The net sales of Viisnurk AS for the first half of 2006 were 109.2 mil kroons/7.0 mil euros (in the same period last year the net sales were 118.5 mil kroons/7.6 mil euros) and the net profit 4.9 mil kroons/310 thousand euros (6.7 mil kroons/428 thousand euros in 2005). The net sales of the 2nd quarter of the accounting year amounted to 56.2 mil kroons/3.6 mil euros (56.6 mil kroons/3.6 mil euros in 2005) and the net profit amounted to 3.0 mil kroons/189 thousand euros (2.7 mil kroons/173 thousand euros in 2005).
The results of Viisnurk AS in the first half of 2006 were significantly influenced by cold weather in January and February that brought along higher heating costs and work stoppages in the Building Materials Division. The fire on the storage area in May had also negative impact on the company’s results. Although the finished goods of the company are insured (excess 157 thousand kroons/10 thousand euros), the sales margin was lost on the destroyed goods; in addition the accident caused a three day work stoppage in the division.
In connection with the expenses related to the implementation of the retail trade strategy developed in 2006 the decrease in profitability of the Furniture Division is expected in the last quarter of the year. Although the net profit of the first half of the year is approx. 40% more than in 2005, the division has been influenced by a lower demand than expected in German market during the summer period as well as the increasing personnel expenses.
Considering the above factors the management of the company shall correct the profit estimation from the initial 16-18 mil kroons (1-1.15 mil euros) to 12-14 mil kroons (0.77-0.89 mil euros).
The total assets of Viisnurk amounted to 153.5 mil kroons (9.8 mil euros) at 30.06.2006. The liabilities of the company accounted for 57% thereof, i.e. 87 mil kroons (5.6 mil euros).
In the 2nd quarter of 2006, the dividends paid out to the shareholders amounted to 4.2 mil kroons (267 thousand euros). The income tax on dividends amounted to 438 thousand kroons (27 thousand euros).
 
 
Divisional review:
 

 

(Thousand kroons)
Net sales
Profit
 
2006 6m
2005 6m
2006 6m
2005 6m
Furniture Division
65 231
64 605
4 498
3 167
Building Materials Division
43 978
53 768
4 959
9 657
Terminated business activities
0
162
0
-991
TOTAL
109 209
118 535
9 457
11 833
Unallocated expenses
 
 
3 022
3 123
OPERATING PROFIT
 
 
6 435
8 710
Net financial expenses
 
 
1 140
2 019
PROFIT BEFORE TAXES
 
 
5 295
6 691
Tax
 
 
438
0
NET PROFIT
 
 
4 857
6 691

 

 

 

(Thousand euros)
Net sales
Profit
 
2006 6m
2005 6m
2006 6m
2005 6m
Furniture Division
4 169
4 129
288
202
Building Materials Division
2 811
3 437
317
617
Terminated business activities
0
10
0
-63
TOTAL
6 980
7 576
605
756
Unallocated expenses
 
 
194
199
OPERATING PROFIT
 
 
411
557
Net financial expenses
 
 
73
129
PROFIT BEFORE TAXES
 
 
338
428
Tax
 
 
28
0
NET PROFIT
 
 
310
428

 

 
 
Furniture Division
 
The net sales of the Furniture Division of Viisnurk for six months were 65.2 mil kroons (4.2 mil euros) and the profit 4.5 mil kroons (288 thousand euros). As compared to the previous year the turnover of the division has increased by 626 thousand kroons (40 thousand euros) and the profit by 1.3 mil kroons (86 thousand euros).
 
The six-month performance of the Furniture Division proves the success of the selected strategy that focuses on stable customers and production of more profitable product lines. Sales in the company’s basic target markets in Finland and Russia have proceeded according to the plans. However, the increase in profit of the Furniture Division is less than estimated due to lower demand during summer period in Germany and the increasing pressure on personnel expenses.
 
Retail sale of furniture shows a rising tendency and, according to the strategy, the division is preparing itself for the expansion of retail business to on-shore markets. In connection with additional expenses due to the extension of retail business this year the profitability of the Furniture Division may decrease in the last quarter of the year.
 
 
Building Materials Division
 
The Building Materials Division earned a profit of 5.0 mil kroons (317 mil euros) at the net sales of 44 mil kroons (2.8 mil euros) in six months. In the same period of the last year, the turnover of the division totalled 53.8 mil kroons (3.4 mil euros) and the net profit 9.7 mil kroons (617 mil euros).
 
The results of the six months were significantly influenced by extreme weather conditions in the beginning of the year when cold weather in January and February brought along higher heating costs and work stoppages (around 15 % of the working time of the main production line was lost). The fire on 6 May had also an impact on the results. The destroyed property was insured and the excess in the case of an insured event is 157 thousand kroons (10 thousand euros). The insurance covers the cost of the goods in cost price, having an impact on the revenues and profit by sales margin.
 
Among “Isoplaat” general building boards the demand of wind protection board in the internal market has leaped ahead. The increase of sales in Finland, which was planned for the 1st quarter of this year, achieved success in the 2nd quarter by selling under our trademark in all of the most significant retail chains.
 
Sales volumes and results of “Isotex” internal finishing boards were on planned levels both in the internal and external markets.
 
Since the beginning of the 2nd quarter production volumes, sales and profitability of the division have improved rapidly and the factory is working on full capacity in order to satisfy the increased demand. In addition, active selling has been initiated in the eastern market - Russia, Ukraine, Latvia and Lithuania.
 
 
 

 

INCOME STATEMENT
 
 
 
 
consolidated
 
 
 
 
thousand kroons
II quarter
II quarter
6 months
6 months
 
2006
2005
2006
2005
 
 
 
 
 
RETURN ON SALES
56 174
56 626
109 209
118 535
 
 
 
 
 
Cost of production sold
(45 528)
(46 416)
(89 834)
(97 211)
 
 
 
 
 
Gross profit
10 646
10 210
19 375
21 324
 
 
 
 
 
Marketing expenses
(5 086)
(4 732)
(9 918)
(10 195)
 
 
 
 
 
General administrative expenses
(1 509)
(1 500)
(3 022)
(3 123)
 
 
 
 
 
Other income
226
812
299
2 278
 
 
 
 
 
Other expenses
(228)
(1 239)
(299)
(1 574)
 
 
 
 
 
Operating profit
4 049
3 551
6 435
8 710
 
 
 
 
 
Financial income and financial expenses
(656)
(847)
(1 140)
(2 019)
 
 
 
 
 
Profit before taxes
3 393
2 704
5 295
6 691
 
 
 
 
 
Tax
(438)
0
(438)
0
 
 
 
 
 
NET PROFIT FOR THE PERIOD
2 955
2 704
4 857
6 691
 
 
 
 
 
Basic earnings per share
0,66
0,60
1,08
1,49
Diluted earnings per share
0,66
0,60
1,08
1,49

 

 
 

 

INCOME STATEMENT
 
 
 
 
consolidated
 
 
 
 
thousand euros
II quarter
II quarter
6 months
6 months
 
2006
2005
2006
2005
 
 
 
 
 
RETURN ON SALES
3 590
3 619
6 980
7 576
 
 
 
 
 
Cost of production sold
(2 910)
(2 967)
(5 741)
(6 213)
 
 
 
 
 
Gross profit
680
652
1 239
1 363
 
 
 
 
 
Marketing expenses
(325)
(302)
(634)
(652)
 
 
 
 
 
General administrative expenses
(95)
(96)
(194)
(199)
 
 
 
 
 
Other income
14
52
19
146
 
 
 
 
 
Other expenses
(15)
(79)
(19)
(101)
 
 
 
 
 
Operating profit
259
227
411
557
 
 
 
 
 
Financial income and financial expenses
(42)
(54)
(73)
(129)
 
 
 
 
 
Profit before taxes
217
173
338
428
 
 
 
 
 
Tax
(28)
0
(28)
0
 
 
 
 
 
NET PROFIT FOR THE PERIOD
189
173
310
428
 
 
 
 
 
Basic earnings per share
0,05
0,04
0,08
0,10
Diluted earnings per share
0,05
0,04
0,08
0,10

 

 
 

 

BALANCE SHEET
 
 
 
 
consolidated
Thou. Kr.
Thou. Kr.
Thou. eur
Thou. eur
 
30.6.2006
31.12.2005
30.6.2006
31.12.2005
 
 
 
 
 
Cash and bank
4 002
5 552
256
355
Short-term fin. invest.
0
6 785
0
434
Receivables and prepayments
28 964
25 749
1 850
1 645
Inventories
48 531
42 161
3 102
2 695
Total current assets
81 497
80 247
5 208
5 129
 
 
 
 
 
Long-term financial investments
1
1
0
0
Investment property
15 521
15 521
992
992
Tangible fixed assets
55 132
58 235
3 524
3 722
Intangible fixed assets
1 342
1 818
86
116
Total fixed assets
71 996
75 575
4 602
4 830
 
 
 
 
 
TOTAL ASSETS
153 493
155 822
9 810
9 959
 
 
 
 
 
 
 
 
 
 
Debt obligations
4 455
8 909
285
569
Payables and prepayments
34 020
32 353
2 175
2 069
Short-term provisions
222
430
14
27
Total current liabilities
38 697
41 692
2 474
2 665
 
 
 
 
 
Non-current debt obligations
47 920
47 920
3 063
3 063
Long-term provisions
430
430
27
27
Total non-current liabilities
48 350
48 350
3 090
3 090
 
 
 
 
 
Total liabilities
87 047
90 042
5 564
5 755
 
 
 
 
 
Share capital (nominal value)
44 991
44 991
2 875
2 875
Issue premium
11 332
11 332
724
724
Mandatory capital reserve
4 499
4 499
288
288
Retained profits
767
(4 817)
49
(308)
Net profit for the year
4 857
9 775
310
625
Total equity
66 446
65 780
4 246
4 204
 
 
 
 
 
TOTAL LIABILITIES AND EQUITY
153 493
155 822
9 810
9 959

 

Einar Pähkel
Business- and Administration Manager
+3724 47 8331