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.
TULIKIVI CORPORATION
Heikki Vauhkonen Managing Director
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
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, 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.
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 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.
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, 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.
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
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.
- The Tulikivi Group’s third-quarter sales were EUR 13.5 million (EUR 16.6 million, 7-9/2008) and result before taxes was EUR 0.4 (1.0) million. - The Group’s sales during the period were EUR 37.5 million (EUR 48.2 million, 1-9/2008) and result before taxes was a loss of EUR -3.5 (+1.2) million. Earnings per share amounted to EUR -0.08 (0.02). Cash flow from operating activities was EUR -0.6 (+3.3) million. - Order books at the end of the period were at EUR 6.0 (7.2) million. - The Group’s financial position is good and the equity ratio was 40.8% (43.5%) - Net sales are expected to fall well below that of last year and the result for the year will be in the red, in spite of the improvement in profitability.
Managing Director's comments:
“The measures implemented in the programme to centralise Group functions and improve profitability improved the company’s profitability as planned during the third quarter.
In Finland, consumer interest in our fireplace products clearly increased. After last winter’s ‘shock phase’, consumers have once again started to plan and implement building projects. In Finland operations are focused on the further development of the distribution network and services.
The autumn season for fireplace sales is late in Central Europe.
Long-term demand for lining stone is helping to widen the customer base.
Demand for natural stone products has been clearly weaker than it was the previous year.
The company’s profitability will further improve as the market conditions develop positively.”
Segment reporting Since the beginning of 2009, the Group's operating segments have been the Fireplaces Business and the Natural Stone Products Business. The Fireplaces Business includes soapstone and ceramic fireplaces sold under the Tulikivi and Kermansavi brands, their accessories, 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 costs and taxes.
Net sales and result The net sales of the Tulikivi Group were EUR 37.5 million (EUR 48.2 million in January – September 2008). The net sales of the Fireplaces Business was EUR 33.4 (42.1) million and of the Natural Stone Business EUR 4.1 (6.1 million). The decrease in the net sales of the Fireplaces Business was mainly a result of declining sales of fireplaces in Finland and its neighbouring regions.
Exports accounted for EUR 18.9 (21.5) million, or 50.4 (44.5) per cent, of total net sales. Finnish sales were 18.6 (26.7) million. The largest countries for exports were France, Germany and Belgium.
At the operating profit level, the Group posted a loss of EUR -2.7 (+1.9) million. In accordance with the Group’s segment reporting, the Fireplaces Business had an operating result of EUR -0.3 (+4.0) million, and the Natural Stone Products Business an operating result of EUR 0.0 (0.4) million, while other items’ expenses were EUR -2.4 (-2.5) million. The results for the Fireplaces Business were weakened by almost EUR 1 million in expenses arising from recognising a restructuring provision and by a write-down of EUR 0.2 million associated with the Kermansavi brand utility ceramics unit in the second quarter. The Group’s result before taxes was EUR -3.5 (+1.2) million and net losses were EUR -2.8 million (+0.9) million. Earnings per share were EUR -0.08 (0.02).
At the beginning of the year the Group launched a programme to centralise functions and improve profitability. The codetermination negotiations concluded in March led to 79 redundancies and 41 layoffs until further notice. 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 in further non-recurring expenses, which will be recorded in future periods.
The Group’s third-quarter sales were EUR 13.5 million (EUR 16.6 million in July-September 2008). Result before taxes was EUR 0.4 (1.0) million.
Financing and investments Cash flow from operating activities before investments was EUR - 0.6 (+3.3 million). The Group’s net financial expenses were EUR 0.8 (0.7) million. The equity ratio was 40.8 per cent (43.5 per cent at 30 September 2008). The ratio of interest bearing net debt to equity, or gearing, was 77.4 (66.9) per cent. The current ratio was 1.7 (1.7). The equity per share amounted to EUR 0.63 (0.72). The Group has a solid financial position. At the end of the review period, the Group’s cash assets were EUR 4.7 million (4.0) and undrawn credit facilities and unused credit limits amounted to EUR 9 million. The Group’s investments in production, quarrying and development were EUR 1.5 (1.8) million during the period. Research and development costs were EUR 1.0 (1.1) million. EUR 0.2 million of this amount was capitalized in the balance sheet. Combustion researchs and product conceptualisation have been continued in development operations.
Personnel The Group employed an average of 419 (569) people during the reporting period. Salaries and bonuses totalled EUR 11.6 (12.7) 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 incentive system was introduced in 2008 and has three earning periods, which are the calendar years 2008, 2009 and 2010. The maximum reward is 360 000 Tulikivi Corporation A shares and a cash payment corresponding to the value of the shares. The realized reward from the plan for the earning period 2008 was 9 800 A shares. A similar transfer of shares to key personnel took place in the review period. The maximum share reward for 2009 is 175 000 A shares and a cash payment corresponding to the value of the shares. A maximum of 40 000 A shares of this can go to the managing director. The share reward is based on the of the Group's profit after financial items and cash flow from operations. The incentive pay scheme is based on of the Group’s result and on the improvement of productivity, and the managing director and key persons also have personal targets in addition to this.
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 Auditors Tulikivi Corporation’s Annual General Meeting elected 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 from amongst its members. The auditor is KPMG Oy Ab, Authorized Public Accountants, Helsinki.
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, Article 1, of the 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, Article 1, of the Companies Act, which entitle to subscribe for shares against payment or by setting off the receivable.
Treasury shares At the beginning of the period Tulikivi Corporation held a total of 74 000 and at the end of the period it held 124 200 of its own A series shares. During the period a further 60 000 A series shares in total were purchased at a total acquisition price of EUR 43 875, and 9 800 A series shares were assigned to key personnel according to the share-based incentive plan. During the period 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 – 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 repurchased shares account for 0.2 per cent of all shares and 0.05 per cent of votes carried by shares. The number of shares in the company’s possession at the end of the period was 124 200 A shares which corresponds to 0.3 per cent of the company’s share capital and 0.1 of all voting rights. The repurchase of 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 system, to pay a share-based incentive or otherwise to be transferred or cancelled.
Risks and uncertainties
Sudden changes in the economy, a significant decline in consumer prices for energy and changes in state subsidies or regulations would weaken demand for fireplaces. The Group’s near-term risks mainly relate to the decline in demand for fireplace products.
According to the Group’s long-term risk assessment, its strategic risks concern, but are not limited to, changes in the Group’s operating environment, market situation and market position, and risks related to raw material reserves and legislative amendments. Operational risks are related to products, distribution channels and processes. For more information, see the 2008 Annual Report.
Future outlook Housing construction is still at a low level in many market-areas, but private house building is starting to increase in Finland. Net sales for the financial period are expected to fall well below that of last year. The centralisation and productivity improvement programme that is underway in the company will improve profitability in the latter half of the year. The result for the year will be in the red in spite of the improvement in profitability.
The order books at the end of the review period amounted to EUR 6.0 (7.2 on 30 September 2008 and 4.9 on 31 December 2008).
The strategic objectives set for the Tulikivi Group are: annual organic growth of 5 per cent in the long term, return on investment of over 20 per cent and the improvement of relative profitability by two percentage points per year. Sales growth, return on investment and the improvement of profitability will fall short of these objectives during the current year, mainly due to the decline in demand.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME MEUR 1-9/ 1-9/ Change,1-12/ 7-9/ 7-9/ Change 2009 2008 % 2008 2009 2008 %
Sales 37.5 48.2 -22.1 66.5 13.5 16.6 -18.5 Other operating income 0.5 0.6 0.7 0.1 0.2 Increase/decrease in inventories of finished goods and in work in progress -1.0 -0.9 -0.6 -0.4 -0.9 Production for own use 0.2 0.4 0.8 0.0 0.1 Raw materials and consumables 7.1 9.0 12.5 2.4 2.7 External services 5.3 7.4 10.0 1.9 2.7 Personnel expenses 14.7 16.6 23.1 4.1 4.9 Depreciation and amortisation 4.2 4.1 5.7 1.3 1.4 Other operating expenses 8.6 9.3 12.9 2.7 3.0
Operating profit/ oss -2.7 1.9 -240.5 3.2 0.6 1.4 -54.4 Percentage of sales -7.3 4.0 4.9 4.7 8.3 Financial incomes 0.1 0.1 0.2 0.0 0.0 Financial expenses -0.9 -0.8 -1.4 -0.3 -0.3 Share of the profit of associated company 0.0 0.0 0.0 0.0 0.0
Profit before income tax -3.5 1.2 -391.3 2.1 0.4 1.0 -62.3 Percentage of sales -0.9 2.5 3.1 2.9 6.3 Direct taxes 0.7 -0.3 -0.6 -0.1 -0.3
Profit/loss for the period -2.8 0.9 -422.2 1.4 0.3 0.8 -66.1
Other comprehensive income Interest rate swaps 0.0 -0.1 0.0 0.0 Translation differences -0,1 0.0 0.0 0.0 0.1
Total comprehensive Income for the period -2.9 0.9 -419.0 1.3 0.2 0.8 -70.7
Earnings per share attributable to the equity holders of the parent company, EUR basic and diluted -0.08 0.02 0.04 -0.02 0.02
CONSOLIDATED BALANCE SHEET MEUR 09/2009 09/2008 12/2008 ASSETS Non-current assets Property, plant and equipment Land 1.0 1.1 1.0 Buildings 7.6 8.2 8.0 Machinery and equipment 8.8 10.8 10.3 Other tangible assets 1.1 1.2 1.2 Intangible assets Goodwill 4.2 4.3 4.3 Other intangible assets 10.5 11.1 11.2 Investment properties 0.2 0.2 0.2 Available-for-sale investments 0.1 0.1 0.1 Receivables Deferred tax assets 1.5 0.9 0.9 Total non-current assets 35.0 37.9 37.2
Current assets Inventories 10.4 11.7 11.5 Trade receivables 6.1 6.9 5.3 Current income tax receivables 0.1 0.3 Other receivables 0.9 0.8 0.4 Cash and cash equivalents 4.7 4.0 11.7 Total current assets 22.2 23.7 28.9 Total assets 57.2 61.6 66.1
EQUITY AND LIABILITIES Equity Share capital 6.3 6.3 6.3 Share premium 7.4 7.4 7.4 Treasury shares -0.1 -0.1 Translation differences -0.1 -0.1 0.0 Revaluation reserve -0.1 -0.1 Retained earnings 9.9 13.2 13.7 Total equity 23.3 26.8 27.2 Non-current liabilities Deferred income tax liabilities 1.9 2.1 2.1 Provisions 0.9 0.9 0.9 Interest-bearing liabilities 18.0 17.7 21.6 Other liabilities 0.4 Total non-current liabilities 20.8 21.1 24.6
Current liabilities Trade and other payables 8.1 9.5 9.1 Current income tax liabilities 0.1 Current provisions 0.3 0.0 Short-term interest-bearing debt 4.7 4.2 5.1 Total current liabilities 13.1 13.7 14.3 Total liabilities 33.9 34.8 38.9 Total equity and liabilities 57.2 61.6 66.1
CONSOLIDATED CASH FLOW STATEMENT 01-09/ 01-09/ 01-12/ MEUR 2009 2008 2008
Cash flows from operating activities Profit for the period -2.8 0.9 1.4 Adjustments: Non-cash transactions 4.1 4.1 5.8 Interest expenses and interest income and taxes 0.1 1.0 1.8 Change in working capital -1.0 -1.4 0.2 Interest paid and received and taxes paid -1.0 -1.3 -1.6 Net cash flow from operating activities -0.6 3.3 7.6
Cash flows from investing activities Investment in property, plant and equipment and intangible assets -1.5 -1.8 -3.3 Grants received for investments and sales of property, plant and equipment 0.2 0.1 0.2 Net cash flow from investing activities -1.3 -1.7 -3.1
Cash flows from financing activities Proceeds from non-current and current borrowings 3.0 10.0 Repayment of non-current and current borrowings -4.0 -2.7 -4.9 Dividends paid treasury shares -1.1 -1.7 -1.7 Net cash flow from financing activities -5.1 -1.4 3.4
Change in cash and cash equivalents -7.0 0.2 7.9
Cash and cash equivalents at beginning of period 11.7 3.8 3.8 Cash and cash equivalents at end of period 4.7 4.0 11.7
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, 2009 6.3 7.4 0.0 -0.1 -0.1 13.7 27.2 Total comprehensive income for the period -0.1 -2.8 -2.9 Dividends paid and treasury shares 0.0 -1.0 -1.0 Equity September 30, 2009 6.3 7.4 -0.1 -0.1 -0.1 9.9 23.3
Equity Jan. 1, 2008 6.3 7.4 -0.1 14.0 27.6 Total comprehensive income for the period 0.9 0.9 Dividends paid and treasury shares 0.0 -1.7 -1.7 Equity September 30, 2008 6.3 7.4 -0.1 0.0 0.0 13.2 26.8
BUSINESS SEGMENTS 1-9/ 1-9/ 1-12 MEUR 2009 2008 2008 Operating segments Sales 37.5 48.2 66.5 Fireplaces 33.4 42.1 58.5 Natural stone products 4.1 6.1 8.0 Other items - - -
Operating profit/loss -2.7 1.9 3.2 Fireplaces -0.3 4.0 6.1 Natural stone products 0.0 0.4 0.3 Other items -2.4 -2.5 -3.2
BUSINESS SEGMENTS QUARTERLY Q3/ Q2/ Q1/ Q4/ Q3/ Q2/ Q1/ 2009 2009 2009 2008 2008 2008 2008 Operating segments Sales 13.5 13.0 11.0 18.3 16.6 17.0 14.6 Fireplaces 12.4 11.4 9.6 16.4 14.9 14.6 12.6 Natural stone products 1.1 1.6 1.4 1.9 1.7 2.4 2.0 Other items - - - - - - -
Operating profit/ loss 0.7 -0.7 -2.7 1.3 1.3 0.9 -0.3 Fireplaces 1.5 0.1 -1.9 2.1 1.9 1.7 0.4 Natural stone products 0.0 0.1 -0.1 -0.1 0.1 0.1 0.2 Other items -0.8 -0.9 -0.7 -0.7 -0.7 -0.9 -0.9
ASSETS AND LIABILITIES BY SEGMENT ON SEPTEMBER 30, 2009 Fire- Natural Other Total places Stone items Products Assets by segment 46.0 4.4 6.8 57.2 Liabilities by Segment 7.7 0.7 25.5 33.9 Investments 1.0 0.0 0.2 1.2 Depreciation and amortisation expenses 3.8 0.2 0.2 4.2
KEY FINANCIAL RATIOS AND SHARE RATIOS 1-9/09 1-9/08 7-9/09 7-9/08 1-12/08
Earnings per share, EUR -0.08 0.02 0.01 0.02 0.04 Equity per share, EUR 0.63 0.72 0.63 0.72 0.73 Return on equity, % -14.8 4.3 4.5 11.3 5.2 Return on investments, % -6.9 5.4 5.6 10.5 6.8 Equity ratio, % 40.8 43.5 41.2 Net indebtness ratio, % 77.4 66.9 55.1 Current ratio 1.7 1.7 2.0 Gross investments, MEUR 1.5 1.8 2.9 Gross investments, % of sales 4.0 3.6 4.4 Research and development costs, MEUR 1.0 1.1 1.8 %/sales 2.6 2.3 2.7 Outstanding orders (30 Sept.), MEUR 6.1 7.2 4.9 Average number of staff 419 569 526
Rate development of shares, EUR Lowest share price, EUR 0.67 1.20 0.60 Highest share price, EUR 1.30 1.88 1.88 Average share price, EUR 0.94 1.45 1.28 Closing price, EUR 1.00 1.22 0.67
Market capitalization at the end of period, 1000 EUR 37 019.8 45 275.9 24 836.9 (Supposing that the market price of the K-share is the same as that of the A-share) Number of shares traded, (1000 pcs) 3 030.7 1 735.0 2 455 % of total amount of A-shares 11.0 6.3 8.9 Number of shares average 37025021 37140677 37019770 37143970 37128494 Number of shares 30 September 37019770 37111366 37019770 37143970 37069970 NOTES TO THE INTERIM REPORT
This interim report has been prepared in accordance with International Financial Reporting Standard (IFRS)- IAS 34 Interim Financial Reporting as endorsed by the European Union. 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 figures presented in the Interim Report have been calculated using the same formulas as in the 2008 financial statements. The formulas can be found on page 67 of the Annual Report 2008.
Income taxes 01-09/09 01-09/08 01-12/08
Taxes for the current and previous financial periods -0.1 -0.3 -0.7 Deferred taxes 0.8 0.1 Total 0.7 -0.3 -0.6
Collateral and securities given and other commitments MEUR 9/09 9/08 12/08
Loans from credit institutions and other non-current liabilities, secured by mortgages and pledges 18.4 18.0 20.9 Mortgages and pledges given 28.6 25.5 25.1 Other mortgages and pledges given by the company on its own behalf 0.5 0.8 0.5 Derivatives Interest rate swaps and currency swaps; nominal value 8.2 11.0 13.0 Interest rate swaps; fair value -0.3 0.1 -0.2
The fair value of derivatives is the gain or loss for closing the contract based on market rates at the balance sheet date.
Changes in tangible assets are classified as follows MEUR 01-09/0901-09/08 01-12/08 Acquisition costs 0.9 1.1 1,4 Proceeds from sale 0.0 -0.1 -0,4 Total 0.9 1.0 1,0
Provisions The Group’s non-current provisions are an environmental provision of EUR 0.4 million and a warranty provision of EUR 0.5 million. Current provisions include a restructuring provision that stood at EUR 0.3 million at the end of the review period. EUR 0.1 million in total of the restructuring provision was recognised during the review period and EUR 0.7 million of this provision had been used.
Non-current provisions are itemized in greater detail in notes 24. Provisions and 33. Other contingent liabilities in the consolidated financial statements in Annual Report 2008. Contingent liabilities have not changed after the end of the financial period.
Share capital Share capital by share series Number % of % of Share, of 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 September 30, 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. The Series A share is listed on the NASDAQOMX Helsinki Ltd. No flagging notifications were made to the company during the review period.
Board authorizations The Annual General Meeting of March 31, 2009 authorized the Board of Directors to acquire the company’s own shares. A maximum of 2760 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 2010 Annual General Meeting. In addition, the Board of Directors has an authorization 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 is valid until the 2010 Annual General Meeting. At the end of the review period, the company hold 124 200 of its own A-shares.
Related party transactions The following transactions with related parties took place: EUR 1000 9/09 9/08 12/08 Sales of goods and services to associated companies 7 12 13 Purchases of goods and services from associated companies 117 98 173 Sales to related parties 24
Leases from related parties 83 88 115 Outstanding receivables from related parties 12
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 thousand 98 (93) thousand in the period. The rent corresponds with the market rents. The company has sold services amounting to EUR 39 thousand (16 )to the foundation and has leased land, amounting to EUR thousand 2 (2). Outstanding receivables from the Foundation amounted EUR thousand 12. Key management compensation 9/09 9/08 12/08 Salaries and other short-term employee benefits of the Board of Directors and the Managing Director 347 339 416 Other long term employee benefits 51 45 62
Largest shareholders on 30 September 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 789 310 3.6 % Paatero Ilkka 718 430 0.6 % Nuutinen Tarja 674 540 3.5 % Investment Fond Phoebus 585 690 0.5 % Other shareholders 18 258 536 16.3 %
The information in this 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 and Leppävirran Matkailukeskus Oy.
Tulikivi Corporation´s Financial Statements Release for 2009 will be published on February 11, 2010. Annual Report will come out on Tulikivi’s website week 11. Annual General meeting will be held on April 14, 2010.
The following interim reports will be published in 2010: – January – March April 21 – January – June August 12 – January – September October 20
Distribution
NASDAQ OMX Helsinki Ltd Central Media www.tulikivi.com
- The Tulikivi Group’s second-quarter sales were EUR 13.0 million (EUR 17.1 million, 4-6/2008) and result before taxes was a loss of EUR -0.9 (0.7) million. - The Group’s sales during the period were EUR 24.0 million (EUR 31.6 million, 1-6/2008) and result before taxes was a loss of EUR -3.9 (0.2) million. Earnings per share amounted to EUR 0.08 (0.00). Cash flow from operating activities was EUR -1.4 (1.0) million. - Order books at the end of the period were at EUR 6.5 (7.7) million. - Net sales for the period are expected to fall well below that of last year. The result for the second half of the year is expected to be better than the first half of the year, but the result after non-recurring items will be in the red. - The Group’s financial position is stable and the equity ratio is 39.6% (42.2%).
Managing Director's comments: “The Group’s sales were as expected during the second quarter. Sales in Finland and its neighbouring regions were notably lower than they were in the previous year as a result of consumer uncertainty and a reduction in the volume of low-rise building construction. Fireplace sales to Central Europe remained on a relatively good level.
During the spring the company introduced a new range of soapstone fireplaces with improved combustion technology which are more cost- effective to manufacture than before. In the summer a water- heating system for the fireplaces that further improves their energy-efficiency was also launched.
The programme to centralise Group functions and improve profitability was implemented as planned and this will improve the Group's profitability from the current level in the latter part of the year.
Demand for fireplace exports in the autumn will be relatively stable. In Finland the forecasts on low-rise house construction have been improved from the gloomiest estimates and this, together with the further development of the domestic distribution network and services, will create a foundation for long-term growth in domestic sales from the level at the beginning of the year.”
Segment reporting Since the beginning of 2009, the Group's operating segments have been the Fireplaces Business and the Natural Stone Products Business. The Fireplaces Business includes soapstone and ceramic Kermansavi fireplaces sold under the Tulikivi and Kermansavi brands, their accessories, 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 costs and taxes.
Net sales and result The net sales of the Tulikivi Group were EUR 24.0 million (EUR 31.6 million in January – June 2008). The net sales of the Fireplaces Business was EUR 21.0 (27.2) million and of the Natural Stone Business EUR 3.0 (4.4) million. The decrease in the net sales of the Fireplaces Business was mainly a result of declining sales of fireplaces in Finland and its neighbouring regions.
Net sales in Finland accounted for EUR 12.1 (17.7) million, or 50.5 (56.0) per cent, of total net sales. Exports accounted for EUR 11.9 (13.9) million. The largest countries for exports were France, Belgium and Germany.
At the operating profit level, the Group posted a loss of EUR -3.4 (0.6) million. In accordance with the Group’s segment reporting, the Fireplaces Business had an operating loss of EUR -1.8 (2.1) million, and the Natural Stone Products Business an operating profit of EUR 0.0 (0.3) million, while other items’ expenses were EUR -1.6 (-1.8) million. The results for the Fireplaces Business were weakened by almost EUR 1 million in expenses arising from recognising a restructuring provision and by a write-down of EUR 0.2 million associated with the Kermansavi brand utility ceramics unit in the second quarter. Consolidated loss before taxes was EUR -3.9 (0.2) million and net losses were EUR -3.1 million (0.1) million. Earnings per share were EUR -0.08 (0.00).
At the beginning of the year the Group launched a programme to centralise functions and improve profitability. The codetermination negotiations concluded in March led to 79 redundancies and 41 layoffs until further notice. A restructuring provision of EUR 1.0 million was entered for these measures for the review period. The restructuring will also result in approximately EUR 0.2 in further non-recurring expenses, which will be recorded in future periods.
The Group’s second-quarter sales were EUR 13.0 million (EUR 17.1 million in April-June 2008) and result before taxes was a loss of EUR -0.9 (0.7) million. The corresponding result before non-recurring items was EUR -0.7 million.
Financing and investments Cash flow from operating activities before investments was EUR - 1.4 (1.0) million. The Group’s net financial expenses were EUR 0.6 (0.4) million. The equity ratio was 39.6 per cent (42.2 per cent at 30 June 2008). The ratio of interest bearing net debt to equity, or gearing, was 79.3 (76.7) per cent. The current ratio was 1.6 (1.4). The equity per share amounted to EUR 0.62 (0.70). The Group has a solid financial position. At the end of the review period, the Group’s cash assets were EUR 4.9 million (2.5) and unused credit limits amounted to EUR 4 million. The Group’s investments in production, quarrying and development were EUR 0.9 (1.2) million during the period. Research and development costs were EUR 0.7 (0.9) million. EUR 0.2 million of this amount was capitalized in the balance sheet. A product development project in which the fireplace range was converted to use the whirlbox technique was completed. As a result, all model ranges of Tulikivi Corporation now display the CE marking.
Personnel The Group employed an average of 393 (570) people during the reporting period. Salaries and bonuses during the review period totalled EUR 8.3 (9.0) million, to which the restructuring provision contributed EUR 0.5 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 incentive system was introduced in 2008 and has three earning periods, which are the calendar years 2008, 2009 and 2010. The maximum reward is 360 000 Tulikivi Corporation A shares and a cash payment corresponding to the value of the shares. The realized reward from the plan for the earning period 2008 was 9 800 A shares. A similar transfer of shares to key personnel took place in the review period. The maximum share reward for 2009 is 175 000 A shares and a cash payment corresponding to the value of the shares. A maximum of 40 000 A shares of this can go to the managing director. The share reward is based on the improvement of the Group's profit after financial items and cash flow from operations. The incentive pay scheme is based on the improvement of the Group’s result and productivity, and the managing director and key persons also have personal targets in addition to this.
Board of Directors, Managing Director and auditors Tulikivi Corporation’s Annual General Meeting elected 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 from amongst its members. The auditor is KPMG Oy Ab, Authorized Public Accountants.
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, Article 1, of the 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, Article 1, of the Companies Act, which entitle to subscribe for shares against payment or by setting off the receivable.
Treasury shares At the beginning of the period Tulikivi Corporation held a total of 74 000 and at the end of the period it held 124 200 of its own A series shares. During the period a further 60 000 A series shares in total were purchased at a total acquisition price of EUR 43 875, and 9 800 A series shares were assigned to key personnel according to the share-based incentive plan. During the period 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 – 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 9 979, i.e. EUR 1.02 per share on average. The repurchased shares account for 0.2 per cent of all shares and 0.05 per cent of votes carried by shares. The number of shares in the company’s possession at the end of the period was 124 200 A shares which corresponds to 0.3 per cent of the company’s share capital and 0.1 of all voting rights. The repurchase of 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 system, to pay a share-based incentive or otherwise to be transferred or cancelled.
Risks and uncertainties A rapid decline in private house construction and remodelling and fluctuation of exchange rates will weaken the demand for fireplaces. The decrease of consumer prices of energy may also affect the demand for fireplace products. The risks the Group will face in the near future relate to the decline in demand for fireplaces products as well as to the success of cost savings attained with the profitability programme.
According to the Group’s long-term risk assessment, its strategic risks concern, but are not limited to, the Group’s raw material reserves, legislative amendments and the market position. Operational risks are related to products, distribution channels and processes. For more information, see the 2008 Annual Report.
Future outlook Housing construction is still at a low level in many market-areas, which, in addition to the general weak economic growth, has an impact on the demand for fireplaces and natural stone products. Demand for fireplaces is expected to be higher in relative terms in Central Europe than in Finland and its neighbouring regions. The total demand for fireplaces is expected to increase during the autumn but to remain on a significantly lower level than it was during the previous year. The centralisation and productivity improvement programme being implemented by the company will improve profitability in the latter half of the year. However, net sales for the current year are estimated to fall well below that of last year. The result for the second half of the year is estimated to be better than that of the first half of the year, but the result after non-recurring items is expected to be in the red.
The order books at the end of the review period amounted to EUR 6.5 (7.7 on 30 June 2008 and 4.9 on 31 December 2008).
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME MEUR 1-6/ 1-6/ Change,1-12/ 4-6/ 4-6/ Change 2009 2008 % 2008 2009 2008 %
Sales 24.0 31.6 -24.0 66.5 13.0 17.1 -24.1 Other operating income 0.4 0.4 0.7 0.3 0.2 Increase/decrease in inventories in finished goods and in work in progress -0.6 0.0 -0.6 -0.1 0.3 Production for own use 0.2 0.4 0.8 0.1 0.3 Raw materials and consumables 4.7 6.3 12.5 2.6 3.5 External services 3.4 4.8 10.0 1.9 2.8 Personnel expenses 10.6 11.7 23.1 5.2 6.3 Depreciation And amortisation 2.8 2.7 5.7 1.6 1.4 Other operating expenses 5.9 6.3 12.9 2.8 3.1
Operating profit/loss-3.4 0.6 -692.9 3.2 -0.7 0.8 -190.8 Percentage of sales -14.0 1.8 4.9 -4.9 4.8 Finance income 0.1 0.2 0.2 0.0 0.1 Finance expense -0.7 -0.6 -1.4 -0.3 -0.2 Share of the profit of associated company 0.0 0.0 0.0 0.0 0.0
Profit before tax -3.9 0.2 -2437.5 2.1 -0.9 0.7 -219.3 Percentage of sales -16.3 0.5 3.1 -6.8 4.4 Direct taxes 0.9 -0.1 -0.6 0.2 -0.2
Profit/loss for the period -3.1 0.1 3051.9 1.4 -0.7 0.6 -229.0
Other comprehensive income Interest rate swaps 0.0 -0.1 0.0 0.0 Translation differences 0.0 0.0 0.0 0.0 0.0
Total comprehensive Income for the period -3.1 0.1 1.3 -0.7 0.0
Earnings per share attributable to the equity holders of the parent company, EUR basic and diluted -0.08 0.00 0.04 -0.02 0.01
CONSOLIDATED BALANCE SHEET MEUR 06/2009 06/2008 12/2008 ASSETS Non-current assets Property, plant and equipment Land 1.0 1.1 1.0 Buildings 7.7 8.3 8.0 Machinery and equipment 9.1 11.4 10.3 Other tangible assets 1.1 1.3 1.2 Intangible assets Goodwill 4.3 4.3 4.3 Other intangible assets 10.7 11.2 11.2 Investment properties 0.2 0.2 0.2 Available-for-sale investments 0.1 0.1 0.1 Receivables Deferred tax assets 1.7 0.9 0.9 Total non-current assets 35.9 38.8 37.2
Current assets Inventories 10.9 12.6 11.5 Trade receivables 5.4 6.1 5.3 Current income tax receivables 0.2 0.6 Other receivables 1.0 0.9 0.4 Cash and cash equivalents 4.9 2.5 11.7 Total current assets 22.4 22.7 28.9 Total assets 58.3 61.5 66.1
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 Translation difference 0.0 -0.1 0.0 Revaluation reserve -0.1 -0.1 Retained earnings 9.6 12.4 13.7 Total equity 23.1 26.0 27.2 Non-current liabilities Deferred income tax liabilities 1.9 2.2 2.1 Provisions 0.9 0.9 0.9 Interest-bearing debt 18.3 16.1 21.6 Other debt 0.3 Total non-current liabilities 21.1 19.5 24.6
Current liabilities Trade and other payables 8.7 9.7 9.1 Current income tax liabilities 0.1 Current provisions 0.5 0.1 Short-term interest-bearing debt 4.9 6.2 5.1 Total current liabilities 14.1 16.0 14.3 Total liabilities 35.2 35.5 38.9 Total equity and liabilities 58.3 61.5 66.1
CONSOLIDATED CASH FLOW STATEMENT 01-06/ 01-06/ 01-12/ MEUR 2009 2008 2008
Cash flows from operating activities Profit for the period -3.1 0.1 1.4 Adjustments: Non-cash transactions 2.8 2.7 5.8 Interest expenses and interest income and taxes -0.3 0.5 1.8 Change in working capital 0.0 -1.2 0.2 Interest paid and received and taxes paid -0.8 -1.1 -1.6 Net cash flow from operating activities -1.4 1.0 7.6
Cash flows from investing activities Investment in property, plant and equipment and intangible assets -0.9 -1.4 -3.3 Grants received for investments and sales of property, plant and equipment 0.1 0.2 Net cash flow from investing activities -0.8 -1.4 -3.1
Cash flows from financing activities Proceeds from non-current and current borrowings 2.0 10.0 Repayment of non-current and current borrowings -3.5 -1.2 -4.9 Dividends paid treasury shares -1.1 -1.7 -1.7 Net cash flow from financing activities -4.6 -0.9 3.4
Change in cash and cash equivalents -6.8 -1.3 7.9
Cash and cash equivalents at beginning of period 11.7 3.8 3.8 Cash and cash equivalents at end of period 4.9 2.5 11.7
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, 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 -3.1 -3.1 Equity June 30, 2009 6.3 7.4 0.0 -0.1 -0.1 9.6 23.1
Equity Jan. 1, 2008 6.3 7.4 -0.1 0.0 0.0 14.0 27.6 Total comprehensive income for the period 0.1 0.1 Dividends -1.7 -1.7 Equity June 30, 2008 6.3 7.4 -0.1 0.0 0.0 12.4 26.0
BUSINESS SEGMENTS 1-6/ 1-6/ 1-12 MEUR 2009 2008 2008 Operating segments Sales 24.0 31.6 66.5 Fireplaces 21.0 27.2 58.5 Natural stone products 3.0 4.4 8.0 Other items - - -
Operating profit/loss -3.4 0.6 3.2 Fireplaces -1.8 2.1 6.1 Natural stone products 0.0 0.3 0.3 Other items -1.6 -1.8 -3.2
BUSINESS SEGMENTS QUARTERLY Q2/ Q1/ Q4/ Q3/ Q2/ Q1/ 2009 2009 2008 2008 2008 2008 Operating segments Sales 13.0 11.0 18.3 16.6 17.0 14.6 Fireplaces 11.4 9.6 16.4 14.9 14.6 12.6 Natural stone products 1.6 1.4 1.9 1.7 2.4 2.0 Other items - - - - - -
Operating profit/loss -0.7 -2.7 1.3 1.3 0.9 -0.3 Fireplaces 0.1 -1.9 2.1 1.9 1.7 0.4 Natural stone products 0.1 -0.1 -0.1 0.1 0.1 0.2 Other items -0.9 -0.7 -0.7 -0.7 -0.9 -0.9
ASSETS AND LIABILITIES BY SEGMENT ON JUNE 30, 2009 Fire- Natural Other Total places Stone items Products Assets by segment 46.3 4.8 7.2 58.3 Liabilities by Segment 8.5 0.8 26.0 35.3 Investments 0.7 0.0 0.1 0.8 Depreciation and amortisation expenses 2.2 0.2 0.2 2.6
KEY FINANCIAL RATIOS AND SHARE RATIOS 1-6/09 1-6/08 4-6/09 4-6/08 1-12/08
Earnings per share, EUR -0.08 0.00 -0.02 0.01 0.04 Equity per share, EUR 0.62 0.70 0.62 0.70 0.73 Return on equity, % -24.4 0.8 -12.1 8.3 5.2 Return on investments, % -12.9 3.0 -3.6 7.8 6.8 Equity ratio, % 39.6 42.2 41.2 Net indebtness ratio, % 79.3 76.7 55.1 Current ratio 1.6 1.4 2.0 Gross investments, MEUR 0.9 1.2 2.9 Gross investments, % of sales 3.8 19.5 4.4 Research and development costs, MEUR 0.7 0.9 1.8 %/sales 2.7 2.9 2.7 Outstanding orders (30 June), MEUR 6.5 7.7 4.9 Average number of staff 393 570 526
Rate development of shares, EUR Lowest share price, EUR 0.67 1.37 0.60 Highest share price, EUR 1.30 1.88 1.88 Average share price, EUR 0.83 1.51 1.28 Closing price, EUR 0.90 1.43 0.67
Market capitalization at the end of period, 1000 EUR 33 318 53 116 24837 (Supposing that the market price of the K-share is the same as that of the A-share) Number of shares traded, (1000 pcs) 1350 1215 2455 % of total amount of A-shares 4.9 4.4 8.9 Number of shares average 37027647 37143970 37011603 37143970 37128494 Number of shares 30 June 37019770 37143970 37019770 37143970 37069970
NOTES TO THE INTERIM REPORT
This interim report has been prepared in accordance with International Financial Reporting Standard IAS 34 Interim Financial Reporting. 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)
Income taxes 01-06/09 01-06/08 01-12/08
Taxes for the current and previous financial periods 0.0 0.0 -0.7 Deferred taxes 0.9 -0.1 0.1 Total 0.9 -0.1 -0.6
Collateral and securities given and other commitments MEUR 6/09 6/08 12/08
Loans from credit institutions and other non-current liabilities, secured by mortgages and pledges 18.4 18.1 20.9 Mortgages and pledges given 25.1 25.5 25.1 Other mortgages and pledges given by the company on its own behalf 0.5 0.8 0.5 Derivatives Interest rate swaps; nominal value 11.9 11.0 13.0 Interest rate swaps; fair value -0.3 0.2 -0.2
Provisions The Group’s non-current provisions are an environmental provision of EUR 0.4 million and a warranty provision of EUR 0.5 million. Current provisions include a restructuring provision that stood at EUR 0.5 million at the end of the review period. EUR 0.1 million in total of the restructuring provision was recognised during the review period and EUR 0.5 million of this provision had been used.
Share capital Share capital by share series Number % of % of Share, of 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, 2009 37 143 970 100.0 100.0 6 314 475
Board authorizations The Annual General Meeting of March 31, 2009 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 2010 Annual General Meeting. In addition, the Board of Directors has an authorization 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 is valid until the 2010 Annual General Meeting.
At the end of the review period, the company hold 124 200 of its own A-shares.
Related party transactions The following transactions with related parties took place: 1000 e 6/09 6/08 12/08 Sales of goods and services to associated companies 6 12 13
Purchases of goods and services from associated companies 85 44 173
Leases from related parties 56 61 115
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 65 thousand (64 thousand)in the period. The rent corresponds with the market rents.
Largest shareholders on 30 June 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 792 700 3.6 % Paatero Ilkka 718 430 0.6 % Nuutinen Tarja 674 540 3.5 % Investment Fond Phoebus 585 690 0.5 % Other shareholders 18 255 146 16.3 %
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 Uuni Vertriebs GmbH and The New Alberene Stone Company, Inc., which are 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 and Leppävirran Matkailukeskus Oy.
In accordance with the decision of the Board of Directors, Tulikivi Corporation has assigned a total of 9800 Tulikivi A shares held by the company to twelve key persons covered by the share-based incentive plan. The shares were assigned on the basis of the 2008 incentive plan. The transfer of the shares to the book entry accounts of the recipients took place today on June 16, 2009. The assignment of the treasury shares without compensation is based on the Board authorization granted by the Annual General Meeting on 31 March 2009.
Following the assignment of the shares, Tulikivi Corporation holds 124 200 A shares.
On 18 April 2008, the Board of Directors of Tulikivi Corporation approved a new incentive plan for the Tulikivi Group. The plan includes a share-based incentive plan for key personnel. The potential reward from the plan for the earning period 2008 is based on the Group’s profit after financial items and on its cash flow from operating activities, and is paid partly in A shares and partly in cash. The shares assigned are subject to restrictions on their reassignment during the restriction period.
Tulikivi Corporation Heikki Vauhkonen
Additional information: Tulikivi Corporation, 83900 Juuka, tel. +358-207-636 000, www.tulikivi.com – Managing Director Heikki Vauhkonen