Oriola-KD Corporation Stock Exchange Release 10 February 2014 at 3:00 p.m.
Oriola-KD Corporation corrects the amount of net cash flow from operations,
presented in the key figures table on page 1, in October-December 2013 which was
erroneously presented to be EUR 90.8 million in the Financial Statements Release
2013 published on the 7(th) of February 2014. Net cash flow from operations for
October-December 2013 was EUR 50.8 million as presented in the financial
performance summary on page 1.
The full corrected Oriola-KD Corporation's Financial Statement Release 2013 here
below.
Oriola-KD Corporation's Financial Statements Release 2013
Financial performance October-December 2013
* Net sales declined by 4.0 per cent to EUR 679.6 (707.8) million.
* EBITDA excluding non-recurring items increased by 25.3 per cent to EUR 19.5
(15.5) million.
* EBITDA was EUR 18.9 (15.5) million.
* Operating profit excluding non-recurring items was EUR 12.4 (10.5) million.
* Operating profit was EUR 10.4 (10.5) million.
* Net cash flow from operations was EUR 50.8 (55.4) million.
* Profit for the period was EUR 5.6 (11.4) million and earnings per share were
EUR 0.04 (0.08).
Financial performance in 2013
* Net sales increased by 5.0 per cent to EUR 2,598.5 (2,474.4) million.
* EBITDA excluding non-recurring items increased by 16.7 per cent to EUR 53.2
(45.6) million.
* EBITDA was EUR 46.7 (44.5) million.
* Operating profit excluding non-recurring items was EUR 29.0 (26.8) million.
* Operating profit was EUR 21.0 (25.8) million.
* Net cash flow from operations was EUR 29.8 (46.1) million.
* Profit for the period was EUR 5.8 (16.4) million and earnings per share were
EUR 0.04 (0.11).
* Return on equity was 2.0 (5.4) per cent.
Key figures 10-12 10-12 Change 1-12 1-12 Change
EUR million 2013 2012 % 2013 2012 %
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Net sales 679.6 707.8 -4.0 2,598.5 2,474.4 5.0
EBITDA excluding non-recurring items 19.5 15.5 25.3 53.2 45.6 16.7
EBITDA 18.9 15.5 21.8 46.7 44.5 4.8
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Operating profit excluding non-
recurring items 12.4 10.5 18.4 29.0 26.8 8.1
Operating profit 10.4 10.5 -0.6 21.0 25.8 -18.5
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Operating profit % excluding non-
recurring items 1.8 1.5 1.1 1.1
Operating profit % 1.5 1.5 0.8 1.0
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Profit for the period 5.6 11.4 -50.8 5.8 16.4 -64.7
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Earnings per share, EUR 0.04 0.08 -50.8 0.04 0.11
Net cash flow from operating
activities 50.8 55.4 29.8 46.1
Return on equity (ROE), % 2.0 5.4
Gearing, % 65.3 2.1
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Outlook for 2014
Oriola-KD estimates that net sales and operating profit excluding non-recurring
items will increase compared to 2013 actual.
President and CEO Eero Hautaniemi's comments regarding the financial statements
release:
"Oriola-KD's net sales increased by 5.0 per cent to EUR 2,598.5 million and
operating profit excluding non-recurring items increased from EUR 26.8 million
to EUR 29.0 million in 2013. Operating profit excluding non-recurring items
includes project costs totalling EUR 2.7 million booked in the first half of
2013 and, based on a court decision received in January 2014, a EUR 1.2 million
cancellation of the principal bonus recognised in 2011 concerning the Russian
wholesale trade. In addition, EUR 0.7 million in trade receivables related to
the efficiency measures carried out in the Russian wholesale business was
written off in the final quarter.
Despite the weaker result of the Consumer Health business, operating profit of
the Finland and Baltics business was at the previous year's level, at EUR 20.9
(20.8) million, due to the improved efficiency of the wholesale business.
Pharmaceutical Trade Sweden's operating profit excluding non-recurring items
increased from EUR 16.2 million to EUR 26.1 million in 2013. Profitability
improved in both Swedish operating segments. Integration of the Medstop
acquisition proceeded according to plan and the merger of the pharmacy companies
was put into effect in the last quarter. Roughly half of the targeted annual
synergy benefits of EUR 8-10 million were confirmed by the end of 2013, as
planned. An efficiency programme was started in the Swedish wholesale business
in the third quarter. The aim is to achieve a significant improvement in
operating profit gradually from 2014 onwards.
Pharmaceutical Trade Russia's operating profit excluding non-recurring items
decreased from EUR -2.3 million to EUR -8.0 million in 2013. The Russian retail
business's operating profit stabilised and was positive for 2013. The delivery
issues in the Moscow region related to the implementation of the warehouse
management system were solved by the end of the second quarter but sales in the
region were significantly short of their annual targets. Regional and hospital
sales again increased substantially from the figures for the comparison period.
The total cost estimate of the new main logistics centre in Moscow is EUR 25-28
million, of which investments account for EUR 15.7 million. According to our
project plan, operations will be gradually transferred to the new facilities and
full production capacity will be reached by the end of the first quarter in
2015."
Oriola-KD Group's financial statements release 1 January - 31 December 2013
The text section of this financial statements release focuses on the annual
financial statements. Unless otherwise stated, the comparative financial
information represents the data for the corresponding period in 2012 in
accordance with the International Financial Reporting Standards (IFRS). The
figures for the entire year presented in this financial statements release have
been audited. The figures in the tables have been rounded independently.
1-12 1-12
Key Figures 2013 2012
-------------------------------------------------------
Equity ratio, % 19.2 24.5
Equity per share, EUR 1.84 2.05
Return on capital employed (ROCE), % 4.2 5.9
Return on equity (ROE), % 2.0 5.4
Net interest-bearing debt, EUR million 181.5 6.7
Gearing, % 65.3 2.1
Earnings per share, EUR 0.04 0.11
Average number of shares, 1000 pcs 151,157 151,248
Changes in the Group structure in 2013
Oriola-KD Holding Sverige AB, which is part of the Oriola-KD Group (hereinafter
referred to as Oriola-KD) acquired the entire capital stock of Medstop Group
Holding AB. The company has been included in the Pharmaceutical Trade Sweden
reporting segment since 1 June 2013. Medstop Group Holding AB was merged into
Oriola-KD Holding Sverige AB, and Kronans Droghandel Apotek AB was merged into
Medstop AB in the last quarter of 2013. Following this, Medstop AB changed its
name to Kronans Droghandel Apotek AB.
In the Russian retail business, OOO Farmask was merged into OOO Vitim & Co in
September 2013 as a Group-internal subsidiary merger. The change does not have
any impact on the Group's result for the period.
The Group's net sales and result for January-December 2013
Oriola-KD's net sales increased by 5.0 per cent to EUR 2,598.5 (2,474.4) million
and its operating profit excluding non-recurring items increased by 8.1 per cent
to EUR 29.0 (26.8) million in 2013. Operating profit was EUR 21.0 (25.8)
million. Oriola-KD's operating profit excluding non-recurring items was reduced
by project costs totalling EUR 2.7 million booked in the first half of 2013 and,
based on a court decision received in January 2014, the EUR 1.2 million
cancellation of the principal bonus recognised in 2011 related to the Russian
wholesale trade. In addition, EUR 0.7 million in trade receivables related to
the efficiency measures carried out in the Russian wholesale business was
written off in the final quarter.
Profit after financial items was EUR 7.4 (20.5) million and profit for the
period EUR 5.8 (16.4) million. Oriola-KD's financial expenses increased to EUR
13.6 (5.3) million. Oriola-KD's financial expenses increased as a result of
higher interest rate costs resulting from the acquisition of Medstop and the
accrued foreign exchange loss of EUR 1.4 million from the change in the fair
value of the Group-internal loan granted to the Russian subsidiary. Earnings
per share were EUR 0.04 (EUR 0.11).
Return on equity was 2.0 (5.4) per cent in 2013.
The comparative financial figures for 2012 have been revised due to a change in
the calculation method for pension liabilities (IAS 19R (revision) Employee
benefits). The impact has been itemised under Revision of IAS 19 Employee
benefits standard.
The Group's net sales and result for October-December 2013
Fourth-quarter net sales were EUR 679.6 (707.8) million. Operating profit
excluding non-recurring items was EUR 12.4 (10.5) million and operating profit
was EUR 10.4 (10.5) million for the period. Profit after financial items was
EUR 5.9 (12.0) million. Oriola-KD's net financial expenses were EUR 4.5 (+1.5)
million. Profit for the October-December period was EUR 5.6 (11.4) million and
earnings per share were EUR 0.04 (0.08).
Reporting segments
Oriola-KD's reporting segments are Pharmaceutical Trade Finland and Baltics,
Pharmaceutical Trade Sweden and Pharmaceutical Trade Russia. Oriola-KD has
formed the reporting segments by combining its operating segments. The
Pharmaceutical Trade Finland and Baltics reporting segment comprises the Finnish
pharmaceutical wholesale business, the Consumer Health and the Pharmaceutical
Trade Baltics operating segments. The Pharmaceutical Trade Sweden reporting
segment comprises the Swedish pharmaceutical retail and Swedish pharmaceutical
wholesale operating segments. The Pharmaceutical Trade Russia reporting segment
comprises the Russian pharmaceutical retail and Russian pharmaceutical wholesale
operating segments.
Pharmaceutical Trade Finland and Baltics
Key Figures 10-12 10-12 Change 1-12 1-12 Change
EUR million 2013 2012 % 2013 2012 %
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Net Sales 109.4 118.3 -7.6 425.3 460.5 -7.6
Pharmaceutical Wholesale in Finland 88.2 97.6 -9.6 342.1 380.7 -10.1
Pharmaceutical wholesale in Baltics 10.8 10.1 6.8 41.0 36.1 13.5
Consumer Health 10.5 10.7 -2.1 42.7 44.2 -3.3
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EBITDA 5.7 6.1 -6.5 24.3 23.9 1.8
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Operating profit 4.8 5.2 -8.7 20.9 20.8 0.6
-------------------------------------------------------------------------------
Operating profit % 4.4 4.4 4.9 4.5
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Number of personnel at the end of period 505 476
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October-December 2013
Net sales of Pharmaceutical Trade Finland and Baltics in the fourth quarter of
2013 was EUR 109.4 (118.3) million and operating profit EUR 4.8 (5.2) million.
Fourth quarter invoicing by the Finnish wholesale business was EUR 257.9
(270.2) million and net sales EUR 88.2 (97.6) million, net sales of the Baltic
wholesale business were EUR 10.8 (10.1) million and net sales of the Consumer
Health business were EUR 10.5 (10.7) million.
January-December 2013
Net sales of Pharmaceutical Trade Finland and Baltics declined by 7.6 per cent
to EUR 425.3 (460.5) million and operating profit grew by 0.6 per cent to EUR
20.9 (20.8) million in 2013. Invoicing by the Finnish wholesale business was EUR
1,022.6 (1,040.2) million and net sales were EUR 342.1 (380.7) million. Net
sales of the Baltic wholesale business were EUR 41.0 (36.1) million and net
sales of the Consumer Health business were EUR 42.7 (44.2) million.
Profitability of the Finnish wholesale business improved as a result of measures
taken to improve operating efficiency. As was expected, discontinuation of the
distribution of AstraZeneca's products by Oriola-KD caused a drop in the net
sales of the Finnish wholesale business in 2013. Oriola-KD's business in the
Baltics grew positively during the period and the start of pharmaceutical
distribution and marketing cooperation with MSD proceeded as planned.
The Finnish pharmaceutical market grew by 1.8 (+3.0) per cent in 2013. The
decrease in drug reimbursements and the 5 per cent cut in the wholesale prices
of patented medicines in February 2013 had a negative impact on the growth of
the pharmaceutical market in Finland (source: IMS Health). Oriola-KD held a
46.2 (47.0) per cent share of the pharmaceutical wholesale market in Finland in
2013 (source: ATY).
Pharmaceutical Trade Finland and Baltics had 505 (476) employees at the end of
2013.
Pharmaceutical Trade Sweden
Key Figures 10-12 10-12 Change 1-12 1-12 Change
EUR million 2013 2012 % 2013 2012 %
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Net Sales 300.5 292.4 2.8 1,194.4 1,061.3 12.5
Retail business 192.8 126.3 52.7 669.6 502.5 33.2
Wholsesale business 174.0 204.0 -14.7 743.4 636.7 16.8
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EBITDA before non -recurring items 13.3 7.5 76.8 41.6 26.4 57.6
EBITDA 13.1 7.5 73.4 35.3 25.3 39.6
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Operating profit before non-
recurring items 8.4 4.6 84.1 26.1 16.2 61.6
Operating profit 6.7 4.6 47.0 18.4 15.1 22.1
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Operating profit % before non-
recurring items 2.8 1.6 2.2 1.5
Operating profit % 2.2 1.6 1.5 1.4
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Number of personnel at the end of
period 1,849 1,324
Retail business 1,573 1,064
Wholsesale business 277 260
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October-December 2013
Net sales of Pharmaceutical Trade Sweden in the fourth quarter of 2013 were EUR
300.5 (292.4) million. Operating profit excluding non-recurring items was EUR
8.4 (4.6) million and operating profit was EUR 6.7 (4.6) million. Net sales of
the retail business totalled EUR 192.8 (126.3) million, invoicing of the
wholesale business was EUR 373.2 (385.4) million and its net sales were EUR
174.0 (204.0) million. Medstop acquisition boosted the net sales of the retail
business by EUR 62.7 million during the fourth quarter.
January-December 2013
Pharmaceutical Trade Sweden's net sales increased by 12.5 per cent to EUR
1,194.4 (1,061.3) million in 2013. Operating profit excluding non-recurring
items increased by 61.6 percent from EUR 16.2 million to EUR 26.1 million, and
operating profit by 22.1 per cent from EUR 15.1 million to EUR 18.4 million in
2013. Profitability improved in both Swedish operating segments. Net sales of
the retail business were EUR 669.6 (502.5) million, invoicing of the wholesale
business was EUR 1,509.3 (1,401.4) million and net sales EUR 743.4 (636.7)
million. Acquisition of Medstop increased net sales of the retail business by
EUR 187.1 million. The start of the centralised purchasing, warehousing and
pharmacy distribution service offered to pharmacy chains has helped to increase
the net sales of the wholesale business.
Development of the product assortment on offer boosted the operating profit of
the retail business. In the retail business the share of sales of OTC- and
traded goods increased to 26.9 (25.3) per cent. Oriola-KD had 297 (219)
pharmacies in Sweden at the end of 2013, operating under the Kronans Apotek
name. The Medstop acquisition increased the number of pharmacies by 67. Oriola-
KD opened a total of 15 (11) pharmacies in Sweden in 2013. A total of 30 (32)
new pharmacies were established on the Swedish pharmacy market during the
period. In 2013, Oriola-KD had a market share of 20.5 (13.4) per cent of the
retail business per cent according to the company's estimate.
The integration of the Medstop acquisition has progressed to plan. The pharmacy
companies were merged in the final quarter of 2013. The total targeted synergy
benefit from the acquisition is EUR 8-10 million annually as of 2015. Roughly
half of the synergy benefits were confirmed by the end of 2013, as planned.
Net sales and operating profit in the Swedish wholesale business improved as
planned in the second half of the year as a result of the consolidation of the
centralised purchasing, warehousing and pharmacy distribution service offered to
pharmacy chains. The relative share of parallel imports and generic
pharmaceuticals has remained high on the Swedish pharmaceutical market, which
has slowed down the growth of net sales and operating profit in the wholesale
business. At the end of 2013, a programme to improve profitability was carried
out in the Swedish wholesale business. In the company's estimate, Oriola-KD's
market share of the wholesale trade was 37.1 (35.8) per cent in 2013. Oriola-KD
ceased the distribution of Sanofi-Aventis products by the end of 2013. Sanofi-
Aventis has a market share of about 0.9 per cent on the Swedish pharmaceutical
market (source: IMS Health).
The pharmaceutical market in Sweden decreased by 1.4 (-1.7) per cent (source:
IMS Health), while the retail market for OTC products and traded goods increased
by 6.1 (+4.8) per cent (source: Nielsen) in 2013.
Pharmaceutical Trade Sweden had 1,849 (1,324) employees at the end of 2013, of
whom 1,573 (1,064) were employed in retail and 277 (260) were employed in
wholesale.
The acquisition of Medstop increased the number of personnel in the
pharmaceutical retail business by 534.
Pharmaceutical Trade Russia
Key Figures 10-12 10-12 Change 1-12 1-12 Change
EUR million 2013 2012 % 2013 2012 %
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Net Sales 269.8 296.9 -9.1 978.8 952.7 2.7
Retail business 33.4 41.3 -19.2 140.3 148.6 -5.6
Wholsesale business 241.9 265.2 -8.8 857.2 831.1 3.1
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EBITDA before non -recurring items 2.1 4.3 -51.8 -2.7 3.1 -186.5
EBITDA 1.8 4.3 -58.6 -3.0 3.1 -195.8
-------------------------------------------------------------------------------
Operating profit before non-recurring
items 0.8 3.1 -73.2 -8.0 -2.3 250.4
Operating profit 0.5 3.1 -82.7 -8.3 -2.3 263.1
-------------------------------------------------------------------------------
Operating profit % before non-recurring
items 0.3 1.0 -0.8 -0.2
Operating profit % 0.2 1.0 -0.8 -0.2
-------------------------------------------------------------------------------
Number of personnel at the end of period 2,901 3,056
Retail business 1,219 1,309
Wholsesale business 1,683 1,747
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October-December 2013
The net sales of Pharmaceutical Trade Russia in the fourth quarter of 2013 fell
to EUR 269.8 (296.9) million and the operating profit excluding non-recurring
items was EUR 0.8 (3.1) million and the operating profit was EUR 0.5 (3.1)
million. The net sales of the retail business totalled EUR 33.4 (41.3) million
and the net sales of the wholesale business totalled EUR 241.9 (265.2) million.
January-December 2013
The net sales of Pharmaceutical Trade Russia grew from 2.7 per cent to EUR
978.8 (952.7) million. Operating profit excluding non-recurring items fell to
EUR -8.0 (-2.3) million in 2013. Operating profit was EUR -8.3 (-2.3) million.
The net sales of the retail business totalled EUR 140.3 (148.6) million and the
net sales of the wholesale business totalled EUR 857.2 (831.1) million. Oriola-
KD booked EUR 0.5 million in accelerated depreciation on the current main
logistics centre in Moscow in 2013.
Positive performance in the Russian retail business continued as a result of
more efficient operations and the development of the product assortment on
offer. The retail business posted a positive operating profit in 2013. At the
end of 2013, Oriola-KD had a total of 233 (240) pharmacies in the Moscow region.
Net sales of the Russian wholesale business increased by 3.1 per cent to EUR
857.2 (831.1) million. The net sales grew primarily thanks to regional
distribution centres. The delivery problems in the Moscow region which occurred
after the implementation of the warehouse management system were solved by the
end of the second quarter.
EUR 1.2 (2.7) million credit loss write-offs relating to trade receivables were
booked during 2013.
In June 2013 Oriola-KD signed a lease agreement on a new main logistics centre
in the Moscow region. The overall project budget of the main logistics centre
is EUR 25-28 million. Investments now account for EUR 15.7 million of the
overall budget and include a distribution centre automation solution and
warehouse machinery and equipment. According to the project plan, operations
will be gradually transferred to the new facilities and full production capacity
will be reached by the end of the first quarter in 2015. As a result of the
investment decision, Oriola-KD will book a total of EUR 0.5 million in 2013 and
in 2014 in accelerated depreciation relating to the machinery and equipment in
the current main logistics centre.
The ruble-denominated growth in the Russian pharmaceutical market was about
10.7 (+10.7) per cent in 2013 (source: IMS Health). In Russian rubles, the net
sales of the Russian retail business were at the level of 2012 (2012: +9.7 per
cent) and net sales of the wholesale business grew 9.4 (+37.3) per cent in 2013.
Pharmaceutical Trade Russia had 2,901 (3,056) employees at the end of the year,
of whom 1,219 (1,309) were employed in the retail business and 1,683 (1,747) in
the wholesale business.
Non-recurring items
A non-recurring item is an income or expense arising from non-recurring or rare
events. Gains or losses from the sale or discontinuation of business operations
or assets, gains or losses from restructuring business operations, and
impairment losses on goodwill and other non-current assets are recognised by the
Group as non-recurring items.
Non-recurring items 10-12 10-12 1-12 1-12
EUR million 2013 2012 2013 2012
-------------------------------------------------------------
Pharmaceutical Trade Sweden
Restructuring costs -1.7 - -4.6 -
Write-off of contract-based accrual - - -3.1 -
Receivable write-off - - - -1.1
Pharmaceutical Trade Russia
Restructuring costs -0.3 - -0.3 -
-------------------------------------------------------------
Total -2.0 - -8.0 -1.1
In 2013, non-recurring
items were related to restructuring costs booked for Pharmaceutical Trade Sweden
and the Russian wholesale business. In addition, the non-recurring items include
the write-off of the accrual entered in the books in 2009 on the basis of the
investment agreement between Oriola-KD and Kooperativa Förbundet.
The 2013 result for Oriola-KD includes EUR 2.7 million in project costs and,
under a court decision issued in January 2014, a EUR 1.2 million cancellation of
the principal bonus recognised in 2011 related to the Russian wholesale trade.
In addition, EUR 0.7 million in trade receivables was written off in the final
quarter related to measures carried out in Russia to improve the efficiency of
the wholesale business. These expenses have not been treated as non-recurring
items.
Balance sheet, financing and cash flow
Oriola-KD's balance sheet total on 31 December 2013 stood at EUR 1,500.1
(1,316.2) million. Cash assets totalled EUR 137.3 (88.1) million and equity EUR
278.1 (310.5) million. The equity ratio was 19.2 (24.5) per cent.
Oriola-KD's goodwill of EUR 379.0 (276.7) million has been allocated in
impairment testing to the cash-generating units consisting of the Group's
operating segments. Oriola-KD prepares the goodwill impairment testing twice a
year, in accordance with the timetable of its strategy and planning process. At
the end of 2013, EUR 238.9 (116.7) million of the goodwill was allocated to the
Swedish pharmaceutical retail business, EUR 26.9 (27.8) million to the Swedish
pharmaceutical wholesale business, EUR 75.9 (88.6) million to the Russian
pharmaceutical wholesale business and EUR 37.4 (43.6) million to the Russian
pharmaceutical retail business. The acquisition of Medstop increased the
goodwill allocated to the Swedish pharmaceutical retail business by EUR 129.9
million in 2013.
At the end of 2013, interest-bearing debt totalled EUR 318.8 (EUR 94.8) million
and interest-bearing net debt EUR 181.5 (6.7) million. The gearing ratio was
65.3 (2.1) per cent. Interest-bearing long-term debt consisted mainly of the
long-term bank loan taken out for the acquisition of Medstop and the conditional
earn-out payment relating to the Medstop acquisition. Most of the interest-
bearing short-term debt consisted of the use of the commercial paper programme
issued by Oriola-KD Corporation and advance payments by pharmacies in Finland.
The trade receivables sales programmes were continued in the retail and
wholesale businesses in Sweden. By the end of 2013, the sales of the trade
receivables totalled EUR 76.8 (72.1) million.
Oriola-KD signed a new financing agreement of approximately EUR 280 million in
May 2013. The financial covenants contained in the financing agreement are based
on the ratio between the Group's net debt and rolling 12-month EBITDA and its
gearing ratio. The ratio between the Group's net debt and the 12-month rolling
EBITDA, adjusted in accordance with the terms and conditions of the financing
agreement, stood at 3.27 at the end of 2013, the covenant limit in the agreement
being 4.25. Oriola-KD's committed long-term credit facilities of EUR 100.0
million and EUR 42.6 million in short-term credit account facilities with banks
were unused at the end of 2013. A total of EUR 83.1 (43.8) million of the
commercial paper programme was in use at the end of the review period.
Financial covenants contained 31 Mar 2014 30 Sept 2014
in the financing agreement 31 Dec 2013 30 Jun 2014
-------------------------------------------------------------------------------
Ratio between net debt and 4.25 4.00 4.00 3.50
rolling 12-month EBITDA
Gearing ratio 120% 120% 120% 100%
Net cash flow from operations in 2013 was EUR 29.8 (46.1) million, of which
changes in working capital accounted for EUR 3.5 (23.1) million. Net cash flow
from investing activities was EUR -97.8 (-34.9) million.
Investments
Gross investments in 2013 totalled EUR 193.7 (22.6) million and consisted of the
acquisition of the Medstop pharmacy chain at EUR 165.9 million, the
establishment of new pharmacies, information technology investments and
investments aimed at improving the efficiency of logistics. Oriola-KD has booked
EUR 0.5 (0.0) million in accelerated depreciation due to the investment plan
concerning to the logistics centre in Moscow in 2013.
Personnel
At the end of 2013, Oriola-KD had a payroll of 5,256 (4,856) employees, 10 (10)
per cent of whom worked in Finland and the Baltics, 35 (27) per cent in Sweden,
and 55 (63) per cent in Russia. Personnel numbers consist of members of staff
in active employment.
Administration
The Annual General Meeting (AGM) of Oriola-KD Corporation held on 20 March 2013
elected the following persons as members of the company's Board of Directors:
Jukka Alho (Chair), Harry Brade, Per Båtelson, Outi Raitasuo and Mika Vidgrén,
and elected Karsten Slotte as a new member. At its constitutive meeting held
immediately after the AGM, the Board of Oriola-KD Corporation elected Outi
Raitasuo as Vice Chair of the Board. The Board of Directors appointed from its
members Outi Raitasuo (Chair), Harry Brade, Karsten Slotte and Mika Vidgrén to
the Board's Audit Committee, and Jukka Alho (Chair), Per Båtelson and Harry
Brade to the Board's Remuneration Committee.
The Board of Directors has assessed the independence of its members and
determined that all members are independent of both the company and its major
shareholders.
The AGM elected PricewaterhouseCoopers Oy as the auditor for the company.
Oriola-KD's Group Management Team:
* Eero Hautaniemi, President and CEO
* Lars Birkeland, Vice President, pharmaceutical retail, Sweden
* Tuomas Itkonen, CFO
* Konstantin Minin, Vice President, pharmaceutical wholesale and retail
business, Russia
* Jukka Mäkelä, Vice President, Development (as of 1 April 2013)
* Teija Silver, Vice President, HR
* Kimmo Virtanen, Executive Vice President, Pharmaceutical Wholesale, Finland,
Sweden and Baltics
Henry Fogels, Vice President, pharmaceutical wholesale, Russia, retired from the
Group Management Team in 2013Konstantin Minin was appointed Vice President,
pharmaceutical wholesale and retail, Russia, on 19 December 2013. Minin has
previously held the positions of Vice President, pharmaceutical retail, Russia,
and acting General Director of OOO Oriola Russia. He is a member of Oriola-KD's
Management Team.
Oriola-KD applies the Finnish Corporate Governance Code which was issued by the
Securities Market Association on 15 June 2010 and which entered into force on 1
October 2010, with the exception that the company's Nomination Committee may
also have members who are not members of the company's Board of Directors. The
purpose of this deviation from Recommendation 22 of the Corporate Governance
Code (Appointment of members to the committees) is to allow the election of
major shareholders in the company to the Nomination Committee and thus to ensure
that their opinions are heard well before the Annual General Meeting. The
Nomination Committee is a body established by the Board for the purpose of
preparing and presenting to the Board a recommendation for the proposal to be
put to the Annual General Meeting concerning the composition and remuneration of
the Board. The Corporate Governance Statement and the Remuneration Statement
for 2013 can be viewed on the company's website at: http://www.oriola-
kd.com/en/Corporate-Governance/.
Board authorisations
The AGM, held on 20 March 2013, authorised the Board to decide on repurchasing
up to fifteen million
of the company's own class B shares, which may also be carried out in a manner
other than in proportion to
the holdings of the shareholders. The authorisation is in force for eighteen
months following the decision of the AGM.
The AGM, held on 20 March 2013, authorised the Board to decide on a share issue
against payment in one or more issues, including the right to issue new class B
shares or to assign class B treasury shares held by the company. The
authorisation covers a combined maximum of thirty million class B shares of the
company and includes the right to derogate from the shareholders' pre-emptive
subscription right. The authorisation is in force for eighteen months following
the decision of the AGM.
On 20 March 2013, the Board was also authorised to decide on a bonus issue of
class B shares to the company in one or more issues, and on a directed issue of
class B shares to implement the new share incentive scheme for the Oriola-KD
Group's management and the share savings plan for its key employees. The maximum
amount of the company's new class B shares issued under this authorisation is
1,715,000, which is 1.13 per cent of the company's total shares. The
authorisation will remain in force for a maximum of five (5) years following the
decision of the AGM.
Dividend distribution
In accordance with a Board proposal, the AGM decided to distribute EUR 0.05 per
share in dividend from the 2012 financial year and EUR 0.04 per share in
repayment of equity, totalling EUR 13.6 (12.1) million. The dividend and
repayment of equity was paid to those who, on the record date of 25 March 2013,
were entered as shareholders of Oriola-KD Corporation in the company's
shareholder register maintained by Euroclear Finland Ltd.
Oriola-KD Corporation shares
Trading volume of the Oriola-KD Corporation's class A and B shares in January-
December 2013:
Trading volume January-December 2013 January-December 2012
Class A Class B Class A Class B
-------------------------------------------------------------------------------
Trading volume, million shares 3.2 28.6 5.7 29.5
Trading volume, EUR million 7.7 68.3 11.5 57.3
Highest price, EUR 2.69 2.73 2.44 2.25
Lowest price, EUR 2.24 2.18 1.77 1.70
Closing quotation, end of 2.60 2.55 2.27 2.23
period, EUR
-------------------------------------------------------------------------------
Oriola-KD Corporation's market capitalisation on 31 December 2013 was EUR 388.1
(EUR 339.2) million.
In the review period, the traded volume of Oriola-KD Corporation shares,
excluding treasury shares, corresponded to 21.1 (23.3) per cent of the total
number of shares. The traded volume of class A shares amounted to 6.8 (12.0) per
cent of the average stock, and that of class B shares, excluding treasury
shares, 27.5 (28.4) per cent of the average stock.
At the end of December 2013, the company had a total of 151.257.828 shares
(151.257.828), of which 47.148.710 were class A shares (47.148.710) and
104.109.118 were class B shares (104.109.118). The company has 115.902 treasury
shares, all of which are class B shares. These account for 0.06 per cent of the
company's shares and 0.011 per cent of the votes.
Under Article 3 of the Articles of Association, a shareholder may demand
conversion of class A shares into class B shares. During the period 1 January-
30 December 2013, 0 (0) class A shares were converted into class B shares.
On 19 December 2012, Oriola-KD Corporation's Board of Directors decided on a new
share incentive scheme for the Group's senior management for the years
2013-2015. The scheme covers eight persons. The company's Board of Directors
will determine the earnings criteria for the earning period and the targets to
be set for these at the start of each earning period. The bonus for the 2013
earning period is based on the Oriola-KD Group's earnings per share (EPS) and
return on capital employed (ROCE). The maximum bonus for the 2013 earning
period is 1,077,500 shares.
The Board of Oriola-KD Corporation approved the terms and conditions of the key
employees' share savings plan on 28 May 2013. A total of about 50 key employees
are participating in the plan. The savings period will start on 1 October 2013
and end on 30 September 2014. The maximum and minimum monthly savings amount to
10 and 2 per cent, respectively, of each participant's fixed gross monthly
salary. The accumulated savings will be used for purchasing Oriola-KD's class B
shares for the participants at market prices. About two years after the start of
the programme, the company will give the participants two class B shares for
every three shares purchased as part of the programme. The shares given to the
participants will be partially used for paying taxes.
Liquidity guarantee
There is no liquidity guarantee in effect for the shares of Oriola-KD
Corporation.
Flagging announcements
After the purchasing of shares by Ilmarinen Mutual Pension Insurance Company on
25 April 2013, its portion of the votes conferred by the shares of Oriola-KD
Corporation exceeded the one twentieth (1/20) limit referred to in Chapter 9,
section 5 of the Securities Markets Act. On 25 April 2013, the direct
shareholding of Ilmarinen Mutual Pension Insurance Company totalled 4.14 per
cent of Oriola-KD Corporation's shares and 5.07 per cent of the votes conferred
by the shares.
Risks
Oriola-KD's Board of Directors has approved the company's risk management policy
in which the risk management operating model, principles, responsibilities and
reporting are specified. The Group's risk management seeks to identify, measure
and manage risks that may threaten Oriola-KD's operations and the achievement of
goals set. The roles and responsibilities relating to risk management have been
determined in the Group.
Oriola-KD's risks are classified as strategic, operational and financial. Risk
management is a key element of the strategic process, operational planning and
daily decision-making at Oriola-KD.
Oriola-KD has identified the following principal strategic and operational risks
in its business:
* Amendments to pharmaceutical market regulations may weaken Oriola-KD's
profitability.
* In the Swedish retail business, the free establishment of pharmacies has led
to an increase in the number of pharmacies. The number of pharmacies may
continue to grow, which could further increase the fierce competition.
* In the Russian retail business, tough competition resulting from the large
number of pharmacies may lead to a further decrease in the gross margin and
a rapid turnover rate of key personnel.
* Extra capacity ensuing from a change made in the Swedish wholesale market
will intensify competition, which may weaken the profitability of
operations. The share of single channel distribution in the pharmaceutical
wholesale market may decline rapidly, which may weaken the profitability of
operations and lead to the restructuring of wholesale operations.
* As a result of the tough competition in the Russian wholesale business, the
gross margin may decline further, which will lead to a continued need to
intensify operations and restructure wholesale operations over the long
term. The payment behaviour that is typical to the Russian market, combined
with the regional expansion of operations may increase credit risks.
* Strategic development projects involve operational risks.
The main financial risks for Oriola-KD involve currency rate, liquidity,
interest rate and credit risks. Currency risks are the most significant
financial risks in Russia and Sweden as any changes in the value of the Russian
ruble and the Swedish krona will have an impact on Oriola-KD's earnings and
equity.
Oriola-KD prepares goodwill impairment testing twice a year, in accordance with
the timetable of its strategy and planning process. Changes in cash flow
forecasts based on strategic plans, or in the discount rate or perpetuity growth
rate, can cause a goodwill write-off, which would weaken Oriola-KD's result. The
impairment test on the goodwill of the cash-generating wholesale unit in Russia
is particularly sensitive to changes in the discount rate or cash-flow
forecasts.
Near-term risks and uncertainty factors
The slowing down in the economic growth of Russia as well as the continuing
weakening of the external value of the Russian rubble may have an effect on the
profitability of the Oriola-KD Russian businesses in 2014. A decrease in gross
margin resulting from intense competition and an increase in credit risks
concerning customers may have an impact on the profitability of the wholesale
business in Russia.
Oriola-KD's strategic development projects in the Russian wholesale business and
the operations in Sweden involve operational risks which may have an effect on
Oriola-KD's profitability.
Oriola-KD's long-term financing agreement contains financial covenants
concerning the ratio between Oriola- KD's net debt and rolling 12-month EBITDA
and the Group's gearing ratio. Weakening profitability of Oriola- KD's business
operations may affect Oriola-KD's ability to meet the financial covenants
contained in the financing agreement.
Outlook
Oriola-KD's outlook for 2014 is based on external market forecasts, agreements
with pharmaceutical companies and pharmacies, and management assessments.
During the five year period from 2013 to 2017, the Finnish pharmaceutical market
is expected to grow at an annual rate of 1.4 per cent and decline an average of
1.3 per cent in Sweden per year while
During the five year period from 2013 to 2017, the Finnish pharmaceutical market
is expected to grow at an annual rate of 1.4 per cent and decline by an annual
average of 1.3 per cent in Sweden, while the Russian pharmaceutical market is
expected to grow by an average of almost 10 per cent annually in the local
currencies (source: IMS Health Market Prognosis 2013-2017).
Outlook for 2014
Oriola-KD estimates that net sales and operating profit excluding non-recurring
items will increase compared to 2013 actual.
Events after the review period
On 28 January 2014, the Board of Directors of Oriola-KD Corporation received a
demand in accordance with Chapter 5, section 5, of the Limited Liability
Companies Act from a group of shareholders representing more than 10 per cent of
Oriola-KD shares and more than 15 per cent of the votes conferred by these
shares to include the merging of share classes and a direct issue of shares to
class A shareholders without payment to be included on the agenda of the Annual
General Meeting to be held on 24 March 2014.
Distribution proposal
Oriola-KD's parent company is Oriola-KD Corporation, whose distributable assets
based on the balance sheet on 31 December 2013 were EUR 226.7 (225.3) million.
Oriola-KD Corporation's net profit in 2013 was EUR 15.7 (15.5) million.
The Board proposes to the Annual General Meeting that no dividend be distributed
(EUR 0.05 per share was distributed on 2012) and that no funds from the invested
non-restricted equity fund (EUR 0.04 per share on 2012) be distributed as return
of equity.
Annual General Meeting
Oriola-KD Corporation's Annual General Meeting will be held on 24 March 2014 at
5.00 p.m. at the Helsinki Fair Centre. The matters specified in article 10 of
the Articles of Association and other proposals of the Board of Directors, if
any, will be dealt with at the meeting. The Board of Directors will decide on
the notice of the Annual General Meeting and the proposals contained in it at a
later date. The full notice of the Annual General Meeting will be published on
25 February 2014.
Publication of the annual report
Oriola-KD Corporation will publish its 2013 annual report on 7 February 2014.
The financial statements in their entirety will be published by 26 February
2014.
Next interim report
Oriola-KD Corporation will publish its results for the first quarter of 2014 on
Thursday 24 April 2014 at about 8.30 am.
Oriola-KD Corporation's Financial Statements Release January - December 2013,
audited
Consolidated Statement of
Comprehensive Income
(IFRS), 10-12 10-12 1-12 1-12
EUR million 2013 2012 2013 2012
revised*** revised***
-------------------------------------------------------------------------------
Net sales 679.6 707.8 2,598.5 2,474.4
Cost of goods sold -567.3 -608.9 -2,199.4 -2,117.8
-------------------------------------------------------------------------------
Gross profit 112.3 98.9 399.0 356.6
Other operating income 1.9 0.5 5.7 2.3
Selling and
distribution expenses -86.9 -75.3 -313.7 -277.1
Administrative expenses -15.0 -13.6 -62.0 -54.9
-------------------------------------------------------------------------------
Operating Profit before
Non-recurring items 12.4 10.5 29.0 26.8
Non-recurring items* -2.0 - -8.0 -1.1
-------------------------------------------------------------------------------
Operating Profit 10.4 10.5 21.0 25.8
Financial income 6.5 7.1 14.1 22.7
Financial expenses -11.0 -5.6 -27.7 -28.0
-------------------------------------------------------------------------------
Profit before taxes 5.9 12.0 7.4 20.5
Income taxes ** -0.3 -0.6 -1.6 -4.1
-------------------------------------------------------------------------------
Profit for the period 5.6 11.4 5.8 16.4
Other comprehensive income
Items which may be
reclassified subsequently
to profit or loss:
Translation difference -9.8 -2.6 -29.7 11.4
Cash flow hedge -0.3 -0.2 0.8 -0.9
Income tax relating to
other comprehensive income 0.1 0.3 0.3 -0.2
-------------------------------------------------------------------------------
-4.3 8.9 -22.9 26.7
Items which are not reclassified subsequently
to profit or loss:
Actuarial gains/losses on
defined benefit plan 5.9 1.6 5.9 1.6
Income tax relating to
other comprehensive income -1.3 -0.4 -1.3 -0.4
-------------------------------------------------------------------------------
Total comprehensive income
for the period 0.3 10.1 -18.3 27.9
Attribution of Profit for
the period
-------------------------------------------------------------------------------
To parent company
shareholders 5.6 11.4 5.8 16.4
-------------------------------------------------------------------------------
Attribution of total
comprehensive
income for the period
-------------------------------------------------------------------------------
To parent company
shareholders 0.3 10.1 -18.3 27.9
-------------------------------------------------------------------------------
Earnings per share for the
period
Basic earnings per share,
EUR 0.04 0.08 0.04 0.11
Diluted earnings per share,
EUR 0.04 0.08 0.04 0.11
*) Pharmaceutical Trade Sweden restructuring expenses EUR -1.7 million and
Pharmaceutical Trade Russia restructuring expenses EUR -0,3 million in
Q4/2013, Pharmaceutical Trade Sweden restructuring expenses EUR -2,0 million
in Q3/2013, Pharmaceutical Trade Sweden restructuring expenses EUR -0,8
million and a write-off of contract-based accrual EUR -3.2 million in Q2/2013
and a receivable write-off EUR -1.1 million in Q3/2012.
**) The tax expense for the period corresponds to the taxes calculated from
the profit for the financial period
***) Revised standard IAS 19 Employyee benefits has been applied as of 1
January 2013
Consolidated Balance Sheet (IFRS),
EUR million
ASSETS 31 Dec 2013 31 Dec 2012
revised*
-------------------------------------------------------------------------------
Non-current assets
Property, plant and equipment 93.2 81.4
Goodwill 379.0 276.7
Other intangible assets 72.0 52.3
Other shares and shareholdings 0.0 0.0
Pension assets 9.3 6.6
Other non-current assets 0.0 0.0
Deferred tax assets 8.3 6.1
-------------------------------------------------------------------------------
Non-current assets total 561.8 423.1
Current assets
Inventories 391.4 389.8
Trade and other receivables 337.9 352.7
Other receivables 71.8 62.6
Cash and cash equivalents 137.3 88.1
-------------------------------------------------------------------------------
Current assets total 938.3 893.1
ASSETS TOTAL 1,500.1 1,316.2
-------------------------------------------------------------------------------
EQUITY AND LIABILITIES
-------------------------------------------------------------------------------
Equity of the parent
company shareholders
Share capital 36.2 36.2
Hedging reserve -0.2 -0.7
Contingency fund 19.4 25.5
Other reserves 1.2 1.2
Other equity 221.5 248.4
-------------------------------------------------------------------------------
Equity total 278.1 310.5
Non-current liabilities
Deferred tax liabilities 17.7 14.1
Pension obligations 7.6 9.7
Borrowings 176.2 0.4
Other non-current liabilities 0.3 1.0
-------------------------------------------------------------------------------
Non-current liabilities total 201.7 25.2
Current liabilities
Trade payables 834.9 851.3
Provisions 3.0 -
Borrowings 142.6 94.3
Other current liabilities 39.8 34.9
-------------------------------------------------------------------------------
Current liabilities total 1,020.3 980.5
EQUITY AND LIABILITIES TOTAL 1,500.1 1,316.2
-------------------------------------------------------------------------------
*) Revised standard IAS 19 Employyee benefits has been applied as of 1 January
2013
Consolidated Statement
of Changes in
Equity (IFRS)
Equity of the parent company shareholders
Trans- Re-
lation tained
Share diffe- earn- Equity
EUR million capital Funds rences ings total
-------------------------------------------------------------------------------
Equity
31 Dec 2011 36.2 31.2 -7.2 239.1 299.3
-------------------------------------------------------------------------------
Change in accounting
policy (IAS19) - - - -4.8 -4.8
-------------------------------------------------------------------------------
Equity, revised*
1 Jan 2012 36.2 31.2 -7.2 234.3 294.5
-------------------------------------------------------------------------------
Comprehensive income for the
period
Net profit for the period - - - 16.4 16.4
Other comprehensive income:
Cash flow hedge - -0.9 - - -0.9
Actuarial gains and losses - - - 1.6 1.6
Income tax relating to
other comprehensive
income - 0.2 -0.4 -0.4 -0.6
Translation difference - - 11.4 - 11.4
-------------------------------------------------------------------------------
Comprehensive income for the
period total - -0.7 11.0 17.6 27.9
-------------------------------------------------------------------------------
Owners related transactions
Dividends paid and return
of equity - -4.5 - -7.6 -12.1
Share-based payments - - - 0.2 0.2
-------------------------------------------------------------------------------
Owners related transactions
total - -4.5 - -7.3 -11.9
-------------------------------------------------------------------------------
Equity
31 Dec 2012 36.2 26.0 3.8 244.5 310.5
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Equity
31 Dec 2012 36.2 26.0 3.9 248.9 314.9
-------------------------------------------------------------------------------
Change in accounting
policy (IAS19) - - -0.0 -4.3 -4.4
-------------------------------------------------------------------------------
Equity, revised*
1 Jan 2013 36.2 26.0 3.8 244.5 310.5
-------------------------------------------------------------------------------
Comprehensive income for the
period
Net profit for the period - - - 5.8 5.8
Other comprehensive income:
Cash flow hedge - 0.8 - - 0.8
Actuarial gains and losses - - - 5.9 5.9
Income tax relating to
other comprehensive
income - -0.3 0.6 -1.3 -1.0
Translation difference - 0.0 -29.7 - -29.7
-------------------------------------------------------------------------------
Comprehensive income for the
period total - 0.5 -29.1 10.4 -18.3
-------------------------------------------------------------------------------
Owners related transactions
Dividends paid and return
of equity - -6.0 - -7.6 -13.6
Share-based incentive - - 0.2 0.2
Purchase of own shares - - - -0.7 -0.7
-------------------------------------------------------------------------------
Owners related transactions
total - -6.0 - -8.1 -14.2
-------------------------------------------------------------------------------
Equity
31 Dec 2013 36.2 20.4 -25.3 246.8 278.1
-------------------------------------------------------------------------------
*) Revised standard IAS 19 Employyee benefits has been applied as of 1 January
2013
Comprised Consolidated Cash Flow Statement 1-12 1-12
(IFRS), EUR million 2013 2012
-------------------------------------------------------
Operating profit 21.0 25.8
Depreciation 25.7 18.8
Change in working capital 3.5 23.1
Cash flow from financial
items and taxes -13.8 -20.3
Other adjustments -6.7 -1.2
-------------------------------------------------------
Net cash flow from operating activities 29.8 46.1
Net cash flow from investing activities -97.8 -34.9
Net cash flow from financing activities 118.4 -77.3
Net change in cash and cash equivalents 50.4 -66.2
Cash and cash equivalents
at the beginning of the period 88.1 153.8
Foreign exchange rate differences -1.2 0.4
Net change in cash and cash equivalents 50.4 -66.2
-------------------------------------------------------
Cash and cash equivalents
at the end of the period 137.3 88.1
-------------------------------------------------------
Notes
Principal accounting policies as of 1 January 2013 (IFRS)
This interim report has been prepared in accordance with IFRS standards (IAS
34).
The accounting policies and calculation methods applied in the interim report
are the same as those in the 31 December 2012 annual financial statements,
excluding the standards and interpretation applied as of 1 January 2013 and
presented below. However, the interim report does not include all of the
information and notes present in the annual financial statements. Consequently,
the interim report should be read with the company's financial statements for
2012. The accounting policies of the 2012 and 2013 financial years are
comparable. The company has not discontinued any operations in 2012 or 2013 that
it should report.
The same principles of calculation have been used for the indicators in this
interim report as for those of the annual financial statements.
The figures in the interim report have been rounded independently.
New amendments that have been applied since 1 January 2013:
* Amendment to the standard IAS1 Presentation of Financial Statements
(effective in financial years beginning on or after 1 January 2013).
* Amendment to the standard IAS 19R (revised) Employee Benefits (effective in
financial years beginning on or after 1 January 2013).
* IFRS 13 Fair Value Measurement (effective in financial years beginning on or
after 1 January 2013).
The impact of the amendment of standard IAS 19 Employee benefits on the
consolidated result has been itemised below. The amendments of the other new
standards referred to above have had minor impact on the Group.
Two new indicators have been introduced in the second quarter of 2013: EBITDA
excluding non-recurring items and EBITDA. EBITDA excluding non-recurring items
is calculated as follows: operating profit excluding non-recurring items plus
depreciation and impairment excluding non-recurring items. EBITDA is calculated
as follows: operating profit plus depreciation and impairment. The quarterly
indicator for return on investment (ROI) and return on equity (ROE) is
annualised as follows: ((1+quarterly earnings)^4)-1).
The figures in this interim report are unaudited.
Amendment of the IAS 19 standard Employee benefits
The Oriola-KD Group has applied the standard IAS 19 Employee benefits as of 1
January 2013. The amendment impacts the Oriola-KD Group's pension costs and
result and the pension assets and obligations and equity on the balance sheet.
As a consequence of the amendment, the 2012 consolidated profit and loss account
and balance sheet have been updated as required by the revised standard.
The key amendments of the standards IAS 19R (revised) Employee benefits are that
all actuarial gains and losses must be recognised immediately in other
comprehensive income and that expected yield from assets no longer depends on
investment distribution. The discount rate used in the calculation of pension
debt is used as the expected yield of investments. The corridor method will no
longer be used and financing expenditure will be the sum of net interest rates.
The net interest rate is the difference between the interest rate costs of
pension debt and the interest rate income from assets. Despite the amendment,
the Group has decided to recognise the sum of net interest rate in personnel
expenses.
With the implementation of the revised standard IAS 19 Employee benefits, the
Oriola-KD Group's operating profit excluding non-recurring items, operating
profit and profit for the financial year 2012 and, on the balance sheet, the
pension assets and equity are smaller and pension obligation is larger than when
calculated in accordance with the standard in force up to 31 December 2012. The
impact of the implementation on consolidated operating profit excluding non-
recurring items and operating profit for 2012 is EUR 1.0 million. The impact on
Group equity on the 2012 opening balance sheet is EUR -4.8 million and EUR -4.4
million on the 31 December 2012 balance sheet due to the recognition of
actuarial gains and losses and their tax effect on equity on the consolidated
balance sheet. The following tables present a summary of the key figures
following the amendment of the accounting policy.
1-3 1-6 1-9 1-12
EUR million 2012 2012 2012 2012
--------------------------------------------------------------------------
Operating profit excluding non-recurring items 5.2 9.2 16.4 26.8
Operating profit 5.2 9.2 15.3 25.8
Profit before taxes 2.5 4.5 8.4 20.5
Profit for the period 1.3 2.8 5.0 16.4
Comprehensive profit for the period 15.5 6.6 17.8 27.9
Earnings per share to shareholders of
the parent company on the profit for the period, EUR
Diluted, EUR 0.01 0.02 0.03 0.11
Adjusted for the dilution effect, EUR 0.01 0.02 0.03 0.11
1-3 4-6 7-9 10-12 1-12
EUR million 2012 2012 2012 2012 2012
-----------------------------------------------------------------------------
Operating profit excluding non-recurring items 5.2 4.0 7.2 10.5 26.8
Operating profit 5.2 4.0 6.2 10.5 25.8
Profit before taxes 2.5 2.0 4.0 12.0 20.5
Profit for the period 1.3 1.5 2.1 11.4 16.4
Comprehensive profit for the period 15.5 -8.8 11.2 10.1 27.9
Earnings per share for shareholders of
the parent company on the profit for the period,
EUR
Diluted, EUR 0.01 0.01 0.01 0.08 0.11
Adjusted for the dilution effect, EUR 0.01 0.01 0.01 0.08 0.11
EUR million 31 Mar 2012 30 Jun 2012 30 Sep 2012 31 Dec 2012
-----------------------------------------------------------------------------
Non-current pension assets 4.3 4.1 3.8 6.6
Non-current pension
obligations 7.8 7.9 8.3 9.7
Equity of the parent
company's shareholders 297.9 289.2 300.4 310.5
Change in Property, Plant and Equipment, 1-12 1-12
EUR million 2013 2012
----------------------------------------------------------------
Carrying amount at the beginning of the period 81.4 74.0
Increases through acquisitions of subsidiary shares 8.0 -
Increases 22.4 16.6
Decreases -1.4 -0.5
Depreciation -14.8 -11.1
Foreign exchange rate differences -2.4 2.4
----------------------------------------------------------------
Carrying amount at the end of the period 93.2 81.4
----------------------------------------------------------------
Derivatives,
Commitments
and Contingent
Liabilities
31 Dec 2013
Positive fair Negative fair Nominal values of
EUR million value value contracts
Derivatives
recognised
as cash flow hedges
Interest rate swaps - -0.3 45.2
Derivatives
measured at
fair value through
profit and loss
Foreign currency
forward and swap
contracts 0.8 - 159.3
31 Dec 2012
Positive fair Negative fair Nominal values of
EUR million value value contracts
Derivatives
recognised
as cash flow hedges
Interest rate swaps - -1.0 46.6
Derivatives
measured at
fair value through
profit and loss
Foreign currency
forward and swap
contracts 3.2 - 139.3
Interest rate swaps - -0.0 116.5
Derivatives measured at fair value through profit and loss are mainly related
to hedging of the Group's internal transactions. Fair values of the
derivatives have been booked to balance sheet in gross amount as the
derivatives contracts are related to credit events and cannot be netted in
financial statements. The Group has not given nor received collateral to/from
derivatives counterparties.
Fair value hierarchy
EUR million
31 Dec 2013 Level 1 Level 2 Level 3 Total
-----------------------------------------------------------
Assets
Derivatives measured at fair
value through profit and
loss - 1.1 - 1.1
Liabilities
Derivatives
designated as hedges - 0.3 - 0.3
Derivatives measured at fair
value through profit and
loss - 0.4 - 0.4
Contingent
consideration - - 14.6 14.6
-----------------------------------------------------------
EUR million
31 Dec 2012 Level 1 Level 2 Level 3 Total
-----------------------------------------------------------
Assets
Derivatives measured at fair
value through profit and
loss - 3.2 - 3.2
Liabilities
Derivatives
designated as hedges - 1.0 - 1.0
Derivatives measured at fair
value through profit and
loss - 0.1 - 0.1
-----------------------------------------------------------
Level 1: Quoted
prices (unadjusted) in active markets for identical assets or liabilities.
Level 2: Inputs other than quoted prices included within level 1 that are
observable for the asset or liability, either directly (i.e. as prices) or
indirectly (i.e. derived from prices).
Level 3: Inputs for the asset or liability that are not based on observable
market data (i.e. unobservable inputs).
Reconciliation of financial liabilities recognised at fair value through profit
and loss according to the level 3 in the year 2013
EUR million
Carrying amount 31 Dec 2012 -
Bookings from contingent consideration 14.1
Bookings to financial expenses 0.5
--------------------------------------------
Carrying amount 31 Dec 2013 14.6
--------------------------------------------
Financial liabilities recognised at fair value through profit and loss (level
3) include estimated discounted fair value of a contingent consideration related
to the Medstop acquisition. Payment of the contingent consideration will be
based on 2015 EBITDA of Oriola-KD's combined Swedish retail businesses and will
be paid in first quarter of 2016. The fair value of the contingent consideration
has been calculated using discounted cash flow method. The discount rate used in
the valuation is determined using the weighted average cost of capital of the
Group.
Contingencies for Own Liabilities
EUR million 31 Dec 2013 31 Dec 2012
--------------------------------------------------------------------
Guarantees given 21.3 21.4
Mortgages on land and buildings - 2.0
Mortgages on company assets 2.4 2.4
Other guarantees and liabilities 0.9 0.8
--------------------------------------------------------------------
Total 24.6 26.7
--------------------------------------------------------------------
Leasing liabilities (operating liabilities) 2.6 2.8
Rent liabilities 77.0 66.9
The most significant guarantees are bank guarantees against trade payables in
wholesale companies in
Russia and Sweden. In addition, Oriola-KD Corporation has granted parent
company guarantees of EUR
26.4 (14.2) million against subsidiaries' trade payables and EUR 153.6 million
against Oriola-KD Holding
Sverige AB's external loan.
Provisions
On 31 December 2013 Oriola-KD had restructuring provisions totalling EUR 3,0
(0.0) million related to restructuring costs incurred by the Swedish wholesale
business in connection with the integration and efficiency programme of the
Medstop acquisition.
Related parties
Related parties in the Oriola-KD Group are deemed to comprise the members of the
Board of Directors and the President and CEO of Oriola-KD Corporation, the other
members of the Group Management Team of the Oriola-KD Group, the immediate
family of the aforementioned persons, the companies controlled by the
aforementioned persons, and the Oriola Pension Fund. The Group has no
significant business transactions with related parties, except for pension
expenses arising from defined benefit plans with the Oriola Pension Fund.
1-12 1-12
Number of personnel 2013 2012
---------------------------------------------------------
Average number of personnel 5,135 4,818
Number of personnel at the end of the period 5,256 4,856
SEGMENT INFORMATION
1-12 1-12
Net Sales, EUR million 2013 2012
-------------------------------------------------------------------------------
Pharmaceutical Trade
Finland and Baltics 425.3 460.5
Pharmaceutical Trade Sweden 1,194.4 1,061.3
Pharmaceutical Trade Russia 978.8 952.7
Net sales to other segments -0.0 -0.0
-------------------------------------------------------------------------------
Group total 2,598.5 2,474.4
1-12 1-12
Operating Profit, EUR million 2013 2012
-------------------------------------------------------------------------------
Pharmaceutical Trade
Finland and Baltics 20.9 20.8
Pharmaceutical Trade Sweden 18.4 15.1
Pharmaceutical Trade Russia -8.3 -2.3
Group Administration and Others -10.0 -7.8
-------------------------------------------------------------------------------
Group total 21.0 25.8
Operating Profit excl. Non-recurring
items, 1-12 1-12
EUR million 2013 2012
-------------------------------------------------------------------------------
Pharmaceutical Trade
Finland and Baltics 20.9 20.8
Pharmaceutical Trade Sweden 26.1 16.2
Pharmaceutical Trade Russia -8.0 -2.3
Group Administration and Others -10.0 -7.8
-------------------------------------------------------------------------------
Operating Profit excl. Non recurring
items 29.0 26.8
Non-recurring items * -8.0 -1.1
-------------------------------------------------------------------------------
Group total 21.0 25.8
*) Pharmaceutical Trade Sweden restructuring expenses EUR -1.7 million and
Pharmaceutical Trade Russia restructuring expenses EUR -0,3 million in
Q4/2013, Pharmaceutical Trade Sweden restructuring expenses EUR -2,0 million
in Q3/2013, Pharmaceutical Trade Sweden restructuring expenses EUR -0,8
million and a write-off of contract-based accrual EUR -3.2 million in Q2/2013
and a receivable write-off EUR -1.1 million in Q3/2012.
Q4/ Q3/ Q2/ Q1/ Q4/ Q3/ Q2/ Q1/
Quarterly Net
Sales, EUR
million 2013 2013 2013 2013 2012 2012 2012 2012
----------------------------------------------------------------
Pharmaceutical
Trade
Finland and
Baltics 109.4 96.0 112.5 107.5 118.3 108.7 116.6 116.8
Pharmaceutical
Trade Sweden 300.5 315.7 304.5 273.7 292.4 254.1 255.9 258.9
Pharmaceutical
Trade Russia 269.8 242.7 235.2 231.1 296.9 223.3 217.3 215.2
Net sales to
other segments 0.0 0.0 0.0 0.0 0.2 0.0 -0.1 0.0
----------------------------------------------------------------
Group total 679.6 654.4 652.1 612.3 707.8 586.1 589.7 590.8
Q4/ Q3/ Q2/ Q1/ Q4/ Q3/ Q2/ Q1/
Quarterly
Operating
Profit, EUR
million 2013 2013 2013 2013 2012 2012 2012 2012
----------------------------------------------------------------
Pharmaceutical
Trade
Finland and
Baltics 4.8 5.7 5.7 4.8 5.2 6.1 4.8 4.6
Pharmaceutical
Trade Sweden 6.7 6.6 1.3 3.8 4.6 3.7 3.4 3.4
Pharmaceutical
Trade Russia 0.5 -1.9 -3.4 -3.6 3.1 -2.0 -2.2 -1.1
Group
Administration
and Others -1.6 -1.8 -4.0 -2.6 -2.4 -1.6 -2.0 -1.8
----------------------------------------------------------------
Group total 10.4 8.6 -0.3 2.3 10.5 6.2 4.0 5.2
Quarterly
Operating
Profit, Q4/ Q3/ Q2/ Q1/ Q4/ Q3/ Q2/ Q1/
excl. Non-
recurring
items, EUR
million 2013 2013 2013 2013 2012 2012 2012 2012
----------------------------------------------------------------
Pharmaceutical
Trade
Finland and
Baltics 4.8 5.7 5.7 4.8 5.2 6.1 4.8 4.6
Pharmaceutical
Trade Sweden 8.4 8.6 5.4 3.8 4.6 4.8 3.4 3.4
Pharmaceutical
Trade Russia 0.8 -1.9 -3.4 -3.6 3.1 -2.0 -2.2 -1.1
Group
Administration
and Others -1.6 -1.8 -4.0 -2.6 -2.4 -1.6 -2.0 -1.8
----------------------------------------------------------------
Group total
excl. Non-
recurring
items 12.4 10.6 3.7 2.3 10.5 7.2 4.0 5.2
Non-recurring
items * -2.0 -2.0 -4.0 - - -1.1 - -
----------------------------------------------------------------
Group total 10.4 8.6 -0.3 2.3 10.5 6.2 4.0 5.2
*) Pharmaceutical Trade Sweden restructuring expenses EUR -1.7
million and Pharmaceutical Trade Russia restructuring expenses
EUR -0,3 million in Q4/2013, Pharmaceutical Trade Sweden
restructuring expenses EUR -2,0 million in Q3/2013,
Pharmaceutical Trade Sweden restructuring expenses EUR -0,8
million and a write-off of contract-based accrual EUR -3.2
million in Q2/2013 and a receivable write-off EUR -1.1 million
in Q3/2012.
1-12 1-12
Net Sales by Market, EUR million 2013 2012
-------------------------------------------------
Finland 382.9 422.4
Sweden 1135.0 1028.8
Russia 978.8 952.7
Baltic countries 38.8 34.6
Other countries 63.0 35.9
-------------------------------------------------
Group total 2,598.5 2,474.4
1-12
Quarterly Net
Sales by
Market, EUR
million Q4/2013 Q3/2013 Q2/2013 Q1/2013 Q4/2012 Q3/2012 Q2/2012 Q1/2012
-------------------------------------------------------------------------------
Finland 98.2 85.3 102.5 96.8 107.8 99.7 107.6 107.4
Sweden 283.0 303.5 289.5 259.0 282.6 244.7 249.3 252.2
Russia 269.8 242.7 235.2 231.1 296.9 223.3 217.3 215.2
Baltic
countries 10.0 9.1 9.6 10.0 9.4 8.6 8.1 8.4
Other
countries 18.7 13.7 15.3 15.4 11.0 10.0 7.4 7.5
-------------------------------------------------------------------------------
Group total 679.6 654.4 652.1 612.3 707.8 586.1 589.7 590.8
ACQUIRED
BUSINESSES 2013
Medstop pharmacy chain
Oriola-KD acquired the entire capital stock of Medstop Group Holding AB,
Sweden's fifth biggest pharmacy chain, on 3 June 2013. The Medstop pharmacy
chain had a total of 67 pharmacies located in shopping centres and city centre
locations in Stockholm, Gothenburg and Malmö. The business operations of the
pharmacy chain acquired by Oriola-KD only involve pharmaceutical retail business
and they are reported in the Pharmaceutical Trade Sweden segment.
The acquisition cost calculation is based on the company's preliminary balance
sheet on 31 May 2013, the essential parts of which have prepared in accordance
with the IFRS's accounting principles.
The acquisition has been entered in the books on a preliminary basis, as
permitted under IFRS 3R (revised). Oriola-KD will make the necessary
adjustments to these preliminary assessments during the 12 months following the
acquisition date.
The preliminary booked goodwill of EUR 129.9 million is the value of Medstop's
experienced personnel, synergy benefits that can be achieved in purchasing
operations, storage and pharmacy distribution and growth expectations. The
goodwill entered in the books is not tax-deductible.
The original acquisition cost calculation made in Swedish krona (SEK) has been
converted into euros on the basis of the exchange rate of 31 May 2013. The
results and balance sheet of Medstop have been consolidated into Oriola-KD as of
1 June 2013.
The table below provides a summary of the consideration paid for the pharmacy
chain and the fair values of the assets and liabilities entered in the books on
the acquisition date.
AQUISITIONS 2013
Aquisition cost, EUR million
Cash 79.2
Contingent liability 14.5
-------------------------------------------------------------------------------
Total aquisition cost 93.7
Recognized amounts of identifiable assets aquired and liabilities
assumed, EUR million Fair value
Property,plant and equipment 7.4
Intangible assets 28.0
Deferred tax assets 3.9
Inventories 18.3
Trade and other receivables 18.4
Cash and cash equivalents 8.9
-------------------------------------------------------------------------------
Assets total 85.0
Deferred tax liabilities 6.2
Trade payables and other current liabilities 30.3
Provisions 0.9
Borrowings 83.8
-------------------------------------------------------------------------------
Liabilities total 121.1
Total identifiable net assets -36.1
Goodwill 129.9
Total 93.7
EUR 1.7 million in acquisition-related costs are included in administrative
expenses in the 2013 consolidated income statement.
The contingent consideration will be paid in the first quarter of 2016. Payment
of the contingent consideration is based on the estimate on Oriola-KD's combined
Swedish retail businesses 2015 EBITDA made by the management.
The contingent consideration has been booked in the balance sheet as financial
liability recognised at fair value through profit and loss and the fair value of
the contingent consideration has been calculated using discounted cash flow
method. The discount rate used in the valuation is determined using the weighted
average cost of capital of the Group.
The estimated net sales of the Group in the period 1 January-31 December 2013
would have been EUR 2,707.4 (reported 2,598.5) million and the operating profit
EUR 25.7 (reported 21.0) million if the acquisition had been made at the start
of 2013.
The impact of the acquired business on the Group's net sales in the period 1
June-31 December 2013 is EUR 144.4 million and on the operating profit EUR -4,8
million.
The following tables include certain illustrative unaudited financial
information of Oriola-KD Corporation and Pharmaceutical Trade Sweden assuming
that the acquisition had taken place 1 January, 2012.
The unaudited illustrative financial information have been derived from the
audited Oriola-KD Corporation and Medstop Group Holding AB financial statements
for the period 1 January-31 December 2012 and from the Oriola-KD Corporation
interim report 1 January-31 December 2013 and from Medstop Group Holding AB
unaudited financial information for the five month period ending 30 May 2013.
Pharmaceutical Pharmaceutical
Trade Sweden Trade
excluding Medstop Group Adjustments Sweden
Income
Statement, to
EUR million Medstop, revised * Holding AB acquisition including Medstop
1-12 1-12 1-12 1-12 1-12 1-12 1-12 1-12
2013 2012 2013 2012 2013 2012 2013 2012
-------------------------------------------------------------------------------
Net sales 1,050.0 1,061.3 253.3 260.2 - - 1,303.3 1,321.5
EBITDA
excluding
non-recurring
items 36.5 26.4 10.4 11.3 2.3 -2.3 49.2 35.4
Operating
Profit
excluding
non-recurring
items 30.9 16.2 -0.8 8.4 1.5 -4.1 31.7 20.5
Operating
Profit 23.2 15.2 -1.6 7.2 1.5 -4.1 23.1 18.4
Oriola-KD Group Medstop Group Adjustments Oriola-KD Group
Income
Statement, excluding Medstop, to
EUR million revised * Holding AB acquisition including Medstop
1-12 1-12 1-12 1-12 1-12 1-12 1-12 1-12
2013 2012 2013 2012 2013 2012 2013 2012
-------------------------------------------------------------------------------
Net sales 2,454.0 2,474.4 253.3 260.2 - 0.0 2,707.4 2,734.6
EBITDA
excluding
non-recurring
items 48.2 45.6 10.4 11.3 2.3 -2.3 60.8 54.6
Operating
Profit
excluding
non-recurring
items 33.8 26.8 -0.8 8.4 1.5 -4.1 34.5 31.1
Operating
Profit 25.8 25.8 -1.6 7.2 1.5 -4.1 25.7 29.0
*) Revised standard IAS 19 Employyee benefits has been applied as of 1 January
2013
Adjustments to acquisition include the additional depreciation charge relating
to the fair value adjustments of identifiable assets acquired as well as the
realisation of inventory fair value step-up in one month following the period of
acquisition. In addition, acquisition related costs have been considered in the
adjustments.
Espoo 6 February 2014
Board of Directors of Oriola-KD Corporation
Oriola-KD Corporation
Eero Hautaniemi
President and CEO
Tuomas Itkonen
CFO
Further information:
Eero Hautaniemi
President and CEO
tel. +358 (0)10 429 2109
e-mail: eero.hautaniemi@oriola-kd.com
Tuomas Itkonen
CFO
tel. +358 (0)40 5964 004
e-mail: tuomas.itkonen@oriola-kd.com
Distribution
NASDAQ OMX Helsinki Ltd
Key media
Released by:
Oriola-KD Corporation
Corporate Communications
Orionintie 5
FI-02200 Espoo
www.oriola-kd.com
[HUG#1760411]
UPDATE: Correction to Oriola-KD Corporation's Financial Statements Release 2013
| Source: Oriola-KD Oyj
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