The shareholders of Tulikivi Corporation are invited to the Annual General Meeting to be held on 13 April 2007 from 12.00 at the Kivikylä auditorium in Nunnanlahti, Juuka.
The following matters will be dealt with by the Annual General Meeting:
1. Matters belonging to the Annual General Meeting according to Article 10 of the Articles of Association and Chapter 5 Article 3 of the Companies’ Act.
2. Proposal concerning the composition of the Board of Directors
The nomination committee proposes to the Annual General Meeting that Matti Virtaala, Juhani Erma, Risto Jääskeläinen (Bishop Ambrosius), Eero Makkonen, Heikki Vauhkonen and Reijo Vauhkonen be re-elected as members of the Board of Directors for the new term and that Maarit Toivanen-Koivisto be elected as a new member of the Board of Directors.
3. Proposal concerning auditor
The Board of Directors proposes to the Annual General Meeting that the audit company KPMG Oy Ab is elected as auditor of the company with authorised public accountant Ari Eskelinen as the responsible auditor.
4. Proposal to distribute dividends
The Board of Directors proposes to the Annual General Meeting that 0.090 euros/share is paid as dividend to the A-series shares and that 0.088 euros/share is paid as dividend to the K-series shares. The dividend payment resolved by the Annual General Meeting is to be paid to shareholders who, on the record date for dividend payment, are registered in the share register of the company kept by the Finnish Central Securities Depository. The record date for the dividend payment is 18 April 2007. The Board of Directors proposes to the Annual General Meeting that the dividend is paid on 25 April 2007.
5. Proposal by the Board of Directors to authorise the Board of Directors to decide upon the repurchase of 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 determined by the Board of Directors. In addition the shares may be acquired for the use in share-based incentive arrangement, 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.
c) Shares will be acquired in the following manner:
(i) The company’s A-series shares will be acquired in accordance with the decision of the Board of Directors deviating from the ownership share of the shareholders in public trading from the Helsinki Stock Exchange at the price set at the Helsinki Stock Exchange and in accordance with its rules;
(ii) The company’s K-series shares will be acquired in the proportion of 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 Helsinki Stock Exchange during the two weeks 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 missing amount from those owners of the 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 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 profit funds available for distribution 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 2008 but, 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.
6. Proposal by the Board of Directors to authorise 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 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 or 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 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 share issue free of charge and deviating from the shareholders’ pre-emptive subscription right may be carried out only if there is a particularly weighty reason therefore 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 accounted for as set out in Chapter 15, Article 11, and paragraph 1 of the Companies’ Act.
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 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 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.
7. Proposal to amend the Articles of Association
The Board of Directors proposes that the company’s Articles of Association are amended to correspond to the new Companies’ Act, which entered into force on 1 September 2006. It is proposed that the provisions concerning maximum and minimum capital (3 §), the nominal value of the shares (4 §), the record date procedure (13 §) and the redemption of own shares (14 §) are removed from the Articles of Association and the provisions concerning the appointment of a deputy auditor, representing the company, the time limit for issuing a summons to the General Meeting, the General Meeting and the book-entry system are amended. The amendments require no actions from the shareholders.
Disclosure of the documents
The annual accounts of the company and the proposals made to the General Meeting are available for inspection by the shareholders as of 21 March 2007 at the company’s head office at Nunnanlahti and on the Internet homepage of the company at the address www.tulikivi.com. Copies of the documents will be sent to shareholders upon request. The annual report will be sent by mail to all shareholders.
Right to participate and advance notification
Shareholders, who, at the latest on 3 April 2007 have been registered as shareholders in the share register of the company maintained by the Central Securities Depository, are entitled to attend the General Meeting.
A shareholder who wishes to attend at the General Meeting shall notify the company in advance thereof at the latest on 3 April 2007. The notification should be made either by phone to Kaisa Toivanen, number 0207 636 251, by e-mail to the address kaisa.toivanen@tulikivi.fi or by mail to the address Tulikivi Corporation / Annual General Meeting, FI-83900 Juuka. Possible powers of attorney should be presented in connection with the advance notification.
In Juuka 21 March 2007
TULIKIVI CORPORATION BOARD OF DIRECTORS
The dispute between soapstone fireplace manufacturers Tulikivi Corporation and NunnaUuni Oy has been resolved in favour of Tulikivi in the Market Court. Tulikivi brought a claim against NunnaUuni’s advertising, which in Tulikivi’s view is misleading and against the Consumer Protection Act.
In its ruling, the Market Court held that NunnaUuni Oy’s Mammuttikivi marketing is against the Consumer Protection Act and constitutes unfair business practices. According to the court, said marketing measures by NunnaUuni Oy are misleading and liable to damage Tulikivi Corporation’s business.
The Market Court prohibited NunnaUuni from making advertising claims on the basis of comparisons of the heat resistance of different types of soapstone in conditions that are not relevant. In its ruling, the Market Court stated that NunnaUuni had not complied with the truthfulness obligation set for marketing in the Consumer Protection Act.
As a guarantee for the prohibition, the Market Court imposed a conditionally imposed fine of EUR 50,000 on NunnaUuni Oy and obligated the company to compensate EUR 75,000 of Tulikivi Corporation’s trial costs. NunnaUuni must comply with the injunction as from April 1, 2007.
Tulikivi Corporation’s fireplaces are environmentally friendly and safe. No consumer disputes concerning its fireplaces are pending.
TULIKIVI CORPORATION
Juha Sivonen Managing Director
For additional information, contact: Marketing Director Heikki Vauhkonen, Tulikivi Corporation, tel. +358 207 636 555
Distribution: Helsinki Stock Exchange, principal media
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
An annual Summary of Tulikivi Corporation´s stock exchange releases and announcements 2006 is available on company´s web-site at the address www.tulikivi.com/Investors/Releases/Annual Summary 2006
Some of the information included in the releases and announcements might be out of date.
Distribution: Helsinki Stock Exchange Central media
For additional information: Tulikivi Corporation, 83900 Juuka, tel. +358 207 636 000, www.tulikivi.com - Financing Director Arja Lehikoinen
* The Tulikivi Group’s sales rose by 40.1 per cent in 2006 and amounted to EUR 82.1 million (EUR 58.6 million in 2005). * The Group’s profit before taxes grew by 28.6 % to EUR 7.8 (6.1) million. * Cash flow from operating activities before investments was EUR 12.0 (10.5) million. * The order book at the turn of the year amounted to EUR 10.4 (9.2) million. * The new plant was started up as planned in November.
Changes in the Group’s structure and segment reporting Tulikivi Corporation acquired all the shares in Kermansavi Oy on April 3, 2006. The Group’s business operations were divided into three business segments in 2006, namely Soapstone Fireplaces, Natural Stone Products and Ceramic Products. The Soapstone Fireplaces Business supplies soapstone fireplaces and stone lining for heaters. The Natural Stone Products Business supplies interior stone products and delivers stone to construction sites. The Ceramic Products Business produces Kermansavi fireplaces and utensils.
Sales and result The Tulikivi Group’s sales rose by 40.1 per cent in 2006 and amounted to EUR 82.1 million (EUR 58.6 million in 2005). Ceramic Products accounted for EUR 13.5 million of consolidated sales, and thus growth in comparable sales was 17.1 per cent. The Soapstone Fireplaces Business posted sales of EUR 61.3 (52.2) million, up 17.6 per cent. Sales of the Natural Stone Products Business grew by 13.2 per cent to EUR 7.3 (6.4) million.
The share of sales accounted for by exports was EUR 41.9 (30.7) million, or 51.1 (52.4) per cent. The largest countries for exports were Germany and Sweden. The greatest relative growth was achieved in the Baltic countries, France, Russia and Germany. Domestic sales were EUR 40.2 (27.9) million. The Group’s operating profit was EUR 8.2 (6.3) million. Soapstone Fireplaces had an operating profit of EUR 9.8 (8.8) million. The earnings of Soapstone Fireplaces are burdened by EUR 0.3 million in expenses due to the distribution channel change in the fourth quarter, the recognition of environmental provisions amounting to EUR 0.2 million and the start-up expenses of the new plant built in Juuka. The launch of the new product generation and the forging of the new distribution channel solution in Finland increased the Group’s marketing expenses substantially. Natural Stone Products posted an operating profit of EUR 0.3 (0.2) million and Ceramic Products an operating profit of EUR 1.2 million, while unallocated expenses totalled EUR 3.1 (2.7) million.
Profit before taxes improved by 28.6 per cent to EUR 7.8 (6.1) million, representing 9.5 per cent of sales. The acquisition of Kermansavi Oy had an effect of EUR 0.8 million on pre-tax profits. The Group’s return on investment was 21.7 (20.7) per cent. Earnings per share amounted to EUR 0.16 (0.12).
Cash flow and financing The Group’s financial position remained good. Cash flow from operating activities before investments amounted to EUR 12.0 (10.5) million. Current ratio was 1.5 (1.6). The equity ratio was 46.4 (63.0) per cent. The ratio of interest-bearing net debt to shareholders’ equity, or gearing, was 40.9 (-3.1) per cent. Shareholders’ equity per share amounted to EUR 0.83 (EUR 0.70). Financial income during the review period amounted to EUR 0.2 million and financial expenses to EUR 0.6 million.
Investments and development During the report period, the company acquired all of Kermasavi Oy’s shares in order to expand its product range and potential clientele, among other things. The acquisition cost was EUR 13.5 million.
The Group’s other investments amounted to EUR 10.6 (4.8) million. The most significant capital item was the investment in a factory in Juuka, valued at about EUR 6 million. The plant mainly uses leftover small blocks as raw material.
R&D expenditure totalled EUR 1.8 (1.7) million and its relative share of sales was 2.2 (2.8) per cent. The main thrust in product development was on the development of the new generation of soapstone fireplaces. Sales and deliveries of the new fireplace collection to customers began in the autumn. The new products feature peerless combustion technology and efficiency.
Tulikivi sought stone reserves in Finland and Russia. Tulikivi is continuing its prospecting operations in new areas of Russian Karelia in cooperation with the Geology Institute of the Karelian Scientific Centre of the Russian Academy of Sciences and the Geological Survey of Finland.
Personnel The Group employed an average of 664 people during the financial period (514) and 765 (537) at its end. Of the personnel, 579 (487) were employed in Soapstone Fireplaces, 54 (50) in Natural Stone Products and 132 in Ceramic Products. 86.8 per cent of the employment relationships are permanent and 13.2 per cent temporary. Salaries and bonuses during the financial year totalled EUR 22.3 (16.7) million. Incentive pay will be paid to employees from the Group’s result for 2006, which had an impact on earnings of EUR 0.9 (0.7) million including social expenses. All personnel who were in the Group’s employ during the whole financial year are covered by the incentive pay scheme, as set out in the plant- specific accounting rules. Occupational safety has developed well. The number of work accidents per one hundred thousand working hours was 0.06 (0.1).
Board of Directors, managing director and auditors At Tulikivi Corporation’s Annual General Meeting held on April 6, 2006, the following members were elected to the Board of Directors: Bishop Ambrosius, Juhani Erma, Eero Makkonen, Aimo Paukkonen, Heikki Vauhkonen, Reijo Vauhkonen and Matti Virtaala. From amongst its members, the Board of Directors elected Matti Virtaala chairman and Heikki Vauhkonen vice chairman. Tulikivi Corporation’s managing director is Juha Sivonen. The firm of authorized public accountants PricewaterhouseCoopers Oy is the company’s auditor.
Number of shares, increase in the share capital and Board authorizations The number of Tulikivi Corporation’s shares was quadrupled during the report period without raising the share capital by dividing each old share into four new shares. The share’s new nominal value is EUR 0.17. The increase in the number of shares entered into force on April 21, 2006.
Tulikivi Corporation’s share capital was raised by EUR 122,133.10, the equivalent of 718,430 new Series A shares, through a directed share issue as part of the payment for the shares acquired in Kermansavi Oy. The fair value of the conveyed Series A shares is EUR 2.105 million. Their value was measured at the price of the Series A share on the stock exchange, adjusted for expected dividends, and amounted to EUR 2.93 per share. The new Series A shares were made available for trading on the stock exchange list on July 3, 2006. The share capital entered in the Trade Register at December 31, 2006 amounted to EUR 6,314,474.90. The number of shares is 37,143,970, of which 27,603,970 are Series A shares and 9,540,000 Series K shares.
The Board of Directors has 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 can be bought back. The company did not own any of its own shares on the closing date.
The Board of Directors has an authorization to increase the share capital, so that the share capital can 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 includes the right to waive the pre-emptive subscription right of shareholders provided there are weighty financial reasons for the company to do so.
Rate development and exchange of Series A shares In 2006, 7.5 million of Tulikivi Corporation’s Series A shares were traded on the Helsinki Stock Exchange. The value of share turnover was EUR 23.8 million. The highest rating for the share was EUR 4.05 and the lowest was EUR 2.04. The closing rate on the last day of trading was EUR 3.51.
Risk Management At the Tulikivi Group, risk analysis and risk management are part of the regular strategic planning process that is performed annually. In the assessment of risks, their probability and impact are taken into account. Risk management seeks 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 are achieved.
Environmental obligations Tulikivi’s environmental strategy is geared towards systematic progress in environmental efforts in the specified areas. The Group operates in line with environmental permits and complies with the requirements of the authorities and environmental protection.
The company shoulders its responsibilities for the environmental impacts of its operations. On the basis of the Mining Act and environmental legislation, the Tulikivi Group has landscaping obligations that must be met during operations and when quarries and plants are eventually shut down. The Group’s operations do not burden the environment with hazardous or poisonous substances.
All of Tulikivi Corporation’s quarries have the required environmental permits. In addition, renewal processes are under way. A procedure for the evaluation of environmental impacts was performed in connection with the founding of the soapstone quarry in Vaaralampi, Juuka. The procedure not only evaluated impacts in the Vaaralampi mining district, but also accounted for the potential combined impacts on the environment from other quarrying operations in Nunnanlahti.
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.
Outlook for the future The positive trend in the economy and brisk construction will continue in Tulikivi’s main market areas and demand for fireplace products is expected to remain solid. Consolidated sales and earnings will develop favourably at the annual level. The start-up of the new distribution channel in Finland and plant will burden the earnings trend in the first part of the year.
The Board’s dividend proposal The Board of Directors will propose to the Annual General Meeting that will convene on April 13, 2007 that a dividend of EUR 0.090 per share be paid for the Series A shares and EUR 0.088 per share for the Series K shares, to a total of EUR 3.3 million. In addition, it will be proposed that EUR 150,000 be used for charitable purposes as decided by the Board of Directors.
The financial statements have been prepared in accordance with the recognition and measurement principles of International Financial Reporting Standards (IFRS), and applying the IAS and IFRS standards as well as SIC and IFRIC interpretations in force as at December 31, 2006.
CONSOLIDATED INCOME STATEMENT MEUR 01-12/ 01-12/ Change 10-12/ 10-12/Change 2006 2005 % 2006 2005 %
Sales 82.1 58.6 40.1 24.5 17.6 39.2 Other operating income 0.6 0.3 0.1 0.1 Increase/decrease in inventories in finished goods and in work in progress -0.3 -1.0 -0.1 -0.2 Production for own use 1.0 1.2 0.3 0.3 Raw materials and consumables 14.4 9.7 4.5 2.8 External services 10.5 6.6 3.3 1.9 Personnel expenses 28.7 21.0 8.5 6.1 Depreciation 5.2 4.0 1.5 1.0 Other operating expenses 16.3 11.5 4.5 3.3
Operating profit 8.2 6.3 30.9 2.5 2.7 -8.9 Percentage of sales 10.0 10.7 10.2 15.5 Finance costs (net) -0.4 -0.1 0.0 0.0 Share of the profit of associated company 0.0 -0.1 0.0 -0.1
Profit before tax 7.8 6.1 28.6 2.4 2.6 -7.5 Percentage of sales 9.5 10.3 9.9 15.0 Income taxes -2.1 1.7 -0.7 0.8
Profit for the year 5.7 4.4 31.1 1.7 1.8 -3.4
Earnings per share attributable to the equity holders of the parent company, EUR basic and diluted 0.16 0.12 29.8
CONSOLIDATED BALANCE SHEET MEUR 12/06 12/05 ASSETS Non-current assets Property, plant and equipment Land 0.9 0.9 Buildings 9.0 6.2 Machinery and equipment 13.8 8.4 Other tangible assets 1.2 0.8 Intangible assets Goodwill 4.0 0.6 Other intangible assets 10.5 4.1 Investment properties 0.2 0.2 Available-for-sale investments 0.1 0.1 Receivables 0.2 Deferred tax assets 0.5 0.5 Total non-current assets 40.2 22.0
Current assets Inventories 10.6 7.0 Trade receivables 8.5 6.5 Current income tax receivables 0,0 0.0 Other receivables 2.0 1.0 Cash and cash equivalents 4.9 4.1 Total current assets 26.0 18.6 Total assets 66.2 40.6
EQUITY AND LIABILITIES Equity Share capital 6.3 6.2 Share premium fund 7.4 5.4 Translation difference 0.0 0.0 Retained earnings 17.0 13.9 Total equity 30.7 25.5 Non-current liabilities Deferred income tax liabilities 3.0 0.8 Provisions 0.6 0.3 Interest-bearing debt 14.7 1.8 Other debt 0.4 0.4 Total non-current liabilities 18.7 3.3 Current liabilities Trade and other payables 13.7 10.2 Current income tax liabilities 0.4 0.1 Short-term interest-bearing debt 2.7 1.5 Total current liabilities 16.8 11.8 Total liabilities 35.5 15.1 Total equity and liabilities 66.2 40.6
CONSOLIDATED CASH FLOW STATEMENT MEUR 01-12/ 01-12/ 2006 2005 Cash flows from operating activities Profit for the period 5.7 4.4 Adjustments: Non-cash transactions 5.1 4.0 Interest expenses and income and taxes 2.5 1.8 Change in working capital 0.8 1.8 Interest paid and received and taxes paid -2.1 -1.5 Net cash flow from operating activities 12.0 10.5
Cash flows from investing activities Acquisition of subsidiaries -11.0 Acquisition of associated companies and loans granted to them -0.1 Investment in property, plant and equipment and intangible assets -10.1 -5.1 Grants received for investments and sales of property, plant and equipment 1.0 0.3 Sale of financial assets at fair value through profit and loss (net) 0.8 Net cash flow from investing activities -20.1 -4.1
Cash flows from financing activities Long-term loans received 15.3 Repayment of long-term loans -3.8 -5.3 Dividends paid -2.6 -2.1 Net cash flow from financing activities 8.9 -7.4
Change in cash and cash equivalents 0.8 -1.0
Cash and cash equivalents at beginning of period 4.1 5.1 Cash and cash equivalents at end of period 4.9 4.1
KEY FINANCIAL RATIOS AND SHARE RATIOS 12/06 12/05 Outstanding orders (31 Dec.), MEUR 10.4 9.2 Gross investment, MEUR 24.1 4.8 Gross investment, % of sales 29.4 8.1 Average number of staff 664 514
Earnings per share, EUR 0.16 0.12 Equity per share, EUR 0.83 0.70 Return on investments, % 21.7 20.7 Equity ratio, % 46.4 63.0 Gearing, % 40.9 -3.1 Current ratio 1.5 1.6
Number of shares average 36784755 36425540 Number of shares 31 Dec. 37143970 36425540
STATEMENT OF CHANGES IN EQUITY MEUR Share Share Trans- Re- Total capital premium lation tained fund diff.earnings
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 year 5.7 5.7 Dividends -2.5 -2.5 Share issue 0.1 2.0 2.1 Equity 31 Dec. 2006 6.3 7.4 0.0 17.0 30.7
Equity 1 January 2005 6.2 5.4 0.0 11.6 23.2 Translation differences 0.0 0.0 Profit for the year 4.4 4.4 Dividends -2.1 -2.1 Equity 31 Dec. 2005 6.2 5.4 0.0 13.9 25.5
BUSINESS SEGMENTS 01-12/ 1-12/ MEUR 2006 2005 Sales 82.1 58.6 Soapstone Fireplaces Business 61.3 52.2 Natural Stone Products Business 7.3 6.4 Ceramic Products Business 13.5
Operating profit 8.2 6.3 Soapstone Fireplaces Business 9.8 8.8 Natural Stone Products Business 0.3 0.2 Ceramic Products Business 1.2 Unallocated group expenses -3.1 -2.7
BUSINESS SEGMENTS QUARTERLY MEUR Q4/ Q3/ Q2/ Q1/ Q4/ Q3/Q2/ Q1/ 2006 2006 2006 2006 2005 2005 2005 2005
Sales 24.4 20.5 20.9 16.3 17.6 13.4 14.6 13.1 Soapstone Fireplaces Business 17.6 14.2 14.9 14.6 15.9 12.1 12.8 11.4 Natural Stone Products Business 1.8 1.7 2.1 1.7 1.7 1.3 1.8 1.7 Ceramic Products Business 5.0 4.6 3.9
Operating profit 2.4 2.4 1.7 1.7 2.7 1.8 1.5 0.3 Soapstone Fireplaces Business 2.5 2.2 2.8 2.3 3.2 2.5 2.1 0.9 Natural Stone Products Business 0.0 0.2 0.0 0.1 0.1 -0.1 0.1 0.1 Ceramic Products Business 0.7 0.7 -0.2 Unallocated group expenses -0.8 -0.7 -0.9 -0.7 -0.6 -0.7 -0.7 -0.7
COLLATERAL AND SECURITIES GIVEN AND OTHER COMMITMENTS MEUR 12/2006 12/2005
Loans from credit institutions and other non-current liabilities, secured by mortgages and pledges 17.4 2.9 Mortgages and pledges given 27.7 10.8 Other mortgages and pledges given by the company on its own behalf 2.1 1.7 Leasing commitments 0.0 Derivatives Interest rate swaps; nominal value 8.3 Interest rate swaps; fair value 0.1
The fair value of derivatives is equivalent to a profit or loss from the closing of the contract calculated on the basis of the market price at Dec. 31.
LARGEST SHAREHOLDERS ON 31 DECEMEBER 2006
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 2 420 346 11.9 % Mutual Pension Insurance Company Ilmarinen 1 902 380 1.5 % Mutanen Susanna 1 643 800 7.2 % Vauhkonen Mikko 800 700 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 18 249 902 16.9 %
The Financial Statements have not yet 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.
Board of directors Matti Virtaala, Chairman of the Board
Distribution: Helsinki Stock Exchange Central Media
Additional information: Tulikivi Corporation, 83900 Juuka, tel. +358-207-636 000, www.tulikivi.com - Chairman of the Board of Directors Matti Virtaala - Managing Director Juha Sivonen
Tulikivi Corporation will publish its Financial Statement Bulletin for 2006 financial year on Wednesday February 7, 2007 at 8.45.
Press and analyst conference will be held on the same day starting at 09.00 at Helsingin Pörssiklubi, Fabianinkatu 14 A, 00100 Helsinki.
For additional information, contact: - Tulikivi Corporation, FI-83900 Juuka, Finland, tel. +358 207 636 000, www.tulikivi.com - Managing Director Juha Sivonen
Distribution: - Helsinki Stock Exchange, - Central media
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 75 million, about half of which is accounted for by exports. The Group owns seven production plants and employs about 700 people. www.tulikivi.com
Tulikivi Corporation´s Financial Statements Release for 2006 will be published on February 7, 2007. Annual Report will come out week 12. Annual General meeting will be held on April 13, 2007. The following interim reports will be published in 2007: - January - March April 20 - January - June July 20 - January - September Oct, 22 The releases are published in Finnish and English. After publication, they can be read on the company´s Internet site, www.tulikivi.com. TULIKIVI CORPORATION Juha Sivonen Managing Director
Distribution
Helsinki Stock Exchange Central Media
The Tulikivi Group will be centralizing Finnish fireplace sales in its own specialized showrooms from the beginning of next year. Tulikivi and Kermansavi fireplaces will be carried by over 30 Tulikivi showrooms. The move aims to increase sales, cost- effectiveness and the Group’s market share in Finland.
From the beginning of 2007, a total of over thirty Tulikivi and Kermansavi fireplace showrooms will merge into a new distribution channel – the Tulikivi showroom chain, which will be expanded to forty-five showrooms.
The Tulikivi Group acquired Kermansavi Oy in spring 2006. The current distribution channel and fireplace business integration will bring synergy benefits and bolster the Tulikivi brand. It seeks to increase sales, cost-effectiveness and the Group’s market share in Finland.
The Tulikivi showrooms will offer customers professional service in all aspects of fireplace purchase, and both Tulikivi’s soapstone fireplaces and Kermansavi’s ceramic tiled fireplaces will soon be found under the same roof. Tulikivi is the market leader in heat-retaining fireplaces and the popularity of Kermansavi’s distinctive fireplaces has surged in recent years.
Tulikivi’s professional fireplace installer network will also continue to serve customers. Finland’s approximately 150 fireplace installers make home visits and provide customers with comprehensive fireplace installation services.
The changes mean that after December 31, 2006, major retail chains like K-Rauta, Rautia, Rautanet, Agrimarket, Hartman, Carlson and Bauhaus will no longer sell Tulikivi fireplaces.
This change in the fireplace business distribution channel will not however affect Tulikivi’s natural stone products or Kermansavi’s stoneware, which will continue to be sold through current channels.
For additional information, contact: Managing Director Juha Sivonen, tel. +358 207 636 280, and Marketing Director Heikki Vauhkonen, Tulikivi Corporation, tel. +358 207 636 555.
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 fireplaces and utility ceramics. The Group’s sales amount to approximately EUR 75 million, about half of which is accounted for by exports. The Group owns seven production plants and employs about 700 people. www.tulikivi.com
- The Tulikivi Group’s sales rose by 40.5% in the January- September period. Growth in comparable sales was 19.8%. - Sales for the report period totalled EUR 57.7 (41.1) million. Comparable sales were EUR 49.2 million. - The Group’s profit before taxes amounted to EUR 5.4 (3.4) million. Comparable profit before taxes was EUR 5.1 million. - Cash flow from operating activities before investments was EUR 6.1 (3.3) million. - The order book at the close of the period amounted to EUR 12.4 (8.8) million.
Changes in the Group’s structure and segment reporting Tulikivi Corporation acquired all the shares in Kermansavi Oy on April 3, 2006. The Group’s business operations are now divided into three business segments, namely the Soapstone Fireplaces Business, the Natural Stone Product Business and the Ceramic Products Business. The Soapstone Fireplaces Business supplies soapstone fireplaces and stone lining for heaters. The Natural Stone Products Business supplies interior stone products for homes and delivers stone to construction sites. The Ceramic Products Business produces Kermansavi stoves and utensils.
Sales and result The Group’s sales totalled EUR 57.7 million (EUR 41.1 million in January - September 2005). Sales grew by 40.5 per cent during the report period, while the comparable growth in sales was 19.8 per cent. The Soapstone Fireplaces Business posted sales of EUR 43.7 (36.3) million, the Natural Stone Products Business sales of EUR 5.5 (4.8) million and the Ceramic Products Business sales of EUR 8.5 million.
The share of sales accounted for by exports was EUR 29.1 (20.4) million, or 50.4 (48.1) per cent of total sales. The Soapstone Fireplaces Business’s exports grew by 41.0 per cent during the report period. The largest countries for exports were Germany and Sweden. Domestic sales were EUR 28.6 (20.7) million.
The Group’s operating profit was EUR 5.8 (3.5) million. The Soapstone Fireplaces Business posted an operating profit of EUR 7.3 (5.5) million, the Natural Stone Products Business an operating profit of EUR 0.3 (0.1) million and the Ceramic Products Business an operating profit of EUR 0.5 million, while unallocated expenses totalled EUR 2.3 (2.1) million. The third-quarter expenses of the Soapstone Fireplaces Business included the one-off recognition of a total of EUR 0.5 million in expenses on brochures for the new collection. The Group’s profit before taxes was EUR 5.4 (3.4) million. The Group’s comparable profit before taxes was EUR 5.1 million. Earnings per share amounted to EUR 0.11 (EUR 0.07).
Financing and investments The Group’s financial position is good. Cash flow from operating activities before investments amounted to EUR 6.1 (3.3) million. The Group’s net finance costs amounted to EUR 0.4 (0.1) million.
The equity ratio was 44.9 per cent (58.0 per cent at September 30, 2005). The ratio of interest-bearing net debt to shareholders’ equity, or gearing, was 56.8 (23.2) per cent. The current ratio was 1.8 (1.8). Shareholders’ equity per share amounted to EUR 0.78 (EUR 0.65).
The Group’s gross investments in the report period amounted to EUR 19.5 (4.0) million. The purchase price paid for Kermansavi Oy’s shares was EUR 13.1 million. Investments in production and quarries were EUR 6.2 (3.6) million. The most significant capital item is the investment in a factory in Juuka, valued at about EUR 5 million, which is currently in the inauguration phase.
Sales and customer deliveries of the new fireplace collection began during the report period. The new products boast combustion technology and efficiency that are the best among their peers. The products will be manufactured at the newly completed factory.
Research at the Medvezhyegorsk deposit, for which the company received prospecting rights in January 2006, has been completed. The reason is that it is not economically feasible to use the soapstone in this deposit for the manufacture of the company’s current products. Tulikivi has decided to expand its prospecting operations to new areas in Russian Karelia in cooperation with the Geology Institute of the Karelian Scientific Centre of the Russian Academy of Sciences and the Geological Survey of Finland.
Personnel The Group employed an average of 632 (509) people during the report period, of whom 96 worked for Kermansavi Oy.
During the report period, the company’s share capital was raised by EUR 122,133.10, the equivalent of 718,430 new Series A shares, through a directed share issue in connection with the terms of the Kermansavi Oy acquisition. The new Series A shares were made available for trading on the stock exchange list on July 3, 2006.
The Board of Directors has 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 can be bought back.
The Board of Directors has an authorization to increase the share capital, so that the share capital can 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 the Directors and under other terms set by the Board. The authorization includes the right to waive the pre-emptive subscription right of shareholders provided there are weighty financial reasons for the company to do so.
Rate development and exchange of Series A shares. During the period, 3,871,093 shares were traded. The value of share turnover was EUR 19.7 million. The highest rating for the share was EUR 4.05 and the lowest was EUR 2.04. At the end of the report period, the rating was EUR 3.69.
Outlook for the future Construction activity will continue to be brisk in Tulikivi’s market areas. The price of heating energy will remain high. The company is making further outlays on developing distribution channels in different market areas. The new collection will have a positive effect on the company’s competitiveness. Demand for fireplace products is expected to remain brisk. The Group’s sales and earnings in the present year will substantially outperform 2005.
The interim report has been prepared in accordance with the recognition and measurement principles of International Financial Reporting Standards (IFRS). Tulikivi Corporation has applied the same financial reporting principles to this Interim Report as the ones applied to the 2005 Annual Report.
CONSOLIDATED INCOME STATEMENT MEUR 1-9/ 1-9/Change, 1-12/ 7-9/ 7-9/Change 2006 2005 % 2005 2006 2005 %
Sales 57.7 41.1 40.5 58.6 20.5 13.4 53.4 Other operating income 0.5 0.2 0.3 0.2 0.1 Increase/decrease in inventories in finished goods and in work in progress -0.3 -0.8 -1.0 -0.2 -0.4 Production for own use 0.7 0.9 1.2 0.2 0.3 Raw materials and consumables 9.8 6.9 9.7 3.5 2.2 External services 7.2 4.8 6.6 3.0 1.6 Personnel expenses 20.2 14.8 21.0 6.6 4.5 Depreciation 3.7 3.0 4.0 1.4 1.0 Other operating expenses 11.9 8.4 11.5 4.1 2.3
Operating profit 5.8 3.5 61.4 6.3 2.3 1.8 30.6 Percentage of sales 10.0 8.7 10.7 11.3 13.3 Finance costs -net -0.4 -0.1 -0.1 -0.2 Share of the profit of associated company -0.1
Profit before tax 5.4 3.4 56.3 6.1 2.1 1.7 20.4 Percentage of sales 9.3 8.4 10.3 10.3 13.1 Income taxes 1.4 0.9 1.7 0.5 0.4
Profit for the period 4.0 2.5 55.6 4.4 1.6 1.3 17.5
Earnings per share attributable to the equity holders of the parent company, EUR basic and diluted 0.11 0.07 0.12
CONSOLIDATED BALANCE SHEET MEUR 09/06 09/05 12/05 ASSETS Non-current assets Property, plant and equipment Land 0.9 0.9 1.0 Buildings 9.0 6.3 6.2 Machinery and equipment 11.9 8.6 8.1 Other tangible assets 0.7 0.8 0.8 Prepayments 1.9 0.2 Intangible assets Goodwill 3.9 0.6 0.6 Other intangible assets 10.3 3.6 4.1 Investment properties 0.2 0.2 0.2 Available-for-sale investments 0.1 0.1 0.1 Receivables 0.2 Deferred tax assets 0.5 0.6 0.5 Total non-current assets 39.4 21.7 22.0
Current assets Inventories 10.6 7.0 7.0 Trade receivables 10.7 9.0 6.5 Current income tax receivables 0.5 Other receivables 1.5 0.7 0.8 Prepayments 0.2 Cash and cash equivalents 2.4 2.0 4.1 Total current assets 25.2 19.2 18.6 Total assets 64.6 40.9 40.6
EQUITY AND LIABILITIES Equity Share capital 6.3 6.2 6.2 Share premium 7.4 5.4 5.4 Translation differences 0.1 Retained earnings 15.3 12.0 13.9 Total equity 29.0 23.7 25.5 Non-current liabilities Deferred income tax liabilities 2.8 0.8 0.8 Provisions 0.4 0.2 0.3 Interest-bearing debt 17.9 5.1 1.8 Other debt 0.4 0.4 0.4 Total non-current liabilities 21.5 6.5 3.3 Current liabilities Trade and other payables 12.9 8.3 10.2 Current income tax liabilities 0.3 0.1 Short-term interest-bearing debt 0.9 2.4 1.5 Total current liabilities 14.1 10.7 11.8 Total liabilities 35.6 17.2 15.1 Total equity and liabilities 64.6 40.9 40.6
CONSOLIDATED CASH FLOW STATEMENT MEUR 01-09/ 01-09/ 01-12/ 2006 2005 2005 Cash flows from operating activities Profit for the period 4.0 2.5 4.4 Adjustments: Non-cash transactions 3.6 3.0 4.0 Interest expenses and income and taxes 1.8 1.0 1.8 Change in working capital -1.8 -2.0 1.8 Interest paid and received and taxes paid -1.4 -1.2 -1.5 Net cash flow from operating activities 6.1 3.3 10.5
Cash flows from investing activities Acquistion of subsidiaries less cash and cash equivalents at the time of acquistion -10.6 Acquistion of associated companies and loans granted to them -0.1 Investment in property, plant and equipment and intangible assets -8.2 -4.1 -5.1 Grants received for investments and sales of property, plant and equipment 0.7 0.2 0.3 Sale of financial assets at fair value through profit and loss (net) 0.7 0.8 Net cash flow from investing activities -18.1 -3.2 -4.1
Cash flows from financing activities Loans received 15.4 2.2 Repayment of loans -2.5 -3.3 -5.3 Dividends paid -2.6 -2.1 -2.1 Net cash flow from financing activities 10.3 -3.2 -7.4
Change in cash and cash equivalents -1.7 -3.1 -1.0
Cash and cash equivalents at beginning of period 4.1 5.1 5.1
Cash and cash equivalents at end of period 2.4 2.0 4.1
KEY FINANCIAL RATIOS AND SHARE RATIOS 09/06 09/05 12/2005 Outstanding orders (30 Sept.), MEUR 12.4 8.8 9.2 Gross investment, MEUR 19.5 4.0 5.1 Gross investment, % of sales 33.8 9.8 8.7 Average number of staff 632 509 514
Earnings per share, EUR 0.11 0.07 0.12 Equity per share, EUR 0.78 0.65 0.70 Equity ratio, % 44.9 58.0 63.0 Gearing, % 56.8 23.2 -3.1 Current ratio 1.8 1.8 1.6
Number of shares average 36667648 36425540 36425540 Number of shares 30 Sept. 37143970 36425540 36425540
STATEMENT OF CHANGES IN EQUITY MEUR Share Share Trans- Divi- Retained Total capital prenium lation dends earnings fund diff. paid
Equity 1 January 2006 6.2 5.4 13.9 25.5 Translation differences 0.0 0.0 Items recognised directly in equity -0.1 -0.1 Profit for the period 4.0 4.0 Dividends paid -2.5 -2.5 Share issue 0.1 2.0 2.1 Equity 30 Sept. 2006 6.3 7.4 0.0 -2.5 17.8 29.0
Equity 1 January 2005 6.2 5.4 11.6 23.2 Translation differences 0.1 0.1 Profit for the period 2.5 2.5 Dividends -2.1 -2.1 Equity 30 Sept. 2005 6.2 5.4 0.1 -2.1 14.1 23.7
BUSINESS SEGMENTS 01-09/ 01-09/ 1-12/ MEUR 2006 2005 2005 Sales 57.7 41.1 58.6 Soapstone Fireplaces Business 43.7 36.3 52.2 Natural Stone Products Business 5.5 4.8 6.4 Ceramic Products business 8.5
Operating profit 5.8 3.5 6.3 Soapstone Fireplaces Business 7.3 5.5 8.8 Natural Stone Products Business 0.3 0.1 0.2 Ceramic Products Business 0.5 Unallocated group expenses -2.3 -2.1 -2.7
BUSINESS SEGMENTS QUARTERLY MEUR Q3/ Q2/ Q1/ Q4/ Q3/ Q2/ Q1/ 2006 2006 2006 2005 2005 2005 2005
Sales 20.5 20.9 16.3 17.6 13.4 14.6 13.1 Soapstone Fireplaces Business 14.2 14.9 14.6 15.9 12.1 12.8 11.4 Natural Stone Products Business 1.7 2.1 1.7 1.7 1.3 1.8 1.7 Ceramic Products Business 4.6 3.9
Operating profit 2.4 1.7 1.7 2.7 1.7 1.5 0.3 Soapstone Fireplaces Business 2.2 2.8 2.3 3.2 2.5 2.1 0.9 Natural Stone Products Business 0.2 0.0 0.1 0.1 -0.1 0.1 0.1 Ceramic Products Business 0.7 -0.2 Unallocated group expenses -0.7 -0.9 -0.7 -0.6 -0.7 -0.7 -0.7
COLLATERAL AND SECURITIES GIVEN AND OTHER COMMITMENTS MEUR 9/2006 9/2005 12/ 2005 Loans from credit institutions and other non-current liabilities, secured by mortgages and pledges 19.2 6.3 2.9 Mortgages and pledges given 28.3 10.8 10.8 Other mortgages and pledges given by the company on its own behalf 1.7 1.7 1.7 Leasing commitments 0.1 Derivatives Interest rate swaps; nominal value 8.3 Interest rate swaps; fair value 0.0
The fair value of derivatives is equivalent to a profit or loss from the closing of the contract calculated on the basis of the market price at Sept. 30.
Environmental guarantees In accordance with the mining and environmental legislation, Tulikivi Croup has environmental commitments, which have to be met when closing quarries. The amount of the commitments cannot be reasonably estimated, but it is not expected to be material.
LARGEST SHAREHOLDERS ON 30 SEPTEMBER 2006
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 2 420 346 11.9 % Mutual Pension Insurance Company Ilmarinen 1 902 380 1.5 % Mutanen Susanna 1 643 800 7.2 % Vauhkonen Mikko 800 700 3.6 % Paatero Ilkka 718 430 0.6 % Nuutinen Tarja 674 540 3.5 % Investment Fund Phoebus 600 000 0,5 % Other shareholders 18 268 902 16.9 %
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 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 a associated company Stone Pole Oy.
On July 21, 2006, the Board of Directors resolved that Marketing Director Heikki Vauhkonen will be the deputy to the company's managing director when needed.
- The Tulikivi Group´s sales rose by 34.2% in the January-June period. Growth in the Group´s comparable sales was 20.3%. - Sales for the report period totalled EUR 37.2 (27.7) million. The comparable sales were EUR 33.3 million. - The Group´s profit before taxes amounted to EUR 3.3 (1.7) million. The comparable profit before taxes was EUR 3.5 million. - The cash flow from operating activities before investments was EUR 4.0 (1.4) million. - The order book at the close of the period amounted to EUR 12.6 (5.0) million. - The integration of Kermansavi Oy´s business operations has gone according to plan.
Changes in the Group´s structure and segment reporting Tulikivi Corporation acquired all the shares in Kermansavi Oy on April 3, 2006. The Group´s business operations are now divided into three business segments, namely the Soapstone Fireplaces Business, the Natural Stone Business and the Ceramic Products Business. The Soapstone Fireplaces Business supplies soapstone fireplaces and stone lining for heaters. The Natural Stone Products Business supplies interior stone products for homes and delivers stone to construction sites. The Ceramic Products Business produces Kermansavi stoves and utensils.
Sales and result The Group´s sales totalled EUR 37.2 (27.7) million. Sales grew by 34.2 per cent during the report period, while the comparable growth in sales was 20.3 per cent. The Soapstone Fireplaces Business posted sales of EUR 29.5 (24.2) million, the Natural Stone Products Business sales of EUR 3.8 (3.5) million and the Ceramic Products Business sales of EUR 3.9 million.
The share of sales accounted for by exports was EUR 20.0 (14.0) million, or 53.8 (50.5) per cent of total sales. The Soapstone Fireplaces Business´s exports grew by 42.4 per cent during the report period. The largest countries for exports were Germany and Sweden. Domestic sales were EUR 17.2 (13.7) million.
The Group´s operating profit was EUR 3.4 (1.8) million. The Soapstone Fireplaces Business posted an operating profit of EUR 5.1 (3.0) million, the Natural Stone Products Business an operating profit of EUR 0.1 (0.2) million and the Ceramic Products Business an operating loss of EUR 0.2 million, while unallocated expenses totalled EUR 1.6 (1.4) million. The Ceramic Products Business´s result was affected by non-recurring expenses of EUR 0.4 million resulting from the acquisition cost of the shares of Kermansavi Oy to inventories and the order book. The Group´s profit before taxes was EUR 3.3 (1.7) million. The Group´s comparable profit before taxes was EUR 3.5 million. Earnings per share amounted to EUR 0.07 (EUR 0.03).
Financing and investments The Group´s financial position is good. Cash flow from operating activities before investments amounted to EUR 4.0 (1.4) million. The working capital of the Group increased by EUR 0.8 (1.5) million during the period. The Group´s net finance costs amounted to EUR 0.2 (0.1) million.
The equity ratio was 44.3 per cent (55.8 per cent at June 30, 2005). The ratio of interest-bearing net debt to shareholders´ equity, or gearing, was 58.5 (28.0) per cent. The current ratio was 1.7 (1.7). Shareholders´ equity per share amounted to EUR 0.74 (EUR 0.61).
The Group invested EUR 5.0 (2.6) million in production and quarries.
The most significant capital item is the ongoing investment in a factory in Juuka. The new factory will be put into operation during September.
During the report period, the company presented to the market a new generation of fireplaces boasting combustion technology and efficiency that are the best among their peers. The products will be manufactured at the new factory and will become available for sale during September.
During the report period, the company acquired all of Kermasavi Oy´s shares in order to expand its product range and potential clientele, among other things. The purchase price was EUR 13.1 million, of which EUR 2.1 million was paid in Tulikivi Corporation´s Series A shares. In addition to the purchase price, the acquisition cost of Kermansavi Oy´s shares includes a total of EUR 0.4 million expenses resulting from the acquisition. The shareholders´ equity of Kermansavi Oy at the time of the acquisition was EUR 4.3 million. In addition to the carrying amounts of asset and liability items, EUR 6.1 million of the expense from the acquisition has been allocated to distribution channels and the brand, EUR 1.8 million to machinery and equipment, EUR 0.4 million to inventories and the order book, EUR 3.0 million to goodwill and EUR 2.2 million to deferred tax expenses.
The report period also saw the company begin prospecting activities in Russia under a permit that authorizes the company to prospect for stone and to utilize it in production.
Personnel The Group employed an average of 638 (499) people during the report period and 759 (550) people at its close. The figure also includes Kermansavi Oy´s personnel, which totalled 156 people at the close of the report period.
Resolutions of the Annual General Meeting
Dividend payout The Annual General Meeting of Tulikivi Corporation on 6 April 2006 resolved to pay a dividend, in accordance with the Board of Directors´ proposal, of EUR 0.280 on Series A shares and EUR 0.273 on Series K shares, or a total of EUR 2.5 million.
Governing bodies Elected to seats on the Board of Directors of the parent company and the operating subsidiaries were Bishop Ambrosius, Juhani Erma, Eero Makkonen, Aimo Paukkonen, Heikki Vauhkonen, Reijo Vauhkonen and Matti Virtaala. From amongst its members, the Board of Directors elected Matti Virtaala chairman and Heikki Vauhkonen vice chairman. The firm of independent public accountants PricewaterhouseCoopers Oy of Helsinki was elected the company´s auditor.
Increase in the number of shares and amendments to the Articles of Association The Annual General Meeting accepted the Board of Directors´ proposal to quadruple the number of shares without raising the share capital by dividing each old share into four new shares. The share´s new nominal value is EUR 0.17. The increase in the number of shares entered into force on April 21, 2006. The Annual General Meeting accepted amendments to Articles 3 and 4 of the Articles of Association in connection with the increase in the number of shares.
Authorization to buy back and transfer the company´s own shares The Annual General Meeting granted the Board of Directors 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 will be bought back.
Authorization for increasing the share capital The Annual Genereal Meeting authorized the Board of Directors to decide on the increase of the share capital, so that the share capital can 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 the Directors and under other terms set by the Board. The authorization includes the right to waive the pre-emptive subscription right of shareholders provided there are weighty financial reasons for the company to do so.
Rate development and exchange of Series A shares. During the period, 2,944,895 shares were traded. The value of share turnover was EUR 16.5 million. The highest rating for the share was EUR 4.05 and the lowest was EUR 2.04. At the end of the report period, the rating was EUR 3.16.
Share capital During the report period, the company’s share capital was raised by EUR 122,133.10, the equivalent of 718,430 new Series A shares, through a directed share issue in connection with the terms of the Kermansavi Oy acquisition. The difference between the share’s subscription price and its nominal value, a total of EUR 1,928,866.90, was booked to the share premium fund. The increase of the share capital was recorded in the Trade Register on June 30, 2006. Following the subscription, the company’s share capital stands at EUR 6,314,474.90, and the number of its shares totals 37,143,970. The increase in the share capital was made on the basis of an authorization by the Annual General Meeting to the Board of Directors on April 6, 2006.
Outlook for the future The active construction sector and the high cost of energy are set to underpin demand for fireplace products. The new products range will have a positive effect on the Group´s competitiveness. Tulikivi´s sales will continue to grow both in its main and in new markets. The Groups´s sales and earnings are set to develop favourably over the full year.
At the close of the report period, the order book amounted to EUR 12.6 (5.0) million.
CONSOLIDATED INCOME STATEMENT MEUR 1-6/ 1-6/Change, 1-12/ 4-6/ 4-6/Change 2006 2005 % 2005 2006 2005 %
Sales 37.2 27.7 34.2 58.6 20.9 14.6 43.3 Other operating Income 0.3 0.1 0.3 0.2 Increase/decrease in inventories in finished goods and in work in progress -0.1 -0.4 -1.0 Production for own use 0.5 0.6 1.2 0.3 0.5 Raw materials and consumables 6.4 4.7 9.7 3.8 2.6 External services 4.2 3.1 6.6 2.6 1.6 Personnel expenses 13.7 10.3 21.0 7.8 5.5 Depreciation 2.4 1.9 4.0 1.4 0.9 Other operating expenses 7.8 6.1 11.5 4.1 2.9
Operating profit 3.4 1.8 92.0 6.3 1.7 1.5 15.5 Percentage of sales 9.2 6.5 10.7 8.2 10.2 Finance costs -net -0.2 -0.1 -0.1 -0.2 -0.1 Share of the profit of associated company -0.1
Profit before tax 3.3 1.7 93.8 6.1 1.5 1.4 8.5 Percentage of sales 8.8 6.1 10.3 7.4 9.8 Direct taxes -0.9 -0.5 1.7 -0.4 -0.3
Profit for the period 2.4 1.2 98.0 4.4 1.1 1.1 1.5
Earnings per share Attributable to the equity holders of the parent company, EUR basic and diluted 0.07 0.03 0.12
CONSOLIDATED BALANCE SHEET MEUR 06/06 06/05 12/05 ASSETS Non-current assets Property, plant and equipment Land 0.9 1.0 1.0 Buildings 7.7 6.4 6.2 Machinery and equipment 11.6 7.8 8.1 Other tangible assets 0.7 0.8 0.8 Prepayments 2.7 0.7 0.2 Intangible assets Goodwill 3.6 0.6 0.6 Other intangible assets 10.4 3.5 4.1 Investment properties 0.3 0.2 0.2 Available-for-sale investments 0.2 0.1 0.1 Receivables 0.2 Deferred tax assets 0.5 0.6 0.5 Total non-current assets 38.6 21.7 22.0
Current assets Inventories 10.3 7.3 7.0 Trade receivables 9.4 8.2 6.5 Other receivables 1.5 1.5 0.8 Prepayments 0.1 0.2 Cash and cash equivalents 2.1 1.4 4.1 Total current assets 23.3 18.5 18.6 Total assets 61.9 40.2 40.6
EQUITY AND LIABILITIES Equity Share capital 6.3 6.2 6.2 Share premium 7.3 5.4 5.4 Translation differences 0.1 Retained earnings 13.8 10.7 13.9 Total equity 27.4 22.4 25.5 Non-current liabilities Deferred income tax liabilities 2.9 0.8 0.8 Provisions 0.4 0.2 0.3 Interest-bearing debt 17.1 5.3 1.8 Other debt 0.4 0.4 0.4 Total non-current liabilities 20.8 6.7 3.3 Current liabilities Trade and other payables 12.5 8.7 10.2 Current income tax liabilities 0.2 0.1 Short-term interest-bearing debt 1.0 2.3 1.5 Total current liabilities 13.7 11.0 11.8 Total liabilities 34.5 17.7 15.1 Total equity and liabilities 61.9 40.1 40.6
CONSOLIDATED CASH FLOW STATEMENT MEUR 01-06/ 01-06/ 01-12/ 2006 2005 2005 Cash flows from operating activities Profit for the period 2.4 1.2 4.4 Adjustments: Non-cash transactions 2.3 1.9 4.0 Interest expenses and income and taxes 1.0 0.6 1.8 Change in working capital -0.8 -1.5 1.8 Interest paid and received and taxes paid -0.9 -0.8 -1.5 Net cash flow from operating activities 4.0 1.4 10.5
Cash flows from investing activities Acquistion of subsidiaries less cash and cash equivalents at the time of acquistion -10.6 Acquistion of associated companies and loans granted to them -0.1 Investment in property, plant and equipment and intangible assets -5.4 -2.9 -5.1 Grants received for investments and sales of property, plant and equipment 0.4 0.1 0.3 Sale of financial assets at fair value through profit and loss (net) 0.8 0.8 Net cash flow from investing activities -15.6 -2.0 -4.1
Cash flows from financing activities Loans received 14.1 1.7 Repayment of loans -1.9 -2.7 -5.3 Dividends paid -2.6 -2.1 -2.1 Net cash flow from financing activities 9.6 -3.1 -7.4
Change in cash and cash equivalents -2.0 -3.7 -1.0
Cash and cash equivalents at end of period 2.1 1.4 4.1
KEY FINANCIAL RATIOS AND SHARE RATIOS 06/06 06/05 12/2005 Outstanding orders (30 June), MEUR 12.6 5.0 9.2 Gross investment, MEUR 17.2 2.9 5.1 Gross investment, % of sales 46.1 10.3 8.7 Average number of staff 638 499 514
Earnings per share, EUR 0.07 0.03 0.12 Equity per share, EUR 0.74 0.61 0.70 Equity ratio, % 44.3 55.8 63.0 Gearing, % 58.5 28.0 -3.1 Current ratio 1.7 1.7 1.6
Number of shares average 36425540 36425540 36425540 Number of shares 30 June 37143970 36425540 36425540
Equity 1 January 2006 6.2 5.4 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 paid -2.5 -2.5 Share issue 0.1 2.0 2.1 Equity 30 June 2006 6.3 7.4 0.0 -2.5 16.2 27.4
Equity 1 January 2005 6.2 5.4 11.6 23.2 Translation differences 0.1 0.1 Profit for the period 1.2 1.2 Dividends -2.1 -2.1 Equity 30 June 2005 6.2 5.4 0.1 -2.1 12.8 22.4
BUSINESS SEGMENTS 01-06/ 01-06/ 1-12/ MEUR 2006 2005 2005 Sales 37.2 27.7 58.6 Soapstone Fireplaces Business 29.5 24.2 52.2 Natural Stone Products Business 3.8 3.5 6.4 Ceramic Products business 3.9
Operating profit 3.4 1.8 6.3 Soapstone Fireplaces Business 5.1 3.0 8.8 Natural Stone Products Business 0.1 0.2 0.2 Ceramic Products Business -0.2 Unallocated group expenses -1.6 -1.4 -2.7
BUSINESS SEGMENTS QUARTERLY MEUR Q2/ Q1/ Q4/ Q3/ Q2/ Q1/ 2006 2006 2005 2005 2005 2005
Sales 20.9 16.3 17.6 13.4 14.6 13.1 Soapstone Fireplaces Business 14.9 14.6 15.9 12.1 12.8 11.4 Natural Stone Products Business 2.1 1.7 1.7 1.3 1.8 1.7 Ceramic Products Business 3.9
Operating profit 1.7 1.7 2.7 1.7 1.5 0.3 Soapstone Fireplaces Business 2.8 2.3 3.2 2.5 2.1 0.9 Natural Stone Products Business 0.0 0.1 0.1 -0.1 0.1 0.1 Ceramic Products Business -0.2 Unallocated group expenses -0.9 -0.7 -0.6 -0.7 -0.7 -0.7
COLLATERAL AND SECURITIES GIVEN AND OTHER COMMITMENTS MEUR 6/2006 6/2005 12/ 2005 Loans from credit institutions and other non-current liabilities, secured by mortgages and pledges 18.0 7.4 2.9 Mortgages and pledges given 26.7 10.8 10.8 Other mortgages and pledges given by the company on its own behalf 1.7 1.7 1.7 Leasing commitments 0.1 Derivatives Interest rate swaps; nominal value 8.3 Interest rate swaps; fair value 0.0 Forward contracts; nominal value 0.2 Forward contracts; fair value 0.0 The fair value of derivatives is equivalent to a profit or loss from the closing of the contract calculated on the basis of the market price at June 30.
Environmental guarantees In accordance with the mining and environmental legislation, Tulikivi Corporation has environmental commitments, which have to be met when closing a quarry. The amount of the commitments cannot be reasonably estimated, but it is not expected to be material.
LARGEST SHAREHOLDERS ON 30 JUNE 2006
Name of shareholder Shares Proportion of total vote Vauhkonen Reijo 4 160 146 24.3 % Vauhkonen Heikki 2 998 206 24.1 % Elo Eliisa 2 957 020 5.9 % Virtaala Matti 2 420 346 11.9 % Mutual Pension Insurance Company Ilmarinen 1 902 380 1.5 % Mutanen Susanna 1 663 100 7.2 % Vauhkonen Mikko 800 700 3.6 % Paatero Ilkka 718 430 0.6 % Nuutinen Tarja 674 540 3.5 % Fondita Nordic Small Cap Placfond 652 400 0.5 % Other shareholders 18 196 702 16.9 %
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 Russia. 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 a associated company Stone Pole Oy.