Annual Report 2008 Report Annual
Annual Report 2008 MARIMEKKO CORPORATION Kyyjärvi SUBSIDIARIES France Netherlands, Belgium, Switzerland Itella Corporation Netherlands Puusepänkatu 4 Factory Shop Germany Scandeco SARL Luxembourg Schatulle P.O. Box 6 Atlanta Offi ce Products BV 00880 Helsinki, Finland Paletti Shopping Centre Marimekko GmbH 970 Chemin de Fontmerle 4nightingales bvba Rosshofgasse 15 00011 ITELLA Techniekweg 1 P.O. Box 107 Vaasantie 2 H 146 Querstrasse 2 Bat B Les Jonquilles Fortlaan 42 4051 Basel Finland 9600 AA Hoogezand 00811 Helsinki, Finland 43700 Kyyjärvi 60322 Frankfurt/Main 06600 Antibes 9000 Gent Switzerland Tel. +358 204511 Netherlands Tel. +358 9 758 71 Tel. +358 14 471 784 Germany France Belgium Tel. +41 61 2614611 Fax +358 20 4515469 Tel. +31 598 329 911 Fax +358 9 755 3051 Lahti Tel. +49 69 749084 Tel. & fax +33 4 97 23 95 90 Tel. +32 9 252 56 06 Fax +41 61 2610696 E-mail: [email protected] Fax +31 598 321 513 E-mail: info@marimekko.fi Vesijärvenkatu 22 Fax +49 69 742643 E-mail: [email protected] Fax +32 9 270 13 66 E-mail: www.itella.com www.atlanta-offi ce.eu Website: www.marimekko.com 15140 Lahti E-mail: salesoffi [email protected] Agent: bags, interior decoration E-mail: [email protected] [email protected] Packaging materials and Notebooks, calendars, stationery
Addresses MARIMEKKO STORES Tel. +358 3 782 9455 products Agent: bags, interior decoration Agent: clothing, bags, interior e-postcards Fatboy the original B.V. Sweden products decoration products Finland Lempäälä Marimekko AB Greece KONE Corporation De Steenbok 19-21 Polyglobal A.E. Nicolette Brunt UK, Ireland Keilasatama 3 5215 MG ’s-Hertogenbosch Helsinki Ideapark Stockholm Modecenter 49 Panepistimiou Street Noordmolenwerf 175 Skandium 02150 Espoo Netherlands Kamppi Shopping Centre Ideaparkinkatu 4 Fack 51 Stoa Arsakiou 15 3011 DC Rotterdam 247 Brompton Road Finland Tel. +31 73 615 4200 Urho Kekkosen katu 1 37570 Lempäälä Gustaf de Lavals torg 8 10564 Athens Netherlands London SW3 2EP Tel. +358 204 751 Fax +31 73 615 4201 00100 Helsinki Tel. +358 10 344 3320 131 59 Nacka Greece Tel. +31 10 4228386 United Kingdom Fax +358 204 75 4496 www.fatboy.nl Tel. +358 10 344 3300 Rovaniemi Sweden Tel. +357 22 678013 Fax +31 10 4185759 Tel. +44 20 7823 8874 E-mail: Beanbag chairs Rinteenkulma Shopping Centre Tel. +46 8 7940730 Kämp Galleria Fax +357 22 671564 E-mail: [email protected] Fax +44 20 7584 7706 [email protected] Koskikatu 25 Fax +46 8 7940739 USA Pohjoisesplanadi 31 E-mail: Agent: clothing E-mail: [email protected] www.kone.com 96200 Rovaniemi E-mail: salesoffi [email protected] Avon Products, Inc. 00100 Helsinki [email protected] Agent: clothing, bags, interior Patterns for elevator interiors Tel. +358 16 346 844 AGENTS AND IMPORTERS Norway 1345 Avenue of the Americas Tel. +358 9 686 0240 Agent: clothing, bags, interior Artinteriør A/S decoration products ONE WAY Sport Oy New York, NY 10020 Pohjoisesplanadi 2 Factory Shop Australia decoration products Box 57, Skøyen USA, Canada Nuijamiestentie 5c USA Napapiirin Lasi Chee Soon & Fitzgerald 00130 Helsinki Italy 0212 Oslo Marimekko North America LLC 00400 Helsinki Tel. +1 212 282-5000 96930 Napapiiri 387 Crown Street Tel. +358 9 622 2317 Piccolo Museo Norway 111 South Broadway Finland www.avoncompany.com Tel. +358 16 356 1186 Surry Hills Via Gherla 46 Tel. +47 22 51 61 50 Rochester, MN 55904 Tel. +358 10 834 5400 Marimekko for Avon Cosmetics Hakaniemi Market Hall Sydney NSW 2010 Sulkava 31017 Crespano del Grappa Fax +47 22 52 31 45 USA Fax +358 10 834 5401 Collection 00530 Helsinki Australia Factory Shop Italy E-mail: [email protected] Tel. +1 507 261-6541 E-mail: info@onewaysport.fi Tel. +358 9 753 6549 Tel. +61 2 9360 1031 Crate & Barrel Alanteentie 3 Tel. & fax +39 0423 538230 Agent: clothing, bags, interior Fax +1 866 347-5381 www.onewaysport.com Itäkeskus Shopping Centre E-mail: 1250 Techny Road 58700 Sulkava E-mail: [email protected] decoration products E-mail: [email protected] Poles for Nordic walking Itäkatu 1-5 a 27 info@cheesoonfi tzgerald.com Northbrook, IL 60062 Tel. +358 15 676 283 Agent: clothing, bags, interior Agent: clothing, bags, interior 00930 Helsinki Importer: fabrics Russia, Latvia, Lithuania, Pyrollpack Oy USA Tampere decoration products Kazakhstan, Ukraine, Belarus decoration products Teollisuuskyläntie 2 Tel. +1 847 272-2888 Tel. +358 9 323 1772 Design Mode International Pty Ltd Koskikeskus Shopping Centre Japan LH-Trade Oy LICENSING PARTNERS 37500 Lempäälä Fax +1 847 272-3607 Factory Shop 3/20 Wilmette Place 33100 Tampere Mitsubishi Corporation Ristiniementie 24 A 5 Finland www.crateandbarrel.com Kirvesmiehenkatu 7 Mona Vale NSW 2103 Denmark Tel. +358 3 223 7627 Textile Div. Brand & Apparel Unit 02320 Espoo Tel. +358 30 624 2300 Interior textiles 00880 Helsinki Australia Le Klint A/S JR Ebisu Bldg. 10F 5-5 Finland Fax +358 30 624 2350 Tel. +358 9 758 7244 Sokos Department Store Tel. +61 2 9998 8200 Egestubben 13-17 DelGreco & Company Ebisu-Minami, 1-Chome Tel. +358 50 5691576 E-mail: Hämeenkatu 21 Fax +61 2 9998 8222 5270 Odense N 232 East 59th Street Espoo Shibuya-ku Fax +358 9 2564663 [email protected] 33200 Tampere E-mail: Denmark New York, NY 10022 Kulttuuriaukio Tokyo 150-0022 E-mail: Multipurpose decorative paper Tel. +358 50 342 9962 [email protected] Tel. +45 66 18 19 20 USA 02100 Espoo Japan larissa.hatanpaa@netsonic.fi Turku Importer: clothing, bags, Fax +45 66 18 19 97 Suomen Kerta Oy Tel. +1 212 688-5310 Tel. +358 9 463 230 Tel. +81 3 5795 3477 Agent: clothing, bags, interior Aurakatu 10 readymade interior decoration www.leklint.com Runeberginkatu 25 Fax +1 212 688-5207 Fax +81 3 5791 3468 decoration products Vantaa 20100 Turku products Lampshades 48200 Kotka www.delgrecoandcompany.com E-mail: Helsinki-Vantaa Airport Tel. +358 2 274 0900 South Korea Finland Finland Fabrics for outdoor use Austria [email protected] 01530 Vantaa Ihyun Design Berner Ltd. Tel. +358 5 350 4400 Kenlo International Corp. Vaasa apres*nord Importer: clothing, bags, interior Tel. +358 9 870 2110 619-8 Shinsa-dong Eteläranta 4 B Fax +358 5 350 4450 306 Fifth Avenue Rewell Center Mandellstrasse 1 decoration products Gangnam-gu E-mail: Humppila 65100 Vaasa 8010 Graz 00130 Helsinki New York, NY 10001 Look Inc. (Boutique Division) Seoul 135-894 riitta.lindeberg@suomenkerta.fi Factory Shop Tel. +358 6 312 4488 Austria Finland USA 2-7-7 Nakameguro South Korea www.suomenkerta.fi Humppilan Lasi Tel. +43 316 819262 Tel. +358 207 91 00 Tel. +1 212 695-8700 Virrat Meguro-ku Tel. +82 2 3445 4776 Paper napkins and tablecloths, 31640 Humppila Fax +43 316 825537 Fax +358 207 91 4232 Fax +1 212 695-0213 Factory Shop Tokyo 153-8638 Fax +82 2 3445 6356 disposable plates and cups Tel. +358 3 437 8702 E-mail: E-mail: tia.yrjola@berner.fi www.kenlo.com Palmroth Center Japan E-mail: [email protected] Joensuu [email protected] www.berner.fi , www.ainu.fi Italy Umbrellas, raincoats Pirkantie 26 Tel. +81 3 3794 9139 Importer: bags, interior Iso Myy Shopping Centre Agent: fabrics Baby bottles, pacifi ers Sirpi S.p.A. Revman Industries, Inc. 34800 Virrat Fax +81 3 3794 9713 decoration products Siltakatu 10 B Iittala Group Ltd Via Grandi, 8 1211 Avenue of the Americas Tel. +358 3 475 3490 Denmark E-mail: [email protected] 80100 Joensuu Spain Hämeentie 135 20068 Peschiera Borromeo (MI) 30th Floor Match Interieur ApS Distributor: clothing, bags, interior Tel. +358 13 224 141 Germany Eickenrodt s.l. 00560 Helsinki Italy New York, NY 10036 Mejlgade 48A decoration products Frankfurt/Main Paseo de Zubiaurre nro 47 Finland Tel. +39 02 516631 USA Jyväskylä 8000 Århus C 20015 San Sebastián Fax +39 02 5530 2228 Torikulma Oeder Weg 29 Denmark Tel. +358 204 39 10 Tel. +1 212 278-0300 60318 Frankfurt/Main Spain Fax +358 204 39 5180 www.sirpi-wallcoverings.it Fax +1 212 840-8446 Asemakatu 12 Tel. +45 20 16 62 32 Tel. +34 943 424 275 Wallpapers 40100 Jyväskylä Tel. +49 69 13023811 Fax +45 86 26 16 31 www.iittalagroup.fi www.revman.com Fax +34 943 273 493 Glassware, porcelain Bed linen, bathroom textiles Tel. +358 14 337 3400 Sweden E-mail: E-mail: [email protected] Kitee Stockholm [email protected] Agent: bags, interior decoration Factory Shop Norrmalmstorg 4 Agent: clothing, bags, interior products Karhutie 1 111 46 Stockholm decoration products 82500 Kitee Tel. +46 8 4403275 Tel. +358 13 414 761 Marimekko Annual Report 2008
Marimekko, established in 1951, CONTENTS is a leading Finnish textile and Design 2 CEO’s review 4 clothing design company renowned Marimekko in 2008 6 for its original prints and colours. Vision, objectives and strategy 9 The company designs and Marimekko’s business operations 10 Clothing 10 manufactures high-quality clothing, Interior decoration 12 interior decoration textiles, bags Bags 14 and other accessories. Marimekko Retail store concept 16 Retail sales 18 products are sold in over 40 Domestic wholesale 20 countries. Products with Marimekko Exports and international operations 22 Licensing 24 designs are also manufactured under Production and sourcing 26 licence in various countries. In 2008, Personnel 28 Social responsibility 30 the company’s net sales amounted Risk management, internal supervision and audit 36 to EUR 81.1 million. Exports and Corporate governance 39 income from international operations Administration and auditors 45 Information for shareholders and investors 46 accounted for 27.0% of the Group’s Banks and securities brokers analysing Marimekko 47 net sales. At the end of 2008, the Financial statements for 2008 49 Group employed 414 people. Report of the Board of Directors 50 Consolidated fi nancial statements, IFRS 56 The company’s share is quoted on Parent company fi nancial statements, FAS 78 the NASDAQ OMX Helsinki Ltd. Key fi gures of the Group 88 Shares and shareholders 90 Signatures to the fi nancial statements and the report of the Board of Directors 94 Auditors’ report 95 Addresses
Annual Report 2008 1 Design
Colour, joy and beauty for everyday life
Marimekko design has many dimensions. It is Samu-Jussi Koski (clothing) and Minna recognisable, but hard to defi ne using individual Kemell-Kutvonen (interior decoration), the words or attributes. Marimekko design is new Creative Directors appointed in summer a powerful interpretation of life and our 2008, are responsible for outlining Marimekko’s surroundings. It springs from a well of emotion creative strategy, supporting the designers and and looks to the future with a touch of nostalgia. coordinating design activities between the product The strength of Marimekko design is unrestrained lines. Work on new collections begins with a joint creativity, the deepest ambition of which is to kick-off meeting where the team determines the offer aesthetic experiences for every moment of framework and goals for the collection – down our lives. This unique spirit is the achievement of to the message content and the colour scheme. designers who interpret contemporary themes Achievement is monitored throughout the design with their individual and moving styles. process. The objective is to introduce beautiful, joyful, bold and avant-garde design in everyday In many ways, 2008 was a year of new beginnings life – increasingly also outside Finland. for Marimekko, including adoption of a new style of design thinking. The company honed its design strategy, streamlined its collections, harmonised the design goals and introduced a new approach to coordinating and developing the design process – all with the intent to increase the appeal of Marimekko design with current clientele and to reach new target groups.
2 Marimekko Colourful Modern Relaxed Playful Bold Surprising Quirky Straightforward International Proud of its roots Radical Natural Clean-lined Functional Signifi cant Cosy Delicate Restrained Sustainable Finnish Social
Annual Report 2008 3 CEO’s review
4 Marimekko At Marimekko we have a year of major changes The Marimekko concept stores – both the and new strategy defi nitions behind us. In the company’s own shops and those owned by next few years, we want to focus on a deliberate retailers – continue to play a key role in the rethinking of our business, reinforcing our strengths internationalisation of Marimekko. This strategy and building up Marimekko’s status as an allows us to present the Marimekko brand in international company. Our vision is to be one depth and to expand our loyal customer base. of the most appealing design-based consumer Our geographic focus will be on areas where the brands in the world. Marimekko brand is already recognised. The goal is to have a suffi cient number of stores in each Marimekko’s major strengths are unique design region so that each shop can benefi t from the and a widely recognised brand. Marimekko economies of scale in marketing and other areas. design is globally known particularly for its original A good example is Japan where we already have patterns and colours. The value of this recognition fi fteen Marimekko concept stores, with three more – achieved through decades of dedicated work – opening this spring. We will also invest in the is immeasurable. It is of the utmost importance for development of an enhanced store concept us that our customers, the international fashion – a concept that offers a friendly and inspiring and design media and distribution channels, our shopping environment for customers and subcontractors and other stakeholders respect maximises effi ciency and profi tability for the Marimekko and see us as a brand that stands out owner. With a unique, functional store concept exceptionally strongly among its competitors. The and a product range that satisfi es the wishes of fact that the best designers in the fi eld are eager to today’s consumers, we can attract established create designs for Marimekko gives us a valuable and esteemed retailers at the best possible competitive edge. locations close to major customer fl ows. In 2008, we put special emphasis on product The global economic situation looks gloomy development, seeking not only to launch new and uncertain at the moment. Recession products but also to reinforce our existing product forces us to keep a close watch on costs and categories. The fruits of this work include a effi ciency, but we will continue to invest in product collection of entirely new kinds of Marimekko development, reshaping the store concept, and bags and accessories, which will be in shops in internationalisation. I am confi dent that with our the spring of 2009. The colours and patterns in amazingly committed and competent personnel we the collection represent the familiar, joyful and bold will weather this crisis. By working in a systematic Marimekko look, while the product design and and persistent way, we will create the foundation materials serve the practical needs of customers for Marimekko to emerge stronger than ever. in a new and more comprehensive way. Bags and impulse-buy accessories – belts, purses and key At present, the world is fi lled with shades of grey. rings – are also strategically important product Now more than ever we need colour and joy in our groups for the retail trade, as they can generate lives, something special and genuine, the courage considerable sales volumes and margins and to be ourselves – the spirit that has characterised improve profi tability in relation to store area. Our Marimekko’s design for almost 60 years. interior decoration line will introduce a variety of products taken one step further – in particular new Mika Ihamuotila easy-buy design items that bring joy to the home. We will also launch new materials alongside our traditional printed fabrics. The clothing line aims to improve the fi t of the garments and offer more styles that can be combined and coordinated with each other.
Annual Report 2008 5 Marimekko in 2008
A year of major changes and novel thinking
Marimekko initiated long-term plans for business development. BUSINESS DEVELOPMENT
The company launched several development projects in its product lines to • The Group’s net sales were up 5.0%. improve effi ciency and profi tability. • Trend in net sales by product line: Marimekko enhanced the coordination of collection projects to strengthen • clothing -0.5% the design process. Some new designers started working with Marimekko. • interior decoration 5.4% • bags 17.9%. Marimekko continued to develop its store concept. The fi rst shop based on the new concept opened in Turku, Finland. • Sales by Marimekko’s own shops in Finland were down 0.2%. Five new concept stores opened in Japan. • Sales to retailers in Finland grew by 5.1%. Licensing cooperation included H & M Hennes & Mauritz AB summer This growth was entirely generated by deliveries 2008 collection and the Marimekko for Avon cosmetics collection launched for one-off promotions. globally in autumn 2008. Marimekko and Sirpi S.p.A. entered into a licensing agreement concerning wallpaper production and distribution; the fi rst • Exports and international operations increased collection will be launched in spring 2009. by 7.3%. Growth was primarily attributable to one-off income from sales of licensed products and the opening of new concept stores.
• Earnings per share were EUR 0.92.
• The equity ratio rose to 78.7%.
Highlights of 2008 Fabrics from Marimekko’s Marimekko presented its spring collection were on show spring and summer 2009 at the HARDCORE New Finnish collection at its own fashion Design exhibition during the shows in Helsinki and at New York Design Week in May. the Gallery International Fashion Fair in Copenhagen in August.
Licensing cooperation with The fi rst shop based on the H&M provided worldwide new retail store concept visibility for Marimekko. opened in Turku, Finland, in August.
Marimekko and Artek arranged a joint design event, Milkbar, in Milan in April.
6 Marimekko KEY FIGURES 2008 2007 Change, %
Net sales, EUR 1,000 81,107 77,264 5.0 Share of exports and international operations, % of net sales 27.0 26.5 Operating profi t, EUR 1,000 9,956 10,487 -5.1 % of net sales 12.3 13.6 Profi t before taxes, EUR 1,000 9,964 10,442 -4.6 Net profi t for the fi nancial year, EUR 1,000 7,378 7,717 -4.4 % of net sales 9.1 10.0 Earnings per share, EUR 0.92 0.96 -4.4 Equity per share, EUR 3.92 3.66 7.3 Dividend per share, EUR *)0.55 0.65 Return on equity (ROE), % 24.2 27.4 Return on investment (ROI), % 32.3 35.0 Equity ratio, % 78.7 72.7 Personnel at the end of the fi nancial year 414 411 0.7
*) Proposal by the Board of Directors.
The formulas for the key fi gures are presented on page 89.
Marimekko and Artek made another joint appearance at the Be Honest! exhibition at the Spiral Garden in Tokyo in September.
Picture: Artek
The Marimekko for Avon cosmetics Five new concept stores The Kirstu storage chest The Marimekko: Fabrics, collection launched globally. opened in Japan. by Ilkka Suppanen won the Fashion, Architecture international 2008 GOOD exhibition organised by the DESIGN Award. Design Museum Helsinki visited Mexico City, Lima and Murmansk during the year.
Picture: Avon
Annual Report 2008 7 Marimekko in 2008
QUARTERLY TRENDS 2007–2008
Jan.–March April–June July–Sept. Oct.–Dec. 2008 2007 2008 2007 2008 2007 2008 2007
Net sales, EUR 1,000 18,594 16,912 18,539 16,997 21,913 20,699 22,061 22,656 Operating profi t, EUR 1,000 1,824 1,497 2,540 1,643 3,747 3,965 1,845 3,382 Profi t before extraordinary items and taxes, EUR 1,000 1,847 1,513 2,531 1,623 3,746 3,931 1,840 3,375 Net profi t, EUR 1,000 1,375 1,124 1,862 1,195 2,775 2,912 1,366 2,486 Earnings per share, EUR 0.17 0.14 0.23 0.15 0.35 0.36 0.17 0.31 Equity per share, EUR 3.83 3.49 3.40 2.98 3.75 3.35 3.92 3.66
NET SALES BY PRODUCT LINE NET SALES BY MARKET AREA
(EUR 1,000) 2008 2007 Change, % (EUR 1,000) 2008 2007 Change, %
Clothing 29,898 30,036 -0.5 Finland 59,175 56,826 4.1 Interior decoration 37,747 35,813 5.4 Other Nordic countries 9,423 8,581 9.8 Bags 13,462 11,415 17.9 Rest of Europe 4,700 4,725 -0.5 North America 3,994 4,067 -1.8 TOTAL 81,107 77,264 5.0 Other countries 3,815 3,065 24.5
TOTAL 81,107 77,264 5.0
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8 Marimekko Vision, objectives and strategy
On the way to becoming the world’s most acclaimed print designer
Marimekko’s objective is to grow and succeed in the international arena as a Finnish design company that has a strong identity. Business development primarily focuses on controlled organic growth in Finland and selected export markets.
OBJECTIVES • Highlight colourful print design as a differentiating factor. • Enhance global awareness of Marimekko as a unique design-based consumer brand. • Generate added value for the Marimekko brand by means of developing the product, store and distribution concepts. • Maintain a strong market position in Finland. • Increase exports and international operations by slightly over one-fi fth annually compared with the previous year. • Expand the distribution network, primarily by increasing the number of concept stores and shop-in-shops.
FINANCIAL OBJECTIVES Marimekko’s vision is to Ensuring profi table growth be the most acclaimed • annual growth in consolidated net sales over 10% • operating profi t as a share of net sales 10% print designer in the world • return on equity over 15% • equity ratio 60% and one of the most appealing design-based A stable dividends policy • the objective is to distribute dividends each year consumer brands. • dividends represent at least 50% of earnings per share
ACHIEVEMENT OF OBJECTIVES 2004–2008 2004 2005 2006 2007 2008 Annual growth in net sales, % 14.1 4.1 6.3 8.2 5.0 Annual growth in comparable net sales, % 16.1 9.3 6.3 8.2 5.0 Operating profi t as a share of net sales, % 14.1 17.0 15.2 13.6 12.3 Return on equity (ROE), % 28.9 38.4 31.3 27.4 24.2 Equity ratio, % 60.3 66.5 70.5 72.7 78.7 Dividend per share, EUR 0.50 0.65 0.65 0.65 *)0.55 Dividend per profi t, % 67.1 62.0 65.4 67.7 *)59.9 *) Proposal by the Board of Directors.
STRATEGIC CORNERSTONES • Developing Marimekko as an increasingly international brand, building on Marimekko’s unique expertise in colour and print design. • Maintaining fi rst-class, innovative design expertise and developing it further as a competitive edge factor. • Developing more customer-oriented product, store and distribution concepts. • Seeking growth from new customer groups and product innovations; controlled expansion of the distribution network primarily by increasing the number of concept stores and shop-in-shops. • Enhancing effi ciency, consistency and coordination in all business areas. • Reinforcing employee competence and fostering a corporate culture that values creativity and encourages internal entrepreneurship.
Annual Report 2008 9 Clothing
Ground-breaking, internationally attractive design for all seasons
Marimekko design is a balanced mix of give the items a fresh look and keep up appeal consummate professional skill and an open- with customers. The classics range is expanded minded, bold attitude. The clothing line brings with the most popular products from the seasonal out Marimekko design in a fascinating multi- collections. layered way. Materials and shapes form striking The trend in clothing sales has varied annually. contrasts. The clean-lined design is both Finnish In 2008, net sales fell by 0.5%, and amounted and international in character; the borders blur to EUR 29.9 million. There was a marked drop between the everyday and the festive. New in sales in Finland; international sales varied by collections express contemporary issues, but they market. Exports and income from international also celebrate Marimekko’s strong heritage. operations accounted for 25.7% of net sales. The new design strategy for the clothing line The major countries for exports were the United divides collections structurally into three parts: States, Sweden, Denmark, Japan, Norway and forefront products, seasonal products that bring Germany. beauty to everyday life, and classic products. Marimekko traditionally brings out two main Forefront products continue Marimekko’s proud collections and two mid-season collections tradition as a pioneer of Finnish design. Each every year. Although Marimekko clothing is not season brings with it new, ground-breaking and representative of fast-paced mass fashion, the internationally attractive design. These clothes restructuring of the fashion trade presents a have small production runs but a high attention challenge for Marimekko’s collection schedules. value. The company’s aim is to balance the fl ow of Seasonal items for women, men and children goods to take better advantage of the season – items that bring beauty to everyday life – are turning points. The role of subcontracting has still the cornerstone of Marimekko’s clothing increased continuously in clothing production. design. These products, too, are designed to Factors affecting the choice of production location bring something new not only to Marimekko but include collection structure, product delivery also to the international world of fashion. The schedules, order volumes and the price level. clothes must be distinctive, attract media attention In 2008, Marimekko initiated several projects in and, most importantly, appeal to a wide range of the clothing product line to improve effi ciency customers. The collections are meant to generate and profi tability. The company is reviewing the high sales volumes, which is why the cuts, development and scheduling of collections with materials, prints and colours must be suitable for a view to enhancing both reaction speed and long production runs. delivery reliability. To ensure profi table growth, Marimekko’s success stories – the timeless adjustments are made to the scope and structures classics – keep their place of honour as the of collections, pricing and delivery scheduling. foundation for the collections. They are an integral Product development resources are targeted element of Marimekko’s product concept and part at new product groups and products with of the basic range at each shop. Small updates signifi cant potential for net sales growth.
10 Marimekko Quality enhancement efforts apply to both The autumn and winter 2009/2010 line is materials and production. Inventory turnover can increasingly harmonious and powerful with colours be improved by more effi cient planning and control and prints enhancing each other. The stunning of the purchasing and order processes. knitwear by design duo Rinne-Niinikoski adds a novel, personal touch to the collection. Marimekko’s 2009 clothing collections include The clothing industry will face many challenges in designs by Samu-Jussi Koski, Mika Piirainen the next few years. The trade will have to adjust and Ritva Falla. Piia Rinne and Noora Niinikoski its supply to weakening demand. In the uncertain represent new talent. Annika Rimala’s Tasaraita market situation, Marimekko relies on its unique, jersey styles – which have been in production for attractive brand, a wealth of prints and original more than 40 years – are the backbone of the styling. Streamlined collections, more effi cient classics collection. The 2009 collections feature coordination and gradual renewal increase the prints refl ecting contemporary themes, picked commercial potential of products and their appeal from Marimekko’s extensive pattern catalogue, for new target groups both in Finland and in the as well as prints by talented young designers. exports markets.
Annual Report 2008 11 Interior decoration
The enchantment of good design never fades
Marimekko’s design is known for its expressive The creative works of Marimekko’s designers power, vivid colours and large patterns. The are closely followed by the design community, interior decoration range features all of these educational institutions and the international media. characteristics but also delicate and subdued One of the most successful interior decoration shades. Good design offers joy and aesthetic products launched within the past years is the experiences. It never loses its charm. Kirstu storage chest. Designed for Marimekko Marimekko’s extensive interior decoration range by Ilkka Suppanen in 2006, Kirstu combines provides ideas to suit every style, space and top design with a multi-function approach and atmosphere. Printed textiles and items made ecological thinking. The storage chest won the from the fabrics constitute the main products of prestigious 2008 GOOD DESIGN award, which the range. The basic collection includes kitchen is one of the oldest international design awards. and tabletop products, bed linen, bath textiles The Kivikko furnishing item launched in spring and home accessories. The interior decoration 2009, also designed by Ilkka Suppanen, is another collections contain both classics and seasonal example of good design suiting multiple purposes. products. New fabric designs are introduced every Roughly spherical in shape and available in three year for spring, autumn and Christmas. sizes, the Kivikko items can be used as comfortable cushions and seats, as toys or in games. Sales of Marimekko’s interior decoration line have increased steadily. In the past few years, Expansion to new product categories is also sales have been boosted by new concept store possible through licensing cooperation – a long- openings and signifi cant promotions in Finland. standing tradition for Marimekko. The latest In 2008, net sales of interior decoration products addition to Marimekko’s range of licensed products rose by 5.4%, amounting to EUR 37.7 million. is the Marimekko wallpaper collection, produced Exports and income from international operations by the Italian company Sirpi S.p.A. The wallpapers, accounted for 27.7% of the net sales. The major available later in the spring, bring Marimekko countries for exports were the United States, designs into a new – yet so natural – product Sweden, Japan, Denmark, Norway and Germany. category. The fi rst collection will include both well- known classics and more recent designs. Future In 2008, Marimekko launched several projects collections will offer new patterns every year. in the interior decoration line, striving for a more coordinated approach to product development. The designers behind Marimekko’s interior The goal is to offer more fi nished interior textiles, decoration range of spring 2009 have sought introduce exciting new designs in various products inspiration in folklore and bustling city life. The and improve the adaption of patterns to products. most recent addition to the designer team is Sanna Annukka, whose designs inspired by Finding and testing new materials to improve the Finnish national epic Kalevala have been quality and diversify the supply also play a crucial well received in Finland and by the international role in the continual development of Marimekko’s media. The collection also features new patterns interior decoration products. by Iiro A. Ahokas, Erja Hirvi, Maija Louekari, In-house production brings fl exibility to Aino-Maija Metsola and Teresa Moorhouse. In Marimekko’s product development, which addition, Marimekko’s 2009 interior decoration designers also appreciate. Seamless cooperation range contains works by the following designers: with the production professionals lets designers Hennamari Asunta, Björn Dahlström, Anna take advantage of the technical experience and Danielsson, Vuokko Eskolin-Nurmesniemi, Klaus knowledge that Marimekko’s printing factory team Haapaniemi, Pia Holm, Fujiwo Ishimoto, Kristina has accumulated over several decades of turning Isola, Maija Isola, Tuula Kaakinen, Inka Kivalo, ideas into reality. The uncompromising ambition Harri Koskinen, Anu Luhtanen, Tanja Orsjoki, shared by the designers and the production team Heikki Orvola, Ilkka Suppanen, Oiva Toikka, Jenni – aspiring to something unique – has brought Tuominen, Katsuji Wakisaka, Marjaana Virta and Marimekko’s fabrics international success. Miina Äkkijyrkkä
12 Marimekko Annual Report 2008 13 Bags
Not just a bag – an important everyday companion
A bag can say much about its owner’s personality. In the recent past, bags have been Marimekko’s It has got to meet its owner’s needs and most rapidly growing product group, particularly expectations in all kinds of situations. The world in the exports market. The positive development in of bags gives designers unlimited opportunities sales is based on successful collections, but also for turning ideas into reality. on international fashion trends which favour bags and other accessories. In 2008, net sales of bags Bags embody Marimekko’s basic philosophy of rose by 17.9%, amounting to EUR 13.5 million. a happy everyday life: designs should express Exports and income from international operations vitality and create a strong emotional tie with the accounted for 28.0% of net sales. The major user. This is the secret behind the worldwide countries for exports were Japan, Denmark, success of Marimekko’s classic bags. An enduring Sweden, the United States, Norway and Italy. popularity over several decades has earned them a place alongside top international brands. Bags are an important product group for Marimekko, with great potential for growth. In addition to the classic bags, Marimekko Thus, the company is willing to increasingly introduces a wide range of new designs every invest in the product development in the bag season. The collections include a variety of line. In spring 2009, Marimekko launched Mari’s rucksacks, shoulder bags, tote bags, makeup New Bags, a collection of completely new kinds bags, umbrellas and purses. The product range of bags and accessories. Each product bears a lives with the times, offering designs for all unique, individually tailored pattern – a feature purposes and age groups. Since bags are an made possible by expertise accumulated over integral element of Marimekko’s lifestyle concept, the decades and by the state-of-the-art printing coordination with other product lines is an technology at Marimekko’s textile printing factory. important consideration in collection design. The 2009 bag collection captivates with rich Finnish design, materials printed in Marimekko’s patterns, colours and careful attention to detail. own textile printing factory and production at the Marimekko’s current bag line includes designs company’s own factories in Sulkava and Kitee by Bo Haglund, Virva Launo, Mika Piirainen and increase the domestic origin of many Marimekko Ristomatti Ratia. products. Marimekko strives to concentrate its bag production in Finland, yet rapidly rising sales volumes have forced the company to seek additional capacity and the necessary special expertise abroad, and increasingly transfer production to foreign subcontractors. A well- functioning subcontracting network complements Marimekko’s in-house design and manufacturing teams, providing an element of operational fl exibility that allows Marimekko to rapidly respond to any special needs the customers may have.
14 Marimekko Annual Report 2008 15 Retail store concept
The new store concept – a move to better service
The guiding principles of Marimekko’s distribution Marimekko opened its fi rst shop based on the strategy are to ensure profi table growth and to new concept in Turku, Finland, in August 2008. increase brand awareness through comprehensive The same visual look also characterises the and controlled development and expansion of the retailer-owned store opened in Oulu, Finland, in distribution network. The company’s sales strategy November. Marimekko will continue enhancing focuses on boosting brand competitiveness and the concept and the related supportive practices attractiveness in all distribution channels. during 2009. The goal is to improve customer relations management both in Finland and abroad. In 2008, Marimekko pressed ahead with its global In Finland, the new concept will next be applied concept store project to create a more consistent to entrepreneur-driven Marimekko stores to be look for the shops, a more manageable product opened in Turku and Ylöjärvi during this spring. structure and operating models that improve In addition to its own shops, Marimekko had profi tability. Following the principles of chain some 50 concept stores and shop-in-shops in management, Marimekko intends to deploy the Finland and abroad at the end of 2008. new retail store concept both in its own shops and in the concept stores established by retailers in Finland and abroad.
The store concept will be implemented in stages, building on the experience gained from the pilot stores. Marimekko provides the stores with business management support based on a uniform operating model, guidance and support about the product range, visual look and enhancing the customer-driven service model. Marimekko also wants to increase cooperation between its own shops and retailer- owned concept stores at the local level to more accurately target products and services to different consumer groups.
16 Marimekko Annual Report 2008 17 Retail sales
Marimekko stores – inspiring meeting places
The retail sector has recently undergone a major In 2008, Marimekko’s shop development restructuring, both in Finland and around the efforts focused on the global concept store world. The factors behind this development project, designed to improve the profi tability and include the increased internationalisation of the competitiveness of the company’s own shops business and changes in consumer behaviour. as well as retailer-owned concept stores. The Customers expect experiences and, even more project covers areas such as product range, visual so, attractive products and customer-oriented, look, and sales control. With the new operating expert service. In the ever-changing fi eld of concept, Marimekko seeks to improve its growth retail business, successful customer relationship opportunities both in Finland and abroad. An management and operational effi ciency have extensive training programme launched in autumn proved to be the key success factors. Businesses 2008 supports the store concept development are continuously developing new shop concepts project. The programme offers Marimekko’s sales to enhance brand appeal and improve the control personnel an opportunity for training leading to a of their operations. qualifi cation.
This restructuring has also set the direction for the The global economic recession has introduced development of Marimekko’s shop network. The great uncertainty in the near-term outlook for company has opened new shops both in the very the retail trade, as well as new challenges heart of cities and towns and in shopping centres for business planning. Predicting consumer located outside urban centres. A survey of the behaviour is becoming more and more diffi cult. area’s economic outlook and demographics, and The recession may also lead to changes in store of the shop location and its appeal, helps ensure locations and competition. To reinforce its position the right conditions for profi table operations. in the changing market situation, Marimekko At the end of 2008, Marimekko had 23 retail will continue the long-term development efforts shops of its own in Finland, one in Stockholm, launched in 2008 to crystallise the brand profi le Sweden, and one in Frankfurt, Germany. Sales in and improve the profi tability of shops. The goal Marimekko’s own retail shops totalled EUR 29.8 is to increase the value of customer relations at million in 2008. all levels of operations. Marimekko will continue revamping and expanding its shop network while Marimekko’s own shops have traditionally served monitoring the market situation. The strategically not only as major distribution channels, but have most important shop renovation project in 2009 been crucial for brand building. Company-owned is the expansion of the Marimekko store at shops offer a competitive edge, which Marimekko the Helsinki-Vantaa airport to twice its current wants to strengthen by enhancing the visual size. The new shop will open in March 2009. look and functionality of the shops. Marimekko Marimekko’s plans for the current year also develops its store concept by combining respect include deepening local cooperation with the for the company’s heritage and basic business retailer network to ensure healthy competition and idea with the spirit of the times, seeking new increasingly customer-oriented service. customer potential. Brand development is geared toward increasing the appeal of the Marimekko brand with both customers and premises owners.
18 Marimekko Annual Report 2008 19 Domestic wholesale
Cooperation sharpens the competitive edge
In addition to its own retail shops, Marimekko Marimekko’s existing distribution network in has a dealer network that covers the whole of Finland is extensive and diverse. The company is Finland and includes both specialist shops and continuously looking for opportunities to establish department stores. Concept stores – stores selling new outlets in strategically important locations. Marimekko products only, with a product range However, the company’s short-term priorities adapted to the Marimekko lifestyle concept – form concern enhancing the management of its a strategically important distribution channel. existing customer relationships and strengthening At the end of 2008, Marimekko had over 100 cooperation. Appropriate operating models retailers in Finland. Approximately one in four is will be designed for each distribution channel a concept store. based on retailer profi les and services provided. More intensive and controlled cooperation will Thanks to its versatile retail network, Marimekko help Marimekko to more effi ciently manage the has established an extensive customer base and distribution channels between its own shops and a strong position in the Finnish market. The appeal entrepreneur-driven concept stores. of the Marimekko brand and a fascinating product concept have contributed to the expansion of The downturn in the Finnish economy poses new the company’s distribution channels. A diverse challenges for Marimekko’s efforts to develop its product range and a fl exible operating model have domestic wholesale operations. In order to ensure enabled Marimekko to offer attractive product a steady growth and profi tability, Marimekko will ensembles for distribution along different channels continue to reinforce its brand and develop its and thus reach new target groups. retailer network in the long term. The company seeks growth potential through new products and The volume of Marimekko’s sales to domestic attractive business locations. retailers has varied from year to year. New shops, new product launches, and signifi cant promotions during the past few years have boosted growth. The restructuring of the retail sector has also had its effect on Marimekko’s sales. Sales to small specialist shops have decreased, with concept stores, department stores and big retail chains accounting for an increasingly large share of the sales volume. In 2008, sales to domestic retailers grew by 5.1%. This growth was entirely generated by deliveries for important promotions.
20 Marimekko Annual Report 2008 21 Exports and international operations
Concept stores are the engine of growth in exports
Marimekko has its own subsidiaries and retail This was partially attributable to the rapid global shops in Stockholm, Sweden, and Frankfurt, economic decline, which affected deliveries in the Germany. Exports to other countries are handled fi nal quarter. In 2008, exports and income from directly or through local agents and importers. international operations accounted for 27.0% of In 2008, Marimekko products were exported the Group’s net sales. to more than 40 countries, the major countries Marimekko will continue its investments in for exports being Sweden, Japan, the United international visibility, being present at trade fairs States, Denmark, Norway and Germany. The and exhibitions and engaging in effi cient PR company engaged in licensed sales in Denmark, activities. To establish more solid relationships with the Netherlands, Sweden and the United States. existing and new customers, the company will The recent boost in exports growth has been improve its long-term planning. The development attributable to the new concept stores opened of the distribution network is closely linked to around the world. At the end of 2008, Marimekko Marimekko’s global concept store project. New had approximately 30 concept stores outside concept stores will be opened in Matsuyama, Finland. Japan has the most extensive shop Niigata and Kokura in Japan in the fi rst half of network, with 15 shops at the end of the the year. A new shop will also be opened in fi nancial year. Copenhagen, Denmark, in the early autumn. Marimekko’s development strategy for exports The global economic recession weakens the and international operations focuses on increasing short-term growth outlook for exports in several brand awareness and profi table growth. Applying markets. The reduced numbers of advance a brand-oriented approach, the company intends and re-orders placed by customers refl ect the to expand its distribution channels by increasing prevailing economic uncertainty. Due to the the number of concept stores and shop-in-shops. decline in consumption demand, shops wish to Resources will be focused on countries where keep stock levels low. Despite the diffi cult global Marimekko is already a recognised brand. New situation, interest in Marimekko’s design and the shops will be opened primarily where customer Marimekko brand continues to be strong among fl ows and an appealing location ensure that international customers and the media. This is a suffi cient conditions exist for long-term, profi table solid reason to continue with the current export operations. development strategy. Marimekko’s long-term goal is to expand exports and international operations by slightly over one- fi fth annually compared with the previous year. In 2008, exports and income from international operations rose by 7.3%, totalling EUR 21.9 million. With the exception of solid growth in Japan, the trend in exports was considerably weaker than anticipated in several markets.
22 Marimekko 2.
New concept stores opened in Japan in 2008
1. Sendai concept store
2. Osaka concept store (Abeno)
3. Osaka concept store (Umeda)
1.
3.
Annual Report 2008 23 Licensing
Licensing offers fl exible opportunities for expansion into new product areas
Original print design is the foundation of Licensing has been an established part of Marimekko’s business. Every year a wide range Marimekko’s business since the 1960s, and it of new designs take their place alongside continues to support Marimekko’s strategy to Marimekko’s timeless classics. The multifaceted grow and develop as an internationally recognised world of patterns and colours offers Marimekko design brand. Successful licensing generates a many opportunities to license its design and steady fl ow of income. Licensing also allows the trademark in a vast variety of products and to company to expand its product range to areas network with other recognised brands. In 2008, where Marimekko lacks the necessary production Marimekko engaged in licensing activities in or distribution expertise. Finland, Denmark, the Netherlands, Sweden and Marimekko continues enhancing its licensing the United States. The company also initiated activities, seeking to fi nd new products in areas licensing in Italy at the beginning of 2009. that fi t in with Marimekko’s lifestyle concept and The company’s licensing strategy is based on where distribution is in line with Marimekko’s own controlled growth. Marimekko develops its distribution channels. At the beginning of 2009, licensing operations as an integral part of the Marimekko entered into a licensing agreement company’s overall product and distribution policy. for wallpaper production and distribution with the Before entering into a new licensing partnership, Italian company Sirpi S.p.A. The new Marimekko- Marimekko analyses its signifi cance for both patterned wallpapers will be in shops in April parties. Cooperation should provide added value 2009. The cooperation agreement covers the EU for both Marimekko and the prospective partner. countries, the United States, Russia, China and some Middle East countries. While Marimekko aims at establishing long-term partnerships with its licensed manufacturers, the past few years have also offered the company several opportunities for participating in signifi cant one-off campaigns by international brands. Examples of such campaigns include Marimekko’s cooperation with the Swedish fashion chain H & M Hennes & Mauritz AB in 2008, and with the leading U.S. cosmetics company Avon Products, Inc., started in March 2008. Both campaigns achieved high visibility on a global level and increased awareness of Marimekko’s design and the Marimekko brand among new customer groups.
24 Marimekko Annual Report 2008 25 Production and sourcing
In-house production adds fl exibility to operations
Marimekko has three production plants of its own, In 2008, the company extended its sourcing all located in Finland: a textile printing factory in network to reduce its dependence on individual Helsinki, a clothing factory in Kitee and a bag suppliers. Marimekko has identifi ed supply factory in Sulkava. At the end of 2008, the textile chain management as one of the key areas in printing factory had 39 employees, the clothing the development of social responsibility. Matters factory 50 and the bag factory 22 employees. relating to Marimekko’s environmental and social responsibility in production and sourcing are Marimekko’s design is largely based on printed discussed on pages 32–33. patterns and product families built upon them. In-house production is of great importance to The fl exibility of the order and supply chain product development: Marimekko’s expressive depends on the scope and structure of patterns are the fruit of smooth cooperation collections. In 2008, Marimekko initiated various between designers, the artwork studio and development projects in all product lines with printing factory specialists. The fl exibility of the aim of streamlining the collection structures. in-house production allows Marimekko to also This will improve the manageability of the produce limited special collections. The most production processes, cost-effi ciency, production signifi cant investments made in production in the chain throughput rates and delivery reliability. past few years involve the modernisation of the Business globalisation poses new challenges Herttoniemi textile printing factory. to Marimekko’s production, sourcing and logistics. To ensure availability of products and In-house production accounted for almost half competitive prices, expansion and enhancement of the Marimekko products sold in 2008. The of the sourcing network and improvement of the proportion of subcontracting has grown rapidly order-supply chain management will be of special in recent years as a result of an expanded importance in the next few years. product range and increased sales. Product characteristics, production volumes, delivery schedules and manufacturing costs infl uence the choice of manufacturing location for each product. Marimekko’s major suppliers are located in the EU.
26 Marimekko Annual Report 2008 27 Personnel
Success depends on competent and committed personnel
In 2008, the Marimekko Group employed an market, the lack of competent personnel is already average of 411 people, of whom 274 were a reality in many sectors. A number of Marimekko’s salaried and 137 non-salaried employees. At key employees have also retired recently, or will the end of the fi nancial year, the Group’s payroll soon achieve retirement age. One of the main numbered 414, including 16 people outside challenges of Marimekko’s HR management will Finland. Of the personnel, 90% were women and be to ensure that suffi cient skilled resources are 10% were men. The average age of employees available at all times and that the valuable historical was 40 years. The personnel turnover rate was knowledge and special expertise of Marimekko’s 13.8% for joining and leaving employees. A total employees are passed on to the next generation. of 6 people retired. To this end, the company must develop its personnel systems further. As Marimekko’s business grows and becomes more international, the duties associated with New Marimekko employees participate in different positions also expand to new areas. The an orientation programme designed to help changing business environment requires an even newcomers quickly adopt Marimekko’s values broader spectrum of expertise and increasing and key business objectives and learn how the fl exibility of the personnel. Within the past few working community operates. Cooperation with years, Marimekko has recruited a number of educational institutions is one of the pathways that new employees to support its business growth. brings new talent to Marimekko. The company In order to reinforce intra-organisational control engages in close cooperation with various and a goal-oriented approach, the company educational institutions, offering students work emphasises each individual’s personal and placements and research opportunities on topics collective responsibility for the achievement of associated with Marimekko’s business. Other common goals. forms of interaction include visits and events targeted at students. Several groups of students CONTINUOUS COMPETENCE DEVELOPMENT from Finnish and international educational IS THE KEY TO SUCCESS institutions visit Marimekko each year to learn Marimekko’s success derives from the fi rm about its business. commitment of its personnel and the company’s ability to translate each individual’s skills into OCCUPATIONAL HEALTH AND SAFETY creative and productive results. The company’s Marimekko monitors and actively works towards aim is to strengthen the competence of the enhancing occupational safety and well-being at management and other personnel and to work in cooperation with the workplace safety establish a more systematic corporate culture that committee and occupational healthcare. The nevertheless continues to value creativity. In 2008, company purchases occupational healthcare a number of the production personnel participated services from external practitioners or local in a training programme leading to a specialist healthcare centres. Occupational healthcare vocational qualifi cation. An extensive sales training focuses on preventive healthcare and monitoring programme launched in autumn 2008 offers the both individual ability to work and the well-being sales team the opportunity to participate in training of the working community as a whole. In 2008, leading to a qualifi cation. In 2009, Marimekko the absence percentage based on theoretical will organise training for its buyers in quality, regular working hours was 5.4% in the entire environmental and social responsibility issues. Group. The workplace safety committee actively Training is largely carried out in-house, but external investigates occupational safety and employee training services will also be used as necessary. well-being issues, organises training and issues instructions for the line organisation concerning MARIMEKKO IS A PREFERRED EMPLOYER the implementation of development measures. In Marimekko’s creative corporate culture and 2008, the company continued the ASKELMA risk international business operations make the assessment and training related to occupational company an appealing employer with a good safety. Other training organised during the year reputation. As workforce mobility increases and included fi rst aid refresher courses and training in the baby boom generations retire from the labour ergonomics and spatial design.
28 Marimekko Annual Report 2008 29 Social responsibility
Sustainable business that generates value for Reporting complies with the division into fi nancial, future generations lies at the heart of Marimekko’s social and environmental responsibility as provided business idea. The main goal set for social in the guidelines. Marimekko regards compliance responsibility, based on shared values and goals, with laws and regulations and responding to is its incorporation into all of the company’s the expectations of its key stakeholders as the activities. Compliance with laws determines essential principles in reporting. The company’s the minimum level of social responsibility; the key stakeholders are the customers, personnel, company continuously strives towards a higher shareholders, cooperation partners and the level by improving its responsible practices. The media. Marimekko has identifi ed sourcing, commitment to responsibility is supported by design, production and quality control as well as the company’s social responsibility training and warehousing, distribution and logistics as the key development programme, internal guidelines areas for the development of social responsibility and the obligations included in cooperation within the next few years. agreements. The company encourages its employees to adopt responsible working FINANCIAL RESPONSIBILITY practices. Achieving a good fi nancial result by responsible means is becoming increasingly important to In 2008, Marimekko continued the development all of the company’s stakeholders. Responsible of the Group’s social responsibility management performance helps to ensure the company’s system, focusing on specifying the general competitiveness and long-term profi tability. guidelines and goals for the next few years. Marimekko seeks to grow and evolve in a These guidelines and goals will be applied and controlled manner, thus securing the smooth implemented in the business areas through continuity of its business. By keeping its fi nances activity-specifi c solutions. The implementation on a solid foundation, the company can provide of social responsibility principles is a long-term, steady returns to its shareholders and fulfi l its practical process which involves continual training obligations as a responsible employer. Moreover, and development. Consultant specialists are used a good fi nancial position enables projects that when necessary to assist the company in this enhance the company’s environmental and social area. responsibility. Marimekko’s Board of Directors confi rmed the Marimekko has set clear fi nancial objectives for its company’s social responsibility principles in business operations. The fi nancial responsibility December 2008. The principles apply to all of indicators are associated with profi tability the Group companies. A social responsibility and competitiveness and response to the steering group monitors and coordinates the owners’ profi t expectations. The key fi gures are implementation of the principles and reports presented on page 7 and the objectives and their the results to the Board of Directors annually. achievement on page 9. The company aims to Business units and functions are responsible follow a stable and active dividend policy. for accountability, supervision, information The company’s dividend policy is described collection and reporting concerning their own on page 90. area. An internal working group consisting of representatives of different functions works Marimekko’s operations generate fi nancial well- under the supervision and coordination of Group being for a number of stakeholder groups both in communications. Marimekko’s social responsibility Finland and abroad. The company’s operations principles are available on the company’s also have an indirect employment impact: in website www.marimekko.com under Marimekko 2008, the share of materials, supplies and Corporation / Social Responsibility. services purchased from Finnish and international suppliers amounted to approximately 60% of Marimekko developed its social responsibility Marimekko’s net sales. Salaries, wages and reporting in 2008. The company aims to have the bonuses paid to Marimekko’s own personnel social responsibility section in its Annual Report accounted for approximately 18% of net sales. verifi ed by a third party within the next few years. Dividends to a total of EUR 5,226,000 were paid The Group applies the Global Reporting Initiative to shareholders for 2007; the Board of Directors’ (GRI) reporting framework’s G3 guidelines. proposal for the dividends for the 2008 fi nancial year is EUR 4,422,000. Taxes and social security costs amounted to EUR 10.0 million, representing approximately 12% of net sales.
30 Marimekko Annual Report 2008 31 Social responsibility
SOCIAL RESPONSIBILITY to these efforts, the exchange of information and Social responsibility includes caring for the well- open dialogue with the various suppliers are of being of Marimekko’s personnel and requiring the primary importance. Suppliers must be able to company’s partners to be socially responsible. ensure that the operations of their respective Information on Marimekko’s personnel is given on subcontractors are responsible. page 28. Cooperation with suppliers will be reinforced in In manufacturing, the proportion of subcontractors 2009, and Marimekko’s buyers will receive training increased further in 2008. The majority of the in quality, environmental and social responsibility company’s foreign suppliers are located within issues. One of the 2009 goals set for sourcing is the EU area. There are few subcontractors in reviewing the company’s cooperation agreements. developing regions. Marimekko has several By the agreements, the parties commit themselves long-standing supplier relationships. In 2008, to adhering to internationally recognised social approximately 70% of all of Marimekko’s and ethical norms. Sourcing agreements require purchases were made from 20 major suppliers, partners to follow the fundamental rules laid most of whom are located within the EU. However, down by the ILO. They relate to forced labour, the effect of globalisation on Marimekko’s freedom of association, promotion of employment, business has become stronger, and this imposes social security, discrimination, minimum age new requirements on the company’s operations. and working conditions. Marimekko, or its Because of the complexity of supply chains, authorised representative, has the right to check Marimekko cannot guarantee that the operating compliance with the agreed processes and the models of all suppliers in its supply chains fully ILO’s fundamental rules. Furthermore, Marimekko meet the company’s requirements. The company has the right to require a partner to correct any aims to deploy responsible operating models detected shortcomings. Changes in the product throughout the supply chain. Marimekko’s range will also be refl ected in the supplier pool. awareness of the different parties in the supply The company aims to secure the commitment of chain has increased, which has enhanced the new partners to the Marimekko practice from the company’s readiness to intervene in the case of beginning. possible defects. All Marimekko products carry a country of origin label to increase transparency in PRODUCT SAFETY AND ECOLOGY the production processes. Carefully-designed products made of high-quality materials give long-lasting joy to their owners, and Whenever possible, Marimekko aims to use are thus sustainable choices. certifi ed suppliers with valid standards or certifi cates that are internationally recognised or Marimekko bed linen, terry cloth products as well important in Marimekko’s branch of business. as several clothing materials and knits have been These include the ISO 9000 and ISO 14000 granted the Öko-Tex Standard 100 certifi cate, standards, the Social Accountability SA 8000 which guarantees that the products do not contain standard, the Öko-Tex Standard 100 certifi cate any substances that are hazardous to people or to and the Business Social Compliance Initiative the environment. In 2008, almost all of the fabrics (BSCI) monitoring system. Of these, the ISO printed at the Herttoniemi textile printing factory 9000 and ISO 14000 standards and the Öko- were also granted the Öko-Tex certifi cate. The Tex Standard 100 are the most common in Öko-Tex standard has four levels: I baby clothes, II Marimekko’s supplier companies. The monitoring clothes worn next to the skin, III other clothes and of social responsibility and environmental issues, IV other textile products. Level I has the strictest initiated in 2007, continued further. In the second requirements. Marimekko products comply with half of 2008, Marimekko conducted a survey level I or II Öko-Tex standards. among its suppliers concerning their existing In spring 2008, Marimekko introduced organic standards and certifi cates, the origin of raw cotton bed linen alongside the existing range materials as well as production conditions. of organic cotton terry products. The cotton Marimekko has identifi ed supply chain production chain is wide, complex and diffi cult to management as one of the key areas in the trace. Organic cotton is grown without using any development of social responsibility. In the environmentally harmful pesticides or fertilisers. Its long term, the goal is to enhance transparency production process is certifi ed, and the origin of throughout the supply chain, minimise the risks the cotton is traceable. The objective is to increase associated with sourcing and further improve the the proportion of organic cotton in Marimekko’s management of supplier relationships. With regard product range.
32 Marimekko As the proportion of subcontracting increases, steamer, automatic colour kitchen, stenter frame quality control is becoming more and more and new fabric inspection machines. Thanks to important. While new collections are being put a waste heat recovery system at the Herttoniemi together, Marimekko’s in-house quality control printing factory, most of the heat released during team tests materials and product structures production can be used to heat the production during the various stages of the process. In premises. In manufacturing, the oil circulation 2008, Marimekko initiated a project involved with system used in process heat production was compiling a new, comprehensive set of quality replaced with direct natural gas heating in criteria. 2008. It is a more effi cient heating method and will generate savings of about 20% in energy THE ENVIRONMENT consumption. Water consumption is minimised in Responsibility for the environment and nature is the printing process by recycling water whenever an integral aspect of Marimekko’s business. In possible. environmental matters, the company’s business WASTE AND SORTING supervision is largely based on legislation and other regulations. Environmental legislation Marimekko’s production processes do not and environmental impacts are taken into generate any waste that is classifi ed as hazardous consideration in the choice of raw materials, or detrimental to health. The amount of mixed chemicals and working methods. The materials waste is minimised by recycling and by sorting any used in the products are tested regularly. non-recyclable waste. The company monitors the Cooperation agreements require Marimekko’s generation, recycling and sorting of waste with subcontractors and other partners to commit reports and statistics on operations. themselves to shouldering their environmental PACKAGING AND TRANSPORT responsibilities. The utilisation of packaging is arranged in The REACH Regulation 1907/2006 (a regulation accordance with the Government Decision 962/97 on the registration, evaluation, authorisation and the EU packaging directive. The ecological and restriction of chemical substances) entered aspects of product packaging are becoming into force in the European Community in 2007. increasingly important at Marimekko. The The REACH provisions will be phased in over a company has identifi ed warehousing, distribution period of eleven years. In relation to the REACH and logistics as one of the key areas in the Regulation, Marimekko is a downstream user development of social responsibility in the next who does not have the obligation to register. All few years. In the long term, the goal is to minimise substances used at the Herttoniemi fabric printing the transport mileage. The fi rst step will be to factory have been pre-registered, and their usage rationalise transportation between Marimekko’s continues as before. The REACH Regulation factories and subcontractors. also applies to substances contained in articles imported from outside the EU. As an importer of ACTIVITIES IN THE LOCAL COMMUNITY articles, Marimekko is, under certain conditions, Marimekko primarily sponsors activities that obliged to inform the Chemicals Agency and are non-profi t making or closely related to downstream users if a product imported by it Marimekko’s business operations. In 2008, contains a specifi ed amount of a substance Marimekko was involved in the Finnish Cancer causing specifi c concern. The European Foundation’s Pink Ribbon campaign for the Chemicals Agency (ECHA) published a list of second year running. The campaign is organised these substances in October 2008. An updated simultaneously in more than 40 countries to raise list is expected in May 2009. The national laws of funds for breast cancer research. Marimekko EU member states will be harmonised with the participated in the campaign with two products REACH Regulation as of 1 June 2009. specifi cally designed for this purpose: the pink Unikko refl ector and the Metsänväki tote bag. ENERGY AND WATER CONSUMPTION Marimekko donated part of the return from the The company seeks to save energy by developing sales of the products to the Cancer Foundation’s its production methods, investing in energy- Pink Ribbon Fund. In Finland, the campaign effi cient machinery and equipment and monitoring ribbon featured a new pattern which was energy consumption. A signifi cant part of the designed by Maija Louekari who is known for machinery and equipment at the Herttoniemi her original Marimekko fabric prints. textile printing factory were replaced in 2004– 2008, including a new printing machine, textile
Annual Report 2008 33 Social responsibility
Key fi gures for social responsibility
Financial responsibility indicators 2008 Net sales, EUR 1,000 81,107 Profi t before taxes, EUR 1,000 9,964 Return on investment (ROI), % 32.3 Dividends paid1, EUR 1,000 4,422 Gross investments, EUR 1,000 1,362 Equity ratio, % 78.7 Salaries, wages and bonuses paid to personnel, EUR 1,000 14,881 Payroll taxes and social security contributions, EUR 1,000 7,402 Income taxes, EUR 1,000 2,586 Average number of employees 411 Salaried 274 Non-salaried 137 Purchases from suppliers 48,836
Environmental responsibility indicators 2008 Power consumption2, MWh 2,419 Heating energy consumption2, MWh 2,979 Natural gas consumption2, MWh 3,780 Water consumption2, m3 37,002 Sourcing ISO 14000 certifi ed suppliers 15
Social responsibility indicators 2008 Personnel turnover rate, employees New 57 Leaving 51 Retired 6 Personnel turnover rate, % 13.8 Average age of employees, years 40 Personnel gender distribution, % Women 90.3 Men 9.7 Sick leave absences3, % 5.4 Healthcare expenses/person4, EUR 365 Training expenses/person5, EUR 316 Responsible procurement SA 8000 certifi ed suppliers 6 BSCI audited suppliers 5
1 The Board of Directors’ proposal to the Annual General Meeting 2 Applies to the Herttoniemi textile printing factory and property 3 Calculated on theoretical regular working hours 4 Includes investments in preventive healthcare and medical care; applies to Marimekko personnel in Finland 5 Excluding salaries paid for training days; applies to Marimekko personnel in Finland
34 Marimekko Annual Report 2008 35 Risk management, internal supervision and audit
RISK MANAGEMENT AND RISKS • The President is responsible for risk Marimekko’s risk management is based on management and its organisation at Group the risk management policy confi rmed by the level, including resourcing and reviewing the risk company’s Board of Directors. The policy defi nes management principles. the principles, objectives and responsibilities of • The Management Group, consisting of the risk management, as well as the organisation and President (Chair) and those responsible for the supervision of the risk management process. various business areas, bears the responsibility for implementing risk management, monitoring Risk management principles operational risks and measures related to risks. Marimekko’s risk management aims to safeguard the smooth continuity of business operations • The risk working group, consisting of and ensure a steady profi t development for the representatives of the key business areas, Group. Comprehensive risk management is an is responsible for enhancing risk management ongoing, systematic process which involves and supporting the business functions in their identifying and evaluating the key risks associated risk management efforts. The working group with the company’s operations and operating also evaluates the results of risk reporting and environment. The company’s key risks comprise provides risk reports to the Management Group risks which could prevent Marimekko from as stipulated in the risk management policy. exploiting business opportunities or jeopardise or • The business functions are responsible for prevent achievement of the strategic objectives of identifying and assessing risks affecting the Group or a Group company or the continuity their own area, proposing measures for risk of operations or would otherwise have signifi cant management and reporting to the risk working consequences for the company, its personnel group as instructed. or stakeholders. Risk management is an integral element of the company’s management and • Each employee is responsible for identifying decision-making process, covering all of the any risks inherent in his or her duties or Group’s functions. otherwise discovered and reporting them to his or her superior. Risk identifi cation and assessment • The transfer of risk through insurance primarily Risk identifi cation builds on Marimekko’s strategic concerns accident risks. Marimekko has a and operational objectives. The company aims to centralised process in place for this purpose. identify risks which have the potential to jeopardise the achievement of the company’s set objectives. Risk reporting Risk analyses and assessments are based on Risk reporting is an integral element of self-assessment. According to Marimekko’s risk Marimekko’s annual business planning and management principles, the company assesses strategy process. Internal risk reporting is part of risks on a scale of 1 to 4 with regard to the regular, continuous business reporting, short- likelihood of risk materialisation, and on a scale of term business planning and the decision-making 1 to 3 with regard to their consequential impact. process. The company reports its key risks and Risks associated with business opportunities are risk management measures in its Annual Report assessed on a case-by-case basis. and quarterly Interim Reports, and in compliance with Corporate Governance principles, laws Risk management responsibilities and and regulations. Individual reports may also be organisation published whenever necessary. • Marimekko’s Board of Directors is responsible for confi rming the Group’s risk management Risk classifi cation principles and assessing whether Marimekko’s The key risks as per Marimekko’s risk classifi cation risk management process is appropriate in are divided into sub-categories as follows: terms of scope and content. The Board also confi rms the risk levels prevailing at any given Strategic risks time and resolves on measures to be taken • Business environment to manage the most signifi cant risks faced by • Business strategy the Group. • Product, distribution and sourcing policies • Corporate reputation or brand image • Design and other core expertise
36 Marimekko Operational risks Economic risks • Management, leadership and decision-making Marimekko’s economic risks include risks • Operational processes (product range, associated with the price development of distribution network, procurement and supply production factors, operating costs and fi nancing. chains) and their management Financial risks are associated with exchange • Intangible assets rates and credit risks. The main objective of risk • Compliance with laws, regulations and management is to minimise the unfavourable agreements effects, if any, on the Group’s fi nancial • Information management performance. The rapid decline in international • Continuity of operations economic trends, which started in the second • Compliance with requirements and responsible half of 2008, affects Marimekko’s business in practices several areas. The uncertainty of the business environment has increased the economic risks Economic risks related to sales structure, price development • Price development of production factors concerning production factors, higher operating • Price development of operating costs expenses and customer liquidity. To prevent the • Financial risks materialisation of these risks, the Group focused • Financial reporting further resources in business monitoring.
Accident risks Accident risks • The environment The company strives to minimise its accident • Personnel risks by means of labour protection and security • Property training, as well as operating procedures • Business operations concerning work and working methods. Group • Stakeholders companies have taken out policies to insure their personnel, assets and operations. The scope, The 2008 risk survey insurance value and excess amount of the Strategic risks policies are reviewed annually with the insurance The main strategic risks as assessed by the companies. company at the end of 2008 were associated INTERNAL SUPERVISION AND AUDIT with the increased uncertainty in the operating Considering the nature and extent of Marimekko’s environment and its impact on the various business, the company has not found it necessary business areas. The slowdown of global economic to establish a separate internal audit function. growth reduces consumption demand and may Internal supervision is part of the business weaken the company’s growth opportunities in all functions’ responsibilities and management. markets. Changes in the operating environment The Board of Directors reviews the level of the are also refl ected in the reliability of delivery of company’s internal supervision activities at least certain important subcontractors. Dependence once a year. Where necessary, the Board may also on individual suppliers may cause problems in the purchase internal audit services from an external deliveries of certain products. The company strives service provider. to minimise the risks related to subcontracting by diversifying and reinforcing its supplier network. Towards the end of 2008, Marimekko initiated the development of the company’s internal audit Operational risks activities with the intention of reviewing the In 2008, there were personnel changes in Group’s core business and support processes Marimekko’s executive management, as well as in and outlining control methods for the processes areas of core expertise with key signifi cance to the by the end of 2009. The team will also draft the company’s business. The company reviewed its principles of internal audit and an operating plan strategic policies and revised its operating models. for implementing and monitoring the supervision The company’s risk management emphasises process. monitoring of changes, ensuring a suffi cient level of core competencies among the personnel, and process management with regard to key functions.
Annual Report 2008 37 38 Marimekko Corporate governance
Applicable provisions Convening a General Meeting Marimekko Corporation is a Finnish public limited Shareholders are invited to the General Meeting company, which applies the Finnish Companies by means of an advertisement in at least one daily Act, other regulations concerning public listed newspaper which is published in Helsinki and which companies, Marimekko Corporation’s Articles has been determined by the Board of Directors. of Association and NASDAQ OMX Helsinki Ltd’s In addition, the Notice of the General Meeting and rules and regulations in its decision-making and the Board’s proposals to the meeting are published administration. Marimekko Corporation also in a stock exchange release and on the company’s complies with the Finnish Corporate Governance website. Notices of Meetings are delivered not Code for listed companies, effective as of earlier than two (2) months and no later than 1 January 2009, in accordance with the Comply seventeen (17) days prior to the meeting. or Explain principle. The principles of corporate governance are available on the company’s Right to attend a General Meeting website. Shareholders registered in the Shareholder Register, maintained by Euroclear Finland Ltd, on the record Group structure date separately announced by the company have The Marimekko Group comprises Marimekko the right to attend a General Meeting. Shareholders Corporation and its subsidiaries. The company’s wishing to attend the General Meeting must registered offi ce is in Helsinki, Finland. inform the company of their intention to do so by the deadline specifi ed in the Notice of Meeting. General Meeting Shareholders may attend the meeting themselves Shareholders exercise the highest decision- or through a representative by proxy, who must making authority in Marimekko Corporation present a power of attorney or other reliable proof through the General Meeting. General of their authority to represent the shareholder. Meetings are either Annual General Meetings Shareholders can exercise their right to speak and or Extraordinary General Meetings. The Annual to vote at a General Meeting. Shareholders are General Meeting shall be held annually by the end entitled to the total number of votes conferred by of June on the day set by the Board of Directors. their shareholding as on the record date. One share Extraordinary General Meetings are convened confers one vote in all matters addressed at the when necessary. According to the Companies Act, General Meeting. Decisions are made by the simple an Extraordinary General Meeting must be held or qualifi ed majority of votes as provided by law and when the Board of Directors considers it advisable the Articles of Association. or when shareholders representing at least 1/10 of the company’s shares request in writing that Record of proceedings at General Meetings a meeting be held to deliberate on a specifi ed The company prepares minutes of the proceedings matter. Shareholders have the right to have items for each General Meeting and makes them available included in the agenda of the General Meeting, to shareholders within two (2) weeks of the meeting. provided they present their demand in writing to The company also announces any decisions taken the Board of Directors well in advance, so that the at the General Meeting in a stock exchange release item can be included in the Notice of Meeting. The promptly after the meeting. Notice of Meeting is usually drafted approximately four (4) weeks before a General Meeting. Presence of administrative bodies at The Annual General Meeting deliberates on a General Meeting matters identifi ed in Article 12 of the Articles of The company expects all of the members of Association as being the business of Annual the Board of Directors and the President to be General Meetings, and other proposals, if any, present at the Annual General Meeting if possible. made to the General Meeting. The company’s Candidates up for election to the Board for the fi rst Board of Directors prepares an agenda for time should be present at the meeting in which the the meeting. In accordance with the Finnish election is held, unless their absence is unavoidable Companies Act, the Annual General Meeting for a particularly weighty reason. The company’s takes decisions on matters such as: auditor also attends the General Meetings. - adopting the fi nancial statements - the distribution of profi t Supervisory Board - the number of Board members, their election The Group does not have a Supervisory Board. and remuneration - the number of auditors, their election and remuneration - amendments to the Articles of Association.
Annual Report 2008 39 Corporate governance
Board of Directors Muotitila Ltd, a company controlled by Mr Ihamuotila, holds 13.0% of Marimekko Corporation’s shares and Board members and their term of offi ce voting rights. The members of Marimekko Corporation’s Board of Directors are elected at the Annual Duties and responsibilities of the Board of Directors General Meeting. Their term of offi ce ends at the The Board of Directors is responsible for the proper close of the Annual General Meeting following organisation of the company’s administration, their election. According to the Articles of operations, accounting and asset management. Association, the Board of Directors comprises a In addition to the duties specifi ed in the Finnish minimum of three (3) and a maximum of fi ve (5) Companies Act and the Articles of Association, the ordinary members. The number of Marimekko written rules of procedure adopted by the Board Corporation’s Board members is set in proportion contain further provisions concerning the Board’s to the company’s size. The Articles of Association operating principles and principal duties. The Board do not set an upper age limit for Board members, reviews and confi rms the rules of procedure annually restrict the number of their terms of offi ce or in any at its constitutive meeting, held following the Annual other way restrict the General Meeting’s authority General Meeting. in the election of Board members. There is no The Board reviews all matters that are signifi cant to particular order governing the appointment of or have long-term effects on the company’s business Board members. The Board of Directors elects a operations. According to the rules of procedure, the Chairman from amongst its members for one year Board addresses issues such as the following: at a time. - specifying and confi rming strategic objectives and Marimekko Corporation’s Annual General Meeting policies for the Group and various business areas held on 3 April 2008 elected fi ve members to the - reviewing and confi rming operating plans and Board of Directors for a term beginning on 3 April budgets for the Group and the various business 2008 and ending at the close of the 2009 Annual areas General Meeting. Tarja Pääkkönen was re-elected, - reviewing and approving interim reports, the and Ami Hasan, Mika Ihamuotila, Joakim Karske consolidated fi nancial statements and the and Pekka Lundmark were elected as new Report of the Board of Directors members. At its constitutive meeting held after the - expanding and contracting business operations Annual General Meeting, the Board of Directors - considering mergers, acquisitions and demergers elected Pekka Lundmark as Chairman and and restructuring arrangements Mika Ihamuotila as Vice Chairman of the Board. - deciding on investments and the acquisition Information on the Board members is available and sale of assets that are either strategically or on page 45 and on the company’s website fi nancially signifi cant under Marimekko Corporation / Administration & - deciding on fi nancial policy and contingent Auditors. The up-to-date information about the liabilities related to fi nancing arrangements board members’ shareholdings in the company - approving the Group’s reporting, risk management is available on the company’s website under procedures and internal supervision procedures Investors/Share Information/Shareholders/Insiders. and audit and control systems - approving the auditing schedule Independence evaluation - appointing the company’s President and the The Corporate Governance Recommendation members of the Management Group and states that the majority of Board members shall deciding on their remuneration be independent of the company. A person without - providing instructions for the President. any signifi cant connection to the company other than Board membership is considered Meeting procedures and decision-making independent of the company. In addition, at least The Board of Directors convenes six times a year on two (2) of the directors representing this majority average. The Chairman of the Board is responsible shall be independent of signifi cant shareholders for convening and chairing Board meetings. In 2008, of the company. The Board evaluates the the Board convened thirteen times. The participation independence of its members annually in rate of Board members was 97%. The Board has not accordance with the Corporate Governance assigned responsibility for monitoring any particular Recommendation. Among the members of aspects of the business to individual Board members. Marimekko Corporation’s Board of Directors, Ami The Board evaluates its performance annually each Hasan, Joakim Karske, Pekka Lundmark and January under the direction of the Chairman. Tarja Pääkkönen are independent of the company and its signifi cant shareholders. Mika Ihamuotila Committees assumed the position of President and CEO of Considering the nature and extent of the company’s Marimekko Corporation on 1 February 2008. business, Marimekko’s Board of Directors has not found it necessary to establish separate committees.
40 Marimekko The Board of Directors takes care of the tasks that pension scheme. The contract between the would belong to committees. company and the President does not specify a retirement age for the President. His term of notice President is agreed at six months, where the President The Board of Directors elects the company’s resigns on his own initiative. If the company President and decides on the terms of the terminates the contract, the President is entitled to President’s employment. The terms are specifi ed a remuneration corresponding to his regular salary in a written contract which is approved by the for twelve months. Board of Directors. The President is responsible The company has no share or share-based for the day-to-day management and development incentive schemes. of the company in accordance with the instructions and orders of the Board of Directors. Management Group The President is also responsible for keeping the The company’s business operations have been Board up-to-date with regard to the development divided into a number of responsibility areas, of the company’s business and fi nancial situation. the directors of which form the company’s Kirsti Paakkanen served as the company’s Management Group. The company’s President President from 1991 to the end of January acts as the Chairman of the Management Group. 2008. Mika Ihamuotila assumed the duties of the The Board of Directors appoints the members President on 1 February 2008. The shareholdings of the Management Group and decides on of the President in Marimekko are reported on their remuneration. The Management Group page 91 and on the company’s website under has no authority based on law or the Articles of Investors/Share information/Shareholders/Insiders. Association. The Management Group reviews business matters and procedures affecting Subsidiary administration the entire Group. The Management Group The members of the subsidiaries’ Boards also reviews the operating plans of the various of Directors are elected from amongst the business areas and business development. The Marimekko Group’s executive management. Management Group convenes every two weeks on average. The members of the Management Remuneration, rewards and incentives Group are presented on page 45 and on the In accordance with the Articles of Association, company’s website under Marimekko Corporation the Annual General Meeting decides on the / Administration & Auditors. remuneration payable to the Board of Directors. In 2008, the Board of Directors was paid a total Audit of EUR 61,000 in annual fees. The Chairman According to the Articles of Association, the received EUR 20,000 and the Board members company must have one auditor and, if the EUR 15,000 each. The President receives no auditor is not a corporation of public accountants, fee for Board membership. The Board members one deputy auditor. The auditor and deputy receive their remuneration in the form of fi xed auditor must be authorised by the Finnish monetary fees. The Board members did not Central Chamber of Commerce. The auditors receive any shares, option rights or other special are appointed until further notice. The Annual rights to shares as compensation. Marimekko has General meeting held on 3 April 2008 elected not issued monetary loans to the Board members PricewaterhouseCoopers Oy, Authorised Public or guarantees or other contingent liabilities on Accountants, as auditor for the Marimekko Group their behalf. The Board members do not receive a and the Group companies, with Kim Karhu, separate fee for attendance. Authorised Public Accountant, as chief auditor. The Annual General Meeting also decided that The Board of Directors of Marimekko Corporation the auditor’s fee will be paid by invoice. In the decides on the salary and remuneration payable 2008 fi nancial year, the Marimekko Group paid its to the President. The salary paid to President Mika auditors a total of EUR 62,000 in audit fees and Ihamuotila in 2008 amounted to EUR 267,000. EUR 37,000 for other assignments. An itemisation Under the contract between the company and of these fees is included in the notes to the Mr Ihamuotila, the President is also entitled fi nancial statements (note 20) on page 75. to an annual bonus, the maximum amount of which corresponds to his regular salary for six The auditor issues a report of the completed months. The principles determining the bonus audit to Marimekko’s Board of Directors and, are confi rmed annually by the Board. The annual as required by law, an auditors’ report to the bonus is based on the growth in the Group’s company’s shareholders. The auditor is present net sales, operating profi t, and the strategic at the Board meeting when the annual fi nancial objectives separately determined by the Board. statements are reviewed. The President is entitled to a defi ned-contribution
Annual Report 2008 41 Corporate governance
Financial reporting in the Group confi rms the updated insider guidelines and list of Marimekko Corporation’s business development insiders. The company has distributed copies of its and the realisation of its fi nancial objectives are insider guidelines to all of its insiders. monitored by means of fi nancial reporting covering Marimekko’s insider registers the entire Group. Sales reports are drafted on a daily, weekly or monthly basis, as applicable. The Marimekko’s permanent public insiders comprise the consolidated result and balance sheet reports members of the Board of Directors, the President, are drafted on a monthly basis. The company’s the auditor and the company’s Management Group. President presents the Board of Directors with Permanent company-specifi c insiders include those who due to their position or duties regularly obtain the Group’s monthly report, fi nancial statement inside information and who are consequently identifi ed and interim report information as well as reports by the company as being included in the company’s on other issues separately defi ned in the Board of company-specifi c insiders and not public insiders. Directors’ rules of procedure. The Group discloses Permanent company-specifi c insiders include the information concerning its business development managing directors of the subsidiaries and others and fi nancial situation in quarterly Interim Reports who, by virtue of their duties, are identifi ed as and the Financial Statement Bulletin. company-specifi c insiders. The company assesses Internal supervision, risk management and whether project-specifi c insider registers are internal audit necessary on a case-by-case basis. Internal supervision, risk management and internal The company maintains its insider register, including auditing are an essential element of Marimekko’s lists of permanent public insiders, permanent administration and management. The Board of company-specifi c insiders and project-specifi c Directors and the President bear the responsibility insiders, in the SIRE register of Euroclear Finland for organising the supervision. Marimekko’s risk Ltd. Up-to-date information concerning Marimekko management is based on the risk management Corporation’s permanent public insiders, their related policy confi rmed by the company’s Board of parties and the corporations in which they exercise Directors, which defi nes the principles, objectives, infl uence is presented on the company’s website responsibilities, organisation and supervision of under Investors/Share information/Shareholders/ risk management. The risk management principles Insiders. and risks associated with Marimekko’s business Supervision of insider guidelines are described on pages 36–37. The person in charge of Group communications and Considering the nature and extent of the investor relations also bears the responsibility for company’s business, Marimekko has not found maintaining the company’s insider register and for it necessary to establish a separate internal audit insider communications. Marimekko Corporation’s function. The Board of Directors reviews the level insider guidelines prohibit permanent public insiders of the company’s internal supervision activities at and permanent company-specifi c insiders, their least once a year. Where necessary, the Board related parties and corporations controlled by them may purchase internal audit services from an from trading in Marimekko shares during the 21-day external service provider. period preceding the publication of the company’s Towards the end of 2008, Marimekko initiated Interim Reports and fi nancial statement information. the development of the company’s internal audit The company announces the publication dates in activities with the intention of reviewing the a stock exchange release annually in advance. The Group’s core business and support processes insider guidelines also prohibit project-specifi c insiders and outlining control methods for the processes from trading in Marimekko shares during the project. by the end of 2009. The team will also draft the Investor relations principles of internal audit and an operating plan The management of Marimekko Corporation’s for implementing and monitoring the supervision investor relations is coordinated by the person in process. charge of Group communications. The Chief Financial Insider administration Offi cer is responsible for the fi nancial information content. Group communications is responsible for Marimekko’s insider guidelines the company’s stock exchange releases, investor and Marimekko Corporation’s insider guidelines are analyst meetings and the company’s online investor based on the insider guidelines issued by information. Marimekko publishes all of its investor NASDAQ OMX Helsinki Ltd, effective as of 2 June information in Finnish and English on the company’s 2008. Marimekko’s insider guidelines have been website at www.marimekko.com under Investors. confi rmed by Marimekko Corporation’s Board The company’s printed Annual Report is published of Directors. The Board of Directors annually in Finnish and English.
42 Marimekko Annual Report 2008 43 44 Marimekko Administration and auditors
BOARD OF DIRECTORS MANAGEMENT GROUP AS OF 1 MARCH 2009 Pekka Lundmark, born 1963 Chairman: Chairman of the Board Mika Ihamuotila, born 1964, President and CEO M.Sc. (Eng.) Employed by the company since 2007 Principal occupation: President and CEO of Konecranes Plc, 2005– Members: Primary work experience and key positions of trust: Thomas Ekström, born 1967, fi nance and administration Managing Director of Hackman Group, 2002–2004; Managing Employed by the company since 2006 Partner of Startupfactory, 2000–2002; several executive positions in Nokia Corporation in Finland, Denmark and the Marja Korkeela, born 1950, Group communications and United States, 1990–2000; Vice Chairman of the Board of investor relations The Federation of Finnish Technology Industries Employed by the company since 1999 Mika Ihamuotila, born 1964 Päivi Lonka, born 1962, exports and licensing sales Vice Chairman of the Board Employed by the company since 2004 Ph.D. (Econ.) Mervi Metsänen-Kalliovaara, born 1963, domestic Principal occupation: President and CEO of wholesale, business-to-business sales, sales development Marimekko Corporation, 2008– Employed by the company since 2007 Primary work experience and key positions of trust: President and CEO of Sampo Bank plc, 2001–2007; President Niina Nenonen, born 1965, clothing and accessories and CEO of Mandatum Bank Plc, 2000–2001; Executive Employed by the company since 2008 Director of Mandatum Bank Plc, 1998–2000; Partner of Mandatum & Co Ltd, 1994–1998; visiting scholar of Yale Piia Rossi, born 1963, company-owned retail stores University (USA), 1992–1993; Member of the Board of Elisa Employed by the company since 1988 Corporation, 2003–2005 and Deputy Chairman of the Board, Helinä Uotila, born 1946, production, purchases, 2006–2007 interior decoration Ami Hasan, born 1956 Employed by the company since 1972 Principal occupation: Chairman of the Board of advertising More detailed background information on board members and agency Hasan & Partners Finland Oy, 1997– members of the management group as well as up-to-date Primary work experience and key positions of trust: information on their shareholdings in Marimekko Corporation founder and Managing Director of advertising agency Hasan are provided on the company’s website under Marimekko & Partners Finland Oy, 1991–1997; Member of the Board of Corporation / Administration & Auditors. Marketing Clinic Ltd; Member of the Board of Kiasma Museum of Contemporary Art Foundation; permanent member of the AUDITORS jury for Cresta International Advertising Awards Regular auditor Joakim Karske, born 1963 PricewaterhouseCoopers Oy, Authorised Public Accountants MA Chief auditor: Kim Karhu, Authorised Public Accountant Principal occupation: Head of Portfolio Design Management at Nokia Corporation, 2006– Primary work experience and key positions of trust: designer at Volvo Group in Spain, 2001–2004, as well as in Sweden and the Netherlands, 1995–1998; designer at DaimlerChrysler Advanced Design Centre in Japan, 1999–2001; designer at Mercedes-Benz sports car studio in Germany, 1998–1999 Tarja Pääkkönen, born 1962 Ph.D. (Eng., Business Strategies), M.Sc. (Tech.) Principal occupation: Senior Vice President and Member of the Executive Board of Itella Corporation, 2005– Primary work experience and key positions of trust: several executive positions in Nokia Corporation, 1995–2004, including Director of Business Unit of Nokia Multimedia, Strategy Director and member of the Management Group of Nokia Mobile Phones, as well as Director of Technology Unit’s Global Services; Management Consultant of Kienbaum GmbH (Germany), 1991–1995; Managing Director of Futum Oy, 1987–1991; Member of the Board of HYY Group; Member of the Board of MJR Information on the Board members’ shareholdings in the company on 31 December 2008 is provided on page 91.
Annual Report 2008 45 Information for shareholders and investors
Schedule for fi nancial reporting in 2009 Dividends Financial statement bulletin 2008 Thursday, 29 Jan. 2009 The Board of Directors will propose to the Annual General Meeting that a dividend of EUR 0.55 per share be paid for Annual Report 2008 week 12 2008. The dividend will be paid to shareholders who are Interim Reports registered, on the dividend payout record date of 15 April • January–March Wednesday, 13 May 2009 2009, in the company’s Shareholder Register kept by Euroclear • January–June Thursday, 13 Aug. 2009 Finland Ltd. The Board of Directors will propose to the Annual • January–September Thursday, 5 Nov. 2009 General Meeting that the dividend be paid on 22 April 2009.
Summary of releases published in 2008 Principles of investor relations A summary of all stock exchange releases and other signifi cant Marimekko Corporation complies with the principles of equity releases published by Marimekko Corporation in 2008 is in its investor communications and publishes all its investor provided on the company’s website www.marimekko.com information primarily on its website in Finnish and English. under Investors/Releases. All company releases are available under the News section. Information sessions and closed period Information sessions are held at least twice a year for analysts Annual General Meeting and the media, always when the fi nancial statements and Marimekko Corporation’s Annual General Meeting will be half-year results are released as well as when necessary in held from 2 p.m. onwards on Wednesday, 8 April 2009 at connection with the disclosure of other signifi cant matters. Marimekko Corporation’s head offi ce, Puusepänkatu 4, Marimekko has a three-week closed period before the 00880 Helsinki, Finland. publication of earnings reports.
Right to attend the Annual General Meeting Financial reports Shareholders who have been registered by the Annual General Marimekko Corporation’s Annual Report and Interim Reports Meeting’s record date of 29 March 2009 (Sunday) at the latest are published in Finnish and English. Annual Reports are in the company’s Shareholder Register kept by Euroclear mailed to all shareholders to the address listed in the Finland Ltd have the right to attend the Annual General company’s Shareholder Register kept by Euroclear Finland Meeting. Ltd. Shareholders are kindly requested to submit changes of address or personal information to the custodian of their Registration in the Shareholder Register book-entry account. Interim Reports are sent, upon request The shareholder in whose name the shares are registered is to the address provided by the subscriber. Financial automatically entered in the company’s Shareholder Register. information is also posted on the company’s website. Those owners of nominee-registered shares who wish to participate in the Annual General Meeting can be temporarily To order publications, contact: recorded in the Shareholder Register. This must be done Address Marimekko Corporation, Communications, by the record date of 29 March 2009 (Sunday) at the latest. P.O. Box 107, 00811 Helsinki, Finland For temporary registration, shareholders must contact their Tel. +358 9 758 71, +358 9 758 7238 account custodian. (Communications) Fax +358 9 755 3051, +358 9 759 1676 Notice of attendance at the Annual General Meeting (Communications) Shareholders who wish to attend the Annual General Meeting E-mail: info@marimekko.fi must notify the company of their intention to do so before 4 p.m. on 1 April 2009 at the latest: Investor relations • by post to Marimekko Corporation, Share Register, Marja Korkeela, Group communications P.O. Box 107, 00811 Helsinki, Finland Address Marimekko Corporation, Communications, • by telephone on +358 9 758 7293 (Piia Pakarinen) P.O. Box 107, 00811 Helsinki, Finland • by fax on +358 9 759 1676 Tel. +358 9 758 7238 • by email to piia.pakarinen@marimekko.fi Fax +358 9 759 1676 • via the Investors section of the company’s website E-mail: marja.korkeela@marimekko.fi www.marimekko.com. Thomas Ekström, fi nance and administration Notifi cation of attendance must be received before the end of Address Marimekko Corporation, Financial Administration, the registration period. P.O. Box 107, 00811 Helsinki, Finland Tel. +358 9 758 7261 Further information on the Annual General Meeting is provided Fax +358 9 727 6227 on the company´s website under Investors. E-mail: thomas.ekstrom@marimekko.fi
46 Marimekko Banks and securities brokers analysing Marimekko
eQ Bank Ltd Pohjola Bank plc Tomi Tiilola Mikael Nummela Mannerheiminaukio 1 A Teollisuuskatu 1 B 00100 Helsinki 00510 Helsinki Finland Finland Tel. +358 9 681 781 Tel. +358 10 252 4414 E-mail: tomi.tiilola@eQ.fi E-mail: mikael.nummela@pohjola.fi
Evli Bank Plc SEB Enskilda Equities Antti Koskivuori Jutta Rahikainen Aleksanterinkatu 19 A Unionkatu 30 00100 Helsinki 00100 Helsinki Finland Finland Tel. +358 9 4766 9773 Tel. +358 9 6162 8713 E-mail: [email protected] E-mail: jutta.rahikainen@enskilda.fi
Handelsbanken Capital Markets Sofi a Capital Plc Maria Wikström Martin Sundman Aleksanterinkatu 11 Kaisaniemenkatu 1 C 00100 Helsinki 00100 Helsinki Finland Finland Tel. +358 10 444 2425 Tel. +358 9 241 5166 E-mail: [email protected] E-mail: martin.sundman@sofi apankki.fi
Nordea Bank Finland Plc Hanna-Maria Heikkinen Aleksis Kiven katu 9 00020 NORDEA Finland Tel. +358 9 1655 9926 E-mail: [email protected]
Annual Report 2008 47 48 Marimekko Report of the Board of Directors and the fi nancial statements of Marimekko Corporation for the fi nancial period from 1 January to 31 December 2008
CONTENTS
Report of the Board of Directors 50
Consolidated fi nancial statements, IFRS 56
Consolidated balance sheet 56
Consolidated income statement 58
Consolidated cash fl ow statement 59
Consolidated statement of changes in shareholders’ equity 60
Notes to the consolidated fi nancial statements 61
Parent company fi nancial statements, FAS 78
Parent company balance sheet 78
Parent company income statement 80
Parent company cash fl ow statement 81
Notes to the parent company fi nancial statements 82
Key fi gures of the Group 88
Shares and shareholders 90
Signatures to the fi nancial statements and the report of the Board of Directors 94
Auditors’ report 95
Annual Report 2008 49 Report of the Board of Directors
• In 2008, the Marimekko Group’s net sales rose by 5% to entirely generated by deliveries for one-off promotions. Exports EUR 81.1 million (EUR 77.3 million). and income from international operations increased by 7.3% and totalled EUR 21.9 million (EUR 20.4 million). Growth was • Operating profi t fell by 5% to EUR 10.0 million (EUR 10.5 primarily attributable to one-off income from sales of licensed million). products and the opening of new concept stores. Exports and • Profi t after taxes for the fi nancial year fell by 4% to EUR 7.4 income from international operations accounted for 27.0% million (EUR 7.7 million). (26.5%) of the Group’s net sales. • Earnings per share decreased to EUR 0.92 (EUR 0.96). The breakdown of the Group’s net sales by product line was as follows: clothing, 36.9%; interior decoration, 46.5%; and bags, • The Board of Directors will propose to the Annual General 16.6%. Net sales by market area were: Finland, 73.0%; the Meeting that a dividend of EUR 0.55 per share be paid other Nordic countries, 11.6%; the rest of Europe, 5.8%; North for 2008. America, 4.9%; and other countries (Japan and other regions • The Marimekko Group anticipates its 2009 net sales to outside Europe and North America), 4.7%. decrease by 5–10% and operating profi t to decline In 2008, sales in Marimekko’s own retail stores totalled EUR 29.8 distinctly compared with 2008 if the weak market situation million (EUR 30.0 million). In Finland, sales in the company’s own continues in 2009 and Marimekko does not succeed in shops decreased by 0.2% (+2.3%). Sales to retailers in Finland winning any signifi cant orders for one-off promotions. grew by 5.1%. This growth was entirely generated by deliveries for one-off promotions. There would have been a notable sales MARKET SITUATION drop without deliveries for promotions. The international economic outlook weakened signifi cantly during the second half of 2008, and economic growth slowed REVIEWS BY BUSINESS UNIT down globally. In Finland, growth continued but decelerated Clothing rapidly towards the year-end. In 2008, the value of retail sales In 2008, net sales of clothing decreased by 0.5% to EUR 29.9 in Finland grew by 5.4% (Statistics Finland: Turnover of trade, million (EUR 30.0 million). A distinct fall was seen in sales in December 2008). Retail sales of clothing (excluding sportswear) Finland. International sales development varied by market. grew by 0.8% (Textile and Fashion Industries TMA). Sales of Vigorous growth was registered in the market area referred to womenswear were up 0.7%, menswear 0.1%, and childrens- as “other Nordic countries”. This growth was boosted by one-off wear 1.6%. Sales of bags grew by 8.0%. Sales of home textiles royalty income from licensing cooperation between Marimekko fell by 2.4%. During the last quarter of 2008, the economic and H & M Hennes & Mauritz AB. The market area referred to outlook of Finnish textile and clothing industry deteriorated as “other countries” developed favourably, and sales showed notably. Volume of orders diminished and profi tability weakened. marked growth. Growth was enhanced by the new concept In the January-November period of 2008, exports of clothing stores opened in Japan. North America and the market area (SITC 84) decreased by 1%; imports increased by 4%. Exports referred to as “the rest of Europe” experienced a fall in sales. of textiles (SITC 65) fell by 3% and imports by 5% (National Exports and income from international operations accounted for Board of Customs, monthly review, November 2008). 25.7% of net sales of clothing.
NET SALES Interior decoration In 2008, the Marimekko Group’s net sales rose by 5.0% to EUR In 2008, net sales of interior decoration products rose by 81.1 million (EUR 77.3 million). In Finland, net sales rose by 5.4% to EUR 37.7 million (EUR 35.8 million). Growth in Finland 4.1% to EUR 59.2 million (EUR 56.8 million). This growth was was entirely generated by deliveries for one-off promotions.
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50 Marimekko International growth was clearly slower than the year before. In the market area referred to as “other Nordic countries”, net Sales grew extremely vigorously in Japan. In North America, sales rose by 9.8% to EUR 9.4 million (EUR 8.6 million). Sales growth continued, although at a slightly slower rate than the of clothing showed vigorous growth, while sales of interior previous year. The market areas referred to as “other Nordic decoration products and bags fell. One-off income generated countries” and “the rest of Europe” experienced a fall in sales. To in the second quarter by licensing cooperation with H & M some extent, net sales growth for the product line was reduced Hennes & Mauritz AB contributed to the growth seen in sales by lower royalty earnings from sales of licensed products, both of clothing. in Finland and abroad. Exports and income from international In the market area referred to as “the rest of Europe”, net sales operations accounted for 27.7% of net sales of interior decor- decreased by 0.5% to EUR 4.7 million (EUR 4.7 million). Sales of ation products. bags showed excellent growth, while sales of interior decoration Bags products and clothes fell. Net sales of bags rose by 17.9% to EUR 13.5 million (EUR 11.4 Net sales in North America fell by 1.8% to EUR 4.0 million (EUR million) in 2008. Strong growth was seen in all market areas 4.1 million). Sales of interior decoration products continued to except North America and the market area referred to as “other grow, while sales of clothes and bags decreased. Nordic countries”, where sales fell. In Finland, the positive Growth continued to be strong in the market area referred to as growth rate was boosted by a substantial delivery for a one-off “other countries” throughout the year. Net sales were up 24.5% promotion. Exports and income from international operations to EUR 3.8 million (EUR 3.1 million). Vigorous sales growth was accounted for 28.0% of net sales of bags. seen in all product lines. Growth was boosted by the opening Business-to-business sales of fi ve new concept stores in Japan: in Hiroshima, Osaka (2 stores), Sapporo and Sendai. At the end of 2008, there were Business-to-business sales (formerly “business gifts and a total of fi fteen Marimekko concept stores and shop-in-shops contract sales”) rose by 19.5%. The growth was generated by a in Japan. delivery for a one-off promotion. Licensing Exports and international operations Royalty earnings from sales of licensed products rose Exports and income from international operations increased substantially during the fi nancial year. The growth was wholly by 7.3% and totalled EUR 21.9 million (EUR 20.4 million). generated during the second quarter through royalty income Growth was generated in the market areas referred to as “other from cooperation with the Swedish company H & M Hennes countries” and “other Nordic countries”. Particularly brisk growth & Mauritz AB. In the United States, royalty earnings remained was seen in the market area referred to as “other countries”, at the level of 2007, but declined markedly in other countries. where Japan is the most important country for exports. In 2008, Marimekko’s major countries for exports were Sweden, Japan, Production and sourcing the United States, Denmark, Norway and Germany. The production volume of the Herttoniemi textile printing factory In 2008, the growth rate in exports and international opera- decreased by 11% in 2008. At the Kitee and Sulkava factories, tions was markedly lower than anticipated. This was largely the production remained at the same level as the previous year. attributable to the rapid global economic decline that began Subcontracting was decreased concerning certain products, in the second half of the year. Due to the increased economic and production was transferred to the Kitee and Sulkava uncertainty, customers grew more cautious about making factories. purchases. In the fi nal quarter, order volumes decreased and growth slowed down. In November and December, sales fell in all of the Group’s main export areas.
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Annual Report 2008 51 The impact of the global economic crisis was refl ected in the market position in Finland and continuing its controlled growth purchases function as an increased risk in the second half of the abroad. The revised policies also aim at improving the effi ciency year. The fi nancial situation of some important subcontractors and profi tability of the company’s business operations. There weakened, and the uncertainty associated with deliveries were no changes to the Group’s previously confi rmed fi nancial increased. The Group extended its sourcing network with the objectives: annual growth in net sales, above 10%; percentage aim of reducing its dependence on individual suppliers. of operating profi t of net sales, 10%; return on equity, above 15%; equity ratio, 60%; and percentage of earnings per share EARNINGS allocated to dividends, at least 50%. In 2008, the Group’s operating profi t fell by 5.1% to EUR 10.0 million (EUR 10.5 million). Operating profi t as a percentage of SHARES AND SHARE PRICE TREND net sales amounted to 12.3% (13.6%). The Group’s marketing Share capital expenses for 2008 totalled EUR 3.4 million (EUR 3.8 million), At the end of the fi nancial year, the company’s fully paid-up representing 4.2% (5.0%) of net sales. share capital, as recorded in the Trade Register, amounted to The Group’s depreciation amounted to EUR 1.3 million (EUR EUR 8,040,000, and the number of shares totalled 8,040,000. 1.3 million), representing 1.6% (1.7%) of net sales. Net fi nancial income totalled EUR 8 thousand (net fi nancial expenses EUR 45 Shareholdings thousand), representing 0.01% (0.1%) of net sales. According to the book-entry register, Marimekko had 6,351 Profi t after taxes for the fi nancial year decreased by 4.4% to (5,331) shareholders at the end of 2008. A total of 15.8% of the EUR 7.4 million (EUR 7.7 million), representing 9.1% (10.0%) of shares were in foreign ownership, and 13.2% were registered in net sales. Earnings per share were EUR 0.92 (EUR 0.96). a nominee’s name. Earnings for the fi nancial year 2008 were weakened by a At the end of 2008, the number of shares owned either directly substantial slowdown in international sales growth and a rise in or indirectly by members of the Board of Directors and the operating costs, while signifi cant one-off income from sales of President of the company was 1,071,089, representing 13.3% licensed products had a positive effect on earnings. of the total share capital and of the voting rights conferred by the company’s shares. The Group’s per-share key fi gures and other key fi nancial fi gures for the last three years, including the formulas for the fi gures, Further information about shareholdings is available under are presented under Key fi gures of the Group on pages 88–89. Shares and shareholders on pages 90–92.
INVESTMENTS Authorisations The Group’s gross investments amounted to EUR 1.4 million At the end of the fi nancial year, the Board of Directors had no (EUR 1.4 million), representing 1.7% (1.8%) of net sales. The valid authorisations to carry out share issues or issue convertible major investments included the construction of the store bonds or bonds with warrants, or to acquire or surrender opened in Turku at the end of August 2008, renovations of the Marimekko shares. Herttoniemi property, the acquisition of information manage- Shareholder agreements ment systems and equipment, and equipment purchases for the Herttoniemi textile printing factory. The arrangement between Muotitila Ltd and Workidea Oy, including authorisation to vote, was terminated on 31 December EQUITY RATIO AND FINANCING 2008. More information about the arrangement is available At the end of 2008, the equity ratio was 78.7% (72.7% on 31 under Flaggings / Muotitila Ltd and Workidea Oy. Marimekko December 2007). The ratio of interest-bearing liabilities minus has neither made nor is aware of any shareholder agreements fi nancial assets to shareholders’ equity (gearing) was -18.8%, concerning the company’s shares or other commitments while it was -15.2% at the end of the 2007 fi nancial year. agreeing on the company’s ownership or the use of voting rights. The Group’s fi nancial liabilities amounted to EUR 0.2 million (EUR 1.6 million) at the end of the fi nancial year. The Group’s Flaggings fi nancing from operations was EUR 8.7 million (EUR 9.1 million). At the end of 2008, the Group’s fi nancial assets amounted to Morgan Stanley & Co Incorporated EUR 6.1 million (EUR 6.3 million). Morgan Stanley & Co Incorporated’s share of Marimekko Corporation’s share capital and voting rights rose to 5.44%, or STRATEGIC DIRECTION 438,083 shares, as a result of a transaction made on 7 April Marimekko reviewed its strategic policies during the report year. 2008; and then fell to 0.90%, or 73,083 shares, as a result of a The company’s long-term goal is to develop Marimekko as an transaction made on 9 April 2008. increasingly international brand based on pattern and colour design. The company also intends to develop new products and ODIN Forvaltning AS product categories that support the brand image and promote ODIN Forvaltning AS’s share of Marimekko Corporation’s share the building of a profi table, scalable sales concept. Marimekko’s capital and voting rights rose to 5.14%, or 413,253 shares, as a strategic policies focus on maintaining the company’s strong result of a transaction concluded on 9 October 2008.
52 Marimekko Muotitila Ltd and Workidea Oy builds on Marimekko’s strategic and operational objectives. The company’s Board of Directors has confi rmed the principles, The share of Muotitila Ltd, a company controlled by Mika responsibilities and organisation of risk management. The Board Ihamuotila, of Marimekko Corporation’s voting rights fell of Directors also monitors the success of risk management. below 3/20, that is, to 13.00% on 31 December 2008. According to its risk management principles, Marimekko Correspondingly, the share of Workidea Oy, a company classifi es its risks as strategic, operational, economic and controlled by Kirsti Paakkanen, of the voting rights conferred accident risks. Risk reporting is part of the company’s regular by Marimekko Corporation’s shares rose to 1/10, that is, to reporting. 10.00% on 31 December 2008. The numbers of shares owned by Muotitila Ltd and Workidea Oy remained unchanged. These The most signifi cant strategic risks with the potential to weaken changes in ownership were associated with the termination of the company’s business operations may be due to changes in the arrangement communicated on 31 October 2007. Based economic trends or the business environment, the failure of the on this arrangement, Muotitila Ltd had the right to acquire the chosen operational strategy or its execution, an event affecting 804,000 shares in Marimekko Corporation held by Workidea Oy the company’s reputation or brand image, or insuffi cient design by the end of 2008. competence or other core expertise. Workidea Oy had also authorised Muotitila Ltd to use the voting The main strategic risks as assessed by the company at the end rights attached to these shares in ordinary matters handled by of 2008 were associated with the increased uncertainty in the general meetings of shareholders as of 31 October 2007 until operating environment and its impact on the various business the above deadline. areas. The slowdown of global economic growth has reduced consumption demand, which may weaken the company’s The right of Muotitila Ltd to acquire the shares in Marimekko growth opportunities in all markets. Changes in the operating Corporation held by Workidea Oy expired on 31 December environment are refl ected in the reliability of delivery of certain 2008, and Muotitila Ltd did not use its right within the term. important subcontractors. Dependence on individual suppliers Accordingly, the arrangement between Muotitila Ltd and may cause problems in the deliveries of certain products. The Workidea Oy, including the authorisation to vote, was company reinforces its supplier network in order to minimise automatically terminated on 31 December 2008. risks related to subcontracting. Share trading Marimekko’s operational risks include risks that may occur During the fi nancial year, a total of 1,652,527 Marimekko shares due to unsuccessful leadership and management, decision- were traded, representing 20.6% of the shares outstanding. The making or operational control and that affect the product range, total value of Marimekko’s share turnover was EUR 20,550,275. distribution network, procurement or supply chain, information The lowest price of the Marimekko share was EUR 7.41, the systems, intangible assets, legality or internal process control highest was EUR 18.20 and the average price was EUR 12.41. and monitoring. Risks may also emerge due to failures or faults At the end of the fi nancial year, the fi nal price of the share in operations or systems. was EUR 8.35. The company’s market capitalisation on 31 In 2008, there were personnel changes in Marimekko’s December 2008 was EUR 67,134,000 (EUR 146,328,000 on executive management, as well as in areas of core expertise 31 December 2007). More information about share trading is with key signifi cance to the company’s business. The company available on page 93. reviewed its strategic policies and revised its operating models. The company’s risk management emphasises monitoring of Dividend paid for the 2007 fi nancial year changes, ensuring a suffi cient level of core competencies A dividend of EUR 0.65 per share was paid for 2007 to a total among the personnel, and process management with regard of EUR 5,226,000. to key functions.
PERSONNEL Marimekko’s economic risks include risks associated with The number of Marimekko personnel increased by 0.7% in the price development of production factors, operating costs 2008. During the fi nancial year, the number of employees and fi nancing. Financial risks are associated with exchange averaged 411 (405). At the end of the year, the Group employed rates and credit risks. The global economic recession affects 414 (411) people, of whom 16 (17) worked abroad. Salaries, Marimekko’s business in several areas. The uncertainty of the wages and bonuses paid to personnel amounted to EUR business environment has increased the economic risks related to sales structure, price development of production factors, 14.9 million (EUR 13.6 million). The personnel turnover rate higher operating expenses and customer liquidity. The Group was 13.8% for both joining and leaving employees. In autumn strives to avoid the materialisation of these risks by more effi cient 2008, Marimekko launched an extensive sales training business supervision. programme which offers the sales team the opportunity to participate in training leading to a qualifi cation. Marimekko’s accident risks include accidents affecting people, property, business operations or stakeholders. The group strives RISK MANAGEMENT AND MAJOR RISKS to minimise risks by means of labour protection and security In 2008, Marimekko assessed its risk management level and training and operating procedures concerning work and working determined joint procedures for risk identifi cation and the methods. Group companies have taken out policies to insure framework for risk reporting. Risk management is an integral their personnel, assets and operations. The scope, insurance element of the company’s management and decision-making value and excess amount of the policies are reviewed annually process, covering all of the Group’s functions. Risk identifi cation with the insurance companies.
Annual Report 2008 53 INTERNAL SUPERVISION AND AUDIT In 2008, Marimekko continued the project launched at the end of 2007 to establish a social responsibility management Marimekko does not have an internal audit function. The Board system. Marimekko’s Board of Directors confi rmed the of Directors reviews the level of the company’s internal audit company’s social responsibility principles in December 2008. activities at least once a year. Where necessary, the Board The company’s Annual Report provides a more extensive report may purchase internal audit services from an external service on environmental, health and safety issues. A summary is also provider. included in each Interim Report. The Group applies the Global Towards the end of 2008, Marimekko initiated the development Reporting Initiative (GRI) reporting framework’s G3 guidelines. of the company’s internal audit activities with the intention of reviewing the Group’s core business and support processes BOARD OF DIRECTORS, MANAGEMENT AND AUDITORS and outlining control methods for the processes by the end The members of Marimekko Corporation’s Board of Directors 2009. The team will also draft the principles of internal audit are elected by the Annual General Meeting. According to the and an operating plan for implementing and monitoring the Articles of Association, the Board of Directors shall consist supervision process. of three to fi ve members. Their term of offi ce ends at the conclusion of the next Annual General Meeting. The Board RESEARCH AND DEVELOPMENT elects a Chairman from amongst its members. The company’s product planning and development costs arise from the design of collections. Design costs are recorded in The duties and responsibilities of the Board of Directors are expenses. determined primarily by the Articles of Association and the Finnish Companies Act. The Board deliberates on all matters THE ENVIRONMENT, HEALTH AND SAFETY that are signifi cant to the Marimekko Group’s business operations. These include approving strategic policies, budgets The environment and operating plans, and deciding on signifi cant investments, Responsibility for the environment and nature is an integral mergers and acquisitions. The Articles of Association do not aspect of Marimekko’s business. In environmental matters, the provide the Board of Directors or the President with any powers company’s business supervision is largely based on legislation other than those that are customary. Decisions to amend the and other regulations. The Herttoniemi textile printing factory Articles of Association or to increase the share capital are made has a valid environmental permit, and the production opera- pursuant to the provisions of the Finnish Companies Act in force. tions comply with its terms. Marimekko’s production processes do not generate any waste that is classifi ed as hazardous The Annual General Meeting held on 3 April 2008 appointed fi ve or detrimental to health. In the interest of monitoring the members to the company’s Board of Directors: Tarja Pääkkönen environmental impact of production and other business was re-elected, and Ami Hasan, Mika Ihamuotila, Joakim operations, the company develops its operating models and Karske and Pekka Lundmark were elected as new members. At conducts regular tests on the materials used in the products. its organisation meeting held after the Annual General Meeting, Cooperation agreements require Marimekko’s subcontractors the Board of Directors elected Pekka Lundmark as Chairman and other partners to commit themselves to shouldering their and Mika Ihamuotila as Vice Chairman of the Board. environmental responsibilities. The company seeks to save energy by developing its production methods, investing in The Annual General Meeting resolved that the remuneration to energy-effi cient machinery and equipment and monitoring the Chairman of the Board will be EUR 20,000 per year and the energy consumption. remuneration to each one of the other Board members will be EUR 15,000 per year. In addition, the Annual General Meeting Health and safety resolved that the President of Marimekko Corporation will not Marimekko monitors and actively works towards enhancing receive remuneration for being a member of the Board. occupational safety and well-being at work in cooperation with The Board of Directors elects the President and decides on the workplace safety committee and occupational healthcare. the President’s salary and other remuneration. The President’s The company purchases occupational healthcare services from duties are set down in the Finnish Companies Act. The post external practitioners or local healthcare centres. Occupational of Marimekko Corporation’s President was held by Kirsti healthcare focuses on preventive healthcare and monitoring Paakkanen until 31 January 2008; Mika Ihamuotila assumed the both individual ability to work and the well-being of the working position of the President as of 1 February 2008. community as a whole. The workplace safety committee actively investigates occupational safety and employee well- At the end of 2008, the composition of the company’s being issues, organises training and issues instructions for the Management Group was as follows: Mika Ihamuotila as Chairman line organisation concerning the implementation of development with members Thomas Ekström (fi nance and administration), measures. In 2008, the company continued the ASKELMA risk Marja Korkeela (Group communications and investor relations), assessment and training related to occupational safety. During Päivi Lonka (exports and licensing sales), Mervi Metsänen- the 2008 fi nancial year, the absence percentage based on Kalliovaara (domestic wholesale, business-to-business sales, theoretical regular working hours was 5.4% in the entire Group. sales development), Niina Nenonen (clothing portfolio and its profi tability), Piia Rossi (company-owned retail stores), Kirsi Räikkönen (brand and marketing communications) and Helinä Uotila (production, purchases, and interior decoration).
54 Marimekko The Annual General Meeting elected PricewaterhouseCoopers Marimekko will review its cost structure and boost the effi ciency Oy, Authorised Public Accountants, as the company’s auditor, of its operations in 2009. However, a general increase in with Kim Karhu, Authorised Public Accountant, as chief auditor. expenses and costs related to the long-term development of It was decided that the auditor’s fee will be paid by invoice. the company’s business will burden the fi nancial performance in 2009. DISAGREEMENT CONCERNING UNIKKO TRADEMARK The Marimekko Group anticipates its 2009 net sales to de- In a stock exchange release dated 2 July 2008, Marimekko crease by 5–10% and operating profi t to decline distinctly announced that Dolce & Gabbana S.r.l. and Dolce & Gabbana compared with 2008 if the weak market situation continues Industria S.p.A. had submitted an application to the Offi ce for in 2009 and Marimekko does not succeed in winning any Harmonisation in the Internal Market (OHIM) for a declaration signifi cant orders for one-off promotions. of invalidity concerning Marimekko’s red fi gure mark Unikko in classes 24 (Textiles and textile goods) and 25 (Clothing and THE BOARD OF DIRECTORS’ PROPOSAL FOR THE headgear). During the spring and summer of 2008, as part of DIVIDEND FOR THE 2008 FINANCIAL YEAR the regular supervision and protection of its intellectual property On 31 December 2008, the parent company’s distributable funds rights, Marimekko reacted to Dolce & Gabbana’s use of a fl oral amounted to EUR 19,821,021.19, of which EUR 7,112,422.46 pattern in certain Dolce & Gabbana products. Marimekko had was profi t for the fi nancial year. The Board of Directors will not authorised the said use and took action in Germany to propose to the Annual General Meeting that a dividend of EUR terminate such use. On the basis of Marimekko’s application, 0.55 per share be paid for 2008 to a total of EUR 4,422,000 the District Court of Hamburg imposed a sales and marketing and that the remaining profi t be retained in equity. The proposed injunction on certain Dolce & Gabbana products in Germany. dividends represent 59.9% of the Group’s earnings per share for In a stock exchange release dated 14 October 2008, Marimekko the fi nancial year. The Board will propose 15 April 2009 as the announced that Marimekko Corporation, Dolce & Gabbana S.r.l. dividend record date, and 22 April 2009 as the dividend payout and Dolce & Gabbana Industria S.p.A. had signed a settlement date. No substantial changes in the company’s fi nancial position agreement concerning Marimekko’s trademark Unikko. The have occurred after the end of the fi nancial year. The company’s parties agreed on the handling of already manufactured products liquidity is good and, in the view of the Board of Directors, the and on the fee to be paid to Marimekko. The parties further proposed dividend payout does not jeopardise the company’s agreed that they would both withdraw all the legal proceedings solvency. concerning the matter, including the invalidity proceedings at the Offi ce for Harmonisation in the Internal Market (OHIM) against ANNUAL GENERAL MEETING Marimekko’s Unikko trademark. Marimekko Corporation’s Annual General Meeting will be held from 2 p.m. onwards on Wednesday, 8 April 2009 at Marimekko EVENTS AFTER THE CLOSING DATE Corporation’s head offi ce, Puusepänkatu 4, 00880 Helsinki, Flagging Finland. The share of Workidea Oy, a company controlled by Kirsti Paakkanen, of Marimekko Corporation’s share capital and Helsinki, 28 January 2009 voting rights decreased to 0.00%, or 0 shares, as a result of a transaction concluded on 8 January 2009. Marimekko Corporation Board of Directors OUTLOOK FOR 2009
Marimekko operates in a fi eld of industry in which changes in the business climate are refl ected in consumption demand. The company continues to generate most of its net sales in Finland. In recent years, however, exports have increasingly been driving Marimekko’s net sales growth. The majority of growth has been attributable to the acquisition of new customers and opening of concept stores. Consumption demand declined sharply in several markets in the fi nal quarter of 2008. This also affected Marimekko’s sales, which fell notably both in Finland and abroad. In 2008, the Group’s earnings and growth in net sales were largely attributable to signifi cant individual promotional deliveries in Finland and one-off income from sales of licensed products. The company does not currently anticipate any comparable one-off items that would boost the net sales and earnings in 2009. The weakened global economic climate has also in- creased the uncertainty of Marimekko’s operating environment, which complicates the outlook for 2009. The rapid decline in consumption demand has weakened the growth prospects both in Finland and abroad.
Annual Report 2008 55 Consolidated fi nancial statements, IFRS Consolidated balance sheet
(EUR 1,000) 31 Dec. 2008 31 Dec. 2007
ASSETS
NON-CURRENT ASSETS Tangible assets 1.1 9 948 9 956 Intangible assets 1.2 458 411 Available-for-sale fi nancial assets 1.3 20 20 10 426 10 387
CURRENT ASSETS Inventories 2.1 17 286 18 281 Trade and other receivables 2.2 6 109 5 533 Current tax assets 268 220 Cash and cash equivalents 6 112 6 269 29 775 30 303
ASSETS, TOTAL 40 201 40 690
The notes are an integral part of the fi nancial statements.
56 Marimekko Consolidated fi nancial statements, IFRS
Consolidated balance sheet
(EUR 1,000) 31 Dec. 2008 31 Dec. 2007
SHAREHOLDERS’ EQUITY AND LIABILITIES
EQUITY ATTRIBUTABLE TO EQUITY HOLDERS OF THE PARENT COMPANY 3. Share capital 3.1 8 040 8 040 Translation differences -2 3 Retained earnings 23 504 21 352 Shareholders’ equity, total 31 542 29 395
NON-CURRENT LIABILITIES 4. Deferred tax liabilities 4.1 705 676 Financial liabilities 4.2 185 705 861 CURRENT LIABILITIES 5. Trade and other payables 5.1 7 751 8 810 Current tax liabilities 18 18 Financial liabilities 5.2 185 1 606 7 954 10 434
Liabilities, total 8 659 11 295
SHAREHOLDERS’ EQUITY AND LIABILITIES, TOTAL 40 201 40 690
The notes are an integral part of the fi nancial statements.
Annual Report 2008 57 Consolidated fi nancial statements, IFRS
Consolidated income statement
(EUR 1,000) 1 Jan.–31 Dec. 2008 1 Jan.–31 Dec. 2007
NET SALES 10. 81 107 77 264
Other operating income 11. 244 74 Increase or decrease in inventories of completed and unfi nished products 185 642 Raw materials and consumables 12. 33 597 31 626 Employee benefi t expenses 13. 18 287 16 799 Depreciation 14. 1 324 1 338 Other operating expenses 15. 18 372 17 730
OPERATING PROFIT 9 956 10 487
Financial income 16. 205 153 Financial expenses 17. -197 -198 8 -45
PROFIT BEFORE TAXES 9 964 10 442
Income taxes 18. 2 586 2 725
NET PROFIT FOR THE PERIOD 7 378 7 717
Distribution To equity holders of the parent company 7 378 7 717
Basic and diluted earnings per share calculated on the profi t attributable to equity holders of the parent company, EUR 19. 0.92 0.96
The notes are an integral part of the fi nancial statements.
58 Marimekko Consolidated fi nancial statements, IFRS
Consolidated cash fl ow statement
(EUR 1,000) 2008 2007
CASH FLOW FROM OPERATING ACTIVITIES
Net profi t for the period 7 378 7 717 Adjustments Depreciation according to plan 1 324 1 338 Financial income and expenses -8 45 Taxes 2 586 2 725 Cash fl ow before change in working capital 11 280 11 825
Change in working capital Decrease (+) / increase (-) in current non-interest-bearing trade receivables -574 126 Decrease (+) / increase (-) in inventories 995 -1 976 Decrease (+) / increase (-) in current non-interest-bearing liabilities -1 050 1 098 Cash fl ow from operating activities before fi nancial items and taxes 10 651 11 073
Paid interest and payments on other fi nancial expenses -200 -207 Interest received 201 150 Taxes paid -2 616 -3 094
CASH FLOW FROM OPERATING ACTIVITIES 8 036 7 922
CASH FLOW FROM INVESTING ACTIVITIES
Investments in tangible and intangible assets 1.1, 1.2 -1 362 -1 365
CASH FLOW FROM INVESTING ACTIVITIES -1 362 -1 365
CASH FLOW FROM FINANCING ACTIVITIES
Short-term loans drawn 4 600 4 150 Short-term loans repaid -5 550 -4 000 Long-term loans repaid -655 -941 Finance leasing debts paid -60 Dividends paid -5 226 -5 226
CASH FLOW FROM FINANCING ACTIVITIES -6 831 -6 077
Change in cash and cash equivalents -157 480
Cash and cash equivalents at the beginning of the period 6 269 5 789 Cash and cash equivalents at the end of the period 6 112 6 269
The notes are an integral part of the fi nancial statements.
Annual Report 2008 59 Consolidated fi nancial statements, IFRS
Consolidated statement of changes in shareholders’ equity
(EUR 1,000) Equity attributable to equity holders of the parent company
Translation Retained Shareholders’ Share capital differences earnings equity, total
Shareholders’ equity, 1 Jan. 2007 8 040 18 861 26 901
Translation differences 3 3 Net profi t for the period 7 717 7 717 Total recognised income and expense for the period 3 7 717 7 720
Dividends paid -5 226 -5 226
Shareholders’ equity, 31 Dec. 2007 8 040 3 21 352 29 395
Shareholders’ equity, 1 Jan. 2008 8 040 3 21 352 29 395
Translation differences -5 -5 Net profi t for the period 7 378 7 378 Total recognised income and expense for the period -5 7 378 7 373
Dividends paid -5 226 -5 226
Shareholders’ equity, 31 Dec. 2008 8 040 -2 23 504 31 542
The notes are an integral part of the fi nancial statements.
60 Marimekko Consolidated fi nancial statements, IFRS
Notes to the consolidated fi nancial statements
GROUP PROFILE Principles of consolidation Marimekko Corporation is a Finnish clothing and textile Marimekko’s consolidated fi nancial statements include the company. Marimekko Corporation and its subsidiaries form a accounts of the parent company Marimekko Corporation and Group that designs, manufactures and markets clothing, interior its subsidiaries. Subsidiaries are companies in which the Group decoration products and bags. has the right to determine the fi nancial and operating principles of the undertaking or business operations, usually by virtue of a Marimekko Corporation’s shares are quoted on the NASDAQ shareholding that entitles to more than half of the voting rights. OMX Helsinki Ltd. The company is domiciled in Helsinki, and its Intra-Group share ownership has been eliminated using the registered address is Puusepänkatu 4, 00880 Helsinki, Finland. acquisition cost method. Acquired subsidiaries are consolidated The fi nancial year of all Group companies is the calendar year. in the Group’s fi nancial statements as of the date on which the Copies of the consolidated fi nancial statements are available at Group acquired a controlling interest and divested subsidiaries www.marimekko.com and the head offi ce of the Group’s parent until the date when such control ceases. Intra-Group business company at Puusepänkatu 4, 00880 Helsinki, Finland. transactions, intra-Group profi t margins related to inventories and fi xed assets, intra-Group receivables and liabilities and Marimekko Corporation’s Board of Directors approved these intra-Group distribution of profi t have been eliminated. fi nancial statements for publication at its meeting on 28 January 2009. According to the Finnish Companies Act, shareholders Associates are entities over which the Group exercises signifi cant have the right to accept or reject the fi nancial statements at the infl uence. As a rule, signifi cant infl uence occurs when the Group Annual General Meeting held after the publication. The Annual holds more than 20% of the voting rights or otherwise exerts General Meeting may also amend the fi nancial statements. signifi cant infl uence but no control. The Marimekko Group does not have any associates. ACCOUNTING POLICY APPLIED IN THE CONSOLIDATED Joint ventures are entities where the Group exercises joint control FINANCIAL STATEMENTS with other parties based on an agreement. The Group’s holdings Accounting policy in joint ventures are consolidated proportionately item by item. The fi nancial statements have been prepared in accordance The consolidated fi nancial statements include the Group’s share with the International Financial Reporting Standards (IFRS), of the joint ventures’ assets, liabilities, income and expenses. complying with the IAS and IFRS standards as well as the SIC At the end of the fi nancial year, the Group had no joint ventures. and IFRIC interpretations in force as at 31 December 2008. Translation of items denominated in foreign currency In the Finnish Accounting Act and the provisions laid down pursuant to the Act, International Financial Reporting Standards The results and fi nancial position of Group units are measured refer to the standards approved for use in the EU in accordance in the currency used in the primary business environment of with the procedures laid down in IAS Regulation (EC) 1606/2002 the unit in question (functional currency). The consolidated of the European Parliament, and the interpretations of these fi nancial statements are presented in euros, the functional and standards. The notes to the consolidated fi nancial statements presentation currency of the parent company. also comply with Finnish accounting and company legislation. Transactions in foreign currencies are recognised in the The fi nancial statements have been prepared at historical cost functional currency at the exchange rates on the date of with the exception of available-for-sale investments in fi nancial transaction. The foreign-currency-denominated receivables assets, which are measured at fair value. Financial statement and liabilities of the parent company and Finnish subsidiaries information is presented in thousands of euros. have been converted to euro amounts using the exchange rates quoted by the European Central Bank on the closing date. Accounting estimates and judgments The foreign-currency-denominated receivables and liabilities The preparation of fi nancial statements in accordance with IFRS of foreign subsidiaries have been converted at the exchange calls for the management to use estimates and assumptions. rate of the country in question on the closing date. Foreign These estimates and assumptions mainly affect the value exchange differences in business operations are booked in the of tangible and intangible assets in the balance sheet and corresponding income statement accounts above operating depreciation according to plan in the income statement through profi t and foreign exchange differences on fi nancial items in the determination of the useful economic life of asset items, and fi nancial income and expenses. credit loss items and income taxes in the income statement. The The foreign-currency-denominated income statements of fi nal amount of the income taxes which will be confi rmed after subsidiaries are converted to euro amounts using the average the close of the fi nancial year may differ from the preliminary exchange rate for the fi nancial year and the balance sheets at estimate in the income statement. The Group’s management the average rate on the closing date. Differences arising from must also make judgments when selecting the accounting policy translation and translation differences in shareholders’ equity are applied for the fi nancial statements and its application and make recorded as a separate item in shareholders’ equity. estimates for provisions (including provisions for credit loss). The actual fi gures may deviate from these estimates.
Annual Report 2008 61 Consolidated fi nancial statements, IFRS
Operating profi t Segment reporting IAS 1 Presentation of Financial Statements does not contain a Business segments provide products and services whose risks defi nition of operating profi t. The Group has defi ned this concept and profi tability differ from those of the products and services of as follows: operating profi t is the net amount of net sales and other business segments. As per this defi nition, the Group has other operating income less the purchase expenses adjusted only one primary segment: the Marimekko business. with the expenses incurred due to the increase or decrease The Group’s secondary segment is geographical, and is divided in inventories or completed and unfi nished products and into Finland and other countries. The risks and profi tability of production for own use, employee benefi t expenses, possible the products and services of geographical segments differ from impairment loss and other operating expenses. Any income those of the products and services of segments operating in statement items other than the above are presented below the different types of economic environments. operating profi t. Foreign exchange differences and changes in the fair value of derivatives are included in the operating profi t, The net sales of geographical segments are disclosed in provided they are attributable to items related to business accordance with customer location, and assets in accordance operations. Otherwise they are recognised in fi nancial items. with asset location. Inter-segment pricing is set at fair market value. Revenue recognition Sales of products are recognised as income when the signifi cant Tangible assets risks and rewards incident to the ownership of goods have been Tangible assets mainly consist of buildings, machinery and transferred to the buyer. The Group then relinquishes oversight equipment. Tangible assets are recorded in the balance sheet at and control of the product. Mainly, this is the moment when original cost less depreciation according to plan. Depreciation of the goods are handed over to the customer as set forth in the tangible assets is carried out on a straight-line basis over their agreed delivery clause. The revenue recognition of licensing estimated useful life. and royalty income is handled in accordance with the clauses The estimated useful lives are as follows: of the agreement between Marimekko and the licensee. The Buildings and structures 40 years clauses mainly provide for royalties payable to Marimekko for Machinery and equipment 3–15 years sales of products covered by the agreement, based either on a percentage rate or the number of items. At least the minimum The residual value and useful life of assets are checked in annual royalty as stipulated in the agreement is payable by some connection with each fi nancial statement and if necessary of the licensees. adjusted to refl ect changes in the expectation of economic benefi t. In the calculation of net sales, sales proceeds are adjusted with indirect taxes and sales adjusting items. The distribution costs If an item of property, plant or equipment consists of several of products sold are recognised in other operating expenses in parts with different useful lives, each part is treated as a separate the income statement. asset. Signifi cant cost of replacing a part is capitalised when the company will derive economic benefi t from the asset. Other Income taxes expenses such as regular maintenance, repair and servicing Taxes on the Group companies’ fi nancial results for the period, costs are entered as expenses in the income statement when taxes from previous periods and the change in deferred taxes are they are incurred. recorded as the Group’s taxes. Taxes on the taxable income for Investment aid is recognised as a reduction to investments and the period are calculated on taxable income in accordance with the aid recorded in the income statement is booked in other the tax rate in force in the country in question. Deferred taxes operating income. are calculated on all temporary differences between the book value and the taxable value. However, a deferred tax liability is Intangible assets not accounted for if it arises from initial recognition of an asset Intangible assets with fi nite useful lives are recognised in the or liability in a transaction, other than a business combination, balance sheet at original cost less depreciation according that at the time of the transaction affects neither accounting nor to plan. Depreciation of intangible assets is carried out on a taxable income. In taxation deferred tax is not recognised for straight-line basis over their estimated useful life. non-deductible goodwill and deferred tax is not recognised for distributable earnings of subsidiaries where it is probable that The estimated useful lives are as follows: the difference will not reverse in the foreseeable future. The Intangible rights 5–10 years largest temporary differences are due to the amortisation of Computer software 3–5 years fi xed assets. Deferred taxes are calculated using the tax rates set by the closing date. Deferred tax assets are recognised to The major intangible asset items are trademarks. The Group the extent that it is probable that future taxable profi t, against has not had any such development expenditure that should be which the temporary difference can be utilised, will be available. recognised as assets under IAS 38 and recorded as amortised expense over their useful life.
62 Marimekko Consolidated fi nancial statements, IFRS
Borrowing costs Loans and other receivables are initially recognised at fair value Borrowing costs are recognised as expenses during the fi nancial and subsequently at amortised cost using the internal rate of year in which they were incurred. Borrowing costs have not return. An impairment of trade receivables is recognised when been recognised as part of the acquisition cost of the assets. there is objective evidence that the Group will not receive all of the benefi ts on the original terms. Indications of the impairment Impairment of trade receivables include the signifi cant fi nancial diffi culties On each closing date, asset items are assessed for indications of of the debtor, the likelihood of bankruptcy, failure to make impairment. If there are such indications, the recoverable amount payments, or a delay of over 90 days in paying. Impairment loss of said asset item is estimated. The impairment recognised is is recognised under other operating expenses in the income the amount by which the book value of the asset item exceeds statement. All of the Group’s loans and receivables are included its recoverable amount, which is the higher of its net selling price in the balance sheet item trade and other receivables. or value in use. Value in use is based on discounted future net Cash and cash equivalents cash fl ows as a rule. The Group’s cash and cash equivalents include cash at hand Lease agreements and at banks. The Group does not have any other items Lease agreements concerning fi xed assets in which the Group classifi ed as cash and cash equivalents. is transferred a material share of the risks and rewards incident Financial liabilities to ownership are classifi ed as fi nance lease agreements. Fixed assets leased under fi nance lease agreements are recorded Financial liabilities are initially recognised at fair value including in tangible assets less accumulated depreciation, and lease transaction costs and subsequently at amortised cost using the commitments are included in other interest-bearing fi nancial internal rate of return. Financial liabilities are non-current, unless liabilities. Fixed assets acquired under fi nance lease agree- they are repayable on demand or the Group intends to repay ments are depreciated in line with the Group’s depreciation them within the next 12 months. policy over their useful life or lease period, whichever is shorter. Rents payable under lease agreements are divided into fi nancial Interest income expenses and debt repayment. Lease agreements in which the Interest income is recognised on a time-proportion basis using risks and rewards incident to ownership are retained by the the internal rate of return. lessor are treated as other lease agreements. Rents payable under other lease agreements are expenses in the income Dividend income statement on a straight-line basis over the lease period. Dividend income is recognised as income when the right to dividends is established. Inventories Inventories are presented in accordance with the FIFO principle Employee benefi ts at the acquisition cost or at the lower probable net realisation Pension commitments value. The acquisition cost of manufactured inventories The pension security of the personnel of the Group’s Finnish includes not only purchase expenditure on materials, direct companies has been arranged under the Finnish statutory labour and other direct costs, but also a share of the fi xed and employee pension plan (TyEL) through an external pension variable general costs of production. Net realisable value is the insurance company. Foreign subsidiaries have arranged estimated selling price in the ordinary course of business, less pensions for their personnel in accordance with local the estimated costs for completion and selling expenses. legislation. The Group’s pension cover is arranged wholly under Financial assets defi ned contribution schemes. Under a defi ned contribution arrangement, the Group pays contributions to publicly or Financial assets are classifi ed as loans and other receivables or privately managed pension insurances. These contributions are available-for-sale investments in accordance with the purpose either compulsory, based on an agreement or voluntary. The underlying their acquisition. The assets are classifi ed upon initial Group does not have any payment obligations other than these recognition. contributions. The contributions are recognised as employee Available-for-sale fi nancial assets comprise shares and they are benefi t expenses at the time when they become due. Any included in non-current assets, unless it is intended that they contributions paid in advance are included in the assets on the will be held for less than 12 months from the closing date, in balance sheet, insofar as they are recoverable as future refunds which case they are included in current assets. Available-for- or future reductions of contributions. sale fi nancial assets are measured at fair value or, where the fair value cannot be reliably determined, at acquisition cost. Available-for-sale fi nancial assets on the closing date comprise unlisted shares measured at fair value less possible impairment. The company does not intend to dispose of these shares for the present.
Annual Report 2008 63 Consolidated fi nancial statements, IFRS
Provisions The Group will adopt the following standards and interpretations Provisions are recognised when the Group incurs, due to in 2009: a previous event, a legal or constructive obligation whose IAS 1 (revised) Presentation of Financial Statements. The settlement will probably require payment whose amount can be standard was revised with the aim of improving the ability estimated reliably. Provisions are related to the restructuring of of fi nancial statement users to analyse and compare the business operations, loss-making contracts, legal proceedings information presented in fi nancial statements by differentiating and both environmental and tax risks. A restructuring provision is changes in shareholders’ equity associated with transactions booked when a detailed and appropriate plan has been drafted with the company’s owners from other changes in equity. Non- concerning said provision and the company has announced owner changes are to be presented in one or two statements of the matter. comprehensive income. The Group will most probably present both an income statement and a statement of comprehensive Dividends, shareholders’ equity and treasury shares income in the future. The Board of Directors’ proposal for dividend distribution has not been recognised in the fi nancial statements; the dividends IFRS 8 Operating Segments standard replaces IAS 14. IFRS 8 will only be recognised on the basis of the Annual General introduces the ”management approach” whereby information Meeting’s approval. used for segment reporting is presented in the same way as in internal reporting. The Group’s reportable segments will remain Outstanding common shares are presented as share capital. the same as the business segments under IAS 14. Costs related to the granting or acquisition of the company’s own equity instruments are presented as equity allowance. If the The IASB published improvements to 34 standards in May company purchases its own shares, the price including direct 2008 in the course of the annual improvements process costs is recognised as decrease in equity. (Improvements to IFRSs). The following revised standards and interpretations to be adopted by the Group in 2009 may, in the Earnings per share opinion of the Group’s management, have an impact on the consolidated fi nancial statements: The basic earnings per share are calculated by dividing the profi t for the period attributable to equity holders of the parent IAS 38 (amendment) Intangible Assets. Prepayments may only company by the weighted average of shares outstanding. The be recorded in the balance sheet where payment has been made weighted average number of shares used to calculate the before the entity has the right to access the goods or services. diluted earnings per share takes into account the diluting effect This means that expenses arising from mail order catalogues of the conversion of potential common shares into actual shares is recognised when the catalogues are made available to the during the period. Group and not when the catalogues are delivered to customers. This amendment will not have any material effect on the Group’s New standards and interpretations fi nancial statements. The IASB has released the following standards and interpret- IAS 38 (amendment) Intangible Assets. The amendment ations which became effective in 2008. The Group adopted the removes the wording that there will “rarely, if ever” be persuasive following new or amended standards and interpretations during evidence to support an amortisation method that results in a the fi nancial year: lower amount of accumulated amortisation than under the IAS 39 (revised) and IFRS 7 (revised) Reclassifi cation of Financial straight-line method. This amendment will not have any material assets. The amendment enables the reclassifi cation of certain effect on the Group’s fi nancial statements. fi nancial assets out of the fi nancial assets held for trading The following new standards, amendments and interpretations category or the available-for-sale fi nancial assets category when that will enter into force in 2009 will not have an effect on the certain criteria are met. In this case further details must be Group’s fi nancial statements: provided in the fi nancial statements. The amendment has been applicable since 1 July 2008. The amendment has no impact on IAS 1 (amendment) Presentation of Financial Statements. The these fi nancial statements. amendment clarifi es that only some of fi nancial assets available- for-sale under IAS 39 qualify as current assets. The IASB has released the following standards and interpret- ations which shall become effective in 2009 or later. The Group IAS 16 (amendment) Property, Plant and Equipment (and has decided not to apply these standards and interpretations consequential amendment to IAS 7 Cash Flow Statements). prematurely and will adopt them during future fi nancial years. Entities whose normal business is both renting and subse- quently selling the same asset present the income from the sale of these as net sales and transfer the book value of the asset to inventories when the asset becomes available for sale. A consequential amendment to IAS 7 will also allow both rental and sale cash fl ows to be included as operating activities.
64 Marimekko Consolidated fi nancial statements, IFRS
IAS 19 (amendment) Employee Benefi ts. The amendment IAS 36 (amendment) Impairment of Assets. If fair value less costs clarifi es that the effect of plan amendments that affect the to sell is determined by discounted cash fl ows, the information impact of future pay rises on the defi ned benefi ts qualifi es as presented in the fi nancial statements is to be consistent with the a curtailment. Changes in the benefi ts for employee service information used for value-in-use calculations. in past periods results in a negative past service cost where it IAS 39 (amendment) Financial Instruments: Recognition and reduces the value of existing obligation arising from a defi ned Measurement. The amendments clarify the classifi cation of benefi t plan. derivatives in situations involving changes to hedge accounting IAS 20 (amendment) Accounting for Government Grants and the defi nition of available-for-sale instruments and require and Disclosure of Government Assistance. The benefi t of a determining the new book value of an equity instrument using government loan at a below-market rate of interest is determined the effective rate of interest when fair value hedge accounting as the difference between the book value under IAS 39 and the ceases. payments received and accounted for under IAS 20. IAS 40 (amendment) Investment Property (and consequential IAS 23 (amendment) Borrowing Costs. The defi nition of amendments to IAS 16). Property that is being constructed borrowing costs has been revised so that interest expense is or developed for future use as investment property falls within valuated by the effective interest method under IAS 39. the scope of application of IAS 40. Thus such a property is measured at fair value, where the fair value model is applied. IAS 23 (revised) Borrowing Costs. The revised standard requires However, if the fair value of a property under construction is that borrowing costs attributable to a qualifying asset form the not reliably determinable, the property is measured at cost cost of that asset and therefore should be capitalised. The until construction is completed or the fair value of the property option to recognise borrowing costs immediately as an expense becomes determinable. is no longer permissible. IAS 41 (amendment) Agriculture. The revised standard requires IAS 27 (amendment) Consolidated and Separate Financial that fair value calculations based on discounted cash fl ows Statements. Investments in subsidiaries accounted for under must be discounted at a market-determined rate, and removes IAS 39 continue to be accounted for on that basis when the prohibition on taking into account additional biological classifi ed as available for sale under IFRS 5. transformation when measuring the fair value. IAS 28 (amendment) Investments in Associates (and IFRS 1 (amendment) First-time Adoption of IFRS and IAS 27 consequential amendments to IAS 32 Financial Instruments: (amendment) Consolidated and Separate Financial Statements. Presentation and IFRS 7 Financial Instruments: Disclosures). According to the revised standard, entities adopting IFRSs for Where investments in associates are accounted for under IAS the fi rst time as the basis for preparing their fi nancial statements 39, only a part of the information required under IAS 28 need may use either fair value or the book value under previous be presented in addition to the information required in IAS 32 accounting practice to measure the initial cost of investments and IFRS 7. in subsidiaries, jointly controlled entities and associates