Income statement

 

Despite of difficult economical situation in target markets and considerable sales decrease, the Group had positive economic result in second quarter. Consolidated net profit in Q2 amounted to 82 thousand kroons/5 thousand euros (2008: 3.0 mil. kroons/192 thousand euros), and the net margin was 0.2% (down from 3.8% in Q2 2008). In Q2 2009, the Group’s return on equity was 0.0% (down from 4.0% in Q2 2008) and return on assets was 0.0% (down from 1.6% in Q2 2008).

 

Consolidated net sales of second quarter 2009 was 51.1 mil. kroons/3.3 mil. euros (78.2 mil. kroons/5.0 mil. euros in same period of 2008) representing a 34.6% decrease on the second quarter compared to Q2 2008. The Group’s gross margin in the second quarter of 2009 was 23.1% compared to 22.7% in the second quarter of 2008. Consolidated operating profit amounted to 0.8 mil. kroons/52 thousand euros (5.6 mil. kroons/358 thousand euros in 2008), representing a 85.5% down compared to Q2 2008. The consolidated operating margin of net sales was 1.6% (down from 7.2% in Q2 2008). Profit before tax amounted to 82.0 thousand kroons/5 thousand euros in Q2 2009 (4.7 mil. kroons/299 thousand euros in Q2 2008).

 

In 2009 dividends were not distributed. The same period in 2008, dividends were distributed in the amount of 6.3 mil. kroons/0.4 mil. euros, i.e. 1 kroon 40 cents/8.95 euro cents per share. Corresponding income tax expense in 2008 amounted to 1.7 mil. kroons/107 thousand euros.

 

The main reason for low sales is continuing cool economical situation in target markets. Compared to Q1, sales decreased only 3.7% and indicate stabilization. Lowering of costs has been effective and helped avoid loss in second quarter.

 

 

Balance sheet

 

As of the end of June 2009 the total assets of Viisnurk amounted to 148.9 mil. kroons/9.5 mil. euros (31.12.2008: 163.8 mil. kroons/10.5 mil. euros). The liabilities of the company accounted for 52% (31.12.2008: 57%) thereof, i.e. 78.1 mil. kroons/5.0 mil. euros (31.12.2008: 92.6 mil. kroons/5.9 mil. euros).

 

Receivables and prepayments have increased by 6.3 mil. kroons/0.4 mil. euros i.e. 32% increase with 6 months. The reason of increase of receivables is very small sales in December 2008, which essentially lowered the amount of receivables at the end of December.

 

Inventories decreased by 13.6 mil. kroons/0.9 mil. euros to reach 54.5 mil. kroons/3.5 mil euros at 30 June 2009 (31.12.2008: 68,1 mil. kroons/4,4 mil. euros). The decrease of amount of inventory is one of the main targets to pass crisis and assure liquidity. Property, plant and intangibles decreased by 3.7 mil. kroons/0.2 mil. euros mainly caused by depreciation.

 

Current liabilities decreased by 4.9 mil. kroons/0.3 mil euros and amounted in 30 June 2009 12.8 mil. kroons/0.8 mil. euros (31.12.2008: 17.7 mil. kroons/1.1 mil. euros). Supplier payables, tax liabilities, other payables, including payables to employees, and provisions amounted to 34.1 mil. kroons/2.2 mil. euros (31.12.2008: 43.8 mil. kroons/2.8 mil. euros). Current and non-current liabilities decreased by 14.6 mil. kroons/0.9 mil. euros to 78.1 mil. kroons/5.0 mil. euros (31.12.2008: 92.6 mil. euros/5.9 mil kroons).

 

 

Divisional review:

 

Net sales by business segments

	th. EEK		th. EUR		% of net sales
	Q2 2009	Q2 2008	Q2 2009	Q2 2008	Q2 2009	Q2 2008
Furniture Factory	26,157	39,176	1,671	2,503	51.2%	50.1%
Skano	9,396	8,596	601	549	18.4%	11.0%
Building Materials Division	19,721	34,996	1,260	2,237	38.6%	44.8%
Elimination	(4,137)	(4,607)	(264)	(294)	(8.1%)	(5.9%)
TOTAL	51,137	78,161	3,268	4,995	100.0%	100.0%

 

Net sales by geographical segments

	th. EEK		th. EUR		% of net sales
	Q2 2009	Q2 2008	Q2 2009	Q2 2008	Q2 2009	Q2 2008
Finland	24,225	34,372	1,548	2,197	47.4%	44.0%
Russia	6,329	16,795	406	1,074	12.4%	21.5%
Estonia	9,421	15,194	602	971	18.4%	19.4%
Ukraine	2,788	1,862	178	119	5.5%	2.4%
Lithuania	2,763	1,787	176	115	5.4%	2.3%
Latvia	1,628	3,456	104	220	3.2%	4.4%
Kazakhstan	1,125	578	72	37	2.2%	0.7%
Sweden	877	2,147	56	137	1.7%	2.7%
Germany	872	1,694	55	108	1.7%	2.2%
Portugal	781	0	50	0	1.5%	0.0%
Other countries	328	276	21	17	0.6%	0.4%
TOTAL	51,137	78,161	3,268	4,995	100.00%	100.00%

 

Concerning the markets, turnover has been decreased in all bigger markets. Stores opened in 2008, which were in first half year of 2008 in launching mode, cause the increase of sales in Ukraine. The sales into Portugal is restarted and sales to Kazakhstan is increased. Sales in Lithuania increased after removing the stores onto new premises at the end of 2008 and beginning of 2009.

 

Gross profit by business segments

	th. EEK		th. EUR
	Q2 2009	Q2 2008	Q2 2009	Q2 2008
Furniture Factory	3,107	5,542	199	354
Skano	4,215	4,465	269	285
Building Materials Division	4,500	7,848	288	502
Elimination	(10)	(131)	(1)	(8)
TOTAL	11,812	17,724	755	1,133

 

The main reason for decreased gross margin in Building Material Division is changes in product portfolio and growth of cost value due to small production volume and big fixed costs.

 

Profit by business segments

	th. EEK		th. EUR
	Q2 2009	Q2 2008	Q2 2009	Q2 2008
Furniture Factory	1,579	3,198	101	204
Skano	(1,609)	(972)	(103)	(63)
Building Materials Division	636	3,510	41	225
Elimination	208	(133)	13	(8)
TOTAL	814	5,603	52	358
Net financial costs	(732)	(930)	(47)	(59)
PROFIT BEFORE TAXES	82	4,673	5	299
Income tax	0	(1,674)	0	(107)
NET PROFIT	82	2,999	5	192

 

 

Furniture Division

 

The net sales of AS Viisnurk Furniture Division in second quarter amounted to 31.5 mil. kroons/2.0 mil. euros (2008: 43.2 mil. kroons/2.8 mil. euros) and the economic result 0.2 mil. kroons/14 thousand euros as a profit (2008 profit 1.7 mil. kroons/111 thousand euros). As compared to the Q2 of previous year the turnover of the division has decreased by 11.7 mil. kroons/472 thousand euros (26.9%).

 

 

Furniture Retail – Skano

 

AS Viisnurk retail business is operated by a private limited company OÜ Skano and its subsidiaries in Latvia, Lithuania and Ukraine. Skano has totally 10 stores in Tallinn, Pärnu, Riga, Vilnius, Kaunas, Klaipeda, Kiev, Donetsk, Kharkiv and Odessa at the end of the second quarter.

 

As a result of unexpected economical situation, openings of new stores are freezed.    

Retail sales by countries

	th. EEK		th. EUR		% of net sales		Number of stores
	Q2 2009	Q2 2008	Q2 2009	Q2 2008	Q2 2009	Q2 2008	30.6.09	30.6.08
Estonia	2,878	3,248	184	208	30.6%	37.8%	2	2
Latvia	1,149	2,634	73	168	12.2%	30.6%	1	1
Lithuania	2,585	1,697	165	108	27.5%	19.7%	3	3
Ukraine	2,784	1,018	178	65	29.6%	11.8%	4	4
TOTAL	9,396	8,597	600	549	100.0%	100.0%	10	10

 

The retail sale of the Furniture Division decreased most in Latvia. The sale in Ukraine has increased due to stores opened in 2008. Within the second quarter this year the retail sale has increased by 9.3% as compared to the same period last year.

 

 

Furniture Factory

 

The Furniture Factory’s sales in the second quarter in the company’s basic target market in Russia and Finland have decreased and clients does not estimate sales recovering in near future.

 

Furniture Factory sales by countries

	th EEK		th EUR		% of net sales
	Q2 2009	Q2 2008	Q2 2009	Q2 2008	Q2 2009	Q2 2008
Finland	14,868	17,492	950	1118	56.8%	44.6%
Russia	5,296	14,825	338	947	20.2%	37.8%
Kazakhstan	1,125	578	72	37	4.3%	1.5%
Germany	382	1,085	24	69	1.5%	2.8%
Others	349	589	22	38	1.3%	1.5%
Subsidiaries	4,137	4,607	263	294	15.8%	11.8%
TOTAL	26,157	39,176	1,669	2,503	100.0%	100.0%

 

 

Building Materials Division

 

The net sales of the Building Materials Division in second quarter amounted to 19.7 mil. kroons/1.3 mil. euros and profit to 0.6 mil. kroons/41 thousand euros. In the same period of the last year, the turnover of the division totalled 35.0 mil. kroons/2.2 mil. euros and the net profit 3.5 mil. kroons/225 thousand euros. As compared to the previous year the turnover of the division has decreased by 15.3 mil. kroons/977 thousand euros and the profit has decreased by 2.9 mil. kroons/184 thousand euros.           

Net sales by geographical segments

	th. EEK		th. EUR		% of net sales
	Q2 2009	Q2 2008	Q2 2009	Q2 2008	Q2 2009	Q2 2008
Finland	9,357	16,880	598	1,079	47.4%	48.2%
Estonia	6,271	11,409	401	729	31.8%	32.6%
Russia	1,033	1,970	66	126	5.2%	5.6%
Sweden	877	2,147	56	137	4.4%	6.1%
Portugal	781	0	50	0	4.0%	0.0%
Germany	490	609	31	39	2.5%	1.7%
Latvia	479	822	31	53	2.4%	2.3%
Lithuania	179	90	11	6	0.9%	0.3%
Ukraine	4	844	0	54	0.0%	2.4%
Other countries	250	225	16	14	1.3%	0.6%
TOTAL	19,721	34,996	1,260	2,237	100.0%	100.0%

 

 

Building Boards

 

The product group that makes up the biggest proportion in general building boards are wind protection boards. Compared to last year, decrease of sales is the biggest in this segment. This is caused by decrease of the building sector in Estonia and Finland, two main markets for the product. Sale of products to companies operating outside the building sector is same as previous year.

 

 

Interior Finishing Boards

 

The biggest market of Isotex interior finishing boards in the second quarter was Finland. The smallest decrease of sales was in Finland, bigger decrease was in Estonia and Russia. In connection with the increase of production capacity potential, activities have been continued in order to find new markets.

 

 

Consolidated balance sheet

	Th EEK	Th EEK	Th EUR	Th EUR
	30.6.2009	31.12.2008	30.6.2009	31.12.2008
Cash and bank	3,014	6,913	193	442
Receivables and prepayments	25,821	19,568	1,650	1,250
Inventories	54,465	68,096	3,481	4,351
Total current assets	83,300	94,577	5,324	6,043
Investment property	2,893	2,893	185	185
Tangible fixed assets	62,680	66,333	4,006	4,239
Intangible fixed assets	17	21	1	1
Total fixed assets	65,590	69,247	4,192	4,425
TOTAL ASSETS	189,238	163,824	9,516	10,468
Debt obligations	12,799	17,722	818	1,132
Payables and prepayments	34,070	43,646	2,178	2,790
Short-term provisions	48	115	3	7
Total current liabilities	46,917	61,483	2,999	3,929
Non-current debt obligations	27,720	27,720	1,772	1,772
Non-current provisions	3,421	3,421	219	219
Total non-current liabilities	31,141	31,141	1,991	1,991
Total liabilities	78,058	92,624	4,990	5,920
Share capital at nominal value	44,991	44,991	2,875	2,875
Issue premium	5,698	5,698	364	364
Statutory capital reserve	4,499	4,499	288	288
Currency translation reserve	476	253	30	14
Retained profits	15,759	9,717	1,007	621
Net profit for the year	(591)	6,042	(38)	386
Total equity	70,832	71,200	4,526	4,548
TOTAL LIABILITIES AND EQUITY	148,890	163,824	9,516	10,468

 

           

Consolidated income statement

 

Th EEK	Q2 2009	Q2 2008 (adjusted)	6 m 2009	6 m 2008 (adjusted)
RETURN ON SALES	51,137	78,161	104,223	152,028
Cost of production sold	(39,325)	(60,437)	(82,052)	(116,621)
Gross profit	11,812	17,724	22,171	35,407
Marketing expenses	(8,937)	(11,025)	(17,816)	(20,947)
General administrative expenses	(1,517)	(1,673)	(3,032)	(3,258)
Other income	275	1,079	1,332	1,258
Other expenses	(820)	(501)	(1,576)	(936)
Operating profit	813	5,604	1,079	11,524
Financial income and financial expenses	(731)	(931)	(1,670)	(1,718)
Profit/loss before taxes	82	4,673	(591)	9,806
Prepaid income tax	0	(1,674)	0	(1,674)
PROFIT/LOSS FOR THE PERIOD	82	2,999	(591)	8,132
Currency translation differences	346	988	223	1,076
TOTAL COMPREHENSIVE INCOME	428	3,987	(368)	9,208
Basic earnings per share	0.02	0.67	(0.13)	1.81
Diluted earnings per share	0.02	0.67	(0.13)	1.81

 

Th EUR	Q2 2009	Q2 2008 (adjusted)	6 m 2009	6 m 2008 (adjusted)
RETURN ON SALES	3,268	4,995	6,661	9,716
Cost of production sold	(2,513)	(3,863)	(5,244)	(7,454)
Gross profit	755	1,132	1,417	2,262
Marketing expenses	(571)	(704)	(1,138)	(1,338)
General administrative expenses	(97)	(107)	(194)	(208)
Other income	17	69	85	80
Other expenses	(52)	(32)	(101)	(60)
Operating profit	52	358	69	736
Financial income and financial expenses	(47)	(59)	(107)	(109)
Profit/loss before taxes	5	299	(38)	627
Prepaid income tax	0	(107)	0	(107)
PROFIT/LOSS FOR THE PERIOD	5	192	(38)	520
Currency translation differences	22	63	16	68
TOTAL COMPREHENSIVE INCOME	27	255	(22)	588
Basic earnings per share	0.00	0.04	(0.01)	0.12
Diluted earnings per share	0.00	0.04	(0.01)	0.12

 

 

Einar Pähkel

CFO

+372 447 8331