Wulff Group Plc's Interim Report for January 1 – September 30, 2011

INTERIM REPORT         November 10, 2011 at 9:00 A.M.

WULFF GROUP PLC’S INTERIM REPORT FOR JANUARY 1 – SEPTEMBER 30, 2011

Net Sales Increased and the Operating Result Turned up to a Profit
 

  • In January-September, the Group’s net sales increased by 8.4 percentages and totalled EUR 71.6 million (EUR 66.0 million). The quarter’s net sales were EUR 22.0 million (EUR 20.4 million). The reporting period’s positive development is backed with the sales operations development activities, good performance in customer service and the efficiency improvement initiatives managed successfully.
  • The quarter’s EBITDA increased by 149 percentages up to EUR 0.57 million from EUR 0.23 million in the comparable period. In January-September, EBITDA increased by 451 percentages and totalled EUR 1.61 million (EUR 0.29 million).
  • The quarter’s operating result turned up to a profit of EUR 0.31 million whereas in the comparable period, the Group reported a loss of EUR -0.41 million. The nine-month operating profit of EUR 0.81 million was EUR 1.67 million better than a year ago (EUR -0.86 million).
  • Earnings per share were EUR 0.02 (EUR -0.09) for the third quarter and EUR 0.03 (EUR -0.14) for the 9-month period.

GROUP’S NET SALES AND PERFORMANCE

The Group’s net sales continued growing also in July-September. The positive sales growth and clear profit improvement have been fuelled by the sales operations development activities and the efficiency improvement initiatives managed successfully. The office supply markets have continued growing as has been experience since the end of last year but the markets have not yet recovered back to their previous years’ level.

In January-September, the Group’s net sales increased by 8.4 percentages and totalled EUR 71.6 million (EUR 66.0 million). The third-quarter net sales were EUR 22.0 million being 7.5 percentages greater than in the comparable period (EUR 20.4 million). The focus on sales activities and new client hunting fuelled the sales growth in both divisions and in all operating countries of the Group. Additionally the Group’s clientele has been served in an even broader way to increase the demand for the Group’s products. The majority of the sales growth was gained in the Group’s Scandinavian companies. In January-September 2011, the net sales have grown also in Finland, especially in the office supply contract sales.

Wulff Group’s CEO Heikki Vienola: ”I am very satisfied with the results from our sales activities. Especially the Group’s Scandinavian companies are doing good job and results. The satisfied customers, sales growth and the profit improvement tell that the direction is right. Our aim is to grow profitably and to be our industry’s top company in all Nordic countries in 2015. This requires still a lot of work. To offer our customers the best services in the field, we focus strongly on our service development both locally and on the Nordic level. During whole 2011, the personnel motivation campaign ‘Full Speed Ahead’ encourages our people for profitability and customer-orientation. Our personnel’s strong commitment in our goals and their willingness to perform well form a good base for the sales growth in the end of 2011.”

Along with the sales growth, the Group’s profitability has improved positively. The positive financial development has been fuelled by the increased demand for the Group’s products and the efficiency improvement initiatives managed successfully. EBITDA in the third quarter increased by 149 percentages up to EUR 0.57 million from EUR 0.23 million in the comparable period. EBITDA was 2.6 percentage (1.1 %) of the quarter’s net sales. In January-September, EBITDA increased by 451 percentages up to EUR 1.61 million (EUR 0.29 million) being 2.2 percentages (0.4%) of the nine-month net sales. The Group, focusing on sales growth and continuing review of its cost structure and performance efficiency, aims to improving the profitability of its businesses.

In the third quarter, the operating result was EUR 0.31 million (EUR -0.41 million) being 1.4 percentages (-2.0 %) of net sales. The nine-month operating profit of EUR 0.81 million was EUR 1.67 million better than a year ago (EUR -0.86 million). The nine-month operating profit was +1.1 percentages (-1.3 %) of net sales.

In January-September 2011, the financial income and expenses totalled (net) EUR -0.43 million (EUR +0.29 million) including dividend income of EUR 0.02 million (EUR 0.15 million), interest expenses of EUR 0.28 million (EUR 0.19 million) and mainly currency-related other financial items (net) of EUR -0.18 million (EUR +0.33 million). The third-quarter financial income and expenses netted EUR -0.16 million (EUR +0.08 million).

The result before taxes was EUR +0.15 million (EUR -0.33 million) in the third quarter and EUR +0.38 million (EUR -0.57 million) in the whole reporting period. The net result after taxes totalled EUR +0.12 million (EUR -0.51 million) in the third quarter and EUR +0.26 million (EUR -0.76 million) in the whole reporting period.

The net result attributable to the equity holders of the parent company amounted to EUR +0.11 million (EUR -0.56 million) in the third quarter and EUR 0.17 million (EUR -0.93 million) in the entire reporting period. Earnings per share were EUR +0.02 (EUR -0.09) for the quarter and EUR +0.03 (EUR -0.14) for the 9-month period.

Return on investment (ROI) was +0.83 percentage (-1.05 %) for the quarter and +2.32 percentage (-1.35 %) for the 9-month period. Return on equity (ROE) was +0.74 percentage (-3.02 %) for the quarter and +1.53 (-4.38%) for the entire reporting period.

CONTRACT CUSTOMERS DIVISION

The Contract Customers Division is the customer’s comprehensive partner in the field of office supplies, business and promotional gifts as well as fair services. In the whole 9-month period, the segment’s net sales increased by EUR 5.1 million i.e. 9 percentages up to EUR 60.0 million (EUR 54.9 million). The division’s net sales totalled EUR 18.9 million (EUR 17.3 million) in the third quarter. The division’s third-quarter operating profit was EUR 0.61 million being EUR 0.92 million better than in the comparable period (EUR -0.31 million). The division’s nine-month operating profit was EUR 1.26 million i.e. EUR 1.63 million better than a year ago (EUR -0.37 million) when the operating result was impacted by the goodwill impairment of EUR 0.35 million for the fair service company Entre Marketing Oy.

The majority of the division’s sales growth and operating profit was gained by Wulff Supplies with its operations in Scandinavia. The company has managed to both increase its market share and win new customers constantly. The Group aims to be the Nordic market leader and the pioneer in its field. Wulff Supplies AB’s Managing Director Trond Fikseaunet is Wulff Group’s Executive Board member since March 2011. Wulff Supplies’ organization was strengthened when Fredrik Onsèr, an expert in office supplies industry, started as the Country Manager in Sweden.

Also Wulff Oy Ab, with its operations in Finland, has increased its sales and improved its operating profit this year. In August, Sami Asikainen started as the Group Executive Board member and Wulff Oy Ab’s Managing Director. During its history of more than 120 years, Wulff Oy is known for being always the pioneer in its branch in Finland. The industry’s first web store Wulffinkulma.fi’s development has been positive: the number of registered customers has been growing constantly and the average purchase is remarkably greater than in other web stores generally. Finland’s broadest office supply web store open for all corporations and organizations, serves its customers with a range of nearly 4,000 products. Wulffinkulma.fi is a strong investment in the future.

The division’s result is affected by the cycles of the business and advertising gift market: the majority of the products are delivered and the majority of the annual profit is generated in the second quarter and the last quarter of the year.

DIRECT SALES DIVISION

The Direct Sales Division aims to improve its customers’ daily operations with innovative products and the industry’s most professional personal, local service. In January-September, the division’s net sales increased by 4 percentages (EUR 0.42 million) from the comparable period’s EUR 11.3 million up to EUR 11.7 million. The division’s third-quarter net sales were EUR 3.1 million (EUR 3.1 million). The sales grew and profitability improved in Sweden and Norway. The Direct Sales Division’s operating result totalled EUR 0.14 million (EUR 0.09 million) in the whole nine-month period and EUR -0.11 million (EUR -0.02 million) in the third quarter.

In order to achieve a good profitability level and financial result, the cost efficiency improvement initiatives will continue in all direct sales companies. Administration will be more effective and fixed costs can be reduced after the merger of seven Finnish subsidiaries since November 1, 2011. Simultaneously, sales and sales support systems are in focus and sales are supported with new methods. The Group’s new partnering strategy aims to gain synergies in product purchases. Group-level price competitions and co-operation have already gained good results.

In the autumn, the Group has focused on recruitment. The autumn’s marketing campaign reached plenty of sales talents and good recruitments were made. Also cooperation with Finnish work agency offices has been deepened with good results. For the Direct Sales division, the sales growth is fuelled most importantly with the recruitment of new sales talents. The Group has possibilities to recruit several new sales talents in its operational countries. Sales talent is accumulated with ongoing training during the whole Wulff career. Wulff has formed a training program, Wulff Academy, especially for the persons who are entering the industry for the first time or changing jobs. Additionally the Group offers a possibility to get a commercial elementary degree along the work.

FINANCING, INVESTMENTS AND FINANCIAL POSITION

The cash flow from operating activities totalled EUR -0.33 million (EUR -1.49 million) in the third quarter and EUR -3.02 million (EUR -1.63 million) in the entire reporting period because the working capital has increased along the sales growth. Traditionally the operating cash flow is negative in the third quarter when there is little sales invoicing due to summer holidays and the holiday compensations accumulated throughout the past year are paid to the personnel. Additionally,  the inventory values are at their peek in the end of September just before the last quarter season. In addition to the profitability improvement initiatives, the Group aims to improve its working capital management.

For its fixed asset investments, the Group paid a net of EUR 0.32 million (EUR 0.56 million) in the third quarter and EUR 0.53 million (EUR 1.04 million) in the whole reporting period. In January-September, the Group paid EUR 0.98 million (EUR 0.22 million) for subsidiary and minority acquisitions made in previous financial years.

The Group raised loan of net EUR 0.17 million (EUR 0.28 million) in the third quarter and EUR 1.72 million (EUR -0.21 million) in the whole reporting period. Wulff Group Plc paid its shareholders dividends of EUR 0.33 million (EUR 0.33 million) and additionally the minority shareholders of the subsidiaries were paid dividends of EUR 0.11 million (EUR 0.14 million).

In general, the Group’s cash balance decreased by EUR -0.48 million (EUR -1.58 million) in the third quarter and by EUR -3.23 million (EUR -3.55 million) in the whole reporting period from the beginning value of EUR 4.38 million down to EUR 1.16 million as of September 30, 2011.

The equity attributable to the equity holders of the parent company totalled EUR 2.37 per share (December 31, 2010: EUR 2.41) and the equity-to-assets ratio was 39.1 percentage (December 31, 2010: 37.0 %).

SHARES AND SHARE CAPITAL

Based on the authorization of the Annual General Meeting held on April 23, 2010, the acquisition of own shares continued in early 2011. In April-September 2011, no own shares were reacquired. Authorized by the Annual General Meeting held on April 28, 2011, the Board of Directors decided in its organizing meeting to continue buying back a maximum of 300,000 own shares by the next Annual General Meeting. In the end of the reporting period, the Group held a total of 90,000 own shares (90,056 as of September 30, 2010) representing 1.4 percentage (1.4 %) of the total number and voting rights of Wulff shares.

Wulff Group Plc’ share is listed on NASDAQ OMX Helsinki in the Small Cap segment under the Consumer Discretionary sector. The company’s trading code is WUF1V. In the end of the reporting period, the share was valued at EUR 2.25 (EUR 2.76) and the market capitalization of the outstanding shares totalled EUR 14.7 million (EUR 18.0 million).

PERSONNEL

In January-September, the Group’s personnel totalled 374 (384) employees on average. In the end of the period, the Group had 377 (391) employees of which 141 (138) persons were employed in Sweden, Norway, Denmark and 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.

In order to increase the organic growth, the Group focuses on recruiting sales personnel. The Group has possibilities to recruit several new sales talents in all its operational countries still during 2011.

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 also in the last quarter of 2011.

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 comes from other than euro-currency countries. Fluctuation of the currencies may affect the Group’s net result and financial position.

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.

Also in the last quarter of 2011, the Group continues taking actions for enhancing profitability. The Group focuses on the growth and development of its sales operations. The Group expects to win new customers and gain growth especially along with Wulff Supplies AB in Scandinavia and with the webstore Wulffinkulma.fi in Finland.

As announced on July 15, 2011, the management believes the Group’s net sales grow from the level of 2010 and the operating profit excluding non-recurring items be better than in 2010.

CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

INCOME STATEMENT III III I-III I-III I-IV
EUR 1000 2011 2010 2011 2010 2010
Net sales 21 971 20 435 71 603 66 035 93 107
Other operating income 37 108 214 373 467
Materials and services -14 909 -13 496 -47 478 -43 133 -60 516
Employee benefit expenses -3 914 -3 792 -13 920 -13 546 -18 617
Other operating expenses -2 618 -3 028 -8 814 -9 438 -12 866
EBITDA 567 228 1 605 291 1 575
Depreciation and amortization -259 -289 -795 -802 -1 182
Impairment 0 -350 0 -350 -350
Operating profit/loss 308 -411 810 -861 43
Financial income 0 177 105 690 755
Financial expenses -157 -93 -539 -400 -575
Profit/Loss before taxes 151 -327 376 -571 223
Income taxes -29 -185 -122 -191 -637
Net profit/loss for the period 122 -513 255 -762 -415
           
Attributable to:          
   Equity holders of the parent company 105 -557 166 -931 -623
   Non-controlling interest 17 45 89 169 209
           
Earnings per share for profit          
attributable to the equity holders          
of the parent company:          
Earnings per share, EUR 0,02 -0,09 0,03 -0,14 -0,10
(diluted = non-diluted)          
           
           
STATEMENT OF COMPREHENSIVE INCOME III III I-III I-III I-IV
EUR 1000 2011 2010 2011 2010 2010
Net profit/loss for the period 122 -513 255 -762 -415
Other comprehensive income, net of tax          
Change in translation differences -45 153 -76 93 134
Fair value changes on available-for-sale investments -44 -1 -57 -15 42
Total other comprehensive income -90 152 -134 78 176
Total comprehensive income for the period 32 -360 121 -684 -238
           
Total comprehensive income attributable to:          
   Equity holders of the parent company 21 -451 93 -918 -540
   Non-controlling interest 11 91 28 234 302
STATEMENT OF FINANCIAL POSITION Sept 30 Sept 30 Dec 31
EUR 1000 2011 2010 2010
ASSETS      
Non-current assets      
Goodwill 9 396 10 622 9 501
Other intangible assets 1 393 1 266 1 382
Property, plant and equipment 1 984 2 267 2 285
Non-current financial assets      
   Interest-bearing financial assets 143 571 503
   Non-interest-bearing financial assets 365 321 442
Deferred tax assets 1 342 1 236 1 011
Total non-current assets 14 622 16 283 15 124
       
Current assets      
Inventories 11 848 12 300 11 740
Current receivables      
   Interest-bearing receivables 0 81 74
   Non-interest-bearing receivables 15 659 14 859 14 708
Financial assets recognised at fair value through profit/loss 63 0 0
Cash and cash equivalents 1 155 1 785 4 379
Total current assets 28 725 29 025 30 902
       
TOTAL ASSETS 43 347 45 308 46 025
       
EQUITY AND LIABILITIES      
Equity      
Equity attributable to the equity holders of the parent company:      
   Share capital 2 650 2 650 2 650
   Share premium fund 7 662 7 662 7 662
   Invested unrestricted equity fund 223 223 223
   Retained earnings 4 889 5 040 5 121
Non-controlling interest 1 042 1 201 1 158
Total equity 16 465 16 776 16 814
       
Non-current liabilities      
Interest-bearing liabilities 7 422 8 935 8 403
Deferred tax liabilities 116 144 136
Total non-current liabilities 7 538 9 079 8 539
       
Current liabilities      
Interest-bearing liabilities 4 631 2 018 2 425
Non-interest-bearing liabilities 14 713 17 435 18 247
Total current liabilities 19 344 19 453 20 673
       
TOTAL EQUITY AND LIABILITIES 43 347 45 308 46 025
STATEMENT OF CASH FLOW III III I-III I-III I-IV
EUR 1000 2011 2010 2011 2010 2010
           
Cash flow from operating activities:          
   Cash received from sales 21 218 19 043 70 547 63 941 91 189
   Cash received from other operating income 43 90 115 292 339
   Cash paid for operating expenses -21 450 -20 506 -73 200 -65 443 -89 433
Cash flow from operating activities before financial items and income taxes -189 -1 373 -2 539 -1 210 2 095
   Interest paid -84 -66 -230 -226 -274
   Interest received 25 43 63 62 79
   Income taxes paid -81 -97 -309 -254 -372
Cash flow from operating activities -330 -1 492 -3 015 -1 628 1 528
           
Cash flow from investing activities:          
   Investments in intangible and tangible assets -378 -585 -1 041 -1 195 -1 509
   Proceeds from sales of intangible and tangible assets 57 29 510 151 187
   Loans granted     -12    
  Repayments of loans receivable     74 4 29
Cash flow from investing activities -322 -556 -470 -1 040 -1 293
           
Cash flow from financing activities:          
   Acquisition of own shares   -1 -3 -85 -110
   Dividends paid -36   -433 -469 -484
   Dividends received 1 26 22 149 149
   Payments for subsidiary acquisitions   -34 -982 -219 -219
   Cash paid for (received from) short-term investments (net) 36 201 -63 -55 -55
   Withdrawals of long- and short-term loans 269 297 2 748 914 914
   Repayments of long-term loans -99 -19 -1 029 -1 119 -1 388
Cash flow from financing activities 170 469 260 -885 -1 193
           
Change in cash and cash equivalents -481 -1 579 -3 225 -3 553 -958
Cash and cash equivalents at the beginning of the period 1 636 3 364 4 379 5 337 5 337
Cash and cash equivalents at the end of the period 1 155 1 785 1 155 1 785 4 379

STATEMENT OF CHANGES IN EQUITY

EUR 1000 Equity attributable to equity holders of the parent company    
  Share capital Share pre-mium fund Fund for invest-
ed
non-
res-
tricted equity
Treasury shares Re-
tained earn-
ings
Total Non-control-ling
inte-
rest
TOTAL
                 
Equity on Jan 1, 2010 2 650 7 662 223 -211 6 562 16 886 1 117 18 003
Comprehensive income *         -918 -918 234 -684
Dividends paid         -327 -327 -145 -472
Treasury share acquisition       -85   -85   -85
Treasury share disposal       16 -16 0   0
Share-based payments         16 16   16
Changes in ownership         4 4 -5 -1
Equity on Sept 30, 2010 2 650 7 662 223 -281 5 321 15 575 1 201 16 776
                 
Equity on Jan 1, 2010 2 650 7 662 223 -211 6 562 16 886 1 117 18 003
Comprehensive income *         -540 -540 302 -238
Dividends paid         -327 -327 -157 -484
Treasury share acquisition       -110   -110   -110
Treasury share disposal       42 -42 0   0
Share-based payments         42 42   42
Changes in ownership         -294 -294 -103 -398
Equity on Dec 31, 2010 2 650 7 662 223 -279 5 400 15 656 1 158 16 814
                 
Equity on Jan 1, 2011 2 650 7 662 223 -279 5 400 15 656 1 158 16 814
Comprehensive income *         93 93 28 121
Dividends paid         -325 -325 -108 -433
Treasury share acquisition       -3   -3   -3
Share-based payments         3 3   3
Changes in ownership           0 -36 -36
Equity on Sept 30, 2011 2 650 7 662 223 -283 5 171 15 424 1 042 16 465

* net of tax

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEGMENT INFORMATION III III I-III I-III I-IV
EUR 1000 2011 2010 2011 2010 2010
           
Net sales by operating segments          
Contract Customers Division 18 864 17 307 59 962 54 856 77 301
Direct Sales Division 3 114 3 092 11 705 11 288 16 075
Group Services 245 292 767 1 008 1 257
Intragroup eliminations between segments -252 -256 -831 -1 118 -1 525
TOTAL NET SALES 21 971 20 435 71 603 66 035 93 107
           
Operating profit/loss by operating segments          
Contract Customers business 614 44 1 257 -23 832
Non-Recurring Impairment   -350   -350 -350
Contract Customers Division Total 614 -306 1 257 -373 482
           
Direct Sales Division Total -109 -22 137 89 324
           
Group Services and non-allocated items -197 -83 -585 -577 -764
TOTAL OPERATING PROFIT/LOSS 308 -411 810 -861 43
KEY FIGURES III III I-III I-III I-IV
EUR 1000 2011 2010 2011 2010 2010
Net sales 21 971 20 435 71 603 66 035 93 107
Increase/Decrease in net sales, % 7,5 % 16,3 % 8,4 % 34,6 % 24,5 %
EBITDA 567 228 1 605 291 1 575
EBITDA margin, % 2,6 % 1,1 % 2,2 % 0,4 % 1,7 %
Operating profit/loss 308 -411 810 -861 43
Operating profit/loss margin, % 1,4 % -2,0 % 1,1 % -1,3 % 0,0 %
Profit/Loss before taxes 151 -327 376 -571 223
Profit/Loss before taxes margin, % 0,7 % -1,6 % 0,5 % -0,9 % 0,2 %
Net profit/loss for the period attributable to equity holders of the parent company 105 -557 166 -931 -623
Net profit/loss for the period, % 0,5 % -2,7 % 0,2 % -1,4 % -0,7 %
Earnings per share, EUR (diluted = non-diluted) 0,02 -0,09 0,03 -0,14 -0,10
Return on equity (ROE), % 0,74 % -3,02 % 1,53 % -4,38 % -2,38 %
Return on investment (ROI), % 0,83 % -1,05 % 2,32 % -1,35 % 1,75 %
Equity-to-assets ratio at the end of period, % 39,1 % 37,3 % 39,1 % 37,3 % 37,0 %
Debt-to-equity ratio at the end of period 65,3 % 50,8 % 65,3 % 50,8 % 34,9 %
Equity per share at the end of period, EUR * 2,37 2,39 2,37 2,39 2,41
Investments in non-current assets 358 585 932 1 195 1 619
Investments in fixed assets, % of net sales 1,6 % 2,9 % 1,3 % 1,8 % 1,7 %
Treasury shares held by the Group at the end of period 90 000 90 056 90 000 90 056 99 036
Treasury shares, % of total share capital and votes 1,4 % 1,4 % 1,4 % 1,4 % 1,5 %
Number of total issued shares at the end of period 6607628 6607628 6607628 6607628 6607628
Personnel on average during the period 371 386 374 384 384
Personnel at the end of period 377 391 377 391 370

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

QUARTERLY KEY FIGURES III II I IV III II I
EUR 1000 2011 2011 2011 2010 2010 2010 2010
Net sales 21 971 24 390 25 242 27 073 20 435 24 016 21 584
EBITDA 567 756 282 1 284 228 2 61
Operating profit/loss 308 491 10 903 -411 -289 -160
Profit/Loss before taxes 151 318 -93 794 -327 -200 -43
Net profit/loss for the period 105 241 -180 308 -557 -134 -240
Earnings per share, EUR (diluted = non-diluted) 0,02 0,04 -0,03 0,05 -0,09 -0,02 -0,04
RELATED PARTY TRANSACTIONS III III I-III I-III I-IV
EUR 1000 2011 2010 2011 2010 2010
Sales to related parties 55 21 154 68 93
Purchases from related parties 5 91 23 100 114
Loan receivables from related parties 0 566 0 566 566
Loan payables to related parties 0 492 0 492 492
COMMITMENTS Sept 30 Sept 30 Dec 31
EUR 1000 2011 2010 2010
Mortgages and guarantees on own behalf      
   Business mortgage for the Group’s loan liabilities 7 350 7 350 7 350
   Real estate pledge for the Group’s loan liabilities 900 900 900
   Subsidiary shares pledged as security for group
   companies’ liabilities
3 284 3 634 3 284
   Other listed shares pledged as security for group
   companies’ liabilities
212 245 289
   Current receivables pledged as security for group
   companies’ liabilities
254   255
   Pledges and guarantees given for the group companies’
   off-balance sheet commitments
219 227 221
Guarantees given on behalf of third parties 191 280 236
Minimum future operating lease payments 6 046 7 134 6 820

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 Annual Report 2010 taking into account also the 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. Adopting the amendments in IAS 24, IAS 32, IFRIC 14 and IFRIC 19 did not have a material impact on the information presented in this report.

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.

After the previous release, the presentation of the cash flow statement has been changed and now the cash flow from financial activities includes the additional acquisition price payments and minority acquisition prices for deals made after the Group has originally acquired the majority control in the subsidiary. Previously all payments for subsidiary acquisitions were presented in the cash flow from investing activities. This new way of presentation is better in line with IFRS guidelines.

The Group’s pension premium loans are secured with a bank guarantee, the margin of which is linked to the covenants regarding the equity ratio and the interest-bearing debt/EBITDA ratio. The equity ratio shall be 35 % at minimum in the end of each year. On December 31, 2010 the equity ratio was 37.0 % (December 31, 2009: 41.7 %). On December 31, 2010, the interest-bearing debt/EBITDA ratio requirement of 3.5 was not reached and accordingly, the Group paid a one-off minor compensation to the bank.

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 November 9, 2011

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

Key media

www.wulff-group.com