The net sales of Viisnurk AS for the first quarter of 2003 were 91.2 mil. kroons (5.8 mil. euros) and the net profit for the period was 586 thousand kroons (37 thousand euros). As compared to the same period of the previous year, the sales revenue of the company increased by 11.5%. The company finished the 1st quarter of 2002 with a loss of 1.1 mil. kroons (70 thousand euros). The earnings of Viisnurk before interest, taxes, depreciation and amortisation (EBITDA) amounted to 10 mil. kroons (0.6 mil. euros) in the accounting period, i.e. the EBITDA margin was 11%. In the 1st quarter of 2002, the EBITDA of the company totalled 7.9 mil. kroons (0.5 mil. euros) and the margin was 9.6%. Viisnurk’s cash flow from operations was positive by 208 thousand kroons (13 thousand euros) in the 1st quarter of 2003. In the same period of the last year, the cash flow from operations totalled 2.9 mil. kroons (185 thousand euros). In the 1st quarter of the current year, the cash flow from operations was influenced by the increase in the inventories of the company by 13.8 mil. kroons (0.9 mil. euros). The increase in the inventories of the Forestry Centre of the Furniture Division in the amount of 11.8 mil. kroons (0.75 mil. euros) resulting from the seasonal nature of the production process was the main reason for the increase in the inventories of the company.
Divisional Review
Since the beginning of the year 2003, accounting has been kept separately for three main business segments. During the accounting period (the 1st quarter of 2003), the respective changes were also introduced to the organisational structure and management of Viisnurk AS.
- The Furniture Division of Viisnurk AS incorporates the structures, which were formerly reviewed and managed separately: the sawmill, kilns, the Wood Panel and Furniture Factories, to improve the synergy and efficiency within the company. The sales revenue of the Furniture Division as a whole for the 1st quarter amounted to 57.7 million kroons (3.7 mil. euros), soaring by 8% on the same period of the previous year. The total sales of the Furniture Division increased, first and foremost, with regard to edge- glued panels, forming 11.9 mil. kroons (0.8 mil. euros), i.e. 21%, of the total sales revenue (cf. 4.2 mil. kroons/268 thou. euros, i.e. 8%, in the 1st quarter of 2002). The operating profit of the division amounted to 5.0 million kroons (317 thousand euros) in the 1st quarter, which is 3.3 mil. kroons (209 thousand euros) more than the year before. The sawmill earned 2.5 mil. kroons (160 thousand euros) of profit (cf. 0.5 mil. kroons/32 thousand euros in the 1st quarter of 2002), the Wood Panel Factory incurred a loss of 3.2 mil. kroons (205 thousand euros; cf. a loss of 4.5 mil.kroons/288 thousand euros in the 1st quarter of 2002), and the Furniture Factory earned a profit of 5.7 mil. kroons (364 thousand euros; cf. a profit of 5.6 mil. kroons/358 thousand euros in the last accounting period). In addition to the increased volumes and decreased loss of the Wood Panel Factory, the increased sales revenue and profitability of the Furniture Factory, which worked under the conditions of limited orders in the last quarter of 2002, is a positive result within the Furniture Division. At the beginning of the year, the sales revenue of the Furniture Factory increased by approximately 15% on the last quarter of 2002 owing to the improved clientele portfolio.
- The sales revenue of the Sports Goods Division (which incorporates production of skis and hockey sticks and distribution of sports goods) for the 1st quarter of 2003 was 9.2 mil. kroons (0.6 mil. euros). The sales revenue for the 1st quarter of 2002 was 8.7 mil. kroons (0.55 mil. euros). The economic activities of the division resulted in the loss of 4.9 mil. kroons (315 thou. euros). The same period of 2002 resulted in a loss of 2.6 mil. kroons (166 thousand euros). Regardless of the increase in sales revenue, the economic results of the division reflected a setback on the 1st quarter of 2002 due to high expenditure on quality issues resulting from postponement of unfavourable orders of 2002 into the year 2003. Due to the restructuring process, the division started to redesign the production process actively in the 1st quarter of the current year; it also took part in ISPO, the biggest fair of sports goods in Munich. At present, the Sports Goods Division has a sufficient supply of orders and
it operates at planned capacities.
- Since the 1st quarter of 2003, the Building Materials Division has included the Softboard Factory and the boiler house that has supplied the factory with heat (approximately 60% of the total intra company sales of heat). The sales revenue of the division was 24.0 mil. kroons (1.5 mil. euros) in the 1st quarter of 2003, which is 26% more than that of the last year. The division earned 5.4 mil. kroons of profit (345 thou. euros), i.e. 1.0 mil. kroons (66 thou. euros) more than in the 1st quarter of 2002. The shares of the sales revenue and profit of heat production formed 8% and 13% of the respective totals of the division. Owing to efficient sales activities and favourable market situation, the Building Materials Division worked in a non-stop production cycle seven days a week throughout the period (due to sales problems, it only managed to work five days a week at the same time last year). Preparations for further increase in the output of Isotex interior finishing boards of higher margin provide an opportunity to launch the production line for Isotex in two shifts at the beginning of the 2nd quarter.
- The sales revenue from other activities amounted to 328 thousand kroons (21 thousand euros) and the profit was 65,000 kroons (4,000 euros). Income from rent formed 50% of the sales revenue of the other activities.
INCOME STATEMENT
th. EEK th. EEK th. euro th. euro
I quarter I quarter I quarter I quarter
2003 2002 2003 2002
NET SALES 91 197 81 791 5 829 5 227
Cost of goods sold (79 848) (72 809) (5 104) (4 653)
Gross profit 11 349 8 982 725 574
Marketing expenses (5 616) (4 630) (359) (296)
General admin. expenses (2 709) (2 622) (173) (168)
Other income 374 251 24 16
Other expenses (602) (581) (38) (37)
Profit from operations 2 796 1 400 179 89
Fin. income and expens. (2 210) (2 496) (142) (159)
NET PROFIT 586 (1 096) 37 (70)
Basic earnings per 0,13 (0,24) 0,01 (0,02)
share
Diluted earnings per 0,13 (0,24) 0,01 (0,02)
share
BALANCE SHEET
th. EEK th. EEK th. euro th. euro
31.3.2003 31.12.2002 31.3.2003 31.12.2002
Cash and bank 623 1 764 40 113
Customer receivables 45 555 54 143 2 911 3 460
Other receivables 1 948 1 916 124 122
Prepaid expenses 5 167 4 447 330 284
Inventories 72 412 58 602 4 629 3 746
Total current assets 125 705 120 872 8 034 7 725
Long-term fin. 1 436 1 436 92 92
investments
Real estate investm. 2 770 2 792 177 178
Tangible assets 213 709 219 008 13 658 13 998
Intangible assets 721 785 46 50
Total non-current 218 636 224 021 13 973 14 318
assets
TOTAL ASSETS 344 341 344 893 22 007 22 043
Debt obligations 39 091 38 773 2 498 2 478
Customer prepayments 211 620 13 40
Supplier payables 32 966 30 978 2 108 1 980
Taxes payable 5 586 5 944 357 380
Accrued expenses 9 610 12 267 614 784
Short-term provisions 1 302 1 493 83 95
Total current 88 766 90 075 5 673 5 757
liabilities
Long-term liabilities 111 944 111 773 7 155 7 144
Total non-current 111 944 111 773 7 155 7 144
liabilities
Total liabilities 200 710 201 848 12 828 12 901
Share capital at par 44 991 44 991 2 875 2 875
value
Share premium 11 332 11 332 724 724
Mandatory capital 4 499 4 499 288 288
reserve
Retained earnings 82 223 101 855 5 255 6 510
Net profit for the per. 586 (19 632) 37 (1 255)
Total equity 143 631 143 045 9 179 9 142
TOTAL LIABILITIES 344 341 344 893 22 007 22 043
AND EQUITY
Andrus Aljas
CFO
044 78355