2017-02-08 08:01:31 CET
2017-02-08 08:01:31 CET
REGULATED INFORMATION
HKScan Oyj - Financial Statement Release
Correction to HKScan Group's financial statements release 1 January - 31 December 2016
HKScan Corporation Financial Statements Release
8 February 2017 at 9:00 am
This is a correction to the financial statements release sent at 8:15 today.
The outlook for 2017 on the first page of the release was not correct. You will
find the correct outlook in this release below. The attachment has also been
corrected accordingly.
(The corresponding Finnish version sent earlier was correct.)
HKScan Group’s financial statements release, 1 January—31 December 2016: Result
dissatisfactory, mainly driven by Sweden - New leadership in place for
turnaround
* Net sales for January–December were EUR 1 872.9 (1 917.1) million, and in the
fourth quarter EUR 485.2 (501.4) million.
* EBIT for January–December was EUR 9.7 (9.6) million. Comparable EBIT was EUR
13.2 (21.5) million. The corresponding EBIT margin was 0.7 (1.1) per cent.
* EBIT for the fourth quarter was EUR 4.2 (-0.6) million. Comparable EBIT was
EUR 6.0 (11.3) million. The corresponding EBIT margin was 1.2 (2.2) per cent.
* Cash flow before debt service for January–December was EUR 23.7 (32.2)
million and in the fourth quarter EUR 29.0 (8.8) million.
* Comparable profit before taxes for January–December was EUR 4.4 (14.1)
million and in the fourth quarter EUR 4.0 (9.6) million.
* EPS for January–December was EUR -0.10 (0.01) and in the fourth quarter EUR
0.02 (-0.04).
* Net financial expenses for January–December were EUR -8.7 (-9.1) million and
in the fourth quarter EUR -2.2 (-2.2) million.
* Net debt was EUR 137.2 (144.0) million and net gearing 33.5 (33.8) per cent
in 2016.
* Outlook for 2017: HKScan aims to reach the comparable operating profit (EBIT)
of the year 2016.
* The Board’s proposal for dividend is EUR 0.16 (0.14) per share.
Jari Latvanen, HKScan’s President and CEO, comments on the fourth quarter and
the full year 2016:
“HKScan’s full-year performance in 2016 was weak. The Group’s smallest market,
the Baltics, was the only area that was ultimately able to improve its
comparable operating profit from the previous year, despite the severe internal
turbulence it faced at the end of the year. Sweden was a particular
disappointment, having lost market share and falling clearly behind its
previous year’s result. Finland recorded slight growth in net sales for the
whole year, and its operating profit improved year-on-year both in the third
and the fourth quarter.
The market grew in value in Sweden and Denmark, but in the Baltics it declined.
In Finland, the market turned to growth at the end of the year. In Sweden, we
succeeded to rise our sales prices to partly offset increased animal raw
material market prices. In Finland, sales prices kept declining. Throughout the
whole year, challenges in animal raw material sourcing affected business
performance negatively in all markets, but mainly in Sweden. Low beef raw
material availability and rapidly increasing purchase prices were also seen in
other markets in addition to Sweden. In Finland, pork oversupply was managed to
be stabilized as a result of active measures to correct a volume imbalance in
the pig value chain.
The highlights of 2016 were the favourable development of the sales mix and
Group’s ability to retain its market share in Finland, as well as promising
initiatives in the BBQ assortment in all market areas. Good progress was also
made in establishing the pillars for future profitable growth with the new
poultry production plant investment in Rauma, Finland, and the bacon plant
investment in Swinoujscie, Poland.
Given the poor performance, we will undertake multiple simultaneous measures to
correct the negative trend. While we continue to invest in strengthening our
innovation capability and offering development to delight consumers and win the
loyalty of our customers. We will also focus on improving our operational
efficiency.
Our renewed values, ‘Inspire, Lead and Care’, describe HKScan’s renewed way of
working and guide us at work every day. We will look into new ways to excite
and inspire our consumers and customers. We will provide products and
information which enable consumers to navigate and make choices they can feel
good about.”
KEY FIGURES, Q4 AND THE WHOLE YEAR 2016
(EUR million) Q4/2016 Q4/2015 2016 2015
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Net sales 485.2 501.4 1 872.9 1 917.1
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EBIT 4.2 -0.6 9.7 9.6
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- % of net sales 0.9 -0.1 0.5 0.5
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Profit/loss before taxes 2.2 -2.3 0.9 2.2
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- % of net sales 0.5 -0.4 0.0 0.1
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Profit/loss for the period 1.7 -1.5 -3.6 1.9
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- % of net sales 0.4 -0.3 -0.2 0.1
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Comparable EBIT 6.0 11.3 13.2 21.5
--------------------------------------------------------------------------------
- % of net sales 1.2 2.2 0.7 1.1
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Comparable profit/loss before taxes 4.0 9.6 4.4 14.1
--------------------------------------------------------------------------------
- % of net sales 0.8 1.9 0.2 0.7
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
EPS, EUR 0.02 -0.04 -0.10 0.01
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Cash flow before debt service) 29.0 8.8 23.7 32.2
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Cash flow before financing activities 25.0 4.0 17.1 25.0
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Return on capital employed (ROCE) before 2.1 2.3
taxes, %
--------------------------------------------------------------------------------
Net debt 137.2 144.0
--------------------------------------------------------------------------------
Gearing % 35.2 36.1
--------------------------------------------------------------------------------
Net Gearing % 33.5 33,8
--------------------------------------------------------------------------------
JANUARY- DECEMBER 2016
The Group’s net sales in the fourth quarter of 2016 declined from the
corresponding period the previous year. Comparable EBIT decreased significantly
in the fourth quarter. The decline was biggest in market area Sweden, whereas
Finland showed improvement. In the last quarter, the Group’s cash flow was
clearly stronger than the previous year.
As for the whole of 2016, the Group’s net sales decreased compared to 2015 and
all market areas were behind the previous year. The Group’s comparable EBIT was
lower than in the previous year. The biggest decline in EBIT was in market area
Sweden, due to weak sales performance, especially in the processed category.
Performance in Sweden was also impacted by the higher purchase prices and the
scarcity of beef on the market. In Finland, full-year EBIT remained behind the
previous year due to the weak first half of the year. The Baltics showed a
slight improvement. Market area Denmark continued performing well on the
domestic retail market, but challenges in exports continued.
Animal raw material prices in Finland and the Baltics were at a level slightly
below 2015. In Sweden, the prices of animal raw material, beef in particular,
continued increasing. A shortage of beef continued in Sweden and also in
Finland to some extent throughout the whole reporting period. An oversupply of
pork posed challenges on the Finnish market. Thanks to successful actions to
mitigate the pig oversupply in the Finnish meat value chain, pork inventories
were successfully lowered towards the end of the year to a level below the
previous year.
The total market in Sweden and Denmark grew in value. In Finland, where the
total market in value had declined throughout the first three quarters of the
year, yet showed growth in the fourth quarter. The Baltic market declined in
value. Fierce price competition continued on all markets, especially in retail.
Despite the market decline in Finland and the Baltics, inventories were
successfully kept in balance.
During 2016, Finland successfully maintained or increased its market share,
depending on category. Away from home sales grew in Finland at a faster pace
than the market in value, but in Sweden the growth rate was slower. In export,
price levels improved from the previous year. HKScan opened a sales office in
Hong Kong in January.
Jari Latvanen took over as HKScan Group’s new President and CEO on 31 October
2016.
The Group’s investment in a new poultry production facility in Rauma, Finland,
proceeded well in 2016. Related to the launch of the new production facility,
HKScan initiated statutory negotiations at its Eura plant, Finland in December.
The expansion investment of the Group’s Polish bacon plant was also making good
headway.
In December, HKScan announced the results of its internal investigation into
its Baltic business. The proven violations of Code of Conduct and the
principles of good governance led to the termination of the managerial and
employment contracts of four persons from the local management.
MARKET AREA: SWEDEN
--------------------------
(EUR million) Q4/2016 Q4/2015 2016 2015
------------------------------------------------
------------------------------------------------
Net sales 209.1 222.9 804.4 841.9
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EBIT 3.2 8.5 12.9 21.1
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- EBIT margin, % 1.6 3.8 1.6 2.5
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------------------------------------------------
Comparable EBIT 4.8 9.0 14.5 21.6
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- EBIT margin, % 2.3 4.0 1.8 2.6
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In Sweden, net sales were EUR 804.4 (841.9) million and comparable EBIT was EUR
14.5 (21.6) million in 2016. In the fourth quarter, net sales amounted to EUR
209.1 (222.9) million. Comparable EBIT was 4.8 (9.0) million.
Net sales in 2016 declined from 2015, mainly due to the shortage of beef raw
material and declined sales of processed food, including cold cuts. In the
fourth quarter, both net sales and comparable EBIT decreased.
A shortage of Swedish pork and beef during spring and summer resulted in
increased animal raw material prices. As a result of that HKScan succeeded to
increase sales prices. However, they did not fully compensate for higher raw
material prices and sales volume decline on a full year basis. The amount of
imported meat increased on the market and private label growth continued in all
categories in Sweden.
Consumer demand for food increased in general with a focus on organic products,
as well as on health, wellbeing and vegetarian trends. HKScan responded to this
by launching several Scan®-branded novelties containing both meat and
vegetables.. Sustainability related communications activities under the
“Framtidens Kött” (Meat of the Future) concept were successfully undertaken
according to targets.
MARKET AREA: FINLAND
--------------------------
(EUR million) Q4/2016 Q4/2015 2016 2015
------------------------------------------------
------------------------------------------------
Net sales 213.4 216.2 806.5 801.6
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EBIT 7.0 -5.3 14.6 4.9
------------------------------------------------
- EBIT margin, % 3.3 -2.4 1.8 0.6
------------------------------------------------
------------------------------------------------
Comparable EBIT 7.2 6.1 14.8 16.3
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- EBIT margin, % 3.4 2.8 1.8 2.0
------------------------------------------------
In Finland, net sales were EUR 806.5 (801.6) million and comparable EBIT was
EUR 14.8 (16.3) million in 2016. Net sales in the fourth quarter amounted to
EUR 213.4 (216.2) million. Comparable EBIT for the period was EUR 7.2 (6.1)
million.
Net sales increased slightly from 2015, but comparable EBIT decreased. Sales
prices declined in Finland, but thanks to the improved product mix and volumes,
the year-on-year increase seen in comparable EBIT in the third quarter
continued also in the fourth quarter. HKScan successfully increased its market
share towards the end of the year. Christmas season sales were better than in
the previous year.
The total market grew in value in the fourth quarter after a long decline that
began back in early 2015. The improved situation was supported by slowly
strengthened consumer confidence. The convenience food and poultry categories
in particular showed positive development, with both volume and value improving
during the whole of 2016. Pork inventories were successfully lowered to a level
below the previous year. Animal purchase prices in the fourth quarter were
somewhat higher than in the previous quarters. For the whole year 2016, the
prices were slightly below the level of 2015.
Vegetarian and vegan food were discussed widely in 2016, but the overall level
of meat consumption remained stable throughout the year. HK Maakarit® artisan
sausages gained loyal consumers and new variants were launched under the
concept. Also the launch of new bacon variants had a positive start, expanding
the product range from classical products to new areas. In poultry, the
Kariniemen KanaSet® products were the best-selling novelty during 2016.
The Group’s investment project in the new poultry production plant in Rauma
proceeded according to schedule.
MARKET AREA: DENMARK
--------------------------
(EUR million) Q4/2016 Q4/2015 2016 2015
------------------------------------------------
------------------------------------------------
Net sales 39.3 37.6 173.2 175.9
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EBIT -2.6 -1.9 -9.5 -9.3
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- EBIT margin, % -6.6 -5.1 -5.5 -5.3
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Comparable EBIT -2.6 -1.9 -9.1 -9.3
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- EBIT margin, % -6.6 -5.1 -5.2 -5,3
------------------------------------------------
In Denmark, net sales were EUR 173.2 (175.9) million and comparable EBIT was
EUR -9.1 (-9.3) million in 2016. Net sales in the fourth quarter amounted to
EUR 39.3 (37.6) million. Comparable EBIT for the period was EUR -2.6 (-1.9)
million.
On the Danish market, overall consumer demand for poultry remained positive.
The sales trend in fresh products was positive, leading to higher volumes,
improved margins, and gained market shares.
The market situation in exports was fierce throughout the year, and Denmark’s
performance in these markets was negatively affected both as regards price and
volumes. Towards the year-end, its performance was further impacted by the
closure of key Asian markets due to an outbreak of avian flu in Denmark during
November.
HKScan’s investments in the Rose® brand have brought positive results, i.e.
improved market share and brand awareness.
MARKET AREA: BALTICS
--------------------------
(EUR million) Q4/2016 Q4/2015 2016 2015
------------------------------------------------
------------------------------------------------
Net sales 40.4 43.3 161.3 173.6
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EBIT 1.0 1.0 6.4 5.4
------------------------------------------------
- EBIT margin, % 2.6 2.3 3.9 3.1
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------------------------------------------------
Comparable EBIT 1.0 1.0 6.4 5.4
------------------------------------------------
- EBIT margin, % 2.6 2.3 3.9 3.1
------------------------------------------------
In the Baltics, net sales were EUR 161.3 (173.6) million and comparable EBIT
was EUR 6.4 (5.4) million in 2016. In the fourth quarter, net sales were EUR
40.4 (43.3) million. Comparable EBIT for the period was EUR 1.0 (1.0) million.
Net sales decreased both in 2016 and the fourth quarter. Comparable EBIT
improved from the previous year throughout 2016, but remained unchanged in the
fourth quarter. For January–December the change in the fair value of
biological assets amounted to EUR 0.8 (0.0) million.
The decline in net sales was mainly due to the continuing Russian food import
embargo. New trends in meat consumption negatively affected traditional
processed meat categories such as sausages. In market area Baltics, sales
prices and volumes declined, but primary production related costs as well as
other costs decreased and compensated for the impact of declined net sales.
For the Baltic business, 2016 marked a year of recovery after the negative
impacts caused by African Swine Fever (ASF) from 2015 onwards. Disease-related
risks prevailed, but actions to mitigate the spread to HKScan farms were
managed successfully. The pork business started showing signs of recovery, and
reduced zoning in November enabled HKScan to regain its previous sales and meat
balance. Poultry consumption kept growing, but sales prices were very low. In
the fourth quarter, the export business picked up thanks to a more favourable
product mix and improved pork prices.
HKScan continued to harness the synergies of its brand and product portfolio
between the Baltic markets. Strong branded sales were to a large extent a
consequence of successful concept launches during the autumn. Particularly the
new Rakvere® 50/50 meatballs, containing both meat and vegetables, and Tallegg®
chicken product novelties were well received by consumers.
FINANCING
The Group’s interest-bearing debt at the year-end stood at EUR 144.1 (153.8)
million. Net debt was EUR 137.2 (144.0) million and the net gearing ratio 33.5
(33.8) per cent.
The Group’s liquidity was good. Committed credit facilities at 31 December
stood at EUR 100.0 (100.0) million, and were entirely undrawn. The EUR 200.0
million commercial paper programme had been drawn to the amount of EUR 7.0
(27.0) million.
Net financial expenses were EUR -2.2 (-2.2) million in the last quarter and EUR
-8.7 (-9.1) million in 2016.
RESEARCH AND DEVELOPMENT
Research and development in HKScan Group is targeted at developing new products
and concepts and making improvements to products that are already on the
market. A total of EUR 6.6 (5.1) million was spent on R&D in 2016, equal to 0.4
(0.3) per cent of net sales.
The development of common innovation platforms and processes continued in 2016,
and synergistic cross-border opportunities received increased attention.
Creating new growth areas is the Group’s key priority going forward.
HKScan is continuously building its R&D network in order to support the
implementation of the Group strategy. During 2016, several new partnerships and
joint projects were established with collaborators such as universities,
research organizations, suppliers and other private organizations.
CORPORATE RESPONSIBILITY
HKScan has defined its priority areas in corporate responsibility as economic
responsibility, social responsibility, animal welfare and the environment.
In 2016, HKScan carried out its second employee engagement survey. The results
confirmed that the improvement actions taken on the basis of the previous
survey (in 2014) have brought results in terms of better information flow and
increased opportunities for involvement and taking initiative. Overall
awareness of values and targets have strengthened. Towards the end of the year,
new improvement plans were made, and the actions will be initiated during 2017.
These include workplace/personnel safety improvements, which were in focus
across the Group during 2016.
The construction of HKScan’s new poultry production facility in Rauma started
in Finland. The plant is scheduled for completion at the end of 2017. From the
very earliest stages of planning the project, special attention has been
addressed to securing animal welfare, biosecurity related to animal diseases,
food safety and product quality, as well as employee wellbeing and safety
aspects. The investment will also improve environmental efficiency overall, and
enable utilization of side-streams for biotech products. Additionally, the new
facility will have a significant direct and indirect employment impact.
In Finland, investment in the Outokumpu beef slaughterhouse and production
facility marked a significant improvement in operational efficiency,
ergonomics, environmental efficiency and animal welfare. Also the renewal of
barn facilities at the Kristianstad slaughterhouse in Sweden brought
improvements in animal welfare.
The Group worked in cooperation with animal behaviour experts, and all
slaughterhouses were audited for animal welfare. The audits kicked off many
improvements at the slaughterhouses premises, starting with improved conditions
for the free movement of animals. Additionally, in Finland, training of the
slaughterhouse personnel, drivers and producers was organized to enhance their
understanding of natural cattle behaviour and to help them take this into
account in their animal handling procedures.
The Group retained its good status regarding animal diseases both in its
contract production and in its own primary production. In all HKScan countries,
the use of antibiotics in the treatment of animals is significantly lower than
in other European countries on average. Neither farms owned by HKScan nor its
contract farmers use antibiotics preventively or to promote animal growth. In
addition, the use of hormones as growth promoters is fully prohibited. Good
animal care and control of animal diseases has led to good results in
preventing outbreaks. Prevention of the spread of African Swine Fever (ASF) on
pig farms was one of the main measures undertaken at HKScan farms in the
Baltics. In Finland and Sweden, HKScan has also worked diligently to prevent
the spread of the disease. A new animal disease threat that has emerged
recently is high pathogenic avian flu (H5N8), which has been found in wild
birds in countries in which the Group operates.
A clinical study undertaken by Helsinki University showed that Rypsiporsas®
meat (rape seed pork) contains four times more polyunsaturated omega 3 fats
than normal pork meat. Healthy lifestyles and responsibly produced, pure food
are emerging trends also in Asia, which is the world’s largest pork market.
HKScan answered to this trend by launching exports of Rypsiporsas® meat to Hong
Kong.
HKScan is a member of the Round Table on Responsible Soy (RTRS) and the
Roundtable on Sustainable Palm Oil (RSPO). The Group is committed to using only
100 per cent responsible soy in animal feed and as an ingredient by the end of
2018. In Sweden, this commitment was already fulfilled in 2015. HKScan
finalized its survey of the Group’s palm oil usage in 2016. Palm oil is used
only in very small amounts in the Group’s products and subcontracting. The
target is to ensure that all palm oil used by HKScan is responsibly produced.
The Group is also looking into the option of using alternative vegetable oils
instead of palm oil.
HKScan is making on ongoing effort to monitor and reduce the environmental
impacts of its operations. These impacts are currently associated with energy
efficiency and greenhouse gas emissions, wastewater, use of water, use of
chemicals and treatment of waste. The Group launched an energy efficiency
project in 2015, which continued in 2016 on multiple fronts. The target is to
decrease the Group’s overall consumption of energy by 10 per cent from the 2014
level by 2017 (indexed to net sales). These efforts included an energy saving
competition among personnel, which yielded over 1 000 energy-saving ideas.
HKScan operates in countries where responsible practices are widely embraced,
automatically bringing us a number of valuable strengths in global comparison.
These include high standards of hygiene, healthy animals, clean soil, as well
as rich and clean water reserves. In 2016, HKScan participated in a number of
cooperation projects and studies focusing on the environmental impacts of meat
production and their mitigation.
SHARES AND SHAREHOLDERS
Shares
HKScan Group’s registered and fully paid-up share capital at the beginning and
end of 2016 was EUR 66 820 528. The total number of shares issued was 55 026
522, and it was divided into two share series as follows: A Shares, 49 626 522
(90.19% of the total number of shares) and K Shares 5 400 000 (9.81%). The A
Shares are quoted on the Nasdaq Helsinki Ltd. The K Shares are held by LSO
Osuuskunta (4 735 000 shares) and Lantmännen ek.för. (665 000 shares) and are
not listed.
According to the Articles of Association, each A Share conveys one vote, and
each K Share 20 votes. Each share gives equal entitlement to a dividend. The
shares have no nominal value.
HKScan’s market capitalization at the end of the year stood at EUR 172.3
(205.6) million based on the closing price of the last trading day of the
period. The Series A shares had a market value of EUR 155.1 (185.1) million,
and the unlisted Series K shares EUR 17.2 (20.6) million correspondingly.
In 2016, a total of 13 313 324 of the company’s shares, with a total value of
EUR 42 427 708, were traded. The highest price quoted was EUR 3.89 and the
lowest EUR 2.89. The average price was EUR 3.18. At the end of 2016, the
closing price was EUR 3.19.
Shareholders
At the end of 2016, the shareholder register maintained by Euroclear Finland
Ltd included 13 226 (12 558) shareholders. Nominee-registered and foreign
shareholders held 12.6 (24.9) per cent of the company's shares.
Notifications of changes in holdings
On 21 December 2016, Sveriges Djurbönder ek. för notified that the total amount
of HKScan Corporation shares owned by them had decreased below the threshold of
ten (10) per cent and the share of voting rights had decreased below five (5)
per cent on 21 December 2016.
On 21 December 2016, Lantmännen ek.för notified that the total amount of HKScan
Corporation shares owned by them had exceeded the threshold of five (5) per
cent and the share of voting rights had exceeded the threshold of ten (10) per
cent on 21 December 2016.
Treasury shares
At the beginning the financial year 2016, HKScan held 1 053 734 treasury A
shares. On 8 April 2016, in total 44 885 treasury shares were gratuitous
transferred to the participants of the share based incentive plan 2013
according to its terms.
At the end of 2016 the Group had 1 008 849 treasury A shares, and they had a
market value of EUR 3.2 million and accounted for 1.83 % of all shares and 0.64
% of all votes.
Share-based incentive scheme
1) Incentive plan 2016 for the Group key personnel was published the stock
exchange release dated on 18 December 2015. The plan covers one performance
period, year 2016. The potential reward from the performance period will be
based on the HKScan Group’s Earnings Before Interest, Taxes, Depreciation and
Amortization (EBITDA) and Earnings per Share (EPS).
Rewards from the performance period will be paid partly in the Company’s A
series shares and partly in cash as follows: 50 per cent pay-out in 2017 and 50
per cent pay out in 2018. The cash proportion is intended to cover taxes and
tax-related costs arising from the rewards to the key personnel. No reward will
be paid, if the key employee’s employment or service ends before reward
payment. The plan was preliminary directed to 37 people. The rewards to be paid
on basis of the performance period are a maximum approximate total of 366 000
HKScan Corporation series A shares and cash payment corresponding to the value
of such shares.
ANNUAL GENERAL MEETING AND BOARD OF DIRECTORS’ AUTHORIZATIONS
The Annual General Meeting of HKScan Corporation was held on 13 April 2016 in
Helsinki. The resolutions of the AGM, including authorizations given to the
Board, are reported in full in a stock release the same day.
The AGM resolved that a dividend of EUR 0.14 be paid for 2015. All the Board
members: Teija Andersen, Niels Borup, Tero Hemmilä, Mikko Nikula, Henrik
Treschow and Pirjo Väliaho, as well as both deputy Board members: Per Nilsson
and Marko Onnela were re-elected for a further term of office. At the
organizational meeting, the Board re-elected Mikko Nikula as Chairman and Niels
Borup as Vice Chairman. Tero Hemmilä resigned from the Company's Board on
11.5.2016.
PricewaterhouseCoopers Oy, an audit firm chartered by the Central Chamber of
Commerce, with APA Jouko Malinen as the main auditor, was elected as the actual
auditor until the close of the next Annual General Meeting.
In April 2016, the Board exercised the authorizations given by the AGM in
conjunction to the directed share issue according to the Group’s share based
incentive plan 2013, payment of the rewards for the performance period
2013–2015.
CHANGES IN THE SENIOR MANAGEMENT
On 27 May, HKScan announced that Jari Latvanen had been appointed as HKScan’s
new President and CEO. He began in the position on 31 October 2016. His
predecessor, Mr Hannu Kottonen, had left the company on 20 January 2016. During
the interim period, Aki Laiho, deputy CEO and COO, assumed the position of CEO.
In June, Anders Jeppesen Jensen, General Manager at HKScan Denmark left the
company and Göran Holm was named acting General Manager of HKScan Denmark on
top of his duties as EVP Consumer Business, Scandinavia.
On 2 November, HKScan announced that Jyrki Karlsson had been appointed as the
new Executive Vice President, Consumer Business, Finland and Baltics. Samuli
Eskola, his predecessor, left the company on 1 November.
On 2 November, HKScan announced that Anu Mankki had been appointed as the new
EVP, HR. Her predecessor Sari Suono left the company in the end of September.
Ms Mankki assumed her position on 2 January 2017.
Effective as of 19 December 2016, Anne Mere, Chief Marketing Officer (CMO) of
HKScan, took over as the new EVP Consumer Business Baltics. She also retained
her role as Group CMO. Consequently, Jyrki Karlsson was appointed as EVP
responsible for Consumer Business Finland.
After the reporting period, on 8 February 2017, HKScan informed on renewing its
Group Leadership Team.
GROUP LEADERSHIP TEAM
As of 8 February 2017, HKScan’s Group Leadership Team comprises the following
members: Jari Latvanen, President and CEO; Sofia Hyléen Toresson, EVP Market
Area Sweden (assuming her post on 2 May 2017); Jyrki Karlsson, EVP for Market
Area Finland; Svend Schou Borch, EVP Market Area Denmark; Anne Mere, EVP Market
Area Baltics; Jukka Nikkinen, EVP Market Area International & Biotech; Heli
Arantola, EVP Categories and Concepts (assuming her post on 2 May 2017); Aki
Laiho, EVP Operations; Anu Mankki, EVP HR; Tuomo Valkonen, CFO; and Markku
Suvanto, EVP Legal.
SHORT-TERM RISKS AND UNCERTAINTY FACTORS
The most significant uncertainty factors in the HKScan Group’s business are
related to sales and raw material prices, as well as management of global and
local meat balances.
The risks include various unexpected actions potentially taken by authorities
or pressure groups, which may cause restrictions to the business or volatility
in demand.
In the food industry’s raw material supply, the risks of animal diseases, such
as the African Swine Fewer (ASF) currently in Estonia, or any international or
regional food scandals impacting the overall consumption outlook cannot be
fully excluded.
EVENTS AFTER THE REPORTING PERIOD
On 13 January 2017, HKScan lowered its outlook for 2016.
On 19 January 2017, HKScan announced that it had acquired the remaining 50% of
Paimion Teurastamo (Paimio Slaughterhouse). HKScan Finland had acquired a 50%
holding in the company in summer 2015.
On 8 February 2017, HKScan informed on renewing its Group Leadership Team and
simultaneously initiating a review of its operating model.
On 8 February 2017, HKScan informed about plans to embark on a partial
re-organization of its operations as part of the review of its operating model.
The potential impacts on personnel of the planned operating model renewal and
planned efficiency upgrades will be assessed in Group-wide statutory
negotiations.
OUTLOOK FOR 2017
HKScan aims to reach the comparable operating profit (EBIT) of the year 2016.
BOARD OF DIRECTORS’ PROPOSAL ON DISTRIBUTION OF PROFIT
The parent company’s distributable equity stands at EUR 307.9 million including
the reserve for invested unrestricted equity, which holds EUR 143.2 million.
The Board of Directors recommends that the company pay a dividend of EUR 0.16
per share for 2016, i.e. a total of approximately EUR 8.6 million.
There have been no material changes in the company’s financial standing since
the end of the year under review. The company maintains good liquidity and the
recommended distribution of dividend will not in the Board’s estimation
compromise the company’s solvency.
ANNUAL GENERAL MEETING 2017
HKScan Corporation’s Annual General Meeting 2017 will be held starting at 10 am
on 6 April 2017 at Logomo, Turku. To be eligible to attend the Annual General
Meeting, shareholders should register by 27 March 2017 in HKScan Corporation’s
shareholder register maintained by Euroclear Finland Ltd. Notice to the Annual
General Meeting will be published at a later date.
NEXT FINANCIAL REPORT
HKScan Group’s interim report January–March 2017 will be published on 3 May
2017.
Vantaa, 8 February 2017
HKScan Corporation
Board of Directors
Further information is available from Jari Latvanen, President and CEO, and
Tuomo Valkonen, CFO. Kindly submit a call-back request to Marja-Leena Dahlskog,
SVP Communications, firstname.surname@hkscan.com or tel. +358 10 570 2142.
HKScan is the leading Nordic food company. We produce, market and sell
high-quality, responsibly-produced pork, beef, poultry and lamb products,
processed meats and convenience foods under strong brand names. Our customers
are the retail, food service, industrial and export sectors, and our home
markets comprise Finland, Sweden, Denmark and the Baltics. We export to close
to 50 countries. In 2016, HKScan had net sales of nearly EUR 1.9 billion and
some 7 300 employees.
DISTRIBUTION:
Nasdaq Helsinki
Main media
www.hkscan.com
CONSOLIDATED FINANCIAL STATEMENTS 1 JANUARY – 31 DECEMBER 2016
CONSOLIDATED INCOME STATEMENT
(EUR million) Note Q4/2016 Q4/2015 2016 2015
--------------------------------------------------------------------------------
Net sales 485.2 501.4 1 872.9 1 917.1
--------------------------------------------------------------------------------
Cost of goods sold 1. -452.0 -476.0 -1 750.8 -1 799.5
--------------------------------------------------------------------------------
Gross profit 33.3 25.4 122.2 117.6
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Other operating items total 1. 1.3 3.8 8.3 11.6
--------------------------------------------------------------------------------
Sales and marketing costs -14.7 -14.3 -56.5 -57.8
--------------------------------------------------------------------------------
General administration costs 1. -15.7 -15.6 -64.4 -61.9
--------------------------------------------------------------------------------
Operating profit 4.2 -0.6 9.7 9.6
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Financial income 0.5 0.5 2.3 2.1
--------------------------------------------------------------------------------
Financial expenses -2.7 -2.7 -11.1 -11.2
--------------------------------------------------------------------------------
Share of profit/loss in associates 0.2 0.6 -0.1 1.7
and joint ventures
--------------------------------------------------------------------------------
Profit/loss before taxes 2.2 -2.3 0.9 2.2
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Income tax -0.5 0.8 -4.4 -0.3
--------------------------------------------------------------------------------
Profit/loss for the period 1.7 -1.5 -3.6 1.9
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Non-controlling interests -0.8 -0.9 -1.8 -1.6
--------------------------------------------------------------------------------
Profit/loss for the period 0.9 -2.3 -5.4 0.3
--------------------------------------------------------------------------------
Earnings per share calculated on profit attributable to equity holders
of the parent:
-----------------------------------------------------------------------
EPS, undiluted, continuing operations, 0.02 -0.04 -0.10 0.01
EUR/share
--------------------------------------------------------------------------------
EPS, diluted, continuing operations, 0.02 -0.04 -0.10 0.01
EUR/share
--------------------------------------------------------------------------------
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
-------------------------------------------------------------------------
(EUR million) Q4/2016 Q4/2015 2016 2015
-------------------------------------------------------------------------
Profit/loss for the period 1.7 -1.5 -3.6 1.9
-------------------------------------------------------------------------
-------------------------------------------------------------------------
OTHER COMPREHENSIVE INCOME (after taxes):
-------------------------------------------------------------------------
Exchange differences on translating foreign 0.7 2.9 -4.1 2.6
operations
-------------------------------------------------------------------------
Cash flow hedging 1.6 0.4 2.5 0.3
-------------------------------------------------------------------------
Actuarial gains or losses -2.9 -1.5 -2.9 -1.5
-------------------------------------------------------------------------
TOTAL OTHER COMPREHENSIVE -0.6 1.8 -4.4 1.4
INCOME
-------------------------------------------------------------------------
-------------------------------------------------------------------------
TOTAL COMPREHENSIVE INCOME FOR 1.1 0.4 -8.0 3.3
THE PERIOD
-------------------------------------------------------------------------
-------------------------------------------------------------------------
TOTAL COMPREHENSIVE INCOME FOR
THE PERIOD ATTRIBUTABLE TO:
-------------------------------------------------------------------------
Equity holders of the parent 0.3 -0.5 -9.8 1.7
-------------------------------------------------------------------------
Non-controlling interests 0.8 0.9 1.8 1.6
-------------------------------------------------------------------------
Total 1.1 0.4 -8.0 3.3
-------------------------------------------------------------------------
CONSOLIDATED BALANCE SHEET
(EUR million) Note 31.12.2016 31.12.2015
---------------------------------------------------------------------------
ASSETS
---------------------------------------------------------------------------
---------------------------------------------------------------------------
Intangible assets 2. 143.0 147.3
---------------------------------------------------------------------------
Tangible assets 3. 401.7 361.8
---------------------------------------------------------------------------
Holdings 34.9 36.6
---------------------------------------------------------------------------
Other non-current assets 28.5 35.0
---------------------------------------------------------------------------
TOTAL NON-CURRENT ASSETS 608.1 580.7
---------------------------------------------------------------------------
---------------------------------------------------------------------------
Inventories 4. 116.1 124.2
---------------------------------------------------------------------------
Current receivables 123.9 122.9
---------------------------------------------------------------------------
Cash and cash equivalents 6.6 9.5
---------------------------------------------------------------------------
TOTAL CURRENT ASSETS 246.6 256.6
---------------------------------------------------------------------------
---------------------------------------------------------------------------
TOTAL ASSETS 854.8 837.3
---------------------------------------------------------------------------
---------------------------------------------------------------------------
EQUITY AND LIABILITIES
---------------------------------------------------------------------------
---------------------------------------------------------------------------
EQUITY 5. 409.7 425.8
---------------------------------------------------------------------------
---------------------------------------------------------------------------
Non-current loans, interest-bearing 126.9 117.2
---------------------------------------------------------------------------
Non-current liabilities, non interest-bearing 39.8 39.4
---------------------------------------------------------------------------
TOTAL NON-CURRENT LIABILITIES 166.7 156.6
---------------------------------------------------------------------------
---------------------------------------------------------------------------
Current loans, interest-bearing 17.2 36.6
---------------------------------------------------------------------------
Current liabilities, non interest-bearing 261.2 218.4
---------------------------------------------------------------------------
TOTAL CURRENT LIABILITIES 278.4 255.0
---------------------------------------------------------------------------
---------------------------------------------------------------------------
TOTAL EQUITY AND LIABILITIES 854.8 837.3
---------------------------------------------------------------------------
STATEMENT OF CHANGES IN CONSOLIDATED EQUITY
(EUR 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11.
million)
--------------------------------------------------------------------------------
EQUITY AT 66.8 72.9 -12.4 143.5 10.2 -3.7 0.0 134.7 412.0 13.8 425.8
1.1.2016
--------------------------------------------------------------------------------
Result for - - - - - - - -5.4 -5.4 1.8 -3.6
the
financial
period
--------------------------------------------------------------------------------
Other
comprehen
sive
income (+)
/ expense
(–)
--------------------------------------------------------------------------------
Transl. - - - - - -4.1 - - -4.1 - -4.1
diff.
--------------------------------------------------------------------------------
Cash flow - - 2.5 - - - - - 2.5 - 2.5
hedging
--------------------------------------------------------------------------------
Actuarial - - - - - - - -2.9 -2.9 - -2.9
gains or
losses
--------------------------------------------------------------------------------
Total - - 2.5 - - -4.1 - -8.3 -9.8 1.8 -8.0
compreh.
income for
the
period
--------------------------------------------------------------------------------
Direct - - - - 0.0 - - 0.1 0.1 - 0.1
recogniti
ons
--------------------------------------------------------------------------------
Transfers - - - - 0.0 2.5 - -2.5 0.0 - 0.0
between
items
--------------------------------------------------------------------------------
Dividend - - - - - - - -7.6 -7.6 -0.7 -8.2
distribut
.
--------------------------------------------------------------------------------
EQUITY AT 66.8 72.9 -9.9 143.5 10.3 -5.3 0.0 116.5 394.8 14.9 409.7
31.12.201
6
--------------------------------------------------------------------------------
(EUR 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11.
million)
--------------------------------------------------------------------------------
EQUITY AT 66.8 72.9 -12.7 143.5 10.1 -6.3 0.0 162.2 436.5 8.7 445.2
1.1.2015
--------------------------------------------------------------------------------
Result for - - - - - - - 0.3 0.3 1.6 1.9
the
financial
period
--------------------------------------------------------------------------------
Other
comprehen
sive
income (+)
/ expense
(–)
--------------------------------------------------------------------------------
Transl. - - - - - 2.6 - - 2.6 - 2.6
diff.
--------------------------------------------------------------------------------
Cash flow - - 0.3 - - - - - 0.3 - 0.3
hedging
--------------------------------------------------------------------------------
Actuarial - - - - - - - -1.5 -1.5 - -1.5
gains or
losses
--------------------------------------------------------------------------------
Total - - 0.3 - - 2.6 - -1.2 1.7 1.6 3.3
compreh.
income for
the
period
--------------------------------------------------------------------------------
Acquisitio - - - - - - - - - 3.8 3.8
n of
subsidiar
y
--------------------------------------------------------------------------------
Direct - - - - 0.1 - - 0.2 0.3 - 0.3
recogniti
ons
--------------------------------------------------------------------------------
Transfers 0.0 - - - 0.0 - - 0.0 0.0 - 0.0
between
items
--------------------------------------------------------------------------------
Dividend - - - - - - - -26.4 -26.4 -0.3 -26.7
distribut
.
--------------------------------------------------------------------------------
EQUITY AT 66.8 72.9 -12.4 143.5 10.2 -3.7 0.0 134.7 412.0 13.8 425.8
31.12.201
5
--------------------------------------------------------------------------------
COLUMNS: 1. Share capital, 2. Share premium reserve, 3. Revaluation reserve, 4.
Reserve for invested unrestricted equity (RIUE), 5. Other reserves, 6.
Translation differences, 7. Treasury shares, 8. Retained earnings, 9. Equity
holders of the parent, 10. Non-controlling interests, 11. Total
CASH FLOW STATEMENT
(EUR million) 2016 2015
--------------------------------------------------------------------------
Cash flow before change in net working 58.4 78.1
capital
--------------------------------------------------------------------------
Change in net working capital 21.4 -2.2
--------------------------------------------------------------------------
Financial items and taxes -8.9 -9.1
--------------------------------------------------------------------------
CASH FLOW FROM OPERATING ACTIVITIES 70.9 66.8
--------------------------------------------------------------------------
--------------------------------------------------------------------------
Cash flow from investing activities -53.9 -41.8
--------------------------------------------------------------------------
CASH FLOW AFTER INVESTING ACTIVITIES 17.1 25.0
--------------------------------------------------------------------------
--------------------------------------------------------------------------
Change in loans -12.3 -4.3
--------------------------------------------------------------------------
Dividends paid -8.2 -26.7
--------------------------------------------------------------------------
CASH FLOW FROM FINANCING ACTIVITIES -20.6 -31.0
--------------------------------------------------------------------------
--------------------------------------------------------------------------
NET CASH FLOW -3.5 -6.0
--------------------------------------------------------------------------
--------------------------------------------------------------------------
Cash and cash equivalents at beginning 9.5 16.4
of period
--------------------------------------------------------------------------
Translation differences 0.7 -1.0
--------------------------------------------------------------------------
Cash and cash equivalents at end of 6.6 9.5
period
--------------------------------------------------------------------------
FINANCIAL INDICATORS
31.12.2016 31.12.2015
-------------------------------------------------------------------
Earnings per share (EPS), undiluted, EUR -0.10 0.01
-------------------------------------------------------------------
Earnings per share (EPS), diluted, EUR -0.10 0.01
-------------------------------------------------------------------
Equity per share, EUR 7.31 7.63
-------------------------------------------------------------------
Equity ratio, % 47.9 50.9
-------------------------------------------------------------------
Adjusted average number of shares, mill. 54.0 54.0
-------------------------------------------------------------------
Gross capital expenditure on PPE, EUR mill. 97.6 49.6
-------------------------------------------------------------------
Employees, end of month average 7 319 7 437
-------------------------------------------------------------------
CALCULATION OF FINANCIAL INDICATORS
Return on capital employed (ROCE) Profit before tax + interest and x 100
before tax (%) other financial expenses
-------------------------------------
Balance sheet total –
non-interest-bearing liabilities
(average
Equity ratio (%) Total equity x 100
-------------------------------------
Balance sheet total – advances
received
Net gearing ratio (%) Net interest-bearing liabilities x 100
-------------------------------------
Total equity
Earnings per share (EPS) Profit for the period attributable
to equity holders of the
parent
-------------------------------------
Average number of outstanding shares
during period
Equity per share Equity attributable to holders of
the parent
-------------------------------------
Number of outstanding shares at end
of period
Market capitalisation The number of outstanding shares at
the end of period X
the closing price on the last
trading day of the financial
year
Cash flow before debt service Cash flow before financing
activities and financial items
Employee numbers Average of workforce figures
calculated at the end of
calendar months
Items affecting comparability One-time charges, which are not
related to the normal
continuing operations and
materially affect company's
finance. Examples of such expenses
are: capacity
adjustment (restructuring),
redundancy, legal costs
relating to restructuring or
similar, one-time expenses
related to efficiency /
reorganization programmes,
significant compensations or
penalties paid out due to
legal verdict or settlement,
transaction fees / expenses
related to business acquisitions
(consultation, advisory,
legal, due diligence, registration
etc.) and gains/losses of
business disposals.
Comparable EBIT Operating profit – items affecting
comparability
Net debt Interest-bearing debt – cash and
bank
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
ACCOUNTING POLICIES
HKScan Corporation’s interim report for 1 January–31 December 2016 has been
prepared in compliance with IAS 34 Interim Financial Reporting standards. The
same accounting principles have been applied in the interim report as in the
annual financial statements for 2015. Due to the rounding of the figures to the
nearest million euros in the interim report, some totals may not agree with the
sum of their constituent parts. Accounting principles are explained in the
financial statements for 2016.
Application of new and revised IFRS norms
IASB has published the following new or revised standards and interpretations
that the Group has not yet adopted. The Group will adopt these standards as of
the effective date of each of the standards, or if the effective date is not
the first day of the reporting period, as of the beginning of the next
reporting period following the effective date.
IFRS 9, ‘Financial instruments’, addresses the classification, measurement and
recognition of financial assets and financial liabilities. The complete version
of IFRS 9 was issued in July 2014. It replaces the guidance in IAS 39 that
relates to the classification and measurement of financial instruments. IFRS 9
retains but simplifies the mixed measurement model and establishes three
primary measurement categories for financial assets: amortized cost, fair value
through OCI and fair value through P&L. The basis of classification depends on
the entity’s business model and the contractual cash flow characteristics of
the financial asset. Investments in equity instruments are required to be
measured at fair value through profit or loss with the irrevocable option at
inception to present changes in fair value in OCI not recycling. There is now a
new expected credit losses model that replaces the incurred loss impairment
model used in IAS 39. For financial liabilities there were no changes to
classification and measurement except for the recognition of changes in own
credit risk in other comprehensive income, for liabilities designated at fair
value through profit or loss. IFRS 9 relaxes the requirements for hedge
effectiveness by replacing the bright line hedge effectiveness tests. It
requires an economic relationship between the hedged item and hedging
instrument and for the ‘hedged ratio’ to be the same as the one management
actually use for risk management purposes. Contemporaneous documentation is
still required but is different to that currently prepared under IAS 39. The
standard is effective for accounting periods beginning on or after 1 January
2018. The new standard will not have a material effect on the Group’s financial
statements. The standard has been endorsed for application in the EU.
IFRS 15, ‘Revenue from contracts with customers’ deals with revenue recognition
and establishes principles for reporting useful information to users of
financial statements about the nature, amount, timing and uncertainty of
revenue and cash flows arising from an entity’s contracts with customers.
Revenue is recognized when a customer obtains control of a good or service and
thus has the ability to direct the use and obtain the benefits from the good or
service. The standard replaces IAS 18 ‘Revenue’ and IAS 11 ‘Construction
contracts’ and related interpretations. The standard is effective for annual
periods beginning on or after 1 January 2018. The new standard will not have a
material effect on the Group’s financial statements. The standard has been
endorsed for application in the EU.
IFRS 16, Leases will replace current IAS 17 guidance regarding lease
agreements. IFRS 16 sets out the principles for the recognition, measurement,
presentation and disclosure of leases for both parties to a contract. IFRS 16
is effective from 1 January 2019. A company can choose to apply IFRS 16 before
that date but only if it also applies IFRS 15. According to IFRS 16 lessee is
required to recognize assets and liabilities for all leases with a term of more
than 12 months and depreciation of lease assets separately from interest on
lease liabilities in the income statement. The new standard is expected to have
no significant impact on profit before taxes. Assets and interest bearing
liabilities are expected to grow by EUR 30-40 million with current lease
agreements. Changes in lease agreements may change this amount. The standard
has not yet been endorsed for application in the EU.
There are no other IFRSs or IFRIC interpretations that are not yet effective
that would be expected to have a material impact on the Group.
ANALYSIS BY SEGMENT
Net sales and EBIT by market area
-------------------------------------
(EUR million) Q4/2016 Q4/2015 2016 2015
---------------------------------------------------------------
NET SALES
---------------------------------------------------------------
- Sweden 209.1 222.9 804.4 841.9
---------------------------------------------------------------
- Finland 213.4 216.2 806.5 801.6
---------------------------------------------------------------
- Denmark 39.3 37.6 173.2 175.9
---------------------------------------------------------------
- Baltics 40.4 43.3 161.3 173.6
---------------------------------------------------------------
- Between segments -17.0 -18.6 -72.4 -76.0
---------------------------------------------------------------
Group total 485.2 501.4 1 872.9 1 917.1
---------------------------------------------------------------
---------------------------------------------------------------
EBIT
---------------------------------------------------------------
- Sweden 3.2 8.5 12.9 21.1
---------------------------------------------------------------
- Finland 7.0 -5.3 14.6 4.9
---------------------------------------------------------------
- Denmark -2.6 -1.9 -9.5 -9.3
---------------------------------------------------------------
- Baltics 1.0 1.0 6.4 5.4
---------------------------------------------------------------
- Between segments - - - -
---------------------------------------------------------------
Segments total 8.7 2.3 24.4 22.1
---------------------------------------------------------------
---------------------------------------------------------------
Group administration costs -4.5 -2.9 -14.7 -12.5
---------------------------------------------------------------
Group total 4.2 -0.6 9.7 9.6
---------------------------------------------------------------
---------------------------------------------------------------
INVESTMENTS
---------------------------------------------------------------
- Sweden 8.2 6.9 19.8 13.7
---------------------------------------------------------------
- Finland 23.8 3.4 64.0 19.9
---------------------------------------------------------------
- Denmark 0.4 1.1 3.1 5.4
---------------------------------------------------------------
- Baltics 3.7 2.1 10.8 10.6
---------------------------------------------------------------
Total 36.1 13.4 97.6 49.6
---------------------------------------------------------------
---------------------------------------------------------------
AVERAGE NUMBER OF EMPLOYEES
---------------------------------------------------------------
- Sweden 2 162 2 176
---------------------------------------------------------------
- Finland 2 912 2 840
---------------------------------------------------------------
- Denmark 686 726
---------------------------------------------------------------
- Baltics 1 560 1 696
---------------------------------------------------------------
Total 7 319 7 437
---------------------------------------------------------------
NOTES TO THE INCOME STATEMENT
1. ITEMS AFFECTING COMPARABILITY
(EUR million) Q4/2016 Q4/2015 2016 2015
--------------------------------------------------------------------------------
Comparable EBIT 6.0 11.3 13.2 21.5
--------------------------------------------------------------------------------
Impairment of assets, Finland 1) - -11.4 - -11.4
--------------------------------------------------------------------------------
Termination of employment, Sweden 2) - -0.5 - -0.5
--------------------------------------------------------------------------------
Termination of employment, Group Management 2) - - -1.2 -
--------------------------------------------------------------------------------
Termination of employment, Denmark 2) - - -0.5 -
--------------------------------------------------------------------------------
Termination of employment, Finland 2) -0.3 - -0.3 -
--------------------------------------------------------------------------------
Environmental provision, Sweden 3) -1.5 - -1.5 -
--------------------------------------------------------------------------------
EBIT 4.2 -0.6 9.7 9.6
--------------------------------------------------------------------------------
1) Included in the Income Statement in the item ”Cost of goods sold”
2) Included in the Income Statement in the item ”General administration costs”
3) Included in the Income Statement in the item ”Other operating items
total”
NOTES TO THE STATEMENT OF FINANCIAL POSITION
2. CHANGES IN INTANGIBLE ASSETS
(EUR million) 2016 2015
---------------------------------------------------
Opening balance 147.3 144.3
---------------------------------------------------
Translation differences -3.5 2.0
---------------------------------------------------
Additions 0.9 0.9
---------------------------------------------------
Additions, business acquisitions - 2.2
---------------------------------------------------
Disposals 0.0 -0.1
---------------------------------------------------
Depreciation and impairment -2.1 -2.6
---------------------------------------------------
Reclassification between items 0.4 0.5
---------------------------------------------------
Closing balance 143.0 147.3
---------------------------------------------------
3. CHANGES IN TANGIBLE ASSETS
(EUR million) 2016 2015
---------------------------------------------------
Opening balance 361.8 369.7
---------------------------------------------------
Translation differences -2.1 1.0
---------------------------------------------------
Additions 96.7 48.7
---------------------------------------------------
Additions, business acquisitions - 7.8
---------------------------------------------------
Disposals -1.9 -2.8
---------------------------------------------------
Depreciation and impairment -52.4 -62.1
---------------------------------------------------
Reclassification between items -0.4 -0.5
---------------------------------------------------
Closing balance 401.7 361.8
---------------------------------------------------
4. INVENTORIES
(EUR million) 2016 2015
---------------------------------------------------
Materials and supplies 61.5 71.5
---------------------------------------------------
Semi-finished products 4.7 5.0
---------------------------------------------------
Finished products 42.0 40.1
---------------------------------------------------
Other inventories 0.3 0.4
---------------------------------------------------
Inventories, advance payments 0.9 1.1
---------------------------------------------------
Biological asset 6.7 6.2
---------------------------------------------------
Total inventories 116.1 124.2
---------------------------------------------------
5. NOTES TO EQUITY
Share capital Number of Share Share Reserve for Treasury Total
and share outstanding capital premium invested
premium shares reserve unrestricted
reserve equity
---------------------------------------------------------------------------
1.1.2016 53 972 788 66.8 72.9 143.5 0.0 283.1
---------------------------------------------------------------------------
31.12.2016 54 017 673 66.8 72.9 143.5 0.0 283.1
---------------------------------------------------------------------------
DERIVATIVE INSTRUMENT LIABILITIES
(EUR million) 31.12.2016 31.12.2015
----------------------------------------------------------------
Nominal values of derivative instruments
----------------------------------------------------------------
----------------------------------------------------------------
Foreign exchange derivatives 43.6 57.7
----------------------------------------------------------------
Interest rate derivatives 126.9 128.5
----------------------------------------------------------------
Electricity derivatives 7.2 8.1
----------------------------------------------------------------
----------------------------------------------------------------
Fair values of derivative instruments
----------------------------------------------------------------
----------------------------------------------------------------
Foreign exchange derivatives -0.2 -0.2
----------------------------------------------------------------
Interest rate derivatives -13.4 -14.0
----------------------------------------------------------------
Electricity derivatives 0.1 -2.9
----------------------------------------------------------------
CONSOLIDATED OTHER CONTINGENT LIABILITIES
(EUR million) 31.12.2016 31.12.2015
----------------------------------------------------------------
Debts secured by pledges or mortgages
----------------------------------------------------------------
- loans from financial institutions 0.0 0.2
----------------------------------------------------------------
----------------------------------------------------------------
On own behalf
----------------------------------------------------------------
- Mortgages given 0.0 0.4
----------------------------------------------------------------
- Assets pledged 3.2 3.2
----------------------------------------------------------------
----------------------------------------------------------------
On behalf of others
----------------------------------------------------------------
- guarantees and other commitments 13.0 13.4
----------------------------------------------------------------
----------------------------------------------------------------
Other contingencies
----------------------------------------------------------------
Leasing commitments 7.5 11.0
----------------------------------------------------------------
Rent liabilities 31.7 36.5
----------------------------------------------------------------
The Eura facility will be closed after the Rauma facility has been completed in
2017. Procedures related to the Eura facility, after the production has ended
there, are still being investigated. The alternatives are selling, renting,
renovation and demolition. Because of the future use is open, potential
renovation or demolition obligations cannot yet be measured with sufficient
reliability. Due to this, no provision has been recorded.
THE FAIR VALUE DETERMINATION PRINCIPLES APPLIED BY THE GROUP ON FINANCIAL
INSTRUMENTS MEASURED AT FAIR VALUE
Derivatives
The fair values of currency derivatives are determined by using the market
prices for contracts of equal duration at the reporting date. The fair values
of interest rate swaps are determined using the net present value method
supported by the market interest rates at the reporting date. The fair value of
commodity derivatives are determined by using publicly quoted market prices.
31.12.2016 Level 1 Level 2 Level 3
--------------------------------------------------------------------------------
Assets measured at fair value
--------------------------------------------------------------------------------
Financial assets recognised at fair value
through profit or loss
--------------------------------------------------------------------------------
- Trading securities - - - -
--------------------------------------------------------------------------------
- Trading derivatives
--------------------------------------------------------------------------------
- Interest rate swaps - - - -
--------------------------------------------------------------------------------
- Foreign exchange derivatives 0.1 0.0 0.1 0.0
--------------------------------------------------------------------------------
- Commodity derivatives 0.6 - 0.6 -
--------------------------------------------------------------------------------
of which subject to cash flow hedging 0.6 - 0.6 -
--------------------------------------------------------------------------------
Total 0.7 0.0 0.7 0.0
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Liabilities measured at fair value
--------------------------------------------------------------------------------
Financial liabilities recognised at fair
value
through profit or loss
--------------------------------------------------------------------------------
-Trading derivatives
--------------------------------------------------------------------------------
- Interest rate swaps -13.4 0.0 -13.4 0.0
--------------------------------------------------------------------------------
of which subject to cash flow hedging -13.4 0.0 -13.4 0.0
--------------------------------------------------------------------------------
- Foreign exchange derivatives -0.3 0.0 -0.3 0.0
--------------------------------------------------------------------------------
- Commodity derivatives -0.5 0.0 -0.5 0.0
--------------------------------------------------------------------------------
of which subject to cash flow hedging -0.5 0.0 -0.5 0.0
--------------------------------------------------------------------------------
Total -14.2 0.0 -14.2 0.0
--------------------------------------------------------------------------------
31.12.2015 Level 1 Level 2 Level 3
--------------------------------------------------------------------------------
Assets measured at fair value
--------------------------------------------------------------------------------
Financial assets recognised at fair value
through profit or loss
--------------------------------------------------------------------------------
- Trading securities - - - -
--------------------------------------------------------------------------------
- Trading derivatives
--------------------------------------------------------------------------------
- Interest rate swaps - - - -
--------------------------------------------------------------------------------
- Foreign exchange derivatives 0.1 0.0 0.1 0.0
--------------------------------------------------------------------------------
- Commodity derivatives - - - -
--------------------------------------------------------------------------------
Total 0.1 0.0 0.1 0.0
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Liabilities measured at fair value
--------------------------------------------------------------------------------
Financial liabilities recognised at fair
value
through profit of loss
--------------------------------------------------------------------------------
-Trading derivatives
--------------------------------------------------------------------------------
- Interest rate swaps -14.0 0.0 -14.0 0.0
--------------------------------------------------------------------------------
of which subject to cash flow hedging -14.0 0.0 -14.0 0.0
--------------------------------------------------------------------------------
- Foreign exchange derivatives -0.3 0.0 -0.3 0.0
--------------------------------------------------------------------------------
- Commodity derivatives -2.9 0.0 -2.9 0.0
--------------------------------------------------------------------------------
of which subject to cash flow hedging -2.9 0.0 -2.9 0.0
--------------------------------------------------------------------------------
Total -17.2 0.0 -17.2 0.0
--------------------------------------------------------------------------------
BUSINESS TRANSACTIONS WITH RELATED PARTIES
-------------------------------------------
(EUR million) 2016 2015
------------------------------------------------
Sales to associates 46.9 70.1
------------------------------------------------
Purchases from associates 39.2 46.6
------------------------------------------------
Trade and other receivables 2.2 1.4
------------------------------------------------
Trade and other payables 5.1 5.3
------------------------------------------------
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