Annual Report • Feb 28, 2014
Annual Report
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| Martela in brief 4 |
|---|
| Key Figures 4 |
| Managing Director's review 6 |
| Strategy and Values 9 |
| Corporate responsibility 10 |
| Business segments 12 |
| One office, many spaces 12 |
| Business Unit Finland 14 |
| Business Unit Sweden and Norway 15 |
| Business Unit International 16 |
| Business Unit Poland 17 |
| Other operations 18 |
| Personnel 18 |
| Products and Communication 19 |
| Supply Chain Management Unit 20 |
| Quality 23 |
| Corporate governance statement 24 |
| Organisation 24 |
| Annual general meeting 24 |
| Shares 24 |
| Board of Directors 26 |
| Managing Director 26 |
| Members of the Board 27 |
| Group Management Team 28 |
| Members of Group Management Team 28 |
| Financial reporting in the Group 30 |
| Auditing 30 |
| Internal control 30 |
| Risk management and internal audit 30 |
| Risk 31 |
| Management remuneration, benefits and |
| incentive plans 31 |
| Insider administration 31 |
| Contact information 32 |
| Information for shareholders 34 | |
|---|---|
| Board of Directors' report 35 | |
| Revenue by segment 40 | |
| Average staff by region 40 | |
| Consolidated Financial Statements, IFRS 41 | |
| Consolidated comprehensive income statement 41 | |
| Consolidated cash flow statement 42 | |
| Consolidated balance sheet 43 | |
| Statement of changes in equity 45 | |
| Notes to the Consolidated Financial Statements 46 | |
| Accounting principles for the consolidated | |
| financial statements 46 | |
| Basis of preparation 46 | |
| 1. Segment reporting 52 | |
| 2. Other operating income 54 | |
| 3. Employee benefits expenses 55 | |
| 4. Depreciation and impairment 56 | |
| 5. Other operating expenses 56 | |
| 6. Research and development expenses 57 | |
| 7. Financial income and expenses 57 | |
| 8. Income taxes 58 | |
| 9. Earnings per share 58 | |
| 10. Intangible assets 59 | |
| 11. Tangible assets 60 | |
| 12. Investments in associates and associated | |
| undertakings62 | |
| 13. Investment properties 62 | |
| 14. Book values of financial assets and | |
| liabilities by group 63 | |
| 15. Other financial assets 64 | |
| 16. Non-current receivables 64 | |
| 17. Deferred tax assets and liabilities65 | |
| 18. Inventories 66 | |
| 19. Current trade receivables and other receivables 66 | |
| 20. Financial assets at fair value through profit or loss . 66 | |
| 21. Cash and cash equivalents 67 | |
| 22. Derivative contracts 67 | |
| 23. Equity 67 | |
| 24. Share-based payments 68 | |
| 25. Financial liabilities 71 | |
| 26. Pension obligations 72 | |
| 27. Current liabilities 73 | |
| 28. Management of financial risks 74 | |
| 29. Operating leases 79 | |
| 30. Pledges granted and contingent liabilities 79 | |
| 31. Related party transactions 80 | |
| 32. The Group's financial indicators 82 | |
| 33. Key share-related figures 83 | |
| 34. Shares and shareholders 83 |
| Parent Company Financial Statements, FAS 86 |
|---|
| Parent Company Income Statement 86 |
| Parent Company Balance Sheet 86 |
| Parent Company's Cash Flow Statement 88 |
| Notes to Parent Company Financial Statements 89 |
| Accounting policies for parent company |
| financial statements 89 |
| 1. Breakdown of revenue by market area, |
| % of revenue 90 |
| 2. Other operating income90 |
| 3. Materials and services 90 |
| 4. Personnel expenses and number of personnel91 |
| 5. Depreciation and write-down 91 |
| 6. Financial income and expenses 92 |
| 7. Extraordinary items 92 |
| 8. Income taxes 92 |
| 9. Intangible assets 93 |
| 10. Tangible assets 94 |
| 11. Investments 95 |
| 12. Receivables 96 |
| 13. Changes in shareholders' equity 97 |
| 14. Non-current liabilities 98 |
| 15. Current liabilities 99 |
| 16. Pledges granted and contingent liabilities 100 |
| Calculation to key figures 101 |
| Board of Directors' proposal for the distribution of profit 102 |
| Auditor's report 103 |
Martela Corporation supplies ergonomic and innovative furniture and provides services to modify and maintain premises. Martela's products and services improve the functionality and comfort of working environments and other environments such as public spaces, schools and nursing homes. Martela's collection includes both classics and new innovations designed to meet changing needs in workplaces and work practices. Quick deliveries and an extensive distribution network support the efficiency of operations. Martela offers the widest
range of after-sales support and modification services in the sector.
Martela is a family company founded 68 years ago and its shares are quoted on NASDAQ OMX Helsinki Ltd. Martela is the largest company in its sector in Finland and one of the three largest in the Nordic countries. The company has production facilities in Finland, Sweden and Poland. In 2013, the Group's revenue was EUR 132.3 million, and at the end of the year it employed 767 people.
| 2013 | 2012 | ||
|---|---|---|---|
| Revenue | Meur | 132.3 | 142.7 |
| Growth in revenue | % | -7.3 | 9.2 |
| Operating profit | Meur | -2.9 | -0.9 |
| - as a percentage of revenue | % | -2.2 | -0.6 |
| Pre-tax profit | Meur | -4.4 | -1.8 |
| - as a percentage of revenue | % | -3.3 | -1.3 |
| Return on investment | -7.9 | -2.7 | |
| Balance sheet, total | Meur | 58.6 | 64.6 |
| Equity ratio | % | 37.6 | 41.4 |
| Earning/share | eur | -0.97 | -0.51 |
| Equity/share | eur | 5.38 | 6,51 |
| Dividend/share | eur | 0.00* | 0.20 |
| Capital expenditure | Meur | 3.0 | 4.0 |
| Average personnel | 770 | 806 |
* Proposal of the Board of Directors
The shift towards a new way of working continued to be strong in 2013. The nature of demand has changed, particularly in the Nordic countries, where customers expect work spaces to be much more versatile than before. The demand for services is increasing, though at the same time furniture order volumes have decreased markedly in Finland and Sweden, our main markets. We believe that our competitive ability in the new market situation is strong, however. We have invested in services and developed our business structures to better meet the present customer needs. This work continues, with the aim of enhanced efficiency and a rapid improvement in profitability.
Martela sees the technology-driven changes in working culture as an opportunity. In addition to a more efficient use of space, mobile work enables a more extensive change in ways of working. Personal offices were replaced by open-plan offices, and these are now being converted into Activity Based Offices. This trend has reduced the size and number of personal workstations. For Martela, the customer need for more efficient use of space is a key trend. Mobile work is increasing, which sets new requirements for spaces and furniture. Customers are using their premises more efficiently, and this is increasing the demand for new types of interior solutions. We have developed work environment solutions that reduce costs but also support employee wellbeing and the customer's business operations, as well as the brand. During 2013, Martela registered the Inspiring Office® by Martela concept, which offers highly customisable comprehensive solutions for constantly changing work environments.
Responsibility plays a significant role in today's changing market. Martela has an important mission to offer the best services in its field for the life-cycle management of furniture. Recycling is an essential part of our corporate responsibility, and we can help our customers adopt more responsible solutions. The Martela Outlets are part of Martela's recycling service, which allows us to care for furniture throughout its life cycle. Our new data management services have further strengthened the role of Martela Outlets in Finland. We support our customers' business operations by streamlining their management of fixed assets and related reporting. For example, well-timed maintenance and recycling of furniture produces savings for customers. Martela's data management services enable us to offer more comprehensive solutions for the life-cycle management of furniture. Martela has secured significant deals through its portfolio of services and concepts, which also focuses strongly on responsibility. A good example is the five-year cooperation agreement signed between Martela and Nordea Bank, covering comprehensive office furniture deliveries and a number of furniture life-cycle management services for Nordea Bank's facilities in Finland, Sweden, Norway and Denmark. These serve to ensure the efficiency and ecological sustainability of Nordea Bank's refurnishing programme, which spans several years.
In 2013, we worked extensively to transform Martela's structure to ensure we can meet customer needs as effectively
as possible. In the autumn, we merged our purchasing, production and logistics functions to create a new unit, Supply Chain Management (SCM). The new unit serves to harmonise processes and make the supply chain faster and more efficient. A more efficient operating model enables us to meet customers' needs more quickly and with a more competitive service than before.
Major projects also included the introduction of a new ERP system. It was implemented in Poland in 2011 and Sweden in 2012, and was adopted by our largest business unit, Finland, in the spring of 2013. This Group-wide ERP system covers the working methods and processes of all employees, and the aim is to enhance the efficiency and transparency of the supply chain. The establishment of the SCM organisation and the implementation of the new ERP system are among the most extensive changes in the history of Martela.
In the summer, we announced significant measures to improve our operations and competitiveness and reduce costs. The programme aims to achieve cost savings equivalent to an annual EUR 6 million by the end of 2014. The principal measures include production transfers among the Group's different business locations and merging of support functions as well as reorganising and improving the productivity of poorly performing businesses.
As part of our reorganisation of business operations, Martela carried out three sets of codetermination negotiations in its Finnish units in 2013 and early 2014. As a result of these negotiations, the Group's costs will decrease significantly due to personnel reductions and production transfers, which will be carried out between our units in Nummela, Riihimäki and Warsaw . The personnel reductions and production transfers made represent approximately EUR 3 .5 million of the total savings programme of EUR 6 million .
At the Stockholm Furniture Fair in February 2014, we presented new solutions and concepts for a transformed working culture . We create added value for customers by offering dynamic workstations that are more than just furniture: they provide services and include information systems . For example, a desk can be customised to individual preferences by showing an access card . When arriving at the workplace, mobile employees can check the location of free workstations from a joint reservation sys tem . They can also see who will be working next to them . Our dynamic furniture solu tions were piloted at PwC Bergen, and the feedback was very positive .
I would like to take this opportunity to thank our customers, partners, share holders and employees for an energetic and eventful 2013 .
Takkatie, February 2014 Heikki Martela, Managing Director
Better Interiors
VISION Leading Finnish Interior Brand
Inspiring Spaces
We are the responsible partner for inspiring and complete workspace solutions. We help our customers to define, plan and run their working environments as the way of working is changing. Our inspiring solutions help to improve the quality of working life, strengthen customers' brands and efficiency. We focus on direct customer and specifier relationships.
Family business Passion for Innovations User Driven Design Finnish
Martela is committed to acting responsibly in all of its operations. Corporate responsibility is a key element of the company's values, operating strategy and daily activities at all levels of the organisation. This means transparency, sustainable business activities and commitment to international agreements and guidelines, as well as caring for the company's personnel and stakeholders. At Martela respect for the environment is evident in its life cycle approach, in the user-oriented design and manufacture of products, and in the services designed to extend the life of premises and products.
Corporate responsibility is also integral to the Inspiring Spaces promise: a passion for innovation that offers customers ever more inspiring premises, helping build a better tomorrow for everyone. Such solutions, boosting productivity, efficiency and satisfaction, will facilitate responsible actions at the individual level and within the organisation.
Martela's products are designed to last in terms of both their visual appeal and practicality. In addition, Martela's working environment solutions promote employee wellbeing in customer companies, and Martela's services help customers to manage their working environment and furniture items throughout their life cycle. The company's maintenance and recycling services extend the life of furniture items, frequently allowing them to be passed from one owner to another. Martela's efficient recycling process and the network of Martela Outlet stores allow customers to recycle their furniture responsibly and cost-effectively.
Martela published its third responsibility report during the year, in compliance with the GRI (Global Reporting Initiative) guidelines. In addition to the responsibility reporting, Martela's operating models were also
audited by one of its key customers. This proved valuable for obtaining new perspectives on ways in which responsibility can be further developed.
In its responsibility reports, Martela explains openly about the distribution of economic benefits in its value chain. The largest share of the Martela Group's revenue goes to product and service suppliers in the form of payment for materials, goods and services. Most of the purchases for customer products are made from local suppliers in Finland, Sweden and Poland. The second greatest share of the economic benefits is distributed among the personnel in the form of pay and indirect employee costs. Shareholders gain economic benefits in the form of annual dividends.
Martela's success is dependent on skilled and motivated employees who enjoy their work. Its human resources (HR) policy is aimed at responsible management of these resources, which ensures that the company's personnel-related success factors are in place. Martela's responsibility report contains a set of HR indicators revealing the personnel structure and the turnover among personnel. They also present information on personnel competence and health and safety, and on Martela's remuneration systems.
During the year, an employee wellbeing model was assembled, which defines employee wellbeing at Martela and specifies the measures taken in the different units to promote this wellbeing. Social responsibility is taken into account throughout the supply chain. Suppliers and their subcontractors are required to commit to observing human rights and to comply with the relevant national labour legislation and ILO agreements.
Martela promotes environmental protection in its operations and complies with the requirements of the relevant legislation. Through continuous development the aim is to reduce adverse environmental effects and promote recycling. The company's environmental work is an integral part of everyday management, in accordance with ISO 140001. Environmental certification has been granted for Martela's companies in Finland and Sweden by an independent certification body. On the Swedish and Norwegian markets the Nordic Swan ecolabel has been obtained for key products as a symbol that they are environmentally friendly. Based on the principle of openness, Martela supplies information to customers about the materials used in its products. Carbon footprint calculations have been made for the company's main products, and these indicate the origin and nature of the emissions.
More detailed information on the indicators connected with environmental responsibility is given in Martela's responsibility report. The most important environmental impact of the products is considered to be the carbon footprint generated by the use of materials.
The most important goal is to find products and interior designs that meet customer needs ever more closely in term of longevity and suitability. This will minimise the overall use of materials. With the Outlet model, our used furniture items are being discovered by an increasing number of new users. The recycling service also allows furniture materials of different kinds to be utilised efficiently.
The nature of knowledge work has changed dramatically over a short period of time. The Inspiring Office® by Martela concept is our response to the needs of the modern Activity Based Office. Developed by Martela, this revolutionary concept allows more efficient use of space, improved wellbeing at work and more diverse opportunities for encounters between people.
The concept of ergonomics nowadays also covers the effect of the work environment on employee wellbeing. Efficient design of spaces improves the flow of information and use of time and reduces the amount of unnecessary interruptions during the working day.
Martela's new Inspiring Office® by Martela concept divides spaces into public, semi-public and private zones. We also examine the use of space from the employees' perspective by dividing employees into four groups according to the nature of work tasks, the need for privacy and individual personality. In a mobile world, people increasingly work outside the office. The office is used for encounters between people and for meetings. This change, in particular, has been taken into account in the concept. Martela offers not only an excellent range of furniture for work environment remodelling projects, but also a full selection of the services needed by the
customer over the lifecycle of its premises – and all on the one-stop shop principle. Our wide selection includes furniture and materials produced by Martela as well as top brands represented by Martela.
The Inspiring Office® by Martela concept allows customers to work more efficiently and make their brand more attractive to their customers and to potential new employees. In an inspiring office, every person will feel that the space is designed especially for their own needs.
Read more about the Activity Based Office concept at martela.fi/inspiring-office
In Finland, Martela has a network of 27 sales centres, of which 6 are Martela Outlet stores specialising in recycling. Martela holds a strong position in the market as a provider of comprehensive interior modification services and as a designer and supplier of innovative furniture, and is the largest company of its kind in Finland. The Business Unit's revenue in 2013 was EUR 92.3 million, down 5.9% from the previous year. Its operating result was EUR 1.4 million (EUR 3.9 million).
In addition to office furnishing, the Business Unit offers interior solutions for learning environments and care sector. Changes in the learning environment are reflected in Martela's product range and business. For the care sector, Martela has developed extensive comprehensive solutions and a collection designed entirely on a customerdriven basis.
Demand for responsible life-cycle management of business premises furniture has increased. Martela's data management services support customers' business by simplifying furniture stock management and the related reporting. For example, a wellplanned maintenance and recycling timetable produces savings for the customer. The service has allowed the Business Unit to offer more comprehensive solutions and to strengthen Martela Outlet's role in the unit's operations. Significant system projects and organisational changes were carried out in 2013. A new Group-wide ERP system was introduced in Finland, and investment was made in sales tools.
Martela's care sector business designed an interior concept for Validia Services, which is part of the Finnish Association of People with Physcial Disabilities. The design takes into account the special housing of the occupants. The aims of the design were safety, support for the occupants' wellbeing, and comfort. The interior concept has six different variations to cover the accommodation needs of the elderly and disabled occupants. In 2013, projects were completed in accordance with the concept at the following locations: Kalasatama in Helsinki, Hirvensalo in Turku, Kauhajoki and Seinäjoki.
| Business Unit Finland (meur) |
2013 | 2012 | Change % |
|---|---|---|---|
| Revenue | 92.3 | 98.1 | -5.9 |
| Operating profit | 1.4 | 3.9 | |
| Investments | 0.7 | 0.5 | |
| Average personnel |
473 | 485 | -2.5 |
| Business Unit Sweden and Norway (meur) |
2013 | 2012 | Change % |
|---|---|---|---|
| Revenue | 20.5 | 20.1 | 2.0 |
| Operating profit | -1.4 | -0.7 | |
| Investments | 0.0 | 0.1 | |
| Average personnel |
58 | 58 | 0.0 |
This Business Unit is the second biggest at Martela. Sales take place through a network of dealers, and Martela also has its own sales and showroom facilities in three locations: Stockholm and Bodafors in Sweden and Oslo in Norway. Logistics centre and order handling are located in Bodafors. In Norway, a marketing company located in Oslo operates as a support organisation for the Norwegian sales network. The Business Unit's revenue in 2013 was EUR 20.5 million, up 2.0% from the previous year. Its operating result was EUR -1.4 million (EUR -0.7 million).
Changes in office environments are setting new demands on acoustic management of spaces. Disruptive sounds need to be minimised without preventing fluent communications. At the Stockholm Furniture Fair, Martela presented exciting products from its Silence solution that enable privacy and peaceful working conditions in open spaces. The new furniture solutions allow premises to be used in a versatile and efficient manner.
Products that are well suited to activity based working methods were also presented at the fair. Intelligent storage units guarantee an easy storage solution for employees even if they use a different workstation every day.
One of Martela's strengths is comprehensive project deliveries. Both standard furniture and customised products can be delivered to the customer as part of a single project. The selection of customised products was broadened during the year.
Martela is committed to acting responsibly in all of its operations. Responsibility is an important part of the company's values
and operating strategy. Martela's highvolume products have already gained the Nordic Swan ecolabel for environmental friendliness. This year, Martela also obtained the Swedish Möbelfakta label for its highvolume products. The label informs customers that the product meets the requirements set by Möbelfakta regarding quality, environmental friendliness and social responsibility.
The Designers Saturday event was held in Oslo in autumn 2013. Finnish design heritage and new products for activitybased offices were exhibited at Martela's Oslo showroom. Over 1,000 guests visited the showroom during the weekend.
The Norwegian information technology company EVRY built new business premises for itself in order to achieve better interaction and communication. The new office was furnished using the Inspiring Office by Martela concept. Employees can select their workstations depending on whether they want to work alone or in a group.
Business Unit International's main market area is Russia. Other export markets include Denmark, Estonia, the Netherlands and Japan. Sales in Russia take place both directly and through a network of dealers. In other markets there are local importers. In addition, the unit is responsible for managing the Group's key international accounts.
Russian working culture is changing at a comparable rate to Western Europe. The mobile way of working has increased demand for modern interior modification solutions and services. Martela's high-quality and versatile product portfolio is designed to meet this demand. Customers have given positive feedback on the Inspiring Office® by Martela concept.
Martela's companies in Moscow and St. Petersburg continued to build up their business. The companies focused on strengthening the brand image and broadening the network of relationships. Martela held a one-day design event in co-operation with Russia's most important design establishment, the Strelka Institute for Media, Architecture and Design, and the Finnish Embassy in Moscow. The event drew 500 invited guests who were informed about the opportunities presented by activity based interior planning.
During the year, Martela focused not only on developing its own companies but also its dealer network. One of the results was that Martela delivered its first learning environment solutions to Kazakhstan.
Martela occupies a significant position on the Polish market, being market leader within its particular segment. Martela serves its customers through a nationwide sales network that includes seven sales offices in the country's largest cities. The Business Unit's headquarters are in Warsaw. Logistics centre in Warsaw is responsible not only for managing logistics but for assembly of products as well. The Business Unit's revenue in 2013 was EUR 11.7 million, down 7.6% from the previous year. Its operating result was EUR -0.6 million (EUR -1.2 million).
Despite the uncertain economic conditions in Europe, a wave of investment by western companies is in progress in Poland. New business premises are being constructed and old ones are being rebuilt in order to meet the needs of international companies. Martela's competitive advantages in Poland's large and growing furniture market lie in its extensive sales network, direct customer and architect relationships and local production. During 2013, the development of project and service sales continued, and investment was made in sales training.
Preparations were made during the year to relocate the head office and logistics centre of Poland, and this will take place in early 2014. The Inspiring Office® by Martela concept was incorporated in the head office design work. The new head office will be in central Warsaw and will also function as a showroom for customers and meeting place for architects.
The new logistics centre will result in more flexible and cost-effective production, and will increase production capacity. It will also enable production to be better allocated between the Group's three logistics centres.
| Business Unit Poland (meur) |
2013 | 2012 | Change % |
|---|---|---|---|
| Revenue | 11.7 | 12.7 | -7.6 |
| Operating profit | -0.6 | -1.2 | |
| Investments | 0.2 | 0.1 | |
| Average personnel |
80 | 81 | -1.0 |
Toruń Agency of Regional Development (TARR) is a local body responsible for business and science development, support of innovations as well as management of European projects. Its building is divided into private and public spaces such as workstations and managers rooms, conference rooms, informal meeting places, cantinas as well as IT development and data center. Martela tailored an Inspiring Office® by Martela concept based solution and furnished the entire building with own and partners' products.
In 2013, Martela employed an average of 770 people in five countries. As a Finnish family-owned company, Martela's employment culture is one in which the owner has a face and each employee is treated as an individual. The company's success is based on its competent and motivated personnel. The company's responsible approach to HR management is aimed at constantly maintaining the competence and wellbeing of its personnel.
2013 was marked by changing customer needs and a weakening of market conditions and the economic outlook. These led to measures being taken in the company to improve the efficiency of operations and reduce the cost level. Operations were reorganised, the number of employees had to be reduced and some job descriptions were modified to better reflect the needs of the changed market conditions.
In the Service Production Unit, a new collective agreement for the removals industry was adopted in February.
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Substantial organisational changes were implemented in 2013. In this difficult situation, Martela aims to support both those who have been made redundant and those who are continuing in the organisation. Supervisor skills were developed through labour legislation training and training to manage dismissal situations. Training in job seeking was arranged for those who were made redundant.
Major development projects begun in 2012 were continued in 2013. The Groupwide ERP system was adopted in Finland and now covers the working methods and processes of the Group's entire personnel. Personnel skills were supported through training, which was also provided via the Martela Learning virtual environment. In 2013, a sales training programme was launched in Finland that offers new operating models for working at the changing customer interface.
Job satisfaction is assessed regularly at Martela. An action plan that aims to make Martela the best workplace for the best employees was drawn up on the basis of the latest assessment. In 2013, Business Unit Poland launched a pilot project based on the action plan. The aim of the project is to create a tool that allows the entire personnel to participate in the development of the organisation and its operations, and thus in the improvement of job satisfaction.
Other operations
Product development, product portfolio management and marketing, which previously constituted Martela's Products and Communication Unit, were separated into discrete functions in 2013. This was carried out in conjunction with the organisational changes made in autumn 2013, with the aim of better reflecting Martela's changed business environment.
The shift in working culture towards mobile and activity based working enables new types of solutions for working environments and more efficient use of spaces. The solutions that Martela offers for today's Activity Based Offices support both employee and business needs. Dividing an office into private, semi-public and public zones is a way of bringing the entire premises into active work use. Martela has registered its Inspiring Office® by Martela concept, which offers unique solution-based packages for a constantly changing work environment. The aim of the concept is to optimise customers' premises costs, improve the efficiency of communications between functions and improve employee wellbeing.
An important product launch took place in the second quarter, when sales of the Alku desk series began. Alku is a range of dynamically designed lightweight desks, which are typically key products in modern offices.
Changing teaching methods and increased group work in schools are creating demand for new furniture solutions. The Salmiakki table, which was launched as a furniture product for learning environments, is designed for various group work situations. The round Movie Button couch, which can be placed in the middle of a learning environment, was added to the Movie product range.
Martela's collection offers a wide range of colour and material options. The collection contains durable materials designed for professional use that are well suited to public spaces and meet even the strictest safety requirements. With these constantly updated material options, a unique interior solution can be planned for every customer. A linoleum option was added to the table top alternatives for the Exceed and Canti tables in Martela's standard collection in 2013. The new print patterns on the range of Face screens also bring variety to the traditional screen materials.
Martela's own collection can be excellently complemented by representatives of other strong brands including Arper, Artek
and Offecct. Customers can be supplied with just the right products that match their needs from a range of manufacturers.
Responsibility forms an integral part of Martela's product development and portfolio management. In product development, Martela is constantly looking for opportunities to reduce its environmental
impact. It also actively measures the carbon footprint of its products. The already long lives of products are extended with Martela's recycling and re-upholstery services.
At the Stockholm Furniture Fair, Martela presented its Silence solutions, which take into account the changing requirements for performing work. Martela's Silence solutions improve ergonomics in the workplace by reducing detrimental interruptions. The new Silence products offer acoustic protection that allows employees to concentrate without interruption. The fair was a success for Martela, and the new products and solutions generated interest among visitors.
Having long worked with Martela, Grundell has become an integral part of Martela's service production chain, following our acquisition of the company. A brand reform that highlights Grundell's important role in Martela's service offering was undertaken in autumn 2013. The Grundell removals and interior planning services are now known as Grundell by Martela.
At the Open Day held in Martela House in September, Dutch interior designer Casper Schwarz gave a talk on the topical theme of Activity Based Offices. At the event, Martela also launched a large number of new products for its collection in support of this theme. These included PodMeeting, which was added to the Pod family of products.
Digital channels are playing a greater role in marketing, reflecting changes in customer behaviour. Martela's digital sales tools were improved during the year. A new website covering all Business Units and a media bank were also introduced. The benefits that have already been felt include product information being easier to find, better features and greater flexibility of the platform.
The Martela Group's purchasing, production and logistics functions were combined to form a new unit called Supply Chain Management (SCM) in 2013.
The merging of Martela's purchasing, production and logistics functions increases the speed and efficiency of the entire delivery chain and harmonises processes. Thanks to a more efficient delivery chain
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and an expanded network of subcontractors and partners, customers' needs can be met more quickly and with a more competitive service than before. New operating models are required as a result of the increase in international projects and their comprehensive deliveries, and the need for individually tailored solutions. Martela's new Supply Chain Management Unit allows the company to better meet the changing needs of customers.
The creation of the new unit gives employees in Martela's delivery chain a broader perspective on decision-making and allows their influence to extend further within the organisation. Information flow between the business units will improve as employees can share information and best practices more easily than before. The new SCM Unit will also reduce unnecessary overlaps in activities and therefore increase efficiency.
The Group's contract manufacturer Kidex Oy is part of the supply chain.
Kidex Oy is a contract manufacturer of board-based furniture components. Reliable and efficient production management and professional staff guarantee Kidex Oy's competitiveness. In 2013, the company employed an average of 65 (70) people.
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At Martela, quality is based on meeting customer requirements and expectations. Several projects were conducted in the Group to improve quality in 2013.
Development of the Group's operations is based on certified quality systems (ISO9001) and environmental systems (ISO14001). The certificates are granted by an accredited third-party assessor for three years at a time.
Martela's Finnish units switched over to using the Group-wide ERP system during the year. The key quality indicators for the delivery chain, such as delivery reliability, were integrated into the ERP system. Therefore, the new system not only supports operating efficiency but also enhances quality measurement and continuous improvement of operations.
The entire Martela Group's delivery chain was reorganised in September 2013 into a new Supply Chain Management Unit. The new unit and the ERP system together enable uniform processes within the Group, from customer service to quality control. Rather than being a separate process, quality is an integral part of the entire delivery chain operation and the Group Management Team's work. During the year, quality control in Martela's units, customer complaints management, and quality control in the delivery chain were audited internally and externally. The results serve as a basis for developing uniform operating models that support quality-related work, and for developing personnel training.
Martela Corporation is a Finnish limited liability company that is governed in its decision-making and management by Finnish legislation, especially the Limited Liability Companies Act, by other regulations concerning public listed companies, and by its Articles of Association.
The company complies with the NASDAQ OMX guidelines for insiders and the Finnish Corporate Governance Code 2010 published by the Securities Market Association. Martela comply with all Code's guidelines.
Martela Group's business area is the furnishing of offices and public premises, and the provision of related services. The Group is managed according to both its operational organisation and legal Group organisation. The Group's management is based primarily on an operational matrix organisation. Its sales operations and customer service are organised by business segment as follows:
Business Unit Finland is responsible for sales, marketing and service production in Finland. Martela has an extensive sales and service network covering the whole of Finland, with a total of 27 sales centres.
Sales in Business Unit Sweden and Norway is handled through dealers. In addition, the Business Unit has its own sales and showroom facilities at three locations: Stockholm and Bodafors in Sweden and Oslo in Norway. The Business Unit's order handling are also located in Bodafors,
Sweden. Sales office in Oslo acts as a support organisation of reseller network in Norway.
Business Unit Poland is responsible for the sales and distribution of Martela products in Poland and Eastern Central Europe. Sales in Poland are organized via the sales network maintained by the Business Unit. The company has altogether 7 sales centres in Poland. Business Unit Poland is based in Warsaw, where it has its sales and administration.
The main market areas of Business Unit International are Russia, Denmark and Estonia, and it also exports products to the Netherlands, Germany and Japan. In addition, the unit is responsible for managing the Group's key international customer relationships. In Russia sales are organised through Martela subsidiaries, and in other markets through local authorised dealers.
The Business Units share Group-level processes:
• Research & Development, Product and Communication Units are responsible for the competitiveness of the product portfolio and its visual consistency and for the development of innovative products and the Group's marketing communications.
• Supply Chain Management (SCM) is responsible for all Business Units' production, the principles and technology of production management, Group procurement, quality and the environment. Group's logistic centres are located in Finland, Sweden and Poland.
• Group HR is responsible for ensuring that Martela has the correct number of skilled, motivated and committed employees. • Financial Administration and IT is responsible for Group financial planning and reporting and Group IT solutions.
Manufacturing takes place on an order-driven basis at Martela. Management of the supply chain and product assembly have been concentrated in the company's logistics centres in Finland, Sweden and Poland which are part of the Supply Chain Management organization. The logistics centres rely on an extensive network of subcontractors when carrying out their acquisitions. The components and products needed by the centres are also produced at Group plant in Kitee. Kidex Oy is a contract manufacturer of wood-based components, and roughly 24 per cent of its production goes to customers outside the Group.
The General Meeting is the company's supreme decision-making body. The Annual General Meeting must be held within six months of the end of the financial year. The financial statements, Board of Directors' report and the auditor's report are presented at the Annual General Meeting. The Meeting decides on the approval of the financial statements, use of the profit shown on the balance sheet, discharging the members of the Board of Directors and the Managing Director from liability, the fees of the Board members and auditors and the number of members on the Board. The General Meeting also elects the Board of Directors and the auditor. Other matters on the agenda for the General Meeting are mentioned in the notice of meeting.
Martela has two share series ('K shares' and 'A shares'), with each K share entitling its holder to 20 votes at a General Meeting and each A share entitling its holder to one vote. The redeeming of K shares is referred
to in the Articles of Association. Private owners of K shares have a valid shareholder agreement that restricts the sale of these shares to other than existing holders of K shares. The company's total share capital on 31 December 2013 was EUR 7 million.
In January-December 2013, a total of 629,357 (422,271) of the company's A shares were traded on the NASDAQ OMX Helsinki exchange, corresponding to 17.8 per cent (11.9) of the total number of A shares.
The value of trading was EUR 2.6 million (2.5); the share price was EUR 5.02 at the beginning of the year and EUR 3.35 at the end of the year. During JanuaryDecember the share price was EUR 5.50 at its highest and EUR 3.30 at its lowest. At the end of December, equity per share was EUR 5.38 (6.51).
The Board of Directors, elected by the Annual General Meeting each year, is responsible for the management and proper arrangement of the operations of the company in compliance with the Limited Liability Companies Act and the Articles of Association. In accordance with the Articles of Association, the Board of Directors consists of no less than five and no more than nine members. There may be no more than two deputy members. The Board of Directors elects from among its members a Chairman and Vice Chairman to serve until the end of the next Annual General Meeting. More information on the composition of the Board and the background information concerning Board members can be found under Corporate Governance/Board of Directors. The Board has confirmed a Charter defining the duties of the Board, meeting practices, the matters to be dealt with at meetings, the targets set by the Board for its operations, a self-evaluation of these operations, and the Board's committees.
In accordance with the Charter, the matters dealt with by the Board of Directors include:
• composition of the Group Management Team
• management's bonus and incentive plans • approval and regular review of the principles and systems of corporate governance • appointment of committees and their reporting
The Board convened nine times during the financial year. The average attendance of Board members was 98 per cent.
The Board reviews its own activities annually either self-assessment or assessment made by external consultant. In both cases a summary of the evaluations is jointly discussed at a Board meeting.
The Board has evaluated the independence of its members and determined that Heikki Ala-Ilkka, Kirsi Komi, Pinja Metsäranta and Yrjö Närhinen are independent of the company. Of the company's largest shareholders, Heikki Ala-Ilkka, Kirsi Komi and Yrjö Närhinen are independent members of the Board.
The Board has formed from among its members a Compensation Committee which also has a written Charter. According to the Charter, the key duties of the Compensation Committee include:
• deciding, with authorisation from the Board, the salaries and bonuses of the Managing Director and the Group Management Team
• preparing for the Board the criteria of the incentive plans for key personnel
• processing the appointments of Managing Director and Group Management Team members, deputy arrangements and successor issues
The Board's Compensation Committee comprises Heikki Ala-Ilkka, Kirsi Komi, Pinja Metsäranta and Jaakko Palsanen.
The company has no separate audit committee. The Board of Directors sees to the audit committee duties specified in the Corporate Governance Code. The Board is of the view that its members have the necessary and sufficient information on the company's operations, and the Board monitors the company's reporting at each meeting. The Finance Director is present at meetings of the Board of Directors and functions as Board secretary. The chairman of the Board is in direct contact with the Finance Director as necessary. The Chairman of the Board is also regularly in contact with Company's auditor.
The Board appoints Martela Corporation's Managing Director and decides on the terms and conditions of his service relationship, which are defined in a written Managing Director's service contract. The Managing Director is responsible for the operational management and supervision of the parent company and the Group according to the guidelines set by the Board.
In the pictures from left to right Ala-Ilkka Heikki, Komi Kirsi, Martela Heikki, Martela Pekka, Metsäranta Pinja, Närhinen Yrjö and Palsanen Jaakko.
born in 1952, M.Sc. (Econ) Chairman of the Board of Martela Oyj since 2003, member of the Board since 2002. Chief Financial Officer of Onninen Oy 1996–2011. Other key duties: Board member of Silmäsäätiö. Owns 15 000 Martela Oyj A shares.
born in 1950, M.Sc. (Econ) Vice Chairman of the Board of Martela Oyj since 2003, Member of the Board since 1981, Chairman of the Board 2002–2003, Vice Chairman of the Board 1994–2001. Managing Director of Marfort Oy since 2002. Other key duties: Board member of Marfort Oy, Auto Innovation Oy.
Owns 8 Martela A shares and 69 274 Martela Oyj K shares.
born in 1963, LL.M. Member of the Board of Martela Oyj since 2013.
Other key duties: Board member of Finnvera, Citycon Oyj, Metsä Board Oyj, Vice Chairman of the Board of Patria Oyj, Chairman of the Board of Veripalvelu and Docrates Oy. Owns no Martela Oyj shares.
born in 1956, M. Sc. (Econ), MBA Member of the Board of Martela Oyj since 1986, Managing Director of Martela Oyj since 2002. Other key duties: Member of the Board of Marfort Oy and the Association of Finnish Furniture and Joinery Industries. Owns 121 342 Martela Oyj A shares and 52 122 Martela Oyj K shares.
born in 1975, M.A. Member of the Board of Martela Oyj since 2010. Senior coordinator, Academy of Fine Arts, University of the Arts Helsinki. Owns 2 000 Martela Oyj A shares.
born 1969, BBA Member of the Board of Martela Oyj since 2012. CEO of Suomen Terveystalo Oy since 2010. Other key duties: Board member of Lääkäripalveluyritykset ry and Peurunka Foundation, Chairman of the board of Terveyspalvelualan liitto TPL (Association of Health Service Industry).
Owns no Martela Oyj shares.
born in 1944, M.Sc. (Eng) Member of the Board of Martela Oyj since 1993. Owns 114 931 Martela Oyj A shares and 1 600 Martela Oyj K shares.
In the pictures from left to right Martela Heikki, Boman Petri, Ontronen Sirpa, Pirskanen Markku, Purhonen Ari-Matti, Rutkowsk Marcin and Savo Veli-Matti.
The Board of Directors and the Managing Director appoint the members of the Group Management Team. The Managing Director of Martela Corporation acts as the Chairman of the Group Management Team. The directors responsible for the main market areas and the Group's processes are also represented in the Group Management Team. The Group Management Team drafts and reviews strategies, budgets and investment proposals, monitors the financial situation of the Group and its business units and processes, and the attainment of operational targets and plans. The Group Management Team meets once a month.
born in 1956, M.Sc (Econ), MBA At Martela since 1993 and member of the Management team since 2002. Member of the Board of Martela Oyj since 1986, Chairman of the Board 2000–2002, Managing Director of Martela Oyj since 1 March 2002. Working experience: Martela-Morgana AB, Sweden, Managing Director 1993–1999, Oy Crawford Door Ab, Sales Director, 1987–1993. Other key duties: Member of the Board of Marfort Oy and the Association of Finnish Furniture and Joinery Industries. Owns 121 342 Martela Oyj A shares and 52 122 Martela Oyj K shares.
born in 1966, M.Sc. (Tech) Head of Supply Chain Management. Area of responsibility: Group sourcing, production, logistics and R&D.
At Martela and member of the management team since 2013. Working experience: Content Group Oy, Partner, Management consulting, 2011–2013. Kemira Oyj, Executive Vice President, Supply Chain Management, 2007–2010.
Tikkurila Oyj, Group Vice President, Supply Chain, 2005–2006. Nokia Oyj, Senior Supply Line Manager, 1997–2005. Vaisala Oyj, Mechanical Designer,
1993–1996. Owns 1 500 Martela Oyj A shares.
born in 1961, M.Sc. (Psych.) HR Director. Area of responsibility: Group HR At Martela and member of the Management team since 2002.
Working experience: Sonera Oyj, HR Manager, 2000–2002, PricewaterhouseCoopers, Management consultant 1995–2000. Owns 7 769 Martela Oyj A shares.
born 1964, M.Sc. (Econ) Chief Financial Officer (CFO). Area of responsibility: Group's Finance and IT operations. At Martela and member of the Management team since 2011. Working experience: Componenta Oyj, Financial Manager, Financial Director, 1989–1998, CFO at F-Secure Oyj 1998–2003, Finlayson & Co Oy 2003–2009 and Comptel Oyj 2009–2011. Owns 7 000 Martela Oyj A shares.
born in 1971, M.Sc. (Tech) Director, Business Unit Finland. Area of responsibility: Sales and Service production in Finland and Group Portfolio. At Martela and member of the management team since 2013.
Working experience: Hewlett-Packard, General Manager, Finland and Baltics, Scandic, 2010–2013. Canon Oy, Director, Strategy, marketing and product management, Finland and Baltics, 2008–2010. IBX Oy, Managing Director 2004–2008.
TDC, Management positions in business unit, sales and product management, 1999–2004. Owns no Martela shares.
born in 1969, M.Sc. (Management) Director, Business Unit Poland. Area of resposibility: Sales, production and logistics in Poland and its neighbouring areas. At Martela and member of the Management team since 2013. Working experience: International Paper, Kimberly-Clark S.A., Cussons (Paterson Zochonis plc), IPF (Provident S.A.) during 1993–2012, sales, marketing and
business development positions both in business area and group responsibilities. Owns no Martela Oyj shares.
born in 1964, B.Sc (Eng.) Director, Business Unit International. Area of responsibility: Operations in Russia and export to other European countries and Japan as well as responsibility and marketing. At Martela and member of the
Management team since 2002. Working experience: Paroc Oy Ab, different managerial positions in international trade in Europe and Asia, 1988–1997 and 1999–2002. Owns 7 569 Martela Oyj A shares.
born in 1963, M.A. (Design Leadership) Design Director, Products & Communication. Area of responsibility: Group Product Portfolio, Marketing, R&D, Design, Corporate Responsibility and Martela Brand. At Martela and member of the Management team since 2007. Working experience: Nokia Design, Design Manager 1993–1998, Senior Design Manager 1998–2007. Owns no Martela Oyj shares. *at Martela until 24.9.2013
born in 1965, B. SC. (Eng.) Director, Business Unit Sweden and Norway. Area of responsibility: Sales, production and logistics in Sweden and Norway. At Martela and member of the Management team since 2007. Working experience: IBS Sverige AB, Business Unit Director, Sales and Marketing Director, 2005–2007. Owns 5 022 Martela Oyj A shares. *at Martela until 10.1.2014
Martela Corporation's Board of Directors is provided with monthly reports on the financial performance and forecasts of the Group and its business units. The reports and forecasts are also presented by the Managing Director at Board meetings, where they are reviewed. For the purposes of reviewing the interim reports and annual financial statements, the Board of Directors receives the financial statement information and analyses in advance.
The Group Management Team meets once a month to evaluate the financial performance, outlook and risks of the Group and its business units.
The auditing of Group companies is carried out in accordance with the valid laws in each country and each company's articles of association. The principally responsible auditor of the parent company co-ordinates the auditing of the Group's subsidiaries together with the Group's Managing Director and Finance Director. The auditors of Martela Corporation and the Group are the authorised public accountants KPMG, with Ari Eskelinen, Authorised Public Accountant, as the principally responsible auditor. All the auditors of the Group's companies are in the KPMG chain. In 2013, a total of EUR 137,000 (117,000) was paid in fees for the Group's auditing, while EUR 9,000 (151,000) was paid for other services.
The reliability of financial reporting is one of the principal objectives of Martela Corporation's internal control.
The Managing Director is responsible for the operational management and supervision of the Group according to the guidelines set by the Board. The Managing Director heads the Group Management Team, the members of which comprise the directors responsible for the business units and processes. The Group Management Team drafts and reviews strategies, annual operating plans and investment proposals, monitors the financial situation of the Group and its business units and processes, and the attainment of operational targets and plans. The Group Management Team meets once a month.
Martela's strategy is updated and its targets defined on an annual basis. Strategic planning forms the basis of all planning at Martela and is carried out on a rolling basis for the forthcoming period of 2–3 years. Target setting is an internal control prerequisite because the targets of the companies, business units, functions and supervisors are derived from Group-level targets. For each business area, specific financial and non-financial targets are set in accordance with the business plan, and their attainment is monitored regularly through comprehensive reporting to executive management, for example.
The Finance Director has overall responsibility for financial reporting in the Group. Reporting to executive management is carried out separately and independently of business operations. For the purpose of monitoring and controlling business operations, the Group has appropriate and reliable enterprise resource planning (ERP) systems and other information systems based on these, as well as the systems of the subsidiaries. Controllers and financial managers (controller function) are responsible for financial reporting at the Group, company and business unit levels. At Martela, financial reporting is carried out in compliance with guidelines, laws and regulations in a consistent manner throughout the Group. The reliability of financial reporting depends on the appropriateness and reliability of financial and reporting processes and on the control measures taken to ensure these. In 2013, a key area of focus in internal control has still been the implementation of the Group's ERP system as well as in production processes and in inventory management.
The Finance Director is responsible for the maintenance and development of reporting processes and defining and implementing control measures. Control measures include guidelines, matching, management reviews and reporting on deviations. The Finance Director monitors compliance with defined processes and controls. He also monitors the reliability of financial reporting.
The Board of Directors approves Martela's strategy and annual operating plans. It also approves the principles and rules of risk management and risk limits, and monitors on a regular basis the effectiveness and sufficiency of internal control and risk management. Furthermore, the Board is responsible for the internal control of the financial reporting process.
Auditors and other external controllers assess the control measures in terms of the reliability of financial reporting.
Martela's Board of Directors has confirmed the principles of risk management. The purpose of risk management is to identify, monitor and manage risks that could pose a threat to business and to the achievement of business objectives. Group management has supreme operational responsibility for risk management policy.
In the Group, risks are analysed and decisions are made to manage these risks as a part of the regular monitoring carried out by the Board and the management teams as described above. Risks are also evaluated when planning and making decisions on significant projects and investments. Risk management is integrated with the strategy process as a separate stage of analysis. There is no separate risk management organisation, but the associated responsibilities are assigned in line with the rest of the business operations and organisation. The company's Board of Directors has included an annual review of risk management in its schedule of work.
The forming of a separate internal audit function has not been deemed appropriate. The fact that the company does not have an internal audit function has been taken into account in the audit plans of the company's auditors.
It is estimated that the greatest risks to the improvement of profit performance relate to the continuation of general economic development and the consequent overall demand for office furniture. In accordance with Martela's risk management model, risks are classified and reduced in different ways. The manufacture of Martela's products is largely based on the company performing the final assembly and using subcontractors for components. Production control is based on orders placed by customers, which means that there is no need for any large-scale warehousing. Risks of damage are covered by appropriate insurance policies, and these provide comprehensive coverage for property, business interruption, supplier interruption loss and loss liability risks. Martela uses the services of an external insurance broker to manage insurance matters. The services of an external partner are also used in legal matters.
Financial risks are discussed in the notes to the financial statements.
The fees paid to the Chairman and to the members of the Board in 2013 totalled EUR 35,000 and EUR 86,000, respectively. However, no fees are paid to Board members employed by the company.
The total salaries and other benefits paid to Martela Corporation's Managing Director in 2013 were EUR 332,000 (299,000). In addition, the Managing Director received EUR 0 (42,000) as bonuses and share-based incentives. The Managing Director is entitled to retire on a full pension
at the age of 60. The period of notice of termination of contract is six months for both the Managing Director and the company. If the company gives notice of termination of contract, the Managing Director is entitled to one-off compensation equivalent to 18 months' salary.
Bonus and incentive plans based on annual or shorter term performance are in place in the Group to promote the achievement of short-term objectives. The amount of the incentive is influenced mainly by performance indicators.
The remuneration of the Managing Director and the Group Management Team consists of a fixed basic salary, annual performance pay and a long-term sharebased incentive plan. The Board of Directors decides the annual performance pay of the Managing Director and other key personnel of the Group as well as the terms and conditions of the long-term share-based incentive plan on the basis of a proposal by the Compensation Committee. The amount of performance pay for the Managing Director and the Group Management Team members is based not only on personal results but also on the financial performance of the entire Group and the unit. The annual performance pay of the Managing Director and the Group Management Team may be no more than 30-45 per cent of their annual taxable earnings excluding performance pay. The principal of one-over-one approval is observed within the Group, which means that all pay-related terms and conditions require approval from the supervisor or manager who appointed the person in question.
The Managing Director and Group management participate in a long-term share-based incentive plan. The plan offers Martela Corporation A shares when the targets set for the specified earnings period are attained. The Earning period is the calendar year 2013. Any incentives paid on the basis of the above scheme will be paid as a combination of shares and cash at the end
of each earnings period. The maximum bonus for the entire scheme is 39,000 Martela Corporation A shares and an amount of cash that will cover taxes and similar charges, estimated at approximately the value of the shares to be paid. The extent to which the targets set for an earnings period are attained will determine how great a proportion of the maximum bonus will be paid to a key person. In 2013 the targets there not fulfilled and therefor no shares were distributed. See the notes to the financial statements for information on the share-based incentive plan's effect on the result for the year.
No other compensation is paid on the basis of membership of the Management Team or a subsidiary.
Martela observes the Guidelines for Insiders issued by NASDAQ OMX. In addition, the Board has adopted Group insider rules, which in some cases establish stricter requirements on processing insider information than the Guidelines for Insiders. For instance, the duration of the so-called closed window is 21 days at Martela, which is longer than the NASDAQ OMX minimum.
The following are considered as insiders subject to disclosure requirements: the members of the Board of Directors of the parent company, the Managing Director, the auditor, and the members of the Group Management Team. Company-specific permanent insiders are defined as people working in the Group in supervisory or expert duties, the execution of which requires regular access to information regarding the financial situation and outlook of the Group and its business units. Project-specific insider registers can be drawn up if necessary.
Martela Corporation has joined the SIRE system maintained by Euroclear Finland Ltd, and up-to-date information on the holdings of the insiders subject to the disclosure requirement is available on the Martela website.
Martela Oyj Head office Takkatie 1 P.O.BOX 44 FI-00371 Helsinki tel. +358 (0)10 345 50 fax. +358 (0)10 345 5744 www.martela.fi
Savikontie 25 FI-82500 Kitee tel. +358 (0)10 345 7211 fax. +358 (0)10 345 7244 www.kidex.fi
Martela Ab Brogatan 1 Box 7 SE-57161 Bodafors tel. +46 380 37 19 00 fax +46 380 37 08 32 www.martela.se
Martela As Drammensveien 130 N-0277 Oslo tel. +47 23 28 38 50 fax +47 23 28 38 51 www.martela.no
Martela Sp. z o.o. ul. Redutowa 25 PL-01-106 Warsaw tel. +48 801 080 045 fax. +48 22/ 836 76 23 www.martela.pl
LLC Martela SP V.O., Malyj pr., 22, lit A 199004, St. Petersburg tel. +7 812 600 05 18 www.martela.ru
Botanicheskiy pereulok 5, 129090 Moscow tel. +7 495 775 48 46 www.martela.ru
www.martela.com
The Annual General Meeting of Martela Oyj will be held on Thursday, 13 March 2014, starting at 3 p.m. at Takkatie 1, 00370 Helsinki. The names of shareholders wishing to attend the meeting should be entered in the shareholder register at the Finnish Central Securities Depository Ltd no later than 3 March 2014, and the shareholders should register with Johanna Suhonen at the Company's head office, tel. +358 (0)10 345 5301, by email [email protected], or by post to Martela Oyj, PL 44, FI-00371 Helsinki, no later than 4 p.m. on 10 March 2014.
The Board of Directors proposes to the general meeting that no dividend be paid from the financial year 1 January 2013 – 31 December 2013.
Martela will publish three interim reports in 2014: January–March (Q1) on Tuesday 29 April 2014 January–June (Q2) on Wednesday 6 August 2014 January–September (Q3) on Tuesday 28 October 2014
Martela's Interim Reports are available in Finnish and English on the Group's websites (www.martela.fi and www.martela.com). Martela's Annual report is available in company's website during week 9.
Stock exchange releases will be published on the Martela Group's website immediately following publication. All stock exchange releases published during a financial year are available on the website in chronological order.
Consolidated revenue for the 2013 financial year was EUR 132.3 million (2012: 142.7 million), a year-on-year decrease of 7.3 per cent. The operating result for the year was EUR -2.9 million (-0.9) and the earnings per share EUR -0.97 (-0.51). The cash flow from operating activities in 2013 was EUR -0.1 million (0.0). The equity ratio was 37.6 per cent (41.4) and the gearing ratio was 51.2 per cent (32.8). The return on investment for the year was -7.9 per cent (-2.7).
The demand for office furniture in Finland continued to be weak in the second half of the year. Demand in Finland is currently focused largely on office alteration and enhancement projects of different kinds instead of new offices. In Sweden, too, the market weakened towards the end of the year. By contrast, the Polish market remained at a normal level.
Statistics on office construction are available for the first three quarters of 2013, and they indicate that 61 per cent fewer office buildings were completed in Finland in terms of square metres in the first nine months than in the same period a year earlier. In the same period, however, 49 per cent fewer office building permits were granted, and there were about 66 per cent fewer new office building starts than the previous year. Office construction activity continued to be at a low level, but it is significant that the number of building permits granted in the third quarter was 35 per cent more than in the same quarter a year earlier. But as this concerns such a short period it is not yet possible to draw any far reaching conclusions from it.
There were no other changes in Group structure during the financial year.
The business segments are based on the Group's operating structure and internal financial reporting.
Sales between segments are reported as part of the segments' revenue. The segment results presented are their operating results, because tax items and financial items are not allocated by segment. The Group's assets and liabilities are not allocated or monitored by segment in the internal financial reporting. The revenue and operating result are in accordance with the consolidated financial statements.
Business Unit Finland is responsible for sales and marketing and for service production in Finland. Martela has an extensive sales and service network covering the whole of Finland, with a total of 27 sales centres.
Business Unit Sweden & Norway's sales are handled through dealers. In addition, the Business Unit has its own sales and showroom facilities at three
locations: Stockholm and Bodafors in Sweden and Oslo in Norway. The Business Unit's administration and order handling are also located in Bodafors. The sales company in Oslo acts as a supporting organisation for Norway's dealer network.
Business Unit Poland is responsible for the sales and distribution of Martela products in Poland and eastern Central Europe. Sales in Poland are organised via the sales network maintained by the Business Unit. There are seven sales centres in Poland. The Business Unit's main location is in Warsaw, where its sales and administration is located.
'Other segments' includes the business activities of Kidex Oy and Business Unit International. Business Unit International's main market areas are Russia, Denmark and Estonia. Exports are also made to the Netherlands, Germany and Japan. In addition, the unit is responsible for managing the Group's key international accounts. In Russia, sales are organised by the unit's own subsidiaries, and in other markets through local authorised importers.
Production and purchasing for the Business Units is carried out by the Group's Supply Chain Management unit, which has logistics centres in Finland and Sweden, and Poland.
Consolidated revenue for the full year 2013 was EUR 132.3 million (142.7), a decrease of 7.3 per cent on the previous year. The difficult market conditions in Finland were reflected in the unit's revenue. Revenue decreased in Finland and also in Poland, both cumulatively and in the final quarter of the year. By contrast, full year revenue in Sweden was at the previous year's level, although revenue in the fourth quarter showed a year-on-year decrease. In other markets, the transfer of the Danish business at the end of 2012 from the Martela subsidiary to a dealer slightly reduced (2.2%) consolidated revenue for the review period. Revenue in Russia grew once again, but is still relatively low compared with the Group's overall revenue.
Business Unit Finland's revenue was down by 5.9 per cent. Business Unit Sweden & Norway's revenue was down by 1.2 per cent, and Business Unit Poland's by 6.8 per cent, calculated in local currencies. Movements in exchange rates did not have a significant impact on the Group's revenue.
The cumulative full year operating result was EUR -2.9 million (-0.9), which was -2.2 per cent (-0.6) of revenue. The consolidated
Equity Gearing %
operating result was boosted by EUR 0.9 million from the sale of a residential property in Nummela.
Despite a reduction in the Group's costs, the full year operating result was down from the previous year due to a clear drop in revenue.
The Group's fixed costs gradually fell during the year as a result of the measures already taken. In the third quarter, the Group began to plan further measures to reduce its costs, targeting an annual cost saving of about EUR 6 million. The savings programme will be implemented by the end of 2014, after which the full impact of the savings will be felt. It is estimated that due to the timing of the measures the cost reduction impact of the savings programme in 2014 will be equivalent to about one third of the total savings target. The measures being put in place allow the Group to adjust its cost structure to correspond to the changed operating environment.
As part of the savings programme, the company began codetermination negotiations in Finland in August, and these were completed at the start of October. The outcome of the negotiations was that the Group's cost level will be reduced by costs equivalent to 35 employees by the end of 2014.
In January 2014, the Group began codetermination negotiations aimed at
Dividend/share (*Boards proposal) Osinko/osake (*hallituksen ehdotus)
improving production efficiency. This improvement will be sought by production transfers between the Group's units located in Nummela and Riihimäki in Finland, and in Warsaw, Poland. It is estimated that the measures implemented and under way will account for approximately EUR 3.5 million annually of the total savings programme. Preparation of further measures to achieve the targeted savings is continuing.
As previously stated, the Group will nevertheless be investing resources at the same time in improving its ability to offer even better comprehensive solutions and services, especially to meet the growing customer need for Activity-Based Office solutions. The Group's aim is to strengthen its pioneering position as a supplier of comprehensive solutions and as the leading service provider for offices and other working environments.
The result before taxes was EUR -4.4 million (-1.8), and the result after taxes was EUR -3.9 million (-2.0). The result for the review period was adversely affected by the EUR 0.6 million recognised in financial expenses as a provision for the realisation of the loan guarantee given to Martela's associated company P.O. Korhonen Oy.
The Group's financial position weakened but remains stable. Cash flow from operating activities in January–December was only slightly negative, at EUR -0.1 million (0.0), despite posting a loss. The Group is continuing to focus attention on more efficient use of its working capital.
Interest-bearing liabilities at the end of the year were EUR 16.0 million (16.2) and net interest-bearing liabilities were EUR 11.2 million (8.7). The gearing ratio at the end of the year was 51.2 per cent (32.8), and the equity ratio was 37.6 per cent (41.4). Net financial expenses were EUR -1.2 million (-0.6). Financial expenses included a provision of EUR 0.6 million for the realisation of the loan guarantee given to Martela's associated company
P.O. Korhonen Oy. The current financing arrangements do not include any covenant obligations.
The balance sheet total at the end of the year was EUR 58.6 million (64.6).
The Group's gross capital expenditure in 2013 totalled EUR 3.0 million (4.0). Martela's most important capital expenditure project during the year was the new enterprise resource planning (ERP) system, which was introduced in Finland in spring 2013. Capital expenditure otherwise consisted of normal everyday maintenance and replacement expenditure.
The Group employed an average of 770 (806) persons, which is a year-on-year decrease of 4.5 per cent. Salaries and fees in 2013 totalled EUR 30.1 million (31.0). Expenses arising from employee benefits are presented in more detail under note 3 of the notes to the financial statements.
The Group continued its vigorous development of new products during the year. The 'New Way of Working' (NWOW) trend intensified as the year wore on. This is all about a fundamental change of working from traditional office work to a more mobile mode. Work is no longer dependent on time and place in the way it used to be. This major change in the way we work is also reflected in the Martela collection: furniture must facilitate the work and inspire the employee in this new approach and in new locations. Modes of working are constantly changing and the industry is affected by new trends all the time, resulting in a rapid pace of change. Martela has responded to the changing customer need with new products and space concepts. Martela
registered its principal marketing theme in July 2013: the Inspiring Office® by Martela concept. This concept was also the main theme at the Open Day held in Martela House in the autumn. At the event, Martela launched a large number of new products for its collection in support of the theme. These included the PodMeeting assembly area, which was added to the Pod family of products.
Martela is also a leading furnisher of learning environments in Finland. For these environments Martela offers its Inspiring School concept. As a new addition to its furniture for learning environments, Martela launched the Salmiakki table for adaptable teaching spaces. The design of the table allows for inspired classroom furniture solutions. The round Movie Button sofa, specially aimed at Martela's school collection, was also launched during the year as an addition to the Movie product family. The Movie Button brings new opportunities for furnishing learning environments because it can be placed in the middle of a space.
Another important product launch took place when sales of the Alku desk series began. Alku is a range of dynamically designed lightweight desks, which are typically key products in modern offices. The Alku desks are available in many different versions, and the product family also includes the increasingly popular 'workbench' arrangement. The impact of materials choices in a changing work environment is also generating an increasing amount of interest. As a consequence, a linoleum option was added to the table top alternatives for the Exceed and Canti tables in Martela's standard collection. The print patterns on the range of Face screens also bring variety to the traditional screen materials.
Corporate responsibility is an integral part of Martela's values, operating principles and business strategy. Martela's products are
designed to last in terms of both their visual appeal and practicality. Martela's services help customers manage their working environment and furniture over the full life cycle. The company's maintenance and recycling services extend the life of furniture items, frequently allowing them to be passed from one owner to another. Martela's efficient recycling process and the network of Martela Outlet stores allow customers to recycle their furniture responsibly and cost-effectively.
In 2013, Martela's personnel were given training on implementing the Group's responsible business principles. This Martela Corporate Code of Conduct incorporates concrete guidelines and requirements for Martela's employees and for the company's partners. This training is given every year.
Martela's third corporate responsibility report based on the GRI protocol was completed in May. Responsibility has already become a well established part of management, operating plans and actions at Martela. In the early part of the year, Martela also launched the Citizen Day project. Martela employees can get involved by working, on the company's time, at care homes, for example.
Martela applies the ISO 9001:2000 standard in its operations and the ISO 14001:2004 standard in its environmental management.
Martela has two share series, A and K, with each K share entitling its holder to 20 votes at a General Meeting and each A share entitling its holder to one vote. Private holders of K shares have a shareholder agreement that restricts the sale of K shares to any party outside the existing holders of K shares. The total number of K shares is 604,800 and A shares 3,550,800.
During the financial year, 629,357 (422,271) of the company's A shares, or 17.7 per cent (11.9) of all A shares, were traded on NASDAQ OMX Helsinki.
The value of trading turnover was EUR 2.6 million (2.5), and the share price was EUR 5.02 at the beginning of the year and EUR 3.35 at the end of the year. During the year, the share price was EUR 5.50 at its highest and EUR 3.30 at its lowest. At the end of December, equity per share was EUR 5.38 (6.51).
Martela did not purchase any of its own shares in 2013. On 31 December 2013, Martela owned a total of 67,700 Martela A shares, purchased at an average price of EUR 10.65. Martela's holding of treasury shares amounts to 1.6 per cent of all shares and 0.4 per cent of all votes.
Share acquisition for the share-based incentive scheme and management of the scheme have been outsourced to an external service provider. These shares have been entered under equity in the consolidated financial statements for 2013. A total of 38,647 shares under the incentive scheme were still undistributed on 31 December 2013.
Martela Corporation's Annual General Meeting was held on 14 March 2013. The AGM approved the financial statements for 2012 and discharged the members of the Board of Directors and the Managing Director from liability. The AGM decided, in accordance with the Board of Directors' proposal, to distribute a dividend of EUR 0.20 per share totalling 817,580.00 EUR. The dividend was paid on 26 March 2013.
The number of members on the Board of Directors was confirmed as seven. Heikki Ala-Ilkka, Heikki Martela, Pekka Martela, Pinja Metsäranta, Yrjö Närhinen and Jaakko Palsanen were re-elected to the Board, and Kirsi Komi was elected as a new member. KPMG Oy Ab, Authorised Public Accountants, was appointed again as the company's auditor.
The AGM also approved the Board of Directors' proposals, detailed in the meeting notice, to authorise the Board to acquire and/or dispose of Martela shares.
The new Board of Directors convened after the Annual General Meeting and elected from its members Heikki Ala-Ilkka as Chairman and Pekka Martela as Vice Chairman.
Martela Corporation is a Finnish limited liability company whose decision-making and administration are governed by Finnish legislation, especially the Limited Liability Companies Act, and by other regulations concerning public listed companies and the Martela Corporation Articles of Association.
The company complies with the NASDAQ OMX Guidelines for Insiders and the Corporate Governance Code 2010 for Finnish listed companies published by the Securities Market Association.
The company has published a report on its corporate governance in accordance with the Corporate Governance Code.
Further information on Martela's corporate governance can be viewed on the company's website and in its annual report.
It is estimated that the greatest risks concerning profit performance are related to general economic growth trends and the consequent overall demand for office furniture. In accordance with Martela's risk management model, the risks are classified and are guarded against in different ways. At Martela's production plants, product assembly is automated and based on component subcontracting, with the assembly carried out by Martela. Production control is based on orders placed by customers, which means that there is no need for any extensive warehousing. Risks of damage are covered with appropriate insurance and this provides comprehensive
coverage for property, business interruption, supplier interruption loss and loss liability risks. Martela uses the services of an external insurance broker to manage insurance matters. The services of an external partner are also used in legal matters.
Finance risks are discussed in note 28 of the notes to the financial statements.
The greatest profit performance risk is related to the general economic uncertainty and the consequent effects on the overall demand for office furniture.
The risks are explained in more detail in the corporate governance section of the company's annual report.
On 9 January 2014, the Group began codetermination negotiations concerning Martela Corporation's employees at its Nummela and Riihimäki locations.
On 3 February 2014 Martela announced that P.O. Korhonen Oy, a joint enterprise of Martela Corporation and Artek Oy Ab, is to cease operating, due to the unprofitability of its operations. In spite of various development and efficiency improvement measures, the company's core business has remained unprofitable, and no change is expected in this in the longer term. P.O. Korhonen Oy's Board of Directors decided on 3 February 2014 to apply for bankruptcy. The company's principal creditors are its owners, Martela Corporation and Artek Oy Ab. At a future date, Martela will acquire some of the products manufactured by P.O. Korhonen Oy from outside subcontractors. The revenue of P.O. Korhonen Oy was in 2013 approximately EUR 3 million.
No other significant reportable events have taken place since the financial year, and operations have continued according to plan.
The Martela Group anticipates that its revenue in 2014 will be at the 2013 level, and that its operating result will show a year-on-year improvement. Due to normal seasonal variation, the Group's operating result is weighted towards the second half of the year.
The Board of Directors will propose to the AGM that no dividend be distributed for 2013.
Martela Corporation's AGM will be held on 13 March 2014 at 3 p.m. in Martela House, Helsinki. The notice of Annual General Meeting will be published in a separate stock exchange release.
| (meur) | Business Unit Finland |
Business Unit Sweden and Norway |
Business Unit Poland |
Other segments |
Total |
|---|---|---|---|---|---|
| 1.1.2013–31.12.2013 | |||||
| External Revenue | 92.3 | 20.5 | 11.7 | 7.8 | 132.3 |
| Internal Revenue | 0 | 1.7 | 0.1 | 10.1 | 11.8 |
| Total 2013 | 92.3 | 22.2 | 11.8 | 17.9 | |
| 1.1.2012–31.12.2012 | |||||
| External Revenue | 98.1 | 20.1 | 12.7 | 11.9 | 142.7 |
| Internal Revenue | 0.0 | 2.2 | 0.0 | 13.2 | 15.4 |
| Total 2012 | 98.1 | 22.3 | 12.7 | 25.1 | |
| External Revenue change % | -5.9% | 2.0% | -7.6% | -34.4% | -7.3% |
| 2013 | 2012 | |
|---|---|---|
| Finland | 620 | 637 |
| Scandinavia | 58 | 76 |
| Poland | 80 | 81 |
| Russia | 12 | 12 |
| Group total | 770 | 806 |
| (EUR 1,000) |
Note | 1.1.–31.12.2013 | 1.1.–31.12.2012 |
|---|---|---|---|
| Revenue | 1 | 132 293 | 142 686 |
| Other operating income | 2 | 1 352 | 409 |
| Changes in inventories of finished goods and work in progress | -325 | -193 | |
| Materials and services | -70 773 | -73 859 | |
| Production for own use | 54 | 278 | |
| Employee benefits expenses | 3 | -38 160 | -38 617 |
| Depreciation and impairment | 4 | -3 550 | -3 421 |
| Other operating expenses | 5 | -23 780 | -28 195 |
| Operating profit (-loss) | -2 889 | -912 | |
| Financial income | 7 | 38 | 73 |
| Financial expenses | 7 | -1 233 | -706 |
| Share of result in associated undertakings | 12 | -305 | -300 |
| Profit (-loss) before taxes | -4 389 | -1 845 | |
| Income taxes | 8 | 455 | -203 |
| Profit (-loss) for the financial year | -3 934 | -2 048 | |
| Other comprehensive income | |||
| Items that will not later be recognised through profit or loss | |||
| Items resulting from remeasurement of the net debt related to defined benefit plans | 337 | -126 | |
| Taxes from items that will not later be recognised through profit or loss | -81 | 31 | |
| Items that may later be recognised through profit or loss | |||
| Translation differences | -80 | 230 | |
| Total comprehensive income | -3 758 | -1 913 | |
| Allocation of profit (loss) for the financial year: | |||
| Equity holders of the parent | -3 934 | -2 048 | |
| Allocation of total comprehensive income: | |||
| Equity holders of the parent | -3 758 | -1 913 | |
| Earnings per share for the profit attributable to the equity holders of the parent | |||
| Basic earnings/share, EUR | 9 | -0.97 | -0.51 |
| Diluted earnings/share, EUR | 9 | -0.97 | -0.51 |
| (EUR 1,000) |
1.1.–31.12.2013 | 1.1.–31.12.2012 |
|---|---|---|
| Cash flows from operating activities | ||
| Cash flow from sales | 132 033 | 143 990 |
| Cash flow from other operating income | 353 | 394 |
| Payments on operating costs | -131 746 | -143 434 |
| Net cash from operating activities before financial items and taxes | 640 | 950 |
| Interest paid | -475 | -514 |
| Interest received | 24 | 33 |
| Other financial items | -196 | -126 |
| Dividends received | 1 | 1 |
| Taxes paid | -130 | -346 |
| Net cash from operating activities (A) | -136 | -2 |
| Cash flows from investing activities | ||
| Capital expenditure on tangible and intangible assets | -2 711 | -3 504 |
| Proceeds from sale of tangible and intangible assets | 38 | 15 |
| Capital expenditure on other investments | 0 | -200 |
| Proceeds from sale of other investments | 960 | 0 |
| Capital expenditure on subsidiaries | 0 | -2 975 |
| Net cash used in investing activities (B) | -1 713 | -6 664 |
| Cash flows from financing activities | ||
| Proceeds from short-term loans | 18 500 | 10 876 |
| Repayments of short-term loans | -18 246 | -7 762 |
| Proceeds from long-term loans | 1 283 | 4 000 |
| Repayments of long-term loans | -1 502 | -3 103 |
| Dividends paid and other profit distribution | -810 | -1 822 |
| Net cash used in financing activities (C) | -775 | 2 189 |
| Change in cash and cash equivalents | -2 624 | -4 477 |
| Cash and cash equivalents at beginning of year 1) | 7 589 | 11 947 |
| Translation differences | -107 | 120 |
| Cash and cash equivalents at end of year 1) | 4 858 | 7 589 |
| (EUR 1,000) |
Note | 31.12.2013 | 31.12.2012 |
|---|---|---|---|
| ASSETS | |||
| Non-current assets | |||
| Intangible assets | 10 | 6 403 | 6 031 |
| Tangible assets | 11 | 11 767 | 12 881 |
| Investments in associates and associated undertakings | 12 | 0 | 42 |
| Available-for-sale financial assets | 14, 15 | 55 | 55 |
| Investment properties | 13 | 600 | 600 |
| Receivables | 14, 16 | 0 | 10 |
| Pension receivables | 26 | 0 | 55 |
| Deferred tax assets | 17 | 373 | 393 |
| Non-current assets, total | 19 198 | 20 067 | |
| Current assets | |||
| Inventories | 18 | 10 913 | 12 885 |
| Trade receivables | 14, 19 | 22 332 | 22 586 |
| Loan receivables | 14, 19 | 87 | 124 |
| Accrued income and prepaid expenses | 14, 19 | 1 227 | 1 298 |
| Financial assets at fair value through profit and loss | 14, 20 | 0 | 0 |
| Cash and cash equivalents | 21 | 4 857 | 7 589 |
| Current assets, total | 39 416 | 44 483 | |
| Assets, total | 58 614 | 64 550 | |
| EQUITY AND LIABILITIES |
|||
| Equity attributable to equity holders of the parent | 23 | ||
| Share capital | 7 000 | 7 000 | |
| Share premium account | 1 116 | 1 116 | |
| Other reserves | -9 | -9 | |
| Treasury shares* | -1 050 | -1 050 | |
| Translation differences | -86 | -6 | |
| Retained earnings | 14 831 | 19 319 | |
| Equity, total | 21 802 | 26 370 | |
| Non-current liabilities | |||
| Deferred tax liabilities | 17 | 846 | 1 269 |
| Other non-current liabilities | 0 | 151 | |
| Pension obligations | 26 | 637 | 904 |
| Financial liabilities | 14, 25 | 8 645 | 9 331 |
| Non-current liabilities, total | 10 128 | 11 655 |
| Current liabilities | Note | 31.12.2013 | 31.12.2012 |
|---|---|---|---|
| Interest-bearing | |||
| Financial liabilities | 14, 25 | 6 731 | 6 010 |
| Interest-bearing current liabilities, total | 6 731 | 6 010 | |
| Non-interest-bearing | |||
| Advances received | 14, 27 | 627 | 777 |
| Trade payables | 14, 27 | 7 346 | 8 268 |
| Accrued liabilities and prepaid income | 14, 27 | 6 423 | 6 655 |
| Other current liabilities | 14, 27 | 4 990 | 4 815 |
| Provisions | 566 | 0 | |
| Non-interest-bearing current liabilities, total | 19 952 | 20 515 | |
| Liabilities, total | 36 811 | 38 180 | |
| Equity and liabilities, total | 58 614 | 64 550 |
* The shares acquired for and assigned to the share-based incentive scheme are shown in accounting terms as treasury shares. See notes, 23.
| (EUR 1,000) |
|||||||
|---|---|---|---|---|---|---|---|
| Equity attributable to equity holders of the parent |
Share capital |
Share premium account |
Other reserves |
Treasury shares |
Trans lation diff. |
Retained earnings |
Equity, total |
| Equity 1.1.2012 | 7 000 | 1 116 | 117 | -1 050 | -236 | 23 809 | 30 756 |
| Retroactive application of the revised IAS 19 standard |
-778 | -778 | |||||
| Adjusted shareholders' equity 1.1.2012 | 7 000 | 1 116 | 117 | -1 050 | -236 | 23 031 | 29 978 |
| Other comprehensive income | |||||||
| Profit (loss) for the financial year | -2 048 | -2 048 | |||||
| Translation differences | 230 | 230 | |||||
| Total comprehensive income | 230 | -2 048 | -1 818 | ||||
| Business transactions with owners | |||||||
| Dividends | -1 822 | -1 822 | |||||
| Share-based incentives | -50 | -50 | |||||
| Business transactions with owners, total | -1 872 | -1 872 | |||||
| Equity 31.12.2012 | 7 000 | 1 116 | 117 | -1 050 | -6 | 19 111 | 26 288 |
| Equity 1.1.2013 | 7 000 | 1 116 | 117 | -1 050 | -6 | 19 889 | 27 066 |
| Retroactive application of the revised IAS 19 standard |
-126 | -778 | -904 | ||||
| Retroactive application of the revised IAS 19 standard, deferred taxes |
208 | 208 | |||||
| Adjusted shareholders' equity 1.1.2013 | 7 000 | 1 116 | -9 | -1 050 | -6 | 19 319 | 26 370 |
| Other comprehensive income | |||||||
| Profit (loss) for the financial year | -3 934 | -3 934 | |||||
| Other items of comprehensive income adjusted by tax effects |
|||||||
| Translation differences | -80 | -80 | |||||
| Items resulting from remeasurement of the net debt related to defined benefit plans (incl. deferred taxes) |
256 | 256 | |||||
| Total comprehensive income | -80 | -3 678 | -3 758 | ||||
| Business transactions with owners | |||||||
| Dividends | -810 | -810 | |||||
| Business transactions with owners, total | -810 | -810 | |||||
| Equity 31.12.2013 | 7 000 | 1 116 | -9 | -1 050 | -86 | 14 831 | 21 802 |
More information in notes 23 Equity and 24 Share-based payments
Martela Corporation supplies ergonomic and innovative furniture and provides interior planning services.
The Group's parent company is Martela Oyj, a Finnish public limited company domiciled in Helsinki, street address Takkatie 1, FI-00370 Helsinki.
Copies of the Group's financial statements are available at Takkatie 1, FI-00370 Helsinki, and on the Internet at Martela's home pages www.martela.com. These financial statements were authorized for issue by the Board of Directors of Martela Oyj on February 5th 2013. The Finnish Limited Liability Companies Act permits the shareholders of a possibility to approve or reject the financial statements in the general meeting that is held after publishing the financial statements. As well, the general meeting has a possibility to amend the financial statements.
Martela's consolidated financial statements are prepared in accordance with the International Financial Reporting Standards (IFRS) as on December 31.2013. As referred to in the Finnish Accounting Act and in ordinances issued pursuant to the provisions of this Act, the International Financial Reporting Standards refer to the standards and their interpretations adopted in accordance with the procedure laid down in Regulation (EC) No 1606/2002 of the EU. The notes to the consolidated financial statements also conform with additional requirements of the Finnish accounting and company legislation.
The consolidated financial statements are presented in thousands of euros and have been prepared on the historical cost basis except as disclosed in the accounting policies. Martela's consolidated financial statements cover the full calendar year, and this represents the financial period for the parent company and the Group companies.
Since 1 January 2013, Martela has applied the following new and revised standards:
Amendments to IAS 1 Presentation of Financial Statements: The key change is the requirement to group items of other comprehensive income in accordance with whether they will possibly be later reclassified to the profit or loss section of the
income statement if certain conditions are met. The amendments only affected the presentation of the Group's items of other comprehensive income.
Amendment to IAS 19 Employee Benefits: The most significant amendments are that all actuarial gains and losses are recognised immediately in items of other comprehensive income – in other words, the "corridor method" is abandoned – and the financial expense is measured at its net value. The amended standard has been applied retroactively in accordance with the transition requirements. Unrecognised actuarial gains and losses are recognised in the balance sheet for the beginning of the comparison period on 1 January 2012. The information for the comparison period 2012 has been adjusted in accordance with the amended standard. Additional information is presented in Note 26: Pension Liabilities. The amendments did not have significant effects.
IFRS 13 Fair Value Measurement: IFRS 13 includes requirements for fair value measurement and the presentation of the related information in financial statements. The use of fair value is not expanded, but the standard provides guidelines on fair value measurement when its use is allowed or is required by another standard. The notes to the consolidated financial
statements are somewhat more extensive as a result of IFRS 13.
Other amended standards did not have an effect on Martela's financial reporting.
The preparation of the financial statements in conformity with IFRS requires Group management to make certain estimates and to use judgement when applying accounting policies. The section "Accounting policies requiring management's judgement and key sources of estimation uncertainty" refers to the judgements made by management and those financial statement items on which judgements have a significant effect.
The consolidated financial statements include the parent company, Martela Oyj, and all the subsidiaries in which the parent company controls, directly or indirectly, more than 50 per cent of the voting power of the shares, or otherwise has control.
Subsidiaries are included in the consolidated financial statements by using the acquisition method. The intra-group transactions, unrealised margins on intra-group deliveries, intra-group receivables and liabilities and profit distribution are eliminated.
Associates are companies in which the Group has significant influence. Significant influence generally arises when Group controls more than 20% of a company's voting power or when Group otherwise has significant influence but no control. Associates are consolidated using equity method after significant influence has been acquired until significant influence ceases. Share of the result of associates is calculated as a percentage of the groups ownership and it is presented in a separate line in the statement of comprehensive income. Unrealised profits between group and associates are eliminated using the groups ownership percentage. Investment in associate includes also acquired goodwill.
Transactions in foreign currencies are translated at the exchange rate prevailing on the date of the transaction – in practice, for transactions taking place within any given month, a rate is used that approximates the rate of the transaction date. At the end of the reporting period, the monetary assets and liabilities are translated into functional currencies at the exchange rate at the end of the reporting period. Exchange rate gains and losses related to business operations are treated as adjustments to the purchases and sales. Exchange rate gains and losses in financing are treated as adjustments to financial income and expenses.
The statements of comprehensive income and cash flows of foreign subsidiaries for the period are translated into euros at the average rates for the financial year,
and the balance sheets at the average rates of the European Central Bank at the end of the reporting period. The translation of the profit or loss and comprehensive income for the period at different exchange rates in the statement of comprehensive income and in the balance sheet causes a translation difference which is recognised in other comprehensive income. The exchange rate differences arising from the elimination of the cost of the foreign subsidiaries and the exchange rate differences arising from the translation of post-acquisition equity are also recognised in other comprehensive income. Similar treatment is applied to intragroup non-current loans which in substance are equity and form a part of the net investment in the operation in question. When a subsidiary is disposed of, all or in part, the accumulated translation differences are reclassified to profit and loss as part of the gain or loss on disposal.
Grants received from the states or other similar sources are recognised and presented as other operating income when they meet the recognition criteria. Grants related to the acquisition of tangible and intangible assets are recognised as deductions from the carrying amount of the assets in question. Grants are recognised as income over the useful life of a depreciable / amortisable asset by way of a reduced depreciation / amortisation charge.
Revenue from sales of goods is recognised when the significant risks and rewards of ownership of the sold goods have been transferred to the buyer. In general, revenue is recognised at the time of delivery of the goods in compliance with contract terms. Revenue from the services rendered is recognised when the service has been performed.
The Group has arranged defined contribution plans and defined benefit plans for retirement. A defined contribution plan is a pension plan under which the Group pays fixed contributions into a separate entity. The Group has no legal or constructive obligations to pay further contributions if the fund does not hold sufficient assets to pay all employees the benefits relating to employee service in the current and prior periods. A defined benefit plan is a pension plan that is not a defined contribution plan. Contributions made to defined contribution plans are recognised in profit or loss as an expense as incurred.
The obligations of defined benefit plans are calculated separately for each plan. The projected unit credit method is used in the calculation. Pension costs are recognised as an expense over the service period of personnel on the basis of calculations performed by qualified actuaries. In calculating the present value of a pension obligation, the market yield of corporate high-grade bonds or the interest rate of government bonds are used as the discount rate. Their maturity corresponds to a significant extent with the maturity of the computed pension liability.
Pension expenses (service cost in the period) and the net interest for the net debt related to the defined benefit pension plan are recognised through profit or loss. Pension expenses are included in employee benefit expenses. Items resulting from the remeasurement of the net debt (or net asset) related to the defined benefit plan are recorded in items of other comprehensive income in the financial period during which they emerge. These include actuarial gains and losses and returns on assets included in the plan, among other items. Past service costs are recognised in expenses through profit or loss on the earlier of the following dates: the date when the plan is amended or reduced, or the date when the entity recognises the reorganisation expenses
related to this or the benefits related to the termination of the employment relationship.
The Group has a single share-based incentive system in which payments are made in a combination of shares and cash. Share rewards are measured at fair value at the grant date and recognised as expenses over the vesting period. The vesting conditions are taken into account in the number of shares which are expected to vest by the end of the validity period. Measurements are adjusted at the end of each reporting period. The determination of the fair value of the reward takes place in two parts under IFRS 2: a part settled as shares and a part settled as cash. The part settled as shares is recognised under equity and the cash share under liabilities. The expense determined at the time of granting the share-based incentives is based on the Group's estimate of the number of shares which are expected to vest by the end of the vesting period. The assumed vesting takes account of the maximum incentive, the assumed achievement of non-market based earnings targets and the reduction of persons participating the plan. The Group updates the estimate of the final number of shares at the end of each reporting period. Their impact on profit or loss is presented in the statement of comprehensive income under employment benefits expenses.
Operating profit is the Group's profit from operations before financial items and income taxes. Exchange rate differences arisen in the translation of trade receivables and payables denominated in foreign currencies are included in operating profit.
The taxes recognised in the consolidated statement of comprehensive income include current tax based on the taxable income of the Group companies for the financial year,
taxes for previous years and the change in deferred taxes. For transactions and other events recognised in profit or loss, any related tax effects are also recognised in profit or loss. For transactions and other events recognised outside profit or loss (either in other comprehensive income or directly in equity), any related tax effects are also recognised either in other comprehensive income or directly in equity, respectively.
Deferred tax assets and liabilities are recognised on temporary differences between the tax bases and IFRS carrying values of assets and liabilities in the financial statements. A deferred tax asset is recognised only to the extent that it is probable that taxable profit will be available against which it can be used. The main temporary differences arise in the measurement of buildings at fair value in accordance with the exemption permitted by the IFRS 1 transition standard. Deferred taxes are measured by using the tax rates enacted or substantively enacted by the end of the reporting period.
Goodwill resulting from business combinations represents the excess of the consideration transferred over the fair value of the net identifiable assets acquired.
Goodwill is tested annually or more frequently if there are indications that the amount might be impaired. Testing is performed at least at the end of each financial year. For this purpose goodwill is allocated to cash generating units. An impairment loss is recognized whenever the carrying amount of cash-generating unit exceeds the recoverable amount. Impairment losses are recognized in the comprehensive income statement. An impairment loss in respect of goodwill is never reversed.
Research and development is active and continuous in the Group and if individual
development projects are of such a scope in relation to operations and if the capitalization criteria are fulfilled these projects are capitalized. R&D-related equipment is capitalised in machinery and equipment.
An intangible asset is initially capitalized in the balance sheet at cost if the cost can be measured reliably and it is probable that the expected future economic benefits that are attributable to the asset will flow to the Group. Other intangible assets include software licences, IT-programmes, patents and other corresponding rights. Patents, licences and other rights are measured at historical cost, less amortisation and any impairment.
The useful lives of intangible assets are as follows:
| Licences | 3–5 years |
|---|---|
| IT-programmes | 3–10 years |
| Customership | 4 years |
| Brands | 6 years |
| Patents and other | |
| corresponding rights | 10 years |
| Amortisation is recognised using the | |
| straight-line method. |
Land, buildings, machinery and equipment constitute the majority of tangible assets. They are measured in the balance sheet at historical cost or deemed cost, less accumulated depreciation and any impairment.
When a part of an item of property, plant and equipment (accounted for as a separate asset) is renewed, the expenditure related to the new item is capitalised. Other expenditure arising later is capitalised only when future economic benefits will flow to the Group. Other expenditure for repairs or maintenance is expensed when it is incurred. Those borrowing costs directly attributable to the acquisition, construction or production of a qualifying asset are capitalised as part of the cost of that asset.
Depreciation is calculated on a straight-line basis over the estimated useful life of the asset. A tangible asset once classified as held for sale is not depreciated. Land is not depreciated. The estimated depreciation periods are as follows:
| Buildings | 15–30 years |
|---|---|
| Machinery and equipment | 3–8 years |
The residual values and useful lives of tangible assets are reviewed at least at each financial year-end and, if necessary, are adjusted to reflect changes in the expected future economic benefits.
Gains and losses from the sale or disposal of tangible assets are recognised in profit and loss and presented under other operating income or other operating expenses.
Land areas that are held for currently undetermined future use are classified as investment properties. They are measured at historical cost, less impairment losses.
The carrying amounts of assets are assessed at the end of each reporting period to observe whether there are any indications that an asset may be impaired. If such indications exist, the recoverable amount of the asset will be estimated at the higher of its fair value less costs to sell and its value in use. An impairment loss is recognised if the balance sheet value of an asset or a cash-generating unit exceeds the recoverable amount. Impairment losses are recognised in the statement of comprehensive income.
If there are indications that impairment losses no longer exist or that they have diminished, the recoverable amount is estimated. An impairment loss previously recognised in the statement of comprehensive income is reversed if the estimates used in measuring the recoverable income have changed. However, an impairment
loss cannot be reversed to an extent more than what the carrying amount of the asset or cash-generating unit would be without recognition of an impairment loss.
Leases in which the Group has substantially all the risks and rewards incidental to ownership are classified as finance leases. Assets acquired under finance leases, less accumulated depreciation, are carried under tangible assets. These assets are depreciated over the shorter of the useful lives of the tangible assets and the lease term. Lease obligations are included in interest-bearing financial liabilities.
Leases in which substantially all the risks and rewards incidental to ownership of an asset remain with the lessor are classified as operating leases and payments made thereunder are recognised as an expense in the statement of comprehensive income on a straight-line basis over the lease term.
Inventories are measured at the lower of cost and net realisable value. The value of inventories is determined by the FIFO method (first in, first out) and it includes all direct expenditure incurred by acquiring the inventories and also a part of the variable and fixed overhead costs of manufacture. Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale.
Group's financial assets are classified into the following groups: financial assets at fair value through profit or loss, loans and receivables, and available-for-sale financial assets. The classification depends on the purpose of acquiring the financial assets, and they are classified at the time of initial
acquisition. All purchases and sales of financial assets are recognised and derecognised on the trade date. The Group derecognizes financial assets when it has lost its right to receive the cash flows or when it has transferred substantially all the risks and rewards to an external party.
Derivatives and investments in mutual fund units are classified as financial assets at fair value through profit or loss. Investments in mutual fund units are measured at fair value on the basis of published price quotations in an active market, and changes in the fair value are recognised in profit or loss in the year in which they arise. Derivatives that hedge accounting is not applied are classified as being held for trading purposes. The fair values of derivatives are based on share market prices at the end of the reporting period and the changes in the fair values are recognized in profit or loss for the period in which they arise. Martela Group has not applied hedge accounting in the financial years 2013 or 2012.
Loans and receivables include non-derivative financial assets with fixed or determinable payments that are not quoted in an active market or are not held by the Group for trading purposes. They are originally recognised at fair value and subsequently measured at amortised cost. These assets are included in either current or non-current financial assets (they are included in the latter if they mature over 12 months later). In addition to loan receivables, the category includes trade and other receivables.
Available-for-sale financial assets are non-derivatives that are either designated in this category or not classified in any of the other categories. They include various unlisted shares that are measured at cost, when their fair value cannot be reliably determined. They are included in non-current assets.
Cash and cash equivalents comprise cash in hand, in banks and in demand bank deposits, as well as other current, very liquid investments. Items qualifying as cash
and cash equivalents have original maturities of three months or less from the date of acquisition.
At the end of each reporting period, the Group assesses whether objective evidence exists of the impairment of an individual financial asset or a group of financial assets. Impairment will be recognised through profit or loss.
The Group recognises an impairment loss on trade receivables when evidence exists that a receivable cannot be collected in full. A debtor's substantial financial difficulties, the likelihood of insolvency and neglect of payments, for example, are indications of impairment. The impairment of a receivable is recognised in profit or loss under other operating expenses. If the impairment loss amount decreases in a later period, the recognised loss is reversed through profit or loss.
The Group classifies its financial liabilities in the following categories: financial liabilities measured at amortised cost (mainly includes borrowings from financial institutions and trade payables) and financial liabilities at fair value through profit or loss (derivative liabilities). Financial liabilities are initially recognised at fair value and are subsequently measured either at amortised cost or at fair value, based on the classification made. Financial liabilities are included in current and non-current liabilities and they can be interest-bearing or non-interest-bearing. Bank overdrafts are included in current interest-bearing liabilities. Financial liabilities are regarded as current, unless the Group has an absolute right to postpone the repayment of the debt until a minimum of 12 months after the end of the reporting period. Financial liabilities (in full or in part) are not eliminated from the balance sheet until the debt has ceased to exist – in other words, when the obligation specified in the agreement has been fulfilled or rescinded or ceases to be valid.
Outstanding ordinary shares are shown as share capital. The share capital consists of K and A series shares. The shares of both series have identical dividend rights but K series shares confer 20 votes and A series shares 1 vote at general meetings of shareholders.
Expenses related to the issuance and acquisition of own equity instruments are presented as deductions from equity. If Martela Oyj buys back its own equity instruments, their cost is deducted from equity.
Dividends proposed by the Board of Directors are not recorded in the financial statements but the related liability is only recognised when approved by a general meeting of shareholders.
A provision is recognised when the Group has a legal or constructive obligation as a result of a past event, it is probable that on outflow of economic benefits will be required to settle the obligation and the amount can be estimated reliably. The amount recognized as a provision is equal to the best estimate of the expenditure required to settle the present obligation at the end of the reporting period. If it is possible to receive compensation for part of the obligation from a third party, the compensation is recognised as a separate asset, but only when receipt of the compensation is virtually certain. A mandatory provision of EUR 566,000 is recognised in the Group's financial expenses in 2013. The provision is for the possible realisation of the loan guarantee given by Martela Corporation to its associated company P.O. Korhonen Oy. The Group had no provisions at the end of 2012.
In preparing the financial statements it is necessary to make forward-looking estimates and assumptions which may not, in fact, turn out to be true. In addition, it is necessary to use judgement in applying accounting policies to the financial statements. The estimates mainly relate on the utilisation of deferred tax assets against future taxable income, and on the measurement of assets. Estimates and assumptions are based on management's current best knowledge at the end of the reporting period, reflecting historical experience and other reasonable assumptions.
The carrying amounts of assets are assessed at the end of each reporting period to observe whether there are any indications that an asset may be impaired.
If such indications exist, the recoverable amount of the asset will be estimated at the higher of its fair value less costs to sell and its value in use. Value in use is calculated based on discounted forecast cash flows. An impairment loss is recognized if the balance sheet value of an asset or a cash-generating unit exceeds the recoverable amount. Impairment losses are recognized in the statement of comprehensive income.
If there are indications that impairment losses no longer exist or that they have diminished, the recoverable amount is estimated. An impairment loss previously recognised in the statement of comprehensive income is reversed if the estimates used in measuring the recoverable income have changed. However, an impairment loss cannot be reversed to an extent more than what the carrying amount of the asset or cash-generating unit would be without recognition of an impairment loss.
An impairment loss in respect of goodwill is never reversed.
Assumptions made by the managers of the Group companies on taxable income in future financial periods have been taken into account when evaluating the amount of deferred tax assets. Various internal and external factors can have a positive or negative effect on deferred tax assets. These include restructuring in the Group, amendments to tax laws (such as changes to tax rates or a change to the period of utilisation of confirmed deductible tax losses) and changes to the interpretations of tax regulations. Deferred tax assets recognised in an earlier reporting period are recognised in expenses in the consolidated statement of comprehensive income if the unit in question is not expected to accumulate sufficient taxable income to be able to utilise the temporary differences, such as confirmed tax losses, on which the deferred tax assets are based.
The IASB has published the following new and amended standards and interpretations that have not yet taken effect and have not yet been applied by Martela. Martela will adopt these on the effective date of each standard and interpretation, or if the effective date is not the first day of the financial period, at the beginning of the financial period following the effective date.
The Group's management estimates that the adoption of the new and amended standards and interpretations will not have a significant effect on Martela's consolidated financial.
* = The regulation had not been adopted by the EU by 31 December 2013.
IFRS 10 Consolidated Financial Statements and its amendments (effective in the EU for financial periods beginning on or after 1 January 2014). The standard determines control to be the key factor in evaluating whether an entity should be included in the consolidated financial statements of the parent company.
IFRS 11 Joint Arrangements and its amendments (effective in the EU for financial periods beginning on or after 1 January 2014). The standard gives greater emphasis in the accounting for joint arrangements to the rights and obligations arising from a joint arrangement than to its legal form. There are two types of joint arrangements: joint operations and joint ventures. The standard requires that the equity method of accounting be used for interests in joint ventures, and no longer the proportionate consolidation method.
IFRS 12 Disclosure of Interests in Other Entities and its amendments (effective in the EU for financial periods beginning on or after 1 January 2014). The standard includes disclosure requirements for all types of interests in other entities, including joint arrangements, affiliated companies and structured entities. IFRS 12 expands the disclosures presented by the Group about its interests in other entities. IAS 28 (revised in 2011) Investments in Associates and Joint Ventures (effective in the EU for financial periods beginning on or after 1 January 2014). Revised after the publication of IFRS 11, the standard includes requirements for the consolidation of joint ventures and associate companies using the equity method.
Amendments to IAS 32 Financial Instruments: Presentation (effective in the EU for financial periods beginning on or after 1 January 2014). The amendments clarify the regulations on the net presentation of financial assets and liabilities on the balance sheet and provide further instruction on applying the standard.
Amendments to IAS 39 Financial Instruments: Recognition and Measurement (effective in the EU for financial periods beginning on or after 1 January 2014). The amendment provides an exception to the requirement to discontinue hedge accounting in situations where derivative instruments designated in hedging relationships are novated from one counterparty to a central counterparty as a result of laws or regulations.
IFRIC 21 Levies* (effective for financial periods beginning on or after 1 January 2014): The interpretation further specifies the accounting treatment of levies. A liability for a levy must be recognised at the occurrence of the activity that triggers payment, as defined in the relevant legislation. The standard's scope of application excludes income tax, fines and other penal payments as well as payments that fall within the scope of the application of other IFRS standards.
Annual Improvements to IFRSs: 2011–2013*, 2010–2012*, December 2013 (effective for financial periods beginning on or after 1 July 2014): Minor and less urgent amendments made to standards through the Annual Improvements procedure are compiled and implemented once a year. The amendments concern four (2011–2013) and seven (2010–2012) standards. The effects vary by standard, but are not significant.
IFRS 9 Financial Instruments* and its amendments (the effective date will be determined later): The IFRS 9 project has not been completed. For this reason, the effects of the standard on Martela's consolidated financial statements cannot be estimated.
The adoption of other new or amended standards is not expected to have an effect on Martela's financial reporting.
The business segments are based on the Group's internal organisational structure and internal financial reporting.
Sales between segments are reported as part of the segments' revenue. The segments' results presented are their operating profits because tax items and financial items are not allocated by segment. The Group's assets and liabilities are not allocated or monitored by segment in the internal financial reporting. Revenue and operating profit are as recorded in the consolidated financial statements.
Business Unit Finland is responsible for sales and marketing and service production in Finland. In Finland, Martela has an extensive sales and service network covering the whole of Finland, with a total of 27 service locations.
Business Unit Sweden and Norway is responsible for sales in Sweden and Norway, handled through dealers. In addition, the Business Unit has its own sales and showroom facilities at three locations: Stockholm and Bodafors in Sweden and Oslo in Norway. The Business Unit's administration and order handling are located in Bodafors. Sales company in Oslo operates as a support organisation for the Norwegian sales network.
Business Unit Poland is responsible for the sales and distribution of Martela products in Poland and eastern Central Europe. In Poland, sales are organised through our own sales network. The company has altogether 7 service locations in Poland. The Business Unit Poland is based in Warsaw, where it has its administration.
Other segments includes the business activities of Kidex Oy and Business Unit International. Business Unit International's main market areas are Russia, Denmark and Estonia. Exports are also made to the Netherlands, Germany and Japan. In addition, the unit is responsible for managing the Group's key international accounts. In Russia, sales are organised by the unit's own subsidiaries, and in other markets through local authorised importers.
Production and purchasing for the Business Units is carried out by the Group's Supply Chain Management unit, which has logistics centres in Finland, Sweden and Poland.
| (EUR 1,000) |
||
|---|---|---|
| Segment revenue | 1.1.–31.12.2013 | 1.1.–31.12.2012 |
| Business Unit Finland | ||
| external | 92 272 | 98 054 |
| internal | 0 | 2 |
| Business Unit Sweden and Norway | ||
| external | 20 524 | 20 095 |
| internal | 1 658 | 2 222 |
| Business Unit Poland | ||
| external | 11 710 | 12 673 |
| internal | 61 | 1 |
| Other segments | ||
| external | 7 787 | 11 865 |
| internal | 10 107 | 13 170 |
| Total external revenue | 132 293 | 142 686 |
| Income from the sale of goods | 119 232 | 130 546 |
| Income from the sale of services | 13 061 | 12 140 |
| Total | 132 293 | 142 686 |
| Segment operating profit/loss | 1.1.–31.12.2013 | 1.1.–31.12.2012 |
| Business Unit Finland | 1 436 | 3 871 |
| Business Unit Sweden and Norway | -1 363 | -720 |
| Business Unit Poland | -676 | -1 224 |
| Other segments | -1 635 | -3 044 |
| Other | -650 | 205 |
| Total operating profit/loss | -2 889 | -912 |
Other segments include Kidex Oy and Business Unit International.
The item 'Other' includes non-allocated Group functions and non-recurring sales gains and losses.
| Non-current assets | Intangible assets 31.12.2013 |
Tangible assets 31.12.2013 |
|
|---|---|---|---|
| Finland | 6 403 | 10 636 | |
| Sweden | 0 | 643 | |
| Other regions | 0 | 488 | |
| Total | 6 403 | 11 767 | |
| Non-current assets | Intangible assets 31.12.2012 |
Tangible assets 31.12.2012 |
|
| Finland | 6 028 | 11 724 | |
| Sweden | 0 | 636 | |
| Other regions | 3 | 521 |
Total 6 031 12 881
| (EUR 1,000) |
1.1.–31.12.2013 | 1.1.–31.12.2012 |
|---|---|---|
| Gains on sale of tangible assets | 38 | 15 |
| Rental income | 77 | 62 |
| Public subsidies | 166 | 162 |
| Other income from operations | 1 071 | 170 |
| Total | 1 352 | 409 |
Other income from operations includes EUR 955 thousand from the sale of a residential property.
| (EUR 1,000) |
1.1.–31.12.2013 | 1.1.–31.12.2012 |
|---|---|---|
| Salaries and wages | -30 084 | -30 988 |
| Pension expenses, defined contribution plans | -4 881 | -4 813 |
| Pension expenses, defined benefit plans, adjusted | -380 | -247 |
| Part paid as shares | 0 | -50 |
| Other salary-related expenses | -2 815 | -2 519 |
| Personnel expenses in the income statement | -38 160 | -38 617 |
| Other fringe benefits | -437 | -403 |
| Total | -38 597 | -39 020 |
A total of EUR -1,216 thousand for 2013 and EUR -731 thousand for 2012 were recognised in the result from incentives and salary-related expenses associated with the incentive scheme. Salaries and fees and share-based payments made to management are presented in more detail under Note 31 Related-party transactions.
| Personnel | 2013 | 2012 |
|---|---|---|
| Average personnel, workers | 403 | 391 |
| Average personnel, officials | 367 | 415 |
| Average personnel, total | 770 | 806 |
| Personnel at year end | 767 | 801 |
| Average personnel in Finland | 620 | 637 |
| Average personnel in Sweden | 54 | 54 |
| Average personnel in Norway | 4 | 4 |
| Average personnel in Denmark | 0 | 18 |
| Average personnel in Poland | 80 | 81 |
| Average personnel in Russia | 12 | 12 |
| Total | 770 | 806 |
| (EUR 1,000) |
1.1.–31.12.2013 | 1.1.–31.12.2012 | |
|---|---|---|---|
| Depreciation | |||
| Intangible assets | -734 | -654 | |
| Tangible assets | |||
| Buildings and structures | -811 | -789 | |
| Machinery and equipment | -2 005 | -1 931 | |
| Depreciation, total | -3 550 | -3 374 | |
| Impairment | 0 | -47 | |
| Depreciation and impairment, total | -3 550 | -3 421 |
Other operating expenses are reported by type of expense.
| (EUR 1,000) |
1.1.–31.12.2013 | 1.1.–31.12.2012 |
|---|---|---|
| Freights | -2 279 | -2 775 |
| Travelling | -1 575 | -1 768 |
| Administration | -2 139 | -2 154 |
| IT | -2 986 | -2 448 |
| Marketing | -2 793 | -2 727 |
| Vehicles | -1 063 | -1 620 |
| Real estate | -5 600 | -6 324 |
| Other | -5 345 | -8 379 |
| Total | -23 780 | -28 195 |
| Audotor's fees | 1.1.–31.12.2013 | 1.1.–31.12.2012 |
| Auditing | -137 | -117 |
| Tax services | 0 | -14 |
| Other services | -9 | -137 |
| Total | -146 | -268 |
Auditors fees are included in administration expenses.
The income statement recognised research and development expenses of EUR -2,337 thousand in 2013 (EUR -2,181 thousand in 2012).
| (EUR 1,000) |
1.1.–31.12.2013 | 1.1.–31.12.2012 |
|---|---|---|
| Financial income | ||
| Dividend income on other financial assets | 0 | 1 |
| Interest income on loans and other receivables | 23 | 33 |
| Foreign exchange gain on loans and other receivables | 13 | 38 |
| Other financial income | 2 | 0 |
| Total | 38 | 73 |
| Financial expenses | ||
| Interest expenses from financial liabilities measured at amortised cost | -458 | -521 |
| Foreign exchange losses on loans and other receivables | -24 | -34 |
| Other financial expenses | -751 | -151 |
| Total | -1 233 | -706 |
| Financial income and expenses, total | -1 195 | -633 |
| Total exchange rate differences affecting profit or loss are as follows: | ||
| Exchange rate differences, sales (incl. in revenue) | -580 | 424 |
| Exchange rate differences, purchases (incl. in adj. of purchases) | -151 | -458 |
| Exchange rate differences, financial items | -11 | 4 |
| Exchange rate differences, total | -742 | -30 |
Other financial expenses for 2013 include a provision of EUR -566 thousand for the realisation of the loan guarantee given by Martela Corporation to its associated company P.O. Korhonen Oy.
| (EUR 1,000) |
1.1.–31.12.2013 | 1.1.–31.12.2012 |
|---|---|---|
| Current taxes | -91 | -80 |
| Taxes for previous years | 67 | -71 |
| Change in deferred tax liabilities and assets | 479 | -52 |
| Total | 455 | -203 |
Reconciliation between the income statement's tax expense and the income tax expense calculated using the Martela Group's domestic corporation tax rate 20,0% for 2013 (24,5% for 2012).
| Profit before taxes | -4 389 | -1 845 |
|---|---|---|
| Taxes calculated using the domestic corporation tax rate | -878 | -452 |
| Different tax rates of subsidiaries abroad | 14 | 4 |
| Taxes for previous years | 0 | 71 |
| Recognition of unused tax losses not booked earlier | -36 | -99 |
| Tax-exempt income | -12 | -12 |
| Non-deductible expenses | 366 | 309 |
| Share of result in associated undertakings | -75 | -74 |
| Unbooked deferred tax assets on losses in taxation | 166 | 456 |
| Income taxes for the year in the income statement | -455 | 203 |
The basic earnings per share is calculated by dividing the profit attributable to equity holders of the parent by the weighted average number of shares outstanding during the year.
| (EUR 1,000) |
1.1.–31.12.2013 | 1.1.–31.12.2012 |
|---|---|---|
| Profit attributable to equity holders of the parent | -3 934 | -2 048 |
| Weighted average number of shares (1,000) | 4 049 | 4 049 |
| Basic earnings per share (EUR /share) |
-0.97 | -0.51 |
The company has no diluting instruments.
| (EUR 1,000) |
1.1.2013– 31.12.2013 |
1.1.2012– 31.12.2012 |
||||||
|---|---|---|---|---|---|---|---|---|
| Intangible assets |
Goodwill | Work in progress |
Total | Intangible assets |
Goodwill | Work in progress |
Total | |
| Acquisition cost 1.1. | 5 652 | 883 | 2 443 | 8 978 | 5 057 | 883 | 1 644 | 7 584 |
| Increases | 3 349 | 0 | 1 764 | 5 113 | 1 214 | 0 | 2 465 | 3 679 |
| Decreases | 0 | 0 | -4 007 | -4 007 | -645 | 0 | -1 666 | -2 311 |
| Exchange rate differences | 0 | 0 | 0 | 0 | 26 | 0 | 0 | 26 |
| Acquisition cost 31.12. | 9 001 | 883 | 200 | 10 084 | 5 652 | 883 | 2 443 | 8 978 |
| Accumulated depreciation 1.1. |
-2 947 | 0 | 0 | -2 947 | -2 885 | 0 | 0 | -2 885 |
| Accumulated depreciation, decreases |
0 | 0 | 0 | 0 | 617 | 0 | 0 | 617 |
| Depreciation for the year 1.1.–31.12. |
-734 | 0 | 0 | -734 | -654 | 0 | 0 | -654 |
| Exchange rate differences | 0 | 0 | 0 | 0 | -25 | 0 | 0 | -25 |
| Accumulated depreciation 31.12. |
-3 681 | 0 | 0 | -3 681 | -2 947 | 0 | 0 | -2 947 |
| Carrying amount 1.1. | 2 705 | 883 | 2 443 | 6 031 | 2 172 | 883 | 1 644 | 4 699 |
| Carrying amount 31.12. | 5 320 | 883 | 200 | 6 403 | 2 705 | 883 | 2 443 | 6 031 |
The increase in intangible assets results from the activation of the ERP system.
The Group's Goodwill EUR 883,000 (EUR 883,000 in 2012) relates to the Grundell acquisition Martela made in 31 December 2011. The cash generating unit is allocated fully to segment Business Unit Finland. The expected future cash flows will be generated through combining and streamlining service operations to improve the quality and efficiency of service processes and the efficiency of service logistics.
With a simpler service chain it is also possible to implement more comprehensive product and service solutions and offering. In addition, functionally integrated service business operations can be used more effectively than before in sales by Martela, which will increase the sales of services in the future.
Goodwill is tested annually or more frequently if there are indications that the amount might be impaired. In assessing whether goodwill has been impaired, the carrying value of the cash generating unit has been compared to the recoverable amount of the cash generating unit. The recoverable amount of goodwill is determined based on value in use calculations. The value in use is calculated based on discounted forecast cash flows. The cash flow forecasts rely on the plans approved by the management concerning profitability and the growth rate of revenue. The plans cover a five-year period taking into account the recent development of the business. The profitability used in the forecast period considers above mentioned synergies at a modest rate and the growth rate used, i.e. the growth factor, is on average 3,4%. The use of the testing model requires making estimates and assumptions concerning market growth and general interest rate level.
The used pre-tax discount rate is 12,9%, which equals the weighted average cost of capital.
The cash flows after the five-year period have been forecasted by estimating the future growth rate of revenue to be 0%. Based on the impairment tests there is no need to recognize an impairment loss.
The ralization of an impairment loss would require the actual operating profit (EBIT) level to be 53,9% lower than the management's estimate at the end of reporting period, or that the discount rate was higher than 40%.
(EUR 1,000) 1.1.2013–31.12.2013 Land areas Buildings Machinery and equipment Other tangible assets Work in progress Total Acquisition cost 1.1. 66 25 255 34 387 34 801 60 543 Increases 0 348 2 200 0 165 2 713 Decreases -3 -25 -4 443 0 -818 -5 289 Exchange rate differences 0 -66 -244 0 0 -310 Acquisition cost 31.12. 63 25 512 31 900 34 148 57 657 Accumulated depreciation 1.1. 0 -19 425 -28 237 0 0 -47 662 Accumulated depreciation, decreases 0 25 4 326 0 0 4 351 Depreciation for the year 1.1.–31.12. 0 -811 -2 006 0 0 -2 817 Re-groupings 0 0 0 0 0 0 Exchange rate differences 0 23 215 0 0 238 Accumulated depreciation 31.12. 0 -20 188 -25 702 0 0 -45 890 Carrying amount 1.1. 66 5 830 6 150 34 801 12 881 Carrying amount 31.12. 63 5 324 6 198 34 148 11 767
| 1.1.2012–31.12.2012 | Land areas | Buildings | Machinery and equip ment |
Other tangible assets |
Work in progress |
Total |
|---|---|---|---|---|---|---|
| Acquisition cost 1.1. | 67 | 24 909 | 33 599 | 34 | 327 | 58 936 |
| Increases | 0 | 271 | 1 196 | 0 | 682 | 2 149 |
| Decreases | 0 | -6 | -734 | 0 | -208 | -948 |
| Exchange rate differences | -1 | 81 | 326 | 0 | 0 | 406 |
| Acquisition cost 31.12. | 66 | 25 255 | 34 387 | 34 | 801 | 60 543 |
| Accumulated depreciation 1.1. | 0 | -18 617 | -26 668 | 0 | 0 | -45 285 |
| Accumulated depreciation, decreases | 0 | 5 | 637 | 0 | 0 | 642 |
| Depreciation for the year 1.1.–31.12. | 0 | -789 | -1 931 | 0 | 0 | -2 720 |
| Re-groupings | 0 | 0 | 0 | 0 | 0 | 0 |
| Exchange rate differences | 0 | -24 | -275 | 0 | 0 | -299 |
| Accumulated depreciation 31.12. | 0 | -19 425 | -28 237 | 0 | 0 | -47 662 |
| Carrying amount 1.1. | 67 | 6 292 | 6 931 | 34 | 327 | 13 652 |
| Carrying amount 31.12. | 66 | 5 830 | 6 150 | 34 | 801 | 12 881 |
| 31.12.2013 | 31.12.2012 | |
|---|---|---|
| Carrying amount of productions | 3 100 | 3 155 |
machinery and equipment
Tangible assets include assets acquired through finance leases as follows:
| 1.1.2013– 31.12.2013 |
1.1.2012– 31.12.2012 |
|||||
|---|---|---|---|---|---|---|
| Machinery and equipment |
Buildings | Total | Machinery and equip ment |
Buildings | Total | |
| Acquisition cost 1.1. | 3 229 | 729 | 3 958 | 3 033 | 702 | 3 735 |
| Increases | 322 | 0 | 322 | 201 | 0 | 201 |
| Decreases | 0 | 0 | 0 | -5 | 0 | -5 |
| Exchange rate differences | 0 | -23 | -23 | 0 | 27 | 27 |
| Acquisition cost 31.12. | 3 551 | 706 | 4 257 | 3 229 | 729 | 3 958 |
| Accumulated depreciation 1.1. | -2 956 | -418 | -3 374 | -2 644 | -332 | -2 976 |
| Accumulated depreciation, decreases | 0 | 0 | 0 | 0 | 0 | 0 |
| Depreciation for the year 1.1.–31.12. | -283 | -72 | -355 | -312 | -72 | -384 |
| Exchange rate differences | 0 | 12 | 12 | 0 | -14 | -14 |
| Accumulated depreciation 31.12. | -3 239 | -478 | -3 717 | -2 956 | -418 | -3 374 |
| Carrying amount 1.1. | 273 | 311 | 584 | 389 | 370 | 759 |
| Carrying amount 31.12. | 312 | 228 | 540 | 273 | 311 | 584 |
The plant of Bodafors, Sweden, was sold in 2007. Part of it was leased back on a long-term lease that is classified as a finance lease.
| Martela's share of the joint enterprise's profit or loss on the basis of Martela's holding | ||
|---|---|---|
| Investments in associates and associated undertakings | 0 | 42 |
| 2013 | 2012 |
| (EUR 1,000) |
2013 | 2012 |
|---|---|---|
| 1.1 | -658 | -358 |
| Share of result in associated undertakings | -306 | -300 |
| 31.12 | -964 | -658 |
| (EUR 1,000) |
Domicile | Assets | Liabilities | Revenue | Result | Martela's share of result (%) |
|---|---|---|---|---|---|---|
| 2013 | ||||||
| P.O. Korhonen | Finland | 1 336 | 2 727 | 3 276 | -599 | 51 |
| Domicile | Assets | Liabilities | Revenue | Result | Martela's share of result (%) |
|
| 2012 | ||||||
| P.O. Korhonen | Finland | 1 816 | 2 607 | 3 746 | -588 | 51 |
On 17 January 2011, Artek Oy Ab and Martela Corporation signed an agreement to establish a joint enterprise. Under the shareholding agreement, Martela does not have control of the company as defined in IAS 27. Martela's consolidated income statement will only include Martela's share of the joint enterprise's profit or loss on the basis of Martela's holding, and this is reported in the consolidated income statement under 'share of result in associated undertakings'.
The land belonging to Kiinteistö Oy Ylähanka has been classified as investment property. The fair value of the land belonging to Kiinteistö Oy Ylähanka was
EUR 600 thousand at the end of financial year 2013 (EUR 600 thousand in 2012). The Group has determined that the fair value of all its investment properties represent
level 3 in the hierarchy, because observable market information for the determination of fair values is not comprehensively available.
| (EUR 1,000) |
Loans and other receivables |
Available for-sale financial assets |
Financial liabilities recognised at amortised acquisition cost |
Book values of balance sheet items |
Fair value | Note |
|---|---|---|---|---|---|---|
| 2013 balance sheet items | ||||||
| Non-current financial assets | ||||||
| Non-current non-interest bearing receivables | 0 | 0 | 0 | 16 | ||
| Other financial assets | 55 | 55 | 55 | 15 | ||
| Current financial assets | ||||||
| Trade and other receivables | 22 419 | 22 419 | 22 419 | 19 | ||
| Book value by group | 22 419 | 55 | 22 474 | 22 474 | ||
| Non-current financial liabilities | ||||||
| Interest-bearing liabilities | 8 645 | 8 645 | 8 645 | 25 | ||
| Other liabilities | 0 | 0 | 0 | |||
| Current financial liabilities | ||||||
| Interest-bearing liabilities | 6 730 | 6 730 | 6 730 | 25 | ||
| Trade payables and other liabilities | 12 360 | 12 360 | 12 360 | 27 | ||
| Book value by group | 27 735 | 27 735 | 27 735 | |||
| 2012 balance sheet items | ||||||
| Non-current financial assets | ||||||
| Non-current non-interest bearing receivables | 10 | 10 | 10 | 16 | ||
| Other financial assets | 55 | 55 | 55 | 15 | ||
| Current financial assets | ||||||
| Trade and other receivables | 22 746 | 22 746 | 22 746 | 19 | ||
| Book value by group | 22 756 | 55 | 22 811 | 22 811 | ||
| Non-current financial liabilities | ||||||
| Interest-bearing liabilities | 9 331 | 9 331 | 9 331 | 25 | ||
| Other liabilities | 151 | 151 | 151 | |||
| Current financial liabilities | ||||||
| Interest-bearing liabilities | 6 010 | 6 010 | 6 010 | 25 | ||
| Trade payables and other liabilities | 13 126 | 13 126 | 13 126 | 27 | ||
| Book value by group | 28 618 | 28 618 | 28 618 |
Fair values of each financial asset and liability group are presented in more detail under the note indicated in the table.
Available-for-sale financial assets include investments in unlisted equities. They have been measured at acquisition cost because fair value cannot be assessed reliably.
| (EUR 1,000) |
31.12.2013 | 31.12.2012 |
|---|---|---|
| Loan receivables | 0 | 10 |
| (EUR 1,000) |
||||||
|---|---|---|---|---|---|---|
| Changes in deferred taxes during 2013 | 1.1.2013 | Recognised in income statement |
Recognised in other comprehen sive income |
Exchange rate differences |
Purchased/ sold enterprises |
31.12.2013 |
| Deferred tax assets | ||||||
| Pension obligations | 208 | 0 | -81 | 0 | 0 | 127 |
| Other temporary differences | 185 | 61 | 0 | 0 | 0 | 246 |
| Total | 393 | 61 | -81 | 0 | 0 | 373 |
| Deferred tax liabilities | ||||||
| On buildings measured at fair value on the transition date |
889 | -229 | 0 | 0 | 0 | 660 |
| Pension obligations | 13 | -13 | 0 | 0 | 0 | 0 |
| Other temporary differences | 367 | -181 | 0 | 0 | 0 | 186 |
| Total | 1 269 | -423 | 0 | 0 | 0 | 846 |
| Deferred tax assets and liabilities, total | -876 | 484 | -81 | 0 | 0 | -473 |
| Changes in deferred taxes during 2012 | 1.1.2012 | Recognised in income statement |
Recognised in other comprehen sive income |
Exchange rate differences |
Purchased/ sold enterprises |
31.12.2012 |
|---|---|---|---|---|---|---|
| Deferred tax assets | ||||||
| Pension obligations, adjusted * | 208 | 0 | 0 | 0 | 0 | 208 |
| Other temporary differences | 407 | -236 | 0 | 15 | 0 | 185 |
| Total | 615 | -236 | 0 | 15 | 0 | 393 |
| Deferred tax liabilities | ||||||
| On buildings measured at fair value on the transition date |
970 | -81 | 0 | 0 | 0 | 889 |
| Pension obligations | 38 | -25 | 0 | 0 | 0 | 13 |
| Other temporary differences | 451 | -84 | 0 | 0 | 0 | 367 |
| Total | 1 459 | -190 | 0 | 0 | 0 | 1 269 |
| Deferred tax assets and liabilities, total | -843 | -46 | 0 | 15 | 0 | -876 |
* Retroactive application of the revised IAS 19 standard
Deferred tax assets have not been recognised on unused tax losses that probably cannot be utilised in the future against taxable income. These losses including 2013 results total about MEUR 12.0 (9.6). These losses have no expiry date according to knowledge that is available today.
| (EUR 1,000) |
31.12.2013 | 31.12.2012 |
|---|---|---|
| Raw materials and consumables | 8 304 | 9 746 |
| Work in progress | 977 | 900 |
| Finished goods | 1 632 | 2 238 |
| Total | 10 913 | 12 885 |
The value of inventories has been written down by EUR -734 thousand in 2013 (EUR -946 thousand in 2012).
| (EUR 1,000) |
31.12.2013 | 31.12.2012 |
|---|---|---|
| Trade receivables | 22 332 | 22 586 |
| Loan receivables | 87 | 124 |
| Accrued income and prepaid expenses | ||
| Personnel expenses | 275 | 105 |
| Royalties | 6 | 11 |
| Interest income | 0 | 0 |
| Derivatives | 0 | 0 |
| Other financial assets | 0 | 36 |
| Advances | 773 | 419 |
| Other | 173 | 728 |
| Accrued income and prepaid expenses, total | 1 227 | 1298 |
| Current tax receivable | 0 | 0 |
| Total | 23 646 | 24 008 |
The book values of trade receivables and receivables other than those based on derivatives are estimated to essentially correspond to their fair values because of the short maturity of the receivables.
The Group has not had financial assets at fair value through profit or loss in 2013 or 2012.
| (EUR 1,000) |
31.12.2013 | 31.12.2012 |
|---|---|---|
| Cash in hand and at bank | 4 857 | 7 589 |
| Deposits | 0 | 0 |
| Total | 4 857 | 7 589 |
Martela can use derivatives for the hedging of its currency position, for example. However, as a rule, Martela does not apply IAS 39 hedge accounting.
The Group had no derivative contracts in 2013 or 2012.
The paid share capital entered in the Trade register is EUR 7,000,000. According to the Articles of Association, the maximum capital is EUR 14,000,000 and the minimum capital EUR 3,500,000.
The counter value of a share is EUR 1.68. The K shares carry 20 votes at a general meeting and the A shares 1 vote. Both share series have the same dividend rights.
| Changes in share capital | Number of shares |
Share capital |
Share premium account |
Treasury shares |
Treasury shares, share-based incentive system |
Total |
|---|---|---|---|---|---|---|
| 1.1.2012 | 4 049 253 | 7 000 | 1 116 | -721 | -329 | 7 066 |
| Acq.of shares for share-based inc.system* | ||||||
| Shares given* | 186 | 186 | ||||
| Shares returned | -25 | -25 | ||||
| Share issue | ||||||
| 31.12.2012 | 4 049 253 | 7 000 | 1 116 | -721 | -329 | 7 066 |
| 31.12.2013 | 4 049 253 | 7 000 | 1 116 | -721 | -329 | 7 066 |
Martela Oyj owns 67,700 A shares purchased at an average price of EUR 10.65. The number of treasury shares is equivalent to 1.6% of all shares and 0.4% of all votes.
* Acquisition of shares for the share-based incentive scheme and the management of the scheme have been outsourced to an external service provider, Evli Alexander Management Oy until transferred to Martela's key personnel under the incentive scheme. Notwithstanding this legal formality, the shares will be treated in the consolidated financial statements for 2010 onwards under equity, as if the company had acquired its own shares. On 31 December 2013, 38,647 shares under the incentive scheme were still undistributed.
Translation differences in equity comprises translation differences of financial statements of foreign subsidiaries when translated into euros and of investments in foreign units. Other reserves consist of reserve funds.The share premium account is a fund established in accordance with the previous Finnish Companies Act. According to the present Limited Liability Companies Act (effective from 1 September 2006), it is included in restricted shareholders' equity and can no longer be accumulated.
The share premium account can be reduced in accordance with the regulations on the reduction of share capital, and it can be used as a fund increase to increase share capital. The acquisition cost of treasury shares is deducted from shareholders' equity (including the related transaction costs). The parent company's distributable equity was EUR 28,683,930.81 on 31.12.2013.
Martela Corporation's Board of Directors resolved on 9 February 2010 and approved the terms for the share-based incentive scheme 2010–2012. The scheme has one (1) earning period made up of three (3) calendar years starting 1 January 2010 and ending on 31 December 2012. Rewards will be paid as combination of shares and cash. The Board have decided to divide the earning period by assigning a separate target and reward for one (1) calendar year. The scheme offers key personnel an opportunity to receive the company's A shares (share) if they attain the targets set for them for the earning period. The earnings criteria for the earning period 2010 is EBIT. The reward will not be paid to key persons whose employment or service relationship with a Group company ends before the end of the earning period. After the introduction of the share ownership plan the earned shares have compulsory ownership of 3 years.
Earnings periods are 2010 and 2010–2012. The share ownership plan offers the key personnel a possibility to earn up to 80,000 shares. In addition to shares a cash payment up to an amount that is needed for taxes and tax-related costs arising from the reward will be paid. A total of 24,000 shares were issued for the 2010 earning period based on results. No shares were issued for the earnings period 2010–2012 based on the group's EBIT.
Martela Corporation's Board of Directors resolved on 5 February 2013 and approved the terms for the share-based incentive scheme 2013. The scheme offers key personnel an oppotunity to receive the company's A shares for one year earning period if they attain the targets set for them for the earning period. Rewards will be paid as combination of shares and cash. The earnings criteria for the earning period 2013 is the Group's EBIT. Rewards will be paid to key personnel after the earning period 15 April 2014 as combination of shares and cash. In addition to shares a cash payment
up to an amount that is needed for taxes and tax-related costs arising from the reward will be paid. The reward will not be paid to key persons whose employment or service relationship with a Group company ends before the end of the earning period. After the introduction of the share ownership plan the earned shares have compulsory ownership of 2 years. Maximum reward is 39,000 shares. No shares will be issued for the 2013 earning period based on the Group's EBIT.
| Earning period 2010 |
Earning period 2010–2012 |
Earning period 2013 |
|
|---|---|---|---|
| February 9, 2010 | February 9, 2010 | February 5, 2013 | |
| Equity and cash | Equity and cash | Equity and cash | |
| Key personnel | Key personnel | Key personnel | |
| 24 000 | 80 000 | 39 000 | |
| 27 064 | 90 213 | 40 560 | |
| January 1, 2010 | January 1, 2010 | January 1, 2013 | |
| December 31, 2010 |
December 31, 2012 |
December 31, 2013 |
|
| April 30, 2013 | April 30, 2013 | January 1, 2015 | |
| EBIT | EBIT | EBIT | |
| Service until the end of restriction period |
Service until the end of restriction period |
||
| 0,0 | 0,0 | 1,0 | |
| 0,0 | 0,0 | 1,0 | |
| 9 | 10 | 8 | |
* The arrangement includes a share-based payment to be settled in cash.
| 2013 | Earning period 2010 | Earning period 2010–2012 | ||||
|---|---|---|---|---|---|---|
| Gross number of shares ** | 1.1.2013 | Changes | 31.12.2013 | 1.1.2013 | Changes | 31.12.2013 |
| Granted | 51 064 | 0 | 51 064 | 180 787 | 0 | 180 787 |
| Forfeited | 4 532 | 0 | 4 532 | 15 106 | 0 | 15 106 |
| Settled | 46 532 | 0 | 46 532 | 0 | 0 | 0 |
| Expired | 0 | 0 | 0 | 46 532 | 0 | 46 532 |
| 2013 | Earning period 2013 | |||
|---|---|---|---|---|
| Gross number of shares ** | 1.1.2013 | Changes | 31.12.2013 | |
| Granted | 0 | 79 560 | 79 560 | |
| Forfeited | 0 | 0 | 0 | |
| Settled | 0 | 0 | 0 | |
| Expired | 0 | 79 560 | 79 560 |
** Number of shares include cash-settled payments of the plan.
| Inputs to fair value measurement | Earning period 2010 |
Earning period 2010–2012 |
Earning period 2013 |
|---|---|---|---|
| Granted shares during the period (equity and cash) | 46 532 | 0 | 79 560 |
| Share price at the grant date | 7.34€ | 7.34€ | 5.16€ |
| Expected dividends | 0.45€ | 1.35€ | 0.20€ |
| Fair value of the share at the grant date *** | 6.89€ | 5.99€ | 4.96€ |
| Share price at the end of period | 3.35€ | 3.35€ | 3.35€ |
| Expexted forfeitures before settlement | 8.9% | 8.9% | 10.0% |
| Expected forfeitures after settlement | 0.0% | 0.0% | 0.0% |
| Expected fulfillment of earning criteria | 100.0% | 0.0% | 0.0% |
| Fair value of the expected reward at the grant date | 351 830€ | 1 019 574€ | 394 618€ |
| Fair value of the expected reward 31 December 2013 | 155 882€ | 0€ | 0€ |
| Expense recognised for the period 2013 | 1 298€ | 0€ | 0€ |
*** Share price at the grant date deducted by the dividends expected to be paid during the earning period.
IFRS2 requires an entity to measure the award at its fair value and recognised over the vesting period. As the award will be settled both in equity and in cash the amount entered in the balance sheet will be divided into equity and liability. The fair value of the liability incurred in respect of a cash-settled transactions is remeasured at each reporting date until the date of settlement.
| (EUR 1,000) |
31.12.2013 | 31.12.2012 |
|---|---|---|
| Non-current | ||
| Bank loans | 5 043 | 5 751 |
| Pension loans | 3 200 | 3 200 |
| Finance leases | 402 | 380 |
| Total | 8 645 | 9 331 |
| Current | ||
| Bank loans | 5 617 | 4 914 |
| Pension loans | 800 | 800 |
| Bank overdrafts used | 0 | 0 |
| Finance leases | 314 | 296 |
| Total | 6 731 | 6 010 |
The Group's bank loans have either variable or fixed interest rates. The Group's average interest rate is 2.14% (2.94% in 2012). The current portions of debt are presented in more detail under Note 28 Management of financial risks.
The book values of debts are estimated to correspond to their fair values. Discounting has no material effect.
Mortgages and quarantees given by credit institutions and, to a minor degree, pledged shares in housing corporations owned by the company are used as collateral for bank loans and pension loans.
| 31.12.2013 | 31.12.2012 | |
|---|---|---|
| Finance lease liabilities are payable as follows: | ||
| Finance leases – total amount of minimum lease payments | ||
| Not later than one year | 373 | 471 |
| Later than one year and not later than five years | 532 | 647 |
| Later than five years | 0 | 0 |
| 905 | 1 118 | |
| Finance leases – present value of minimum lease payments | ||
| Not later than one year | 314 | 296 |
| Later than one year and not later than five years | 402 | 380 |
| Later than five years | 0 | 0 |
| 716 | 676 | |
| Unearned finance expense | 189 | 442 |
The average interest of financial leases was 2.4% in 2013 and 4.8% in 2012.
Martela adopted the amended IAS 19 Employee Benefits standard retroactively on 1 January 2013. The effects of the standard are explained under "Accounting policies".
Martela's defined benefit pension plans concern its operations in Finland. The arrengements have primarily been made through insurance companies. The plans are either partly funded or unfunded.
On the balance sheet, the commitment to those insured is presented as a pension
liability, and the part of this liability that falls under the responsibility of insurance companies is presented as an asset. Because the funds related to the plans belong to the insurance companies, they cannot be itemised in Martela's consolidated financial statements.
In insurance arrangements, the amount of funds is calculated using the same discount rate used for the determination of pension liabilities. This means that a change
in the discount rate does not pose a significant risk. In addition, an increase in life expectancy does not pose a significant risk for Martela, as insurance companies will bear most of the impact of this.
| Present value of the defined benefit liability |
Fair value of the funds included in the plan |
Net debt of the defined benefit liability |
||||
|---|---|---|---|---|---|---|
| 2013 | 2012* | 2013 | 2012* | 2013 | 2012* | |
| 1.1. | 3 271 | 2 451 | -2 422 | -1 828 | 849 | 623 |
| Recognised in profit or loss | ||||||
| Service cost in the period | 267 | 225 | 267 | 225 | ||
| Past service cost | 91 | 0 | 91 | 0 | ||
| Interest expense or income | 98 | 110 | -76 | -88 | 22 | 22 |
| 456 | 335 | -76 | -88 | 380 | 247 | |
| Recognised in other comprehensive income | ||||||
| Items resulting from remeasurement: | ||||||
| Actuarial gains (or losses) | ||||||
| Actuarial gain (-) and losses (+) resulting from changes in financial assumptions |
-515 | 600 | -515 | 600 | ||
| Experience-based profits (-) or losses (+) | -142 | -114 | -142 | -114 | ||
| Return on the funds included in the plan, excluding items in interest expenses or income (+/-) |
321 | -271 | 321 | -271 | ||
| -657 | 486 | 321 | -271 | -336 | 215 | |
| Other items | ||||||
| Employer's payments (+) | -255 | -235 | -255 | -235 | ||
| 0 | 0 | -255 | -235 | -255 | -235 | |
| 31.12. | 3 070 | 3 272 | -2 432 | -2 422 | 638 | 850 |
* adjusted retroactively on the adoption of the amended IAS 19 standard
The Group anticipates that it will pay a total of EUR 324 thousand to defined benefit pension plans in the financial period 2014.
The following table illustrates the effects of changes in the most significant actuarial assumptions on the funds related to the defined benefit pension liability and plans.
| Defined benefit liability | Fair value of the funds included in the plan | |||
|---|---|---|---|---|
| Effect of a change in the assumption employed | The assumption is growing |
The assumption is decreasing |
The assumption is growing |
The assumption is decreasing |
| Discount rate (0.5%-change) | -8.3% | 9.3% | -7.0% | 7.9% |
| Increase in salaries (0.5%-change) | 2.4% | -2.3% | 0.0% | 0.0% |
| Mortality rate (a change of 5% points) | -1.1% | 1.1% | -1.0% | 1.0% |
The weighted average of the duration of the plans is 18 years.
| (EUR 1,000) |
31.12.2013 | 31.12.2012 |
|---|---|---|
| Advances received | 627 | 777 |
| Trade payables | 7 346 | 8 268 |
| Accrued liabilities and prepaid income | ||
| Personnel expenses | 4 382 | 4 560 |
| Derivatives | 0 | 0 |
| Interests | 25 | 43 |
| Royalties | 133 | 152 |
| Residual expenses | 1 346 | 905 |
| Other | 537 | 995 |
| Total | 6 423 | 6 655 |
| Other current liabilities | 4 990 | 4 815 |
| Provisions | 566 | 0 |
| 19 952 | 20 515 |
The book values of trade and other non-interest bearing liabilities are also estimated to corrspond to their fair values. Discounting has no material effect.
Financial risks are unexpected exceptions relating to exchange rates, liquidity, customer liquidity, investments and interest rates. The objective of financial risk management is to ensure that the company has sufficient financing on a cost-efficient basis and to reduce the adverse effects of financial market fluctuations on the Group's net assets. The general principles of risk management are approved by the Board of Directors and the practical implementation of financial risk management is the responsibility of the parent company's financial administration.
Market risks comprise the following three risks: currency risk, interest rate risk and price risk. The associated fluctuations in exchange rates, market interest rates and market prices lead to changes in the fair value of financial instruments and hence they impact the result and balance sheet of the Group. The Group does not apply hedge accounting as in IAS 39.
The Group has operations in Finland, Sweden, Norway, Russia and Poland and it is therefore exposed to currency risks that arise in intra-group transactions, exports and imports, the financing of foreign subsidiaries and equity that is denominated in foreign currencies. Transaction risks result from incoming cash flows denominated in foreign currencies. Translation risks arise when the value of the capital invested in the parent company's foreign subsidiaries, annual profits and loans changes as a result of exchange rate fluctuations.
Martela's major trading currencies are the EUR, SEK, NOK, DKK and PLN. The SEK, NOK, PLN and DKK currency positions are reviewed mainly on a half-yearly basis. The Group's policy is to hedge the net positions remaining after reconciliation of forecast income and expenses. The hedging instruments used are mainly forward
contracts maturing within 3–12 months. The Group does not apply hedge accounting. The Group has not hedged against transaction risks during the financial periods 2012 and 2013.
The main translation risks derive from equity or subordinated loans provided by the parent company to its subsidiaries in Sweden, Poland and Russia. The company selectively hedges against translation risks by using currency loans and options. Hedging decisions are based on the estimated effect of each currency on the Group's result, cash flow and equity and on the hedging cost.
The following table presents currency risks per instrument and currency.
| EUR | SEK | PLN | NOK | DKK | |
|---|---|---|---|---|---|
| Trade receivables | 308 | 452 | 534 | 0 | 990 |
| Trade payables | -788 | -613 | -4 | -81 | -3 |
| Total | -480 | -161 | 530 | -81 | 987 |
| EUR | SEK | PLN | NOK | DKK | |
|---|---|---|---|---|---|
| Trade receivables | 576 | 1 691 | 3 445 | 769 | 0 |
| Trade payables | -735 | -627 | -4 | -76 | 0 |
| Total | -159 | 1 064 | 3 441 | 693 | 0 |
Other currencies have minor impact.
Net investments in foreign subsidiaries have not been taken into account in the calculations.
The following table presents the average impact of a 10 per cent change in exchange rates on 31 December on the company's financial result before taxes and capital for 2013 (2012). The estimates are based on the assumption that no other variables change.
| Analysis of sensitivity to currency risk (EUR 1,000) |
Impact on shareholders' equity | Impact on results |
|---|---|---|
| 31.12.2013 | ||
| EUR | 0 | +/- 48 |
| SEK | 0 | +/- 16 |
| PLN | 0 | +/- 53 |
| NOK | 0 | +/- 8 |
| DKK | 0 | +/- 98 |
| Analysis of sensitivity to currency risk (EUR 1,000) |
Impact on shareholders' equity | Impact on results |
|---|---|---|
| 31.12.2012 | ||
| EUR | 0 | +/- 16 |
| SEK | 0 | +/- 106 |
| PLN | 0 | +/- 344 |
| NOK | 0 | +/- 69 |
| DKK | 0 | +/- 0 |
The Group's interest rate risks relate mainly to the Group's loan portfolio and to changes in the value of the cash reserve due to interest rate variations. The duration of loans varies between 1–5 years. The Group can raise either fixed-interest or variable-interest loans and can use interest rate swaps. Excess cash assets are
invested in both short- and long-term fixed income funds.
The Group invests excess funds in short-term bank deposits at partner banks and in liquid, low-risk fixed income funds based on government treasury bills and commercial papers.
The Group has invested in fixed income funds, the value of which is determined on the basis of price quotations published in active markets. Changes in fair value are recognised in the income statement in the financial statements.
The following table presents the distribution of the Group's financial instruments into fixed interest rate and variable interest rate on the balance sheet date.
| Financial instruments (EUR 1,000) |
31.12.2012 | 31.12.2011 |
|---|---|---|
| Fixed rate | ||
| Financial liabilities, incl. derivatives | 716 | 675 |
| Variable rate | ||
| Financial liabilities | 14 659 | 14 665 |
| Total | 15 375 | 15 340 |
Impact of a 1 per cent increase in interest rate on financial result before taxes and capital on the balance sheet date 31 December. Decrease in interest rate would have an opposite impact of equal size.
| Analysis of sensitivity to interest rate risks (EUR 1,000) |
Impact on shareholders' equity | Impact on results |
|---|---|---|
| 31.12.2013 | ||
| Financial liabilities | ||
| Variable rate financial instruments | 0 | -147 |
| Analysis of sensitivity to interest rate risks (EUR 1,000) |
Impact on shareholders' equity | Impact on results |
|---|---|---|
| 31.12.2012 | ||
| Financial liabilities | ||
| Variable rate financial instruments | 0 | -147 |
Available-for-sale shares included in financial assets are not deemed subject to resale price risk. Their book value is their original acquisition cost and their current sale price is estimated to be higher than their acquisition price. The shares are unlisted and they are not measured at fair value.
Credit risks arise from the possibility that a counterparty will not meet its contractual payment obligation. Hence the seriousness of the risk is determined on the basis of the counterparty's creditworthiness. The objective of credit risk management is to minimise the losses that would arise should the counterparty not meet its obligations.
The Group's financial policy determines the investment policy and the credit rating requirements of customers and counterparties in investment transactions and derivative contracts. The turnover and maturity structure of Group's companies' trade receivables are reported monthly and are monitored by the parent company's financial management.
The principles of credit risk management are confirmed by Martela's Board of Directors. Risk Management is based on authorisations given to the organisation.
Credit risks related to the company's trade and other receivables are minimised by using short terms of payment, effective collection measures and accounting for the counterparty's creditworthiness. Supply agreements are used when the customer company is unknown and the available credit information is insufficient. In this context a supply agreement is an agreement which secures any receivables arising from an order by withholding the right of ownership with Martela Oyj until the customer has paid the sale price in full. Supply agreements are only used in sales in Finland. A customer may also be required to make prepayment before sold products are delivered if it is considered necessary in light of the potential credit risk associated with the customer. Counterparties may also be granted to credit limits. The creditworthiness of established customers is monitored regularly on the basis of payment history and credit rating. Collateral may be required from certain customers based on their creditworthiness and in the case of exports, for example, Martela may use confirmed irrevocable Letters of Credit.
The book value of financial assets corresponds to the maximum amount of the credit risk.
The maximum financial asset credit risk amount on the balance sheet date 31 December is presented in the following table:
| Maximum financial asset credit risk (EUR 1,000) |
2013 | 2012 |
|---|---|---|
| Available-for-sale financial assets | 55 | 55 |
| Financial assets recognised at fair value through profit and loss | 0 | 0 |
| Loans and other receivables | 22 419 | 22 746 |
| Cash and cash equivalents | 4 857 | 7 589 |
| Total | 27 331 | 30 390 |
The age distribution of Group trade receivables on the balance sheet date 31 December is presented in the following table.
| Age distribution of trade receivables (EUR 1,000) |
2013 | 2012 |
|---|---|---|
| Unmatured | 14 969 | 16 761 |
| Matured 1–30 days | 4 441 | 3 612 |
| Matured 31–60 days | 1 265 | 1 400 |
| Matured over 60 days | 1 657 | 813 |
| Total | 22 332 | 22 586 |
The maximum trade receivable credit risk amount on the balance sheet date 31 December by country or region.
| Distribution of trade receivables by country or region (EUR 1,000) |
2013 | 2012 |
|---|---|---|
| Finland | 13 587 | 14 509 |
| Scandinavia | 4 693 | 4 109 |
| European countries | 466 | 3 491 |
| Other regions | 3 586 | 477 |
| Total | 22 332 | 22 586 |
Credit risks from trade receivables are not concentrated.
EUR 167 thousand in credit losses has been recognised as expenses and presented in other operating expenses. In 2012, EUR 102 thousand in credit losses was recognised as expenses, and a provision of EUR 190 thousand was cancelled, producing a net effect of EUR +88 thousand on the result.
The Group strives to assess and monitor the amount of funding required by business operations so that there are sufficient liquid assets for operating expenses and repayment of maturing loans. In addition,
the Group continually maintains sufficient liquidity by means of effective cash management solutions such as cash reserves and bank overdrafts. The refinancing risk is managed by balancing the maturity schedules of loans and bank overdrafts according to forecast cash flows and by using several banks in financial operations. There are no covenants attached to loans.
Cash and cash equivalents at the end of financial year totalled EUR 4,857 thousand, and unused bank overdrafts totalled EUR 6,463 thousand.
| 2014 | 2015 | 2016 | 2017 | 2018 | later | Total | Balance sheet value |
|
|---|---|---|---|---|---|---|---|---|
| Bank loans | 5 399 | 871 | 4307 | 82 | 0 | 0 | 10 659 | 10 659 |
| Pension loans | 1 000 | 1 000 | 1 000 | 1 000 | 0 | 0 | 4 000 | 4 000 |
| Financial leases | 240 | 301 | 111 | 45 | 19 | 0 | 716 | 716 |
| Trade payables | 7 346 | 0 | 0 | 0 | 0 | 0 | 7 346 | 7 346 |
| Bank overdrafts | 0 | 0 | 0 | 0 | 0 | 0 | 0 | |
| Loan interest and quarantee fees | 282 | 229 | 195 | 54 | 13 | 0 | 773 | |
| Total | 14 267 | 2 401 | 5 613 | 1 181 | 32 | 0 | 23 494 | |
| Guarantees given* | 177 | 177 | 177 | 46 | 0 | 0 | 577 | |
| Derivatives | 0 | |||||||
| Total | 14 444 | 2 578 | 5 790 | 1 227 | 32 | 0 | 24 071 | |
* Guarantees given to third-party on rents given to subsidiaries by the parent company.
Cash and cash equivalents at the end of financial year 2012 totalled EUR 7,589 thousand, and unused bank overdrafts totalled EUR 3,493 thousand.
| as follows: (EUR | 1,000) |
|---|---|
| ------------------ | -------- |
| 2013 | 2014 | 2015 | 2016 | 2017 | later | Total | Balance sheet value |
|
|---|---|---|---|---|---|---|---|---|
| Bank loans | 4 914 | 851 | 700 | 4 200 | 0 | 0 | 10 665 | 10 665 |
| Pension loans | 800 | 800 | 800 | 800 | 800 | 0 | 4 000 | 4 000 |
| Financial leases | 295 | 181 | 86 | 91 | 22 | 0 | 675 | 675 |
| Trade payables | 8 268 | 0 | 0 | 0 | 0 | 0 | 8 268 | 8 268 |
| Bank overdrafts | 0 | 0 | 0 | 0 | 0 | 0 | 0 | |
| Loan interest and quarantee fees | 347 | 277 | 241 | 204 | 36 | 0 | 1 105 | |
| Total | 14 624 | 2 109 | 1 827 | 5 295 | 858 | 0 | 24 713 | |
| Guarantees given* | 176 | 176 | 176 | 176 | 48 | 0 | 752 | |
| Derivatives | 0 | 0 | ||||||
| Total | 14 800 | 2 285 | 2 003 | 5 471 | 906 | 0 | 25 465 |
* Guarantees given to third-party on rents given to subsidiaries by the parent company.
It is the Group's objective to ensure an efficient capital structure that will secure its operating capacity in the capital markets in all circumstances irrespective of volatility. The Group's Board of Directors assesses the capital structure on a regular basis. The Group uses the equity ratio to monitor its capital structure. The Group's capital management is not subject to external
demands such as covenants, for example. The equity ratio formula is presented in the following table:
Key capital indicator to be monitored in capital management: Equity to assets ratio.
| Equity ratio (EUR 1,000) |
31.12.2013 | 31.12.2012 |
|---|---|---|
| Shareholders' equity | 21 802 | 26 370 |
| Balance sheet total – advance payments | 57 987 | 63 773 |
| Equity to assets ratio, % | 37.6 | 41.4 |
| (EUR 1,000) |
31.12.2013 | 31.12.2012 |
|---|---|---|
| Minimum lease payments under non-cancellable operating leases are as follows: |
||
| Not later than one year | 4 595 | 4 267 |
| Later than one year and not later than five years | 8 706 | 9 013 |
| Later than five years | 819 | 1 802 |
| 14 120 | 15 082 |
The group has leased many of the premises it uses. The lengths of operating leases are from 1 to 10 years, and normally they include the option to extend the lease after the initial expiry date. The income statement for 2013 includes rents paid on the basis of operating leases totalling EUR -4,808 thousand (EUR -5,602 thousand in 2012).
| (EUR 1,000) |
31.12.2013 | 31.12.2012 |
|---|---|---|
| Debts secured by mortgages | ||
| Bank loans | 14 659 | 10 808 |
| Property mortgages | 10 760 | 9 194 |
| Corporate mortgages | 12 455 | 12 395 |
| Shares pledged | 4 | 4 |
| Total mortgages | 23 219 | 21 593 |
| Other pledges | ||
| Guarantees as security for rents | 336 | 336 |
| Collateral granted on behalf of others | ||
| Guarantees on behalf of associated undertakings | 546 | 537 |
Martela Group's related party comprise the CEO, members of the board, the group's management team and associated undertaking P.O. Korhonen Oy. Members of the company's board and the CEO hold a total of 9.1% of the share capital and 17,3% of the votes.
| Domicile | Holding (%) 31.12.2013 |
Voting power (%) 31.12.2013 |
|
|---|---|---|---|
| Parent company | |||
| Martela Oyj | Finland | ||
| Subsidiaries | |||
| Kidex Oy | Finland | 100 | 100 |
| Grundell Henkilöstöpalvelut | Finland | 100 | 100 |
| Grundell Muuttopalvelut | Finland | 100 | 100 |
| Kiinteistö Oy Ylähanka | Finland | 100 | 100 |
| Martela AB, Bodafors | Sweden | 100 | 100 |
| Aski Avvecklingsbolag AB, Malmö | Sweden | 100 | 100 |
| Martela AS, Oslo | Norway | 100 | 100 |
| Martela SP. Z o.o., Warsaw | Poland | 100 | 100 |
| 000 Martela, Moscow | Russia | 100 | 100 |
| 000 Martela SP, St. Petersburg | Russia | 100 | 100 |
The Group has determined key persons in management to be: Members of the Board, CEO, Group's Management Team
The table below presents the employee benefits received by key persons in management. The information on employee benefits covers performance-based benefits only. Voluntary pension plans, which include both defined contribution plans and defined benefit plans, are recognised as post-employment benefits.
| (EUR 1,000) |
2013 | 2012 |
|---|---|---|
| Management employee benefits | ||
| Salaries and other short-term employee benefits | -1 410 | -1 499 |
| Benefits following end of employment | 0 | -146 |
| Share-based benefits | 0 | 90 |
| Total | -1 410 | -1 555 |
| Salaries and other short-term employee benefits | 2013 | 2012 |
| Board members | -121 | -105 |
| CEO | -249 | -280 |
| Management team members (excl. salary of CEO) | -1 040 | -1 170 |
| Total | -1 410 | -1 555 |
| Fees paid to Board members: | 2013 | 2012 |
|---|---|---|
| Heikki Ala-Ilkka | -35 | -30 |
| Pekka Martela | -17 | -15 |
| Jaakko Palsanen | -17 | -15 |
| Jori Keckman | 0 | -2 |
| Tapio Hakakari | -4 | -15 |
| Yrjö Närhinen | -17 | -13 |
| Pinja Metsäranta | -17 | -15 |
| Kirsi Komi | -14 | 0 |
| Total | -121 | -105 |
Fees based on board membership are not paid to members employed by the company.
| Salaries, other short-term employee benefits and pension commitment of CEO | 2013 | 2012 |
|---|---|---|
| Salaries | -249 | -280 |
| Voluntary pension plans | -83 | -61 |
| Total | -332 | -341 |
| Statutory earnings-related pension payment (TyEL) on salaries | -57 | -63 |
The CEO is entitled, if he wishes, to retire with a full pension after reaching the age of 60. Retirement benefits are included in pension expenses, defined benefit plans, presented in note 3. The period of notice is 6 months with respect to both the CEO and the company, and in the event of a dismissal by the company, the CEO is entitled to a lump-sum compensation equalling his salary for 18 months.
A new long-term share-based incentive scheme was launched for the Managing Director and Group Management, which covered the period from 2010 to the end of 2012. The incentive plan was based on the Group's overall profit performance during 2010–2012. Rewards based on this system will be paid as a combination of shares and cash. A total of EUR 0 thousand from this system has been recognised in the result for the year 2012.
A new share-based incentive scheme has been launched for the Managing Director and Group Management 2013. The incentive plan is based on the Group's overall profit performance 2013. A total of EUR 0 thousand from this system has been recognised in the result for the year 2013.
| Martela-Group 2009-2013 | ||||||
|---|---|---|---|---|---|---|
| 2013 | 2012 | 2011 | 2010 | 2009 | ||
| Revenue | EUR million | 132.3 | 142.7 | 130.7 | 108.4 | 95.3 |
| Change in revenue | % | -7.3 | 9.2 | 20.6 | 13.7 | -32.5 |
| Export and operations outside Finland | EUR million | 39.9 | 41.2 | 40.9 | 32.7 | 29.2 |
| In relation to revenue | % | 30.1 | 28.8 | 31.3 | 30.2 | 30.6 |
| Exports from Finland | EUR million | 10.2 | 10.4 | 10.5 | 9.6 | 11.1 |
| Gross capital expenditure | EUR million | 3.0 | 4.0 | 6.8 | 4.7 | 2.2 |
| In relation to revenue | % | 2.3 | 2.8 | 5.2 | 4.4 | 2.3 |
| Depreciation | EUR million | 3.6 | 3.4 | 2.6 | 2.7 | 3.1 |
| Research and development | EUR million | 2.4 | 2.7 | 2.4 | 2.2 | 2.6 |
| In relation to revenue | % | 1.8 | 1.9 | 1.8 | 2.0 | 2.7 |
| Average personnel | 770 | 806 | 637 | 601 | 636 | |
| Change in personnel | % | -4.5 | 26.5 | 6.0 | -5.5 | -6.6 |
| Personnel at end of year | 767 | 801 | 791 | 625 | 606 | |
| Of which in Finland | 618 | 634 | 610 | 457 | 453 | |
| Profitability | ||||||
| Operating profit | EUR million | -2.9 | -0.9 | 2.6 | 1.3 | 0.8 |
| In relation to revenue | % | -2.2 | -0.6 | 2.0 | 1.2 | 0.8 |
| Profit before appropriations and taxes | EUR million | -4.4 | -1.8 | 1.9 | 1.1 | 0.4 |
| In relation to revenue | % | -3.3 | -1.3 | 1.5 | 1.0 | 0.4 |
| Profit for the year *) | EUR million | -3.9 | -2.1 | 1.6 | 0,6 | 0.1 |
| In relation to revenue | % | -3.0 | -1.4 | 1.2 | 0.6 | 0.1 |
| Revenue/employee | EUR thousand | 171.8 | 177.0 | 205.2 | 180.4 | 149.9 |
| Return on equity (ROE) | % | -16.3 | -7.2 | 5.1 | 2.0 | 0.4 |
| Return on investment (ROI) | % | -7.9 | -2.7 | 6,0 | 3.7 | 2.3 |
| Finance and financial position | ||||||
| Balance sheet total | EUR million | 58.6 | 64.6 | 69.7 | 56.7 | 55.6 |
| Equity | EUR million | 21.8 | 26.4 | 30.8 | 31.2 | 31.8 |
| Interest-bearing net liabilities | EUR million | 11.2 | 8.7 | -0.8 | -4.4 | -10.8 |
| In relation to revenue | % | 8.4 | 5.4 | -0.6 | -4.0 | -11.3 |
| Equity ratio | % | 37.6 | 41.4 | 44.7 | 55.6 | 57.4 |
| Gearing | % | 51.2 | 32.8 | -2.6 | -14.1 | -33.9 |
| Net cash flow from operations | EUR million | -0.1 | 0,0 | 1.2 | -0.1 | 10.8 |
| Dividends paid | EUR million | 0.8 | 1.8 | 1.8 | 1.8 | 2.4 |
*) Change in deferred tax liability included in profit for the year.
| 2013 | 2012 | 2011 | 2010 | 2009 | ||
|---|---|---|---|---|---|---|
| Earnings per share | EUR | -0.97 | -0.51 | 0.39 | 0.16 | 0.03 |
| Earnings per share (diluted) | EUR | -0.97 | -0.51 | 0.39 | 0.16 | 0.03 |
| Share par value | EUR | 1.7 | 1.7 | 1.7 | 1.7 | 1.7 |
| Dividend | EUR *) | 0.00 | 0.20 | 0.45 | 0.45 | 0.45 |
| Dividend/earnings per share | % | - | -39.2 | 115.4 | 281.3 | 1 500.0 |
| Effective dividend yield | % | - | 4.0 | 7.8 | 5.8 | 6.3 |
| Equity per share | EUR | 5.38 | 6.51 | 7.60 | 7.74 | 7.88 |
| Price of A share 31.12. | EUR | 3.35 | 5.02 | 5.79 | 7.77 | 7.13 |
| Share issue-adjusted number of shares | thousands | 4 155.6 | 4 155.6 | 4 155.6 | 4 155.6 | 4 155.6 |
| Average share issue-adjusted number of shares |
thousands | 4 155.6 | 4 155.6 | 4 155.6 | 4 155.6 | 4 155.6 |
| Price/earnings ratio (P/E) | -3.5 | -9.8 | 14.8 | 48.6 | 237.7 | |
| Market value of shares **) | EUR million | 13.6 | 20.3 | 23.4 | 31.3 | 28.1 |
*) Board proposal
**) Price of A shares used as value of K shares
The number of registered Martela Oyj shares on 31.12.2013 was 4,155,600. The shares are divided into A and K shares. Each A share carries 1 vote and each K
share 20 votes in a general shareholders' meeting. Both share series have the same dividend rights. The company's maximum share capital is EUR 14,000,000 and the minimum is EUR 3,500,000.
Martela Oyj's shares were entered in the book-entry register on 10.2.1995.
The counter-book value of each share is EUR 1.68. The A shares are quoted on the Small Cap list of the OMX Nordic Exchange in Helsinki. A trading lot is 100 shares. Martela Oyj has made a Liquidity Providing (LP) market-making agreement with FIM Pankki Oy.
| Distribution of shares 31.12.2013 | Number | Total EUR | % of share capital |
Votes | % of votes |
|---|---|---|---|---|---|
| K shares | 604 800 | 1 018 500 | 15 | 12 096 000 | 77 |
| A shares | 3 550 800 | 5 981 500 | 85 | 3 550 800 | 23 |
| Total | 4 155 600 | 7 000 000 | 100 | 15 646 800 | 100 |
| The largest shareholders by number of shares 31.12.2013 |
K series shares |
A series shares |
Number of shares |
% | Number of votes |
% of total votes |
|---|---|---|---|---|---|---|
| Marfort Oy | 292 000 | 232 574 | 524 574 | 12.6 | 6 072 574 | 38.8 |
| Ilmarinen Mutual Pension Insurance Company | 0 | 335 400 | 335 400 | 8.1 | 335 400 | 2.1 |
| OP-Suomi Arvo | 0 | 285 000 | 285 000 | 6.9 | 285 000 | 1.8 |
| Nordea Pankki Suomi Oyj | 0 | 177 711 | 177 711 | 4.3 | 177 711 | 1.1 |
| Martela Heikki | 52 122 | 121 342 | 173 464 | 4.2 | 1 163 782 | 7.4 |
| Palsanen Leena | 24 486 | 131 148 | 155 634 | 3.7 | 620 868 | 4.0 |
| Pohjola Vakuutus Oy | 0 | 117 982 | 117 982 | 2.8 | 117 982 | 0.8 |
| Palsanen Jaakko | 1 600 | 114 931 | 116 531 | 2.8 | 146 931 | 0.9 |
| Oy Autocarrera Ab | 0 | 116 000 | 116 000 | 2.8 | 116 000 | 0.7 |
| Martela Matti Tapio | 58 256 | 56 982 | 115 238 | 2.8 | 1 222 102 | 7.8 |
| Sijoitusrahasto Nordea Suomi Small Cap | 0 | 111 333 | 111 333 | 2.7 | 111 333 | 0.7 |
| Lindholm Tuija | 43 122 | 32 841 | 75 963 | 1.8 | 895 281 | 5.7 |
| Martela Pekka | 69 274 | 8 | 69 282 | 1.7 | 1 385 488 | 8.9 |
| Martela Oyj | 0 | 67 700 | 67 700 | 1.6 | 67 700 | 0.4 |
| Oy Joeston Ltd | 0 | 43 425 | 43 425 | 1.0 | 43 425 | 0.3 |
| Erikoissijoitusrahasto Fourton Fokus Suomi | 0 | 39 700 | 39 700 | 1.0 | 39 700 | 0.3 |
| Other shareholders | 63 940 | 1 566 723 | 1 630 663 | 39.2 | 2 845 523 | 18.2 |
| Total | 604 800 | 3 550 800 | 4 155 600 | 100.0 | 15 646 800 | 100.0 |
The list includes all shareholders holding over 5% of the shares and votes.
The company's Board of Directors and CEO together hold 9.1% of the shares and 17.3% of the votes.
Martela Oyj owns 67,700 A shares. Of these, 33,850 shares have been purchased at an average price of EUR 10.65 and 33,850 shares resulted from a share issue. The number of treasury shares is equivalent to 1.6% of all shares and 0.4% of all votes.
The Annual General Meeting has in 2013 re-authorised the Board of Directors to decide, for the following years, on raising the share capital, issuing convertible bonds and acquiring and/or disposing of the company's shares in deviation from the pre-emptive rights of shareholders.
The AGM approved the Board of Directors' proposals, detailed in the meeting notice, to authorise the Board to acquire and/or dispose of Martela shares. The authorisation is for a maximum of 415,560 of the company's A series shares.
| Number of shares | Number of share holders |
% of total share holders |
Number of shares |
% | Number of votes |
% of total votes |
|---|---|---|---|---|---|---|
| 1–500 | 1 543 | 73.3 | 283 821 | 6.8 | 294 461 | 1.9 |
| 501–1000 | 273 | 13.0 | 211 317 | 5.1 | 222 337 | 1.4 |
| 1001–5000 | 215 | 10.2 | 452 234 | 10.9 | 592 834 | 3.8 |
| Over 5000 | 75 | 3.6 | 3 207 182 | 77.2 | 14 536 122 | 92.9 |
| Total | 2 106 | 100.0 | 4 154 554 | 100.0 | 15 645 754 | 100.0 |
| of which nominee-registered | 5 | 186 637 | 186 637 | |||
| In the waiting list and collective account | 1 046 | 0.0 | 1 046 | 0.0 | ||
| Total | 4 155 600 | 100.0 | 15 646 800 | 100.0 |
| Number of share holders |
% | Number of shares |
% | Number of votes |
% | |
|---|---|---|---|---|---|---|
| Private companies | 94 | 4.5 | 1 062 524 | 25.6 | 6 610 524 | 42.2 |
| Financial and insurance institutions | 10 | 0.5 | 738 929 | 17.8 | 738 929 | 4.7 |
| Public corporations | 1 | 0.0 | 335 400 | 8.1 | 335 400 | 2.1 |
| Non-profit entities | 10 | 0.5 | 8 717 | 0.2 | 8 717 | 0.1 |
| Households | 1 982 | 94.1 | 1 988 871 | 47.9 | 7 932 071 | 50.7 |
| Foreign investors | 9 | 0.4 | 20 113 | 0.5 | 20 113 | 0.1 |
| Total | 2 106 | 100.0 | 4 154 554 | 100.0 | 15 645 754 | 100.0 |
| of which nominee-registered | 5 | 186 637 | 4.5 | 186 637 | ||
| In the waiting list and collective account | 1 046 | 0.0 | 1 046 | 0.0 | ||
| Total | 4 155 600 | 100.0 | 15 646 800 | 100.0 |
| (EUR 1,000) | Note | 1.1.–31.12.2013 | 1.1.–31.12.2012 |
|---|---|---|---|
| Revenue | 1 | 88 838 | 102 251 |
| Changes in inventories of finished goods and work in progress | -147 | -125 | |
| Production for own use | 54 | 278 | |
| Other operating income | 2 | 1 266 | 308 |
| Materials and services | 3 | -54 004 | -58 652 |
| Personnel expenses | 4 | -19 718 | -21 134 |
| Depreciation and impairment | 5 | -1 515 | -1 411 |
| Other operating expenses | -16 074 | -23 056 | |
| Operating profit (-loss) | -1 300 | -1 541 | |
| Financial income and expenses | 6 | -930 | -314 |
| Profit (-loss) before extraordinary items | -2 230 | -1 855 | |
| Extraordinary expenses | 7 | 0 | 184 |
| Profit (-loss) before appropriations and taxes | -2 230 | -1 671 | |
| Income taxes | 8 | 0 | -102 |
| Profit (-loss) for the financial year | -2 230 | -1 774 |
| (EUR 1,000) | Note | 31.12.2013 | 31.12.2012 |
|---|---|---|---|
| ASSETS | |||
| NON-CURRENT ASSETS | |||
| Intangible assets | 9 | ||
| Intangible rights | 390 | 530 | |
| Other long-term expenditure | 4 877 | 1 805 | |
| Advance payments | 199 | 2 443 | |
| 5 466 | 4 778 | ||
| Tangible assets | 10 | ||
| Land and water areas | 79 | 84 | |
| Buildings and structures | 2 337 | 2 430 | |
| Machinery and equipment | 2 133 | 2 525 | |
| Other tangible assets | 23 | 23 | |
| Advance payments and purchases in progress | 8 | 99 | |
| 4 580 | 5 161 | ||
| Investments | 11 | ||
| Shares in subsidiaries | 7 962 | 7 962 | |
| Receivables from subsidiaries | 14 324 | 14 324 | |
| Shares in associated undertakings | 0 | 250 | |
| Receivables from associated undertakings | 0 | 450 | |
| Other shares and participations | 15 | 15 | |
| 22 301 | 23 001 |
| CURRENT ASSETS | Note | 31.12.2013 | 31.12.2012 |
|---|---|---|---|
| Inventories | |||
| Materials and supplies | 5 797 | 6 794 | |
| Work in progress | 784 | 558 | |
| Finished goods | 1 129 | 1 437 | |
| Advances paid to suppliers | 387 | 131 | |
| 8 097 | 8 920 | ||
| Non-current receivables | 12 | ||
| Loan receivables | 328 | 328 | |
| Current receivables | 12 | ||
| Trade receivables | 15 220 | 18 697 | |
| Loan receivables | 4 839 | 3 099 | |
| Accrued income and prepaid expenses | 689 | 867 | |
| 20 748 | 22 663 | ||
| Cash and cash equivalents | 3 248 | 4 266 | |
| 64 771 | 69 118 | ||
| LIABILITIES | |||
| SHAREHOLDERS' EQUITY | |||
| Shareholders' equity | 13 | ||
| Share capital | 7 000 | 7 000 | |
| Share premium account | 1 116 | 1 116 | |
| Reserve fund | 11 | 11 | |
| Retained earnings | 30 914 | 33 497 | |
| Profit for the year | -2 230 | -1 774 | |
| Total | 36 811 | 39 850 | |
| OBLIGATORY PROVISIONS | |||
| Other obligatory provisions | 566 | 0 | |
| 566 | 0 | ||
| LIABILITIES | |||
| Non-current | 14 | ||
| Loans from financial institutions | 4 900 | 5 600 | |
| Pension loans | 3 200 | 3200 | |
| Accrued liabilities and prepaid income | 90 | 150 | |
| 8 190 | 8 950 | ||
| Current Interest-bearing |
15 | ||
| Loans from financial institutions | 4 700 | 4 708 | |
| Pension loans | 800 | 800 | |
| 5 500 | 5 508 | ||
| Non-interest-bearing | |||
| Advances received | 256 | 448 | |
| Trade payables | 5 881 | 6 457 | |
| Accrued liabilities and prepaid income | 4 547 | 4 974 | |
| Other current liabilities | 3 019 | 2 931 | |
| 13 703 | 14 810 | ||
| Liabilities, total | 27 393 | 29 268 | |
| 64 771 | 69 118 |
| (EUR 1,000) | 1.1.–31.12.2013 | 1.1.–31.12.2012 |
|---|---|---|
| CASH FLOWS FROM OPERATING ACTIVITIES | ||
| Cash flow from sales | 88 988 | 102 111 |
| Cash flow from other operating income | 304 | 308 |
| Payments on operating costs | -87 498 | -102 733 |
| Net cash from operating activities before financial items and taxes | 1 794 | -314 |
| Interests paid and other financial payments | -919 | -325 |
| Taxes paid | 447 | -619 |
| Net cash from operating activities before extraordinary items | 1 322 | -1 258 |
| Net cash from operating activities (A) | 1 322 | -1 258 |
| CASH FLOWS FROM INVESTING ACTIVITIES | ||
| Capital expenditure on tangible and intangible assets | -1 781 | -2 593 |
| Proceeds from sale of tangible and intangible assets | 2 | 1 |
| Investment in shares in subsidiaries | 0 | -2 900 |
| Investment in associated undertakings | 0 | -200 |
| Proceeds from other investments | 960 | 0 |
| Loans granted | -565 | -827 |
| Repayments of loan receivables | 562 | 0 |
| Net cash used in investing activities (B) | -822 | -6 519 |
| CASH FLOWS FROM FINANCING ACTIVITIES | ||
| Proceeds from short-term loans | 18 500 | 10 000 |
| Repayments of short-term loans | -18 287 | -6 500 |
| Proceeds from long-term loans | 800 | 4 000 |
| Repayments of long-term loans | -1 721 | -2 821 |
| Dividends and other profit distribution | -810 | -1 822 |
| Net cash used in financing activities (C) | -1 518 | 2 857 |
| CHANGE IN LIQUID FUNDS (A+B+C) (+ increase, - decrease) | -1 018 | -4 920 |
| Liquid funds at beginning of financial year 1) | 4 266 | 9 187 |
| Changes in fair value, investments | 0 | 0 |
| Liquid funds at end of financial year 1) | 3 248 | 4 266 |
Martela Oyj's financial statements have been prepared in accordance with Finnish Accounting Standards (FAS). Items in the financial statements have been recognised at cost. No account has been taken of increases in value, unless separately mentioned.
Transactions denominated in foreign currencies are recognised at the rate of exchange on the date of their occurrence, and receivables and liabilities in the balance sheet are translated at the average rate on the balance sheet date. Exchange rate differences arising from trade receivables are recognised in revenue and those of trade payables in adjustment items for purchases. Exchange rate differences arising from balance sheet financial items, such as loans, are recognised in exchange rate differences of finance.
Intangible assets are depreciated according to their estimated useful life in 3–10 years.
Buildings, machinery, equipment and other tangible assets are reported in the balance sheet at cost. No depreciation is recognised on revaluations of buildings or on land areas. Otherwise, depreciation is calculated on a straight line basis according to the estimated useful life.
| Buildings and structures | 20–30 years |
|---|---|
| Machinery and equipment | 4–8 years |
| Other tangible assets | 3–5 years |
Stock exchange listed shares are recognised at market value and changes are entered in financial items. Other shares are recognised at cost. On the balance sheet date, Martela Oyj held no stock exchange listed shares. Investments in subsidiaries and associated undertakings are recognised at cost and permanent impairments are deducted.
Inventories are recognised at cost using the FIFO method. The value of inventories is reduced with respect to unsaleable items. The cost of finished goods includes not only the direct manufacturing costs, but also a share of the overhead costs of production.
Investments in fund units are classified as financial assets at fair value through profit and loss. Investments are measured at fair value on the basis of price quotations published on functioning markets, and changes in fair value are recognised in the income statement in the year in which they were incurred.
The company's derivatives include currency forward contracts and an interest rate swap agreement. The currency forward contracts are used to hedge the net position remaining after reconciliation of forecast revenues and expenses. The interest rate swap agreement relates to changing the floatingrate loan to a fixed-rate one. The fair values of derivatives are based on market prices on the balance sheet date and changes in the fair values are recognised in the income statement for the period in which they arise. More detailed information on derivatives is
given in Notes 22 and 14 of the Notes to the Consolidated Financial Statements.
The company's income taxes are recognised on an accrual basis and are calculated according to local tax legislation with adjustments from previous financial years. Deferred tax liabilities are reported in the Notes.
Revenue is recognised on an accrual basis. Direct taxes, discounts and exchange rate differences are deducted from sales income in calculating revenue.
Research and development expenses are recognised normally through profit or loss in the year they arise. R&D-related equipment is capitalised in machinery and equipment.
Proceeds from sale of assets, public subsidies and other income (e.g. rent income) than that from actual operations are recognised in "Other operating income". Losses from disposal of assets and other costs than those from actual operations are recognised in "Other operating expenses".
Extraordinary income and expenses are deemed as those based on events in the company that are extraordinary, non-recurring and substantial, such as group contribution and items related to corporate restructuring.
All leasing payments are treated as rent expenses.
The companies' pension security has been arranged through pension companies. Martela Oyj's CEO is entitled to transfer to a full pension after reaching the age of 60 years.
The treasury shares in the parent company's financial statements are reported as a deduction from equity.
| 2013 | 2012 | |
|---|---|---|
| Finland | 91 | 92 |
| Scandinavia | 5 | 5 |
| Other | 4 | 3 |
| Total | 100 | 100 |
| (EUR 1,000) | 2013 | 2012 |
|---|---|---|
| Gains on sale of fixed assets | 2 | 1 |
| Rental income | 106 | 54 |
| Public subsidies | 164 | 160 |
| Other operating income | 994 | 93 |
| Total | 1 266 | 308 |
Other operating icome include sale of Ahtela property EUR 960 thousand.
| (EUR 1,000) | 2013 | 2012 |
|---|---|---|
| Purchases during the financial year | -47 211 | -53 525 |
| Change in inventories of materials and supplies | -931 | 171 |
| External services | -5 862 | -5 298 |
| Materials and supplies, total | -54 004 | -58 652 |
| Auditor's fees | ||
| Auditing | -64 | -79 |
| Tax services | 0 | -14 |
| Other services | -3 | -68 |
| Auditor's fees, total | -67 | -161 |
| (EUR 1,000) | 2013 | 2012 |
|---|---|---|
| Salaries, CEO | -237 | -287 |
| Salaries of boards of directors | -121 | -105 |
| Salaries of boards of directors and managing director, total | -358 | -392 |
| Other salaries | -15 026 | -16 413 |
| Pension expenses | -3 069 | -3 277 |
| Other salary-related expenses | -1 265 | -1 051 |
| Personnel expenses in the income statement | -19 718 | -21 133 |
| Fringe benefits | -349 | -373 |
| Total | -20 067 | -21 506 |
| Personnel | ||
| Average personnel, workers | 125 | 147 |
| Average personnel, officials | 221 | 251 |
| Average personnel, total | 346 | 398 |
| Personnel at year end | 334 | 395 |
| (EUR 1,000) | 2013 | 2012 |
|---|---|---|
| Depreciation according to plan | ||
| Intangible assets | -737 | -608 |
| Tangible assets | ||
| Buildings and structures | -93 | -93 |
| Machinery and equipment | -684 | -670 |
| Depreciation according to plan, total | -1 514 | -1 371 |
| Impairments | 0 | -41 |
| Depreciations and impairments, total | -1 514 | -1 412 |
| (EUR 1,000) | 2013 | 2012 |
|---|---|---|
| Financial income and expenses | ||
| Interest income on short-term investments | 8 | 18 |
| Interest income on short-term investments from Group companies | 98 | 131 |
| Foreign exchange gains | 3 | 24 |
| Other financial income | 0 | 0 |
| Interest expenses | -303 | -385 |
| Losses on foreign exchange | -17 | -17 |
| Other financial expenses | -718 | -85 |
| Change in value of assets recognised at fair value through profit or loss | 0 | 0 |
| Total | -929 | -314 |
Financial expenses 2013 include obligatory provision of EUR 566 thousand for the realisation of the loan guarantee given to Martela's associated company, P.O. Korhonen Oy.
| (EUR 1,000) | 2013 | 2012 |
|---|---|---|
| Extraordinary income | ||
| Group contribution | 0 | 562 |
| Extraordinary expenses | ||
| Group contribution | 0 | -378 |
| Extraordinary items, total | 0 | 184 |
| (EUR 1,000) | 2013 | 2012 |
|---|---|---|
| Income taxes from operations | 0 | -31 |
| Taxes from previous years | 0 | -71 |
| Total | 0 | -102 |
Deferred taxes liabilities and assets have not been included in the income statement or balance sheet. Deferred tax assets due to matching differences and losses total EUR 0 thousand 2013 and 2012.
| (EUR 1,000) | ||||
|---|---|---|---|---|
| 1.1.2013–31.12.2013 | Intangible rights | Other long-term expenses |
Work in progress | Intangible assets total |
| Acquisition cost 1.1. | 2 978 | 4 162 | 2 443 | 9 582 |
| Increases | 147 | 3 516 | 0 | 3 663 |
| Decreases | -1 | 0 | -2 243 | -2 244 |
| Acquisition cost 31.12. | 3 124 | 7 678 | 200 | 11 001 |
| Accumulated depreciation 1.1. | -2 448 | -2 358 | 0 | -4 806 |
| Accumulated depreciation, decreases | 0 | 0 | 0 | 0 |
| Depreciation for the year 1.1.–31.12. | -286 | -444 | 0 | -730 |
| Accumulated depreciation 31.12. | -2 734 | -2 802 | 0 | -5 536 |
| Carrying amount 1.1. | 530 | 1 805 | 2 443 | 4 778 |
| Carrying amount 31.12. | 390 | 4 876 | 200 | 5 466 |
| 1.1.2012–31.12.2012 | Intangible rights | Other long-term | Work in progress | Intangible assets |
|---|---|---|---|---|
| expenses | total | |||
| Acquisition cost 1.1. | 2 683 | 3 117 | 1 644 | 7 443 |
| Increases | 295 | 1 045 | 2 464 | 3 804 |
| Decreases | 0 | 0 | -1 665 | -1 665 |
| Acquisition cost 31.12. | 2 978 | 4 162 | 2 443 | 9 582 |
| Accumulated depreciation 1.1. | -2 126 | -2 078 | 0 | -4 204 |
| Accumulated depreciation, decreases | 0 | 0 | 0 | 0 |
| Depreciation for the year 1.1.–31.12. | -322 | -280 | 0 | -602 |
| Accumulated depreciation 31.12. | -2 448 | -2 358 | 0 | -4 806 |
| Carrying amount 1.1. | 557 | 1 040 | 1 644 | 3 241 |
| Carrying amount 31.12. | 530 | 1 805 | 2 443 | 4 778 |
| Land areas | Buildings | Machinery and equip ment |
Other tangible assets |
Work in progress |
Total |
|---|---|---|---|---|---|
| 84 | 10 607 | 10 835 | 23 | 99 | 21 648 |
| 0 | 0 | 310 | 0 | 0 | 310 |
| -4 | 0 | -16 | 0 | -91 | -111 |
| 80 | 10 607 | 11 129 | 23 | 8 | 21 847 |
| 0 | -8 177 | -8 312 | 0 | 0 | -16 489 |
| 0 | 0 | 5 | 0 | 0 | 5 |
| 0 | -93 | -691 | 0 | 0 | -784 |
| 0 | -8 270 | -8 998 | 0 | 0 | -17 268 |
| 84 | 2 430 | 2 524 | 23 | 99 | 5 160 |
| 80 | 2 337 | 2 132 | 23 | 8 | 4 580 |
| 1.1.2012–31.12.2012 | Land areas | Buildings | Machinery and equip ment |
Other tangible assets |
Work in progress |
Total |
|---|---|---|---|---|---|---|
| Acquisition cost 1.1. | 84 | 10 595 | 10 752 | 23 | 99 | 21 553 |
| Increases | 0 | 12 | 724 | 0 | 0 | 736 |
| Decreases | 0 | 0 | -641 | 0 | 0 | -641 |
| Acquisition cost 31.12. | 84 | 10 607 | 10 835 | 23 | 99 | 21 648 |
| Accumulated depreciation 1.1. | 0 | -8 084 | -8 195 | 0 | 0 | -16 279 |
| Accumulated depreciation, decreases | 0 | 0 | 559 | 0 | 0 | 559 |
| Depreciation for the year 1.1.–31.12. | 0 | -93 | -676 | 0 | 0 | -769 |
| Accumulated depreciation 31.12. | 0 | -8 177 | -8 312 | 0 | 0 | -16 489 |
| Carrying amount 1.1. | 84 | 2 511 | 2 558 | 23 | 99 | 5 275 |
| Carrying amount 31.12. | 84 | 2 430 | 2 524 | 23 | 99 | 5 160 |
Revaluations included in buildings total EUR 1,850 thousand in 2013 (EUR 1,850 thousand in 2012).
Carrying amount of production machinery and equipment in 2013 total EUR 1,559 thousand (EUR 1,923 thousand in 2012).
| 1.1.2013–31.12.2013 | Subsidiary shares |
Shares in associated undertakings |
Other shares and partici pations |
Loan receivables |
Total |
|---|---|---|---|---|---|
| Balance sheet value at beginning of year | 7 962 | 250 | 15 | 14 774 | 23 000 |
| Increases | 0 | 0 | 0 | 0 | 0 |
| Decreases | 0 | -250 | 0 | -450 | -700 |
| Balance sheet value at end of year | 7 962 | 0 | 15 | 14 324 | 22 300 |
| 1.1.2012–31.12.2012 | Subsidiary shares |
Shares in associated undertakings |
Other shares and partici pations |
Loan receivables |
Total |
|---|---|---|---|---|---|
| Balance sheet value at beginning of year | 8 960 | 250 | 15 | 14 474 | 23 698 |
| Increases | 0 | 0 | 0 | 300 | 300 |
| Decreases | -998 | 0 | 0 | 0 | -998 |
| Balance sheet value at end of year | 7 962 | 250 | 15 | 14 774 | 23 000 |
| Subsidiary shares: | Parent company's holding % |
Voting power % |
No. of shares | Par value | Book value | |
|---|---|---|---|---|---|---|
| (EUR 1,000) | ||||||
| Kidex Oy | Finland | 100 | 100 | 200 | 2.208 teur | 2 208 |
| Muuttopalvelu Grundell Oy | Finland | 100 | 100 | 100 | 3 teur | 4 675 |
| Grundell Henkilöstöpalvelu Oy | Finland | 100 | 100 | 100 | 3 teur | 50 |
| Kiinteistö Oy Ylähanka | Finland | 100 | 100 | 510 | 9 teur | 8 |
| Martela AB, Bodafors | Sweden | 100 | 100 | 50 000 | 5.000 tsek | 550 |
| Aski avvecklingsbolag Ab, Malmö | Sweden | 100 | 100 | 12 500 | 1.250 tsek | 132 |
| Martela AS, Oslo | Norway | 100 | 100 | 200 | 200 tnok | 24 |
| Martela SP.z.o.o; Warsaw | Poland | 100 | 100 | 3 483 | 3.483 tpln | 135 |
| 000 Martela, Moscow | Russia | 100 | 100 | 3.700 trub | 90 | |
| 000 Martela SP, St. Petersburg | Russia | 100 | 100 | 3.700 trub | 90 | |
| Total | 7 962 | |||||
Other shares and participations: 15
| (EUR 1,000) | 2013 | 2012 |
|---|---|---|
| Non-current receivables | ||
| Receivables from associated undertakings | 0 | 0 |
| Loan receivables | 329 | 329 |
| Current receivables | ||
| Receivables from companies in same group | ||
| Trade receivables | 1 476 | 5 017 |
| Loan receivables | 4 839 | 3 099 |
| Accrued income and prepaid expenses | 0 | 93 |
| Receivables from associated undertakings | ||
| Trade receivables | 0 | 16 |
| Loan receivables | 0 | 0 |
| Other receivables | ||
| Trade receivables | 13 744 | 13 664 |
| Loan receivables | 0 | 0 |
| Accrued income and prepaid expenses | 688 | 774 |
| Current receivables, total | 20 748 | 22 663 |
Accrued income and prepaid expenses include prepaid royalties and expenses, as well as personnel expense and other assorted prepayments.
| Distribution of shares 31.12.2013 | Number | Total EUR | % of share capital |
Votes | % of votes |
|---|---|---|---|---|---|
| K shares (20 votes/share) | 604 800 | 1 018 500 | 15 | 12 096 000 | 77 |
| A shares (1 vote/share) | 3 550 800 | 5 981 500 | 85 | 3 550 800 | 23 |
| Total | 4 155 600 | 7 000 000 | 100 | 15 646 800 | 100 |
| Treasury shares | 67 700 | ||||
| No. of shares | 4 087 900 | ||||
| Shareholders' equity (EUR 1,000) | 2 013 | 2 012 | |||
| Share capital 1.1. and 31.12. | 7 000 | 7 000 | |||
| Share premium account 1.1. and 31.12. | 1 116 | 1 116 | |||
| Reserve fund 1.1. and 31.12. | 11 | 11 | |||
| Retained earnings 1.1. | 31 722 | 35 319 | |||
| Dividends | -817 | -1 840 | |||
| Profit for the year | -2 230 | -1 774 | |||
| Shares assigned on the basis of the share-based |
0 | 0 | |||
| incentive scheme* | |||||
| Returned shares | 8 | 17 | |||
| Retained earnings 31.12. | 28 683 | 31 722 | |||
| Shareholders' equity, total | 36 810 | 39 849 |
The distributable equity of the parent company is EUR 28.683 thousand in 2013 (EUR 31.723 thousand 2012).
Treasury shares held by Martela Oyj are reported as a deduction from retained earnings. Martela Oyj owns 67,700 A shares and they were purchased at an average price of EUR 10.65. Market value of treasury shares on 31.12.2013: EUR 3.35/share; (5.02 EUR 2012), total EUR 227 thousand (EUR 340 thousand 2012).
* In the parent company balance sheet, the loan issued for the acquisition of shares has been treated as a loan receivable, and for the assigned shares, the acquisition cost has been recognised as a reduction in receivables and removed from equity. The acquisition cost of shares for the incentive scheme has been treated in the IFRS consolidated financial statements as an item comparable to treasury shares.
| (EUR 1,000) | 2013 | 2012 |
|---|---|---|
| Loans from financial institutions | 4 900 | 5 600 |
| Pension loans | 3 200 | 3200 |
| Accrued expenses | 90 | 150 |
| 8 190 | 8 950 | |
| Changes and repayments of non-current liabilities | 2013 | 2012 |
| Loans from financial institutions |
Loans from financial institutions |
|
| Loans 1.1. | 5 600 | 6 808 |
| Proceeds | 0 | 0 |
| Repayments | -700 | -1 208 |
| Loans 31.12. | 4 900 | 5 600 |
| Pension loans | Pension loans | |
| Loans 1.1. | 3 200 | 0 |
| Proceeds | 800 | 4 000 |
| Repayments | -800 | -800 |
| Loans 31.12. | 3 200 | 3 200 |
| Repayments | 2 014 | 2 015 | 2 016 | 2 017 | 2 018 | 2019- |
|---|---|---|---|---|---|---|
| Loans from financial institutions | 700 | 700 | 3 500 | 0 | 0 | 0 |
| Pension loans | 800 | 800 | 800 | 800 | 0 | 0 |
| Total | 1 500 | 1 500 | 4 300 | 800 | 0 | 0 |
| (EUR 1,000) | 2013 | 2012 |
|---|---|---|
| Current liabilities | ||
| Liabilities to group companies | ||
| Trade payables | 1 523 | 1 692 |
| Accrued liabilities to group companies | 317 | 30 |
| Total | 1 840 | 1 722 |
| Liabilities to associated undertakings | ||
| Trade payables | 99 | 200 |
| Other current liabilities | ||
| Loans from financial institutions | 4 700 | 4 708 |
| Pension loans | 800 | 800 |
| Advances received | 256 | 448 |
| Trade payables | 4 259 | 4 565 |
| Other current liabilities | 3 018 | 2 930 |
| Accrued liabilities | 4 230 | 4 944 |
| Other current liabilities, total | 17 263 | 18 395 |
| Current liabilities, total | 19 203 | 20 317 |
Current liabilities are specified in Notes because items are combined in Balance Sheet.
| 2013 | 2012 | |
|---|---|---|
| Essential items of accrued liabilities | ||
| Personnel expenses | 1 793 | 2 760 |
| Interest and financing accruals | 24 | 43 |
| Royalties | 122 | 142 |
| Residual expenses | 1 028 | 249 |
| Taxes | 0 | 0 |
| Other accrued liabilities | 1 263 | 1 749 |
| Accrued liabilities, total | 4 230 | 4 943 |
| (EUR 1,000) | 2013 | 2012 |
|---|---|---|
| Debts secured by mortgages | ||
| Bank loans | 5 600 | 6 808 |
| Property mortgages | 6 556 | 4 990 |
| Corporate mortgages | 8 368 | 8 200 |
| Shares pledged | 4 | 4 |
| Pension loans | 4 000 | 4 000 |
| Property mortgages | 4 204 | 4 204 |
| Total mortgages | 19 128 | 17 394 |
| Other pledges | ||
| Guarantees as security for rents | 335 | 334 |
| Guarantees given on behalf of companies in the same group | 1 344 | 1 556 |
| Guarantees given on behalf of associated undertakings | 547 | 537 |
| Leasing commitments | ||
| falling due within 12 months | 901 | 926 |
| falling due after 12 months | 609 | 915 |
| Total | 1 510 | 1 841 |
| Repurchase sureties | 0 | 0 |
| Other commitments | ||
| Rent commitments | 8 894 | 10 416 |
| Earnings / share | = | Profit attributable to the equity holders of the parent Average share issue-adjusted number of shares |
|---|---|---|
| Price / earnings multiple (P/E) | = | Share issue-adjusted share price at year end Earnings/share |
| Equity / share, EUR | = | Equity attributable to the equity holders of the parent Share issue-adjusted number of shares at year end |
| Dividend / share, EUR | = | Dividend for the financial year Share issue-adjusted number of shares at year end |
| Dividend / earnings, % | = | Dividend / share x 100 Earnings / share |
| Effective dividend yield, % | = | Share issue-adjusted dividend / share x 100 Share issue-adjusted share price at year end |
| Market value of shares outstanding, EUR |
= | Total number of shares at year end x share price on the balance sheet date |
| Return on equity, % | = | Profit/loss for the financial year x 100 Equity (average during the year) |
| Return on investment, % | = | (Pre-tax profit/loss + interest expenses + other financial expenses) x 100 Balance sheet total - Non-interest-bearing liabilities (average during year) |
| Equity ratio, % | = | Equity x 100 Balance sheet total - advances received |
| Gearing, % | = | Interest-bearing liabilities - cash and cash equivalents and liquid asset securities x 100 Equity |
| Average personnel | = | Month-end average calculation of the number of personnel in active employment |
| Interest-bearing net debt | = | Interest-bearing debt - cash and other liquid financial assets |
The Board of Directors proposes to the general meeting that no dividend be paid from the financial year 1 January 2013 – 31 December 2013 and that the parent company's losses from the financial year, EUR 2,229,503.74, shall be covered from the non-restricted equity fund.
Helsinki, 3 February 2014 The Board of Directors' Report and the Financial Statements are signed by:
Heikki Ala-Ilkka Pekka Martela Heikki Martela Chairman of the Board Vice Chariman Managing Director
Jaakko Palsanen Kirsi Komi Pinja Metsäranta
Yrjö Närhinen
We have today issued a report on the audit performed by us.
Helsinki, 3 February 2014 KPMG Oy Ab Ari Eskelinen Authorised Public Accountant This document is an English translation of the Finnish auditor's report. Only the Finnish version of the report is legally binding.
We have audited the accounting records, the financial statements, the report of the Board of Directors, and the administration of Martela Oyj for the year ended 31 December 2013. The financial statements comprise the consolidated statement of financial position, statement of comprehensive income, statement of changes in equity and statement of cash flows, and notes to the consolidated financial statements, as well as the parent company's balance sheet, income statement, cash flow statement and notes to the financial statements.
The Board of Directors and the Managing Director are responsible for the preparation of consolidated financial statements that give a true and fair view in accordance with International Financial Reporting Standards (IFRS) as adopted by the EU, as well as for the preparation of financial statements and the report of the Board of Directors that give a true and fair view in accordance with the laws and regulations governing the preparation of the financial statements and the report of the Board of Directors in Finland. The Board of Directors is responsible for the appropriate arrangement of the control of the company's accounts and finances, and the Managing Director shall see to it that the accounts of the company are in compliance with the law and that its financial affairs have been arranged in a reliable manner.
Our responsibility is to express an opinion on the financial statements, on the consolidated financial statements and on the report of the Board of Directors based on our audit. The Auditing Act requires that we comply with the requirements of professional ethics. We conducted our audit in accordance with good auditing practice in Finland. Good auditing practice requires that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and the report of the Board of Directors are free from material misstatement, and whether the members of the Board of Directors of the parent company or the Managing Director are guilty of an act or negligence which may result in liability in damages towards the company or have violated the Limited Liability Companies Act or the articles of association of the company.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements and the report of the Board of Directors. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation of financial statements and report of the Board of Directors that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the company's internal control. An audit also includes evaluating the appropriateness of accounting policies used and the
reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements and the report of the Board of Directors.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
In our opinion, the consolidated financial statements give a true and fair view of the financial position, financial performance, and cash flows of the group in accordance with International Financial Reporting Standards (IFRS) as adopted by the EU.
In our opinion, the financial statements and the report of the Board of Directors give a true and fair view of both the consolidated and the parent company's financial performance and financial position in accordance with the laws and regulations governing the preparation of the financial statements and the report of the Board of Directors in Finland. The information in the report of the Board of Directors is consistent with the information in the financial statements.
Helsinki, 3 February 2014 KPMG OY AB Ari Eskelinen Authorized Public Accountant
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