Wulff Group Plc’s Interim Report for January 1 – September 30, 2013

INTERIM REPORT                 November 5, 2013 at 9:00 A.M.

WULFF GROUP PLC’S INTERIM REPORT FOR JANUARY 1 – SEPTEMBER 30, 2013

Result Impacted by Goodwill Impairment together with Difficult Market Situation

  • Net sales totalled EUR 61.0 million (EUR 65.1 million) in January-September and EUR 17.5 million (EUR 19.8 million) in the third quarter. Compared to 2012, net sales decreased by six percentages cumulatively and 12 percentages in the third quarter.
  • In January-September, EBITDA was EUR -0.33 million (EUR 1.31 million) being -0.5 percentages (2.0 %) of net sales. In the third quarter, EBITDA was EUR -0.25 million (EUR 0.47 million) being -1.4 percentages (2.4 %) of net sales.
  • The operating result was also impacted by an impairment of EUR 0.6 million in the Group’s business gifts’ goodwill. The reported operating result including the impairment was EUR -1.79 million (EUR 0.5 million) in January-September and EUR -1.14 million (EUR 0.17 million) in the third quarter.
  • Earnings per share (EPS) were EUR -0.27 (EUR 0.05) in January-September and EUR -0.16 (EUR 0.02) in the third quarter.
  • Equity-to-assets ratio was 40.2 percentages (December 31, 2012: 44.3 %).
  • Equity per share amounted to EUR 2.14 (December 31, 2012: EUR 2.51).
  • With the co-operational personnel negotiations held in October-November 2013, Wulff aims to gain savings of EUR 1.0 million which are estimated to impact the result mainly in 2014.

GROUP’S NET SALES AND RESULT PERFORMANCE

Net sales totalled EUR 61.0 million (EUR 65.1 million) in January-September and EUR 17.5 million (EUR 19.8 million) in the third quarter. Compared to 2012, net sales decreased by six percentages cumulatively and 12 percentages in the third quarter. In January-September, EBITDA was EUR -0.33 million (EUR 1.31 million) being -0.5 percentages (2.0 %) of net sales. In the third quarter, EBITDA was EUR -0.25 million (EUR 0.47 million) being -1.4 percentages (2.4 %) 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 January-September, operating result (EBIT) excluding the non-recurring goodwill impairment of EUR 0.6 million totalled EUR -1.16 million (EUR 0.50 million) being -1.9 percentages (0.8 %) of net sales. In the third quarter, operating result (EBIT) excluding the impairment was EUR -0.51 million (EUR 0.17 million) being -2.9 percentages (0.9 %) of net sales. The reported operating result including the impairment was EUR -1.79 million (EUR 0.5 million) in January-September and EUR -1.14 million (EUR 0.17 million) in the third quarter. 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: “We continue to increase our operational efficiency in order to improve our profitability. It is essential to react to the changes in the economic and financial situations as quickly as possible. We have renewed and reduced our organization together with cost-cutting. Despite our actions the Group’s operating result will be negative in 2013. The cost-saving actions of 2013 are estimated to affect our result mainly in 2014. In order to ensure our competitiveness and ability to be the pioneer in our industry also in the future, we need to focus on issues which are most valuable to 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. Even though the operational environment is challenging and we do not expect the markets to increase next year yet, we have focused in personal customer service: we launched our international fair service sales in Sweden, Wulff Store Helsinki moved into modern and well-functioning premises along good traffic routes in Konala Helsinki, and the new Wulff Kuopio office serves well the Group’s all customers.”

In January-September the financial income and expenses totalled (net) EUR -0.36 million (EUR -0.03 million) including dividend income of EUR 0.01 million (EUR 0.02 million), interest expenses of EUR 0.15 million (EUR 0.20 million) and mainly currency-related other financial items (net) EUR -0.22 million (EUR +0.15 million). In the third quarter the financial income and expenses totalled (net) EUR -0.07 million (EUR 0.01 million).

The result before taxes was EUR -2.15 million (EUR 0.47 million) in January-September and EUR -1.21 million (EUR 0.18 million) in the third quarter. The net result after taxes was EUR -1.80 million (EUR 0.40 million) in January-September and EUR -1.09 million (EUR 0.17 million) in the third quarter. Earnings per share (EPS) were EUR -0.27 (EUR 0.05) in January-September and EUR -0.16 (EUR 0.02) in the third quarter.

Return on investment (ROI) was -7.9 percentages (2.5 %) in January-September and -4.6 percentages (3.4 %) in the third quarter. Return on equity (ROE) was -11.0 percentages (2.3 %) in January-September and -7.0 percentages (4.7 %) in the third 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 52.3 million (EUR 55.1 million) in January-September and EUR 15.6 million (EUR 17.1 million) in the third 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 an impairment of EUR 0.6 million in the Group’s business gifts’ goodwill. Operating result (EBIT) excluding the non-recurring goodwill impairment of EUR 0.6 million totalled EUR -0.18 million (EUR 1.29 million) in January-September and EUR -0.16 million (EUR 0.43 million) in the third quarter. The reported operating result including the impairment was EUR -0.81 million (EUR 1.29 million) in January-September and EUR -0.79 million (EUR 0.43 million) in the third quarter.

International fair services 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 the Southern 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. Also 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 exports 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 during the reporting period. Today almost 50 percent 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 the Wulff brand, its sales channels and its whole service range to be more versatile and ecological. 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. This year 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 decreased from last year. In September 2013, Wulff reports an impairment of EUR 0.6 million from its business gift goodwill which decreases 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 January-September the division’s net sales totalled EUR 8.7 million (EUR 10.0 million) and operating result was EUR -0.3 (EUR -0.1 million). In the third quarter the net sales totalled EUR 1.8 million (EUR 2.6 million) and operating result was EUR -0.1 million (EUR -0.05 million).

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 -2.8 million (EUR -0.6 million) in January-September and EUR -1.2 million (EUR -0.9 million) in the third 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 0.6 million) in January-September and EUR 0.1 million (EUR 0.2 million) in the third quarter. In January-September the Group raised loans of net EUR 2.86 million (EUR 0.27 million, net) of which EUR 1.75 million (EUR 0.8 million net) during the third quarter.

In general the Group’s cash balance decreased by EUR 1.3 million in January-September (EUR -1.3 million). The Group’s bank and cash funds totalled EUR 2.7 million in the beginning of the year and EUR 1.4 million in the end of the reporting period.

In the end of September 2013 the Group’s equity-to-assets ratio was 40.2 percentages (December 31, 2012: 44.3 %). Equity attributable to the equity holders of the parent company amounted to EUR 2.14 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 1.64 (EUR 2.00) and the market capitalization of the outstanding shares totalled EUR 10.7 million (EUR 13.0 million).

In January-September 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 September 2013, the Group held 79,000 (September 30, 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 January-September 2013 the Group’s personnel totalled 319 (345) employees on average. In the end of September the Group had 311 (330) employees of which 117 (132) 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.

Wulff’s themes for 2013 are “Professional care for customers and personnel alike” and “Becoming the masters in giving and utilizing feedback”. The coaching-style leadership and the ‘100-percent-responsibility’ working attitude have a significant role in building a well-being, developing and successful organization. Wulff’s culture means that everyone understands the significance of their own work: each and everyone at Wulff can influence a customer’s unique Wulff experience in a positive way.

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. The group management have started finance agreement negotiations with the banks which have given loans to Wulff.

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.

The markets have not improved as expected and the demand for Wulff’s products has decreased from last year. Based on the Group management’s forecast the operating result will be negative in 2013. Typically in the industry, the annual profit is made in the last quarter of the year. Also in 2013 the last quarter will be the strongest.

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. With the co-operational personnel negotiations held in October-November 2013, Wulff aims to gain savings of EUR 1.0 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.

CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

INCOME STATEMENT III III I-III I-III I-IV
EUR 1000 2013 2012 2013 2012 2012
Net sales 17 474 19 768 60 958 65 133 90 238
Other operating income 17 25 72 147 200
Materials and services -11 791 -13 054 -40 243 -42 016 -58 260
Employee benefit expenses -3 573 -3 829 -13 048 -13 767 -18 755
Other operating expenses -2 372 -2 440 -8 064 -8 188 -11 155
EBITDA -246 470 -325 1 310 2 269
Depreciation and amortization -266 -296 -836 -814 -1 136
Impairment -629 0 -629 0 0
Operating profit/loss -1 141 174 -1 790 496 1 132
Financial income 22 126 85 252 272
Financial expenses -92 -116 -448 -283 -413
Profit/Loss before taxes -1 212 184 -2 153 465 990
Income taxes 126 -13 350 -67 -100
Net profit/loss for the period -1 086 171 -1 802 398 890
           
Attributable to:          
   Equity holders of the parent company -1 030 150 -1 761 348 717
   Non-controlling interest -55 21 -41 49 173
           
Earnings per share for profit          
attributable to the equity holders          
of the parent company:          
Earnings per share, EUR -0,16 0,02 -0,27 0,05 0,11
(diluted = non-diluted)          
           
           
STATEMENT OF COMPREHENSIVE INCOME III III I-III I-III I-IV
EUR 1000 2013 2012 2013 2012 2012
Net profit/loss for the period -1 086 171 -1 802 398 890
Other comprehensive income which may be reclassified to profit or loss subsequently (net of tax)          
Change in translation differences 15 139 -107 228 181
Fair value changes on available-for-sale investments -8 1 -40 -4 -22
Total other comprehensive income 7 140 -146 224 159
Total comprehensive income for the period -1 079 311 -1 949 622 1 049
           
Total comprehensive income attributable to:          
   Equity holders of the parent company -1 029 259 -1 886 510 839
   Non-controlling interest -50 52 -63 111 210
STATEMENT OF FINANCIAL POSITION     Sept 30 Sept 30 Dec 31
EUR 1000     2013 2012 2012
ASSETS          
Non-current assets          
Goodwill     8 883 9 574 9 546
Other intangible assets     1 285 1 310 1 308
Property, plant and equipment     1 687 2 030 1 890
Non-current financial assets          
   Interest-bearing financial assets     35 69 43
   Non-interest-bearing financial assets     266 362 327
Deferred tax assets     2 475 1 850 1 972
Total non-current assets     14 630 15 195 15 085
           
Current assets          
Inventories     9 853 10 164 10 236
Current receivables          
   Interest-bearing receivables     21 39 16
   Non-interest-bearing receivables     14 053 15 684 13 350
Financial assets recognised at fair value through profit/loss     3 71 78
Cash and cash equivalents     1 407 1 135 2 749
Total current assets     25 337 27 094 26 429
           
TOTAL ASSETS     39 967 42 289 41 513
           
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     3 449 5 519 5 849
Non-controlling interest     1 060 1 183 1 283
Total equity     15 044 17 237 17 667
           
Non-current liabilities          
Interest-bearing liabilities     5 235 6 417 6 008
Deferred tax liabilities     90 122 102
Total non-current liabilities     5 325 6 539 6 109
           
Current liabilities          
Interest-bearing liabilities     5 317 3 397 1 685
Non-interest-bearing liabilities     14 280 15 116 16 052
Total current liabilities     19 598 18 513 17 737
           
TOTAL EQUITY AND LIABILITIES     39 967 42 289 41 513
STATEMENT OF CASH FLOW III III I-III I-III I-IV
EUR 1000 2013 2012 2013 2012 2012
           
Cash flow from operating activities:          
   Cash received from sales 17 967 19 360 60 260 65 728 93 018
   Cash received from other operating
   income
6 16 71 38 65
   Cash paid for operating expenses -19 110 -20 165 -62 618 -65 729 -89 063
Cash flow from operating activities before financial items and income taxes -1 137 -790 -2 287 38 4 020
   Interest paid -27 -68 -110 -149 -169
   Interest received 4 4 23 36 39
   Income taxes paid -57 -67 -459 -482 -592
Cash flow from operating activities -1 216 -921 -2 833 -557 3 297
           
Cash flow from investing activities:          
   Investments in intangible and
   tangible assets
-179 -254 -745 -771 -946
   Proceeds from sales of intangible
   and tangible assets
33 14 86 216 269
   Disposal of other non-current
   investments
        12
   Loans granted -1   -7 -6 -13
   Repayments of loans receivable   3 34 8 8
Cash flow from investing activities -148 -237 -633 -553 -670
           
Cash flow from financing activities:          
   Dividends paid     -632 -531 -531
   Dividends received     7 20 20
   Payments for subsidiary share
   acquisitions
    -33 -129 -129
   Payments received for subsidiary
   share disposals
      81 81
   Cash paid for (received from)
   short-term investments (net)
-5 -28 77 -32 -32
   Withdrawals and repayments of
   short-term loans
1 960 1 316 3 850 1 472 -254
   Withdrawals of long-term loans       355 355
   Repayments of long-term loans -212 -512 -990 -1 556 -1 952
Cash flow from financing activities 1 743 776 2 280 -321 -2 443
           
Change in cash and cash equivalents 380 -383 -1 187 -1 431 184
Cash and cash equivalents at the beginning of the period 1 056 1 469 2 749 2 464 2 464
Translation difference of cash -28 49 -155 102 101
Cash and cash equivalents at the end of the period 1 407 1 135 1 407 1 135 2 749

STATEMENT OF CHANGES IN EQUITY

EUR 1000 Equity attributable to equity holders of the parent company  
      Fund            
      for in            
      vested            
      non   Trans Re   Non  
    Share re   lation tai   cont  
* net   pre strict   diffe ned   rolling  
 of tax Share mium ed Own ren Earn   inte  
  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           348 348 49 398
Other comprehens. income*:                  
   Change in translation diff         166   166 62 228
   Fair value changes on
   available-for-sale
   investments
          -4 -4   -4
Comprehensive income *         166 345 510 111 622
Dividends paid           -457 -457 -78 -535
Treasury share disposal       11   -11 0   0
Share- based payments           4 4   4
Changes in ownership             0 -48 -48
Equity on Sept 30, 2012 2 650 7 662 223 -272 50 5 741 16 054 1 183 17 237
                   
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           -1 761 -1 761 -41 -1 802
Other comprehens. income*:                  
   Change in translation diff         -85   -85 -21 -107
   Fair value changes on
   available-for-sale
   investments
          -40 -40   -40
Comprehensive income *         -85 -1 801 -1 886 -63 -1 949
Dividends paid           -522 -522 -111 -633
Treasury share disposal       12   -12 0   0
Share- based payments           8 8   8
Changes in ownership             0 -49 -49
Equity on Sept 30, 2013 2 650 7 662 223 -260 -57 3 767 13 985 1 060 15 044

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEGMENT INFORMATION III III I-III I-III I-IV
EUR 1000 2013 2012 2013 2012 2012
           
Net sales by operating segments          
Contract Customers Division 15 640 17 105 52 251 55 058 76 250
Direct Sales Division 1 816 2 573 8 730 10 019 14 023
Group Services 119 255 513 843 1 079
Intersegment eliminations -101 -165 -537 -787 -1 114
TOTAL NET SALES 17 474 19 768 60 958 65 133 90 238
           
Operating profit/loss by operating segments          
Contract Customers business -157 431 -182 1 285 2 041
Goodwill Impairment -629   -629    
Contract Customers Division -786 431 -811 1 285 2 041
           
Direct Sales Division -129 -49 -256 -138 -38
           
Group Services and non-allocated items -226 -208 -722 -652 -872
TOTAL OPERATING PROFIT/LOSS -1 141 174 -1 790 496 1 132
KEY FIGURES III III I-III I-III I-IV
EUR 1000 2013 2012 2013 2012 2012
Net sales 17 474 19 768 60 958 65 133 90 238
Change in net sales, % -11,6 % -10,0 % -6,4 % -9,0 % -9,0 %
EBITDA -246 470 -325 1 310 2 269
EBITDA margin, % -1,4 % 2,4 % -0,5 % 2,0 % 2,5 %
Operating profit/loss (EBIT) -1 141 174 -1 790 496 1 132
Operating profit/loss margin, % -6,5 % 0,9 % -2,9 % 0,8 % 1,3 %
Profit/Loss before taxes -1 212 184 -2 153 465 990
Profit/Loss before taxes margin, % -6,9 % 0,9 % -3,5 % 0,7 % 1,1 %
Net profit/loss for the period attributable to equity holders of the parent company -1 030 150 -1 761 348 717
Net profit/loss for the period, % -5,9 % 0,8 % -2,9 % 0,5 % 0,8 %
Earnings per share, EUR (diluted = non-diluted) -0,16 0,02 -0,27 0,05 0,11
Return on equity (ROE), % -6,97 % 4,69 % -11,02 % 2,31 % 5,11 %
Return on investment (ROI), % -4,58 % 3,35 % -7,87 % 2,48 % 4,67 %
Equity-to-assets ratio at the end of period, % 40,2 % 43,5 % 40,2 % 43,5 % 44,3 %
Debt-to-equity ratio at the end of period 60,4 % 49,7 % 60,4 % 49,7 % 27,6 %
Equity per share at the end of period, EUR * 2,14 2,46 2,14 2,46 2,51
Investments in non-current assets 160 233 695 752 972
Investments in non-current assets, % of net sales 0,9 % 1,2 % 1,1 % 1,2 % 1,1 %
Treasury shares held by the Group at the end of period 79 000 85 000 79 000 85 000 85 000
Treasury shares, % of total share capital and votes 1,2 % 1,3 % 1,2 % 1,3 % 1,3 %
Number of total issued shares at the end of period 6607628 6607628 6607628 6607628 6607628
Personnel on average during the period 313 326 319 345 343
Personnel at the end of period 311 330 311 330 326

* 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 2013 2013 2013 2012 2012 2012 2012
Net sales 17 474 20 743 22 742 25 105 19 768 22 039 23 326
EBITDA -246 -486 407 959 470 364 476
Operating profit/loss -1 141 -769 120 637 174 -524 216
Profit/Loss before taxes -1 212 -1 005 64 525 184 -572 223
Net profit/loss for the period attributable to the equity holders of the parent company -1 030 -760 29 369 150 25 174
Earnings per share, EUR (diluted = non-diluted) -0,16 -0,12 0,00 0,06 0,02 0,00 0,03
RELATED PARTY TRANSACTIONS III III I-III I-III I-IV
EUR 1000 2013 2012 2013 2012 2012
Sales to related parties 39 46 147 137 203
Purchases from related parties   38 55 47 80
Current non-interest-bearing receivables from related parties 12 0 12 0 0
Non-current interest-bearing receivables from related parties 0 59 0 59 33
COMMITMENTS     Sept 30 Sept 30 Dec 31
EUR 1000     2013 2012 2012
Mortgages and guarantees on own behalf          
   Business mortgage for the Group’s loan liabilities     7 550 7 550 7 550
   Real estate pledge for the Group’s loan liabilities     900 900 900
   Subsidiary shares pledged as
   security for group companies’ liabilities
    4 018 4 018 4 018
   Other listed shares pledged as
   security for group companies’ liabilities
    134 210 187
   Current receivables pledged as
   security for group companies’ liabilities
    246 271 272
   Pledges and guarantees given for the
   group companies’ off-balance sheet
   commitments
    214 232 232
Guarantees given on behalf of third parties     65 130 114
Minimum future operating lease payments     5 169 6 126 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 decreases down to EUR 0.7 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 and discount interest rate used in the impairment tests on September 30, 2013 were the same as in the financial statements as of December 31, 2012, and the testing methods have been described in detail in its consolidated notes.

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, 2012 the covenants were reached successfully: the equity ratio of 44.3 % exceeded the required level and the interest-bearing debt/EBITDA ratio was below 3.5 in accordance with the covenants. According to the loan agreements, the covenants are tested only at year end i.e. the next time on December 31, 2013. Based on the Group management’s forecast the operating result will be negative in 2013 and thus the loan covenants will breach on December 31, 2013. The group management have started finance agreement negotiations with the banks which have given those loans.

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 4, 2013

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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