2009-10-29 07:30:00 CET
2009-10-29 07:32:08 CET
REGULATED INFORMATION
Oriola-KD Oyj - Interim report (Q1 and Q3)
Oriola-KD Corporation's interim report for 1 January - 30 September 2009
Oriola-KD Corporation Stock Exchange Release 29 October 2009 at 8.30
a.m.
This review presents the financial information for the Oriola-KD
Group (hereinafter Oriola-KD) for the period January-September 2009.
As of 1 January 2009, the company has applied the revised IAS 1
standard and the IFRS 8 standard. This interim report was drawn up in
accordance with the IAS 34 standard and Oriola-KD's new segmentation.
The retail and wholesale businesses OOO Vitim & Co and OOO Moron,
acquired in Russia, have been consolidated into Oriola-KD's accounts
since 1 April 2008. The figures are unaudited.
Key figures for 1 January - 30 September 2009
* Net sales increased 8 per cent to EUR 1226.6 million (Jan-Sep
2008: EUR 1131.7 million).
* Operating profit increased 87 per cent to EUR 38.5 million
(Jan-Sep 2008: EUR 20.6 million).
* Net profit increased 90 per cent to EUR 28.7 million (Jan-Sep
2008: EUR 15.1 million).
* Earnings per share were EUR 0.20 (Jan-Sep 2008: EUR 0.11).
* Net cash flow from operations was EUR 6.4 million (Jan-Sep 2008:
EUR -22.6 million)
* Return on capital employed was 15.5 per cent (Jan-Sep 2008: 13.4
per cent)
* Oriola-KD's net sales for 2009 is forecast to be higher than in
2008, while its operating profit is forecast to be substantially
higher.
Key figures for 1 July - 30 September 2009
* Net sales increased 3 per cent to EUR 410.8 million (Q3/2008: EUR
398.4 million).
* Operating profit increased 60 per cent to EUR 12.6 million
(Q3/2008: EUR 7.9 million).
* Net profit increased 83 per cent to EUR 10.0 million (Q3/2008:
EUR 5.4 million).
* Earnings per share were EUR 0.07 (Q3/2008: EUR 0.04).
President and CEO Eero Hautaniemi: "Oriola-KD's business developed
positively in January-September 2009. Net sales were up by 8 per cent
and operating profit increased by 87 per cent on the previous year.
In the final quarter of 2009, we will focus especially on developing
the Russian business, launching pharmacy operations in Sweden and
streamlining the Group structure."
Financial performance
Oriola-KD's net sales in January-September 2009 was EUR 1226.6
million (EUR 1131.7 million) and third quarter net sales were EUR
410.8 million (EUR 398.4 million).
Operating profit for January-September 2009 came to EUR 38.5 million
(EUR 20.6 million) and profit after financial items came to EUR 36.7
million (EUR 20.2 million). Third-quarter operating profit came to
EUR 12.6 million (EUR 7.9 million) and profit after financial items
came to EUR 12.6 million (EUR 7.3 million).
Oriola-KD invested in developing its business in Russia, preparing
for the change in Sweden's pharmacy market and improving its
operating efficiency. The costs incurred in the preparations made for
the change in the pharmacy market in Sweden came to EUR 8.0 million
in January-September, of which EUR 2.0 million was recorded in the
third quarter.
Oriola-KD's financing expenses in January-September 2009 were EUR 1.8
million. A financing expense of EUR 0.4 million was recorded for the
corresponding period in 2008. The increase was mainly due to the
execution of the Russian acquisition in April 2008.
Taxes for January-September 2009 came to EUR 8.0 million (EUR 5.1
million). Taxes corresponding to the result for the period are
entered under this figure.
Net profit in January-September 2009 was EUR 28.7 million (EUR 15.1
million). Third-quarter net profit was EUR 10.0 million (EUR 5.4
million).
Oriola-KD's earnings per share in January-September 2009 were EUR
0.20 (EUR 0.11), and EUR 0.07 (EUR 0.04) in the third quarter.
Return on capital employed in January-September 2009 was 15.5 per
cent (13.4 per cent) and return on equity 18.9 per cent (10.0 per
cent).
Balance sheet, financing and cash flow
Oriola-KD's balance sheet total on 30 September 2009 stood at EUR
855.5 million (EUR 796.7 million). Cash assets at the end of
September 2009 were at EUR 52.3 million (EUR 20.4 million), and
equity was EUR 219.7 million (EUR 196.9 million). Oriola-KD's equity
ratio was 26.4 per cent (25.3 per cent). The weakening of the Swedish
krona (SEK) and the Russian ruble (RUB) decreased Oriola-KD's equity
in comparison on the corresponding period in 2008.
Interest-bearing net debt at the end of September 2009 was EUR 97.1
million (EUR 39.0 million) and the gearing ratio was 44.2 per cent
(19.8 per cent). Interest-bearing debt, which at the end of September
was EUR 149.4 million (EUR 59.4 million), comprised some EUR 77
million from the commercial paper programme, some EUR 22 million from
pharmacy advance payments in Finland and the debt of approximately
EUR 49 million from the anticipated final price for the remaining 25
per cent holding in the Russian companies. Oriola-KD has a EUR 150
million commercial paper programme. Oriola-KD's bank credit
facilities of approximately EUR 79 million stood unused at the end of
the review period.
Net cash flow from operations in January-September 2009 was EUR 6.4
million (EUR -22.6 million), of which changes in working capital
accounted for EUR -26.2 million (EUR -43.3 million). Working capital
increased largely because of the growth of the Russian companies and
the seasonal increase in working capital in Finland associated with
the first quarter. Net cash flow from investments was EUR -29.6
million (EUR -76.0 million), including the additional sum of EUR 21.7
million paid for the 75 per cent holding in the Russian companies.
During the January-September 2009 period, cash flow after investments
was EUR -23.2 million (EUR -98.5 million). Cash flow from financing
includes a dividend of EUR 11.3 million paid in May and the directed
issue of EUR 20.6 million carried out in June.
Investments
Investments in January-September 2009 came to EUR 31.5 million (EUR
112.3 million), mostly associated with the increase of the
anticipated final price of the Russian companies, the acquisition of
the minority holding in Kronans Droghandel AB in Sweden and operating
investments in maintenance and PPE.
Staff
On 30 September 2009, Oriola-KD had a payroll of 4254 (4696 )
employees, 15 per cent (14 per cent) of whom worked in Finland, 9 per
cent (8 per cent) in Sweden, 71 per cent (73 per cent) in Russia and
5 per cent (5 per cent) in the Baltic countries and Denmark combined.
Operating segments
In accordance with its organisational structure and internal
reporting, Oriola-KD's business segments are Pharmaceutical Trade
Finland, Pharmaceutical Trade Sweden, Pharmaceutical Trade Russia,
Pharmaceutical Trade Baltic Countries, Healthcare Trade and Dental
Trade.
Changes in Oriola Oy's corporate structure
In the third quarter, Oriola-KD started preparations for the partial
demerger of Oriola Oy's Nordic business operations. In the demerger,
Pharmaceutical Trade will continue under Oriola Oy and the Healthcare
Trade business will be transferred to a new company named Oriola-KD
Healthcare Oy. The demerger will take place at the beginning of
2010, following which Oriola-KD Corporation will have two fully owned
Finnish subsidiaries that are engaged in business: Oriola Oy and
Oriola-KD Healthcare Oy. The demerger will simplify the corporate
structure and increase the efficiency of managing business
operations. It is a follow-on to the structural changes carried out
earlier in Sweden. The change will have no impact on Oriola-KD's
operating segments.
Pharmaceutical Trade Finland
Pharmaceutical Trade Finland's net sales in January-September 2009
were EUR 378.9 million (EUR 389.4 million) and its operating profit
was EUR 13.7 million (EUR 11.9 million). Third-quarter net sales came
to EUR 120.4 million (EUR 129.1 million) and operating profit to EUR
4.9 million (EUR 4.8 million).
The Finnish pharmaceutical market expanded by 0.0 per cent (6.7 per
cent) in January-September 2009. The introduction of the reference
price system in Finland at the beginning of April 2009 is impeding
the growth of net sales of the Pharmaceutical Trade Finland business
segment in 2009. Oriola-KD's market share in the Finnish wholesale
market was 46.9 percent (47.8 per cent) in January-September 2009
(source: IMS Health). No significant changes took place in
distribution agreements in Finland during the review period.
At the end of September 2009, 460 (433) people were employed by
Pharmaceutical Trade Finland.
Pharmaceutical Trade Sweden
Pharmaceutical Trade Sweden's net sales in January-September 2009
were EUR 388.1 million (EUR 410.0 million) and its operating profit
was EUR -2.8 million (EUR 4.7 million). Third-quarter net sales came
to EUR 131.8 million (EUR 129.2 million) and operating profit to EUR
-0.4 million (EUR 1.4 million).
Net sales were reduced by a decline in Oriola-KD's market share and
the weakening of the Swedish krona (SEK). The costs incurred in the
preparations made for the change of the pharmacy market in Sweden
came to EUR 8.0 million in January-September, of which EUR 2.0
million was recorded in the third quarter. Of the total project
costs, EUR 0.6 million has been recorded for the Group. Excluding
these project costs, Pharmaceutical Trade Sweden's operating profit
in January-September 2009 was EUR 4.6 million.
The pharmaceutical market grew 2.6 per cent (4.9 per cent) in Sweden
in January-September 2009. Oriola-KD's market share in the Swedish
wholesale market was 41.4 per cent (44.0 per cent) in
January-September 2009 (source: IMS Health). The pharmaceutical
manufacturers Schering-Plough and Organon discontinued as
pharmaceutical principals for Oriola-KD in Sweden during the period
under review.
On 29 April 2009, the Swedish Parliament decided that the country's
pharmacy monopoly would be dismantled as of 1 July 2009. The
deregulation of the pharmacy market makes it possible for other
operators than Apoteket AB to engage in the pharmacy business in
Sweden. With the deregulation, 466 pharmacies will be sold to large
and medium-sized companies, while 150 pharmacies remaining in state
ownership will be later sold to small entrepreneurs. Apoteket AB will
retain ownership of 330 pharmacies.
On 15 June 2009, Oriola-KD and the Swedish KF (Kooperativa Förbundet)
announced that they will be joining forces on the deregulated
pharmacy market. This will include preparation for the sales process
of the pharmacy clusters owned by Apoteket AB and the founding of new
pharmacies mostly in connection with the Coop hypermarkets and
supermarkets owned by KF. The purpose is to set up a joint venture
in which Oriola-KD would hold a simple majority and be responsible
for the development and management of the pharmacy chain. The joint
venture would engage in the pharmacy business under the Kronans
Droghandel brand.
Pharmaceutical Trade Sweden had 277 (241) employees at the end of
September 2009.
Pharmaceutical Trade Russia
Pharmaceutical Trade Russia's net sales in January-September 2009
were EUR 332.5 million (pro forma EUR 287.6 million) and its
operating profit was EUR 22.8 million (pro forma EUR -1.6 million).
Third-quarter net sales came to EUR 118.6 million (EUR 97.9 million)
and operating profit to EUR 6.6 million (EUR 0.3 million). The retail
and wholesale businesses OOO Vitim & Co and OOO Moron, acquired in
Russia, have been consolidated into Oriola-KD's accounts since 1
April 2008. The investments in expansion, efficiency improvements and
development of the business in Russia had a positive impact on the
January-September 2009 operating profit.
The Russian pharmaceutical market expanded by some 20 per cent and
Oriola-KD's net sales by more than 40 per cent in Russian rubles
(RUB) in January-September 2009 compared with the corresponding
period in 2008. Oriola-KD maintained 170 (140) pharmacies in the
Moscow region at the end of September 2009. Pharmaceutical wholesale
operations were launched in the third quarter in Rostov-on-Don in
southern Russia.
In April 2009, Henry Fogels was appointed managing director of the
pharmaceutical retail company (OOO Vitim & Co), and Vladimir Kniazev
was appointed managing director of the pharmaceutical wholesale
company (OOO Moron). Igor and Oleg Yankov, the founders and current
minority shareholders of the two companies, will continue as members
of the Boards of Vitim and Moron.
Pharmaceutical Trade Russia had 3011 (3459) employees at the end of
September 2009.
Pharmaceutical Trade Baltic Countries
Pharmaceutical Trade Baltic Countries' net sales in January-September
2009 were EUR 25.4 million (EUR 28.1 million) and the operating
profit was EUR 0.6 million (EUR 0.8 million). Third-quarter net sales
came to EUR 8.0 million (EUR 8.4 million) and operating profit to EUR
0.2 million (EUR 0.2 million). The Baltic market was challenging,
which had a negative effect on net sales and operating profit.
Pharmaceutical Trade Baltic Countries had 140 (164) employees at the
end of September 2009.
Healthcare Trade
Healthcare Trade net sales in January-September 2009 were EUR 101.7
million (EUR 112.6 million) and operating profit was EUR 6.6 million
(EUR 6.2 million). Third-quarter net sales came to EUR 31.9 million
(EUR 33.8 million) and operating profit to EUR 1.9 million (EUR 1.8
million). The sale of the Finnish ConvaTec wound and stoma care
business to the manufacturer of the products in the second quarter
improved the January-September operating profit. Healthcare Trade's
business in Sweden has developed favourably in 2009.
The Healthcare Trade business segment had a payroll of 367 (399)
employees on 30 September 2009.
Dental Trade
Dental Trade operating profit in January-September 2009 came to EUR
2.6 million (EUR 1.3 million) and in the third quarter to EUR 0.8
million (EUR 0.3 million). The operating profit improved mainly as a
result of the positive trend in the Finnish, Swedish and Danish
businesses.
The dental trade businesses of Oriola-KD Corporation and Lifco AB
were combined in 2007. Oriola-KD's holding in the Dental Trade
business is 30 per cent, while that of Lifco is 70 per cent.
Related parties
Related parties in the Oriola-KD Group are deemed to comprise the
parent company Oriola-KD Corporation, the subsidiaries and associated
companies, the members of the Board and the President and CEO of
Oriola-KD Corporation, 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 Foundation. The Group has no significant business
transactions with related parties, except for pension expenses
arising from defined benefit plans with the Oriola Pension
Foundation. The notes to the financial statements of Oriola-KD
Corporation provide additional information on intra-Group liabilities
and sureties given on behalf of Group companies. Oriola-KD
Corporation has given no significant sureties on behalf of Group
companies.
Oriola-KD Corporation shares
Trading volume of the Oriola-KD Corporation's Class A and B shares in
January-September 2009:
Trading volume Jan-Sep 2009 Jan-Sep 2008
Class A Class B Class A Class B
Trading volume, million 6.1 83.6 3.2 28.7
Trading volume, EUR million 15.0 214.4 8.5 79.1
Highest, EUR 4.15 4.20 3.03 3.10
Lowest, EUR 1.29 1.30 2.00 1.94
Closing quotation, end of period, EUR 4.10 4.13 2.00 2.00
In the review period, the traded volume of Oriola-KD Corporation
shares, excluding treasury shares, corresponded to 61.7 per cent
(22.5 per cent) of the total number of shares. The traded volume of
class A shares amounted to 12.6 per cent (6.3 per cent) of the
average stock, and that of class B shares, excluding treasury shares,
86.1 per cent (31.4 per cent).
Oriola-KD Corporation's market capitalisation on 30 September 2009
was EUR 623.3 million (EUR 283.8 million).
On 19 March 2009, pursuant to the authorisation granted to it by the
Annual General Meeting of 13 March 2007, the Board of Directors of
Oriola-KD Corporation resolved that a directed bonus issue be made,
in which a total of 150,480 class B shares held by the company were
assigned to the company's President and CEO and to certain other
members of Oriola-KD Corporation's Group Management Team and of its
extended Group Management Team, as part of the Group's share-based
incentive scheme for senior management. These shares represent
approximately 0.11 per cent of the total number of company shares and
approximately 0.01 per cent of the total number of votes.
Following the share issues, the company has 343,472 treasury shares,
all of which are class B shares. These account for 0.23 per cent of
the company's shares and 0.03 per cent of the votes.
On 3 June 2009, Oriola-KD Corporation's Board of Directors decided on
a directed issue of shares under an authorisation granted by the
Annual General Meeting of 16 April 2009, issuing 9,350,000 new class
B shares to institutional investors. The new class B shares in the
directed issue have been entered in the Trade Register and they were
listed for public trading on NASDAQ OMX Helsinki Ltd on 8 June 2009
with the old class B shares. Following the share issue the company
had a total of 151,257,828 shares, of which class A shares account
for 48,392,203 and class B shares for 102,865,625.
On 26 June 2009, Varma Mutual Pension Insurance Company executed
share transactions as a result of which the votes conferred by its
Oriola-KD Corporation shares exceeded one twentieth (1/20) of the
total votes as referred to in Chapter 2, section 9, of the Securities
Markets Act. The direct share holding of Varma Mutual Pension
Insurance Company by share class on 26 June 2009 was 3.56 per cent of
Oriola-KD Corporation shares and 5.21 per cent of the votes conferred
by the shares.
At the end of September 2009, the company had a total of 151,257,828
(141,907,828) shares, of which 47,967,359 (48,692,203) were class A
shares and 103,290,469 were class B shares (93,215,625). Pursuant to
article 3 of the Articles of Association, a shareholder can request
that class A shares be converted to class B shares. During
January-September 2009, a total of 724,844 (2,553,202) Class A shares
have been converted into Class B shares
Decisions of the Annual General Meeting
The Annual General Meeting of Oriola-KD Corporation, held on 16 April
2009, confirmed the 2008 financial statements and discharged the
Board members and the President and CEO from liability for the
financial year ending 31 December 2008.
The Annual General Meeting resolved that the sum of EUR 0.08 per
share be paid as dividend on the basis of the balance sheet adopted
for the financial year ending 31 December 2008. The dividend was paid
to those who, on the dividend distribution record date of 21 April
2009, were entered as shareholders of the company in the company's
shareholder register kept by Euroclear Finland Ltd. The dividend
payment date was 15 May 2009.
The Annual General Meeting confirmed that the Board would continue to
comprise seven members. Harry Brade, Pauli Kulvik, Outi Raitasuo,
Antti Remes, Olli Riikkala, Jaakko Uotila and Mika Vidgrén were
re-elected to the Board. Olli Riikkala continued as Chairman of the
Board. The Annual General Meeting confirmed that the Chairman of the
Board will receive EUR 44,000 in remuneration for his term of office,
the Vice Chairman EUR 27,500 and the other members of the Board EUR
22,000 each. The Board's remuneration will be paid in cash. The
Chairman of the Board will receive an attendance fee of EUR 800 for
each meeting, and the other Board members EUR 400 per meeting.
Meeting fees will also be paid in the same manner to members of any
committees set up by the Board of Directors or the company. The
Chairman of the Board will also have a company-paid phone. Travel
expenses will be paid in accordance with the travel policy of the
company.
The Annual General Meeting re-elected PricewaterhouseCoopers Oy as
auditor for the company, with Heikki Lassila APA as principal
auditor. The auditor will be remunerated according to invoice.
The Annual General Meeting resolved that articles 3, 4, 7, 9, 10 and
12 of the Articles of Association be amended. The main content of the
amendments is as follows: The references to minimum and maximum
authorised share capital were removed from article 3; the definition
in article 4 concerning the book-entry system was simplified and the
references concerning the record date procedure were removed; an
amendment was made to the wording of article 7 on the right to sign
on behalf of the company, ensuring that it is consistent with the
terminology used in the Limited Liability Companies Act; the
references to deputy auditor were removed from article 9. Following
this amendment the company has just one auditor, which must be a firm
of authorised public accountants; the phrases in article 10
concerning the AGM were amended to ensure consistency with the
terminology used in the Limited Liability Companies Act and with the
newly amended article 9; the definition in article 12 concerning the
notice of the annual general meeting was amended such that the notice
must be given at least 21 days prior to the meeting.
The Annual General Meeting authorised the Board to decide on the
purchase of Oriola-KD Corporation class B shares. Pursuant to the
authorisation, the Board is authorised to decide on the purchase of
no more than 14,000,000 of the company's own class B shares,
corresponding to approximately 9.9 per cent of the total number of
company shares. The authorisation can only be used in such a way that
the company and its subsidiaries together would hold no more than one
tenth (1/10) of the total number of company shares at any one time.
In accordance with the Board's decision, the company's shares can be
purchased in a manner other than in proportion to the existing
holdings of shareholders using assets belonging to the company's
non-restricted equity at the class B share's market price in public
trading arranged by the NASDAQ OMX Helsinki Ltd exchange at the time
of purchase. The shares will be paid for in accordance with the rules
and regulations of NASDAQ OMX Helsinki Ltd and Euroclear Finland Ltd.
The Board will decide how the shares are purchased. Derivatives may
also be used in the purchase. The purchase of the shares will reduce
the company's distributable non-restricted equity. The shares can be
purchased for the purpose of developing the company's capital
structure, implementing any corporate transactions or other business
arrangements, financing investments, inclusion in the company's
incentive schemes or to be otherwise assigned, held by the company or
annulled. The Board will decide on all other matters related to the
purchase of class B shares. The purchase authorisation remains in
force no longer than eighteen (18) months following the decision of
the General Meeting. The authorisation repeals the Annual General
Meeting's decision of 17 March 2008 authorising the Board to decide
on the purchase of Oriola-KD Corporation class B shares.
The Annual General Meeting authorised the Board to decide on a share
issue of the company's class B shares against payment in one or more
batches. The authorisation includes the right to issue new class B
shares or to assign class B shares held by the company. The
authorisation covers no more than 28,000,000 of the company's class B
shares in total, which corresponds to approximately 19.8 per cent of
the total number of company shares. The authorisation granted to the
Board includes the right to deviate, by means of a directed issue,
from the pre-emptive subscription right of shareholders, provided
that there are financial grounds considered important from the
company's perspective for such a deviation. Subject to the
restrictions presented above, the authorisation can be used for
purposes such as payment of consideration in corporate transactions
or other business arrangements and financing and carrying out
investments, expansion of the company's ownership base, development
of the capital structure, or as part of incentive and commitment
programmes for personnel. On the basis of the authorisation, class B
shares held by the company can also be sold in public trading
arranged by the NASDAQ OMX Helsinki Ltd exchange. The authorisation
includes the right of the Board to determine the terms of the share
issue as specified in the Limited Liability Companies Act, including
the right to decide whether the subscription price will be partially
or fully entered in the invested non-restricted equity fund or in the
share capital. The authorisation will remain in force for eighteen
(18) months following the decision of the General Meeting. The
authorisation cancels the share issue authorisations previously
received by the Board, with the exception of the authorisation
granted to the Board by the Annual General Meeting of 13 March 2007,
under which the Board may decide on arranging a directed bonus issue
of no more than 650,000 class B shares for the purpose of
implementing the share-based incentive scheme for management.
Decisions of the Board's organisational meeting
At the organisational meeting held immediately after the AGM, the
Board resolved to elect Antti Remes to continue serving as Vice
Chairman of the Board. The composition of the Audit and Compensation
Committees was confirmed as follows.
Audit Committee:
Antti Remes, Chairman
Harry Brade
Outi Raitasuo
Mika Vidgrén
Compensation Committee:
Olli Riikkala, Chairman
Pauli Kulvik
Jaakko Uotila
All members of the Board are independent of the company and its major
shareholders.
Risks
The Board of Directors of Oriola-KD 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 the operations of the company and the achievement of goals
set for them. 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:
* changes in bargaining position vis-à-vis suppliers and customers;
* impact on business concepts as a result of changes in the
structure of the Swedish market;
* maintenance of cost-effectiveness and flexibility in costs;
* provision of competitive products and services in expanding and
consolidating markets;
* expansion-related risks in new markets and businesses; and
* commitment of key employees.
The major financial risks for Oriola-KD involve currency exchange
rates, interest rates, liquidity and credit. The anticipated
USD-denominated purchase price of the remaining 25 per cent holding
in the Russian business acquisition has been hedged in accordance
with the Group's treasury policy.
Oriola-KD's exposure to risks relating to new markets and businesses
as well as financial risks has increased as a result of the company's
expansion into the Russian pharmaceutical retail and wholesale
market. Currency risks are the most significant of Oriola-KD's
financial risks in Russia, as any changes in the value of the ruble
(RUB) will have an impact on Oriola-KD's financial performance and
equity. Oriola-KD has used some EUR 90 million to acquire a 75 per
cent holding in the Russian companies and anticipates that final
price for the remaining 25 per cent will be roughly EUR 49 million.
In addition, by the end of September it had provided the companies
with long-term financing amounting to approximately EUR 61 million.
The Russian companies have no loans external to the Group.
Goodwill and intangible rights are subject to annual impairment
testing, which may have a negative effect on Oriola-KD's financial
performance.
Near-term risks and uncertainty factors
Factors significantly affecting Oriola-KD's outlook in the short term
in Russia are the completion of the Russian acquisition, the price
control system that will come into effect in the beginning of 2010
and increasing competition. The change in the Swedish pharmacy market
is subject to uncertainty that may have a substantial effect on
Oriola-KD's Swedish business.
Outlook
Oriola-KD's outlook for 2009 is based on external market forecasts,
agreements with principals, the order intake and management
assessments. Long-term fundamentals and growth prospects are deemed
to remain favourable in the healthcare market.
Oriola-KD expects that the pharmaceutical market in Finland and
Sweden will grow by about 3-5 per cent annually over the next few
years, which is in line with the longer-term average growth rate of
these markets. The Russian pharmaceutical market is expected to see
annual growth of approximately 15-20 per cent in Russian rubles (RUB)
in the next few years. Growth in the market for healthcare equipment
and supplies in Finland and Sweden is expected to outpace that of the
pharmaceutical market.
The introduction of the reference price system in Finland in April
2009 will hamper the growth of net sales of the Pharmaceutical Trade
Finland business segment in 2009. It is too early to foresee the
development of net sales in Pharmaceutical Trade Sweden because of
the effects of the deregulation of Sweden's pharmacy market. The
Pharmaceutical Trade Russia business segment is expected to continue
growing.
Guidelines issued on 13 August 2009 concerning net sales and
operating profit
Oriola-KD's net sales and operating profit for 2009 are forecast to
be higher than in 2008.
New guidelines concerning net sales and operating profit
Oriola-KD's net sales for 2009 is forecast to be higher than in 2008,
while its operating profit is forecast to be substantially higher.
Tables
Consolidated Statement 1 Jan - 30 1 Jan - 1 July - 1 July - 1 Jan -31
of Sep 30 Sep 30 Sep 30 Sep Dec
Comprehensive Income
(IFRS), EUR million 2009 2008 2009 2009 2008
Net sales 1226.6 1131.7 410.8 398.4 1580.8
Cost of goods sold -1052.9 -990.0 -356.6 -346.7 -1370.0
Gross profit 173.7 141.8 54.2 51.7 210.8
Other operating income 3.8 2.6 0.7 0.5 3.4
Selling and
distribution expenses -120.1 -102.9 -38.4 -36.2 -146.7
Administrative
expenses -21.6 -22.2 -4.6 -8.5 -33.3
Profit from
associated company 2.7 1.3 0.8 0.3 2.2
Operating profit 38.5 20.6 12.6 7.9 36.4
Financial income
and expenses -1.8 -0.4 0.0 -0.5 -1.8
Profit before taxes 36.7 20.2 12.6 7.3 34.6
Tax expense*) -8.0 -5.1 -2.7 -1.9 -7.2
Profit for the period 28.7 15.1 10.0 5.4 27.5
Other comprehensive
income:
Translation
differences -2.9 -3.7 4.1 -2.8 -27.6
Total comprehensive
income for the period 25.8 11.4 14.0 2.6 -0.1
Profit attributable
to:
Parent company
shareholders 28.7 15.0 10.0 5.4 27.4
Minority interest 0.0 0.1 0.0 0.0 0.1
Total comprehensive
income attributable
to:
Parent company
shareholders 25.8 11.3 14.0 2.6 -0.2
Minority interest 0.0 0.1 0.0 0.0 0.1
Earnings
per share:
Basic earnings per share (EUR) 0.20 0.11 0.07 0.04 0.19
Diluted earnings
per share (EUR) 0.20 0.11 0.07 0.04 0.19
*) The tax expense for the period has
been calculated as the proportional
share of the total estimated taxes for
the financial year.
Consolidated Statement of
Financial Position (IFRS), EUR
million
ASSETS 30 Sep 2009 30 Sep 2008 31 Dec 2008
Non-current assets
Tangible assets 53.6 58.2 54.5
Goodwill 127.7 104.3 105.1
Other intangible assets 38.6 46.3 41.9
Investments in associates 29.5 27.8 28.5
Other non-current receivables 8.0 9.7 9.8
Deferred tax assets 2.9 1.8 0.8
Non-current assets total 260.3 248.0 240.5
Current assets
Inventories 261.2 251.5 250.7
Trade and other receivables 281.8 276.9 252.9
Cash and cash equivalents 52.3 20.4 46.5
Current assets total 595.3 548.8 550.1
ASSETS TOTAL 855.5 796.7 790.6
EQUITY AND LIABILITIES 30 Sep 2009 30 Sep 2008 31 Dec 2008
Equity
Share capital 36.2 36.2 36.2
Other funds 50.8 30.1 30.1
Retained earnings 132.7 129.5 118.1
Equity of the parent
company shareholders 219.7 195.8 184.4
Minority interest 0.0 1.1 1.0
Equity total 219.7 196.9 185.5
Non-current liabilities
Deferred tax liabilities 13.8 18.7 16.5
Pension liability 4.5 4.3 4.2
Provisions 0.0 0.0 0.0
Interest-bearing non-current
liabilities 0.2 0.2 27.9
Other non-current liabilities 0.0 28.9 0.0
Non-current liabilities total 18.6 52.1 48.5
Current liabilities
Trade payables and other current
liabilities 468.1 488.5 475.8
Provisions 0.0 0.0 0.0
Interest-bearing current
liabilities 149.2 59.2 80.8
Current liabilities total 617.3 547.8 556.6
EQUITY AND LIABILITIES TOTAL 855.5 796.7 790.6
Consolidated
Statement of
Changes in
Equity
(IFRS):
Equity
of the
parent
company
Translation Retained share- Minority
Share Other
EUR million capital funds differences earnings holders interest Total
Equity
1 Jan 2008 36.2 30.1 -2.5 131.7 195.5 8.1 203.6
Dividends -11.3 -11.3 0.0 -11.3
Change in
minority
interest 0.0 -7.1 -7.1
Share based
payments 0.3 0.3 0.3
Total
comprehensive
income
for the
period -3.7 15.0 11.3 0.1 11.4
Equity
30 Sep 2008 36.2 30.1 -6.2 135.7 195.8 1.1 196.9
Equity
1 Jan 2009 36.2 30.1 -30.1 148.2 184.4 1.1 185.5
Dividends -11.3 -11.3 -11.3
Share issue 20.6 20.6 20.6
Change in
minority
interest 0.0 -1.1 -1.1
Share based
payments 0.2 0.2 0.2
Total
comprehensive
income
for the
period -2.9 28.7 25.8 25.8
Equity
30 Sep 2009 36.2 50.8 -33.0 165.8 219.7 0.0 219.7
Consolidated Statement of Cash 1 Jan - 30 1 Jan - 30
Flows (IFRS), Sep Sep 1 Jan -31 Dec
EUR million 2009 2008 2008
Operating profit 38.5 20.6 36.4
Depreciation 7.1 7.3 9.8
Change in working capital -26.2 -43.3 -52.2
Cash flow from financial
items and taxes -13.1 -7.3 -6.8
Other adjustments 0.1 0.1 -5.2
Net cash from operating
activities 6.4 -22.6 -18.1
Net cash used in investing
activities -29.6 -76.0 -75.3
Net cash used in financing
activities 28.6 -10.9 10.5
Net change in cash and cash
equivalents 5.5 -109.4 -82.9
Cash and cash equivalents
at beginning of period 46.5 131.0 131.0
Foreign exchange difference 0.3 -1.2 -1.6
Net change in cash and cash
equivalents 5.5 -109.4 -82.9
Cash and cash equivalents at
end of period 52.3 20.4 46.5
1 Jan - 30 1 Jan - 30
Change in Tangible Assets Sep Sep 1 Jan -31 Dec
EUR million 2009 2008 2008
Carrying amount at the
beginning of the period 54.5 56.3 56.3
Increase through acquisition
of subsidiary share 0.0 6.8 6.9
Additions 4.4 3.0 4.0
Disposals -1.1 -1.7 -2.2
Depreciation -4.8 -5.1 -6.7
Translation differencies 0.5 -1.0 -3.7
Carrying amount at the end of
the period 53.6 58.2 54.5
1 Jan - 30 1 Jan - 30
Sep Sep 1 Jan -31 Dec
Key Figures 2009 2008 2008
Equity ratio, % 26.4% 25.3% 25.1%
Equity per share, EUR 1.46 1.38 1.30
Return on capital employed
(ROCE), % 15.5% 13.4% 13.5%
Return on equity, % 18.9% 10.0% 14.1%
Net interest bearing debt, Me 97.1 Me 39.0 Me 62.2 Me
Gearing, % 44.2% 19.8% 33.5%
Earnings per share, EUR 0.20 0.11 0.19
Average number of share, tpcs 145 812 141 385 141 393
Forward Contracts and
Contingent Liabilities
30 Sep 2009
Positive Negative Nominal values
fair fair of
EUR million value value contracts
Currency forward and swap
contracts
under hedge accounting 0.5 45.2
Other forward and currency
swap contracts -0.0 23.1
30 Sep 2008
Positive Negative Nominal values
fair fair of
EUR million value value contracts
Currency forward and swap
contracts
under hedge accounting 35.2
Other forward and currency
swap contracts -0.3 28.8
FX options purchased
Contingent for Own Liabilities
EUR million 30 Sep 2009 30 Sep 2008 31 Dec 2008
Guarantees given 32.5 35.1 37.8
Real-estate mortgages given 2.0 2.0 2.0
Mortgages on company assets 2.1 21.1 2.2
Other guarantees and
liabilities 1.4 2.6 1.2
Total 37.9 60.9 43.2
Guarantees given on behalf of
external parties 0.0 0.0 0.0
Leasing-liabilities (operating
liabilities) 0.3 0.5 0.4
Rent contingent 32.3 30.4 33.3
1 Jan - 30 1 Jan - 30
Sep Sep 1 Jan -31 Dec
Net Sales by Operating
Segments, EUR million 2009 2008 2008
Pharmaceutical Trade Finland 378.9 389.4 533.4
Pharmaceutical Trade Sweden 388.1 410.0 535.9
Pharmaceutical Trade Russia 332.5 191.6 318.9
Pharmaceutical Trade Baltics 25.4 28.1 37.4
Healthcare Trade 101.7 112.6 155.2
Dental Trade 0.0 0.0 0.0
Group Total 1226.6 1131.7 1580.8
Operating Profit by Operating 1 Jan - 30 1 Jan - 30
Segments, Sep Sep 1 Jan -31 Dec
EUR million 2009 2008 2008
Pharmaceutical Trade Finland 13.7 11.9 16.6
Pharmaceutical Trade Sweden -2.8 4.7 6.0
Pharmaceutical Trade Russia 22.8 -0.8 8.2
Pharmaceutical Trade Baltics 0.6 0.8 1.1
Healthcare Trade 6.6 6.2 7.9
Dental Trade 2.6 1.3 2.1
Group Administration and
Others -5.1 -3.6 -5.6
Group total 38.5 20.6 36.4
Average number of personnel 4 403 3 513 3 807
Number of personnel at the end
of the period 4 254 4 696 4 709
Net Sales by
Operating
Segments,
EUR million Q3/2009 Q2/2009 Q1/2009 Q4/2008 Q3/2008 Q2/2008 Q1/2008
Pharmaceutical
Trade Finland 120.4 131.9 126.6 144.0 129.1 132.7 127.6
Pharmaceutical
Trade Sweden 131.8 130.2 126.1 125.9 129.2 141.0 139.8
Pharmaceutical
Trade Russia 118.6 106.6 107.2 127.3 97.9 93.8 0.0
Pharmaceutical
Trade Baltics 8.0 8.8 8.6 9.2 8.4 9.8 10.0
Healthcare
Trade 31.9 34.9 35.0 42.7 33.8 38.1 40.6
Dental Trade 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Group Total 410.8 412.3 403.5 449.1 398.4 415.4 318.0
Operating
Profit by
Operating
Segments,
EUR million Q3/2009 Q2/2009 Q1/2009 Q4/2008 Q3/2008 Q2/2008 Q1/2008
Pharmaceutical
Trade Finland 4.9 4.9 3.9 4.7 4.8 3.2 3.9
Pharmaceutical
Trade Sweden -0.4 -2.0 -0.4 1.3 1.4 1.6 1.7
Pharmaceutical
Trade Russia 6.6 8.6 7.6 8.9 0.3 -1.0 0.0
Pharmaceutical
Trade Baltics 0.2 0.2 0.1 0.3 0.2 0.3 0.3
Healthcare
Trade 1.9 3.0 1.7 1.7 1.8 1.5 2.9
Dental Trade 0.8 0.7 1.1 0.8 0.3 0.4 0.6
Group
Administration
and Others -1.5 -2.0 -1.6 -1.9 -1.0 -1.8 -0.8
Group total 12.6 13.5 12.4 15.8 7.9 4.2 8.5
1 Jan - 30 Sep 1 Jan - 30 Sep 1 Jan -31 Dec
Net Sales by Market, EUR
million 2009 2008 2008
Finland 428.3 443.8 618.2
Sweden 429.0 457.8 568.9
Russia 332.5 191.7 319.0
Baltics countries 31.9 36.1 48.2
Other countries 4.9 2.4 26.5
Total 1226.6 1131.7 1580.8
Net Sales by Market, Q3/ Q2/ Q1/ Q4/ Q3/ Q2/ Q1/
EUR million 2009 2009 2009 2008 2008 2008 2008
Finland 139.2 146.2 143.0 174.5 144.6 150.5 148.7
Sweden 140.0 147.5 141.5 111.1 144.4 157.8 155.7
Russia 118.6 106.6 107.2 127.3 97.9 93.8 0.0
Baltics countries 9.8 11.1 11.0 12.1 10.9 12.5 12.7
Other countries 3.2 1.0 0.8 24.1 0.8 0.8 0.8
Total 410.8 412.3 403.5 449.1 398.4 415.4 318.0
Consolidated Proforma net sales for the
he retail and wholesale businesses
acquired in Russia was 96 EUR million
and consolidated Proforma
EBIT -0.8 EUR million for the period
January to March 2008.
Corporate acquisitions
Acquisition of Vitim & Co and Moron Ltd
Oriola-KD announced in March 2008 that it would acquire 75 percent of
a Moscow-based pharmacy company (Vitim & Co) and of a pharmaceutical
wholesaler (Moron Ltd.) The transaction was executed in April 2008.
In addition, Oriola-KD has agreed to buy out the remaining 25-percent
holding in 2010 for a consideration based on the companies'
performance in 2009. The purchase of the remaining 25-percent holding
is recognized as a liability, the magnitude of which is based on the
best estimate of management.
The initial purchase price allocation as of 31 March 2008 has been
finalised during Q1 2009 as permitted by International Financial
Reporting Standards. No material changes have been made compared to
the information disclosed in the Consolidated Financial statements
for 2008, with the exception of the estimated purchase price for the
remaining 25-percent holding. The initial purchase price allocation
calculated in rubles have been translated into euros by using the
exchange rate from acquisition date. The balance sheets of the
acquired companies have been consolidated into the Oriola-KD Group as
of 1 April 2008 and the calculation below includes the acquisition of
both companies.
Details on the net assets and goodwill acquires are as
follows: Fair
Carrying Fair value value
amount EUR allocations EUR
million EUR million million
Tangible assets 5.0 1.8 6.9
Other intangible
assets 5.4 41.5 46.9
Deferred tax assets 0.7 0.0 0.7
Inventories, advances
paid 69.2 0.0 69.2
Trade receivables 39.6 0.0 39.6
Other receivables 5.0 0.0 5.0
Cash and cash
equivalents 3.0 0.0 3.0
Deferred tax
liabilities 0.0 -10.4 -10.4
Interest-bearing
non-current
liabilities -8.8 0.0 -8.8
Trade payables and
other current
liabilities -108.5 0.0 -108.5
Interest-bearing
current liabilities -8.9 0.0 -8.9
Net indentifiable
assets 1.7 32.9 34.7
Acquisition price
Purchase price -64.0
Additional purchase
price
and purchase of the
remaining 25% -70.8
Costs related to
acquisition -4.4
Goodwill 104.6
Purchase price settled
in cash -64.0
Paid additional
purchase price -21.7
Costs related to
acquisition -4.4
Cash and cash
equivalents acquired 3.0
Cash outflow on acquisition as per 30 September
2009 -87.1
Estimated purchase
price payable -49.1
Total cash outflow on
acquisition -136.3
The remaining goodwill arising from the acquisition, is based
on synergy benefits and widened new market area possibilities and
benefits.
Espoo 28 October 2009
Oriola-KD Corporation's Board of Directors
Oriola-KD Corporation
Eero Hautaniemi
President and CEO
Kimmo Virtanen
Executive Vice President and CFO
Further information:
Eero Hautaniemi
President and CEO
tel. +358 (0)10 429 2109
e-mail: eero.hautaniemi@oriola-kd.com
Kimmo Virtanen
Executive Vice President and CFO
tel. +358 (0)10 429 2069
e-mail: kimmo.virtanen@oriola-kd.com
Pellervo Hämäläinen
Vice President, Communications and Investor Relations
tel. +358 (0)10 429 2497
e-mail: pellervo.hamalainen@oriola-kd.com
Distribution
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