Viisnurk AS managed to reach all its most important goals set for the financial year of 2005. The company underwent a successful restructuring process, achieved stable profitability and improved its financial status considerably. The restructuring plan included the sale of the machinery and equipment of the Sports Goods Division and the closure of the sales process of the Wood Division in the first half of the accounting year. As the restructuring process went more smoothly than expected, the company waived the idea of selling the Building Materials Division. All above-mentioned transactions did not have a considerable influence on the company’s economic performance in 2005 as they were in main part already included in the financial report of 2004.

For the remaining units of Viisnurk AS – the Furniture Division and the Building Materials Division – 2005 was mainly the year of strategic and development planning for future periods.

An important event was the change of core owners in the previous accounting year. On 2 June 2005 an agreement on the sale of majority shares of Viisnurk AS was concluded with Trigon Wood OÜ and the company acquired 59.47% of the company’s shares accordingly.

 

The average number of employees in the company in 2005 was 324 (435 in 2004). As of the balance sheet date 31 of December 2005 the number of the employees was 322 (389 as of 31.12.2004).

 

 

In 2005, return on sales of Viisnurk AS was 218.7 mil. Estonian kroons (14 mil. euros). The company’s turnover cannot be compared to that of 2004 (347.5 mil. kroons/22.2 mil. euros), as the business volume has considerably decreased after closing down two divisions.

 

In the financial year of 2005, net profit of Viisnurk AS amounted to 9.3 mil. kroons (0.6 mil. euros). As a comparison, in 2004, the company had a loss of 16.8 mil. kroons (1.1 mil. euros). Viisnurk earnings per share in 2005 were 2,06 kroons (0,13 euros). In 2006, company expects earnings per share to reach 3,5-4 kroons (0,22-0,26 euros).

 

 

As of 31.12.2005 the total assets of Viisnurk AS accounted for 155.8 mil. kroons (10 mil. euros). The balance sheet total decreased by 52.7 mil. kroons (3.4 mil. euros), once again due to the planned reduction of the company’s business volume. As a very important development the debt obligations of Viisnurk AS declined by 49.5 mil. kroons (3.2 mil. euros) within the year, reducing the debt to equity ratio to 57% .

 

The company’s operating cash flow in 2005 was positive with 53.4 mil. kroons (3.4 mil. euros). The operating cash flow increased by 22.2 mil. kroons (1.4 mil. euros) compared to the previous year. 4.3 mil. kroons (0.3 mil. euros) were used for business investments in 2005.

 

 

 

 

 

 

 

The Furniture Division of Viisnurk AS manufactures and markets unique wooden furniture for home interiors.

 

In 2005, the division’s sales turnover was 122.1 mil. kroons (7.8 mil. euros) and profit 4.7 mil. kroons (0.3 mil. euros). The respective figures for 2004 were 156.5 mil. kroons (10 mil. euros) and 2.8 mil. kroons (0.2 mil. euros).

 

In 2005, the Furniture Division withdrew from cooperation as a subcontractor for major clients (IKEA) and focused on profit-making product portfolio, improvement of production efficiency and optimisation of cost levels. Those are the key activities in maintaining the sustainable profitability of furniture production in the situation of ever-growing competition and operating costs. Finland, Russia and Germany continued to be the leading sale markets with 78% of its total production volume marketed there.

 

Last year, considerably more attention was paid to the development of the retail sale of furniture. Since its launch in 2003, the retail concept of the Furniture Division has proved vital, and in 2005 the retail sale of furniture expanded to the Republic of Latvia where in Riga a new furniture salon was opened in November. The turnover of Skano, the subsidiary of the Furniture Division focusing on retail sale, increased appr. 70% in the accounting year. Active development of the retail sale of furniture in neighbouring markets will be main strategic direction of Viisnurk AS in the coming periods.

 

 

The Building Materials Division of Viisnurk AS manufactures two softboard based product categories: standard building boards for thermal and sound insulation and interior finishing boards for walls and ceilings.

 

The division’s success continued also in 2005, as the plans for the economic year were met. The turnover was in the same range as in 2004 – 96.4 mil. kroons (6.2 mil. euros) – and the profit amounted to 13.8 mil. kroons/0.9 mil. euros (cf. 18.5 mil. kroons/1.2 mil. euros in 2004).

 

Competition in the markets of one of the division’s main products – standard building boards – grew considerably in 2005. While European competitors have remarkably increased their production volumes in recent years, market growth has failed to catch up with the offer. This situation has temporarily increased the stock reserves of all other manufacturers and lowered the market’s general price levels. The division’s decline in profit is also due to this development.

 

The production and sales volumes of the other main product – Isotex interior finishing board – are still growing. The sales of the Isotex product range account for 35% of the total turnover. The division has improved its position in Finland, which is the main market, and also in the domestic market.

 

As to the main strategic direction for the future, the division will continue to increase Isotex product volumes, especially in the Eastern market where the development of the building sector is showing signs of acceleration, which will provide a solid basis for a long-term growth in the division’s economic performance.

 

 

 

 

 

 

 

 

Andrus Aljas

Member of the Management Board

+3724 47 8355