Annual Report • Mar 10, 2009
Annual Report
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| The Year 2008 in Brief | 3 |
|---|---|
| Strategic Policies | 4 |
| Managing Director's Review | 6 |
| Fireplaces | 8 |
| Natural Stone Products | 10 |
| Utility Ceramics | 11 |
| Corporate Responsibility | 12 |
| Shareholder Policy | 14 |
| Highlights of the Year 2008 | 15 |
| Board of Directors | 16 |
| Corporate Governance | 18 |
| Management Group | 22 |
| Information for Shareholders | 24 |
| Tulikivi Corporation's Stock Exchange Releases and | |
| Announcements in 2008 | 25 |
| Board of Directors' Report and Financial Statements | 26 |
| Board of Directors' Report | 27 |
| Consolidated Financial Statements, IFRS | 32 |
| Key Financial Indicators | 65 |
| Calculation of Key Ratios | 67 |
| Parent Company Financial Statements, FAS | 68 |
| Tulikivi Corporation's Shareholders and | |
| Management Ownership | 77 |
| Signatures to Report of the Board and | |
| Financial Statements | 78 |
| Auditors' Report | 78 |
| Contact Information | 79 |
| 2008 | 2007 | Change, % |
|
|---|---|---|---|
| Net Sales, MEUR | 66.5 | 69.9 | -4.8 |
| Operating profit, MEUR Profit before |
3.2 | 1.0 | 236.4 |
| income tax, MEUR Return on |
2.1 | 0.2 | 1 189.4 |
| investments, % | 6.8 | 2.5 | |
| Solvency ratio, % | 41.2 | 43.9 | |
| Earnings per share, | |||
| EUR | 0.04 | 0.01 | 295.5 |
| Equity per share, | |||
| EUR | 0.73 | 0.74 | -1.0 |
| Payment of dividend on | |||
| A share, EUR | 0.0280 | 0.0450 | -37.8 |
| K share, EUR | 0.0263 | 0.0433 | -39.3 |
Tulikivi Corporation brings warmth and comfort to homes with high-quality branded products that are environmentally friendly and complement interiors.
Tulikivi is a growing and highly profitable company of solid financial standing. It is a leader in selected market areas specialising in branded heating products and natural stone products for homes. Tulikivi's products are well-suited to modern energy-efficient building and modernisation methods and to supplement the heating systems of low-rise houses. As markets develop, Tulikivi will expand its operations to new product groups and new markets, through corporate acquisition if needed.
• Tulikivi will pay out a dividend equalling about one half of its annual earnings, while keeping its equity ratio at no less than 40 per cent
Courage is Tulikivi's most important value. It is evident in our decision-making ability, our confidence in our vision, our acceptance of facts and our determination to finish what we have started.
Of all of Tulikivi's values, the one that best characterizes the company is entrepreneurship -being proactive, goal-oriented, committed to targets and looking ahead.
Tulikivi values its satisfied customers. We find out what our customers need, listen to them, keep our promises and exceed their expectations.
Our business is founded on fair play. This means being honest with ourselves and putting our money where our mouth is.
Return on capital greater than 20%
Tulikivi's goal is to sell 20 000 branded fireplaces in 2011. The fireplaces are made with our own raw materials on a centralised and modular basis; they are environmentally friendly and complement customers' interiors. We sell them with the help of our highly committed partners in affluent market areas with a cold climate where the benefits of bioenergy are valued.
We make efficient use of our raw materials, taking the entire production chain into consideration. We improve profitability by centralising operations.
Modularity of the product line means more effective production and sales. Our products are proven to be environmentally-friendly.
Our products are respected and meet high design standards. Our product line includes products that suit different needs.
Consumers who value energy-efficiency, environmentally-friendliness and the comfort of wood heating.
Committed dealers who consider Tulikivi their top product.
The year 2008 was a busy one for the Tulikivi Group. In the early part of the year the Group focused on bringing its costs into line with the weakening market situation. Following the vigorous flow of orders in the early months of the year, the volume of new construction on the Finnish market fell sharply. In central Europe the situation was rather better, as exports of Tulikivi fireplaces picked up quite briskly in the autumn on account of the higher consumer prices for energy and the timely onset of winter.
The effects of the financial crisis in the fourth quarter of the year were evident in the level of demand in all product groups.
The Tulikivi Group's net sales were down by about five per cent in 2008, to EUR 66.5 million. Thanks to the efficiency measures put in place, the company's pre-tax profit improved to EUR 2.1 million for the full year. The cash flow, which rose to MEUR 7.6 was also an indication of the success of the efficiency drive.
Despite a reduction in the number of personnel in 2008, the company has sought to treat its employees well. The focus on employee wellbeing has produced results. Absences have fallen by more than one percentage point, to 6.5 per cent, and a reduction has been achieved in the occupational accident rate.
As well as looking for greater efficiency within the different units, we have also focused on making the entire Group's processes more efficient. The company now operates in a way that supports the development of our various processes very well. The work to develop our processes will provide a sound basis for the renewal of our information systems.
The aim is that, alongside our existing ISO 9001 quality management system, we should also obtain ISO 14001 certification for our environmental management system. Environmental matters have been well managed at Tulikivi, and in future we intend to be more active in issuing information on these matters.
Attention was also given to the quality of internal reporting during the year. Measuring all aspects of our operations as well as possible is essential for successfully developing these operations in the future.
Tulikivi's goal is to sell 20 000 branded fireplaces in 2011, made from our own raw materials on a centralised and modular basis. Our fireplaces will all be environmentally friendly and attractively designed to complement customers' interiors. Sales of fireplaces will be targeted at affluent market areas with a climate suitable for their use and where the benefits of bioenergy are valued, and will involve close collaboration with our highly committed partners.
Our vision is based on Tulikivi's traditional strengths: a respected brand, differentiated products based on use of our own raw materials, and excellent product characteristics. In order to secure growth we will seek to expand our market area, focusing primarily on Russia and those European countries in which Tulikivi has no distribution at present.
Our aim is to increase net sales through our own products in preference to subcontracting. With this in mind, we will be increasing exports of Kermansavi products to Russia under the Tulikivi brand, and will be launching new product groups on the European market.
Emissions test requirements for products and the growing demands of consumers regarding various product characteristics will add to product development costs, especially in the international market. We firmly believe that this trend will favour the larger manufacturers in the longer run, and this is why we have sought to make our products more modular in nature, which has implications for the combustion technology and appearance.
The bioenergy sector has been evolving strongly in recent years, and energy savings have also been a key theme in construction. These trends must be taken into account in the development of new products. Though they also present a challenge for existing products, they do at the same time present development opportunities for entirely new product groups. Tulikivi's highly committed partners throughout its dealer network are in a position to provide valuable support for the company in its product development work in the constantly changing market.
It has been encouraging to see that Tulikivi's products have retained their competitive advantage very well in Europe, also among builders of modern, energy-efficient homes. In France and the Benelux countries, for instance, our fireplaces have achieved a reputation as excellent "heat generators". This level of appreciation has been reinforced by the recent uncertainties in energy distribution throughout Europe.
Key challenges for the future are the need for further synergy between the existing product groups, in both manufacturing and product development. The aim is that the benefits of our special expertise in ceramics and natural stone should be given greater attention in our fireplace designs. Ceramic production at Heinävesi will in future focus strongly on the needs of the Fireplaces Business.
The company decided to launch a programme of profitability and centralisation measures at the end of January 2009, with the aim of securing profitability in the future, too. The programme is intended to achieve annual savings of approximately EUR 5 million. The programme will centralise the operations of the Fireplaces Business and Group administration, and product groups with poor profitability will be discontinued.
The current year, 2009, will be an exceptionally difficult one. Tulikivi has been going through a concentrated period of change in recent years, and the company's management and employees are firmly committed to developing Tulikivi's operations. Despite the challenging situation, we enjoy our work. I would like to warmly thank all our personnel and partners for their valuable efforts, and my thanks also go to all our shareholders for the past year.
Juuka, February 10, 2009
Heikki Vauhkonen, Managing Director
Tulikivi Corporation's Fireplaces Business includes fireplaces sold under the Tulikivi and Kermansavi brands and soapstone linings for European heater manufacturers. The Fireplaces Business includes product marketing and sales and the chain from product manufacture right up to customer delivery. It also includes R&D for the segment's products.
Exports of Tulikivi fireplaces grew over 15 per cent in 2008. The main fireplace export markets were France, Belgium, Germany and Russia. Other markets are Sweden, the Baltic countries, Switzerland, Austria, Italy, the Netherlands and North America. Sales increased in all of the principal export countries in the year under review, despite the declining economy, with most of the growth occurring in the latter part of the period. The underlying reason was the productive cooperation with importers and dealers. What is more, the modern and clean-burning Tulikivi line that was launched in 2006 has improved our competitiveness in the market. Concerns about the economy affected sales especially in Sweden, the Baltic countries and North America.
2006 was a record year in the European fireplace market, and the market actually overheated. Good sales figures were boosted by the rapid increase in energy prices. The rapid increase in the price and in some areas the actual shortage of wood, and the problems in the availability of installation capacity and certain materials attested to the overheated market. The overheating led to a shrinking market in 2007, with demand for fireplaces declining strongly, despite the fact that energy prices remained high and the economic situation was still very good. The decline was also amplified by a mild winter. In 2008, the fireplace market returned to its normal level.
Growth continued at an even pace in France, which is Tulikivi's principal export country. France still grants a considerable tax incentive for energy-saving measures but the incentive is not as substantial as it used to be. It is likely to remain in force until the end of 2009 and then be discontinued.
Tulikivi has further strengthened its solid market position in Belgium, thanks to excellent cooperation with the local importer.
An obvious upturn in sales took place in Germany despite the recession, although the fireplace market as a whole did not expand. Improvement of distribution channels and the tightening of networks were continued by seeking new partners.
Solid growth continued in Russia, with sales concentrated in the final part of the year, despite the increasing economic uncertainty. The growth was achieved in the metropolitan areas of St. Petersburg and Moscow as a result of the improved operations of our partners. Tulikivi reorganised its operations in Russia during the year, and the company opened an import warehouse St. Petersburg. Russia will continue to be one of our most potential areas of growth. Tulikivi seeks to reinforce its position in the St. Petersburg and Moscow regions and expand its business to other key cities through its partner network.
Uncertainty hit the Finnish economy with force in October and November. There was also evidence of this in the outlook for construction. The forecast for low-rise house construction in 2009 fell from the earlier figure of 10 000 starts to about 8 000. However, almost 12 000 starts took place in 2008 while the number of starts in the record years of 2005 and 2006 was as high as 16 000. Renovation of flats and houses is expected to increase, despite the uncertain economic outlook.
According to our estimate the fireplace market declined more than 10 per cent in 2008. Less than half of the fireplaces sold each year in Finland go into new buildings and correspondingly, just over half go into renovated ones. Tulikivi's Kermansavi brand is more popular with new builders and Tulikivi with renovators.
Tulikivi's fireplace sales in Finland decreased more than 15 per cent in 2008. This drop in sales concentrated heavily on the latter part of the year. Sales of Kermansavi products decreased considerably more than sales of Tulikivi fireplaces. The main reason for the poor sales was the rapidly increasing economic uncertainty and the decline in new building.
Tulikivi continued to develop its distribution channel systematically. The Tulikivi Showrooms have a clear concept for visibility, look and operation. In addition to fireplaces, the Showrooms provide a comprehensive service which includes site visits, consultation and design services, including applications for any permits that are needed, installation of all products, removal of old fireplaces, flue solutions, fireplace accessories and service of previously purchased fireplaces.
At the end of the year, Tulikivi fireplaces were sold at 35 Tulikivi Showrooms and almost 30 Tulikivi Service Points that supplement the network of showrooms. Most Tulikivi Service Points are located in hardware stores. The Service Points have a small fireplace display based on the concept's requirements and a salesperson with sufficient expertise. The number of Service Points will continue to be increased rapidly, especially in smaller towns and rural centres. The aim is to reach renovators more successfully.
Variation in demand for fireplaces in Europe and especially Germany has had a direct impact on the sales of lining stones for Tulikivi heaters. In 2006, sales of lining stones increased nearly 150 per cent, but fell by a third in 2007 and another third in 2008. The decrease in sales in 2008 was heavily concentrated on the early part of the year, while in the latter part they were significantly higher than a year before.
At the beginning of the year, fireplace production was terminated in Kuhmo and the third production shift was discontinued in Suomussalmi. However, this did not remove all overcapacity in production, which mainly affected the early part of the year. Capacity was adjusted with temporary lay-offs. Tulikivi makes tiled stoves in Heinävesi, Tulikivi fireplaces in Juuka and lining stones in Suomussalmi and Juuka.
In addition to measures taken to reduce personnel costs, production has been improved on a wide scale. The benefits of the measures will mostly be realised in the near future. We have improved productivity by rationalising manufacture and products, increasing the utilisation rate of machinery by improving maintenance and break practices, paid special attention to warehousing and the capital committed to warehouses, management practices, metering and follow-up. We have also paid close attention to occupational safety.
The CE standard for heat-retaining fireplaces entered into force in Europe at the beginning of 2008. The standard must be implemented by the end of a two-year transition period, i.e. by the beginning of 2010. Tulikivi was the first manufacturer to implement the CE marking for heat retaining fireplaces in part of its product line during the spring of 2008. During 2008, product development focused on developing the entire collection to meet future emission regulations in different market areas and improving the manufacturability of products. This has required extensive testing programmes. During the first half of 2009, our entire collection, excluding a small number of products, will have the CE marking.
Natural stone is a durable and environmentally-friendly material that is perfect for many uses in the home, from kitchen and bathroom tops to flooring and for wall and stair cladding. Tulikivi's range of natural stone includes soapstone, granite, marble, limestone, travertine and slate.
In addition to interior decoration stone products, the Natural Stone Products Business includes paving stones and stone deliveries to construction sites to be used in facades, floors, stairs and walls. Paving stones are ideal for paths, borders, patios and stairs and for cladding walls, plinths, stairs and fences.
Tulikivi's natural stone factories are located in Taivassalo, Espoo and Juuka. The Taivassalo factory produces granite kitchen countertops and building stones. The Espoo factory makes kitchen and bathroom tops out of granite, marble, soapstone and limestone. Soapstone tiles are made in Juuka. Our main market for natural stone products is Finland. Roughly ten per cent of our products are exported, mostly to Sweden and Norway.
Interior decoration stones contribute to more than 80 per cent of the Natural Stones Products Business's sales. In 2008, we successfully enlarged both our retailer and partner networks and motivated our existing dealers. In addition, our active collaboration with interior designers and architects has also brought good results. We update the colours, tile sizes and surface finishes of the decoration stone range every year.
During 2008, we signed new dealer and chain agreements, continued the development of the overall interior decoration stone concept, intensified production and offer-delivery processes and actively trained dealers and enhanced their sales skills. Within the scope of interior decoration stones we offer measurement and installation services for kitchen countertops, adhesives and grouting for tiles, caring and protective products, cleaning products in various strengths, stone samples and training material.
In 2009, the target of the Natural Stone Products Business is continued growth and improved profitability. Improving operating efficiency is key: balanced loading of production, greater efficiency in purchasing, and the most efficient use of raw materials as possible. The main focus will be in interior decoration stone products. We will also continue to train dealers and partners, improve sales work, and carry out active marketing and personnel development.
The utility ceramics range, sold under the Kermansavi brand, is primarily aimed at consumers and includes ceramic tableware, cookware and ornaments. Seventysix per cent of Finnish consumers are familiar with the Kermansavi brand name and 60 per cent own Kermansavi products.
Tulikivi's utility ceramics market is Finland. It is the only Finnish manufacturer whose products are made entirely in Finland. Production takes place at the company's Heinävesi plant in a manufacturing process largely shared with ceramic tile production for the company's fireplaces. All Kermansavi products have been granted the right to display the Association of Finnish Work's 'Made in Finland' Avainlippu label and they meet the requirements of the Ministry of Trade and Commerce (now Ministry of Employment and the Economy) decree 165/2006 and the EC regulation 1935/2004, which deal with materials and articles intended to come into contact with food.
Increasing imports of low-cost utility ceramics, the private label products of major retail chains and a strengthening in the position of Finnish producers have further tightened competition in 2008. Sales growth fell short of expectations in the year under review, therefore measures have been taken to adjust production accordingly.
Cooperation with young Finnish designers plays a central role in product development. In spring, we launched a service designed by Paola Suhonen and entitled Saimaa. In autumn, we launched a children's service entitled Karuselli and illustrated by the designer Elina Keltto. We also discontinued products that had poor turnover and were unprofitable.
In 2008, we focused on adding specialist shops to our
distribution channel. The Tulikivi Shop online store also came into its own as a distribution channel. In the case of the major retail chains, which are our principal distribution channel, we focused on improving product selection, presentation and brand visibility.
We will continue to develop the utility ceramics range. We will seek improved operational synergy with tile manufacturing and adjust costs to sales. We will continue to expand the distribution channel and increase sales volume with campaign products. In product development, we will continue our cooperation with young Finnish designers.
Tulikivi's operations are guided by the company's values. The company complies with laws and statutes in every facet of its work. We act responsibly towards our stakeholders, of whom the most important are our customers, personnel, shareholders and cooperation partners, both in Finland and abroad.
The 'Cleaner-burning fireplaces for Finland' programme launched by Tulikivi in autumn 2007 continued in autumn 2008 with another expert seminar arranged by the company. Through the program, Tulikivi aims to promote a cleaner environment in various ways by increasing public awareness of the following: correct wood burning techniques, the potential for increasing the use of firewood, and the new, environmentally-friendly options created by firebox solutions that are based on modern technology.
In conjunction with the seminar, Tulikivi's Managing Director, Heikki Vauhkonen, proposed a state subsidy model for Finland corresponding with those applied by France and Italy, where the state grants an investment subsidy to consumers for the purchase of a wood-burning fireplace. This is done to promote the consumption of bioenergy by private households.
As part of the 'Cleaner-burning fireplaces for Finland' programme, Tulikivi used various means, such as meetings, to inform those with influence, i.e. politicians and public servants of the programme goals.
Environmental issues are part of everyday working life in the Tulikivi Group, and we take note of these issues at the strategy planning stage, in making long-term action plans, and in defining annual focus areas.
We pay attention to environmental issues in our products' lifecycles throughout the entire design of production chain and in product development, and also during quarrying, product manufacture, and end use.
Tulikivi's environmental strategy is geared towards systematic progress in environmental efforts in specified sub-areas. Environmental issues are now a part of business management. The company has started to expand its ISO 9001-standard-compliant quality management system to also cover the requirements of ISO 14001, the environmental system standard. Tulikivi is preparing for the certification of the Group's environmental activities in 2009. The aim of environmental work is to improve the company's ability to use natural resources sparingly as well as to manage processes and products eco-efficiently in order to minimize their environmental loading. The Group complies with the environmental legislation and norms that concern its operations and seeks to engage in anticipatory environmental work to meet the Group's internal requirements and the challenges posed by stakeholders.
The most notable environmental projects of 2008 were the commencement of construction at the soapstone quarry in Vaaralampi, Juuka, and the construction of the related Huutojoki channel. The environmental permit for the Vaaralampi mining patent was granted in March 2008.
The environmental permit decision includes requirements regarding such matters as reduction of noise disturbance arising from the operation and reduction of damage to water systems caused by the quarry's wastewaters, and the arrangement of waste management for all quarrying waste produced. Quarrying in Vaaralampi is scheduled to start in 2010.
During 2008, a decision was passed by the Vaasa Administrative Court regarding the new environmental permit for Tulikivi's mining patent, and an environmental permit application for the Heinävesi plant was submitted
for handling. Once the environmental permit has been granted, environmental measures can be commenced at the Heinävesi plant in 2009. There are no changes in environmental permits for other mining patents.
Tulikivi's financial results are reported on in interim reports and the financial statements. The result of operations is reported on simultaneously, truthfully, openly and in compliance with legislation.
By keeping the company's finances on a solid footing, Tulikivi can provide its shareholders with steady returns and fulfil its obligations as a responsible employer.
In 2008, the Tulikivi Group introduced a new incentive system. Its fundamental component is the incentive pay scheme, based on the achievement of the Group's earnings, productivity and personal targets. This scheme covers all employees and replaces prior incentive plans. The incentive plan also includes a share-based incentive plan for key personnel.
In 2008, the Tulikivi Group's personnel structure has changed to correspond with the development of net sales. As a result of the codetermination negotiations that were concluded in January 2008, 67 people were made redundant. Five fixed-term employment contracts ended during the year. A further 13 employment contracts were ended due to employees changing their job or going to study.
Even though large numbers of people retiring will not be an issue in the near future owing to the company's personnel structure, the company's personnel strategy has made preparations for this by surveying personnel well-being and creating a personnel well-being promotion plan. The largest number of people will retire within the next 5-9 years at Juuka.
Dutry & Co. imports Tulikivi products to Belgium, the Netherlands and France. The company operates in these countries through a network of 67 dealers. In the autumn of 2008, Dutry made a major pitch by opening one of the world's largest Tulikivi Showrooms in Vichte, Belgium. More than 40 Tulikivi fireplaces are exhibited in the sizeable premises. The showroom also boasts 'Gigantico', the biggest and heaviest Tulikivi fireplace ever built. This custom-built product is made out of 23.5 tons of massive soapstone.
Tulikivi Corporation participates in the nationwide 'Accident Count: Zero' ('Nolla tapaturmaa') forum, whose members share their best practices with one another to promote occupational safety. During the year, Group-wide occupational safety objectives, plans, procedures and indicators were introduced at all Tulikivi production sites. Supervisors and occupational safety personnel received training in occupational safety-related responsibility, risk evaluation and anticipatory risk management. The concept of occupational safety working pairs was introduced in active production use to provide members of the working community with up-to-date information on workplace safety hazards and risks.
At Tulikivi, every incident requiring first-aid counts as a work accident. In 2008, there were 26 accidents per one million working hours, compared with 37 in 2007. Moreover, the accident severity rate has decreased substantially. On average, each work accident in 2008 resulted in a loss of 1.3 workdays, while the previous year's figure for workdays lost was 5.1.
Saimaa tableware set, designed by Paola Suhonen
The Saimaa tableware set, with its elegant shapes, eye-catching colours and beautiful embossment, was created for the Kermansavi brand by innovative Finnish designer Paola Suhonen. Tulikivi's R&D personnel worked closely to convert Paola Suhonen's designs into tangible products. The Saimaa set combines age-old pottery skills with modern technology. The tableware set was launched in spring 2008. It was designed and is manufactured in Finland. The production takes place at Tulikivi's Heinävesi plant.
Nammi was Tulikivi's most important new fireplace of 2008. Active product development combined the best features of Tulikivi and Kermansavi fireplaces and created Nammi. Nammi has soapstone on the inside and ceramic on the surface, and comes in four colour choices. The soapstone core guarantees a slow and smooth heat release, while the newest combustion technology ensures clean burning. The beautiful ceramic surface comes in various colour options to provide more choice for the fireplace appearance. The tiles were designed by Ristomatti Ratia. The Nammi design is one of clear lines, and it features a handsome rectangular glass door providing a view of the mesmerising flames. Nammi, like the entire Tulikivi 2006 range, has been awarded the Allergy and Asthma Federation's Allergy Label.
Tulikivi Corporation's Boad of Directors
MATTI VIRTAALA, Chairman of the Board (b.1951)
B.Sc. (Eng.), President of Abloy Oy to 31 December 2008. Member of the Board of Directors of Tulikivi Corporation since 1994, Chairman of the Board since 2003.
Other key positions of trust: Board Member of Etteplan Oyj, Board Member of Metroauto Group Oy.
Primary work experience: Managing Director of Kone Sweden, 1982–85; Area Director, Europe, for the Crane Division of Kone Finland, 1985–87; President of Abloy Oy, 1987–2008.
Series K shares 1 460 000 Series A shares 961 300
LLB and BBA. Managing Director since June 2007. Member of the Management Group since 2001. Has worked for Tulikivi since 1997.
Other key positions of trust: Member of the Board of Directors of Tulikivi Corporation since 2001, Chairman of the Board of Stone Pole Oy.
Primary work experience: Tulikivi U.S. Inc, Vice President, 1997-2001; Tulikivi Corporation: Marketing Director of the Fireplace Business, 2002–2007, Managing Director 2007-.
Series K shares 2 957 000 Series A shares 46 887
M.Sc. (Civil Eng.), founder of the company. Managing Director and Chairman of the Board of Tulikivi Corporation, 1980–1989. Full-time Chairman of the Board, 1990– 2002.
Other key positions of trust: Member of the Supervisory Board of Fennia Mutual Insurance Company, Chairman of the Board of the Finnish Stone Research Foundation, Board Member of the Product Industry Division of the Confederation of Finnish Construction Industries RT, Member of the Legal Affairs Committee of Conferedation of Finnish Industries EK.
Primary work experience: Marketing Director at Lohja Ltd, 1966–1979; Entrepreneur 1979-.
Series K shares 2 852 500 Series A shares 1 334 327
M.A. (Theo.), B.Sc. (Soc. Sc.) Metropolitan of Helsinki. Member of the Board of Directors of Tulikivi Corporation since 1992.
Other key positions of trust: Chairman of the Board of the Banking Sector Customer Advisory Office, Vice Chairman of the Board of FinnAgora. Several international ecumenical positions of trust.
Primary work experience: Treasurer at the Orthodox Monastery of New Valamo, 1977–88; Lecturer and Acting Associate Professor at the University of Joensuu, 1973–76; Bishop of Joensuu, 1988–96, Metropolitan of Oulu, 1996–2002. Metropolitan of Helsinki 2002-.
Tulikivi Corporation share ownership: Series A shares 19 527
LL.Lic. (trained on the Bench), Senior Advisor at Attorneys at law Borenius & Kemppinen. Member of the Board of Directors of Tulikivi Corporation since 2000.
Other key positions of trust: Board Member of Oral Hammaslääkärit Plc, Vice Chairman of the Panel on Takeovers and Mergers at The Central Chamber of Commerce of
Tulikivi's Board of Directors from left to right:
Matti Virtaala, Heikki Vauhkonen, Reijo Vauhkonen, Bishop Ambrosius, Juhani Erma, Eero Makkonen and Maarit Toivanen-Koivisto.
Finland, Board Member of Hallitusammattilaiset ry (the Finnish Association of Professional Board Members), Vice Chairman of the Board of Turvatiimi Oyj, Vice Chairman of the Board of the Finnish Stone Research Foundation, Vice Chairman of the Board of Silmäsäätiö (the Finnish Eye Foundation).
Primary work experience: In-house lawyer at Enso-Gutzeit Ltd, 1972–1979; head of the legal affairs department and the financial and legal affairs group at Union Bank of Finland Ltd, 1979–1985; Managing Director of Unitas Ltd, 1985–1988; Managing Director of Suomen Teollisuuspankki Oy, 1988–1989; Managing Director of the Helsinki Stock Exchange, 1989–1997; Managing Director of HEX Oy, Helsinki Securities and Derivatives Exchange, Clearing House, 1998–1999; Managing Director of Helsinki Exchanges Group Ltd, 1999; own legal and securities consultancy, 2000– 2002; Senior Advisor at Attorneys at law Borenius & Kemppinen Ltd, 2002–.
Tulikivi Corporation share ownership: Series A shares 31 527
B.Sc. (Eng.). Member of the Board of Directors of Tulikivi Corporation since 2002.
Other key positions of trust: Board Member of Rapala VMC Corporation, Chairman of the Board of Hansastroi Oy, Chairman of the Board of Elematic Ltd.
Primary work experience: Site Manager at Vesi-Seppo Ky, 1973–1975; Regional Manager at Vise Ky Saudi-Arabia, 1976–77; Construction Industry Manager at Oy Wilhelm Schauman Ab, 1979–1983; Kauhajoki House Factory Manager at Rauma-Repola Oy, 1983–1985; Managing Director of Insinööri-rakentajat Oy, 1985– 1991; President of Haka Oy, 1992–1994; President of Skanska Oy, 1994–2001, Chairman of the Board, 2001– 2002 and Vice Chairman of the Board, 2002–2003.
Series A shares 19 527
M.Sc. (Econ.). Professional Development Diploma. Vuorineuvos (honorary title of mining counsellor), President of Onvest Oy. Member of the Board of Directors of Tulikivi Corporation since 2007.
Other key positions of trust: Chairman of the Board of Onninen Oy, Chairman of the Board of Onvest Oy, Board Member of Are Oy, Board Member of Neste Oil Corporation, Board Member of Itella Corporation, Member of the Board of F.B.N International, member of the delegation of the Finnish Family Firms Association, Vice Chairman of the Board and Member of the Delegation of the Central Chamber of Commerce, Vice Chairman of the Helsinki Chamber of Commerce, EU-Russia Industrialists Round Table, Building Task Force Chairman, Member of the Nordea Advisory Board, Member of the Advisory Board of the City of Vantaa, and Member of the Board and Committee of the Foundation for Economic Education.
Primary work experience: Purchasing and sales at Onninen Oy, 1978–1980; Store Manager at Elektro–Sähkö Oy, 1980–1984; Buyer, Product Manager, Purchase Manager and Quality Manager at Onninen Oy, 1984–1998; Development Manager, Financial Manager, Financial Director at Onvest Oy, 1998–2001, and its President, 2001–
Tulikivi Corporation share ownership:
Series A shares 56 181
Tulikivi Corporation and its subsidiaries comply with the Finnish Corporate Governance Code for listed companies that takes effect on 1 January 2009, with the exception of recommendation 22 of the Code, under which the Board elects committee members and chairmen from among its members. The exception and the reasons for it are discussed in greater detail under item 'Board of Directors´/ Nomination Committee.
The Annual General Meeting is held each year no later than by the end of June on the day set by the Board of Directors. The tasks of the Annual General Meeting are set forth in the Companies Act and the Articles of Association. According to the Articles of Association, the Board of Directors shall issue the invitation to the meeting by publishing a Notice of Meeting in a wide circulation newspaper selected by the Board of Directors no earlier than three months and no later than 21 days before the Annual General Meeting. The Notice of Meeting shall also be published as a stock exchange bulletin and on the company's Internet site. The following information shall be made available on the company website at least 21 days before the general meeting: the total number of shares and voting rights according to classes of shares at the date of the notice, the documents to be submitted to the general meeting, a proposal for a resolution by the board or another competent body, an item on the agenda of the general meeting with no proposal for a resolution.
The auditor proposed by the board or the audit committee shall be reported in the notice of meeting. If the Board does not know who the auditor is at the time of sending the notice of annual general meeting, the candidacy must be publicised separately. The proposal for board members shall be included in the notice of the general meeting when the proposal is made by the nomination committee or the candidate is supported by shareholders with at least 10 % of the votes carried by the company shares, provided that the candidate has given his/her consent to the election. The candidates proposed after execution of the notice of the general meeting shall be disclosed separately. The company will report the biographical details of the candidates for the board on its website.
The minutes of the general meeting including the voting results and the appendices of the minutes that are part of a decision made by the meeting, shall be posted on the company website within two weeks of the general meeting.
The board is responsible for the administration and the proper organisation of the operations of the company. The board supervises and controls the operative management of the company, appoints and dismisses the managing director, approves the company's strategic objectives, budget, total investments and their allocation, and the reward systems employed, decides on agreements that are of far-reaching consequence and the principles of risk management, and ensures that the management system is operational, ratifies the company's vision and the values that are to be followed in its operations, approves the company's organization model, approves and publishes interim reports, annual reports and financial statements and specifies the company's dividend policy and convenes the annual general meeting. The duty of the board is to promote the best interest of the company and all its shareholders. A director does not represent the interests of the parties who have proposed his or her election as director. Chapter 6, section 2, of the Limited Liability Companies Act lays down the duties of the Board of Directors. The Board draws up written rules of procedure for its activities, and the key content of these rules is explained in the annual report and the company's website. The general duty of the chairman of the Board of Directors is to lead the Board's work and carry out separately agreed tasks.
The Board of Directors shall have no less than five and no more than seven members. The Annual General Meeting elects the members for terms of one year. The members of the board of the group's parent company also serve as members of the boards of the group's business subsidiaries, if the board has not made any other decision.
Effective discharge of the duties of the board may require that board committees are established. The company has a nomination committee and it can have audit committee and remuneration committee. The Board will appoint the members and chairmen of the committee. The Nomination Committee has three members. One member of the Nomination Committee may be elected from outside the Board of Directors. The reason for the deviation from the Corporate Governance Code is that in view of the company's ownership structure and stage of development, it is appropriate to aim for a Nomination Committee composition that reflects the owners' views directly, from outside the Board, while at the same time guaranteeing a sufficiently wide range of contacts via which suitable Board candidates can be found. The duties of the nomination committee are preparation of a proposal for election of directors to be presented to the general meeting, preparation of matters relating to the compensation of directors and succession planning of directors. The members of the nomination committee are Ahti Hirvonen, Reijo Vauhkonen and Matti Virtaala. The chairman of the committee is Reijo Vauhkonen. In 2008, the Nomination Committee convened 3 times.
At Tulikivi Corporation's Annual General Meeting held on April 17, 2008, the following Board members were elected: Bishop Ambrosius, Juhani Erma, Eero Makkonen, Maarit Toivanen-Koivisto, Heikki Vauhkonen, Reijo Vauhkonen and Matti Virtaala. The Board of Directors elected from amongst its members Matti Virtaala as Chairman. The Board members who are independent of the company are Bishop Ambrosius, Juhani Erma, Eero Makkonen, Maarit Toivanen-Koivisto, Reijo Vauhkonen and Matti Virtaala. The Board members who are independent of the company's major shareholders are Bishop Ambrosius, Juhani Erma, Eero Makkonen and Maarit Toivanen-Koivisto.
The annual remuneration of Board members is EUR 15 600, of which 60 per cent will be paid in cash and 40 per cent in the form of Series A shares in Tulikivi Corporation. Each Board member received 4 148 Series A shares. Unless the Board of Directors grants express permission in advance, members of the Board are not allowed to surrender any shares received in this manner until they leave the Board. In addition, the Chairman of the Board of Directors will be paid a EUR 6 240 monthly fee and the director serving as secretary to the Board of Directors a EUR 728 monthly fee.
Board members who perform non-Board assignments for the company shall be reimbursed on the basis of time rates and bills approved by the Board of Directors.
In 2008, the company's Board of Directors convened 13 times. The average participation rate of Board members in these meetings was 92.3 per cent.
The Managing Director attends to the day-to-day
management of the company as specified in the instructions and regulations issued by the Board of Directors. The Managing Director may take action which is unusual or far-reaching considering the extent and type of the company's activities only with the authorisation of the Board, or if waiting for the Board to provide authorisation would cause substantial damage to the activities of the Board. In the latter case the Board must be informed of the action taken as soon as possible. The Managing Director must see to it that the company's accounts meet the requirements of the law and that its finances have been settled reliably. The Managing Director is responsible for line operations, the implementation of the budget, the company's financial result, the activities of his subordinates and for keeping the board fully informed of the company's situation and operating environment. Chapter 6, section 17, of the Limited Liability Companies Act lays down the duties of the Managing Director. A written agreement of the terms and conditions of the managing director's employment is drafted with his participation and approved by the board.
The company's Managing Director is Heikki Vauhkonen. The Managing Director's period of notice is three months. If the company terminates his employment contract, the period of notice is 12 months. The salary of the Managing Director, including bonuses, amounted to EUR 211 405. In addition to his statutory pension, supplementary pension plans entitle the Managing Director to retire at the age of 60.
In the management and planning of line operations, the managing director is assisted by Management Group, whose members are managing director and directors of business areas and the corporate communications director (on maternity leave in 2008) and the financing director.
The Managing Director and Management Group have a
reward system and the Board decides on the calculation method and amount of these rewards each year. The reward system's principles and decision-making process are outlined in the annual report and on the Internet. Tulikivi Corporation has an incentive plan which includes a share-based incentive plan for key personnel of the company / its business areas and an incentive pay scheme for all personnel.
The Plan includes three earning periods which are calendar years 2008, 2009 and 2010. The potential reward from the Plan for the earning period 2008 will be based on the Group's profit after financial items and cash flow from operating activities. The potential reward from the earning period 2008 will be paid partly as the Company's A shares and partly in cash in 2009. The proportion to be paid in cash will cover taxes and tax-related costs arising from the reward. It is prohibited to transfer the shares during the two year restriction period. If a key person's employment or service ends during the restriction period, he/she must return the shares given as reward to the Company without compensation. Furthermore, a key person must own 30% of the shares earned on the basis of the Plan for two years after the restriction period. A maximum total of 120 000 Tulikivi Corporation A shares and a cash payment corresponding to the value of the shares will be paid as reward on the basis of the earning period 2008. A maximum total of 360 000 A shares and a cash payment corresponding to the value of the shares will be paid as reward on the basis of the entire Plan.
The 2008 profit/cash flow entitled to 10 per cent of the maximum reward of the incentive plan. Based on the terms of the plan Series A shares will be granted to those participating the plan, in total 9 800 shares.
The incentive pay scheme is based on the achievement
of the Group's earnings, productivity and personal targets. This scheme covers all personnel and replaces prior incentive plans.
The company and its subsidiaries are represented by the Chairman of the Board of Directors and the Managing Director, each acting alone. Others entitled to represent the company always represent the company with another person entitled to represent.
The Managing Director reports to the Board every month on the operations and results of the Group and business units and any divergence from the budget (monthly report), every quarter on operating profit based on inventories and otherwise, immediately on fundamental changes to the operating environment. The units report according to the internal reporting system.
Tulikivi Corporation complies with the Guidelines for Insiders of the NASDAQ OMX Helsinki Ltd. The Board of the company appoints a person in charge of insiders. The company´s insider register is maintained by Euroclear Finland Ltd.
The board ensures that the company has defined the operating principles of internal control and monitors the function of such control. Risk management is part of the company's control system. The purpose of risk management is to ensure that the risks related to the business operations of the company are identified, evaluated and monitored. The company has defined the risk management principles. The company assesses risks at regular intervals. On the basis of these assessments, the Board of Directors and the Managing Director decide on what measures are necessary. In the assessment of risks, their probability and impact are taken into account. After their analysis, means of preventing and controlling risks have been overviewed on the basis of their impact and probability.
The auditors, besides the statutory audit, have performed extended audit procedures on areas determined by the Board of Directors. Related findings have been regularly reported to the Board of Directors and to the Managing Director.
The auditor is elected at the Annual General Meeting for a term ending at the conclusion of the subsequent Annual General Meeting. The auditor has been KPMG Oy Ab, Authorized Public Accountants. In 2008, the auditing firm were paid a total of EUR 67 000 salaries and fees by the Group, of which the audit accounted for EUR 36 093.
Engaging in mining activities requires the forming of a mining concession and an environmental permit. Production activities require an environmental permit. Mining operations are regulated by the Mining Act and environmental legislation. The director in charge of quarrying is responsible for making sure that mining permits are valid and up-to-date.
Tulikivi's environmental strategy is geared towards systematic progress in environmental efforts in specified sub-areas. The goal of its environmental work is the economical use of natural resources and the management of processes and products so that there is as little environmental loading as possible. The Group complies with the environmental legislation and norms that concern its operations and seeks, through continuous improvement of operations, to engage in anticipatory environmental work to meet the Group's internal requirements and the challenges posed by stakeholders. The Group acknowledges and is aware of its responsibility as an environmental operator.
The company has rules of procedure for communications, which define the persons responsible for internal, external and crisis communications and the persons with the right to speak on behalf of the company. The Financing Director is responsible for compliance with rules concerning stock exchange releases.
Tulikivi Corporation´s Corporate Governance code in full and key information about the company's administration is published on the Tulikivi Group's Internet site (www. tulikivi.com). The company's stock exchange bulletins and other investor information are posted on the site immediately after their publication.
LLB and BBA. Managing Director since June 2007. Member of the Management Group since 2001. Has worked for Tulikivi since 1997.
Positions of trust: Member of the Board of Directors of Tulikivi Corporation since 2001, Chairman of the Board of Stone Pole Oy.
Primary work experience: Tulikivi U.S. Inc, Vice President, 1997-2001; Tulikivi Corporation: Marketing Director of the Fireplace Business, 2002-2007, Managing Director 2007-.
Series K shares 2 957 000 Series A shares 46 887
M.Sc. (Civil Eng.). Marketing Director of the Fireplace Business. Member of the Management Group since 1987. Has worked for Tulikivi since 1987.
Positions of trust: Chairman of the Board of Tulisija- ja savupiippuyhdistys TSY ry (Fireplace and Chimney Association).
Primary work experience: Suomen Vuolukivi Oy: Development Engineer 1987–1988, sales engineer, 1988–1989 and Production Manager, 1989-1990; The New Alberene Stone Co Virginia, USA, Project Manager 1991 and President 1992; Production Manager at Tulikivi Oy, 1993–1996; Product Manager at Exel Oy, 1997; Marketing Director at Tulikivi Corporation, 1998–1999, Business Unit Manager, 2000-2001, Managing Director, 2001–2007, Director of the Fireplace Business, 2007-.
Tulikivi Corporation share ownership: Series K shares 100 000
D.Sc. (Tech.), M.Sc. (Eng.). Director of the Natural Stone Products Business. Member of the Management Group since 1995. Has worked for Tulikivi since 1993.
Positions of trust: Member of the Board of the Finnish Natural Stone Association.
Primary work experience: Accounting Assistant 1993- 1994, Accounting Manager, 1995-1997, Financial Manager, 1997–1999 at Tulikivi Corporation; Manager, operational accounting and management systems for the Tulikivi Group, 1999–2001; Tulikivi Group's Financial Director, 2001-2007; and Director of the Natural Stone Products Business, 2003–.
Tulikivi Corporation share ownership: Series A shares 500
The members of the Management Group from left to right: Heikki Vauhkonen, Juha Sivonen, Jouko Toivanen, Mirja Vänttinen, Anu Vauhkonen and Arja Lehikoinen.
MBA, Marketing Certificate from The Institute of Marketing, business college degree. Product Group Director, Utility Ceramics. Member of the Management Group since 2007. Has worked for Kermansavi Oy and its subsidiaries since 1988 and, after the acquisition, for the Tulikivi Group since 2006.
Positions of trust: Member of the Board of Leppävirran Matkailukeskus Oy.
Primary work experience: Primary work experience: Marketing Manager at Kermacos Oy, 1992-1998; Sales Manager, 1999-2000, and Sales Director, 2000-2006, at Kermansavi Oy; Sales Manager, Tableware, 2006- 2007, and Director, Utility Ceramics, for the Tulikivi Group, 2007-.
No share ownership of Tulikivi Corporation.
M.A., Communication management training at The Institute of Marketing. Corporate Communications Director. Member of the Management Group since 2001. Has worked for Tulikivi since 1997.
Positions of trust: Board Member of the Family Business Network Finland and Chairman of its PR work group.
Primary work experience: PR for Wärtsilä Diesel Oy, 1995–1997; PR for Tulikivi Corporation, 1998: PR and Communications Manager at Tulikivi U.S. Inc., 1998– 2001; Communications Director at Tulikivi Corporation, 2001–.
Tulikivi Corporation share ownership: Series K shares 500
M.Sc. (Econ.), MBA. Financing Director. Member of the Management Group since 1984. Has worked for Tulikivi since 1984.
Positions of trust: Board Member of the Finnish Stone Research Foundation.
Primary work experience: Office Manager at accounting firm Tietokate Oy, 1979–1982; Office Manager at Juuan Tili- ja kiinteistötoimisto (accounting and real-estate firm), 1982–1984; Financial Director for Tulikivi Corporation and the Tulikivi Group, 1984–2001; Financing Director for the Tulikivi Group, 2001–.
Tulikivi Corporation share ownership: Series A shares 65 620
The Annual General Meeting of Tulikivi Corporation will be held in the Kivikylä auditorium in Nunnanlahti, Juuka, on March 31, 2009, starting at 12:00. Financial statement documents will be available for inspection at the company's Internet site and head office in Nunnanlahti as from March 10, 2009. Copies of these documents will be sent to shareholders upon request. The right to participate in the Annual General Meeting rests with a shareholder who by March 21, 2009 at the latest has been registered in the company's shareholder list that is maintained by Euroclear Finland Ltd. Shareholders who wish to attend the Annual General Meeting must notify the company thereof by March 21, 2009, either by telephoning Kaisa Toivanen at +358 207 636 251, by emailing [email protected] or by writing to the address Tulikivi Corporation / Annual General Meeting, FI-83900 Juuka.
The Board of Directors proposes to the Annual General Meeting that the following dividends be paid for the fiscal year 2008:
On Series A shares 0.0280/share On Series K shares 0.0263/share
Dividends decided by the Annual General Meeting will be paid on shares that have been recorded on the record date in the shareholder list that is maintained by Euroclear Finland Ltd. The record date for the dividend payout is April 3, 2009. The Board of Directors proposes to the Annual General Meeting that the dividend payout date be April 14, 2009.
We request shareholders to report any changes in their personal details, address and share ownership to the book-entry register in which the shareholder has a bookentry securities account.
Tulikivi Corporation will publish the following financial reports in 2009:
| Financial statement bulletin for 2008 | February 10, 2009 |
|---|---|
| Annual Report for 2008 | week 12 |
| Interim Report for January-March | April 21, 2009 |
| Interim Report for January-June | July 21, 2009 |
| Interim Report for January-September | October 20, 2009 |
The Annual Report, Interim Reports and the company's stock exchange bulletins are published in Finnish and English.
The Annual Report is mailed to all shareholders. Financial reports are posted on the company's site, www.tulikivi.com, on their day of publication. Reports may also be ordered by emailing [email protected], by writing to the address Tulikivi Corporation / Financial Reports, FI-83900 Juuka, or by telephoning +358 207 636 211. If you have questions concerning investor relations, please contact the company's Financing Director Arja Lehikoinen at tel. +358 207 636 260.
Analysts following Tulikivi Corporation: Petri Karhunkoski / eQ Bank Ltd tel. +358 9 6817 8487, [email protected]; Antti Koskivuori / Evli Equity Research, tel. +358 9 4766 9773, [email protected] and Matias Rautionmaa / Pohjola Bank, tel. +358 10 252 4408, [email protected].
11.9. Share repurchase 11.9.2008
10.9. Share repurchase 10.9.2008
| Board of Directors' Report | 27-31 |
|---|---|
| Consolidated Financial Statements, IFRS | 32 |
| Consolidated Income Statement | 32 |
| Consolidated Balance Sheet | 33 |
| Consolidated Cash Flow Statement | 34 |
| Statement of Changes in Shareholders' Equity | 35 |
| Notes to the Consolidated | |
| Financial Statements | 36-64 |
| Key Financial Indicators | 65-66 |
| Calculation of Key Ratios | 67 |
| Parent Company Financial Statements, FAS | 68 |
| Parent Company Income Statement | 68 |
| Parent Company Balance Sheet | 69 |
| Parent Company Cash Flow Statement | 70 |
| Notes to the Parent Company | |
| Financial Statements | 71-76 |
| Shares and Shareholders of Tulikivi Corporation | 77 |
| Signatures to Report of the Board and | |
| Financial Statements | 78 |
| Auditors' Report | 78 |
These are the financial statements of Tulikivi Corporation, that have been prepared in accordance with International Financial Reporting Standards (IFRS) and in compliance with the IAS and IFRS standards as well as the SIC and IFRIC interpretations upon force as at December 31, 2008.
The term IFRS refers to the standards and interpretations upon these in the Finnish Accounting Act and regulations issued by virtue to it and endorsed in the EU in accordance with the procedure defined in the EU Regulation (EY) No 1606/2002. The notes to the consolidated financial statements also conform with Finnish Accounting and Corporate Legislation.
The consolidated financial statements are presented in thousands of euros.
There have been no changes in Tulikivi Corporation´s share capital in 2008. Tulikivi Corporation´s share capital entered in Trade Register amounted to EUR 6 314 479,40 on December 31, 2008. The number of shares is 37 143 970, of which 27 603 970 are Series A shares and 9 540 000 Series K shares. According to the articles of association the dividend paid for Series A shares shall be 0.0017 EUR higher than the dividend paid on Series K shares. Each Series K shares confers 10 votes at a general meeting, while each Series A shares confers one vote. The Series A share is listed on the NASDAQ OMX Helsinki Ltd.
7.3 per cent of all shares were nominee registered or in foreign ownership. No flagging notifications were made to the company during the review period.
The Board of Directors has an authorization to acquire the company's own shares. A maximum of 2 760 397 Series A shares in the company and 954 000 Series K shares in the company can be bought back. The authorization is valid until the Annual General Meeting 2009.
The Board of Directors has an authorization to decide on share issues and the conveyance of the company's own shares in the possession of the company and the granting of special rights that give entitlement to shares as set forth in Chapter 10, Article 1 of the Companies Act.
New shares can be issued or own shares held by the company conveyed amounting to a maximum of 5 520 794 Series A shares and 1 908 000 Series K shares. The authorization also includes the right to issue special rights, as defined in Chapter 10, Article 1 of the Companies Act, entitling the right holder to subscribe for shares against payment or by setting off the receivable. The authorization is valid until the Annual General Meeting 2009.
The Tulikivi Corporation's Board of Directors has decided to commence repurchasing the company's A shares, as authorised by the Annual General Meeting. During 2008, 74 000 A shares were purchased at the repurchase value of EUR 77 657. The average purchase price per share was EUR 1.05. The purchase price was the exchange rate at the moment of the purchase, which varied between EUR 0.65 and EUR 1.39 during the purchase periods. The repurchased shares account for 0.20 per cent of all shares and 0.06 per cent of votes carried by all shares. The repurchase of own shares had no material impact on the shareholdings and voting rights in the company. The first phase of repurchasing shares took place between 1 August–30 November 2008, when a total of 60 000 shares were acquired. The total acquisition prices of these shares was EUR 68 499 or EUR 1.14 per share on average. The second phase began in December and will continue to 30 March 2009 according to the Board's decision. During the period between 23 December and 31 December 2008 a total of 14 000 shares were acquired. The total acquisition prices of these shares was EUR 9 158 or EUR 0.65 per share on average. Under the Board's decision, during the second phase a total of 100 000 A shares can be repurchased, which would bring the total number of treasury shares to 160 000, corresponding to 0.4 per cent of share capital and 0.1 per cent of total voting rights.
The shares are repurchased for use as consideration in corporate acquisitions or other structural arrangements or to implement the share-based incentive system, to pay a share-based incentive or otherwise to be transferred or cancelled.
systematic progress in environmental efforts in specified subareas. All operational quarries of the Tulikivi Corporation have the environmental permits they require. In addition, permit renewals are in progress. The Group's operations comply with the environmental permits and the requirements of the authorities and environmental protection.
The company bears the responsibility for the environmental impacts of its operations. Under the Mining Act and environmental legislation, the Tulikivi Group has landscaping obligations that must be met when operating the quarries and after quarries and plants are eventually shut down. The Group's operations do not burden the environment with hazardous or poisonous substances. The content and recognition principles of environmental management expenditure are presented in greater detail in note 33 and the key figures for environmental responsibilities in note 34.
The Group is neither party to judicial or administrative procedures concerning environmental issues nor is it aware of any environmental risks that would have a significant effect on its financial position.
Because of the declining order inflow, the company's Board of Directors has launched a programme to improve the profitability of Tulikivi Corporation's operations and to introduce concentration measures in order to secure the company's profitability in the future. The programme is intended to achieve annual savings of approximately EUR 5 million in future years. As a result of launching the programme, the company has initiated co-determination talks with all Group personnel. The company is seeking a personnel reduction of about 120 persons. The company will also have to introduce lay-offs among its personnel during the current year. It is estimated that the programme will give rise to approximately EUR 2 million in non-recurring costs.
Housing construction will decline in several markets, which will affect the demand for fireplaces. Demand for fireplaces is estimated to be relatively higher in Central Europe than in Finland or its neighbouring countries. The rapid contraction in demand in late 2008 has adversely affected the company's order books and no improvement is anticipated in the coming months, especially in the domestic market. Net sales and profit for the current financial year after non-recurring items are expected to fall short of 2008. The adjustments costs that have an impact on profit are concentrated in the early part of the year.
The strategic policies of the Tulikivi Group establish the Group's long-term organic growth target at five per cent per annum. The Group also seeks growth from corporate acquisition. In addition to growth, the target is to attain over 20 per cent in return on capital invested and improving relative profitability by two percentage points annually. During the 2008 financial year, net sales declined on 2007 because of the recession on all of Tulikivi's markets. As a result, the targeted level of return on capital invested was not attained.
The Group´s order book, financial ratios and key indicators per share together with their definitions as well as information on shareholders and management ownership are presented in connection with the financial statements.
The Group's business segments are the Fireplaces Business, Natural Stone Products Business and Other Operations. The Fireplaces Business includes soapstone and ceramic fireplaces sold under the Tulikivi and Kermansavi brands and also soapstone lining for heater manufacturers. The Natural Stone Products Business includes interior decoration stone products for households and stone deliveries to construction sites. Other Operations includes expenses that are not allocated to the Group's other segments, tax and financial expenses, as well as sales of ceramic utensils and the expenses of this business.
The companies included in the Group are the parent company Tulikivi Corporation (Kermansavi Oy merged with the parent company as at December 31, 2007), its fixed establishment in Germany Tulikivi Oyj Niederlassung Deutschland and the subsidiaries Kivia Oy, AWL-Marmori Oy, Tulikivi U.S. Inc. and OOO Tulikivi. The Group has interests in associated companies Stone Pole Oy and Leppävirran Matkailukeskus Oy. Group companies include also Uuni Vertriebs GmbH and The New Alberene Stone Company, Inc., which are dormant.
The parent company's distributable equity amounts to EUR 6 946 thousand, of which the profit for the period accounts for EUR 1 173 thousand. The Board proposes to the Annual General Meeting that the distributable equity be used as follows:
EUR 0.0280/share on Series A shares EUR 0.0263/share on Series K shares To a total of EUR 1 022 thousand Retained in equity EUR 5 924 thousand.
It is the Board's opinion that the proposed distribution of dividends will not endanger the company's solvency.
| EUR 1 000 | Note | Jan. 1 - Dec. 31, 2008 | Jan. 1 - Dec. 31, 2007 |
|---|---|---|---|
| Sales | 2 | 66 502 | 69 887 |
| Other operating income | 4 | 684 | 590 |
| Increase/decrease in inventories of finished goods and in work in progress | -608 | 2 086 | |
| Production for own use | 785 | 1 085 | |
| Raw materials and consumables | 12 454 | 14 237 | |
| External services | 9 990 | 11 059 | |
| Personnel expenses | 5 | 23 079 | 27 054 |
| Depreciation | 6 | 5 432 | 5 644 |
| Amortisation | 250 | 6 | |
| Other operating expenses | 7 | 12 912 | 14 683 |
| Operating profit | 3 246 | 965 | |
| Financial income | 8 | 243 | 234 |
| Financial expenses | 9 | -1 426 | - 1 039 |
| Share of loss (-) / profit (+) of associates | 0 | 0 | |
| Profit before income tax | 2 063 | 160 | |
| Income taxes expense | 10 | 634 | -201 |
| Profit for the year | 1 429 | 361 | |
| Calculated from profit attributable to the equity holders of the parent company | |||
| earnings per share, EUR | |||
| basic/diluted | 11 | 0.04 | 0.01 |
| EUR 1 000 | Note | Dec. 31, 2008 | Dec. 31, 2007 |
|---|---|---|---|
| Assets | |||
| Non-current assets | |||
| Property, plant and equipment | 12 | 20 596 | 23 755 |
| Goodwill | 13 | 4 266 | 4 266 |
| Other intangible assets | 13 | 11 163 | 11 140 |
| Investment properties | 14 | 265 | 229 |
| Investments in associates | 15 | 24 | 24 |
| Other financial assets | 16 | 27 | 33 |
| Deferred tax assets | 17 | 855 | 996 |
| Total non-current assets | 37 196 | 40 443 | |
| Current assets | |||
| Inventories | 18 | 11 452 | 12 660 |
| Trade and other receivables | 19 | 5 729 | 5 862 |
| Current income tax receivables | 19 | 13 | 64 |
| Cash and cash equivalents | 20 | 11 705 | 3 765 |
| Total current assets | 28 899 | 22 351 | |
| Total assets | 66 095 | 62 794 | |
| Equity and liabilities | |||
| Capital and reserves attributable to equity holders of the Company | |||
| Share capital | 21 | 6 314 | 6 314 |
| Share premium | 7 334 | 7 334 | |
| Treasury shares | 21 | -78 | |
| Translation differences | 21 | -38 | -70 |
| Revaluation reserve | 21 | -60 | |
| Retained earnings | 13 770 | 13 993 | |
| Total equity | 27 242 | 27 571 | |
| Non-current liabilities | |||
| Deferred income tax liabilities | 17 | 2 043 | 2 252 |
| Provisions | 24 | 919 | 859 |
| Interest-bearing liabilities | 25 | 21 582 | 17 751 |
| Other liabilities | 26 | 347 | |
| Total non-current liabilities | 24 544 | 21 209 | |
| Current liabilities | |||
| Trade and other payables | 26 | 9 064 | 9 389 |
| Current income tax liabilities | 101 | 77 | |
| Provisions | 24 | 687 | |
| Short-term interest-bearing liabilities | 25 | 5 144 | 3 861 |
| Total current liabilities | 14 309 | 14 014 | |
| Total liabilities | 38 853 | 35 223 | |
| Total equity and liabilities | 66 095 | 62 794 |
| EUR 1 000 | Note | Jan. 1 - Dec. 31, 2008 | Jan. 1 - Dec. 31, 2007 |
|---|---|---|---|
| Cash flows from operating activities | |||
| Profit for the period | 1 429 | 361 | |
| Adjustments: | |||
| Non-cash transactions | 29 | 5 747 | 5 520 |
| Interest expense and finance costs | 1 426 | 1 040 | |
| Interest income | -237 | -224 | |
| Dividend income | -6 | -10 | |
| Income taxes | 10 | 634 | -201 |
| Changes in working capital: | |||
| Change in trade and other receivables | 96 | 3 430 | |
| Change in inventories | 1 208 | -2 048 | |
| Change in trade and other payables | -467 | -3 929 | |
| Change in provisions | -677 | 746 | |
| Interest paid | -1 169 | -899 | |
| Interest received | 217 | 156 | |
| Dividends received | 5 | 10 | |
| Income tax paid | -607 | -1 434 | |
| Net cash flow from operating activities | 7 599 | 2 518 | |
| Cash flows from investing activities | |||
| Acquisition of subsidiary, net of cash acquired | -347 | -10 | |
| Purchases of property, plant and equipment (PPE) | -1 380 | -3 966 | |
| Grants received for PPE | 1 077 | ||
| Purchases of intangible assets | -1 509 | -1 707 | |
| Grants received for intangible assets | 86 | 185 | |
| Proceeds from sale of PPE | 93 | 121 | |
| Disposals of other financial assets | 4 | ||
| Net cash flow from investing activities | -3 053 | -4 300 | |
| Cash flows from financing activities | |||
| Proceeds from short-term borrowings | 1 836 | ||
| Repayments of borrowings | -1 836 | ||
| Proceeds from long-term borrowings | 10 000 | 6 704 | |
| Repayments of borrowings | -3 051 | -4 391 | |
| Purchase of own shares | -75 | ||
| Dividends paid | -1 655 | -3 459 | |
| Net cash flow from financing activities | 3 383 | 690 | |
| Net decrease (-) / increase (+) in cash and cash equivalents | 7 929 | -1 092 | |
| Cash and cash equivalents at the beginning of the year | 3 765 | 4 913 | |
| Exchange gains (+) / losses (-) | 11 | -56 | |
| Cash and cash equivalents at the end of the year | 20 | 11 705 | 3 765 |
| Attributable to equity holders of the Company |
Share capital | Share premium | Translation differences |
Revaluation reserve |
Treasury shares |
Retained earnings |
Total equity |
|---|---|---|---|---|---|---|---|
| EUR 1 000 | |||||||
| Equity | |||||||
| Balance at January 1, 2007 | 6 314 | 7 334 | -13 | 17 076 | 30 711 | ||
| Translation differences | -57 | -57 | |||||
| Charitable contribution | -124 | -124 | |||||
| Profit for the year | 361 | 361 | |||||
| Dividends paid | -3 320 | -3 320 | |||||
| Balance at December 31, 2007 | 6 314 | 7 334 | -70 | 13 993 | 27 571 | ||
| Translation differences | 33 | 33 | |||||
| Revaluation reserve | -60 | -60 | |||||
| Acquisition of treasury shares | -78 | -78 | |||||
| Profit for the year | 1429 | 1 429 | |||||
| Dividends paid | -1 653 | -1 653 | |||||
| Balance at December 31, 2008 | 6 314 | 7 334 | -37 | -60 | -78 | 13 769 | 27 242 |
The parent company is Tulikivi Corporation (Business ID 0350080-1) and it is domiciled in Juuka. Its registered address is 83900 Juuka.
A copy of the consolidated financial statements is available on the Internet at www.tulikivi.com or at the parent company's head office, located at the above address.
The Group's business is divided into three business segments: Fireplaces, Natural Stone Products and Other Operations. The Fireplaces Business comprises soapstone quarrying, production of soapstone fireplaces and ceramic fireplaces, design, sales and marketing. Its products are Tulikivi soapstone fireplaces, Kermansavi ceramic fireplaces and stone lining for heaters. The Natural Stone Products Business comprises household interior stone products and deliveries of stone to construction sites, and purchases, sales and marketing of natural stone. Other Operations includes expenses that are not allocated to the Group's business functions, tax and financial expenses, as well as sails of ceramic utensils and the expenses of this business. Soapstone fireplaces and other natural stone products are sold under Tulikivi brand, ceramic fireplaces and utensils under Kermansavi brand.
Tulikivi Corporation's Board of Directors has approved these financial statements for publication at its meeting held on February 10, 2009. Under the Finnish Companies Act, shareholders may approve or reject the financial statements at the Annual General Meeting held after publication. The Annual General Meeting may also revise the financial statements.
These are the financial statements of the Group, that have been prepared in accordance with International Financial Reporting Standards (IFRS) and in compliance with the IAS and IFRS standards as well as the SIC and IFRIC interpretations in force as at December 31, 2008. The term IFRS refers to the standards and interpretations that are approved for adoptation in the Finnish Accounting Act and regulations issued by virtue to it and endorsed in the EU in accordance with the procedure defined in the EU Regulation (EY) No 1606/2002. The notes to the consolidated financial statements also comply with the additional requirements under the Finnish accounting and company legislation.
The consolidated financial statements have been prepared under the historical cost convention except for financial assets classified as available for sale and financial assets and financial liabilities (including derivatives) carried at fair value through profit or loss. The consolidated financial statements are presented in thousands of euros.
The group has adopted the following standards and amendments and interpretations beginning on or after January 1, 2008:
IFRIC 11 IFRS 2 – Group and Treasury Share Transactions. The interpretation clarifies the scope of the rules pertaining to equity-settled transactions (IFRS 2) and requires these transactions be reconsidered in subsidiaries. The interpretation has not had an impact on the consolidated financial statements.
IFRIC 12 Service Concession Arrangements. The Group's business activities do not involve service concession arrangements and consequently the interpretation does not have an impact on the consolidated financial statements.
IFRIC 14 IAS 19 – The Limit on a Defined Benefit Asset, Minimum Funding Requirements and Their Interaction. This interpretation does not have an impact on the consolidated financial statements as all of the Group's pension plans are defined contributions plans.
Amendments to IAS 39 Financial Instruments: Recognition and Measurement and IFRS 7 Financial Instruments: Disclosures. The amendments were issued in October 2008 due to the international financial crisis and they pertain to the reclassification of certain financial assets. The amendments have no impact on the consolidated financial statements for the financial year 2008 or on those for subsequent periods since the Group assesses that at the balance sheet date the consolidated balance sheet did not include such financial assets covered by the amendments which would have been necessary to be reclassified.
Tulikivi has not early adopted the following new standards, amendments or interpretations to existing standards published before December 31, 2008:
IFRS 8, Operating Segments (effective January 1, 2009)
IAS 1 Presentation of Financial Statements (revised) (effective from January 1, 2009)
Amendment to IFRS 2 Share-based Payment (effective from 1 January 2009)
IAS 23 Borrowing Costs (revised) (effective from January 1, 2009)
IAS 27 Consolidated and Separate Financial Statements (revised) (effective from July 1, 2009)
IFRS 3 Business Combinations (revised) (effective from July 1, 2009)
Amendment to IFRS 5 Non-current Assets Held for Sale and Discontinued Operations (effective from 1 July 2009)
Amendment to IAS 28 Investments in Associates (and consequential amendments to IAS 32 Financial Instruments: Presentation and IFRS 7 Financial Instruments: Disclosures) (effective from 1 January 2009)
Amendment to IAS 36 Impairment of Assets (effective from 1 January 2009)
Amendment to IAS 38 Intangible Assets (effective from 1 January 2009)
Amendment to IAS 19 Employee Benefits (effective from 1 January 2009)
Amendment to IAS 39 Financial Instruments: Recognition and Measurement (effective from 1 January 2009)
IFRIC 16 Hedges of a Net Investment in a Foreign Operation (effective from 1 October 2008 onwards)
IFRIC 13 Customer Loyalty Programmes (effective from 1 July 2008)
Amendment to IAS 16 Property, Plant and Equipment (effective from 1 January 2009)
Amendment to IAS 29 Financial Reporting in Hyperinflationary Economies (effective from 1 January 2009)
Amendment to IAS 31 Interests in Joint Ventures (effective from 1 January 2009)
Amendment to IAS 40 Investment Property (effective from 1 January 2009)
Amendment to IAS 20 Accounting for Government Grants and Disclosures for Government Assistance (effective from 1 January 2009)
IFRIC 15 Agreements for the Construction of a Real Estate (effective from 1 January 2009)
IFRIC 17 Distribution of Non-cash Assets to Owners (effective from 1 July 2009). The interpretation has not yet been endorsed by the EU.
In 2009 the Group will adopt IFRS 8 Operating Segments issued in 2006. The Group is assessing the impacts of the standard on the consolidated financial statements. Management assesses that the adoption of other standards and interpretations as listed above will not have a material impact on the consolidated financial statements in the year 2009. The Group will adopt the amended IAS 27 Consolidated and Separate Financial Statements and the revised IFRS 3 Business Combinations as well as the interpretation IFRIC 17 Distribution Of Non-cash Assets to Owners in 2010.
The preparation of the consolidated financial statements in conformity with IFRS requires the management use of certain estimates and exercise of judgment in the process of applying the Group's accounting policies. Information about the areas where the management has exercised judgment in the application of the Group accounting principles is presented under "Critical Accounting Judgments in applying the Entity's Accounting Principles".
The consolidated financial statements include the parent company Tulikivi Corporation and all its subsidiaries. Subsidiaries are companies, over which the Group has control. Control exists when the Group owns more than half of the voting rights, or it has otherwise control. Also the existence of potential voting rights is considered when assessing the conditions of control if the instruments entitling to potential voting rights are exercisable. Control means the power to govern financial and operating policies of an entity so as to obtain benefits from its activities.
Intragroup share holdings are eliminated according to the purchase method. Subsidiaries are consolidated from the date on which control is transferred to the Group, and disposed subsidiaries until the control ceases. Intragroup transactions, balances and unrealized gains on transactions between group companies, and intragroup distribution of profits are eliminated. Unrealized losses are also eliminated unless the loss is due to impairment. Tulikivi Corporation has a full ownership in its all subsidiaries and therefore no profit or loss attributable to minority interest is included in the consolidated result nor is minority interest presented within equity.
Associated companies are all entities over which the Group has significant influence. Significant influence is realized when the Group holds over 20 per cent of the voting rights or otherwise has significant influence, but no control. Investments in associates are accounted for using the equity method. When the Group's proportionate share of the associated company's result exceeds the book value, the investment is recognized in the balance sheet to zero value and the exceeding losses are not recognized unless the Group has incurred obligations or made payments on behalf of the associate company.
The results and financial positions of subsidiaries are measured using the currency of the primary economic environment (Functional currency) in which the entity operates. The consolidated financial statements are presented in euros, which is the parent company's functional and presentation currency.
Transactions in foreign currencies are translated into the functional currency using the foreign exchange rate prevailing at the transaction date. In practice, exchange rates close to the rates prevailing at the dates of the transactions are usually used. Monetary items are translated into functional currency using the exchange rates prevailing at the balance sheet date. Non-monetary items are translated using the exchange rate at the transaction date. Exchange differences of transactions in foreign currencies and translation of monetary items are recognized in the income statement. Exchange differences resulting from operations are recognized in the income statement as part of the operating profit. Gains or losses arising from loans and cash in bank are presented in the income statement within financial income and expense.
The income statements of subsidiaries are translated to euro using the average exchange rates for the year and the balance sheets are translated using the exchange rates at the balance sheet date. Exchange differences arising from the translation of the income statement and the balance sheet with different exchange rates results in translation difference that is recognized in equity.
Translation differences arising from the elimination of the acquisition cost of foreign subsidiaries and the accumulated equity are recognized in equity. Translation differences that have arisen before January 1, 2004 which was the date of transition to IFRS, were recognized in retained earnings on transition to IFRS according to the exemption of IFRS 1 and they shall not be transferred to the income statement afterwards in connection with disposal of subsidiaries. Translation differences arising after January 1, 2004 are presented in equity as separate item.
From 1 January 2004 goodwill arisen from acquisition of foreign entities and related fair value adjustments to the assets and liabilities of the acquired entity are recognized as assets and liabilities of the said foreign entities and are translated to euro using the exchange rates at the balance sheet date. For those acquisitions occurred prior to 1 January 2004 goodwill and fair value adjustments are recognized in euro.
Tangible assets are measured in the balance sheet at cost less accumulated depreciation and impairment charges.
When the asset consists of several items with different useful lives, each item will be dealt with as a separate asset. In this case the replacement costs of the item are capitalized and the remaining part of the asset is expensed. Otherwise subsequent costs are included in the book value of property, plant and equipment only when it is probable that the future economic benefits associated with the item will flow to the Group and that the cost can be measured reliably. Other repair and maintenance costs are charged to the income statement when they occur.
Depreciation has been calculated using the straight-line method based on the useful lives of the assets. Land areas are not depreciated except for mining areas, where depreciations are recognised based on the consumption of the rock material and stacking area filling time. The useful lives are as follows:
| Buildings | 25 to 30 years |
|---|---|
| Constructions | 5 years |
| Process machinery | 3 to 10 years |
| Motor vehicles | 5 to 8 years |
| Other property, plant and equipment | 3 to 5 years |
The acquisition cost of the equipment is amortised by 25 per cent outlay residue write-offs. Investment property buildings have a depreciation period of 10 to 20 years.
The assets' residual values and useful lives are reviewed, and adjusted if appropriate, at each balance sheet date. Gains and losses on disposal of property, plant and equipment are included in either other operating income or in other operating expenses.
Borrowing costs are expensed as occurred.
Government and other public grants related to the
purchase of property, plant and equipment or intangible assets are deducted from the carrying amount of the asset when there is a reasonable assurance that the grant will be received and the group will comply with attached conditions. The grants are recognized in the income statement during the useful life of the asset in the form of lower depreciation on the asset in question. Government grants relating to costs are deferred and recognised in the income statement over the period necessary to match them with the costs that they are intended to compensate. Government grants are presented within other operating income.
Investment properties are properties held in order to obtain rental revenues or capital appreciation. Investment properties are valued at cost less accumulated depreciation.
Goodwill represents the excess of the cost of the business combination over the Group's share in the net fair value of the identifiable assets, liabilities and contingent liabilities at the date of acquisition. Goodwill arising from acquisitions before January 1, 2004 represents the carrying amount of goodwill at the date of transition to IFRS based on the previous accounting principles.
Goodwill is not amortised but tested annually for impairment. For this purpose the goodwill has been allocated to cash generating units. The goodwill is valued at historical cost less impairment.
Research costs are recognized as expenses in the income statement are capitalised. Development costs arising from planning of new or improved products are capitalized as intangible assets in the balance sheet when the entity can demonstrate the technological and commercial feasibility of the product. Capitalised development costs comprise material, labour and test costs incurred in bringing the assets capable of operating in the manner intended by management. Development costs previously expensed cannot be capitalized later.
Amortisations of an asset are started when the asset is available for use. Assets not available for use are annually tested for impairment. After initial recognition, intangible assets shall be carried at cost less any accumulated amortisation and any accumulated impairment losses. The useful life of the capitalized development costs is 5 to 10 years during which the capitalized assets are recognized as expenses using the straight-line method.
Costs of exploration and evaluation of soapstone are mainly capitalised. However, costs of exploration and evaluation of soapstone are expensed when there is significant uncertainty related to commercial viability. Elements of cost of exploration and evaluation are geographical studies, exploration drilling, trenching, sampling and activities in relation to evaluating the technical feasibility and commercial viability of extracting mineral resources. After initial recognition Group applies the cost model and assets are amortised between 5 – 10 years. Exploration and evaluation the assets are classified as a separate intangible asset until technical feasibility and commercial viability is demonstrable. Afterwards the exploration and evaluation assets are classified to other intangible assets. The Exploration and evaluation activities start when the Ministry of Employment and the Economy has granted a right of appropriation.
Intangible assets should be recognized in the balance sheet only if the cost of the item can be measured reliably and it is probable that the future economic benefits associated with the asset will flow to the entity.
Costs arising from establishing the quarries and construction of roads, dams and other site facilities related to the quarry are also capitalised. It can take years to establish a quarry. The amortisation of the quarrying areas and basins and other auxiliary quarry constructions is started when the quarry is ready for production use and amortisation is recognised over its useful life using the unit of production method. The amortisation of construction expenses of roads and dams is started in the construction year.
Intangible assets with a finite useful life are amortised over their useful live using the straight-line method. Intangible assets that have an indefinite useful life are not subject to amortisation and are tested annually for impairment.
| Amortisation periods of intangible assets are as follows: | |
|---|---|
| Patents and trademarks | 5 to 10 years |
| Development costs | 5 to 10 years |
| Distribution channel | 10 years |
| Mineral resource exploration and | |
| evaluation costs | 5 to 10 years |
| Quarrying areas and basins unit of production method | |
| Quarrying area roads and dams | 5 years |
| Computer Software | 3 to 5 years |
| Others | 5 years |
Intangible assets that have an indefinite useful life are not subject to amortization and are tested annually for impairment.
The useful live of trademarks related to Fireplaces Business –segment and to Other Operations -segment has been assessed to be indefinite, because there is no foreseeable limit to the period which these assets are expected to generate net cash inflows.
Inventories are valued at cost or at lower probable net
realisable value. The cost is determined using the weighted average cost method. The cost of quarried blocks is affected by the stone yield percentage. The cost of finished goods and work in progress consists of raw materials, direct labor, other direct costs and related variable and fixed production overheads allocated on a reasonable basis on a normal capacity of the production facilities. Net realisable value is the estimated selling price in the ordinary course of business less estimated costs of completion and sale.
The leases of the Group are agreements under which substantially all the risks and rewards incident to the leased assets is retained by the lessor and the agreements are therefore classified as operating leases. Payments made under operating leases are charged to the income statement as rental expenses on a straight-line basis over the lease term.
Assets leased out by the Group are leased under operating leases. The assets are included in property, plant and equipment or investment property in the balance sheet. They are depreciated over their economic useful lives consistent with the Group's normal depreciation policy. Part of the leased assets are subleased. Lease income from operating leases is recognized in income on a straight-line basis over the lease term.
It is assessed at each reporting date whether there is any indication that an asset may be impaired. If any such indication exists, the recoverable amount of the asset is assessed. The recoverable amount is annually tested for impairment for the following assets independent of the existence of indicators of impairment: goodwill and intangible assets in progress. Mineral resource exploration and evaluation assets are tested always before a change in classification of the assets in question. For the purpose of assessing impairment assets are grouped at the lowest levels for which there are separately identifiable cash-generating units with separately identifiable cash flows.
The recoverable amount is defined as the higher of an asset's or cash-generating unit's fair value less costs to sell and its value in use. Value in use is the present value of the future cash flows expected to be derived from an asset or cash-generating unit. A pre-tax rate, which reflects the market view on the time value of money and asset specific risks is used as discount rate.
An impairment loss is recognized when the carrying amount exceeds the recoverable amount. The impairment loss is immediately recognized in the income statement. If an impairment loss is allocated to a cash-generating unit, it is first recognised as deduction of the goodwill allocated to the unit and then on pro-rata basis to unit's other assets. By recognition of impairment loss the useful life of the asset to be depreciated is reassessed. For other assets except goodwill, impairment loss is reversed in case there is a change in those estimates that were used when recoverable amount of the assets was determined. The increased carrying amount must not, however, exceed the carrying amount that would have been determined if no impairment loss had been recognized in prior years. Previously recognized impairment loss of goodwill is not reversed under any conditions.
Pension obligations are classified as defined benefit plans and defined contribution plans. In defined contribution plans the group makes fixed contributions into a separate entity. The group has no legal or constructive obligation to pay any further contributions if the receiver of payments is not able to pay the pension benefits in question. All other pension plans that do not fill these conditions are defined benefit plans. The contributions made to defined contribution plans are recognised in the income statement in the period, which they are due. Group's pension plans are defined contribution plans.
The Group has an incentive plan in which payments are settled in equity instruments and in cash. The benefits granted are measured at fair value at the grant date and recognized as an expense in the income statement on the straight-line basis over the vesting and restriction period. For the cash-settled part the related liability and the change of the liability's fair value are expensed correspondingly. The impact of the incentive plan on the income statement is presented under personnel expenses.
A provision is recognized when the Group has a present legal or constructive obligation as a result of past events and it is probable that an outflow of resources will be required to settle the obligation, and when a reliable estimate of the amount can be made. A provision is measured at the present value of the expenditure required to settle the obligation. The discount factor used in the calculation of the present value is determined so that it reflects the current market assessment of the time value of money.
A warranty provision is recognized when the product subject to the warranty is sold. The amount of the warranty provision relies on the statistical information of historical warranty realization. A provision for restructuring is recognised when the Group has prepared a detailed restructuring plan and the restructuring either has commenced or has been announced publicly. A provision of onerous contracts is recognized when the incremental costs exceed the benefits received from the contract. Based on environmental legislation the group has restoration obligations related to factory and quarry areas. A provision is recognised in the consolidated financial statements for the estimable environmental obligations.
A contingent liability is a contingent obligation as a result of a past event and its existence will be confirmed by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Group. An existing obligation which probably does not require settling the payment obligation or which can not be reliably estimated is also considered a contingent liability. A contingent liability is disclosed in the notes.
Tax expense is the aggregate amount included in the determination of profit and loss for the period in respect of current tax and deferred tax. The tax effects of items recognised directly in equity are recognised in equity correspondingly. Current tax is the amount of income taxes payable in respect of the taxable profit for the period and is calculated on the basis of the local tax legislation. Current tax is adjusted by possible tax items related to previous periods.
Deferred taxes are calculated on temporary differences between the carrying amounts of balance sheet items and their taxable values. However, the deferred tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction other than business combination that at the time of the transaction affects neither accounting nor taxable profit or loss. Deferred taxes are not recognised related to goodwill that is not tax deductible. Deferred taxes are not recognised for the part of temporary difference related to subsidiaries' retained earnings that is not estimated to be reversed in foreseeable future. Most significant temporary differences arise from depreciation of property, measuring derivatives at fair value, tax losses carried forward and fair value measurement associated to acquisitions. Deferred tax is determined using tax rates that have been enacted by the balance sheet date. Deferred tax assets are recognized to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilized.
Revenue includes the consideration received from sale of goods and services the considerations received for sales measured at fair value adjusted with indirect taxes, rebates, and translation differences from sales in foreign currency.
Revenues of sold goods are recognized when the risks, rewards and control have been transferred to the buyer. Generally this coincides with the delivery of products in accordance with the terms of contract. Revenue from installing and services is recognised in the period when the service is rendered. Lease revenue is recognised on a straight-line basis over the lease term.
The Group did not have any construction contract revenues in 2008 and 2007.
Interest income is recognized according to the effective interest rate method and dividends when the right to the dividend is arisen.
The Group classifies its financial assets in the following categories in following categories: financial assets at fair value through profit or loss, loans and receivables and available-for-sale financial assets. The classification depends on the purpose for which the financial asset was acquired and is made at initial acquisition. Assets at fair value through profit or loss are financial assets held for trading or financial assets which are classified at initial recognition in this category.
The financial assets measured at fair value through profit or loss include the financial assets held for trading. The financial assets held for trading due for settlement within twelve months are acquired in order to achieve short-term market gains and are included in the current assets. Derivatives that do not qualify for hedge accounting are classified as held for trading. derivatives and financial assets with maturities less than 12 months are included in current assets. The items are measured at fair value. Unrealized and realized gains and losses from changes in fair value are recognized in the income statement in the active period.
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market and the Group does not held for trading. Loans and receivables are carried at amortized cost using the effective interest rate method. Loans and receivables are included in trade and other receivables and are classified as current or non-current based on their maturity, to the latter if they have a maturity of more than 12 months.
The financial assets available for sale are non-derivative financial assets, that are specifically defined to this group of assets or that are not classified into any other category. They are recognized as non-current assets in the balance sheet except when the management intends to dispose of the investment within 12 months from the reporting date. In this case the investment is classified as a current asset. Available-for-sale financial assets can contain investments in shares and interest-bearing investments. Available-for-sale financial assets are carried at fair value, or when the fair value can not be measured reliably, at cost. Changes in the fair value of investments classified as available for sale are recognised in fair value reserve in equity deducted by tax effect. When securities classified as available for sale are sold or impaired, the accumulated fair value adjustments recognised in equity are included in the income statement as gains and losses from available-for-sale financial assets.
Cash and cash equivalents includes cash in hand, deposits held at call with banks, other short-term highly liquid investments with original maturities of three months or less, and bank overdrafts. Credit accounts are included in current interest-bearing liabilities and are presented as a net amount, because the Group has a contractual right to set-off or in other ways settle the amount to be paid to the creditor either partly or as a whole on a net basis. Other credit limits in use are included in current interest-bearing liabilities.
Transaction costs are included in the initial value of all the financial assets not carried at fair value through profit or loss. Regular purchases and sales of financial assets are recognised on the trade date.
Financial assets are derecognized when the rights to receive cash flows from the investments have expired or have been transferred and the Group has transferred substantially all risks and rewards of ownership.
Financial liabilities are initially recognized at fair value on the basis of the consideration received. Subsequently, all financial liabilities are measured at amortized cost using the effective interest rate method. Financial liabilities may comprise of current and non-current, and interest-bearing and non-interest-bearing items. Financial liabilities are classified as current liabilities if the Group does not have an unconditional right to defer the settlement of the liability for at least 12 months after the balance sheet date.
Borrowing costs are expensed during the period in which they are incurred.
The principles applied in determination of fair values of all financial assets and financial liabilities are presented in note 28.
The Group assesses at each balance sheet date whether there is objective evidence that a financial asset or a group of financial assets is impaired. If any such evidence exists, the cumulative loss previously recognized in profit or loss is removed from equity and recognized through the income statement.
The group recognises an impairment loss when there is objective evidence that the trade receivables are not collectible in full. Significant financial difficulties of a debtor, probability of bankruptcy or delay of payments exceeding 90 days are considered as evidence of the impairment of trade receivables. An impairment loss to be recognised in the income statement is determined as the difference between the carrying amount of a receivable less the present value of the estimated future cash flows discounted with the effective interest rate. If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised, the previously recognised impairment loss shall be reversed through the income statement.
Derivatives are initially recognized at fair value on the date a derivative contract is entered into and are subsequently remeasured their fair value. Gains and losses from the fair value measurement are recognized following the purpose of use of the underlying derivative. Changes in the fair value of derivatives that are designated and qualify as effective hedges are presented in the income statement, together with any changes in the hedged item. When the group enters into a derivative contract, it is accounted for either as a hedge of the fair value of receivables or liabilities or firm commitments (fair value hedge), or in respect of foreign currency risk, as a cash flow hedge or as a derivative not qualifying for hedge accounting.
At the inception of hedge accounting the group documents the relationship between hedging instruments and hedged items, as well as its risk management objectives and strategy for undertaking various hedging transactions. The group also documents its assessment, both at hedge inception and at least each balance sheet date, of whether the derivatives that are used in hedging transactions are highly effective in offsetting changes in fair values or cash flows of hedged items.
The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges is recognized directly in the revaluation reserve within equity. The gains and losses accumulated in equity are recycled in the income statement in the periods when the hedged item affects profit or loss. Gains and losses from the derivatives designated to hedge future sales denominated in foreign currency are recognized as an adjustment to revenue when the sale is realized. The ineffective portion is recognized in the income statement in other operating income or in other operating expenses. If the hedged forecast transaction results in the recognition of a non-financial asset, the gains and losses previously deferred in equity are transferred to the initial measurement of the cost of the asset.
When a hedging instrument designated as a cash flow hedge expires or is sold or when a hedge no longer meets the criteria for hedge accounting, any cumulative gain or loss remains in equity until the forecast transaction realizes. However, if the forecast transaction is no longer expected to occur, the cumulative gain or loss deferred in equity is immediately transferred to the income statement.
If Tulikivi Corporation repurchases its own equity instruments the cost of these instruments is deducted from equity.
The IAS 1 Presentation of financial statements does not define the concept of operating profit. The Group has defined it as following: The operating profit is the net amount attained when the net sales are added by other operating income, deducted by costs of goods sold adjusted with finished and costs of production for own use, by employee benefit expenses, by depreciation and amortisation, by possible impairment charges and by other operating expenses. All other items are presented below operating profit in the income statement. Exchange rate differences and the fair value changes of derivatives are included in operating profit if they result from operations, otherwise they are recognised in the financial items.
In preparing the consolidated financial statements critical assumptions and judgments are made, the actual outcome of which might differ from the assumptions and estimates made previously. In addition, judgment is exercised in applying the accounting principles. Judgments and assumptions are based on the Directors' best estimate as at the reporting date. The estimates are based on earlier experience and assumptions of the future considered to be most probable at the balance sheet date, relating to i.a. expected development of the economic environment in which the Group operates affecting the sales volumes and expenses. The Group follows realisation of the estimates, the assumptions and the changes in underlying factors regularly in co-operation with business units by using various, both internal and external sources of information. Possible changes in the estimates and assumptions are recognized as expenses during the period they occurred and during the periods following.
comparisons have been made to comparable assets taking into account the decrease in value due to age, wearing and other corresponding factors. For all assets it has not been possible to use market values. In these cases the valuation has been based to historical cost from which the estimated decrease in value due to age, wearing and other corresponding factors has been deducted. The determination of the fair value of intangible assets is based on the estimates on the cash flows related to the assets. During the financial years 2008 and 2007 no business combinations have occurred.
The estimates of the future and assumptions as at the reporting date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are outlined below:
The Group tests goodwill and intangible assets under progress annually for potential impairment and estimates the indicators of impairment according to the abovementioned accounting policies. In addition, for mineral resource exploration and evaluation assets' part impairment tests are performed when the classification of the assets changes.The recoverable amounts of cash generating units are assessed based on their value in use. The assessment of these values requires the use of estimates, especially in respect of future growth estimates of the cash-generating units and changes in profitability. Further information on the sensitivity of the recoverable amount to the changes in the assumptions used is in Notes 13.3. and 13.4.
The Group has used external advisor in valuation of fair values of tangible and intangible assets in significant business combinations. For tangible assets' part
Segment information is presented for the group's business segments and geographical segments. The Group's primary reporting format is business segments. Business segments are based on the Group's internal organisational structure and internal financial reporting. Segments' assets and liabilities are operative items, which are used in segment operations and can be reasonably allocated to segments. Other operations includes expenses that are not allocated to the Group's business functions, tax and financial expenses as well as net sales of ceramic utensils and the expenses of this business. Capital expenditure consists of additions to tangible and intangible assets, that are used in more than one financial period.
| Business segments | ||||
|---|---|---|---|---|
| Fireplaces business | ||||
| Natural stone products business | ||||
| Other operations | ||||
| Geographical segments | ||||
| Finland | ||||
| Rest of Europe | ||||
| USA | ||||
| 2.1. Business segments 2008 |
Fireplaces | Natural stone products | Other operations | Group |
| Sales | 56 415 | 7 968 | 2 119 | 66 502 |
| Operating profit | 6 555 | 278 | -3 587 | 3 246 |
| Finance income/expense, share of profit of associates and income taxes | -1 817 | -1 817 | ||
| Profit for the year | 1 429 | |||
| Assets by segment | 43 971 | 4 959 | 17 165 | 66 095 |
| Liabilities by segment | 7 699 | 877 | 30 278 | 38 854 |
| Capital expenditure | 2 159 | 233 | 393 | 2 785 |
| Depreciation and amortisation expenses | 4 629 | 298 | 755 | 5 682 |
| 2007 | Fireplaces | Natural stone products | Other operations | Group |
| Sales | 59 662 | 7 404 | 2 821 | 69 887 |
| Operating profit | 4 433 | 365 | -3 833 | 965 |
| Finance income/expense, share of profit of associates and income taxes | -604 | -604 | ||
| Profit for the year | 361 | |||
| Assets by segment | 47 830 | 5 463 | 9 501 | 62 794 |
| Liabilities by segment | 8 783 | 934 | 25 506 | 35 223 |
| Capital expenditure | 4 154 | 421 | 611 | 5 186 |
| Depreciation and amortisation expenses | 4 829 | 277 | 544 | 5 650 |
| 2.2. Geographical segments 2008 |
Finland | Rest of Europe |
USA | Group |
| Sales | 34 864 | 30 218 | 1 420 | 66 502 |
| Assets by segment | 64 843 | 838 | 414 | 66 095 |
| Capital expenditure | 2 722 | 63 | 2 785 | |
| 2007 | Finland | Rest of Europe |
USA | Group |
| Sales | 38 296 | 29 704 | 1 887 | 69 887 |
| Assets by segment | 61 414 | 772 | 608 | 62 794 |
| Capital expenditure | 5 140 | 46 | 5 186 |
Geographical segment sales are presented based on the country in which the customer is located and assets are presented based on location of the assets.
The Group has not undertaken any business combinations during the financial years 2008 and 2007. On the basis of additional information gained during 2007, the accounting for the acquisition of the shares in Kermansavi Oy in 2006, was adjusted in 2007 by increasing environmental provisions by EUR 170 thousand, reversing an unjustified revaluation of EUR 47 thousand and increasing the amount of deferred tax liabilities recognized with EUR 75 thousand. Due to these adjustments, the related goodwill increased with about EUR 292 thousand, and amounted to EUR 3 634 thousand on December 31, 2008 and December 31, 2007.
| 4. Other operating income | 2008 | 2007 |
|---|---|---|
| Proceeds from sale of PPE | 15 | 82 |
| Rental income from investment properties | 28 | 26 |
| Public grants | 294 | 136 |
| Other income | 347 | 346 |
| Other operating income, total | 684 | 590 |
| 5. Employee benefit expense | ||
| Wages and salaries | 17 773 | 21 158 |
| Pension costs - defined contribution plans | 3 373 | 3 763 |
| Other social security expenses | 1 933 | 2 133 |
| Employee benefit expense, total | 23 079 | 27 054 |
| 5.1. Group's average number of personnel for the financial period | ||
| Fireplaces business | 419 | 542 |
| Natural stone products business | 53 | 54 |
| Other operations | 54 | 86 |
| Personnel, total | 526 | 682 |
| 6. Depreciation, amortisation and impairment | ||
| Depreciation and amortisation by class of assets | ||
| Intangible assets | ||
| Capitalised development costs | 159 | 147 |
| Other intangible assets | 791 | 847 |
| Amortisation on quarries based on the unit of production method *) | 133 | 91 |
| Depreciation of intangible assets, total | 1 083 | 1 085 |
| Tangible assets | ||
| Buildings | 622 | 620 |
| Machinery and equipment | 3 170 | 3 378 |
| Motor vehicles | 305 | 306 |
| Amortisation on land areas based on the unit of production method | 31 | 33 |
| Other tangible assets | 214 | 218 |
| Depreciation of tangible assets, total | 4 342 | 4 555 |
| Investment property | ||
| Buildings | 7 | 4 |
| Impairment by class of assets | ||
| Investments | 6 | |
| Trademark | 250 | |
| Total depreciation, amortisation and impairment | 5 682 | 5 650 |
*) The group changed its accounting policy for amortising quarries and mining rights from the straight-line method to the unit of production method in 2007. The change in the amortisation method resulted in a decrease of amortisation amounting to EUR 396 thousand for 2007 in comparison to the amortisation method previously applied.
| EUR 1 000 | 2008 | 2007 |
|---|---|---|
| 7. Other operating expenses | ||
| Losses on sales of tangible assets | 20 | 5 |
| Rental expenses | 1 387 | 1 398 |
| Maintenance of real estates | 28 | 67 |
| Marketing expenses | 3 252 | 3 927 |
| Other variable production costs | 4 127 | 4 779 |
| Other expenses | 4 098 | 4 507 |
| Other operating expenses, total | 12 912 | 14 683 |
| 7.1. Research and development expenditure | ||
Research and development costs expensed totalled EUR 1 347 thousand (1 491 thousand in 2007).
| 7.2. Auditors' fees | ||
|---|---|---|
| Audit fees | 36 | 78 |
| Tax advice | 33 | 11 |
| Other fees | 10 | 9 |
| Audit fees, total | 79 | 98 |
In 2008 and 2007 the statutory audit was performed by the firm of authorized public accountants KPMG Oy Ab and in 2007 partly by the firm of authorized public accountants PricewaterhouseCoopers.
| 8. Finance income | ||
|---|---|---|
| Changes in fair values of derivative contracts | ||
| Dividend income | 5 | |
| Foreign exchange transaction gains | 88 | |
| Interest income on trade receivables | 34 | |
| Other interest income | 116 | |
| Finance income, total | 243 | |
| 9. Finance expense | ||
| Changes in fair values of derivative contracts | 234 | |
| Interest expenses on financial liabilities at amortised cost and other liabilities | 1010 | |
| Foreign exchange transactions losses | 147 | |
| Other finance expense | 35 | |
| Finance expense, total | 1426 | |
| 10. Income taxes | ||
| Current tax | 682 | |
| Tax carried from previous years | ||
| Transfer of income taxes to the revaluation reserve | 21 | |
| Deferred tax | -69 | |
| Income taxes, total | 634 | |
| The reconciliation between Income statement tax expense and tax calculated based on Group's domestic tax base (26%). | ||
| Profit before tax | 2063 | |
| Tax calculated at domestic tax rates | 536 | |
| Effect of foreign subsidiaries and branch offices different tax bases | 10 | |
| Income not subject to tax | -2 | |
| Expenses not deductible for tax purposes | 42 | |
| Tax losses for which no deferred income tax asset was recognised | 48 | |
| Tax carried from previous years | ||
| Other | ||
| Income statement tax expense | 634 |
| EUR 1 000 | 2008 | 2007 | |||||
|---|---|---|---|---|---|---|---|
| 11. Earnings per share | |||||||
| Earnings per share is calculated by dividing the profit attributable to equity holders of the parent company by the weighted average number of ordinary shares in issue during the year. | |||||||
| Profit attributable to equity holders of the parent company (EUR 1 000) | 1 429 | 361 | |||||
| Weighted average number of shares for the financial period | 37 128 494 | 37 143 970 | |||||
| Basic/diluted earnings per share (EUR) | 0,04 | 0,01 | |||||
| 12.Property, plant and equipment 2008 |
Land | Buildings | Vehicles and machinery |
Motor vehicles | Other tangible assets |
Advances | Total |
| Cost January 1 | 1 264 | 15 075 | 42 381 | 3 568 | 2 455 | 107 | 64 850 |
| Additions | 2 | 94 | 1 054 | 203 | 25 | 51 | 1 429 |
| Reclassification to investment property | 72 | 72 | |||||
| Disposals | 3 | 172 | 100 | 35 | 107 | 417 | |
| Cost December 31 | 1 266 | 15 094 | 43 263 | 3 671 | 2 445 | 51 | 65 790 |
| Accumulated depreciation and impairment January 1 | 186 | 6 478 | 30 795 | 2 555 | 1 081 | 41 095 | |
| Depreciation | 31 | 622 | 3 170 | 305 | 214 | 4 342 | |
| Depreciation related to the disposals | 138 | 49 | 26 | 213 | |||
| Accumulated depreciation on reclassified investment property | 30 | 30 | |||||
| Accumulated depreciation and impairment December 31 | 217 | 7 070 | 33 827 | 2 811 | 1 269 | 45 194 | |
| Property, plant and equipment, Net book amount January 1, 2008 | 1 078 | 8 597 | 11 586 | 1 013 | 1 374 | 107 | 23 755 |
| Property, plant and equipment, Net book amount December 31, 2008 | 1 049 | 8 024 | 9 436 | 860 | 1 176 | 51 | 20 596 |
The group did not receive any grants for machinery and equipment in 2008 (totalling to EUR 10 thousand in 2007).
The Group's production machinery within property, plant and equipment has carrying amount of EUR 9 498 (10 232) thousand.
| 2007 | Land | Buildings | Vehicles and machinery |
Motor vehicles | Other tangible assets |
Advances | Total |
|---|---|---|---|---|---|---|---|
| Cost January 1 | 1 061 | 14 777 | 40 371 | 3 270 | 2 066 | 110 | 61 655 |
| Additions | 203 | 298 | 2 071 | 568 | 389 | 3 529 | |
| Disposals | 61 | 270 | 3 | 334 | |||
| Cost December 31, 2007 | 1 264 | 15 075 | 42 381 | 3 568 | 2 455 | 107 | 64 850 |
| Accumulated depreciation and impairment January 1 | 153 | 5 858 | 27 462 | 2 492 | 863 | 36 828 | |
| Depreciation | 33 | 620 | 3 378 | 306 | 218 | 4 555 | |
| Depreciation related to the disposals | 0 | 45 | 243 | 288 | |||
| Accumulated depreciation and impairment December 31 | 186 | 6 478 | 30 795 | 2 555 | 1 081 | 41 095 | |
| Property, plant and equipment, Net book amount January 1, 2007 | 908 | 8 919 | 12 909 | 778 | 1 203 | 110 | 24 827 |
| Property, plant and equipment, Net book amount December 31, 2007 | 1 078 | 8 597 | 11 586 | 1 013 | 1 374 | 107 | 23 755 |
| 13. Intangible assets | |||||||
|---|---|---|---|---|---|---|---|
| 13.1. Goodwill and other intangible assets 2008 |
Goodwill | Patents and trademarks |
Development costs |
Internally generated capitalised intangible assets |
Mineral resource exploration and evaluation assets |
Other intangible assets |
Total |
| Cost January 1 | 4 266 | 3 678 | 847 | 9 458 | 164 | 9 691 | 28 104 |
| Additions | 34 | 488 | 428 | 950 | |||
| Capitalised development costs | 406 | 406 | |||||
| Cost December 31 | 4 266 | 3 712 | 1 253 | 9 946 | 164 | 10 119 | 29 460 |
| Accumulated amortisation January 1 | 368 | 211 | 6 768 | 104 | 5 247 | 12 698 | |
| Depreciation | 23 | 159 | 350 | 31 | 520 | 1 083 | |
| Impairment | 250 | 250 | |||||
| Accumulated amortisation and impairment December 31 | 641 | 370 | 7 118 | 135 | 5 767 | 14 031 | |
| Goodwill and other intangible assets, Net book amount January 1, 2008 | 4 266 | 3 310 | 636 | 2 690 | 60 | 4 444 | 15 406 |
| Goodwill and other intangible assets, Net book amount December 31, 2008 | 4 266 | 3 071 | 883 | 2 828 | 29 | 4 352 | 15 429 |
The group received grants totalling to EUR 188 (70) thousand for development costs. The grants have been recognised as deduction of the carrying amount.
Internally generated intangible assets are mainly costs incurred from opening new quarries. The carrying amount of intangible assets includes costs incurred from opening quarries EUR 4 102 (3 315) thousand in total.
There were no classification changes relating to the mineral resources exploration and evaluation assets, that is, there were no transfers to other intangible assets during the reporting period or comparative period. EUR 50 (96) thousand of expenditures relating to mineral resources exploration and evaluation have been recognised directly as an expense in the income statement.
| 2007 | Goodwill | Patents and trademarks |
Development costs |
Internally generated capitalised intangible assets |
Mineral resource exploration and evaluation assets |
Other intangible assets |
Total |
|---|---|---|---|---|---|---|---|
| Cost January 1 | 4 266 | 3 660 | 749 | 8 607 | 164 | 8 997 | 26 443 |
| Additions | 18 | 851 | 694 | 1 563 | |||
| Capitalised development costs | 98 | 98 | |||||
| Cost December 31 | 4 266 | 3 678 | 847 | 9 458 | 164 | 9 691 | 28 104 |
| Accumulated amortisation January 1 | 346 | 63 | 6 751 | 71 | 4 382 | 11 613 | |
| Depreciation | 22 | 148 | 17 | 33 | 865 | 1 085 | |
| Accumulated amortisation December 31 | 368 | 211 | 6 768 | 104 | 5 247 | 12 698 | |
| Goodwill and other intangible assets, Net book amount January 1, 2007 | 4 266 | 3 314 | 686 | 1 856 | 93 | 4 615 | 14 830 |
| Goodwill and other intangible assets, Net book amount December 31, 2007 | 4 266 | 3 310 | 636 | 2 690 | 60 | 4 444 | 15 406 |
For the purpose of impairment testing EUR 3.6 million of goodwill has been allocated to Ceramic fireplaces unit under Fireplaces Business segment and EUR 0.6 million to Natural Stone Products Business segment, which are separate cash-generating units. Of the value of the Kermansavi trademark acquired in the acquisition of Kermansavi Oy, amounting to EUR 3.2 million, EUR 2.7 million has been allocated to Ceramic fireplaces unit under Fireplaces Business segment and EUR 0.5 million to Utensils unit under Other Operations segment. The useful life of the brand has been estimated to be indefinite, since it is expected to generate net cash inflows for the group for an undefined period of time.
| The carrying amounts of goodwill and trade mark were allocated as follows: | Natural Stone Product | Fireplaces | Other Operations |
|---|---|---|---|
| 2008 | |||
| Goodwill | 632 | 3 634 | |
| Trademark | 2 712 | 229 | |
| Total | 632 | 6 346 | 229 |
| 2007 | |||
| Goodwill | 632 | 3 634 | |
| Trademark | 2 712 | 479 | |
| Total | 632 | 6 346 | 479 |
During the course of the year ended an impairment loss amounting to EUR 250 thousand has been recognized on Utility Ceramics unit under Other Operations segment. The impairment was allocated to the trademark. After the recognition of the impairment loss the carrying amount of the trade mark amounts to EUR 229 thousand. The main reason for impairment was the sales volume and the result of the Utility Ceramics unit, which did not meet the targets set.
In impairment testing the recoverable amounts of the business segments are determined based on value in use. The estimated cash flow projections are based on forecasts approved by management covering a five-year period. The pre-tax discount rate used range from 7.0 to 7.4 per cent which equal the weighted average cost of capital. The future cash flows beyond the forecast period approved by management are extrapolated by using a constant 1 per cent growth rate. The growth rate used does not exceed the actual long-term growth rate of the industry in question.
Budgeted sales margin
The budgeted sales margin is determined based on the last year's actual sales margin. The Group does not expect any material changes to occur in the sales margin during the forecast period.
Budgeted market share is determined based on the previous year's actual market share. The value of the assumption is based on actual development. The market share is not expected to change materially, when continuous product development and anticipated tightening of competition is taken into account.
Budgeted royalty percentage, which is the amount that an external party would be willing to pay for a license agreement, determined based on actual data in the industry.
The discount rate is defined as the weighted average cost of capital (WACC) where the cost of capital is weighted average cost of equity and liabilities.
An increase in the discount rate with 1 percentage point or the result being 20 per cent lower than the target set would result in an additional impairment loss of EUR 350 thousand in Utility Ceramics unit under Other Operations segment. An increase in the discount rate with 1 percentage point would not lead to recognition of an impairment loss in Fireplaces and Natural Stone Products business areas. The result being 20 per cent lower than the target set would result in an impairment loss in Ceramic fireplaces unit under Fireplaces business segment, amounting to EUR 600 thousand, but would not lead to recognition of an impairment loss in Natural Stone Products business segment.
Mineral resource exploration and evaluation assets belong to the Fireplaces business segment. The carrying amount of capitalised exploration and evaluation expenditure is EUR 29 (60) thousand. Impairment tests are performed always when the classification of assets in question changes and if there is an indication of impairment. Change in classification is dealt with more thoroughly in the accounting principles, section Mineral resource exploration and evaluation assets.
| EUR 1 000 | 2008 | 2007 | ||
|---|---|---|---|---|
| 14. Investment property | Land | Buildings | Land | Buildings |
| Acquisition cost January 1 and December 31 | 188 | 115 | 188 | 115 |
| Reclassification from property, plant and equipment / buildings | 72 | |||
| Cost December 31 | 188 | 187 | 188 | 115 |
| Accumulated depreciation and impairment January 1 | 73 | 69 | ||
| Accumulated depreciation on reclassified building | 30 | |||
| Disposals | 7 | 4 | ||
| Accumulated depreciation and impairment December 31 | 110 | 73 | ||
| Net book amount January 1 | 188 | 42 | 188 | 46 |
| Net book amount December 31 | 188 | 77 | 188 | 42 |
| Fair value *) | 280 | 280 | ||
| Pledged property | 34 | 34 |
*) The value of the real estates, that have market value on active markets, is based on the opinions of real estate agents.
| 15. Investments in associates | 2008 | 2007 | ||||
|---|---|---|---|---|---|---|
| Shares and interest in associates | ||||||
| Acquisition cost January 1 | 24 | 24 | ||||
| Share of the (loss)/profit of associates | 0 | 0 | ||||
| Acquisition cost December 31 | 24 | 24 | ||||
| Information of the Group's associates, including the aggregated amounts of assets, liabilities, revenues and profit or loss (EUR 1 000). 2008 |
Domicile | Assets | Liabilities | Sales | Profit/Loss | % of shares |
| Leppävirran Matkailukeskus Oy, Leppävirta | Leppävirta | 79 | 5 | 85 | -1 | 33,0 |
| Stone Pole Oy, Juuka | Juuka | 285 | 281 | 398 | 22 | 27,3 |
| Associate financials are unaudited. | ||||||
| 2007 | ||||||
| Leppävirran Matkailukeskus Oy, Leppävirta | Leppävirta | 79 | 4 | 78 | -1 | 33,0 |
| Stone Pole Oy, Juuka | Juuka | 253 | 262 | 246 | 2 | 27,3 |
Stone Pole Oy is a stone business development company. The purpose of the limited liability company Leppävirran Matkailukeskus Oy is to lease and own real estates that relate to or serve tourism.
| 16. Other financial assets | 2008 | 2007 |
|---|---|---|
| Financial assets available for sale | ||
| Balance sheet value January 1 | 33 | 39 |
| Disposals | 6 | 6 |
| Balance sheet value December 31 | 27 | 33 |
Financial assets available for sale are investments in unquoted shares and they are measured at cost, since their fair values can not be determined reliably.
| EUR 1 000 | |||||
|---|---|---|---|---|---|
| 17. Deferred tax assets and liabilities | |||||
| Changes in deferred taxes during year 2008: | Jan. 1, 2008 | Adjustments made |
Recognised through profit and loss |
Translation differences | Dec. 31, 2008 |
| Deferred tax assets: | |||||
| Provisions | 400 | -176 | 224 | ||
| Unused tax losses | 15 | -1 | 14 | ||
| Accumulated negative depreciation difference | 278 | -28 | 250 | ||
| Change in the revaluation reserve | 21 | 21 | |||
| Other items | 303 | -18 | 61 | 346 | |
| Deferred tax assets, total | 996 | -18 | -122 | -1 | 855 |
| Deferred tax liabilities: | |||||
| Capitalisation of intangible assets | -155 | -36 | -191 | ||
| The effect of the business combinations | -1 937 | 227 | -1 710 | ||
| Other items | -160 | 18 | -142 | ||
| Deferred tax liabilities, total | -2 252 | 18 | 191 | -2 043 | |
| Changes in deferred taxes during year 2007: | Jan. 1, 2007 | Adjustments made |
Recognised through profit and loss |
Translation differences | Dec. 31, 2007 |
| Deferred tax assets: | |||||
| Provisions | 206 | 194 | 400 | ||
| Unused tax losses | 150 | -200 | 65 | 15 | |
| Accumulated negative depreciation difference | 226 | 200 | -149 | 277 | |
| Other items | 4 | -162 | 462 | 304 | |
| Deferred tax assets, total | 586 | -162 | 572 | 996 | |
| Deferred tax liabilities: | |||||
| Capitalisation of intangible assets | -178 | 23 | -155 | ||
| Accumulated depreciation difference | -574 | 574 | 0 | ||
| The effect of the business combinations | -2 088 | 151 | -1 937 | ||
| Other items | -304 | 162 | -18 | -160 | |
| Deferred tax liabilities, total | -3 144 | 162 | 730 | -2 252 |
At December 31, 2008 deferred tax assets of EUR 147 (147) thousand retaling to accumulated negative depreciation difference were not recorded since it is not probable that the subsidiary in question will generate taxable income for the Group against which the unused depreciations can be utilised.
| 18. Inventories | 2008 | 2007 |
|---|---|---|
| Raw materials and consumables | 5 488 | 6 088 |
| Finished goods | 5 964 | 6 572 |
| Inventories, total | 11 452 | 12 660 |
The cost of inventories recognized as expense amounted to EUR 36 301 (40 953) thousand.
A write-down of EUR 80 (46) thousand was recognised during the financial year to lower the book value of the inventories to their net realisable value.
| EUR 1 000 | 2008 | 2007 | |
|---|---|---|---|
| 19. Trade and other receivables | |||
| 19.1. Current trade and other receivables | |||
| Trade receivables | 5 292 | 5 309 | |
| Trade receivables from associates | 1 | ||
| Current tax assets based on the taxable income for the financial period | 13 | 64 | |
| Accrued incomes | |||
| Grant receivables | 202 | 85 | |
| Prepayments | 123 | ||
| Other accrued income | 190 | 267 | |
| Other receivables | 44 | 78 | |
| Current receivables, total | 5 742 | 5 926 | |
| 19.2. Aging analysis of trade receivables and impairment losses at balance sheet date | Gross 2008 |
Impairment 2008 |
Gross 2007 |
| Not past due | 4 071 | 3 722 | |
| Past due 1-30 days | 731 | 993 | |
| Past due 31-90 days | 430 | 446 | |
| Past due over 90 days | 253 | 193 | 223 |
| Total | 5 485 | 193 | 5 384 |
| 19.3. Trade receivables by risk categories | |||
| Largest customers by customer groups | |||
| Stove producers | 1 046 | 486 | |
| Distributors of fireplaces in foreign countries | 1 305 | 102 | 1 845 |
| Construction companies | 911 | 64 | 922 |
| Distributors in home country | 984 | 940 | |
| End users | 1 239 | 27 | 1 191 |
| Total | 5 485 | 193 | 5 384 |
| The carrying amount of trade receivables for which the terms have been renegotiated | 0 | 0 | |
| Trade and other receivables | |||
| The carrying amounts of trade and other receivables equal with their fair values, since discounting has not material effect owing to short maturities. | |||
| 20. Cash and cash equivalents | 2008 | 2007 | |
| Cash in hand and at bank | 11 705 | 3 765 |
At the balance sheet date, fixed-term deposit under cash and cash equivalents amounted to EUR 8 503 thousand, with maturities of less than three months.
| 21. Notes to shareholders' equity | ||||
|---|---|---|---|---|
| Share series | Number of shares |
% of shares |
% of voting rights |
Share, EUR of share capital |
| K shares (10 votes) | 9 540 000 | 25,7 | 77,6 | 1 621 800 |
| A shares (1 vote) | 27 603 970 | 74,3 | 22,4 | 4 692 675 |
| Total at December 31, 2008 | 37 143 970 | 100,0 | 100,0 | 6 314 475 |
According to the articles of association the company shall distribute from distributable profit EUR 0.0017 per share more to the company's series A shares than for the company's series K shares. Tulikivi Corporation's series A share is listed in the NASDAQ OMX Helsinki Ltd.
The shares entered in the company's book-entry account in accordance with Finnish Companies Act - the "joint account" - were sold in April-May 2003 on behalf of the shareholders. Shareholders and other right holders are entitled until May 2013 to withdraw the amount of funds corresponding to their shareholding by delivering their share certificates and required notices of receipt to one of the offices of Sampo Pankki Plc or to the State Provincial Office of Eastern Finland.
Translation differences consist of translation differences related to translation of the financial statements of foreign entities into Group reporting currency.
The revaluation reserve includes the effective portion of changes in the fair value of derivatives that qualify as cash flow hedges.
During the financial year the company has acquired 74 000 own shares based on the authorization given by the Annual General Meeting on 17 April 2008. The acquisition price has been the stock exchange rate of the share at the time of acquisition. The acquired shares represent 0.2 per cent of the share capital and 0.06 per cent of the voting rights. The acquisition of own shares has not had any material impact on the distribution of ownership or voting rights of the company.
| During the financial year the parent company has purchased its own shares as follows: |
Period | Number of shares | Consideration transferred (average), eur |
Consideration transferred (range), eur |
|---|---|---|---|---|
| 1.08. - 31.08.2008 | 13 334 | 1,344 | 1,31 - 1,39 | |
| 1.09. - 30.09.2008 | 19 270 | 1,298 | 1,23 - 1,34 | |
| 1.10. - 31.10.2008 | 5 000 | 1,124 | 0,90 - 1,23 | |
| 1.11. - 30.11.2008 | 22 396 | 0,890 | 0,80 - 0,96 | |
| 1.12. - 31.12.2008 | 14 000 | 0,654 | 0,65 - 0,67 | |
| Total at December 31, 2008 | 74 000 | 1,050 | 0,65 - 1,39 |
Parent company's distributable earnings were EUR 6 946 (7 504) thousand.
The Board of Directors has proposed after the balance sheet date that a dividend of EUR 0.0280 per share will be paid for A series shares and EUR 0.0263 per share to be paid for the K series shares.
All Group's pension plans where defined contribution plans at December 31, 2008. The group had no defined benefit liabilities at the year-end 2008, nor 2007.
| 24. Provisions | Environmental provision | Warranty provision | Restructuring provision | |||
|---|---|---|---|---|---|---|
| 2008 | 2007 | 2008 | 2007 | 2008 | 2007 | |
| Provisions January 1 | 397 | 410 | 462 | 382 | 687 | |
| Increase in provisions | 120 | 115 | 238 | 330 | 687 | |
| Effect of discounting, change | -60 | -95 | ||||
| Used provisions | -33 | -238 | -250 | -687 | ||
| Provisions December 31 | 457 | 397 | 462 | 462 | 687 |
Warranty provision
There is a warranty period of five to ten years related to certain products of Tulikivi Group. During the warranty period faults consistent with the warranty contract are fixed at company's expense. Warranty provision is based on previous years experience on the faulty products, taking into consideration improvements.
Environmental provision
A provision for Tulikivi Group's estimable environmental obligations has been recognised. The provision covers the costs from future closure of quarries related to monitoring waters, security arrangements and stacking area lining work. For the quarries open at the moment, the costs are estimated to incur on average in twelve years from now. The discount rate used in determining the present value is 5 per cent.
Restructuring provision
The restructuring provision recognized in 2007 was used in 2008. The provision related to termination benefits resulting from the dismissals decided based on the co-operation negotiations carried out in 2007.
| 2008 | |
|---|---|
| Non-current provisions | 919 |
| Current provisions | |
| Total | 919 |
| 25. Interest-bearing liabilities | |
| Balance sheet value | 26 725 |
| 25.1 Non-current | |
| Bank borrowings | 12 810 |
| TyEL premium loans | 7 000 |
| Other non-current interest bearing liabilities | 1 772 |
| EUR 1 000 | 2008 | 2007 |
|---|---|---|
| 25.2. Current | ||
| Current portion of non-current bank borrowings | 4 670 | 2 852 |
| Current portion of other non-current interest bearing liabilities | 473 | |
| Other current interest-bearing liabilities | 473 | 536 |
| Non-current loans expire as follows: | ||
| 2008 | 3 326 | |
| 2009 | 5 144 | 4 839 |
| 2010 | 6 301 | 4 186 |
| 2011 | 5 166 | 2 900 |
| 2012 | 3 643 | 2 264 |
| 2013 | 2 612 | 1 498 |
| Later | 3 859 | 2 063 |
| Total | 26 725 | 21 076 |
Debt obligations are denominated in euro.
At December 31, 2008 interest-bearing non-current liabilities effective interest rate weighted average was 4.0 per cent (4.5 per cent) including the effect of interest rate swaps and 4.2 per cent (4.9 per cent) excluding the effect of the interest rate swaps.
The carrying amounts of interest-bearing liabilities broadly equal their fair values, since 59.8 per cent (87.0 per cent) of the liabilities have floating interest rates and the interest rate of fixed rate loans approximates the interest rate of corresponding liabilities at the balance sheet date. In order to manage interest rate risk the group has entered into interest rate swaps, amounting to EUR 13.0 million (EUR 7.4 million).
Total amount of EUR 17.8 (16.1) million of the Group's liabilities are under covenants and other conditions connected with the Group's solvency and profitability. The conditions do not directly restrict the Group's use of equity, but they might require negotiations with the financier and arranging additional collaterals to the loans.
| 26. Trade and other payables | 2008 | 2007 |
|---|---|---|
| 26.1. Non-current | ||
| Unpaid acquisition price of subsidiaries | 347 | |
| 26.2. Current | ||
| Trade payable | 1 876 | 2 418 |
| Advances received | 20 | 2 |
| Accrued expenses | ||
| Wages and social security expenses | 4 394 | 4 511 |
| Discounts and marketing expenses | 653 | 505 |
| External services | 445 | 334 |
| Other accrued expenses | 903 | 757 |
| Amounts due to associates | 39 | 6 |
| Other liabilities | 734 | 856 |
| Current trade and other payables, total | 9 064 | 9 389 |
Other accrued expenses comprise accrued interest expenses and accruals related to other operating expenses.
The Group's activities expose it to various financial risks. The objective of the Group's financial risk management is to minimisize the unfavourable effects of the changes in the finance market to its profit for the period. The main financial risks to which the Group is exposed are foreign exchange risk, interest rate risk, credit risk and liquidity risk. The Group finance has been centralised in parent company, and the financing of the subsidiaries is mainly taken care of by internal loans. The liquidity of the Group companies is centralised by consolidated accounts. The group treasury is responsible for investing the liquidity surplus and for financial risk management in accordance with the policies approved by the Board of Directors.
The group's currency risks arise from commercial transactions, monetary items in the balance sheet and net investments in foreign subsidiaries. The most important currencies in respect of the group's foreign currency risk are United States Dollar (USD) and Russian Rouble (RUB). Over 95 per cent of the group's cash flows are denominated in euro, thus the group's exposure to foreign currency risk is not significant. Foreign currency risk can be hedged with foreign exchange contracts. The group had no open foreign exchange contract positions at the balance sheet date 2008 or 2007. The group does not apply hedge accounting as defined under IAS 39 on foreign exchange contracts.
The functional currency of the parent company is Euro. Foreign currency assets and liabilities translated to euro using the balance sheet rate are as follows:
| 2008 | 2008 | 2007 | 2007 | |
|---|---|---|---|---|
| Nominal values, EUR 1 000 | USD | RUB | USD | RUB |
| Non-current assets | 42 | 1 | 47 | |
| Current assets | 559 | 62 | 905 | 25 |
| Current liabilities | 9 | 3 | 50 | 15 |
| Net position | 550 | 101 | 856 | 57 |
The equity-related foreign currency translation position, which mainly pertains to the foreign subsidiaries, was minor at the balance sheet date 2008 and 2007. The Group does not hedge the foreign equity exposure.
The table below analyses the effect of strengthening or weakening of Euro against the currencies below assuming that all other variables remain constant. The sensitivity analysis is based on assets and liabilities denominated in foreign currencies at the balance sheet date.
| 2008 Income statement |
2007 Income statement |
|
|---|---|---|
| +/- 10 per cent change in EUR/USD | ||
| exchange rate, before income taxes | +/- 55 | +/- 86 |
| +/- 10 per cent change in EUR/RUB | ||
| exchange rate, before income taxes | +/- 6 | +/- 6 |
The Group's short-term money market investments expose Tulikivi to interest rate risk but their effect as a whole is not material. The Group's result and cash flows from operating activities are mainly independent from changes in interest rates.
The group is exposed to fair value interest rate risk which largely relates to the loan portfolio. The group can borrow funds with fixed or floating rates and use interest rate swaps in order to hedge risks arising from fluctuation of interest rates. In accordance with the risk management principles the amount of fixed rate borrowings and borrowings hedged with interest derivatives shall be over 50 per cent of the total loan portfolio. The share of interest rate sensitive loans amounted to EUR 15.9 (18.3) million representing 59.8 per cent (87.0 per cent) for interest-bearing liabilities at the year-end. At the balance sheet date the group had open long-term interest rate swaps denominated in Euro with a nominal value of EUR 8.8 (7.4) million. Based on these interest rate swaps the group receives floating rate interest based on Euribor rates (EUR 6.2 million / 3 months, EUR 2.6 million / 6 months) and pays fixed interest on average 3.9 (3.7) per cent. In addition the Group has a short-term interest rate swap with the nominal amount of EUR 4.2 million, under which the Group pays 3 months Euribor and receives 1 month Euribor. The Group applies hedge accounting to those interest rate swaps which result in effective hedging. The fair value changes of these interest rate swaps, resulting in a loss of EUR 81 thousand at the balance sheet date, are rocognized in the revaluation reserve under equity. The fair value changes of other interest rate swaps resulted in a loss of EUR 224 thousand (gain of EUR 70 thousand), which has been recognized in the income statement
The interest rate risk related to loans amounts to EUR 72 thousand (110 thousand) assuming 1 per cent change in market interest rates. The impact of derivatives on interest rate risk has been taken into account.
| Interest rate risk | 2008 | 2007 |
|---|---|---|
| EUR 1 000 | Balance sheet value | Balance sheet value |
| Fixed rate instruments | ||
| Financial liabilities | 10 750 | 2 750 |
| Floating rate instruments | ||
| Financial assets | 11 705 | 3 765 |
| Financial liabilities | 15 975 | 18 326 |
The Group has no significant concentration of credit risk since it has a large clientele and receivables of single costumer or a group of customers is not material for the Group. The aggregate amount of the credit losses on trade receivables and the impairment losses on other receivables recognised in the income statement during the financial year totalled EUR 238 (97) thousand. Credit risk related to commercial activities has been reduced by customer credit insurances. These covered 54.2 (61) per cent of the outstanding accounts at balance sheet date. Business units are responsible for credit risk related to trade receivables. The aging analysis of trade receivables is presented in note 19.2. The group's maximum credit risk exposure for trade receivables is their carrying amount at the year-end less any compensation received from customer credit insurances. The risk related to financial instruments is that the counterparty fails to meet its contractual obligations. Liquid assets are invested in targets with good credit standing. Derivative contracts are only entered into the banks having a good credit rating.
The maximum credit risk related to group's other financial assets than trade receivables equals their carrying amounts at the balance sheet date.
The group strives to continuously asses and monitor the amount of capital needed for business operations in order to ensure that the group has adequate liquid funds for financing its operations and repayment for loans due. The Group aims at ensuring the availability and flexibility of financing is ensured, in addition to liquid funds, by using credit limits and different financial institutions for raising funds. The unused credit limits and undrawn credit facilities amounted to EUR 4.0 (6.5) million at the balance sheet date. Management is in the opinion that the Group has adequate amount of financing available for the near future.
The following table summarises the maturity profile of the group. The undiscounted amounts include interests and capital repayments.
| 27.5. Maturity analysis | ||||||
|---|---|---|---|---|---|---|
| December 31, 2008 | ||||||
| Type of credit | Balance sheet value |
Undrawn credit facilities |
Under 1 year |
1 - 2 years |
3 - 5 years |
Later than 5 years |
| Loans from credit institution | 24 480 | 5 659 | 6 324 | 11 549 | 4 028 | |
| Cash flows from derivatives | 17 | 20 | 28 | |||
| Hire-purchase liabilities | 2 246 | 581 | 829 | 1 052 | ||
| Credit limit accounts | 4 000 | |||||
| Trade and other payables | 9 210 | 9 210 | ||||
| Total | 35 936 | 4 000 | 15 467 | 7 173 | 12 629 | 4 028 |
| December 31, 2007 | ||||||
| Type of credit | Balance sheet value |
Undrawn credit facilities |
Under 1 year |
1 - 2 years |
3 - 5 years |
Later than 5 years |
| Loans from credit institution | 18 063 | 2 000 | 3 680 | 4 741 | 8 621 | 3 820 |
| Cash flows from derivatives | -68 | -57 | -78 | -8 | ||
| Hire-purchase liabilities | 3 013 | 1 155 | 881 | 1 895 | ||
| Credit limit accounts | 536 | 4 464 | 536 | |||
| Trade and other payables | 9 813 | 9 466 | 347 | |||
| Total | 31 425 | 6 464 | 14 769 | 5 912 | 10 438 | 3 812 |
| Derivatives, nominal value Interest rate swaps |
2008 | 2007 | ||||
| Arrive at maturity 2008 | 1 131 | |||||
| Arrive at maturity 2009 | 5 735 | 1 131 | ||||
| Arrive at maturity 2010 | 1 498 | 3 394 | ||||
| Arrive at maturity 2011-2013 | 5 558 | 1 698 | ||||
| Arrive at maturity 2014 or later | 236 | |||||
| Total Interest rate swaps | 13 027 | 7 354 |
The fair values of interest rate swaps are determined using a method based on the present value of future cash flows, supported by market interest rates at the balance sheet date and other market information.
The objective of the Group's capital management is through an optimal capital structure to support the business operations by ensuring the normal operating conditions and increase shareholder value by striving at the best possible return. An optimal capital structure also guarantees lower cost of capital. The capital structure is effected i.a. through dividend distribution and share issues. The Group may change and adjust the dividends distributed and capital repaid to the shareholders or the number of new shares issued or decide on sales of assets in order to repay liabilities.
The group monitors capital on the basis of the equity ratio, for which 40 per cent is set as the lowest limit for dividend distribution.
The group calculates equity ratio using the following formula
100*Equity / (Balance sheet total - Advances received)
| 2008 | 2007 | |
|---|---|---|
| Equity | 27 242 | 27 571 |
| Balance sheet total | 66 095 | 62 794 |
| Advances received | 21 | 2 |
| Solvency ratio, % | 41,2 | 43,9 |
| Balance sheet, 2007 | Financial assets or liabilities at fair value through profit or loss |
Loans and receivables |
Available-for sale financial assets |
Financial liabilities at amortised cost |
Carrying amounts of balance sheet items |
Fair value |
|---|---|---|---|---|---|---|
| Long-term assets | ||||||
| Other financial assets | 51 | 51 | 51 | |||
| Short-term assets | ||||||
| Trade and other receivables | 5 336 | 5 336 | 5 336 | |||
| Cash and cash equivalents | 11 705 | 11 705 | 11 705 | |||
| Carrying amounts of financial assets by categories | 17 041 | 51 | 17 092 | 17 092 | ||
| Long-term liabilities | ||||||
| Interest bearing liabilities | 21 582 | 21 582 | 21 582 | |||
| Derivatives | 177*) | 177 | 177 | |||
| Short-term liabilities | ||||||
| Interest bearing liabilities | 5 144 | 5 144 | 5 144 | |||
| Trade and other payables | 2 472 | 2 472 | 2 472 | |||
| Carrying amounts of financial liabilities by categories | 177 | 29 198 | 29 375 | 29 375 |
*) Includes cash flow hedging instruments recognized in the revaluation reserve, amounting to EUR 81 thousand.
| EUR 1 000 | ||||||
|---|---|---|---|---|---|---|
| Balance sheet, 2007 | Financial assets or liabilities at fair value through profit or loss |
Loans and receivables |
Available-for sale financial assets |
Financial liabilities at amortised cost |
Carrying amounts of balance sheet items |
Fair value |
| Long-term assets | ||||||
| Other financial assets | 57 | 57 | 57 | |||
| Short-term assets | ||||||
| Trade and other receivables | 5 394 | 5 394 | 5 394 | |||
| Derivatives | 138 | 138 | 138 | |||
| Cash and cash equivalents | 3 765 | 3 765 | 3 765 | |||
| Carrying amounts of financial assets by categories | 138 | 9 159 | 57 | 9 354 | 9 354 | |
| Long-term liabilities | ||||||
| Interest bearing liabilities | 17 751 | 17 751 | 17 751 | |||
| Other long-term liabilities | 347 | 347 | 347 | |||
| Short-term liabilities | ||||||
| Interest bearing liabilities | 3 861 | 3 861 | 3 861 | |||
| Trade and other payables | 2 424 | 2 424 | 2 424 | |||
| Carrying amounts of financial liabilities by categories | 24 383 | 24 383 | 24 383 | |||
| 29. Adjustments of cash generated from operations | 2008 | 2007 | ||||
| Non-cash transactions: | ||||||
| Depreciations and amortizations | 5 432 | 5 644 | ||||
| Impairment | 250 | 6 | ||||
| Share of profit of associates | 0 | 0 | ||||
| Exchange differences | 59 | -53 | ||||
| Other | 6 | -77 | ||||
| Non-cash transactions, total | 5 747 | 5 520 | ||||
| 30. Leases | ||||||
| Operating leases | ||||||
| 30.1. Group as lessee | ||||||
| Future aggregate minimum lease payments under non-cancellable operating leases: | 2008 | 2007 | ||||
| Not later than 1 year | 1 004 | 868 | ||||
| Later than 1 year and not later than 5 years | 163 | 140 | ||||
| The Group has leased several production and office facilities. The agreements are mainly made for the time being. |
Fixed-term leases include an option to continue the agreement after the initial date of expiration.
The income statement for 2008 includes expensed lease rentals EUR 1 129 (1 066) thousand.
| EUR 1 000 | 2008 | 2007 |
|---|---|---|
| 30.2. Group as lessor | ||
| The Group has leased commercial spaces and offices from its own properties under cancellable operating leases. |
||
| In addition, the Group has subleased some of its offices. | ||
| Minimum lease payment under non-cancellable operating leases | ||
| Not later than 1 year | 45 | 47 |
| Later than 1 year and not later than 5 years | 7 | 3 |
| 31. Commitments | ||
| Loans with related mortgages and pledges | ||
| Loans from financial institutions and loan guarantees | 18 730 | 15 312 |
| Credit limits | 4 000 | 5 000 |
| Other long-term liabilities | 2 263 | 3 051 |
| Real estate mortgages given | 9 186 | 8 891 |
| Company mortgages given | 13 396 | 13 396 |
| Object for purchase | 2 263 | 3 051 |
| Pledged leaseholds | 219 | 219 |
| Total given mortgages and pledges | 25 064 | 25 557 |
| Other own liabilities for which guarantees have been given | ||
| Guarantees | 450 | 520 |
| Total other commitments | 35 | 280 |
| Total other own liabilities for which guarantees have been given | 485 | 800 |
| Company mortgages given | 450 | 779 |
| Pledges given | 35 | 35 |
| Total given guarantees on behalf of other own liabilities | 485 | 814 |
| Derivatives (Interest rate swaps) | ||
| Derivatives, nominal value | 13 027 | 7 354 |
| Derivatives, fair value | -177 | 138 |
| Obligation to repay VAT deductions made in earlier periods | 164 | 292 |
During 2008 was paid the contingent consideration of EUR 0.3 million for Kivia Oy's shares included in the non-current liabilities in 2007.
The final income tax to be paid for the year 2007 by the group company Kivia Oy amounts to EUR 361 thousand and related interest EUR 13 thousand. In its 2007 tax form the company has requested that the claim for adjustment submitted in 2007 concerning the previous years would be considered in taxation. The claim deals with an error regarding recognition of non-current assets depreciated using the straight-line method. The board of adjustment has not yet discussed the claim. The company is in the opinion that the claim for adjustment is justified and considers that no income tax should become payable for the year 2007. Due to this the income tax to be paid and interest have not been recognized in the financial statements. However, should the income tax or part of it become payable, a deferred tax asset would arise. Thus the decision would have an impact of the group's result and equity only in respect of the unrecognized interest. The unrecognized interest accumulated by the balance sheet date amounts to EUR 16 thousand. The enforcement of the income tax payment decision has been suspended.
Tulikivi group has landscaping obligations based on the Mining Act and other environmental legislation, which must be met during operations and when the quarries are shut down in the future.
Actions demanded by the environmental obligations are continuously performed besides normal production processes. Handling of water, arrangements for soil and rock material stacking areas, vibration and noise measurement, dust prevention and the monitoring the measurement result belong to these tasks. The costs relating to these activities are mainly recognised in the income statement as expense. Transport of soil material to stacking areas by opening new quarries is capitalised to other long-term expenses and depreciated during the useful life of the quarry. Lining work of stacking areas is based on long-term quarrying plans, according to which surface material of new opened quarries will be used in lining work. However, the lining work cannot be done until the point when there are finished sectors in the stacking area. No provision is recognised for the lining work, because it is not estimated to increase the costs of normal quarrying work.
After a factory or a quarry is shut down, the final lining work of the stacking areas, water arrangements, establishing of check points, bringing to safety condition and planting and seeding the vegetation will take place. For that part of these costs which are estimable, a provision is recognised.
Based on the environmental authorisations, the Group has given guarantees to the effect of EUR 229 600 in total, and additional EUR 270 000 which were given after the balance sheet date. For other environmental obligations, the Group has given real estate mortgages for EUR 33 638.
| 34. Indicators relating to environmental obligation | 2008 | 2007 | 2006 |
|---|---|---|---|
| Use of energy, electricity MWh | 14 987 | 18 517 | 17 897 |
| Use of oil, m3 | 825 | 1 020 | 811 |
| District and wood chips heating, MWh | 1 457 | 1 312 | 1 065 |
| Liquid gas, tonne | 348 | 521 | 825 |
| Fuel for vehicles was used in total 500 (700) tonne, explosives 82 (105) tonne. | |||
| Transfer of soil and use of raw material | |||
| Soapstone, 1 000 fixed-m3 gross | 144 | 241 | 219 |
| Soil and residual rock material, 1 000 m3 (detached material) | 115*) | 690 | 880 |
*) Left over stone, soapstone and soil have been utilized in the preparatory work in the mining patent in Vaaralampi, Juuka, as construction material for dam works and roads as well as for replacement of soil and as crushed stone, totaling approximately 428 000 m³ (detached material), due to which the amount of residual rock material is considerably lower compared to the previous year.
The lubricant used for saw chains, for soapstone extraction sawing, is rapeseed oil which binds permanently with fine soapstone powder. During the year 2008 105 (135) cubic meter rapeseed and pine oil was spent.
The amount of soapstone used is affected by factory-specific capacity as well as yield of stone in the quarry and the factory in a given time.
Leftover clippings from production are partly used as filling for earthwork sites, the rest is stacked in stacking areas or is transferred to a waste disposal site. The natural stone is purchased from external suppliers.
The ceramic production uses mainly natural materials, like clay, feldspar, quartz, different kind of cements and gravel as raw material. The amount of ceramic materials used annually is approximately 2 500 tonnes. Components including heavy metals are used only in very insignificant amounts in production. Disposing of components including heavy metals takes place at hazardous waste disposal plants.
In 2008 100 217 cubic meter new process water and 14 856 cubic meter domestic water was taken in group's production processes. Process waters have closed circulation except for the production plant in Kuhmo. In Kuhmo as well as in the Espoo, Taivassalo and Heinävesi production plants process waters are treated in sedimentation basins. Process waters are extracted through sedimentation basins to the water system. Quarry waters are led to the water system through sedimentation basins. Domestic waste water is led to the municipal waste water system or in absence of such a system, in filted fields.
The Group's related parties are the parent company, subsidiaries, associates, board members and managing director. In addition Finnish Stone Research Foundation is included in the related parties.
| 35.1. The Group's parent company and subsidiaries have the following relation: | Ownership interest (%) | Share of voting right (%) |
|---|---|---|
| Tulikivi Corporation, Juuka, parent company | ||
| Kivia Oy, Kuhmo | 100 | 100 |
| Tulikivi U.S. Inc., USA | 100 | 100 |
| AWL-Marmori Oy, Turku | 100 | 100 |
| The New Alberene Stone Company Inc., USA | 100 | 100 |
| Uuni Vertriebs GmbH, Germany | 100 | 100 |
| OOO Tulikivi, Russia | 100 | 100 |
| Associated companies | ||
| Stone Pole Oy, Juuka | 27 | 27 |
| Leppävirran Matkailukeskus Oy, Leppävirta | 33 | 33 |
| 35.2. Related party transactions: | 2008 | 2007 |
| Sales of goods and services | ||
| Sales of goods and services to associated companies | 13 | 2 |
| Purchases of goods and services | ||
| Purchases of goods and services from associated companies | 173 | 86 |
| Transactions with key management | ||
| Leases from related parties | 115 | 105 |
At December 31, 2008, the Group did not have any receivables from key management.
Tulikivi Corporation is a founder member of Finnish Stone Research Foundation. In 2008 the company has donated EUR 100 (70) thousand to the foundation. In addition, the company has leased offices and storages from the property owned by the foundation and North Karelian Educational Federation of Municipalities. The rent paid for these facilities was EUR 128 (125) thousand. The rent corresponds to the market level of rents. The service charges by Tulikivi Corporation where EUR 52 (34) thousand in 2008. The Foundation did not charge any services from Tulikivi Corporation.
The Tulikivi Group has a share-based incentive plan for key personnel. Based on the plan the vesting periods are the years 2008, 2009 and 2010. The incentive plan is conditional. The reward from the plan for the vesting period 2008 is based on the Group´s profit after financial items and cash flow from operating activities. In accordance with the terms of the plan for the year 2008 the reward could have been at the maximum 120 000 Tulikivi Corporation Series A shares and a cash payment corresponding to the value of the shares. A maximum total of 360 000 Series A shares and cash payment corresponding the value of the shares will be paid as rewards on the basis of the entire share-based incentive plan. The grant date of the incentive plan was 18 April 2008 and the share price at the grant date was EUR 1.5. The 2008 profit/cash flow entitled to 10 per cent of the maximum reward of the incentive plan. Based on the terms of the plan Series A shares will be granted to those participating the plan, in total 9 800 shares. It is prohibited to transfer the shares within the two year restriction period. Furthermore, a key person must own at least 30 per cent of the shares earned on the basis of the plan for two years after the restriction period. The impact of the share-based rewards on the 2008 result amounted to approximately EUR 10 thousand.
Because of the declining order inflow, the company's Board of Directors has launched a programme to improve the profitability of Tulikivi Corporation's operations and to introduce concentration measures in order to secure the company's profitability in the future. The programme is intended to achieve annual savings of approximately EUR 5 million in future years. As a result of launching the programme, the company has initiated co-determination talks with all Group personnel. The company is seeking a personnel reduction of about 120 persons. The company will also have to introduce lay-offs among its personnel during the current year. It is estimated that the programme will give rise to approximately EUR 2 million in non-recurring costs.
The Group's risks are divided into strategic and operational risks, damage, casualty and loss risks and financial risks. In the assessment of risks, their probability and impact are taken into account. After their analysis, means of preventing and controlling risks have been overviewed on the basis of their impact and probability
Strategic risks are related to the nature of business operations and concern, but are not limited to, the Group's raw material reserves, amendments to laws and decrees, business operations as a whole, the market position, the reputation of the company and the raw materials and large investments.
The recession and resulting general atmosphere lead to decline in housing construction and even in renovation which decreases the demand for products and thereby profitability. Operations in over twenty countries partly smooth the market risks relating to business cycles. The downturn may also have a negative impact on customers' solvency and subcontractors' operations.
The fireplace cultures in Tulikivi's market areas range from countries where traditional heat-retaining fireplaces are preferred to countries with strong stove traditions. Engaging in business in close over 20 countries balances out possible sales risks due to cyclical variations in the economy. Globalization leads to a shift in the fireplace cultures of our business countries, too. When the market becomes uniform changes in consumer habits may affect the demand for certain products or production materials and thereby impact on profitability. In general, this is quite a slow process. Tulikivi focuses on understanding the needs of customers and meets them by, for instance, continuously developing products for new customer segments.
Unsound price competition decrease demand for the products and thereby weaken profitability. Disturbance may arise in connection with renewal of distribution channels or owing to reasons relating to entrepreneurs which are part of the distribution channel or competing products entering the same distribution channel. Regional changes in market positions may occur due to amendments in government grants regarding different heating methods. Warm winters and impression of permanent global warming may impact, more intensively than before, on demand for a single season. It may also affect demand for different types of fireplaces. The global warming may create an illusion for consumers that fireplaces are no longer needed.
Soapstone is a natural material whose integrity, texture and yield percentage vary by quarry. The quality of the raw materials affects manufacturing costs. Tulikivi seeks to determine the quality of the materials on a quarry-specific basis by taking core samples and through test excavations before opening the quarry. Risks are also posed by potential competitors in raw materials on a global scale and soapstone deposits held by parties other than Tulikivi. Tulikivi's strategic objective is to further increase the reserves of soapstone. We continuously seek and explore new deposits. The adequacy of the stone is increased by using the raw material as precisely as possible and by accounting for the special requirements of the stone in product development. Tulikivi manages the competition risks of its raw materials with continuous product development, a strong total concept and the Tulikivi brand.
About half of the fireplaces manufactured by Tulikivi are exported, primarily to continental Europe, Russia and the United States. Exceptional changes in the product approval process in these countries, sudden changes in product approval, such as in the case of particulate emission limits or restrictions on use, might affect the sales potential of Tulikivi products and restrict their use. Other legislative risks are the tightening of the requirements of environmental permits for quarrying and the lengthening of permit processes. Environmental legislation and regulations may cause the company to incur costs that will affect sales margins and the earnings trend.
Tulikivi keeps abreast of the development and preparation of regulations and exercise an influence on them both directly and through regional fireplace associations. In addition, our product development takes a long-term approach to ensuring that Tulikivi products measure up to local regulations. We secure product approval for our products in all our business countries.
The management of Tulikivi's business operations accounts for development opportunities, new products and customer groups and new technological solutions. New business opportunities and markets involve risks that may affect not only profitability, but also the Tulikivi brand.
The Tulikivi Group's strategic objective is to seek growth through acquisitions as well. Successful acquisitions and mergers have a bearing on the implementation of growth plans. If an acquisition or merger fails, the company's competitiveness might suffer. On the other hand, acquisitions can change the company's risk profile. However, the Group only carries out acquisitions on the basis of precise business and financial analyses.
Business risks are related to products, distribution channels, personnel, operations and processes.
We reduce potential product liability risks by developing the products for optimal user safety. We ensure that the product and service chain spanning from Tulikivi to the customer is hitch-free and knowledgeable by providing training for retailers and installers as well as ensuring that the terms and conditions of sale are precise. We also seek to protect ourselves against product liability risks by taking out product and business liability insurance policies. Keeping the product cost structure competitive is a prerequisite for maintaining demand and growth.
Operational risks are related to the consequences of human activities, failures in internal company processes or external events. The operational risks of factory operations are minimized by means such as compliance with the company's operating manual and systematic development efforts. Introduction of new production techniques and commissioning of production plants involves risks related to expenses and capacity. Careful planning and training of personnel are used as protection against these risks. Dependence on key goods supplies might increase the Group's material costs or the costs of machinery or their spare parts or affect production. Energy procurements from external suppliers might influence the Group's energy costs or energy supply. On the other hand, the high price of energy supports demand for products. Changes in distribution channels and logistics systems might also disturb operations. Contractual risks are part of operational risks.
The Group's business relies on functional and reliable information systems. Steps taken to manage their risks include setting up backups for critical information systems and telecom connections, selecting cooperation partners carefully and standardizing the workstation configurations and software used in the Group as well as consistent information security practices. In line with the nature of the Group's business, trade receivables and inventories are major balance sheet items. The credit loss risk of trade receivables is managed by means of a consistent credit granting policy, insuring receivables and effective collection.
The Group's core expertise involves its core business processes, including sales, product development, quarrying, manufacture, procurements and logistics, as well as the necessary support functions, which include information administration, finance, HR and communications. An unforeseen drain in the core expertise or decrease in personnel's development ability pose a risk. The company continuously seeks to step up the core expertise and other significant competence of its personnel by offering opportunities for on-the-job learning and training and by hiring competent new employees. The turnover of the key personnel has been moderate.
Boosting operational efficiency, controlled change and effective internal communications serve as means of managing operational and process risks.
Most of the Group's production is capital-intensive and a large share of the Group's capital is committed to its production plants. A fire or serious machinery break¬down, for instance, could therefore cause major damage to assets or loss of profits as well as other indirect adverse impacts on the Group's operations. The Group seeks to protect itself against such risks by evaluating its production plants and processes from the perspective of risk management. Damage, casualty and loss risks also include occupational health and protection risks, environmental risks and accident risks. The Group regularly reviews its insurance coverage as part of overall risk management. Insurance policies are taken out to cover the risks that it is prudent to insure for business or other reasons.
There are no pending legal proceedings and the Board of Directors is not aware of any other legal risks involved in the company's operations that would have a significant effect on its result of operations.
The Group's business exposes it to a variety of financial risks. Risk management seeks to minimize the potential adverse effects of changes in the financial markets on the Group's result. The main financial risks are energy price risk, market risk, and liquidity risk. Financial risks and their management are presented in greater detail in section 27 of the notes to the consolidated financial statements.
| MEUR | ||||||||
|---|---|---|---|---|---|---|---|---|
| Q4/2008 | Q3/2008 | Q2/2008 | Q1/2008 | Q4/2007 | Q3/2007 | Q2/2007 | Q1/2007 | |
| Sales | 18,3 | 16,6 | 17,0 | 14,6 | 16,8 | 16,5 | 17,4 | 19,2 |
| Fireplaces business | 15,8 | 14,4 | 14,2 | 12,0 | 14,4 | 13,9 | 14,7 | 16,7 |
| Natural stone products business | 1,9 | 1,7 | 2,4 | 2,0 | 1,7 | 1,7 | 2,1 | 1,9 |
| Other operations | 0,6 | 0,5 | 0,4 | 0,6 | 0,7 | 0,9 | 0,6 | 0,6 |
| Operating profit | 1,3 | 1,3 | 0,9 | -0,3 | -0,6 | 0,3 | 0,6 | 0,7 |
| Fireplaces business | 2,4 | 1,9 | 1,8 | 0,4 | 0,8 | 0,8 | 1,4 | 1,4 |
| Natural stone products business | -0,1 | 0,1 | 0,1 | 0,2 | 0,0 | 0,1 | 0,2 | 0,1 |
| Other operations | -1,0 | -0,7 | -1,0 | -0,9 | -1,4 | -0,6 | -1,0 | -0,8 |
| Key Figures Describing Financial Development and Earnings per Share | ||||||||
| EUR 1 000 | ||||||||
| Income statement | 2004 | 2005 | 2006 | 2007 | 2008 | |||
| IFRS | IFRS | IFRS | IFRS | IFRS | ||||
| Sales | 55 291 | 58 642 | 82 149 | 69 887 | 66 502 | |||
| Change, % | 3,1 | 6,1 | 40,1 | -14,9 | -4,8 | |||
| Operating profit | 6 283 | 6 285 | 8 230 | 965 | 3246 | |||
| % of turnover | 11,4 | 10,7 | 10,0 | 1,4 | 4,9 | |||
| Finance incomes and expenses and share of loss of | ||||||||
| loss of associated companies | -161 | -222 | -430 | -805 | -1 187 | |||
| Profit before taxes | *) 6 122 |
6 063 | 7 800 | 160 | 2 063 | |||
| % of turnover | 11,1 | 10,3 | 9,5 | 0,2 | 3,1 | |||
| Income taxes | 1 772 | 1 697 | 2 075 | -201 | 634 | |||
| Profit for the year | 4 350 | 4 366 | 5 725 | 361 | 1 429 | |||
| Balance sheet | ||||||||
| Assets | ||||||||
| Non current assets | 20 981 | 21 946 | 40 540 | 40 443 | 37 196 | |||
| Inventories | 7 455 | 7 015 | 10 611 | 12 660 | 11 452 | |||
| Cash and cash equivalents | 5 829 | 4 141 | 4 913 | 3 765 | 11 705 | |||
| Other current assets | 7 657 | 7 487 | 10 444 | 5 926 | 5 742 | |||
| Equity and liabilities | ||||||||
| Equity | 23 166 | 25 517 | 30 711 | 27 571 | 27 242 | |||
| Interest bearing liabilities | 8 647 | 3 347 | 17 463 | 21 612 | 26 725 | |||
| Non-interest bearing liabilities | 10 109 | 11 724 | 18 334 | 13 611 | 12 128 | |||
| Balance sheet total | 41 922 | 40 588 | 66 508 | 62 794 | 66 095 |
*) The comparable profit before taxes for 2004 is EUR 5.0 million. The difference is due to the non-recurring reduction of the disability pension obligation, amounting to 1.2 million, in 2004 due to the change in pension system under the Employees' Pension Act.
| 2004 | 2005 | 2006 | 2007 | 2008 | |
|---|---|---|---|---|---|
| IFRS | IFRS | IFRS | IFRS | IFRS | |
| Return on equity, % | 18,7 | 17,9 | 20,4 | 1,2 | 5,2 |
| Return on investments, % | 20,3 | 20,7 | 21,7 | 2,5 | 6,8 |
| Solvency ratio, % | 55,3 | 63,0 | 46,2 | 43,9 | 41,2 |
| Net indebtness ratio, % | 12,1 | -3,1 | 40,9 | 64,7 | 55,1 |
| Current ratio | 1,9 | 1,6 | 1,5 | 1,6 | 2,0 |
| Gross investments, EUR 1 000 | 3 937 | 5 150 | 24 118 | 5 267 | 2 925 |
| % of turnover | 7,1 | 8,8 | 29,4 | 7,5 | 4,4 |
| Research and development costs, EUR 1 000 | 1 497 | 1 652 | 1 832 | 1 589 | 1 799 |
| % of turnover | 2,7 | 2,8 | 2,2 | 2,3 | 2,7 |
| Development costs, capitalised, EUR 1 000 | 140 | 377 | 265 | 98 | 422 |
| Order book, EUR million | 5,4 | 9,2 | 10,4 | 6,9 | 4,9 |
| Average personnel | 513 | 514 | 664 | 682 | 526 |
| Key indicators per share | |||||
| Earnings per share, EUR | 0,12 | 0,12 | 0,16 | 0,01 | 0,04 |
| Equity per share, EUR | 0,64 | 0,70 | 0,83 | 0,74 | 0,73 |
| Dividends | |||||
| Nominal dividend per share, EUR | |||||
| A share | 0,058 | 0,070 | 0,090 | 0,0450 | 0,0280*) |
| K share | 0,055 | 0,068 | 0,088 | 0,0433 | 0,0263*) |
| Dividend per earnings, % | 47,6 | 58,0 | 58,1 | 457,9 | 71,5 |
| Effective dividend yield, %/A shares | 3,6 | 3,4 | 2,6 | 2,9 | 4,2 |
| Price/earnings ratio, EUR | 13,2 | 17,0 | 22,6 | 160,3 | 16,8 |
| Highest share price, EUR | 2,05 | 2,25 | 4,05 | 3,75 | 1,88 |
| Lowest share price, EUR | 1,31 | 1,39 | 2,04 | 1,53 | 0,60 |
| Average share price, EUR | 1,69 | 1,79 | 3,18 | 2,69 | 1,28 |
| Closing price, EUR | 1,58 | 2,04 | 3,51 | 1,56 | 0,67 |
| Market capitalization, EUR 1 000 | 57 552 | 74 308 | 130 375 | 57 945 | 24 837 |
| (supposing that the market price of the K share is the same as that of the A share) | |||||
| Number of shares traded, (1 000 pcs) | 5 334 | 4 866 | 7 454 | 5 369 | 2 455 |
| % of the total amount | 19,8 | 18,1 | 27,0 | 19,4 | 8,9 |
| The average issue-adjusted number of shares for the financial year (1 000 pcs) | 36 426 | 36 426 | 36 785 | 37 144 | 37 128 |
| The issue-adjusted number of outstanding shares at December 31 (1 000 pcs) | 36 426 | 36 426 | 37 144 | 37 144 | 37 070 |
| *) According to the proposal of the Board of Directors. |
| Key figures describing financial development | ||
|---|---|---|
| Profit for the year | ||
| Return on equity (ROE) = | 100 x | Average shareholders' equity during the year |
| Profit before income tax + interest and other finance expenses | ||
| Return on investments (ROI) = | 100 x | Balance sheet total - non-interest bearing liabilities (mean value of beginning and end of the year) |
| Shareholders' equity | ||
| Solvency ratio, % = | 100 x | Balance sheet total - advance payments |
| Interest-bearing liabilities - assets | ||
| Net indebtness ratio, % = | 100 x | Shareholders' equity |
| Key figures per share | ||
| Earnings per share = | Profit for the year | |
| Average issue-adjusted number of shares for the financial year | ||
| Equity per share = | Shareholders' equity | |
| Issue-adjusted number of shares at balance sheet date | ||
| Dividend per share = | Dividend paid for the year | |
| Issue-adjusted number of shares at balance sheet date | ||
| Dividend per earnings, % = | 100 x | Dividend per share |
| Earnings per share | ||
| Effective dividend yield = | 100 x | Issue-adjusted dividend per share |
| The closing price of A- share at balance sheet date | ||
| The closing price of A-share at balance sheet date | ||
| Price/ Earnings ratio (P/E)= | Earnings per share |
| EUR 1 000 | Note | Jan. 1 - Dec. 31, 2008 | Jan. 1 - Dec. 31, 2007 |
|---|---|---|---|
| Net Sales | 1.1. | 65 572 | 52 150 |
| Increase (+) / decrease (-) in inventories | |||
| in finished goods and in work in progress | -402 | 2 202 | |
| Production for own use | 522 | 914 | |
| Other operating income | 1.2. | 1 005 | 2 673 |
| Materials and services | 1.3. | 22 646 | 18 590 |
| Personnel expenses | 1.4. | 22 341 | 22 015 |
| Depreciation and value adjustments | 1.5. | 5 178 | 4 233 |
| Other operating expenses | 1.6. | 13 307 | 12 666 |
| Operating profit | 3 225 | 435 | |
| Financial income and expenses | 1.7. | -1 127 | -709 |
| Profit / loss before untaxed reserves and income taxes | 2 098 | -274 | |
| Untaxed reserves | 1.8. | -177 | 950 |
| Income taxes | 1.9. | -748 | -630 |
| Profit for the year | 1 173 | 46 |
| EUR 1 000 | Note | Dec. 31, 2008 | Dec. 31, 2007 |
|---|---|---|---|
| Assets | |||
| Fixed asset and other non-current investments | |||
| Intangible assets | 2.1. | 6 876 | 6 624 |
| Goodwill | 2.1. | 6 713 | 7 459 |
| Tangible assets | 2.2. | 18 227 | 20 632 |
| Investments | |||
| Shares in group companies | 2.3. | 930 | 917 |
| Group receivables | 2.4. | 34 | 34 |
| Participating interests | 2.3. | 26 | 25 |
| Other investments | 2.5. | 27 | 33 |
| Fixed assets and other non-current investments, total | 32 833 | 35 724 | |
| Current assets | |||
| Inventories | 2.6. | 11 286 | 12 209 |
| Non-current receivables | 2.7. | 345 | 396 |
| Deferred tax assets | 2.8. | 285 | 386 |
| Current receivables | 2.9. | 5 314 | 5 369 |
| Cash in hand and at banks | 11 442 | 3 479 | |
| Total current assets | 28 672 | 21 839 | |
| Total assets | 61 505 | 57 563 | |
| Liabilities and shareholders' equity | |||
| Shareholders' equity | |||
| Capital stock | 2.10. | 6 314 | 6 314 |
| Share premium fund | 2.10. | 7 334 | 7 334 |
| Revaluation reserve | 2.10. | -60 | |
| Treasury shares | 2.12. | -78 | |
| Retained earnings | 2.10. | 5 851 | 7 458 |
| Profit for the year | 2.10. | 1 173 | 46 |
| Total shareholders' equity | 20 535 | 21 153 | |
| Untaxed reserves | |||
| Accelerated depreciation | 3 034 | 2 856 | |
| Provisions | 2.13. | 909 | 844 |
| Liabilities | |||
| Deferred income tax liabilities | 18 | ||
| Non-current liabilities | 2.14. | 22 728 | 18 098 |
| Current liabilities | 2.15. | 14 299 | 14 594 |
| Total liabilities | 37 027 | 32 710 | |
| Total liabilities and shareholders' equity | 61 505 | 57 563 |
| EUR 1 000 | Jan. 1 - Dec. 31, 2008 | Jan. 1 - Dec. 31, 2007 |
|---|---|---|
| Cash flow from operating activities | ||
| Profit before extraordinary items | 2 098 | -274 |
| Adjustments for: | ||
| Depreciation | 5 178 | 4 233 |
| Unrealised exchange rate gains and losses | 23 | 4 |
| Other non-payment-related expenses | 85 | 12 |
| Financial income and expenses | 1 127 | 709 |
| Other adjustments | 3 | -75 |
| Cash flow before working capital changes | 8 514 | 4 609 |
| Change in net working capital: | ||
| Increase (-) / decrease (+) in current non-interest bearing receivables | -104 | 3 182 |
| Increase (-) / decrease (+) in inventories | 923 | -2 186 |
| Increase (+) / decrease (-) in current non-interest bearing liabilities | -878 | -2 676 |
| Cash generated from operations before financial items and income taxes | 8 455 | 2 929 |
| Interest paid and payments on other financial expenses from operations | -1 078 | -849 |
| Dividends received | 56 | 10 |
| Interest received | 168 | 109 |
| Income taxes paid | -532 | -863 |
| Cash flow before extraordinary items | 7 069 | 1 336 |
| Net cash flow from operating activities | 7 069 | 1 336 |
| Cash flow used in investing activities | ||
| Investments in tangible and intangible assets, gross | -3 310 | -6 308 |
| Investment grants received | 1 120 | |
| Proceeds from sale of tangible and intangible assets | 76 | 118 |
| Loans given | -1 090 | |
| Acquired subsidiary companies | -361 | |
| Gains on disposal of other investment | 2 051 | |
| Disposals of other financial assets | 4 | |
| Interest received | 127 | |
| Net cash used in investing activities | -3 591 | -3 982 |
| Cash flow from financing activities | ||
| Purchase of own shares | -75 | |
| Short-term borrowing | 1 836 | |
| Repayment of short-term loans | -1 836 | |
| Long-term borrowing | 11 198 | 6 704 |
| Repayment of long-term loans | -3 153 | -3 520 |
| Dividends paid | -1 655 | -3 459 |
| Net cash flow from financing activities | 4 479 | 1 561 |
| Net increase (+) / decrease (-) in cash and cash equivalents | 7 957 | -1 085 |
| Cash and cash equivalents at the beginning of the financial year | 3 479 | 2 884 |
| Effect of changes in exchange rates | 6 | -46 |
| Accumulated cash and equivalents in merger | 1 726 | |
| Cash and cash equivalents at the end of the financial year | 11 442 | 3 479 |
The financial statements have been prepared in accordance with the Finnish accounting law.
Fixed assets have been disclosed in the balance sheet at acquisition cost net of received investment grants and depreciation according to plan. Depreciation according to plan have been calculated on straight-line method based on the economic life time of the assets as follows:
| Depreciation period | |
|---|---|
| Intangible rights and other long-term expenditure | 5 to 10 years |
| Goodwill | 10 years |
| Buildings | 25 to 30 years |
| Constructions | 5 years |
| Process machinery | 3 to 10 years |
| Motor vehicles | 5 to 8 years |
| IT equipment | 3 to 5 years |
| Development expenditure | 5 years |
The acquisition cost of equipment is depreciated applying the maximum depreciation rates allowed by the corporate tax law, starting from the time of acquisition.
Quarrying areas are amortised using the unit of production method based on the amount of stone used and filling time for damping areas.
Inventories have been presented in accordance with the average cost principle or the net realisable value, whichever is lower. The cost value of inventories includes direct costs and their proportion of indirect manufacturing and acquisition costs.
Net sales represents sales after the deduction of discounts, indirect taxes and exchange gains/losses on trade receivables. Revenue has been recognized at the time of the delivery of the goods. Revenue from installing and services is recognised in the period when the service is rendered.
Research and development expenditure has mainly been recorded as annual costs when incurred. Other development costs than those relating to fireplaces have been capitalized. Costs incurred from drilling exploration in quarry areas have been capitalised for their main part and they are depreciated over their useful lives. However, drilling exploration costs are expensed when there is significant uncertainty involved in the commercial utilization of the soapstone reserves in question.
Employee pension schemes have been arranged with external pension insurance companies. Pension costs are expensed for the year when incurred. Pension schemes for personnel outside Finland follow the local practices.
According to the Finnish corporate tax law untaxed reserves, such as accelerated depreciation, are tax deductible only if recorded in financial statements.
Income taxes include taxes corresponding to the Group companies' results for the financial period as well as the change in deferred tax liability and asset. The deferred tax liabilities and assets have been provided on temporary differences arising between the tax basis of assets and liabilities and their carrying amounts in the financial statements using tax rate and their carrying amounts in the financial statements using tax rate enacted at the balance sheet date for the following years. In the financial statements the deferred tax liabilities have been fully provided and deferred tax assets have been recognised to the extent they are probably coverable.
The financial statements do not include the divided proposed by the Board of Directors to the annual shareholders' meeting. Dividends are recorded on the basis of the decision made by the annual general meeting.
When comparing the current year financial information with the financial information of the previous period it should be taken into account that Kermansavi Oy merged with the parent company at 31 December 2007.
Foreign currency balance sheet items have been valued at the average exchange rate prevailing on the balance sheet date as indicated by the European Central Bank.
| EUR 1 000 | 2008 | 2007 | EUR 1 000 | 2008 | 2007 |
|---|---|---|---|---|---|
| 1.1. Net sales | 1.4.3. Average number of employees during the fiscal year | ||||
| 1.1.1. Net sales per business area | Clerical employees | 151 | 105 | ||
| Fireplaces business | 55 486 | 44 750 | Workers | 370 | 427 |
| Natural stone products business | 7 967 | 7 400 | Total number of employees | 521 | 532 |
| Utility ceramics | 2119 | 1.5. Depreciation according to plan | |||
| Total net sales per business area | 65 572 | 52 150 | Development expenditure | 9 | |
| 1.1.2. Net sales per geographical area | Intangible rights | 21 | 20 | ||
| Finland | 34 158 | 21 275 | Other long-term expenditure | 656 | 712 |
| Rest of Europe | 30 175 | 29 612 | Amortization on quarries based on the unit of production method | 133 | 86 |
| USA | 1 239 | 1 263 | Buildings and constructions | 628 | 554 |
| Total net sales per geographical area | 65 572 | 52 150 | Machinery and equipment | 2 925 | 2 810 |
| 1.2. Other operating income | Other tangible assets | 30 | 18 | ||
| Rental income | 276 | 128 | Amortisation on land areas based on unit of production method | 30 | 33 |
| Charges for intergroup services | 271 | 2 245 | Goodwill | 746 | |
| Government grants | 294 | 113 | Depreciation according to plan in total | 5 178 | 4 233 |
| Proceeds from sale of fixed and other non-current investments | 15 | 80 | The company has changed its accounting policy for amortising quarries and mining rights from the straight | ||
| Other income | 149 | 107 | line method to the unit of production method. The change in the amortisation method resulted in a decrease of amortisation amounting to EUR 284 thousand for 2007 in comparison to the amortisation method |
||
| Total other operating income | 1 005 | 2 673 | previously applied. | ||
| 1.3. Materials and services | 1.6. Other operating expenses | ||||
| Materials and supplies (good) | 1.6.1. Auditors' fees | ||||
| Purchases during the fiscal year | 12 230 | 12 176 | Audit fees | 36 | 71 |
| Change in inventories, increase (-) / decrease (+) | 521 | 16 | Tax advice | 21 | 11 |
| External charges | 9 895 | 6 398 | Other fees | 10 | 9 |
| Total materials and services | 22 646 | 18 590 | Audit fees, total | 67 | 91 |
| 1.4. Personnel expenses and number of employees | In 2008 and 2007 the statutory audit was performed by the firm of authorized public accountants KPMG Oy | ||||
| 1.4.1. Personnel expenses | Ab and in 2007 partly by the firm of authorized public accountants PricewaterhouseCoopers. | ||||
| Salaries and wages | 17 587 | 17 366 | 1.7. Financial income and expenses | ||
| Pension expenses | 3 344 | 3 133 | Dividend income from group companies | 50 | |
| Other social security expenses | 1 410 | 1 516 | Dividend income from others | 6 | 10 |
| Total personnel expenses | 22 341 | 22 015 | Interest and finance income | ||
| 1.4.2. Salaries and fees paid to Directors | Interest income from group companies | 19 | 93 | ||
| Salaries and other short-term employee benefits of the Board of | 416 | 473 | Interest income from others | 139 | 82 |
| Directors and the Managing Director | Interest expenses | -1 010 | -907 | ||
| Other long term employee benefits | 62 | 89 | Interest expenses to group companies | -49 | |
| Salaries and wages | Exchange rate gains / losses | -14 | -42 | ||
| Managing Director | 210 | 242 | Reduction in value of investments held as non-current assets | -6 | |
| Members of the Board | Changes in fair value of derivatives | -234 | 70 | ||
| Bishop Ambrosius | 16 | 15 | Other financial income and expenses | -34 | -9 |
| Erma Juhani | 24 | 23 | Financial income and expenses in total | -1 127 | -709 |
| Makkonen Eero | 16 | 15 | 1.8. Untaxed reserves | ||
| Toivanen-Koivisto Maarit | 16 | 15 | Change in accelerated depreciation | -177 | 950 |
| Vauhkonen Heikki | 16 | 50 | 1.9. Income taxes | ||
| Vauhkonen Reijo | 28 | 27 | Income taxes on ordinary operations | 645 | 714 |
| Virtaala Matti | 90 | 86 | Change in deferred tax liabilities / tax assets | 82 | -84 |
| Transfer of income taxes to the revaluation reserve | 21 |
Income taxes in total 748 630
| EUR 1 000 | 2008 | 2007 | EUR 1 000 | 2008 | 2007 |
|---|---|---|---|---|---|
| 2.1. Intangible assets | 2.2. Tangible assets | ||||
| 2.1.1. Capitalised development expenditure | 2.2.1. Land | ||||
| Capitalised development expenditure January 1 | 42 | Acquisition cost January 1 | 1 378 | 1 172 | |
| Capitalised development expenditure received in merger | 42 | Land received in merger | 3 | ||
| Additions | 116 | Additions | 2 | 203 | |
| Depreciation for the financial year | 9 | Acquisition cost December 31 | 1 380 | 1 378 | |
| Balance sheet value of capitalised development expenditure December 31 |
149 | 42 | Accumulated depreciation January 1 | 186 | 153 |
| 2.1.2. Intangible rights | Amortization based on the unit of production method for the financial year |
31 | 33 | ||
| Acquisition cost January 1 | 568 | 550 | Accumulated depreciation December 31 | 217 | 186 |
| Additions | 34 | 18 | Balance sheet value of land, December 31 | 1 163 | 1 192 |
| Acquisition cost December 31 | 602 | 568 | 2.2.2. Buildings and constructions | ||
| Accumulated depreciation according to plan January 1 | 460 | 440 | Acquisition cost January 1 | 15 167 | 13 280 |
| Depreciation for the financial year | 21 | 20 | Buildings and constructions received in merger | 1 589 | |
| Accumulated depreciation December 31 | 481 | 460 | Additions | 94 | 298 |
| Balance sheet value of intangible rights, December 31 | 121 | 108 | Disposals | 3 | |
| 2.1.3. Goodwill | Acquisition cost December 31 | 15 258 | 15 167 | ||
| Acquisition cost January 1 | 8 804 | 1 345 | Accumulated depreciation according to plan January 1 | 7 046 | 5 864 |
| Acquisition received in merger | 7 459 | Accumulated depreciation received in merger | 628 | ||
| Acquisition cost December 31 | 8 804 | 8 804 | Depreciation for the financial year | 628 | 554 |
| Accumulated depreciation according to plan January 1 | 1 345 | 1 345 | Accumulated depreciation December 31 | 7 674 | 7 046 |
| Depreciation for the financial year | 746 | Revaluation received in merger | 505 | 505 | |
| Accumulated depreciation December 31 | 2 091 | 1 345 | Balance sheet value of buildings and constructions, December 31 | 8 089 | 8 626 |
| Balance sheet value of goodwill, December 31 | 6 713 | 7 459 | 2.2.3. Machinery and equipment | ||
| The parent company's goodwill comprises merger losses. | Acquisition cost January 1 | 46 035 | 38 574 | ||
| 2.1.4. Other long term expenditures | Machinery and equipment acquired in merger | 5 562 | |||
| Acquisition cost January 1 | 17 661 | 13 441 | Additions | 1 224 | 2 221 |
| Other long term expenditures received in merger | 135 | Disposals | 252 | 322 | |
| Additions | 930 | 4 085 | Acquisition cost December 31 | 47 007 | 46 035 |
| Disposals | 35 | Accumulated depreciation according to plan January 1 | 35 425 | 28 503 | |
| Acquisition cost December 31 | 18 556 | 17 661 | Accumulated depreciation on disposals | 187 | 279 |
| Accumulated depreciation according to plan January 1 | 11 187 | 10 355 | Accumulated depreciation received in merger | 4 391 | |
| Accumulated depreciation received in merger | 34 | Depreciation for the financial year | 2 925 | 2 810 | |
| Accumulated depreciation on disposals | 26 | Accumulated depreciation December 31 | 38 163 | 35 425 | |
| Depreciation for the financial year | 789 | 798 | Balance sheet value of machinery and equipment, December 31 | 8 844 | 10 610 |
| Accumulated depreciation December 31 | 11 950 | 11 187 | |||
| Balance sheet value of long term expenditure, December 31 | 6 606 | 6 474 | |||
| Total intangible assets | 13 589 | 14 083 |
The balance sheet value of other long term expenditure includes EUR 4 102 million for stone research and costs relating to the opening of new soapstone quarries and of quarries not yet taken into production use.
| EUR 1 000 | 2008 | 2007 | EUR 1 000 | 2008 | 2007 |
|---|---|---|---|---|---|
| 2.2.4. Other tangible assets | 2.7. Non-current receivables | ||||
| Acquisition cost January 1 | 281 | 198 | Receivables for group companies | ||
| Additions | 13 | 83 | Loan receivables | 310 | 381 |
| Acquisition cost December 31 | 294 | 281 | Prepayments and accrued income | 35 | 15 |
| Accumulated depreciation according to plan January 1 | 184 | 166 | Total non-current receivables | 345 | 396 |
| Depreciation for the financial year | 30 | 18 | 2.8. Deferred tax assets | ||
| Accumulated depreciation December 31 | 214 | 184 | Provisions and accrued expenses | 285 | 244 |
| Balance sheet value of other tangible assets, December 31 | 80 | 97 | Provisions and accrued expenses received in merger | 142 | |
| 2.2.5. Advance payments | Deferred tax assets, total | 285 | 386 | ||
| Advance payments | 51 | 37 | 2.9. Current receivables | ||
| Advance payments received in merger | 70 | Receivables form group companies | |||
| Total advance payments | 51 | 107 | Trade receivables | 13 | 98 |
| Total tangible assets | 18 227 | 20 632 | Receivables from participating interest undertakings | ||
| Amount of machinery and equipment included in balance sheet value | 8 065 | 9 559 | Trade receivables | 1 | |
| 2.3. Shares in Group Companies | Ownership, | Ownership, | Receivables form others | ||
| % | % | Trade receivables | 4 925 | 4 712 | |
| Kivia Oy, Kuhmo | 100 | 100 | Other receivables | 29 | 66 |
| Tulikivi U.S. Inc., USA | 100 | 100 | Other accrued income | ||
| AWL-Marmori Oy, Turku | 100 | 100 | Receivables from grants | 202 | 85 |
| The New Alberene Stone Company Inc., USA | 100 | 100 | Prepayments | 101 | 123 |
| Uuni Vertriebs GmbH, Germany | 100 | 100 | Employment pension receivable | 26 | |
| OOO Tulikivi, Russia | 100 | 100 | Interest receivable | 25 | 141 |
| In addition to its subsidiaries, Tulikivi Corporation has a branch office | Other prepayments and accrued income | 18 | 118 | ||
| in Germany, Tulikivi Oyj Niederlassung Deutschland. | Receivables from other, total | 5 300 | 5 271 | ||
| Associated companies | Total current receivables | 5 314 | 5 369 | ||
| Stone Pole Oy, Juuka | 27 | 27 | 2.10. Shareholders' equity | ||
| Leppävirran Matkailukekus Oy, Leppävirta | 33 | 33 | Capital stock January 1 | 6 314 | 6 314 |
| 2.4. Receivables from Group companies | Capital stock December 31 | 6 314 | 6 314 | ||
| Capital loan, AWL-Marmori Oy | 34 | 34 | Share premium fund January 1 | 7 334 | 7 334 |
| Receivables from Group companies, total | 34 | 34 | Share premium fund December 31 | 7 334 | 7 334 |
| 2.5. Other investments | Revaluation reserve January 1 | ||||
| Stone Pole Oy | 1 | 1 | Revaluation reserve December 31 | -60 | |
| Other | 26 | 32 | Retained earnings January 1 | 7 504 | 10 903 |
| Total other investments | 27 | 33 | Dividend paid | -1 653 | -3 320 |
| 2.6. Inventories | Charitable contribution | -124 | |||
| Raw material and consumables | 5 463 | 5 985 | Treasury shares | -78 | |
| Finished products/goods | 5 823 | 6 224 | Retained earnings December 31 | 5 773 | 7 458 |
| Total inventories | 11 286 | 12 209 | Profit for the year | 1 173 | 46 |
| Total shareholders' equity | 20 535 | 21 153 |
| 2.11. Statement of distributable earnings December 31 | 2.15. Current liabilities | ||
|---|---|---|---|
| Profit for the previous years | 5 773 | 7 458 | Liabilities to group companies |
| Total distributable earnings | 6 946 | 7 504 | Liabilities to associates |
| Period | Number of shares |
Consideration transferred (average) |
Consideration transferred (range) |
|---|---|---|---|
| 1.08. - 31.08.2008 | 13 334 | 1.344 | 1.31 - 1.39 |
| 1.09. - 30.09.2008 | 19 270 | 1.298 | 1.23 - 1.34 |
| 1.10. - 30.10.2008 | 5 000 | 1.124 | 0.90 - 1.23 |
| 1.11. - 30.11.2008 | 22 396 | 0.890 | 0.80 - 0.96 |
| 1.12. - 31.12.2008 | 14 000 | 0.654 | 0.65 - 0.67 |
| Total at December 31, 2008 | 74 000 | 1.05 | 0.65 - 1.39 |
| 2008 | 2007 |
|---|---|
| 452 | 447 |
| 457 | 397 |
| 909 | 844 |
| 1 146 | |
| 19 810 | 15 211 |
| 1 772 | 2 540 |
| 347 | |
| 22 728 | 18 098 |
| EUR 1 000 | 2008 | 2007 | EUR 1 000 | 2008 | 2007 | |
|---|---|---|---|---|---|---|
| 2.11. Statement of distributable earnings December 31 | 2.15. Current liabilities | |||||
| Profit for the previous years | 5 773 | 7 458 | Liabilities to group companies | |||
| Profit for the year | 1 173 | 46 | Trade payables | 338 | 1 271 | |
| Total distributable earnings | 6 946 | 7 504 | Liabilities to associates | |||
| 2.12. Treasury shares | Trade payables | 39 | 6 | |||
| During the financial year the company has acquired 74 000 own shares based on the authorization given by | Liabilities to others | |||||
| the Annual General Meeting on 17 April 2008. The acquisition price has been the stock exchange rate of the share at the time of acquisition. The acquired shares represent 0.2 per cent of the share capital and 0.06 per cent of the voting rights. The acquisition of own shares has not had any material impact on the distribution of ownership or voting rights of the company. During the financial year the parent company has purchased its own shares as follows: |
Loans from credit institutions | 4 670 | 2 852 | |||
| Advances received | 21 | 2 | ||||
| Trade payables | 2 332 | 2 811 | ||||
| Consideration | Consideration | Other current liabilities | 632 | 1 225 | ||
| Period | Number of shares |
transferred | transferred | Accrued liabilities | ||
| 1.08. - 31.08.2008 | 13 334 | (average) 1.344 |
(range) 1.31 - 1.39 |
Salaries, wages and social costs | 4 361 | 4 902 |
| 1.09. - 30.09.2008 | 19 270 | 1.298 | 1,23 - 13,4 1.23 - 1.34 |
Discounts and marketing expenses | 653 | 505 |
| 1.10. - 30.10.2008 | 5 000 | 1.124 | 0.90 - 1.23 | External charges | 402 | 276 |
| 1.11. - 30.11.2008 | 22 396 | 0.890 | 0.80 - 0.96 | Interest liabilities | 433 | 219 |
| 1.12. - 31.12.2008 | 14 000 | 0.654 | 0.65 - 0.67 | Tax liabilities | 101 | 39 |
| Total at December 31, 2008 | 74 000 | 1.05 | 0.65 - 1.39 | Other accrued liabilities | 317 | 486 |
| Total current liabilities | 14 299 | 14 594 | ||||
| 2.13. Provisions | 2008 | 2007 | 2.16. Given guarantees, contingent liabilities and other commitments | |||
| Warranty provision | 452 | 447 | Loans and credit limit accounts with related mortgages and pledges | |||
| Environmental provision | 457 | 397 | ||||
| Provisions, total | 909 | 844 | Loans from financial institutions and loan guarantees | 18 730 | 15 312 | |
| 2.14. Non-current liabilities | Credit limit accounts | 4 000 | 5 000 | |||
| Liabilities to group companies | Other long-term liabilities | 2 263 | 3 051 | |||
| Other long-term current liabilities | 1 146 | Real estate mortgages given | 9 186 | 8 891 | ||
| Loans from credit institutions | 19 810 | 15 211 | Company mortgages given | 13 396 | 12 975 | |
| Installment credit | 1 772 | 2 540 | Object for purchase | 2 263 | 3 051 | |
| Other non-current liabilities | 347 | Pledged leaseholds | 219 | 219 | ||
| Total non-current liabilities | 22 728 | 18 098 | Given mortgages and pledges, total | 25 064 | 25 136 | |
| Other own liabilities for which guarantees have been given | ||||||
| Guarantees | 420 | 520 | ||||
| Other commitments | 35 | 680 | ||||
| Other own liabilities for which guarantees have been given | 455 | 1 200 | ||||
| Collaterals given on behalf of group companies Company mortgages given |
30 | 420 | ||||
| Real estate mortgages given | 450 | 745 | ||||
| Pledges given | 35 | 35 | ||||
| Guarantees given on behalf of other own liabilities | 485 | 1 200 | ||||
| EUR 1 000 | 2008 | 2007 |
|---|---|---|
| Leasing commitments | ||
| Due during the financial year 2009 | 8 | 20 |
| Due later | 10 | 18 |
| Leasing commitments, total | 18 | 38 |
| Leasing agreements are three to six years in duration and do not include redemption clauses. | ||
| Derivatives | ||
| Interest rate swaps , nominal value | 13 027 | 7 354 |
| Interest rate swaps , fair value | -177 | 138 |
During 2008 was paid the contingent consideration of EUR 0.3 million for Kivia Oy's shares included in the non-current liabilities in 2007.
Tulikivi Corporation's environmental obligations, their management and recognition of environmental costs
Tulikivi group has landscaping obligations based on the Mining Act and other environmental legislation, which must be met during operations and when the quarries are shut down in the future.
Actions demanded by the environmental obligations are continuously performed besides normal production processes. Handling of water, arrangements for soil and rock material stacking areas, vibration and noise measurement, dust prevention and the monitoring the measurement result belong to these tasks. The costs relating to these activities are mainly recognised in the income statement as expense. Transport of soil material to stacking areas by opening new quarries is capitalised to other long-term expenses and depreciated during the useful life of the quarry. Lining work of stacking areas is based on long-term quarrying plans, according to which surface material of new opened quarries will be used in lining work. However, the lining work cannot be done until the point when there are finished sectors in the stacking area. No provision is recognised for the lining work, because it is not estimated to increase the costs of normal quarrying work.
After a factory or a quarry is shut down, the final lining work of the stacking areas, water arrangements, establishing of check points, bringing to safety condition and planting and seeding the vegetation will take place. For that part of these costs which are estimable, a provision is recognised.
Based on the environmental authorisations, the Group has given guarantees to the effect of EUR 229 600 in total, and additional EUR 270 000 which were given after the balance sheet date.
The terms of the share-based incentive plan
The Tulikivi Group has a share-based incentive plan for key personnel. Based on the plan the vesting periods are the years 2008, 2009 and 2010. The incentive plan is conditional. The reward from the plan for the vesting period 2008 is based on the Group´s profit after financial items and cash flow from operating activities. In accordance with the terms of the plan for the year 2008 the reward could have been at the maximum 120 000 Tulikivi Corporation Series A shares and a cash payment corresponding to the value of the shares. A maximum total of 360 000 Series A shares and cash payment corresponding the value of the shares will be paid as rewards on the basis of the entire share-based incentive plan. The grant date of the incentive plan was 18 April 2008 and the share price at the grant date was EUR 1.5. The 2008 profit/cash flow entitled to 10 per cent of the maximum reward of the incentive plan. Based on the terms of the plan Series A shares will be granted to those participating the plan, in total 9 800 shares. It is prohibited to transfer the shares within the two year restriction period. Furthermore, a key person must own at least 30 per cent of the shares earned on the basis of the plan for two years after the restriction period. The impact of the share-based rewards on the 2008 result amounted to approximately EUR 10 thousand.
Because of the declining order inflow, the company's Board of Directors has launched a programme to improve the profitability of Tulikivi Corporation's operations and to introduce concentration measures in order to secure the company's profitability in the future. The programme is intended to achieve annual savings of approximately EUR 5 million in future years. As a result of launching the programme, the company has initiated co-determination talks with all Group personnel. The company is seeking a personnel reduction of about 120 persons. The company will also have to introduce lay-offs among its personnel during the current year. It is estimated that the programme will give rise to approximately EUR 2 million in non-recurring costs.
| 10 Major shareholders according to number of shares Shares registered in the name of a nominee are not included. |
K shares | A shares | Proportion, % | |||
|---|---|---|---|---|---|---|
| 1. Vauhkonen Reijo | 2 852 500 | 1 334 327 | 11.27 | |||
| 2. Vauhkonen Heikki | 2 957 000 | 46 887 | 8.09 | |||
| 3. Elo Eliisa | 477 500 | 2 479 520 | 7.96 | |||
| 4. Virtaala Matti | 1 460 000 | 961 300 | 6.52 | |||
| 5. Ilmarinen Mutual Pension Insurance Company | 1 902 380 | 5.12 | ||||
| 6. Mutanen Susanna | 797 500 | 846 300 | 4.43 | |||
| 7. Vauhkonen Mikko | 397 500 | 400 200 | 2.15 | |||
| 8. Paatero Ilkka | 718 430 | 1.93 | ||||
| 9. Nuutinen Tarja | 397 500 | 277 040 | 1.82 | |||
| 10. Investment Fund Phoebus | 608 140 | 1.64 | ||||
| 10 Major shareholders according to number of votes Shares registered in the name of a nominee are not included. |
K shares | A shares | Proportion, % | |||
| 1. Vauhkonen Reijo | 2 852 500 | 1 334 327 | 24.28 | |||
| 2. Vauhkonen Heikki | 2 957 000 | 46 887 | 24.08 | |||
| 3. Virtaala Matti | 1 460 000 | 961 300 | 12.65 | |||
| 4. Mutanen Susanna | 797 500 | 846 300 | 7.17 | |||
| 5. Elo Eliisa | 477 500 | 2 479 520 | 5.90 | |||
| 6. Vauhkonen Mikko | 397 500 | 400 200 | 3.56 | |||
| 7. Nuutinen Tarja | 397 500 | 277 040 | 3.46 | |||
| 8. Ilmarinen Mutual Pension Insurance Company | 1 902 380 | 1.55 | ||||
| 9. Suomen Kulttuurirahasto | 100 000 | 340 000 | 1.09 | |||
| 10. Sivonen Juha | 100 000 | 0.81 | ||||
| The members of the Board and Managing Director control 7 269 500 K shares and 2 581 246 A shares representing 61.20 % of votes. | ||||||
| Breakdown of share ownership of December 31, 2008 Number of shares |
Shareholders pcs |
Proportion % |
Shares pcs |
Proportion % |
||
| 1 - 100 | 359 | 7.87 | 25 090 | 0.07 | ||
| 101 - 1000 | 2 159 | 47.34 | 1 211 979 | 3.26 | ||
| 1001 - 5000 | 1 469 | 32.21 | 3 624 196 | 9.75 | ||
| 5001 - 10000 | 291 | 6.38 | 2 208 639 | 5.95 | ||
| 10001 - 100000 | 260 | 5.70 | 6 234 806 | 16.79 | ||
| 100001 - | 23 | 0.50 | 23 839 260 | 64.18 | ||
| Total | 4 561 | 100.00 | 37 143 970 | 100.00 | ||
| On December 31, 2008 the Company's shareholders were broken down by sector as follows: Sector |
Holding, % | Votes, % | ||||
| Enterprises | 2.19 | 0.66 | ||||
| Financial and insurance institutions | 10.24 | 3.09 | ||||
| Public organisations | 5.16 | 1.56 | ||||
| Non-profit organisations | 2.79 | 1.58 | ||||
| Households | 79.38 | 93.04 | ||||
| Foreign | 0.24 | 0.07 |
Nominee-registered shares, 2 623 118 in total (7.06 % of the capital stock), are entered under financial and insurance institutions.
In Nunnanlahti February 10, 2009
Matti Virtaala Bishop Ambrosius Juhani Erma
Eero Makkonen Maarit Toivanen-Koivisto Reijo Vauhkonen
Heikki Vauhkonen Managing Director
We have audited the accounting records, the financial statements, the report of the Board of Directors, and the administration of Tulikivi Corporation for the financial period 1 January – 31 December 2008. The financial statements comprise the consolidated balance sheet, income statement, cash flow statement, statement of changes in equity 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 the financial statements and the report of the Board of Directors and for the fair presentation of the consolidated financial statements in accordance with International Financial Reporting Standards (IFRS) as adopted by the EU, as well as for the fair presentation of the parent company's financial statements and the report of the Board of Directors in accordance with 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 perform an audit in accordance with good auditing practice in Finland, and to express an opinion on the parent company's financial statements, on the consolidated financial statements and on the report of the Board of Directors based on our audit. Good auditing practice requires that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance 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 and the Managing Director have complied with the Limited Liability Companies Act.
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 of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances. 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.
The audit was performed in accordance with good auditing practice in Finland. 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, together with the consolidated financial statements included therein, and the report of the Board of Directors give a true and fair view of the financial performance and financial position of the company 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.
The consolidated financial statements and the parent company's can be adopted and the members of the Board of Directors of the parent company and the Managing Director can be discharged from liability for the financial period audited by us. The proposal by the Board of Directors on how to deal with the result for the financial period is in compliance with the Limited Liability Companies Act.
In Nunnanlahti February 24, 2009 KPMG OY AB
Ari Eskelinen Authorized Public Accountant
78 FINANCIAL STATEMENTS
FACTORIES AND OFFICES HEAD OFFICE AND JUUKA FACTORIES FI-83900 Juuka Tel. +358 207 636 000 Fax +358 207 636 130 www.tulikivi.com [email protected]
SUOMUSSALMI FACTORY
Saarikyläntie 26 FI-89920 Ruhtinansalmi Tel. +358 207 636 750 Fax +358 207 636 769
HEINÄVESI FACTORY Rasiahontie 3 FI-79700 Heinävesi Tel. +358 207 636 501 Fax +358 207 636 505
TAIVASSALO AND VINKKILÄ FACTORIES Helsingintie 108 FI-23310 Taivassalo Tel. +358 207 636 880 Fax +358 207 636 888
Bulevardi 22 FI-00120 Helsinki Tel. +358 207 636 000 Fax +358 207 636 558
Lautamiehentie 1 FI-02770 Espoo Tel. +358 207 636 820 Fax +358 207 636 877
KIVIA OY Kivikatu 2-4 FI-88900 Kuhmo Tel. +358 207 636 700 Fax +358 207 636 720 TULIKIVI U.S., INC. P.O. Box 7547 Charlottesville, VA 22906-7547, USA Tel. +1 800 843 3473
DEUTSCHLAND Wernher-von-Braun-Str. 5 D-63263 Neu-Isenburg, Germany Tel. +49 6102 74 140 Fax +49 6102 741 414
Ul. Marata 47/49 191002 St. Petersburg, Russia Tel. +990 7 8129 512 655
STONE POLE OY Kuhnustantie 10 FI-83900 Juuka Tel. +358 207 636 600 Fax + 358 207 636 609
LEPPÄVIRRAN MATKAILUKESKUS OY Rasiahontie 3 FI-79700 Heinävesi Tel. +358 207 636 501 Fax +358 207 636 505
Nearest distributor on Internet site www.tulikivi.com
BENELUX DUTRY & CO. Jagershoek 10 B-8570 Vichte Belgium Tel. +32 56 776 090 Fax +32 56 774 294
ITALY EUROTRIAS S.R.L. – GMBH Via Max Planck I-39100 Bolzano Italy Tel. +39 0 471 201 616 Fax +39 0 471 201 689
NEUHAUSER-SPECKSTEIN-ÖFEN Bahnhofstrasse 54 A-4810 Gmunden Austria Tel. +43 7612 744 58 Fax +43 7612 744 584
LATVIA, LITHUANIA Baltic TK Pihlaka 1 a 11216 Tallinn Estonia Tel. +372 6555 486 Fax +372 6555 487
TULIKIVI OYJ 75, avenue Parmentier F-75011 Paris France Tel. +33 1 40 21 25 65 Fax +33 1 40 21 24 00
Tel. +358 207 636 000 Fax +358 207 636 120
GERMANY TULIKIVI OYJ NIEDERLASSUNG DEUTSCHLAND Wernher-von-Braun-Str. 5 D-63263 Neu-Isenburg Germany Tel. +49 6102 74 140 Fax +49 6102 741 414
SWITXERLAND ARMAKA AG Duggingerstrasse 10 CH-4153 Reinach BL Switzerland Tel. +41 61 715 9911 Fax +41 61 715 9919
TULIKIVI U.S., INC. P.O. Box 7547 Charlottesville, VA 22906-7547 USA Tel. +1 800 843 3473
OOO TULIKIVI Ul. Marata 47/49 191002 St. Petersburg Russia Tel. +990 7 812 911 831 30 22
Pihlaka 1 a 11216 Tallinn Estonia Tel. +372 6555 486 Fax +372 6555 487
SLOVENIA Horizont DOM, d.o.o. Prešernova 10a 1000 Ljubljana Slovenia Tel. +386 1 251 66 00 Fax +386 1 251 88 35
Tulikivi Corporation FI-83900 Juuka, tel. +358 207 636 000, fax +358 207 636 130, www.tulikivi.com VAT-number 0350080-1, domicile Juuka
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