | -------------------------------------------------------------------------------- | Non-current liabilities | 0 | -------------------------------------------------------------------------------- | Current liabilities | -2,264 | -------------------------------------------------------------------------------- | TOTAL | -502 | -------------------------------------------------------------------------------- SEGMENT-SPECIFIC FIGURES -------------------------------------------------------------------------------- | NET SALES BY | | | | | | SEGMENT | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | EUR 1.000 | 2008 | 2007 | 2008 | 2007 | 2007 | | | 7-9 | 7-9 | 1-9 | 1-9 | 1-12 | -------------------------------------------------------------------------------- | Tiimari | 17,673 | 14,591 | 51,051 | 41,916 | 72,641 | -------------------------------------------------------------------------------- | Tiimore | 233 | 192 | 786 | 1,382 | 2,040 | -------------------------------------------------------------------------------- | Other operations | 834 | 66 | 2 467 | 235 | 506 | -------------------------------------------------------------------------------- | Internal | -686 | -46 | -2,384 | -255 | -616 | -------------------------------------------------------------------------------- | Group | 18,054 | 14,804 | 51,920 | 43,278 | 74,570 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | OPERATING PROFIT | | | | | | BY SEGMENT | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | EUR 1.000 | 2008 | 2007 | 2008 | 2007 | 2007 | | | 7-9 | 7-9 | 1-9 | 1-9 | 1-12 | -------------------------------------------------------------------------------- | Tiimari | -2,105 | -702 | -5,484 | -1,958 | 5,894 | -------------------------------------------------------------------------------- | Tiimore | -204 | -270 | 30 | -326 | -572 | -------------------------------------------------------------------------------- | Other operations | 263 | 58 | 153 | -26 | -993 | -------------------------------------------------------------------------------- | Group | -1,959 | -914 | -5,301 | -2,310 | 4,329 | -------------------------------------------------------------------------------- DEPRECIATION BY SEGMENT -------------------------------------------------------------------------------- | EUR 1.000 | 2008 | 2007 | 2008 | 2007 | 2007 | | | 7-9 | 7-9 | 1-9 | 1-9 | 1-12 | -------------------------------------------------------------------------------- | Tiimari | 810 | 365 | 1,906 | 1,115 | 1,685 | -------------------------------------------------------------------------------- | Tiimore | 19 | 19 | 61 | 47 | 75 | -------------------------------------------------------------------------------- | Other operations | 142 | 150 | 482 | 483 | 643 | -------------------------------------------------------------------------------- | Group | 971 | 534 | 2,449 | 1,645 | 2,402 | -------------------------------------------------------------------------------- CAPITAL EXPENDITURE BY SEGMENT -------------------------------------------------------------------------------- | EUR 1.000 | 2008 | 2007 | 2008 | 2007 | 2007 | | | 7-9 | 7-9 | 1-9 | 1-9 | 1-12 | -------------------------------------------------------------------------------- | Tiimari | 992 | 215 | 1,480 | 680 | 10,492 | -------------------------------------------------------------------------------- | Tiimore | 11 | 131 | 88 | 131 | 225 | -------------------------------------------------------------------------------- | Other operations | 100 | 0 | 100 | 0 | 86 | -------------------------------------------------------------------------------- | Group | 1 103 | 346 | 1,668 | 811 | 10,803 | -------------------------------------------------------------------------------- NET SALES BY GEOGRAPHICAL SEGMENTS -------------------------------------------------------------------------------- | EUR 1.000 | 2008 | 2007 | 2008 | 2007 | 2007 | | | 7-9 | 7-9 | 1-9 | 1-9 | 1-12 | -------------------------------------------------------------------------------- | Finland | 13,427 | 13,525 | 39,200 | 39,837 | 66,431 | -------------------------------------------------------------------------------- | Other countries | 4,627 | 1,279 | 12,720 | 3,441 | 8,138 | -------------------------------------------------------------------------------- | Group | 18,054 | 14,804 | 51,920 | 43,278 | 74,570 | -------------------------------------------------------------------------------- EXPORT -------------------------------------------------------------------------------- | | 2008 | 2007 | 2007 | -------------------------------------------------------------------------------- | | 1-9 | 1-9 | 1-12 | -------------------------------------------------------------------------------- | Export from Finland | 1,420 | 944 | 1,400 | -------------------------------------------------------------------------------- INTANGIBLE NON-CURRENT ASSETS -------------------------------------------------------------------------------- | EUR 1.000 | 30.9.2008 | 30.9.2007 | 31.12.2007 | -------------------------------------------------------------------------------- | Carrying value, 1 Jan | 57,145 | 50,779 | 50,779 | -------------------------------------------------------------------------------- | Translation difference for the | 6 | | -1 | | period | | | | -------------------------------------------------------------------------------- | Increase | 2,291 | 513 | 7,842 | -------------------------------------------------------------------------------- | Depreciation and impairment | -1,720 | -827 | -1,579 | -------------------------------------------------------------------------------- | Depreciation and transfers | 1,046 | -2,469 | 104 | -------------------------------------------------------------------------------- | CARRYING VALUE AT END OF | 58,768 | 47,996 | 57,145 | | PERIOD | | | | -------------------------------------------------------------------------------- TANGIBLE NON-CURRENT ASSETS -------------------------------------------------------------------------------- | EUR 1.000 | 30.9.2008 | 30.9.2007 | 31.12.2007 | -------------------------------------------------------------------------------- | Carrying value, 1 Jan | 4,650 | 9,890 | 9,890 | -------------------------------------------------------------------------------- | Translation difference for the | 4 | 0 | 5 | | period | | | | -------------------------------------------------------------------------------- | Increase | 1,088 | 298 | 1,923 | -------------------------------------------------------------------------------- | Depreciation and impairment | -729 | -818 | -823 | -------------------------------------------------------------------------------- | Depreciation and transfers | -529 | -5,962 | -6,345 | -------------------------------------------------------------------------------- | CARRYING VALUE AT END OF | 4,484 | 3,408 | 4,650 | | PERIOD | | | | -------------------------------------------------------------------------------- RELATED PARTY TRANSACTIONS Atine Group Oy subscribed for a total of 325,975 new shares in the Tiimari Plc directed share issue, thereby increasing its share of ownership to 21.7%. Having subscribed for 80,645 new shares, Assetman Oy now has a 10.4% share of the capital. Oy Rosaco Ab subscribed for 20,000 new shares. Prior to the subscription, the share of ownership of the company was 0.1%, which was increased to 0.3%. Suomen Kauppayhtiöt Oy subscribed for 10,800 new shares, increasing its share of ownership to 1.2%. CONTINGENT LIABILITIES -------------------------------------------------------------------------------- | | 30.9.2008 | 30.9.2007 | 31.12.2007 | -------------------------------------------------------------------------------- | Secured loans | 31,445 | 25,193 | 20,527 | -------------------------------------------------------------------------------- | Real estate mortgages | 1,000 | 2,361 | 2,361 | -------------------------------------------------------------------------------- | Corporate mortgages | 31,137 | 31,137 | 31,137 | -------------------------------------------------------------------------------- | Pledged shares | 1,476 | 1,476 | 1,476 | -------------------------------------------------------------------------------- | Other own liabilities: | | | | -------------------------------------------------------------------------------- | Bank guarantees | 2,114 | 941 | 1,927 | -------------------------------------------------------------------------------- | Other liabilities | 8 | 13 | 413 | -------------------------------------------------------------------------------- | | | | | -------------------------------------------------------------------------------- | Leasing liabilities | | | | -------------------------------------------------------------------------------- | Due in one year | 87 | 8 | 30 | -------------------------------------------------------------------------------- | Due after one year | 92 | 11 | 21 | -------------------------------------------------------------------------------- | | | | | -------------------------------------------------------------------------------- | OTHER RENT LIABILITIES | | | | -------------------------------------------------------------------------------- | Due in one year | 9,716 | 10,057 | 12,108 | -------------------------------------------------------------------------------- | Due after one year | 14,861 | 6,079 | 17,814 | -------------------------------------------------------------------------------- MAJOR SHAREHOLDERS (Number of shares and share of ownership in shares being currently traded. The 1,000,000 new shares subscribed and paid for in the directed share issue in the end of September and the respective holdings are not included in these figures.) -------------------------------------------------------------------------------- | | Shares | % of shares | | | | and voting | | | | rights | -------------------------------------------------------------------------------- | Atine Group Oy | 2,134,664 | 20.7 | -------------------------------------------------------------------------------- | Assetman Oy | 1,100,000 | 10.7 | -------------------------------------------------------------------------------- | Baltiska Handels A.B. | 516,483 | 5.0 | -------------------------------------------------------------------------------- | Cumasa Oy | 407,625 | 4.0 | -------------------------------------------------------------------------------- | Varma Mutual Pension Insurance Company | 375,000 | 3.6 | -------------------------------------------------------------------------------- | Ilmarinen Mutual Pension Insurance Company | 351,781 | 3.4 | -------------------------------------------------------------------------------- | Nordea Bank Finland Plc (administrative | 342,227 | 3.3 | | reg.) | | | -------------------------------------------------------------------------------- | Troll Capital Oy | 200,000 | 1.9 | -------------------------------------------------------------------------------- | Edgar Holding AB | 154,440 | 1.5 | -------------------------------------------------------------------------------- | Suomen Kauppayhtiöt Oy | 125,000 | 1.2 | -------------------------------------------------------------------------------- | Nordea Bank Finland Plc | 122,100 | 1.2 | -------------------------------------------------------------------------------- | Sonesson Thomas | 110,314 | 1.1 | -------------------------------------------------------------------------------- | Thomas Sonesson Konsult AB | 110,314 | 1.1 | -------------------------------------------------------------------------------- | Tapiola Suomi Mutual Fund | 103,602 | 1.0 | -------------------------------------------------------------------------------- | Arvo Finland Value Mutual Fund | 100,000 | 1.0 | --------------------------------------------------------------------------------
Tiimari continued to invest in growth. Result of the entire year expected to remain below 2007 level.
| Source: Tiimari Oyj Abp