The Group’s net sales are improving, cost efficiency is continuing to grow and results turned positive in the second quarter. However, as a result of export demand focusing on products with a lower profit margin, the 2010 result before taxes for may remain slightly in the red. The future outlook previously forecast that the result before taxes for the year would be positive.
Tulikivi will publish its interim report for January-September on Wednesday 20 October, according to the original timetable.
Heikki Vauhkonen Managing Director
NASDAQ OMX Helsinki Ltd Central Media www.tulikivi.com
Tulikivi Corporation, 83900 Juuka, www.tulikivi.com – Chairman of the Board Matti Virtaala, tel. 0207 636 666 – Managing Director Heikki Vauhkonen, tel. 0207 636 555
Tulikivi Corporation´s Financial Statements Release for 2010 will be published on February 10, 2011. Annual Report will come out on Tulikivi’s website week 11. Annual General meeting will be held on April 14, 2011.
The following interim reports will be published in 2011: – January – March April 21 – January – June August 4 – January – September October 20
TULIKIVI CORPORATION
- The Tulikivi Group’s second-quarter net sales were EUR 14.7 million (EUR 13.0 million, 4-6/2009), the operating profit was EUR 0.5 (-0.7) million and the result before taxes was EUR 0.2 (-0.9) million. - The Group’s net sales during the report period were EUR 25.4 million (EUR 24.0 million, 1-6/2009), the operating profit was EUR -1.3 (-3.4) million and the result before taxes was EUR -1.7 (- 3.9) million. - Earnings per share amounted to EUR -0.04 (-0.08) in the report period and EUR 0.00 (-0.02) in the second quarter. - Cash flow from operating activities was EUR -2.1 (-1.4) million. - Order books at the end of the period were at EUR 6.7 (6.5) million. - With the company’s recovering sales and improved cost efficiency, the full-year net sales are expected to be up from the previous year and the result for the year is expected to be in the black.
Managing Director’s comments:
“With new building recovering in the second quarter, demand has improved significantly in Finland and the neighbouring regions. Demand for lining stone products also increased. In Central Europe, consumers’ reluctance to make major investment decisions is having an impact on the sales of fireplaces.
“The Group’s net sales will grow in the autumn as a result of normal seasonal variation and the recovery in the construction sector both in Finland and neighbouring regions, and sales will also be boosted by new products launched during the first half of the year. Furthermore, higher energy taxation in Finland will motivate consumers to invest in saving energy. The company’s centralisation and productivity improvement programme will continue to improve profitability in the latter half of the year.”
Segment reporting
The Group’s operating segments are the Fireplaces Business and the Natural Stone Products Business. The Fireplaces Business includes soapstone and ceramic fireplaces sold under the Tulikivi and Kermansavi brands and their accessories, and utility ceramics and fireplace lining stones. The Natural Stone Products Business includes interior decoration stone products for households and stone deliveries to construction sites. Expenses not allocated to a segment are included under ‘Other items’, which also includes financial expenses and taxes. Expenses not allocated to a segment include expenses of the Group administration and expenses pertaining to financial administration. The segment reporting has been adjusted by allocating to the operating segments the data and personnel administration expenses, which were previously included in expenses not allocated to a segment. The comparison data has been changed accordingly.
Net sales and result
The Group’s net sales during the report period were EUR 25.4 million (EUR 24.0 million, 1-6/2009). The net sales of the Fireplaces Business were EUR 22.5 (21.0) million and of the Natural Stone Products Business EUR 2.9 (3.0) million.
Net sales in Finland accounted for EUR 13.3 (12.1) million, or 52.2 (50.5) per cent, of total net sales. Exports amounted to EUR 12.1 (11.9) million in net sales. The principal export countries were France, Sweden and Germany. Export growth was held back by the uncertainty affecting consumer decisions in the principal markets.
The Group’s operating profit was EUR -1.3 (-3.4) million. In accordance with the Group’s segment reporting, the operating profit for the Fireplaces Business was EUR -0.3 (-2.4) million and for the Natural Stone Products Business EUR -0.1 (-0.1) million. The expenses under ‘Other items’ were EUR -0.9 (-0.9) million. The consolidated result before taxes was EUR -1.7 (-3.9) million, and the net result was EUR -1.3 (-3.1) million. Earnings per share amounted to EUR -0.04 (-0.08).
The Group’s second-quarter net sales were EUR 14.7 million (EUR 13.0 million, 4-6/2009) and profit before taxes was EUR 0.2 (-0.9) million. Earnings per share amounted to EUR 0.00 (-0.02).
The Group’s programme of profitability and centralisation measures launched in 2009 has been completed and the objectives mainly met.
Financing and investments
Cash flow from operating activities before investments was EUR - 2.1 (-1.4) million. Working capital increased by EUR 3.0 million in the period and came to EUR 9.4 million (EUR 8.9 million on 30 June 2009). Interest-bearing debt was EUR 26.7 (23.3) million and consolidated net financial expenses were EUR 0.5 (0.6) million. The equity ratio was 35.8 per cent (39.6 per cent on 30 June 2009). The ratio of interest-bearing net debt to equity, or gearing, was 84.4 (79.3) per cent. The current ratio was 1.8 (1.6). Equity per share was EUR 0.58 (0.62).
The Group has a solid financial position. At the end of the report period, the Group’s cash assets were EUR 8.4 (4.9) million and unused credit limits amounted to EUR 1.0 (4.0) million.
The Group’s investments in production, quarrying and development were EUR 1.2 (0.9) million in the report period. Research and development costs were EUR 0.9 (0.7) million, i.e. 3.6 (2.7) per cent of net sales. EUR 0.2 (0.2) million of this was capitalised in the balance sheet.
Product development focused on productisation of the Tulikivi Green products and an interior design fireplace collection and other new products. These products will complement and expand the uses of fireplaces in household heating. Other large development projects include development of the Group’s processes and up- dating of the enterprise resource planning system.
Personnel
The Group employed an average of 374 (393) people during the report period. Salaries and bonuses during the report period totalled EUR 7.8 (8.3) million.
The Tulikivi Group has an incentive plan that includes a share- based incentive plan for the Managing Director and key personnel and an incentive pay scheme for all personnel.
The share-based plan, introduced in 2008, comprises three earning periods, which are the calendar years 2008, 2009 and 2010. The bonus is determined on the basis of the Group’s result after financial items and the cash flow from operating activities after investments. A maximum total of about 360 000 Series A shares and a cash payment corresponding to the value of the shares can be paid as rewards on the basis of the entire share-based incentive plan. The maximum share reward for 2010 is 218 750 A shares and a cash payment corresponding to the value of the shares. The Managing Director’s share of the share reward is a maximum of 50 000 shares.
The incentive pay scheme is based on the Group’s result and on the improvement in productivity, and the Managing Director and key personnel also have personal targets in addition to this.
Annual General Meeting
Tulikivi Corporation’s Annual General Meeting, held on 14 April 2010, resolved to pay a dividend of EUR 0.0250 on Series A shares and EUR 0.0233 on Series K shares. The dividend payout date was 26 April 2010. The other decisions of the general meeting can be found in the separate release published in the date of the meeting.
Transfer of the funds of the share premium account to the reserve for invested unrestricted equity
The decision of the Annual General Meeting taken on 14 April 2010 to transfer the funds of the share premium account to the reserve for invested unrestricted equity has been entered in the Trade Register and was announced on 6 May 2010. The due date for debtors is 19 August 2010.
As decided by the Annual General Meeting, the share premium account (part of the equity) on the company’s balance sheet as of 31 December 2009 will be reduced by EUR 7 334 116.06, by transferring all the funds in the share premium account on the balance sheet as of 31 December 2009 to the reserve for invested unrestricted equity.
Treasury shares
The company did not purchase or assign any of its own shares during the report period. At the end of the period, the total number of Tulikivi shares held by company was 124 200 Series A shares, which corresponds to 0.3 per cent of the company’s share capital and 0.1 per cent of all voting rights.
Risks and uncertainties
The Group’s near-term risks are mainly associated with the increased uncertainty among consumers and the effect of this on consumers’ building and fireplace projects.
The risks and the means of preventing and controlling them are presented in more detail in section 38 of the notes to the financial statements in the 2009 Annual Report.
Future outlook
The increase in private house building in Finland will improve the demand for Tulikivi products. Exports of lining stone products will continue at a good level. In Central Europe the demand for fireplaces varies by country but is expected to remain lower than before as a whole. New products will improve the company’s net sales during the second half of the year.
With the company’s recovering sales and improved cost efficiency, the full-year consolidated net sales are expected to be up from the previous year and the 2010 result before taxes is expected to be positive.
The order books at the end of the report period amounted to EUR 6.7 million (EUR 6.5 million on 30 June 2009 and EUR 4.8 million on 31 December 2009).
Strategy
The revised strategy put in place in the Group at the beginning of the report period covers all key operating and financial targets to the end of 2015. Under the strategy, the company’s organic growth target is an annual growth of over 10 per cent, and the target for profit before taxes is 10 per cent of net sales over the next five years. The target for return on equity is to exceed 20 per cent. Corporate acquisitions in support of the strategy are also possible.
INTERIM REPORT January – June 2010, SUMMARY CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME MEUR 1-6/ 1-6/ Change, 1-12/ 4-6/ 4-6/ Change 2010 2009 % 2009 2010 2009 %
Sales 25.4 24.0 5.9 53.1 14.7 13.0 13.3 Other operating income 0.3 0.4 0.6 0.2 0.3 Increase/decrease in inventories in finished goods and in work in progress 1.1 -0.6 -1.0 1.1 -0.1 Production for own use 0.1 0.2 0.3 0.0 0.1 Raw materials and consumables 5.6 4.7 10.2 3.4 2.6 External services 4.0 3.4 7.6 2.5 1.9 Personnel expenses 9.7 10.6 20.0 5.3 5.2 Depreciation 2.4 2.8 5.5 1.2 1.6 Other operating expenses 6.5 5.9 12.1 3.1 2.8
Operating profit/ loss -1.3 -3.4 62.2 -2.4 0.5 -0.7 160.7 Percentage of sales -5.0 -14.0 -4.5 3.1 -4.9 Finance income 0.1 0.1 0.2 0.1 0.0 Finance expense -0.6 -0.7 -1.1 -0.3 -0.3 Share of the profit of associated company 0.0 0.0 0.0 0.0 0.0
Profit before tax -1.7 -3.9 56.1 -3.3 0.2 -0.9 122.0 Percentage of sales -6.8 -16.3 -6.2 1.3 -6.8 Direct taxes 0.4 0.9 1.0 0.0 0.2
Profit/loss for the period -1.3 -3.1 56.9 -2.4 0.2 -0.7 135.1
Other comprehensive income Interest rate swaps 0.0 0.0 0.0 0.0 0.0 Translation differences 0.0 0.0 0.0 -0.1 0.0
Total comprehensive income for the period -1.3 -3.1 56.8 -2.4 0.1 -0.7 111.6
Earnings per share attributable to the equity holders of the parent company, EUR basic and diluted -0.04 -0.08 56.8-0.06 0.00 -0.02 121.1
CONSOLIDATED STATEMENT OF FINANCIAL POSITION MEUR 06/2010 06/2009 12/2009 ASSETS Non-current assets Property, plant and equipment Land 1.0 1.0 1.0 Buildings 7.2 7.7 7.4 Machinery and equipment 7.2 9.1 8.1 Other tangible assets 1.0 1.1 1.1 Intangible assets Goodwill 4.2 4.3 4.2 Other intangible assets 10.6 10.7 10.6 Investment properties 0.2 0.2 0.2 Available-for-sale investments 0.1 0.1 0.1 Receivables Deferred tax assets 1.9 1.7 1.6 Total non-current assets 33.4 35.9 34.3
Current assets Inventories 11.1 10.9 10.2 Trade receivables 6.4 5.4 4.1 Current income tax receivables 0.1 0.2 0.3 Other receivables 1.1 1.0 0.9 Cash and cash equivalents 8.4 4.9 10.6 Total current assets 27.1 22.4 26.1 Total assets 60.5 58.3 60.4
EQUITY AND LIABILITIES Equity Share capital 6.3 6.3 6.3 Share premium fund 7.4 7.4 7.4 Treasury shares -0.1 -0.1 -0.1 Translation difference 0.0 0.0 -0.1 Revaluation reserve -0.1 -0.1 -0.1 Retained earnings 8.2 9.6 10.4 Total equity 21.6 23.1 23.8 Non-current liabilities Deferred income tax liabilities 1.8 1.9 1.0 Provisions 1.0 0.9 1.9 Interest-bearing debt 21.1 18.3 19.9 Other debt 0.1 0.1 Total non-current liabilities 24.0 21.1 22.9 Current liabilities Trade and other payables 9.1 8.7 8.7 Current income tax liabilities 0.0 Current provisions 0.2 0.5 0.2 Short-term interest-bearing debt 5.6 4.9 4.8 Total current liabilities 14.9 14.1 13.7 Total liabilities 38.9 35.2 36.6 Total equity and liabilities 60.5 58.3 60.4
CONSOLIDATED STATEMENT OF CASH FLOWS 01-06/ 01-06/ 01-12/ MEUR 2010 2009 2009
Cash flows from operating activities Profit for the period -1.3 -3.1 -2.4 Adjustments: Non-cash transactions 2.5 2.8 5.5 Interest expenses and interest income and taxes 0.0 -0.3 0.0 Change in working capital -3.0 0.0 1.8 Interest paid and received and taxes paid -0.3 -0.8 -1.2 Net cash flow from operating activities -2.1 -1.4 3.7
Cash flows from investing activities Investment in property, plant and equipment and intangible assets -1.3 -0.9 -2.0 Grants received for investments and sales of property, plant and equipment 0.1 0.1 0.2 Net cash flow from investing activities -1.2 -0.8 -1.8
Cash flows from financing activities Proceeds from non-current and current borrowings 5.0 5.1 Repayment of non-current and current borrowings -3.0 -3.5 -7.0 Dividends paid and treasury shares -0.9 -1.1 -1.1 Net cash flow from financing activities 1.1 -4.6 -3.0
Change in cash and cash equivalents -2.2 -6.8 -1.1
Cash and cash equivalents at beginning of period 10.6 11.7 11.7 Cash and cash equivalents at end of period 8.4 4.9 10.6
STATEMENT OF CHANGES IN EQUITY MEUR Share Share Trans- Revalu- Trea- Re- Total capital premium lation ation sury tained fund diff. re- share earn- serve ings Equity Jan. 1, 2010 6.3 7.4 -0.1 -0.1 -0.1 10.4 23.8 Dividends paid and treasury shares -0.9 -0.9 Total comprehensive income for the period 0.1 -1.3 -1.2 Equity June 30, 2010 6.3 7.4 0.0 -0.1 -0.1 8.2 21.6
Equity Jan. 1, 2009 6.3 7.4 0.0 -0.1 -0.1 13.7 27.2 Total comprehensive income for the period 0.0 -1.0 -1.0 Dividends -3.1 -3.1 Equity June 30, 2009 6.3 7.4 0.0 -0.1 -0.1 9.6 23.1
SEGMENT REPORTING 1-6/ 1-6/ 1-12 MEUR 2010 2009 2009 Operating segments Sales 25.4 24.0 53.1 Fireplaces 22.5 21.0 47.8 Natural Stone Products 2.9 3.0 5.3 Other items - - -
Operating profit/loss -1.3 -3.4 -2.4 Fireplaces -0.3 -2.4 -0.2 Natural Stone Products -0.1 -0.1 -0.3 Other items -0.9 -0.9 -1.9
OPERATING SEGMENTS QUARTERLY Q2/ Q1/ Q4/ Q3/ Q2/ Q1/ 2010 2010 2009 2009 2009 2009 Operating segments Sales 14.7 10.7 15.6 13.5 13.0 11.0 Fireplaces 13.0 9.5 14.4 12.4 11.4 9.6 Natural Stone Products 1.7 1.2 1.2 1.1 1.6 1.4 Other items - - - - - -
Operating profit/loss 0.4 -1.7 0.3 0.7 -0.7 -2.7 Fireplaces 0.8 -1.1 1.0 1.2 -0.2 -2.2 Natural Stone Products 0.1 -0.2 -0.2 0.0 0.0 -0.1 Other items -0.5 -0.4 -0.5 -0.5 -0.5 -0.4
ASSETS AND LIABILITIES BY SEGMENT ON JUNE 30, 2010 Fire- Natural Other Total places Stone items Products Assets by segment 45.1 4.2 11.2 60.5 Liabilities by Segment 8.5 0.9 29.4 38.8 Investments 1.0 0.0 0.2 1.2 Depreciation and amortisation expenses 2.1 0.1 0.2 2.4
KEY FINANCIAL RATIOS AND SHARE RATIOS 1-6/10 1-6/09 4-6/10 4-6/09 1-12/09
Earnings per share, EUR -0.04 -0.08 0,00 -0.02 -0.06 Equity per share, EUR 0.58 0.62 0.58 0.62 0.64 Return on equity, % -11.7 -24.4 2.7 -12.1 -9.2 Return on investments, % -4.7 -12.9 4.3 -3.6 -4.3 Equity ratio, % 35.8 39.6 39.4 Net indebtness ratio, % 84.4 79.3 59.4 Current ratio 1.8 1.6 1.9 Gross investments, MEUR 1.2 0.9 2.1 Gross investments, % of sales 4.8 3.8 4.0 Research and development costs, MEUR 0.9 0.7 1.6 %/sales 3.6 2.7 3.1 Outstanding orders (30 June), MEUR 6.7 6.5 4.8 Average number of staff 374 393 417
Rate development of shares, EUR Lowest share price, EUR 1.07 0.67 0.67 Highest share price, EUR 1.79 1.30 1.30 Average share price, EUR 1.38 0.83 0.96 Closing price, EUR 1.35 0.90 1.06
Market capitalization at the end of period, 1000 EUR 49 976.7 33 317.8 39 241.0 (Supposing that the market price of the K-share is the same as that of the A-share) Number of shares traded, (1000 pcs) 2 342.5 1 349.7 3 959.0 % of total amount of A-shares 8.5 4.9 14.4 Number of shares average 37019770 37027647 37019770 37011603 37023708 Number of shares 30 June 37019770 37019770 37019770 37019770 37019770
NOTES TO THE CONSOLIDATED FINANCIALS STATEMENTS This financial statement release has been prepared in accordance with the IAS 34 Interim Financial Reporting standard.
In preparing of this interim report, Tulikivi has applied same accounting policies as in the 2009 financial statements, with the exception of the following new/amended standards that the group has adopted as from January 1, 2010:
- Revised IFRS 3 Business combinations (effective as of 1 July 2009). The revised standard includes several significant changes. - Amendments to IAS 27 Consolidated and separate financial statements (effective as of 1 July 2009). The amended standard affects accounting for step acquisitions and divestments. - Amendment to IAS 39 Financial Instruments: Recognition and Measurement - Eligible hedged items (effective as of 1 July 2009) - IFRIC 17 Distributions of Non-cash Assets to Owners (effective as of 1 July 2009) - IFRIC 18 Transfers of assets from customers (effective as of 1 July 2009) - Improvements to IFRSs (April 2009, mainly effective as of 1 January 2010). - Amendments to IFRS 2 Share-based Payment – Intra-group cash- settled share-based payment transaction (effective as of 1 January 2010).
The Group’s view is that the adoption of the standards and interpretations mentioned above will not have any significant effect on the financial statements of 2010 reporting period. The adaptation of the revised IFRS 3 would affect the financial statements of Tulikivi Group in 2010, should a transaction during the financial period meet the definition of a business combination.
The key performance ratios and share ratios are calculated using the same methods as for the consolidated financial statements for 2009. The calculations rules can be found in the 2009 annual report, page 76.
Income taxes EUR million 01-06/10 01-06/09 01-12/09 Taxes for the current and previous reporting periods 0.0 0.0 0.1 Deferred taxes 0.4 0.9 0.9 Total 0.4 0.9 1.0
Collaterals given EUR million 6/10 6/09 12/09 Loans from credit institutions and other long term debts and loan guarantees, with related mortgages and pledges 24.8 22.4 21.9 Mortgages granted and collaterals pledged 29.3 25.1 28.2 Other given guarantees and pledges on behalf of own liabilities 0.8 0.5 0.8 Derivatives Interest rate swaps Nominal value 6.5 11.9 7.3 Fair value -0.2 -0.3 -0.3 Foreign exchange forward contracts Nominal value 0.2 - 0.1 Fair value 0.0 0.0 The fair value of derivatives is the gain or loss for closing the contract based on market rates at the balance sheet date.
Provisions The Group’s non-current provisions are an environmental provision of EUR 0.6 million and a warranty provision of EUR 0.4 million. Current provisions include the latter part of in 2009 recognized restructuring provision of EUR 0.2 million.
Non-current provisions are itemized in greater detail in notes 26. Provisions and 34. Contingent liabilities in the consolidated financial statements in Annual Report 2009. Contingent liabilities have not changed after the end of the financial period.
Changes in tangible assets are classified as follows: 6/10 6/09 12/09 Acquisition costs 0.6 0.9 1.1 Proceeds from sale 0.0 0.0 -0.1 Total 0.6 0.9 1.0
Share capital Share capital by share series
Number of % of % of Share, shares shares voting EUR of rights share capital K shares (10 votes) 9 540 000 25.7 77.6 1 621 800 A shares (1 vote) 27 603 970 74.3 22.4 4 692 675 Total June 30, 2010 37 143 970 100.0 100.0 6 314 475
There have been no changes in Tulikivi Corporation´s share capital during the period. According to the articles of association the dividend paid for Series A shares shall be 0.0017 EUR higher than the dividend paid on Series K shares. The Series A share is listed on the NASDAQ OMX Helsinki Ltd. No flagging notifications were made to the company during the review period. The number of the shares in the company´s possession at the end of the period was 124 200 series A shares.
Board authorizations The Annual General Meeting of April 14, 2010 authorized the Board of Directors to acquire the company’s own shares. A maximum of 2 760 397 Series A shares in the company and 954 000 Series K shares in the company can be bought back. The authorization is valid until the Annual General Meeting 2011.
The Board of Directors has further an authorization to decide on share issues and the conveyance of the company’s own shares in the possession of the company. New shares can be issued or own shares held by the company conveyed amounting to a maximum of 5 520 794 Series A shares and 1 908 000 Series K shares. The authorization is valid until the Annual General Meeting 2011.
Related party transactions The following transactions with related parties took place: EUR 1000 6/10 6/09 12/09 Sales to associated companies 6 7 Purchases from associated companies 94 85 148
Sales to related parties 12
Leases from related parties 54 56 109
Receivables from the related parties - - 1 Debts to the related parties 2
Transactions with other related parties Tulikivi Corporation is a founder member of the Finnish Stone Research Foundation. The company has leased offices and storages from the property owned by the Foundation and North Karelia Educational Federation of Municipalities. The rent paid for these facilities was EUR 66 thousand (65 thousand) in the period. The rent corresponds with the market rents. The service charges from the Foundation were EUR 2 thousand.
EUR 1000 6/10 6/09 12/09 Salaries and other short-term employee benefits of the Board of Directors and Managing Directors 213 274 479 Other long term employee benefits 32 32 61
Largest shareholders on June 30, 2010 Name of shareholder Shares Pro- portion of total vote
Vauhkonen Reijo 4 186 827 24.3 % Vauhkonen Heikki 3 014 724 24.1 % Elo Eliisa 2 957 020 5.9 % Virtaala Matti 2 429 887 12.6 % Mutual Pension Insurance Ilmarinen 1 902 380 1.5 % Mutanen Susanna 1 643 800 7.2 % Vauhkonen Mikko 782 310 3.5 % Paatero Ilkka 718 430 0.6 % Nuutinen Tarja 674 540 3.5 % Investment Fond Phoebus 585 690 0.5 % Other shareholders 18 248 362 16.3 %
The information in the interim report is unaudited.
The companies included in the Group are the parent company Tulikivi Corporation, Kivia Oy, AWL-Marmori Oy, Tulikivi U.S. Inc. and OOO Tulikivi. Group companies include also The New Alberene Stone Company, Inc., which is dormant. The parent company has a fixed place of business in Germany, Tulikivi Oyj Niederlassung Deutschland. The Group has interests in associated companies Stone Pole Oy, Leppävirran Matkailukeskus Oy and Rakentamisen MALL Oy.
Board of Directors Matti Virtaala Chairman of the Board
Distribution: NASDAQ OMX Helsinki Ltd Central Media www.tulikivi.com
Additional information: Tulikivi Corporation, 83900 Juuka, www.tulikivi.com - Chairman of the Board of Directors Matti Virtaala, +358 207 636 666 - Managing Director Heikki Vauhkonen, +358 207 636 555
- The Tulikivi Group´s sales amounted to EUR 10.7 million (EUR 11.0 million, 01-03/2009). - The Group´s result before taxes was EUR -1.9 (-3.0) million. Earnings per share were EUR -0.04 (-0.06). - Cash flow from operating activities before investments was EUR - 2.4 (-1.0) million. - Order books were EUR 8.2 (6.6 on 31 March 2009) million on 31 March. - The Group’s recovering sales and improved cost efficiency, are expected to improve net sales on the previous year, and the result for the year is expected to be positive.
Managing Director’s comments: “During the first quarter, there was a positive development in demand in Finland. In addition to the demand in Finland, the export of lining stone products also increased. Net sales from the export of fireplaces were reduced by the lower demand in Central Europe. A colder-than-normal winter slowed the completion of building projects and delayed deliveries, which lowered net sales at the beginning of the year.
In February we launched our first new interior design fireplaces and the Tulikivi Green products at the international fireplace exhibition in Europe. The products were very well received. Deliveries to consumers will start during the second half of the year.
On the annual level the positive development that started last year is continuing. Over the next few months, sales are expected to be on a clearly higher level than at the beginning of the year.”
Segment reporting The Group’s operating segments have been the Fireplaces Segment and the Natural Stone Products Segment. The Fireplaces Segment includes soapstone and ceramic fireplaces sold under the Tulikivi and Kermansavi brands, their accessories, utility ceramics and fireplace lining stones. The Natural Stone Products Segment includes interior design stone products for households and stone deliveries to construction sites. Expenses not allocated to a segment are recognised under ‘Other items’, which also include financial costs and taxes. Since the beginning of 2010 segment reporting has been defined by allocating data and personnel administration expenses, which were previously included in expenses not allocated to a segment, to the relevant operating segments. The comparison information has been changed accordingly.
The 2009 net sales of the Tulikivi Group totalled EUR 10.7 million (EUR 11.0 million in January – March 2009). The net sales of the Fireplaces Business amounted to EUR 9.5 (9.6) million, and those of the Natural Stone Business were EUR 1.2 (1.4) million. Construction activity was lower than normal in the Group’s main market areas during the winter months due to the exceptionally cold weather and this lowered the Group’s net sales.
Exports accounted for EUR 5.4 (5.6) million, or 50.1 (50.6) per cent, of total sales. The largest markets for the Group’s exports were Sweden and France. Sales in Finland totalled EUR 5.3 (5.4).
At the operating profit level, the Group posted a loss of EUR -1.7 (-2.7) million. In accordance with the Group’s segment reporting, the Fireplaces Business had an operating result of EUR -1.1 (-2.2) million, and the Natural Stone Products Business an operating result of EUR -0.2 (-0.1) million, while other items’ expenses were EUR 0.4 (0.4) million.
The Group’s result before taxes was EUR -1.9 (-3.0) million and net result was EUR -1.4 (-2.4) million. Earnings per share were EUR -0.04 (-0.06).
Financing and investments Cash flow from operating activities before investments was EUR - 2.4 (-1.0) million. At the end of the reporting period, the Group’s cash and other liquid assets were EUR 9.0 (9.6) million, and the total of undrawn credit facilities and unused credit limits amounted to EUR 3 million. The equity ratio was 37.3 per cent (37.4 per cent on 31 March, 2009). The ratio of interest- bearing net debt to equity, or gearing, was 76.5 (69.4) per cent. The current ratio was 2.0 (1.6). Financial income was EUR 0.1 (0.1)million and financial expenses EUR 0.3 (0.4) million. The equity per share amounted to EUR 0.60 (0.64).
The Group’s investments in production, quarrying and development were EUR 0.7 (0.5) million. Research and development costs were EUR 0.5 (0.4) million, i.e. 4.2 (3.4) per cent of net sales. EUR 0.1 (0.1) million of this amount was capitalised in the balance sheet. Product development focused on the productisation of the Tulikivi Green products and interior design fireplace that will be launched for consumers in the autumn. Other large development projects include the development of the Group's processes and renewal of the enterprise resource planning system. The aim is to intensify operations and to implement the Group-wide information system.
Personnel The Group employed an average of 361 (399) people during the reporting period. Salaries and bonuses totalled EUR 3.5 (4.2) million during the period.
Tulikivi Corporation has an incentive plan which includes a share- based incentive plan for the Managing Director and key personnel of the company and an incentive pay scheme for all personnel. The share-based incentive plan launched in 2008 includes three earning periods which are the calendar years 2008, 2009 and 2010. Under the plan, the bonus is determined on the basis of the Group’s result after financial items and the cash flow from operating activities after investments. A maximum total of about 360 000 Series A shares and a cash payment corresponding to the value of the shares can be paid as rewards on the basis of the entire share-based incentive plan. In 2010 the bonus can amount to a maximum of 218 750 Tulikivi Corporation Series A shares and a cash payment corresponding to the value of the shares. A maximum of 50 000 A shares of this can go to the Managing Director. The incentive pay scheme is based on of the Group´s result and on the improvement of productivity. The Managing Director and key persons also have personal targets in addition to this.
Treasury shares The company did not purchase or assign any of its own shares during the period. At the end of the period the company held a total of 124 200 of its own A series shares which corresponds to 0.3 per cent of the company’s share capital and 0.1 per cent of all voting rights.
Risks and uncertainties The Group’s near-term risks are mainly associated with the increased uncertainty among consumers and the effect of this on consumers’ building and fireplace projects. The risks and the means of preventing and controlling them are presented in more detail in section 38 of the notes to the financial statements in the 2009 Annual Report.
Events following the end of the reporting period Resolutions of the Annual General Meeting Dividends Tulikivi Corporation´s Annual General Meeting, held on 14 April 2010, resolved to pay a dividend of EUR 0.0250 on Series A shares and EUR 0.0233 on Series K shares. The dividend will be paid out on April 26, 2010.
Board of Directors, Managing Director and auditors Tulikivi Corporation’s Annual General Meeting elected the following members o the Board of Directors of the parent company and domestic business subsidiaries: Bishop Ambrosius, Juhani Erma, Olli Pohjanvirta, Markku Rönkkö, Maarit Toivanen-Koivisto, Heikki Vauhkonen and Matti Virtaala. The Board of Directors elected Matti Virtaala as Chairman from amongst its members. The auditor is KPMG Oy Ab, Authorized Public Accountants, from Helsinki.
Amendment of the Articles of Association An amendment of the first paragraph of Section 8 (Notice of meeting) of the Articles of Association was adopted as proposed by the Board.
Authorisation to repurchase the company’s own shares The Annual General Meeting authorised the Board to acquire the company’s own shares as proposed by the Board. More information about the authorisation in Notes to this interim report.
Authorisation to decide on share issues and on transfer of the company’s own shares in the possession of the company and the right to issue special rights which give entitlement to shares as defined in Chapter 10, section 1, of the Limited Liability Companies Act The Annual General Meeting authorised the Board of Directors to decide on issuing new shares and the transfer of the company’s own shares in the possession of the company as proposed by the Board. The authorization also includes the right to issue special rights, as defined in Chapter 10, section 1, of the Limited Liability Companies Act, which entitle to subscribe for shares against payment or by setting off the receivable. More information about the authorisation in Notes to this interim report.
The transfer the Funds of the Share Premium Account to the Reserve for Invested Unrestricted Equity As proposed by the Board, the Annual General Meeting decided that the share premium account on the company’s balance sheet as of 31 December 2009 will be reduced by EUR 7,334,116.06, by transferring all the funds in the share premium account on the balance sheet as of 31 December 2009 to the reserve for invested unrestricted equity.
Future outlook Private house building along with the demand of fireplaces has increased in Finland and this positive development is expected to continue. Sales of lining stone products have clearly risen, but sales of fireplaces are yet to increase in Central Europe. New products will improve the company’s net sales during the second half of the year. Adjustment measures will be continued in the Group, with layoffs where necessary.
With the company’s recovering sales and improved cost efficiency, the full-year net sales are expected to be up from the previous year and the result is expected to be positive.
The order books at the end of the review period amounted to EUR 8.2 (6.6 on 31 March 2009 and 4.8 on 31 December 2009) million.
INTERIM REPORT January – March 2010, SUMMARY CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME EUR million 01-03/ 01-03/ Change, 01-12/ 2010 2009 % 2009
Sales 10.7 11.0 -2.0 53.1 Other operating income 0.1 0.1 0.6 Increase/decrease in inventories in finished goods and in work in progress 0.0 -0.5 -1.0 Production for own use 0.1 0.1 0.3 Raw materials and consumables 2.2 2.1 10.2 External services 1.6 1.5 7.6 Personnel expenses 4.4 5.4 20.0 Depreciation and amortisation 1.2 1.3 5.5 Other operating expenses 3.4 3.1 12.1
Operating profit/loss -1.7 -2.7 36.5 -2.4 Percentage of sales -16.0 -24.7 -4.5 Finance income 0.1 0.1 0.2 Finance expense -0.2 -0.4 -1.1 Share of the profit of associated company 0.0 0.0 0.0
Profit before tax -1.9 -3.0 36.8 -3.3 Percentage of sales -17.8 -27.7 -6.2 Income tax expenses 0.4 0.7 1.0
Profit/loss for the period -1.5 -2.4 37.5 -2.4
Other comprehensive income Interest rate swaps 0.0 0.0 0.0 Translation differences 0.1 0.0 0.0
Total comprehensive income for the period -1.4 -2.4 42.1 -2.4
Earnings per share attributable to the equity holders of the parent company, EUR basic and diluted -0.04 -0.06 33.3 -0.06
CONSOLIDATED STATEMENT OF FINANCIAL POSITION EUR million 03/10 03/09 12/09 ASSETS Non-current assets Property, plant and equipment Land 1.0 1.0 1.0 Buildings 7.3 7.9 7.4 Machinery and equipment 7.7 9.8 8.1 Other tangible assets 1.0 1.2 1.1 Intangible assets Goodwill 4.2 4.3 4.2 Other intangible assets 10.7 11.1 10.6 Investment properties 0.2 0.2 0.2 Available-for-sale investments 0.1 0.1 0.1 Receivables Deferred tax assets 2.0 1.5 1.6 Total non-current assets 34.2 37.1 34.3
Current assets Inventories 10.2 11.2 10.2 Trade receivables 4.9 4.6 4.1 Current income tax receivables 0.5 0.2 0.3 Other receivables 1.1 1.0 0.9 Cash and other liquid assets 9.0 0.6 10.6 Total current assets 25.7 26.6 26.1 Total assets 59.9 63.7 60.4
EQUITY AND LIABILITIES Equity Share capital 6.3 6.3 6.3 Share premium fund 7.4 7.4 7.4 Treasury shares -0.1 -0.1 -0.1 Translation difference 0.0 0.0 -0.1 Revaluation reserve -0.1 -0.1 -0.1 Retained earnings 8.8 10.3 10.4 Total equity 22.3 23.8 23.8 Non-current liabilities Deferred income tax liabilities 1.8 2.0 1.9 Provisions 1.0 0.9 1.0 Financial liabilities 21.6 20.8 19.9 Other debt 0.1 0.0 0.1 Total non-current liabilities 24.5 23.7 22.9 Current liabilities Trade and other payables 8.3 9.8 8.7 Current income tax liabilities 0.0 0.1 0.0 Current provisions 0.2 1.0 0.2 Current financial liabilities 4.6 5.3 4.8 Total current liabilities 13.1 16.2 13.7 Total liabilities 37.6 39.9 36.6 Total equity and liabilities 59.9 63.7 60.4
CONSOLIDATED STATEMENT OF CASH FLOWS EUR million 01-03/ 01-03/ 01-12/ 2010 2009 2009 Cash flows from operating activities Profit for the period -1.5 -2.4 -2.4 Adjustments: Non-cash transactions 1.2 1.3 5.5 Interest expenses and interest income and income taxes -0.2 -0.3 0.0 Change in working capital -1.6 0.7 1.8 Interest paid and received and taxes paid -0.3 -0.3 -1.2 Net cash flow from operating activities -2.4 -1.0 3.7
Cash flows from investing activities Investment in property, plant and equipment and intangible assets -0.7 -0.4 -2.0 Grants received for investments and sales of property, plant and equipment 0.1 0.2 Net cash flow from investing activities -0.6 -0.4 -1.8
Cash flows from financing activities Loans taken 3.0 5.1 Repayment of loans -1.6 -0.6 -7.0 Dividends paid and treasury shares -0.1 -1.1 Net cash flow from financing activities -1.4 -0.7 -3.0
Change in cash and cash equivalents -1.6 -2.1 1.1
Cash and cash equivalents at beginning of period 10.6 11.7 11.7
Cash and cash equivalents at end of period 9.0 9.6 10.6
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY EUR million Share Share Trans- Revalu- Trea- Re- Total capital premium lation ation sury tained fund diff. reserve shares earnings
Equity January 1, 2010 6.3 7.4 -0.1 -0.1 -0.1 10.4 23.8 Total comprehensive income for the period 0.1 -1.5 -1.4 Equity March 31. 2010 6.3 7.4 0.0 -0.1 -0.1 8.9 22.3
Equity January 1, 2009 6.3 7.4 0.0 -0.1 -0.1 13.7 27.2 Dividends paid and treasury shares 0.0 -1.0 -1.0 Total comprehensive income for the period -2.4 -2.4 Equity March 31, 2009 6.3 7.4 0.0 -0.1 -0.1 10.3 23.8
SEGMENT REPORTING Operating segments EUR million 01-03/ 01-03/ 01-12/ 2010 2009 2009 Sales 10.7 11.0 53.1 Fireplaces 9.5 9.6 47.8 Natural Stone Products 1.2 1.4 5.3
Operating profit/loss -1.7 -2.7 -2.4 Fireplaces -1.1 -2.2 -0.2 Natural Stone Products -0.2 -0.1 -0.3 Other items -0.4 -0.4 -1.9
OPERATING SEGMENTS QUARTERLY EUR million Q1/ Q4/ Q3/ Q2/ Q1/ 2010 2009 2009 2009 2009
Sales 10.7 15.6 13.5 13.0 11.0 Fireplaces 9.5 14.4 12.4 11.4 9.6 Natural stone products 1.2 1.2 1.1 1.6 1.4
Operating profit/loss -1.7 0.3 0.7 -0.7 -2.7 Fireplaces -1.1 1.0 1.2 -0.2 -2.2 Natural stone products -0.2 -0.2 0.0 0.0 -0.1 Other items -0.4 -0.5 -0.5 -0.5 -0.4
ASSETS AND LIABILITIES BY SEGMENT ON MARCH 31, 2010 Fire- Natural Other Total places stone items products Assets by segment 43.8 4.2 11.9 59.9 Liabilities by segment 8.0 0.7 28.9 37.6 Investments 0.6 0.0 0.1 0.7 Depreciation and amortisation expenses 1.0 0.1 0.1 1.2
KEY FINANCIAL RATIOS AND SHARE RATIOS 3/10 3/09 12/09 07
Earnings per share, EUR -0.04 -0.06 -0.06 Equity per share, EUR 0.60 0.64 0.64 Return on equity, % -25.6 -37.0 -9.2 Return on investments, % -13.8 -20.1 -4.3 Equity ratio, % 37.3 37.4 39.4 Net indebtness ratio, % 76.5 69.4 59.4 Current ratio 2.0 1.6 1.9 Gross investments, EUR million 0.7 0.5 2.1 Gross investments, % of sales 6.5 4.6 4.0 Research and development costs, EUR million 0.5 0.4 1.6 %/sales 4.2 3.4 3.1 Outstanding orders (31.March), EUR million 8.2 6.6 4.8 Average number of staff 361 399 417
Rate development of shares, EUR Lowest share price, EUR 1.07 0.67 0.67 Highest share price, EUR 1.38 0.85 1.30 Average share price, EUR 1.25 0.73 0.96 Closing price, EUR 1.35 0.70 1.06
Market capitalization at the end of period, 1000 EUR 49977 25907 39241 (Supposing that the market price of the K-share is the same as that of the A-share) Number of shares traded, (1000 pcs) 1167 673 3959 % of total amount of A-shares 4.2 2.5 14.4 Number of shares average 37019770 37043690 37023708 Number of shares at the end of period 37019770 37009970 37019770
Income taxes EUR million 01-03/10 01-03/09 01-12/09 Taxes for the current and previous reporting periods -0.1 0.1 Deferred taxes 0.4 0.7 0.6 Total 0.4 0.6 0.7
Collaterals given EUR million 3/10 3/09 12/09 Loans from credit institutions and other long term debts and loan guarantees, with related mortgages and pledges 22.7 20.7 20.9 Mortgages granted and collaterals pledged 28.0 25.1 28.6 Other given guarantees and pledges on behalf of own liabilities 0.9 0.5 0.5 Derivatives Interest rate swaps Nominal value 7.1 12.8 7.3 Fair value -0.3 -0.3 -0.3 Foreign exchange forward contracts Nominal value 0.2 - 0.1 Fair value The fair value of derivatives is the gain or loss for closing the contract based on market rates at the balance sheet date.
Provisions are itemized in greater detail in notes 26. Provisions and 34. Contingent liabilities in the consolidated financial statements in Annual Report 2009. Contingent liabilities have not changed after the end of the financial period.
Changes in tangible assets are classified as follows: 3/10 3/09 12/09 Acquisition costs 0.2 0.2 1.1 Proceeds from sale -0.1 Total 0.2 0.2 1.0
Number of % of % of Share, shares shares voting EUR of rights share capital K shares (10 votes) 9 540 000 25.7 77.6 1 621 800 A shares (1 vote) 27 603 970 74.3 22.4 4 692 675 Total March 31, 2010 37 143 970 100.0 100.0 6 314 475
Related party transactions The following transactions with related parties took place: EUR 1000 3/10 3/09 12/09 Sales to associated companies - 5 7 Purchases from associated ompanies 63 44 148
Leases from related parties 27 32 109 Receivables from the related parties 12 1 Debts to the related parties 2
Transactions with other related parties Tulikivi Corporation is a founder member of the Finnish Stone Research Foundation. The company has leased offices and storages from the property owned by the Foundation and North Karelia Educational Federation of Municipalities. The rent paid for these facilities was EUR 33 thousand (32 thousand) in the period. The rent corresponds with the market rents.
Largest shareholders on March 31, 2010 Name of shareholder Shares Pro- portion of total vote
Vauhkonen Reijo 4 186 827 24.3 % Vauhkonen Heikki 3 010 974 24.1 % Elo Eliisa 2 957 020 5.9 % Virtaala Matti 2 957 020 12.6 % Mutual Pension Insurance Ilmarinen 1 902 380 1.5 % Mutanen Susanna 1 643 800 7.2 % Vauhkonen Mikko 782 310 3.5 % Paatero Ilkka 718 430 0.6 % Nuutinen Tarja 674 540 3.5 % Investment Fond Phoebus 585 690 0.5 % Other shareholders (incl. treasury shares) 18 255 862 16.3 %
Additional information: Tulikivi Corporation, 83900 Juuka, tel. +358-207-636 000, www.tulikivi.com - Chairman of the Board of Directors Matti Virtaala - Managing Director Heikki Vauhkonen
The Annual General Meeting of the Tulikivi Corporation held on April 14, 2010 approved the financial statement for the financial year 2009 and discharged the members of the Board of Directors and the Managing Director from liability. It was resolved to pay a dividend of EUR 0.0250 on Series A shares and 0.0233 on Series K shares. The Annual General Meeting accepted the proposals of the Board of Directors to amend the Articles of Association, to authorise the Board of Directors to acquire the company’s own shares, to decide upon an issue of shares, to dispose of the company’s own shares and to issue special rights related to the shares, as well as to transfer the funds of the share premium account to reserve for invested unrestricted equity.
1. Dividend The Annual General Meeting resolved, in accordance with the Board’s proposal, to pay a dividend of: – EUR 0.0250 on Series A shares – EUR 0.0233 on Series K shares The record date for the dividend payment will be April 19, 2010. The dividend will be paid out on April 26, 2010.
2. Remuneration of Board members and auditor’s fees The annual remuneration of a Board member is EUR 15 600. In accordance with the resolution of the Annual General Meeting, each Board member will receive 40 per cent of the annual remuneration in the form of Tulikivi Corporation Series A shares. In addition, the Chairman of the Board of Directors will be paid a EUR 6 240 monthly fee and the director serving as secretary to the Board of Directors a EUR 1224 monthly fee. The members of committees of the Board will receive a EUR 300 remuneration per each meeting. The fees for the auditor are paid according to the relevant invoice.
3. Board members and Chairman of the Board The number of Board members was set at seven. Bishop Ambrosius, Mr. Juhani Erma, Mr. Markku Rönkkö, Mrs. Maarit Toivanen-Koivisto, Mr. Heikki Vauhkonen and Mr. Matti Virtaala were re-relected as the members of the Board of Directors for the new term, and LL.M., Mr. Olli Pohjanvirta from Helsinki was elected as a new member of the Board of Directos.
4. Auditor The firm of independent public accountants KPMG Oy Ab was elected the auditor of Tulikivi Corporation, with Mr. Ari Eskelinen, Authorized Public Accountant, acting as the chief auditor.
5. Amendment the Artices of Association The first paragraph of Section 8 (Notice of meeting) of the Articles of Association was amended to be as follows:
Notice of a General Meeting of shareholders shall be delivered by the Board of Directors no earlier than three months and no less than three weeks prior to the General Meeting, however, always at least nine days prior to the record date of the General Meeting set forth in Chapter 4, Section 2.2 of the Finnish Companies Act, by publishing the notice of meeting as a stock exchange release and on the company’s homepage as well as in a widely circulated newspaper specified by the Board of Directors.
6. Authorisation to acquire the company’s own shares The Annual General Meeting granted the Board authorisation to acquire the company’s own shares as proposed by the Board. The company’s own shares are acquired to develop the company’s capital structure and to be used as consideration in business and company acquisitions and other structural arrangements, the manner and scope of which will be determined at the discretion of the Board of Directors. In addition the shares will be acquired for the use in share-based incentive arrangement, for payment of share-based remuneration or otherwise to be transferred or cancelled. No more than a total of 2 760 397 Series A shares of the company shall be acquired and no more than a total of 954 000 Series K shares of the company shall be acquired, taking into account that the company may not hold more than 10 per cent of all shares. The authorisation is in force until the Annual General Meeting to be held in 2011 but, however, not for a longer period than 18 months as of the resolution by the General Meeting.
7. The authorisation of the Board of Directors to decide upon an issue of shares and the company´s own shares in possession of the company and the right to issue special rights which give entitlement to shares as defined in Chapter 10 Article 1 of the Companies´ Act The Annual General Meeting authorised the Board of Directors to decide on the issue of new shares and the company´s own shares in possession of the company as proposed by the Board. The new shares or the company´s own shares in possession of the company will be issued in the following amounts: A total of no more than 5 520 794 A series and no more than 1 908 000 K series shares. The authorisation also includes the right to carry out share capital increase deviating from the shareholders´ pre-emptive subscription right provided there is a weighty financial reason from the company´s point of view for the deviation. The authorisation includes the right to issue cost-free shares to the company, provided that the number of shares issued to the company would not exceed one tenth of all shares of the company. The authorisation also includes the right to issue special rights, as defined in Chapter 10 Article 1 of the Companies´ Act, which entitle to subscribe for shares against payment or by setting off the receivable. The authorisation also includes the right to pay remuneration in the form of shares. The Board of Directors is entitled to decide on other issues related to the share issues. The authorisation to repurchase shares is in force until the Annual General Meeting to be held in 2011.
8. The transfer the Funds of the Share Premium Account to the Reserve for Invested Unrestricted Equity It was decided that the share premium account (part of the equity) on the company’s balance sheet as of 31 December 2009 will be reduced by EUR 7,334,116.06, by transferring all the funds in the share premium account on the balance sheet as of 31 December 2009 to the reserve for invested unrestricted equity.
9. Organisation of the Board At its organisational meeting following the Annual General Meeting the Board elected Matti Virtaala as its chairman. Juhani Erma was elected chairman of the Audit Committee and Markku Rönkkö and Matti Virtaala as its members. Reijo Vauhkonen was elected chairman of the Nomination Committee and Bishop Ambrosius and Matti Virtaala were elected as members.
TULIKIVI OYJ
Matti Virtaala Chairman of the Board
Tulikivi Corporation, 83900 Juuka, Tel. +358 207 636 000 Matti Virtaala, Chairman of the Board Heikki Vauhkonen, Managing Director
NASDAQ OMX Helsinki Ltd, key media www.tulikivi.com
An annual Summary of Tulikivi Corporation´s stock exchange releases 2009 is available on company´s web-site at the address www.tulikivi.com/news/Annual_summary_2009
Some of the information included in the releases and announcements might be out of date.
NASDAQ OMX Helsinki Ltd, Central Media
Tulikivi Corporation, 83900 Juuka, tel. +358 207 636 000, www.tulikivi.com – Financing Director Arja Lehikoinen
The shareholders of Tulikivi Corporation are invited to the Annual General Meeting to be held on April 14, 2010 at 13.00 at the Kivikylä auditorium in Nunnanlahti, Juuka. The reception of persons who have registered for the meeting will commence at 12.30 a.m.
A. Matters on the agenda of the general meeting
The following matters will be dealt with by the Annual General Meeting:
1. Opening of the meeting
2. Calling the meeting to order
3. Election of persons to scrutinize the minutes and to supervise the counting of votes
4. Recording the legality of the meeting
5. Recording the attendance at the meeting and adoption of the list of votes
6. Presentation of the annual accounts, the report of the Board of Directors and the auditor’s report for the year 2009 – Review by the CEO
7. Adoption of the annual accounts
8. Resolution on the use of the profit shown on the balance sheet and the payment of dividend – The Board of Directors proposes to the Annual General Meeting that 0.0250 euros/share is paid as dividend for the A-series shares and that 0.0233 euros/share is paid as dividend for the K- series shares. The dividend decided by the Annual General Meeting will be paid for shares that have been recorded on the record date for the dividend payment in the shareholders’ register that is maintained by Euroclear Finland Ltd. The record date for the dividend payment is April 19, 2010. The Board of Directors proposes to the Annual General Meeting that the dividend payment date be April 26, 2010.
9. Resolution on the discharge of the members of the Board of Directors and the CEO from liability
10. Resolution on the remuneration of the members of the Board of Directors – The Nomination Committee proposes that the annual remuneration of Board members is EUR 15,600, of which 60 per cent will be paid in cash and 40 per cent in the form of Series A shares in Tulikivi Corporation. The shares will be purchased on the stock exchange on or before December 31, 2010 for a total consideration per each Board member of no more than 6,240 euros. The purchase of shares will take place on the basis of the General Meeting’s resolution and instructions. If it is not possible to effect the purchase of the shares on or before the above date, the remuneration will be paid in cash. Unless the Board of Directors grants express permission in advance, members of the Board are not allowed to transfer any shares received in this manner until their Board membership has ended. In addition, the Chairman of the Board of Directors will be paid a 6,240 euros monthly salary and the Board member serving as secretary to the Board of Directors a 724 euros monthly salary. Board members who perform non-Board assignments for the company shall be paid a fee on the basis of time rates and invoices approved by the Board of Directors. Travel costs will be reimbursed in accordance with the company’s travelling compensation regulations. The members of committees of the Board will receive a 300 euro remuneration per each meeting.
11. Resolution on the number of members of the Board of Directors – It is proposed to the Annual General Meeting that seven members will be elected to the Board of Directors.
12. Election of members of the Board of Directors – The Nomination Committee proposes to the Annual General Meeting that Bishop Ambrosius, Mr. Juhani Erma, Mr. Markku Rönkkö, Mrs. Maarit Toivanen-Koivisto, Mr. Heikki Vauhkonen and Mr. Matti Virtaala will be re-elected members of the Board of Directors, and that Mr. Olli Pohjanvirta, Master of Laws, from Helsinki will be elected new member of the Board of Directors.
13. Resolution on the remuneration of the auditor – The Board of Directors proposes to the Annual General Meeting that the fees of the auditor are paid according to approved invoices.
14. Election of auditor – The Board of Directors proposes to the Annual General Meeting that the firm of authorized public accountants KPMG Oy Ab will be elected auditor, with Mr. Ari Eskelinen, Authorized Public Accountant, acting as the chief auditor.
15. Proposal of the Board of Directors to amend the Articles of Association
– The Board of Directors proposes to the Annual General Meeting that the first paragraph of Section 8 (Notice of meeting) of the Articles of Association shall be amended to be as follows:
16. Authorizing the Board of Directors to decide on the repurchase of the company’s own shares – The Board of Directors proposes to the Annual General Meeting that the Annual General Meeting would resolve to authorise the Board of Directors to decide on the repurchase of the company’s own shares under the following terms: a) The company’s shares are to be acquired in order to develop the company’s capital structure and to be used as consideration in acquisitions or other structural arrangements in a manner and with a scope determined by the Board of Directors. In addition, the shares may be acquired for the use in share-based incentive arrangements, for payment of share-based remuneration or otherwise to be transferred or cancelled. b) A maximum number of 2,760,397 of the A-series shares and 954,000 of the K-series shares of the company may be repurchased, taking into account that the company may not hold more than 10 per cent of all shares. c) Shares will be acquired in the following manner: (i) The company’s A-series shares will be acquired through public trading at the NASDAQ OMX Helsinki Oy as decided by the Board of Directors and by deviating from the proportion in which the company’s shareholders own shares in the company, at the price set at the NASDAQ OMX Helsinki Oy and in accordance with its rules; (ii) The company’s K-series shares will be acquired in proportion to shares owned by the shareholders by making an offer to the owners of the K-series shares with the following terms: the price paid for the K-series shares corresponds to the weighted average price paid in the executed transactions in the public trading of the A-series shares at the NASDAQ OMX Helsinki Oy during the two week period preceding the signing date of the offer. In case the company has not managed to acquire the number of K-series shares set out in the resolution by the General Meeting, the Board of Directors may acquire the remaining number from those owners of K- series shares willing to sell more than their proportional share of the shares to be acquired. In case more shares are offered for sale than the number to be purchased, the Board of Directors will decide, having regard to the ownership share of the sellers and the number of shares offered for sale, how the number of shares to be purchased is to be allocated among the shareholders offering shares for repurchase. d) The repurchase of the shares will be carried out with funds available for distribution of profits and the acquisition will reduce the equity available for distribution e) The authorisation to repurchase shares is in force until the Annual General Meeting to be held in 2011, however, not for a longer period than 18 months as of the resolution by the General Meeting. f) All other issues related to the repurchase of shares are decided by the Board of Directors of the Company. 17. Authorizing the Board of Directors to decide on the issuance of shares and the company’s own shares in possession of the company and the right to issue special rights which give entitlement to shares as defined in Chapter 10 Section 1 of the Companies Act.
The Board of Directors proposes to the Annual General Meeting that the Annual General Meeting would resolve to authorise the Board of Directors to decide on the issue of new shares or the company’s own shares in the possession of the company. The new shares and the company’s own shares in possession of the company may be issued against payment or free of charge to all shareholders in accordance with their proportional ownership of the company’s shares or through a directed issue by deviating from the shareholders’ pre-emptive subscription right provided there is a weighty financial reason from the company’s point of view for the deviation. A directed share issue may only be free of charge if there is a particularly weighty financial reason for it from the point of view of the company and all its shareholders.
New shares may be issued in the following amounts: a total of no more than 5,520,794 A-series shares and no more than 1,908,000 K- series shares. The company’s own shares in the company’s possession may be issued in the following amounts: a total of no more than 5,520,794 A-series shares and no more than 1,908,000 K- series shares.
In addition, the authorisation would include a right to issue cost- free shares to the company, provided that the number of shares issued to the company would not exceed one tenth (1/10) of all shares of the company. When calculating this number, the number of shares held by the company as well as those held by its subsidiaries must be taken into account as set out in Chapter 15, Section 11, and subsection 1 of the Companies Act.
The authorisation would also include the right to issue special rights, as defined in Chapter 10, Section 1 of the Companies Act, which entitle to subscribe for new shares or shares in the possession of the company against payment. The payment may be made in cash or by setting off the subscriber’s receivable against the company as payment for the share subscription.
The Board of Directors may use the authorization for the purpose of making fee/salary payments in the form of shares.
The Board of Directors is entitled to decide on other issues related to the share issuances.
The authorisation to issue shares is in force until the Annual General Meeting to be held in 2011.
18. Proposal of the Board of Directors to Transfer the Funds of the Share Premium Account to the Reserve for Invested Unrestricted Equity
– The Board of Directors proposes to the Annual General Meeting that the share premium account (part of the equity) on the company’s balance sheet as of 31 December 2009 be reduced by EUR 7,334,116.06, by transferring all the funds in the share premium account on the balance sheet as of 31 December 2009 to the reserve for invested unrestricted equity.
19. Closing of the meeting
B. Documents of the general meeting
The proposals of the Board of Directors and its Committees relating to the agenda of the General Meeting as well as this notice are available on Tulikivi Corporation’s website at www.tulikivi.com/investors/general meetings. The annual report of Tulikivi Corporation, including the company’s annual accounts, the report of the Board of Directors and the auditor’s report as well as the the Corporate Governance Statement, is available on the above-mentioned website no later than March 16, 2010 and it will be mailed to the shareholders on March 16, 2009. The proposals of the Board of Directors and the annual accounts are also available at the meeting. Copies of these documents and of this notice will be sent to shareholders upon request. The minutes of the meeting will be available on the above-mentioned website as from April 28, 2010.
C. Instructions for the participants in the general meeting
1. The right to participate and registration Each shareholder, who is registered on March 31, 2010 in the shareholders’ register of the company held by Euroclear Finland Ltd., has the right to participate in the general meeting. A shareholder, whose shares are registered on his/her personal, Finnish book-entry account, is registered in the shareholders’ register of the company. A shareholder, who wants to participate in the general meeting, shall register for the meeting no later than April 4, 2010 giving a prior notice of participation. Such notice can be given: a) by e-mail to the address kaisa.toivanen@tulikivi.fi b) by telephone + 358 207 636 251 or 207 636 322 (from Monday to Friday at 8.00 a.m. – 4.00 p.m., except Thursday April 1, 2010 at 8.00 a.m. – 1 p.m. Registering by phone is not possible on Friday April 2,2010); c) by telefax; + 358 207 636 130 or d) by regular mail to Tulikivi Corporation/ Annual General Meeting, FI-83900 JUUKA In connection with the registration, a shareholder shall notify his/her name, personal identification number, address, telephone number and the name of a possible assistant or a proxy and his/her personal identification number.
The personal data given to Tulikivi Corporation is used only in connection with the general meeting and with the processing of related registrations.
Pursuant to Chapter 5, Section 25 of the Companies Act, a shareholder who is present at the general meeting has the right to request information with respect to the matters to be considered at the meeting.
2. Proxy representative and powers of attorney A shareholder may participate in the general meeting and exercise his/her rights at the meeting by way of proxy representation. A proxy representative shall produce a dated proxy document or otherwise in a reliable manner demonstrate his/her right to represent the shareholder at the general meeting. When a shareholder participates in the general meeting by means of several proxy representatives representing the shareholder with shares at different securities accounts, the shares by which each proxy representative represents the shareholder shall be identified in connection with the registration for the general meeting.
Possible proxy documents should be delivered in originals to Tulikivi Corporation/ general meeting, FI-83900 Juuka on or before the last date for registration.
3. Holders of nominee registered shares A holder of nominee registered shares is advised to request in good time necessary instructions regarding the registration in the shareholders’ register of the company, the issuing of proxy documents and registration for the general meeting from his/her custodian bank. The account management organisation of the custodian bank will register a holder of nominee registered shares, who wants to participate in the general meeting, to be temporarily entered into the shareholders’ register of the company at the latest on 9 April 2010 at 10.00 a.m. Further information is also available on www.tulikivi.com/investors/general meetings.
4. Other instructions and information On the date of this summons to the Annual General Meeting, on February 11, 2010, the total number of shares in Tulikivi Corporation is 37,143,970 of which the number of A-series shares is 27,603,970 and the number of K-series shares is 9,540,000. Of such shares, a total of 124,200 A-series shares are held by the company. A-series shares have 27,603,970 votes altogether and K- series shares have 95,400,00 votes. On the basis of the above, a maximum of 122,879,770 votes can be cast at the general meeting.
In Juuka February 11, 2010
TULIKIVI CORPORATION BOARD OF DIRECTORS
- The 2009 net sales of the Tulikivi Group amounted to EUR 53.1 million (EUR 66.5 million in 2008). - The 2009 result before taxes was a loss, at EUR -3.3 (+2.1) million. Earnings per share were EUR -0.06 (+0.04). - Net sales for the final quarter of 2009 were EUR 15.6 (18.3) million, and profit before taxes was EUR 0.2 (0.9) million. - Year-end order books were at EUR 4.8 (4.9) million. - Cash flow from operating activities before investments was EUR 3.7 (7.6) million. - With the Group’s recovering sales and improved cost efficiency, net sales in 2010 are expected to be up from the previous year, and the result is expected to turn positive during 2010.
Managing Director Heikki Vauhkonen “2009 began in very challenging circumstances following the collapse of sales both in Finland and in neighbouring markets due to the global economic crisis that emerged in the second half of the previous year. The adjustment measures under the profitability and centralisation programme launched in January proceeded as planned and have brought considerable cost savings.
Since the summer, demand in Finland has picked up as a result of the recovery in private house building, whereas demand in Central Europe has been weaker than in the early part of the year as a consequence of the slow start to the fireplace season and because of the economic recession.
In the latter part of the year we continued to focus on bringing new product groups to market. In the first half of 2010 we shall be launching the Tulikivi Green product range designed for energy- efficient and environmentally friendly living. These products mark a further improvement to the energy efficiency of our fireplaces and a reduction in their emissions.
In conjunction with developing the environmental friendliness of our products we also estimated the carbon footprint of our operations, being the first fireplace manufacturer in the world to do so. This was conducted in accordance with the British PAS 2050 standard and the results indicate that the carbon footprint from the manufacture of a Tulikivi fireplace will typically be neutralised during the first or second year of its use.
In the early part of 2010 we will launch our first new interior design fireplaces on the market.
The cold winter weather that began in late 2009 has boosted the demand for fireplaces in the early months of 2010, which will be reflected in the first six months’ sales, especially in the Finnish market. Sales of lining stone are also expected to grow favourably. A positive factor in fireplace sales in Central European markets is that French government support for fireplace purchasing will remain high during 2010.
The demand for natural stone products has been comparatively low and will not recover as quickly as the demand for fireplaces.”
Segment reporting Since the beginning of 2009, the Group’s operating segments have been the Fireplaces Segment and the Natural Stone Products Segment. The Fireplaces Segment includes soapstone and ceramic fireplaces sold under the Tulikivi and Kermansavi brands, their accessories, utility ceramics and fireplace lining stones. The Natural Stone Products Segment includes interior design stone products for households and stone deliveries to construction sites. Expenses not allocated to a segment are recognised under ‘Other items’, which also include financial costs and taxes. Expenses not allocated to a segment include expenses of the Group administration and expenses pertaining to data, financial and personnel administration.
Net sales and result The 2009 net sales of the Tulikivi Group totalled EUR 53.1 million (EUR 66.5 million in 2008). The net sales of the Fireplaces Segment amounted to EUR 47.8 (58.5) million, and those of the Natural Stone Segment were EUR 5.3 (8.0) million.
Exports accounted for EUR 27.2 (31.6) million, or 51.1 (47.6) per cent, of total sales. Net sales in Finland totalled EUR 25.9 (34.9) million. The largest markets for the Group’s exports were France and Germany.
The consolidated operating result was EUR -2.4 (+3.2) million. The Fireplaces Segment’s operating profit totalled EUR 1.0 (6.1) million, while the operating result for the Natural Stone Products Segment was a loss, at EUR -0.2 (+0.3) million. The expenses under ‘Other items’, i.e. expenses not allocated to the segments, were EUR -3.2 (-3.2) million. The Fireplaces Segment’s result was adversely affected by the total of almost EUR 1.0 million in expenses resulting from the restructuring of operations following the drop in net sales, and the write-down of EUR 0.2 million for the Kermansavi brand utility ceramics unit. The weakened result for the Natural Stone Products Segment was due to the drop in net sales. The consolidated result before taxes was EUR -3.3 (+2.1) million, and the net result was EUR -2.4 (+1.4) million. The consolidated return on investment was -4.3 (+6.8) per cent. Earnings per share amounted to EUR -0.06 (+0.04).
The profitability and centralisation programme was put into effect within the Group during 2009. In March, the codetermination negotiations were concluded, leading to 79 redundancies and 41 layoffs until further notice. For the most part, these layoffs are still continuing. The restructuring provision mentioned above, of which EUR 0.7 million has been used, was recognised for these measures. In addition to the restructuring provision, the restructuring will also result in approximately EUR 0.2 million in further non-recurring expenses, which will be recorded in future periods.
Consolidated net sales in the fourth quarter were EUR 15.6 (18.3) million, and the fourth-quarter profit before taxes was EUR 0.2 (0.9) million.
Monitoring achievement of the strategic goals The strategic goals set for the Tulikivi Group in 2009 were: an annual organic growth of 5 per cent in the long term; a return on investment of over 20 per cent; and an improvement in relative profitability of two percentage points per year. Sales growth, return on investment and the improvement in profitability all fell short of these goals, mainly due to the decline in demand.
Financing and investments Cash flow from operating activities before investments was EUR 3.7 (7.6) million. The current ratio was 1.9 (2.0). The equity ratio was 39.4 (41.2) per cent. The ratio of interest-bearing net debt to equity, or gearing, was 59.4 (55.1) per cent. The equity per share amounted to EUR 0.64 (0.73). Financial income for the period was EUR 0.2 million and financial expenses EUR 1.1 million. At the end of the financial year, the Group’s cash and other liquid assets came to EUR 10.6 (11.7) million, and the total of undrawn credit facilities and unused credit limits amounted to EUR 6 million.
The Group’s investments in production, quarrying and development came to a total of EUR 2.1 (2.9) million. Major investments made during the year comprised the conversion and replacement investments made in fireplace production and the opening of new quarries and quarrying sites.
Research and development expenses totalled EUR 1.6 (1.8) million, representing about 3.1 (2.7) per cent of net sales. A total of EUR 0.4 (0.4) million of this figure was capitalized. The development work during the year included continued combustion tests and product conceptualisation. In addition, a lifecycle assessment of Tulikivi fireplaces was undertaken and an estimation made of the carbon footprint associated with manufacture of the fireplaces. The results of these were available in January 2010. The product lifecycle covers many decades and the carbon emissions from the product’s manufacture are neutralised in as little as 1-2 years, depending on the model in question and how heavily it is used.
Personnel The Group employed an average of 417 (526) people during the financial year and the amount of the personnel was 484 (587) at the end of the year. Of these employees, 406 (504) were employed by the Fireplaces Segment, 52 (55) by the Natural Stone Products Segment and 26 (28) in activities not allocated to the segments. In all, 99.2 per cent of the employment relationships were permanent and 0.8 per cent were temporary. Salaries and bonuses during the review period totalled EUR 15.9 (17.8) million.
The Tulikivi Group has an incentive plan that includes a share- based incentive plan for key personnel and an incentive pay scheme for all personnel. The share-based incentive plan includes three earning periods: the calendar years 2008, 2009 and 2010. Under the plan, the bonus would be based on any improvement in Group’s result after financial items and on any improvement in cash flow from operating activities. The bonus could amount to a maximum of 175 000 Tulikivi Corporation Series A shares and a cash payment corresponding to the value of the shares. A maximum total of about 360 000 Series A shares and a cash payment corresponding to the value of the shares can be paid as rewards on the basis of the entire share-based incentive plan. No incentive plan bonus was accumulated on the 2009 earnings period.
The incentive pay scheme is based on the Group’s earnings and productivity and on attainment of personal targets. The cost impact of the incentive pay scheme was EUR 0.1 million in the financial year.
Occupational safety has improved well. The number of accidents per 1 000 000 working hours was 25 (26).
Resolutions of the Annual General Meeting Dividends Tulikivi Corporation’s Annual General Meeting, held on 31 March 2009, resolved to pay a dividend of EUR 0.0280 on Series A shares and EUR 0.0263 on Series K shares. The dividend was paid out on 14 April 2009.
Board of Directors, Managing Director and auditor Tulikivi Corporation’s Annual General Meeting elected the following persons to the Board of Directors of the parent company and domestic business subsidiaries: Bishop Ambrosius, Juhani Erma, Eero Makkonen, Markku Rönkkö, Maarit Toivanen-Koivisto, Heikki Vauhkonen and Matti Virtaala. The Board of Directors elected Matti Virtaala as Chairman. The auditor was KPMG Oy Ab, Authorized Public Accountants, Helsinki.
Authorisation to repurchase the company’s own shares The Annual General Meeting authorised the Board to acquire the company’s own shares as proposed by the Board.
Authorisation to decide on share issues and on the transfer of Tulikivi Corporation shares held by the company, and on the right to issue special rights giving entitlement to shares as defined in chapter 10, section 1 of the Limited Liability Companies Act.
The Annual General Meeting authorised the Board of Directors to decide on issuing new shares and on the transfer of Tulikivi Corporation shares held by the company as proposed by the Board. The authorisation also includes the right to issue special rights, as defined in chapter 10, section 1 of the Limited Liability Companies Act, which give entitlement to subscribe shares against payment or by setting off the receivable.
Treasury shares At the beginning of the year Tulikivi Corporation held a total of 74 000, and at the end of the year 124 200, of its own Series A shares. During the year a further total of 60 000 Series A shares were purchased at a total acquisition price of EUR 43 875, and 9 800 Series A shares were assigned to key personnel in accordance with the share-based incentive plan. During the year the average purchase price was EUR 0.73 per share. The purchase price was the share price at the time of purchase, which varied between EUR 0.68 and EUR 0.83 per share during the purchase periods. The book value of the assigned shares was EUR 13 212 and the value for recipients was EUR 9 979, i.e. EUR 1.02 per share on average. The during the year repurchased shares account for 0.2 per cent of all shares and 0.05 per cent of the votes carried by the shares. The number of shares in the company’s possession at the end of the year was 124 200 Series A shares, which corresponds to 0.3 per cent of the company’s share capital and 0.1 per cent of all voting rights.
The repurchase of the company’s own shares and their partial assignment had no material impact on the division of shareholdings and voting rights in the company.
The shares are repurchased for use as consideration in corporate acquisitions or other structural arrangements or to implement the share-based incentive plan, to pay a share-based incentive or otherwise to be transferred or cancelled.
Major business risks In the Tulikivi Group, risk analysis and risk management form part of the regular strategic planning process performed each year and part of line operations. Strategic planning includes analysing the opportunities and risks that are associated with strategy choices and which are taken into account in decision-making. Separate risk analyses are drawn up for major individual projects, and the necessary risk management measures are decided upon. When compiling action plans, the risks that threaten the fulfilment of objectives are assessed and suitable measures for managing the risks are determined. The action plans and budgets are adjusted to suit the risk level. In day-to-day operations, continuous risk management is employed to ensure undisturbed operations.
The necessary remedies and development measures are determined immediately for any risks that emerge. In the assessment of risks, their probability and impact are taken into account. Euro- denominated risk limits are used in evaluating the impacts. The purpose of risk management is to ensure that the Tulikivi Group’s business risks are identified and managed as effectively as possible so that the Group’s strategic and financial objectives can be attained.
In accordance with the division of responsibilities of the Group’s risk management, the Board of Directors of Tulikivi Corporation and the Boards of the business subsidiaries are responsible for the companies’ and the Group’s risk management policy and oversee its implementation. The Managing Director, assisted by the Management Team, is responsible for establishing risk management procedures. The Managing Director is responsible for ensuring that risk management is organised appropriately. The business units are responsible for the management of their business risks.
The Group’s risks comprise strategic and operational risks, damage, casualty and loss risks and financial risks.
Strategic risks are related to the nature of business operations and concern, but are not limited to, changes in the Group’s operating environment, market situation and market position, raw material reserves, legislative changes, business operations as a whole, the reputation of the company, its brands and raw materials, and major investments.
Operational risks are related to products, distribution channels, personnel, operations and processes. Damage, casualty and loss risks include fires, serious breakdowns of machinery and other damage to assets that may also lead to interruption of business. Damage risks also include occupational safety and protection risks, environmental risks and accident risks. Financial risks to which the Group is exposed are foreign currency risk, interest rate risk, credit risk and liquidity risk.
During the financial year, one risk that materialised in Finland and in neighbouring regions was a substantial deterioration in the demand, to which we reacted by implementing a profitability and centralisation programme. However, this did not yet have an effect in the first part of the year, and instead increased non-recurring expenses. Outside the euro zone, strong exchange rate fluctuations caused demand to fall more than predicted in the risk assessment.
The Group’s near-term risks are increased uncertainty among consumers and the effect of this on consumers’ building and fireplace projects.
Environmental obligations Tulikivi’s environmental strategy is geared towards making systematic progress in environmental matters in specified areas. All of Tulikivi Corporation’s operational quarries have the environmental permits they require. Permit renewals are also in progress. The Group’s operations comply with the environmental permits, the requirements of the authorities and the environmental protection requirements.
The company is responsible for the environmental impacts of its operations. Under the Mining Act and environmental legislation, the Tulikivi Group has landscaping obligations that must be met when operating its quarries and after the quarries and plants are eventually shut down. No hazardous or poisonous substances are left in the environment as a result of the Group’s operations.
The Group is neither party to judicial or administrative procedures concerning environmental issues nor is it aware of any environmental risks that would have a significant effect on its financial position.
Events following the end of the financial year
At the end of the financial year, order books were at EUR 4.8 (4.9) million. Order books for the Tulikivi Group have since grown, and stood at EUR 6.1 million on 11 February 2010.
The Tulikivi Group has drawn up and, since the start of the year, put into effect a revised strategy, which covers the key operational and financial goals for the period to 2015, and a new division of product groups. The product group division does not affect the current segment reporting. According to the strategic goals, the company’s organic growth target is an annual growth of over 10 per cent in the next few years, the target for profit before taxes is to reach the level of 10 per cent of net sales over the next five years, and the target for return on capital is more than 20 per cent. Corporate acquisitions in support of the strategy are also possible.
Future outlook Private house building, and along with it the demand for fireplaces, increased in Finland last autumn and this positive trend is expected to continue. The trough in demand in Russia and the Baltic countries is also behind us. In Central Europe sales of lining stones have increased significantly, but securing a market for fireplaces continues to be a challenge. New products will increase the company’s net sales during the second half of the year. Adjustment measures will be continued in the Group, with layoffs where necessary.
With the company’s recovering sales and improved cost efficiency, the full-year net sales are expected to be up from the previous year and the result is expected to turn positive during the year.
The Board’s proposal for the distribution of profits The parent company’s distributable equity following the financial year’s result of EUR -2.7 million amounts to EUR 4.7 million.
Dividend distribution EUR 0.0250/share for Series A shares EUR 0.0233/share for Series K shares in total approximately EUR 0.9 million and EUR 3.8 million will be left to equity. In the Board’s view, the proposed distribution of profits will not jeopardise the company’s solvency.
Corporate Governance Statement Tulikivi Corporation will issue its Corporate Governance Statement for 2009 separately from the Report of the Board. The Corporate Governance Statement has been prepared in accordance with Recommendation 51 of Corporate Governance Code and chapter 2, section 6 of the Securities Markets Act. Information on Corporate Governance can be found on Tulikivi’s website, at www.tulikivi.com/Investors/Corporate Governance and Management.
FINANCIAL STATEMENTS Jan-Dec 2009, SUMMARY CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME EUR million Jan-DecJan-Dec Change Q4 Q4Change 2009 2008 % 2009 2008 %
Sales 53.1 66.5 -20.1 15.6 18.3 -14.7 Other operating income 0.6 0.7 0.1 0.1 Increase/decrease in inventories in finished goods and in work in progress -1.0 -0.6 0.1 0.3 Production for own use 0.3 0.8 0.1 0.3 Raw materials and consumables 10.2 12.5 3.1 3.4 External services 7.6 10.0 2.3 2.6 Personnel expenses 20.0 23.1 5.3 6.5 Depreciation and amortisation 5.5 5.7 1.4 1.6 Other operating expenses 12.1 12.9 3.5 3.6
Operating profit/loss -2.4 3.2 -173.5 0.3 1.3 -73.8
Percentage of sales -4.5 4.9 2.2 7.1 Finance income 0.2 0.2 0.0 0.1 Finance expense -1.1 -1.4 -0.2 -0.6 Share of the profit of associated company 0.0 0.0 0.0 0.0
Profit before tax -3.3 2.1 -260.8 0.2 0.9 -74.6 Percentage of sales -6.2 3.1 1.4 4.6 Income tax expenses 1.0 -0.6 0.2 -0.3
Profit/loss for the year -2.4 1.4 -265.1 0.5 0.6 -19.0
Other comprehensive income Interest rate swaps 0.0 0.0 0.0 - 0.1 Translation differences 0.0 0.0 0.0 0.0
Total comprehensive income for the year -2.4 1.4 -271.0 0.5 0.5 -5.4
Earnings per share attributable to the equity holders of the parent company, EUR basic and diluted -0.06 0.04 0.01 0.02
CONSOLIDATED BALANCE SHEET EUR million 12/09 12/08 ASSETS Non-current assets Property, plant and equipment Land 1.0 1.0 Buildings 7.4 8.0 Machinery and equipment 8.1 10.3 Other tangible assets 1.1 1.2 Intangible assets Goodwill 4.2 4.3 Other intangible assets 10.6 11.2 Investment properties 0.2 0.2 Available-for-sale investments 0.1 0.1 Receivables Deferred tax assets 1.6 0.9 Total non-current assets 34.3 37.2
Current assets Inventories 10.2 11.5 Trade receivables 4.1 5.3 Current income tax receivables 0.3 Other receivables 0.9 0.4 Cash and other liquid assets 10.6 11.7 Total current assets 26.1 28.9 Total assets 60.4 66.1
EQUITY AND LIABILITIES Equity Share capital 6.3 6.3 Share premium fund 7.4 7.4 Treasury shares -0.1 -0.1 Translation difference -0.1 0.0 Revaluation reserve -0.1 -0.1 Retained earnings 10.4 13.7 Total equity 23.8 27.2 Non-current liabilities Deferred income tax liabilities 1.9 2.1 Provisions 1.0 0.9 Financial liabilities 19.9 21.6 Other debt 0.1 Total non-current liabilities 22.9 24.6 Current liabilities Trade and other payables 8.7 9.1 Current income tax liabilities 0.0 0.1 Current provisions 0.2 Current financial liabilities 4.8 5.1 Total current liabilities 13.7 14.3 Total liabilities 36.6 38.9 Total equity and liabilities 60.4 66.1
CONSOLIDATED CASH FLOW STATEMENT EUR million Jan-Dec Jan-Dec 2009 2008 Cash flows from operating activities Profit for the period -2.4 1.4 Adjustments: Non-cash transactions 5.5 5.8 Interest expenses and interest income and income taxes 0.0 1.8 Change in working capital 1.8 0.2 Interest paid and received and taxes paid -1.2 -1.6 Net cash flow from operating activities 3.7 7.6 Cash flows from investing activities Investment in property, plant and equipment and intangible assets -2.0 -3.3 Grants received for investments and sales of property, plant and equipment 0.2 0.2 Net cash flow from investing activities -1.8 -3.1
Cash flows from financing activities Loans taken 5.1 10.0 Repayment of loans -7.0 -4.9 Dividends paid and treasury shares -1.1 -1.7 Net cash flow from financing activities -3.0 3.4
Change in cash and cash equivalents -1.1 7.9
Cash and cash equivalents at beginning of period 11.7 3.8
Cash and cash equivalents at end of period 10.6 11.7
Equity January 1, 2009 6.3 7.4 0.0 -0.1 -0.1 13.8 27.2 Dividends paid and treasury shares -1.0 -1.0 Total comprehensive income for the period -0.1 -2.4 -2.5 Equity Dec.31, 2009 6.3 7.4 -0.1 -0.1 -0.1 10.4 23.8
Equity January 1, 2008 6.3 7.4 -0.1 14.0 27.6 Dividends paid and treasury shares -0.1 -1.6 -1.7 The comprehensive income for the period 0.1 -0.1 1.4 1.4 Equity Dec.31, 2008 6.3 7.4 0.0 -0.1 -0.1 13.8 27.2
SEGMENT REPORTING Jan-Dec Jan-Dec EUR million 2009 2008 Sales 53.1 66.5 Fireplaces 47.8 58.5 Natural Stone Products 5.3 8.0 Other items - -
Operating profit -2.4 3.2 Fireplaces 1.0 6.1 Natural Stone Products -0.2 0.3 Other items -3.2 -3.2
BUSINESS SEGMENTS QUARTERLY EUR million Q4/ Q3/ Q2/ Q1/ Q4/ Q3/ Q2/ Q1/ 2009 2009 2009 2009 2008 2008 2008 2008
Sales 15.6 13.5 13.0 11.0 18.3 16.6 17.0 14.6 Fireplaces 14.4 12.4 11.4 9.6 16.4 14.9 14.6 12.6 Natural stone products 1.2 1.1 1.6 1.4 1.9 1.7 2.4 2.0 Other items - - - - - - - -
Operating profit/loss 0.3 0.7 -0.7 -2.7 1.3 1.3 0.9 -0.3 Fireplaces 1.3 1.5 0.1 -1.9 2.1 1.9 1.7 0.4 Natural stone products -0.2 0.0 0.1 -0.1 -0.1 0.1 0.1 0.2 Other items -0.8 -0.8 -0.9 -0.7 -0.7 -0.7 -0.9 -0.9
ASSETS AND LIABILITIES BY SEGMENT ON DECEMBER 31, 2009 Fire- Natural Other Total places stone items products Assets by segment 43.6 3.9 12.9 60.4 Liabilities by segment 8.3 0.6 27.7 36.6 Investments 1.9 0.0 0.2 2.1 Depreciation and amortisation expenses 4.9 0.3 0.3 5.5
KEY FINANCIAL RATIOS AND SHARE RATIOS Jan-Dec/09 Jan-Dec/08 Q4/09 Q4/ 08 07
Earnings per share, EUR -0.06 0.04 0.01 0.02 Equity per share, EUR 0.64 0.73 0.64 0.73 Return on equity, % -9.3 5.2 7.7 8.3 Return on investments, % -4.3 6.8 3.2 8.8 Equity ratio, % 39.4 41.2 Net indebtness ratio, % 59.4 55.1 Current ratio 1.9 2.0 Gross investments, EUR million2.1 2.9 Gross investments, % of sales 4.0 4.4 Research and development costs, EUR million 1.6 1.8 %/sales 3.1 2.7 Outstanding orders (31.Dec.), EUR million 4.8 4.9 Average number of staff 417 526
Rate development of shares, EUR Lowest share price, EUR 0.67 0.60 Highest share price, EUR 1.30 1.88 Average share price, EUR 0.96 1.28 Closing price, EUR 1.06 0.67
Market capitalization at the end of period, 1000 EUR 39241,0 24836,9 (Supposing that the market price of the K-share is the same as that of the A-share) Number of shares traded, (1000 pcs) 3959 2455 % of total amount of A-shares14.4 8.9 Number of shares average 37023708 37128494 37143970 37091946 Number of shares 31 December 37019770 37069970 37019770 37069970
NOTES TO THE CONSOLIDATED FINANCIALS STATEMENTS
This financial statement release has been prepared in accordance with the IAS 34 Interim Financial Reporting standard.
In preparing of this interim report, Tulikivi has applied same accounting policies as in the 2008 financial statements, with the exception of the following new/amended standards that the group has adopted as from January 1, 2009:
In preparing of this interim report, Tulikivi has applied same accounting policies as in the 2008 financial statements, with the exception of the following new/amended standards that the group has adopted as from January 1, 2009: - IFRS 8, Operating Segments - IAS 1 Presentation of Financial Statements (revised)
and the following new/amended standards and interpretations the adoption of which has not have any material impact on the figures for the period: - Amendment to IFRS 2 Share-based Payment - IAS 23 Borrowing Costs (revised) -Amendments to IFRS 7 Financial Instruments: Discloseres – improving Disclosures about Financial Instruments - Amendments to IFRIC 9 and IAS 39: Embedded Derivatives - Amendment to IAS 28 Investments in Associates (and consequential amendments to IAS 32 Financial Instruments: Presentation and IFRS 7 Financial Instruments: Disclosures) - Amendment to IAS 36 Impairment of Assets - Amendment to IAS 38 Intangible Assets - Amendment to IAS 19 Employee Benefits - Amendment to IAS 39 Financial Instruments: Recognition and Measurement - IFRIC 16 Hedges of a Net Investment in a Foreign Operation - IFRIC 13 Customer Loyalty Programmes - Amendment to IAS 16 Property, Plant and Equipment - Amendment to IAS 29 Financial Reporting in Hyperinflationary Economies - Amendment to IAS 31 Interests in Joint Ventures - Amendment to IAS 40 Investment Property - Amendment to IAS 20 Accounting for Government Grants and Disclosures for Government Assistance - IFRIC 15 Agreements for the Construction of a Real Estate
The key performance ratios and share ratios are calculated using the same methods as for the consolidated financial statements for 2008. The formulas can be found in the 2008 annual report, page 67.
Use of estimates When preparing the financial statements certain assumptions and estimates regarding future have to be made. The outcomes might differ from these assumptions and estimates. In addition judgements have to be made in the application of accounting principles. The estimates affect the amounts of assets and liabilities at the balance sheet date, reporting of contingent liabilities and income and expenses for the reporting period. Estimates are used i.a. when determining realisability of certain assets, useful lives of property, plant and equipment and intangible assets, income taxes, provisions and impairment of goodwill.
Income taxes EUR million Jan-Dec/09 Jan-Dec/08 Taxes for the current and previous reporting periods 0.1 -0.7 Deferred taxes 0.9 0.1 Total 1.0 -0.6
Collaterals given EUR million 12/2009 12/2008 Mortages granted and collaterals pledged 29.1 25.5 Derivatives Interest rate swaps Nominal value 7.3 13.0 Fair value -0.3 -0.2 Foreign exchange forward contracts Nominal value 0.1 Fair value 0.0 The fair value of derivatives is the gain or loss for closing the contract based on market rates at the balance sheet date.
Provisions EUR million Environ- Warranty Restruc- mental provisions turing provisions provision Provisions, Jan. 1, 2009 0.4 0.5 Increase in provisions 0.1 0.1 1.0 Effect of discounting 0.1 Used provisions 0.2 0.7 Provisions, Dec. 31, 2009 0.6 0.4 0.3
- The environmental and warranty provisions are non-current provisions. The environmental provision before discounting amounts to EUR 0.9 (0.8) million. The discount factor used in determining the present value is 4 (5) per cent. The restructuring provision comes under current provisions.
Under the Mining Act and environmental legislation, the Tulikivi Group has landscaping obligations which must be met during operations and when the quarries are shut down in the future. The environmental provision takes into account the costs of environmental monitoring after the closure of a quarry and the costs of landscaping obligations in so far as it has been possible to determine these reliably. The lining work carried out in stacking areas is based on a long-term quarrying plan, according to which surface material from new quarries is to be used in lining work. No provision is recognised for the lining work because this particular landscaping work is not expected to increase the costs of normal quarrying activity.
Changes in tangible assets are classified as follows: 12/09 12/08 Acquisition costs 1.1 1.4 Proceeds from sales -0.1 -0.4 Total 1.0 1.0
Impairment of property, plant and equipment, intangible assets and other assets A total of EUR 221 000 (250 000) in goodwill/trademark impairment was recognised for the financial year.
Number of % of % of Share, shares shares voting EUR of rights share capital K shares (10 votes) 9 540 000 25.7 77.6 1 621 800 A shares (1 vote) 27 603 970 74.3 22.4 4 692 675 Total Dec.31, 2009 37 143 970 100.0 100.0 6 314 475
There have been no changes in Tulikivi Corporation´s share capital during the period. According to the articles of association the dividend paid for Series A shares shall be 0.0017 EUR higher than the dividend paid on Series K shares. Each Series K shares confers 10 votes at a general meeting, while each Series A shares confers one vote. The Series A share is listed on the NASDAQ OMX Helsinki Ltd. 5.5 per cent of all shares were nominee registered or in foreign ownership. No flagging notifications were made to the company during the review period.
Board authorizations The Board of Directors has an authorization to acquire the company’s own shares. A maximum of 2 760 397 Series A shares in the company and 954 000 Series K shares in the company can be bought back. The authorization is valid until the Annual General Meeting 2010.
The Board of Directors has an authorization to decide on share issues and the conveyance of the company’s own shares in the possession of the company and the granting of special rights that give entitlement to shares as set forth in Chapter 10, Article 1 of the Companies Act. The Annual General Meeting authorized the Board of Directors to decide on issuing new shares and the conveyance of own shares in the company’s possession. New shares can be issued or own shares held by the company conveyed amounting to a maximum of 5 520 794 Series A shares and 1 908 000 Series K shares.
The authorization also includes the right to issue special rights, as defined in Chapter 10, Article 1 of the Companies Act, entitling the right holder to subscribe for shares against payment or by setting off the receivable. The authorization is valid until the Annual General Meeting 2010.
At the end of the period, the company hold 124 200 of its own A- series shares, corresponding to 0.3 per cent of share capital and 0.1 per cent of total voting rights.
Related party transactions The following transactions with related parties took place: EUR 1000 12/09 12/08 Sales of goods and services to associated companies 7 13 Purchases of goods and services from associated companies 148 173 Sales to related parties 30
Leases from related parties 109 115 Sales of goods and services to related parties 30
Transactions with other related parties Tulikivi Corporation is a founder member of the Finnish Stone Research Foundation. In 2009 the company has donated EUR 30 thousand (in 2008 EUR 100 thousand) for the Foundation. The company has leased offices and storages from the property owned by the Foundation and North Karelia Educational Federation of Municipalities. The rent paid for these facilities was EUR 131 thousand (128 thousand)in the period. The rent corresponds with the market rents. The rent corresponds with the market rents. The company has sold services amounting to EUR 41 thousand (52 )to the foundation and has leased land, amounting to EUR thousand 2 (2).
Largest shareholders on December 31, 2009 Name of shareholder Shares Proportion of total vote
Vauhkonen Reijo 4 186 827 24.2 % Vauhkonen Heikki 3 006 137 24.1 % Elo Eliisa 2 957 020 5.9 % Virtaala Matti 2 421 300 12.6 % Mutual Pension Insurance Ilmarinen 1 902 380 1.5 % Mutanen Susanna 1 643 800 7.2 % Vauhkonen Mikko 786 310 3.5 % Paatero Ilkka 718 430 0.6 % Nuutinen Tarja 674 540 3.5 % Investment Fond Phoebus 585 690 0.5 % Other shareholders 18 261 536 16.4 %
The figures contained in the financial statement release have not yet been audited.
The financial statements and Board of Directors´report will be published on the company´s website (www.tulikivi.com/Investors/Releases) during the week beginning March 15.
The companies included in the Group are the parent company Tulikivi Corporation, Kivia Oy, AWL-Marmori Oy, Tulikivi U.S. Inc. and OOO Tulikivi. Group companies include also The New Alberene Stone Company, Inc., which is dormant. The Group company Uuni Vertriebs GmbH was liquidated during the year. The parent company has a fixed place of business in Germany, Tulikivi Oyj Niederlassung Deutschland. The Group has interests in associated companies Stone Pole Oy and Leppävirran Matkailukeskus Oy.
Additional information: Tulikivi Corporation, 83900 Juuka, tel. +358-207-636 000, www.tulikivi.com - Chairman of the Board of Directors Matti Virtaala - Managing Director Heikki Vauhkonen- The 2009 net sales of the Tulikivi Group amounted to EUR 53.1 million (EUR 66.5 million in 2008). - The 2009 result before taxes was a loss, at EUR -3.3 (+2.1) million. Earnings per share were EUR -0.06 (+0.04). - Net sales for the final quarter of 2009 were EUR 15.6 (18.3) million, and profit before taxes was EUR 0.2 (0.9) million. - Year-end order books were at EUR 4.8 (4.9) million. - Cash flow from operating activities before investments was EUR 3.7 (7.6) million. - With the Group’s recovering sales and improved cost efficiency, net sales in 2010 are expected to be up from the previous year, and the result is expected to turn positive during 2010.
Tulikivi Corporation’s Corporate Governance Statement for 2009 can be viewed on the company’s website, at www.tulikivi.com/en/tulikivi/Corporate_governance_statement_2009.
– Tulikivi Corporation, FI-83900 Juuka, Finland, tel. +358 207 636 000, www.tulikivi.com – Managing Director Heikki Vauhkonen
A listed family company, Tulikivi Corporation and its subsidiaries form the Tulikivi Group, the world’s largest manufacturer of heat- retaining fireplaces. The Group is known for its Tulikivi soapstone fireplaces and natural stone products as well as its Kermansavi tiled stoves and utility ceramics.
Tulikivi Corporation will publish its Financial Statement Release for 2009 financial year on Thursday February 11, 2010.
Press and analyst conference will be held on the same day starting at 14.30 at Tulikivi-studio, Bulevardi 22, 00120 Helsinki.
We welcome you to look over Tulikivi Corporation´s financial statements for 2009 and for future strategies.