The twelve-month net sales of Viisnurk AS in 2006 were 227.4 mil. kroons/14.5 mil. euros (218.7 mil. kroons/14.0 mil. euros during the same period in 2005) and the net profit amounted to 12.8 mil. kroons/817 thou. euros (9.5 mil. kroons/608 thou. euros in 2005). The total assets of Viisnurk amounted to 153.2 mil. kroons (9.8 mil euros) at the end of December 2006. The liabilities of the company accounted for 53% thereof, i.e. 81.4 mil. kroons (5.2 mil. euros).
The turnover of the Furniture Division in 2006 amounted to 132.8 mil. kroons/8.5 mil. euros (122.1 mil. kroons/7.8 mil. euros during the same period in 2005) and the profit amounted to 9.5 mil. kroons/610 thou. euros (4.8 mil. kroons/308 thou. euros in 2005).
The turnover of the Building Materials Division in 2006 amounted to 94.6 mil. kroons/6.0 mil. euros (96.4 mil. kroons/6.2 mil. euros during the same period in 2005) and the profit amounted to 11.7 mil. kroons/746 thou. euros (13.9 mil. kroons/889 thou. euros in 2005).
The profit of the Divisions does not reflect the general administrative costs of the corporation in the amount of 5.4 mil. kroons/346 thou. euros and the financial expenses of 2.6 thou. kroons/165 thou. euros that have been recorded in the report of business segments as unallocated expenses.
4th quarter of 2006
The net sales of the 4th quarter of the accounting year amounted to 66.8 mil. kroons/4.3 mil. euros (52.8 mil. kroons/3.4 mil. euros in 2005) and the net profit amounted to 4.4 mil. kroons/281 thousand euros (2.3 mil. kroons/148 thousand euros in 2005).
The results of the fourth quarter of the company compared to the fourth quarter of 2005 have improved both in the Furniture Division and the Building Materials Division.
The turnover of the Furniture Division in the 4th quarter of 2006 amounted to 40.6 mil. kroons/2.6 mil. euros (32.5 mil. kroons/2.1 mil. euros during the same period in 2005) and the profit amounted to 3.3 mil. kroons/209 thou. euros (342 thou. kroons/22 thou. euros in 2005).
The turnover of the Building Materials Division in the 4th quarter of 2006 amounted to 26.2 mil. kroons/1.7 mil. euros (20.3 mil. kroons/1.3 mil. euros during the same period in 2005) and the profit amounted to 3.1 mil. kroons/198 thou. euros (2.8 mil. kroons/178 thou. euros in 2005).
According to the valuation report issued on 04 December 2006 of an independent real estate company the estimated market value of the properties located in Niidu street, Pärnu, as at 04 December 2006 amounted to 110,130,000 kroons/7,038,590 euros (estimated market value of properties on 31 December 2005 amounted to 57,800,000 kroons/3,694,093 euros). At 31 December 2006, the carrying amount of the same properties was EEK 7,664,368 (€489,842) and it is not changed during the year. The valuation of property does not affect company’s profit – real estate investments are in balance on original value.
Forecast and development
On 26 February 2007 Supervisory Board recalled Toivo Kuldmäe from Management Board and elected Einar Pähkel, Andres Kivistik and Erik Piile as the new Members of the Management Board. In Supervisory board meeting on 27 February 2007 Andres Kivistik appointed the Chairman of Management Board until 31 December 2007, when Supervisory Board will review the situation.
In 4th quarter AS Viisnurk signed the contract of property development of land plot in Pärnu Rääma street.
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. The company will plan to open on 2nd quarter of 2007 three stores in Lithuania and prepares to enter into Russian and Ukrainian market. 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. On 4th quarter of 2006 company started renovation of building necessary for new Isotex line. 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:
The twelve-month net sales of Viisnurk AS Furniture Division were 132.8 mil. kroons (8.5 mil. euros) and the economic result 9.5 mil. kroons (610 thousand euros) as a profit. As compared to the previous year the turnover of the division has increased by 10.7 mil. kroons (685 thou. euros) and the profit by 4.7 mil. kroons (302 thou. euros).
The Furniture Division’s twelve-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 91% (79% in 2005) in the accounting period. Thus, the share of pine furniture was 9% (21% in 2005) and the market demand in the respective sector is decreasing. The company intends to further increase the share of birch furniture.
The range of products of furniture lines with higher profitability was expanded within the product portfolio of the Furniture Division in the fourth 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 were introduced in various markets in fourth quarter in 2006 and it will continue 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 twelve months this year the retail sale has increased by 56% as compared to the same period last year; the increase in the fourth quarter was 68% as compared to the respective period in 2005.
Building Materials Division
The twelve-month net sales of the Building Materials Division amounted to 94.6 mil. kroons (6.0 mil. euros) and profit to 11.7 mil. kroons (746 thou. euros). In the same period of the last year, the turnover of the division totalled 94.5 mil. kroons (6.2 mil. euros) and the net profit 13.9 mil. kroons (889 thou. euros). The results of the twelve 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 and fourth quarter by selling under our trademark in all of the most significant retail chains. The sales of flooring boards have also increased, 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 2007 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 37% 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.
Investments
In the retail business of the division activities were initiated in the fourth 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.
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.
|
Consolidated Balance Sheet
|
|
|
|
|
|||||
|
|
Th EEK
|
Th EEK
|
Th EUR
|
Th EUR
|
|
||||
|
|
31.12.2006
|
31.12.2005 (adjusted)
|
31.12.2006
|
31.12.2005, (adjusted)
|
|
||||
|
|
|
|
|
|
|
||||
|
Cash and bank
|
13,138
|
5,552
|
840
|
355
|
|
||||
|
Short-term financial investments
|
0
|
6,785
|
0
|
434
|
|
||||
|
Receivables and prepayments
|
26,628
|
25,749
|
1,702
|
1,645
|
|
||||
|
Inventories
|
44,971
|
42,161
|
2,874
|
2,695,
|
|
||||
|
Total current assets
|
84,737
|
80,247
|
5,416
|
5,129
|
|
||||
|
|
|
|
|
|
|
||||
|
Long-term financial investments
|
1
|
1
|
0
|
0
|
|
||||
|
Investment property
|
10,294
|
15,521
|
658
|
992
|
|
||||
|
Tangible fixed assets
|
57,535
|
58,235
|
3,677
|
3,722
|
|
||||
|
Intangible fixed assets
|
650
|
1,818
|
42
|
116
|
|
||||
|
Total fixed assets
|
68,480
|
75,575
|
4,377
|
4,830
|
|
||||
|
|
|
|
|
|
|
||||
|
TOTAL ASSETS
|
153,217
|
155,822
|
9,793
|
9,959
|
|
||||
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
||||
|
Debt obligations
|
19,409
|
8,909
|
1,240
|
569
|
|
||||
|
Payables and prepayments
|
29,974
|
32,353
|
1,916
|
2,069
|
|
||||
|
Short-term provisions
|
478
|
176
|
31
|
11
|
|
||||
|
Total current liabilities
|
49,861
|
41,438
|
3,187
|
2,649
|
|
||||
|
|
|
|
|
|
|
||||
|
Non-current debt obligations
|
28,511
|
47,920
|
1,822
|
3,063
|
|
||||
|
Non-current provisions
|
3,046
|
3,268
|
195
|
209
|
|
||||
|
Total non-current liabilities
|
31,557
|
51,188
|
2,017
|
3,272
|
|
||||
|
|
|
|
|
|
|
||||
|
Total liabilities
|
81,418
|
92,626
|
5,204
|
5,921
|
|
||||
|
|
|
|
|
|
|
||||
|
Share capital (nominal value)
|
44,991
|
44,991
|
2,875
|
2,875
|
|
||||
|
Issue premium
|
11,332
|
11,332
|
724
|
724
|
|
||||
|
Statutory capital reserve
|
4,499
|
4,499
|
288
|
288
|
|
||||
|
Retained profits
|
(1,810)
|
(7,144)
|
(115)
|
(457)
|
|
||||
|
Net profit for the year
|
12,787
|
9,518
|
817
|
608
|
|
||||
|
Total equity
|
71,799
|
63,196
|
4,589
|
4,038
|
|
||||
|
|
|
|
|
|
|
||||
|
TOTAL LIABILITIES AND EQUITY
|
153,217
|
155,822
|
9,793
|
9,959
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
(Th EEK)
|
Net sales
|
Profit
|
||
|
|
2006
|
2005
|
2006
|
2005
|
|
Furniture Division
|
132,823
|
122,105
|
9,540
|
4,817
|
|
Building Materials Division
|
94,581
|
96,443
|
11,674
|
13,910
|
|
Terminated business activities
|
0
|
162
|
0
|
345
|
|
TOTAL
|
227,404
|
218,710
|
21,214
|
19,072
|
|
Unallocated expenses
|
|
|
(5,414)
|
(6,232)
|
|
OPERATING PROFIT
|
|
|
15,800
|
12,840
|
|
Net financial costs
|
|
|
(2,575)
|
(3,322)
|
|
PROFIT BEFORE TAXES
|
|
|
13,225
|
9,518
|
|
Prepaid income tax
|
|
|
(438)
|
0
|
|
NET PROFIT
|
|
|
12,787
|
9,518
|
|
(Th EUR)
|
Net sales
|
Profit
|
||
|
|
2006
|
2005
|
2006
|
2005
|
|
Furniture Division
|
8,489
|
7,804
|
610
|
308
|
|
Building Materials Division
|
6,045
|
6,164
|
746
|
889
|
|
Terminated business activities
|
0
|
10
|
0
|
22
|
|
TOTAL
|
14,534
|
13,978
|
1,356
|
1,219
|
|
Unallocated expenses
|
|
|
(346)
|
(398)
|
|
OPERATING PROFIT
|
|
|
1,010
|
821
|
|
Net financial costs
|
|
|
(165)
|
(213)
|
|
PROFIT BEFORE TAXES
|
|
|
845
|
608
|
|
Prepaid income tax
|
|
|
(28)
|
0
|
|
NET PROFIT
|
|
|
817
|
608
|
Furniture Division
|
Consolidated Income Statement
|
|
|
|
|
|
Thousand EEK
|
|
|
|
|
|
|
4th quarter
|
4th quarter
|
12 months
|
12 months
|
|
|
2006
|
2005 (adjusted)
|
2006
|
2005 (adjusted)
|
|
|
|
|
|
|
|
RETURN ON SALES
|
66,768
|
52,842
|
227,404
|
218,710
|
|
|
|
|
|
|
|
Cost of production sold
|
(53,123)
|
(43,287)
|
(184,526)
|
(180,840)
|
|
|
|
|
|
|
|
Gross profit
|
13,645
|
9,555
|
42,878
|
37,870
|
|
|
|
|
|
|
|
Marketing expenses
|
(6,853)
|
(5,689)
|
(21,258)
|
(20,473)
|
|
|
|
|
|
|
|
General administrative expenses
|
(1,082)
|
(1,646)
|
(5,414)
|
(6,232)
|
|
|
|
|
|
|
|
Other income
|
74
|
298
|
526
|
2,722
|
|
|
|
|
|
|
|
Other expenses
|
(513)
|
566
|
(932)
|
(1,047)
|
|
|
|
|
|
|
|
Operating profit
|
5,271
|
3,084
|
15,800
|
12,840
|
|
|
|
|
|
|
|
Financial income and financial expenses
|
(870)
|
(759)
|
(2,575)
|
(3,322)
|
|
|
|
|
|
|
|
Profit before taxes
|
4,401
|
2,325
|
13,225
|
9,518
|
|
|
|
|
|
|
|
Prepaid income tax
|
0
|
0
|
(438)
|
0
|
|
|
|
|
|
|
|
NET PROFIT FOR THE PERIOD
|
4,401
|
2,325
|
12,787
|
9,518
|
|
|
|
|
|
|
|
Basic earnings per share
|
0.98
|
0.52
|
2.84
|
2.12
|
|
Diluted earnings per share
|
0.98
|
0.52
|
2.84
|
2.12
|
|
Consolidated Income Statement
|
|
|
|
|
|
Thousand EUR
|
|
|
|
|
|
|
4th quarter
|
4th quarter
|
12 months
|
12 months
|
|
|
2006
|
2005 (adjusted)
|
2006
|
2005 (adjusted)
|
|
|
|
|
|
|
|
RETURN ON SALES
|
4,267
|
3,377
|
14,534
|
13,978
|
|
|
|
|
|
|
|
Cost of production sold
|
(3,395)
|
(2,767)
|
(11,793)
|
(11,558)
|
|
|
|
|
|
|
|
Gross profit
|
872
|
610
|
2,741
|
2,420
|
|
|
|
|
|
|
|
Marketing expenses
|
(438)
|
(364)
|
(1,359)
|
(1,308)
|
|
|
|
|
|
|
|
General administrative expenses
|
(69)
|
(104)
|
(346)
|
(398)
|
|
|
|
|
|
|
|
Other income
|
5
|
19
|
34
|
174
|
|
|
|
|
|
|
|
Other expenses
|
(33)
|
36
|
(60)
|
(67)
|
|
|
|
|
|
|
|
Operating profit
|
337
|
197
|
1,010
|
821
|
|
|
|
|
|
|
|
Financial income and financial expenses
|
(56)
|
(49)
|
(165)
|
(213)
|
|
|
|
|
|
|
|
Profit before taxes
|
281
|
148
|
845
|
608
|
|
|
|
|
|
|
|
Prepaid income tax
|
0
|
0
|
(28)
|
0
|
|
|
|
|
|
|
|
NET PROFIT FOR THE PERIOD
|
281
|
148
|
817
|
608
|
|
|
|
|
|
|
|
Basic earnings per share
|
0.06
|
0.03
|
0.18
|
0.14
|
|
Diluted earnings per share
|
0.06
|
0.03
|
0.18
|
0.14
|