The nine-month net sales of Viisnurk AS in 2006 were 160.6 million kroons/10.3 mil. euros (165.9 mil. kroons/10.6 mil. euros during the same period in 2005) and the net profit amounted to 8.4 mil. kroons/536 thou. euros (7.2 mil. kroons/460 thou. euros in 2005). The total assets of Viisnurk amounted to 151.3 mil. kroons (9.7 mil euros) at the end of September 2006. The liabilities of the company accounted for 54% thereof, i.e. 81.3 mil. kroons (5.2 mil. euros).
 
3rd quarter of 2006
The net sales of the 3rd quarter of the accounting year amounted to 51.4 mil. kroons/3.3 mil. euros (47.3 mil. kroons/3.0 mil. euros in 2005) and the net profit amounted to 3.5 mil. kroons/225 thousand euros (0.5 mil. kroons/33 thousand euros in 2005).
The results of the third quarter of the company compared to the third quarter of 2005 have improved both in the Furniture Division and the Building Materials Division.
The profit of the Divisions does not reflect the general administrative costs of the corporation in the amount of 1.3 mil. kroons/84 thou. euros and the financial expenses of 565 thou. kroons/35 thou. euros that have been recorded in the report of business segments as unallocated expenses.
The turnover of the Furniture Division in the third quarter of 2006 amounted to 27.0 mil. kroons/1.7 mil. euros (25.0 mil. kroons/1.6 mil. euros during the same period in 2005) and the profit amounted to 1.8 mil. kroons/113 thou. euros (1.3 mil. kroons/84 thou. euros in 2005).
The turnover of the Building Materials Division in the third quarter of 2006 amounted to 24.4 mil. kroons/1.6 mil. euros (22.4 mil. kroons/1.4 mil. euros during the same period in 2005) and the profit amounted to 3.6 mil. kroons/231 thou. euros (1.4 mil. kroons/92 thou. euros in 2005).
 
Forecast and development
Based on the demand on the furniture and building materials market as well as the results of the activities planned in divisions, the management of the company foresees the continuation of positive trends and approves the calculated profit to be 12-14 mil. kroons (0.77-0.89 mil. euros).
In 2005, the profit of the company amounted to 9.8 million kroons (625 million euros).At the end of the third quarter the expansion plans of business units were approved by the Supervisory Board and implementing the activities of business plans began.
According to the strategy of developing the retail sale of the Furniture Division an international retail chain of furniture stores in our neighbouring markets operating under the trademark Skano shall be created. Upon creating the retail unit Viisnurk AS entered the business area of the retail of furniture and furnishing materials that is operated by a private limited company Skano, registered on 1 September 2003. Viisnurk AS holds 100% of the shares of Skano OÜ.
The production unit of the Furniture Division has concentrated on producing wooden home furniture. The trademark of the Division’s own products is Skano.
The Building Materials Division increased the production capacity of Isotex interior finishing boards as products of higher level of refinement and higher margin by installing a new production line to satisfy the increased demand in existing markets and to enter new markets. Increasing the production capacity of Isotex products helps the company to improve sales margins and give the existing production a higher value.
The Building Materials Division produces two categories of products: softboard-based building boards for insulation and soundproofing, and interior finishing boards for walls and ceilings. The trademarks of the Division’s products are Isoplaat (building board) and Isotex (interior finishing boards).
 
Divisional review:
 
(Thousand kroons)
Net sales
Profit
 
2006 9m
2005 6m
2006 9m
2005 6m
Furniture Division
92,249
89,574
6,282
4,475
Building Materials Division
68,387
76,132
8,579
11,097
Terminated business activities
0
162
0
(1,230)
TOTAL
160,636
165,868
14,861
14,342
Unallocated expenses
 
 
(4,332)
(4,586)
OPERATING PROFIT
 
 
10,529
9,756
Net financial expenses
 
 
(1,705)
(2,563)
PROFIT BEFORE TAXES
 
 
8,824
7,193
Tax
 
 
(438)
0
NET PROFIT
 
 
8,386
7,193
 
(Thousand euros)
Net sales
Profit
 
2006 9m
2005 6m
2006 9m
2005 6m
Furniture Division
5,896
5,725
401
286
Building Materials Division
4,371
4,866
548
709
Terminated business activities
0
10
0
(78)
TOTAL
10,267
10,601
949
917
Unallocated expenses
 
 
(277)
(293)
OPERATING PROFIT
 
 
672
624
Net financial expenses
 
 
(109)
(164)
PROFIT BEFORE TAXES
 
 
564
460
Tax
 
 
(28)
0
NET PROFIT
 
 
536
460
 
 
Furniture Division
The nine-month net sales of Viisnurk AS Furniture Division were 92.2 mil. kroons (5.9 mil. euros) and the economic result 6.3 mil. kroons (401 thousand euros) as a profit. As compared to the previous year the turnover of the division has increased by 2.7 mil. kroons (171 thou. euros) and the profit by 1.8 mil. kroons (115 thou. euros).
The Furniture Division’s nine-month sales in the company’s basic target markets in Finland and Russia have proceeded according to the plans and as compared to 2005 the sales have increased considerably. The Division has increased the sales of higher margin furniture that is based on the birch timber up to 89% (72% in 2005) in the accounting period. Thus, the share of pine furniture was 11% and the market demand in the respective sector is decreasing.  The company intends to further increase the share of birch furniture.
The share of furniture marketed under the Division’s own trademark Skano has also increased during the reporting period forming 22% of the division’s net sales (20% in 2005). It allows for better margins and increases sustainability in long-term perspective.
The range of products of furniture lines with higher profitability was expanded within the product portfolio of the Furniture Division in the third quarter. At the same time, developing new product lines continued both among the division’s own brands and for new subcontractors. The new furniture lines shall be introduced in various markets starting from the fourth quarter in 2006 and in the beginning of 2007. Additional opportunities for increasing sales in the existing markets are created through the above activities as well as the preconditions for entering new markets. Among potential markets the division sees an opportunity to increase sales in Great Britain and Eastern and Central Europe.
The retail sale of the Furniture Division shows a rising tendency. Within nine months this year the retail sale has increased by 51% as compared to the same period last year; the increase in the third quarter was 39% as compared to the respective period in 2005.
In the retail business of the division activities were initiated in the third quarter to expand the retail business to our neighbouring markets according to the strategy. The expansion of retail business includes opening new stores offering home furniture and furnishing materials in various Eastern European markets.
 
 
Building Materials Division
The nine-month net sales of the Building Materials Division amounted to 68.4 mil. kroons (4.4 mil. euros) and profit to 8.6 mil. kroons (548 thou. euros). In the same period of the last year, the turnover of the division totalled 76.2 mil. kroons (4.9 mil. euros) and the net profit 11.1 mil. kroons (709 thou. euros). The results of the nine months were influenced by extreme weather conditions in the beginning of the year and the fire in May. These negative facts had a one-time affect on the results of the division.
Since the beginning of the third 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 and the Ukraine as well as Latvia and Lithuania.
 
Building Boards
Among Isoplaat building boards the demand of wind protection board in the internal market has leaped ahead. The commencement of direct marketing in Finland (as one of the principal markets), which was planned for the first quarter of this year, achieved success in the third quarter by selling under our trademark in all of the most significant retail chains. The sales of flooring boards have also increased in the third quarter, especially in our neighbouring markets. Wind protection boards were the product group with the largest share in the sales of building boards.
Within the nine months of 2006 the division has increased the share of products sold under its own trademark Isoplaat up to 90% (64% in 2005) of the total sales of building boards; in addition, it has increased the share of direct marketing as compared to sales through intermediaries. It allows for better margins and increases sustainability in the long-term perspective.
This year the division took its building boards to new eastern markets with large potential – Russia and the Ukraine.
 
Interior Finishing Boards
Sales volumes and results of Isotex internal finishing boards were on planned levels both on the internal and external markets. At the end of the third quarter an updated and larger choice of wall panels was introduced to the market helping further strengthen its leading position in the markets and creating better opportunities for entering new markets. At the same time development activities for introducing new ceiling panels to the market in the fourth quarter of 2006 continued. Ceiling panels comprised 73% and wall panels 27% of the sales of interior finishing boards.
Within nine months this year the division has increased the share of Isotex interior finishing boards as products of higher level of refinement and higher margin up to 39% of the sales of the division (35% in 2005). Interior finishing boards are being produced since 1996 and they are sold 100% under the company’s own trademark Isotex.
Together with building boards interior finishing boards have also been taken to eastern markets where both product groups have a good perspective. Offering larger volume more actively is limited by the present production capacity.
In order to satisfy the increased demand in the existing markets and to enter the markets of Russia and the Ukraine, the Supervisory Board of Viisnurk AS has approved the decision to increase the production capacity of interior finishing boards via opening the second production line. The estimated total cost of the investment shall be 10 mil. kroons/639 thou. euros and the planned deadline for implementing the line is the beginning of the third quarter in 2007. The new production line enables to increase the volume of products from 39% to 55% of the net sales of the Building Materials Division. Increasing the production capacity of Isotex products helps the company to improve sales margins and give the existing production a higher value.
 
 
INCOME STATEMENT
 
 
 
 
consolidated
 
 
 
 
thousands kroons
III quarter
III quarter
9 months
9 months
 
2006
2005
2006
2005
 
 
 
 
 
RETURN ON SALES
51,428
47,333
160,636
165,868
 
 
 
 
 
Cost of production sold
(41,570)
(40,342)
(131,403)
(137,553)
 
 
 
 
 
Gross profit
9,858
6,991
29,233
28,315
 
 
 
 
 
Marketing expenses
(4,487)
(4,589)
(14,404)
(14,784)
 
 
 
 
 
General administrative expenses
(1,310)
(1,463)
(4,332)
(4,586)
 
 
 
 
 
Other income
152
146
451
2 424
 
 
 
 
 
Other expenses
(120)
(39)
(419)
(1 613)
 
 
 
 
 
Operating profit
4,093
1,046
10,529
9,756
 
 
 
 
 
Financial income and financial expenses
(565)
(544)
(1,705)
(2,563)
 
 
 
 
 
Profit before taxes
3,528
502
8,824
7,193
 
 
 
 
 
Tax
0
0
(438)
0
 
 
 
 
 
NET PROFIT FOR THE PERIOD
3,528
502
8,386
7,193
 
 
 
 
 
Basic earnings per share
0,78
0,11
1,86
1,60
Diluted earnings per share
0,78
0,11
1,86
1,60
 
 
INCOME STATEMENT
 
 
 
 
consolidated
 
 
 
 
thousands euros
III quarter
III quarter
9 months
9 months
 
2006
2005
2006
2005
 
 
 
 
 
RETURN ON SALES
3,287
3,025
10,267
10,601
 
 
 
 
 
Cost of production sold
(2,657)
(2,578)
(8,398)
(8,791)
 
 
 
 
 
Gross profit
630
447
1,869
1,810
 
 
 
 
 
Marketing expenses
(287)
(293)
(921)
(945)
 
 
 
 
 
General administrative expenses
(84)
(93)
(277)
(293)
 
 
 
 
 
Other income
10
9
29
155
 
 
 
 
 
Other expenses
(8)
(2)
(27)
(103)
 
 
 
 
 
Operating profit
261
68
673
624
 
 
 
 
 
Financial income and financial expenses
(36)
(35)
(109)
(164)
 
 
 
 
 
Profit before taxes
225
33
564
460
 
 
 
 
 
Tax
0
0
(28)
0
 
 
 
 
 
NET PROFIT FOR THE PERIOD
225
33
536
460
 
 
 
 
 
Basic earnings per share
0,05
0,01
0,12
0,10
Diluted earnings per share
0,05
0,01
0,12
0,10
 
BALANCE SHEET
 
 
 
 
consolidated
Thou. Kr.
Thou. Kr.
Thou. eur
Thou. eur
 
30.9.2006
31.12.2005
30.9.2006
31.12.2005
 
 
 
 
 
Cash and bank
5,755
5,552
368
355
Short-term fin. invest.
0
6,785
0
434
Receivables and prepayments
27,572
25,749
1,762
1,645
Inventories
48,033
42,161
3,070
2,695
Total current assets
81,360
80,247
5,200
5,129
 
 
 
 
 
Long-term financial investments
1
1
0
0
Investment property
15,521
15,521
992
992
Tangible fixed assets
53,272
58,235
3,405
3,722
Intangible fixed assets
1,098
1,818
70
116
Total fixed assets
69,892
75,575
4,467
4,830
 
 
 
 
 
TOTAL ASSETS
151,252
155,822
9,667
9,959
 
 
 
 
 
 
 
 
 
 
Debt obligations
2,325
8,909
149
569
Payables and prepayments
30,478
32,353
1,948
2,069
Short-term provisions
124
430
8
27
Total current liabilities
32,927
41,692
2,105
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
81,277
90,042
5,195
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
8,386
9,775
536
625
Total equity
69,975
65,780
4,472
4,204
 
 
 
 
 
TOTAL LIABILITIES AND EQUITY
151,252
155,822
9,667
9,959
 
Einar Pähkel
Business- and Administration Manager
+372 447 8331