Annual Report • Mar 7, 2008
Annual Report
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| Martela in brief 3 |
|---|
| The year in Brief 3 |
| Managing Director's Review. 4 |
| People behind quality 6 |
| Business review 8 |
| Marketing highlights in 2007. 14 |
| Quality and the environment 14 |
| Personnel 16 |
| Corporate governance 18 |
| Martela Group's Board of Directors 25 |
| Management Team of Martela Group 25 |
| Contents of the financial statements 28 |
| Information for shareholders 29 |
| Board of Directors' Report 30 |
| Consolidated financial statements, IFRS 34 |
| Consolidated income statement 34 |
| Consolidated Cash Flow Statement 35 |
| Consolidated balance sheet 36 |
| Statement of changes in equity 38 |
| Notes to the Consolidated Financial Statements. 39 |
| Martela Group 2003 – 2007. 63 |
| Statistics on Martela Oyj shares. 64 |
| Calculation of Key Figures 66 |
| Parent Company Financial Statements, FAS 67 |
| Parent Company Income Statement 67 |
| Parent Company Balance Sheet. 68 |
| Parent Company's Cash Flow Statement. 70 |
| Accounting Policies for Parent Company Financial Statements 71 |
| Notes to Parent Company Financial Statements: 72 |
| Board of Directors' proposal for the distribution of profit 78 |
| Auditors' report 78 |
| Addresses 79 |
Martela designs and supplies interior solutions for working environments and public spaces. Martela's objective is to offer its customers and partners the best service in the business and high-quality, ergonomic and innovative products. Fast deliveries and an efficient delivery network help Martela to attain its objective.
Martela is the largest company in its sector in Finland and one of the three largest in the Nordic countries. Martela also offers a wider range of services that support the maintenance and modification of interior solutions than anyone else. In Finland, Martela offers a comprehensive service that can cover the entire process of change from initial inventory and design to removal and maintenance.
Martela is a family company founded more than 60 years ago and its shares are quoted on the OMX Nordic Exchange Helsinki. The company has production facilities in Finland, Sweden and Poland. Our main markets include the regions around the Baltic Sea and Norway, the Netherlands, Ukraine, Hungary and Japan.
In 2007, Martela Group's turnover was EUR 128.4 million and it employed an average of 663 employees.
| 2007 | 2006 | ||
|---|---|---|---|
| Revenue | € million | 128.4 | 119.7 |
| Growth in revenue | % | 7.3 | 17.1 |
| Operating profit | € million | 8.3 | 4.5 |
| – as a percentage of revenue | % | 6.4 | 3.8 |
| Pre-tax profit | € million | 7.6 | 3.7 |
| – as a percentage of revenue | % | 5.9 | 3.1 |
| Return on investment | 19.6 | 11.0 | |
| Balance sheet, total | € million | 63.8 | 59.1 |
| Equity ratio | % | 46.7 | 42.4 |
| Earning/share | € | 1.3 | 0.7 |
| Equity/share | € | 7.2 | 6.1 |
| Dividend/share | € | 0.50* | 0.25 |
| Capital expenditure | € million | 3.2 | 1.8 |
| Average personnel | 663 | 626 | |
| – change % | 5.9 | 2.6 |
* Proposal of the Board of Directors
Combo, design Iiro Viljanen
Martela's year 2007 went largely according to plan. Our revenue increased by 7.3 per cent and profitability improved markedly. This progress was largely the result of our efforts to develop the various parts of the company. Our collection, operations and information systems, for example, are now mostly harmonised across the units in respective countries. This work has taken years and has provided us with a very solid basis for improving profitability and future development. We are in a very good position regarding the future.
A favourable situation continued in our main markets. Growth continued to be especially strong in Poland, Sweden and Norway. This suits Martela's plans well because nearly two-thirds of our business takes place in Finland and it is our goal to reduce the company's dependence on the Finnish market.
We already enjoy a very high market share as an office furniture supplier in Finland, and in fact seek growth from a wider range of services and school, elderly care, restaurant, hotel and auditorium furniture. In Scandinavia, our sector is somewhat narrower than in Finland and our goal is to expand as a furnisher of workstations and especially surroundings.
We also have a very strong position on the rapidly growing Polish market. We have seven sales offices and a local logistics and procurement centre, which provide us with a good opportunity to become the leading office furniture manufacturer in Poland. What is more, the Polish company provides us with access to Hungary and Ukraine, where we operate via our importers.
Other important export countries include Russia, Estonia, Japan and certain countries in western Europe. We are seeking export growth especially from surroundings furniture. At the international Milan Furniture Fair in April we will again introduce new space furniture products from established designers.
A comfortable working environment is a productive one Companies are increasingly aware of the benefits to be obtained from changing your working position. We further expanded our ergonomic collection in early 2008, and the challenge we now face lies in convincing our customers that it is worthwhile to invest in a comfortable working environment. Research shows that such investment pays off in improved performance and lower sickness costs.
Continued improvements in quality have benefited our customers and increased our productivity. Producing good quality requires continued investment and effort and hence it is a part of everyone's job at Martela. Our goal is to be a top b-to-b seller. We made significant progress towards this goal in 2007 and received very positive feedback from our customers. We have also made internal progress: the results from our personnel satisfaction survey were the best ever.
In recent years environmental matters have received much attention in the media, and for good reason, too. At Martela, we have paid continued and long-term attention and responsibility. Furniture recycling – where we are the leader – is an example.
The outlook for Martela continues to be favourable: the pace of office building is brisk and demand is expected to be stable. We are dependent on our operating environment and the unstable world economy, and changes in trends may also affect demand in our sector. For 2008, our goal is to continue to improve profitability.
I wish to express my warmest thanks to our customers, personnel, partners and shareholders for their fine cooperation during the year.
Martela Head Office, February 2008
Heikki Martela Managing Director
Our challenge is to convince our customers that it's worthwhile to invest in a comfortable working environment. Research shows that investment in the working environment pays off in better performance and lower sickness costs.
At Martela, quality means that every day we do our job better than the day before and we get it right the first time. Our most important indicator of quality is that we at least meet and preferably surpass customers' expectations.
Market leader seeks growth
from comprehensive services
The Group's revenue in the Finnish market was EUR 85.5 million (82.9), 67 per cent of consolidated revenue. Invoicing in Finland increased by about 3 per cent. In 2007, Martela employed an average of 518 people (501) in Finland. Martela is the clear market leader in its sector in Finland.
Business Area Finland is responsible for sales and marketing, service production and manufacturing, and development and support. During the year profitability was successfully improved. The market position is estimated to have remained unchanged in the focus areas of operations, which are solutions combining services and furniture for offices and their surroundings, schools and elderly care facilities. The Business Area employed 299 people.
Martela's market leadership is based on its ability to offer solutions that provide tangible support to and enhance the efficiency of customers' operations. The cornerstones of this competitive edge are extremely experienced and competent staff, a profound understanding of customers' needs, a comprehensive service network, a widely modifiable collection, tailored customer solutions, and fast and reliable delivery.
The company has an extensive sales and service network that covers the whole of Finland. There are a total of 23 service locations, nine of which are Martela's while the other 14 are entrepreneur-driven Martela centres.
The service concept has been developed to cover increasingly larger entities. The aim is to offer solutions with which customers can easily and effectively manage change. The services can include office design, a survey and inventory of the existing office, collection and recycling of old furniture, removal services in connection with furniture projects, furniture maintenance services and the Martela rental service. Long-term Martela rentals include flexible replacement of furniture when needs change.
Customer solutions have been integrated between sales and customer service and the Nummela logistics centre. Needs are determined with the customer and defined and communicated
to the logistics centre, which manages service production and assembly, and the logistics of ready products that supplement the overall solution.
Products are available in various versions. The assembly of products is highly automated and based on an extensively subcontracted supply of components and fast and reliable deliveries. As production is driven by customer orders, finished products rarely need storing. Correspondingly, service production is based on our own core competence, which is supplemented by an extensive network of trained partners.
Business Area Finland has applied the ISO 9001 standard in quality management since 1997 and the ISO 14001 standard in environmental management since 1999.
Kidex Oy's business idea is to be a contract manufacturer of boardbased furniture components such as cabinet and pedestal components and tabletops. The subsidiary's customers include Martela Group companies and also non-Martela furniture manufacturers, especially kitchen and shop furniture manufacturers. The proportion of customers outside the Group was 24 per cent.
The company has been organised as part of the Group's production and logistics function. Its revenue in 2007 was EUR 10.5 million, and the average number of employees was 84.
The company's aim is to strongly increase revenue by being an active contract manufacturer in the Nordic countries. Kidex offers flexible, cost-effective and high-quality services to its customers.
Kidex Oy's quality management system is certified as part of Martela Oyj's quality management system.
The company is Martela's contract manufacturer for specific chairs, a flexible manufacturer of chair applications and form-pressed wooden chairs in the initial stages of their lifecycle. It is also responsible for the auditorium business and its development as well as auditorium sales in Finland.
The company has been organised as part of the Group's production and logistics function. Its revenue in 2007 was EUR 7.7 million, and the average number of employees was 57.
P.O. Korhonen has held an ISO 9001 quality management certificate issued by DNW since 2000 and an ISO 14001 environmental management certificate since 2001, both of which meet the latest requirements.
| * | |
|---|---|
| Geographical segment Finland (EUR million) | 2007 | 2006 | Change % |
|---|---|---|---|
| Revenue | 85.5 | 82.9 | 3.1 |
| Segments assets | 52.3 | 49.2 | |
| Investments | 2.1 | 1.6 | |
| Average personnel (person) | 518 | 501 | 3.4 |
SoftX, design Julia Läufer and Marcus Keichel
Stronger position in Sweden and Norway The Group's revenue in the Scandinavian market was EUR 26.6 million (22.4), corresponding to 21 per cent of consolidated revenue. Revenue in Scandinavia increased by 18.7 per cent. In 2007, Martela employed an average of 71 people (75) in Sweden and Norway.
The Business Area Sweden and Norway constitutes Martela's second largest market area, in which the Group has achieved a solid market position. The unit's performance improved and growth was good.
The Business Area manufactures and markets furniture for offices and public spaces. Sales in Sweden are handled through 34 dealers. In addition, the company has sales and showroom facilities in Stockholm and Bodafors. Sales was strengthened particularly in the Stockholm region. The company's logistics centre and order handling is situated in Bodafors, Sweden.
The marketing company located in Oslo operates as a support organisation for the Norwegian sales network. Sales in Norway are handled through 30 dealers. In addition, the company has sales and showroom facilities in Oslo, which employ 4 people. Martela has established itself in the Norwegian market and is among the biggest suppliers of office furniture in the country.
Sales to the Danish market are the responsibility of Business Area Export based in Helsinki. Sales in Denmark are conducted via a local importer.
Brisk demand in Poland
The revenue from Poland and Eastern Central Europe increased by 32 per cent and was EUR 11.1 million, accounting for 9 per cent of consolidated revenue. The Business Area has 74 employees, all of which are based in Poland.
Business Area Poland is responsible for the sales and distribution of Martela products in Poland and Eastern Central Europe. Its sales centres are in Warsaw, Wroclaw, Katowice, Gdansk, Poznan, Kraków and Łódž. The principal export countries are Ukraine, Hungary, the Czech Republic and Slovakia, in which sales are handled by established dealers.
The demand for office furniture in Poland has been at a good level for a number of years. The market is highly fragmented and there are numerous competing companies. Martela's growth has outpaced the market and the company has strengthened its market position, becoming one of the main office furniture manufacturers in the country.
The Business Area's headquarters are in Warsaw, as is the logistics centre. About 70 per cent of all products sold are the Group's own, and the majority of these are assembled in the company's logistics centre in Poland. The logistics centre manufactures chairs, tables and storage units. The number of products assembled in Warsaw increases every year, as does the proportion of locally procured components.
In 2007 Martela entered the new market segment of auditorium furniture. First year ended with very positive result promising good perspectives for the future.
The main market areas for Business Area Export were Denmark, the Netherlands, Germany, and the UK in Western Europe; Russia, Estonia and the other Baltic countries in Eastern Europe; and Japan in the Far East. The Business Area employs 12 people.
The business model in all export markets is founded on authorised distributors, through which products and services are sold to end customers. The selection of export products is broad and covers furniture for offices, surroundings, schools and auditoriums. Some markets have separate distribution channels for specific product ranges.
In 2007 the Business Area continued to focus on overall improvement of customer service, as well as on a more active presence and influence in the main market areas. In Japan, the model based on six authorised importers was replaced by a single importer in October. Both parties to the sole rights sales agreement – Actus Corporation and Martela – are committed to promoting the Martela brand and sales of Martela products in Japan.
Business Area Export is also responsible for the Group's international key customer relationships. The number of international key customers increased and sales continued their strong growth during the year.
In addition, the Business Area's staff provide support in Sweden, Norway and Poland for the sale of products made in Finland.
Demand in the export market remained at a good level but price competition continued to be tight. Thanks to our new products and good service, we were able to maintain and partly improve our market positions in Western and Eastern Europe. In the Japanese market sales were hit by the continuing deterioration of exchange rates and very tight competition.
| * | ||
|---|---|---|
| Geographical segment Scandinavia (EUR million) | 2007 | 2006 | Change % |
|---|---|---|---|
| Revenue | 26.6 | 22.4 | 18.7 |
| Segments assets | 8.2 | 10.0 | |
| Investments | 0.8 | 0.1 | |
| Average personnel (person) | 71 | 75 | -5.3 |
Pinta, design Pekka Toivola and Iiro Viljanen
| Geographical segment Poland and other areas (EUR million) | 2007 | 2006 | Change % |
|---|---|---|---|
| Revenue | 16.4 | 14.4 | 13.7 |
| Segments assets | 6.8 | 4.4 | |
| Investments | 0.3 | 0.1 | |
| Average personnel (person) | 74 | 50 | 48.0 |
The business unit Office is responsible for the development, product marketing, collection management and product profitability of the Group's workstation furniture. Workstation furniture includes desks and task chairs, storage units and screens.
The organisation has 22 employees in product development, product support and marketing. Product development personnel and the research lab are located in Nummela in connection with the logistics centre, and the rest of the organisation's personnel are based at the company's Helsinki site.
In 2007 Martela introduced the Pinta workstation collection, which is based on a single, uniform range of tabletops with base options to suit specific customer needs. Transition to the Pinta collection was successful in all markets and it was the single most significant product introduction of the year.
Acoustics solutions were presented at the Stockholm Furniture Fair and at numerous events in Finland and other countries. Acoustics variables were illustrated in a special acoustics tunnel that provided audible evidence of the differences between effective and poor noise dampening. The sound-absorbing Stacks screens and Combo cabinets were also a commercial success. Customer trials, development and testing were continued on the Acu workstation loudspeakers, which mask unwished noise by directed sound.
The task chair collection was also updated: Martela introduced the Axia Profit chair, which has an automated back support system to make daily adjustments easier.
The revenue from the service products Martela offers to support the furniture business continued to increase rapidly, and investment was continued in the organisation that provides the services and their marketing. The year 2008 will witness new, significant and interesting products, services and interior concepts.
Surroundings furnishes public spaces
The Surroundings business unit is responsible for furniture for surroundings. These include lobbies, conference rooms and brainstorming rooms, schools, hotels, restaurants, elderly care facilities and auditoriums. The unit's responsibilities cover the entire chain from product development, product marketing, product support and collection management to profitability.
The organisation has 10 employees in product development, product support and marketing. Numerous designers from Finland and abroad are engaged in developing the collection.
The Surroundings business unit serves all Group sales companies. In accordance with Group strategy, its objective is to substantially increase sales in all sales areas to make Martela a leading supplier of furniture for public spaces, especially surroundings.
Several new products were introduced during the year under review, such as the SoftX chair from the Berlin-based designers Julia Läufer and Marcus Keichel, which won the international iF design award in 2008. Other new chairs included Samuli Naamanka's Sides, Timo Saarnio's Strip and Stefan Lindfors' Menu, which was launched in Milan in April.
Martela's strategic goal is to expand its business to become a leading hotel and restaurant furnisher. In June, the Parliament of the self-governed region of Aland in western Finland selected the Menu chair for its restaurant, and in September Martela took part in the Design Partners event in Helsinki, where it furnished the restaurant.
Work on developing the collection will continue in 2008. The goal is to conform Martela's product range to the segments defined in its strategy and ensure they are considered attractive by the desired target groups.
The Group's product development, collection management and product marketing is divided into two business units: Office workstation furniture and Surroundings furniture for surroundings and other public spaces.
For architect Malgorzata Grzyb, work is a passion and every project is important, no matter whether it is big or small. Her job as head of design is to help customers with the design of offices and surroundings at the Warsaw sales centre.
"Our work is like putting a puzzle together – we must focus on the smallest of details to build the perfect solution to the customer's specifications. Every employee plays a role in this."
Martela's theme was acoustics at the Stockholm Furniture Fair in February. Our stand included a tunnel with acoustic screens to illustrate the importance of good acoustics. In addition to acoustic screen and cabinet solutions, we introduced the Pinta workstation series by Pekka Toivola and Iiro Viljanen. New space furniture products included Julia Läufer and Marcus Keichel's SoftX chairs and Samuli Naamanka's Sides chair.
In April, Martela took part in Milan's Salone Internationale del Mobile (Milan Furniture Fair), one of the most important fairs in the business. The main attractions were Stefan Lindfors's Menu chairs, designed especially for restaurants, and Samuli Naamanka's Sides chairs, which are made with recycled aluminium. The designer was inspired to use recycled aluminium by a news article on aluminium from Soviet fighters, which is being imported to Finland for processing. In fact, the Martela gallery was presented under the theme 'Soviet Fighters'.
New website and campaigns activated customers Martela refurbished its website in 2007. The goal was to improve customer service with more useful product information and also to improve the overall usability of the website.
Our marketing campaigns dealt with topical issues. The goal of the Finnish campaign was to tell customers of the benefits of Martela's service entity. In Poland, we focused on the 'Healthy Office' theme and emphasised the importance of ergonomics at the workplace. Martela put on a wide and varied range of exhibition premiers, design events and seminars in its main markets.
Durable and environmentally friendly quality Martela's aim is long-term development of the Group's quality management and environmental management culture. The objective is to offer customers excellent customer service and durable, long-lasting products that promote the safety and high quality of work environments, and whose production harms the environment as little as possible.
Martela makes use of the ISO 9001:2000 standard for operations and the ISO 14001:2004 standard for environmental management. The aim of the company's environmental management programs is to reduce the environmental load of Martela's products throughout their life cycle, and to increase the reuse and recycling of materials. Martela has paid particular attention to the recycling and potential re-use of discarded furniture by offering recycling services to customers.
Det Norske Veritas conducts regular audits to oversee Martela Oyj's compliance with the standards ISO 9001:2000 and ISO 14001:2004 in quality and environmental management. Martela Oyj's environmental system certification, which also covers Kidex Oy's operations, will be valid until the end of 2008. Martela AB and P.O. Korhonen Oy have their own quality systems which are certified separately.
The objective of quality management in 2008 is to improve the efficiency of processing customer feedback and that of internal audit, and to build a quality system for Martela's Polish subsidiary. The environmental management objective is to harmonise the environmental indicators and monitoring procedures used in the various units.
Martela has paid particular attention to the recycling and potential re-use of discarded furniture by offering recycling services to customers.
product development
Product development is about designing, testing, measuring and conforming to standards. On average, every product is the result of two years of hard development work.
"The goal of product development is to develop products that meet customers' needs and expectations. Customers expect style, quality and durability from Martela. This is why we invest in design and choose only dependable component suppliers and partners. We take no chances with quality," says Mika Hillberg, project manager at the Nummela product development unit.
Martela's success depends on skilled, motivated and committed personnel. For this reason, personnel matters play a critical role in the Group. Various training programmes were organised in 2007 to promote competence and new skilled employees were also hired. Several development projects were initiated during the year, the purpose of which was to boost productivity and efficiency and the meaningfulness of work.
In 2007, Martela Oyj employed an average of 377 people. Recruitment of both permanent and temporary staff was brisker than in previous years. Hired labour was also used to deal with seasonal variation.
The chosen development focus for 2007 was employee skills, because good performance requires not only good managerial skills but also competent employees. All salaried employees, including supervisors, took part in the training, entitled 'Skilled employee: how to manage your boss and succeed as an employee'.
The planning of a special vocational management programme (JET) and a vocational programme for communications and logistics was started in the spring. Both programmes were launched in late 2007. Internal product and service training was organised extensively. Development of management skills was also continued.
A personnel survey was conducted in the autumn and the results were the best ever, with improved marks throughout. The survey covered the entire Group.
In 2007, P.O. Korhonen employed an average of 57 people. P.O. Korhonen's transition into a special product plant was supported with a development project funded by Tykes, the Finnish Workplace Development Programme. All staff took part to the project. Re-auditing of the international Investors in People (IiP) human resources certificate awarded to the company in 2003 was also carried out in September.
In 2007, Kidex Oy employed an average of 84 people. During 2007, Kidex's key development targets were improving production efficiency, enhancing the flexibility of the production capacity and strengthening sales. At the end of the year Kidex made a local agreement on implementing a flexible working hour system from the beginning of 2008. The training of salaried employees focused on their employee and supervisor skills.
Development projects in Sweden, Norway and Poland The average staff in Sweden and Norway was 71 and in Poland 74 in 2007. Favourable development and strong growth continued in Sweden and Norway. The new Managing Director started work in August. The production improvement project progressed in steps and work was continued with self-guiding teams.
In Poland the focus was on improving the sales organisation and processes, and training. A new sales office was opened in Łódž.
Developing the performance review process and incentive principles are the Group's personnel focuses in 2008. Attention will also be paid to the availability of labour and Martela's image as an employer. The next internal, Group-wide survey will concern supervisors. In Finland, the focus is also on improving skills and the efficiency of the recruitment process and developing a working hour bank.
A new business plan and objective programme will be initiated in Sweden and Norway in 2008. Work will also continue to improve production efficiency with self-guiding teams and an associated salary system. Marketing and sales will be reinforced and their goalorientation improved.
An intensive customer management training programme will be implemented in Poland. This will concentrate on the new sales process and customer management. Supervisors' leadership skills will also be improved. Staff will be motivated to support the strong growth of the company by expanding the target group of the performance-based bonus system. Training and motivation systems will gradually be extended to cover the partners in countries that come under Business Area Poland.
Developing the performance review process and incentive principles are the focus in 2008.
Every production employee contributes to quality assurance. "At Martela we understand that production is as efficient as its weakest link. Every job affects the following one and every stage must be completed so that no patching-up is needed afterwards. Quality leaves no room for flexibility," says Piia Pääkkönen, pedestal assembler at the Nummela plant.
Martela Oyj is a Finnish limited liability company that is governed in its decision-making and management by Finnish legislation, especially the Finnish Limited Liability Companies Act, other regulations concerning public listed companies, and its own articles of association. The company complies with the OMX Nordic Exchange Helsinki's Guidelines for Insiders and the Corporate Governance Recommendation for Listed Companies issued by OMX Nordic Exchange Helsinki, the Central Chamber of Commerce of Finland and the Confederation of Finnish Industry and Employers, which came into force on 1 July 2004, excluding the exceptions indicated in the text.
Martela Group's business idea is the furnishing of offices and public premises, and the provision of related services. The Group is managed according to both its operational organisation and legal Group organisation. The Group's management is based primarily on an operational matrix organisation. Its sales operations and customer service are organised by market area as follows:
In Finland and Poland, sales are carried out primarily through regional direct sales organisations. In Finland, direct sales are supported by entrepreneur-driven Martela Centres which promote Martela products and services exclusively. These centres are closely integrated with Martela's operations.
In Sweden and Norway, sales are organised through a dealer network. Local importers are primarily used in the other export markets.
The market-area-specific organisations are co-ordinated by Group-level processes. They are:
Manufacturing takes place on an order-driven basis. Management of the supply chain and product assembly have been concentrated in the company's logistics centres in Finland, Sweden and Poland, which are part of the operational organisations of their respective areas. The logistics centres are supported by an extensive network of subcontractors. The components and products needed by the centres are produced also at Group plants in Kitee and Raisio.
Kidex Oy is a contract manufacturer of wood-based components and roughly a quarter of its production goes to customers outside the Group. P.O. Korhonen manufactures form-pressed wooden furniture for public spaces and auditorium furniture.
It's your attitude that counts "Our goal is a satisfied customer. We must do our job so well that the customer wants to come back for more Martela products and services," says Vesa Granlund, service manager with 21 years of experience. It is Vesa's job to make sure there are no hiccups with comprehensive services in Oulu. Orders vary from coordinating office design to organising removals and installing new furniture.
"It's your attitude that counts. The Martela way is to work fast and provide friendly services, even in difficult cases. We never leave things unfinished, and if a customer complains, we try to settle the matter immediately."
19
The General Meeting is the company's supreme decision-making body. The Annual General Meeting must be held before the end of June. Martela has two share series ('K shares' and 'A shares'), with each K share entitling its holder to 20 votes at a General Meeting and each A share entitling its holder to one vote.
The Board of Directors, elected by the Annual General Meeting, is responsible for the management and proper arrangement of the operations of the company in compliance with the Limited Liability Companies Act and the Articles of Association. In accordance with the Articles of Association, the Board of Directors consists of no less than five and no more than nine members. There may be no more than two deputy members. The Board of Directors elects from among its members a Chairman and Vice Chairman to serve until the end of the Annual General Meeting that follows their election. The Martela Oyj staff are represented on the Board by one representative and one deputy. Both staff representatives attend the Board's meetings. The staff elects their representative for a three-year period, and this choice must be confirmed annually by the Annual General Meeting. More information on the composition of the Board and the backgrounds of Board members can be found later in the Annual Report.
The Board has confirmed a Charter, which defines the duties of the Board, its meeting practice, the matters to be dealt with at meetings, the Board's targets for its activities, a self-evaluation of these activities, and the Board's committees.
In accordance with the Charter, the matters to be dealt with by the Board of Directors include:
The Board convened nine times in the financial year. The average attendance of Board members was 96 per cent.
The Board has evaluated the independence of the directors and determined that Heikki Ala-Ilkka, Tapio Hakakari and Jori Keckman are independent of the company . In this respect the Board diverges from section 17 of the Corporate Governance Recommendation, under which the majority of Board members should be independent of the company. Heikki Ala-Ilkka, Tapio Hakakari, Jori Keckman and the staff representatives Matti Lindström and Raimo Santala are independent of the largest shareholders.
The Board has formed from its membership a Compensation Committee with a written Charter. According to the Charter, the key duties of the Compensation Committee include:
In 2007, the Board's Compensation Committee comprised Heikki Ala-Ilkka, Jaakko Palsanen and Tapio Hakakari. The Committee met six times in 2007.
The Board appoints the Managing Director of Martela Oyj and decides on the terms and conditions of his service relationship, which are defined in a written Managing Director's service contract. The Managing Director is responsible for the operational management and supervision of the parent company and the Group according to the guidelines set by the Board.
The Board of Directors and the Managing Director appoint the members of the Group Management Team. The Managing Director of Martela Oyj acts as the Chairman of the Group Management Team. The directors responsible for the main market areas and the Group's processes are also represented in the Group Management Team. The Group Management Team prepares and reviews strategies, budgets and investment proposals, monitors the financial situation of the Group, its business units and processes, and the attainment of operational targets and plans. The Group Management Team meets once a month.
Martela Oyj's Board of Directors is provided with monthly reports on the financial performance and forecasts of the Group and its business units. The reports and forecasts are reviewed at Board meetings at the initiative of the Managing Director. For the purposes of reviewing the interim reports and annual financial statements, the Board of Directors receives the financial statements information and analyses in advance.
The Group Management Team meets once a month to evaluate the financial performance, outlook and risks of the Group and its business units.
The delivery chain must run smoothly to ensure that goods make it to the customer intact and on time. Furniture technician Vesa Huttunen is Martela's hallmark. He is responsible for the quality customers see every day. He visits 5 to 15 customers daily.
"Faultless and intact deliveries are a joy to install. Usually, customers are delighted with our speed and that we tidy up before we leave. Of course, it's impossible to avoid accidents. When they happen, you have to do your best to fix it as soon as possible. I think providing good service when there is a problem is the best indicator of quality."
The auditing of Group companies is carried out in accordance with each country's valid laws and each company's articles of association. The principally responsible auditor of the parent company coordinates the auditing of the Group's subsidiaries together with the Group's Managing Director and Finance Director. The auditors of Martela Oyj and the Group are the authorised public accountants KPMG, with Mr Reino Tikkanen, Authorised Public Accountant, as the principally responsible auditor. All the auditors of the Group's companies are in the KPMG chain. In 2007, a total of EUR 103 thousand was paid for the Group's auditing, while EUR 41 thousand was paid for other services.
Internal control is the responsibility of the Board of Directors and the executive management. The objective of internal control is to ensure the efficiency and profitability of operations, the reliability of information, compliance with regulations and operating principles, and the application of appropriate internal control procedures. The Board of Directors and the operating management carry out this control by means of the reporting system described above and regular inspections. The forming of a separate internal audit function has not been deemed appropriate. The audit plans of the company's auditors take into account the fact that the company has no internal audit, and extend audit to include the functioning of the internal control system.
Martela's Board of Directors has confirmed the risk management principles. The purpose of risk management is to identify, monitor and manage risks that could pose a threat to business and to the achievement of business objectives. Risk management is an integral part of normal business and management.
In the Group, risks are analysed and decisions are made to manage these risks as a part of the regular monitoring carried out by the Board and the management teams as described above. Risks are also evaluated when planning and making decisions on significant projects and investments. Risk management is integrated in the strategy process as a separate stage of analysis. There is no separate risk management organisation, but the associated responsibilities are assigned in line with the other business operations and organisation. The company's Board of Directors has included an annual review of risk management in its schedule of work.
Management compensation, benefits and incentive plans The fees paid to the Chairman and to the members of the Board for 2007 totalled EUR 24 thousand and EUR 48 thousand, respectively. No fees are paid to Board members employed by the company, however.
The total salaries and other benefits paid to Martela Oyj's Managing Director in 2007 were EUR 290 thousand. In addition, the Managing Director was paid a total of EUR 57 thousand in profit and share bonuses. The Managing Director may retire on a full pension at the age of 60 years. The period of notice of termination of contract is six months for both the Managing Director and the company, and if the company gives notice of termination of contract, the Managing Director is entitled to one-off compensation equivalent to 18 months' salary.
Bonus and incentive plans based on annual or shorter-term performance are in place in the Group to promote the achievement of short-term objectives. The amount of the incentive is influenced mainly by performance indicators.
The Managing Director, Group management and certain key persons participate in a long-term share-based incentive plan. The plan offers Martela's A shares when the targets set for the specified earnings period are achieved. The earnings periods are the calendar years 2007, 2008 and 2009. Any reward paid on the basis of the share reward system will be paid after the end of a period as a combination of shares and cash. The maximum bonus for the whole system is 153,000 Martela Oyj A shares and cash to the amount needed to cover taxes and similar charges, estimated to approximate the value of the shares to be paid. The achievement of the targets set for an earnings period determines the percentage of the maximum bonus to be paid to a key person. See the notes to the financial statements for information on the share-based incentive plan's effect on the result for the year.
No other compensation is paid based on membership of the Management Team or a subsidiary.
Martela complies with the Guideline for Insiders published by OMX Nordic Exchange Helsinki. The following are considered as insiders subject to disclosure requirements: the members of the Board of Directors, the Managing Director, the auditor, and the members of the Group's management team. Company-specific permanent insiders are people working in supervisory or expert duties in the Group, the execution of which requires regular access to information regarding the financial situation and outlook of the Group and its business units. If needed, project-specific insider registers can be drawn up. Martela's Board of Directors has decided that the abovementioned permanent insiders may only trade in the company's shares during the six weeks following the publication of interim reports or the financial statements, unless project-specific insider information otherwise prevents them from doing so.
Martela Oyj has joined the SIRE system maintained by the Finnish Central Securities Depository Ltd and up-to-date information on the holdings of the insiders subject to the disclosure requirement is available on the Martela website.
Largo, design Iiro Viljanen
24
Heikki Ala-Ilkka, born 1952, M.Sc. (Econ) Chairman of the Board of Martela Oyj since 2003, Member of the Board since 2002. Chief Financial Officer of Onninen Oy since 1996. Other key duties: Board member of Design Combus Oy. Owns 7 500 Martela Oyj A shares.
Pekka Martela, born 1950, M.Sc. (Econ) Vice Chairman of the Board of Martela Oyj since 2003, Member of the Board since 1981, Chairman of the Board 2002–2003, Vice Chairman of the Board 1994–2001. Managing Director of Marfort Oy since 2002. Other key duties: Board member of Marfort Oy. Owns 69 274 Martela Oyj K shares and 8 Martela Oyj A shares.
Tapio Hakakari, born 1953, LL.M. Member of the Board of Martela Oyj since 2003. Other key duties: Member of the Boards of Cargotec Corporation, Etteplan Oy, Havator Oy and Suomen Autoteollisuus Oy, and Chairman of the Boards of Esperi Care Oy and Enfo Oyj. Owns 25 200 Martela Oyj A shares.
Jori Keckman, born 1961, M.Sc. (Econ) Member of the Board of Martela Oyj since 2000. Managing Director of Lundia Oy since 2003. Other key duties: Board member of Oy Unicafe Ab. Owns 1 000 Martela Oyj A shares.
Matti Lindström, born 1948, Packer, Chief Shop Steward Member of the Board of Martela Oyj and Personnel Representative since 2005 and 1993–1996, Deputy Personnel Representative 2002–2004. At Martela since 1966. Does not own any Martela Oyj shares.
Heikki Martela, born 1956, M.Sc. (Econ), MBA Member of the Board of Martela Oyj since 1986, Chairman of the Board 2000–2002. Managing Director of Martela Oyj since 1 March 2002. Other key duties: Member of the Board of Marfort Oy. Owns 52 122 Martela Oyj K shares and 106,234 Martela Oyj A shares.
Jaakko Palsanen, born 1944, M.Sc. (Eng.) Member of the Board of Martela Oyj since 1993. Other key duties: Member of the Board of Coloured Wood Products Oy Owns 2 000 Martela Oyj K shares and 83,868 Martela Oyj A shares.
Raimo Santala, born 1959, Technician, Method Planning Technician Deputy Personnel Representative since 2005, Shop Steward for the salaried employees of the Nummela Plant. At Martela since 1988. Does not own any Martela Oyj shares.
SECRETARY TO THE BOARD Mats Danielsson, see Management Team
Heikki Martela, see Board of Directors Managing Director of Martela Oyj.
Panu Ala-Nikkola, born 1965, M.Sc. (Econ) Director, Business Area Finland Responsibilities: Sales, production and logistics in Finland. At Martela since 2001. Owns 3 400 Martela Oyj A shares.
Mats Danielsson, born 1969, M.Sc. (Econ) Finance Director Responsibilities: Group financial administration and IT. At Martela since 2007. Owns 2 000 Martela Oyj A shares.
Piotr Fic, born 1968, M.Sc. (Pharm) Director, Business Area Poland Responsibilities: Sales, production and logistics in Poland and its neighbouring areas. At Martela since 2005. Does not own any Martela Oyj shares.
Petteri Kolinen, born 1963, MA Director, Business Unit Surroundings Responsibilities: Surroundings furniture At Martela since 2007. Does not own any Martela Oyj shares.
Ilkka Koskimies, born 1955, M.Sc. (Econ) Director, Business Unit Office Responsibilities: Workstation furniture and Group brand At Martela since 1990 (excluding 1999). Does not own any Martela Oyj shares.
Jaakko Luhtasela, born 1954, M.Sc. (Eng) Production and Logistics Director Responsibilities: Group production, logistics and purchasing At Martela since 1985. Does not own any Martela Oyj shares.
Anders Olsson, born 1965, Engineer Director, Business Area Sweden and Norway Responsibilities: Sales, production and logistics in Sweden and Norway. At Martela since 2007. Does not own any Martela Oyj shares.
Sirpa Ontronen, born 1961, M.Sc. (Psych) HR Director Responsibilities: Group HR matters At Martela since 2002. Owns 200 Martela A shares.
Veli-Matti Savo, born 1964, Engineer Director, Business Area Export Responsibilities: sales to other European countries, Russia, Japan and other markets At Martela since 2002. Does not own any Martela Oyj shares.
Reino Tikkanen, Authorized Public Accountant, KPMG Oy Ab Deputy: KPMG Oy Ab
| Information for shareholders 29 |
|---|
| Board of Directors' Report 30 |
| Consolidated financial statements, IFRS 34 |
| Consolidated income statement 34 |
| Consolidated Cash Flow Statement 35 |
| Consolidated balance sheet 36 |
| Statement of changes in equity 38 |
| Notes to the Consolidated Financial Statements. 39 |
| Martela Group 2003 – 2007. 63 |
| Statistics on Martela Oyj shares. 64 |
| Calculation of Key Figures 66 |
| Parent Company Financial Statements, FAS 67 |
| Parent Company Income Statement 67 |
| Parent Company Balance Sheet. 68 |
| Parent Company's Cash Flow Statement. 70 |
| Accounting Policies for Parent Company Financial Statements 71 |
| Notes to Parent Company Financial Statements: 72 |
| Board of Directors' proposal for the distribution of profit 78 |
| Auditors' report 78 |
| Addresses 79 |
The Annual General Meeting of Martela Oyj will be held on Tuesday, 1 April 2008, starting at 3 p.m. at Takkatie 1, 00370 Helsinki. The names of shareholders wishing to attend the meeting should be entered in the shareholder register at the Finnish Central Securities Depository Ltd no later than 20 March 2008, and the shareholders should register with Johanna Suhonen at the Company's head office, tel. +358 (0)10 345 5301, fax +358 (0)10 345 5345, or by post to Martela Oyj, PL 44, FI-00371 Helsinki, no later than 4.30 p.m. on 27 March 2008.
The Board of Directors will propose to the Annual General Meeting that a dividend of EUR 0.50 per share is to be distributed for the year ended 31 December 2007. Only shareholders registered in the shareholder register maintained at the Finnish Central Securities Depository Ltd on the record date for dividend payment, 4 April 2008, will be entitled to the dividend proposed by the Board. Dividend payments will be made on 11 April 2008.
Publication of financial information
Martela will publish three interim reports in 2008: January–March (Q1) on 23 April 2008 January-June (Q2) on 6 August 2008
January-September (Q3) on 22 October 2008
Martela's Annual and Interim Reports are available in Finnish and English on the Group's websites www.martela.fi and www.martela.com. Annual reports are mailed to all shareholders.
Annual reports may also be ordered from: Martela Oyj, Takkatie 1, P.O. Box 44, FI-00371 Helsinki. Telephone +358 (0)10 345 5301, fax +358 (0)10 345 5345, or email [email protected]
Stock exchange releases will be published on the Martela Group's website immediately following publication. All stock exchange releases published during a financial year are available on the website in chronological order.
The market situation has continued to be favourable and both revenue and profit have improved according to plan. Revenue was EUR 128.4 million (119.7) in 2007, showing an increase of 7.3 per cent on the previous year. Profit grew to EUR 8.3 million (4.5) and was 6.4 per cent of revenue (3.8). The improvement was partly due to capital gains from the sale of assets totalling EUR 2.5 million (1.1). The financing position remained solid and the equity-to-assets ratio increased to 46.7 per cent (42.4).
The market situation improved in all of the Group's main market areas, with especially strong increase in invoicing in Sweden, Norway and Poland.
No changes took place in the Group structure in 2007. As this was the case also in 2006, the Group structure and financial statements figures are comparable.
Martela has one primary segment, which is the furnishing of offices and public spaces. The revenue and result are as recorded in the consolidated financial statements. The Group's secondary segment is customers according to geographic location.
Revenue for 2007 rose to EUR 128.4 million (119.7), an increase of 7.3 per cent. All of the Group's main market areas contributed to the increase.
Revenue rose to EUR 85.5 million in Finland, an increase of 3.1 per cent. In Scandinavia, revenue rose to EUR 26.6 million, an increase of 18.7 per cent.
Revenue in the Polish market rose to EUR 9.8 million (7.4), showing an increase of 33.8 per cent. In Poland, the company has an assembly plant and also sales centres in seven locations. A new centre was opened in Łódž in 2007.
Profit before taxes was EUR 7.6 million (3.7) in 2007. Capital gains from the sale of assets totalling EUR 2.5 million (1.1) contributed to the improvement. Profit improved in all Group units.
Of the capital gains, EUR 1.0 million was recognised in the first quarter and most of it was from the sale of the Bodafors plant. Ownership of the plant property was outsourced and some 50 per cent of the plant's surface area was leased back on a long-term lease. The property at Oulu facility was also divested in the second quarter, bringing EUR 0.9 million in capital gains. Operations in Oulu will continue under a long-term lease.
Operating profit for January-December, excluding non-recurring items, was EUR 5.8 million (3.4), which corresponds to 4.5 per cent (2.8) of revenue.
The taxes recognised in the income statement derive from a decrease in deferred tax assets recognised earlier, paid income taxes and tax refunds from previous years.
The Group's gross capital expenditure for January-December was EUR 3.2 million (1.8). EUR 0.7 million of this was attributable to the ownership rearrangements at the Bodafors plant, as a result of which the long-term lease liability for the part leased back was recognised in the consolidated balance sheet in accordance with the IFRS. The remaining capital expenditure concerns production replacements and IT investments.
The Group employed 663 (626) people on average, up by 5.9 per cent. In the end of 2007, the Group employed 655 people (632).
Product development and collection management are the responsibility of two Group-level organisations: Business Unit Office, which is responsible for workstation furniture, and Business Unit Surroundings, which is responsible for furniture for surroundings and other public spaces.
During 2007, product development employed 22 (21) people and product development expenses accounted for 2.4 (2.1) per cent of revenue.
The Pinta workstation collection was launched at the Stockholm Furniture Fair in the first quarter of 2007. Pinta is based on a single, uniform range of tabletops, with base options to suit specific customer needs. At the Stockholm fair, we also introduced screen and storage solutions that improve acoustics and the SoftX chair designed by Julia Läufer and Marcus Keichel.
In April, the Surroundings business unit introduced new furniture for surroundings at the Milan Furniture Fair in Italy. They included Stefan Lindfors' Menu chair and Samuli Naamanka's Sides chair.
The aim of Martela's environmental management policy is to provide customers with durable, long lasting products that promote safety and high quality in the working environment, and whose production harms the natural environment as little as possible.
Martela Oyj applies the ISO 14001:2004 standard in environmental management. The purpose of environmental management systems is to reduce the environmental load of products throughout their life cycles, and to increase the re-use and recycling of materials. Martela pays particular attention to the recycling and potential re-use of discarded furniture by offering recycling services to its customers. Martela Oyj's environmental system certification will be valid until the end of 2008 and also covers Kidex Oy's operations. P.O. Korhonen Oy also has its own certified environmental system. Environmental management is discussed in the annual report.
Cash flow from business operations for January-December was EUR 9.9 million (0.9). Cash flow from investing activities was EUR 0.7 million positive as a result of the sale of property. EUR 1.2 million in loans were granted to Alexander Management Oy to finance the acquisition of shares for a three-year share-based incentive system. Interest-bearing liabilities decreased by EUR 2.7 million from the beginning of the year, and totalled EUR 14.4 million (17.1) at year-end. Liquid assets amounted to EUR 9.7 million (3.9) at the end of the period. The equity-to-assets ratio rose to 46.7 per cent (42.4) and gearing improved correspondingly to 16.0 per cent (53.0).
During January-December, 1 159 509 (1 076 693) of the company's A shares were traded on the OMX Nordic Exchange in Helsinki, corresponding to 32.7 per cent (30.3) of all A shares. The value of trading was EUR 10.0 million (7.3). The increase was partly caused by the acquisition of shares in the first quarter by Alexander Management Oy for the three-year share-based incentive system. A total of 143 166 shares were acquired for EUR 1.2 million in cash. The value of a share was EUR 6.50 at the beginning of the year and EUR 8.35 at the end of the year. During the review period the share price was EUR 10.35 at its highest and EUR 6.39 at its lowest. At the end of 2007, equity per share was EUR 7.2 (6.1).
Martela did not purchase any of its own shares for the Treasury in 2007. On 31 December 2007, Martela owned 67 700 of its own A shares, which had been purchased at an average price of EUR 10.65. Martela's holding of treasury shares amounts to 1.6 per cent of all shares and 0.4 per cent of all votes.
The Annual General Meeting of Martela Oyj was held on Tuesday, 20 March 2007. The AGM adopted the financial statements and discharged those responsible for the accounts from further liability. The AGM decided, in accordance with the Board of Directors' proposal, to distribute a dividend of EUR 0.25 per share. The meeting elected Heikki Ala-Ilkka, Tapio Hakakari, Heikki Martela, Pekka Martela, Jori Keckman and Jaakko Palsanen as members of the Board of Directors for the next term. Matti Lindström was elected as the staff representative and Raimo Santala as his deputy.
Reino Tikkanen, Authorised Public Accountant, was elected as the auditor of the company, with KPMG Oy Ab as the deputy auditor.
The AGM also approved the Board of Directors' proposals detailed in the notice of meeting to authorise the Board to acquire and/or dispose of the company's own shares.
The authorisation applies to the company's A series shares and to a maximum of 5 per cent of the company's share capital or 207 780 A series shares. The shares may be assigned as part of the salary and incentive system, as consideration when the company acquires property associated with its business operations and as consideration in any merger or acquisition, in a way and to the extent decided by the Board of Directors. Assignment of shares can also be carried out in public trading on the OMX Nordic Exchange Helsinki. The authorization is valid for 12 months as of the decision of the Annual General Meeting.
The new Board of Directors convened after the Annual General Meeting and elected Heikki Ala-Ilkka as Chairman and Pekka Martela as Vice Chairman.
On 14 February 2007, Martela's Board of Directors decided on a share-based incentive system for key personnel for 2007–2009. The number of A shares that can be earned through the system depends on the attainment of targets. The maximum bonus for the whole system is 153 000 Martela Oyj A shares and cash to the amount needed to cover taxes and similar charges, estimated to approximate the value of the shares to be paid. The company has outsourced management of the incentive system to Alexander Management Oy, which acquired all the necessary shares from OMX Nordic Exchange Helsinki during the first quarter with a EUR 1.2 million loan granted by Martela.
It is estimated that the greatest risks to the improvement of profit performance relate to the continuation of general economic growth and the consequent overall demand for office furniture.
Risks of damage are covered with appropriate insurance and they provide comprehensive coverage for property, business interruption, supplier interruption loss and loss liability risks. Martela uses the services of an external insurance broker to manage insurance matters.
Finance risks are discussed in the notes to the financial statements.
The principles of risk management are discussed under corporate governance in the annual report.
Non-business-related assets were sold in early 2008, which will improve the result of the first quarter by some EUR 0.6 million.
In the beginning of 2008, Martela made a decision to establish a company in Russia. According to its plan, the company will import and market Martela products and promote the Martela brand in Russia. Sales to key customers will take place through the new company directly, and to other customers through the Martela dealer network. Until now, Martela's sales in Russia have taken place from Finland through local dealers.
The Group's result for 2008 is expected to improve further on 2007. The outlook is supported by the solid order books of early 2008 and the continuing growth of office building.
Helsinki, 19 February 2008 Martela Oyj Board of Directors
| *OWPJDJOHCZNBJONBSLFUBSFBT &63NJMMJPO | |||||
|---|---|---|---|---|---|
| 1-12 2007 | % | 1-12 2006 | % | Change, % | |
| Finland | 85.8 | 66.7% | 83.0 | 69.3% | 3.4% |
| Scandinavia | 26.4 | 20.5% | 22.3 | 18.6% | 18.3% |
| Other regions * | 16.5 | 12.8% | 14.5 | 12.1% | 13.7% |
| Total | 128.7 | 100.0% | 119.8 | 100.0% | 7.4% |
* Invoicing on the Polish market was EUR 9.8 million (7.4), growth 34%
| 2VBSUFSMZJOWPJDJOHCZNBJONBSLFUBSFBT &63NJMMJPO | ||||||||
|---|---|---|---|---|---|---|---|---|
| 1/2006 | 2/2006 | 3/2006 | 4/2006 | 1/2007 | 2/2007 | 3/2007 | 4/2007 | |
| Finland | 19.0 | 18.4 | 19.5 | 26.1 | 19.6 | 20.7 | 20.7 | 24.8 |
| Scandinavia | 5.1 | 4.6 | 6.2 | 6.4 | 6.5 | 5.9 | 6.8 | 7.2 |
| Other regions | 2.8 | 4.3 | 3.0 | 4.3 | 3.9 | 3.7 | 3.8 | 5.1 |
| Total | 26.9 | 27.3 | 28.8 | 36.8 | 30.0 | 30.3 | 31.3 | 37.1 |
| 3FTVMUCZRVBSUFSZFBS &63NJMMJPO | ||||||||
|---|---|---|---|---|---|---|---|---|
| 1/2006 | 2/2006 | 3/2006 | 4/2006 | 1/2007 | 2/2007 | 3/2007 | 4/2007 | |
| Profit before taxes | -0.3 | 0.6 | 0.7 | 2.7 | 1.5 | 2.4 | 1.2 | 2.4 |
| 2007 | 2006 | 2005 | 2004 |
|---|---|---|---|
| 128.4 | 119.7 | 102.2 | 100.7 |
| 7.3 | 17.1 | 1.5 | -1.4 |
| 5.8 | 3.4 | 1.1 | -2.6 |
| 4.5 | 2.8 | 1.1 | -2.6 |
| 19.6 | 11.0 | 4.3 | -2.2 |
| 19.8 | 11.4 | -0.5 | -8.1 |
| 46.7 | 42.4 | 40.8 | 39.3 |
| 16.0 | 53.0 | 62.8 | 56.4 |
| 663 | 626 | 610 | 662 |
| 193.7 | 191.3 | 167.6 | 152.2 |
| 1-12/2007 | 1-12/2006 | Change, % | |
|---|---|---|---|
| Finland | 518 | 501 | 3.4% |
| Scandinavia | 71 | 75 | -5.3% |
| Poland | 74 | 50 | 48.0% |
| Group total | 663 | 626 | 5.9% |
| &63 /PUF m |
m |
|---|---|
| REVENUE 1 128 445 |
119 727 |
| Other operating income 2 3 023 |
1 429 |
| Changes in inventories of finished goods | |
| and work in progress 466 |
124 |
| Raw material and consumables used -63 136 |
-59 347 |
| Production for own use 42 |
47 |
| Employee benefits expenses 3 -28 723 |
-27 562 |
| Depreciation and impairment 4 -3 231 |
-3 332 |
| Other operating expenses 5 -28 608 |
-26 587 |
| OPERATING PROFIT(-LOSS) 8 278 |
4 499 |
| Financial income 7 165 |
125 |
| Financial expenses 7 -891 |
-923 |
| PROFIT (-LOSS) BEFORE TAXES 7 552 |
3 701 |
| Income taxes 8 -2 165 |
-977 |
| PROFIT (-LOSS) FOR THE | |
| FINANCIAL YEAR 5 387 |
2 723 |
| Attributable to: | |
| Equity holders of the parent 5 387 |
2 723 |
| Minority interest 0 |
0 |
| Earnings per share for the profit attributable to the | |
| equity holders of the parent: | |
| Basic earnings/share, EUR 9 1,3 |
0,7 |
| Diluted earnings/share, EUR 9 1,3 |
0,7 |
| &63 | m | m |
|---|---|---|
| CASH FLOWS FROM OPERATING ACTIVITIES | ||
| Cash flow from sales | 130 833 | 114 537 |
| Cash flow from other operating income | 550 | 364 |
| Payments on operating costs | -121 090 | -113 292 |
| Net cash from operating activities before financial | 10 294 | 1 609 |
| items and taxes | ||
| Interest paid | -842 | -691 |
| Interest received | 82 | 48 |
| Other financial items | -21 | -84 |
| Dividends received | 1 | 3 |
| Taxes paid | 382 | -18 |
| Net cash from operating activities (A) | 9 895 | 867 |
| CASH FLOWS FROM INVESTING ACTIVITIES | ||
| Capital expenditure on tangible and intangible assets | -2 256 | -1 840 |
| Proceeds from sale of shares in subsidiaries | 2 150 | 0 |
| Proceeds from sale of tangible and intangible assets | 2 028 | 2 992 |
| Loans granted | -1 193 | 0 |
| Repayments on loan receivables | 11 | 6 |
| Net cash used in investing activities (B) | 740 | 1 158 |
| CASH FLOWS FROM FINANCING ACTIVITIES | ||
| Proceeds from short-term loans | 976 | 1 783 |
| Repayments of short-term loans | -1 704 | -1 546 |
| Repayments of long-term loans | -3 108 | -2 689 |
| Dividends paid and other profit distribution | -1 022 | -613 |
| Net cash used in financing activities (C) | -4 858 | -3 065 |
| CHANGE IN CASH AND CASH EQUIVALENTS | 5 778 | -1 041 |
| Cash and cash equivalents at beginning of year 1) | 3 911 | 4 963 |
| Translation differences | 2 | -10 |
| Cash and cash equivalents at end of year 1) | 9 691 | 3 911 |
| &63 | /PUF | ||
|---|---|---|---|
| ASSETS | |||
| Non-current assets | |||
| Intangible assets | 10 | 633 | 662 |
| Tangible assets | 11 | 14 151 | 15 784 |
| Investments in associates | 12 | 22 | 22 |
| Available-for-sale financial assets | 14, 15 | 31 | 40 |
| Investment properties | 13 | 1 203 | 1 166 |
| Receivables | 14, 16 | 623 | |
| Pension receivables | 26 | 35 | 18 |
| Deferred tax assets | 17 | 240 | 776 |
| Non-current assets, total | 16 938 | 18 468 | |
| Current assets | |||
| Inventories | 18 | 13 635 | 11 938 |
| Trade receivables | 14, 19 | 21 443 | 23 903 |
| Loan receivables | 14, 19 | 25 | 38 |
| Accrued income and prepaid expenses | 14, 19 | 2 064 | 732 |
| Current tax receivable | 4 | 119 | |
| Financial assets at fair value through | |||
| profit and loss | 14, 20 | 2 004 | 1 943 |
| Cash and cash equivalents | 21 | 7 686 | 1 968 |
| Current assets, total | 46 861 | 40 641 | |
| ASSETS, TOTAL | 63 800 | 59 109 |
| &63 | /PUF | ||
|---|---|---|---|
| EQUITY AND LIABILITIES | |||
| Equity attributable to equity holders of the parent |
23 | ||
| Share capital | 7 000 | 7 000 | |
| Share premium account | 1 116 | 1 116 | |
| Other reserves | 117 | 117 | |
| Treasury shares | -721 | -721 | |
| Translation differences | -129 | -129 | |
| Retained earnings | 22 127 | 17 542 | |
| Equity, total | 29 510 | 24 925 | |
| Non-current liabilities | |||
| Deferred tax liabilities | 17 | 1 553 | 175 |
| Interest-bearing liabilities | 14, 25 | 10 453 | 12 844 |
| Non-current liabilities, total | 12 006 | 13 019 | |
| Current liabilities | |||
| Interest-bearing | |||
| Current portion of interest-bearing | 14, 25 | 3 831 | 4 062 |
| borrowings | |||
| Bank overdrafts | 14, 25 | 137 | 209 |
| Interest-bearing current liabilities, total | 3 969 | 4 271 | |
| Non-interest-bearing | |||
| Advances received | 14, 27 | 545 | 270 |
| Trade payables | 14, 27 | 7 718 | 6 602 |
| Accrued liabilities and prepaid income | 14, 27 | 5 516 | 5 148 |
| Current tax payables | 556 | 37 | |
| Other current liabilities | 14, 27 | 3 980 | 4 837 |
| Non-interest-bearing current liabilities, total | 18 315 | 16 894 | |
| LIABILITIES, TOTAL | 34 290 | 34 184 | |
| EQUITY AND LIABILITIES, TOTAL | 63 800 | 59 109 |
| Share capital | Share premium account |
Other reserves |
Treasury shares |
Translation differences |
Retained earnings |
Equity, total |
|
|---|---|---|---|---|---|---|---|
| Equity 1.1.2006 | 7 000 | 1 116 | 117 | -721 | -108 | 15 432 | 22 836 |
| Translation differences | -21 | -21 | |||||
| Taxes on items recognised | |||||||
| in equity or transferred | |||||||
| from equity | 0 | ||||||
| Net income recognised | |||||||
| directly in equity | -21 | -21 | |||||
| Profit for the financial year | 2 723 | 2 723 | |||||
| Total recognized income and | |||||||
| expense for the financial year | -21 | 2 723 | 2 702 | ||||
| Dividends | -613 | -613 | |||||
| Share issue | 0 | 0 | |||||
| -21 | 2 110 | 2 089 | |||||
| Equity 31.12.2006 | 7 000 | 1 116 | 117 | -721 | -129 | 17 542 | 24 925 |
| Cash flow hedges | 0 | ||||||
| Translation differences | 0 | ||||||
| Other change | 153 | 153 | |||||
| Taxes on items recognised | |||||||
| in equity or transferred | 0 | ||||||
| from equity | |||||||
| Net income recognised | |||||||
| directly in equity | 153 | 153 | |||||
| Profit for the financial year | 5 387 | 5 387 | |||||
| Total recognized income and expense for the financial year |
5 540 | 5 540 | |||||
| Dividends | -1 022 | -1 022 | |||||
| Share-based incentives | 67 | 67 | |||||
| 4 585 | 4 585 | ||||||
| Equity 31.12.2007 | 7 000 | 1 116 | 117 | -721 | -129 | 22 127 | 29 510 |
The Martela Group makes office furniture and designs and implements a wide range of solutions for the working environment.
The Group's parent company is Martela Oyj, a Finnish public limited company domiciled in Helsinki, street address Takkatie 1, FI-00370 Helsinki.
Copies of the Group's financial statements are available at Takkatie 1, FI-00370 Helsinki, and on the Internet at Martela's home pages www.martela.com.
Policies used in compiling the financial statements Martela's consolidated financial statements are prepared in accordance with the International Financial Reporting Standards (IFRS). As referred to in the Finnish Accounting Act and in ordinances issued pursuant to the provisions of this Act, the International Financial Reporting Standards refer to the standards and their interpretations adopted in accordance with the procedure laid down in regulation (EC) No 1606/2002 of the EU. The notes to the consolidated financial statements also conform with the Finnish accounting and company legislation.
The consolidated financial statements are presented in thousands of euros and have been prepared on the historical cost basis except as disclosed in the accounting policies.
The preparation of the financial statements in conformity with IFRS requires management to make estimates and assumptions that affect the contents of the financial statements, and to use judgement when applying accounting policies. The section "Accounting policies requiring management's judgement and key sources of estimation uncertainty" refers to the judgements made by management and those financial statement items on which judgements have a significant effect.
The consolidated financial statements include the parent company, Martela Oyj, and all the subsidiaries in which the parent company controls, directly or indirectly, more than 50 per cent of the voting power of the shares, or otherwise has control.
Associates are companies in which the Group has significant influence. Significant influence occurs when a group controls more than 20 per cent of a company's voting power or when a group otherwise has significant influence but no control.
Subsidiaries are included in the financial statements by using the purchase method. The Group's internal business transactions, unrealised margins on internal deliveries, internal receivables and liabilities and internal profit distribution are eliminated.
Under an exemption permitted by IFRS 1, business combinations before the IFRS adoption date have not been restated to comply with the IFRS. In accordance with the previous Finnish practice, the difference between the cost of a business combination and its equity on the acquisition date has been allocated to buildings. The difference allocated to buildings is amortised in line with the planned depreciation of the buildings.
Transactions in foreign currencies are translated at the exchange rate prevailing on the date of the transaction – in practice, for transactions taking place within any given month, a rate is used that approximates the rate of the transaction date. On the balance sheet date, the monetary receivables and liabilities are translated into functional currencies at the exchange rate of the balance sheet date. Exchange rate gains and losses related to purchases and sales are treated as adjustments to the respective items. Exchange rate gains and losses in financing are treated as adjustments to financial income and expenses.
The income statements of foreign subsidiaries are translated into euros at the weighted average rates for the financial year, and the balance sheets at the average rates of the European Central Bank on the balance sheet date. The translation of the profit/loss for the year at different exchange rates in the income statement and balance sheet cause a translation difference which is recognised in shareholders' equity. The exchange rate differences arising from elimination of the acquisition cost of foreign subsidiaries and the exchange rate differences arising from the post-acquisition equity are recognised in shareholders' equity. Similar treatment has been applied to intragroup long-term loans which in substance are equity and form a part of net investment. When a subsidiary is disposed of, the accumulated translation differences are recognised in the income statement as part of the sales gains or losses.
Grants received from the government or other sources are entered in the income statement as income from other operations when they are to be recognised as income. Grants related to the acquisition of fixed assets are recognised as deductions from the carrying amount of the asset. Grants are recognised as income over the life of a depreciable asset by way of a reduced depreciation charge.
Research and development
Although research and development is active and continuous in the group, individual development projects are of such a scope in relation to operations that the capitalisation criteria are not fulfilled. Research and development expenditure is recognised as an expense as incurred.
R&D-related equipment is capitalised in machinery and equipment.
Other intangible assets include software licences, patents and other corresponding rights. Patents, licences and other rights are measured at the original cost, less depreciation and any impairment.
| The useful lives of intangible assets are as follows: | |
|---|---|
| Licences | 3 – 5 years |
| Patents and other corresponding rights | 10 years |
Land, buildings, machinery and equipment constitute the majority of tangible fixed assets. They are measured in the balance sheet at original cost or deemed cost, less accumulated depreciation and any impairment. Under an exemption permitted by IFRS 1, an item of property, plant and equipment may be measured at the date of transition to IFRS at its fair value, and that value may be used as its deemed cost at that date.
When a separate asset item is renewed, the expenditure related to the new item is capitalised. Other expenditure arising later is capitalised only when future economic benefits flow to the company. Other expenditure for repairs or maintenance is recognised through profit or loss when it is incurred.
Depreciation is calculated on a straight-line basis over the estimated useful life of the asset. Land is not depreciated. The depreciation periods are as follows:
| Buildings | 15 – 30 years |
|---|---|
| Machinery and equipment | 3 – 8 years |
The residual value and useful life of assets is reviewed in each financial statements and, if necessary, is adjusted to reflect changes in the expected useful life.
Profits and losses from the sale or disposal of fixed assets are recognised in the income statement.
Land-areas that are held for currently undetermined future use are classified as investment properties. They are measured at original cost, less impairment loss.
The carrying amounts of asset items are assessed at each balance sheet date to observe whether there are any indications that an asset may be impaired. If such indications exist, the recoverable amount of the asset will be estimated at the higher of its fair value less the costs of disposal or of its value in use. An impairment loss is recognised if the balance sheet value of an asset or cash generating unit exceeds the recoverable amount. Impairment losses are recognised in the income statement.
If there are indications that impairment losses no longer exist or that they have diminished, the recoverable amount is estimated.
A previously recognised impairment in the income statement is reversed if the estimates used in measuring the recoverable income are materially changed. However, an impairment loss cannot be reversed to an extent more than what the carrying amount of the asset or cash generating unit would be without recognition of an impairment loss.
Leases concerning tangible assets in which the Group has substantially all the risks and rewards incident to ownership are classified as finance leases. Asset items purchased by finance leasing, less accumulated depreciation, are capitalised in tangible assets These asset items are depreciated in accordance with the shorter of 1) the useful lives of the tangible asset, or 2) the lease term. Lease obligations are included in interest-bearing liabilities.
Leases in which substantially all the risks and rewards incident to ownership of an asset remain with the lessor are classified as operating leases and are recognised as an expense in the income statement on a straight line basis over the lease term.
Inventories are recognised at the lower of cost or net realisable value. The value of inventories is determined by the FIFO method and it includes all direct expenditure incurred by acquiring the inventories and also a part of the variable and fixed overhead costs of manufacture.
The Group has arranged defined contribution plans and defined benefit plans for retirement. Contributions made to defined contribution plans are recognised in the income statement as an expense as incurred.
The obligations of defined benefit plans are calculated separately for each plan. The projected unit credit method is used in the calculation. Pension costs are recognised as an expense for the service period of personnel on the basis of calculations performed by qualified actuaries. In calculating the present value of a pension obligation, the market yield of corporate high-grade bonds or the interest rate of government bonds are used as the discount rate. Their maturity corresponds to a significant extent with the maturity of the computed pension liability.
The accumulated actuarial gains and losses of defined benefit plans are recognised in the income statement for the average remaining service period of personnel to the extent that they exceed the larger of the following: 10 per cent of the present value of the defined benefit obligation or 10 per cent of the fair value of the plan assets.
The group has a single share-based incentive system in which payments are made in a combination of shares and cash. Share rewards are measured at fair value at the time of their issuance and recognised as expenses for the period when they arose. The terms concerning the arising of rights to share rewards are taken into account in the number of shares to which a right is deemed to arise at the end of the validity period. Measurements are adjusted at each date of reporting. The determination of the fair value of the reward takes place in two parts under the IFRS 2 standard: a part settled as shares and a part settled as cash. The part settled as shares is recognised under shareholder's equity and the cash share under liabilities. The expense determined at the time of granting the share-based incentives is based on the Group's estimate of the number of shares to which a right is expected to arise at the end of the day when the rights arise. The assumed right takes account of the maximum incentive, the assumed achievement of non-market based earnings targets and the reduction of persons. The Group updates the estimate of the final number of shares at each balance sheet date. Their impact on financial results is presented in the income statement under employment benefits expenses.
A provision is recognised when the Group has a legal or constructive obligation as a result of a past event, and it is probable that on outflow of economic benefits will be required to settle the obligation. If it is possible to receive compensation for part of the obligation from a third party, the compensation is recognised as a separate asset item, but only when receipt of the compensation is virtually certain. The Group has no such provisions.
The taxes recognised in the consolidated income statement include current tax, taxes for previous years and changes in deferred taxes.
Deferred tax assets and liabilities are recognised, in accordance with the liability method, on temporary differences between the tax values and IFRS carrying values of asset and liability items.
A deferred tax asset is recognised only to the extent that it is probable that taxable profit will be available against which it can be used.
The main temporary differences arise in Martela Oyj's unused tax losses and in the measurement of buildings at fair value in accordance with the exemption permitted by the IFRS 1 transition standard.
Deferred taxes are calculated by using the tax rates enacted by the balance sheet date.
Revenue is recognised in the income statement when the significant risks and rewards of ownership of the sold goods have been transferred to the buyer. In general, revenue is recognised in the income statement at the time of delivery of the goods in compliance with contract terms.
Revenue from the services rendered is recognised when the service has been performed.
Operating profit is the Group's profit from operations before financial items and taxes. Exchange rate differences in the measurement of trade receivables and payables are recognised as part of operating profit.
The Group has applied the IAS 39 Financial Instruments: Recognition and Measurement standard. Under the standard, the Group's financial assets have been classified into the following groups: financial assets at fair value through profit or loss, loans and receivables, and available-for-sale financial assets. The classification depends on the purpose of acquiring the financial assets, and they are classified at the time of initial acquisition. All purchases and sales of financial assets are recognised on the date when the transaction was made.
Derivatives and investments in mutual fund units are classified as financial assets at fair value through profit or loss. Investments are measured at fair value on the basis of published price quotations in an active market, and changes in fair value are recognised in the income statement in the year in which they arise. Derivatives that do not meet the terms of IAS 39 hedge accounting have been classified as being held for trading purposes. The fair values of derivatives based on share market prices on the balance sheet date and changes in the fair values are recognized in the income statement for the period in which they arise.
Loans and receivables include non-derivative financial assets with fixed or determinable payments; these assets are not quoted in an active market or are not held by the company for trading purposes. This group includes the Group's financial assets gained by transferring money, goods or services to debtors. They are measured at amortised cost and are included in either current or non-current financial assets (they are included in the latter if they mature over 12 months later). In addition to loan receivables, the group includes trade and other receivables. Trade receivables are originally recognised at fair value and then at amortised cost, less any impairment.
Available-for-sale financial assets include various unlisted shares that are measured at cost in the financial statements, because their fair value cannot be reliably defined and the acquisition cost is deemed to be the best estimate of fair value. They are included in non-current assets.
Cash and cash equivalents comprise cash in hand , in banks and in demand bank deposits, as well as other current, very liquid investments.
Financial liabilities are initially recognised at fair value on the basis of the consideration received and will be measured later at amortised cost. Financial liabilities are included in current and non-current liabilities and they can be interest-bearing or non-interest-bearing. Bank overdrafts are included in current interest-bearing liabilities. Borrowing costs are recognised as an expense in the period in which they are incurred. In addition to loan receivables, the group includes trade and other receivables. The basis for their measurement is the amortised cost.
On the balance sheet date, the Group will assess whether objective evidence exists of the impairment of individual financial asset items or a group of financial assets. Impairment will be recognised through profit or loss.
The Group will recognise an impairment loss on trade receivables when evidence exists that the receivables cannot be collected in full. A debtor's substantial financial difficulties, the likelihood of insolvency and neglect of payments, for example, are indications of impairment. The impairment of a receivable is recognised in the income statement under other operating expenses. If the impairment loss amount decreases in another later period, the recognised loss will be cancelled through profit or loss.
Outstanding preference shares are shown as share capital. The share capital consists of K and A series shares. The shares of both series have identical dividend rights but K series shares confer 20 votes and A series shares 1 vote at general meetings of shareholders. Expenses related to the issuance and acquisition of equity instruments are reported as deductions from equity. If Martela Oyj buys back its own equity instrument, their acquisition cost will be deducted from share capital.
Dividend distribution proposed by the Board of Directors to the Annual General Meeting is not entered in the books but will be booked when the decision is made by the Annual General Meeting. Accounting policies requiring management's judgement and key sources of estimation uncertainty
In preparing the financial statements it is necessary to make forwardlooking estimates and assumptions which may not, in fact, turn out to be true. In addition, it is necessary to use judgement in applying accounting policies to the financial statements. The estimates are mainly based on the utilisation of deferred tax assets against future taxable income, and on the measurement of asset items.
The IASB has announced the following new and amended standards and interpretations which have not yet come into force and which the Martela Group has not yet adopted. The Group will adopt them as of the date when each standard and interpretation comes into force or, if the date is not the first date of a financial year, of the beginning of the subsequent financial year.
IFRIC 11/IFRS 2 – Group and Treasury Share Transactions (in force in financial years beginning on 1 March 2007 or later). The new interpretation does not affect the coming consolidated financial statements.
IFRIC 12 Service Concession Arrangements. The Group has no agreements with the public sector as referred to in the interpretation and hence the interpretation has no affect on the coming consolidated financial statements.
IFRIC 13 Customer Loyalty Programmes (in force in financial years beginning after 1 July 2008). The Group has no customer loyalty agreements as referred to in the interpretation and hence the interpretation has no affect on the coming consolidated financial statements.
IFRIC 14/IAS 19 The Limit on a Defined Benefit Asset, Minimum Requirements and their Interaction (in force in financial years beginning on 1 January 2008). The new interpretation has no material bearing on the coming consolidated financial statements.
IFRS 8 Operating Segments (in force in financial years beginning after 1 January 2009). IFRS 8 will replace the IAS 14 Segment Reporting standard. According to preliminary estimate, the implementation of IFRS 8 will mainly influence the way segment information is presented in the notes to the coming financial statements.
Amendment of the IAS 23 Borrowing Costs standard (in force in financial years beginning on 1 January 2009). The Group has recognised debt liabilities as expenses as was earlier allowed for the financial year in which they arose. However, the implementation of the revised standard will not have material bearing on the coming financial statements.
Amendment of the IAS 1 Presentation of Financial Statements standard (in force in financial years beginning on 1 January 2009). The revised standard changes the presentation of the financial statements.
The group's business segment, i.e. the furnishing of offices and public spaces, is the primary reporting format. The group's geographical segments are the secondary reporting format. Revenue from the geographical segments is reported according to the location of customers, and assets are reported according to their location. The segments' assets include intangible and tangible assets, inventories and receivables excluding tax-related items and financial assets at fair value through profit and loss. Capital expenditure comprises increases in tangible fixed assets and intangible assets that are in use for more than one year.
The geographical segment is shown for three areas: Finland, Scandinavia, Other areas.
2007 (EUR 1,000)
| Geographical segments | Finland | Scandinavia | Other areas | Elim. | Unallocated | Total |
|---|---|---|---|---|---|---|
| Revenue | 85 503 | 26 551 | 16 391 | 0 | 0 | 128 445 |
| Segment assets | 52 337 | 8 197 | 6 791 | -8 197 | 4 672 | 63 800 |
| Capital expenditure | 2 088 | 843 | 317 | 0 | 0 | 3 248 |
| 2006 (EUR 1,000) | ||||||
| Geographical segments | Finland | Scandinavia | Other areas | Elim. | Unallocated | Total |
| Revenue | 82 920 | 22 364 | 14 414 | 29 | 0 | 119 727 |
| Segment assets | 49 215 | 10 003 | 4 377 | -8 684 | 4 198 | 59 109 |
| Capital expenditure | 1 598 | 78 | 148 | 0 | 0 | 1 824 |
| 2. Other operating income | ||||||
| 1.1. – 31.12.2007 | 1.1. – 31.12.2006 | |||||
| Gains on sale of tangible assets | 2 473 | 1 066 | ||||
| Rental income | 190 | 207 | ||||
| Public subsidies | 139 | 126 | ||||
| Other income from operations | 221 | 30 | ||||
| Total | 3 023 | 1 429 |
In June 2007, the parent company Martela Oyj sold the entire stock of its subsidiary Kiinteistöyhtiö Oy Oulu Kaarnatie 14, a property company that is not part of its core business. The sale price was EUR 2 150 thousand and the Group recorded total gains of EUR 879 thousand from the sale. Martela has leased the property for its own use on a long-term lease, which has been classified as an operative lease.
In 2007, the subsidiary Martela Ab sold the plant facilities in Bodafors and leased a part of them back on a long-term basis. This lease is classified as a finance leaseagreement. These sales generated gains of EUR 980 thousand, which were entered as consolidated capital gains.
| 1.1. – 31.12.2007 | 1.1. – 31.12.2006 | |
|---|---|---|
| Salaries and wages | 22 617 | 21 872 |
| Pension expenses, defined contribution plans | 3 642 | 3 600 |
| Pension expenses, defined benefit plans | 147 | 130 |
| Part paid as shares | 67 | 0 |
| Part paid as cash | 89 | 0 |
| Other salary-related expenses | 2 160 | 1 960 |
| Personnel expenses in the income statement | 28 723 | 27 562 |
| Other fringe benefits | 481 | 465 |
| Total | 29 203 | 28 027 |
A total of EUR 419 thousand for 2007 and EUR 659 thousand for 2006 were recognised in the result from incentives and salary-related expenses associated with the incentive scheme. Salaries and fees and share-based payments made to management are presented in more detail under note 31 Related-party transactions.
| Personnel | ||
|---|---|---|
| Average personnel, workers | 341 | 329 |
| Average personnel, officials | 322 | 297 |
| Personnel at year end | 655 | 626 |
| Average personnel in Finland | 518 | 501 |
| Average personnel in Sweden | 67 | 71 |
| Average personnel in Norway | 4 | 4 |
| Average personnel in Poland | 74 | 50 |
| Total | 663 | 626 |
| Depreciation | ||
|---|---|---|
| Intangible assets | 295 | 202 |
| Tangible assets | ||
| Buildings and structures | 791 | 908 |
| Machinery and equipment | 2 146 | 2 222 |
| Depreciation, total | 3 231 | 3 332 |
Other operating expenses are reported by type of expense. They include all sales, marketing, administration, production and product development expenses allocated to actual business operations.
Other operating expenses also include auditor's fees for auditing, EUR 103 thousand (EUR 95 thousand in 2006) and for other services, EUR 41 thousand (EUR 17 thousand in 2006).
The income statement recognised research and development expenses of EUR 3 098 thousand in 2007 (EUR 2 283 thousand in 2006).
| 7. Financial income and expenses | ||
|---|---|---|
| 1.1. – 31.12.2007 | 1.1. – 31.12.2006 | |
| Financial income | ||
| Dividend income on other financial assets | 1 | 3 |
| Interest income on loans and othe receivables | 82 | 48 |
| Foreign exchange gain on loans and other receivables | 21 | 5 |
| Other financial income | 0 | 4 |
| Change in value of assets at fair | ||
| value through profit or loss | 61 | 65 |
| 165 | 125 | |
| Financial expenses | ||
| Interest expenses on interest-bearing loans | -813 | -754 |
| Foreign exchange losses on loans and other receivables | -5 | -32 |
| Changes in the value of interest rate derivatives - no hedge accounting | 15 | 31 |
| Other financial expenses | -87 | -168 |
| Total | -891 | -923 |
| Financial income and expenses, total | -726 | -798 |
| Total exchange rate differences affecting profit or loss are as follows: | ||
| Exchange rate differences, sales | -98 | 58 |
| Exchange rate differences, purchases | -21 | 244 |
| Exchange rate difference, financial items | 16 | -27 |
| Exchange rate differences, total | -103 | 275 |
| 8. Income taxes | ||
| Current taxes | 650 | 55 |
| Taxes for previous years | -399 | 0 |
| Change in deferred tax liabilities and assets | 1 914 | 922 |
| Total | 2 165 | 977 |
| Reconciliation between the income statement's tax expense and the income tax expense | ||
| calculated using the Martela Group's domestic corporation tax rate (26% for 2007, 26% for 2006). | ||
| Profit before taxes | 7 552 | 3 701 |
| Taxes calculated using the domestic corporation tax rate | 1 964 | 962 |
| Taxes for previous years | -305 | 0 |
| Effect of tax rates in foreign jurisdictions | 0 | 0 |
| Tax-exempt income | -8 | -209 |
| Non-deductible expenses | 535 | 247 |
| Unbooked deferred tax assets on losses in taxation | -21 | -23 |
| Income taxes for the year in the income statement | 2 165 | 977 |
The basic earnings per share is calculated by dividing the profit attributable to equity holders of the parent by the weighted average number of shares outstanding during the year.
| Profit attributable to equity holders of the parent | 5 387 | 2 723 |
|---|---|---|
| Weighted average number of shares (1,000) | 4 088 | 4 088 |
| Basic earnings per share (EUR/share) | 1.3 | 0.7 |
The company has no diluting instruments.
| 1.1.2007 – 31.12.2007 |
1.1.2006 – 31.12.2006 |
|||||
|---|---|---|---|---|---|---|
| Intangible assets |
Work in progress |
Total | Intangible assets |
Work in progress |
Total | |
| Acquisition cost 1.1. | 1 927 | 182 | 2 109 | 2 358 | 152 | 2 510 |
| Increases | 400 | 99 | 499 | 317 | 276 | 593 |
| Decreases | -12 | -221 | -233 | -785 | -246 | -1 031 |
| Regroupings | 0 | 0 | 0 | 0 | 0 | 0 |
| Exchange rate differences | -32 | 0 | -32 | 37 | 0 | 37 |
| Acquisition cost 31.12. | 2 283 | 60 | 2 343 | 1 927 | 182 | 2 109 |
| Accumulated depreciation 1.1. | -1 447 | 0 | -1 447 | -1 993 | 0 | -1 993 |
| Accumulated depreciation, decreases | 0 | 0 | 0 | 784 | 0 | 784 |
| Depreciation for the year 1.1.-31.12. | -295 | 0 | -295 | -202 | 0 | -202 |
| Exchange rate differences | 31 | 0 | 31 | -36 | 0 | -36 |
| Accumulated depreciation 31.12. | -1 710 | 0 | -1 710 | -1 447 | 0 | -1 447 |
| Carrying amount 1.1. | 480 | 182 | 662 | 365 | 152 | 517 |
| Carrying amount 31.12. | 573 | 60 | 633 | 480 | 182 | 662 |
| 1.1.2007 – 31.12.2007 | Land areas | Buildings | Machinery and equipment |
Other tangible assets |
Work in progress |
Total |
|---|---|---|---|---|---|---|
| Acquisition cost 1.1. | 692 | 32 239 | 42 087 | 215 | 410 | 75 643 |
| Increases | 0 | 1 057 | 1 559 | 157 | 962 | 3 735 |
| Decreases | -604 | -4 817 | -230 | -16 | -765 | -6 431 |
| Regroupings | 26 | 0 | 0 | 0 | 0 | 26 |
| Exchange rate differences | -22 | -130 | -183 | 14 | 1 | -319 |
| Acquisition cost 31.12. | 93 | 28 350 | 43 233 | 370 | 609 | 72 655 |
| Accumulated depreciation 1.1. | 0 | -22 325 | -37 456 | -78 | 0 | -59 859 |
| Accumulated depreciation, decreases | 0 | 3 840 | 185 | 16 | 0 | 4 041 |
| Depreciation for the year 1.1.-31.12. | 0 | -844 | -2 066 | -30 | 0 | -2 940 |
| Exchange rate differences | 0 | 75 | 186 | -8 | 0 | 253 |
| Accumulated depreciation 31.12. | 0 | -19 254 | -39 152 | -100 | 0 | -58 505 |
| Carrying amount 1.1. | 692 | 9 914 | 4 631 | 137 | 410 | 15 784 |
| Carrying amount 31.12. | 93 | 9 096 | 4 082 | 270 | 609 | 14 150 |
| (EUR 1,000) | |||
|---|---|---|---|
| 1.1.2006 – 31.12.2006 | Land areas | Buildings | Machinery and |
Other tangible |
Work in progress |
Total |
|---|---|---|---|---|---|---|
| equipment | assets | |||||
| Acquisition cost 1.1. | 797 | 33 434 | 41 075 | 209 | 569 | 76 084 |
| Increases | 0 | 175 | 1 333 | 21 | 681 | 2 210 |
| Decreases | -124 | -1 483 | -513 | -15 | -840 | -2 975 |
| Regroupings | 0 | 0 | 0 | 0 | 0 | 0 |
| Exchange rate differences | 19 | 113 | 192 | 0 | 0 | 324 |
| Acquisition cost 31.12. | 692 | 32 239 | 42 087 | 215 | 410 | 75 643 |
| Accumulated depreciation 1.1. | 0 | -21 471 | -35 554 | -66 | 0 | -57 091 |
| Accumulated depreciation, decreases | 0 | 115 | 474 | 12 | 0 | 601 |
| Depreciation for the year 1.1.-31.12. | 0 | -908 | -2 198 | -24 | 0 | -3 130 |
| Exchange rate differences | 0 | -61 | -178 | 0 | 0 | -239 |
| Accumulated depreciation 31.12. | 0 | -22 325 | -37 456 | -78 | 0 | -59 859 |
| Carrying amount 1.1. | 797 | 11 963 | 5 521 | 143 | 569 | 18 991 |
| Carrying amount 31.12. | 692 | 9 914 | 4 631 | 137 | 410 | 15 784 |
| 31.12.2007 | 31.12.2006 | |||||
| Carrying amount of production | 2 833 | 3 692 |
machinery and equipment
Tangible assets include assets acquired through finance leases as follows:
| 1.1.2007 – 31.12.2007 |
1.1.2006 – 31.12.2006 |
|||||
|---|---|---|---|---|---|---|
| Machinery and equipment |
Buildings | Total | Machinery and equipment |
Buildings | Total | |
| Acquisition cost 1.1. | 790 | 0 | 790 | 619 | 0 | 619 |
| Increases | 512 | 662 | 1 174 | 175 | 0 | 175 |
| Decreases | -2 | 0 | -2 | -4 | 0 | -4 |
| Acquisition cost 31.12. | 1 300 | 662 | 1 962 | 790 | 0 | 790 |
| Accumulated depreciation 1.1. | -522 | 0 | -522 | -298 | 0 | -298 |
| Accumulated depreciation, decreases | 0 | 0 | 0 | 0 | 0 | 0 |
| Depreciation for the year 1.1.-31.12. | -269 | -51 | -320 | -224 | 0 | -224 |
| Accumulated depreciation 31.12. | -791 | -51 | -842 | -522 | 0 | -522 |
| Carrying amount 1.1. | 268 | 0 | 268 | 322 | 0 | 322 |
| Carrying amount 31.12. | 509 | 612 | 1 121 | 268 | 0 | 268 |
The plant at Bodafors, Sweden, was sold in 2007. Part of it was leased back on a long-term lease that is classified as a finance lease.
| Nominal | ||||
|---|---|---|---|---|
| Parent | value | Book value | ||
| company | Number of | of share | of share | |
| holding % | shares | (CHF 1,000) | (EUR 1,000) | |
| Essa Office Systems AG, Switzerland | 30 | 34 | 34 | 22 |
The land belonging to Kiinteistö Oy Ylähanka and the land in Poland have been classified as investment properties. The fair value of the land belonging to Kiinteistö Oy Ylähanka was EUR 600 000 at the end of financial year 2007 (EUR 600 000 in 2006). The fair value of the land in Poland was EUR 603 000 at the end of financial year 2007 (EUR 566 000 in 2006). The fair values have been appraised by a third-party valuer.
| Financial assets recognised at fair value through profit or loss |
Loans and other receivables |
Available for-sale financial assets |
Financial liabilities recognised at amortised acquisition cost |
Book values of balance sheet items |
Fair value | Note | |
|---|---|---|---|---|---|---|---|
| 2007 balance sheet items | |||||||
| Non-current financial assets | |||||||
| Non-current non-interest bearing receivables |
623 | 623 | 623 | 16 | |||
| Other financial assets | 31 | 31 | 31 | 15 | |||
| Current financial assets | |||||||
| Trade and other receivables | 23 488 | 23 488 | 23 488 | 19 | |||
| Interest rate swaps | 48 | 48 | 48 | 22 | |||
| Fund units | 2 004 | 2 004 | 2 004 | 20 | |||
| Book value by group | 2 052 | 24 111 | 31 | 0 | 26 194 | 26 194 | |
| Non-current financial liabilities | |||||||
| Interest-bearing liabilities | 10 453 | 10 453 | 10 453 | 25 | |||
| Current financial liabilities | |||||||
| Interest-bearing liabilities | 3 969 | 3 969 | 3 969 | 25 | |||
| Currency forward contracts | 96 | 96 | 96 | 22 | |||
| Trade payables and other | |||||||
| liabilities | 18 219 | 18 219 | 18 219 | 27 | |||
| Book value by group | 96 | 0 | 0 | 32 641 | 32 737 | 32 737 |
&63
| Financial assets recognised at fair value through profit or loss |
Loans and other receivables |
Available for-sale financial assets |
Financial liabilities recognised at amortised acquisition cost |
Book values of balance sheet items |
Fair value | Note | |
|---|---|---|---|---|---|---|---|
| 2006 balance sheet items | |||||||
| Non-current financial assets | |||||||
| Non-current non-interest | 16 | ||||||
| bearing receivables | |||||||
| Other financial assets | 40 | 40 | 40 | 15 | |||
| Current financial assets | |||||||
| Trade and other receivables | 24 646 | 24 646 | 24 646 | 19 | |||
| Interest rate swaps | 31 | 31 | 31 | 22 | |||
| Currency forward contracts | 115 | 115 | 115 | 22 | |||
| Fund units | 1 943 | 1 943 | 1 943 | 20 | |||
| Book value by group | 2 089 | 24 646 | 40 | 0 | 26 775 | 26 775 | |
| Non-current financial liabilities | |||||||
| Interest-bearing liabilities | 12 844 | 12 844 | 12 844 | 25 | |||
| Current financial liabilities | |||||||
| Interest-bearing liabilities | 4 272 | 4 272 | 4 272 | 25 | |||
| Trade payables and | |||||||
| other liabilities | 16 894 | 16 894 | 16 894 | 27 | |||
| Book value by group | 0 | 0 | 0 | 34 010 | 34 010 | 34 010 |
Fair values of each financial asset and liability group are presented in more detail under the note indicated in the table.
Derivatives (interest rate swaps and currency forward contracts) have been measured at fair value based on balance sheet day market rates. They are not subject to hedge accountingand changes in fair values have been recognised in the income statement.
| Available-for-sale financial assets | 31.12.2007 | 31.12.2006 |
|---|---|---|
| Balance sheet value at beginning of year | 40 | 55 |
| Increases | 0 | 0 |
| Decreases | -9 | -15 |
| Balance sheet value at end of year | 31 | 40 |
Available-for-sale financial assets include investments in unlisted equities. They have been measured at acquisition cost because fair value cannot be assessed reliably.
The loan receivable concerns the existing management of the incentive scheme which has been outsourced to Alexander Management Oy. A EUR 1 200 thousand loan has been granted to Alexander Management Oy, which it used to acquire Martela Oyj shares to protect and implement the incentive scheme. (See notes 24).
| Changes in deferred taxes during 2007 | 1.1.2007 | Recognised in income statement |
Recognised in equity |
Exchange rate differences |
31.12.2007 |
|---|---|---|---|---|---|
| Deferred tax assets | |||||
| Tax losses carried forward | 2 239 | -1 920 | 0 | 0 | 319 |
| Other temporary differences | 0 | -5 | 0 | 0 | -5 |
| Total | 2 239 | -1 925 | 0 | 0 | 314 |
| Deferred tax liabilities | |||||
| On buildings measured at fair value on | |||||
| the transition date | 1 540 | -92 | 0 | 0 | 1 448 |
| Cumulative depreciation difference | 92 | -50 | 0 | 0 | 42 |
| Pension obligations | 5 | 4 | 0 | 0 | 9 |
| Other temporary differences | 0 | 128 | 0 | 0 | 128 |
| Total | 1 637 | -10 | 0 | 0 | 1 627 |
| Deferred tax assets and liabilities, total | 602 | -1 915 | 0 | 0 | -1 313 |
| Due to set-off, divided in the balance sheet as follows: | |||||
| Deferred tax assets | 776 | 240 | |||
| Deferred tax liabilities | 174 | 1 553 | |||
| Deferred tax assets and liabilities, total | 602 | -1 313 | |||
| Changes in deferred taxes during 2006 | 1.1.2006 | Recognised in income statement |
Recognised in equity |
Exchange rate differences |
31.12.2006 |
| Deferred tax assets | |||||
| Tax losses carried forward | 3 362 | -1 123 | 0 | 0 | 2 239 |
| Deferred tax liabilities | |||||
| On buildings measured at fair value on | |||||
| the transition date | 1 633 | -93 | 0 | 0 | 1 540 |
| Cumulative depreciation difference | 207 | -115 | 0 | 0 | 92 |
| Pension obligations | 0 | 5 | 0 | 0 | 5 |
| Total | 1 840 | -203 | 0 | 0 | 1 637 |
| Deferred tax assets and liabilities, total | 1 522 | -920 | 0 | 0 | 602 |
| Due to set-off, divided in the balance sheet as follows: | |||||
| Deferred tax assets | 1 819 | 776 | |||
| Deferred tax liabilities | 297 | 174 | |||
| Deferred tax assets and liabilities, total | 1 522 | 602 |
Deferred tax assets have not been recognised on unused tax losses that probably cannot be utilised in the future against taxable income. These losses including 2007 results total about MEUR 8. These losses have no expiry date according to knowledge that is available today.
| 18. Inventories | ||
|---|---|---|
| ----------------- | -- | -- |
| 31.12.2007 | 31.12.2006 | |
|---|---|---|
| Raw materials and consumables | 8 703 | 7 675 |
| Work in progress | 1 708 | 1 484 |
| Finished goods | 3 189 | 2 769 |
| Advances | 35 | 10 |
| 13 635 | 11 938 | |
| The value of inventories has been written down by EUR 1 104 thousand (EUR 901 thousand in 2006). | ||
| 19. Current trade receivables and other receivables | ||
| 31.12.2007 | 31.12.2006 | |
| Trade receivables | 21 443 | 23 903 |
| Loan receivables | 25 | 38 |
| Accrued income and prepaid expenses | ||
| Personnel expenses | 822 | 82 |
| Royalties | 0 | 53 |
| Derivatives | 48 | 146 |
| Other financial assets | 484 | 45 |
| Advances | 361 | 359 |
| Other | 350 | 47 |
| Accrued income and prepaid expenses, total | 2 064 | 732 |
| Current tax receivable | 4 | 119 |
| Total | 23 536 | 24 792 |
| The book values of trade receivables and receivables based on other than derivatives are estimated to correspond to their fair values. |
| 31.12.2007 | 31.12.2006 | |
|---|---|---|
| Fund units | 2 004 | 1 943 |
| 21. Cash and cash equivalents | ||
| 31.12.2007 | 31.12.2006 | |
| Cash in hand and at bank | 4 686 | 1 968 |
| Certificates of deposit | 3 000 | 0 |
| 7 686 | 1 968 |
Martela uses derivatives for hedging purposes but does not apply hedge accounting as in IAS 39.
The Group has partly hedged the currency net position remaining after the reconciliation of forecast revenues and expenses by using currency forward contracts maturing within 3-12 months.
| Nominal values of derivative contracts | 2007 | 2006 | ||||
|---|---|---|---|---|---|---|
| Validity | Validity | |||||
| < 1 year | 1 – 6 years | Total | < 1 year | 1 – 6 years | Total | |
| Interest rate swap agreements, | ||||||
| EUR 1,000 | 0 | 3 375 | 3 375 | 0 | 4 492 | 4 492 |
| Currency forward contracts, EUR 1,000 | 4 268 | 0 | 4 268 | 4 646 | 0 | 4 646 |
| Fair values | 2007 | 2006 | ||||
| Validity | Validity | |||||
| < 1 year | 1 – 6 years | Total | < 1 year | 1 – 6 years | Total | |
| Interest rate swap agreements, | ||||||
| EUR 1,000 | 0 | 48 | 48 | 0 | 31 | 31 |
| Currency forward contracts, EUR 1,000 | -96 | 0 | -96 | 115 | 0 | 115 |
| -96 | 48 | -48 | 115 | 31 | 146 |
The fair values of derivatives are included in current accrued income and prepaid expenses. (See notes 19).
Share capital
The paid share capital entered in the Trade Register is EUR 7 000 000.
According to the Articles of Association, the maximum capital is EUR 14 000 000 and the minimum capital is EUR 3 500 000. The counter value of a share is EUR 1.68. The K shares carry 20 votes at a general meeting and the A shares 1 vote. Both share series have the same dividend rights.
Changes in share capital Number of shares Share capital Share premium account Treasury shares 01.01.2006 4 087 900 7 000 1 116 -721 7 395 Share issue 0 0 0 0 0 31.12.2006 4 087 900 7 000 1 116 -721 7 395 Share issue 0 0 0 0 0
31.12.2007 4 087 900 7 000 1 116 -721 7 395
Total
Martela Oyj owns 67 700 A shares purchased at an average price of EUR 10.65.
The number of treasury shares is equivalent to 1.6% of all shares and 0.4% of all votes.
Translation differences in equity comprises translation differences of financial statements of foreign subsidiaries when translated into euros and of investmets in foreign units.
Other reserves consist of reserve funds.
The parent company's distributable equity was EUR 31 665 067.06 on 31.12.2007.
On 14 February 2007, the Martela Board of Directors decided to implement a share-based incentive scheme as a part of the company's incentive and commitment programme for key personnel.
The system offers key personnel an opportunity to receive Martela shares for three separate earnings period if they achieve the targets set for them for a specified period.
The Board decides on the criteria and associated targets and the maximum reward for each person annually for each earnings period.
The attainment of targets for a specific period determines what percentage of the maximum incentive is paid to key personnel.
The earnings periods are the calendar years 2007, 2008 and 2009. Any incentive paid on the basis of the share incentive scheme will be paid after the end of a period as a combination of shares and cash. The maximum total incentive for the whole system is 153 000 in shares and cash to the amount needed to cover taxes and similar charges when the shares are
granted, but not more than the value of the shares to be paid at the time of payment.
For the 2007 period, a combination equivalent to a maximum of 91 600 shares in shares and cash was granted as follows: 45 800 shares and cash equivalent to the value of 45 800 shares.
The amount of the incentive paid for the 2007 period is tied to the consolidated operating profit (EUR; weight 70%) and the consolidated turnover (weight 30%).
No reward is paid to a person whose employment relationship ends before the payment of the incentive. In addition, the person must own the earned shares for at least two yearsafter the end of the earnings period (vesting period).
| Date of granting | 14.2.2007 |
|---|---|
| Type of incentive | Share incentive |
| Maximum number of shares | 45 800 |
| Cash amount corresponding to the maximum number of shares * | 45 800 |
| Earnings period begins, date | 1.1.2007 |
| Earnings period ends, date | 31.12.2007 |
| Terms of right to incentive | Achievement of non-market based earnings terms (operating profit 70% and turnover |
| 30%) during a one-year earnings followed by a two-year employment requirement. |
|
| Release of shares, date | 1.1.2009 |
| Remaining vesting period, years | 2 |
| Persons, 31.12.2007 | 22 |
*In addition to shares, the company is obligated to pay taxes on share incentives.
| Gross amounts ** | Shares 1.1.2007 | Changes during the financial year |
Shares 31.12.2007 |
|---|---|---|---|
| Share incentives given (share+cash) in number of shares | 0 | 91 600 | 91 600 |
| Share incentives returned due to end of employment | 0 | 0 | 0 |
| Shares paid | 0 | 0 | 0 |
| Shares expired | 0 | 0 | 0 |
**The amounts include part in cash granted by share- based incentive scheme (in shares).
Share incentives are measured at fair value when they are granted and recognised as expenses in the income statement for the period when they arise. The terms of the right are taken into account in the number of share to which a right is expected to arise at the end of the vesting period. The estimate is adjusted on each reporting date if needed.
Since the share reward is paid as a combination of shares and cash, the determining of the fair value of the reward is divided to two parts in accordance with the IFRS 2 standard:
a part settled as shares and a part settled as cash. The part settled as shares is recorded under shareholders' equity and the part settled as cash under debt.
The fair value of the share-based payment at the time of granting the reward is the price of Martela's share, less anticipated dividends for the earnings period.
Correspondingly, the fair value of the part settled as cash is reviewed on each reporting date to the end of the earning period and hence the fair value of the debt varies in accordance with the price of Martela's share. At the end of the financial year, the equity liability arising from the sharebased incentive scheme amounted to EUR 67 254, while the cash liability entered under debt wasEUR 89 004. The total cost effect of the sharebased incentive scheme for the financial year was EUR 156 258.
| Number of shares granted as share incentive | 45 800 |
|---|---|
| Number of shares granted as share-based cash payment | 45 800 |
| Share price at the time of granting | 6.86 EUR |
| Fair value of share price at the time of granting*** | 6.61 EUR |
| Share price on 31.12.2007 (part paid as cash) | 8.35 EUR |
| Estimated rate at which the criteria will be met | 84.9 % |
| Estimated rate of share incentive returning before payment | 0.00% |
| Estimated rate of share incentive returning after payment | 4.5 % |
| Fair value of share incentive at the time of granting, EUR | 512 087 |
| Fair value of share incentive on 31.12.2007, EUR | 570 025 |
| Impact on the results of the financial year, EUR | 156 258 |
*** Share price at the time of granting, less anticipated dividends for the earnings period: EUR 0.25
There was no share incentive scheme in use in 2006.
| 31.12.2007 | 31.12.2006 | |
|---|---|---|
| Non-current | ||
| Bank loans | 9 621 | 12 749 |
| Finance leases | 833 | 95 |
| Total | 10 453 | 12 844 |
| Current | ||
| Bank loans | 3 379 | 3 747 |
| Pension loans | 147 | 136 |
| Bank overdrafts used | 137 | 209 |
| Finance leases | 306 | 180 |
| Total | 3 969 | 4 272 |
The book values of debts are estimated to correspond to their fair values. Discounting has no material effect.
Mortgages and guarantees given by credit institutions and, to a minor degree, pledged shares in housing corporations owned by the company are used as collateral for bank loans and pension loans.
Finance lease liabilities are payable as follows:
| Finance leases - total amount of minimum lease payments | ||
|---|---|---|
| Not later than one year | 419 | 185 |
| Later than one year and not later than five years | 931 | 96 |
| Later than five years | 709 | 0 |
| 2 059 | 281 | |
| Finance leases - present value of minimum lease payments | ||
| Not later than one year | 305 | 180 |
| Later than one year and not later than five years | 508 | 95 |
| Later than five years | 325 | 0 |
| 1 138 | 275 | |
| Mainly connected with the long-term leasing contract of the real-estate. | 921 | 6 |
The average interest of finance leases was 5.12% in 2007 and 4.1% in 2006.
Terms of loans from credit institutions.
The Group's bank loans have either variable or fixed interest rates. The Group's average interest rate is 4.67% (4.35% 2006) The current portions of debt are presented in more detail under Note 28 Management of financial risks.
The pension plans of foreign subsidiaries follow the local legislation and have been classified as defined contribution plans. In addition, in Finland, the group has onesupplementary pension plan classified as a defined benefit plan.
The following presents the impact of the group's defined benefit plans on the consolidated result and balance sheet, calculated in accordance with IAS 19.
| The amounts recognized in the balance sheet were determined as follows: | 1.1.2007 – 31.12.2007 | 1.1.2006 – 31.12.2006 |
|---|---|---|
| Present value of unfunded obligations | 0 | 0 |
| Present value of funded obligations | 1 033 | 954 |
| Present value of funded obligations | -776 | -759 |
| Deficit / Excess | 257 | 195 |
| Unrecognised actuarial gains (+) and losses (-) | -292 | -213 |
| Unrecognised past service cost | 0 | 0 |
| Pension liability in balance sheet | -35 | -18 |
| The amounts recognized in the income statement were determined as follows: | ||
| Current service cost | 133 | 123 |
| Interest cost | 52 | 37 |
| Expected return on plan assets recognized during the year | -40 | -31 |
| Actuarial gains (-) and losses (+) | 9 | 1 |
| Past service cost | 0 | 0 |
| Losses/profits on curtailment | 0 | 0 |
| Total | 154 | 130 |
| The actual return on plan assets (EUR 1,000) | -154 | -12 |
| Changes to present value of obligations: | ||
| Present value of funded obligations 1.1. | 954 | 705 |
| Current service cost | 133 | 123 |
| Interest cost | 52 | 37 |
| Actuarial gains (-) and losses (+) | -106 | 89 |
| Losses/profits on curtailment | 0 | 0 |
| Paid benefits | 0 | 0 |
| Present value of funded obligations 31.12. | 1 033 | 954 |
| Changes to fair values of the assets in the plan are as follows: | ||
| Fair values of plan assets 1.1. | 759 | 621 |
| Expected return on plan assets | 40 | 31 |
| Actuarial gains (-) and losses (+) | -194 | -42 |
| Contributions made by the employer to the plan | 171 | 149 |
| Paid benefits | 0 | 0 |
| Fair values of plan assets 31.12. | 776 | 759 |
Actuarial assumptions used were as follows:
| Discount rate (%) | 5.25% | 4.75% | |
|---|---|---|---|
| Expected return on plan assets (%) | 5.25% | 4.75% | |
| Future salary increases (%) | 3.30% | 3.30% | |
| Rate of pension increase (%) | 1.75% | 1.75% | |
| Rate of inflation increase (%) | 2.00% | 2.00% | |
| Present and fair values of obligations: | 31.12.2007 | 31.12.2006 | 31.12.2005 |
| Present value of obligations | 1 033 | 954 | 705 |
| Fair value of plan assets | -776 | -759 | -622 |
| Deficit/excess | 257 | 195 | 83 |
| Experience adjustments to plan assets | -194 | -42 | -99 |
| Experience adjustments to plan liabilities | 106 | -138 | 57 |
| The Group anticipates it will contribute EUR 188 thousand to the plan in 2008. | |||
| An itemisation of plan assets is not available. | |||
| 27. Non-interest-bearing current liabilities | |||
| 31.12.2007 | 31.12.2006 | ||
| Advances received | 545 | 270 | |
| Trade payables | 7 718 | 6 602 | |
| Accrued liabilities and prepaid income | |||
| Personnel expenses | 3 307 | 3 704 |
Derivatives 96 0 Interests 123 166 Other financial expenses 0 0 Royalties 110 163 Residual expenses 1 528 898 Other 352 217 Total 5 516 5 148
Tax payables 556 37 Other current liabilities 3 980 4 837
18 315 16 894
The book values of trade and other non-interest bearing liabilities are also estimated to correspond to their fair values. Discounting has no material effect.
Financial risks are unexpected exceptions relating to currencies, liquidity, customer liquidity, investments and interest rates. The objective of financial risk management is to ensure that the company has sufficient financing on a cost-efficient basis and to reduce the adverse effects of financial market fluctuations on the Group's net assets. The general principles of risk management are approved by the Board of Directors and the practical implementation of financial risk management is the responsibility of the parent company's financial administration.
Market risks comprise the following three risks: currency risk, fair value interest rate risk and price risk. The associated fluctuations in exchange rates, market interest rates and market prices lead to changes in the value of financial instruments and hence they may impact the result, balance sheet and cash flow of the Group. The Group does not apply hedge accounting as in IAS 39.
The Group has operations in Finland, Sweden, Norway and Poland, and it is therefore exposed to currency risks that arise in intra-group transactions, exports and imports, the financing of foreign subsidiaries and equity that is denominated in foreign currencies.
Transaction risks arise when the cash flows of contracts made at the exchange rates of certain dates are realised at different exchange rates.
Currency risks per instrument and currency 31.12.2007 (EUR thousand)
Translation risks arise when the value of the capital invested in the parent company's foreign subsidiaries, annual profits and loans changes as a result of exchange rate fluctuations.
Martela's major trading currencies are the EUR, SEK, NOK and PLN. The SEK, NOK and PLN currency positions are reviewed mainly on a half-yearly basis. The Group's policy is to hedge the net positions remaining after reconciliation of forecast income and expenses. The hedging instruments used are mainly forward contracts maturing within 3 – 12 months. The Group does not apply hedge accounting.
The main translation risks derive from equity or subordinated loans provided by the parent company to its subsidiaries in Sweden and Poland. The company selectively hedges against translation risks by using currency loans and options. Hedging decisions are based on the estimated effect of each currency on the Group's result, cash flow and equity and on the hedging cost. There were no open hedge positions on the balance sheet date.
The following table presents currency risks per instrument and currency.
| EUR | SEK | PLN | NOK | |
|---|---|---|---|---|
| Trade receivables | 923 | 4 324 | 3 543 | 1 229 |
| Trade payables | -773 | -615 | -21 | 0 |
| Currency forward contracts | 1 002 | 3 267 | ||
| Total | 150 | 3 709 | 4 524 | 4 496 |
| Currency risks per instrument and currency 31.12.2006 (EUR thousand) | ||||
| EUR | SEK | PLN | NOK | |
| Trade receivables | 631 | 3 088 | 2 411 | 881 |
| Trade payables | -2 911 | - 645 | -34 | -21 |
| Currency forward contracts | -4 646 |
Total -2 280 -2 203 2 377 860
Other currencies have minor impact.
The following table presents the average impact of a 10 per cent change in exchange rates on 31 December on the company's financial results and capital for 2007 (2006). The estimates are based on the assumption that no other variables change.
| Impact on shareholders' equity |
Impact on results |
|---|---|
| 0 | +/-15 |
| 0 | +/-371 |
| 0 | +/-452 |
| 0 | +/-450 |
| Analysis of sensitivity to currency risk (EUR thousand) | Impact on shareholders' equity |
Impact on results |
|---|---|---|
| 31.12.2006 | ||
| EURO | 0 | +/-228 |
| SEK | 0 | +/-220 |
| PLN | 0 | +/-238 |
| NOK | 0 | +/-86 |
The Group's interest rate risks relate to the Group's loan portfolio and to changes in the value of the cash reserve due to interest rate variations. Approximately half of the loan portfolio is at a fixed interest rate, while the other half is at variable rates. The duration of loans varies from 6 months for half of the loans to 3–6 years for the rest. The Group can raise either fixed-interest or variable-interest loans and can use interest rate swaps. Excess cash assets are invested in both short- and long-term fixed income funds.
On the balance sheet date the Group had open euro-denominated interest rate swap agreements totalling EUR 3 375 thousand at nominal value on the basis of which the Group receives an average of 3.68% in fixed interest and pays the 6-month Euribor interest on average. The interest rate swaps were from variable interest rate loans to fixed rate loans.
The Group invests excess funds in short-term bank deposits at partner banks and in liquid, low-risk fixed income funds based on government treasury bills and commercial papers.
The Group has invested in fixed income funds, the value of which is determined on the basis of price quotations published in active markets. Changes in fair value are recognised in the income statement in the financial statements.
The following table presents the distribution of the Group's financial instruments into fixed interest rate and variable interest rate on the balance sheet date.
| Financial instruments (EUR thousand) | 31.12.2007 | 31.12.2006 |
|---|---|---|
| Fixed rate | ||
| Financial liabilities, incl. derivatives | 6 532 | 8 222 |
| Variable rate | ||
| Financial liabilities | 7 891 | 8 892 |
| Total | 14 423 | 17 114 |
Impact of a 1 per cent increase in interest rate on financial results and capital on the balance sheet date 31 December. Decrease in interest rate would have an opposite impact of equal size.
| Analysis of sensitivity to interest rate risks (EUR thousand) | Impact on shareholders' equity |
Impact on results |
|---|---|---|
| 31.12.2007 | ||
| Financial liabilities | ||
| Variable rate financial instruments | 0 | -111 |
| Derivatives | ||
| Interest rate swaps | 0 | +33 |
| Analysis of sensitivity to interest rate risks (EUR thousand) | Impact on shareholders' equity |
Impact on results |
| 31.12.2006 | ||
| Financial liabilities | ||
| Variable rate financial instruments | 0 | -135 |
| Derivatives | ||
| Interest rate swaps | 0 | +47 |
Available-for-sale shares included in financial assets are not deemed subject to resale price risk. Their book value is their original acquisition cost and their current sale price is estimated to be higher than their acquisition price. The shares are unlisted and they are not measured at fair value.
Credit risks arise from the possibility that a counterparty will not meet its contractual payment obligation. Hence the seriousness of the risk is determined on the basis of the counterparty's creditworthiness. The objective of credit risk management is to minimise the losses that would arise should the counterparty not meet its obligations.
The Group's policy determines the investment policy and the credit rating requirements of customers and counterparties in investment transactions and derivative contracts. The turnover and maturity structure of Group companies' trade receivables are reported monthly and are monitored by the parent company's financial management.
The principles of credit risk management are confirmed by Martela's Board of Directors. Risk management is based on authorisations given to the organisation.
Credit risks related to the company's trade and other receivables are minimised by using short terms of payment, effective collection measures and accounting for the counterparty's creditworthiness. Supply agreements are used when the customer company is unknown and the available credit information is insufficient. In this context a supply agreement is an agreement which secures any receivables arising from an order by withholding the right of ownership with Martela Oyj until the customer has paid the sale price in full. Supply agreements are only used in sales in Finland. A customer may also be required to make prepayment before sold products are delivered if it is considered necessary in light of the potential credit risk associated with the customer. Counterparties may also be granted to credit limits. The creditworthiness of established customers is monitored regularly on the basis of payment history and credit rating.
Collateral may be required from certain customers based on their creditworthiness and in the case of exports, for example, Martela may use confirmed irrevocable Letters of Credit.
The book value of financial assets corresponds to the maximum amount of the credit risk. The maximum financial asset credit risk amount on the balance sheet date 31 December is presented in the following table:
| Maximum financial asset credit risk (EUR thousand) | 2007 | 2006 |
|---|---|---|
| Available-for-sale financial assets | 31 | 40 |
| Financial assets recognised at fair value | 2 052 | 2 089 |
| through profit or loss | ||
| Loans and other receivables | 24 111 | 24 646 |
| Cash and cash equivalents | 7 686 | 1 968 |
| Total | 33 880 | 28 743 |
| The age distribution of Group trade receivables on the balance sheet date 31 December is presented in the following table: |
||
| Age distribution of trade receivables (EUR thousand) | 2007 | 2006 |
| Unmatured | 16 643 | 18 717 |
| Matured 1–30 days | 2 664 | 2 667 |
| Matured 31–60 days | 745 | 566 |
| Matured over 60 days | 1 391 | 1 953 |
| Total | 21 443 | 23 903 |
| The maximum trade receivable credit risk amount on the balance sheet date 31 December by country or region |
||
| Distribution of trade receivables by country or region (EUR thousand) | 2007 | 2006 |
| Finland | 13 404 | 16 438 |
| Scandinavia | 3 932 | 4 540 |
| European countries | 4 042 | 2 910 |
| Other regions | 65 | 15 |
| Total | 21 443 | 23 903 |
Credit risks from trade receivables are not concentrated.
The Group strives to assess and monitor the amount of funding required by business operations so that there are sufficient liquid assets for operating expenses and repayment of maturing loans. In addition, the Group continually maintains sufficient liquidity by means of effective cash management solutions such as cash reserves and bank overdrafts. The refinancing risk is managed by balancing the maturity schedules of loans and bank overdrafts according to forecast cash flows and by using several banks in financial operations.
Cash and cash equivalents at the end of the financial year totalled EUR 9 691 thousand, and unused bank overdrafts totalled EUR 1 704 thousand.
| 2008 | 2009 | 2010 | 2011 | 2012 | Later | Total | |
|---|---|---|---|---|---|---|---|
| Bank loans | 3 379 | 2 273 | 4 507 | 1 316 | 1 016 | 508 | 12 999 |
| Pension loans | 147 | 0 | 0 | 0 | 0 | 0 | 147 |
| Finance leases | 306 | 188 | 191 | 62 | 66 | 325 | 1 139 |
| Trade payables | 7 718 | 0 | 0 | 0 | 0 | 0 | 7 718 |
| Bank overdrafts | 137 | 0 | 0 | 0 | 0 | 0 | 137 |
| Loan interest and guarantee fees | 582 | 479 | 380 | 168 | 110 | 58 | 1 777 |
| Total | 12 269 | 2 940 | 5 078 | 1 546 | 1 192 | 891 | 23 917 |
Management of capital structure
It is the Group's objective to ensure an efficient capital structure that will secure its operating capacity in the capital markets in all circumstances irrespective of volatility. The Group's Board of Directors assesses the capital structure on a regular basis. The Group uses the equity ratio to monitor its capital structure. The Group's capital management is not subject to external demands such as covenants, for example. The equity ratio formula is presented in the following table:
Key capital indicator to be monitored in capital management: Equity ratio
| Equity ratio | 31.12.2007 | 31.12.2006 |
|---|---|---|
| Shareholders' equity | 29 510 | 24 925 |
| Balance sheet total – advance payments | 63 255 | 58 839 |
| Equity ratio, % | 46.7 | 42.4 |
| 29. Operating leases Minimum lease payments under non-cancellable |
31.12.2007 | 31.12.2006 |
|---|---|---|
| operating leases are as follows: | ||
| Not later than one year | 2 545 | 2 304 |
| Later than one year and not later than five years | 6 859 | 6 831 |
| Later than five years | 1 270 | 618 |
| 10 674 | 9 753 |
The group has leased many of the premises it uses. The lengths of operating leases are from 1 to 10 years, and normallythey include the option to extend the lease after the initial expiry date.
The income statement for 2007 includes rents paid on the basis of operating leases totalling EUR 3 077 thousand (EUR 2 320 thousand in 2006).
| Debts secured by mortgages | ||
|---|---|---|
| Pension loans | 0 | 0 |
| Property mortgages | 0 | 0 |
| Corporate mortgages | 0 | 0 |
| Bank loans | 12 894 | 16 496 |
| Property mortgages | 11 801 | 13 548 |
| Corporate mortgages | 3 868 | 7 187 |
| Shares pledged | 4 | 4 |
| Total mortgages | 15 673 | 20 739 |
| Other pledges | ||
| Guarantees as security for rents | 167 | 163 |
| Collateral granted on behalf of others | ||
| Guarantees | 0 | 115 |
| Repurchase sureties | 150 | 161 |
Group's parent and subsidiary relationships are as follows:
| Domicile | Holding (%) | Voting power (%) | |
|---|---|---|---|
| 31.12.2007 | 31.12.2007 | ||
| Parent company | |||
| Martela Oyj | Finland | ||
| Subsidiaries | |||
| Kidex Oy | Finland | 100 | 100 |
| P.O. Korhonen Oy | Finland | 100 | 100 |
| Kiinteistö Oy Ylähanka | Finland | 100 | 100 |
| Martela AB, Bodafors | Sweden | 100 | 100 |
| Aski Inredningscenter AB, Malmö | Sweden | 100 | 100 |
| Martela AS, Oslo | Norway | 100 | 100 |
| Martela Sp.z o.o., Warsaw | Poland | 100 | 100 |
Martela Group's related party comprise the CEO, members of the board and the group's management team. Members of the company's board and the CEO hold a total of 8.4% of the share capital and 17.2% of the votes.
| Management employee benefits | 2007 | 2006 |
|---|---|---|
| Salaries and other short-term employee benefits | 1 659 | 1 501 |
| Benefits following end of employment | 55 | 0 |
| Share-based benefits | 85 | 0 |
| 1 799 | 1 501 | |
| Salaries | 2007 | 2006 |
| Board members | 72 | 72 |
| CEO | 347 | 288 |
| Management team members(excl. salary of CEO) | 1 325 | 1 141 |
Fees based on board membership are not paid to members employed by the company.
The CEO is entitled, if he wishes, to retire with a full pension after reaching the age of 60. Retirement benefits are included in pension expenses, defined benefit plans, presented in note 3. The period of notice is 6 months with respect to both the CEO and the company, and in the event of a dismissal by the company, the CEO is entitled to a lump-sum compensation equalling his salary for 18 months.
The CEO and the company's management were included in a long-term incentive scheme, extending from 2004 to the end of 2006. This incentive scheme was based on the group's combined profit performance for the period 2004–2006. On the basis of this scheme, a total of EUR 533 thousand in incentives has been recognised for the 2006 financial year.
The CEO and the group's management and some key persons are included in a long-term incentive scheme, extending from 2007 to the end of 2009. This incentive scheme is based on the group's combined profit performance for the period 2007–2009. The incentive paid under this scheme will be paid as a combination of shares and cash.
A total of EUR 156 thousand has been recognised for 2007 from incentives and related expenses associated with the scheme.
| IFRS | IFRS | IFRS | IFRS | FAS | FAS | ||
|---|---|---|---|---|---|---|---|
| 2007 | 2006 | 2005 | 2004 | 2004 | 2003 | ||
| Revenue | meur | 128.4 | 119.7 | 102.2 | 100.7 | 100.7 | 102.1 |
| Change in revenue | % | 7.3 | 7.1 | 1.5 | $-1.4$ | $-1.4$ | $-15.7$ |
| Export and operations outside Finland | meur | 42.8 | 36.7 | 31.6 | 31.0 | 31.0 | 34.2 |
| In relation to revenue | % | 33.3 | 30.7 | 30.9 | 30.8 | 30.8 | 33.5 |
| Exports from Finland | meur | 16.2 | 16.2 | 13.8 | 13.2 | 13.2 | 10.8 |
| Gross capital expenditure | meur | 3.2 | 1.8 | 1.6 | 0.9 | 0.9 | 1.0 |
| In relation to revenue | % | 2.5 | 1.5 | 1.6 | 0.9 | 0.9 | 1.0 |
| Depreciation | meur | 3.2 | 3.3 | 3.8 | 4.6 | 4.9 | 4.7 |
| Research and development expenses | meur | 3.1 | 2.5 | 2.0 | 2.7 | 2.7 | 2.6 |
| In relation to revenue | % | 2.4 | 2.1 | 2.0 | 2.7 | 2.7 | 2.5 |
| Average personnel | 663 | 626 | 610 | 662 | 662 | 767 | |
| Change in personnel | % | 5.9 | 2.6 | $-7.9$ | $-13.7$ | $-13.7$ | $-17.5$ |
| Personnel at end of year | 655 | 632 | 604 | 613 | 613 | 715 | |
| Of which in Finland | 515 | 508 | 478 | 488 | 488 | 531 | |
| PROFITABILITY | |||||||
| Operating profit | meur | 8.3 | 4.5 | 1.5 | $-1.6$ | $-2.2$ | $-10.7$ |
| In relation to revenue | % | 6.4 | 3.8 | 1.5 | $-1.5$ | $-2.2$ | $-10.5$ |
| Profit before appropriations and taxes | meur | 7.6 | 3.7 | 1.0 | $-2.1$ | $-3.0$ | $-12.6$ |
| In relation to revenue | % | 5.9 | 3.1 | $\overline{1.0}$ | $-2.0$ | $-3.0$ | $-12.4$ |
| Profit for the year *) | meur | 5.4 | 2.7 | $-0.1$ | $-2.0$ | $-2.7$ | $-12.3$ |
| In relation to revenue | $\%$ | 4.2 | 2.3 | $-0.1$ | $-2.0$ | $-2.7$ | $-12.0$ |
| Revenue/employee | teur | 193.7 | 191.3 | 167.6 | 152.2 | 152.2 | 133.2 |
| Return on equity (ROE) | % | 19.8 | 11.4 | $-0.5$ | $-8.1$ | $-13.3$ | $-38.6$ |
| Return on investment (ROI) | % | 19.6 | $ \cdot $ .0 | 4.3 | $-2.2$ | $-4.7$ | $-20.9$ |
| FINANCE AND FINANCIAL POSITION | |||||||
| Balance sheet total | meur | 63.8 | 59.1 | 56.1 | 59.9 | 55.2 | 59.7 |
| Equity | meur | 29.5 | 24.9 | 22.8 | 23.5 | 9.1 | 22.5 |
| Interest-bearing net liabilities | meur | 4.7 | 13.2 | 14.3 | 13.3 | 3.1 | 5.1 |
| In relation to revenue | % | 3.7 | 11.0 | 14.0 | 13.2 | 13.0 | 14.8 |
| Equity ratio | $\%$ | 46.7 | 42.4 | 40.8 | 39.3 | 33.8 | 36.8 |
| Gearing | % | 16.0 | 53.0 | 62.8 | 56.4 | 71.1 | 69.4 |
| Net cash flow from operations | meur | 9.9 | 0.9 | 1.0 | 2.5 | 2.5 | $-5.6$ |
| Dividends paid | meur | $\overline{1.0}$ | 0.6 | 0.6 | 0.5 | 0.5 | 0.5 |
*) Change in deferred tax liability included in profit for the year.
The comparison figures for 2003 have been adjusted for the number of shares in the bonus issue of 2004
| IFRS | IFRS | IFRS | IFRS | FAS | FAS | ||
|---|---|---|---|---|---|---|---|
| 2007 | 2006 | 2005 | 2004 | 2004 | 2003 | ||
| Earnings per share | EUR | 1.3 | 0.7 | 0.0 | -0.5 | -0.7 | -2.7 |
| Earnings per share (diluted) | EUR | 1.3 | 0.7 | 0.0 | -0.5 | -0.7 | -2.7 |
| Share par value | EUR | 1.7 | 1.7 | 1.7 | 1.7 | 1.7 | 1.7 |
| Dividend | EUR | 0.50 *) | 0.25 | 0.15 | 0.15 | 0.15 | 0.13 |
| Dividend/earnings per share | % | 37.9 | 37.5 | -547.9 | -30.4 | -23.1 | -4.7 |
| Effective dividend yield | % | 6.0 | 3.8 | 2.1 | 2.4 | 2.4 | 1.7 |
| Equity per share | EUR | 7.2 | 6.1 | 5.6 | 5.8 | 4.5 | 5.3 |
| Price of A share 31.12. | EUR | 8.35 | 6.50 | 7.26 | 6.35 | 6.35 | 7.15 |
| Share issue-adjusted number of shares | thousands | 4 155.6 | 4 155.6 | 4 155.6 | 4 155.6 | 4 155.6 | 4 155.6 |
| Average share issue-adjusted | |||||||
| number of shares | thousands | 4 155.6 | 4 155.6 | 4 155.6 | 4 155.6 | 4 155.6 | 4 155.6 |
| Price/earnings ratio (P/E) | 6.3 | 9.8 | -265.2 | -12.8 | -9.8 | -2.7 | |
| Market value of shares **) | MEUR | 34.1 | 26.6 | 29.7 | 26.0 | 26.0 | 29.2 |
*) Board proposal
**) Price of A shares used as value of K shares
The number of registered Martela Oyj shares on 31.12.2007 was 4 155 600. The shares are divided into A and K shares. Each A share carries 1 vote and each K share 20 votesin a general shareholders' meeting. Both share series have the same dividend rights. The company's maximum share capital is EUR 14 000 000 and the minimum is EUR 3 500 000.
Martela Oyj's shares were entered in the book-entry register on 10.2.1995. The counter-book value of each share is EUR 1.68. The A shares are quoted on the Small Cap list of the OMX NordicExchange in Helsinki. A trading lot is 100 shares. Martela Oyj has made a Liquidity Providing (LP) market-making agreement with Nordea Bank Finland plc.
| Distribution of shares 31.12.2007 | Number | Total EUR |
% of share capital |
Votes | % of votes |
|---|---|---|---|---|---|
| K shares | 604 800 | 1 018 500 | 15 | 12 096 000 | 77 |
| A shares | 3 550 800 | 5 981 500 | 85 | 3 550 800 | 23 |
| Total | 4 155 600 | 7 000 000 | 100 | 15 646 800 | 100 |
| K series shares |
A series shares |
Number of shares |
% | Number of votes |
% of total votes |
|
|---|---|---|---|---|---|---|
| Marfort Oy | 292 000 | 232 574 | 524 574 | 12.6 | 6 072 574 | 38.8 |
| Ilmarinen Mutual Pension Insurance Company | 0 | 335 400 | 335 400 | 8.1 | 335 400 | 2.1 |
| OP-Suomi arvo | 0 | 273 700 | 273 700 | 6.6 | 273 700 | 1.7 |
| Odin Finland | 0 | 228 400 | 228 400 | 5.5 | 228 400 | 1.5 |
| Mutual Fund Nordea Nordic Small Cap | 0 | 220 343 | 220 343 | 5.3 | 220 343 | 1.4 |
| Palsanen Leena | 68 486 | 131 148 | 199 634 | 4.8 | 1 500 868 | 9.6 |
| FIM Fenno Mutual Fund | 0 | 193 900 | 193 900 | 4.7 | 193 900 | 1.2 |
| Pohjola P&C Insurance Company | 0 | 170 000 | 170 000 | 4.1 | 170 000 | 1.1 |
| Suomen Argentor Oy | 0 | 162 700 | 162 700 | 3.9 | 162 700 | 1.0 |
| Martela Heikki | 52 122 | 106 234 | 158 356 | 3.8 | 1 148 674 | 7.3 |
| Evli Alexander Management Oy | 0 | 143 166 | 143 166 | 3.4 | 143 166 | 0.9 |
| Martela Matti | 58 256 | 56 982 | 115 238 | 2.8 | 1 222 102 | 7.8 |
| Lindholm Tuija | 43 122 | 50 424 | 93 546 | 2.3 | 912 864 | 5.8 |
| Nordea pankki Suomi Oyj | 0 | 89 523 | 89 523 | 2.2 | 89 523 | 0.6 |
| Palsanen Jaakko | 2 000 | 83 868 | 85 868 | 2.1 | 123 868 | 0.8 |
| Martela Pekka | 69 274 | 8 | 69 282 | 1.7 | 1 385 488 | 8.9 |
| Other shareholders | 19 540 | 1 072 430 | 1 091 970 | 26.3 | 1 463 230 | 9.4 |
| Total | 604 800 | 3 550 800 | 4 155 600 | 100.0 | 15 646 800 | 100.0 |
The list includes all shareholders holding over 5% of the shares and votes.
The company's board of directors and CEO together hold 8.4% of the shares and 17.2% of the votes.
Martela Oyj owns 67 700 A shares. Of these, 33 850 shares have been purchased at an average price of EUR 10.65 and 33 850 shares resulted from a share issue.
The number of treasury shares is equivalent to 1.6% of all shares and 0.4% of all votes.
The Annual General Meeting has in 2007 re-authorized the Board of Directors to decide, for the following year, on raising the share capital, issuing convertible bonds and acquiring and/or disposing of the company's shares in deviation from the pre-emptive rights of shareholders.
| Number of shares | Number of shareholders |
% of total shareholders |
Number of shares |
% | Number of votes |
% of total votes |
|---|---|---|---|---|---|---|
| 1-500 | 475 | 61.2 | 83 439 | 2.0 | 101 679 | 0.7 |
| 501-1 000 | 111 | 14.3 | 88 504 | 2.1 | 129 924 | 0.8 |
| 1 001-5 000 | 123 | 15.9 | 266 390 | 6.4 | 406 990 | 2.6 |
| Over 5 000 | 67 | 8.6 | 3 716 219 | 89.4 | 15 007 159 | 95.9 |
| Total | 776 | 100.0 | 4 154 552 | 100.0 | 15 645 752 | 100.0 |
| of which nominee-registered | 7 | 124 116 | ||||
| In the waiting list and collective account | 1 048 | 0.0 | 1 048 | 0.0 | ||
| Total | 4 155 600 | 100.0 | 15 646 800 | 100.0 |
| Number of shareholders |
% | Number of shares |
% | Number of votes |
% | |
|---|---|---|---|---|---|---|
| Private companies | 54 | 7.0 | 1 093 903 | 26.3 | 6 642 803 | 42.5 |
| Financial and insurance institutions | 9 | 1.2 | 671 495 | 16.2 | 765 629 | 4.9 |
| Public corporations | 1 | 0.1 | 335 400 | 8.1 | 335 400 | 2.1 |
| Non-profit entities | 11 | 1.4 | 217 255 | 5.2 | 217 255 | 1.4 |
| Households | 693 | 89.3 | 1 423 953 | 34.3 | 7 367 153 | 47.1 |
| Foreign investors | 8 | 1.0 | 288 430 | 6.9 | 317 512 | 2.0 |
| Total | 776 | 100.0 | 4 030 436 | 97.0 | 15 645 752 | 100.0 |
| Nominee-registered | 7 | 124 116 | 3.0 | |||
| In the waiting list and collective account | 1 048 | 0.0 | 1 048 | 0.0 | ||
| Total | 4 155 600 | 100.0 | 15 646 800 | 100.0 |
| Earnings / share | = | Profit attributable to the equity holders of the parent Average share issue-adjusted number of shares |
|---|---|---|
| Price / earnings multiple (P/E) | = | Share issue-adjusted share price at year end Earnings / share |
| Equity / share, EUR | = | Equity attributable to the equity holders of the parent Share issue-adjusted number of shares at year end |
| Dividend / share, EUR | = | Dividend for the financial year Share issue-adjusted number of shares at year end |
| Dividend / earnings, % | = | Dividend / share x 100 Earnings / share |
| Effective dividend yield, % | = | Share issue-adjusted dividend / share x 100 Share issue-adjusted share price at year end |
| Market value of shares outstanding, EUR |
= | Total number of shares at year end X share price on the balance sheet date |
| Return on equity, % | = | Profit/loss for the financial year x 100 Equity (average during the year) |
| Return on investment, % | = | (Pre-tax profit/loss + interest expenses + other financial expenses) x 100 Balance sheet total - Non-interest-bearing liabilities (average during year) |
| Equity ratio, % | = | Equity x 100 Balance sheet total - advances received |
| Gearing, % | = | Interest-bearing liabilities-cash and cash equivalents and liquid asset securities x 100 Equity |
| Average personnel | = | Month-end average calculation of the number of personnel in active employment |
| Interest-bearing net debt | = | Interest-bearing debt - cash and other liquid financial assets |
| (EUR 1,000) | Note | 1.1. – 31.12.2007 | 1.1. – 31.12.2006 |
|---|---|---|---|
| REVENUE | 1 | 96 225 | 92 436 |
| Changes in inventories of finished goods and work in progress |
200 | -11 | |
| Production for own use | 39 | 46 | |
| Other operating income | 2 | 898 | 1 077 |
| Materials and services | 3 | -56 596 | -55 603 |
| Personnel expenses | 4 | -17 979 | -17 054 |
| Depreciation and impairment | 5 | -1 410 | -1 292 |
| Other operating expenses | -14 196 | -13 994 | |
| OPERATING PROFIT (-LOSS) | 7 182 | 5 605 | |
| Financial income and expenses | 6 | -458 | -465 |
| PROFIT (-LOSS) BEFORE | |||
| EXTRAORDINARY ITEMS | 6 724 | 5 140 | |
| Extraordinary expenses | 0 | -1 000 | |
| Extraordinary income | 7 | 774 | 0 |
| PROFIT (-LOSS) BEFORE APPROPRIATIONS AND TAXES |
7 498 | 4 140 | |
| Income taxes | 8 | -144 | 0 |
| PROFIT (-LOSS) FOR THE FINANCIAL YEAR |
7 355 | 4 140 |
| &63 | /PUF | ||
|---|---|---|---|
| ASSETS | |||
| NON-CURRENT ASSETS | |||
| Intangible assets | 9 | ||
| Intangible rights | 175 | 149 | |
| Other long-term expenditure | 713 | 492 | |
| Advance payments | 60 | 182 | |
| 948 | 823 | ||
| Tangible assets | 10 | ||
| Land and water areas | 84 | 163 | |
| Buildings and structures | 2 815 | 2 973 | |
| Machinery and equipment | 1 872 | 2 066 | |
| Other tangible assets | 20 | 20 | |
| Advance payments and purchases | |||
| in progress | 272 | 383 | |
| 5 063 | 5 605 | ||
| Investments | 11 | ||
| Shares in subsidiaries | 4 833 | 6 483 | |
| Shares in associates | 22 | 22 | |
| Other shares and participations | 102 | 111 | |
| Loan receivables | 12 919 | 12 889 | |
| 17 875 | 19 505 | ||
| CURRENT ASSETS Inventories |
|||
| Materials and supplies | 5 243 | 4 150 | |
| Work in progress | 860 | 674 | |
| Finished goods | 1 712 | 1 850 | |
| 7 815 | 6 674 | ||
| Non-current receivables | 12 | ||
| Loan receivables | 623 | 0 | |
| Current receivables | 12 | ||
| Trade receivables Loan receivables |
21 186 3 451 |
22 085 3 480 |
|
| Accrued income and prepaid expenses | 1 131 | 258 | |
| 25 768 | 25 823 | ||
| Financial assets at fair value through | |||
| profit or loss | 13 | 2 004 | 1 943 |
| Cash and cash equivalents | 5 118 | 968 | |
| 65 215 | 61 341 | ||
| &63 | /PUF | ||
|---|---|---|---|
| LIABILITIES | |||
| SHAREHOLDERS' EQUITY | |||
| Shareholders' equity | 14 | ||
| Share capital | 7 000 | 7 000 | |
| Share premium account | 1 116 | 1 116 | |
| Reserve fund | 11 | 11 | |
| Retained earnings | 24 310 | 21 192 | |
| Profit for the year | 7 355 | 4 140 | |
| Total | 39 792 | 33 459 | |
| LIABILITIES | |||
| Non-current | 15 | ||
| Loans from financial institutions | 9 621 | 11 894 | |
| Current | 16 | ||
| Interest-bearing | |||
| Loans from financial institutions | 3 273 | 3 273 | |
| Other current liabilities | 0 | 757 | |
| 3 273 | 4 030 | ||
| Non-interest-bearing | |||
| Advances received | 30 | 30 | |
| Trade payables | 5 798 | 5 206 | |
| Accrued liabilities and prepaid income | 3 906 | 3 407 | |
| Other current liabilities | 2 796 | 3 315 | |
| 12 529 | 11 958 | ||
| Liabilities, total | 25 423 | 27 882 | |
| 65 215 | 61 341 |
| &63 | m | m |
|---|---|---|
| CASH FLOWS FROM OPERATING ACTIVITIES | ||
| Cash flow from sales | 96 928 | 85 210 |
| Cash flow from other operating income | 224 | 237 |
| Payments on operating costs | -89 990 | -85 164 |
| Net cash from operating activities before financial items | ||
| and taxes | 7 162 | 283 |
| Interests paid and other financial payments | -550 | -474 |
| Taxes paid | 406 | 0 |
| Net cash from operating activities before extraordinary items | 7 018 | -191 |
| Cash flow from extraordinary items (net) | 0 | 0 |
| Net cash from operating activities (A) | 7 018 | -191 |
| CASH FLOWS FROM INVESTING ACTIVITIES | ||
| Capital expenditure on tangible and intangible assets | -1 173 | -1 065 |
| Proceeds from sale of shares in subsidiaries | 2 150 | 0 |
| Proceeds from sale of tangible and intangible assets | 717 | 2 204 |
| Loans granted | -1 605 | -801 |
| Repayments of loan receivables | 339 | 362 |
| Net cash used in investing activities (B) | 427 | 700 |
| CASH FLOWS FROM FINANCING ACTIVITIES | ||
| Proceeds from short-term loans | 0 | 1 000 |
| Repayments of long-term loans | -2 273 | -2 104 |
| Dividends and other profit distribution | -1 022 | -613 |
| Net cash used in financing activities (C) | -3 295 | -1 717 |
| CHANGE IN LIQUID FUNDS (A+B+C) | ||
| (+ increase, - decrease) | 4 150 | -1 208 |
| Liquid funds at beginning of financial year 1) | 2 911 | 4 054 |
| Changes in fair value, investments | 62 | 65 |
| Liquid funds at end of financial year 1) | 7 122 | 2 911 |
| 1. Liquid funds include cash in hand and at bank and financial assets | ||
| at fair value through profit and loss. | ||
Martela Oyj's financial statements have been prepared in accordance with Finnish Accounting Standards (FAS). Items in the financial statements have been recognised at cost. No account has been taken of increases in value, unless separately mentioned.
Transactions denominated in foreign currencies are recognised at the rate of exchange on the date of their occurrence, and receivables and liabilities in the balance sheet are translated at the average rate on the balance sheet date. Exchange rate differences arising from trade receivables are recognised in revenue and those of trade payables in adjustment items for purchases. Exchange rate differences arising from balance sheet financial items, such as loans, are recognised in exchange rate differences of finance.
Intangible assets are depreciated according to their estimated useful life in either 5 or 10 years.
Buildings, machinery, equipment and other tangible assets are reported in the balance sheet at cost. No depreciation is recognised on revaluations of buildings or on land areas. Otherwise, depreciation is calculated on a straight line basis according to the estimated useful life.
| Buildings and structures | 20–30 years |
|---|---|
| Machinery and equipment | 4–8 years |
| Other tangible assets | 3–5 years |
Stock exchange listed shares are recognised at market value and changes are entered in financial items. Other shares are recognised at cost. On the balance sheet date, Martela Oyj held no stock exchange listed shares.
Investments in subsidiaries and associated companies are recognised at cost and permanent impairments are deducted.
Inventories are recognised at cost using the FIFO method. The value of inventories is reduced with respect to unsaleable items.
The cost of finished goods includes not only the direct manufacturing costs, but also a share of the overhead costs of production.
Financial assets at fair value through profit or loss: Investments in fund units are classified as financial assets at fair value through profit or loss. Investments are measured at fair value on the basis of price quotations published on functioning markets, and changes in fair value are recognised in the income statement in the year in which they were incurred.
The company's income taxes are recognised on an accrual basis and are calculated according to local tax legislation with adjustments from previous financial years. Deferred tax liabilities are reported in the Notes.
Revenue is recognised on an accrual basis. Direct taxes, discounts and exchange rate differences are deducted from sales income in calculating revenue.
Research and development expenses are recognised normally through profit or loss in the year they arose. R&D-related equipment is capitalised in machinery and equipment.
Proceeds from sale of assets, public subsidies and other income (e.g. rent income) than that from actual operations are recognised in "Other operating income". Losses from disposal of assets and other costs than those from actual operations are recognised in "Other operating expenses".
Extraordinary income and expenses are deemed as those based on events in the company that are extraordinary, non-recurring and substantial, such as group contribution and items related to corporate restructuring.
All leasing payments are treated as rent expenses.
The companies' pension security has been arranged through pension companies. Martela Oyj's CEO is entitled to transfer to a full pension after reaching the age of 60 years.
The treasury shares in the parent company's financial statements are reported as a deduction from equity.
| &63 | ||
|---|---|---|
| 1. Breakdown of revenue by market area, % of revenue | ||
| Finland | 85.7 | 86.5 |
| Scandinavia | 6.9 | 5.7 |
| Other Total |
7.4 100.0 |
7.8 100.0 |
| 2. Other operating income | ||
| Gains on sale of fixed assets | 646 | 840 |
| Rental income | 159 | 145 |
| Public subsidies | 59 | 92 |
| Other operating income | 34 | 0 |
| Total | 898 | 1 077 |
| 3. Materials and services | ||
| Materials and supplies | ||
| Purchases during the financial year | 54 114 | 53 721 |
| Change in inventories of materials and supplies | -941 | -1 120 |
| External services | 3 423 | 3 002 |
| Materials and supplies, total | 56 596 | 55 603 |
| Auditor's fees | ||
| Auditing | 59 | 53 |
| Other services | 28 | 12 |
| Auditor's fees, total | 87 | 65 |
| 4. Personnel expenses and number of personnel | ||
| Salaries, CEO | 335 | 276 |
| Salaries of board of directors | 72 | 72 |
| Salaries of board of directors and managing director, total | 407 | 348 |
| Other salaries | 14 006 | 13 239 |
| Pension expenses | 2 620 | 2 592 |
| Other salary-related expenses | 945 | 875 |
| Personnel expenses in the income statement | 17 979 | 17 054 |
| Fringe benefits | 408 | 377 |
| Total | 18 386 | 17 431 |
| Personnel | ||
| Average personnel, workers | 176 | 167 |
| Average personnel, officials | 201 | 189 |
| Personnel at year end | 399 | 356 |
| 5. Depreciation and write-down | ||
| Depreciation according to plan | ||
| Intangible assets | 412 | 322 |
| Tangible assets | ||
| Buildings and structures | 104 | 130 |
| Machinery and equipment | 895 | 839 |
| Depreciation according to plan, total | 1 410 | 1 291 |
| &63 | ||
|---|---|---|
| 6. Financial income and expenses | ||
| Financial income and expenses | ||
| Dividend income | 0 | 1 |
| Interest income on short-term investments | 51 | 39 |
| Interest income on short-term investments from Group companies | 137 | 214 |
| Foreign exchange gains | 21 | 3 |
| Other financial income | 0 | 4 |
| Interest expenses | -675 | -631 |
| Losses on foreign exchange | -2 | -32 |
| Other financial expenses | -51 | -127 |
| Change in value of assets recognised at | ||
| fair value through profit or loss | 62 | 65 |
| Total | -458 | -464 |
| 7. Extraordinary items | ||
| Extraordinary expenses | ||
| Group contribution | 0 | -1 000 |
| Extraordinary income | ||
| Item on mutual receivables and liabilities between Martela Oyj | 774 | 0 |
| and real-estate company connected with the sale of real-estate | ||
| company Oulu | ||
| 8. Income taxes | ||
| Income taxes from operations | 549 | 0 |
| Taxes from previous years | -406 | 0 |
| Total | 143 | 0 |
Deferred tax liabilities and assets have not been included in the income statement or balance sheet. Deferred tax assets due to matching differences and losses total EUR 15 thousand (EUR 2,2 million 2006).
| Intangible rights |
Other longterm expenses |
Work in progress |
Intangible assets, total |
|---|---|---|---|
| 436 | 4 457 | 182 | 5 074 |
| 62 | 631 | 99 | 791 |
| -12 | -71 | -221 | -304 |
| 485 | 5 016 | 60 | 5 561 |
| -287 | -3 965 | 0 | -4 252 |
| 0 | 50 | 0 | 50 |
| -24 | -388 | 0 | -412 |
| -310 | -4 304 | 0 | -4 614 |
| 149 | 492 | 182 | 823 |
| 175 | 713 | 60 | 948 |
| &63 | ||||
|---|---|---|---|---|
| 1.1.2006 – 31.12.2006 | Intangible rights |
Other long-term expenses |
Work in progress |
Intangible assets, total |
| Acquisition cost 1.1. | 421 | 4 116 | 152 | 4 689 |
| Increases | 15 | 422 | 276 | 713 |
| Decreases | -1 | -81 | -246 | -328 |
| Acquisition cost 31.12. | 436 | 4 457 | 182 | 5 075 |
| Accumulated depreciation 1.1. | -264 | -3 711 | 0 | -3 975 |
| Accumulated depreciation, decreases | 0 | 45 | 0 | 45 |
| Depreciation for the year 1.1.-31.12. | -23 | -299 | 0 | -322 |
| Accumulated depreciation 31.12. | -287 | -3 965 | 0 | -4 252 |
| Carrying amount 1.1. | 158 | 405 | 152 | 715 |
| Carrying amount 31.12. | 149 | 492 | 182 | 823 |
| 1.1.2007 – 31.12.2007 | Land areas | Buildings | Machinery and | Other tangible | Work in | Total |
|---|---|---|---|---|---|---|
| equipment | assets | progress | ||||
| Acquisition cost 1.1. | 163 | 11 687 | 23 828 | 20 | 383 | 36 081 |
| Increases | 0 | 68 | 725 | 0 | 478 | 1 271 |
| Decreases | -79 | -719 | -49 | 0 | -589 | -1 437 |
| Acquisition cost 31.12. | 84 | 11 035 | 24 504 | 20 | 272 | 35 915 |
| Accumulated depreciation 1.1. | 0 | -8 714 | -21 762 | 0 | 0 | -30 476 |
| Accumulated depreciation, decreases | 0 | 597 | 25 | 0 | 0 | 622 |
| Depreciation for the year 1.1.-31.12. | 0 | -104 | -895 | 0 | 0 | -999 |
| Accumulated depreciation 31.12. | 0 | -8 221 | -22 632 | 0 | 0 | -30 853 |
| Carrying amount 1.1. | 163 | 2 973 | 2 067 | 20 | 383 | 5 606 |
| Carrying amount 31.12. | 84 | 2 815 | 1 872 | 20 | 272 | 5 063 |
| 1.1.2006 – 31.12.2006 | Land areas | Buildings | Machinery and equipment |
Other tangible assets |
Work in progress |
Total |
| Acquisition cost 1.1. | 211 | 11 767 | 23 236 | 20 | 406 | 35 640 |
| Increases | 0 | 16 | 692 | 0 | 388 | 1 096 |
| Decreases | -48 | -96 | -100 | 0 | -411 | -655 |
| Acquisition cost 31.12. | 163 | 11 687 | 23 828 | 20 | 383 | 36 081 |
| Accumulated depreciation 1.1. | 0 | -8 680 | -21 021 | 0 | 0 | -29 701 |
| Accumulated depreciation, decreases | 0 | 96 | 98 | 0 | 0 | 194 |
| Depreciation for the year 1.1.-31.12. Accumulated depreciation 31.12. |
0 0 |
-130 -8 714 |
-839 -21 762 |
0 0 |
0 0 |
-969 -30 476 |
| Carrying amount 1.1. Carrying amount 31.12. |
211 163 |
3 088 2 973 |
2 214 2 067 |
20 20 |
406 383 |
5 939 5 606 |
Revaluations included in buildings total EUR 1 850 thousand in 2007 (EUR 1 850 thousand in 2006).
Carrying amount of production machinery and equipment in 2007 total EUR 1 547 thousand (EUR 1 660 thousand in 2006).
| 1.1.2007 – 31.12.2007 | Subsidiary shares |
Associate shares |
Other shares and participations |
Loan receivables |
Total | |
|---|---|---|---|---|---|---|
| Balance sheet value at beginning of year | 6 484 | 22 | 111 | 12 889 | 19 506 | |
| Increases | 0 | 0 | 0 | 30 | 30 | |
| Decreases | -1 651 | 0 | -9 | 0 | -1 660 | |
| Balance sheet value at end of year | 4 833 | 22 | 102 | 12 919 | 17 875 | |
| 1.1.2006–31.12.2006 | Subsidiary shares |
Associate shares |
Other shares and participations |
Loan receivables |
Total | |
| Balance sheet value at beginning of year | 6 484 | 22 | 1 831 | 10 730 | 19 067 | |
| Increases | 0 | 0 | 0 | 2 159 | 2 159 | |
| Decreases | 0 | 0 | -1 720 | 0 | -1 720 | |
| Balance sheet value at end of year | 6 484 | 22 | 111 | 12 889 | 19 506 | |
| Subsidiary shares: | Parent company's holding % |
Voting power % |
No. of shares | Par value | Book value teur |
|
| Kidex Oy | Finland | 100 | 100 | 200 | 2 208 teur | 2 208 |
| P.O. Korhonen Oy | Finland | 100 | 100 | 50 000 | 967 teur | 976 |
| Kiinteistö Oy Ylähanka | Finland | 100 | 100 | 12 500 | 9 teur | 8 |
| Martela AB. Bodafors | Sweden | 100 | 100 | 150 | 5 000 tsek | 550 |
| Aski Inredningscenter Ab, Malmö | Sweden | 100 | 100 | 510 | 1 250 tsek | 132 |
| Martela AS, Oslo | Norway | 100 | 100 | 5 720 | 200 tnok | 24 |
| Martela SP.z.o.o; Warsaw | Poland | 100 | 100 | 3 483 | 3 483 tpln | 935 |
| Total | 4 833 | |||||
| Associated companies: | ||||||
| Essa Office Systems AG, Switzerland | 30 | 30 | 34 | 34 tchf | 22 | |
| Other shares and participations: | ||||||
| As. Oy Kivipellonpolku | 287 | 1 teur | 21 | |||
| As. Oy Kivipellonpiha | 2 590 | 1 teur | 30 | |||
| Other shares and participations | 51 | |||||
| Total | 102 | |||||
| 12. Receivables | ||||||
| 2007 | 2006 | |||||
| Non-current receivables | ||||||
| Loan receivables | 623 | 0 | ||||
| Current receivables | ||||||
| Receivables from companies in same group | ||||||
| Trade receivables | 7 724 | 5 111 | ||||
| Loan receivables | 3 428 | 3 446 | ||||
| Accrued income and prepaid expenses | 13 | 4 | ||||
| Other receivables | ||||||
| Trade receivables | 13 463 | 16 974 | ||||
| Loan receivables | 22 | 34 | ||||
| Accrued income and prepaid expenses | 1 119 | 254 | ||||
| Current receivables, total | 25 768 | 25 823 |
Accrued income and prepaid expenses include prepaid royalties and expenses, as well as personnel expense and other assorted prepayments.
| Fund units | 2 004 | 1 943 | |||
|---|---|---|---|---|---|
| 14. Changes in shareholders' equity | |||||
| Distribution of shares 31.12.2007 | Number | Total EUR |
% of share capital |
Votes | % of votes |
| K shares (20 votes/share) | 604 800 | 1 018 500 | 15 | 12 096 000 | 77 |
| A shares (1 vote/share) | 3 550 800 | 5 981 500 | 85 | 3 550 800 | 23 |
| Total | 4 155 600 | 7 000 000 | 100 | 15 646 800 | 100 |
| Treasury shares | 67 700 | ||||
| No. of shares | 4 087 900 | ||||
| Share capital 1.1.and 31.12. | 7 000 | 7 000 | |||
| Share premium account 1.1 and 31.12. | 1 116 | 1 116 | |||
| Reserve fund 1.1 and 31.12. | 11 | 11 | |||
| Retained earnings 1.1. | 25 332 | 21 805 | |||
| Dividends | -1 022 | -613 | |||
| Profit for the year | 7 355 | 4 140 | |||
| Retained earnings 31.12. | 31 665 | 25 332 | |||
| Shareholders' equity, total | 39 792 | 33 459 |
The distributable funds of the parent company are EUR 31 665 thousand in 2007 (EUR 25 332 thousand 2006).
Treasury shares held by Martela Oyj are reported as a deduction from retained earnings. Martela Oyj owns 67 700 A shares and they were purchased at an average price of EUR 10.65. Market value of treasury shares on 31.12.2007: EUR 8.35 /share; (6.5 EUR 2006), total EUR 565 thousand (EUR 440 thousand 2006).
| 2007 | 2006 | |
|---|---|---|
| Loans from financial institutions | 9 621 | 11 894 |
| Loans from financial institutions |
Loans from financial institutions |
Pension loans | ||||
|---|---|---|---|---|---|---|
| Non-current liabilities 1.1. | 11 894 | 11 723 | 2 422 | |||
| Increases | 0 | 2 422 | 0 | |||
| Repayments | -2 273 | -2 251 | -2 422 | |||
| Non-current liabilities 31.12. | 9 621 | 11 894 | 0 | |||
| Repayments | 2008 | 2009 | 2010 | 2011 | 2012 | 2013 - |
| Loans from financial institutions | 2 273 | 2 273 | 4 507 | 1 316 | 1 016 | 508 |
| &63 | ||
|---|---|---|
| 16. Current liabilities | ||
| Current liabilities | ||
| Liabilities to group companies | ||
| Trade payables | 1 245 | 1 458 |
| Other current liabilities | 0 | 757 |
| Total | 1 245 | 2 215 |
| Other current liabilities | ||
| Loans from financial institutions | 3 273 | 3 273 |
| Advances received | 30 | 30 |
| Trade payables | 4 553 | 3 748 |
| Other current liabilities | 2 796 | 3 315 |
| Accrued liabilities | 3 906 | 3 407 |
| Other current liabilities, total | 14 557 | 13 773 |
| Current liabilities, total | 15 802 | 15 988 |
| Current liabilities are specified in Notes because items are combined in Balance Sheet | ||
| Essential items of accrued liabilities | ||
| Personnel expenses | 2 483 | 2 735 |
| Interest and financing accruals | 123 | 143 |
| Royalties | 92 | 80 |
| Residual expenses | 602 | 439 |
| Taxes | 549 | 0 |
| Other accrued liabilities | 57 | 10 |
| Accrued liabilities, total | 3 905 | 3 407 |
| 17. Pledges granted and contingent liabilities | ||
| Debts secured by mortgages | ||
| Bank loans Property mortgages |
12 894 11 548 |
15 167 11 548 |
| Corporate mortgages | 3 869 | 3 869 |
| Shares pledged | 4 | 4 |
| Total mortgages | 15 421 | 15 421 |
| Other pledges | ||
| Guarantees as security for rents | 97 | 97 |
| Guarantees given on behalf of companies | ||
| in the same group. | 2 284 | 2 057 |
| Leasing commitments | ||
| falling due within 12 months | 619 | 742 |
| falling due after 12 months | 1 077 | 640 |
| Total | 1 696 | 1 382 |
| Repurchase sureties | 150 | 161 |
| Other commitments | ||
| Rent commitments | 8 727 | 7 712 |
The parent company's distributable funds are EUR 31 665 067.06, of which the profit for the financial year is EUR 7 355 098.53.
The Board of Directors proposes to the Annual General Meeting that the distributable funds be used as follows:
| r distribution of a dividend of EUR 0.50 | ||
|---|---|---|
| per share, totalling | EUR 2 043 950.00 | |
| r to be left in shareholders' equity | EUR 29 621 117.06 |
Helsinki, 19 February 2008
The Board of Directors' Report and the Financial Statements are signed by:
| Heikki Ala-Ilkka | Pekka Martela |
|---|---|
| Chairman of the Board | Vice Chairman |
Heikki Martela Jaakko Palsanen Managing Director
Jori Keckman Tapio Hakakari
Matti Lindström
The above financial statements and the Report of the Board of Directors have been prepared in accordance with good accounting practice.
We have today issued a report on the audit performed by us.
Helsinki, 20 February 2008
Reino Tikkanen Authorised Public Accountant
I have audited the accounting records, the report of the Board of Directors, the financial statements and the administration of Martela Oyj for the period 1.1. – 31.12.2007. The Board of Directors and the Managing Director have prepared the consolidated financial statements, prepared in accordance with International Financial Reporting Standards as adopted by the EU, containing the consolidated balance sheet, income statement, cash flow statement, statement on the changes in equity and notes to the financial statements, as well as the report of the Board of Directors and the parent company's financial statements, prepared in accordance with prevailing regulations in Finland, containing the parent company's balance sheet, income statement, cash flow statement and notes to the financial statements. Based on my audit, I express an opinion on the consolidated financial statements, as well as on the report of the Board of Directors, the parent company's financial statements and the administration.
I conducted my audit in accordance with Finnish Standards on Auditing. Those standards require that I perform the audit to obtain reasonable assurance about whether the report of the Board of Directors and the financial statements are free of material misstatement. An audit includes examining on a test basis evidence supporting the amounts and disclosures in the report and in the financial statements, assessing the accounting principles used and significant estimates made by the management, as well as evaluating the overall financial statement presentation. The purpose of my audit of the administration is to examine whether the members of the Board of Directors and the Managing Director of the parent company have complied with the rules of the Limited Liability Companies Act.
In my opinion the consolidated financial statements, prepared in accordance with International Financial Reporting Standards as adopted by the EU, give a true and fair view, as defined in those standards and in the Finnish Accounting Act, of the consolidated results of operations as well as of the financial position.
In my opinion the parent company's financial statements have been prepared in accordance with the Finnish Accounting Act and other applicable Finnish rules and regulations. The parent company's financial statements give a true and fair view of the parent company's result of operations and of the financial position.
In my opinion the report of the Board of Directors has been prepared in accordance with the Finnish Accounting Act and other applicable Finnish rules and regulations. The report of the Board of Directors is consistent with the consolidated financial statements and the parent company's financial statements and gives a true and fair view, as defined in the Finnish Accounting Act, of the result of operations and of the financial position.
The consolidated financial statements and the parent company's financial statements can be adopted and the members of the Board of Directors and the Managing Director of the parent company can be discharged from liability for the period audited by me. The proposal by the Board of Directors regarding the disposal of distributable funds is in compliance with the Limited Liability Companies Act.
Helsinki, February 20, 2008
Reino Tikkanen Authorised Public Accountant
Takkatie 1 P.O. Box 44, FI-00371 Helsinki Tel.int. +358 (0)10 345 50 telefax int. +358 (0)10 345 5744 www.martela.com
Tuotekatu 13, FI-21200 Raisio Tel.int. +358 (0) 10 345 7100 telefax int. +358 (0) 10 345 7150 www.po-korhonen.fi
Savikontie 25 FI-82500 Kitee Tel.int. +358 (0) 10 345 7211 telefax int. +358 (0) 10 345 7244 www.kidex.fi
Elofs Erikssons väg 2 Box 7 SE-571 06 Bodafors Tel.int. +358 (0) 380 37 19 00 telefax +46 (0) 380 37 08 32 www.martela.se
Drammensveien 120 N-0277 Oslo Tel.int. +47 23 28 38 50 telefax int. +47 23 28 38 51 www.martela.no
Ul.Redutowa 25 PL-01-106 Warsaw Tel.int. +48 (22) 837 09 95 telefax int. +48 (22) 836 76 23 www.martela.pl
www.martela.com
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