The net sales of Viisnurk AS for the 6 months of 2007 were 129.7 mil. kroons/8.3 mil. euros (109.2 mil. kroons/7.0 mil. euros during the same period in 2006) and the net profit amounted to 10.8 mil. kroons/0.7 mil. euros (4.7 mil. kroons/0.3 mil. euros during the same period in 2006).

 

As of the end of June 2007 the total assets of Viisnurk amounted to 160.2 mil. kroons/10.2 mil. euros (30.6.2006: 153.5 mil. kroons/9.8 mil. euros). The liabilities of the company accounted for 52% (30.6.2006: 58%) thereof, i.e. 82.9 mil. kroons/5.3 mil. euros (30.6.2006: 89.7 mil. kroons/5.7 mil. euros).

 

The turnover of the Furniture Division in the 6 months of 2007 amounted to 67.9 mil. kroons/4.3 mil. euros (65.2 mil. kroons/4.2 mil. euros during the same period in 2006) and the profit amounted to 3.7 mil. kroons/238 thou. euros (2.3 mil. kroons/147 thou. euros during the same period in 2006).

 

The turnover of the Building Materials Division in the 6 months of 2007 amounted to 61.7 mil. kroons/3.9 mil. euros (44.0 mil. kroons/2.8 mil. euros during the same period in 2006) and the profit amounted to 10.1 mil. kroons/648 thou. euros (5.0 mil. kroons/317 thou. euros during the same period in 2006).

 

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 (833 thou. kroons/53 thou euros during the same period in 2006) and the financial expenses of 1.3 mil. kroons/80 thou. euros (1.3 mil. kroons/80 thou. euros during the same period in 2006) that have been recorded in the report of business segments as unallocated expenses.

 

In the first half of 2007 dividends were distributed in the amount of 5.4 mil. kroons/0.3 mil. euros, i.e. 1 kroon 20 cents/7.67 euro cents per share. Corresponding income tax expense amounted to 475 thou. kroons/30 thou. euros. The same period in 2006, dividends were distributed in the amount of 4.2 mil. kroons/0.3 mil. euros, i.e. 93 cents/5.94 euro cents per share. Corresponding income tax expense amounted to 438 thou. kroons/28 thou. euros.

 

 

Divisional review:

 

 

 

 

 

The six-month net sales of Viisnurk AS Furniture Division were 67.9 mil. kroons/4.3 mil. euros (2006: 65.2 mil. kroons/4.2 mil. euros) and the economic result 3.7 mil. kroons/238 thou. euros (2006: 2.3 mil kroons/147 thou. euros) as a profit. As compared to the previous year the turnover of the division has increased by 2.7 mil. kroons/174 thou. euros and the profit by 1.4 mil. kroons/91 thou. euros.

 

Furniture Production

 

The Furniture Division’s six-month sales in the company’s basic target markets in Finland and Russia have proceeded according to the plans and as compared to 2006 the sales have increased considerably. The enterprise has made a strategic decision to focus on the profitable production of two basic product lines, namely Björkkvist and Villinki in order to improve the efficiency. Already today, the aforementioned product lines make more than 90% of the production of Viisnurk Furniture Division. Above all, the management board foresees that there are some reserves to be found in improvement of quality due to specialization and minimizing the time lost due to re-adjustments made for different product lines. The market has shown an increasing demand for both Björkkvist and Villinki product series and because of their classical design, there is little risk that the demand would decrease due to trends.

 

Furniture Retail - Skano

 

Concerning the retail trade of the furniture division, the company continued its strategic activities in the second quarter of 2007 in order to expand the retail trade to the neighbouring markets. The expansion of retail business includes opening new stores offering home furniture and furnishing goods in various Eastern European markets.

 

The retail sale of the Furniture Division shows a rising tendency. Within six months this year the retail sale has increased by 85% as compared to the same period last year. At the same time, the sales of the present stores have increased 80% during the first six months compared to the same period in 2006.

 

In May the company opened three new stores in Lithuania – in Vilnius, Kaunas and Klaipeda. The plan is to open two new stores in Ukraine in the third quarter. The company also plans to change the present location of the store in Riga for a more favourable location in the second half of 2007. According to the plans, Skano shall operate no less than eight stores in the Baltics and Ukraine by the end of 2007.

 

Building Materials Division

 

The six-month net sales of the Building Materials Division amounted to 61.7 mil. kroons/3.9 mil. euros and profit to 10.1 mil. kroons/0.6 mil. euros. In the same period of the last year, the turnover of the division totalled 44.0 mil. kroons/2.8 mil. euros and the net profit 5.0 mil. kroons/0.3 mil. euros. As compared to the previous year the turnover of the division has increased by 17.8 mil. kroons/1.1 mil. euros and the profit by 5.2 mil. kroons/0.3 mil. euros.

 

Since the beginning of the third quarter in 2006, 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 Russia and Ukraine as well as in Latvia and Lithuania.

 

In order to satisfy the increased demand in the existing markets and to enter the markets of Russia and the Ukraine, Viisnurk AS is establishing an additional line of interior finishing boards (Isotex) in the third quarter this year. The total cost of investment is approximately 10 mil. kroons/639 thou. euros which includes the acquisition of production equipment as well as a complete renovation of the present production facilities. The works related to building the line have progressed as expected. The new production line enables to increase the volume of Isotex products 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.

 

 

 

 

 

 

Important events after the balance sheet date – division of AS Viisnurk

 

The division plan of Viisnurk AS was signed on June 29, 2007 as the result of which the part of the present Viisnurk engaged in production shall become separate, namely the Furniture and Building Materials Division. The aforementioned decision was also approved by the general meeting of shareholders on August 6, 2007.

 

The principal activity of the present Viisnurk AS shall be the development of real estate and after the separation of the production activity, the assets of the company shall only include the registered immovables located at Niidu street with the area of approximately 40 ha and the book residual value of which is 7,392 thou. kroons/472 thou. euros. The estimated value of the given registered immovables on December 4, 2006 was 110,130 thou. kroons/7,039 thou. euros (57,800 thou. kroons/3,964 thou. euros on February 3, 2006).

 

The present Viisnurk shall be renamed Trigon Property Development and it shall remain quoted on Tallinn Stock Exchange. The separated unit engaged in production shall be called Viisnurk AS and its quotation application shall be presented to Tallinn Stock Exchange immediately. The division engaged in production shall maintain the real estate necessary for its principal activity also in the future as well as the Rääma street real estate development project. Real estate located at Niidu street which is not used in the production activity of Viisnurk shall not be separated and will remain with Trigon Property Development.

 

 

Consolidated balance sheet

 

 

Consolidated income statement