Wulff Group Plc’s Financial Statements for January 1 – December 31, 2013

Result Impacted by Difficult Market Situation and Impairments

WULFF GROUP PLC

FINANCIAL STATEMENTS RELEASE          February 6, 2014 at 9:00 A.M.

WULFF GROUP PLC’S FINANCIAL STATEMENTS FOR JANUARY 1 – DECEMBER 31, 2013

Result Impacted by Difficult Market Situation and Impairments

  • Net sales totalled EUR 83.5 million (EUR 90.2 million) in 2013 and EUR 22.6 million (EUR 25.1 million) in the last quarter. Compared to 2012, net sales decreased by seven percentages cumulatively and 10 percentages in the last quarter.
  • In 2013, EBITDA was EUR 0.00 million (EUR 2.3 million) being 0.0 percentages (2.5 %) of net sales. In the last quarter, EBITDA was EUR 0.33 million (EUR 0.96 million) being 1.5 percentages (3.8 %) of net sales.
  • The operating result was also impacted by an impairment of EUR 0.6 million in the Group’s business gifts’ goodwill in September and EUR 1.0 million in the Finnish office supplies business in December. The reported operating result including the impairments was EUR -2.7 million (EUR 1.1 million) in 2013 and EUR -0.9 million (EUR 0.6 million) in the last quarter.
  • The result was impacted by a total of EUR -2.6 million non-recurring items of which EUR -1.8 million impacted operating result and EUR -0.8 million impacted financial items and taxes.
  • Earnings per share (EPS) were EUR -0.59 (EUR 0.11) in 2013 and EUR -0.32 (EUR 0.06) in the last quarter.
  • Equity-to-assets ratio was 38.3 percentages (December 31, 2012: 44.3 %).
  • Equity per share amounted to EUR 1.80 (December 31, 2012: EUR 2.51).
  • The Board of Directors proposes to the Annual General Meeting that no dividend will be distributed for the financial year 2013.

GROUP’S NET SALES AND RESULT PERFORMANCE

Net sales totalled EUR 83.5 million (EUR 90.2 million) in 2013 and EUR 22.6 million (EUR 25.1 million) in the last quarter. Compared to 2012, net sales decreased by seven percentages cumulatively and 10 percentages in the last quarter. In 2013, EBITDA was EUR 0.00 million (EUR 2.3 million) being 0.0 percentages (2.5 %) of net sales. In the last quarter, EBITDA was EUR 0.33 million (EUR 0.96 million) being 1.5 percentages (3.8 %) of net sales.

The general economic situation remained difficult which impacted the demand in the office supply markets. The operating result was also impacted by an impairment of EUR 0.6 million in the Group’s business gifts’ goodwill in September and EUR 1.0 million in the Finnish office supplies business in December. Additionally the result was impacted by inventory write-downs and bad debts of EUR 0.12 million in 2013. The reported operating result including the impairments was EUR -2.7 million (EUR 1.1 million) in 2013 and EUR -0.9 million (EUR 0.6 million) in the last quarter. In 2013, operating result (EBIT) excluding the non-recurring goodwill impairments totalled EUR -1.1 million (EUR 1.1 million) and EUR 0.1 million (EUR 0.6 million) in the last quarter. The reported operating result including the impairments was EUR -2.7 million (EUR 1.1 million) in 2013 and EUR -0.9 million (EUR 0.6 million) in the last quarter. In the cost-saving program performed in the year-end 2013, the target is to gain annual savings of EUR 2.0 million which are estimated to impact the result mainly in 2014. The Group continues to review its expense structure and optimise its operations to improve the profitability of its businesses.

Wulff Group’s CEO Heikki Vienola: “The difficult economic situation in our markets impacted strongly our product demand in 2013. Despite our many achievements Wulff’s financial result 2013 was a disappointment. We have adjusted our operations by many cost-saving actions. In 2014 we search for growth in the international fair services and new product categories such as led lighting. In order to ensure our competitiveness and competitive advantage to be our industry pioneer also in the future, we shall focus on those issues that are the most important for our customers. Customer focus has been in our values already for more than 120 years – and we will also continue that way in the future. Success will be built by developing our operations with long-term partnerships together with our customers.”

In 2013 the financial income and expenses netted EUR -0.7 million (EUR -0.1 million) including dividend income of EUR 0.01 million (EUR 0.02 million), interest expenses of EUR 0.2 million (EUR 0.2 million), allowances of EUR 0.2 million (EUR 0.0 million) for given bank guarantee receivables as well as mainly currency-related other financial items (net) EUR -0.3 million (EUR +0.1 million). In the last quarter the financial income and expenses totalled (net) EUR -0.3 million (EUR -0.1 million).

The result before taxes was EUR -3.4 million (EUR 1.0 million) in 2013 and EUR -1.2 million (EUR 0.5 million) in the last quarter. The last quarter’s result was impacted by the decrease in deferred tax assets booked for previous years’ losses due to the Finnish income tax rate change (EUR 0.4 million) together with an allowance from the parent company’s corporate tax credits receivable (EUR 0.2 million). The effective income tax rate increased due to the goodwill impairments for which no related deferred tax asset increase is booked. The net result after taxes was EUR -3.9 million (EUR 0.9 million) in 2013 and EUR -2.1 million (EUR 0.5 million) in the last quarter. Earnings per share (EPS) were EUR -0.59 (EUR 0.11) in 2013 and EUR -0.32 (EUR 0.06) in the last quarter.

Return on investment (ROI) was -13.9 percentages (4.7 %) in 2013 and -5.2 percentages (2.1 %) in the last quarter. Return on equity (ROE) was -25.6 percentages (5.1 %) in 2013 and -15.1 percentages (2.8 %) in the last quarter.

CONTRACT CUSTOMERS DIVISION

The Contract Customers Division is the customer’s comprehensive partner in the field of office supplies, IT supplies, business and promotional gifts as well as international fair services. The division’s net sales totalled EUR 70.7 million (EUR 76.3 million) in 2013 and EUR 18.9 million (EUR 21.2 million) in the last quarter. The general economic situation and the decrease in the products’ demand have led to the decrease in net sales. The division’s operating result was also impacted by inventory write-downs.

The Contract Customers division’s operating result was also impacted by an impairment of EUR 0.6 million in the business gifts’ goodwill in September and EUR 1.0 million in the Finnish office supplies business in December. The division’s operating result (EBIT) excluding the non-recurring goodwill impairments totalled EUR -0.1 million (EUR 2.04 million) in 2013 and EUR 0.11 million (EUR 0.76 million) in the last quarter. The reported operating result including the impairments was EUR -1.69 million (EUR 2.04 million) in 2013 and EUR -0.88 million (EUR 0.76 million) in the last quarter.

International fair services with the net sales of EUR 8 million (EUR 7 million) are an even more significant part of Wulff’s business. In spring 2013 Wulff Entre established its fair service sales in the Swedish markets by opening its own operations in Sweden. Wulff Entre’s investments in sales and its development have resulted in both stronger customer relationships and an increase in clientele in Finland, Russia and Germany. In Sweden Wulff Entre has won new customers who have already given good feedback on Wulff Entre’s services and know-how. In 2013 Wulff Entre exported Finnish companies’ know-how to more than 30 countries. Wulff Entre is the market leader in its field in Finland and the customers have had a solid trust in Wulff Entre’s ability to find the right international venues for over 90 years already.

The net sales and profitability of Wulff’s Scandinavian operator Wulff Supplies AB decreased in 2013. Today almost half of the Group’s net sales come from Scandinavia. Office supply markets have decreased in Finland and  also some in Scandinavia. Wulff’s position in the market is strong. Wulff Supplies serves the Group’s Scandinavian and pan-Nordic customers.

The Group’s web store Wulffinkulma.fi has increased its net sales. According to the strategy, Wulff has developed its sales channels and its whole service range to be more versatile. Wulff stores serve locally small and mid-sized corporate customers, entrepreneurs and consumers. In summer 2013 Wulff Helsinki store moved to new premises in Konala, Helsinki. The new store is located along excellent traffic routes in a business centre which enables to attract plenty of new customers. Since 2013 for the first time, the stores exhibit the Group’s entire product range, Wulff’s Green products and recycling centres. The stores exhibit also seasonal business gifts.

Traditionally the Contract Customers Division’s result is affected by the cycles of the business and promotional gift market: the majority of the products are delivered and the majority of the annual profit is generated in the second and the last quarter of the year. The markets have not improved as expected and the demand for Wulff’s products has continued to decrease. In September 2013, Wulff reported an impairment of EUR 0.6 million from its business gift goodwill which decreased down to EUR 0.7 million.

As the industry pioneer and the most professional partner Wulff believes to have a good position to serve its customers as broadly and versatile as possible when the markets start turning up again. In a poor general economic situation companies search for cost saving solutions and Wulff is the partner capable of offering such savings.

DIRECT SALES DIVISION

The Direct Sales Division aims to improve its customers’ daily operations with innovative products as well as the industry’s most professional personal and local service. In 2013 the division’s net sales totalled EUR 12.9 million (EUR 14.0 million) and operating result was EUR -0.11 (EUR -0.04 million). In the last quarter the net sales totalled EUR 3.7 million (EUR 4.0 million) and operating result was EUR 0.1 million (EUR 0.1 million). The division’s result was impacted by inventory write-downs and bad debts.

The Division’s profitability is improved by concentrating on profitable product and service fields and by optimising the operations’ efficiency. Wulff invests strongly in the development of the product and service range and aims to increase the synergy of the purchasing operations by group-wide competitive bidding and cooperation. Unifying the sales support systems improve the sales operations.

Wulff’s sales growth is fuelled most importantly by the sales personnel. Successful recruiting affects especially the performance of Direct Sales. Wulff is prepared to employ new sales talents also in the times of economic slowdown. Wulff’s own introduction and training programmes ensure that every sales person gets both a comprehensive starting training and further education on how to improve one’s own know-how.

FINANCING, INVESTMENTS AND FINANCIAL POSITION

The cash flow from operating activities was EUR 0.6 million (EUR 3.3 million) in 2013 and EUR 3.4 million (EUR 3.9 million) in the last quarter. Typically in this industry the result and cash flow are generated in the last quarter.

For its fixed asset investments the Group paid a net of EUR 0.7 million (EUR 0.7 million) in 2013 and EUR 0.05 million (EUR 0.12 million) in the last quarter. In 2013 the Group paid back loans of net EUR 0.03 million (EUR 1.85 million, net) of which EUR 2.9 million (EUR 2.1 million net) during the last quarter.

In general the Group’s cash balance decreased by EUR 1.0 million in 2013 (EUR +0.3 million). The Group’s bank and cash funds totalled EUR 2.7 million in the beginning of the year and EUR 1.8 million in the end of the reporting period.

In the end of the financial year 2013 the Group’s equity-to-assets ratio was 38.3 percentages (December 31, 2012: 44.3 %). Equity attributable to the equity holders of the parent company amounted to EUR 1.80 per share (December 31, 2012: EUR 2.51).

 
 

SHARES AND SHARE CAPITAL

Wulff Group Plc’s share is listed on NASDAQ OMX Helsinki in the Small Cap segment under the Industrials sector. The company’s trading code is WUF1V. In the end of the reporting period the share was valued at EUR 1.57 (EUR 1.77) and the market capitalization of the outstanding shares totalled EUR 10.2 million (EUR 11.5 million).

In 2013 no own shares were reacquired. As a part of Wulff Group’s key personnel’s share-based incentive plan introduced in February 2011, the Board of Directors decided in May 2013 to grant 6,000 treasury shares without compensation to the Group’s key person who may not transfer the shares during a restriction period of two years. In the end of December 2013, the Group held 79,000 (December 31, 2012: 85,000) own shares representing 1.2 percentage (1.3 %) of the total number and voting rights of Wulff shares. According to the Annual General Meeting’s authorisation on April 10, 2013, the Board of Directors decided in its organizing meeting to continue the acquisition of its own shares, by acquiring a maximum of 300.000 own shares by April 30, 2014.

PERSONNEL

In 2013 Wulff Group’s personnel totalled 311 (343) employees on average. In the end of the year the Group had 295 (326) employees of which 115 (125) persons were employed in Sweden, Norway, Denmark or Estonia.

The majority, approximately 60 percentages, of the Group’s personnel works in sales operations and approximately 40 percentages of the employees work in sales support, logistics and administration. The personnel consists approximately half-and-half of men and women.

ORGANIZATIONAL CHANGE

Samu Vuorio (Master of Science in Technology, born in 1974) has been nominated as Wulff’s new CFO and Group Executive Board member since February 7, 2014 when Kati Näätänen will leave Wulff Group to join her new employer. Vuorio reports to Group CEO Heikki Vienola. Previously Vuorio has worked e.g. as Itella Logistics Oy’s CFO and he has a strong background in finance and logistics.

RISKS AND UNCERTAINTIES IN THE NEAR FUTURE

The demand for office supplies is still affected by the organizations’ personnel lay-offs and cost-saving initiatives made during the economic downturn. The general uncertainty may still continue which will most likely affect the ordering behaviour of some corporate clients.

Although the business gifts are seen increasingly as a part of the corporate communications as a whole and they are utilized also in the off-season, some cost savings may be sought after by decreasing the investments in the brand promotion. The ongoing economic uncertainties impact especially the demand for business and promotional gifts. During the uncertain economic periods, the corporations may also minimize attending fairs.

Half of the Group’s net sales come from other than euro-currency countries. Fluctuation of the currencies affects the Group’s net result and financial position.

In case of long-term economic slowdown and poor financial performance it is even more important to ensure the adequacy of financing. A part of the Group’s loan agreements include covenants, according to which the equity ratio shall be 35 percentages at minimum and the interest-bearing debt/EBITDA ratio shall be 3.5 at maximum in the end of each financial year. On December 31, 2013 the equity ratio was 38.3 % (44.3 %). On December 31, 2013 the interest-bearing debt/EBITDA ratio (requirement max. 3.5) was breached due the loss in 2013. During the end of 2013 the group management negotiated with the banks which will require a non-recurring waiver fee from the company.

SUBSEQUENT EVENTS

20% of Wulff Liikelahjat Oy was sold to an external non-controlling shareholder in January 2014.

BOARD OF DIRECTORS’ PROPOSAL FOR THE ANNUAL RESULT       

The Group’s parent company Wulff Group Plc’s distributable funds totalled EUR 1.9 million. The Group’s net result attributable to the parent company shareholders was EUR -3.9 million (EUR 0.7 million) i.e. EUR -0.59 per share (EUR 0.11 per share). The Board of Directors proposes to the Annual General Meeting that no dividend will be distributed for the financial year 2013 and the financial year’s loss will be transferred in the retained earnings in the shareholders’ equity.

MARKET SITUATION AND FUTURE OUTLOOK

Wulff is the most significant Nordic player in its industry. Wulff’s mission is to help its corporate customers to succeed in their own business by providing them with leading-edge products and services in a way best suitable to them. The markets have been consolidating in the past few years and the Nordic markets are expected to consolidate in the future as well. Wulff is prepared to carry out new strategic acquisitions.

Wulff’s management believes the demand for office supplies will recover earliest in late 2014. Operating result is believed to improve in 2014 due to cost savings. Typically in the industry, the annual profit is made in the last quarter of the year.

Wulff continues to improve the efficiency of its operations along the continuous renewal in order to increase the Group’s profitability and to reach its long-term financial targets. In the cost-saving program performed in the year-end 2013, the target is to gain annual savings of EUR 2.0 million which are estimated to impact the result mainly in 2014.

The Group focuses strongly on sales activities, the development of its sales operations and new solutions offered to customers. Examples of new products and services, which have already received good customer feedback, are LED lights and lighting solutions as well as acoustic panels improving work environment, personnel well-being and ecological objectives.

WULFF GROUP PLC’S FINANCIAL REPORTING AND ANNUAL GENERAL MEETING 2014 
 

Wulff Group Plc will release the following financial reports in 2014:

Statutory Financial Statements 2013 Week 12/2014
Interim Report, January-March 2014 Thursday May 8, 2014
Interim Report, January-June 2014 Thursday August 7, 2014
Interim Report, January-September 2014 Thursday November 6, 2014

Wulff Group Plc’s Annual General Meeting will be held on Thursday April 10, 2014. A separate notice to the Annual General Meeting will be published prior to the meeting.

CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

INCOME STATEMENT IV IV I-IV I-IV
EUR 1000 2013 2012 2013 2012
Net sales 22 585 25 105 83 543 90 238
Other operating income 39 53 110 200
Materials and services -14 948 -16 244 -55 190 -58 260
Employee benefit expenses -4 763 -4 988 -17 811 -18 755
Other operating expenses -2 585 -2 967 -10 649 -11 155
EBITDA 328 959 3 2 269
Depreciation and amortization -268 -322 -1 104 -1 136
Impairment -990 0 -1 620 0
Operating profit/loss -930 637 -2 721 1 132
Financial income 69 19 155 272
Financial expenses -381 -131 -829 -413
Profit/Loss before taxes -1 242 525 -3 395 990
Income taxes -860 -33 -510 -100
Net profit/loss for the period -2 102 492 -3 904 890
         
Attributable to:        
   Equity holders of the parent company -2 113 369 -3 874 717
   Non-controlling interest 11 124 -31 173
         
Earnings per share for profit        
attributable to the equity holders        
of the parent company:        
Earnings per share, EUR -0,32 0,06 -0,59 0,11
(diluted = non-diluted)        
         
         
STATEMENT OF COMPREHENSIVE INCOME IV IV I-IV I-IV
EUR 1000 2013 2012 2013 2012
Net profit/loss for the period -2 102 492 -3 904 890
Other comprehensive income which may be reclassified to profit or loss subsequently (net of tax)        
Change in translation differences -152 -47 -258 181
Fair value changes on available-for-sale investments -10 -18 -50 -22
Total other comprehensive income -162 -65 -308 159
Total comprehensive income for the period -2 264 427 -4 212 1 049
         
Total comprehensive income attributable to:        
   Equity holders of the parent company -2 262 329 -4 148 839
   Non-controlling interest -2 98 -64 210
STATEMENT OF FINANCIAL POSITION     Dec 31 Dec 31
EUR 1000     2013 2012
ASSETS        
Non-current assets        
Goodwill     7 845 9 546
Other intangible assets     1 180 1 308
Property, plant and equipment     1 536 1 890
Non-current financial assets        
   Interest-bearing financial assets     35 43
   Non-interest-bearing financial assets     246 327
Deferred tax assets     1 737 1 972
Total non-current assets     12 578 15 085
         
Current assets        
Inventories     9 053 10 236
Current receivables        
   Interest-bearing receivables     20 89
   Non-interest-bearing receivables     11 728 13 276
Financial assets recognised at fair value through profit/loss     3 78
Cash and cash equivalents     1 774 2 749
Total current assets     22 578 26 429
         
TOTAL ASSETS     35 156 41 513
         
EQUITY AND LIABILITIES        
Equity        
Equity attributable to the equity holders of the parent company:        
   Share capital     2 650 2 650
   Share premium fund     7 662 7 662
   Invested unrestricted equity fund     223 223
   Retained earnings     1 190 5 849
Non-controlling interest     1 137 1 283
Total equity     12 861 17 667
         
Non-current liabilities        
Interest-bearing liabilities     4 825 6 008
Deferred tax liabilities     39 102
Total non-current liabilities     4 864 6 109
         
Current liabilities        
Interest-bearing liabilities     2 839 1 685
Non-interest-bearing liabilities     14 591 16 052
Total current liabilities     17 431 17 737
         
TOTAL EQUITY AND LIABILITIES     35 156 41 513
STATEMENT OF CASH FLOW IV IV I-IV I-IV
EUR 1000 2013 2012 2013 2012
         
Cash flow from operating activities:        
   Cash received from sales 24 950 27 289 85 210 93 018
   Cash received from other operating    income 43 27 114 65
   Cash paid for operating expenses -21 557 -23 334 -84 131 -89 063
Cash flow from operating activities before financial items and income taxes 3 436 3 982 1 193 4 020
   Interest paid -25 -20 -136 -169
   Interest received 6 3 30 39
   Income taxes paid -60 -111 -520 -592
Cash flow from operating activities 3 357 3 854 567 3 297
         
Cash flow from investing activities:        
   Investments in intangible and    tangible assets -83 -175 -828 -946
   Proceeds from sales of intangible    and tangible assets 37 53 123 269
   Disposal of other non-current    investments 11 12 11 12
   Loans granted -14 -7 -65 -13
   Repayments of loans receivable     34 8
Cash flow from investing activities -49 -117 -725 -670
         
Cash flow from financing activities:        
   Dividends paid -6   -638 -531
   Dividends received     7 20
   Payments for subsidiary share    acquisitions     -33 -129
   Payments received for subsidiary    share disposals       81
   Cash paid for (received from)    short-term investments (net) 17   95 -32
   Withdrawals and repayments of    short-term loans -2 494 -1 726 1 357 -254
   Withdrawals of long-term loans       355
   Repayments of long-term loans -395 -396 -1 385 -1 952
Cash flow from financing activities -2 877 -2 122 -598 -2 443
         
Change in cash and cash equivalents 431 1 615 -756 184
Cash and cash equivalents at the beginning of the period 1 407 1 135 2 749 2 464
Translation difference of cash -64 -1 -219 101
Cash and cash equivalents at the end of the period 1 774 2 749 1 774 2 749

STATEMENT OF CHANGES IN EQUITY

EUR 1000 Equity attributable to equity holders of the parent company  
                   
      Fund            
      for in            
      vested         Non-  
      non   Trans Re   cont-  
    Share re   lation tai   roll-  
* net   pre strict   diffe ned   ing  
of Share mium ed Own ren Earn   inte  
tax capital fund equity shares ces ings Total rest TOTAL
                   
Equity on Jan 1, 2012 2 650 7 662 223 -283 -116 5 860 15 996 1 198 17 195
Net profit / loss for the period           717 717 173 890
Other comprehens. income*:                  
   Change in translation diff         144   144 37 181
   Fair value changes on    available-for-sale    investments           -22 -22   -22
Comprehensive income *         144 695 839 210 1 049
Dividends paid           -457 -457 -77 -534
Treasury share disposal       11   -11 0   0
Share- based payments           5 5   5
Changes in ownership             0 -48 -48
Equity on Dec 31, 2012 2 650 7 662 223 -272 28 6 093 16 384 1 283 17 667
                   
Equity on Jan 1, 2013 2 650 7 662 223 -272 28 6 093 16 384 1 283 17 667
Net profit / loss for the period           -3 874 -3 874 -31 -3 904
Other comprehens. income*:                  
   Change in translation diff         -225   -225 -34 -258
   Fair value changes on    available-for-sale    investments           -50 -50   -50
Comprehensive income *         -225 -3 923 -4 148 -64 -4 212
Dividends paid           -522 -522 -117 -638
Treasury share disposal       12   -12 0   0
Share- based payments           11 11   11
Changes in ownership             0 35 35
Equity on Dec 31, 2013 2 650 7 662 223 -260 -196 1 647 11 725 1 137 12 862

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEGMENT INFORMATION IV IV I-IV I-IV
EUR 1000 2013 2012 2013 2012
         
Net sales by operating segments        
Contract Customers Division 18 868 21 193 70 669 76 250
Direct Sales Division 3 711 4 005 12 892 14 023
Group Services 146 235 659 1 079
Intersegment eliminations -141 -328 -677 -1 114
TOTAL NET SALES 22 585 25 105 83 543 90 238
         
Operating profit/loss by operating segments        
Contract Customers business 113 756 -70 2 041
Goodwill Impairment -990   -1 619  
Contract Customers Division -878 756 -1 689 2 041
         
Direct Sales Division 148 100 -108 -38
         
Group Services and non-allocated items -201 -220 -923 -872
TOTAL OPERATING PROFIT/LOSS -930 637 -2 721 1 132
KEY FIGURES IV IV I-IV I-IV
EUR 1000 2013 2012 2013 2012
Net sales 22 585 25 105 83 543 90 238
Change in net sales, % -10,0 % -8,8 % -7,4 % -9,0 %
EBITDA 328 959 3 2 269
EBITDA margin, % 1,5 % 3,8 % 0,0 % 2,5 %
Operating profit/loss (EBIT) -930 637 -2 721 1 132
Operating profit/loss margin, % -4,1 % 2,5 % -3,3 % 1,3 %
Profit/Loss before taxes -1 242 525 -3 395 990
Profit/Loss before taxes margin, % -5,5 % 2,1 % -4,1 % 1,1 %
Net profit/loss for the period attributable to equity holders of the parent company -2 113 369 -3 874 717
Net profit/loss for the period, % -9,4 % 1,5 % -4,6 % 0,8 %
Earnings per share, EUR (diluted = non-diluted) -0,32 0,06 -0,59 0,11
Return on equity (ROE), % -15,07 % 2,82 % -25,58 % 5,11 %
Return on investment (ROI), % -5,15 % 2,10 % -13,92 % 4,67 %
Equity-to-assets ratio at the end of period, % 38,3 % 44,3 % 38,3 % 44,3 %
Debt-to-equity ratio at the end of period 45,4 % 27,6 % 45,4 % 27,6 %
Equity per share at the end of period, EUR * 1,80 2,51 1,80 2,51
Investments in non-current assets 83 220 778 972
Investments in non-current assets, % of net sales 0,4 % 0,9 % 0,9 % 1,1 %
Treasury shares held by the Group at the end of period 79 000 85 000 79 000 85 000
Treasury shares, % of total share capital and votes 1,2 % 1,3 % 1,2 % 1,3 %
Number of total issued shares at the end of period 6607628 6607628 6607628 6607628
Personnel on average during the period 303 328 311 343
Personnel at the end of period 295 326 295 326

* Equity attributable to the equity holders of the parent company / Number of shares excluding the acquired own shares

QUARTERLY KEY FIGURES IV III II I IV III II I
EUR 1000 2013 2013 2013 2013 2012 2012 2012 2012
Net sales 22 585 17 474 20 743 22 742 25 105 19 768 22 039 23 326
EBITDA 328 -246 -486 407 959 470 364 476
Operating profit/loss -930 -1 141 -769 120 637 174 106 216
Profit/Loss before taxes -1 242 -1 212 -1 005 64 525 184 58 223
Net profit/loss for the period attributable to the equity holders of the parent company -2 113 -1 030 -760 29 369 150 25 174
Earnings per share, EUR (diluted = non-diluted) -0,32 -0,16 -0,12 0,00 0,06 0,02 0,00 0,03
RELATED PARTY TRANSACTIONS IV IV I-IV I-IV
EUR 1000 2013 2012 2013 2012
Sales to related parties 100 66 247 203
Purchases from related parties 1 32 56 80
Current non-interest-bearing receivables from related parties 49   49  
Non-current interest-bearing receivables from related parties   33   33
COMMITMENTS     Dec 31 Dec 31
EUR 1000     2013 2012
Mortgages and guarantees on own behalf        
   Business mortgage for the Group’s loan liabilities     7 550 7 550
   Real estate pledge for the Group’s loan liabilities     900 900
   Subsidiary shares pledged as security for group companies’ liabilities     6 702 4 018
   Other listed shares pledged as security for group companies’ liabilities     125 187
   Current receivables pledged as security for group companies’ liabilities     239 272
   Pledges and guarantees given for the group companies’ off-balance sheet    commitments     183 232
Guarantees given on behalf of third parties     0 114
Minimum future operating lease payments     4 648 6 033

Accounting principles applied in the condensed consolidated financial statements

These condensed consolidated financial statements are unaudited. This report has been prepared in accordance with IAS 34 following the valuation and accounting methods guided by IFRS principles. The accounting principles used in the preparation of this report are consistent with those described in the previous year’s Financial Statement taking into account also the possible new, revised and amended standards and interpretations. Income tax is the amount corresponding to the actual effective rate based on year-to-date actual tax calculation.

The IFRS principles require the management to make estimates and assumptions when preparing financial statements. Although these estimates and assumptions are based on the management’s best knowledge of today, the final outcome may differ from the estimated values presented in the financial statements.

The business gift markets have not improved as expected and Wulff Liikelahjat Oy’s net sales and profitability have decreased from last year. In September 2013 Wulff reported an impairment of EUR 0.6 million from its business gift goodwill which decreased down to EUR 0.7 million in the consolidated statement of financial position. Due to the decreased profitability in the Finnish office supplies business its goodwill was impaired by EUR 1.0 million in December 2013 after which the Finnish office supplies business’ goodwill is EUR 3.5 million in the consolidated statement of financial position. In goodwill impairment tests the carrying amount is compared to the unit’s discounted present value of the recoverable cash flows i.e. the value in use, where the previous profit performance level, the next year’s budget as well as the sales and profit estimates for future years are considered. The testing calculations’ five-year estimate period consists of the budget year and the following four estimate years where a moderate, approximately two-percent annual growth is estimated in each business areas. After this five-year estimate period, the so-called eternity value is based on zero-growth assumption. The budgets and later years’ estimates used in the testing are carefully estimated and the growth expectations are moderate considering also the impacts of economic slowdown. The technique used in the impairment tests on December 31, 2013 was the same as in the financial statements as of December 31, 2012 where the testing methods have been described in detail in its consolidated notes. The discount interest rate used on December 31, 2013 was 12.2% (Dec 31, 2012: 10.4%).

A part of the Group’s loan agreements include covenants, according to which the equity ratio shall be 35 percentages at minimum and the interest-bearing debt/EBITDA ratio shall be 3.5 at maximum in the end of each financial year. On December 31, 2013 the equity ratio was 38.3 % (44.3 %). On December 31, 2013 the interest-bearing debt/EBITDA ratio (requirement max. 3.5) was breached due the loss in 2013. During the end of 2013 the group management negotiated with the banks which will require a non-recurring waiver fee from the company. In the financial statements as of December 31, 2013 the Group’s interest-bearing liabilities have been presented in non-current and current liabilities based on the loans’ maturities.

The Group has no knowledge of any significant events after the end of the financial period that would have had a material impact on this report in any other way that has been already discussed in the review by the Board of Directors.

In Vantaa on February 5, 2014

WULFF GROUP PLC

BOARD OF DIRECTORS

Further information:

CEO Heikki Vienola

tel. +358 9 5259 0050 or mobile: +358 50 65 110

e-mail: heikki.vienola@wulff.fi

DISTRIBUTION

NASDAQ OMX Helsinki Oy

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