In September, demand for fireplace products in Tulikivi’s main market areas was more sedate than expected. The Tulikivi Group had sales of about EUR 52.5 million at the end of September (EUR 57.7 million in January-September 2006). The decline was largely due to exports, but domestic sales also still fell short of the previous year’s level. The strong decline in fireplace demand in Germany impacts on exports of both fireplaces and lining stone products. The order book on 30 September was EUR 7.9 (12.4) million.
Annual sales will thus be approximately 10 percent lower than last year. Earnings will be satisfactory.
TULIKIVI CORPORATION
Heikki Vauhkonen Managing Director
Distribution: Helsinki Stock Exchange and principal 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, tel. +358 50 550 7313 – Managing Director Heikki Vauhkonen, tel. +358 207 636 555
Tulikivi Corporation is starting codetermination negotiations in order to balance out fluctuations in demand affecting the company’s soapstone production. The negotiations concern Tulikivi Corporation’s soapstone production and quarrying.
To level out variations in demand, Tulikivi Corporation will start codetermination negotiations covering the company’s production and quarrying employees and salaried employees in Juuka. The negotiations primarily involve layoffs lasting under 90 days. It is intended that the downscaling measures will be carried out in the autumn. Layoffs will also take place at the Suomussalmi and Kuhmo plants this autumn as a result of codetermination negotiations held there.
The primary cause of the variations in demand is that the German market has quieted down, which is evident in the decline in exports of both fireplaces and lining stones.
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. The Group’s revenue amounts to over EUR 80 million, about half of which is accounted for by exports. The Group owns seven production plants and employs more than 700 people. www.tulikivi.com
Distribution: Helsinki Stock Exchange Central Media
www.tulikivi.com
Additional information: Managing Director Heikki Vauhkonen, tel. +358 207 636 555
The Boards of Directors of Tulikivi Corporation and its subsidiary Kermansavi Oy have signed a merger plan on June 29, 2007. Under the plan, Kermansavi Oy will merge into Tulikivi Corporation by means of absorption. The merger plan was registered on July 27, 2007.
According to the merger plan, Kermansavi Oy’s assets and liabilities will be transferred to Tulikivi Corporation at their book value at the time of merger. No consideration will be paid in the merger, as the receiving company, Tulikivi Corporation, owns all the shares in Kermansavi Oy. The merger will not affect Tulikivi Corporation’s Articles of Association. The merger aims to streamline the Group structure. It is planned that the implementation of the merger will be registered on December 31, 2007.
The merger plan, with its annexes and the documents specified in Article 11, Chapter 16 of the Companies Act, will be available for inspection by shareholders from August 29, 2007, at Tulikivi Corporation’s head office at Kuhnustantie 10, 83900 Juuka, and at Kermansavi Oy’s head office at Rasiahontie 3,79700 Heinävesi. Copies of the documents will be sent to shareholders on request. They can be ordered by phone from +358 207 636 251/Kaisa Toivanen or by email from kaisa.toivanen@tulikivi.fi.
If Tulikivi Corporation shareholders that own at least five (5) per cent of the company’s shares demand in writing within one month of the publication of this announcement that the merger must be decided on at a general meeting of shareholders, an extraordinary general meeting will be convened in accordance with the Companies Act and the Articles of Association. The demand must be sent to Tulikivi Corporation at the address Tulikivi Corporation/Kaisa Toivanen, 83900 Juuka.
Juuka, August 29, 2007
Tulikivi Corporation Board of Directors
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 ceramic fireplaces and utility ceramics. The Group’s revenue amounts to approximately EUR 80 million, about half of which is accounted for by exports. The Group owns seven production plants and employs just over 700 people. www.tulikivi.com
– The Tulikivi Group’s sales were EUR 36.6 (37.2) million. – The Group’s profit before taxes was EUR 1.1 (3.3) million. – The order book amounted to EUR 9.1 (12.6) million at period’s end. – Fireplace exports have developed according to plan, with the exception of exports to Germany.
Sales and result The Group’s sales amounted to EUR 36.6 million (EUR 37.2 million in January-June 2006). The Fireplaces Business posted sales of EUR 31.4 (32.7) million, the Natural Stone Products Business sales of EUR 4.0 (3.8) million and Other Operations sales of EUR 1.2 (0.7) million. The comparable sales of the Fireplaces Business – that is, exclusive of ceramic fireplace sales in Q1 – amounted to EUR 27.8 million.
The share of sales accounted for by Finland was EUR 18.7 (17.2) million, representing 51.1 (46.2) per cent. Exports accounted for EUR 17.9 (20.0) million. The largest countries for exports were France and Germany.
The Group’s operating profit was EUR 1.3 (3.4) million. The Fireplaces Business had an operating profit of EUR 2.8 (5.0) million, the Natural Stone Products Business an operating profit of EUR 0.3 (0.1) million and Other Operations an operating loss of EUR 1.8 (1.7) million.
Consolidated profit before taxes was EUR 1.1 (3.3) million. Earnings per share amounted to EUR 0.02 (0.07).
The sales of the Fireplaces Business declined due to weaker demand for fireplaces in Germany and the launch of the new distribution channel in Finland. Fireplace demand in Germany has been exceptionally weak in the first part of the year, which is evident in the decline in both fireplace exports to Germany and total exports of stone lining for heaters. In addition, the start-up expenses of the new plant cut into consolidated profit.
Financing and investments The Group’s financial position is good. The Group’s working capital increased by EUR 4.8 million during the review period, mainly due to the decline in trade payables and accrued liabilities. Working capital has also been tied up in products slated for delivery in the autumn. Due to the growth in working capital, the cash flow from operating activities before investments became negative, EUR -2.1 (4.0) million. The Group’s net financial expenses amounted to EUR 0.2 (0.2) million.
The equity ratio was 42.6 per cent (44.3 per cent at June 30, 2006). The ratio of interest-bearing net debt to shareholders’ equity, or gearing, was 75.1 (58.5) per cent. Current ratio was 1.6 (1.7). Shareholders’ equity per share amounted to EUR 0.76 (0.74).
The Group’s investments totalled EUR 3.2 (17.2) million during the report period. The major investments during the review period were earmarked for production and quarrying machines, opening new quarries and the distribution channel change.
Resolutions of the Annual General Meeting Dividend payout Tulikivi Corporation’s Annual General Meeting held on April 13, 2007, resolved to pay a dividend of EUR 0.090 on Series A shares and EUR 0.088 on Series K shares.
Administrative bodies Bishop Ambrosius, Mr. Juhani Erma, Mr. Eero Makkonen, Mrs. Maarit Toivanen-Koivisto, Mr. Heikki Vauhkonen, Mr. Reijo Vauhkonen and Mr. Matti Virtaala were elected as members of the Board of Directors of the parent company and its business subsidiaries. From amongst its number, the Board elected Mr. Matti Virtaala as chairman and Mr. Heikki Vauhkonen as vice chairman. The firm of independent public accountants KPMG Oy Ab of Helsinki was elected as the auditor.
Authorization to acquire the company’s own shares The Annual General Meeting 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 will be bought back.
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 as follows: 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.
Amendments to the Articles of Association The company’s Articles of Association were amended to conform to the new Companies Act.
Managing director Mr. Heikki Vauhkonen was appointed as Tulikivi Corporation’s managing director as from May 28, 2007. A new vice chairman was not elected to replace him on the Board of Directors. At that time, Mr. Juha Sivonen was appointed as the head of the Fireplaces Business.
Merger of Kermansavi Oy into its parent company The Boards of Directors of Tulikivi Corporation and Kermansavi Oy decided to merge Kermansavi Oy into Tulikivi Corporation by means of an absorption merger, as set out in the merger plan signed on June 29, 2007. The merger aims to clarify the Group structure. The planned registration date for consummation of the merger is December 31, 2007.
Risks and uncertainties The Group’s risks and uncertainties have not changed significantly during the report period. Changes in the business environment – such as the recovery of demand in Germany and improved efficiency in distribution channel operations – have the greatest impact on the Group’s operations in the short term. Assessments of the Group’s risks over the long term indicate that its strategic risks include risks related to its raw material reserves, business operations as a whole and market position as well as legislative amendments. Operational risks concern, for instance, products, distribution channels and processes. For more on this topic, see the 2006 Annual Report.
Outlook for the future The growth prospects for construction are good at the annual level in the Group’s main market areas, supporting growth in demand for Fireplaces. The efficiency of the new distribution channel in Finland will increase. Demand for Fireplaces in Germany will grow in the latter half of the year, but will be lower than last autumn. This means that the Group’s sales and result will fall short of the previous year; that said, good earnings are expected.
Changes in segment reporting As from January 1, 2007, the Group’s business segments are the Fireplaces Business, Natural Stone Products Business and Other Operations. The Fireplaces Business includes soapstone and ceramic Fireplaces as well as stone lining for heaters. The Natural Stone Products Business includes interior decoration stone products for households and stone deliveries to construction sites. Other Operations includes expenses that have not been allocated to the Group’s business functions and tax and financial expenses as well as sales of ceramic utensils and the expenses of this business.
CONSOLIDATED INCOME STATEMENT MEUR 1-6/ 1-6/Change, 1-12/ 4-6/ 4-6/Change 2007 2006 % 2006 2007 2006 %
Sales 36.6 37.2 -1.6 82.1 17.4 20.9 -16.8 Other operating income 0.3 0.3 0.6 0.2 0.2 Increase/decrease in inventories in finished goods and in work in progress 2.1 -0.1 -0.3 0.9 0.0 Production for own use 0.5 0.5 1.0 0.4 0.3 Raw materials and consumables 7.4 6.4 14.4 3.5 3.8 External services 5.1 4.2 10.5 2.7 2.6 Personnel expenses 14.5 13.7 28.7 7.0 7.8 Depreciation and amortisation 3.0 2.4 5.2 1.5 1.4 Other operating expenses 8.2 7.8 16.3 3.7 4.1
Operating profit 1.3 3.4 -61.9 8.2 0.6 1.7 -62.3 Percentage of sales 3.6 9.2 10.0 3.7 8.2 Finance costs -net -0.2 -0.2 -0.4 -0.1 -0.2 Share of the profit of associated company 0.0 0.0 0.0
Profit before income tax 1.1 3.3 -67.1 7.8 0.5 1.5 -64.7 Percentage of sales 2.9 8.8 9.5 3.1 7.4 Income tax expenses -0.3 -0.9 -2.1 -0.2 -0.4
Profit for the period 0.8 2.4 -68.2 5.7 0.4 1.1 -65.2
Earnings per share attributable to the equity holders of the parent company, EUR basic and diluted 0.02 0.07 0.16
CONSOLIDATED BALANCE SHEET MEUR 06/07 06/06 12/06 ASSETS Non-current assets Property, plant and equipment Land 1.1 0.9 0.9 Buildings 8.8 8.8 9.0 Machinery and equipment 13.6 13.2 13.8 Other tangible assets 1.3 0.7 1.2 Intangible assets Goodwill 4.3 3.6 4.0 Other intangible assets 10.7 10.4 10.5 Investment properties 0.2 0.3 0.2 Available-for-sale investments 0.1 0.2 0.1 Receivables Deferred tax assets 0.6 0.5 0.5 Total non-current assets 40.7 38.6 40.2
Current assets Inventories 12.9 10.3 10.6 Trade receivables 7.7 9.4 8.5 Current income tax receivables 0.5 0.0 0.0 Other receivables 2.1 1.5 2.0 Cash and cash equivalents 2.0 2.1 4.9 Total current assets 25.2 23.3 26.0 Total assets 65.9 61.9 66.2
EQUITY AND LIABILITIES Equity 6.3 6.3 6.3 Share capital 7.4 7.4 7.4 Share premium Retained earnings 14.4 13.7 17.0 Total equity 28.1 27.4 30.7 Non-current liabilities Deferred income tax liabilities 3.1 2.9 3.0 Provisions 0.8 0.4 0.6 Interest-bearing debt 17.5 17.1 14.7 Other debt 0.4 0.4 0.4 Total non-current liabilities 21.8 20.8 18.7 Current liabilities Trade and other payables 10.5 12.5 13.7 Current income tax liabilities 0.2 0.4 Short-term interest-bearing debt 5.5 1.0 2.7 Total current liabilities 16.0 13.7 16.8 Total liabilities 37.8 34.5 35.5 Total equity and liabilities 65.9 61.9 66.2
CONSOLIDATED CASH FLOW STATEMENT MEUR 01-06/ 01-06/ 01-12/ 2007 2006 2006 Cash flows from operating activities Profit for the period 0.8 2.4 5.7 Adjustments: Non-cash transactions 2.9 2.3 5.1 Interest expenses and income and taxes 0.5 1.0 2.5 Change in working capital -4.8 -0.8 0.8 Interest paid and received and taxes paid -1.5 -0.9 -2.1 Net cash flow from operating activities -2.1 4.0 12.0
Cash flows from investing activities Acquistion of subsidiaries less cash and cash equivalents at the time of acquistion -10.6 -11.0 Investment in property, plant and equipment and intangible assets -3.2 -5.4 -10.1 Grants received for investments and sales of property, plant and equipment 0.2 0.4 1.0 Net cash flow from investing activities -3.0 -15.6 -20.1
Cash flows from financing activities Proceed from borrowings 7.0 14.1 15.3 Repayment of borrowings -1.4 -1.9 -3.8 Dividends paid -3.4 -2.6 -2.6 Net cash flow from financing activities 2.2 9.6 8.9
Change in cash and cash equivalents -2.9 -2.0 0.8
Cash and cash equivalents at beginning of period 4.9 4.1 4.1 Cash and cash equivalents at end of period 2.0 2.1 4.9
STATEMENT OF CHANGES IN EQUITY MEUR Share Share Trans- Retained Total capital prenium lation earnings fund diff.
Equity 1 January 2007 6.3 7.4 0.0 17.0 30.7 Translation differences 0.0 0.0 Items recognised directly in equity -0.1 -0.1 Profit for the period 0.8 0.8 Dividends paid -3.3 -3.3 Equity 30 June 2007 6.3 7.4 0.0 14.4 28.1
Equity 1 January 2006 6.2 5.4 0.0 13.9 25.5 Translation differences 0.0 0.0 Items recognised directly in equity -0.1-0.1 Profit for the period 2.4 2.4 Dividends -2.5 -2.5 Share issue 0.1 2.0 0.0 2.1 Equity 30 June 2006 6.3 7.4 0.0 13.7 27.4
BUSINESS SEGMENTS 01-06/ 01-06/ 1-12/ MEUR 2007 2006 2006 Sales 36.6 37.2 82.1 Fireplaces business 31.4 32.7 72.0 Natural stone products business 4.0 3.8 7.3 Other operations 1.2 0.7 2.8
Operating profit 1.3 3.4 8.2 Fireplaces business 2.8 5.0 11.0 Natural stone products business 0.3 0.1 0.3 Other operations -1.8 -1.7 -3.1
BUSINESS SEGMENTS QUARTERLY MEUR Q2/ Q1/ Q4/ Q3/ Q2/ Q1/ 2007 2007 2006 2006 2006 2006
Sales 17.4 19.2 24.4 20.5 20.9 16.3 Fireplaces business 14.7 16.7 21.5 17.8 18.1 14.6 Natural stone products business 2.1 1.9 1.8 1.7 2.1 1.7 Other operations 0.6 0.6 1.1 1.0 0.7
Operating profit 0.6 0.7 2.4 2.4 1.7 1.7 Fireplaces business 1.4 1.4 3.2 2.8 2.7 2.3 Natural stone products business 0.2 0.1 0.0 0.2 0.0 0.1 Other operations -1.0 -0.8 -0.8 -0.6 -1.0 -0.7
KEY FINANCIAL RATIOS AND SHARE RATIOS 06/07 06/06 12/2006 Outstanding orders (30 June), MEUR 9.1 12.6 10.4 Gross investment, MEUR 3.2 17.2 24.1 Gross investment, % of sales 8.7 46.1 29.4 Average number of staff 711 638 664
Earnings per share, EUR 0.02 0.07 0.16 Equity per share, EUR 0.76 0.74 0.83 Equity ratio, % 42.6 44.3 46.4 Gearing, % 75.1 58.5 49.0 Current ratio 1.6 1.7 1.6
Number of shares average 37143970 36425540 36784755 Number of shares 30 June 37143970 37143970 37143970
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 2006 financial statements, with the exception of the following new/amended standards that the group has adopted as from January 1, 2007: – IFRIC 11, IFRS 2 Group and Treasury Share Transactions – IFRIC 10, Interim Financial Reporting and Impairment – IFRS 7 Financial Instruments: Disclosures – IAS 1 (Amendment) Presentation of Financial Statements: Capital Disclosures
The changes have no material effect on Tulikivi’s interim report.
The key figures presented in the Interim Report have been calculated using the same formulas as the latest financial statements. The formulas can be found on page 64 of the 2006 Annual Report.
Business Combinations
On the basis of additional information gained during the review period, the accounting for the acquisition of the shares in Kermansavi Oy in 2006, was adjusted by adding environmental provisions of EUR 0.2 million to provisions and supplementing the amount of deferred tax liabilities recognized with EUR 0.1 million. Due to these changes, goodwill grew by about EUR 0.3 million, and amounted to EUR 3.6 million on June 30, 2007.
Income taxes 01-06/0701-06/06 01-12/06
Taxes for the current and previous financial periods 0.4 0.9 2.1 Deferred taxes -0.1 0.0 0.0 Total 0.3 0.9 2.1
Collateral and securities given And other commitments MEUR 6/2007 6/2006 12/ 2006 Loans from credit institutions and other non-current liabilities, secured by mortgages and pledges 23.0 18.0 17.4 Mortgages and pledges given 26.7 26.7 27.7 Other mortgages and pledges given by the company on its own behalf 2.2 1.7 2.1 Derivatives Interest rate swaps; nominal value 8.3 8.3 8.3 Interest rate swaps; fair value 0.2 0.0 0.1 Forward contracts Forward contracts; nominal value 0.2 Forward contracts; fair value 0.0
Environmental and warranty provisions Environmental Warranty EUR million provisions provisions Provisions, Jan. 1, 2007 0.2 0.4 Increase in provisions 0.2 0.0 Provisions, June 30, 2007 0.4 0.4
Provisions and obligations are itemized in the notes to the 2006 consolidated financial statements under notes 25. Provisions and 33. Other contingent liabilities.
Rate development and exchange of Series A shares During the report period, 2,695,986 shares were traded, with the value of share turnover being EUR 8.5 million. The highest rating for the share was EUR 3.75 and the lowest was EUR 2.82. The closing rate for the period was EUR 2.92.
According to the decision of the Annual General Meeting held on April 13, 2007, the Board of Directors has an authorization to acquire no more than a total of 2,760,397 Series A shares and no more than a total of 954,000 Series K shares of the company. The authorization is in force until the Annual General Meeting to be held in 2008 but, however, not for a longer period than 18 months as of the resolution by the General Meeting. In addition, the Board of Directors has an authorization to decide on issuing new shares and own shares held by the company. 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 Series A shares and no more than 1,908,000 Series K shares. The authorization is valid until the 2008 Annual General Meeting.
Largest shareholders on 30 June 2007 Name of shareholder Shares Proportion of total vote Vauhkonen Reijo 4 152 179 24.2 % Vauhkonen Heikki 2 999 739 24.1 % Elo Eliisa 2 957 020 5.9 % Virtaala Matti 2 417 152 12.6 % Mutual Pension Insurance Company Ilmarinen 1 902 380 1.5 % Mutanen Susanna 1 643 800 7.2 % Vauhkonen Mikko 797 700 3.6 % Paatero Ilkka 718 430 0.6 % Nuutinen Tarja 674 540 3.5 % Fondita Nordic Small Cap Placfond 517 000 0.4 % Other shareholders 18 364 030 16.4 %
The interim report has not been audited.
The companies included in the Group are the parent company Tulikivi Corporation and subsidiaries Kermansavi Oy, Kivia Oy, AWL- Marmori Oy, Tulikivi U.S. Inc. and OOO Tulikivi. Group companies include also Uuni Vertriebs GmbH (former Tulikivi Vertriebs GmbH) and The New Alberene Stone Company, Inc., which are dormant. Parent company has a fixed place of business in Germany, Tulikivi Oyj Niederlassung Deutschland. The Group has associated companies Stone Pole Oy and Leppävirran Matkailukeskus Oy.
Board of directors Matti Virtaala, Chairman of the Board
Distribution: Helsinki Stock Exchange 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
Tulikivi Corporation and Kermansavi Oy’s Boards of Directors have today decided to merge Kermansavi Oy into Tulikivi Corporation by absorption. The merger aims to clarify the Group structure. The draft terms of merger will be registered in the Trade Register within a month. The planned registration date for consummation of the merger is December 31, 2007.
Kermansavi Oy manufactures Kermansavi fireplaces and utility ceramics. The merger will not affect the figures in the Group’s financial statements.
Tulikivi Corporation
Board of Directors Matti Virtaala, Chairman of the Board
Distribution: Helsinki Stock Exchange Principal media
For additional information, contact: Tulikivi Corporation, 83900 Juuka, Finland, tel. +358 207 636 000, www.tulikivi.com – Matti Virtaala, Chairman of the Board – Heikki Vauhkonen, Managing Director
Heikki Vauhkonen (1970), LLB and BBA,has been appointed as managing director for Tulikivi Corporation effective May 28, 2007.
He has worked for Tulikivi Corporation since 1997. He is stepping into the position of managing director from his former role as marketing director of the Tulikivi Group’s Fireplace Business.
Heikki Vauhkonen will stay on as a member of the Board. A new vice chairman will not be elected for the Board.
Juha Sivonen (1962), M.Sc. (Civil Eng.) will stay on at Tulikivi Corporation as the head of the Fireplace Business. The goal is to ensure the future growth of Tulikivi’s Fireplace Business and upgrade the efficiency of line operations. Projects that have a major bearing on future operations are ongoing at the company – these include among others completing both the overhaul of the domestic distribution channel and the fireplace collection project.
Board of Directors Matti Virtaala, Chairman of the Board of Directors
For additional information, contact: Tulikivi Corporation, 83900 Juuka, Finland, tel. +358 207 636 000, www.tulikivi.com – Chairman of the Board Matti Virtaala – Heikki Vauhkonen, Managing Director as from May 28, 2007, tel. +358 207 636 555 – Juha Sivonen, Managing Director until May 28, 2007, tel. +358 207 636 280 – For photographs, see Tulikivi Corporation’s media bank at www.tulikivi.com. Go to Media/Pictures/Contact Persons.
– The Tulikivi Group’s sales were EUR 19.2 million (EUR 16.3 million in the previous year). – The Group’s profit before taxes was EUR 0.5 (1.7) million. – The order book amounted to EUR 10.8 (9.7) million at period’s end.
Changes in segment reporting As from January 1, 2007, the Group’s business segments are the Fireplace Business, Natural Stone Products Business and Other Operations. The Fireplace Business includes soapstone and ceramic fireplaces as well as stone lining for heaters. The Natural Stone Products Business includes interior decoration stone products for households and stone deliveries to construction sites. Other Operations includes expenses that have not been allocated to the Group’s business functions and tax- and financial expenses as well as sales of ceramic utensils and the expenses of this business.
Sales and result The Group’s sales amounted to EUR 19.2 million (EUR 16.3 million in January-March 2006). The Fireplace Business posted sales of EUR 16.7 (14.6) million, the Natural Stone Products Business sales of EUR 1.9 (1.7) million and Other Operations sales of EUR 0.6 million. The comparable sales of the Fireplace Business – that is, sales exclusive of ceramic fireplaces – amounted to EUR 13.6 million. Comparable sales fell short of the previous year’s level due to the change in the Finnish distribution channel system and weaker demand for fireplaces in Germany.
The share of sales accounted for by exports was EUR 9.8 (9.7) million, or 51.3 (59.4) per cent. The largest countries for exports were Germany and Sweden. With the exception of Germany, exports have grown in line with expectations. Domestic sales were EUR 9.4 (6.6) million.
The Group’s operating profit was EUR 0.7 (1.7) million. According to the Group’s segment reporting, the Fireplace Business had an operating profit of EUR 1.4 (2.3) million, the Natural Stone Products Business an operating profit of EUR 0.1 (0.1) million and Other Operations an operating loss of EUR -0.8 (-0.7) million. Consolidated profit before taxes was EUR 0.5 (1.7) million and comparable profit amounted to EUR 0.6 million. The earnings trend was weaker than expected due to slacker demand; in addition, the start-up expenses of the new plant and the setting up and marketing of the new distribution chain in Finland burdened profitability, as reported earlier.
Financing and investments The Group’s financial position is good. Cash flow from operating activities before investments amounted to EUR -1.2 (-0.4) million. The equity ratio was 47.5 per cent (64.1 per cent at March 31, 2006). The ratio of interest-bearing net debt to shareholders’ equity, or gearing, was 48.7 (5.5) per cent. Current ratio was 1.6 (1.6). Shareholders’ equity per share amounted to EUR 0.84 (EUR 0.74).
The Group’s investments totalled EUR 1.3 (1.8) million. During the report period, the Group continued to open the new quarry area in Kuhmo, carried out investments related to the distribution channel change and acquired quarrying machines.
Major events after the end of the report period Tulikivi Corporation’s Annual General Meeting, held on April 13, 2007, resolved that a dividend of EUR 0.090 be paid on Series A shares and EUR 0.088 on Series K shares. Bishop Ambrosius, Mr. Juhani Erma, Mr. Eero Makkonen, Mrs. Maarit Toivanen-Koivisto, Mr. Reijo Vauhkonen, Mr. Heikki Vauhkonen and Mr. Matti Virtaala were elected as the members of the Board of Directors. The Annual General Meeting accepted the proposals of the Board of Directors to authorize the Board of Directors to acquire the company’s own shares, to decide upon an issue of shares and to dispose of the company’s own shares as well as to issue special rights related to the shares. In addition, the Annual General Meeting accepted the proposal of the Board of Directors to amend the Articles of Association.
Outlook for the future Growth is foreseen in Tulikivi’s fireplace exports, with the exception of Germany. The distribution channel overhaul in Finland will continue to impact on product sales in the second quarter. Consolidated annual sales are expected to measure up to the previous year’s level, and good earnings are forecast.
CONSOLIDATED INCOME STATEMENT MEUR 01-03/ 01-03/ Change, 01-12/ 2007 2006 % 2006
Sales 19.2 16.3 18.1 82.1 Other operating income 0.1 0.1 0.6 Increase/decrease in inventories in finished goods and in work in progress 1.2 -0.1 -0.3 Production for own use 0.1 0.2 1.0
Raw materials and consumables 3.9 2.5 14.4 External services 2.5 1.7 10.5 Personnel expenses 7.5 5.9 28.7 Depreciation and amortisation 1.4 1.0 5.2 Other operating expenses 4.6 3.7 16.3
Operating profit 0.7 1.7 -61.6 8.2 Percentage of sales 3.4 10.6 10.0 Finance costs -net -0.2 0.0 -0.4 Share of the profit of associated company 0.0 0.0 0.0
Profit before income tax 0.5 1.7 -69.3 7.8 Percentage of sales 2.7 10.5 9.5 Income tax expenses 0.1 0.4 -2.1
Profit for the period 0.4 1.3 -70.9 5.7
Earnings per share attributable to the equity holders of the parent company, EUR 0.01 0.03 0.16 basic and diluted
CONSOLIDATED BALANCE SHEET MEUR 03/2007 03/2006 12/2006 ASSETS Non-current assets Property, plant and equipment Land 0.9 0.9 0.9 Buildings 8.8 6.7 9.0 Machinery and equipment 13.5 9.0 13.8 Other tangible assets 1.3 0.7 1.2 Intangible assets Goodwill 4.3 0.6 4.0 Other intangible assets 10.7 4.2 10.5 Investment properties 0.2 0.2 0.2 Available-for-sale investments 0.1 0.1 0.1 Receivables Deferred tax assets 0.6 0.5 0.5 Total non-current assets 40.3 22.9 40.2
Current assets Inventories 12.2 7.3 10.6 Trade receivables 7.4 8.6 8.5 Current income tax receivables 0.2 0.1 0.0 Other receivables 2.5 1.4 2.0 Cash and cash equivalents 2.8 1.4 4.9 Total current assets 25.1 18.8 26.0 Total assets 65.4 41.7 66.2
EQUITY AND LIABILITIES Equity Share capital 6.3 6.2 6.3 Share premium 7.4 5.4 7.4 Retained earnings 17.4 15.2 17.0 Total equity 31.3 26.8 30.7 Non-current liabilities Deferred income tax liabilities 3.1 0.8 3.0 Provisions 0.8 0.3 0.6 Interest-bearing debt 14.4 1.8 14.7 Other debt 0.3 0.4 0.4 Total non-current liabilities 18.6 3.3 18.7 Current liabilities Trade and other payables 11.9 10.4 13.7 Current income tax liabilities 0.3 0.1 0.4 Short-term interest-bearing debt 3.5 1.1 2.7 Total current liabilities 15.7 11.6 16.8 Total liabilities 34.3 14.9 35.5 Total equity and liabilities 65.4 41.7 66.2
CONSOLIDATED CASH FLOW STATEMENT 01-03/ 01-03/ 01-12/ MEUR 2007 2006 2006
Cash flows from operating activities Profit for the period 0.4 1.3 5.7 Adjustments: Non-cash transactions 1.5 1.0 5.1 Interest expenses and income and taxes 0.3 0.4 2.5 Change in working capital -2.8 -2.8 0.8 Interest paid and received and taxes paid -0.6 -0.3 -2.1 Net cash flow from operating Activities -1.2 -0.4 12.0
Cash flows from investing activities Acquisition of subsidiaries -11.0 Investment in property, plant and equipment and intangible assets -1.4 -1.9 -10.1 Grants received for investments and sales of property, plant and equipment 0.1 1.0 Net cash flow from investing activities -1.4 -1.8 -20.1
Cash flows from financing activities Proceeds from borrowings 1.0 15.3 Repayment of borrowings -0.5 -0.5 -3.8 Dividends paid -2.6 Net cash flow from financing activities 0.5 -0.5 8.9
Change in cash and cash equivalents -2.1 -2.7 0.8
Cash and cash equivalents at beginning of period 4.9 4.1 4.1 Cash and cash equivalents at end of period 2.8 1.4 4.9
STATEMENT OF CHANGES IN EQUITY MEUR Share Share Trans- Re- Total capital premium lation tained fund diff. ear- nings Equity 1 January 2007 6.3 7.4 0.0 17.0 30.7 Translation differences 0.0 0.0 Profit for the period 0.4 0.4 Equity 31 March 2007 6.3 7.4 0.0 17.4 31.1
Share Share Trans- Re- Total capital premium lation tained fund diff. ear- nings Equity 1 January 2006 6.2 5.4 0.0 13.9 25.5 Translation differences 0.0 0.0 Profit for the period 1.3 1.3 Equity 31 March 2006 6.2 5.4 0.0 15.2 26.8
BUSINESS SEGMENTS Q1/ Q1/ 1-12 MEUR 2007 2006 2006 Sales 19.2 16.3 82.1 Fireplaces business 16.7 14.6 72.0 Natural stone products business 1.9 1.7 7.3 Other operations 0.6 2.8
Operating profit 0.7 1.7 8.2 Fireplaces business 1.4 2.3 11.0 Natural stone products business 0.1 0.1 0.3 Other operations -0.8 -0.7 -3.1
BUSINESS SEGMENTS QUARTERLY Q1/ Q4/ Q3/ Q2/ Q1/ 2007 2006 2006 2006 2006
Sales 19.2 24.4 20.5 20.9 16.3 Fireplaces business 16.7 21.5 17.8 18.1 14.6 Natural stone products business 1.9 1.8 1.7 2.1 1.7 Other operations 0.6 1.1 1.0 0.7
Operating profit 0.7 2.4 2.4 1.7 1.7 Fireplaces business 1.4 3.2 2.8 2.7 2.3 Natural stone products business 0.1 0.0 0.2 0.0 0.1 Other operations -0.8 -0.8 -0.6 -1.0 -0.7
KEY FINANCIAL RATIOS AND SHARE RATIOS 03/2007 03/2006 12/2006 Outstanding orders (31 March), MEUR 10.8 9.7 10.4 Gross investment, MEUR 1.3 2.2 24.1 Gross investment, % of sales 6.6 13.4 29.4 Average number of staff 746 544 664
Earnings per share, EUR 0.01 0.03 0.16 Equity per share, EUR 0.84 0.74 0.83 Equity ratio, % 47.5 64.1 46.4 Gearing, % 48.7 5.5 49.0 Current ratio 1.6 1.6 1.6 Number of shares average 37143970 36425540 36784755 Number of shares 31 March 37143970 36425540 37143970
On the basis of additional information gained during the review period, the accounting for the acquisition of the shares in Kermansavi Oy in 2006, was adjusted by adding environmental provisions of EUR 0.2 million to provisions and supplementing the amount of deferred tax liabilities recognized with EUR 0.1 million. Due to these changes, goodwill grew by about EUR 0.3 million, and amounted to EUR 3.6 million on March 31, 2007.
Income taxes 01-03/0701-03/06 01-12/06
Taxes for the current and previous financial periods 0.2 0.4 2.1 Deferred taxes -0.1 0.0 0.0 Total 0.1 0.4 2.1
Collateral and securities given and other commitments MEUR 3/2007 3/2006 12/ 2006 Loans from credit institutions and other non-current liabilities, secured by mortgages and pledges 17.9 2.6 17.4 Mortgages and pledges given 27.7 10.8 27.7 Other mortgages and pledges given by the company on its own behalf 2.1 1.7 2.1 Derivatives Interest rate swaps; nominal value 8.3 8.3 Interest rate swaps; fair value 0.1 0.1
Environmental and warranty provisions Environmental Warranty EUR million provisions provisions Provisions, Jan. 1, 2007 0.2 0.4 Increase in provisions 0.2 0.0 Provisions, March 31, 2007 0.4 0.4
Rate development and exchange of Series A shares During the report period, 1,363,794 shares were traded, with the value of share turnover being EUR 4.6 million. The highest rating for the share was EUR 3.75 and the lowest was EUR 3.00. The closing rate for the period was EUR 3.11.
The Board of Directors had an authorization to buy and, similarly, to transfer treasury shares. A maximum of 2,688,552 Series A shares and a maximum of 954,000 Series K shares could be bought back. The authorization was valid until April 6, 2007. The company did not own any of its own shares on the closing date.
The Board of Directors had an authorization to increase the share capital such that the share capital could be increased by a maximum of EUR 1,238,468 by offering a maximum of 7,285,108 new Series A shares for subscription at the price determined by the Board of Directors and under the terms set by the Board. The authorization was valid until April 6, 2007.
Largest shareholders on 31 March 2007 Name of shareholder Shares Proportion of total vote Vauhkonen Reijo 4 160 146 24.3 % Vauhkonen Heikki 2 997 706 24.1 % Elo Eliisa 2 957 020 5.9 % Virtaala Matti 2 315 119 11.8 % Mutual Pension Insurance Company Ilmarinen 1 902 380 1.5 % Mutanen Susanna 1 643 800 7.2 % Vauhkonen Mikko 797 700 3.6 % Paatero Ilkka 718 430 0.6 % Nuutinen Tarja 674 540 3.5 % Fondita Nordic Small Cap Placfond 619 000 0,5 % Other shareholders 18 358 129 17,0 %
The Financial Statements have not been audited.
The companies included in the Group are the parent company Tulikivi Corporation and subsidiaries Kermansavi Oy, Kivia Oy, AWL- Marmori Oy, Tulikivi U.S. Inc. and OOO Tulikivi. Group companies include also Tulikivi Vertriebs GmbH and The New Alberene Stone Company, Inc., which are dormant. Parent company has a fixed place of business in Germany, Tulikivi Oyj Niederlassung Deutschland. The Group has associated companies Stone Pole Oy and Leppävirran Matkailukeskus Oy.
Additional information: Tulikivi Corporation, 83900 Juuka, tel. +358-207-636 000 – Chairman of the Board of Directors Matti Virtaala – Managing Director Juha Sivonen
The Annual General Meeting of the Tulikivi Corporation held on April 13, 2007 approved the financial statement for the financial year 2006 and discharged the members of the Board of Directors and the Managing Director from liability. It was resolved to pay a dividend of EUR 0.090 be paid on Series A shares and 0.088 on Series K shares. The Annual General Meeting accepted the proposals of the Board of Directors to authorise the Board of Directors to acquire the company’s own shares, to decide upon an issue of shares and to dispose of the company’s own shares as well as to issue special rights related to the shares. In addition, the Annual General Meeting accepted the proposal of the Board of Directors to amend the Articles of Association.
1. Dividend The Annual General Meeting resolved, in accordance with the Board’s proposal, to pay a dividend of: – EUR 0.090 on Series A shares – EUR 0.088 on Series K shares The record date for the dividend payment will be April 18, 2007. The dividend will be paid out on April 25, 2007.
Grants The Annual General Meeting resolved to grant EUR 150 000 of the Group’s distributable equity to charitable, non-profit, organisations and foundations.
2. Remuneration of Board members and auditor’s fees The annual remuneration of a Board member is EUR 15 000. 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 6 000 monthly fee, the Vice Chairman a EUR 3 000 monthly fee and the director serving as secretary to the Board of Directors a EUR 700 monthly fee. 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. Eero Makkonen, Mr. Reijo Vauhkonen, Mr. Heikki Vauhkonen and Mr. Matti Virtaala were re-relected as the members of the Board of Directors for the new term and Mrs. Maarit Toivanen-Koivisto was elected as a new member of the Board of Directors. The initial meeting of the Board was held immediately after the Annual General Meeting. Mr. Matti Virtaala was elected Chairman of the Board, and Mr. Heikki Vauhkonen was elected Vice Chairman.
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. 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. The authorisation is in force until the Annual General Meeting to be held in 2008 but, however, not for a longer period than 18 months as of the resolution by the General Meeting.
6. 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. 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 2008.
The amendment of the Articles of Association The Annual General Meeting accepted Board´s proposal to amend the Articles of Association. The provisions concerning maximum and minimum capital, the nominal value of the shares, the record date procedure and the redemption of own shares were removed from the Articles of Association. To the Articles of Association were amended the provisions concerning the appointment of a deputy auditor, representing the company, the time limit for issuing a summons to the General Meeting and the General Meeting.
TULIKIVI OYJ
Matti Virtaala Chairman of the Board
Additional Information: Tulikivi Corporation, 83900 Juuka, Tel. +358 207 636 000 Matti Virtaala, Chairman of the Board Juha Sivonen, Managing Director Distribution: Helsinki Stock Exchanges and Principal Media, www.tulikivi.com
Growth in the Tulikivi Group’s Q1 revenue did not measure up to expectations. Revenue amounted to about EUR 19.2 million (EUR 16.3 million in the previous year). Comparable revenue – that is, revenue in Q1 2007 less Kermansavi’s share – amounted to about EUR 15.5 million. The order book on March 31 was EUR 10.8 (9.7) million and the comparable order book was EUR 7.5 million.
In 2006, demand for Tulikivi Group fireplace products increased briskly right up to the end of the year. Demand has slowed in the first half of this year, especially in Germany and Finland.
There has been a substantial change in German fireplace demand since the beginning of the year. The three percentage point VAT increase that came into force at the beginning of 2007 brought product deliveries forward to the end of last year. The impact of the VAT increase is temporaryx). The IFO Business Climate Index, which measures the confidence of construction companies, swung into a decline in February. Slower demand for fireplaces in Germany has also been evident in Tulikivi’s lining stone sales.
Sales have risen in other export markets.
Tulikivi overhauled its distribution channel organization in Finland at the start of 2007. The changes were forecast to slow soapstone fireplace sales during the first half of the year. The transition phase has progressed in line with expectations.
Residential construction in Finland increased by almost 6 per cent in 2006. High house prices and a rise in interest rates limit new residential construction. Growth of 2 per cent is forecast for housing production in 2007*). In addition to new construction, the number of residential renovations carried out has an impact on fireplace demand.
Tulikivi Corporation’s first quarter result will be released on Friday, April 20, 2007.
Sources: *)Suhdanne 2007:1, ETLA
Tulikivi Corporation's annual report for 2006 was published today as a printed product and will be mailed to shareholders. The annual report is also available as a PDF file on the company's website at www.tulikivi.com. The annual report can also be ordered from the company: tel 0207 636 254, e-mail tulikivi@tulikivi.fi, street address: Tulikivi Corporation / Financial reports, 83900 Juuka.
Juha Sivonen Managing Director
Distribution: - Helsinki Stock Exchange