The net sales of AS Viisnurk for the 3 months of 2008 were 73.9 mil. kroons/4.7 mil. euros (66.7 mil. kroons/4.3 mil. euros during the same period in 2007) and the net profit amounted to 5.1 mil. kroons/0.3 mil. euros (7.4 mil. kroons/0.5 mil. euros during the same period in 2007). As of the end of March 2008 the total assets of Viisnurk amounted to 172.7 mil. kroons/11.0 mil. euros (31.3.2007: 152.0 mil. kroons/9.7 mil. euros). The liabilities of the company accounted for 56% (31.3.2007: 52%) thereof, i.e. 96.2 mil. kroons/6.1 mil. euros (31.3.2007: 78.6 mil. kroons/5.0 mil. euros). The turnover of the Furniture Division in the 3 months of 2008 amounted to 40.1 mil. kroons/2.6 mil. euros (33.6 mil. kroons/2.1 mil. euros during the same period in 2007) and the profit amounted to 2.1 mil. kroons/0.1 mil. euros (2.6 mil. kroons/0.2 mil. euros during the same period in 2007). The turnover of the Building Materials Division in the 3 months of 2008 amounted to 33.8 mil. kroons/2.2 mil. euros (33.0 mil. kroons/2.1 mil. euros during the same period in 2007) and the profit amounted to 4.3 mil. kroons/0.3 mil. euros (5.9 mil. kroons/0.4 mil. euros during the same period in 2007). The profit of the Divisions does not reflect the general administrative costs of the corporation in the amount of 0.5 mil. kroons/0.03 mil. euros (0.6 mil. kroons/0.04 mil. euros during the same period in 2007) and the financial expenses of 0.8 mil. kroons/0.05 mil. euros (0.6 mil. kroons/0.04 mil. euros during the same period in 2007) that have been recorded in the report of business segments as unallocated expenses. The division plan of AS Viisnurk was signed on June 29, 2007 as the result of which the part of the previous Viisnurk engaged in production became separate, namely the Furniture and Building Materials Division. The aforementioned decision was also approved by the general meeting of shareholders on August 6, 2007. The division was registered in Commercial Register on September 19, 2007. The separated unit engaged in production named to AS Viisnurk and trading with the share of AS Viisnurk started in Tallinn Stock Exchange on September 25, 2007. The division engaged in production maintain the real estate necessary for its principal activity also in the future as well as the Rääma street real estate development project. Real estate located at Niidu street which was not used in the production activity of Viisnurk, was separated. All assets, liabilities, revenues and costs related to separated unit, are eliminated from comparison basis of the report. Forecast and development Increase of furniture retail trade and the expansion of our network of stores have gone according to the plan. In the end of 1st quarter 2008, Skano operated six stores in the Baltic states and two in Ukraine. Retail sale increased 132% in 1st quarter 2008 compared to same period 2007 and the sale in stores existing as of 31.3.2007 has increased 64% in 2008. The openings of new stores are being prepared and one store opened in the 1st quarter of 2008 in Ukraine and the plan is to open three more shops in Ukraine in the 2nd quarter. It is planned to open 16 stores in Ukraine and Central Europe in 2008-2009. Upon creating the retail unit, AS Viisnurk entered the business area of the retail of furniture and furnishing goods that is operated by a private limited company Skano, registered on September 1, 2003 and its subsidiaries in Latvia, Lithuania and Ukraine. AS Viisnurk holds 100% of the shares of OÜ Skano. The furniture factory has considerably narrowed its product portfolio. The production of pine furniture has basically been terminated and the most profitable production lines have been put into focus. Searching for new out-sourced lines has been terminated and preparations are being made in order to satisfy the demands related to the increase in retail business. The company has made a decision to focus on the profitable production of two basic product lines, namely Björkkvist/Boknäs and Villinki in order to improve the efficiency. Already today, the aforementioned product lines make more than 90% of the production of Viisnurk Furniture Division and 90% of the production is exported outside the Baltic states. The market has shown an increasing demand for both product lines and because of their classical design, there is little risk that the demand would decrease due to trends. Besides the increase of demand in its retail trade, the management board predicts the increase of furniture production due to the changes in the sales strategy of Scandinavian and Russian customers and increase of the sales network. At the end of 1st quarter 2008, new Isotex production line of interior finishing boards operated in Building Materials Division in one shift. This has created an opportunity for the increase of profitability and margins within the following periods. The main goal for 2009 is to utilize the entire production capacity of the new line and considerably larger marketing costs are planned for 2008 in order to sell the entire production volume. Although the result of 1st quarter of 2008 is weaker than same period of 2007, the results at the beginning of 2008 are again on the rise and surpass the initial expectations. The result in Building Materials Division was very good in 2007. This was caused by a great demand and the sale of all warehouse stock in the 1st quarter of 2007 (in the level of the entire group, 58% of the net profit of 2007 was achieved in the 1st quarter of the previous year). The management board plans a 20 mil. kroons (1.3 mil. euros) profit for 2008 whereas a considerable profit growth has been planned in the second half of 2008 due to the 6 months opening period of Skano stores. Divisional review: -------------------------------------------------------------------------------- | Th EEK | Net sales | Profit | -------------------------------------------------------------------------------- | | 3 m 2008 | 3 m 2007 | 3 m 2008 | 3 m 2007 | -------------------------------------------------------------------------------- | Furniture Division | 40,082 | 33,619 | 2,129 | 2,638 | -------------------------------------------------------------------------------- | Incl. retail (Skano) | 9,686 | 4,166 | (164) | 275 | -------------------------------------------------------------------------------- | Building Materials | 33,785 | 33,038 | 4,301 | 5,918 | | Division | | | | | -------------------------------------------------------------------------------- | TOTAL | 73,867 | 66,657 | 6,430 | 8,556 | -------------------------------------------------------------------------------- | Unallocated expenses | | | (510) | (568) | -------------------------------------------------------------------------------- | OPERATING PROFIT | | | 5,920 | 7,988 | -------------------------------------------------------------------------------- | Net financial costs | | | (787) | (584) | -------------------------------------------------------------------------------- | PROFIT BEFORE TAXES | | | 5,133 | 7,404 | -------------------------------------------------------------------------------- | Income tax | | | 0 | 0 | -------------------------------------------------------------------------------- | NET PROFIT | | | 5,133 | 7,404 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Th EUR | Net sales | Profit | -------------------------------------------------------------------------------- | | 3 m 2008 | 3 m 2007 | 3 m 2008 | 3 m 2007 | -------------------------------------------------------------------------------- | Furniture Division | 2,562 | 2,148 | 136 | 168 | -------------------------------------------------------------------------------- | Incl. retail (Skano) | 619 | 266 | (10) | 18 | -------------------------------------------------------------------------------- | Building Materials | 2,159 | 2,112 | 275 | 378 | | Division | | | | | -------------------------------------------------------------------------------- | TOTAL | 4,721 | 4,260 | 411 | 546 | -------------------------------------------------------------------------------- | Unallocated expenses | | | (33) | (36) | -------------------------------------------------------------------------------- | OPERATING PROFIT | | | 378 | 510 | -------------------------------------------------------------------------------- | Net financial costs | | | (50) | (37) | -------------------------------------------------------------------------------- | PROFIT BEFORE TAXES | | | 328 | 473 | -------------------------------------------------------------------------------- | Income tax | | | 0 | 0 | -------------------------------------------------------------------------------- | NET PROFIT | | | 328 | 473 | -------------------------------------------------------------------------------- Furniture Division The three-month net sales of AS Viisnurk Furniture Division were 40.1 mil. kroons/2.6 mil. euros (2007: 33.6 mil. kroons/2.1 mil. euros) and the economic result 2.1 mil. kroons/136 thousand euros (2007: 2.6 mil. kroons/168 thousand euros) as a profit. As compared to the previous year the turnover of the division has increased by 6.5 mil. kroons/414 thousand euros. Furniture Production The Furniture Division's three-month sales in the company's basic target market in Russia and Finland have proceeded better than the plans and compared to same period in 2007 sales has increased. The following increase in sales is basically the result of the increase in retail sale, but in Russian market increase of sales is also possible. Furniture Retail - Skano Concerning the retail trade of the Furniture Division, the company continued its strategic activities in the 1st quarter of 2008 in order to expand the retail trade to the neighbouring markets. The expansion of retail business includes opening new stores offering home furniture and furnishing goods in various Eastern European markets. Moreover, the company is searching for possibilities to enter the market of Central Europe. The retail sale of the Furniture Division shows a rising tendency. Within three months this year the retail sale has increased by 132% as compared to the same period last year. At the same time, the sales of the stores opened before 31.3.2008 (Tallinn, Riga, Pärnu) have increased 64% compared to the same period in 2007. In the Ukraine in Kiev were opened two stores in March and April. One store will open in Donetsk in the May 2008. After these openings Skano has four stores in Ukraine. Building Materials Division The three-month net sales of the Building Materials Division amounted to 33.8 mil. kroons/2.2 mil. euros and profit to 4.3 mil. kroons/0.3 mil. euros. In the same period of the last year, the turnover of the division totalled 33.0 mil. kroons/2.1 mil. euros and the net profit 5.9 mil. kroons/0.4 mil. euros. As compared to the previous year the turnover of the division has increased by 0.7 mil. kroons/0,05 mil. euros and the profit has decreased by 1.60 mil. kroons/0.1 mil. euros. Production volume in current prices has increased by 21.5% compared to 1st quarter 2007. The three-month net sales to Estonia, Latvia and Lithuania was 25.8% (2007: 34.4%) of total sales of the Building Materials Division. Building Boards The results of the first three months of 2008 have most been influenced by the sale of Isoplaat wind protection boards in domestic and foreign markets. In neighbouring markets, especially in Latvia and Russia, the sale of floor boards has increased. Wind protection boards were the product group with the largest share in the sale of building boards. Interior Finishing Boards Biggest markets for Isotex interior finishing boards are Finland and Estonia and the best selling products ceiling panels. In October, the selection of wall panels with textile cover increased by 3 new covers which make the entire product selection more attractive and help to differentiate clearly in tough competition. In 1st quarter were participated and in near future is plan to participate with full Isotex product range in different building fairs (Riga, Tallinn, St. Petersburg). Ceiling panels comprised 75% (80% in 2007) and wall panels 25% (20% in 2007) of the sales of interior finishing boards. Interior finishing boards are being produced since 1996 and they are sold under the company's own trademark Isotex. Investments In the retail business of the Furniture division activities were initiated in the first quarter of 2008 to expand the retail business to our neighbouring markets according to the strategy. The expansion of retail business includes opening new stores offering home furniture and furnishing materials in various Eastern European markets. During 3 months 2008 investments into technology totalled 484 thousand kroons/31 thousand euros and into buildings 642 thousand kroons/41 thousand euros. At the same period of 2007 investments into technology totalled 31 thousand kroons/2 thousand euros and into buildings 3 mil. kroons/192 thousand euros. Consolidated balance sheet -------------------------------------------------------------------------------- | | Th EEK | Th EEK | Th EUR | Th EUR | -------------------------------------------------------------------------------- | | 31.3.2008 | 31.12.200 | 31.3.2008 | 31.12.2007 | | | | 7 | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Cash and bank | 3,773 | 6,006 | 241 | 384 | -------------------------------------------------------------------------------- | Receivables and | 41,092 | 29,859 | 2,626 | 1,908 | | prepayments | | | | | -------------------------------------------------------------------------------- | Inventories | 62,112 | 54,742 | 3,969 | 3,499 | -------------------------------------------------------------------------------- | Total current assets | 106,977 | 90,607 | 6,836 | 5,791 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Investment property | 2,893 | 2,893 | 185 | 185 | -------------------------------------------------------------------------------- | Tangible fixed assets | 62,680 | 63,727 | 4,006 | 4,073 | -------------------------------------------------------------------------------- | Intangible fixed assets | 128 | 220 | 8 | 14 | -------------------------------------------------------------------------------- | Total fixed assets | 65,701 | 66,840 | 4,199 | 4,272 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | TOTAL ASSETS | 172,678 | 157,447 | 11,035 | 10,063 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Debt obligations | 6,518 | 8,782 | 416 | 561 | -------------------------------------------------------------------------------- | Payables and prepayments | 49,834 | 37,488 | 3,185 | 2,396 | -------------------------------------------------------------------------------- | Short-term provisions | 192 | 264 | 12 | 17 | -------------------------------------------------------------------------------- | Total current liabilities | 56,544 | 46,534 | 3,613 | 2,974 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Non-current debt | 36,734 | 36,734 | 2,348 | 2,348 | | obligations | | | | | -------------------------------------------------------------------------------- | Non-current provisions | 2,936 | 2,936 | 187 | 187 | -------------------------------------------------------------------------------- | Total non-current | 39,670 | 39,670 | 2,535 | 2,535 | | liabilities | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Total liabilities | 96,214 | 86,204 | 6,148 | 5,509 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Share capital at nominal | 44,991 | 44,991 | 2,875 | 2,875 | | value | | | | | -------------------------------------------------------------------------------- | Issue premium | 5,698 | 5,698 | 364 | 364 | -------------------------------------------------------------------------------- | Statutory capital reserve | 4,499 | 4,499 | 288 | 288 | -------------------------------------------------------------------------------- | Currency translation | 127 | 39 | 8 | 3 | | reserve | | | | | -------------------------------------------------------------------------------- | Retained profits | 16,016 | 3,359 | 1,024 | 215 | -------------------------------------------------------------------------------- | Net profit for the year | 5,133 | 12,657 | 328 | 809 | -------------------------------------------------------------------------------- | Total equity | 76,464 | 71,243 | 4,887 | 4,554 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | TOTAL LIABILITIES AND | 172,678 | 157,447 | 11,035 | 10,063 | | EQUITY | | | | | -------------------------------------------------------------------------------- Consolidated income statement -------------------------------------------------------------------------------- | | Th EEK | Th EEK | Th EUR | Th EUR | -------------------------------------------------------------------------------- | | 3 m 2008 | 3 m 2007 | 3 m 2008 | 3 m 2007 | | | | (adjusted) | | (adjusted) | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | RETURN ON SALES | 73,867 | 66,657 | 4,721 | 4,260 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Cost of production sold | (56,590) | (50,109) | (3,617) | (3,203) | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Gross profit | 17,277 | 16,548 | 1,104 | 1,057 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Marketing expenses | (9,922) | (7,108) | (634) | (454) | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | General administrative | (1,179) | (1,382) | (75) | (88) | | expenses | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Other income | 179 | 45 | 11 | 2 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Other expenses | (435) | (115) | (28) | (7) | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Operating profit | 5,920 | 7,988 | 378 | 510 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Financial income and | (787) | (584) | (50) | (37) | | financial expenses | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | NET PROFIT FOR THE | 5,133 | 7,404 | 328 | 473 | | PERIOD | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Basic earnings per share | 1.14 | 1.65 | 0.07 | 0.11 | -------------------------------------------------------------------------------- | Diluted earnings per | 1.14 | 1.65 | 0.07 | 0.11 | | share | | | | | -------------------------------------------------------------------------------- Einar Pähkel CFO +372 447 8331 einar.pahkel@viisnurk.ee