Untitled - PRT

2008
PRT-Forest Group 2008
Net turnover
EUR 152.6 million
Export
EUR 25.0 million
Operating profit
EUR 2.5 million
Capital expenditures
EUR 11.8 million
Return on capital invested
3.8%
Equity ratio
61.6%
Personnel
893
PRT-Forest Group
Group structure 31.12.2008
PRT-FOREST OY
President and CEO
Risto Mätäsaho
CFO
Jouko Limma
CIO
Jouni Limma
PYHÄNNÄN RAKENNUSTUOTE OY
Managing Director Mikko Huhtala
LAPPLI-TALOT OY
Managing Director Pentti Vaara
KONTIOTUOTE OY
Managing Director Jalo Poijula
MELLANO OY
Managing Director Jarmo Pekkarinen
PIKLAS OY
Managing Director Juha Hautala
PRT-LAMI OY
Managing Director Jukka Sydänmetsä
PRT-WOOD OY
Managing Director Vesa Heinonen
3
PRT-Forest Group
The Group’s business lines are the man-
Lappli-Talot Oy
ufacturing of prefabricated wooden houses,
Kontiotuote Oy
ready-made houses, log houses, furniture,
Pyhännän Rakennustuote Oy
windows and laminated wood products and
Piklas Oy
the timber industry. The Group’s parent
PRT-Lami Oy
company, PRT-Forest Oy, functions as the
Mellano Oy
Group’s administrative firm. The business
Jokeri Talot Oy
operations have been organised into eight
PRT-Wood Oy
subsidiaries, which have plants in seven
localities.
Business development
4
History
YEAR
TURNOVER
(1000 euros)
PERSONNEL
1968
1969
1970
1971
1972
1973
1974
1975
1976
1977
1978
1979
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
42
106
146
195
458
561
1,009
1,455
1,527
1,765
2,529
3,255
4,492
8,622
9,243
16,510
20,296
23,539
25,279
23,072
32,912
44,431
43,075
30,737
28,360
30,672
41,268
39,796
44,229
63,984
82,114
93,199
100,765
98,315
109,260
129,556
148,103
154,813
167,398
177,510
152,642
9
18
27
37
45
60
80
84
89
95
100
133
159
236
249
388
430
445
441
390
466
594
600
446
396
395
479
451
455
519
604
642
679
669
733
789
858
886
952
941
893
1968 Operations begin with the production of leisure homes in the Kirkkoniemi industrial area of Pyhäntä
1970 The first detached houses are supplied
1972 Main product in detached houses: ‘Jukka’ homes
1973 Viiskasi Oy, a timber industry company, is established as a subsidiary to ensure the acquisition
of raw materials
1975 Pyhännän Einestuote Oy becomes a subsidiary through an increase in share capital
1976 Rakennuskartio Oy is founded as a subsidiary operating in construction contracting
1981 Pyhännän Einestuote Oy is sold to Oy Gustav Paulig Ab
1981 Viiskasi Oy is merged with Pyhännän Rakennustuote Oy
1981 The construction of the Leiviskänkangas industrial area begins in Pyhäntä
1982 Rakennuskartio Oy is sold to the acting management
1982 Pudasjärvi-based Kontiotuote Oy, which makes log houses, is purchased
1985 A new small element factory is built in Pyhäntä
1986 A new sawmill is constructed in Pyhäntä
1989 The capital assets of Nordberg’s sawmill in Pyhäjärvi are purchased
1989 A laminated wood factory and large element plant are built in Pyhäntä
1992 Mellano Oy starts operations in Lapinlahti by purchasing Mellamino Oy’s door business
and capital assets
1994 Lappli-Talot Oy, based in Tornio is purchased
1998 House industry incorporated into Pyhännän Rakennustuote Oy and the timber as well as the
laminated wood industries into PRT-Wood Oy. PRT-Forest Oy adopted as the new name of the
parent company
2000 Business operations and capital assets of Kaluste Nuorikko Ky are purchased and merged
into Mellano Oy
2004 The laminated wood industry belonging to PRT-Wood Oy is incorporated into PRT-Lami Oy
2005 The window industry belonging to Pyhännän Rakennustuote Oy is incorporated into Piklas Oy
2007 PRT-Forest Oy purchases the share capital of Piklas Oy from Pyhännän Rakennustuote Oy.
2009 In 2009 Pyhännän Rakennustuote Oy acquires Vieremä-based Jokeri Talot Oy.
Group Management Review
Developments on the global fi-
A second factor reflecting the developments in permit statistics and serving
nancial markets and the world
as an indicator of the construction of detached houses and holiday homes
economy at the end of last year
is the trend in the industry sales. At the start of January, sales of detached
plunged Finland into a fi nancial
houses in Finland for 2009 were about 41% lower than in the previous year,
crisis, which was followed by a
while in holiday homes the decline was about 22%. These figures indicate
downturn in the real economy.
that the actual decline is greater than the drop in the number of permits
Economic growth for the year
granted. Despite a number of supporting factors, the most important of
as a whole was negligible. The
which are the rapid fall in interest rates, availability of skilled workforce and
important sector for the Group
a drop in building costs, the decline in the construction of detached housing
– new construction, particularly
and holiday homes this year will probably at least equal the drop in orders
the building of detached houses
between early 2008 and early 2009. This will also mean that the competi-
and holiday homes – was also
tion in the sector will sharpen, which, together with a falling demand, will
affected by the slowdown. The
result in a substantially weaker basis for profitable business operations.
construction-component industry and especially the timber
The success of the Group companies manufacturing construction compo-
industry also found themselves
nents is also closely linked with new construction and they must prepare for
in serious diffi culties during the latter half of the year. The Group’s
a drop in demand and tougher competition in 2009. The fact that a decline
performance was negatively affected by a signifi cant drop in demand
in renovation has not been as steep will have little impact: the prospects for
and by continuing operational changes in some of its business opera-
profitable business operations are slim.
tions. Adjusting to changes in demand always takes time and for this
reason the costs were higher than usual. At the same time, the one-
In the timber industry, the 2009 will at best be characterised by an effort
time expenses resulting from the operational changes were higher than
to find a balance between market demand and supply and, consequently,
expected. For this reason, the Group’s performance in 2008 was weak,
between inventories and prices. For this reason, the Group’s timber industry
both in terms of turnover and profi t. However, a number of Group com-
will post a loss this year.
panies, particularly Kontiotuote Oy, did extremely well. The Group’s solvency and liquidity position also remained strong.
In 2008, the Group reached the respectable age of forty. In keeping with our
values, we celebrated the milestone in February 2008 in a low-key manner
Finland is highly dependent on what is happening on its export markets
but at the same time honoured the work of our personnel and the role of
and the world’s fi nancial markets. It still seems that the players on the
our main stakeholders. The past four decades have witnessed both highs
global fi nancial markets do not trust each other. According to all fore-
and lows and we have experienced a great deal at both company level and
casts, the negative trend in real economies will continue at least until
the level of individual staff members. Thus, even though the short-term
the end of 2009 and most economists predict a downturn of between
prospects are bleak we should nevertheless remain optimistic. After all, a
two and three years. This would mean that, in addition to negative eco-
downturn in the economy and the construction sector is always followed,
nomic growth, there will also be more unemployment, less consumer
sooner or later, by a recovery. With this in mind, the Group decided to ex-
demand and higher public spending. There may not be any recovery in
pand into ready-made houses and, in accordance with this strategy, ac-
the United States before 2010, which means that the Finnish economy
quired Jokeri Talot Oy, a Vieremä-based company in early 2009. It became
would only start picking up in 2011 at the earliest.
the ninth Group company.
The Group’s main business, the construction of detached houses and
Rapid changes in the operating environment meant that the year 2008 was
holiday homes, has always been closely linked with fl uctuations in the
already a challenging one in the Group companies in many ways. We were
economy. In the detached-housing industry, the number of building
forced to adjust the number of employees to shrinking volumes and in this
permits has been on the decline since spring 2006, which has had a
respect the year 2009 will be even more difficult. In the present downturn,
delayed impact on housings starts. The decline in detached-housing
the only purpose of these measures is to ensure the future of the Group
permits has been particularly steep during the year in review, amount-
companies. My sincere hope is that everybody in the Group will understand
ing to about 24%. This will probably mean that, on a declining market,
this, even though it may be difficult at times. My greatest thanks go to our
the drop in actual start-ups will be even steeper in 2009 because, for
personnel for their input and cooperative spirit during a difficult year. I would
various reasons, some of the building permits granted will lapse. In
also like to thank our partners and stakeholders.
the construction of holiday homes, there is usually less fl uctuation in
the number of building permits though at the same time allowing them
to lapse may be easier than in detached-housing construction. The
number of building permits for holiday homes dropped by about 5%,
which probably means that this year there will be a signifi cant decline
in construction start-ups.
Risto Mätäsaho
President and CEO
5
Key Indicators
KEY INDICATOR
2004
2005
2006
2007
2008
Turnover in millions of euros
177.5 152.6
148.1
154.8
167.4
Change in turnover, %
14.3
4.5
8.1
6.0
-14.0
Operating profit in millions of euros
11.0
11.7
11.6
13.5
2.5
7.4
7.6
6.9
7.6
1.6
10.5
11.3
11.4
13.3
2.1
7.1
7.3
6.8
7.5
1.4
9.7
14.8
9.8
11.0
11.8
69.8
76.4
83.3
91.8
95.4
% of turnover
Profit before extraordinary items in millions of euros
% of turnover
Capital expenditures in millions of euros
Consolidated balance sheet sum total in millions of euros
Turnover
by company 2008
Return on capital invested, %
25.7
24.2
22.4
23.4
3.8
Equity ratio, %
48.9
56.0
60.2
64.3
61.6
Pyhännän
Rakennustuote Oy
27%
858
886
952
941
893
Lappli-Talot Oy
10%
Kontiotuote Oy
40%
Personnel
Group operating profit development
in millions of euros
Group turnover development
in millions of euros
180
18
160
16
140
14
120
12
100
10
80
8
60
6
40
4
20
2
0
Mellano Oy
9%
Piklas Oy
0%
PRT-Lami Oy
2%
PRT-Wood Oy
12%
Turnover
by industry 2008
0
04
05
06
07
08
04
Group capital expenditure
development
in millions of euros
05
06
07
08
Group development
in return on capital invested
in millions of euros
Prefabricated wooden
house industry
37%
Log house industry
37%
16
40
Built-in furnishing industry
9%
14
35
12
30
Window industry
0%
10
25
8
20
6
15
4
10
2
5
0
0
04
05
06
07
08
Laminated wood industry
Timber industry
2%
15%
Turnover
by market area 2008
04
05
06
07
08
Group personnel development
1200
1000
800
600
400
200
0
04
6
05
06
07
08
Domestic
84%
Export
10%
Intra-Community sales
6%
PRT-Forest Oy in business for 40 years
PRT-Forest Oy (formerly Pyhännän Rakennustuote Oy) celebrated 40 years of operations
on 2 February 2008. Among the guests bringing greetings to the anniversary event were
Ahti Pekkala, former governor of the Province
of Oulu, Economic Councellor Arto Vilkuna and
Jussi Salo, Municipal Manager of Pyhäntä.
The portrait of Industrial Councellor Veijo
Sydänmetsä was unveiled at the event.
7
Report of the Board of Directors
Operational environment
a sharp drop in new construction and a growing uncertainty among consumers
during the second half of the year. Changes in the household tax deduction intro-
During the year in review, developments on the global financial market and the
duced at the start of 2009 also caused consumers to postpone renovation plans,
real economy plunged Finland into an economic downturn. Even though Finland’s
and consequently purchases of fixtures from late autumn to this year. Contrac-
gross domestic product contracted during the last two quarters of 2008, a rise
tion of the markets and price competition substantially weakened prospects for
during the first half of the year meant that the GDP for the year as a whole in-
profitable operations.
creased by 0.9%. The growth was, however, weaker than at any time since the recession of the early 1990s. Industrial production started declining already during
In the window industry, demand fell as a result of the decline in new construction.
the early months of 2008. Even though export demand dropped by one percent-
Prospects for profitable operations weakened as a result of tighter markets.
age point, domestic demand in the public and private sector plus investments
kept the economic growth slightly above zero.
In the laminated wood industry, oversupply increased while at the same time both
domestic and export demand contracted sharply. A significant oversupply and a con-
Construction of detached houses in Finland, the basis of the Group’s business,
sequent sharpening of competition led to a further drop in average product prices.
declined throughout the year and the trend was at its strongest during the second
A decline in raw material costs was not enough to compensate for this trend.
half of the year. At the same time, housing construction as a whole decreased,
both in terms of building permits granted and housing start-ups. Start-ups of
On the timber markets, there was a sharp turn for the worse at the end of 2007
detached houses dropped by 19%, to 11,800; the figure for 2007 was 14,500.
and this was followed by a rapid fall in prices. The downward trend in prices
The most important reason for these developments was the uncertainty in the
continued throughout 2008. The basis for profitable business was therefore lost
economy, which was also reflected in the consumers’ decisions. At the same
quite early. In terms of profits, the year was extraordinarily weak; the sector’s loss
time, the proportion of prefabricated houses of the detached-housing construc-
totalled almost 18%. The main reason for the heavy losses was the collapse in
tion was unchanged, at 68%, even though the actual numbers dropped from
timber prices and the far too expensive sawtimber wood. Even though the amount
9,900 to 8,100. The decline in the number of houses sold also led to a substan-
of timber sawn dropped by 21%, there was insufficient adjustment to the market
tially lower turnover in the industry: overall turnover in the prefabricated-housing
situation and inventories were at historic high at the turn of the year.
industry decreased from 820 million euros to 735 million euros. This means a
drop of 10%. Shrinking volumes also led to a tougher competition. A slight fall
Information on essential events
in raw-material costs was not enough to compensate for the lower prices that
resulted from tougher competition.
In terms of profits and business operations, the Group was still doing fairly well
during the early part of the year but uncertainties in the world economy and the
8
There was also a substantial decline in the construction of holiday homes.
resulting downturn during the second half of the year led to a rapid weakening in
Holiday-home start-ups in Finland totalled 6,800, compared with 7,700 in the
the volumes and profitability of the business operations. In the Group’s business
previous year. On the export market, the drop was even sharper. It is therefore
this was particularly evident during the last quarter which saw a rapid fall in the
estimated that the turnover in the industry has contracted by almost 10%, to 318
turnover and profitability of the house and timber industries. Even thought adjust-
million euros. The figure for 2007 was 353 million euros. Despite falling demand,
ment measures were introduced immediately, they did not have a quick enough
prerequisites for profitable performance remained good.
impact on the Group’s profits.
After many years of growth, sales in the built-in furnishing industry contracted
There was one structural change in the Group after the financial year: Pyhännän
by an estimated 12%. The main factors contributing to the negative trend were
Rakennustuote Oy acquired the shares of the Vieremä-based Jokeri Talot Oy on
2 February 2009. As a result, Jokeri Talot Oy became a subsidiary of Pyhännan
The operating profits of the individual Group companies and their proportions of
Rakennustuote Oy. The acquisition meant that the Group expanded its business
turnover were as follows (in 1,000 euros):
to ready-made houses. Krister Kaisanlahti was appointed as the managing director of Jokeri Talot Oy.
2006
Pyhännän
Rakennustuote Oy
Financial development
2007
2008
- 356 (-0.6 %)
376 ( 0.8 %)
542
(1.3 %)
Lappli-Talot Oy
2.216 (11.8 %)
1.652 ( 8.8 %)
1.009
(6.4 %)
Kontiotuote Oy
5.800 (11.0 %)
7.188 (11.0 %)
5.900
(9.6 %)
940 ( 5.6 %)
- 212 (-1.3 %)
Turnover
Mellano Oy
The Group’s turnover dropped by 14% on the previous year, to 152.6 million eu-
Piklas Oy
621 ( 8.8 %)
328 ( 4.7 %)
ros (2007: 177.5 million; 2006: 167.4 million). The turnover for individual Group
PRT-Lami Oy
195 ( 3.1 %)
263 ( 4.2 %)
-76 (-1.7 %)
companies was as follows (in 1,000 euros):
PRT-Wood Oy
2.356 (10.0 %)
3.881 (13.5 %)
-3.171 (-14.9 %)
11.621 ( 6.9 %)
13.541 ( 7.6 %)
PRT-Forest Group
2006
PRT-Forest Oy
2007
2008
-1.908 (-13.5 %)
124
(1.7 %)
2.461
(1.6%)
change
1.121
1.331
1.490
12 %
Pyhännän Rakennustuote Oy
54.875
47.840
40.792
-15 %
The operating profits of the house-construction companies Kontiotuote Oy and
Lappli-Talot Oy
18.787
18.861
15.829
-16 %
Lappli-talot Oy decreased but remained at satisfactory levels. The operating
Kontiotuote Oy
52.585
65.453
61.337
-6 %
profit of Rakennustuote Oy improved slightly but remained weak. The opera-
Mellano Oy
16.831
16.653
14.136
-15 %
ting loss of the furniture company Mellano Oy deepened from the previous year
Piklas Oy
7.089
6.949
7.105
2%
as a result of changes in the production process and the one-time expenses
PRT-Lami Oy
6.191
6.211
4.505
-28 %
caused by entries of lower inventories. In the construction component industry,
PRT-Wood Oy
24.085
28.836
21.259
-26 %
the operating profit of Piklas Oy was weak, while PRT-Lami Oy posted a loss. The
./.internal invoicing
14.166
14.624
13.811
Group net turnover
167.398
177.510
152.642
change in PRT-Wood was dramatic and the company made a substantial loss.
-14 %
The Group’s return on assets was 2.8% (2007: 18.8%; 2006: 19.0%) and return
The Group’s exports totalled 25.0 million euros (2007: 37.2 million; 2006: 29.6
on equity 3.8% (2007: 23.4%; 2006: 22.4%). Even though the operating en-
million). Exports accounted for 16.4% of the turnover (2007: 20.9%; 2006:
vironment was difficult, these figures must be considered highly unsatisfactory.
17.7%). Exports were made up of Kontiotuote Oy’s log houses, Lappli-talot
Oy’s homes, PRT-Lami Oy’s laminated wood products and PRT-Wood Oy’ timber
Financing and financial position
goods.
The Group’s net financing costs amounted to 0.3 million euros, or 0.2% of turnover. The consolidated balance sheet total was 95.4 million euros. Interest-bearing debts in the consolidated balance sheet amounted to 16.3 million euros.
Profit
Long-term loans in the Group were reduced by 0.1 million euros, while the new
The Group’s operating profit totalled 2.5 million euros (2007: 13.5 million; 2006:
loans drawn totalled 12.0 million euros. Liquidity remained good in all Group
11.6 million) or 1.6% of the turnover (2007: 7.6%; 2006: 6.9%). This was 81%
companies. The Group’s equity ratio at the end of the financial year was 61.6%
less than in the previous year and must be considered highly unsatisfactory.
(2007: 64.3%; 2006: 60.2%).
Development of detached housing construction
Startup operations during the years 1998-2008
18000
16000
14000
12000
10000
8000
6000
4000
2000
0
98
99
00
01
02
03
04
05
06
07
08
9
Capital expenditures
Group capital expenditures totalled 11.8 million euros (2007: 11.0 million; 2006:
Even though in principle there are many factors supporting construction, such as
9.9 million). The most important investments involved the construction of a new
a rapid fall in interest rates, drop in construction costs and availability of sites,
laminated-log hall and production line in Kontiotuote Oy and the purchase of a
reluctance among consumers to make big investment decisions is proving a
new heating plant and a machine tool hall and centre in Lappli-Talot Oy.
decisive obstacle. The downward trend in detached-housing building permits has
accelerated since autumn 2008. Moreover, the turn-of-the-year order backlog for
the industry, measured in houses delivered, was substantially (almost 41%) lower
Personnel and the environment
than a year earlier.
The total number of personnel employed by the Group averaged 893 (2007: 941;
2006: 952). The number of office staff was 287 (2007: 320; 2006: 315) and
As a result of the overall economic situation, the decline in the construction
workers 606 (2007: 621; 2006: 637). At the end of the financial year, person-
of holiday homes in Finland is also expected to continue this year even though
nel totalled 817. The total amount of salaries paid in the Group was 25.0 million
the downward trend will probably be slower. In the log-house industry, the order
euros (2007: 25.9 million; 2006: 25.3 million).
backlog at the turn of the year was in euro terms about 22% lower than at the
start of 2008.
The average number of personnel in the individual Group companies was as follows:
In the built-in furnishing, demand is expected to develop slightly better than in new
construction as renovation projects are initiated. However, renovation cannot fully
2006
2007
2008
13
12
16
ating environment for the window industry will become substantially more difficult
226
223
175
as new construction slows down. In the laminated wood industry, falling demand
Lappli-Talot Oy
73
74
72
Kontiotuote Oy
290
282
285
Mellano Oy
compensate for the fall in demand caused by a drop in new construction. The operPRT-Forest Oy
Pyhännän Rakennustuote Oy
and permanent overcapacity will probably keep competition tough during 2009.
187
184
183
In the timber industry, the operating environment will remain extremely difficult as
Piklas Oy
63
64
68
the recession keeps world demand at low levels. However, substantial production
PRT-Lami Oy
29
31
23
cuts and falls in inventories will cause the sharp drop in sales prices to bottom
PRT-Wood Oy
71
71
71
out. Log prices have fallen rapidly since last autumn and the downward trend is
Group in total
952
941
893
continuing. In 2009 prospects for profitable operations remain extremely weak as
there is still no balance between demand and supply and prices.
Of the Group companies, Kontiotuote Oy, Mellano Oy, PRT-Lami Oy and PRT-Wood
The Group’s business operations are to a great extent dependent on domestic
Oy require environmental permits for their operations. The companies have valid
construction volumes. At the turn of the year, the order backlog of the Group
environmental permits for the places of business for which the permits are needed
companies was 43% lower than a year earlier, totalling 32.8 million euros (57.9
and their operations have been in accordance with the terms of the permits.
million). In the prevailing economic and demand situation, the turn-of-the-year
order backlog should give a fairly accurate picture of the turnover for the year as a
Prospects for the year 2009
whole. Adjustment to the falling demand started at the end of the year 2008 and
the process will continue this spring. A sharp fall in demand and the cost and de-
The world economy and the Group’s main export markets went into recession
preciation structure, which will remain heavy even after the adjustment, will make
during the last months of the year 2008. Most experts are of the view that the
it impossible to put operations on a profitable basis during 2009.
downturn will get worse during 2009. The construction of detached houses, the
10
Group’s main business, is expected to decrease sharply in both Finland and on
Group investments in 2009 will be substantially lower than in the previous years
the most important export markets as a result of the general economic downturn.
and will total about 2.1 million euros. The most important investment will be the
construction of a production line in Pyhännän Rakennustuote Oy enabling the
as the board members at Pyhännän Rakennustuote Oy and Lappli-Talot Oy. Indus-
company to manufacture wall structures that are in compliance with the new
trial Counsellor Antero Ikäheimo, Tapio Kuokkanen, Engineer, Master of Business
energy regulations.
Economics/Licentiate of Social Sciences as well as Timo Koivumäki, Engineer
have acted as the members of the Board at Kontiotuote Oy. Tapio Kuokkanen,
Group structure
Engineer, Master of Business Economics/Licentiate of Social Sciences and
Esa Konola, Engineer, have acted as the members of the Board at Mellano Oy.
The parent company of the Group is PRT-Forest Oy, which looks after the Group
Electrical technician Martti Jokelainen and Antti Lauhikari, Graduate Engineer,
administration and does not engage in industrial business. The domicile of the
have functioned as the members of the Board at Piklas Oy. Esa Konola, Engi-
parent company is Pyhäntä. The subsidiaries are: Pyhännän Rakennustuote Oy,
neer, and Antti Lauhikari, Graduate Engineer, have functioned as the members of
Lappli-Talot Oy, Kontiotuote Oy, Mellano Oy, Piklas Oy, PRT-Lami Oy and PRT-
the Board at PRT-Lami Oy. Technician Aulis Pitkäkangas and Seppo Vainio, B.Sc.
Wood Oy. The ownership share of the parent company respective to all subsidi-
(For.) have acted as members of the Board at PRT-Wood Oy. Authorized public
aries is 100%. Pyhännän Rakennustuote Oy owns 100%f of the shares of its
accountant company KPMG Oy Ab has acted as the auditor, with main responsi-
subsidiary Jokeri Talot Oy. The shares were acquired on 2 February 2009.
bility resting with Tapio Raappana, authorized public accountant.
The main products of Pyhännän Rakennustuote Oy are detached houses made
of elements, and its place of operations is Pyhäntä. Jokeri Talot Oy manufac-
Risk management for the Group with respect to financing and damage risk is
tures ready-made houses at its plant in Vieremä. Lappli-talot Oy is situated
concentrated on the Group administration, whilst responsibility for operative
in Tornio, and its business operations are also made up of the production of
and strategic risk is handled by each subsidiary seperately. The Group’s indem-
element-based detached houses.
nity insurance covers all significant accidents as well as interruption-related
damage caused to operations.
Kontiotuote Oy, located in Pudasjärvi, makes holiday log homes as well as detached houses. In Lapinlahti and Pieksämäki, Mellano Oy manufactures compo-
Proposal for distribution of profits
nents respective to home fixtures for the industry in the field. Piklas Oy makes
windows and doors at its Pyhäntä plant. PRT-Lami Oy produces gluelam and
The parent company’s unrestricted shareholder’s equity in total is 4 501 495.52
other laminated wood products in Pyhäntä. Business operations at PRT-Wood
euros, of which profit for the financial year is 265 366.57 euros.
Oy are centred on the timber industry. Its operational centres are located in
Pyhäntä and Pyhäjärvi.
The Board of Directors proposes to the company meeting that profit for the
financial year be transferred to the retained earnings account and that 718 392
Group administration
euros are distributed as dividends: i.e., 12 euros per share.
Industrial Counsellor Veijo Sydänmetsä has acted as the Chairman of the Board
After the close of the financial year, no fundamental changes have occurred in
at PRT-Forest Oy. Kyösti Karjula, M.P., B.Sc. (Agr.); Hannu Linna, Graduate Engi-
the company’s financial position. The liquidity of the company is good, and in
neer; Pekka Pystynen, Master of Laws; and Mikko Tahkola, Master of Business
the view of the Board the distribution of profits proposed shall not threaten the
Economics have acted as members of the Board. Sauli Sydänmetsä, Bachelor
liquidity of the company.
of Business Administration, has acted as secretary and deputy member of the
Board. Risto Mätäsaho, Master of Business Economics/Master of Social Sciences, has acted as the Group’s CEO.
The members of PRT-Forest Oy’s Board and executive management in a group
portrait. From left to right: Risto Mätäsaho (President and CEO), Pekka Pystynen,
All subsidiaries have their own boards of directors. Risto Mätäsaho, CEO for the
Kyösti Karjula, Veijo Sydänmetsä (Chairman of the Board), Hannu Linna (Vice
parent company, has acted as chairman for the subsidaries’ boards. Tapio Kal-
Chairman of the Board) , Mikko Tahkola and Sauli Sydänmetsä (Deputy Member,
liola, Graduate Engineer; Lasse Kivikko, Doctor of Technology; have functioned
Secretary).
11
Profit and loss accounts
GROUP
2008
GROUP
2007
PARENT COMPANY
2008
PARENT COMPANY
2007
152,641,873.78
-1,114,439.60
862,802.77
380,945.91
177,509,878.19
1,953,209.58
672,485.12
419,366.26
1,489,500.00
1,331,004.00
95,275.91
59,735.25
70,458,145.69
3,060,220.56
22,328,342.68
95,846,708.93
88,726,176.09
-2,006,705.31
25,132,228.67
111,851,699.45
24,941,935.38
25,911,287.63
651,448.40
534,512.45
4,118,180.71
2,196,486.67
31,256,602.76
4,346,378.45
2,486,803.40
32,744,469.48
135,013.61
55,220.60
841,682.61
91,070.70
43,033.82
668,616.97
Depreciation and value adjustments
Depreciation according to plan
6,502,706.25
5,928,877.23
147,037.78
154,059.14
Other operating costs and expenses
16,703,508.52
16,488,855.79
554,336.72
522,130.40
2,461,656.40
13,541,037.20
41,718.80
45,932.74
110,835.38
119,783.39
789,508.38
35,346.14
692,002.76
32,597.79
-495,448.35
-313,464.32
-84,312.12
NET TURNOVER
Variations in stocks of finished goods
Production for own use
Other operating income
Raw materials and services
Raw materials and consumables
Purchases during the financial year
Variations in stocks
External services
Staff expenses
Wages and salaries
Social security expenses
Pension expenses
Other social security expenses
OPERATING PROFIT
Financial income and expenses
Interest and financial income
From companies within the Group
From others
Interest and other financial expenses
To companies within the Group
To others
PROFIT / LOSS BEFORE
EXTRAORDINARY ITEMS
-443,941.58
-360,664.90
-333,106.20
-240,881.51
-526,802.85
-389,177.80
-91,126.13
2,128,550.20
13,300,155.69
-49,407.33
-38,379.38
6,000,000.00
-5,600,000.00
400,000.00
3,700,000.00
-1,300,000.00
2,400,000.00
350,592.67
2,361,620.62
17,161.96
4,078.64
Extraordinary items
Extraordinary income
Extraordinary expenses
PROFIT / LOSS BEFORE
APPROPRIATIONS AND TAXES
Appropriations
Increase or decrease in accumulated
depreciation difference
Income tax
Income tax
From previous financial periods
Calculated taxes
PROFIT FOR THE FINANCIAL PERIOD
12
-217,368.70
-3,018.83
-351,445.82
-2,902,397.11
-23,191.69
-555,930.63
-101,171.00
-1,217.06
-615,894.18
1,556,716.85
9,818,636.26
265,366.57
1,749,805.08
Balance sheets
ASSETS
NON-CURRENT ASSETS
Intangible assets
Goodwill
Intangible rights
Other capitalized expenditure
Tangible assets
Land and water areas
Buildings
Machinery and equipment
Advance payments and outstanding acquisitions
Investments
Holdings in the Group’s companies
Other shares and holdings
CURRENTS ASSETS
Stocks
Raw materials and consumables
Production outstanding
Finished products and goods
Other stocks
Advance payments
Receivables
Long-term receivables
Receivables from companies within Group
Short-term receivables
Trade receivables
Loan receivables
Receivables from companies within Group
Other receivables
Prepayments and accrued income
GROUP
2008
GROUP
2007
PARENT COMPANY
2008
PARENT COMPANY
2007
95,104.25
1,124,008.27
815,751.62
2,034,864.14
142,656.37
1,517,762.22
766,323.09
2,426,741.68
126,361.19
37,619.94
163,981.13
158,315.35
59,438.58
217,753.93
3,057,305.02
20,887,573.71
36,779,198.29
1,079,082.37
61,803,159.39
2,325,162.17
18,453,832.07
33,039,352.87
2,455,962.12
56,274,309.23
14,295.98
14,295.98
147,971.71
176,896.53
162,267.69
191,192.51
4,001.14
4,001.14
3,821.10
3,821.10
6,071,508.52
831.62
6,072,340.14
6,071,508.52
831.62
6,072,340.14
5,340,017.80
3,300,127.81
6,050,263.78
116,747.86
507,057.38
15,314,214.63
8,400,238.36
4,685,323.03
5,779,508.16
116,747.86
1,165,426.43
20,147,243.84
9,200,000.00
10,700,000.00
8,007.24
7,938.54
5,503,096.22
2,494.82
9,017,438.75
14,261.82
5,292,019.10
5,654,430.02
Cash and bank receivables
838,698.41
3,741,026.05
10,085,315.50
6,176,209.93
1,394,247.81
2,133,741.59
12,559,689.97
373,338.02
549,218.47
5,849,244.81
6,000,057.21
12,358.46
5,674,727.02
76.96
TOTAL ASSETS
95,417,764.73
91,785,143.84
27,447,890.98
22,856,090.56
EQUITY AND LIABILITIES EQUITY
Share capital
Retained earnings
Profit for financial period
Total equity
1,006,873.84
54,230,627.46
1,556,716.85
56,794,218.15
1,006,873.84
45,367,016.66
9,818,636.26
56,192,526.76
1,006,873.84
4,236,128.95
265,366.57
5,508,369.36
1,006,873.84
3,444,179.87
1,749,805.08
6,200,858.79
122,299.07
139,461.03
APPROPRIATIONS
Accumulated depreciation difference
LIABILITIES
Long-term
Deferred tax liabilities
Loans from credit institutions
Pension loans
Short-term
Loans from credit institutions
Other loans
Advance payments received
Trade payables
Payables to companies within the Group
Other liabilities
Accruals and deferred income
4,639,229.32
4,639,229.32
4,287,783.50
4,287,783.50
12,000,000.00
12,000,000.00
3,200,532.61
5,746,121.73
6,210,437.74
12,192.00
4,412,331.20
9,262,991.57
Total liabilities
1,362,832.29
7,344,161.03
21,984,317.26
38,623,546.58
1,948,465.10
9,458,415.97
31,304,833.58
35,592,617.08
61.00
20,775.91
5,184,705.10
82,672.65
198,338.29
9,817,222.55
21,817,222.55
TOTAL LIABILITIES
95,417,764.73
91,785,143.84
27,447,890.98
4,330,669.60
4,330,669.60
6,148,453.66
61.00
46,264.96
10,020,820.90
73,738.46
226,431.76
16,515,770.74
16,515,770.74
22,856,090.56
13
Cash flow statements
GROUP
GROUP
PARENT COMPANY
PARENT COMPANY
2008
2007
2008
2007
2,128,550.20
13,300,155.69
-49,407.33
-38,379.38
6,502,706.25
5,928,877.23
147,037.78
154,059.14
333,106.20
240,881.51
91,126.13
84,312.12
8,964,362.65
19,469,914.43
188,756.58
199,991.88
4,833,029.21
-4,594,500.04
Cash flow from operating activities
Profit before extraordinary items
Adjustments
Depreciation in accordance with plan
Finance income and expenses
Cash flow before change in working capital
Change in working capital
Change in stocks
Change in short-term
interest-free business receivables
2,474,374.47
-316,848.16
-362,876.93
-46,010.69
-7,428,556.18
166,680.82
-44,593.78
-22,647.23
8,843,210.15
14,725,247.05
-218,714.13
131,333.96
Interest and remittances paid
-443,941.58
-360,664.90
-915,980.65
-808,912.67
Interest received from business
110,835.38
119,783.39
824,854.52
724,600.55
Income taxes
-220,387.53
-2,925,588.80
-102,388.06
-615,894.18
8,289,716.42
11,558,776.74
-412,228.32
-568,872.34
-11,794,659.50
-10,995,202.71
-64,340.16
-190,792.08
157,631.13
215,788.44
Change in short-term interest-free loans
Cash flow from operating activities before
financial items and taxes
Cash flow from operating activities
Cash flow from investing activities
Investments in tangible and
intangible assets
Proceeds from disposal of tangible and
intangible assets
14,193.65
-2,032,000.00
Investments on other investments
Cash flow from investing activities
-11,637,028.37
-10,779,414.27
-64,340.16
-2,208,598.43
Cash flow from financing activities
8,682,215.94
5,648,453.66
8,682,215.94
5,648,453.66
Repayment charges on short-term loans
-10,500,000.00
-1,445,374.97
-10,500,000.00
-1,445,374.97
Drawing of long-term loans
12,000,000.00
Long-term loan repayments
-74,176.08
-4,317,514.42
-957,856.00
-838,124.00
Drawing of short-term loans
Dividends paid
12,000,000.00
Group contributions
-838,124.00
400,000.00
2,400,000.00
-3,147,811.21
1,084,648.63
Cash flow from financing activities
9,150,183.86
-952,559.73
6,476,548.73
2,777,521.32
Change in liquid assets
5,802,871.91
-173,197.26
5,999,980.25
50.55
26.41
Change in Group financing
Liquid assets at beginning of financial year
Liquid assets at end of financial year
14
-4,072,082.00
-957,856.00
373,338.02
546,535.28
76.96
6,176,209.93
373,338.02
6,000,057.21
76.96
5,802,871.91
-173,197.26
5,999,980.25
50.55
Notes to the financial statements 31.12.2008
Scope of consolidation
Deferred tax liability
All companies engaged in business respective to the Group have been
combined within the Group closing of the accounts.
Accounting principles applied in the conslidated financial
accounts
Mutual share ownership
The Group closing of the accounts has been prepared by means of the
acquisition cost method.
The deferred tax liability or receivable is calculated for temporary items
between taxation and the closing of the accounts utilizing the tax base of
the following years ratified at the time of the final accounts. The profit and
loss statement contains the deferred tax liability in its entirety.
Appreciation of capital assets
Capital assets have been activated for direct acquisition costs. The depreciation in accordance with the plan has been calculated as straight-line
depreciation on the basis of the economic lifetime of the capital assets.
Internal transactions and margins
The Group’s internal transactions, non-realized margins for internal deliver-
Appreciation of inventories
ies, internal receivables and debts, in like manner to the internal distribution of profits, have been eliminated.
Inventories are presented mainly in accordance with the FIFO principle as
the amounts of acquisition cost or its apparent lower realization price. Vari-
Appropriations
able expenditures have been included in the appreciation of inventories.
Appropriations represent depreciation differences. In the Group profit and
loss account, the quantity of accumulated appropriations have been divided into shareholder’s equity and deferred tax liability. The change in appro-
Currency-specific items
priations from the financial year is correspondingly distributed in the profit
Receivables in foreign currencies have been converted to Finnish sums ac-
calculation profit for the financial year and change in deferred tax liability.
cording to the rate of exchange on the final accounts date.
Key indicators: criteria for calculations
Return on investment, % (ROI) =
Equity ratio, %
=
Profit before extraordinary items + interest and other financing charges
Profit and loss statement: sum total - interest-free debts (average during year)
Equity + voluntary provisions and depreciation as deducted by deferred tax liability
Profit and loss statement: sum total - advance payments received
x 100
x 100
15
GROUP
2008
GROUP
2007
TURNOVER BY INDUSTRY
Timber industry
Prefabricated wooden house industry
Log house industry
Built-in furnishing industry
Laminated wood industry
Window industry
Total
22,887,057.57
56,097,677.54
55,712,854.98
14,111,324.62
3,204,449.75
628,517.35
152,641,881.81
28,874,177.35
66,385,992.32
60,977,284.29
16,638,543.19
4,403,571.36
230,309.68
177,509,878.19
TURNOVER ACCORDING TO MARKET
Domestic (Finland)
Export
Intra community sales
Total
127,600,146.78
15,482,694.92
9,559,040.11
152,641,881.81
140,348,088.92
19,330,975.25
17,830,814.02
177,509,878.19
9,098.36
173,696.68
67,097.63
37,872.29
46,712.00
46,468.95
380,945.91
55,692.65
179,895.59
65,712.08
31,431.97
64,409.00
22,224.97
419,366.26
893
817
OTHER OPERATING INCOME
Gain on sale of non-current assets
Income from rents
Income from canteen
Insurance compensation
Contributions received
Other
Total
NUMBER OF PERSONNEL
Average
At end of year
PERSONNEL EXPENSES
Wages and salaries
Pension expenses
Other social security expenses
Expenses on profit and loss accounts
Fringe benefits
Activated salaries
MANAGEMENT SALARIES
Boards and managing directors
AUDITORS’ FEES
Audit
Taxation
Other services
DEPRECIATION
Depreciation in accordance with the plan has been
calculated per capital asset commodity or as
straight-line depreciation in accordance with
the group’s economic lifetime from the original
purchase price.
The depreciation periods are as follows:
Buildings
Machinery and equipment
ADP equipment and programs
Goodwill
DEPRECIATION IN ACCORDANCE WITH PLAN
Goodwill
Intangible goods
Land and water areas
Buildings
Machinery and equipment
Total
CHANGE IN DEPRECIATION DIFFERENCE
Goodwill
Land and water areas
Buildings
Machinery and equipment
Total
16
PARENT COMPANY
2008
PARENT COMPANY
2007
1,489,500.00
1,331,004.00
1,489,500.00
1,331,004.00
61,422.00
4,335.25
55,400.00
33,853.91
95,275.91
59,735.25
941
885
16
16
12
14
24,941,935.38
4,118,180.71
2,196,486.67
31,256,602.76
110,112.06
487,352.57
25,911,287.63
4,346,378.45
2,486,803.40
32,744,469.48
151,469.40
603,723.47
651,448.40
135,013.61
55,220.60
841,682.61
1,432.10
534,512.45
91,070.70
43,033.82
668,616.97
1,415.83
979,286.00
837,513.67
149,740.00
128,600.00
37,546.08
840.00
2,512.50
40,898.58
34,153.46
2,732.50
8,838.68
45,724.64
8,365.00
840.00
2,512.50
11,717.50
8,289.09
2,732.50
3,822.50
14,844.09
78,756.17
92,386.97
68,281.61
147,037.78
61,672.17
154,059.14
-5,973.43
-5,411.31
-11,188.53
-17,161.96
1,332.67
-4,078.64
10-30
10-15
5
10
47,552.12
541,041.44
249,318.55
1,164,795.13
4,499,999.01
6,502,706.25
79,552.12
477,489.24
159,765.25
1,056,779.40
4,155,291.22
5,928,877.23
GROUP
2008
GROUP
2007
PARENT COMPANY
2008
PARENT COMPANY
2007
4,601,559.29
110,856.98
571,753.88
24,983.37
509,054.04
76,893.49
-14,193.65
571,753.88
-413,438.53
158,315.35
CHANGES IN ACQUISITION COSTS
FOR CAPITAL ASSETS
INTANGIBLE RIGHTS AND GOODWILL
Acquisition cost 1 Jan
Increases
Decreases
Acquisition cost 31 Dec
Depreciation
Book value 31 Dec
4,712,416.27
-3,493,303.75
1,219,112.52
3,643,888.55
971,864.39
-14,193.65
4,601,559.29
-2,941,140.70
1,660,418.59
OTHER LONG-TERM EXPENSE ITEMS
Acquisition cost 1 Jan
Increases
Decreases
Acquisition cost 31 Dec
Depreciation
Book value 31 Dec
1,099,742.79
86,519.73
-698.48
1,185,564.04
-369,812.42
815,751.62
1,022,005.78
151,992.62
-74,293.40
1,099,705.00
-333,381.91
766,323.09
LAND AREAS
Acquisition cost 1 Jan
Increases
Decreases
Acquisition cost 31 Dec
Depreciation
Book value 31 Dec
3,408,079.53
983,611.40
-2,150.00
4,389,540.93
-1,332,235.91
3,057,305.02
148,974.62
112,615.68
36,358.94
148,974.62
-111,354.68
37,619.94
148,974.62
-89,536.04
59,438.58
2,537,287.79
870,791.74
14,295.98
14,295.98
3,408,079.53
-1,082,917.36
2,325,162.17
14,295.98
14,295.98
14,295.98
14,295.98
842,595.06
39,356.79
765,055.41
77,539.65
881,951.85
-733,980.14
147,971.71
842,595.06
-665,698.53
176,896.53
1,281.43
1,281.43
38,248,771.96
38,250,053.39
28,430,409.34
28,431,690.77
BUILDINGS AND STRUCTURES
Acquisition cost 1 Jan
Increases
Decreases
Acquisition cost 31 Dec
Depreciation
Book value 31 Dec
34,762,810.08
-13,875,236.37
20,887,573.71
29,087,309.40
2,093,278.14
-16,314.23
31,164,273.31
-12,710,441.24
18,453,832.07
MACHINERY AND EQUIPMENT
Acquisition cost 1 Jan
Increases
Decreases
Acquisition cost 31 Dec
Depreciation
Book value 31 Dec
71,254,139.11
8,399,010.90
-159,166.47
79,493,983.54
-42,714,785.24
36,779,198.30
63,895,086.43
7,484,126.64
-125,073.96
71,254,139.11
-38,214,786.23
33,039,352.88
541,658.54
13,118,290.83
3,731.14
13,659,949.37
579,616.14
11,769,499.85
3,501.10
12,349,115.99
35,368,805.11
31,313,833.49
51,326.43
115,815.34
167,141.77
87,253.00
119,131.00
206,384.00
TAXABLE VALUE
Land areas
Buildings
Shares and holdings
Total
If there is no tax value, book value is presented.
SHARE OF PRODUCTION MACHINES
AND EQUIPMENT
LEASING DEBTS
To be paid during the next financial year
To be paid later
Total
31,164,273.31
3,598,536.77
596,737.25
-470,376.06
126,361.19
1,848.00
1,848.00
17
GROUP
GROUP
PARENT COMPANY
PARENT COMPANY
2008
2007
2008
2007
5,015,971.20
6,274,948.71
CONTINGENT LIABILITIES
Securities given for own debt
Mortgages on property
934,569.81
Total
934,569.81
On behalf of one’s own and group companies
Guarantees and other liabilities
Guarantees given and other liabilities
Rental liabilities for rented premises
101,956.16
127,500.95
55,185,652.92
47,015,867.04
5,193,984.95
4,282,303.87
-957,856.00
-838,124.00
-957,856.00
-838,124.00
CHANGES IN EQUITY
Unrestricted shareholder’s equity 1 Jan
Distribution of dividend
Discharge of appreciation
-1,095,576.17
Calculated tax debt from discharge of appreciation
Adjustment of depreciation difference
284,849.79
2,830.54
Profit for the financial period
Unrestricted shareholder’s equity 31 Dec
1,556,716.85
9,818,636.26
265,366.57
1,749,805.08
55,787,344.31
55,185,652.92
4,501,495.52
5,193,984.95
4,501,495.52
5,193,984.95
Distributable retained assets 31 December
RECEIVABLES FROM AND PAYABLES
TO THE GROUP COMPANIES
Sales receivables
15,523.82
189,575.60
Long-term loan receivables
9,200,000.00
10,700,000.00
Other receivables
5,276,495.28
5,464,854.42
Accounts payable
54.55
Other debts
5,184,650.55
10,020,820.90
Shares and holdings
Parent company
Pyhännän Rakennustuote Oy
Total
Share of ownership %
Nominal value
Book value
20,000
100
336,375.85
336,375.85
1,127,800.96
Lappli-Talot Oy
441
100
75,684.57
Kontiotuote Oy
600
100
100,912.76
727,177.32
30
100
504,563.78
707,214.76
PRT-Lami Oy
15,000
100
300,000.00
300,000.00
Piklas Oy
15,000
100
300,000.00
2,032,000.00
PRT-Wood Oy
50,000
100
840,939.63
840,939.63
Mellano Oy
Other shares and participations
Total
Subsidiaries
18
831.62
831.62
2,459,308.22
6,072,340.14
Share of group ownership %
Equity
Profit for the financial year
Pyhännän Rakennustuote Oy
100
9,951,584.50
216,687.30
Lappli-Talot Oy
100
5,921,820.04
53,409.35
Kontiotuote Oy
100
17,136,061.70
4,499.90
Mellano Oy
100
4,424,527.99
3,345.23
PRT-Lami Oy
100
835,133.83
9,885.03
Piklas Oy
100
1,586,243.22
1,139.36
PRT-Wood Oy
100
4,295,195.09
2,115.23
Signatures to the financial
statements and annual report
Auditor’s report
To the Annual General Meeting of PRT-Forest Oy
Pyhäntä, 16 March 2009
Veijo Sydänmetsä
Hannu Linna
Chairman of the Board
Vice Chairman
Kyösti Karjula
Pekka Pystynen
Mikko Tahkola
Risto Mätäsaho
President and CEO
A report has been submitted today on the audit performed.
We have audited the accounting records, the financial statements, the report
of the Board of Directors, and the administration of PRT-Forest Oy for the year
ended on 31 December, 2008. The financial statements comprise the consolidated balance sheet, income statement, cash flow statement and notes to the
consolidated financial statements, as well as the parent company’s balance
sheet, income statement, cash flow statement and notes to the financial
statements.
The responsibility of the Board of Directors and the Managing Director
The Board of Directors and the Managing Director are responsible for the preparation and fair presentation of the financial statements and the report of the
Board of Directors in accordance with the laws and regulations governing the
preparation of the financial statements and the report of the Board of Directors
in Finland. The Board of Directors is responsible for the appropriate arrangement of the control of the company’s accounts and finances, and the Managing
Director shall see to it that the accounts of the company are in compliance with
the law and that its financial affairs have been arranged in a reliable manner.
Auditor’s Responsibility
Pyhäntä, 17 March 2009
KPMG OY AB
Tapio Raappana
Authorised public accountant
Our responsibility is to perform an audit in accordance with good auditing practice in Finland, and to express an opinion on the parent company’s financial
statements, on the consolidated financial statements and on the report of the
Board of Directors based on our audit. Good auditing practice requires that we
comply with ethical requirements and plan and perform the audit to obtain
reasonable assurance whether the financial statements and the report of the
Board of Directors are free from material misstatement and whether the
members of the Board of Directors of the parent company and the Managing
Director have complied with the Limited Liability Companies Act.
An audit involves performing procedures to obtain audit evidence about the
amounts and disclosures in the financial statements and the report of the
Board of Directors. The procedures selected depend on the auditor’s judgment,
including the assessment of the risks of material misstatement of the financial
statements, whether due to fraud or error. In making those risk assessments,
the auditor considers internal control relevant to the entity’s preparation and
fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of
accounting estimates made by management, as well as evaluating the overall
presentation of the financial statements and the report of the Board of Directors.
The audit was performed in accordance with good auditing practice in Finland.
We believe that the audit evidence we have obtained is sufficient and
appropriate to provide a basis for our audit opinion.
Opinion
In our opinion, the financial statements and the report of the Board of Directors
give a true and fair view of both the consolidated and the parent company’s
financial performance and financial position in accordance with the laws and
regulations governing the preparation of the financial statements and the report
of the Board of Directors in Finland. The information in the report of the Board
of Directors is consistent with the information in the financial statements.
We recommend that the financial statements should be adopted. The proposal
by the Board of Directors regarding the distribution of the result for the period
is in compliance with the Limited Liability Companies Act. We recommend that
the Members of the Board of Directors and the Managing Director should be
discharged from liability for the financial period audited by us.
Pyhäntä March 17 2009
KPMG Oy Ab
Tapio Raappana
Authorised Public Accountant
19
Business Reviews
Pyhännän Rakennustuote Oy
Managing Director:
Pyhännän Rakennustuote Oy
turnover development in millions of euros
Mikko Huhtala
Net turnover:
EUR 40.792 million
70
Change in turnover:
-15%
60
Share of Group’s gross turnover:
24%
50
Operating profit:
EUR 0.542 million
40
Capital expenditures:
EUR 0.935 million
30
Return on capital invested:
6%
20
Personnel, on average:
175
10
0
04
Volume of house construction contracted as market
demand decreased
Construction decreased in Finland during the year in review and the fall was
particularly sharp in housing production. Consumers’ confidence in their own
finances decreased throughout the year and collapsed during the last few
months of 2008, which led to a drop in the sales of detached houses. The
volume of the industry dropped to 8,100 housing packages (-18%), while the
turnover declined to 735 million euros (-10%). Deliveries of wooden-framed
housing packages numbered 6,300 (-18%), while the turnover fell to 382
million euros (-16%).
Falling market demand was reflected in the performance
of Pyhännän Rakennustuote Oy
A decline in market demand and market prices also had an impact on the
business operations of Pyhännän Rakennustuote Oy. The combined deliveries of ’Jukka’ and ’Koti’ houses totalled 776, compared with 901 in the
previous year, a fall of 14%. Turnover for the year dropped by 15% from the
previous year, which also had an impact on profits. Profit before extraordinary items amounted to 0.7 million euros, compared with 0.3 million in
the previous year (excl. one-time items). Even though the profits improved
slightly on the previous year’s figures they fell short of expectations. The
performance was unsatisfactory mainly because of weaker-than-expected
growth in volumes and falling sales prices. Considering the industry as a
whole, the performance was weak. Weak volumes and low profits forced the
company to introduce adjustment measures and lay off staff.
Investments in the new wall structure
The investments started in 2007 were completed during the early part of the
year in review. Towards the end of the year the company began the construction of a production line allowing the manufacturing of a wall structure that
is in accordance with new energy regulations. The new regulations will take
effect at the start of 2010. The investments totalled 0.9 million euros.
During the year 2009 there will be a change of generation
at the top of the company
The company’s current managing director Mikko Huhtala will retire on 1 August 2009 in accordance with his management contract. Jukka Sydänmetsä
has been appointed as his successor and he will start in his new job on the
same day. He is currently the managing director of PRT-Lami Oy and he will
also continue in this job for the time being.
20
05
06
07
08
Future prospects
It is estimated that this year detached-housing start-ups will drop from
11,800 to 9,000. However, at the turn of the year, the sector’s order backlog was, in euro terms, 41% below last year’s figures. During the last months
of the year, sales in the sector as a whole actually dropped 51% from the
previous year. The likeliest scenario is that both detached-housing start-ups
and sales of housing packages will shrink more than forecast and in the
worst case, the drop may be almost 50%. This will make it impossible for
the sector to operate profitably. Falling market demand and high structural
costs will make profitable operations difficult. Falling sales will inevitably
lead to changes in personnel structure this year and additional layoffs can
be expected. Sales efforts in holiday homes and exports to areas adjacent
to Finland will continue despite the tight market situation in these markets.
Lappli-Talot Oy
Managing Director:
Lappli-Talot Oy
turnover development
in millions of euros
Pentti Vaara
Net turnover:
EUR 15.829 million
40
Change in turnover:
-16%
30
Share of Group’s gross turnover:
10%
25
Export:
EUR 1.910 million
20
Export share of turnover:
12%
15
Operating profit:
EUR 1.009 million
10
Capital expenditures:
EUR 1.798 million
5
Return on capital invested:
19%
0
Personnel, on average:
72
04
05
06
07
08
Turnover of Lappli-Talot Oy fell as a result of shrinking
market demand
The company’s housing deliveries in Finland dropped from 331 to 260
(-22%). The fall was slightly steeper than in the sector in average. A total
of 28 (37) houses were delivered for export. For the first time this decade,
the company experienced a fall in its turnover. The drop was 16% and the
situation also led to temporary layoffs during the year.
The investments carried out during the financial year, totalling 1.8 million
euros, were made up of the construction of a heating plant and machine
tools and a hall for them. The investment involving the painting line for
external cladding panels was also started at the end of the year.
Future prospects
Profits remain good even though falling turnover caused
them to contract
A falling turnover combined with higher structural costs caused profits
to drop. Profit before extraordinary items totalled 1.2 million euros (1.8
million), which was 7.5% (9.6%) of turnover. Return on capital invested
dropped to 19% (30%). However, in view of the changes in the operating
environment, the performance must be considered satisfactory.
Because of a fall in detached-housing construction, there will be little prospect for profitable operations and growth this year. At the same time, however, the company is in a good position to survive the shrinking demand:
the new range of houses and holiday homes will generate more demand
potential and the recently completed investments combined with the management of the production process will allow the company to make its
operations more cost-effective.
21
Kontiotuote Oy
Managing Director:
Kontiotuote Oy
turnover development
in millions of euros
Jalo Poijula
Net turnover:
EUR 61.337 million
70
Change in turnover:
-6%
60
Share of Group’s gross turnover:
37%
50
Export:
EUR 12.538 million
40
Export share of turnover:
20%
30
Operating profit:
EUR 5.900 million
20
Capital expenditures:
EUR 7.420 million
10
Return on capital invested:
27%
Personnel, on average:
285
0
04
05
06
07
08
Markets and volumes in log-house industry contracted
Future prospects
For the first time this decade, there was a drop in the construction of holiday
homes and the volume of the log-house industry in Finland. Start-ups of
holiday homes totalled 6,800, which was 12% less than in the previous year.
Start-ups of log-constructed detached housed also declined. They totalled
860, which was 24% less than in 2007. Turnover declined from 358 million
euros to 318 million, a drop of 10%. Domestic sales accounted for 174
million euros of the turnover, while exports totalled 145 million. Domestic
turnover fell by 8% compared with the previous year, while in exports the
drop was 11%.
Turnover of Kontiotuote Oy dropped in both Finland and on the
export markets
Deliveries of log houses dropped from 2,302 units to 2,131 units (-7%).
Turnover decreased by 6%, which was mainly the result of falling exports. On
the domestic markets, Kontio remained the market leader. Exports accounted for 20% of the turnover. At the same time, the company only accounted
for 10% of the industry’s export. The most important export markets were
Russia, Ukraine, Japan and France. The company exported its products to a
total of 15 countries.
Profits remained high even though a falling turnover caused
them to shrink
Profits remained high even though a falling turnover caused them to shrink
slightly. Profit before extraordinary items totalled 6.1 million euros, compared with 7.4 million in 2007. This was 9.9% (11.3%) of the turnover. Return
on in capital invested was 27% (39%).
Investments in laminated log capacity
The company’s investments during the financial year totalled 7.4 million
euros. Most of the investments concerned the construction of a new laminated-log factory and a new production line. The investment has made the
company self-sufficient in laminated log preforms and the entire production
process, from timber to finished products, can now be carried out at the
company’s own plant.
22
According to forecasts for the sector, construction of holiday homes in Finland will, as a result of the economic downturn, shrink by almost 20% this
year. Furthermore, all important export markets have also been hit by the
downturn. At the turn of the year, the sector’s order backlog was 22% lower
than a year earlier.
Even though the investments in laminated-log production will substantially
improve the company’s price competitiveness, a sharp drop in demand will
make the year 2009 a difficult one. Profitability will be substantially lower
than in 2008.
Mellano Oy
Managing Director:
Mellano Oy
turnover development
in millions of euros
Jarmo Pekkarinen
Net turnover:
EUR 14.136 million
21
Change in turnover:
-15%
18
Share of Group’s gross turnover:
9%
15
Operating profit:
EUR -1.908 million
12
Capital expenditures:
EUR 0.332 million
9
Return on capital invested:
neg.
6
Personnel, on average:
183
3
0
04
05
06
07
08
Economic downturn has also affected fi xture markets
Future prospects
The company manufactures and sells household fi xture components
for the industry in the sector. The main products are painted and filmcoated doors, laminate tops, frames, mounts and sliding doors. The
downturn in the Finnish economy also had impact on fi xture markets
and, as a result, the sector’s turnover dropped by an estimated 12%.
The sharpest contraction was in the demand for fi xtures in new construction.
This year, fi xture markets are expected to contract, mainly as a result
of a drop in new construction. This will sharpen competition between
players in the sector. The company’s turnover is expected to fall slightly
but profi ts should improve signifi cantly from the previous year.
Substantial structural changes led to heavy losses
The company’s turnover dropped by 15%, which was slightly more than
in the sector as a whole. The decline was the result of cuts in the
number of fi xture-manufacturing units, falling unit prices and such factors as the termination of the manufacturing of wooden, veneer and
curved doors. The development measures launched in the company in
the previous year resulted in restructuring and signifi cant changes in
the manufacturing processes at all places of operations. These measures resulted in signifi cant one-time expenses during the fi nancial year.
The company’s profi t before extraordinary items was therefore negative,
at –2.1 million euros (-0.3 million). Return on capital invested was
also negative. The most important one-time expenses were: entries of
dropped inventories (0.8 million euros), pay costs resulting from the
employment of additional staff in connection with the changes (0.4
million euros), costs resulting from extensive machine repairs (0.2
million euros), costs resulting from the dismantling of the network of
representatives (0.2 million euros), cost resulting from the ending of
employment relationships (0.1 million euros) and customer compensations (0.1 million euros).
Most of the planned changes were carried out during the fi nancial year.
This year will see the closure of the plant at Alapitkä and its operations
will be transferred to Mellano’s plant in Pieksämäki. Otherwise, the
focus this year will be on the securing of the effi ciency benefi ts of the
already implemented changes in sales, manufacturing and the orderdelivery process.
The investments during the year in review totalled 0.3 million euros
and were mainly in connection with the operative changes carried out
in production units.
23
Piklas Oy
Managing Director:
Piklas Oy
turnover development
in millions of euros
Juha Hautala
Net turnover:
EUR 7.105 million
Change in turnover:
+2%
Share of Group’s gross turnover:
4%
Operating profit:
EUR 0.124 million
Capital expenditures:
EUR 0.495 million
Return on capital invested:
3%
Personnel, on average:
68
14
12
10
8
6
4
2
0
04
The window industry also contracted
In the window industry, the year in review was characterised by falling volumes, which resulted from a drop in new construction. In all, about 1.1
million windows were manufactured (1.4 million). Of this, slightly more than
half is used for new construction and the remaining for renovation projects.
Piklas Oy’s performance was weak
The number of windows manufactured and delivered was slightly below last
year’s output. This was mainly because of a decline in detached-housing
construction in Finland. During the year in review, Piklas Oy manufactured
about 44,000 windows (46,000) and about 3,700 frame doors (4,000).
There was, however, a slight increase in turnover. Profit before extraordinary
items fell compared with the previous year, to 0.1 million euros (0.3 million).
This was 0.7% of the turnover (4.3%). Return on capital invested was lower
than in the previous year, dropping from 9% to 3%. The company’s performance can be considered unsatisfactory. The fall in profi tability is mainly
explained by problems in the manufacturing process and the resulting
additional expenses. In order to eliminate the problems, the company
launched manufacturing-development measures at the end of the year. They
will last until the end of 2009. The measures are already expected to
produce significant improvements in efficiency and profi tability this year.
Investments totalled about 0.5 million euros and they mainly concerned the
completion of the painting and frame-assembly investments started during
the previous financial year.
Future prospects
The window sector is strongly dependent on general trends in the construction business. The success of Piklas Oy is closely tied to what is happening
in new construction. New construction in Finland will contract substantially
this year, particularly in the area of housing construction. At the same time,
growth prospects in renovation are slim and this will mean sharper competition in the sector. This will significantly weaken the company’s growth and
profitability prospects.
24
05
06
07
08
PRT-Lami Oy
Managing Director:
PRT-Lami Oy
turnover development
in millions of euros
Jukka Sydänmetsä
Net turnover:
EUR 4.505 million
Change in turnover:
-28%
Share of Group’s gross turnover:
3%
Export:
EUR 0.963 million
Export share of turnover:
21%
Operating profit:
EUR -0.076 million
Capital expenditures:
EUR 0.093 million
Return on capital invested:
neg.
Personnel, on average:
23
14
12
10
8
6
4
2
0
04
05
06
07
08
Production of laminated wood decreased
Future prospects
Production of laminated wood in Finland has been increasing slowly since
The business operations of the company are strongly tied to construction
the start of the decade. Production volumes started to decline in early
in Finland and on the export markets. Because of the economic downturn,
2008. Domestic use of strength-graded laminated wood fell to 50,000
a substantial decline is predicted for construction on all major export mar-
m3 (55,000 m3). In addition to this, almost 100,000 m3 of laminated logs
kets, which means that the demand outlook and, consequently, business
and other laminated products were used in Finland (100,000 m3). Exports
prospects, are bleak. However, the company aims to maintain its existing
of laminated wood, laminated logs and other laminated products to other
operational levels in both laminated wood and I-beams. More publicity for
parts of Europe totalled 55,000 m3 (70,000 m3). Exports outside Europe,
I-beam and its new applications will help the company to aim for increasing
primarily to Japan, also dropped. The total was 130,000 m3 (195,000 m3).
deliveries in 2009.
Laminated-wood production capacity in the domestic laminated-wood industry totals more than 600,000 m3 of which almost 400,000 m3 remained
In laminated wood, shrinking markets and sharper competition will signifi -
unused during the year in review. Excess capacity accelerated the down-
cantly weaken profit prospects during the current financial year.
ward trend in the average prices of laminated-wood products. Not even
the summer season in Finland helped the market to recover to previous
years’ levels.
Consumption of I-beams in Finland in 2008 totalled about 150,000 linear metres. PRT-Lami Oy accounted for 100,000 linear metres of this
amount.
Turnover and profits of PRT-Lami Oy contracted
Production of laminated wood in 2008 declined by 28% compared with the
previous year and totalled 7,360 m3 (10,277 m3). In I-beam production,
the drop was 18%, and the amounts declined to 100,300 linear metres
(123,000 linear metres). Turnover dropped by 28%, to 4.5 million euros
(6.2 million). Exports accounted for 21% (28%) of the turnover.
Profit before extraordinary items was negative, at -0.1 million euros, compared with a plus of 0.1 million in the previous year. Return on capital
invested was also negative (13%). The company’s performance was unsatisfactory. The main factor behind the weak performance was a substantial
drop in turnover compared with the previous year. Investments in 2008
were kept to a minimum and were small replacement investments.
25
PRT-Wood Oy
Managing Director:
PRT-Wood Oy
turnover development
in millions of euros
Vesa Heinonen
Net turnover:
EUR 21.259 million
Change in turnover:
-26%
40
30
Share of Group’s gross turnover:
13%
Export:
EUR 9.604 million
Export share of turnover:
45 %
15
Operating profit:
EUR -3.171 million
10
Capital expenditures:
EUR 0.657 million
5
Return on capital invested:
neg.
0
Personnel, on average:
71
25
20
04
05
06
07
08
Timber production at PRT-Wood Oy contracted
The sector posted heavy losses
Production in the Finnish timber industry dropped as much as 21% from the
Timber production fell to 99,575 m3 (109,892 m3). At Pyhäntä, a total of
previous and totalled 9.8 million m (12.4 million m ). Contraction was at its
80,124 m3 (89,726 m3) was sawn, while in Pyhäsalmi the amount was
strongest during the last quarter. Timber production also contracted in Swe-
19,451 m3 (20,081 m3). Pinewood accounted for 68,797 m3 (85,282 m3),
3
3
den, though the drop (6%) was nowhere near as steep as in Finland.
and sprucewood for 30,778 m3 (24,610 m3) of the total. Timber deliveries
totalled 95,690 m3 (109,748 m3), of which exports accounted for 53,449 m3
Demand fell on all timber markets and selling products was difficult through-
(70,497 m3).
out the year. A slight upturn in early autumn was followed by a collapse
in late autumn in the wake of the global financial crisis and the economic
Performance was extremely weak
downturn. Towards the end of the year, sales more or less came to a halt as
a steep decline in end demand filled customers’ inventories.
Turnover contracted both as a result of falling production and a sharp drop
in timber prices. Falling timber prices and the fact that in proportional terms
Especially in Sweden but also in Finland end-product inventories at sawmills
the price of sawtimber wood was too high, combined with a lower load factor
were at high levels as a result of rapidly falling demand and insufficient
resulted in heavy losses. Turnover dropped by 26% and profit before extraor-
production cutbacks.
dinary items was heavily negative, at -3.7 million euros (3.6 million). Return
on capital invested was also negative (25%). This must be considered an
Timber prices dropped sharply until July after which they remained stable un-
extremely weak result.
til the end of the year as a result of the brief upturn in sales in early autumn.
On average, prices dropped by a fifth during the year.
Future prospects
On the raw-material side, the decline in the price of sawtimber wood which
Prospects for the construction sector are extremely weak on all main timber-
had started in 2007 continued into February 2008. After that, prices re-
using markets. In Finland, construction, especially housing building, may be
mained stable until October even though a concurrent steep drop in timber
falling to the same levels as during the recession of the early 1990s. Tim-
prices would have necessitated a further fall in prices. Seeming insufficien-
ber prices will continue to decline until the excessive inventories have been
cy of the raw material for the pulping industry led to overpricing of stands
cleared and demand on the main markets starts to recover. In this respect,
marked for harvesting. When it became clear that Russia would not be in-
the year 2009 will be a period of adjustment and only a balance between
troducing additional timber duties, the shortage of raw material anticipated
demand and supply will allow timber prices to recover. However, this will
by the industry turned into an oversupply, which led to a sharp drop in the
only happen after the world economy has emerged from the recession. The
prices of all timber qualities during the last months of the year. Thus, the
prices of sawtimber wood will drop this year as there are further falls in sawn
stocks of sawtimber wood during the last months of the year were, in view of
quantities. However, the decline will be slower than during the last months
the future sawing needs, both excessive and overpriced.
of 2008. Falling timber prices combined with excessive prices for sawtimber
wood will keep the timber sector unprofitable throughout the year.
The slight drop in the price of sawtimber wood was not enough to compensate for the fall in timber sales prices during the year in review. After two
successive positive years, the average performance of the timber industry
in 2008 was extremely weak: the average loss in the sector was 18% and
even the sales margin was negative.
26
Contact information:
Leiviskäntie 2, 92930 PYHÄNTÄ, FINLAND
tel. +358 20 770 7000, fax +358 20 770 7015
www.prt-forest.fi
Leiviskäntie 2, 92930 PYHÄNTÄ, FINLAND
tel. +358 20 770 7000, fax +358 20 770 7015
www.jukkatalo.fi
Kivistöntie 36, 73100 LAPINLAHTI, FINLAND
tel. +358 20 770 7700, fax +358 20 770 7720
www.mellano.fi
Ranuantie 224, 93100 PUDASJÄRVI, FINLAND
tel. +358 20 770 7400, fax +358 20 770 7516
www.kontio.fi
Teollisuustie 2, 74200 VIEREMÄ, FINLAND
tel. +358 20 711 8500, fax +358 20 711 8509
www.jokeri-talot.fi
Talotehtaantie 14, 95440 KYLÄJOKI (Tornio), FINLAND
tel. +358 20 770 7600, fax +358 20 770 7660
www.lappli.fi
Leiviskäntie 2, 92930 PYHÄNTÄ, FINLAND
tel. +358 20 770 7000, fax +358 20 770 7386
www.piklas.fi
Leiviskäntie 2, 92930 PYHÄNTÄ, FINLAND
tel. +358 20 770 7000, fax +358 20 770 7361
www.prtlami.fi
Leiviskäntie 2, 92930 PYHÄNTÄ, FINLAND
tel. +358 20 770 7000, fax +358 20 770 7339
www.prt-wood.fi
PRT-Forest Oy 92930 Pyhäntä, FINLAND, tel. +358 20 770 7000, telefax +358 20 770 7015 www.prt-forest.fi