Oriola-KD Corporation Stock Exchange Release 1 February 2007 at 8.30 am
Oriola-KD pro forma review 1 January - 31 December 2006
Oriola-KD Corporation listed on the Helsinki Exchanges on 3 July 2006.
Oriola-KD Corporation was entered in the Trade Register on 1 July 2006 as a
result of the demerger of Orion Corporation. Trading in Class A and Class B
shares in Oriola-KD Corporation commenced on the main list of the Helsinki
Exchanges on 3 July 2006. The General Meeting of Shareholders of the demerged and
dissolved Orion Corporation held in Helsinki on 16 October 2006 confirmed the
final account of the company and discharged the Board of Directors and the
President and CEO of the company from liability for the period of 1 January - 1
July 2006. The assets and liabilities of the demerged company were transferred to
the two companies that arose from the demerger on 1 July 2006, the new Orion
Corporation and Oriola-KD Corporation.
This pro forma review presents the figures of Oriola-KD Group (hereinafter Oriola-
KD) for January-December 2006 according to the businesses and corporate structure
following the demerger of Orion Corporation. The comparison figures from 2005 are
based on published figures for Orion Corporation's Wholesale and Distribution
Division extracted from financial data for Orion Corporation, which have been
adapted to correspond to the businesses and structure subsequent to demerger. The
figures of Oriola-KD for the period under review have been prepared in accordance
with the recognition and valuation principles of the IFRS standards and are
unaudited. Oriola-KD Corporation published its interim report for July-December
on 1 February 2007.
Key figures
- Invoicing in the period under review was EUR 2,340.1 million (1-12/2005: EUR
2,392.2 million) and net sales were EUR 1,334.7 million (1-12/2005: EUR 1,330.7
million).
- Operating profit excluding one-off items was EUR 22.6 million (1-12/2005: EUR
25.8 million).
- Operating profit including one-off items was EUR 17.4 million (1-12/2005: EUR
25.8 million).
- Cash flow from operations was EUR 52.7 million (1-12/2005: EUR 39.5 million).
- Return on capital employed was 8.6 percent (1-12/2005 11.8 percent).
- Earnings per share were EUR 0.10 (1-12/2005: EUR 0.12).
- The Board proposes to the AGM that a dividend of EUR 0.06 per share be paid
for 2006.
President and CEO Eero Hautaniemi: "Demerger and subsequent operation as an
independent listed company have provided Oriola-KD with enhanced opportunities to
focus on the development of its core businesses. The cost efficiency programme
implemented in 2006 and our revised business structure have allowed us to
introduce greater efficiency to our operations and improve our competitiveness.
These measures eroded operating profit for 2006. In 2007, we will continue to
pursue greater efficiency and active development of our core businesses. More
efficient operations together with our strong cash flow, balance sheet and market
position further combined with favourable long-term fundamentals in the
healthcare market enable business development in line with strategy."
Invoicing and net sales
Oriola-KD's invoicing in January-December was EUR 2,340.1 million (EUR 2,392.2
million) and net sales were EUR 1,334.7 million (EUR 1,330.7 million). Invoicing
in Pharmaceutical Trade decreased by 2.8 percent compared to the previous year,
to EUR 2,064.7 million. Invoicing in Healthcare and Dental Trade increased by 3.0
percent compared to the previous year, to EUR 275.4 million.
Fourth-quarter invoicing came to EUR 603.0 million (EUR 619.2 million) and net
sales to EUR 343.7 million (EUR 347.0 million).
Financial performance
Oriola-KD's operating profit in the period excluding one-off items was EUR 22.6
million (EUR 25.8 million) and profit after financial income and expenses,
excluding one-off items, was EUR 23.6 million (EUR 25.7 million). Oriola-KD's
operating profit excluding one-off items decreased from the previous year, mainly
as a consequence of the weakened profitability of the Pharmaceutical Trade
business segment.
Fourth-quarter operating profit excluding one-off items came to EUR 5.5 million
(EUR 6.7 million) while profit after financial income and expenses, excluding one-
off items came to EUR 5.9 million (EUR 6.7 million). Low profitability of the
pharmaceutical trade particularly in Finland eroded fourth-quarter operating
profit from the comparable period in the previous year. New agreements with
principals, market growth and the cost efficiency programme implemented are
projected to improve comparable operating profit excluding one-off items in 2007.
Oriola-KD's operating profit including one-off items was EUR 17.4 million in the
review period (EUR 25.8 million). Profit after financial income and expenses came
to EUR 18.4 million (EUR 25.7 million) and net profit to EUR 14.0 million (EUR
18.1 million). One-off items during the period under review amounted to EUR 5.7
million (EUR 0.0 million) consisting of a charge of EUR 1.6 million due to a
change in inventory valuation principles, one-off expenses of EUR 3.2 million for
the cost efficiency measures and EUR 0.9 million in expenses relating to the
demerger. The one-off items in the cost efficiency programme mainly arose from
the closures of the offices in Malmö, Kuopio and Seinäjoki and measures to make
the management organisation more lean and flat. The demerger expenses were made
up of EUR 0.5 million of one-off expenses for pension liabilities and EUR 0.4
million of demerger expenses. In addition, EUR 0.5 million in one-off income was
recognised in the fourth quarter for the property sales in Kuopio and Malmö and
the decision to close down the Mölnlycke automated packing line. One-off items in
the period amounted to EUR -5.2 million.
The costs of Oriola-KD Corporation's 15-person Head Office and Group
Administration were EUR 3.8 million while the extracted financial statement
information for 2005 contains EUR 1.8 million in Group Administration expenses
allocated by the demerged Orion Corporation to Oriola-KD.
Oriola-KD had net financing income of EUR 1.0 million (EUR -0.1 million).
Taxes amounted to EUR 4.4 million (EUR 7.6 million). Taxes corresponding to the
result for the period under review are accounted as taxes for 2006. Taxes for
2005 are based on published figures for the Orion Corporation's Wholesale and
Distribution Division, which have been extracted from the financial information
of the demerged Orion Corporation.
Earnings per share were EUR 0.10 (EUR 0.12). Return on capital employed was 8.6
percent (11.8 percent) and return on equity 7.4 percent (9.8 percent).
Balance sheet, financing and cash flow
Oriola-KD's total assets at 31 December 2006 were EUR 611.2 million (EUR 610.1
million). Interest-bearing net debt amounted to EUR -80.6 million (EUR 10.5
million) and the gearing ratio was -42.0 percent (5.7 percent). Cash assets at
the end of December 2006 stood at EUR 112.9 million (EUR 35.0 million). In the
balance sheet for 2005, deposits by Orion Corporation's Wholesale and
Distribution Division into the Group account of the demerging Orion were treated
as other receivables. Interest-bearing debt at year-end 2006 amounted to EUR 32.3
million and consisted mainly of pharmacies' advance payments in Finland.
Oriola-KD has credit facilities of EUR 25.4 million with banks and a commercial
paper programme of EUR 100.0 million, which remained untapped at the end of the
period under review. Oriola-KD did not have significant business transactions
with the circle of related parties with the exception of pension contributions
related to defined benefit plans to the Oriola Pension Fund. Additional
information can be found from the notes of the financial statement section 22
commitments and contingencies and section 25 related party transactions.
Additional information of the liabilities to the group companies and
contingencies and guarantees on behalf of the group companies is presented in the
notes of the financial statement of Oriola-KD Corporation.
Cash flow from operations in the period was EUR 52.7 million (EUR 39.5 million),
of which changes in working capital accounted for EUR 25.9 million (EUR 4.4
million). Cash flow from investments was EUR -10.2 million (EUR -7.1 million).
Cash flow after investments in the period was EUR 42.5 million (EUR 32.4
million). Oriola-KD had an equity ratio of 33.1 percent (32.1 percent).
Investments
Investments in the period under review amounted to EUR 16.6 million (EUR 9.8
million). They consisted mainly of the purchases of Meteko Instrument AB and the
minority shares in Kronans Droghandel AB as well as maintenance investments.
Oriola-KD increased its shareholding in the Swedish Kronans Droghandel AB in
August 2006 from 69.39 percent to 82.96 percent by acquiring the minority
holdings of Pfizer AB and Pfizer Health AB. In November 2006, Oriola-KD further
increased its holding in Kronans Droghandel AB from 82.96 percent to 85.62
percent by acquiring the minority holding of Astra Arcus AB. Minority interests
in KD after the acquisitions at year-end 2006 stood as follows: Merck Sharp &
Dohme Sverige AB 12.51 percent and Organon AB 1.87 percent.
Personnel
At the end of the period, Oriola-KD had a total of 1,495 employees (1,530) of
whom 57 percent were based in Finland (56 percent), 26 percent in Sweden (30
percent) and 17 percent in the Baltics and Denmark combined (14 percent).
As part of its cost efficiency programme, Oriola-KD closed down the Malmö office
in early 2006 and the offices in Seinäjoki and Kuopio in the third quarter. A
double shift system was introduced at the Espoo distribution centre in connection
with the centralisation of operations in Espoo and Oulu. The transfer of
activities was completed by the end of 2006. Reorganisation and efficiency
measures in the Oriola-KD group led to the termination of some 150 employees in
Finland and Sweden in 2006, which figure includes the downsizing of some 20
persons in the first quarter of 2007. During 2006, approximately 50 employees
were added to the Espoo office due to new agreements with principals, the
transition to two shifts in distribution and extension of the hours for taking
orders in pharmaceutical sales. Establishment of Oriola-KD's new Group
Administration involved the addition of 15 employees. Further increases in
staffing include some ten persons in pharmacies in the Baltics and twenty in the
sales of healthcare equipment, of whom half came as part of the Meteko AB
acquisition. The net reduction comes to some 55 employees, which includes the
downsizing of roughly 20 persons to be implemented in the first quarter of 2007.
Business structure and management
In early October, Oriola-KD Group reformed the management model of business
operations by rationalising organisational structure and strengthening the
steering of businesses. As of 3 October 2006, the Group's businesses consist of
Pharmaceutical Trade in Finland, Sweden and the Baltic Countries, Pharmacy and
Retail Marketing, Healthcare Trade and Dental Trade. The business segments of
Oriola-KD Group 1) Pharmaceutical Trade and 2) Healthcare and Dental Trade will
be reported as earlier. The new management model will have no impact on relations
with customers or principals. The heads of businesses report to Eero Hautaniemi,
President and CEO of Oriola-KD Corporation.
Upon introduction of the new organisation Risto Kanerva, who had been managing
director of Oriola and head of the Pharmaceutical Trade business segment at
Oriola-KD resigned the company by mutual agreement. Eero Hautaniemi serves as pro
tem managing director of Oriola.
Risto Kanerva resigned his seat on the Boards of Oriola Oy and Kronans Droghandel
AB (KD). Kimmo Virtanen, CFO of Oriola-KD was elected to replace Kanerva on the
Board of Oriola while Henry Haarla, General Counsel of Oriola-KD is proposed to
replace Kanerva on the Board of KD. Birgitta Gunneflo was appointed Managing
Director of Kronans Droghandel AB as of 4 September 2006.
As of 3 October 2006, the management team of the Oriola-KD Group consists of:
Eero Hautaniemi President & CEO
Claes von Bonsdorff CIO
Birgitta Gunneflo Vice President, Pharmaceutical Distribution,
Sweden
Henry Haarla General Counsel
Pellervo Hämäläinen Vice President, Communications and IR
Anne Kariniemi Vice President, Logistics and Sourcing (as of 15
January 2007)
Matti Lievonen Vice President, Pharmaceutical Distribution,
Finland
Jukka Niemi Vice President, Pharmacy and Retail Marketing &
Pharmacist Relations in Finland
Teija Silver Vice President, Human Resources
Senja Tynkkynen Vice President, Dental Trade
Ilari Vaalavirta Vice President, Healthcare Trade
Kimmo Virtanen CFO
Environment
Oriola-KD attends to environmental concerns and conforms to the environmental
system best suited to its operations. KD has been certified in accordance with
the ISO 14000 environmental system. Oriola and KD, whose business operations do
not include manufacturing of their own, but for whom transport and the logistics
management of large flows of goods are an essential part of operations, have
defined the environmental goals appropriate for their operations. The efficiency
and economy of distribution are based on a scheduled route network according to
which goods deliveries are timed and combined. Deliveries are optimised with
information systems developed for this purpose. Deliveries to established
customers are packed in recyclable plastic boxes that can be used hundreds of
times. Large volumes of goods are delivered in recyclable packaging or on pallets
or rolls.
Waste prevention, reuse, sorting and recycling are essential principles of waste
management. Pharmaceutical and other hazardous waste is sorted and delivered to a
hazardous waste treatment plant for disposal with the methods required by medical
and environmental authorities.
Risks
The Board of Directors of Oriola-KD has approved the company's risk management
policy in which the operational model, principles, responsibilities and reporting
in risk management have been determined. The Group's risk management seeks to
identify, measure and manage risks that may threaten the operations of the
company and the achievement of goals set for them. Roles and responsibilities
relating to risk management have been determined in the Group. Oriola-KD's risk
management strategy will be further developed in 2007.
During the period under review, no material changes have occurred in Oriola-KD's
strategic and operative risks presented in the company's Prospectus of 16 June
2006.
Business segments
Oriola-KD's operations are divided into two business segments: the Pharmaceutical
Trade business segment and the Healthcare and Dental Trade business segment. Both
are core businesses for the Group.
Pharmaceutical Trade business segment
The Pharmaceutical Trade business segment's invoicing in January-December 2006
was EUR 2,064.7 million (EUR 2,124.8 million) and net sales were EUR 1,098.7
million (EUR 1,093.3 million). Operating profit excluding one-off items was EUR
15.6 million (EUR 18.1 million). Fourth-quarter invoicing amounted to EUR 527.7
million (EUR 540.8 million) and operating profit excluding one-off items came to
EUR 4.1 million (EUR 4.9 million).
The pharmaceutical market grew by 4.5 percent in Sweden and shrank by 0.4 percent
in Finland in 2006 (source: IMS Health). The cut in wholesale prices of
prescription drugs at the beginning of 2006 and the exceptionally large purchases
of self-medication products by pharmacies towards the end of 2005 depressed the
pharmaceutical market in Finland. Higher fuel prices raised distribution costs in
both Finland and Sweden in 2006.
Oriola-KD's market share in pharmaceutical distribution in Finland was 41.4
percent (47.4 percent) in December 2006 and 43.2 percent (47.1 percent) in
January-December 2006 (source: IMS Health). Oriola-KD's market share in
pharmaceutical distribution in Finland was 39.8 percent (40.9 percent) in
December 2006 and 41.4 percent (42.1 percent) in January-December 2006 (source:
IMS Health).
The cost efficiency programme launched in early 2006 was completed by the end the
year. The programme will contribute to improved profitability in the
Pharmaceutical Trade business segment in 2007.
Oriola-KD Corporation and pharmaceutical company Schering-Plough agreed on the
distribution in Finland of Schering-Plough's human pharmaceuticals as of 1
January 2007. The wholesale value of Schering-Plough's pharmaceuticals in 2006
was ca. EUR 32 million. The company's share of pharmaceutical wholesale in
Finland in 2006 came to 1.7 percent (source: IMS Health).
Oriola-KD Corporation and pharmaceutical company Roche concluded in November 2006
an agreement on the distribution of Roche pharmaceuticals in Finland as of 1
January 2007. The company's share of pharmaceutical wholesale in Finland in 2006
came to 3.8 percent (source: IMS Health). Roche is one of the quickest growing
companies in the market and is especially strong in the cancer medication market.
Kronans Droghandel AB, part of the Oriola-KD Group, signed in early July 2006 an
agreement concerning the distribution of Pfizer AB pharmaceuticals in Sweden.
Under the agreement, Oriola-KD will be responsible for the distribution of all
Pfizer drugs in Sweden as of the second quarter of 2007. At present, the Group
distributes approximately half of Pfizer's portfolio of pharmaceuticals. With a
market share of 9.2 percent, Pfizer is the largest pharmaceutical company in the
Swedish market (source: IMS Health).
Kronans Droghandel AB and pharmaceutical company Meda concluded an agreement on
the distribution of Meda pharmaceuticals such as vaccines and medical technology
products in the Swedish market. The agreement takes effect on 1 January 2007 and
remains in force until further notice. Meda holds a 1.2 percent share of the
Swedish pharmaceutical market.
The pharmaceutical principals transferring from Oriola-KD in the period under
review hold a total combined share of some 2.0 percent of the Swedish
pharmaceutical market. Transferring pharmaceutical principals in Sweden:
Alpharma, Leo Pharma and Sandoz. Negotiations in Finland in 2006 resulted in no
pharmaceutical principals transferring from Oriola-KD.
Negotiations on distribution agreements with pharmaceutical companies are mainly
conducted between July and October. Negotiations in 2006 took longer than in
previous years and the agreements concluded were mainly for several years'
duration. According to the situation at year-end 2006, Oriola-KD's market share
in 2007 is estimated at some 46 percent in Finland and approximately 44 percent
in Sweden. Negotiations with certain principals remained underway at year-end
2006.
The number of employees within the Pharmaceutical Trade business segment at year-
end 2006 was 925 (957).
Healthcare and Dental Trade
The Healthcare and Dental Trade business segment's invoicing in January-December
2006 was EUR 275.4 million (EUR 267.4 million) and net sales were EUR 236.0
million (EUR 237.5 million). Operating profit excluding one-off items was EUR
10.4 million (EUR 8.8 million). Fourth-quarter invoicing amounted to EUR 75.3
million (EUR 78.4 million) and operating profit excluding one-off items came to
EUR 3.1 million (EUR 2.0 million).
Sales of healthcare equipment and supplies developed favourably in 2006. The
healthcare logistics services in Sweden, which are part of the Healthcare and
Dental Trade business segment, saw unsatisfactory business development, primarily
due to the loss of a principal in 2005. The healthcare logistics services in
Sweden account for about half of the business segment's invoicing but have no
impact on the segment's operating profit. Invoicing and net sales in Dental Trade
improved in the latter half of the year but continued to fall short of target.
The Healthcare and Dental Trade business segment had a payroll of 570 (574)
employees at the end of the period under review.
Board of Directors
According to the company's corporate governance principles, the Chairman of the
Board is elected by the General Meeting of Shareholders. The Vice Chairman is
elected by the Board. The Board appoints the President and CEO of Oriola-KD and
decides on the terms and conditions of his/her employment. The President and CEO
has a six-month period of notice and is entitled to severance pay equal to 12
months' salary.
The demerging Orion Corporation's Annual General Meeting held on 21 March 2006
confirmed that the number of members of the Board of Directors of the Oriola-KD
Corporation arising from the demerger was to be set at six. Elected to seats on
the Board of Directors for the current term of office were Pauli Kulvik, M.Sc.
(Eng.) , MBA; Outi Raitasuo, attorney-at-law; Antti Remes, Honorary Counsellor;
Olli Riikkala, M.Sc. (Eng.) , MBA; Jaakko Uotila, president and CEO, Alko Inc.;
and Mika Vidgrén, pharmacist. Olli Riikkala was elected Chairman of the Board.
Ernst & Young Oy was elected as Oriola-KD Corporation's auditor for the current
term of office and has designated Rabbe Nevalainen, Authorised Public Accountant,
as principal auditor. Juha Nenonen, Authorised Public Accountant, was elected
deputy auditor.
On 28 March 2006, Oriola-KD Corporation's Board of Directors elected from amongst
their number Antti Remes as Vice Chairman. The Board of Directors also elected
from amongst their number an Audit Committee and Compensation Committee. The
members of the committees are as follows:
Audit Committee:
Antti Remes (Chairman)
Outi Raitasuo
Mika Vidgrén
Compensation Committee:
Olli Riikkala (Chairman)
Pauli Kulvik
Jaakko Uotila
On 17 October 2006, the Board of Oriola-KD Corporation elected the following to
serve on the company's Nomination Committee:
Eero Karvonen
Timo Maasilta
Antti Remes
Olli Riikkala
Harri Sailas
Jukka Ylppö
Jukka Ylppö was elected Chairman of the Nomination Committee.
Under the Rules of Procedure of the Nomination Committee adopted by the Board,
the Committee is a body which has been established by the Board and tasked with
preparing and presenting to the Board a recommendation for a proposal to be put
before the Annual General Meeting of Shareholders concerning the composition and
remuneration of the Board.
The Board has assessed the independence of its members and determined all members
to be independent both of the company and of its majority shareholders.
Chairman of the Board of Oriola-KD Corporation Olli Riikkala notified the company
in early October that he was unable to take part in the work of the Board until
the end of 2006 for reasons of illness. In early 2007 it was announced that
Riikkala would remain on sick leave until the end of January 2007. In Mr
Riikala's absence the duties of Chairman of the Board have been assumed by Vice
Chairman Antti Remes.
Oriola-KD Corporation share
Oriola-KD Corporation's Class A and Class B shares were admitted to public
trading on the Main List of the Helsinki Exchanges on the trading day first
following the effective date of demerger, 3 July 2006. Oriola-KD Corporation's
GICS-based industry code is 35102010 - Health Care Distributors, and the industry
class is Healthcare.
Oriola-KD Corporation's share capital is EUR 147,899,766.14 and the counter book
value of the shares is about EUR 1.05. At year-end 2006, the company had a total
of 141,257,828 shares, of which there were 56,294,640 Class A shares and
84,963,188 Class B shares.
Oriola-KD shares are divided into two classes of shares: Class A shares entitle
to twenty (20) votes each at general meetings of shareholders while each Class B
share has one (1) vote. Both classes of shares give shareholders the same rights
to Company assets and distribution of dividends.
Under Article 3 of the Articles of Association, a shareholder may demand
conversion of Class A shares into Class B shares. During the financial year, a
total of 102,900 Class A shares have been converted into Class B shares.
Oriola-KD Corporation held none of its own shares at 31 December 2006. The
company's Board of Directors holds no valid authorisation from the General
Meeting of Shareholders to acquire or assign treasury shares or undertake any
other share issue in accordance with Chapter 9 of the Companies Act or to issue
options or other special rights.
In the demerger of Orion Corporation, the demerging company's shareholders
received, as demerger consideration, shares in the companies to be formed in
proportion to their shareholdings such that for each demerging Orion Corporation
Class A share, they received one Oriola-KD Corporation Class A share and one
Class A share of the new Orion Corporation and for each demerging Orion
Corporation Class B share, they received one Oriola-KD Corporation Class B share
and one Class B share of the new Orion Corporation. The Oriola-KD Corporation
shares were issued within the book-entry system, and no action was required on
the part of the demerging Orion's shareholders in order to obtain the shares.
On 6 September 2006, the American Deccan Value Advisors L.P. informed Oriola-KD
Corporation in accordance with Chapter 2, section 9 of the Finnish Securities
Market Act that due to share purchases made on 5 September 2006, the holdings of
the companies administered by Deccan Value Advisors L.P. represent more than one
twentieth (1/20) of the share capital of Oriola-KD Corporation.
In November 2006, the Board of Oriola-KD Corporation decided on a new share
incentive scheme for key employees in the Oriola-KD Group. Some twelve key
employees are eligible for the scheme. The scheme encourages sustained effort on
the part of key employees by strengthening their commitment to the operation and
development of the company. Any bonuses are determined on the basis of the
development of Oriola-KD's operating profit and return on capital employed (ROCE)
in 2007-2009. Bonuses are payable in 2008-2010 in the form of stock, cash or a
combination of the two. Except for certain special circumstances, the bonus
shares may not be transferred for a period of one year from payment of the bonus.
The number of Class B shares included in the scheme may not exceed 650,000. The
incentive scheme comprises three earning periods of one year. The Board decides
on the target group of the earning period and the bonuses of the key employees in
the target group at the beginning of each earning period.
Trading volume of Oriola-KD Corporation Class A and B shares in July-September
2006:
Class A Class B
Trading volume, million 8.1 57.7
Trading volume, EUR million 19.5 129.3
High, EUR 3.13 3.14
Low, EUR 1.90 1.81
Close on 31 Dec 2006, EUR 3.13 3.11
The traded volume of Oriola-KD Corporation's Class A shares in the period under
review amounted to 14.3 percent of average outstanding stock while that of Class
B shares came to 68.0 percent of average outstanding stock. Traded volume
amounted to 46.6 percent of total stock.
Oriola-KD Corporation had a market capitalisation of EUR 440.4 million at 30
December 2006.
20 largest shareholders of Oriola-KD Corporation in the book-entry system at 31
December 2006 in order of shareholding:
Shareholder Class A Class B % of shares % of
shares shares (A&B) votes
(A&B)
1. Orionin Eläkesäätiö 2 765 624 - 1.96 % 4.57
2. Oy Etra Ab 2 329 720 86 000 1.71 % 3.86
3. Ilmarinen Mutual Pension 2 264 256 122 836 1.69 % 3.75
Insurance Company
4. Varma Mutual Pension 2 210 000 41 600 1.59 % 3.65 %
Insurance Company
5. Avenir Special Mutual 1 000 000 800 000 1.27 % 1.72 %
Fund Ltd.
6. The Social Insurance - 1 659 568 1.17 % 0.14 %
Institution of Finland
7. Ylppö Jukka Arvo 1 247 136 286 992 1.09 % 2.08 %
8. Medical Investment Trust 1 300 000 194 950 1.06 % 2.16 %
Oy
9. Oriolan Eläkesäätiö 863 804 305 685 0.83 % (1.45 %)
(non-voting)
10. Tukinvest Oy 1 048 500 0.74 % 1.73 %
11. Maa- ja Vesitekniikan 1 034 860 - 0.73 % 1.71 %
Tuki Ry
12. Evli-Select Mutual Fund 400 000 575 159 0.69 % 0.71 %
13. The Finnish Cultural 321 946 610 220 0.66 % 0.58 %
Foundation
14. State Pension Fund - 900 000 0.64 % 0.07 %
15. Ylppö Into 577 936 240 200 0.58 % 0.97 %
16. Helsingin Lääkärikeskus 658 230 - 0.47 % 1.09 %
Oy
17. OP-Delta Equity Fund 79 600 567 900 0.46 % 0.18 %
18. Evli Bank Plc - 540 000 0.38 % 0.04 %
19. Relander Gustaf 523 100 - 0.37 % 0.86 %
20. Etera Mutual Pension 231 100 227 400 0.32 % 0.40 %
Insurance Company
Custodian holdings 3 363 299 34 488 839 26.87 % 8.42 %
Proposal for distribution of dividend
Oriola-KD's parent company is Oriola-KD Corporation, of which distributable funds
on 31 December 2006 according to balance sheet were EUR 59.7 million. The Board
proposes to the AGM that a dividend of EUR 0.06 per share be paid for 2006.
Annual General Meeting of Shareholders
The Annual General Meeting of Shareholders of Oriola-KD Corporation will be held
on 13 March 2007 starting at 5pm at Helsinki Fair Centre. The Annual General
Meeting shall decide on matters referred to in chapter 10 of the By-laws as well
as on the proposals by the Board of Directors to empower the Board to decide on
the execution of the share based incentive plan for key employees. The proposals
by the Board are dealt within the notice to convene annexed to the stock exchange
release.
Publication of Annual Report
Oriola-KD Corporation will publish its Annual Report for 2006 in the week of 26
January 2007. Printed annual reports will be supplied upon request.
Events after the period under review
Subsequent to the period under review, the conversions of a total of 1,872,100
shares have been entered in the Trade Register on 12 January 2007 and 26 January
2007. At the time of publication of this financial statement, the company has
54,422,540 Class A shares and 86,835,288 Class B shares.
The Nomination Committee of Oriola-KD Corporation gave its recommendation on 30
January 2007 to the Board of Directors for the proposal to the Annual General
Meeting on 13 March 2007 concerning the composition of the Board of Directors as
follows: The number of Board members would be seven (7). As Board members would
be re-elected Mr. Pauli Kulvik, Ms. Outi Raitasuo, Mr. Antti Remes, Mr. Olli
Riikkala, Mr. Jaakko Uotila and Mr. Mika Vidgrén. As a new member would be
elected Mr. Harry Brade. Mr. Olli Riikkala would be re-elected as Chairman of the
Board.
Oriola-KD announced to acquire a major part of Finnish based Medith Oy's hospital
equipment and supplies marketing business in Finland. The net sales of acquired
business in 2006 was about EUR 3 million and operating profit was positive.
According to agreement 10 employees from Medith will transfer to Oriola-KD. The
agreement is valid as of 5 March 2007.
Oriola-KD announced that Kronans Droghandel Ab made a decision to discontinue
automatic packaging operations of pharmaceuticals in Mölnlycke. The packaging
line operation is part of Oriola-KD's Pharmaceutical Trade business segment. The
discontinuing will take place during second half of 2007 and has no impact on
personnel. The invoicing of packaging business in 2006 was about EUR 0.3
million.
Future outlook
Oriola-KD's outlook for 2007 is based on external market forecasts, agreements
with principals, cumulative orders and management's estimates.
Long term fundamentals and growth prospects are deemed favourable. Oriola-KD
estimates that the pharmaceutical market in Finland and Sweden will grow by about
3-5 percent annually over the next few years, which is in line with the longer-
term average growth rate of these markets.
The overall objective of the cost efficiency measures that were implemented in
2006 is to achieve total savings of some five million euros annually in the
Group's operations in Finland and Sweden, with full impact as of 2007. The one-
off expenses relating to the cost efficiency measures occurred in 2006.
Oriola-KD estimates that growth in the market for healthcare and dental equipment
and supplies will outpace that of the pharmaceutical market in Finland and in
Sweden. Oriola-KD projects growth outpacing that of the market in sales of
healthcare equipment and supplies and in keeping with the market in dental trade
sales. Invoicing in the healthcare logistics services in Sweden is estimated to
fall from 2006 levels.
Oriola-KD's invoicing in 2007 is projected to exceed comparable invoicing in the
previous year primarily as a result of new agreements with principals concluded
in 2006 and market growth. Operating profit excluding one-off items in 2007 is
projected to exceed comparable operating profit in the previous year primarily as
a result of higher invoicing and cost efficiency measures implemented in 2006.
Tables
Income
Statement, EUR
million 1.1.-31.12.2006 1.1.-31.12.2005 1.10.-31.12.2006 1.10.-31.12.2005
Net sales 1334.7 1330.7 343.7 346.9
Cost of goods
sold -1195.4 -1187.7 -306.7 -309.4
Gross profit 139.2 143.0 37.0 37.5
Other
operating
income 4.0 1.7 2.7 0.4
Selling and
distribution
expenses -105.5 -103.6 -28.2 -28.1
Administrative
expenses -20.3 -15.4 -6.1 -3.2
Operating
profit 17.4 25.8 5.3 6.7
Financial
income and
expenses 1.0 -0.1 0.3 0.0
Profit before
taxes 18.4 25.7 5.7 6.7
Tax expense*) -4.4 -7.6 -1.1 -0.6
Profit for the
period 14.0 18.1 4.6 6.1
of which
available for:
Parent company
shareholders 13.6 17.1 4.5 6.1
Minority
interest 0.5 1.0 0.1 0.0
Earnings per
share:
- Basic, EUR 0.10 0.12 0.03 0.04
*) The tax expense for the period 2006 has been calculated as the proportional
share of the total estimated taxes for the financial year. The tax expense for
2005 are based on published figures for Orion Corporation's Wholesale and
Distribution Division extracted from financial data for Orion Corporation.
Income
statement
excluding
one-off items,
EUR million 1.1.-31.12.2006 1.1.-31.12.2005 1.10.-31.12.2006 1.10.-31.12.2005
Net Sales 1334.7 1330.7 343.7 346.9
Cost of goods
sold -1193.8 -1187.7 -306.7 -309.4
Gross profit 140.8 143.0 37.0 37.5
Other
operating
income 1.9 1.7 0.6 0.4
Selling and
distribution
expenses -102.3 -103.6 -26.6 -28.1
Administrative
expenses -17.9 -15.4 -5.5 -3.2
Operating
profit 22.6 25.8 5.5 6.7
Financial
income and
expenses 1.0 -0.1 0.3 0.0
Profit before
taxes 23.6 25.7 5.9 6.7
Balance sheet, EUR million 31.12.2006 31.12.2005
Non-current assets
Property, plant and equipment 63.3 70.1
Goodwill 34.7 33.7
Other intangible assets 7.5 10.8
Investments in associates and
available-for-sale investments 0.0 0.0
Other non-current receivables 10.0 13.1
Deferred tax assets 0.0 1.2
Non-current assets total 115.6 129.0
Current assets
Inventories 181.0 182.7
Trade and other receivables 201.8 263.6
Cash and cash equivalents 112.9 35.0
Current assets total 495.6 481.2
ASSETS TOTAL 611.2 610.1
Balance sheet, EUR million 31.12.2006 31.12.2005
Non-current liabilities
Deferred tax liabilities 9.7 13.3
Pension liability 4.1 3.5
Provisions 0.0 0.1
Interest-bearing non-current liabilities 0.5 15.0
Other non-current liabilities 0.4 0.0
Non-current liabilities total 14.8 31.8
Current liabilities
Trade payables and other current liabilities 370.9 360.8
Provisions 1.9 0.7
Interest-bearing current liabilities 31.8 30.5
Current liabilities total 404.6 392.0
Net assets
Minority interest 8.5 17.2
Net assets of the parent company shareholders 183.2 169.1
Net assets total 191.8 186.3
LIABILITIES AND NET ASSETS TOTAL 611.2 610.1
The following table presents the capital structure of the Oriola-KD
Group at 31 December 2006 and 31 December 2005:
Capital structure, EUR
million 31.12.2006 31.12.2005
Equity attributable to
shareholders of the parent
company
Share capital 36.2 36.2
Other funds 30.1 30.1
Retained earnings 116.9 102.8
Total 183.2 169.1
Minority interest 8.5 17.2
Total 191.8 186.3
Cash flow statement, EUR
million 1.1.-31.12.2006 1.1.-31.12.2005
Operating profit 17.4 25.8
Depreciation 11.7 12.4
Change in working capital 25.9 4.4
Cash flow from financial
items and taxes -6.3 -6.0
Other adjustments 3.9 2.9
Cash flow from operating
activities 52.7 39.5
Cash flow from investing
activities -10.2 -7.1
Cash flow from financing
activities 35.1 -35.3
Net change in cash and cash
equivalents 77.6 -2.8
Cash and cash equivalents at
beginning of period 35.0 38.6
Foreign exchange difference 0.4 -0.8
Net change in cash and cash
equivalents 77.6 -2.8
Cash and cash equivalents at
end of period 112.9 35.0
Key figures and rations 31.12.2006 31.12.2005
Equity ratio, % 33.1% 32.1%
Equity per share, EUR 1.30 1.23
Return on capital employed
(ROCE), % 8.6% 11.8%
Return on equity, % 7.4% 9.8%
Net interest bearing debt,
Me -80.6 Me 10.5 Me
Gearing, % -42.0% 5.7%
Earnings per share, EUR 0.10 0.12
Average number of share,
tpcs *) 141 258 137 670
*) In the calculation for the share related key figures of 2006,
number of shares at the end of period has been used. In the
calculation for the share related key figures of 2005, average number
of shares for the period has been used.
Forward contracts and
contingent liabilities
31.12.2006
Positive fair Negative fair Nominal values
EUR million value value of contracts
Hedging of a net
investment in an
independent foreign unit -0.3 26.5
Other forward and
currency swap contracts 0.0 0.0 4.6
31.12.2005
Positive fair Negative fair Nominal values
EUR million value value of contracts
Hedging of a net
investment in an
independent foreign unit -0.1 29.3
Other forward and
currency swap contracts 0.0 2.4
EUR million 31.12.2006 31.12.2005
Contingent for own liabilities
Guarantees given 4.8 3.5
Real-estate mortgages given 1.0 16.5
Mortgages on company assets 22.9 71.3
Other guarantees and liabilities 2.5 0.0
Total 31.2 91.3
Contingent for liabilities of other
parties
Guarantees given on behalf of
external parties 0.0 0.1
Leasing-liabilities (operating
liabilities) 0.6 0.5
Other guarantees 0.0 0.0
Rent contingent 6.5 6.2
Invoicing by business segment, EUR
million 1.1.-31.12.2006 1.1.-31.12.2005
Pharmaceutical Trade 2064.7 2124.8
Healthcare and Dental Trade 275.4 267.4
Group total 2340.1 2392.2
Net sales by business segment, EUR
million 1.1.-31.12.2006 1.1.-31.12.2005
Pharmaceutical Trade 1098.7 1093.3
Healthcare and Dental Trade 236.0 237.5
Group total 1334.7 1330.7
Operating profit by business segment,
EUR million 1.1.-31.12.2006 1.1.-31.12.2005
Pharmaceutical Trade 13.0 18.1
Healthcare and Dental Trade 8.2 8.8
Group items -3.8 -1.1
Group total 17.4 25.8
Average number of personnel 1 548 1 562
Number of personnel at the end of the
period 1 495 1 530
Operating profit by business segment
excluding one-off items, EUR million 1.1.-31.12.2006 1.1.-31.12.2005
Pharmaceutical Trade 15.6 18.1
Healthcare and Dental Trade 10.4 8.8
Group items -3.4 -1.1
Group total 22.6 25.8
Invoicing by
business
segment, EUR
million 10-12/ 7-9/ 4-6/ 1-3/ 10-12/ 7-9/ 4-6/ 1-3/
2006 2006 2006 2006 2005 2005 2005 2005
Pharmaceutical
Trade 527.7 500.0 529.0 508.1 540.8 510.5 552.2 521.3
Healthcare and
Dental Trade 75.3 63.0 65.7 71.3 78.4 58.0 69.4 61.6
Group total 603.0 563.0 594.7 579.4 619.2 568.5 621.6 582.9
Net sales by
business
segment, EUR
million 10-12/ 7-9/ 4-6/ 1-3/ 10-12/ 7-9/ 4-6/ 1-3/
2006 2006 2006 2006 2005 2005 2005 2005
Pharmaceutical
Trade 278.6 264.9 280.2 275.0 277.6 265.3 281.3 269.2
Healthcare and
Dental Trade 65.2 54.1 55.6 61.1 69.4 52.6 61.5 54.0
Group total 343.7 319.0 335.8 336.1 347.0 317.9 342.8 323.2
Operating
profit by
business
segment, EUR
million 10-12/ 7-9/ 4-6/ 1-3/ 10-12/ 7-9/ 4-6/ 1-3/
2006 2006 2006 2006 2005 2005 2005 2005
Pharmaceutical
Trade 4.0 4.5 1.8 2.7 4.9 4.8 4.4 3.9
Healthcare and
Dental Trade 2.9 3.2 0.9 1.2 2.0 2.6 2.4 1.8
Group items -1.6 -0.9 -0.6 -0.6 -0.3 -0.3 -0.3 -0.2
Group total 5.3 6.8 2.1 3.3 6.6 7.1 6.5 5.5
Operating
profit by
business
segment
excluding
one-off items,
EUR million 10-12/ 7-9/ 4-6/ 1-3/ 10-12/ 7-9/ 4-6/ 1-3/
2006 2006 2006 2006 2005 2005 2005 2005
Pharmaceutical
Trade 4.1 4.9 3.9 2.7 4.9 4.8 4.4 3.9
Healthcare and
Dental Trade 3.1 3.2 1.3 2.8 2.0 2.6 2.4 1.8
Group items -1.7 -0.9 -0.6 -0.2 -0.3 -0.3 -0.3 -0.2
Group total 5.5 7.2 4.6 5.3 6.6 7.1 6.5 5.5
Net sales by market, EUR million 1.1.-31.12.2006 1.1.-31.12.2005
Finland 538.6 548.4
Other Nordic countries 751.4 736.5
Other Europe 43.2 45.4
Other countries 1.5 0.4
Total 1334.7 1330.7
Net sales
by market,
EUR million 10-12/ 7-9/ 4-6/ 1-3/ 10-12/ 7-9/ 4-6/ 1-3/
2006 2006 2006 2006 2005 2005 2005 2005
Finland 139.5 130.7 133.5 134.9 137.8 125.5 145.2 139.9
Other
Nordic
countries 191.8 178.3 191.7 189.5 196.6 181.9 185.9 172.1
Other
Europe 12.3 9.3 10.1 11.6 12.5 10.5 11.3 11.1
Other
countries 0.2 0.7 0.5 0.1 0.0 0.1 0.3 0.0
Total 343.7 319.0 335.8 336.2 346.9 318.0 342.7 323.2
Espoo, 31 January 2007
Board of Directors of Oriola-KD Corporation
Oriola-KD Corporation
Eero Hautaniemi President and CEO
Kimmo Virtanen CFO
Further information:
Eero Hautaniemi
President and CEO
Tel. +358 10 429 2109
Email: eero.hautaniemi@oriola-kd.com
Kimmo Virtanen
CFO
Tel. +358 10 429 2069
Email: kimmo.virtanen@oriola-kd.com
Pellervo Hämäläinen
Vice President, Communications and IR
Tel. +358 10 429 2497
Email: pellervo.hamalainen@oriola-kd.com
Distribution:
Helsinki Exchanges
Main Media
Published by:
Oriola-KD Corporation
Corporate Communications
Orionintie 5
FI-02200 Espoo, Finland
www.oriola-kd.com
Oriola-KD pro forma review 1 January - 31 December 2006
| Source: OKD